AWEA

Stock Code: 1530

==> picture [387 x 141] intentionally omitted <==

AWEA Mechantronic Co., Ltd.

2022 ANNUAL REPORT

Date of Issuance: 17May 2023 This annual report is accessible on: http://mops.twse.com.tw/

1. The name, title, telephone number and email address of the spokesperson and acting spokesperson

Spokesperson: Hsu Hongbin Title: Finance Division Manager Tel: (03)5885191*61700

E-Mail：[email protected]

Acting Spokesperson: Lin Honghong Title: Chief of the General Management Office Tel:(03)5885191*61801

E-Mail：[email protected]

2. Addresses and telephone numbers of the Headquarter, Branches and Plant

Headquarter：No. 629, Shuichetou Sec., Guanpu Rd., Xinpu Township, Hsinchu County 305, Taiwan Tel: (03)5885191

Taichung Branch: No. 15, Keyuan 2nd Rd., Xitun Dist., Taichung City 407, Taiwan Tel:(04)24629698

Hsinchu Plant: No. 629, Shuichetou Sec., Guanpu Rd., Xinpu Township, Hsinchu County 305, Taiwan Tel:(03)5885191

Zhongke Plant: No. 15, Keyuan 2nd Rd., Xitun Dist., Taichung City 407, Taiwan Tel:(04)24629698

Chiayi Branch: No. 21, Dapumeiyuanqu 5th Rd., Dalin Township, Chiayi County 622, Taiwan Tel:(05)2953699

3. Stock Transfer Agent

Name: Taishin General Securities Co., Ltd. Stock Affairs Agency Department

Tel:(02)25048125 Address: B1F., No. 96, Sec. 1, Jianguo N. Rd., Zhongshan Dist., Taipei City Website：https://www.tssco.com.tw

4. The latest annual financial report signed by accountant, and indicated accounting

office, address, website and telephone number

Name of accountant: Chen Guiduan & Yi Changyun Accounting Office: EnWise CPAs & Co.

Address: 9F.-1, No. 130, Taiyuan N. Rd., North Dist., Taichung City Tel: (04)22966234

Website：http：//www.enwise.com.tw

5. The name of the trading place where overseas securities are listed and traded; and

the way to check about the overseas securities information: not applicable

6. Corporate Website ：http：//www.awea.com

I. Letter to Shareholders	1
II. Company Profile	6
1 Date of Incorporation	6
2 Addresses and telephone numbers of the head office, branch offices and plants	6
3 Company History	6
III. Corporate Governance Report	11
1 Organization	11
2 Information regarding board of directors, supervisors, president, vice president, associates, heads of
departments and branches	13
3 Implementation of Corporate Governance	25
4 Information Regarding Accountant Fees	39
5 Information Regarding Change of Accountants	39
6 The Employment of the Company’s Chairman, General Manager, Financial or Accounting Manager
with the Firm of the Auditing CPA or Its Affiliated Businesses in the Past Year	39
7 Particulars about Changes in Shareholding and Equity Pledge of Directors, Supervisors, Managers and
Shareholders Holding More Than 10% of the Company's Shares in the Past Year and as of the Date of
Publication of the Annual Report	39
8 Information regarding relationships among the Top Ten Shareholders	41
9 The number of shares held by the board of directors, supervisors, managers, and directly or indirectly
controlled by the company in the same reinvested enterprise shall be combined to calculate the
comprehensive shareholding ratio	42
IV. Capital Overview	43
1 Capital and Shares	43
2 Corporate Bonds (including oversea ones)	48
3 Preferred Shares	48
4 Overseas Depositary Receipts	48
5 Employee Stock Options	48
6 Issuance of New Shares for Acquisition or Exchange of Other Companies’Shares	48
7 Financing Plans and Implementation	48
V. Operations Profile	49
1 Business Activities	49
2 Market and Sales Overview	61
3 The number of employees employed in the last two years, the average years of service, average age and
educational background distribution ratio	66
4 Environmental Expenditure Information	66
5 Labor Relations	67
6 Important Contracts	68

VI. Financial Profile	69
1 Condensed Balance Sheet and Income Statement in the Past Five Years	69
2 Financial Analysis in the Past Five Years	73
3 Review Report of Audit Committee on the Latest Financial Report	77
4 Financial Statements for the Last Year	78
5 Latest Consolidated Financial Statements of the Parent Company and Subsidiaries Audited and
Certified by CPAs	142
6 If the company and affiliated companies have financial difficulties in the last year and as of the date	of
publication of the annual report, its impact on the company's financial status	220
VII. Review and Analysis of Financial Status and Business Results and Risk Management	220
1 Financial Status	220
2 Financial Performance	221
3 Cash Flow	222
4 Impact of Major Capital Expenditure in the Past Year on the Financial Status	222
5 Re-investment Policy in the Past Year, the Main Reason for Its Profit or Loss, the Improvement Plan
and Investment Plan in the Next Year	222
6 Analysis and Assessment of Risk Issues in the Past Year and as of the Date of Publication of the Annual
Report	222
7 Other important matters	226
VIII. Special Disclosure	227
1 Information about the company’s Affiliates	227
2 Private Securities in the Past Year and as of the Date of Publication of the Annual Report, the date and
amount approved by the shareholder meeting or the board of directors, the basis and rationality of the
price setting, the method chosen by a specific person, and the necessary reasons for private placement
should be disclosed	230
3 Holding or Disposal of the Company’s Shares by Affiliates in the Past Year and as of the Date of
Publication of the Annual Report	230
4 Other necessary supplementary notes	230
IX. Matters in the Past Year and as of the Date of Publication of the Annual Report which have a
Substantial Impact on Owner’s Equity or Security Price as Stipulated in Item 2, Paragraph 2 of Article	36
of the Securities Exchange Law	230

I. Letter to Shareholders

1. 2022Business Results Report

1.1 Revenue Perspective[：] Our company's net operating revenue for the fiscal year 2022 was NT$2,283,658 thousand. Compared with the net operating revenue of NT$2,492,430 thousand in 2021, the net operating revenue in 2022 decreased by NT$208,772 thousand, a decline of 8.38%.
1.2 Profit or Loss Perspective：Our company's net profit before tax for the fiscal year 2022 was NT$439,857 thousand, which increased by NT$258,128 thousand, a growth of 142.04% compared to the net profit before tax of NT$181,729 thousand for the fiscal year 2021. The net profit after tax for the fiscal year 2022 was NT$354,143 thousand (NT$3.67 per share), which increased by NT$223,283 thousand, a growth of 170.63% compared to the net profit after tax of NT$130,860 thousand (NT$1.35 per share) for the fiscal year 2021.
1.3 The comparison of the net income for the years 2022 and 2021 is as follows： (Individual)

Unit：In Thousands of New Taiwan Dollars

		Unit：I	n Thousands of New	Taiwan Dollars
Item	2022	2021	Surplus (Deficit) Amount	Surplus (Deficit) %
Net Operating Revenue	2,283,658	2,492,430	(208,772)	(8.38%)
Operating Expenses	(1,825,556)	(2,077,984)	(252,428)	(12.15%)
Operating Margin	458,102	414,446	43,656	10.53%
Unrealized Profit on Intercompany Sales	(4,904)	3,502	(8,406)	(240.03%)
Net Operating Profit	212,519	139,903	72,616	51.90%
Net Profit before Tax	439,857	181,729	258,128	142.04%
Net Profit after Tax	354,143	130,860	223,283	170.63%

(Consolidated)

(Consolidated)
Item	2022	2021	Surplus (Deficit) Amount	Surplus (Deficit) %
Net Operating Revenue	3,100,517	3,630,956	(530,439)	(14.61%)
Operating Expenses	(2,432,617)	(2,951,020)	(518,403)	(17.57%)
Operating Margin	667,900	679,936	(12,036)	(1.77%)
Unrealized Profit on Intercompany Sales	(4,900)	1,924	(6,824)	(354.68%)
Net Operating Profit	298,225	266,199	32,026	12.03%
Net Profit before Tax	459,788	237,800	221,988	93.35%
Net Profit after Tax	349,287	122,033	227,254	186.22%
Attributable toParent Company	354,143	130,860	223,283	170.63%

1.4 2022 Budget implementation and the financial income and expenditure are as follows:[：] As per the Applicable Public Company Rule for Financial Forecast Information by Public Companies, the Company is not obligated to disclose its financial forecast information for the year 2022. Therefore, there is no information available on the implementation of the budget for the year 2022.

1.5 Breakthrough in Business Management[：]

(1) Product Development Breakthrough

Awea optimizes itself toward such features as larger scale, multification, five-axle, high-speed and intelligence:
(a)The high-speed five-axle aisle machining center AG and RG families fulfill the machining demand at five-axle and high-speed in mold/aviation industries.

(b)Diversified horizontal/horizontal five-axle machining center family fulfills the mass production line requiring machines.
(c)Complete Bridge type of maching centerseries of models fit with Awea-made high-speed embedded main axle, thereby fulfilling our customers’ need for module machining process.
(d)MEGA5 series of superior-performed large five-axle machining center fulfills the need of high-speed and high-precision machining in aviation industry.
(e)FCV800S milling and turning compound machining center series fulfill our customers’ need of multi-machining process.
(f)Complete Bridge type of maching center series of models integrated into new generation of attached head series improve performance and function to the utmost and provide more options for our customers.
(g)Large Bridge type of maching center model integrated into Awea-made full automatic allin-one head fulfills customers’ machining need at different angles.
(h)Large moving-pillar machining center’s MVP series, extra-large ground moving-beam machining center’s MCP series and brand-new moving-pillar & moving-beam MVCP models fulfill customers’ machining need of larger scope, longer travel and convenience.
(i)Brand new long-travel high-speed aluminum milling machining center provides extra high speed milling feeding and fulfills customers’ need of milling aluminum materials at high speed.
(j)The release of brand-new intelligent information control system, AiLINC, facilitates its machines to upgrade to be intelligent machine and bridge intelligent manufacture.
(2) Breakthrough in Production and Sales Layout
(a)Increase in sales of niche products and an increase in the proportion of gantry crane exports.
(b)Breakthrough in sales volume in mature markets such as Italy, Germany, North America, and Turkey.
(c)Expansion of new markets such as Eastern Europe, Northern Europe, ASEAN, and India.
(d)Successful development and launch of new products - new large gantry cranes and integration of Euro-standard supplementary heads.
(e)Provide a diverse selection of controllers and ensuring speedy delivery.
(3) Breakthrough in Company Management Improvement
(a)Establishing corporate culture to enhance corporate competitiveness.
(b)Effectively managing accounts receivable and inventory balances.
(c)Promoting lean production to control costs and enhance product competitiveness.
(d)Reasonable use of management expenses to reduce unnecessary expenditures.

2. 2023 Business Plan Overview

2.1 2023 Business strategy
(1)Market strategy: Utilize information platforms to establish a complete marketing document and sales system. Coordinate different regional agents to support each other in machine sales, reduce inventory levels, and increase delivery speed. Use the group image to complement domestic and international exhibitions, promote the market and reduce sales resistance.
- (a) Domestic sales:
  - i. Establish the group's high-quality brand image to increase product market share.
  - ii. Strongly promote product lines such as horizontal machining centers, gantry machining centers, and 5-axis machines, etc.
  - iii. Shorten delivery time for order scheduling and increase flexibility in competitive order-taking.

(b) Export：

i. Expand the sales of gantry machines, modular shipping design maximizes container space utilization, reduces costs, and increases competitiveness.
ii. Expansion of new markets such as Southeast Asia - India, Vietnam, Northern Europe, Eastern Europe, etc., which are listed as annual key tasks.

  - iii. Expand existing markets with different attribute agents to increase market share: the United States, Europe, etc.

  - iv. Improve the sales organization and human resources to strengthen the ability to identify and capitalize on emerging market trends.

(c) China：Effectively utilize the production capacity of the Phase II factory and expand employee recruitment to enhance the production capacity of fighter aircraft models; continuously strengthen the order-taking and production capabilities of larger equipment to improve overall profitability.
- i. Focus on mass production models, expand localized procurement of parts, reduce costs, and enhance market competitiveness.
- ii. Improve the localized production efficiency of large gantry-type milling machines and five-axis machining centers, and develop localized additional functions to enhance product added value and profitability.
- iii. Expand professional technical capabilities in integrating automated production lines to enhance sales competitiveness.
- iv. Continuously expand market share in key industries such as semiconductors, new energy, and aerospace.
- v. Expand sales of imported equipment to cope with the impact of the COVID-19 pandemic on local production efficiency and prepare early response strategies.
(2)Sales Strategy: Strengthening the recognition of agents and customers with the company.
(a)Highlighting the advantages of industrialized processing of machine models, catering to the development trends of industries such as aerospace, wind power, etc.
(b)Continuously strengthening product lines such as vertical and horizontal machines, gantry machines, and five-axis machines.
(c)Providing intelligent product features to help users enhance their production management capabilities.
(d)Establishing a mechanism for managing currency exchange risks, such as pricing in New Taiwan Dollars or sharing responsibility for currency exchange risks.
(e)Providing options for customized turnkey solutions to increase business opportunities.
(3)Management Strategy: Reduce error rates and improve work quality.
(a)Cost Management: Standardize and simplify processes; optimize resources and implement job training.
(b)Reach&Development Cost: Reduce design error rates, simplify and modularize design, and improve product cost-effectiveness.
(c)Production Cost: Lean production; get it right the first time.
(d)Sales Cost: Improve order quality and reduce error rate costs.
(e)Service Cost: Promptly respond to customer needs and proactively prevent recurring defects.

(f)Shipping Cost: Optimize packaging methods, reduce land and sea transportation costs, and improve the overall competitiveness of products.

(g)Capital Cost: Effectively plan the use of funds and minimize unnecessary expenditures.

(h)Self-Management: Strive for simplicity and efficiency and continue to enhance capabilities.

2.2 2023 Sales targets

In the fiscal year 2023, we aim to sell 130 units of gantry machines and 420 units of C-type

machines.

3. Production and Marketing policies

Important Long-term Strategic Objectives：

3.1 Continuously diversify the market: Diversifying the market is advantageous in avoiding the risk of market concentration, and is a long-term policy established for the company to promote its stable development.
3.2 Enhance customer satisfaction through service: Maintenance service is an important aspect of

maintaining customers. A good maintenance and service system can lead to repeat orders. In the future, we will strive to achieve the goal of fast service and affordable maintenance.

3.3 Develop products based on market demands: Strengthen interaction and understanding with the market, develop products based on market demands, and increase the company's market share.

4. The future development of our company is affected by external competitive, regulatory, and macroeconomic environments. The following unfavorable factors affect our future development:

4.1 The volatile exchange rate of the Taiwanese dollar affects order placement and production costs, which has an adverse impact on operations.
4.2 Inflexible labor laws and regulations in Taiwan can lead to labor-management conflicts, resulting in increased operating costs and unfavorable industry development.

5. Future development strategies for the company

5.1 Marketing Strategy:
(a)Adjust sales market share and strategy in response to the impact of COVID-19, the U.S.China trade war, and inflation.
(b)Showcase the advantages of the company's products in the aerospace and wind power green energy industries to expand industry supply and market share.
(c)Allocate more resources to develop the area of intelligent products that are increasingly evident in conjunction with Industry 4.0.
(d)Integrate and develop various five-axis application technologies to expand the sales market for five-axis machines.
(e)Actively improve various high-end five-axis products to meet the needs of the dynamic fiveaxis machine market.
(f)Actively expanding our international market and integrating exhibition, sales, service, and maintenance locations.
(g)Actively recruit talents and engage in industry-academia collaboration to cultivate our company's long-term competitive edge.
(h)Utilize information tools and platforms to integrate trade shows, advertisements, and public relations materials to strengthen marketing channels.
5.2 Procurement Strategy
(a)Strengthen the supply chain linkages to reduce the lead time for raw material delivery and decrease inventory holding costs, thereby enhancing delivery speed and agility.
(b)Collective purchasing and negotiations, conduct regular supplier evaluations, enforce ISO standards for assessing product quality, lead time, and price, and provide support to suppliers to enhance their competitiveness and in turn improve the competitiveness of our company.
5.3 Product Development Direction
(a)Develop new-generation products in line with national industrial policies such as green energy, wind power, and national defense, in preparation for future competitive advantages.
(b)Establish a complete product line and collaborate with GOODWAY Machine Cor. parent company to develop expertise in milling and lathe processes technologies.
(c)Research and develop high-value-added new products, such as gantry cranes with moving columns and stationary beams, gantry cranes with moving columns and moving beams, high-efficiency production machines, high-speed five-axis machines, and horizontal boring machines.
(d)Deepen the development of high-tech level intelligent and automated new products.
(e)Actively promote aerospace machining products in line with the world's aerospace industry development trends.
(f)Develop new-generation products that align with the global trend of energy-saving, carbon reduction, and green manufacturing.
5.4 Production Strategy Layout:
(a)Increase self-sufficiency rate, strengthen precision processing equipment and independent assembly capability to improve product quality.

(b)The construction of the DabouMei Phase II factory will enhance the production capacity of small vertical machining centers and achieve rapid supply capabilities.
(c)The Wujiang Phase II factory has entered mass production, and key precision components are supported by the parent company to increase production capacity in China.

After two years since the outbreak of the COVID-19 pandemic in 2022, the world is now facing the normalization of the pandemic, coupled with challenges such as material shortages, labor shortages, port congestion, and skyrocketing freight costs. In 2023, the post-pandemic era is marked by high global inflation, with the expectation that the Federal Reserve will raise interest rates to curb inflation, which will inevitably suppress global capital expenditures and indirectly affect the recovery of the machine tool industry. Fortunately, since the fourth quarter of 2022, global economies have gradually lifted strict pandemic controls, and major economies have released signals of partial economic activity recovery in the first quarter of 2023, which is a glimmer of hope in the current challenging industrial environment. We hope that this glimmer of hope will continue and usher in the dawn of global economic recovery.

Our Awea management team has always been diligent and prepared for all-round challenges. With your continuous support as shareholders, we believe that we have the confidence to overcome various adverse internal and external factors and enable the company to continue stable growth in the unfavorable business environment, as a way to reward your trust in the Awea management team. Once again, we thank all shareholders for their support and recognition, and wishing everyone good health and all the best!

AWEA MECHANTRONIC CO. LTD. Chief Executive Officer：Cheng-Jyun Yang

Chairman： De-Hua Yang Chief Executive Officer：Cheng-Jyun Yang Accounting Supervisor: Hong-Bin Hsu

II. Company Profile

1 Date of Incorporation

Head Office：Approval of establishment registration on July 16, 1986.

Taichung Branch Office: Approval of establishment registration on May 16, 2007. Chiayi Branch Office: Approval of establishment registration on December 25, 2017

2 Addresses and telephone numbers of the head office, branch offices and plants

Head Office：No. 629, Shuichetou Sec., Guanpu Rd., Xinpu Township, Hsinchu County 305, Taiwan Tel: (03)5885191

Taichung Branch Office: No. 15, Keyuan 2nd Rd., Xitun Dist., Taichung City 407, Taiwan Tel:(04)24629698

Hsinchu Plant: No. 629, Shuichetou Sec., Guanpu Rd., Xinpu Township, Hsinchu County 305, Taiwan Tel:(03)5885191

Taichung Science Park Plant: No. 15, Keyuan 2nd Rd., Xitun Dist., Taichung City 407, Taiwan Tel:(04)24629698

Chiayi Branch Office: No. 21, Dapumeiyuanqu 5th Rd., Dalin Township, Chiayi County 622, Taiwan Tel:(05)2953699

3 Milestone

‧
1986 Established at Yanghsiiwo, Hukou Township, Hsinchu County, Taiwan Province on July 1, with a capital of NT$4.4 million.
‧
1987 Increased capital to NT$14.21 million. ‧ VMC won the “Excellent Design Award” from TAITRA
‧
1988 Started to export the products. ‧ Developed P-type gantry vertical machining center in November,
‧
1989 The capital was increased to NT$112.3 million, and the factory was moved to the current location in Xinpu Town, Hsinchu County in September
‧ Won the "Excellent Brand Award" from TAITRA
‧ FMV won the "Excellent Design Award" from TAITRA
‧
1990 Increased capital to NT$179.94 million ‧ Developed PM type moving column gantry vertical machining center in June.
‧ The LS type moving column CO2 laser cutting machine was completed in October.
‧ The P-type gantry vertical machining center won the excellent work award in the competition of “Research and Development Innovative Product” held by Taiwan Machinery Association.
‧ The LS type moving column CO2 laser cutting machine won the excellent award in the competition of “Research and Development New Product” held by the Taiwan Machinery Association.
‧
1991 The first phase of the factory was completed on February 2[nd] . ‧ Completed PL type fixed column gantry CO2 laser cutting machine.
‧
1992 Cooperated with TRE Corporation in Japan to develop the MMA-type moving column gantry vertical machining center, and won the excellent work award in the competition of “Research and Development Innovative Product” held by the Taiwan Machinery Association.
‧ Completed PL type fixed column CO2 laser cutting machine.

1993	‧ Developed the SP-type gantry vertical machining center in April.
	‧Developedthe PMT type moving column gantry vertical turning and milling
	machining center in May.
1994	‧ SP type gantry vertical machining center won the “Taiwan Excellence Award”.
	‧ Launched VP1050 small gantry vertical machining center in September.
	‧Acquired subsidiesof the Industrial Bureau (leading new product development
	plan) to started the development of HVC-type large-scale gantry five-sided
	machining center.
1995	‧ In March, VP-1050 gantry vertical machining center won the Excellent Work
	Award in the competition of “Research and Development Innovative Product” held
	by the Taiwan Machinery Association.
	‧ In September, Launched LP type gantry type vertical machining center.
	‧ In September, the VP and SP gantry type vertical machining centers obtained the
	British “AMTRI” (CE) certification.
	‧ In December, completed the establishment of the 1,000m2 factory (Plant D).
1996	‧ VP1050 gantry vertical machining center won the “Taiwan Excellence Award”.
	‧ Set up “Integrity, Mutual Benefit, Refinement, Harmony" as the company's business
	philosophy.
	‧ In October, the Quality Assurance System passed the German TUV RHEINLAND
	ISO 9001 certification.
	‧ In December, launched VP1509/VP2012 small gantry vertical machining center.
1997	‧In February, "LP type machining center" won the "Innovation Research Award" for
	SMEs from the Ministry of Economic Affairs.
	‧ In March, the "VP-type machining center" won the Special Award of “Research and
	Development Innovative Product” in the 5th Machine Tool Competition" held by
	the Taiwan Machinery Association.
	‧ In June, obtained approval by the Securities and Futures Commission of the
	Ministry of Finance for public offering of stocks.
	‧In August, increased capital to NT$302.02 million.
1998	‧InApril, "VP2012 Machining Center" won the "National Product Image Award".
	‧ In June, Increased capital to NT$381.7 million.
	‧ On September 19th, Obtained the “National Award of Outstanding SMEs” for
	SMEs.
	‧ In September, completed the construction of A1/A2 Plant.
	‧ In November, obtained ISO14001 certification.
	‧ In December, obtained the trademark of “BRIDGE BRINGS PERFORMANCE”.
	‧ On December 29, the stock was officially listed in OTC, with an underwriting price
	of NT$36.
1999	‧ In February, invested in the establishment of “Baiwei Development Co., Ltd.”,
	holding 99.99% of the shares.
	‧ In March, obtained subsidies of the leading new product development plan from the
	Industrial Development Bureau, MOEA to assist in the development of RV-type
	high-speed cutting machining center.
	‧ In July, increased capital to NT$423.11 million.
	‧InAugust “VB, LP Gantry Vertical Machining Center” obtained British "AMTRI"
	(CE) certification.
	‧InDecember, LP Gantry Vertical Machining Center won the “Taiwan Excellence
	Award”.
2000	‧ In July, increase capital to NT$466.68 million.
	‧ On September 11, the stock listed on the OTC was transferred to the IPO.
	‧ In September, obtained the "Industrial Technology Development Award" from the
	Ministry of Economic Affairs (MOEA).

	‧ The "additional head positioning device" has obtained patents in China and Taiwan.
	‧ Completed the development of the leading new product "Gantry Vertical High
	Speed Machining Center" subsided by the Industry Development Bureau.
2001	‧ Developed a series of small vertical machining centers, rented a new factory in
	Taichung, and officially started production in November.
	‧ Completed the large (6M×5M) crane moving column machining center.
	‧ In March, "Puwei Technology Co., Ltd." was established to develop electronic
	production equipment through international cooperation. ODM completed the first
	two PCB drilling sample machines.
	‧In March, "Shanghai Zhuwei Electromechanical Co., Ltd." was established through
	the third place and rented a factory in Qingpu Industrial Zone, Shanghai. It started
	operation in November, greatly enhancing the service and business capabilities in
	mainland China.
2002	‧ In August, 16,701 square meters of adjacent agricultural land in Xinpu was changed
	to industrial land.
	‧ In August, "Dawei Electromechanical (Suzhou) Co., Ltd." was established in
	Suzhou Xiangcheng Economic Development Zone through the third place.
	‧ Completed the planning of horizontal models and the development of prototypes.
	‧ The large-scale crane moving column machining center was successfully launched
	into the market, and one of the working ranges was listed as the first created
	14M×5M domestically.
2003	‧ In March, the gantry five-axis machining center won the special award of the
	“Research and Development Innovation Product Competition”.
	‧ In August, obtained approval to set up a branch office in the Science and
	Technology Industrial Park in Taichung.
2005	‧In March, the BL on-floor boring type CNC horizontal machining center was
	officially launched into the market, and won the excellent work award in the
	“Research and Development Innovative Product Competition”.
	‧ On June 30, the affiliated company "Puwei Technology Co., Ltd." applied to
	suspend operations due to the lack of investment benefits.
	‧ In September, obtained the subsidies of the leading new product development plan
	from the Industrial Development Bureau to assist the development of “CNC
	Horizontal Integrated Machining Center”.
2006	‧ On January 25th, the first domestic unsecured convertible corporate bond was issued
	and traded in OTC.
	‧ In February, consulted with Japan's Toyota Machinery Co., Ltd. on the cooperation
	in production, sales and product development.
	‧ On April 25th, the plant in Taichung Science Park held a groundbreaking ceremony.
	The leased area is 25,000 square meters, and the building area is 23,837 square
	meters.
2007	‧In March, the newly developed five-axis processing machine F99U won the
	Excellent Work Award in the “Research and Development Innovative Product
	Competition”.
	‧ In April, the company's domestic first unsecured convertible corporate bonds have
	been fully converted into ordinary shares, divided into 5,756,926 shares.
	‧In May, obtained approval of the establishment and registration of the branch office
	in the Science and Technology Industrial Park in Taichung.
	‧ In October, the plant in the Science and Technology Industrial Park in Taichung
	was officially put into production.

2008	‧ On March 8th, the industrial, official and academic friends as well as domestic and
	foreign agents and suppliers were invited to the official opening ceremony of the
	plant in the Science and Technology Industrial Park in Taichung.
	‧ In July, transfer to paid-in capital was increased NT$ 45.447 million, and the paid-
	in capital reached NT$ 829.011 million.
	‧ In November, AWEA (USA) subsidiary was established as the market development
	and service base of gantry machine in the Americas.
	‧ In November, merged the 100%-owned subsidiary of Baiwei Development Co.,
	Ltd, and cancelled the shares of AWEA held by Baiwei Development Co., Ltd
	amounted to NT$ 5,303,090 and the paid-in capital was NT$ 823.709 million.
	‧ In December, the Hsinchu Plant was newly added adjacent to the site, and changed
	as an industrial land use.
2009	‧ In March, the five-axis processing machine FMV-45 won the Excellent Work
	Award in the “Research and Development Innovative Product Competition”.
	‧ In July, the surplus revenue was transferred to capital increase of NT$ 82.371
	million, and the paid-in capital reached NT$ 906.080 million.
	‧ In October, started the expansion of the Hsinchu Plant in order to prepare mid-term
	development of AWEA in the future.
	‧ In November, the gantry moving beam type MVP-5032 was launched to participate
	in the Taichung Automation Machinery Exhibition, which set up a new
	development milestone for AWEA Gantry Machine.
2010	‧ In November, Hsinchu Plant Building A was officially reconstructed and put into
	production.
	‧ In November, invested and established "Jiawei Electromechanical Co., Ltd.",
	holding 100% of the shares.
	‧ In November, the new gantry crane five-axis machining center LV6030 was
	launched to participate in the Taichung Automation Machinery Exhibition, which
	set up a new development milestone for AWEA Gantry Machine.
	‧ Applied for the "Consolidated and Advanced Research Project" of the Science Park
	and cooperate with the Mechanical Engineering Department of National Chung
	Hsing University.
	‧ Applied for the Industry-University Program of the National Science Council
	"Development of High-precision Optical Installation and Calibration System for
	Large Machinery" and jointly implement it with National Formosa University.
2011	‧In January,invested in "YAMA SEIKI USA.INC." in January with holding 28.58%
	of the shares.
	‧InFebruary, Hsinchu Plant office building officially started operation.
	‧ In March, invested and established “AWEA Korea” with holding 100% of the
	shares.
2012	‧ In October, the results of the gantry type friction stir welding machine were
	published.
	‧In November, the crane type five-axis machine was launched and participated in the
	exhibition.
2013	‧In March, the high-precision horizontal boring and milling machine MB1512+APC
	won the Excellent Work Award in the “Research and Development Innovative
	Product Competition”.
2014	‧In January, Extroncnc Machinery Industry Co., Ltd. joined AWEA Group, holding
	60% of the shares.
	‧In April, the first echelon of AWEA Hele Life One Day Camp was held at the
	Taichung Plant.
2015	‧In May, the second convertible corporate bond of AWEA was issued, with a total

	amount of NT$ 400 million.
	‧In November, the 2015of Hele Life One Day Camp was held.
	‧The five-axis machine FCV 620 started mass production, adding a new force in the
	production and sales of five-axis machines.
	‧Increased MEGA5 large-scale five-axis model to complete the allocation of series
	products.
2016	‧In September, the surplus revenue was transferred to capital increase of
	NT$45,997,220.
	‧In October, started the construction of the new Mei-Hsin Plant in Dapu.
2017	‧In March, the vertical five-axis processing machine FCV620 won the Excellent
	Work Award in the “Research and Development Innovative Product Competition”.
	‧In December, the construction of Dapu Mei-Hsin Plant was completed, and the
	Chiayi branch office was established.
2018	‧Developed AHM-800 Horizontal Comprehensive Processing Machine.
	‧Developed of EH5-500 horizontal five-axis processing machine.
2019	‧Developed FCV-8000II new generation five-axis machine.
2020	‧Developed moving column and moving beam machining center.
	‧Developed and released the intelligent information control system product.
	‧Developed the production management function of intelligent information control
	system.
	‧Developed AD-550/500 double main axis C-type machine.
2021	‧Optimized the development of one-division AC fully automatic universal joint.
	‧Optimized the development of 4,500RPM horizontal joint.
	‧Integrated LB/EP fixed column gantry processing machine.
	‧Developed the function of machine diagnosis.
2022	‧Developed VP model 12KB built-in main axis.
	‧Electrification design of self-made tool magazine.
	‧Developed AU-680 high rigidity moving column five-axis machine.
	‧Developed deep learning compensation technology for intelligent thermal
	displacement of main axis.
	‧Developed deep learning automatic modulation technology on Smart tapping.

III. Corporate Governance Report

1. Organisation

1.1 Organisation Chart

==> picture [494 x 286] intentionally omitted <==

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

Shareholders’ Meeting
Audit Committee
Board of Directors
Remuneration Committee
Internal Auditor
Chairman
Labour Benefit
Committee
President
Labour Safety
President’s Office
Health Committee
R & D Marketing Chiayi Central Hsinchu General Finance
Division Service Plant Taiwan Plant Management Division
Division Science Division
Park Plant
----- End of picture text -----

1.2 Major Corporate Functions:

Department	Functions
Internal Auditor	Responsible for internal audit and relevant tasks.
President’s Office	Responsible for corporate culture, strategy/policy promulgation, long-term development planning, human resource development, corporate cooperation, business performance, information and project management, and relevant tasks.
Research & Development Division	In charge of establishment of product technique, development and renovation of new products, preparation and management of technical documents, Intellectual property management, technical cooperation, integration of R&D resources, and relevant tasks, in order to ensure market competitiveness of products.
Marketing Service Division	Responsible for domestic, Mainland China, and foreign sales and market development, establishment/management of channels, customer service and complaints, post-sales service, product sales/invoice, import/export and other tasks, in order to achieve annual targets by the company.
Chiayi Plant	Responsible for management and production, promulgation of product quality/cost/lead time, quality plan and target, establishment and implementation of each quality inspection/assurance system, establishment of product technique, product capacity expansion, product assembly and equipment, in order to achieve annual yield target by the company.
Central Taiwan Science Park Plant	Responsible for management and production, promulgation of product quality/cost/lead time, quality plan and target, establishment and implementation of eachqualityinspection/assurance system,establishment

Department	Functions
Internal Auditor	Responsible for internal audit and relevant tasks.
	of product technique, product capacity expansion, product assembly and equipment, in order to achieve annual yield target by the company.
Hsinchu Plant	Responsible for management and production, promulgation of product quality/cost/lead time, quality plan and target, establishment and implementation of each quality inspection/assurance system, establishment of product technique, product capacity expansion, product assembly and equipment, in order to achieve annual yield target by the company.
General Management Division	Responsible for administration, human resources, stock affairs, general affairs.
Finance Dept.	Handling subsidiary’s management, finance, accounting, ledger, investment and management,and relevant tasks.

2. Director, supervisor, president, vice president, associate, supervisor of each department and branch.

2.1 Directors

(1) Information 9 April 2023; Unit: stock

Tit le	Nation ality or reside nce	Name	Gen der/ Age	Onboard Date	Term	Onboard Date of first term	Number of shares held onboard	Number of shares held onboard	Number of shares currently held	Number of shares currently held	Number of shares currently held by spouse, minors	Number of shares currently held by spouse, minors	Shares substantially held	Shares substantially held	Mentionable experience(backgr ound)	Other titles by the company/other companies	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade
							Shares	Sharehol ding ratio %	Shares	Sharehol ding ratio %	Shares	Shareh olding ratio %	Share s	Shareh olding ratio %			Title	Name	Relations
Ch air ma n	Taiwa n	Yang Dehua	Male Age d 77	10 June 2020	3 years	29 May 2002	9,031,403	9.35%	9,031,403	9.35%	－	－	－	－	Department of Mechanical Engineering, Chung Hsing University EMBA, Chung Hsing University	Chairman by the company Other companies: Chairman and Executive Officer by Goodway Machine Corp. Chairman by Hung Jiu Machine Co., Ltd. Chairman by Chiajin Investment Co., Ltd. Chairman by Honghua Investment Co., Ltd. Chairman by Huahan Renting Co., Ltd. B-way,Billion-way(Cayman) In-charge YAMA SEIKI USA INC. In- Charge General Director by Precision Machinery Research & Development Center General Director by Taiwan Machine Tool Foundation Director by Honghua Environment Protection and Digital Future Fund Director by Universal Microelectronics Co., Ltd. Chairman of Central Science Park Industrial Training Association Director by Turvo International Co., Ltd. Chairman by Yang Wenhsu Charity Fund	Presiden t Director	Yang Chengju n Yang Chingfu ng	Father/S on Brother- in-law

Tit le	Nation ality or reside nce	Name	Gen der/ Age	Onboard Date	Term	Onboard Date of first term	Number of shares held onboard	Number of shares held onboard	Number of shares currently held	Number of shares currently held	Number of shares currently held by spouse, minors	Number of shares currently held by spouse, minors	Shares substantially held	Shares substantially held	Mentionable experience(backgr ound)	Other titles by the company/other companies	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade
							Shares	Sharehol ding ratio %	Shares	Sharehol ding ratio %	Shares	Shareh olding ratio %	Share s	Shareh olding ratio %			Title	Name	Relations
Di rec tor	Taiwa n	Chairman and Executive Officer by Goodway Machine Corp.		10 June 2020	3 years	29 MAY 1974	46,377,311	48.01%	47,941,311	49.63%	－	－	－	－	－	－	－	－	－
	Taiwa n	Goodway Machine Corp. behalf: Wang Chenghsu an	M Age d 49	02 April 2021	2 years	02 April 2021	－	－	－	－	－	－	－	－	Department of Information Engineering and Computer Science BA, Feng Chia University	Assistant Manager by the company Titles by other companies: Manager by Goodway Machine Corp. Legal person behalf by AWEA Suzhou Legal Person by Shanghai Zhuwei Mechanical Engineering Co., Ltd. Hongjhu Investment Co., Ltd. In-charge Hongli InvestmentCo., Ltd. In-charge	－	－	－
Di rec tor	Taiwa n	Yang Chengjhun	M Age d 49	18 Aug. 2021	1.8 years	18 Aug. 2021	－	－	－	－	1,000	0.00%	－	－	EMBA MA, Chung Hsing University	President by the company Other companies: Chincheng Investment Co., Ltd. In-charge Chairman by Extron Machinery Industry Co., Ltd. Director by Goodway Machine Corp.	Chairma n	Yang Dehua	Father/S on
Di rec tor	Taiwa n	Yang Chingfung	M Age d 72	18 Aug. 2021	1.8 years	18 Aug. 2021	130,000	0.13%	130,000	0.13%	－	－	－	－	Accounting BA, Chung Hsing University	No title by the company or other companies.	Chairma n	Yang Dehua	Brother- In-Law

Tit le	Nation ality or reside nce	Name	Gen der/ Age	Onboard Date	Term	Onboard Date of first term	Number of shares held onboard	Number of shares held onboard	Number of shares currently held	Number of shares currently held	Number of shares currently held by spouse, minors	Number of shares currently held by spouse, minors	Shares substantially held	Shares substantially held	Mentionable experience(backgr ound)	Other titles by the company/other companies	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade	Other manager, director, or supervisor to which a spouse or kinship within 2nd grade
							Shares	Sharehol ding ratio %	Shares	Sharehol ding ratio %	Shares	Shareh olding ratio %	Share s	Shareh olding ratio %			Title	Name	Relations
In de pe nd ent Di rec tor	Taiwa n	Yang Lianfa	M Age d 62	10 June 2020	3 years	14 June 2017	－	－	－	－	－	－	－	－	Business Management MA, Chung Hsing University PhD Candidate of NCCU Business Management Group	No title by the company. Other companies: Executive Director by Arich Enterprise Co., Ltd. Executive Director, Yuguo Asset Management Co., Ltd. Chairman by Yanex International Co., Ltd. Director by Eagle ConstructionCo.,Ltd	－	－	－
In de pe nd ent Di rec tor	Taiwa n	Lin Yimin	M Age d 50	10 June 2020	3 years	14 June 2017	－	－	－	－	－	－	－	－	Architecture MA Cheng Kung University	No title by the company. Other companies: President by Batom Co., Ltd. Director by Batom Co., Ltd.	－	－	－
In de pe nd ent Di rec tor	Taiwa n	Hong Hsipeng	M Age d 76	10 June 2020	3 years	10 June 2020	1,000	0.00%	0	0.00%	－	－	－	－	Bio-industrial MA, Chung Hsing University	No title by the company or other companies.	－	－	－

(2)Major Shareholders of shareholders by legal person

April 30, 2023

	April 30,2023
Legal person shareholder	Major shareholders by legal person
Goodway Machine Corp	Yang Dehua (41.21%) Hongli Investment Co., Ltd.（7.15％） Chiajing Investment Co.,Ltd.（7.39％） Yu-en Investment Co., Ltd.（6.43％） Jiyuan Investment Com.,Ltd.（6.48％） Zonghan Investment Co.,Ltd.（6.09％） Jincheng Investment Co., Ltd（5.79％） Fubon Financial Co., Ltd.（3.85％） Hongjhu Investment Co.,Ltd.（2.59％） HungJiu Machine Co., Ltd.（2.56％）

(3)Major shareholders (top 10) of aforesaid shareholders who are a legal person and their shareholding

ratio

Legal person	Major shareholders by legal person
Hongjhu Investment Co.,Ltd.	Yang Dehua (31.33%) Yang Shuhan (12.50%) Yang Shangru (12.50%) Jiang Jiangbin (8.33%) Hsiao Suwan (8.33%) Jiang Shanghua (5.00%) Wu Chingjang (5.00%) Yu-en Investment Co., Ltd. (4.17%) Zonghan Investment Co., Ltd. (4.17%) Tsai Jichang (3.33%) Deng Jhenjhong (1.67%) You Jenchuan(0.33%)
Hongli Investment Co., Ltd.	Yang Dehua (27.40%) Yang Chengjhun (24.20%) Yang Shangru (24.20%) Yang Shuhan (24.20%)
Jiyuan Investment Co., Ltd.	Yang Dehua (46.60%) Yang Chengjhun (17.25%) Yang Shangru (17.75%) Yang Shuhan (17.75%) Zeng Chiguan (0.50%) Yang Desheng (0.05%) JangChunmu (0.05%) YangChingfeng(0.05%)
Chiajing Investment Co., Ltd.	Yang Dehua (33.31%) Yang Chengjhun (22.50%) Yang Shangru (22.47%) Yang Shuhan (21.67%) Yang Desheng (0.02%) Jang Chunmu (0.02%) Yang Chingfeng (0.02%)
Honghua Investment Co., Ltd.	Yang Dehua (27.40%) Yang Chengjhun (24.20%) Yang Shangru (24.20%) Yang Shuhan (24.20%)

(4)Disclosure of credential and independence of independent directors

Credential Name	Credential and experience	Independence (*)	Number of other listed companies where entitled independent director
Yang Dehua	Degree: Department of Mechanical Engineering BA, National Chung Hsing University EMBA, National Chung Hsing University Experience: Chairman and Executive Director by Goodway Machine Corp. Chairman By Hung Jiu Machine Co., Ltd. Chairman by Chiajing Investment Co., Ltd. Chairman by Honghua Investment Co., Ltd. Chairman by Huahan Rental Co., Ltd. In charge of B-way,Billion-way(Cayman) In charge of YAMA SEIKI USA INC. General Director by Precision Machinery Research & Development Center General Director by Taiwan Machine Tool Foundation Chairman by Central Taiwan Science Park Industry Training Association Director by Turvo International Co., Ltd. Chairman of Yang Wenshu Charity Foundation	(8)(9)(11)(12)	n/a
Behalf of Goodway Machine Corp.: Wang Chenghsuan	Degree: Department of Information Engineering and Computer Science BA, Feng Chia University Experience: Chairman by Hingjhu Investment Co., Ltd. Marketing Manager By Goodway Machine Corp. Assistant Manager by AWEA	(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)	n/a
Yang Chengjhun	Degree: Department of Business Administration MA, National Chung Hsing University Experience: In-charge Jincheng Investment Co., Ltd. Chairman by Extron Co., Ltd. Director by Goodway Machine Corp.	(5)(8)(9)(11)(12)	n/a
Yang Chingfeng	Degree: Department of Accounting BA, Chung Hsing University Experience: Manager by by Goodway Machine Corp.	(1)(2)(3)(5)(6)(7)(8)(9)(11)(12)	n/a
Lin Yiming (independen t director)	Degree: Department of Architecture MA, Cheng Kung University Experience: President by Batom Co., Ltd. Director by Batom Co., Ltd.	(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)	n/a

Yang Lianfa (independen t director)	Degree: Business Management MA, Chung Hsing University PhD Candidate of NCCU Business Management Group Experience Executive Director by Arich Enterprise Co., Ltd. Executive Director, Yuguo Asset Management Co., Ltd. Chairman by Yanex International Co., Ltd. DirectorbyEagle ConstructionCo.,Ltd	(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)	n/a
Hong Hsipeng (independen t director)	Degree Bio-industrial MA, Chung Hsing University Experience Lecturer of Dept. of Mechanical Engineering.	(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)	n/a

Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.
Not an employee of the company or any of its affiliates.
Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or

any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

Not a spouse, or a relative within the second degree of kinship to any other director.
Not been a person of any conditions defined in Article 30 of the Company Act.
Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act

2.2 President, vice president, associate, supervisor of each department and branch

					9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share	9 April 2023;Unit: Share
Title	National ity	Name	Gende r	Onboard date	Held Shares		Shares held by spouse or minor children		Substantial Shareholding		Mentionable (degree) experience	Titles by other companies	Spouse or family within second kinship to manager			Re mar ks
					Number	Ratio	Number	Ratio	Number	Ratio			Title	Name	Kinsh ip
Preside nt	Taiwan	Yang Chengjh un	M	December 23, 2020	－	－	1,000	0.00%	－	－	EMBA MA, Chung Hsing University	Chairman by Jincheng Investment Co., Ltd.	－	－	－	*1
Vice Preside nt	Taiwan	Yang Changjh i	M	April 2, 2021	－	－	－	－	－	－	Department of Management, Feng Chia University	President Of Shanghai Zhuwei Machinery Com, Ltd. Director Of Awea Mechantronic ( Suzhou ) Ltd.	－	－	－
Vice Preside nt	Taiwan	Ye Ruemin g	M	September 1, 2016	－	－	－	－	－	－	Mechanical and Electro- Engineering BA, Tamkang University	Director Of Awea Mechantronic ( Suzhou ) Ltd	－	－	－
Manag er	Taiwan	Hsu Hongbin	M	September 1, 1975	257	0.00%	－	－	－	－	Department of Accounting BA, Tunghai University	Supervisor by Shanghai AWEA Co., Ltd. Supervisor by AWEA Co., Ltd.(Suzhou) Supervisor by ExtronMachinery Industry Co., Ltd.	－	－	－

*1: As heritage of business governance, Chairman and President are of first-grade relatives, in response over half of directors will not be an employee or manager, or via other approaches, etc.

2.3 Remuneration of Directors, Supervisors, President, and Vice Presidents

(1) Remuneration of Directors

31 December 2022

Unit: thousand NTD; %

Title	Name	Remuneration for Directors	Remuneration for Directors	Remuneration for Directors	Remuneration for Directors	Remuneration for Directors	Remuneration for Directors	Remuneration for Directors	Remuneration for Directors	A+B+C+D total ratio to net income after tax	A+B+C+D total ratio to net income after tax	Remuneration paid to employees with multiple titles	Remuneration paid to employees with multiple titles	Remuneration paid to employees with multiple titles	Remuneration paid to employees with multiple titles	Remuneration paid to employees with multiple titles	Remuneration paid to employees with multiple titles	Remuneration paid to employees with multiple titles	Remuneration paid to employees with multiple titles	A+B+C+D+E+ F+G total and ratio to net income after tax	A+B+C+D+E+ F+G total and ratio to net income after tax	Remunerati on from ventures other than subsidiaries or from the parent company
		Base Compensation (A)		Severance Pay (B)		Director Reward (C)		Operation fee(D)				Pay, reward, perk (E)		Pension from discharge (F)		Employee remuneration (G)
		The company	All companies in financial statements	The company	Companies in the financial statements	The Company	Companies in the financial statements	The Company	Companies in the financial statements	The Company	Companies in the financial statements	The Company	Companies in the financial statements	The Company	Companies in the financial statements	The Company		Companies in the financial statements		The Company	Companies in the financial statements
																Cash	Stock value	Cash	Stock value
Chairman	Yang Dehua	480	1,073	0	0	1,800	1,800	160	160	0.69%	0.86%	2,466	2,466	108	108	1,600	0	1,600	0	1.87%	2.04%	n/a
Director	Goodway Machine Corp. Behalf: WangChenghsuan
Director	Yang Chenjjhun
Director	Yang Chingfeng
Independe t director	n Yang Lianfa
Independe t director	n Lin Yimin
Independe t director	n Hong Hsipeng

*1. One car lent to Director Yang Chenjhun, of which the cost is 3,675 thousand NTD, with a book value at 2,501 thousand NTD. (Not incorporated to remuneration, bonus, and special allowance for 2022).
*2. A 6% severance pension for 2022 is overall allocated for contribution.

Remuneration Scale

	RemunerationScale	RemunerationScale	RemunerationScale	RemunerationScale
Remuneration scale of directors	Directors
	Total of 4 (A+B+C+D) remunerations		Total of 7 (A+B+C+D+E+F+G)
	The company	List of Companies from Financial Statements H	The company	List of Companies from Financial Statements I
Under 1,000,000 NTD	Yang Dehua, Yang Lianfa, Lin Yimin, Hong Hsipeng, Yang Chenjhun, Yang Chingfeng Legal person behalf by Goodway Machine Corp.: Wang Chenhsuan	Yang Dehua, Yang Lianfa, Lin Yimin, Hong Hsipeng, Yang Chenjhun, Yang Chingfeng Legal person behalf by Goodway Machine Corp.: Wang Chenhsuan	Yang Dehua, Yang Lianfa, Lin Yimin, Hong Hsipeng, Yang Chingfeng Legal person behalf by Goodway Machine Corp.: Wang Chenhsuan	Yang Dehua, Yang Lianfa, Lin Yimin, Hong Hsipeng, Yang Chingfeng Legal person behalf by Goodway Machine Corp.: Wang Chenhsua
1,000,000 NTD (incl.)～2,000,000NTD (not incl.)	-
2,000,000 NTD (incl.)～3,500,000 NTD (not incl.)	-	-	-	-
3,500,000 NTD (incl.)～5,000,000 NTD (not incl.)	-	-	Yang Chenjhun	Yang Chenjhun
5,000,000 NTD (incl.)～10,000,000 NTD (not incl.)	-	-	-	-
10,000,000 NTD (incl.)～15,000,000 NTD (not incl.)	-	-	-	-
15,000,000 NTD (incl.)～30,000,000 NTD (not incl.)	-	-	-	-
30,000,000 NTD (incl.)～50,000,000 NTD(not incl.)	-	-	-	-
50,000,000 NTD(incl.)～100,000,000 NTD (not incl.)	-	-	-	-
100,000,000 NTD above	-	-	-	-
Total	7 persons	7 persons	7 persons	7 persons

(2) President and manager remuneration

31 December 2022

Unit: thousand NTD; %

												Unit:	Unit:	31 December 2022 thousand NTD;%
Title	Name	Salary (A)		Pension per discharge (B)		Reward and perk etc. (C)		Remuneration for Employees(D)				A+B+C+D total and ratio to net income after tax(%)(*8)		Remuneration from
														ventures other than
														subsidiaries or from the
														parent company
		The Company	List of Companies from Financial statements	The Company	List of Companies from Financial statements	The Company	List of Companie from Financial statements	s The Company		List of Companies from Financial statements		The Company	List of Companies from Financial statements

								Cash	Stock Value	Cash	Stock Value
President	Yang Chengjhun	5,570	7,202	348	348	1,900	2,832	2,786	0	2,786	0	2.99%	3.72%	n/a
Vice president	Yeh Reiming
Vice president	Yang Changchi
Manager	Hsu Hongbin

*1. One car lent to President Yang Chenjhun, of which the cost is 3,675 thousand NTD, with a book value at 2,501 thousand NTD. (Not incorporated to remuneration, bonus, and special allowance for 2022).
*2. A precedent 2% and a 6% severance pension for 2021 is overall allocated for contribution.

Remuneration Scale

	Remuneration Scale	Remuneration Scale
Remuneration scale of president and manager	President and vice president
	The company	List of Companies from Financial statements E
Under 1,000,000 NTD	-	-
1,000,000 NTD(incl.)～2,000,000NTD(not incl.)	Hsu Hongbin	Hsu Hongbin
2,000,000 NTD(incl.)～3,500,000 NTD(not incl.)	YangChangjhi,Yeh Ruiming	Yeh Ruiming
3,500,000 NTD(incl.)～5,000,000 NTD(not incl.)	YangChengjhun	YangChengjhun,YangChangjhi
5,000,000 NTD(incl.)～10,000,000 NTD(not incl.)	-	-
10,000,000 NTD(incl.)～15,000,000 NTD(not incl.)	-	-
15,000,000 NTD(incl.)～30,000,000 NTD(not incl.)	-	-
30,000,000 NTD(incl.)～50,000,000 NTD(not incl.)	-	-
50,000,000 NTD(incl.)～100,000,000 NTD(not incl.)	-	-
100,000,000 NTD above	-	-
Total	4persons	4persons

(3) Managers who allocate employee remuneration and allocation details

	31 December 2022 Unit: thousand NTD;%	31 December 2022 Unit: thousand NTD;%	31 December 2022 Unit: thousand NTD;%	31 December 2022 Unit: thousand NTD;%	31 December 2022 Unit: thousand NTD;%	31 December 2022 Unit: thousand NTD;%
	Title	Name	Stock value	Cash	Total	Total and ratio to net income after tax(%)
Manager	President	Yang Chengjhun	－	2,786	2,786	0.79%
	Vice president	Yang Changchi
	Vice president	Yeh Rueming
	Finance Manager	Hsu Hongbin

*1: The employee remuneration allocation is estimated with the allocated remuneration from previous year by ratio, adopted by Board of Directors’ meeting.

(4) Analysis of director, supervisor, president, and vice president remuneration ratio to net income after tax from the company and consolidated report for the past two years. Elaborate the association among remuneration policy, criteria and programme, remuneration promulgation procedure, governance performance and future risks.

Title	The company	The company	Consolidated report	Consolidated report
	2021	2022	2021	2022
Director	5.29%	1.87%	5.84%	2.04%
Supervisor	-		-	-
President and manager	6.63	2.99%	8.21%	3.72%

Note:2022 statements include net income disposition, of which the proposal has been adopted by Board of Directors meeting; the employee remuneration hereof is estimated with allocated remuneration from previous year by ratio.

Explanation:

(a)The remuneration allocation for directors and supervisors by the company and its subsidiaries is calculated with weighted number of seats, duties, endorsement guarantee.

(b)President remuneration has been approved by Chairman and adopted by Board of Directors per recruitment.

(c)Remuneration of the company and its subsidiaries is provided to directors, supervisors, and mainly to director and supervisor bonus other than transport reimbursement; president remuneration is fixed and the rest is for employee bonus; therefore, the remuneration of the company and its subsidiaries is highly correlated principally with the business performance of the company and its subsidiaries of the year.

(d)Alteration analysis for the past two years: n/a.

(e)No supervisor remuneration was paid due to the establishment of Audit Committee for 2021 and 2022.

Implementation of Corporate Governance

3.1 Board of Directors

(1) total of 5(A) meetings of the Board of Directors were held in recent year. The attendance of director and supervisor were as follows:

31 December 2022

Title	Name (*1)	Attendance in Person (B)	Attendance by Proxy	Attendance Rate (%)【B/A】	Remarks
Chairman	Yang Dehua	4	1	80.00%	10 June 2020 re-election
Director	Behalf by Goodway Machine Corp.: Wang Chenghsuan	5	－	100.00%	2 April 2021 onboard
Director	Yang Chengjhun	4	－	80.00%	18 Aug. 2021 onboard
Director	Yang Chingfeng	5	－	100.00%	18 Aug. 2021 onboard
Independent Director	Yang Lianfa	5	－	100.00%	10 June 2020 re-election
Independent Director	Lin Yimin	4	1	80.00%	10 June 2020 re-election
Independent Director	Hong Hsipeng	5	－	100.00%	10 June 2020 onboard
Other mentionable items: 1. If any of the following circumstances matters referred to in Article 14-3 of the Securities and Exchange Act or by members or expressed reservations and recorded or declared in writing occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: n/a. 2. Implementation of conflict of interest shall state directors, subject, reason for conflict, and voting result: n/a. 3. Improvement in competency of most recent Board of Directors (I.e. Establishment of Audit Committee, improvement in transparency of information etc.) and evaluation in implementation for the current and recent years: improvement of information transparency, reinforcement of corporategovernance.

(2) Evaluation details of Board of directors

Frequency	Term	Scope	Approach	Item
Annual	1 Jan 2022~ 31 Dec. 2022	Respective members from Board of directors	Self-evaluation of members from Board of directors	1. Participation in business operation by company. 2. Improvement of decision making by Board of Directors 3.Composition and structure of the Board of Directors 4. Election and continual training and development of directors 5. Internal control

3.2 Information on Implementation of Audit Committee:
(1). A total of 5 (A) meetings of the Audit Committee were held in recent year. The attendance of independent directors is as follows:

31 December 2022

Title	Name	Actual Meetings Present (B)	Meetings Present by Proxy	Actual Meetings Present Ratio (%)(B/A)	Remarks
Independent Director	Yang Lianfa	5	－	100.00%	10 June 2020 onboard
Independent Director	Lin Yimin	4	1	80.00%	10 June 2020 onboard
Independent Director	Hong Hsipeng	5	－	100.00%	10 June 2020 onboard
Other mentionable items: 1.If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (a)Matters referred to in Article 14-5 of the Securities and Exchange Act: n/a. (b)Rest items not approved by Audit Committee and approved by over two-thirds Directors except aforesaid items: n/a. 2. Avoidance of conflicts of interest by independent directors: please specify independent directors, subject, reason for avoidance and participation in voting: n/a. 3. Communication between independent directors and internal audit manager and accountants (supposedly including finance, business conditions of company, major items, approaches, results, etc.) (1)Audit report and follow-up report shall be submitted to convenor for reference minimum per quarter, and monthly audit performance, audit punch rectification and corporate finance and operation details shall be presented. Convenor shall comment on audit report. (2) Internal audit supervisor and accountants are in attendance of Audit Committee for presentation of audit approach, scope, and material adjustment and details to Audit Committee. Accountants communicate and discuss with directors and Audit Committee occasionally. Besides in meetings, audit supervisor and accountants and directors may at any time contact for smooth communication.

3.3 Corporate Governance Implementation Status and Deviations from Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies and cause

Evaluation Item	Implementation Status (*1)	Implementation Status (*1)	Implementation Status (*1)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies
	Y	N	Summary
1. Does the Company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies?	✓		The company has promulgated the Corporate Governance Best- Practice Principles. Each operation is followed pursuant hereto. No material deviation was discovered by now.	Compliant with Corporate Governance Best-Practice Principles.
2.Shareholding structure & shareholders’ rights (1)Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2)Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3)Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4)Does the company establish internal rules against prohibition to insiders trading with undisclosed information?	✓ ✓ ✓ ✓		(1) The company appoints a spokesperson, spokesperson’s proxy that address to the public for the company and be authorised to respond to shareholder’s disputes. (2) Commissioned to Stock Department and Securities Stock Department. (3) Promulgated in Internal Control System by the company. (4)Written standard has been promulgated pursuant to regulation stipulated by the competent authority with Internal Material Information Handling Procedure for implementation.	Compliant with Corporate Governance Best-Practice Principles.
3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop a diversified policy, concrete management target and implement? (2) Has the company voluntarily established other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Has the company established a standard to assess the performance of the Board and implement it annually, and are the performance evaluation results submitted to the Board of Directors and referenced when determining the remuneration of individual directors and nominations for re- election? (4) Does the Company regularly evaluate the independence of CPAs?	✓ ✓	✓ ✓	(1)The company takes diversification and talents into account for composition of Board of Directors. (2)The company established a remuneration committee, audit committee; we are evaluating to establish other specialised committees. (3)Evaluation guideline and approach of Board of Directors’ performance was promulgated by 2020 Q1 Board of Directors and is reviewed per year. The evaluation report is presented to Board of Directors. (4)The company evaluates CPA independence per year.	(1) Directors of the company are professional and seek the best for benefits of shareholders as exercise. (2) Accountants of the company are capable of auditing financial operation by the company.

Evaluation Item	Implementation Status (*1)	Implementation Status (*1)	Implementation Status (*1)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies
	Y	N	Summary
4.Have TWSE/GTSM listed companies appointed a suitable number of competent personnel and a supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, assisting directors and supervisors with compliance, handling work related to meetings of the board of directors and the shareholders' meetings, and producing minutes of board meetings and shareholders' meetings)?	✓		The company authorises Finance Department, General Management to handle corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, assisting directors and supervisors with compliance, handling work related to meetings of the board of directors and the shareholders' meetings, and producing minutes of board meetings and shareholders' meetings)?	Compliant with Corporate Governance Best-Practice Principles.
5.Has the company established a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?	✓		The company appoints a spokesperson, spokesperson’s proxy that address to the public for the company and a stakeholders’ section was set on the official website.	Compliant with Corporate Governance Best-Practice Principles.
6.Does the company commission a professional shareholder service agency to deal with shareholder affairs?	✓		The company commissions Board of Stakeholders’ affairs to Taishin Bank.	Compliant with Corporate Governance Best-Practice Principles.
7.Information Disclosure (1)Has the Company set up a corporate website to disclose both financial conditions and corporate governance details? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (3)Has the Company announced and report annual financial statements within two months after the end of each fiscal year, and announced and presented Q1, Q2, and Q3 financial statements, as well as monthly operation results by the stipulated deadline?	✓ ✓	✓	(1)The company has a website that allows access to finance, business, and corporate governance information of the company. (2)The company has assigned collection and disclosure of company information exclusively to implement spokesperson system. (3)Annual, semi-annual financial statements, Q1 and Q3 financial statements and monthly operation reports shall be issued and declared within stipulated term.	Compliant with Corporate Governance Best-Practice Principles.
8.Is there any other important information to facilitate a better understanding of the company’s governance practices (e.g. including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of	✓		(1)The company is operated with ethic guideline and responsible for the society. We anticipating creating best for shareholders and employees’ benefits. (2)The company discloses information for investors’ understanding of the company operation via MOPS.	Compliant with Corporate Governance Best-Practice Principles.

Evaluation Item	Implementation Status (*1)	Implementation Status (*1)	Implementation Status (*1)
	Y	N	Summary
risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchase of liability insurance for directors and supervisors)?			(3)Directors and supervisors are professional and receive training pursuant to regulation. The company informs occasionally directors and supervisors to participate in professional skill training organised by regarding parties. (4)Directors participated Board of Directors meeting with good attendance. Supervisors were invited to each Board of Directors meeting. Minutes of Board of Directors meeting was handed over to each director and supervisor. (5)Directors of the company are disciplined and avoid proposals in the event of conflict of interests. They anticipate smooth company governance.
9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures (companies without having been evaluated are exempted.) :The company reviewed company governance evaluation result and aims at improving information transparency and reinforcing Board of Directors’ operation. Information disclosure in terms of annual reports and website will be improved; Directors by the company are advised to receive sufficient training pursuant to Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEX Listed Companies; the failing items from self-evaluation will be improved for company governance guideline.

3.4Shall the Company include a Remuneration Committee or electees, it shall disclose its composition and operation:
(1) Remuneration Committee members

31 December 2022

Credential Title Name	Credential Title Name	Credential and experience	Independence (*)	Number of other listed companies where entitled independent director
Independent Director	Yang Lianfa	Degree: Business Management MA, Chung Hsing University PhD Candidate of NCCU Business Management Group Experience Executive Director by Arich Enterprise Co., Ltd. Executive Director, Yuguo Asset Management Co., Ltd. Chairman by Yanex International Co., Ltd. Director by Eagle Construction Co.,Ltd	(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)	n/a
Independent Director	Lin Yiming	Degree: Department of Architecture MA, Cheng Kung University Experience: President by Batom Co., Ltd. Director by Batom Co., Ltd.	(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)	n/a
Independent Director	Hong Hsipeng	Degree Bio-industrial MA, Chung Hsing University Experience Lecturer of Dept. of Mechanical Engineering.	(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)	n/a

Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

1.Not an employee of the company or any of its affiliates.

2.Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

3.Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.

4.Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.

5.Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

6.If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
7.If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

8.Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or

institution that has a financial or business relationship with the company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.

9.Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

10.Not been a person of any conditions defined in Article 30 of the Company Act.

(2) Remuneration Committee Operation

(a) 3 Remuneration Committee members of the Company in total.
(b) Term of Committee member: 10 June 2020 until 9 June 2023. 2 Remuneration meetings (A)

were held in recent year, directors’ credential and attendance to follow:

Title	Name	Number of meetings attended in person (B)	Meetings attended by Proxy	Attendance (%) (B / A)	Remarks
Convener	Yang Lianfa	2	－	100%	10 June 2020 re-election
Director	Lin Yimin	1	1	50%	10 June 2020
					re-election
Director	Hong Hsipeng	2	－	100%	10 June 2020 re-election

Other mentionable items:

1.If the Board of Directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to Pay & Remuneration committee’s opinion (E.g. the remuneration adopted by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None.

2.Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified.
*1: Actual presence rate (%) of is calculated by one’s actual attended Remuneration Committee meetings during one’s service in proportion to convened meetings.

3.5 CSR promotion implementation:

.5 CSR promotion implementation:
Evaluation Item	Implementation Status(*1)			Deviations from Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies
	Y	N	Summary
1.Has the company established CSR structure and (non-)exclusive CSR promotion unit? Has Board of Directors authorised high managerial positions solely and supervised?		✓	The company is preparing for establishment of an exclusive CSR department. It will be reported to Board of Directors after establishment.	Not compliant with Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies. Planning to rectify.
2.Has the company evaluated risks associating environment, society, and company governance regarding company operation and promulgated related risk management or strategy based on materiality principle?	✓		The company evaluates risks regarding environment, society, and corporate governance (ISO9001 and 14001) based on materiality guideline and promulgated risk management policy or strategy.	Compliant with Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies.
3.Environment (1) Has the Company established environment management industry- wise? (2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment? (3) Does the company evaluate the potential risks and opportunities in climate change with regard to the present and future of its business, and take appropriate action to counter climate change issues? (4) Does the company take inventory of its greenhouse gas emissions, water consumption, and total weight of waste in the last two years, and implement policies on energy efficiency and carbon dioxide reduction, greenhouse gas reduction, water reduction, or waste management?	✓ ✓ ✓ ✓		The company focuses on environment and resources use, etc. We promulgated environmental policy and waste reduction per ISO14001 and implement.	Compliant with Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies.
4. Social Topics (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (2) Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries? (3) Does the company provide a healthy and safe working environment and organise training on health and safety for its employees on a regular basis? (4) Does the company provide its employees with career development and training sessions? (5) Do the company's products and services comply with relevant laws and	✓ ✓ ✓ ✓ ✓		The company abides by Labour Act and relevant regulations. Besides employee representatives’ meeting per month, a mail address has been set for protection of employees’ legal rights. Employees’ feedbacks can be passed to management directly. A safe, healthy, and comfortable workplace is available to employees pursuant to fire and construction safety regulations, as well as regular health checks and occasional briefing on work safety with incentives. The company holds supervisor meeting monthly per plant and addresses business operation, industry conditions to staff and analyses its effects.	Compliant with Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies.

Evaluation Item	Implementation Status(*1)	Implementation Status(*1)	Implementation Status(*1)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies
	Y	N	Summary
international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented? (6)Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights and its implementation?	✓		The company established a machinery institute order to develop employee competency. The company products have a warranty, for which the customer service department is responsible in terms of customer service and product warranty. Customer service abides by standard procedure and the system promulgation and implementation is authenticated by ISO9001. The company is working closely with suppliers. We established an industry committee to enforce CSR implementation. The company’s suppliers have all been properly authenticated. In the event of violation to CSR policy by suppliers, with which business will suspend or terminate.
5. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non- financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance or guarantee from a third-party verification unit?		✓	The company is preparing promulgation principle or guideline.	Not compliant with Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies. Under planning.
6. Shall the Company have established CSR guideline pursuant to Sustainable Development Best Practice Princip TWSE/TPEX Listed Companies, please specify its deviation hereof in implementation: The company is developing Sust Development Best Practice Principles and its managementguideline
7. Other useful information for explaining the status of corporate social responsibility practices: (1)Environment protection: We implement energy saving and carbon reduction, etc. to minimise environmental impact and promote it to employees and participate in beach cleaning organised by Environmental Protection Agency. (2)Contribution to society: participated in mass mask production movement for disease control. We donate occasionally regional charities and environmental protection groups. (3)Social welfare: employment of the disabled. (4)Customer benefit: communication with customers in a timely manner. Customer complaint meetings are held regularly for review.

(1)Environment protection: We implement energy saving and carbon reduction, etc. to minimise environmental impact and promote it to employees and participate in beach cleaning organised by Environmental Protection Agency.
(2)Contribution to society: participated in mass mask production movement for disease control. We donate occasionally regional charities and environmental protection groups.

(4)Customer benefit: communication with customers in a timely manner. Customer complaint meetings are held regularly for review.

3.6Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles " and Measures taken

Evaluation Item	Implementation (*1)	Implementation (*1)	Implementation (*1)	Deviation from Ethical Corporate Management for TWSE/GTSM Listed Companies and Cause
	Y	N	Summary
1.Establishment of ethical corporate management policies and programmes (1)Does the company have a Board-approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy? (2)Does the company have mechanisms in place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies? (3)Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular reviews and amendments?	✓ ✓ ✓		The company promulgated Ethical Practice Principles that stipulates ethical governance policy, approaches, and commitment of Board of directors and management implement from governance policy. Before establishing commercial liaison, the company shall evaluate the legitimacy, ethical governance policy, and unethical history of the other party if any, in order to ensure fair, transparent business governance, and will not request, offer, or accept bribery. Our employees are requested to abide by Ethical Practice Guideline. Internal audit takes place occasionally. No discovery of violation has been found among employees, clients, or suppliers.	Compliant with Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.

Evaluation Item	Implementation (*1)	Implementation (*1)	Implementation (*1)	Deviation from Ethical Corporate Management for TWSE/GTSM Listed Companies and Cause
	Y	N	Summary
2.Implementation of ethical corporate management (1)Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (2)Does the company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations? (3)Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (4)Does the company have effective accounting and internal control systems in place to implement ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessment and promulgate audit plans to audit the systems accordingly to prevent unethical conduct, or commission external auditors to audit? (5)Does the company regularly hold internal and external training on ethical corporate management?	✓ ✓ ✓ ✓ ✓		Management procedure by the company stipulates business operation shall ethically abide by regarding regulations. Board of Directors members and management shall deem ethics company governance principle. General Management Division by the company is in charge of business ethics and reports its implementation to Board of Directors. Should any policy or trading involve potential conflicts of interests with directors, supervisors, or managers, the relevant person may not take part in decision making or voting. Ethical conduct principles and system are stipulated in Corporate Ethics Governance Principle. Audit system, internal control system has been established. Internal auditors audit occasionally. The company promotes and informs employees of ethics principle and standard via supervisor meeting and monthly meeting.	Compliant with Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.
3.Whistle-blowing implementation (1)Has the Company established both a reward/disciplinary system for whistle blowing, and personnel exclusive for defendant appeal? (2)Has the Company promulgated a standard investigation procedure against whistle- blowing, and follow-up measures and confidential measures post-investigation? (3)Does the company provide whistleblower protection against improper aftermath?	✓ ✓ ✓		The company operation is deemed fair, just, open. Any issues can be reported to supervisor directly via mail, phone, or in person. All whistleblowing evidence is deemed confidential. All participants hereof are obliged to keep solely the process confidential. The investigation will be passed on to Performance Appraisal based on regulations for follow-up. The company is obliged to keep whistleblowers confidential, in order to make sure one’s whistleblowing conduct is improperly used against oneself.	Compliant with Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies.
4.Reinforcement of information disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?		✓	The company discloses required information by law and implements transparency of financial statements.	Overall compliant with Corporate Governance Best- Practice Principles for TWSE/GTSM Listed Companies.。
5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best- Practice Principles for TWSE/TPEX Listed Companies, please describe any discrepancy between the policies and their implementation: n/a.

Evaluation Item	Implementation (*1)	Implementation (*1)	Implementation (*1)	Deviation from Ethical Corporate Management for TWSE/GTSM Listed Companies and Cause
	Y	N	Summary
6.Other important information to facilitate a better understanding of the Company’s ethical corporate management policies (e.g., review and amendment to Ethical Corporate Principles in terms of company policies): n/a.

3.7 Should there be Company Governance Principles and regarding sections by company, please disclose where accessible: Company Governance Principle has been promulgated and is available via official website: http：//www.awea.com.
3.8 Other Important Disclosure Regarding Corporate Governance is accessible via: the company has disclosed on MOPS for latest information updated for shareholders by the company.

3.9 Implementation of internal control system shall disclose following:

(1) Internal control system statement

AWEA Mechantronic Co., Ltd.

Statement on Internal Control

Date: 13 March 2023

The Company states the following with regard to its internal control system during fiscal year 2022, based on the findings of its self-assessment:

The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management. The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), the reliability, timeliness, and transparency of reporting, and compliance with applicable norms and applicable laws, regulations, and bylaws.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three objectives mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, however, and the Company takes corrective actions as soon as a deficiency is identified.
The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets (hereinbelow, the “Regulations”). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. control environment 2. risk assessment 3. control activities 4. information and communications 5. monitoring activities. Each element further contains several items. Please refer to the Regulations for details.
The Company has assessed the design and operating effectiveness of its internal control system according to the aforesaid criteria.
Based on the findings of the assessment mentioned in the preceding paragraph, the Company believes that as of 31 December 2022 its internal control system (including its supervision and management of subsidiaries and its overall implementation of information security), encompassing internal controls for understanding the degree of achievement of operational effectiveness and efficiency objectives, the reliability, timeliness, and transparency of reporting, and compliance with applicable norms and applicable laws, regulations, and bylaws, is—with the exception of the matters, if any, specifically listed in the Appendix— effectively designed and operating, and reasonably assures the achievement of the above-stated objectives.
This Statement will become a major part of the content of the Company's Annual Report and Prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
This Statement has been passed by the Board of Directors Meeting of the Company (the Exchange) held on 13 March 2023, where none of the 7 attending directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement.

AWEA Mechantronic Co., Ltd.

Chairman: Yang Dehua

President: Yang Chengjhun

(2) CPA audit report shall be disclosed against Internal control system commissioned to CPA audit: n/a.
3.10 Company or its staff are disciplined, or measures against violators of internal control that will impact shareholder’s rights or securities price by recent year until closure of annual report: please specify the discipline, material punch and rectification: n/a.
3.11 Conclusion and Implementation from Board of Shareholders and Directors Meetings by end of recent fiscal year and until annual report closure:

Meeting	Session/Date	Material Adoption
Board of Shareholders meeting	15 June 2022	1. 2021 Business Report and Financial Statement. 2. 2021 EarningAllocation.
Board of Directors meeting	8 Aug. 2022	1. Adoption of 2022 Q2 Consolidated Financial Statement. 2. Bank quota proposal. 3. Lending funds proposal of Shanghai Zhuwei Machinery Co., Ltd. for AWEA Suzhou. 4. Addition proposal of common shares’ holding of Yulong Tech. Co.,Ltd.
Board of Directors meeting	7 Nov. 2022	1. Adoption of 2022 Q3 Consolidated Financial Report. 2. Bank quota proposal 3. Lending funds proposal for Extron Machinery Co., Ltd. 4.Amendment tointernalcontrolsystemby the company.
Board of Directors meeting	19 Dec. 2022	1. Remuneration adoption discussion 2. 2023 Internal Control Audit proposal 3. 2023 Annual budget proposal 4. Lending funds proposal of Shanghai Zhuwei Machinery for Atrump Machinery Inc. 5. Amendment proposal of Standard procedure for handling Internal Material Information by the company. 6.Bankquota proposal.
Board of Directors meeting	13 March 2023	1. 2022 employee and director remuneration distribution proposal. 2. 2022 Business Report and Financial Statement proposal. 3. Remuneration Committee discussion of adoption. 4. 2022 earning distribution proposal 5. Re-election of board of directors. 6. 2023 convention venue and time and proposals. 7. Admission of shareholders’ written proposal for 2023 common shareholder meeting 8. 2022 internal control system disclaimer proposal. 9. Addition of holding of common shares of Yulong. 10. Amendment proposal to articles of incorporate by the company. 11.Bankquota proposal.
Board of Directors meeting	11 April 2023	1. Nominee proposal of directors. 2. Release proposal of business strife limitation to new elected directors and their legalperson behalf.
Board of Directors	8 May 2023	1. Adoption of 2023Q1 Consolidated Financial Statement.

Meeting	Session/Date	Material Adoption
meeting		2. Bankquotaproposal.

3.12 Recorded or written objection summary of directors or supervisors against material adoption by end of recent year or closure of annual report: n/a.
3.13 Resignation/Discharge summary of president, chief manager, audit manager, finance manager, internal audit manager, company governance manager and R&D manager etc. by end of recent year or closure of annual report: n/a.

4. CPA Commission Details

Unit Amount: thousand NTD

Audit Agency	Auditor	Audit Term	Commission	Non-audit Commission	Total	Remarks
EnWise CPAs & Co.	Sporn Chen	1 Jan. 2022~31 Dec. 2022	1,930	-	1,930
	Gordon Yi	1 Jan. 2022~31 Dec. 2022

5. Change of auditors

n/a.

Chairperson, chief manager, finance or audit manager having served at the CPA Agency or its affiliated business within the past year

n/a.

Transfer of shares from Director, supervisor, manager whose shareholding ratio is over 10% and alteration in stock pledge by end of fiscal year and closure of annual report
(1) Transfer of shares from supervisor, director, manager, and material shareholder with a shareholding ratio over 10%:

Unit: share

						Unit: share	Unit: share
Title	Name	2021		2022		Fiscal Year by 9 April 2023
		Held Share Difference	Pledged Share Difference	Held Share Difference	Pledged Share Difference	Held Share Difference	Pledged Share Difference
Chairman	Yang Dehua (*1)	－	－	－	－	－	－
Director	Behalf by Goodway Machine Corp.: Wang Chenghsuan(*4)	-	－	－	－	-.	-
Independent director	Yang Lianfa(*1)	－	－	－	－	－	－
Independent director	Lin Yimin (*1)	－	－	－	－	－	－
Independent director	Hong Hsipeng (*1)		－	(1,000)	－
Director	Yang Chengjhun (*2)	－	－	－	－	－	－
Director	Yang Chingfeng (*2)	－	－	－	－	－	－
Main shareholder	Goodway Machine Corp.	1,385,000	－	145,000	－	29,000	－

Title	Name	2021	2021	2022	2022	Fiscal Year by 9 April 2023	Fiscal Year by 9 April 2023
		Held Share Difference	Pledged Share Difference	Held Share Difference	Pledged Share Difference	Held Share Difference	Pledged Share Difference
President	Yang Chengjhun (*3)	－	－	－	－	－	－
Vice President	Yang Changchi (*4)	－	－	－	－	－	－
Vice President	Yeh Rueming	－	－	－	－	－	－
Finance Manager	Hsu Hongbin	(33,000)	－				－

*1: Re-elected on 10 June 2020.
*2: Re-elected on 18 Aug. 2021.
*3: Re-elected on 23 Dec. 2020.
*4: Re-elected on 2 Apr. 2021.

(2) Relation with transferee of directors, supervisors, managers, and main shareholders: n/a.

(3) Relation with pledgers of directors, supervisors, managers, and main shareholders: n/a.

8. Relations among top 10 shareholders

9 April 2023

							9 April 2023	9 April 2023
Name(*1)	Shareholding Ratio		Shareholding Ratio by Spouse, MinorChildren		Substantial Shareholding Ratio		Top ten shareholders per ratio, or relatives, spouse, kinship within 2nd gradehereto		Re mar ks
	Number of Shares	Shareholding Ratio	Number of Shares	Shareh olding Ratio	Number of Shares	Shareh olding Ratio	Name	Relation
Goodway Machine Corp.	47,941,311	49.63%	－	－	－	－	Yang Dehua	Chairman by the company
Yang Dehua	9,031,403	9.35%	－	－	－	－	Goodway Machine Corp. Honghua Investment Co., Ltd. Chiajin Investment Co., Ltd. Hung Jiu Machine Co.,Ltd.	Chairman by the company
Chiajin Investment Co., Ltd.	6,256,388	6.48%	－	－	－	－	Yang Dehua	Chairman by the company
Fubon Financial Co., Ltd.	5,406,500	5.60%	－	－	－	－	n/a.	n/a.
Hung Jiu Machine Co., Ltd.	1,482,818	1.54%	－	－	－	－	n/a.	n/a.
Jihyuan Investment Co., Ltd.	1,481,316	1.53%	－	－	－	－	n/a.	n/a.
Jingcheng Investment Co., Ltd.	1,199,000	1.24%	－	－	－	－	Yang Dehua	a relative within second grade to in-charge
Honghua Investment Co., Ltd.	828,250	0.86%	－	－	－	－	Yang Dehua	Chairman by the company
Yu-en Investment Co., Ltd.	786,728	0.81%	－	－	－	－	Yang Dehua	a relative within second grade to in-charge
Hung Jiu Machine Co., Ltd.	751,312	0.78%	－	－	－	－	Yang Dehua	Chairman by the company

Calculation of shareholding ratio, consolidated comprehensive shareholding ratio held by Company, directors, supervisors, managers of the Company with direct or indirect control over business.

directors, supervisors, managers of	the Company with direct or indirect control over business.	the Company with direct or indirect control over business.	the Company with direct or indirect control over business.	the Company with direct or indirect control over business.	the Company with direct or indirect control over business.	the Company with direct or indirect control over business.
	30 April 2023;Unit: share %
Investee	Investment of the company		Investment from directors, supervisors, managers to business under direct or indirect control		Comprehensive Investment
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Sharehol dingratio
B-WAY(CAYMAN)CO,LTD(*1)	10,665,029	100%	－	－	10,665,029	100%
BILLION-WAY(CAYMAN)CO,LTD(*1)	12,829,840	100%	－	－	12,829,840	100%
Shanghai Zhuwei Machinery Co., Ltd (*3)	－	100%	－	100%	－	100%
AWEA Suzhou Co., Ltd. (*3)	－	100%	－	100%	－	100%
AUTECH EUROPE	50	5%	－	－	50	5%
ExtronMachinery Industry Co., Ltd.	5,914,800	60%	－	－	5,914,800	60%
YAMA SEIKI,USA,INC.	584,192	28.58%	1,460,000	71.42%	2,044,192	100%
AXTRON INT'L INVESTMENT CO.,LTD. (*1)	50,000	100﹪	－	－	50,000	100﹪
AXTRON INT'L INVESTMENT LIMITED (*2)	10,000	100﹪	－	－	10,000	100﹪
ExtronMachinery (Chiahsing) Industry Co., Ltd. (*3)	－	100﹪	－	100﹪	－	100﹪
Huahan Rental Co., Ltd.	666,667	13.33﹪	2,666,666	53.34%	3,333,333	66.67%

*1: An overseas company. EPS is 1 USD.
*2: An overseas company. EPS is 1 HKD.
*3: Number of shares of companies in Mainland China is not calculated.

IV. Fundraising

1. Company capital and shares

1.1 Source of equity capital

Unit: Share/NTD

						Unit: Share/NTD	Unit: Share/NTD	Unit: Share/NTD
M/Y	Issue Price (NTD)	Approved Share Capital		Paid-in share capital		Remarks
		Number of Shares(thousand)	Price (thousand NTD)	Number of Shares (thousand)	Price (thousand NTD)	Source of Equity Capital	Share Price Disposition with non- cash property	Oth er
July 2008	10	100,000,000	1,000,000,000	82,901,175	829,011,750	Capital increase from earnings at 39,178,250 NTD Capital increase from employee bonus at 6,268,500 NTD	n/a.	*1
Dec. 2008	10	100,000,000	1,000,000,000	82,370,866	823,708,660	Merger of ByWell Materials Co., Ltd. Inventory decrease at 5,303,090 NTD	n/a.	*2
July 2009	10	100,000,000	1,000,000,000	90,607,952	906,079,520	Capital increase from earnings at 82,370,860 NTD	n/a.	*3
Aug 2011	10	100,000,000	1,000,000,000	94,952,449	949,524,490	Capital increase from earnings at 43,444,970 NTD	n/a.	*4
Nov 2012	10	100,000,000	1,000,000,000	94,952,449	949,524,490	Merger of Jinwei Co., Ltd stocks	n/a.	*5
Nov 2013	10	100,000,000	1,000,000,000	91,994,449	919,944,490	Treasury stock cancellation at 29,580,000 NTD	n/a.	*6
Sept 2016	10	100,000,000	1,000,000,000	96,594,171	965,941,710	Capital increase from earnings at 45,997,220 NTD	n/a.	*7

*1: Capital increase approved by FSC 0970033790 order on 7 July 2008.

*2: Capital reduction approved by MOEA 09701323420 order on 23 Dec. 2008.
*3: Capital increase approved by FSC 0980033595 order on 7 July 2009.
*4: Capital increase approved by FSC 1000030026 order on 29 June 2011.
*5: Registration change approved by MOEA 10101223870 order.
*6: Registration change approved by MOEA 10201241980 order.
*7: Registration change approved by MOEA 10501224890 order.

Approved share capital	Approved share capital	Approved share capital	Approved share capital	Approved share capital	Remarks
Outstanding shares			Un-issued shares	Total
Issued	Un-issued	Total
96,594,171	-	96,594,171	3,405,829	100,000,000	Listed shares

1.2 Shareholding structure

.2 Shareholding structure	.2 Shareholding structure	.2 Shareholding structure	.2 Shareholding structure	.2 Shareholding structure	.2 Shareholding structure	.2 Shareholding structure
9 April 2023;unit: share
Shareholders Number	Authority	Financial Institution	Other Legal Person	Individual	Foreign Institution and Foreigners	Total
Number of shareholders	0	5	23	7,011	30	7,069
Number of shares held	0	5,499,282	61,942,384	28,316,130	836,375	96,594,171
Shareholding ratio	0.00%	5.69%	64.13%	29.31%	0.87%	100.00%

1.3 Shareholding Dispersion: Common Stocks (book value 10 NTD/share)

hareholding Dispersion: Common Stocks (book value 10 NTD/share)	hareholding Dispersion: Common Stocks (book value 10 NTD/share)	hareholding Dispersion: Common Stocks (book value 10 NTD/share)	hareholding Dispersion: Common Stocks (book value 10 NTD/share)
9 April 2023
Shareholding Scale	Number of Shareholders	Number of held Shares	Shareholding Ratio (%)
1 to 999	3,956	540,596	0.56%
1,000 to 5,000	2,349	4,561,702	4.72%
5,001 to 10,000	363	2,657,522	2.75%
10,001 to 15,000	146	1,775,257	1.84%
15,001 to 20,000	64	1,143,984	1.18%
20,001 to 30,000	76	1,890,753	1.96%
30,001 to 40,000	40	1,400,901	1.45%
40,001 to 50,000	12	548,947	0.57%
50,001 to 100,000	26	1,751,380	1.81%
100,001 to 200,000	18	2,366,345	2.45%
200,001 to 400,000	8	2,239,758	2.32%
400,001 to 600,000	1	552,000	0.57%
600,001 to 800,000	2	1,538,040	1.59%
800,001 to 1,000,000	1	828,250	0.86%
Above 1,000,001	7	72,798,736	75.37%
Total	7,069	96,594,171	100.00%

Preferred Stocks: n/a. No preferred stocks by the company.

1.4 List of Major Shareholders: Specify the shareholders, number of shares held, and ratio who hold over 5% shares, or top 10 shareholders.

Shares Major Shareholders	Number of held shares	Shareholding ratio(%)
1. GoodwayMachine Corp.	47,941,311	49.63%
2. YangDehua	9,031,403	9.35%
3. Chiajin Investment Co.,Ltd.	6,256,388	6.48%
4. Fubon Finance Co.,Ltd.	5,406,500	5.60%
5. Hongjhu Investment Co.,Ltd.	1,482,818	1.54%

Shares Major Shareholders	Number of held shares	Shareholding ratio(%)
6. Jihyuan Investment Investment Co.,Ltd.	1,481,316	1.53%
7. Jingchen Investment Co.,Ltd.	1,199,000	1.24%
8. Honghua Investment Co.,Ltd.	828,250	0.86%
9. Yu-en Investment Co,,Ltd.	786,728	0.81%
10.HungJiu Machine Co., Ltd.	751,312	0.78%

1.5 Share price, net worth, earning, dividend, and other information in the past two years

Item	Year	Year	2021	2022	Fiscal year by 31 March 2023
Price per share	Peak		42.80	33.90	34.40
	Bottom		31.20	29.00	30.75
	Mean		35.19	31.08	31.89
Net Value per share (*1)	Before Distribution		32.68	34.87	34.94
	After Distribution		31.48	n/a	-
Earning per share	Weighted average number of shares (thousand shares)		96,594,171	96,594,171	96,594,171
	EPS (*2)	1.35 n/a	1.35	3.67	0.15
			1.35	n/a	-
Dividend per share	Cash Dividend		1.20	n/a	-
	Stock Grant	n/a	n/a	n/a	-
		n/a	n/a	n/a	-
	Accumulated unpaid dividends		n/a	n/a	-
Return on Investment	Price to Earning Ratio(*3)		26.07	n/a	-
	Price to Earning Ratio(*4)		29.33	n/a
	Dividendyield(*5)		3.41%	n/a	-

*1: Please list allocation based on number of issue stocks at year end and concluded distribution by Board of Directors or following Board of Directors.
*2: Retroactive adjustment will be necessary due to stock grants, capital increase from employee remuneration, company bonds in exchange for common shares.
*3: Price / Earnings Ratio = Average Market Price / Earnings per Share
*4: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share
*5: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

1.6 Dividend Policy by company & implementation (to be adopted by 2023 Board of Shareholders’

meeting)

(1).Dividend policy: The settled annual net income

After closing of accounts, if there is earnings, the Company shall first pay the tax, make up the losses for the preceding years and then set aside a legal reserve of 10% of the net profit. the remaining profit shall be combined with undistributed earnings of previous year, and be partially held for company development capital. Board of Directors will draft earning distribution proposal and Board of Shareholders will adopt.

The company incurs constant change amid industry. The corporate is expanding in life cycle. In consideration of long-term financial plan and satisfaction of cash inflow requirements by shareholders, the cash dividends issued per year cannot fall below 10% of cash and dividend total.

(2). Implementation

Implementation of dividend distribution on Board of Shareholders’ adoption

(a) 2022 earnings distribution proposal adopted by Board of Directors as following:
i. Legal reserve adopted at 35,790,289 NTD.
ii. Distributable dividends at 154,550,674 NTD; EPS is 1.6 NTD.
iii. Undistributed earnings at 1,405,254,991 NTD is held.
iv. Should company bonds be transferred for company stocks or in exchange of stock inventory, transfer, and cancellation affect number of outstanding stocks and distribution rate per share alter, it will be adjusted by the Chairman.

Aforesaid adoption conforms to dividend policy of articles of incorporation by the company that stipulates cash dividends cannot fall below 10% of cash and dividend total.

2022 Disposition of net income

	Unit: NTD	Unit: NTD	Unit: NTD
Item	Amount		Remarks
	Subtotal	Total
Beginning Balance Adjustment: Add: 2022 net income Add: Other comprehensive income Add: Disposition of equity method of comprehensive income evaluated by fair value Subtract: legal reserve Distributable earning Distribution: Shareholder bonus-cash (1.6 NTD/share) End undistributed earning	354,142,189 2,636,547 1,124,154 (35,790,289) (154,550,674)	$ 1,237,693,064 1,559,805,665 $ 1,405,254,991	*1

Chairman: Manager:[ Accounting supervisor: ]

*1: A 10% of net income after tax is allocated for legal reserve pursuant to articles of company. $ 357,902,890 * 10% = $ 35,790,289
(a) Shareholder dividends: EPS at 1.6 NTD; once adopted on Annual Shareholder Meeting, Chairman will be authorised to set a Ex-dividend date for its distribution.
(b) The amount of cash dividends to be distributed is up to NT$1, and the balance of the fractional amount less than NT$1 is neglected and added to a total in a descending row and an ascending row of shareholder account number until it meets the total of cash dividends.
(c) Should company stock sources alter that affects number of outstanding stocks and EPS rate, Annual Shareholder Meeting will authorise the Chairman exclusively.

1.7 Effects of stock grant proposal from shareholder meeting to business performance and earning per share

Unit: thousand NTD

Year Item	Year Item	Year Item	2023 (Estimation)
Paid-inCapitalby yearbeginning(thousand NTD)			965,942
Share/divided distribution of currentyear	EPS(NTD)(*1)		1.6
	Capital increase from Additional Paid-In Capital(issued per thousand shares)		－
Business Performance Flow	OperatingMargin(thousand NTD)		n/a (*2)
	Difference in Operating Marin per ratio (%) to same quarter from previous year
	NetIncome(thousand NTD)
	Difference in Net Income(%) per ratio (%) to same quarter from previous year
	EPS(NTD)
	Difference in EPS per ratio (%) to same quarter from previous year
	Annual average of return of investment(reciprocal to annual average ofprice-to-earningsratio)
Fictional EPS and Price-to-Earning Ratio	In the event of entire capital increase from earning replaced by cash dividends	Fictional EPS	n/a (*2)
		Fictional annual average to returnof investment
	In the event that there is no capital increase from additional paid-in capital	Fictional EPS
		Fictional annual average to returnof investment
	In the event there is no capital increase from additional paid-in capital & capital increase from earningreplaced bycash dividends	Fictional EPS
		Fictional annual average to return of investment

*1: Adopted by Annual Shareholders’ meeting for 2023.
*2: Regulations Governing the Publication of Financial Forecasts of Public Companies stipulates no financial forecast is required to issue for 2023.

1.8 Employee and Director Bonus

(1) Should there be earnings (earnings are benefits before tax, benefits before subtraction of employee remuneration and director, supervisor remuneration) in the year, a 3%~8% will be allocated for employee bonus. A cap of 2% will be director and supervisor remuneration. The company allocates aforesaid employee cash and dividends conditionally to official employees. Its conditions and approaches are promulgated by Board of Directors. Should the company incur loss, it will then be reserved for coverage.
The company shall allocate employee and director and supervisor bonus pursuant to Company Act and articles of corporate. Accounting Research and Development Foundation(96) interpretation letter 052 states an estimated is made hereto in preparation of midterm and annual financial statements. Proper accounting items will list employee bonus and director and supervisor remuneration under operation cost or operation fee based on its nature. Should there be difference between allocation adopted by Board of Shareholders and estimation in financial statements, it will be deemed estimation alteration and be listed for distribution of income in current year.
(2) Remuneration distribution adopted by Board of Directors:
(a) Employee bonus estimation for 2022 is 16,000 thousand NTD. Director remuneration is 1,800 thousand NTD. All is distributed in cash.
(b) Number of shares intended for employee dividends and their ratio to capital increase from earnings: employee bonus for 2022 is all distributed with cash.

  - (c) EPS after intended employee bonus and director remuneration: n/a.

(3) Earnings having been distributed to employees, directors, and supervisor remuneration for the first half-year: earning for 2021 is distributed based on Board of Director adoption, of which employee cash bonus is 12, 000 thousand NTD, director and supervisor remuneration is 1,800 thousand NTD. Distributed in cash. No difference in allocation.
1.9 Share repurchase by the company:

n/a.

Company bonds (including oversea company bonds):
n/a.
Preferred stocks:

n/a.

Issuance of overseas depository Receipt

n/a.

Employee stock option

n/a.

Merger or acquisition of new shares from other companies

n/a.

Implementation of capital allocation plan
7.1 Plan: n/a

7.2 Implementation: n/a.

7.3 Allocation of Remaining capital: n/a.

V. Operation

1 Business Activities

1.1 Business Scope

(1)A. Main items of business operation

The company's main business items are the development, design, production, manufacturing and sales of computer numerical control (CNC) machine tools. The business items listed in the company change registration form as follows:

‧ CB01010 Machinery Equipment Manufacturing Industry.
‧ CC01110 Computer and its Peripheral Equipment related Manufacturing Industry.
‧ I501010 Product Design Industry
‧ F113010 Wholesale of Machinery Industry
‧ F213080 Retail of Machinery Equipment Industry.
‧ ZZ99999 In addition to licensed business, can run the business that is not prohibited or restricted by law.
(2) The operation ratio of the main business

The operating ratio of the company's main products is as follows:

	Unit: NT$ thousand 2022 2021 amount % amount % 1,497,127 48.29 1,623,682 44.72 1,460,438 47.10 1,783,199 49.11 142,952 4.61 224,075 6.17 3,100,517 100.00 3,630,956 100.00	Unit: NT$ thousand 2022 2021 amount % amount % 1,497,127 48.29 1,623,682 44.72 1,460,438 47.10 1,783,199 49.11 142,952 4.61 224,075 6.17 3,100,517 100.00 3,630,956 100.00	Unit: NT$ thousand 2022 2021 amount % amount % 1,497,127 48.29 1,623,682 44.72 1,460,438 47.10 1,783,199 49.11 142,952 4.61 224,075 6.17 3,100,517 100.00 3,630,956 100.00	Unit: NT$ thousand 2022 2021 amount % amount % 1,497,127 48.29 1,623,682 44.72 1,460,438 47.10 1,783,199 49.11 142,952 4.61 224,075 6.17 3,100,517 100.00 3,630,956 100.00
Main Product Items	2022		2021
	amount	%	amount	%
Gantry type vertical comprehensive machiningcenter	1,497,127	48.29	1,623,682	44.72
C type vertical comprehensive machiningcenter	1,460,438	47.10	1,783,199	49.11
Other(Note)	142,952	4.61	224,075	6.17
Total	3,100,517	100.00	3,630,956	100.00
Note: Others include machine maintenance, spare parts and trades of outsourcing goods

Focusing on the development, design, production, manufacture and sales of computer numerical control (CNC) machine tools, the business proportion is more than 95%.

(3) The company's current product items

The company's main products are Computer Numerical Control (CNC) machine tools, which belong to the metal cutting machine in industrial machinery; as an indispensable mechanical equipment for various basic processing and precision processing. The product application extends to aerospace industry, national defense industry, automobile industry, general machinery, metal product processing industry and electronics industry, etc. The company’s machine tool products can be divided into two categories: gantry type vertical comprehensive machining center and C type vertical comprehensive machining center. If it’s distinguished by machine, it can be divided into:

‧ Vertical Machining Center

‧ Gantry type vertical machining center
‧ Gantry type five-sided machining center

‧ Gantry type high speed machining center
‧ Horizontal Machining Center
‧ Horizontal High Speed Machining Center
‧ Horizontal boring and milling machining center
‧ Five-axis processing center machine

‧ Automation equipment

(4) Development plan of new products

Computer Numerical Control (CNC) machine tools are one of the emerging industries which is actively promoted by the government in recent years, especially the high-value-added precision CNC lathes and machining centers are key development projects. At the beginning of the company was founded, focused on the medium and large precision machining centers as the core of development, which mainly meets the needs of large-scale mechanical parts processing industry and mold processing industry. In recent years, the company has also developed a series of small and mediumsized CNC vertical machining centers to meet the market demand for small and medium-sized object processing and molds. In the future, the company will not only continuously improve the competitiveness of the original series of medium and large gantry-type machining centers and series of small and medium-sized CNC vertical machining centers, but also making every effort to develop various types of CNC horizontal boring and milling machining centers and CNC five-axis machining centers. The development plan of new products are as follows:

‧ Crane type high-speed five-axis machining center

‧ Horizontal fully automatic column high-speed five-axis machine

‧ Milling lathe compound with five-axis machining center

‧ Development on horizontal oblique fully automatic universal head

‧ VP6 high-speed gantry aerospace structure use machining center

‧ Development on EH5 high-speed horizontal five-axis machining center

‧ Design and development of A+/AF series modularization

‧ Design and development on the series of AE series new comprehensive machining center

‧ Development of AHM800 Horizontal Machining Center

‧ Development of Z800 Gear Spindle Head

‧ Development of AC fully automatic universal head

‧ Development of SP4 high-speed gantry aluminum processing machine

‧ Development of BS-Φ130 boring shaft
‧ Development of 16K built-in spindle

‧ The diagnosis function of intelligent information control system

‧ Facial identification function of intelligent information control system
‧ Development of moving column and moving beam machining center

‧ Design and development of AU-680 high rigidity moving column five-axis machine

‧ Development of VP-xx16 gantry type comprehensive processing machine (can be put into the cabinet)

‧ Design and development of X-A2 two-axis head

1.2 Industry Overview:

(1) Current status and development of machine tool industry

(a)Current status of the industry

According to customs export statistics, the total export value of Taiwan's machine tools from January to December in 2022 reached US$3.02303 billion, with growth rate of 8.6% compared with the same period of last year, in which the cutting machine tools were US$2.54299 billion, with growth rate of 10.4% year-over-year (YOY). The export value of molding machine tools was US$480.03 million, with growth rate of 0.2% YOY.

According to the ranking of exporting countries from Taiwan, mainland China ranked No.1 in 2022 with an export value of US$801.79 million, accounting for 26.5% of total exports, with a decrease rate of 10.4% YOY. The United States ranked No.2, with an amount of US$445.18 million, accounting for 14.7% of total exports, with growth rate of 37.7% YOY. Turkey ranked No.3, with an amount of US$254.35 million, accounting for 8.4%, with growth rate of 5.4% YOY. Vietnam ranked No.4, with an amount of US$116.79 million, accounting for 3.9%, with growth rate of 14.2% YOY. Russia ranked No.5, with an amount of US$114.61 million, accounting for 3.8%, with growth rate of 10.2% YOY.

The rest part are as follows: Netherlands accounted for 3.6%, with growth rate of 31.7%. Italy accounted for 3.5%, with growth rate of 40.7%. India accounted for 3.1%, with decrease rate of 0.8%. Thailand accounted for 2.9%, with decrease rate of 11.2%. Malaysia accounted for 2.7%, with growth rate 13.6%. Germany accounted for 2.6%, with growth rate of 30.4%. Japan accounted for 2.6%, with growth rate of 19.7%. Mexico accounted for 1.9%, with growth rate of 47.1%. The UK accounted for 1.6%, with growth rate of 5.2%. South Korea accounted for 1.5%, with decrease rate of 6.2%. Indonesia accounted for 1.2%, with growth rate of 13.7%. Australia accounted for 1.1%, with decrease rate of 15.1%. Brazil accounted for 1.1%, with decrease; rate of 6.0%. Belgium accounted for 1.1%, with growth rate of 27.6%. France accounted for 0.9%, with a growth rate of 63.1%. The ranking of exporting countries in 2022 is shown in the table below:

Statistical Analysis Table of Taiwan's Machine Tool Exports to Major Countries in 2022

Unit: thousands of US dollars; %

Ranking	Export to the country	2021	2021	2022	2022	Variation Ratio %
		Export Value	%	Export Value	%
1	China	894,998	32.1	801,792	26.5	-10.4
2	U.S.	323,291	11.6	445,186	14.7	37.7
3	Turkey	241,355	8.7	254,357	8.4	5.4
4	Vietnam	102,242	3.7	116,795	3.9	14.2
5	Russia	103,966	3.7	114,610	3.8	10.2
6	Netherland	82,593	3.0	108,750	3.6	31.7
7	Italy	74,362	2.7	104,594	3.5	40.7
8	India	94,213	3.4	93,492	3.1	-0.8
9	Thailand	98,655	3.5	87,645	2.9	-11.2

Ranking	Export to the country	2021	2021	2022	2022	Variation Ratio %
		Export Value	%	Export Value	%
10	Malaysia	71,538	2.6	81,299	2.7	13.6
Others		695,917	25.0	814,515	26.9	17.0
Total		2,783,130	100.0	3,023,035	100.0	8.6

Source: Customs Monthly Report on Import and Export Statistics, Taiwan Machine Tool Foundation

According to the analysis of cutting machine tools, non-traditional machine tools such as electric discharge machining and laser machining grew by 23.6%, comprehensive processing machines grew by 10.9%, lathes grew by 16.0%, and drilling machines, boring machines, milling machines, and tapping machines decreased 15.5%, and grinding machines grew by 12.9%. Planing, sawing, drawing, and gear machinery grew by 9.2%. Regarding molding machine tools, forging, punching and shearing machinery decreased by 0.5% compared with the previous year, and other molding machine tools increased by 2.8%. The statistical analysis of the categories of machine tools exported from Taiwan in 2022 is shown in the table below:

Statistical Analysis Table of the categories of machine tools exported from Taiwan in 2022

	Unit: thousands of US dollars;%	Unit: thousands of US dollars;%	Unit: thousands of US dollars;%	Unit: thousands of US dollars;%	Unit: thousands of US dollars;%
Product Items	2021		2022		Variation Ratio %
	Export Value	%	Export Value	%
Non-traditional machine tools such as electric dischargemachining andlaser machining	147,673	5.3	182,512	6.0	23.6
Comprehensive processingmachines	941,242	33.8	1,044,179	34.5	10.9
lathes	590,438	21.2	685,177	22.7	16.0
Drilling machines, boring machines, milling machines, and tappingmachines	243,361	8.8	205,635	6.8	-15.5
Grindingmachines	245,894	8.8	277,736	9.2	12.9
Planing, sawing, drawing, and gear machinery	135,333	4.9	147,757	4.9	9.2
Cuttingmachine subtotal	2,303,941	82.8	2,542,996	84.1	10.4
Forging, punching and shearingmachinery	378,383	13.6	376,447	12.5	-0.5
Other moldingmachine tools	100,806	3.6	103,592	3.4	2.8
Moldingmachine subtotal	479,189	17.2	480,039	15.9	0.2
Machine Tool Total	2,783,130	100.0	3,023,035	100.0	8.6

Source: Customs Monthly Report on Import and Export Statistics, Taiwan Machine Tool Foundation

(2) The connection between the middle stream and downstream in the industry:

The relationship among the upstream, midstream and downstream in the machine tool industry is very close. The raw materials required for production include numerical controllers, ball screws, castings, hardware parts and other components. Usually, third-party manufacturers cooperate with parts processing and integrate machinery on manufacture through specialized division of work, and assembled as a machine tool. Machine tool, also known as “mother of machinery”, is a machine for manufacturing machinery, and it is also an indispensable machine equipment for various basic processing and precision processing. The machine tool industry occupies a key position in industrial development, and it is particularly closely related to the defense industry, automobile industry, and aerospace industry.

Since the machining processes in the machine tool industry are relatively complex and the large number of components are required, Taiwan's machine tool industry has developed the integrated manufacture of machinery through specialized division of work including key components are purchased from foreign countries, general parts are supplied and processed by third-party manufacturers, and the central factory is responsible for assembly and testing. The relationship among the upstream, midstream and downstream in the machine tool industry is listed as follows:

==> picture [363 x 310] intentionally omitted <==

(3) Various development trends of products: (a)Technology Development Trend

The technical development of domestic machine tools continues to develop towards high speed, high precision, and high compounding. The focus is on improving the manufacturing process of components, increasing production efficiency, and reducing costs. Therefore, accuracy, high speed, open controller, complex and systematization has become the common pursued goal in the machine tool industry. In terms of high speed and precision, the development of high-speed feed system and high-speed spindle to increase the processing speed is benefit on the improvement of production efficiency; while improving production efficiency, it is also necessary to improve the roughness of the processing surface, so it is also necessary to take into account high-precision capability. In terms of open controllers, due to the rapid development of computers and information processing, the controller will make the functions of machine tools more intelligent, so as to improve the performance of the machine and reduce the demand and cost of production manpower. In terms of complex, in order to save space, reduce costs and meet the needs of a small number, diverse and

complex workpieces, it will focus on multi-functional machines, reduce the space occupied by the machine, and improve the processing accuracy by reducing the times of workpiece delivery. In terms of systematization, it will focus on the development of processing flexibility, process automation, intelligent monitoring and interface standardization.

(b)Product Development Trend

At present, there are two major development trends in the global computer numerical control (CNC) machine tool market. One is to use the strategy of mass production and low cost to occupy the low-priced market for standard-spec models; the other is to use technology to produce highprecision and high-end and high-quality machine tool models to occupy the high-value-added market with high cost-performance ratio; high-value-added models will develop towards high speed, multi-function, environmental protection, safety, quality stability, and product reliability in the future. Machine tool manufacturers will actively improve the production process and develop highspeed spindle rotation, high-speed cutting and high-precision products to enhance competitiveness.

(4) Product competition

The company's current products include gantry machine products and C-type small machine models. The competition situation of the products is described as follows:

In terms of gantry machine products, the manufacturing process of this product is complicated and unable to go mass-production because the specifications vary according to customer requirements, it belongs to a variety of products in small quantities. Currently, companies producing similar products in the world include WALDRICH SIEGEN in Germany and SNK, OKUMA, TOSHIBA, MITSUBISHI in Japan, etc., due to the high unit price of their products, they form different market segments from domestic machine tool manufacturers.

In terms of C-type machine products, due to the large market demand, there are many manufacturers divided domestically and abroad. According to different functions and properties, there are different market segments. The main differences can be divided into special-purpose machines and general-purpose machines. Currently, the company's C-type machine belong to a mid-level general-purpose model, and the competition mainly comes from South Korea, Italy, etc. Because the labor wage in our country is lower than that of South Korea and Italy, the competitiveness of this machine is better than the same level of manufacturers in other countries. However, due to the impact of exchange rate fluctuations, when the Taiwan dollar or competitors' exchange rates fluctuate greatly, the competitiveness of them will also increase or decrease accordingly.

In terms of five-axis machines, the market demand is increasing day by day. Competitors domestically and abroad have invested a lot in research and production. The company is also investing in the development of various types of five-axis machines including small-sized, midsized and large-sized. At present, the companies produce similar small and medium-sized products in the world include Hermle, DMG & MORI in Germany, the large-sized ones include SNK, OKUMA, TOSHIBA, MITSUBISHI in Japan, etc. Due to the high unit price of their products, there is a different market segment on prices in the domestic market; while the products of domestic

competitors are not yet mature, there should be considerable opportunities for market competition.

1.3 Overview on Technology and Research and Development:

(1) The technical level of the business

The company has focused on the research and development and production of machine tools since founded. The main source of technology is the company's long-term cultivation of talents, establishment of technology, inheritance of experience, and product research. The main R&D cadres have product development capabilities. Meanwhile, we also maintain a close cooperative relationship with upstream component suppliers; because the design and manufacture of machine tools requires long-term experience accumulation and planning capabilities, the company is still technically cooperating with domestic machinery research institutions such as the Industrial Technology Research Institute (ITRI) and the Precision Machinery Research and Development Center, dedicated to product development and improvement.

With the rich experience accumulated in product research and development for many years, the company has established a complete research and development system, which can develop the product process capability that meet the needs of customer application and product quality requirements, and maintain market competitiveness with leading production technology in the industry.

(2) Research development

In recent years, the company's main focus on research and development is to improve production efficiency and process capabilities, and then develop high-end products; in addition to continuously reducing production costs, the future research and development direction will actively focus on the fields of aerospace, 3C industry, light metal processing industry and precision mold processing industry, etc. The products that are planned to be developed in the near future are as follows:

(a)Small and medium horizontal boring and milling machining center

With the small and medium-sized CNC horizontal three-axis machining center as the main body, it is equipped with a rotatable high-load indexing table and a self-made boring spindle to cope with precision machining applications; and developed a worktable exchange mechanism to reduce waiting downtime and improve work efficiency.

(b)Large horizontal boring and milling machining center

The main market is large-scale turbine parts processing, large-scale mechanical precision parts, large-scale pipe valve parts and wind power generation parts manufacturing, etc. The product features are super-high-load worktable, super-large working stroke, super-large spindle output torque and three-axis travel module design can be matched according to customer needs.

(c)Large crane type five-axis machining center

In response to the trend of large-scale products in the market, we will improve the ultra-large crane-type gantry machine products to reach higher processing efficiency and better processing quality. The large-scale crane-type gantry is added to the two-axis spindle head to improve the performance of products processing, and minimize the times of overturning of large workpieces.

(d)Small High Speed CNC Vertical Machining Center

With the small CNC vertical three-axis machining center as the main body, the structure optimization and performance optimal design are carried out to meet the processing needs of 3C industrial parts, and produce high-efficiency, high-precision, and low-cost production.

(e)Intelligent software development

In response to customers' strict processing requirements, including size, shape, surface gloss and shortened processing time, the company will continue to develop the most suitable processing parameters, compensation functions, anti-collision simulation software and machine status monitoring functions to meet different industry groups in order to improve customer satisfaction with products and enhance product competitiveness.

(f)Develop High Precision Optical Mounting and Calibration System for Large Machine Tools

In response to the market demand for processing large objects, we will develop super-large

stroke machining center products. In order to meet this demand, improve product accuracy and value, and upgrade precision assembly technology, we participate in the industry-university cooperation project “Development of High Precision Optical Mounting and Calibration System on Large Machine Tool” led by National Formosa University.

(g)Development of large-scale moving column and moving beam gantry five-sided machining center

In response to the market demand for processing large objects, we will develop ultra-large moving column and moving beam gantry five-sided machining center products to meet the processing needs of large-scale, high torque, and high rigidity.

(h)Development of Gantry Type Friction Stir Welding Machine

Combined with the new technology transfer "Friction Stir Welding Technology" carried out by TWI (Welding Institute) in the UK, it is applied to the existing gantry machining center structure, which will help to enter the soldering and welding market in shipbuilding, aerospace and automobile industries. Currently, there is no manufacturer to involve the development on this type of functional machine, by entering the market firstly to obtain opportunities in the blue ocean market, increase product lines, and enhance the company's competitiveness.

The company focus on product research and development extremely, and organizes special research and development teams from time to time. The research and development personnel are responsible for the development of new products, improvement of production process and technical guidance.

(3) R&D expenses invested in the recent years

The ratio of the company's research and development expenses to operating income in the most recent year is as follows:

Unit: NT$ thousand

Year Item	2021	2022	2023 Q1
R&D expenses	60,627	61,671	14,459
Revenue income	3,630,956	3,100,517	538,803
Revenue Ratio	1.67%	1.99%	2.68%

Source: Financial report audited and certified by accountants

In order to respond to market demand and enhance product competitiveness, the company focus on product research and development extremely. The research and development funds invested in 2021 and 2022 are NT$60.627 thousand and NT$61.671 thousand respectively, accounting for 1.67% and 1.99% of revenue ratio. The expenses are mainly used for developing new products, improving the functions of existing products, testing new products and developing parts and components. The company continues to recruit excellent R&D talents, invest equipment and related application software. Looking forward to the future, the amount of R&D expenses is expected to show a steady growth with the growth of revenue scale.

(4) Successfully developed technology or product

The company's research and development achievements are based on the production technology accumulated over more than 20 years, and continuously improve product performance to meet the actual needs from customers and obtain market competitive advantages. The company's recent annual research and development achievements are listed below:

Year	Successfully developed technology or product
2008	1.Completed the development of the optimal cutting parameter "I Console" to improve the convenience of the control interface. 2. DevelopedBL2018-S/14 3.Developed new five-sided spindle head 4.Developed AF-1250 5.DevelopedA+1800/2100/2500 6.Developed FMV-45U
2009	1.Developed MVP-5032 moving beam model 2.Developed super large crane type gantry machine: LG-10070, LG-20070 3.Developed AF full series line rail machine vertical processing machine 4.BL high-load rotary worktable development, Z-axis one-meter four-gear spindle development, LP five-sided processing machine development, Y-axis screw anti- vibration mechanismdevelopment,APC unit development project, etc.
2010	1.Developed LV-6030 crane type five-axis processing model with composite material 2.Developed small and medium-sized gantry five-sided processing machine series: LP- 2515/3016/4016/5016 3.Developed a full series of large-scale gantry five-axis processing machines MEGA 5P 4.Developed 8000rpm hightorque oil mist built-inspindle
2011	1.AF510 Small High Speed CNC Vertical Machining Center 2.MB1512 medium-sized horizontal boring and milling machining center 3.Developed full series of MEGA 5G large-scale crane-type five-axis processing machines
2012	1.HTP high rigidity gantry machining center 2.Gantry Friction Stir Welding machine 3.Medium-sizedLPgantry type comprehensivemachining center
2013	1.Developed new AC automatic universal head 2.New fixed-column gantry machining center 3.HD Gantry Processing Machine 4.FCV-620 vertical five-axis processing machine 5.AH630Horizontal Machining Center
2014	1.Developed water outlet function in the center of horizontal head 2.Developed Gantry X-axis Nut Rotary Feed System 3.Developed MVP-8040 moving beam model 4.Developed EMENA Head Changing Spindle System 5.AH500 Horizontal Machining Center 6.Developed MEGA5 P2520 high-speed gantry five-axis processing machine

Year	Successfully developed technology or product
	7.The improvement and optimization on FMV99 8.C-type machine appearance aesthetic sheet metal 9.C type machine with high speed gear spindle 10.MB2012 medium-sized horizontal boring and milling machining center 11.Developed FV960 vertical five-axis processing machine
2015	1.MEGA5G Feed System Retrofit 2.Developed AF510#30 Synchronous Tool Changing System 3.Developed a special processing machine for cams (a special processing machine for automation system components) 4.Optimized Development of FCV800 Crane Type Spindle Processing Machine 5.Developed MEGAxx20 series gantry type five-axis processing machine 6.Developed side-mounted tool magazines for SP models to meet the needs of the economical market 7.Developed 760 long nose gear spindle 8.Geared spindle increases air curtain function 9.Improved SP model low water tank 10.Optimized development of HD high rigidity gantry machine sheet metal appearance aesthetics 11.Fully optimized development of the new VP gantry processing machine (including optimized design of appearance aesthetics) 12.Optimized Development of AH Series Chip Removal System 13. OptimizedDevelopment of FCV620Moving Column Five-AxisProcessingMachine
2016	1.Crane type high-speed five-axis machining center 2.Horizontal full-moving column high-speed five-axis machine 3.AC automatic universal head 4.Five-axis head 5.Large-scale moving column moving beam gantry five-sided machining center 6.Millinglathe compoundfive-axismachining center
2017	1.Developed ultra-large floor-standing moving column processing machine 2.Developed high-speed built-in spindle 3.Developed the long nose end built-in spindle 4.Developed High rigidity 90 degree horizontal head 5.Developed water outlet extension head of high speed center 6.Upgraded Project of AT510 Small High-Speed CNC Vertical Machining Center Magazine Knife Number 7.Developed FCV620-H moving column five-axis processing machine used for special machine for automobile mold 8.Developed specification of Self-made five-axis head A5+M 9.Developed specialautomationsystem for large C-typemachine withtrackprocessing
2018	1.Developed vertical oblique automatic universal head 2.Developed European 12,000RPM built-in spindle 3.Developed RG crane type five-axis machining center 4.Developed new generation manual horizontal head and universal head 5.Developed additional head for flat wheel grinding 6.Developed new generation A+/AF vertical comprehensive processing machine 7.AHM-800 Horizontal Comprehensive Processing Machine 8.Developed AE-1000 vertical parts processing machine 9.Developed VP6012 Gantry High Speed Aluminum Structural Parts Machining Center 10.DevelopedEH5-500horizontal five-axis processingmachine
2019	1.Developed FCV-800II new generation five-axis machine 2.Developedφ110 Boring Spindle Head Module (MB) 3.Module development for rapid mold change (improving efficiency) in processing department 4.Developed AC fully automatic universal head 5.Developed SP4 high-speed gantry aluminum processing machine 6.Developed BS-Φ130 Boring Shaft 7.16Kbuilt-inspindle development
2020	1.Developed moving column and moving beam machining center 2.Developed and released intelligent information control systemproduct

Year	Successfully developed technology or product
	3.Developed production management function of intelligent information control system 4.Developed AD-550/500 double-spindle C-type machine 5.Developedφ110 boring spindle head module (AHM specification) 6.Developed CF-1060 high-efficiency/rigid vertical processing machine 7.NA+gear spindle (small) optimization solution (#50-6K upgraded to 8K) 8.Developed LH-119 geared spindle (assisting Yiquan company) 9.Developed Adaptive Cutting Function 10.Developed wireless hand wheel function 11.DevelopedMEGA5P,RG5five-axismachine
2021	1.Optimized development of one-division AC fully automatic universal head 2.Optimized development 4,500RPM horizontal head 3.Integration of LB/EP fixed column gantry processing machine 4.Developed Tool magazine management function 5.Developed Tool monitoring function 6.Developed machine diagnosis function
2022	1.Developed VP model 12KB built-in spindle 2.Electrification design of self-made tool magazine 3.Developed Z800 Hard Rail Short Transmission Gear Spindle 4.Developed AU-680 high rigidity moving column five-axis machine 5.Developed VP-xx16 gantry processing machine (can be put into the cabinet) 6.Developed AHM-800-APC horizontal exchange worktable 7.Designed and developed X-A2 two-axis head 8.Developed deep learning compensation technology for intelligent spindle thermal displacement 9.Developed Intelligent tapping deep learning automatic modulation technology 10.Platform development of intelligent information control system(FANUC controller)

1.4 Long-, short-term business development plan:

Since the establishment of the company, we have been expanding highly precision and automatic production equipment, in order to improve efficiency, productivity, and advance technique towards high-added value products’ development that creates operation benefit. Our short- and long-term development as following:

(1)Short-term business plan

(a)Marketing strategy

‧ Strengthening customer service quality system

Establishment of cross-communication channel between the company and customers. Enhancement of training for personnel against marketing and customer complaint. Improvement of customer service quality. Offering post-sales customer service. Prioritising customer feedbacks. Working towards customer satisfaction. Consolidation of long-term relations with customers.

‧ Working on high added value orders. Improving competitiveness.

Besides long-term customers, we are reinforcing developing business with potential domestic customers and working on high added value product orders. By increasing market ratio of medium and high price machining centres, we can differentiate positioning in market from same industry and strengthen our competitiveness.

‧ Diversification in customers. Arrangement of product structure and channels

We consolidate customer sources, maintain good customer relations, adjust product structure against market requirement and industry development trend, develop diverse sales channels, in order to produce flexible and qualifying products for domestic and international customers. We diversify customers in order to reduce business risks from industrial and economic alteration.

(b)Product strategy

‧ Mass production and modification of machine tools

In order to shorten lead time for market, we reinforce mass production and modification of machine tools, so that it will satisfy the multifunctionality requirements of customers and production will be flexible. Interchangeability of components can reduce inventory risk of spare parts.

‧ Upgrade in assembly of plants in Mainland China

We upgrade assembly in plants in Mainland China and cultivate local machinery talents. We develop self-owned products and it strengthens our product competitiveness. It satisfies the requirements for lead time of our Mainland Chinese customers.

(c)Product development target

‧ Comprehensive supply competence of product lines

Besides development of precise machinery tools, in order to satisfy customer requirements and market diversification, we aim as well at development of medium-small CNC vertical machine centres with competence in comprehensive product line, which satisfies customer requirements at once for all.

‧ Reinforcement of integration of high-speed machining centres and applications.

We will develop medium-small high-speed products against high-paced market. It will improve machining efficiency, including size, shape, surface rating, and shortens machining time; we will as well develop most applicable software with specification and satisfy diverse industries with optimised specification. It improves competitiveness of minor specification models.

(d)Operation scale and financial coordination

‧ Implementation of management mechanism and improvement of administration efficiency We plan efficient management for the company and implement digitalisation of business information operation, so that it complements integration, analysis of information and customer service. We promote performance evaluation management aiming at improvement of administration efficiency.

‧ Reinforcement of financial management and proper use of capital

(2) Long-term business plan

(a)Strategy policy

‧ Development of overseas market and reputation.

Development of international market with good reputation that caters to foreign orders; we increase overseas export sales ratio with development of Mainland China production strategy. We aim at global marketing network and achieve diversification in market.

‧ Integration of cross-department resources to ensure competitiveness.

We improve process flexibility and mobilisation with our sound customer service mechanism and integration of resources cross-department. Our professional reputation improves and customers trust us. It will reflect on business performance and earnings by the company which ensures our competitiveness.

(b)Production strategy

‧ Reinforcement of production strategy and improvement of product quality.

In association of domestic and foreign customers requirements for products, we settle production plans, plan development of new products, facilitate product launching. We ensure to meet revenue targets and make good use of productivity. Overall productivity improves.

‧ Production structure adjustment against market demands and supply

The company will adjust production structure pursuant to shift in market demand and supply and business cycle. The production flexibility reaches optimisation. We consolidate a strategy alliance with upper and lower stream suppliers. We reinforce labour division and improve profitability.

(c)Product development target

‧ Improvement of competence in self-production for key elements

The company has been cultivating talents for electronic control unit in integration with domestic technical research institutes, e.g., precise bearings, etc., so that it reduces dependency on foreign suppliers.

(d)Association on business scale and finance
‧ Sustainable governance is our value. Expansion of business scale.

Sustainable governance is a value by the company. We cultivate R & D talents and integrate academy and industry. Students receive cooperative education and they will be talents needed by the company. R & D competence is rooted for global competitiveness in integration with long-term marketing strategy and product strategy target. Product automatisation and quality improve and operation scale and items expand, so that market share will increase.

2. Market, production and sales

2.1 Market analysis

(1). Sales area of flagship products

ales area of flagship products	ales area of flagship products	ales area of flagship products	ales area of flagship products	ales area of flagship products
Unit: thousand NTD
Year Area	2022		2021
	Amount	%	Amount	%
Taiwan	806,651	26.02	1,019,178	28.07
Mainland China	1,097,559	35.40	1,450,073	39.93
Asia	179,114	5.78	299,482	8.25
US	270,455	8.72	221,299	6.09
Turkey	195,875	6.32	166,907	4.60
Italy	97,816	3.15	126,617	3.49
Other countries	453,047	14.61	347,400	9.57
Total	3,100,517	100.00	3,630,956	100.00

(2) Market share

Due to variety of machining products and their functions, specification, and use, no general overall analysis can be made. Our group’s products overall belong to the metal cutting machining industry and relevant production, maintenance and repair. Gross revenue in 2022 is 3,100,517 thousand NTD.

(3) Future supply, demand and margin of market
(a)Future supply and demand of market

Machine tools are used overall in a variety of industry. Besides conventionally in car, motorcycle, and household appliance industry, production and manufacture of information and aerospace industry and other high-tech components depend on production of machine tools. Its end industry has a great deal diversity. In accompany of global development in artificial intelligence and no-man plants, machine tool industry aims at high-end and complexity. The company strives existing market with cost-effectiveness and as well cooperates with domestic information electronic technical support providers and domestic academic institutes. We integrate gradually peripheral automisation elements and manage intelligence goal and plant-wise consistent design against export requirements for machine tool products.

(b)Future market demand

Machine tools have a variety of end use. Besides processing car, motorcycle and precision machine components, semiconductor, tablets and electronic industry also applies, as well as other markets like wind energy, solar and optoelectronics industry, LEDs from green energy.

Taiwan’s machine industry aims at export. Under the impact of China-US Trade War and COVID-19 Pandemic, global investment is on the watch. Followed by the global port congestion in 2021, freight increased a great deal. Demand for machine tools dropped subsequently.

We look forward to the future. As global pandemic lockdowns released, the port congestion

eased. It is anticipated that the annual growth rate of inflation can be controlled after US Federal Reserve launches rate rising recycle. On the other hand. Russian-Ukrainian war caused regional devastation. Peaceful resolution is foreseen in 2023. Global investment and post-war reconstruction will encourage the comeback and growth of machine tool industry.

(c)Margin of future market

Due to the global pandemic impact, stagflation, Russian-Ukrainian war, global port congestion and decoupling of supply chain, the investment incurred a stagnation in the past two years. The demand hereof is anticipated to bounce back following the global lockdown release and inflation recovery. 2050 Carbon neutral is a focus. Industry has demands for new equipment in response to carbon neutralisation; we are convinced it will bring a great deal opportunity to develop in the future.

(4) Competitiveness

(a)The company focuses on its strength with credibility and good reputation.

The company has been founded for over twenty years. Self-owned brand AWEA has excellent credibility and reputation. We insist high quality policy and endeavor improving customer satisfaction. We acquired international quality assurance management system ISO 9001 authentication and environment management system ISO 14001, respectively in 1996 and 1998. The products meet CE safety requirements. The company has strict standard for product quality and technical level. We constantly develop new products. We have comprehensive product lines and are competitive in machine tool market.

(b)We are an experienced management team.

The company’s management focuses on machine tools with years’ experience. Our managers are experienced in industrial condition shift, product development trend, production and manufacture. The company has gradual growth in revenue and earning throughout recent years. It evidences the excellent qualified profession and business performance of our management team.

(c)Steady R & D competence. High technical level for products.

The company not only researches and develops process, but also cooperates with Machine Institute and Precision Machinery, ITRI, so that technology transfer and latest product information will be acquired and the company will have competitive development in production technique; we renovate on existing basis with immense achievement for the past years. We obtained credibility from the federal government and profession commission and awards and patents. It shows the products of our company have quality and technique equivalent to the world’s level.

(d)Flexible production of products. Proper diversification and isolation.

In order to customise products and shorten lead time, the company increases constantly added value of products and reduces product costs and shortens lead time through establishment of commission system and modular production; the company orientates its market products at high added value medium high machine tools with complete product combination and strong product development competence. We have our accomplishments in the advanced machine tool market amid market control of Japan and Germany in machine tools. Price competition is avoided in the meantime.

(e)Expansion of overseas export and import sales points. Offer complete post-sales service. The company cooperates with potential competent sales and maintenance distributors. We offer distributors backup and technical support so that their marketing and service improve that allows to expand the domestic and international market. We provide instant post-sales service and established a good reputation brand.

(5) Pros and cons and response strategy amid vision development

(a)Pros

‧ Development in industry career for a greater vision. Taiwan is competitive.

Machinery industry is one out of ten high added value, high-tech new industries of the federal plan. Electronic information and car and motorcycle industry recent years’ offers excellent

integration of mechatronics resources and stamping equipment market in Mainland China and Southeast Asia; after China-US Trade War, Taiwan replaced consumption requirements of the US in China with investment back in Taiwan. It increases the demand for machine tools made in Taiwan.

‧ Marketing strategy for multi-channel self-own brand and wide marketing points

The company launches marketing around the globe with self-owned brand AWEA. The market is prospering in European and American regions and business will perform better; in the meantime, new Asian market, Mainland China and India raise demands for machine tools, which will be our future niche market and margin; furthermore, the company diversifies business promotion in market via direct sales, distribution, agent, and other marketing channels, etc. It allows steady growth in sales performance.

‧ Good and credible product quality in market

Since foundation, the company tests and advances technology at all costs. We acquired international quality assurance management system ISO 9001 authentication and environment management system ISO 14001. The products meet CE safety requirements. The products of our company have quality and technique equivalent to the world’s level. We were awarded Good SelfOwned Brand, Good Product Design, Taiwan SME’s Innovation Award, Taiwan Excellence Award, National Product Image, National Award of Outstanding SMEs and Industrial Technology records, etc. Self-owned brand AWEA wins product reputation and global competitiveness with credibility from our clients.

‧ Unique process renovation

The company develops constantly develops new products with customisation, diversified and limited production. Our esteemed senior technicians renovate the process and improves productivity, e.g., straightforward process change, flexible process management, instant product support, etc. It allows process renovation technique to apply to product line renovation and ensure timely lead time and quality.

‧ Highly vertical division of labor in centre plants and subcontractor

Taiwan’s machine tool industry has a complete spiral system. Besides few key elements are supplied by foreign suppliers, we are capable of producing most components; the company’s machinery elements’ casting, components production is supplied by long-term contractors. The production process is highly efficient and elastic.

(b)Cons and response strategy

‧ Port congestion, energy price rise caused immense freight rise compared with same period. Response measure:

The company invests in machine tools’ design renovation accordingly. Container-wise design allows to reduce freight and improves competitiveness.

‧ Domestic wage rise. Increase in production cost.

Domestic technique talents are not easily cultivated and there is shortage in domestic experienced labour. Recent years’ adjustment of benefit policy, universal health insurance, basic wage increase adds up to business operation’s cost. Response policy:

We work on training and technical development for employees and strengthening overall work conditions and reducing turnover rate; we increase productivity and increase in investment in automisation equipment and commission, so that direct manpower can be reduced. It improves employees’ work efficiency and reduces production cost.

‧ Partial dependency on foreign major materials

Currently the domestic machine tools key elements such as numerical controllers, precise bearings’ technique is owned by Japanese and German suppliers. Given the components take up a high percentage cost, it will have adverse future career development and global competitiveness. Response strategy:

The company reduces production cost of key components by expanding capacity and batch

procurement. Meanwhile the supply source is diversified with communication with multiple suppliers. It de-centralises supply sources and reduces risks of floating pricing. ‧ Limited domestic sales market. Fierce competition in products.

Compared with Europe and America, Taiwan’s machine industry has limited domestic market. Companies of same industry are highly similar with fierce competition. It ends up with instalment pay as a consequence, adverse to business operation by the company. Response strategy:

The company renders harsh domestic trading conditions and implement product diversification and isolation. We avoid low pricing competition and expand overseas market, widely spread sales points, strengthen agents’ competence in marketing and maintenance, establish close relations, so that our overseas market will expand in scale and the domestic market will de-centralise; furthermore, we develop high precision, automatisation, highly efficient products, so that add values will increase in products thus creates a diversification in market.

2.2 Usage and production process of major products:

(1) Main usage

The company focuses on development, production, manufacture, and sales, etc. of computer numerical controller (CNC) machine tools, a metal cutting machinery manufacturing industry; machine tool industry is technique-centralised, has high add values, highly industrially associated, etc., especially highly correlated with machinery industry, defence industry, car industry, aerospace industry. The products apply widely to processing of precision components, stamping mould for car sheet metal, plastic mould and aerospace components, etc.; usage of our main products as following:

Major products	Main usage
Vertical Machining Centre (Double Columns Gantry)	Machine tools and industrial machinery, car and motorcycle mould, plastic mould, petrochemical industry, power plant boiler components and aerospace military industry components, household appliance components process and mould process.
Double Column 5-FACE MachiningCentre	multi-face process of immense precision components of aforesaid industry
Fixed Double Columns Machining Centre	Machine tools and industrial machinery, car and motorcycle mould, plastic mould, petrochemical industry, power plant boiler components and aerospace military industry components, household appliance components process and mouldprocess
Double Columns Moving-Cross- rail(W-travel)MachiningCentre	Big car and motorcycle mould, petrochemical industry
Double Columns 5-axis machiningcentre	Process of aerospace components, complex curved space components
Horizontal Boring and Milling MachiningCentre	Precision process of medium big axle hole; process of medium big components.
Type C Vertical Machining Centre	Applicable to light metal process, medium small moulding industry, car components and 3C industry.

(2) Production process

Production plan Component Casting／Material Coating Machinery assembly	Machinery process Outer supply order Incoming quality Control Electronic control assembly Electromechanical Adjustment

End product quality Control

Customer division Package/delivery Installation, acceptance Post-sales service

==> picture [31 x 20] intentionally omitted <==

2.3 Supply of major materials

The company’s main materials are controllers, casting parts, and linear slide rails. Controllers are supplied by domestic suppliers. Price ranges on brands and application software. The company accompanies well with suppliers and price is secured; casting and slide rail suppliers are of long-term relations. The incoming price alters from international material pricing flow and specification difference. In general, the company has multiple steady domestic and foreign supply. Due to minimisation of risks from incoming goods, the company adds suppliers if applicable, so that price and quality will be ensured. Overall material supply for 2023 is deemed stable.

2.4 Customers with a gross sale over ten percent and their sales and ratio in either year of the past two years. Specify the reason for change:
(1) Major customers with a gross sale over ten percent for the past two years:

No single customer has a gross sale over ten percent and their sales and ratio in either year of 2022 and 2021.

(2) Major suppliers with net purchase over 10 % for the past two years

Unit: thousand NTD

									Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD
	2021				2022				2023 Q1
Item No.	Name	Amount			Name	Amount	Percentage of annual net purchases (%)	Relation to issuer	Item	Amount	Percentage of annual net purchases (%)	Relation to issuer
			Ratio of net
				Relations
			purchases in the
				hip with Issuer
			whole year
			(%)
1	FANUC	231,071	8.75	N/A	FANUC	211,894	10.51	n/a	FANUC	23,033	6.05	n/a
	Other	2,411,215	91.25		Other	1,803,998	89.49		Other	357,514	93.95
	purchase net amount	2,642,286	100.00		Net purchase	2,015,892	100.00		Net purchase	380,547	100.00

Explanation of alteration:

Controllers are major material procurement by the company. They are required by precision and complex components process, so their function and stable quality is appreciated by the customers. FANUC is a global brand with reputation. Its products are stable in quality. It has sound marketing and post-sales service system that allows straightforward maintenance and operation training. So FANUC’s controllers are our designated equipment.

Year Main Products	2021	2021	2021	2022	2022	2022
	Capacity	Output Qty	Output value	Productivity	Yield	Output value
Gantry processing machine	385	226	1,370,159	385	208	1,171,550
C-type machine	1,335	1,001	1,540,317	1,234	683	1,146,793
Maintenance and others	18	18	115,320	15	15	92,039
Total	1,738	1,245	3,025,796	1,634	906	2,410,382

2.6 Sales value of the past two years Unit: NTD/thousand NTD

Year Main Products	2021	2021	2021	2021	2022	2022	2022	2022
	Domestic sales		Export		Domestic		Export
	Qty	Value	Qty	Value	Yield	Value	Yield	Value
Gantry processing	29	314,633	189	1,309,049	38	299,449	171	1,197,678
machine
C-type machine	300	569,837	678	1,213,362	212	446,843	485	1,013,595
Maintenance and	49	134,708	1	89,367	16	60,359	0	82,593
others
Total	378	1,019,178	868	2,611,778	266	806,651	656	2,293,866

3.Number, average service term, average age, and academic background of employees from the past two years

Information on the employees hired in the last two years

	Year	2021	2022	Until 31 March 2023
Number of employe es	Direct labor	240	207	206
	Indirect labor	397	387	378
	Total	637	594	584
	Average age	36.3	38.1	38.2
Average years of service		7 years and 7 months	8 years and 4months	8 years 5 months
Educati onal Distribu tion Ratio	PHD	0.00%	0.00%	0.00%
	Master	5.65%	7.24%	7.36%
	Bachelor	59.03%	59.76%	59.08%
	Senior High School	28.89%	28.12%	28.42%
	Under senior high school	6.43%	4.88%	5.14%

4. Environmental protection cost

4.1 The law states a pollution source installation permit or pollution emission permit shall be established or pollution control fee shall be paid or exclusive environmental personnel shall be appointed. Application, payment, or establishment details:

The company products do not cause pollution, thus no pollution source installation permit or pollution emission permit needs establishing or pollution control fee needs paying or exclusive environmental personnel needs appointing; general household waste is commissioned to qualified recyclers. Before the machine is finalised, the cutting oil caused by test-runs is recycled and reused. When it is out of use, then is commissioned to recyclers. No pollution damage has been caused for the past two years.

4.2 Investment in pollution control equipment and purpose and potential benefit

Unit: thousand NTD

					Unit: thousand NTD
Equipment	Quantity	Date of acquisition	Investment cost	Un-depreciated Value	Purpose and Estimated benefit
Painting room Painting equipment	One set	25 Nov. 2004	3,980	0	environment Air quality protection. Air pollution reduction.

4.3 Environmental pollution by the company control for the past two years until Prospectus issuance. State if pollution disputes and its handling details: n/a.
4.4 Loss from environmental pollution, disposition amount by the company for the past two years until Prospectus issuance. Disclose its future response measures and potential cost:

The production of company products does not cause pollution. The company pays attention to pollution control. We invest in pollution control equipment and reinforce employee training on environmental protection. No material loss or indemnity from environmental pollution has occurred for the past two years until Prospectus issuance.

4.5 Current pollution conditions and its rectification effects on earning, competitiveness, and capital expense and material environmental capital cost estimation for the upcoming two years by the company:

The production by the company aims at design and assembly. Most in-between process has been commissioned. No earning, competitiveness, or capital by the company was affected by material environmental pollution since establishment; recent years’ environmental protection is being noticed. The authority issues strict pollution emission standard. The company pays attention to environmental protection and endeavours in investing resources and capital increase for environmental pollution equipment, as well as commission of general household waste to specialised recyclers; there is no estimated material environmental cost for the upcoming two years.

5. Labour relations

5.1 Specify Benefit, training, development, pension and implementation, and labour agreement and employee benefit protection measures.
(1) Employee benefit:

The company maintains actively labour relations based on win-win concept and pays attention to employee benefit and health with complete benefit measures, in order to improve employee orientation.

◎The company employees are insured with labour and health insurance, and enjoys pension, and regular health checks.
◎The bonus system and earning division, stock option are incentives for employees’ performance encouragement.
◎Health, accidents, material illness, etc. are insured within company insurance package for employees.
◎Employee welfare is allocated for employee benefit committee that is in charge of employee benefit affairs, e.g. holiday bonus, birthday bonus, wedding and funeral subsidy, scholarship, domestic and overseas travels, etc.
◎Employee dormitory is provided for travel safety of outer county employees.
◎Employee Stock Ownership Trust is introduced for benefit of life after retirement of employees. A third layer pension safety net is established.
(2) Employee training and development:

In order to onboard new employees, training is arranged before on duty which will

facilitate information on industry orientation and future development of the company for new employees. Occasional specialised training is held for profession updates and self-development. The proper onboard training is organised on company’s internal requirements or training that depends on specialisation to improve employee profession.

(3) Employee pension

The company established a labour pension reserve supervision committee. It allocates a 2% pension reserve for employees who opt for former pension system. It will be saved in account of Central Trust of China for labour pension reserve supervision committee to manage and supervise.

For employees who opt for current pension system, a 6% pension is allocated for saving in account of Labour Insurance Bureau; the company hires actuaries for actuary report that estimates accrued pension liabilities.

(4) Labour agreement:

The company has smooth labour relations and follow regulations and implement by law. It is running smoothly and monthly employee benefit committee and quarterly labour meetings are held. No conflict or dispute has taken place.

5.2 Loss from labour disputes, current and future estimation and measures in current year by closure date of annual report:

The company pays attention to employee benefit and abide by labour regulations. No loss from labour disputes has been incurred by recent year until closure date of annual report. No potential loss from labour dispute is foreseen for the future.

6. Important agreements

nt agreements
Type of Agreement	Stakeholder	Term	Content	Limitation
Land lease	Central Taiwan Science Park	01 Apr. 2004~ 31 Dec. 2023	AWEA Land use in Central Taiwan Science Park	n/a

VI. Financial Information

1. Recent five-year condensed balance sheet and comprehensive income statement

1.1 Condensed balance sheet

(1) IFRS-individual statement is applied

Unit: thousand NTD

		2018	2019	2020	2021	2022	2023 Q1
Year
Item

Current assets		3,688,120	2,678,945	2,504,911	2,974,201	3,750,594	3,576,282
Property, Plant and Equipment		1,560,426	1,530,354	1,496,232	1,439,750	1,395,401	1,382,637
Intangible assets		7,605	6,289	4,954	7,909	6,794	6,347
Otherassets		1,392,233	1,448,957	1,233,057	1,219,084	1,095,293	1,041,582
Totalassets		6,648,384	5,664,545	5,239,154	5,640,944	6,248,082	6,006,848
Current liabilities	Before distribution	3,465,443	2,619,034	1,987,014	2,465,953	2,885,554	2,630,763
	After distribution	3,658,631	2,686,650	2,180,202	2,581,866	not applicable	－
Non-currentliabilities		216,686	185,384	128,893	137,765	109,852	105,794
Total liabilities	Before distribution	3,682,129	2,804,418	2,115,907	2,603,718	2,995,406	2,736,557
	After distribution	3,875,317	2,872,034	2,309,095	2,719,631	not applicable	－
Equity attributable to shareholders of the parent office		2,966,255	2,860,127	3,123,247	3,037,226	3,252,676	3,270,290
Capitalstock		965,942	965,942	965,942	965,942	965,942	965,942
Capitalsurplus		250,067	250,067	172,792	124,495	95,516	95,516
Retained earnings	Before distribution	1,799,468	1,724,431	2,039,270	1,978,858	2,220,850	2,235,568
	After distribution	1,606,280	1,656,815	1,846,082	1,862,945	not applicable	－
Otherequityinterest		(49,222)	(80,313)	(54,757)	(32,069)	(29,632)	(26,736)
Treasurystock		－	－	－	－	－	－
Non-controlling interest		－	－	－	－	－	－
Total equity	Before distribution	2,966,255	2,860,127	3,123,247	3,037,226	3,252,676	3,270,290
	After distribution	2,773,067	2,792,511	2,930,059	2,921,313	not applicable	－

Note:

(1) The above information has been audited and certified by an accountant or reviewed.

(2) The 2022 surplus distribution proposal has not yet been resolved by the shareholders' meeting.

(2) IFRS-consolidated statement is applied.

Unit: thousand NTD

						Unit:	thousand NTD
Year Item		2018	2019	2020	2021	2022	2023 Q1
Current assets		5,002,351	3,885,376	3,616,189	3,859,310	4,604,226	4,393,675
Property, Plant andEquipment		2,321,747	2,376,540	1,923,220	1,872,994	1,797,473	1,777,920
Intangible assets		13,570	11,964	9,883	12,043	10,368	10,753
Otherassets		443,733	462,803	474,678	462,933	379,731	402,124
Totalassets		7,781,401	6,736,683	6,023,970	6,207,280	6,791,798	6,584,472
Curre nt liabilit ies	Before distribution	4,259,295	3,367,142	2,604,765	2,825,233	3,288,494	3,081,183
	After distribution	4,452,483	3,434,758	2,797,953	2,941,146	not applicable	－
Non-current liabilities		388,615	357,185	167,333	225,560	135,109	128,525
Total liabilit ies	Before distribution	4,647,910	3,724,327	2,772,098	3,050,793	3,423,603	3,209,708
	After distribution	4,841,098	3,791,943	2,965,286	3,166,706	not applicable	－
Equity attributable to shareholders of theparent office		2,966,255	2,860,127	3,123,247	3,037,226	3,252,676	3,270,291
Capitalstock		965,942	965,942	965,942	965,942	965,942	965,942
Capitalsurplus		250,067	250,067	172,792	124,495	95,516	95,516
Retain ed earnin gs	Before distribution	1,799,468	1,724,431	2,039,270	1,978,858	2,220,850	2,235,568
	After distribution	1,606,280	1,656,815	1,846,082	1,862,945	not applicable	－
Other equity interest		(49,222)	(80,313)	(54,757)	(32,069)	(29,632)	(26,735)
Treasurystock		－	－	－	－	－	－
Non-controlling interest		167,236	152,229	128,625	119,261	115,519	104,473
Total equity	Before distribution	3,133,491	3,012,356	3,251,872	3,156,487	3,368,195	3,374,764
	After distribution	2,940,303	2,944,740	3,058,684	3,040,574	not applicable	－

Note:

(1) The above information has been audited and certified or reviewed by an accountant.

(2) The 2022 surplus distribution proposal has not yet been resolved by the shareholders' meeting.

1.2 Condensed consolidated balance sheet:

(1) IFRS-individual statement is applied.

Unit: thousand NTD

Year Item	2018	2019	2020	2021	2022	2023 Q1
Operating revenue	3,759,947	2,442,611	2,068,417	2,492,430	2,283,658	325,936
Gross profit	594,432	411,625	230,399	417,948	453,198	37,235
Incomefromoperations	198,139	101,851	(63,054)	139,903	212,519	(16,617)
Non-operating income and expenses	157,281	49,600	408,923	41,826	227,338	38,332
Income before tax	355,420	151,451	345,869	181,729	439,857	21,715
Net income of continuing business units	333,392	118,773	378,605	130,860	354,143	14,958
Income of discontinued units	－	－	－	－	－	－
Netincome (Loss)	333,392	118,773	378,605	130,860	354,143	14,958
Other comprehensive income (income aftertax)	(11,637)	(31,713)	29,406	24,604	6,199	2,656
Total comprehensive income	321,755	87,060	408,011	155,464	360,342	17,614
Net income attributable to shareholders of the parent company	333,392	118,773	378,605	130,860	354,143	14,958
Net income attributable to non- controllinginterest	－	－	－	－	－	－
Comprehensive income attributable to Shareholders of the parent company	321,755	87,060	408,011	155,464	360,342	17,614
Comprehensive income attributable to non-controlling interest	－	－	－	－	－	－
Earnings per share	3.45	1.23	3.92	1.35	3.67	0.15

Note:

(1) The above information has been audited and certified by an accountant

(2) The consolidated financial statements for the first quarter of 2023 have been reviewed by accountants

(2) IFRS-consolidated statement is applied.

Unit: thousand NTD

Year Item	2018	2019	2020	2021	2022	2023 Q1
Operating revenue	4,872,536	3,417,949	3,093,583	3,630,956	3,100,517	538,803
Gross profit	893,461	663,667	482,591	681,860	663,000	52,224
Income from operations	340,814	195,610	37,924	266,199	298,225	(28,015)
Non-operating income and expenses	64,479	(11,992)	517,496	(28,399)	161,563	44,909
Income before tax	405,293	183,618	555,420	237,800	459,788	16,894
Net income of continuing business units	333,195	107,708	594,202	122,033	349,287	3,531
Income of discontinued units	－	－	－	－	－	－
Net income (Loss)	333,195	107,708	594,202	122,033	349,287	3,531
Other comprehensive income (income after tax)	(13,227)	(35,655)	30,740	24,067	7,313	3,038
Total comprehensive income	319,968	72,053	624,942	146,100	356,600	6,569
Net income attributable to shareholders of the parent	333,392	118,773	378,605	130,860	354,143	14,958
Net income attributable to non-controlling interest	(197)	(11,065)	215,597	(8,827)	(4,856)	(11,427)
Comprehensive income attributable to Shareholders of the parent	321,755	87,060	408,011	155,464	360,342	17,615
Comprehensive income attributable to non- controlling interest	(1,787)	(15,007)	216,931	(9,364)	(3,742)	(11,046)
Earningsper share	3.45	1.23	3.92	1.35	3.67	0.15

Note:

(1): Aforesaid data has been certified or verified by CPA.

1.3 Five-year CPA names and audit commentary

Audit Year	Accounting firm	Name of visa accountant	Audit opinion
2018	Enwise CPAs & Co.,	Yi Changyun, Chen Yuson	unqualified opinions
2019	Enwise CPAs & Co.,	Yi Changyun, Chen Yuso	unqualified opinions
2020	Enwise CPAs & Co.,	Yi Changyun, Chen Sporn	unqualified opinions
2021	Enwise CPAs & Co.,	Yi Changyun,Chen Sporn	unqualified opinions
2022	Enwise CPAs & Co.,	Yi Changyun, Chen Sporn	unqualified opinions

2. Five-Year Financial Summary

(1) IFRS-individual is applied.

IFRS-individual is applied.	IFRS-individual is applied.	IFRS-individual is applied.
Year ( Note.1) Analysis Item (Note.2)			2018	2019	2020	2021	2022
Financial structure (%)	Debt Ratio		55.38	49.51	40.39	46.16	47.20
	Ratio of long-term capital to property, plant and equipment		203.98	199.01	217.36	220.52	240.97
Solvency (%)	Current ratio		106.43	102.29	126.06	120.61	132.10
	Quick ratio		62.45	58.63	81.33	80.57	95.89
	Interest coverage ratio		16.53	7.52	22.39	19.85	23.11
Operating performance	Receivable turnover rate (times)		2.95	2.38	2.72	3.17	2.97
	Average cash recovery day		123.73	153.36	134.19	115.14	122.90
	Inventory turnover rate (times)		2.23	1.58	1.87	2.27	1.83
	Payable turnover rate (times)		3.91	3.34	4.44	3.78	3.19
	Average daysinsales		163.68	231.01	195.19	160.79	199.45
	Property, plant, and equipment turnover rate (times)		2.43	1.58	1.37	1.70	1.61
	Total assets turnover rate (times)		0.57	0.40	0.38	0.46	0.38
Profitability	Returnontotalassets (%)		5.32	2.23	7.18	2.55	6.23
	Return on stockholders' equity (%)		11.63	4.08	12.66	4.25	11.26
	Pre-tax income to paid-in capital (%)	Business interest	20.51	10.54	(6.53)	14.48	22.00
		Pre-tax net income	36.80	15.68	35.81	18.81	45.54
	Profitratio (%)		8.87	4.86	18.30	5.25	15.51
	Earnings pershare (NT$)		3.45	1.23	3.92	1.35	3.67
Cash flow	Cash flowratio (%)		0.58	24.56	46.03	14.68	7.36
	Cash flow adequacyratio (%)		52.16	100.66	159.23	74.49	104.50
	Cash reinvestment ratio(%)		(2.78)	12.65	20.08	3.16	1.56
Leverage	Operating leverage		1.48	1.78	(0.29)	1.55	1.63
	Financial leverage		1.13	1.30	0.80	1.07	1.10

Please justify the financial rate change for the past two years. (is exempted if difference falls below 20%.)

Inventory turnover, payable turnover, total asset turnover decreased due to poor market performance and led to revenue decrease.
Return on assets and return on equity increased due to exchange rate change in 2022 and led to nonoperation profit increase.
Operating margin increased due to profitability increase by the company in 2022.
Net income, profit rate, EPS increased due to exchange rate change in 2022 and led to led to non-operation profit increase.
Cash flow rate decreased due to poor market performance and business declined. Cash inflow from operation decreased.

Note:1 The above information has been audited and certified by an accountant

Note 2: Please refer to the description of Note 2 in the table below for the calculation formula of financial analysis

(2) Adoption of IFRS - Consolidation

Year ( Note.1) Analysis Item (Note.2)	Year ( Note.1) Analysis Item (Note.2)	2018	2019	2020	2021	2022	2023 Q1
Financial structure (%)	Debt Ratio	59.73	55.28	46.02	49.15	50.41	48.75
	Ratio of long-term capital to property, plant and equipment	144.50	135.38	171.10	174.20	188.47	191.17
Solvency (%)	Current ratio	117.45	115.39	138.83	136.60	140.01	142.60
	Quick ratio	62.45	62.38	83.41	79.06	89.38	88.73
	Interest coverageratio (times)	13.94	6.53	25.54	17.47	18.68	2.78
Operating performance	Receivable turnover rate (times)	3.28	2.88	3.38	4.16	3.72	2.97
	Average cash recovery day	111.28	126.74	107.99	87.74	98.12	122.90
	Inventory turnover rate (times)	1.91	1.40	1.72	2.04	1.54	1.18
	Payable turnover rate (times)	3.97	3.72	5.01	4.28	3.45	3.26
	Average daysinsales	191.10	260.71	212.21	178.92	237.01	309.32
	Property, plant and equipment turnover rate (times)	2.12	1.45	1.44	1.91	1.69	1.18
	Totalassets turnover(times)	0.63	0.47	0.48	0.59	0.48	0.34
Profitability	Returnontotalassets (%)	4.65	1.85	9.60	2.18	5.69	0.34
	Return on stockholders' equity (%)	11.63	3.70	19.86	3.96	11.11	0.44
	Pre-tax income to paid-in capital (%)	41.96	19.01	57.50	24.62	47.60	1.75
	Profitratio (%)	6.84	3.15	19.21	3.36	11.27	0.66
	Earnings pershare (NT$)	3.45	1.23	3.92	1.35	3.67	0.15
Cash flow	Cash flow ratio (%)	0.72	24.10	15.50	16.94	6.75	1.67
	Cash flow adequacyratio (%)	51.51	90.34	111.48	75.48	99.27	99.27
	Cash reinvestment ratio (%)	(2.14)	14.88	6.14	5.56	1.72	(4.23)
Leverage	Operating leverage	1.32	1.66	4.23	1.44	1.41	(0.03)
	Financial leverage	1.10	1.20	2.48	1.06	1.10	0.75

Please justify the financial rate change for the past two years. (is exempted if difference falls below 20%.)
Inventory turnover, payable turnover, total asset turnover decreased due to poor market performance and led to revenue decrease.
Return on assets and return on equity increased due to exchange rate change in 2022 and led to non-operation profit increase.
Operating margin increased due to profitability increase by the company in 2022.
Net income, profit rate, EPS increased due to exchange rate change in 2022 and led to led to non-operation profit increase.
Cash flow rate decreased due to poor market performance and business declined. Cash inflow from operation decreased.

Note 1. The above information has been audited and certified by an accountant or reviewed.

Note 2. The financial analysis formula in this table is as follows:

Financial structure
(1) Ratio of liabilities to assets = total liabilities / total assets
(2) The ratio of long-term funds to real estate, plant and equipment = (total equity + non-current liabilities) / net value of real estate, plant and equipment
Solvency
(1) Current ratio = current assets / current liabilities
(2) Quick ratio = (current assets - inventory - prepaid expenses) / current liabilities
(3) Interest coverage ratio = net income before income tax and interest expenses / interest expenses for the current period
Operating performance
(1) Turnover rate of receivables (including accounts receivable and notes receivable arising from business operations) = net sales / average receivables of each period
(including accounts receivable and notes receivable arising from business operations) balance
(2) Average cash recovery days = 365 / turnover rate of accounts receivable
(3) Inventory turnover rate = cost of sales / average inventory
(4) Turnover rate of payables (including accounts payable and bills payable arising from business operations) = cost of sales / average payables for each period
(including accounts payable and notes payable due to business operations) balance
(5) Average days of sales = 365/inventory turnover
(6) Turnover rate of real estate, plant and equipment = net sales / average net value of real estate, plant and equipment
(7) Total asset turnover ratio = net sales / average total assets
Profitability
(1) Return on Assets = [Income After-tax + Interest Expenses × (1 - Tax Rate)] / Average Total Assets
(2) Return on equity = income after tax / total average equity
(3) Profit rate = income after tax / net sales
(4) Earnings per share = (Profit or loss attributable to owners of the parent company - special stock dividends) / weighted average number of issued shares

5. Cash flow

(1) Cash flow ratio = net cash flow from operating activities / current liabilities
(2) Allowable ratio of net cash flow = net cash flow from operating activities in the last five years / last five years (capital expenditure + inventory increase + cash dividends)
(3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (gross value of real estate, plant and equipment + long-term investment + other non-current assets + operating capital)
Leverage
(1) Operating leverage = (net operating income - variable operating costs and expenses) / operating profit
(2) Financial leverage = operating profit / (operating profit - interest expense)

Note 3: The net cash flow of operating activities is negative, so it is not applicable
Note 4: The formula for calculating earnings per share in the preceding paragraph shall pay special attention to the following items when measuring:
Based on the weighted average number of common shares, not the number of outstanding shares at the end of the year
Anyone who has cash capital increase or treasury stock trading should consider its circulation period and calculate the weighted average number of shares
For those who convert surplus into capital increase or capital reserve into capital increase, when calculating earnings per share for previous years and semi-annual years, retrospective adjustments should be made according to the capital increase ratio, regardless of the issuance period of the capital increase.
If the preference shares are non-convertible cumulative preference shares, the current annual dividends (whether paid or not) shall be deducted from or added to the after-tax net profit. If the special stock is non-cumulative, if there is a net profit after tax, the special stock dividend should be deducted from the net profit after tax; if it is a loss, no adjustment is required.

Note 5: Cash flow analysis should pay special attention to the following items when measuring:

Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.
Capital expenditure refers to the annual cash outflow of capital investment.
The increase in inventory will only be included when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory at the end of the year decreases, it will be calculated as zero.
Cash dividends include cash dividends of ordinary shares and special shares.
Gross real estate, plant and equipment refers to the total amount of real property, plant and equipment before deducting accumulated depreciation.
Note 6: The issuer should classify various operating costs and operating expenses into fixed and variable according to their nature. If estimates or subjective judgments are involved, attention should be paid to other reasonable and consistent.
Note 7: If the company's stock has no par value or the par value of each share is not NT$10, the calculation of the ratio of the previous statement to the paid-in capital shall be changed to the balance sheet calculated based on the ratio of equity attributable to owners of the parent company.

3. Audit Committee audit report from recent annual financial statement

AWEA Mechantronic Co., Ltd.

Audit Committee’s Review Report

The Company’s 2022 Business Report, Financial Statement, and Distributable Profit, etc. were published, of which Financial Statement was audited by independent auditors, Sporn Chen and Gordon Yi of EnWise CPAs & Co. with an audit report.

Aforesaid Business Report, Financial Statement, and Distributable Profit have been reviewed by the Audit Committee and no non-conformity was discovered, stated pursuant to Art. 219 of Company Act.

Audit Committee Convener of AWEA Mechantronic Co., Ltd.:

Mr. Lin Yimin

M a r c h 1 3 , 2 0 2 3

4.Recent annual financial statement 4.1 2021 Individual financial statement

==> picture [67 x 51] intentionally omitted <==

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

INDEPENDENT AUDITORS’ REPORT

The board of Directors and Shareholders AWEA Mechantronic Company Limited

Opinion

We have audited the accompanying individual financial statements of AWEA Mechantronic Company Limited (the “Company”), which comprise the individual balance sheets as of December 31, 2022 and 2021, and the individual financial statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the individual financial statements, including a summary of significant accounting policies.

In our opinion, according to our auditing result and other auditors’ report (please refer to “Other Items” section), the accompanying individual financial statements prepared, in all material aspects, in accordance with the Regulations Governing the Preparation of Financial Reports by Security Issuers, and can fairly present the individual financial position of the Company as of December 31, 2022 and 2021, and its individual financial performance and its individual cash flows for the ears then ended.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, according to our professional judgement, were of most significance in the audit of the Company’s individual financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the individual financial statements, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s individual financial statements for the year ended December 31, 2022 are stated as follows:

Revenue Recognition

The Company’s main source of revenue is the sales of machining center machine, and the revenue recognized in 2022 is NT$1,953,731 (in Thousands), accounting for about 86% of total operating income. And since the sales locations include Taiwan, Mainland China, Italy, United States and other markets, the sales conditions are not the same. Therefore, it is necessary to determine the timing of the transfer of the ownership risk and rewords of the sold goods according to customers’ order or contract documents. Since the timing and amount of revenue recognition have significance of impact to financial statements, we listed revenue recognition as one of the key audit matters.

For accounting policies related to revenue recognition, please refer to Note 4 to the individual financial statements.

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [67 x 51] intentionally omitted <==

We evaluated the rationality of sales revenue recognition, executed the cut-off tests and internal control tests to understand the Company’s sales revenue recognition processes and the design and implementation of related control systems. In addition, we performed related tests of controls to the sales and collection cycle, sampled sales contracts to confirm the accuracy of accounting system data, checked and adjusted the general ledger system data and sales system, and evaluated whether the timing of revenue recognition is handled in accordance with related statements. Valuation of Inventory

The company is mainly engaged in the design, manufacture, and sale of special purpose machine, automation equipment, and computer-controlled machine tools. As of December 31, 2022, the total inventory and allowance of loss for market price decline and obsolete and slow-moving inventories are NT$1,337,240 and NT$315,961 (in thousands), respectively. Inventories of the Company are measured by cost and net realizable value, and recorded allowance of loss for market price decline and obsolete and slow-moving inventories for inventories exceeding certain shelf life or individuals identified as obsolete. Due to fierce competition of parts market and the different speed of different parts obsolescence, the risks of loss for market price decline and obsolete is higher. The obsolete inventory items and the net realizable value method applied for their evaluation often involve subjective judgements, hence are highly uncertain. Considering the inventory and the allowance of loss for market price decline and obsolete and slow-moving inventories are in significance of impact to financial statements, we listed the allowance of loss for market price decline and obsolete and slow-moving inventories as one of the key audit matters. For inventory related policies, and key sources of evaluation and assumption of the inventory, please refer to Noe 4 and 5 to the individual financial statements, respectively.

We understand, evaluate, and test the design and implementation of inventory related internal controls. Obtain the evaluation data for inventory by the lower of cost and net realizable value prepared by managements, sampled the estimated pricing data to the latest sales record to assess the basis and reasonability of the management’s estimation of net realizable value. We also acquire inventory aging report to assess the appropriateness the policy to record the allowance of loss for market price decline and obsolete and slow-moving inventories.

Other Items – mention of other auditors’ report

In the above mentioned individual financial statements, companies invested using equity method, YAMA SEIKI USA, INC and Huahan Leasing Co., Ltd., are not audited by us but entrusted other auditors to audit by the company. As of December 31, 2022 and 2021, the balance of investment using equity method are NT$109,850 and NT$96,604 (in thousands), respectively, both accounting for 2% of total assets. For the years ended December 31, 2022 and 2021, the proportion for these subsidiaries invested using equity method and the profit or loss of associates and joint ventures are NT$7,782 and NT$4,712 (in thousands), respectively, accounting for 2% and 3% of the profit before tax.

Responsibilities of Management and Those Charged with Governance for the Individual Financial Statements

Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of the individual financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the individual financial statements, management is responsible for assessing the

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [67 x 51] intentionally omitted <==

Company’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 Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Individual Financial Statements

Our objectives are to obtain reasonable assurance about whether the individual financial statements are free from material misstatements, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is high-level of assurance but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement that 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 based on these individual financial statements.

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

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

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [67 x 51] intentionally omitted <==

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 individual financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Jui-Kuei Chen and Chang Yun Yi.

EnWise CPAs & Co. Taichung, Taiwan Republic of China

March 13, 2023

AWEA Mechantronic Company Limited INDIVIDUAL BALANCE SHEETS

December 31, 2022 and 2021

In Thousands of New Taiwan Dollars Amount % Amount 979,024 $ 16 629,970 $ 377,002 6 172,417 254,096 4 170,905 1,060 - 15,197 419,852 7 486,472 68,917 1 119,357 10,629 - 9,422 70,042 1 65,278 - - - 1,021,279 17 977,757 6,734 - 9,682 541,959 9 317,744 3,750,594 61 2,974,201 10,458 - 16,829 1,002,016 16 1,037,352 1,395,401 22 1,439,750 12,276 - 24,080 6,794 - 7,909 54,214 1 103,049 300 - 3,964 3,914 - 4,137 12,115 - 29,673 - - - 2,497,488 39 2,666,743 6,248,082 $ 100 5,640,944 $ 31-Dec-22 31-Dec-21	In Thousands of New Taiwan Dollars Amount % Amount 979,024 $ 16 629,970 $ 377,002 6 172,417 254,096 4 170,905 1,060 - 15,197 419,852 7 486,472 68,917 1 119,357 10,629 - 9,422 70,042 1 65,278 - - - 1,021,279 17 977,757 6,734 - 9,682 541,959 9 317,744 3,750,594 61 2,974,201 10,458 - 16,829 1,002,016 16 1,037,352 1,395,401 22 1,439,750 12,276 - 24,080 6,794 - 7,909 54,214 1 103,049 300 - 3,964 3,914 - 4,137 12,115 - 29,673 - - - 2,497,488 39 2,666,743 6,248,082 $ 100 5,640,944 $ 31-Dec-22 31-Dec-21
Amount 979,024 $ 377,002 254,096 1,060 419,852 68,917 10,629 70,042 - 1,021,279 6,734 541,959 3,750,594 10,458 1,002,016 1,395,401 12,276 6,794 54,214 300 3,914 12,115 - 2,497,488 6,248,082 $	Amount 629,970 $ 172,417 170,905 15,197 486,472 119,357 9,422 65,278 - 977,757 9,682 317,744 2,974,201 16,829 1,037,352 1,439,750 24,080 7,909 103,049 3,964 4,137 29,673 - 2,666,743 5,640,944 $	%
		11 3 3 - 9 2 - 1 - 18 - 6
		53
		- 18 26 - - 2 - - 1 -
		47
		100

Please refer to the accompanying notes to the individual financial reports.

AWEA Mechantronic Company Limited INDIVIDUAL BALANCE SHEETS

December 31, 2022 and 2021

	December 31, 2022 and 2021
Code 2100 2110 2130 2150 2160 2170 2180 2200 2220 2230 2250 2280 2310 2399 21XX 2540 2570 2580 2640 2645 25XX 2XXX 3100 3110 3200 3211 3213 3240 3280 3300 3310 3320 3350 3400 3410 3420 3XXX	Items Notes CURRENT LIABILITIES Short-term loans 6 and 8 Short-term notes and bills payable 6 Current contract liabilities 4 and 6 Notes payable Notes payable to related parties 7 Accounts payable Accounts payable to related parties 7 Other accounts payable 6 Other payables to related parties 7 Current tax liabilities 4 Current provisions 4 and 6 Current lease obligations payable 4, 6, and 7 Advance receipts 7 Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings 6 and 8 Deferred tax liabilities 4 and 6 Non-current lease liabilities 4, 6, and 7 Non-current net defined benefit liability 4 and 6 Guarantee deposits Total non-current liabilities Total Liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT Share capital 6 Ordinary share Capital surplus 6 Capital surplus, additional paid-in capital arising from ordinary share Capital surplus, additional paid-in capital arising from bond conversion Capital surplus, gain on sale of fixed assets Other additional paid-in capital Retained earinings 6 Legal reserve Special reserve Unappropriated earnings Other equity interest 6 Exchange differences on translation of foreign financial statements Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income Total equity Total liability and equity	In Thousands of New Taiwan Dollars Amount % Amount 1,880,000 $ 30 1,290,000 $ 289,641 5 259,907 73,324 1 97,752 393,505 6 502,033 11,770 - 13,279 72,828 1 143,508 1,489 - 5,750 89,106 1 109,798 1,677 - 1,850 47,627 1 17,995 11,055 - 11,240 11,420 - 11,606 42 - 11 2,070 - 1,224 2,885,554 45 2,465,953 - - 2,206 99,315 2 107,360 918 - 12,764 8,991 - 12,794 628 - 2,641 109,852 2 137,765 2,995,406 47 2,603,718 965,942 15 965,942 6,124 - 6,124 57,468 1 86,447 4 - 4 31,920 1 31,920 527,176 8 513,898 98,077 2 98,077 1,595,597 26 1,366,883 (18,699) - (36,109) (10,933) - 4,040 3,252,676 53 3,037,226 6,248,082 $ 100 5,640,944 $ 31-Dec-22 31-Dec-21
		Amount 1,880,000 $ 289,641 73,324 393,505 11,770 72,828 1,489 89,106 1,677 47,627 11,055 11,420 42 2,070 2,885,554 - 99,315 918 8,991 628 109,852 2,995,406 965,942 6,124 57,468 4 31,920 527,176 98,077 1,595,597 (18,699) (10,933) 3,252,676 6,248,082 $	Amount 1,290,000 $ 259,907 97,752 502,033 13,279 143,508 5,750 109,798 1,850 17,995 11,240 11,606 11 1,224 2,465,953 2,206 107,360 12,764 12,794 2,641 137,765 2,603,718 965,942 6,124 86,447 4 31,920 513,898 98,077 1,366,883 (36,109) 4,040 3,037,226 5,640,944 $	%
				23 5 2 9 - 3 - 2 - - - - - -
				44
				- 2 - - -
				2
				46
				17 - 2 - 1 9 2 24 (1) -
				54
				100

Please refer to the accompanying notes to the individual financial reports.

AWEA Mechantronic Company Limited

INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME

The years ended December 31, 2022 and 2021

In Thousands of New Taiwan Dollars, Except Earnings Per Share

2022	2021
Amount 2,283,658 $ (1,825,556) 458,102 (4,904) 453,198 (145,146) (49,140) (61,294) 14,901 (240,679) 212,519 16,006 31,373 104,081 (19,897) 95,775 227,338 439,857 (85,714) 354,143 3,296 (13,848) (659) 21,763 (4,353) 6,199 360,342 $ 3.67 $ 3.65 $	Amount 2,492,430 $ (2,077,984) 414,446 3,502 417,948 (164,727) (43,936) (58,193) (11,189) (278,045) 139,903 1,247 29,772 (30,099) (9,643) 50,549 41,826 181,729 (50,869) 130,860 (1,035) 5,303 207 25,162 (5,033) 24,604 155,464 $ 1.35 $ 1.35 $	%
		100 (83)
		17 -
		17
		(7) (2) (2) (1)
		(12)
		5
		- 1 (1) - 2
		2
		7 (2)
		5
		- - - 1 -
		1
		6

Please refer to notes to the individual financial reports.

AWEA Mechantronic Company Limited

INDIVIDUAL STATEMENTS OF CHANGES IN EQUITY The years ended December 31, 2022 and 2021

	Retained Earnings	Total Equity of New Taiwan Dollars
Legal Capital Reserve 475,653 $ 38,245 - - - - - - - 513,898 13,278 - - - - - - - 527,176 $	Special Capital Reserve 98,077 $ - - - - - - - - 98,077 - - - - - - - - 98,077 $
		3,123,247 $ - - (193,188) (48,297) 130,860 24,604
		155,464
		-
		3,037,226 - - (115,913) (28,979) 354,143 6,199
		360,342 -
		3,252,676 $

Please refer to the accompanying notes to the individual financial statements.

AWEA Mechantronic Company Limited

INDIVIDUAL STATEMENTS OF CASHFLOWS

The years ended December 31, 2022 and 2021

The years ended December 31, 2022	and 2021
CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustment for: Depreciation expense Amortization expense Expected credit losses recognized (reversal) on investments in debt instruments Interest expense Interest income Dividend revenue Share of profit (loss) of associates and joint ventures accounted for using equity method, Financial instruments at fair value through profit or loss Loss (gain) on disposal or retirement of property, plant and equipment Loss (gain) on disposal or retirement of intangible assets Profit from lease modification Gains on disposals of investments Unrealized (realized) gain from sale Changes in operating assets and liabilities: Notes receivable Notes receivable from related parties Account receivables Account receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments Other current assets Overdue receivables Long-term notes receivable Current contractual liabilities Notes payable Notes payable from related parties Accounts payable Accounts payable from related parties Other payables Other payables from related parties Provisions Advance receipts Other current liabilities Net defined benefit liability Cash generated from operations Interest received Income tax received (paid) Net cash generated by operating activities (Continued)	In Thousands 2022 439,857 $ 72,373 1,915 (14,901) 19,897 (16,006) (18,114) (95,775) 11,149 241 - (283) (2,095) 4,904 (84,082) 14,137 87,423 50,580 2,707 236 (43,522) 2,948 (254) (6,784) 19,191 (24,428) (108,528) (1,509) (70,680) (4,261) (19,636) (173) (185) 31 846 (507) 216,712 12,091 (19,885) 208,918	of New Taiwan Dollars 2021
		181,729 $ 79,185 1,311 11,189 9,643 (1,247) (1,724) (50,549) (7,073) (1,190) 48 - - (3,502) (8,052) (13,233) (10,826) 6,811 (4,179) (190) (120,929) 22,441 8,582 2,494 5,969 23,336 209,036 8,463 11,725 1,849 3,087 153 (11,190) (960) (52) (598)
		351,557 1,221 9,342
		362,120

AWEA Mechantronic Company Limited INDIVIDUAL STATEMENTS OF CASHFLOWS

The years ended December 31, 2022 and 2021

The years ended December 31, 2022	and 2021
(Continued) CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisitions of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisitions of investments accounted for using equity method Acquisitions of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in guarantee deposits paid Increase in other receivables from related parties Acquisitions of intangible assets Increase in other financial assets Decrease (increase) in prepayments for business facilities Dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Increase (decrease) in short-term notes payable Increase (decrease) in long-term borrowings Increase (decrease) in guarantee deposits received Repayment of the principal portion of lease liabilities Cash dividends paid Interest paid Net cash generated (used) in financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	In Thousands 2022 (236,175) 22,536 (11,268) 3,790 - (20,297) 2,272 223 (5,000) (800) (223,962) 3,664 165,665 (299,352) 590,000 29,734 (2,206) (2,013) (11,410) (144,890) (19,727) 439,488 349,054 629,970 979,024 $	of New Taiwan Dollars 2021
		(159,812) - (11,549) 8,539 (7,333) (8,855) 1,190 3,749 (65,000) (4,314) (46,420) (754) 84,352
		(206,207)
		412,065 (199,904) 939 1,700 (11,654) (241,484) (9,069)
		(47,407)
		108,506 521,464
		629,970 $

Please refer to the accompanying notes to the individual financial statements.

AWEA Mechantronic Company Limited NOTES TO INDIVIDUAL FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise

1. GENERAL

AWEA Mechantronic Company Limited (the “Company”) was incorporated on July 16, 1986. The main business of the Company is the design, manufacture and sales of special-purpose machines, automation equipment and computer-controlled machine tools.

On September 6, 2000, the Company’s shares were approved for listing by the approval letter (89) Shentzu No. 025773 of Taiwan Stock Exchange (TWSE) and started listing and trading on TWSE centralized order market on September 11, 2000.

2. DATE AND PROCEDURE FOR APPROVAL OF FINANCIAL STATEMENTS

The accompanying individual financial statements were approved and authorized for issue by the Board of Directors on March 13, 2023.

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL

REPORTING STANDARDS

(1) The impact of adoption of the newly issued and revised International Financial Reporting Standards (IFRS) approved by the Financial Supervisory Commission (FSC)：

Since 2022, the Company has fully adopted IFRS approved by FSC and effective since 2022 to prepare financial statements. The related new, revised or amended standards and interpretations are as below:

nterpretations are as below:
New, Revised or Amended Standards and Interpretations Amendments to IAS 16 “Property, Plant and Equipment: Proceeds Before Intended Use” Amendments to IAS 37 “Onerous Contracts: Cost of Fulfilling a Contract” Amendments to IFRS 3 “Reference to the Conceptual Framework” Annual Improvements to IFRSs 2018-2020 Cycle	Effective Date Issued by IASB
	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

The Company assessed that the application of the above-mentioned newly recognized IFRS will not have material impact on the individual financial statements.

(2) The impact of not yet applying of IFRSs endorsed by the FSC:

The table below listed the new, revised or amended standards and interpretations endorsed by the FSC with effective date starting 2023:

New, Revised or Amended Standards and Interpretations Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction” Disclosure of Accounting Policies	Effective Date Issued by IASB
	January 1, 2023 January 1, 2023 January 1, 2023

The amendment improved the disclosure of accounting policies to provide more useful

information to the investors and other users of the financial statements. Definition of Accounting Estimates

This amendment is to directly define accounting estimates, and to make other amendments for the accounting policies, changes of accounting estimates and errors to help companies differentiate changes of accounting policies and changes of accounting estimates.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction

This amendment is to limit the scope of exemption for deferred income tax recognition in income tax, so that the exemption will not be applicable to transactions that generate the same amount of taxable and deductible temporary difference at original recognition.

The Company assessed that the above-mentioned new, revised or amended standards and interpretations will not have material impact on the individual financial statements.

(3) The impact of the IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC:

The table below listed the new, revised or amended standards and interpretations issued and published by IASB but not yet endorsed by FSC:

New, Revised or Amended Standards and
Interpretations
Amendments to IFRS 10 and IAS 28 “Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IAS 1 “Classification of
Liabilities as Current or Noncurrent” and “Non-
current Liabilities with Covenants”
Amendments to IFRS 16 “Lease Liability in a
Sale and Leaseback”
Amendments to IAS 1 “Classification of
Liabilities as Current or Noncurrent” and “Non-
current Liabilities with Covenants”

Effective Date Issued
by IASB

Pending IFRS Committee
decision
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

The Company anticipated that the above-mentioned newly published or amended standards will not have material impact to the individual financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that the individual financial statements adopted are listed as below. Except for the illustration of accounting changes in Note 3 and 4, all the accounting policies below are applied consistently to all periods presented in the individual financial statements.

(1) Statement of Compliance

The accompanying individual financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by FSC.

(2) Basis of Preparation

The individual financial statements have been prepared on the historical cost basis, except for important items in the balance sheets listed below:

Financial assets at fair value through profit or loss;
Financial assets at fair value through other comprehensive income;
Net defined benefit liability, which is based on the fair value of pension fund asset minus the present value of defined benefit obligations.

When preparing the individual financial statements, the Company account for subsidiaries and associates by using the equity method. In order to agree with the amount of net income, other comprehensive income and equity attributable to shareholders of the parent in the consolidated financial statements, the differences of the accounting treatment between the individual basis and the consolidated basis are adjusted under the heading of investments accounted for using equity method, share of profits of subsidiaries and associates and share of other comprehensive income of subsidiaries and associates in the individual financial statements.

(3) Functional Currency and Presentation currency
The functional currency of the Company is the currency of the primary economic environment in which it operates. The individual financial statements use the Company’s functional currency, New Taiwan Dollars (NT$), to present. All the financial information presented in NT$ are in thousands of New Taiwan Dollars.
(4) Classification of Current and Noncurrent Assets and Liabilities
1. Assets that meet one of the following conditions are classified as current assets, and all assets that are not current assets are classified as non-current assets:
  - (1) The asset expected to realize, or intended to be sold or consumed, during its normal operating cycle;
  - (2) The asset is held primarily for transaction purposes;
  - (3) The asset is expected to be realized within twelve months of the reporting period; or
  - (4) The asset is cash or cash equivalent unless there are other restrictions on exchanging the asset or using it to settle liabilities at least twelve months after the reporting period.
2. Liabilities that meet one of the following conditions are classified as current liabilities, and all liabilities that are not current liabilities are classified as noncurrent liabilities:
  - (1) The liability is expected to be settled within normal operating cycle;
  - (2) The liability is held primarily for transaction purposes;
  - (3) The liability is expected to be settled within twelve months after the reporting period; or
  - (4) The liability without an unconditional right to defer settlement for at least twelve months after the reporting period. The terms of the liability, which may, at the option of the counterparty, result in its liquidation through the issuance of equity instruments do not affect its classification.
(5) Foreign Currencies
In preparing the individual financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in foreign currencies are recognized at the rates of exchange prevailing at the dates of the transactions. The exchange differences are recognized as profit or loss in the reporting period in which they occurred.

For the purposes of presenting individual financial statements, the assets and liabilities of the Company’s foreign operations are translated into NT$ using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other

comprehensive income and accumulated inequity.

(6) Cash and Cash Equivalents

Cash includes cash on hand and demand deposits. Cash equivalents are investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the aforementioned definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are listed in cash equivalents.

(7) Financial Instruments

Accounts receivable are originally recognized when incurred. All the other financial assets and liabilities shall be recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets (other than trade receivables that do not contain a significant financial component) or financial liabilities not measured at fair value through profit or loss are originally measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of them. Accounts receivable that does not contain significant financial components are measured at transaction prices.

Financial Assets

At the time of original recognition, financial assets are classified into financial assets measured at amortized cost, financial assets at FVTPL, and financial assets at FVTOCI. Only when the Company changes its business model for managing financial assets will it reclassify all affected financial assets from the first day of the next reporting period.

(1) Financial assets measured at amortized cost
Financial assets that meet both of the following conditions and are not designated as measured at fair value through profit or loss are measured at amortized cost:
- A. The financial asset is held under the business model for the purpose of collecting contractual cash flow.
- B. The contractual terms of the financial asset generate cash flows on specified dates that are exclusively for the payments of principal and interest on the principal amount outstanding.

Subsequent amortization of these assets is measured at the original recognized amount plus or minus the cumulative amortization amount calculated using the effective interest method and adjusting any allowance for losses. Interest income, foreign exchange gain or losses, and impairment loss are recognized in profit or loss. In case of delisting, the gain or loss is recognized in profit or loss.

(2) Financial assets at FVTPL
Financial assets that are neither measured at amortized cost as above nor at fair value through other comprehensive income are measured at fair value through profit or loss, including derivative financial assets. In order to eliminate or significantly reduce the improper accounting ratio at the time of original recognition, the Company may irrevocably designate financial assets that meet the conditions of measuring at amortized cost or at fair value through other comprehensive income as at fair value through profit or loss. These assets are subsequently measured at fair value, and the net profit or loss are recognized as profit or loss.
(3) Financial assets at FVTOCI

On initial recognition, the Company may irrevocably designate investments in equity investments that is not held for trading as at FVTOCI. This decision is made on an instrument-by-instrument basis.

Debt instruments are subsequently measured at fair value. Interest income calculated using the effective interest method, and foreign exchange gains and losses and impairment gains or losses on investments in debt instruments at FVTOCI are recognized in profit or loss. Other changes in the carrying amount of these debt instruments are recognized in other comprehensive income and will be reclassified to profit or loss when these debt instruments are disposed. Investments in equity instruments are subsequently measured at fair value. Dividend income, unless clearly represents a recovery of part of the cost of the investment, is recognized in profit or loss. The remaining net gain or loss is recognized in other comprehensive income and is not reclassified to profit or loss.

Dividends on these investments in equity instruments at FVTOCI are recognized in profit or loss at the date when the Company’s right to receive the dividends is established, normally means the ex-dividend date.

(4) Impairment of financial assets

A loss allowance for expected credit loss is recognized by the Company for financial assets measured at amortized cost, including cash and cash equivalents, financial assets measured at amortized cost, notes receivable, accounts receivable, other receivables, guarantee deposits paid, and other financial assets. The following financial assets are measured at an amount equal to expected credit loss within 12 months, the rest are measured at an amount equal to lifetime expected credit losses:

A. Debt securities are considered to have low credit risk on reporting date; and

B. the credit risk on other debt securities and bank deposits (i.e., the risk of default during the expected life of the financial instrument) has not increased significantly since initial recognition.

The allowance for losses on accounts receivable and contract assets is measured at an amount equal to lifetime expected credit losses.

When determining whether the credit risk has increased significantly since the original recognition, the Company considers reasonable and substantiated information (obtainable without undue cost or investment), including qualitative and quantitative information, and based on the Company's historical experience, credit ratings, and analysis from forward-looking information.

The expected credit loss during the lifetime refers to the expected credit loss arising from all possible default events during the expected duration of the financial instrument.

Twelve-month expected credit losses refer to the expected credit losses arising from possible default events of a financial instrument within 12 months after the reporting date (or a shorter period if the expected lifetime of the financial instrument is shorter than 12 months).

The longest period for measuring expected credit losses is the longest contractual period over which the Company is exposed to credit risk.

Expected credit loss is the probability-weighted estimate of credit loss during the expected lifetime of a financial instrument. Credit losses are measured as the present value of all cash shortfalls, which is the difference between the cash flows that the Company can receive under the contract and the cash flows that the Company expects to receive. Expected credit losses are discounted at the financial asset's effective interest rate.

The Company assesses whether financial assets measured at amortized cost and debt securities measured at fair value through other comprehensive income are

credit-impaired at each reporting date. A financial asset is credit-impaired when one or more events that have an adverse effect on the estimated future cash flows of the financial asset have occurred. Evidence that the financial asset is credit-impaired includes below item’s observable information:

A. Significant financial difficulties of the borrower or issuer;
B. Default, such as delay or overdue more than 90 days;
C. Concessions granted by the Company to the borrower that would not have been considered by the Company for economic or contractual reasons related to the borrower's financial difficulties;
D. Borrower is likely to file for bankruptcy or other financial restructuring; or
E. Absence of an active market for the financial asset due to financial difficulties.

An allowance for loss of financial asset measured at amortized cost is deducted from the book value of the asset. An allowance for a debt instrument investment at fair value through other comprehensive income is recognized in other comprehensive income (without reducing the book value of the asset), and the amount of the recognition or reversal of the allowance is recognized in profit or loss.

When the Company cannot reasonably expect to recover all or part of the financial assets, it directly reduces the total book value of its financial assets. The Company analyzes the timing and the number of write-offs individually on the basis of whether it is reasonably expected to be recoverable. The Company does not anticipate a material reversal of the amount written off. However, written-off financial assets are still enforceable to comply with the Company's procedures to recover overdue amounts.

(5) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, when it transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset to another entity, or when it neither transfers substantially all the risks and rewards of ownership nor retain controls of the financial asset.

If the Company makes a transaction to transfer financial assets and it retains all or substantially all the risks and rewards of ownership of the transferred assets, the assets will continue to be recognized in the balance sheets.

(8) Financial Liabilities and Equity Instruments

Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2.Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

3.Financial liabilities

Financial liabilities are not held for transactions and are not designated to be subsequently measured as at fair value through profit or loss, including notes payable, accounts payable and other payables. When originally recognized, it is measured at fair value plus directly attributable transaction costs. The subsequent evaluation adopts the effective interest rate method to measure at amortized cost, and the interest expenses not capitalized as asset costs are included in the non-operating

income and expenses.

Derecognition of financial liabilities
- The merging Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled or they expire.
- When derecognizing financial liability, the difference between its book value and total amount paid or payable, including any non-cash assets transferred or liabilities assumed, is recognized as profit or loss, and listed under non-operating income and expenses.
5.Offset of financial assets and liabilities
- Financial assets and liabilities are offset and listed on the balance sheets in net amount only when the merging company has legal rights to offset them and intends to settle net or to realize assets and liquidate liabilities at the same time.

(9) Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost at the end of the reporting period. Net realizable value represents the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale.

(10) Investments Accounted for Using Equity Method
Investments accounted for using the equity method include investments in subsidiaries, associates, and joint ventures.

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor a joint venture. Significant influence refers to the power to participate in the investee's financial and operating policy decisions, but not the power to control or jointly control such policy decisions.

A joint venture means that the Company and other entities engage in economic activities under joint control through contractual agreement, meaning that strategic financial and operational decisions related to the joint venture must obtain the unanimous consensus of the shared controllers. If another entity is established in accordance with the joint venture agreement, and each joint venture controller has the interests in it, the entity is a jointly controlled entity.

Except for assets classified as held for sale, the operating results and assets and liabilities of associate companies and joint ventures are included in the financial statements using the equity method. With the equity method, investments in associate companies and joint ventures are initially recognized at cost in the balance sheets and are subsequently adjusted according to changes in the Company's share of the investee's net assets. When the Company's share of losses from associate companies and joint ventures exceeds its equity in the associate companies, additional losses are recognized only within the scope of the Company's statutory obligations, constructive obligations, or payments made on behalf of the associate companies.

The portion of the acquisition cost exceeding the net fair value share of the Company's identifiable assets and liabilities of the associated companies and joint ventures on the acquisition date is recognized as goodwill and is included in the book value of the investment. If the share of the net fair value of identifiable assets and liabilities of associated companies and joint ventures on the acquisition date exceeds the acquisition cost, it will be recognized as profit immediately after reassessment.

value of the investment. A reversal of any impairment loss is recognized to the extent of subsequent increases in the recoverable amount of the investment.

If the Company does not subscribe to additional shares issued by associates or joint ventures according to existing ownership proportion, which leads to changes of shareholding percentage and results in changes of equity net worth, the increased or decreased amount will be adjusted to capital surplus and investments using equity methods. However, if the ownership interest in the associates is reduced by not subscribing or obtaining shares according to the shareholding ratio, the amount recognized in other comprehensive profit and loss related to the associates will be reclassified according to the reduced proportion, and the basis of accounting should be the same as if the associates directly disposed the related assets or liabilities.

(11) Property, Plant and Equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment. Costs include any costs that are directly attributable to the construction, acquisition of the item of property, plant and equipment, any other directly attributable costs of bringing the asset to a usable condition for its intended purpose, and costs of dismantling, relocation, and restoration of original location. The aforementioned costs include renewal costs for replacing part of the plant and equipment and necessary interest expenses arising from the construction contract.

Property, plant and equipment in construction are carried at cost less any recognized impairment loss. The cost includes professional service fees. Such assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other identical categories of property, plant and equipment, commences when the assets are available for their intended use.

Self-owned land is not recognized for depreciation.

When a major item of property, plant and equipment needs to be restored periodically, the Company treats the item as an individual asset and recognizes it as depreciation with a specific useful life and specific depreciation method. Major overhaul cost will be considered as replacing cost and listed as part of the book value of property, plant and equipment if meeting the recognition condition. Other repairing and maintenance fees are listed in profit or loss. If meeting the conditions, the present value of decommissioning cost after the asset is used will be included in the cost of the asset.

If the cost of each part of property, plant and equipment is significant relative to the total cost of the item, each part is depreciated separately and treated as a separate item (significant component) of property, plant and equipment.

An item or material part of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Depreciation is recognized in profit or loss over the estimated useful lives of each component of an item of property, plant and equipment on a straight-line method as it best reflects the expected pattern of consumption of the asset's future economic effects.

Depreciation is computed using the straight-line method mainly over the following estimated useful lives:

ated useful lives:
Buildings	5	to 51 years
Machinery	2	to 16 years
Mold		2 to 3 years
Transportation equipment		2 to 6 years
Computer communication		4 years

equipment Business equipment 2 to 7years Lease improvement 5 years Other equipment 2 to 11 years

Depreciation is recognized to write off the cost of the assets less their residual values over their useful lives, and it is computed using the straight-line method over the estimated useful lives. Estimated useful life, residual value and depreciation method are reviewed at the end of each reporting period, and the effect of any change in estimate is treated on a deferred basis.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

(12) Leases
1.Lease judgement
- The Company assess whether the contract is or contains a lease on the date of establishment of the contract.
2.The Company as lessor

The Company recognizes the right-of-use asset and lease liability on the lease commencement date. The right-of-use asset is measured at cost, which includes the original measurement amount of the lease liability, adjusting any lease payments made on or before the lease commencement date, and adding all Original direct costs incurred and estimated costs of dismantling, removing, and restoring the site or the subject asset, less any lease incentives received.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. In addition, the Company regularly assesses whether the right-of-use asset has been impaired and deals with any impairment loss that has occurred and adjusts the right-of-use asset when the lease liability is remeasured.

The lease liability is initially measured at the present value of the unpaid lease payments at the start date of the lease. If the implied interest rate of the lease is easy to determine, the discount rate will be the interest rate; if it is not easy to determine, the Company's incremental borrowing rate will be used. Normally, the Company uses its incremental borrowing rate as discount rate.

Lease payments that are included in lease liability includes:

(1) Fix payment, including substantiative fix payment;
(2) Changing lease payment that depends on an index or rate using the index or rate on the leasing start date for original measurement.

Lease liability interests are recognized with effective interest method and will be reevaluate when below situations happened:

(1) Index or rate which is for deciding lease payment changes that leads to changes in future lease payments;
(2) Estimation for whether to extend or end the option is changed and therefore changes the lease duration estimation;
(3) Payment amount changes to expected guarantee for residual;
(4) Estimation for options of target assets to purchase is changed;
(5) Leasing target, scope or other terms changed.

When the lease liability is remeasured due to the aforementioned changes in the

index or rate used to determine the lease payment, changes in the residual value guarantee amount, and changes in the evaluation of the purchase, extension or termination options, the book value of the right-of-use asset is adjusted accordingly, and when the carrying amount of the right-of-use asset has been reduced to zero, the remaining remeasured amount is recognized in profit or loss.

For lease modifications that reduce the scope of the lease, the carrying amount of the right-of-use asset is reduced to reflect partial or full termination of the lease, and the difference between this and the remeasurement amount of the lease liability is recognized in profit or loss.

The Company expresses the right-of-use assets and lease liabilities that do not meet the definition of investment real estate as separate line items in the balance sheet. For the short-term lease of business equipment and other equipment leases and the lease of low-value underlying assets, the Company chooses not to recognize the right-of-use assets and lease liabilities but recognizes the relevant lease payments as expenses on a straight-line basis during the lease period.

  - A sale and leaseback transaction are assessed in accordance with IFRS 15 to assess whether the transfer of assets to the buyer-lessor meets the requirements for sale. If it is judged to be treated as a sale, the asset will be delisted and the part of the rights that have been transferred to the buyer and lessor will be recognized in the relevant profit or loss. The accounting treatment model of the lessee is applicable to the leaseback transaction, and the right-of-use asset is measured according to the original account amount of the leased back part. If it is judged not qualified as sale, the transferred asset shall continue to be recognized and the consideration received shall be recognized as a financial liability.

3.The Company as lessee
- In transactions where the Company is the lessee, lease contract is classified according to whether it transfers almost all the risks and rewards of the ownership of the underlying asset on the date of establishment of the lease. If yes, then it’s classified as a finance lease, otherwise it is classified as operating lease. When evaluating, the Company considers relevant specific indicators including whether the lease period covers the main part of the economic life of the underlying asset.
- If the Company is a sublease lessor, it handles master lease and sublease transactions separately, and evaluates the classification of sublease transactions based on the right of use generated by the master lease. If the head lease is a short-term lease and the recognition exemption applies, the sub-lease transaction should be classified as an operating lease.
(13) Intangible Assets

Intangible assets acquired by the Company with finite useful lives are carried at cost less accumulated amortization and accumulated impairment losses.

Amortization is recognized using the straight-line method over the following estimated useful lives:

Computer software The economic life or contract period

The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

(14) Impairment of Non-financial Assets

At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets (excluding inventory, contractual assets, and deferred tax assets), to determine whether there is any indication that those assets have suffered an impairment

loss. If any such indication exists, the recoverable amount of the asset is estimated. For the purposes of impairment testing, a group of assets whose cash inflows are largely independent of those of other individual assets or groups of assets is the smallest identifiable group of assets. Goodwill acquired in a business combination is allocated to each cash-generating unit or group of cash-generating units that are expected to benefit from the benefits of the combination.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than it carrying amount, an impairment loss is recognized.

Impairment losses are recognized immediately in profit or loss for the current period, and firstly reduce the carrying amount of the cash-generating unit's apportioned goodwill, and then reduce the carrying amount of each asset in proportion to the carrying amount of other assets in the unit.

An impairment loss recognized for goodwill is not reversed in subsequent periods. Nonfinancial assets other than goodwill are reversed only to the extent that the asset's book value (less depreciation or amortization) would have been determined had no impairment loss been recognized in prior years.

(15) Provision

Provisions are recognized due to the current obligations from past events, resulting in that the Company will have high possibilities to flow out resources with economic benefits to pay off the obligation in the future, and the amount of the obligation can be reliably estimated.

The amount recognized as a liability provision is the best estimate of the expenditures required to settle the obligation at the end of the reporting period, considering the risks and uncertainties of the obligation. If the liability provision is measured by the estimated cash flows required to settle the present obligation, its book value is the present value of those cash flows.

(16) Revenue Recognition

Revenue is measured by the consideration to which goods or services are transferred and to which they are expected to be entitled. The Company recognizes revenue when performance obligations are satisfied.

Sale of Goods

The Company recognizes revenue when control of the product is transferred to the customer. Control of product is considered transferred when the product has been delivered to the customer, the customer can fully decide the sales channel and price of the product, and there is no unfulfilled obligation that will affect the customer's acceptance of the product. Delivery happened when the product is delivered to specific locations, and the risks of obsolete and loss is transferred to the customer, and when the customer has accepted the product according to sales contract, the terms of acceptance have expired, or the Company has the objective evidence supporting that all terms of acceptance are met.

The Company recognizes accounts receivable when the goods are delivered, because the Company has the unconditional right to receive the consideration at that point in time.

Financial Composition

The Company expects that the time interval between the time point of all customer contracts to transfer goods or services to the customer and the time point when the customer pays for the goods or services will not exceed one year. Therefore, the Company does not adjust the time value of money of the transaction price.

(17) Government Subsidy

The Company will comply with the conditions attached to the government grant and will recognize it only when the grant can be received.

(18) Employee Benefits
Defined contribution plan

Contribution obligations that are part of defined contribution pension plans are recognized as an expense during the period of service performed by the employee. Prepaid appropriations are recognized as an asset to the extent that they will result in a return of cash or a reduction in future payments.

Defined benefit plan
- The Company's net obligation to the defined benefit plan is calculated by converting the number of future benefits earned by the employee's service in the current or previous period into the present value and deducting the fair value of the plan assets. The defined benefit obligation is actuarial zed annually by a qualified actuary using the projected unit benefit method. When the calculation result is likely to be beneficial to the Company, the recognized asset is limited to the present value of any economic benefit that can be obtained in the form of returning the allocation from the plan or reducing future allocations to the plan. The calculation of the present value of economic benefits considers any minimum funding requirements. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. The Company determines the net interest expense (income) of the net defined benefit liability (asset) using the net defined benefit liability (asset) and discount rate determined at the beginning of the annual reporting period. Net interest expense and other expenses for defined benefit plans are recognized in profit or loss. Changes in benefits associated with prior service costs or curtailment benefits or losses arising from program modifications or curtailments are recognized immediately in profit or loss. The Company recognizes the liquidation profit and loss of the defined benefit plan when the liquidation occurs.
Short-term employee benefits
- Short-term employee benefit obligations are recognized as expenses when services are rendered. If the Company has a current statutory or constructive payment obligation due to the past service provided by the employee, and the obligation can be reliably estimated, the amount is recognized as a liability.
(19) Borrowing Cost

Borrowing costs directly attributable to the acquisition of an asset are included as part of the cost of the asset until substantially all activities necessary to bring the asset to its intended state for use or sale have been completed.

Aside from the aforementioned, all other borrowing costs are recognized as profit or loss within the year in which it occurred.

(20) Taxation

tax payable and tax refund receivable in previous years whose amount is the best estimate of the amount expected to be paid or received based on the statutory tax rate or substantive legislative tax rate on the reporting date.

Deferred income tax is recognized by measuring the temporary difference between the carrying amount of assets and liabilities at the financial reporting date and their tax base. Unused tax losses, unused income tax credits carried forward, and deductible temporary differences are recognized as deferred tax assets to the extent that future taxable income is likely to be available for use, and will be reevaluate at every reporting date where relevant income tax benefits will be adjusted to the extent that it is not likely to be realized, or reverse the original reduced amount within the scope that it is likely to have sufficient taxable income.

The Company only allows offsets of deferred tax asset and deferred tax liability when both conditions below are met:

Has the statutory enforcement power to offset current income tax assets and current income tax liabilities; and
Deferred tax asset and liabilities are related to one of the following taxpayers who are levied income tax by the same tax authority：
- (1) Same tax entity; or
- (2) Different tax entity, but each subject intends to settle current income tax liabilities and assets on a net basis, or realize assets and settlement simultaneously, in each future period in which significant amounts of deferred income tax assets are expected to be recovered and deferred income tax liabilities are expected to be settled.
(21) Earnings per share

The Company presents basic and diluted earnings per share attributable to equity holders of the Company's common stock. The Company's basic earnings per share is calculated by dividing the profit or loss attributable to the Company's common stockholders by the weighted average number of common shares outstanding in the current period. Diluted earnings per share is calculated by adjusting the profit and loss attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares outstanding, respectively, after adjusting the impact of all potential dilutive ordinary shares.

(22) Operating Segment Information

The Company has disclosed operating segment information in the consolidated financial statements, so the individual will not disclose department information.

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

The Company has considered the economic implications of COVID-19, Ukrainian-Russian conflict, and inflation on critical accounting estimates and the management will continue to review estimates and underlying assumptions, and changes in accounting estimates will be recognized in the period of change and in the affected future periods.

In preparing this separate financial report, management must make judgements, estimates and assumptions. It will affect the adoption of accounting policies and the reported amounts of assets, liabilities, income and expenses. The actual result may be different with estimations. For the uncertainty of assumptions and estimates, there are major risks that will cause major adjustments in the next year. The relevant information is as follows. Uncertainty in the following assumptions and estimates has a material risk of causing a material adjustment to the carrying amount of assets and liabilities in the next financial year and has already reflected the impact of the COVID-19 pandemic. See below:

(1) Allowance for Losses on Accounts Receivable

100

The allowance for loss of the Company's accounts receivable is estimated based on the assumptions of default risk and expected loss rate. The Company considers historical experience, current market conditions and forward-looking estimates on each reporting date to determine the assumptions to be used and the input values selected when calculating the impairment. Please refer to Note 6(4) for details on related assumptions and input value.

(2) Valuation of Inventory

Inventories are stated at the lower of cost or net realizable value, and the Company estimates the net realizable value of inventory for normal waste, obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is determined mainly based on assumptions of future demand within a specific time horizon, therefore major changes may occur due to rapid changes in the industry.

(3) Impairment of investment using equity method

When there is any indication of impairment that an investment using the equity method may have been impaired and the carrying amount cannot be recovered, the Company immediately assesses the impairment of the investment. The Company assesses the impairment based on the future cash flow forecast of the invested company, including the sales growth rate and capacity utilization rate estimated by the internal management of the invested company, and analyzes the rationality of the relevant assumptions.

(4) Impairment of Tangible Assets and Intangible Assets Other than Goodwill

In the process of evaluating the potential impairment of tangible assets and intangible assets other than goodwill, the Company determines the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of semiconductor industry. Any change in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years.

(5) Recognition and Valuation of Provisions

The provision for product warranty liabilities is estimated when the product sales revenue is recognized and is estimated based on the quantity of products that are still in the warranty repair period, the historical and expected repair rate of such products, and the estimated unit repair cost. The Company continues to review the estimation basis and revise it when appropriate. Any change in the above estimation basis may have a significant impact on the estimation of product warranty liability reserves.

(6) Realization of Deferred Income Tax Assets

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available for deductible temporary differences in the future. Assessment of the realization of the deferred tax assets requires subjective judgment and estimate, including the future revenue growth and profitability, tax holidays, the amount of tax credits can be utilized and feasible tax planning strategies. Any changes in the global economic environment, the industry trends and relevant laws and regulations could result in significant adjustments to the deferred tax assets.

(7) Measurement of Defined Benefit Obligations

The defined benefit costs and net defined benefit liabilities (assets) that should be recognized in the defined benefit retirement plan are actuarially evaluated using the projected unit benefit method, and the actuarial assumptions adopted include discount rate, employee turnover rate and future salary increase rate, etc. Changes in these assumptions due to changes in market and economic conditions may materially affect the amount of expenses and liabilities recognized. Please refer to Note 6 (17) for the description of the major actuarial assumptions and sensitivity analysis adopted by the actuarial.

101

6. ILLUSTRATION OF IMPORTANT ACCOUNTING ITEMS (1) Cash And Cash Equivalents

December 31, 2022 Cash $ 2,574 Deposits in banks 976,450 $ 979,024 (2) Financial Assets at Fair Value Through Profit or Loss Current: Mandatorily measured at FVTPL December 31, 2022 Domestic listed (counter) stocks $ 380,865 Adjustments (3,863) $ 377,002		December 31, 2021
		$ 2,509 627,461
		$ 629,970
		December 31, 2021 $ 165,131 7,286 $ 172,417

Non-Current: Mandatorily measured at FVTPL December 31, 2022 Foreign non-listed (counter) stocks $ 27 Adjustments (27) $ - 1. Profit and loss of financial assets measured at FVTPL Mandatorily measured at FVTPL 2022 Evaluation (loss) profit $ (11,149) Profit of disposal $ 2,095 Dividend income $ 16,926	December 31, 2021 $ 27 (27) - 2021 $ 7,073 $ - $ 1,437

The Company has not pledged financial assets at fair value through profit or loss.
Aforementioned equity instrument are held for trading purposes, so they are measured at fair value through profit or loss.
The Company invested FRF5,000 (around NT$27 thousand) in French agent AUTECH EUROPE in 1990, whose total capital is FRF100,000. In 1996, the value of the invested company had been reduced, and there was little hope of recovery, the total investment amount was transferred as a loss.

(3) Non-current Financial Assets at Fair Value Through Other Comprehensive Income

Measured at FVTOCI Domestic listed (counter) stocks Adjustments	December 31, 2022 $ 21,391 (10,933) $ 10,458	December 31, 2021
		$ 12,789 4,040
		$ 16,829

1.The Company holds theses equity instruments for long-term strategic investments, therefore designated the investments as measured at FVTOCI.
The Company disposed equity investments with fair value of NT$3,808 (in thousands) and NT$8,578(in thousands), respectively, in 2022 and 2021, with the accumulated disposal benefits of NT$1,125(in thousands) and NT$2,744 (in thousands) , respectively. The Company has transferred the accumulated disposal benefits from other interests to retained earnings.

102

Profit and loss of financial assets measured at FVTOCI:

Measured at FVTOCI Dividend income recognized as profit or loss Hold at the end of the period Delisted within the period Changes in fair value at other comprehensive income (loss) Accumulated interest transferred to retained earnings due to delisting	2022 $ 1,188 - $ 1,188 $ (13,848) $ 1,125	2021
		$ 287 -
		$ 287
		$ 5,303
		$ 2,744

The Company has not pledged financial assets at fair value through other comprehensive income.

(4) Notes and Accounts Receivable

Notes receivable Less: Loss allowance Net Accounts receivable Less: Loss allowance Net	December 31, 2022 $ 258,779 (4,683) $ 254,096 December 31, 2022 $ 421,595 (1,743) $ 419,852	December 31, 2021
		$ 174,697 (3,792)
		$ 170,905
		December 31, 2021
		$ 509,018 (22,546)
		$ 486,472

The payment term granted to customers is due 30 - 90 days from the invoice date, and the account receivable are not interest-bearing.

The Company adopts the simplified approach of IFRS 9 to recognize the allowance loss of accounts receivable based on the expected credit loss during the duration. The expected credit loss during the duration is calculated using the provision matrix, which considers the customer's past default record, current financial situation, and industrial economic situation. As the Company's historical credit loss experience shows that there is no significant difference in the loss patterns of different customer groups, the provision matrix does not further distinguish customer groups, and only determines the expected credit loss rate based on the number of days overdue of accounts receivable.

If there is evidence that the counterparty is facing serious financial difficulties and the Company cannot reasonably expect the recoverable amount, the Company will write off the relevant accounts receivable directly, but will continue to pursue, and the recovered amount due to the pursuit activities will be recognized in profit or loss.

103

The Company measures loss allowance for notes and accounts receivable according to below provision matrix:

below provision matrix:
Not past due Past due within 30 days Past due within 31- 180 days Past due within 181-365 days Past due more than a year Total Not past due Past due within 30 days Past due within 31- 180 days Past due within 181-365 days Past due more than a year Total		December 31, 2022
	Total book value $ 659,895 12,226 7,863 116 274 $ 680,374	Loss allowance (expected credit loss in the duration) $ (5,863) (245) (194) (34) (90) $ (6,426) December 31, 2021	Cost after amortization
			$ 654,032 11,981 7,669 82 184 $ 673,948

	Total book value $ 618,882 6,627 8,102 38,779 11,325 $ 683,715	Loss allowance (expected credit loss in the duration) $ (5,867) (181) (181) (11,447) (8,662) $ (26,338)	Cost after amortization
			$ 613,015 6,446 7,921 27,332 2,663
			$ 657,377

The Company’s expected credit loss rate for abovementioned intervals (excluding abnormal payments whose loss are rated 100%) are: not past due and past due within 90 days is within 1%, past due within 365 days is within 5%, and past due more than 365 days will be 5% - 80%.

Movements of loss allowance for notes and account receivables:

Balance, beginning of year Provision (Reversal) Write off Balance, end of year	2022 $ 26,338 891 (20,803) $ 6,426	2021
		$ 12,109 14,454 (225)
		$ 26,338

104

(5) Inventories

December 31, 2022 Products $ 6,264 Raw materials 289,213 Work in process 661,340 Finished goods 64,462 $ 1,021,279 1. Expenses related to inventories within the year 2022 Cost of goods sold $ 1,770,139 Inventory depreciation and obsolete loss 26,215 Inventory scrap 2,352 Inventory loss 2,554 Income from sale of scrap (1,205) Costs related to idle capacity 25,501 $ 1,825,556	December 31, 2021
	$ 1,093 220,774 621,682 134,208
	$ 977,757
	2021
	$ 2,024,435 23,364 6,533 1,664 (1,175) 23,163
	$ 2,077,984

2. The Company has not pledged inventories on December 31, 2022 and 2021. (6) Investments Accounted for Using Equity Method

Subsidiaries Associates 1. Investments in subsidiaries Subsidiaries consisted of the following: Subsidiaries Principal Activities Place of Incorporation and Operation B-Way (Cayman) Co.,Ltd. Foreign investments and international business Cayman Islands Yih Chuan Machinery Industry Co., Ltd. Manufacturing and sales of machinery and equipment and tools Taiwan		December 31, 2022 $ 892,166 109,850 $ 1,002 016 Carrying amount	December 31, 2021 $ 940,748 96,604 $ 1,037,352 Percentage of ownership	December 31, 2021 $ 940,748 96,604 $ 1,037,352 Percentage of ownership



	December 31, 2022	December 31, 2021	December 31, 2022	December 31, 2021
B-Way (Cayman) Co.,Ltd. Yih Chuan Machinery Industry Co., Ltd.	$ 718,246 173,920	$ 761,213 179,535	100.00% 60.00%	100.00% 60.00%
	$ 892,166	$ 940,748

105

(1) The Company invested $1,700 thousand USD in B-Way (Cayman) Co., Ltd. through the resolution of the Board of Directors on August 8, 2002, and indirectly invested through B-Way (Cayman) Co., Ltd. to Dawea Mechantronic (Suzhou) Ltd. and Shanghai Zhuwei Mechantronic Co., Ltd. in mainland China, engaging in the operation of parts and accessories of machine tools, sales and installation of mechanical appliances, and international trade.
(2) The Company invested $8,000 thousand USD in B-Way (Cayman) Co., Ltd. through the resolution of the Board of Directors on May 4, 2007, and indirectly invested through B-Way (Cayman) Co., Ltd. to Awea Mechantronic (Suzhou) Ltd., engaging in the operation of parts and accessories of machine tools, sales and installation of mechanical appliances, and international trade.
(3) The Company invested NT$192,570 thousand in Yih Chuan Machinery Industry Co., Ltd. through the resolution of the Board of Directors on September 23, 2013 and invested NT$72,022 thousand again on September 8, 2015. As of December 31, 2021, the Company holds 60% of its shares, engaging in manufacturing, processing, and trading of various machine tools and mechanical parts, and casting of various mechanical parts.
(4) With the resolution of Board of Directors on August 2, 2018, Dawea Mechantronic (Suzhou) Ltd. was merged into Awea Mechantronic (Suzhou) Ltd., and the merger is completed on September 8, 2020.
(5) The Company's portion of profit and loss and other comprehensive income and loss of subsidiaries that adopted the equity method in 2022 and 2021 were recognized based on the financial reports of the subsidiaries audited by accountants during the same period.
Investments in associates

Associates consisted of the following:

Carrying amount December 31, 2022 December 31, 2021 $ 101,849 $ 89,149 8,001 7,455 $ 109,850 $ 96,604	% of Ownership and Voting Rights Held by the Company	% of Ownership and Voting Rights Held by the Company
December 31, 2022	December 31, 2022	December 31, 2021
$ 101,849 8,001	28.58% 13.33%	28.58% 13.33%
$ 109,850

(1) The Company invested $1,700 thousand USD in YAMA SEIKI USA, INC. through the resolution of the Board of Directors on December 23, 2010, engaging in the operation of parts and accessories of machine tools, sales and installation of mechanical appliances, and international trade.

106

(2) The Company invested NT$7,333 thousand in Huahan Leasing Co., Ltd. through the resolution of the Board of Directors on August 2021, engaging in machinery rental business.
(3) The Company's portion of profit and loss and other comprehensive income and loss of associates subsidiaries that adopted the equity method in 2022 and 2021 were recognized based on the financial reports of the associates audited by accountants during the same period.

(7) Property, plant and equipment

Self-owned land Buildings Machinery equipment Tooling equipment Transportation Equipment Computer communication equipment Business equipment Lease Improvement Other equipment Equipment to be checked and construction in progress January 1, 2022 Additions Cost Self-owned land $ 536,761 $ - Buildings 1,162,434 - Machinery equipment 229,623 1,844 Tooling equipment 47,223 3,560 Transportation Equipment 51,886 5,363 Computer communication equipment 4,435 6,961 Business equipment 17,802 1,010 Lease Improvement 749 - Other equipment 24,660 273 Equipment to be checked and construction in progress 8,346 60 $ 2,083,919 $ 19,071	December 31, 2022 December 31, 2021 $ 536,761 $ 536,761 741,443 776,201 74,600 87,411 5,398 4,667 12,269 11,473 6,527 355 5,988 8,281 - 21 4,009 6,234 8,406 8,346 $ 1,395,401 $ 1,439,750 Disposals Reclassification s December 31, 2022 $ - $ - $ 536,761 - - 1,162,434 (10,099) - 221,368 (412) - 50,371 (612) - 56,637 (74) - 11,322 - - 18,812 - - 749 (876) - 24,057 - - 8,406 $ (12,073) $ - $ 2,090,917	December 31, 2021	December 31, 2021
		$	536,761 776,201 87,411 4,667 11,473 355 8,281 21 6,234 8,346
		$	1,439,750
	Disposals $ - - (10,099) (412) (612) (74) - - (876) - $ (12,073)		December 31, 2022
$ - - 1,844 3,560 5,363 6,961 1,010 - 273 60			$ 536,761 1,162,434 221,368 50,371 56,637 11,322 18,812 749 24,057 8,406
$ 19,071			$ 2,090,917

107

Accumulated depreciation Buildings Machinery equipment Tooling equipment Transportation Equipment Computer communication equipment Business equipment Lease Improvement Other equipment Net Cost Self-owned land Buildings Machinery equipment Tooling equipment Transportation Equipment Computer communication equipment Business equipment Lease Improvement Other equipment Equipment to be checked and construction in progress	January 1, 2022 $ 386,233 142,212 42,556 40,413 4,080 9,521 728 18,426 $ 644,169 $ 1,439,750 January 1, 2021 $ 536,761 1,162,434 228,990 44,132 50,984 4,530 17,707 749 24,347 6,014 $ 2,076,648	Depreciation $ 34,758 12,439 2,829 4,512 789 3,303 21 2,256 $ 60,907 Additions $ - - 633 3,091 4,588 - 95 - 313 2,332 $ 11,052	Disposals $ - (7,883) (412) (557) (74) - - (634) $ (9,560) Disposals $ - - - - (3,686) (95) - - - - $ (3,781)	Reclassifications $ - - - - - - - - $ - Reclassifications $ - - - - - - - - - - $ -	December 31, 2022 $ 420,991 146,768 44,973 44,368 4,795 12,824 749 20,048 $ 695,516 $ 1,395,401 December 31, 2021 $ 536,761 1,162,434 229,623 47,223 51,886 4,435 17,802 749 24,660 8,346 $ 2,083,919

108

Accumulated depreciation Buildings Machinery equipment Tooling equipment Transportation Equipment Computer communication equipment Business equipment Lease Improvement Other equipment Net	January 1, 2021 $ 350,517 127,580 37,646 38,758 3,372 5,763 670 16,110 $ 580,416 $ 1,496,232	Depreciation $ 35,716 14,632 4,910 5,341 803 3,758 58 2,316 $ 67,534	Disposals $ - - - (3,686) (95) - - - $ (3,781)	Reclassifications $ - - - - - - - - $ -	December 31, 2021
					$ 386,233 142,212 42,556 40,413 4,080 9,521 728 18,426
					$ 644,169
					$ 1,439,750

Please refer to Note 8 for property, plant and equipment pledged for borrowing.
On December 31, 2022 and 2021, the Company's land was partly agricultural land, and the amount temporarily registered in the name of another person was NT$88,529 thousand. The Company has obtained a certificate of other rights for the land.

(8) Lease Arrangement

Right-of-use assets

Land Buildings January 1, 2022 Cost Land $ 48,848 Buildings 5,334 $ 54,182	Additions		December 31, 2022 December 31, 2021 $ 10,044 $ 19,485 2,232 4,595 $ 12,276 $ 24,080 Disposals Others December 31, 2022 $ - $ - $ 49,451 (1,635) - 4,393 $ (1,635) $ - $ 53,844


			Disposals $ - (1,635) $ (1,635)
	$ 603 694
	$ 1,297

109

	Disposals Others December 31, 2022 - $ - $ 39,407 - - 2,161 - $ - $ 41,568 $ 12,276 Disposals Others December 31, 2021 - $ - $ 48,848 (5,420) - 5,334 (5,420) $ - $ 54,182 Disposals Others December 31, 2021 - $ - $ 29,363 (5,420) - 739 (5,420) $ - $ 30,102 $ 24,080 December31,2022 December31,2021 $ 11,420 $ 11,606 918 12,764 $ 12,338 $ 24,370	December 31, 2022
$		$ 39,407 2,161
$		$ 41,568
		$ 12,276
		December 31, 2021
$		$ 48,848 5,334
$		$ 54,182
		December 31, 2021
$		$ 29,363 739
$		$ 30,102
		$ 24,080
	$ 11,606 12,764
	$ 24,370

The Company leases many assets with lease terms of 3 to 10 years. The Company does not have purchase options to acquire the assets at the end of the lease terms.

Other lease information

4. Other lease information
2022 Expenses relating to short-term and low-value assets leases $ 681 Total cash outflow for leases $ 11,410 (9) Intangible Assets December 31, 2022 Software $ 6,794	2022	2021 $ 836 $ 11,654 December 31, 2021
	$ 681
	$ 11,410
		$ 7,909

110

Cost	January 1, 2022 Additions		Disposals		Reclassificatio n	Reclassificatio n	December 31, 2022
Software	$ 15,756 $ 800	$		-	$	-	$ 16,556
Accumulated amortization	January 1, 2022 Amortization in this year		Disposals		Reclassificatio n		December 31, 2022
Software	$ 7,847 $ 1,915	$		-	$	-	$ 9,762
Net	$ 7,909						$ 6,794
Cost	January 1, 2021 Additions		Disposals		Reclassificatio n		December 31, 2021
Software	$ 11,490 $ 4,314	$	(48)		$	-	$ 15,756
Accumulated amortization	January 1, 2021 Amortization in this year		Disposals		Reclassificatio n		December 31, 2021
Software	$ 6,536 $ 1,311	$	-		$	-	$ 7,847
Net	$ 4,954						$ 7,909
(10)	Net Overdue Receivables
			December	31, 2022		December 31, 2021
	Overdue receivables		$		9,732	$	19,424
	Less: Allowance for uncollectible accounts				(9,732)		(19,424)
			$		-	$	-
(11) Other current financial assets
			December	31, 2022		December 31, 2021
	Repatriated Offshore Funds		$		353,397	$	317,381
	Restricted assets – bank deposits				187,946		-
			$		541,343	$	317,381
	The repatriated offshore funds of the	Group approved by National Taxation Bureau,
	Ministry of Finance according to Regulations Governing the					Management Repatriated
	Offshore Funds will be submitting an investment plan to the Ministry of Economic
	Affairs within one year of the day when the funds			are deposited into			the designated
	foreign exchange deposit account in accordance with				Article	8 of the	regulation. The
	investment plan was approved by approval letter no.				111020433960 on		September 23,
	2021.

(12) Short-Term Loans

ort-Term Loans
Secured loans Credit loans Interest interval	December 31, 2022 $ 435,000 1,445,000 $ 1,880,000 1.3123%~1.9500%	December 31, 2021
		$ 265,000 1,025,000
		$ 1,290,000
		0.5451%~0.8508%

Please refer to Note 8 for guarantees.

111

(13) Short-term Notes Payable

Short-term notes payable Less: Discounts on notes payable Interest interval (14) Other Payables Other expenses payable Employee compensation payable Compensation due to directors and supervisors Dividends payable Payable on equipment and projects (15) Current provisions Warranty Employee benefits January 1, 2022 Warranty $ 4,355 Employee benefits 6,885 $ 11,240 January 1, 2021 Warranty $ 7,927 Employee benefits 14,503 $ 22,430	December 31, 2022 December 31, 2021 $ 290,000 $ 260,000 (359) (93) $ 289,641 $ 259,907 1.30%~1.78% 0.60%~0.63% December 31, 2022 December 31, 2021 $ 69,729 $ 93,195 16,000 12,000 1,800 1,800 491 491 1,086 2,312 $ 89,106 $ 109,798 December 31, 2022 December 31, 2021 $ 5,272 $ 4,355 5,783 6,885 $ 11,055 $ 11,240 Additions Reversals December 31, 2022 $ 917 $ - $ 5,272 - (1,102) 5,783 $ 917 $ (1,102) $ 11,055 Additions Reversals December 31, 2021 $ - $ (3,572) $ 4,355 - (7,618) 6,885 $ - $ (11,190) $ 11,240	December 31, 2021	December 31, 2021
		$ 260,000 (93)
		$ 259,907
		0.60%~0.63%
		December 31, 2021
		$ 93,195 12,000 1,800 491 2,312
		$ 109,798
		December 31, 2021
		$	4,355 6,885
		$	11,240
			December 31, 2022 $ 5,272 5,783 $ 11,055 December 31, 2021 $ 4,355 6,885 $ 11,240

The provision for warranty is based on the sales contract, and the management of the Company makes the best estimate based on the historical experience of the product.

112

Provision for employee benefit refers to the Company's current legal or constructive payment obligations due to past service provided by employees, and when the obligations can be reliably estimated, the amount is recognized as liabilities.

(16) Long-term Loans

ng-term Loans
Nature of loan Secured loans Less: due within a year Total Interest interval	Year due 2029	December 31, 2022 $ - - $ - -	December 31, 2021
			$ 2,206 -
			$ 2,206
			0.3800%

(17) Employee Benefits

1. Defined benefit plans

The Company has defined benefit plans under the R.O.C. Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The Company contributes an amount equal to 2% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. Before the end of each year, the Company assesses the balance in the Funds. The Funds are operated and managed by the government’s designated authorities; as such, the Company does not have any right to intervene in the investments of the Funds.

The present value of defined benefit obligation is is calculated by a qualified actuary. The main assumptions of the actuarial on the measurement date are listed below:

(1) Assumptions of the actuarial on the measurement date:

Discount rate Expected salary adjustment rate	December 31,2022 1.400% 2.500%	December 31,2021
		0.750% 2.500%

(2) The amount of pension expenses recognized in the individual comprehensive income statement for the defined benefit plan is listed as follows:

Current service cost Net interest expense Interest income from plan assets Recognized in profit or loss Remeasurement Actuarial loss arising from experience adjustments Actuarial loss arising from changes in demographic assumptions Actuarial gain arising from changes in financial assumptions Return on plan assets Recognized in other comprehensive income	2022 $ 235 273 (180) 328 743 - (1,858) (2,181) (3,296)	2021
		$ 288 147 (106)
		329
		1,002 1,974 (1,517) (424)
		1,035

113

Total	$	(2,968)	$	1,364
The pension costs of the aforementioned defined benefit plans were recognized in
profit or loss by the following categories:
		2022	2021
Cost of revenue	$	624	$	654
Marketing expenses		71		93
General and administrative		62		87
expenses
Research and development		70		72
expenses
Others		(499)		(577)
	$	328	$	329
(3) The amounts arising from the defined benefit obligation			of the Company were
recognized in the individual balance sheets by the following categories:
	December 31, 2022		December 31, 2021
Present value of defined benefit obligation	$	28,824	$	36,351
Fair value of plan assets		(19,833)	(23,557)
Net defined benefit liability	$	8,991	$	12,794
(4) Movements in the present value	of the defined benefit obligation			were as
follows:
		2022	2021
Balance, beginning of year	$	36,351	$	43,218
Current service cost		235		288
Interest expense, net		273		147
Remeasurement:
Actuarial loss arising from experience adjustments		743		1,002
Actuarial loss arising from
changes in demographic		-		1,974
assumptions
Actuarial gain arising from
changes in financial		(1,858)	(1,517)
assumptions
Benefits paid from plan assets		(6,920)	(8,761)
Balance, end of year	$	28,824	$	36,351

114

(5) Movements in the fair value of the plan assets were as follows:

Balance, beginning of year Interest income Remeasurement: Return on plan assets Contributions from employer Benefits paid from plan assets Balance, end of year	2022 $ 23,557 180 2,181 835 (6,920) $ 19,833	2021
		$ 30,881 106 424 907 (8,761)
		$ 23,557

The Company expected to allocate NT$835 thousand within a year after December 31, 2022.

Defined contribution plans

The plan under the R.O.C. Labor Pension Act (the “Act”) is deemed a defined contribution plan. Pursuant to the Act, the Company has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts. Accordingly, the Company recognized expenses of NT$12,495 thousand and NT$11,820 thousand for the years ended December 31, 2022 and 2021, respectively.

(18) Capital Stock

On December 31, 2022, the authorized common stock capital is NT$1,000,000 thousand, the paid-in capital is NT$965,942 thousand, with a par value of NT$10 per share, divided into 96,594,171 shares.

(19) Capital Surplus

According to the provisions of the Company Law, the capital surplus shall not be used except for making up for the Company's losses and appropriating capital. If the Company does not use the surplus reserve to make up for capital losses and if there is still a deficiency, it may not use the capital reserve to make up for it.
In accordance with the provisions of the Company Law, the premium obtained from the issuance of stocks exceeding the par value and the capital surplus obtained from the receipt of gifts may be used to make up for losses. Replenishment of capital is limited to a certain percentage of paid-in capital every year. In addition, changes in ownership interests in subsidiaries are recognized to offset losses

(20) Retained Earnings

The statutory surplus reserve shall be appropriated until its total amount reaches the total paid-in capital. The legal capital reserve may be used to offset a deficit or be distributed as dividends in cash or stocks for the portion more than 25% of the paid-in capital if the Company incurs no loss.

If there is a subsequent reversal of the balance of the deduction of other shareholders' equity, the surplus may be distributed based on the reversal. According to the Company's Articles of Incorporation, the Company's net profit after the annual final accounts, in addition to paying taxes and making up for previous years' losses according to law, should

115

set aside 10% as a legal reserve and a special reserve according to law, then adding the undistributed earnings of the previous year to its balance and retaining part of the balance for the funds needed for enterprise growth, the Board of Directors will draw up a earning distribution proposal and submit it to the shareholders' meeting for resolution on distribution.

The Company's shareholders' regular meeting passed resolutions of earning distribution plans on June 15, 2022 and August 18, 2021, respectively, as follows:

		Earning distribution plan	Cash dividends per share (NT$)	Cash dividends per share (NT$)
		2021 2020	2021	2020
Legal reserve	$	13,278 $ 38,245
Distribution:
Capital surplus		28,979 48,297 $	0.3 $	0.5
Cash dividends		115,913 193,188	1.2	2.0
Aforementioned earning		distribution is no different from the board resolutions of the
Company on March 15, 2022 and March 17, 2021.
For the distribution of	profits proposed by the Board of Directors and resolutions of the
shareholders' meeting,	please visit the "Market Observation Post System"			of Taiwan
Stock Exchange.
The appropriations of	2022 yearly earnings approved by the Company’s			Board of
Directors’ resolution on March 13, 2023 is as below:
		Earning distribution	Cash dividends per
		plan	share (NT$)
		2022	2022
Legal reserve		$ 35,790
Distribution:
Cash dividends		154,551	$	1.6

Aforementioned earning distribution is no different from the board resolutions of the Company on March 15, 2022 and March 17, 2021.

For the distribution of profits proposed by the Board of Directors and resolutions of the shareholders' meeting, please visit the "Market Observation Post System" of Taiwan Stock Exchange.

The appropriations of 2022 yearly earnings approved by the Company’s Board of Directors’ resolution on March 13, 2023 is as below:

The earning distribution plan of 2022 is still waiting for shareholders’ meeting resolution expected on June 7, 2023.

(21) Others

The exchange difference in the translation adjustment of foreign operations’ financial statements refers to the relevant exchange differences arising from the translation of the functional currency to the Company’s expression currency (i.e., New Taiwan Dollars) of foreign operations’ net assets, and is listed directly under other comprehensive income. The other comprehensive income recognized in the year ended December 31, 2022 and 2021 are NT$17,410 thousand and NT$20,129 thousand, respectively.

(22) Operating Income

ating Income
Total operating income Less: sales returns and discounts Sale of product Maintenance and other income	2022 $ 2,292,233 (8,575) $ 2,283,658 2022 $ 1,953,731 329,927 $ 2,283,658	2021
		$ 2,501,492 (9,062)
		$ 2,492,430
		2021
		$ 2,156,224 336,206
		$ 2,492,430

1.Revenue breakdown

(1) The Company's revenue of the contract is derived from the provision of goods and services transferred at a certain point in time.

(2)Major sales market by geography:

116

		2022		2021
Domestic	$	805,834	$	941,859
Foreign
Asia		677,126		883,498
America		375,904		272,173
Europe		419,212		387,472
Other countries		5,582		7,428
	$	2,283,658	$	2,492,430

Contract balance
(1) The changes in the contract liability balances primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment.

Contract liabilities (2) Revenue of the year from the Sales revenue (23) Other Income Rental income Dividend income Other income (24) Other Gain or Loss Foreign exchange gain (loss) Net gain or loss on disposals of property, plant and equipment Proceeds from disposal of financial assets Net (loss) gain on financial instruments at FVTPL Others (25) Finance Cost Interest expense from bank loans Interest expense from lease liabilities	December 31, 2022 December 31, 2021 $ 73,324 $ 97,752 beginning balance of contract liability: 2022 2021 $ 94,597 $ 65,967 2022 2021 $ 3,121 $ 3,245 18,114 1,724 10,138 24,803 $ 31,373 $ 29,772 2022 2021 $ 113,941 $ (38,314) (241) 1,190 2,095 - (11,149) 7,073 (565) (48) $ 104,081 $ (30,099) 2022 2021 $ 19,729 $ 9,388 168 255 $ 19,897 $ 9,643	December 31, 2022 December 31, 2021 $ 73,324 $ 97,752 beginning balance of contract liability: 2022 2021 $ 94,597 $ 65,967 2022 2021 $ 3,121 $ 3,245 18,114 1,724 10,138 24,803 $ 31,373 $ 29,772 2022 2021 $ 113,941 $ (38,314) (241) 1,190 2,095 - (11,149) 7,073 (565) (48) $ 104,081 $ (30,099) 2022 2021 $ 19,729 $ 9,388 168 255 $ 19,897 $ 9,643
		$ (38,314) 1,190 - 7,073 (48)
		$ (30,099)
		2021 $ 9,388 255 $ 9,643

117

(26) Employee Benefits, Depreciation and Amortization Expense

	2022
Recognized in cost of revenue $ 179,735 18,202 8,305 - 7,317 59,728 297	Recognized in operating expenses $ 114,647 11,352 5,018 2,440 3,297 12,645 1,618 2021	Total
		$ 294,382 29,554 13,323 2,440 10,614 72,373 1,915
Recognized in cost of revenue $ 181,795 17,164 7,630 - 7,234 66,436 25	Recognized in operating expenses $ 92,769 10,745 4,520 3,715 3,250 12,749 1,286	Total
		$ 274,564 27,909 12,150 3,715 10,484 79,185 1,311

On December 31, 2022 and 2021, the Company has 423 and 450 employees, respectively, and 5 of which are non- part-time employee directors.

According to the Company’s Articles of Incorporation, the Company shall allocate profit sharing of no less than 3% - 8% to employees and no more than 2% to directors. The Company's subordinate employees who meet certain conditions may be allocated the above-mentioned employee remuneration, and the conditions and methods shall be determined by the Board of Directors. However, if the Company still has accumulated losses, it shall reserve the compensation amount in advance.

The Company estimated employee remuneration at NT$16,000 thousand and directors and supervisors' remuneration at NT$1,800 thousand for the year ended December 31, 2022. The basis of the estimation is based on the experience of actual distribution, considering the net profit of the current period and the ratio stipulated in Company’s Articles of Incorporation, and recognized as the operating cost or operating expenses of the year. If there is a discrepancy between the actual distribution amount and the estimated amount in the next year, it shall be treated as a change in accounting estimate, and the difference shall be recognized as profit or loss for the next year. Related information can be found on Market Observation Post System.

The Company recognized employee remuneration at NT$12,000 thousand and directors

118

and supervisors' remuneration at NT$1,800 thousand for the year ended December 31, 2021. Related information can be found on Market Observation Post System. Actual amount distributed is no different from the estimation.

In the year ended December 31, 2022 and 2021, the average employee benefits expense of the Company are NT$832 thousand and NT$731 thousand, respectively.

In the year ended December 31, 2022 and 2021, the average employee salary expense of the Company are NT$704 thousand and NT$617 thousand, respectively.

In the year ended December 31, 2022, the average salary expense adjustment of the Company is 14.1%.

The Company’s salary policies (including directors, supervisors, managers, and employees) are as below:

Directors’ compensation
The Company's general directors and independent directors' compensation policy is determined according to their responsibilities, risks, invested time and other factors. According to the Company’s Articles of Incorporation, the compensation of the chairman, vice chairman and directors of the Company shall be determined by the Board of Directors according to the degree of participation in the operation of the Company and the value of their contribution, as well as the average level of domestic and foreign industries. The Company’s Articles of Incorporation also stipulate that directors' compensation shall not exceed 2% of the annual profit.
Compensation to the supervisors

The Company replaced supervisor system with the audit committee since June 2020.

Compensation to the managers
Compensation to the managers is determined by the position, contribution, company’s operation performance of the Company of the year, and considers future risk. It is reviewed by Compensation Committee and sent to Board of Directors for resolution.
Compensation to the employees
Compensation to the employees includes monthly payment and unscheduled performance bonus, year-end bonus, and employee compensation based on the Company’s profitability. The Company’s Articles of Incorporation stipulate that employees’ compensation should be no less than 3% - 8% of annual profit.
The competitive compensation to the employees of subsidiaries (oversea) is determined not only according to local labor market, but also distribute annual bonus according to local regulations, industry practice, and each subsidiary’s performance as a whole, to encourage employee’s contribution and their growth with the Company.

(27) Income Tax

Income tax expense

Income tax expense of the year ended December 31, 2022 and 2021 consisted of the following:

wing:
Current income tax expense: Recognized in the current year Adjustments on prior years Deferred income tax expense: The origination and reversal of temporary differences Income tax expense	2022 $ 48,783 735 36,196 $ 85,714	2021
		$ 25,838 5,933 19,098
		$ 50,869

119

(1) Income tax expense recognized in profit or loss of the year ended December 31, 2022 and 2021 was as follows:

2022 and 2021 was as follows:
		2022		2021
Income before tax	$	439,856	$	181,729
Income tax expense at the statutory rate	$	87,971	$	36,346
Tax effect of adjusting items:
Non-included items in determining taxable income		(22,441)		(6,626)
Tax-exempt income		(16,747)		(11,618)
Income tax on repatriation of overseas surplus		-		7,736
Adjustments on prior years		735		5,933
Net change in deferred income tax
Temporary differences		36,196		19,098
Income tax expense recognized in profit or loss	$	85,714	$	50,869
(2) Income tax expense recognized in other	comprehensive		income	and loss of the
year ended December 31, 2022 and 2021 was		as follows:
		2022		2021
Items are not reclassified to profit or
loss subsequently
Remeasurement of defined benefit plan	$	659	$	(207)
Items may be reclassified to profit or
loss subsequently
Exchange difference on translation
of financial statements of foreign	$	4,353	$	5,033
operations

120

2. The analysis of deferred income tax assets and liabilities was as follows:

Deferred income tax assets

Deferred income tax assets	Deferred income tax assets	me tax assets	me tax assets
December 31, 2022 December 31, 2021 Allowance for bad debts exceeded $ 1,952 $ 7,989 Unrealized exchange losses (21,495) 8,536 Unrealized loss on inventories 63,192 57,949 Unrealized sales profit 5,765 4,784 Unrealized no vacation bonus 1,157 1,377 Unrealized warranty expense 1,054 871 Pension exceeded and actuarial loss 1,785 2,544 Exchange difference on translation of financial statements of foreign operations 734 4,669 Investment offset - resource poor areas - 14,250 Others 70 80 $ 54,214 $ 103,049 Deferred income tax liabilities December 31, 2022 December 31, 2021 Subsidiaries, associates and joint venture profit and loss share $ 99,315 $ 107,360 $ 99,315 $ 107,360 Year ended December 31, 2022 Balance, beginning of the year Recognized in profit or loss Recognized in other comprehensive income Balance, end of the year Temporary differences Allowance for bad debts exceeded $ 7,989 $ (6,037) $ - $ 1,952 Unrealized exchange losses 8,536 (30,031) - (21,495) Unrealized loss on inventories 57,949 5,243 - 63,192 Unrealized sales profit 4,784 981 - 5,765 Unrealized no vacation bonus 1,377 (220) - 1,157 Unrealized warranty expense 871 183 - 1,054 Pension exceeded and actuarial loss 2,544 (100) (659) 1,785	December 31, 2022 December 31, 2021 $ 1,952 $ 7,989 (21,495) 8,536 63,192 57,949 5,765 4,784 1,157 1,377 1,054 871 1,785 2,544 734 4,669 - 14,250 70 80 $ 54,214 $ 103,049 Deferred income tax liabilities	December 31, 2021
		$ 7,989 8,536 57,949 4,784 1,377 871 2,544 4,669 14,250 80
		$ 103,049
		December 31, 2021
		$	107,360
		$	107,360
			Balance, end of the year $ 1,952 (21,495) 63,192 5,765 1,157 1,054 1,785

121

Exchange difference on translation of financial statements of foreign operations Investment offset - resource poor areas Others Total deferred income tax assets Subsidiaries, associates and joint venture profit and loss share Total deferred income tax liabilities Year ended December 31, 2021 Temporary differences Allowance for bad debts exceeded Unrealized exchange losses Unrealized loss on inventories Unrealized sales profit Unrealized no vacation bonus Unrealized warranty expense Pension exceeded and actuarial loss Exchange difference on translation of financial statements of foreign operations Investment offset - resource poor areas Research and development investment offset Others Total deferred income tax assets Subsidiaries, associates and joint venture profit and loss share Adjustments to actuarial reports Total deferred income tax liabilities	4,669 14,250 80 $ 103,049 $ 107,360 $ 107,360 Balance, beginning of the year $ 5,773 7,208 53,277 5,485 2,901 1,585 2,477 9,902 21,761 3,935 91 $ 114,395 $ 94,557 24 $ 94,581	(14,250) (10) $ (44,241) $ (8,045) (8,045) Recognized in profit or loss $ 2,216 1,328 4,672 (701) (1,524) (714) (116) - (7,511) (3,935) (11) $ (6,296) $ 12,803 - $ 12,803	(3,935) - - $ (4,594) $ - $ - Recognized in other comprehensiv e income $ - - - - - - 183 (5,233) - - - $ (5,050) $ - (24) $ (24)	734 - 70
				$ 54,214
				$ 99,315
				$ 99,315
				Balance, end of the year
				$ 7,989 8,536 57,949 4,784 1,377 871 2,544 4,669 14,250 - 80
				$ 103,049
				$ 107,360 -
				$ 107,360

Investment offset related information:
The Company chooses to apply Article 10-1.1 of the Statute for Industrial Innovation for investment credits in research and development expenses and offsets current year income tax payable within the limit of 15% of the amount of research and development expenses declared in the current year that comply with the relevant regulations.

The Company chooses to apply investment credits related to company or limited partnership investment in smart machines, 5th-generation mobile networks, and cyber security products and offset current year income tax payable within 5% of the expenditure amount of cyber security products declared.

On December 31, 2022, according to the Statute for Upgrading Industries, estimated tax amount that can be deducted from income tax of the Company has been fully deducted this year.
The Company's income tax settlement declaration as of 2019 has been approved by the competent taxation agency.

122

(28) Earnings Per Share

Year ended	December 31, 2022	December 31, 2022	December 31, 2022
Amount Before tax After tax $ 439,857 $ 354,143 $ 439,857 $ 354,143 Year ended	Weighted averaged EPS (in NT dollars) number of shares outstanding (thousand shares) Before tax After tax 96,594 $ 4.55 $ 3.67 516 97,110 $ 4.53 $ 3.65 December 31, 2021	EPS (in NT dollars)
Before tax $ 439,857 $ 439,857		Before tax	After tax
		$ 4.55	$ 3.67
		$ 4.53	$ 3.65

Amount Before tax After tax $ 181,729 $ 130,860 $ 181,729 $ 130,860	Weighted averaged number of shares outstanding (thousand shares) 96,594 361 96,955	EPS (in NT dollars)
Before tax $ 181,729 $ 181,729		Before tax $ 1.88 $ 1.87	After tax
			$ 1.35
			$ 1.35

If the Company can choose to distribute compensate to employees with stock or cash, when calculating diluted EPS, employee compensation in the form of stock will be calculating diluted EPS with the weighted average number of outstanding shares that includes the potential common stocks when they have a dilutive effect. When calculating diluted EPS, the net value of the potential common stock on the balance sheet date is used as the basis for judging the number of issued shares. When calculating the diluted EPS before the next year's shareholders' meeting resolution on the number of shares issued for employee compensation, the dilution effect of these previous ordinary shares should continue to be considered.

(29) Capital Management

In consideration of the industry dynamics, the future development of the Company, and the environmental changes, the Company manages its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs and dividend payments to maintain its existing operations and give back to shareholders while taking into account the interests of other stakeholders, and maintain an optimal capital structure to shareholder value in the long run.

123

The management of the Company regularly reviews the capital structure and considers the possible costs and risks involved. In general, the Company adopts a prudent risk management strategy.

(30) Additional Cash Flow Information

Investment activities with only partial cash payments:

ditional Cash Flow Information vestment activities with only partial cash	payments:
Additions of property, plant and equipment Add: Payable on equipment, beginning of the year Less: Payable on equipment, end of the year Cash paid in the year	2022 $ 19,071 2,312 (1,086) $ 20,297	2021
		$ 11,052 115 (2,312)
		$ 8,855

7. RELATED PARTY TRANSACTIONS

a. Related party name and Relationship

ELATED PARTY TRANSACTIONS Related party name and Relationship
Related Party Name Goodway Machine Corp. Awea Mechantronic (Suzhou) Ltd. Shanghai Zhuwei Mechantronic Co., Ltd. Yih Chuan Machinery Industry Co., Ltd. Yih Chuan Machinery (Jiaxing) Industry Co., Ltd. YAMA SEIKI USA, INC. Huahan Leasing Co., Ltd. Allrich Cnc, Ltd. Yang Wenxu Charity Foundation Turvo International Co., Ltd. Boldwin Bio Co., Ltd. AXTRON INVESTMENT CO., LTD	Relationship with the Company
	Parent Subsidiaries Subsidiaries Subsidiaries Subsidiaries Associates Associates Substantial related parties Substantial related parties Other related parties Other related parties Other related parties

b. Significant transactions with the related parties
Sales

Sales
Parent Subsidiaries Associates Other related parties	2022 $ 1,396 295,724 271,350 1 $ 568,471	2021
		$ 4,643 427,680 165,064 39,610
		$ 636,997

The specifications of the products sold by the Company to related parties are different, so there are no other customers for comparison. The Company's sales to related parties and general customer collection conditions are determined in accordance with the contract.

Purchases

124

Parent Subsidiaries Associates Substantial related parties Transition price of purchase 3. Net notes receivable Parent Subsidiaries Other related parties 4. Net accounts receivable Parent Subsidiaries Associates 5. Other receivables Parent Subsidiaries 6. Notes payable Parent Subsidiaries Substantial related parties 7. Accounts payable Parent	2022 2021 $ 159 $ 163 22,468 16,161 - 7,673 3,573 4,889 $ 26,200 $ 28,886 from related parties are close to general transactions. December 31, 2022 December 31, 2021 $ 1,030 $ 1,529 30 11,526 - 2,142 $ 1,060 $ 15,197 December 31, 2022 December 31, 2021 $ 170 $ 240 35,351 105,547 33,396 13,570 $ 68,917 $ 119,357 December 31, 2022 December 31, 2021 $ - $ 174 70,042 65,104 $ 70,042 $ 65,278 December 31, 2022 December 31, 2021 $ 146 $ 1,625 11,256 11,468 368 186 $ 11,770 $ 13,279 December 31, 2022 December 31, 2021 $ 21 $ 8	2021
		$ 163 16,161 7,673 4,889
		$ 28,886
		$ 240 105,547 13,570
		$ 119,357
		December 31, 2021 $ 174 65,104 $ 65,278 December 31, 2021
		$ 1,625 11,468 186
		$ 13,279
		December 31, 2021 $ 8

125

Subsidiaries 709 Substantial related parties 759 $ 1,489 8. Other payables December 31, 2022 Parent $ 1,177 Subsidiaries 489 Other related parties 11 $ 1,677 9. Prepayments December 31, 2022 Parent $ 29 Other related parties 48 $ 77 10. Advance receipts December 31, 2022 Parent $ 1,045 11. Current lease liabilities December 31, 2022 Parent $ 1,190 12. Non-current lease liabilities December 31, 2022 Parent $ 499 13. Property transactions (1) Acquisition of property, plant and equipment 2022 Parent $ - Subsidiaries - Other related parties - $ -	5,252 490
	$ 5,750
	December 31, 2021
	$ 1,023 816 11
	$ 1,850
	December 31, 2021
	$ 1,050 48
	$ 1,098
	December 31, 2021
	$ 160
	December 31, 2021
	$ 1,770
	December 31, 2021 $ 2,833
	2021
	$ 148 520 4,069
	$ 4,737

126

(2) Disposal of property, plant and equipment

(2) Disposal of property, plant and equipment	nt	nt	nt
2022 Items Proceeds Gains Parent Transportation equipment $ - $ - 2021 Items Proceeds Gains Parent Transportation equipment $ 1,095 $ 1,095 14. Leases Rent income 2022 2021 Parent $ 1,110 $ 960 Subsidiaries - 320 $ 1,110 $ 1,280 15. Others Other income 2022 2021 Parent $ 461 $ 628 Subsidiaries - 4,813 Associates 84 60 $ 545 $ 5,501 Operating cost – warranty expense 2022 2021 Subsidiaries $ 659 $ 622 Manufacturing expenses 2022 2021 Parent $ 770 $ 1,753 Subsidiaries 229 898 Associates - 81 Other related parties 66 - $ 1,065 $ 2,732	2022
	Proceeds Gains $ - $ - 2021		Gains
			$ -
			Gains
			$ 1,095
			2021
		$	960 320
		$	1,280
			2021
		$	628 4,813 60
		$	5,501
			2021
		$	622
			2021
		$	1,753 898 81 -
		$	2,732

127

Marketing expense		2022		2021
Parent	$	2,392	$	1,109
Subsidiaries		483		111
Associates		10		288
Other related parties		77		66
	$	2,962	$	1,574
Management expense		2022		2021
Parent	$	44	$	-
Subsidiaries		-		48
Substantial related		-		39
i Other related parties		-		106
	$	44	$	193
Research and development expense		2022		2021
Other related parties	$	-	$	15
Interest income		2022		2021
Subsidiaries	$	1,004	$	441
16. Loans to related parties (listed as other account receivable)
The actual movement of loans to related parties of the Company is				as below:
		2022		2021
Subsidiaries	$	70,000	$	65,000
The Company's capital	loan to the	related party is calculated according to the
interest rate agreed between the Company and the related			party, and no
impairment loss is recognized after evaluation.
17. Compensation of key management		personnel

interest rate agreed between the Company and the related impairment loss is recognized after evaluation. . Compensation of key management personnel	party, and no
2022	2021
Short-term employee benefits $ 16,763	$	15,076
Post-employment benefits 456		515
$ 17,218	$	15,591
The compensation to directors and other key management	personnel were
determined by the Compensation of the Company in accordance with the
individual performance and the Company performance.

128

8. PLEDGED ASSETS

Detailed list of pledged assets of the Company is as below:

Assets Property, plant and equipment – land Property, plant and equipment – buildings Other current assets – restricted bank deposits	December 31, 2022 $ 377,341 738,391 187,946 $ 1,303,678	December 31, 2021
		$ 377,341 773,007 -
		$ 1,150,348

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant contingent liabilities and unrecognized commitments of the Company as of the end of the reporting period were as follows:

(1) The endorsement guarantee notes issued by the Company are NT$6,699 thousand.
(2) The endorsement guarantee notes received from customers are NT$84,656 thousand.
(3) The endorsement guarantee note received by the Company from the manufacturer for leasing solar photovoltaics is NT$21,180 thousand.
(4) The Company received endorsement guarantee notes of NT$80,000 thousand for loan from its subsidiary – Yih Chuan Machinery Industry Co., Ltd.
(5) The Company entrusted First Commercial Bank to open performance guarantee of NT$2,000 for the imported goods to be released first and then pay tax to the Customs.
(6) The Company entrusted First Commercial Bank to open performance guarantee of $233USD thousand mainly for commodity import.

10. LOSSES FROM MAJOR DISASTERS: None

11. MAJOR SUBSEQUENT EVENTS: None

12. OTHERS

Financial instruments

a. Fair value of financial instruments
Book value of financial instruments not measured by fair value (including cash equivalent, notes receivable, accounts receivable, other receivables, guarantee deposits paid, shortterm loans, short-term notes payable, notes payable, accounts payable, other payables, bonds payable, long-term loans and guarantee deposits received) is a reasonable approximation of fair value. Bonds payable (including put option due or execute within one year) and long-term loans’ interest rates are close to market rate, so the carrying amount should be a reasonable basis for estimating fair value. Please refer to Note 12 (6) for fair value of financial instrument measured by fair value.
b. Financial risk management objectives
The Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit risk and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance. The plans for material treasury activities are reviewed by the Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Company must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.
c. Market risks

The Company is exposed to the financial market risks, primarily changes in foreign

129

currency exchange rates, interest rates and equity investment prices. A portion of these risks is hedged.

1. Foreign currency risk

Part of the Company's cash inflows and outflows are in foreign currency, so there is a natural hedging effect. The Company's exchange rate risk management is for the purpose of avoiding risks, not for the purpose of profit.

The management strategy for exchange rate risk is to examine the net positions of assets and liabilities in various currencies periodically and conduct risk management to the net positions.

At the reporting date, the book value of the Company’s monetary assets and liabilities denominated in foreign currencies were as follows:

In thousands of New Taiwan Dollar and foreign currencies

			In thousands of New Taiwan Dollar and foreign currencies	In thousands of New Taiwan Dollar and foreign currencies	In thousands of New Taiwan Dollar and foreign currencies	In thousands of New Taiwan Dollar and foreign currencies
Financial assets Monetary items USD EUR RMB Non-monetary items USD Financial liabilities Monetary items USD EUR RMB JPY Non-monetary items USD RMB			December 31, 2022
	Foreign currencies 56,209 3,012 8,631 - 148 - 90 2,869 1,551 -	Exchange rate (Note) 30.66 32.52 4.383 - 30.66 - 4.383 0.2304 30.66 -	NT Dollar 1,723,368 97,950 37,830 - 4,538 - 394 661 47,554 -	Sensitivity analysis
				Rate of change 5% 5% 5% - 5% - 5% 5% - -	Profit or loss impact 86,168 4,898 1,892 - 227 - 20 33 - -	Equity impact
						- - - - - - - - - -

		In thousands of New Taiwan Dollar and foreign currencies December 31, 2021	In thousands of New Taiwan Dollar and foreign currencies December 31, 2021	In thousands of New Taiwan Dollar and foreign currencies December 31, 2021	In thousands of New Taiwan Dollar and foreign currencies December 31, 2021
Foreign currencies 37,761 4,262 25,529	Exchange rate (Note) 27.63 31.12 4.319	NT Dollar 1,043,336 132,633 110,260	Sensitivity analysis
			Rate of change 5% 5% 5%	Profit or loss impact 52,167 6,632 5,513	Equity impact
					- - -

130

items
USD	306	27.63	8,455	-	-	-
Financial liabilities
Monetary items
USD	816	27.63	22,546	5%	1,127	-
EUR	1	31.12	31	5%	2	-
RMB	119	4.319	514	5%	26	-
JPY	7,866	0.2385	1,876	5%	94	-
Non-monetary
items
USD	1,954	27.63	53,989	-	-	-
RMB	290	4.319	1,253	-	-	-

Note. Using exchange rate of the balance sheets date.

Interest rate risk
Interest rate risk refers to the risk of changes in the fair value of financial instruments due to changes in market interest rates. The Company is exposed to interest rate risks primarily in relation to its bank loans.

Assuming that the floating rate loan at the end of the reporting period is held throughout the reporting period, when the interest rate increases by 1%, the Company's net profit will decrease by NT$21,696 thousand.

  3. Other price risk

     - The Company is exposed to equity price risk arising from financial assets at FVTPL and at FVTOCI.

     - Assuming a decrease of 10% in prices of the equity investments at the end of the reporting period for the years ended December 31, 2022 and 2021, the profit and loss would have decreased by NT$38,746 thousand and NT$18,925 thousand, respectively.

d. Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Company. The Company is exposed to credit risks from operating activities, primarily accounts receivable, and from investing activities like deposits with banks. Credit risk is managed separately for business related and financial related exposures.
1. Business related credit risk
  - The Company has established the procedures to maintain the quality of accounts receivable and conduct management and credit risk analysis for each new customer in accordance with the internally specified credit policy. Internal risk control is to evaluate customer credit quality by considering its financial status, past experience and other factors.
  - The risk assessment of an individual customer is based on the consideration of the customer's financial status, credit rating agency rating, the Company's internal credit rating, historical transaction records and current economic conditions, and many other factors that may affect the customer's ability to pay. The Company will also use certain credit enhancement tools, such as credit insurance, at appropriate times to reduce the credit risk of specific customers.

As of December 31, 2022 and 2021, the Company’s ten largest customers accounted for 80% and 70% of accounts receivable, respectively. The Company considers the concentration of credit risk for the remaining accounts receivable not material.

Financial credit risk

131

The credit risk of bank deposits is measured and monitored by the financial department of the Company. Since the Company's transaction partners and other parties to the contract are all credit-worthy banks, financial institutions with investment grade and above, and government agencies, there are no major concerns about the performance of the contract, and therefore major credit risk observed.

e. Liquidity risk management

The objective of liquidity risk management is to ensure the Company has sufficient cash and cash equivalents and sufficient lines of credit to fund its business operations and maintain adequate financial flexibility.

The table below summarizes the maturity profile of the Company’s financial liabilities based on expiry date and contractual undiscounted payments:

	December31,2022	December31,2022	December31,2022
1 to 3 months $ 1,530,000 289,641 326,284 72,981 90,783 11,055 2,845 - 628 $ 2,324,217	4 to 6 months $ 235,000 - 78,991 282 - - 2,851 - - $ 317,124	7 months to 1year $ 115,000 - - 234 - - 5,724 - - $ 120,958	More than a year $ - - - 820 - - 918 - - $ 1,738	Total
				$ 1,880,000 289,641 405,275 74,317 90,783 11,055 12,338 - 628
				$ 2,764,037

Non-derivative financial liabilities Short-term loans Short-term notes payable Notes payable (including related parties) Accounts payable (including related parties) Other payables (including related parties) Provision		December 31, 2021	December 31, 2021	December 31, 2021
	1 to 3 months $ 940,000 259,907 394,765 148,718 111,648 11,240	4 to 6 months $ 235,000 - 119,772 281 - -	7 months to 1 year $ 115,000 - 775 83 - -	More than a year $ - - - 176 - -	Total
					$ 1,290,000 259,907 515,312 149,258 111,648 11,240

132

Lease liabilities (including related parties) Long-term loans (including long-term loans due within one year or within one business cycle) Guarantee deposits received	2,891 - 2,641 $ 1,871,810	2,898 - - $ 357,951	5,817 - - $ 121,675	12,764 2,206 - $ 15,146	24,370 2,206 2,641
					$ 2,366,582

(6) Fair value of financial instruments
Please refer to Note 12(1) for financial assets and liabilities not measured by fair value.
Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
- (1)Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market refers to markets that meets all the following conditions: the commodities traded in the market are homogeneous, and willing buyers and sellers can be found in the market at any time and price information is available to the public.
- (2) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
- (3) Level 3 fair value measurements are not based on inputs for the asset or liability that are based on observable market data.
- There is no transition between level 1 and 2 during the year ended December 31, 2022 and 2021.
- There is no transition into or out of level 3 during the year ended December 31, 2022 and 2021.
The method and assumption that the Company applied to measure fair value are as below:
- (1) Fair value of financial assets and liabilities with standard terms and conditions and are traded in active market is determined by referencing market quotations.
- (2) Fair value of other financial liabilities is determined by the generally accepted evaluation model based on discounted cash flow analysis.
Fair value hierarchy
- The following table presents the Company’s financial assets and liabilities measured at fair value:

at fair value:
Financial assets at FVTPL Listed (counter) stocks Financial assets at FVTOCI Listed (counter) stocks		December 31, 2022
	Level 1 $ 377,002 10,458 $ 387,460	Level 2 $ - - $ -	Level 3 $ - - $ -	Total
				$ 377,002 10,458
				$ 387,460

133

December 31, 2021

Financial assets at FVTPL Listed (counter) stocks Financial assets at FVTOCI Listed (counter) stocks	Level 1 $ 172,417 16,829 $ 189,246	Level 2 $ - - $ -	Level 3 $ - - $ -	Total
				$ 172,417 16,829
				$ 189,246

13. ADDITIONAL DISCLOSURES

(1) Significant transactions:
Financings provided: See Table 1 attached;
Endorsement/guarantee provided: None;
Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): See Table 2 attached;
Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None;
Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None;
Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None;
Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: See Table 3 attached;
Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
Information about the derivative financial instruments’ transaction: See Note 12.
(2) Information on reinvestment business: See Table 4 attached;
(3) Information on investment in mainland China：See Table 5 attached.
(4) Information of major shareholder (list of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership): See Table 6 attached.

14. OPERATING SEGMENTS INFORMATION

The Company has provided the operating segments disclosure in the consolidated financial statements.

134

Table 1：FINANCINGS PROVIDED

Table 1：FINANCINGS PROVIDED	Table 1：FINANCINGS PROVIDED	Table 1：FINANCINGS PROVIDED	Table 1：FINANCINGS PROVIDED
December 31, 2022				Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise
No. (Note 1)	Financing Company	Counterparty	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Note 4)	Amount Actually Drawn	Interest Rate	Nature for Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	Other receivables from related parties	Yes	230,000	80,000	70,000	1.8% ~ 1.925%	The need for short- term financing	7,911	Operating capital	-	promissory note	80,000	325,268	1,301,070
1	Shanghai Zhuwei Mechantronic Co., Ltd.	Awea Mechantronic (Suzhou) Ltd.	Other receivables from related parties	Yes	87,680	87,680	87,660	3.8%	The need for short- term financing	-	Operating capital	-	-	-	145,953	145,953
1	Shanghai Zhuwei Mechantronic Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Other receivables from related parties	Yes	7,451	7,451	7,451	3.65%	The need for short- term financing	-	Operating capital	-	-	-	145,953	145,953

Note 1: information of the numbering column:

(1)Issuer is No. 0.

(2)Invested companies are listed in order from No.1.

Note 2: financing limit to individual counterparty is no more than 10% of net value of the current period, and the total amount of financing should be no more than 40% of net value of the current period.

Note 3: Maximum balance of financing for the period.

Note 4: The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors.

135

Table 2: MARKETABLE SECURITIES HELD (excluding investments in subsidiaries, associates and joint ventures)

December 31, 2022			Amounts in Thousands	of New Taiwan Dollars, Unless Specified Otherwise	of New Taiwan Dollars, Unless Specified Otherwise	of New Taiwan Dollars, Unless Specified Otherwise	of New Taiwan Dollars, Unless Specified Otherwise	of New Taiwan Dollars, Unless Specified Otherwise
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2022			Note
				Share units	Carrying Value	Percentage of Ownership	Fair Value (Note 1)
AWEA Mechantronic Company Limited	Stock - AUTECH EUROPE	-	Non-Current financial asset at FVTPL	50	- (Note 2)	5.00%	-
AWEA Mechantronic Company Limited	Stock - P-DUKE TECHNOLOGY CO., LTD.	-	Current financial asset at FVTPL	1,063,852	91,917	1.36%	91,917
AWEA Mechantronic Company Limited	Stock - TURVO INTERNATIONAL CO., LTD.	Other related parties	Current financial asset at FVTPL	2,607,000	263,307	4.32%	263,307
AWEA Mechantronic Company Limited	Stock - EAGLE COLD STORAGE ENTERPRISE CO., LTD.	-	Current financial asset at FVTPL	675,000	14,850	0.57%	14,850
AWEA Mechantronic Company Limited	Stock - TSMC	-	Current financial asset at FVTPL	10,000	4,485	-	4,485
AWEA Mechantronic Company Limited	Stock - Zeng Hsing Industrial Co., Ltd.	-	Current financial asset at FVTPL	20,534	2,443	0.03%	2,443
AWEA Mechantronic Company Limited	Stock - FITTECH CO., LTD	Other related parties	Non-Current financial asset at FVTOCI	118,846	10,458	0.16%	10,458

Note 1: If the invested company has no public market price, it shall be listed according to the net equity value. Note 2: During the year of 1996, due to the value of the invested company has been impaired and there is little hope of recovery, the amount has been transferred fully to loss.

136

Table 3: TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

December 31, 2022 Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise

Company Name	Related Party	Nature of Relationships		Transaction Details	Transaction Details		Abnormal Transaction (Note 1)	Abnormal Transaction (Note 1)	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchases/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending balance	% to Total
AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	Indirect subsidiary	Sales	$ 287,814	12.60%	3 months after shipped	-	-	$35,351	4.71%	-
AWEA Mechantronic Company Limited	YAMA SEIKI USA,INC.	Subsidiary	Sales	$ 240,190	10.52%	3 months after shipped	-	-	$33,396	4.45%	-

Note 1: The products sold by the Company to related parties Awea Mechantronic (Suzhou) and YAMA SEIKI have different functions, so there are no other customers for comparison. The payment conditions, like for general customers, are determined in accordance with the contract.

137

Table 4: NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES (Excluding Information on Investment in Mainland China) December 31, 2022 Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise

Investor Company	Investee Company	Location	Main business	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Net Income (Losses) of the Investee	Share of Profits/ Losses of Investee (Note 1)	Note
				December 31, 2022	December 31, 2021	Shares	Percentage of Ownership	Carrying Value
AWEA Mechantronic Company Limited AWEA Mechantronic Company Limited AWEA Mechantronic Company Limited AWEA Mechantronic Company Limited B-Way (Cayman) Co., Ltd. Yih Chuan Machinery Industry Co., Ltd. AXTRON INT’L INVESTMENT CO.,TLD	B-Way (Cayman) Co., Ltd. YAMA SEIKI USA,INC. Yih Chuan Machinery Industry Co., Ltd. Huahan Leasing Co., Ltd. Billion-Way (Cayman) Co., Ltd. AXTRON INT’L INVESTMENT CO., LTD AXTRON INT’L INVESTMENT LIMITED	Cayman Islands USA Taiwan Taiwan Cayman Islands Marshall Islands, USA Hong Kong	International investment and International trade Machinery sales and installation, International trade Machinery sales and retail、product design Rental of machinery and equipment International investment and International trade international investment and International trade International investment and International trade	$ 332,212 53,968 264,592 7,333 USD 12,830 (NTD 393,368) 200,000 HKD 10 (NTD 39)	$ 332,212 53,968 264,592 7,333 USD 12,830 (NTD 393,368) 200,000 HKD 10 (NTD 39)	10,665,029 584,192 5,914,800 666,667 12,829,840 50,000 10,000	100.00% 28.58% 60.00% 13.33% 100.00% 100.00% 100.00%	$ 718,246 101,849 173,920 8,001 733,801 230,394 230,394	$ 95,283 22,916 (12,140) 4,097 85,859 (7,257) (7,257)	$ 95,278 7,236 (7,284) 546 85,859 (7,257) (7,257)	(Note 1) - (Note 1) - (Note 1) (Note 1) (Note 1)

Note 1: already written-off.

138

Table 5: INFORMATION ON INVESTMENT IN MAINLAND CHINA December 31, 2022

Chinese Invested Company Name, Primary Business Activities, Paid-in Capital, Investment Method, Inflow and Outflow of Funds,

Ownership Percentage, Investment Book Value, and Repatriation of Investment Gain/Loss:

Investee Company	Main Businesses	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Net Income (Losses) of the Investee Company	Percentage of Ownership	Share of Profits/ Losses (Note 2)	Carrying Amount as of Balance as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31, 2022
					Outflow	Inflow
Shanghai Zhuwei Mechantronic Co., Ltd.	Machinery sales and installation, business management consultation, and International trade	USD 2,500 (NTD 76,650) (Note 3)	2	USD 2,494 (NTD76,466) (Note 3)	-	-	USD 2,494 (NTD 76,466) (Note 3)	$ 3,148	100%	$ 3,667	$143,541	USD 15,438 (NTD 458,016) (Note 3)
Awea Mechantronic (Suzhou) Ltd.	Machinery sales and installation, and International trade	USD 11,400 (NTD 349,524) (Note 3)	2	USD 10,400 (NTD318,864) (Note 3)	-	-	USD 10,400 (NTD 318,864) (Note 3)	81,807	100%	81,807	583,296	USD 2,306 CNY 49,580 (NTD 285,977)
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Machinery sales, manufacturing and installation, and International trade	USD 2,510 (NTD 76,957) (Note 3)	2	USD 2,510 (NTD76,957) (Note 3)	-	-	USD 2,510 (NTD 76,957) (Note 3)	(7,257)	100%	(7,257)	230,394	-

139

2. Upper Limit for reinvestment in Mainland China:

Investee Company	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
The Company	$ 395,330 (Note 3) (USD 12,894)	$ 426,174 (Note 3) (USD 13,900)	$ 1,951,606 (Note 5)
Yih Chuan Machinery Industry Co., Ltd.	$ 76,957 (Note 3) (USD 2,510)	$ 76,957 (Note 3) (USD 2,510)	$ 173,278(Note 5)

Note 1: The investment methods are divided into the following three types, just indicate the type:
(1) Directly go to Mainland China to invest
(2) Reinvest in mainland China through companies in third regions
(3) Other methods
Note 2: investment profit or loss is recognized based on financial reports audited of the same period.

Note 3: Amount in New Taiwan Dollar is exchanged according to the exchange rate on balance sheet date.

Note 4: Dawea Mechantronic (Suzhou) Ltd. merged with Awea Mechantronic (Suzhou) Ltd. in September 2020, and Awea Mechantronic (Suzhou) Ltd. is the existing company after the merger. This merger case has been approved and put on record by the Investment Commission, MOEA in July 2021 through letter No. 11000165350.
Note 5: The upper limit on investment in mainland China is determined by sixty percent (60%) of the Company’s consolidated net worth.
Significant transaction items with direct or indirect investees in Mainland China: see Table 4.

140

Table 6: INFORMATION ON MAJOR SHAREHOLDERS December 31, 2022

December 31, 2022
Major Shareholders	Total Shares Owned	Ownership Percentage
GOODWAY MACHINE CORP.	47,912,311	49.60 %
YANG, TE-HUA	9,031,403	9.34 %
JIAJIN INVESTMENT CO., LTD.	6,256,388	6.47 %
FUBON LIFE INSURANCE CO., LTD.	5,406,500	5.59 %

141

Latest Consolidated Financial Statements of the Parent Company and Subsidiaries Audited and Certified by CPAs

==> picture [66 x 51] intentionally omitted <==

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

INDEPENDENT AUDITORS’ REPORT

The board of Directors and Shareholders

AWEA Mechantronic Company Limited

Opinion

We have audited the accompanying consolidated financial statements of AWEA Mechantronic Company Limited and its subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, and the consolidated financial statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, according to our auditing result and other auditors’ report, the accompanying consolidated financial statements prepared, in all material aspects, in accordance with the Regulations Governing the Preparation of Financial Reports by Security Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and ISC Interpretations (ISC) endorsed and issued into effect by the Financial Supervisory Commission of Republic of China, and can fairly present the consolidated financial position of the Company as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the ears then ended.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, according to our professional judgement, were of most significance in the audit of the Company’s consolidated financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements, and in forming our opinion thereon, and we do not

142

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [66 x 51] intentionally omitted <==

provide a separate opinion on these matters.

Key audit matters for the Company’s consolidated financial statements for the year ended December 31, 2022 are stated as follows:

Revenue Recognition

The Company’s main source of revenue is the sales of machining center machine, and the revenue recognized in 2022 is NT$2,965,844 (in Thousands), accounting for about 96% of total operating income. And since the sales locations include Taiwan, Mainland China, Italy, United States and other markets, the sales conditions are not the same. Therefore, it is necessary to determine the timing of the transfer of the ownership risk and rewords of the sold goods according to customers’ order or contract documents. Since the timing and amount of revenue recognition have significance of impact to financial statements, we listed revenue recognition as one of the key audit matters.

For accounting policies related to revenue recognition, please refer to Note 4 to the consolidated financial statements.

Valuation of Inventory

The company is mainly engaged in the design, manufacture, and sale of special purpose machine, automation equipment, and computer-controlled machine tools. As of December 31, 2022, the total inventory and allowance of loss for market price decline and obsolete and slow-moving inventories are NT$2,028,951 and NT$421,944 (in thousands), respectively. Inventories of the Company are measured by cost and net realizable value, and recorded allowance of loss for market price decline and obsolete and slow-moving inventories for inventories exceeding certain shelf life or individuals identified as obsolete. Due to fierce competition of parts market and the different speed of different parts obsolescence, the risks of loss for market price decline and obsolete is higher. The obsolete inventory items and the net realizable value method applied for their evaluation often involve subjective judgements, hence are highly uncertain. Considering the inventory and the allowance of loss for market price decline and obsolete and slow-moving inventories are in significance of impact to financial statements, we listed the allowance of loss for market price decline and obsolete and slow-moving inventories as one of the key audit matters. For inventory related policies, and key sources of evaluation and assumption

143

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [66 x 51] intentionally omitted <==

of the inventory, please refer to Noe 4 and 5 to the consolidated financial statements, respectively.

Other Items

In the above mentioned consolidated financial statements, companies invested using equity method, YAMA SEIKI USA, INC and Huahan Leasing Co., Ltd., are not audited by us but entrusted other auditors to audit by the company. As of December 31, 2022 and 2021, the balance of investment using equity method are NT$109,850 and NT$96,604 (in thousands), respectively, both accounting for 2% of total assets. For the years ended December 31, 2022 and 2021, the proportion for these subsidiaries invested using equity method and the profit or loss of associates and joint ventures are NT$7,782 and NT$4,712 (in thousands), respectively, both accounting for 2% of the profit before tax.

We have also audited the individual financial statements of AWEA Mechantronic Co., Ltd. as of and for the years ended December 31, 2022 and 2021 on which we have issued an unqualified opinion with Other Items section for reference.

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 IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of 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 Company’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 Company or to cease operations, or has no realistic alternative but to do so.

144

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [66 x 51] intentionally omitted <==

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatements, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is high-level of assurance but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement that 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 based on these consolidated financial statements.

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern. 5. Evaluate the overall presentation, structure, and content of the

145

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [66 x 51] intentionally omitted <==

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.

Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

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 for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Jui-Kuei Chen and Chang Yun Yi.

EnWise CPAs & Co. Taichung, Taiwan Republic of China

March 13, 2023

146

AWEA Mechantronic Company Limited

CONSOLIDATED BALANCE SHEETS

December 31, 2022 and 2021

31-Dec-22	In Thousands of New Taiwan Dollars % Amount % 17 937,652 $ 15 5 172,417 3 6 247,478 4 - 3,765 - 7 526,533 9 - 13,810 - - 9,628 - - 174 - - 732 - 24 1,549,646 25 1 75,973 1 8 321,502 5 68 3,859,310 62 - 16,829 - 2 96,604 3 26 1,872,994 30 2 146,084 2 - 12,043 - 1 148,210 2 - 3,964 - - 12,931 - 1 29,673 1 - - - - 8,638 - 32 2,347,970 38 100 6,207,280 $ 100 31-Dec-21	In Thousands of New Taiwan Dollars % Amount % 17 937,652 $ 15 5 172,417 3 6 247,478 4 - 3,765 - 7 526,533 9 - 13,810 - - 9,628 - - 174 - - 732 - 24 1,549,646 25 1 75,973 1 8 321,502 5 68 3,859,310 62 - 16,829 - 2 96,604 3 26 1,872,994 30 2 146,084 2 - 12,043 - 1 148,210 2 - 3,964 - - 12,931 - 1 29,673 1 - - - - 8,638 - 32 2,347,970 38 100 6,207,280 $ 100 31-Dec-21
Amount 1,132,171 $ 377,002 381,640 4,274 457,612 33,566 10,766 - 143 1,607,007 57,859 542,186 4,604,226 10,458 109,850 1,797,473 132,035 10,368 101,283 300 7,146 12,115 - 6,544 2,187,572 6,791,798 $	Amount 937,652 $ 172,417 247,478 3,765 526,533 13,810 9,628 174 732 1,549,646 75,973 321,502 3,859,310 16,829 96,604 1,872,994 146,084 12,043 148,210 3,964 12,931 29,673 - 8,638 2,347,970 6,207,280 $	%
		15 3 4 - 9 - - - - 25 1 5
		62
		- 3 30 2 - 2 - - 1 - -
		38
		100

Please refer to the accompanying notes to the consolidated financial reports.

147

AWEA Mechantronic Company Limited

CONSOLIDATED BALANCE SHEETS

December 31, 2022 and 2021

31-Dec-22	In Thousands of New Taiwan Dollars % Amount % 29 1,335,781 $ 22 4 259,907 4 3 220,951 4 6 518,234 8 - 17,034 - 3 278,516 5 - 591 - 2 139,559 2 - 1,476 - 1 27,390 1 - 12,934 - - 11,606 - - 12 - - 1,242 - 48 2,825,233 46 - 62,672 1 2 121,459 2 - 12,764 - - 11,698 - - 12,794 - - 4,173 - 2 225,560 3 50 3,050,793 49 14 965,942 16 - 6,124 - 1 86,447 1 - 4 - - 31,920 1 8 513,898 8 1 98,077 2 24 1,366,883 22 - (36,109) (1) - 4,040 - 48 3,037,226 49 2 119,261 2 50 3,156,487 51 100 6,207,280 $ 100 31-Dec-21	In Thousands of New Taiwan Dollars % Amount % 29 1,335,781 $ 22 4 259,907 4 3 220,951 4 6 518,234 8 - 17,034 - 3 278,516 5 - 591 - 2 139,559 2 - 1,476 - 1 27,390 1 - 12,934 - - 11,606 - - 12 - - 1,242 - 48 2,825,233 46 - 62,672 1 2 121,459 2 - 12,764 - - 11,698 - - 12,794 - - 4,173 - 2 225,560 3 50 3,050,793 49 14 965,942 16 - 6,124 - 1 86,447 1 - 4 - - 31,920 1 8 513,898 8 1 98,077 2 24 1,366,883 22 - (36,109) (1) - 4,040 - 48 3,037,226 49 2 119,261 2 50 3,156,487 51 100 6,207,280 $ 100 31-Dec-21
Amount 1,954,949 $ 289,641 225,013 393,849 514 201,312 799 128,889 2,007 64,623 12,445 11,420 934 2,099 3,288,494 - 112,224 918 10,793 8,991 2,183 135,109 3,423,603 965,942 6,124 57,468 4 31,920 527,176 98,077 1,595,597 (18,699) (10,933) 3,252,676 115,519 3,368,195 6,791,798 $	Amount 1,335,781 $ 259,907 220,951 518,234 17,034 278,516 591 139,559 1,476 27,390 12,934 11,606 12 1,242 2,825,233 62,672 121,459 12,764 11,698 12,794 4,173 225,560 3,050,793 965,942 6,124 86,447 4 31,920 513,898 98,077 1,366,883 (36,109) 4,040 3,037,226 119,261 3,156,487 6,207,280 $	%
		22 4 4 8 - 5 - 2 - 1 - - - -
		46
		1 2 - - - -
		3
		49
		16 - 1 - 1 8 2 22 (1) -
		49 2
		51
		100

Please refer to the accompanying notes to the consolidated financial reports.

148

AWEA Mechantronic Company Limited

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The years ended December 31, 2022 and 2021

In Thousands of New Taiwan Dollars, Except Earnings Amount % Amount 3,100,517 $ 100 3,630,956 $ (2,432,617) (78) (2,951,020) 667,900 22 679,936 (4,900) - 1,924 663,000 22 681,860 (188,205) (6) (217,903) (128,520) (4) (125,687) (61,671) (2) (60,627) 13,621 - (11,444) (364,775) (12) (415,661) 298,225 10 266,199 15,972 1 4,226 46,011 2 35,444 117,800 4 (58,340) (26,002) (1) (14,441) 7,782 - 4,712 161,563 5 (28,399) 459,788 15 237,800 (110,501) (4) (115,767) 349,287 11 122,033 3,296 - (1,035) (13,848) - 5,303 (659) - 207 23,155 - 24,490 (4,631) - (4,898) 7,313 - 24,067 356,600 $ 11 146,100 $ 354,143 $ 11 130,860 $ (4,856) - (8,827) 349,287 $ 11 122,033 $ 360,342 $ 11 155,464 $ (3,742) - (9,364) 356,600 $ 11 146,100 $ 3.67 $ 1.35 $ 3.65 $ 1.35 $ 2022 2021	In Thousands of New Taiwan Dollars, Except Earnings Amount % Amount 3,100,517 $ 100 3,630,956 $ (2,432,617) (78) (2,951,020) 667,900 22 679,936 (4,900) - 1,924 663,000 22 681,860 (188,205) (6) (217,903) (128,520) (4) (125,687) (61,671) (2) (60,627) 13,621 - (11,444) (364,775) (12) (415,661) 298,225 10 266,199 15,972 1 4,226 46,011 2 35,444 117,800 4 (58,340) (26,002) (1) (14,441) 7,782 - 4,712 161,563 5 (28,399) 459,788 15 237,800 (110,501) (4) (115,767) 349,287 11 122,033 3,296 - (1,035) (13,848) - 5,303 (659) - 207 23,155 - 24,490 (4,631) - (4,898) 7,313 - 24,067 356,600 $ 11 146,100 $ 354,143 $ 11 130,860 $ (4,856) - (8,827) 349,287 $ 11 122,033 $ 360,342 $ 11 155,464 $ (3,742) - (9,364) 356,600 $ 11 146,100 $ 3.67 $ 1.35 $ 3.65 $ 1.35 $ 2022 2021	Per Share
Amount 3,100,517 $ (2,432,617) 667,900 (4,900) 663,000 (188,205) (128,520) (61,671) 13,621 (364,775) 298,225 15,972 46,011 117,800 (26,002) 7,782 161,563 459,788 (110,501) 349,287 3,296 (13,848) (659) 23,155 (4,631) 7,313 356,600 $ 354,143 $ (4,856) 349,287 $ 360,342 $ (3,742) 356,600 $ 3.67 $ 3.65 $	Amount 3,630,956 $ (2,951,020) 679,936 1,924 681,860 (217,903) (125,687) (60,627) (11,444) (415,661) 266,199 4,226 35,444 (58,340) (14,441) 4,712 (28,399) 237,800 (115,767) 122,033 (1,035) 5,303 207 24,490 (4,898) 24,067 146,100 $ 130,860 $ (8,827) 122,033 $ 155,464 $ (9,364) 146,100 $ 1.35 $ 1.35 $	%
		100 (81)
		19 -
		19
		(6) (4) (2) -
		(12)
		7
		- 1 (2) - -
		(1)
		6 (3)
		3
		- - - 1 -
		1
		4
		3 -
		3
		4 -
		4

Please refer to notes to the individual financial reports.

149

AWEA Mechantronic Company Limited

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The years ended December 31, 2022 and 2021

		EquityAttributable to	EquityAttributable to	Shareholders of the Parent	Shareholders of the Parent	ew Taiwan Dollars Total Equity
Capital Stock Common Stock 965,942 $ - - - - - - - 965,942 - - - - - - - 965,942 $	Capital Surplus 172,792 $ - - (48,297) - - - - 124,495 - - (28,979) - - - - 95,516 $		Retained Earnings	Unappropriated Earnings 1,465,540 $ (38,245) (193,188) - 130,860 (828) 130,032 2,744 1,366,883 (13,278) (115,913) - 354,143 2,637 356,780 1,125 1,595,597 $	Exchange Differences on Translation of Foreign Financial Statements Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Comprehensive Income (56,238) $ 1,481 $ - - - - - - - - 20,129 5,303 20,129 5,303 - (2,744) (36,109) 4,040 - - - - - - - - 17,410 (13,848) 17,410 (13,848) - (1,125) (18,699) $ (10,933) $ Others
		Legal Capital Reserve 475,653 $ 38,245 - - - - - - 513,898 13,278 - - - - - - 527,176 $	Special Capital Reserve 98,077 $ - - - - - - - 98,077 - - - - - - - 98,077 $		Exchange Differences on Translation of Foreign Financial Statements (56,238) $ - - - - 20,129 20,129 - (36,109) - - - - 17,410 17,410 - (18,699) $
						3,251,872 $ - (193,188) (48,297) 122,033 24,067
						146,100
						-
						3,156,487 - (115,913) (28,979) 349,287 7,313
						356,600
						-
						3,368,195 $

Please refer to the accompanying notes to the consolidated financial statements.

150

AWEA Mechantronic Company Limited

CONSOLIDATED STATEMENTS OF CASHFLOWS

The years ended December 31, 2022 and 2021

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustment for: Depreciation expense Amortization expense Expected credit losses recognized (reversal) on investments in debt instruments Interest expense Interest income Dividend revenue Share of profit (loss) of associates and joint ventures accounted for using equity method, Gain on disposal or retirement of property, plant and equipment Loss on disposal or retirement of intangible assets Unrealized (realized) gain from sale Other income Profit from lease modification Gains on disposals of investments Loss (gain) on valuation of financial asset Changes in operating assets and liabilities: Notes receivable Notes receivable from related parties Account receivables Account receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments Other current assets Overdue receivables Long-term notes receivable Contractual liabilities Notes payable Notes payable from related parties Accounts payable Accounts payable from related parties Other payables Other payables from related parties Provisions Advance receipts Other current liabilities Net defined benefit liability Cash generated from operations Interest received Income tax paid Net cash generated by operating activities (Continued)	2022 2021 459,788 $ 237,800 $ 115,080 117,382 2,965 2,406 (13,621) 11,444 26,002 14,441 (15,972) (4,226) (18,114) (1,724) (7,782) (4,712) (211) (1,499) - 48 4,900 (1,924) (1,081) (1,063) (283) (88) (2,095) - 11,149 (7,073) (134,978) 109,807 (509) (2,783) 88,299 7,459 (19,617) 32,232 2,777 (3,763) 174 (119) (57,361) (203,306) 18,114 17,707 (255) 9,169 (6,784) 2,494 19,191 5,969 4,062 (641) (124,385) 218,303 (16,520) 16,124 (77,204) 19,441 208 (4,289) (9,489) (35,024) 531 (96) (513) (11,896) 922 (719) 857 (155) (507) (578) 247,738 536,548 12,058 4,226 (37,909) (62,093) 221,887 478,681 In Thousands of New Taiwan Dollars	2022 2021 459,788 $ 237,800 $ 115,080 117,382 2,965 2,406 (13,621) 11,444 26,002 14,441 (15,972) (4,226) (18,114) (1,724) (7,782) (4,712) (211) (1,499) - 48 4,900 (1,924) (1,081) (1,063) (283) (88) (2,095) - 11,149 (7,073) (134,978) 109,807 (509) (2,783) 88,299 7,459 (19,617) 32,232 2,777 (3,763) 174 (119) (57,361) (203,306) 18,114 17,707 (255) 9,169 (6,784) 2,494 19,191 5,969 4,062 (641) (124,385) 218,303 (16,520) 16,124 (77,204) 19,441 208 (4,289) (9,489) (35,024) 531 (96) (513) (11,896) 922 (719) 857 (155) (507) (578) 247,738 536,548 12,058 4,226 (37,909) (62,093) 221,887 478,681 In Thousands of New Taiwan Dollars
		237,800 $ 117,382 2,406 11,444 14,441 (4,226) (1,724) (4,712) (1,499) 48 (1,924) (1,063) (88) - (7,073) 109,807 (2,783) 7,459 32,232 (3,763) (119) (203,306) 17,707 9,169 2,494 5,969 (641) 218,303 16,124 19,441 (4,289) (35,024) (96) (11,896) (719) (155) (578)
		536,548 4,226 (62,093)
		478,681

151

AWEA Mechantronic Company Limited

CONSOLIDATED STATEMENTS OF CASHFLOWS

The years ended December 31, 2022 and 2021

In Thousands of New Taiwan Dollars

(Continued) CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisitions of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisitions of investments accounted for using equity method Acquisitions of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisitions of intangible assets Decrease in prepayments for business facilities Decrease (increase) in guarantee deposits paid Decrease (increase) in other non-current assets Dividends received Increase in other financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Increase (decrease) in short-term notes payable Increase (decrease) in long-term borrowings Repayment of the principal portion of lease liabilities Increase (decrease) in guarantee deposits received Cash dividends paid Interest paid Net cash generated (used) in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	2022 (236,175) 22,536 (11,268) 3,791 - (22,340) 3,740 (1,246) 3,664 5,785 2,094 18,114 (220,429) (431,734) 619,168 29,734 (62,672) (11,410) (1,990) (25,793) (144,890) 402,147 2,219 194,519 937,652 1,132,171 $	2021
		(159,812) - (11,549) 8,540 (7,333) (58,104) 3,519 (4,639) 3,228 (1,686) (3,097) 1,724 (42,719)
		(271,928)
		227,313 (229,893) 61,405 (14,914) 1,688 (13,894) (241,485)
		(209,780)
		32,871
		29,844 907,808
		937,652 $

Please refer to the accompanying notes to the consolidated financial statements.

152

AWEA Mechantronic Company Limited NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise

1.GENERAL

2.DATE AND PROCEDURE FOR APPROVAL OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 13, 2023.

3.APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

(1) The impact of adoption of the newly issued and revised International Financial Reporting Standards (IFRS) approved by the Financial Supervisory Commission (FSC)：

2022 to prepare financial statements. The related new, interpretations are as below:	revised or amended standards and
New, Revised or Amended Standards and Interpretations Amendments to IAS 16 “Property, Plant and Equipment: Proceeds Before Intended Use” Amendments to IAS 37 “Onerous Contracts: Cost of Fulfilling a Contract” Amendments to IFRS 3 “Reference to the Conceptual Framework” Annual Improvements to IFRSs 2018-2020 Cycle	Effective Date Issued by IASB
	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

The Company assessed that the application of the above-mentioned newly recognized IFRS will not have material impact on the consolidated financial statements.

(2) The impact of not yet applying of IFRSs endorsed by the FSC:

The table below listed the new, revised or amended standards and interpretations endorsed by the FSC with effective date starting 2023:

New, Revised or Amended Standards and Interpretations Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”	Effective Date Issued by IASB
	January 1, 2023 January 1, 2023 January 1, 2023

Disclosure of Accounting Policies

The amendment improved the disclosure of accounting policies to provide more useful information to the investors and other users of the financial statements.

Definition of Accounting Estimates

This amendment is to directly define accounting estimates, and to make other amendments for the accounting policies, changes of accounting estimates and errors to

153

help companies differentiate changes of accounting policies and changes of accounting estimates.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction

The Company assessed that the above-mentioned new, revised or amended standards and interpretations will not have material impact on the consolidated financial statements.

(3) The impact of the IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC:

The table below listed the new, revised or amended standards and interpretations issued and published by IASB but not yet endorsed by FSC:

New, Revised or Amended Standards and
Interpretations
Amendments to IFRS 10 and IAS 28 “Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IAS 1 “Classification of
Liabilities as Current or Noncurrent” and
“Non-current Liabilities with Covenants”
Amendments to IFRS 16 “Lease Liability in a
Sale and Leaseback”
Amendments to IAS 1 “Classification of
Liabilities as Current or Noncurrent” and
“Non-current Liabilities with Covenants”

Effective Date Issued
by IASB

Pending IFRS Committee
decision
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

The Company anticipated that the above-mentioned newly published or amended standards will not have material impact to the consolidated financial statements.

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that the consolidated financial statements adopted are listed as below. Except for the illustration of accounting changes in Note 3 and 4, all the accounting policies below are applied consistently to all periods presented in the consolidated financial statements.

(1) Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by FSC.

(2) Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis, except for important items in the balance sheets listed below:

Financial assets at fair value through profit or loss;
Financial assets at fair value through other comprehensive income;
Net defined benefit liability, which is based on the fair value of pension fund asset minus the present value of defined benefit obligations.

(3) Functional Currency and Reporting Currency

The functional currency of each entity within the consolidated company is the currency of the primary economic environment in which it operates. This consolidated financial report is presented in the functional currency of the company, which is the New Taiwan Dollar (NTD). All financial information expressed in NTD is presented in thousands of New

154

Taiwan Dollars (NTD thousand).

(4) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of AWEA Mechantronic Company Limited and entities controlled by AWEA Mechantronic Company Limited (its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

The detail information of the subsidiaries at the end of reporting period was as follows:

Name of Investor AWEA Mechantronic Co., Ltd. AWEA Mechantronic Co., Ltd. B-Way (Cayman) Co., Ltd. Billion-Way (Cayman)Co., Ltd. Billion-Way (Cayman)Co. ,Ltd. Yih Chuan Machinery Industry Co., Ltd. AXTRON INT’L INVESTMENT CO., LTD AXTRON INT’L INVESTMENT LIMITED	Name of Subsidiaries B-Way (Cayman) Co., Ltd. Yih Chuan Machinery Industry Co., Ltd. Billion-Way (Cayman)Co., Ltd. Shanghai Zhuwei Mechantronic Co., Ltd. Awea Mechantronic (Suzhou) Ltd. AXTRON INT’L INVESTMENT CO., LTD AXTRON INT’L INVESTMENT LIMITED Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Main Businesses and Products International investment and trade Industrial machinery manufacture and trade International investment and trade Machinery sale and installation and international trade Machinery sale and installation and international trade International investment and trade International investment and trade Machinery sale and installation and international trade	Percentage of Ownership	Percentage of Ownership
			December 31, 2022 100% 60% 100% 100% 100% 100% 100% 100%	December 31, 2021 100% 60% 100% 100% 100% 100% 100% 100%

(5) Classification of Current and Noncurrent Assets and Liabilities

Assets that meet one of the following conditions are classified as current assets, and all assets that are not current assets are classified as non-current assets:

155

  - (1) The asset expected to realize, or intended to be sold or consumed, during its normal operating cycle;

  - (2) The asset is held primarily for transaction purposes;

  - (3) The asset is expected to be realized within twelve months of the reporting period; or

  - (4) The asset is cash or cash equivalent unless there are other restrictions on exchanging the asset or using it to settle liabilities at least twelve months after the reporting period.

Liabilities that meet one of the following conditions are classified as current liabilities, and all liabilities that are not current liabilities are classified as non-current liabilities:
- (1) The liability is expected to be settled within normal operating cycle;
- (2) The liability is held primarily for transaction purposes;
- (3) The liability is expected to be settled within twelve months after the reporting period; or
- (4) The liability without an unconditional right to defer settlement for at least twelve months after the reporting period. The terms of the liability, which may, at the option of the counterparty, result in its liquidation through the issuance of equity instruments do not affect its classification.
(6) Foreign Currencies

In preparing the consolidated financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign currencies are recognized at the rates of exchange prevailing at the dates of the transactions.

The exchange differences are recognized as profit or loss in the reporting period in which they occurred.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company’s foreign operations are translated into NT$ using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated inequity.

(7) Cash and Cash Equivalents

(8) Financial Instruments

iginally measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of them. Accounts receivable that does not contain significant financial

156

components are measured at transaction prices.

Financial Assets

(1) Financial assets measured at amortized cost
Financial assets that meet both of the following conditions and are not designated as measured at fair value through profit or loss are measured at amortized cost:
- A.The financial asset is held under the business model for the purpose of
- collecting contractual cash flow.
- B.The contractual terms of the financial asset generate cash flows on specified dates that are exclusively for the payments of principal and interest on the principal amount outstanding.

(2) Financial assets at FVTPL
Financial assets that are neither measured at amortized cost as above nor at fair value through other comprehensive income are measured at fair value through profit or loss, including derivative financial assets. In order to eliminate or significantly reduce the improper accounting ratio at the time of original recognition, the Company may irrevocably designate financial assets that meet the conditions of measuring at amortized cost or at fair value through other comprehensive income as at fair value through profit or loss. These assets are subsequently measured at fair value, and the net profit or loss are recognized as profit or loss.
(3) Financial assets at FVTOCI

On initial recognition, the Company may irrevocably designate investments in equity investments that is not held for trading as at FVTOCI. This decision is made on an instrument-by-instrument basis.

(4) Impairment of financial assets

157

A. Debt securities are considered to have low credit risk on reporting date; and
B. the credit risk on other debt securities and bank deposits (i.e., the risk of default during the expected life of the financial instrument) has not increased significantly since initial recognition.

The allowance for losses on accounts receivable and contract assets is measured at an amount equal to lifetime expected credit losses.

The expected credit loss during the lifetime refers to the expected credit loss arising from all possible default events during the expected duration of the financial instrument.

The longest period for measuring expected credit losses is the longest contractual period over which the Company is exposed to credit risk. Expected credit loss is the probability-weighted estimate of credit loss during the expected lifetime of a financial instrument. Credit losses are measured as the present value of all cash shortfalls, which is the difference between the cash flows that the Company can receive under the contract and the cash flows that the Company expects to receive. Expected credit losses are discounted at the financial asset's effective interest rate.

The Company assesses whether financial assets measured at amortized cost and debt securities measured at fair value through other comprehensive income are credit-impaired at each reporting date. A financial asset is credit-impaired when one or more events that have an adverse effect on the estimated future cash flows of the financial asset have occurred. Evidence that the financial asset is credit-impaired includes below item’s observable information:

A. Significant financial difficulties of the borrower or issuer;
B. Default, such as delay or overdue more than 90 days;
C. Concessions granted by the Company to the borrower that would not have been considered by the Company for economic or contractual reasons related to the borrower's financial difficulties;
D. Borrower is likely to file for bankruptcy or other financial restructuring; or
E. Absence of an active market for the financial asset due to financial difficulties.

158

comprehensive income (without reducing the book value of the asset), and the amount of the recognition or reversal of the allowance is recognized in profit or loss.

(5) Derecognition of financial assets

(9) Financial Liabilities and Equity Instruments
Classification as debt or equity

2.Equity instruments

3.Financial liabilities
Financial liabilities are not held for transactions and are not designated to be subsequently measured as at fair value through profit or loss, including notes payable, accounts payable and other payables. When originally recognized, it is measured at fair value plus directly attributable transaction costs. The subsequent evaluation adopts the effective interest rate method to measure at amortized cost, and the interest expenses not capitalized as asset costs are included in the non-operating income and expenses.
Derecognition of financial liabilities
The merging Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled or they expire.

When derecognizing financial liability, the difference between its book value and total amount paid or payable, including any non-cash assets transferred or liabilities assumed, is recognized as profit or loss, and listed under non-operating income and expenses.

Offset of financial assets and liabilities Financial assets and liabilities are offset and listed on the balance sheets in net amount only when the merging company has legal rights to offset them and intends to settle net or to realize assets and liquidate liabilities at the same time.
(10) Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost at the end of the

159

reporting period. Net realizable value represents the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale.

(11) Investments Accounted for Using Equity Method
Investments accounted for using the equity method include investments in subsidiaries, associates, and joint ventures.
An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor a joint venture. Significant influence refers to the power to participate in the investee's financial and operating policy decisions, but not the power to control or jointly control such policy decisions.

When assessing impairment, the Company regards the overall book value of the investment including goodwill as a single asset and compares the recoverable amount (the higher of the value in use or the fair value minus the cost of sale) with the book value to conduct an impairment test. The recognized impairment loss will be included in the book value of the investment. A reversal of any impairment loss is recognized to the extent of subsequent increases in the recoverable amount of the investment.

When there are transactions between the consolidated entities and related companies or joint ventures, unrealized gains and losses are eliminated proportionally upon consolidation.

(12) Property, Plant and Equipment

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

160

accumulated impairment. Costs include any costs that are directly attributable to the construction, acquisition of the item of property, plant and equipment, any other directly attributable costs of bringing the asset to a usable condition for its intended purpose, and costs of dismantling, relocation, and restoration of original location. The aforementioned costs include renewal costs for replacing part of the plant and equipment and necessary interest expenses arising from the construction contract.

Self-owned land is not recognized for depreciation.

ated useful lives:
Buildings	5 to 51 years
Machinery	2 to 16 years
Mold	2 to 3 years
Transportation equipment	2 to 6 years
Computer communication equipment	4 years
Office equipment	3 to 5 years
Business equipment	2 to 7 years
Lease improvement	5 years
Other equipment	2 to 11 years

161

deferred basis.

(13) Leases
Lease judgement
- The Company assess whether the contract is or contains a lease on the date of establishment of the contract.
2.The Company as lessor

Lease payments that are included in lease liability includes:

(1) Fix payment, including substantiative fix payment;
(2) Changing lease payment that depends on an index or rate using the index or rate on the leasing start date for original measurement.

Lease liability interests are recognized with effective interest method and will be reevaluate when below situations happened:

(1) Index or rate which is for deciding lease payment changes that leads to changes in future lease payments;
(2) Estimation for whether to extend or end the option is changed and therefore changes the lease duration estimation;
(3) Payment amount changes to expected guarantee for residual;
(4) Estimation for options of target assets to purchase is changed;
(5) Leasing target, scope or other terms changed.

When the lease liability is remeasured due to the aforementioned changes in the index or rate used to determine the lease payment, changes in the residual value guarantee amount, and changes in the evaluation of the purchase, extension or termination options, the book value of the right-of-use asset is adjusted accordingly, and when the carrying amount of the right-of-use asset has been reduced to zero, the remaining remeasured amount is recognized in profit or loss.

162

recognized in profit or loss.

A sale and leaseback transaction are assessed in accordance with IFRS 15 to assess whether the transfer of assets to the buyer-lessor meets the requirements for sale. If it is judged to be treated as a sale, the asset will be delisted and the part of the rights that have been transferred to the buyer and lessor will be recognized in the relevant profit or loss. The accounting treatment model of the lessee is applicable to the leaseback transaction, and the right-of-use asset is measured according to the original account amount of the leased back part. If it is judged not qualified as sale, the transferred asset shall continue to be recognized and the consideration received shall be recognized as a financial liability.

3.The Company as lessee
In transactions where the Company is the lessee; lease contract is classified according to whether it transfers almost all the risks and rewards of the ownership of the underlying asset on the date of establishment of the lease. If yes, then it’s classified as a finance lease, otherwise it is classified as operating lease.

When evaluating, the Company considers relevant specific indicators including whether the lease period covers the main part of the economic life of the underlying asset.

If the Company is a sublease lessor, it handles master lease and sublease transactions separately, and evaluates the classification of sublease transactions based on the right of use generated by the master lease. If the head lease is a short-term lease and the recognition exemption applies, the sub-lease transaction should be classified as an operating lease.

(14) Intangible Assets
Goodwill

Goodwill arising on the acquisition of a subsidiary is measured at cost less accumulated impairment losses.

Other intangible assets
Intangible assets acquired by the Company with finite useful lives are carried at cost less accumulated amortization and accumulated impairment losses.
Amortization is recognized using the straight-line method over the following estimated useful lives:
Computer software The economic life or contract

period

The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

(15) Impairment of Non-financial Assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets (excluding inventory, contractual assets, and deferred tax assets), to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated.

For the purposes of impairment testing, a group of assets whose cash inflows are largely independent of those of other individual assets or groups of assets is the smallest

163

identifiable group of assets. Goodwill acquired in a business combination is allocated to each cash-generating unit or group of cash-generating units that are expected to benefit from the benefits of the combination.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than it carrying amount, an impairment loss is recognized.

An impairment loss recognized for goodwill is not reversed in subsequent periods. Non-financial assets other than goodwill are reversed only to the extent that the asset's book value (less depreciation or amortization) would have been determined had no impairment loss been recognized in prior years.

(16) Provision

(17) Revenue Recognition

Sale of Goods

The Company recognizes accounts receivable when the goods are delivered, because the Company has the unconditional right to receive the consideration at that point in time.

Financial Composition

164

(18) Government Subsidy

The Company will comply with the conditions attached to the government grant and will recognize it only when the grant can be received.

(19) Employee Benefits

Defined contribution plan
- Contribution obligations that are part of defined contribution pension plans are recognized as an expense during the period of service performed by the employee. Prepaid appropriations are recognized as an asset to the extent that they will result in a return of cash or a reduction in future payments.
Defined benefit plan
- The Company's net obligation to the defined benefit plan is calculated by converting the number of future benefits earned by the employee's service in the current or previous period into the present value and deducting the fair value of the plan assets. The defined benefit obligation is actuarial zed annually by a qualified actuary using the projected unit benefit method. When the calculation result is likely to be beneficial to the Company, the recognized asset is limited to the present value of any economic benefit that can be obtained in the form of returning the allocation from the plan or reducing future allocations to the plan. The calculation of the present value of economic benefits considers any minimum funding requirements. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. The Company determines the net interest expense (income) of the net defined benefit liability (asset) using the net defined benefit liability (asset) and discount rate determined at the beginning of the annual reporting period. Net interest expense and other expenses for defined benefit plans are recognized in profit or loss. Changes in benefits associated with prior service costs or curtailment benefits or losses arising from program modifications or curtailments are recognized immediately in profit or loss. The Company recognizes the liquidation profit and loss of the defined benefit plan when the liquidation occurs.
Short-term employee benefits
- Short-term employee benefit obligations are recognized as expenses when services are rendered. If the Company has a current statutory or constructive payment obligation due to the past service provided by the employee, and the obligation can be reliably estimated, the amount is recognized as a liability.
(20) Borrowing Cost

Aside from the aforementioned, all other borrowing costs are recognized as profit or loss within the year in which it occurred.

(21) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Current income tax including the income tax payable or tax refund receivable, which is calculated based on the taxable income (loss) of the current year, and any adjustments of tax payable and tax refund receivable in previous years whose amount is the best estimate of the amount expected to be paid or received based on the statutory tax rate or substantive legislative tax rate on the reporting date.

Deferred income tax is recognized by measuring the temporary difference between the

165

carrying amount of assets and liabilities at the financial reporting date and their tax base. Unused tax losses, unused income tax credits carried forward, and deductible temporary differences are recognized as deferred tax assets to the extent that future taxable income is likely to be available for use, and will be reevaluate at every reporting date where relevant income tax benefits will be adjusted to the extent that it is not likely to be realized, or reverse the original reduced amount within the scope that it is likely to have sufficient taxable income.

The Company only allows offsets of deferred tax asset and deferred tax liability when both conditions below are met:

  1. Has the statutory enforcement power to offset current income tax assets and current income tax liabilities; and

  2. Deferred tax asset and liabilities are related to one of the following taxpayers who are levied income tax by the same tax authority：

     - (1) Same tax entity; or

     - (2) Different tax entity, but each subject intends to settle current income tax liabilities and assets on a net basis, or realize assets and settlement simultaneously, in each future period in which significant amounts of deferred income tax assets are expected to be recovered and deferred income tax liabilities are expected to be settled.

(22) Earnings per share
The Company presents basic and diluted earnings per share attributable to equity holders of the Company's common stock. The Company's basic earnings per share is calculated by dividing the profit or loss attributable to the Company's common stockholders by the weighted average number of common shares outstanding in the current period. Diluted earnings per share is calculated by adjusting the profit and loss attributable to ordinary equity holders of the Company and the weighted average number of ordinary shares outstanding, respectively, after adjusting the impact of all potential dilutive ordinary shares.
(23) Operating Segment Information

An operating segment is the part of the consolidated Company that is engaged in activities that may generate revenue and incur expenses, including those related to transactions between other parts within the consolidated Company. The operating results of all operating segments are regularly reviewed by the chief operating decision-maker of the consolidated Company to make decisions on allocating assets to the divisions and evaluating their performance. Consolidated financial information is available for each operating segment.

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

For the uncertainty of assumptions and estimates, there are major risks that will cause major adjustments in the next year. The relevant information is as follows.

Uncertainty in the following assumptions and estimates has a material risk of causing a material adjustment to the carrying amount of assets and liabilities in the next financial year

166

and has already reflected the impact of the COVID-19 pandemic. See below:

(1) Allowance for Losses on Accounts Receivable
The allowance for loss of the Company's accounts receivable is estimated based on the assumptions of default risk and expected loss rate. The Company considers historical experience, current market conditions and forward-looking estimates on each reporting date to determine the assumptions to be used and the input values selected when calculating the impairment. Please refer to Note 6(4) for details on related assumptions and input value.
(2) Valuation of Inventory
Inventories are stated at the lower of cost or net realizable value, and the Company estimates the net realizable value of inventory for normal waste, obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is determined mainly based on assumptions of future demand within a specific time horizon, therefore major changes may occur due to rapid changes in the industry.
(3) Impairment of investment using equity method
When there is any indication of impairment that an investment using the equity method may have been impaired and the carrying amount cannot be recovered, the Company immediately assesses the impairment of the investment. The Company assesses the impairment based on the future cash flow forecast of the invested company, including the sales growth rate and capacity utilization rate estimated by the internal management of the invested company, and analyzes the rationality of the relevant assumptions.
(4) Impairment of Tangible Assets and Intangible Assets Other than Goodwill In the process of evaluating the potential impairment of tangible assets and intangible assets other than goodwill, the Company determines the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of semiconductor industry. Any change in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years.
(5) Recognition and Valuation of Provisions
The provision for product warranty liabilities is estimated when the product sales revenue is recognized and is estimated based on the quantity of products that are still in the warranty repair period, the historical and expected repair rate of such products, and the estimated unit repair cost. The Company continues to review the estimation basis and revise it when appropriate. Any change in the above estimation basis may have a significant impact on the estimation of product warranty liability reserves.
(6) Realization of Deferred Income Tax Assets
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available for deductible temporary differences in the future. Assessment of the realization of the deferred tax assets requires subjective judgment and estimate, including the future revenue growth and profitability, tax holidays, the amount of tax credits can be utilized and feasible tax planning strategies. Any changes in the global economic environment, the industry trends and relevant laws and regulations could result in significant adjustments to the deferred tax assets.
(7) Measurement of Defined Benefit Obligations
The defined benefit costs and net defined benefit liabilities (assets) that should be recognized in the defined benefit retirement plan are actuarially evaluated using the projected unit benefit method, and the actuarial assumptions adopted include discount rate, employee turnover rate and future salary increase rate, etc. Changes in these assumptions due to changes in market and economic conditions may materially affect the amount of expenses and liabilities recognized. Please refer to Note 6 (17) for the description of the

167

major actuarial assumptions and sensitivity analysis adopted by the actuarial. 6.ILLUSTRATION OF IMPORTANT ACCOUNTING ITEMS (1) Cash And Cash Equivalents

December 31, 2022 Cash $ 2,873 Deposits in banks 1,129,298 $ 1,132,171 Financial Assets at Fair Value Through Profit or Loss Current: Mandatorily measured at FVTPL December 31, 2022 Domestic listed (counter) stocks $ 380,865 Adjustments (3,863) $ 377,002 Non-Current: Mandatorily measured at FVTPL December 31, 2022 Domestic listed (counter) stocks $ 27 Adjustments (27) $ - 1. Profit and loss of financial assets measured at FVTPL Mandatorily measured at FVTPL 2022 Evaluation (loss) profit $ (11,149) Profit of disposal $ 2,095 Dividend income $ 16,926	December 31, 2021	December 31, 2021
	$ 3,029 934,623
	$ 937,652
		December 31, 2021
		$ 165,131 7,286
		$ 172,417
		December 31, 2021 $ 27 (27) - 2021
$ (11,149)		$ 7,073
$ 2,095		$ -
$ 16,926		$ 1,437

(2) Financial Assets at Fair Value Through Profit or Loss

2.The Company has not pledged financial assets at fair value through profit or loss.
3.Aforementioned equity instrument are held for trading purposes, so they are measured at fair value through profit or loss.
4.The Company invested FRF5,000 (around NT$27 thousand) in French agent AUTECH EUROPE in 1990, whose total capital is FRF100,000. In 1996, the value of the invested company had been reduced, and there was little hope of recovery, the total investment amount was transferred as a loss.

(3) Non-current Financial Assets at Fair Value Through Other Comprehensive Income

Measured at FVTOCI Domestic listed (counter) stocks Adjustments	December 31, 2022 $ 21,391 (10,933) $ 10,458	December 31, 2021
		$ 12,789 4,040
		$ 16,829

168

1.The Company holds theses equity instruments for long-term strategic investments, therefore designated the investments as measured at FVTOCI.
2.The Company disposed equity investments with fair value of NT$3,808 (in thousands) and NT$8,578(in thousands), respectively, in 2022 and 2021, with the accumulated disposal benefits of NT$1,125(in thousands) and NT$2,744 (in thousands) , respectively. The Company has transferred the accumulated disposal benefits from other interests to retained earnings.
Profit and loss of financial assets measured at FVTOCI:

Measured at FVTOCI Dividend income recognized as profit or loss Hold at the end of the period Delisted within the period Changes in fair value at other comprehensive income (loss) Accumulated interest transferred to retained earnings due to delisting	2022 $ 1,188 - $ 1,188 $ (13,848) $ 1,125	2021
		$ 287 -
		$ 287
		$ 5,303
		$ 2,744

4.The Company has not pledged financial assets at fair value through other comprehensive income.

(4) Notes and Accounts Receivable

Notes and Accounts Receivable
Notes receivable Less: Loss allowance Net Accounts receivable Less: Loss allowance Net	December 31, 2022 $ 386,323 (4,683) $ 381,640 December 31, 2022 $ 468,846 (11,234) $ 457,612	December 31, 2021
		$ 251,345 (3,867)
		$ 247,478
		December 31, 2021
		$ 557,144 (30,611)
		$ 526,533

The payment term granted to customers is due 30 - 90 days from the invoice date, and the account receivable are not interest-bearing.

The Company adopts the simplified approach of IFRS 9 to recognize the allowance loss of accounts receivable based on the expected credit loss during the duration.

The expected credit loss during the duration is calculated using the provision matrix, which considers the customer's past default record, current financial situation, and industrial economic situation. As the Company's historical credit loss experience shows that there is no significant difference in the loss patterns of different customer groups, the provision matrix does not further distinguish customer groups, and only determines the expected credit loss rate based on the number of days overdue of accounts receivable. If there is evidence that the counterparty is facing serious financial difficulties and the Company cannot reasonably expect the recoverable amount, the Company will write off

169

the relevant accounts receivable directly, but will continue to pursue, and the recovered amount due to the pursuit activities will be recognized in profit or loss.

The Company measures loss allowance for notes and accounts receivable according to below provision matrix:

below provision matrix:
Not past due Past due within 30 days Past due within 31-180 days Past due within 181-365 days Past due more than a year Total		December 31, 2022
	Total book value $ 811,590 12,382 15,109 5,603 10,485 $ 855,169	Loss allowance (expected credit loss in the duration) $ (6,104) (248) (388) (1,352) (7,825) $ (15,917)	Cost after amortization
			$ 805,486 12,134 14,721 4,251 2,660
			$ 839,252

December 31, 2021 Total book value Loss allowance (expected credit loss in the duration) Cost after amortization Not past due $ 719,421 $ (6,338) $ 713,083 Past due within 30 days 10,338 (265) 10,073 Past due within 31-180 days 14,999 (308) 14,691 Past due within 181-365 days 44,568 (11,607) 32,961 Past due more than a year 19,163 (15,960) 3,203 Total $ 808,489 $ (34,478) $ 774,011 The Company’s expected credit loss rate for abovementioned intervals (excluding abnormal payments whose loss are rated 100%) are: not past due and past due within 90 days is within 1%, past due within 365 days is within 5%, and past due more than 365 days will be 5% - 80%.		December 31, 2021
			Cost after amortization
			$ 713,083 10,073 14,691 32,961 3,203
			$ 774,011

Movements of loss allowance for notes and account receivables:

Balance, beginning of Provision (Reversal) Write off Exchange rate impacts Balance, end of year	2022 $ 34,478 2,172 (20,803) 70 $ 15,917	2021
		$ 20,027 14,485 - (34)
		$ 34,478

170

(5) Inventories

December 31,2022 December 31,2021 Products $ 5,242 $ 4,432 Raw materials 579,565 526,494 Work in process 916,835 854,587 Finished goods 105,365 164,133 $ 1,607,007 $ 1,549,646 1. Expenses related to inventories within the year 2022 2021 Cost of goods sold $ 2,362,128 $ 2,878,255 Inventory depreciation and obsolete loss 41,547 42,580 Inventory scrap 2,352 6,533 Inventory loss 2,294 1,664 Income from sale of scrap (1,205) (1,175) Costs related to idle capacity 25,501 23,163 $ 2,432,617 $ 2,951,020 2. The Company has not pledged inventories on December 31, 2022 and 2021. (6) Investments Accounted for Using Equity Method December 31, 2022 December 31, 2021 Associates $ 109,850 $ 96,604 Associates consisted of the following: Associates Principal Activities Place of Incorporation and peration Carrying amount % of Ownership and Voting Rights Held by the Company December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 YAMA SEIKI USA,INC. Design and production of CNC machine tools with linkage of more than three axes, CNC systems, servo devices and related components, and maintenance and sales of precision CNC machine tools US $ 101,849 $ 89,149 28.58% 28.58% Huahan Leasing Co., Ltd. Rental of machinery Taiwan 8,001 7,455 13.33% 13.33% $ 109,850 $ 96,604	December 31,2022 December 31,2021 Products $ 5,242 $ 4,432 Raw materials 579,565 526,494 Work in process 916,835 854,587 Finished goods 105,365 164,133 $ 1,607,007 $ 1,549,646 1. Expenses related to inventories within the year 2022 2021 Cost of goods sold $ 2,362,128 $ 2,878,255 Inventory depreciation and obsolete loss 41,547 42,580 Inventory scrap 2,352 6,533 Inventory loss 2,294 1,664 Income from sale of scrap (1,205) (1,175) Costs related to idle capacity 25,501 23,163 $ 2,432,617 $ 2,951,020 2. The Company has not pledged inventories on December 31, 2022 and 2021. (6) Investments Accounted for Using Equity Method December 31, 2022 December 31, 2021 Associates $ 109,850 $ 96,604 Associates consisted of the following: Associates Principal Activities Place of Incorporation and peration Carrying amount % of Ownership and Voting Rights Held by the Company December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 YAMA SEIKI USA,INC. Design and production of CNC machine tools with linkage of more than three axes, CNC systems, servo devices and related components, and maintenance and sales of precision CNC machine tools US $ 101,849 $ 89,149 28.58% 28.58% Huahan Leasing Co., Ltd. Rental of machinery Taiwan 8,001 7,455 13.33% 13.33% $ 109,850 $ 96,604	December 31,2022 December 31,2021 Products $ 5,242 $ 4,432 Raw materials 579,565 526,494 Work in process 916,835 854,587 Finished goods 105,365 164,133 $ 1,607,007 $ 1,549,646 1. Expenses related to inventories within the year 2022 2021 Cost of goods sold $ 2,362,128 $ 2,878,255 Inventory depreciation and obsolete loss 41,547 42,580 Inventory scrap 2,352 6,533 Inventory loss 2,294 1,664 Income from sale of scrap (1,205) (1,175) Costs related to idle capacity 25,501 23,163 $ 2,432,617 $ 2,951,020 2. The Company has not pledged inventories on December 31, 2022 and 2021. (6) Investments Accounted for Using Equity Method December 31, 2022 December 31, 2021 Associates $ 109,850 $ 96,604 Associates consisted of the following: Associates Principal Activities Place of Incorporation and peration Carrying amount % of Ownership and Voting Rights Held by the Company December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 YAMA SEIKI USA,INC. Design and production of CNC machine tools with linkage of more than three axes, CNC systems, servo devices and related components, and maintenance and sales of precision CNC machine tools US $ 101,849 $ 89,149 28.58% 28.58% Huahan Leasing Co., Ltd. Rental of machinery Taiwan 8,001 7,455 13.33% 13.33% $ 109,850 $ 96,604
	December 31, 2022	December 31, 2021
	28.58% 13.33%	28.58% 13.33%

(1) The Company invested $1,700 thousand USD in YAMA SEIKI USA, INC. through the resolution of the Board of Directors on December 23, 2010, engaging in the operation of parts and accessories of machine tools, sales and installation of mechanical appliances, and international trade.
(2) The Company invested NT$7,333 thousand in Huahan Leasing Co., Ltd. through the resolution of the Board of Directors on August 2021, engaging in machinery rental business.

171

(3) The Company's portion of profit and loss and other comprehensive income and loss of associates subsidiaries that adopted the equity method in 2022 and 2021 were recognized based on the financial reports of the associates audited by accountants during the same period.

(7) Property, plant and equipment

Self-owned land Buildings Machinery equipment Tooling equipment Transportation Equipment Computer communication equipment Business equipment Lease Improvement Other equipment Equipment to be checked and construction in progress Self-owned land January 1, 2022 Additions Cost Self-owned land $ 536,761 $ - Buildings 1,592,374 - Machinery equipment 413,581 1,892 Tooling equipment 51,161 3,560 Transportation Equipment 67,279 5,362 Computer communication equipment 12,578 7,313 Office equipment 8,357 707 Business equipment 17,802 1,010 Lease Improvement 749 - Other equipment 50,376 1,045 Equipment to be checked and construction in progress 9,459 60 $ 2,760,477 $ 20,949	December 31, 2022 December 31, 2021 $ 536,761 $ 536,761 1,045,193 1,094,808 149,012 178,880 6,304 5,885 15,187 15,221 8,833 2,968 1,463 1,321 5,989 8,282 - 21 19,195 19,388 9,536 9,459 $ 1,797,473 $ 1,872,994 Disposals Reclassifica tion Ex-rate impact December 31, 2022 $ - $ - $ - $ 536,761 - - 6,371 1,598,745 (19,896) (10,210) 3,057 388,424 (412) - 59 54,368 (1,846) - 211 71,006 (309) - 121 19,703 (3,124) - 50 5,990 - - - 18,812 - - - 749 (1,083) 10,210 372 60,920 - - 17 9,536 $ (26,670) $ - $ 10,258 $ 2,765,014	December 31, 2022 December 31, 2021 $ 536,761 $ 536,761 1,045,193 1,094,808 149,012 178,880 6,304 5,885 15,187 15,221 8,833 2,968 1,463 1,321 5,989 8,282 - 21 19,195 19,388 9,536 9,459 $ 1,797,473 $ 1,872,994 Disposals Reclassifica tion Ex-rate impact December 31, 2022 $ - $ - $ - $ 536,761 - - 6,371 1,598,745 (19,896) (10,210) 3,057 388,424 (412) - 59 54,368 (1,846) - 211 71,006 (309) - 121 19,703 (3,124) - 50 5,990 - - - 18,812 - - - 749 (1,083) 10,210 372 60,920 - - 17 9,536 $ (26,670) $ - $ 10,258 $ 2,765,014
		$ 536,761 1,598,745 388,424 54,368 71,006 19,703 5,990 18,812 749 60,920 9,536
		$ 2,765,014

172

Depreciation $ 54,359 25,761 3,159 5,386 1,464 574 3,303 21 5,529 $ 99,556 Depreciation	Ex-rate impact	December 31, 2022
	$ 1,627 1,522 41 155 81 40 - - 178	$ 553,552 239,412 48,064 55,819 10,870 4,527 12,823 749 41,725
	$ 3,644	$ 967,541
	Ex-rate impact	$ 1,797,473
		December 31, 2021 $ 536,761 1,592,374 413,581 51,161 67,279 12,578 8,357 17,802 749 50,376 9,459 $ 2,760,477
$ - - 2,684 3,540 6,469 667 176 96 - 3,901 39,948	$ - (1,732) (1,533) (34) (111) (58) (24) - - (167) (1,324)
$ 57,481	$ (4,983)

173

			January 1, 2021	January 1, 2021	Depreciation	Depreciation	Disposals	Disposals	Reclassifica tion	Reclassifica tion	Reclassifica tion		Ex-rate impact	December 31, 2021	December 31, 2021
Accumulated
depreciation
Buildings		$		450,143	$	48,170	$	-	$		-	$	(747)	$	497,566
Machinery equipment				205,341		28,558		(2,202)			4		3,000		234,701
Tooling equipment				40,950		5,219		(868)			-		(25)		45,276
Transportation Equipment				52,275		6,430		(6,559)			-		(88)		52,058
Computer
communication				8,389		1,418		(159)			-		(38)		9,610
equipment
Office equipment				6,323		733		-			-		(20)		7,036
Business equipment				5,763		3,757		-			-		-		9,520
Lease Improvement				670		58		-			-		-		728
Other equipment				27,026		4,353		(311)			-		(80)		30,988
		$		796,880	$	98,696	$	(10,099)	$		4	$	2,002	$	887,483
Net		$		1,923,220										$	1,872,994
	1. Please refer to Note 8 for property, plant and equipment											pledged for borrowing.
	2.		On December 31,			2022 and	2021, the Company's				land	was partly agricultural land,
		and the amount			temporarily registered in the name						of another person was NT$88,529
		thousand. The Company has					obtained a certificate of other						rights for the land.
(8) Lease Arrangement
	1. Right-of-use assets
								December		31,	2022		December 31,2021
			Land					$		129,803			$		141,490
		Buildings									2,232				4,594
								$		132,035			$		146,084
			January 1, 2022 Depreciation				Disposals		Reclassifica tion				Ex-rate impact		December 31, 2022
Cost
Land		$		182,835 $		603	$	-	$	25,080		$	2,357	$	210,875
Buildings				5,334		694		(1,634)			-		-		4,394
		$		188,169 $		1,297	$	(1,634)	$	25,080		$	2,357	$	215,269
			January 1, 2022 Depreciation				Disposals		Reclassifica tion				Ex-rate impact		December 31, 2022
Accumulated
depreciation
Land		$		41,345 $		14,102	$	-	$	25,080		$	545	$	81,072
Buildings				740		1,422		-			-		-		2,162
		$		42,085 $		15,524	$	-	$	25,080		$	545	$	83,234
Net		$		146,084										$	132,035

174

January 1, 2021 Depreciation Cost Land $ 183,858 $ - Buildings 23,088 5,334 Transportati on equipment 308 - $ 207,254 $ 5,334 January 1, 2021 Depreciation Accumulated depreciation Land $ 27,669 $ 13,734 Buildings 8,668 4,952 Transportati on equipment 308 - $ 36,645 $ 18,686 Net $ 170,609 2. Lease liabilities Current Non-current	Disposals Reclassifica tion $ - $ - (23,088) - (308) - $ (23,396) $ - Disposals Reclassifica tion $ - $ - (13,116) 236 (308) - $ (13,424) $ 236 December31,2022 $ 11,420 918 $ 12,338	Disposals Reclassifica tion $ - $ - (23,088) - (308) - $ (23,396) $ - Disposals Reclassifica tion $ - $ - (13,116) 236 (308) - $ (13,424) $ 236 December31,2022 $ 11,420 918 $ 12,338	Ex-rate impact December 31, 2021 $ (1,023) $ 182,835 - 5,334 - - $ (1,023) $ 188,169 Ex-rate impact December 31, 2021 $ (58) $ 41,345 - 740 - - $ (58) $ 42,085 $ 146,084 December31,2021 $ 11,606 12,764 $ 24,370
			$
			$

		$ 11,420 918
		$ 12,338

3. Material terms of right-of-use assets

The Company leases many assets with lease terms of 3 to 10 years. The Company does not have purchase options to acquire the assets at the end of the lease terms.

The Company leases land in the People's Republic of China for product manufacturing for a period of 50 years. The lease payment is paid in one lump sum when the contract is signed, and the Company does not have the right to purchase the land at the end of the lease terms.

4. Other lease information

4. Other lease information	4. Other lease information
Expenses relating to short-term and low-value assets leases Total cash outflow for leases (9) Intangible Assets Goodwill $ Software $		2022 $ 1,199 $ 11,410 111.12.31 642 9,726 10,368	2021 $ 2,239 $ 14,914 110.12.31
	$		$ 642 11,401
	$		$ 12,043

175

January 1, 2022 Depreciation Disposals Reclassificat ion Ex-rate impact December 31, 2022 Cost Goodwill $ 642 $ - $ - $ - $ - $ 642 Software 23,494 1,246 - - 81 24,821 $ 24,136 $ 1,246 $ - $ - $ 81 $ 25,463 January 1, 2022 Depreciation Disposals Reclassificati on Ex-rate impact December 31, 2022 Accumulated amortization Software $ 12,093 $ 2,965 $ - $ - $ 37 $ 15,095 $ 12,093 $ 2,965 $ - $ - $ 37 $ 15,095 Net $ 12,043 $ 10,368 January 1, 2021 Depreciation Disposals Reclassificati on Ex-rate impact December 31, 2021 Cost Goodwill $ 642 $ - $ - $ - $ - $ 642 Software 23,112 4,639 (4,211) - (46) 23,494 $ 23,754 $ 4,639 $ (4,211) $ - $ (46) $ 24,136 January 1, 2021 Depreciation Disposals Reclassificati on Ex-rate impact December 31, 2021 Accumulated amortization Software $ 13,871 $ 2,406 $ (4,163) $ - $ (21) $ 12,093 $ 13,871 $ 2,406 $ (4,163) $ - $ (21) $ 12,093 Net $ 9,883 $ 12,043 (10) Net Overdue Receivables December 31, 2022 December 31, 2021 Overdue receivables $ 9,732 $ 19,424 Less: Allowance for uncollectible accounts (9,732) (19,424) $ - $ - (11) Other current financial assets December31,2022 December31,2021 Repatriated Offshore Funds $ 353,397 $ 317,381 Restricted assets – bank deposits 188,170 3,758 $ 541,567 $ 321,139	Disposals	Reclassificat ion $ - - $ -	Ex-rate impact $ - 81 $ 81	December 31, 2022 $ 642 24,821 $ 25,463
	$ - -
	$ -
	Disposals
	$ -
	$ -
	Disposals

The repatriated offshore funds of the Group approved by National Taxation Bureau, Ministry of Finance according to Regulations Governing the Management Repatriated Offshore Funds will be submitting an investment plan to the Ministry of Economic Affairs within one year of the day when the funds are deposited into the designated foreign exchange deposit account in accordance with Article 8 of the regulation. The investment plan was approved by approval letter no. 111020433960 on September 23, 2021.

176

(12) Short-Term Loans

(12) Short-Term Loans
			December		31, 2022		December		31, 2021
Secured loans			$		509,949		$		310,781
Credit loans					1,445,000				1,025,000
			$		1,954,949		$		1,335,781
Interest interval			1.3123%-4.9000%				0.5451%-5.0025%
Please refer to Note 8	for guarantees.
(13) Short-term Notes Payable
			December		31,2022		December		31,2021
Short-term notes payable			$		290,000		$		260,000
Less: Discounts on notes payable					(359)				(93)
			$		289,641		$		259,907
Interest interval			1.30%-1.78%				0.60%-0.63%
(14) Other Payables
			December		31, 2022		December		31, 2021
Other expenses payable			$		101,697		$		116,916
Employee compensation payable					16,000				12,000
Compensation due to directors and supervisors					1,800				1,800
Dividends payable					491				491
Payable on equipment and projects					2,379				3,769
Others					6,522				4,583
			$		128,889		$		139,559
(15) Current provisions
			December		31,2022		December		31,2021
Warranty			$		5,272		$		4,355
Employee benefits					7,173				8,579
			$		12,445		$		12,934
January 1, 2022		Additions		Reversals			Ex-rate impact	December 31, 2021
Warranty $	4,355	$	917	$	-	$	-	$	5,272
Employee benefits	8,579		18		(1,448)		24		7,173
$	12,934	$	935	$	(1,448)	$	24	$	12,445

177

Warranty Employee benefits	January 1, 2022 $ 7,927 16,914 $ 24,841	Additions $ - 154 $ 154	Reversals $ (3,572) (8,478) $ (12,050)	Ex-rate impact $ - (11) $ (11)	December 31, 2021
					$ 4,355 8,579
					$ 12,934

The provision for warranty is based on the sales contract, and the management of the Company makes the best estimate based on the historical experience of the product.
Provision for employee benefit refers to the Company's current legal or constructive payment obligations due to past service provided by employees, and when the obligations can be reliably estimated, the amount is recognized as liabilities.

(16) Long-term Loans

Nature of loan Secured loans Sum Less: due within a year Total Interest interval	Year due 118	December31,2022 $ - - - $ - -	December31,2021 $ 62,672 62,672 - $ 62,672 0.3800~3.9000%

Please refer to Note 8 for guarantees provided.

(17) Employee Benefits

Defined benefit plans
The Company has defined benefit plans under the R.O.C. Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The Company contributes an amount equal to 2% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. Before the end of each year, the Company assesses the balance in the Funds. The Funds are operated and managed by the government’s designated authorities; as such, the Company does not have any right to intervene in the investments of the Funds.

The present value of defined benefit obligation is calculated by a qualified actuary. The main assumptions of the actuarial on the measurement date are listed below:

(1) Assumptions of the actuarial on the measurement date:

	December31,	2022	December31,2021	December31,2021
Discount rate	1.400%			0.750%
Expected salary adjustment rate	2.500%			2.500%
(2) The amount of pension expenses	recognized in the consolidated			comprehensive
income statement for the defined	benefit plan is listed as		follows:
	2022			2021
Current service cost	$	235	$	288
Net interest expense		273		147
Interest income from plan assets		(180)		(106)
Recognized in profit or loss		328		329
Remeasurement
Actuarial loss arising from experience adjustments		743		1,002

178

Actuarial loss arising from changes in demographic assumptions Actuarial gain arising from changes in financial assumptions Return on plan assets Recognized in other comprehensive income Total	- (1,858) (2,181) (3,296) $ (2,968)	1,974 (1,517) (424) 1,035 $ 1,364

The pension costs of the aforementioned defined benefit plans were recognized in profit or loss by the following categories:

		2022	2021	2021
Cost of revenue	$	624	$	654
Marketing expenses		71		93
General and administrative		62		87
expenses
Research and development		70		72
expenses
Others		(499)		(577)
	$	328	$	329
(3) The amounts arising from the defined benefit obligation			of the Company were
recognized in the consolidated balance sheets by the following categories:
	December 31, 2022		December 31, 2021
Present value of defined benefit obligation	$	28,824	$	36,351
Fair value of plan assets		(19,833)	(23,557)
Net defined benefit liability	$	8,991	$	12,794
(4) Movements in the present value	of the defined benefit obligation			were as
follows:
		2022	2021
Balance, beginning of year	$	36,351	$	43,218
Current service cost		235		288
Interest expense, net		273		147
Remeasurement:
Actuarial loss arising from experience adjustments		743		1,002
Actuarial loss arising from
changes in demographic		-		1,974
assumptions

179

Actuarial gain arising from
changes in financial		(1,858)		(1,517)
assumptions
Benefits paid from plan assets		(6,920)		(8,761)
Balance, end of year	$	28,824	$	36,351
(5) Movements in the fair value of the plan		assets were as follows:
		2022		2021
Balance, beginning of year	$	23,557	$	30,881
Interest income		180		106
Remeasurement:
Return on plan assets		2,181		424
Contributions from employer		835		907
Benefits paid from plan assets		(6,920)		(8,761)
Balance, end of year	$	19,833	$	23,557

The Company expected to allocate NT$835 thousand within a year after December 31, 2022.

Defined contribution plans

Shanghai Zhuwei Mechantronic Co., Ltd., Awea Mechantronic (Suzhou) Ltd., and Yih Chuan Machinery Industry (Jiaxing) Co., Ltd. adopted defined contribution plan, in which the companies allocate pension fund monthly to employees’ personal pension insurance accounts. The accounts are completely separate from the companies and will transfer with employee when they leave the companies. The amount that should be allocated is listed as the current expense. B-Way (Cayman) 、、 Co., Ltd Billion-Way (Cayman) Co., Ltd AXTRON INT’L INVESTMENT CO.,

LTD and AXTRON INT’L INVESTMENT LIMITED do not have full time employee, therefore there is no respective pension plans.

Accordingly, the Company recognized expenses of NT$20,276 thousand and NT$16,699 thousand for the years ended December 31, 2022 and 2021, respectively.

(18) Capital Stock

On December 31, 2022, the authorized common stock capital is NT$1,000,000 thousand, the paid-in capital is NT$965,942 thousand, with a par value of NT$10 per share, divided into 96,594,171 shares.

(19) Capital Surplus

According to the provisions of the Company Law, the capital surplus shall not be used except for making up for the Company's losses and appropriating capital. If the Company does not use the surplus reserve to make up for capital losses and if there is still a deficiency, it may not use the capital reserve to make up for it.
In accordance with the provisions of the Company Law, the premium obtained from the issuance of stocks exceeding the par value and the capital surplus obtained from the receipt of gifts may be used to make up for losses. Replenishment of capital is limited to a certain percentage of paid-in capital every year. In addition, changes in

180

ownership interests in subsidiaries are recognized to offset losses.

(20) Retained Earnings

The Company recognize and reverse special reserve according to No. 1090150022 letter issued from FSC and “Applicable questions and answers for the provision of special surplus reserve after the adoption of IFRSs”. If there is a subsequent reversal of the balance of the deduction of other shareholders' equity, the surplus may be distributed based on the reversal.

According to the Company's Articles of Incorporation, the Company's net profit after the annual final accounts, in addition to paying taxes and making up for previous years' losses according to law, should set aside 10% as a legal reserve and a special reserve according to law, then adding the undistributed earnings of the previous year to its balance and retaining part of the balance for the funds needed for enterprise growth, the Board of Directors will draw up a earning distribution proposal and submit it to the shareholders' meeting for resolution on distribution.

The Company's shareholders' regular meeting passed resolutions of earning distribution plans on June 15, 2022 and August 18, 2021, respectively, as follows:

Legal reserve Distribution: Capital surplus Cash dividends	Earning distribution plan 2021 2020 $ 13,278 $ 38,245 28,979 48,297 115,913 193,188	Cash dividends per share ~~NT$~~	Cash dividends per share ~~NT$~~
	2021 $ 13,278 28,979 115,913	~~()~~ 2021 2020 $ 0.3 $ 0.5 1.2 2.0
			$ 0.5 2.0

Aforementioned earning distribution is no different from the board resolutions of the Company on March 15, 2022 and March 17, 2021.

For the distribution of profits proposed by the Board of Directors and resolutions of the shareholders' meeting, please visit the "Market Observation Post System" of Taiwan Stock Exchange.

The appropriations of 2022 yearly earnings approved by the Company’s Board of Directors’ resolution on March 13, 2023 is as below:

Legal reserve Distribution: Cash dividends	Earning distribution plan 2022 $ 35,790 154,551	Cash dividends per share (NT$)
		2022

		1.6

The earning distribution plan of 2022 is still waiting for shareholders’ meeting resolution expected on June 7, 2023.

(21) Others

The exchange difference in the translation adjustment of foreign operations’ financial

181

statements refers to the relevant exchange differences arising from the translation of the functional currency to the Company’s expression currency (i.e., New Taiwan Dollars) of foreign operations’ net assets, and is listed directly under other comprehensive income. The other comprehensive income recognized in the year ended December 31, 2022 and 2021 are NT$18,524 thousand and NT$19,592 thousand, respectively.

(22) Non-controlling Interest

Balance, beginning of year Portions of non-controlling interest Net income (loss) Other comprehensive income Balance, end of year (23) Operating Income Total operating income Less: sales returns and discounts Sale of product Maintenance and other income 1.Revenue breakdown Major sales market by geography: Domestic Foreign Asia America Europe Other countries	2022 $ 119,261 (4,856) 1,114 $ 115,519 2022 $ 3,108,963 (8,446) $ 3,100,517 2022 $ 2,957,565 142,952 $ 3,100,517 2022 $ 806,651 1,483,083 377,286 427,914 5,583 $ 3,100,517	2021
		$ 128,625 (8,827) (537)
		$ 119,261
		2021
		$ 3,641,711 (10,755)
		$ 3,630,956
		2021
		$ 3,417,479 213,477
		$ 3,630,956
		2021
		$ 1,019,178 1,921,006 281,598 401,651 7,523
		$ 3,630,956

2. Contract balance

(1) The changes in the contract liability balances primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment.

182

December 31, 2022 December 31, 2021 Contract liabilities $ 225,013 $ 220,951 (2) Revenue of the year from the beginning balance of contract liability: 2022 2021 Sales revenue $ 201,348 $ 205,408 (24) Other Income 2022 2021 Rental income $ 11,570 $ 11,237 Dividend income 18,114 1,724 Other income 16,327 22,483 $ 46,011 $ 35,444 (25) Other Gain or Loss 2022 2021 Foreign exchange gain (loss) $ 127,208 $ (66,718) Net gain or loss on disposals of property, plant and equipment 211 1,499 Proceeds from disposal of financial assets 2,095 - Net (loss) gain on financial instruments at FVTPL (11,149) 7,073 Others (565) (194) $ 117,800 $ (58,340) (26) Finance Cost 2022 2021 Interest expense from bank loans $ 25,834 $ 14,106 Interest expense from lease liabilities 168 335 $ 26,002 $ 14,441 (27) Employee Benefits, Depreciation and Amortization Expense 2022 Recognized in cost of revenue Recognized in operating expenses Total Employee benefits expense Salary expense $ 221,718 $ 149,619 $ 371,337 Labor and health insurance expense 20,787 12,855 33,642 Pension expense 13,174 7,929 21,103 Director's remuneration - 2,440 2,440 Other employee benefit 7,324 6,471 13,795	December 31, 2022 December 31, 2021 Contract liabilities $ 225,013 $ 220,951 (2) Revenue of the year from the beginning balance of contract liability: 2022 2021 Sales revenue $ 201,348 $ 205,408 (24) Other Income 2022 2021 Rental income $ 11,570 $ 11,237 Dividend income 18,114 1,724 Other income 16,327 22,483 $ 46,011 $ 35,444 (25) Other Gain or Loss 2022 2021 Foreign exchange gain (loss) $ 127,208 $ (66,718) Net gain or loss on disposals of property, plant and equipment 211 1,499 Proceeds from disposal of financial assets 2,095 - Net (loss) gain on financial instruments at FVTPL (11,149) 7,073 Others (565) (194) $ 117,800 $ (58,340) (26) Finance Cost 2022 2021 Interest expense from bank loans $ 25,834 $ 14,106 Interest expense from lease liabilities 168 335 $ 26,002 $ 14,441 (27) Employee Benefits, Depreciation and Amortization Expense 2022 Recognized in cost of revenue Recognized in operating expenses Total Employee benefits expense Salary expense $ 221,718 $ 149,619 $ 371,337 Labor and health insurance expense 20,787 12,855 33,642 Pension expense 13,174 7,929 21,103 Director's remuneration - 2,440 2,440 Other employee benefit 7,324 6,471 13,795	December 31, 2021	December 31, 2021
		$ 220,951
		$	205,408
			2021
		$	11,237 1,724 22,483
		$	35,444
			2021
		$	(66,718) 1,499 - 7,073 (194)
		$	(58,340)
			2021
		$	14,106 335
		$	14,441

Recognized in cost of revenue $ 221,718 20,787 13,174 - 7,324	Recognized in operating expenses		Total
	$ 149,619 12,855 7,929 2,440 6,471		$ 371,337 33,642 21,103 2,440 13,795

183

expenses Depreciation expense Amortization expense Employee benefits expense Salary expense Labor and health insurance expense Pension expense Director's remuneration Other employee benefit expenses Depreciation expense Amortization expense	87,623 517	27,457 2,448 2021	115,080 2,965
	Recognized in cost of revenue $ 235,637 20,182 10,913 - 7,493 89,227 228	Recognized in operating expenses $ 136,226 12,559 6,692 3,715 6,598 28,155 2,178	Total
			$ 371,863 32,741 17,605 3,715 14,091 117,382 2,406

On December 31, 2022 and 2021, the Company has 594 and 637 employees, respectively, and 5 of which are non- part-time employee directors.

The Company recognized employee remuneration at NT$12,000 thousand and directors and supervisors' remuneration at NT$1,800 thousand for the year ended December 31, 2021. Related information can be found on Market Observation Post System. Actual amount distributed is no different from the estimation.

The Company’s salary policies (including directors, supervisors, managers, and employees) are as below:

Directors’ compensation

The Company's general directors and independent directors' compensation policy is determined according to their responsibilities, risks, invested time and other factors. According to the Company’s Articles of Incorporation, the compensation of the chairman, vice chairman and directors of the Company shall be determined by the Board of Directors according to the degree of participation in the operation of the Company and the value of their contribution, as well as the average level of domestic

184

and foreign industries. The Company’s Articles of Incorporation also stipulate that directors' compensation shall not exceed 2% of the annual profit.

Compensation to the supervisors

The Company replaced supervisor system with the audit committee since June 2020.

Compensation to the managers
Compensation to the managers is determined by the position, contribution, company’s operation performance of the Company of the year, and considers future risk. It is reviewed by Compensation Committee and sent to Board of Directors for resolution.
Compensation to the employees Compensation to the employees includes monthly payment and unscheduled performance bonus, year-end bonus, and employee compensation based on the Company’s profitability. The Company’s Articles of Incorporation stipulate that employees’ compensation should be no less than 3% - 8% of annual profit. The competitive compensation to the employees of subsidiaries (oversea) is determined not only according to local labor market, but also distribute annual bonus according to local regulations, industry practice, and each subsidiary’s performance as a whole, to encourage employee’s contribution and their growth with the Company.

(28) Income Tax

Income tax expense

Income tax expense of the year ended December 31, 2022 and 2021 consisted of the following:

Current income tax expense: Recognized in the current year Income Tax on Repatriation of Overseas Surplus Adjustments on prior years Deferred income tax expense: The origination and reversal of temporary differences Income tax expense (1) Income tax expense recognized in 2022 and 2021 was as follows: Income before tax Income tax expense at the statutory rate Tax effect of adjusting items: Non-included items in determining taxable income Effect of different applicable tax rates of the parent company and the subsidiaries Tax-exempt income Income tax on repatriation of overseas Surplus Adjustments on prior years Net change in deferred income tax Temporary differences	2022 2021 $ 75,692 $ 54,663 - 43,030 735 3,813 34,074 14,261 $ 110,501 $ 115,767 profit or loss of the year ended December 31, 2022 2021 $ 459,788 $ 237,800 $ 91,957 $ 47,560 28,042 999 (27,560) 17,722 (16,747) (11,618) - 43,030 735 3,813 34,074 14,261	2021
		$ 54,663 43,030 3,813 14,261
		$ 115,767
		$ 237,800
		$ 47,560 999 17,722 (11,618) 43,030 3,813 14,261

(1) Income tax expense recognized in profit or loss of the year ended December 31, 2022 and 2021 was as follows:

185

Income tax expense recognized in profit or loss

$ 110,501 $ 115,767

(2) Income tax expense recognized in other comprehensive income and loss of the year ended December 31, 2022 and 2021 was as follows:

Items are not reclassified to profit or loss subsequently Remeasurement of defined benefit plan Items may be reclassified to profit or loss subsequently Exchange difference on translation of financial statements of foreign operations	2022 $ 659 $ 4,631	2021
		$ (207)
		$ 4,898

The analysis of deferred income tax assets and liabilities was as follows:

Allowance for bad debts exceeded Unrealized exchange losses Unrealized loss on inventories Unrealized sales profit Unrealized no vacation bonus Unrealized warranty expense Loss write-off Pension exceeded and actuarial loss Exchange difference on translation of financial statements of foreign operations Investment offset - resource poor areas Others Subsidiaries, associates and joint venture profit and loss share	Deferred income tax assets	Deferred income tax assets
	December 31, 2022 December 31, 2021 $ 3,285 $ 8,734 (21,495) 8,580 82,583 74,935 6,765 5,784 1,309 1,522 1,054 871 18,625 18,977 1,785 2,544 7,302 11,933 - 14,250 70 80 $ 101,283 $ 148,210 Deferred income tax liabilities	December 31, 2021
		$ 8,734 8,580 74,935 5,784 1,522 871 18,977 2,544 11,933 14,250 80
		$ 148,210
	December 31, 2022 $ 112,224 $ 112,224	December 31, 2021
		$ 121,459
		$ 121,459

186

Recognized in profit or loss	Recognized in other comprehensive income	Ex-rate impact	Balance, end of the year
$ (5,885) (30,075) 6,418 981 (219) 183 (352) (100) - (14,250) (10)	$ - - - - - - - (659) (4,631) - -	$ 436 - 1,230 - 6 - - - - - -	$ 3,285 (21,495) 82,583 6,765 1,309 1,054 18,625 1,785 7,302 - 70
$ (43,309)	$ (5,290)	$ 1,672	$ 101,283
$ (9,497) 262	$ - -	$ - -	$ 111,962 262
$ (9,235)	$ -	$ -	$ 112,224

187

Balance, beginning of the year	Recognized in profit or loss	Recognized in other comprehen sive income	Ex-rate impact	Balance, end of the year
$ 6,716 7,257 67,795 6,564 3,200 1,585 16,372 2,477 16,831 21,761 3,935 91	$ 2,177 1,323 4,706 (780) (1,695) (714) 2,605 (116) - (7,511) (3,935) (11)	$ - - - - - - - 183 (4,898) - - -	$ (159) - 2,434 - 17 - - - - - - -	$ 8,734 8,580 74,935 5,784 1,522 871 18,977 2,544 11,933 14,250 - 80
$ 154,584	$ (3,951)	$ (4,715)	$ 2,292	$ 148,210
$ 111,149 24	$ 10,310 -	$ - (24)	$ - -	$ 121,459 -
$ 111,173	$ 10,310	$ (24)	$ -	$ 121,459

Investment offset related information:

The Company chooses to apply Article 10-1.1 of the Statute for Industrial Innovation for investment credits in research and development expenses and offsets current year income tax payable within the limit of 15% of the amount of research and development expenses declared in the current year that comply with the relevant regulations.

On December 31, 2022, according to the Statute for Upgrading Industries, estimated tax amount that can be deducted from income tax of the Company has been fully deducted this year.
The Company's income tax settlement declaration as of 2019 has been approved by the competent taxation agency.

188

(29) Earnings Per Share

ings Per Share
Basic EPS Net profit attributable to ordinary shareholders of the parent company Diluted EPS Net profit attributable to ordinary shareholders of the parent company Effects of all dilutive potential common shares – employee compensation Net income available to common shareholders plus effects of potential common shares Basic EPS Net profit attributable to ordinary shareholders of the parent company Diluted EPS Net profit attributable to ordinary shareholders of the parent company Effects of all dilutive potential common shares – employee compensation Net income available to common shareholders plus effects of potential common shares	Year ended December 31, 2022
	Amount Weighted average number of shares outstanding (thousand shares) EPS (in NT dollars) $ 354,143 96,594 $ 3.67 $ 354,143 96,594 - 516 $ 354,143 97,110 $ 3.65 Year ended December 31, 2021
	Amount $ 130,860 $ 130,860 - $ 130,860	Weighted average number of shares outstanding (thousand shares) EPS (in NT dollars) 96,594 $ 1.35 96,594 361 96,955 $ 1.35

If the Company can choose to distribute compensate to employees with stock or cash, when calculating diluted EPS, employee compensation in the form of stock will be

189

calculating diluted EPS with the weighted average number of outstanding shares that includes the potential common stocks when they have a dilutive effect. When calculating diluted EPS, the net value of the potential common stock on the balance sheet date is used as the basis for judging the number of issued shares. When calculating the diluted EPS before the next year's shareholders' meeting resolution on the number of shares issued for employee compensation, the dilution effect of these previous ordinary shares should continue to be considered.

(30) Capital Management

The management of the Company regularly reviews the capital structure and considers the possible costs and risks involved. In general, the Company adopts a prudent risk management strategy.

(31) Additional Cash Flow Information

Investment activities with only partial cash payments:

Additions of property, plant and equipment Add: Payable on equipment, beginning of the year 加： Interest capitalization Less: Payable on equipment, end of the year Cash paid in the year	2022 $ 20,949 3,769 - (2,378) $ 22,340	2021
		$ 57,481 4,392 - (3,769)
		$ 58,104

7. RELATED PARTY TRANSACTIONS

(1) Parent Company and the ultimate controlling party

Goodway Machine Corp. is the ultimate controlling party of the group that the Company is in.

(2) Related party name and Relationship

Related Party Name Goodway Machine Corp. YAMA SEIKI USA,INC. Goodway Machine Corp. (Wujiang) Huahan Leasing Co., Ltd. Allrich Cnc, Ltd. HUNG JIU MACHINE CO., LTD.	Relationship with the Company
	Ultimate parent company Associates Associates Associates Substantial related parties Substantial related parties

190

Yang Wenxu Charity Foundation	Substantial related parties
Turvo International Co., Ltd.	Other related parties
Boldwin Bio Co., Ltd.	Other related parties
AXTRON INVESTMENT CO., LTD	Other related parties
FITTECH CO., LTD.	Other related parties

(3) Significant transactions with the related parties

The transactions, balance income and expenses between the Company and its subsidiaries are all written off when consolidated. Therefore, they are not disclosed in the Notes. Transaction between the Company and other related parties:

Sales

Sales
Parent Associates Substantial related parties Other related parties	2022 $ 1,396 296,207 - 1 $ 297,604	2021
		$ 4,648 179,715 - 39,610
		$ 223,973

Purchases

Purchases
Parent Associates Substantial related parties	2022 $ 396 247 3,573 $ 4,216	2021
		$ 15,139 8,206 4,889
		$ 28,234

Transition price of purchase from related parties are close to general transactions. 3. Net notes receivable

Net notes receivable
Parent Associates Other related parties	December 31, 2022 $ 1,030 3,244 - $ 4,274	December 31, 2021
		$ 1,623 - 2,142
		$ 3,765

191

4. Net accounts receivable

4. Net accounts receivable
Parent Associates 5. Other receivables Parent 6. Notes payable Parent Substantial related parties 7. Accounts payable Parent Substantial related parties 8. Other payables Parent Associates Other related parties 9. Prepayments Parent Other related parties	December 31, 2022 $ 170 33,396 $ 33,566 December 31, 2022 $ - December 31, 2022 $ 146 368 $ 514 December 31, 2022 $ 40 759 $ 799 December 31, 2022 $ 1,178 819 10 $ 2,007 December 31, 2022 $ 29 48 $ 77	December 31, 2021
		$ 240 13,570
		$ 13,810
		December 31, 2021
		$ 174
		December 31, 2021
		$ 16,848 186
		$ 17,034
		December 31, 2021
		$ 101 490
		$ 591
		December 31, 2021 $ 1,023 442 11 $ 1,476 December 31, 2021 $ 1,050 48 $ 1,098

192

10. Advance receipts

10. Advance receipts
	December 31,	2022	December 31,	2021
Parent	$	1,045	$	160
Associates		9,550		426
	$	10,595	$	586
11. Current lease liabilities
	December 31,	2022	December 31,	2021
Parent	$	1,190	$	1,770
12. Non-current lease liabilities
	December 31,	2022	December 31,	2021
Parent	$	499	$	2,833
13. Property transactions
(1) Acquisition of property,	plant and equipment
	2022		2021
Parent	$	-	$	148
Other related parties		-		4,069
	$	-	$	4,217

(2) Disposal of property, plant and equipment

2022	2022	2022
Proceeds Gains $ 23 $ 8 2021		Gains
		$ 8
		Gains
		$ 1,095
		2021
		960
	$ $	2021
		840 3,104
		3,944

193

15. Others

Others
Other income Parent Associates Interest income Substantial related parties Manufacturing expenses Parent Associates Substantial related parties Other related parties Marketing expense Parent Associates Other related parties Management expense Parent Associates Substantial related parties Research and development expense Other related parties	2022 $ 461 84 $ 545 2022 $ - 2022 $ 770 7 - 66 $ 843 2022 $ 2,392 10 77 $ 2,479 2022 $ 44 5,691 - $ 5,735 2022 $ -	2021
		$ 628 60
		$ 688
		2021
		$ 5
		2021
		$ 1,753 - 880 81
		$ 2,714
		2021
		$ 1,109 288 65
		$ 1,462
		2021
		$ - 5,092 146
		$ 5,238
		2021
		$ 15

194

Compensation of key management personnel

Short-term employee benefits Post-employment benefits	2022 $ 15,382 400 $ 15,782	2021
		$ 17,874 515
		$ 18,389

The compensation to directors and other key management personnel were determined by the Compensation of the Company in accordance with the individual performance and the Company performance.

8.PLEDGED ASSETS

Detailed list of pledged assets of the Company is as below:

Assets Property, plant and equipment – land Property, plant and equipment – buildings Other current assets – restricted bank deposits Right-of-use assets - land use rights	December 31, 2022 $ 377,341 754,425 188,170 94,032 $ 1,413,968	December 31, 2021
		$ 377,341 791,593 - 95,929
		$ 1,264,863

9.SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED

COMMITMENTS

Significant contingent liabilities and unrecognized commitments of the Company as of the end of the reporting period were as follows:

(1) The endorsement guarantee notes issued by the Company are NT$6,699 thousand.
(2) The endorsement guarantee notes received from customers are NT$84,656 thousand.
(3) The endorsement guarantee note received by the Company from the manufacturer for leasing solar photovoltaics is NT$21,180 thousand.
(4) The Company received endorsement guarantee notes of NT$80,000 thousand for loan from its subsidiary – Yih Chuan Machinery Industry Co., Ltd.
(5) The Company entrusted First Commercial Bank to open performance guarantee of NT$2,000 for the imported goods to be released first and then pay tax to the Customs.
(6) The Company entrusted First Commercial Bank to open performance guarantee of $233USD thousand mainly for commodity import.

10. LOSSES FROM MAJOR DISASTERS: None

11. MAJOR SUBSEQUENT EVENTS: None

12. OTHERS

Financial instruments

(1) Fair value of financial instruments

Book value of financial instruments not measured by fair value (including cash equivalent, notes receivable, accounts receivable, other receivables, guarantee deposits paid, short-term loans, short-term notes payable, notes payable, accounts payable, other payables, bonds payable, long-term loans and guarantee deposits received) is a reasonable approximation of fair value. Bonds payable (including put option due or execute within one year) and long-term loans’ interest rates are close to market rate, so the carrying amount should be a reasonable basis for estimating fair value. Please refer to Note 12 (6) for fair value of financial instrument measured by fair value.

195

(2) Financial risk management objectives

The Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit risk and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance. The plans for material treasury activities are reviewed by the Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Company must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

(3) Market risks

The Company is exposed to the financial market risks, primarily changes in foreign currency exchange rates, interest rates and equity investment prices. A portion of these risks is hedged.

1. Foreign currency risk

The management strategy for exchange rate risk is to examine the net positions of assets and liabilities in various currencies periodically and conduct risk management to the net positions.

At the reporting date, the book value of the Company’s monetary assets and liabilities denominated in foreign currencies were as follows:

In thousands of New Taiwan Dollar and foreign currencies

			In thousands of New Taiwan Dollar and foreign currencies	In thousands of New Taiwan Dollar and foreign currencies	In thousands of New Taiwan Dollar and foreign currencies	In thousands of New Taiwan Dollar and foreign currencies
Financial assets Monetary items USD EUR RMB AUD Non-monetary items USD Financial liabilities Monetary items USD JPY RMB Non-monetary items USD			December 31, 2022
	Foreign currencies 57,809 3,014 8,906 1 - 150 2,869 90 1,551	Exchange rate (Note) 30.66 32.52 4.383 20.73 - 30.66 0.2304 4.383 30.66	NT Dollar 1,772,424 98,015 39,035 21 - 4,599 661 394 47,554	Sensitivity analysis
				Rate of change 5% 5% 5% 5% - 5% 5% 5% -	Profit or loss impact 88,621 4,901 1,952 1 - 230 33 20 -	Equity impact
						- - - - - - - - -

196

In thousands of New Taiwan Dollar and foreign currencies

December 31, 2021

Financial assets Monetary items USD EUR RMB AUD Non-monetary items USD Financial liabilities Monetary items USD EUR JPY RMB Non-monetary items USD RMB	Foreign currencies 43,608 4,332 27,166 1 2,006 817 1 7,866 119 2,022 290	Exchange rate (Note) 27.63 31.12 4.319 19.98 27.63 27.63 31.12 0.2385 4.319 27.63 4.319	NT Dollar 1,204,889 134,812 117,330 20 55,426 22,574 31 1,876 514 55,868 1,253	Foreign currencies	Foreign currencies	Foreign currencies
				Rate of change 5% 5% 5% 5% - 5% 5% 5% 5% - -	Profit or loss impact 60,244 6,741 5,867 1 - 1,129 2 94 26 - -	Equity impact
						- - - - - - - - - - -

Note. Using exchange rate of the balance sheets date.

Interest rate risk

Interest rate risk refers to the risk of changes in the fair value of financial instruments due to changes in market interest rates. The Company is exposed to interest rate risks primarily in relation to its bank loans.

Other price risk
The Company is exposed to equity price risk arising from financial assets at FVTPL and at FVTOCI.

Assuming a decrease of 10% in prices of the equity investments at the end of the reporting period for the years ended December 31, 2022 and 2021, the profit and loss would have decreased by NT$38,746 thousand and NT$18,925 thousand, respectively.

(4) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Company. The Company is exposed to credit risks from operating activities, primarily accounts receivable, and from investing activities like deposits with banks. Credit risk is managed separately for business related and financial related exposures.

Business related credit risk

The Company has established the procedures to maintain the quality of accounts

197

receivable and conduct management and credit risk analysis for each new customer in accordance with the internally specified credit policy. Internal risk control is to evaluate customer credit quality by considering its financial status, past experience and other factors.

The risk assessment of an individual customer is based on the consideration of the customer's financial status, credit rating agency rating, the Company's internal credit rating, historical transaction records and current economic conditions, and many other factors that may affect the customer's ability to pay. The Company will also use certain credit enhancement tools, such as credit insurance, at appropriate times to reduce the credit risk of specific customers.

As of December 31, 2022 and 2021, the Company’s ten largest customers accounted for 60% and 54% of accounts receivable, respectively. The Company considers the concentration of credit risk for the remaining accounts receivable not material.

Financial credit risk

(5) Liquidity risk management

The table below summarizes the maturity profile of the Company’s financial liabilities based on expiry date and contractual undiscounted payments:

	December 31, 2022	December 31, 2022	December 31, 2022
1 to 3 months $ 1,556,298 289,641 315,393 200,289 130,896 12,445 2,845 - 2,183 $ 2,509,990	4 to 6 months $ 256,038 - 78,970 282 - - 2,851 - - $ 338,141	7 months to 1 year $ 142,613 - - 234 - - 5,724 - - $ 148,571	More than a year $ - - - 1,306 - - 918 - - $ 2,224	Total
				$ 1,954,949 289,641 394,363 202,111 130,896 12,445 12,338 - 2,183
				$ 2,998,926

198

	December 31, 2021
		Total
		$ 1,335,781 259,907 535,268 279,107 141,035 12,934 24,370 62,672 4,173

(6) Fair value of financial instruments
Please refer to Note 12(1) for financial assets and liabilities not measured by fair value.
Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
(1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. An active market refers to markets that meets all the following conditions: the commodities traded in the market are homogeneous, and willing buyers and sellers can be found in the market at any time and price information is available to the public.
(2) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
(3) Level 3 fair value measurements are not based on inputs for the asset or liability that are based on observable market data.
- There is no transition between level 1 and 2 during the year ended December 31, 2022 and 2021.
- There is no transition into or out of level 3 during the year ended December 31, 2022 and 2021.
The method and assumption that the Company applied to measure fair value are as below:
- (1) Fair value of financial assets and liabilities with standard terms and conditions and are traded in active market is determined by referencing market quotations.
- (2) Fair value of other financial liabilities is determined by the generally accepted evaluation model based on discounted cash flow analysis.

Fair value hierarchy

 - The following table presents the Company’s financial assets and liabilities measured at fair value:

199

	December 31, 2022	December 31, 2022
Level 1 $ 377,002 10,458 $ 387,460	Level 2 Level 3 $ - $ - - - $ - $ - December 31, 2021		Total
			$ 377,002 10,458
			$ 387,460

Level 1 $ 172,417 16,829 $ 189,246	Level 2 $ - - $ -	Level 3 $ - - $ -	Total
			$ 172,417 16,829
			$ 189,246

13. ADDITIONAL DISCLOSURES

(1) Significant transactions:

Financings provided: See Table 1 attached;
Endorsement/guarantee provided: None;
Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): See Table 2 attached;
Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None;
Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None;
Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None;
Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: See Table 3 attached;
Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
Information about the derivative financial instruments’ transaction: See Note 12;
The business relationship between the parent and the subsidiaries and significant transactions between them: See Table 4.
(2) Information on reinvestment business: See Table 5 attached;
(3) Information on investment in mainland China：See Table 6 attached.
(4) Information of major shareholder : See Table 7 attached.

200

Table 1：FINANCINGS PROVIDED

December 31, 2022	December 31, 2022	December 31, 2022							Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise
No. (Note 1)	Financing Company	Counterparty	Financial Statement Account	Relate d Party	Maximum Balance for the Period (Note 3)	Ending Balance (Note 4)	Amount Actually Drawn	Interest Rate	Nature for Financing	Transactio n Amounts	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	Other receivables from related	Yes	230,000	80,000	70,000	1.8% ~ 1.925%	The need for short-term financing	7,911	Operating capital	-	promiss ory note	80,000	325,268	1,301,070
1	Shanghai Zhuwei Mechantronic Co., Ltd.	Awea Mechantronic (Suzhou) Ltd.	Other receivables from related	Yes	87,680	87,680	87,660	3.8%	The need for short-term financing	-	Operating capital	-	-	-	145,953	145,953
1	Shanghai Zhuwei Mechantronic Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Other receivables from related parties	Yes	7,451	7,451	7,451	3.65%	The need for short-term financing	-	Operating capital	-	-	-	145,953	145,953

Note 1: information of the numbering column:

(1)Issuer is No. 0.

(2)Invested companies are listed in order from No.1.

Note 3: Maximum balance of financing for the period.

Note 4: The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors.

201

Table 2: MARKETABLE SECURITIES HELD (excluding investments in subsidiaries, associates and joint ventures)

December 31, 2022 Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2022	December 31, 2022
				Share units	Carrying Value	Percentage of Ownership	Fair Value (Note 1)
AWEA Mechantronic CompanyLimited	Stock - AUTECH EUROPE	-	Non-Current financial asset at FVTPL	50	- (Note 2)	5.00%	-
AWEA Mechantronic CompanyLimited	Stock - P-DUKE TECHNOLOGY CO., LTD.	-	Current financial asset at FVTPL	1,063,852	91,917	1.36%	91,917
AWEA Mechantronic CompanyLimited	Stock - TURVO INTERNATIONAL CO., LTD.	Other related parties	Current financial asset at FVTPL	2,607,000	263,307	4.32%	263,307
AWEA Mechantronic CompanyLimited	Stock - EAGLE COLD STORAGE ENTERPRISE CO.,LTD.	-	Current financial asset at FVTPL	675,000	14,850	0.57%	14,850
AWEA Mechantronic CompanyLimited	Stock - TSMC	-	Current financial asset at FVTPL	10,000	4,485	-	4,485
AWEA Mechantronic CompanyLimited	Stock - Zeng Hsing Industrial Co., Ltd.	-	Current financial asset at FVTPL	20,534	2,443	0.03%	2,443
AWEA Mechantronic CompanyLimited	Stock - FITTECH CO., LTD	Other related parties	Non-Current financial asset at FVTOCI	118,846	10,458	0.16%	10,458

Note 1: If the invested company has no public market price, it shall be listed according to the net equity value.

Note 2: During the year of 1996, due to the value of the invested company has been impaired and there is little hope of recovery, the amount has been transferred fully to loss.

202

Table 3: TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

December 31, 2022 Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise

Company Name	Related Party	Nature of Relationships		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction (Note 1)	Abnormal Transaction (Note 1)	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchase s/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending balance	% to Total
AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	Indirect subsidiary	Sales	$ 287,814	12.60%	3 months after shipped	-	-	$35,351	4.71%	-
AWEA Mechantronic Company Limited	YAMA SEIKI USA,INC.	Subsidiary	Sales	$ 240,190	10.52%	3 months after shipped	-	-	$33,396	4.45%	-

203

Table 4. INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

December 31, 2022	December 31, 2022			Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise	Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise
No. (Note 1)	Company Name	Counterparty	Relationship with the Company (Note 2)		Intercompany Transactions
				Financial Statements Item	Amount	Terms	Percentage of Consolidated Net Revenue or Total Assets (Note 4)
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Sales revenue	7,911	(Note 3)	0.3%
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Purchases	22,603	(Note 3)	0.7%
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Notes receivable	29	(Note 3)	-
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Other receivables	70,042	(Note 3)	1.0%
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Notes payable	11,256	(Note 3)	0.2%
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Accounts payable	709	(Note 3)	-
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Interest income	1,004	(Note 3)	-
0	AWEA Mechantronic Company Limited	Yih Chuan Machinery Industry Co., Ltd.	1	Operating cost- after-sales service fee	75	(Note 3)	-
0	AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	1	Sales revenue	287,814	(Note 3)	9.3%
0	AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	1	Accounts receivable	35,350	(Note 3)	0.5%
0	AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	1	Other payables	489	(Note 3)	-
0	AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	1	Manufacturing -repair expense	229	(Note 3)	-
0	AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	1	Sales -warranty expense	659	(Note 3)	-

204

0	AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	1	Sales -repair expense	232	(Note 3)	-
0	AWEA Mechantronic Company Limited	Awea Mechantronic (Suzhou) Ltd.	1	Sales -other expense	175	(Note 3)	-
1	Awea Mechantronic (Suzhou) Ltd.	Shanghai Zhuwei Mechantronic Co., Ltd.	3	Other payables	87,660	(Note 3)	1.3%
1	Awea Mechantronic (Suzhou) Ltd.	Shanghai Zhuwei Mechantronic Co., Ltd.	3	Advance payment	26,298	(Note 3)	0.4%
1	Awea Mechantronic (Suzhou) Ltd.	Shanghai Zhuwei Mechantronic Co., Ltd.	3	Interest expense	1,390	(Note 3)	-
2	Shanghai Zhuwei Mechantronic Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	3	Other receivables	7,451	(Note 3)	0.1%
3	Yih Chuan Machinery Industry Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	3	Sales revenue	168	(Note 3)	-

Note 1: information of the numbering column:

Parent company is No. 0.
Subsidiaries are listed in order from No.1.

Note 2：There are 3 types of transactions with related party, and just mark the number as below:

Parent to subsidiary
Subsidiary to parent
Subsidiary to subsidiary

Note 3: Made according to the contract.

Note 4: The important transactions in this form can be determined by the Company based on the principle of materiality.

205

Table 5: NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES (Excluding Information on Investment in Mainland China) December 31, 2022 Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise

Investor Company	Investee Company	Location	Maian business	Original Investment Amount	Original Investment Amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Net Income (Losses) of the Investee	Share of Profits/ Losses of Investee (Note 1)	Note
				December 31, 2022	December 31, 2021	Shares	Percentage of Ownership	Carrying Value
AWEA Mechantronic Company Limited AWEA Mechantronic Company Limited AWEA Mechantronic Company Limited AWEA Mechantronic Company Limited B-Way (Cayman) Co., Ltd. Yih Chuan Machinery Industry Co., Ltd. AXTRON INT’L INVESTMENT CO.,TLD	B-Way (Cayman) Co., Ltd. YAMA SEIKI USA,INC. Yih Chuan Machinery Industry Co., Ltd. Huahan Leasing Co., Ltd. Billion-Way (Cayman) Co., Ltd. AXTRON INT’L INVESTMENT CO., LTD AXTRON INT’L INVESTMENT LIMITED	Cayman Islands USA Taiwan Taiwan Cayman Islands Marshall Islands, USA Hong Kong	International investment and International trade Machinery sales and installation, International trade Machinery sales and retail、product design Rental of machinery and equipment International investment and International trade international investment and International trade International investment and International trade	$ 332,212 53,968 264,592 7,333 USD 12,830 (NTD 393,368) 200,000 HKD 10 (NTD 39)	$ 332,212 53,968 264,592 7,333 USD 12,830 (NTD 393,368) 200,000 HKD 10 (NTD 39)	10,665,029 584,192 5,914,800 666,667 12,829,840 50,000 10,000	100.00% 28.58% 60.00% 13.33% 100.00% 100.00% 100.00%	$ 718,246 101,849 173,920 8,001 733,801 230,394 230,394	$ 95,283 22,916 (12,140) 4,097 85,859 (7,257) (7,257)	$ 95,278 7,236 (7,284) 546 85,859 (7,257) (7,257)	(Note 1) - (Note 1) - (Note 1) (Note 1) (Note 1)

Note 1: already written-off

206

Table 6: INFORMATION ON INVESTMENT IN MAINLAND CHINA

December 31, 2022 Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise 1. Chinese Invested Company Name, Primary Business Activities, Paid-in Capital, Investment Method, Inflow and Outflow of Funds,

Ownership Percentage, Investment Book Value, and Repatriation of Investment Gain/Loss:

Investee Company	Main Businesses	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Net Income (Losses) of the Investee Company	Percentage of Ownership	Share of Profits/ Losses (Note 2)	Carrying Amount as of Balance as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31, 2022
					Outflow	Outflow
Shanghai Zhuwei Mechantronic Co., Ltd.	Machinery sales and installation, business management consultation, and International trade	USD 2,500 (NTD 76,650) (Note 3)	2	USD 2,494 (NTD 76,466) (Note 3)	-	-	USD 2,494 (NTD 76,466) (Note 3)	$ 3,148	100%	$ 3,667	$143,541	USD 15,438 (NTD 458,016) (Note 3)
Awea Mechantronic (Suzhou) Ltd.	Machinery sales and installation, and International trade	USD 11,400 (NTD 349,524) (Note 3)	2	USD 10,400 (NTD 318,864) (Note 3)	-	-	USD 10,400 (NTD 318,864) (Note 3)	81,807	100%	81,807	583,296	USD 2,306 CNY 49,580 (NTD 285,977)
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Machinery sales, manufacturing and installation, and International trade	USD 2,510 (NTD 76,957) (Note 3)	2	USD 2,510 (NTD 76,957) (Note 3)	-	-	USD 2,510 (NTD 76,957) (Note 3)	(7,257)	100%	(7,257)	230,394	-

207

2. Upper Limit for reinvestment in Mainland China:

Investee Company	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
The Company	$ 395,330 (Note 3) (USD 12,894)	$ 426,174 (Note 3) (USD 13,900)	$ 1,951,606 (Note 5)
Yih Chuan Machinery Industry Co., Ltd.	$ 76,957 (Note 3) (USD 2,510)	$ 76,957 (Note 3) (USD 2,510)	$ 173,278(Note 5)

Note 1: The investment methods are divided into the following three types, just indicate the type:

(1) Directly go to Mainland China to invest

(2) Reinvest in mainland China through companies in third regions

(3) Other methods

Note 2: investment profit or loss is recognized based on financial reports audited of the same period.

Note 3: Amount in New Taiwan Dollar is exchanged according to the exchange rate on balance sheet date.

Note 4: Dawea Mechantronic (Suzhou) Ltd. merged with Awea Mechantronic (Suzhou) Ltd. in September 2020, and Awea Mechantronic (Suzhou) Ltd. is the existing company after the merger. This merger case has been approved and put on record by the Investment Commission, MOEA in July 2021 through letter No. 11000165350.
Note 5: The upper limit on investment in mainland China is determined by sixty percent (60%) of the Company’s consolidated net worth. 3. Significant transaction items with direct or indirect investees in Mainland China: see Table 4.

208

Table 7: INFORMATION ON MAJOR SHAREHOLDERS December 31, 2022

December 31, 2022
Major Shareholders	Total Shares Owned	Ownership Percentage
GOODWAY MACHINE CORP.	47,912,311	49.60 %
YANG, TE-HUA	9,031,403	9.34 %
JIAJIN INVESTMENT CO., LTD.	6,256,388	6.47 %
FUBON LIFE INSURANCE CO., LTD.	5,406,500	5.59 %

209

14. OPERATING SEGMENTS INFORMATION

(1) The operating segments information for the years ended December 31, 2022 and 2021 are as below:

	December 31, 2022	December 31, 2022	December 31, 2022
Awea Taiwan $ 1,987,934 295,724 16,006 95,775 19,897 74,288 439,857	Awea (Suzhou) Other segments Adjustment s and write-offs $ 942,995 $ 169,588 $ - 1,159 22,847 (319,730) 809 1,550 (2,393) - - (87,993) 4,717 3,781 (2,393) 32,516 13,450 (2,209) 108,716 (791) (87,994) December 31, 2021			Total
				$ 3,100,517 - 15,972 7,782 26,002 118,045 459,788
Awea Taiwan $ 2,064,750 427,680 1,247 50,549 9,642 80,496 181,729	Awea (Suzhou) $ 1,102,489 1,685 1,916 - 46 24,772 155,990	Other segments $ 463,717 25,031 1,503 - 5,197 16,966 (54,600)	Adjustment s and write-offs $ - (454,396) (440) (45,837) (444) (2,445) (45,319)	Total
				$ 3,630,956 - 4,226 4,712 14,441 119,789 237,800

The total amount of inter-segment transactions that should be written off of the reporting revenue of operating segments for the years ended December 31, 2022 and 2021 are NT$319,730 thousand and NT$454,396, respectively.
The total amount of profit and loss excluding income tax of operating segments for the years ended December 31, 2022 and 2021 are NT$110,501 thousand and

210

NT$115,767 thousand, respectively.

There are 2 operating segments should be reported: Awea Taiwan and Awea Suzhou. The main business of Awea Taiwan is the design, manufacture and sales of special machines, automation equipment and computer-controlled machine tools. Awea Suzhou is engaged in the manufacturing and sales of mechanical appliances and the installation of mechanical appliances.

The Company has not apportioned income tax expenses to the reportable segments. The reported amount is consistent with the report used by the operating decision makers. The accounting policies of the operating segments are the same as the summary of important accounting policies described in Note 4. The profit and loss of the operating segments of the Company is based on the net profit before tax as the basis for evaluating performance. The Company regards the sale and transfer between segments as a transaction with a third party and measures it at the current market price.

211

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [67 x 51] intentionally omitted <==

INDEPENDENT AUDITORS’ REVIEW REPORT

The board of Directors and Shareholders AWEA Mechantronic Company Limited

Introduction

We have reviewed the accompanying consolidated financial statements of AWEA Mechantronic Company Limited and its subsidiaries (the “Company”), which comprise the consolidated balance sheets as of March 31, 2023 and 2022, and the consolidated financial statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standards (“IAS”) 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of Republic of China. Our responsibility is to express a conclusion on the financial statements based on our review.

Scope of Review

Except for those described in the paragraph of “Basis for Qualified Opinion”, we conducted our reviews in accordance with International Standard on Review Engagements (“ISRE”) No.2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of the financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Opinion

As described in Note 4 (3) of the consolidated financial statements, the same-period financial statements of part of the non-material subsidiaries that are recognized in the consolidated financial statements were not reviewed by accountant. There total assets of March 31, 2023 and 2022 are NT$611,524 thousand and NT$ 689,604 thousand, accounting for 9% and 11% of the consolidated total assets, respectively; Total liabilities are NT$201,225 thousand and NT$236,829 thousand, accounting for 6% and 8% of the consolidated total liabilities, respectively. There total comprehensive income and loss of March 31, 2023 and 2022 are (NT$24,450) thousand and NT$11,270 thousand, accounting for (372)% and 13% of the total comprehensive income and loss, respectively.

In addition, as described in Note 6 (6) of the consolidated financial statements, the same-period financial statements of investment using equity method, Huahan Leasing Inc., Ltd., was not reviewed by accountant. The amount of the aforementioned long-term equity investment of March 31, 2023 and 2022 are NT$8,178 thousand and NT$7,579 thousand, accounting for 0% of the total assets of both period. The share of profits and losses of related companies recognized using the equity method of March 31, 2023 and 2022 are NT$177 thousand and NT$124 thousand, accounting for 1% and 0% of income before tax, respectively.

212

建智聯合會計師事務所 EnWise CPAs & Co. 台中市 404 太原北路 130 號 9 樓之 1 TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

==> picture [67 x 51] intentionally omitted <==

Qualified Opinion

Based on our review and other accountants’ review report (please refer to “Other Matters”), aside from the non-material subsidiaries and investments using the equity method mentioned in the “Basis for Qualified Opinion” paragraph, that if the financial statements of the consolidated financial statements are reviewed by accountants, there could be impact of adjustments to the consolidated financial statements, nothing has come to our attention that causes us to believe the accompanying financial statements do not present fairly, in all material respects, the financial position of the Company as of March 31, 2023 and 2022, and of its cash flows for the three months ended March 31, 2023 and 2022 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standards (“IAS”) 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of Republic of China.

Other Matters

As mentioned in Note 6(6) of the consolidated financial statements, company invested using equity method, YAMA SEIKI USA, INC. is not reviewed by us but entrusted other auditors to review by the company. Therefore, the in the review results of the above-mentioned consolidated financial statements, the amounts listed in the financial statements of the investee company are based on the review reports of other accountants. As of March 31, 2023 and 2022, the balance of investment using equity method are NT$101,522 and NT$96,044 (in thousands), respectively, both accounting for 2% of total assets. For the period ended March 31, 2023 and 2022, the proportion for these subsidiaries invested using equity method and the profit or loss of associates and joint ventures are NT$340 and NT$3,910 (in thousands), accounting for 2% and 5% of the profit before tax, respectively.

The engagement partners on the audits resulting in this independent auditors’ report are Jui-Kuei Chen and Chang Yun Yi.

EnWise CPAs & Co. Taichung, Taiwan Republic of China

May 8, 2023

213

AWEA Mechantronic Company Limited

CONSOLIDATED BALANCE SHEETS

March 31, 2023, December 31, 2022, and March 31, 2022

(Reviewed only, not audited in accordance with generally accepted auditing standards)

March 31, 20	December 31, 2	ands of New Taiwan March 31, 20	Dollars 22
Amount 1,037,833 $ 425,373 258,290 1,638 416,057 16,014 4,896 640 144 1,602,322 57,377 573,091 4,393,675 11,376 109,700 1,777,920 128,804 10,753 132,124 300 5,855 7,786 - 6,179 2,190,797 6,584,472 $	Amount 1,132,171 $ 377,002 381,640 4,274 457,612 33,566 10,766 - 143 1,607,007 57,859 542,186 4,604,226 10,458 109,850 1,797,473 132,035 10,368 101,283 300 7,146 12,115 - 6,544 2,187,572 6,791,798 $	Amount 711,524 $ 194,955 255,344 862 477,799 23,501 7,405 1,228 - 1,684,408 57,606 332,544 3,747,176 19,809 103,623 1,862,283 145,818 12,204 129,294 3,964 7,135 25,457 - 8,293 2,317,880 6,065,056 $	%
			12 3 4 - 8 - - - - 28 1 6
			62
			- 2 31 2 - 2 - - 1 - -
			38
			100

Please refer to the accompanying notes to the consolidated financial reports.

214

AWEA Mechantronic Company Limited

CONSOLIDATED BALANCE SHEETS

March 31, 2023, December 31, 2022, and March 31, 2022

(Reviewed only, not audited in accordance with generally accepted auditing standards)

March 31, 20	December 31, 2	ands of New Taiwan March 31, 20	Dollars 22
Amount 1,832,709 $ 314,615 201,726 243,066 1,923 261,195 424 114,236 366 87,147 12,271 8,909 1,195 1,401 3,081,183 - 106,932 584 10,578 8,989 1,442 128,525 3,209,708 965,942 6,124 57,468 4 31,920 527,176 98,077 1,610,315 (17,260) (9,475) 3,270,291 104,473 3,374,764 6,584,472 $	Amount 1,954,949 $ 289,641 225,013 393,849 514 201,312 799 128,889 2,007 64,623 12,445 11,420 934 2,099 3,288,494 - 112,224 918 10,793 8,991 2,183 135,109 3,423,603 965,942 6,124 57,468 4 31,920 527,176 98,077 1,595,597 (18,699) (10,933) 3,252,676 115,519 3,368,195 6,791,798 $	Amount 1,449,217 $ 129,951 227,342 453,002 657 232,810 430 110,071 481 53,987 11,854 11,178 725 1,126 2,682,831 2,206 97,932 9,372 11,861 12,792 1,769 135,932 2,818,763 965,942 6,124 86,447 4 31,920 513,898 98,077 1,430,499 (10,067) 888 3,123,732 122,561 3,246,293 6,065,056 $	%
			24 2 4 8 - 4 - 2 - 1 - - - -
			45
			- 1 - - - -
			1
			46
			16 - 1 - 1 8 2 24 - -
			52 2
			54
			100

Please refer to the accompanying notes to the consolidated financial reports.

215

AWEA Mechantronic Company Limited

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2023 and 2022

(Reviewed only, not audited in accordance with generally accepted auditing standards)

Items	In Thousands of New Taiwan Dollars, Except Earnings Per Share Amount % Amount % 538,803 $ 100 625,412 $ 100 (486,840) (90) (516,303) (83) 51,963 10 109,109 17 261 - (260) - 52,224 10 108,849 17 (37,016) (7) (44,797) (7) (31,794) (6) (28,623) (5) (14,459) (3) (15,578) (2) 3,030 1 (723) - (80,239) (15) (89,721) (14) (28,015) (5) 19,128 3 9,218 2 385 - 8,546 2 11,398 2 36,100 6 51,342 8 (9,472) (2) (4,613) (1) 517 - 4,034 1 44,909 8 62,546 10 16,894 3 81,674 13 (13,363) (2) (18,696) (3) 3,531 1 62,978 10 1,218 - (2,027) - 2,274 - 36,068 5 (454) - (7,213) (1) 3,038 - 26,828 4 6,569 $ 1 89,806 $ 14 14,958 $ 3 62,491 $ 10 (11,427) (2) 487 - 3,531 $ 1 62,978 $ 10 17,615 $ 3 86,506 $ 14 (11,046) (2) 3,300 - 6,569 $ 1 89,806 $ 14 0.15 $ 0.65 $ 0.15 $ 0.64 $ Three Months Ended March 31, 2023 Three Months Ended March 31, 2022	In Thousands of New Taiwan Dollars, Except Earnings Per Share Amount % Amount % 538,803 $ 100 625,412 $ 100 (486,840) (90) (516,303) (83) 51,963 10 109,109 17 261 - (260) - 52,224 10 108,849 17 (37,016) (7) (44,797) (7) (31,794) (6) (28,623) (5) (14,459) (3) (15,578) (2) 3,030 1 (723) - (80,239) (15) (89,721) (14) (28,015) (5) 19,128 3 9,218 2 385 - 8,546 2 11,398 2 36,100 6 51,342 8 (9,472) (2) (4,613) (1) 517 - 4,034 1 44,909 8 62,546 10 16,894 3 81,674 13 (13,363) (2) (18,696) (3) 3,531 1 62,978 10 1,218 - (2,027) - 2,274 - 36,068 5 (454) - (7,213) (1) 3,038 - 26,828 4 6,569 $ 1 89,806 $ 14 14,958 $ 3 62,491 $ 10 (11,427) (2) 487 - 3,531 $ 1 62,978 $ 10 17,615 $ 3 86,506 $ 14 (11,046) (2) 3,300 - 6,569 $ 1 89,806 $ 14 0.15 $ 0.65 $ 0.15 $ 0.64 $ Three Months Ended March 31, 2023 Three Months Ended March 31, 2022	In Thousands of New Taiwan Dollars, Except Earnings Per Share Amount % Amount % 538,803 $ 100 625,412 $ 100 (486,840) (90) (516,303) (83) 51,963 10 109,109 17 261 - (260) - 52,224 10 108,849 17 (37,016) (7) (44,797) (7) (31,794) (6) (28,623) (5) (14,459) (3) (15,578) (2) 3,030 1 (723) - (80,239) (15) (89,721) (14) (28,015) (5) 19,128 3 9,218 2 385 - 8,546 2 11,398 2 36,100 6 51,342 8 (9,472) (2) (4,613) (1) 517 - 4,034 1 44,909 8 62,546 10 16,894 3 81,674 13 (13,363) (2) (18,696) (3) 3,531 1 62,978 10 1,218 - (2,027) - 2,274 - 36,068 5 (454) - (7,213) (1) 3,038 - 26,828 4 6,569 $ 1 89,806 $ 14 14,958 $ 3 62,491 $ 10 (11,427) (2) 487 - 3,531 $ 1 62,978 $ 10 17,615 $ 3 86,506 $ 14 (11,046) (2) 3,300 - 6,569 $ 1 89,806 $ 14 0.15 $ 0.65 $ 0.15 $ 0.64 $ Three Months Ended March 31, 2023 Three Months Ended March 31, 2022	In Thousands of New Taiwan Dollars, Except Earnings Per Share Amount % Amount % 538,803 $ 100 625,412 $ 100 (486,840) (90) (516,303) (83) 51,963 10 109,109 17 261 - (260) - 52,224 10 108,849 17 (37,016) (7) (44,797) (7) (31,794) (6) (28,623) (5) (14,459) (3) (15,578) (2) 3,030 1 (723) - (80,239) (15) (89,721) (14) (28,015) (5) 19,128 3 9,218 2 385 - 8,546 2 11,398 2 36,100 6 51,342 8 (9,472) (2) (4,613) (1) 517 - 4,034 1 44,909 8 62,546 10 16,894 3 81,674 13 (13,363) (2) (18,696) (3) 3,531 1 62,978 10 1,218 - (2,027) - 2,274 - 36,068 5 (454) - (7,213) (1) 3,038 - 26,828 4 6,569 $ 1 89,806 $ 14 14,958 $ 3 62,491 $ 10 (11,427) (2) 487 - 3,531 $ 1 62,978 $ 10 17,615 $ 3 86,506 $ 14 (11,046) (2) 3,300 - 6,569 $ 1 89,806 $ 14 0.15 $ 0.65 $ 0.15 $ 0.64 $ Three Months Ended March 31, 2023 Three Months Ended March 31, 2022
	Amount 538,803 $ (486,840) 51,963 261 52,224 (37,016) (31,794) (14,459) 3,030 (80,239) (28,015) 9,218 8,546 36,100 (9,472) 517 44,909 16,894 (13,363) 3,531 1,218 2,274 (454) 3,038 6,569 $ 14,958 $ (11,427) 3,531 $ 17,615 $ (11,046) 6,569 $ 0.15 $ 0.15 $		Amount 625,412 $ (516,303) 109,109 (260) 108,849 (44,797) (28,623) (15,578) (723) (89,721) 19,128 385 11,398 51,342 (4,613) 4,034 62,546 81,674 (18,696) 62,978 (2,027) 36,068 (7,213) 26,828 89,806 $ 62,491 $ 487 62,978 $ 86,506 $ 3,300 89,806 $ 0.65 $ 0.64 $	%
NET REVENUE COST OF REVENUE GROSS PROFIT (Un)Realized profit on sales Gross profit, net OPERATING EXPENSES Marketing Management Research and development Expected credit loss (gain) Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income Other income Other gains and losses Finance cost Share of Profit or Loss of Associates & Joint Ventures Accounted for Using Equity Method Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Unrealized gain on investments in equity instruments at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Income tax benefit (expense) related to items that may be reclassified subsequently Other comprehensive income (loss), net of income tax TOTAL COMPREHENSIVE INCOME NET INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests EARNINGS PER SHARE Basic earnings per share Diluted earnings per share				100 (83)
				17 -
				17
				(7) (5) (2) -
				(14)
				3
		2 2 6 (2) - 8 3 (2) 1 - - - - 1 3 (2) 1 3 (2) 1		- 2 8 (1) 1
				10
				13 (3)
				10
				- 5 (1)
				4
				14
				10 -
				10
				14 -
				14

Please refer to notes to the individual financial reports.

216

AWEA Mechantronic Company Limited

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the three months ended March 31, 2023 and 2022

(Reviewed only, not audited in accordance with generally accepted auditing standards)

In Thousands of New Taiwan Dollars

			EquityAttributable to Shareholders of	EquityAttributable to Shareholders of	the Parent	Total Equity
Capital Stock Common Stock 965,942 $ - - - - 965,942 $ 965,942 $ - - - - 965,942 $	Capital Surplus 124,495 $ - - - - 124,495 $ 95,516 $ - - - - 95,516 $		Retained Earnings	Unappropriated Earnings 1,366,883 $ 62,491 - 62,491 1,125 1,430,499 $ 1,595,597 $ 14,958 - 14,958 (240) 1,610,315 $	Exchange Differences on Translation of Foreign Financial Statements Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Comprehensive Income (36,109) $ 4,040 $ - - 26,042 (2,027) 26,042 (2,027) - (1,125) (10,067) $ 888 $ (18,699) $ (10,933) $ - - 1,439 1,218 1,439 1,218 - 240 (17,260) $ (9,475) $ Others
		Legal Capital Reserve 513,898 $ - - - - 513,898 $ 527,176 $ - - - - 527,176 $	Special Capital Reserve 98,077 $ - - - - 98,077 $ 98,077 $ - - - - 98,077 $		Exchange Differences on Translation of Foreign Financial Statements (36,109) $ - 26,042 26,042 - (10,067) $ (18,699) $ - 1,439 1,439 - (17,260) $
						3,156,487 $ 62,978 26,828
						89,806
						-
						3,246,293 $
						3,368,195 $ 3,531 3,038
						6,569
						-
						3,374,764 $

Please refer to the accompanying notes to the consolidated financial statements.

217

AWEA Mechantronic Company Limited

CONSOLIDATED STATEMENTS OF CASHFLOWS

For the Three Months Ended March 31, 2023 and 2022

(Reviewed only, not audited in accordance with generally accepted auditing standards)

(Reviewed only, not audited in accordance with	generally accepted auditing standards)	generally accepted auditing standards)
CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustment for: Depreciation expense Amortization expense Expected credit losses recognized (reversal) on investments in debt instruments Interest expense Interest income Dividend revenue Share of profit (loss) of associates and joint ventures accounted for using equity method, Gain on disposal or retirement of property, plant and equipment Unrealized (realized) gain from sale to related companies Other income Profit from lease modification Gains on disposals of investments Loss (gain) on valuation of financial asset Changes in operating assets and liabilities: Notes receivable Notes receivable from related parties Account receivables Account receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments Other current assets Overdue receivables Long-term notes receivable Contractual liabilities Notes payable Notes payable from related parties Accounts payable Accounts payable from related parties Other payables Other payables from related parties Provisions Advance receipts Other current liabilities Net defined benefit liability Cash generated (used) from operations Interest received Income tax paid Net cash generated (used)by operating activities (Continued)	In Thousands of New Taiwan Dollars Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 16,894 $ 81,674 $ 28,446 29,500 633 744 (3,030) 723 9,472 4,613 (9,218) (385) (28) - (517) (4,028) (178) (57) (261) 260 (270) (270) - (1) 86 47 (45,414) (4,347) 125,785 (7,653) 2,636 2,903 41,791 47,837 17,552 (9,790) 1,954 2,223 (640) (1,054) 4,685 (134,762) 482 18,367 (605) 42 (3) (632) 4,664 4,726 (23,287) 6,391 (150,783) (65,232) 1,409 (16,377) 59,883 (45,706) (375) (161) (13,750) (26,581) (1,641) (995) (181) (1,136) 261 713 (698) (116) (2) (2) 65,752 (118,522) 13,133 385 (27,356) (2,749) 51,529 (120,886)
		81,674 $ 29,500 744 723 4,613 (385) - (4,028) (57) 260 (270) (1) 47 (4,347) (7,653) 2,903 47,837 (9,790) 2,223 (1,054) (134,762) 18,367 42 (632) 4,726 6,391 (65,232) (16,377) (45,706) (161) (26,581) (995) (1,136) 713 (116) (2)
		(118,522) 385 (2,749)
		(120,886)

218

AWEA Mechantronic Company Limited CONSOLIDATED STATEMENTS OF CASHFLOWS

For the Three Months Ended March 31, 2023 and 2022

(Reviewed only, not audited in accordance with generally accepted auditing standards)

(Reviewed only, not audited in accordance with	generally accepted auditing standards)	generally accepted auditing standards)
(Continued) CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisitions of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisitions of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisitions of intangible assets Decrease in guarantee deposits paid Dividends received Increase in other financial assets Decrease in other non-current assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loans Increase (decrease) in short-term notes payable Decrease in long-term borrowings Decrease in guarantee deposits received Lease liability principal repayments Interest paid Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	In Thousands of New Taiwan Dollars Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 (4,396) (20,736) 1,353 2,498 - (8,798) 300 3,790 (4,326) (3,805) 190 2,232 (1,003) (800) 1,290 5,796 28 - (30,300) (10,943) 365 345 (36,499) (30,421) (122,240) 113,436 24,974 (129,956) - (60,466) (741) (2,404) (2,845) (2,876) (8,973) (4,385) (109,825) (86,651) 457 11,830 (94,338) (226,128) 1,132,171 937,652 1,037,833 $ 711,524 $
		(20,736) 2,498 (8,798) 3,790 (3,805) 2,232 (800) 5,796 - (10,943) 345
		(30,421)
		113,436 (129,956) (60,466) (2,404) (2,876) (4,385)
		(86,651)
		11,830
		(226,128) 937,652
		711,524 $

Please refer to the accompanying notes to the consolidated financial statements.

219

Financial impact from any financial turnover incurs to the company or its affiliated companies in recent year until closure date of annual report in case any.
n/a.

VII . Financial statement and governance review and risk management

Financial statement

Unit: thousand NTD

Year Statement	2022	2021	Difference	Difference	Remarks
			Amount	%
Current Assets	4,604,226	3,859,310	744,916	19.30%
Investment by equity law	109,850	96,604	13,246	13.71%
Property, plant, equipment	1,797,473	1,872,994	(75,521)	-4.03%
Intangible assets	10,368	12,403	(1,675)	-13.91%
Other Assets	269,881	366,329	(96,448)	-26.33%	*1
Total Assets	6,791,798	6,207,280	584,518	9.42%
Current Liabilities	3,288,494	2,825,233	463,261	16.4%
Non-current Liabilities	135,109	225,560	(90, 451)	-40.10%	*2
Total Liabilities	3,423,603	3,050,793	372,810	12.22%
Equity ratio attributable to shareholders of the parent company.	3,252,676	3,037,226	215,450	7.09%
Capital stock	965,942	965,942	0	0.00%
Legal reserve	95,516	124,495	(28, 979)	-23.28%	*3
Retained Earnings	2,220,850	1,978,858	241,992	12.23%
Other equities	(29,632)	(32,069)	2,437	-7.60%
Non-controlling equities	115,519	119,261	(3,742)	-3.14%
Total Equity	3,368,195	3,156,487	211,708	6.71%

*1: Other assets decrease due to exchange rate change that led to deferred income tax decrease.
*2: Non-current liabilities decreased due to long term loan decrease.
*3: Paid-in capital decrease due to cash allocation of paid-in capital.

220

2. Financial Performance

2.1 Comparison of governance analysis

Unit: thousand NTD

Year Statement	2022	2021	Difference	Ratio (%)	Remarks
Operating revenue	3,100,517	3,630,956	(530,439)	-14.61%
Operating cost	(2,432,617)	(2,951,020)	518,403	-17.57%
Gross profit	667,900	679,936	(12,036)	-1.77%
(Un-)realised profit by affiliated companies	(4,900)	1,924	(6,824)	-354.68%
Realised profit	663,000	681,860	(18,860)	-2.77%
Operating cost	(364,775)	(415,661)	50,886	-12.24%
Income from operations	298,225	266,199	32,026	12.03%
Non-operating income and expenses	161,563	(28,399)	189,962	-668.90%	*1
Current net profit before tax	459,788	237,800	221,988	93.35%	*1
Tax fee	(110,501)	(115,767)	5,266	-4.55%
Current net income	349,287	122,033	227,254	186.22%	*1
Other comprehensive income	7,313	24,067	(16,754)	-69.61%	*2
Total comprehensive income	356,600	146,100	210,500	144.08%	*1

Difference analysis in change of ratio:

*1. Non-operational income and cost, current net profit before tax, current net income, current comprehensive income total increase occurred due to exchange rate change that generated profit from exchange of foreign currency.
*2: Other comprehensive balance decreased mainly due to equities investment failing to invest in un-realised gains (losses) with equity instruments of evaluation via other comprehensive balance pursuant to fair value.
2.2 Sales forecast and basis: Proper disease control and economic stimulus programmes in the world in 2023 will encourage sales growth.
2.3 Impact and response plan for future business operation: We anticipate long-calling growth in global economy in 2023 under proper disease control. Finance and business will welcome margin. No response plan will be required.

221

3. Cash flow

3.1 Cash flow change analysis in recent 2022

Preliminary cash amount	Net cash flow from whole-year operation activities	Net cash flow from investment activities	Net cash flow from fundraising activities	Effect of exchange rate change to cash	Surplus amount	Surplus measures	Surplus measures
						Invest ment plan	Financial manage ment
937,652	221,887	(431,734)	402,147	2,219	1,132,171	－	－

3.2 Rectification plan against insufficient fluidity: n/a.

3.3 Cash adequacy for the coming year :

Unit: thousand NTD

				Unit: thousand NTD	Unit: thousand NTD
Estimated Cash and Cash Equivalents, Beginning of Year (1)	Estimated Net Cash Flow from Operating Activities (2)	Estimated Cash Outflow (Inflow) (3)	Cash Surplus (Deficit) (1)+(2)-(3)	Leverage of Cash Surplus(Deficit)
				Investment Plans	Financing Plans
1,132,171	302,724	627,258	807,637	－	－

(1) Cash Flow Analysis for the Coming Year

(a)Operation activities: operation will be steady in future. Term of payable amount is fixed.

(b)Fundraising activities: mainly financial activities for business operation. No material changes other than repay of loan and estimated cash dividends allocation.
(2) Remedy and liquidity analysis to insufficient cash: n/a.

4. Effects of recent major capital cost to financial business

4.1 Source of material capital cost and capital: n/a

Unit: thousand NTD

Project	Source of actual or estimated fund	Actual or estimated completion date	Fund total required in 2022 and 2023	Actual or estimated fund allocation for 2022 and2023	Actual or estimated fund allocation for 2022 and2023
				2022	2023
Dapumei Plant- Phase 2(AWEA)	Self	2024	88,890	－	88,890

Recent investment policy, cause, rectification plan of earning or loss, and investment plan for the future year

n/a.

Risk items shall evaluate and analyse recent year and until closure date of annual report as following
6.1 Interest rate, exchange rate change, inflation effect to company income and future response measures: (1) Interest rate:

The company evaluates interest rate on borrowings compared with market and maintains close contact with the bank to ensure beneficial rate. The interest rate change does not impact the company.

(2) Exchange rate

222

The company collects information on change in exchange rate, grasps exchange rate trend, judges exchange rate change for hedging measures or motorise foreign exchange deposit. We are in close contact with the bank for response measures against exchange rate change in order to avoid exchange rate risks.

(3) Inflation:

The company will pay attention to inflation and price products and raw material inventory accordingly.

6.2 Highly-risky, high leverage investment, loans to the others, endorsement, guarantee, and trading policy for derivatives products, cause and measures of earning or loss:
(1) The company’s financial policy aims at healthy and steady principle. No highly risky, high leverage investment takes place.

223

(2) Lending Funds to Other Parties by the company in recent year by closure date of annual report as following:

31 Dec. 2022 Unit: thousand NTD (unless otherwise stated)

No. (*)	Lender	Borrower	Relations	Relat ed?	Highest end amount (*3)	End amount (*3)	Expenditu re	Interest rate range	Fund purpose	Financin g amount	Short term financing purpose	Allowa nce for doubtf ul debts	Mortgage	Mortgage	lending fund and limits to specific party (*2)	Lending fund cap limits (*2)
													Item	Value
0	AWEA	ExtronMach inery Industry Co.,Ltd	Other payable- stakeholde r	Y	230,000	80,000	70,000	1.80% ~ 1.925%	short-term financing requireme nt	7,911	Operati on financin g	-	Prom issory note	80,000	325,268	1,301,070
1	Shanghai Zhuwei Machinery Co., Ltd.	AWEA (Suzhou) Co., Ltd.	Other payable- stakeholde r	Y	87,680	87,680	87,660	3.8%	short-term financing requireme nt	-	Operati on financin g	-	-	-	145,953	145,953
1	Shanghai Zhuwei Machinery Co., Ltd.	AWEA (Suzhou) Co., Ltd.	Other payable- stakeholde r	Y	7,451	7,451	7,451	3.65%	short-term financing requireme nt	-	Operati on financin g	-	-	-	145,953	145,953

31 March 2023 Unit: thousand NTD (unless otherwise specified)

No. (*)	Lender	Borrower	Relations	Relat ed?	Highest end amount (*3)	End amount (*3)	Expendit ure	Interest rate range	Fund purpose	Financin g amount	Short term financing purpose	Allowan ce for doubtful debts	Mortgage	Mortgage	lending fund and limits to specific party (*2)	Lending fund cap limits (*2)
													Item	Value
0	AWEA	YihChuan Machinery Industry Co.,Ltd	Other payable- stakeholder	Y	80,000	80,000	70,000	1.925% ~ 2.05%	short-term financing requirement	97	Operatio n financing	-	Prom issory note	80,000	327,029	1,308,116
1	Shanghai Zhuwei Machinery Co.,Ltd.	AWEA (Suzhou) Co., Ltd.	Other payable- stakeholder	Y	87,680 (CNY20,000)	87,680 (CNY20,000)	88,120	3.65%	short-term financing requirement	-	Operatio n financing	-		-	149,116	149,116

224

	1	Shanghai Zhuwei Machinery Co.,Ltd.	AWEA (Suzhou) Co., Ltd.	Other payable- stakeholder	Y	7,451 (CNY1,700)	7,451 (CNY1,700)	7,490	3.65%	short-term financing requirement	-	Operatio n financing	-	-	-	149,116	149,116

*1: Number as following:
(1)Issuer: 0
(2)Number investees from 1 by company.
*2: Respective fund lending is limited to a 10% cap of current net value. Fund lending and total has a 40% cap of current net value.
*3: Remaining amount of maximum current fund lending to other is pursuant to exchange rate declared to Securities and Futures Bureau by the company by 31 March 2023.
*4: Maximum current fund lending and ratio are pursuant to exchange rate declared to Securities and Futures Bureau by the company by 31 March 2023, adopted by Board of Directors.
(3) Endorsement and guarantee by recent year and closure date of annual report as following:

Endorsement and guarantee for other parties by 31 March 2022: n/a.

Endorsement and guarantee for other parties by 31 March 2023: n/a.

(4) The company operates derivative products for hedging purpose of exchange rate. No material risk in market.

225

6.3 Future R &D Plan and estimated cost

(1) Recent R &D Plan target as following:
(a)Search and development of blue ocean market products
(b)R & D of high-added value performance and technique
(c)Development of low cost/feasible manufacture products for mass production to ensure current market competitiveness.
(d)Modular/stacked design to ensure productivity and reduce product cost.
(2) R & D cost:

The company invested 61, 671 thousand NTD in R & D in 2022 that accounts for 1.99% of revenue. The company will develop new products and research and develop new technique by comparable ratio to expand competitiveness in market.

6.4 Effects from and response measures against change in domestic and international important policy and law: n/a.
6.5 Effects from and response measures against technical change and industrial change: n/a.
6.6 Effects from and response measures against change in corporate image in terms of corporate risk management: n/a.
6.7 Expected benefit, potential risk, and response measures against merger: n/a.
6.8 Expected benefit, potential risk, and response measures against plant expansion: n/a.
6.9 Risks from and response measures against purchase and sales: the company takes diversification policy over suppliers and clients. No purchase or sales risks centralisation.
6.10 Effects, risks, and response measures against transferal or replacement of stocks by directors, supervisors or shareholders with a shareholding ratio over 10%: n/a.
6.11 Effects, risks, and response measures against change in governance: n/a.
6.12 Directors, supervisors, president, substantial in-charge, shareholders by company with a ratio over ten percent, or their belonging company with concluded or bound material litigation, non-litigation, or administrative appeal: n/a.
6.13 Other material risk and response measures: n/a.

7. Other important matters

n/a.

226

VIII. Mentionable items

1. Affiliated companies

1.1 Consolidation report of Affiliated companies
(1) Organisation chart (by 30 April 2023)

==> picture [459 x 263] intentionally omitted <==

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

100% shareholding 100% shareholding 100% shareholding
Shanghai
Zhuwei
B-Way Billion-Way
(Cayman) (Cayman)
Co.,Ltd. Co.,Ltd.
AWEA
Suzhou
AWEA
100% shareholding
AXTRON INT’L AXTRON Yichuan
Extron INVESTMENT INT’L Machinery
Co.,Ltd INVESTMENT (Chaixing)
60% shareholding 100% shareholding 100% shareholding 100% shareholding
----- End of picture text -----

(2) Affiliated companies

Date: 31 March 2023

Unit: thousand NTD; thousand USD

Company	Founded on	Address	Paid-in capital	Core business
B-WAY(Cayman) Co.,Ltd.	11 Jan. 2001	Cayman Islands, British Overseas Territory	NTD 332,212 thousand	International business and international trading
Billion-way(Cayman) Co.,Ltd.	11 Jan. 2001	Cayman Islands, British Overseas Territory	NTD390,032 thousand	International business and international trading
Shanghai Zhuwei Machinery Co., Ltd.	14 Feb. 2001	Songze Boulevard 7801, Qingpu Industrial Park, Shanghai City	USD2,500 thousand	Machinery sale, machinery installation, business governance consult, international trading
AWEA Suzhou Machinery Co., Ltd.	4 Sep. 2007	Dongtaihu Boulevard 4888, Wujiang economic technical development area	USD11,400 thousand	Machinery production and sale, machinery installation, international trading
Extron Machinery Co., Ltd.	03 Nov. 1972	2F., No. 13-1, Gongyequ 5th Rd., Xitun Dist., Taichung City	NTD98,580 thousand	Machinery production, product design, machinery wholesale, machinery retail

227

Company	Founded on	Address	Paid-in capital	Core business
AXTRON INT'L INVESTMENT CO.,LTD.	22 Nov. 2012	Trust Company Complex,Ajeltake Road,Ajeltake The registered address is Island,Majuro,Marshall Islands MH96960	NTD1,580 thousand	International investment and international trading
AXTRON INT'L INVESTMENT LIMITED	25 March 2013	7/F.,Chuang's Enterprises Building,382 Lockhart Road,Wanchai,Hong Kong	NTD41 thousand	International investment and international trading
Yichuan (Chiahxing) Co., Ltd.	27 Nov. 2000	Zhongshan W. Rd. Xuzhou Industrial Park 3198, Jiaxing City, Zhejiang Province	USD2,510 thousand	Machinery production and sale, machinery installation, international trading

(3) Shareholders having controlling and subordinate relation between them induced: n/a.
(4) Occupation included in overall business operation by affiliated companies
- (a) Machine tools.
- (b) Electronic machinery.
- (c) International trades.
(5) Directors, supervisors, and presidents of affiliated companies

31 March 2023

Unit: share %

			31 March 2023 Unit: share %	31 March 2023 Unit: share %
Affiliated company	Title	Name or Representative	Shareholding
			Number of shares	Ratio
B-WAY(Cayman) Co.,Ltd.	In-charge	YangDehua	10,665,029	100%
Billion-way(Cayman) Co.,Ltd.	In-charge	Yang Dehua	12,829,840	100%
Shanghai Zhuwei Machinery Co., Ltd.	Legal person behalf and director	Wang Chenghsuan	－	100%
Shanghai Zhuwei MachineryCo., Ltd.	President	Yang Changchi	－	100%
Shanghai Zhuwei MachineryCo., Ltd.	Supervisor	Hsu Hongbin	－	100%
AWEA Suzhou Co., Ltd.	Legal person behalf and director	Wang Chenghsuan	－	100%

228

AWEA Suzhou Co., Ltd.	Director and president	Yang Changchi	－	100%
AWEA Suzhou Co.,Ltd.	Director	Zeng Chiguan	－	100%
AWEA Suzhou Co.,Ltd.	Director	YeRueming	－	100%
AWEA Suzhou Co.,Ltd.	Supervisor	HsuHongbin	－	100%
Extron Machinery Co., Ltd.	In-charge	Goodway Machine Corp. Behalf:Yang Chengjun	3,943,200	40%
Extron Machinery Co., Ltd.	Director	Goodway Machine Corp. Behalf:YangDehua
Extron Machinery Co., Ltd.	Director	Goodway Machine Corp. Behalf: Chen Bilian
Extron Machinery Co., Ltd.	Supervisor	AWEA Behalf: Hsu Hongbin	5,914,800	60%
AXTRON INT'L INVESTMENT CO.,LTD	In-charge	Chen Bilian	－	100%
AXTRON INT'L INVESTMENT LIMITED	In-charge	Chen Bilian	－	100%
Yichuan Machinery (Chiaxing) Co., Ltd.	Legal person behalf	Chen Bilian	－	100%
Yichuan Machinery (Chiaxing) Co., Ltd.	Director	Zeng Chiguan	－	100%
Yichuan Machinery (Chiaxing) Co., Ltd.	Director	Yang Shangru	－	100%
Yichuan Machinery (Chiaxing) Co., Ltd.	Director	Kang Jianwen	－	100%
Yichuan Machinery (Chiaxing) Co., Ltd.	Supervisor	Yang Changchi	－	100%

(6) Affiliated company operation

31 December 2021 Unit: thousand NTD

Company	Capital	Asset total	Liabilities total	Net value	Operation revenue	Operation balance	Current balance (aftertax)	EPS(NTD) (after tax)
B-WAY (Cayman) Co.,Ltd.	334,213	737,251	0	737,251	0	(291)	95,283	0.29
Billion-way (Cayman) Co.,Ltd.	406,355	733,801	0	733,801	0	(311)	85,859	0.21
Shanghai ZhuweiCo.,Ltd.	83,058	150,490	4,537	145,953	0	(3,409)	3,148	Note
AWEA (Suzhou) Co.,Ltd.	354,478	1,064,074	480,778	583,296	944,154	110,100	81,807	Note
Goodway Machine Corp.	98,580	375,553	86,756	288,797	41,117	(8,258)	(12,140)	(1.23)
AXTRON INT'L	1,580	230,394	0	230,394	0	0	(7,257)	(4.59)

229

Company	Capital	Asset total	Liabilities total	Net value	Operation revenue	Operation balance	Current balance (aftertax)	EPS(NTD) (after tax)
INVESTMENT CO.,LTD.
AXTRON INT'L INVESTMENT LIMITED	41	230,394	0	230,394	0	0	(7,257)	Note
Yichuan (Chiaxing) Co., Ltd.	82,781	325,792	95,399	230,393	151,316	(12,639)	(7,258)	Note

Note:Shanghai Zhuwei Machinery/AWEA(Zuzhou): currency unit is thousand RMB. EPS does not apply to Mainland Chinese companies. Exchange rate: 1 RMB=4.383 NTD.

Private equity securities by recent year and closure date of annual report shall disclose date of adoption and number and amount by Board of Shareholders or Board of Directors, basis and rationale for the setting of the price, means of selecting the specified persons, reasons necessitating the private placement.: n/a.
Shareholding or share disposition by subsidiaries by recent year and closure date of annual report n/a.
Other mentionable matters

n/a.

IX. Occurrence associated with Securities Exchange Act. Art. 36 Item 2 Paragraph 2, any event which has a material impact on shareholders' rights and interests or securities prices, by recent year and closure date of annual report. n/a.

230

AI assistant

AWEA — Annual Report 2022

51853_rns_2023-08-14_da1f03c5-a4d6-42bf-b50d-1e8a9248318f.pdf

AWEA Mechantronic Co., Ltd.

2022 ANNUAL REPORT

1. The name, title, telephone number and email address of the spokesperson and acting spokesperson

2. Addresses and telephone numbers of the Headquarter, Branches and Plant

3. Stock Transfer Agent

4. The latest annual financial report signed by accountant, and indicated accounting

office, address, website and telephone number

5. The name of the trading place where overseas securities are listed and traded; and

the way to check about the overseas securities information: not applicable

6. Corporate Website ：http：//www.awea.com

Contents

I. Letter to Shareholders

1. 2022Business Results Report

1.5 Breakthrough in Business Management[：]

(1) Product Development Breakthrough

2. 2023 Business Plan Overview

(b) Export：

3. Production and Marketing policies

II. Company Profile

1 Date of Incorporation

2 Addresses and telephone numbers of the head office, branch offices and plants

3 Milestone

III. Corporate Governance Report

1. Organisation

1.1 Organisation Chart

1.2 Major Corporate Functions:

2. Director, supervisor, president, vice president, associate, supervisor of each department and branch.

2.1 Directors

2.2 President, vice president, associate, supervisor of each department and branch

2.3 Remuneration of Directors, Supervisors, President, and Vice Presidents

(1) Remuneration of Directors

Remuneration Scale

(2) President and manager remuneration

Remuneration Scale

3.1 Board of Directors

(2) Evaluation details of Board of directors

(2) Remuneration Committee Operation

Other mentionable items:

3.5 CSR promotion implementation:

3.6Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles " and Measures taken

3.9 Implementation of internal control system shall disclose following:

(1) Internal control system statement

Statement on Internal Control

Date: 13 March 2023

4. CPA Commission Details

5. Change of auditors

8. Relations among top 10 shareholders

IV. Fundraising

1. Company capital and shares

1.1 Source of equity capital

1.2 Shareholding structure

1.5 Share price, net worth, earning, dividend, and other information in the past two years

1.6 Dividend Policy by company & implementation (to be adopted by 2023 Board of Shareholders’

meeting)

(1).Dividend policy: The settled annual net income

AWEA

1.8 Employee and Director Bonus

7.2 Implementation: n/a.

V. Operation

1 Business Activities

1.1 Business Scope

‧ Automation equipment

(4) Development plan of new products

1.2 Industry Overview:

(a)Current status of the industry

(2) The connection between the middle stream and downstream in the industry:

(3) Various development trends of products: (a)Technology Development Trend

(b)Product Development Trend

(4) Product competition

1.3 Overview on Technology and Research and Development:

(1) The technical level of the business

(2) Research development

(a)Small and medium horizontal boring and milling machining center

(b)Large horizontal boring and milling machining center

(d)Small High Speed CNC Vertical Machining Center

(e)Intelligent software development

(f)Develop High Precision Optical Mounting and Calibration System for Large Machine Tools

AWEA Annual Report 2022