Farglory Hotel Co., Ltd.
Financial Statements and Independent Auditors' Report
For the Years Ended December 31, 2025 and 2024
(Stock Code: 2712)

Address: No. 18, Shanling, Yanliao Village, Shoufeng Township, Hualien County
Tel.: (03) 812-3999

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Farglory Hotel Co., Ltd.
2025 and 2024 Financial Statements and Independent Auditors’ Report
Table of Contents

Item	Page/No./Index
1. Cover	1
2. Table of Contents	2
3. Independent Auditors’ Report	3-6
4. Balance sheet	7-8
5. Statement of Comprehensive Income	9
6. Statement of Changes in Equity	10
7. Statement of Cash Flows	11
8. Notes to the Financial Statements	12-
(1) Company History	12
(2) Date and Procedure for Approval of Financial Statements	12
(3) Application of Newly Issued and Amended Standards and Interpretations	12-13
(4) Summary of Significant Accounting Policies	13-19
(5) Critical Accounting Judgments, Assumptions, and Key Sources of Estimation Uncertainty	19
(6) Description of Significant Accounting Items	19-37
(7) Related Party Transactions	38-41
(8) Assets Pledged	42
(9) Material Contingent Liabilities and Unrecognized Contractual Commitments	42
(10) Major Disaster Loss	42
(11) Material Events After the Balance Sheet Date	42
(12) Others	43-46
(13) Additional Disclosures	46
(14) Information on Operating Segments	47-48
9. Schedules of Significant Accounting Items
Schedule of Changes in Property, Plant, and Equipment	Schedule 1
Schedule of Operating Revenue	Schedule 2
Schedule of Operating Costs	Schedule 3
Schedule of Other Catering and Hotel Costs	Schedule 4
Schedule of Other Operating Costs	Schedule 5
Schedule of Selling Expenses	Schedule 6
Schedule of General and Administrative Expenses	Schedule 7
Summary of Employee Benefits, Depreciation, and Expenses by Function for the Period	Schedule 8

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Independent Auditors' Report

(2026) Tsai-Shen-Bao-Zi No. 25004444

To Farglory Hotel Co., Ltd.,

Audit opinions

We have audited the balance sheets of Farglory Hotel Co., Ltd. (the “Company”) as of December 31, 2025 and 2024, and the related statements of comprehensive income, changes in equity, and cash flows for the years then ended, and the notes to the financial statements (including a summary of significant accounting policies).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and its financial performance and cash flows for the years ended December 31, 2025 and 2024, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers as well as the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

Basis for audit opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of Farglory Hotel Co., Ltd. for the year ended December 31, 2025. These matters are addressed in our audit of the financial statements as a whole and in forming our audit opinion. We do not express a separate opinion on these matters.

The key audit matters for the financial statements of Farglory Hotel Co., Ltd. for the year ended December 31, 2025 are as follows:

The correctness of room revenue recognition

Description

For the accounting policies on revenue recognition, please refer to Note 4(20) to the financial statements; for the accounting items related to operating revenue, please refer to Note 6(14) to the financial statements.

The Company’s revenue mainly comes from hotel rooms booked through travel agencies. As there are many terms for the collaboration and transactions with travel agencies, it usually involves a great deal of manual work to reconcile these accounts to determine the correctness of the hotel room revenue. Therefore, we took the correctness of room revenue recognition as one of the most important audit matters.

Corresponding audit procedures

We have implemented the following procedures to address specific aspects of the key audit matter described in the preceding paragraph:

We learned about the Company’s internal control procedures for the room revenue recognition and adopted them consistently during the comparative period for the financial statements.
We obtained the daily income statements, randomly checked if the hotel room transaction bills and the monetary amount of the receipts issued were consistent, and confirmed that the monetary amounts of the daily income statements were consistent with the monetary amounts on the invoices.
After obtaining the travel agencies' reconciliation sheets, we randomly checked the calculation process to confirm that it was consistent with the contract terms and checked if the monetary amounts of the receipts were consistent with the monetary amounts on the reconciliation sheet.
We randomly checked if the receipt records of the transactions with customers were consistent with the monetary amounts of the invoices.

Management of accommodation voucher advance receipts

Description

Please refer to Note 6(14) to the financial statements for the description of the accommodation voucher advance receipts accounting item.

The Company’s main form of advance receipts are accommodation vouchers. The management of accommodation vouchers is in compliance with the voucher management principles. Many vouchers are issued and reimbursed, which involves a great deal of manual work, which might result in the inappropriate recognition of advance receipts. Also, due to the significant monetary amount of accommodation voucher advance receipts, we listed it as one of the most important key audit matters.

Corresponding audit procedures

We have implemented the following procedures to address specific aspects of the key audit matter described in the preceding paragraph:

We obtained a voucher production application form and confirmed that the application form had been properly approved.
We obtained detailed listings generated from the ticketing system and performed sampling procedures to reconcile them with daily cash reports, bank statements, and credit card transaction records, in order to verify that proceeds from the sale of accommodation vouchers had been received and were consistent with the amounts recorded on the corresponding invoices.
We confirmed that the accommodation vouchers recovered were consistent with the reimbursement statements produced in the voucher system, and that they were consistent with the vouchers written off.

Responsibilities of the management and the governing body for the financial statements

The responsibilities of the management are to prepare financial statements that accurately represent the financial status of the Company in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs, IASs, interpretations, and interpretative bulletins endorsed and issued into effect by the FSC, and to maintain the necessary internal control associated with said preparation in order to ensure that the financial statements are free from material misstatement arising from fraud or error.

In preparing the financial statements, the management is responsible for assessing the Company’s ability in continuing as a going concern, disclosing relevant matters, and adopting the going concern basis of accounting, unless the management intends to liquidate the Company or cease operations, or has no viable alternatives but to liquidate or cease operations.

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

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CPAs’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement arising from fraud or error and to issue an independent auditors’ report. Reasonable assurance means a high degree of assurance. However, there is no guarantee that a material misstatement contained in the financial statements will be discovered during an audit conducted in accordance with the auditing standards of the Republic of China. Misstatement may arise from fraud or error. If the monetary amounts of misstatement, either separately or in aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements, such misstatement is considered material.

We conducted our audit in accordance with the auditing standards of the Republic of China, exercising professional judgment and maintaining professional skepticism. We also performed the following tasks:

We identified and assessed the risks of material misstatement arising from fraud or error within the financial statements, designed and executed countermeasures in response to said risks, and obtained sufficient and appropriate audit evidence to provide a basis for our opinion. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a material misstatement resulting from fraud is higher than one resulting from error.
We examined the internal control mechanisms related to the audit in order to design appropriate audit procedures under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control system.
We evaluated the appropriateness of the accounting policies adopted and the reasonableness of the accounting estimates and relevant disclosures made by the management.
Based on the audit evidence obtained, we made conclusions on the appropriateness of the management’s adoption of the going concern basis of accounting whether a material uncertainty exists for events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we are of the opinion that a material uncertainty exists, our audit report shall remind users of the financial statements to pay attention to relevant disclosures in said statements. If such disclosures are inadequate, we need to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
We evaluated the overall presentation, structure, and content of the financial statements (including relevant notes) and whether the financial statements adequately presented the relevant transactions and events.

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

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

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the financial statements of Farglory Hotel Co., Ltd. for the year ended December 31, 2025 to be the key audit matters. We clearly indicate such matters in our audit report, unless legal regulations prohibit the public disclosure of specific matters or in extremely rare cases in which we decide not to communicate a specific item in the auditors’ report for it could be reasonably anticipated that the negative effects of such disclosure would be greater than the public interest it might bring forth.

PricewaterhouseCoopers Taiwan

Lin, Chia-Hung

Certified Public Accountant

Chen, Chi-Tung

Financial Supervisory Commission

Approval Reference Nos.: Jin-Guan-Zheng-Shen-Zi No. 1080323093

Jin-Guan-Zheng-Shen-Zi No. 1130350413

March 4, 2026

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Farglory Hotel Co., Ltd.
Balance sheet
December 31, 2025 and 2024
Unit: NT$ thousand

	Asset	Note	December 31, 2025		December 31, 2024
			Amount	%	Amount	%
Current assets
1100	Cash and cash equivalents	6(1)	$ 44,393	3	$ 98,167	5
1170	Net accounts receivable	6(2)	8,032	1	5,538	-
1180	Net accounts receivable – related parties	6(2) and 7	427	-	359	-
1200	Other receivables		13,977	1	14,631	1
1220	Current tax assets		5,792	-	5,761	-
130X	Inventory	6(3)	4,421	-	4,428	-
1410	Prepayments		14,582	1	14,795	1
1470	Other current assets	8	7,345	-	7,987	1
11XX	Total current assets		98,969	6	151,666	8
Non-current assets
1600	Property, plant, and equipment	6(4) and 8	1,522,968	91	1,605,923	89
1755	Right-of-use assets	6(5) and 7	32,753	2	35,517	2
1780	Intangible assets		2,948	-	1,220	-
1840	Deferred tax assets	6(21)	2,110	-	1,862	-
1900	Other non-current assets	6(10), 7, and 8	14,475	1	12,694	1
15XX	Total non-current assets		1,575,254	94	1,657,216	92
1XXX	Total assets		$ 1,674,223	100	$ 1,808,882	100

(Continued on the next page)

Farglory Hotel Co., Ltd.
Balance sheet
December 31, 2025 and 2024
Unit: NT$ thousand

	Liabilities and Equity	Note	December 31, 2025		December 31, 2024
			Amount	%	Amount	%
Current liabilities
2100	Short-term borrowings	6(6)	$ -	-	$ 10,000	1
2110	Short-term notes and bills payable	6(7)	69,755	4	139,730	8
2130	Contract liabilities – current	6(14) and 7	74,307	5	78,740	4
2170	Accounts payable	7	19,884	1	25,459	1
2200	Other payables	6(9)	57,832	4	63,327	4
2280	Lease liabilities – current	6(24) and 7	4,930	-	4,945	-
2320	Long-term liabilities maturing within a year or operating cycle	6(8)	105,769	6	40,000	2
2399	Other current liabilities – others		3,959	-	3,251	-
21XX	Total current liabilities		336,436	20	365,452	20
Non-current liabilities
2527	Contract liabilities – non-current	6(14) and 7	187	-	101	-
2540	Long-term borrowings	6(8)	273,654	17	336,923	19
2570	Deferred tax liabilities	6(21)	3,279	-	2,974	-
2580	Lease liabilities – non-current	6(24) and 7	29,703	2	32,084	2
2600	Other non-current liabilities		4,672	-	5,397	-
25XX	Total non-current liabilities		311,495	19	377,479	21
2XXX	Total liabilities		647,931	39	742,931	41
	Capital stock	6(11)
3110	Common stock		1,050,000	63	1,050,000	58
	Capital surplus	6(12)
3200	Capital surplus		108,392	6	108,392	6
	Retained earnings	6(13)
3310	Legal reserve		55,391	3	55,391	3
3350	Undistributed earnings		( 187,491)	( 11)	( 147,832)	( 8)
3XXX	Total equity		1,026,292	61	1,065,951	59
3X2X	Total liabilities and equity		$ 1,674,223	100	$ 1,808,882	100

The notes attached are part of the financial statements. Please refer to them together.

Chairman: Wu, Hsiang-Sheng
President: Nelson Shen
Chief Accounting Officer: Lin, Shu-Yuan

Farglory Hotel Co., Ltd.
Statement of Comprehensive Income
For the Years Ended December 31, 2025 and 2024
Unit: NT$ thousand
(Except for loss per share, which is expressed in NT$)

	Item	Note	2025		2024
			Amount	%	Amount	%
4000	Operating revenue	6(14) and 7	$ 524,994	100	$ 354,975	100
5000	Operating costs	6(3)(19)(20) and 7	( 424,406)	( 81)	( 379,382)	( 107)
5900	Operating gross profit (loss)		100,588	19	( 24,407)	( 7)
	Operating expenses	6(19)(20) and 7
6100	Selling expenses		( 38,990)	( 7)	( 29,017)	( 8)
6200	Administrative expenses		( 99,256)	( 19)	( 97,791)	( 28)
6450	Expected credit loss expense		( 10)	-	-	-
6000	Total operating expenses		( 138,256)	( 26)	( 126,808)	( 36)
6900	Operating loss		( 37,668)	( 7)	( 151,215)	( 43)
	Non-operating revenue and expenses
7100	Interest income	6(15)	406	-	513	-
7010	Other income	6(16)	11,165	2	10,512	3
7020	Other gains and losses	6(17)	( 1,233)	-	( 1,458)	-
7050	Financial costs	6(18) and 7	( 13,162)	( 3)	( 7,417)	( 2)
7000	Total non-operating income and expenses		( 2,824)	( 1)	2,150	1
7900	Net loss before tax		( 40,492)	( 8)	( 149,065)	( 42)
7950	Income tax benefit (expense)	6(21)	121	-	( 92)	-
8200	Current net loss		($ 40,371)	( 8)	($ 149,157)	( 42)
	Other comprehensive income
8311	Remeasurement of defined benefit plans	6(10)	$ 890	-	$ 1,657	-
8349	Income tax related to items not reclassified	6(21)	( 178)	-	( 332)	-
8310	Total of items not recategorized to profits and losses		712	-	1,325	-
8300	Other comprehensive income (net)		$ 712	-	$ 1,325	-
8500	Total comprehensive income for the period		($ 39,659)	( 8)	($ 147,832)	( 42)
	Basic loss per share	6(22)
9750	Basic loss per share		($ 0.38)	($		1.42)
	Diluted loss per share	6(22)
9850	Diluted loss per share		($ 0.38)	($		1.42)

The notes attached are part of the financial statements. Please refer to them together.

Chairman: Wu, Hsiang-Sheng
President: Nelson Shen
Chief Accounting Officer: Lin, Shu-Yuan

Farglory Hotel Co., Ltd.
Statement of Changes in Equity
For the Years Ended December 31, 2025 and 2024
Unit: NT$ thousand

	Common stock	Capital surplus - shares issued at premium	Retained earnings		Total equity
			Legal reserve	Undistribute d earnings
2024
Balance as of January 1, 2024	$ 1,050,000	$ 108,392	$ 50,514	$ 48,777	$ 1,257,683
Current net loss	-	-	-	( 149,157 )	( 149,157 )
Current other comprehensive income	-	-	-	1,325	1,325
Total comprehensive income for the period	-	-	-	( 147,832 )	( 147,832 )
Earnings distribution: 6(13)
Provision for legal reserve	-	-	4,877	( 4,877 )	-
Cash dividends	-	-	-	( 43,900 )	( 43,900 )
Balance as of December 31, 2024	$ 1,050,000	$ 108,392	$ 55,391	($ 147,832 )	$ 1,065,951
2025
Balance as of January 1, 2025	$ 1,050,000	$ 108,392	$ 55,391	($ 147,832 )	$ 1,065,951
Current net loss	-	-	-	( 40,371 )	( 40,371 )
Current other comprehensive income	-	-	-	712	712
Total comprehensive income for the period	-	-	-	( 39,659 )	( 39,659 )
Balance as of December 31, 2025	$ 1,050,000	$ 108,392	$ 55,391	($ 187,491 )	$ 1,026,292

The notes attached are part of the financial statements. Please refer to them together.

Chairman: Wu, Hsiang-Sheng
President: Nelson Shen
Chief Accounting Officer: Lin, Shu-Yuan

Farglory Hotel Co., Ltd.
Statement of Cash Flows
For the Years Ended December 31, 2025 and 2024
Unit: NT$ thousand

	Note	2025	2024
Cash flow from operating activities
Net loss before tax for the period		($ 40,492)	($ 149,065)
Adjustments
Income and expenses
Expected credit loss expense		10	-
Depreciation expenses	6(4), (5) and (19)	94,940	92,022
Amortization expenses	6(19)	2,316	2,584
Interest income	6(15)	( 406)	( 513)
Interest expenses	6(18)	13,162	7,417
Losses on disposal of property, plant, and equipment	6(4) and (17)	25	1,320
Business facilities reclassified as expenses	6(4)	1,562	2,665
Uncompleted projects reclassified as expenses	6(4)	-	568
Changes in operating assets/liabilities
Net changes in operating assets
Accounts receivable (including from related parties)		( 2,572)	3,477
Other receivables		654	( 9,621)
Inventory		26	( 253)
Prepayments		188	( 914)
Other current assets		( 416)	13
Other non-current assets		( 812)	295
Other financial assets		1,058	25,863
Net changes in operating liabilities
Contract liabilities – current		( 4,433)	( 15,707)
Accounts payable		( 5,575)	1,803
Other payables		( 1,114)	( 6,206)
Other current liabilities		708	1,227
Contract liabilities – non-current		86	( 20)
Other non-current liabilities		( 625)	3,395
Cash inflow (outflow) from operating activities		58,290	( 39,650)
Interest paid		( 13,119)	( 7,399)
Interest received		406	513
Income tax paid		( 32)	( 16,675)
Net cash inflow (outflow) from operating activities		45,545	( 63,211)
Cash flow from investing activities
Acquisition of property, plant, and equipment	6(23)	( 12,978)	( 102,659)
Proceeds from sale of property, plant, and equipment		-	1
Acquisition of intangible assets		( 4,051)	( 2,513)
Disposal of intangible assets		-	97
Increase in guarantee deposits paid		( 79)	( 102)
Capitalized interest paid	6(4)(23)	-	( 3,814)
Net cash outflow from investing activities		( 17,108)	( 108,990)
Cash flow from financing activities
Increase in short-term loans	6(24)	20,000	10,000
Decrease in short-term loans	6(24)	( 30,000)	-
Increase in short-term notes payable	6(24)	298,875	318,940
Decrease in short-term notes and bills payable	6(24)	( 368,850)	( 179,210)
Long-term borrowings	6(24)	60,000	130,000
Repayment of long-term borrowings	6(24)	( 57,500)	( 24,616)
Lease principal repaid	6(24)	( 4,636)	( 4,213)
Decrease in guarantee deposits received	6(24)	( 100)	-
Payout of cash dividends	6(13) and (24)	-	( 43,900)
Net cash inflow (outflow) from financing activities		( 82,211)	207,001
Increase (decrease) in cash and cash equivalents in the current period		( 53,774)	34,800
Cash and cash equivalents at the beginning of the period		98,167	63,367
Cash and cash equivalents at the end of the period		$ 44,393	$ 98,167

The notes attached are part of the financial statements. Please refer to them together.

Chairman: Wu, Hsiang-Sheng
President: Nelson Shen
Chief Accounting Officer: Lin, Shu-Yuan

Farglory Hotel Co., Ltd.
Notes to the Financial Statements
For the Years Ended December 31, 2025 and 2024
Unit: NT$ thousand
(Unless otherwise specified)

Company History

Farglory Hotel Co., Ltd. (hereinafter referred to as the “Company”) was incorporated in January 1991 and mainly operates hotels and restaurants.

Date and Procedure for Approval of Financial Statements

These financial statements were approved for issuance by the Board of Directors on March 4, 2026.

Application of Newly Issued and Amended Standards and Interpretations

(1) The effect of adopting new or amended IFRSs endorsed and promulgated by the Financial Supervisory Commission (FSC)

The table below lists the new, revised, and amended standards and interpretations of the IFRSs, which apply to the reporting period of 2025, as endorsed and promulgated by the FSC:

New/revised/amended standards and interpretations	Effective date announced by the IASB
Amendments to IAS 21 “Lack of Exchangeability”	January 1, 2025

As per the Company’s assessment, the above standards and interpretations have no material impact on the Company’s financial position and financial performance.

(2) The effect of not adopting new or amended IFRSs endorsed by the FSC

The table below summarizes the newly issued, amended, and revised IFRSs and accounting standards and interpretations endorsed by the Financial Supervisory Commission and applicable in 2026:

New/revised/amended standards and interpretations	Effective date announced by the IASB
Amendments to IFRS 9 and IFRS 7 “Classification and Measurement of Financial Instruments”	January 1, 2026
Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity”	January 1, 2026
IFRS 17 Insurance Contracts	January 1, 2023
Amendments to IFRS 17 Insurance Contracts	January 1, 2023
Amendments to IFRS 17 (Initial Application of IFRS 17 and IFRS 9—Comparative Information)	January 1, 2023
Annual Improvements to IFRS Standards - Volume 11	January 1, 2026

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As per the Company’s assessment, the above standards and interpretations have no material impact on the Company’s financial position and financial performance.

(3) IFRSs issued by the IASB but not yet endorsed by the FSC

The table below lists the new, revised, and amended standards and interpretations of the IFRSs issued by the IASB but not yet endorsed by the FSC:

New/revised/amended standards and interpretations	Effective date announced by the IASB
Amendments to IFRS 10 and IAS 28 (Sale or Contribution of Assets between an Investor and its Associate or Joint Venture)	To be determined by the IASB
IFRS 18 “Presentation and Disclosure in Financial Statements”	January 1, 2027 (Note)
IFRS 19 “Subsidiaries without Public Accountability: Disclosures”	January 1, 2027
Amendments to IAS 21 “Translation to a Hyperinflationary Presentation Currency”	January 1, 2027

Note: In a press release dated September 25, 2025, the Financial Supervisory Commission announced that public companies will adopt IFRS 18 beginning in 2028. Companies that wish to adopt IFRS 18 early may do so after IFRS 18 has been endorsed by the Financial Supervisory Commission.

Except as described below, the Company has assessed that the above standards and interpretations do not have a significant impact on the Company’s financial position and financial performance.

IFRS 18 “Presentation and Disclosure in Financial Statements”

IFRS 18 “Presentation and Disclosure in Financial Statements” replaces IAS 1 and introduces changes to the structure of the statement of comprehensive income. It also introduces new disclosure requirements for management performance measures and strengthens the principles of aggregation and disaggregation applied in the primary financial statements and the notes.

Summary of Significant Accounting Policies

The major accounting policies adopted in the preparation of these financial statements are described below. Unless otherwise stated, these policies apply consistently throughout all reporting periods.

(1) Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) as endorsed and promulgated by the FSC.

(2) Basis of preparation

A. Except for defined benefit liabilities recognized as the net amount of retirement fund assets less the present value of defined benefit obligations, this financial report has been prepared on a historical cost basis.

B. The preparation of financial statements in alignment with the IFRSs requires the use of some significant accounting estimates, and the adoption of the Company's accounting policies requires management's judgment. Please refer to Note 5 for details of the items involving a high degree of judgment or complexity or items involving critical assumptions and estimates in financial reporting.

(3) Criteria for classification of current and non-current assets and liabilities

A. Assets that meet one of the following criteria are classified as current assets:

(A) Assets to be realized, or intended to be sold or consumed, in the Company's normal operating cycle.
(B) Assets held primarily for the purpose of trading.
(C) Assets expected to be realized within twelve months after the reporting period.
(D) Cash or cash equivalents, except for those restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The Company classifies all assets that do not meet the above criteria as non-current assets.

B. Liabilities that meet one of the following criteria are classified as current liabilities:

(A) Liabilities expected to be settled within the Company's normal operating cycle.
(B) Liabilities held primarily for the purpose of trading.
(C) Liabilities due to be settled within twelve months after the reporting period.
(D) Items that do not have the right to defer settlement of the liability for at least twelve months after the reporting period.

The Company classifies all liabilities that do not meet the above criteria as non-current liabilities.

(4) Accounts receivable

A. This refers to the receivables with the right to unconditionally receive the consideration in exchange for the goods or services transferred as per the contract terms.
B. As the impact of discounting on short-term accounts receivable with unpaid interest is small, the Company measures them at the initial monetary amount.

(5) Impairment of financial assets

On each balance sheet date, after considering all reasonable and corroborative information (including forward-looking information), the Company measures allowance for loss according to the 12-month expected credit losses for financial assets at amortized cost without significant increase in credit risk after initial recognition; measures allowance for loss according to the lifetime expected credit losses for financial assets at amortized cost with significant increase in credit risk after initial recognition; measures allowance for loss according to lifetime expected credit losses for accounts receivable that do not include significant financing components.

(6) Derecognition of financial assets

Financial assets are derecognized when the Company's contractual rights to receive cash flows from the financial assets expire.

(7) Lessor's lease transactions – operating leases

Lease income from operating leases, less any incentives given to the lessee, is amortized on a straight-line basis over the lease term and recognized as profit or loss in the current period.

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(8) Inventory

Inventory is accounted for at cost, and the cost is calculated using the weighted average method. Inventory at the end of the period is measured at the lower of cost or net realizable value (NRV). When determining the lower of cost or NRV, the item-by-item comparison method is adopted. 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.

(9) Property, plant, and equipment

A. Property, plant, and equipment are accounted for at acquisition cost, and the relevant interest accrued during the period of acquisition and construction is capitalized.

B. Subsequent costs are included in the carrying amount of such assets or recognized as independent assets only when it is probable that the future economic benefits associated with such assets will flow into the Company and that the cost of such assets can be measured reliably. The carrying amount of the part being reset shall be derecognized. All other repair and maintenance expenses are recognized as profit or loss in the period when they are incurred.

C. Property, plant, and equipment are subsequently measured at cost and depreciated on a straight-line basis over the estimated useful life, except for land which is not depreciated. Each component of property, plant, and equipment is depreciated separately if it is significant.

D. The Company reviews the residual value, useful life, and depreciation method of each asset at the end of each fiscal year. If the estimated residual value and useful life are different from the previous estimates, or there has been a significant change in the expected consumption pattern of the future economic benefits contained in such assets, it shall be handled as per the provisions on changes in accounting estimates under IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors from the date of the change. The useful life of each asset is as follows:

Property and buildings	3–59 years
Transportation equipment	5–10 years
Landscape gardening	7–15 years
Others	2–40 years

E. Business facilities are accounted for at cost and reclassified to expenses when they are actually damaged.

(10) Lessee’s lease transactions – right-of-use assets/lease liabilities

A. Lease assets are recognized as right-of-use assets or lease liabilities on the date they are available for use by the Company. When a lease contract is for a short-term lease or a lease of a low-value asset, lease payments are recognized as an expense on a straight-line basis over the lease term.

B. Lease liabilities are recognized at the present value of the unpaid lease payments at the inception date of the lease, discounted at the Company’s incremental borrowing rate. Lease payments include:

(A) Regular payment, less any lease incentives that may be received; and

(B) The exercise price of the purchase option if the lessee is reasonably certain that the option will be exercised.

Lease liabilities are subsequently measured at amortized cost in the interest method, and the interest expenses are recognized over the lease term. The lease liabilities are reassessed and the right-of-use assets are adjusted as per remeasurement when there is a change in the lease term or lease payments not due to a contract modification.

C. Right-of-use assets are recognized at cost at inception of the lease. Costs include:

(A) The monetary amount of the lease liability initially measured;
(B) Any lease payments paid on or before the inception of the lease; and
(C) Any initial direct costs incurred.

Right-of-use assets are subsequently measured at cost and reclassified to depreciation expense at the end of the useful life or the lease term, whichever is earlier. When lease liabilities are reassessed, the right-of-use assets will be adjusted as per any remeasurement of the lease liabilities.

(11) Intangible assets

Computer software is recognized at acquisition cost and amortized on a straight-line basis over an estimated useful life of one to three years.

(12) Impairment of non-financial assets

The Company, on the balance sheet date, estimates the recoverable amount of assets with signs of impairment and recognizes such assets as impairment losses when the recoverable amount is lower than the book amount. The recoverable amount is the fair value of an asset, less the cost of disposal or its value in use, whichever is higher. When the asset impairment recognized in previous years does not exist or decreases, the impairment loss is reversed; however, the increase in the carrying amount of the asset due to the reversal of impairment loss shall not exceed the carrying amount, less the asset's depreciation or amortization, if the impairment loss on the asset has not been recognized.

(13) Borrowings

A. This refers to long-term and short-term funds borrowed from banks. The Company measures borrowings at fair value, less transaction costs, upon initial recognition and subsequently recognizes interest expenses in profit or loss based on any difference between the monetary amount and the redemption value, less transaction costs, using the effective interest method during the outstanding period according to the amortization procedure.
B. Expenses paid for the establishment of borrowing facilities are recognized as transaction costs of the borrowings when it is probable that part or all of the facilities will be drawn; recognized as adjustment to the effective interest rate when they are deferred until they are drawn; and recognized as prepayment and amortized over the period related to the facilities when it is not probable that part or all of the facilities will be drawn.

(14) Accounts payable

A. Accounts payable represents obligations arising from the purchase of raw materials, merchandise, or services on credit.
B. As the impact of discounting on short-term accounts payable with unpaid interest is small, the Company measures them at the initial invoice amount.

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(15) Derecognition of financial liabilities

The Company derecognizes financial liabilities when the obligations specified in the contract are fulfilled, cancelled, or expired.

(16) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount expected to be paid and are recognized as an expense when the relevant services are provided.

B. Pension

(A) Defined contribution plans

For a defined contribution plan, the amount to be contributed to the pension fund is recognized as the current pension cost on an accrual basis. Advance contribution is recognized as an asset when cash can be refunded or the future contribution is reduced.

(B) Defined benefit plans

a. The net obligations under a defined benefit plan are calculated by discounting the amount of future benefits earned by employees for current or past service and subtracting the fair value of the plan asset from the present value of the defined benefit obligations at the balance sheet date. The net defined benefit obligations are calculated annually by the actuary using the projected unit credit method, and the discount rate is determined with reference to the market yield of high-quality corporate bonds with the currency and period consistent with those in the defined benefit plan on the balance sheet date. In countries without market depth for high-quality corporate bonds, the market yield on government bonds (at the balance sheet date) is used.

b. Remeasurements arising from defined benefit plans are recognized in other comprehensive income in the period in which they arise and are presented in retained earnings.

c. Expenses related to past service costs are recognized immediately as profit or loss.

C. Employee compensation and directors and supervisors' remuneration

Employee compensation and directors and supervisors' remuneration are recognized as expenses and liabilities when there are legal or constructive obligations and the amount can be reasonably estimated. If there is a discrepancy between the amount distributed based on the resolution and the estimated amount, it shall be treated as a change in accounting estimate. If employee compensation is distributed in shares, the number of shares is subject to the closing price on the day before the resolution by the Board of Directors.

(17) Income tax

A. Income tax expense includes current and deferred tax. Income tax is recognized in profit or loss, except for income tax relating to items listed in other comprehensive income or directly listed in equity, which is listed in other comprehensive income or directly listed in equity, respectively.

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B. Surtax on undistributed earnings levied in accordance with the Income Tax Act is recognized as income tax expense for undistributed earnings based on the actual distribution of the earnings after the profit distribution proposal is passed at the annual shareholders' meeting in the year following the year in which the profit is made.

C. Deferred tax is recognized on the basis of temporary differences between the tax bases of assets and liabilities and their carrying amounts on the balance sheet using the balance sheet approach. Deferred tax is determined using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the relevant deferred income tax asset is realized or the deferred income tax liability is settled.

D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.

E. When there is a legally enforceable right to offset the recognized amounts of current income tax assets and liabilities and an intention to settle on a net basis or realize the assets and settle the liabilities at the same time, the current income tax assets and current income tax liabilities can be offset. When there is a legally enforceable right to offset current income tax assets with current income tax liabilities, and the deferred income tax assets and liabilities arise from the same taxable entity subject to income tax by the same tax authority or different taxable entities, each of which intends to settle on a net basis or to realize the assets and settle the liabilities at the same time, deferred tax assets and liabilities can be offset.

(18) Capital stock

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new shares or share options are recognized as a deduction from equity, net of income tax.

(19) Dividend distribution

Dividends distributed to the Company's shareholders are recognized in the financial statements when the shareholders' meeting resolves to distribute such dividends, and the cash dividends distributed are recognized as liabilities.

(20) Recognition of revenue

A. The Company provides hotel and catering services. Hotel and catering revenue is recognized as revenue during the financial reporting period in which such services are provided to customers. Revenue from fixed-price contracts is recognized based on services actually rendered as at the balance sheet date. Clients pay the contract price as per the agreed payment schedule.

B. The membership fees collected by the Company from the issuance of membership cards are recognized as revenue in two different ways depending on the services provided: annually, according to the estimated service period; and according to the number of services provided. The membership card prepayment revenue is divided into contract liabilities – current and contract liabilities – non-current according to the realization period.

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C. The Company’s customer loyalty program gives customers reward points for each transaction, and the reward points obtained by customers can be exchanged for free or discounted products. The fair value of the consideration received or receivable related to the original sales allocated to the goods sold and reward points is allocated to the consideration of the reward points with reference to the fair value of the products exchanged and the estimated exchange percentage, and such monetary amount is deferred to be recognized in revenue when the obligations to relevant reward points are fulfilled.

(21) Government grants

Government grants are recognized at fair value when there is reasonable assurance that the enterprise will comply with the conditions attached to the government grant and will receive the grant. If the nature of government grants is to compensate the expenses incurred by the Company, the government grants are recognized as profit or loss in the current period on a systematic basis during the period in which such expenses are incurred. Government grants related to property, plant, and equipment are recognized as non-current liabilities and recognized in profit or loss on a straight-line basis over the estimated useful lives of the related assets.

(22) Operating segments

The information on the Company’s operating segments is reported in a manner consistent with that adopted of the internal management reports provided to the chief operating decision maker. The chief operating decision maker is responsible for allocating resources to operating segments and evaluating their performance. The chief operating decision maker is identified to be the Board of Directors.

Critical Accounting Judgments, Assumptions, and Key Sources of Estimation Uncertainty

During the preparation of the financial statements, the management exercised its judgment to adopt the accounting policies to be used, and made accounting estimates and assumptions based on reasonable expectations of future events with reference to the circumstances at the balance sheet date. If there is any difference between any critical accounting estimates and assumptions made and actual results, assessment and adjustment will be conducted continuously by taking into account the historical experience and other factors. The Company does not exercise critical judgments in its accounting policy and has made no significant accounting estimates or assumptions risking a material adjustment to the carrying amounts of assets and liabilities in the next fiscal year.

Description of Significant Accounting Items

(1) Cash

	December 31, 2025		December 31, 2024
Demand deposits	$	43,751	$	95,578
Cash on hand		610		2,557
Checking deposit		32		32
	$	44,393	$	98,167

A. The financial institutions the Company deals with have solid credit ratings. The Company also deals with multiple financial institutions at the same time to diversify credit risks. Therefore, the expected risk of default is rather low.

B. As of December 31, 2025 and 2024, the Company had restricted cash of $7,011 thousand and $8,069 thousand, respectively, provided as performance guarantees. Such amounts are classified as “other financial assets” and, based on their liquidity, are presented under “other current assets” and “other non-current assets.” Please refer to Note 8 for further details.

(2) Accounts receivable (including from related parties)

	December 31, 2025	December 31, 2024
Accounts receivable	$ 8,042	$ 5,538
Accounts receivable – related parties	427	359
	8,469	5,897
Less: allowance for losses	(10)	-
	$ 8,459	$ 5,897

A. The aging analysis of accounts receivable is as follows:

	December 31, 2025	December 31, 2024
Not past due	$ 8,044	$ 4,835
Less than 30 days	405	517
31–90 days	10	541
91–180 days	10	-
181 days or more	-	4
	$ 8,469	$ 5,897

The aging analysis above is based on the number of days past due.

B. As of December 31, 2025 and 2024, the balances of accounts receivable arose from contracts with customers. The balance of accounts receivable arising from contracts with customers as of January 1, 2024 was $9,374.

C. The collateral held by the Company to secure the accounts receivable is the guarantee deposits received.

D. Without taking into account the collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the Company’s accounts receivable as of December 31, 2025 and 2024 was $8,459 and $5,897, respectively.

E. There were no significant impairment losses on accounts receivable as of December 31, 2025 and 2024.

F. For relevant information regarding the credit risks of accounts receivable, see Note 12(2).

(3) Inventory

	December 31, 2025
	Cost	Allowance for valuation losses		Carrying amount
Catering supplies	$ 4,430	($	215)	$ 4,215
Merchandise	252	(	46)	206
	$ 4,682	($	261)	$ 4,421

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December 31, 2024

	Cost	Allowance for valuation losses		Carrying amount
Catering supplies	$ 4,477	($	265)	$ 4,212
Merchandise	253	(	37)	216
	$ 4,730	($	302)	$ 4,428

The cost of inventories recognized as expense for the years ended December 31, 2025 and 2024 amounted to $82,355 and $67,561, respectively. Such amounts include $67 and $197, respectively, recognized as cost of sales for write-downs of inventory to net realizable value, as well as reductions in costs of sales of $108 and $47, respectively, arising from reversals of prior write-downs due to the sale of certain obsolete inventory.

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(4) Property, plant, and equipment

	Land	Property and buildings	Transportation equipment	Business facilities	Landscape gardening	Unfinished construction work and equipment to be tested	Others	Total
January 1
Cost	$ 37,069	$ 2,356,166	$ 10,993	$ 39,337	$ 158,987	$ 12,935	$ 269,895	$ 2,885,382
Accumulated depreciation	-	( 939,027)	( 5,589)	-	( 154,566)	-	( 180,277)	( 1,279,459)
	$ 37,069	$ 1,417,139	$ 5,404	$ 39,337	$ 4,421	$ 12,935	$ 89,618	$ 1,605,923
January 1	$ 37,069	$ 1,417,139	$ 5,404	$ 39,337	$ 4,421	$ 12,935	$ 89,618	$ 1,605,923
Addition	-	1,726	-	2,149	-	558	4,243	8,676
Disposal	-	-	-	( 1,562)	-	-	( 25)	( 1,587)
Transfer	-	12,846	-	( 19)	-	( 12,935)	-	( 108)
Depreciation expenses	-	( 66,176)	( 1,220)	-	( 344)	-	( 22,196)	( 89,936)
December 31	$ 37,069	$ 1,365,535	$ 4,184	$ 39,905	$ 4,077	$ 558	$ 71,640	$ 1,522,968
December 31
Cost	$ 37,069	$ 2,364,022	$ 10,924	$ 39,905	$ 158,987	$ 558	$ 273,086	$ 2,884,551
Accumulated depreciation	-	( 998,487)	( 6,740)	-	( 154,910)	-	( 201,446)	( 1,361,583)
	$ 37,069	$ 1,365,535	$ 4,184	$ 39,905	$ 4,077	$ 558	$ 71,640	$ 1,522,968

	Land	Property and buildings	Transportation equipment	Business facilities	Landscape gardening	Unfinished construction work and equipment to be tested	Others	Total
January 1
Cost	$ 37,069	$ 2,282,575	$ 7,403	$ 37,555	$ 158,873	$ 32,243	$ 259,901	$ 2,815,619
Accumulated depreciation	-	( 877,913)	( 4,767)	-	( 154,237)	-	( 163,024)	( 1,199,941)
	$ 37,069	$ 1,404,662	$ 2,636	$ 37,555	$ 4,636	$ 32,243	$ 96,877	$ 1,615,678
January 1	$ 37,069	$ 1,404,662	$ 2,636	$ 37,555	$ 4,636	$ 32,243	$ 96,877	$ 1,615,678
Addition	-	51,026	3,590	4,463	114	7,570	15,057	81,820
Disposal	-	( 1,200)	-	( 2,665)	-	-	( 121)	( 3,986)
Transfer	-	24,475	-	( 16)	-	( 26,878)	1,836	( 583)
Depreciation expenses	-	( 61,824)	( 822)	-	( 329)	-	( 24,031)	( 87,006)
December 31	$ 37,069	$ 1,417,139	$ 5,404	$ 39,337	$ 4,421	$ 12,935	$ 89,618	$ 1,605,923
December 31
Cost	$ 37,069	$ 2,356,166	$ 10,993	$ 39,337	$ 158,987	$ 12,935	$ 269,895	$ 2,885,382
Accumulated depreciation	-	( 939,027)	( 5,589)	-	( 154,566)	-	( 180,277)	( 1,279,459)
	$ 37,069	$ 1,417,139	$ 5,404	$ 39,337	$ 4,421	$ 12,935	$ 89,618	$ 1,605,923

A. None of the above asset categories are assets under an operating lease.
B. Borrowing costs capitalized as part of property, plant, and equipment for the years ended December 31, 2025 and 2024 amounted to $0 and $3,814, respectively, with capitalization rates of 0% and 2.59–2.93%, respectively.
C. Please refer to Note 8 for information on property, plant, and equipment pledged as collateral.

(5) Lease transactions – as a lessee

A. The assets leased by the Company include buildings, transportation equipment, and other equipment, usually for a lease term between 2 to 12 years. The lease contracts are negotiated individually and contain various terms and conditions, and no other restrictions are imposed except that the assets leased shall not be used to secure loans.

B. The information on the book amount of the right-of-use assets and the recognized depreciation expenses are as follows:

| | December 31, 2025
Carrying amount | | December 31, 2024
Carrying amount | |
| --- | --- | --- | --- | --- |
| Buildings | $ | 28,388 | $ | 31,572 |
| Transportation equipment
(company vehicles) | | 4,365 | | 3,254 |
| Other equipment | | - | | 691 |
| | $ | 32,753 | $ | 35,517 |
| | 2025
Depreciation expenses | | 2024
Depreciation expenses | |
| Buildings | $ | 3,184 | $ | 3,184 |
| Transportation equipment
(company vehicles) | | 1,129 | | 757 |
| Other equipment | | 691 | | 1,075 |
| | $ | 5,004 | $ | 5,016 |

C. The additions to the Company’s right-of-use assets for the years ended December 31, 2025 and 2024 amounted to $2,240 and $3,471, respectively.

D. Information on the profit or loss items related to lease contract is as follows:

	2025		2024
Items affecting current profit or loss
Interest expenses on lease liabilities	$	874	$ 895
Expenses on short-term lease contracts		73	24
Expenses on leases of low-value assets		1,054	1,095
Expenses on variable lease payments		6,503	6,879

E. The total cash outflows for leases of the Company for the years ended December 31, 2025 and 2024 amounted to $13,140 and $13,106, respectively.

(6) Short-term borrowings (December 31, 2025: Not applicable)

Nature of borrowings	December 31, 2024	Interest rate range	Collateral
Bank borrowings
Secured borrowings	$ 10,000	2.67%	Land, premises, and buildings

(7) Short-term notes and bills payable

Item	December 31, 2025
	Guarantor	Date of maturity	Interest rate	Amount	Collateral
Financing commercial papers	International Bills Finance Corporation	2026.2.25	2.330%	$ 20,000	None
Less: Discount in commercial papers payable				( 60)
Financing commercial papers	Ta Ching Bills Finance Corporation	2026.3.5	2.320%	30,000	None
Less: Discount in commercial papers payable				( 98)
Financing commercial papers	Mega Bills	2026.3.24	2.368%	20,000	None
Less: Discount in commercial papers payable				( 87)
				$ 69,755
December 31, 2024
Item	Guarantor	Date of maturity	Interest rate	Amount	Collateral
Financing commercial papers	Ta Ching Bills Finance Corporation	2025.1.23	2.310%	$ 30,000	None
Less: Discount in commercial papers payable				( 35)
Financing commercial papers	Ta Ching Bills Finance Corporation	2025.3.28	2.340%	10,000	None
Less: Discount in commercial papers payable				( 45)
Financing commercial papers	China Bills Finance Corporation	2025.1.22	2.398%	50,000	None
Less: Discount in commercial papers payable				( 45)
Financing commercial papers	International Bills Finance Corporation	2025.3.28	2.300%	20,000	None
Less: Discount in commercial papers payable				( 85)
Financing commercial papers	Mega Bills	2025.2.8	2.368%	30,000	None
Less: Discount in commercial papers payable				( 60)
				$ 139,730

As of December 31, 2025 and 2024, the Company had unused borrowing facilities of $300,000 and $310,000, respectively. Of these amounts, the unused short-term borrowing facilities shared with short-term notes payable from Taichung Commercial Bank amounted to $200,000 and $190,000, respectively.

(8) Long-term borrowings

Nature of borrowings	Duration and repayment method	Interest rate range	Collateral	December 31, 2025
Long-term bank borrowings
Credit loan	The loan term is from April 12, 2021 to April 12, 2027, with a three-year grace period. Interest is payable monthly. Upon expiration of the grace period, the principal shall be repaid in 13 equal installments.	2.72%	None	$ 36,923
"	The loan term is from December 3, 2024 to December 3, 2029, with a two-year grace period. Interest is payable monthly. Upon expiration of the grace period, the principal shall be repaid in 13 equal installments.	2.22%	None	80,000
Secured borrowings	The loan term is from June 24, 2022 to June 24, 2029, with a three-year grace period. Interest is payable monthly. Upon expiration of the grace period, the principal shall be repaid in 16 equal installments.	2.77%	Land, premises, and buildings	262,500
379,423
Less: Long-term borrowings maturing within a year or an operating cycle				( 105,769)
$ 273,654
Nature of borrowings	Duration and repayment method	Interest rate range	Collateral	December 31, 2024
Long-term bank borrowings
Credit loan	The loan term is from April 12, 2021 to April 12, 2027, with a three-year grace period. Interest is payable monthly. Upon expiration of the grace period, the principal shall be repaid in 13 equal installments.	2.59%~2.72%	None	$ 36,923
"	The loan term is from December 3, 2024 to December 3, 2029, with a two-year grace period. Interest is payable monthly. Upon expiration of the grace period, the principal shall be repaid in 13 equal installments.	2.22%	None	20,000
Secured borrowings	The loan term is from June 24, 2022 to June 24, 2029, with a three-year grace period. Interest is payable monthly. Upon expiration of the grace period, the principal shall be repaid in 16 equal installments.	2.75%~2.93%	Land, premises, and buildings	320,000
376,923
Less: Long-term borrowings maturing within a year or an operating cycle				( 40,000)
$ 336,923

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(9) Other payables

	December 31, 2025		December 31, 2024
Salary and bonuses payable	$	34,262	$	32,499
Insurance payable		4,827		9,187
Construction facilities payable		3,504		7,806
Others		15,239		13,835
	$	57,832	$	63,327

(10) Pension

A. In accordance with the Labor Standards Act, the Company has formulated retirement regulations with defined benefits, which apply to the number of service years of all full-time employees before the Labor Pension Act took effect on July 1, 2005, and the number of service years of employees who chose the system under the Labor Standards Act after the Labor Pension Act took effect. For employees who meet the retirement criteria, the pension is calculated based on the length of service and the average salary of the six months prior to the retirement date. For employees who have served for 15 years or less, two points are given for each full year of service; for employees who have served for over 15 years, one point will be given for each full year of service; however, the maximum number of points receivable is 45. The Company makes a contribution equal to 2% of the total salary to the pension fund on a monthly basis and deposits it into an account with the Bank of Taiwan in the name of the Supervisory Committee of Labor Retirement Reserve. In addition, the Company, before the end of each year, estimates the balance of said pension fund account. If the balance is insufficient to pay the pensions to employees who are estimated to meet the retirement criteria in the following year, the Company will make a contribution to make up for the difference in a lump sum before the end of March the next year.

(A) The amounts recognized on the balance sheet are as follows:

	December 31, 2025		December 31, 2024
Present value of defined benefit obligations	$	11,181	$	10,482
Fair value of plan assets	(	22,665)	(	20,442)
Net defined benefit assets (stated as other non-current assets)	($	11,484)	($	9,960)

(B) Changes in net defined benefit liabilities are as follows:

| | Defined benefit
Present value of obligation | Plan assets
Fair value | Net defined benefit
Benefit assets |
| --- | --- | --- | --- |
| 2025 | | | |
| Balance as of January 1 | ($ 10,482) | $ 20,442 | $ 9,960 |

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Interest (expense) income	( 157)	310	153
	( 10,639)	20,752	10,113
Remeasurement:
Return on plan assets (excluding amounts included in interest income or expenses)	-	1,432	1,432
Effect of changes in financial assumptions	( 134)	-	( 134)
Experience adjustments	( 408)	-	( 408)
	( 542)	1,432	890
Pension contributed	-	481	481
Pension paid	-	-	-
Balance as of December 31	($ 11,181)	$ 22,665	$ 11,484
	Defined benefit
Present value of obligation	Plan assets
Fair value	Net defined benefit
Benefit assets
---	---	---	---
2024
Balance as of January 1	($ 10,680)	$ 18,413	$ 7,733
Interest (expense) income	( 147)	256	109
	( 10,827)	18,669	7,842
Remeasurement:
Return on plan assets (excluding amounts included in interest income or expenses)	-	1,605	1,605
Effect of changes in financial assumptions	135	-	135
Experience adjustments	( 83)	-	( 83)
	52	1,605	1,657
Pension contributed	-	461	461
Pension paid	293	( 293)	-
Balance as of December 31	($ 10,482)	$ 20,442	$ 9,960

(C) The fund assets of the Company's defined benefit pension plan are managed by the Bank of Taiwan as per the percentage and amount of management items entrusted in the fund's annual investment plan in accordance with Article 6 of the Regulations on the Custody and Utilization of the Income and Expenditure of the Labor Retirement Fund (that is, deposits in domestic or foreign financial institutions, investments in domestic or foreign listed, over-the-counter, or private placement equity securities, and investments in domestic or foreign real estate and its securitization products, etc.). The relevant management is supervised by the Labor Pension Fund Supervisory Committee. The minimum income distributed as per the annual financial statements shall not be lower than the income calculated according to local banks' two-year time deposit interest rate. If there is any shortage, it will be made up for with an amount from the national treasury after being approved by the competent authority. As the Company has no right to participate in the operation and management of the fund, it cannot disclose the classification of the fair value of the plan assets in accordance with paragraph 142 of IAS 19. For the fair value of the total assets of the fund as of December 31, 2025 and 2024, please refer to the report on the use of the labor pension fund for each year announced by the government.

(D) A summary of the actuarial assumptions about pensions is as follows:

	2025		2024
Discount rate	1.38%		1.50%
Future salary increase rate	2.25%		2.25%

The assumptions about future mortality are estimated based on the 2021 Taiwan Standard Ordinary Experience Mortality Table.

The analysis of the present value of the defined benefit obligation affected by changes in the critical actuarial assumptions adopted is as follows:

	Discount rate		Future salary increase rate
	0.25% increase	0.25% decrease	0.25% increase	0.25% decrease
December 31, 2025
Effect on the present value of defined benefit obligations	($ 265)	$ 275	$ 267	($ 260)
December 31, 2024
Effect on the present value of defined benefit obligations	($ 262)	$ 272	$ 265	($ 257)

The sensitivity analysis above is based on the analysis of the impact of a change in a single assumption with other assumptions remaining unchanged. In practice, many changes in assumptions may be interlinked. The sensitivity analysis is consistent with the method adopted to calculate the net pension liability on the balance sheet.

The methods and assumptions used for the sensitivity analysis in this period are the same as those used in the prior period.

(E) In 2025 and 2024, the pension costs recognized by the Company as per the above pension regulations were ($153) and ($109), respectively.

(F) The Company's estimated contribution to the pension plan in 2026 is $481.

(G) As of December 31, 2025, the weighted average duration of the pension plan was 10 years. The maturity analysis of pension contribution is as follows:

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Less than one year	$	651
1–2 years		628
2–5 years		1,378
5 years or more		3,353
	$	6,010

B. Since July 1, 2005, the Company has formulated the defined contribution regulations on the basis of the Labor Pension Act, which applies to Taiwanese employees. For employees who choose the labor pension system under the Labor Pension Act, the Company makes a contribution equal to 6% of each employee’s salary to their personal account under the Bureau of Labor Insurance every month. The employee’s pension is paid based on the amount in the personal pension account and the amount of cumulative income on a monthly basis or in a lump sum.

In 2025 and 2024, the pension costs recognized by the Company as per the above pension regulations were $8,964 and $9,041, respectively.

(11) Capital stock

The Company’s authorized and paid-in capital as of December 31, 2025 and 2024, were $4,000,000 and $1,050,000, respectively, with a par value of $10 per share. The Company’s ordinary outstanding shares at both the beginning and end of the period amounted to 105,000 thousand.

(12) Capital surplus

In accordance with the Company Act, the premium on shares issued at a premium and the capital surplus from the receipt of gifts may be used to compensate the deficit losses and to issue new shares or pay out cash to shareholders in proportion to the shareholders’ shareholdings when the Company has no cumulative deficit. Furthermore, as per the relevant regulations of the Securities and Exchange Act, when said capital surplus is allocated to capital, the total amount shall not exceed 10% of the paid-in capital each year. The Company may not use the capital surplus to make up for its capital loss, unless the surplus reserve is insufficient to make up for such loss.

(13) Retained earnings

A. As per the Company’s Articles of Incorporation, in the event of a surplus of net income after tax in the annual financial statements, any cumulative deficit shall be compensated first (including the adjustment to the undistributed earnings), then 10% of the balance shall be set aside as a legal reserve, and an amount may be set aside as a special reserve or the special reserve may be reversed upon resolution by the shareholders’ meeting in compliance with laws and regulations. The remaining balance, together with undistributed earnings at the beginning of the same period, are the cumulative distributable earnings to shareholders, which can be distributed in the form of stock and cash dividends. However, the cash dividends to be distributed shall not be lower than 20% of the total dividends to be distributed. When distributing earnings, an appropriate amount may be withheld depending on current and future circumstances. After drawing up an earnings distribution proposal as per the above-mentioned principles, the Board of Directors shall submit it to the shareholders’ meeting for resolution.

B. The legal reserve may not be used except to make up for the Company’s losses and to issue new shares or pay out cash in proportion to the shareholders’ shareholdings. However, if new shares or cash are paid out, it shall be limited to the portion of the reserve in excess of 25% of the paid-in capital.

C. The 2023 earnings distribution proposal, approved by the shareholders’ meeting on May 29, 2024, is as follows:

	2023
	Amount	Dividends per share
Legal reserve	$ 4,877
Cash dividends	43,900	$ 0.42
	$ 48,777

D. On May 28, 2025, the shareholders’ meeting resolved that for the fiscal year 2024, there were accumulated losses to be covered and no profits available for distribution.

E. On March 4, 2026, the Board of Directors resolved that for the fiscal year 2025, there were accumulated losses to be covered and no profits available for distribution; however, such resolution remains subject to approval by the shareholders’ meeting.

F. Please refer to Note 6(20) for information on employee compensation and directors’ and supervisors’ remuneration.

(14) Operating revenue

	2025		2024
Revenue from customer contracts	$	524,994	$	354,975

A. Breakdown of revenue from customer contracts

The Company’s revenue is generated from the goods and services that are gradually transferred over time and transferred at a certain point in time. Income can be broken down into the main types below:

2025	Hotel room segment	Catering segment	Other segments	Write-off	Total
Segment revenue	$ 304,462	$ 200,304	$ 20,228	$ -	$ 524,994
Revenue from transactions between internal segments	4,202	-	40	( 4,242)	-
Revenue from contracts with external clients	$ 308,664	$ 200,304	$ 20,268	($ 4,242)	$ 524,994
Time point of revenue recognition
Revenue recognized gradually over time	$ 308,414	$ 200,304	$ 12,450	($ 4,242)	$ 516,926
Revenue recognized at a point in time	250	-	7,818	-	8,068
	$ 308,664	$ 200,304	$ 20,268	($ 4,242)	$ 524,994
2024	Hotel room segment	Catering segment	Other segments	Write-off	Total

B. Contract liabilities

The Company recognizes contract liabilities related to revenue from customer contracts as follows:

	December 31, 2025	December 31, 2024	January 1, 2024
Contract liabilities:
Contract liabilities – accommodation voucher advance receipts	$ 44,548	$ 48,745	$ 58,630
Contract liabilities – advance receipts for deposits	14,707	11,258	13,593
Contract liabilities – advance receipts for notes – others	9,533	10,743	13,983
Contract liabilities – membership card prepayment revenue	3,667	6,573	7,037
Contractual liabilities – customer loyalty program	2,039	1,522	1,325
	$ 74,494	$ 78,841	$ 94,568
Contract liabilities – current	$ 74,307	$ 78,740	$ 94,447
Contract liabilities – non-current	187	101	121
	$ 74,494	$ 78,841	$ 94,568

The contract liabilities at the beginning of the period recognized as revenue in 2025 and 2024 were $10,281 and $17,683, respectively.

(15) Interest income

	2025	2024
Interest on bank deposits	$ 387	$ 496
Other interest income	19	17
	$ 406	$ 513

(16) Other income

	2025	2024
Income from government grants	$ 1,079	$ 3,283
Rent income	857	1,007
Other income – others	9,229	6,222
	$ 11,165	$ 10,512

(17) Other gains and losses

	2025		2024
Losses on disposal of property, plant, and equipment	($)	25)	($) 587)
Disaster Losses		-	( 733)
Miscellaneous expenditures	( 1,208)		( 138)
	($)	1,233)	($) 1,458)

(18) Financial costs

	2025		2024
Interest expenses	$	12,288	$ 6,522
Interest expenses on lease liabilities		874	895
	$	13,162	$ 7,417

(19) Additional information on expenses

	2025		2024
Employee benefit expenses	$	225,599	$ 213,220
Catering and hotel service costs		106,234	82,357
Depreciation expenses		94,940	92,022
Utilities		39,341	36,514
Commission Expenses		13,271	7,554
Cleaning expenses		10,313	8,105
Credit card processing fees		7,802	4,430
Operating lease rents		7,630	7,998
Repair and maintenance expenses		5,526	7,679
Tax		5,163	5,240
Service fee		4,109	3,318
Amortization expenses		2,316	2,584
Other costs and expenses		40,418	35,169
Operating costs and operating expenses	$	562,662	$ 506,190

(20) Employee benefit expenses

	2025		2024
Salary and wages	$	181,627	$ 170,129
Labor and health insurance costs		20,439	20,287
Pension costs		8,811	8,932
Remuneration to directors		1,960	2,090

Other labor costs

12,762	11,782
$ 225,599	$ 213,220

A. Pursuant to the Company's Articles of Incorporation, the Company, after compensating the cumulative deficit according to the profitability of the year, shall allocate not less than 1% of the balance as employee compensation, of which 85% to 90% shall be allocated to entry-level employees, and not more than 2% as directors' and supervisors' remuneration.

B. The estimated amounts of employee compensation and director and supervisor remuneration were both $0 for the years ended December 31, 2025 and 2024, and such amounts were recorded under personnel expenses.

The amounts of employee compensation and director and supervisors remuneration for 2024 as resolved by the Board of Directors are consistent with the amounts recognized in the 2024 financial statements.

Please visit the MOPS for the relevant information on the employee compensation and directors' and supervisors' remuneration approved by the Company's Board of Directors.

(21) Income tax

A. Income tax expense

(A) Income tax expense components:

	2025	2024
Current income tax:
Income tax on current income	$ -	$ -
Prior year income tax underestimation	-	73
Total current income tax	-	73
Deferred tax:
Initial and reversal of temporary difference	(121)	19
Total deferred tax	(121)	19
Income tax (benefit) expense	($121)	$92

(B) The amount of income tax related to other comprehensive income:

	2025	2024
Remeasurement of defined benefit obligations	$ 178	$ 332

B. Relations between income tax expenses and accounting profit

	2025		2024
Income tax on net profit before tax at statutory tax rate	($)	8,098)	($)	29,813)
Expenses that should be excluded according to the tax law		1		-
Income exempted from tax under the tax law		-	(	1,031)
Taxable losses not recognized as deferred tax assets		7,976		30,863
Prior year income tax underestimation		-		73
Income tax (benefit) expense	($)	121)	$	92

C. The amount of each deferred tax asset or liability arising from the temporary difference is as follows:

	2025
	January 1	Recognized in profit or loss	Recognized in other comprehensive net income	December 31
Temporary difference:
- Deferred tax assets:
Unrealized expenses	$ 1,384	$ 155	$ -	$ 1,539
Allowance for inventory obsolescence and valuation losses	59	( 8)	-	51
Others	419	101	-	520
	1,862	248	-	2,110
- Deferred tax liabilities:
Remeasurement of defined benefit plans	( 2,799)	-	( 178)	( 2,977)
Others	( 175)	( 127)	-	( 302)
	( 2,974)	( 127)	( 178)	( 3,279)
	($ 1,112)	$ 121	($ 178)	($ 1,169)

-36-

	2024
	January 1	Recognized in profit or loss	Other comprehensive net income
Temporary difference:
- Deferred tax assets:
Unrealized expenses	$ 1,355	$ 29	$ -
Allowance for inventory obsolescence and valuation losses	29	30	-
Others	383	36	-
	1,767	95	-
- Deferred tax liabilities:
Remeasurement of defined benefit plans	( 2,467)	-	( 332)
Others	( 61)	( 114)	-
	( 2,528)	( 114)	( 332)
	($ 761)	($ 19)	($ 332)

D. The effective period of the Company's unused tax loss carryforwards and the relevant amounts of unrecognized deferred tax assets are as follows:

Year Incurred	Filed Amount/Assessed Amount	December 31, 2025		Amount of unrecognized deferred tax assets	Last valid year
		Amount not yet used for offsets
114	$ 39,884	$ 39,884	$ 39,884	124
113	$ 147,511	$ 147,511	$ 147,511	123
Year Incurred	Filed Amount/Assessed Amount	December 31, 2024		Amount of unrecognized deferred tax assets	Last valid year
		Amount not yet used for offsets
113	$ 147,511	$ 147,511	$ 147,511	123

The Company's income tax returns have been assessed by the tax authorities up to 2023.

(22) Loss per share

	2025
	After-tax amount	Weighted average shares outstanding Outstanding shares (thousand shares)	Loss per share (NT$)
Basic (diluted) loss per share
Current net loss	($ 40,371)	105,000	($ 0.38)

	2024 Weighted average shares outstanding Outstanding shares (thousand shares)		Loss per share (NT$)
Basic (diluted) loss per share	After-tax amount
Current net loss	($ 149,157)	105,000	($ 1.42)

(23) Additional information on cash flows

Investing activities with only partial cash payments:

	2025	2024
Acquisition of property, plant, and equipment	$ 8,676	$ 81,820
Add: Business facilities payable at the beginning of the period	7,806	32,459
Less: Business facilities payable at the end of the period	( 3,504)	( 7,806)
Less: Capitalization of interest	-	( 3,814)
Cash payment in the current period	$ 12,978	$ 102,659

(24) Changes in liabilities from financing activities

	2025
	Short-term borrowings	Short-term notes and bills payable	Long-term borrowings	Lease liabilities	Guarantee Deposits	Total liabilities arising from financing activities
January 1	$ 10,000	$ 139,730	$ 376,923	$ 37,029	$ 502	$ 564,184
Changes in financing cash flows	( 10,000)	( 69,975)	2,500	( 4,636)	( 100)	( 82,211)
Interest expenses paid (Note)	-	-	-	( 874)	-	( 874)
Other non-cash changes	-	-	-	3,114	-	3,114
December 31	$ -	$ 69,755	$ 379,423	$ 34,633	$ 402	$ 484,213
	2024
---	---	---	---	---	---	---
	Short-term notes and bills payable	Dividends payable	Long-term borrowings	Lease liabilities	Guarantee deposits received	Total liabilities from financing activities
January 1	$ -	$ -	$ 271,539	$ 37,926	$ 502	$ 309,967
Changes in financing cash flows	10,000	139,730	( 43,900)	105,384	( 4,213)	-
Interest expenses paid (Note)	-	-	-	-( 895)	-(	895)
Other non-cash changes	-	-	-	4,211	-	4,211
December 31	$ 10,000	$ 139,730	($ 43,900)	$ 376,923	$ 37,029	$ 502

Note: Cash flow from operating activities.

-38-

Related Party Transactions

(1) Names of related party and relations therewith

Name of related party	Relation with the Company
Fareast Land Development Co., Ltd.	Associate
Far Long Development Co., Ltd.	Associate
Family Treasure Career Co., Ltd.	Associate
Farglory Ocean Park Co., Ltd. (Farglory Ocean)	The representative of the juridical person chairperson is the same person
Yan Ying Investment Co., Ltd.	The representative of the juridical person chairperson is the same person
OLAH Poshtel Co., Ltd.	The representative of the juridical person chairperson is the same person
FGD Co., Ltd. (FGD)	The representative of the juridical person chairperson is the same person
Farglory International Investment Co., Ltd.	The major shareholder is the same person.
Farglory Creative Co., Ltd.	The major shareholder is the same person.
Tung Yuan Construction Co., Ltd.	The major shareholder is the same person.
Shin Yu Investment Co., Ltd.	The major shareholder is the same person.
Farglory Cultural & Educational Foundation	The major shareholder is the same person.
Farglory Life Insurance Co., Ltd. (Farglory Life Insurance)	The major shareholder is the same person.
Farglory Dome Co., Ltd.	The major shareholder is the same person.
Farglory Realty Co., Ltd. (Farglory Realty)	The major shareholder is the same person.
Farglory Land Development Co., Ltd. (Farglory Land Development)	The major shareholder is the same person.
Farglory Retail Management & Service Co., Ltd.	The major shareholder is the same person.
Farglory Free Trade Zone Co., Ltd.	The major shareholder is the same person.
Farglory Construction Co., Ltd. (Farglory Construction)	The major shareholder is the same person.
Farglory Free Trade Zone Investment Holding Co., Ltd.	The major shareholder is the same person.
Farglory Logistics Co., Ltd.	The major shareholder is the same person.
Yuan Xiang Construction Co., Ltd.	The major shareholder is the same person.
EvoVision Properties Co., Ltd.	Sub-subsidiary of associate
Chao, Wen-Chia	Chairman of associate

(2) Material transactions with related parties

A. Operating revenue

	2025	2024
Product sales:
- Other related parties	$ 7,524	$ 6,587

There is no material difference in the transaction price and payment terms for the products sold to related parties and non-related parties.

B. Product and ticket purchase

	2025	2024
Product and ticket purchase:
- Farglory Ocean	$ 25,649	$ 16,026

Due to operational needs, the Company purchases various tickets from related parties. It sells them and its accommodation vouchers as package deals or sells them in conjunction with group tour packages. The purchase of such tickets, as there are no other transaction types for comparison, is handled as per the conditions agreed upon by both parties. The Company purchased such tickets in 2025 and 2024 in the amounts of $25,649 and $16,026, respectively.

C. Lease transactions – as a lessee

(A) The Company leases buildings from related parties. The lease terms range from 2 to 12 years, and lease payments are made at the end of each month.
(B) Acquisition of Right-of-Use Assets

The Company did not obtain any right-of-use assets from related parties for the years ended December 31, 2025 and 2024.

Zhan Yue	$ 2025	984	$ 2024	1,068

(D) Lease liabilities

a. Ending balance

	December 31, 2025	December 31, 2024
Farglory Life Insurance	$ 30,221	$ 32,975

b. Interest expenses

	2025	2024
Farglory Life Insurance	$ 773	$ 840

D. Receivables from related parties

	December 31, 2025		December 31, 2024
Accounts receivable:
- Other related parties	$	427	$	359

This is from the membership cards and general products sold; the collection period is around 60 to 90 days. The sale of membership cards, as there are no other transaction types for comparison, is handled as per the conditions agreed upon by both parties.

E. Payables to related parties

	December 31, 2025		December 31, 2024
Accounts payable:
- Farglory Ocean	$	2,390	$	4,072
- Other related parties		140		-
	$	2,530	$	4,072

F. Accommodation voucher advance receipts (in "Contract liabilities – current")

	December 31, 2025		December 31, 2024
Farglory Construction	$	5,038	$	4,987
Farglory Life
Insurance		4,560		4,518
Farglory Realty		4,415		3,622
Other related parties		8,780		8,274
	$	22,793	$	21,401

The above amounts were related to the Company's sale of accommodation vouchers to related parties for advertising and promotional purposes. The Company recognized them as revenue based on the number of vouchers used. For the years ended December 31, 2025 and 2024, revenue from the hotel and catering business recognized amounted to $1,459 and $1,138, respectively. As there are no other transaction types for comparison, it is handled as per the conditions agreed upon by both parties.

G. Membership card prepayment revenue (in “Contract liabilities – current” and “Contract liabilities – non-current”)

	December 31, 2025		December 31, 2024
Farglory Land Development	$	3,488	$	6,317
Other related parties		65		114
		3,553		6,431
Less: Current portion (in “Contract liabilities – current”)	(	3,512)	(	6,431)
Total (in “Contract liabilities – non-current”)	$	41	$	-

The above amounts were related to the Company’s sale of membership cards to related parties, which were given to their clients as gifts for advertising and promotion purposes. The Company recognized the revenue based on the number of times the cards were used. For the years ended December 31, 2025 and 2024, membership card prepayment revenue recognized amounted to $6 and $0, respectively. As there are no other transaction types for comparison, it is handled as per the conditions agreed upon by both parties.

H. Guarantee deposits paid

	December 31, 2025		December 31, 2024
Farglory Life Insurance	$	1,102	$	1,102

I. Related parties’ provision of endorsement/guarantee

Mr. Chao, Wen-Chia acts as the joint guarantor of the Company’s long-term and short-term borrowings and commercial paper.

(3) Information on key management personnel’s remuneration

	2025	2024
Salary and other short-term employee benefits	$ 3,511	$ 3,712

-42-

8. Assets Pledged

The details of the Company’s assets pledged as collateral are as follows:

Assets	December 31, 2025	December 31, 2024	Purpose of guarantee
Property, plant, and equipment			Financing amounts for long-term and short-term borrowings and commercial papers
- Land	$ 37,069	$ 37,069	Financing amounts for long-term and short-term borrowings and commercial papers
- Property and buildings	875,529	899,800
Other current assets			Guarantee for performance obligations for pre-sale vouchers
- Trust deposits	6,911	7,969
Other non-current assets			Guarantee for performance obligations for pre-sale membership cards
- Trust deposits	100	100
	$ 919,609	$ 944,938

9. Material Contingent Liabilities and Unrecognized Contractual Commitments

(1) Contingencies
N/A.

(2) Commitments
The Company plans to carry out a large renovation and improvement project for the hotel to satisfy future operational needs. The amount of capital expenditure that has been finalized in contracts but not yet incurred is as follows:

Property, plant, and equipment	December 31, 2025	December 31, 2024
	$ 2,400	$ 3,122

10. Major Disaster Loss

N/A.

11. Material Events After the Balance Sheet Date

N/A.

-43-

12. Others

(1) Capital management

The Company’s capital management goals are to ensure that it can continue as a going concern, maintain an optimal capital structure to reduce capital costs, and provide shareholders with profit. The Company’s strategy in 2025 was the same as in 2024, which aimed to keep the debt-to-capital ratio below 15%. As of December 31, 2025, the debt-to-capital ratio exceeded the target level due to short-term financing undertaken for facility renovations and improvements, as well as the April 3, 2024 Hualien–Taitung earthquake, in order to ensure the quality of accommodations and increase overall visitor volume. As of December 31, 2025 and 2024, the Company’s debt-to-capital ratios were as follows:

	December 31, 2025		December 31, 2024
Total borrowings	$	449,178	$	526,653
Less: Cash	(	44,393)	(	98,167)
Net debt		404,785		428,486
Total equity		1,026,292		1,065,951
Total capital	$	1,431,077	$	1,494,437
Debt ratio	28.29%		28.67%

(2) Financial instruments

A. Types of financial instruments

	December 31, 2025		December 31, 2024
Financial assets
Financial assets at amortized cost
Cash and cash equivalents	$	44,393	$	98,167
Accounts receivable (including from related parties)		8,459		5,897
Other receivables		13,977		14,631
Guarantee deposits paid		2,379		2,300
Other financial assets		7,011		8,069
	$	76,219	$	129,064
	December 31, 2025		December 31, 2024
---	---	---	---	---
Financial liabilities
Financial liabilities at amortized cost
Short-term borrowings	$	-	$	10,000
Short-term notes and bills payable		69,755		139,730
Accounts payable		19,884		25,459
Other payables		57,832		63,327

Long-term
borrowings
(including those
maturing within a
year or an operating
cycle)
379,423
376,923
Guarantee deposits
received
402
502
$ 527,296
$ 615,941
Lease liabilities
$ 34,633
$ 37,029

B. Risk management policy
(A) The Company’s daily operations are affected by a number of financial risks, including market risks (including exchange rate risk, interest rate risk, and price risk), credit risk, and liquidity risk.
(B) Risk management is carried out by the Company’s finance department in accordance with the policy approved by the Board of Directors. The Company’s finance department is responsible for identifying, evaluating, and avoiding financial risks through close collaboration with its internal operating units. The Board of Directors has formulated principles for overall risk management and also provided written policies for specific areas and matters, such as exchange rate risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment using remaining liquidity.
(C) The Company does not invest in derivative instruments to avoid financial risks.

C. Nature and level of material financial risks
(A) Market risk
Exchange rate risk
The Company’s business does not involve certain non-functional currencies, so it is not affected by exchange rate fluctuations.
Price risk
The Company does not hold equity instruments and is therefore not affected by price risk.
Interest rate risk of cash flow and fair value
a. The Company’s borrowings are measured at amortized cost. According to the contracts, the interest rates are re-set every year. Therefore, the Company is exposed to the risk of future changes in market interest rates.
b. If New Taiwan Dollar borrowing interest rates had increased or decreased by 1%, with all other variables holding constant, post-tax net income for the years ended December 31, 2025 and 2024 would have decreased or increased by $3,035 thousand and $3,095 thousand, respectively. This is mainly attributable to changes in interest expenses arising from floating-rate borrowings.
(B) Credit risk

a. The credit risk of the Company is the risk of financial loss suffered by the Company arising from the failure of customers or counterparties of financial instruments to fulfill contractual obligations. In accordance with the internal credit policy, the Company shall conduct management and credit risk analysis of each new customer before deciding payment terms and conditions and obligations. The internal risk control system evaluates the credit quality of customers by considering their financial positions, past experience, and other factors. Individual risk limits are set by the Board of Directors based on internal or external ratings, and the drawdown of credit limits is regularly monitored. The main credit risk arises from cash and deposits in banks and financial institutions as well as customers, including uncollected receivables and committed transactions.

b. The Company adopts IFRS 9 as a basis for judging whether the credit risk of financial instruments has increased significantly since the initial recognition. When a contract payment is overdue for more than 30 days according to the agreed payment terms, it is deemed that the credit risk of the financial asset has increased significantly since initial recognition.

c. The Company adopts IFRS 9 to set the premise and assumption that when a contract payment is overdue for more than 90 days, it is deemed to be in default.

d. The Company groups the accounts receivable from customers according to the types of customers and adopts a simplified provision matrix to estimate expected credit losses.

e. The Company estimated the future outlook with reference to the Taiwan's economic outlook released by the Taiwan Institute of Economic Research and adjusted the loss rate identified according to historical information in a specific period and current information to estimate the allowance for loss on accounts receivable. Based on its assessment, there was no material impact on its financial position and financial performance.

f. The allowance for losses on accounts receivable determined using the simplified approach is not material.

a. The cash flow forecast is executed by each operating entity in the Company and is compiled by the Company's finance department. The Company's finance department monitors the forecast of the Company's liquidity requirements to ensure that it has sufficient funds to meet operational needs and pay liabilities due.

b. The following table shows the Company's non-derivative financial liabilities, grouped by maturity date, and non-derivative financial liabilities are analyzed based on the remaining period from the balance sheet date to the contract maturity date. The contractual cash flows disclosed in the table below are the undiscounted amounts.

Non-derivative financial liabilities:

December 31, 2025	Less than 1 year	1–2 years	2–5 years	After 5 years
Short-term notes and bills payable	$ 70,000	$ -	$ -	$ -
Accounts payable	19,884	-	-	-
Other payables	57,832	-	-	-

-46-

Guarantee deposits received	402	-	-	-
Lease liabilities	5,324	5,324	12,308	15,292
Long-term borrowings	114,678	117,842	165,687	-
Non-derivative financial liabilities:
December 31, 2024	Less than 1 year	1–2 years	2–5 years	After 5 years
Short-term borrowings	$ 10,267	$ -	$ -	$ -
Short-term notes and bills payable	140,000	-	-	-
Accounts payable	25,459	-	-	-
Other payables	63,325	-	-	-
Guarantee deposits received	502	-	-	-
Lease liabilities	5,239	4,546	12,607	19,034
Long-term borrowings	50,109	114,113	239,067	-

c. The Company does not expect that the cash flows in the maturity analysis will occur significantly earlier or that the actual amounts will differ significantly.

13. Additional Disclosures

(1) Information on material transactions

A. Funds lent to others: N/A.
B. Endorsements/guarantees provided to others: N/A.
C. Significant marketable securities held at the end of the period (excluding investments in subsidiaries, associates, and joint ventures): None.
D. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: N/A.
E. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: N/A.
F. Business relationship and major transactions between the parent company and subsidiaries: None.

(2) Information on investees

N/A.

(3) Information on investment in mainland China

N/A.

Information on Operating Segments

(1) General information

The Company’s management team has identified the reportable segments based on the reporting information used by the operating decision makers to make decisions. As the Company mainly operates in the hotel and restaurant business, its reportable segments in 2025 and 2024 were the hotel and the catering segments. The remainder of the operational results are consolidated and presented in the “Other segments” column.

(2) Measurement of segment information

The accounting policy of the operating segments are the same as the summary of significant accounting as described in Note 4.
The Company measures its operating segments’ revenue and net segment profit or loss as a basis for evaluating performance.

(3) Segment information

The Company’s financial information on relevant operating segments in 2025 and 2024 is listed as follows:

	Hotel room segment	Catering segment	2025 Other segments	Write-off	Total
External revenue	$ 304,462	$ 200,304	$ 20,228	$ -	$ 524,994
Internal revenue	4,202	-	40	( 4,242)	-
Segment revenue	$ 308,664	$ 200,304	$ 20,268	($ 4,242)	$ 524,994
Segment profit or loss	$ 108,690	$ 10,557	($ 159,739)	$ -	($ 40,492)
Segment profit or loss includes:
Depreciation expenses	($ 51,764)	($ 12,906)	($ 30,270)	$ -	($ 94,940)
	Hotel room segment	Catering segment	2024 Other segments	Write-off	Total
---	---	---	---	---	---
External revenue	$ 197,225	$ 143,844	$ 13,906	$ -	$ 354,975
Internal revenue	3,631	-	125	( 3,756)	-
Segment revenue	$ 200,856	$ 143,844	$ 14,031	($ 3,756)	$ 354,975
Segment profit or loss	$ 20,166	($ 15,478)	($ 153,753)	$ -	($ 149,065)
Segment profit or loss includes:
Depreciation expenses	($ 50,334)	($ 12,493)	($ 29,195)	$ -	($ 92,022)

The Company does not provide the operating decision maker with total assets and total liabilities for making operating decisions.

-47-

(4) Information on reconciliation of segment profit or loss

The segment revenue and segment profit or loss presented by the Company to the operating decision makers are measured in the same way as revenue and net income before tax in the financial statements, so no reconciliation is required.

(5) Product and service information

The Company’s revenue mainly comes from the hotel and catering business and the provision of services, including catering, leisure, and accommodation, which belongs to a single industry. The details of the revenue balance are the same as Note 6(14) regarding operating revenue.

(6) Information by region

All of the Company’s revenue is from within the country, and all non-current assets are located domestically.

(7) Information on important clients

The Company has no clients accounting for more than 10% of its revenue in the income statement.

(The remainder of this page is intentionally left blank)

-48-

Schedule 1

Fairly Hotel Co., Ltd.

Schedule of Changes in Property, Plant, and Equipment

For the Year Ended December 31, 2025

Unit: NT$ thousand

Schedule 1

Item	Opening balance	Increase in the current period	Decrease in the current period	Reclassification in the current period	Ending balance	Pledged as collateral
Cost
Land	$ 37,069	$ -	$ -	$ -	$ 37,069	See Note 8
Property and buildings	2,356,166	1,726	( 6,716)	12,846	2,364,022	See Note 8
Transportation equipment	10,993	-	( 69)	-	10,924
				Note
Business facilities	39,337	2,149	( 1,562)	( 19)	1	39,905
Landscape gardening	158,987	-	-	-	158,987
Other equipment	269,895	4,243	( 1,052)	-	273,086
Unfinished construction
work and equipment to be tested	12,935	558	-	( 12,935)	558
	2,885,382	8,676	( 9,399)	( 108)	2,884,551
Accumulated depreciation
Property and buildings	( 939,027)	( 66,176)	6,716	-	( 998,487)
Transportation equipment	( 5,589)	( 1,220)	69	-	( 6,740)
Landscape gardening	( 154,566)	( 344)	-	-	( 154,910)
Other equipment	( 180,277)	( 22,196)	1,027	-	( 201,446)
	( 1,279,459)	( 89,936)	7,812	-	( 1,361,583)
	$ 1,605,923	($ 81,260)	($ 1,587)	($ 108)	$ 1,522,968

Note 1: Reclassified from business facilities to inventory $19.

Schedule 1 Page 1

Schedule 2
Fairly Hotel Co., Ltd.
Schedule of Operating Revenue
For the Year Ended December 31, 2025
Unit: NT$ thousand

Item	Quantity	Amount	Remarks
Guest room income		$ 304,462
Catering income		200,304
Other income		20,228
		$ 524,994

Schedule 2 Page 1

Schedule 3
Fairly Hotel Co., Ltd.
Schedule of Operating Costs
For the Year Ended December 31, 2025
Unit: NT$ thousand

Item	Amount	Remarks
Catering and hotel service costs
Beginning inventory	$ 4,730
Add: Purchases in the current period	87,525
Reclassified from fixed assets	19
Reclassified from other expenses	151
Less: Ending inventory	( 4,682)
Gain from price recovery of inventory	( 41)
Inventory reclassified to supplies inventory	( 7,180)
Other Catering and Hotel Costs	301,355
	381,877
Other Operating Costs	42,529
	$ 424,406

Schedule 3 Page 1

Schedule 4
Fairly Highest Lending Rate 100%
18-20
Part 1
Part 2

Schedule 4
Item	Summary	Amount	Remarks
Salary and wages		$ 116,215
Depreciation		64,698
Utilities		33,463
Additional products for package deals		25,688
Others		61,291	The balance of each item does not exceed 5% of the total amount of this account
		$ 301,355

Page 1

Schedule 5
Fairly Highest Lets
of the

Schedule 5			Unit: NT$ thousand
Item	Summary	Amount	Remarks
Salary and wages		$ 19,202
Depreciation		10,350
Utilities		4,222
Insurance		2,589
Others		6,166	The balance of each item does not exceed 5% of the total amount of this account
		$ 42,529

Schedule 5 Page 1

Schedule 6
Fairglory Hotel Co., Ltd.
Schedule of Selling Expenses
For the Year Ended December 31, 2025
Unit: NT$ thousand

Item	Amount	Remarks
Commission Expenses	$ 13,271
Salary and wages	8,745
Credit card processing fees	7,802
Advertising expenses	4,547
Others	4,625	The balance of each item does not exceed 5% of the total amount of this account
	$ 38,990

Schedule 6 Page 1

Schedule 7
Page 1

| Farglory Hotel Co., Ltd.
Schedule of General and Administrative Expenses
For the Year Ended December 31, 2025 | | | |
| --- | --- | --- | --- |
| Schedule 7 | | | Unit: NT$ thousand |
| Item | Summary | Amount | Remarks |
| Salary and wages | | $ 37,465 | |
| Depreciation | | 19,756 | |
| Insurance | | 5,363 | |
| Tax | | 5,112 | |
| Others | | 31,560 | The balance of each item does not exceed 5%
of the total amount of this account |
| | | $ 99,256 | |

Schedule 8
2025
Fall 2025
2024
April 2024

SCHEDULE 8
By function	Operating costs	2025 Operating expenses	Total	Operating costs	2024 Operating expenses
By nature					Total
Employee benefit expenses
Salary and wages	$ 135,417	$ 46,210	$ 181,627	$ 125,026	$ 45,103
Labor and health insurance costs	15,245	5,194	20,439	15,094	5,193
Pension costs	6,454	2,357	8,811	6,522	2,410
Remuneration to directors	-	1,960	1,960	-	2,090
Other employee benefit expenses	6,065	6,697	12,762	5,202	6,580
Depreciation expenses	75,048	19,892	94,940	73,658	18,364
Amortization expenses	276	2,040	2,316	462	2,122
Note:
1. The number of employees in 2024 and 2023 was 341 and 337, respectively, and the number of directors who did not serve as employees concurrently was 4 in both.
2. (1) The average employee benefit expenses in 2021 were $663.
The average employee benefit expenses in 2023 were $634.
(2) The average employee benefit expenses in 2023 were $634.
The average employee salary expense in 2023 was $511.
(3) The average employee salary adjustment was (5%).
(4) Since the Company has set up the Audit Committee, remuneration for supervisors is not applicable.

Unit: NT$ thousand
Page 1

Farglory Hotel Co., Ltd.
Summary of Employee Benefits, Depreciation, and Expenses by Function for the Period (Continued)
2025

Schedule 8

Unit: NT$ thousand

Directors' and managers' remuneration policy:
(1) The Remuneration Committee and the Board of Directors are authorized to determine the fixed remuneration to directors by considering their level of participation in and contribution to the Company's operations and the value of their contributions to the Company's operations while taking into account the general standards adopted in the industry and their individual responsibilities.
(2) The remuneration of the Company's managers includes salary, bonuses, employee compensation, and retirement benefits. The remuneration is determined based on their job positions, responsibilities, and contributions to the Company's operations and with reference to the general salary level in the industry. The payment of remuneration is subject to the future operational risks faced by the Company and is positively associated to its operational performance. Their remuneration is reviewed by the Remuneration Committee and resolved and approved by the Board of Directors.
Employee salary and compensation policy:
(1) The Company is committed to providing competitive salary and benefits and realizing gender equality and equal pay for equal work, in order to attract outstanding talent from all sides, and rewards employees for their contributions to the Company. The Company adopts a competitive salary system in compliance with the labor laws and regulations every year as per the market salary standards, external competitiveness and internal fairness of talent, labor market supply and demand, and overall economic indicators, and determines employees' salary based on their job positions, education and experience, professional knowledge and skills, years of professional service, and personal performance, regardless of age, gender, and ethnicity.
(2) The Company has established a complete performance evaluation and review system and achieved the goals of strengthening organizational efficiency and enhancing employees' capabilities through an annual performance evaluation. Employee promotion and salary adjustment are based on individual abilities and qualifications and are not affected by factors such as age, gender, and ethnicity; as such, employees can enjoy employee compensation in alignment with their individual performance and the Company's profitability and share the Company's operating profits.
As per Article 30 of the Company's Articles of Incorporation: To motivate employees and the management team, the Company shall, after compensating any accumulated deficits from the annual profit (pre-tax profit, less employee compensation and directors' remuneration), distribute:
A. Not less than 1% of the balance as employee compensation;
B. Not more than 2% of the balance as directors' remuneration.

The employee compensation mentioned in the preceding paragraph shall be distributed in stock or cash as resolved by the Board of Directors, and the recipients of the compensation may include employees of the Company's subsidiaries who meet certain criteria. The employee compensation and directors' remuneration distribution proposal shall be carried out after being approved by the Board of Directors and reported to the shareholders' meeting.

Schedule 8 Page 2

AI assistant

Far Glory Hotel Co., Ltd. Annual Report 2025

52187_rns_2026-04-30_e913d611-b5a0-4442-a066-92191a0bd32e.pdf

Audit opinions

Basis for audit opinion

Key audit matters

The correctness of room revenue recognition

Description

Corresponding audit procedures

Management of accommodation voucher advance receipts

Description

Corresponding audit procedures

Responsibilities of the management and the governing body for the financial statements

CPAs’ responsibilities for the audit of the financial statements

(21) Income tax

(23) Additional information on cash flows

(24) Changes in liabilities from financing activities

8. Assets Pledged

9. Material Contingent Liabilities and Unrecognized Contractual Commitments

10. Major Disaster Loss

11. Material Events After the Balance Sheet Date

12. Others

(1) Capital management

(2) Financial instruments

A. Types of financial instruments

13. Additional Disclosures

AI assistant

Far Glory Hotel Co., Ltd. — Annual Report 2025

52187_rns_2026-04-30_e913d611-b5a0-4442-a066-92191a0bd32e.pdf

Audit opinions

Basis for audit opinion

Key audit matters

The correctness of room revenue recognition

Description

Corresponding audit procedures

Management of accommodation voucher advance receipts

Description

Corresponding audit procedures

Responsibilities of the management and the governing body for the financial statements

CPAs’ responsibilities for the audit of the financial statements

(21) Income tax

(23) Additional information on cash flows

(24) Changes in liabilities from financing activities

8. Assets Pledged

9. Material Contingent Liabilities and Unrecognized Contractual Commitments

10. Major Disaster Loss

11. Material Events After the Balance Sheet Date

12. Others

(1) Capital management

(2) Financial instruments

A. Types of financial instruments

13. Additional Disclosures

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Far Glory Hotel Co., Ltd. Annual Report 2025