CHAINTECH — Annual Report 2020

Nov 13, 2020

Chaintech Technology Corporation and Subsidiaries Consolidated Financial Statements and Independent Auditors' Report For the Years Ended December 31, 2020 and 2019 (Stock Code: 2425)

Company Address: 3F., No. 48-3, Minsheng Road, Xindian District, New Taipei City

Tel: (02)2913-8833

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Chaintech Technology Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors' Report

Table of Contents

Contents Cover Table of Contents Declaration of Consolidated Financial Statements of Affiliated Enterprises Independent Auditors' Report Consolidated Balance Sheets Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements I. Company History II. Approval Date and Procedures of the Consolidated Financial Statements III. Application of New and Amended Standards and Interpretations IV. Summary of Significant Accounting Policies V. Significant Accounting Judgments and Sources of Estimation and Assumption Uncertainty VI. Descriptions of Significant Accounting Items

Page No. 1 2-3 4 5-10 11-12 13-14 15 16 17- 17 17 17-19 19-35 35-36 36-60

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Contents VII. Related Party Transactions VIII. Pledged Assets IX. Significant Contingent Liabilities and Unrecognized Contract Commitments X. Significant Disaster Loss XI. Significant Events after the End of the Financial Reporting Period XII. Others XIII. Supplementary Disclosures 1. Information on significant transactions 2. Information on investees 3. Information on investments in Mainland China 4. Information on major shareholders XIV. Segment Information

Page No. 60-62 62 62 62 62 63-73 73 73 73 73 74 74-75

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Chaintech Technology Corp. and Subsidiaries

Declaration of Consolidated Financial Statements of Affiliated Enterprises

The companies required to be included in the consolidated financial statements of affiliated enterprises under the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" are all the same as enterprises required to be included in the consolidated financial statements of Chaintech Technology Corporation and subsidiaries for the year ended December 31, 2020 as provided in the IFRS 10 Consolidated Financial Statements. In addition, relevant information that should be disclosed in the consolidated financial statements of affiliated enterprises has all been disclosed in the consolidated financial statements of Chaintech Technology Corporation and subsidiaries. Consequently, no consolidated financial statements of affiliated enterprises are prepared separately.

Hereby declared by

Company Name: Chaintech Technology Corporation

Person in Charge: Kao, Shu-Jung

March 23, 2021

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Independent Auditors' Report

(110) Cai-Shen-Bao-Zi No. 20005262

To Chaintech Technology Corporation:

Audit Opinions

The independent auditors have audited the accompanying consolidated balance sheets of Chaintech Technology Corporation and subsidiaries (hereinafter referred to as "the Group") as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated statements of cash flows for the years then ended, and the notes to the consolidated financial statements (including the summary of significant accounting policies).

In our opinions, the accompanying consolidated financial statements, in all material respects, give a true and fair view of the consolidated financial position of the Group as of December 31, 2020 and 2019, and of its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and the International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), International Financial Reporting Interpretations Committee (IFRIC) Interpretations, and Standing Interpretations Committee (SIC) Interpretations as endorsed by the Financial Supervisory Commission of the Republic of China (the "FSC").

Basis of Audit Opinion

For the consolidated financial statements for the year ended December 31, 2020, we conducted our audit in accordance with the "Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants" and the Generally Accepted Auditing Standards (GAAS) of the Republic of China. For consolidated financial statements for the year ended December 31, 2019, we conducted our audit in accordance with the "Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants," "Financial Supervisory Commission Letter Jin-Guan-Zheng-Shen-Zi No. 1090360805 dated February 25, 2020," and the GAAS of the Republic of China. Our responsibilities under those standards are further described in the section of Responsibilities of Certified Public Accountants for Auditing the Consolidated Financial Statements. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm.

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We believe that the audit evidence we have obtained is sufficient and appropriate to serve as the foundation of our audit opinion.

Key Audit Matters

Key audit matters refer to matters that, in our professional judgment, are of most significance in our audit of the consolidated financial statement of the Group for the year ended December 31, 2020. These matters are addressed in the context of our audit of the consolidated financial statements as a whole, and in forming out opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the consolidated financial statement of the Group for the year ended December 31, 2020 are stated as follows:

Sales revenue cut-off

Description

Regarding the accounting policy for recognition of sales revenues, please refer to Notes 6 (aa) to the consolidated financial statements. For the description of sales revenue, please refer to Note 6 r. to the consolidated financial statements.

The Group has engaged in the trading and manufacturing of computer peripherals. Sales revenue will not be recognized until customers take the delivery of goods from the warehouse and the transfer control has passed. The Group mainly relies on the statements or other information provided by the depositary of the delivery warehouse, then uses the actual shipment made by the warehouse to the customer as the basis for recognizing the income.

The recognition of the turnover from the warehouse is based on the information and report provided by the depositary as the basis for recognizing the sales revenue. Such revenue recognition generally involves a large number of manual operations. Considering that the volume of the shipments of the Group is large, and the amount of transaction before and after the financial date has a significant impact on the financial statements, the independent auditors have thus listed the sales revenue as the most important matter for this year's audit.

Corresponding audit procedures

We have performed the following key audit procedures for the matter mentioned above:

1. Understand revenue recognition and adjustment procedures for revenue cut-off for shipment from the depository of warehouse of the Group. Then, inspect the appropriateness of the revenue's recognition from the warehouse, including understanding

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of the relevant internal control procedures, obtaining information and the statements provided by the depository.

1. Carry out an internal control test for the sales revenue from the warehouse in order to make sure that the Group determine the sales recognition when the customer receives the delivery of goods and the right of control is transferred.

2. Perform a closing test for sales revenue from delivery of warehouses for a certain period before and after the balance sheet date, including the verification of shipment certificates and that revenue recognition is recorded in the appropriate period.

3. Make an written inquiry into the stock quantity in the warehouse and check if the inventory quantity on the record is correct.

Impairment of intangible assets

Description

As of December 31, 2020, the balance of intangible assets was NT$180,171. Please refer to Note 6 k. for the assessment of the impairment of non-financial assets. To assess whether intangible assets are impaired, the Group estimates the future cash flows based on the cashgenerating units to which the intangible assets belong, and measures the recoverable amount of such cash-generating units at an appropriate discount rate. As the estimation of future cash flow involves many assumptions that may greatly affect the recoverable amount, we identify the Group's assessment of the impairment of intangible assets as one of the key audit matters for the year.

Corresponding audit procedures

We have performed the following key audit procedures for the matter mentioned above: We have carried out the following audit procedures based on the goodwill impairment test report issued by a third-party valuation expert appointed by management:

1. Assess the expertise, competence, and objectivity of the independent valuation experts appointed by management and verify their qualifications, and discuss with management the scope of work of the valuation experts and review the appointment conditions to verify that no conditions that may affect their objectivity or inhibit their work scope exist, and that the methods used by them are consistent with the IFRSs and industry regulations.

2. Understand and evaluate the process and the basis where management has made its projections of the growth rate of the future operations in terms of sales and profit margin.

3. Adopt the evaluation models and important assumptions (including discount rate, etc.)

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provided by financial experts of our firm, compare the data in assumptions made by management to market and historical data, and check the calculation to ensure the appropriateness of management's judgment.

Other Matters – Parent Company Only Financial Statements

We have also audited the parent company only financial statements of Chaintech Technology Corporation for the years ended December 31, 2020 and 2019, for which we have issued the audit report with an unqualified opinion for reference.

Responsibility of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers," and the International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), International Financial Reporting Interpretations Committee (IFRIC) Interpretations, and Standing Interpretations Committee (SIC) Interpretations as endorsed by the FSC, 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, the responsibility of management includes assessing the Group's ability to continue as a going concern, disclosing going concern related matters, as well as adopting going concern basis of accounting unless management intends to liquidate the Group or terminate the business, or has no realistic alternative but to do so.

Those charged with governance, including the supervisors, are responsible for overseeing the Group's financial reporting process.

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Responsibilities of Certified Public Accountants for Auditing the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the GAAS of Republic of China will always detect a material misstatement when it exists. Misstatements may arise from fraud and error. If it could be reasonably anticipated that the misstated individual amounts or aggregated sum could have influence on the economic decisions made by the users of the consolidated financial statements, it will be deemed as material.

As part of an audit in accordance with the GAAS of Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also execute the following tasks:

1. 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 that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

3. Evaluate the appropriateness of accounting policies adopted by management and the reasonableness of the accounting estimates and related disclosures made accordingly.

4. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, determine whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements; or, if such disclosures are inadequate, we are required to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or circumstances may cause the Group to no longer continue as a going concern.

5. Evaluate the overall expression, structure, and contents of the consolidated financial

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statements (including related notes) and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

1. Obtain sufficient and appropriate audit evidence with regard to the financial information of the entities within the Group to express an opinion about the consolidated financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

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

We also provide those charged with governance with a statement that we have complied with the Norm 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 are of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 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.

PwC Taiwan

Feng, Min-Chuan

Certified Public Accountants

Lin, Ya-Hui

Former Securities and Futures Bureau, Financial Supervisory Commission Approved Certification Number: Jin-Guan-Zheng-Liu-Zi No. 0960038033

Financial Supervisory Commission Approved Certification Number: Jin-Guan-Zheng-Shen-Zi No. 1070323061 March 23, 2021

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Chaintech Technology Corporation and Subsidiaries Consolidated Balance Sheets For the Years Ended December 31, 2020 and 2019

Assets	Notes VI(I) VI(II) VI(IV) VI(IV) VI(IV) and VII VI(V) VI(VII) and VIII VI(III) VI(VI) VI(VIII) VI(IX) VI(X) VI(XXIV)	December31,2020 Amount % $ 330,087 11 237,671 8 3,187 - 531,724 18 770,724 27 1,761 - 29,859 1 273,611 10 84,624 3 56,887 2 2,320,135 80 186,150 6 133,573 5 34,723 1 17,060 1 180,171 6 3,132 - 36,602 1 591,411 20 $ 2,911,546 100	Unit: NT$ thousands December31,2019 Amount % $ 360,088 15 184,273 8 - - 335,326 14 616,786 26 2,778 - 9,044 - 346,795 15 51,882 2 63,085 3 1,970,057 83 137,045 6 - - 62,003 3 11,364 - 188,971 8 3,435 - 8,740 - 411,558 17 $ 2,381,615 100
		Amount $ 330,087 237,671 3,187 531,724 770,724 1,761 29,859 273,611 84,624 56,887 2,320,135 186,150 133,573 34,723 17,060 180,171 3,132 36,602 591,411 $ 2,911,546	Amount $ 360,088 184,273 - 335,326 616,786 2,778 9,044 346,795 51,882 63,085 1,970,057 137,045 - 62,003 11,364 188,971 3,435 8,740 411,558 $ 2,381,615
Current assets 1100 Cash and cash equivalents 1110 Financial asset at fair value through profit and loss - current 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable from related parties, net 1200 Other receivables 1220 Current tax assets 130X Inventories 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 1550 Investments using equity method 1600 Property, plant, and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets

(Continued)

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Chaintech Technology Corporation and Subsidiaries Consolidated Balance Sheets For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands

Liabilities and equity

December 31,2020 December 31,2019 Notes Amount % Amount % VI(XIII) and VIII $ 402,027 14 $ 156,597 7 VI(XVIII) 67,620 2 14,545 1 - - 24 - 358,229 12 358,860 15 VII 13,462 1 10,741 - VI(XIV) and VII 100,834 4 98,983 4 10,952 - - - 6,719 - 5,942 - 568 - 442 - 960,411 33 646,134 27 VI(XIV) 2,592 - 5,489 - 10,623 1 5,619 1 VI(XXVI) 4,252 - 4,130 - 17,467 1 15,238 1 977,878 34 661,372 28 VI(XVI) 1,014,988 35 1,014,988 42 100 - - - VI(XVII) 132,984 4 122,290 5 97,541 3 112,514 5 670,152 23 551,542 23 ( 39,702 ) ( 1 ) ( 97,541 ) ( 4 ) VI(XVI) ( 151,746 ) ( 5 ) ( 151,746 ) ( 6 ) 1,724,317 59 1,552,047 65 209,351 7 168,196 7 1,933,668 66 1,720,243 72 IX $ 2,911,546 100 $ 2,381,615 100

Current liabilities 2100 Short-term borrowings 2130 Current contract liabilities 2150 Notes payable 2170 Accounts payable 2180 Accounts payable to related parties 2200 Other payables 2230 Current tax liabilities 2280 Current lease liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2570 Deferred tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Equity attributable to owners of the parent Share capital 3110 Ordinary shares 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity 3400 Other equity 3500 Treasury shares 31XX Total equity attributable to owners of the parent 36XX Non-controlling interests 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments 3X2X Total liabilities and equity

The accompanying notes are an integral part of the consolidated financial statements. Please refer to them as well. Chairman: Shu-Jung Kao President: Shu-Jung Kao Chief Accounting Officer: Yu-Nu Lai

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Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2020 and 2019

Items

Unit: NT$ thousand (EPS in NT$) 2020 2019 Notes Amount % Amount % VI(XII)(XVIII) and VII $ 4,672,310 100 $ 4,738,182 100 VI(V)(XII) (XXII) and (XXIII) ( 4,235,305) ( 91)( 4,405,546 ) ( 93) 437,005 9 332,636 7 VI(XII) (XXII) (XXIII) and VII ( 105,616 ) ( 2 ) ( 107,889 ) ( 2 ) ( 83,744 ) ( 2 ) ( 77,153 ) ( 2 ) ( 17,887 ) - ( 16,627 ) - XII(III) ( 3,547) - 1,166 - ( 210,794) ( 4)( 200,503 ) ( 4) 226,211 5 132,133 3 794 - 4,457 - VI(XIX) 7,115 - 3,951 - VI(XI)(XX) ( 26,072 ) ( 1 ) 17,248 - VI(XXI) ( 6,503 ) - ( 5,884 ) - VI(VI) ( 11,921) - - - ( 36,587) ( 1) 19,772 - 189,624 4 151,905 3 VI(XXIV) ( 6,211) - ( 14,681 ) - 183,413 4 137,224 3 VI(XII) - - ( 8,545 ) - $ 183,413 4 $ 128,679 3

4000 Operating revenue 5000 Operating costs 5950 Gross profit from operations Operating expenses 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Gain (loss) on expected credit losses 6000 Total operating expenses 6900 Operating income Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Financial costs 7060 Share of profit or loss of associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before tax 7950 Tax expense 8000 Profit from continuing operations 8100 Loss from discontinued operations 8200 Profit

(Continued)

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Items	Notes VI(III) VI(XXV) VI(XXV)	2020	2019 % Amount 1 $ 28,060 1 28,060 - ( 13,087 ) - ( 13,087 ) 1 $ 14,973 5 $ 143,652 3 $ 106,942 1 21,737 4 $ 128,679 4 $ 121,915 1 21,737 5 $ 143,652 1.51 $ - ( 1.51 $ 1.51 $ - ( 1.51 $	2019	% - - - - - 3 2 1 3 3 - 3 1.14 0.08 ) 1.06 1.14 0.08 ) 1.06
		Amount $ 49,105 49,105 12,383 12,383 $ 61,488 $ 244,901 $ 145,907 37,506 $ 183,413 $ 203,746 41,155 $ 244,901 $
Other comprehensive income, net Items that will not be reclassified to profit or loss 8316 Unrealized valuation gain (loss) on equity instruments measured at fair value through other comprehensive income 8310 Total amount of items that will not be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of financial statements of foreign operation 8360 Total amount of items that may be reclassified subsequently to profit or loss 8300 Other comprehensive income, net 8500 Total comprehensive income (loss) Net income attributable to: 8610 Owners of the parent 8620 Non-controlling interests Total comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interests Basic earnings per share 9710 Profit from continuing operations 9720 Loss from discontinued operations 9750 Basic earnings per share Diluted earnings per share 9810 Profit from continuing operations 9820 Loss from discontinued operations 9850 Diluted earnings per share
		$		$
		$		$ (
		$		$

The accompanying notes are an integral part of the consolidated financial statements. Please refer to them as well.

Chairman: Shu-Jung Kao President: Shu-Jung Kao

Chief Accounting Officer: Yu-Nu Lai

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Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Changes in Equity For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands

2019 Balance as of January 1, 2019 Profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of earnings for 2018 Legal reserve appropriated Special reserve appropriated Cash dividends paid Treasury shares repurchased Changes in non-controlling interests Balance as of December 31, 2019 2020 Balance as of January 1, 2020 Profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of earnings for 2019 Legal reserve appropriated Special reserve reversed Cash dividends paid Changes in the net worth of associates and joint ventures accounted for using equity method Balance as of December 31, 2020	Notes					Equity att	ributable to owners of th	e parent
		Ordinary shares	Capital surplus - changes in the net worth of associates and joint ventures accounted for using equity method			Retained earnings	Unappropriated retained earnings	Other e	quity Unrealized gains (losses) on financial assets at fair value through other comprehensive income	Treasury shares
				Legal reserve		Special reserve		Exchange differences on translation of financial statements of foreign operation
	VI(XVII) VI(XVII) VI(VI)	$ 1,014,988 - - - - - - - - $ 1,014,988 $ 1,014,988 - - - - - - - $ 1,014,988	$ - - - - - - - - - $ - $ - - - - - - - 100 $ 100	$ 97,859 - - - 24,431 - - - - $ 122,290 $ 122,290 - - - 10,694 - - - $ 132,984	$ 88,481 - - - - 24,033 - - - $ 112,514 $ 112,514 - - - - ( 14,973 ) - - $ 97,541		$ 645,310 106,942 - 106,942 ( 24,431 ) ( 24,033 ) ( 152,246 ) - - $ 551,542 $ 551,542 145,907 - 145,907 ( 10,694 ) 14,973 ( 28,950 ) ( 2,626 ) $ 670,152	($ 36,515 ) - ( 13,087 ) ( 13,087 ) - - - - - ($ 49,602 ) ($ 49,602 ) - 8,734 8,734 - - - - ($ 40,868 )	($ 75,999 ) - 28,060 28,060 - - - - - ($ 47,939 ) ($ 47,939 ) - 49,105 49,105 - - - - $ 1,166	$ - - - - - - - ( 151,746 ) - ($ 151,746 ) ($ 151,746 ) - - - - - - - ($ 151,746 )

The accompanying notes are an integral part of the consolidated financial statements. Please refer to them as well.

Chairman: Shu-Jung Kao

President: Shu-Jung Kao

Chief Accounting Officer: Yu-Nu Lai

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Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

Cash flows from operating activities Profit from continuing operations before tax Loss from discontinued operations before tax Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation expenses Depreciation expenses on right-of-use assets Amortization expenses Loss (gain from reversal) on expected credit losses Net loss (gain) on financial assets at fair value through profit or loss Loss (gain) on disposal of investments Interest expenses Interest income Dividend income Share of profit or loss of associates accounted for using equity method Loss on disposal of property, plant, and equipment Gain on disposal of discontinued operations Impairment loss Changes in operating assets and liabilities Net changes in operating assets Financial assets at fair value through profit or loss Notes receivable Accounts receivable (including related parties) Other receivables Inventories Prepayments Other current assets Other non-current assets Net changes in operating liabilities Contract liabilities Notes payable Accounts payable (including related parties) Other payables Other current liabilities Cash flows generated from (used in) operations Interest received Dividends received Interest paid Income tax paid Net cash flows used in operating activities Cash flows from investing activities Net cash flows from acquisition of subsidiaries Disposal of property, plant, and equipment Acquisition of property, plant, and equipment Proceeds from disposal of subsidiaries Proceeds from capital reduction of investments Increase in restricted assets Acquisition of investments accounted for using equity method Net cash flows used in investing activities Cash flows from financing activities Increase in short-term borrowings Decrease in guarantee deposits received Repayments of lease liabilities Cash dividends paid Payments to acquire treasury shares Net cash flows generated from (used in) financing activities Effect of exchange rate changes Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

Unit: NT$ thousands Notes January 1 to December 31,2020 January 1 to December 31,2019 $ 189,624 $ 151,905 - ( 8,485 ) 189,624 143,420 VI(VIII)(XXII) 24,609 21,219 VI(IX)(XXII) 7,193 5,916 VI(X)(XXII) 11,670 10,184 XII(III) 3,547 ( 1,166 ) VI(II)(XX) ( 6,124 ) ( 2,792 ) - 370 VI(XXI) 6,503 5,884 ( 794 ) ( 4,461 ) VI(XIX) ( 3,079 ) ( 3,053 ) VI(VI) 11,921 - VI(XVIII) - 474 VI(X) - ( 26,313 ) VI(VI)(XI)(XX) 1,980 - ( 49,084 ) ( 179,726 ) ( 3,117 ) - ( 350,311 ) 162,626 1,017 10,887 75,045 ( 164,870 ) ( 30,504 ) ( 50,260 ) 45 28,204 2,173 ( 44,853 ) 53,075 5,853 ( 24 ) 24 ( 184 ) 77,533 1,655 33,943 125 ( 22,925 ) ( 53,039 ) 6,118 794 4,616 3,079 3,053 ( 6,306 ) ( 5,324 ) ( 18,670 ) ( 80,371 ) ( 74,142 ) ( 71,908 ) - ( 160,987 ) 2,803 - VI(XXVII) ( 2,359 ) ( 48,994 ) VI(X) - 151,565 - 5,974 ( 23,882 ) ( 28,390 ) VI(VI) ( 150,000 ) - ( 173,438 ) ( 80,832 ) VI(XXVIII) 245,430 156,597 VI(XXVIII) 58 1,013 VI(XXVIII) ( 7,110 ) ( 5,949 ) VI(XVII) ( 28,950 ) ( 152,246 ) - ( 151,746 ) 209,428 ( 152,331 ) 8,151 12,248 ( 30,001 ) ( 292,823 ) 360,088 652,911 $ 330,087 $ 360,088

The accompanying notes are an integral part of the consolidated financial statements. Please refer to them as well. Chairman: Shu-Jung Kao President: Shu-Jung Kao Chief Accounting Officer: Yu-Nu Lai

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Chaintech Technology Corporation and Subsidiaries Notes to the Consolidated Financial Statements For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousand (Unless specified otherwise)

I. Company History

• (I) The original East Chaintech Technology Corporation was established in November 1986, and was renamed as Chaintech Technology Corporation (hereinafter referred to as the "Company") in January 2013. Approved by the Securities and Futures Bureau as an OTClisted company in December 1997, the Company was transferred to be a listed company and was listed at the stock exchange market on August 17, 2000. The Company and its subsidiaries (hereinafter referred to as the "Group") are principally engaged in the business of buying and selling and manufacturing of motherboards, display cards, and computer peripherals.

• (II) Colorful Group Ltd. (hereinafter referred to as the "Colorful Group") acquired 10% equity in the Company indirectly through Zhongjie Xingye Co., Ltd., and acquired 100% equity in Yicheng International Development Co., Ltd. (which held 36.2% equity of the Company) in June 2014. Therefore, Colorful Group held 46.2% equity in the Company indirectly, and obtained more than half of the seats in the Company's Board of Directors. In June 2017, Zhongjie Xingye Co., Ltd. sold all the equity of the Company it held. In July 2016, Yicheng International Development Co., Ltd. sold the equity of the Company to 26.11%. As of December 31, 2020, the Colorful Group indirectly held 28.11% of the equity in the Company through Yicheng International Development Co., Ltd. As of December 31, 2020, the Group had 137 employees.

II. Approval Date and Procedures of the Consolidated Financial Statements

The consolidated financial statements were approved by the Board of Directors on March 23, 2021.

III. Application of New and Amended Standards and Interpretations

• (I) Effect of adopting new and amended International Financial Reporting Standards ("IFRSs") endorsed by the FSC

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

are as follows:
New/revised/amended standards, interpretations, and amendments	Effective date by the International Accounting
	Standards Board (IASB)

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Amendments to IAS 1 and IAS 8 "Disclosure Initiative - January 1, 2020 Definition of Materiality" Amendments to IFRS 3 "Definition of a Business" January 1, 2020

Effective date by the New/revised/amended standards, interpretations, and International Accounting amendments Standards Board (IASB) Amendments to IFRS 9, IAS 39, and IFRS 7 "Interest Rate Benchmark Reform" January 1, 2020

Amendments to IFRS 16 "Covid-19-Related Rent Concessions" June 1, 2020 (Note)

Note: The FSC allows early application on January 1, 2020.

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

(II) Effect of new issuance of or amendments to the IFRSs endorsed by the FSC but not yet

adopted by the Group

The following table summarizes the new, revised, and amended standards and interpretations of IFRSs endorsed by the FSC that are applicable in 2021:

New/revised/amended standards, interpretations, and Effective date by the amendments IASB Amendments to IFRS 4 "Temporary Exemption from January 1, 2021 Applying IFRS 9" Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 "Changes in Interest Rate Benchmark Reform - Phase 2" January 1, 2021

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

(III) Effect of the IFRSs issued by the IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by the IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

New/revised/amended standards, interpretations, and Effective date by the amendments IASB Amendments to IFRS 3 "Reference to the Conceptual January 1, 2022 Framework" Amendments to IFRS 10 and IAS 28 "Sale or Contribution of To be determined by the Assets between an Investor and its Associate or Joint Venture" IASB IFRS 17 "Insurance Contracts" January 1, 2023

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New/revised/amended standards, interpretations, and amendments Amendments to IFRS 17 "Insurance Contracts" Amendments to IAS 1 "Classification of Liabilities as Current or Non-Current" Amendments to IAS 1 "'Disclosure of Accounting Policies" Amendments to IAS 8 "Definition of Accounting Estimates" Amendments to IAS 16 "Property, Plant and Equipment – Proceeds before Intended Use" Amendments to IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" Annual Improvements to IFRSs 2018-2020 Cycle

Effective date by the

IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 January 1, 2022 January 1, 2022

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

IV. Summary of Significant Accounting Policies

The significant accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(I) Statement of compliance

The consolidated financial statements are prepared by the Group in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC Interpretations as endorsed by the FSC (the "IFRSs").

(II) Basis of preparation

1. Except for the following significant items, these consolidated financial statements have been prepared under the historical cost convention:

2. (1) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

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

4. The preparation of financial statements requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(III) Basis of consolidation

1. Principles for preparation of consolidated financial statements

2. (1) All subsidiaries are included in the Group's consolidated financial statements. Subsidiaries refer to all entities (including structured entities) controlled by the

3. 19 -

Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

• (2) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group have been eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• (3) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance.

• (4) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.

• (5) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. For all amounts previously recognized in other comprehensive income, they shall be reclassified from equity to profit or loss.

• Subsidiaries included in the consolidated financial statements:

Name of Investor company The Company	Name of Subsidiary Shenzhen Jinghong Digital R&D Service Co., Ltd. (Shenzhen Jinghong)	Business activities Technology R&D and support and trading of electronic products, computer hardware, and peripheral devices	Percentage of ownership December 31, 2020 December 31, 2019 100% 100%	Explanation
				-

• 20 -

Name of Investor company Shenzhen Jinghong Sitonholy (Tianjin) Technology Co., Ltd.	Name of Subsidiary Sitonholy (Tianjin) Technology Co., Ltd. Beijing Sitonholy Technology Co., Ltd. (Beijing Sitonholy)	Business activities Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts	Percentage of ownership December 31, 2020 December 31, 2019 51% 51% 100% 100%	Explanation - -

1. Subsidiaries not included in the consolidated financial statements: None.

2. Adjustments for subsidiaries with different balance sheet dates: None.

3. Significant restrictions: None.

4. Subsidiaries with significant non-controlling interests to the Group:

As of December 31, 2020 and 2019, the Group’s non-controlling interests totaled NT$209,351 and NT$168,196, respectively. What stated below is the information in respect of the Group’s significant non-controlling interests and the corresponding subsidiaries:

Non-controlling interests

Non-controlling interests
Subsidiary Main business premise December 31, 2020 December 31, 2019 Amount Percentage of ownership Amount Percentage of ownership Sitonholy (Tianjin) Technology Co., Ltd. Mainland China $209,351 49 $168,196 49 Summarized financial information of the subsidiary:	Explanation

Balance sheet

Statement of comprehensive income Current assets Non-current assets Current liabilities Non-current liabilities Total assets	Sitonholy (Tianjin) Technology Co., Ltd. and subsidiaries December 31, 2020 December 31, 2019 $ 632,518 $ 429,734 34,507 42,601 ( 235,437) ( 127,729) ( 4,341) ( 1,349) $ 427,247 $ 343,257

• 21 -

Sitonholy (Tianjin) Technology Co., Ltd. and subsidiaries

Statement of cash flows Revenue Profit before tax Tax expense Profit Other comprehensive income, net Total comprehensive income (loss) Total comprehensive income (loss) attributable to non-controlling interests	$ (	2020 1,044,515 79,888 3,345) 76,543 7,447 83,990 41,155	$	2019 951,431
			(	59,894 15,532)
				44,362 -
	$		$	44,362
	$		$	21,737

	Sitonholy (Tianjin)	Technology	Co., Ltd. and subsidiaries	Co., Ltd. and subsidiaries
	2020		2019
Net cash flows used in operating activities	($	2,522)	($	29,547)
Net cash flows used in investing activities		-	(	42,300)
Net cash flows generated from financing		-		25,374
activities
Effects of exchange rate changes on cash
and cash equivalents		6,589	(	6,088)
Net increase (decrease) in cash and cash
equivalents		4,067	(	52,561)
Cash and cash equivalents at beginning of
period		29,638		82,199
Cash and cash equivalents at end of
period	$	33,705	$	29,638

(IV) Foreign currency translation

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (i.e., functional currency). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company's functional currency.

1. Foreign currency transactions and balances

2. (1) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

3. (2) Foreign currency monetary assets and liabilities are translated at the exchange rate

4. 22 -

prevailing at the balance sheet date. Exchange differences arising upon the retransaction at the balance sheet date are recognized in profit or loss.

• (3) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• (4) All exchange gains and losses are presented in the earnings statement of profit or loss within "other gains and losses."

• Translation of foreign operations

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (1) Assets and liabilities for each balance sheet presented are re-translated at the closing rate prevailing at the balance sheet date;

• (2) Income and expenses for each composite income sheet are re-translated at the average exchange rates for the period; and

• (3) All resulting exchange differences are recognized in other comprehensive income.

• (4) When a foreign operation is partially disposed of or sold, the cumulative exchange differences that were recognized in other comprehensive income are reclassified to the non-controlling interests in the foreign operation. However, if the Group still retains partial interests in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

• (5) Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at balance sheet date.

• 23 -

(V) Standard of assets and liabilities being classified as current and non-current

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

2. (1) Assets arising from operating activities that are expected to be realized or are intended to be sold or consumed within the normal operating cycle.

3. (2) Liabilities held mainly for trading purposes.

4. (3) Assets that are expected to be realized within twelve months from the balance sheet date.

5. (4) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

Assets that do not meet the aforementioned conditions are classified as noncurrent.

1. Liabilities that meet one of the following conditions are classified as current liabilities:

2. (1) Liabilities that are expected to be paid off within the normal operating cycle.

3. (2) Liabilities held mainly for trading purposes.

4. (3) Liabilities that are to be paid off within twelve months from the balance sheet date.

5. (4) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Liabilities that do not meet the aforementioned conditions are classified as noncurrent.

(VI) f. Financial assets at fair value through profit or loss

1. Financial assets at fair value through profit or loss refer to financial assets not measured at amortized cost nor measured at fair value through other comprehensive income.

2. Financial assets at fair value through profit or loss that follow regular way purchase or sale are recognized by the Group using trade date accounting.

3. At initial recognition, the Group measures the financial assets at fair value and

4. 24 -

recognizes the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

1. Dividend income is recognized in profit or loss when the right to receive payment is established, and it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of dividends can be measured reliably.

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

1. Changes in fair value of investments in equity instruments that are not held for trading purpose at initial recognition presented in other comprehensive income; or, financial assets meeting the criteria listed below are classified as debt instrument:

2. (1) The financial asset is held for the purpose of obtaining the contractual cash flows and the sales of the contract.

3. (2) Cash flow generated form the said contractual terms of the financial asset at specific date are solely payments of principal and interest on the principal amount outstanding.

4. The Group adopts trade date accounting for financial assets measured at fair value through other comprehensive income.

5. At initial recognition, the Group measures the financial assets at fair value plus transaction costs; the Group subsequently measures the financial assets at fair value. The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(VIII) Accounts and notes receivable

1. Accounts receivables and notes receivables are accounts and notes of which the contractual right to consideration for goods sold or services rendered is unconditional.

2. Short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

3. 25 -

(IX) Impairment of financial assets

Considering all reasonable and provable information (including forward-looking information), the Group measures the credit risk that increases insignificantly since original recognition vie the 12-month expected credit loss amount through financial debt instrument at fair value through other comprehensive income and accounts receivable containing significant financial components. For those credit risk increasing significantly since original recognition, the allowance loss is measured by the expected amount of credit loss during the existence period; for accounts receivable that do not contain significant financial components, the allowance loss is measured by the amount of expected credit losses during the duration of the period.

(X) De-recognition of financial assets

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

(XI) Operating leases - lessor

Lease income from operating leases less any incentives given to lessees is recognized in profit or loss on a straight-line basis over the term of the lease.

(XII) Inventories

Inventories are measured at the lower of cost and net realizable value, and cost is determined using the weighted average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production burden (allocated based on normal operating capacity). It excludes borrowing costs. Goods on hand are stated at the lower of comparative cost and net realizable value. The item by item approach is used in applying the lower of comparative cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(XIII) Investments accounted for using equity method - associates

1. Associates are all entities over which the Group has significant influence but has no control. Investments in associates are accounted for using the equity method and are initially recognized at cost.

2. The Group's share of its associates' post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income.

3. 26 -

When the Group’s share of losses in an associate equals or exceeds its interest in the associate (including any other unsecured receivables), the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

1. When an associate’s equity changes are not recognized in profit or loss or other comprehensive income of the associate, and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the change in ownership interests in the associate in "capital surplus" in proportion to its ownership.

2. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of related enterprises have been adjusted as necessary, and are consistent with the policies adopted by the Group.

3. Where an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group's ownership percentage of the associate but maintains significant influence on the associate, the "capital surplus" and "investments accounted for using equity method" shall be adjusted for the increase or decrease of its share of equity interest. Where its investment proportion decreases, in addition to the above adjustments, the profit or loss previously recognized in other comprehensive income due to decrease in its ownership interest and the profit or loss to be reclassified to profit or loss during the disposal of assets or liabilities shall be reclassified to profit or loss based on the proportion of decrease.

4. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

5. (XIV) Property, plant, and equipment

6. Property, plant and equipment are recorded as the foundation of acquisition cost.

7. 27 -

8. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replacement is derecognized. All other repairs and maintenance are recognized as current gain or loss when incurred.

9. Property, plant and equipment apply the cost model. Except for land, other property, plant and equipment are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is material, it is depreciated separately.

10. The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

11. Buildings and structures 5 ~ 50 years Machinery and equipment 5 ~ 10 years Transportation equipment 5 ~ 5 years Derivative instruments 3 ~ 10 years Other equipment 2 ~ 10 years

(XV) Lease transaction in the capacity of a lessee - right-of-use assets/lease liabilities

1. A right-of-use asset and a lease liability are recognized for a leased asset on the date when it becomes readily available for the Group's use. When a lease contract is a short-term lease or when it is a lease of which the underlying asset is of low value, lease payments are recognized as an expense on a straight-line basis over the lease term.

2. On the commencement date, the Group measures lease liabilities by the present value of outstanding lease payments, using the Group's incremental borrowing rate. Lease payments include fixed payments less any lease incentives receivable. In subsequent periods, the Group measures lease liabilities at amortized cost using the effective interest method and recognizes interest expenses during the lease term. When a change in the lease term or lease payments occurs due to reasons other than lease modifications, lease liabilities

3. 28 -

are reassessed and the remeasurements are adjusted to the right-of-use assets.

1. Right-of-use assets are recognized at cost on the commencement date. Costs include the originally measured amount of lease liabilities. In subsequent periods, the Group measures right-of-use assets at cost and recognizes depreciation expenses at the earlier of the end of useful life of right-of-use assets or the end of the lease term. When a lease liability is reassessed, the right-of-use asset is adjusted for any remeasurements of the lease liability.

2. When a lease modification decreases the scope of a lease, the carrying value of the right-of-use asset is decreased to reflect partial of full termination of the lease liability, and any difference resulting therefrom is immediately recognized in profit or loss.

3. (XVI) Intangible assets

4. Acquired in a business combination, customer relationship is recognized at fair value on the acquisition date. Customer relationship is an asset of limited and durable years as amortized over an estimated useful life of 2.7 years on a straight-line basis.

5. Goodwill arises from the difference between the purchase price set in the equity purchase contract and the net identifiable assets.

6. (XVII) Impairment of non-financial assets

7. The Group assesses on each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. Except for goodwill, When circumstances contributed to the recognition of impairment loss of an asset in the previous period do not exist or are decreased, the recognized impairment loss is reversed to the carrying amount of an asset to the extent that it does not exceed the carrying amount (net of depreciation and amortization) if the impairment loss had not been recognized.

8. The recoverable amount of goodwill shall be evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss should not be reversed in the future.

9. For the purpose of impairment testing, goodwill acquired in a business merger is allocated to each of the cash-generating units. This allocation is based on the

10. 29 -

judgment of the operating units and the goodwill is allocated among cashgenerating units or groups that are expected to benefit from goodwill generated in corporate mergers.

(XVIII) Borrowings

Borrowings refer to short-term loans from banks. The initial recognition of loans measured at fair value less transaction cost. Any subsequent difference between the price and the redemption value after deducting the transaction cost shall be recognized as interest expense in gain and loss by applying amortization procedure of effective interest method during the circulation period.

(XIX) Accounts payable

1. Account payable is the liabilities arising from the purchase of raw materials, commodities or services are taken.

2. Short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(XX) De-recognition of financial liabilities

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

(XXI) Offset of financial assets and liabilities

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(XXII) Non-hedging and embedded derivatives

1. Under the financial assets, the hybrid contracts embedded with derivatives are initially recognized as financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income, and financial assets at amortized cost based on the contract terms.

2. Under the non-financial assets, whether the hybrid contracts embedded with derivatives are accounted for separately at initial recognition is based on whether the economic characteristics and risks of an embedded derivative are closely related in the host contract. When they are closely related, the entire hybrid instrument is accounted for by its nature in

3. 30 -

accordance with the applicable standard. When they are not closely related, the derivative is accounted for differently from the host contract as derivative while the host contract is accounted for by its nature in accordance with the applicable standard. Alternatively, the entire hybrid instrument is designated as financial liabilities at fair value through profit or loss upon initial recognition.

(XXIII) Employee benefits

1. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expenses in that period when the employees render service.

1. Pensions

For the defined contribution plan, the contributions are recognized as pension expenses when they are due on an accrual foundation.

1. Employees' compensation and directors' and supervisors' remuneration Employees' compensation and directors' and supervisors' remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(XXIV) Income tax

1. Income tax expense comprises current and deferred income tax. Income tax is recognized in gain or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

2. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the country domicile where the Group operates and generates taxable income. The management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities are recorded in tax

3. 31 -

liability. Undistributed earnings are subject to income tax credit. After the distribution of earnings is approved by the shareholders' meeting in the following year, the Group shall recognize the distribution of earnings and expenses, and recognize the earnings and expenses for the actual earnings.

1. Deferred income tax adopts the balance sheet approach, and is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred income tax is not recognized, if the temporary difference arises from initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable income (loss). Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group, and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

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

3. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

(XXV) Share capital

1. Ordinary shares are classified as equity. The incremental cost directly attributable to the issue of new shares or options is deducted from the equity in equity after deducting the income tax.

2. 32 -

3. When the Company bought back the issued stocks, the consideration paid includes any incremental costs that are directly attributable to the incremental costs, net of any directly attributable incremental costs. When the shares are subsequently reissued, the difference between the consideration received net of any directly attributable incremental costs and the carrying amount is recorded in the adjustment of stockholder's equity.

(XXVI) Dividend distribution

Dividends are recognized in the Company's financial statements in the period in which they are approved by the Company's shareholders. Cash dividends are recorded as liabilities. Stock dividends are recognized as stock dividends to be distributed and transferred to ordinary shares on the base date of issuance of new shares.

(XXVII) Revenue recognition

1. Sales of goods

2. (1) The Group manufactures and sells products related to motherboards, display cards, and computer peripherals. The sales revenue is recognized when the control of the products is transferred to customers. That is, when the product is delivered to the customer, the customer has discretion in the access and price of the product, and the Group has no outstanding performance obligations that may affect the customer's acceptance of the product. When the product is shipped to a designated location, the risk of obsolete and lost risks has been transferred to the customer, and the customer is required to obtain the products in accordance with the sales contract, or when there is objective evidence that all acceptance criteria have been met, the goods are delivered.

3. (2) Sales revenue is recognized the net amount of contract price minus estimated sales allowance. The amount of revenue recognition is limited to the extent that it is very unlikely to see a significant reversal in the future, and is updated on the balance sheet date. The terms of sales transactions are mainly due to the expiry of 30 to 90 days after the transfer date. It is consistent with the market practice. Therefore, it is judged that the contact does not contain significant financial component.

4. (3) Accounts receivable are recognized when the control right of

5. 33 -

commodities is transferred to the customs; that is because the Group has unconditional rights to the contract price since that point in time, and the Group can collect the consideration from the customer once upon the contractual time is expired.

1. Service revenue

The Group provides services related to processing and research and development. Revenue is recognized as revenue in the reporting period in which the services are rendered to customers.

1. Financial composition

The duration of commitment to transfer commodities or services to customer and the payment period in the contracts between the Group and customers are all less than one year. Therefore, the Group has not adjusted the transaction price to reflect the time value of money.

1. Costs to acquire contracts from customers

The Group recognizes the incremental costs incurred in the contracts with the customers and that are expected to be recoverable. However, such costs are recognized in expense as incurred since the contracts are less than one year.

(XXVIII) Government grants

Government grants are recognized at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants to compensate the Group’s expense are recognized as profit or loss on a systematic basis when the expense occurs.

(XXIX) Business combinations

1. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business acquisition case, the

2. 34 -

Group measures the components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either acquisition-date fair value or the ratio of non-controlling interests to the acquiree’s net identifiable assets. All other components of noncontrolling interests shall be measured at acquisition-date fair value.

1. If the aggregate of (i) the value of consideration transferred, (ii) the amount of non-controlling interests, and (iii) the fair value of the acquirer's previously-held equity interest in the acquiree exceeds the fair value of identifiable assets acquired and liabilities assumed, the difference is recognized as goodwill on the acquisition date. If the fair value of identifiable assets acquired and liabilities assumed exceeds the aggregate of (i) the value of consideration transferred, (ii) the amount of noncontrolling interests, and (iii) the fair value of the acquirer's previouslyheld equity interest in the acquiree, the difference is recognized as profit or loss on the acquisition date.

(XXX) Operating segments

The Group's operating segments are reported in a manner consistent with the internal management reporting provided to the chief operating decision makers. The chief operating decision makers, who are responsible for allocating resources to the operating segments and assessing the performance of the Group, has been identified as the members of the Board of Directors.

V. Significant Accounting Judgments and Sources of Estimation and Assumption Uncertainty

The preparation of the Group's financial statements requires management to make critical judgments in applying the Group's accounting policies and make critical assumptions and estimates concerning future events according to the conditions on balance sheet date. Material accounting assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such estimates and assumptions possess a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Uncertainties in material accounting judgments, estimates, and assumptions are addressed below:

(I) Significant judgments in applying accounting policies

None.

• 35 -

(II) Significant accounting estimates and assumptions

Assessment of impairment of intangible assets

The assessment of impairment of intangible assets relies on the Group’s subjective judgment, including identifying cash-generating units and the allocation of assets and liabilities and intangible assets to the relevant cash-generating units, and determining the recoverable amount of the relevant cash-generating units.

• VI. Descriptions of Significant Accounting Items

(I) Cash and cash equivalents

Cash on hand and revolving funds Checking deposits and demand deposits	$	December 31, 2020 100 329,987 330,087	$	December 31, 2019 120 359,968 360,088
	$		$

1. The Group associates with a variety of financial institutions, all with high credit quality to disperse credit risk, so it is expected that the probability of counterparty default is extremely low.

2. The Group do not provide any cash and cash equivalents as pledges to others.

(II) Financial assets at fair value through profit or loss - current

Item Financial assets mandatorily measured at fair value through profit or loss Stocks of listed companies Beneficiary certificates Valuation adjustments Total		December 31, 2020 $ - 237,671 237,671 - $ 237,671	(	December 31, 2019 $ 2,568 182,101 184,669 396) $ 184,273

1. The breakdown of profit or loss for current financial assets at fair value through profit or loss is as follows:

Items Equity instruments Beneficiary certificates Derivatives - structured deposits	$	2020 1,049 4,043 1,032	$	2019 447 2,345 -

• 36 -

$ 6,124 $ 2,792

1. The Group's financial assets at fair value through profit or loss - current have never been provided as pledged assets or guarantees.

2. Structured deposit contracts entered into between the Group with banks contain an embedded derivative that is not closely related to the host contract. Based on the assessment of the overall hybrid contracts, they should be classified as financial assets mandatorily measured at fair value through profit or loss.

3. For information on the price risk and fair value of financial assets at fair value through profit or loss, please refer to Note 12 (c) (d).

(III) Non-current financial assets at fair value through other comprehensive income

Items Equity instruments Stocks of listed companies Stocks unlisted at stock exchange market, over the counter market or emerging stock market Valuation adjustments Total	December 31, 2020 $ 169,634 15,350 184,984 1,166 $ 186,150	December 31, 2020 $ 169,634 15,350 184,984 1,166 $ 186,150	December 31, 2019 $ 169,634 15,350 184,984 ( 47,939) $ 137,045
		184,984 1,166
		$ 186,150

1. The Group elects to classify the strategic investments in equity as financial assets at fair value through other comprehensive income.

2. The breakdown in profit or loss and other comprehensive income of financial assets at fair value through other comprehensive income is as follows:

Equity instruments measured at fair value through other comprehensive income Changes in fair value recognized in other comprehensive income $ Dividend income recognized in profit or loss at end of period $	$	2020 49,105 $	2019 28,060 3,005
		3,050 $

1. For more information on the price risk and fair value of financial assets at fair value through other comprehensive income, please refer to Note 12 c. d.

2. 37 -

(IV) Notes and accounts receivable

Accounts receivable Accounts receivable from related parties Notes receivable Accounts receivable Accounts receivable from related parties	$	Total 3,187 538,667 771,028	December 31, 2020 Allowance loss $- ($ 6,943) ( 304)	Net $ 3,187
	$			$ 531,724 770,724
	$ $	Total 338,710 616,972 1,309,695	($ 7,247)	Net $ 335,326 616,786 $ 1,302,448
			December 31, 2019 Allowance loss ($ 3,384) ( 186)
	$	955,682	($ 3,570)	$ 952,112

1. The aging analysis of accounts receivable and notes receivable are as follows:

Not overdue Overdue for 1~90 days Overdue for 91~120 days Overdue for 121 days or more Total		December 31, 2020 Accounts receivable Notes receivable $ 1,299,642 $ 3,187 9,432 - 264 - 357 - $ 1,309,695 $ 3,187	December 31, 2019 Accounts receivable Notes receivable $ 945,302 $ - 10,380 - - - - -	December 31, 2019 Accounts receivable Notes receivable $ 945,302 $ - 10,380 - - - - -
		$ 1,309,695	$ 955,682	$-

The aging analysis above is based on past due date.

1. The balance of receivables on contracts with customers as of December 31, 2020, December 31, 2019, and January 1, 2019 was NT$1,312,882, NT$955,682, and NT$923,758, respectively.

2. Without consideration of the collateral held or other credit enhancements, the maximum credit risk that best represent the Group's notes receivable as of December 31, 2020 and 2019 amounted to NT$3,187 and NT$0, respectively, and the maximum credit risk that best represent the Group's accounts receivable as of December 31, 2020 and 2019 amounted to NT$1,302,448 and NT$952,112, respectively.

3. 38 -

4. For more information on the credit risk of accounts receivable, please refer to Note 12 c. (V) Inventories

Raw materials Work in progress Finished goods Products	$	December 31, 2020 Cost Allowance for valuation loss Carrying amount 59,126 ($ 4,994) $ 54,132 36,434 - 36,434 85,257 ( 1,605) 83,652 101,053 ( 1,660) 99,393 281,870 ($ 8,259) $ 273,611
	$

Raw materials Work in progress Finished goods Products	$	December 31, 2019 Cost Allowance for valuation loss 203,353 ($ 6,435) 78,771 - 16,234 ( 1,599) 57,821 ( 1,350) 356,179 ($ 9,384)	December 31, 2019 Cost Allowance for valuation loss 203,353 ($ 6,435) 78,771 - 16,234 ( 1,599) 57,821 ( 1,350) 356,179 ($ 9,384)	Carrying amount $ 196,918 78,771 14,635 56,471
			($ 6,435) - ( 1,599) ( 1,350) ($ 9,384)
	$			$ 346,795

Cost of inventories is recognized by the Group as expenses in the current period:

Cost of inventories sold Loss (gain) on inventories (Note) Less: Operating costs of discontinued operations	$ (		2020 4,236,463 1,158 ) 4,235,305 - 4,235,305	$	2019 4,414,184 7,756 4,421,940 16,394) 4,405,546
				( $
		$

Note: The Group's reported the gain on inventories in 2020 as a result of de-stocking.

(VI) Investments using equity method

January 1 $ Investments using equity method Share of profit or loss of Investments using equity method ( Impairment loss (	2020 - 150,000 11,921) 1,980)

• 39 -

Changes in capital surplus Changes in retained earnings December 31

Associates

100 ( 2,626) $ 133,573 December 31, 2020 $ 133,573

1. On January 21, 2020, the Board of Directors resolved to pass the investment in uSenlight Corporation, and acquire a 13.70% equity interest in uSenlight Corporation at the amount of NT$150,000 in April 2020. As the Group has significant influence on uSenlight Corporation in terms of business decisionmaking, such investment is accounted for using equity method. As of December 31, 2020, the Group held a 13.05% equity interest in uSenlight Corporation, making the Group its single largest shareholder. As the other two largest shareholders (not the Group's related parties) held more than the Group’s shares, the Group had no ability to direct the relevant business activities of uSenlight Corporation. Accordingly, the Group had significant influence but had no control over uSenlight Corporation.

2. For the above investment accounted for using equity method, the Group carried out an impairment test based on the recoverable amount of such investment. Based on the above valuation result, the Group recognized a impairment loss on investments accounted for using equity method of NT$1,980.

3. The basic information of the associates that are material to the Group is as follows:

	Main Shareholding ratio
Company name	business premise December 31, 2020	Nature of relationship Measurement
uSenlight	Republic of China13.05% (Note)	Significant influence Equity method
Corporation
Note:	The Company’s shareholding ratio decreased from 13.70% to 13.05% due to the
	conversion of share options by uSenlight Corporation during the period, resulting
	in a decrease in retained earnings due to net	equity difference of NT$2,626.

• 40 -

• The summarized financial information of the associates that are material to the Group is as follows:

Balance sheet

Current assets Non-current assets Current liabilities Non-current liabilities Total assets Share of net assets of associates Difference in net equity Carrying value of associates Statement of comprehensive income Revenue Profit from continuing operations (total comprehensive income or loss) (VII) Other current assets December 31, 2020 Restricted bank deposits $ 56,887 Tax reserve - $ 56,887	Current assets Non-current assets Current liabilities Non-current liabilities Total assets Share of net assets of associates Difference in net equity Carrying value of associates Statement of comprehensive income Revenue Profit from continuing operations (total comprehensive income or loss) (VII) Other current assets December 31, 2020 Restricted bank deposits $ 56,887 Tax reserve - $ 56,887	uSenlight Corporation December 31, 2020 $ 394,179 196,520 ( 273,142) ( 15,197) $ 302,360 $ 39,458 94,115 $ 133,573 uSenlight Corporation 2020 $ 374,660 ($ 89,749) December 31, 2019 $ 33,005 30,080 $ 63,085	uSenlight Corporation December 31, 2020 $ 394,179 196,520 ( 273,142) ( 15,197) $ 302,360 $ 39,458 94,115 $ 133,573 uSenlight Corporation 2020 $ 374,660 ($ 89,749) December 31, 2019 $ 33,005 30,080 $ 63,085
			$
			($
	$ 56,887

The details of the pledges of other current assets of the Group are set out in Note 8.

• 41 -

(VIII) Property, plant, and equipment

January 1, 2020 Cost Accumulated depreciation 2020 January 1 Additions Disposal Depreciation expenses Net exchange differences December 31 December 31, 2020 Cost Accumulated depreciation January 1, 2019 Cost Accumulated depreciation Accumulated impairment 2019 January 1 Additions Acquired through business combinations Depreciation expenses Disposal of discontinued operations (Note) Net exchange differences December 31 December 31, 2019 Cost Accumulated depreciation	Transportation equipment Derivative instruments $ 10,224 $ 4,127 ( 8,605) ( 3,963) $ 1,619 $ 164 $ 1,619 $ 164 - - - - ( 594) ( 35) 14 1 $ 1,039 $ 130 $ 10,395 $ 4,137 ( 9,356) ( 4,007) $ 1,039 $ 130 Buildings and structures Machinery equipment Transportatio n equipment $ 122,509 $ 60,721 $ 11,124 ( 36,846) ( 40,286) ( 7,025) ( 4,289) ( 3,383) - $ 81,374 $ 17,052 $ 4,099 $ 81,374 $ 17,052 $ 4,099 - - - - - - ( 1,077) ( 1,754) ( 2,367) ( 81,198) ( 15,499) ( 51) 901 201 ( 62) $- $- $ 1,619 $ - $ - $ 10,224 - - ( 8,605) $- $- $ 1,619	Transportation equipment Derivative instruments $ 10,224 $ 4,127 ( 8,605) ( 3,963) $ 1,619 $ 164 $ 1,619 $ 164 - - - - ( 594) ( 35) 14 1 $ 1,039 $ 130 $ 10,395 $ 4,137 ( 9,356) ( 4,007) $ 1,039 $ 130 Buildings and structures Machinery equipment Transportatio n equipment $ 122,509 $ 60,721 $ 11,124 ( 36,846) ( 40,286) ( 7,025) ( 4,289) ( 3,383) - $ 81,374 $ 17,052 $ 4,099 $ 81,374 $ 17,052 $ 4,099 - - - - - - ( 1,077) ( 1,754) ( 2,367) ( 81,198) ( 15,499) ( 51) 901 201 ( 62) $- $- $ 1,619 $ - $ - $ 10,224 - - ( 8,605) $- $- $ 1,619	Transportation equipment Derivative instruments $ 10,224 $ 4,127 ( 8,605) ( 3,963) $ 1,619 $ 164 $ 1,619 $ 164 - - - - ( 594) ( 35) 14 1 $ 1,039 $ 130 $ 10,395 $ 4,137 ( 9,356) ( 4,007) $ 1,039 $ 130 Buildings and structures Machinery equipment Transportatio n equipment $ 122,509 $ 60,721 $ 11,124 ( 36,846) ( 40,286) ( 7,025) ( 4,289) ( 3,383) - $ 81,374 $ 17,052 $ 4,099 $ 81,374 $ 17,052 $ 4,099 - - - - - - ( 1,077) ( 1,754) ( 2,367) ( 81,198) ( 15,499) ( 51) 901 201 ( 62) $- $- $ 1,619 $ - $ - $ 10,224 - - ( 8,605) $- $- $ 1,619	Others $ 80,979 $ ( 20,759) ( $ 60,220 $ $ 60,220 $ 121 ( 2,803) ( ( 23,980) ( ( 4) $ 33,554 $ $ 73,889 $ ( 40,335) ( $ 33,554 $ Derivative instruments Others $ 6,249 $ 55,288 ( 5,791) ( 31,134) ( 10) ( 5,054) $ 448 $ 19,100 $ 448 $ 19,100 - 69,010 - 797 ( 78) ( 15,943) ( 202) ( 12,687) ( 4) ( 57) $ 164 $ 60,220 $ 4,127 $ 80,979 ( 3,963) ( 20,759) $ 164 $ 60,220	$ (	Total 95,330 33,327) 62,003 62,003 121 2,803) 24,609) 11 34,723 88,421 53,698) 34,723 Total $ 255,891 ( 121,082) ( 12,736) $ 122,073 $ 122,073 69,010 797 ( 21,219) ( 109,637) 979 $ 62,003 $ 95,330 ( 33,327) $ 62,003
			$ 164		$
			$ 164 - - ( 35) 1		$ ( (
			$ 130		$
			$ 4,137 ( 4,007)		$ (
			$ 130		$
			Transportatio n equipment $ 11,124 ( 7,025) - $ 4,099 $ 4,099 - - ( 2,367) ( 51) ( 62) $ 1,619 $ 10,224 ( 8,605) $ 1,619			( (
	( (	equipment $ 60,721 ( 40,286) ( 3,383) $ 17,052 $ 17,052 - - ( 1,754) ( 15,499) 201 $- $ - - $-
	( (					( (

• 42 -

Note: On May 9, 2019, the Group's Board of Directors resolved to dispose of Bahamas Federal Shanghai and its subsidiary, Fortech Electronics. The Group completed the transfer of equity on July 8, 2019 and removed the subsidiary's property, plant and equipment from the account.

The Group had no property, plant, and equipment pledged to others.

(IX) Lease transaction - lessee

1. The Group's leased underlying assets comprise land and buildings, of which the lease term is usually between 3~5 years. Lease contracts are individually negotiated and include various terms and conditions. Except for the term where the leased assets cannot be used as collateral for loans, there are no other restrictions.

2. Below is the carrying amounts of right-of-use assets and their recognized depreciation expenses:

Buildings Land use rights (Note) Buildings	December 31, 2020 Carrying amount $ 17,060 2020 Depreciation expenses $ - 7,193 $ 7,193

• Note: On May 9, 2019, the Group's Board of Directors resolved to dispose of Bahamas Federal Shanghai and its subsidiary, Fortech Electronics. The Group completed the transfer of equity on July 8, 2019. As of December 31, 2019, the subsidiary's right-of-use assets had been removed from the account.

• For the years ended December 31, 2020 and 2019, the Group's additions of rightof-use assets amounted to NT$12,781 and NT$2,595, respectively, and the net amount of right-of-use assets acquired from business combinations was NT$0 and NT$3,744, respectively. For more information on business combinations, please refer to Note 6 z.

• 43 -

• Profit or loss items in connection with lease contracts are stated as follows:

Items that affect profit or loss Interest expense on lease liabilities $ Expense on short-term leases	2020 360 $ 416	2019 384 1,463

1. For the years ended December 31, 2020 and 2019, the Group's cash flows used in leases amounted to NT$7,886 and NT$7,796, respectively.

(X) Intangible assets

(X) Intangible assets
January 1, 2020 Cost Accumulated amortization and impairment 2020 January 1 Amortization expenses Net exchange differences December 31 December 31, 2020 Cost Accumulated amortization and impairment 2019 January 1 Additions - acquired from business combinations Amortization expenses Net exchange differences December 31 December 31, 2019 Cost	$	Goodwill 167,012 -	Customer relationship $ 31,762 ( 9,803) $ 21,959 $ 21,959 ( 11,670) 77 $ 10,366 $ 32,294 ( 21,928) $ 10,366 Customer relationship $ - 33,961 ( 10,184) ( 1,818) $ 21,959 $ 31,762	$ (	Total 198,774 9,803) 188,971 188,971 11,670) 2,870 180,171 202,099 21,928) 180,171 Total - 212,534 10,184) 13,379) 188,971 198,774
	$	167,012		$ $ ( $ (
	$	167,012 - 2,793
	$	169,805
	$	169,805 -
	$	169,805		$ $ (
	$ (	Goodwill - 178,573 - 11,561)
	$	167,012		$
	$	167,012

• 44 -

Accumulated amortization - and impairment ( 9,803) ( 9,803) $ 167,012 $ 21,959 $ 188,971 On March 1, 2019, the Group had a 51% equity interest in Sitonholy (Tianjin) Technology Co., Ltd. and secured control over Sitonholy (Tianjin) Technology Co., Ltd. Goodwill and other intangible assets (customer relationship) arose from the difference between the purchase price set in the equity purchase contract and the net identifiable assets. For more information on business combinations, please refer to Note 6 z. Goodwill is allocated to the Group’s cash-generating units by operating segments:

December 31, 2020 December 31, 2019 Sitonholy (Tianjin) Technology Co., Ltd. $ 169,805 $ 167,012

• (XI) Impairment of non-financial assets

• The impairment loss recognized by the Group in 2020 was NT$1,980, as detailed below.

Impairment loss on investments accounted for using equity method	2020 Recognized in profit or loss Recognized in other comprehensive income $ 1,980 $-	2020 Recognized in profit or loss Recognized in other comprehensive income $ 1,980 $-	2020 Recognized in profit or loss Recognized in other comprehensive income $ 1,980 $-
			comprehensive income $-
	$	or loss 1,980

1. The Group adjusted the carrying amount of uSenlight Corporation based on its recoverable amount, and recognized an impairment loss of NT$1,980 in 2020. The recoverable amount is measured using the discounted cash flow.

2. Goodwill is allocated to the Group’s cash-generating units by operating segments. The recoverable amount is determined based on the value in use, and the value in use is calculated using the pre-tax cash flow forecast of the five-year financial budget approved by management. Cash flows beyond the five-year period were estimated using the estimated growth rates stated below.

The Group’s recoverable amount calculated based on the value in use exceeded the carrying amount, so no impairment loss on goodwill was generated. Main assumptions used to calculate the value in use are as follows:

Profit margin Growth rate	Sitonholy (Tianjin) Technology Co.,
	Ltd. 2020 2019 16.60% 17.85% 4.00% 8.78%

• 45 -

Discount rate

15.10%

15.80%

Management determined the budgeted gross margin based on the past performance and its expectation for market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect the risks specific to relevant operating segments.

(XII) Non-current assets held for sale and discontinued operations

1. On May 9, 2019, the Group's Board of Directors resolved to sell Bahamas Federal Shanghai and its subsidiary, Fortech Electronics. As at June 30, 2019, the assets and liabilities of Bahamas Federal Shanghai and Fortech Electronics had been recognized as disposal groups classified as held for sale, and Bahamas Federal Shanghai and Fortech Electronics were presented as discontinued operations according to the definition of discontinued operations. The Group completed the transfer of equity in July 2019; therefore, there were no assets, liabilities, and equity in relation to disposal groups classified as held for sale as at December 31, 2019.

2. Cash flows of discontinued operations are stated as follows:

3. Revenues or expenses cumulatively recognized in other comprehensive income in relation to disposal groups classified as held for sale: 2019 Cash flows from (used in ) operating activities ($ 2,096)	($	2019 2,096)

Adjustments in foreign currency conversion	$	2019 1,437

1. Business results of discontinued operations are stated as follows:

Operating revenues Operating costs Gross loss from operations Operating expenses Total non-operating income and expenses Loss from discontinued operations before tax Income tax Loss from discontinued operations after tax	$ (	2019 11,026 16,394) 5,368) 8,981) 5,864
	( (
	( (	8,485) 60) 8,545)
	($

1. The Group completed the transfer of its equity interest in Bahamas Federal Shanghai and its subsidiary, Fortech Electronics, in July 2019. Proceeds from

2. 46 -

disposal amounted to US$4,880 thousand, and the gain on disposal was NT$$26,313.

(XIII) Short-term borrowings

Loan type Bank loans	December 31, 2020	Interest range	Collateral
Secured loans	$ 271,900	1.10%~1.61%	Other current assets -
			bank deposits
Unsecured loans	130,127	0.97%~1.22%	None
	$ 402,027
Loan type Bank loans	December 31, 2019	Interest range	Collateral
Secured loans	$ 127,317	2.71%~3.30%	Other current assets -
			bank deposits
Unsecured loans	29,280	3.17%	None
	$ 156,597

Interest expenses recognized in profit or loss as of December 31, 2020 and 2019 were NT$6,143 and NT$5,478, respectively.

(XIV) Other payables

(XIV) Other payables
Royalty fees payable Others	$	December 31, 2020 31,861 68,973 100,834	$	December 31, 2019 31,213 67,770 98,983
	$		$

(XV) Pension

1. The Company has established a defined contribution retirement plan ("the New Plan") in accordance with the Labor Pension Act, which is applicable to employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

2. The Company's subsidiaries in Mainland China have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People's Republic of China are based

3. 47 -

on certain percentage of employees' monthly salaries and wages The pension funds of each employee are managed and arranged by the government, and the Group has no further obligations except the monthly contributions.

1. The pension costs recognized by the Group in accordance with the aforesaid pension regulations for the years ended December 31, 2020 and 2019 were NT$2,886 and NT$5,249, respectively (for the Group's subsidiaries in Mainland China, NT$2,043 was exempt from the pension funds by the local government due to the COVID-19 pandemic).

(XVI) Share capital

1. As of December 31, 2020, the Company's authorized capital was NT$2,500,000 (of which NT$100,000 was for the issuance of stock options, preferred shares or corporate bonds with warrants), with paid-in capital of NT$1,014,988 and the face value of NT$10 per share, and the number of outstanding shares was 96,499 thousand.

2. Treasury shares

3. (1) The reason for repurchase and movements in the number of treasury shares are as follows:

December 31, 2020

Company holding shares Reason Number of shares (in thousands)Carrying amount $ 151,746 The Company Transfer to employees 5,000

December 31, 2019

Company holding shares Reason Number of shares (in thousands)Carrying amount $ 151,746 The Company Transfer to employees 5,000

• (2) The Securities Exchange Act stipulates that the proportion of the Company's purchase of shares outstanding shall not exceed 10% of the total number of shares issued by the Company, and the total monetary amount of share purchased shall not exceed the retained earnings plus the share premium and the realized capital reserve amount.

• (3) Treasury shares held by the Company may be neither pledged nor assigned shareholder rights in accordance with the Securities and Exchange Act.

• (4) According to the Securities and Exchange Act, treasury shares should be

• 48 -

reissued to the employees within five years from the repurchase date and shares not reissued within the five-year period are to be retired. To maintain the Company's credit and shareholders' rights to buy back shares, the registration change and elimination shall be handled within 6 months after the buy back.

(XVII) Retained earnings

1. Under the Company's Articles of Incorporation, if there is a surplus in the annual final accounts, in addition to the income tax payable according to law, the Corporation shall first offset its losses in previous years and set aside a legal capital reserve at 10% of the earnings left over. However, when the accumulated legal capital surplus has equaled the total paid-up-capital of the Company, the said restriction does not apply. After the Company has set aside or reversed the special capital reserve in accordance with relevant laws or the competent authority, along with the earnings not distributed at the beginning of the period, and after retaining part of the surplus depending on the situation, the Board of Directors may propose a surplus distribution proposal and submit it to the shareholders' meeting to distribute bonus to the shareholders.

2. The Company is in stable growth and expands in line with sales development in the future. The future capital expenditures and capital requirement are necessary to be considered first when the Company distribute the earnings. The Board of Directors proposes the distribution plan and distributes the earnings after being approved at the shareholders' meeting. In the annual distribution of shareholder dividends, cash dividend shall not be less than 5%, but if the cash dividend is less than NT$0.1 per share, it may not be issued, and the stock dividend will be distributed instead.

3. The legal reserve shall not be used except for offsetting the loss of the Company and issuing new shares or cash in proportion to the original number of shares held by the shareholders. However, if it is issued to issue new shares or cash, the said legal reserve shall only exceed 25% at most of the paid-up capital.

4. (1) When the company distributes the surplus, it is required by law to provide a special surplus reserve for the debit balance of other equity items on the balance sheet date of the current year. After that, when the debit balance of other equity projects is reversed, the amount of revolving will be included in the surplus available for distribution.

5. (2) When the Company adopted IFRSs at first time, for the special reserve listed in the Official Letter of the Financial Management Certificate No. 1010012865 issued on April 6, 2012, the Company reversed the original portion of the said

6. 49 -

special reserve, and when the Company subsequently uses, disposes of, or reclassifies related assets, they are reversed according to the ratio of the recognized special reserve.

1. By a resolution in the shareholders' meetings on June 18, 2020 and June 14, 2019, respectively, the Company adopted the earnings distribution plan for the year ended December 31, 2019 and 2018 as follows:

Amount (NT$ thousands) Legal reserve $ 10,694 Special reserve (reversed) ( 14,973) Cash dividends 28,950	Amount (NT$	Amount (NT$	2019 Dividends per share (NT$) $ 0.3	2019 Dividends per share (NT$) $ 0.3	2019 Dividends per share (NT$) $ 0.3	For the year ended December 31, 2018 Amount (NT$ thousands) Dividends per share (NT$) $ 24,431 24,033 152,246 $ 1.5	For the year ended December 31, 2018 Amount (NT$ thousands) Dividends per share (NT$) $ 24,431 24,033 152,246 $ 1.5	For the year ended December 31, 2018 Amount (NT$ thousands) Dividends per share (NT$) $ 24,431 24,033 152,246 $ 1.5
						Amount (NT$ thousands) $ 24,431 24,033 152,246
		thousands) 10,694 14,973) 28,950		$	(NT$) 0.3		$	(NT$) 1.5

1. Please refer to Note 6 w. for information on employees' remuneration and directors' and supervisors' remuneration.

2. As of March 23, 2021, the Company’s Board of Directors was yet to propose the earnings distribution plan for the year ended December 31, 2020.

(XVIII) Operating revenue

Sales revenue: Computer peripherals Service revenue Less: Operating revenue from discontinued operations	2020 $ 4,665,443 6,867 - $ 4,672,310	2019
		$ 4,727,776 21,432 ( 11,026) $ 4,738,182

1. The Group derives revenue from the transfer of goods and services over time and at a point in time.

2. The contract liabilities in relation to revenue from contracts with customers recognized by the Group are as follows:

==> picture [291 x 12] intentionally omitted <==

==> picture [447 x 29] intentionally omitted <==

Revenue recognized that was included in the contract liability balance at the beginning of the period:

• 50 -

Opening balance of contract liabilities recognized as revenue for the period Receipts in advance (XIX) Other income Rental income Dividend income Other income - others Less: Other income from discontinued operations (XX) Other gains and losses Loss on disposal of property, plant, and equipment Gain (loss) on disposal of investments Income from disposal of non- current assets held for sale Net foreign exchange gain (loss) Gain on financial assets at fair value through profit or loss Impairment loss Other losses (XXI) Financial costs Bank loans Finance costs Lease liabilities	$	2020 13,916 2020 158 3,079 3,878 7,115 - 7,115 2020 - - - 29,558) 6,124 1,980) 658) 26,072) 2020 6,143 - 360 6,503	$	2019 - 2019 6,018 3,053 740 9,811 5,860) 3,951 2019 474) 370) 26,313 7,086) 2,792 3,927) 17,248 2019 5,478 22 384 5,884
	$		$
			(
	$		$
	$ ( ( (		($ ( ( (
	($		$
	$		$
	$		$

• 51 -

(XXII) Expenses by nature

XII) Expenses by nature
Employee benefit expenses Depreciation expenses on property, plant and equipment Depreciation expenses on right-of-use assets Amortization expenses on intangible assets Less: Employee benefit expenses from discontinued operations Less: Depreciation expenses on property, plant and equipment from discontinued operations	$	2020 96,457 24,609 7,193 11,670 139,929 - - 139,929	$	2019 102,186 21,219 5,916 10,184 139,505 7,967) 4,277) 127,261
			( (
	$		$

(XXIII) Employee benefit expenses

Wages and salaries Labor and health insurance premiums Pension expense Other personnel costs Less: Employee benefit expenses from discontinued operations	$	2020 85,944 2,860 2,886 4,767 96,457 - 96,457	$	2019 88,519 4,850 5,249 3,568 102,186 7,967) 94,219
			(
	$		$

1. According to the Company's Articles of Incorporation, after deducting the accumulated losses based on the profitability of the current year, if there are still some earnings left, the employee shall be granted no less than 0.1% as compensation, and the directors and supervisors shall not be paid more than 6% as remuneration.

2. For the years ended December 31, 2020 and 2019, the estimated amount of employees' remuneration was NT$2,535 and NT$2,232, respectively, and the estimated amount of directors' and supervisors' remuneration was NT$7,129 and NT$2,232, respectively; the aforesaid amounts were recognized as wages and

3. 52 -

salaries.

For the year ended December 31, 2020, 1.6% and 4.5% were estimated according to the profitability of the year. The resolved amounts as approved by the Board of Directors were NT$2,535 and $7,129, respectively. The employees' remuneration will be distributed in the form of cash.

The employees' remuneration, NT$2,232, and directors' and supervisors' remuneration, NT$2,232, for the year ended December 31, 2019 that had been resolved by the Board of Directors were the same as the amounts recognized in the financial statements for the year then ended.

1. Information regarding employees' remuneration and directors' and supervisors' remuneration approved by the Board of Directors is available on the Market Observation Post System (MOPS).

(XXIV) Income tax

1. Tax expense

Components of tax expense:

Current income tax: Income tax incurred in the current period $ Surtax on unappropriated earnings Underestimated (overestimated) income tax in previous years ( Total income tax in the period Deferred income tax: Origination and reversal of temporary differences ( Total deferred income tax ( Less: Tax expense from discontinued operations Tax expense $ 2. Tax expense and accounting profit Income tax calculated based on profit before tax and at the statutory rate $ Deductible losses pursuant to the taxation law Expenses that should be excluded pursuant to the taxation law ( Tax exempted income pursuant to the taxation law (	$ (	2020 8,442 $ 406 43)	2020 8,442 $ 406 43)	2020 8,442 $ 406 43)	2019 10,446 2,180 55	2019 10,446 2,180 55
			8,805			12,681
	(		2,594)			2,060
	(		2,594)			2,060
			-	(		60)
	$		6,211	$		14,681
			2020 35,995 $ - ( 334) 210) (			2019 31,596 43,503) 546 701)

• 53 -

Temporary differences not recognized as deferred tax assets Tax losses not recognized as deferred tax assets Deduction of tax losses Surtax on unappropriated earnings Underestimated (overestimated) income tax in previous years Less: Tax expense from discontinued operations Tax expense	( 7,606) - ( 21,997) 406 ( 43) 6,211 -	2,571 21,997 - 2,180 55 14,741 ( 60)
	$ 6,211	$ 14,681

1. The amount of deferred tax assets or liabilities that arise from temporary differences and losses from the taxable financial assets are set out below:

Temporary differences: Deferred tax assets Allowance for valuation loss and slow-moving loss Unrealized exchange loss Deferred tax liabilities Amortization of intangible assets Temporary differences: Deferred tax assets Allowance for valuation loss and slow-moving loss Unrealized exchange loss	2020 Recognized in other January 1 Recognized in profit or loss comprehensive income $ 1,287 ($ 290) $ - 2,148 ( 13) - 3,435 ( 303) - ( 5,489) 2,897 - ($ 2,054) $ 2,594 $- 2019 Recognized in other January 1 Recognized in profit or loss comprehensive income $ 6 $ 1,281 $ - - 2,148 -		December
	$ 1,287 2,148 3,435 ( 5,489) ($ 2,054)
	January 1 $ 6 -	December 31 $ 1,287 2,148

• 54 -

Deferred tax liabilities Amortization of intangible assets	6	3,429 ( 5,489) ($ 2,060)	- - $-	3,435 ( 5,489) ($ 2,054)
	-
	$ 6

1. Deductible temporary differences of assets that have not been recognized as deferred tax assets:

Deductible temporary differences$	December 31, 2020 127,572		December 31, 2019 $ 252,049

1. The revenue service authority has assessed the profit-seeking enterprise income tax of the Company through 2018.

(XXV) Earnings per share

(XXV) Earnings per share
2020 Weighted average Earnings After-tax amount number of outstanding shares (thousand shares) per share (NT$) Basic earnings per share Net profit attributable to ordinary equity holders of the parent $ 145,907 96,499 $ 1.51 Diluted earnings per share Net profit attributable to ordinary equity holders of the parent $ 145,907 96,499 Effects of dilutive potential ordinary shares Employees' remuneration - 106 Net income attributable to ordinary shareholders of the parent plus potential ordinary shares $ 145,907 96,605 $ 1.51 2019 Weighted average Earnings After-tax amount number of outstanding shares (thousand shares) per share (NT$) Basic earnings per share Basic earnings per share from continuing operations of the parent $ 115,487 100,703 $ 1.14 Basic earnings per share from discontinued operations of the parent ( 8,545) - ( 0.08) Net profit attributable to ordinary equity holders of the parent $ 106,942 - $ 1.06 Diluted earnings per share Basic earnings per share from continuing operations of the parent $ 115,487 100,703 Effects of dilutive potential ordinary shares Employees' remuneration - 73 Diluted earnings per share from continuing operations of the parent's common shareholders plus effect of potential ordinary shares 115,487 100,776 $ 1.14	2020 Weighted average Earnings After-tax amount number of outstanding shares (thousand shares) per share (NT$)
	$ 145,907 96,499 $ 1.51 $ 145,907 96,499 - 106 $ 145,907 96,605 $ 1.51 2019 Weighted average Earnings After-tax amount number of outstanding shares (thousand shares) per share (NT$)
		100,703 - - 100,703 73 100,776	$ 1.14 ( 0.08) $ 1.06 $ 1.14

• 55 -

==> picture [481 x 56] intentionally omitted <==

(XXVI) Business combinations

1. In December 2018, the Group invested in Sitonholy (Tianjin) Technology Co., Ltd. through its subsidiary, Shenzhen Jinghong, and made a prepayment of RMB 10 million. On March 1, 2019, the Group acquired a 51% equity interest in Sitonholy (Tianjin) Technology Co., Ltd. The investment totaled RMB 86.36 million (including contingent consideration of RMB 44.36 million).

The equity interest was acquired as follows:

• (1) The Group purchased a 26% equity interest from Tianjin Daweisi Technology Center (Limited Partnership) and Tianjin Qunchuang Enterprise Management Consulting Center (Limited Partnership) at the amount of RMB 35.36 million.

• (2) The Group acquired a 25% equity interest in Sitonholy (Tianjin) Technology Co., Ltd. through capital increase at the amount of RMB 51 million.

• Sitonholy (Tianjin) Technology Co., Ltd. retails electronic products and communication products in China. After the acquisition, the Group expects to strengthen its presence in the retail market of electronic products and communication products in China.

• Information on the consideration for acquiring Sitonholy (Tianjin) Technology Co., Ltd., acquisition-date fair value of assets acquired and liabilities assumed, and portion of non-controlling interests to the acquiree's net identifiable assets is stated as follows:

Acquisition consideration Cash (Note 1) Payments for equity transfer Payments for purchase of shares Contingent consideration (Note 2) Portion of non-controlling interests to the acquiree's net identifiable assets	$ 119,678 73,648 149,140 342,466 157,465 $ 499,931

• 56 -

Fair value of identifiable assets acquired and liabilities assumed Cash Accounts receivable Inventories Other current assets Intangible assets (customer relationship) Property, plant, and equipment Right-of-use assets Other non-current assets (Note 3) Accounts payable Other current liabilities (Note 4) Lease liabilities Deferred tax liabilities Net identifiable assets Goodwill	20,266 182,945 90,866 113,415 33,961 797 3,744 201,522 ( 129,566) ( 184,300) ( 3,802) ( 8,490) 321,358 $ 178,573

• Note 1: Acquisition consideration - cash includes payments for equity transfer and payments for purchase of shares.

  1. Payments for equity transfer include prepayments of NT$44,720 (RMB 10 million) made in December 2018 and NT$74,958 (RMB 16 million) paid in March 2019.

  2. Payments for purchase of shares amounted to RMB 16 million. The capital increase was completed in March 2019.

• Note 2: Contingent consideration is the present value of investment after taking into account performance compensation set forth in the investment agreement.

• Note 3: Other non-current assets include payments for purchase of shares receivable, RMB 16 million, in March 2019 and payments for purchase of shares, RMB 35 million, to be received when conditions of contingent consideration are established.

• Note 4: Other current liabilities include payments for equity transfer, RMB 18.1326 million payable by Sitonholy (Tianjin) Technology Co., Ltd. due to its acquisition of a 100% equity interest in Beijing Sitonholy.

• After the Group acquired Sitonholy (Tianjin) Technology Co., Ltd. in March 1, 2019, Sitonholy (Tianjin) Technology Co., Ltd. contributed NT$574,121 and NT$35,434 to operating revenue and profit before tax, respectively, for the year

• 57 -

ended December 31, 2019. If Sitonholy (Tianjin) Technology Co., Ltd. were acquired by the Group in January 1, 2019, the Group's operating revenue and profit before tax would be NT$4,865,012 and NT$150,727, respectively, for the year ended December 31, 2019.

1. On December 17, 2018, both parties reached an agreement on contingent consideration as follows:

2. (1) If the audited net profit of Sitonholy (Tianjin) Technology Co., Ltd. and Beijing Sitonholy for the year ended December 31, 2018 (subject to the net profit attributable to parent after deduction of non-recurring profit or loss) reaches RMB 15 million, Shenzhen Jinghong should increase capital of Sitonholy (Tianjin) Technology Co., Ltd. by RMB 20 million within 15 working days, and should pay RMB 7.488 million and RMB 1.872 million to Tianjin Daweisi Technology Center (Limited Partnership) and Tianjin Qunchuang Enterprise Management Consulting Center (Limited Partnership) respectively (recognized in other non-current liabilities).

3. (2) If the audited net profit of Sitonholy (Tianjin) Technology Co., Ltd. and Beijing Sitonholy for the year ended December 31, 2019 (subject to the net profit attributable to parent after deduction of non-recurring profit or loss) reaches RMB 22 million, Shenzhen Jinghong should increase capital of Sitonholy (Tianjin) Technology Co., Ltd. by RMB 15 million within 15 working days.

4. (3) If Sitonholy (Tianjin) Technology Co., Ltd. and Beijing Sitonholy fail to meet the performance target for the year within the period of performance commitment, Shenzhen Jinghong has the right to defer the aforesaid contingent consideration to the next period and, based on the realization of the accumulated net profit of Sitonholy (Tianjin) Technology Co., Ltd. and Beijing Sitonholy, determine whether to pay.

5. As of December 31, 2019, the audited net profit of Sitonholy (Tianjin) Technology Co., Ltd. and Beijing Sitonholy for the year ended December 31, 2018 reached the agreement on contingent consideration. According to the agreement, Shenzhen Jinghong paid RMB 20 million to Sitonholy (Tianjin) Technology Co., Ltd. for capital increase and paid RMB 7.488 million and RMB 1.872 million to Tianjin Daweisi Technology Center (Limited Partnership) and Tianjin Qunchuang Enterprise Management Consulting Center (Limited Partnership) respectively. The audited net profit of Sitonholy (Tianjin) Technology Co., Ltd. and Beijing Sitonholy for the year ended December 31, 2019 was not met. According to the agreement, Shenzhen Jinghong deferred the contingent consideration to the next period.

6. 58 -

7. On December 28, 2020, both parties entered into a supplemental agreement to extend the original terms of the contract for two years (to the end of 2022). Both parties also agreed that compensation should be collected from the original shareholders for the portion belonging to Shenzhen Jinghong (51%) in case of failure to meet the performance target.

The amount of compensation is calculated below:

• (1) If the performance target is met by the end of 2021: Unmet net profit target for 2018 to 2020 x 51% x 15%

• (2) If the performance target is met before June 2022: Unmet net profit target for 2018 to 2020 x 51% x (15%+10%)

• (3) If the performance target is met before the end of 2022: Unmet net profit target for 2018 to 2020 x 51% x (15%+20%)

(XXVII)Supplemental cash flow information

Investing activities with partial cash payments:

Purchase of property, plant and equipment Add: Advance on equipment, end of year Less: Advance on equipment, beginning of year Cash paid in the period	$ $ $	2020 121 2,238 - 2,359	$ (	2019 69,010 20,016) 48,994
			$

(XXVIII) bb. Changes in liabilities from financing activities

January 1 Changes in cash flows from financing activities Effect of exchange rate changes Other non-cash changes December 31	Short-term borrowings $ 156,597 245,430 - $ 402,027	2020 Guarantee deposits received $ 362 58 - $ 420	Lease liabilities $ 11,561 ( 7,110) 110 12,781 $ 17,342	Total liabilities from the financing activities $168,520 238,378 110 12,781 $419,789	Total liabilities from the financing activities $168,520 238,378 110 12,781 $419,789
					from the financing activities $168,520 238,378 110 12,781 $419,789

• 59 -

2019

		2019	2019
January 1 Changes in cash flows from financing activities Effect of exchange rate changes Changes in acquisition/disposal of subsidiaries Other non-cash changes December 31	Short-term borrowings $ - 156,597 - - - $ 156,597	Guarantee deposits received Lease liabilities $ 1,375 $ - 362 ( 5,949) - 62 ( 1,375) 3,802 - 13,646 $ 362 $ 11,561		Total liabilities from the financing activities $ 1,375 151,010 62 2,427 13,646
			$ 11,561	$	168,520

VII. Related Party Transactions

(I) Parent company and the ultimate controller

The Company is controlled by Yicheng International Development Co., Ltd. (incorporated in the Republic of China), which owns 28.11% of the shares of the Company. The rest is held by the public. The ultimate controller of the Company is the Colorful Group.

(II) Name of related party and relationship with the Group

Name of related party Relationship with the Group 100% reinvestment business by Colorful Colorful Technology Co., Ltd. (Colorful) Group Shenzhen Colorful Yugong Technology and The same person in charge as the Colorful Development Co., Ltd. (Yugong) Group uSenlight Corporation (uSenlight) Associate

(III) Significant transactions with related parties

1. Operating revenue

Sales of goods: Colorful Yugong		$	2020 1,703,136 - 1,703,136	$	2019 1,877,101 120,700 1,997,801
		$		$

• 60 -

The Group's transaction prices to related parties are not significantly different from those of the unrelated parties. The payment terms are OA 45~125 days depending on the different transaction object. The Group sells all-in-one (AIO) to Yugong.

1. Purchase

Purchases of goods: Yugong	$	2020 123,173	$	2019 117,368

Goods are purchased from related parties according to general commercial terms and conditions. Sitonholy (Tianjin) Technology Co., Ltd. purchases display cards from Yugong.

1. Receivables from related parties

Accounts receivable: Colorful Yugong Allowance loss Total	$ ( $	December 31, 2020 771,028 - 771,028 304) 770,724	$	December 31, 2019 614,258 2,714
			(	616,972 186) 616,786
			$

Receivables from related parties mainly arise from sales transactions. Payment for sales transactions is made in accordance with the payment terms after the date of sale. The receivables are unsecured and not interest-bearing.

1. Payables to related parties

Accounts payable: Yugong	$	December 31, 2020 13,462	$	December 31, 2019 10,741

The payables to related parties mainly arise from purchases, which are due one month after the purchase date. The payables are non-interest bearing.

1. Advertising expense

After the launch of the products jointly developed by the Group and Colorful, both sides have agreed to pay no more than US$60,000 per month as advertising expenses

• 61 -

for the related parties. The amounts of advertising expense incurred in 2020 and 2019 were NT$10,698 and NT$10,740, respectively; the amounts not yet paid as of December 31, 2020 and 2019 were NT$6,778 and NT$5,886, respectively, and recognized as "other payables."

(IV) Key management compensation information

Salary and other short-term employees' benefits	$	2020 15,061	$	2019 7,437

VIII. Pledged Assets

The Group's assets pledged as collateral are as follows:

Carrying amount

Pledged assets Other current assets Bank deposits	$	December 31, 2020 56,887	$	December 31, 2019 Guarantee use 33,005 Reserve accounts

IX. Significant contingent liabilities and unrecognized contract commitments

(I) Contingencies

None.

(II) Commitments

1. As of December 31, 2020, the Group's guaranteed letter of credit for the purchase was US$1,500 thousand.

2. As of December 31, 2020, the Company issued a promissory note totaling NT$100,000 for the purchase of goods as a guarantee for the purchase of loan claims.

X. Significant Disaster Loss

None.

XI. Significant Events after the End of the Financial Reporting Period

None.

• 62 -

XII. Others

1. The Group’s major sales markets are located in Mainland China. As a result of the COVID19 pandemic, the government of the People's Republic of China put a ban on the movements of people between certain provinces and cities and requested employees to work at home. This caused the Group to delay the delivery and thus reflected on revenue. At present, economy activity in Mainland China is resuming. As the Group adopts a make-to-order model, there is no significant impact on the Group's financial position and financing risk. The Group will continue assessing the future impact of containment.

2. Capital management

3. The Group's objectives in capital management are to safeguard the Group's ability to continue as a going concern in order to maintain optimal capital structure in order to minimize the cost of funding and to provide remuneration for its shareholders. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

3. Financial instruments

• (1) Category of financial instruments

Financial assets Financial assets at amortized cost Cash Notes receivable Accounts receivable (including related parties) Other receivables Other financial assets (recognized in other current assets) Refundable deposits (recognized in other non- current assets) Financial liabilities Financial liabilities at amortized cost Short-term borrowings Notes payable Accounts payable Other payables Refundable deposits (recognized in other non- current liabilities) Lease liabilities	December 31, 2020 $ 330,087 3,187 1,302,448 1,761 56,887 5,784 $ 1,700,154 $ 402,027 - 371,691 100,834 420 $ 874,972 $ 17,342	December 31, 2019 $ 360,088 - 952,112 2,778 33,005 7,310 $ 1,355,293 $ 156,597 24 369,601 98,983 12,021 $ 637,226 $ 11,561

• 63 -

(2) Risk management policies

• A. The Group's daily operations are affected by a number of financial risks, including market risk (including exchange rate risk, interest rate risk, and price risk), credit risk, and liquidity risk.

• B. The risk management is carried out by the Group's finance department according to the policies approved by the Board of Directors. The finance department of the Group is responsible for identifying, evaluating, and avoiding financial risks in close co-operation with the Group's operating units. The Board of Directors has established written principles for overall risk management, and provides written policies for specific areas and matters such as exchange rate risk, interest rate risk, credit risk, and investment of the remaining current capital.

• (3) The nature and degrees of significant financial risks

• A. Market risk

Exchange rate risk

• (A) The Group is a multinational operation and is exposed to exchange rate risk arising from transactions with the Company and its subsidiaries, which is mainly denominated in USD and CNY. The related exchange rate risk arises from future commercial transactions and recognized assets and liabilities.

Exchange rate risk (A) The Group is a multinational operation and is exposed to exchange rate risk arising from transactions with the Company and its subsidiaries, which is mainly denominated in USD and CNY. The related exchange rate risk arises from future commercial transactions and recognized assets and liabilities.	Exchange rate risk (A) The Group is a multinational operation and is exposed to exchange rate risk arising from transactions with the Company and its subsidiaries, which is mainly denominated in USD and CNY. The related exchange rate risk arises from future commercial transactions and recognized assets and liabilities.	Exchange rate risk (A) The Group is a multinational operation and is exposed to exchange rate risk arising from transactions with the Company and its subsidiaries, which is mainly denominated in USD and CNY. The related exchange rate risk arises from future commercial transactions and recognized assets and liabilities.
(B) Business of the Group is involved in a number of non-functional currency
(the functional currency of	the Company is NTD; for subsidiaries, the
functional currency is CNY) and deeply affected by the exchange rate
fluctuation. The information of significant impact affected by exchange rate
fluctuation for foreign assets	and liabilities is as follow:
	December 31, 2020
		Carrying
(Foreign currency: Functional	Foreign currency (in Exchange	amount
currency)	thousands) rate	(NT$)
Financial assets
Monetary items
USD:NTD	$ 47,035 28.48	$ 1,339,557
Financial liabilities
Monetary items
USD:NTD	$ 19,899 28.48	$ 566,724

• 64 -

	December	December	31, 2019
				Carrying
(Foreign currency: Functional	Foreign currency (in	Exchange		amount
currency)	thousands)		rate	(NT$)
Financial assets
Monetary items
USD:NTD	$ 36,557		29.98	$ 1,095,979
Financial liabilities
Monetary items
USD:NTD	$ 15,867		29.98	$ 475,693

• (C) The Group's material monetary items affected by the exchange rate fluctuations were recognized as net exchange losses (including realized and unrealized), which amounted to NT$29,558 and NT$7,086, respectively, for the years ended December 31, 2020 and 2019.

• (D) The Group's foreign currency market risk analysis due to significant exchange rate fluctuations is as follows:

exchange rate fluctuations is as	follows:	follows:
(Foreign currency: Functional currency) Financial assets Monetary items USD:NTD Financial liabilities Monetary items USD:NTD (Foreign currency: Functional currency) Financial assets Monetary items USD:NTD Financial liabilities Monetary items USD:NTD	Range of		2020 Sensitivity analysis Effect on profit or Loss Effect on other comprehensive income $ 13,396 $ - $ 5,667 $ - 2019 Sensitivity analysis Effect on profit or Loss Effect on other comprehensive income $ 10,960 $ - $ 4,757 $ -
	change 1% 1% Range of
				Effect on profit or Loss $ 10,960 $ 4,757
		change 1% 1%			$ $

• 65 -

Price risk

• (A) The Group's equity instruments exposed to price risk are financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage the price risk of investments in equity instruments, the Group diversifies its portfolio with its diversification method based on limits set by the Group.

• (B) The Group primarily invests in equity instruments and beneficiary certificates issued by domestic companies, and the price of such equity instruments is affected by the uncertainty of the future value of the investment target. If the prices of these equity instruments increase or decrease by 1%, with all other factors remaining unchanged, profit after tax for the years ended December 31, 2020 and 2019 will increase or decrease by NT$2,377 and NT$1,842, respectively due to the gain or loss on equity instruments at fair value through profit or loss, and other comprehensive income for the years then ended will increase or decrease by NT$1,862 and NT$1,370, respectively due to the gain or loss on equity instruments at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

• (A) The Group's interest rate risk arises primarily from short-term borrowings issued at variable rates, which expose the Group to cash flow interest rate risk. For the years ended December 31, 2020 and 2019, the Group's borrowings issued at variable rates were mainly denominated in USD.

• (B) The Group's borrowings are measured at amortized cost and are re-priced at the contract annual rate every year. Therefore, the Group is exposed to the risk of changes in future market interest rates.

• (C) If the USD borrowing interest rate increases/decreases by 1%, with all other variables held constant, profit before tax for the years ended December 31, 2020 and 2019 will decrease or increase by NT$3,216 and NT$1,253, respectively. Changes in interest expense mainly result from floating-rate borrowings.

• B. Credit risk

• (A) The Group's credit risk is primarily attributable to the risk of financial loss from customers or the counterparty of financial instruments who are unable to fulfill the contract obligation. That credit risk is mainly from the fact that the counterparty is unable to pay off the accounts receivable payable on the terms of the payment.

• 66 -

• (B) The Group has established credit risk management in the Group's corporate policy. For banks and financial institutions, only those with good credit rating can be accepted as our transaction counterparties. In accordance with the internal defined credit policy, the Group's operating entities and each new customer shall be subject to the management and credit risk analysis before making payment and delivery of the agreed payment and delivery. Internal risk control is evaluated by considering its financial position, historical experience and other factors to assess the credit quality of customers. Limits on individual risks are formulated by the Board of Directors based on internal or external ratings and regularly monitored by the Board of Directors.

• (C) The Group adopts IFRS 9 to make the following assumptions as to whether the credit risk on financial instruments since initial recognition has increased by the following:

• a. When the contract amount is overdue for more than 30 days in accordance with the agreed payment terms, the credit risk has been significantly increased since the original recognition of the financial assets.

• b. There are actual or expected significant changes in external credit ratings of financial instruments.

• c. The Group adopts IFRS 9 to make assumptions that if the contract amount is overdue for more than 90 days in accordance with the agreed payment terms, it is regarded that a default has taken place.

• d. The Group will group the customer's accounts receivable based on the characteristics of the customer's rating and customer type, and use the simplified method to estimate the expected credit loss based on the preparation matrix.

• e. The Group includes the forward-looking consideration to adjust the loss rate established by historical and current information for a specific period so as to estimate the allowance loss for accounts receivable by the said loss rate. The provision matrix as of December 31, 2020 and 2019 is as follows:

December 31, 2020 Expected loss rate Total carrying amount	Not overdue 0.04%~3.62% $ 1,302,829	Overdue for 1~89 days 6.81% $ 9,432	Overdue for 90~120 days 6.81% $ 264	Overdue for 121	Overdue for 121	Total $ 1,312,882
					days or more 100% $ 357
			$		$

• 67 -

Allowance loss December 31, 2019 Expected loss rate Total carrying amount Allowance loss	$ 6,230 Not overdue 0.07%~4.97% $ 945,302 $ 682	$ 642 Overdue for 1~89 days 27.83% $ 10,380 $ 2,888	$ 18 Overdue for 90~120 days - $- $-	$ 18	$ 357 Overdue for 121	$ 357 Overdue for 121	$ $	$	7,247 Total 955,682 3,570
						days or more - $- $-
							$

• f. The statement of allowance loss for accounts receivable of the Group using simplified approach is as follows:

January 1 Provision of impairment loss Reversal of impairment loss Effect of exchange rate changes Acquired through business combinations December 31	2020 Accounts receivable $ 3,570 3,547 - 130 - $ 7,247	2019 Accounts receivable $ 323 - ( 1,166) ( 258) 4,671 $ 3,570

C. Liquidity risk

• (A) Cash flow prediction is performed by individual operating entities within the Group and are aggregated by the Group's finance department. The Group's finance department monitors the Group's liquidity requirements predict to ensure that it has sufficient funds to support its operational needs and maintains sufficient unencumbered borrowing commitments at all times so that the Group does not violate the relevant borrowing limits or terms.

• (B) The surplus cash held by each operating entity will be transferred back to the Group's finance department when it exceeds the management needs of the working capital. The Group's finance department invests the surplus funds in interest-bearing demand deposits and fixed deposits, and the selected instruments have appropriate maturity dates or sufficient liquidity to meet the above forecasts and provide sufficient water and effluents.

• (C) The following tables detail the Group's non-derivative financial liabilities grouped by the maturity date. Non-derivative financial liabilities are analyzed based on the remaining period from the balance sheet date to the contractual maturity date. The contractual cash flow amounts disclosed in

• 68 -

the table below are undiscounted amounts.

December 31, 2020 Within 1 year Non-derivative financial liabilities: Lease liabilities $ 7,104 December 31, 2019 Within 1 year Non-derivative financial liabilities: Lease liabilities $ 6,374	Within 1~2 years $ 6,127 Within 1~2 years $ 2,654	Within 2~5 years
		$ 4,798 Within 2~5 years
		$ 3,233

Except as stated above, the Group's non-derivative financial liabilities are due within one year.

1. Fair value information

2. (1) The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

   • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group's investment in listed stocks is of Level 1.

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

   • Level 3: Unobservable inputs for the asset or liability. The fair value of the Group's investment in equity investment without active markets is of Level 3.

3. (2) For financial instruments not measured at fair value, including cash and cash equivalents, notes receivable, accounts receivable (including related parties), other receivables, short-term borrowings, notes payable, accounts payable (including related parties), and other payables, their carrying amounts are a reasonable approximation of their fair value.

4. (3) The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

5. 69 -

6. A. The Group classifies its assets and liabilities according to their nature; the information is as follows:

December 31, 2020 Assets Recurring fair value Financial assets at fair value through profit or loss Beneficiary certificates Financial assets at fair value through other comprehensive income Equity securities Total December 31, 2019 Assets Recurring fair value Financial assets at fair value through profit or loss Equity securities Beneficiary certificates Financial assets at fair value through other comprehensive income Equity securities Total	Level 1 $ 237,671 170,800 $ 408,471 Level 1 $ 2,172 182,101 121,695 $ 305,968	$	Level 2 - - - Level 2 - - - -	$	Level 3 - 15,350 15,350 Level 3 - - 15,350 15,350	Total $ 237,671 186,150 $ 423,821 Total $ 2,172 182,101 137,045 $ 321,318
		$		$
		$		$
		$		$

• B. Methods and assumptions used by the Group to measure the fair value are as follows:

• (A) The instruments that the Group uses market-quoted prices as their fair values (i.e. Level 1) are listed below by characteristics:

values (i.e. Level 1) are listed	below by characteristics:
Market quoted price	Stocks of listed companies Closing price	Beneficiary
		certificates Net worth

• (B) In addition to the aforementioned financial instruments with active markets, the fair value of the remaining financial instruments is obtained by means of evaluation techniques or reference to counterparty quotes. The fair value obtained through evaluation techniques can refer to the current fair value of

• 70 -

other substantial financial instruments with similar conditions and characteristics, discounted cash flow method or other evaluation techniques, including calculations based on the market information utilization model available on the date of the consolidated balance sheets (e.g., the reference yield curve offered by Taipei Exchange or the average offer price of Reuters commercial paper interest rate).

• (C) The valuation of derivative instruments is based on the valuation model that is widely accepted by market users, such as the discount method. Structured interest rate derivatives are valued by the estimation of future cash flows at contractual interest rates.

• (D) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group's financial and non-financial instruments. Therefore, the estimated value of the evaluation model will be adjusted according to additional parameters, such as model risk or liquidity risk. According to the Group's fair value evaluation model management policy and related control procedures, the management believes that the adjustment is appropriate and necessary to recognize the fair value of financial instruments and non-financial instruments in the consolidated balance sheet. The price information and parameter used in the valuation process are carefully evaluated and adjusted appropriately based on current market conditions.

• (E) The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group's credit quality.

• (4) For the years ended December 31, 2020, and 2019, there were no transfers between Level 1 and Level 2.

• (5) The following table indicates the movement of Level 3 for the years ended December 31, 2020, and 2019:

2020 2019 Equity instruments Equity instruments January 1 (i.e., December 31) $ 15,350 $ 15,350

• (6) For the years ended December 31, 2020, and 2019, there were no transfers into or out of Level 3.

• (7) The finance department of the Group is in charge of valuation procedures for fair value

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measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable, and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model, and making any other necessary adjustments to the fair value.

• (8) Quantitative information and sensitivity analysis of significant unobservable inputs to the valuation models used in the valuation models for Level 3 fair value measurement and the sensitivity analysis of changes in significant unobservable inputs are as follows:

Fair value as of December 31, 2020 Non-derivative equity instruments: Shares of unlisted companies $ 15,350 Fair value as of December 31, 2019 Non-derivative equity instruments: Shares of unlisted companies $ 15,350	Valuation techniques Market price method Valuation techniques Market price method	Significant unobservable inputs Lack of marketability discount, expected equity volatility Significant unobservable inputs Lack of marketability discount, expected equity volatility	Relationship of inputs and fair value The higher the lack of marketability discount and expected equity volatility, the lower the fair value Relationship of inputs to fair value The higher the lack of marketability discount and expected equity volatility, the lower the fair value

• (9) The Group carefully evaluates the valuation models and inputs used in selecting the valuation models and inputs that the valuation models may result in different valuation models. For financial assets classified as Level 3, if there are changes in evaluation parameters, the impact on other comprehensive gains and losses is as follows:

December 31, 2020

Recognized in other comprehensive income Input Change Favorable change Unfavorable change Financial assets Lack of marketability Equity instruments discount, expected ±1% $ 154 $ 154 equity volatility

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December 31, 2019

Recognized in other comprehensive income Input Change Favorable change Unfavorable change

Financial assets

Lack of marketability Equity instruments discount, expected ±1% $ 154 $ 154 equity volatility

XIII. Supplementary Disclosures

1. Information on significant transactions

2. (1) Capital loans to others: None.

3. (2) Endorsements and guarantees: Please refer to Table 1.

4. (3) Marketable securities held at the end of the period (excluding investment in subsidiaries): Please refer to Table 2.

5. (4) Accumulated purchase or disposal of the same securities amount reaching NT$300 million or 20% of the paid-in capital: None.

6. (5) Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

7. (6) Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

8. (7) Purchases and sales with related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 3.

9. (8) Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 4.

10. (9) Derivative transactions: Please refer to Note 6 b.

11. (10) Parent-subsidiary and subsidiary-subsidiary business relations and significant transactions and amounts thereof: Please refer to Table 5.

12. Information on investees

Information on investees (not including investees in Mainland China): Please refer to Table 6.

1. Information on investments in Mainland China

2. (1) Basic information: Please refer to Table 7.

3. 73 -

4. (2) Significant transactions between the Group and investees in Mainland China directly or indirectly through entities in a third area: Please refer to Table 8.

5. Information on major shareholders

Information about major shareholders: Please refer to Table 9.

XIV. Segment Information

1. General information

The Board of Directors of the Group operates business and makes decisions by product types, which are divided into consumer electronic products and AI servers (namely, reportable segments).

1. Segment information

The information for departments that should issue a report to the chief operating decision maker is as follows:

External Internal r Segment Segment	2020 revenue evenue revenue profit or loss	consu	mer electronic products $ 3,627,796 $ 10,178 $ 3,637,974 $ $ 153,356 $	mer electronic products $ 3,627,796 $ 10,178 $ 3,637,974 $ $ 153,356 $	AI servers Adjustments and write-offs 1,044,514 $ - $ 33,039 ( 43,217) 1,077,553 ($ 43,217) $ 85,318 ($ 55,261) $	AI servers Adjustments and write-offs 1,044,514 $ - $ 33,039 ( 43,217) 1,077,553 ($ 43,217) $ 85,318 ($ 55,261) $	AI servers Adjustments and write-offs 1,044,514 $ - $ 33,039 ( 43,217) 1,077,553 ($ 43,217) $ 85,318 ($ 55,261) $	Total 4,672,310 - 4,672,310
			$ 3,627,796 10,178 $ 3,637,974 $ 153,356			$ - ( 43,217) ($ 43,217) ($ 55,261)
				$			$	183,413

2019 External revenue Internal revenue Segment revenue Segment profit or loss	co	nsu	mer electronic products 3,786,751 8,044 3,794,795 122,413	AI servers $ 951,431 57,124 $ 1,008,555 $ 52,000	Adjustments and write-offs $ - ( 65,168) ($ 65,168) ($ 37,189)	Discontinued operations $ - - $- ($ 8,545)	Total $ 4,738,182 - $ 4,738,182 $ 128,679
		$ $			$ (
					($
		$			($

3. Information on the adjustment of segment profit or loss

• (1) No reconciliation is necessary as the Group’s chief operating decision maker assesses segment performance and decide on the allocation of resources based on profit after tax.

• (2) The measurement method used for total amount of assets reported to the chief operating decision maker is the same as that used for the total amount of assets stated

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in the financial statements.

4. Information on products and services

The breakdown of the revenue balance is as follows:

2020 2019 Sales revenue: Computer peripherals $ 4,665,443 $ 4,716,750 Service revenue 6,867 21,432 $ 4,672,310 $ 4,738,182 5. Geographical information 2020 2019 Revenue Non-current assets Revenue Non-current assets China $ 4,671,645 $ 201,583 $ 4,738,182 $ 209,828 Taiwan 665 66,973 - 61,250 $ 4,672,310 $ 268,556 $ 4,738,182 $ 271,078 6. Key accounts information 2020 2019 10C001 $ 1,703,136 $ 2,026,018 16L002 497,686 473,302	2020 2019 Sales revenue: Computer peripherals $ 4,665,443 $ 4,716,750 Service revenue 6,867 21,432 $ 4,672,310 $ 4,738,182 5. Geographical information 2020 2019 Revenue Non-current assets Revenue Non-current assets China $ 4,671,645 $ 201,583 $ 4,738,182 $ 209,828 Taiwan 665 66,973 - 61,250 $ 4,672,310 $ 268,556 $ 4,738,182 $ 271,078 6. Key accounts information 2020 2019 10C001 $ 1,703,136 $ 2,026,018 16L002 497,686 473,302	$	$	$	$	$	$
		$
			Revenue 4,738,182 -
							$ 209,828 61,250 $ 271,078 2019 2,026,018 473,302
	$		4,738,182

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Chaintech Technology Corporation and Subsidiaries

Endorsements and Guarantees

For the Year Ended December 31, 2020

Table 1

Unit: NT$ thousand (Unless specified otherwise)

Subject of endorsements and guarantees

No. (Note 1) 0	Endorser/G uarantor Company name Chaintech Technology Corporation Sitonholy (Tianjin) Technology Co., Ltd.	Relationship (Note 2) 2	Ceiling limit on endorsements and guarantees for a single	Ceiling limit on endorsements and guarantees for a single	Maximum balance of endorsements and guarantees for the period (Note 4) $ 56,901	Balance of endorsements and guarantees at end of period $56,901	Endorseme	Endorsem	Ratio of aggregated endorsements and guarantees to net value in the most recent	Ceiling limit on endorsem	Parent providing	Subsidiar y providing	Endorsem ents and guarantee s involving Mainland China (Note 5) Rem ark Y
											endorsem
											ents and guarantee	endorsem
								ents and				ents and
								guarantee			s for subsidiar y (Note 5) Y	guarantee
							nts and guarantees	s secured		ents and		s for parent (Note 5) N
								with collateral $ -	financial statements 3.30%	guarantee
				entity (Note 3) $ 862,159			used $56,901			s (Note 3)
										$862,159

Note 1: Explanations are as follows:

• (1) The issuer shall fills in 0.

• (2) The investees are numbered in alphabetical order beginning with the Arabic numeral 1.

• Note 2: The relationships between endorsers/guarantors and endorsees/guarantees are categorized into the following 6 types. Please specify the type.

• (1) Companies with which the Group conducts business;

• (2) Subsidiaries in which the Group directly holds more than 50% of their common shares;

• (3) Investee companies in which the Company and its subsidiaries collectively hold more than 50% of their common shares;

• (4) The parent company which holds, directly or indirectly through a subsidiary, more than 50% of its outstanding common shares;

• (5) Companies in same type of business and providing mutual endorsements/guarantees in favor of each other in accordance with the contractual obligations in order to fulfill the needs of the construction project; or

• (6) Shareholders making endorsements/guarantees for their mutually invested company in proportion to their shareholding ratio.

• Note 3: The ceiling limit on endorsements and guarantees provided by the Company, on endorsements and guarantees for a single enterprise, and on endorsements and guarantees provided by the Company and its subsidiaries should be 50% of the net value in the most recent financial statements respectively.

• Note 4: The maximum balance of endorsement/guarantee provided to others in the current year.

• Note 5: Fill in Y if a listed parent company provides endorsements/guarantees for its subsidiary or if a subsidiary provides endorsements/guarantees for its listed parent company or if endorsements/guarantees involve Mainland China.

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Chaintech Technology Corporation and Subsidiaries

Marketable Securities Held at the End of the Period (excluding Subsidiaries, Associates, and Joint Ventures) As of December 31, 2020

Table 2

Unit: NT$ thousand (Unless specified otherwise)

Relationship with the issuer of securities Company holding securities Type and name of securities Accounting item Chaintech Technology Corporation Stocks_APAQ Technology Co., Ltd. - Non-current financial assets at fair value through other comprehensive income Chaintech Technology Corporation Stocks_CloudMile Co., Ltd. (Cayman Islands) - Non-current financial assets at fair value through other comprehensive income Sitonholy (Tianjin) Technology Co., Ltd. Beneficiary certificates_Tiantianli net-value wealth management product - Financial asset at fair value through profit and loss - current Sitonholy (Tianjin) Technology Co., Ltd. Beneficiary certificates_Tianlibao net-value wealth management product - Financial asset at fair value through profit and loss - current Beijing Sitonholy Technology Co., Ltd. Beneficiary certificates_Gongying Wenjian Tiantianli wealth management product - Financial asset at fair value through profit and loss - current	Number of shares 3,050,000 510,204 - - -	End of period Carrying amount 170,800 15,350 164,137 24,074 49,460	Shareholding ratio Fair value 3.61% 10,800 2.19% 15,350 - 164,137 - 24,074 - 49,460	Remark
				- - - - -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities as promulgated in IFRS 9 "Financial Instruments." Note 2: When the issuers of marketable securities are not related parties, this column can be left blank.

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Chaintech Technology Corporation and Subsidiaries

Purchases and Sales with Related Parties Reaching NT$100 Million or 20% of Paid-in Capital or More

For the Year Ended December 31, 2020

Table 3

Unit: NT$ thousand (Unless specified otherwise)

Company Counterparty Chaintech Technology Corporation Colorful Technology Co., Ltd. Sitonholy (Tianjin) Technology Co., Ltd. Shenzhen Colorful Yugong Technology and Development Co., Ltd.	Relationship 100% reinvestment business by Colorful Group The same person in charge as the Colorful Group	Purchases (sales) Sales $ Purchases $	Transaction Percentage of total purchases (sales) Amount 1,703,136 36.45% 123,173 3.01%	Credit period	Unusual trade conditions and its reasons Unit price Credit period Not applicable Not applicable Not applicable Not applicable	Ratio	of notes	and accounts receivable	Remark
						$ $	(payable) to total notes and accounts receivable (payable) Balance 770,724 59.03% 13,463 3.62%
				OA 45~125 days OA 30 days					-

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Chaintech Technology Corporation and Subsidiaries

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

As of December 31, 2020

Table 4

Unit: NT$ thousand (Unless specified otherwise)

Company Counterparty Relationship Balance of receivables from related parties Chaintech Technology Corporation Colorful Technology Co., Ltd. 100% reinvestment business by Colorful GroupAccounts receivable$ 770,724	Turnover rate	Overdue receivables from related parties Receivables from related parties recoverable after period Amount Handling method Allowances for losses $ - - $ 276,226 ($ 304)
		$
	2.45

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Chaintech Technology Corporation and Subsidiaries Parent-subsidiary and Subsidiary-subsidiary Business Relations and Significant Transactions and Amounts Thereof For the Year Ended December 31, 2020

Table 5

Unit: NT$ thousand (Unless specified otherwise)

Transaction status

No. (Note 1) Company Counterparty 0 Chaintech Technology Corporation Shenzhen Jinghong Digital R&D Service Co., Ltd. 0 Chaintech Technology Corporation Shenzhen Jinghong Digital R&D Service Co., Ltd.	Relationship with counterparty (Note 2) Accounting item Parent company to a subsidiary Operating expenses $ Parent company to a subsidiary Other payables	Amount 7,807 2,061	Percentage of consolidated total revenue or total assets Transaction terms Agreed by both parties 0.17% Agreed by both parties 0.07%

• Note 1: Information of business contacts between the parent company and subsidiaries shall be specified in No. column. Please fill in the No. column following the instruction:

• (1) The parent company is coded 0.

• (2) The subsidiaries are coded from "1" in the order presented in the table above.

• Note 2: Regarding the percentage of transaction amount to consolidated total revenue or total assets, it is calculated based on the ending balance to consolidated total assets for balance sheet items; it is calculated based on interim accumulated amount to consolidated net revenue for profit or loss items.

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Chaintech Technology Corporation and Subsidiaries

Information on Investees (Not Including Investees in Mainland China)

For the Year Ended December 31, 2020

Table 6 Investor Investee company Location Chaintech Technology Corporation uSenlight CorporationRepublic of China	Main businesses and	Initial amount December 31, 2020	Initial amount	of investment December 31, 2019 $ -	Shareholding at end of period Number of shares Percentage Carrying amount 5,000,000 13.05 $ 133,573	Unit: NT$ thousand (Unless specified otherwise) Profit or loss of investee for the period Gain (loss) on investment for the period Remark ($ 89,749) ($ 11,921)	Unit: NT$ thousand (Unless specified otherwise) Profit or loss of investee for the period Gain (loss) on investment for the period Remark ($ 89,749) ($ 11,921)
	products Electronics, computers, and peripherals
		$ 150,000

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Chaintech Technology Corporation and Subsidiaries

Information on Investments in Mainland China - Basic Information

For the Year Ended December 31, 2020

Table 7

Unit: NT$ thousand (Unless specified otherwise)

Investee in Mainland China Main businesses and products Actual paid-in capital Method of investment (Note 1) Accumulated investment amount remitted from Taiwan at beginning of period Shenzhen Jinghong Digital R&D Service Co., Ltd. Technology research and development and trading of electronic products, computer hardware, and peripheral devices $ 499,065 1 $ 499,065 Sitonholy (Tianjin) Technology Co., Ltd. Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts 100,162 3 - Beijing Sitonholy Technology Co., Ltd. Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts 36,824 3 -		Accumulated investment amount remitted or recovered Accumulated investment amount remitted from Taiwan at end of period Profit or loss of investee for the period Percentage of ownership (direct or indirect) Gain (loss) on investment for the period (Note 2) Carrying amount of investments at end of period Gain (loss) on investment recovered as of the period Remittance Recovery $ - $ - $ 499,065 $37,469 100 $ 37,469 $ 518,552 $ - - - - 85,318 51 43,512 406,163 - - - - 41 51 21 49,771 -	Remark
		Remittance $ - - -
			- - -

Note 1: The method of investment in Mainland China includes the three following types:

• (1) Direct investment;

(2) Investment in Mainland China through a company set up in a third area; or

• (3) Others: Investment in Mainland China through an reinvestment in Mainland China.

Note 2: The valuation is recognized in the financial statements audited by the CPAs of the parent company in Taiwan.

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Accumulated investment amount remitted from Taiwan to Mainland China at end of period Company name Chaintech Technology Corporation $ 499,065	Investment amount authorized by Investment Commission, M.O.E.A. Ceiling on investment in Mainland China regulated by Investment Commission, M.O.E.A. $ 544,794 $ 1,160,200
	$

Note 3: The Group's investment in Shenzhen Jinghong Digital R&D Service Co., Ltd., which was approved by the Investment Commission, Ministry of Economic Affairs on November 26, 2015, at a total amount of US$5 million, was remitted in full. Note 4: The Group's increase in capital of Shenzhen Jinghong Digital R&D Service Co., Ltd. by US$6.4 million, which was approved by the Investment Commission, Ministry of Economic Affairs on February 1, 2019, was remitted in full.

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Chaintech Technology Corporation and Subsidiaries

Information on Investments in Mainland China - Significant Transactions between the Group and Investees in Mainland China Directly or Indirectly through Entities in a Third Area For the Year Ended December 31, 2020

Table 8 Investee in Mainland China Shenzhen Jinghong Digital R&D Service Co., Ltd. $	Endorsements and guarantees or collateral provided Sales (purchases) Property transactions Accounts receivable (payable) Amount % Amount % Balance % Balance at end of period Purpose Highest balance for the period - - $ - - ($ 2,061) - $ - - $ -	Highest balance for	Unit: NT$ thousand (Unless specified otherwise) Financing Balance at end of period Interest range Interest for the period Others $ - - $ - Operating expenses $7,807

Table 8

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Chaintech Technology Corporation and Subsidiaries Information on Major Shareholders As of December 31, 2020

Table 9

Name of major shareholder Yeland International Development Ltd. Masterlink Securities (Hong Kong) Corporation Limited - Client A/C at CTBC Bank Core Pacific - Yamaichi International (H.K.) Ltd. - Client A/C at HSBC

Number of shares	Shareholding	Percentage
28,532,080 8,444,841 6,335,000		28.11% 8.32% 6.24%

Note 1: Information on major shareholders listed above is based on the information on shareholders holding more than 5% of the ordinary shares and preferred shares that have completed non-physical registration and delivery on the last business day of each quarter as calculated by the Taiwan Depository & Clearing Corporation. In addition, share capital stated in the financial statements may vary from the actual number of traded shares with the completion of non-physical registration due to different calculation bases.

Note 2: If a shareholder delivers its shareholding information to the trust, the aforesaid information should be disclosed by the individual trustee who opened the trust account. For the shareholders' declaration of insiders holding more than 10% of the shares in accordance with the Securities and Exchange Act, the number of share held includes the shares held by the shareholders plus the shares delivered to the trust and having the right to decide on the use of trust property. For information on the declaration of insider equity, please refer to the Market Observation Post System.

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