PARPRO — Annual Report 2023

Jun 6, 2024

Stock code: 4916

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PARPRO CORPORATION

2023 Annual report

Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw/ Company website: http://www.parpro.com/ Printed on April 30, 2024

1. Spokesperson and acting spokesperson of the company:

Spokesman: Name: Wu Hsiu Pi Job Title: Chief Financial Officer Tel: (03)457-5535 E-mail: shiny@parpro.com.tw

Acting Spokesperson: Name: Lee Shen Lung Job Title: Finance Manager Tel: (03)457-5535 E-mail: frank@parpro.com.tw

1. Addresses and telephone numbers of the head office, branch offices and factories 4th Floor, No. 169, Jianxing Road, Zhongli District, Taoyuan City Factory address: no Tel: (03)457-5535

2. The name, address, website and telephone number of the institution handling the stock transfer Name: KGI Securities Co., Ltd. Stock Affairs Agency Department Address: 5th Floor, No. 2, Section 1, Chongqing South Road, Taipei City URL : https://www.kgi.com.tw/ Tel: (02)2389-2999

3. Name,addresses and contact number of Audit Firm:

Name of CPA Firm: Deloitte & Touche Audit Firm Name of CPAs: Chen Peide, Chen Junhong Address: Floor 20, No. 100, Songren Road, Xinyi District, Taipei City Website: www.deloitte.com.tw Tel : (02)2725-9988

1. Name of overseas securities exchange where the securities are listed and method of inquiry: Not applicable.

2. Company's website:

http://www.parpro.com/

1

Contents

• I. Letter to Shareholders II. Company Profile 1. Date of Establishment 2. Company History

• III. Corporate Governance Report 1. Organizational System Chart 2. Information on Directors, Supervisors, General Managers, Deputy General Managers, Assistant Managers, Heads of Departments and Branches

• 1. Status of Corporate Governance

• Information on CPA Professional Fees

• Information on Replacement of CPA

• The Company's Chairman, General Manager, and Manager in Charge of Financial or Accounting Officers holding Any Positions in the Company's CPA firm or its Affiliates in the Recent Year

• Transfer of Equity and Changes to Equity pledge of Directors, Supervisors, Managerial Officers and Shareholders Representing More than 10% of Shares

• Information on the Relationship among the Company's Top 10 shareholders.

• Total Number of Shares and Total Equity held by the Same Investee by the Company, its Directors and Supervisors, Managerial Officers, and Any Companies Controlled Either Directly or Indirectly by the Company

• IV. Fundraising situation 1. Capital and Shares

• Corporate bonds

• Preferred Shares 4. Global Depository Receipts (GDRs)

• Employee Stock Options 6. New Employee Restricted Stock

• New Share Issuance in Connection with Acquisition or Acceptance of Shares from Other Companies

• Implementation of Capital Utilization Plan

V. Operational Overview 1. Business Activities 2. Market, and Production and Sales Overview

1. Employees 4. Disbursements for Environmental Protection

2. Labor Relationship

3. Important Contracts

VI. Financial overview

2

1. Financial Information for the Last Five Years

2. Financial Analysis for the Last Five Years

3. Audit Committee’s Review Report on the Financial Reports of the Recent Years

4. Parent Company Only Financial Report and Auditor’s Report of the Recent Years

5. Consolidated Financial Reports and Auditor’s Report of the Recent Years

6. Impact of Financial Difficulties of the Company and its Affiliates on the Company’s Financial Position during The Most Recent Years and Up To the Date of Publication of The Annual Report

7. VII Financial Status, and Financial Performance Analysis and Risks

8. Financial status

9. Financial Performance

10. Cash Flow

11. Significant Capital Expenditures and its Impact on the Financial Operations in the Most Recent Years

12. Reinvestment Policies for the Recent Years, Main Reasons for Profits or Losses, Improvement Plan, and Investment Plan for the Coming Year

13. Risk Analysis and Assessment

14. Other Important Matters

15. VIII. Special Disclosure

16. Overview of Affiliates

17. Private Placement Securities during the Most Recent Years and up to the Date of Publication of the Annual Report

18. Holding or Disposal of Shares in the Company by Subsidiaries during the Most Recent Years and up to the Date of Publication of Annual Report

19. Supplementary Disclosures

20. Occurrence of Any Events that have Significant Impact on the Shareholders’ Rights or Securities Prices as Stated in Item 2 of Paragraph 3 of Article 36 of the Securities and Exchange Act during the Most Recent Years and up to the Date of Publication of the Annual Report

3

I. Letter to Shareholders

2023 operating results, 2024 year business plan and future company development strategy, affected by external competition environment, regulatory environment and overall business environment are explained as follows:

1. Operating Results of 2023

(1)2023 business plan implementation results

In 2023, benefiting from the continued increase in economic and industrial demand after the epidemic and the influx of new orders from the national defense industry, revenue in 2023 increased by 637,691 thousand compared with 2022, which increase of 22.97%. The overall net profit after tax in 2023 was 80,320 thousand. Consolidated financial statement are presented below.

Looking forward to 2024, although global inflation is still high and there may be uncertain factors that drive the industrial and economic development of various regions, the U.S. industrial and economic recovery trend should be expected. In addition, geopolitics and the emergence of new technologies and product applications in various regions, if the application of edge AI expands in various industrial fields, it will increase the vigorous development of industrial demand and create favorable opportunities.Parpro Corporation is expected to benefit from the epidemic economic recovery, which will drive an increase in shipments of aerospace, network communications, medical, gaming and smart retail products. The threat of geopolitical risks will also increase the investment in defense industry products by various countries. Parpro Corporation is cautiously optimistic about Business development of each product line in 2024.

	Unit: NT$ thousand;%	Unit: NT$ thousand;%	Unit: NT$ thousand;%	Unit: NT$ thousand;%
Item	2022	2023	Increase/Decrease	Ratio of change
Operatingincome	2,776,680	3,414,371	637,691	22.97
Cost ofgoods sold	2,318,545	2,935,555	617,010	26.61
Operating profit	458,135	478,816	20,681	4.51
Operatingexpenses	369,217	321,708	(47,509)	(12.87)
Operatingnet(loss) profit	88,918	157,108	68,190	76.69
Net non-operatingincome	18,823	(16,437)	(35,260)	(187.32)
Netprofit before tax	107,741	140,671	32,930	30.56
Netprofit for theyear	99,513	80,320	(19,193)	(19.29)

(2)Budget execution status: Not applicable.

(3)Profitability Analysis

	Item	2022	2023
Financial Structure (%)	Liabilities to Assets Ratio	58.25	44.89
	Long-term funds to fixed assets Ratio	1,403.12	2,010.12
Solvency (%)	Current Ratio	147.29	221.23
	Quick Ratio	65.99	91.67
Profitability (%)	Return on assets	4.37	3.25
	Return on equity	7.41	4.62
	Earningsper share(NT$)	1.21	0.87

(4)Research Development Status

The main operations and products of Papro Corporation are divided into gaming and industrial computers, aerospace and defense industries and other fields. The operating bases are in Taiwan, Mexico and the United States. "Technology research and development, innovative development, global layout" and other strategies, through vertical and horizontal integration, continue to improve and optimize the group's production and manufacturing

4

capacity, strengthen research and development capabilities, gradually form barriers to entry in the same industry, and develop new technologies and new products And industrial applications, widely used in gaming, industrial computers, aerospace, defense industry, Netcom, medical, Internet of Things, smart retail, automotive and other industries/product fields.

1. 2024 Annual Operation Plan

2. (1) Operating strategy

   • A. Maintenance and improvement of customer relationship, deep cultivation and development of gaming, industrial computer, aerospace, defense industry and other industrial applications.

   • B. Group operation integration, including order receiving and production arrangement, R&D cooperation/support and joint development, so as to achieve resource sharing, more efficient operation, and share results.

   • C. Intensify research and development energy with innovation, and expand new or potential products and industrial applications in the future.

   • D. Effectively control operating costs and improve the overall profitability of the group.

3. (2) Important Production and Marketing Policies

   • A. Strengthen the relationship with existing customers, grasp existing orders and shipments, and then increase new or potential customers and orders.

   • B. Strengthen the supply chain relationship and enhance the bargaining power of suppliers.

   • C. To reduce material cost.

   • D. Through the improvement of manufacturing process and yield rate, we can provide customers with high quality and shorten delivery time.

   • E. Carry out cost control and maintain/improve stable profits.

4. Future company development strategy

5. (1) Maintenance and improvement of customer relationship.

6. (2) R&D energy and technology are continuously quenched to establish/enlarge the differentiated value with competitors in the same industry.

7. (3) Seek for mergers and acquisitions or strategic alliances, and gradually expand the group's operating scale and realize greater profit momentum for the group through horizontal and vertical operation integration models.

8. (4) Prudent financial strategy and implementation of corporate governance, strengthening and maintaining good investor relations.

9. (5) Cultivate global talents and build an international team.

10. Affected by the external competitive environment, regulatory environment and overall business environment

The competition in the external environment is fierce. The company will continue to recruit outstanding talents, increase the added value of products and expand product lines to increase market share, so as to maintain the stable growth of operations. At the same time, it will continue to integrate the operations of the various operating companies of the group Configuration, in order to achieve the effect of reducing costs and enhancing competitiveness.

In addition, in the face of increasingly strict laws and regulations on environmental protection, investors, consumers, intellectual property rights, and labor rights, the company will also implement the spirit of corporate governance, fulfill corporate social responsibilities, and implement relevant laws and regulations. Changes in important policies and regulations affect finances and business. In the future, we will also keep an eye on changes in important policies and regulations at home and abroad, and propose timely measures to respond to them.

5

Under the operation of a globalized, conglomerate, and specialized enterprise, Papro Corporation will continue to face challenges with more stable and practical management in response to the trend of internationalization. Papro Corporation also believes that with the encouragement and encouragement of all colleagues and shareholders of the company .Under the guidance, Papro Corporation will be able to reach new heights and create greater benefits for shareholders.

• II. Company Profile

• Date of establishment: December 27, 2001

• Company history

Company history
Time	Important note
December 2001	Parpro Corporation was registered and established with a paid-in
	capital of NT$10,000 thousand.
October 2003	In order to meet the needs of business development and operating,
	cash capital was increased by NT$5,000 thousand. The paid-in
	capital after increasing was NT$15,000 thousand.
February 2004	Invenstment project proposal of capital increase and expansion of
	production of computers and their peripheral equipment,
	communication machinery equipment, and audio-visual electronic
	products was approved by Industrial Development Bureau for the
	five year tax-free investment plan.
October 2006	In order to meet the needs of business development and operating,
	cash capital was increased by NT$5,000 thousand. The paid-in
	capital after increasing was NT$20,000 thousand.
October 2007	Obtained ISO-9001 qualified certification.
June 2008	Obtained ISO-13485 certification (management system for
	medical devices).
October 2008	Capitalized surplus reserve of NT$5,000 thousand and cash capital
	increase of NT$10,000 thousand. The paid-in capital after
	increasing was NT$35,000 thousand.
November 2008	Acquired Industrial Computer and Gaming Machine Sales
	Distributor EFA Technologies Corporation as a subsidiary.
August 2009	Capitalized surplus reserve of NT$31,600 thousand. The paid-in
	capital after increasing was NT$66,600 thousand.
October 2009	In order to meet the needs of business development and operating,
	cash capital was increased by NT$83,400 thousand. The paid-in
	capital after increasing was NT$150,000 thousand.
December 2009	Applied for IPO.
December 2009	Applied for stock registration and stock trading.Got approval from
	the governmental authority.
March 2010	Purchased a new plant in Zhongli.
May 2010	Obtained ISO-14001 certification (environmental management
	system).
August 2010	Capitalized surplus reserve of NT$45,000 thousand. The paid-in
	capital after increasing was NT$195,000 thousand.
September 2011	Capitalized surplus reserve of NT$19,500 thousand. The paid-in

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Time	Important note
	capital after increasing was NT$214,500 thousand.
April 2012	In order to meet the needs of business development and operating,
	cash capital was increased by NT$25,000 thousand. The paid-in
	capital after increasing was NT$239,500 thousand.
August 2012	Capitalized surplus reserve of NT$11,975 thousand. The paid-in
	capital after increasing was NT$251,475 thousand.
October 2012	Invested in AP Parpro, Inc. (AP Parpro), an American company in
	the aerospace field, and acquired its Mexican production base.
January 2013	Moved to the new factory in Zhongli.
July 2013	Capitalized surplus reserve of NT$352,065 thousand. The paid-in
	capital after increasing was NT$603,540 thousand.
November 2013	The company was officially listed.
December 2013	Cash capital was increased by NT$75,450 thousand. The paid-in
	capital after increasing was NT$678,990 thousand.
December 2013	Invested in Parpro (Nevada), Inc. (PNV), an American company in
	the field of gaming, and acquired its Las Vegas production base.
October 2014	Obtained the main net assets, R&D team and customer base of the
	U.S. company JumeGen Systems LLC through investment by the
	U.S. subsidiary to strengthen and enhance the group's R&D
	capabilities.
October 2014	Issued the first deomestic unsecured convertible corporate bond of
	NT$280,000 thousand, and listed it on the OTC trading center.
April 2015	Invested and participated in the domestic listed company Anderson
	Industrial Corp.'s subscription, and obtained 13.33% of the
	company's equity.
March 2016	Jointly invested with Anderson Industrial Corp. to acquire 100%
	equity of Parpro Technologies, Inc., an American company.
June 2016	Invested to obtain 47% equity of Parpro Technologies, Inc., an
	American subsidiary held by Anderson Industrial Corp., and
	completely acquired 100% equity of Parpro Technologies, Inc.
June 2017	Obtained more than half of the directors of Anderson Industrial
	Corp., with substantial control, which to be included in the
	preparation of consolidated financial statements .
August 2018	Participated in the stock subscription case of investing in 2018
	Anderson Industrial Corp.'s cash capital increase and issuance of
	new shares project.
August 2019	Sell real estate such as land and buildings in Zhongli District,
	Taoyuan City, in order to revitalize assets and maximize
	shareholders' equity.
December 2019	Issued the second domestic unsecured convertible corporate bond
	of NT$500,000 thousand, and listed it on the OTC trading center.
May 2020	Since May 27, 2010, Parpro Group lost control of Anderson
	Industrial Corp. and its subsidiaries, which were excluded in the
	preparation of consolidated financial statements.

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Time	Important note
March 2022	Issued the third domestic unsecured convertible corporate bond of
	NT$500,000 thousand, and listed it on the OTC trading center.
May 2023	Issued the fourth domestic unsecured convertible corporate bond
	of NT$400,000 thousand, and listed it on the OTC trading center.

• III. Corporate Governance Report

• Organization system Chart

• (1) Organization system Chart

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(2) The business of each main department

Main Department	Take charge of the business
General Manager	A. Coordinate the company's business strategy, business planning, drafting of business policies, planning and control of investment. B. Evaluation and control of each department's operating status and internal control, and overall management of the company's overall business execution,planningand coordination.
Audit room	Evaluation and audit of the operating status and internal control of each department, suggestions and tracking for improvement of deficiencies, promotion of internal self-assessment, other related internal audits and assigned tasks.
Occupational Safety and Health Committee	Coordinate safety and health plans, coordinate promotion and supervision.
Administrative Office	General affairs management, administrative support planning and management, drafting and execution of annual manpower budget, human resource development, salary management operations, and other administrative related businesses.
Information technology office	ERP system planning, application program maintenance and development, database management and maintenance, network planning and management, other related information and network-related work.
Accounting& Finance Office	A. Establish and maintain relevant accounting management operations. B. Preparation and analysis of accounting information such as tax planning and filing. C. Coordinate financial fund allocation and usage, budget preparation and control management business. D. Preparation and analysis of financial information for management.
Operations Management Office	A. Grasp market products and development trends, and coordinate the group's annual operating goals. B. Coordinate the group's production, purchase and sales allocation and other tasks. C. Coordinate the allocation and improvement of the group's R&D resources andprocess technology.
Strategic Investment Office	Strategic investment matters such as operations and M&A projects .

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1. Information on Directors, Supervisors, General Managers, Deputy General Managers, Assistant Managers, Heads of Departments and Branches

2. (1) Directors and supervisors:

A. Director:

																As of April 2, 2024	As of April 2, 2024	As of April 2, 2024	As of April 2, 2024	As of April 2, 2024
Job title	Nationality or place of registration	Name	Gender Age	Elect Date	Term s	Initial Election Date	When	elected	Cu Number o	rrent f shares held	Spouse and minor children currently hold shares		Holding s name	hares in the of others	Main experience (Education)	Current positions in the company and other companies	Other executives, or supervisors related to the sp within the secon		directors who are ouse or d degree	Note
							Number of shares	Shareholdi ng Ratio	Number of shares	Shareholdin g Ratio	Numbe r of shares	Shareholdin g Ratio	Number of shares	Shareholdin g Ratio			Job title	Name	Relation
Chairman	Taiwan	Liao, Wenjia	Male 41~50	2022/5/31	3	2004/10/1	8,071,942	8.20	8,071,942	8.20	0	0	17,085,879	17.37	Boston University/Master of Electronic Commerce National Taiwan University Bachelor	Parpro Corporation./General Manager Parpro Holdings Co., Ltd./Legal Person Director Representative AP Parpro, Inc./Legal Person Director Representative Efa Technologies Corporation /Legal Person Director Representative Paide Investment Co., Ltd. / Chairman Jieshi Investment Co., Ltd. / Chairman Yunyong Investment Co., Ltd./Chairman Anderson Industrial Corp. /Chairman Parpro (Nevada) Inc./Legal Person Director Representative Pilot(Las Vegas) Inc./Corporate Director Representative Parpro Technologies, Inc. / Legal Person Director Representative Parpro Quality Inc/Legal Person Director Representative Sogotec Precision Co., Ltd. / Chairman Shengde Co., Ltd. / Chairman Anderson Merchandise Corporation / Chairman Giben Holdings Ltd.(SAMOA)/Director Giben Holdings Ltd.(BVI)/Director	None	None	None	Note
Director	Taiwan	Zeng, Xueqing	Female 61~70	2022/5/31	3	2010/5/26	0	0	0	0	0	0	0	0	Shih Chien College/Fashion Design Department Head of Fangdeng International Trading Co., Ltd. Manager of Fufeng Engineering Company Anderson Industrial Corp./Legal person director representative	Changchi Co., Ltd./Consultant	None	None	None	None

10

Director	Taiwan	Jieshi Investmen t Co., Ltd Represent ative:Yu Shaoyin	Female 61~70	2022/5/31	3	2022/5/31	5,830,415	5.93	5,830,415	5.93	0	0	0	0	Shih Chien College Housheng Electronic Industry Co., Ltd./Accountant System Electronics Industry Co., Ltd./Accountant/Financia l Director/Assistant Manager of Management Department/Director of Audit Office/Supervisor Supervisor of Boji Electronics Co., Ltd.	None	None	None	None	None
Director	Taiwan	Shen, Zhenlin	Male 61~70	2022/5/31	3	2013/4/18	0	0.00	0	0.00	0	0	0	0	Master of Economics, National Chung Hsing University Motech Co., Ltd. / Chief Financial Officer Sincere Information (Shares) Company/Chief Financial Officer and Senior Deputy General Manager Taiwan Semiconductor Manufacturing Co., Ltd./Deputy Director of Finance Kanglian Holdings Limited / Independent Director	Spectrum Technology Co., Ltd./Independent Director	None	None	None	None
Independent Director	Taiwan	Zhang, Naiwen	Male 41~50	2022/5/31	3	2022/5/31	0	0.00	0	0.00	0	0	0	0	Chung Yuan University/Master of Accounting, Tunghai University/Bachelor of Business Administration, Financial Manager of Changyuan Technology Industrial Co., Ltd. Zhang Naiwen Certified Public Accountants	Zhang Naiwen Certified Public Accountants Director of Maiber Co., Ltd. Director of Wheat Brewery Co., Ltd. Independent Director of Xiangyao Industrial Co., Ltd.	None	None	None	None
Independent Director	Taiwan	Feng, Zhiqing	Male 41~50	2022/5/31	3	2022/5/31	0	0.00	0	0.00	0	0	0	0	National Taiwan University/Master of Accounting, National Chengchi University/Bachelor of Accounting, Associate Director of Deloitte & Touche Audit Frim Certified Public Accountants of Deloitte & Touche Audit Frim Certified Public Accountants of Yuanshi Audit Frim	Accountants of Yuanshi Audit Frim	None	None	None	None

• B. Supervisor: The company has an audit committee, so it is not applicable.

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• (2) Directors and supervisors who are legal person shareholder representatives:

Table 1: Major Shareholders of Legal Person Shareholders

	April 2, 2024
Legal entity shareholder name	Major shareholders of corporate shareholders
Jieshi Investment Co., Ltd.	Liao Wenjia / shareholding ratio 99.66 %

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• (3) Disclosure of Directors' Professional Qualifications and Independent Directors' Independence

• Directors' Professional Qualifications and Independent Directors' Independence Information

Information
Condition	Professional qualifications and experience	Independence situation	Article 30 of the Company Law	Number of Concurrent with other public offerings independent directors of the company
Liao, Wenjia	Boston University/Master of Electronic Commerce National Taiwan University Bachelor Please refer to page 7 for Directors' Information	Directors, without the circumstances specified in Items 3 and 4 of Article 26-3 of the Securities and Exchange Act.	None	0
Zeng, Xueqing	Shih Chien College/Fashion Design Department Head of Fangdeng International Trading Co., Ltd. Manager of Fufeng Engineering Company Anderson Industrial Corp./Legal person director representative Please refer to page 7 for Directors' Information	Directors, without the circumstances specified in Items 3 and 4 of Article 26-3 of the Securities and Exchange Act.	None	0
Jieshi Investment Co., Ltd Representative:Yu Shaoyin	Shih Chien College Housheng Electronic Industry Co., Ltd./Accountant System Electronics Industry Co., Ltd./Accountant/Financial Director/Assistant Manager of Management Department/Director of Audit Office/Supervisor Supervisor of Boji Electronics Co., Ltd.	Directors, without the circumstances specified in Items 3 and 4 of Article 26-3 of the Securities and Exchange Act.	None	0
Shen, Zhenlin	Master of Economics, National Chung Hsing University Motech Co., Ltd. / Chief Financial Officer Sincere Information (Shares) Company/Chief Financial Officer and Senior Deputy General Manager Taiwan Semiconductor Manufacturing Co., Ltd./Deputy Director of Finance Kanglian Holdings Limited / Independent Director	Independent directors have obtained independent director declarations and qualification checklists to confirm their independence.	None	1
Zhang, Naiwen	Chung Yuan University/Master of Accounting, Tunghai University/Bachelor of Business Administration, Financial Manager of Changyuan Technology Industrial Co., Ltd. Zhang Naiwen Certified Public Accountants Director of Maiber Co., Ltd. Director of Wheat Brewery Co., Ltd. Independent Director of Xiangyao Industrial Co., Ltd.	Independent directors have obtained independent director declarations and qualification checklists to confirm their independence.	None	0
Feng, Zhiqing	National Taiwan University/Master of Accounting, National Chengchi University/Bachelor of Accounting, Associate Director of Deloitte & Touche Audit Frim Certified Public Accountants of Deloitte & Touche Audit Frim Certified Public Accountants of Yuanshi Audit Frim	Independent directors have obtained independent director declarations and qualification checklists to confirm their independence.	None	0

2.Board Diversity and Independence

Please refer to the explanation of the third item of the assessment item " Corporate

governance operations and their differences and reasons from the Code of Practice for the Governance of Listed Companies" on page 22 .

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( 4) General Manager, Deputy General Managers, Assistant Managers, Heads of Departments and Branches

													As of April 2, 2024	As of April 2, 2024	As of April 2, 2024	As of April 2, 2024
Job title	Country of Citizenship	Name	Gender	Assigned Date	Number	Current of shares held	Spouse and minor chil shar	dren currently hold es	Holding shares i	n the name of others	Main experience (Education)	Current positions in the company and other companies	Other executives, directors or supervisors who are related to the spouse or within the second degree			Note
					Number of shares	Shareholding Ratio	Number of shares	Shareholding Ratio	Number of shares	Shareholding Ratio			Job title	Name	Relation
General manager	Taiwan	Yan, Congqian (Note)	Male	2023/11/9	97,850	0.10	5,000	0,.01	-	-	Taipei Yanping Senior High School Parpro Corporation./General Manager Anderson Merchandise Corporation/ General Manager Parpro Corporation./ Executive Deputy General Manager Asiastar International Co., Ltd./Associate Manager	None	None	None	None	Note
Overseas Operate General Manager	United States	Thomas Sparrvik	Male	2014/1/1	-	-	-	-	-	-	Warwick Business School MBA Kontron AG, Munich, Germany Chief Operating Officer & Vice Chairman Field Works Inc., Eden Prairie, Minnesota CEO & President Laserstans AB, Malmoe, Sweden CEO & President Betech Components AB, Stockholm, Sweden CEO & President	AP Parpro, Inc./Corporate Director Representative Parpro(Nevada) Inc./Representative of corporate director Pilot (Las Vegas) Inc./Corporate Director Representative Parpro Technologies, Inc. / Legal Person Director Representative Parpro Quality Inc/Legal Person Director Representative	None	None	None	None
Deputy General Manager and Chief Financial Officer	Taiwan	Wu, Hsiupi	Female	2017/2/10	9,765	0.01	-	-	-	-	Shih Chien College Director of Materials, Yulin Technology Co., Ltd. Parpro Corporation/financial manager, special assistant Anderson Industrial Corp. /legal person director representative Parpro Corporation/Chief Financial Officer, Deputy General Manager	Parpro Corporation/Chief Financial Officer, Deputy General Manager AP Parpro, Inc./Legal Person Director Representative Parpro(Nevada) Inc./Representative of corporate director Pilot (Las Vegas) Inc./Corporate Director Representative Parpro Technologies, Inc. / Legal Person Director Representative Parpro Quality Inc/Legal Person Director Representative Efa Technologies Corporation/Legal Person Director Representative Shengde Co., Ltd./Director Anderson Merchandise Corporation/Director	None	None	None	None
R & D Departmen t Manager	United States	Matthew Dharm	Male	2017/2/10	-	-	-	-	-	-	Parpro Technologies Chief Technology Officer JumpGen Systems Senior Software Engineer and CTO Mercury Computer Systems	None	None	None	None	None

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											Principal SW Engineer Momentum Computer Senior SW Developer Qualcomm, Inc Senior Engineer Harvey Mudd College
Senior Manager	Taiwan	Ye Jianshen	Male	2010/7/16	192	-	-	-	-	-	Jianxing Engineering College Engineering Purchasing Specialist of Hechang Xingye Co., Ltd.	None	None	None	None	None
Finance Manager	Taiwan	Lee Shen-Lung	Male	2012/9/17	71,466	0.07	-	-	-	-	Ming Chuan University/Department of Accounting Auditor of the PricewaterhouseCoopers Audit firm Accounting Firm Assistant Manager of Underwriting Department of Taiwan Stock Exchange Deputy Manager of Capital Market Department of Polaris SecuritiesManager of Finance Department of Qizheng Optoelectronics Co., Ltd. Head of Accounting Department, Youwei Technology Co.,Ltd.	Hongyi Precision Industry Co., Ltd./Independent Director	None	None	None	None

Note: Newly appointed on November 9, 2023.

15

• ( 5) Remuneration paid to directors, supervisors, general manager and deputy general manager in the most recent year (2023) A. Remuneration of general directors and independent directors

Unit: NT$ thousand

Job title	Name	Director's remuneration	Director's remuneration	Director's remuneration	Director's remuneration	Director's remuneration	Director's remuneration			A, B, C and amount of the the proportion net profit	D, etc., the total four items and of the after-tax			Part-time employ	ees receive	relevant remu	neration			A, B, C, D, E, F, and G, etc., the total amount of the seven items and their proportions to the after-tax net profit	A, B, C, D, E, F, and G, etc., the total amount of the seven items and their proportions to the after-tax net profit	remuneration from reinvestment business outside the subsidiary or parent company
		remuneration (A)		retirement pension (B)		Directors ' remuneration (C) ( Note)		business execution cost (D)				Salary, bo special exp (E)	nus and enses, etc.	retirement pen	sion (F)	E	mployee Co ( N	mpensation (G) ote)
		The company	All companies in the financial report	The company	All compani es in the financial report	The company	All compani es in the financial report	The company	All companie s in the financial report	The company	All companie s in the financial report	The company	All companies in the financial report	The company	All compani es in the financial report	Our co	mpany	All companies in the financial report		The company	All companies in the financial report
																cash amount	stock amount	cash amount	stock amount
Chairman	Liao, Wenjia	1,440	1,440	0	0	139	139	0	0	1,579/1.97%	1,579/1.97%	3,713	3,713	108	108	0	0	0	0	5,400/6.72%	5,400/6.72%	0
Director	Zeng, Xueqing	480	480	0	0	138	138	0	0	618/0.77%	618/0.77%	0	0	0	0	0	0	0	0	618/0.77%	618/0.77%	0
Director	Jieshi Investment Co., Ltd Representative:Yu Shaoyin	480	480	0	0	138	138	0	0	618/0.77%	618/0.77%	0	0	0	0	0	0	0	0	618/0.77%	618/0.77%	0
Director	Wu, Hsiupi (Note1)	440	440	0	0	139	139	0	0	579/0.72%	579/0.72%	1,934	1,934	99	99	0	0	0	0	2,612/3.25%	2,612/3.25%	0
Independent director	Shen, Zhenlin	840	840	0	0	138	138	0	0	978/1.22%	978/1.22%	0	0	0	0	0	0	0	0	978/1.22%	978/1.22%	0
Independent director	Zhang, Naiwen	480	480	0	0	138	138	0	0	618/0.77%	618/0.77%	0	0	0	0	0	0	0	0	618/0.77%	618/0.77%	0
Independent director	Feng, Zhiqing	480	480	0	0	138	138	0	0	618/0.77%	618/0.77%	0	0	0	0	0	0	0	0	618/0.77%	618/0.77%	0
A. Please describe the independent director B. In addition to the disclosure in the abov		's remuneration payment policy, system, standards and structure, and describe the relatio e table, the remuneration received by the directors of the company for providing services						nship with the amount of re to all companies in the fina		muneration based o ncial report (such as	n the responsibilities, serving as consultan	risks, investment ts who are not em	time and other ployees, etc.) i	factors: based on t n the most recent y	he actual att ear: 0.	endance rate a	nd considerin	g the individual contribution of directors .

Note 1: Resigned on 2023/11/16.

Note 2: Directors’ remuneration and employee remuneration are distributions approved by the board of directors in 2024.

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Remuneration Grading Schedule

Remuneration Grading Schedule
Payment of remuneration levels for each director of the company		Direct	or name
	Total remuneration for the	first four items (A+B+C+D)	Total remuneration for the first s	even items (A+B+C+D+E+F+G)
	The company	All companies in the financial report	The company	All companies in the financial report
Less than NTD$ 1,000,000	Jieshi Investment Co., Ltd., Zeng Xueqing, Wu Hsiu Pi, Shen Zhenlin, Zhang Naiwen, Feng Zhiqing	Jieshi Investment Co., Ltd., Zeng Xueqing, Wu Hsiu Pi, Shen Zhenlin, Zhang Naiwen, Feng Zhiqing	Jieshi Investment Co., Ltd., Zeng Xueqing, Shen Zhenlin, Zhang Naiwen, Feng Zhiqing	Jieshi Investment Co., Ltd., Zeng Xueqing, Shen Zhenlin, Zhang Naiwen, Feng Zhiqing
NTD$ 1,000,000 (inclusive) to NTD$ 2,000,000 (exclusive)	Liao,Wenjia	Liao,Wenjia	—	—
NTD$ 2,000,000 (inclusive) to NTD$ 3,500,000 (exclusive)	—	—	Wu, Hsiupi	Wu, Hsiupi
NTD$ 3,500,000 (inclusive) to NTD$ 5,000,000 (exclusive)	—	—	—	—
NTD$ 5,000,000 (inclusive) to NTD$ 10,000,000 (exclusive)	—	—	Liao,Wenjia	Liao,Wenjia
NTD$ 10,000,000 (inclusive) to NTD$ 15,000,000 (exclusive)	—	—	—	—
NTD$ 15,000,000 (inclusive) to NTD$ 30,000,000 (exclusive)	—	—	—	—
NTD$ 30,000,000 (inclusive) to NTD$ 50,000,000 (exclusive)	—	—	—	—
NTD$ 50,000,000 (inclusive) to NTD$ 100,000,000 (exclusive)	—	—	—	—
More than NTD$ 100,000,000	—	—	—	—
Total	7 people	7 people	7 people	7 people

B. Supervisor's remuneration: The company has an audit committee, so it is not applicable.

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C. Remuneration for general manager and deputy general manager

Unit: NT$ thousand

Job title	Name	Salary (A)	Salary (A)	Pension (B) ( Note 1)	Pension (B) ( Note 1)	Bonuses a expenses	nd special , etc. (C)		employee remuneration (D) (Note 2 )	employee remuneration (D) (Note 2 )	employee remuneration (D) (Note 2 )	A, B, C and D, et the four items and after-tax net profit	c., the total amount of the proportion of the (%)	remunerati on from reinvestme nt business outside the subsidiary or parent company
		The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The co	mpany	All companies in the financial report		The company	All companies in the financial report
								cash amount	stock amount	cash amount	stock amount
General manager	Yan, Congqian (Note 2)	243	243	15	15	0	0	0	0	0	0	258/0.32%	258/0.32%	0
General manager	Liao, Wenjia (Note 2)	3,713	3,713	108	108	0	0	0	0	0	0	3,821/4.76%	3,821/4.76%	0
General Manager of Overseas Operations	Thomas Sparrvik	0	7,789	0	0	0	0	0	0	0	0	0	7,789/9.70%	0
Deputy General Manager and Chief Financial Officer	Wu, Hsiupi	2,107	2,107	108	108	0	0	0	0	0	0	2,215/2.76%	2,215/2.76%	0

Note 1 : Employee remuneration was approved by the 2024 Board of Directors resolution.

Note 2: General manage,Yan,Congqian was newly appointed on November 9, 2023, and general manager Liao,Wenjia resigned on the same day.

Remuneration Grading Schedule

RemunerationGrading Schedule
Pay the Company's General Manager and Deputy General Manager remuneration grades	Name of General Manager an	d Deputy General Manager
	Our company	All companies in the financial report
less than NTD$1,000,000	Yan, Congqian	Yan, Congqian
NTD$ 1,000,000 (inclusive) to NTD$ 2,000,000 (exclusive)	-	-
NTD$ 2,000,000 (inclusive) to NTD$ 3,500,000 (exclusive)	Wu Hsiu Pi	Wu Hsiu Pi
NTD$ 3,500,000 (inclusive) to NTD$ 5,000,000 (exclusive)	Liao Wenjia	Liao Wenjia
NTD$ 5,000,000 (inclusive) to NTD$ 10,000,000 (exclusive)	Thomas Sparrvik	Thomas Sparrvik
NTD$ 10,000,000 (inclusive) to NTD$ 15,000,000 (exclusive)	-	-
NTD$ 15,000,000 (inclusive) to NTD$ 30,000,000 (exclusive)	-	-
NTD$ 30,000,000 (inclusive) to NTD$ 50,000,000 (exclusive)	-	-
NTD$ 50,000,000 (inclusive) to NTD$ 100,000,000 (exclusive)	-	-
More than NTD$ 100,000,000	-	-
Total	4	4

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D.The name of the manager who distributes employee remuneration and the distribution situation:

2023/12/31

					Unit: NT$ thousand	Unit: NT$ thousand
	Job title	Name	Stock amount	Cash amount	Total	Proportion of total amount to net profit after tax(%)
Manager	General manager (Note2)	Yan Congqian	0	200	200	0.25
	General manager (Note2)	Liao, Wenjia
	General Manager of Overseas Operations	Thomas Sparrvik
	Deputy General Manager and Chief Financial Officer	Wu,Hsiupi
	Senior Manager	Ye,Jianshen
	Finance Manager	Lee, Shen-Lung

Note 1 : Employee remuneration was approved by the 2024 Board of Directors resolution.

Note 2: General manage,Yan,Congqian was newly appointed on November 9, 2023, and general manager Liao,Wenjia resigned on the same day.

E.Top five salaries of manager:

Job title	Name	Salary (A)	Salary (A)	Pension (B) ( Note 1)	Pension (B) ( Note 1)	Bonuses a expenses,	nd special etc. (C)	employee remuneration (D) (Note 2 )	employee remuneration (D) (Note 2 )	employee remuneration (D) (Note 2 )	employee remuneration (D) (Note 2 )	A, B, C and D, etc., the total amount of the four items and the proportion of the after-tax net profit (%)	A, B, C and D, etc., the total amount of the four items and the proportion of the after-tax net profit (%)	remuneration from reinvestment business outside the subsidiary or parent company
		The company	All companies in the financial report	The company	All companies in the financial report	The company	All companies in the financial report	The co	mpany	All companies in the financial report		The company	All companies in the financial report
								cash amount	stock amount	cash amount	stock amount
General manager	Liao, Wenjia(Note3)	3,713	3,713	108	108	0	0	0	0	0	0	4.76	4.76	0
General Manager of Overseas Operations	Thomas Sparrvik	0	7,789	0	0	0	0	0	0	0	0	0	9.70	0
Project manager	Mike Orozco	0	3,427	0	0	0	0	0	0	0	0	0	4.27	0
Deputy General Manager and Chief Financial Officer	Wu Hsiupi	2,107	2,107	108	108	0	0	0	0	0	0	2.76	2.76	0
Finance Manager	Lee Shen-Lung	1,407	1,407	76	76	0	0	200	0	200	0	2.10	2.10	0

Note 1: The actual withdrawal is made to the personal account of the Labor Insurance Bureau. Note 2: This is the distribution approved by the board of directors on March 13, 2024. Note 3: Resigned as general manager on November 9, 2023.

(6) Analysis and explanation of the proportion of total remuneration paid to the company's directors, supervisors, general managers and deputy general managers in the last two years by the company and all companies in the consolidated statement to the after-tax profit of individual or individual financial reports The policy, standard and combination of payment of remuneration, the procedure of setting remuneration, and the correlation with business performance and future risks.

1. The total remuneration paid to the company's directors, supervisors, general managers and deputy general managers by the company and all companies with consolidated statements in

19

the last two years to the after-tax profit of individual or individual financial reports :

The company's total remuneration paid to directors in 2022 and 2023 accounted for 12.19% and 14.27% of the after-tax net profit, and the total remuneration paid to the general manager and deputy general manager accounted for 13.56% and 17.54% of the after-tax net profit , The proportion of the total remuneration paid in 2023 to the after-tax net profit of individual financial reports increased, mainly due to the loss of operations and the increase in operating profits in 2023.

1. The company's remuneration policy, standard and combination, the procedure for determining remuneration, and its relationship with business performance and future risks:

According to Article 19 of the company's articles of association, the director's remuneration of the company should first allocate no more than 5% of the director's remuneration if the company makes a profit in the year, and consider the company's operating results and its contribution to the company's performance to give a reasonable amount. remuneration. The remuneration payment policy for the general manager and deputy general manager is based on the salary level of the position in the industry market, the scope of power and responsibility of the position in the company, and the achievement of personal goals and key results set by the company. The procedures for determining remuneration are based on the company's salary and labor management methods, performance management methods, annual employee performance appraisals, board performance evaluation methods, etc., in addition to referring to the company's overall operating performance, future business risks and development trends of the industry, We also give reasonable remuneration with reference to the achievement of individual performance. Relevant performance appraisal and remuneration rationality are reviewed by the remuneration committee and the board of directors, and the remuneration system is reviewed at any time depending on the actual operating conditions and relevant laws and regulations, so as to achieve the company's sustainable operation and Balance of risk control.

1. Operation of corporate governance

2. (1) The operation of the board of directors: The board of directors held 8 meetings in 2023 (A), and the attendance of directors is as follows:

Job title	Name	The actual number of (column) seats (B)	Entrusted to attend frequency	Actual attendance rate (%) (B/A)	Remark
Chairman	Liao,Wenjia	7	1	88
Director	Zeng,Xueqing	7	1	88
Director	Wu,Hsiupi	7	0	100	2023/11/16 Resigned
Legal person director	Jieshi Investment Co., Ltd Representative:Yu Shaoyin	8	0	100
Independent director	Shen Zhenlin	8	0	100

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Independent director	Zhang Naiwen	8	0	100
Independent director	Feng Zhiqing	8	0	100
Other matters to be recorded: A. If any of the following situations occurs in the operation of the board of directors, the date, period, content of the proposal, opinions of all independent directors, and the company's handling of the opinions of independent directors shall be stated: a. Matters listed in Article 14-3 of the Securities Exchange Act: Please refer to pages 45-46 of the annual report . b. Except for the above-mentioned matters, other resolutions of the board of directors that have been opposed or reserved by independent directors and have records or written statements: None. B. When a director withdraws from an interest-related proposal, the director's name, content of the proposal, reason for recusal and participation in the event should be stated: On December 13, 2023, the board of directors resolved to appoint Liao Wenjia, the chairman of the board, as the head of the sustainable strategic development department of the company's sustainable strategy development department and the ransom proposal. Based on the principle of avoidance of interests, the chairman of the board, Mr. Liao Wenjia, recused himself and did not participate in the vote. After being consulted by Chief Financial Officer Wu Xioupi and all present at the meeting, the proposal was approved without objection. C. Listed OTC companies should disclose information such as the evaluation cycle and period, evaluation scope, method, and evaluation content of the board of directors' self (or peer) evaluation: Please refer to Attachment 1 for details. D. The current and most recent year’s goal of strengthening the functions of the board of directors (such as the establishment of an audit committee, the improvement of information transparency, etc. ) and the evaluation of its implementation: Introduce independent directors to set up an audit committee and a remuneration committee to supervise the decision-making content of the board of directors. In addition, the board of directors shall be held at least quarterly and relevant information shall be disclosed to the investing public in accordance with the provisions of laws and regulations . E. Attendance of independent directors at each board meeting: Please refer to Attachment 2 for details.

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Attached Table 1: Implementation of Board Evaluation

Evaluate cycle Once a year Once a year Once a year	Evaluation period	Assessment scope	Evaluation method	Assessment content Conduct self-evaluation on the degree of participation in the company's operations, the quality of the board's decision-making, the composition and structure of the board of directors, the selection and appointment of directors, continuous education, and internal control . Conduct self-evaluation on the grasp of the company's goals and tasks , awareness of directors' responsibilities , degree of participation in company operations , internal relationship management and communication , directors' professional and continuing education , and internal control . Conduct self-evaluation on the degree of participation in the company's operations , awareness of the responsibilities of functional committees , improvement of decision-making quality of functional committees , composition of functional committees, selection of members , and internal control .
	2023/1/1 to 2023/12/31	Board Performance Evaluation	Internal self-assessment of the board of directors
	2023/1/1 to 2023/12/31	Board Member Performance Evaluation	Board member self-assessment
	2023/1/1 to 2023/12/31	Functional Committee Performance Evaluation	Board member self-assessment

Schedule 2: Attendance of independent directors at each board meeting in 2023:

◎: Attended in person ☆ : Attended by proxy ＊ : Did not attend

			◎:	Attended in p	erson☆: A	ttended by p	roxy＊: Di	d not attend
Name	1st	2nd	3rd	4th	5th	6th	7th	8th
Shen Zhenlin	◎	◎	◎	◎	◎	◎	◎	☆
Zhang Naiwen	◎	◎	◎	◎	◎	◎	◎	◎
Feng Zhiqing	◎	◎	◎	◎	◎	◎	◎	◎

• (2) Operation of the Audit Committee: The Audit Committee held 6 meetings in 2023 (A), and the attendance of independent directors is as follows:

Job title	Name	Actual number of attendance (B)	Entrusted Attendance	Actual attendance rate (%) (B/A)(Note)	Remark
Independent Director (convener)	Shen, Xiaoling	7	0	100
Independent director	Zhang Naiwen	7	0	100
Independent director	Feng Zhiqing	7	0	100
Other matters to be recorded: A. In case of any of the following situations in the operation of the audit committee, the audit committee meeting date, period, content of proposals, independent directors’ objections, reservations, or content of major proposals, audit committee resolution results, and the company’s response to the audit committee shall be stated. Handling of opinions. a. Matters listed in Article 14-5 of the Securities and Exchange Act: Attachment 1 . b. Except for the above-mentioned matters, other resolution matters that have not been approved by the audit committee and approved by more than two-thirds of all directors: None. B. Execution of independent directors’ recusal of interest-related proposals. The independent director’s name, content of the proposal, reasons for recusal of interests, and participation in voting shall be stated : None. C. Communications between independent directors and internal audit supervisors and accountants (should include major events, methods and results of communication on the company's financial and business conditions) : a. The company's internal audit supervisor submits the audit report to the independent directors every month, and regularly conducts two-way exchange of opinions and communication with the independent directors and accountants at thequarterlycorporategovernance meeting. Overall,the communication between the

22

independent directors and the internal audit supervisor in 2023 should be sufficient .

• b. The company invites certified accountants to report on quarterly financial statement audit or audit results, internal control implementation, relevant legal requirements or updates, etc. in the quarterly corporate governance meeting for two-way exchange of opinions and communication. Overall, in 2023 the status of communication between independent directors and certified accountants should be sufficient .

• c. Independent directors, internal audit supervisors and accountants also communicate directly by email, telephone or face to face as needed.

• d. The communications between the company's independent directors, internal audit supervisors and accountants have been disclosed in the corporate governance section of the company's website.

Schedule I	Schedule I	Schedule I	Schedule I
The Audit Committee	Proposal content and follow-up processing	Matters listed in Article 14-5 of the Securities and Exchange Act	Resolutions that have not been approved by the Audit Committee but have been agreed by more than two-thirds of all directors
1. Operational situation in 2023
1st (2023/3/9)	1. 2023Annual Business Report and Financial Statements	V	None
	2. 2023 Annual auditors’ independence and performance evaluation review case	V	None
	3. 2023 Annual"Internal Control Statement"case	V	None
	4. Amend some articles of the "Articles of Association"	V	None
	5. Amend some provisions of the "Operational Proceduresfor FundLoans to Others"	V	None
	6. PARPRO TECHNOLOGIES loan to AP PARPRO case	V	None
	7. Plan to handle the issuance of the fourth domestic unsecured conversioncorporate bonds	V	None
	Result of the resolution of the Audit Committee:All members of the Audit Committee passedit without objection.
	The company's handling of the audit committee's opinion:All directors present passed without objection.
2nd (2023/4/13)	1. 2022 EarningsDistribution Proposal	V	None
	2. Amend some provisions of the "Rules of ProcedureforShareholders' Meetings"	V	None
	Result of the resolution of the Audit Committee:All members of the Audit Committee passedit without objection.
	The company's handling of the audit committee's opinion:All directors present passed without objection.

23

3rd (2023/5/11)	1. Consolidated financial statements for the first quarterof 2023		None
	2. Convertible corporate bonds exchange for new shares		None
	3. PARPRO TECHNOLOGIES capital loan to AP PARPRO case	V	None
	4. PARPRO TECHNOLOGIES loan to PARPRO NEVADAcase	V	None
	Result of the resolution of the Audit Committee:All members of the Audit Committee passedit without objection.
	The company's handling of the audit committee's opinion:All directors present passed without objection.
4th (2023/8/10)	1. Consolidated financial statements for the first half of 2023	V	None
	2. Convertible corporate bonds exchange for new shares		None
	Result of the resolution of the Audit Committee:All members of the Audit Committee passed it without objection.
	The company's handling of the audit committee's opinion:All directors present passed without objection.
5th (2023/9/21)	1. Capital increase in overseas subsidiary Parpro Holdings and capital increase in U.S. subsidiary AP Parpro	V	None
	2. Amendment to the company’s inventory aging policy		None
	3. Formulate the audit method plan for pre-approval of certified independant auditors providing non-certified services		None
	4. Amendment to Internal Control "Internal Control of Other Operations" and its Implementation Rules Case	V	None
	Result of the resolution of the Audit Committee:All members of the Audit Committee passed it without objection.
	The company's handling of the audit committee's opinion:All directors present passed without objection.
6th (2023/11/9)	1. Consolidated financial statements for the third quarter of 2023		None
	2. The company’s audit plan for the 2024	V	None
	Result of the resolution of the Audit Committee:All members of the Audit

24

Committee passed it without objection. The company's handling of the audit committee's opinion: All directors present passed without objection. 1. 2024 Budget None 2. Cancellation of treasury shares None 3. Exchange of convertible corporate bonds for new None 7th shares (2023/12/13) Result of the resolution of the Audit Committee: All members of the Audit Committee passed it without objection. The company's handling of the audit committee's opinion: All directors present passed without objection. 2. Review the financial report The board of directors prepared the company's 2023 annual business report, financial statements, and profit distribution proposals, among which the financial statements were audited by Deloitte & Touche Audit Firm, and an audit report was issued. The above-mentioned business report, financial statement and profit distribution case have been checked by the audit committee on March 9, 2024 and April 13, 2024 , and there is no discrepancy . Evaluate the effectiveness of the internal control system The audit committee evaluates the effectiveness of the policies and procedures of the company's internal control system (including control environment, risk assessment, control operations, information and communication, and supervision operations), and reviews the periodic reports of the company's audit department. The audit committee believes that the company's risk management and internal control systems are effective, and the company has adopted the necessary control mechanisms to monitor and correct violations.

2. Review the financial report

3. Evaluate the effectiveness of the internal control system

• (3) The operation of corporate governance and the differences between it and the Code of Practice for Corporate Governance of listed companies and the reasons:

25

evaluation items			Operation status(Note)	Differences from the Governance Code of Practice for Listed OTC Companies and Reasons
	yes	no	summary description
A. Does the company formulate and disclose the code of corporate governance practice in accordance with the Code of Practice for Corporate Governance of Listed OTC Companies?	V		The company has approved the "Corporate Governance Code" by the board of directors in 2014, and currently implements and operates in accordance with relevant regulations.	no major difference
B. Company Shareholding Structure and Shareholders' Equity (a) Does the company formulate internal operating procedures to deal with shareholders' suggestions, doubts, disputes and litigation matters, and implement them according to the procedures? (b) Does the company have a list of the major shareholders who actually control the company and the ultimate controllers of the major shareholders? (c) Does the company establish and implement risk control and firewall mechanisms with related companies? (d) Does the company have internal regulations to prohibit company insiders from using unpublished information in the market to buy and sell securities?	V V V V		The company has formulated the "Corporate Governance Code", and according to the regulations, the spokesperson is responsible for handling shareholders' suggestions or disputes. The company obtains the list of shareholders with a shareholding ratio of more than 5% or the top ten shareholders through a stock affairs agency. The company has formulated the "Supervision and Management of Subsidiaries" and "Procedures for Transactions of Group Enterprises, Specific Companies, and Related Persons", which are handled in accordance with the company's internal control system, and the risk management and control mechanism and firewall mechanism for related companies are actually implemented. The company has formulated the "Internal Material Information Handling Procedures" and the "Ethical Code of Conduct", which clearly stipulate that company personnel must not use the company's internal information for improperprofit.	no major difference no major difference no major difference no major difference
C. Composition and Responsibilities of the Board of Directors			Board Diversity Policy : The company's "Corporate Governance Code" and "Director Election Methods" clearly regulate the diversity policy of the board of directors : the composition of the board of directors should pay attention to gender equality and generally possess the necessary knowledge, skills and qualities to perform their duties. In order to achieve the ideal goal of corporate governance, the board of directors as a whole should possess capabilities , including : operational judgment, accounting and financial analysis, business management, crisis management, industry knowledge, international market outlook, leadership and decision-making capabilities . Specific management objectives and achievement status of the diversity policy Goal A: The company has six directors, who must have relevant professional skills and experience in business management, leadership decision-making, industry knowledge, financial accounting, law and environmental protection . Achievement:Achieved, the diversity situation of the board of directors is detailed in Appendix 1 .	no major difference
(a) Does the board of directors formulate diversity policies, specific management objectives and implement them?	V

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evaluation items			Operation status(Note)	Differences from the Governance Code of Practice for Listed OTC Companies and Reasons
	yes	no	summary description Goal B: One-quarter or two female directors should be maintained . Achievements:The company has two female directors this term, accounting for 33%, achieving the goal.
(b) Has the company voluntarily set up various other functional committees besides the remuneration committee and the audit committee in accordance with the law? (c) Has the company formulated the performance evaluation method and evaluation method of the board of directors, conducts performance evaluation every year and regularly, and submits the results of the performance evaluation to the board of directors, and uses it as a reference for the salary and remuneration of individual directors and nomination for renewal?	V	V	The company currently only has a salary and compensation committee and an audit committee, and there is no need to add other functional committees. The company has formulated the "Performance Evaluation Method of the Board of Directors", and conducts performance evaluation every year according to the method. The most recent evaluation result was reported by the Board of Directors on March 13, 2024, in terms of the operational efficiency of the Board of Directors, internal relations, management and communication, and the composition and capabilities of members. Directors' self-assessment scores were all between satisfactory and verysatisfied.	no major difference no major difference
(d) Does the company regularly assess the independence of CPA?	V		The company's audit committee evaluates the independence and competency of its certified accountants every year. In addition to requiring the certified accountants to provide "Declaration of Detachment of Independence" and "Audit Quality Indicators (AQIs)", it also considers Article 47 of the Accountants Act and the professional ethics of accountants. Standard Bulletin No. 10 was formulated and a total of 13 AQI indicators from five major aspects were evaluated. It is confirmed that the accountant has no other financial interests or business relationships with the company except for fees for visas and financial and tax cases. The accountant's family members do not violate the independence requirements. With reference to the AQI indicator information, it is confirmed that the accountant and the firm are in the process of checking professionalism, quality control, independence, supervision and innovation capabilities are all better than the average level of the industry. The evaluation results of the most recent year have been approved by the audit committee and the board of directors on March 13, 2023, as detailed in Appendix 2.	no major difference
D. Whether the listed OTC company has a qualified and appropriate number of corporate governance personnel, and designates a corporate governance supervisor to be responsible for corporate governance -related affairs (including but not limited to providing directors and supervisors with	V		The company has a corporate governance team under the general manager's office. On August 13, 2019, the board of directors approved the appointment of Wu,Hsiupi, deputy general manager, as the corporate governance supervisor. Such as management work experience, 2023 annual training situation is detailed in Table 3. The duties of the corporate governance team are toprovide directors and independent	no major difference

27

evaluation items	Operation status(Note)	Operation status(Note)	Operation status(Note)	Differences from the Governance Code of Practice for Listed OTC Companies and Reasons
	yes	no	summary description
information needed to perform business, assisting directors, supervising to follow the laws and regulations , handle matters related to the meetings of the board of directors and shareholders' meetings, make minutes of the board of directors and shareholders' meetings, etc.)?			directors with the information they need to carry out their business, assist directors and independent directors to comply with laws and regulations, and handle matters related to the board of directors and shareholders' meetings according to the law.
E. Whether the company has established a communication channel with stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc.), set up a special area for stakeholders on the company website, and properly responded to important corporate social responsibility issues that stakeholders are concerned about ?	V		The company has set up a special section for interested parties on the company website to provide smooth communication channels for stakeholders such as employees, shareholders, suppliers, banks and other creditors, and to understand the company's operating conditions through the spokesperson.	no major difference
F. Does the company appoint a professional stock affairs agency to handle the affairs of the shareholders meeting?	V		The company appointed KGI Securities Co., Ltd. Stock Affairs Agency Department to handle matters related to the shareholders' meeting.	no major difference
G. Information Disclosure (a) Does the company set up a website to disclose financial business and corporate governance information?	V		The company has set up a company website and disclosed relevant information at the public information observation station in accordance with regulations.	no major difference
(b) Does the company adopt other methods of information disclosure (such as setting up an English website, appointing a special person to be responsible for the collection and disclosure of company information, implementing the spokesperson system, placing the company website during the legal person briefing session, etc.)? (c) Whether the company announces and declares the annual financial report within two months after the end of the fiscal year, and announces and declares the first, second and third quarter financial reports and the operating conditions of each month before the prescribed deadline	V	V	The company designates a special person to be responsible for the collection and disclosure of company information, and implements the spokesperson system. In discussion.	no major difference no major difference
H. Does the company have other important information that is helpful to understand the operation of corporate governance (including but not limited to employee rights, employee care, investor relations, supplier relations, rights of interested parties, training of directors and supervisors, risk management The implementation of policies and risk measurement	V		1. Employees' rights and interests: In addition to handling employees' rights and interests in accordance with the Labor Standards Act and related laws and regulations, the company has established an employee welfare committee to allocate employee welfare funds and employee retirement funds according to law, and organize various employee welfare activities to connect employees. 2. Employee care: The companyregularlyorganizes	no major difference

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evaluation items	Operation status(Note)	Operation status(Note)	Operation status(Note)	Differences from the Governance Code of Practice for Listed OTC Companies and Reasons
	yes	no	summary description
standards, the implementation of customer policies, the company’s purchase of liability insurance for directors and supervisors, etc.)?			employee tours and subsidies, and protects the legitimate rights and interests of employees in accordance with the Labor Standards Act and other relevant laws and regulations. The website reveals various management methods, clearly stipulates the rights and obligations of employees and welfare items, and regularly reviews the content of benefits to protect the rights and interests of employees. 3. Investor relations: The company discloses information in the public information observatory according to the laws and regulations to protect the rights and interests of investors, and the investor's mailbox and spokesperson contact information are listed on the company's website to maintain a healthy and harmonious relationship between the company and shareholders. 4. Supplier relationship: The company attaches great importance to the rationality of purchase prices and the premise of cooperating with suppliers in the spirit of life community, mutual trust and reciprocity, and safeguards the due rights and interests of both parties. The transaction conditions are determined after mutual communication and coordination between the two parties. 5. Rights of interested parties: The company's website (http://www.parpro.com.tw) has an "Investor Zone", which discloses the company's financial and business-related information, and links to public information observation stations for interested parties refer to. In addition, the company's stock affairs agency, KGI Securities (Shares) Co., Ltd. Stock Affairs Agency Department, also assists in handling relevant issues and suggestions from shareholders and stakeholders of the company. If legal issues are involved, professional lawyers or legal personnel will be appointed Processing to protect the rights and interests of interested parties. 6. The situation of directors' further education: please refer to the attached table 4. 7. Implementation of risk management policies and risk measurement standards: Please refer to page 98 of this annual report . 8. Implementation of customer policies: The company and customers have designated special personnel to make regular contact, keep abreast of customer dynamics, and ensure the best interests of both parties through good communication and interaction. 9. Circumstances in which the company purchases liability insurance for directors: The company has purchased directors' liability insurance.

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evaluation items	Operation status(Note)	Operation status(Note)	Operation status(Note)	Differences from the Governance Code of Practice for Listed OTC Companies and Reasons
	yes	no	summary description
9. Please explain the improvement of the corporate governance evaluation results released by the Corporate Governance Center of Taiwan Stock Exchange Corporation in the most recent year, and propose priority strengthening matters and measures for those that have not been improved. (Companies not included in the evaluation do not need to fill in) The promotion items are as follows: 1. Strengthen information disclosure in English and prepare English versions of the "Shareholders Meeting Manual and Meeting Supplementary Information", "Shareholders Meeting Annual Report" and "Annual Financial Report" . 2. Appoint a general manager so that the responsibilities of the chairman and the general manager are clearly divided . 3. Set up a dedicated information security manager Priorities and measures for improvement that have not yet been improved: 1. Legal person briefing meetings are held twice a year . 2. Conduct internalperformance evaluations of functional committees on a regular basis every year .

Attached Table 1: Diversity of the Board of Directors

Diversified core projects Director name	Ggender	Management	Leadership decision	Industry knowledge	Financial Accounting	law
Liao Wenjia	Male	V	V	V
ZengXueqing	Female	V	V	V
Wu Hsiu Pi	Female	V	V	V	V
Jieshi Investment Co., Ltd. Representative: Yu Shaoyin	Female	V	V	V	V
Shen Zhenlin	Male	V	V	V	V	V
ZhangNaiwen	Male	V	V	V	V	V
FengZhiqing	Male	V	V	V	V	V

Schedule 2: Evaluation CPA for Independence

Schedule 2: Evaluation CPA for Independence
Evaluation items	Evaluation result	Whether it meets independence
1. As of the latest visa operation, there has been no change in seven years.	yes	yes
2. There is no significant financial interest relationship with the client.	yes	yes
3. Avoid any inappropriate relationship with the client.	yes	yes
4. Accountants should ensure the honesty, impartiality and independence of their assistants.	yes	yes
5. The financial statements of the service organization within the two years prior to thepractice shall not be checked for visas.	yes	yes
6. The name of the accountant shall not be used by others.	yes	yes
7. Does not hold shares in the company or affiliated companies.	yes	yes
8. Has not had any money loans with the company or affiliated companies.	yes	yes
9. Has no joint investment or interest-sharing relationship with the company or affiliated companies.	yes	yes
10. Does not concurrently hold the regular work of the company or affiliated enterprises, and receives a fixed salary.	yes	yes
11. Does not involve the management functions of the company or affiliated companies to make decisions.	yes	yes
12. Failure to concurrently operate other businesses that may lose their independence.	yes	yes
13. Has no relationship with the company's management personnel as a spouse, a direct blood relative, a direct blood relative, or a collateral blood relative	yes	yes

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within the second degree.
14. No commissions related to business are charged.	yes	yes
15. As of now, there has been no punishment or damage to the principle of independence.	yes	yes

Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.
Name	Study date	organizer	Course Title	study hours
Wu Hsiu Pi	2023/7/13	Taiwan Stock Exchange Corporation	Publicity meeting on sustainable development action plans for listed companies	3
	2023/10/13	Securities and Futures Development Foundation of the Republic of China	2023 Annual Insider Trading Prevention Promotion Conference	3
	2023/10/26-10/27	Securities and Futures Development Foundation of the Republic of China	Continuing training courses for accounting supervisors of issuers, securities companies and stock exchanges	6

Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.	Implementation of Advanced Training for Corporate Governance Supervisors in 2023.
Name	Study date	organizer	Course Title	study hours
Wu Hsiu Pi	2023/7/13	Taiwan Stock Exchange Corporation	Publicity meeting on sustainable development action plans for listed companies	3
	2023/10/13	Securities and Futures Development Foundation of the Republic of China	2023 Annual Insider Trading Prevention Promotion Conference	3
	2023/10/26-10/27	Securities and Futures Development Foundation of the Republic of China	Continuing training courses for accounting supervisors of issuers, securities companies and stock exchanges	6

Attachment 4: Important information items that are helpful in understanding corporate governance

operations

Helps to understand corporate	Detailed description of the implemented situation or planned
governance operations Important information items	situation
1. Employee Rights and Interests
(1) Provide adequate education and training for employees	All employees of our company must receive pre-employment training when they arrive on the job. Specialty training and safety and health education will be provided during their tenure. For those who require special expertise in the business , personnel will be dispatched to receive training depending on the situation .
(2) Provide employees with the right to fully respond to their opinions	The company holds regular labor-management meetings, where the heads of each department listen to the opinions of the employees, and set up a suggestion box for employees to fully respond to their opinions.
(3) Others (such as occupational safety and health management system certified by ISO 45001 or related organizations, providing employees with reasonable benefits and remuneration, etc.)	The company conducts safety and health education, disaster prevention training and health examinations that are necessary for employees to perform their work. In addition to reasonable salaries, the company's employees are also awarded year-end bonuses based on operational performance and remuneration is paid to employees in accordance with the company's articles of association. In addition, the company has set up an employee welfare committee to handle employee welfare business to provide employees with reasonable benefits and remuneration.
2. Employee care
(1) Ensure the safety of the working environment	Employee safety and fire protection business inspections in accordance with the labor safety and health laws and fire regulations , and then reports them to the competent authorities. It also conducts labor safetyeducation from time to

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Helps to understand corporate	Detailed description of the implemented situation or planned
governance operations Important information items	situation
	time.
( 2 ) Others (such as paying attention to the physical and mental development of workers and family life, etc.)	The company attaches great importance to the physical and mental development and family life of its employees. In the event of weddings or funerals, supervisors will personally go to celebrate or pay tribute. If there is an accident, they will provide condolences and assistance. In addition, the company and the employee welfare committee organize travel and parent-child activities to prevent overwork. Family members are encouraged to participate.
3.Investor relations
(1) Improve operational transparency	The company handles matters in accordance with the list of business matters to be handled by issuers of listed securities and the information disclosure regulations of the Taiwan Stock Exchange Co., Ltd. on verification and disclosure procedures for material information of listed companies, and provides various information to investors in a timely manner. . In the event of a major incident, a press conference must be held immediately to make a public statement.
(2) Pay attention to corporate governance	The company has three independent directors, and the three independent directors serve as members of the audit committee and the remuneration committee. Important proposals must be resolved by the functional committee and the board of directors before they can be implemented. Directors are required to take a 6-hour course every year. The company formulates and implements various internal control and internal audit systems. The company follows the provisions of the "Code of Practice for the Governance of Listed Overseas Companies", strengthens the responsibilities of directors, protects the rights and interests of shareholders, and designates corporate governance personnel and supervisors.
(3)Others	The company has spokespersons and agent spokespersons, which serve as channels for the company to communicate with investors and stakeholders.
4.Supplier relations
(1) Pay attention to the rationality of the purchase price	In line with the spirit of cooperation and the premise of mutual trust and reciprocity in a community of life, the due rights and interests of both parties are safeguarded, and transaction conditions are determined through communication and coordination between both parties.
(2)Others	Maintain close contact with suppliers, affirm their support and look forward to closer cooperation to achieve great results.
5. Rights and interests of interested parties
(1) Respect intellectual property rights	Our company's computer software is used with legal authorization.
(2) Pay attention to the relationship with customers (such as protecting consumer rights and interests, paying attention toproductquality,safety	Before sales, the company's products are tested for various functions according to the requirements of individual customers to ensure that they meet customer quality requirements. The companycontinuouslyinvests in research

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Helps to understand corporate	Detailed description of the implemented situation or planned
governance operations Important information items	situation
and innovation, paying attention to and handling customer complaints immediately, providing complete product information, etc.)	and development, striving to improve product safety and energy saving, and handles customer complaints in the internal control system. Standardize the processing and after-sales service, understand and solve the problems raised by customers in the fastest way, and pay attention to the rights and interests of consumers. We also comply with contracts with customers, including relevant confidentiality agreements and integrity clauses. Depending on the situation, the company instructs specialized units to communicate with customers, and has contact information for business departments on the company's website.
(3) Comply with laws and regulations	The company assigns dedicated personnel to pay attention to relevant information such as law amendments and interpretations at all times. Information on law amendments related to labor and finance must be collected, publicized and conducted by relevant departments for education and training.
(4) Others (such as disclosing the implementation status of social responsibility policies on the companywebsite,etc.)	The company has formulated a code of practice for sustainable development and has disclosed the implementation of the sustainable development policy on the company's website.

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Attachment 5: 2023 directors' training status

Job title	Name	Study date	Organizer	Course Title	Training hours
Chairman	Liao Wenjia	2023/11/15	Foundation for Accounting Research and Development of the Republic of China	Carbon rights trading mechanism and carbon management application	3
				Outlook for the global economic situation in 2024	3
Director	Zeng Xueqing	2023/11/15	Foundation for Accounting Research and Development of the Republic of China	Carbon rights trading mechanism and carbon management application	3
				Outlook for the global economic situation in 2024	3
Legal Person Director	Jieshi Investment Co., Ltd. Representative: Yu Shaoyin	2023/11/15	Foundation for Accounting Research and Development of the Republic of China	Carbon rights trading mechanism and carbon management application	3
				Outlook for the global economic situation in 2024	3
Independent Director	Shen Zhenlin	2023/11/15	Foundation for Accounting Research and Development of the Republic of China	Carbon rights trading mechanism and carbon management application	3
				Outlook for the global economic situation in 2024	3
Independent Director	Zhang Naiwen	2023/11/15	Foundation for Accounting Research and Development of the Republic of China	Carbon rights trading mechanism and carbon management application	3
				Outlook for the global economic situation in 2024	3
Independent Director	Feng Zhiqing	2023/11/15	Foundation for Accounting Research and Development of the Republic of China	Carbon rights trading mechanism and carbon management application	3
				Outlook for the global economic situation in 2024	3

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• (4) If the company has established a remuneration committee or a nomination committee , it shall

• disclose its composition, professional qualifications and experience, independence,

responsibilities, operating conditions, and other recorded items :

Up to now, the company has not set up a nomination committee, and the information about the remuneration committee is detailed in the follow-up instructions:

1. Information on members of the Remuneration Committee

Separate	Condition Name	Professional qualifications and experience	Independence situation	The number of members of the remuneration committee of other publicly issued companies
Independent director (convener)	Zhang Naiwen	Master of Accounting, Chung Yuan University Bachelor of Business Administration, Tunghai University Financial Manager of Changyuan Technology Industrial Co., Ltd. Certified Public Accountants Director of Maiber Co., Ltd. Please also refer to the relevant content under the information of directors on page 7	Independent directors have obtained independent director declarations and qualification checklists to confirm their independence.	1
Independent director	Shen Zhenlin	Master of Economics, National Chung Hsing University Motech Co., Ltd. / Chief Financial Officer Sincere Information (Shares) Company/Chief Financial Officer and Senior Deputy General Manager Taiwan Semiconductor Manufacturing Co., Ltd./Deputy Director of Finance Kanglian Holdings Limited / Independent Director Spectrum Technology Co., Ltd./Independent Director Also refer to page 7 for Directors'Information	Independent directors have obtained independent director declarations and qualification checklists to confirm their independence.	1
Independent director	Feng Zhiqing	Master of Accounting, National Taiwan University Bachelor of Accountancy, National Chengchi University Qualified internal auditor Qualified as an enterprise appraiser Associate Director of Deloitte & Touche United Accounting Firm Certified public accountant of Zhongqin United Certified Public Accountants Certified Public Accountant of Yuanshi Certified Public Accountants Please also refer to the relevant content under the information of directors on page 7	Independent directors have obtained independent director declarations and qualification checklists to confirm their independence.	0

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1. Information on the operation of the Salary and Remuneration Committee

2. (1) The company's salary and compensation committee has 3 members.

3. (2) The term of office of the current committee members: from May 31 , 2022 to May 30 , 2025, the Salary and Remuneration Committee met four times in 2023 (A). The

qualifications and attendance of the members are as follows:

Job title	Name	Actual attendance Times (B)	Entrusted Attendance	Actual attendance rate (%) (B/A)	Remark
Convener	Zhang Naiwen	4	0	100
Member	Shen Zhenlin	4	0	100
Member	Feng Zhiqing	4	0	100
Other matters to be recorded: 1. If the board of directors does not adopt or revise the suggestion of the salary and compensation committee, it shall state the date, period, content of the proposal, the result of the resolution of the board of directors, and the company's handling of the opinions of the salary and compensation committee (such as the salary approved by the board of directors is better than that of the salary and compensation committee). Suggestions should describe the differences and reasons): None. (The operation of the Remuneration Committee in 2023 is detailed in Table 1). 2. For the resolutions of the salary and compensation committee, if members have objections or reservations and there are records or written statements, the date, period, content of the proposal, all members’ opinions and the handling of members’ opinions should be stated: None.

Attached Table 1: Operation of the Remuneration Committee in 2023.

	eration of the Remuneration Committee in 2023.
Salary committee Fourth session 1st 2023/1/16 Fourth session 2nd 2023/3/9	Proposal content and resolution results
	A. Year-end bonus case for managers of Parpro Corporation Groupin 2022
	Resolution result: The chairman consulted with all the attending members, and unanimously passed the resolution of handing over to the board of directors .
	The company's handling of the opinions of the remuneration committee : All directorspresent agreed topass.
	A. 2022 Annual employee remuneration and distribution of remuneration for directors and supervisors
	B. 2022 annual self- evaluation of directors

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	Resolution result: The chairman consulted with all the attending members, and unanimously passed the resolution of handing over to the board of directors .
	The company's handling of the opinions of the remuneration committee : All directorspresent agreed topass.
Fourth session 3rd 2023/11/9	A. Appointment case of general manager of the company
	Resolution result: The chairman consulted with all the attending members, and unanimously passed the resolution of handing over to the board of directors .
	The company's handling of the opinions of the remuneration committee : All directorspresent agreed topass.
Fourth session 4th 2023/12/13	A. Appointment case of Chief sustainability officer of the company and remuneration
	Resolution result: The chairman consulted with all the attending members, and unanimously passed the resolution of handing over to the board of directors .
	The company's handling of the opinions of the remuneration committee : All directorspresent agreed topass.

(5) The implementation of sustainable development and the differences and reasons for the

implementation of sustainable development and the code of practice for listed OTC companies :

promote the project			Execution situation	Differences and Reasons for Differences from the Code of Practice for Sustainable Development of Listed OTC Companies
	yes	no	summary description
1. Has the company established a governance structure to promote sustainable development, has set up a full-time (part-time) unit to promote sustainable development , and has the board of directors authorize the senior management to handle it, and the situation of the board of directors ' supervision ?	V		The company has established a sustainable strategic development department responsible for promoting the development of a sustainable environment and safeguarding social welfare. The chief sustainability officer serves as the convener. The sustainable strategic development department is responsible for: 1. Formulating and reviewing sustainable development policies and systems. 2. Plan and promote projects, deliver them to relevant departments for implementation after approval by the general manager, and report implementation results to the board of directors every year. On May 9, 2013, the board of directors reported on the implementation of sustainable development in 2012,as detailed in Appendix 1. The board	No major differences.

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promote the project			Execution situation	Differences and Reasons for Differences from the Code of Practice for Sustainable Development of Listed OTC Companies
	yes	no	summary description
			of directors listened to the report of the management team and instructed the management to formulate company strategies, evaluate the possibility of success of these strategies, and review them regularly. The progress of the strategy urges the management team to make adjustments.
2. Does the company conduct risk assessments on environmental, social and corporate governance issues related to the company's operations in accordance with the principle of materiality, and formulate relevant risk management policies or strategies?	V		Based on the materiality principle of sustainable development , the company conducts relevant risk assessments on important issues, and formulates relevant risk management policies or strategies based on the assessed risks, as detailed in Table 2.	No major differences.
3. Environmental Issues (一) Has the company established a suitable environmental management system according to its industrial characteristics? (二) Is the company committed to improving energy efficiency and using recycled materials with low impact on the environment? (三) Does the company assess the current and future potential risks and opportunities of climate change, and take relevant countermeasures? (四) Has the company made statistics on greenhouse gas emissions, water consumption and total waste weight in the past two years, and formulated policies for greenhouse gas reduction, water reduction or other waste management?	V V V V		The company has established the ISO-14001 environmental management system according to the characteristics of its industry. The company's products are dedicated to the design of energy saving and carbon reduction, and strive to reduce the generation of waste products and improve the recycling rate of waste products. The company has assessed the potential risks and opportunities of climate change on the company, and has taken corresponding measures, which are announced on the company website. The company has set greenhouse gas emissions, water use and waste reduction targets to reduce by 1~2% compared with the previous year. A self-inspection of carbon dioxide emissions in 2023 and 2022 revealed that the emissions in 2023 were approximately 17.14 metric tons, a decrease of approximately 4% compared with 2022. %; Water consumption: 25.6 metric tons in 2023, an increase of 10.7% compared with 2022; Total waste: Taiwan is the group's operation and management center and an office area, so no waste is generated. In addition, the company has taken into consideration the impact on the environment during all manufacturing processes and formulated various response strategies based on the characteristics of the industry in which it operates and the ISO-14001 environmental management system. In the "Environmental Protection and Management Operational Measures", greenhouse gas, water use and waste reduction strategies are formulated to minimize the impact on the environment and	No major differences. No major differences. No major differences. No major differences.

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promote the project			Execution situation	Differences and Reasons for Differences from the Code of Practice for Sustainable Development of Listed OTC Companies
	yes	no	summary description
			ecology.
4. Social Issues (一) Does the company formulate relevant management policies and procedures in accordance with relevant laws and regulations and international human rights conventions?	V		The company refers to international human rights conventions, conducts risk assessments on human rights issues in accordance with the "United Nations Universal Declaration of Human Rights", incorporates external expectations and communicates with stakeholders, identifies important human rights issues, and formulates the company's human rights policies. In addition, the company complies with the "Labor Standards Law", "GAnderson Industrial Corp.Work Equality Law", "Labor Pension Regulations", "Labor Leave Rules", "Employee Safety and Health Law", "Labor Insurance Regulations", "Employment Service Law" and Relevant laws and regulations formulate "work rules".	No major differences.
(二) Does the company formulate and implement reasonable employee welfare measures (including salary, vacation and other benefits, etc.), and properly reflect business performance or results in employee compensation?	V		The company has working rules and related personnel management regulations, which cover the basic wages, working hours, vacations, pension payments, labor and health insurance payments, occupational accident compensation, etc. of the employees employed by the company, all of which comply with the relevant provisions of the Labor Standards Law. The company pays year-end bonuses every year depending on the operating results and the employees' contribution to the company, performance, etc. Depending on the operating conditions and the price index, the company regularly adjusts the salaries of employees with outstanding performance. In addition, the company stipulates the employee remuneration policy in the company's articles of association, and distributes cash or stocks according to the company's annual operating results. In addition, the company has established an employee welfare committee to operate and handle various welfare activities through the welfare committee elected by employees. Other employee welfare measures and retirement systems are detailed onpages 78 -79 .	No major differences.
(三) Does the company provide employees with a safe and healthy working environment, and regularly implement safety and health education for employees?	V		The company handles labor safety and fire protection business in accordance with the provisions of the Labor Safety and Health Act and Fire Protection Regulations. Equipment and facilities are inspected and safety inspected once a year. Fire prevention, disasterprevention,first aid and other	No major differences.

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promote the project			Execution situation	Differences and Reasons for Differences from the Code of Practice for Sustainable Development of Listed OTC Companies
	yes	no	summary description
			prevention and disaster drills are carried out every six months , and fire drills are held twice every year. The company provides employees with a safe and healthy working environment, regularly implements environmental safety and health inspections, including equipment and working environment, and holds employee safety and health education and training every month.
(四) Has the company established an effective career development training program for employees?	V		All departments of the company formulate education and training plans, including job skills testing, and the results are used as the basis for career development.	No major differences.
(五) For issues such as customer health and safety, customer privacy, marketing and labeling of products and services, does the company follow relevant laws and international standards, and formulate relevant consumer or customer rights protection policies and complaintprocedures?	V		In order to improve customer service satisfaction, the company has established a "customer complaint handling procedure", establishes a customer-oriented feedback system, and comprehensively evaluates customer complaints and satisfaction with the company's products or services to understand customer needs and expectations.	No major differences.
(六) Does the company formulate supplier management policies, requiring suppliers to follow relevant norms on issues such as environmental protection, occupational safety and health, or labor rights, and their implementation?	V		The company has "supplier management operations" that require suppliers to comply with sustainable development responsibility commitments, including issues such as environmental protection, occupational safety and health, or labor rights. This management operation also includes a supplier assessment mechanism, in which the "Supplier Environmental Protection and Occupational Safety Self-Assessment Form" for the annual assessment of major suppliers is listed as an important scoring item. The annual assessment is classified according to the results. Those who fail to score will be dealt with according to regulations . Suppliers are expected to understand and cooperate with the company's determination to fulfill its responsibility for sustainable development . If they are found to be in violation of the company's established policies, they will suspend transactions or terminate relationships.	No major differences.
5. Does the company refer to internationally accepted standards or guidelines for preparing reports, and prepare reports such as sustainability reports that disclose non-financial information of the company? Has the previous disclosure report obtained the confirmation or guarantee opinion of a third-partyverification unit?		V	In discussion.	In discussion.

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promote the project	Execution situation	Execution situation	Execution situation	Differences and Reasons for Differences from the Code of Practice for Sustainable Development of Listed OTC Companies
	yes	no	summary description
6. If the company has its own sustainable development code based on the "Code of Practice for Sustainable Development of Listed OTC Companies", please describe the differences between its operation and the established code: The company has formulated a code of practice for sustainable development , which is currently implemented and operated in accordance with relevant regulations, and there is no major difference from the "Code of Practice for Sustainable Development of Listed OTC Companies".
7. Other important information that helps to understand the implementation of sustainable development: Please refer to Attachment 1.

Attachment 1:

tachment 1:
Social responsibility projects	Detailed description of executed or planned situations
Social responsibility projects	Detailed description of executed or planned situations
Environmental friendly	1. Actively promote environmental protection and care for the environment. The management department is responsible for promoting environmental protection matters and complying with environmental protection-related laws and regulations. It advocates saving electricity and formulates lighting plans to distinguish between daytime and nighttime to save unnecessary lighting. Control the use of air conditioners to save unnecessary energy expenditure. Carry out waste paper, publicity and reduce the use of disposable tableware, and continue to reduce and classify garbage to do ourpart for environmentalprotection.
Social contribution and services	1. The company is located in Zhongli District, Taoyuan City. The company's main consideration for recruiting talents is to live near the company. Currently, the vast majority of employees come from towns and cities near the company's location, creating more job opportunities for the local area. From time to time, we respond to public welfare activities initiated by various circles, donate money or materials to charities, and make regular donations to Taoyuan Friends of Rehabilitation Association , Peers Medical Culture and Education Foundation , Taoyuan Enterprise Federation and other groups every year. The total donation amount in 2023 years is NT$ 450 thousand.
Customer / Consumer Rights	The company has dedicated personnel to serve customers.
Human rights	1. The relationship between the company and its employees follows the provisions of the Labor Standards Act and other labor-related laws. It has established "work rules" and holds regular labor-management meetings. 2. New employees will receive new employee education and training after registration so that they can understand the current work standards and protect employee rights. The company provides various training courses such as management training, professional skills and self-development according to employees' work needs and career plans to provide employees with sufficient education and training. 3. When the company recruits employees, it is entirely based on whether their character and expertise meet the needs, regardless of their gender, age, ethnicity, etc. We take care of the disabled and other vulnerable people, safeguard the rights and interests of all people, and comply with laws and regulations on the prevention and control of sexual harassment, taking allpossible care to ensure that employees are free from harassment and discrimination.

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1. We pay attention to environmental hygiene and greening and landscaping to provide employees with a safe and comfortable working environment. 5. 2023 Family Day Fei Niu Ranch 1-Day Roast Day event was successfully concluded. 6. 2023 of subsidies for self-guided travel for employees to encourage employees to relieve their daily work pressure and relax at appropriate times. The company has carried out supervision and management operations in accordance with the matters stipulated in labor safety and health laws, so that colleagues can understand the importance of safety and health, and understand the environmental overview of the workplace, Health and Safety occupational hazard factors, labor safety and health laws and regulations, and various safety and health regulations. The correct use of protective equipment is essential to prevent the occurrence of occupational disasters and ensure worker safety and health.

Attachment 2: Implementation Results of Promoting Sustainable Development

Social Responsibility Project	Specific description of the implemented situation or planned situation
Environmental friendly	Actively promote environmental protection and care for the environment. The management department is responsible for promoting environmental protection matters, and complying with environmental protection related laws and regulations, advocating energy saving, formulating lighting plans to distinguish between day and night, saving unnecessary lighting; controlling the use of air conditioners to save unnecessary power expenditure. Carry out waste paper, publicize and reduce the use of disposable tableware, and continue to reduce and sort garbage to contribute to environmentalprotection.
Social Contribution and Service	The company is located in Zhongli District, Taoyuan City. The main consideration for the company's recruitment is to live near the company. At present, most of the employees come from towns and cities near the company's location, creating more job opportunities for the local area. In addition, it responds to public welfare activities initiated by various circles from time to time, donates money or materials to charitable organizations, and regularly donates to Taoyuan Friends of Rehabilitation Association and Mingpei Medical Culture and Education Foundation and othergroups every year. The total donation amount in 2022 is NT$500,000.
Customer / Consumer Rights	The company has full-time staff to serve customers.
Human rights	The relationship between the company and its employees follows the Labor Standards Act and other labor-related laws and regulations. It has established "work rules" and holds regular labor-management meetings. After the newcomers report to work, they will conduct newcomer education and training, so that the newcomers can understand the current work norms and protect the rights of employees. According to the work needs and career planning of employees, the company provides various training courses such as management training, professional skills and self-development, so as to provide employees with sufficient education and training. When recruiting employees, the company fully considers whether their character and expertise meet the needs, regardless of their gender, age, ethnic group...etc. We will do our best to take care of the disabled and other vulnerable people, safeguard the rights and interests of all people, and follow laws and regulations to prevent sexual harassment, and do our best to ensure that employees are free from harassment and discrimination. Pay attention to environmental sanitation and green landscaping to provide employees with a safe and comfortable working environment. To have interaction, the parent-child one-day tour of the Spring Festival, which was originally held regularly,was temporarilysuspended due to the epidemicpreventionpolicy. Subsidize

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employees to travel on their own. The number of subsidized people and the amount of subsidy are 11 people and NT$110,000. The company has carried out supervision and management operations in accordance with the labor safety and health laws and regulations, so that colleagues understand the importance of safety and health, understand the environmental situation of the workplace, occupational Health and Safety hazards, labor safety and health related laws and regulations, and various safety and health protection The correct use of the tool is used to prevent the occurrence of occupational accidents and ensure the safety and health of workers.

Schedule II: Risk Management Policy or Strategy

major issues	Risk Assessment Project	Risk Management Policyor Strategy
Environment	Environmental Protection and Ecological Conservation	In accordance with the ISO14001 environmental management system specification, the company is committed to environmental protection, responds to green and clean production, and effectively reduces pollution emissions and the impact on the environment; at the same time, it formulates implementation plans and programs every year, and regularly tracks and reviews them The progress of each goal to ensure the achievement of thegoal.
Society	Occupational safety	In accordance with the ISO14001 environmental management system specification, the company conducts various industrial safety inspections and checks on a daily basis to implement the occupational safety and health management system; secondly, regularly holds fire drills and industrial safety education and training every year to cultivate employees' abilityto respond to emergencies and self-safetymanagement ability.
	Product Safety	The company's products comply with various government product and service laws and regulations, and do not contain any hazardous substances. And through strict quality system management, we provide customers with stable product quality. At the same time, in order to ensure customer service quality and improve customer satisfaction, we set up customer service hotlines and communication websites, and actively conduct customer service satisfaction surveys every year to strengthen the relationship with customers. The cooperative relationship with customers has become the cornerstone of the sustainable development of the enterprise through the mutual benefit and co-prosperity relationship with customers.
Corporate Governance	Socioeconomic and Legal Compliance	Through the establishment of a governance organization and the implementation of an internal control mechanism, it is ensured that all personnel and operations of the company truly comply with relevant laws and regulations.
		Insure directors' liability insurance to protect directors from lawsuits or claims

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(6) Climate-related information of listed companies :

A. Implementation of climate-related information

Project	Execution situation
1. Describe the board and management’s oversight and governance of climate-related risks and opportunities. 2. Describe how the identified climate risks and opportunities affect the company's business, strategy and finance (short-term, medium-term, long-term). 3. Describe the financial impact of extreme climate events and transition actions.	The Company’s Board of Directors is the highest governance unit on climate-related issues and is responsible for supervising and managing climate-related risks and opportunities. In order to assist the board of directors in continuously promoting various aspects of corporate environmental, social and corporate governance operations to achieve the purpose of sustainable management, the company established the "Sustainability Strategy Development Department" in 2023 , with the chief executive serving as the chairman and the heads of each unit . Serve as a member, responsible for the proposal and implementation of sustainable development policies, systems or related management guidelines and specific promotion plans , and regularly report operational results and implementation status to the board of directors . Short-term: There may be risks of operational interruption due to extreme weather conditions such as typhoons, floods, and droughts, as well as rising raw material costs and government imposition of carbon and energy-related taxes, which will increase operating costs. It is necessary to strengthen various disaster prevention facilities and use low-cost carbon energy, and adopt more efficient production, distribution, and transportation methods to respond. Mid-term: Customers may require green production, and it is necessary to develop channels for obtaining low-carbon raw materials to reduce costs. Water restriction measures, increased electricity consumption due to warming , etc. may occur , resulting in suppliers being unable to produce and deliver on time , resulting in reduced production capacity and increased infrastructure costs. It is necessary to improve the overall disaster response capacity, introduce green procurement, and develop diversified Alternative energy sources to reduce risk impact. Facing the risk of abnormal weather, natural disasters such as typhoons , floods, droughts and other extreme weather risks of operational interruption. The financial impact is: revenue loss and cost increase. Regarding climate-related transformation actions , such as: (1) Risks related to carbon reduction policies and regulations. (2) Control of corporate carbon footprint and greenhouse gas emissions. (3) When purchasing, it is necessary to evaluate whether the supply chain complies with relevant policies and regulations. The financial impact is: increased costs.
4. Describe how climate risk identification, assessment and management processes are integrated into the overall risk management system. 5. If scenario analysis is used to assess resilience to climate change risks, the scenarios, parameters, assumptions, analysis factors and main financial impacts used should be explained.	Under discussion . Under discussion .

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Project

Execution situation

6. If there is a transformation plan to manage climate-related risks, describe the content of the plan, and the indicators and goals used to identify and manage physical risks and transformation risks. 7. If internal carbon pricing is used as a planning tool, the basis for setting the price should be stated. 8. If climate-related goals are set, information such as the activities covered, greenhouse gas emission scope, planning schedule, annual achievement progress, etc. should be explained; if carbon offsets or renewable energy certificates (RECs) are used to achieve relevant goals, information such as Explain the source and quantity of carbon reduction credits or the quantity of renewable energy certificates (RECs) being redeemed . 9. Greenhouse gas inventory and confirmation, reduction goals, strategies and specific action plans ( fill in 1-1 and 1-2 separately) .

Under discussion . Under discussion . Under discussion . Details are as explained in 1-1 and 1-2.

1-1 The company’s greenhouse gas inventory and confirmation status in the last two years

1-1-1 Greenhouse gas inventory information

Describe the emission volume (metric tons CO2e), intensity (metric tons CO2e/million yuan) and data coverage of greenhouse gases in the past two years.

1-1-1 Greenhousegas inventoryinformation	1-1-1 Greenhousegas inventoryinformation	1-1-1 Greenhousegas inventoryinformation
Describe the emission volume (metric tons CO2e), intensity (metric tons CO2e/million yuan) and data coverage ofgreenhousegases in thepast twoyears.
		According to the provisions of the sustainable development road map of listed companies, at least □ Parent company individual investigation □ Consolidated financial reporting subsidiary inventory □ The parent company is personally convinced □ Consolidated financial reporting of subsidiaries ■ The company has not yet met the standards that should be disclosed
	Basic information of the company □ Companies with capital of more than 10 billion, steel industry, cement industry □ Companies with capital of more than 5 billion but less than 10 billion ■ Companies with capital of less than NT$5 billion	According to the provisions of the sustainable development road map of listed companies, at least □ Parent company individual investigation □ Consolidated financial reporting subsidiary inventory □ The parent company is personally convinced □ Consolidated financial reporting of subsidiaries ■ The company has not yet met the standards that should be disclosed

Note 1: Direct emissions (Category 1, that is, directly from emission sources owned or controlled

by the company), indirect energy emissions (Category 2, that is, indirect greenhouse gas emissions from the input of electricity, heat or steam) and Other indirect emissions

45

• (Category 3 , i.e. emissions generated by company activities, are not indirect emissions from energy, but come from emission sources owned or controlled by other companies).

• Note 2: The coverage of direct emissions and energy indirect emissions data shall be handled in accordance with the timetable specified in the order specified in Paragraph 2 of Article 10 of these Guidelines. Other indirect emissions information may be disclosed voluntarily.

• Note 3: Greenhouse gas inventory standard: Greenhouse Gas Protocol (GHG Protocol) or ISO 14064-1 issued by the International Organization for Standardization ( ISO).

• Note 4: The intensity of greenhouse gas emissions can be calculated per unit of product/service or turnover, but at least the data calculated in terms of turnover (NT$ million) should be stated.

1-1-2 Greenhouse Gas Confirmation Information

Two years as of the publication date of the annual report , including the scope of the confidence, the organization of the confidence, the criteria for the confidence and the opinion of the confidence.

Not applicable.

• 1-2 Greenhouse gas reduction goals, strategies and specific action plans

Describe the greenhouse gas reduction base year and its data, reduction targets, strategies, specific action plans and achievement of reduction targets.

The company has not yet completed its greenhouse gas inventory and does not need to set a base year for greenhouse gas reduction .

Set a greenhouse gas reduction target : reduce annual emissions by 1 to 2% compared to the previous year.

Greenhouse gas reduction strategy : The company continues to develop energy-saving,

waste-reducing and high-efficiency equipment in line with its sustainable business strategy. Specific action plan :

1. Replace old official vehicles and purchase electric (gasoline) vehicles.

2. Promote energy and water conservation policies, use electrical equipment with Green Energy

46

trademarks and set air conditioning temperature and time control.

1. Continue to replace ordinary fluorescent lamps with high power consumption into T5 lamps or LED lamp sets.

2. Continue to look for new green energy materials or energy opportunities.

3. The packaging boxes, wooden boxes, etc. of the supplier's packaging parts are returned to the supplier for reuse.

4. Reduce the use of packaging materials for shipped products.

5. New product development and design give priority to energy-saving and environmentally friendly parts.

Achievement of reduction target : Not applicable.

Note 1: It should be handled in accordance with the timetable specified in the order stipulated in

Article 10, Paragraph 2 of these Guidelines.

• Note 2: The base year should be the year in which the review is completed based on the boundaries of the consolidated financial report. For example, in accordance with the provisions of Article 10, Paragraph 2 of these Standards, companies with a capital of more than 10 billion should complete the consolidated financial report in 2025. Inventory, so the base year is 2024. If the company has completed the inventory of consolidated financial reports in advance, the earlier year can be used as the base year. In addition, the data in the base year can be calculated as the average of a single year or several years.

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(6) The performance of integrity management and the differences and reasons from the integrity management code of listed OTC companies :

evaluation items	Operating situation	Operating situation	Operating situation	The situation and reasons for the differences with the Code of Integrity Management of listed OTC companies
	yes	no	Summary description
1. Formulate integrity management policies and plans (1) Does the company formulate an honest management policy approved by the board of directors, and clearly state the policy and practices of honest management in regulations and external documents, as well as the commitment of the board of directors and senior management to actively implement the business policy? (2) Whether the company has established a risk assessment mechanism for dishonesty, regularly analyzes and evaluates business activities with relatively high risks of dishonesty within the scope of business, and formulates a plan to prevent dishonesty based on this, and at least covers "listing on the OTC market" What are the preventive measures for the behaviors in the second paragraph of Article 7 of the company's code of integrity management ? (3) Does the company clearly define operating procedures, behavior guidelines, punishment and appeal systems for violations in the dishonesty prevention plan, and implement them, and regularly review and revise the previous disclosure plan?	V V V		The company has established the "Code of Integrity Management" and "Code of Ethical Conduct", which have been approved by the board of directors and announced in the company's internal regulations and company website. The board of directors and senior management are committed to implementing them. The company has established the "Code of Integrity Management" and "Code of Ethical Conduct", and conducts a risk assessment of dishonesty behavior once a year. For bribery and bribery, illegal political donations, improper charitable donations or sponsorships, etc. 7 items that affect business Develop preventive measures for dishonest activities and announce them to directors and employees. In order to prevent any dishonest behavior, the company has formulated the "Code of Integrity Management" and "Code of Ethical Conduct"; the punishment for violations is implemented in accordance with the "reward and punishment" stipulated in the work rules; Handling Measures for Cases of Dishonest Behavior” to appeal in the “Stakeholder Zone” of the company’s website, and regularly review the implementation and implementation status once ayear.	no major difference no major difference no major difference
2. Implement integrity management			Currently, before a transaction with a manufacturer, the organizer will review the past transaction records and search for the information of the company on the Internet to confirm whether the manufacturer has a record of dishonest behavior and obtain a letter of commitment to honest operation.	no major difference
(1) Does the company evaluate the integrity records of its counterparties, and specify the terms of honest behavior in the contracts it signs with its counterparties ?	V

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evaluation items			Operating situation	The situation and reasons for the differences with the Code of Integrity Management of listed OTC companies
	yes	no	Summary description
(2) Has the company set up a unit responsible for promoting corporate integrity management under the board of directors, and regularly (at least once a year) report to the board of directors its integrity management policies, plans for preventing dishonest behavior, and supervision and implementation?	V		An integrity management group is set up under the chairman's office, with the chairman as the convener. This group's job duties are to ensure the implementation of the integrity management code, and report to the board of directors once a year on the integrity management policy and the plan to prevent dishonest behavior and supervise the implementation.	no major difference
(3) Does the company formulate policies to prevent conflicts of interest, provide appropriate channels for statements, and implement them? (4) Whether the company has established an effective accounting system and internal control system in order to implement honest management, and the internal audit unit draws up relevant audit plans based on the assessment results of dishonesty risks, and checks the plan for preventing dishonesty Follow the situation, or commission an accountant to perform the check? (5) Does the company hold regular internal and external education and training on integrity management?	V V V		The company formulates the policy of preventing conflicts of interest in the "Code of Ethical Conduct", and provides employees with the opportunity to report to managers, internal audit supervisors or other appropriate personnel when they suspect or discover violations of laws and regulations or the "Code of Ethical Conduct". In addition, the company has set up a reporting system on the website to provide employees and related personnel to report any improper business practices, which will be directly handled by the chairman. The company has established an effective accounting system and internal control system to ensure the implementation of honest management, and the audit office prepares an annual audit plan based on the assessment results of the risk of dishonesty, and checks the compliance with the preceding system. The company has organized internal and external integrity management education and training related to integrity management issues for 2023, with a total of 22 person-times and a total of 33 hours.	no major difference no major difference no major difference
3. The operation of the whistleblowing system of the company (1) Has the company established a specific whistleblowing and reward system, established channels to facilitate whistleblowing, and assigned appropriate specialists to handle whistleblowers?	V		The company has formulated the "Measures for Handling Cases of Reporting Illegal, Unethical or Dishonest Behaviors" to specify the reporting, reward system and reporting channels; it also has an employee suggestion box so that employees have a complaint mechanism and channels. There are complaint mailboxes for customers, suppliers and employees on the company website, which are handled by the chairman's office.	no major difference

49

evaluation items	Operating situation	Operating situation	Operating situation	The situation and reasons for the differences with the Code of Integrity Management of listed OTC companies
	yes	no	Summary description
(2) Has the company established a standard operating procedure for the investigation of the reported matter, the follow-up measures to be taken after the investigation is completed, and the relevant confidentiality mechanism? (3) Has the company adopted measures to protect the whistleblower from being improperly dealt with due to whistleblowing?	V V		The company's "Handling Measures for Reporting Illegal, Unethical or Dishonest Behavior Cases" has investigation procedures and a confidentiality mechanism. In the above measures, the company guarantees that the colleague will not be dealt with improperly due to reporting.	no major difference no major difference
4. Strengthen information disclosure the content of its integrity management code and promote its effectiveness on its website and public information observation station ?	V		The "Code of Integrity Management", "Code of Ethical Conduct" and "Measures for Reporting Illegal, Unethical or Dishonest Behavior Cases" have been disclosed on the company website and public information observation station, and a "Corporate Integrity Management Zone" has been established on the company website Exposure drives results. In 2022, there has been no dishonesty and no reportingincidents	no major difference
of Integrity Management for Listed OTC Companies" , please describe the differences between its operation and the established code: No major differences.
6. Other important information that is helpful to understand the company's integrity management and operation: (such as the company's review and revision of its integrity management code, etc.) On March 17, 2015, the company's board of directors resolved to revise the "Code of Integrity Management". On March 17, 2015, the company's board of directors passed a resolution to formulate the "Code of Ethical Conduct". On August 15, 2016, the company approved and formulated the "Measures for Handling Cases of Reporting Illegal, Unethical or Dishonest Behaviors".

• (7) If the company has formulated corporate governance codes and related regulations, it shall disclose its inquiry method:

The company has "Investor Relations" on the company website for inquiries.

• (8) Other important information sufficient to enhance the understanding of the operation of corporate governance may be disclosed together:

• The company has an "Investor Relations" on the company website for inquiries.

2 .2023 manager training situation:

Job title	Name	Study date	organizer	Course Title	Training hours
Chairman	Liao Wenjia	2023/11/15	Securities and Futures Market Development Foundation of the Republic of China	Outlook for the global economic situation in 2024	3

50

Job title	Name	Study date	organizer	Course Title	Training hours
		2023/11/15	Securities and Futures Market Development Foundation of the Republic of China	Carbon rights trading mechanism and carbon management application	3
Deputy General Manager and Chief Financial Officer	Wu Hsiu Pi	2023/10/26 To 2023/10/27	Accounting Research and Development Foundation of the Republic of China	Continuing training courses for accounting supervisors of issuers, securities companies and stock exchanges	12
		2023/11/15	Securities and Futures Market Development Foundation of the Republic ofChina	Outlook for the global economic situation in 2024	3
		2023/11/15	Securities and Futures Market Development Foundation of the Republic ofChina	Carbon rights trading mechanism and carbon management application	3
Finance Department manager	Lee Shenlung	2023/4/27	Taiwan Stock Exchange/Securities Over-the-Counter Trading Center	Publicity meeting on sustainable development action plans for listed companies	3
		2023/12/14 To 2023/12/15	Accounting Research and Development Foundation of the Republic of China	Continuing training courses for accounting supervisors of issuers, securities companies and stock exchanges	12
Audit Manager	Cai Shuhua	2023/10/24	Internal Audit Association of the Republic of China	Information Business Verification Practical Workshop	6
		2023/12/19	Internal Audit Association of the Republic of China	How to Use Excel Functions to Improve Auditing and Financial Efficiency Practical Workshop	6

• (9) Implementation status of internal control system

• Statement of Internal Control System: Please refer to page 103 .

• Those who entrust an accountant to review the internal control system shall disclose the accountant's review report: Not applicable .

• (10) In the most recent year and as of the date of publication of the annual report, the company and its internal personnel have been punished according to law, or the company has punished its internal personnel for violating the provisions of the internal control system, and the punishment result may have a significant impact on shareholders' rights and interests or securities prices, The content of the punishment, main deficiencies and improvements should be listed : none.

• (11) Important resolutions of the shareholders' meeting and the board of directors in the most recent year and up to the date of publication of the annual report

  1. Important resolutions and implementation of shareholders' meeting in 2023 :

51

Meeting date		Important Resolutions and Implementation Status
2023/5/30	1. 2. 3. 4. 5.	Acknowledge the 2022 annual business report and financial statement . Acknowledge the 2022 Earnings distribution case. Approved the revision of some articles of the "Articles of Association". Execution status: After the 2023 shareholders' general meeting passed the change registration with the Ministry of Economic Affairs within 15 days, and the approval was obtained on 2023/6/16 . Approved the revision of some articles in the "Operational Procedures for Fund Loans to Others". Implementation status: It will be applicable immediately after approval at the 2023 regular meeting of shareholders. Approved the revision of some articles in the "Rules of Procedure for Shareholders' Meetings". Execution status: It will be applicable immediately after approval at the 2023 regular meeting of shareholders.

1. Important resolutions of the board of directors in the most recent year and as of the publication date of the annual report:

Meeting date	Important Resolutions	Matters listed in Article 14-3 of the Securities and Exchange Act	Independent directors object or reserve opinions
2023/1/16	Year-end bonus case for the managers of Parpro Group in 2022 .	-	None
2023/3/9	2022 annual business report and financial statements.	-	None
	The2022 Auditors independence and performance evaluation review case.	V	None
	2022"Internal Control Statement"case.	V	None
	Amend some articles of the "Articles of Association".	V	None
	Amend some provisions of the "Operational Procedures for Fund Loans to Others".	V	None
	The 2023 regular meeting of shareholders was convened.	-	None
	The company's greenhouse gas inventory and verification schedule plan.	-	None
	PARPRO TECHNOLOGIES capital loan to AP PARPRO case.	V	None
	It is planned to handle the issuance of the fourth domestic unsecured conversion corporate bonds.	V	None
	2022 Employeeremunerationand director	-	None

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Meeting date	Important Resolutions	Matters listed in Article 14-3 of the Securities and Exchange Act	Independent directors object or reserve opinions
	and supervisor remuneration distribution case.
	2022 Annual self-evaluation of directors.	-	None
2023/4/13	2022 Annual Earnings distribution case.	V	None
	Amend some provisions of the "Rules of Procedure for Shareholders'Meetings".	V	None
	Bank line credit case.	-	None
	The 2023 regular meeting of shareholders was convened.	-	None
2023/5/11	2022 1st Quarter Financial Statements .	-	None
	The case of convertible corporate bonds being exchanged for new shares.	-	None
	Bank line credit case.	-	None
	PARPRO TECHNOLOGIES capital loan to AP PARPRO case.	V	None
	PARPRO TECHNOLOGIES loan to PARPRO NEVADA case.	V	None
2023/8/10	Financial report for the first half of 2023.	V	None
	The case of convertible corporate bonds being exchanged for new shares.	-	None
2023/9/21	Capital increase in overseas subsidiary Parpro Holdings and capital increase in US subsidiary AP Parpro.	V	None
	Amend the company's inventory age profiling policy.	-	None
	Formulate the audit method plan for pre-approval of non-confidence services provided by certification auditors.	-	None
	Bank line credit case.	-	None
	Revise the internal control "Internal Control of Other Operations" and its implementation details.	V	None
2023/11/9	Financial report case for the third quarter of 2023.	-	None
	The company's audit plan for the 2024.	V	None
	Bank line credit case.	-	None
	The appointment of the company’s general manager.	-	None
2023/12/13	2024 annual budget.	-	None
	Cancellation of treasury shares case.	-	None
	The case of convertible corporate bonds being exchanged for new shares.	-	None
	The company’s permanent employment and remuneration case.	-	None
2024/1/25	2023 year-end bonus case for group managers.	-	None
2024/3/13	2023 annual business report and financial	-	None

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Meeting date	Important Resolutions	Matters listed in Article 14-3 of the Securities and Exchange Act	Independent directors object or reserve opinions
	statements.
	The 2023 annual audit independence and performance evaluation review case.	V	None
	2023"Internal Control Statement"case.	V	None
	PARPRO TECHNOLOGIES capital loan to AP PARPRO case.	V	None
	The company's capital loan to AP PARPRO case.	V	None
	The case of convertible corporate bonds being exchanged for new shares.	-	None
	Revise some provisions of internal major information processing procedures.	V	None
	Bank line credit case.	-	None
	The convening of the 2023 regular meeting of shareholders.	-	None
	2023 annual employee remuneration and remuneration distribution case for directors and supervisors.	-	None
	Self-evaluation case of the 2023 Board of Directors, Board Members and Functional Committees.	-	None
	2023 Year Profit Distribution Case.	-	None
	Nomination of candidates for director of the company.	-	None
	PARPRO TECHNOLOGIES capital to and AP PARPRO case.	V	None
	The company's capital loan to AP PARPRO case.	V	None

(12) In the most recent year and as of the date of publication of the annual report , if directors or supervisors have different opinions on important resolutions passed by the board of directors and there are records or written statements, the main content: None.

(13) Summary of the resignations and dismissals of the company's chairman, general manager, accounting supervisor, financial supervisor, internal audit supervisor, corporate governance supervisor, and R&D supervisor in the most recent year and as of the publication date of the annual report :

POSITION	NAME	DATE OF APPOINTMENT	DATE OF RESIGNED	REASON FOR RESIGNATION OR DISMISSAL
General Manager	Liao Wenjia	2010/4/14	2023/11/09	Meet operational needs

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4. Public independent auditors information

				Amount	unit : NT$thousand	unit : NT$thousand
Audit Firm	CPAs Name	Audit period	Audit fees	Non-audit fees (Note)	Total	Remark
Deloitte& Touche United Audit Firm	Chen Peide	2023/1/1 To 2023/12/31	4,800	30	4,830	Note
	Chen Junhong

• Note: The content of the non-audit service at public expense refers to the salary review public expense of full-time employees who are not in supervisory positions.

• If the audit firm is changed and the audit fee paid in the replacement year is less than the audit fee in the previous year, the amount of audit fees before and after the change and the reasons shall be disclosed : there is no such case.

• If the audit public fee has decreased by more than 10% compared with the previous year, the amount, proportion and reason of the audit public fee reduction shall be disclosed: there is no such case.

• Change of CPA information: No such case.

• The company's chairman , general manager, and manager in charge of financial or accounting affairs, who have worked in a certification auditors firm or its affiliated companies in the past year, shall disclose their names, titles, and employment status in a certification accounting firm or its affiliates . The period of the affiliated enterprise. The term "affiliated enterprises of the certified auditor firm" refers to the accountants of the certified accounting firm holding more than 50% of the shares or obtaining more than half of the directors' seats, or listed as affiliated enterprises in the materials released or published by the certified auditor firm Company or institution: None .

55

1. In the most recent year and as of the date of publication of the annual report, directors, supervisors, managers, and shareholders holding more than 10% of the shares have been transferred and pledged:

(1) Changes in equity

(1) Changes	in equity
Job title	name	2023		As of April 2,2024
		Number of shares held increase (decrease) number	Pledged shares increase (decrease) number	Number of shares held increase (decrease) number	Pledged shares increase (decrease) number
Chairman and General Manager (Major shareholder)	Liao,Wenjia	0	0	0	0
Director	Zeng, Xueqing	0	0	0	0
Legal Person Director	Jieshi Investment Co., Ltd.	0	0	0	0
Independent Director	Shen,Xiaoling	0	0	0	0
Independent Director	Zhang, Naiwen	0	0	0	0
Independent Director	Feng, Zhiqing	0	0	0	0
General Manager	Yan,Congqian.	0	0	0	0
General Manager of Overseas Operations	Thomas Sparrvik	0	0	0	0
Director and Chief Financial Officer	Wu,Hsiupi	(100,000)	0	0	0
Senior Manager	Ye Jianshen	0	0	0	0
Finance Manager	Lee,Shen-Lung	0	0	0	0

Note: In order to meet the company's operational needs, Mr. Yan Congqian took over as general manager on November 9, 2023.

• (2) If the relative of the equity transfer is a related party: None.

• (3) If the counterparty of the equity pledge is a related party: None.

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1. Information on the relationship between the top ten shareholders who hold the largest shareholding ratio, and whether they are related parties in the Financial Accounting Standards Bulletin No. 6 or spouses or relatives within the second degree:

Unit : share; April 2 , 2024

							Unit : share; April 2	Unit : share; April 2	, 2024
Name	Cur	rent	Shares held by spouse and minor children		Holding shares oth	in the name of ers	For the top ten shareholders who have financial and accounting standards bulletin No. 6 related persons or relatives within the spouse or second degree, their names or names and relationships		Note
	Share	holding
	Number of shares	Share-	Number of shares	Share-	Number of shares	Share-	Name	Relaionship
		holding ratio (%)		holding ratio (%)		holding ratio (%)
Liao Wenjia	8,071,942	8.20	0	0	17,085,879	17.37	Liao Lizhengzi Yunyong Investment Co., Ltd. Jieshi Investment Co., Ltd. Paide Investment Co., Ltd.	1.The chairman of the company and Yunyong Investment, Jieshi Investment, Paide Investment and other four companies are the same person. 2. Liao,Wenjia and Liao Lizhengzi are relatives of the same degree.	None
									None
									None
Yunyong Investment Co., Ltd.	7,500,865	7.62	0	0	0	0	Liao,Wenjia Liao Lizhengzi Jieshi Investment Co., Ltd. Paide Investment Co., Ltd.		None
									None
Representative: Liao Wenjia	8,071,942	8.20	0	0	17,085,879	17.37			None
Jieshi Investment Co., Ltd.	5,830,415	5.93	0	0	0	0	Liao,Wenjia Liao Lizhengzi Yunyong Investment Co., Ltd. Paide Investment Co., Ltd.		None
									None
Representative: Liao Wenjia	8,071,942	8.20	0	0	17,085,879	17.37			None
Paide Investment Co., Ltd.	3,754,599	3.82	0	0	0	0	Liao,Wenjia Liao Lizhengzi Yunyong Investment Co., Ltd. Jieshi Investment Co., Ltd.		None
									None
Representative: Liao Wenjia	8,071,942	8.20	0	0	17,085,879	17.37			None
Chen Lili	780,000	0.79	0	0	0	0	None	None	None
Citi custody Berkeley Capital SBL/PB investment account	640,000	0.65	0	0	0	0	None	None	None
Li Rongfu	568,000	0.58	0	0	0	0	None	None	None
You Benhong	458,000	0.47	0	0	0	0	None	None	None
Chen Jinchuan	300,000	0.30	0	0	0	0	None	None	None
Liao Lizhengzi	267,473	0.27	0	0	0	0	Liao,Wenjia Yunyong Investment Co., Ltd. Jieshi Investment Co., Ltd. Paide Investment Co., Ltd.	Liao,Wenjia and Liao Lizhengzi are relatives of the same degree.	None

57

1. The number of shares held by the company, its directors, supervisors, managers, and enterprises directly or indirectly controlled by the company in the same reinvested enterprise, and calculate the comprehensive shareholding ratio:

			March 31 , 2024 ; unit: thousand shares; %	March 31 , 2024 ; unit: thousand shares; %	March 31 , 2024 ; unit: thousand shares; %	March 31 , 2024 ; unit: thousand shares; %
Invest in business	The company invests		Investments of directors, supervisors, managers, and directly or indirectly controlled enterprises		Comprehensive investment
	Number of shares(thousand shares)	Shareholding ratio	Number of shares(thousand shares)	Shareholding ratio	Number of shares(thousand shares)	Shareholding ratio
Efa Technologies Corporation	3,272	100%	－	－	3,272	100%
Parpro Holdings Co., Ltd	42	100%	－	－	42	100%
Anderson Industrial Corp..	39,904	20.86%	－	－	39,904	20.86%
Sogotec Precision Co., Ltd.	960	4.73%	485	2.39%	1,445	7.12%
AP Parpro, Inc.	7	100%	－	－	7	100%
Pilot (Las Vegas), Inc.	1	100%	－	－	1	100%
Parpro (Nevada), Inc.	1	100%	－	－	1	100%
Parpro Quality, Inc.	23,500	100%	－	－	23,500	100%
Parpro Technologies, Inc.	13	100%	－	－	13	100%

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IV. Fundraising situation

1. Capital and shares

(1) Source of share capital

A. Source of equity

Unit: NT$ thousand/thousand shares

years	Issued p r i c e	Approved share capital	Approved share capital	Paid-in share capital	Paid-in share capital	Remark	Remark	Remark	Remark
		Number of shares	Amount	Number of shares	Amount	Source of equity		Using property other than cash to offset the share capital	Other
Dec.,2 00 1	10	3,00 0	30,0 00	1,00 0	10,0 00	Set up Capital		-	N o t e 1
Oct., 20 03	10	3,00 0	30,0 00	1,50 0	15,0 00	Cash capital increase	5 , 0 0 0 t h o u s a n d	-	N o t e 2
Oct., 20 06	10	3,00 0	30,0 00	2,00 0	20,0 00	Cash capital increase	5 , 0 0 0 t h o u s a n d	-	N o t e 3
Oct., 20 08	10	8,00 0	80,0 00	3,50 0	35,0 00	Cash capital increase Surplus capital increase	1 0 , 0 0 0 t h o u s a n d 5 , 0 0 0 t h o u s a n d	-	N o t e 4
Aug., 20 09	10	8,00 0	80,0 00	6,66 0	66,6 00	Surplus capital increase	3 1 , 6 0 0 t h o u s a n d	-	N o t e 5
Oct., 20 09	10	30,0 00	30 0,00 0	15,0 00	15 0,00 0	Cash capital increase	8 3 , 4 0 0 t h o u s a n d	-	N o t e 6
Aug., 20 10	10	30,0 00	30 0,00 0	19,5 00	19 5,00 0	Surplus capital increase	4 5 , 0 0 0 t h o u s a n d	-	N o t e 7
Sep.,20 11	10	30,0 00	30 0,00 0	21,4 50	21 4,50 0	Surplus capital increase	1 9 , 5 0 0 t h o u s a n d	-	N o t e 8
Ap r.,20 12	10	30,0 00	30 0,00 0	23,9 50	23 9,50 0	Cash capital increase	2 5 , 0 0 0 t h o u s a n d	-	N o t e 9
Aug., 20 12	10	30,0 00	30 0,00 0	25,1 47	25 1,47 5	Surplus capital increase	11 , 9 7 5 t h o u s a n d	-	N o t e 1 0
Jul.,2 01 3	10	65,0 00	65 0,00 0	60,3 54	60 3,54 0	Surplus capital increase	3 5 2 , 0 6 5 t h o u s a n d	-	N o t e 11
Dec.,2 01 3	10	10 0,00 0	1,00 0,0 00	67,8 99	67 8,99 0	Cash capital increase	7 5 , 4 5 0 t h o u s a n d	-	N o t e 1 2
Jan.,2 01 7	10	10 0,00 0	1,00 0,0 00	69,4 07	69 4,06 5	Corporate bond conversion	1 5 , 0 7 5 t h o u s a n d	-	N o t e 1 3
Mar.,2 01 7	10	10 0,00 0	1,00 0,0 00	70,8 99	70 8,99 0	Corporate bond conversion	1 4 , 9 2 5 t h o u s a n d	-	N o t e 1 4
Jul.,2 01 7	10	10 0,00 0	1,00 0,0 00	71,8 57	71 8,56 7	Corporate bond conversion	9 , 5 7 7 t h o u s a n d	-	N o t e 1 5
Jul.,2 01 7	10	10 0,00 0	1,00 0,0 00	78,8 30	78 8,30 1	Surplus capital increase	6 9 , 7 3 4 t h o u s a n d	-	N o t e 1 6
Dec.,2 01 7	10	10 0,00 0	1,00 0,0 00	80,5 72	80 5,72 3	Corporate bond conversion	1 7 , 4 2 2 t h o u s a n d	-	N o t e 1 7
Mar.,2 01 8	10	10 0,00 0	1,00 0,0 00	81,2 60	81 2,59 6	Corporate bond conversion	6 , 8 7 3 t h o u s a n d	-	N o t e 1 8
Jun.,2 01 8	10	10 0,00 0	1,00 0,0 00	81,9 54	81 9,53 7	Corporate bond conversion	6 , 9 4 1 t h o u s a n d	-	N o t e 1 9
Oct., 20 18	10	10 0,00 0	1,00 0,0 00	82,1 81	82 1,80 5	Corporate bond conversion	2 , 2 6 8 t h o u s a n d	-	N o t e 2 0
Dec.,2 01 8	10	10 0,00 0	1,00 0,0 00	82,1 87	82 1,87 5	Corporate bond conversion	7 0 t h o u s a n d	-	N o t e 2 1
Jul.,2 01 9	10	10 0,00 0	1,00 0,0 00	82,2 79	82 2,79 4	Corporate bond conversion	9 1 9 t h o u s a n d	-	N o t e 2 2
Oct., 20 19	10	10 0,00 0	1,00 0,0 00	83,0 74	83 0,74 4	Corporate bond conversion	7 , 9 5 1 t h o u s a n d	-	N o t e 2 3
Dec.,2 01 9	12	10 0,00 0	1,00 0,0 00	83,4 52	83 4,51 6	Corporate bond conversion Treasury stock cancellation	3 , 7 7 2 t h o u s a n d	-	N o t e 2 4
Fe b.,20 22	02	12 0,00 0	1,20 0,0 00	83,3 52	83 3,51 6	Treasury stock cancellation	1 , 0 0 0 t h o u s a n d	-	N o t e 2 5
Ap r.,20 22	04	12 0,00 0	1,20 0,0 00	83,3 54	83 3,54 4	Corporate bond conversion	2 8 t h o u s a n d	-	N o t e 2 6
Jun.2 02 3	06	20 0,00 0	2,00 0,0 00	88,3 75	88 3,75 4	Corporate bond conversion	5 0 , 2 1 0 t h o u s a n d	-	Note 27
Oct. 20 23	10	20 0,00 0	2,00 0,0 00	93,8 74	93 8,74 3	Corporate bond conversion	5 4 , 9 8 9 t h o u s a n d	-	Note 28
Jan.2 02 4	01	20 0,00 0	2,00 0,0 00	98,1 71	98 1,711	Corporate bond conversion	4 2 , 9 6 8 t h o u s a n d	-	Note 29
Ap r.20 24	04	20 0,00 0	2,00 0,0 00	98,3 79	98 3,78 9	Corporate bond conversion	2 , 0 7 8 t h o u s a n d	-	Note 30
Note 1: 90.12.27 Sutra (90) Chinese subtitle No. 09033279280 Note 16: 106.07.25 Jingshu Shang Zi No. 10601106180 Note 2: 92.10.27 Jingzhizhongzi No. 09232861870 Note 17: 106.12.14 Jingshu Shang Zi No. 10601171020 Note 3: 95.10.03 Jingzhizhongzi No. 09532926440 Note 18: 107.03.15 Jingshu Shang Zi No. 10701026080 Note 4: 97.10.15 Jingzhizhongzi No. 09733261020 Note 19: 107.06.22 Jingshu Shang Zi No. 10701067400 Note 5: 98.08.03 Jingzhizhongzi No. 09832777800 Note 20: 107.10.03 Jingshu Shang Zi No. 10701119640 Note 6: 98.10.28 Jingzhizhongzi No. 09833329390 Note 21: 107.12.26 Jingshu Shang Zi No. 10701157950 Note 7: 99.08.23 Jingzhizhongzi No. 09932490060 Note 22: 108.07.08 Jingshu Shang Zi No. 10801071380 Note 8: 100.09.06 Jingzhizhongzi No. 10032481050 Note 23: 108.10.24 Jingshu Shang Zi No. 10801148670 Note 9: 101.04.18 Jingzhizhongzi No. 10131902020 Note 24 : 108.12.31 Jingshu Shang Zi No. 10801181060 Note 10: 101.08.27 Jingzhi Zhongzi No. 10132419010 Note 25 : 1 11. 02. 10 Jing Shu Shang Zi No. 11101014470 Note 11: 102.07.17 Jingshu Shang Zi No. 10201139110 Note 2 6 : 111.04.19 Jing Shu Shang Zi No. 11101058240

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Note 12: 102.12.18 Jingshu Shang Zi No. 10201256770 Note 2 7 : 112.10.04 Jing Shu Shang Zi No. 11230190080 Note 13: 106.01.04 Jingshu Shang Zi No. 10501300750 Note 2 8 : 112.10.16 Jing Shu Shang Zi No. 11230182970 Note 14: 106.03.09 Jingshu Shang Zi No. 10601028470 Note 2 9 : 113.01.17 Jing Shu Shang Zi No. 11330006440 Note 15: 106.07.13 Jingshu Shang Zi No. 10601092960 Note 30 : 113.04.22 Jing Shu Shang Zi No. 11330052780

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B. Type of shares

Unit: share

				Unit: share
Type of shares	Approved share capital			Remark
	Shares outstanding	Unissued shares	total
Common shares	98,378,905	101,621,095	200,000,000	listing

C. Information related to the comprehensive declaration system: Not Applicable.

(2) Shareholder structure

April 2 , 2024 ; unit : share

Shareholder structure Quantity	Government agency	Financial institution	Other legal persons	Individual	Foreign institution and outsiders	Total
Numbers ofpeople	-	-	213	37,790	51	38,054
Number of shares held	-	-	18,099,299	78,964,687	1,314,919	98,378,905
Shareholding ratio	-	-	18.40%	80.26%	1.34%	100.00%

(3) Shareholding dispersion

A. Common share:

April 2, 2024; Unit:share

Shareholding classification	Number of shareholders	Number of shares held	Shareholding ratio
1 to 999	24,452	387,139	0.39%
1,000 to 5,000	10,930	22,175,514	22.54%
5,001 to 10,000	1,471	11,832,665	12.03%
10,001 to 15,000	375	4,833,579	4.91%
15,001 to 20,000	291	5,430,735	5.52%
20,001 to 30,000	206	5,303,879	5.39%
30,001 to 40,000	97	3,535,069	3.59%
4 0,001 to 5 0,000	74	3,435,217	3.49%
50,001 to 100,000	116	8,358,027	8.50%
100,001 to 200,000	28	3,974,787	4.04%
200,001 to 400,000	6	1,508,473	1.53%
400,001 to 600,000	2	1,026,000	1.04%
600,001 to 800,000	2	1,420,000	1.44%
800,001 to 1,000,000	0	0	0.00%
1,000,001 or more	4	25,157,821	25.59%
Total	38,054	98,378,905	100.00%

B. Special share: No special share has been issued, so it is not applicable.

(4) List of major shareholders: shareholders whose shareholding ratio is more than 5% or whose shareholding ratio accounts for the top ten shareholders

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April 2, 2024 ; unit : share	April 2, 2024 ; unit : share	April 2, 2024 ; unit : share
Share Major shareholder Name	Number of shares held	Shareholding ratio
Liao Wenjia	8,071,942	8.20
Yunyong Investment Co., Ltd.	7,500,865	7.62
Jieshi Investment Co., Ltd.	5,830,415	5.93
PaideInvestment Co.,Ltd.	3,754,599	3.82
Chen Lili	780,000	0.79
Citi custody Berkeley Capital SBL/PB investment account	640,000	0.65
Li Rongfu	568,000	0.58
You Benhong	458,000	0.47
ChenJinchuan	300,000	0.30
Liao Lizhengzi	267,473	0.27

• (5) Share price, net worth, earnings and dividend information per share for the last two years and as of the date of publication of the annual report

Unit: NT$; thousand shares

Item	Year	Year	2022	2023	As of March 31,2024
Per share market price	The highest		33.70	49.00	36.10
	The lowest		20.50	26.20	30.50
	The average		25.50	35.60	33.71
Per share net worth	Before allocation		17.93	20.36	Not applicable
	After allocation		17.50	19.96	Not applicable
Per share Surplus	Weighted average number of shares		82,327	91,799	Not applicable
	Earningsper share		1.21	0.87	Not applicable
Per share dividend	Cash dividend		0.40	0.40	Not applicable
	Gratuitous allotment	Surplus allotment	0	0	Not applicable
		Capital reserve allotment	0	0	Not applicable
	Accumulated unpaid dividends		0	0	Not applicable
ROI Analysis	PE Ratio(Note 1)		21.07	40.92	Not applicable
	Cost -to-earnings ratio(Note 2)		63.75	89.00	Not applicable
	Cash dividendyield(Note 3)		1.57%	1.12%	Not applicable

• Note 1: P/E ratio = average closing price per share in the current year/earnings per share. Note 2: Cost to profit ratio = average closing price per share in the current year/cash dividend per share.

• Note 3: Cash dividend yield = cash dividend per share/average closing price per share for the current year.

• (6) Dividend policy and implementation status of the company:

  • A. Dividend policy stipulated in the articles of association of the company The company will consider the company's environment and growth stage, respond to future capital needs and long-term financial planning, and meet shareholders' needs for cash inflow. If there is a surplus in the annual final accounts, it should first pay taxes to make up for previous years' losses, Ten percent shall be raised as the statutory surplus reserve, except when the statutory surplus reserve has reached the total capital, and another special surplus reserve may be raised according to business needs or regulations, and the board of directors shall prepare a

62

distribution plan according to the following proportions, It is proposed to be distributed after approval by the general meeting of shareholders.

Shareholder dividends are based on the consideration of the current year's after-tax surplus and the accumulated undistributed surplus in the previous period. The amount of surplus to be distributed should not be less than 10% of the current year's after-tax surplus. Cash dividends should not be lower than the total amount of cash dividends and stock dividends. However, if the cash dividend per share is less than NT$0.1, it can be paid as stock dividend instead, but the distribution ratio can be adjusted depending on the company's future earnings and capital status. When the company has no profit, no dividends and bonuses will be distributed.

B. Situation of dividend distribution proposed by this year's shareholders' meeting The resolution of the board of directors of the company on April 13, 2024 was passed, and it was resolved to distribute NT$39,351,562 in surplus, and NT$0.4 per share. It is planned to submit the report of the regular meeting of shareholders on May 31, 2024 and handle it in accordance with relevant regulations.

• C. Expected major changes in the dividend policy : None .

• (7) The impact of the gratuitous allotment of shares proposed at this shareholders' meeting on the company's operating performance and earnings per share:

• There’s no gratuitous allotment of shares proposed at this shareholders' meeting , so it is not applicable.

( 8) Remuneration of employees, directors and supervisors

• A. The ratio or range of remuneration for employees, directors and supervisors as stated in the company's articles of association:

• According to the company's articles of association, if the company makes a profit in the year, it should allocate 1% to 15% as employee remuneration, which is distributed by the board of directors in the form of stock or cash distribution, and the distribution targets include employees of subordinate companies who meet certain conditions; the company The above-mentioned profit amount can be allocated, and the board of directors decides to allocate no more than 5% as remuneration for directors and supervisors. Proposals on employee remuneration and distribution of remuneration to directors and supervisors shall be reported to the shareholders' meeting. However, if the company still has accumulated losses, it shall reserve the compensation amount in advance, and then allocate employee remuneration and director and supervisor remuneration according to the proportion mentioned in the preceding paragraph.

The proportion of remuneration distributed by directors is based on

63

the overall evaluation and consideration of their participation in the company's operations and personal performance contributions. The considerations include, for example, the company's operational management capabilities, financial and business operating performance indicators, and comprehensive management indicators, and measure other special contributions or Major negative events ... etc. In addition, independent directors still receive fixed monthly remuneration.

The manager's remuneration includes salary and bonus. The salary is evaluated with reference to the industry standard and items such as professional title, rank, education (experience), professional ability and responsibility. The bonus is also based on the target achievement rate, profit rate, and operating efficiency. , contribution and other comprehensive project evaluation considerations.

Relevant managers receive employee remuneration and director remuneration must be reviewed by the remuneration committee, and then submitted to the board of directors for resolution.

• B. The estimation basis for the estimated remuneration of employees, directors and supervisors in the current period, the basis for calculating the number of shares of employee compensation based on stock distribution, and the accounting treatment when the actual distribution amount is different from the estimated amount:

The company's estimated employee and director remuneration is calculated in accordance with the company's articles of association, with 1% to 15% as employee remuneration and no higher than 5% as director remuneration. If the actual distribution amount is different from the estimated amount, it will be included in the next year profit and loss .

• C. The distribution of remuneration approved by the board of directors

• (a) The amount of employee remuneration distributed in cash or stock and the remuneration of directors and supervisors . If there is any discrepancy from the estimated amount of recognized expenses in the year, the discrepancy, reason and treatment shall be disclosed :

  • The company's pre-tax net profit in 2023 and estimated employee remuneration of 1,937,065 and directors' remuneration of 968,532 in accordance with the company's articles of association were submitted to the resolution of the board of directors on March 13, 2024, and were all paid in cash. The annual recognized expenses and There is no difference in the amount of remuneration distributed by the board of directors.

• (b) The ratio of the amount of employee remuneration distributed by stock to the

64

total after-tax net profit and total employee remuneration in the individual or individual financial report of the current period: None.

• D. The actual distribution of the remuneration of employees, directors and supervisors in the previous year (including the number of shares distributed, amount, and stock price), and if there is any difference between the remuneration of employees, directors and supervisors recognized, the difference, reason and Processing situation:

The 2023 annual shareholders' meeting resolution passed the 2022 year profit distribution plan. The employee remuneration was NT$2,119,983, and the director's compensation was NT$1,059,991. All of them were distributed in cash.

• ( 9) Repurchase of the company's shares: None

65

2. The handling of corporate bonds:

(1) Issuance and conversion

Types of corporate bonds	Types of corporate bonds	The 2nd domestic unsecured conversion of corporate bonds	The 3rd domestic unsecured conversion of corporate bonds
Issue (processing) date		December 13 , 2019	March 10, 2022
Denomination		NT$ (the same below) 100 thousand	NT$ (the same below) 100 thousand
Issue and trading place		Not applicable (non-overseas corporate bonds)	Not applicable (non-overseas corporate bonds)
Issue price		NT$100.50	NT$100.00
Lump sum		NT$500,000 thousand	NT$500,000 thousand
Interest rate		0%	0%
Term		5-year term ; Maturity Date :Dec.13,2024	5-year term ; Maturity Date :Mar.10,2027
Guarantee agency		None	None
Trustee		Taishin International Bank	Chang Hwa Commercial Bank, Ltd. Trust Office
Underwriting agency		Taishin Securities Co.,Ltd.	President Securities Corporation
Attorney		Qiu,Yawen	Qiu, Yawen
CPA		Chen, Peide; Lin, Wenqin	Chen, Peide, Chen, Junhong
Repayment method		Repayment once due	Repayment once due
Outstanding principal		NT$41,300 thousand	NT$76,200 thousand
Redeem or advance terms of settlement		Detailed issuance and conversion method	Detailed issuance and conversion method
Restrictions		Detailed issuance and conversion method	Detailed issuance and conversion method
Credit rating agency name, rating date, corporate bond rating results		Not applicable	Not applicable
Other right attached	Amount of converted (exchanged or subscribed) ordinary shares, overseas depositary receipts or other securities as of the publication date of the annual report	None	None
	Issuance and conversion (exchange or subscription) method	Detailed issuance and conversion method	Detailed issuance and conversion method
Issuance and conversion, exchange or subscription methods, issuance conditions on possible dilution of equity and impact on existing shareholders' rights and interests		Based on the current conversion price of NT$34.30 and the issuance balance of NT$41,300 thousand, the equity dilution ratio is about 1.21 %.	Based on the current conversion price of NT$28.30 and the issuance balance of NT$76,200 thousand, the equity dilution ratio is about 2.66 %.
The name of the entrusted custodian of the exchange target		Not applicable	Not applicable

66

Types of corporate bonds	Types of corporate bonds	The 4th domestic unsecured conversion of corporate bonds (processing)
Issue ( processing ) date		May 31, 2023
Denomination		NT$ (the same below) 100,000
Issue and trading place		Not applicable (non-overseas corporate bonds)
Issue price		NT$100.00
Lump sum		400,000 thousand
Interest rate		0%
Term		5 years
Guarantee agency		None
Trustee		Changhua Commercial Bank Co., Ltd. Trust Office
Underwriting agency		Uni-President Securities Co., Ltd.
Attorney		Qiu Yawen
CPA		Chen Peide, Chen Junhong
Repayment method		Repayment once due
Outstanding principal		388,800 thousand
Redeem or advance terms of settlement		Detailed issuance and conversion method
Restrictions		Detailed issuance and conversion method
Credit rating agency name, rating date, corporate bond rating results		Not applicable
Other right attached	Amount of converted (exchanged or subscribed) ordinary shares, overseas depositary receipts or other securities as of the publication date of the annual report	None
	Issuance and conversion (exchange or subscription) method	Detailed issuance and conversion method
Issuance and conversion, exchange or subscription methods, issuance conditions on possible dilution of equity and impact on existing shareholders' rights and interests		Based on the current conversion price of NT$34.90 and the issuance balance of NT$388,800 thousand, the equity dilution ratio is about 10.17 %.
The name of the entrusted custodian of the exchange target		Not applicable

67

(2) Conversion of corporate bond information

Types of corporate bonds	Types of corporate bonds	The 2nddomestic unsecured conversion of corporate bonds	The 2nddomestic unsecured conversion of corporate bonds	The 2nddomestic unsecured conversion of corporate bonds	The 2nddomestic unsecured conversion of corporate bonds	The 2nddomestic unsecured conversion of corporate bonds
	Year	2020	2021	2022	2023	As of
Item						2024/3/31
Convert the market price of corporate bonds	Highest	98.20	109.90	103.75	128.70	105.80
	Lowest	77.05	91.85	100.15	101.50	102.10
	Average	89.15	100.5	101.79	113.79	103.84
Conversion price		36.10	35.40	34.70	34.30	34.30
Issue (processing) date		Issued date : December 13 , 2019
Conversion price at the time of issue		Conversion price at the time of issuance: NT$ 39.00
Fulfillment of conversion obligations		Issuance of new shares

Types of corporate bonds	Types of corporate bonds	The 3rd domestic unsecured conversion of	The 3rd domestic unsecured conversion of	corporate bonds
	Year	2022	2023	As of
Item				2024/3/31
Convert the market price of corporate bonds	Highest	107.00	159.00	0.00
	Lowest	93.20	100.20	0.00
	Average	102.81	121.38	0.00
Conversion price		28.60	28.30	28.30
Issue (processing) date		Issued date : March 10 , 2022
Conversion price at the time of issue		Conversion price at the time of issuance: NT$ 29.20
Fulfillment of conversion obligations		Issuance of new shares

Types of corporate bonds

The 3rd domestic unsecured conversion of corporate bonds

Types of corporate bonds	Types of corporate bonds	The 3rd domestic unsecured conversion of corporate bonds	The 3rd domestic unsecured conversion of corporate bonds
	Year	2023	As of
Item			2024/3/31
Convert the market price of corporate bonds	Highest	127.00	107.50
	Lowest	100.90	102.20
	Average	112.34	104.71
Conversion price		34.90	34.90
Issue (processing) date		Issued date : May 31 , 2023
Conversion price at the time of issue		Conversion price at the time of issuance: NT$ 35.30
Fulfillment of conversion obligations		Issuance of new shares

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1. Handling status of special shares: None.

2. Handling status of overseas depositary receipts: None.

3. Handling of employee stock option certificates: None.

4. Handling of new shares with restrictions on employee rights: None.

5. Handling of mergers and acquisitions or transfer of shares from other companies to issue new shares: None.

6. Fund utilization plan and execution:

7. (1) As of the quarter before the publication date of the annual report, previous issuances or private placements of securities have not yet been completed or have been completed within the last three years and the benefits of the plan have not yet emerged: None.

8. (2) Implementation situation: Not applicable.

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• V. Operation Overview

• Business Activities

• (1) Business scope:

  • A. The main activities of the company's business:

The company's current main business is the manufacture and sale of industrial computers and gaming machines. At the same time, it also provides motherboard processing business for security control and communication. The business items listed in the profit-seeking enterprise registration certificate are as follows:

CC01060 Manufacturing of wired communication machinery and equipment CC01070 Manufacturing of wireless communication machinery and equipment. CC01080 Manufacturing of electronic components. F401010 International trade industry. F113020 Wholesale of electrical equipment. F213010 Retailing of electrical equipment. F113070 Wholesale of telecommunications equipment. F213060 Retailing of telecommunications equipment. CC01101 Manufacturing of telecommunications control the radio frequency equipment

• B. Operating ratio of main products

erating ratio of main products	erating ratio of main products	erating ratio of main products
B. Unit: NT$ thousand
Year	2023
value
Items	Revenue	Proportion of business (%)
Gaming and Industrial Computers	833,221	24
Aerospace and Defense Industry	2,581,150	76
Total	3,414,371	100

• C. The company's current commodity (service) items

At present, the company is mainly specialized in the manufacturing and sales of gaming machines, industrial computers, aerospace ancillary equipment and spare parts. The main product items include the following:

• (a) Gaming machines: gaming machines and their components such as gaming boards, barebone systems, player tracking systems, and machine frames.

• (b) Industrial computer: all kinds of industrial computer motherboards and their components.

• (c) Aerospace products: various wiring harnesses, customized cables, chassis wiring for the aerospace industry, etc.

• D. New product (service) items planned to be developed

• (a) Mechanisms: Develop power supply frames for light and thin intelligent system products, mainly used in gaming and intelligent system products.

• (b) Electronics: the development of thin and light low-power embedded computers

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and peripheral products, mainly used in gaming, industrial computers and peripheral products. Development of ultra-thin gaming machine frame .

• (2) Industry overview

• A. Current status and development of the industry

  • (a) Gaming and industrial computers:

The company's main products are industrial embedded motherboards and modules, embedded computer systems, and embedded box computers, which are used in fields such as smart gaming, smart retail, smart industrial control, network security, smart homes, smart transportation, and smart cities.

The industrial computer industry has reached a certain level of maturity after long-term development. It has a complete industrial structure, an abundant module supply chain, mass production management experience and small-scale and diverse capabilities. Currently, industrial computer manufacturers are moving towards manufacturing high value-added products. With the development focus of improving design capabilities and strengthening research and development of core technologies, coupled with the large number of applications of the Internet and the advent of the computer digital age, new business opportunities, new layouts and new markets have been created. The improvement and application of new technologies have rapidly expanded, and applications The field has expanded from simple factory automation to various industries and life, such as security products, monitoring products, traffic control, commercial transaction systems, medical care equipment, etc. The original application market continues to develop, and with the continuous expansion of new application fields, product categories tend to Diversification, the overall market size will continue to expand and grow.

In recent years, the application fields of industrial computer products have continued to expand, including medical, aerospace, communications, robotic automation equipment, smart grids, and the Internet of Things (IOT). Application products have been developed, and they will all contribute to the overall output value of domestic industrial computers. future growth momentum. Among them, robot automation equipment, Internet of Things products and intelligent application solutions have a wide range, and their future shipment growth is the most promising.

The characteristics of the industrial computer industry have always been that orders are mostly customized, with small quantities and diverse orders. Therefore, it is difficult for PC or EMS manufacturers to enter the industrial computer industry, allowing industrial computer manufacturers that maintain a high degree of flexibility and customization to maintain their niche. The blue ocean market for industrial computer products.

According to Statista, an international research consultancy, global end-user

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spending on IoT solutions is predicted to be US$418 billion in 2021, rising to US$1.567 billion in 2025. The booming and diversified development of the Internet of Things industry in recent years has caused companies in various fields to invest large amounts of resources in development, most of which are transportation, retail, warehousing, medical, network security, intelligent solutions and manufacturing industries. Although the Internet of Things is an innovative concept, it is formed by the integration of three traditional industries, including the automation industry, telecommunications industry, and computer industry. The company and its subsidiaries start from interactive terminal products and focus on big data, Internet of Things, and intelligent applications. Product line development.

B. Aerospace and defense industry:

As the world continues to relax anti-epidemic policies and border controls in 2022, people around the world are rapidly increasing their willingness to travel across borders, prompting a strong recovery in passenger volume on domestic and international routes in North America, Europe and other regions. According to the International Air Transport Association ( According to statistics from IATA, global air passenger traffic has recovered to 74% of 2019 (pre-epidemic) in the first 10 months of 2022, driving demand for new passenger aircraft to rebound. The delivery volumes of Boeing and Airbus from January to October 2022 The annual growth rates also reached 35% and 8% respectively, effectively boosting the order volume of China's related parts manufacturers and injecting strong growth momentum into the industry's sales value. From January to October 2022, the industry's sales value reached 260.03 billion, a significant increase of 31.58% compared with the same period in 2021 (see Table 1 below for details).

As the (COVID-19) epidemic can be controlled, borders of various countries are gradually opening up, and tourism and business air passenger traffic has recovered rapidly, driving the performance of the overall aerospace industry to rebound. On the other hand, as governments and airlines around the world pay more and more attention to the issue of carbon reduction, new aircraft with high fuel efficiency can significantly reduce airline operating costs, prompting airlines to accelerate the replacement of old aircraft with new ones, and also drive the development of the aerospace industry. Demand is strong and moving in a fast and stable direction .

20 years (2022~2041) by Boeing and Airbus, the world's two largest aircraft manufacturers , including market demand and the need to replace old aircraft with new ones, the estimated demand for new aircraft is 41,170 aircraft respectively. and 39,490 aircraft, showing that the overall aviation industry will still show a steady growth trend in the next 20 years.

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1. The relationship between the upper, middle and lower reaches of the industry A. Gaming industry:

In the ecosystem of the gaming industry, operators such as casinos or amusement parks put forward the procurement requirements of gaming machines to the system integrator (SI). However, because the system integrator mainly focuses on software manufacturing, the hardware part of the machine is entrusted to the upstream Mainboard or hardware manufacturers, and finally sold to downstream casino operators by system integrators after combining hardware and software (details below), and Parpro Corporation Company is a manufacturer of gaming machines and related components. It is located upstream of the gaming industry. The upper, middle and lower reaches of the gaming industry are listed below:

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• B. Industrial computer industry:

Industrial computer products are mainly computer-centric. The upstream component suppliers provide components such as IC, CPU, PCB board, liquid crystal display and casing, and the midstream is industrial control cards, single-board computers, embedded computers and bare-bones products. , domestic industrial computer manufacturers are mostly located in the middle reaches of the industrial chain, while the downstream sales part is to meet the needs of various markets, and because industrial computer products have a high degree of system integration and a wide range of product applications, most industrial computers are sold through system integrators (SI) ) or distributors to develop local potential customers, provide technical support nearby, or sell to relevant academic research institutes for system integration or testing. The correlation between the upper, middle and lower reaches of the industry can be illustrated as follows:

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C. Aerospace industry and defense industry:

The company's main products are aerospace accessory equipment and its components . Its main product, electronic wiring harness, is used in aerospace equipment. It is in the middle reaches of the industrial chain, and its upstream is the raw material industry. It is mainly divided into metal materials, plastic materials, Electroplating materials and copper wire are the four major parts, and the

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downstream is the application products of various electronic wiring harnesses and integrated assembled products. Its application fields span aerospace, automobile and defense industries and other industries.

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1. Various development trends and competition situations of products A. Gaming industry:

As more casinos (CASINOs) in Genting Casino in Malaysia, South Korea, Singapore and Vietnam in the communist country , and there are currently 140 locations in the world. The above countries are used as one of the important policy tools to develop or revitalize the tourism market and to assist the government in balancing the budget. In addition, the Golden Triangle area bordering Japan, Myanmar, Thailand and Laos (Laos) is also planning and building a modern casino to reap the huge benefits brought by gaming activities. In the future, the Asia-Pacific region is expected to become the largest gaming market in the world . For example, the Singapore government has attracted the Genting Group of Malaysia and the Sands Group of the United States to build the "Resorts World Sentosa" (Resorts World Sentosa) and "Marina Bay Sands" (Marina Bay Sands) has two integrated resorts with casinos; Macau is benefiting from the fact that Chinese VIP customers have leapt to the world's largest casino (CASINO) , and its gaming revenue has already surpassed that of Latin America. Las Vegas is more than six times; In addition to the above, the Philippines and Vietnam are also competing to carve up the Asian market with a number of large casinos. The tourism and gaming industry (casino or gaming industry) is not just about gaming, but also includes tourist hotels, entertainment, tourism, convention and exhibition, shipping, catering, etc. The development of the gaming industry will bring many surrounding business opportunities and create jobs. Chance.

• B. Industrial computer industry:

Looking forward to the future , various regional markets are actively promoting new infrastructure construction, and the visibility of orders in fields such as the Industrial Internet of Things and enterprise digital transformation is clear, which will help drive the shipment of smart application products such as automation, 5G, and AIoT. Business opportunities after the lockdown will continue to ferment, and it will also promote The shipment performance of lottery machines, self-service, smart retail and other related products, as well as the acceleration of production capacity optimization and carbon emission management by various companies, are expected to drive ESG business opportunities. In addition, the shipment of deferred orders affected by material shortages will all Boosted the growth of industrial computer shipments.

However, the world continues to face challenges such as inflation, rising interest rates, and geopolitical risks. There is still a risk that the international climate may change, which will affect customers' willingness to place orders or adjust orders, thus suppressing overall growth. However, it benefits from Increasing demand in most downstream application markets will help drive shipment growth in this

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industry.

• (3) Aerospace and defense industry:

In response to the international civil aviation industry's demands for energy conservation, carbon reduction, weight reduction of aircraft, reduction of noise and exhaust emissions and other environmental trends, international aviation manufacturers are actively investing in green manufacturing technologies and launching new fuel-saving aircraft models to respond to environmental protection. In addition, because new types of aircraft have better fuel efficiency, they can help significantly reduce airlines' operating costs, thus prompting airline operators to accelerate their demand for aircraft replacement. At the same time, according to predictions by Boeing and Airbus, single-aisle aircraft will account for up to 75% of the demand for new aircraft in the next two decades , and have become the mainstream of the future aircraft replacement wave. (3) Overview of Technology and R&D

• A. Research and development expenses invested in the most recent year up to the date of publication of the annual report

ublication of the annual report	ublication of the annual report
Unit: NT$thousand
Year Item	2023
A. Research and development costs	1,899
B. Net Operating Income	3,414,371
A/B	0.06%

• B. Technologies or products successfully developed in the most recent year and as of the publication date of the annual report

The company attaches great importance to research and development. In addition to investing manpower in Taiwan to be responsible for product research and development, there is also a research and development team in the United States to accelerate the speed of integrated product development and grasp the pulse of the market. So far, the company has launched Intel Bay Trail and Haswell platform and other architecture system platforms, as the application of intelligent systems and aerospace peripheral products, and also launched new versions of thin and light intelligent Single Stand and Extend Stand and other system products, which shows that the company has invested in key Efforts in the development of innovative components, and the strength of new product research and development.

In addition to continuing the current unfinished products and extending the existing series to expand product specifications, the company will continue to develop new/old product series with high added value and market competitiveness for different market segments and application fields, and actively expand emerging demand markets , innovation and development of diversified application fields; in addition, the company controls the progress of research and development by project, and always pays attention to the development of science and technology, product trends, the situation of competitors in the same industry, changes in the supply and demand of the sales market and material supply market, etc. Factors that may affect the success of research and development , to ensure that the R&D plans can meet market demands and be

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completed on schedule.

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

Since its establishment, the company has focused on the excellent quality and stability of products, and actively contacted customers and the market. With the expansion of customers and the growth of the market, the company has successfully laid the foundation for product quality and company image in customer evaluations. Gradually occupy a place in the market . In response to industry development trends and domestic and foreign market competition, we hope to enrich the company's strength and enhance overall production capacity and competitiveness through the practice of the following long-term and short-term development plans.

1. Short-term business development plan

2. Fully understand customer needs and market information, and actively communicate product specifications and quality requirements with customers to improve the consistency of production in the factory to improve quality stability.

3. Provide customers with convenient and fast services, consolidate existing customer relationships, and actively start the development of new customers, and continue to expand sales and market share.

4. Actively maintain a good partnership with upstream and downstream manufacturers, so that the cooperative manufacturers can fully cooperate, the product cost is more competitive, and the sales network is more smooth.

5. Deeply cultivate the three major fields of gaming, industrial computers, aerospace and national defense , and diversify the risk of concentrating on a single industry.

6. Strengthen the research and development of key components and new product lines, such as high-speed spindle, high-speed feed and other products.

7. Strengthen inventory and accounts receivable management, reduce capital demand, and reduce capital costs.

8. Long-term business development plan

9. Actively set up other overseas bases to improve the timeliness and quality of after-sales service and the functions of real-time technical support. Actively establish distributor channels for undeveloped countries or regions.

10. Cultivate international marketing talents and fully grasp international market information to achieve the goal of internationalization.

11. Utilizing the funds in the capital market allows the company to have more sufficient resources for the company's financial and capital use in the face of market competition, so as to obtain the company's continuous growth.

12. Through acquisitions or strategic alliances, go deep into the upstream and downstream supply chains, and actively seek a vertical integration model to effectively develop new products and new business areas.

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 Strengthen the research and development of key components and new product lines.

 Develop the Taiwan head office to be upgraded to a research and development, manufacturing and financial control center. In addition, it can quickly grasp market information, new product design and technology, and market strategy information in response to the changing environment of the global economy. This management model can Pave the way for future multinational enterprise management.

1. Market and Production and Sales Overview

(1) Market analysis

1. Sales (supply) regions of main products (services)

	Unit: NT$thousand	Unit: NT$thousand
Year Sales regions	2023
	Sales	Ratio(%)
Asia	7,327	0.21
Europe	1,292	0.04
America	3,405,752	99.75
Total	3,414,371	100.00

2. Market share

The gaming, industrial computer and aerospace products of the company and its subsidiaries are industries with a small amount of variety and a high degree of customization. The R&D team gradually obtains and maintains the trust relationship of major customers, and continuously introduces new products and develops new markets, upholds innovative technology, improves customer satisfaction, and expects to become a world-class leader in its industry field. However, because there is no statistical data from institutions with credibility in China for reference, it is impossible to clearly know the market share of the company. However, the industry prospects of the three fields in the future are promising, so it is expected that the company and its subsidiaries will continue to improve Market position in the industry.

3. The future supply and demand situation and growth of the market

• (1) Gaming and industrial computers

As more casinos (CASINOs) in Genting Casino in Malaysia, South Korea, Singapore and Vietnam in the communist country , and there are currently 140 locations in the world. The above countries are used as one of the important policy tools to develop or revitalize the tourism market and to assist the government in balancing the budget. In addition, the Golden Triangle area bordering Japan, Myanmar, Thailand and Laos (Laos) is also planning and building a modern casino to reap the huge benefits brought by gaming activities. In the future, the Asia-Pacific region is expected to become the largest gaming market in the world .

For example, the Singapore government has attracted the Genting Group of Malaysia and the Sands Group of the United States to build the "Resorts World

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Sentosa" (Resorts World Sentosa) and "Marina Bay Sands" (Marina Bay Sands) are two integrated resorts with casinos; Macau is benefiting from the fact that Chinese VIP customers have jumped to the world's largest casino (CASINO) . In addition to the above, the Philippines and Vietnam Many large casinos are also competing to carve up the Asian market; and the Japanese government has passed the "Comprehensive Resort Development Law" including the construction of casinos. Japan can set up casinos in up to 3 integrated resorts in Japan, including Osaka, Tokyo, and Yokohama. Local governments are eager to try. It is expected that the first casino will be opened before 2025 at the earliest. They also hope that by setting up casinos to increase revenue, it will be used for the operation of large-scale international conference venues and theaters to boost the growth strategy of the Japanese economy. , in order to attract more foreign tourists visiting Japan. The tourism and gaming industry (casino or gaming industry) is not just about gaming, but also includes tourist hotels, entertainment, tourism, convention and exhibition, shipping, catering, etc. The development of the gaming industry will bring many surrounding business opportunities and create jobs. Chance.

• (2) Aerospace and defense industry

According to Boeing's forecast of the future development of the global aviation industry in the next 20 years (2022~2041) , the average annual growth rate of global air passenger traffic in the next 20 years is 3.8% , and the demand for new aircraft is approximately 41,170 , with the main demand being single-aisle aircraft. airliner. Airbus estimates that the average annual growth rate of air passenger traffic in the next 20 years will be 3.6% , with a total demand for new aircraft of approximately 39,490 , and the main demand will still be single-aisle passenger aircraft. Forecast data from the two major aircraft manufacturers show that the overall demand for aircraft will show a steady growth trend in the next 20 years.

1. Competitive Niche

2. Industry business opportunities continue to be optimistic.

3. The market positioning is clear and the product line is complete.

4. Planned and flexible production to grasp market opportunities.

5. With strong research and development capabilities, the products have been repeatedly recognized.

6. Flexible, fast and stable quality customized technology.

7. Professional marketing, R&D, and manufacturing teams.

8. With "process design and innovation, manufacturing and pragmatism, service and quality first", we will stick to our commitments to customers, suppliers, employees, shareholders and all stakeholders.

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1. Favorable and unfavorable factors and countermeasures for development prospects

2. (1) Favorable factors:

   • A. Targeting a niche product market

   • B. Fast delivery and stable quality

   • C. Have a well-organized excellent R&D, marketing and manufacturing team

   • D. Capacity utilization is flexible and efficient , and has a small amount of diverse mass production capacity

   • E. Diversified product management, reducing operational risks

   • F. Tailor-made customer service, attach importance to customer commitments and establish a good cooperative relationship

3. (2) Unfavorable factors:

   • A. Customized production is characterized by a small amount of variety. The production scale of a single product cannot be compared with a large number of standardized products. The production cost and parts procurement cost will be relatively high.

Countermeasures:

Tailor-made high-value-added application products with market advantages for customers, and provide technical solutions to expand the differences with market standard products and avoid the vicious circle of low-cost competition in the same industry. In addition , through strategic procurement, the cost and inventory of key components are controlled.

• B. The scale of competitors in the same industry is getting bigger and bigger, and there is a tendency to combine or strategic alliance with international manufacturers to seize the market.

Countermeasures:

To strengthen cooperation with customers, in addition to being committed to improving yields and shortening delivery times to meet customer requirements, we also look forward to strategic alliances and cooperation with international major manufacturers to strengthen our company's competitiveness.

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• (2) Important uses and production processes of main products

• Important uses of main products

mportant uses of	main products
Main product	Important purpose
Gaming machine	It is widely used in the manufacture of complete machines and parts of international first-line gaming machines (mainly slot machines), including single-board boards, barebone systems, machines, and player tracking systems.
Industrial computer	Including the manufacture of various industrial computer motherboards, the products are widely used in security control , testing , transportation and other industrial purposes, with the characteristics of high stability and strong environmental endurance.
Aerospace related products	Including the manufacture and sales of components for communication, control, and signal transmission harnesses in the aerospace industry .

1. Production process

A. Gaming and industrial computer

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

SMT
目檢
DIP
Touch Up
OK
OK
組裝
燒機 Burn-In
NG
OK
測試 Testing
維修
NG OK
維修
成品檢驗
入庫
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B. Aerospace and Defense Industry

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(a)Electrical
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(b)Metals
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• (3) Supply status of main raw materials

The company's current supply of main raw materials is as follows:

raw material	source of supply	Availability
SSD & DDR	APACER	Stable supply
IC	AVNET,ARROW	Stable supply
VIDEO CARD	AVNET	Stable supply
POWER SUPPLY	FSP	Stable supply

• (4) List of major purchase and sales customers in the last two years

Names of customers who accounted for more than 10% of the total purchase (sales) in any

of the most recent two years, their purchase (sales) amount and proportion, and reasons for their increase or decrease:

• (A) Major purchasers:

Information on major purchasing suppliers in the past two years

							Unit: NT$thousand	Unit: NT$thousand
Item			2022				2023
	Name	Amount	Accounted for the whole year	Relationship with Issuer	name	the amount	Accounted for the whole year	Relationship with Issuer
			Net sales ratio (%)				Net sales ratio (%)
1	Company I	185,323	10.04	None	Company I	96,984	4.47	－
Other	Other	1,659,872	89.96	-	Other	2,073,875	95.53	－
	Net Purchase	1,845,195	100.00	-	Net Purchase	2,170,859	100.00	－

Explanation of reasons for increases and decreases: Mainly due to the company's procurement strategy and consideration of changes in market prices, there has been an increase or decrease in supplier purchases.

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(B) Main sales customers:

Information on major sales customers in the past two years

Unit: NT$ thousand

project			2022			2023	2023
	Name	Amount	Accounted for the whole year	Relationship with Issuer	name	the amount	Accounted for the whole year	Relationship with Issuer
			Net sales ratio (%)				Net sales ratio (%)
1	Company A	708,026	25.50	None	Company A	827,474	24.24	None
2	Company D	348,575	12.55	None	Company D	390,275	11.43	None
3	Company Q	24,021	0.87	None	Company Q	378,190	11.08	None
4	Company P	299,284	10.78	None	Company P	138,158	4.05	None
5	Other	1,396,774	50.30	－	Other	1,680,274	49.20	－
	Net sales	2,776,680	100.00	－	Net sales	3,414,371	100.00	－

Explanation of reasons for increases and decreases: Mainly due to changes in market and customer supply and demand, resulting in increases and decreases in sales to customers.

(C) Production value in the last two years

(C) Production value in the last two years	(C) Production value in the last two years	(C) Production value in the last two years	(C) Production value in the last two years	(C) Production value in the last two years
Numerical unit: NT$ thousand Quantity unit: thousand units; thousand PCS; thousand pieces Year Production value Major Products 2022 2023 Output Output value Output Output value Gaming and Industrial Computers 3,316 885,950 206 910,837 Aerospace and Defense Industry 6,364 2,260,371 3,121 2,896,291 Total 9,680 3,146,321 3,327 3,807,128
Year Production value Major Products	2022		2023
	Output	Output value	Output	Output value
Gaming and Industrial Computers	3,316	885,950	206	910,837
Aerospace and Defense Industry	6,364	2,260,371	3,121	2,896,291
Total	9,680	3,146,321	3,327	3,807,128

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(5) Sales value in the last two years

Numerical unit: NT$ thousand Quantity unit: thousand units;

thousand PCS; thousand pieces

					Numerical unit: NT$ thousand Quantity unit: thousand units; thousand PCS; thousand pieces	Numerical unit: NT$ thousand Quantity unit: thousand units; thousand PCS; thousand pieces	Numerical unit: NT$ thousand Quantity unit: thousand units; thousand PCS; thousand pieces	Numerical unit: NT$ thousand Quantity unit: thousand units; thousand PCS; thousand pieces
Year Major Products	2022				2023
	Domestic sales		Export		Domestic sales		Export
	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Gaming and Industrial Computers	0	0	377	841,118	0	0	134	833,221
Aerospace and Defense Industry	0	455	6,322	1,935,107	0	0	3,080	2,581,150
Total	0	455	6,699	2,776,225	0	0	3,214	3,414,371

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1. The number of employees employed in the last two years and as of the date of publication of the annual report, the average length of service, average age, and educational background distribution ratio

				Unit: person; %
Item	Year	2022	2023	As of March 31,2024
Employee numbers (people)	Direct employees	449	421	423
	Indirect employee	281	274	265
	R & D personnel	1	1	1
	total	731	696	689
Average age ( years old )		40	42	41
Average years of service (years)		8	9	7
Educational distribution ratio (%)	Doctor	0	0	0
	Master	1	2	2
	College	15	15	15
	High school	40	44	45
	Below high school	44	39	38
	Total	100	100	100

1. Environmental protection expenditure information

In the most recent year and up to the date of publication of the annual report, the losses suffered due to environmental pollution (including compensation and environmental protection audit results in violation of environmental protection laws and regulations, the date of punishment, the name of the punishment, the violation of laws and regulations, the content of violations of laws and regulations, and the content of punishment should be listed), And disclose the estimated amount and countermeasures that may occur at present and in the future. If it cannot be reasonably estimated, the fact that it cannot be reasonably estimated should be explained: None.

5. Labor relations

• A.List the company's various employee welfare measures, advanced education, training, and retirement systems and their implementation, as well as the agreement between labor and management and the protection measures for employees' rights and interests:

• (1) Procrastination and implementation of employee welfare measures:

In order to improve employee welfare, the company has established an employee

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welfare committee according to law to allocate welfare funds on a regular basis. At present, the main points of the company's welfare measures are as follows:

• (a) The company's statutory welfare measures:

National health insurance, labor insurance, allocation of labor retirement reserves, contribution of labor pensions, etc.

• (b) The company specifically provides:

Allocate and allocate employee remuneration, share subscription when capital increase, annual festival and performance bonus, employee education and training plan , and regular health checkup in accordance with the company's articles of association every year.

• (c) The Benefits Committee provides:

Gift money for three festivals, birthday gift money, wedding and funeral celebration subsidy, injury and sickness condolences, regular employee travel activities and other various activities, etc.

• (2) Further study, training and implementation :

Employees are the company's most important assets, so the company attaches great importance to talent cultivation and pays attention to the future development of talents. In order to improve the quality and work skills of employees, strengthen work efficiency, quality and career planning, the company has formulated "education and training procedures" based on the needs of employees. .

First week of registration, new employees will be given instructions on company introduction, salary and benefits, attendance system and labor safety, etc., so that they can understand the company's relevant rules, systems, functions of each department and job functions, and learn the work requirements. basic knowledge . In terms of functional training: various educational trainings (including internal and external education and training), including general training, professional skills training, management ability training, quality management training, and safety and health training, are implemented from time to time for all employees to establish a complete skill development, Inspiration for employees’ self-growth .

In addition to its own education and training courses, the company also has external training and an internal lecturer system to continuously provide a more optimized and diversified learning environment, strengthen the work skills of colleagues, improve the quality of talents, and then reserve to respond to future market trends and environmental changes The energy and organizational competitiveness have increased even more .

• (3) Employee retirement system and its implementation:

In order to improve the security of workers' retirement life and strengthen the relationship between labor and employment, the company implements pension allocation according to law.

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• (a) Applicable to old employees:

The company's retirement system is handled in accordance with the relevant provisions of the Labor Standards Act, and the retirement funds are deposited in the Bank of Taiwan on a monthly basis according to the law, and the Labor Retirement Reserve Supervision Committee is responsible for the management and use of the retirement reserve. In 2016 , through the labor agreement, the company chose to settle the working years before the labor pension regulations were applied to the employees, and settled the labor retirement reserve account.

• (b) Applicable to new employees:

The Labor Pension Regulations came into effect on July 1, 2005, and adopted a definite appropriation system. After the implementation, employees can choose to apply the pension provisions related to the "Labor Standards Act".

For employees who are subject to this regulation, the company pays 6% of the salary to the employee's personal account of the Labor Insurance Bureau every month. The payment of employee pension is based on the employee's personal pension account and the amount of accumulated income. Or receive it as a lump sum pension

• (4) Protection measures for working environment and personal safety of employees :

• (a) Through regular maintenance and overhaul, ensure the safety and sanitation of the company's various facilities and equipment, so as to protect the health and safety of employees.

• (b) In order to improve the efficiency of safety and health management and to be in line with international standards, the company continues to promote the introduction of occupational safety and health management in overseas production bases, with systematic management and continuous improvement to prevent work-related injuries and create a high-quality safety and health environment.

• (5) The agreement between labor and management and various measures to protect the rights and interests of employees:

• The company has safeguarded the legitimate rights and interests of workers in accordance with the Labor Standards Act and other relevant laws and regulations. In order to create a harmonious labor-management relationship, the company holds regular labor-management meetings and provides channels for employees to complain, so that the channels for employees to complain are smooth. Since its establishment, the company has a harmonious labor-management relationship, and there have been no disputes in recent years .

The company has established comprehensive welfare measures and various management measures, which clearly stipulate the rights and obligations of employees and welfare items, and regularly review the content of welfare to protect

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the rights and interests of employees.

• B. List the losses suffered due to labor disputes in the most recent year and up to the date of publication of the annual report (including labor inspection results that violate the Labor Standards Act, and the date of punishment, the name of the punishment, the violation of laws and regulations, the content of violations of laws and regulations, and the content of punishment should be listed), And disclose the estimated amount and countermeasures that may occur at present and in the future. If it cannot be reasonably estimated, the fact that it cannot be reasonably estimated should be explained:

Since the establishment of the company, the relationship between labor and capital has been harmonious, and no loss has occurred due to labor disputes. It is estimated that the possibility of losses due to labor disputes in the future is extremely low.

1. Information security management

2. (1) Describe the information security risk management framework, information security policies, specific management plans, and resources invested in information security management, etc.:

   1. Information Communication Security Risk Management Framework

The company has established a dedicated information security unit in accordance with the information security risk management framework, appointed information security supervisors and dedicated information security personnel , and regularly reviews information security policies and implementation.

• (1) Information Security Organization: Establish the company's "Information Security Team" to be responsible for the prevention and crisis management of the company's information security.

• (2) Information security organization members: The "Information Security Team" is composed of the general manager, information security director, information security personnel and heads of departments. It is responsible for coordinating and discussing information security policies, plans, resource scheduling and other matters. The meeting will be convened by the company’s information security manager.

• (3) Information security organization meeting timing: In principle, one meeting will be held every year, and additional temporary meetings may be held as needed .

• (4) The information security team meets once a year to review information security policies and management plans .

• Information Security Policy

In order to ensure that the personnel, data, information systems, equipment and network security related to the company's information operations comply with the requirements of relevant laws and regulations, this information security policy is specially formulated to establish a safe and normal operating environment and ensure that the company's computers Data, system equipment and network security , ensuring the sustainable operation and operation of the company's business, including the company's personnel security management and education and training,

• 90-

computer equipment security management, data security management, network security management, network access security control, System and network intrusion processing, physical environment security management and other work items.

1. Specific management plan

   • (1) Network security : set up an enterprise-level firewall with strict control rules and apply a network behavior management mechanism to monitor abnormal network behavior.

   • (2) Device security : Computer devices are equipped with anti-virus and endpoint protection software, which is the last layer of protection for network terminals.

   • (3) Data security : There is an account and password management mechanism, and special access rights are set up according to business duties to control data access.

   • (4) System security : important information systems are built with high availability and backup backup mechanisms to ensure the continuous operation of the company's business.

   • (5) E-mail security : Import a comprehensive e-mail filtering mechanism to actively defend against various phishing and malicious threat e-mails.

   • (6) Overall information security systemic risk assessment and improvement: Through a third-party objective and professional information security platform or vendor, we assist the company in diagnosing information security vulnerabilities and risks, and provide improvement suggestions. The company will evaluate the information security risks and impact severity based on the Arrange relevant information security improvement work plans.

2. Invest resources in information security management

   • (1) Regularly inspect the overall information system security and submit inspection reports .

   • (2) Inspection of personal computers and software .

   • (3) Annual information security education and training .

3. (2) List the losses, possible impacts and response measures suffered due to major information security incidents in the most recent year and up to the date of publication of the annual report. If it cannot be reasonably estimated, the fact that it cannot be reasonably estimated should be stated: None.

4. 91-

7. Important contracts:

Contract nature	Parties	Contract Term	Main content	Limit terms
Lease	Proyectos y Construcciones Musa SA de CV	2018/06/14~2029/12/13	Factory rental	None
Lease	Carlo Enrique Muzquiz Davila	2023/12/08~2034/12/31	Factory rental	None
Lease	Schnitzer Valley Freeway, LLC	2024/03/20-2027/04/30	Factory rental	None
Lease	2722 S. FAIRVIEW PROPERTIES, LLC	2021/11/01~2028/10/31	Factory rental	None
Lease	PACIFIC SOTHEBY'S INTERNATIONAL REALTY	2022/03/15~2025/12/31	Factory rental	None

• 92-

• VI. Financial overview

• Financial information for the last five years

• (1) Condensed balance sheet and comprehensive income statement for the last five years

  • A. Condensed un-consolidated balance sheet

Unit: NT$ thousand

					Unit:	NT$ thousand
Year Item		2019	2020	2021	2022	2023
Current assets		589,179	419,746	259,704	387,396	233,988
Financial assets at fair value through other comprehensive income		－	－	－	10,160	48,448
Investments using the equity method		2,233,392	2,080,806	2,098,268	2,328,589	2,569,639
Property, plant and equipment		31,211	32,599	23,585	16,309	13,410
Intangible assets		－	－	－	－	－
Other assets		14,228	14,666	7,502	3,671	16,222
Total assets		2,868,010	2,547,817	2,389,059	2,746,125	2,881,707
Current liabilities	before allocation	725,644	780,423	1,128,622	758,557	378,202
	after allocation	890,097	821,536	1,169,737	809,903	417,554
Non-current liabilities		523,567	558,466	47,395	513,389	500,380
Total liabilities	before allocation	1,249,211	1,338,889	1,176,017	1,271,946	878,582
	after allocation	1,413,664	1,380,002	1,217,132	1,315,069	917,934
Attributable to company Owner's rights	the parent	1,618,799	1,208,928	1,213,042	1,474,179	2,003,125
Share capital		834,516	834,516	834,544	833,544	983,789
Capital reserve	before allocation	369,961	351,925	310,881	329,808	642,138
	after allocation	369,961	310,812	302,658	321,585	642,138
Retained earnings	before allocation	522,583	197,426	303,400	373,012	400,323
	after allocation	358,130	197,426	270,508	338,112	360,971
Other interests		(76,537)	(143,215)	(204,059)	(33,051)	(23,125)
Treasury stock		(31,724)	(31,724)	(31,724)	(29,134)	－
Non-controlling interest		－	－	－	－	－
Shareholders' equity total amount	before allocation	1,618,799	1,208,928	1,213,042	1,474,179	2,003,125
	after allocation	1,454,346	1,167,815	1,171,927	1,431,056	1,963,773

Note : Reviewed/audited by independent auditors.

• 93-

B. Condensed consolidated balance sheet

Unit: NT$ thousand

Year Item	Year Item	2019	2020	2021	2022	2023
Current assets		5,339,949	1,602,851	1,526,637	1,999,206	2,122,070
Financial assets at fair value through other comprehensive income		－	－	－	10,160	48,448
Investments using the equity method		8,975	562,449	552,882	594,576	590,166
Property, plant and equipment		1,775,379	179,967	177,594	154,899	133,121
Intangible assets		619,745	522,010	497,282	540,550	529,297
Other assets		489,190	171,323	247,575	231,339	211,999
Total assets		8,233,238	3,038,600	3,001,970	3,530,730	3,635,101
Current liabilities	before allocation	3,362,896	1,153,258	1,523,616	1,357,307	959,205
	after allocation	3,527,349	1,194,371	1,564,731	1,400,430	998,557
Non-current liabilities		1,023,352	676,414	265,312	699,244	672,771
Total liabilities	before allocation	4,386,248	1,829,672	1,788,928	2,056,551	1,631,976
	after allocation	4,550,701	1,870,785	1,830,043	2,099,674	1,671,328
Attributable to the parent company Owner's rights		1,618,799	1,208,928	1,213,042	1,474,179	2,003,125
Share capital		834,516	834,516	834,544	833,544	983,789
Capital reserve	before allocation	369,961	351,925	310,881	329,808	642,138
	after allocation	369,961	310,812	302,658	321,585	642,138
Retained earnings	before allocation	522,583	197,426	303,400	373,012	400,323
	after allocation	358,130	197,426	270,508	338,112	360,971
Other interests		(76,537)	(143,215)	(204,059)	(33,051)	(23,125)
Treasury stock		(31,724)	(31,724)	(31,724)	(29,134)	－
non-controlling interest		2,228,191	－	－	－	－
Sharehold ers' equity total amount	before allocation	3,846,990	1,208,928	1,213,042	1,474,179	2,003,125
	after allocation	3,682,537	1,167,815	1,171,927	1,431,056	1,963,773

Note : Reviewed/audited by independent auditors.

• 94-

(3) Condensed un-consolidated comprehensive income statement

				Unit: NT$ thousand	Unit: NT$ thousand
Year Item	2019	2020	2021	2022	2023
Operating income	943,270	360,033	208,730	82,345	78,170
Operating profit	123,306	30,085	7,491	(244)	1,484
Operating ( loss ) gain	13,195	(29,385)	(39,786)	(61,430)	(46,084)
Non-operating income and expenses	331,147	(112,599)	147,843	164,249	140,032
(Loss) before tax	344,342	(141,984)	108,057	102,819	93,948
Continuing business unit Net (loss) profit for the period	326,325	(146,141)	106,306	99,513	80,320
Loss of closed units	－	－	－	－	－
Net (loss) profit for the period	326,325	(146,141)	106,306	99,513	80,320
Other comprehensive profit and loss for the period	(46,645)	(78,214)	(61,176)	173,999	9,701
Total comprehensive profit and loss for the period	279,680	(224,355)	45,130	273,512	90,021
Net profit (loss) attributable to parent company owner	326,325	(146,141)	106,306	99,513	80,320
Net profit (loss) attributable to non-controlling interests	－	－	－	－	－
The total comprehensive profit and loss is attributable to the owner of the parent company	279,680	(224,355)	45,130	273,512	90,021
Total comprehensive profit or loss attributable to non-controlling interests	－	－	－	－	－
Earnings (loss) per share	4.02	(1.78)	1.29	1.21	0.87

Note: Reviewed/audited by independent auditors.

.

• 95-

(4) Condensed consolidated statement of comprehensive income

				Unit: NT$ thousand	Unit: NT$ thousand
Year Item	2019	2020	2021	2022	2023
Operating income	7,794,299	3,377,878	2,097,948	2,776,680	3,414,371
Operating profit	1,770,429	657,351	317,722	458,135	478,816
Operating ( loss ) gain	(32,589)	(111,611)	(31,179)	88,918	157,108
Non-operating income and expenses	230,420	(53,878)	130,767	18,823	(16,437)
(Loss) before tax	197,831	(165,489)	99,588	107,741	140,671
Continuing business unit Net (loss) profit for the period	121,017	(180,876)	106,306	99,513	80,320
Loss of closed units	－	－	－	－	－
Net (loss) profit for the period	121,017	(180,876)	106,306	99,513	80,320
Other comprehensive profit and loss for the period	(67,302)	(91,171)	(61,176)	173,999	9,701
Total comprehensive profit and loss for the period	53,715	(272,047)	45,130	273,512	90,021
Net profit (loss) attributable to parent company owner	326,325	(146,141)	106,306	99,513	80,320
Net profit (loss) attributable to non-controlling interest	(205,308)	(34,735)	－	－	－
The total comprehensive profit and loss is attributable to the owner of the parent company	279,680	(224,355)	45,130	273,512	90,021
Total comprehensive profit or loss attributable to non-controlling interests	(225,965)	(47,692)	－	－	－
Earnings (loss) per share	4.02	(1.78)	1.29	1.21	0.87

Audited by independent auditors .

• 96-

• (2) The name and audit opinion of the certified auditors in the last five years

• The name and audit opinion of the CPAs in the last five years

Year	Audit firm	CPA name	Opinion
2019	Deloitte & Touche United AccountingFirm	Chen Peide Lin Wenqin	Unqualified Opinion Annotated Other Matters Paragraph
2020	Deloitte & Touche United AccountingFirm	Chen Peide Lin Wenqin	Unqualified Opinion Annotated Other Matters Paragraph
2021	Deloitte & Touche United AccountingFirm	Chen Peide Chen Junhong	Unqualified Opinion
2022	Deloitte & Touche United AccountingFirm	Chen Peide Chen Junhong	Unqualified Opinion
2023	Deloitte & Touche United AccountingFirm	Chen Peide Chen Junhong	Unqualified Opinion

1. Instructions for changing accountants in the last five years:

The replacement of certified auditors is mainly due to the adjustment of the rotation mechanism for the independence of Deloitte & Touche United Audit Firm .

• 97-

2. Financial analysis for the last five years

1. Unconsolidated financial analysis

Item	Year	Year	2019	2020	2021	2022	2023
Financial structure (%)	Liabilities to Assets Ratio		43.56	52.55	49.23	46.32	30.49
	Ratio of long-term funds to real estate, plant and equipment		6,864.14	5,421.62	5,344.23	12,186.94	18,668.94
Solvency (%)	Current Ratio		81.19	53.78	23.01	51.07	61.87
	Quick ratio		62.97	32.82	22.16	50.89	61.60
	Interest coverage ratio		18.38	(12.05)	12.32	7.16	12.92
Manageme nt capacity	Accounts receivable turnover rate(times)		3.47	2.27	6.22	1.97	1.91
	Average cash collection days		105	160	59	185	191
	Inventoryturnover(times)		3.63	2.21	2.26	12.33	127.50
	Payable turnover ratio (times)		8.74	7.60	67.46	6.83	8.39
	Average sales days		100	165	162	29	2
	Turnover rate of real estate, plant and equipment (times)		6.77	11.28	7.43	4.13	5.26
	Total asset turnover(times)		0.31	0.13	0.08	0.03	0.03
Profitability	Return on Assets (%)		11.38	(4.82)	4.93	4.97	3.38
	Return on Equity (%)		21.39	(10.34)	8.78	7.41	4.62
	Ratio of paid-in capital (%)	business interest	1.58	(3.52)	(4.77)	(7.37)	(4.68)
		net profit before tax	41.26	(17.01)	12.95	12.34	9.55
	Profit rate (%)		34.60	(40.59)	50.93	120.85	102.75
	Earnings (loss) per share		4.02	(1.78)	1.29	1.21	0.87
Cash flow	Cash flow ratio (%)		29.84	2.81	19.53	2.41	11.92
	Cash flow allowable ratio (%)		－	16.26	43.31	43.85	97.20
	Cash reinvestment ratio(%)		0.69	－	12.90	－	0.39
Leverage	Operating leverage		2.33	0.36	0.69	0.83	0.82
	Financial leverage		(1.80)	0.60	0.67	0.64	0.71

• 98-

Reasons for changes in various financial ratios of more than 20% in the last two years:

1. The decrease in the ratio of liabilities to assets: mainly due to the decrease in total liabilities due to the repayment of bank borrowings.

2. The increase in the ratio of long-term funds to real estate, plant and equipment: mainly due to the expansion of equity capital and increase in capital reserves caused by the conversion of convertible corporate bonds, resulting in an increase in total equity.

3. The current ratio increased : mainly due to the decrease in current liabilities due to repayment of bank borrowings.

4. The quick ratio increased : mainly due to the decrease in current liabilities due to the repayment of bank borrowings.

5. The increase in interest coverage ratio was mainly due to the decrease in bank borrowing interest.

6. Increase in inventory turnover rate : mainly due to inventory reduction.

7. The increase in payables turnover rate (times): mainly due to the decrease in payables.

8. The decrease in average sales days was mainly due to the increase in inventory turnover rate.

9. The increase in the turnover rate of real estate, plant and equipment (times): mainly due to the decrease in real estate, plant and equipment.

10. The return on assets decreased: mainly due to the increase in total assets.

11. The return on equity decreased: mainly due to the increase in total equity.

12. The increase in the ratio of operating profit to paid-in capital was mainly due to the decrease in net operating loss.

13. The ratio of pre-tax net income to paid-in capital decreased: mainly due to the increase in paid-in capital.

14. The decrease in earnings per share: mainly due to the decrease in profits and the expansion in equity capital.

15. The increase in cash flow ratio: mainly due to the decrease in current liabilities.

16. The increase in cash flow admissible ratio: mainly due to the increase in net cash inflow from operating activities in the past five years.

17. The increase in cash reinvestment ratio: mainly due to the increase in net cash inflow from operating activities.

18. 99-

2. Consolidated Financial Analysis

Item	Year	Year	2019	2020	2021	2022	2023
Financial structure (%)	Liabilities to Assets Ratio		53.27	60.21	59.59	58.25	44.89
	Ratio of long-term funds to real estate, plant and equipment		274.33	1,047.60	832.43	1,403.12	2,010.12
Solvency (%)	Current Ratio		158.79	138.98	100.20	147.29	221.23
	Quick ratio		89.82	74.51	46.16	65.99	91.67
	Interest coverage ratio		4.09	(3.73)	6.79	4.23	5.27
Manageme nt capacity	Accounts receivable turnover rate(times)		3.83	2.94	5.39	4.96	4.89
	Average cash collection days		95	124	68	73	74
	Inventoryturnover(times)		2.23	1.64	2.12	2.18	2.30
	Payable turnover ratio (times)		9.85	7.97	12.97	10.23	9.90
	Average sales days		164	222	172	167	158
	Turnover rate of real estate, plant and equipment (times)		4.26	3.46	11.73	16.70	23.71
	Total asset turnover(times)		0.90	0.60	0.69	0.85	0.95
Profitability	Return on Assets (%)		1.99	(2.61)	4.25	4.37	3.25
	Return on Equity (%)		3.14	(7.16)	8.78	7.41	4.62
	Ratio of paid-in capital (%)	business interest	(3.91)	(13.37)	(3.74)	10.67	15.97
		net profit before tax	23.71	(19.83)	11.93	12.93	14.30
	Profit rate (%)		1.55	(5.35)	5.07	3.58	2.35
	Earnings (loss) per share		4.02	(1.78)	1.29	1.21	0.87
Cash flow	Cash flow ratio (%)		22.37	19.62	(4.84)	(11.47)	11.52
	Cash flow allowable ratio (%)		27.39	46.39	34.76	14.91	65.11
	Cash reinvestment ratio(%)		14.52	4.13	(10.79)	(11.03)	3.31
Leverage	Operating leverage		(5.76)	(0.25)	(1.61)	2.04	1.60
	Financial leverage		0.34	0.73	0.53	2.55	1.40

• 100-

Reasons for changes in various financial ratios of more than 20% in the last two years:	Reasons for changes in various financial ratios of more than 20% in the last two years:
1.	The decrease in the ratio of liabilities to assets: mainly due to the decrease in total liabilities
	due to the repayment of bank borrowings.
2.	The increase in the ratio of long-term funds to real estate, plant and equipment: mainly due
	to the expansion of equity capital and increase in capital reserves caused by the conversion
	of convertible corporate bonds, resulting in an increase in total equity.
3.	The current ratio increased : mainly due to the decrease in current liabilities due to
	repayment of bank borrowings.
4.	The quick ratio increased : mainly due to the decrease in current liabilities due to the
	repayment of bank borrowings.
5.	The increase in interest coverage ratio was mainly due to the increase in profits.
6.	The increase in turnover rate of real estate, equipment and equipment (times): mainly due to
	the increase in operating income.
7.	Decline in return on assets: mainly due to decrease in profits.
8.	The return on equity decreased: mainly due to the increase in total equity.
9.	The increase in the ratio of operating profit to paid-in capital: mainly due to the increase in
	operating net profit.
10.	The decrease in net profit margin: mainly due to the decrease in profits and the increase in
	revenue.
11.	The decrease in earnings per share : mainly due to the decrease in profits and the increase in
	equity capital.
12.	The increase in cash flow ratio : mainly due to the increase in net cash inflow from
	operating activities.
13.	The increase in cash flow allowance ratio : mainly due to the increase in net cash inflow
	from operating activities in the past five years.
14.	The increase in cash reinvestment ratio : mainly due to the increase in net cash inflow from
	operating activities.
15.	The decrease in operating leverage : mainly reflects changes in operations and operating
	profits.
16.	The decrease in financial leverage : mainly reflects changes in operating and financial costs.

• 101-

The formula for calculating financial analysis items is as follows:

1. Financial structure

2. (1) Ratio of liabilities to assets = total liabilities / total assets.

3. (2) The ratio of long-term funds to real estate, plant and equipment = (total equity + non-current liabilities) / net real estate, plant and equipment.

4. Solvency

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

6. (2) Quick ratio = (current assets - inventory - prepaid expenses) / current liabilities.

7. (3) Interest coverage ratio = net profit before income tax and interest expenses / interest expenses for the current period.

8. Operating ability

9. (1) Turnover rate of accounts receivable (including accounts receivable and notes receivable arising from business operations) = net sales/average accounts receivable of each period (including accounts receivable and notes receivable arising from operations) Notes receivable) balance.

10. (2) Average cash collection days = 365/receivable turnover rate.

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

12. (4) Turnover rate of accounts payable (including accounts payable and notes payable arising from business operations) = cost of goods sold/balance of average payables (including accounts payable and notes payable arising from operations) in each period.

13. (5) Average days of sales = 365/inventory turnover.

14. (6) Turnover rate of real estate, plant and equipment = net sales/average net real estate, plant and equipment.

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

16. Profitability

17. (1) Return on assets = [after-tax profit and loss + interest expense x (1 - tax rate)] / total average assets.

18. (2) Return on equity = after-tax profit/loss/average total equity.

19. (3) Profit rate = profit and loss after tax / net sales.

20. (4) Earnings per share = (Profit or loss attributable to owners of the parent company - special stock dividends) / weighted average number of issued shares.

21. Cash flow

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

23. (2) Allowable ratio of net cash flow = net cash flow from operating activities in the last five years / (capital expenditure + increase in inventory + cash dividends) in the last five years.

24. (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross real estate, plant and equipment + long-term investment + other non-current assets + working capital).

25. Leverage:

26. (1) Operating leverage = (net operating income - variable operating costs and expenses) / operating profit.

27. (2) Financial leverage = operating profit / (operating profit - interest expense).

28. 102-

29. Review report of the audit committee for the most recent annual financial report

Audit Committee Review Report

The board of directors formulated the company's 2023 annual business report, financial statements (including consolidated financial statements) and profit distribution proposals, among which the financial statements (including consolidated financial statements) were audited and certified by accountants Chen Peide and Chen Junhong of Deloitte & Touche United Audit Firm Completed and a review report issued. The above-mentioned business report, financial statements (including consolidated financial statements) and profit distribution proposals have been reviewed by the audit committee and found to be inconsistency, and reported in accordance with the provisions of Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. As above, please review.

Sincerely,

Parpro Corporation

2024 Annual General Meeting of Shareholders

Convener of Audit Committee:

Shen Zhenlin

1. Individual financial report of the most recent year audited and certified by CPA: Please refer to pages 108 to 163 .

2. Consolidated financial report audited and certified by CPA for the most recent year: Please refer to pages 164 to 227 .

3. If the company and its affiliated companies had financial turnover difficulties in the most recent year and up to the date of publication of the annual report, the impact on the company's financial status should be listed: None.

4. 103-

5. Review and Analysis of Financial Status and Financial Performance and Risk Matters

1. Financial status

• (1) The main reason and impact of major changes in consolidated assets, liabilities, and equity in the last two years . If the impact is significant, the future response plan should be explained:

Financial status (1) The main reason and impact of major changes in consolidated assets, liabilities, and equity in the last two years . If the impact is significant, the future response plan should be explained:	Financial status (1) The main reason and impact of major changes in consolidated assets, liabilities, and equity in the last two years . If the impact is significant, the future response plan should be explained:	Financial status (1) The main reason and impact of major changes in consolidated assets, liabilities, and equity in the last two years . If the impact is significant, the future response plan should be explained:	Financial status (1) The main reason and impact of major changes in consolidated assets, liabilities, and equity in the last two years . If the impact is significant, the future response plan should be explained:	Financial status (1) The main reason and impact of major changes in consolidated assets, liabilities, and equity in the last two years . If the impact is significant, the future response plan should be explained:
Unit: NT$ thousand
Year	2022	2023	Increase or decrease
Item	Amount	Amount	Amount	%
CurrentAssets	1,999,206	2,122,070	122,864	6.15
Financial Assets Measured At Fair Value through Other Comprehensive Income	10,160	48,448	38,288	376.85
Investments UsingTheEquityMethod	594,576	590,166	(4,410)	(0.74)
Property,Plant andEquipment	154,899	133,121	(21,778)	(14.06)
IntangibleAssets	540,550	529,297	(11,253)	(2.08)
Other Assets	231,339	211,999	(19,340)	(8.36)
Total Assets	3,530,730	3,635,101	104,371	2.96
CurrentLiabilities	1,357,307	959,205	(398,102)	(29.33)
Non-CurrentLiabilities	699,244	672,771	(26,473)	(3.79)
Total Liabilities	2,056,551	1,631,976	(424,575)	(20.65)
Share Capital	833,544	983,789	150,245	18.02
Capital Reserve	329,808	642,138	312,330	94.70
Retained Earnings	373,012	400,323	27,311	7.32
Other Interests	(33,051)	(23,125)	9,926	30.03
Treasury Stock	(29,134)	0	29,134	100.00
Non-Controlling Interest	0	0	0	0
TotalShareholders' Equity	1,474,179	2,003,125	528,946	35.88
Explanation for analysis of changes in increase or decrease ratio: (if the increase or decrease is more than 20%, and the amount of change is 10,000,000) A. Increase in financial assets measured at fair value through other comprehensive gains and losses : mainly due to new investments in marketable securities. B. Decrease in current liabilities: mainly due to repayment of bank borrowings. C. Total liabilities decreased: mainly due to repayment of bank borrowings. D. Increase in capital reserves: mainly due to the conversion of convertible corporate bonds. E. Decrease in treasury stocks: mainly due to cancellation of treasury stocks. F. Increase in total shareholders' equity: Mainly due to the increase in share capital and capital reserves caused by the conversion of convertible corporate bonds.

Explanation for analysis of changes in increase or decrease ratio: (if the increase or decrease is more than 20%, and the amount of change is 10,000,000)

(2) Future coping plans:

There is no major abnormality in the overall performance of the company, so there is no need for a response plan. In the future, we will continue to focus on the improvement of business performance and the stable growth of profits, and improve the company's financial structure to reduce financial burdens.

• 104-

• Financial performance:

• Financial performance analysis for the last two years:

Unit: NT$ thousand

Item	2022	2023	Increase (decrease) Amount	Change ratio%
Operating income	2,776,680	3,414,371	637,691	22.97
Operating profit	458,135	478,816	20,681	4.51
Operating expenses	369,217	321,708	(47,509)	(12.87)
Operating (loss)	88,918	157,108	68,190	76.69
Non-operating income and expenses	18,823	(16,437)	(35,260)	(187.32)
Net (loss) profit before tax	107,741	140,671	32,930	30.56
Income tax	(8,228)	(60,351)	(52,123)	(633.48)
Net (loss) profit for the year	99,513	80,320	(19,193)	(19.29)
Explanation for analysis of changes in increase or decrease ratio: (if the increase or decrease is more than 20%, and the amount of change is 10,000,000) A. The increase in operating income was mainly due to the continued increase in economic and industrial demand after the epidemic and the influx of new orders from the national defense industry. B. The decrease in operating expenses was mainly due to expected credit impairment reversal benefits and expense control. C. The increase in operating net profit was mainly due to the expansion of business scale and cost control. D. The increase in non-operating net expenses was mainly due to the recognition of reinvestment losses and exchange losses. E. The increase in pre-tax net profit was mainly due to the expansion of operating operations and cost control. F. The increase in income tax expenses was mainly due to the increase in profits in the current period and the addition of income tax adjustments in previous years. G. The decrease in net profit this year was mainly due to the increase in income tax.

1. The expected sales volume and its basis, the possible impact on the company's future financial business and the response plan:

The company has not announced the financial forecast for 2024, so it does not intend to disclose the expected sales volume.

• 105-

3. Cash flow

• (1) Analysis of cash flow changes in the most recent year:

				Unit: NT$ thousand	Unit: NT$ thousand
Opening cash balance	Annual net cash flow from operating activities	Net cash flow from other activities for theyear	Cash surplus (Insufficient) amount	Remedial Measures for Cash Insufficiency
				investment plan	financial plan
143,828	110,467	(58,743)	195,552	Not applicable	Not applicable

• (1) Business activities:

The net cash inflow was 110,467 thousand, mainly due to the increase in various operating expenses such as inventories due to the gradual recovery of operations in the current period .

• (2) Net cash flow from other activities for the year:

The net cash outflow was 58,743 thousand, which was mainly due to investment in stocks, repayment of bank loans and payment of cash dividends in the current period. However, although the third domestic convertible corporate bond was issued in the current period, the overall net cash outflow was small.

• (2) Improvement plan for insufficient liquidity : None.

• (3) Analysis of cash flow in the coming year:

				Unit: NT$ thousand	Unit: NT$ thousand
Opening cash balance	Annual net cash flow from operating activities	Net cash flow from other activities for the year	cash surplus (Insufficient) amount	Remedial Measures for Cash Insufficiency
				investment plan	financial plan
195,552	85,336	(74,195)	206,693	-	-

The company estimates that the net cash inflow from operating activities in 2024 will be 85,336 thousand, the net cash outflow from other activities for the whole year is expected to be 74,195 thousand, and the estimated remaining amount of cash is 206,693 thousand. There is no cash shortage expected in 2024.

1. The impact of major capital expenditures on financial business in the most recent year: None.

2. 106-

3. Reinvestment policy for the most recent year, main reasons for its profit or loss, improvement plan, and investment plan for the next year:

4. Reinvestment policy

Depending on the company's business development and sustainable operation needs, in line with the group's goals of operating expansion, ensuring production capacity, and serving customers nearby, it is mainly for long-term holding. If there is any transfer of investment, it will follow the "investment cycle" of the company's internal control system and "Procedures for Acquiring or Disposing of Assets".

1. Gain or loss from reinvestment:

December 31, 2023; unit: thousands of NT dollars/thousands of foreign currency

Reinvestment company	Investment cost	Book value	Profit and loss
Efa TechnologyCo.,Ltd.	－	18,190	(2,696)
Parpro Holdings Co.,Ltd.	USD 41,990	1,972,934	69,556
Anderson Industrial Corp.	470,758	555,457	(14,954)
Sogotec Precision Co.,Ltd.	85,304	34,709	(75,205)
AP Parpro,Inc.	USD 18,522	613,203	(21,127)
Pilot(Las Vegas),Inc.	USD 735	17,662	(8,211)
Parpro(Nevada), Inc.	USD 3,676	88,322	(41,053)
ParproQuality, Inc.	USD 23,955	1,255,017	115,198
Parpro Technologies, Inc.	USD 23,500	1,255,017	115,198

Note: The visa has been verified by an accountant.

1. Investment plan for the next year: Appropriately evaluate the investment funds for each reinvestment business according to the needs of the group's operation and development.

2. Analysis and evaluation of risk management

3. (1) The impact of interest rate, exchange rate changes, and inflation on the company's profit and loss in the most recent year and as of the date of publication of the annual report, and future response measures:

   • A. Impact on the company's profit and loss

Unit: NT$ thousand

Impact on the company's profit and loss Unit: NT$ thousand
Iem	2023
Interest (income) expense	23,108
Exchange (loss) gain	(1,714)
Ratio of net interest income to net revenue	0.68%
Ratio of net interest income to net profit before tax	16.43%
Ratio of net exchange gain and loss to net revenue	(0.05%)
Ratio of net exchange gain and loss to net profit before tax	(1.22%)

• B.The company's future response measures

• A. Changes in interest rates:

• 107-

The company's ratio of net interest income and expenses to net revenue and pre-tax net income ratio for 2023 were 0.68 % and 16.43 % respectively.

The financial department of the company pays attention to the changes in interest rates at any time, and keeps in close contact with the bank to obtain more favorable loan interest rates, so as to minimize the impact of interest rate changes on the company. In addition, we will also comprehensively consider the capital cost of various financing tools and the company's financial situation, select the most suitable working capital structure, and evaluate the increase in the ratio of self-owned funds in a timely manner.

B. Exchange rate changes:

The company's ratio of net exchange profit and loss to net revenue and pre-tax net income ratio for 2023 were (0.05%) and (1.22%) respectively . The company has taken the following possible response measures:

• ①Foreign exchange fund dispatching, using self-owned foreign exchange income to cover foreign exchange expenditures, reducing exchange risk.

• ②Collect information about exchange rate changes at any time, and fully grasp the exchange rate trend, so as to decide the time to convert currency or keep it in the foreign exchange account .

• ③Improve product quality and its added value, reflect the cost in a timely manner when the exchange rate fluctuates, and adjust the selling price .

C. Inflation:

The recent annual price index is still within a reasonable range, and inflation will not have a significant impact on the company's profit and loss.

• (2) Policies for engaging in high-risk, high-leverage investments, capital lending to others, endorsement guarantees, and derivatives transactions in the most recent year and as of the date of publication of the annual report , the main reasons for profit or loss, and future countermeasures:

• A. Engage in high-risk, high-leverage investment: no such case.

• B. Fund loan to others:

Our company has established the "Operating Procedures for Capital Loans to Others", and the relevant capital loans to others are handled in accordance with the operating procedures. As of the date of publication of the annual report, the circumstances of the Company’s board of directors’ approval of quota of capital loans to others are as follows:

• (a) The company has a capital loan of US$2,000,000 to its subsidiary AP Parpro, Inc.

• (2) Subsidiary Parpro Holdings Co., Ltd loan of USD 2,200,000 to subsidiary AP Parpro, Inc.

• (3) Subsidiary Parpro Technologies, Inc. has a capital loan of US$2,800,000 to subsidiary Parpro (Nevada), Inc.

• 108-

  • (4) Subsidiary Parpro Technologies, Inc. has a capital loan of US$10,100,000 to subsidiary AP Parpro, Inc.

  • (5) Subsidiary Parpro (Nevada) loan of US$1,000,000 to subsidiary AP Parpro, Inc.

• C. Endorsement Guarantee : None.

• D. Derivative commodity trading: None.

• (3) Future R&D plans and estimated R&D expenses

In addition to continuing the current unfinished products and extending the existing series to expand product specifications, the company will continue to develop new/old product series with high added value and market competitiveness for different market segments and application fields, and actively expand emerging demand markets , innovation and development of diversified application fields; in addition, the company controls the progress of research and development by project, and always pays attention to the development of science and technology, product trends, the situation of competitors in the same industry, changes in the supply and demand of the sales market and material supply market, etc. Factors that may affect the success of research and development , to ensure that the R&D plans can meet market demands and be completed on schedule.

The company's research and development is based on customer needs, product categories and market trends . The research and development progress is based on customer demand and timely adjustments based on operating conditions and industry trends ..

• (4) The impact of major policy and legal changes at home and abroad on the company's financial business and countermeasures

The Company continues to pay attention to changes in the domestic and international political and economic environment, important policies and laws, and analyzes and reviews their impact at any time . It also cooperates with the review and revision of the Company's important letters and orders issued by the competent authorities on corporate governance and risk control. Follow control mechanisms. It has been assessed that the aforementioned changes have no significant impact on the company's financial operations in 2023 and as of the date of publication of the annual report .

• (5) The impact of technological changes ( including information security risks) and industrial changes on the company's financial business and countermeasures

• Since its establishment, the company has actively invested in product design, sales channels, and R&D innovation. In recent years, various new technologies have been continuously introduced, such as mobility services , big data applications, unmanned store self-service , etc. , cloud software services and other innovative applications, the company fully grasps the pulse of technology and industry, and introduces new product designs to provide innovative applications. Therefore, the product positioning is correct, coupled with flexible sales strategies and extensive market access, it is ahead of its competitors. The company's products are customized products, with a wide range of applications and flexible customization capabilities as competitive

• 109-

niches, and can maintain stable profits. In terms of information security, internal and external audits are conducted every year to maintain the continued effectiveness of the management system. No major abnormalities occurred in 2012. It has been assessed that changes in technology, information security risks and industries have no significant impact on the company's financial operations in 2012 and as of the date of publication of the annual report.

• (6) The impact of corporate image changes on corporate crisis management and countermeasures

The company adheres to the operating principles of professionalism and integrity, and attaches great importance to corporate image and risk control. Therefore, the corporate image is still good, and there are no illegal incidents or changes in corporate image, and there is no violation of laws and principles of integrity to affect corporate image Things happen.

(7) Expected benefits, possible risks and countermeasures of mergers and acquisitions The company will still regard mergers and acquisitions as one of the main axes of future business strategy development. Comprehensively consider whether the merger and acquisition can bring long-term and specific benefits to the company/group to ensure the maximum interests of shareholders.

• (8) Expected benefits, possible risks and countermeasures of plant expansion : None.

• (9) Risks and countermeasures faced by centralized purchase or sales

The company's purchase mainly considers factors such as procurement strategy and market price changes, so it diversifies its purchases from suppliers and there is no risk of centralized purchase.

The company's main sales customers account for about 10 to 25% of the revenue, and most of them are listed companies in North America. In addition, we have established very deep cooperative relationships with customers. For the company, orders and revenue The quality is relatively stable. In addition, in order to diversify the risk that sales may be concentrated in a single industry, the company will still actively invest in the development of product application fields, such as medical, network communications, satellite networks, cloud computing and national defense applications. In the future, it will invest more resources to continue to develop new products. models and new customers.

• (10) Directors, supervisors or major shareholders holding more than 10% of the shares, the impact, risk and countermeasures of a large number of equity transfers or replacements on the company: None.

• (11) Impacts, risks and countermeasures of the change of management rights on the company : None.

• (12) Litigation or non- litigation events : None.

• (13) Other important risks and countermeasures: None.

• 110-

• Other important matters : None.

• 111-

VIII. Special records

1. Relevant information of related enterprises:

2. (1) Affiliated business merger business report

   1. Relational enterprise map (March 31 , 2024)

						Parpro Corporation.
		100%						100%					20.86 %		4.73 %
Efa Technologies												Anderson Industrial Corp.		Sogotec
						Parpro Holdings. Co., Ltd.								Precision
														Co.,Ltd.
Corporation.				100%			Sogotec Precision Co.,Ltd.				100%
		2.39 %	AP Parpro, Inc.			Pilot (Las Vegas), Inc.
									Parpro Quality, Inc.
Sogotec Precision Co.,Ltd.				80%			20%				100%
									Parpro
									Technologies,Inc.
	2. Basic
	Company Name				Date of establishment			address		Paid-in capital		Main business or production items
	Efa Technologies Corporation				2004.01.07			Taipei City		32,719		Industrial computers andgamingmachines.
	Parpro Holdings Co., Ltd.				2012.09.24			British virgin islands		USD41,990		Investment holding company.
	Anderson Industrial Corp.				1972.07.21			Taipei City		1,913,310		Non-metallic computer numerical control machining center .
	Sogotec Precision Co., Ltd.				1990.10.02			Taiwan		204,000		Manufacturing and trading of electronic machinery and peripheral products
	AP Parpro, Inc.				2012.10.31(Note)			U.S.		USD12,670		aerospace , national defense , Netcom , smart retail and medical care .
	Pilot (Las Vegas), Inc.				2013.12.13			U.S.		USD982		Investment holding company.
	Parpro (Nevada), Inc.				2013.12.13(Note)			U.S.		USD3,796		industrial computers andgamingmachines.
	Parpro Quality, Inc.				2016.04.01			U.S.		USD23,500		Investment holding company.
	Parpro Technologies, Inc.				2016.04.01			U.S.		USD23,500		Aerospace , national defense , Netcom , and medical .

• 112-

Note: It is the date when the company invested and purchased the company.

• (1) Affiliated companies directly or indirectly controlled by the company in terms of personnel, finance, or business operations in accordance with Article 369-2 of the Company Law : None.

• (2) According to Article 369-3 of the Company Law, it is presumed to have control and affiliated companies: None.

• The industries and division of labor covered by the overall related enterprises

  • (1 ) Efa Technologies Corporation: responsible for the sales of industrial computers and gaming machines.

  • (2 ) Parpro Holdings Co., Ltd.: Investment holding company.

  • (3 ) Anderson Industrial Corp.: a strategic investment for the company.

  • ( 4) Sogotec Precision Co., Ltd.: manufacturing and trading of electronic machinery and peripheral products.

  • (5 ) AP Parpro, Inc.: Production and sales of electronic components such as aerospace , national defense , Netcom , smart retail and medical care .

  • (6 ) Pilot (Las Vegas), Inc.: Investment holding company.

  • (7 ) Parpro (Nevada), Inc.: responsible for the sales of industrial computers and gaming machines.

  • (8 ) Parpro Quality , Inc.: Investment holding company.

  • ( 9) Parpro Technologies , Inc.: Production and sales of electronic components such as aerospace , national defense , Netcom , and medical care

• The names of the directors, supervisors and general managers of each affiliated

company and their shareholding or capital contribution to the company

Unit: thousand shares/1 March 31 , 2024

Company Name	Job title	name or representative	Hold	shares
			Number of shares (thousand shares)	shareholding ratio
Efa Technologies Corporation	Director	Parpro Corporation Technology Co., Ltd. Representative: Liao Wenjia	3,272	100%
	Director	Parpro Corporation Technology Co., Ltd. Representative: Wu Hsiu Pi	3,272	100%
	Director	Parpro Corporation Technology Co., Ltd. Representative: SongXinda	3,272	100%

• 113-

	Supervisor	Parpro Corporation Technology Co., Ltd. Representative: Yan Congqian	3,272	100%
Parpro Holdings Co., Ltd.	Director	Parpro Corporation Technology Co., Ltd. Representative: Liao Wenjia	42	100%
Anderson Industrial Corp.	Chairman	Yunyong Investment Co., Ltd. Representative : Liao Wenjia	17,000	8.89%
	Director	Yunyong Investment Co., Ltd. Representative : LinQiquan	17,000	8.89%
	Director	Yunyong Investment Co., Ltd. Representative : Xu Yonghao	17,000	8.89%
	Director	Yunyong Investment Co., Ltd. Representative : Huang Yixian	17,000	8.89%
	Independent director	Wu Qingsong	-	-
	Independent director	Lai Junliang	-	-
	Independent director	Liang Yihong	-	-
Sogotec Precision Co., Ltd. (Note)	Chairman	Anderson Industrial Corp. Representative: Liao Wenjia	11,796	58.11%
	Director	Anderson Industrial Corp. Representative: Huang Yixian	11,796	58.11%
	Director and General manager	Anderson Industrial Corp. Representative: Hou Jianfu	11,796	58.11%
	Director	Deng Chuanjin	-	-
	Independent director	Lin Shaoyuan	-	-
	Independent director	Liu Fuyun	-	-
	Independent director	Lai Wenxiang	-	-

• 114-

AP Parpro, Inc.	Director	Parpro Holdings Co., Ltd. Representative: Liao Wenjia	7	100%
	Director	Parpro Holdings Co., Ltd. Representative: Wu Hsiu Pi	7	100%
	Director	Parpro Holdings Co., Ltd. Representative: Thomas Sparrvik	7	100%
Pilot (Las Vegas), Inc.	Director	Parpro Holdings Co., Ltd. Representative: Liao Wenjia	1	100%
	Director	Parpro Holdings Co., Ltd. Representative: Thomas Sparrvik	1	100%
	Director	Parpro Holdings Co., Ltd. Representative: Wu Hsiu Pi	1	100%
Parpro (Nevada), Inc.	Director	AP Parpro, Inc. Representative: Liao Wenjia	1	80%
	Director	AP Parpro, Inc. Representative: Thomas Sparrvik	1	80%
	Director	Pilot (Las Vegas), Inc. Representative: Wu Hsiu Pi	1	20%
Parpro Quality, Inc.	Director	Parpro Holdings Co., Ltd. Representative: Liao Wenjia	23,500	100%
	Director	Parpro Holdings Co., Ltd. Representative: Thomas Sparrvik	23,500	100%
	Director	Parpro Holdings Co., Ltd. Representative: Wu Hsiu Pi	23,500	100%
Parpro Technologies, Inc.	Director	Parpro Quality, Inc Representative: Liao Wenjia	13	100%
	Director	Parpro Quality, Inc. Representative: Thomas Sparrvik	13	100%

• 115-

		Director	Parpro Quality, Inc. Representative: Wu Hsiu Pi	13	100%

Note: Sogotec Co., Ltd.changed its name to Sogotec Precision Co., Ltd. after the change registration was completed on January 9, 2015.

• 116-

5. Overview of the operation of each affiliated company

December 31, 2023; unit: thousands of NT dollars/thousands of foreign currency

Company Name	Capital amount	Total assets	Total liabilities	Net worth	Operating income	Operating profit and loss	Profit and loss for the period (after tax)	Earnings per share (dollar) (after tax)
Efa Technologies Corporation	32,719	18,390	200	18,190	0	(933)	(2,696)	Not applicable
Anderson Industrial Corp..	1,913,310	4,108,172	1,710,257	2,397,915	1,017,726	(6,166)	(14,954)	(0.08)
Sogotec Precision Co., Ltd.	204,000	1,542,709	1,055,021	487,688	881,363	(37,238)	(75,205)	(3.70)
Parpro Holdings Co., Ltd.	USD41,990	USD64,905	USD650	USD64,255	0	(580)	USD2,223	Not applicable
Pilot (Las Vegas), Inc.	USD982	USD580	USD5	USD575	0	0	(USD264)	Not applicable
Parpro Quality, Inc.	USD23,500	USD40,873	0	USD40,873	0	0	USD3,698	Not applicable
Parpro Technologies, Inc.	USD23,500	USD48,794	USD7,920	USD40,874	USD44,413	USD4,481	USD3,698	Not applicable
AP Parpro, Inc.	USD12,670	USD32,184	USD12,318	USD19,866	USD58,594	USD205	(USD678)	Not applicable
Parpro (Nevada), Inc.	USD3,796	USD6,892	USD4,016	USD2,876	USD27,189	(USD627)	(USD1,318)	Not applicable

• 117-

(2) Consolidated financial statements of affiliated enterprises:

In 2023 (from January 1, 2023 to December 31, 2023), our company should be included in the preparation of related company mergers in accordance with the "Relationship Enterprise Merger Business Report, Related Enterprise Consolidated Financial Statements, and Relationship Report Preparation Guidelines " The company for the financial statements is the same as the company that should be included in the preparation of the parent-subsidiary consolidated financial statements in accordance with International Accounting Standards No. 10, and the relevant information that should be disclosed in the parent-subsidiary consolidated financial statements has been disclosed in the previously disclosed parent-subsidiary consolidated financial statements. The consolidated financial statements of affiliated enterprises will no longer be prepared separately.

• (3) Affiliated Enterprise Report: Not applicable.

• Handling of private placement of securities in the most recent year and as of the date of publication of the annual report: None.

• In the most recent year and as of the publication date of the annual report, the holding or disposal of the company's stocks by subsidiaries: None.

• Other necessary supplementary explanations: None.

• In the most recent year and as of the date of publication of the annual report, any event that had a material impact on shareholders' equity or securities prices as specified in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act: None.

• 118-

PARPRO CORPORATION

Statement of Internal Control System

1. The company knows that it is the responsibility of the board of directors and managers of the company to establish, implement and maintain an internal control system, and the company has already established such a system. Its purpose is to achieve the goals of operational effectiveness and efficiency (including profit, performance, and asset security, etc.), report reliability, timeliness, transparency, and compliance with relevant norms and compliance with relevant laws and regulations, and provide reasonable ensure.

2. The internal control system has its inherent limitations. No matter how perfect the design is, an effective internal control system can only provide reasonable assurance for the achievement of the above three objectives; moreover, due to changes in the environment and circumstances, the effectiveness of the internal control system may vary change. However, the company's internal control system has a self-monitoring mechanism. Once a defect is identified, the company will take corrective action.

3. The company judges whether the design and implementation of the internal control system are effective based on the items for judging the effectiveness of the internal control system stipulated in the "Guidelines for the Establishment of Internal Control Systems for Publicly Issued Companies" (hereinafter referred to as "the Guidelines"). The internal control system judgment items adopted in the "Processing Criteria" are based on the process of management control, and the internal control system is divided into five components: A. Control environment, B. Risk assessment, C. Control operations, D. Information Communicate with and E. Supervise operations. Each constituent element in turn includes several items. For the aforementioned items, please refer to the provisions of the "Handling Guidelines".

4. The company has adopted the above-mentioned internal control system to judge projects and evaluate the effectiveness of the design and implementation of the internal control system.

5. Based on the evaluation results in the preceding paragraph, the company believes that the company's internal control system (including the supervision and management of

6. 119-

subsidiaries) on December 31, 2023 includes understanding the effect of operations and the degree of achievement of efficiency goals, The reporting is reliable, timely, transparent and in compliance with relevant norms and relevant laws and regulations, and the design and implementation of the relevant internal control system are effective, which can reasonably ensure the achievement of the above goals.

1. This statement will become the main content of the company's annual report and prospectus, and will be made public. If there are falsehoods, concealment, or other illegal matters in the above-mentioned disclosed content, it will involve legal liabilities under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

2. This statement was approved by the company's board of directors on March 9, 2023. Among the seven directors present, no director held an objection, and the rest agreed with the content of this statement, and hereby declare it.

Very truly yours,

Parpro Corporation By

WEN JIA LIAO Chairman

YAN CONGQIAN Gerneral Manager

• 120-

Independent Auditor’s Report

To PARPRO CORPORATION,

Audit opinion

We have audited the accompanying parent company only balance sheet of PARPRO CORPORATION (the “Company”) for the years ended December 31, 2023 and 2022 and the relevant parent company only statements of comprehensive income, changes in equity, and cash flows for the years then ended, and relevant notes, including a summary of significant accounting policies (collectively referred to as the “parent company only financial statements”).

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the Company’s individual financial position as of December 31, 2023 and 2022 and for the years then ended, and its individual financial performance and cash flows for the years then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for audit opinion

We conducted our audits in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and the auditing standards. Our responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the parent company only financial statements” paragraph of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China and have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that we have acquired enough and appropriate audit evidence to serve as the basis for our audit opinion.

Key audit matters

Key audit matters refer to the most vital matters in our audit of the Company’s parent company only financial statements for the year ended December 31, 2023 based on our professional judgment. These matters were addressed in our audit of the parent company only financial statements as a whole, and in forming our audit opinion. We do not express a separate opinion on these matters.

• 121-

Key audit matters of the Company’s parent company only financial statements for the year ended December 31, 2023, are stated as follows: – ’ Authenticity of investments using the equity method operating revenue from subsidiaries

certain customers

The Company’s subsidiaries mainly sell gaming and industrial computers as well as aerospace and national defense products. In 2023, the amount of product revenue from certain customers changed significantly on a year-on-year basis; as we considered revenue recognition to bear a higher inherent risk of fraud and that the management might be pressured to achieve planned financial targets, we listed the authenticity of such revenue as a key audit matter.

We performed for the following audit procedures for the above matter:

1. Learned about and tested the key internal control systems for the revenue and evaluated the design and implementation effectiveness;

2. Obtained the statements of the account of the revenue, selected samples for testing of the details, and reviewing documents, such as orders, shipping orders, and invoices to confirm the authenticity of the revenue;

3. Obtain the statements of the account of the revenue and selected samples to test if there was a significant difference in the write-offs and amounts of receivables to confirm the authenticity of the revenue.

Responsibilities of the management and the governing bodies for the parent company only financial statements

The management’s responsibilities are to prepare the parent company only financial statements with fair presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and to maintain necessary internal control associated with the preparation in order to ensure that the parent company only financial statements are free from material misstatement arising from fraud or error.

In preparing the parent company only financial statements, the management is also responsible for assessing the ability of the Company in continuing as a going concern, disclosing relevant matters, and adopting the going concern basis of accounting unless the management intends to liquidate the Company or cease the operations without other viable alternatives.

The Company’s governing bodies (including the Audit Committee) are responsible for supervising the financial reporting process.

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance on whether the parent company only financial statements as a whole are free from material misstatement arising from fraud or error and to issue an independent auditors’ report. Reasonable assurance is a high-level assurance but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatement may arise from frauds or error. If the amounts of misstatements, either separately or in aggregate, could reasonably be expected to influence the economic decisions of the users of the parent company only financial statements, they are considered material.

• 122-

We have exercised our professional judgment and professional skepticism when performing the audit work in accordance with the auditing standards. We also performed the following tasks:

1. Identified and assessed the risks of material misstatement arising from fraud or error within the parent company only financial statements; designed and executed countermeasures in response to said risks, and obtained sufficient and appropriate audit evidence to provide a basis for our opinion. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error.

2. Understood the internal control related to the audit in order to design appropriate audit procedures under the circumstances, while not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluated the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and relevant disclosures made by the management.

4. Concluded on the appropriateness of the management’s adoption of the going concern basis of accounting based on the audit evidence obtained and whether a material uncertainty exists for events or conditions that may cast significant doubt over the Company’s ability to continue as a going concern. If we are of the opinion that a material uncertainty exists, we shall remind users of the parent company only financial statements to pay attention to relevant disclosures in the said statements within our audit report. If such disclosures are inadequate, we need to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluated the overall presentation, structure, and content of the parent company only financial statements (including relevant notes), and whether the parent company only financial statements adequately present the relevant transactions and events.

6. Obtained sufficient and appropriate audit evidence concerning the financial information of entities within the Company, to express an opinion on the parent company only financial statements. We were responsible for guiding, supervising, and performing the audit and forming an audit opinion on the Company.

7. 123-

The matters communicated between us and the governing bodies included the planned scope and times of the audit and material audit findings (including any material defects in internal control identified during the audit).

We also provided the governing bodies with a declaration that we have complied with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China regarding independence and communicated with them all relations and other matters that may possibly be regarded as detrimental to our independence (including relevant protective measures).

From the matters communicated with the governing bodies, we determined the key audit matters for the audit of the Company’s parent company only financial statements for the year ended December 31, 2023. We have clearly indicated such matters in the auditors’ report. Unless legal regulations prohibit the public disclosure of specific matters, or in extremely rare cases, where we decided not to communicate specific items in the auditors’ report for it could be reasonably anticipated that the negative effects of such disclosure would be greater than the public interest it brings forth.

Deloitte & Touche CPA Chen, Pei-Te

CPA Chen, Chun-Hung

Financial Supervisory Commission Approval Document No. Jin-Guan-Zheng-Shen-Zi No. 1080321204

Financial Supervisory Commission Approval Document No.

Jin-Guan-Zheng-Shen-Zi No. 0990031652

March 13, 2024

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PARPRO CORPORATION

Parent Company Only Balance Sheet December 31, 2023 and 2022

Unit: NTD thousand

Code 1100 1110 1172 1200 1220 130X 1410 11XX 1517 1550 1600 1755 1840 1990 15XX 1XXX Code 2100 2110 2120 2170 2219 2230 2250 2280 2320 2399 21XX 2530 2540 2570 2580 25XX 2XXX 3100 3200 3310 3320 3350 3300 3400 3500 3XXX	Assets Current assets Cash (Note 6) Financial assets at fair value through profit or loss (Note 7) Accounts receivable (Notes 9 and 23) Other receivables (Note 23) Current income tax assets Inventory Prepayments Total current assets Non-current assets Financial assets at fair value through other comprehensive income (Note 8) Investments using the equity method (Notes 5 and 10) Property, plant and equipment (Note 11) Right-of-use assets (Note 23) Deferred tax assets (Note 19) Other non-current assets Total non-current assets Total assets Liabilities and equity Current liabilities Short-term borrowings (Note 12) Short-term notes payable Financial liabilities at fair value through profit or loss (Note 7) Accounts payable (Note 23) Other payables (Notes 14 and 23) Current income tax liabilities Provisions Lease liabilities (Note 23) Long-term liabilities – current portion (Notes 12 and 13) Other current liabilities (Notes 17 and 23) Total current liabilities Non-current liabilities Corporate bonds payable (Note 13) Long-term borrowings (Note 12) Deferred tax liabilities (Note 19) Lease liabilities (Note 23) Total non-current liabilities Total liabilities Equity (Note 16) Ordinary share capital Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity Treasury shares Total equity Total liabilities and equity		December 31, 2023 Amount % $ 90,254 3 8 - 31,769 1 110,945 4 3 - - - 1,009 - 233,988 8 48,448 2 2,569,639 89 13,410 1 11,528 - 1,536 - 3,158 - 2,647,719 92 $ 2,881,707 100 $ 180,000 6 30,000 1 7,880 - 62 - 48,567 2 14,719 1 1,113 - 5,090 - 90,621 3 150 - 378,202 13 422,685 15 71,156 2 20 - 6,519 - 500,380 17 878,582 30 983,789 34 642,138 23 141,737 5 33,051 1 225,535 8 400,323 14 23,125) ( 1) - - 2,003,125 70 $ 2,881,707 100		December 31, 2022	December 31, 2022
			Amount $ 90,254 8 31,769 110,945 3 - 1,009 233,988 48,448 2,569,639 13,410 11,528 1,536 3,158 2,647,719 $ 2,881,707 $ 180,000 30,000 7,880 62 48,567 14,719 1,113 5,090 90,621 150 378,202 422,685 71,156 20 6,519 500,380 878,582 983,789 642,138 141,737 33,051 225,535 400,323 23,125) - 2,003,125 $ 2,881,707		Amount $ 47,896 - 49,986 286,267 3 454 2,790 387,396 10,160 2,328,589 16,309 521 1,211 1,939 2,358,729 $ 2,746,125 $ 470,000 - 11,954 18,218 80,669 - 1,113 532 130,041 46,030 758,557 463,567 47,827 1,995 - 513,389 1,271,946 833,544 329,808 131,486 137,381 104,145 373,012 33,051) 29,134) 1,474,179 $ 2,746,125	%
		(		( (		2 - 2 10 - - - 14 - 85 1 - - - 86 100 17 - - - 3 - - - 5 2 27 17 2 - - 19 46 30 12 5 5 4 14 ( 1) ( 1) 54 100

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

Chairman: Liao, Wen-Chia

Managerial Officer: Yen, Tsung-Chien

Chief Accounting Officer: Wu, Hsiu-Pi

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PARPRO CORPORATION

Parent Company Only Statement of Comprehensive Income

December 31, 2023 and 2022

Unit: In NTD thousand, except for earnings per share in NTD

Code 4100 Operating revenue (Notes 17 and 23) 5110 Operating costs (Note 23) 5900 Gross profit (loss) Operating expenses (Notes 9 and 18) 6100 Selling expense 6200 Administrative expenses 6450 Gain on reversal of expected credit impairment 6000 Total operating expenses 6900 Net operating loss Non-operating income and expenses (Notes 18 and 23) 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Financial costs 7070 Share of profit and loss of subsidiaries and associates using the equity method 7000 Total non-operating income and expenses 7900 Net income before tax 7950 Income tax expense (Note 19) 8200 Net income for 2023		2023

(Continued from the next page)

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(Continued from the previous page)

Code Other comprehensive income 8310 Items not reclassified to profit or loss: 8316 Unrealized gains or losses on investment in equity instruments at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries and associates using the equity method 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange Differences in Translating the Financial Statements of Foreign Operations 8300 Other comprehensive income after tax 8500 Total comprehensive income for 2023 Earnings per share (Note 20) 9750 Basic 9850 Diluted		2023		% 10 7 5) 12 115	2022
		Amount $ 8,306 5,432 4,037) 9,701 $ 90,021 $ 0.87 $ 0.73			Amount ( $ 7,300 ) 9,144 172,155 173,999 $ 273,512 $ 1.21 $ 1.07	%
	(		(			( 9 ) 11 209 211 332

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

Chairman: Liao, Wen-Chia Managerial Officer: Yen, Tsung-Chien Chief Accounting Officer: Wu, Hsiu-Pi

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PARPRO CORPORATION

Parent Company Only Statement of Changes in Equity

December 31, 2023 and 2022

Unit: NTD thousand

Code A1 Balance as at January 1, 2022 Earnings distribution for 2021 B1 Legal reserve provided B3 Special reserve provided B5 Common stock cash dividends Total earnings distributed D1 Net income for 2022 D3 Other comprehensive income after tax for 2022 D5 Total comprehensive income for 2022 C5 Components of convertible corporate bonds issued by the Company recognize in equity C15 Cash distributed from the capital surplus I1 Convertible corporate bonds converted L3 Treasury shares canceled Z1 Balance as at December 31, 2022 Earnings distribution for 2022 B1 Legal reserve provided B17 Special reserve reversed B5 Common stock cash dividends Total earnings distributed D1 Net income for 2023 D3 Other comprehensive income after tax for 2023 D5 Total comprehensive income for 2023 C5 Components of convertible corporate bonds issued by the Company recognize in equity I1 Convertible corporate bonds converted L3 Treasury shares canceled Z1 Balance as at December 31, 2023	Share capital Ordinary share capital Share capital to be registered $ 834,516 $ 28 - - - - - - - - - - - - - - - - - - 28 ( 28 ) ( 1,000) - 833,544 - - - - - - - - - - - - - - - - - 161,495 - ( 11,250) - $ 983,789 $ -	Share capital Ordinary share capital Share capital to be registered $ 834,516 $ 28 - - - - - - - - - - - - - - - - - - 28 ( 28 ) ( 1,000) - 833,544 - - - - - - - - - - - - - - - - - 161,495 - ( 11,250) - $ 983,789 $ -	Capital surplus $ 310,881 - - - - - - - 28,740 ( 8,223 ) - ( 1,590) 329,808 - - - - - - - 31,291 281,039 - $ 642,138			Retained earnings	Undistributed earnings $ 105,974 ( 10,597 ) ( 60,844 ) ( 32,892) ( 104,333) 99,513 2,991 102,504 - - - - 104,145 ( 10,251 ) 104,330 ( 34,900) 59,179 80,320 ( 225) 80,095 - - ( 17,884) $ 225,535	Other equity items Exchange Differences in Translating the Financial Statements of Foreign Operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income ( $ 193,964 ) ( $ 10,095 ) - - - - - - - - - - 172,155 ( 1,147) 172,155 ( 1,147) - - - - - - - - ( 21,809 ) ( 11,242 ) - - - - - - - - - - ( 4,037) 13,963 ( 4,037) 13,963 - - - - - - ($ 25,846) $ 2,721	Other equity items Exchange Differences in Translating the Financial Statements of Foreign Operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income ( $ 193,964 ) ( $ 10,095 ) - - - - - - - - - - 172,155 ( 1,147) 172,155 ( 1,147) - - - - - - - - ( 21,809 ) ( 11,242 ) - - - - - - - - - - ( 4,037) 13,963 ( 4,037) 13,963 - - - - - - ($ 25,846) $ 2,721	Treasury shares ( $ 31,724 ) - - - - - - - - - - 2,590 ( 29,134 ) - - - - - - - - - 29,134 $ -		Total equity
								Exchange Differences in Translating the Financial Statements of Foreign Operations ( $ 193,964 ) - - - - - 172,155 172,155 - - - - ( 21,809 ) - - - - - ( 4,037) ( 4,037) - - - ($ 25,846)
	Ordinary share capital $ 834,516 - - - - - - - - - 28 ( 1,000) 833,544 - - - - - - - - 161,495 ( 11,250) $ 983,789				Legal reserve $ 120,889 10,597 - - 10,597 - - - - - - - 131,486 10,251 - - 10,251 - - - - - - $ 141,737	Special reserve $ 76,537 - 60,844 - 60,844 - - - - - - - 137,381 - ( 104,330 ) - ( 104,330) - - - - - - $ 33,051
	( (	(	( (			( (	( ( ( ( ( ( ( (	( ( ( ( (	( ( ( (	( (	( ( ( ( (	$ 1,213,042 - - 32,892) 32,892) 99,513 173,999 273,512 28,740 8,223 ) - - 1,474,179 - - 34,900) 34,900) 80,320 9,701 90,021 31,291 442,534 - $ 2,003,125

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

Chairman: Liao, Wen-Chia

Managerial Officer: Yen, Tsung-Chien

Chief Accounting Officer: Wu, Hsiu-Pi

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PARPRO CORPORATION

Parent Company Only Statement of Cash Flows December 31, 2023 and 2022

Unit: NTD thousand

Code Net cash flow of operating activities A10000 Net income before tax A20010 Income and expenses A20100 Depreciation expense A20300 Gain on reversal of expected credit impairment A20400 Net (gain) loss on financial instruments measured at fair value through profit or loss A20900 Financial costs A21200 Interest income A22400 Share of profit and loss of subsidiaries and associates using the equity method A22500 Gain on disposal of property, plant and equipment A23700 Loss on inventory valuation loss and obsolescence reversed A24100 Unrealized foreign exchange gain A24200 Loss on repayment of convertible corporate bonds A30000 Net changes in operating assets and liabilities A31150 Accounts receivable A31180 Other receivables A31200 Inventory A31230 Prepayments A32150 Accounts payable A32180 Other payables A32230 Other current liabilities A33000 Cash inflow from operations A33100 Interest received A33300 Interest paid A33500 Income tax (paid) refunded AAAA Net cash inflow from operating activities Net cash flow of investing activities B00010 Financial assets at fair value through other comprehensive income acquired B02700 Property, plant and equipment acquired B02800 Proceeds from disposal of property, plant and equipment	2023 $ 93,948 8,334 - ( 7,834 ) 18,459 ( 2,000 ) ( 58,770 ) - ( 749 ) ( 2,511 ) - 18,476 11,107 1,203 1,781 ( 18,161 ) 33,260 ( 45,880) 50,663 3,240 ( 8,702 ) ( 107) 45,094 ( 29,982 ) ( 1,500 ) -	2022
		$ 102,819 10,539 ( 835 ) 4,003 35,013 ( 1,506 ) ( 93,012 ) ( 108 ) ( 2,367 ) ( 27,377 ) 6,175 ( 12,424 ) ( 49,799 ) 10,989 ( 2,217 ) 12,170 ( 1,945 ) 45,760 35,878 1,651 ( 19,247 ) 13 18,295 ( 17,460 ) - 108

(Continued from the next page)

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(Continued from the previous page)

Code B04300 Loans to subsidiaries B04400 Loans to subsidiaries recovered B06800 Decrease (increase) in other non-current assets B07600 Dividends from associates received BBBB Net cash inflows (outflows) from investing activities Net cash flow of financing activities C00200 Decrease in short-term borrowings C00500 Increase in short-term notes payable C01200 Convertible corporate bonds issued C01300 Convertible corporate bonds repaid C01600 Long-term borrowings C01700 Long-term borrowings repaid C03700 Increase (decrease) in other payables C04020 Lease principal repaid C04500 Dividends paid to owners of the Company C05400 Equity in subsidiary acquired C09900 Capital contribution returned for subsidiary’s capital reduction CCCC Net cash inflows (outflows) from financing activities DDDD Effect of exchange rate changes on cash EEEE Net increase (decrease) in cash E00100 Opening balance of cash E00200 Ending balance of cash	2023 $ - 165,495 ( 1,219 ) 3,990 136,784 ( 290,000 ) 30,000 394,488 - 100,000 ( 85,105 ) ( 65,000 ) ( 3,865 ) ( 34,900 ) ( 184,875 ) - (139,257) ( 263) 42,358 47,896 $ 90,254	2022
		( $ 150,862 ) - 348 3,990 (163,876) ( 60,000 ) - 494,409 ( 425,500 ) 70,000 ( 101,036 ) 65,000 ( 3,308 ) ( 41,115 ) - 40,000 38,450 9,539 ( 97,592 ) 145,488 $ 47,896

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

Chairman: Liao, Wen-Chia Managerial Officer: Yen, Tsung-Chien Chief Accounting Officer: Wu, Hsiu-Pi

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PARPRO CORPORATION

Notes to Parent Company Only Financial Statements

December 31, 2023 and 2022

(In NTD thousand, unless stated otherwise)

I. Company History

PARPRO CORPORATION (hereinafter referred to as the “Company”) was incorporated on December 27, 2001, mainly engaging in the processing of motherboards for security control and communications as well as the manufacturing and sales of industrial computers and gaming machines.

The Company’s stock was approved by the Securities and Futures Bureau (SFB), Financial Supervisory Commission (FSC) in December 2009 for the retroactive procedures for public offering and trading at Taipei Exchange (TPEx), and was listed on Taiwan Stock Exchange (TWSE) on November 21, 2013.

The parent company only financial statements are presented in the Company’s functional currency, i.e. New Taiwan dollar (NTD).

II. Date and Procedures for Approval of Financial Statements

The parent company only financial statements were published after being approved by the Board of Directors on March 13, 2024.

III. Application of New and Revised Standards and Interpretation

• (I) Initial application of 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 FSC.

The application of the IFRS Accounting Standards endorsed and issued into effect by the FSC does not cause a material change in the Company’s accounting policies.

• (II) Application of the IFRS Accounting Standards endorsed by FSC in 2024

Effective date announced New/amended/revised standards or interpretation by IASB (Note 1) Amendments to IFRS 16, “Lease Liability in a Sale January 1, 2024 (Note 2) and Leaseback”

Amendments to IAS 1 “Classification of Liabilities January 1, 2024 as Current or Non-current” Amendments to IAS 1 “Non-current Liabilities with January 1, 2024 Covenants” Amendments to IAS 7 and IFRS 7 “Supplier January 1, 2024 (Note 3) Financing Arrangements”

• Note 1: Unless otherwise noted, the above new/revised/amended standards and interpretations take effective in their respective annual reporting periods beginning on or after their respective dates.

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• Note 2: The seller and lessee shall apply the amendments to IFRS 16 retrospectively to the sale and leaseback carried out after the date of initial application of IFRS 16.

• Note 3: When the amendments apply for the first time, some requirements for disclosures are exempted.

By the time the parent company only financial statements were approved to be released, the Company confirmed that the amendments to the above standards and interpretations would not cause a material impact on its financial position and financial performance.

(III) The IFRS Accounting Standards released by the IASB but not yet endorsed and issued into effect by the FSC

issued into effect by the FSC
New/amended/revised standards or interpretation Amendment to IFRS 10 and IAS 28, “Sale or Contribution of Assets between an Investor and its Affiliate or Joint Venture.” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information” Amendments to IAS 21 “Lack of Exchangeability”	Effective date announced byIASB(Note1)
	To be determined January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2025 (Note 2)

• Note 1: Unless otherwise noted, the above new/revised/amended standards and interpretations take effective in their respective annual reporting periods beginning on or after their respective dates.

• Note 2: It applies to the annual reporting periods starting on or after January 1, 2025. When the amendments apply for the first time, the effect will be recognized in retained earnings on the first-time application date. When the Company adopts a non-functional currency as the presentation currency, the effects will be reclassified as the exchange differences arising from the translation of the financial statements of foreign operations under equity on the first-time application date.

As of the date of issuance of this individual financial report, the Company still continued to evaluate the effect of the amendments to other standards and interpretations on its financial position and financial performance, and the relevant effects will be disclosed when the evaluation is completed.

IV. Summary of Significant Accounting Policies

• (I) Statement of compliance

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

(II) Basis for preparation

The parent company only financial statements were prepared on a historical cost basis, except for financial instruments measured at fair value.

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The fair value measurement is classified into three levels based on the observability and significance of relevant inputs:

1. Level 1 inputs: Quoted (unadjusted) prices in active markets for identical assets or liabilities on the measurement date.

2. Level 2 inputs: Inputs, other than quoted market prices within level 1 that are observable, either directly (i.e. prices) or indirectly (derived from prices) for assets or liabilities.

3. Level 3 inputs: Unobservable inputs for assets or liabilities.

When the Company prepared the parent company only financial statements, it adopted the equity method to account for the investments in its subsidiaries and associates. To ensure that the amounts of this year’s profit and loss, other comprehensive income, and equity in the parent company only financial statements are the same as this year’s profit and loss, other comprehensive income, and equity attributable to the owners of the Company in the consolidated financial statements, adjustments were made to the investments using the equity method, the share of profit and loss on subsidiaries and associates using the equity method, the share of other comprehensive income of subsidiaries and associates using the equity method, as well as relevant equity items, as appropriate, in the parent company only financial statements to account for differences arising from accounting treatments between the parent company only basis and the consolidated basis.

• (III) Criteria for 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 balance sheet date; and

3. Cash.

Current liabilities include:

1. Liabilities held primarily for the purpose of trading;

2. Liabilities due to be settled within 12 months after the balance sheet date; and

3. Liabilities with a repayment deadline that cannot be unconditionally deferred for at least 12 months after the balance sheet date.

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

(IV) Foreign currencies

When the Company prepares the parent company only financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are converted into the functional currency at the exchange rate prevailing on the transaction date.

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On each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the year in which they arise.

When the parent company only financial statements are prepared, the assets and liabilities of foreign operations (including subsidiaries and associates operating in a country or using a currency different from that of the Company) are translated into NTD at the exchange rate prevailing on each balance sheet date. Income and expense items are translated at the year’s average exchange rate, and the resulting exchange differences are recognized in other comprehensive income.

(V) Inventory

Inventories are finished goods. The values of inventories are determined at cost or net realizable value, whichever is lower. The comparison of the cost and the net realizable value is based on individual items except for inventories of the same category. The net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. The costs of inventories are calculated using the weighted average method.

(VI) Investment in subsidiaries

The Company adopts the equity method to account for its investments in subsidiaries.

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

Under the equity method, investments are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of its subsidiaries. In addition, changes in the Company’s ownership of its subsidiaries’ other equity are recognized based on its shareholdings.

The amount by which the acquisition cost exceeds the Company’s share of the net fair values of a subsidiary’s identifiable assets and liabilities that constitute its business on the acquisition date is recognized in goodwill. This goodwill is included in the carrying amount of the investment and cannot be amortized. The amount by which the Company’s share of the net fair values of a subsidiary’s identifiable assets and liabilities that constitute its business on the acquisition date exceeds the acquisition cost is recognized in the year’s income.

When the Company assesses the impairment, it considers the cash-generating unit as a whole in the financial statements and compares its recoverable amount with the carrying amount. If the recoverable amount of an asset increases subsequently, the reversal of the impairment loss shall be recognized in gains, but the carrying amount of the asset after the reversal of the impairment loss shall not exceed the carrying amount of the asset, less amortization, without impairment loss recognized. The impairment loss attributable to goodwill may not be reversed after the balance sheet date.

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The unrealized profit or loss on downstream transactions between the Company and its subsidiaries are eliminated in the parent company only financial statements. Profit or loss on upstream and lateral transactions between the Company and its subsidiaries is recognized in the parent company only financial statements only to the extent that it does not affect the Company’s equity in the subsidiaries.

• (VII) Investments in associates

An associate is an entity over which the Company has significant influence and is not a subsidiary.

The Company adopts 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 Company’s share of the profit or loss and other comprehensive income of the associate. In addition, the Company recognizes the changes in the equity it holds in its associates in proportion to its shareholdings.

The amount by which the Company’s share of an associate’s net fair values of the identifiable assets and liabilities on the acquisition date exceeds the acquisition cost is recognized in the year’s profit or loss.

When the Company assesses the impairment, it takes the carrying amount of the entire investment as a single asset, compares its recoverable amount with the carrying amount, and performs an impairment test, and the impairment loss recognized is not apportioned to any assets that form part of the carrying amount of the investment. Any reversal of impairment losses is recognized to the extent of a subsequent increase in the recoverable amount of the investment.

• (VIII) Property, plant and equipment

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

Property, plant and equipment are depreciated using the straight-line method over their useful lives. Each significant part is depreciated separately. The Company conducts at least one annual review at the end of each year to assess the estimated useful life, residual value, and depreciation methods, while applying the effect of changes in accounting estimates prospectively.

When property, plant and equipment are derecognized, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in loss or profit.

• (IX) Impairment of property, plant and equipment, right-of-use assets, and intangible assets

The Company assesses if there are any signs of potential impairment of property, plant and equipment, right-of-use assets, and intangible assets at each balance sheet date. If there is any sign of impairment, an estimate is made of its recoverable amount. If it is not unable to determine the recoverable amount of an asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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The recoverable amount is the fair value, less cost of sales or its value in use, whichever is higher. If the recoverable amount of an asset or the cash-generating unit is lower than its carrying amount, the carrying amount is reduced to the recoverable amount, and the impairment loss is recognized in profit or loss.

When the impairment loss is subsequently reversed, the carrying amount of the asset or the cash-generating unit is increased to the revised recoverable amount, provided that the increased carrying amount should not exceed the carrying amount (less amortization or depreciation) of the asset or cash-generating unit which was not recognized as impairment loss in prior years. The reversal of the impairment loss is recognized in profit or loss.

• (X) Financial instruments

Financial assets and financial liabilities are recognized in the parent company only balance sheet when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities not at fair value through profit or loss are measured at fair value plus transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities. The transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss is immediately recognized in profit or loss.

1. Financial asset

Regular trading of financial assets shall be recognized and derecognized in accordance with trade date accounting.

(1) Measurement types

Financial assets held by the Company are those measured at amortized cost and investments in equity instruments measured at fair value through other comprehensive income.

• A. Financial assets measured at amortized cost

When the Company’s investments in financial assets meet the following two conditions simultaneously, they are classified as financial assets measured at amortized cost:

• a. which the objective is to collect contractual cash flows by holding the financial assets; and

• b. The cash flows on specific dates specified in the contractual terms are solely payments of the principal and interest on the principal amount outstanding.

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After initial recognition, the assets (including cash and cash equivalents, accounts receivable, and other receivables) are measured at the amortized cost of the total carrying amount determined using the effective interest method, less any impairment loss, and any foreign currency exchange differences are recognized in profit or loss.

• Interest revenue is calculated by multiplying the effective interest

• rate by the total carrying amount of financial assets:

• B. Investment in equity instruments at fair value through other comprehensive income

The Company may, upon initial recognition, make an irrevocable election to designate as at fair value through other comprehensive income the investments in equity instruments that are not held for trading and the ones that are not recognized by an acquirer in a business combination or with the contingent consideration.

Investments in an equity instrument measured at fair value through other comprehensive income are measured at fair value, and any subsequent fair value changes are recognized in other comprehensive income and accumulated in other equity. Upon disposal of investments, cumulative gain or loss is directly transferred to retained earnings and is not reclassified to profit or loss.

Dividends of investments in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss when the Company’s right to receive dividends is established unless such dividends clearly represent the recovery of a part of the investment cost.

(2) Impairment of financial assets

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

An allowance for losses on accounts receivable is recognized based on expected credit losses during the duration. Other financial assets are first assessed based on whether the credit risk has increased significantly since the initial recognition. If there is no significant increase in the risk, an allowance for losses is recognized at an amount equal to 12-month expected credit losses. If the risks have increased significantly, an allowance for losses is recognized at an amount equal to lifetime expected credit losses.

The expected credit losses refer to the weighted average credit loss with the risk of default as the weight. The 12-month expected credit losses represent the expected credit losses from possible defaults of a financial instrument within 12 months after the reporting date. The lifetime expected credit losses represent the expected credit losses from all possible defaults in a financial instrument over the expected life of a financial instrument.

All impairment losses on financial assets are reduced to their carrying amounts through an allowance account for losses.

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(3) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the consideration received is recognized in profit or loss. When an investment in equity instrument at fair value through other comprehensive income in its entirety is derecognized, the cumulative profit or loss is transferred directly to retained earnings and is not reclassified to profit or loss.

2. Financial liabilities

• (1) Subsequent measurement

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

(2) Derecognition of financial liabilities

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

3. Convertible corporate bonds

The convertible corporate bonds issued by the Company are based on the substance of the contractual agreement and the definitions of financial liabilities and equity instruments, and components of the bonds are classified as financial liabilities and equity upon initial recognition.

Upon initial recognition, the fair values of the components of liabilities are estimated with the current market interest rate for similar non-convertible instruments and measured at amortized cost in the effective interest method before conversion or the maturity date. Liability components, which are embedded non-equity derivatives, are measured at fair value.

The right to convert bonds classified as equity is equal to the remaining amount of the overall fair value of the composite instrument minus the separately determined fair value of the liability component. It is recognized as equity after deducting the impact of income tax and is not subsequently measured. When the right to convert bonds is exercised, its relevant components of liabilities and the amounts under equity will be reclassified to share capital and capital surplus – issuance at premium. If the right to convert convertible corporate bonds has not been exercised on the maturity date, the amount recognized in equity will be reclassified to capital surplus – others.

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Transaction costs related to the issuance of convertible corporate bonds are apportioned to the components of liabilities and equity of the instrument in proportion to the total price.

• (XI) Revenue recognition

After the Company identifies its performance obligations in contracts with clients, it allocates the transaction costs to each obligation in the contracts and recognizes revenue upon completion of performance obligations.

Merchandise sales revenue

The merchandise sales revenue is from gaming and sales of industrial computers. The revenue from the products sold by the Company is recognized when the products are shipped out according to the contract, at which the Company recognizes the amount in accounts receivable.

When supplying materials for outsourced processing, as the control of the ownership of the processed products has not been transferred, it is not recognized in revenue when the materials are supplied out.

• (XII) Borrowing costs

Borrowing costs are recognized in profit or loss when arise.

• (XIII) Employee benefits

• Short-term employee benefits

Relevant liabilities for short-term employee benefits are measured by the non-discounted amount expected to be paid in exchange for employee services.

1. Post-employment benefits

For pension under a defined contribution plan, the amount of pension contributed is recognized in expenses during employees’ service period.

(XIV) Income tax

Income tax expense is the sum of the current income tax and deferred income tax.

1. Current income tax

The Company determines the current income (loss) in accordance with the Income Tax Act of the Republic of China and calculates the income tax payable (recoverable) accordingly.

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A surtax is imposed on the undistributed earnings pursuant to the Income Tax Act of the Republic of China is recognized by a resolution of the shareholders’ meeting.

Adjustment to income tax payable from prior years are recognized in the current income tax.

2. Deferred tax

Deferred tax is calculated based on the temporary differences between the carrying amount of assets and liabilities,

and the corresponding tax bases used in the computation of taxable income. All taxable temporary differences are generally in deferred tax liabilities, and deferred tax assets are recognized when it is probable that future taxable income will be available against the income tax credits arising from the deductible temporary differences and carryforward of the unused losses.

Taxable temporary differences associated with investments in subsidiaries are recognized in deferred liabilities, except where the Company is able to control the reversal of the temporary difference and it is probable that the said temporary difference will not be reversed in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at each balance sheet date, and its carrying amount will be increased as it has become probable that future taxable income will allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates in the year in which the liabilities are expected to be settled or assets realized, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.

3. Current and deferred income taxes

Current and deferred taxes are recognized in profit or loss. However, the current and deferred income taxes related to items recognized in other comprehensive income or directly included in equity are recognized in other comprehensive income or directly included in equity.

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V. Significant Accounting Judgments and Estimations, and Main Sources of Assumption Uncertainties

When the Company adopts accounting policies, the management is required to make judgments, estimates and assumptions that are based on historical experience and other factors that are not readily apparent from other sources. Actual results may differ from the estimates.

The management will continue to review the estimates and basic assumptions. If a revision of an estimate affects only the current year, it is recognized in the period in which it is revised. If a revision of an accounting estimate affects both the current period and future periods, it is recognized in the period in which it is revised and in the future periods.

– Significant accounting judgment judgment of associates with a significant influence

The Company holds 20.86% of the voting rights in Anderson Industrial Corp. as the single largest shareholder. Based on the number and distribution of voting rights held by other shareholders, their shareholdings are not extremely dispersed, and considering the votes they cast at the prior shareholders’ meetings, they do not act passively. The Company cannot appoint more than half of the members of the governing body of the company, so the Company cannot lead the company’s relevant activities and, therefore, has no control over it. The Company’s management believes that the Company has only significant influence on Anderson Industrial Corp., so it is listed as an associate of the Company.

Estimations and main sources of assumption uncertainties

Estimation of goodwill impairment of investment in subsidiaries

When the Company assesses if the goodwill generated from acquisition of a subsidiary is impaired, it is necessary to estimate the value in use of the cash-generating units to which the goodwill is apportioned. To calculate value in use, the management should estimate the future cash flows estimated to be generated from the cash-generating units and determine the appropriate discount rate used to calculate the present value. If actual cash flows are less than estimated, or changes in facts and circumstances cause future cash flows to be revised downward or the discount rate upwards, significant impairment losses may arise.

VI. Cash

Cash
Check and demand deposits Cash on hand and working capital	December 31, 2023 $ 90,141 113 $ 90,254	December 31, 2022
			$ 47,783 113 $ 47,896

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VII. Financial instruments at fair value through profit or loss

Financial asset Held for trading Derivatives - right of redemption/put option Financial liabilities Held for trading Derivatives - right of redemption/put option	December 31, 2023 $ 8 $ 7,880	December 31, 2022	December 31, 2022
			$ - $ 11,954

VIII. Financial assets at fair value through other comprehensive income

Investment in equity instruments Domestic investment TWSE-listed stocks Unlisted stocks	December 31, 2023 $ 18,466 29,982 $ 48,448	December 31, 2022	December 31, 2022
			$ 10,160 - $ 10,160

The Company invests in the above ordinary shares for medium- and long-term strategic purposes and estimates to make profits through such long-term investments. The Company’s management believes that including the short-term fair value fluctuations of such investments in profit or losses is inconsistent with the above long-term investment plan and, therefore, elects to designate the investments to be measured as at fair value through other comprehensive income.

IX. Accounts receivable

Accounts receivable
Measured at amortized cost Total carrying amount	December 31, 2023 $ 31,769	December 31, 2022
			$ 49,986

The Company’s average credit period for merchandise sales is 30 to 180 days.

The Company recognizes an allowance for losses on accounts receivable at the expected credit losses during the duration. The expected credit losses during the duration are based on each customer’s past payment collection records, the increase in delayed payments beyond the average credit period, as well as their past default records and current financial position and the economic conditions in their industries. Based on the Company’s history of credit losses, as there was no significant difference in the loss patterns among different groups of customers, customers were not further grouped, and only expected credit loss ratio was set based on the number of days of the credit period for accounts receivable.

If there is evidence that the counterparty is facing serious financial difficulties and the Company cannot reasonably expect to recover the amount, the Company directly

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writes off the relevant accounts receivable but will continue to try to collect the receivable. The recovered amount is recognized in profit or loss.

The allowances for losses on accounts receivable are as follows:

December 31, 2023

December 31, 2023
Deferred tax assets Total carrying amount Allowances for losses (expected credit losses during the duration) Amortized cost December 31, 2022 Deferred taxassets Total carrying amount Allowances for losses (expected credit losses during the duration) Amortized cost	Fewer than 180 days $ 17,851 - $ 17,851 Fewer than 180 days $ 25,060 - $ 25,060	181–365 days $ - - $ - 181–365 days $ 6,193 - $ 6,193	366 days or beyond $ 13,918 - $ 13,918 366 days or beyond $ 18,733 - $ 18,733		Total
					$ 31,769 - $ 31,769 Total
					$ 49,986 - $ 49,986

The above is an aging analysis based on the account opening dates.

Information on changes in allowances for losses on accounts receivable is as follows:

follows:
Opening balance Reversal during this year Ending balance		2023 $ - - $ -		2022
			(	$ 835 835) $ -

X. Investments using the equity method

Investments using the equity method
Investment in subsidiaries Investments in associates	December 31, 2023 $ 1,991,124 578,515 $ 2,569,639	December 31, 2022
			$ 1,747,415 581,174 $ 2,328,589

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(I) Investment in subsidiaries

December 31, 2023 December 31, 2022

Unlisted stocks Efa Technologies Corporation (“Efa Technologies”) Parpro Holdings Co., Ltd.	$ 18,190 1,972,934 $ 1,991,124	$ 20,840 1,726,575 $ 1,747,415

The Company’s percentage of ownership and voting rights in the subsidiaries on the balance sheet date are as follows:

the balance sheet date are as follows:
Efa Technologies Parpro Holdings Co., Ltd.	December 31, 2023 100% 100%	December 31, 2022
		100% 100%

• (II)

Investments in associates

Investments in associates
Material enterprises Anderson Industrial Corp. Associates that are not individually material	December 31, 2023 $ 555,457 23,058 $ 578,515	December 31, 2022
			$ 554,651 26,523 $ 581,174

Material enterprises are as follows:

Percentage of ownership and voting rights

Name of company	Nature of business Non-metal computer numerical control machining centers, PCB electronic machinery, cutting tools, and boards	Principal business premises Taiwan	December 31, 2023 20.86%	December 31, 2022
Anderson Industrial Corp.				20.86%

1. Investments using the equity method and the Company’s share of profit and loss and other comprehensive income of the associates are recognized based on the financial reports for the same periods audited by certified public accountants (CPAs).

2. Information of associates with level 1 fair value (quoted prices in active markets) is as follows:

Name of company December 31, 2023 December 31, 2022 Anderson Industrial Corp. $ 458,902 $ 405,031

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XI. Property, plant and equipment

XI.	Property, plant and equipment
XII. (I)	Machine and equipment Other equipment Total Costs Balance as at January 1, 2022 $ 147,849 $ 10,611 $ 158,460 Disposal - ( 850) ( 850) Balance as at December 31, 2022 $ 147,849 $ 9,761 $ 157,610 Accumulated depreciation Balance as at January 1, 2022 $ 125,102 $ 9,773 $ 134,875 Disposal - ( 850 ) ( 850 ) Depreciation expense 6,694 582 7,276 Balance as at December 31, 2022 $ 131,796 $ 9,505 $ 141,301 Net amount as at December 31, 2022 $ 16,053 $ 256 $ 16,309 Costs Balance as at January 1, 2023 $ 147,849 $ 9,761 $ 157,610 Additions - 1,500 1,500 Disposal - ( 724) ( 724) Balance as at December 31, 2023 $ 147,849 $ 10,537 $ 158,386 Accumulated depreciation Balance as at January 1, 2023 $ 131,796 $ 9,505 $ 141,301 Disposal - ( 724 ) ( 724 ) Depreciation expense 4,058 341 4,399 Balance as at December 31, 2023 $ 135,854 $ 9,122 $ 144,976 Net amount as at December 31, 2023 $ 11,995 $ 1,415 $ 13,410 Depreciation expenses are calculated on a straight-line basis over their estimated useful lives as shown in the following: Machine and equipment 8 years Other equipment 3–8 years Borrowings Short-term borrowings December 31, 2023 December 31, 2022 Unsecured borrowings Bank loans $ 180,000 $ 470,000 Range of interest rates 1.96%–2.44% 1.80%–2.18%

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(II) Long-term borrowings

Long-term borrowings
Unsecured borrowings Bank loans Less: Current portions Long-term borrowings Range of interest rates Last due date Corporate bond payable Domestic unsecured convertible corporate bonds Less: Discount of corporate bonds payable Current portions Total corporate bond payable	December 31, 2023 $ 121,234 ( 50,078) $ 71,156 2.35%–2.84% August 2026 December 31, 2023 $ 506,300 ( 43,072 ) ( 40,543) $ 422,685	December 31, 2022
		$ 106,338 ( 58,511) $ 47,827 2.01%–2.47% September 2025 December 31, 2022
		$ 574,400 ( 39,303 ) ( 71,530) $ 463,567

XIII. Corporate bond payable

The Company issued the second domestic unsecured convertible corporate bonds with a coupon rate of 0% on December 13, 2019, and listed them on TPEx for trading on the same day. The total amount of the principal was NTD502,500 thousand, with the face value per unit of NTD100 thousand. The bonds were issued at 100.50% of the face value, for a period of five years, and the conversion period is from March 14, 2020 through December 13, 2024. The conversion price at the time of issuance was NTD39 per share. Due to the payout of dividends, the conversion price was adjusted to NTD34.3 from July 8, 2023, in accordance with the issuance and conversion regulations.

From the day following the end of three months after the bonds were issued to 40 days before the end of the issuance period, if the closing price of the Company’s ordinary shares traded in the stock exchange market exceeds the conversion price of said bonds by 30% or more for 30 consecutive business days, or when the outstanding balance of the convertible bonds is less than 10% of the initial amount of the bonds issued, the Company may redeem all its bonds in cash at the face value of the bonds.

After three or four full years after the bonds were issued, the bond holders may request the Company to redeem the bonds they hold in cash at the face value of the bonds, plus interest compensation.

The bonds includes the components of liabilities and equity. The components of equity are presented as “Capital surplus – stock options” under equity. The effective interest rate initially recognized for the liability component is 1.9452%.

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The bond holders exercised the put option three full years after the bonds were issued, and the Company has paid NTD438,393 thousand (including interest compensation of NTD12,893 thousand, the book amount of the corporate bonds of NTD409,369 thousand, and financial liabilities measured at fair value through profit and loss of NTD9,956 thousand) and recognized the amount in repayment loss of NTD6,175 thousand).

NTD6,175 thousand).
Issuance price (less transaction costs of
NTD5,406 thousand)		$ 497,094
Components of equity	(	31,774 )
Deferred tax assets		1,081
Financial liabilities	(	12,739)
Components of liabilities on issuance date		$ 453,662
Components of liabilities as at January 1, 2022		$ 472,045
Interest calculated at the effective interest rate of
1.9452% (Note 18)		8,854
Repayment of corporate bonds	(	409,369)
Components of liabilities as at December 31,
2022		71,530
Interest calculated at the effective interest rate of
1.9452% (Note 18)		1,248
Corporate bonds payable converted to ordinary
shares	(	32,235)
Components of liabilities as at December 31,
2023		$ 40,543

The Company issued the third domestic unsecured convertible corporate bonds with a coupon rate of 0% on March 10, 2022, and listed them on TPEx for trading on the same day. The total amount of the principal was NTD500,000 thousand, with the face value per unit of NTD100 thousand. The bonds were issued at 100.00% of the face value, for a period of five years, and the conversion period is from June 11, 2022 through March 10, 2027. The conversion price at the time of issuance was NTD29.2 per share. Due to the payout of dividends, the conversion price was adjusted to NTD28.3 from July 8, 2023, in accordance with the issuance and conversion regulations.

From the day following the end of three months after the bonds were issued to 40 days before the end of the issuance period, if the closing price of the Company’s ordinary shares traded in the stock exchange market exceeds the conversion price of said bonds by 30% or more for 30 consecutive business days, or when the outstanding balance of the convertible bonds is less than 10% of the initial amount of the bonds issued, the Company may redeem all its bonds in cash at the face value of the bonds.

After three or four full years after the bonds were issued, the bond holders may request the Company to redeem the bonds they hold in cash at the face value of the bonds, plus interest compensation.

The bonds includes the components of liabilities and equity. The components of equity are presented as “Capital surplus – stock options” under equity. The effective interest rate initially recognized for the liability component is 1.8061%.

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Issuance price (less transaction costs of NTD5,591
thousand)		$ 494,409
Components of equity	(	28,740 )
Deferred tax assets		1,118
Financial liabilities	(	9,960)
Components of liabilities on issuance date		$ 456,827
Components of liabilities on issuance date in 2022		$ 456,827
Interest calculated at the effective interest rate of 1.8061%
(Note 18)		6,740
Components of liabilities as at December 31, 2022		463,567
Interest calculated at the effective interest rate of 1.8061%
(Note 18)		4,042
Corporate bonds payable converted to ordinary shares	(	395,676)
Components of liabilities as at December 31, 2023		$ 71,933

The Company issued the fourth domestic unsecured convertible corporate bonds with a coupon rate of 0% on May 31, 2023, and listed them on TPEx for trading on the same day. The total amount of the principal was NTD400,000 thousand, with the face value per unit of NTD100 thousand. The bonds were issued at 100.00% of the face value, for a period of five years, and the conversion period is from September 1, 2023 through May 31, 2028. The conversion price at the time of issuance was NTD35.3 per share. Due to the payout of dividends, the conversion price was adjusted to NTD34.9 from July 8, 2023, in accordance with the issuance and conversion regulations.

From the day following the end of three months after the bonds were issued to 40 days before the end of the issuance period, if the closing price of the Company’s ordinary shares traded in the stock exchange market exceeds the conversion price of said bonds by 30% or more for 30 consecutive business days, or when the outstanding balance of the convertible bonds is less than 10% of the initial amount of the bonds issued, the Company may redeem all its bonds in cash at the face value of the bonds.

After three or four full years after the bonds were issued, the bond holders may request the Company to redeem the bonds they hold in cash at the face value of the bonds, plus interest compensation.

The bonds includes the components of liabilities and equity. The components of equity are presented as “Capital surplus – stock options” under equity. The effective interest rate initially recognized for the liability component is 2.3340%.

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Issuance price (less transaction costs of NTD5,512
thousand)		$ 394,488
Components of equity	(	31,291 )
Deferred tax assets		1,102
Financial liabilities	(	8,347)
Components of liabilities on issuance date		$ 355,952
Components of liabilities on issuance date in 2023		$ 355,952
Interest calculated at the effective interest rate of 2.3340%
(Note 18)		4,829
Corporate bonds payable converted to ordinary shares	(	10,029)
Components of liabilities as at December 31, 2023		$ 350,752

XIV. Other payables

Other payables
Amounts payable to related parties (Note 23) Salary and wages and bonuses payable Employee remuneration and director remuneration payable Others	December 31, 2023 $ 28,989 8,456 6,364 4,758 $ 48,567	December 31, 2022
			$ 65,189 6,343 5,408 3,729 $ 80,669

XV. Post-employment benefit plan

Defined contribution pension plan

The Company adopted a pension scheme under the Labor Pension Act, which is a government-managed defined contribution plan. Under the act, the Company makes monthly contributions, equal to 6% of their monthly salary and wages, to employees’ individual pension accounts under the Bureau of Labor Insurance.

XVI. Equity

(I) Ordinary share capital

uity Ordinary share capital
Authorized shares (in thousands) Authorized shares Number of shares issued and fully paid (in thousands) Share capital already publicly offered	December 31, 2023 200,000 $ 2,000,000 98,379 $ 983,789	December 31, 2022
			120,000 $ 1,200,000 83,354 $ 833,544

Among the authorized capital, the capital reserved for the issuance of employee stock warrants is 500 thousand shares.

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(II) Capital surplus

Capital surplus
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note) Share premium from issuance Invalid stock options May not be used for any purpose Stock options for convertible corporate bonds	December 31, 2023 $ 576,762 27,957 37,419 $ 642,138	December 31, 2022
			$ 268,383 27,957 33,468 $ 329,808

Note: Such capital surplus may be used to make up for losses or, when the Company has no losses, to distribute cash or to capitalize equity, provided that the capitalization is limited to a certain percentage of the paid-in capital each year.

(III) Retained earnings and dividend policy

As per the amended Articles of Incorporation approved by a resolution of the shareholders’ meeting on May 31, 2022, when the Company distributes earnings, legal reserve, or capital surplus in cash, it should be approved by more than half of the directors present at a board meeting with the attendance of two-thirds or more of all directors and reported to the shareholders’ meeting.

As per the earnings distribution policy in the amended Articles of Incorporation, the Company will consider its industry environment, stage of growth, future capital needs, and long-term financial plan, and meet shareholders‘ needs for cash inflows. When the Company makes a profit for a fiscal year, the profit shall be first used for paying the tax and then offsetting the cumulative deficit. 10% of the remaining profit shall be provided as a legal reserve, unless it has reached the total amount of the Company’s paid-in capital. A special reserve shall be provided or reversed based on business needs or in accordance with the competent authority’s regulations.

The Company takes into account the year’s earnings after tax and the prior period’s cumulative undistributed earnings for shareholder dividends. The amount of the earnings to be distributed should not be less than 10% of the year’s earnings after tax, of which the cash dividends should not be less than 10% of the total dividends, but if cash dividends are less than NTD0.1 per share, it may be distributed as stock dividends, but the payout ratio may be adjusted based on the Company’s future earnings and capital status. The Company does not distribute dividends or bonuses when it does not make a profit. Please refer to Note 18(6) Employee remuneration and director remuneration for the employee remuneration and director remuneration distribution policy.

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The legal reserve should be paid into until the balance reaches the amount of the Company’s total paid-in capital. The legal reserve may be used to offset the deficit. If the Company has no deficit and the legal reserve exceeds 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The Company’s 2022 and 2021 earnings distribution proposals are as follows:

Legal reserve Special reserve provided (reversed) Cash dividends	Earnings distribution proposal 2022 2021 $ 10,251 $ 10,597 ( 104,330 ) 60,844 34,900 32,892	Dividend per share (NTD)	Dividend per share (NTD)
	2022 $ 10,251 ( 104,330 ) 34,900	2022 $ 0.4	2021
			$ 0.4

The 2021 cash dividends distribution and earnings distribution proposal has been approved by a resolution of the shareholders’ meeting on May 31, 2022. The 2022 cash dividends distribution and earnings distribution proposal has been approved by a resolution of the board of directors on April 13, 2023, and the remaining earnings distribution items are pending a resolution by the shareholders’ meeting scheduled to be held on May 30, 2023.

In addition, the Company’s shareholders’ regular meeting resolved, on May 31, 2022, a decision to pay out cash of NTD0.1 per share from the capital surplus of NTD8,223 thousand.

The Company’s 2023 earnings distribution proposal has been approved by a resolution of the board of directors on March 13, 2024. The details are as follows:

Legal reserve Special reserve reversed Cash dividends	Earnings distribution proposal $ 8,009 ( 9,927 ) 39,352	Dividend per share (NTD)
		$ 0.4

(IV) Treasury shares

Unit: In thousands of shares

Reason for redemption Number of shares as at January 1, 2022 Canceled during this year Number of shares as at December 31, 2022 Canceled during this year Number of shares as at December 31, 2023	To transfer shares to employees	To transfer shares to employees
	( (	1,225 100) 1,125 1,125) -

The treasury shares held by the Company cannot be pledged in accordance with the Securities and Exchange Act and are not entitled to rights to receive dividends and vote.

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XVII. Revenue

Revenue
Sales revenue	December 31, 2023 $ 78,170	December 31, 2022
			$ 82,345

• (I) Revenue from contracts with customers

Merchandise sales revenue

The merchandise sales revenue is from gaming and sales of industrial computers. The revenue from the products sold by the Company is recognized when the products are shipped out according to the contract, at which the Company recognizes the amount in accounts receivable.

When supplying materials for outsourced processing, as the control of the ownership of the processed products has not been transferred, it is not recognized in revenue when the materials are supplied out.

(II) Balance of contracts

Balance of contracts
Accounts receivable (Note 9) Contract liabilities (in other current liabilities) (Note 23)	December 31, 2023 $ 31,769 $ -	December 31, 2022 $ 49,986 $ 45,810	January 1, 2022
				$ 32,681 $ 63

The changes in contract liabilities mainly arise from the difference between the point at which performance obligations are satisfied and the point at which customers pay.

• (III) Breakdown of revenue from contracts with customers

Please refer to Table 4 for the breakdown of revenue.

XVIII. Net income for 2023

The net income for 2023 includes the following items:

• (I) Other income

Other income
Income from administrative expenses Rental income Others		2023 $ 65,659 25,112 993 $ 91,764		2022
				$ 62,983 24,170 1,146 $ 88,299

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(II) Other gains and losses

(II) Other gains and losses
Net gain (loss) on financial instruments measured at fair value through profit or loss Net foreign exchange gain (loss) Loss on repayment of convertible corporate bonds Gain on disposal of property, plant and equipment Others (III) Financial costs Interest on convertible corporate bonds Interest on bank loans Interest on lease liabilities (Note 23) Interest on loans from related parties (Note 23) Repayment of interest on convertible corporate bonds (IV) Depreciation Property, plant and equipment Right-of-use assets Aggregate information on depreciation expenses by function Operating expenses (V) Employee benefit expenses Short-term employee benefits Salary and wages Labor and health insurance Other personnel expenses Post-employment benefits (Note 15) Defined contribution pension plan Total employee benefits Aggregate by function Operating expenses		2023 $ 7,834 1,713 ) - - 164) $ 5,957 2023 $ 10,119 7,993 192 155 - $ 18,459 2023 $ 4,399 3,935 $ 8,334 $ 8,334 2023 $ 21,934 1,476 459 23,869 534 $ 24,403 $ 24,403	2022
	( (		( $ 4,003 ) 26,515 ( 6,175 ) 108 - $ 16,445 2022
				$ 15,594 6,497 29 - 12,893 $ 35,013 2022
				$ 7,276 3,263 $ 10,539 $ 10,539 2022
				$ 21,571 944 766 23,281 486 $ 23,767 $ 23,767

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(VI) Employee remuneration and director remuneration

Where the Company makes a profit for a fiscal year, it should provide 1% to 15% of the balance as employee remuneration, which should be distributed in stock or cash as resolved by the board of directors. The recipients include employees at subsidiaries who meet certain criteria; the Company may provide more than 5% of the above profit as director remuneration as resolved by the board of directors. The employee remuneration and director remuneration distribution proposal should be reported to the shareholders’ meeting. However, if the Company still has a cumulative deficit, it should reserve an amount to offset the deficit in advance and then provide employee remuneration and director remuneration based on the percentages mentioned above.

The 2023 and 2022 employee remuneration and director remuneration was approved by resolutions of the board of directors on March 13, 2024 and March 9, 2023, respectively. The details are as follows:

Percentage for estimation

Percentage for estimation
Employee remuneration Director remuneration	2023 2% 1%	2022
		2% 1%

Amount

Amount
Employee remuneration Director remuneration	2023 Cash Stock $ 1,937 $ - 969 -	2022
	Cash $ 1,937 969	Cash $ 2,120 1,060	Stock
			$ - -

If there is a change in the proposed amounts after the annual parent company only financial statements were approved for release, the differences are recorded as a change in accounting estimates and will be accounted for in the following year.

There is no difference between the amounts of 2022 and 2021 employee remuneration and director remuneration paid out and the amounts recognized in the 2022 and 2021 parent company only financial statements.

For information on employee remuneration and director remuneration as resolved by the board of directors, please visit the Market Observation Post System (MOPS) of Taiwan Stock Exchange.

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XIX. Income tax

(I) Income tax recognized in profit or loss

The major components of income tax expense are as follows.

		2023		2022
Current income tax
Arose during this year	$	7,475	$	-
Surtax on undistributed
earnings		7,272		-
Adjustment to the prior years		79	(	7 )
Deferred tax
Arose during this year	(	1,198)		3,313
Income tax expense recognized in
profit or loss	$	13,628	$	3,306
A reconciliation of accounting profit and		income tax expense is as		follows:
		2023		2022
Net income before tax	$	93,948	$	102,819
Income tax expense calculated at
statutory tax rate	$	18,790	$	20,564
Surtax on undistributed earnings		7,272		-
Non-deductible expenses for tax		2,614		7,402
Tax-free income		-	(	6,596 )
Unrecognized temporary
differences	(	13,911 )	(	12,106 )
Unrecognized loss carryforwards	(	1,216 )	(	5,951 )
Adjustment to the prior years		79	(	7)
Income tax expense recognized in
profit or loss	$	13,628	$	3,306

(II) Deferred tax assets and liabilities

The changes in the deferred tax assets and liabilities are as follows:

2023

2023
Deferred taxassets Unrealized exchange loss Costs of convertible corporate bonds issued Allowance for inventory depreciation losses Others Deferred income liabilities Unrealized exchange gains Others		Opening balance $ - 839 149 223 $ 1,211 $ 1,975 20 $ 1,995	Recognized in profit or loss $ 378 ( 1,006 ) ( 149 ) - ($ 777) ( $ 1,975 ) - ($ 1,975)	Recognized in equity $ - 1,102 - - $ 1,102 $ - - $ -		Ending balance
						$ 378 935 - 223 $ 1,536 $ - 20 $ 20

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2022

2022
Deferred taxassets Unrealized exchange loss Costs of convertible corporate bonds issued Allowance for inventory depreciation losses Others Deferred income liabilities Unrealized exchange gains Others		Opening balance $ 224 361 623 223 $ 1,431 $ - 20 $ 20	Recognized in profit or loss ( $ 224 ) ( 640 ) ( 474 ) - ($ 1,338) $ 1,975 - $ 1,975	Recognized in equity $ - 1,118 - - $ 1,118 $ - - $ -		Ending balance
						$ - 839 149 223 $ 1,211 $ 1,975 20 $ 1,995

(III) Income tax return approval

The Company’s profit-seeking enterprise income tax returns filed up to 2021 have been approved by the tax authority.

XX. Earnings per share

Earnings per share
Basic earnings per share Diluted earnings per share		2023 $ 0.87 $ 0.73	Unit: NTD per share 2022 $ 1.21 $ 1.07

The net income and weighted average number of ordinary shares used to calculate the earnings per share are as follows:

Net income for 2023

the earnings per share are as follows: Net income for 2023
Net income used to calculate basic earnings per share Impact of potential common stock with dilutive effect: Corporate bonds converted Net income used to calculate diluted earnings per share Number of shares Weighted average number of ordinary shares used to calculate the basic earnings per share Impact of potential common stock with dilutive effect: Corporate bonds converted Employee remuneration Weighted average number of ordinary shares used to calculate the diluted earnings per share		2023 2022 $ 80,320 $ 99,513 2,285 7,030 $ 82,605 $ 106,543 Unit: In thousands of shares 2023 2022 91,799 82,327 21,741 17,483 67 96 113,607 99,906

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The second domestic unsecured convertible corporate bonds in 2022 were not included in the calculation of diluted earnings per share due to anti-dilution.

If the Company may choose to pay out employee remuneration in stock or cash, when the diluted earnings per share are calculated, it is assumed that the employee remuneration will be paid out in stock, and the weighted average number of shares outstanding will be included when the ordinary shares have the potential dilution effect, to calculate diluted earnings per share. When the diluted earnings per share are calculated before the number of shares to be distributed for employee remuneration is resolved in the following year, the potential dilution effect of such ordinary shares will continue to be considered.

XXI. Capital risk management

The Company engages in capital management to ensure that it can maximize shareholder returns by optimizing debt and equity balances while continuing to operate.

The Company’s capital structure consists of net debt (i.e. borrowings, less cash) and equity (i.e. share capital, capital surplus, retained earnings, and other equity items).

The Company does not need to abide by other external requirements for capital.

The Company’s key management re-examines the capital structure every year, and the review includes consideration for the cost of funds and relevant risks. Based on the key management’s suggestions, the Company balances the overall capital structure by paying dividends, repurchasing shares, and increasing or repaying borrowings.

XXII. Financial instruments

• (I) Information on fair value – financial instruments not measured at fair value

Except as listed in the table below, the Company’s management believes that the carrying amounts of financial assets and financial liabilities not measured at fair value approximate their fair values or their fair values cannot be measured reliably:

Financial liabilities Convertible corporate bonds - Second issuance of domestic bonds - Third issuance of domestic bonds - Fourth issuance of domestic bonds	December 31, 2023 Carrying amount Fair value $ 40,543 $ 44,183 71,933 93,612 350,752 409,795	December 31, 2022	December 31, 2022
	Carrying amount $ 40,543 71,933 350,752	Carrying amount $ 71,530 463,567 -	Fair value
			$ 75,479 497,500 -

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The fair values of convertible corporate bonds is measured using Level 2 inputs. The valuations of fair values was based on the weighted average price per hundred of NTD announced by TPEx on the balance sheet date.

• (II) Information on fair value – financial instruments measured at fair value on a recurring basis

1.	Fair value hierarchy December 31, 2023 Financial assets at fair value through profit or loss Derivatives Financial assets at fair value through other comprehensive income Domestic TWSE-listed stocks Domestic unlisted stocks Total Financial liabilities at fair value through profit or loss Derivatives December 31, 2022 Financial assets at fair value through other comprehensive income Domestic TWSE-listed stocks Financial liabilities at fair value through profit or loss Derivatives		Level 1		Level 2		Level 3		Total
			$ - $ 18,466 - $ 18,466 $ - Level 1 $ 10,160 $ -		$ 8 $ - - $ - $ 7,880 Level 2 $ - $ 11,954		$ - $ - 29,982 $ 29,982 $ - Level 3 $ - $ -		$ 8 $ 18,466 29,982 $ 48,448 $ 7,880 Total $ 10,160 $ 11,954

There was no transfer between Level 1 and Level 2 fair values during the years ended December 31, 2023 and 2022.

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• Valuation techniques and inputs for Level 2 fair value measurements

Categories of financial instruments Valuation techniques and inputs Derivatives – convertible Binary tree model for convertible bond corporate bond right of valuation: The fair values of the financial redemption/put option assets or liabilities of convertible corporate bonds are valuated based on observable stock prices, risk-free interest rates, and risk discount rates at the end of the period.

1. Valuation techniques and inputs for Level 3 fair value measurements

As for the Company’s valuation process for Level 3 fair values, the finance department is responsible for independently verifying the fair values of financial instruments, using data from independent sources to make the valuation results close to market conditions, and reviewing them regularly to ensure that the valuation results are reasonable. The Company adopts an income approach to investments in domestic unlisted equity and calculates the present value of the income estimated to be earned from the investments based on the discounted cash flows.

(III) Types of financial instruments

on the discounted cash flows. Types of financial instruments
Financial asset Financial assets measured at amortized cost (Note 1) Financial assets at fair value through other comprehensive income Investment in equity instruments Financial assets at fair value through profit or loss Financial liabilities Financial liabilities at fair value through profit or loss Measured at amortized cost (Note 2)	December 31, 2023 $ 232,968 48,448 8 7,880 843,091	December 31, 2022
		$ 384,149 10,160 - 11,954 1,210,322

• Note 1: The balance includes other financial assets measured at amortized cost, including cash, accounts receivable, and other receivables.

• Note 2: The balance includes financial liabilities measured at amortized cost, including short-term borrowings, short-term notes payable, accounts payable, other payables, long-term liabilities – current portion, corporate bonds payable, and long-term borrowings.

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(IV) Purpose and policy of financial risk management

The Company’s main financial instruments include accounts receivable, accounts payable, corporate bonds payable, borrowings, and lease liabilities. The Company’s financial management department provides services to each business unit, coordinates the operations of investments in the domestic and international financial markets, and supervises and manages the financial risks related to the Company’s operations by analyzing the internal risk reports on the exposure as per the breadth and depth. Such risks include market risk (including exchange rate risk, interest rate risk and other price risk), credit risk, and liquidity risk.

1. Market risk

The main financial risk arising from the operating activities for the Company is the risk of changes in foreign exchange rates and interest rates.

• (1) Exchange rate risk

The Company engages in foreign currency-denominated sales and purchases and is thus exposed to the risk of exchange rate fluctuations.

See Note 25 for the carrying amounts of monetary assets and monetary liabilities denominated in non-functional currencies on the balance sheet date.

Sensitivity analysis

The Company is mainly affected by the exchange rate fluctuations of the USD.

The table below details the Company’s sensitivity analysis when the exchange rate of the Company’s functional currency, NTD, against the USD increased and decreased by 10%. Ten percent is the sensitivity rate used in reporting the exchange rate risk to the Company’s key management and represents the management’s assessment of the reasonable range of potential changes in foreign currency exchange rates. The sensitivity analysis only included monetary items in foreign currencies in circulation, and the translation at the end of the period was based on a 10% change in the exchange rates. When the NTD appreciated by 10% against the foreign currency, the Company’s pre-tax net income for 2023 and 2022 would have decreased by NTD13,866 thousand and NTD32,451 thousand, respectively.

(2) Interest rate risk

Interest rate risk arises when the Company borrows funds at both fixed and floating interest rates. The Company manages interest rate risk by maintaining an appropriate mix of fixed and floating interest rates to ensure the most cost-effective strategy is adopted.

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The carrying amounts of the Company’s financial assets and financial liabilities exposed to the interest rate risk on the balance sheet date are as follows:

date are as follows:
Fair value interest rate risk - financial liabilities Cash flow interest rate risk - financial assets - financial liabilities	December 31, 2023 $ 474,837 90,023 331,234	December 31, 2022
		$ 535,629 47,666 576,338

Sensitivity analysis

The sensitivity analysis below is based on the interest rate risk to which derivatives and non-derivatives were exposed at the balance sheet date. For liabilities at floating rates, the analysis is based on the assumption that the amounts of the liabilities outstanding at the balance sheet date were all outstanding throughout the reporting period. An increase or decrease in interest rates by ten basis points (0.1%) is the sensitivity rate adopted in reporting the interest rate risk to the Company’s key management and represents the management’s assessment of the reasonable range of potential changes in interest rates.

If the interest rate increased by 1%, with all other variables remaining unchanged, the Company’s net income before tax for 2023 and 2022 would have decreased by NTD241 thousand and NTD529 thousand, respectively.

2. Credit risk

Credit risk refers to the risk that a counterparty defaults on its contractual obligations, resulting in a financial loss to the Company. As of the balance sheet date, the Company’s maximum exposure to credit risk of financial loss due to non-performance by counterparties is mainly from the carrying amounts of financial assets recognized in parent company only balance sheet.

The policy adopted by the Company is to only engages in transactions with reputable entities. Before trading with new customers, the Company’s relevant sales management departments evaluate the potential customers’ credit quality through internal credit investigation procedures and set the customers’ credit limit and review their credit limits and ratings once per year.

Financial assets are potentially affected by the Company’s counterparties or other parties’ failure to fulfill contracts. The Company evaluates contracts with positive fair values on the balance sheet date. The Company only engages in transactions with financial institutions and companies with great reputations and does not expect significant credit risk.

The Company’s credit risk is mainly concentrated on the Company’s subsidiaries and associates. The Company continues to evaluate the financial positions of customers from whom accounts receivable are to be received.

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3. Liquidity risk

The Company manages and maintains sufficient cash to support the operations and mitigate the impact of cash flow fluctuations. The Company’s management regularly monitors the use of bank financing facilities and ensures compliance with the terms of loan contracts.

(1) Liquidity and interest rate risk of derivative financial liabilities

The table below details the Company’s analysis of the remaining contractual maturities of non-derivative financial liabilities, which was prepared based on the undiscounted cash flows of the financial liabilities, including cash flows of interest and principal, based on the earliest possible date on which the Company can be required to make repayment.

Bank loans that the Company may be required to repay immediately are shown in the table below for the earliest period, without regard to the probability that the bank will enforce the right immediately; the maturity analysis of other non-derivative financial liabilities is prepared based on the contractual repayment dates.

December 31, 2023

December 31, 2023
Non-derivative financial liabilities Non-interest-bearin g liabilities Floating-rate instruments Lease liabilities Corporate bond payable	Repayment on demand or less than 1 month $ - 71,487 442 - $ 71,929	1–3 months $ 48,629 122,053 883 - $ 171,565	3 months–1 year $ - 69,262 3,976 41,300 $ 114,538		1–5 years
					$ - 72,267 6,625 465,000 $ 543,892

December 31, 2022

December 31, 2022
Non-derivative financial liabilities Non-interest-bearin g liabilities Floating-rate instruments Lease liabilities Corporate bond payable	Repayment on demand or less than 1 month $ - 108,036 278 - $ 108,314	1–3 months $ 33,887 206,548 170 - $ 240,605	3 months–1 year $ - 217,584 85 74,400 $ 292,069		1–5 years
					$ - 48,447 - 500,000 $ 548,447

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The amount of floating-rate instruments of the above non-derivative financial assets and liabilities will change with the differences between the floating rates and the estimated rates on the balance sheet date.

• (2) Financing facility

Financing facility
Unsecured bank overdraft facility - Amount drawn - Amount not yet drawn	December 31, 2023 $ 331,234 450,000 $ 781,234	December 31, 2022
			$ 576,338 220,000 $ 796,338

XXIII. Related Party Transactions

In addition to those disclosed in other notes, transactions between the Company and related parties are as follows.

• (I) Name of related party and relationship therewith

Name of related party Liao, Wen-Chia Anderson Industrial Corp. Sogotec Precision Co., Ltd. Giben do Brasil Maqs. e Equips. Powertech Industrial Co., Ltd. Anderson Merchandise Corporation Verite Corporation Efa Technologies Parpro Holdings Co., Ltd. AP Parpro, Inc. Pilot (Las Vegas), Inc. Parpro Quality Inc. Parpro (Nevada), Inc. Parpro Technologies Inc.	Relationship with the Company
	Chairman of the Company An associate An associate Other related parties Other related parties Other related parties Other related parties A subsidiary A subsidiary A sub-subsidiary A sub-subsidiary A sub-subsidiary A sub-subsidiary A sub-subsidiary

• (II) Operating revenue

Account	Category of related party/Name Other related parties Giben do Brasil Maqs. e Equips. A sub-subsidiary AP Parpro, Inc. Parpro Technologies Inc.		2023 $ 77,752 - - $ 77,752		2022
Sales revenue					$ 55,774 19,569 37 $ 75,380

The transaction terms and payment collection terms for related parties are about the same as those for regular non-related parties.

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(III) Operating costs

Account	Category of related party/Name A sub-subsidiary AP Parpro, Inc. A sub-subsidiary AP Parpro, Inc.		2023 $ - $ 284		2022
Purchases Outsourced processing fees					$ 19,111 $ 4,130

The transaction terms and payment terms for related parties are the same as those for regular non-related parties.

• (IV) Amounts receivable from related parties (excluding loans to related parties)

Account	Category of related party/Name A sub-subsidiary AP Parpro, Inc. Parpro Technologies Inc. Other related parties Giben do Brasil Maqs. e Equips. A sub-subsidiary Parpro Technologies Inc. AP Parpro, Inc. Parpro (Nevada), Inc. Other related parties An associate	December 31, 2023 $ 13,918 - 17,851 $ 31,769 $ 53,427 41,452 14,738 1,079 - $ 110,696	December 31, 2022	December 31, 2022
Accounts receivable Other receivables				$ 38,821 39 10,450 $ 49,310 $ 55,800 45,211 17,781 488 55 $ 119,335

The Company did not request collateral for outstanding receivables from related parties. The Company did not recognize an allowance for losses on receivables from related parties for 2023 and 2022.

• (V) Lease agreements

related parties for 2023 and 2022. Lease agreements
Category of related party/Name 2023 Right-of-use assets acquired An associate Anderson Industrial Corp. $ 1,148 Account Category of related party December 31, 2023 Lease liabilities An associate $ 625 Account Category of related party 2023			2022
			$ - December 31, 2022
		$	- 2022

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Financial costs An associate $ 19 $ - Lease expenses An associate $ 542 $ -

The Company has rented an office from Anderson Industrial Corp. and pays rent monthly.

(VI)

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

Contract liabilities (in other current liabilities)
Category of related party/Name December 31, 2023 December 31, 2022
An associate
-
Anderson Industrial Corp. $ $ 45,810
Amounts payable to related parties (excluding borrowings from related parties)
Category of related December 31, December 31,
Account party/Name 2023 2022
Accounts A sub-subsidiary
payable
-
AP Parpro, Inc. $ $ 18,218
Other payables A sub-subsidiary
AP Parpro, Inc. $ - $ 189
An associate
Anderson Industrial 28,989 -
Corp.
$ 28,989 $ 189
----- End of picture text -----

• (VII) Amounts payable to related parties (excluding borrowings from related parties)

• (VIII) Borrowings from related parties Other payables

Borrowings from related parties Other payables
Category of related party Chairman of the Company Financial costs Category of related party Chairman of the Company	December 31, 2023 $ - 2023 $ 155	December 31, 2022
			$ 65,000 2022
			$ -

The interest rates of the Company’s borrowings from related parties are about the same as the market interest rates.

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(IX)	Loans to related parties Other receivables Category of related party/Name A sub-subsidiary AP Parpro, Inc. Parpro Technologies Inc. Parpro (Nevada), Inc.	December 31, 2023 $ - - - $ -	December 31, 2022	December 31, 2022
				$ 161,626 2,303 1,566 $ 165,495

(X)	Interest receivable Category of related party December 31, 2023 A sub-subsidiary $ 247 Interest income Category of related party 2023 A sub-subsidiary $ 1,245 Other income Account Category of related party/Name 2023 Income from administrati ve expenses A sub-subsidiary Parpro Technologies Inc. $ 33,576 AP Parpro, Inc. 20,891 Parpro (Nevada), Inc. 11,192 $ 65,659 Rental income A sub-subsidiary AP Parpro, Inc. $ 12,684 Parpro Techndologies Inc. 9,699 Parpro (Nevada), Inc. 746 An associate 1,114 Other related parties 797 $ 25,040 Account processing income A subsidiary $ 720 Others An associate $ 132 Other related parties 127 $ 259	Interest receivable Category of related party December 31, 2023 A sub-subsidiary $ 247 Interest income Category of related party 2023 A sub-subsidiary $ 1,245 Other income Account Category of related party/Name 2023 Income from administrati ve expenses A sub-subsidiary Parpro Technologies Inc. $ 33,576 AP Parpro, Inc. 20,891 Parpro (Nevada), Inc. 11,192 $ 65,659 Rental income A sub-subsidiary AP Parpro, Inc. $ 12,684 Parpro Techndologies Inc. 9,699 Parpro (Nevada), Inc. 746 An associate 1,114 Other related parties 797 $ 25,040 Account processing income A subsidiary $ 720 Others An associate $ 132 Other related parties 127 $ 259	Interest receivable Category of related party December 31, 2023 A sub-subsidiary $ 247 Interest income Category of related party 2023 A sub-subsidiary $ 1,245 Other income Account Category of related party/Name 2023 Income from administrati ve expenses A sub-subsidiary Parpro Technologies Inc. $ 33,576 AP Parpro, Inc. 20,891 Parpro (Nevada), Inc. 11,192 $ 65,659 Rental income A sub-subsidiary AP Parpro, Inc. $ 12,684 Parpro Techndologies Inc. 9,699 Parpro (Nevada), Inc. 746 An associate 1,114 Other related parties 797 $ 25,040 Account processing income A subsidiary $ 720 Others An associate $ 132 Other related parties 127 $ 259	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
						$ 1,285 2022
						$ 1,334 2022
	Income from administrati ve expenses Rental income Account processing income Others		$ 33,576 20,891 11,192 $ 65,659 $ 12,684 9,699 746 1,114 797 $ 25,040 $ 720 $ 132 127 $ 259				$ 32,212 20,030 10,741 $ 62,983 $ 12,167 9,304 716 1,114 797 $ 24,098 $ 720 $ 132 140 $ 272

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(XI) Remuneration to key management personnel

Short-term employee benefits Post-employment benefits		2023 $ 9,953 342 $ 10,295		2022
				$ 9,584 328 $ 9,912

The remuneration to directors and other key management personnel is determined by the remuneration committee depending on individual performance and market trends.

XXIV.Material Contingencies and Unrecognized Contractual Commitments

In addition to those mentioned in other notes, the Company’s material commitments and contingencies on the balance sheet date are as follows:

As of December 31, 2023, the amount of notes issued by the Company to secure bank credit lines was NTD720,000 thousand.

XXV.Information on Foreign Currency Assets and Liabilities with Significant Effect

The information below is aggregated and presented in foreign currencies other than the Company’s functional currency. The exchange rates disclosed refer to the rates at which these foreign currencies are converted to the functional currency. The information on foreign currency assets and liabilities with significant effect is as follows:

Financial asset Monetary items USD Non-monetary items Investments using the equity method USD Financial liabilities Monetary items USD	December 31, 2023	December 31, 2023
	Foreign currencies $ 5,458 64,254 942	Exchange rate 30.705 30.705 30.705	NTD
			$ 167,588 1,972,934 28,924

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Financial asset Monetary items USD Non-monetary items Investments using the equity method USD Financial liabilities Monetary items USD	December 31, 2022	December 31, 2022
	Foreign currencies $ 11,174 56,222 607	Exchange rate 30.710 30.710 30.710	NTD
			$ 343,154 1,726,575 18,641

Foreign exchange gains and losses (realized and unrealized) with significant effect are as follows:

are as follows:
Functional currency NTD	2023		Net exchange gain (loss) $ 1,713)	2022
	Exchange rate (NTD : NTD)			Exchange rate (NTD : NTD)		Net exchange gain (loss)
		(				$ 26,515

XXVI. Additional Disclosures

• (I) Significant transactions:

• Loans to others: Table 1.

• Endorsements/Guarantees for others: None.

• Securities held at the end of the period (excluding investment in subsidiaries, associates, and joint ventures): Table 2.

• Securities acquired or sold at costs or prices of at least NTD300 million or 20% of the paid-in capital: None.

• Acquisition of individual property at costs of at least NTD300 million or 20% of the paid-in capital: None.

• Disposal of individual property at costs of at least NTD300 million or 20% of the paid-in capital: None.

• Total purchases from or sales to related parties amounting to at least NTD100 million or 20% of the paid-in capital: Table 3.

• Receivables from related parties amounting to at least NTD100 million or 20% of the paid-in capital: Table 4.

• Derivatives trading: None.

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• (II) Information on investees: Table 5.

• (III) Information on investments in mainland China: None.

• (IV) Information on major shareholders: Names of shareholders, each holding 5% or more of total shares, and the number and percentage of shares held: Table 6.

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Unit: NTD thousand

PARPRO CORPORATION

Loans to others

2023

Table 1

No.	Lender	Borrower	Account	Related party status	Highest balance of this year	Ending balance	Amount drawn Amount	Range of interest rates	Nature of loan	Business transaction amount	Reasons for short-term financing	Allowance for losses	Collateral	Collateral	Limit on loan to each borrower	Total limit on loans to others
													Name	Worth
0 1 2 3	The Company Parpro Holdings Co., Ltd. PARPRO CORPORATION Parpro (Nevada), Inc.	AP Parpro, Inc. Parpro (Nevada), Inc. PARPRO CORPORATION AP Parpro, Inc. Parpro (Nevada), Inc. AP Parpro, Inc. AP Parpro, Inc.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes Yes Yes Yes	$ 213,360 32,425 32,425 71,335 90,790 327,493 32,425	$ - - - 67,551 85,974 310,121 30,705	$ - - - 38,381 21,494 220,059 -	2.5%-3% 3% 3% 2.75%-3% 2.75% 2.5%-5% 2.75%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	$ - - - - - - -	Working capital Working capital Working capital Working capital Working capital Working capital Working capital	$ - - - - - - -	- - - - - - -	- - - - - - -	$ 400,625 (Up to 20% of the Company’s net worth as stated in the most recent financial statements) 400,625 (Up to 20% of the Company’s net worth as stated in the most recent financial statements) 400,625 (Up to 100% of the Company’s net worth as stated in the most recent financial statements) 1,972,934 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 88,322 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements)	$ 1,001,563 (Up to 50% of the Company’s net worth as stated in the most recent financial statements) 1,001,563 (Up to 50% of the Company’s net worth as stated in the most recent financial statements) 1,001,563 (Up to 100% of the Company’s net worth as stated in the most recent financial statements) 1,972,934 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 88,322 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements)

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PARPRO CORPORATION

Securities held at the end of the period December 31, 2023

Table 2

Unit: NTD thousand

Company	Type and name of securities	Relationship with the securities issuer	Account		End of	the period		Remarks
				Number of shares	Carrying amount	Shareholdings	Fair value
The Company	ICatch Technology, Inc. eTreego Co., Ltd.	- -	Financial assets at fair value through other comprehensive income – non-current Financial assets at fair value through other comprehensive income – non-current	254,000 1,578,000	$ 18,466 29,982	- -	$ 18,466 29,982	- -

Note 1: The securities in this table refer to stocks, bonds, beneficiary certificates, and securities derived therefrom within the scope of IFRS 9 “Financial Instruments.” Note 2: See Table 5 for the information on subsidiaries and associates.

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PARPRO CORPORATION

Total purchases from or sales to related parties amounting to at least NTD100 million or 20% of the paid-in capital

2023

Table 3									Unit: NTD thousand Notes or accounts receivable (payable) Remarks Balance As a % of total notes or accounts receivable (payable) $ 36,360 14% -	Unit: NTD thousand Notes or accounts receivable (payable) Remarks Balance As a % of total notes or accounts receivable (payable) $ 36,360 14% -	Unit: NTD thousand Notes or accounts receivable (payable) Remarks Balance As a % of total notes or accounts receivable (payable) $ 36,360 14% -
Buyer/Seller	Counterparty	Relationship		Transaction situation			Situation and reason for transaction terms different from regular ones		Notes or accounts receivable (payable)		Remarks
			Purchases/ Sales	Amount	As a % of total purchases (sales)	Credit period	Unit price	Credit period	Balance	As a % of total notes or accounts receivable (payable)
AP Parpro, Inc.	Parpro Nevada, Inc.	A subsidiary	Sales	( $ 627,263 )	( 34% )	Net 30 days after end of month	As agreed	None	$ 36,360	14%	-

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PARPRO CORPORATION

Receivables from related parties amounting to at least NTD100 million or 20% of the paid-in capital

December 31, 2023

Table 4

Unit: NTD thousand

Company listed under accounts receivable	Counterparty	Relationship	Balance of amounts receivable from related parties	Turnover	Overdue receivables from relatedparties	Overdue receivables from relatedparties	Amount to be recovered after the balance sheet date from related parties (Note)	Allowance for losses
					Amount	Treatment method
Parpro Technologies Inc.	AP Parpro, Inc.	Same parent company	Other receivables $	2 -	$ -	-	$ 25,518	$ -

Note: It is as of February 29, 2024.

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PARPRO CORPORATION

Information on investees, including names of investees and locations

2023

Table 5

Unit: NTD thousand/$ thousand in foreign currency

Name of investor	Name of investee	Location	Principal business activities	Initial investment amount	Initial investment amount	Holding	at the end of the period	at the end of the period	Profit (loss) of investee for this period	Investment income (loss) recognized for this period	Remarks
				End of this period	End of last period	Number of shares	Shareholding (%)	Carrying amount
The Company Efa Technologies Parpro Holdings Co., Ltd. AP Parpro, Inc. Pilot (Las Vegas), Inc. Parpro Quality Inc.	Efa Technologies Parpro Holdings Co., Ltd. Anderson Industrial Corp. Sogotec Precision Co., Ltd. Sogotec Precision Co., Ltd. AP Parpro, Inc. Pilot (Las Vegas), Inc. Parpro Quality Inc. Parpro (Nevada), Inc. Parpro (Nevada), Inc. Parpro Technologies Inc.	Taiwan British Virgin Islands Taiwan Taiwan Taiwan The United States The United States The United States The United States The United States The United States	Sales of industrial computers and gaming machines Investment Non-metal computer numerical control machining center Manufacturing and sales of machinery Manufacturing and sales of machinery Production and sales of aerospace parts Investment Investment Sales of industrial computers and gaming machines Sales of industrial computers and gaming machines Production and sales of components for the network communications, aerospace, and national defense industries	$ - USD 41,990 470,758 56,507 28,797 USD 18,522 USD 735 USD 23,955 USD 2,941 USD 735 USD 23,500	$ - USD 36,190 470,758 56,507 28,797 USD 12,722 USD 735 USD 23,955 USD 2,941 USD 735 USD 23,500	3,271,945 41,990 39,904,488 959,880 485,000 6,765 735 23,500,000 510 490 12,859	100 100 20.86 4.73 2.39 100 100 100 80 20 100	$ 18,190 1,972,934 555,457 23,058 11,651 613,203 17,662 1,255,017 70,660 17,662 1,225,017	( $ 2,696 ) 69,556 ( 14,954 ) ( 75,205 ) ( 75,205 ) ( 21,127 ) ( 8,211 ) 115,198 ( 41,053 ) ( 41,053 ) 115,198	( $ 2,696 ) 69,556 ( 4,534 ) ( 3,556 ) N/A N/A N/A N/A N/A N/A N/A	A subsidiary A subsidiary An associate An associate An associate A sub-subsidiary A sub-subsidiary A sub-subsidiary A sub-subsidiary A sub-subsidiary A sub-subsidiary

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PARPRO CORPORATION

Information on major shareholders

December 31, 2023

Table 6

Name of major shareholder	Shares	Shares
	Number of shares	Shareholdings
Liao, Wen-Chia Yunyong Investment Co., Ltd. Jieshi Investment Co., Ltd.	8,071,942 7,500,865 5,830,415	8.11% 7.53% 5.85%

• Note: The major shareholders in this table are shareholders each holding 5% or more of the Company’s ordinary shares with registration of dematerialized securities completed (including treasury shares) on the last business day of each quarter calculated by the Taiwan Depository & Clearing Corporation. The share capital indicated in the Company’s parent company only financial statements may differ from the actual number of shares that have been issued and delivered with registration of dematerialized securities completed as a result of different bases of preparation.

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Independent Auditor’s Report

To PARPRO CORPORATION,

Audit opinion

We have audited the accompanying consolidated balance sheets of PARPRO CORPORATION (the “Company”) and its subsidiaries (collectively, the “Group”) for the years ended December 31, 2023 and 2022 and the relevant consolidated statements of comprehensive income, changes in equity, and cash flows for the years then ended, and relevant notes, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023 and 2022 and for the years then ended, and its consolidated financial performance and its consolidated cash flows for the years then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for audit opinion

We conducted our audits in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and the auditing standards. Our responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements” paragraph of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China and have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that we have acquired enough and appropriate audit evidence to serve as the basis for our audit opinion.

Key audit matters

Key audit matters refer to the most vital matters in our audit of the Group’s consolidated financial statements for the year ended December 31, 2023 based on our professional judgment. These matters were addressed in our audit of the consolidated financial statements as a whole, and in forming our audit opinion. We do not express a separate opinion on these matters.

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Key audit matters of the Group’s consolidated financial statements for the year ended December 31, 2023, are stated as follows:

– Authenticity o revenue operating revenue from certain customers

The Group mainly sells gaming and industrial computers as well as aerospace and national defense products. In 2023, the amount of product revenue from certain customers changed significantly on a year-on-year basis; as we considered revenue recognition to bear a higher inherent risk of fraud and that the management might be pressured to achieve planned financial targets, we listed the authenticity of such revenue as a key audit matter.

We performed for the following audit procedures for the above matter:

1. Learned about and tested the key internal control systems for the revenue and evaluated the design and implementation effectiveness;

2. Obtained the statements of the account of the revenue, selected samples for testing of the details, and reviewing documents, such as orders, shipping orders, and invoices to confirm the authenticity of the revenue;

3. Obtain the statements of the account of the revenue and selected samples to test if there was a significant difference in the write-offs and amounts of receivables to confirm the authenticity of the revenue.

Other matters

The Company has also prepared the parent company only financial statements for the years ended December 31, 2023 and 2022, for which we have issued an audit report, with an unqualified opinion, for reference.

Responsibilities of the management and the governing bodies for the consolidated financial statements

The management’s responsibilities are to prepare the consolidated financial statements with fair presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively referred to as “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China and to maintain necessary internal control associated with the preparation in order to ensure that the consolidated financial statements are free from material misstatement arising from fraud or error.

In preparing the consolidated financial statements, the management is responsible for assessing the ability of the Group in continuing as a going concern, disclosing relevant matters, and adopting the going concern basis of accounting unless the management intends to liquidate the Group or cease the operations without other viable alternatives.

The Group’s governing bodies (including the Audit Committee) are responsible for supervising the financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance on whether the consolidated financial statements as a whole are free from material misstatement arising from fraud or error and to issue an independent auditors’ report. Reasonable assurance is a high-level assurance but is not a guarantee that an audit conducted in accordance with the auditing standards will always detect a material misstatement when it exists. Misstatement may arise from frauds or error. If the amounts of misstatements, either separately or in aggregate, could reasonably be expected to

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influence the economic decisions of the users of the consolidated financial statements, they are considered material.

We have exercised our professional judgment and professional skepticism when performing the audit work in accordance with the auditing standards. We also performed the following tasks:

1. Identified and assessed the risks of material misstatement arising from fraud or error within the consolidated financial statements; designed and executed countermeasures in response to said risks, and obtained sufficient and appropriate audit evidence to provide a basis for our opinion. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error.

2. Understood the internal control related to the audit in order to design appropriate audit procedures under the circumstances, while not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluated the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and relevant disclosures made by the management.

4. Concluded on the appropriateness of the management’s adoption of the going concern basis of accounting based on the audit evidence obtained and whether a material uncertainty exists for events or conditions that may cast significant doubt over the Group’s ability to continue as a going concern. If we are of the opinion that a material uncertainty exists, we shall remind users of the consolidated financial statements to pay attention to relevant disclosures in the said statements within our audit report. If such disclosures are inadequate, we need to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluated the overall presentation, structure, and content of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements adequately present the relevant transactions and events.

6. Obtained sufficient and appropriate audit evidence concerning the financial information of entities within the Group, to express an opinion on the consolidated financial statements. We were responsible for guiding, supervising, and performing the audit and forming an audit opinion on the Group.

The matters communicated between us and the governing bodies included the planned scope and times of the audit and material audit findings (including any material defects in internal control identified during the audit).

We also provided the governing bodies with a declaration that we have complied with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China regarding independence and communicated with them all relations and other matters that may possibly be regarded as detrimental to our independence (including relevant protective measures).

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From the matters communicated with the governing bodies, we determined the key audit matters for the audit of the Group’s consolidated financial statements for the year ended December 31, 2023. We have clearly indicated such matters in the auditors’ report. Unless legal regulations prohibit the public disclosure of specific matters, or in extremely rare cases, where we decided not to communicate specific items in the auditors’ report for it could be reasonably anticipated that the negative effects of such disclosure would be greater than the public interest it brings forth.

Deloitte & Touche CPA Chen, Pei-Te

CPA Chen, Chun-Hung

Financial Supervisory Commission Approval Document No.

Jin-Guan-Zheng-Shen-Zi No. 1080321204

Financial Supervisory Commission Approval Document No.

Jin-Guan-Zheng-Shen-Zi No. 0990031652

March 13, 2024

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PARPRO CORPORATION and Its Subsidiaries

Consolidated Balance Sheet

December 31, 2023 and 2022

Unit: NTD thousand

Code 1100 1110 1172 1200 1220 130X 1410 11XX 1517 1550 1600 1755 1805 1821 1840 1990 15XX 1XXX Code 2100 2110 2120 2170 2219 2230 2250 2280 2320 2399 21XX 2530 2540 2570 2580 25XX 2XXX 3110 3200 3310 3320 3350 3300 3400 3500 3XXX	Assets Current assets Cash (Note 6) Financial assets at fair value through profit or loss (Note 7) Accounts receivable (Notes 9 and 27) Other receivables (Notes 9 and 27) Current income tax assets Inventories (Note 10) Prepayments Total current assets Non-current assets Financial assets at fair value through other comprehensive income (Note 8) Investments using the equity method (Notes 5 and 12) Property, plant and equipment (Note 13) Right-of-use assets (Notes 14 and 27) Goodwill (Notes 5 and 15) Intangible assets (Note 15) Deferred tax assets (Note 23) Other non-current assets Total non-current assets Total assets Liabilities and equity Current liabilities Short-term borrowings (Note 16) Short-term notes payable Financial liabilities at fair value through profit or loss (Note 7) Accounts payable Other payables (Notes 18 and 27) Current income tax liabilities Provisions Lease liabilities (Notes 14 and 27) Long-term liabilities – current portion (Notes 16 and 17) Other current liabilities (Notes 21 and 27) Total current liabilities Non-current liabilities Corporate bonds payable (Note 17) Long-term borrowings (Note 16) Deferred tax liabilities (Note 23) Lease liabilities (Notes 14 and 27) Total non-current liabilities Total liabilities Equity (Note 20) Ordinary share capital Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Total retained earnings Other equity Treasury shares Total equity Total liabilities and equity		December 31, 2023 Amount % $ 195,552 5 8 - 650,982 18 1,090 - 11,863 - 1,195,798 33 66,777 2 2,122,070 58 48,448 1 590,166 16 133,121 4 189,491 5 462,304 13 66,993 2 1,536 - 20,972 1 1,513,031 42 $ 3,635,101 100 $ 293,608 8 30,000 1 7,880 - 310,868 9 126,385 3 25,790 1 1,113 - 40,018 1 90,621 2 32,922 1 959,205 26 422,685 12 92,650 3 20 - 157,416 4 672,771 19 1,631,976 45 983,789 27 642,138 18 141,737 4 33,051 1 225,535 6 400,323 11 23,125) ( 1) - - 2,003,125 55 $ 3,635,101 100		December 31, 2022	December 31, 2022
			Amount $ 195,552 8 650,982 1,090 11,863 1,195,798 66,777 2,122,070 48,448 590,166 133,121 189,491 462,304 66,993 1,536 20,972 1,513,031 $ 3,635,101 $ 293,608 30,000 7,880 310,868 126,385 25,790 1,113 40,018 90,621 32,922 959,205 422,685 92,650 20 157,416 672,771 1,631,976 983,789 642,138 141,737 33,051 225,535 400,323 23,125) - 2,003,125 $ 3,635,101		Amount $ 143,828 - 688,004 49,501 2,616 1,066,199 49,058 1,999,206 10,160 594,576 154,899 217,931 462,379 78,171 1,211 12,197 1,531,524 $ 3,530,730 $ 620,479 - 11,954 282,266 166,584 10,979 1,113 37,083 130,041 96,808 1,357,307 463,567 47,827 1,995 185,855 699,244 2,056,551 833,544 329,808 131,486 137,381 104,145 373,012 33,051) 29,134) 1,474,179 $ 3,530,730	%
		(		( (		4 - 20 2 - 30 1 57 - 17 5 6 13 2 - - 43 100 17 - - 8 5 - - 1 4 3 38 13 2 - 5 20 58 24 9 4 4 3 11 ( 1) ( 1) 42 100

The accompanying notes are an integral part of the consolidated financial statements.

Chairman: Liao, Wen-Chia Managerial Officer: Yen, Tsung-Chien

Chief Accounting Officer: Wu, Hsiu-Pi

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PARPRO CORPORATION and Its Subsidiaries

Consolidated Statement of Comprehensive Income

December 31, 2023 and 2022

Unit: In NTD thousand, except for earnings per share in NTD

Code 4100 Operating revenue (Notes 21 and 27) 5110 Operating costs (Notes 9, 10, and 22) 5900 Gross profit Operating expenses (Notes 9, 22, and 27) 6100 Selling expense 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit impairment loss (gain on reversal) 6000 Total operating expenses 6900 Net operating profit Non-operating income and expenses (Notes 22 and 27) 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Financial costs 7060 Share of profit and loss of associates using the equity method 7000 Total non-operating income and expenses 7900 Net income before tax 7950 Income tax expense (Note 23) 8200 Net income for 2023		2023	% 100 86 14 1 9 - ( 1) 9 5 - 1 - ( 2 ) - ( 1) 4 ( 1) 3		2022
						%
						100 84 16 1 12 - - 13 3 - 1 1 ( 2 ) 1 1 4 - 4

(Continued from the next page)

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(Continued from the previous page)

Code Other comprehensive income 8310 Items not reclassified to profit or loss: 8316 Unrealized gains or losses on investment in equity instruments at fair value through other comprehensive income 8330 Share of other comprehensive income of associates using the equity method 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange Differences in Translating the Financial Statements of Foreign Operations 8300 Other comprehensive income after tax for 2023 8500 Total comprehensive income for 2023 Earnings per share (Note 24) 9750 Basic 9850 Diluted		2023	% - - - - 3	2022
		Amount $ 8,306 5,432 4,037) 9,701 $ 90,021 $ 0.87 $ 0.73		Amount ( $ 7,300 ) 9,144 172,155 173,999 $ 273,512 $ 1.21 $ 1.07	%
	(				- - 6 6 10

The accompanying notes are an integral part of the consolidated financial statements.

Chairman: Liao, Wen-Chia Managerial Officer: Yen, Tsung-Chien Chief Accounting Officer: Wu, Hsiu-Pi

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Unit: NTD thousand

PARPRO CORPORATION and Its Subsidiaries

Consolidated Statement of Changes in Equity

December 31, 2023 and 2022

Code A1 Balance as at January 1, 2022 Earnings distribution for 2021 B1 Legal reserve provided B3 Special reserve provided B5 Common stock cash dividends Total earnings distributed D1 Net income for 2022 D3 Other comprehensive income after tax for 2022 D5 Total comprehensive income for 2022 C5 Components of convertible corporate bonds issued by the Company recognize in equity C15 Cash distributed from the capital surplus I1 Convertible corporate bonds converted L3 Treasury shares canceled Z1 Balance as at December 31, 2022 Earnings distribution for 2022 B1 Legal reserve provided B17 Special reserve reversed B5 Common stock cash dividends Total earnings distributed D1 Net income for 2023 D3 Other comprehensive income after tax for 2023 D5 Total comprehensive income for 2023 C5 Components of convertible corporate bonds issued by the Company recognize in equity I1 Convertible corporate bonds converted L3 Treasury shares canceled Z1 Balance as at December 31, 2023	Share capital Ordinary share capital Share capital to be registered $ 834,516 $ 28 - - - - - - - - - - - - - - - - - - 28 ( 28 ) ( 1,000) - 833,544 - - - - - - - - - - - - - - - - - 161,495 - ( 11,250) - $ 983,789 $ -	Share capital Ordinary share capital Share capital to be registered $ 834,516 $ 28 - - - - - - - - - - - - - - - - - - 28 ( 28 ) ( 1,000) - 833,544 - - - - - - - - - - - - - - - - - 161,495 - ( 11,250) - $ 983,789 $ -	Capital surplus $ 310,881 - - - - - - - 28,740 ( 8,223 ) - ( 1,590) 329,808 - - - - - - - 31,291 281,039 - $ 642,138			Retained earnings		Undistributed earnings $ 105,974 10,597 ) 60,844 ) 32,892) 104,333) 99,513 2,991 102,504 - - - - 104,145 10,251 ) 104,330 34,900) 59,179 80,320 225) 80,095 - - 17,884) $ 225,535	Other equity items Exchange Differences in Translating the Financial Statements of Foreign Operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income ( $ 193,964 ) ( $ 10,095 ) - - - - - - - - - - 172,155 ( 1,147) 172,155 ( 1,147) - - - - - - - - ( 21,809 ) ( 11,242 ) - - - - - - - - - - ( 4,037) 13,963 ( 4,037) 13,963 - - - - - - ($ 25,846) $ 2,721	Other equity items Exchange Differences in Translating the Financial Statements of Foreign Operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income ( $ 193,964 ) ( $ 10,095 ) - - - - - - - - - - 172,155 ( 1,147) 172,155 ( 1,147) - - - - - - - - ( 21,809 ) ( 11,242 ) - - - - - - - - - - ( 4,037) 13,963 ( 4,037) 13,963 - - - - - - ($ 25,846) $ 2,721	Treasury shares ( $ 31,724 ) - - - - - - - - - - 2,590 ( 29,134 ) - - - - - - - - - 29,134 $ -		Total equity
									Exchange Differences in Translating the Financial Statements of Foreign Operations ( $ 193,964 ) - - - - - 172,155 172,155 - - - - ( 21,809 ) - - - - - ( 4,037) ( 4,037) - - - ($ 25,846)
	Ordinary share capital $ 834,516 - - - - - - - - - 28 ( 1,000) 833,544 - - - - - - - - 161,495 ( 11,250) $ 983,789				Legal reserve $ 120,889 10,597 - - 10,597 - - - - - - - 131,486 10,251 - - 10,251 - - - - - - $ 141,737	Special reserve $ 76,537 - 60,844 - 60,844 - - - - - - - 137,381 - ( 104,330 ) - ( 104,330) - - - - - - $ 33,051
	( (	(	( (			( (	( ( ( ( ( ( ( (		( ( ( ( (	( ( ( (	( (	( ( ( ( (	$ 1,213,042 - - 32,892) 32,892) 99,513 173,999 273,512 28,740 8,223 ) - - 1,474,179 - - 34,900) 34,900) 80,320 9,701 90,021 31,291 442,534 - $ 2,003,125

The accompanying notes are an integral part of the consolidated financial statements.

Chairman: Liao, Wen-Chia

Managerial Officer: Yen, Tsung-Chien

Chief Accounting Officer: Wu, Hsiu-Pi

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PARPRO CORPORATION and Its Subsidiaries

Consolidated Statement of Cash Flows

December 31, 2023 and 2022

Code Net cash flow of operating activities A10000 Net income before tax A20010 Income and expenses A20100 Depreciation expense A20200 Amortization expense A20300 Expected credit impairment loss (gain on reversal) A20400 Net (gain) loss on financial instruments measured at fair value through profit or loss A20900 Financial costs A21200 Interest income A22300 Share of profit and loss of associates using the equity method A22500 Gain on disposal of property, plant and equipment A23700 Loss on inventory valuation loss and obsolescence (reversed) A24100 Unrealized foreign exchange gain A24200 Loss on repayment of convertible corporate bonds A29900 Government grants A30000 Net changes in operating assets and liabilities A31150 Accounts receivable A31180 Other receivables A31200 Inventory A31230 Prepayments A32150 Accounts payable A32180 Other payables A32230 Other current liabilities A33000 Cash inflow (outflow) from operations A33100 Interest received A33300 Interest paid A33500 Income tax paid AAAA Net cash inflows (outflows) from operating activities

Unit: NTD thousand 2023 2022 $ 140,671 $ 107,741 82,476 81,919 11,329 10,838 ( 19,469 ) 10,756 ( 7,834 ) 4,003 44,996 54,009 ( 898 ) ( 428 ) 9,886 ( 30,420 ) ( 78 ) ( 108 ) ( 22 ) 34,362 ( 1,612 ) ( 3,261 ) - 6,175 - ( 18,113 ) 56,355 ( 285,266 ) 48,411 ( 46,342 ) ( 140,385 ) ( 236,871 ) ( 9,989 ) 6,323 28,702 88,357 14,855 28,772 ( 56,465) 78,119 200,929 ( 109,435 ) 898 428 ( 35,239 ) ( 38,243 ) ( 56,121) ( 8,487) 110,467 (155,737)

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(Continued from the previous page)

Code Net cash flow of investing activities B00100 Financial assets at fair value through other comprehensive income acquired B02700 Property, plant and equipment acquired B02800 Proceeds from disposal of property, plant and equipment B03700 Increase in guarantee deposits paid B06800 Decrease in other non-current assets B07100 Increase in prepayments for business facilities B07600 Dividends from associates received BBBB Net cash outflow from investing activities Net cash flow of financing activities C00200 Decrease in short-term borrowings C00500 Increase in short-term notes payable C01200 Convertible corporate bonds issued C01300 Convertible corporate bonds repaid C01600 Long-term borrowings C01700 Long-term borrowings repaid C03700 Increase (decrease) in other payables C04020 Lease principal repaid C04500 Dividends paid to owners of the Company CCCC Net cash outflow from financing activities DDDD Effect of exchange rate changes on cash EEEE Net increase (decrease) in cash E00100 Opening balance of cash E00200 Ending balance of cash	2023 ( $ 29,982 ) ( 16,691 ) 249 ( 5,773 ) - ( 3,070 ) 3,990 ( 51,277) ( 327,386 ) 30,000 394,488 - 274,468 ( 237,765 ) ( 65,000 ) ( 40,945 ) ( 34,900) ( 7,040) ( 426) 51,724 143,828 $ 195,552	2022
		( $ 17,460 ) ( 2,302 ) 108 ( 206 ) 349 - 3,990 ( 15,521) ( 48,078 ) - 494,409 ( 425,500 ) 70,000 ( 101,036 ) 65,000 ( 36,971 ) ( 41,115) ( 23,291) 23,853 ( 170,696 ) 314,524 $ 143,828

The accompanying notes are an integral part of the consolidated financial statements.

Chairman: Liao, Wen-Chia Managerial Officer: Yen, Tsung-Chien Chief Accounting Officer: Wu, Hsiu-Pi

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PARPRO CORPORATION and Its Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2023 and 2022

(In NTD thousand, unless stated otherwise)

I. Company History

PARPRO CORPORATION (hereinafter referred to as the “Company”) was incorporated on December 27, 2001, mainly engaging in the processing of motherboards for security control and communications as well as the manufacturing and sales of industrial computers and gaming machines.

The Company’s stock was approved by the Securities and Futures Bureau (SFB), Financial Supervisory Commission (FSC) in December 2009 for the retroactive procedures for public offering and trading at Taipei Exchange (TPEx), and was listed on Taiwan Stock Exchange (TWSE) on November 21, 2013.

The consolidated financial statements are presented in the Company’s functional currency, i.e. New Taiwan dollar (NTD).

II. Date and Procedures for Approval of Financial Statements

The consolidated financial statements were published after being approved by the Board of Directors on March 13, 2024.

III. Application of New and Revised Standards and Interpretation

• (I) Initial application of 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).

The application of the IFRS Accounting Standards endorsed and issued into effect by the FSC does not cause a material change in the Group’s accounting policies.

• (II) Application of the IFRS Accounting Standards endorsed by FSC in 2024

Effective date announced New/amended/revised standards or interpretation by IASB (Note 1) Amendments to IFRS 16, “Lease Liability in a Sale January 1, 2024 (Note 2) and Leaseback”

Amendments to IAS 1 “Classification of Liabilities January 1, 2024 as Current or Non-current” Amendments to IAS 1 “Non-current Liabilities with January 1, 2024 Covenants” Amendments to IAS 7 and IFRS 7 “Supplier January 1, 2024 (Note 3) Financing Arrangements”

• Note 1: Unless otherwise noted, the above new/revised/amended standards and interpretations take effective in their respective annual reporting periods beginning on or after their respective dates.

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• Note 2: The seller and lessee shall apply the amendments to IFRS 16 retrospectively to the sale and leaseback carried out after the date of initial application of IFRS 16.

• Note 3: When the amendments apply for the first time, some requirements for disclosures are exempted.

By the time the consolidated financial statements were approved to be released, the Group confirmed that the amendments to the above standards and interpretations would not cause a material impact on its financial position and financial performance.

(III) The IFRS Accounting Standards released by the IASB but not yet endorsed and issued into effect by the FSC

Effective date announced New/amended/revised standards or interpretation by IASB (Note 1) Amendment to IFRS 10 and IAS 28, “Sale or To be determined Contribution of Assets between an Investor and its Affiliate or Joint Venture.” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS January 1, 2023 17 and IFRS 9 – Comparative Information” Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Note 2)

• Note 1: Unless otherwise noted, the above new/revised/amended standards and interpretations take effective in their respective annual reporting periods beginning on or after their respective dates.

• Note 2: It applies to the annual reporting periods starting on or after January 1, 2025. When the amendments apply for the first time, the effect will be recognized in retained earnings on the first-time application date. When the Group adopts a non-functional currency as the presentation currency, the effects will be reclassified as the exchange differences arising from the translation of the financial statements of foreign operations under equity on the first-time application date.

As of the date of issuance of the consolidated financial statements, the Group still continued to evaluate the effect of the amendments to other standards and interpretations on its financial position and financial performance, and the relevant effects will be disclosed when the evaluation is completed.

IV. Summary of Significant Accounting Policies

• (I) Statement of compliance

The consolidated financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS Accounting Standards endorsed and issued into effect by the FSC.

(II) Basis for preparation

The consolidated financial statements were prepared on a historical cost basis, except for financial instruments measured at fair value.

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The fair value measurement is classified into three levels based on the observability and significance of relevant inputs:

1. Level 1 inputs: Quoted (unadjusted) prices in active markets for identical assets or liabilities on the measurement date.

2. Level 2 inputs: Inputs, other than quoted market prices within level 1 that are observable, either directly (i.e. prices) or indirectly (derived from prices) for assets or liabilities.

3. Level 3 inputs: Unobservable inputs for assets or liabilities.

4. (III) Criteria for 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 balance sheet date; and

3. Cash.

Current liabilities include:

1. Liabilities held primarily for the purpose of trading;

2. Liabilities due to be settled within 12 months after the balance sheet date; and

3. Liabilities with a repayment deadline that cannot be unconditionally deferred for at least 12 months after the balance sheet date.

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

• (IV) Basis for consolidation

The consolidated financial statements include the financial statements of the Company and entities controlled by the Company (subsidiaries). The subsidiaries’ financial statements have been adjusted to make the accounting policies consistent with the Group’s ones. In preparing the consolidated financial statements, all inter-entity transactions, account balances, as well as income and losses have been eliminated.

For details of subsidiaries, shareholdings, and business activities, please refer to Note 11 and Table 6.

• (V) Foreign currencies

When each entity prepares financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are converted into the functional currency at the exchange rate prevailing on the transaction date.

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On each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the year in which they arise.

When the consolidated financial statements are prepared, the assets and liabilities of foreign operations (including subsidiaries and associates operating in a country or using a currency different from that of the Company) are translated into NTD at the exchange rate prevailing on each balance sheet date. Income and expense items are translated at the year’s average exchange rate, and the resulting exchange differences are recognized in other comprehensive income.

Goodwill and adjustments to the fair values of the carrying amounts of assets and liabilities arising from the acquisition of a foreign operation are regarded as the foreign operation’s assets and liabilities and translated at the closing exchange rate on each balance sheet date, and the resulting exchange difference is recognized in other comprehensive income.

(VI) Inventory

Inventories include raw materials, work in progress, and finished goods. The values of inventories are determined at cost or net realizable value, whichever is lower. The comparison of the cost and the net realizable value is based on individual items except for inventories of the same category. The net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. The costs of inventories are calculated using the weighted average method.

(VII) Investments in associates

An associate is an entity over which the Group has significant influence and is not a subsidiary.

The Group adopts 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 Group’s share of the profit or loss and other comprehensive income of the associate. In addition, the Group recognizes the changes in the equity it holds in its associates in proportion to its shareholdings.

The amount by which the Group’s share of an associate’s net fair values of the identifiable assets and liabilities on the acquisition date exceeds the acquisition cost is recognized in the year’s profit or loss.

When the Group assesses the impairment, it takes the carrying amount of the entire investment as a single asset, compares its recoverable amount with the carrying amount, and performs an impairment test, and the impairment loss recognized is not apportioned to any assets that form part of the carrying amount of the investment. Any reversal of impairment losses is recognized to the extent of a subsequent increase in the recoverable amount of the investment.

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(VIII) Property, plant and equipment

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

Property, plant and equipment are depreciated using the straight-line method over their useful lives. Each significant part is depreciated separately. The Group conducts at least one annual review at the end of each year to assess the estimated useful life, residual value, and depreciation methods, while applying the effect of changes in accounting estimates prospectively.

When property, plant and equipment are derecognized, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in loss or profit.

(IX) Goodwill

The cost of goodwill from business combination is the amount of goodwill recognized at the acquisition date and is subsequently measured at cost less accumulated impairment losses.

To test impairment, goodwill is allocated among each cash-generating unit or a group of cash-generating units, which is expected to benefit from the synergies of the combination.

The carrying amount and recoverable amount of the cash-generating units to which goodwill is allocated will be compared every year and whenever there are signs of impairment to test the impairment of the units. If the goodwill apportioned to cash-generating units was obtained from a business combination in the year, the cash-generating units should be tested for impairment before the end of the year. If the recoverable amount of cash-generating units to which goodwill is apportioned is lower than its carrying amount, the impairment loss is first deducted from the carrying amount of the goodwill of the said cash-generating units. Next, the carrying amount of other assets within the said cash-generating units is deducted from the carrying amount of the goodwill of the said cash-generating units in proportion to the carrying amount of each asset. Any impairment loss is recognized in loss in the current year. Impairment loss of goodwill may not be reversed subsequently.

(X) Intangible assets

1. Intangible asset

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost, less accumulated amortization and accumulated impairment loss. Intangible assets are amortized using a straight-line method over the useful lives. The Group conducts at least one annual review at the end of each year to assess the estimated useful life, residual value, and amortization methods, while applying the effects of changes in accounting estimates prospectively.

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• Acquisition through business combination

Intangible assets acquired through business combination are recognized at fair value on the acquisition date and recognized separately from goodwill, and the subsequent measurement method is the same as that of intangible assets acquired separately.

3.Derecognition

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

• (XI) Impairment of property, plant and equipment, right-of-use assets, and intangible assets (excluding goodwill)

The Group assesses if there are any signs of potential impairment of property, plant and equipment, right-of-use assets, and intangible assets (excluding goodwill) at each balance sheet date. If there is any sign of impairment, an estimate is made of its recoverable amount. If it is not unable to determine the recoverable amount of an asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Shared assets are apportioned to each cash-generating unit on a reasonable and consistent basis.

The recoverable amount is the fair value, less cost of sales or its value in use, whichever is higher. If the recoverable amount of an asset or the cash-generating unit is lower than its carrying amount, the carrying amount is reduced to the recoverable amount, and the impairment loss is recognized in profit or loss.

When the impairment loss is subsequently reversed, the carrying amount of the asset or the cash-generating unit is increased to the revised recoverable amount, provided that the increased carrying amount should not exceed the carrying amount (less amortization or depreciation) of the asset or cash-generating unit which was not recognized as impairment loss in prior years. The reversal of the impairment loss is recognized in profit or loss.

(XII) Financial instruments

Financial assets and financial liabilities are recognized in the consolidated balance sheet when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities not at fair value through profit or loss are measured at fair value plus transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities. The transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss is immediately recognized in profit or loss.

1. Financial asset

Regular trading of financial assets shall be recognized and derecognized in accordance with trade date accounting.

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(1) Measurement types

Financial assets held by the Group are those measured at amortized cost and investments in equity instruments measured at fair value through other comprehensive income.

• A. Financial assets measured at amortized cost

When the Group’s investments in financial assets meet the following two conditions simultaneously, they are classified as financial assets measured at amortized cost:

• a. which the objective is to collect contractual cash flows by holding the financial assets; and

• b. The cash flows on specific dates specified in the contractual terms are solely payments of the principal and interest on the principal amount outstanding.

After initial recognition, the assets (including cash and cash equivalents, accounts receivable, and other receivables) are measured at the amortized cost of the total carrying amount determined using the effective interest method, less any impairment loss, and any foreign currency exchange differences are recognized in profit or loss.

Interest revenue is calculated by multiplying the effective interest rate by the total carrying amount of financial assets:

• B. Investment in equity instruments at fair value through other comprehensive income

The Group may, upon initial recognition, make an irrevocable election to designate as at fair value through other comprehensive income the investments in equity instruments that are not held for trading and the ones that are not recognized by an acquirer in a business combination or with the contingent consideration.

Investments in an equity instrument measured at fair value through other comprehensive income are measured at fair value, and any subsequent fair value changes are recognized in other comprehensive income and accumulated in other equity. Upon disposal of investments, cumulative gain or loss is directly transferred to retained earnings and is not reclassified to profit or loss.

Dividends of investments in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss when the Group’s right to receive dividends is established unless such dividends clearly represent the recovery of a part of the investment cost.

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(2) Impairment of financial assets

The Group assesses the impairment loss of financial assets measured at amortized cost (including notes and accounts receivable) based on the expected credit loss on each balance sheet date.

An allowance for losses on accounts receivable is recognized based on expected credit losses during the duration. Other financial assets are first assessed based on whether the credit risk has increased significantly since the initial recognition. If there is no significant increase in the risk, an allowance for losses is recognized at an amount equal to 12-month expected credit losses. If the risks have increased significantly, an allowance for losses is recognized at an amount equal to lifetime expected credit losses.

The expected credit losses refer to the weighted average credit loss with the risk of default as the weight. The 12-month expected credit losses represent the expected credit losses from possible defaults of a financial instrument within 12 months after the reporting date. The lifetime expected credit losses represent the expected credit losses from all possible defaults in a financial instrument over the expected life of a financial instrument.

All impairment losses on financial assets are reduced to their carrying amounts through an allowance account for losses.

(3) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the consideration received is recognized in profit or loss. When an investment in equity instrument at fair value through other comprehensive income in its entirety is derecognized, the cumulative profit or loss is transferred directly to retained earnings and is not reclassified to profit or loss.

2. Financial liabilities

(1) Subsequent measurement

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

(2) Derecognition of financial liabilities

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

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3. Convertible corporate bonds

The convertible corporate bonds issued by the Group are based on the substance of the contractual agreement and the definitions of financial liabilities and equity instruments, and components of the bonds are classified as financial liabilities and equity upon initial recognition.

Upon initial recognition, the fair values of the components of liabilities are estimated with the current market interest rate for similar non-convertible instruments and measured at amortized cost in the effective interest method before conversion or the maturity date. Liability components, which are embedded non-equity derivatives, are measured at fair value.

The right to convert bonds classified as equity is equal to the remaining amount of the overall fair value of the composite instrument minus the separately determined fair value of the liability component. It is recognized as equity after deducting the impact of income tax and is not subsequently measured. When the right to convert bonds is exercised, its relevant components of liabilities and the amounts under equity will be reclassified to share capital and capital surplus – issuance at premium. If the right to convert convertible corporate bonds has not been exercised on the maturity date, the amount recognized in equity will be reclassified to capital surplus – others.

Transaction costs related to the issuance of convertible corporate bonds are apportioned to the components of liabilities and equity of the instrument in proportion to the total price.

(XIII) Revenue recognition

After the Group identifies its performance obligations in contracts with clients, it allocates the transaction costs to each obligation in the contracts and recognizes revenue upon completion of performance obligations.

Merchandise sales revenue

Merchandise sales revenue is from gaming and sales of industrial computers and aerospace and national defense components. The revenue from the products sold by the Group is recognized when the products are shipped out according to the contract, at which the Group recognizes the amount in accounts receivable.

When supplying materials for outsourced processing, as the control of the ownership of the processed products has not been transferred, it is not recognized in revenue when the materials are supplied out.

(XIV) Leasing

The Group assesses whether a contract belongs to (or contains) a lease on the date of establishment of the contract.

1. The Group as a lessor

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

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2. The Group as a lessee

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

The right-of-use assets are initially measured at cost (including the initially measured amount of the lease liability, lease payments made before the commencement date of the lease, less lease incentives received, initial direct costs, and estimated costs of restoring the underlying assets) and subsequently measured at cost less accumulated depreciation and accumulated impairment losses, and the remeasurement of the lease liability is adjusted. Right-of-use assets are presented on a separate line in the consolidated balance sheets

Right-of-use assets are depreciated on a straight-line basis from the lease commencement date to the end of the useful life or the end of the lease term, whichever is earlier.

Lease liabilities are initially measured at the present value of the lease payment (including fixed payments) If the interest rate implicit in a lease can be easily determined, the lease payment is discounted at such an interest rate. If the interest rate cannot be easily determined, the lessee’s incremental borrowing rate applies

Subsequently, lease liabilities are measured at the amortized cost using the effective interest rate method, and interest expense is amortized over the lease term. Lease liabilities are presented on a separate line in the consolidated balance sheets.

(XV) Borrowing costs

Borrowing costs are recognized in profit or loss when arise.

(XVI) Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis in the period in which the relevant costs of intended compensation are recognized in expenses by the Group.

If the government grants are used to compensate for expenses or losses already incurred or for providing immediate financial support to the Group without relevant costs incurred in the future, they will be recognized in profit or loss in the period in which they can be received.

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(XVII) Employee benefits

1. Short-term employee benefits

Relevant liabilities for short-term employee benefits are measured by the non-discounted amount expected to be paid in exchange for employee services.

2. Post-employment benefits

For pension under a defined contribution plan, the amount of pension contributed is recognized in expenses during employees’ service period.

(XVIII) Income tax

Income tax expense is the sum of the current income tax and deferred income

tax.

1. Current income tax

The Group determines the current income (loss) in accordance with the laws and regulations formulated by the authority in the jurisdiction to which an income tax turn should be filed and calculates the payable (recoverable) income tax accordingly.

A surtax is imposed on the undistributed earnings pursuant to the Income Tax Act of the Republic of China is recognized by a resolution of the shareholders’ meeting.

Adjustment to income tax payable from prior years are recognized in the current income tax.

2. Deferred tax

Deferred tax is calculated based on the temporary differences between the carrying amount of assets and liabilities, and the corresponding tax bases used in the computation of taxable income.

All taxable temporary differences are generally in deferred tax liabilities, and deferred tax assets are recognized when it is probable that future taxable income will be available against the income tax credits arising from the deductible temporary differences and carryforward of the unused losses.

Taxable temporary differences associated with investments in subsidiaries are recognized in deferred liabilities, except where the Group is able to control the reversal of the temporary difference and it is probable that the said temporary difference will not be reversed in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at each balance sheet date, and its carrying amount will be increased as it has become probable that future taxable income will allow all or part of the asset to be recovered.

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Deferred tax assets and liabilities are measured at the tax rates in the year in which the liabilities are expected to be settled or assets realized, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.

1. Current and deferred income taxes

Current and deferred taxes are recognized in profit or loss. However, the current and deferred income taxes related to items recognized in other comprehensive income or directly included in equity are recognized in other comprehensive income or directly included in equity.

V. Significant Accounting Judgments and Estimations, and Main Sources of Assumption Uncertainties

When the Group adopts accounting policies, the management is required to make judgments, estimates and assumptions that are based on historical experience and other factors that are not readily apparent from other sources. Actual results may differ from the estimates.

The Group’s management will continue to review the estimates and basic assumptions. If a revision of an estimate affects only the current year, it is recognized in the period in which it is revised. If a revision of an accounting estimate affects both the current period and future periods, it is recognized in the period in which it is revised and in the future periods.

– Significant accounting judgment judgment of associates with a significant influence

The Group holds 20.86% of the voting rights in Anderson Industrial Corp. as the single largest shareholder. Based on the number and distribution of voting rights held by other shareholders, their shareholdings are not extremely dispersed, and considering the votes they cast at the prior shareholders’ meetings, they do not act passively. The Group cannot appoint more than half of the members of the governing body of the company, so the Group cannot lead the company’s relevant activities and, therefore, has no control over it. The Group’s management believes that the Group has only significant influence on Anderson Industrial Corp., so it is listed as an associate of the Company.

Estimations and main sources of assumption uncertainties

Estimation of goodwill impairment

When the impairment of goodwill is decided, it is necessary to estimate the value in use of the cash-generating units to which the goodwill is apportioned. To calculate value in use, the management should estimate the future cash flows estimated to be generated from the cash-generating units and determine the appropriate discount rate used to calculate the present value. If actual cash flows are less than estimated, or changes in facts and circumstances cause future cash flows to be revised downward or the discount rate upwards, significant impairment losses may arise.

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VI.	Cash Cash on hand and working capital Check and demand deposits	December 31, 2023 $ 451 195,101 $ 195,552	December 31, 2022	December 31, 2022
				$ 455 143,373 $ 143,828

VII. Financial instruments at fair value through profit or loss

Financial asset Held for trading Derivatives - right of redemption/ put option Financial liabilities Held for trading Derivatives - right of redemption/ put option	December 31, 2023 $ 8 $ 7,880	December 31, 2022	December 31, 2022
			$ - $ 11,954

VIII. Financial assets at fair value through other comprehensive income

Investment in equity instruments Domestic investment TWSE-listed stocks Unlisted stocks	December 31, 2023 $ 18,466 29,982 $ 48,448	December 31, 2022	December 31, 2022
			$ 10,160 - $ 10,160

The Group invests in the above ordinary shares for medium- and long-term strategic purposes and estimates to make profits through such long-term investments. The Group’s management believes that including the short-term fair value fluctuations of such investments in profit or losses is inconsistent with the above long-term investment plan and, therefore, elects to designate the investments to be measured as at fair value through other comprehensive income.

IX. Accounts receivable and other receivables

Accounts receivable Measured at amortized cost Total carrying amount Less: Allowance for losses	December 31, 2023 $ 665,755 ( 14,773) $ 650,982	December 31, 2022	December 31, 2022
	(	(	$ 730,234 42,230) $ 688,004

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Other receivables Tax refund receivable (Note) Others	December 31, 2023 $ - 1,090 $ 1,090	December 31, 2022	December 31, 2022
			$ 47,902 1,599 $ 49,501

• Note: Due to the impact of the COVID-19 pandemic, the U.S. Federal Government passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and launched the Employee Retention Credit (ERC) to assist small- and medium-sized enterprises in continuing as a going concern during the economic shutdown caused by the spread of the pandemic, thereby continuing to pay employee wages and provide jobs.

In 2023 and 2022, the U.S. subsidiary of the Group applied to the U.S. Internal Revenue Service for the ERC program. The application was accepted and reclassified to a deduction of the operating costs and operating expenses, amounting to US$2,132 thousand and US$1,634 thousand, respectively.

The Group’s average credit period for merchandise sales is 30 to 180 days.

The Group recognizes an allowance for losses on accounts receivable at the expected credit losses during the duration. The expected credit losses during the duration are based on each customer’s past payment collection records, the increase in delayed payments beyond the average credit period, as well as their past default records and current financial position and the economic conditions in their industries. Based on the Group’s history of credit losses, as there was no significant difference in the loss patterns among different groups of customers, customers were not further grouped, and only expected credit loss ratio was set based on the number of days of the credit period for accounts receivable.

If there is evidence that the counterparty is facing serious financial difficulties and the Group cannot reasonably expect to recover the amount, the Group directly writes off the relevant accounts receivable but will continue to try to collect the receivable. The recovered amount is recognized in profit or loss.

The allowances for losses on accounts receivable are as follows:

December 31, 2023

December 31, 2023
Total carrying amount Allowances for losses (expected credit losses during the duration) Amortized cost	Fewer than 180 days		181–365 days $ 17,576 ( 7,526) $ 10,050	366 days or beyond		(	Total
		$ 640,932 - $ 640,932		(	$ 7,247 7,247) $ -		$ 665,755 14,773) $ 650,982

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December 31, 2022

December 31, 2022
Total carrying amount Allowances for losses (expected credit losses during the duration) Amortized cost	Fewer than 180 days		181–365 days $ 4,454 ( 4,424) $ 30	366 days or beyond		(	Total
		$ 687,974 - $ 687,974		(	$ 37,806 37,806) $ -		$ 730,234 42,230) $ 688,004

The above is an aging analysis based on the account opening dates.

Information on changes in allowances for losses on accounts receivable is as follows:

follows:
Opening balance Provision (reversal) for this year Write-offs for this year Foreign currency translation difference Ending balance	2023 $ 42,230 ( 19,469 ) ( 8,383 ) 395 $ 14,773		2022
			$ 28,133 10,756 - 3,341 $ 42,230

X. Inventory

Inventory
Raw materials Work in progress Finished goods	December 31, 2023 $ 637,375 536,732 21,691 $ 1,195,798	December 31, 2022
			$ 556,175 492,607 17,417 $ 1,066,199

The cost of goods sold related to inventories in 2023 and 2022 totaled NTD2,935,555 thousand and NTD2,318,545 thousand, respectively.

The cost of goods sold in 2023 and 2022 included the loss on inventory valuation loss and obsolescence reversed and the loss on inventory valuation loss and obsolescence of NTD22 thousand and NTD34,362 thousand, respectively.

XI. Subsidiaries

• (I) Subsidiaries included in the consolidated financial statements

The entities in the consolidated financial statements are as follows:

Name of investor The Company	Name of subsidiary	Nature of business Sales of industrial computers and gaming machines Investment	Shareholding December 31, 2023 December 31, 2022 100% 100% 100% 100%	Notes
	Efa Technologies Corporation (“Efa”) Parpro Holdings Co., Ltd.			－ －

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Name of investor Parpro Holdings Co., Ltd. AP Parpro, Inc. Pilot (Las Vagas), Inc. Parpro Quality Inc.	Name of subsidiary	Nature of business Production and sales of aerospace parts Investment Investment Sales of industrial computers and gaming machines Sales of industrial computers and gaming machines Production and sales of components for the network communications, aerospace, and national defense industries	Shareholding December 31, 2023 December 31, 2022 100% 100% 100% 100% 100% 100% 80% 80% 20% 20% 100% 100%	Notes
			December 31, 2023 100% 100% 100% 80% 20% 100%
	AP Parpro, Inc. Pilot (Las Vagas), Inc. Parpro Quality Inc. Parpro (Nevada), Inc. Parpro (Nevada), Inc. Parpro Technologies Inc.			－ － － － － －

• (II) Subsidiaries note included in the consolidated financial statements: None.

• XII. Investments using the equity method

Investments in associates

Investments using the equity method Investments in associates
Material enterprises Anderson Industrial Corp. Associates that are not individually material	December 31, 2023 $ 555,457 34,709 $ 590,166	December 31, 2022
			$ 554,651 39,925 $ 594,576

Material enterprises are as follows:

Name of company Anderson Industrial Corp.	Nature ofbusiness Non-metal computer numerical control machining centers, PCB electronic machinery, cutting tools, and boards	Principal business premises Taiwan	Percentage of ownership and voting rights	Percentage of ownership and voting rights
			December 31, 2023 20.86%	December 31, 2022
				20.86%

• (I) Investments using the equity method and the Group’s share of profit and loss and other comprehensive income of the associates are recognized based on the financial reports for the same periods audited by certified public accountants (CPAs).

• (II) Information of associates with level 1 fair value (quoted prices in active markets) is as follows:

as follows:
Name of company Anderson Industrial Corp.	December 31, 2023 $ 458,902	December 31, 2022
			$ 405,031

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XIII. Property, plant and equipment

				Machine and	Machine and			Other
		Buildings		equipment			equipment		Total
Costs
Balance as at January 1,
2022		$	98,529	$	311,569		$	87,615	$ 497,713
Additions			1,118		135			1,049	2,302
Disposal			-		-	(		850 ) (	850 )
Net exchange difference			10,820		17,925			8,353	37,098
Balance as at December
31, 2022		$	110,467	$	329,629		$	96,167	$ 536,263
Accumulated depreciation
Balance as at January 1,
2022		$	20,995	$	236,083		$	63,041	$ 320,119
Depreciation expense			8,768		25,323			6,815	40,906
Disposal			-		-	(		850 ) (	850 )
Net exchange difference			2,565		12,692			5,932	21,189
Balance as at December
31, 2022		$	32,328	$	274,098		$	74,938	$ 381,364
Net amount as at
December 31, 2022		$	78,139	$	55,531		$	21,229	$ 154,899
Costs
Balance as at January 1,
2023		$	110,467	$	329,629		$	96,167	$ 536,263
Additions			1,683		13,215			1,793	16,691
Disposal	(		6,567 )	(	25,391 )	(		11,399 ) (	43,357 )
Net exchange difference			53		146			136	335
Balance as at December
31, 2023		$	105,636	$	317,599		$	86,697	$ 509,932
Accumulated depreciation
Balance as at January 1,
2023		$	32,328	$	274,098		$	74,938	$ 381,364
Depreciation expense			8,134		16,929			13,488	38,551
Disposal	(		6,567 )	(	25,220 )	(		11,399 ) (	43,186 )
Net exchange difference	(		27)		155	(		46)	82
Balance as at December
31, 2023		$	33,868	$	265,962		$	76,981	$ 376,811
Net amount as at
December 31, 2023		$	71,768	$	51,637		$	9,716	$ 133,121

Depreciation expenses are calculated on a straight-line basis over their estimated useful lives as shown in the following:

iation expenses are calculated on a as shown in the following:	straight-line basis over t
Buildings	3–50 years
Machine and equipment	3–8 years
Other equipment	3–8 years

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XIV. Lease agreements

(I) Right-of-use assets

ase agreements Right-of-use assets
Carrying amount of right-of-use assets Buildings Transportation equipment Additions to right-of-use assets Depreciation expenses of right-of-use assets Buildings Transportation equipment	December 31, 2023 $ 183,798 5,693 $ 189,491 2023 $ 14,942 $ 43,337 588 $ 43,925	December 31, 2022
			$ 217,599 332 $ 217,931 2022
			$ - $ 40,016 997 $ 41,013

Except for the additions and depreciation expenses recognized listed above, the Group did not have any significant sublease or impairment of the right-of-use assets during the years ended December 31, 2023 and 2022.

(II) Lease liabilities

during the years ended December 31, Lease liabilities	2023 and 2022.
Carrying amount of lease liabilities Current Non-current	December 31, 2023 $ 40,018 $ 157,416	December 31, 2022
			$ 37,083 $ 185,855

The range of discount rates for lease liabilities was 2.24%–4.75% and 1.38%– 4.75% as of December 31, 2023 and 2022, respectively.

XV. Goodwill and intangible assets

Goodwill and intangible assets
Costs Balance as at January 1, 2022 Net exchange difference Balance as at December 31, 2022		Goodwill $ 416,758 45,621 $ 462,379	Intangible assets Relationship with customers $ 145,791 15,959 $ 161,750		Total
					$ 562,549 61,580 $ 624,129

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Accumulated amortization Balance as at January 1, 2022 Amortization expense Net exchange difference Balance as at December 31, 2022 Net amount as at December 31, 2022 Costs Balance as at January 1, 2023 Net exchange difference Balance as at December 31, 2023 Accumulated amortization Balance as at January 1, 2023 Amortization expense Net exchange difference Balance as at December 31, 2023 Net amount as at December 31, 2023		Goodwill $ - - - $ - $ 462,379 $ 462,379 75) $ 462,304 $ - - - $ - $ 462,304	Intangible assets Relationship with customers $ 65,267 10,838 7,474 $ 83,579 $ 78,171 $ 161,750 ( 26) $ 161,724 $ 83,579 11,329 ( 177) $ 94,731 $ 66,993		Total
	(		( (	( (	$ 65,267 10,838 7,474 $ 83,579 $ 540,550 $ 624,129 101) $ 624,028 $ 83,579 11,329 177) $ 94,731 $ 529,297

Amortization expenses are calculated on a straight-line basis over their estimated useful lives as shown in the following:

Relationship with customers 14 years

The management believes that any reasonably possible changes in the critical assumptions underlying the amounts to be recovered by the cash-generating units will not cause the book values of the above intangible assets to exceed their recoverable amounts. Thus, there was no asset impairment occurring in 2023 and 2022.

XVI.Borrowings

(I)	Short-term borrowings Unsecured borrowings Bank loans Range of interest rates	December 31, 2023 $ 293,608 1.96%–9.00%	December 31, 2022
			$ 620,479 1.80%–8.00%

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(II) Long-term borrowings

Long-term borrowings
Unsecured borrowings Bank loans Less: Current portions Long-term borrowings Range of interest rates Last due date	December 31, 2023 $ 142,728 ( 50,078) $ 92,650 2.35%–8.75% August 2026	December 31, 2022
		$ 106,338 ( 58,511) $ 47,827 2.01%–2.47% September 2025

Due to the impact of the COVID-19 pandemic, the U.S. Federal Government passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and launched the Paycheck Protection Program to assist small- and medium-sized enterprises in continuing as a going concern during the economic shutdown caused by the spread of the pandemic, thereby continuing to pay employee wages and provide jobs.

The U.S. subsidiary of the Group was granted a loan approved by a bank authorized by the U.S. Small Business Administration and mainly used the loan to pay for employee salaries and relevant benefit expenses. If the loan is in line with all specific criteria, the subsidiary can apply for exemption. In 2022, it passed the loan exemption review, and the loan was reclassified as a government grant, amounting to US$630 thousand.

XVII. Corporate bond payable

US$630 thousand. Corporate bond payable
Domestic unsecured convertible corporate bonds Less: Discount of corporate bonds payable Current portions Total corporate bond payable	December 31, 2023 $ 506,300 ( 43,072 ) ( 40,543) $ 422,685	December 31, 2022
		$ 574,400 ( 39,303 ) ( 71,530) $ 463,567

The Company issued the second domestic unsecured convertible corporate bonds with a coupon rate of 0% on December 13, 2019, and listed them on TPEx for trading on the same day. The total amount of the principal was NTD502,500 thousand, with the face value per unit of NTD100 thousand. The bonds were issued at 100.50% of the face value, for a period of five years, and the conversion period is from March 14, 2020 through December 13, 2024. The conversion price at the time of issuance was NTD39 per share. Due to the payout of dividends, the conversion price was adjusted to NTD34.3 from July 8, 2023, in accordance with the issuance and conversion regulations.

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From the day following the end of three months after the bonds were issued to 40 days before the end of the issuance period, if the closing price of the Company’s ordinary shares traded in the stock exchange market exceeds the conversion price of said bonds by 30% or more for 30 consecutive business days, or when the outstanding balance of the convertible bonds is less than 10% of the initial amount of the bonds issued, the Company may redeem all its bonds in cash at the face value of the bonds.

After three or four full years after the bonds were issued, the bond holders may request the Company to redeem the bonds they hold in cash at the face value of the bonds, plus interest compensation.

The bonds includes the components of liabilities and equity. The components of equity are presented as “Capital surplus – stock options” under equity. The effective interest rate initially recognized for the liability component is 1.9452%.

The bond holders exercised the put option three full years after the bonds were issued, and the Company has paid NTD438,393 thousand (including interest compensation of NTD12,893 thousand, the book amount of the corporate bonds of NTD409,369 thousand, and financial liabilities measured at fair value through profit and loss of NTD9,956 thousand) and recognized the amount in repayment loss of NTD6,175 thousand).

NTD6,175 thousand).
Issuance price (less transaction costs of
NTD5,406 thousand)		$ 497,094
Components of equity	(	31,774 )
Deferred tax assets		1,081
Financial liabilities	(	12,739)
Components of liabilities on issuance date		$ 453,662
Components of liabilities as at January 1, 2022		$ 472,045
Interest calculated at the effective interest rate of
1.9452% (Note 22)		8,854
Repayment of corporate bonds	(	409,369)
Components of liabilities as at December 31,
2022		71,530
Interest calculated at the effective interest rate of
1.9452% (Note 22)		1,248
Corporate bonds payable converted to ordinary
shares	(	32,235)
Components of liabilities as at December 31,
2023		$ 40,543

The Company issued the third domestic unsecured convertible corporate bonds with a coupon rate of 0% on March 10, 2022, and listed them on TPEx for trading on the same day. The total amount of the principal was NTD500,000 thousand, with the face value per unit of NTD100 thousand. The bonds were issued at 100.00% of the face value, for a period of five years, and the conversion period is from June 11, 2022 through March 10, 2027. The conversion price at the time of issuance was NTD29.2 per share. Due to the payout of dividends, the conversion price was adjusted to NTD28.3 from July 8, 2023, in accordance with the issuance and conversion regulations.

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From the day following the end of three months after the bonds were issued to 40 days before the end of the issuance period, if the closing price of the Company’s ordinary shares traded in the stock exchange market exceeds the conversion price of said bonds by 30% or more for 30 consecutive business days, or when the outstanding balance of the convertible bonds is less than 10% of the initial amount of the bonds issued, the Company may redeem all its bonds in cash at the face value of the bonds.

After three or four full years after the bonds were issued, the bond holders may request the Company to redeem the bonds they hold in cash at the face value of the bonds, plus interest compensation.

The bonds includes the components of liabilities and equity. The components of equity are presented as “Capital surplus – stock options” under equity. The effective interest rate initially recognized for the liability component is 1.8061%.

Issuance price (less transaction costs of NTD5,591
thousand)		$ 494,409
Components of equity	(	28,740 )
Deferred tax assets		1,118
Financial liabilities	(	9,960)
Components of liabilities on issuance date		$ 456,827
Components of liabilities on issuance date in 2022		$ 456,827
Interest calculated at the effective interest rate of 1.8061%
(Note 22)		6,740
Components of liabilities as at December 31, 2022		463,567
Interest calculated at the effective interest rate of 1.8061%
(Note 22)		4,042
Corporate bonds payable converted to ordinary shares	(	395,676)
Components of liabilities as at December 31, 2023		$ 71,933

The Company issued the fourth domestic unsecured convertible corporate bonds with a coupon rate of 0% on May 31, 2023, and listed them on TPEx for trading on the same day. The total amount of the principal was NTD400,000 thousand, with the face value per unit of NTD100 thousand. The bonds were issued at 100.00% of the face value, for a period of five years, and the conversion period is from September 1, 2023 through May 31, 2028. The conversion price at the time of issuance was NTD35.3 per share. Due to the payout of dividends, the conversion price was adjusted to NTD34.9 from July 8, 2023, in accordance with the issuance and conversion regulations.

From the day following the end of three months after the bonds were issued to 40 days before the end of the issuance period, if the closing price of the Company’s ordinary shares traded in the stock exchange market exceeds the conversion price of said bonds by 30% or more for 30 consecutive business days, or when the outstanding balance of the convertible bonds is less than 10% of the initial amount of the bonds issued, the Company may redeem all its bonds in cash at the face value of the bonds.

After three or four full years after the bonds were issued, the bond holders may request the Company to redeem the bonds they hold in cash at the face value of the bonds, plus interest compensation.

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The bonds includes the components of liabilities and equity. The components of equity are presented as “Capital surplus – stock options” under equity. The effective interest rate initially recognized for the liability component is 2.3340%.

Issuance price (less transaction costs of NTD5,512
thousand)		$ 394,488
Components of equity	(	31,291 )
Deferred tax assets		1,102
Financial liabilities	(	8,347)
Components of liabilities on issuance date		$ 355,952
Components of liabilities on issuance date in 2023		$ 355,952
Interest calculated at the effective interest rate of 2.3340%
(Note 22)		4,829
Corporate bonds payable converted to ordinary shares	(	10,029)
Components of liabilities as at December 31, 2023		$ 350,752

XVIII. Other payables

Other payables
Salary and wages and bonuses payable Amounts payable to related parties (Note 27) Employee remuneration and director remuneration payable Others	December 31, 2023 $ 49,748 36,665 6,364 33,608 $ 126,385	December 31, 2022
			$ 52,818 65,000 5,408 43,358 $ 166,584

XIX. Post-employment benefit plan

Defined contribution pension plan

The Group’s domestic companies adopted a pension scheme under the Labor Pension Act, which is a government-managed defined contribution plan. Under the act, the Company makes monthly contributions, equal to 6% of their monthly salary and wages, to employees’ individual pension accounts under the Bureau of Labor Insurance.

The Group’s overseas subsidiaries have contributed to the social or pension insurance funds of the local government agencies at certain percentages of the total monthly salaries in accordance with local regulations. Employees of the subsidiaries can receive pensions from these government agencies after retirement.

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XX. Equity

(I) Ordinary share capital

uity Ordinary share capital
Authorized shares (in thousands) Authorized shares Number of shares issued and fully paid (in thousands) Share capital already publicly offered	December 31, 2023 200,000 $ 2,000,000 98,379 $ 983,789	December 31, 2022
			120,000 $ 1,200,000 83,354 $ 833,544

Among the authorized capital, the capital reserved for the issuance of employee stock warrants is 500 thousand shares.

• (II) Capital surplus

Capital surplus
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note) Share premium from issuance Invalid stock options May not be used for any purpose Stock options for convertible corporate bonds	December 31, 2023 $ 576,762 27,957 37,419 $ 642,138	December 31, 2022
			$ 268,383 27,957 33,468 $ 329,808

Note: Such capital surplus may be used to make up for losses or, when the Company has no losses, to distribute cash or to capitalize equity, provided that the capitalization is limited to a certain percentage of the paid-in capital each year.

(III) Retained earnings and dividend policy

As per the amended Articles of Incorporation approved by a resolution of the shareholders’ meeting on May 31, 2022, when the Company distributes earnings, legal reserve, or capital surplus in cash, it should be approved by more than half of the directors present at a board meeting with the attendance of two-thirds or more of all directors and reported to the shareholders’ meeting.

As per the earnings distribution policy in the amended Articles of Incorporation, the Company will consider its industry environment, stage of growth, future capital needs, and long-term financial plan, and meet shareholders‘ needs for cash inflows. When the Company makes a profit for a fiscal year, the profit shall be first used for paying the tax and then offsetting the cumulative deficit. 10% of the remaining profit shall be provided as a legal reserve, unless it has reached the total amount of the Company’s paid-in capital. A special reserve shall be provided or reversed based on business needs or in accordance with the competent authority’s regulations.

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The Company takes into account the year’s earnings after tax and the prior period’s cumulative undistributed earnings for shareholder dividends. The amount of the earnings to be distributed should not be less than 10% of the year’s earnings after tax, of which the cash dividends should not be less than 10% of the total dividends, but if cash dividends are less than NTD0.1 per share, it may be distributed as stock dividends, but the payout ratio may be adjusted based on the Company’s future earnings and capital status. The Company does not distribute dividends or bonuses when it does not make a profit. Please refer to Note 22(6) Employee remuneration and director remuneration for the employee remuneration and director remuneration distribution policy.

The legal reserve should be paid into until the balance reaches the amount of the Company’s total paid-in capital. The legal reserve may be used to offset the deficit. If the Company has no deficit and the legal reserve exceeds 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The Company’s 2022 and 2021 earnings distribution proposals are as follows:

Legal reserve Special reserve provided (reversed) Cash dividends	Earnings distribution proposal 2022 2021 $ 10,251 $ 10,597 ( 104,330 ) 60,844 34,900 32,892	Dividend per share (NTD)	Dividend per share (NTD)
	2022 $ 10,251 ( 104,330 ) 34,900	2022 $ 0.4	2021
			$ 0.4

The 2021 cash dividends distribution and earnings distribution proposal has been approved by a resolution of the shareholders’ meeting on May 31, 2022. The 2022 cash dividends distribution and earnings distribution proposal has been approved by a resolution of the board of directors on April 13, 2023, and the remaining earnings distribution items are pending a resolution by the shareholders’ meeting scheduled to be held on May 30, 2023.

In addition, the Company’s shareholders’ regular meeting resolved, on May 31, 2022, a decision to pay out cash of NTD0.1 per share from the capital surplus of NTD8,223 thousand.

The Company’s 2023 earnings distribution proposal has been approved by a resolution of the board of directors on March 13, 2024. The details are as follows:

Legal reserve Special reserve reversed Cash dividends	Earnings distribution proposal $ 8,009 ( 9,927 ) 39,352	Dividend per share (NTD)
		$ 0.4

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(IV) Treasury shares

Unit: In thousands of shares

Reason for redemption Number of shares as at January 1, 2022 Canceled during this year Number of shares as at December 31, 2022 Canceled during this year Number of shares as at December 31, 2023	To transfer shares to employees	To transfer shares to employees
	( (	1,225 100) 1,125 1,125) -

The treasury shares held by the Company cannot be pledged in accordance with the Securities and Exchange Act and are not entitled to rights to receive dividends and vote.

XXI. Revenue

and vote. Revenue
Sales revenue		2023 $ 3,414,371		2022
				$ 2,776,680

• (I) Revenue from contracts with customers

Merchandise sales revenue

Merchandise sales revenue is from gaming and sales of industrial computers and aerospace and national defense components. The revenue from the products sold by the Group is recognized when the products are shipped out according to the contract, at which the Group recognizes the amount in accounts receivable.

When supplying materials for outsourced processing, as the control of the ownership of the processed products has not been transferred, it is not recognized in revenue when the materials are supplied out.

(II) Balance of contracts

Balance of contracts
Accounts receivable (Note 9) Contract liabilities (in other current liabilities) (Note 27)	December 31, 2023 $ 650,982 $ 28,820	December 31, 2022 $ 688,004 $ 63,136	January 1, 2022
				$ 361,371 $ 16,118

The changes in contract liabilities mainly arise from the difference between the point at which performance obligations are satisfied and the point at which customers pay.

• (III) See Note 31 for the breakdown of revenue from contracts with customers

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XXII. Net income for 2023

The net income for 2023 includes the following items:

• (I) Other income

(I)	Other income
				2023		2022
	Service income (Note 27)		$	23,366	$	-
	Rental income			1,983		1,995
	Government grants (Note 16)			-		18,113
	Others			6,306		2,895
			$	31,655	$	23,003
(II)	Other gains and losses
				2023		2022
	Net gain (loss) on financial
	instruments measured at fair
	value through profit or loss		$	7,834	( $	4,003 )
	Net foreign exchange gain (loss)	(		1,714 )		29,354
	Gain on disposal of property, plant
	and equipment			78		108
	Loss on repayment of convertible
	corporate bonds			-	(	6,175 )
	Others	(		306)	(	303)
			$	5,892	$	18,981
(III)	Financial costs
				2023		2022
	Interest on bank loans		$	24,006	$	14,844
	Interest on lease liabilities (Note
	27)			10,716		10,678
	Interest on convertible corporate
	bonds			10,119		15,594
	Interest on loans from related
	parties (Note 27)			155		-
	Repayment of interest on
	convertible corporate bonds			-		12,893
			$	44,996	$	54,009
(IV)	Depreciation and amortization
				2023		2022
	Property, plant and equipment		$	38,551	$	40,906
	Right-of-use assets			43,925		41,013
	Intangible assets			11,329		10,838
			$	93,805	$	92,757

(Continued from the next page)

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(Continued from the previous page)

Aggregate information on depreciation expenses by function Operating costs Operating expenses Aggregate information on amortization expenses by function Operating expenses (V) Employee benefit expenses Short-term employee benefits Salary and wages Labor and health insurance Other personnel expenses Post-employment benefits (Note 19) Defined contribution pension plan Aggregate by function Operating costs Operating expenses		2023 $ 65,290 17,186 $ 82,476 $ 11,329 2023 $ 608,382 27,114 18,801 654,297 4,646 $ 658,943 $ 470,444 188,499 $ 658,943		2022
				$ 61,621 20,298 $ 81,919 $ 10,838 2022
				$ 511,826 25,285 13,670 550,781 3,204 $ 553,985 $ 365,788 188,197 $ 553,985

(VI) Employee remuneration and director remuneration

Where the Company makes a profit for a fiscal year, it should provide 1% to 15% of the balance as employee remuneration, which should be distributed in stock or cash as resolved by the board of directors. The recipients include employees at subsidiaries who meet certain criteria; the Company may provide more than 5% of the above profit as director remuneration as resolved by the board of directors. The employee remuneration and director remuneration distribution proposal should be reported to the shareholders’ meeting. However, if the Company still has a cumulative deficit, it should reserve an amount to offset the deficit in advance and then provide employee remuneration and director remuneration based on the percentages mentioned above.

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The 2023 and 2022 employee remuneration and director remuneration was approved by resolutions of the board of directors on March 13, 2024 and March 9, 2023, respectively. The details are as follows:

Percentage for estimation

Percentage for estimation
Employee remuneration Director remuneration	2023 2% 1%	2022
		2% 1%

Amount

Amount
Employee remuneration Director remuneration	2023 Cash Stock $ 1,937 $ - 969 -	2022
	Cash $ 1,937 969	Cash $ 2,120 1,060	Stock $ - -

If there is a change in the proposed amounts after the annual consolidated financial statements were approved for release, the differences are recorded as a change in accounting estimates and will be accounted for in the following year.

There is no difference between the amounts of 2022 and 2021 employee remuneration and director remuneration paid out and the amounts recognized in the 2022 and 2021 consolidated financial statements.

For information on employee remuneration and director remuneration as resolved by the board of directors, please visit the Market Observation Post System (MOPS) of Taiwan Stock Exchange.

XXIII. Income tax

(I) Income tax recognized in profit or loss

The major components of income tax expense are as follows.

Current income tax Arose during this year Surtax on undistributed earnings Adjustment to the prior years Deferred tax Arose during this year Income tax expense recognized in profit or loss		2023 $ 42,949 7,272 11,328 1,198) $ 60,351	2022
	(		$ 4,922 - ( 7 ) 3,313 $ 8,228

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

			2023			2022
Net income before tax		$	140,671		$	107,741
Income tax expense calculated at
statutory tax rate		$	53,725		$	25,486
Surtax on undistributed earnings			7,272			-
Non-deductible expenses for tax			2,973			7,444
Tax-free income			-	(		6,596 )
Unrecognized temporary differences	(		13,911 )	(		12,201 )
Unrecognized loss carryforwards	(		1,036 )	(		5,898 )
Adjustment to the prior years			11,328	(		7)
Income tax expense recognized in
profit or loss		$	60,351		$	8,228

(II) Deferred tax assets and liabilities

The changes in the deferred tax assets and liabilities are as follows:

2023

2023
Deferred tax assets Unrealized exchange loss Costs of convertible corporate bonds issued Allowance for inventory depreciation losses Others Deferred income liabilities Unrealized exchange gains Others 2022		Opening balance $ - 839 149 223 $ 1,211 $ 1,975 20 $ 1,995	Recognized in profit or loss $ 378 ( 1,006 ) ( 149 ) - ($ 777) ( $ 1,975 ) - ($ 1,975)	Recognized in equity $ - 1,102 - - $ 1,102 $ - - $ -		Ending balance
						$ 378 935 - 223 $ 1,536 $ - 20 $ 20

Deferred income liabilities Unrealized exchange gains Others 2022		$ 1,975 20 $ 1,995	( $ 1,975 ) - ($ 1,975)	$ - - $ -		$ - 20 $ 20
Deferred tax assets Unrealized exchange loss Costs of convertible corporate bonds issued Allowance for inventory depreciation losses Others Deferredincomeliabilities Unrealized exchange gains Others		Opening balance $ 224 361 623 223 $ 1,431 $ - 20 $ 20	Recognized in profit or loss ( $ 224 ) ( 640 ) ( 474 ) - ($ 1,338) $ 1,975 - $ 1,975	Recognized in equity $ - 1,118 - - $ 1,118 $ - - $ -		Ending balance
						$ - 839 149 223 $ 1,211 $ 1,975 20 $ 1,995

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(III) Information unused and unrecognized loss carryforwards

Name of company Efa Technologies	Balance of unused loss carryforwards $ 15,624	Last valid year
		2027–2033

(IV) Income tax return approval

The years, up to which the profit-seeking enterprise income tax returns filed by Company and its subsidiaries have been approved by the tax authority, are as follows:

Company and its subsidiaries have been approved by follows:	the tax authority, are as
Name of company The Company Efa Technologies	Year
	2021 2021

XXIV. Earnings per share

Earnings per share
Basic earnings per share Diluted earnings per share		2023 $ 0.87 $ 0.73	Unit: NTD per share 2022 $ 1.21 $ 1.07

The net income and weighted average number of ordinary shares used to calculate the earnings per share are as follows:

Net income for 2023

the earnings per share are as follows: Net income for 2023
Net income used to calculate basic earnings per share Impact of potential common stock with dilutive effect: Corporate bonds converted Net income used to calculate diluted earnings per share Number of shares		2023 $ 80,320 2,285 $ 82,605		2022
				$ 99,513 7,030 $ 106,543

Unit: In thousands of shares

Weighted average number of ordinary shares used to calculate the basic earnings per share Impact of potential common stock with dilutive effect: Corporate bonds converted Employee remuneration Weighted average number of ordinary shares used to calculate the diluted earnings per share		2023 91,799 21,741 67 113,607		2022
				82,327 17,483 96 99,906

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The second domestic unsecured convertible corporate bonds in 2022 were not included in the calculation of diluted earnings per share due to anti-dilution.

If the Company may choose to pay out employee remuneration in stock or cash, when the diluted earnings per share are calculated, it is assumed that the employee remuneration will be paid out in stock, and the weighted average number of shares outstanding will be included when the ordinary shares have the potential dilution effect, to calculate diluted earnings per share. When the diluted earnings per share are calculated before the number of shares to be distributed for employee remuneration is resolved in the following year, the potential dilution effect of such ordinary shares will continue to be considered.

XXV. Capital risk management

The Group engages in capital management to ensure that it can enable all enterprises within the Group to continue to operate by optimizing debt and equity balances, to maximize shareholder returns.

The Group’s capital structure consists of net debt (i.e. borrowings, less cash) and equity (i.e. share capital, capital surplus, retained earnings, and other equity items).

The Group does not need to abide by other external requirements for capital.

The Group’s key management re-examines the capital structure every year, and the review includes consideration for the cost of funds and relevant risks. Based on the key management’s suggestions, the Group balances the overall capital structure by paying dividends, repurchasing shares, and increasing or repaying borrowings.

XXVI. Financial instruments

• (I) Information on fair value – financial instruments not measured at fair value

Except as listed in the table below, the Group’s management believes that the carrying amounts of financial assets and financial liabilities not measured at fair value approximate their fair values or their fair values cannot be measured reliably:

Financial liabilities Convertible corporate bonds - Second issuance of domestic bonds - Third issuance of domestic bonds - Fourth issuance of domestic bonds	December 31, 2023 Carrying amount Fair value $ 40,543 $ 44,183 71,933 93,612 350,752 409,795	December 31, 2022	December 31, 2022
	Carrying amount $ 40,543 71,933 350,752	Carrying amount $ 71,530 463,567 -	Fair value
			$ 75,479 497,500 -

The fair values of convertible corporate bonds is measured using Level 2 inputs. The valuations of fair values was based on the weighted average price per hundred of NTD announced by TPEx on the balance sheet date.

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• (II) Information on fair value – financial instruments measured at fair value on a recurring basis

• Fair value hierarchy

December 31, 2023

ing basis Fair value hierarchy December 31, 2023
Financial assets at fair value through profit or loss Derivatives Financial assets at fair value through other comprehensive income Domestic TWSE-listed stocks Domestic unlisted stocks Total Financial liabilities at fair value through profit or loss Derivatives December 31, 2022 Financial assets at fair value through other comprehensive income Domestic TWSE-listed stocks Financial liabilities at fair value through profit or loss Derivatives		Level 1 $ - $ 18,466 - $ 18,466 $ - Level 1 $ 10,160 $ -		Level 2 $ 8 $ - - $ - $ 7,880 Level 2 $ - $ 11,954		Level 3 $ - $ - 29,982 $ 29,982 $ - Level 3 $ - $ -		Total
								$ 8 $ 18,466 29,982 $ 48,448 $ 7,880 Total
								$ 10,160 $ 11,954

There was no transfer between Level 1 and Level 2 fair values during the years ended December 31, 2023 and 2022.

1. Valuation techniques and inputs for Level 2 fair value measurements

Categories of financial instruments Valuation techniques and inputs Derivatives – convertible Binary tree model for convertible bond corporate bond right of valuation: The fair values of the financial redemption/put option assets or liabilities of convertible corporate bonds are valuated based on observable stock prices, risk-free interest rates, and risk discount rates at the end of the period.

1. Valuation techniques and inputs for Level 3 fair value measurements

As for the Group’s valuation process for Level 3 fair values, the finance department is responsible for independently verifying the fair values of financial instruments, using data from independent sources to make the

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valuation results close to market conditions, and reviewing them regularly to ensure that the valuation results are reasonable. The Group adopts an income approach to investments in domestic unlisted equity and calculates the present value of the income estimated to be earned from the investments based on the discounted cash flows.

(III) Types of financial instruments

discounted cash flows. Types of financial instruments
Financial asset Financial assets measured at amortized cost (Note 1) Financial assets at fair value through other comprehensive income Investment in equity instruments Financial assets at fair value through profit or loss Financial liabilities Financial liabilities at fair value through profit or loss Measured at amortized cost (Note 2)	December 31, 2023 $ 847,624 48,448 8 7,880 1,366,817	December 31, 2022
		$ 881,333 10,160 - 11,954 1,710,764

• Note 1: The balance includes other financial assets measured at amortized cost, including cash, accounts receivable, and other receivables.

• Note 2: The balance includes financial liabilities measured at amortized cost, including short-term borrowings, short-term notes payable, accounts payable, other payables, long-term liabilities – current portion, corporate bonds payable, and long-term borrowings.

(IV) Purpose and policy of financial risk management

The Group’s main financial instruments include accounts receivable, accounts payable, corporate bonds payable, borrowings, and lease liabilities. The Group’s financial management department provides services to each business unit, coordinates the operations of investments in the domestic and international financial markets, and supervises and manages the financial risks related to the Group’s operations by analyzing the internal risk reports on the exposure as per the breadth and depth. Such risks include market risk (including exchange rate risk, interest rate risk and other price risk), credit risk, and liquidity risk.

1. Market risk

The main financial risk arising from the operating activities for the Group is the risk of changes in foreign exchange rates and interest rates.

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(1) Exchange rate risk

The Group engages in foreign currency-denominated sales and purchases and is thus exposed to the risk of exchange rate fluctuations.

See Note 29 for the carrying amount of the Group’s monetary assets and monetary liabilities denominated in non-functional currencies on the balance sheet date (including the monetary items denominated in non-functional currencies that have been written off in the consolidated financial statements).

Sensitivity analysis

The Group is mainly affected by the exchange rate fluctuations of the USD.

The table below details the Group’s sensitivity analysis when the exchange rate of the Group’s functional currency, NTD, against the USD increased and decreased by 10%. Ten percent is the sensitivity rate used in reporting the exchange rate risk to the Group’s key management and represents the management’s assessment of the reasonable range of potential changes in foreign currency exchange rates. The sensitivity analysis only included monetary items in foreign currencies in circulation, and the translation at the end of the period was based on a 10% change in the exchange rates. When the NTD appreciated by 10% against the foreign currency, the Group’s pre-tax net income for 2023 and 2022 would have decreased by NTD13,866 thousand and NTD32,464 thousand, respectively.

(2) Interest rate risk

Interest rate risk arises when the entities within the Group borrow funds at both fixed and floating interest rates. The Group manages interest rate risk by maintaining an appropriate mix of fixed and floating interest rates to ensure the most cost-effective strategy is adopted.

The carrying amounts of the Group’s financial assets and financial liabilities exposed to the interest rate risk on the balance sheet date are as follows:

follows:
Fair value interest rate risk - financial liabilities Cash flow interest rate risk - financial assets - financial liabilities	December 31, 2023 $ 660,662 121,734 466,336	December 31, 2022
		$ 758,035 90,331 726,817

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Sensitivity analysis

The sensitivity analysis below is based on the interest rate risk to which derivatives and non-derivatives were exposed at the balance sheet date. For liabilities at floating rates, the analysis is based on the assumption that the amounts of the liabilities outstanding at the balance sheet date were all outstanding throughout the reporting period. An increase or decrease in interest rates by ten basis points (0.1%) is the sensitivity rate adopted in reporting the interest rate risk to the Group’s key management and represents the management’s assessment of the reasonable range of potential changes in interest rates.

If the interest rate increased by 1%, with all other variables remaining unchanged, the Group’s net income before tax for 2023 and 2022 would have decreased by NTD345 thousand and NTD636 thousand, respectively.

2. Credit risk

Credit risk refers to the risk that a counterparty defaults on its contractual obligations, resulting in a financial loss to the Group. As of the balance sheet date, the Group’s maximum exposure to credit risk of financial loss due to non-performance by counterparties is mainly from the carrying amounts of financial assets recognized in the consolidated balance sheet.

The policy adopted by the Group is to only engages in transactions with reputable entities. Before trading with new customers, the Group’s relevant sales management departments evaluate the potential customers’ credit quality through internal credit investigation procedures and set the customers’ credit limit and review their credit limits and ratings once per year.

Financial assets are potentially affected by the Group’s counterparties or other parties’ failure to fulfill contracts. The Group evaluates contracts with positive fair values on the balance sheet date. The Group only engages in transactions with financial institutions and companies with great reputations and does not expect significant credit risk.

The Group’s customer base is large, and they are unrelated to each other, so the credit concentration risk is not high.

3.

Liquidity risk

The Group manages and maintains sufficient cash to support the operations and mitigate the impact of cash flow fluctuations. The Group’s management regularly monitors the use of bank financing facilities and ensures compliance with the terms of loan contracts.

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(1) Liquidity and interest rate risk of derivative financial liabilities

The table below details the Group’s analysis of the remaining contractual maturities of non-derivative financial liabilities, which was prepared based on the undiscounted cash flows of the financial liabilities, including cash flows of interest and principal, based on the earliest possible date on which the Group can be required to make repayment.

Bank loans that the Group may be required to repay immediately are shown in the table below for the earliest period, without regard to the probability that the bank will enforce the right immediately; the maturity analysis of other non-derivative financial liabilities is prepared based on the contractual repayment dates.

December 31, 2023

Non-derivative financial liabilities Non-interest-bearing liabilities Floating-rate instruments Lease liabilities Corporate bond payable	Repayment on demand or less than 1 month $ - 72,496 4,451 - $ 76,947		1–3 months $ 437,253 124,071 8,903 - $ 570,227		3 months–1 year $ - 186,838 35,910 41,300 $ 264,048		1–5 years $ - 94,231 184,497 465,000 $ 743,728		5 years or beyond
									$ - - - - $ -

December 31, 2022

Non-derivative financial liabilities Non-interest-bearing liabilities Floating-rate instruments Lease liabilities Corporate bond payable	Repayment on demand or less than 1 month $ - 108,036 4,180 - $ 112,216		1–3 months $ 383,850 206,548 7,973 - $ 598,371		3 months–1 year $ - 368,063 35,304 74,400 $ 477,767		1–5 years $ - 48,447 178,732 500,000 $ 727,179		5 years or beyond
									$ - - 43,139 - $ 43,139

The amount of floating-rate instruments of the above non-derivative financial assets and liabilities will change with the differences between the floating rates and the estimated rates on the balance sheet date.

(2) Financing facility

Financing facility
Unsecured bank overdraft facility - Amount drawn - Amount not yet drawn	December 31, 2023 $ 466,336 621,949 $ 1,088,285	December 31, 2022 $ 726,817 220,000 $ 946,817
			$ 726,817 220,000 $ 946,817

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XXVII. Related Party Transactions

The Company is the ultimate controller of the Group.

Transactions, balances of accounts, and income and expenses between the Company and its subsidiaries (which are the Company’s related parties) are all eliminated upon consolidation and are, therefore, not disclosed in this note.

• (I) Name of related party and relationship therewith

Name of related party Relationship with the Group Liao, Wen-Chia Chairman of the Company Anderson Industrial Corp. An associate Sogotec Precision Co., Ltd. An associate Giben do Brasil Maqs. e Equips. Other related parties Giben Holdings Co., Ltd. (SAMOA) （ Giben Other related parties SAMOA ） Powertech Industrial Co., Ltd. Other related parties Anderson Merchandise Corporation Other related parties Verite Corporation Other related parties

(II) Operating revenue

Operating revenue
Category of related party Other related parties		2023 $ 77,752		2022
				$ 55,774

The sales between the Group and related parties are not significantly different from regular transactions.

• (III) Accounts receivable

from regular transactions. Accounts receivable
Category of related party Other related parties	December 31, 2023 $ 17,851	December 31, 2022
			$ 10,450

The Company did not request collateral for outstanding receivables from related parties. The Company did not recognize an allowance for losses on receivables from related parties for 2023 and 2022.

(IV) Other receivables

related parties for 2023 and 2022. Other receivables
Category of related party Other related parties An associate	December 31, 2023 $ 1,079 - $ 1,079	December 31, 2022
			$ 488 55 $ 543

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(V)	Lease agreements Category of related party/Name 2023 Right-of-use assets acquired An associate Anderson Industrial Corp. $ 1,148 Account Category of related party December 31, 2023 Lease liabilities An associate $ 625 Account Category of related party 2023 Financial costs An associate $ 19 Lease expenses An associate $ 542			2022	2022
				$ - December 31, 2022
				$	- 2022
					$ - $ -

The Group has rented an office from Anderson Industrial Corp. and pays rent monthly.

(VI) Temporary credits (in other current liabilities)

monthly. Temporary credits (in other current liabilities)
Category of related party/Name December 31, 2023 Other related parties Giben SAMOA $ - Contract liabilities (in other current liabilities) Category of related party/Name December 31, 2023 An associate Anderson Industrial Corp. $ - Other payables Category of related party/Name December 31, 2023 An associate Anderson Industrial Corp. $ 28,989 Other related parties Giben SAMOA 7,676 $ 36,665	December 31, 2022
	$ 30,710 December 31, 2022
	$ 45,810 December 31, 2022
		$ - - $ -

(VII) Contract liabilities (in other current liabilities)

(VIII) Other payables

(IX)	Borrowings from related parties Other payables Category of related party Chairman of the Company	December 31, 2023 $ -	December 31, 2022	December 31, 2022
				$ 65,000

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Financial costs

Financial costs
Category of related party Chairman of the Company		2023 $ 155		2022
				$ -

The interest rates of the Group’s borrowings from related parties are about the same as the market interest rates.

• (X) Other income

Other income
Account Service income Rental income Others	Category of related party Other related parties An associate Other related parties An associate Other related parties		2023 $ 23,366 $ 1,114 797 $ 1,911 $ 132 127 $ 259		2022
					$ - $ 1,114 797 $ 1,911 $ 132 140 $ 272

• (XI) Remuneration to key management personnel

Short-term employee benefits Post-employment benefits		2023 $ 55,012 342 $ 55,354		2022
				$ 43,506 328 $ 43,834

The remuneration to directors and other key management personnel is determined by the remuneration committee depending on individual performance and market trends.

XXVIII. Material Contingencies and Unrecognized Contractual Commitments

In addition to those mentioned in other notes, the Group’s material commitments and contingencies on the balance sheet date are as follows:

As of December 31, 2023, the amount of notes issued by the Group to secure bank credit lines was NTD720,000 thousand.

XXIX. Information on Foreign Currency Assets and Liabilities with Significant Effect

The information below is aggregated and presented in foreign currencies other than the functional currencies of each entity within the Group. The exchange rates disclosed refer to the rates at which these foreign currencies are converted to the functional currency. The information on foreign currency assets and liabilities with significant effect is as follows:

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Unit: USD/NTD thousand

Financial asset Monetary items USD Financial liabilities Monetary items USD Financial asset Monetary items USD Financial liabilities Monetary items USD	December 31, 2023	December 31, 2023
	Foreign currencies Exchange rate $ 5,458 30.705 942 30.705 December 31, 2022		NTD
			$ 167,588 28,924
	Foreign currencies $ 11,177 606	Exchange rate 30.710 30.710	NTD
			$ 343,246 18,610

Foreign exchange gains and losses (realized and unrealized) with significant effect are as follows:

are as follows:
Functional currency NTD	2023		Net exchange gain (loss) $ 1,714)	2022
	Exchange rate (NTD : NTD)			Exchange rate (NTD : NTD)		Net exchange gain (loss)
		(				$ 29,354

XXX. Additional Disclosures

• (I) Significant transactions:

• Loans to others: Table 1.

• Endorsements/Guarantees for others: None.

• Securities held at the end of the period (excluding investment in subsidiaries, associates, and joint ventures): Table 2.

• Securities acquired or sold at costs or prices of at least NTD300 million or 20% of the paid-in capital: None.

• Acquisition of individual property at costs of at least NTD300 million or 20% of the paid-in capital: None.

• Disposal of individual property at costs of at least NTD300 million or 20% of the paid-in capital: None.

• Total purchases from or sales to related parties amounting to at least NTD100 million or 20% of the paid-in capital: Table 3.

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• Receivables from related parties amounting to at least NTD100 million or 20% of the paid-in capital: Table 4.

• Derivatives trading: None.

• Other: Business relations and important transactions between the parent company and subsidiaries and among subsidiaries and amounts: Table 5.

• (II) Information on investees: Table 6.

• (III) Information on investments in mainland China: None.

• (IV) Information on major shareholders: Names of shareholders, each holding 5% or more of total shares, and the number and percentage of shares held: Table 7.

XXXI. Segment information

The Group’s information reported to the chief operating decision-maker for resource allocation and segment performance assessment focuses on types of goods or services delivered or provided. The Group’s reportable segments are the gaming and industrial computers segment and the aerospace and national defense segment.

• (I) Segment revenue and operating performance

The Group’s segment revenue and operating performance are as follows:

Reportable segment Gaming and industrial computers Aerospace and national defense Total of reportable segments Non-operating income and expenses Net income before tax		Segment	revenue 2022 $ 841,118 1,935,562 $ 2,776,680	Segment profit or loss	Segment profit or loss	Segment profit or loss
		2023 $ 833,221 2,581,150 $ 3,414,371		2023 ($ 41,949) 199,057 157,108 ( 16,437) $ 140,671		2022
						$ 29,423 59,495 88,918 18,823 $ 107,741

• (II) Total segment assets and liabilities

When the Group discloses the estimated amounts of reportable segments’ total assets and liabilities and other segment information, as such information is not provided to the chief operating decision-maker, it is not disclosed.

• (III) Information by region

The Group’s main business premises and non-current assets are both located in the United States.

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(IV) Information major customers

The customers, each of whom contributes to 10% or more of the Group’s total revenue are as follows:

revenue are as follows:
Customer A Customer B Customer C Customer D		2023 $ 827,474 390,275 (Note) 378,190 $ 1,595,939		2022
				$ 708,026 348,575 299,284 (Note) $ 1,355,885

Note: The amount of revenue did not reach 10% of the Group’s total revenue.

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PARPRO CORPORATION and Its Subsidiaries

Loans to others

2023

Table 1

Unit: NTD thousand

No.	Lender	Borrower	Account	Related party status	Highest balance of this year	Ending balance	Amount drawn	Range of interest rates	Nature of loan	Business transaction amount	Reasons for short-term financing	Allowance for losses	Collateral	Collateral	Limit on loan to each borrower	Total limit on loans to others
													Name	Worth
0 1 2 3	The Company Parpro Holdings Co., Ltd. PARPRO CORPORATIO N Parpro (Nevada), Inc.	AP Parpro, Inc. Parpro (Nevada), Inc. PARPRO CORPORATION AP Parpro, Inc. Parpro (Nevada), Inc. AP Parpro, Inc. AP Parpro, Inc.	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes Yes Yes Yes	$ 213,360 32,425 32,425 71,335 90,790 327,493 32,425	$ - - - 67,551 85,974 310,121 30,705	$ - - - 38,381 21,494 220,059 -	2.5%-3% 3% 3% 2.75%-3% 2.75% 2.5%-5% 2.75%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	$ - - - - - - -	Working capital Working capital Working capital Working capital Working capital Working capital Working capital	$ - - - - - - -	- - - - - - -	- - - - - - -	$ 400,625 (Up to 20% of the Company’s net worth as stated in the most recent financial statements) 400,625 (Up to 20% of the Company’s net worth as stated in the most recent financial statements) 400,625 (Up to 100% of the Company’s net worth as stated in the most recent financial statements) 1,972,934 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 88,322 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements)	$ 1,001,563 (Up to 50% of the Company’s net worth as stated in the most recent financial statements) 1,001,563 (Up to 50% of the Company’s net worth as stated in the most recent financial statements) 1,001,563 (Up to 100% of the Company’s net worth as stated in the most recent financial statements) 1,972,934 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 1,255,017 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements) 88,322 (Up to 100% of the subsidiary’s net worth as stated in the most recent financial statements)

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Unit: NTD thousand

PARPRO CORPORATION and Its Subsidiaries

Securities held at the end of the period

December 31, 2023

Table 2

Company	Type and name of securities	Relationship with the securities issuer	Account		End of	theperiod		Remarks
				Number of shares	Carrying amount	Shareholdings	Fair value
The Company	ICatch Technology, Inc. eTreego Co., Ltd.	- -	Financial assets at fair value through other comprehensive income – non-current Financial assets at fair value through other comprehensive income–non-current	254,000 1,578,000	$ 18,466 29,982	－ －	$ 18,466 29,982	- -

Note 1: The securities in this table refer to stocks, bonds, beneficiary certificates, and securities derived therefrom within the scope of IFRS 9 “Financial Instruments.” Note 2: See Table 6 for the information on subsidiaries and associates.

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PARPRO CORPORATION and Its Subsidiaries

Total purchases from or sales to related parties amounting to at least NTD100 million or 20% of the paid-in capital

2023

Table 3									Unit: NTD thousand Notes or accounts receivable (payable) Remarks Balance As a % of total notes or accounts receivable (payable) $ 36,360 14% -	Unit: NTD thousand Notes or accounts receivable (payable) Remarks Balance As a % of total notes or accounts receivable (payable) $ 36,360 14% -	Unit: NTD thousand Notes or accounts receivable (payable) Remarks Balance As a % of total notes or accounts receivable (payable) $ 36,360 14% -
Buyer/Seller	Counterparty	Relationship		Transaction situation			Situation and reason for transaction terms different from regular ones		Notes or accounts receivable (payable)		Remarks
			Purchases/ Sales	Amount	As a % of total purchases (sales)	Credit period	Unit price	Credit period	Balance	As a % of total notes or accounts receivable (payable)
AP Parpro, Inc.	Parpro Nevada, Inc.	A subsidiary	Sales	( $ 627,263 )	( 34% )	Net 30 days after end of month	As agreed	None	$ 36,360	14%	-

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PARPRO CORPORATION and Its Subsidiaries

Receivables from related parties amounting to at least NTD100 million or 20% of the paid-in capital

December 31, 2023

Table 4

Unit: NTD thousand

Company listed under accounts receivable	Counterparty	Relationship	Balance of amounts receivable from related parties	Turnover	Overdue receivables from relatedparties	Overdue receivables from relatedparties	Amount to be recovered after the balance sheet date from related parties (Note)	Allowance for losses
					Amount	Treatment method
Parpro Technologies Inc.	AP Parpro, Inc.	Same parent company	Other receivables $	2 -	$ -	-	$ 25,518	$ -

Note: It is as of February 29, 2024.

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PARPRO CORPORATION and Its Subsidiaries

Business relationships and significant transactions between the parent company and subsidiaries and amounts

2023

Table 5

Unit: NTD thousand

No.	Name of trader	Counterparty	Relationship between traders (Note 1)		Transaction situation	Transaction situation
				Account	Amount	Transaction terms	As a % of total consolidated revenue or total assets
0 1 2 3 4	The Company Parpro Holdings Co., Ltd. AP Parpro, Inc. Parpro Technologies Inc. Parpro Nevada, Inc.	AP Parpro, Inc. Parpro Nevada, Inc. Parpro Technologies Inc. AP Parpro, Inc Parpro Nevada, Inc. Parpro Technologies Inc. Parpro Nevada, Inc. AP Parpro, Inc. AP Parpro, Inc. Parpro Technologies Inc.	1 1 1 3 3 3 3 3 3 3	Accounts receivable Other income Other receivables Other income Other receivables Other income Other receivables Other receivables Sales revenue Accounts receivable Other receivables Other receivables Other receivables Sales revenue Other receivables Other receivables	$ 13,918 33,575 41,699 11,938 14,738 43,275 53,427 38,381 627,263 36,360 25,518 21,494 220,059 92,034 21,771 23,385	According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties	- 1% 1% - - 1% 1% 1% 18% 1% 1% 1% 6% 3% 1% 1%

Note 1: There are three types of relationships between traders:

1. Parent company to subsidiary.

2. Subsidiary to parent company.

3. Subsidiary to subsidiary.

Note 2: Each transaction of NTD10,000 thousand or more is disclosed.

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PARPRO CORPORATION and Its Subsidiaries

Information on investees, including names of investees and locations

2023

Table 6

Unit: NTD thousand/$ thousand in foreign currency

Name of investor	Name of investee	Location	Principal business activities	Initial investment amount	Initial investment amount	Holding at the end of the period	Holding at the end of the period	Holding at the end of the period	Profit (loss) of investee for this period	Investment income (loss) recognized for this period	Remarks
				End of this period	End of last period	Number of shares	Shareholdin g (%)	Carrying amount
The Company Efa Technologies Parpro Holdings Co., Ltd. AP Parpro, Inc. Pilot (Las Vegas), Inc. Parpro Quality Inc.	Efa Technologies Parpro Holdings Co., Ltd. Anderson Industrial Corp. Sogotec Precision Co., Ltd. Sogotec Precision Co., Ltd. AP Parpro, Inc. Pilot (Las Vegas), Inc. Parpro Quality Inc. Parpro (Nevada), Inc. Parpro (Nevada), Inc. Parpro Technologies Inc.	Taiwan British Virgin Islands Taiwan Taiwan Taiwan The United States The United States The United States The United States The United States The United States	Sales of industrial computers and gaming machines Investment Non-metal computer numerical control machining center Manufacturing and sales of machinery Manufacturing and sales of machinery Production and sales of aerospace parts Investment Investment Sales of industrial computers and gaming machines Sales of industrial computers and gaming machines Production and sales of components for the network communications, aerospace, and national defense industries	$ - USD 41,990 470,758 56,507 28,797 USD 18,522 USD 735 USD 23,955 USD 2,941 USD 735 USD 23,500	$ - USD 36,190 470,758 56,507 28,797 USD 12,722 USD 735 USD 23,955 USD 2,941 USD 735 USD 23,500	3,271,945 41,990 39,904,488 959,880 485,000 6,765 735 23,500,000 510 490 12,859	100 100 20.86 4.73 2.39 100 100 100 80 20 100	$ 18,190 1,972,934 555,457 23,058 11,651 613,203 17,662 1,255,017 70,660 17,662 1,225,017	( $ 2,696 ) 69,556 ( 14,954 ) ( 75,205 ) ( 75,205 ) ( 21,127 ) ( 8,211 ) 115,198 ( 41,053 ) ( 41,053 ) 115,198	( $ 2,696 ) 69,556 ( 4,534 ) ( 3,556 ) N/A N/A N/A N/A N/A N/A N/A	A subsidiary A subsidiary An associate An associate An associate A sub-subsidiar y A sub-subsidiar y A sub-subsidiar y A sub-subsidiar y A sub-subsidiar y A sub-subsidiar y

• 234-

PARPRO CORPORATION

Information on major shareholders

December 31, 2023

Table 7

Name of major shareholder	Shares	Shares
	Number of shares	Shareholdings
Liao, Wen-Chia Yunyong Investment Co., Ltd. Jieshi Investment Co., Ltd.	8,071,942 7,500,865 5,830,415	8.11% 7.53% 5.85%

• Note: The major shareholders in this table are shareholders each holding 5% or more of the Company’s ordinary shares with registration of dematerialized securities completed (including treasury shares) on the last business day of each quarter calculated by the Taiwan Depository & Clearing Corporation. The share capital indicated in the Company’s consolidated financial statements may differ from the actual number of shares that have been issued and delivered with registration of dematerialized securities completed as a result of different bases of preparation.

• 235-

PARPRO CORPORATION

2023 Annual report

Chairman

Liao, Wen Jia

• 236-