Altek - AGM Information 2020 | FinancialReports.eu

Altek Corporation

2020 Annual General Shareholders’ Meeting Minutes (Translation)

Time and Date: June 12, 2020 at 9 a.m.

Place: No.2, Zhanye 1st Rd., Hsinchu City, Taiwan

Total outstanding shares (excluding 8,000,000 non-voting shares): 271,587,325 shares Total shares represented by shareholders present in person or by proxy: 184,657,301 shares (including 27,771,675 shares casted electronically) Percentage of shares held by shareholders present in person or by proxy: 67.99 % Chairman: Alex Hsia, the Chairman of the Board of Directors

Directors: Belle Liang, Director

Attendees: Tien-Yi Lee, CPA of PricewaterhouseCoopers Taiwan and Jennifer Chen,

Attorney.

Recorder: Carrie Wei

A.Commencement (The aggregate shareholding of the shareholders present in person or by proxy constituted a quorum. The Chairman called the meeting to order.)

B.Chairman’s Address (omitted)

C.Report Items

I. 2019 business report (refer to Attachment 1)
II. Audit Committee’s review report (refer to Attachment 2)
III. Distribution of 2019 profit sharing bonus to employees and directors.

Explanations:

i.According to Article 25 of the Company’s Articles of Incorporation, the Company shall appropriate 10%~20% of the annual earnings, if any, as employees’ profit sharing bonus and appropriate no more than 2% of the annual earnings as director’s bonus.
ii.It’s proposed to appropriate 15% of the annual earnings, equivalent to NT$16,220,178, as employees’ profit sharing bonus and 2% of the annual earnings, equivalent to NT$2,162,690, as director’s bonus. The aforementioned amounts are the same as the amounts estimated in 2019 and will all be paid in cash.

IV. 2019 cash dividend report.
Explanations:
i.According to Article 26 of the Company’s Articles of Incorporation, the distributable dividends and bonuses in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition, thereto a report of such distribution shall be submitted to the shareholders’ meeting.
ii.Cash dividends to common shareholders: Totaling NT$139,793,663. Each common share holder will be entitled to receive a cash dividend of NT$0.5 per share. The cash dividend less than NT$1 for the odd shares will be booked as other income of the Company.
iii.The Board of Directors resolved to authorize the Chairman to schedule the ex-dividend date, dividend distribution date. If the outstanding shares are affected by the changes in the capital stock of the Company and thus affects the distribution ratio to shareholders, the Chairman is authorized to handle the relevant matters discretionally
V. To report the status of issuance of new common shares in private placement and/or issuance of domestic or overseas convertible bonds in private placement. Explanations:
i.The Annual General Shareholders’ Meeting held on June 13, 2019 approved to issue new common shares in private placement and/or issue domestic or overseas convertible bonds in private placement (hereinafter “the Fund Raising”) not exceeding 60,000,000 shares subject to Article 43-6 of Securities and Exchange Act, and to carry out the Fund Raising in single or combo instruments, one or two run(s) within one year.
ii.The Fund Raising has yet been executed and it will be due on June 12, 2020. The Board of directors has resolved to cease the Fund Raising in the remaining period.

VI. Implementation of share buyback program. Explanations:

i.Implementation of share buyback program as below:

Batch Order	The 9th Batch (The 1st of 2020)	The 10thBatch
Date of board resolution	2020/01/31	2020/03/20
Purpose of buy-back	To transfer to employees	To transfer to employees
Timeframe of buy-back	2020/02/03-2020/04/02	2020/03/23-2020/05/22
EstimatedQuantityof buy-back	8,000,000 shares	8,000,000 shares
Price range	NT$20 to NT$28per share	NT$18 to NT$25per share
Quantityof shares bought back	8,000,000 shares	3,000,000 shares
Value of shares bought-back	NT$145,952,950	NT$63,231,863
Average repurchasepriceper share	NT$18.24	NT$21.08
Shares sold/transferred	0 shares	0 shares
Accumulated number of company shares held	8,000,000 shares	11,000,000 shares
Percentage of total company shares held(%)	2.86%	1.07%
Reasons for failure to complete the buy-back program before the expiration date	N.A.	This program has not been completed in order to protect shareholders’ rights and market mechanism.

ii.Attach the 1st Rules on Transfer Repurchased Shares to Employees for 2020 and the 10th Rules on Transfer Repurchased Shares to Employees. Please refer to Attachment 3 and 4.

D.Recognition Items

I. 2019 business report and financial statements (Proposed by the Board of Directors)

Explanations:

i.The Company’s 2019 financial statements were audited by CPA Tien-Yi Lee and CPA Kwok-Wah Tsang of PricewaterhouseCoopers Taiwan which were presented and resolved along with the business report in the 15th board meeting of the 8th term of Board of Directors as well as reviewed by the Audit Committee.
ii.Please refer to Attachment 1 for the business report and Attachment 5 for the independent auditor’s report and financial statements.

Resolution: The result is as follows:

184,657,301 shares were represented at the time of voting (including 27,771,675 shares casted electronically), Votes in favor: 175,763,454 votes (95.18% of total represented shares), Votes against: 64,728 votes (0.03% of total represented shares), Votes abstained: 8,829,119 votes (4.78% of total represented shares), Votes invalid: 0 vote (0.00% of total represented shares).

It was resolved that the above proposal be and hereby were accepted as submitted.

II. Distribution of 2019 earnings (Proposed by the Board of Directors)

Explanations:

i.The Company plans to distribute the 2019 earnings in accordance with the Company Law and the Company’s Articles of Incorporation as follows:

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. Unit: NTD
Item Amount
Unappropriated earnings – beginning 2,311,812,038
Add: The 2019 net income 84,307,773
Add: The actuarial benefits of the current (1,143,762)
defined benefit plan
Less: 10% legal reserve (8,316,401)
Less: Special reserve (156,646,026)
Current earnings available for distribution 2,230,013,622
Distribution:
Cash dividend (NT$0.5 per share) (139,793,663)
Stock dividend 0
Unappropriated earnings - ending 2,090,219,959
Note 1:The cash dividend per share for the aforementioned shareholder
is computed in accordance with the 279,587,325 shares entitled to
the dividend distribution as of March 11, 2020. The cash dividend
less than NT$1 for the odd shares will be booked as other income
of the Company.
Note 2:The distribution of earnings is based on the earnings generated in
2019 and the insufficient amount, if any, is to be replenished with
the earnings of previous years according to the last-in-first-out
principle.
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Resolution: The result is as follows:

184,657,301 shares were represented at the time of voting (including 27,771,675 shares casted electronically), Votes in favor: 176,132,208 votes (95.38% of total represented shares), Votes against: 64,733 votes (0.03% of total represented shares), Votes abstained: 8,460,360 votes (4.58% of total represented shares), Votes invalid: 0 vote (0.00% of total represented shares).

It was resolved that the above proposal be and hereby were accepted as submitted.

E.Discussion and Election Items

I. To amend the Articles of Incorporation. (Proposed by the Board of Directors)

Explanations:

To comply with the Company Act and to accommodate the Company’s actual operational needs, it is proposed to amend the Articles of Incorporation. Please refer to Attachment 6 for the comparison table of amendments.

Resolution: The result is as follows:

184,657,301 shares were represented at the time of voting (including 27,771,675 shares casted electronically), Votes in favor: 176,134,911 votes (95.38% of total represented shares), Votes against: 64,751 votes (0.03% of total represented shares), Votes abstained: 8,457,639 votes (4.58% of total represented shares), Votes invalid: 0 vote (0.00% of total represented shares).

It was resolved that the above proposal be and hereby were accepted as submitted.

II. To approve the issuance of new common shares in private placement and/or issuance of domestic or overseas convertible bonds in private placement. (Proposed by the Board of Directors)

Explanations:

i. To invest the high-end technologies, enrich working capital, repay borrowings, reinforce financial structures, invite strategic investors and support the Company’s development funding needs, taking fund-raising flexibility into consideration and in accordance with Article 43-6 of the Securities and Exchange Act, it is proposed that the shareholders meeting to authorize the Board of Directors, within the limit of 60,000,000 common shares, to raise funds through private placement based on the Company’s needs and market conditions. Afore-mentioned private placement includes single or combo instruments such as issuance of new common shares for cash in private placement ("Private Placement Common Shares") and/or issuance of overseas or domestic convertible bonds in private placement (“Private Placement CB”), and shall be executed by one or two run(s). For issuance of Private Placement CB, the number of common shares to be converted shall be calculated in accordance with the conversion price at the time of issuance and shall be no more than 60,000,000 shares. Considering the capital market’s effectiveness, feasibility and costs to raise capital, the benefits to maintain long-term relationship with strategic partners and the no-trading period of 3 years by such security issuance of private placement, the Company proposed to raise funds through private placement, rather than public offering. Please refer to Attachment 7 for the amount of shares, the basis and rationality to determine the issue price, the method of determining specific investors, objective, necessity and anticipated benefit, the necessity for issuance of Private Placement Common Shares and the use of proceeds and the anticipated benefit.
ii. It’s proposed that the shareholders meeting to authorize the Board to adjust and process the Private Placements conditions, convertible bond issuance and conversion scheme, use of proceeds, schedule, anticipated benefit and other relevant matters based on the Company’s needs, market conditions, relevant laws and regulations, instruction by competent authority.
iii. The Chairman or designated personnel shall be authorized to process all matters related to the Private Placement and sign relevant contracts on behalf of the Company.
iv. For matters not mentioned herein, the Board of Directors shall be authorized to process fully by relevant laws and regulations.

Resolution: The result is as follows:

184,657,301 shares were represented at the time of voting (including 27,771,675 shares casted electronically), Votes in favor: 164,420,716 votes (89.04% of total represented shares), Votes against: 11,775,828 votes (6.37% of total represented shares), Votes abstained: 8,460,757 votes (4.58% of total represented shares), Votes invalid: 0 vote (0.00% of total represented shares).

It was resolved that the above proposal be and hereby were accepted as submitted.

III.To elect the board members for the 9th term. (Proposed by the Board of Directors)

Explanations:

i. The 8th term of the Board of Directors of the Company will expire on June 15, 2020. Since the shareholders’ meeting will be held on June 12, 2020 ahead of the schedule, the 9th term of Board of Directors (including Independent Directors) will be elected accordingly in accordance with Articles 195 of the Company Law. The 8th session of the Directors will be discharged on the date when the 9th session of the Directors begins their duties (which is 12th June, 2020).
ii. The Company intends to set up the Audit Committee in accordance with the Securities and Exchange Act, which shall be organized by all three Independent Directors.
iii. The Company has seven to nine Directors elected for a term of three years that shall be elected among the competent individuals in the shareholders’ meeting and they can be elected for a second term according to Article 15 of the Articles of Incorporation of the Company. There should be not less than three Independent Directors elected among the aforementioned Board Directors, which shall not be less than one fifth of the seats of the Directors. It was resolved in the 15th meeting of the Company’s 8th term of Board of Directors that the seven Directors (including three Independent Directors) elected for the 9th term of Board of Directors begin their duties for a term of three years from June 12, 2020 to June 11, 2023.
iv. The Directors of the Company are elected according to the nomination system for candidates and the list of candidates for Directors has been examined and approved in the 16th meeting of the 8th term of Board of Directors. The information related to their education, experience, and shareholding is as follows:

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Shareholding as of
Title Name Education Experience
April 14, 2020
M.A. of Electronics Engineering,
Director Alex Hsia Vice President of Microtek Co. 897,934 shares
UCS
Bachelor of Rutgers University President of Gold Jasper
Director Sophia Chen 0 share
of New Jersey Management Co., Ltd.
University of California, Design Manager of Xerox
Director Simon Law 13,956,100 shares
Berkeley, USA Corporation
MBA of Finance, National Special Assistant to Chairman
Director Belle Liang 13,956,100 shares
Taiwan University of THSR Corporation
Researcher of Faculty of
Independent Director of Fuji Film Corp.
MORI SHOREI Engineering 0 share
Director Japan
The University of Tokyo
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Title	Name	Education	Experience	Shareholding as of April 14,2020
Independent Director	Kuo Hsiung Wu	Ph.D. of Computer Science, UCLA, USA	Vice president of TSMC Japan	0 share
Independent Director	Daphne Wang	M.A. of Business Administration, University of Pittsburgh, USA	Assistant Manager of CDIB Capital Group	805 shares

The representative of Yitsang International Limited Company.
v. This election will be implemented in accordance with the Procedures for Election of Directors.

Voting results:

The list of the newly elected directors with votes received as below ：

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Title Name Votes Received
Director Alex Hsia 257,726,652
Director Sophia Chen 208,425,895
Representative of Yitsang International
Director 208,179,919
Limited Company, Simon Law
Representative of Yitsang International
Director 208,173,890
Limited Company, Belle Liang
Independent
MORI SHOREI 116,673,531
Director
Independent
KUO HSIUNG WU 116,633,195
Director
Independent
Daphne Wang 116,018,829
Director
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IV. To release the prohibition on directors from participation in competitive Business. (Proposed by the Board of Directors) Explanations:
i.According to Article 209 of the Company Law, the Directors conducting the same or similar business with the Company’s business for themselves or others shall explain the important contents of their acts in the shareholders’ meeting for approval.
ii.For the Directors and their representatives of the Company newly elected in the 2020 annual general shareholders’ meeting, under the precondition of not jeopardizing the Company’s best interests, it’s proposed to release the non-competition restrictions in accordance with Article 209 of the Company Law. The scope of aforementioned non-competition restrictions to be released is to be explained when discussed in the annual general shareholders’ meeting.

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Company name and position of Main scope of
Title Name
Participation in Competitive Business business
R&D and sales of
Chairman of Altek Semiconductor
integrated circuits
Corp.
with special
applications
Imaging technology
and electronic
Director Alex Hsia
Executive Director of Altek hardware and
Semiconductor (Shanghai) Co., Ltd. software
development and
sales
Chairman of Altek Semiconductor Business operation
(Cayman) Co., Ltd. and investment
Medical (dental)
Independent Director of Veden
Director Sophia Chen materials
Dental Group
manufacturing
IC design, electronic
Independent Director of
Director Belle Liang materials wholesale
eGalax_eMPIA Technology Inc
and retail
----- End of picture text -----*

The representative of Yitsang International Limited Company.

Resolution: The result is as follows:

184,657,301 shares were represented at the time of voting (including 27,771,675 shares casted electronically), Votes in favor: 176,041,990 votes (95.33% of total represented shares), Votes against: 107,920 votes (0.05% of total represented shares), Votes abstained: 8,507,391 votes (4.60% of total represented shares), Votes invalid: 0 vote (0.00% of total represented shares).

It was resolved that the above proposal be and hereby were accepted as submitted.

V.To amend the Rules of Procedure for Shareholder Meetings. (Proposed by the Board of Directors)

Explanations:

To comply with the Company Act and to accommodate the Company’s actual operational needs, it is proposed to amend the Rules of Procedure for Shareholder Meetings. Please refer to Attachment 8 for the comparison table of amendments.

Resolution: The result is as follows:

184,657,301 shares were represented at the time of voting (including 27,771,675 shares casted electronically), Votes in favor: 176,067,582 votes (95.34% of total represented shares), Votes against: 69,981 votes (0.03% of total represented shares), Votes abstained: 8,519,738 votes (4.61% of total represented shares), Votes invalid: 0 vote (0.00% of total represented shares).

It was resolved that the above proposal be and hereby were accepted as submitted.

F.Extraordinary Motions:

(Questions raised by shareholder (No.167247) and chairman responses were omitted.)

G.Adjournment: Meeting ended at 9:36 am

Attachment 1

Altek Corporation

2019 Business Report

In the last year, the global political and economic situation has changed rapidly, such as the trade war, the rise of national protectionism, geopolitical tensions, and the extreme weather disasters. In addition, the developed countries are facing growth bottlenecks, rapid technological innovation, dramatic changes in consumer behaviors and corporate business models, all of which are facing severe challenges. In recent years, Altek has continued to transform and develop in the field of digital imaging and optimize its product structure. Due to the transition period of old and new products and the delay launch of new products by customers, consolidated revenue of 2019 was NT $ 6.2 billion, decreased significantly than last year. Consolidated gross profit margin increased to 16%, net income was NT$ 84 million, and earnings per share was NT$0.31.

Altek has been deeply involved in the field of digital imaging for more than 20 years. We have the total solution of software and hardware system integration, chip designed and algorithm capabilities. In recent years, it has been actively developing Edge Vision AI (Vision AI Company). Altek continues to cooperate with Qualcomm, Microsoft, Amazon and other international giants to provide edge AI solutions for various industries, which provide commercial and home AI security camera systems, imagine signal processor , 3D sensor solutions and other vision related products. Altek’s capabilities for those new trend-up product lines generate the long-term growth drivers. Moreover, in the medical product lines such as blood glucose meters, insulin injection systems and disposable endoscopes will be steadily growth in the next few years.

Looking forward to 2020, the whole world has been shrouded in the shadow of the coronavirus, which has a profound impact on the global industry and economy. With continuously investing in smart imaging core technology and system integration capabilities, strengthen the company's competitiveness, Altek will continue to work hard to overcome various challenges, and to strengthen the company's growth and competitiveness. Altek is expecting to achieve higher shareholders’ value. Thanks again to all shareholders for the long-term support and encouragement to the Company.

Chairman & CEO Alex Hsia

Attachment 2

Audit Committee’s Review Report

To: The 2020 Annual General Shareholders’ Meeting

The Board of Directors has prepared the Company’s 2019 Business Report, Financial Statements and proposal for allocation of earnings. The CPA firm of PricewaterhouseCoopers was retained to audit Altek’s Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and earnings allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of Altek Corporation. According to relevant requirements of the Securities Exchange Act and the Company Act, we hereby submit this report.

Altek Corporation

Chairman of the Audit Committee

Ching Jen Hu

March 20, 2020

Attachment 3

The 1st Rules on Transfer Repurchased Shares to Employees for 2020

Revised on March 20, 2020

Article 1

For the purpose to encourage our employees and to build cohesion among the employees, the Company hereby, pursuant to Article 28-2, Paragraph 1, Subparagraph 1 of the “Securities and Exchange Act” and the “Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies” issued by Financial Supervisory Commission R.O.C., establishes the 2020 1st Plan of Share Repurchase and Transferring to the Employees”(the “Plan”). Except otherwise provided in relevant laws or regulations, all share repurchase and transfer to the employees of the Company shall

be implemented in compliance with the Plan.

Article 2

Type of transfer of shares, content of rights and restrictions on rights

The shares to be transferred to the employees are ordinary shares. Except as otherwise provided in relevant laws or regulations or in this plan, the rights and obligations embedded thereon are the same with other ordinary shares of the Company.

Article 3

Transfer period

The repurchased shares can be transferred to employees in one time or several times, such subscription day(s) shall be set within 5 years from the date of share-repurchase.

Article 4

Transferee’s eligibility

Any full-time employee of the Company and its subsidiaries who has served on the subscription record date and approved by the Chairman is eligible for subscription in accordance with Article 5 of the plan.

Article 5

The procedure of transfer

The number of shares to be subscribed by the employees shall be determined by the Chairman in consideration of the service years, position, grade, performance, overall contribution, special merits or other conditions for the management needs to determine the rights of the shares being received by the employees.

However, for employees who are managerial officers or Board members, the award of such shares shall obtain approval of the Compensation Committee in advance.

Article 6

The procedure of the Plan

(1) In accordance with the resolution of the Board to make the announcement and the filings and repurchase the shares of the Company within the execution period.

(2) The Board authorizes the Chairman in accordance with the Plan to announce and approve the number of shares transferred in each phase, the employees’ subscription record date, the standard of the number of shares to be subscribed, the payment period of the subscription, the content of rights, the conditions of restrictions, and etc.

(3)If the employee fails to subscribe and make the payment at the expiration of the payment period, it shall be deemed as a waiver, and the balance of the under-subscription shall be authorized to the Chairman to have other employees to subscribe.

(4) Count the actual number of shares being paid for subscription and process the registration of the transfer of shares.

Article 7

The agreed transfer price per share

For the repurchase shares being transferred to the employees, the transfer price is the average repurchase price of the repurchased shares.

However, before the transfer, if the Company's outstanding common shares increase or decrease, it may be adjusted according to the increase or decrease ratio of the issued shares.

Transfer price adjustment formula: Adjusted transfer price = Average repurchase price of shares repurchased x (Total number of outstanding common shares at the time of filing the repurchase of shares / Total number of outstanding common shares before the transfer of the repurchase shares to the employees)

Article 8

Rights and obligations of shares after transfer

After the repurchased shares have been transferred and registered under employees’ names, unless otherwise specified, the rights and obligations associated with the shares are the same as the other common shares.

Article 9

Other related rights and obligations of the Company and employee

The taxes and fees incurred in association with the Plan shall be handled in accordance with the regulations currently in effect and the relevant procedures of the Company.

The Company may reserve the right to adjust the Plan in according to the regulation amended. The employees who subscribe the repurchased shares shall undertake the obligation of confidentiality.

Article 10

This Plan shall take effect and be amended after being affirmatively resolved by the Board.

Article 11

The enactment and any amendment of the Plan shall be reported to the shareholders meeting.

Attachment 4

The 10th Rules on Transfer Repurchased Shares to Employees

Set on March 20, 2020

Article 1

For the purpose to encourage our employees and to build cohesion among the employees, the Company hereby, pursuant to Article 28-2, Paragraph 1, Subparagraph 1 of the “Securities and Exchange Act” and the “Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies” issued by Financial Supervisory Commission R.O.C., establishes the 10th“Plan of Share Repurchase and Transferring to the Employees”(the “Plan”). Except otherwise provided in relevant laws or regulations, all share repurchase and transfer to the employees of the Company shall be implemented in compliance with the Plan.

Article 2

Type of transfer of shares, content of rights and restrictions on rights

The shares to be transferred to the employees are ordinary shares. Except as otherwise provided in relevant laws or regulations or in this Plan, the rights and obligations embedded thereon are the same with other ordinary shares of the Company.

Article 3

Transfer period

The repurchased shares can be transferred to employees in one time or several times, such subscription day(s) shall be set within 5 years from the date of share-repurchase.

Article 4

Transferee’s eligibility

Article 5

The procedure of transfer

However, for employees who are managerial officers or Board members, the award of such shares shall obtain approval of the Compensation Committee in advance.

Article 6

The procedure of the Plan

(1) In accordance with the resolution of the Board to make the announcement and the filings and repurchase the shares of the Company within the execution period.

(4) Count the actual number of shares being paid for subscription and process the registration of the transfer of shares.

Article 7

The agreed transfer price per share

For the repurchase shares being transferred to the employees, the transfer price is the average repurchase price of the repurchased shares.

However, before the transfer, if the Company's outstanding common shares increase or decrease, it may be adjusted according to the increase or decrease ratio of the issued shares.

Article 8

Rights and obligations of shares after transfer

After the repurchased shares have been transferred and registered under employees’names, unless otherwise specified, the rights and obligations associated with the shares are the same as the other common shares.

Article 9

Other related rights and obligations of the Company and employee

The taxes and fees incurred in association with the Plan shall be handled in accordance with the regulations currently in effect and the relevant procedures of the Company.

The Company may reserve the right to adjust the Plan in according to the regulation amended. The employees who subscribe the repurchased shares shall undertake the obligation of confidentiality.

Article 10

This Plan shall take effect and be amended after being affirmatively resolved by the Board.

Article 11

The enactment and any amendment of the Plan shall be reported to the shareholders meeting.

Attachment 5

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR 19000242 (In Thousands of New Taiwan Dollars)

To the Board of Directors and Shareholders of ALTEK CORPORATION

Opinion

We have audited the accompanying consolidated balance sheets of ALTEK CORPORATION AND SUBSIDIARIES (the “Group”) as at December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

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

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Allowance for inventory valuation losses

Description

Please refer to Note 4(14) for description of accounting policy on inventory valuation. Please refer to Note 5(2) for accounting estimates and assumption uncertainty in relation to inventory valuation. Please refer to Note 6(6) for description of allowance for inventory valuation losses.

The Group is primarily engaged in manufacturing and sales of digital image application products. As the Group is in a rapidly changing industry and the short life cycle of electronic products and the highly competitive nature of the market, there is a higher risk of incurring inventory valuation losses or having obsolete inventory. The Group measures inventories sold at the lower of cost and net realisable value. For inventory that is over a certain age and individually identified obsolete or damaged inventory, the Group recognises losses at net realisable value. Aforementioned allowance for inventory valuation losses mainly arises from individually identified obsolete or damaged inventory. Since the value of inventories is significant, involves various types of inventory, and the individual identification of inventory usually involves management judgement which is an area that also needs to be assessed using our judgement during the audit process. Thus, we identified valuation of allowance for inventory losses as one of the key audit matters.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

A. Obtained an understanding and assessed the provision policy on inventory valuation losses.

B. Obtained the statement of individually identified obsolete inventory prepared by management and checked the accuracy of stock age analysis report and relevant information.

C. Checked the accuracy of net realisable value of inventory, assessed the consistency between valuation of market value decline and its provision policy, and assessed the reasonableness of allowance for valuation losses determined by the Group.

Timing of sales revenue recognition

Description

Please refer to Note 4(30) for accounting policies of revenue recognition. The Company and its subsidiaries’ revenue mainly arises from export sales and the cash amounts are material. As the sales terms vary from customers who are located in Mainland China, Europe and America, the terms in customer orders and contracts needs to be properly assessed. Since this involves judgement in the determination of timing of control transfer, we consider the timing of revenue recognition as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

A. Assessed the appropriation of policies on sales revenue recognition.

B. Assessed and tested the design of internal controls that are relevant to sales revenue recognition and the effectiveness of execution.

C. Performed cutoff test on sales revenue in specific period around balance sheet date. D. Performed confirmation and substantive test on the balance of accounts receivable at the end of period to confirm accounts receivable and that relevant sales revenue have been recorded in the proper period.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Altek Corporation as at and for the years ended December 31, 2019 and 2018.

Responsibilities of management and those charged with governance for the consolidated financial statements

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

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

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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

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

Tsang, Kwok-Wah Li, Tien-Yi

For and on behalf of PricewaterhouseCoopers, Taiwan

March 15, 2019

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

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December 31, 2019 December 31, 2018
Assets Notes AMOUNT % AMOUNT %
Current assets
1100 Cash and cash equivalents 6(1) $ 6,666,055 47 $ 6,495,017 40
1136 Current financial assets at amortised 6(4)
cost, net 371,900 3 261,228 2
1150 Notes receivable, net 6(5) - - 1,387,222 8
1170 Accounts receivable, net 6(5) 918,019 7 2,414,775 15
1200 Other receivables 42,095 - 31,712 -
1220 Current income tax assets 5,481 - 683 -
130X Inventories, net 6(6) 1,038,629 8 999,212 6
1410 Prepayments 194,345 1 89,451 1
1470 Other current assets 5,869 - 6,141 -
11XX Current Assets 9,242,393 66 11,685,441 72
Non-current assets
1510 Non-current financial assets at fair 6(2)
value through profit or loss 40,156 - 23,683 -
1517 Non-current financial assets at fair 6(3)
value through other comprehensive
income 50,644 - 114,508 1
1535 Non-current financial assets at 6(4)
amortised cost 365,285 3 - -
1550 Investments accounted for using 6(7)
equity method - - 26,768 -
1600 Property, plant and equipment, net 6(8) 3,135,694 22 3,376,345 21
1755 Right-of-use assets 6(9) 131,950 1 - -
1760 Investment property, net 6(10) 763,733 6 770,551 4
1780 Intangible assets, net 6(11) 153,541 1 100,142 1
1840 Deferred income tax assets 6(28) 161,572 1 102,696 1
1900 Other non-current assets 40,466 - 70,336 -
15XX Non-current assets 4,843,041 34 4,585,029 28
1XXX Total assets $ 14,085,434 100 $ 16,270,470 100
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ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

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December 31, 2019 December 31, 2018
Liabilities and Equity Notes AMOUNT % AMOUNT %
Current liabilities
2100 Short-term borrowings 6(12) $ 2,200,000 16 $ 1,760,000 11
2110 Short-term notes and bills payable 6(13) 229,962 2 - -
2130 Current contract liabilities 34,096 - - -
2150 Notes payable 4,316 - 1,049,446 6
2170 Accounts payable 1,010,670 7 1,878,509 12
2200 Other payables 424,512 3 415,658 3
2230 Current income tax liabilities 39,762 - 58,625 -
2250 Provisions for liabilities - current 6(17) 5,823 - 35,378 -
2280 Current lease liabilities 7,274 - - -
2300 Other current liabilities 200,878 2 223,054 1
21XX Current Liabilities 4,157,293 30 5,420,670 33
Non-current liabilities
2540 Long-term borrowings 6(14) - - 600,000 4
2550 Provisions for liabilities - noncurrent 6(17) 136,568 1 113,115 1
2570 Deferred income tax liabilities 6(28) 449,924 3 447,061 3
2580 Non-current lease liabilities 95,531 1 - -
2600 Other non-current liabilities 29,392 - 28,043 -
25XX Non-current liabilities 711,415 5 1,188,219 8
2XXX Total Liabilities 4,868,708 35 6,608,889 41
Equity attributable to owners of parent
Share capital 6(18)
3110 Common stock 2,753,613 19 2,740,113 17
Capital surplus 6(19)
3200 Capital surplus 2,280,487 16 2,262,397 14
Retained earnings 6(20)
3310 Legal reserve 1,394,151 10 1,381,094 8
3320 Special reserve 435,679 3 425,580 3
3350 Unappropriated retained earnings 2,394,976 17 2,471,973 15
Other equity interest 6(21)
3400 Other equity interest ( 615,359) ( 4) ( 294,938) ( 2)
31XX Equity attributable to owners of
the parent 8,643,547 61 8,986,219 55
36XX Non-controlling interest 573,179 4 675,362 4
3XXX Total equity 9,216,726 65 9,661,581 59
Significant subsequent event 11
3X2X Total liabilities and equity $ 14,085,434 100 $ 16,270,470 100
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The accompanying notes are an integral part of these consolidated financial statements.

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

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Year ended December 31
2019 2018
Items Notes AMOUNT % AMOUNT %
4000 Sales revenue 6(22) $ 6,189,352 100 $ 11,193,569 100
5000 Operating costs 6(6)(26)(27) ( 5,174,937) ( 84) ( 9,875,021) ( 88)
5900 Net operating margin 1,014,415 16 1,318,548 12
Operating expenses 6(26)(27)
6100 Selling expenses ( 57,328) ( 1) ( 69,425) ( 1)
6200 General and administrative
expenses ( 335,763) ( 5) ( 336,529) ( 3)
6300 Research and development
expenses ( 787,765) ( 13) ( 814,075) ( 7)
6450 Expected credit gains (losses) 12(2) 9,771 - ( 7,262) -
6000 Total operating expenses ( 1,171,085) ( 19) ( 1,227,291) ( 11)
6900 Operating (loss) profit ( 156,670) ( 3) 91,257 1
Non-operating income and
expenses
7010 Other income 6(23) 189,844 3 184,733 2
7020 Other gains and losses 6(24) 23,951 - 50,527 -
7050 Finance costs 6(25) ( 25,703) - ( 25,497) -
7000 Total non-operating income
and expenses 188,092 3 209,763 2
7900 Profit before income tax 31,422 - 301,020 3
7950 Income tax expense 6(28) ( 35,275) - ( 127,870) ( 1)
8200 (Loss) profit for the year ($ 3,853) - $ 173,150 2
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ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

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Year ended December 31
2019 2018
Items Notes AMOUNT % AMOUNT %
Other comprehensive income
Components of other
comprehensive income that will
not be reclassified to profit or loss
8311 Other comprehensive income, 6(15)
before tax, actuarial gains
(losses) on defined benefit plans ( $ 1,430) - $ 682 -
8316 Unrealised gains from financial 6(3)
assets measured at fair value
through other comprehensive
income ( 61,872) ( 1) ( 12,016) -
8349 Income tax related to 6(28)
components of other
comprehensive income that will
not be reclassified to profit or
loss 558 - ( 1,029) -
8310 Components of other
comprehensive income that
will not be reclassified to
-
profit or loss ( 62,744) ( 1) ( 12,363)
Components of other
comprehensive income that will
be reclassified to profit or loss
8361 Currency translation differences
-
of foreign operations ( 310,899) ( 5) 33,267
8399 Income tax relating to the 6(28)
components of other
comprehensive income 59,375 1 6,219 -
8360 Components of other
comprehensive (loss) income
that will be reclassified to
-
profit or loss ( 251,524) ( 4) 39,486
8300 Total other comprehensive (loss)
-
income for the year ( $ 314,268) ( 5) $ 27,123
8500 Total comprehensive (loss) income
for the year ( $ 318,121) ( 5) $ 200,273 2
Profit (loss), attributable to:
8610 Owners of the parent $ 84,308 1 $ 130,562 2
8620 Non-controlling interest ( 88,161) ( 1) 42,588 -
Profit (loss) for the year ( $ 3,853) - $ 173,150 2
Comprehensive (loss) income
attributable to:
8710 Owners of the parent ( $ 215,938) ( 3) $ 144,490 1
8720 Non-controlling interest ( 102,183) ( 2) 55,783 1
Total comprehensive income (loss)
for the year ( $ 318,121) ( 5) $ 200,273 2
6(29)
9750 Basic earnings per share $ 0.31 $ 0.48
6(29)
9850 Diluted earnings per share $ 0.31 $ 0.48
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The accompanying notes are an integral part of these consolidated financial statements.

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

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Equity attributable to owners of the parent
Retained Earnings Other equity interest
Currency translation
Unappropriated differences of foreign Non-controlling
Notes Common stock Capital surplus Legal reserve Special reserve retained earnings operations Other equity-others Treasury stocks Total interest Total equity
2018
Balance at January 1, 2018 $ 2,738,188 $ 2,256,692 $ 1,379,754 $ 142,456 $ 2,737,026 ($ 283,124 ) ($ 19,215 ) ($ 96,138 ) $ 8,855,639 $ 629,586 $ 9,485,225
Effects of retrospective application 6(21) - - - - 23,600 - ( 23,600 ) - - - -
Equity at beginning of period after
adjustments 2,738,188 2,256,692 1,379,754 142,456 2,760,626 ( 283,124 ) ( 42,815 ) ( 96,138 ) 8,855,639 629,586 9,485,225
Profit for the year - - - - 130,562 - - - 130,562 42,588 173,150
Other comprehensive income (loss) 6(21)
for the year - - - - 427 26,291 ( 12,790 ) - 13,928 13,195 27,123
Total comprehensive income (loss) - - - - 130,989 26,291 ( 12,790 ) - 144,490 55,783 200,273
Appropriation of 2017 earnings 6(20)
Legal reserve - - 1,340 - ( 1,340 ) - - - - - -
Special reserve - - - 283,124 ( 283,124 ) - - - - - -
Cash dividends - - - - ( 135,178 ) - - - ( 135,178 ) - ( 135,178 )
Share-based payment transactions 6(16)(18)(19)(21) 3,200 6,624 - - - - 14,060 - 23,884 - 23,884
Retirement of employee restricted 6(16)(18)(19)(21)
shares ( 1,275 ) ( 2,165 ) - - - - 3,440 - - - -
Treasury stock sold to employees - 1,246 - - - - - 96,138 97,384 - 97,384
Non-controlling interest - - - - - - - - - ( 10,007 ) ( 10,007 )
Balance at December 31, 2018 $ 2,740,113 $ 2,262,397 $ 1,381,094 $ 425,580 $ 2,471,973 ($ 256,833 ) ($ 38,105 ) $ - $ 8,986,219 $ 675,362 $ 9,661,581
2019
Balance at January 1, 2019 $ 2,740,113 $ 2,262,397 $ 1,381,094 $ 425,580 $ 2,471,973 ($ 256,833 ) ($ 38,105 ) $ - $ 8,986,219 $ 675,362 $ 9,661,581
Profit (loss) for the year - - - - 84,308 - - - 84,308 ( 88,161 ) ( 3,853 )
Other comprehensive income (loss) 6(21)
for the year - - - - ( 1,144 ) ( 237,502 ) ( 61,600 ) - ( 300,246 ) ( 14,022 ) ( 314,268 )
Total comprehensive income (loss) - - - - 83,164 ( 237,502 ) ( 61,600 ) - ( 215,938 ) ( 102,183 ) ( 318,121 )
Appropriation of 2018 earnings 6(20)
Legal reserve - - 13,057 - ( 13,057 ) - - - - - -
Special reserve - - - 10,099 ( 10,099 ) - - - - - -
Cash dividends - - - - ( 137,005 ) - - - ( 137,005 ) - ( 137,005 )
Share-based payment transactions 6(16)(21) - - - - - - 10,271 - 10,271 - 10,271
Restricted stock 6(16)(18)(19)(21) 14,500 19,430 - - - - ( 33,930 ) - - - -
Retirement of employee restricted 6(16)(18)(19)(21)
shares ( 1,000 ) ( 1,340 ) - - - - 2,340 - - - -
Balance at December 31, 2019 $ 2,753,613 $ 2,280,487 $ 1,394,151 $ 435,679 $ 2,394,976 ($ 494,335 ) ($ 121,024 ) $ - $ 8,643,547 $ 573,179 $ 9,216,726
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The accompanying notes are an integral part of these consolidated financial statements.

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ Adjustments Adjustments to reconcile profit (loss) Depreciation 6(8)(9)(10)(26) Amortisation 6(11)(26) Expected credit (gains) losses 12(2) ( Net gain on financial assets at fair value through profit or loss 6(2)(24) ( Interest expense 6(25) Interest income 6(23) ( Dividend income 6(23) ( Share-based payment compensation cost 6(16)(27) Reversal of impairment loss on investments accounted for under the equity method 6(24) ( (Gain) loss on disposal of property, plant and equipment 6(24) ( Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Notes receivable Accounts receivable Other receivables Inventories ( Prepayments ( Other current assets Changes in operating liabilities Current contract liabilities Notes payable ( Accounts payable ( Other payables Provisions for liabilities ( Other current liabilities ( Other non-current liabilities Cash inflow generated from operations Interest received Dividends received Interest paid ( Income tax paid ( Net cash flows from operating activities	Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ Adjustments Adjustments to reconcile profit (loss) Depreciation 6(8)(9)(10)(26) Amortisation 6(11)(26) Expected credit (gains) losses 12(2) ( Net gain on financial assets at fair value through profit or loss 6(2)(24) ( Interest expense 6(25) Interest income 6(23) ( Dividend income 6(23) ( Share-based payment compensation cost 6(16)(27) Reversal of impairment loss on investments accounted for under the equity method 6(24) ( (Gain) loss on disposal of property, plant and equipment 6(24) ( Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Notes receivable Accounts receivable Other receivables Inventories ( Prepayments ( Other current assets Changes in operating liabilities Current contract liabilities Notes payable ( Accounts payable ( Other payables Provisions for liabilities ( Other current liabilities ( Other non-current liabilities Cash inflow generated from operations Interest received Dividends received Interest paid ( Income tax paid ( Net cash flows from operating activities	2019 31,422 $ 196,903 29,352 9,771 ) 16,710 ) ( 25,703 143,999 ) ( 763 ) ( 10,271 649 ) ( 1,922 ) 237 1,389,593 ( 1,506,379 ( 21,074 ( 78,118 ) 107,492 ) 91 34,228 1,046,737 ) 829,267 ) ( 15,079 6,108 ) 21,651 ) 64 997,209 111,086 763 24,258 ) ( 54,691 ) ( 1,030,109	2019 31,422 $ 196,903 29,352 9,771 ) 16,710 ) ( 25,703 143,999 ) ( 763 ) ( 10,271 649 ) ( 1,922 ) 237 1,389,593 ( 1,506,379 ( 21,074 ( 78,118 ) 107,492 ) 91 34,228 1,046,737 ) 829,267 ) ( 15,079 6,108 ) 21,651 ) 64 997,209 111,086 763 24,258 ) ( 54,691 ) ( 1,030,109	2018 301,020 218,896 28,802 7,262 13,944 ) 25,497 123,745 ) 915 ) 16,841 26,272 ) 1,358 581,745 1,383,249 ) 101,648 ) 12,602 ) 150,526 86,624 9,853 - 1,039,044 186,687 ) 9,556 24,908 41,550 81 694,501 123,176 915 23,434 ) 91,383 ) 703,775

(Continued)

~30~

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost
Proceeds from capital reduction of investments
accounted for under the equity method
Proceeds from capital reduction of financial assets
at fair value through profit or loss
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Increase in intangible assets
Acquisition of investment property
Increase in deposits received
Net cash flows used in investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
Proceeds from issuance of short-term notes and
bills payable
Repayment of short-term notes and bills payable
Increase in long-term borrowings
Repayment of long-term borrowings
Increase (decrease) in deposits-in
Repayment of lease liabilities principal
Cash dividends for capital surplus
Employee stock options exercised
Treasury shares sold to employees
Net cash flows (used in) from financing
activities
Effect of exchange rate
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2019
2018
( $ 506,472 )
( $ 257,524 )
27,529
-
-
3,915
6(31)
(
17,948 )
(
29,373 )
4,076
41,831
6(31)
(
85,612 )
(
7,927 )
-
(
8,000 )
(
2,347 )
(
4,656 )
(
580,774 )
(
261,734 )
440,000
(
261,000 )
709,203
798,756
(
480,000 )
(
1,000,000 )
-
600,000
(
600,000 )
-
424
(
3,209 )
(
7,966 )
-
6(20)
(
137,005 )
(
135,178 )
-
9,824
-
94,603
(
75,344 )
103,796
(
202,953 )
74,198
171,038
620,035
6(1)
6,495,017
5,874,982
6(1)
$ 6,666,055
$ 6,495,017

The accompanying notes are an integral part of these consolidated financial statements.

Attachment 6

Comparison Table for Articles of Incorporation

	Article after Revision	Article before Revision	Reason for Revision
	Article 2: The scope of business of the Company shall be as follows: 1. CC01080 Electronics parts and components manufacturing business. 2. CF01011 Medical Materials and Equipment Manufacturing. 3. F108031 Wholesale of Drugs, Medical Goods. 4. F208031 Retail sale of Medical Equipments. 5.F401010 International trade business. 6.F401021 Restricted telecommunication radio frequency equipment and material import business. Researching, developing, designing, producing, manufacturing, and selling the following products: Digital Imaging-Related Product. Digital medical imaging related products. Insulin injection pump system. Glucose machine with smart medical function. Endoscopic system. Conducting import and export trade relating to the Company’s business.	Article 2: The scope of business of the Company shall be as follows: 1. CC01080 Electronics parts and components manufacturing business. 2. F401010 International trade business`。` 3. F401021 Restricted telecommunication radio frequency equipment and material import business`。` Researching, developing, designing, producing, manufacturing, and selling the following products: Digital Imaging-Related Product. Conducting import and export trade relating to the Company’s business.	To accommodate the actual operational needs.
	Article 32: With the consent of the promotes in the promoter‘s meeting, the Articles of Incorporations were duly stipulated on December 20, 1996. The Articles were duly amended on December 26, 1996 as the 1st amendment~ the 19th	Article 32: With the consent of the promotes in the promoter‘s meeting, the Articles of Incorporations were duly stipulated on December 20, 1996. The Articles were duly amended on December 26, 1996 as the 1st amendment~ the 19th	To add the date of revision.

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Article after Revision Article before Revision Reason for Revision
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	amendment….(omitted) The Articles were duly amended on June 13, 2019 as the 20th amendment. The Articles were duly amended on June 12, 2020 as the 21th amendment.	amendment….(omitted) The Articles were duly amended on June 13, 2019 as the 20th amendment.

Attachment 7

Fund Raising Methods and Handling Principles of Private Placement

I.Amount of shares

It is proposed that the shareholders meeting to authorize the Board of Directors (“Board”), within the limit of 60,000,000 common shares, to raise funds through private placement based on the Company’s needs and market conditions. Afore-mentioned private placement includes single or combo instruments such as issuance of new common shares for cash in private placement ("Private Placement Common Shares") and/or issuance of overseas or domestic convertible bonds in private placement (“Private Placement CB”), and shall be executed by one or two run(s). For issuance of Private Placement CB, the number of common shares to be converted shall be calculated in accordance with the conversion price at the time of issuance and shall be no more than 60,000,000 shares.

II.Issuance of Private Placement Common Shares

1.Basis and rationality to determine the issue price:

(1) The reference price is set as the higher of the following two calculation methods: (a) the simple average closing price from either 1, 3 or 5 trading days prior to the pricing date; (b) the simple average closing price of 30 trading days prior to the pricing date, minus dividends adjustments, plus price discount due to capital reduction.
(2) The issue price shall be no less than 80% of the reference price. It is proposed to authorize the Board to determine the issue price based on the results of negotiation with specific investors and market conditions.
(3) The issue price of Private Placement Common Shares will be determined referring to the Company’s share prices and Directions for Public Companies Conducting Private Placements of Securities which has set a no-trading period of 3 years on private placement securities. Therefore, determination of the issue price should be considered reasonable.
2.The method of determining specific investors, objective, necessity and anticipated benefit:
The specific investors shall meet the qualifications regulated in Article 43-6 of the Securities and Exchange Act and are limited to strategic investors. Priority will be given to the individual or institutional investors who could benefit the Company's long term development and competitiveness. The Board is fully authorized to determine the specific investors. By leveraging the strategic investor’s capability and experience in technology, knowledge, business, finance or marketing channel, the Company could benefit from technology upgrades, product development, cost reduction, market expansion and ultimately to strengthen the Company’s competitiveness and to enhance its operational efficiency and long term development.

3.The necessity for issuance of Private Placement Common Shares ： Considering the capital market’s effectiveness, feasibility and costs to raise capital, the benefits to maintain long-term relationship with strategic partners and the no-trading period of 3 years by such security issuance of private placement, the Company proposed to raise funds through private placement, rather than public offering.

The private placement will be executed by one or two run(s) according to the results of negotiation with specific investors and market conditions.

4.Use of proceeds and the anticipated benefit:
(1).Private placement with one run (adding issued Private Placement CB shall be no more than 60,000,000 shares in aggregate):

The proceeds will be used to invest in digital imaging related equipment and technology, expanding market, enriching working capital, repaying borrowings and reinforcing financial structures which will in turn strengthen the company's competitiveness, operating efficiency and boost shareholders’ equity.

(2).Private placement with two runs

The first run: 10,000,000 ~ 50,000,000 shares (adding issued Private Placement CB shall be no more than 60,000,000 shares in aggregate)

The second run:10,000,000 ~ 50,000,000 shares (adding issued Private Placement Common Shares and issued Private Placement CB shall be no more than 60,000,000 shares in aggregate)

5.The rights and obligations of Private Placement Common Shares are the same as the issued common shares except for the restriction on transfers specified in Article 43-8 of the Securities and Exchange Act.

III.Issuance of Private Placement CB

1.Duration ： No more than seven years.
2.Rate ： It is proposed to authorize the Board to decide the rate based on market conditions.
3.Par Value ： NTD 100,000 or its multiple times ； USD 10, 000 or its multiple times.
4.Basis and rationality to determine the issue price:
(1)The issue price of Private Placement CB shall not be lower than 80% of the theoretical price which is determined by a pricing model considering all options in the issuance terms.

(2)It is proposed to authorize the Board to determine the issue price based on the results of negotiation with specific investors and market conditions.
(3)The issue price of the Private Placement CB will be determined referring to the Company’s share prices and Directions for Public Companies Conducting Private Placements of Securities which has set a no-trading period of 3 years on private placement securities. Therefore, determination of the issue price should be considered reasonable.
5.The method of determining specific investors, objective, necessity and anticipated benefit:
The specific investors shall meet the qualifications regulated in Article 43-6 of the Securities and Exchange Act and are limited to strategic investors. Priority will be given to the individual or institutional investors who could benefit the Company's long term development and competitiveness. The Board is fully authorized to determine the specific investors. By leveraging the strategic investor’s capability and experience in technology, knowledge, business, finance or marketing channel, the Company could benefit from technology upgrades, product development, cost reduction, market expansion and ultimately to strengthen the Company’s competitiveness and to enhance its operational efficiency and long term development.
6.The necessity for issuance of Private Placement CB ：
Considering the capital market’s effectiveness, feasibility and costs to raise capital, the benefits to maintain long-term relationship with strategic partners and the no-trading period of 3 years by such security issuance of private placement, the Company proposed to raise funds through private placement, rather than public offering.

The private placement will be executed by one or two run(s) according to the results of negotiation with specific investors and market conditions.

7.Use of proceeds and the anticipated benefits:
(1).Private placement with one run ： (adding issued Private Placement Common Shares shall be no more than 60,000,000 shares in aggregate)
The proceeds will be used to invest in digital imaging related equipment and technology, expanding market, enriching working capital, repaying borrowings and reinforcing financial structures which will in turn strengthen the company's competitiveness, operating efficiency and boost shareholders’ equity.
(2).Private placement with two runs

The first run: 10,000,000 ~ 50,000,000 shares (adding issued Private Placement Common Shares shall be no more than 60,000,000 shares in aggregate)

The second run:10,000,000 ~ 50,000,000 shares (adding issued Private Placement Common Shares and issued Private Placement CB shall be no more than 60,000,000 shares in aggregate)

8.The restriction on transfer of Private Placement CB complies with Article 43-8 of the Securities and Exchange Act.

Attachment 8

Comparison Table for the Rules of Procedure for Shareholder Meetings

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Article after Revision Article before Revision Reason for Revision
1-1: 1-1: To accommodate the
Unless otherwise provided by New regulations.
law or regulation, this
Corporation's shareholders
meetings shall be convened by
the board of directors.
Election or dismissal of directors
or supervisors, amendments to
the articles of incorporation, the
dissolution, merger, or
demerger of the corporation, or
any matter under Article 185,
paragraph 1 of the Company
Act, Articles 26-1 and 43-6 of
the Securities and Exchange Act,
or Articles 56-1 and 60-2 of the
Regulations Governing the
Offering and Issuance of
Securities by Securities Issuers
shall be set out in the notice of
the reasons for convening the
shareholders meeting. None of
the above matters may be
raised by an extraordinary
motion.
The convening of the
shareholders 'meeting has
stated the full re-election of
directors and the date of
appointment. After the
re-election of the shareholders'
meeting, the same meeting shall
not change its appointment
date by temporary motion or
other means.
2. Attending Shareholders and 2.Attending shareholders (or To accommodate the
their proxies (collectively, their proxies) shall wear an regulations.
"shareholders") shall wear an attendance card and submit a
attend shareholders meetings sign-in card to show their
based on attendance cards, and present. The number of the
submit a sign-in cards to show shares represented by attending
their present, or other shareholders (or their proxies)
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----- Start of picture text -----

Article after Revision Article before Revision Reason for Revision
certificates of attendance. The shall be calculated according to
number of the shares the submitted sign-in card.
represented by attending The Corporation may appoint
shareholders (or their proxies) retained attorneys or certified
shall be calculated according to public accountants or relevant
the submitted sign-in personnel to attend a
card.Solicitors soliciting proxy shareholders’ meeting.
forms shall also bring
identification documents for
verification.
The Corporation may appoint
retained attorneys or certified
public accountants or relevant
personnel to attend a
shareholders’ meeting.
6. Before speaking, an attending 6.Before speaking, an attending To accommodate the
shareholder must specify on a shareholder must specify on a regulations.
speaker's slip the subject of the speaker's slip his or her
speech, his/her shareholder attendance card number and
account number (or attendance account name. The order in
card number), and account which they speak will be
name. The order in which decided by the chair.
shareholders speak will be set
by the chair.
A shareholder in attendance
who has submitted a speaker's
slip but does not actually speak
shall be deemed to have not
spoken. When the content of
the speech does not correspond
to the subject given on the
speaker's slip, the spoken
content shall prevail.
7. A shareholder may not speak 7. A shareholder may not speak To accommodate the
more than twice on the same more than twice on the same regulations.
proposal, and a single speech proposal, and a single speech
may not exceed five minutes. may not exceed five minutes.
However, the speech can extend However, the speech can extend
three more minutes with the three more minutes with the
chair’s permission. If a chair’s permission. If a corporate
corporate shareholder shareholder designated two or
designated two or more more representative in the
representative in the shareholders' meeting, only one
shareholders' meeting, only one person may speak up for the
person may speak up for the same proposal. After the speech
same proposal. After the speech of an attending shareholder, the
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Article after Revision	Article before Revision	Reason for Revision
~~of an attending shareholder, the~~ ~~chairperson may respond in~~ ~~person or assign relevant~~ ~~personnel to respond.~~ When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.	chairperson may respond in person or assign relevant personnel to respond.
stop any violation.
9. A shareholder shall entitled to one voting ~~resect of each share~~	9.A shareholder shall have one voting power in respect of each share in his/her/its possession.	To accommodate the regulations.

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

Article after Revision Article before Revision Reason for Revision
----- End of picture text -----

deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that this Corporation avoid the submission of extraordinary motions and amendments to original proposals. A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to this Corporation before 2 days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent. After a shareholder has exercised voting rights by correspondence or electronic means, in the event the shareholder intends to attend the shareholders meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to this Corporation, by the same means by which the voting rights were exercised, before 2 business days before the date of the shareholders meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by

Article after Revision	Article before Revision	Reason for Revision
correspondence or electronic means shall prevail. When a shareholder has exercised voting rights both by correspondence or electronic means and by appointing a proxy to attend a shareholders meeting, the voting rights exercised by the proxy in the meeting shall prevail.
11. Except for special resolutions as specified in the Company Act that shall comply with the provisions therein, passage of a vote on a proposal shallproceed in the order set by the agenda andrequire the consent of a majority of the voting rights of shareholders in attendance.~~When a non-ballot~~ ~~voting method is adopted and~~ ~~upon inquiry by the chair there~~ ~~is no objection from~~ ~~shareholders in attendance, it is~~ ~~deemed passed, and its~~ ~~effectiveness shall be the same~~ ~~as a vote by ballot.~~	11.Except for special resolutions as specified in the Company Act that shall comply with the provisions therein, passage of a vote on a proposal shall require the consent of a majority of the voting rights of shareholders in attendance. When a non-ballot voting method is adopted and upon inquiry by the chair there is no objection from shareholders in attendance, it is deemed passed, and its effectiveness shall be the same as a vote by ballot.	To accommodate the regulations.
12. (above omitted) Shareholder(s) may propose to the Corporation a proposal for discussion pursuant to Article 172-1 of the Company Act. A shareholder holding 1 percent or more of the total number of issued shares may submit to this Corporation a written proposal for discussion at a regular shareholders meeting. Such proposals, however, are limited to one item only, and no proposal containing more than one item will be included in the meeting agenda. In addition, when the circumstances of any subparagraph of Article 172-1,	12. (above omitted) Shareholder(s) may propose to the Corporation a proposal for discussion pursuant to Article 172-1 of the Company Act. (below omitted)	To accommodate the regulations.

Article after Revision	Article before Revision	Reason for Revision
paragraph 4 of the Company Act apply to a proposal put forward by a shareholder, the board of directors may exclude it from the agenda. (below omitted)
13. While a meeting is in progress, the chair may consider the time schedule and announce a break.If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed. If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue. A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days in accordance with Article 182 of the Company Act.	13. While a meeting is in progress, the chair may consider the time schedule and announce a break.	To accommodate the regulations.
13-1. Staff handling administrative affairs of a shareholders meeting shall wear identification cards or arm bands. The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word"Proctor." At the place of a shareholders	13-1. NEW	To accommodate the regulations.

	Article after Revision	Article before Revision	Reason for Revision
	meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by this Corporation, the chair may prevent the shareholder from so doing. When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.
	15. These Rules and any amendments hereto, shall be implemented after being passed by a shareholders’ meeting. The Procedures were duly amended on May 17, 2002 as the 1st amendment. The Procedures were duly amended on June 14, 2006 as the 2nd amendment. The Procedures were duly amended on June 12, 2020 as the 3rd amendment.	15. These Rules and any amendments hereto, shall be implemented after being passed by a shareholders’ meeting. The Procedures were duly amended on May 17, 2002 as the 1st amendment. The Procedures were duly amended on June 14, 2006 as the 2nd amendment.	To add the date of revision.

AI assistant

Altek — AGM Information 2020

52290_rns_2020-06-30_bdfc3249-17cb-4a32-ac17-68ca86669f81.pdf

Altek Corporation

B.Chairman’s Address (omitted)

C.Report Items

D.Recognition Items

Resolution: The result is as follows:

E.Discussion and Election Items

Resolution: The result is as follows:

Resolution: The result is as follows:

F.Extraordinary Motions:

G.Adjournment: Meeting ended at 9:36 am

Altek Corporation

2019 Business Report

Audit Committee’s Review Report

Altek Corporation

The 1st Rules on Transfer Repurchased Shares to Employees for 2020

Article 1

Article 2

Transfer period

The 10th Rules on Transfer Repurchased Shares to Employees

Article 1

Article 2

Transfer period

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Allowance for inventory valuation losses

Description

How our audit addressed the matter

Timing of sales revenue recognition

Description

How our audit addressed the matter

Other matter – Parent company only financial reports

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

Tsang, Kwok-Wah Li, Tien-Yi

March 15, 2019

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

ALTEK CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

ALTEK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

Comparison Table for Articles of Incorporation

Fund Raising Methods and Handling Principles of Private Placement

I.Amount of shares

Comparison Table for the Rules of Procedure for Shareholder Meetings

More from Altek

Altek AGM Information 2020