Merida Industry Co., Ltd.

Parent Corporation Only Financial Statements for the Years Ended December 31, 2025 and 2024 and Independent Auditors' Report

Deloitte.

勤業眾信

勤業眾信聯合會計師事務所

110421 台北市信義區松仁路100號20樓

Deloitte & Touche

20F, Taipei Nan Shan Plaza

No. 100, Songren Rd.,

Xinyi Dist., Taipei 110421, Taiwan

Tel: +886 (2) 2725-9988

Fax: +886 (2) 4051-6888

www.deloitte.com.tw

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Merida Industry Co., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Merida Industry Co., Ltd. (the Corporation), which comprise the parent corporation only balance sheets as of December 31, 2025 and 2024, and the parent corporation only statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent corporation only financial statements, including material accounting policy information (collectively referred to as the “parent corporation only financial statements”).

In our opinion, based on our audits and the reports of other auditors (refer to the Other Matter section of this report), the accompanying parent corporation only financial statements present fairly, in all material respects, the parent corporation only financial position of the Corporation as of December 31, 2025 and 2024, and its parent corporation only financial performance and its parent corporation only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the parent corporation only Consolidated Financial Statements section of our report. We are independent of the Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our audits and the report of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

The key audit matter identified in the parent corporation only financial statements for the year ended December 31, 2025 is as follows:

Revenue Recognition

The Corporation’s sales revenue mainly comes from the manufacture and sales of bicycles, e-bikes, and bicycle components. Since revenue from the export sales of e-bikes for the year ended December 31, 2025 accounted for a significant proportion of sales revenue, recognition of export sales revenue from the sale of e-bikes has been identified as a key audit matter. For the accounting policies on the recognition of sales revenue, refer to Note 4.

Our audit procedures performed in respect of revenue recognition include the following:

We obtained an understanding of and evaluated the design and appropriateness of implementation of the internal controls related to the recognition of sales revenue and the operating procedures and risks related to revenue collection. We also tested the continuous effectiveness of its related procedures during the year.
We obtained the sales revenue receipts from the export of e-bikes, sampled the orders, and subsequently recognized the documents and receipt vouchers related to sales revenue and verified the occurrence of the sales revenue recognized.

Other Matter

We did not audit the part of the investments accounted for using the equity method that were evaluated in the parent corporation only financial statements, which is consistent with the U.S. GAAP financial reporting structures. This part has been audited by other accountants in accordance with auditing standards generally accepted in the U.S. We have applied all necessary audit procedures on the conversion adjustments made to the financial statements of the Corporation, and in our opinion, such financial statements present fairly and are in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS). In our opinion, the amounts relating to the abovementioned adjusted financial statements are based on the reports of other auditors and are the results of additional audit procedures performed in order to meet the relevant requirements of the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. The balance of the long-term investments accounted for using the equity method was NT$15,970,171 thousand and NT$15,770,662 thousand, accounting for 52% and 49% of the Corporation’s total assets as of December 31, 2025 and 2024, respectively. The share of profit (loss) of associates was NT$99,329 thousand and NT$(4,046,255) thousand, accounting for 7% and 435% of the Corporation’s net income (loss) before tax for the years ended December 31, 2025 and 2024, respectively.

Responsibilities of Management and Those Charged with Governance for the parent corporation only Financial Statements

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

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

Those charged with governance, including the audit committee, are responsible for overseeing the Corporation's financial reporting process.

Auditors' Responsibilities for the Audit of the parent corporation only Financial Statements

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

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

Identify and assess the risks of material misstatement of the parent corporation only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent corporation only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent corporation only financial statements, including the disclosures, and whether the parent corporation only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
3 -

Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Corporation to express an opinion on the parent corporation only financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

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

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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

The engagement partners on the audits resulting in this independent auditors' report are Shao-Chun Wu and Done-Yuin Tseng.

Deloitte & Touche
Taipei, Taiwan
Republic of China

March 12, 2026

Notice to Readers

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

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

MERIDA INDUSTRY CO., LTD.

PARENT CORPORATION ONLY BALANCE SHEETS

DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	2025		2024
ASSETS	Amount	%	Amount	%
CURRENT ASSETS
Cash (Notes 4 and 6)	$ 2,086,037	7	$ 2,294,519	7
Financial assets at fair value through profit or loss - current (Notes 4 and 7)	35,047	-	57,764	-
Notes receivable (Notes 4 and 19)	4,936	-	3,593	-
Trade receivables (Notes 4, 8 and 19)	253,627	1	254,478	1
Trade receivables from related parties (Notes 4, 19 and 26)	3,732,831	12	3,670,741	12
Other receivables (Notes 4 and 26)	179,287	1	352,035	1
Inventories (Notes 4 and 9)	2,519,351	8	4,290,319	13
Other current assets	127,699	-	80,204	-
Total current assets	8,938,815	29	11,003,653	34
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 10)	92,620	-	92,620	-
Investments accounted for using the equity method (Notes 4, 11 and 23)	20,484,070	67	19,723,131	61
Property, plant and equipment (Notes 4 and 12)	899,689	3	887,445	3
Right-of-use assets (Notes 4 and 13)	28,641	-	6,029	-
Intangible assets (Notes 4 and 14)	9,800	-	22,168	-
Deferred tax assets (Notes 4 and 21)	202,259	1	281,283	1
Prepayments for equipment	859	-	45,000	-
Prepayments for investment (Note 11)	-	-	315,721	1
Net defined benefit assets - non-current (Notes 4 and 17)	104,111	-	90,774	-
Other non-current assets (Note 4)	6,193	-	6,354	-
Total non-current assets	21,828,242	71	21,470,525	66
TOTAL	$ 30,767,057	100	$ 32,474,178	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bank loans (Note 15)	$ 4,358,400	14	$ 5,053,600	16
Contract liabilities - current (Notes 4, 19 and 26)	2,847	-	124,221	-
Trade payables	2,517,668	8	3,616,146	11
Trade payables to related parties (Note 26)	81,217	-	100,363	-
Other payables (Note 16)	307,675	1	277,850	1
Current tax liabilities (Notes 4 and 21)	412,016	2	279,815	1
Lease liabilities - current (Notes 4 and 13)	11,875	-	3,714	-
Other current liabilities	48,575	-	14,170	-
Total current liabilities	7,740,273	25	9,469,879	29
NON-CURRENT LIABILITIES
Deferred tax liabilities (Notes 4 and 21)	3,510,546	12	3,626,078	11
Lease liabilities - non-current (Notes 4 and 13)	16,866	-	2,337	-
Guarantee deposits received	9,129	-	14	-
Credit balance of investments accounted for using the equity method (Notes 4, 11 and 23)	97,395	-	80,417	1
Total non-current liabilities	3,633,936	12	3,708,846	12
Total liabilities	11,374,209	37	13,178,725	41
EQUITY
Ordinary shares	2,989,838	10	2,989,838	9
Capital surplus	1,192,078	4	940,458	3
Retained earnings
Legal reserve	4,116,578	13	4,116,578	12
Special reserve	-	-	638,687	2
Unappropriated earnings	10,977,093	36	10,323,780	32
Other equity	117,261	-	286,112	1
Total equity	19,392,848	63	19,295,453	59
TOTAL	$ 30,767,057	100	$ 32,474,178	100

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

(With Deloitte & Touche auditors' report dated March 12, 2026)

MERIDA INDUSTRY CO., LTD.

PARENT CORPORATION ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

	2025		2024
	Amount	%	Amount	%
SALES (Notes 4, 19 and 26)	$ 19,299,769	100	$ 18,215,546	100
COST OF GOODS SOLD (Notes 9, 20 and 26)	17,459,032	90	15,938,591	88
GROSS PROFIT	1,840,737	10	2,276,955	12
REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4)	446,856	2	(79,132)	-
REALIZED GROSS PROFIT	2,287,593	12	2,197,823	12
OPERATING EXPENSES (Notes 20 and 26)
Selling and marketing expenses	506,623	3	465,806	2
General and administrative expenses	182,479	1	153,125	1
Total operating expenses	689,102	4	618,931	3
PROFIT FROM OPERATIONS	1,598,491	8	1,578,892	9
NON-OPERATING INCOME AND EXPENSES
Interest income (Notes 4 and 26)	124,406	1	85,815	-
Technical service and royalty income (Note 26)	147,613	1	313,352	2
Dividend income	2,883	-	2,644	-
Other income (Note 26)	34,637	-	51,766	-
Interest expense	(85,200)	-	(84,424)	-
Other expenses (Note 20)	(29,591)	-	(37,967)	-
Net foreign exchange gains (Notes 4 and 31)	(192,918)	(1)	351,310	2
Gain on fair value changes of financial assets at fair value through profit or loss (Note 4)	(22,111)	-	6,027	-
Share of profit (loss) of subsidiaries and associates (Notes 4 and 11)	(95,467)	(1)	(3,196,932)	(18)
Total non-operating income and expenses	(115,748)	-	(2,508,409)	(14)
PROFIT BEFORE INCOME (LOSS) TAX	1,482,743	8	(929,517)	(5)
INCOME TAX EXPENSE (BENEFIT) (Notes 4 and 21)	282,533	2	(230,414)	(1)
NET PROFIT (LOSS) FOR THE YEAR	1,200,210	6	(699,103)	(4)

(Continued)

MERIDA INDUSTRY CO., LTD.

PARENT CORPORATION ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

	2025		2024
	Amount	%	Amount	%
OTHER COMPREHENSIVE INCOME (LOSS) (Note 4)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit plans (Note 17)	$ 7,471	-	$ 62,370	-
Share of the other comprehensive income (loss) of associates accounted for using the equity method	8,653	-	(17,010)	-
	16,124	-	45,360	-
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of the financial statements of foreign operations	(528,192)	(3)	1,271,212	7
Share of the other comprehensive income (loss) of associates accounted for using the equity method	317,128	2	(302,511)	(2)
Income tax related to items that may be reclassified subsequently to profit or loss	42,213	-	(43,902)	-
	(168,851)	(1)	924,799	5
Other comprehensive income for the year, net of income tax	(152,727)	(1)	970,159	5
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	$ 1,047,483	5	$ 271,056	1
EARNINGS (LOSS) PER SHARE (Note 22)
Basic	$ 4.01		$ (2.34)
Diluted	$ 4.00		$ (2.34)

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

(With Deloitte & Touche auditors’ report dated March 12, 2026) (Concluded)

MERIDA INDUSTRY CO., LTD.

PARENT CORPORATION ONLY STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	Ordinary Shares (Note 18)	Capital Surplus (Note 18)	Retained Earnings (Notes 18 and 23)			Other Equity Exchange Differences on Translating the Financial Statements of Foreign Operations	Total Equity
			Legal Reserve	Special Reserve	Unappropriated Earnings
BALANCE AT JANUARY 1, 2024	$ 2,989,838	$ 630,152	$ 3,937,840	$ 666,194	$ 12,934,212	$ (638,687)	$ 20,519,549
Appropriation of 2023 earnings
Legal reserve	-	-	178,738	-	(178,738)	-	-
Reversal of special reserve	-	-	-	(27,507)	27,507	-	-
Cash dividends distributed by the Corporation	-	-	-	-	(1,793,903)	-	(1,793,903)
Changes in capital surplus from investments in associates accounted for using the equity method	-	310,306	-	-	-	-	310,306
Changes in ownership interests in subsidiaries	-	-	-	-	(11,555)	-	(11,555)
Net loss for the year ended December 31, 2024	-	-	-	-	(699,103)	-	(699,103)
Other comprehensive income (loss) for the year ended December 31, 2024, net of income tax	-	-	-	-	45,360	924,799	970,159
Total comprehensive (loss) income for the year ended December 31, 2024	-	-	-	-	(653,743)	924,799	271,056
BALANCE AT DECEMBER 31, 2024	2,989,838	940,458	4,116,578	638,687	10,323,780	286,112	19,295,453
Appropriation of 2024 earnings
Reversal of special reserve	-	-	-	(638,687)	638,687	-	-
Cash dividends distributed by the Corporation	-	-	-	-	(1,195,935)	-	(1,195,935)
Changes in capital surplus from investments in associates accounted for using the equity method	-	251,620	-	-	-	-	251,620
Difference between consideration received or paid and the carrying amount of the subsidiaries' net assets during actual disposal or acquisition (Note 23)	-	-	-	-	(4,623)	-	(4,623)
Changes in ownership interests in subsidiaries	-	-	-	-	(1,150)	-	(1,150)
Net profit for the year ended December 31, 2025	-	-	-	-	1,200,210	-	1,200,210
Other comprehensive income (loss) for the year ended December 31, 2025, net of income tax	-	-	-	-	16,124	(168,851)	(152,727)
Total comprehensive income (loss) for the year ended December 31, 2025	-	-	-	-	1,216,334	(168,851)	1,047,483
BALANCE AT DECEMBER 31, 2025	$ 2,989,838	$ 1,192,078	$ 4,116,578	$ -	$ 10,977,093	$ 117,261	$ 19,392,848

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

(With Deloitte & Touche audit report dated March 12, 2026)

MERIDA INDUSTRY CO., LTD.

PARENT CORPORATION ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	2025	2024
CASH FLOWS FROM OPERATING ACTIVITIES
Profit (loss) before income tax	$ 1,482,743	$ (929,517)
Adjustments for:
Depreciation expense	85,643	98,031
Amortization expense	15,452	17,175
Expected credit loss recognized on trade receivables	1,399	1,667
Net loss (gain) on fair value changes of financial assets at fair value through profit or loss	22,111	(6,027)
Interest expense	85,200	84,424
Interest income	(124,406)	(85,815)
Dividend income	(2,883)	(2,644)
Share of profit (loss) of subsidiaries and associates	95,467	3,196,932
Gain on disposal of property, plant and equipment	(4)	-
Write-down (reversed) of inventories	6,032	(102,741)
Unrealized (realized) gain on transactions with associates	(446,856)	79,132
Unrealized net gain on foreign currency exchange	(36,190)	(56,950)
Changes in operating assets and liabilities
Financial assets at fair value through profit or loss	606	153,214
Notes receivable	(1,343)	3,561
Trade receivables	(23,678)	(273,516)
Other receivables	185,368	(119,024)
Inventories	1,764,936	(1,137,991)
Other current assets	(47,495)	(61,380)
Contract liabilities	(121,374)	109,105
Notes and trade payables	(1,120,395)	1,612,188
Other payables	30,304	(121,035)
Other current liabilities	34,405	3,777
Net defined benefit assets	(5,866)	(9,275)
Cash generated from operations	1,879,176	2,453,291
Interest received	111,786	88,416
Dividends received	306,162	682,235
Interest paid	(85,405)	(84,661)
Income tax paid	(144,627)	(939,022)
Net cash generated from operating activities	2,067,092	2,200,259
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment	(44,603)	(29,199)
Proceeds from disposal of property, plant and equipment	185	-
Decrease in refundable deposits	161	30
Payments for intangible assets	(3,084)	(1,678)
Increase in prepayments for equipment	(859)	(45,000)
Net cash used in investing activities	(48,200)	(75,847)

(Continued)

MERIDA INDUSTRY CO., LTD.

PARENT CORPORATION ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	2025	2024
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayments of) short-term bank loans	$ (695,200)	$ 348,974
Proceeds from guarantee deposits received	9,115	14
Repayment of the principal portion of lease liabilities	(8,660)	(22,106)
Dividends paid to owners of the Corporation	(1,195,935)	(1,793,903)
Acquisition of additional interests in subsidiaries	(336,694)	(17,313)
Increase in prepayments for investment	-	(315,721)
Net cash used in financing activities	(2,227,374)	(1,800,055)
NET INCREASE (DECREASE) IN CASH	(208,482)	324,357
CASH AT THE BEGINNING OF THE YEAR	2,294,519	1,970,162
CASH AT THE END OF THE YEAR	$ 2,086,037	$ 2,294,519

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

(With Deloitte & Touche auditors’ report dated March 12, 2026) (Concluded)

10 -

MERIDA INDUSTRY CO., LTD.

NOTES TO PARENT CORPORATION ONLY FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Merida Industry Co., Ltd. (the "Corporation") was incorporated in September 1972 in the Republic of China (ROC). It manufactures and sells bicycles and related parts.

Shares of the Corporation have been listed on the Taiwan Stock Exchange (TWSE) since September 1992.

The parent corporation only financial statements are presented in the Corporation's functional currency, the New Taiwan dollar.

2. APPROVAL OF PARENT CORPORATION ONLY FINANCIAL STATEMENTS

The parent corporation only financial statements were approved by the Corporation's board of directors on March 12, 2026.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the "IFRS Accounting Standards") endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Amendments to IAS 21 "Lack of Exchangeability"

The initial application of the Amendments to IAS 21 "Lack of Exchangeability" did not have a material impact on the Corporation's accounting policies.

b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2026

New, Amended and Revised Standards and Interpretations	Effective Date Announced by IASB
Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments”	January 1, 2026
Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity”	January 1, 2026
Annual Improvements to IFRS Accounting Standards - Volume 11	January 1, 2026
IFRS 17 “Insurance Contracts” (including the 2020 and 2021 amendments to IFRS 17)	January 1, 2023

Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments”

1) The amendments to the application guidance of classification of financial assets

The amendments mainly amend the requirements for the classification of financial assets, including:

a) If a financial asset contains a contingent feature that could change the timing or amount of contractual cash flows and the contingent event itself does not relate directly to changes in basic lending risks and costs (e.g., whether the debtor achieves a contractually specified reduction in carbon emissions), the financial asset has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding if, and only if,

In all possible scenarios (before and after the occurrence of a contingent event), the contractual cash flows are solely payments of principal and interest on the principal amount outstanding; and
In all possible scenarios, the contractual cash flows would not be significantly different from the contractual cash flows on a financial instrument with identical contractual terms, but without such a contingent feature.

b) To clarify that a financial asset has non-recourse features if an entity’s ultimate right to receive cash flows is contractually limited to the cash flows generated by specified assets.

c) To clarify that the characteristics of contractually linked instruments include a prioritization of payments to the holders of financial assets using multiple contractually linked instruments (tranches) established through a waterfall payment structure, resulting in concentrations of credit risk and a disproportionate allocation of cash shortfalls from the underlying pool between the tranches.

2) The amendments to the application guidance of derecognition of financial liabilities

The amendments mainly stipulate that a financial liability is derecognized on the settlement date. However, when settling a financial liability in cash using an electronic payment system, the Corporation can choose to derecognize the financial liability before the settlement date if, and only if, the Corporation has initiated a payment instruction that resulted in:

The Corporation having no practical ability to withdraw, stop or cancel the payment instruction;
The Corporation having no practical ability to access the cash to be used for settlement as a result of the payment instruction; and
The settlement risk associated with the electronic payment system being insignificant.

An entity shall apply the amendments retrospectively but is not required to restate prior periods. The effect of initially applying the amendments shall be recognized as an adjustment to the opening balance at the date of initial application. An entity may restate prior periods if, and only if, it is possible to do so without the use of hindsight.

Except for the above impact, as of the date the parent corporation only financial statements were authorized for issue, the Corporation has assessed that the application of the above standards and interpretations will not have a material impact on the Corporation’s financial position and financial performance.

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c. New IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC

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

Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.

Note 2: On September 25, 2025, the FSC announced that IFRS 18 will take effect starting from January 1, 2028. Domestic entities could elect to apply IFRS 18 for an earlier period after the endorsement of IFRS 18 by the FSC.

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

IFRS 18 will supersede IAS 1 “Presentation of Financial Statements”. The main changes comprise:

To classify items of income and expenses presented in the statement of profit or loss into the operating, investing, financing, income taxes and discontinued operations categories, the Corporation shall assess whether it has specified main business activities of investing in particular types of assets and providing financing to customers.
The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or loss before financing and income taxes and profit or loss.
Provides guidance to enhance the requirements of aggregation and disaggregation: The Corporation shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual transactions or other events and shall classify and aggregate them into groups based on shared characteristics, so as to result in the presentation in the primary financial statements of line items that have at least one similar characteristic. The Corporation shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Corporation labels items as “other” only if it cannot find a more informative label.
Disclosures on Management-defined Performance Measures (MPMs): When in public communications outside financial statements and communicating to users of financial statements management’s view of an aspect of the financial performance of the Corporation as a whole, the Corporation shall disclose related information about its MPMs in a single note to the financial statements, including the description of such measures, calculations, reconciliations to the subtotal or total specified by IFRS Accounting Standards and the income tax and non-controlling interests effects of related reconciliation items.

In addition, the following consequential amendments have been made to IAS 7 “Statement of Cash Flows”:

The Corporation shall use operating profit or loss as the starting point when presenting cash flows from operating activities under the indirect method.
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Interest and dividends received by the Corporation shall be classified as investing activities, while interest and dividends paid shall be classified as financing activities. However, if, after assessment, the Corporation has a specific main operating activity, it shall determine how to classify dividends received, interest received and interest paid in the statement of cash flows by referring to how it classifies dividend income, interest income and interest expense in the statement of profit or loss. The total of each of these cash flows shall be classified in a single category in the statement of cash flows.

Except for the above impact, As of the date the parent corporation only financial statements were authorized for issue, the Corporation is continuously assessing other impacts of the above amended standards and interpretations on the Corporation financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

a. Statement of compliance

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

b. Basis of preparation

The parent corporation only financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value, and net defined benefit assets that are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing these parent corporation only financial statements, the Corporation used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent corporation only financial statements to be the same as the amounts attributable to the owners of the Corporation in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent corporation only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates, the share of other comprehensive income of subsidiaries and associates and the related equity items, as appropriate, in these parent corporation only financial statements.

c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;

2) Assets expected to be realized within 12 months after the reporting period; and

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3) Cash unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Corporation does not have the substantial right at the end of the reporting period to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Foreign currencies

In preparing the parent corporation only financial statements, transactions in currencies other than the Corporation’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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

Non-monetary item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

In preparing the parent corporation only financial statements, assets and liabilities of the foreign operations are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated into the New Taiwan dollar at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

e. Inventories

Inventories consist of raw materials, work in process and finished goods and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at their weighted-average cost on the balance sheet date.

f. Investments in subsidiaries

The Corporation uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Corporation.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the subsidiary. The Corporation also recognizes the changes in the Corporation’s share of equity of subsidiaries.

Changes in the Corporation’s ownership interest in a subsidiary that do not result in the Corporation losing control of the subsidiary are accounted for as equity transactions. The Corporation recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

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When the Corporation’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the subsidiary), the Corporation continues recognizing its share of further losses, if any.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Corporation’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Corporation assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Corporation recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

Profits or losses resulting from downstream transactions is eliminated in full only in the parent corporation only financial statements. Profit and losses resulting from upstream transactions and transactions between subsidiaries is recognized only in the parent corporation only financial statements and only to the extent of interests in the subsidiaries that are not related to the Corporation.

g. Investments in associates

An associate is an entity over which the Corporation has significant influence and is neither a subsidiary nor an interest in a joint venture.

The Corporation uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the associate. The Corporation also recognizes the changes in the Corporation’s share of equity of associates.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Corporation’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Corporation subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Corporation’s proportionate interest in the associate. The Corporation records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted from using the equity method. If the Corporation’s ownership interest is reduced due to its additional subscription of the new shares of an associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

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When the Corporation’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the associate), the Corporation discontinues recognizing its share of further loss, if any. Additional losses and liabilities are recognized only to the extent that the Corporation has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

When the Corporation transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the parent corporation only financial statements only to the extent of interests in the associate that are not related to the Corporation.

h. Property, plant and equipment

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

The depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Intangible assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

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

j. Impairment of property, plant and equipment, right-of-use assets and intangible assets

At the end of each reporting period, the Corporation reviews the carrying amounts of its property, plant and equipment, right-of-use assets and intangible assets other than goodwill to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Corporation estimates the recoverable amount of the cash-generating unit to which the asset belongs assets.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

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When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (less amortization or depreciation) that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

k. Financial instruments

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories: financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, and any dividends, interest earned and remeasurement gains or losses on such financial assets are recognized in gains or losses. Fair value is determined in the manner described in Note 25.

ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i) The financial assets are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

ii) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash, notes and trade receivables, other receivables and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

i) Significant financial difficulty of the issuer or the borrower;

ii) Breach of contract, such as a default;

iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

iv) The disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

iii. Investments in equity instruments at FVTOCI

On initial recognition, the Corporation may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Corporation’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Corporation recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

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The Corporation always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Corporation recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Corporation measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Corporation considers the following situations as indication that a financial asset is in default (without taking into account any collateral held by the Corporation):

i. Internal or external information shows that the debtor is unlikely to pay its creditors.

ii. Financial asset is more than 360 days past due unless the Corporation has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

c) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by the Corporation are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

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

The repurchase of the Corporation's own equity instruments is recognized in and deducted directly from equity, and its carrying amounts are calculated based on weighted average by share types. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Corporation's own equity instruments.

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3) Financial liabilities

a) Subsequent measurement

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

b) Derecognition of financial liabilities

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

4) Derivative financial instruments

The Corporation enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Revenue recognition

The Corporation identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

For contracts where the period between the date on which the Corporation transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Corporation does not adjust the promised amount of consideration for the effects of a significant financing component.

Revenue from the sale of goods is recognized as revenue when the goods are delivered to the customer's specific location or when the goods are shipped, because it is the time when the customer has full discretion over the manner of distribution and bears the risks. Trade receivables are recognized concurrently. The transaction price received is recognized as a contract liability until the goods have been delivered to the customer.

The Corporation does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

m. Leases

At the inception of a contract, the Corporation assesses whether the contract is, or contains, a lease.

1) The Corporation as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

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2) The Corporation as lessee

The Corporation recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the parent company only balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate will be used.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in future lease payments resulting from a change in a lease term the Corporation remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the parent company only balance sheets.

n. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

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

Defined benefit costs (including service costs, net interest and remeasurement) under the defined retirement benefit plans are determined using the projected unit credit method. Service costs and net interest on the net defined benefit liabilities are recognized as employee benefits expenses in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Net defined benefit assets represent the actual surplus in the Corporation’s defined benefit plans.

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o. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and research and development expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and such temporary differences are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which liabilities are settled or assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Corporation expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.

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5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Corporation’s accounting policies, management is required to make judgments, estimations, and assumptions on the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

When the Corporation develops material accounting estimates, the Corporation considers the possible impact of US reciprocal tariffs. The estimates and underlying assumptions are reviewed on an ongoing basis.

Based on the assessment of the Corporation’s management, the accounting policies, estimates, and assumptions adopted by the Corporation have not been subject to material accounting judgements, estimates and assumptions uncertainty.

6. CASH

	December 31
	2025	2024
Cash on hand	$ 280	$ 262
Checking accounts and demand deposits	2,085,757	2,294,257
	$ 2,086,037	$ 2,294,519

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	December 31
	2025	2024
Financial assets
Non-derivative financial assets
Domestic listed shares	$ 35,047	$ 57,764

8. TRADE RECEIVABLES - NON-RELATED PARTIES

	December 31
	2025	2024
Trade receivables	$ 254,902	$ 255,757
Less: Allowance for impairment loss	(1,275)	(1,279)
	$ 253,627	$ 254,478

In principle, the payment term granted to customers is 90 days from the invoice date and D/A or O/A of 60 to 120 days. The Corporation adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Corporation uses other publicly available financial information or its own trading records to rate its major customers. The Corporation’s exposure and the credit ratings of its counterparties are continuously monitored.

In order to minimize credit risk, the management of the Corporation has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Corporation reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Corporation’s credit risk was significantly reduced.

The Corporation measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix prepared by reference to the past default experience of the customer, the customer’s current financial position, economic condition of the industry in which the customer operates, as well as the GDP forecasts and industry outlook. The Corporation determines the expected credit loss rate by reference to the past due days of trade receivables.

The Corporation writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Corporation continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of trade receivables of the Corporation:

December 31, 2025

	Not Past Due	Past Due Within 3 Months	Total
Expected credit loss rate	0%-0.5%	3%
Gross carrying amount	$ 254,902	$ -	$ 254,902
Loss allowance (Lifetime ECLs)	(1,275)	-	(1,275)
Amortized cost	$ 253,627	$ -	$ 253,627

December 31, 2024

	Not Past Due	Past Due Within 3 Months	Total
Expected credit loss rate	0%-0.5%	3%
Gross carrying amount	$ 255,757	$ -	$ 255,757
Loss allowance (Lifetime ECLs)	(1,279)	-	(1,279)
Amortized cost	$ 254,478	$ -	$ 254,478

The movements of the loss allowance of trade receivables were as follows:

	For the Year Ended December 31
	2025	2024
Balance at January 1	$ 1,279	$ 1,506
Net reversal of loss allowance	(4)	(227)
Balance at December 31	$ 1,275	$ 1,279

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9. INVENTORIES

	December 31
	2025	2024
Finished goods	$ 1,072,015	$ 1,750,135
Work in process	87,794	104,915
Raw materials and supplies	1,336,511	2,367,753
Inventory in transit	23,031	67,516
	$ 2,519,351	$ 4,290,319

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2025 and 2024 was $17,459,032 thousand and $15,938,591 thousand, respectively. The cost of goods sold for the years ended December 31, 2025 and 2024 included inventory write-downs (reversals) of $6,032 thousand and $(102,741) thousand, respectively. Previous write-downs were reversed because slow moving inventories were sold.

10. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	December 31
	2025	2024
Financial assets - non-current
Overseas unlisted shares	$ 89,220	$ 89,220
Domestic unlisted shares	3,400	3,400
	$ 92,620	$ 92,620

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Corporation's strategy of holding these investments for long-term purposes.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

	December 31
	2025	2024
Investments in subsidiaries	$ 4,223,682	$ 3,699,135
Investments in associates	16,260,388	16,023,996
	$20,484,070	$19,723,131

a. Investments in subsidiaries

	December 31
	2025	2024
Unlisted shares
Merida International (B.V.I) Ltd. (“Merida B.V.I.”)	$ 2,869,909	$ 3,061,868
Merida & Centurion Germany GmbH (“Merida & Centurion”)	1,169,409	501,510
Merida Polska Sp.z.o.o (“Merida Polska”)	62,169	38,449
Merida Norge A.S. (“Merida Norge”)	62,059	40,265
Merida Bicycles Ltd. (“Merida U.K.”)	60,136	57,043
	$ 4,223,682	$ 3,699,135
Credit Balance of Investments Accounted for Using the Equity Method
Merida Japan Co., Ltd (“Merida Japan”)	$ 54,563	$ 28,635
Merida Benelux B.V. (“Merida Benelux”)	42,832	51,782
	$ 97,395	$ 80,417

The proportion of ownership and voting rights of investments in subsidiaries for the Corporation was as follows:

	December 31
	2025	2024
Merida B.V.I.	100%	100%
Merida & Centurion (Note 23)	90%	51%
Merida Polska	74%	74%
Merida Norge (Note 23)	80%	80%
Merida U.K.	81%	81%
Merida Japan (Note 23)	98%	90%
Merida Benelux	60%	60%

On August 12, 2024, the Corporation's board of directors resolved to purchase 39% of the shares of Merida & Centurion from the shareholder and managing director of Wolfgang Renner for EUR17,273,800. The parties signed the contract on October 16, 2024. In November 2024, the Corporation made a prepayment of EUR 9,000,000 for the investment, however and the transfer of equity was completed in September, 2025.

Refer to Table 6 "Information on Investees" following the Notes to Financial Statements for the nature of activities, principal places of business and countries of incorporation of the Corporation's subsidiaries.

b. Investments in associates

	December 31
	2025	2024
Unlisted shares
Specialized Bicycle Components Holding Company, Inc. (“SBC”)	$ 15,970,171	$ 15,770,662
SAIL & SURF GMBH. (“SAIL & SURF”)	135,842	121,889
Merida Bikes SWE, S.A (“Merida Bikes SWE”)	62,732	50,857
Merida Czech s.r.o (“Merida Czech”)	54,476	42,818
Merida Slovakia s.r.o (“Merida Slovakia”)	29,492	26,963
Merida Korea Inc. (“Merida Korea”)	6,314	3,587
Merida Italy S.r.l (“Merida Italy”)	1,361	7,220
	$ 16,260,388	$ 16,023,996

The Corporation's proportion of ownership and voting rights of investments in associates was as follows:

	December 31
	2025	2024
SBC	35%	35%
SAIL & SURF	40%	40%
Merida Bikes SWE	36%	36%
Merida Czech	45%	45%
Merida Slovakia	30%	30%
Merida Korea	40%	40%
Merida Italy	28%	27%

Merida Italy underwent a restructuring of its corporate organization in September 2025 and transferred treasury shares to its shareholders, resulting in the corporation's ownership stake increasing from 27% to 28%.

Refer to Table 6 "Information on Investees" following the Notes to Financial Statements for the nature of activities, principal place of business and country of incorporation of the Corporation's associates.

The aggregate financial information of associates is as follows:

	For the Year Ended December 31
	2025	2024
The Corporation's share of:
Net loss for the year	$ 92,064	$ (4,064,696)
Other comprehensive income (loss) for the year	325,781	(319,521)
Total comprehensive income (loss) for the year	$ 417,845	$ (4,384,217)

12. PROPERTY, PLANT AND EQUIPMENT

	For the Year Ended December 31, 2025
	Land	Buildings	Machinery and Equipment	Transportation Equipment	Miscellaneous Equipment	Total
Cost
Balance at January 1	$ 478,692	$ 652,685	$ 270,775	$ 580	$ 76,585	$1,479,317
Additions	-	-	12,080	-	32,523	44,603
Disposals	-	-	(16,533)	(510)	(21,579)	(38,622)
Reclassifications	-	-	-	-	45,000	45,000
Balance at December 31	$ 478,692	$ 652,685	$ 266,322	$ 70	$ 132,529	$1,530,298
Accumulated depreciation
Balance at January 1	$ -	$ 377,712	$ 179,972	$ 461	$ 33,727	$ 591,872
Additions	-	13,053	31,407	74	32,644	77,178
Disposals	-	-	(16,533)	(510)	(21,398)	(38,441)
Balance at December 31	$ -	$ 390,765	$ 194,846	$ 25	$ 44,973	$ 630,609
Carrying amount at December 31	$ 478,692	$ 261,920	$ 71,476	$ 45	$ 87,556	$ 899,689
	For the Year Ended December 31, 2024
	Land	Buildings	Machinery and Equipment	Transportation Equipment	Miscellaneous Equipment	Total
Cost
Balance at January 1	$ 478,692	$ 651,189	$ 287,013	$ 968	$ 93,500	$1,511,362
Additions	-	748	5,250	70	23,131	29,199
Disposals	-	-	(37,988)	(458)	(40,046)	(78,492)
Reclassifications	-	748	16,500	-	-	17,248
Balance at December 31	$ 478,692	$ 652,685	$ 270,775	$ 580	$ 76,585	$1,479,317
Accumulated depreciation
Balance at January 1	$ -	$ 363,941	$ 184,282	$ 799	$ 44,823	$ 593,845
Additions	-	13,771	33,678	120	28,950	76,519
Disposals	-	-	(37,988)	(458)	(40,046)	(78,492)
Balance at December 31	$ -	$ 377,712	$ 179,972	$ 461	$ 33,727	$ 591,872
Carrying amount at December 31	$ 478,692	$ 274,973	$ 90,803	$ 119	$ 42,858	$ 887,445

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
- Main buildings: 25-60 years
- Ancillary work: 4-55 years
- Machinery and equipment: 8-15 years
- Transportation equipment: 5 years
- Miscellaneous equipment: 3-15 years

13. LEASE ARRANGEMENTS

a. Right-of-use assets

	December 31
	2025	2024
Carrying amounts
Land	$ 2,123	$ 342
Buildings	22,601	-
Transportation equipment	3,917	5,687
	$ 28,641	$ 6,029
	For the Year Ended December 31
	2025	2024
Additions to right-of-use assets	$ 31,077	$ 2,844
Depreciation charge for right-of-use assets
Land	$ 1,009	$ 1,016
Buildings	2,916	16,418
Transportation equipment	4,540	4,078
	$ 8,465	$ 21,512

Except for the aforementioned additions and recognized depreciation, the Corporation did not have significant sublease or impairment of right-of-use assets for the years ended December 31, 2025 and 2024.

b. Lease liabilities

	December 31
	2025	2024
Carrying amounts
Current	$ 11,875	$ 3,714
Non-current	$ 16,866	$ 2,337

Range of discount rates for lease liabilities was as follows:

	December 31
	2025	2024
Land	1.725%	1.725%
Buildings	1.725%	-
Transportation equipment	1.04%-1.725%	1.04%-1.725%

c. Material lease activities and terms

The Corporation leases certain land, buildings and transportation equipment for product manufacturing and operational uses with lease terms of 2 to 5 years. According to the lease contract, the Corporation does not have bargain purchase options to acquire the land, buildings and transportation equipment at the end of the lease terms.

d. Other lease information

	For the Year Ended December 31
	2025	2024
Expenses relating to short-term leases	$ 15,060	$ 3,521
Expenses relating to low-value asset leases	$ 215	$ 159
Total cash outflow for leases	$ (23,935)	$ (25,786)

The Corporation leases certain office equipment and miscellaneous equipment which qualify as short-term leases and low-value asset leases. The Corporation has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

INTANGIBLE ASSETS

	For the Year Ended December 31
	2025	2024
Cost
Balance at January 1	$ 70,722	$ 59,646
Additions	3,084	11,918
Disposals	(109)	(842)
Balance at December 31	$ 73,697	$ 70,722
Accumulated amortization
Balance at January 1	$ 48,554	$ 32,221
Amortization expenses	15,452	17,175
Disposals	(109)	(842)
Balance at December 31	$ 63,897	$ 48,554
Carrying amount at January 1	$ 22,168	$ 27,425
Carrying amount at December 31	$ 9,800	$ 22,168

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Computer software 3-5 years

32 -

15. SHORT-TERM BANK BORROWINGS

	December 31
	2025	2024
Unsecured borrowings	$ 4,358,400	$ 5,053,600
Rate of interest per annum (%)
Unsecured borrowings	1.75-1.94	1.78-1.92

16. OTHER PAYABLES

	December 31
	2025	2024
Payables for compensation of employees	$ 97,335	$ -
Payables for salaries and bonuses	95,074	179,735
Payables for remuneration of directors	42,179	-
Others	73,087	98,115
	$ 307,675	$ 277,850

17. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees' individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plans adopted by the Corporation in accordance with the Labor Standards Act. The Act is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Corporation contributes amounts equal to 6% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee's name. Before the end of each year, the Corporation assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Corporation is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the "Bureau"); the Corporation has no right to influence the investment policy and strategy. According to the regulations for employees' retirement policy, the Corporation reserves 4% of monthly salaries and wages of appointed managers as an employee retirement reserve (recognized as net defined benefit assets).

The amounts included in the balance sheets in respect of the Corporation’s defined benefit plan were as follows:

	December 31
	2025	2024
Present value of defined benefit obligation	$ 327,133	$ 366,071
Fair value of plan assets	(431,244)	(456,845)
Net defined benefit assets	$ (104,111)	$ (90,774)

Movements in net defined benefit assets were as follows:

	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets	Net Defined Benefit Assets
Balance at January 1, 2025	$ 366,071	$ (456,845)	$ (90,774)
Service cost
Current service cost	1,599	-	1,599
Net interest expense (income)	5,484	(6,971)	(1,487)
Recognized in profit or loss	7,083	(6,971)	112
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(32,533)	(32,533)
Actuarial (gain) loss
Changes in financial assumptions	4,013	-	4,013
Experience adjustments	21,049	-	21,049
Recognized in other comprehensive (income) loss	25,062	(32,533)	(7,471)
Contributions from the employer	-	(3,838)	(3,838)
Benefits paid	(71,083)	68,943	(2,140)
Balance at December 31, 2025	$ 327,133	$ (431,244)	$ (104,111)
Balance at January 1, 2024	$ 430,560	$ (449,689)	$ (19,129)
Service cost
Current service cost	2,441	-	2,441
Net interest expense (income)	5,754	(6,052)	(298)
Recognized in profit or loss	8,195	(6,052)	2,143
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(41,670)	(41,670)
Actuarial (gain) loss
Changes in financial assumptions	(4,587)	-	(4,587)
Changes in demographic assumptions	497	-	497
Experience adjustments	(16,610)	-	(16,610)
Recognized in other comprehensive income	(20,700)	(41,670)	(62,370)
Contributions from the employer	-	(4,213)	(4,213)
Benefits paid	(51,984)	44,779	(7,205)
Balance at December 31, 2024	$ 366,071	$ (456,845)	$ (90,774)

Through the defined benefit plan under the Labor Standards Act, the Corporation is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

2) Interest risk: A decrease in the government and corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans' debt investments.

3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

	December 31
	2025	2024
Discount rate	1.40%	1.60%
Expected rate of salary increase	2.25%	2.25%

If possible reasonable changes in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

	December 31
	2025	2024
Discount rate
0.50% increase	$ (9,873)	$ (11,037)
0.50% decrease	$ 10,425	$ 11,661
Expected rate of salary increase
0.50% increase	$ 10,289	$ 11,533
0.50% decrease	$ (9,844)	$ (11,025)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

	December 31
	2025	2024
Expected contributions to the plans for the next year	$ 3,452	$ 4,257
Average duration of the defined benefit obligation	6.3 years	6.3 years

18. EQUITY

a. Ordinary shares

	December 31
	2025	2024
Number of shares authorized (in thousands)	350,000	350,000
Shares authorized	$ 3,500,000	$ 3,500,000
Number of shares issued and fully paid (in thousands)	298,984	298,984
Shares issued	$ 2,989,838	$ 2,989,838

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

b. Capital surplus

	December 31
	2025	2024
May be used to offset a deficit, distributed as cash dividends or transferred to share capital (Note)
Issuance of ordinary shares	$ 416,290	$ 416,290
May only be used to offset a deficit
Changes in capital surplus from investments in associates accounted for using the equity method	775,788	524,168
	$ 1,192,078	$ 940,458

Note: Such capital surplus may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Corporation’s capital surplus and to once a year).

c. Retained earnings and dividends policy

Under the dividends policy as set forth in the amended Articles, where the Corporation made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Corporation’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors after the amendment, refer to Note 20(b) employees’ compensation and remuneration of directors.

According to the dividends policy of the Corporation, the total dividends distributed shall be 5% to 60% of the distributable retained earnings of the current year. In addition, cash dividends distributed should be at least 10% of the total dividends distributed.

The legal reserve may be used to offset deficits. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

35 -

The appropriations of earnings and earnings per share approved in the shareholders' meetings in June 2025 and 2024, respectively, were as follows:

	Appropriation of Earnings		Dividends Per Share (NT$)
	For the Year Ended December 31		For the Year Ended December 31
	2024	2023	2024	2023
Legal reserve	$ -	$ 178,738
Reversal of special reserve	(638,687)	(27,507)
Cash dividends	1,195,935	1,793,903	$ 4.0	$ 6.0

The appropriation of earnings for 2025, which was proposed by the Corporation's board of directors on March 12, 2026, was as follows:

	Appropriation of Earnings	Dividends Per Share (NT$)
Legal reserve	$ 121,056
Cash dividends	837,155	$ 2.8

The appropriation of earnings for 2025 will be resolved by the shareholders in their meeting to be held on June 24, 2026.

19. REVENUE

	For the Year Ended December 31
	2025	2024
Revenue from contracts with customers
Revenue from sale of goods	$19,299,769	$18,215,546

a. Contract balances

	December 31, 2025	December 31, 2024	January 1, 2024
Notes and trade receivables	$ 3,991,394	$ 3,928,812	$ 3,602,997
Contract liabilities - current	$ 2,847	$ 124,221	$ 15,116

b. Disaggregation of revenue

Refer to Statement 9 in the Statements of Major Accounting Items for information about the disaggregation of revenue.

20. NET PROFIT FROM CONTINUING OPERATIONS

a. Employee benefits expense, depreciation and amortization expenses

	Operating Costs	Operating Expenses	Non-Operating Expenses	Total
For the Year Ended December 31, 2025
Short-term employee benefits
Salary expenses	$ 639,743	$ 136,227	$ 14,626	$ 790,596
Labor and health insurance costs	62,590	8,559	1,812	72,961
Post-employment benefits
Defined contribution plans	20,290	3,093	700	24,083
Defined benefit plans	87	23	2	112
Remuneration of directors	-	46,997	-	46,997
Other employee benefits	21,288	2,106	234	23,628
Depreciation expense	61,807	23,836	-	85,643
Amortization expense	600	14,852	-	15,452
For the Year Ended December 31, 2024
Short-term employee benefits
Salary expenses	559,810	127,828	13,824	701,462
Labor and health insurance costs	61,186	9,536	1,991	72,713
Post-employment benefits
Defined contribution plans	19,810	2,917	804	23,531
Defined benefit plans	910	1,176	57	2,143
Remuneration of directors	-	4,879	-	4,879
Other employee benefits	19,802	2,199	214	22,215
Depreciation expense	77,396	20,635	-	98,031
Amortization expense	450	16,725	-	17,175

1) As of December 31, 2025 and 2024, the Corporation had 1,243 and 1,296 employees, respectively. Among them, the number of directors not concurrently serving as employees was 7 for both years, the basis of calculation is the same as employee benefits expenses.

2) The average employee benefits expense was NT$737 thousand and NT$638 thousand for the years ended December 31, 2025 and 2024, respectively.

3) The average employee salary expense was NT$640 thousand and NT$544 thousand for the years ended December 31, 2025 and 2024, respectively.

4) Average employee salary expenses increased by 17.6%.

5) The Corporation does not have supervisors.

6) The Corporation’s salary and compensation policy is as follows:

a) The salary and compensation of employees shall be decided in accordance with the Corporation’s remuneration management policy and related regulations, with reference to industry practices. It shall be approved by the remuneration committee to ensure the competitiveness of remuneration for the purpose of motivation and retention of talent.

b) The remuneration of directors shall be decided in accordance with the Corporation’s Articles of Incorporation and shall be approved by the remuneration committee.

37 -

b. Employees' compensation and remuneration of directors

According to the Corporation's Articles of Incorporation, the Corporation accrued employees' compensation and remuneration of directors at rates of no less than 5% and no higher than 5%, respectively, of net profit before income tax, employees' compensation, and remuneration of directors. In accordance with the amendments to the Securities and Exchange Act in August 2024, the shareholders of the Corporation resolved the amendments to the Corporation's Articles at their 2025 regular meeting. The amendments explicitly stipulate the allocation of 30% of the compensation of employees as compensation distributions for non-executive employees. The compensation of employees and remuneration of directors were not accrued because of the pre-tax net loss of the years ended December 31, 2024. The employees' compensation and remuneration of directors for the years ended December 31, 2025, which was approved by the Corporation's board of directors on March 12, 2026, are as follows:

	For the Year Ended December 31
	2025
Cash	Accrual Rate	Amount
Employees' compensation	6%	$ 97,335
Remuneration of directors	2.6%	42,179

If there is a change in the amounts after the annual parent corporation only financial statements are authorized for issue, the differences are recorded as a change in the accounting estimates.

There is no difference between the actual amounts of employees' compensation and remuneration of directors paid and the amounts recognized in the parent corporation only financial statements for the years ended December 31, 2024 and 2023.

Information on the employees' compensation and remuneration of directors resolved by the Corporation's board of directors is available at the Market Observation Post System website of the TWSE.

TAXES

a. Major components of tax expense (benefit) recognized in profit or loss

	For the Year Ended December 31
	2025	2024
Current tax
In respect of the current year	$ 294,689	$ 550,248
Adjustments for prior years	(17,861)	(42,791)
	276,828	507,457
Deferred tax
In respect of the current year	5,705	(737,871)
Income tax expense (benefit) recognized in profit or loss	$ 282,533	$ (230,414)

A reconciliation of accounting profit and income tax expense is as follows:

	For the Year Ended December 31
	2025	2024
Income tax (benefit) expense calculated at the statutory rate on pre-tax net income (loss)	$ 296,548	$ (185,904)
Other	3,846	(1,719)
Adjustments for prior years’ tax	(17,861)	(42,791)
Income tax (benefit) expense recognized in profit or loss	$ 282,533	$ (230,414)

b. Current tax liabilities

	December 31
	2025	2024
Current tax liabilities
Income tax payable	$ 412,016	$ 279,815

c. Changes in deferred tax assets and liabilities

	For the Year Ended December 31, 2025
	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
Deferred tax assets
Temporary differences
Unrealized intercompany profit	$ 213,492	$ (89,371)	$ -	$ 124,121
Defined benefit obligations	4,340	(811)	-	3,529
Unrealized impairment loss on assets	12,498	-	-	12,498
Unrealized loss on inventories	50,953	1,206	-	52,159
Other	-	9,952	-	9,952
	$ 281,283	$ (79,024)	$ -	$ 202,259
Deferred tax liabilities
Temporary differences
Investments accounted for using the equity method	$ 3,468,450	$ (70,162)	$ -	$ 3,398,288
Reserve for land revaluation increment tax	100,934	-	-	100,934
Unrealized foreign currency exchange gains	12,792	(3,157)	-	9,635
Exchange differences on translation of the financial statements of foreign operations	43,902	-	(42,213)	1,689
	$ 3,626,078	$ (73,319)	$ (42,213)	$ 3,510,546

40 -

	For the Year Ended December 31, 2024
	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
Deferred tax assets
Temporary differences
Unrealized intercompany profit	$ 197,666	$ 15,826	$ -	$ 213,492
Defined benefit obligations	4,840	(500)	-	4,340
Unrealized impairment loss on assets	12,498	-	-	12,498
Unrealized loss on inventories	71,642	(20,689)	-	50,953
Unrealized foreign currency exchange losses	19,278	(19,278)	-	-
	$ 305,924	$ (24,641)	$ -	$ 281,283
Deferred tax liabilities
Temporary differences
Investments accounted for using the equity method	$ 4,243,754	$ (775,304)	$ -	$ 3,468,450
Reserve for land revaluation increment tax	100,934	-	-	100,934
Unrealized foreign currency exchange gains	-	12,792	-	12,792
Exchange differences on translation of the financial statements of foreign operations	-	-	43,902	43,902
	$ 4,344,688	$ (762,512)	$ 43,902	$ 3,626,078

d. Income tax assessments

The income tax returns of the Corporation through 2023 have been assessed by the tax authorities.

22. EARNINGS (LOSS) PER SHARE

	Net Profit (Loss)	Number of Shares	Earnings (Loss) Per Share (NT$)
For the Year Ended December 31, 2025
Basic earnings per share
Net profit for the year	$ 1,200,210	298,983,800	$ 4.01
Effect of potentially dilutive ordinary shares:
Employees’ compensation	-	1,176,970
Diluted earnings per share
Net profit for the year plus effect of potentially dilutive ordinary shares	$ 1,200,210	300,160,770	$ 4.00
For the Year Ended December 31, 2024
Basic and diluted loss per share
Net loss available to ordinary shareholders of the parent	$ (699,103)	298,983,800	$ (2.34)

The Corporation may settle compensation paid to employees in cash or shares; therefore, the Corporation assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares will be included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year. Because of the net loss after tax in 2024, they are anti-dilutive and excluded from the computation of diluted loss per share if employee compensation is added potential common stock impact.

23. PARTIAL ACQUISITION OF SUBSIDIARIES - WITHOUT LOSS OF CONTROL

In February 2025, the Corporation participated in the cash capital increase of Merida Japan. As the Corporation subscribed more than its original ownership percentage, its equity interest increased from 90% to 98%. The transaction resulted in a decrease in retained earnings of $1,150 thousand.

In September 2025, the Corporation completed the acquisition of a 39% equity stake of Merida & Centurion from Wolfgang Renner (Other Related Party), increasing its shareholding from 51% to 90%. The transaction resulted in a decrease in retained earnings of $4,623 thousand.

In December 2024, the Corporation acquired a 5% equity stake of Merida Norge from Bike Holding AS (Other Related Party) for $17,313 thousand, increasing its shareholding from 75% to 80%.

The above transactions were accounted as equity transactions since the Corporation did not cease to have control over these subsidiaries.

24. CAPITAL MANAGEMENT

The Corporation manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The capital structure of the Corporation consists of net debt (borrowings offset by cash) and equity (comprising issued capital, reserves, retained earnings and other equity).

Key management personnel of the Corporation review the capital structure on an annual basis. As part of this review, the key management personnel considers the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Corporation may adjust the number of dividends paid to shareholders, the number of new shares issued or repurchased, and the amount of new debt issued or existing debt redeemed.

25. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

The carrying amounts of the Corporation’s financial assets and liabilities that are not measured at fair value approximated their fair values.

b. Fair value of financial instruments measured at fair value on a recurring basis

The Corporation’s financial assets at FVTPL, and financial assets at FVTOCI are measured at fair value using Level 1 inputs. There were no transfers between Levels 1 and 2 in the current and prior years.

41 -

c. Categories of financial instruments

	December 31
	2025	2024
Financial assets
Financial assets at FVTPL	$ 35,047	$ 57,764
Financial assets at amortized cost	6,259,350	6,555,551
Financial assets at FVTOCI - equity instruments	92,620	92,620
Financial liabilities
Financial liabilities at amortized cost	7,274,089	9,047,973

The balances include financial assets at amortized cost, which comprise cash, notes and trade receivables, other receivables and refundable deposits.

The balances of financial liabilities above include financial liabilities measured at amortized cost, which comprise short-term bank borrowings, notes and trade payables, other payables and guarantee deposits received.

d. Financial risk management objectives and policies

The Corporation's major financial instruments include equity investments, trade receivables, trade payables, borrowings, and lease liabilities. The Corporation's corporate treasury function provides services to the business, coordinates access to financial markets, and monitors and manages the financial risks relating to the operations of the Corporation through internal risk reports that analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The Corporation sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Corporation's policies approved by the board of directors and compliance with policies and exposure limits was reviewed according to the internal control policies on a continuous basis.

a) Market risk

The Corporation's activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Corporation entered into forward foreign exchange forward contracts to hedge the exchange rate risk arising on imports and exports.

i. Foreign currency risk

The Corporation has foreign currency sales and purchases, which expose the Corporation to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts.

The carrying amounts of the Corporation's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 31.

Sensitivity analysis

The Corporation was mainly exposed to the USD.

Assuming a 1% increase in the NTD against the USD, the pre-tax profit for the years ended December 31, 2025 and 2024 would have decreased in pre-tax profit by $37,687 thousand and increased in pre-tax loss by $36,332, respectively. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management's assessment of the reasonably possible change in foreign exchange rates was 1% for the years ended December 31, 2025 and 2024.

ii. Interest rate risk

The Corporation is exposed to interest rate risk because the Corporation borrowed funds at both fixed and floating interest rates.

The carrying amounts of the Corporation's financial assets and financial liabilities with exposure to interest rates were as follows.

	December 31
	2025	2024
Fair value interest rate risk
Financial liabilities	$ 1,828,741	$ 906,051
Cash flow interest rate risk
Financial assets	2,085,757	2,294,257
Financial liabilities	2,558,400	4,153,600

Sensitivity analysis

The sensitivity analysis was determined based on the Corporation's exposure to interest rates at the end of the reporting period. For floating rate assets and liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. A 0.25% increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

If interest rates had been 0.25% higher and all other variables were held constant, the Corporation's pre-tax profit for the years ended December 31, 2025 and 2024 would have decreased in pre-tax profit by $1,182 thousand and increased in pre-tax loss by $4,648 thousand, respectively.

b) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Corporation. As at the end of the reporting period, the Corporation's maximum exposure to credit risk which would cause a financial loss to the Corporation due to the failure of counterparties to discharge an obligation and financial guarantees provided by the Corporation could arise from:

i. The carrying amount of the respective recognized financial assets as stated in the balance sheets; and
ii. The maximum amount the Corporation would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised.

The Corporation's concentration of credit risk was mainly from the top 2 customers, which together accounted for 56% and 48% of the total trade receivables as of December 31, 2025 and 2024, respectively.

43 -

c) Liquidity risk

The Corporation manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Corporation’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Corporation relies on bank borrowings as a significant source of liquidity. As of December 31, 2025 and 2024, the Corporation had available unutilized bank loan facilities of $13,120,488 thousand and $11,606,148 thousand, respectively.

Liquidity and interest rate risk table for non-derivative financial liabilities

The following table details the Corporation’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Corporation can be required to pay. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

	On Demand or Less Than 1 Year	1-2 Years	2-5 Years
December 31, 2025
Non-interest bearing	$ 2,906,560	$ -	$ -
Lease liabilities	12,251	11,305	5,774
Variable interest rate liabilities	2,558,400	-	-
Fixed interest rate liabilities	1,800,000	-	-
Financial guarantee contracts	937,859	301,742	480,055
	$ 8,215,070	$ 313,047	$ 485,829
December 31, 2024
Non-interest bearing	$ 3,994,359	$ -	$ -
Lease liabilities	3,775	1,390	989
Variable interest rate liabilities	4,153,600	-	-
Fixed interest rate liabilities	900,000	-	-
Financial guarantee contracts	767,328	323,863	522,376
	$ 9,819,062	$ 325,253	$ 523,365

The amounts included above for financial guarantee contracts are the maximum amounts the Corporation could be required to settle under the arrangement with an option to demand the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Corporation considers that it is more likely than not that no amount will be payable under the arrangement.

45 -

26. TRANSACTIONS WITH RELATED PARTIES

Besides information disclosed elsewhere in the other notes, details of transactions between the Corporation and other related parties are disclosed below.

a. Related Party Categories/Names

Related Party	Relationship with the Corporation
Merida Polska	Subsidiary
Merida Benelux	Subsidiary
Merida & Centurion	Subsidiary
Merida U.K.	Subsidiary
Merida B.V.I.	Subsidiary
Merida International (SAMOA) Ltd. (“Merida SAMOA”)	Subsidiary
Merida Industry (Hong Kong) Co., Ltd. (“Merida Hong Kong”)	Subsidiary
Merida Bicycle (China) Co., Ltd. (“Merida China”)	Subsidiary
Merida Bicycle (Shandong) Co., Ltd. (“Merida Shandong”)	Subsidiary
Merida Bicycle (Jiangsu) Ltd. (“Merida Jiangsu”)	Subsidiary
Merida Europe GmbH	Subsidiary
Merida R&D Center GmbH	Subsidiary
Merida Japan	Subsidiary
Miyata Cycle Co. Ltd., (“Miyata”)	Subsidiary
Merida Norge	Subsidiary
Merida Sverige AB (“Sverige”)	Subsidiary
SBC Group	Associate
SAIL & SURF	Associate
Merida Bikes SWE	Associate
Merida Czech	Associate
Merida Slovakia	Associate
Merida Korea	Associate
Merida Italy	Associate
Cheng Shin Rubber Industry Co., Ltd. (“Cheng Shin”)	Other
Cheng Shin Rubber (Xiamen) Ind., Ltd. (“Cheng Shin (Xiamen)”)	Other
Tianjin Ta Feng Rubber Industry Co., Ltd. (“Tianjin Ta Feng”)	Other
Cheng Shin Rubber (Vietnam) Ind., Ltd. (“Cheng Shin (Vietnam)”)	Other

b. Sales of goods

Related Party Category/Name	For the Year Ended December 31
	2025	2024
Associates
SBC Group	$14,581,368	$12,442,585
Others	994,949	1,190,430
	15,576,317	13,633,015
Subsidiaries	2,526,774	3,386,352
	$18,103,091	$17,019,367

The selling price and gross profit of the products that the Corporation sells to related parties are quoted based on the differences in the products and the acceptance of the market.

c. Purchase of goods

Related Party Category	For the Year Ended December 31
	2025	2024
Subsidiaries	$ 374,393	$ 582,722
Others related parties	62,227	115,613
Associates	48,409	88,620
	$ 485,029	$ 786,955

The purchase price is quoted based on market prices.

d. Other revenue (classified as subtraction of cost of goods sold)

Related Party Category/Name	For the Year Ended December 31
	2025	2024
Associates
SBC Group	$ 30,753	$ 22,645

It is the subsidy amount from associates.

e. Contract liabilities - advance receipts

Related Party Category/Name	December 31
	2025	2024
Associates
SBC Group	$ -	$ 110,839

f. Receivables from related parties

Related Party Category/Name	December 31
	2025	2024
Trade receivables
Associates
SBC Group	$ 1,855,311	$ 1,355,386
Others	519,157	636,897
	2,374,468	1,992,283
Subsidiaries
Merida & Centurion	386,746	514,603
Others	971,617	1,163,855
	1,358,363	1,678,458
	$ 3,732,831	$ 3,670,741

47 -

Related Party Category/Name

December 31
2025	2024
Other receivables
Subsidiaries
Merida Shandong	$ 115,434
Others	27,261
	48,562
	142,695
Associates	27,377
	9,842
	$ 170,072
	$ 289,441

g. Loans to related parties

Related Party Category/Name

December 31
2025	2024
Other receivables
Subsidiaries
Merida Benelux	$ -
	$ 32,785

h. Payables to related parties

Related Party Category

December 31
2025	2024
Trade payables
Subsidiaries	$ 66,209
Other related parties	14,970
Associates	38
	3,596
	$ 81,217
	$ 100,363

i. Other transactions with related parties

1) Selling and marketing expenses - promotional and advertising expenses and others

Related Party Category

For the Year Ended December 31
2025	2024
Subsidiaries
Merida R&D Center GmbH	$ 82,302
Merida Europe GmbH	65,992
Merida & Centurion	51,171
Others	547
	1,647
	$ 200,012
	$ 162,897

2) Interest income

Related Party Category/Name	For the Year Ended December 31
	2025	2024
Subsidiaries
Merida & Centurion	$ 17,600	$ 14,306
Merida Benelux	9,678	7,345
Others	9,631	6,131
	36,909	27,782
Associates
SBC Group	36,757	19,184
Others	30,145	13,191
	66,902	32,375
	$ 103,811	$ 60,157

The Corporation receives interest from overdue trade receivables at an interest rate agreed upon in the terms of the transactions.

3) Technical service and royalty income

Related Party Category/Name	For the Year Ended December 31
	2025	2024
Subsidiaries
Merida Shandong	$ 130,395	$ 271,816
Merida Jiangsu	13,298	29,489
Merida China	3,920	12,047
	$ 147,613	$ 313,352

The Corporation entered into trademark licensing contracts with Merida China, Merida Jiangsu and Merida Shandong for agreement to label registered trademarks which were licensed to these companies for the bikes and electric bikes they manufacture and sell. The Corporation calculates and charges royalties for 3% of these companies' annual domestic net sales each year. Furthermore, the Corporation respectively entered into technical service contracts with Merida China, Merida Jiangsu and Merida Shandong to transfer production and management techniques to these companies. The Corporation charges technical service income at 1% of the net sales amount for each company individually every year.

4) Other income

Related Party Category/Name	For the Year Ended December 31
	2025	2024
Associates
SBC Group	$ 23,464	$ 19,964
Subsidiaries	92	-
	$ 23,556	$ 19,964

j. Endorsements and guarantees

Related Party Category	Item Endorsed	Amount Endorsed
December 31, 2025
Subsidiaries	Standby letter of credit	EUR	6,000
	Standby letter of credit	USD	5,500
	Bank borrowings	EUR	31,100
	Bank borrowings	GBP	6,000
	Bank borrowings	RMB	370,000
December 31, 2024
Subsidiaries	Standby letter of credit	EUR	6,000
	Standby letter of credit	USD	3,500
	Bank borrowings	EUR	26,300
	Bank borrowings	GBP	6,000
	Bank borrowings	RMB	320,000

Refer to Table 2 "Financing provided to others" for the actual amount borrowed by the subsidiaries.

k. Remuneration of key management personnel

	For the Year Ended December 31
	2025	2024
Short-term employee benefits	$ 68,674	$ 29,207
Post-employment benefits	7,545	564
	$ 76,219	$ 29,771

The remuneration of directors and key executives, as determined by the remuneration committee, is based on the performance of individuals and market trends.

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

No such incident.

28. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Corporation as of December 31, 2025 and 2024 were as follows:

a. As of December 31, 2025 and 2024, unused letters of credit for purchases of raw materials amounted to approximately $192,830 thousand and $124,108 thousand, respectively.

b. Unrecognized commitments are as follows:

	December 31
	2025	2024
Acquisition of property, plant and equipment	$ 539	$ 5,000

c. Product liability insurance

The Corporation purchased product liability insurance over the products manufactured by the Corporation and its subsidiaries. The insured amount of the sales in USA and Canada is USD4,000 thousand and it covers accidents happening after September 18, 2000. The maximum indemnity claims for the single original cause of a liability is USD3,000 thousand. The insured amount for sales, other than those within the USA and Canada, is USD1,000 thousand, and covers accidents happening after January 7, 1999. The maximum indemnity claims for the single original cause of a liability is USD1,000 thousand.

SIGNIFICANT LOSSES FROM DISASTERS

No such incident.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

No such incident.

SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Corporation's significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

	December 31, 2025			December 31, 2024
	Foreign Currency	Exchange Rate	Carrying Amount	Foreign Currency	Exchange Rate	Carrying Amount
Financial assets
Monetary items
USD	$ 140,746	31.430	$ 4,423,647	$ 137,415	32.785	$ 4,505,151
JPY	1,077,013	0.2008	216,264	620,615	0.2099	130,267
Non-monetary items
Investments accounted for using the equity method
USD	595,334	31.430	18,711,347	576,935	32.785	18,914,814
EUR	39,635	36.90	1,462,532	27,410	34.14	935,777
JPY	208,688	0.2008	41,905	10,835	0.2099	2,274
POL	9,780	8.7459	85,535	12,867	7.6278	98,147
Financial liabilities
Monetary items
USD	20,837	31.430	654,907	26,596	32.785	871,950
JPY	1,094,698	0.2008	219,815	1,783,261	0.2099	374,306

The significant realized and unrealized foreign exchange gains (losses) were as follows:

	For the Year Ended December 31
	2025		2024
Foreign Currency	Exchange Rate	Net Foreign Exchange (Losses) Gains	Exchange Rate	Net Foreign Exchange (Losses) Gains
USD	31.180	$ (114,954)	32.112	$ 308,357
JPY	0.2085	(6,449)	0.2121	16,256
EUR	35.18	(8,601)	34.74	10,080
		$ (130,004)		$ 334,693

32. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:

1) Financing provided to others. (Table 1)
2) Endorsements/guarantees provided. (Table 2)
3) Significant marketable securities held (excluding investments in subsidiaries and associates). (Table 3)
4) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)
5) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)
6) Information on investees. (Table 6)

b. Information on investments in mainland China:

1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 7)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period. (Table 4)
b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period. (Table 4)
c) The amount of property transactions and the amount of the resultant gains or losses. (None)
d) The balance of negotiable instrument endorsements, guarantees or pledges of collateral at the end of the year and their purposes. (Table 2)

e) The highest balance, the end of year balance, the interest rate range, and total current period interest with respect to financing of funds. (Table 1)

f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services. (None)

52 -

TABLE 1

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars and Foreign Currencies)

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period	Ending Balance	Actual Amount Borrowed	Interest Rate (%)	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral		Financing Limit for Each Borrower	Aggregate Financing Limit
													Item	Value
0	The Corporation	Merida Benelux	Other receivables from related parties	Yes	$ 32,685	$ -	$ -	5.6-6.3	For short-term financing needs	$ -	Operating capital	$ -	-	$ -	$ 7,757,139 (Note 1)	$ 9,696,424 (Note 2)
1	Merida Shandong	Merida Jiangsu	Other receivables from related parties	Yes	RMB 80,000	RMB 80,000	RMB 13,000	1.52	For short-term financing needs	-	Operating capital	-	-	-	RMB 170,200 (Note 3)	RMB 170,200 (Note 3)

Note 1: 40% of the net assets of The Corporation in their latest financial statements.
Note 2: 50% of the net assets of The Corporation in their latest financial statements.
Note 3: 40% of the net assets of Merida Shandong in their latest financial statements.

TABLE 2

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars and Foreign Currencies)

No.	Endorser/Guarantor	Endorsee/Guaranteed Party		Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Corporation	Merida U.K.	Subsidiary	$ 5,817,854	GBP 6,000	GBP 6,000	GBP 5,943	$ -	1.31	$ 9,696,424	Yes	-	-
		Merida & Centurion	Subsidiary	5,817,854	EUR 32,300	EUR 31,100	EUR 19,400	-	5.92	9,696,424	Yes	-	-
		Merida Norge	Subsidiary	5,817,854	USD 1,500	USD 1,500	USD 1,500	-	0.24	9,696,424	Yes	-	-
		Merida Benelux	Subsidiary	5,817,854	USD 1,000	USD 1,000	-	-	0.16	9,696,424	Yes	-	-
		Merida Bikes SWE	Associate	5,817,854	USD 3,000	USD 3,000	USD 2,829	-	0.49	9,696,424	-	-	-
		Merida Jiangsu	Third-tier subsidiary	5,817,854	RMB270,000	RMB270,000	RMB 98,800	-	6.26	9,696,424	Yes	-	Yes
		Merida China	Third-tier subsidiary	5,817,854	RMB100,000	RMB100,000	RMB 38,250	-	2.32	9,696,424	Yes	-	Yes

Note 1: 30% of the net assets of the Corporation in their previous year's financial statements.
Note 2: 50% of the net assets of the Corporation in their previous year's financial statements.

TABLE 3

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

SIGNIFICANT MARKETABLE SECURITIES HELD

DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account	December 31, 2025
				Number of Shares (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value (Note)
The Corporation	Share capital
	Cheng Shin	The Corporation’s chairman is their director	Financial assets at FVTPL - current	$ 1,146	$ 33,801	-	$ 33,801
	Merida Benelux	-	Financial assets at FVTOCI - non-current	2,749	89,220	-	89,220

Note : Refer to Note 25 for information on the fair values.

TABLE 4

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars and Foreign Currencies)

Company Name	Related Party	Relationship	Transaction Details	Abnormal Transaction	Notes/Trade Receivables (Payables)	Note
Purchases/Sales	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance
The Corporation	SBC Group	Associate	Sales	$ (14,581,368)	(76)	O/A 60 days
Merida & Centurion	Subsidiary	Sales	(940,512)	(5)	T/T 14 days or O/A 150 days	-
Merida U.K.	Subsidiary	Sales	(569,857)	(3)	O/A 120 days	-
Merida Bikes SWE	Associate	Sales	(295,292)	(2)	T/T 14 days or O/A 120 days	-
Merida Jiangsu	Third-tier subsidiary	Sales	(262,892)	(1)	O/A 90 days	-
Merida Norge	Subsidiary	Sales	(260,607)	(1)	T/T 14 days or O/A 120 days	-
Merida Benelux	Subsidiary	Sales	(242,318)	(1)	O/A 180 days	-
SAIL & SURF	Associate	Sales	(205,327)	(1)	T/T 14 days or O/A 180 days	-
Merida Korea	Associate	Sales	(167,509)	(1)	T/T 14 days or O/A 120 days	-
Merida Italy	Associate	Sales	(163,073)	(1)	O/A 120 days	-
Merida Czech	Associate	Sales	(122,190)	(1)	T/T 14 days or O/A 150 days	-
Merida Japan	Subsidiary	Sales	(121,073)	(1)	O/A 120 days	-
Merida Polska	Subsidiary	Sales	(100,013)	(1)	O/A 150 days	-
Merida China	Third-tier subsidiary	Purchases	290,456	2	T/T 90 days	-
Merida Jiangsu	Merida Shandong	Associate	Sales	RMB (318,494)	(89)	T/T 90 days
Merida China	Merida Shandong	Associate	Sales	RMB (82,705)	(54)	T/T 90 days

TABLE 5

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars and Foreign Currencies)

Company Name	Related Party	Relationship	Financial Statement Account	Ending Balance	Turnover Rate	Overdue		Amounts Received in Subsequent Period	Allowance for Impairment Loss
						Amount	Actions Taken
The Corporation	SBC Group	Associate	Trade receivables from related parties	$ 1,855,311	9.08	$ -	-	$ 1,855,311	$ -
			Other receivables from related parties	11,930	-	-	-	8,388	-
	Merida & Centurion	Subsidiary	Trade receivables from related parties	386,746	2.09	-	-	72,139	-
			Other receivables from related parties	6,615	-	-	-	1,067	-
	Merida Polska	Subsidiary	Trade receivables from related parties	353,407	0.28	322,079	Enhanced collection	2,700	-
	Merida Italy	Associate	Trade receivables from related parties	252,664	0.66	120,623	Enhanced collection	12,724	4,300
			Other receivables from related parties	7,649	-	-	-	23	-
	Merida U.K.	Subsidiary	Trade receivables from related parties	196,268	3.22	2	Enhanced collection	73,066	-
	Merida Benelux	Subsidiary	Trade receivables from related parties	163,657	1.28	368	Enhanced collection	52,107	-
			Other receivables from related parties	3,325	-	-	-	1,094	-
	Merida Norge	Subsidiary	Trade receivables from related parties	134,169	1.87	-	-	30,716	-
			Other receivables from related parties	1,771	-	-	-	405	-
	Merida Japan	Subsidiary	Trade receivables from related parties	108,401	1.82	-	-	15,297	-
			Other receivables from related parties	294	-	-	-	41	-
	SAIL & SURF	Associate	Trade receivables from related parties	102,604	1.80	-	-	37,975	516
	Merida Shandong	Third-tier subsidiary	Trade receivables from related parties	987	45.47	-	-	-	-
			Other receivables from related parties	115,434	-	-	-	-	-

TABLE 6

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars and Foreign Currencies)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		As of December 31, 2025			Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2025	December 31, 2024	Number of Shares (In Thousands)	%	Carrying Amount
The Corporation	Share capital
	SBC	Delaware, United States of America	Design, development, manufacture and sale of bicycles	$ 887,013	$ 887,013	3,410	35	$ 15,970,171	USD 9,003	$ 99,329
	Merida B.V.I.	British Virgin Islands	International investment	1,362,597	1,362,597	42,500	100	2,869,909	USD 2,743	85,522	Subsidiary
	Merida & Centurion	Stuttgart, Germany	Sale of bicycles	717,346	103,725	-	90	1,169,409	EUR (3,458)	(163,586)	Subsidiary
	Merida Polska	Gliwice, Poland	Sale of bicycles and bicycle components	113,170	113,170	-	74	62,169	PLN (4,167)	(25,796)	Subsidiary
	Merida Norge	Lysaker, Norway	Sale of bicycles	168,772	168,772	211	80	62,059	NOK (334)	(807)	Subsidiary
	SAIL & SURF	Strobl, Austria	Sale of bicycles	116,195	116,195	-	40	135,842	EUR (225)	(3,164)
	Merida Czech	Brno, Czech Republic	Sale of bicycles	21,042	21,042	-	45	54,476	CZK 572	370
	Merida Bikes SWE	Madrid, Spain	Sale of bicycles	18,646	18,646	1	36	62,732	EUR 263	3,363
	Merida Slovakia	Partizanska, Slovakia	Sale of bicycles	40	40	-	30	29,492	EUR 40	419
	Merida Japan	Kanagawa, Japan	Sale of bicycles	157,668	118,875	8	98	(54,563)	JPY (406,078)	(82,170)	Subsidiary
	Merida Italy	Reggio Emilia, Italy	Sale of bicycles	19,011	19,011	566	28	1,361	EUR (1,071)	(10,588)
	Merida Benelux	Beekbergen, Netherlands	Sale of bicycles	65,400	65,400	766	60	(42,832)	EUR (36)	(758)	Subsidiary
	Merida U.K.	Nottingham, United Kingdom	Sale of bicycles	40,309	40,309	482	81	60,136	GBP 2	64	Subsidiary
	Merida Korea	Seoul, Republic of Korea	Sale of bicycles	10,598	10,598	77	40	6,314	KRW264,161	2,335
Merida B.V.I.	Share capital
	Merida Hong Kong	Hong Kong	International investment and trade	USD 27,087	USD 27,087	202,800	100	USD 73,847	HKD 29,243	(Note)	Indirectly owned subsidiary
	Merida SAMOA	Samoa	International investment	USD 24,500	USD 24,500	24,500	70	USD 16,306	USD (1,456)	(Note)	Indirectly owned subsidiary
Merida Norge	Share capital
	Merida Sverige	Gothenburg, Sweden	Sale of bicycles	NOK 814	NOK 814	-	100	NOK 1,636	SEK (912)	(Note)	Indirectly owned subsidiary
Merida & Centurion	Share capital
	Merida Europe GmbH	Stuttgart, Germany	Brand promotion and cycling team management	EUR 25	EUR 25	-	100	EUR 1,746	EUR (157)	(Note)	Indirectly owned subsidiary
	Merida R&D Center GmbH	Stuttgart, Germany	Design and development of bicycles	EUR 25	EUR 25	-	100	EUR 554	EUR 25	(Note)	Indirectly owned subsidiary
Merida Japan	Share capital
	Miyata	Kanagawa, Japan	Sale of bicycles	JPY 62,371	JPY 62,371	-	100	JPY (196,181)	JPY (60,651)	(Note)	Indirectly owned subsidiary

Note: Not applicable.

TABLE 7

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars and Foreign Currencies)

Investee Company	Main Businesses and Products	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2025	Remittance of Funds		Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2025	Net Income of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Note 1)	Carrying Amount as of December 31, 2025 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2025
					Outward	Inward
Merida China	Manufacture and sale of bicycles	$ 385,960 (USD 12,280)	The investment was made through a corporation established in a third country, which, in turn, invested in companies located in mainland China	$ 348,464 (USD 11,087)	$ -	$ -	$ 348,464 (USD 11,087)	$ (35,580)	100	$ (35,580)	$ 341,693	$ 1,966,481 (USD 62,567)
Merida Shandong	Manufacture and sale of e-bikes and bicycles	502,880 (USD 16,000)	The investment was made through a corporation established in a third country, which, in turn, invested in companies located in mainland China	502,880 (USD 16,000)	-	-	502,880 (USD 16,000)	152,457	100	152,457	1,913,372	1,960,478 (USD 62,376)
Merida Jiangsu	Manufacture and sale of e-bikes and bicycles	1,100,050 (USD 35,000)	The investment was made through a corporation established in a third country, which, in turn, invested in companies located in mainland China	518,595 (USD 16,500)	-	-	518,595 (USD 16,500)	(45,647)	70	(31,953)	478,014	-
Accumulated Outward Remittance for Investments in Mainland China as of DECEMBER 31, 2025	Investment Amounts Authorized by the Investment Commission, MOEA	Upper Limit on the Amount of Investment Stipulated by the Investment Commission, MOEA
---	---	---
$ 1,369,939 (USD 43,587)	$ 1,436,822 (USD 45,715) (Note 2)	$ 11,893,978 (Note 3)

Note 1: The investment gain and carrying amount as of December 31, 2025 are recognized according to the financial statements audited by the Corporation's independent auditors.
Note 2: The amount includes the upper limit of the investment amount for Merida China of USD13,215 thousand, USD 16,000 thousand for Merida Shandong and USD16,500 thousand for Merida Jiangsu.
Note 3: Amounts are based on the upper limit of the investment amount regulated by the "Regulation for Screening of Application to Engage in Technical Cooperation in Mainland China".

60 -

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM	STATEMENT INDEX
MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND EQUITY
STATEMENT OF CASH	1
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT	2
STATEMENT OF ACCOUNTS RECEIVABLE	3
STATEMENT OF OTHER RECEIVABLES	4
STATEMENT OF INVENTORIES	5
STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT	6
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD	7
STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT	Note 12
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT	Note 12
STATEMENT OF DEFERRED TAX ASSETS	Note 21
STATEMENT OF SHORT-TERM BANK LOANS	Note 15
STATEMENT OF ACCOUNTS PAYABLE	8
STATEMENT OF OTHER PAYABLES	Note 16
STATEMENT OF DEFERRED TAX LIABILITIES	Note 21
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF NET REVENUE	9
STATEMENT OF OPERATING COSTS	10
STATEMENT OF SELLING AND MARKETING EXPENSES	11
STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES	11
STATEMENT OF NET OTHER PROFITS AND LOSSES	Statements of comprehensive income
STATEMENT OF EMPLOYEE BENEFITS EXPENSES, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION	Note 20

STATEMENT 1

MERIDA INDUSTRY CO., LTD.

STATEMENT OF CASH
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars and Foreign Currencies)

Item	Foreign Currency	Exchange Rate	Amount
Cash on hand and petty cash			$ 280
Cash in banks
Demand deposits			1,153,697
Foreign currency deposits
USD	14,778	31.430	464,474
EUR	7,668	36.90	282,942
JPY	919,542	0.2008	184,644
			$ 2,086,037

61 -

STATEMENT 2

MERIDA INDUSTRY CO., LTD.

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Type and Name of Marketable Securities	Number of Shares/Units	Acquisition Cost	Market Value
			Unit Price	Total Amount
Domestic listed shares
Cheng Shin	1,145,814	$ 49,858	29.50	$ 33,801
Leechi Enterprises Co., Ltd.	112,750	4,777	11.05	1,246
		$ 54,635		$ 35,047

STATEMENT 3

MERIDA INDUSTRY CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)

Client Name	Amount
Notes receivable - non-related parties
Acetrikes Ind. Co., Ltd.	$ 4,823
Others (Note)	113
	$ 4,936
Accounts receivable - non-related parties
ADVANCE TRADERS (AUSTRALIA) PTY LTD.	$ 146,871
ADVANCE TRADERS (NEW ZEALAND) LIMITED	50,956
BIKEFUN LTD.	15,069
Others (Note)	42,006
	254,902
Less: Allowance for impairment loss	(1,275)
Total	$ 253,627

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

63 -

STATEMENT 4

MERIDA INDUSTRY CO., LTD.

STATEMENT OF OTHER RECEIVABLES
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)

Item	Amount
Technical service and royalty receivable	$ 125,332
Interest receivable	26,656
Others	27,299
	$ 179,287

64 -

STATEMENT 5

MERIDA INDUSTRY CO., LTD.

STATEMENT OF INVENTORIES
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)

Item	Amount
	Cost	Market Price (Note 1)
Finished goods	$ 1,072,015	$ 1,201,459
Work in process	87,794	87,794
Raw materials and supplies	1,336,511	1,473,846
Inventory in transit	23,031	23,031
	$ 2,519,351	$ 2,786,130

Note 1: Net realizable value is used in the valuation of inventories.
Note 2: Inventories have not been provided as a collateral.

65 -

STATEMENT 6

MERIDA INDUSTRY CO., LTD.

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Investees	Balance, January 1, 2025			Increase in the Current Year		Decrease in the Current Year		Balance, December 31, 2025			Accumulated Impairment
	Number of Shares	Amount	Ownership (%)	Number of Shares	Amount	Number of Shares	Amount	Number of Shares	Amount	Ownership (%)
Domestic unlisted shares
SR Suntour Inc.	110,000	$ 3,000	-	-	$ -	-	$ -	110,000	$ 3,000	-	$ -
Taifong Golf Course	30,000	400	-	-	-	-	-	30,000	400	-	-
Long Jee Holdings Pte. Ltd.	330,000	-	2	-	-	-	-	330,000	-	2	-
		3,400			-		-		3,400		-
Overseas unlisted shares
Merida Benelux	2,748,637	89,220	-	-	-	-	-	2,748,637	89,220	-	-
		$ 92,620			$ -		$ -		$ 92,620		$ -

STATEMENT 7

MERIDA INDUSTRY CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Investees	Balance, January 1, 2025			Increase in the Current Year (Note 1)		Decrease in the Current Year		Others (Note 2)	Share of Profit (Loss) of Subsidiaries and Associates	Exchange Differences on Translating the Financial Statements of Foreign Operations	Realized (Unrealized) Gain on Transactions	Balance, December 31, 2025			Net Assets Value
	Number of Shares	Amount	Ownership (%)	Number of Shares	Amount	Number of Shares (Note 1)	Amount					Number of Shares	Amount	Ownership (%)
Long-term Investments
SBC	3,409,982	$ 15,770,662	35	-	$ -	-	$ -	$ 260,063	$ 99,329	$ (330,072)	$ 170,189	3,409,982	$ 15,970,171	35	$ 15,500,557
Merida B.V.I.	42,500,000	3,061,868	100	-	-	-	-	(301,829)	85,522	(16,442)	40,790	42,500,000	2,869,909	100	2,891,509
Merida & Centurion	-	501,510	51	-	613,621	-	-	(4,623)	(163,586)	74,699	147,788	-	1,169,409	90	1,169,409
Merida Polska	100	38,449	74	-	-	-	-	-	(25,796)	13,186	36,330	100	62,169	74	62,169
Merida Norge	211,200	40,265	80	-	-	-	-	-	(807)	12,358	10,243	211,200	62,059	80	62,059
SAIL & SURF	-	121,889	40	-	-	-	-	-	(3,164)	10,523	6,594	-	135,842	40	126,399
Merida Czech	-	42,818	45	-	-	-	-	-	370	9,336	1,952	-	54,476	45	51,644
Merida Bikes SWE	448	50,857	36	-	-	-	-	-	3,363	5,043	3,469	448	62,732	36	62,732
Merida Slovakia	-	26,963	30	-	-	-	-	-	419	2,503	(393)	-	29,492	30	29,492
Merida Italy	559,050	7,220	27	6,955	210	-	-	(1,450)	(10,588)	1,103	4,866	566,005	1,361	28	1,361
Merida U.K.	481,763	57,043	81	-	-	-	-	-	64	3,151	(122)	481,763	60,136	81	46,652
Merida Korea	76,560	3,587	40	-	-	-	-	-	2,335	(106)	498	76,560	6,314	40	6,314
		19,723,131			613,831			(47,839)	(12,539)	(214,718)	422,204		20,484,070		20,010,297
Long-term Investments - credit
Merida Japan	1,800	(28,635)	90	6,000	38,794	-	-	(1,150)	(82,170)	347	18,251	7,800	(54,563)	98	(62,871)
Merida Benelux	766,126	(51,782)	60	-	-	-	-	-	(758)	3,307	6,401	766,126	(42,832)	60	(42,832)
		(80,417)			38,794			(1,150)	(82,928)	3,654	24,652		(97,395)		(105,703)
		$ 19,642,714			$ 652,625		$ -	$ (48,989)	$ (95,467)	$ (211,064)	$ 446,856		$ 20,386,675		$ 19,904,594

Note 1: $315,721 thousand was recognized as beginning prepayments for investment. The shares of Merida Italy were acquired through the transfer of treasury shares.
Note 2: SBC is the remeasurement of defined benefit plans and issuance of employees share options. Merida B.V.I. and Merida Italy have declared the distribution of cash dividends, Merida & Centurion and Merida Japan have recorded changes in ownership equity.

STATEMENT 8

MERIDA INDUSTRY CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE
DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)

Vendor Name	Amount
Non-related parties
SRAM Corporation, Taiwan	$ 523,482
TOPKEY CORPORATION	256,834
MARUI LTD.	201,221
Others (Note)	1,536,131
	$ 2,517,668

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

68 -

STATEMENT 9

MERIDA INDUSTRY CO., LTD.

STATEMENT OF NET REVENUE
FOR THE YEAR ENDED DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)

Item	Shipment	Amount
Bikes	About 368 thousand units	$ 18,133,784
Frames		383,113
Rims		515,544
Other parts		280,129
Gross sales		19,312,570
Less: Sales returns		(3,294)
Sales discounts and allowances		(9,507)
Net sales		$ 19,299,769

69 -

STATEMENT 10

MERIDA INDUSTRY CO., LTD.

STATEMENT OF OPERATING COSTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)

Item	Amount
Raw material and supplies, beginning of year	$ 2,677,709
Add: Raw material and supplies purchased	14,599,071
Less: Sale of raw material and supplies	(215,346)
Raw material and supplies, end of year	(1,605,325)
Loss on raw material and supplies	(31)
Raw material and supplies scrapped	(8,156)
Others	(36,842)
Raw material and supplies used	15,411,080
Direct labor	654,812
Manufacturing expenses	479,240
Manufacturing cost	16,545,132
Add: Work in process, beginning of year	104,915
Less: Work in process, end of year	(87,794)
Sale of work-in-progress	(808,953)
Cost of finished goods	15,753,300
Add: Finished goods, beginning of year	1,762,458
Less: Finished goods, end of year	(1,086,015)
Transferred to other expenses	(6,516)
Cost of goods sold	16,423,227
Sale of work-in-process cost	808,953
Sales of raw material and supplies	215,346
Scrapped and loss on inventories	8,187
Gain from sale of scraps	(2,713)
Write-downs of inventories	6,032
Operating costs	$ 17,459,032

70 -

STATEMENT 11

MERIDA INDUSTRY CO., LTD.

STATEMENT OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2025
(In Thousands of New Taiwan Dollars)

Item	Selling and Marketing Expenses	General and Administrative Expenses	Total
Advertisement	$ 234,004	$ -	$ 234,004
Payroll and annual bonus	76,999	62,344	139,343
Remuneration of directors	-	42,179	42,179
Shipping expense	37,488	-	37,488
Insurance expense	28,549	4,011	32,560
Export expense	6,899	-	6,899
Depreciation expense	11,349	12,487	23,836
Professional service fees	1,492	10,561	12,053
Others	109,843	50,897	160,740
Total	$ 506,623	$ 182,479	$ 689,102

71 -

AI assistant

MIC — Audit Report / Information 2025

52782_rns_2026-04-23_74a4625f-562e-4d46-8df0-62d2a727b0fa.pdf

INDEPENDENT AUDITORS' REPORT

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition

Other Matter

Responsibilities of Management and Those Charged with Governance for the parent corporation only Financial Statements

Auditors' Responsibilities for the Audit of the parent corporation only Financial Statements

Notice to Readers

MERIDA INDUSTRY CO., LTD.

PARENT CORPORATION ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

1. GENERAL INFORMATION

2. APPROVAL OF PARENT CORPORATION ONLY FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. TRADE RECEIVABLES - NON-RELATED PARTIES

9. INVENTORIES

10. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

12. PROPERTY, PLANT AND EQUIPMENT

13. LEASE ARRANGEMENTS

15. SHORT-TERM BANK BORROWINGS

16. OTHER PAYABLES

17. RETIREMENT BENEFIT PLANS

18. EQUITY

19. REVENUE

20. NET PROFIT FROM CONTINUING OPERATIONS

22. EARNINGS (LOSS) PER SHARE

23. PARTIAL ACQUISITION OF SUBSIDIARIES - WITHOUT LOSS OF CONTROL

24. CAPITAL MANAGEMENT

25. FINANCIAL INSTRUMENTS

26. TRANSACTIONS WITH RELATED PARTIES

Related Party Category/Name

Related Party Category/Name

Related Party Category

Related Party Category

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

28. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

32. SEPARATELY DISCLOSED ITEMS

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

MERIDA INDUSTRY CO., LTD. AND SUBSIDIARIES

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

MERIDA INDUSTRY CO., LTD.

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