English Translation of Financial Statements and a Report Originally Issued in Chinese

Ticker: 6152

PRIME ELECTRONICS & SATELLITICS INC. and Subsidiaries

Consolidated Financial Statements

With Review Report of Independent

Auditors AS OF DECEMBER 31, 2025

AND 2024

And For The Years Then Ended

Address: 3, Tze-Chiang 1st Road, Chung-Li Industrial Zone, Chung-Li

Dist., Taoyuan City, Taiwan.

Telephone: (03)461-5000

English Translation of Financial Statements and a Report Originally Issued in Chinese

Consolidated Financial Statements Index

Item	Page
1、Cover sheet	1
2、Index	2
3、Management representation letter	3
4、Independent Auditors’ Report	4-8
5、Consolidated balance sheets	9-10
6、Consolidated statements of comprehensive income	11
7、Consolidated statements of changes in equity	12
8、Consolidated statements of cash flows	13
9、Footnotes to the consolidated financial statements
(1) History and organization	14
(2) Date and procedures of authorization of financial statements for issue	14
(3) Newly issued or revised standards and interpretations	14-18
(4) Summary of significant accounting policies	19-44
(5) Significant accounting judgments, estimates and assumptions	44-46
(6) Contents of significant accounts	46-76
(7) Related party transactions	76
(8) Assets pledged as collaterals	77
(9) Significant contingencies and unrecognized contract commitments	77
(10) Losses due to major disasters	77
(11) Significant subsequent events	77
(12) Others	77-89
(13) Additional disclosures
1. Information on significant transactions	89
2. Information on investees	89-90
3. Information on investments in Mainland China	91-95
(14) Operating segment	95-96

English Translation of Financial Statements and a Report Originally Issued in Chinese

MANAGEMENT REPRESENTATION LETTER

The entities included in the consolidated financial statements as of December 31, 2025 and for the year then ended prepared under the International Financial Reporting Standards, No.10 are the same as the entities to be included in the combined financial statements of the Company, if any to be prepared, pursuant to the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises (referred to as “Combined Financial Statements”). Also, the footnotes disclosed in the Consolidated Financial Statements have fully covered the required information in such Combined Financial Statements. Accordingly, the Company did not prepare any other set of Combined Financial Statements than the Consolidated Financial Statements.

Very truly yours,

Company Name : PRIME ELECTRONICS & SATELLITICS INC.

Chairman : Hsu, Jing-Hui

March 12, 2026

English Translation of Financial Statements and a Report Originally Issued in Chinese

安永聯合會計師事務所

33045桃園市桃園區中正路1088號27樓

27F, No. 1088, Zhongzheng Road, Taoyuan District,

Taoyuan City, Taiwan, R.O.C.

Tel: 886 3 319 8888

Fax: 886 3 319 8866

www.ey.com/tw

Independent Auditors' Report

To The Board of Directors of

PRIME ELECTRONICS & SATELLITICS INC.：

Opinion

We have audited the accompanying consolidated balance sheets of PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries as of December 31, 2025 and 2024, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2025 and 2024, and notes to the consolidated financial statements, including the summary of material accounting policies (together “the consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries as of December 31, 2025 and 2024, and their consolidated financial performance and cash flows for the years ended December 31, 2025 and 2024, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed and became effective by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagement of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"),

English Translation of Financial Statements and a Report Originally Issued in Chinese

and we have fulfilled our other ethical responsibilities in accordance with the Norm. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

Revenue recognition

The consolidated operating revenue of the Group in the year ended December 31, 2025 amounted to NT$ 1,571,397 thousand. As the sales location diversifies in various countries, including Taiwan, Mainland China, America, Europe, etc., the sales terms for main customers are not the same, the judgment and determination of what the contractual obligations are and the time point of fulfilling them depend on the terms indicated on contracts with customers or documentations of contracts. Therefore, there is significant risk in the recognition of operating revenue, which identified as one of the key audit matters. The audit procedures include (but are not limited to) assessing the appropriateness of the accounting policies relevant to revenue recognition of contractual obligations under sales models, assessing and testing the effectiveness of internal control related to the time point of recognizing revenue in sales cycle, selecting samples to implement testing of details, which include obtaining the contracts or documentations of contracts of main customers, checking the transaction terms to verify the correctness of the recognition of revenues from contractual obligations and the time point of the recognition, implementing analytic review procedures to monthly revenue and cut-off testing during a certain period prior and after the balance sheet date, etc. We also take into consideration the appropriateness of the disclosure of operating revenue in Note 4 and Note 6 to the consolidated financial statements.

Market valuation on Inventory

As of December 31, 2025, the net inventory of the Group amounted to NT$771,941 thousand, which accounts for 27% of total consolidated assets and is material to the financial statements. Most of the inventories are customized products, including wireless communication equipment and networking equipment. As the communication techniques changes fast, and the evaluation and calculation of allowance for inventory valuation and obsolescence losses involve significant judgment of management, we identified inventory valuation as one of the key audit matters. The audit procedures include (but are not limited to) evaluating the appropriateness of accounting policies relevant to slow-moving and obsolete inventories (including identification of slow-moving and obsolete inventories), testing the correctness of inventory age, analyzing the variation of inventory age, implementing inventory observation, and check current status of inventory usage, etc. We also take into consideration the appropriateness of the disclosure of inventories in Note 5 and Note 6 to the consolidated financial statements.

Responsibilities of Management and Those Charged with Governance for the Consolidated

English Translation of Financial Statements and a Report Originally Issued in Chinese

Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including audit committee, are responsible for overseeing the financial reporting process of PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

English Translation of Financial Statements and a Report Originally Issued in Chinese

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause PRIME ELECTRONICS & SATELLITICS INC. and its subsidiaries to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the accompanying notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

English Translation of Financial Statements and a Report Originally Issued in Chinese

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

Others

We have audited and expressed an unqualified opinion on the parent company only financial statements of PRIME ELECTRONICS & SATELLITICS INC. as of and for the years ended December 31, 2025 and 2024.

Ernst & Young

Reference number of the approval letter for conducting the auditing and attesting business for the financial report of a public company :

(106)No.Financial-Supervisory-Securities-Auditing-1060026003

(110)No.Financial-Supervisory-Securities-Auditing-1100352201

Lo, Hsiao Ching

CPA :

Chen, Kuo Shuai

March 12, 2026

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2025, and 2024

(Amounts Expressed In Thousands of New Taiwan Dollars)

Assets			As of December 31, 2025		As of December 31, 2024
Code	Accounts	Notes	Account	%	Account	%
	Current assets
1100	Cash and cash equivalents	4,6(1)	$801,209	28	$913,195	33
1110	Financial assets at fair value through profit or loss	4,6(2)	314	-	327	-
1136	Financial assets carried at amortized cost	4,6(4),8	59,147	2	67,991	3
1150	Notes receivable, net	4,6(5),6(20)	-	-	12	-
1170	Accounts receivable, net	4,5,6(6),6(20)	491,226	17	457,876	16
1180	Accounts receivable - related parties, net	4,5,6(6),6(20),7	515	-	236	-
1200	Other receivables	6(20)	3,799	-	483	-
1220	Current tax assets	4,5,6(25)	3,226	-	2,080	-
130x	Inventories, net	4,5,6(7)	771,941	27	605,530	22
1410	Prepayments		157,597	5	92,985	3
1470	Other current assets		3,928	-	1,827	-
11xx	Total current assets		2,292,902	79	2,142,542	77
	Non-current assets
1517	Financial asset at fair value through OCI	4,5,6(3)	16,177	1	10,000	-
1550	Investment accounted for under equity method	4,6(8)	8,241	-	8,740	-
1600	Property, plant and equipment, net	4,6(9),8	362,225	12	390,181	14
1755	Right-of-use asset	4,6(21)	79,698	3	84,399	3
1760	Investment property, net	4,6(10)	145,990	5	164,655	6
1780	Intangible assets	4,6(11)	1,119	-	1,730	-
1840	Deferred income tax assets	4,5,6(25)	1,250	-	1,930	-
1900	Other non-current assets	6(12)	11,896	-	6,900	-
15xx	Total non-current assets		626,596	21	668,535	23
1xxx	Total Assets		$2,919,498	100	$2,811,077	100

(The accompanying notes are an integral part of the consolidated financial statements.)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Consolidated Balance Sheets-(Continued)

As of December 31, 2025, and 2024

(Amounts Expressed In Thousands of New Taiwan Dollars)

Liabilities and Equity			As of December 31, 2025		As of December 31, 2024
Code	Accounts	Notes	Account	%	Account	%
	Current liabilities
2100	Short-term loans	6(13),8	$486,405	17	$190,000	7
2130	Contract liability	4,6(19)	328,158	11	329,155	12
2150	Notes payable		74,541	3	81,148	3
2170	Accounts payable		432,466	15	351,593	12
2200	Other payables	6(14),6(17)	157,286	5	133,457	5
2280	Lease liability	4,6(21)	11,730	-	9,841	-
2322	Current portion of long-term liabilities	6(15)	54,495	2	55,976	2
2399	Other current liabilities		15,829	1	15,074	-
21xx	Total current liabilities		1,560,910	54	1,166,244	41
	Non-current liabilities
2540	Long-term loans	6(15)	57,875	2	77,371	3
2570	Deferred income tax liabilities	4,5,6(25)	1,250	-	1,930	-
2580	Lease liability	4,6(21)	15,622	-	19,808	1
2600	Other non-current liabilities	4,5,6(16),6(17)	16,774	1	40,414	1
25xx	Total non-current liabilities		91,521	3	139,523	5
2xxx	Total liabilities		1,652,431	57	1,305,767	46
31xx	Total equity attributable to the parent company
3100	Capital	6(18)
3110	Common stock		1,677,385	57	1,677,385	60
3200	Capital surplus	6(18)	291,899	10	291,899	10
3300	Retained earnings	6(18)
3350	Unappropriated earnings(accumulated deficit)		(695,744)	(24)	(449,259)	(16)
3400	Other components of equity		(22,175)	(1)	(30,839)	(1)
31xx	Total equity attributable to the parent company		1,251,365	42	1,489,186	53
36xx	Non-controlling interests	6(18)	15,702	1	16,124	1
3xxx	Total equity		1,267,067	43	1,505,310	54
3x2x	Total liabilities and equity		$2,919,498	100	$2,811,077	100

(The accompanying notes are an integral part of the consolidated financial statements.)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2025 and 2024

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

Code	Accounts	Notes	2025		2024
			Account	%	Account	%
4000	Operating revenues	4,6(19),7	$1,571,397	100	$2,268,560	100
5000	Operating costs		(1,363,981)	(87)	(1,893,357)	(84)
5900	Gross profit		207,416	13	375,203	16
	Operating expenses
6100	Sales and marketing		(105,366)	(7)	(128,659)	(6)
6200	General and administrative		(193,728)	(12)	(191,462)	(8)
6300	Research and development		(214,688)	(14)	(229,696)	(10)
6450	Expected credit gains (losses)	4,6(20)	(528)	-	3,758	-
6000	Total operating expenses		(514,310)	(33)	(546,059)	(24)
6900	Operating income(losses)		(306,894)	(20)	(170,856)	(8)
	Non-operating incomes and expenses
7100	Interest income	6(23)	20,816	1	13,359	1
7010	Other incomes	4,6(23)	120,080	8	116,684	5
7020	Other gains or losses	6(23)	(44,829)	(3)	24,446	1
7050	Finance costs	6(23)	(12,156)	(1)	(9,636)	-
7055	Impairment gains (impairment losses) and reversal of impairment	6(20)	6,612	1	(13,706)	(1)
7060	Share of the profit or loss of associates and joint ventures	4,6(8)	(521)	-	(162)	-
7000	Total non-operating incomes and expenses		90,002	6	130,985	6
7900	Income before income tax (loss)		(216,892)	(14)	(39,871)	(2)
7950	Income tax expense	4,5,6(25)	(30,015)	(2)	(634)	-
8200	Net income (loss)		(246,907)	(16)	(40,505)	(2)
	Other comprehensive income (loss)	6(24)
8310	Item that not be reclassified to profit or loss
8311	Actuarial gain (loss) from defined benefit plans		-	-	3,637	-
8360	Items that may be reclassified subsequently to profit or loss
8361	Exchange differences on translation of foreign operations		8,664	1	33,635	2
8300	Other comprehensive income (loss)		8,664	1	37,272	2
8500	Total comprehensive income		$(238,243)	(15)	$(3,233)	-
8600	Net income (loss) attributable to :
8610	Shareholders of the parent		$(246,485)	(16)	$(39,234)	(2)
8620	Non-controlling interests		(422)	-	(1,271)	-
			$(246,907)	(16)	$(40,505)	(2)
8700	Comprehensive income attributable to :
8710	Shareholders of the parent		$(237,821)	(15)	$(1,962)	-
8720	Non-controlling interests		(422)	-	(1,271)	-
			$(238,243)	(15)	$(3,233)	-
9750	Earnings per share-basic (loss) (in NTD)	6(26)	$(1.47)		$(0.23)

(The accompanying notes are an integral part of the consolidated financial statements.)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2025 and 2024

(Amounts Expressed In Thousands of New Taiwan Dollars)

Items	Equity Attributable to Shareholders of the Parent						Non-controlling Interests	Total Equity
		Common Stock	Capital Surplus	Retained Earnings	Others				Total
				Unappropriated Earnings	Exchange differences arising on translation of foreign operations	Unrealized Gains or Losses on Financial Assets Measured at Fair Value through Other Comprehensive Income
Code		3100	3200	3350	3410	3420	31XX	36XX	3XXX
A1	Balance as of January 1, 2024	$1,677,385	$291,899	$(413,662)	$(54,474)	$(10,000)	$1,491,148	$17,395	$1,508,543
D1	Net income for 2024			(39,234)			(39,234)	(1,271)	(40,505)
D3	Other comprehensive income (loss), net of tax, for 2024			3,637	33,635		37,272	-	37,272
D5	Total comprehensive income (loss)	-	-	(35,597)	33,635	-	(1,962)	(1,271)	(3,233)
Z1	Balance as of December 31, 2024	1,677,385	291,899	(449,259)	(20,839)	(10,000)	1,489,186	16,124	1,505,310
D1	Net income for 2025			(246,485)			(246,485)	(422)	(246,907)
D3	Other comprehensive income (loss), net of tax, for 2025			-	8,664		8,664	-	8,664
D5	Total comprehensive income (loss)	-	-	(246,485)	8,664	-	(237,821)	(422)	(238,243)
Z1	Balance as of December 31, 2025	$1,677,385	$291,899	$(695,744)	$(12,175)	$(10,000)	$1,251,365	$15,702	$1,267,067

(The accompanying notes are an integral part of the consolidated financial statements.)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2025 and 2024

(Amounts Expressed in Thousands of New Taiwan Dollars)

Code	Items	2025	2024	Code	Items	2025	2024
		Account	Account			Account	Account
AAAA	Cash flows from operating activities :			BBBB	Cash flows from investing activities :
A10000	Income before income tax	$(216,892)	$(39,871)	B00010	Acquisition of financial assets at fair value through other comprehensive income	(6,177)	-
A20000	Adjustments :			B00050	Proceeds from disposal of financial assets at amortised cost	8,844	15,869
A20010	Income and expense adjustments:			B00100	Acquisition of financial assets at fair value through profit or loss	-	(327)
A20100	Depreciation (including right-of-use assets)	78,600	87,510	B00200	Proceeds from disposal of financial assets at fair value through profit or loss	13	310
A20200	Amortization	684	717	B02700	Acquisition of property, plant and equipment	(14,376)	(70,696)
A20300	Expected credit losses	(6,084)	9,948	B02800	Proceeds from disposal of property, plant and equipment	3,163	-
A20900	Interest expense	12,156	9,636	B03800	Decrease (increase) in refundable deposits	(6,932)	472
A21200	Interest income	(20,816)	(13,359)	B04500	Acquisition of intangible assets	(76)	(915)
A22300	Share of profit or loss of associates and joint ventures	521	162	BBBB	Net cash provided by (used in) investing activities	(15,541)	(55,287)
A22500	Gain on disposal of property, plant and equipment	(3,090)	710
A29900	Other adjustments to reconcile profit (loss)	(100)	-	CCCC	Cash flows from financing activities :
A30000	Changes in operating assets and liabilities :			C00200	Repayment of short-term loans	296,405	(8,750)
A31130	Notes receivable	12	508	C01600	Increase in long-term loans	35,000	70,200
A31150	Accounts receivable	(56,440)	(62,902)	C01700	Repayments of long-term loans	(55,977)	(60,307)
A31160	Accounts receivable - related parties	(279)	(236)	C03000	Increase in deposits received	(5,898)	(2,326)
A31180	Other receivables	26,575	(5,388)	C04020	Cash payments for the principal portion of the lease liability	(14,067)	(15,287)
A31200	Inventories	(166,411)	28,632	CCCC	Net cash provided by (used in) financing activities	255,463	(16,470)
A31230	Prepayments	(64,612)	(35,934)
A31240	Other current assets	(2,101)	1,386	DDDD	Effect of exchange rate changes	7,892	17,433
A32125	Contract liabilities	(997)	74,701
A32130	Notes payable	(6,607)	9,157	EEEE	Increase (decrease) in cash and cash equivalents	(111,986)	(18,529)
A32150	Accounts payable	80,873	(35,312)	E00100	Cash and cash equivalents at beginning of period	913,195	931,724
A32180	Other payables	7,053	5,250	E00200	Cash and cash equivalents at end of period	$801,209	$913,195
A32230	Other current liabilities	755	(2,160)
A32240	Net defined benefit liability	(2,412)	(25)
A33000	Cash generated from (used in) operations	(339,612)	33,130
A33100	Interest received	20,816	13,359
A33300	Interest paid	(9,843)	(8,874)
A33500	Income tax paid	(31,161)	(1,820)
AAAA	Net cash provided by (used in) operating activities	(359,800)	35,795

(The accompanying notes are an integral part of the consolidated financial statements.)

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1 HISTORY AND ORGANIZATION

PRIME ELECTRONICS AND SATELLITICS INCORPORATION (the “Company”) was established on June 12, 1995, and is principally engaged in the manufacture, processing and sales of satellite communication equipment, wired communication equipment, and wireless communication equipment. The Company has formally been approved to be listed on the Taipei Exchange on October 29, 2009 based on the approval letter with No. Financial-Supervisory-Securities-Corporate-0980057525 issued by Securities and Futures Bureau of Executive Yuan, and the trading in the stock exchange market started on December 8, 2009. The place of incorporation and the main operation location is at 3, Tze-Chiang 1st Road, Chung-Li Industrial Zone, Chung-Li Dist., Taoyuan City, Taiwan.

2 DATE AND PROCEDURE OF AUTHORIZATION FOR FINANCIAL STATEMENTS ISSUANCE

The consolidated financial statements of the Company and its subsidiaries (“the Group”) were authorized to be issued in accordance with a resolution of the Board of Directors’ meeting held on March 12, 2026.

3 NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

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

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

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 17 “Insurance Contracts”	January 1, 2023

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

b	Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7	January 1, 2026
c	Annual Improvements to IFRS Accounting Standards – Volume 11	January 1, 2026
d	Contracts Referencing Nature –dependent Electricity – Amendments to IFRS 9 and IFRS 7	January 1, 2026

A. IFRS 17 “Insurance Contracts”

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

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

IFRS 17 was issued in May 2017 and it was amended in 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after January 1, 2023 (from the original effective date of January 1, 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard 0– IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after January 1, 2023.

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

The amendments include:

a. Clarify that a financial liability is derecognised on the settlement date and describe the accounting treatment for settlement of financial liabilities using an electronic payment system before the settlement date.

b. Clarify how to assess the contractual cash flow characteristics of financial assets that include environmental, social and governance (ESG)-linked features and other similar contingent features.

c. Clarify the treatment of non-recourse assets and contractually linked instruments.

d. Require additional disclosures in IFRS 7 for financial assets and liabilities with contractual terms that reference a contingent event (including those that are ESG-linked), and equity instruments classified at fair value through other comprehensive income.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

C. Annual Improvements to IFRS Accounting Standards – Volume 11

a. Amendments to IFRS 1
The amendments mainly improve the consistency in wording between first-time adoption of IFRS and requirements for hedge accounting in IFRS 9.

b. Amendments to IFRS 7
The amendments update an obsolete cross-reference relating to gain or loss on derecognition.

c. Amendments to Guidance on implementing IFRS 7
The amendments improve some of the wordings in the implementation guidance, including the introduction, disclosure of deferred difference between fair value and transaction price and credit risk disclosures.

d. Amendments to IFRS 9
The amendments add a cross-reference to resolve potential confusion for a lessee applying the derecognition requirements and clarify the term “transaction price”.

e. Amendments to IFRS 10
The amendments remove the inconsistency between paragraphs B73 and B74 of IFRS

f. Amendments to IAS 7
The amendments remove a reference to “cost method” in paragraph 37 of IAS 7.

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

The amendments include:

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

The above mentioned standards and amendments are applicable for annual periods beginning on or after January 1, 2026 and have no material impact on the Group.

(3) Standards or interpretations issued, revised or amended, by IASB which have not been endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

listed below.

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

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

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

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

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

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

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

a. Improved comparability in the statement of profit or loss (income statement)

IFRS 18 requires entities to classify all income and expenses within their statement of profit or loss into one of five categories: operating; investing; financing; income taxes; and discontinued operations. The first three categories are new, to improve the structure of the income statement, and requires all entities to provide new defined subtotals, including

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

operating profit or loss. The improved structure and new subtotals will give investors a consistent starting point for analyzing entities' performance and make it easier to compare entities.

b. Enhanced transparency of management-defined performance measures

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

c. Useful grouping of information in the financial statements

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

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

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

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

The amendments include:

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

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

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

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

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
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4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

The consolidated financial statements of the Group for the years ended December 31, 2025 and 2024 were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by the FSC.

(2) Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are presented in thousands of New Taiwan Dollars (“NT$”) unless otherwise specified.

(3) Basis of consolidation

Preparation principle of consolidated financial statements

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if and only if the Company has :

(a) Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
(b) Exposure, or rights, to variable returns from its involvement with the investee, and
(c) The ability to use its power over the investee to affect its returns

When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including :

(a) The contractual arrangement with the other vote holders of the investee
(b) Rights arising from other contractual arrangements

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the NCIs even if this results in a deficit balance of the NCIs.

If the Company loses control of a subsidiary, it:

(a) Derecognizes the assets (including goodwill) and liabilities of the subsidiary;
(b) Derecognizes the carrying amount of any non-controlling interest;
(c) Recognizes the fair value of the consideration received;
(d) Recognizes the fair value of any investment retained;
(e) Reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss, or directly transferred to retained earnings in accordance with other IFRS requirements; and
(f) Recognizes the difference arise in profit or loss for the period.

The consolidated entities are listed as follows :

Investor	Subsidiary	Main business	Percentage of Ownership (%), As of December 31
			2025	2024
The Company	Prime International Services Ltd.	Processing and sales of electronic products	100.00%	100.00%
The Company	Pro Broadband	Investing activities	100.00%	100.00%

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

| Investor | Subsidiary
(B.V.I.) Inc. | Main business | Percentage of
Ownership (%),
As of December 31 | |
| --- | --- | --- | --- | --- |
| | | | 2025 | 2024 |
| The Company | Prime International
Developments Ltd. | Investing activities | 100.00% | 100.00% |
| The Company | KeyStone
Semiconductor
Corp. | Radio modem integrated
circuits design | 65.48% | 65.48% |
| Pro Broadband
(B.V.I.) Inc. | PRO BROADBAND
(SHENZHEN)
LTD. | Production and sales of
color television
receivers, antenna, and
various antenna reflector
and technology service | 100.00% | 100.00% |
| Pro Broadband
(B.V.I.) Inc. | BEIJING JAEGER
COMMUNICATION
N ELECTRONICS
TECH LOGY
CO. · LTD | Production and sales of
color television
receivers, antenna, and
various antenna reflector | 100.00% | 100.00% |
| Prime International
Developments
Ltd. | PRIME
BROADBAND
(SHENZHEN) INC | Production and sales of
set-up box and wireless
information products | 100.00% | 100.00% |
| Prime International
Developments Ltd. | DONG GUAN
PRIME
ELECTRONICS &
SATELLITICS
INC. | Production and sales of
audio and video decoder
equipment, broadband
radio access network
communication system
equipment, wireless
LAN equipment and
electronics products | 100.00% | 100.00% |

(4) Foreign currency transactions

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group’s consolidated financial statements are presented in New Taiwan Dollar, which is the parent company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. At the reporting date, monetary items denominated in foreign currencies are retranslated at the prevailing functional currency closing rate of exchange; non-monetary items measured at fair value in a foreign currency are retranslated using the exchange rates at the date when the fair value is determined; and non-monetary items measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

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

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

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

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

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

(5) Foreign currency transactions and translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into New Taiwan dollars at the closing rate of exchange prevailing at the balance sheet date and their income and expenses

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income under exchange differences on translation of foreign operations. On disposal of the foreign operation, cumulative amount of the exchange differences recognized in other comprehensive income under separate component of equity is reclassified from equity to profit or loss when recognizing the disposal gain/loss.

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

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

(6) Current and non-current distinction for assets and liabilities

An asset is classified as current when :

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

All other assets are classified as non-current.

A liability is classified as current when:

(a) The Group expects to settle the liability in its normal operating cycle.
(b) The Group holds the liability primarily for the purpose of trading.

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Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(d) The Group does not have the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

(7) Cash and cash equivalents

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

(8) Financial instruments

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

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

(a) Financial assets: Recognition and Measurement

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

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

A. The Group’s business model for managing the financial assets and
B. The contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

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

A. The financial asset is held within a business model whose objective is to hold

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financial assets in order to collect contractual cash flows and

B. The contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amount outstanding.

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

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

A. Purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
B. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

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

A. The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
B. The contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amount outstanding.

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

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

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

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

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

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

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

Financial asset measured at fair value through profit or loss

Financial assets were measured at amortized cost or measured at fair value through other comprehensive income only if they met particular conditions. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial

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assets measured at fair value through profit or loss.

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

(b) Impairment of financial assets

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

The Group measures expected credit losses of a financial instrument in a way that reflects :

A. An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
B. The time value of money; and
C. Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measures as follows :

A. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance for a financial asset at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that condition is no longer met.
B. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.

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C. For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

D. For lease receivables arising from transactions within the scope of IFRS 16, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

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

A financial asset is derecognized when :

A. The rights to receive cash flows from the asset have expired.

B. The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred.

C. The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

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

(d) Financial liabilities and equity

Classification between liabilities or equity

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

Equity instruments

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

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extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

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

Financial liabilities at fair value through profit or loss

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

A. It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

B. On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

C. It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

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

A. It eliminates or significantly reduces a measurement or recognition inconsistency; or

B. A group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

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

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Financial liabilities at amortized cost

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

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

Derecognition of financial liabilities

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

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

(e) Offsetting of financial instruments

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

(9) Fair value measurement

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

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

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

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

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

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

(10) Inventories

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

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

Raw materials—At actual purchase cost, using weighted average method

Finished goods and work in progress—Including cost of direct materials and labor and a Proportion of manufacturing overheads based on Normal operating capacity, excluding costs of borrowings.

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

Rendering of services is accounted in accordance with IFRS 15 but not within the scoping of inventories.

(11). Investments accounted for using the equity method

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

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

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

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

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

The Group determines at each reporting date whether there is any objective evidence that the

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures. If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the 'shareof profit or loss of an associate' in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Group estimates :

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

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

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

(12) Property, plant and equipment

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

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

"Property, plant and equipment". When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

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

Buildings	5~20 years
Machinery	1~10 years
Vehicle	2~10 years
Office equipment	2~5 years
Other equipment	1~10 years
Leasehold improvements	1~10 years

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

The property, plant and equipment's residual values, useful lives and methods of depreciation are reviewed at each financial year. If the expected values differ from the estimates, the differences are recorded as a change in accounting estimate.

(13) Investment property

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

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

Buildings
5~20 years

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

Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(14) Leases

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

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and
(b) the right to direct the use of the identified asset.

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

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Group as a lessee

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

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

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

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

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

(a) the amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

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

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

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

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

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

Group as a lessor

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

For a contract that contains lease components and non-lease components, the Group allocates

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

the consideration in the contract applying IFRS 15.

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

(15) Intangible assets

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

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

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

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

Gains or losses arising from derecognition of an intangible asset are recognized in profit or loss.

The Group’s accounting policies for intangible assets are as follows :

Cost of Computer Software

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Useful economic life	1~10 year
Amortization method	Amortize by straight-line method
over the estimated years with
economic benefits
Internally generated or
acquired externally	Acquired externally

(16) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 “Impairment of Assets” may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group would conduct impairment tests at individual or CGU level. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired. An asset’s recoverable amount is the higher of an asset’s net fair value or its value in use.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the recoverable amount of the asset or CGU. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized for the asset in prior years.

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

Impairment loss or reversals of continuing operations are recognized in profit or loss.

(17) Revenue recognition

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group’s revenue arising from contracts with customers mainly includes sale of goods and rendering of services. The accounting policies for the Group’s types of revenue are explained as follows :

Sale of goods

The Group manufactures and sells goods. Revenue is recognized when goods are transferred to a customer and the customer obtains control of that asset (control of an asset refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.) The main goods of the Group are digital communication products, and revenue shall be recognized based on the prices indicated on the contracts. The transactions of sales of other goods are usually with quantity discount (based on the accumulated sales amount within a specific period). Therefore, revenue shall be recognized by contract price less quantity discounts. The Group shall estimate an amount of variable consideration arising from quantity discount by cumulative experiences and using the expected value. The Group shall include in the transaction price some or all of an amount of variable consideration estimated only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Within the specific period specified in the agreements, the estimated quantity discount shall be recognized as refund liabilities accordingly.

The credit periods of sales of goods are usually 30~150 days. Accounts receivables arising from most of the contracts shall be recognized at the time when the goods are transferred to the customer, and the Group has the unconditional right to receive the consideration. Those accounts receivables are usually short-term and without significant financing components. For a fraction of the contracts, contract assets shall be recognized at the time when the goods are transferred to the customer, but the Group does not have the unconditional right to receive the consideration. In addition, allowances for impairment of contract assets shall be measured by the lifetime expected credit losses in accordance with IFRS 9.

(18) Borrowing costs

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

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

incurs in connection with the borrowing of funds.

(19) Government grants

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset, it is recognized as deferred income and recorded gains in equal amounts over the expected useful life of the related asset. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Where the Group receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts in the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant.

(20) Post-employment benefits

All regular employees of Kinsus and its domestic subsidiaries are entitled to pension plans that are managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with Kinsus and its domestic subsidiaries. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, Kinsus and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations and the contribution is expensed as incurred.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of :

(a) the date of the plan amendment or curtailment, and
(b) the date that the Company recognizes restructuring-related costs.

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

(21) Income tax

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

Current income tax

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

The income tax for undistributed earnings of the Company and its subsidiaries is recognized as income tax expense in the subsequent year when the distribution proposal is approved at the Shareholders' meeting.

Deferred income tax

Deferred income tax is a temporary difference between the tax bases of assets and liabilities and their carrying amounts in balance sheet at the reporting date.

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

(a) Where the deferred tax liability arises from the initial recognition of goodwill or of an

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit (loss);

(b) In respect of taxable temporary differences associated with investments in subsidiaries, and associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

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

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

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed and recognized at each reporting date.

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

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

5 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

(1) Judgement

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

A. Investment property, net

Some of the real estate held by the Group is intended for generating rental income or capital appreciation, while others are for own use. If each part can be sold separately, they would be classified and dealt with respectively as investment properties and property, plant, and equipment.

B. Operating Lease Commitments - Company as Lessor

The Group has entered into commercial real estate leases for its portfolio of investment properties. Based on an assessment of the terms of these agreements, the Group retains significant risks and rewards of ownership of these properties and accounts for the leases as operating leases.

(2) Estimates and assumptions

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

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A. Fair value of financial instruments

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

B. Accounts receivables - estimation of impairment loss

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

C. Inventory

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

D. Post-employment benefitS

The cost of post-employment benefit pension plan and the present value of the defined benefit obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions, including the change in the discount rate and expected salary level. The detailed explanation of the assumptions used to measure defined benefit costs and defined benefit obligations can be found in Note 6.

E. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the

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Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

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

6 \ CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	December 31, 2025	December 31, 2024
Cash and petty cash	$5,710	$3,209
Checks and savings	764,119	844,516
Time deposit(Note)	31,380	65,470
Total	$801,209	$913,195

Note: The term deposit contract expires within 3 months and can be converted into cash at any time with little risk of value changes.
(2) Financial assets at fair value through profit or loss

December 31, December 31, 2025 2024

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Mandatorily measured at fair value through profit or loss :
Money market fund	$314	$327
Valuation adjustment	-	-
Total	$314	$327
Current	$314	$327
Non-current	-	-
Total	$314	$327

No financial asset at fair value through profit or loss was pledged as collateral.

(3) Financial assets at fair value through other comprehensive income

	December 31, 2025	December 31, 2024
Equity instruments investments measured at fair value through other comprehensive income – non-current
Unlisted company stocks	$26,177	$20,000
Valuation adjustment	(10,000)	(10,000)
Total	$16,177	$10,000
Current	$-	$-
Non-current	16,177	10,000
Total	$16,177	$10,000

No financial assets at fair value through other comprehensive income was pledged by the Group as collateral.

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

(4) Financial assets measured at amortized cost

December 31, 2025

December 31, 2024

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Time deposit (reserve account)	$59,147	$61,993
Time deposit	-	$5,998
Less: loss allowance	-	-
Total	$59,147	$67,991
Current	$59,147	$67,991
Non-current	-	-
Total	$59,147	$67,991

Please refer to Note 8 for the information on financial assets at amortized cost pledged as collateral.

(5) Notes receivable

	December 31, 2025	December 31, 2024
Notes receivable arising from operating activities	$-	$12
Less: loss allowance	-	-
Total	$-	$12

A. Notes receivable were not pledged.

B. The Group follows the requirement of IFRS 9 to assess the impairment. Please refer to Note6(20) for more details on loss allowance and Note 12 for details on credit risk.

(6) Accounts receivable

	December 31, 2025	December 31, 2024
Accounts receivable, gross—arising from operation	$492,335	$458,438
Less: loss allowances	(1,109)	(562)
Subtotal	491,226	457,876

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Accounts receivable - total amount of related parties	515	236
Less: loss allowances	-	-
Subtotal	515	236
Total	$491,741	$458,112

A. Accounts receivable were not pledged.

B. The credit periods of sales of goods are usually 30~150 days. The total carrying amounts of accounts receivables amounted to NT$492,850 thousand and NT$458,674 thousand as of December 31, 2025 and 2024, respectively. Please refer to Note 6.20 for the information on loss allowance as of December 31, 2025 and 2024. Please refer to Note 12 for the information relevant to credit risks.

(7) Inventories

A. Details of inventory :

	December 31, 2025	December 31, 2024
Raw material	$510,455	$415,234
Work in process	111,309	105,305
Finished goods	150,177	84,991
Total	$771,941	$605,530

B. The inventory costs recognized as expenses amounted to NT$1,363,981 thousand and NT$1,893,357 thousand for the years ended December 31, 2025 and 2024, respectively, including the expenses and losses as follows:

Item	2025	2024
Loss on inventory scrapping	4,617	4,980
Loss for market price decline and slow-moving inventories (Gain from price recovery of inventory)	3,677	(3,346)
Total	$8,294	$1,634

The Group recognized gains on recovery of inventory market decline because some of the

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

inventories previously provided with market loss or obsolescence were disposed and sold.

C. The inventories were not pledged.

(8) Investments accounted for under the equity method

Investee	December 31, 2025		December 31, 2024
	Carrying amount	Percentage of ownership (%)	Carrying amount	Percentage of ownership (%)
Investments in associates :
Beijing Pro Broad Info Tech Co. Ltd	$8,241	20.00%	$8,740	20.00%

A. Investments in associates

The group invested CNY 2,000 thousand Beijing Pro Broad Info Tech Co. Ltd. in October 2023, approximately equivalent to NT$8,768 thousand. According to the articles of association of Beijing Pro Broad Info Tech Co. Ltd., the group holds a 20% equity interest, and thus, it is considered as an associate due to significant influence.

The aggregate carrying amount of the group's investment in Beijing Paibo Information Technology Co., Ltd. as of December 31, 2025 and 2024 of the Republic of China, was NT$8,241 thousand and NT$8,740 thousand. The summarized financial information, based on the group's share of ownership, is presented as follows:

Item	2025	2024
Profit from continuing operations(loss)	($521)	($162)
Other comprehensive income (post-tax)	-	-
Total comprehensive income	($521)	($162)

B. No investment accounted for under equity method was pledged as collateral as of December 31, 2025 and 2024.

(9) Property, plant and equipment

Owner occupied property, plant and equipment

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

	Land	Buildings	Machinery	Vehicle	Office Equipment	Other Equipment	Leasehold improvement	Construction in progress and equipment awaiting examination	Total
Cost :
As of 1/1/2025	$90,934	$527,409	$450,184	$3,497	$37,416	$359,857	$72,287	$-	$1,541,584
Addition	-	-	9,444	-	1,509	5,344	-	-	16,297
Disposals	-	(130)	(9,380)	(1,254)	(1,701)	(29,701)	(2,799)	-	(44,965)
Transfers	-	49	-	-	-	-	-	-	49
Effect of exchange rate	-	1,899	1,059	(24)	52	2	(71)	-	2,917
As of 12/31/2025	$90,934	$529,227	$451,307	$2,219	$37,276	$335,502	$69,417	$-	$1,515,882
As of 1/1/2024	$90,934	$469,619	$380,642	$3,378	$34,590	$342,197	$65,345	$-	$1,386,705
Addition	-	-	59,780	-	3,953	13,797	9,085	-	86,615
Disposals	-	-	(1,954)	-	(1,975)	(3,958)	(2,233)	-	(10,120)
Transfers	-	43,293	-	-	-	-	-	-	43,293
Effect of exchange rate	-	14,497	11,716	119	848	7,821	90	-	35,091
As of 12/31/2024	$90,934	$527,409	$450,184	$3,497	$37,416	$359,857	$72,287	$-	$1,541,584
Depreciation and impairment: :
---	---	---	---	---	---	---	---	---
As of 1/1/2025	$-	$334,181	$385,937	$3,497	$34,069	$333,976	$59,743	$-
Depreciation	-	22,941	9,833	-	1,089	7,037	3,272	-
Disposal	-	(83)	(9,359)	(1,254)	(1,701)	(29,696)	(2,799)	-
Transfers	-	29	-	-	-	-	-	29
Effect of exchange rate	-	1,844	1,106	(24)	57	32	(70)	2,945
As of 12/31/2025	$-	$358,912	$387,517	$2,219	$33,514	$311,349	$60,146	$-
As of 1/1/2024	$-	$274,000	$359,969	$3,378	$34,457	$322,751	$58,900	$-
Depreciation	-	23,592	16,198	-	744	7,613	2,986	-

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

	Land	Buildings	Machinery	Vehicle	Office Equipment	Other Equipment	Leasehold improvement	Construction in progress and equipment awaiting examination	Total
Disposal	-	-	(1,244)	-	(1,975)	(3,958)	(2,233)	-	(9,410)
Transfers	-	28,951	-	-	-	-	-	-	28,951
Effect of exchange rate	-	7,638	11,014	119	843	7,570	90	-	27,274
As of 12/31/2024	$-	$334,181	$385,937	$3,497	$34,069	$333,976	$59,743	$-	$1,151,403
Net carrying amount:
As of 12/31/2025	$90,934	$170,315	$63,790	$-	$3,762	$24,153	$9,271	$-	$362,225
As of 12/31/2024	$90,934	$193,228	$64,247	$-	$3,347	$25,881	$12,544	$-	$390,181

Please refer to Note 8 for details on property, plant and equipment pledged as collaterals.

(10) Investment property

	Buildings
Cost:
As of January 1, 2025	$362,840
Addition	-
Transfer from (to) property, plant and equipment	(49)
Exchange differences	1,537
As of December 31, 2025	$364,328
As of January 1, 2024	$392,357
Addition	-
Transfer from (to) property, plant and equipment	(43,293)
Exchange differences	13,776

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of December 31, 2024	$362,840
Depreciation and impairment :
As of January 1, 2025	$198,185
Depreciation	18,748
Transfer from (to) property, plant and equipment	(29)
Exchange differences	1,434
As of December 31, 2025	$218,338
As of January 1, 2024	$200,813
Depreciation	19,271
Transfer from (to) property, plant and equipment	(28,951)
Exchange differences	7,052
As of December 31, 2024	$198,185
Net carrying amount as of :
December 31, 2025	$145,990
December 31, 2024	$164,655
	2025
---	---
Rental income from investment properties	$88,948
Less: Direct operating expenses from investment properties generating rental income	(34,595)
Total	$54,353

No Investment property was pledged as collateral.

The investment properties held by the Group are not measured at fair value. And only the information on fair value is disclosed, which is within the scope of level 3 of fair value hierarchy. The fair value of the investment properties held by the Group amounted to NT$227,478 thousand and NT$239,890 thousand as of December 31, 2025 and 2024. The fair values were appraised by independent external appraisers. The valuation techniques used in 2025 and 2024. were income approach, comparative approach.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(11) Intangible asset

	Computer software
Cost :
As of 1/1/2025	$3,746
Additions – acquired separately	76
Derecognized upon retirement	(1,111)
Effect of exchange rate changes	(25)
As of 12/31/2025	$2,686
As of 1/1/2024	$3,062
Additions – acquired separately	915
Derecognized upon retirement	(297)
Effect of exchange rate changes	66
As of 12/31/2024	$3,746
Amortization and Impairment :
As of 1/1/2025	$2,016
Amortization	684
Derecognized upon retirement	(1,111)
Effect of exchange rate changes	(22)
As of 12/31/2025	$1,567
As of 1/1/2024	$1,546
Amortization	717
Derecognized upon retirement	(297)
Effect of exchange rate changes	50
As of 12/31/2024	$2,016
Carrying amount, net :
As of 12/31/2025	$1,119
As of 12/31/2024	$1,730

Amounts of amortization recognized for intangible assets are as follows :

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

	2025	2024
Operating expenses	$684	$717

(12) Other non-current assets

	December 31, 2025	December 31, 2024
Prepayments for equipment	$215	$2,151
Refundable deposits	11,681	4,749
Total	$11,896	$6,900

(13) Short-term loans

	Interest interval (%)	December 31, 2025	December 31, 2024
Unsecured bank loans	2.25%~2.44%	$70,000	$10,000
Secured bank loans	2.13%~2.72%	416,405	180,000
Total		$486,405	$190,000

As of December 31, 2025 and 2024, the line of unused short-term loan credit for the Group amounted to NT$436,355 thousand and NT$735,670 thousand, respectively.

Please refer to Note 8 for the assets pledged as collateral for bank loans.

(14) Other payable

	December 31, 2025	December 31, 2024
Accrued interest	$1,741	$281
Payable on machinery and equipment	89	192
Pension expense payable	16,405	5,995
Other payables	139,051	126,989
Total	$157,286	$133,457

(15) Long-term loans

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Long-term loans as of December 31, 2025 and 2024 are as follows :

Creditor bank	December 31, 2025	Interest rate (%)	Repayment periods and schedules
Hua Nan Bank — Taoyuan Branch	$3,873	90-day time deposit floating rate of Hua Nan Bank plus 0.7%	The loan period is from March 30, 2023 to March 30, 2026. The first repayment shall be made in April, 2023, and principal shall be evenly repaid monthly thereafter.
Hua Nan Bank — Taoyuan Branch	33,150	90-day time deposit floating rate of Hua Nan Bank plus 0.7%	The loan period is from May 14, 2024 to May 14, 2027. The first repayment shall be made in June, 2024, and principal shall be evenly repaid monthly thereafter.
Shanghai Bank — Yenping Branch	8,264	2-year postal time deposit floating rate plus 0.655%	The loan period is from July 3, 2023 to July 9, 2026. The first repayment shall be made in July, 2024, and principal shall be evenly repaid monthly thereafter.
Shanghai Bank — Yenping Branch	32,083	1-year postal time deposit floating rate plus 0.5%	The loan period is from September 1, 2023 to September 1, 2028. The first repayment shall be made in October, 2025, and principal shall be evenly repaid monthly thereafter.
Shanghai Bank — Yenping Branch	35,000	2-year postal time deposit floating rate plus 0.5%	The loan period is from February 27, 2025 to February 27, 2030. The first repayment shall be made in March, 2026, and principal shall be evenly repaid monthly thereafter.
Total	112,370
Less: current portion	(54,495)
Non-current portion	$57,875
Creditor bank	December 31, 2024	Interest rate (%)	Repayment periods and schedules
---	---	---	---
Hua Nan Bank — Taoyuan Branch	$19,365	90-day time deposit floating rate of Hua Nan Bank plus 0.7%	The loan period is from March 30, 2023 to March 30, 2026. The first repayment shall be made in April, 2023, and principal shall be evenly repaid monthly

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Creditor bank	December 31, 2024	Interest rate (%)	Repayment periods and schedules
Hua Nan Bank — Taoyuan Branch	56,550	90-day time deposit floating rate of Hua Nan Bank plus 0.7%	Thereafter.
The loan period is from May 14, 2024 to May 14, 2027. The first repayment shall be made in June, 2024, and principal shall be evenly repaid monthly thereafter.
Shanghai Bank — Yenping Branch	22,432	2-year postal time deposit floating rate plus 0.655%	The loan period is from July 3, 2023 to July 9, 2026. The first repayment shall be made in July, 2024, and principal shall be evenly repaid monthly thereafter.
Shanghai Bank — Yenping Branch	35,000	1-year postal time deposit floating rate plus 0.5%	The loan period is from September 1, 2023 to September 1, 2028. The first repayment shall be made in October, 2025, and principal shall be evenly repaid monthly thereafter.
Total	133,347
Less: current portion	(55,976)
Non-current portion	$77,371

(16) Other non-current liabilities

	December 31, 2025	December 31, 2024
Net defined benefit liability	$-	$17,742
Deposits received	16,774	22,672
Total	$16,774	$40,414

(17) Post-employment benefits

Defined contribution plan

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

Subsidiaries located in the People's Republic of China will contribute social welfare benefits based on a certain percentage of employees' salaries or wages to the employees' individual pension accounts.

Pension benefits for employees of overseas subsidiaries and branches are provided in accordance with the local regulations.

Expenses under the defined contribution plan for the years ended December 31, 2025 and 2024 were NT$29,427 thousand and NT$27,045 thousand, respectively.

The pension expenses additionally recognized because of appointing managers amounted for the years ended December 31, 2025 and 2024 were NT$416 thousand and NT$288 thousand, respectively.

Defined benefits plan

The Company and its domestic subsidiaries adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of serviceyears and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, Kinsus and its domestic subsidiaries contribute an amount equivalent to 2% of the employees' total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and domestic subsidiaries assess the balance in the aforementioned Fund. If the balance in the Fund is inadequate to pay the Post-employments of employees who are eligible for retirement in the following year by the aforementioned method, the Company and domestic subsidiaries are required to fund the deficit in one appropriation before the end of next March.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandate, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19.

In 2025, the Company applied to the Department of Labor, Taoyuan City Government, for the settlement of its pension obligations under the old pension system and the withdrawal of the remaining balance of the labor pension reserve funds, followed by the closure of the pension fund account.

The Company recognized expenses for defined benefit plans in the amounts of NT$220 thousand and NT$263 thousand for the years ended December 31, 2025 and 2024, respectively.

As of December 31, 2024, the maturities of Kinsus' defined benefit plan are both in 2034.

Pension costs recognized in profit or loss were as follows :

	2024
Current period service costs	$-
Net interest of defined benefit liability (asset)	263
Total	$263

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

	December 31, 2024	January 1, 2024
Defined benefit obligation	$37,177	$43,732
Plan assets at fair value	(19,435)	(22,328)

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Other non-current liabilities – defined benefit liability

$17,742 $21,404

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

	Present value of defined benefit obligation	Fair value of plan assets	Net defined benefit liability (asset)
1/1/2024	$43,732	$(22,328)	$21,404
Current service cost	-	-	-
Interest cost (revenue)	538	(275)	263
Pasts service cost and settlement	-	-	-
Subtotal	44,270	(22,603)	21,667
Remeasurement of defined benefit liability/assets :
Actuarial gain/loss due to change in population statistic assumptions	241	-	241
Actuarial gain/loss due to change in financial assumptions	(1,560)	-	(1,560)
Experience gain/loss	(435)	-	(435)
Remeasurement of defined benefit assets	-	(1,883)	(1,883)
Subtotal	(1,754)	(1,883)	(3,637)
Benefits paid	(5,339)	5,339	-
Contributions by employer	-	(288)	(288)
Effect of exchange rate	-	-	-
12/31/2024	$37,177	$(19,435)	$17,742

The actuarial assumptions used for the Company's defined benefit plan are shown below :

	December 31, 2024
Discount rate	1.65%
Expected rate of salary increases	3.00%

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Sensitivity analysis :

	2024
	Increase in defined benefit obligation	Decrease in defined benefit obligation
Discount rate increased by 0.5%	$-	$(1,760)
Discount rate decreased by 0.5%	1,883	-
Expected salary level increased by 0.5%	1,849	-
Expected salary level decreased by 0.5%	-	(1,746)

For the purpose of sensitivity analysis above, the Company calculated the impact on defined benefit obligation due to a reasonable and feasible change of one single assumption (i.e. discount rate or expected salary level) with other assumptions remaining equal. Please note that the sensitivity analysis has its limitation due to the co-relation between different actuarial assumptions and the rarity that only one assumption changes at a time.

The method used in the analysis is consistent for both current and prior years.

(18) Equity

A. Common stock

As of December 31, 2025 and 2024, the Company's authorized capital were both NT$3,000,000 thousand, and the Company's paid-in capital were both NT$1,677,385 thousand, each share at par value of NT$10, divided into 167,738,463 shares. A shareholder is entitled to one vote for each share held and has the right to receive dividends.

B. Capital surplus

	December 31, 2025	December 31, 2024
Additional paid-in capital	$291,899	$291,899

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

According to the Taiwan Company Act, the capital surplus shall not be used except for making good the deficit of the Company. When a company incurs no loss, it may distribute the capital surplus related to the income derived from the issuance of new shares at a premium or income from endowments received by the company up to a certain percentage of paid-in capital. The said capital surplus could be distributed in cash to its shareholders in proportion to the number of shares being held by each of them.

C. Appropriation of earnings and dividend policies

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

a. Payment of all taxes and dues;
b. Offset prior years’ operation losses;
c. Set aside 10% of the remaining amount as legal reserve. This restriction shall not apply when the statutory surplus reserve has reached the paid-in capital of the company.
d. Set aside or reverse special reserve in accordance with law and regulations; and
e. If there is still remaining balance, the Company shall set aside with accumulated retained earnings-unappropriated for shareholders’ dividends. The Board of Directors shall draw up a meeting regarding the issue of profit distribution and report to the shareholders’ meeting for the resolution of the distribution of the dividend.

(b) Dividend policies

The Company adopts balanced dividend policy. In response for the future development and shareholders’ demand for cash inflows, the ratio of cash dividend shall be no less than ten percent of total distribution of cash dividend and stock dividend.

(c) Legal reserve

According to the Company Act, legal reserve shall be set aside until such amount equals total authorized capital. Legal reserve can be used to offset deficits. If the Company does not incur any loss, the portion of legal reserve exceeding 25% of the paid-in capital may be distributed to shareholders by issuing new shares or by cash in proportion to the number of shares held by each shareholder.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(d) Special reserve

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

The FSC issued Order No. Financial-Supervisory-Securities-Corporate -1090150022 on March 31, 2021, which sets out the following provisions for compliance :

On a public company's first-time adoption of the IFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders' equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside special reserve. For any subsequent use, disposal or reclassification of related assets, the company can reverse the special reserve by proportion and transfer to retained earnings.

The Company did not incur any special reserve upon the first-time adoption of T-IFRS.

E. Based on the board of directors' proposal on March 12, 2026, and the shareholders' meeting's resolution on June 17, 2025, although the Company earned profits in 2025 and 2024, as there is deficit to be covered, the Company would not distribute dividend.

The Company's Board of Directors proposed on March 12, 2026, to offset accumulated deficits in the amount of NT$291,899 thousand using capital surplus.

Please refer to Note 6.22 for the accrued basis and the amounts recognized for employees' and directors' remuneration.

D. Non-controlling interests

	2025	2024
Beginning balance	$16,124	$17,395
Net income attributable to NCIs	(422)	(1,271)
Ending balance	$15,702	$16,124

(19) Operating revenues

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

	2025	2024
Revenue from customer contracts
Sales of goods	$1,571,397	$2,268,560

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

A. Disaggregation of revenue

	Single operating segment
	2025	2024
Sales of goods	$1,571,397	$2,268,560

Timing of revenue recognition :

At a point in time

	$1,571,397	$2,268,560

B. Contract balances

(a) Contract liabilities-current

	December 31, 2025	December 31, 2024	January 1, 2024
Sales of goods	$328,158	$329,155	$254,454

The significant changes in the Group's balances of contract liabilities for the years ended December 31, 2025 and 2024 are as follows :

	2025	2024
The opening balance transferred to revenue	$(23,702)	$(43,701)
Increase in receipts in advance during the period (excluding the amount incurred and transferred to revenue during the period)	22,705	118,402

C. The assets recognized from the costs to obtain or fulfill a contract with a customer : None.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(20) Expected credit losses(gains)

	2025	2024
Operating expenses – Expected credit losses (gains)
Account receivables	$528	$(3,758)
Non-operating incomes and expenses – Expected credit losses(gains)
Other receivables	(6,612)	13,706
Total	$(6,084)	$9,948

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

The Group measures the loss allowance of its accounts receivable (including notes receivable and accounts receivable) at an amount equal to lifetime expected credit losses. The assessment of the Group's loss allowance as of December 31, 2025 and 2024 are as follows:

A. The Group considers the grouping of accounts receivable by counterparties' credit rating, by geographical region and by industry sector and its loss allowance is measured by using a provision matrix. Details are as follows:

As of December 31, 2025

	Not past due (Note)	Past due					Total
		<=30 days	31-90 days	91-180 days	181-365 days	>=365 days
Gross carrying amount	$491,197	$-	$322	$465	$-	$866	$492,850
Loss ratio	0.01%	-%	10%	30%	-%	100%
Lifetime expected credit losses	(72)	-	(32)	(139)	-	(866)	(1,109)
Subtotal	$491,125	$-	$290	$326	$-	$-	$491,741

Note: all the Group's note receivables were not past due.

As of December 31, 2024

Not past due (Note)	Past due					Total
	<=30 days	31-90 days	91-180 days	181-365 days	>=365 days

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Gross carrying amount	$458,241	$-	$-	$-	$-	$-445	$458,686
Loss ratio	-%	-%	-%	-%	-%	100%
Lifetime expected credit losses	(117)	-	-	-	-	(445)	(562)
Subtotal	$458,124	$-	$-	$-	$-	$-	$458,124

Note: all the Group’s note receivables were not past due.

B. The movement in the provision for impairment of notes receivable and accounts receivable and other receivables during the years ended December 31, 2025 and 2024 are as follows:

	Notes receivable	Accounts receivable	Other receivables
Beginning balance as of January 1, 2025	$-	$562	$44,781
Addition/(reversal) for the current period	-	528	(6,612)
Amount written off due to uncollectibility	-	-	(22,543)
Effect of exchange rate	-	19	(736)
Ending balance as of December 31, 2025	$-	$1,109	$14,890
Beginning balance as of January 1, 2024	$-	$4,756	$30,023
Addition/(reversal) for the current period	-	(3,758)	13,706
Amount written off due to uncollectibility	-	-	-
Effect of exchange rate	-	(436)	1,052
Ending balance as of December 31, 2024	$-	$562	$44,781

(21) Leases

A. Group as a lessee

The Group leases various properties, including real estate such as land and buildings, transportation equipment. These leases have terms of between 2 and 50 years.

The effect of leases on the Group’s consolidated financial position, financial performance

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

and cash flows are as follows :

(a) Amounts recognized in the balance sheet

I. Right-of-use assets

	December 31, 2025	December 31, 2024
Land	$29,137	$30,930
Buildings	49,392	53,084
Transportation equipment	1,169	385
Total	$79,698	$84,399

II. Lease liability

	December 31, 2025	December 31, 2024
Lease liabilities	$27,352	$29,649
Current	$11,730	$9,841
Non-current	$15,622	$19,808

Please refer to Note 6(23) (D) for the interest on lease liability recognized for the years ended December 31, 2025 and 2024 and refer to Note 12(5) for the maturity analysis for lease liabilities as of December 31, 2025 and 2024.

(b) Amounts recognized in the statement of comprehensive income

	2025	2024
Land	$1,867	$1,918
Buildings	13,395	14,770
Transportation equipment	418	418
Total	$15,680	$17,106

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

	2025	2024
The expense relating to short-term leases	$488	$701
The expense relating to leases of low-value assets (Not including the expense relating to short-term leases of law-value assets)	78	47

(d) Cash outflow relating to leasing activities

For the years ended December 31, 2025 and 2024, the Group’s total cash outflow for leases amounted to NT$14,633 thousand and NT$16,035 thousand, respectively.

B. Group as a lessor

Please refer to Note 6.10 for the relevant disclosure about own-occupied investment properties. A own-occupied investment property is classified as an operating lease, as it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. The average terms are from 1 to 20 years.

	2025	2024
Lease income for operating leases
Income relating to fixed lease payments	$89,679	$69,357

For operating leases entered into by the Group, the undiscounted lease payments to be received and a total of the amounts for the remaining years as of December 31, 2025 and 2024 are as follows:

	December 31, 2025	December 31, 2024
Less than one year	$58,771	$73,239
More than one year but less than five years	80,891	144,878
Over 5 years	2,540	5,468
Total	$142,202	$223,585

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(22) Summary statement of employee benefits, depreciation and amortization was as follows :

	2025			2024
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefit
Salaries & wages	$78,870	$246,314	$294,184	$76,305	$263,739	$340,044
Labor and health insurance	-	13508	13,508	-	13,785	13,785
Pension	8,653	21,410	30,063	7,631	19,965	27,596
Other employee benefit	2,047	2,988	5,035	2,692	2,956	5,648
Depreciation (Note)	8,259	70,341	78,600	17,160	70,350	87,510
Amortization	-	684	684	-	717	717

Note: Including the miscellaneous expenses recognized in other gains and losses.

According to the resolution, 5% to 10% of profit of the current year is distributable as employees' compensation and no higher than 3% of profit of the current year is distributable as remuneration to directors and supervisors. However, the Company's accumulated losses shall have been covered. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation in the form of shares or in cash; and in addition, a report of such distribution is submitted to the shareholders' meeting. On June 17, 2025, the Company's shareholders resolved to amend the Articles of Incorporation to stipulate that no less than 25% of the aforementioned employee compensation shall be distributed to junior employees. Information on the Board of Directors' resolution regarding the employees' compensation and remuneration to directors and supervisors can be obtained from the "Market Observation Post System" on the website of the TWSE.

In 2025 and 2024 as there is deficit to be covered, the Company did not accrue and distribute employees' and directors' remuneration.

(23) Non-operating incomes and expenses

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A. Interest income

	2025	2024
Financial assets measured at amortized cost	$20,816	$13,359

B. Other income

	2025	2024
Rent income	$89,679	$69,357
Government grants (Note)	9,200	9,000
Other income-others	21,201	38,327
Total	$120,080	$116,684

Note : In relation to this, the Group has applied for and received government grants through the Ministry of Economic Affairs' Industrial Innovation Program.

C. Other gains and losses

	2025	2024
Gain on disposal of property, plant and equipment (loss)	$3,090	$(710)
Foreign exchange gain (loss), net	(27,447)	44,455
Gain on lease modification	100	-
Investment property depreciation	(18,748)	(19,271)
Other	(1,824)	(28)
Total	$(44,829)	$24,446

D. Finance costs

	2025	2024
Interest on bank loans	$11,303	$8,711
Interests on lease liabilities	853	925
Total	$12,156	$9,636

(24) Components of other comprehensive income (OCI)

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the year ended December 31, 2025

	Arising during the period	Reclassification during the period	Other comprehensive income before tax	Income tax benefit (expense)	OCI, Net of tax
Not to be reclassified to profit or loss :
Remeasurement of defined benefits plan	$-	$-	$-	$-	$-
May be reclassified to profit or loss in subsequent period :
Exchange differences arising on translation of foreign operations	8,664	-	8,664	-	8,664
Total OCI	$8,664	$-	$8,664	$-	$8,664

For the year ended December 31, 2024

	Arising during the period	Reclassification during the period	Other comprehensive income before tax	Income tax benefit (expense)	OCI, Net of tax
Not to be reclassified to profit or loss :
Remeasurement of defined benefits plan	$3,637	$-	$3,637	$-	$3,637
May be reclassified to profit or loss in subsequent period :
Exchange differences arising on translation of foreign operations	33,635	-	33,635	-	33,635
Total OCI	$37,272	$-	$37,272	$-	$37,272

(25) Income tax

A. The major components of income tax expense (income) are as follows :

Income tax expense (benefit) recognized in profit or loss

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

	2025	2024
Current income tax expense (income) :
Current income tax payable	$30,653	$634
Adjustments in respect of current income tax of prior periods	(638)
Deferred tax expense (income) :
Deferred tax expense (income) relating to origination and reversal of temporary differences	-	-
Total income tax expense	$30,015	$634

Income tax recognized in other comprehensive income

	2025	2024
Deferred tax expense (income) :
Exchange differences arising on translation of foreign operations	$-	$-

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

	2025	2024
Profit before tax from continuing operations	($216,892)	($39,871)
Tax payable at the enacted tax rates	($54,638)	($14,531)
Tax effect of income tax-exempted	160	481
Tax effect of deferred tax assets/liabilities	48,206	(19,477)
Adjustments in respect of current income tax of prior periods	(638)	-
Adjustments in current period relating to current income tax in prior years	36,925	34,161
Total income tax expense recognized in profit or loss	$30,015	$634

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

C. Deferred tax assets (liabilities) relate to the following :

For the year ended December 31, 2025

	Beginning balanceas of Jan. 1, 2024	Deferred tax income (expense) recognized in P/L	Deferred tax income (expense) recognized in OCI	Ending balanceas of Dec. 31, 2024
Temporary differences moving inventories	$1,930	$(680)	$-	$1,250
Exchange loss (gain)	(1,930)	680	-	(1,250)
Unused tax losses	-	-	-	-
Deferred tax income/(expense)		$-	$-
Net deferred tax assets/(liabilities)	$-			$-

Reflected in balance sheet as follows :

Deferred tax assets $1,930 $1,250

Deferred tax liabilities $(1,930) 1,250

For the year ended December 31, 2024

	Beginning balanceas of Jan. 1, 2023	Deferred tax income (expense) recognized in P/L	Deferred tax income (expense) recognized in OCI	Ending balanceas of Dec. 31, 2024
Temporary differences moving inventories	$-	$1,930	$-	$1,930
Exchange loss (gain)	-	(1,930)	-	(1,930)
Unused tax losses	-	-	-	-
Deferred tax income/(expense)		$-	$-
Net deferred tax assets/(liabilities)	$-			$-

Reflected in balance sheet as

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

follows :

Deferred tax assets

Deferred tax liabilities

$1,930

$(1,930)

D. As of December 31, 2024, the amount and deductible deadline of the unused tax loss of the Company are as follows :

Occurrence year	Accumulated net operating loss	Unused balance		Expiration Year
		December 31, 2025	December 31, 2024
2015	$241,293	$-	$18,668	2025
2016	13,868	-	12,901	2026
2018	110,400	109,049	110,400	2028
2020	40,020	40,020	40,020	2030
2023	24,417	24,417	24,417	2033
2024(expected)	36,206	36,206	36,206	2034
Total	$466,204	$209,692	$242,612

The amount and deductible deadline of the unused tax loss of the subsidiaries in Taiwan are as follows :

Occurrence year	Accumulated net operating loss	Unused balance		Expiration Year
		December 31, 2025	December 31, 2024
2016	$23,163	$23,163	$23,163	2026
2017	18,825	18,825	18,825	2027
2018	17,418	17,418	17,418	2028
2019	1,272	1,272	1,272	2029
2023	3,924	3,924	3,924	2023
2024(expected)	4,943	4,943	4,943	2034
2025(expected)	840	840	-	2035
Total	$70,385	$70,385	$69,545

E. Deferred tax assets not recognized

As of December 31, 2025 and 2024, the deferred tax assets not recognized amounted to NT$355,907 thousand and NT$307,562 thousand, respectively.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

F. The assessment of income tax return

As of December 31, 2025, the assessment status of income tax returns of the Company and subsidiaries was as follows:

	The assessment of income tax returns
The Company	Assessed and approved up to 2023
Subsidiary -KEYSTONE SEMICONDUCTOR CORP.	Assessed and approved up to 2023

(26) Earnings per share

Basic earnings per share is calculated by dividing net profit for the year attributable to the common shareholders of the parent entity by the weighted average number of common shares outstanding during the year.

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

The Group has no dilutive potential ordinary shares and does not have a complex capital structure. It only discloses basic earnings per share as follows:

	2025	2024
A. Basic earnings per share
Net income attributable to ordinary equity holders of the parent company (in NT$’000)	($246,485)	($39,234)
Weighted average number of ordinary shares outstanding for basic earnings per share (in thousand shares)	167,738	167,738
Basic earnings per share (loss) (in NT$)	($1.47)	($0.23)

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

B. No other transactions that would significantly change the outstanding common shares or potential common shares incurred during the period after reporting date and up to the approval date of financial statements.

7. RELATED PARTY TRANSACTIONS

(1) Related parties and Relationship

Deal with related parties as of the end of the reporting period :

Related parties	Relationship
Beijing Pro Broad Info Tech Co. Ltd	Associate

(2) Significant transactions with related parties

A. Sales

	2025	2024
Beijing Pro Broad Info Tech Co. Ltd	$2,851	$2,801

The group's sales prices and payment terms to Beijing Pro Broad Info Tech Co. Ltd. are comparable to those offered to regular customers.

B. Accounts receivable - related parties

	December 31, 2025	December 31, 2024
Beijing Pro Broad Info Tech Co. Ltd	$515	$236

(3) Salaries and rewards to key management of the Group

	2025	2024
Short-term employee benefit	$11,543	$12,197
Post-employee benefit	1,902	658
Total	$13,445	$12,855

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

8. PLEDGED ASSETS

The following assets of the Group are pledged as collaterals :

Item	Carrying Amount As of		Purpose
	December 31, 2025	December 31, 2024
Financial assets measured at amortized cost	$20,128	$26,145	secured loans
Financial assets measured at amortized cost	29,819	32,468	Reserve account of notes
Financial assets measured at amortized cost	9,200	9,378	Margin
Property, plant and equipment, net-Land	90,934	90,934	secured loans
Property, plant and equipment, net-Buildings	224	419	secured loans
Total	$150,305	$159,344

9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS

As of December 31, 2024, the promissory note issued for long-term and Short-term loans and Apply for the Industrial Innovation Program of the Ministry of Economic Affairs amounted to NT$1,042,760 thousand and NT$28,200 thousand, respectively, as guarantees of performances. As they are contingent liabilities, they are not stated in the financial statements.

10. LOSSES DUE TO MAJOR DISASTERS

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

12. OTHERS

(1) Categories of financial instruments

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial assets

	December 31, 2025	December 31, 2024
Financial assets at fair value through profit or loss :
Mandatorily measured at fair value through P/L	$314	$327
Financial assets at fair value through OCI	16,177	10,000
Financial assets measured at amortized cost :
Cash and cash equivalents (Not included Cash and petty cash)	795,499	909,986
Financial assets measured at amortized cost	59,147	67,991
Notes receivable, net	-	12
Accounts receivable ( including related parties)	491,741	458,112
Other receivables	3,799	483
Refundable deposits	11,681	4,749
Subtotal	1,361,867	1,441,333
Total	$1,378,358	$1,451,660

Financial liabilities

	December 31, 2025	December 31, 2024
Financial liabilities at amortized cost :
Short-term borrowings	$486,405	$190,000
Notes payable	74,541	81,148
Accounts payable	432,465	351,593
Other payables	157,286	133,457
Lease liabilities (including current portion with maturity less than 1 year)	27,352	29,649
Long-term borrowings (including current portion with maturity less than 1 year)	112,370	133,347
Total	$1,290,419	$919,194

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Objectives and policies of financial risk management

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

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

(3) Market risk

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

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

Foreign currency risk

The Group’s exposure to foreign currency risk relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign operations.

Some of the receivables and payables are denominated in the same foreign currencies; thus, the positions would benefit from the natural hedging effect. However, managing foreign currency risk by natural hedging does not qualify for hedge accounting, hedge accounting was not used. Furthermore, as net investments in foreign operations are for strategic purposes, they are not hedged by the Group.

Foreign currency sensitivity analysis of possible change in foreign exchange rates on the

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Group’s profit/loss and equity is performed on significant monetary items denominated in foreign currencies as of the reporting period-end. The Group’s foreign currency risk is mainly related to volatility in the exchange rates of US dollars. It is stated as follows :

(a) If NT dollars appreciates/depreciates against US dollars by 1%, net income (loss) for the year ended December 31, 2025 and 2024 would increase/decrease by NT$4,863 thousand and NT$7,363 thousand, respectively.
(b) If NT dollars appreciates/depreciates against CNY dollars by 1%, net income (loss) for the year ended December 31, 2025 and 2024 would increase/decrease by NT$134 thousand and NT$1,527 thousand, respectively.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk relates primarily to the Group’s investments with variable interest rates and loans with fixed and variable interest rates, which are all categorized as loans and receivables.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as of the end of the reporting period and presumed to be held for one accounting year, including investments and loans with variable interest rates. If interest rate increases/decreases by 0.5%, the net income (loss) for the year ended December 31, 2025 and 2024 would decrease/increase by NT$1,372 thousand and NT$2,916 thousand, respectively

Equity price risk

The fair values of the unlisted equity securities by the Group are susceptible to the investment targets’ uncertainty of future value. The unlisted equity securities held by the Group are recognized in Financial asset at fair value through OCI. The Group manages the price risk of equity securities by diversified investments and setting upper limit to investment in a single equity security and to the whole equity securities investments. The portfolio information of equity securities shall be provided to high level of management of the Group on regular basis, and the decision of all the equity securities investments shall be reviewed and approved by the board of directors.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract and

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PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

result in a financial loss. The Group is exposed to credit risk from operating activities (primarily for accounts and notes receivable) and from its financing activities including bank deposits and other financial instruments.

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit risk of all customers are assessed based on a comprehensive review of the customers’ financial status, credit ratings from credit institutions, past transactions, current economic conditions and the Group’s internal credit ratings. The Group also employs some credit enhancement instruments (e.g. prepayment or insurance) to reduce certain counterparty’s credit risk.

As of December 31, 2025 and 2024, receivables from the top ten customers accounted for 95.85% and 94.30% of the Group’s total accounts receivable, respectively. The concentration of credit risk is relatively insignificant for the remaining receivables.

Credit risk from balances with banks and fixed income securities and other financial instruments is managed by the Group’s finance division in accordance with the Group’s policy. The counterparties that the Group transacts with are determined by internal control procedures. They are banks with fine credit ratings and financial institutions, corporate and government agencies with investment-grade credit ratings. Thus, there is no significant default risk. Conclusively, no significant credit risk is expected by the Group.

The Group adopted IFRS 9 to assess the expected credit losses. Except for trade receivables, the remaining debt instrument investments which are not measured at fair value through profit or loss, low credit risk for these investments is a prerequisite upon acquisition and by using their credit risk as a basis for the distinction of categories. The Group makes an assessment at each reporting date as to whether the credit risk still meets the conditions of low credit risk and then further determines the method of measuring the loss allowance and the loss ratio.

Financial assets are written off when there is no realistic prospect of future recovery (the issuer or the debtor is in financial difficulties or bankruptcy).

(5) Liquidity risk management

The Group maintains financial flexibility using cash and cash equivalents, highly-liquid marketable securities, bank loans, etc. The table below summarizes the maturity profile of

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

the Group's financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted interest payment relating to borrowings with variable interest rates is extrapolated based on the estimated yield curve as of the end of the reporting period.

Non-derivative financial instruments

	More than 5
	Less than 1 year	1 to 3 years	3 to 5 years	years	Total
As of December 31, 2025
Loans	$546,530	$48,947	$10,347	$-	$605,824
Payables	664,292	-	-	-	664,292
Lease liabilities	12,328	15,806	165	-	28,299
As of December 31, 2024
Loans	$249,565	$70,143	$8,815	$-	$328,523
Payables	566,198	-	-	-	566,198
Lease liabilities	10,443	14,523	6,000	-	30,966

(6) Movement schedule of liabilities arising from financing activities

Movement schedule of liabilities for year ended December 31, 2025 :

	Short-term borrowings	Long-term borrowings	Leases liabilities	Refundable deposits	Total liabilities from financing activities
As of January 1, 2025	$190,000	$133,347	$29,649	$22,672	$375,668
Cash flows	296,405	(20,977)	(14,067)	(5,898)	255,463
Non-cash changes	-	-	11,770	-	11,770
As of December 31, 2025	$486,405	$112,370	$27,352	$16,774	$642,901

MoveMovement schedule of liabilities for the year ended December 31, 2024

Short-term borrowings	Long-term borrowings	Leases liabilities	Refundable deposits	Total liabilities from financing activities

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of January 1, 2024	$198,750	$123,454	$43,137	$24,998	$390,339
Cash flows	(8,750)	9,893	(15,287)	(2,326)	(16,470)
Non-cash changes	-	-	1,799	-	1,799
As of December 31, 2024	$190,000	$133,347	$29,649	$22,672	$375,668

(7) Fair values of financial instruments

A. The evaluation methods and assumptions applied in determining the fair value

Fair value is the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between willing market participants (not undercoercion or liquidation). The following methods and assumptions are used by the Group in estimating the fair values of financial assets and liabilities :

(a) The carrying amount of cash and cash equivalents, receivables, payables and other current liabilities approximate their fair value due to their short maturity terms.

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

C. Fair value of bank loans, bonds payable and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the Taipei Exchange, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)

B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Group’s financial assets and liabilities measure at amortized cost approximates their fair value.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

C. Fair value measurement hierarchy for financial instruments

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

(8) Fair value measurement hierarchy

A. Fair value measurement hierarchy

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

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

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

Level 3 – Unobservable inputs for the asset or liability

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

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

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

As of December 31, 2025

	Level 1	Level 2	Level 3	Total
Financial assets :
Financial assets at fair value through profit or loss Money market fund	$314	$-	$-	$314

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Equity instrument measured at fair value through other comprehensive income private company equity securities

- 16,177 16,177

As of December 31, 2024

	Level 1	Level 2	Level 3	Total
Financial assets :
Financial assets at fair value through profit or loss Money market fund	$327	$-	$-	$327
Equity instrument measured at fair value through other comprehensive income private company equity securities	-	-	10,000	10,000

Reconciliation for fair value measurements on a recurring basis in Level 3 hierarchy

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy formovements during the period is as follows :

	Assets
	value through other comprehensive income
	Stocks
Beginning balances as of January 1, 2025	$10,000
Total gains and losses recognized for the year ended December 31, 2025	6,177
Ending balances as of December 31, 2025	$16,177
	Assets
	Financial assets at fair value through other comprehensive income
	Stocks
Beginning balances as of January 1, 2024
Total gains and losses recognized for the year ended December 31, 2024	$10,000

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Ending balances as of December 31, 2024

$10,000

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows :

As of December 31, 2025 :

	Valuation techniques	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity of the input to fair value
Financial assets :
Financial assets at fair value through other comprehensive income
Stocks	Market Approach	Discount for lack of marketability	30%	The higher the discount for lack of marketability, the lower the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s equity by NT$1,618thousand

As of December 31, 2024 :

	Valuation techniques	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity of the input to fair value
Financial assets :
Financial assets at fair value through other comprehensive income

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Stocks	Market Approach	Discount for lack of marketability	30%	The higher the discount for lack of marketability, the lower the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability would result in decrease/increase in the Group’s equity by NT$1,000 thousand

C. The information of fair value hierarchy for the assets not measured at fair value which shall be disclosed is as follows

As of December 31, 2025

	Level 1	Level 2	Level 3	Total
Assets whose fair value shall be disclosed :
Investment properties(Please refer to Note 6.10)	$-	$-	$227,478	$227,478
As of December 31, 2024
	Level 1	Level 2	Level 3	Total
Assets whose fair value shall be disclosed :
Investment properties(Please refer to Note 6.10)	$-	$-	$239,890	$239,890

(9) Significant financial assets and liabilities denominated in foreign currencies

Information regarding the Group’s significant financial assets and liabilities denominated in foreign currencies was listed below: (In Thousands) :

December 31, 2025
Foreign Currencies	ExchangeRate	NTD

Financial assets

Monetary items :

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

USD	$24,083	31.38	$755,782
CNY	144,001	4.46	641,759

Non-monetary items :
None

Financial liabilities

Monetary items :
USD $8,641 31.18 $269,450
CNY 146,793 4.46 655,134

Non-monetary items :
None

December 31, 2024

	Foreign Currencies	ExchangeRate	NTD
Financial assets
Monetary items :
USD	$31,927	32.51	$1,037,938
CNY	23,320	4.60	107,271

Non-monetary items :
None

Financial liabilities

Monetary items :
USD $9,448 31.93 $301,665
CNY 58,814 4.42 259,978

Non-monetary items :
None

The above information is disclosed based on the carrying amount of foreign currency (afterbeing converted to functional currency).

As there were various functional currencies of each entity of the Group, the Group was unable to disclose foreign exchange gains or losses towards each foreign currency with

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

significant impact. The Group recognized net exchange gains (losses) amounted to NT$(27,447) thousand and NT$44,455 thousand for the years ended December 31, 2025 and 2024, respectively

(10) Capital management

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

13 • ADDITIONAL DISCLOSURES

(1) Information on significant transactions

A. Financing provided to others : None.

B. Endorsement/Guarantee provided to others : None.

C. Marketable securities held as of December 31, 2025 (excluding investments in subsidiaries, associates and joint ventures) : Please refer to attachment 1.

D. Related party transactions with purchase or sales amount of at least NT$100 million or 20 percent of the paid-in capital for the year ended December 31, 2025 : Please refer to attachment 2.

E. Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of December 31, 2025 : None.

F. Intercompany relationships and significant intercompany transactions for the year ended December 31, 2025 , Please refer to attachment 7.

(2) Information on investees :

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A. Name, locations and related information of investees (excluding investees in Mainland China): Please refer to attachment 3.

B. Investees over which the Company exercises control shall be disclosed of information under Note 13(1):

(a) Financing provided to others : Please refer to attachment 4.

(b) Endorsement/Guarantee provided to others : None.

(c) Marketable securities held as of December 31, 2025 (excluding investments in subsidiaries, associates and joint ventures) : Please refer to attachment 1-1.

(d) Related party transactions with purchase or sales amount of at least NT$100 million or 20 percent of the paid-in capital for the year ended December 31, 2025 : Please refer to attachment 5.

(e) Receivables from related parties of at least NT$100 million or 20 percent of the paid-in capital as of December 31, 2025 : Please refer to attachment 6.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Information on investments in Mainland China :

A. Name of investee in China, main business, paid-in capital, method of investment, investment flows, percentage of ownership, investment gain or loss, carrying amount at the end of reporting period, inward remittance of earning or loss and the upper limit on investment in China :

(In Thousands of New Taiwan Dollars/ Foreign currencies)

Name of Investee in China	Main Business	Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of Jan.1, 2024	Investment Flows		Accumulated Outflow of Investment from Taiwan as of Dec. 31, 2024	Profit/ Loss of Investee	Percentage of Ownership (Direct or Indirect Investment)	Share of Profit/Loss	Carrying Amount as of Dec. 31, 2024 (Note 3)	Accumulated Inward Remittance of Earnings as of Dec. 31, 2024	Accumulated Outflow of Investment from Taiwan to Mainland China as of Dec. 31, 2024	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment in China by Investment Commission , MOEA
					Outflow	Inflow
DONG GUAN PRIME ELECTRONICS FACTORY (Note 4)	Production and processing of other static converters	$-	(Note 1 and 4)	$1,745	$-	$-	$1,745	(Note 4)	(Note 4)	(Note 4)	(Note 4)	$-	$979,979	$979,979	$760,240
CHENGDU ORBSAT ELECTRONICS CO.,LTD (Note 5)	Production and sales of other static converters	$-	(Note 1 and 5)	$10,872	$-	$-	$10,872	(Note 5)	(Note 5)	(Note 5)	(Note 5)	$-
PRO BROADBAND (SHENZHEN) LTD. (Note 6)	Production and sales of color television receivers, antenna, and various antenna reflecto	$30,920	(Note 1 and 6)	$30,920	$-	$-	$30,920	$1,998	100%	$1,998 (Note 2)	$60,745 (Note 2)	$-

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. · LTD (Note 7)	Production and sales of color television receivers, antenna, and various antenna reflector	$80,000	(Note 1 and 7)	$68,234	$-	$-	$68,234	($17,049)	100%	($17,049) (Note 2)	$314,672 (Note 2)	$178,000
PRIME BROADBAND (SHENZHEN) INC (Note 8)	Production and sales of set-up box and wireless information products	$169,467	(Note 1 and 8)	$169,467	$-	$-	$169,467	($28)	100%	($28) (Note 2)	$375,975 (Note 2)	$12,371
DONG GUAN PRIMESAT INSTRUMENT INC. (Note 9)	Production and sales of satellite communication antenna	$211,969	(Note 1 and 9)	$26,327	$-	$-	$26,327	(Note 9)	(Note 9)	(Note 9)	(Note 9)	$-
DONG GUAN PRIME ELECTRONICS & SATELLITICS INC. (Note 10)	Production and sales of audio and video decoder equipment, broadband radio access network communication system equipment, wireless LAN equipment and electronics products	$634,730	(Note 1 and 10)	$634,730	$-	$-	$634,730	($29,820)	100%	($29,820) (Note 2)	$438,916 (Note 2)	$-
DONG GUAN MING JU FENG PACKAGING AND PRINTING.,LTD (Note 11)	Production and sales of paper products	$79,881	(Note 1 and 11)	$37,684	$-	$-	$37,684	(Note 11)	(Note 11)	(Note 11)	(Note 11)	$-

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Note 1: Investments in investees in Mainland China through a holding company registered in a third region.

Note 2: Financial statements audited and attested by the CPA of the parent company in Taiwan.

Note 3: Amounts denominated in foreign currencies were translated into the amounts in New Taiwan Dollars based on exchange rate of the balance sheet date.

Note 4: DONG GUAN PRIME ELECTRONICS FACTORY is a factory of processing supplied materials, which was established in Mainland China by Prime International Services Ltd., a subsidiary 100% owned by the Company. The factory of processing supplied materials has been cancelled on December 15, 2011.

Note 5: CHENGDU ORBSAT ELECTRONICS CO.,LTD is an investee 100% held by Orbsat International L.L.C., a subsidiary 100% owned by the Company. The company has been liquidated in June, 2013.

Note 6: PRO BROADBAND (SHENZHEN) LTD. is an investee 100% held by Pro Broadband (B.V.I.) Inc., a subsidiary 100% owned by the Company.

Note 7: BEIJING JAEGER COMMUNICATION ELECTRONIC TECHNOLOGY CO., LTD. is an investee 100% held by Pro Broadband (B.V.I.) Inc., a subsidiary 100% owned by the Company.

Note 8: PRIME BROADBAND (SHENZHEN) INC. is an investee 100% held by Prime International Developments Ltd., a subsidiary 100% owned by the Company.

Note 9: DONG GUAN PRIMESAT INSTRUMENT INC is an investee 20% held by Prime International Developments Ltd., a subsidiary 100% owned by the Company, which is recognized in investments accounted for using equity method. The Company has transferred the 20% of ownership by the amount of NT$20,917 thousand in August, 2017, and the transfer has been approved by the letter from investment commission, MOEA with reference No. Investment-Committee-Auditing-II-10600250840.

Note 10: DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC. is an investee 100% held by Prime International Developments Ltd., a subsidiary 100% owned by the Company, which is recognized in investments accounted for using equity method.

Note 11: DONG GUAN MING JU FENG PACKAGING AND PRINTING.,LTD is an investee 100% held by RUI ZHAO FENG CO., LTD, a subsidiary 48% owned by Prime International Developments Ltd. a subsidiary 100% owned by the Company, which is recognized in investments accounted

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

for using equity method. The Company has transferred the 48% of ownership by the amount of NT$726 thousand in August, 2017, and the transfer has been approved by the letter from investment commission, MOEA with reference No. Investment-Committee-Auditing-II-10400006540.

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese
PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

B. Service revenue : Please refer to attachment 7 for details.

C. Purchase and balances of related accounts payable as of December 31, 2025 : Please refer to attachment 7 for details.

D. Sale and balance of related accounts receivable as of December 31, 2025 : Please refer to attachment 5 and 6 for details.

E. Property transaction amounts and resulting gain or loss : None.

F. Ending balance of endorsements/guarantees or collateral provided and the purposes : None.

G. Maximum balance, ending balance, interest rate range and total interest for current period from financing provided to others : Please refer to attachment 4 for details.

H. Transactions that have significant impact on profit or loss of current period or the financial position, such as services provided or rendered : Please refer to attachment 7 for details.

I. Above transactions are eliminated upon preparation of consolidated financial statements. Please refer to attachment 7 for details.

14 \ OPERATING SEGMENT

(1) The revenue of the Group is principally arising from the manufacture, processing and sales of satellite communication equipment, wired communication equipment, and wireless communication equipment. Since those are in a single industry, disclosure of industrial information is not applicable.

(2) Geographical information

(a) Revenues from external customers :

	2025	2024
U.S.A.	$904,498	$923,118
Taiwan	240,719	242,748

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

(Amounts Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Switzerland	123,286	415,387
China	150,335	144,434
Malaysia	76,753	355,786
Other countries	75,806	187,087
Total	$1,571,397	$2,268,560

Note : The revenue information above is based on the location of the customers.

(b) Non-current assets :

	December 31, 2025	December 31, 2024
Taiwan	$142,554	$155,507
China	458,374	492,358
Total	$600,928	$647,865

Name of customers	2025	2024
Customer A	$901,305	$915,177
Customer B	(Note)	415,387
Customer C	(Note)	355,786

Note: As the net sales revenue from this customer in 2025 did not reach 10% of the Group's total net operating revenue, disclosure is not required and will be omitted.

Attachment 1

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION. and Subsidiaries

Marketable Securities Held (Excluding Investments in Subsidiaries, Associates and Joint Ventures)

As of December 31, 2025

(In Thousands of New Taiwan Dollars)

Name of Held Company	Type and Name of Marketable Securities	Relationship with the Issuer	Financial Statement Account	As of December 31, 2025
				Shares / Units	Carrying Amount	Shareholding %	Fair Value
PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Stock
	ACCFAST TECHNOLOGY CORP.	-	Financial assets at fair value through other comprehensive income, noncurrent	277,766	$10,000	11.11%	$-
	Strong-Wave Radio Technology Inc.	This company serves as a director of that company.	Financial assets at fair value through other comprehensive income, noncurrent	509,805	16,177	9.78%	16,177
			Less: Valuation adjustments of financial assets at fair value through other comprehensive income, noncurrent		(10,000)
			Total		$16,177		$16,177

Attachment 1-1

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION. and Subsidiaries

Marketable Securities Held (Excluding Investments in Subsidiaries, Associates and Joint Ventures)

As of December 31, 2025

(In Thousands of New Taiwan Dollars)

Name of Held Company	Type and Name of Marketable Securities	Relationship with the Issuer	Financial Statement Account	As of December 31, 2025				Note
				Shares / Units	Carrying Amount	Shareholding %	Fair Value
Pro Broadband (B.V.I.) Inc.	Money market funds		Financial assets at fair value through profit or profit or loss, current	2.37	$157	-%	$157	-
Prime International Developments Ltd.	UBS (Lux) Equity Fund	-	Financial assets at fair value through profit or profit or loss, current	2.37	$157	-%	$157	-
Add : Valuation adjustments					-
Total					$314		$314

ENGLISH TRANSLATION OF CONSOLIDATED FINANCIAL STATEMENTS UITGIBALITY ISSUED IN CHINESE

PRIME ELECTRONICS AND SATELLITICS INCORPORATION, and Subsidiaries

Related Party Transactions with Purchase or Sales Amount of At least NTS 100 Million or 20% of the Paid-in Capital

For the Year Ended December 31, 2025

Attachment 2

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Transaction Details				Abnormal Transaction		Notes/ Accounts Payable or Receivable		Note
			Purchase/Sale	Amount	% to Total	Payment/ Collection Term	Unit Price	Payment/ Collection Term	Ending Balance	% to Total
PRIME ELECTRONICS AND SATELLITICS INCORPORATION,	Prime International Services Ltd.	Subsidiary	Purchase	$1,344,677	91.68%	Mutual offset of receivables and payables.	A single vendor cannot be compared	The typical payment terms for vendors are 30-115 days after the monthly settlement.	$-	-%	Note 1

Note 1: Transactions are eliminated when preparing the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese

PRINE ELECTRONICS AND SATELLITICS INORPORATION, and Subsidiaries

Attachment 3

Investees over Which the Company Exercise Significant Influence or Control Directly or Indirectly (Excluding Investees in Mainland China)

As of December 31, 2015

(In Thousands of Foreign Currency / New Taiwan Dollars)

Investor	Investee	Business Location	Main Business and Product	Original Investment Amount		Ending balance			Net Income(Loss) of the Investee	Share of Income(Loss) of the Investee	Note
				As of December 31, 2015	As of Dec. 31, 2014	Shares	%	Carrying Value
PRINE ELECTRONICS AND SATELLITICS INORPORATION.	Prime International Services Ltd.	House of Francis, Room 303, Ile Du Port, Wube, Seychelles	Processing and sales of electronic products	USD 10	USD 50	18,000	100.00%	$(337,196)	$(510)	$(510)	Note 1
PRINE ELECTRONICS AND SATELLITICS INORPORATION.	Prime International Developments Ltd.	3rd Floor, J & C Building, Wichhamo Car 1, Road Town, Tortola, British Virgin Islands	Investing activities	USD 28,809	USD 28,809	27,381,399	100.00%	822,783	(28,895)	(28,895)	Note 1
PRINE ELECTRONICS AND SATELLITICS INORPORATION.	Pro Broadband (B.V.I.) Inc.	3rd Floor, J & C Building, Wichhamo Car 1, Road Town, Tortola, British Virgin Islands	Investing activities	USD 2,996	USD 2,996	2,998,337	100.00%	(354,320)	(15,366)	(15,366)	Note 1
PRINE ELECTRONICS AND SATELLITICS INORPORATION.	KEVITONE SERVIOVANCTOR CORP.	S. Tse-Chiang 1st Road, Chang-Li Industrial Zone.	Radio modem integrated circuits design	NTD 65,584	NTD 65,584	4,583,493	65.48%	29,783	(1,223)	(801)	Note 1

Note 1: Transactions are eliminated when preparing the consolidated financial statements.

Attachment 4

PRIME ELECTRONICS AND SATELLITICS INCORPORATION AND SUBSIDIARIES

Loans to Others

For the Year Ended December 31, 2025

Expressed in thousands of New Taiwan Dollars

No. (Note 1)	Name of lender	Name of borrower	Account name (Note 2)	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Interest rate interval	Nature of financing (Note 3)	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Individual funding loan limits (Note 4)	Maximum limit of fund financing (Note 4)
													Item	Value
1	Pro Broadband Inc.	DONG GUAN PRIME ELECTRONICS AND	Other receivables	Y	$614,097	$321,959	$321,959	1.50%	2	$-	Operating turnover	$-	-	$-	$327,593	$327,593
2	PRO BROADBAND (SHENZHEN) LTD.	DONG GUAN PRIME ELECTRONICS AND	Other receivables	Y	$31,842	$31,302	$-	1.50%	2	$-	Operating turnover	$-	-	$-	$60,745	$60,745
2	PRO BROADBAND (SHENZHEN) LTD.	Pro Broadband (B.V.I.) Inc.	Accounts receivables	Y	$16,578	$15,690	$15,138	-%	2	$-	Operating turnover	$-	-	$-	$60,745	$60,745
3	PRIME BROADBAND (SHENZHEN) INC.	Pro Broadband (B.V.I.) Inc.	Other receivables	Y	$351,443	$332,628	$330,359	-%	2	$-	Operating turnover	$-	-	$-	$360,987	$360,987

Note 1: The No. column shall be filled as follows:
1. Issuer: 0
2. Investees: sequentially numbered from 1.

Note 2: All the accounts with financing nature, such as receivables from associates, receivables from related parties, stockholders' current account, prepayments, temporary payments, etc., shall be filled in the table.

Note 3: The column of nature of financing shall be filled as follows:
1. Companies or firms have business relations: 1
2. Companies or firms in need of short-term financing: 2

Note 4: The total amount loaned shall not exceed 100 percent of the Company's net worth on the most recent financial statements audited or reviewed by CPA.

Note 5: The amounts were eliminated in the consolidated financial statements.

AMKINA TRANSACTION OF CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY INVOLVED IN CHINESE

PRIME ELECTRONICS AND SATELLITICS INCOMPARATION, and Subsidiaries

Related Party Transactions with Purchase or Sales Amount of At least NT$ 100 Million or 20% of the Paid-in Capital

For the Year Ended December 31, 2021

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Transaction Details				Abnormal Transaction		Notes/ Accounts Payable or Receivable		Note
			Purchase/ Sale	Amount	% to Total	Payment/ Collection Term	Unit Price	Payment/ Collection Term	Ending Balance	% to Total
Prime International Services Ltd.	PRIME ELECTRONICS AND SATELLITICS INCOMPARATION.	Parent and subsidiary	Sales	$1,344,677	88.32%	Mutual offset of receivables and payables.	A single customer cannot be compared	A single customer cannot be compared	$ -	-%	Note 1
DONG GEAN Prime Electronics & SATELLITICS INC.	Prime International Services Ltd.	Also a subsidiary under the Company's control	Sales	$1,322,423	97.69%	Mutual offset of receivables and payables.	Product specifications are different and cannot be reasonably compared.	cannot be reasonably compared.	$447,991	99.38%	Note 1

Note 1: Transactions are eliminated when preparing the consolidated financial statements.

Attachments 6

PRIME ELECTRONICS AND SATELLITICS INCORPORATION AND SUBSIDIARIES

Receivables from Related Parties Reaching NT$100 Million or 20% of Paid-in Capital or More

As of December 31, 2025

Expressed in thousands of New Taiwan Dollars

The Company with accounts receivables	Counter-party	Relationship	Balance of receivables from related parties	Turnover rate	crude receivables from related par
					Amount	Collection status
PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Pro Broadband (B.V.I.) Inc.	PRIME ELECTRONICS AND SATELLITICS INCORPORATION's subsidiary	Dividends Receivable
$161,179
(Note 1)	-	$-	-	$161,179	$-
PRIME BROADBAND (SHENZHEN) INC.	Pro Broadband (B.V.I.) Inc.	PRIME ELECTRONICS AND SATELLITICS INCORPORATION's subsidiary and sub-subsidiary	Other receivables
$330,359
(Note 1)	-	-	-	-	-
DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	Prime International Services Ltd.	PRIME ELECTRONICS AND SATELLITICS INCORPORATION's subsidiary and sub-	Accounts receivable
$447,991
(Note 1)	2.92	-	-	268,341	-
Prime International Services Ltd.	Pro Broadband (B.V.I.) Inc.	PRIME ELECTRONICS AND SATELLITICS INCORPORATION's subsidiary	Other receivables
$407,435
(Note 1)	-	-	-	-	-
Pro Broadband (B.V.I.) Inc.	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. · LTD	PRIME ELECTRONICS AND SATELLITICS INCORPORATION's subsidiary and sub-subsidiary	Other receivables
$183,898
(Note 1)	-	-	-	85	-
BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. · LTD	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	PRIME ELECTRONICS AND SATELLITICS INCORPORATION's sub-subsidiary	Other receivables
$325,274
(Note 1)	-	-	-	7,253	-

Note 1 : The amounts were eliminated in the consolidated financial statements.

Attachments 7

PRIME ELECTRONICS AND SATELLITICS INCORPORATION AND SUBSIDIARIES

Business Relationships Among the Parent Company and Subsidiaries, and Significant Intercompany Transactions

Expressed in thousands of New Taiwan Dollars

No. (Note 1)	Name of company	Name of counter-party	Relationship (Note 2)	Intercompany Transaction
				Account name	Amount	Trading terms	Percentage accounting for the consolidated total revenue or total assets (Note 3)
	2025
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Prime International Services Ltd.	1	Purchase of goods	$1,344,677	Note 5	85.57%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Prime International Services Ltd.	1	Purchase on behalf of others	18,960	Note 5	1.21%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Prime International Services Ltd.	1	Service revenue	8,271	Note 5	0.53%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Pro Broadband (B.V.I.) Inc.	1	Purchase of goods	47	Note 5	-%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	KeyStone Semiconductor Corp. (Note 4)	1	Purchase on behalf of others	43,778	Note 5	2.79%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	KeyStone Semiconductor Corp.	1	Rental income	420	Note 5	0.03%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	KeyStone Semiconductor Corp.	1	Other revenue	8,002	Note 5	0.51%
1	Prime International Services Ltd.	Pro Broadband (B.V.I.) Inc.	3	Purchase of goods	780	Note 5	0.05%
1	Prime International Services Ltd.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Purchase on behalf of others	5,730	Note 5	0.36%
1	Prime International Services Ltd.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Purchase of goods	1,322,423	Note 5	84.16%
1	Prime International Services Ltd.	KeyStone Semiconductor Corp.	3	Purchase of goods	1,044	Note 5	0.07%
2	Pro Broadband (B.V.I.) Inc.	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	1	Purchase of goods	359	Note 5	0.02%
2	Pro Broadband (B.V.I.) Inc.	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	1	Purchase on behalf of others	209	Note 5	0.01%
2	Pro Broadband (B.V.I.) Inc.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Purchase on behalf of others	11,696	Note 5	0.74%
3	PRO BROADBAND (SHENZHEN) LTD.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Interest revenue	65	Note 5	-%
3	PRO BROADBAND (SHENZHEN) LTD.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Service revenue	87	Note 5	0.01%
4	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Purchase of goods	1,244	Note 5	0.08%
4	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Interest revenue	7,634	Note 5	0.49%
5	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	3	Purchase of goods	15	Note 5	0.00%
5	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	3	Rental income	2,600	Note 5	0.17%

Attachment-7-1

PRIME ELECTRONICS AND SATELLITICS INCORPORATION AND SUBSIDIARIES

Business Relationships Among the Parent Company and Subsidiaries, and Significant Intercompany Transactions

Expressed in thousands of New Taiwan Dollars

No. Note 1	Name of company	Name of counter-party	Relationship (Note 2)	Intercompany Transaction
				Account name	Amount	Trading terms	Percentage accounting for the consolidated total revenue or total assets (Note 3)
	2025
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Prime International Services Ltd.	1	Prepayments	$452,434	Note 5	15.50%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Prime International Developments Ltd.	1	Other payables	7,742	Note 5	0.27%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Pro Broadband (B.V.I.) Inc.	1	Prepayments	34,203	Note 5	1.17%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	Pro Broadband (B.V.I.) Inc.	1	Dividends Receivable	161,179	Note 5	5.52%
0	PRIME ELECTRONICS AND SATELLITICS INCORPORATION	KeyStone Semiconductor Corp.	1	Contract liability	11,467	Note 5	0.39%
1	Prime International Services Ltd.	Pro Broadband (B.V.I.) Inc.	3	Other receivables	407,435	Note 5	13.96%
1	Prime International Services Ltd.	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	3	Other receivables	90,530	Note 5	3.10%
2	Pro Broadband (B.V.I.) Inc.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Other receivables	47,291	Note 5	1.62%
2	Pro Broadband (B.V.I.) Inc.	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	3	Other receivables	183,898	Note 5	6.30%
3	PRO BROADBAND (SHENZHEN) LTD.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Other receivables	44,200	Note 5	1.51%
3	PRO BROADBAND (SHENZHEN) LTD.	Pro Broadband (B.V.I.) Inc.	3	Accounts receivables	15,138	Note 5	0.52%
4	BEIJING JAEGER COMMUNICATION ELECTRONICS TECH LOGY CO. - LTD	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Other receivables	325,274	Note 5	11.14%
5	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	Prime International Services Ltd.	3	Accounts receivables	447,991	Note 5	15.34%
6	PRIME BROADBAND (SHENZHEN) INC.	Pro Broadband (B.V.I.) Inc.	3	Other receivables	330,359	Note 5	11.32%
6	PRIME BROADBAND (SHENZHEN) INC.	DONG GUAN PRIME ELECTRONICS AND SATELLITICS INC.	3	Other receivables	46,130	Note 5	1.58%

Note 1: Business relationships among the parent company and subsidiaries, and significant intercompany transactions shall be filled in the No. column as the way below :
1. The parent company:0
2. Subsidiaries: sequentially numbered from 1.

Note 2 : There are three types of intercompany relationships. Please indicate the type by numbers :
1. Parent company to subsidiary
2. Subdisidary to parent company
3. Subsidiary to subsidiary

Note 3 : Concerning the calculation of percentage accounting for the consolidated net revenue or total assets, for assets and liabilities, the percentage shall be calculated by the ending balance accounting for the consolidated total assets.

For profit or loss, the percentage shall be calculated by the cumulative amount accounting for consolidated total revenue.

Note 4 : KeyStone Semiconductor Corp. purchased goods from Dong Guan Prime Electronics and Satellitics Inc. through Primd Electronics and Satellitics Inc. for an amount of 36,988 thousand.

Note 5 : Transactions with related parties are conducted based on mutually agreed prices and terms, as no comparable transactions of a similar nature are available. The settlement terms involve the offsetting of receivables and payables.

AI assistant

PRIME — Audit Report / Information 2025

52512_rns_2026-05-21_3b54bb05-a7b3-4ef8-9c6a-ab4eee31e357.pdf

PRIME ELECTRONICS & SATELLITICS INC. and Subsidiaries

MANAGEMENT REPRESENTATION LETTER

安永聯合會計師事務所

Independent Auditors' Report

Opinion

Basis for Opinion

Key Audit Matters

Revenue recognition

Market valuation on Inventory

Financial Statements

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Others

1 HISTORY AND ORGANIZATION

2 DATE AND PROCEDURE OF AUTHORIZATION FOR FINANCIAL STATEMENTS ISSUANCE

3 NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of compliance

(2) Basis of preparation

(3) Basis of consolidation

Preparation principle of consolidated financial statements

Financial asset measured at fair value through profit or loss

Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at amortized cost

Derecognition of financial liabilities

(e) Offsetting of financial instruments

(9) Fair value measurement

(12) Property, plant and equipment

Group as a lessee

Group as a lessor

Sale of goods

(18) Borrowing costs

5 SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

(1) Judgement

A. Investment property, net

B. Operating Lease Commitments - Company as Lessor

(2) Estimates and assumptions

A. Fair value of financial instruments

B. Accounts receivables - estimation of impairment loss

C. Inventory

D. Post-employment benefitS

E. Income tax

6 \ CONTENTS OF SIGNIFICANT ACCOUNTS

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements (Continued)

Defined benefits plan

(18) Equity

A. Common stock

B. Capital surplus

C. Appropriation of earnings and dividend policies

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

(b) Dividend policies

(c) Legal reserve

(d) Cash outflow relating to leasing activities

B. Group as a lessor

E. Deferred tax assets not recognized

7. RELATED PARTY TRANSACTIONS

(1) Related parties and Relationship

(2) Significant transactions with related parties

(3) Salaries and rewards to key management of the Group

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS

10. LOSSES DUE TO MAJOR DISASTERS

11. SIGNIFICANT SUBSEQUENT EVENT

12. OTHERS

Interest rate risk

Equity price risk

(4) Credit risk management

Non-derivative financial instruments

(6) Movement schedule of liabilities arising from financing activities

(7) Fair values of financial instruments

English Translation of Consolidated Financial Statements and Footnotes Originally Issued in Chinese

PRIME ELECTRONICS AND SATELLITICS INCORPORATION and Subsidiaries

14 \ OPERATING SEGMENT

PRIME ELECTRONICS AND SATELLITICS INCORPORATION AND SUBSIDIARIES

PRIME ELECTRONICS AND SATELLITICS INCORPORATION AND SUBSIDIARIES

PRIME Audit Report / Information 2025