2024Q4 Financial Statements Standalone

Stock Code : 6168

Harvatek Corporation

Parent Company Only Financial Statements for the

Years Ended December 31, 2024, and

2023 and

Independent Auditors' Report

Address: No. 18, Ln. 522, Sec. 5, Zhonghua Rd., Hsinchu City

Tel No.: (03) 539-9889

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

Table of contents

consolidated financial statements

1. New standards, amendments, and interpretations adopted

2. Summary of significant accounting policies

3. Critical accounting judgments and key sources of estimation uncertainty

4. Explanation of Significant Accounting Items

5. Transactions with related parties

6. Assets pledged as collateral or for security

7. Significant contingent

   liabilities and unrecognized commitments

   13～ 17 3

   17～ 29 4

   30 5

   31～ 58 6～ 26

   58～ 63 27

   63 28

   63 29

8. Losses due to major disasters - -

9. Significant subsequent events - -

10. Others 64 30

11. Separately disclosed items

    1. Information about significant transactions

       65、66 ～ 67 31

    2. Information on investees 65、68 31

    3. Information on investments in mainland China

    4. Information on major shareholders

9. Detailed List of Significant Accounting Items

65、69 -

65、70 31

71～ 84 -

The Board of Directors and Shareholders Harvatek Corporation

We have audited the accompanying financial statements of Harvatek Corporation (collectively referred to as the "Company"), which parent company only balance sheets as of December 31, 2024, and 2023, parent company only statements of comprehensive income, parent company only statements of changes in equity, and parent company only statements of cash flows individual, and the notes to the parent company only financial statements individual statements, including a summary of significant accounting policies (collectively referred to as the "financial statements").

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and 2023, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China ("ROC").

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the parent company only financial statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the Company for the year ended December 31, 2024. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The description of the key audit matter of the Company's parent company only financial statements for the year ended December 31, 2024, is as follows:

Recognition of Revenue from Sales

In the fiscal year 2024, the main source of revenue for the Company is sales revenue from goods. Due to the decrease in demand in the light-emitting diode (LED) market in fiscal year 2024, the Company identified the sales revenue from customers with significant growth as a potential source of material fraud risk. Therefore, the auditor categorized the recognition of this revenue as a key audit matter and performed the following audit procedures in response to the risks associated with these customers:

1. We reviewed and tested the relevant internal control systems and operating procedures of the sales transaction cycle to confirm and assess the effectiveness of internal controls when conducting sales transactions.

2. For the sales transactions involving the potentially risky sales entities identified above, we selected samples for testing and conducted sampling audits. We examined customer and external supporting documents to confirm the authenticity of sales revenue. Additionally, we investigated whether there were any abnormalities in the collection of payments from these sales entities after the period ended.

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

2. 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 Company's internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

   estimates and related disclosures made by management.

4. 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent company only financial statements. or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure, and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the invested company adopting the equity method to express an opinion on the parent company only 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2024, 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.

Deloitte & Touche

Accountant: Fang Su-lie Accountant: Zhang Ya-Yun

Financial Supervisory Commission Approved-certified No.:

Tai-Cai-Zheng-Liu-Certificate No. 0940161384

Financial Supervisory Commission Approved-certified No.:

Jin-Guan-Certificate No. 1110348898

March 25, 2025

Harvatek Corporation

PARENT COMPANY ONLY BALANCE SHEETS

DECEMBER 31, 2024 AND 2023

(In Thousands of New Taiwan Dollars)

December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023

CODE ASSETS Amount ％ Amount ％ CODE LIABILITIES AND EQUITY Amount ％ Amount ％

CURRENT ASSETS CURRENT LIABILITIES

1100 Cash and cash equivalents (Note 4, 6, and 26) $ 352,650 9 $ 585,315 16 2130 Current contract liabilities（Note 4, 21） $ 61,578 2 $ 73,575 2

1136 Financial assets at amortized cost (Note 4, 766,632 21 601,632 16 2170 Account payables (Note 26) 267,391 7 218,904 6

9 and 26) 2180 Accounts payable-related parties (Note 26 and

27) 18,652 - 13,075 -

1170 Net accounts receivable(Note 4, 5, 10, 21 and

26 375,742 10 354,654 9

2200 Other Payables (Note 18 and 26)

2220 Other payables-related parties (Note 18, 26

171,165 5 170,702 5

and 27) 130 - - -

1180 Accounts receivable - related parties, net 2230 Current tax liabilities (Note 4 and 23) - - 14,467 -(Note 4, 5, 10, 21, 26, and 27) 27,006 1 16,746 - 2250 Liability Reserves 3,430 - 2,325 -

2280 Lease liabilities-current (Note 4, 14 and 26) 3,264 - 3,852 -

1200 Other receivables(Note 10 and 26) 5,753 - 4,287 - 2300 Other current liabilities (Note 18) 12,505 - 4,256 -1210 Other receivables - related parties (Note 21XX Total current liabilities 538,115 14 501,156 13

10, 26, and 27） 23,508 1 25,279 1

1220 Current tax assets(Note 4 and 23) 2,094 - 6,900 -

130X Inventories(Note 4, 5 and 11) 357,582 10 296,053 8 NON-CURRENT LIABILITIES

1410 Prepayments(Note 17 and 27) 33,064 1 9,870 -

1470 Other current liabilities 39 - - - 2540 Long-term notes payable - related parties 1482 Cost to fulfill contracts - current(Note 21) 4,155 - 452 - (Notes 26 and 27)

11XX Total current assets 1,948,225 53 1,901,188 50 2570 Deferred income tax liabilities (Notes 4 and

23)

2580 Lease Liabilities - Non-current (Note 4, 14,

and 26)

NONCURRENT ASSETS 2640 Net Defined Benefit Liabilities (Notes 4 and

19)

1510 Non-current financial assets at fair value

through profit or loss(Note 4, 7, and 26) 1517 Non-current financial assets at fair value

Through other comprehensive income(Note

4, 8, and 26) 438,012 12 455,219 12

1535 Financial assets measured at amortized

2XXX Total liabilities

679,976 18 646,945 17

1940 Long-term receivables - installment

payments from related parties (Notes 26 and 27）

1990 Other non-current assets (Notes 4, 17, and 26) 15XX Total non-current assets

1XXX TOTAL

The accompanying notes are an integral part of the parent company only f inancial s tatements. ( Please refer to the audit report issued by Deloitte & Touche on March 25 , 2025 )

Chairman: Wang, Ping - Lung Manager: Wang, Ping - Lung Accounting Supervisor: Su Yu - Hui

Harvatek Corporation

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2024, AND 2023

( In Th o u san d s o f New Taiwa n Do l l a r s , Ex cep t Earn i n g s Per Sh a re)

2024 2023

OPERATING EXPENSES (Note 4, 10, 22 and 27)

NON-OPERATING INCOME AND EXPENSES(Note 22)

（ Continued）

（ Continued）

2024 2023

EARNINGS PER SHARE（Note

24）

The accomp anying notes are an integ ral p art o f the p arent co mpany only f in ancial statements. ( Please refer to the audit report i ssu ed by Deloitte & Touche on March 25 , 2025 )

Ch a i rman : Wang , Pin g - Lu n g M an ag e r : Wan g , Pin g - Lun g Acco u n t i n g Su perv i sor: Su Yu - Hu i

Harv atek Corporation

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

( In Th o u san d s o f New Taiwa n Do l l a r s , Ex cep t Earn i n g s Per Sh a re)

L3 Repurchase of treasury stock

L7 The disposal of the parent company's shares by a subsidiary is treated as a treasury stock transaction

Q1 Disposal of equity instruments measured at fair value

- - 8,976 - ( 8,976 ) - -

( 7,399 ) - ( 11,178 ) - - - ( 18,577 ) 489,514 138,410 201,042 ( 110 ) 235,917 ( 5,521 ) 3,119,950

(

(

The accomp anying notes are an integ ral p art o f the p arent co mpany only f in ancial statements. ( Please refer to the audit report i ssu ed by Deloitte & Touche on March 25 , 2025 )

Chairman: Wang, Ping - Lu ng Manag er: Wang, Ping - Lung Accounting Supervisor: Su Yu - Hui

Harvatek Corporation

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

( In Thousands of New Taiwan Dollars)

（ Continued）

（ Continued）

Th e accomp anying notes are an integral part of th e parent co mpany only f in ancial statements. ( Please refer to the audit report i ssu ed by Deloitte & Touche on March 25 , 2025 )

Ch a i rman : Wang , Pin g - Lu n g M an ag e r : Wan g , Pin g - Lu ng Acco u n t i ng Su p e rv i so r : Su Yu - Hu i

Harvatek Corporation

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

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

1. COMPANY HISTORY

   Harvatek Corporation ( hereinafter referred to as "the Company") was established on March 21, 1995, and primarily engaged in the research, development, design, manufacturing, testing, and import - export trade of light-emitting diode packaging.

   The Company's shares have been l isted and traded on the Taiwan Stock Exchange since August 25, 2003.

   The parent company only financial statement is presented in New Taiwan Dollars (TWD), which is the functional currency of the Company.

2. APPROVAL DATE AND PROCEDURES OF THE CONSOLIDATED FINANCIAL STATEMENTS

   The parent company only financial statements were approved by the Board of Directors and authorized for issue on March 7, 2025.

3. NEW STANDARDS, AMENDMENTS, AND INTERPRETATIONS ADOPTED:

   1. Initial application of the International Financial Reporting Standards (IFRS), International Accounting Standards ( IAS), Interpretations of IFRS ( IFRIC), and Interpretations of IAS (SIC) (collectively, the "IFRSs") endorsed and issued into effect by the Financial Supervisory Commission (FSC).

      1. Amendments to IAS 1 "Classification of Liabilities as Current or Non- current" (2020 amendments) and "Non- current Liabilities with Covenants" ( 2022 amendments)

         The 2020 amendments clarify that when determining whether a liability should be classified as non- current, the Company should assess whether it has the right to defer settlement of the liability for at least twelve months after the reporting period. If the Company has such a right at the end of the reporting period, the liability is classified as non- current regardless of whether the Company expects to exercise that right.

         The 2020 amendments also specify that if the Company's right to defer settlement is subject to compliance with specified conditions, the Company must comply with those conditions at the end of the reporting period, even if the lender does not test compliance until a later date. The 2022 amendments further clarify that only covenant requirements that must be complied with before the end of the reporting period affect the classification of a liability. Although covenant requirements that must be complied wi th within twelve months after the reporting period do not affect the classification of a

         liability, related information must be disclosed to enable users of financial statements to understand the risk that the Company may be unable to comply with the contractual terms and may have to repay within twelve months after the reporting period.

         The 2020 amendments stipulate that for the purpose of l iability classification, the aforementioned settlement refers to the transfer of cash, other economic resources, or the Company' s own equity instruments to the counterparty that results in the extinguishment of the l iability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by the transfer of the Company's own equity instruments, and if the option is recognized separately as equity in accordance with IAS 32 "Financial Instruments: Presentation", the aforementioned terms would not affect the classification of the liability.

   2. IFRSs endorsed by the Financial Supervisory Commission ( FSC) with an effective date starting 2025

      Interpretations

      (the "New IFRSs")

      Effective Date

      Announced by IASB

      Amendments to IAS 21 "Lack of Exchangeability" January 1, 2025 (Note 1) Amendments to IFRS 9 and IFRS 7 "Amendments to

      Classification and Measurement of Financial Instruments" regarding the revised application

      guidance on classification of financial assets January 1, 2026(Note 2)

      Note 1: Effective for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, comparative periods shall not be restated, and the effects shall be recognized in retained earnings or exchange differences on translation of foreign operations (as appropriate) and the related affected assets and liabilities at the date of initial application.

      Note 2: Effective for annual reporting periods beginning on or after January 1 , 2026, with early application permitted from January 1, 2025. Upon initial application of the amendments, retrospective application is required without restating comparative periods, and the effects of initial application shall be recognized at the date of initial application. However, if an entity can restate comparative periods without the use of hindsight, it may elect to do so.

      1. Amendments to IFRS 9 and IFRS 7 " Amendments to Classification and Measurement of Financial Instruments" regarding the revised application guidance on classification of financial assets

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

         1. When a financial asset contains a contingent feature that could change the timing or amount of contractual cash flows, and the nature of the contingency is not directly related to changes in basic lending risks and costs ( such as whether the borrower achieves a specific carbon emission reduction), the contractual

            cash flows of such financial assets are still solely payments of principal and interest on the principal amount outstanding if the following two conditions are met:

            • The contractual cash flows in all possible scenarios (before or after the contingent event occurs) are solely payments of principal and interest on the principal amount outstanding; and

            • The contractual cash flows in all possible scenarios do not significantly differ from the cash flows of a financial instrument with the same contractual terms but without the contingent feature.

         2. Clarification that a financial asset with non - recourse features refers to an entity's ultimate right to collect cash flows that is contractually limited to cash flows generated from specific assets.

         3. Clarification that contractually linked instruments establish multiple tranches of securities through a waterfall payment structure to establish payment priority for holders of financial assets, thereby creating credit risk concentration and resulting in disproportionate allocation of cash shortfalls from the underlying pool among different tranches of securities.

            Apart from the impact mentioned above, as of the date the parent company only financial statements were authorized for issue, the Company has assessed that the amendments to other standards and interpretations will not have a significant impact on the Company's financial position and financial performance.

   3. The IFRSs issued by IASB in issue but not yet endorsed and issued into effect by the FSC

      New, Amended, or Revised Standards and Interpretations

      Effective Date Announced by

      IASB (Note 1)

      "Annual Improvements to IFRS Standards - Volume 11" January 1, 2026

      Amendments to IFRS 9 and IFRS 7 "Amendments to Classification and Measurement of Financial Instruments" regarding the revised application guidance on derecognition of financial liabilities

      Amendments to IFRS 9 and IFRS 7 "Contracts Involving Nature-dependent Electricity"

      Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"

      January 1, 2026

      January 1, 2026 To be determined

      IFRS 17 "Insurance Contracts" January 1, 2023

      Amendments to IFRS 17 January 1, 2023

      Initial Application of IFRS 17 and IFRS 9- Comparative Information Proposed amendment to IFRS 17

      IFRS 18 "Presentation and Disclosure in Financial Statements"

      IFRS 19 "Subsidiaries without Public Accountability: Disclosures"

      January 1, 2023

      January 1, 2027

      January 1, 2027

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

      1. Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"

         These amendments stipulate that when the Company sells or contributes assets to an associate (or joint venture), or when the Company loses control of a subsidiary but retains significant influence (or joint control) over that subsidiary, if the aforementioned assets or former subsidiary meet the definition of a "business" under IFRS 3 "Business Combinations," the Company shall recognize the full amount of gains or losses arising from such transactions.

         Furthermore, when the Company sells or contributes assets to an associate (or joint venture), or when the Company loses control of a subsidiary in a transaction with an associate (or joint venture) but retains significant influence (or joint control) over that subsidiary, if the aforementioned assets or former subsidiary do not meet the definition of a " business" under IFRS 3, the Company shall recognize the gains or losses arising from such transactions only to the extent of unrelated investors' interests in the associate ( or joint venture), meaning that the portion attributable to the Company's share of the gain or loss should be eliminated.

      2. IFRS 18 "Presentation and Disclosure in Financial Statements"

         IFRS 18 will replace IAS 1 "Presentation of Financial Statements." The main changes include:

         • The income statement should classify income and expense items into operating, investing, financing, income tax, and discontinued operations categories.

         • The income statement should present operating profit or loss, profit or loss before financing and income tax, as well as subtotals and totals of profit or loss.

         • Guidance is provided to strengthen aggregation and disaggregation requirements: The Company must identify assets, liabilities, equity, income, expenses, and cash flows arising from individual transactions or other events, and classify and aggregate them based on common characteristics, so that each line item presented in the primary financial statements has at least one similar characteristic. Items with dissimilar characteristics should be disaggregated in the primary financial statements and notes. The Company shall label such items as "other" only when it cannot find a more informative label.

         • Enhanced disclosure of management - defined performance measures: When the Company communicates publicly outside financial statements and communicates management' s view of an aspect of the Company's overall financial performance to financial statement users, the Company shall disclose information about management-defined performance measures in a single note to the financial statements, including a description of the measure, how i t is calculated, its reconciliation to

         subtotals or totals specified by IFRS Standards, and the income tax and non- controlling interest effects of reconciling items.

      3. Amendments to IFRS 9 and IFRS 7 " Amendments to Classification and Measurement of Financial Instruments" regarding the revised application guidance on derecognition of financial liabilities

         These amendments mainly explain that when an entity uses an electronic payment system to settle financial liabilities in cash, the entity may choose to derecognize financial liabilities before the settlement date if the following conditions are met:

         • The entity has no practical ability to withdraw, stop, or cancel the payment instruction;

         • The entity has no practical ability to access the cash that will be used for settlement as a result of the payment instruction; and

         • The settlement risk associated with the electronic payment system is not significant.

         The Company shall apply these amendments retrospectively without restating comparative periods and recognize the effect of initial application at the date of initial application.

         As of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company's financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   1. Statement of compliance

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

   2. Basis of preparation

      In addition to financial instruments measured at fair value, investment properties, and net defined benefit liabilities recognized by deducting the fair value of plan assets, this parent company only financial report is prepared on a historical cost basis.

      Fair value measurements are categorized into Level 1 to Level 3 based on the degree of observability and significance of relevant inputs:

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

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

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

      When preparing the parent company only financial statements, the Company accounts for its investments in subsidiaries using the equity method. To reconcile the profit or loss, other comprehensive income, and equity of the current year of the parent company only financial statements with those of the Company's consolidated financial statements that are attributable to the Company's owners, certain accounting differences between the parent company only basis and the consolidated basis are adjusted in " Inves tment Accounted for Using

      Equity Method," "Share of Profit of Subsidiary Recognized Using Equity Method," "Share of Other Comprehensive Income of Subsidiary Recognized Using Equity Method," and related equity items.

   3. Classification of current and non -current assets and liabilities Current assets include:

      1. Assets held primarily for the purpose of trading;

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

      3. Cash and cash equivalents unless the assets are restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

      Current liabilities include:

      1. Liabilities held primarily for the purpose of trading;

      2. Liabilities due to be settled within 12 months after the reporting period; and

      3. Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the balance sheet date.

      Items not classified as current assets or current liabilities are categorized as non- current assets or non- current liabilities.

   4. Foreign currency

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

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

      Non-monetary i tems measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary i tems are included in profit or loss for the period except for exchange differences arising from the retranslation of nonmonetary i tems in respect of which gains and losses are recognized directly in other comprehensive income; in which case, the exchange differences are also recognized directly in other comprehensive income.

      Non-monetary i tems that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. In preparing the parent company only financial statements, assets and l iabilities of foreign operations ( including subsidiaries and affiliated entities operating in countries or using currencies different from the Company) are translated into New Taiwan Dollars at the exchange rates prevailing on each balance sheet date. Income and expenses are translated at the average exchange rates for the period, and the resulting exchange differences are recognized in other comprehensive income.

   5. Inventory

      Inventory includes raw materials, materials, finished goods, and work in progress. Inventory is measured at the lower of cost and net realizable value. When comparing cost and net realizable value, individual i tems are considered except for inventories of the same category. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The cost of inventory is calculated using the weighted average method.

   6. Investment in Subsidiaries

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

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

      Under the equity method, investments in a subsidiary are initially recognized at cost and adjusted thereafter to recognize the Company's share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company's share of the equity of i ts subsidiaries.

      Changes in the Company's ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of such investments and the fair value of the consideration paid or received.

      When the Company's share of losses of a subsidiary exceeds i ts interest in that subsidiary ( which includes any carrying amount of the investment accounted for using the equity method and long -term interests that, in substance, form part of the Company's net investment in the subsidiary), the Company continues recognizing i ts share of further losses. the cost of an acquisition over the Company's share of the net fair value of the identifiable assets and l iabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company's share of the net fair value of the identifiable assets and l iabilities over the cost of the acquisition is recognized immediately in profit or loss. When the Company acquires a subsidiary that does not constitute a business, the Company appropriately allocates the cost of acquisition to the Company's share of the amounts of the identifiable assets acquired ( including intangible assets) and l iabilities assumed, and the transaction does not give rise to goodwill nor gains.

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

      When the Company loses control of a subsidiary, i t recognizes the investment retained in the former subsidiary at i ts fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain

      or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or l iabilities.

      Profits or losses resulting from downstream transactions are eliminated in full only in the Company's parent company only financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the Company's parent company only financial statements to the extent of interests in the subsidiaries that are not related to the Company.

   7. Investments in associates

      An associate is an entity over which the Company has significant influence but is not a subsidiary or joint venture.

      The Company accounts for investments in associates using the equity method.

      Under the equity method, investments in associates are initially recognized at cost, and subsequently adjusted for the Company's share of the associates' profit or loss and other comprehensive income, as well as for any dividends received. Additionally, changes in the equity of associates are recognized based on the Company's ownership percentage.

      If the cost of investment exceeds the Company's share of the associates' identifiable net assets at the acquisition date, the excess is recognized as goodwill, which is included in the carrying amount of the investment and not subject to amortization. Conversely, if the Company's share of the associates' identifiable net assets at the acquisition date exceeds the cost of investment, the excess is recognized in profit or loss for the period.

      When associates issue new shares and the Company does not subscribe to them in proportion to its ownership interest, resulting in changes in the ownership interest and consequently the net equity of the investment, such changes are adjusted against the capital surplus - changes in equity of associates recognized under the equity method and the investment accounted for using the equity method. If the Company does not subscribe to or acquire shares leading to a decrease in the ownership interest in the associate, any amounts recognized in other comprehensive income related to the associate are reclassified based on the reduction in ownership proportion. This adjustment, if necessary, is debited to the capital surplus. If the balance in the capital surplus resulting from the investment accounted for using the equity method is insufficient, the difference is debited to retained earnings.

      When the Company's share of losses of an associate equals or exceeds its interest in the associate's equity (including the carrying amount of the investment in associates under the equity method and any other long-term interests that are part of the Company's net investment in the associate), further losses are not recognized. Additional losses and liabilities are recognized only to the extent of legal or constructive obligations or payments already made on behalf of the associate.

      When assessing impairment, the Compnay compares the carrying amount of the investment (including goodwill) to the recoverable amount of the investment as a single asset. Any impairment loss recognized is not allocated to any assets that form part of the carrying amount of the investment, including goodwill. Any reversals of impairment losses are recognized to the extent that the recoverable amount of the investment increases subsequently.When the Company ceases to use the equity method for an investment, the investment in the former associate is remeasured at fair value, with any difference between the fair value and the carrying amount of the investment at the date of discontinuation, along with the proceeds from disposal, recognized in profit or loss for the period. Additionally, any amounts recognized in

      other comprehensive income related to the former associate are accounted for on the same basis as if the associate had directly disposed of the assets or liabilities.

      Profits and losses resulting from transactions between the Company and its associates are recognized in the parent company only financial statements only to the extent that they do not relate to the Company's interest in the associates' equity.

   8. Property, plant, and equipment

      Property, plant, and equipment are recognized based on cost, and their value is subsequently measured by deducting accumulated depreciation and accumulated impairment losses from the cost.

      Except for land held for own use, depreciation on other property, plant, and equipment is recognized on a straight -line basis over their estimated useful lives, with each significant component depreciated separately. The Company reviews the estimated useful lives, residual values, and depreciation methods at least annually and defers the effects of changes in accounting estimates.

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

   9. Investment properties

      Investment properties are properties held for earning rental income, capital appreciation, or both.

      Owned investment property is initially measured at cost, which includes transaction costs. Subsequently, it is measured at cost less accumulated depreciation and accumulated impairment losses.

      Investment properties are depreciated on a straight -line basis.

      When investment properties are disposed of, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit and loss.

   10. Intangible assets

       1. Separately acquired

          Intangible assets with separately acquired finite useful l ives are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. The Company reviews the estimated useful lives, residual values, and amortization methods at least annually and adjusts for the effects of any changes in accounting estimates.

       2. Derecognition

       When an intangible asset is derecognized, any difference between the net disposal proceeds and the carrying amount of the asset is recognized in the current period's income statement.

   11. Impairment of property, plant and equipment, right -of- use assets, investment property, and intangible assets ( excluding goodwill)

       The Company evaluates at each balance sheet date whether there are any indications that property, plant and equipment, right -of-use assets, investment property, and intangible assets ( excluding goodwill) may be impaired. If any indication of impairment exists, the estimated recoverable amount of the asset is determined. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable

       amount of the cash-generating unit to which the asset belongs is estimated. Shared assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis.

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

       When an impairment loss is subsequently reversed, the carrying amount of the asset or cash- generating unit is increased to the revised recoverable amount, not exceeding the carrying amount that would have been determined had no impairment loss been recognized in prior years (net of amortization or depreciation). The reversal of an impairment loss is recognized in the income statement.

   12. Financial instruments

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

       When initially recognizing financial assets or financial liabilities that are not measured at fair value through profit or loss, their carrying amounts are measured at fair value plus transaction costs directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs are directly attributable to the acquisition or issue of financial assets or financial liabilities measured at fair value through profit or loss are recognized in profit or loss immediately.

       1. Financial assets

          Conventional transactions of financial assets are recognized and derecognized on a trade date basis.

          1. Measurement categories

             Financial assets of the Company are classified as financial assets at FVTPL, financial assets not measured at amortized cost, and debt instrument investment at FVTOCI.

             1. Financial asset at FVTPL

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

                Financial assets at FVTPL are measured at fair value with any resulting benefits or losses (including any dividends or interest) recognized in profit or loss. For the determination of fair value, please refer to Note 26.

             2. Financial assets at amortized cost

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

                1. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

                2. The contractual terms of the financial assets give rise on a specified date to cash flow that is solely payments of principal and interest on the principal amount outstanding.

                   Financial assets at amortized cost (including cash and cash equivalents, financial assets at amortized cost, accounts receivable (including those from related parties), other receivables (including those from related parties), and refundable deposits) are subsequently measured at amortized cost, which equals the gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

                   Except for the following two cases, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset:

                   1. Purchased or originated credit-impaired financial assets: for those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

                   2. 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 Company shall apply the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

                   Impairment of financial assets refers to the occurrence of significant financial difficulties, default, or a high likelihood of bankruptcy or another financial restructuring on the part of the issuer or debtor, or the disappearance of an active market for the financial asset due to financial difficulties.

                   Cash equivalents include highly liquid deposits with original maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value, and are used to meet short-term cash commitments.

             3. Equity investments measured at fair value through other comprehensive income

                Upon initial recognition, the Company has an irrevocable option to designate equity investments that are neither held for trading nor held for purposes of an association with another business entity as measured at fair value through other comprehensive income.

                Equity investments measured at fair value through other comprehensive income are initially and subsequently

                measured at fair value, with subsequent fair value changes recognized in other comprehensive income and accumulated in other equity. Upon disposal of the investment, the cumulative gain or loss is reclassified directly to retained earnings and not reclassified to profit or loss.

                Dividends from equity investments measured at fair value through other comprehensive income are recognized in profit or loss when the Company's right to receive payment is established unless the dividend represents a recovery of part of the investment's cost.

          2. Impairment of financial assets

             At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable).

             Accounts receivable are assessed for expected credit losses based on the period over which they are expected to be outstanding. For other financial assets, the Company first assesses whether the credit risk has significantly increased since initial recognition. If there is no significant increase, expected credit losses are recognized based on a 12 -month expected credit loss. If there is a significant increase, expected credit losses are recognized based on the period over which they are expected to be outstanding.

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

             The impairment loss for all financial assets is recognized by adjusting their carrying amounts through the allowance accounts.

          3. Derecognition of financial assets

             The Company only derecognizes financial assets when the contractual rights to receive cash flows from the financial assets have expired or when it has transferred the financial assets and has transferred substantially all the risks and rewards of ownership to another entity.

             When a financial asset measured at amortized cost is derecognized in its entirety, any difference between the carrying amount and the consideration received is recognized in profit or loss. When equity investments measured at fair value through other comprehensive income are derecognized in their entirety, the cumulative gain or loss is reclassified directly to retained earnings and not reclassified to profit or loss.

       2. Equity instruments

          The equity instruments issued by the Company are classified as equity in accordance with the substance of the contractual arrangements and the definition of equity instruments.

          The equity instruments issued by the Company are recognized at the amount received, net of directly attributable issuance costs.

          The repurchase of the Company's equity instruments are recognized and deducted from equity, and the carrying amount is calculated as the weighted average of the type of shares. Purchases, sales, issuances, or cancellations of the Company's equity instruments are not recognized in the profit or loss.

       3. Financial liabilities

          1. Subsequent measurement

             The effective interest method is used to measure all financial liabilities at amortized cost.

          2. De-recognition of financial liabilities

       When financial liabilities are derecognized, the difference between the carrying amount and the consideration paid (including any non-cash assets transferred or l iabilities assumed) is recognized in the profit or loss.

   13. Provisions

       The amount recognized as a provision is the best estimate of the expenditure required to settle the obligation as of the balance sheet date, taking into account the risks and uncertainties associated with the obligation. Provisions are measured at the present value of the estimated cash flows required to settle the obligation.

       1. Warranty:

       The obligation to provide warranty for products to ensure compliance with agreed specifications is recognized based on management's best estimate of the expenditure required to settle the Company's obligation, at the time the related goods are recognized as revenue.

   14. Revenue recognition

       After identifying performance obligations in customer contracts, the Company allocates transaction prices to each performance obligation and recognizes revenue when the performance obligations are satisfied.

       1. Revenue from the sale of goods

          The revenue from the sale of light - emitting diode (LED) products is recognized when the products are delivered to the customer's specified location or point of shipment ( depending on the terms of the contract). Customers have already established pricing and the right to use the products, assuming primary responsibility for resale and bearing the risk of obsolescence. At that point, the Company recognizes revenue and accounts receivable.

       2. Labor revenue

          The service provided by the Company primarily involves accepting customer commissions to provide product processing services. According to the contract agreement, ownership of the in-process products belongs to the customer. The Company enhances the in- process products during the processing process, and control is transferred to the customer upon enhancement, constituting service revenue that is recognized over time as performance obligations are gradually fulfilled.

          The majority of the contractual agreements of the Company involve receiving consideration based on the payment terms specified in the contract. When the services have been transferred to the customer but the unconditional right to receive consideration has not yet been established, contract assets are recognized. Contract assets are also subject to impairment assessment in accordance with IFRS 9, based on the expected credit loss amount over the expected life of the asset. However, for some contracts, where partial consideration is received from the customer at the t ime of signing and the Company still has an obligation to provide services thereafter, such consideration is recognized as contract liabilities.

          The period for which the aforementioned contract liabilities are recognized as revenue typically does not exceed one year and does not result in significant financial compositional changes.

       3. Engineering revenue

       The engineering revenue of the Company primarily involves providing integrated product services upon customer commission. The contract entails the integration of hardware equipment engineering and software services. Due to limitations imposed by hardware specifications and on- site conditions, these hardware and software integration services are highly interrelated. The Company cannot fulfill its commitments by independently transferring each product or service. Therefore, all products and services promised in the contract are treated as a single performance obligation. Regarding warranties for engineering quality provided within a specified period, the Company recognizes a l iability provision in accordance with IAS 37.

       The Company recognizes accounts receivable when the engineering project is completed, accepted, control is transferred, and there is an unconditional right to receive consideration. These accounts receivable typically have short durations and do not constitute significant financial components. If partial

       consideration has been received from customers for engineering contracts but there is still an obligation to provide goods or services thereafter, the Company recognizes contract liabilities, which are subsequently transferred to revenue upon fulfilling the performance obligation. When costs directly relate to specific contracts, and i t is expected that these costs will be recoverable and used to fulfill future performance obligations, the company recognizes these costs as contract fulfillment costs under assets. Revenue and costs are recognized when control is transferred to the customer to fulfill the performance obligation.

   15. Leases

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

       1. The Company as lessor

          Leases that transfer substantially all the risks and rewards incidental to ownership of an asset to the lessee are classified as finance leases, while all other leases are classified as operating leases.

          Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight -line basis over the terms of the relevant leases. The initial direct costs incurred due to obtaining operating leases are added to the carrying amount of the leased asset and recognized as expenses on a straight -line basis over the lease term.

       2. The Company as lessee

       Except for leases of low-value assets and short-term leases that qualify for recognition exemptions, lease payments for other leases are recognized on a straight -line basis over the lease term as expenses, and the right- of-use assets and lease liabilities are recognized at the commencement date of the lease.

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

       The right-of- use asset is depreciated on a straight-line basis from the lease commencement date to the earlier of the end of the useful life or the end of the lease term.

       The lease liability is initially measured at the present value of lease payments. If the implicit rate in the lease is readily determinable, the lease payments are discounted at that rate. If the implicit rate is not readily determinable, the lessee's incremental borrowing rate is used.

       Subsequently, the lease liability is measured using the effective interest method based on the amortized cost, and interest expense

       is recognized over the lease term. If changes in estimates for lease term, expected payments under residual value guarantees, assessment of purchase options for the leased asset, or changes in indices or rates used to determine lease payments result in changes to future lease payments, the Company reassesses the lease liability and adjusts the right -of- use asset accordingly. However, if the carrying amount of the right -of-use asset has been reduced to zero, any remaining adjustment is recognized in profit or loss. Lease liabilities are separately presented in the parent company only balance sheet.

   16. Employee benefits

       1. Short-term employee benefits

          The short-term employee benefits l iability is measured by the non-discounted amount expected to be paid in exchange for services rendered by employees.

       2. Retirement benefits

          The retirement benefits payable under the defined benefit retirement plan are recognized as an expense during the period in which the employees provide service, in the amount of the retirement benefits that are expected to be provided.

          The defined benefit obligation (including service cost, net interest, and remeasurement) is determined using the projected unit credit method. The service cost and the net defined benefit liability (asset) net interest are recognized as employee benefit expenses when they occur, either upon plan amendments or curtailments, or upon settlement. Remeasurement amounts (including actuarial gains and losses, changes in the asset ceiling, and the return on plan assets, excluding interest) are recognized in other comprehensive income when they occur and are subsequently not reclassified to profit or loss.

          The net defined benefit liability ( asset) represents the deficit (surplus) in the defined benefit retirement plan's funding. The net defined benefit asset may not exceed the present value of the refunds from the plan or the reductions in future contributions.

   17. Income tax

       The income tax expense represents the sum of the tax currently payable and deferred tax.

       1. Current tax

          The current income tax (expense) is calculated based on the current income (loss) determined in accordance with the tax regulations of the tax jurisdiction where the Company operates, which is used to calculate the payable ( recoverable) income tax.

          The income tax on retained earnings calculated in accordance with the Income Tax Act of Republic of China is recognized annually based on the resolution of the shareholders' meeting.

          Adjustments for prior- year income taxes payable are included in the current year's income tax expense.

       2. Deferred tax

       Deferred income tax is calculated based on the temporary differences that arise from the carrying amount of assets and liabilities and the taxable basis for calculating taxable income.

       Deferred tax liabilities are generally recognized for all taxable temporary differences, while deferred tax assets are recognized when it is probable that taxable income will be available against which the deductible temporary differences or tax loss carryforwards can be utilized, such as for deductible temporary differences or tax loss carryforwards that can be utilized against future taxable income or for tax deductions related to the purchase of machinery and equipment.

       For temporary differences related to investments in subsidiaries and associated companies, deferred tax liabilities are recognized, except when the Company can control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deductible temporary differences related to such investments are recognized as deferred tax assets only when it is probable that there will be sufficient taxable income available to realize the temporary difference and within the scope of expected reversal in the foreseeable future.

       The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered. The deferred tax assets which originally not recognized are also reviewed at the end of each reporting period and recognized to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

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

       1. Current and deferred tax for the year

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

   In adopting accounting policies, the management of the Company must make judgments, estimates, and assumptions based on historical experience and other relevant factors when relevant information is not readily available from other sources. The actual results may differ from the estimates.

   When developing significant accounting estimates, the Company incorporates the potential impacts into consideration. The Management will continually review the estimates and underlying assumptions.

   Key Sources of Estimation and Uncertainty

   1. Impairment of Financial Assets

      The estimated impairment of accounts receivable is based on the Company's assumptions regarding probability of default and loss given default. The Company considers historical experience, current market conditions, and forward-looking information to make assumptions and select inputs for impairment assessment. Significant impairment losses may arise if actual cash flows in the future are less than the Company's expectations.

   2. Impairment of Inventory

The net realizable value of inventory is estimated as the estimated selling price in the ordinary course of business, less the estimated costs to complete and the estimated costs necessary to make the sale, based on current market conditions and historical sales experience of similar products. Changes in market conditions may significantly affect these estimates.