CHAINTECH - Annual Report 2020 | FinancialReports.eu

Stock Code: 2425

CHAINTECH Technology Corporation

2020 Annual Report

(Translation)

Printed on May 10, 2021

Annual Report Website: http://mops.twse.com.tw Company Website: http://www.chaintech.com.tw

Notice to Readers:

For the convenience of readers, the Meeting Handbook has been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese version shall prevail .

I. Company Spokesperson, Acting Spokesperson

Name of Spokesperson: Chou, Tzu-An

Title: Assistant Manager, Marketing and Planning Department

Tel: (02) 2913-8833

Email: [email protected]

Name of Acting Spokesperson: Chang, Ya-Ling

Title: Chief Auditor Tel: (02) 2913-8833

Email: [email protected]

II. Company Address: 3F, No. 48-3, Minchuan Rd., Xindian Dist., New Taipei City

Tel: (02) 2913-8833

III. Stock Transfer Institution

Name: Service Agency Department, Grand Fortune Securities Co., Ltd.

Address: 6F, No. 6, Sec. 1, Zhongxiao W. Rd., Zhongzheng Dist., Taipei City 10041

Tel.: (02)2371-1658

Website: http://gfortune.com.tw

IV. CPAs for the Financial Report in the Most Recent Fiscal Year

Name of Accounting Firm: Pricewaterhouse Coopers

Name of CPAs: CPA Feng, Min-Chuan and CPA Lin, Ya-Hui

Address: 27F., No. 333, Sec. 1, Keelung Rd., Taipei City

Tel.: (02) 2729-6666

Website: http://www.pwc.tw

V. Name of Trading Venues for Overseas Flotation of Marketable Securities and Means of Inquiry into Information Thereof: None.
VI. CHAINTECH's Website: http://www.chaintech.com.tw/

Page

Chapter 1 Letter to Shareholders ............................................................................................................................ 1	Chapter 1 Letter to Shareholders ............................................................................................................................ 1
Chapter 2 Company Profile ...................................................................................................................................... 3
I.	Date of Founding: November 17, 1986 ............................................................................................................. 3
II.	Company History: .............................................................................................................................................. 3
Chapter 3 Corporate Governance Report ............................................................................................................... 7
I.	Organization ...................................................................................................................................................... 7
II.	Information of Directors, Supervisors, General Manager, Deputy General Manager, Assistant Manager, and
	Managers of Departments and Branches ......................................................................................................... 10
III.	Status of Corporate Governance ...................................................................................................................... 21
IV.	Information on CPAs fees ............................................................................................................................... 59
V.	Information About Replacement of CPA ........................................................................................................ 60
VI.	If the Company's Chairman, General Manager, or Managers in Charge of Finance and Accounting Operations
	Held Positions in an Accounting Firm or Its Affiliates in the Most Recent Year, their names, positions, and
	period of working should be disclosed. The affiliated enterprises of the accounting firm of CPAs refer to
	those in which the CPAs of the accounting firm hold more than 50% shares or obtain more than half seats of
	directors, or the accounting firm of CPAs is company or institution of affiliated enterprises in released or
	printed materials to the outside ........................................................................................................................ 61
VII.	Status of Share Transfer and Changes in Equity Pledge by the Chairman, Supervisors, Managers, and
	Shareholders with Over 10% Shareholdings in the Most Recent Year until the Publication Date of the Annual
	Report .............................................................................................................................................................. 62
VIII.	Information on the related party relationship as defined in the Statements of Financial Accounting Standards
	No. 6 between the Company's top ten shareholders by shareholding ratio ...................................................... 63
IX.	Shares of Investment of Equity Method and the Consolidated Shareholdings Held by the Company, Its
	Directors, Supervisors, Managers, and Enterprises under Direct or Indirect Control of the Company ........... 64
Chapter 4 Funding Overview ................................................................................................................................. 65
I.	Capital and Shares ........................................................................................................................................... 65
II.	Corporate Bonds. ............................................................................................................................................. 72
III.	Issuance of Preferred Shares: None. ................................................................................................................ 72
IV.	IV. Global Depository Receipts (GDRs). ........................................................................................................ 72
V.	Employee Stock Options ................................................................................................................................. 72
VI.	New Restricted Employee Stares ..................................................................................................................... 72
VII.	Issuance of New Shares in Connection with the Merger or Acquisition of Other Companies. ....................... 72
VIII.	Capital Utilization Plan and Implementation ................................................................................................... 72

Chapter 5 Operating Overview .............................................................................................................................. 73	Chapter 5 Operating Overview .............................................................................................................................. 73
I.	Business Activities .......................................................................................................................................... 73
II.	Market, Production, and Sales Overview ........................................................................................................ 81
III.	Employees ....................................................................................................................................................... 90
IV.	Information on Environmental Protection Expenditure ................................................................................... 91
V.	Labor Relations................................................................................................................................................ 91
VI. Material Contracts: ............................................................................................................................................. 93
Chapter 6 Financial Information ........................................................................................................................... 94
I.	Condensed balance sheet and statement of comprehensive income and audit opinion of the most recent five
	years ................................................................................................................................................................. 94
II.	Financial Analysis of the Last Five Years ....................................................................................................... 98
III.	Audit report of the financial report for the most recent year from the supervisors or audit committee ......... 104
IV.	Individual financial report for the latest year audited and approved by accountants ..................................... 106
V.	Consolidated Financial Statements for the Most Recent Year, Certified by CPAs ....................................... 106
VI.	Financial Difficulties of CHAINTECH and Its Affiliates in the Most Recent Year to the Publication Date of
	this Annual Report and their Impact on the Company's Financial Conditions .............................................. 106
Chapter 7 Analysis for Financial Condition and Operating Results and Risk Management ......................... 106
I.	Comparative Analysis of Financial Conditions ............................................................................................. 106
II.	Comparative Analysis of Financial Performance .......................................................................................... 107
III.	Cash Flow Analysis ....................................................................................................................................... 108
IV.	Impact of Major Capital Expenditures on Corporate Finances and Business for the Most Recent Year....... 108
V.	Policy on Reinvestment in Other Companies, the Main Reasons for Profit/Loss Resulting Therefrom,
	Improvement Plan, and Investment Plans for the Upcoming Fiscal Year ..................................................... 108
VI.	Risk Management and Assessment................................................................................................................ 109
VII.	Other important items .................................................................................................................................... 114
Chapter 8 Special Notes ........................................................................................................................................ 115
I.	Information on Affiliated Companies ............................................................................................................ 115
II.	Private Placement Securities in the Most Recent Year to the Publication Date of this Annual Report ......... 119
III.	Holding or Disposal of CHAINTECH's Shares by the Subsidiaries of the Most Recent Year to the Date of
	Publication of this Annual Report ................................................................................................................. 119
IV.	Other Necessary Supplements. ...................................................................................................................... 119
Chapter 9 For the Most Recent Year and up to the Publication Date of the Annual Report, the Occurrence
	of Events as Provided for in Subparagraph 2, Paragraph 2, Article 36 of the Securities Exchange
	Act Which Have a Material Effect on Shareholders' Equity or Securities Prices ......................... 119
Appendix I: Individual Financial Report for the Most Recent Year ....................................................................... 120
Appendix II: Consolidated Financial Report for the Most Recent Year ................................................................. 194

Chapter 1 Letter to Shareholders

Dear Esteemed Shareholders:

I. 2020 Business Results

CHAINTECH's consolidated operating revenues in 2020 was NT$4,672,310 thousand, a decrease of 1.39% from that of NT$4,738,182 thousand in 2019. Net profit after tax was NT$183,413 thousand, net profit attributable to owners of the parent company was NT$145,907 thousand, and net profit after tax per share was NT$1.51.

CHAINTECH's business results for 2020 and business plan for 2021 are summarized below:

(I) Implementation Results of Business Plan:

Unit: NT$ thousand; %

Items	2020	2019	Increase (decrease) amount	Increase (Decrease) %
Operatingrevenue	4,672,310	4,738,182	(65,872)	(1.39)
Grossprofit	437,005	332,636	104,369	31.38
OperatingMargin	226,211	132,133	94,078	71.20
Netprofit after tax	183,413	128,679	54,734	42.54
Net profit attributable to owners of parent company	145,907	106,942	38,965	36.44
Netprofit on non-controllinginterest	37,506	21,737	15,769	72.54
Netprofit after taxper share(NT$)	1.51	1.06	0.45	42.45

(II) Financial income and expenditure and profitability analysis:

Items	Year	2020	2019
Financial structure (%)	Ratio of liabilities to assets	33.59	27.77
	Ratio of long-term capital to property, plant and equipment	5,568.84	2,774.45
Solvency (%)	Currentratio	241.58	302.73
	Quick ratio	204.28	241.47
	Interest coverageratio	30.16	26.82
Profitability (%)	ReturnonassetsROA(%)	7.13	6.07
	Return on shareholders' equity (%)	10.04	7.45
	Net profitmargin	3.93	2.72
	Earningsper share after tax(NT$)	1.51	1.06

II. Outline of 2021 Business Plan

In the face of future market changes, CHAINTECH's business policy, expected targets and important production and marketing policies are as follows:

(I) Business Policy

Marketing: Continue to strengthen the close cooperation between distributors and agents, build different types of sales channels, and strengthen cooperation with clients with sound financial structure.
Financial policy: Focus on stable operations and strict control over the quality of accounts receivable, make collections according to the terms of sales to ensure the asset preservation, and carry out production by order to maintain low inventories and the efficiency of working capital.
R&D policy: Develop all-in-one server of work management, container management, and maintenance management system based on Docker, Kubernetes, and Hadoop, and integrate multiple development tools specifically for AI model development to establish highefficiency information processing solutions.
(II) Estimated sales volume and supporting information

After the introduction of new products in the fourth quarter of 2020, the GeForce RTX 30 series with Ampere architecture has shown a significant improvement in performance and cost performance compared to RTX 20 series GPUs based on the Turing architecture. The market demand for graphics cards has picked up obviously, and the number of sales is expected to increase in 2021 compared with that in 2020.

(III) Important Production and Marketing Policies

Maintain relationships with various suppliers to secure the raw materials and ensure the manufacturing capacity. Continue to improve technology R&D and product quality, provide products that meet customer needs, and unremittingly build new sales channels.

CHAINTECH is committed to maintaining its financial health and stable operations based on its existing core values. It continues to maintain the technical quality of the products, strengthen product performance and marketing channels through the production and supplier management. Facing the changing industry environment of board card market, CHAINTECH will strive to adjust its product structure. In addition to investing in blockchain industry, passive component industry, AI industry and 5G industry, CHAINTECH will also continue to expand its high-level manpower in software development, improve the use performance of AI servers through the software of the AI development management platform, and enhance its competitiveness on the integration of hardware and software systems of AI servers, so as to increase the quality of product projects and technologies, and maintain the sustainable development and stable profit of the enterprise under the situation of continuous changes in market demand. On behalf of the management team of CHAINTECH Technology Corporation, I would like to take this opportunity to once again express our gratitude for your continued support and encouragement.

Chairman: Kao, Shu-Jung

Chapter 2 Company Profile

I. Date of Founding: November 17, 1986

II. Company History:

1986 ⚫ Founding of CHAINTECH Technology Corporation with an NT$5 million registered capital.
⚫ Establishment of self-owned brand ELT.
1987 ⚫ Purchase of factories and setting up production lines. 1988 ⚫ Introduction of high-end equipment and appliances in the factories. 1989 ⚫ Conclusion of technical cooperation contract with IBM in April.
⚫ Cash capital increases of NT$55 million and NT$60 million in March and December, respectively, with paid-in capital reaching NT$120 million.
1990 ⚫ Cash capital increase of NT$75 million in June, with the paid-in capital reaching NT$195 million.
1991 ⚫ Establishment of Chaintech Computer GmbH through investment in Germany in July.
1993 ⚫ Ex-Chairman of the Board Ke, Heng-Kuang passed away of illness, and Mr. Su, Ke-Kang, representative of Behavior Tech Computer Corp., appointed as his successor.
1994 ⚫ Capital reduction of NT$87 million in April and cash capital increase of NT$82 million in December, with a paid-in capital of NT$199 million.
⚫ Purchased factory building on Lian-Cheng Road of Jhonghe City. ⚫ Passed ISO-9002 certification.
1995 ⚫ Cash capital increase of NT$111 million in July, with paid-in capital reaching NT$320 million.
⚫ Increased investment of NT$1.3 million in Chaintech Computer GmbH, with 100% shareholding in November.
1996 ⚫ Earnings turned capital increase of NT$32 million in November, with paid-in capital reaching NT$352 million.
⚫ Establishment of the American subsidiary Chaintech Computer U.S.A. in December.
1997 ⚫ Earnings and employees' bonus turned capital increase of NT$76.6 million in May, with paid-in capital reaching NT$328.6 million.
⚫ Mr. Wang, Ching-Yeh, representative of Central Asia Venture Corp., appointed the Chairman of CHAINTECH in July.
1998 ⚫ Publicly listed on February 4.
⚫ Earnings and employees' bonus turned capital increase of NT$92.617 million and cash capital increase of NT$178.783 million in July, with paid-in capital reaching NT$700 million.
⚫ Acquired land in Tucheng in August and officially commenced construction in August.
⚫ Established Gold Ring overseas company in October.
⚫ Disposal of subsidiary in Germany and established an European subsidiary in October. ⚫ Passed ISO 9001 certification in December.

1999	⚫	Mr. Tung, Chung-Chuan, representative of Central Asia Venture Corp.
		appointed the Chairman of CHAINTECH on April 30.
	⚫	Mr. He, Ai-Tang appointed the General Manager of CHAINTECH in
		October.
	⚫	The first convertible corporate bonds of NT$300 million raised in December.
	⚫	Mr. Tung, Chung-Chuan, representative of Hongyun Electronics Co.,
		appointed the Chairman of CHAINTECH on December 18.
1990	⚫	Launched marketing posts in China Mainland in January to expand the
		Chinese market.
	⚫	The Investment Review Commission passed indirect re-reinvestment in
		DONGGUAN CHANGAN FORTECH ELECTRONICS CO., LTD in January.
	⚫	Relocated to the Tucheng plant in Taipei City in March.
	⚫	The US subsidiary was combined with Chaintech Excel in April.
	⚫	Shares went from Over-the-Counter to public listing on August 11.
	⚫	Mr. Tung, Chung-Chuan passed away in December and Vice Chairman of the
		Board Tung, Ching-Chuan appointed interim Chairman.
2001	⚫	Mr. Tung, Ting-He, representative of Hongyun Electronics Co., was
		reappointed as the Chairman of CHAINTECH on January 4.
	⚫	Established the Digital Media Business Development department in
		November, officially engaging in the field of digital multi-media.
2002	⚫	Inject of KRW270 million for the establishment of a subsidiary in February.
	⚫	Mr. He, Ai-Tang appointed the Chairman of CHAINTECH and Ms. Chang,
		Pi-Lan appointed the Vice Chairman of CHAINTECH on May 2.
	⚫	Issued 5 million employee stock option certificates in October.
	⚫	Established the US subsidiary with US$1 million in December.
2003	⚫	Remaining bonds of "CHAINTECH I" completed the conversion in August.
2004	⚫	Sales of Tucheng plant in June.
	⚫	The operation headquarters was relocated to the Far East Industrial Zone in
		Jhonghe City in December.
2005	⚫	After the completion of two private placements of convertible bonds in May
		and June, a total of NT$265 million was funded, with paid-in capital reaching
		NT$2,056,136,860, and became the subsidiary of Walton Advanced
		Engineering, Inc.
	⚫	Changed its name to Walton Chaintech Corp on August 7.
	⚫	Mr. Yu, Hung-Chi, representative of Walton Advanced Engineering, Inc.,
		appointed the Chairman of CHAINTECH in September.
	⚫	Treasury stocks capital reduction of NT$16 million, with a paid-in capital of
		NT$2,040,136,860 in September.
2006	⚫	Capital reduction of NT$750,489,950 in January, with a paid-in capital of NT$1,289,646,910.
	⚫	Set up the EMS Business Development Department in January to increase the OEM business.
	⚫	Set up the Memory Business Development in January and officially entered the DRAM field.
2007	⚫	Passed ISO 14001 certification in June.
	⚫	Capital increase of NT$11.17 million for employees' executive stock option, with
		paid-in capital reaching NT$1,300,816,910.

⚫ Disposal of South Korean subsidiary in December.
2008 ⚫ Two private placements were listed on the Stock Exchange on August 5. ⚫ Capital reduction of NT$532,294,280, with paid-in capital reaching NT$768,522,630 on August 9.
2009 ⚫ Mr. Chang, Ta-Rung, representative of Walton Advanced Engineering, Inc., appointed the Chairman of CHAINTECH on January 6.
⚫ Jointly held 15% of Info-Tek Corporation’s equity with HannStar Board in July.
⚫ Mr. Fan, Po-Kang, representative of Walton Advanced Engineering, Inc., appointed the Chairman of CHAINTECH in August.
2010 ⚫ Cash capital increase of NT$207,500,000, with paid-in capital reaching NT$893,522,630 in March.
⚫ Acquired 100% equity of PSA through investment to expand the domestic channel market in April.
⚫ The operation headquarters was relocated to the 4F, No. 48-3, Minquan Road, Xindian District in April.
⚫ Sold out the entire shares of "Info-Tek Corporation" to GBM in July.

2011

⚫ Ended DRAM related businesses in April. ⚫ Capital reduction of NT$275,204,970 in November, with paid-in capital reaching NT$618,317,660.
⚫ Private placement of common shares totaling NT$385,280,000 in November, with paid-in capital reaching NT$1,178,317,660.
⚫ Yeland Investment obtained 35.64% of the Company's equity through private placement in November, and became a major shareholder of CHAINTECH.
⚫ Sold out all equity of subsidiary PSA in November.
2012 ⚫ Mr. Lu, Li-Cheng, representative of Yeland Investment, appointed the Chairman of CHAINTECH on January 18.
⚫ Signed strategic alliance cooperation agreement with Shenzhen Colorful Group Limited in March, establishing strategic partnership incorporating production, sales, and research, for joint marketing of main board, display card, and digital multi-media products in March.
⚫ Capital reduction of NT$242,615,600 in August, with paid-in capital reaching NT$935,702,060.
⚫ Established Jinghong Digital R&D Service Co., Ltd. in Shenzhen in October.

2013

⚫ Changed its name to Chaintech Technology Corporation on January 18.
⚫ The operation headquarters was relocated to 3F, No. 48-3, Minquan Road, Xindian District in January.
⚫ The Investment Review Commission approved Colorful Group’s investment in Zhongjie Properties, directly holding 10% equity of CHAINTECH.
⚫ Established the Wise Providence Limited overseas company in May.
⚫ Mr. Kao, Shu-Jung, representative of Yicheng International, appointed the Chairman of CHAINTECH on June 21.
⚫ Earnings turned capital increase of NT$9,357,030 in September, with paid-in capital reaching NT$945,059,090.

2014 ⚫ The Investment Review Commission re-approved Colorful Group to invest in Yicheng International in March, directly holding up to 46.2% of the equity of CHAINTECH. In July, CHAINTECH officially varied to China Mainland invested enterprise.
⚫ Earnings turned capital increase of NT$147,129,220 in September, with paidin capital reaching NT$1,092,488,310.
2015 ⚫ Issuance of common shares by private placement in 2011 and became listed for transactions on June 10.
⚫ The status of Zhongjie Properties as a major shareholder was revoked on October 2.
2016 ⚫ After the re-election of directors and supervisors, two independent directors were elected in addition to implementing corporate governance in June.
2018 ⚫ Capital reduction of NT$77,500,000 on May 3, the base date for the capital reduction of treasury stock, with paid-in capital reaching NT$1,014,988,310.
⚫ Established the Application Technology Development Department in May. ⚫ Invested in B2B cloud service company CloudeMile Co. with the main business of in-depth learning and big data analysis in September.
2019 ⚫ Acquired 51% of Siteng Heli (Tianjin) Technology Co.’s equity through the subsidiary Jinghong Investment in March.
⚫ Closed the Wise Providence Limited overseas company in April. ⚫ Sold Bahamas Federal Shanghai Co., Ltd. and Dongguan Kede plant in August.
2020 ⚫ Invested in uSenlight Corporation in March for the 5G product layout.

Chapter 3 Corporate Governance Report

I. Organization

(I) Organizational Structure

==> picture [663 x 274] intentionally omitted <==

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

Shareholders' Meeting
Board of Directors
Remuneration
Auditing Office Committee
Chairman of the Board
General Manager
Financial Marketing Application Material Research and Overseas
Division Division Development Division Development subsidiaries
Division Division
----- End of picture text -----

(II) Businesses of Major Departments

Department	Responsible Business
Auditing Office	Assist the Board of Directors and the Manager in checking and reviewing the deficiency of the internal control system and measuring operation effect and efficiency, offering timely improvement suggestions to support the Company in reaching the goal of the internal control system, and ensure sustainable and effective implementation of internal control system that is to be used as the basis for perfectingthe internal control system.
Financial Division	1. Responsible for the mid-to-long-term capital planning and short-term funding scheduling of the Company. 2. Preparing and promoting the planning of operations concerning stock affairs, capital, and credit auditing. 3. Performing budget aggregation and preparation, preparing operational financial statements concerning accounting, tax processing, and cost settlement. 4. Managing and planning the Company's general and common affairs including procurement and management. 5. Establishing educational training system and following up on the implementation effectiveness of each unit. 6. Making and implementing human resource planning, recruitment, appointment, training, and development. 7. Establishing and implementing a personnel management system. 8. Undertaking the formulation of information-related business procedures and systems. 9. Establishing mechanisms related to safety control and firewall. 10. Preparing, reviewing and managing contracts, and handling matters involving litigation and mediation cases, collection of decrees, protection of intellectual propertyand operation secrets, and collection of bad debts.
Marketing Division	1. Planning and promoting various public relations advertising and marketing activities to enhance the image and reputation of the Company and its products. 2. Providing various marketing tools and formulating sales and marketing strategies to assist the business units in selling. 3. Responsible for sales and business expansion of the products. 4. Responsible for control and management related matters like handling of orders, arranging shipping, import and export declarations, and cargo insurance. 5. Responsible for matters related to customer service, DOA, RMA, and technical support.

Application Development Division	1. Responsible for the AI server cluster management and module development, and the development for plug-in tools software/hardware solution and business promotion. 2. R&D for leading-edgeindustry application.
Material Division	1. Responsible for the procurement and return of all raw materials, personal or production equipment as well as the disposal of abnormalities and claim for compensation thereof. 2. Responsible for supplier management and evaluation as well as raw material price investigation and cost price review and analysis. 3. Keeping abreast of delivery schedules of materials and ensuring their sources to avoid production interruption and thus product delivery as a result of material shortage. 4. Responsible for order production scheduling and progress control management.
Research and Development Division	1. Responsible for the research and development of new products and the confirmation of primary samples. 2. Responsible for analysis and countermeasures of product defects for improvement and uplifting quality. 3. Responsible for document control operations to ensure the appropriateness and effectiveness of the documents. 4. Responsible for the matters related to new product verification, transfer of technology, and parts recognition. 5. Collecting industrial information and planning the specifications of products and services as reference for product development. 6. Providing customer service and resolving customers' problems arising in the use of CHAINTECH's products and transferring customer feedback to the relevant responsible units for handling and follow-up. 7. Promoting the implementation of quality assurance systems in each department of CHAINTECH. 8. Supervisingand implementingallqualitysystems.
Overseas subsidiaries	Responsible for managing the overseas subsidiaries.

II. Information of Directors, Supervisors, General Manager, Deputy General Manager, Assistant Manager, and Managers of Departments and Branches
(I) Information on Directors and Supervisors
1. Information on Directors and Supervisors

							As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands	As of April 18, 2021 Unit: NT$thousands
Title	Nationality or Registration Place	Name	Gender	Date of Election	Term	Date First Election	Shares Held Upon Election		Number of Shares Currently Held		Shares Held by Spouse and Underage Children		Shares Held in the Name of Other Persons		Main Education and Experience	Current Positions in CHAINTECH and Other Companies	Any Executives, Directors, or Supervisors who are spouses or relatives within the Second Degree of Kinship:			Remarks
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Title	Name	Relations
Chairman of the Board	The Republic of China	Yiland International Ltd. Representative: Kao, Shu-Jung	M	2019.6.14	3	2012.1.18 2013.6.21	28,532,080 -	28.11 -	28,532,080 -	28.11 -	- -	- -	- -	- -	Department of Electronic Engineering, National Chin-Yi University of Technology, General Manager of AI-EN Thailand domestic businesses, Deputy General Manager of Beijing Kunru Computers, General Manager of Chih-Jung Information, Chief Representative of ELSA Technology Inc.	General Manager of CHAINTECH	-	-	-	Note 1
Director	The Republic of China	Yiland International Ltd. Representative: Lu, Li- Cheng	M	2019.6.14	3	2012.1.18 2012.1.18	28,532,080 -	28.11 -	28,532,080 -	28.11 -	- -	- -	- -	- -	Computer Research Institute of Bond University, General Manager of Albatron Technology Administrative Management Center, General Manager of LJ Optics, Chairman and General Manager of Chaintech Technology Corporation	Chun Electronics Co., Ltd., Independent Director of Walton Advanced Engineering, Inc., and the supervisor and legal representative of Fullerton.	-	-	-

Title	Nationality or Registration Place	Name	Gender	Date of Election	Term	Date First Election	Shares Held Upon Election	Shares Held Upon Election	Number of Shares Currently Held	Number of Shares Currently Held	Shares Held by Spouse and Underage Children	Shares Held by Spouse and Underage Children	Shares Held in the Name of Other Persons	Shares Held in the Name of Other Persons	Main Education and Experience	Current Positions in CHAINTECH and Other Companies	Any Executives, Directors, or Supervisors who are spouses or relatives within the Second Degree of Kinship:	Any Executives, Directors, or Supervisors who are spouses or relatives within the Second Degree of Kinship:	Any Executives, Directors, or Supervisors who are spouses or relatives within the Second Degree of Kinship:
Director	The Republic of China	Yiland International Ltd. Representative: Wang, Mu-Tien	M	2019.6.14	3	2012.1.18 2013.6.21	28,532,080 -	28.11 -	28,532,080 -	28.11 -	- -	- -	- -	- -	College of Law in Taiwan University, EMBA of the Chinese University of Hong Kong, Vice President of Credit Card Business Department of Ping An Bank, Assistant Manager of Credit Business Division of China CTBC Bank, General Manager of Credit Card Customer Service Department ofChinaMerchantsBank.	CEO, Shanghai Himalayas Financial Information Services Co., Ltd.	-	-	-
Independent Director	The Republic of China	Chen, Kuo-Chin	M	2019.6.14	3	2016.6.14	-	-	-	-	-	-	-	-	School of Computer Science, Tamkang University IBM Project Manager, HP Senior Deputy General Manager, Professional Consultant and Lecturer of Haoyu, Qunchuang, Yuyi, Chuangxin and Dun & Bradstreet	Professional Consultant and Lecturer of Timing international Group	-	-	-
Independent Director	The Republic of China	Tang, Han-Yu	M	2019.6.14	3	2016.6.14	-	-	-	-	-	-	-	-	MBA of Peking University, General Manager of Gigabyte China Region	Technical Consultant of VIA CPU PLATFORM INC.	-	-	-
Supervisor	The Republic of China	Chou, Chun-Tsun	M	2019.6.14	3	2012.1.18	30,000	0.03	30,000	0.03	-	-	-	-	NTUST EMBA Financial Research Institute Director, Audit Department, KPMG Partner, Shih-Huan Accounting Firm	Partner and Chief Auditor, Chia-Chia Co., Ltd.	-	-	-
Supervisor	The Republic of China	Hsu, Sheng-Chin	M	2019.6.14	3	2014.2.21	1,151,048	1.13	1,151,048	1.13	-	-	-	-	School of Computer Science, Tamkang University, IBM Project Manager, HP Senior Deputy General Manager, Professional Consultant and Lecturer of Haoyu, Qunchuang, Yuyi, Chuangxin and Dun & Bradstreet	Chairman of Win- Way Advance Technology Ltd.	-	-	-

Note 1: Where the Chairman and the general manager is the same person, explain the reason, rationality, necessity, and responding measures: (1) The Chairman is also the general manager of CHAINTECH, which allows the Board of Directors to grasp the operating status of the Company and delayer the management capacity to improve the efficiency and decision-making capacity. (2) To improve the independence of the Board of Directors, the Company actively trains proper candidates and estimates to increase the number of seats for Independent Directors upon the next re-election for realizing corporate governance. (3) Among the members of the Board of Directors, less than half of the Directors are also an employee or managerial personnel.

As of April 18, 2021

2. Major Shareholders of the Corporate Shareholders

	As of April 18,2021
Name of Corporate Shareholders	Major Shareholders of the Corporate Shareholders
Yiland International Ltd.	COLORFUL GROUP LIMITED (100%)

Note 1: Directors and supervisors who are corporate shareholders shall fill in the name of corporate shareholders.

Note 2: Fill in the names of major shareholders with top-10 ownership of the institutional shareholders and their individual holding percentage. If the major shareholders are a judicial person, please proceed to fill in more details in Table 2 below.

3. Major Shareholders as Judicial Person

3. Major Shareholders as Judicial Person	3. Major Shareholders as Judicial Person
As of April 18,2021
Name of Corporate Shareholders	Major Shareholders of the Corporate Shareholders
COLORFUL GROUP LIMITED	Wan Shan (100%)

Note 1: If major shareholders in the above Table 1 are a judicial person, the name of a judicial person shall be filled.
Note 2: Fill in the names of major shareholders with top-10 ownership of the institutional shareholders and their individual holding percentage.

Information on Independence of Directors and Supervisors

December 31, 2020

Conditions Name	Do the Directors have five or more years of work experience and theprofessionalqualifications below	Do the Directors have five or more years of work experience and theprofessionalqualifications below	Do the Directors have five or more years of work experience and theprofessionalqualifications below	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Compliant to the requirements of independence (Note 1)	Number of Other Taiwanese Public Companies Concurrently Served as an Independent director
	Serving in lecturer roles or above in public or private college institutions in one of the following departments: business administration, law, finance, accounting, or another discipline relevant to the Company's operations	Currently serving as a judge, prosecutor, lawyer, certified public accountant or other professional or technical staffs who have been certified by national examinations and licensed by the competent authorities	Work experience necessary for business administration, legal affairs, finance, accounting, or business sector of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Kao, Shu-Jung			✓			✓	✓			✓	✓		✓	✓		0
Lu, Li-Cheng			✓	✓		✓	✓	✓	✓	✓	✓	✓	✓	✓		1
Wang, Mu-Tien			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓		0
Tang, Han-Yu			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Chen, Kuo-Chin			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Hsu, Sheng-Chin			✓	✓	✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Chou, Chun-Tsun		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓		✓	✓	✓	0

Note 1: If the Directors or Supervisors have met any of the following criteria in the first two years after being elected and during their tenure:
Note 2: Directors or Supervisors, during the two years before being elected and during the term of office, meet any of the following situations, please tick [ ] the appropriate corresponding boxes.
(1) Is not employed by CHAINTECH or its affiliated companies.
(2) Not a director or supervisor of CHAINTECH or any of its affiliates (except for independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of CHAINTECH or is ranked in the top 10 in shareholdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the persons in the preceding three subparagraphs.
(5) Not a Director, Supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total outstanding shares of the Company or ranks among the top 5 corporate shareholders in the terms of share

volume held or is assigned according to the Item 1 or 2, Article 27 of the Company Act. (This does not apply in cases where the person is an Independent Director of the Company, its parent or subsidiary or a subsidiary of the same parent established in pursuant to the law or the laws and regulations of the local country).

(6) Not a director, supervisor or employee of a company controlled by the same person who has shares over half of CHAINTECH's director seats or voting rights (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(7) Not a director, supervisor, or employee of another company or institution who, or whose spouse, is a chairman, general manager, or person holding an equivalent position of CHAINTECH (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with CHAINTECH (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of CHAINTECH and concurrently serving as an independent director, as appointed in accordance with the Act or the laws and regulations of the local country, at CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, director, supervisor, managerial officer or spouse thereof that provides auditing service for CHAINTECH or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT$500,000 in the past two years. However, members of the special committee on remuneration, public acquisition review, or merger and acquisition who perform their functions and powers in accordance with the provisions of the Securities and Exchange Act or Business Mergers and Acquisitions Act and other relevant regulations shall not be subject to this provision.
(10) Not a spouse or a relative within the second degree of kinship with any director.
(11) None of the circumstances in the subparagraphs of Article 30 of the Company Act apply.
(12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

(II) Information on General Manager, Deputy General Manager, Assistant Managers, and Managers of Departments and Branches

							As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares	As of April 18,2021 Unit: Shares
Title	Nationality	Name	Gender	Date of Appointment	Number of Shares Held		Shares Held By Spouse and Minor Children		Shares Held in the Name of Other Persons		Main Education and Experience	Positions Currently Held in Other Companies	Managers who have spousal or second-degree family relationships within the Company			RemarksEnd of this section
					Number of shares	Shareholdi ng ratio	Number of shares	Shareholdi ng ratio	Number of shares	Shareholdi ng ratio			Title	Name	Relations
Acting General Manager	The Repub lic of China	Kao, Shu- Jung	M	July 31, 2013	-	-	-	-	-	-	Department of Electronic Engineering, National Chin-Yi University of Technology General Manager of AIEN Thailand PVT Co., Ltd. domestic businesses, Deputy General Manager of Beijing Kunru Computers, General Manager of Chih-Jung Information, Chief Representative of ELSA TechnologyInc	None	-	-	-	(Note 1)
Assistant Manager of Marketing and Planning Department	The Republic of China	Chou, Tzu- An	M	May 1, 2016	-	-	-	-	-	-	Department of Accountancy, National Cheng Kung University Master of Business Administration, National Taipei University Manager of KPMG, Underwriting Department of Yuanda Securities, Underwriting Department of Hua Nan Securities, Senior Manager of Capital Market Division of Jih Sun Securities	None	-	-	-	-
Financial/ Accounting Manager	The Republic of China	Lai, Yu-Nu	F	Sep. 7, 2005	-	-	-	-	-	-	Department of Business Administration, GLYJ Accountant of Haiji Shipping Forwarding Inc.	None	-	-	-	-

(III) Remuneration Paid During the Most Recent Fiscal Year to Directors, Supervisors, General Manager and Deputy General Manager 1. Remuneration to Directors and Independent Directors (names and remuneration thereof to be disclosed individually)

2020 Unit: NT$1,000/share

Title	Name	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Percentage of NIAT after summing up the four items of A, B, C, andD	Percentage of NIAT after summing up the four items of A, B, C, andD	Compensations Paid to Concurrent Employees	Compensations Paid to Concurrent Employees	Compensations Paid to Concurrent Employees	Compensations Paid to Concurrent Employees	Compensations Paid to Concurrent Employees	Compensations Paid to Concurrent Employees	Compensations Paid to Concurrent Employees	Compensations Paid to Concurrent Employees	Percentage of the total sums of A, B, C, D, E, F, and G on the netprofit	Percentage of the total sums of A, B, C, D, E, F, and G on the netprofit	Whether or not to have received remunerations from an invested company other than the Company’s subsidiary or parent company
		Compensations (A)		Severance Pay (B)		Directors' remuneration (C)		Allowances (D)				Salaries, bonuses and allowances (E)		Severance Pay (F)		Employee Remuneration (G)
		CHAINTECH	All companies listed in this financial report	CHAINTECH	All companies listed in this financial report	CHAINTECH	All companie listed in this financial report	s CHAINTECH	All companies listed in this financial report	CHAINTECH	All companies listed in this financial report	CHAINTECH	All companies listed in this financial report	CHAINTECH	All companies listed in this financial report	CHAINTECH		All companies listed in this financial report		CHAINTECH	All companies listed in this financial report
																Cash	Stock	Cash	Stock
Director and General Manager	Representative of Yiland International Ltd.: Kao,Shu-Jung	`－`	`－`	`－`	`－`	6,230	6,230	108	108	4.34	4.34	3,180	3,180	`－`	`－`	575	`－`	575	`－`	6.92	6.92	550
Director	Yiland International Ltd. Representative: Lu, Li-Cheng
Director	Representative of Yiland International Ltd.: Wang,Mu-Tien
Independent Director	Tang, Han-Yu	`－`	`－`	`－`	`－`	450	450	92	92	0.37	0.37	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	0.37	0.37	`－`
Independent Director	Chen, Kuo-Chin
1. Please describe the remuneration payment policy, system, standard, and structure of Independent Directors, and describe the connectivity with the amount of the remuneration paid according to factors such as duties, risks assumed, and time invested: For the remuneration of Independent Directors, except for referring to Directors' performance evaluation results, the Company also refer to Article 16-1 of CHAINTECH's Articles of Association, where the Board of Directors are authorized to determine the remuneration of Directors and Supervisors according to the level of participation with CHAINTECH's operations and the value of their contribution, with reference to the standard within the industry. 2. Except for information disclosed above,remunerationpaid for services rendered byDirectors of the Companyto all companies in the financial report(e.g.,servingas a non-employee consultant)in the most recent fiscalyear: None.

Table of range of remuneration

Table of range of remuneration	Table of range of remuneration	Table of range of remuneration	Table of range of remuneration
Range of Remuneration Paid to Each Director of CHAINTECH				Name of Directors
				Total of the four items(A+B+C+D)						Total of the seven items(A+B+C+D+E+F+G)
				CHAINTECH				All companies listed in this financial reportI		CHAINTECH				All companies listed in this financial report J
Less than NT$ 1,000,000				Lu, Li-Cheng, Wang, Mu-Tien, Tang, Han- Yu, Chen,Kuo-Chin				Same as left		Lu, Li-Cheng, Wang, Mu-Tien, Tang, Han-Yu, Chen,Kuo-Chin				Same as left
NT$1,000,000(inclusive)to NT$2,000,000
NT$2,000,000(inclusive)to NT$3,500,000
NT$3,500,000(inclusive)to NT$5,000,000				Kao, Shu-Jung				Same asleft		Kao, Shu-Jung				Same asleft
NT$5,000,000 (inclusive) to NT$10,000,000
NT$10,000,000 (inclusive) to NT$15,000,000
NT$15,000,000 (inclusive) to NT$30,000,000
NT$30,000,000 (inclusive) to NT$50,000,000
NT$50,000,000 (inclusive) to NT$100,000,000
OverNT$100,000,000
Total				5				5		5				5
	2. Supervisors' remuneration (disclose the name and remuneration individually) 2020 Unit: NT$1,000/share
	Title	Name	Supervisors' remuneration									Percentage of the three items A, B, C to net income after taxes			Whether or not to have received remuneration~~s~~ from an invested company other than the Company’s subsidiary or parent company
			Compensations (A)			Compensation (B)			Allowances (C)
			CHAINTECH		All companies listed in this financial report	CHAINTECH	All companies listed in this financial report		CHAINTECH		All companies listed in this financial report	CHAINTECH	All companies listed in this financial report
	Supervisor	Chou, Chun-Tsun	`－`		`－`	450	450		72		72	0.36	0.36		`－`
	Supervisor	Hsu, Sheng- Chin

Table of range of remuneration

Table of range of remuneration
Range of Remuneration Paid to Each Supervisor of CHAINTECH	Name of Supervisor
	Total of the three items(A B C)
	CHAINTECH	All companies listed in this financial report D
Less than NT$ 1,000,000	Hsu,Sheng-Chin,Chou,Chun-Tsun	Same as left
NT$1,000,000(inclusive)to NT$2,000,000
NT$2,000,000(inclusive)to NT$3,500,000
NT$3,500,000(inclusive)to NT$5,000,000
NT$5,000,000(inclusive)to NT$10,000,000
NT$10,000,000(inclusive)to NT$15,000,000
NT$15,000,000(inclusive)to NT$30,000,000
NT$30,000,000(inclusive)to NT$50,000,000
NT$50,000,000(inclusive)to NT$100,000,000
Over NT$100,000,000
Total	2	2

3. Remuneration for the General Manager and Deputy General Manager (disclose the name and remuneration individually)

				2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share	2020 Unit: NT$1,000/share
Title	Name	Salary (A)		Severance Pay (B)		Bonuses and Allowances (C)		Employees' Remuneration (D)				Percentage of the total of four items A, B, C and D to net income after taxes(%)		Whether or not to have received remunerations from an invested company other than the Company’s subsidiary or parent company
		CHAINTECH	All companies listed in thi financial report	s CHAINTECH	All companie listed in this financial report	CHAINTECH	All companies listed in this financial report	CHAINTECH		All companies listed in this financial report		CHAINTECH	All companies listed in this financial report
								Cash	Stock	Cash	Stock
Director and General Manager	Kao, Shu- Jung	2,616	2,616	`－`	`－`	600	600	575	`－`	575	`－`	2.60	2.60	`－`

Table of range of remuneration

Table of range of remuneration
Range of Remuneration Paid to Each General Manager and Deputy General Manager of CHAINTECH	Name of General Manager and DeputyGeneral Manager
	CHAINTECH	All companies listed in this financial report E
Less thanNT$1,000,000
NT$1,000,000 (inclusive)toNT$2,000,000
NT$2,000,000 (inclusive) to NT$3,500,000
NT$3,500,000 (inclusive) to NT$5,000,000	Kao, Shu-Jung	Same asleft
NT$5,000,000 (inclusive)toNT$10,000,000
NT$10,000,000 (inclusive) to NT$15,000,000
NT$15,000,000 (inclusive) to NT$30,000,000
NT$30,000,000 (inclusive)toNT$50,000,000
NT$50,000,000 (inclusive) to NT$100,000,000
OverNT$100,000,000
Total	1	1

4. Remuneration for the Five Senior Officers with the Highest Remuneration (disclose the name and remuneration individually)

2020 Unit: NT$1,000/share

Title	Name	Salary (A)	Salary (A)	Severance Pay (B)	Severance Pay (B)	Bonuses and Allowances (C)	Bonuses and Allowances (C)	Employees' Remuneration (D)	Employees' Remuneration (D)	Employees' Remuneration (D)	Employees' Remuneration (D)	Percentage of the total of four items A, B, C and D to net income after taxes (%)	Percentage of the total of four items A, B, C and D to net income after taxes (%)	Whether or not to have received remunerations from an invested company other than the Company’s subsidiary or parent company
		CHAINTECH	All companies listed in this financial report	CHAINTECH	All companies listed in this financial report	CHAINTECH	All companies listed in this financial report	CHAINTECH		All companies listed in this financial report		CHAINTECH	All companies listed in this financial report
								Cash	Stock	Cash	Stock
Director and General Manager	Kao, Shu- Jung	4,912	4,912	110	110	1,082	1,082	1,045	`－`	1,045	`－`	4.90	4.90	`－`
Assistant Manager of Marketing and Planning	Chou, Tzu-An
Financial/Accounting Manager	Lai, Yu-Nu

4. Names of Managers and for Distribution of Employees Remunerations and Distribution Status

	December 31,2020	December 31,2020	December 31,2020	December 31,2020	December 31,2020	December 31,2020
	Title	Name	Stock	Cash	Total	Ratio of total amount tonetincome (%)
Manager	Director and General Manager	Kao, Shu- Jung	-	1,045	1,045	0.72
	Assistant Manager of Marketing and Planning	Chou, Tzu- An
	Financial/Accounting Manager	Lai, Yu-Nu

(IV) Compare and analyze the total remunerations paid to each of CHAINTECH's Directors, Supervisors, General Managers, and Deputy General Managers in the 2 most recent years by all companies listed in this Company's individual and consolidated financial statements as a percentage of NIAT listed in the individual financial report and describe the policies, standards, and packages for payment of and the procedures for determining of such compensations and its linkage to business performance and future risk exposure.
Analysis of total remuneration of Directors, Supervisors, General Manager and Deputy General Manager as a percentage of NIAT:

General Manager as	apercentage of NIAT:	apercentage of NIAT:	apercentage of NIAT:	apercentage of NIAT:
Items Title	Ratio of total remunerations to net profit (loss) after taxes
	2020		2019
	CHAINTECH	All companies in the consolidated financial statements	CHAINTECH	All companies in the consolidated financial statements
Directors (including independent directors)	7.29	7.29	3.96	3.96
Supervisor	0.36	0.36	0.39	0.39
General Managers and Deputy General Manager	2.60	2.60	3.54	3.54

Description of policies, standards, and packages for payment of remuneration of CHAINTECH, as well as procedures for determining remuneration, and its linkage to business performance and future risk exposure relevance:
(1) The remuneration of CHAINTECH's Directors and Supervisors comprise of salaries, remuneration, and allowances:

Salaries: All CHAINTECH's Directors and Supervisors do not get paid salaries.

Remuneration: According to Article 19 of CHAINTECH's Articles of Association, where the Company has any profit for the year, the Board of Directors shall pass the

resolution to allocate no more than 6% of the profit as the remuneration of Directors and Supervisors; however, where CHAINTECH still has accumulated losses, the amount of loss shall be preserved, and the allocation shall be made according to the percentage in the previous paragraph.

Allowances: Primarily comprise of traffic allowance for Directors and Supervisors, which is determined according to the payment standards for listed companies or within the industry.
(2) The remuneration for managers shall comply with paragraph 2, Article 3 of CHAINTECH's Regulations Governing the Remuneration of Managers, and shall consider the value of their contributions to the Company's operations with reference to the domestic standards of counterparts. The salary will be adjusted according to CHAINTECH earnings status, price of goods and Company policies every year.
(3) Relevance of future risk: The remuneration standards, or structure and system of CHAINTECH to pay Directors, Supervisors, General Manager and Deputy General Managers are based on the evaluation according to CHAINTECH's Regulations Governing the Evaluation for Directors and Managers. Except for referring to the overall operating efficiency of the Company, the future operating risks and development trend of the industry, CHAINTECH also refers to the individual performance achievement and the contribution made to CHAINTECH's performance to provide reasonable compensation. Relevant performance audit and rationality of remuneration are reviewed by the Remuneration Committee and the Board of Directors, and they shall review the remuneration system at any time according to the actual operating status and relevant laws and regulations to pursue the balances between the sustainable operations and risk control of the Company.

III. Status of Corporate Governance

(I) Implementation of Board of Directors

1. The Board of Directors convened 6 meetings in the most recent year (A). The attendance of Directors and Supervisors is as follows:

Title	Name	Times of actual attendance (attendance as nonvoting delegate) (B)	Times of Attendance by Proxy	Actual attendance (attendance as nonvoting delegate) (%) [B/A]	Remarks
Chairman of the Board	Representative of Yiland International Ltd.: Kao, Shu-Jung	6	0	100%	Re-elected (required to attend 6 meetings) Re-election Date: June 21, 2013
Chairman of the Board	Representative of Yiland International Ltd.: Lu, Li-Cheng	5	1	83%	Re-elected (required to attend 6 meetings) Re-election Date: January 18, 2012
Director	Representative of Yiland International Ltd.: Wang, Mu- Tien	6	0	100%	Re-elected (required to attend 6 meetings) Re-election Date: June 21, 2013
Independent Director	Tang, Han-Yu	6	0	100%	Newly elected (required to attend 6 meeting) Re-election Date:

Independent Director					June 14, 2016
	Chen, Kuo-Chin	5	1	83%	Newly elected (required to attend 6 meeting) Re-election Date: June 14, 2016

2. Attendance of Independent Directors at each Board mMeeting

◎: Attendance in Person ☆ : Attendance by Proxy ＊: On Leave

2020	1/21	3/27	5/5	8/10	10/14	11/6
Tang, Han-Yu	`◎`	`◎`	`◎`	`◎`	`◎`	`◎`
Chen, Kuo-Chin	`☆`	`◎`	`◎`	`◎`	`◎`	`◎`

Other issues to be recorded:

I. If operation of the Board of Directors encounters one of the following circumstances, the date, session of the board meeting, content of the proposal, opinions of all Independent Directors, and the Company’s handling of the aforementioned opinions should be clarified:
(I) Matters referred to in Article 14 3 of the Securities and Exchange Act.

Board of Directors	Proposal Content	Independent Directors' Opinion	The Company's handling of the opinions of independent directors	Voting results
The 5th Meeting of the 14th Board of Directors 2020.1.21	Approved the proposal to change the CPAs.	None	None	Approved as proposed
	Approved the proposal of 2020 managers' remuneration.	None	None	Approved as proposed
	Approved the proposal of 2019 managers' year-end bonus and special leaves bonus.	None	None	Approved as proposed
	Approved the proposal for the investment in domestic opto-electronics industry	None	None	Approved as proposed
The 6th meeting of the 14th Board of Directors 2020.3.27	Approved the proposal for CHAINTECH's 2019 remuneration to Directors and Supervisors.	None	None	Approved as proposed
	Approved the proposal for CHAINTECH's 2019 remuneration to managers.	None	None	Approved as proposed
	Approved the proposal of CHAINTECH's "Evaluation of the Effectiveness of Internal Control Systems" and "Statement on Internal Control System" for 2019.	None	None	Approved as proposed
	Approved the proposal of CHAINTECH's "Evaluation of the Effectiveness of Internal Control Systems" and "Statement on Internal Control System" for 2018.	None	None	Approved as proposed
The 9th meeting	Approved the proposal of regular evaluation of independence of the CPAs.	None	None	Approved as

of the 14th Board of Directors 2020.11.6				proposed
	Approved the proposal on renewal of the due endorsements and guarantees to CHAINTECH's invested companies.	None	None	Approved as proposed

(II) Other than the matters mentioned above, other resolutions on which the Independent Directors have dissenting opinions with records or written announcements: None.

II. Recusal of directors from voting due to conflicts of interest: a total of two such occasions.

December 31, 2020

Date/Term	Name of Directors	Proposal Content	Reasons of recusal	Participation in Voting
January 21, 2020 The 5th Meeting of the 14th Board of Directors	Kao, Shu-Jung	Discussion on the proposal on 2020 managers' remuneration	Conflict of interests	Recusal from law and not participate in voting
	Kao, Shu-Jung	Discussion of the 2019 managers' year-end bonus and special leaves bonus	Conflict of interests	Recusal from law and not participate in voting
3/27/2020 The 6th meeting of the 14th Board of Directors	Kao, Shu- Jung/Lu, Li- Cheng/Wang, Mu-Tien/Tang, Han-Yu/Chen, Kuo-Chin	Discussion of the proposal for CHAINTECH's 2019 remuneration to Directors and Supervisors.	Conflict of interests	Recusal from law and not participate in voting regarding the personal remuneration
	Kao, Shu-Jung	Discussion of the proposal for CHAINTECH's 2019 remuneration to managers	Conflict of interests	Recusal from law and not participate in voting

III. Disclose the evaluation cycle and period, scope of evaluation, method, and content of

evaluation for the Board of Directors' self (or peer) evaluation Implementation of Board of Directors' Evaluation

Evaluation cycle	Period of evaluation	Scope of evaluation	Evaluation method	Content of evaluation
Once a year	From January 1, 2020 to December 31, 2020	Board of Directors, Individual Directors, and Functional Committee	Internal self-evaluation of the Board of Directors, self- evaluation of Directors and evaluation of functional committees	Please see the following explanation s for details

(I) The internal evaluation of annual performance in 2020 aimed to:
Performance audit for the Board of Directors: (1) the degree of participation in the Company's operations; (2) enhancement of decision-making quality of the Board of Directors; (3) the composition and structure of the Board of Directors; (4) the election and continuous education of Directors.; (5) internal control
Performance audit for the individual Directors: (1) mastery of the Company's objectives and tasks; (2) cognition of Directors’ duties.; (3) the degree of participation in the Company's operations; (4) internal relationship management and communication; (5)

professional and continuous education of directors; (6) internal control
Performance audit for functional committees: (1) the degree of participation in the Company's operations; (2) cognition of functional committees's duties; (3) enhancement of decision-making quality of the functional committees; (4) composition of the functional committees and the election of committee members; (5) internal control

(II) Evaluation results:

For the evaluation in 2020, the achieving rate for the measuring items for self-evaluation of members of functional committees and Board of Directors were over 90%, representing a healthy rating, and the results were reported to the Board of Directors of CHAINTECH on March 23, 2021.
IV. Goal of enhancing Board of Directors functions (such as establishing an audit committee and uplifting information transparency) and evaluation of its implementation in the current and most recent fiscal year:
(I) The Board of Directors approved the amendments to the Rules of Procedure for Board Meeting and the Regulations Governing the Evaluation of the Performance of the Board of Directors of CHAINTECH on March 27, 2020.
(II) The Board of Directors approved the amendments to the Rules of Procedure for Board Meeting and the Rules on the Scope of Duties of Independent Directors of CHAINTECH on November 6, 2020.
(III) CHAINTECH has purchased liability insurance for all Directors and Supervisors and has reported according to the requirements.
(IV) Proactively provide various training programs and encourage Directors and Supervisors to participate in all corporate governance programs to enhance the function of the Board of Directors.
V. Communications between the Independent Directors, the internal audit supervisor and the CPAs:
(I) The Independent Directors and internal audit supervisor of CHAINTECH regularly report to the Independent Directors at the regular Board meetings regarding the implementation of the Company and its subsidiaries' audit operations and follow-up, and fully communicate during the meeting. The auditors also regularly submit the results of the audit report and follow-up report to Independent Directors.
(II) Previous communications between the Independent Directors and the internal audit supervisor are summarized as below:

Date of the Board Meeting	Summary of the communication with the internal audit supervisor
March 27, 2020	Operation audit report for October to December in 2019
May 5, 2020	Operation audit report for January to March in 2020
August 10, 2020	Operation audit report for April to June in 2020
November 6, 2020	1. Operation audit report for July to September in 2020

Approved CHAINTECH's audit plan for 2020. March 23, 2021 Operation audit report for October to December in 2020

(III) Previous communication between Independent Directors and CPAs:

The CPA had communicated with independent directors and supervisors before the Board Meetings on March 27, 2020 and March 23, 2021 upon the following items:

Date of Communication Meeting	Proposal Content	Independent Directors' Opinion
March 27, 2020	The CPA explained and discussed the scope of audit, findings, other communication matters and independence in 2019.	Disclaimer of Opinion
March 23, 2021	The CPA explained and discussed the scope of audit, findings, other communication matters and independencein 2020.	Disclaimer of Opinion

Financial and accounting supervisor and audit supervisor also attended the meetings as

nonvoting delegates; if the independent directors and supervisors raised any questions thy have and obtained immediate response.

(IV) CHAINTECH's Independent Directors, internal audit supervisor, and CPAs maintain healthy communication.

(II) Operations of the Audit Committee or Supervisors' Participation in the Operations of the Board of Directors
Operations of the Audit Committee: CHAINTECH has yet to establish an Audit Committee, hence not applicable.
Supervisors’ participation in the operations of the Board of Directors:

6 Board Meetings were held in the most recent year (A); attendance was as the following:

Title	Name	Times of actual attendance as nonvoting delegate (B)	Actual rate of attendance as nonvoting delegate (%) [B/A]	Remarks
Supervisor	Chou, Chun-Tsun	6	100%	Re-elected (required to attend 6 meetings) Re-election Date: June21,2013
Supervisor	Hsu, Sheng-Chin	5	83%	Re-elected (required to attend 6 meetings) Re-election Date: February 21, 2014
Other issues to be recorded: I. Composition and responsibilities of the supervisors: (I) Communication of supervisors with employees and shareholders (e.g. communication channel and method): Supervisors may directly contact employees, shareholders or stakeholders for talks when necessary: (II) Communication between the Independent Director and the internal audit supervisor or CPAs (e.g. the items, methods and results of communication concerning the Company's finance and business): 1. The supervisors have no objection to the audit report submitted by the audit supervisor to supervisors in the following month after completion of audit items. 2. The CPAs, independent directors and supervisors conducted communication over the followingitems on March 27,2020 and March 23,2021 before the Board Meeting: Date of Communication Meeting Proposal Content Supervisors’ Opinion March 27, 2020 The CPA explained and discussed the scope of audit, findings, other communication matters and independence in 2019. Disclaimer of Opinion March 23, 2021 The CPA explained and discussed the scope of audit, findings, other communication matters and independence in 2020. Disclaimer of Opinion Financial and accounting supervisor and audit supervisor also attended the meetings as nonvotingdelegates;if the independent directors and supervisors raised any questions

thy have and obtained immediate response.

Discussion and exchange of opinions at the Board Meetings on a regular basis. II. If Supervisors who attend the Board Meetings as nonvoting delegate need to state opinions, they shall specify the date of the Board Meeting, the term, the content of the proposal, resolution of the meeting and the follow-up procedure of the Company toward the opinions: there has been no the above situation in the current year.

(III) Implementation of corporate governance and the Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
I. Has the Company formulated and disclosed its corporate governance practice principles in accordance with the "Corporate Governance Practice Principles for TWSE/TPEx Listed Companies"?	V		CHAINTECH has adopted the "Corporate Governance Practice Principles" to promote corporate governance at the Board Meeting since December 19, 2014, and has made disclosures on its Company website and MOPS.	None
II. Shareholding Structure & Shareholders' Rights (I) Does the Company establish an internal procedure for handling shareholder proposals, inquiries, disputes, and litigations? Are such matters handled according to the internal procedure? (II) Does the Company maintain a register of major shareholders with controlling power as well as a register of persons exercising ultimate control over those major shareholders? (III) Does the Company establish and enforce risk control and firewall systems with its affiliated businesses?	V V V V		(I) CHAINTECH has appointed a spokesperson and an acting spokesperson to handle related matters in accordance with regulations. Furthermore, CHAINTECH also provides a mailbox exclusive for handling shareholders' recommendations or disputes on CHAINTECH's website. In the event of any dispute, the Company shall entrust the matter to the lawyers of legal consultation of CHAINTECH. (II) CHAINTECH has set up a shareholder stock unit and a stock service agency that can keep abreast of the major shareholders of the Company and the ultimate controlling party of the major shareholders. (III) CHAINTECH and its affiliated enterprises are running independently, and CHAINTECH has formulated the Supervisory Methods for the Group to supervise the operation of subsidiaries, so as toimplement theriskcontrolandmanagementmechanism	None None None

Evaluation Items	State of Operations	State of Operations	State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
(IV) Does the Company stipulate internal rules that prohibit company insiders from trading securities using information not disclosed to the market?			over them. The Company also established effective risk management for the Management of Related Party Transaction. (IV) CHAINTECH has established the “Procedures for Prevention of Insider Trading” as internal regulations.	None
III. Composition and Responsibilities of the Board of Directors (I) Has the Board developed, and does it implement, a diversity policy for the composition of its members?	V		(I) CHAINTECH has established the "Corporate Governance Practice Principles" and "Election Procedures for the Directors and Supervisors" to stipulate the diversity of the composition of the Board. The fundamental conditions and diversity guidelines of professional knowledge have been formulated for CHAINTECH's business operations and development needs. The principle of appointment is based on the merits. CHAINTECH has 5 directors, including 1 employee (20%), 2 Independent Directors (40%) and 5 male Directors (100%). The re-election of 2 Independent Directors has not continued for over three sessions. The age of CHAINTECH's Directors is ranging from 54 to 59. CHAINTECH expects to add female Directors to its 15th Board of Directors in order to implement gender diversity. Backgrounds and competency of the Directors are described as the following:	None

Evaluation Items				State of	State of	Operations	Operations	Operations	Operations	Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No				Summary

(II) In addition to the Remuneration Committee and Audit Committee established according to law, is the Company willing to set up other functional committees? (III) Has the Company established standards to measure the performance of the Board, and does the Company implement such annually? Does it report the results of the	V	V	Name of Directors Gender Concurrent employee Business Leadership Industrial Knowledge Legal Knowledge Marketing Ability General Director: Kao, Shu-Jung Male V V V V General Director: Lu, Li-Cheng Male V V V General Director: Wang, Mu-Tien Male V V V Independent Director: Tang, Han-Yu Male V V V Independent Director: Chen, Kuo-Chin Male V (III) In addition to the Remuneration Committee set up in accordance with the law, CHAINTECH has elected two independent directors in the 2016 shareholders' meeting. Other functional committees are currently under planning. (III) CHAINTECH has adopted the "Regulations Governing the Evaluation of the Performance of the Board of Directors" on August 9, 2018. The scope of evaluation includes the overall operation of the Board, the performance of individual Directors, and the performance evaluation of functional committees'	Name of Directors	Gender	Concurrent employee	Business Leadership	Industrial Knowledge	Legal Knowledge	Marketing Ability	Not yet voluntarily established, currently under planning None
				General Director: Kao, Shu-Jung	Male	V	V	V		V
				General Director: Lu, Li-Cheng	Male		V	V		V
				General Director: Wang, Mu-Tien	Male		V		V	V
				Independent Director: Tang, Han-Yu	Male		V	V		V
				Independent Director: Chen, Kuo-Chin	Male		V

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
performance evaluation to the BOD and use them as a reference for each Director's remuneration and nomination of term renewal? (IV) Does the Company regularly implement assessments on the independence of CPA?	V		members. The evaluation period: From January 1, 2020 to December 31, 2020. CHAINTECH completed the overall evaluation of the Board of Directors for 2020 at the beginning of 2021, the evaluation results achieved over 90 points, representing a healthy rating. The results of the Company's 2020 Board of Directors' performance evaluation are as follows: 1. The Board of Directors had a total of 91 points for self- evaluation (out of 100 points). 2. The individual Directors had an average of 96 points for self- evaluation (out of 100 points). 3. The Remuneration Committee had an average of 95 points for self-evaluation (out of 100 points). 4. The results of the Board of Directors' performance evaluation have been reported to the Board of Directors on March 23, 2021. CHAINTECH will benefit from the evaluation in helping the Company and the Board of Directors to gain continual improvements and advances, and the evaluation may serve as the reference for nominating Directors in the future. (IV) CHAINTECH's Accounting Department assesses the competence and independence of CPAs once every year. The results of the evaluation were reported to the Board Meeting on November 6, 2020, for deliberation. According to the evaluation of CHAINTECH Accounting Department, CPAs from Pricewaterhouse Coopers, Feng, Min-Chuan and Lin, Ya-Hui conform to the independence evaluation standard, so they are competent enoughto act as CPAsforCHAINTECH.And the CPA	None

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
			firm has issued an independent declaration. CHAINTECH's CPA independence assessment standards (see Note1 fordetails)
IV. Does the listed Company have an adequate number of qualified corporate governance personnel and assign a corporate governance executive to handle corporate governance matters (including but not limited to the provision of data to Directors and Supervisors for business execution, assisting Directors and Supervisors in legal compliance, matters related to Board Meeting and Shareholders' Meeting, preparation of minutes for Board Meeting and Shareholders' Meeting)?		V	CHAINTECH has established the “Standard Operating Procedures for Handling Directors' Requirements” the management division is responsible for the corporate governance-related matters, including the provision of data to Board of Directors and Independent Directors for business execution, assisting Directors and Supervisors in legal compliance, handling matters related to Board Meeting and Shareholders' Meeting according to law, handling Company registration and variation, and preparation of minutes for Board Meeting and Shareholders' Meeting. However, the Company has not assigned a corporate governance executive, but the establishment of such position is now under planning.	Not yet voluntarily established, currently under planning
V. Has the company established a channel to communicate with stakeholders (including but not limited to the shareholders, employees, customers and suppliers), and set up a special zone for stakeholders on the Company's website, and appropriately respond to the important corporate social responsibility issues that are essential to stakeholders?	V		CHAINTECH website has established a special zone (including employees, suppliers, customers, investors, community and complaint channels) for stakeholders and has a mailbox and contact number in place. Any stakeholders can exchange views with CHAINTECH at any time, but they are not allowed to go beyond the national laws and regulations as well as the Company internal control system regulations.	None
VI.Has the Company commissioned a	V		CHAINTECH has commissioned GrandFortune Securities tohandle	None

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
professional stock affair agency to manage shareholders' meetings and other relevant affairs?			matters related to shareholders' meetings.
VII. Information Disclosure (I) Does the Company establish a website to disclose information on financial operations and corporate governance? (II) Does the Company adopt other means of information disclosure (such as establishing an English language website, delegating a professional to collect and disclose Company information, implement a spokesperson system, and disclosing the process of legal person conferences on the Company website)? (III) Does the Company publish and declare its annual report within two months from the end of a fiscal year and publish and declare its financial reports for the first, second, and third quarters and the operatingstatus of each monthwithin the	V V V		(I) CHAINTECH has set up its Company website (www.chaintech.com.tw) to disclose relevant information at any time and publish and declare its Company profile and various financial and business information on the MOPS according to the requirements of the competent authority. (II) CHAINTECH has launched and maintained the Chinese and English websites. Apart from introducing the technical services and business related to the Company's products, the websites also disclose information on financial operations and corporate governance as well as the process of legal person conference regularly and irregularly. The websites have also designated the Company spokesperson and specially-assigned person to be in charge of the Company's material information disclosure and reveal it on Market Observation Post System on a timely basis. (III) CHAINTECH publishes and declares its annual report, its financial reports for the first, second, and third quarters and the operating status of each month within the prescribed time; for details, please see the content of declaration on the MOPS (website: https://mops.twse.com.tw/)	None None None

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
prescribed time.
VIII. Has the Company provided other important information that is helpful to understand the implementation of corporate governance (including but not limited to the rights and interests of employees, employee care, investor relations, supplier relations, stakeholder rights, continuous education of directors and supervisors, implementation of the risk management policies and risk measurement standards, customer policies, and purchase of liability insurance for the Directors and Supervisors)?	V		1. Employee rights and interests: CHAINTECH has established an Employee Welfare Committee and developed relevant regulations to regularly provide pensions to employees and ensure their rights and interests in accordance with the law. 2. Employee care: CHAINTECH has joined the group insurance, provides regular health checkups for employees, and organizes employee education and training to safeguard the physical and mental health of employees. 3. Investor relations: CHAINTECH has set up a special zone for stakeholders in accordance with the law to protect the basic rights and interests of the investors. 4. CHAINTECH has established the Procurement Department to manage the affairs related to suppliers and maintain a smooth complaint channel to protect the legitimate rights and interests of both parties. 5. Stakeholder rights: CHAINTECH has developed the rules and regulations to protect the rights of different stakeholders. CHAINTECH has also set up a special zone for different stakeholders on CHAINTECH's website and provided corresponding complaint channels to allow the stakeholders to feedback immediately to CHAINTECH in unequal treatment or right damage. 6. Implementation of Risk Management Policies and Risk Measurement Standards: CHAINTECH has formulated relevant operating guidelines and control measures that are implemented by specially-assigned persons. The auditpersonnel shall regularlyand irregularlyaudit and track the	None

Evaluation Items	Evaluation Items	Evaluation Items	State of Operations	State of Operations	State of Operations	State of Operations	State of Operations
			Yes	No	Summary
					implementation of the corrective actions. 7. The Company has purchased liability insurance for Directors and Supervisors, and the amount of insurance coverage, coverage and insurance premium and the like are reported to the Board of Directors on a regular basis. 8. Directors and supervisors' continuous education: CHAINTECH has irregularly notified directors and supervisors through letters to participate in professional knowledge education course hosted by the relevant units. (Please see Note2 fordetails)
IX. Preferential enhancement items and measures have to be proposed for what is improved and what is not for the corporate governance assessment resultsreleasedinthemostrecent yearby the corporate governance Centerof TaiwanStock Exchange.
What is improved		1. The Company discloses and formulates the appointment and removal, evaluation, and salary and remuneration verification methods ofauditors onthe Company website.
Preferential enhancement items		1. The Company will add female directors and establish an Audit Committee since 2022. 2. The Company will continue to evaluate and consider possible improvements for items without scores obtained. 3. The corporate governance issues will be fully disclosed on the Company website. CHAINTECH will also continue to strengthen corporate governance in the future and implement transparency and enhance shareholders' interests and rights.
	Note 1: Evaluation Standards for the Independence of CPAs
	Evaluation Items					2020 evaluation results (Y/N)	Whether in line with the independence (Y/N)
	1. The CPA has not engaged in any financial interest relations, whether directly or indirectly, with CHAINTECH.					Y	Y
	2. There are no financing or guarantee activities between CPAs and CHAINTECH or its Directors and Supervisors?					Y	Y
	3. The CPAs have not been influenced in auditing by consideration of the possibility of customer loss.					Y	Y

4. There are no close business relationship or potential employment relationship between the CPAs and CHAINTECH.	4. There are no close business relationship or potential employment relationship between the CPAs and CHAINTECH.	4. There are no close business relationship or potential employment relationship between the CPAs and CHAINTECH.	4. There are no close business relationship or potential employment relationship between the CPAs and CHAINTECH.	4. There are no close business relationship or potential employment relationship between the CPAs and CHAINTECH.	Y	Y
5. The audit service team members of CPAs have not acted as the Director, Supervisor, or manager of CHAINTECH or held a position of CHAINTECH that have a substantial influence upon audit cases currently or in the most recent two years.					Y	Y
6. The non-audit service provided by the accounting firm to CHAINTECH has not directly influenced the important audit items.					Y	Y
7. The CPAs have not engaged in publicizing any shares or other securities issued by CHAINTECH or worked as the agency thereof.					Y	Y
8. There are no CPAs who acted as the director, supervisor, manager or positions that have substantial influence over the audit cases of CHAINTECH within one year after relief.					Y	Y
9. The CPAs did not receive presents or gifts with the material value from CHAINTECH or its Directors, Supervisors, or managers.					Y	Y
10. No CPAs have been appointed for five consecutive years.					Y	Y
Note 2: Directors'continuous education in 2020:						Training Hours 3 hours 3 hours 3 hours 3 hours 3 hours 3 hours 3 hours
Title	Name	Date of participation	Organizer	Course Name		Training Hours
Chairman of the Board	Kao, Shu-Jung	April 14, 2020	Taiwan Corporate Governance Association	Corporate Operations and Crisis Management for Public Opinions and News		3 hours
Chairman of the Board	Kao, Shu-Jung	Nov. 16, 2020	Corporate Operation Association of the Republic of China	Operation Best Practices for the Board of Directors		3 hours
Director	Lu, Li- Cheng	Aug. 12, 2020	Taiwan Corporate Governance Association	Trends of Digital Technology and Artificial Intelligence and Risk Management		3 hours
Director	Lu, Li- Cheng	Nov. 16, 2020	Corporate Operation Association of the Republic of China	Operation Best Practices for the Board of Directors		3 hours
Director	Wang, Mu-Tien	March 20, 2020	Taiwan Corporate Governance Association	Corporate tax governance strategy and response under the trend of cross-national information exchange		3 hours
Director	Wang, Mu-Tien	April 14, 2020	Taiwan Corporate Governance Association	Corporate Operations and Crisis Management for Public Opinions and News		3 hours
Independent	Chen,	Nov. 24, 2020	Taiwan Corporate Governance	Corporate Governance 3.0 - Sustainable		3 hours

Director	Kuo-Chin		Association	Development Roadmap
Independent Director	Chen, Kuo-Chin	Dec. 22, 2020	Taiwan Corporate Governance Association	The Role of Independent Directors in Business Management and Corporate Governance	3 hours

(IV) The composition, duties and operations of the Remuneration Committee, if the Company has:

1. Information on the members of the Remuneration Committee

Category of identity (Note 1)	Conditions Name	Do the Directors have five or more years of work experience and the professional qualifications below	Do the Directors have five or more years of work experience and the professional qualifications below	Do the Directors have five or more years of work experience and the professional qualifications below	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Compliant to the requirements of independence (Note 2)	Number of Other Taiwanese Public Companies Concurrently Served as an Independent director	Remarks (Note 3)
		Serving in lecturer roles or above in public or private college institutions in one of the following departments: business administration, law, finance, accounting, or another discipline relevant to the company's operations	Currently serving as a judge, prosecutor, lawyer, certified public accountant or other professional or technical staffs who have been certified by national examinations and licensed by the competent authorities	Work experience necessary for business administrati on, legal affairs, finance, accounting, or business sector of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	Tang, Han- Yu			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Independent Director	Chen, Kuo- Chin			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Others	Ke, Cong- Yuan			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	1	Note 3
Others	Yang, Hsin- Ying			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	1	Note 4

Note 1: The identity to be filled in is selected from Director, Independent Director or others.

Note 2: For any committee member who fulfills the relevant condition(s) 2 years before being elected or during the term of office, please tick "" in the field below the corresponding condition(s). ✓
(1) Is not employed by CHAINTECH or its affiliated companies.
(2) Not a director or supervisor of CHAINTECH or any of its affiliates (except for independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of CHAINTECH or is ranked in the top 10 in shareholdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding 1 subparagraph, or of any of the persons in the preceding three subparagraphs.

(5) Not a director, supervisor, or employee of an institutional shareholder that directly holds 5%or more of the total number of issued shares of CHAINTECH, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of CHAINTECH under Paragraph 1 or 2, Article 27 of the Company Act (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(6) Not a director, supervisor or employee of a company controlled by the same person who has shares over half of CHAINTECH's director seats or voting rights (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(7) Not a director, supervisor, or employee of another company or institution who, or whose spouse, is a chairman, president, or person holding an equivalent position of CHAINTECH (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with CHAINTECH (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of CHAINTECH and concurrently serving as an independent director, as appointed in accordance with the Act or the laws and regulations of the local country, at CHAINTECH and its parent or subsidiary or a subsidiary of the same parent).
(9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, director, supervisor, managerial officer or spouse thereof that provides auditing service for CHAINTECH or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT$500,000 in the past two years. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

(10) Not falling into the conditions defined in Article 30 of the Company Law.

Note 3: Mr. Ke, Cong-Yuan resigned as a member of the Remuneration Committee on March 31, 2021.
Note 4: Ms. Yang, Hsin-Ying was appointed by the Board of Directors as the member of the Remuneration Committee on May 4, 2021.
Operational Status of the Remuneration Committee
- (1) CHAINTECH's Remuneration Committee consists of three members.
- (2) Term of office: June 14, 2019 to June 13, 2022. A total of two meetings (A) were conducted by the Remuneration Committee in the most recent fiscal year, where the qualifications and attendance of the members were as follows:

Title	Name	Times of Attendance in Person (B)	Times of Attendance by Proxy	Actual attendance rate (%) (B/A) (Note)	Remarks
Convener	Tang, Han-Yu	2	0	100%	Re-elected (required to attend 2 meetings) Re-election Date: June14,2016
Members	Chen, Kuo-Chin	1	1	50%	Newly elected (required to attend 2 meetings) Re-election Date: June14,2019
Members	Ke, Cong-Yuan	2	0	100%	Re-elected (required to attend 2 meetings) Date of resignation:March31,2021
Members	Yang, Hsin-Ying	0	0	-	Newly elected (required to attend 0 meeting) Re-election Date: May4,2021

Other issues to be recorded: I. In the event that the Board of Directors does not adopt or amend the proposals of the Remuneration Committee, please state the date and number of the Board meeting, the content of the proposals, resolution from the Board of Directors, and disposal of opinion from the Remuneration Committee (if the salaries and compensations approved by the Board were higher than the suggested levels from the Remuneration Committee, please state the differences and reasons): None. II. If a member has a dissenting or qualified opinion, if a member has a dissenting or qualified opinion, that a member has a record or reservation that is recorded or stated in a written statement, the date and session of the Remuneration Committee, the content of the proposal, all members' opinions, and the handling of the opinions of the member of the Remuneration Committee shall be stated. Date/Term Proposal Content Resolution The Company's actions in response to the opinions of the Remuneration Committee Dec. 21, 2020 The 5th term of the 1st meeting I. Passed the proposal of 2020 individual managers’ remuneration II. Passed the proposal of 2019 managers’ year-end bonus and special leaves bonus. Passed by all attending committee members Submitted to the Board and passed by all attending directors March 27, 2020 The 5th-term of the 2nd meeting I. Passed the proposal of continuous application of the measures related to remuneration of Directors, Supervisors and managers of CHAINTECH II. Passed the proposal of continuous application of Directors, Supervisors and managers' performance evaluation in conjunction with the remuneration policies, systems, standards, and structure. III. Passed the proposal of amendments to CHAINTECH's Organizational Procedures of the Remuneration Committee. IV. Passed the proposal for the Company's 2019 remuneration to Directors and Supervisors V. Passed the proposal of CHAINTECH's 2019remunerationtomanagers Passed by all attending committee members Proposals 1~2 Resolved to continue the application of the existing measures without amendments Proposals 3~5 Submitted to the Board and passed by all attending directors	Other issues to be recorded: I. In the event that the Board of Directors does not adopt or amend the proposals of the Remuneration Committee, please state the date and number of the Board meeting, the content of the proposals, resolution from the Board of Directors, and disposal of opinion from the Remuneration Committee (if the salaries and compensations approved by the Board were higher than the suggested levels from the Remuneration Committee, please state the differences and reasons): None. II. If a member has a dissenting or qualified opinion, if a member has a dissenting or qualified opinion, that a member has a record or reservation that is recorded or stated in a written statement, the date and session of the Remuneration Committee, the content of the proposal, all members' opinions, and the handling of the opinions of the member of the Remuneration Committee shall be stated. Date/Term Proposal Content Resolution The Company's actions in response to the opinions of the Remuneration Committee Dec. 21, 2020 The 5th term of the 1st meeting I. Passed the proposal of 2020 individual managers’ remuneration II. Passed the proposal of 2019 managers’ year-end bonus and special leaves bonus. Passed by all attending committee members Submitted to the Board and passed by all attending directors March 27, 2020 The 5th-term of the 2nd meeting I. Passed the proposal of continuous application of the measures related to remuneration of Directors, Supervisors and managers of CHAINTECH II. Passed the proposal of continuous application of Directors, Supervisors and managers' performance evaluation in conjunction with the remuneration policies, systems, standards, and structure. III. Passed the proposal of amendments to CHAINTECH's Organizational Procedures of the Remuneration Committee. IV. Passed the proposal for the Company's 2019 remuneration to Directors and Supervisors V. Passed the proposal of CHAINTECH's 2019remunerationtomanagers Passed by all attending committee members Proposals 1~2 Resolved to continue the application of the existing measures without amendments Proposals 3~5 Submitted to the Board and passed by all attending directors	Other issues to be recorded: I. In the event that the Board of Directors does not adopt or amend the proposals of the Remuneration Committee, please state the date and number of the Board meeting, the content of the proposals, resolution from the Board of Directors, and disposal of opinion from the Remuneration Committee (if the salaries and compensations approved by the Board were higher than the suggested levels from the Remuneration Committee, please state the differences and reasons): None. II. If a member has a dissenting or qualified opinion, if a member has a dissenting or qualified opinion, that a member has a record or reservation that is recorded or stated in a written statement, the date and session of the Remuneration Committee, the content of the proposal, all members' opinions, and the handling of the opinions of the member of the Remuneration Committee shall be stated. Date/Term Proposal Content Resolution The Company's actions in response to the opinions of the Remuneration Committee Dec. 21, 2020 The 5th term of the 1st meeting I. Passed the proposal of 2020 individual managers’ remuneration II. Passed the proposal of 2019 managers’ year-end bonus and special leaves bonus. Passed by all attending committee members Submitted to the Board and passed by all attending directors March 27, 2020 The 5th-term of the 2nd meeting I. Passed the proposal of continuous application of the measures related to remuneration of Directors, Supervisors and managers of CHAINTECH II. Passed the proposal of continuous application of Directors, Supervisors and managers' performance evaluation in conjunction with the remuneration policies, systems, standards, and structure. III. Passed the proposal of amendments to CHAINTECH's Organizational Procedures of the Remuneration Committee. IV. Passed the proposal for the Company's 2019 remuneration to Directors and Supervisors V. Passed the proposal of CHAINTECH's 2019remunerationtomanagers Passed by all attending committee members Proposals 1~2 Resolved to continue the application of the existing measures without amendments Proposals 3~5 Submitted to the Board and passed by all attending directors	Other issues to be recorded: I. In the event that the Board of Directors does not adopt or amend the proposals of the Remuneration Committee, please state the date and number of the Board meeting, the content of the proposals, resolution from the Board of Directors, and disposal of opinion from the Remuneration Committee (if the salaries and compensations approved by the Board were higher than the suggested levels from the Remuneration Committee, please state the differences and reasons): None. II. If a member has a dissenting or qualified opinion, if a member has a dissenting or qualified opinion, that a member has a record or reservation that is recorded or stated in a written statement, the date and session of the Remuneration Committee, the content of the proposal, all members' opinions, and the handling of the opinions of the member of the Remuneration Committee shall be stated. Date/Term Proposal Content Resolution The Company's actions in response to the opinions of the Remuneration Committee Dec. 21, 2020 The 5th term of the 1st meeting I. Passed the proposal of 2020 individual managers’ remuneration II. Passed the proposal of 2019 managers’ year-end bonus and special leaves bonus. Passed by all attending committee members Submitted to the Board and passed by all attending directors March 27, 2020 The 5th-term of the 2nd meeting I. Passed the proposal of continuous application of the measures related to remuneration of Directors, Supervisors and managers of CHAINTECH II. Passed the proposal of continuous application of Directors, Supervisors and managers' performance evaluation in conjunction with the remuneration policies, systems, standards, and structure. III. Passed the proposal of amendments to CHAINTECH's Organizational Procedures of the Remuneration Committee. IV. Passed the proposal for the Company's 2019 remuneration to Directors and Supervisors V. Passed the proposal of CHAINTECH's 2019remunerationtomanagers Passed by all attending committee members Proposals 1~2 Resolved to continue the application of the existing measures without amendments Proposals 3~5 Submitted to the Board and passed by all attending directors
Date/Term	Proposal Content	Resolution	The Company's actions in response to the opinions of the Remuneration Committee
Dec. 21, 2020 The 5th term of the 1st meeting	I. Passed the proposal of 2020 individual managers’ remuneration II. Passed the proposal of 2019 managers’ year-end bonus and special leaves bonus.	Passed by all attending committee members	Submitted to the Board and passed by all attending directors
March 27, 2020 The 5th-term of the 2nd meeting	I. Passed the proposal of continuous application of the measures related to remuneration of Directors, Supervisors and managers of CHAINTECH II. Passed the proposal of continuous application of Directors, Supervisors and managers' performance evaluation in conjunction with the remuneration policies, systems, standards, and structure. III. Passed the proposal of amendments to CHAINTECH's Organizational Procedures of the Remuneration Committee. IV. Passed the proposal for the Company's 2019 remuneration to Directors and Supervisors V. Passed the proposal of CHAINTECH's 2019remunerationtomanagers	Passed by all attending committee members	Proposals 1~2 Resolved to continue the application of the existing measures without amendments Proposals 3~5 Submitted to the Board and passed by all attending directors

Note:

(1) Where members of the Remuneration Committee resign before the end of the year, the Notes column shall be annotated with the date of resignation. Actual attendance rate (%) shall be calculated using the number of Remuneration Committee meetings convened and actual attendance during the term of service.

(2) Where an election may be held for filling the vacancies of committee member before the end of the fiscal year, please list out both the new and the discharged committee members, and specify if they are former members or newly elected, re-elected, and the date of the reelection. The actual attendance rate (%) shall be calculated based on the number of meetings held by the Remuneration Committee and the number of actual attendance during the term of service.

(V) Implementation of social responsibility and the deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPExListed Companies and reasons (the Company's system and measures for environmental protection, social engagement, social contribution, social services, social welfare, consumer rights, human rights, and other social responsibilities activities and the implementation thereof):

Evaluation Items	State of Operations	State of Operations	State of Operations	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx- Listed Companies and Reasons
	Yes	No	Summary
I. Has the company assessed the environmental, social, and corporate governance risks related to its operations based on the principle of materiality and established related risk management policies or strategies? (Note 3)	V		CHAINTECH has established "Corporate Social Responsibility Best Practice Principles" to implement corporate governance, promote the development of a sustainable environment, and maintain social welfare. CHAINTECH has also established its Regulations for the Prevention of Insider Trading, Procedures and Code of Conducts for Integrity Management, and Procedures for Self-Evaluation of the Internal Control System for the realization of its risk management policy.	None
II. Has the company established a dedicated (part- time) unit to promote CSR? Has the Board of Directors authorized senior management to handle such matter and to report their implementation to the Board of Directors?		V	The Management Department is a parttime unit that is responsible for promoting CSR activities, and it has no matters that need to be reported to the Board of Directors.	Currently under planning
III. Environmental Issues (I) Has the Company established a suitable environmental management system based on the characteristics of its industry?	V		(I) CHAINTECH has established the "Regulations Governing the Occupational and Environmental Safetyand Health Management" in accordance	None

Evaluation Items	State of Operations	State of Operations	State of Operations	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx- Listed Companies and Reasons
	Yes	No	Summary
(II) Is the company committed to improving the efficient use of resources and utilize renewable resources to reduce environmental impact? (III) Has the Company evaluated the current and future potential risks and opportunities for the Company arising from climate change and adopted corresponding measures according to aspects related to climate?	V V		with the Labor Safety and Health Act, and its subsidiary Siteng Heli (Tianjin) Technology Co. has obtained ISO9001 certification. (II) Due to the energy shortage and the carbonization of the earth in recent years, the Company continued to promote measures for energy conservation and carbon reduction, such as the implementation of garbage separation and paper box recycling. The toner cartridges used by the printing machine are returned to the original supplier for recycling. Encourage employees to bring their own cups and lunch boxes to reduce the use of disposable tableware. The Company also encourages employees to turn off the light when leaving and adopt paperless operations to minimize the impacts of the Company's operations on the natural environment. (III) As the carbonization of the earth has been worsening, CHAINTECH faces potential risks related to aspects of operation and environment, such as resource shortage and an increase in costs for raw materials, which would cause impacts on CHAINTECH's operations. CHAINTECHwill	None None

Evaluation Items	State of Operations	State of Operations	State of Operations	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx- Listed Companies and Reasons
	Yes	No	Summary
(IV) Has the Company calculated the greenhouse gas emissions, water consumption, and total weight of waste for the past two years and established the policies with regard to energy conservation and carbon reduction, greenhouse gas reduction, water consumption reduction, and other waste management?	V		develop green energy technology to create opportunities for CHAINTECH. (IV) The Company’s products are all produced by means of OEM in China Mainland. Taiwan is the operational headquarters, so although the headquarters has no problem of greenhouse gas emission, water consumption and waste, it attaches great importance to and cares for energy conservation and carbon reduction, and has been constantly promoting electronic measures and reduction in use of paper, water and electricity, aiming to conserve energy and reduce carbon emission.	None
IV. Social Issues (I) Has the Company set up management policy and procedures according to related laws and regulations and the International Human Rights Treaty?	V		(I) CHAINTECH complies with labor laws and regulations like labor standards, respects the internationally recognized principles of basic labor human rights, protects the legitimate rights and interests of employees, and contributes to pension. Meanwhile, it has also established the Employees Welfare Committee that is in charge of appropriating employee benefits and disposing ofvarious welfarematters.	None

Evaluation Items	State of Operations	State of Operations	State of Operations	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx- Listed Companies and Reasons
	Yes	No	Summary
(II) Has the Company established and implemented reasonable employee's welfare measures (including remuneration, leave, and other benefits) and reflect the operating performance or results in employee's remuneration? (III) Has the company provided employees with a safe and healthy working environment, and routinely implemented safety and health education for employees? (IV) Has the Company established an effective competency development career training program for employees? (V) Has the Company complied with relevant regulations and international standards regarding customers' health and safety, customer privacy, marketing and labeling forproducts and services,and established	V V V V		(II) CHAINTECH conveys its working rules to its employees through internal educational training, and it implements an employee audit system regardless of age and gender. Furthermore, according to the Articles of Association, where there is any profit of CHAINTECH for the year, CHAINTECH shall allocate no less than 0.1 of such surplus to employees and employees' remuneration. (III) CHAINTECH provides employees with safety and protection equipment for safety and health, regularly reviews the working environment, organizes health checkups, and implements various work safety and health education and training. (IV) CHAINTECH organizes education and training from time to time to provide employees with effective career ability. (V) CHAINTECH attaches great attention to customers' opinions. Except for maintaining communication with customers at any time, the Company also provides product information, contactwindow,and mailbox on itswebsite,and	None None None None

Evaluation Items	State of Operations	State of Operations	State of Operations	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx- Listed Companies and Reasons
	Yes	No	Summary
relevant policy and appeal procedures to protect consumers' rights? (VI) Has the Company established the management policies for suppliers and required suppliers to comply with relevant requirements in terms of environmental protection, occupational safety and hygiene, or laborers' human rights.	V		set up a special zone for stakeholders as the channel for customers to make inquiries and appeal. (VI) Before engaging in commercial dealings with the suppliers, CHAINTECH shall evaluate whether the suppliers had negative records of affecting environment and society in the past as the significant references for selecting suppliers, and shall stipulate that the suppliers shall provide qualified products made with environmental- friendly raw materials to duly fulfill its corporate social responsibility. If the Company's suppliers violate the corporate social responsibility policy and the impact upon environment and society is significant, the Company is entitled to terminate or rescind the contract at any time.	None
V. Does the Company prepare and publish reports such as its Corporate Social Responsibility (CSR) report to disclose non-financial information of the Company with reference to internationally recognized standards or guidelines for the preparation of reports? Has the company received assurance orcertificationofthe aforesaidreports		V	Even though CHAINTECH has not prepared its CSR report and has not obtained the assurance or guarantee from a third-party certifying department, CHAINTECH has established the "Corporate Social Responsibility Practice Principles" to fulfill its corporate social responsibility. CHAINTECH considers theinterests of its stakeholders and treatits	Has not prepared the CSR report

Evaluation Items	State of Operations	State of Operations	State of Operations
	Yes	No	Summary
from a third party accreditation institution?			customers and suppliers in fair and reasonable manners, and has complied with the regulations under the agreement on social and environmental responsibility.
VI. Where CHAINTECH has stipulated its own corporate social responsibility regulations according to the "Corporate Social Responsibility Practice Principles for TWSE/GTSM Listed Companies," please describe any differences between the prescribed practice principles and the actual activities taken by the Company: CHAINTECH has established the "Corporate Social Responsibility Practice Principles" and implemented the rules and procedures in accordance with the requirements. CHAINTECH will think over the preparation of the corporate social responsibility report or formulate the relevant regulations in the future according to actual needs.
VII. Other important information that facilitates the understanding of the implementation of corporate social responsibility: CHAINTECH has established relevant management regulations concerning employees' rights and interests and supplier relations, established Employee Welfare Committee to attach importance to the rights and interests of employees, and put in place communication channels with banks and other creditors, customers and suppliers; (1) Environmental Protection: As CHAINTECH has no plant in Taiwan, it focuses on environment protection in its offices. CHAINTECH actively promotes paper and packaging materials for reuse and waste sorting, so as to reduce the impact of environmental pollution, and strive to promote sustainable development philosophy and fulfill corporate social responsibility. (2) Community engagement, social contribution, social services, social welfare, etc.: Regular assistance for socially disadvantaged groups, fulfilment of social responsibilities, and participation in public welfare in the past two years: In 2015, NT150,000 was donated to the Social Welfare Fund of the Charity Society of the Financial Group and NT100,000 for the Youth Care Foundation. In 2016, NT$100,000 was donated to the establishment of the "Injury Rescue Center" of the National Marine University. In 2017, the Company donated NT$30,000 to Youth Development Society of Dream House every month, totaling NT$270,000 for the year, to spread love and educationto disadvantaged studentsinthe western regionand ultimatelyfostertheirown leadership.

Evaluation Items	State of Operations	State of Operations	State of Operations	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx- Listed Companies and Reasons
	Yes	No	Summary
In 2018, the Company continuously donated NT$30,000 every month to Youth Development Society of Dream House, totaling NT$90,000. In 2019, the Company continuously donated to Youth Development Society of Dream House, totaling NT$100,000. In 2020, CHAINTECH donated NT$100,000 to each of Puren Youth Care Foundation, House of Dreams, and Xingsha Welfare Foundation, totaling NT$300,000. (3) Consumer rights and interests: Through a comprehensive quality management system, stringent quality management is conducted in various processes to ensure the best services and products to customers. (4) Human Rights: CHAINTECH's labor-management relations are equal. The Company respects the work performance of every employee, so that there is no labor dispute, fully manifesting CHAINTECH's efforts on human rights issues. (5) Safety and Health: CHAINTECH provides a safe employment environment for employees, displaying its fulfillment of the responsibility for employees' life safety. Meanwhile, the Company regularly provides straining and work safety education for the employees to avoid occupational accidents,safeguard employees' life safetyand enhance their understandingof health and safetyrelated knowledge.

(VI) Implementation of Ethical Corporate Management and Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and the Reasons

Companies and theReasons

Evaluation Items	State of Operations			Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and theReasons
	Yes	No	Summary
I. Formulating policies and plans for Ethical Corporate Management (I) Has the Company established the ethical corporate management policies approved by the Board of Directors and specified in its rules and external documents the ethical corporate management policies and practices and the commitment of the Board of Directors and senior management to rigorous and thorough implementation of such policies? (II) Does the company establish a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activities within its business scope which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly, which shall at least include those specified in Paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"?	V V		(I) CHAINTECH has established the "Code of Ethical Conduct" and "Code of Conduct for Directors, Supervisors, and Managerial Officers." The Directors, Supervisors and Senior Executives are in compliance with the standards of the implementation of business. Relevant rules and regulations are disclosed on the MOPS and CHAINTECH's website. (II) CHAINTECH stipulates in its "Code of Ethical Conduct" not to request or accept any unjust profits or carry out any other unethical conducts that violate integrity, or are illegal, or breach of fiduciary When the Company signs a contract with others, the content of the contract will include the provisions that the counterparty shall be in compliance with the integrity management policy and that if the counterparty is involved in bad faith behaviors, the Company is entitled to terminate or rescind the contract. Moreover, the Company avoids carrying on transactions with the parties having records of dishonest conduct. The auditors of CHAINTECH shall periodicallyexamine CHAINTECH's	None None

Evaluation Items	State ofOperations	State ofOperations	State ofOperations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and theReasons
	Yes	No	Summary
(III) Has the Company provided any solutions to prevent the unethical conducts, stipulate the definite procedures, conduct guidelines, punishment for violation as well as appeals system and put into practice, and review and revise on a regular basis the aforesaid solutions?	V		compliance with the foregoing systems according to the annual audit plan and prepare audit reports and submit the same to the Board of Directors. (III) CHAINTECH has established and implemented the Code of Conduct for Directors, Supervisors and Managerial Officers and the Code of Ethical Conduct. For any unethical conduct or conducts violating integrity, CHAINTECH would impose punishments according to Rule 8.3 of its Rules for Personnel Management and provide employee's appeal channels to deal with any unreasonable treatments. CHAINTECH shall at all times monitor the development of relevant local and international regulations concerning ethical corporate management and encourage their Directors, Supervisors, managers, and employees to make suggestions, based on which, the adopted ethical corporate management policies will be reviewed and improved with a view to achieving better implementation of ethical management.	None
II. Implementing integrity operation (I) Has the Company assessed the integrity records of its business partners, and specified ethical business policy in contracts with them?	V		(I) CHAINTECH shall consider whether the counterparty has records of dishonest conduct before transactions and avoid transactions with them. When a contract is signedwith others,the contentwill include	None

Evaluation Items	State ofOperations	State ofOperations	State ofOperations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and theReasons
	Yes	No	Summary
(II) Does the Company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity, and regularly reports (at least once a year) to the Board of Directors the implementation of the ethical corporate management policies and prevention programs against unethical conduct? (III) Does the Company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement such policy properly? (IV) Has the Company established an effective accounting system and internal control systems to implement ethical corporate	V V	V	the terms of termination or rescission of the contract at any time upon the counterparty involving any dishonest conduct. (II) CHAINTECH's auditors are responsible for the formulation and implementation of ethical corporate management policies, but they are not urged to regularly report to the Board of Directors. (III) CHAINTECH stipulates policies for preventing the conflict of interests in its Code of Conduct for Directors, Supervisors and Managerial Officers and its Code of Ethical Conduct. If the Board of Directors has various proposals, the Director who has a conflict of interest shall abstain from voting. If the employees have a conflict of interest over business execution, supervisors shall be notified to abstain from answering. CHAINTECH has set up a whistle-blowing mailbox for its internal and external systems to provide unobstructed channels for report and appeal. (IV) CHAINTECH has established the accounting system and internal control system accordingto relevant laws and	Under planning None None

Evaluation Items	State ofOperations	State ofOperations	State ofOperations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and theReasons
	Yes	No	Summary
management, and has the internal audit unit prepared relevant audit plans according to the evaluation results for the risk of unethical conduct, and based on which, audited the compliance with the prevention programs for unethical conduct, or has the Company engaged CPAs for performing such audits? (V) Does the Company host routine internal and external training geared towards business integrity practices?	V		regulations. Internal auditors regularly review their compliance, perform project audits from time to time according to the requirements, and report the audit results to the Board of Directors. (V) Relevant personnel of CHAINTECH participates in educational training related to ethical management organized by the competent authority or external professional institutions according to the requirements, and CHAINTECH communicates on ethical management at departments' internal meetingfrom time to time	None
III. Operation of the whistleblowing system (I) Has the company established a specific whistleblowing and reward system, set up convenient whistleblowing channels and designated appropriate personnel? (II) Does the Company establish standard investigation operation and procedure for whistle-blowing matters, follow-up measures to be adopted after the investigation,and relevant confidential	V V		(I) CHAINTECH has established the "Report System and Measures" and set up the report mailbox for employees to report the breach of good faith to department supervisors, auditors or supervisors in any form. Furthermore, the Company has also set up a whistle-blowing mailbox on its website for relevant personnel to report on illegal conduct. (II) CHAINTECH has established standard operating procedures for investigation in accordance with Article 6 of the "Report System and Measures".In accordancewith	None None

Evaluation Items	State ofOperations	State ofOperations	State ofOperations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and theReasons
	Yes	No	Summary
mechanisms? (III) Has the Company established protection measures for whistle-blower from mishandling against them?	V		Article 8, the identity of the whistle-blowers and the contents of whistle-blowing will be kept strictly confidential. If any material violation is found in the investigation, CHAINTECH will immediately make a report and notify the independent directors and supervisors in writing. (III) According to rule 6.7 under the Code of Conduct for Employees, the identity of the whistle-blowers and the content of reported misconduct shall be kept confidential. The whistle-blowers shall not be subject to inappropriate measures out of whistle- blowing.	None
IV. Strengthening information disclosure (I) Has the Company disclosed the content and effectiveness of its ethical corporate management best practice principles on its website and the Market Observation Post System(MOPS)?	V		CHAINTECH has disclosed the "Ethical Corporate Management Regulations" on CHAINTECH's website "Corporate Governance Regulations" and the Market Observation Post System (MOPS).	None
V. Where the Company has stipulated its own ethical corporate management best practices according to the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies," please describe any differences between the prescribed best practices and the actual activities taken bythe company:no substantial difference.
VI. Other important information that facilitates the understanding of the implementation of ethical corporate management (such as review and amendment of the Company's Ethical Corporate Management Best Practice Principles): 1. CHAINTECH complies with the relevant laws and regulations of the Company Act and the Securities and Exchange Act, which are taken as the basis for integrity management. 2. CHAINTECH's "Proceeding Rules for Board Meetings" requires the director who or whose representative has interest relationship with the meetingmatter to be discussed shall abstain himself/herself from the discussion or votingand cannot exercise the votingright on behalf of

Evaluation Items	State ofOperations	State ofOperations	State ofOperations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and theReasons
	Yes	No	Summary
other director. 3. CHAINTECH's "Procedures for Preventing Insider Trading" stipulates that those who have been informed of the information that may have a material impact on CHAINTECH's stock price shall not disclose the information to other persons before its public disclosure and within 18 hours after its disclosure, with sufficient attention given to the prevention of insider trading. 4. In transactions with the manufacturers, the Company has always followed the principle of good faith and been committed to strengthening internal education.

(VII) If Corporate Governance codes and relevant laws and regulations are formulated, their inquiry methods shall be disclosed:
CHAINTECH has established the Articles of Association, Corporate Governance Practice Principles, Rules of Procedure for Shareholders' Meeting, Rules of Procedure for Shareholders' Meeting for Board Meeting, Handling Procedures for Acquisition or Disposal of Assets, Operation Procedures of Capital Loan to Others, Endorsement/ Guarantee Operating Procedures, Remuneration Committee Organization Charter, Ethical Corporate Management Regulations, and Standards for Practices of Corporate Social Responsibility. The rules and regulations are issued at CHAINTECH's website, and the inquiry path is as follows: Homepage > Special zone for Investors > Corporate Governance > Corporate Governance Guidelines (http://www.chaintech.com.tw/).
(VIII) Other material information that can enhance the understanding of the state of Corporate Governance at the Company:

Courses involving corporate governance participated in by CHAINTECH's managers (including general manager, deputy general managers, accountant officer, finance supervisor, internal audit supervisor) for professional training in the most recent year:

Title	Name	Date of Professional Training	Organizer	Course Name	Training Hours
General Manager	Kao, Shu- Jung	April 14, 2020	Taiwan Corporate Governance Association	Corporate Operations and Crisis Management for Public Opinions and News	3
General Manager	Kao, Shu- Jung	November 16, 2020	Corporate Operation Association of the Republic ofChina	Operation Best Practices for the Board of Directors	3
Financial/Accounting Manager	Lai, Yu- Nu	November 19~20, 2020	Accounting Research and Development Foundation, the Republic of China	Continuous Education for Accounting Supervisors (Including discussion on reward strategies and tools of employeesforenterprise)	12
Financial/Accounting Manager	Lai, Yu- Nu	October 28, 2020	Accounting Research and Development Foundation, the Republic of China	Corporate governance 3.0 blueprint and setting up corporate governance personnel to audit legal practices	6
Financial/Accounting Manager	Lai, Yu- Nu	October 26, 2020	Taiwan Stock Exchange	Corporate governance advocacymeeting	3
Audit Supervisor	Chang, Ya-Ling	October 28, 2020	Accounting Research and Development Foundation, the Republic of China	Corporate governance 3.0 blueprint and setting up corporate governance personnel to audit legal practices	6
Audit Supervisor	Chang, Ya-Ling	October 26, 2020	Taiwan Stock Exchange	Corporate governance advocacymeeting	3
Assistant Manager of Marketing and Planning	Chou, Tzu-An	September 3, 2020	Chen & Lin Attorneys-at- Law	Corporate governance under management right struggle	3
Assistant Manager of Marketing and Planning	Chou, Tzu-An	January 13, 2021	Taiwan Stock Exchange	Investor Relations Forum and ESG Trends Outlook	3

(IX) Implementation of Internal Control System

1. Internal Control Statement

Chaintech Technology Corporation
Statement on Internal Control System
Date: March 23, 2021
CHAINTECH hereby states the results of the self-evaluation of the internal control system for 2020 as follows:
I.
CHAINTECH acknowledges that the establishment, implementation and maintenance of the internal
control system are the responsibilities of the Board of Directors and the managers of the Company.
CHAINTECH has established such system. The objective of the internal control system lies in providing a
reasonable guarantee for achieving business benefits and efficiency (including profitability, performance,
and protection of assets and safety), ensuring the reliability, timeliness, transparency, and regulatory
compliance with relevant norms and laws and regulations.
II. The internal control system has inherent limitations. The internal control system is designed, no matter
how perfect, to provide reasonable guarantee on the achievement of the above three objectives; moreover,
the effectiveness of the internal control system is subject to changes in environment and situations.
However, CHAINTECH's internal control system contains self-monitoring mechanisms, and
CHAINTECH will take corrective actions upon identification of any deficiency thereof.
III. CHAINTECH has made judgments on the design of internal control systems and effectiveness of
implementation according to the judgment items in the "Handling Guidelines Governing the Establishment
of Internal Control Systems by Public Companies" (hereinafter referred to as the "Handling Guidelines").
The judgment items for internal control system adopted in the "Handling Guidelines" divide the internal
control system into five composition elements according to the process of management and control: (1)
Control Environment; (2) Risk Assessment; (3) Control Activities; (4) Information and Communication;
and (5) Monitoring Activities. Each composition element includes a number of items. For the
aforementioned items, please refer to the provisions of "Handling Guidelines."
IV. CHAINTECH has already adopted the aforementioned ICS assessment items to evaluate the effectiveness
of ICS design and implementation.
V. Based on the results of the determination in the preceding paragraph, CHAINTECH is of the opinion that,
as of December 31, 2020, the internal control system (including the supervision and management of
subsidiaries) of Note 2, including the design and implementation of the internal control system relating to
the effectiveness and efficiency of the operations, reliability, timeliness, and transparency of reporting, and
compliance with applicable laws and regulations, is effective and can reasonably assure the achievement
of the foregoing goals.
VI. This statement will become the main content of CHAINTECH's annual report and prospectus, and shall be
made public. Any falsehood, concealment, or other illegality in the content made public will entail legal
liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
VII. This statement was approved by the Board of Directors on March 23, 2021, and none of the five Directors
in attendance objected to it and all consented to the content expressed in this statement.
Chaintech Technology Corporation
Chairman and General Manager: Kao, Shu-Jung Signature

Note 1: In the design and implementation of the internal control system of publicly-listed companies, if there is any material deficiency during the year, it shall be added behind paragraph 4, to list and explain the major deficiency discovered in self-check as well as the improvement actions taken by the Company and improvement status before the balance sheet date.

Note 2: The date of the statement is the date of the "end of the fiscal year."

Any CPA commissioned to review the ICS shall disclose the CPA’s audit report: not applicable.
(X) Punishments against the Company and its internal personnel in accordance with the law in the most recent year and up to the date of the publication of the annual report, punishments imposed by the Company against its internal personnel for violating the provisions of the internal control system, major deficiency and improvement: None.
(XI) Significant resolutions made at Shareholders' Meeting and Board Meeting in the most recent fiscal year up to the publication date of this Annual Report:
Content and implementation of important resolutions of the shareholders' meeting in 2020
- (1) Passed CHAINTECH's 2019 Business Report and Financial Statements. Implementation status: Resolved as passed.
- (2) Passed the proposal of CHAINTECH's 2019 earnings distribution plan. Implementation status: The distribution of cash dividends amounted to NT$28,949,649 (a distribution of cash dividends of NT$0.30 per share) was distributed to the shareholders. The ex-dividend date was July 14, 2020 and the distribution was fully made on July 31, 2020.
- (3) Passed the proposal for amendment to CHAINTECH's Articles of Association. Implementation status: It was announced on CHAINTECH's website on June 18, 2020 and was handled in accordance with the amended regulations.
Important resolutions of the Board Meeting from January 1, 2020 to May 10, 2021
- (publication date)

Date	Meeting Type	Important Resolutions
Jan. 21, 2020	The 5th Meeting of the 14th Board of Directors	1. Approved the proposal of CHAINTECH's 2020 operation plan. 2. Approved the change in the CPA. 3. Approved the remuneration of individual remuneration for managers of CHAINTECH for 2020. 4. Approved the proposal for CHAINTECH's 2019 year-end bonus and special leave bonus distribution for managers. 5. Approved the proposal for the Board of Directors to authorize the Chairman in signing a letter of endorsement/guarantee for overseas (subsidiaries) companies. 6. Approved the proposal for the investment in domestic opto- electronics industry (Usenlight Corp.) 7. Approved the plan to improve CHAINTECH's ability regarding the in-house preparation for financial reports. 8. Approved the authorization of Chairman of the Board to interact with banks and securities and financial companies in the name of CHAINTECH.
March 27, 2020	The 6th	1. Approved CHAINTECH's 2019Business Report and Financial

	meeting of the 14th Board of Directors	Statements. 2. Approved the proposal for CHAINTECH's 2019 remuneration to Directors and Supervisors. 3. Approved the proposal for CHAINTECH's remuneration to managers for 2019. 4. Approved the proposal for the amendment to CHAINTECH's "Remuneration Committee Organization Charter." 5. Approved the proposal for the amendment to CHAINTECH's Rules of Procedure for Board Meeting. 6. Approved the proposal for the amendment to CHAINTECH's Articles of Association. 7. Approved the proposal of CHAINTECH's "Evaluation of the Effectiveness of Internal Control Systems" and "Statement on Internal Control System" for 2019. 8. Approved the ratification authorizing the Chairman in signing an external letter of endorsement/guarantee for the subsidiary SITONHOLY (Tianjin) on behalf of the Company. 9. Approved the matters concerning the convening date, time, place and content of CHAINTECH's 2020 regular Shareholders' Meeting.
May 5, 2020	The 7th session of the 14th Board of Directors	1. Approved the proposal for CHAINTECH's consolidated financial report for Q1 2020. 2. Approved the proposal forthe earning distribution for 2019.
Aug 10, 2020	The 8th session of the 14th Board of Directors	1. Approved CHAINTECH's 2020 consolidated financial statements. 2. Approved the proposal of amendment to CHAINTECH's Operational Procedures for Financial Statements Preparation Process.
Nov. 6, 2020	The 9th meeting of the 14th Board of Directors	1. Approved CHAINTECH's Q3 2020 consolidated financial statements. 2. Approved the proposal of amendment to CHAINTECH's Rules of Procedures for Board of Directors' Meetings. 3. Approved the amendment to the Rules on the Scope of Duties of Independent Directors of CHAINTECH. 4. Approved CHAINTECH's audit plan for 2021. 5. Passed the proposal on regularly evaluating the independence of CPAs. 6. Passed the proposal on renewal of the due endorsement for CHAINTECH'sre-invested businesses.
Dec. 25, 2020	The 10th session of the 14th Board of Directors	1. Passed the proposed execution of the “Investment Agreement - 3.01 Supplementary Agreement” by and between the subsidiary Jinghong and the original shareholder of Sitonholy (Tianjin). 2. Passed the proposal on revising the methods of appointment, removal, evaluation and remuneration of internal auditors of CHAINTECH.

		3. Passed the proposal on the amendment to CHAINTECH's "Report SystemandMeasures".
Jan. 27, 2021	The 11th session of the 14th Board of Directors	1. Passed the proposal on CHAINTECH's 2021 operation plan. 2. Approved the proposal for the amendment to CHAINTECH's "Remuneration Committee Organization Charter." 3. Passed the proposal on the amendment to the "Performance Evaluation Measures of the Board of Directors” of CHAINTECH. 4. Passed the proposal on CHAINTECH's individual salary and remuneration for managers in 2021. 5. Passed the proposal on CHAINTECH's year-end bonus and special leave bonusfor managersin 2020.
March 23, 2021	12th meeting of the 14th Board of Directors	1. Passed CHAINTECH's 2020 Business Report and Financial Statements. 2. Passed the proposal on CHAINTECH's 2020 remuneration to Directors and Supervisors. 3. Passed the proposal on CHAINTECH's remuneration to managers for 2020. 4. Passed the proposal on CHAINTECH's "Evaluation of the Effectiveness of Internal Control Systems" and "Statement on Internal Control System" for 2020. 5. Approved the matters concerning the convening date, time, place and content of CHAINTECH's 2021 regular shareholders' meeting.
May 4, 2021	13th meeting of the 14th Board of Directors	1. Passed the proposal on CHAINTECH's consolidated financial report for Q1 2021. 2. Passed the proposal on the earning distribution for 2020. 3. Passed the proposal on reviewing the policies, systems, standards and structures for the performance evaluation, salary and remuneration of the directors, supervisors and managers of the Company. 4. Passed the proposal on the recruitment of members of CHAINTECH's Salaryand Remuneration Committee.

(XII) In the most recent year and as of the publication date of this report, whether there are Directors or Supervisors having different opinions on the important resolutions passed by the Board of Directors with records or written announcements: None.

(XIII) Resignation or Dismissal of the Company's Key Individuals, Including the Chairman, General Manager, and Heads of Accounting, Finance, Internal Audit, Corporate Governance and R&D for the Most Recent Year and up to the Date of Publication of this Annual Report: None.

IV. Information on CPAs fees

(I) CPA fees

I) CPA fees
Accounting Firm	Name of CPA		Audit Period	Remarks
PwC Taiwan	Feng, Min-Chuan	Lin, Ya-Hui	January 01, 2020 ~ December 31, 2020	Internal adjustment of the firm

Note: Where this Company replaces the CPA or accounting firm for the year, the auditing periods of the former and successor CPA or firm shall be annotated separately. The reason for the replacement shall be provided in the Notes section accordingly.

Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
Professional Fees Range of the Amount		Audit Fees	Non-Audit Fees	Total
1	Less than NT$ 2,000,000		675	675
2	NT$2,000,000 (inclusive) to NT$4,000,000	3,380		3,380
3	NT$4,000,000 (inclusive) to NT$6,000,000
4	NT$6,000,000 (inclusive) to NT$8,000,000
5	NT$8,000,000 (inclusive) to NT$10,000,000
6	More than NT$10,000,000(inclusive)

Note: Please tick the range or fill in the amount.

(II) If the non-audit fees paid to CPAs, accounting firm where the CPAs work and its affiliates reaches over one-fourth of the audit fees paid to the CPA, the amount of audit and non-audit fees and the content of non-audit services shall be disclosed:

Unit: NT$ 1,000

Accounting Firm	Name of CPA	Audit Fees	Non-Audit Fees	Non-Audit Fees	Non-Audit Fees	Non-Audit Fees	Non-Audit Fees	Audit Period	Remarks
			System Design	Business registration	Human resource	Others	Sub-total
PwC Taiwan	Feng, Min- Chuan	3,380				675	675	2020.01.01 ~ 2020.12.31	Detailed explanation
	Lin, Ya-Hui


Explanation	Non-audit service items (others): Transfer valuation, information review service fee of group owner's documents and impairment report.

Note 1: Where this Company replaces the CPA or accounting firm, the audit periods of the former and successor CPA or firm shall be annotated separately with the reason for replacement. The audit and non-audit fees paid to the former and succeeding CPA or firm shall also be disclosed.

Note 2: Non-audit fees shall be listed separately according to the service item. If the "Others" column in the nonaudit fees reaches 25% of the total amount of non-audit fees, the service content of the service shall be listed in the Remark column.

(I) Where the CPA firm was replaced, and the audit fees in the fiscal year, when the replacement

was made, were less than that in the previous fiscal year before replacement, the amount of audit fees paid before/after replacement and reasons for paying this amount shall be disclosed: None.

(II) Where accounting fee paid for the year was more than 10% of the previous year, the sum, proportion, and cause of the reduction shall be disclosed: None.
V. Information on replacement of CPAs in the past two years and subsequent periods:

(I) Information on the previous CPA

Date of Replacement	Approved by Board of Directors on January 21, 2020	Approved by Board of Directors on January 21, 2020	Approved by Board of Directors on January 21, 2020	Approved by Board of Directors on January 21, 2020	Approved by Board of Directors on January 21, 2020
Replacement reasons and explanations	Internal job rotation adjustment of PricewaterhouseCoopers.
Whether the authorizing party terminates the authorization or the CPA rejects it	Related Parties Situation		Independent Auditors' Report		The authorizing party
	Voluntary Termination of the authorization		Not applicable		Not applicable
	Reject the (continuing) authorization		Not applicable		Not applicable
The opinions and reasons in the signed and issued audit reports which were not "no reservations" in the last two years		Not applicable
Whether there are different opinions with the issuer	Yes			Accounting principles or practices
				Disclosure of financial statements
				Scope orprocedure of auditing
				Others

	None	V
	Explanation	None
Other Disclosures (Disclosure according to subparagraph 1-4 to 1-7 of Article 10-6)		None

(II) About the successor CPA

About the successor CPA
Name of accountingfirm	PwC Taiwan
Name of CPA	CPA Feng, Min-Chuan and CPA Lin, Ya-Hui
Date of Appointment	January21, 2021
Subjects and outcomes of consultation on the accounting treatment of or application of accounting principles to specific transactions, or opinions that may be included on financial statements before the appointment of new CPAs	Not applicable
Written opinion of the successor CPAs on the matters relating to former CPAs	Not applicable

(III) The former CPAs reply to the above-mentioned matters in subparagraph 1 and 2-3 of

Article 10-5 of the Guidelines: Not applicable.

VI. If the Company's Chairman, General Manager, or Managers in Charge of Finance and Accounting Operations Held Positions in an Accounting Firm or Its Affiliates in the Most Recent Year, their names, positions, and period of working should be disclosed. The affiliated enterprises of the accounting firm of CPAs refer to those in which the CPAs of the accounting firm hold more than 50% shares or obtain more than half seats of directors, or the accounting firm of CPAs is company or institution of affiliated enterprises in released or printed materials to the outside: None.

VII. Status of Share Transfer and Changes in Equity Pledge by the Chairman, Supervisors, Managers, and Shareholders with Over 10% Shareholdings in the Most Recent Year until the Publication Date of the Annual Report
(I) Change in the equities of the Directors, Supervisors, Managers and substantial shareholders

Unit: Shares

				Unit: Shares	Unit: Shares
Title	Name	2020		(As of April 18, 2021)
		Change in Shares Held	Change in Shares Pledged	Change in Shares Held	Change in Shares Pledged
Director	Yiland International Ltd. Representative: Kao, Shu-Jung Representative: Lu, Li-Cheng Representative: Wang, Mu-Tien	- - - -	- - - -	- - - -	- - - -
Independent Director	Chen, Kuo-Chin	-	-	-	-
Independent Director	Tang, Han-Yu	-	-	-	-
Supervisor	Chou, Chun-Tsun	-	-	-	-
Supervisor	Hsu, Sheng-Chin	-	-	-	-
Acting General Manager	Kao, Shu-Jung	-	-	-	-
Assistant Manager of Marketing and Planning	Chou, Tzu-An	-	-	-	-
Manager of Finance/Accounting	Lai, Yu-Nu	-	-	-	-
Major Shareholder	Yiland International Ltd.	-	-	-	-

(II) Equity transfer information:

Equity transfer of CHAINTECH's Directors, Supervisors, managerial officers and major shareholders to related parties.

(III) Information on equity pledge:

There is no equity pledge by the Directors, Supervisors, managers and major shareholders of CHAINTECH.

VIII. Information on the related party relationship as defined in the Statements of Financial Accounting Standards No. 6 between the Company's top ten shareholders by shareholding ratio:

Unit: Shares; %

Name	SHARES HELD BY THE PERSON Number of Shares Held	SHARES HELD BY THE PERSON Number of Shares Held	Shares Held By Spouse and Minor Children	Shares Held By Spouse and Minor Children	Shares Held in the Name of Other Persons	Shares Held in the Name of Other Persons	The title or name and relations of the top 10 shareholders who are related parties, spouses, or relatives within the second degree of kinship. (Note 3)	The title or name and relations of the top 10 shareholders who are related parties, spouses, or relatives within the second degree of kinship. (Note 3)	Remarks
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Title or name	Relations
Yiland International Ltd.	28,532,080	28.11	`－`	`－`	`－`	`－`	`－`	`－`	Director /Major Shareholder
Yiland International Ltd. Representative: Zhang, Qi	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	-
Investment account of Yuanfu Investment (HK) Co., Ltd. under custody of CTBC	8,444,841	8.32	`－`	`－`	`－`	`－`	`－`	`－`	-
Treasury share account of Chaintech Technology Corporation	5,000,000	4.93
APAQ Technology Co., Ltd	4,710,000	4.64
Account of Core Pacific - Yamaichi (HK) Co., Ltd. under custody of HSBC	4,489,000	4.42	`－`	`－`	`－`	`－`	`－`	`－`	-
Yang, Shun-Hsing	2,055,000	2.02
Wu, Ming-Wei	1,979,000	1.95	`－`	`－`	`－`	`－`	`－`	`－`	-
PG Rental Corp.	1,885,000	1.86
Lin, Wei-Ling	1,515,468	1.49
Lin, Sheng	1,501,000	1.48	`－`	`－`	`－`	`－`	`－`	`－`	-
Borai Hong Kong Customer Account of Yuanta Securities under custody of Citibank	1,470,000	1.45

Note 1: All the top 10 shareholders shall be listed. For juristic person shareholders, their names and the name of their representatives shall be listed separately.

Note 2: Shareholding ratio is calculated separately based on the ratio of shares held in the name of the person, his/her spouse, minor children, or others.

Note 3: Relations between the aforementioned shareholders, including juristic person shareholders and natural person shareholders, shall be disclosed based on the financial reporting standards used by the issuer.

IX. Shares of Investment of Equity Method and the Consolidated Shareholdings Held by the Company, Its Directors, Supervisors, Managers, and Enterprises under Direct or Indirect Control of the Company

December 31, 2020

Unit: Shares; %

					Unit: Shares;%	Unit: Shares;%
Re-investment Businesses (Note 1)	Investments of CHAINTECH		Investments of Directors, Supervisors, Managers and directly or indirectly controlled businesses		Total Ownership
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio
Shenzhen Jinghong Digital R&D Service Co.,Ltd Sitonholy (Tianjin) Technology Co., Ltd. Beijing Sitonholy Technology Co., Ltd. (Note 3)	(Note 2) (Note 2) (Note 2)	100% 51% 100%	- - -	- - -	(Note 2) (Note 2) (Note 2)	100% 51% 100%

Note 1: Investment by using the equity method

Note 2: The investee company is a limited company with no share issued, so there is no number of shares held.

Note 3: The investee company is a 100% reinvestment of Sitonholy (Tianjin) Technology Co., Ltd.

Chapter 4 Funding Overview

I. Capital and Shares

(I) Sources of share capital:

Formation of share capital

Year Month	Issued Price	Authorized Share Capital	Authorized Share Capital	Paid-in Capital	Paid-in Capital	Remarks	Remarks	Remarks
		Number of shares	Amount	Number of shares	Amount	Sources of Share Capital	Capital from Non- Cash Assets	Others
1986.11	10	500,000	5,000,000	500,000	5,000,000	Incorporation of the Company	None	Note
1989.03	10	6,000,000	60,000,000	6,000,000	60,000,000	Cash Capital Increase of NT$55,000,000	None	Note
1989.12	10	12,000,000	120,000,000	12,000,000	120,000,000	Cash Capital Increase of NT$60,000,000	None	Note
1990.06	10	19,500,000	195,000,000	19,500,000	195,000,000	Cash Capital Increase of NT$75,000,000	None	Note
1994.05	10	19,500,000	195,000,000	11,700,000	117,000,000	Capital Reduction of NT$78,000,000	None	Note
1994.05	10	19,900,000	199,000,000	19,900,000	199,000,000	Cash Capital Increase of NT$82,000,000	None	Note
1995.07	10	50,000,000	500,000,000	32,000,000	320,000,000	Cash Capital Increase of NT$121,000,000	None	Note
1996.11	10	50,000,000	500,000,000	35,200,000	352,000,000	Capital Increased by Surplus of NT$32,000,000	None	Note
1997.05	10	50,000,000	500,000,000	42,860,000	428,600,000	Capital Increased by Surplus of NT$70,400,000 Capital Increased by Employee Bonus of NT$6,200,000	None	Note
1998.04	10	200,000,000	2,000,000,000	70,000,000	700,000,000	Capital Increased by Surplus of NT$85,720,000 Capital Increased by Employee Bonus of NT$6,897,000 Cash Capital Increase of NT$178,783,000	None	Note
1999.06	10	200,000,000	2,000,000,000	77,943,000	779,430,000	Capital Increased by Surplus of NT$42,000,000 Capital Increased by Capital Surplus of NT$35,000,000 Capital Increased by Employee Bonus of NT$2,430,000	None	Note
2000.06	10	200,000,000	2,000,000,000	95,019,900	950,199,000	Capital Increased by Surplus of NT$116,914,500 Capital Increased by Capital Surplus of NT$38,971,500 Capital Increased by Employee Bonus of NT$14,883,000	None	Note

2000.12	10	200,000,000	2,000,000,000	102,924,423	1,029,244,230	Capital Increased by Corporate Convertible Bonds of NT$79,045,230	None	February 13, 2001 (90) Business No. 09001037670
2001.06	10	200,000,000	2,000,000,000	117,187,775	1,171,877,750	Capital increase with surplus by NT$56,608,430 Capital Increased by Capital Surplus of NT$46,315,990 Capital Increased by Employee Bonus of NT$13,194,440 Capital Increased by Convertible Bonds of NT$26,514,660	None	May 23, 2001 (90) TWF (I) No. 132078
2002.05	10	200,000,000	2,000,000,000	135,133,069	1,351,330,690	Capital Increased by Surplus of NT$82,031,440 Capital Increased by Capital Surplus of NT$70,312,660 Capital Increased by Employee Bonus of NT$23,795,240 Capital Increased by Convertible Bonds of NT$3,313,600	None	May 16, 2002 (91) TWF (I) No. 126710
2003.10	10	200,000,000	2,000,000,000	135,197,020	1,351,970,200	Capital Increased by Convertible Bonds of NT$639,510	None	October 13, 2003 (92) Business No. 09201288850
2005.7	10	250,000,000	2,500,000,000	149,863,686	1,498,636,860	Capital Increased by Corporate Convertible Bonds under Private Placement of NT$146,666,660	None	July 8, 2005 (94) Business No. 09401126820
2005.8	10	250,000,000	2,500,000,000	205,613,686	2,056,136,860	Capital Increased by Convertible Bonds under Private Placement of NT$557,500,000	None	August 16, 2005 (94) Business No. 09401158030
2005.9	10	250,000,000	2,500,000,000	204,013,686	2,040,136,860	Writing Off Repurchased Treasury Stock of NT$16,000,000	None	September 26, 2005 (94) Business No. 09401190290
2006.2	10	250,000,000	2,500,000,000	128,964,691	1,289,646,910	Capital Reduction of NT$750,489,950	None	February 6, 2006 (95) S.Z. No. 09501018170
2007.1	10	250,000,000	2,500,000,000	129,813,191	1,298,131,910	Capital Increased by Employee Equity of NT$8,485,000	None	January 22, 2007 (96) S.Z. No. 09601012070
2007.8	10	250,000,000	2,500,000,000	130,078,691	1,300,786,910	Capital Increased by Employee Equity of NT$2,655,000	None	August 16, 2007 (96) S.Z. No. 09601197660
2007.10	10	250,000,000	2,500,000,000	130,081,691	1,300,816,910	Capital Increased by Employee Equity of NT$30,000	None	October 17, 2007 (96) S.Z. No. 09601253600
2008.9	10	250,000,000	2,500,000,000	76,852,263	768,522,630	Capital Reduction of NT$532,294,280	None	September 22, 2008 (97) S.Z. No. 09701239470
2010.3	10	250,000,000	2,500,000,000	89,352,263	893,522,630	Cash Capital Increase of NT$125,000,000	None	March 17, 2010 (99) S.Z. No. 09901050980
2011.11	10	250,000,000	2,500,000,000	117,831,766	1,178,317,660	Capital Reduction of NT$275,204,970 Cash Capital Increase under Private Placement of NT$560,000,000	None	November 24, 2011 (100) S.Z. No. 10001266040
2012.8	10	250,000,000	2,500,000,000	93,570,206	935,702,060	Capital Reduction of NT$242,615,600	None	August 14, 2012 (101) Business No. 10101165750

2013.9	10	250,000,000	2,500,000,000	94,505,909	945,059,090	Capital Increased by Surplus of NT$9,357,030	None	September 9, 2013 (102) Business No. 10201184650
2014.9	10	250,000,000	2,500,000,000	109,248,831	1,092,488,310	Capital Increased by Surplus of NT$147,429,220	None	September 23, 2014 (103) Business No. 10301199230
2018.5	10	250,000,000	2,500,000,000	101,498,831	1,014,988,310	Treasury Stock Capital Reduction of NT$77,500,000	None	May 23, 2018 (107) Business No. 10701052620

Note: It is not provided for no value of disclosure due to time.

April 18, 2021 (shares)

2. Type of Shares

				April 18,2021(shares)
Type of Shares	Authorized Share Capital			Remarks
	OutstandingShares	Unissued shares	Total
Common Share	101,498,831	148,501,169	250,000,000	CHAINTECH has repurchased 5,000,000 treasury shares, and has not transferred to its employees as of the date of printing the annual report.

(II) Shareholder Structure

As of April 18, 2021

						As of April	18,2021
Shareholder Structure Quantity	Government Agencies	Financial Institutions	Other Legal Persons	Individual	Foreign Institutions and Foreigners	Chinese Capital	Total
Number of Individuals	0	0	27	10,864	34	1	10,926
Number of shares	0	0	13,805,923	42,508,715	16,652,113	28,532,080	101,498,831
Shareholding Ratio (%)	0	0	13.60	41.88	16.41	28.11	100.00

Note: The first TPEx-listed company and emerging stock companies shall disclose their own shareholding ratio of Mainland investors. Mainland investor refers to the companies invested by the people, legal persons, groups, other institutions, or companies that are invested in the third region by people from China Mainland, as stipulated in Article 3 of the Regulations Governing the Investment and Licensing in Taiwan by the People from China Mainland.

(III) Distribution of Shares

1. Common Shares

As of April 18, 2021

(III) Distribution of Shares 1. Common Shares			As of April 18,2021
Shareholding Range	Number of Shareholders	Number of shares	Shareholding Ratio (%)
1 to 999	4,576	950,107	0.94
1,000 to 5,000	5,279	10,251,693	10.10
5,001 to 10,000	575	4,739,107	4.67
10,001 to 15,000	147	1,907,656	1.88
15,001 to 20,000	107	1,987,631	1.96
20,001 to 30,000	92	2,418,613	2.38
30,001 to 40,000	31	1,092,429	1.08
40,001 to 50,000	30	1,441,949	1.42
50,001 to 100,000	41	2,872,157	2.83
100,001 to 200,000	17	2,370,664	2.33
200,001 to 400,000	9	2,604,976	2.57
400,001 to 600,000	5	2,425,528	2.39
600,001 to 800,000	4	2,726,884	2.69
800,001 to 1,000,000	1	977,000	0.96
1,000,001 and more Create new ranges as needed	12	62,732,437	61.80
Total	10,926	101,498,831	100.00

2. Preferred Shares: Not applicable.

(IV) List of Major Shareholders

List of Major Shareholders	List of Major Shareholders	List of Major Shareholders
As of April 18,2021 Shareholding Name of major shareholders Number of shares Shareholding ratio Yeland International Development Ltd. 28,532,080 28.11%
Shareholding Name of major shareholders	Number of shares	Shareholding ratio
Yeland International Development Ltd.	28,532,080	28.11%

(V) Net worth, earnings, dividends, and market price-related information for the last two years up to the publication date of this annual report

Unit: thousand shares

						Unit: thousand shares
Items	Year			2019	2020	As of March 31, 2021 (Note 8)
Market price per share (Note 1)	Highest			39.20	33.20	39.60
	Lowest			25.70	22.90	26.10
	Average			30.38	26.77	29.40
Net value per share (Note 2)	Before distribution			16.95	17.87	18.70
	After distribution			16.95	17.87	`－`
Earnings per share	Weighted Average Shares			101,499	96,499	96,499
	Earnings per share (Note 3)		Before adjustment	1.06	1.51	0.51
			After adjustment	1.06	1.51	0.51
Dividends per share	Cash Dividends			0.30	0.50(Note 9)	`－`
	Stock Grants	Dividend for paid-in capital		`－`	`－`	`－`
		Earnings Grants		`－`	`－`	`－`
	Accumulated dividend not paid out(note 4)			`－`	`－`	`－`
Return on Investments	Price-to-earning ratio (Note5)			28.66	17.73(Note 9)	`－`
	Price-to-dividend ratio (Note6)			101.27	53.54(Note 9)	`－`
	Cash dividend yield (Note 7)			0.01	0.02(Note 9)	`－`

If the Company has contributed surplus or capital surplus to the capital increase, the market price and cash dividend adjustment retrospectively adjusted for the distribution of the number of shares shall be disclosed based on the number of shares released retrospectively.
Note 1: Disclose the annual maximum and minimum market value of the common stock. The annual average market value is calculated based on each year's transaction value and quantity.
Note 2: Fill in the shares based on the number of shares that have been issued by year-end and the distribution through resolution at the shareholders' meeting in the following year.
Note 3: If there is any retrospective adjustment required due to stock grants or capital reduction to offset losses, earnings per share before and after the adjustment shall be disclosed.
Note 4: If the conditions of equity securities issuance allow unpaid dividends to be accumulated to the subsequent

years in which there is profit, the Company shall disclose the accumulated unpaid dividends respectively up to that year.

Note 5: P/E Ratio = Average closing price for each share in the year/earnings per share
Note 6: P/D ratio = Average closing price per share of the year/Cash dividends per share
Note 7: Cash dividend yield = cash dividend per share/current year average per share closing price.
Note 8: The net value per share and earnings per share should be filled up to the quarter nearest to the date of the publication of this annual report to be audited by an accountant. The remaining column should be filled with the annual data up to the publication of this annual report.
Note 9: Earnings distribution proposal passed by the Board of Directors for 2020 has not been resolved by the Shareholders' Meeting.
(VI) Explanation of the Company's dividend policy, implementation, and the expected significant changes
1. Dividend policy

If CHAINTECH has a surplus in the general annual report, the surplus shall be made up for the previous losses, apart from allocating income taxes. And 10% of the balance shall be allocated as a statutory surplus reserve unless the statutory surplus reserve has reached the paid-in capital. After the statutory surplus reserve is retained or rotated in accordance with the rules and regulations by competent agencies, the undistributed earnings at the beginning of the period shall be combined and the Board of Directors shall formulate a specific proposal for distribution of earnings to be submitted to the Shareholders' Meeting for resolution, with consideration given to retaining partial earnings. For the current year, cash dividends shall not be less than 5%. However, if cash dividends are not paid below NT$0.1 per share, the dividend will be distributed in stock dividends.

The status of Shareholders' Meeting on approving the proposal for the distribution of earnings:
- CHAINTECH's earnings distribution for 2020 was approved by the Board of Directors on May 4, 2021, to issue NT$0.5 per share. After the resolution of the General Shareholders' Meeting is passed, the Chairman of the Board will be authorized to set the ex-dividend base date.
(VII) Effect of free allotment of shares proposed at this shareholders' meeting on the Company's business performance and earnings per share: No free allotment is proposed at the shareholders' meeting in 2021.
(VIII) Remuneration for Employees, Directors, and Supervisors:
Percentage or scope of remuneration for employees, directors, and supervisors as prescribed under the Articles of Association:
- If CHAINTECH has a profit for the year, it shall appropriate no less than 0.1% as the remuneration for employees, and no more than 6% as remuneration for directors and supervisors. However, in case of the accumulated losses, certain profits shall first be reserved to cover them, and then reserve remuneration to employees, directors and supervisors in accordance with the proportion mentioned in the preceding paragraph.
Accounting treatment for the basis of estimating the amount of remuneration for employees, directors, and supervisors for this fiscal period, the basis of calculating the number of shares to be distributed as employees’ remuneration, and for any discrepancy between the actual amount distributed and the estimated figures.

(1) The remuneration for employees, directors, and supervisors of CHAINTECH is estimated in accordance with CHAINTECH's Articles of Association.
(2) The remuneration for employees, directors, and supervisors of CHAINTECH shall be based on the explanation letter issued by the Accounting Research and Development Foundation (96) Official Letter No. 052. The amount of remuneration for employees, directors, and supervisors of the Company shall be estimated, and recognized under appropriate accounting items of operation cost or operation expense according to its nature. If there is a discrepancy between the resolution of Shareholders' Meeting and estimated amount in financial statements, it is considered as changes in an estimate and is recognized as profit or loss for the current period.
The Board of Directors approved the amount of remuneration for employees, directors, and supervisors and calculation of earnings per share:
(1) Amount of remuneration for employees, directors and supervisors:

As approved by the Board of Directors on March 23, 2021, the proposed distribution of remuneration to employees, directors and supervisors of CHAINTECH for the year of 2020 is as follows:

  - A. Remuneration of employees was NT$2,535,012.

  - B. Remuneration of directors and supervisors was NT$7,129,722.

  - C. All the above amounts have been paid in cash, which has no difference with the estimated amounts that were found in 2020.

(2) The amount of any employee remuneration distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee remuneration: N/A
The actual distribution of remuneration for employees, directors, and supervisors (including the number, sum, and price of shares distributed), and where there were discrepancies with the recognized compensations for employees, directors, and supervisors, the difference, cause, and treatment of the discrepancy shall be described:

			Unit: NT$
Items	Actual distribution in 2020	Listed amount in 2019	Discrepancies
Employee's compensation in cash	2,231,867	2,231,867	0
Employee compensation in shares	0	0	0
Rewardsfor Directors and Supervisors	2,231,867	2,231,867	0

(IX) Repurchase of Shares by CHAINTECH
(1) Completed execution

(1) Completed execution
Term of Repurchase	7th term
Purpose of Repurchase	Transfer to employees
Repurchase period	From October 15, 2019 to December 12, 2019
Repurchase price	Average repurchase price of NT$30.35
Type and number of repurchased shares	Common stocks/5,000,000 shares
Total monetary amount of the repurchase	NT$151,745,862
Ratio of quantity repurchased to scheduled quatity of repurchase	100%
Number of shares eliminated and transferred	0 Shares
Cumulative number of shares held	5,000,000 shares
Ratio of the cumulative number of shares held to total number of shares issued(%)	4.93%

(2) Undergoing: None.

II. Issuance of Corporate Bonds (including overseas corporate bonds): None.
III. Issuance of Preferred Shares: None.
IV. Issuance of Overseas Depository Receipts: None.
V. Employee Stock Options: None.
VI. New Employee Shares with Limited Rights: None.
VII.Issuance of New Shares in Connection with the Merger or Acquisition of Other Companies: None.

VIII.Capital Utilization Plan and Implementation: None.

Chapter 5 Operating Overview

I. Business Activities

(I) Scope of Business:
Business Items
- (1) CC01010 Power Generation, Transmission and Distribution Machinery Manufacturing (limited to the 2810 power generation, transmission and distribution machinery manufacturing according to the Industrial Standard Classification of the Republic of China; 2890 other power equipment manufacturing, limited to wind power generation equipment manufacturing).
- (2) CC01030 Electric Appliances and Audio-visual Electronic Products Manufacturing (limited to 2730 audio-visual electronic products manufacturing, 2851 household AC manufacturing, 2852 household refrigerator manufacturing, 2853 household washing machine manufacturing, 2854 household electric fan manufacturing, and 2859 other household electric appliances manufacturing according to the Industrial Standard Classification of the Republic of China).
- (3) CC01060 Wired Communication Machinery and Equipment Manufacturing (limited to 2721 telephone and mobile phone manufacturing and 2729 other communication and transmission equipment manufacturing according to the Industrial Standard Classification of the Republic of China).
- (4) CC01070 Wireless Communication Equipment Manufacturing (limited to 2721 telephone and mobile phone manufacturing, 2729 other communication and transmission equipment manufacturing and 2751 measurement, navigation and control equipment manufacturing according to the Industrial Standard Classification of the Republic of China).
- (5) CC01080 Electronic Parts and Components Manufacturing (limited to 2630 printed circuit board manufacturing, 2691 printed circuit board parts and components manufacturing and 2699 other electronic parts and components manufacturing according to the Industrial Standard Classification of the Republic of China).
- (6) CC01101 Telecommunications Control RF Equipment Manufacturing (limited to 2721 telephone and mobile phone manufacturing, 2729 other communication and transmission equipment manufacturing and 2760 radiation and electronic medical equipment manufacturing according to the Industrial Standard Classification of the Republic of China).
- (7) CC01110 Computer and Peripheral Devices Manufacturing (limited to 2711 computer manufacturing, 2712 display and terminal manufacturing and 2719 other computer and peripheral devices manufacturing according to the Industrial Standard Classification of the Republic of China).
- (8) CC01120 Data Storage Media Manufacturing and Copying (limited to 2740 data storage media manufacturing according to the Industrial Standard Classification of the Republic of China).
- (9) CE01010 General Instruments Manufacturing (limited to 2751 measurement, navigation and control equipment manufacturing and 2760 radiation and electronic medical equipment manufacturing according to the Industrial Standard Classification of the Republic of China).

(10) CH01040 Toys Manufacturing (limited to 3312 toys manufacturing according to the Industrial Standard Classification of the Republic of China).
(11) F102030 Tobacco and Beverage Wholesale (limited to 4546 tobacco and beverage wholesale according to the Industrial Standard Classification of the Republic of China).
(12) F109070 Stationery, Musical Instrument, and Entertainment Products (limited to 4581 books and stationery wholesale, 4582 sports products, and apparatus wholesale and 4583 toys and entertainment products wholesale according to the Industrial Standard Classification of the Republic of China), excluding books, magazines, and newspapers wholesale.
(13) F113010 Machinery Wholesale (limited to 4643 agricultural and industrial machinery and equipment wholesale according to the Industrial Standard Classification of the Republic of China).
(14) F113020 Electrical Appliances Wholesale (limited to 4561 household appliances wholesale according to the Industrial Standard Classification of the Republic of China).
(15) F113030 Precision Instruments Wholesale (limited to 4564 household photographic equipment and optical products wholesale and 4649 other machinery and appliances wholesale according to the Industrial Standard Classification of the Republic of China).
(16) F113050 Computer and Office Machine and Equipment Wholesale (limited to 4641 computer and peripheral equipment and software wholesale and 4644 office machine and equipment wholesale according to the Industrial Standard Classification of the Republic of China).
(17) F113070 Telecommunication Equipment Wholesale (limited to 4642 electronic equipment and parts and components whole according to the Industrial Standard Classification of the Republic of China), excluding telecommunication core network equipment (such as exchange and transmission equipment) wholesale.
(18) F118010 Information Software Wholesale (limited to 4641 computer and peripheral equipment and software wholesale according to the Industrial Standard Classification of the Republic of China).
(19) F119010 Electronic Materials Wholesale (limited to 4642 electronic equipment and parts and components wholesale according to the Industrial Standard Classification of the Republic of China).
(20) F203020 Tobacco and Beverage Retail (limited to 4729 other food and beverage, tobacco retail according to the Industrial Standard Classification of the Republic of China; excluding the retail of drug stores, pharmacy, cosmeceuticals shop, or live animal shop).
(21) F209060 Stationery, Musical Instrument and Entertainment Products Retail (limited to 4761 books and stationery retail, 4762 sports products and apparatus retail, 4763 toys and entertainment products retail and 4764 music tape and movies retail according to the Industrial Standard Classification of the Republic of China), excluding the retail of books, magazines and newspapers.
(22) F213010 Electric Appliances Retail (limited to 4741 household electric appliances retail and 4833 audio-visual equipment retail according to the Industrial Standard Classification of the Republic of China).

(23) F213030 Computer and Office Machine and Equipment Retail (limited to 4831 computer and peripheral equipment and software retail according to the Industrial Standard Classification of the Republic of China).
(24) F213060 Telecommunication Equipment Retail (limited to 4832 telecommunication equipment retail according to the Industrial Standard Classification of the Republic of China), excluding the retail of telecommunication core network equipment (e.g. exchange and transmission equipment).
(25) F214030 Auto and Motor Vehicle Parts and Components Retail (limited to 4843 auto and motor vehicle parts and components retail according to the Industrial Standard Classification of the Republic of China).
(26) F218010 Information Software Retail (limited to 4831 computer and peripheral equipment and software retail according to the Industrial Standard Classification of the Republic of China).
(27) F219010 Electronic Materials Retail (limited to 4831 computer and peripheral equipment and software retail, 4832 telecommunication equipment retail and 4833 audio-visual equipment retail according to the Industrial Standard Classification of the Republic of China).
(28) I501010 Product Design (limited to 7402 design service for specially manufactured products in industrial design and 7409 design service for specially manufactured products in other professional design service industry according to the Industrial Standard Classification of the Republic of China).
(29) JA02010 Electrical Appliance and Electronic Products Repair (limited to 9521 computer and peripheral equipment repair, 9522 telecommunication and transmission equipment repair and 9523 audio-visual electronic products and household appliances repair according to the Industrial Standard Classification of the Republic of China).
Business proportion

Unit: NT$ thousands

Items	2020 Operatingrevenue	2020 Operatingrevenue
	Amount	Percentage
Computerperipherals	4,665,443	99.85%
Others	6,867	0.15%
Total	4,672,310	100.00%

Current products and services
(1) Display cards
(2) Motherboard
(3) AI server and system integration
(4) High-performance data computing solutions
New products and services that are planned to be developed
(1) Display cards
- A. The subsequent development plans will be prepared for the development of

NVIDIA Ampere new high-end chips that cover the series of Kudan, Vulcan, Neptune, Advanced, Ultra, and so on.

B. The chipset of NVIDIA Turing architecture has been basically release in 2020. In 2021, CHAINTECH will continue to develop medium and low-end chipset display cards, covering the new series of MINI, BATTLE-AX, Netscape, Smart Shark, and so on.
C. Develop display cards heat dissipation solutions in advance for NVIDIA's next-generation chips, including Vulcan, Neptune, Advanced, etc.
(2) Motherboard
A. Develop iGame series high-end game motherboards, adopting the latest Intel 600 series high-end chipset, supporting the Alder Lake processor of the 12gen Intel LGA 1700 architecture, and the product series include iGame, CVN, BATTLE-AX, Neptune and other new products.
B. In AMD AM4 architecture, B550 and A550 chipset products in AMD 500 series had been launched in 2020, the planned mainstream products are CVN series and BATTLE-AX series. In 2021, the Company will continue to enrich AMD product line, such as ATX X570 and MINI ITX type B550 and A520 series chipset products.
C. Emphasize the development of e-commerce: Strengthen the cooperation between online marketing of products and e-commerce.
D. Strengthen the close cooperation with the upstream manufacturers of Intel, AMD, NV, etc.
(3) High-performance data computing solutions
A. High-performance data computing solutions were officially released in the Q3 2019. Built on the basis of Docker, Kubernetes, and Hadoop, highperformance data computing solutions are the server cluster management, container management, maintenance management systems, integrated with multiple development tools especially designed for artificial intelligence (AI). At the management system level, the solutions enable resource virtualization, stable and optimized scheduling, and streamlined user privacy and intellectual property rights management; in terms of development tools, the solutions realize effective AI model training and intuitive development tool operations and are compatible with mainstream AI development frameworks and application environments such as TensorFlow, Keras, Pytorch, Caffe, and MXNET; they also provide users with high flexibility for custom tuning.
B. Following the development plan for high-performance data computing solutions in 2019, the Company will continue to support users' AI model development in 2020 by strengthening data computing infrastructure server and cluster management, software/hardware performance of AI model development tools, including NVLink and RDMA, to improve computing and

transmission speed; supporting multiple shared and distributed storage systems to meet users' diverse storage needs; and adding and upgrading multiple cluster management and development tool sets such as optimizing the privacy access of big data users, updating the visualization and automation features of model training, adding multiple data pre-processing and model deployment application tool sets, etc.

  - C. In 2021, high-performance data computing solutions will continue to optimize processes for existing functional systems and operational interfaces, and achieve three development goals, including

     - a. Add optimized model deployment and model management functions to further support the whole process of AI model development for users, and explore the development of marginal computing and industrial AI solutions;

     - b. Integrate Automated Machine Learning (AutoML) development tools and improve AI solution preparation in the commercial field;

     - c. Realize system modularization and promote the development of lightweight customized multi-product lines.

(II) Industry Overview
Current State and Development of the Industry

Worldwide PC shipments rose 26.1% from a year earlier to 91.6 million units in Q4 2020, according to preliminary results from IDC Quarterly Personal Computing Device Tracker. In 2020, the worldwide PC shipments grew by 13.1% annually, with the main drivers being the recovery of home-based working, online learning and consumer demand.

Initial estimates of global PC manufacturers' unit shipments in Q4 2020

(Unit: thousand units)

Manufacturer	4Q20	4Q20	4Q19	4Q19	4Q20-4Q19
	Shipment	Market share	Shipment	Market share	Growth Rate
		(%)		(%)	(%)
Lenovo	23,122	25.2%	17,918	24.7%	29.0%
HP	19,130	20.9%	17,185	23.7%	11.3%
Dell	15,797	17.2%	12,463	17.2%	26.8%
Apple	7,349	8.0%	4,927	6.8%	49.2%
Acer	6,551	7.2%	4,418	6.1%	48.3%
Others	19,641	21.4%	15,712	21.6%	25.0%
Total	91,590	100.0%	72,622	100.0%	26.1%

Source: IDC Quarterly Personal Computing Device Tracker, January 11, 2021

Worldwide PC shipments rose 26.1% from a year earlier to 91.6 million units in Q4 2020, according to IDC Quarterly Personal Computing Device Tracker. In 2020, the worldwide PC shipments grew by 13.1% annually, with the main drivers being the recovery of home-based working, online learning and consumer demand. “Production potential in every part of the supply

chain is reaching its limit due to high demand and capacity shortages,” says IDC. PC manufacturers and ODMs need to deal with component and capacity shortages.

According to a report from Jon Peddie Research, AMD and NVIDIA will launch their new AIB based on the latest RDNA2 and Ampere architectures in Q4 2020. In S4 of 2020, several new 3A games were launched, including Cyberpunk 2077, Assassin's Creed: Valhalla, The Avengers, and Microsoft Flight Simulator. Despite new hardware and games, actual stand-alone GPU shipments decreased in Q4 2020 compared to Q3, probably due to a component shortage.

In terms of the market size of the AI industry, according to IDC’s Worldwide Semiannual Artificial Intelligence Systems Spending Guide, 2H19, software, hardware, services and implementation cases of AI in the industry and application levels, enterprises around the world are expected to invest US $50.1 billion in AI solutions in 2020. The AI market in the Chinese mainland is expected to reach US $11.9 billion by 2024, with a compound growth rate of 23.0% from 2019 to 2024. Senior AI analyst at IDC said that COVID-19 has innovated AI product forms and applications, such as infrared temperature measurement, face recognition access control, intelligent elevators, COVID-19 auxiliary screening, etc., providing possibilities for the exploration of AI scenarios. Technology vendors are also working in the fields of calculator vision, speech semantics, machine learning, deep learning, etc., to facilitate the implementation of AI in multiple industries and business scenarios. In the next five years, AI will become ubiquitous: RPA, which enhances personal productivity, and edge intelligent computing will accelerate technological innovation in AI, resulting in a multiplication of business efficiency and resilience, as well as a transformation of service experience. The global revenue of AI market, which includes software, hardware and services, is expected to grow 16.4% year-on-year to reach US $327.5 billion by 2021. By 2024, the market is expected to exceed US $500 billion with a fiveyear compound annual growth rate (CAGR) of 17.5% and total revenue of US $554.3 billion.

In the three technology categories of software, hardware and services, software will account for 88% of total revenue in the AI market in 2020, according to IDC. It is the fastest growing category, with a five-year CAGR of 17.3%. In the AI software category, AI applications will account for the largest share of revenue in 2020, at 50%. In terms of growth rate, the market for AI software platforms is expected to be the strongest, with a five-year CAGR of 32.7%. The slowest will be AI system infrastructure software, which is expected to have a five-year CAGR of 13.7% and account for about 36% of AI software revenue.

In the first half of 2020, the global AI server market size reached US $5.59 billion, accounting for more than 84.2% of the AI infrastructure market, becoming the main demand for AI infrastructure. AI hardware market is the smallest category, accounting for around 5% of AI's total revenue by 2020. AI server market is growing faster than AI storage market in 2020, but these results are expected to reverse in 2021, when AI storage is expected to grow 31.8% year on year, compared to 26.4% in AI server market. By 2024, AI hardware is expected to be a US $30.5 billion market, with AI server market accounting for 82% of revenue. AI server market and AI storage market continues to grow rapidly, providing an increasingly specialized and innovative infrastructure

base throughout the AI sector.

Correlation among upstream, midstream, and downstream of the industry

Motherboard and display cards:

==> picture [458 x 287] intentionally omitted <==

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

Motherboard System integrators
Semiconductor Special application IC
CPU
Static memory
Logic clip Monitor
Programmable read only
memory
Interface Cards
Diode
Power supply End users
Printed circuit board Case
Metal and plastic Stand
component Connector
Keyboard Distributor
Expansion slot
Soft and hard drives
Drive program basic Other input devices
output and input Franchiser
Software
system
----- End of picture text -----

3. Product development trends and competition status

(1) Continuing to roll out new display cards to maintain unit prices and gross profits Due to NVIDIA’s continuous promotion of RTX product line and the promotion of consumers’ spending power, the average unit price of graphics card is increasing. NVIDIA’s successive launching of new products from Q4 2020 to Q1 2021 sustained the average price and profit of the products; the emerging of vaccine and remittance of COVID-19 epidemic in China Mainland have led to the significant rebound of product demand. The overall product development direction is to continue to launch new products to maintain a stable unit price and gross margin.
(2) Continuously improved performance of new graphics cards After the release of new products in succession in Q4 2020, the new GeForce RTX 30 series using the Ampere architecture offers up to a 2X improvement in efficiency and a 1.9X improvement in energy efficiency compared to RTX 20 Series GPUs using the Turing architecture. The brand new streaming multiprocessors offer twice the capacity of the previous generation FP32, and the processing capacity of 30 Shader-TFLOPS; the second generation RT core has the processing capacity of 58 RT-TFLOPS, which can achieve twice

the processing capacity of the previous generation, and possesses ray tracing, coloring and computing functions at the same time; The third generation Tensor Core has 238 TensorTFLOPS processing capacity, up to twice the capacity of the previous generation; NVIDIA RTX IO can perform fast GPU architecture loading and decompression of game assets.

(3) Supply and demand of display card market in China Mainland

After the release of new products in succession in Q4 2020, the demand for graphics cards far exceeds the supply. In the supply side, the shipment of graphics cards can not be timely and effectively promoted in the early stage after release of the new products. Demands:

A. Continuously improving hardware capabilities

The performance of the GeForce RTX 30 series using Ampere architecture is significantly better than that of the RTX 20 series, while the price is lower than that of the RTX 20 series, making the GeForce RTX 30 series highly cost-effective.

B. Continuously launched new games

The global hit Fortnite will support RTX real-time ray tracing and add 4 more ray tracing features to provide a more immersive gameplay experience, including reflection, shadow, global lighting and ambient shading. In S4 of 2020, several new 3A games were launched, including Cyberpunk 2077, Assassin's Creed: Valhalla, The Avengers, and Microsoft Flight Simulator.

C. New application layers

In addition, it also provides new tools for gamers, including NVIDIA ReFlex, which allows professional players to operate more quickly and easily, Omniverse Machinima, which makes narrative creation of video games based on real-time computer graphics engine, and NVIDIA Broadcast, which uses AI to turn any room into a live-streaming home studio. At these application levels, applications increase the demand even more.

As hardware features continue to improve, new games continue to be launched, and applications continue to increase, the demand of consumer market for graphics cards shows steady support and growth.

(III) Technology and Research Overview

R&D expenses input and successfully developed technologies or products from the most recent year up to the publication date of the annual report:

(III) Technology and Research Overview R&D expenses input and successfully developed technologies or products from the most recent year up to the publication date of the annual report:	(III) Technology and Research Overview R&D expenses input and successfully developed technologies or products from the most recent year up to the publication date of the annual report:	(III) Technology and Research Overview R&D expenses input and successfully developed technologies or products from the most recent year up to the publication date of the annual report:	(III) Technology and Research Overview R&D expenses input and successfully developed technologies or products from the most recent year up to the publication date of the annual report:
Unit: NT$thousands
Year	Research Project	Results	Expenditure
2020	Display cards Motherboard Application software	NVIDIA AMPERE high-end chipset development plan Intel 500 series high-end chips strengthening data computing infrastructure server and cluster management,software/hardwareperformance of AI	17,887

		model development tools, including NVLink and RDMA, to improve computingand transmission speed
2021 Q1	Display cards Motherboard Application software	Development of NVIDIA Ampere high-end chipset Develop graphics card heat dissipation solution in advance for NVIDIA's next-generation chips Develop iGame series high-end game motherboard, using the latest Intel 600 series high-end chipset. (1) Optimize container management (2) Add multiple nodes and maintenance notification management function (3) Compatible with NVIDIA professional graphics card video memory splitting function (4) Execute the scheduler that optimizes the underlying resource scheduling system (5) Perform optimizations usingthe UI Framework	5,460

(IV) Short-/long-term business development plans

Short-term development plans
(1) Continue to work closely with major customers to maintain market share and reduce production costs with the economic scale.
(2) Maintain a sound financial structure to uphold a good corporate profile.
(3) Continue to expand customer base and maintain and establish sales channels.
Long-term development plans
(1) Continuously maintain the release of the latest original chip products and develop products matching new chips of manufacturers
(2) Continue to improve product quality, reduce costs, and strengthen competitiveness.
(3) Continue to invest in blockchain and artificial intelligence industry.
(4) Look forward into the intelligent technology wave and enter the AI industry ecology to become a key resource integrator and service provider.

II. Market, Production, and Sales Overview

(I) Main Products and Sales Regions
Main products
- (1) Display cards
- (2) Motherboard
- (3) AI server and system integration

2. Sales regions

Unit: NT$ thousands

					Unit: NT$thousands	Unit: NT$thousands
Items	2018		2019		2020
	Sub-total	Total	Sub-total	Total	Sub-total	Total
Domestic sales revenue	-	-	-	-	665	665
Foreign sales revenue	-	4,050,310	-	4,738,182	-	4,671,645
Mega	-	-	-	-	-	-
Asia Pacific Region	4,050,310	-	4,738,182	-	4,671,645	-
Europe	-	-	-	-	-	-
Total	-	4,050,310	-	4,738,182	-	4,672,310

3. Market share

As the motherboard and display cards fall into professional OEM businesses, there is no independent brand, so it is not applicable to the calculation of the market share.

Future supply and demand of the market and its growth

In terms of graphics cards and motherboards, according to the primary investigation results of an international research and consultant institute, Gartner, global PC shipments totaled 915.9 million in Q4 2020, up 26.12% from the same period last year; More than 302 million units were shipped in 2020, up 13.05% from 2019.

(1) Display cards:

In Q1 2021, the supply and demand of the graphics card sector was in a state of imbalance. The reasons why demand far exceeds supply are as follows:

A. Continuously improved performance of new graphics cards

After the release of new products in succession in Q4 2020, compared with RTX 20 Series GPUs using the Turing architecture, the performance of the GeForce RTX 30 series using Ampere architecture is significantly better than that of the RTX 20 series, while the price is lower than that of the RTX 20 series, making the GeForce RTX 30 series highly cost-effective.

B. Continuously launched new games

C. New application layers

In addition, the GeForce RTX 30 series using Ampere architecture also provides new tools for gamers, including NVIDIA ReFlex, which allows professional players to operate more quickly and easily, Omniverse Machinima, which makes narrative creation of video games based on real-time computer graphics engine, and NVIDIA Broadcast, which uses AI to turn any room into a live-streaming home studio. At these application levels, applications increase the demand even more.

D. Limited supply

Graphics card shipments are limited by the lack of chip production capacity, resulting in the graphics card shipments cannot be effectively scaled up.

As hardware features continue to improve, new games continue to be launched, and applications continue to increase, the demand of consumer market for graphics cards shows steady support and growth; Due to insufficient production capacity, the shipments of graphics cards can't satisfy the explosive demand, and it is expected that this will last in the first half of this year. Whether the limited shipment will further restrict the operation growth depends on the chip capacity and whether the shortage of key components can be resolved in time.

(2) Motherboard

On the supply side, in 2020, the upstream components of motherboard, such as passive components, power management chips and audio chips, rose in price by about 10% due to shortage. On the demand side: Due to COVID-19 epidemic, the global demand for laptop computers has increased significantly due to home-based working and online learning; Windows 10 computer replacement demand is expected to drive desktop computer demand in the commercial market in 2021. These demand momentum will support the steady growth of motherboard shipments, and it is expected that motherboard demand and profit will maintain steady growth in 2021.

(3) High-performance data computing solutions

According to the international market research institute, the global AI business will exceed US$230 billion in 2025.

The Data-Driven business model and advanced data analytics technology (including AI algorithms) become a focused discipline and gradually popularized into innovation and even industry of traditional finance, medicine, manufacturing, and education, hence driving forward the growth of demand for GPU server and high-performance data computing solutions.

Competition Niches

(1) The R&D team that is in closer contact with the market The Company re-invested in Shenzhen Jinghong Digital R&D Service Co., Ltd, which was officially incorporated for operation in 2012. R&D and technical service items include consumer electronic products and peripheral devices, including digital multimedia products, case, and power supply. The establishment of Shenzhen R&D center shows that CHAINTECH has developed a niche product layout, and the main way to better understand the market demand is to locate the R&D units in China Mainland, which is the forefront of the world's premier market.
(2) Professional management team CHAINTECH's operating team has accumulated rich technologies and experience for many years. The management belongs to the seniors in the industry who have grasped the key technologies, so the changes in the overall market can be fully mastered. For professional talents, the elite system has been adopted to reduce the management, sales, and research fees to maintain a sound operation structure.
(3) Competitive business mode CHAINTECH has conducted marketing of products developed and produced by Chaintech in many countries through the business sales platforms of major customers. In the market of China Mainland, it has cooperated with operation platforms and image centers in Shenyang, Beijing, Nanjing, Xi’an, Chengdu, Wuhan, Guangzhou, Shenzhen. At the same time, it has also opened up the international business: South Korea marketing center in Seoul is mainly responsible for the South Korean market; the sales center in Hamburg of Germany is mainly responsible for the entire European market. With the changing global market, the Company has created a variety of channels and modes to enhance the visibility of products in different markets and expand the product sales regions through the marketing channels of cooperation partners.
Favorable and Unfavorable Factors of Development Prospect and Countermeasures
(1) Advantages:
- Industrial value chain integration, reducing costs and improving product quality in China Mainland market through strategic alliances and joint procurement. Cooperation with strategic partner COLORFUL GROUP LIMITED has expanded further from products to channels and operation. The "COLORFUL" platform strategic system has developed in China Mainland for many years. At present, it has been ranked the first for over 10 consecutive years in the Chinese market of display cards, with a market share of more than 25%, 300 core distribution channels, 3,000 direct and indirect channel partners, covering 660 cities, and over 5,000 retail stores. The great advantage of

product sales network makes CHAINTECH's products keep grow steadily in the main consumer market - China Mainland.

In terms of new businesses, it has cooperated with Siteng Heli (Tienjin) to develop high-performance data computing software and hardware solutions and integrate services, thus carrying out the layout in the 100 billion-level AI infrastructure service market in China. Siteng Heli (Tienjin) devotes itself to provision of software and hardware solutions to in-depth learning, GPU highperformance computing, virtualization and storage in the AI area, and turns out to be the core cooperation partner in China of the globally leading AI leader NVIDIA. In recent years, it has provided high-performance computing and indepth learning products and solutions for thousands of education and research institutions and AI customers, with the service points covering East, South, Central, Northwest, and Southwest China. Meanwhile, its possesses rich experience in channel operation and international resources integration, hence contributing to the Company's entry into the AI industrial ecology and market channel of CHAINTECH's key market, China Mainland market.

(2) Disadvantages

The panel industry has been maturing and stabilizing, and with matured design and manufacturing comes intensive competition. The biggest challenge facing motherboard and graphics card makers is the shortage of chips and key components, which further restrict the shipments.

In terms of the new businesses, the AI hardware producers and distributors in the key market China Mainland have actively transformed to enter into the AI software and hardware solutions and products market, hence making the competition more intensive, so continuous input of R&D resources must be maintained to raise the competition threshold.

Countermeasures:

A. CHAINTECH's product manufacturing adopts the outsourcing method, so there is no need to solicit more orders by cutting down price for the purpose of maintaining the capacity utilization rate.
B. Strengthen inventory cost management to lower operation risk.
C. Set clear product orientation to conform to the niche market.
D. Expand the product channel share, including sales channels for ecommerce platforms and online franchises.
E. Product design in closer contact with the market
F. Actively obtain stable supply of chips and key components, to maintain stable sales and profit.
G. Continue to invest in high-performance data computing solutions and services with high added value.

(II) Major applications and production process of the primary products
Major uses of the primary products
- The main products of CHAINTECH in 2020 can be classified into three categories: graphics card, motherboard and AI server. The three important applications are described as follows.
- (1) The panel and display cards are one of the main components for the following computer systems:
  - A. PC, use: clerical processing, briefing system, graphic design and drawing, spreadsheet, multi-media
  - B. Computer workstation, use: engineering design, financial information, image processing and editing, desk top publishing
  - C. Server, use: video servers, internet servers, file servers, database servers
  - D. Multi-user and multi-tasking computer system mainframe
  - E. Computer-aided design CAD system and computer auxiliary manufacturing CAM system
- (2) AI servers

AI server mainly refers to the server that adopts the heterogeneous form, mainly in rack type. In the heterogeneous mode, it can be CPU+GPU, CPU+FPGA, CPU+TPU, CPU+ASIC or CPU+ multiple acceleration cards. Although AI server can adopt a variety of heterogeneous forms, CPU+GPU is widely used at present. Therefore, when the industry talks about AI server, it is often regarded as GPU server. With the extensive technical applications of cloud computing, big data, AI, and IoT, the relevant data has grown exponentially in recent years. IDC data statistics show that 90% of data all over the world are produced in recent years, which imposes challenges to the processing power of CPUs. On the other hand, the physical technology and the number of cores of CPUs are approaching the limit, but the amount of data will not stop increasing, so the processing capacity of servers must be improved. Therefore, in the era of AI, traditional servers with only CPU serving as the computing power provider can no longer meet the demand.

Different from CPUs, GPUs adopt parallel computing mode and have thousands of cores on a single card. They are good at processing intensive computing applications, such as graphics rendering, computational vision and machine learning.

Production processes of the main products

SMT flow chart

==> picture [433 x 187] intentionally omitted <==

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

Solder paste High speed Multifunction
Solder side Loader
printing mounting mounting
Pass Pass
PQC sampli Visual ICT Hot air reflow Sampling Visual
inspection inspection Test inspection
Fail Fail
Maintenance
Rework Touch-up
Repair
PTH assembly
----- End of picture text -----

DIP flow chart

==> picture [423 x 187] intentionally omitted <==

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

Components Manual Visual Wave Visual inspection
Pre-forming insertion inspection Soldering & Touch-up
Functional Pass CPU/Batter Pass Additional
test y voltage test ICT Test Components
Fail Fail Fail
Fail Fail Fail
Repair
Pass
PQC sampling Packing Stock
inspection
PTH assembly
----- End of picture text -----

(III) Supply of Major Raw Materials

Title	Suppliers	State of supply
Chip	NVIDIA	Stable
Electronic parts and components	HK LINK, Wanyuan, Glory Rich	Stable

(IV) The name, amount and ratio of customers accounting for more than 10% of the total sales for any of the last two years, and the reasons for changes in such figures:

Major suppliers in the past two years

Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years	Major suppliers in the past two years
Unit: NT$thousands
	2019				2020				As of Q1 2021
Item	Title	Amount	Percentage in the annual net purchases (%)	Relations with the issuer	Title	Amount	Percentage in the annual net purchases (%)	Relations with the issuer	Title	Amount	Percentage of net purchases as of Q1 of the current year (%)	Relations with the issuer
1	005505	2,099,232	46	`－`	005505	1,364,010	33	`－`	005505	586,118	44	`－`
2	005507	744,097	16	`－`	005507	629,194	15	`－`	005507	140,742	10	`－`
4	Others	1,693,130	38	`－`	Others	2,089,754	52	`－`	Others	615,840	46	`－`
	Net purchases	4,536,459	100		Net purchases	4,082,958	100		Net purchases	1,342,700	100

Explanation of changes: Not applicable

Major sales customers for the most recent two fiscal years

Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years	Major sales customers for the most recent two fiscal years
Materials unit: NT$thousands
Year	2019				2020				As of Q1 2021
Item	Title	Amount	Percentage of net sales in the year (%)	Relations with the issuer	Title	Amount	Percentage of net sales in the year (%)	Relations with the issuer	Title	Amount	Percentage of net sales as of Q1 2019 (%)	Relations with the issuer
1	`COLORFUL`	`1,877,101`	`40`	Related parties	`COLORFUL`	`1,703,136`	`COLORFU` `L`	Related parties	COLORFUL	`431,875`	`35`	Related parties
2	`10F001`	`－`	`－`	`－`	`10F001`	`496,072`	`10F001`	`－`	`10F001`	`156,828`	`13`	`－`
3	`16L002`	`473,508`	`10`	`－`	`16L002`	`497,686`	`16L002`	`－`	`16L002`	`116,106`	`10`	`－`
4	`16N002`	`457,435`	`10`	`－`	`16N002`	`458,640`	`16N002`	`－`	`16N002`	`91,990`	`8`	`－`
	Others	`1,930,138`	`40`	`－`	Others	`2,012,848`	`43`	`－`	Others	`424,726`	`34`	`－`
	Net sales	`4,738,182`	`100`		Net sales	`4,672,310`	`100`		Net sales	`1,221,525`	`100%`

Explanation of changes: Not applicable

(V) Production volume and value in the most recent two fiscal years

Unit: Pcs, NT$ thousands

				Unit: Pcs,NT$thousands	Unit: Pcs,NT$thousands	Unit: Pcs,NT$thousands
Year	2019			2020
Production volume and value Main Products	Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
Computerperipherals	800,000	565,100	2,338,810	800,000	570,000	2,438,731
Total	800,000	565,100	2,338,810	800,000	570,000	2,438,731

(VI) Sales volume and value in the most recent two fiscal years

Unit: Pcs, NT$ thousands

					Unit: Pcs,NT$thousands	Unit: Pcs,NT$thousands	Unit: Pcs,NT$thousands	Unit: Pcs,NT$thousands
Year	2019				2020
Sales volume Main Products	Domestic Sales		Foreign Sales		Domestic Sales		Foreign Sales
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Computer peripherals	0	0	1,213,236	4,716,750	0	0	1.357,733	4,664,778
Others	0	0	0	21,432	0	665	0	6,867
Total	0	0	1,213,236	4,738,182	0	665	1,357,373	4.671.645

III. Number of Employees in the Last Two Years Up to the Printing of this Annual Report

Report
	Year	2019	2020	As of March 31, 2021
Number of employees	Direct employees	0	0	0
	Indirect employees	17	19	19
	Total	17	19	19
	Average Age	42.92	42.06	42.31
Average Year of Services		9.37	9.14	9.38
Education distribution ratio (%)	Doctor	0	0	0
	Master	35	21	21
	University/College	59	74	74
	Senior High School	5	5	5
	Below Senior High School	0	0	0

IV. Information on Environmental Protection Expenditure

(I) Loss and disposal caused by environmental pollution in the most recent year and as of the date of the annual report: None.
(II) Future countermeasures (including improvement measures) and possible expenditures (including the estimated amount of losses that may be incurred for the failure of adopting countermeasures, estimated amount for penalty and compensation; where there is no reasonable estimation, the facts thereof shall be explained): CHAINTECH outsources the production of its products and there had been no pollution to the environment. However, CHAINTECH still stringently requests the processing plants shall comply with relevant environmental laws and regulations to join hands in solving the environmental issues of scarcer energy on earth.

V. Labor Relations

CHAINTECH always adheres to the belief of improving the care for employees, so that they can strive to make progress without any worries. It has formulated multiple welfare measures concerning vocation and retirement system, so employees have maintained high centripetal force and the labor relations have remained harmonious, without any disputes therefrom.

(I) Employee Benefit Plans, Continuing Education, Training, and Retirement Systems and the Status of Their Implementation, and the Status of Labor-management Agreements and Measures for Preserving Employees' Rights and Interests:
Employees' welfare measures
- (1) CHAINTECH has purchased national health insurance, labor insurance and group insurance for all the employees, and handles the payment for employees' childbirth, injury, health care, retirement, and death pursuant to Labor Insurance Act, National Health Care, Group Insurance and relevant rules and regulations in the Labor Standard Act.
- (2) CHAINTECH rewards employees for stock subscription to enhance employees' participation enthusiasm.
- (3) CHAINTECH has established an Employee Welfare Committee to promote employee welfare work, such as gifts at Spring Festival and holidays, allowance for weddings and funerals, celebration of employees' birthday, regular domestic and international travel activities.
- (4) Employees' health check-ups are conducted regularly.
CHAINTECH's system concerning advanced studies, educational training, and its implementation:

CHAINTECH's human resources department formulates education and training plans annually based on business development and employee needs.

(1) Induction training: The HR Department is in charge of introducing the Company's organizational structure and system, work rules, and responsibilities; each staffing department shall explain the operating rules and procedures, and regularly assess and supervise new employees.
(2) External training: Participation in the professional courses offered by the corporate

management consulting companies, education, and training institutions, and government agencies.

(3) Internal training: Senior or learned employees or professional lecturers are invited to impart their experience and professional knowledge.
(4) Departmental training: The professional training courses organized by each department.

In 2020, CHAINTECH held internal and external education and training related to ethical management (including ethical management related law compliance, food safety and hygiene management, accounting system, corporate governance and internal control and other related courses) for 15 person-times. Totally 81 hours.

Implementation of retirement system

CHAINTECH has established retirement regulations for the employees with formal employment. The retirement conditions, pension benefits and calculation methods are handled in accordance with the Labor Standard Act, Labor Pension Act, and relevant laws and regulations.

The new pension system in the "Labor Pension Act" is a defined contribution plan. As for the pension payment, CHAINTECH allocates no less than 6% of the monthly salary of employees as pension to be deposited into the individual retirement fund account managed by Labor Insurance Bureau.

The old pension system in the Labor Standard Act is a defined benefit plan. Upon approval of the retirement, two bases for the annual salary shall be paid every one year; however, if the job tenure is over fifteen years, one base shall be paid every one year, but the total shall not exceed 45 bases. The payment of pension is calculated through multiplying the above base standard with the average monthly salary six months before retirement.

Labor relations

The realization of corporate business objectives is dependent upon the committed devotion and hard work of the employees. Therefore, labor relations have always been the focus of CHAINTECH's efforts. CHAINTECH has always adhered to the philosophy of respect for humanity and care for employees and adopts an open, candid, and honest attitude towards employees in terms of various salary and welfare policies. Since its establishment, CHAINTECH has established harmonious labor relations, without any disputes arising therefrom.

Code of ethical conducts for employees

CHAINTECH has established the Code of Ethical Management and the Code of Ethical Conducts for Employees. All Chaintech employees, whether inside or outside the Company, are required to maintain a high level of personal behavior and professional ethics. CHAINTECH's employees shall clearly understand and abide by the following principles:

(1) Avoid any possible conflict between personal interests and the interests of the Company or possible impact.

(2) Do not use the properties, information or position of the Company for personal gain. (3) The confidential and commercially sensitive information obtained in the course of business shall be kept confidential.
(4) Do not engage in business dealings with dishonest suppliers, customers or businesses.
(5) Suppliers, contractors, customers, and other persons related to the business of the Company must maintain the highest standards of professional ethics. It is prohibited to offer or accept improper benefits or give any gift, money or entertainment that may affect the normal business relationship and judgment. Bribery of any form shall be strictly prohibited.
Protective measures for work environment and employees' personal safety

The software and hardware facilities of CHAINTECH's office environment are designed with protecting the safety of employees as the first consideration, so as to ensure that employees can get the maximum protection at work. The Company has set up access card devices at each entrance to protect the personal safety of employees. Repair and maintenance work shall be scheduled regularly, either annually, quarterly or monthly pursuant to regulations, for electromechanical or fire equipment (such as fire alarms or fire extinguishers) to ensure that they can function well at all times. In addition, CHAINTECH annually organizes health check-ups and carries out fire drills as scheduled by the building management committee so that employees are well informed about their physical conditions and know the correct responses at the time of emergencies. CHAINTECH also provides employees with group insurance to increase their protection at work.

(II) Explain the losses incurred to CHAINTECH for labor disputes in the most recent two years as of the published date of the statements, and the current and future possible estimated amounts and the countermeasures:

Since its establishment on November 17, 1986, CHAINTECH has developed harmonious labor relations and communication channels. The Company attaches great importance to the opinions of employees and their demands and is committed to offering the best assistance for them. Therefore, there has been no major labor disputes since establishment. Looking forward to the future, with favorable labor interaction, the possibility of losses incurred by labor disputes is extremely low.

VI. Material Contracts:

Nature	Related Parties	Main Content	Restrictive Provisions	Contract Start/End Date
Property Leases	Prosperity Dielectrics Co., Ltd.	Office Leases	None	Jan. 1, 2020 ~ Dec. 31, 2023

Chapter 6 Financial Information

I. Condensed balance sheet and statement of comprehensive income and audit opinion of the most recent five years
Condensed Balance Sheet - Adoption of IFRS

Unit: NT$ thousands

Year Items	Year Items	2016	2017	2018	2019	2020	As of March 31, 2021
Current assets		1,971,840	1,609,221	1,551,324	1,412,661	1,539,894	Since the first quarter is the time to issue the consolidated review report, it is not applicable.
Property, Plant, and Equipment(Note 2)		172	25	-	55,272	32,489
Funds and Investment		376,940	364,473	455,185	609,394	838,275
Intangible assets		-	-	-	-	-
Other assets		77	1,874	11	9,413	37,616
Total assets		2,349,029	1,975,593	2,006,520	2,086,740	2,448,274
Current liabilities	Before distribution	544,183	251,966	272,396	534,693	720,822
	After distribution	564,830	251,966	424,645	563,643	(Note 1)
Non-current liabilities		-	-	-	-
Total liabilities	Before distribution	547,751	251,966	272,396	534,693	723,957
	After distribution	586,251	251,966	424,645	563,643	(Note 1)
Equity attributable to owners of theparent		1,801,278	1,723,627	1,734,124	1,552,047	1,724,317
Share capital		1,092,488	1,092,488	1,014,988	1,014,988	1,014,988
Capital surplus		-	-	-	-	100
Retained earnings	Before distribution	733,743	660,442	831,650	786,346	900,677
	After distribution	717,356	251,966	679,404	757,396	(Note 1)
Other equity interest		(24,953)	(29,301)	(112,514)	(97,541)	(39,702)
Treasury stock		-	-		(151,746)	(151,746)
Non-controlling interests		-	-		-	-
Total shareholder equity	Before distribution	1,801,278	1,723,627	1,734,124	1,552,047	1,724,317
	After distribution	1,784,891	1,723,627	1,581,878	1,523,097	(Note 1)

Note 1: The proposal of 2020 earnings distribution is subject to the resolution of shareholders' meeting. Note 2: Asset revaluation has not been performed for each year.

2. Consolidated Condensed Balance Sheet - Adoption of IFRS

Unit: NT$ thousands

Year Items	Year Items	2016	2017	2018	2019	2020	As of March 31, 2021
Current assets		2,201,468	1,841,440	1,728,661	1,970,057	2,320,135	2,368,518
Property, Plant, and Equipment(Note 2)		145,013	134,335	122,073	62,003	34,723	28,932
Funds and Investment		-	-	108,985	137,045	319,723	348,776
Intangible assets		-	-	-	188,971	180,171	175,845
Other assets		11,121	12,465	54,784	23,539	56,794	64,373
Total assets		2,357,602	1,988,240	2,014,503	2,381,615	2,911,546	2,986,444
Current liabilities	Before distribution	551,998	263,190	279,003	650,766	960,411	932,667
	After distribution	572,645	263,190	431,252	680,122	(Note 1)	(Note 1)
Non-current liabilities		4,326	1,423	1,376	10,606	17,467	32,794
Total liabilities	Before distribution	556,324	264,613	280,379	661,372	977,878	965,461
	After distribution	576,971	264,613	432,625	690,322	(Note 1)	(Note 1)
Equity attributable to owners of theparent		1,801,278	1,723,627	1,734,124	1,552,047	1,724,317	1,804,275
Share capital		1,092,488	1,092,488	1,014,988	1,014,988	1,014,988	1,014,988
Capital surplus		-	-	-	-	100	100
Retained earnings	Before distribution	733,743	660,442	831,650	786,346	900,677	949,842
	After distribution	717,356	660,442	679,404	757,396	(Note 1)	(Note 1)
Other equity interest		(24,953)	(29,303)	(112,514)	(97,541)	(39,702)	(8,909)
Treasury stock		-	-	-	(151,746)	(151,746)	(151,746)
Non-controlling interests		-	-	-	168,196	209,351	216,708
Total shareholder equity	Before distribution	1,801,278	1,732,627	1,734,124	1,720,243	1,933,668	2,020,983
	After distribution	1,784,891	1,732,627	1,581,878	1,691,293	(Note 1)	(Note 1)

Note 1: The proposal of 2020 earnings distribution is subject to the resolution of shareholders' meeting. Note 2: Asset revaluation has not been performed for each year.

(II) 1. Standalone Condensed Consolidated Statement of Comprehensive Income or Profit - Adoption of IFRS

Adoption of IFRS	Adoption of IFRS	Adoption of IFRS	Adoption of IFRS
							Unit: NT$thousands
Year Items				2016	2017	2018	2019	2020	As of March 31, 2021
Operating revenue				6,201,316	5,276,351	3,755,138	3,591,11 4	3,515,850	Since the first quarter is the time to issue the consolidated review report, it is not applicable.
Operating margin including (unrealized) realized profits of affiliated companies				226,619	80,824	357,955	158,267	228,826
Operating (loss) profit				138,778	32,161	270.828	79.694	154,155
Non-operating income and expenses				(30,484)	(90,332)	23,606	26,054	(5,381)
			Profit before tax	108,294	(58,171)	294,434	105,748	148,774
Profit from continuing operations				-	-	-	-	-
Loss from discontinued operations				-	-	-	-	-
		Net profit (loss) for current period		91,631	(56,914)	244,304	106,942	145,907

Other comprehensive income (loss) (net amount after tax)				( 31,537)	(4,350)	(83,121)	14,973	57,839

		Total comprehensive income (loss)		60,094	(61,264)	161,093	121,915	203,746

o	Net profit attributable to wners of parent company			-	-	-	-	-
	Net profit attributable to non-controlling equity			-	-	-	-	-
Total comprehensive income or loss attributable to the owner of the parent company				-	-	-	-	-
Total comprehensive income (loss) attributable to non-controlling interests				-	-	-	-	-
Earnings (loss) per share				0.84	(0.52)	2.39	1.06	1.51

Note 1: The proposal of 2020 earnings distribution is subject to the resolution of shareholders' meeting. Note 2: Asset revaluation has not been performed for each year.

2. Consolidated condensed statement of comprehensive income - Adoption of IFRS

		Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Items	2016	2017	2018	2019	2020	As of March 31, 2021
Operating revenue	6,687,790	5,772,839	4,050,310	4,738,182	4,672,310	1,221,525
Operating margin including (unrealized) realized profits of affiliated companies	241,040	104,334	372,418	332,636	437,005	133,444
Operating (loss) profit	110,632	16,831	267,295	132,133	226,211	77,092
Non-operating income and expenses	(1,916)	(74,656)	39,808	19,772	(36,587)	(4,171)
Pretax net profit (loss)	108,716	(57,825)	307,103	151,905	189,624	72,921
Profit from continuing operations	-	-	256,644	137,224	183,413	-
Loss from discontinued operations	-	-	(12,340)	(8,545)	-	-
Net profit (loss) for current period	91,631	(56,914)	244,304	128,679	183,413	58,167
Other comprehensive income (loss) (net amount after tax)	( 31,537)	(4,350)	(83,211)	14,973	61,488	29,148
Total comprehensive income (loss)	60,094	(61,264)	161,093	143,652	244,901	87,315
Net Income Attributable to Profit (loss), attributable to owners of parent	91,631	(56,914)	244,304	106,942	145,907	49,165

Net profit attributable to non- controlling equity	-	-	-	21,737	37,506	9,002
Total comprehensive income or loss attributable to the owner of the parent company	60,094	(61,264)	161,093	121,915	203,746	79,958
Total comprehensive income (loss) attributable to non- controlling interests	-	-	-	21,737	41,155	7,357
Earnings (loss) per share	0.84	(0.52)	2.39	1.06	1.51	0.51

Note 1: The proposal of 2020 earnings distribution is subject to the resolution of shareholders' meeting. Note 2: Asset revaluation has not been performed for each year.

(III) Name of the CPAs and their opinions for the most recent five years

Audit Year	Name of accounting firm	Name of CPAs	Audit Opinions
2016	PwC Taiwan	Wu, Han-Chi, Hsu, Sheng-Chung	No retained opinions
2017	PwC Taiwan	Wu, Han-Chi, Hsu, Sheng-Chung	No retained opinions
2018	PwC Taiwan	Wu, Han-Chi, Hsu, Sheng-Chung	No retained opinions
2019	PwC Taiwan	Wu, Han-Chi, Hsu, Sheng-Chung	No retained opinions
2020	PwC Taiwan	Feng, Min-Chuan and Lin, Ya-Hui	No retained opinions

II. Financial Analysis of the Last Five Years

1. Financial analysis for the most recent five years - Adopt IFRS

Year	Analysis Items	2016	2017	2018	2019	2020	As of March 31, 2021
Financial structure (%)	Ratio of liabilities to assets	23.32	12.75	13.58	25.62	29.57	Since the first quarter is the time to issue the consolidated review report, it is not applicable.
	Ratio of long-term capital to property, plant and equipment	1,047,254.65	6,894,508	-	2,808.02	5,307.39
Solvency (%)	Current ratio	362.35	638.67	569.51	264.20	213.63
	Quick ratio	328.42	593.11	533.91	208.26	189.07
	Interest coverage ratio	16.25	(36.12)	137.00	19.61	24.59
Operating Ability	Receivables Turnover Rate (Times)	3.57	4.03	3.81	4.07	3.56
	Average Collection Days	102.24	90.57	95.80	89.68	102.52
	Inventory Turnover Rate (times)	18.34	34.70	32.26	17.35	13.72
	Payables Turnover Rate (Times)	10.27	16.98	18.41	14.42	11.46
	Average days of sales	19.90	10.51	11.31	21.03	26.60
	Property, Plant and Equipment Turnover Rate (Times)	22,306.89	53,567.02	300,411.04	129.94	80.12
	Total Asset Turnover Rate (Times)	2.64	2.67	1.87	1.72	1.44
Profitability	Return on assets(%)	3.68%	(2.57)	12.36	5.45	6.66
	Return on shareholder equity (%)	5.13%	(3.23)	14.13	6.51	8.91
	Ratio of net income	9.91%	(5.32)	29.01	10.42	14.66
	before tax in paid-in
	capital (%) (Note 7)
	Netprofit rate(%)	1.48%	(1.08)	6.51	2.98	4.15
	Earnings per share (NT$)	0.84	(0.52)	2.39	1.06	1.51
Cash flow	Cash flow ratio(%)	73.05	122.75	156.83	6.45	(10.69)
	Cash flow adequacy ratio	Note 2	64.41	383.93	124.48	244.03
	Cash flow reinvestment ratio (%)	20.15	16.96	26.21	(8.22)	(4.88)
Degree of	Degree of operating leverage	1	1	1	1.19	2.13
leverage	Degree of financial leverage	1.05	1.05	1.01	1.08	1.04

Please explain the reasons for changes in various financial ratios in the most recent two years. (If the change is within 20%, the explanation is not required).

Solvency: The decrease in the current ratio and quick ratio is mainly due to the increase in the current accounts receivable and short-term borrowings.
Operating ability: The decrease in inventory turnover ratio and accounts receivable turnover ratio for the period is mainly due to the decrease in sales revenue for the current period.
Increase in various ratio of profitability: It is mainly due to the increase in net income for the current period.
Cash flow ratio: The decrease in cash flow ratio and cash reinvestment ratio is mainly due to the decrease in net cash inflow from operating activities.

Note 1: Cash flow from operating activities refers to cash inflow, so for net cash outflow, it is not applicable.

Consolidation of Financial Analysis for the most recent five years - Adoption of IFRS

Analysis Items Year	Analysis Items Year	2016	2017	2018	2019	2020	As of March31,2021
Financial structure (%)	Ratio of liabilities to assets	23.60	13.31	13.92	27.77	33.59	32.33
	Ratio of long-term capital to property, plant and equipment	1242.15	1283.08	1420.56	2774.45	5568.84	6985.29
Solvency (%)	Current ratio	398.82	699.66	619.59	302.73	241.58	253.95
	Quick ratio	364.82	655.21	584.66	240.02	204.28	182.41
	Interest coverage ratio	16.31	(35.90)	137.18	26.82	30.16	199.11
Operating Ability	Accounts receivable turnover rate (times)	3.76	4.29	4.08	5.04	4.12	4.08
	Average Collection Days	97.07	85.08	89.46	72.42	88.59	89.46
	Inventory Turnover Rate (times)	19.78	37.86	35.28	19.42	13.28	10.48
	Accounts payable turnover rate (times)	11.12	18.50	20.10	16.74	11.43	11.62
	Average days of sales	18.45	9.64	10.34	18.79	27.48	34.82
	Property, Plant and Equipment Turnover Rate (Times)	44.80	41.33	31.85	51.48	96.61	153.52
	Total assets turnover rate (times)	2.84	2.90	2.03	1.99	1.60	1.64
Profitability	Return on assets(%)	3.66	(2.56)	12.29	6.07	7.13	2.01
	Return on equity (%)	5.13	(3.23)	14.13	7.45	10.04	2.94
	Ratio of net income before tax in paid-in capital(%) (Note 7)	9.95	(5.29)	29.05	14.97	18.68	7.18
	Netprofit rate(%)	1.37	(0.99)	5.98	2.72	3.93	4.76
	Earnings per share (NT$)	0.84	(0.52)	2.39	1.06	1.51	0.51
Cash flow	Cash flow ratio(%)	62.56	134.92	159.19	(10.93)	(7.72)	12.96
	Cash flow adequacy ratio	Note 1	60.17	335.40	107.13	214.87	229.82
	Cash reinvestment ratio (%)	Note 1	18.33	25.23	Note 1	(4.38)	6.68
Degree of leverage	Degree of operating leverage	1.13	1.72	1.05	4.24	3.00	1.08
	Degree of financial leverage	1.07	1.10	1.01	1.05	1.03	1.02
Please explain the reasons for changes in various financial ratios in the most recent two years. (If the change is within 20%, the explanation is not required). 1. Solvency: The decrease in the current ratio and quick ratio is mainly due to the increase in current accounts receivable and short-term borrowings. The increase in the interest coverage ratio is mainly due to the increase in net profit for the current period. 2. Operating capacity: The decrease in accounts receivable turnover ratio and inventory turnover ratio for the current period is mainly due to the decrease in sales revenue for the current period. 3. Increase in various ratio of profitability: It is mainly due to the increase in net income for the current period. 4. Cash flow ratio: The decrease in cash flow ratio and cash reinvestment ratio is mainly due to the decrease in net cash inflow from operatingactivities.

Note 1: Cash flow from operating activities refers to cash inflow, so for net cash outflow, it is not applicable.

＊ If the Company has formulated a standalone financial report, it shall also offer an explanation of the Company's individual financial ratios.

100

Note 1: The year that has not been audited and attested by CPAs should be noted.
Note 2: The companies who are listed or whose shares are traded at securities exchange shall include the financial data for the year one quarter before the printing date of the annual report into the financial statements of the year for analysis.
Note 3: Calculation formulas shall be disclosed at the end of the annual report:
Financial structure
- (1) Debt-asset Ratio = Total Liabilities/Total Assets.
- (2) Long-term funds to property, plant and equipment = (Stockholders' equity ＋ Noncurrent Liabilities) / Net Property, Plant and Equipment
Solvency
- (1) Current Ratio = Current Assets/Current Liabilities.
- (2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses)/Current Liabilities.
- (3) Interest Coverage Ratio = Net Profit before Tax and Interest/Interest Expenses.
Operating ability
- (1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.
- (2) Average Collection Days = 365/Receivables Turnover Rate.
- (3) Inventory Turnover Rate = Cost of Sales/Average Inventory.
- (4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.
- (5) Average Days for Sale = 365/Inventory Turnover Rate.
- (6) Property, plant, and equipment turnover rate = Net sales/Average net property, plant, and equipment.
- (7) Total Asset Turnover Rate = Net Sales/Average Total Assets.
Profitability
- (1) Return on assets = [Income after tax + Interest expenses x (1 - tax rate)]/Average total assets.
- (2) Return on equity = net income after tax/average equity
- (3) Net margin = net income/net sales.
- (4) Earnings per share = (net income – dividends on preferred shares)/weighted average number of issued shares. (Note 4)
Cash flow
- (1) Cash flow ratio = net operating cash flow/current liabilities.
- (2) Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years/(capital expenditures + inventory increase + cash dividend) for the most recent five years.
- (3) Cash reinvestment ratio = (Net cash flow from operating activities – cash dividend)/(gross fixed assets value + long-term investment + other assets + working capital). (Note 5)
Degree of Leverage:
- (1) Operating leverage = (Net operating revenue - Variable operating costs & expenses)/Operating income (Note 6).
- (2) Financial leverage = Operating income/(Operating income - Interest expenses).
Note 4: Special attention shall be paid to the following matters when using the calculation formula to earning per share above:
Based on the weighted average number of shares of common stock, rather than the number of issued shares at the end of the year.
If the company conducted cash capital increase or transaction of treasury stock, the circulation period should be considered and the weighted average number of shares calculated.
If the Company conducted capital increase by retained earnings or capital surplus, it shall retrospectively adjust the earnings per share for the past fiscal year and the semi-annual earnings ratio, without considering the issuance period of the capital increase.
If the preferred stocks are nonconvertible cumulative preferred stocks, its dividend of the year (whether it is being distributed or not) shall add or subtract the net loss from the net income after tax. If the

101

preferred stock is non-cumulative, the dividend of the preferred stock should be deducted from the net profit after tax, if any; if there is a loss, it shall not be adjusted.

Note 5: Special attention should be paid to the following matters when measuring cash flow analysis:

Net cash flow from operating activities refers to the net cash inflow from operating activities in the statement of cash flows.
Capital expenditure is the annual cash outflow of capital investment.
The increase in inventory is included only when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory decreases at the end of the year, it is counted as zero.
Cash dividends include cash dividends from common stock and preferred stocks.
The gross property, plant, and equipment refer to the total value of property, plant, and equipment minus accumulated depreciation.
Note 6: The issuer shall classify the operating costs and operating expenses as fixed or variable in accordance with their nature. If it involves estimation or subjective judgment, attention should be paid to its reasonableness and consistency.
Note 7: If the Company's shares have no par value or a par value other than NT$10, any calculation that involves the paid-in capital ratio shall be replaced with the equity ratio attributable to the owner of the parent company, as shown in the balance sheet.

Calculation formulas:

Financial structure
(1) Debt-asset Ratio = Total Liabilities/Total Assets.
(2) Ratio of Long-Term Funds to Fixed Assets = (Net Shareholders' Equity + Long-term Liabilities)/Net Fixed Assets.
Solvency
(1) Current Ratio = Current Assets/Current Liabilities.
(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses)/Current Liabilities.
(3) Interest Coverage Ratio = Net Profit before Tax and Interest/Interest Expenses.
Operating ability
(1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.
(2) Average Collection Days = 365/Receivables Turnover Rate.
(3) Inventory Turnover Rate = Cost of Sales/Average Inventory.
(4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.
(5) Average Days for Sale = 365/Inventory Turnover Rate.
(6) Fixed Asset Turnover Ratio = Net Sales/Average Net Fixed Asset
(7) Total Asset Turnover Rate = Net Sales/Average Total Assets.
Profitability
(1) Return on assets = [Income after tax + Interest expenses x (1 - tax rate)]/Average total assets.
(2) Return on Equity (ROE) = Gain (loss) after tax/Average net equity.
(3) Net margin = net income/net sales.
(4) Earnings per share = (net income – dividends on preferred shares)/weighted average number of issued shares. (Note 4)
Cash flow
(1) Cash flow ratio = net operating cash flow/current liabilities.
(2) Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years/(capital expenditures + inventory increase + cash dividend) for the most recent five years.
(3) Cash reinvestment ratio = (Net cash flow from operating activities – cash dividend) / (gross fixed assets value + long-term investment + other assets + working capital). (Note 5)
Degree of Leverage:

102

(1) Operating leverage = (Net operating revenue - Variable operating costs & expenses)/Operating income (Note 6).
(2) Financial leverage = Operating income/(Operating income - Interest expenses).
Note 3: Special attention shall be paid to the following matters when using the calculation formula to earning per share above:
Based on the weighted average number of shares of common stock, rather than the number of issued shares at the end of the year.
If the company conducted cash capital increase or transaction of treasury stock, the circulation period should be considered and the weighted average number of shares calculated.
If the Company conducted capital increase by retained earnings or capital surplus, it shall retrospectively adjust the earnings per share for the past fiscal year and the semi-annual earnings ratio, without considering the issuance period of the capital increase.
If the preferred stocks are nonconvertible cumulative preferred stocks, its dividend of the year (whether it is being distributed or not) shall add or subtract the net loss from the net income after tax. If the preferred stock is non-cumulative, the dividend of the preferred stock should be deducted from the net profit after tax, if any; if there is a loss, it shall not be adjusted.
Note 4: Special attention should be paid to the following matters when measuring cash flow analysis:
Net cash flow from operating activities refers to the net cash inflow from operating activities in the statement of cash flows.
Capital expenditure is the annual cash outflow of capital investment.
The increase in inventory is included only when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory decreases at the end of the year, it is counted as zero.
Cash dividends include cash dividends from common stock and preferred stocks.
Gross fixed assets refer to the total fixed assets before deduction of accumulated depreciation.
Note 5: The issuer shall classify the operating costs and operating expenses as fixed or variable in accordance with their nature. If it involves estimation or subjective judgment, attention shall be paid to its reasonableness and consistency.

103

III. Audit report of the financial report for the most recent year from the supervisors or audit committee

Chaintech Technology Corporation Supervisors' Review Report

Whereas

The Financial Report and Consolidated Financial Report issued by the Board of Directors of CHAINTECH for the year 2020 have been audited by CPA Feng, Min-Chuan and CPA Lin, Ya-Hui of Pricewaterhouse Coopers (PwC) Taiwan, which, together with the proposal of the Business Report, have been reviewed by the supervisors and are considered to be consistent. Therefore, the review report has been prepared in accordance with Article 219 of the Company Act. Please review.

In addition

2021 Regular Shareholders' Meeting of CHAINTECH

Chaintech Technology Corporation

Supervisor: Chou Chun-Tsun

Supervisor: Hsu Sheng-Chin

March 26, 2021

104

Chaintech Technology Corporation Supervisors' Review Report

Whereas

The proposal for the 2020 earnings distribution has been reviewed by the supervisors and is considered to be consistent. Therefore, the review report has been prepared in accordance with Article 219 of the Company Act.

Please review.

In addition

2021 Regular Shareholders' Meeting of CHAINTECH

Chaintech Technology Corporation

Supervisor: Chou Chun-Tsun

Supervisor: Hsu Sheng-Chin

May 7, 2021

105

IV. Individual financial report for the latest year audited and approved by accountants (please refer to pages 120 to 193 for details)
V. Consolidated Financial Statements for the Most Recent Year, Certified by CPAs (please refer to pages 194 to 274 for details)
VI. Financial Difficulties of CHAINTECH and Its Affiliates in the Most Recent Year to the Publication Date of this Annual Report and their Impact on the Company's Financial Conditions: None.

Chapter 7 Analysis for Financial Condition and Operating Results and Risk Management

I. Financial Status: The main reason for the significant changes in assets, liabilities, and shareholders' equity in the past two years, and the impact of such changes; if such changes are significant, future countermeasures should be stated.

Year Items	2020	2019	Difference	Difference
			Amount	%
Current assets	2,320,135	1,970,057	350,078	17.77
Investment using equity method	133,573	-	133,573	100.00
Property, plant, and equipment	34,723	62,003	(27,280)	(44.00)
Intangible assets	180,171	188,971	(8,800)	(4.66)
Other assets	56,794	23,539	33,255	141.28
Total assets	2,911,546	2,381,615	529,931	22.25
Current liabilities	966,041	650,766	315,275	48.45
Non-current liabilities	17,467	10,606	6,861	64.69
Total liabilities	977,878	661,372	316,506	47.86
Share capital	1,014,988	1,014,988	-	-
Capital surplus	100	-	100	100.00
Retained earnings	900,677	786,346	114,331	14.54
Other equity interest	(39,702)	(97,541)	57,839	(59.30)
Treasury stock	(151,746)	(151,746)	-	-
Total equity attributable to owners of the parent company	1,724,317	1,552,047	3,276,364	211.10
Non-controlling interests	209,351	168,196	41,155	24.47
Total equity	1,933,668	1,720,243	213,425	12.41

106

Analysis of changes in the percentage of increase and decrease: (more than 20% and the amount of change reaching NT$10 million)

The increase in current assets: It is mainly due to the increase in accounts receivable in the current year.
Increase in investment accounted for using the equity method: Mainly due to the increase in long-term equity investment in the current year.
The decrease in property, plant and equipment: It is mainly due to the apportionment of depreciation expense in the current year.
Increase in other assets: mainly due to reclassification of the current offset against tax payable to non-current assets.
Increase in current liabilities: mainly due to the increase in short-term borrowing during the year.
Increase in retained earnings: mainly due to the increase in earnings in the current period.
Increase in other equities: mainly due to the unrealized valuation of non-current financial assets measured at fair value through other comprehensive gains and losses and the difference in the conversion and exchange of subsidiaries.
Increase in uncontrolled interests: mainly due to the increase in the income from the reinvested company.
II. Financial Performance: The main reasons for the significant changes in operating revenue, operating profit, and net profit before tax in the most recent two years, and the expected sales volume and its basis, as well as the possible impact on the Company's financial condition and countermeasures.

Unit: NT$ thousands

Year Items	2020	2019	Increase (decrease) amount	Change ratio %
Net operatingrevenue	4,672,310	4,738,182	(65,872)	(1.39)
Operatingcosts	4,235,305	4,405,546	(170,241)	(3.86)
Grossprofit	437,005	332,636	104,369	31.38
Operatingexpenses	210,794	200,503	10,291	5.13
Operatingincome	226,211	132,133	94,078	71.20
Non-operating income and expenses	(36,587)	19,772	(56,359)	(285.04)
Profit before tax	189,624	151,905	37,719	24.83
Tax expense	(6,211)	(14,681)	8,470	(57.69)
Profit	183,413	128,679	54,734	42.54
Increase or decrease of change analysis: 1. Decrease in operating revenues and operating costs: mainly due to the decrease in revenues in the current year compared with the same period of last year due to the impact of COVID-19. 2. Increase in gross operating margin: mainly due to the increase in operating margin caused by the difference in products sold in this year. 3. Increase in operating profits: mainly due to the increase in gross profit for the current period. 4. Decrease in non-operatingincomes: mainlydue to the equityinvestment loss and exchange

107

loss recognized in the current period and the sale of interests of the invested company using the equity method in the same period.

Increase in net profit for the period: mainly due to the increase in gross profit.
III. Cash Flow: Analysis of changes in cash flow in the most recent year, improvement plans for liquidity shortage, and cash liquidity analysis for the upcoming fiscal year.
(I) Liquidity analysis in the most recent two years

Year Items	2020	2019	Increases (decreases) ratio %
Cash flow ratio	(7.72)	(10.93)	(29.37)
Cash flow adequacy ratio	214.87	107.13	100.57
Cash reinvestment ratio	(4.45)	(4.51)	(1.33)
Increase or decrease of change analysis: Increase/decrease in various cash flow ratios compared to the previous year: Due to the decrease in net cash inflow duringtheyear as compared with thepreviousperiod.

(II) Cash liquidity analysis for the following year.

Cash Flow Analysis

(II) Cash liquidity analysis for the following year. Cash Flow Analysis	(II) Cash liquidity analysis for the following year. Cash Flow Analysis	(II) Cash liquidity analysis for the following year. Cash Flow Analysis	(II) Cash liquidity analysis for the following year. Cash Flow Analysis
				Unit: NT$thousands
Cash balance at beginning of the period	Net cash flow from operating activities for the year	Cash outflow for the year	Cash surplus (inadequacy) +-	Remedial measures for cash inadequacy
				Investment plans	Financial plan
330,087	295.983	193,956	432,114	0	0
Analysis of the changes in cash flow: 1. Business activities: Mainly due to cash inflow resulting from operating profit for expected turnover.

IV. Impact of Major Capital Expenditures on Corporate Finances and Business for the Most Recent Year
CHAINTECH had no significant capital expenditure in the most recent year.
Expected benefits: Not applicable.
V. Policy on Reinvestment in Other Companies, the Main Reasons for Profit/Loss Resulting Therefrom, Improvement Plan, and Investment Plans for the Upcoming Fiscal Year
Newly added investment businesses in the most recent year:

108

In March 2020, CHAINTECH invested in uSenlight Corporation for spanning its business to 5G and optical fiber communication module sectors, with a view to increasing the expansion of new product business. This investment involved 5,000,000 shares, NT$ 30 per share, and the total amount was NT $150 million, accounting for 13.70% of the equity.

2. Reasons for the profit or loss from reinvestment and improvement plans:

	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Name of reinvestment companies	The initial amount of investment	Profit or loss of investee for the period	Reason	Improvement Plan
	December 31,2020
Shenzhen Jinghong Digital R&D Service Co.,Ltd	499,065	37,469	-	-

3. Investment Plans for the Next 12 Months: none.

VI. Risk Management and Assessment

(I) The Organizational Structure of Risk Management

The implementation and responsible units of CHAINTECH's risk management are as below:

Risk Items	Responsible Department	Risk Business Items
Operational Strategy Risk	General Manager Office	Construct corporate value and principles, formulate annual operating strategies, mid-to-long-term operational objectives, and evaluate investment returns in combination with the Group’s core competitiveness,industrial trends,and international economy.
Financial Risk	Financial Division	Provide transparent and credible financial information, operational analysis and improvement plans, and make appropriate financial planning, interest rate risk hedging, customer credit risk control, account collection, and financial crisis forecasts to reduce corporate risks.
Legal risks	Financial Division	Responsible for the preparation and management of contracts, disposal of litigation and mediation cases, collection of laws and regulations, intellectual property and business secrets protection, bad debt collection and the like, to reduce the overall legal risks of theCompany.
Information Risk	Financial Division	Plan and construct information management system, be in charge of network and system information security control, protection measures and system recovery mechanism, and provide real- time, accurate and suitable management information to the management, so as to reduce the Company's operations and information securityrisks.
Inventory risk	Material Division	Procure raw materials and finished products, and undertake OEM contracting businesses andinventorymanagement.
Internal Risk	Auditing Office	Draft and implement the annual audit plan based on the results of risk evaluation,evaluate the effectiveness of the design and

109

implementation of the Company's internal control system, and assist the risk management organization and operational unit in designing risk management-based control operations.

(II) Impact of interest rates and exchange rate fluctuations, as well as inflation on the Company’s profit and loss, as well as future response measures:
Changes in interest rates

Apart from share capital and operation profit, CHAINTECH's working capital mainly depends on the bank loan. A bank loan is a kind of liability with a floating interest rate, so market interest rate changes will also change the effective interest rate and interest costs, thus influencing the profit or loss of CHAINTECH.

As of December 31, 2020, the balance of CHAINTECH's bank loan was NT$402,027 thousand, and if the market interest rate increased or reduced by 1%, the Company's net loss before tax would decrease or increase by NT$4,020 thousand on the condition that other factors remain unchanged, which accounted for 0.086% of our consolidated net revenue, having no significant effect on the overall net income after tax.

CHAINTECH's countermeasures for changes in interest rates are as below:

A. Maintain close contact with banks to obtain a preferential interest rate and actively reduce interest expenses.
B. Refer to the interest rate volatility in domestic and overseas index markets to grasp the future trend of the interest rate.
Changes in exchange rates
CHAINTECH is mainly engaged in foreign sales in the US dollar. Therefore, CHAINTECH will also take US$ as the payment currency in procurement as much as possible to reduce the amount of foreign currency held. In addition, the financial department of CHAINTECH maintains close contact with banks' foreign exchange department to keep abreast of the trend of the exchange rate as the basis for exchange settlement, thus reducing the risks arising out of exchange rates. The future countermeasures are as below:
(1) Effects on CHAINTECH's profit or loss: CHAINTECH's consolidated profit (loss) from the exchange in 2020 was NT$(29,558) thousand, accounting for 0.63% of the consolidated net income of the year; there overall exchange profit or loss would not result in any significant effect.
(2) Future Remedial Measures:
- A. Pay close attention to the development of domestic and foreign political and economic conditions and maintain contact with financial institutions to keep abreast of the changes in the exchange rate.
- B. Make judgment upon the trend of the future exchange rate, and adjust the US$ holding when appropriate, so as to create the most optimal exchange gain.
- C. Hedge possible risks of foreign currency with forwarding exchange contracts

110

and select credit-worthy financial institutions to enter into contracts.

D. Engage in transactions with steady hedging means instead of speculative ones as the principle for responding to exchange rate risks.
Inflation

CHAINTECH always pays attention to the price fluctuation of raw materials, maintains

good interaction with suppliers, and preset the procurement quantity by judging the price trend of raw materials, so as to lower the impact of price increases.

(III) Policy regarding High-risk Investments, Highly Leveraged Investments, Loans to Other Parties, Endorsements/Guarantees, and Derivatives Transactions, Main Reasons for the Profit (Loss) Generated Thereby, and Response Measures to Be Taken in the Future:
High-risk and highly leveraged investment policies: The Company's policy is to engage in non-high risk and non-high leveraged investments.
Derivative products transaction policy: CHAINTECH follows the principle of hedging against risks in substantial positions, and disposes of related matters according to the provisions of "Procedures for Acquisition and Disposal of Assets." CHAINTECH didn't get engaged in derivative financial product transaction in 2020.
Loan to other parties: CHAINTECH's capital loan is only limited to parent company and subsidiaries, to the exclusion of shareholders or any other parties. In 2020, as the invested subsidiaries or sub-subsidiaries have capital requirements, sub-subsidiaries had provided loans for subsidiaries according to the "Procedures for Acquisition and Disposal of Assets" formulated by CHAINTECH.
Endorsements and Guarantees for other parties: CHAINTECH may conduct endorsement/guarantee for the companies in which it directly or indirectly holds more than 90% of the voting shares. The endorsement and guarantee provided by CHAINTECH during 2020 were made according to the "Endorsement/ Guarantee Operating Procedures" formulated by CHAINTECH.
(IV) Research and development work to be carried out in the future, and further expenditures expected for research and development work
Future research and development plan
- (1) Display cards

Develop high, medium and low end gaming graphics cards by using the latest NVIDIA Ampere series chipset. For high-end gamers, we will develop e-sports graphics cards with core overclocking, high power consumption and outstanding heat dissipation performance.

(2) Motherboard
A. Develop iGame series gaming motherboard, including Vulcan and Gaming MINI iTX series by using the latest Intel 600 series high-end chipset.
B. Develop the Intel 600 LGA1700/AMD AM4 B550, A520 series medium-end motherboard, including the plan for CVN, BATTLE-AX, and Netscape series product line.
C. Development of UEFI multi-language graphical BIOS enhanced version.
(3) High-performance data computing solutions
A. Develop GPU computing server cluster management and development tool

111

software system for AI in-depth learning, machine learning, big data analysis and high-efficiency scientific computing based on the technology of Docker, Kubernetes containerization and container management.

     - B. Explore marginal computing and AI solutions in the industrial field; Explore automated machine learning and business AI solutions; Explore opportunities for cloud computing services.

     - C. Optimize the multi-language operation interface, and plan to integrate server hardware to create AI complete machine solutions, and explore business opportunities facing the international market.

Estimated R&D spendings:
- In order to maintain CHAINTECH's competitiveness, CHAINTECH has diversified product research and development and attached great importance to resource input for R&D. In 2021, the expenditure related to R&D is expected to maintain at a similar level to 2020, within 0.5% of the revenue.
(V) Changes in domestic and overseas policies and laws that impact the company’s financial operations and countermeasures:
There have been no matters arising out of changes in domestic and overseas laws that have influenced CHAINTECH's finance and business in the most recent year. The operating team of the Company will continuously pay close attention to the changes in policies and laws that may affect CHAINTECH's operation, and make quick response thereof.
(VI) Impact of changes in technology and industry on the Company’s financial operations, and related countermeasures:
In recent years, the biggest change in technology lies in electronization, and CHAINTECH has also been electronized as well. Whether in internal procedures or external connections, it has applied the newest technologies, hence lowering the cost.
(VII)Effect on the Crisis Management of Changes in the Corporate Image, and Measures to Be Taken in Response: CHAINTECH has always valued corporate image and risk management. Currently, there is no foreseeable crisis. If there are matters occurring that influence CHAINTECH's corporate image or lead to enterprise crisis, CHAINTECH will set up a project team that is in full charge of formulating the countermeasures.
(VIII) Expected Benefits and Possible Risks Associated with Any Mergers and Acquisitions, and Measures to Be Taken in Response: none.
(IX) Expected Benefits and Possible Risks Associated with Any Plant Expansion, and Measures to Be Taken in Response: none.
(X) Risks Associated with Any Consolidation of Sales or Purchasing Operations: In terms of the procurement: CHAINTECH follows the raw material procurement policy of maintaining two or more suppliers and diversifying raw material sources while keeping long-term close partnership with suppliers to ensure the sufficient supply of raw materials.

112

In terms of sales: Although CHAINTECH's sales are concentrated in some regions, the Company has established long-term cooperative relationships with its existing customers. On the other hand, CHAINTECH will also strive to develop new customers to expand and diversify the distribution channels and strive to reduce the risks concerning sales concentration.

(XI) Impact and risk of the mass transfer or change of shares of the directors, supervisors or major shareholders holding more than 10% of the shares of the Company, and measures to be taken in response: none.
(XII) Impact and risk associated with changes in management rights, and countermeasures: none.
(XIII) For litigation or non-litigation events, the major litigation, non-litigation or administrative dispute cases that have been judged or are pending of the Company and its directors, President, substantial responsible persons, major shareholders holding more than 10% of the shares and its affiliates shall be listed; if the results of which are likely to have a material impact on shareholders' equity or the price of securities, the facts in dispute, the amount of the subject matter, the commencement date of the proceeding, the principal parties involved and the disposition as of the date of publication of the annual report shall be disclosed: none.
(XIV) Other important risks and countermeasures:

CHAINTECH's information security risk management mechanism is as follows:

(I) Formulation of information security policy: In consideration of the policy objectives, perform information security risk assessment, formulate information security policies, determine the information security requirements, and implement appropriate and adequate information security measures accordingly, so as to be followed by all employees to ensure the security of the Company's information collection, processing, transmission, storage and distribution.
(II) Management of information security:
System entity and environmental security management: strengthen the management of access control, fire prevention measures, power and protection measures in the machine room to ensure the normal operation of the system.
Network, communication and operation management: set up firewall and antivirus software to strengthen the security control of the internal information management system, ensure the control of the external network connection and E-mail or other electronic means of transmission.
System access control: ensure the correctness and integrity of data input and output, and establish database and file management mechanism.
Control of information security inspection: establish transport and transmission procedures for backup equipment and computer media for important materials such as databases and system files, which shall have proper security measures.
(III) Information security management and review: The information security audit business shall be handled by the specialized unit according to the Company’s information security management regulations and information security audit plan, and the audit report shall be made to report the implementation effect. As of the date of the annual report, there have been no major security incidents affecting CHAINTECH's operations in the most recent year.

113

VII. Other important items: None.

114

Chapter 8 Special Notes

I. Information on Affiliated Companies

(I) Consolidated Business Report of Affiliated Companies
Organization chart of affiliated companies

==> picture [131 x 333] intentionally omitted <==

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

2425
Chaintech Technology
(parent company)
Shenzhen Jinghong
Digital R&D Service
Co.,Ltd
100%
Sitonholy (Tianjin)
Technology Co., Ltd.
51%
Beijing Sitonholy
Technology Co., Ltd.
100%
----- End of picture text -----

115

2. Basic information of affiliated companies

Unit: NT$ thousands

				Unit: NT$thousands
Name of business	Date of Incorporation	Address	Actual paid-in capital	Main business or production items
Shenzhen Jinghong Digital R&D Service Co.,Ltd	Aug. 2012	3A, 3F., Aozhihao Parking Complex, Xinzhou Fourth Street, Futian District, Shenzhen	NT$499,065	Technology research and development and trading of electronic products, computer hardware, and peripheraldevices
Sitonholy (Tianjin) Technology Co., Ltd.	July 2018	Floor 1, D Building, Zhongshan Road East, Yixianyuan Science Industrial Park, Wuqing District, Tianjin City, PRC	NT$100,162	Manufacturing and sales of electronics and computers, servers, and high-performance computing server
Beijing Sitonholy Technology Co., Ltd.	May 2012	Room 317, 3F, Building 29, Court 9, Anningzhuang West Road, Haidian District. Beijing City, PRC	NT$36,824	Manufacturing and sales of electronics and computers, servers, and high-performance computingserver

For those who are concluded as the existence of the controlling and subordinate relations, the information of the same shareholders: None.
Industry and interactive division of labor of overall affiliated companies:
(1) Industry: Electronics and R&D Centers.
(2) Interactive division of labor situation:
- a. CHAINTECH is responsible for the order receiving, procurement and sales.
- b. Shenzhen Jinghong Digital R&D Service Co., Ltd. is responsible for product research and development and trading of electronic peripherals.
- c. The Company invested in Sitonholy (Tianjin) technology Co., Ltd, responsible for the production and manufacturing of server products, through Jinghong.
- d. The Company invested in Beijing Sitonholy technology Co., Ltd, responsible for the production and manufacturing of server products, through Sitonholy (Tianjin) technology Co., Ltd.

116

5. Information of directors, supervisors, and general managers in all affiliated companies:

Unit: Share; %

			Unit: Share;%	Unit: Share;%
Name of business	Title	Name or representative	Number ofShares Held
			Number of shares	Shareholding ratio
Shenzhen Jinghong Digital R&D Service Co.,Ltd	Chairman of the Board	Chaintech Technology Corporation Representative: Chu,Ping	Note	100%
Sitonholy (Tianjin) Technology Co., Ltd.	Chairman of the Board Director Supervisor Supervisor	Tianjin Daweisi Technology Center Representative: Wang, Wei Shenzhen Jinghong Digital R&D Service Co.,Ltd Representative: Chu, Ping Representative: Tan, Li-Ying Tianjin Daweisi Technology Center Representative: Guo, Rui-Ling Shenzhen Jinghong Digital R&D Service Co.,Ltd Representative:He,Bo	Note	51%
Beijing Sitonholy Technology Co., Ltd.	Chairman of the Board Supervisor	Sitonholy (Tianjin) technology Co., Ltd Representative: Wang, Wei Sitonholy (Tianjin) technology Co., Ltd Representative: Wang,Shou-Zheng	Note	100%

Note: A company with limited liability; therefore, no number of shares.

117

6. Operation Overview of Affiliated Companies

6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies	6. Operation Overview of Affiliated Companies
Unit: NT$thousands
Name of business	Capital	Total Assets	Total Liabilities	Net Value	Operating Revenue	Operating Income	Profit or Loss (after Tax)	Earnings Per Share (NT$) (aftertax)
Shenzhen Jinghong Digital R&D Service Co.,Ltd	499,065	545,534	26,981	518,553	119,394	(894)	37,469	-
Sitonholy (Tianjin)Technology Co.,Ltd.	100,162	631,767	225,603	406,164	1,010,175	86,938	85,318	-
BeijingSitonholyTechnologyCo.,Ltd.	36,824	63,946	14,175	49,771	34,340	(2,288)	41	-

(II) Consolidated financial statements of affiliated companies: Due to the Consistency of compilation subject between the consolidated financial statements of the consolidated financial statement for parent company and subsidiaries, the financial statements are consolidated. (III) Relations report: None.

118

II. Private Placement Securities in the Most Recent Year to the Publication Date of this Annual Report: None.
III. Holding or Disposal of CHAINTECH's Shares by the Subsidiaries of the Most Recent Year to the Date of Publication of this Annual Report: None.
IV. Other Necessary Supplements: None.

Chapter 9

The Most Recent Year and up to the Publication Date of the

Annual Report, the Occurrence of Events as Provided for in Subparagraph 2, Paragraph 2, Article 36 of the Securities Exchange Act Which Have a Material Effect on Shareholders' Equity or Securities Prices: None.

119

Appendix I: Individual Financial Report for the Most Recent Year

Independent Auditors' Report (110) Cai-Shen-Bao-Zi No. 20004788

To Chaintech Technology Corp.,

Audit Opinion

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

In our opinions, the accompanying parent company only financial statements, in all material respects, give a true and fair view of the parent company only financial position of the Company as of December 31, 2020 and 2019, and of its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers."

Basis of Audit Opinion

For the parent company only 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 parent company only 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 Responsibilities of Certified Public Accountants for Auditing the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. 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

120

audit of the parent company only financial statement of the Company for the year ended December 31, 2020. These matters are addressed in the context of our audit of the parent company only 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 parent company only financial statement of the Company 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 Note IV(XXIV) to the parent company only financial statements. For the description of sales revenue, please refer to Note VI(XV) to the parent company only financial statements.

The Company 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 Company 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. These revenue recognitions generally involve a large number of manual operations. Considering that the volume of the shipments of the Company is large, and the amount of transaction before and after the financial statement 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:

Understand revenue recognition and adjustment procedures for revenue cut-off for shipment from the depository of warehouse of the Company. Then, inspect the appropriateness of the revenue's recognition from the warehouse, including understanding of the relevant internal control procedures, obtaining information and the statements provided by the depository.
Carry out an internal control test for the sales revenue from the warehouse in order to make sure that the Company determines the sales recognition when the customer receives the delivery of goods and the right of control is transferred.
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
121

that revenue recognition is recorded in the appropriate period.

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

Assessment of impairment of intangible assets by Shenzhen Jinghong Digital R&D Service Co., Ltd. - investments accounted for using the equity method

Description

Regarding the accounting policy for assessment of impairment of investments accounted for using the equity method, please refer to Note IV(XV) to the parent company only financial statements. For the estimation and assumption uncertainty in assessment of impairment of investments accounted for using the equity method, please refer to Note V(II) to the parent company only financial statements. For the description of impairment of non-financial assets, please refer to Note VI(X) to the parent company only financial statements.

In 2019, the Company had a 51% equity interest in Sitonholy (Tianjin) Technology Co., Ltd. through Shenzhen Jinghong Digital R&D Service Co., Ltd. Goodwill and customer relationships were recognized in investments accounted for using the equity method according to the equity purchase contract. This has a significant impact on the parent company only financial statements of the Company.

To assess whether intangible assets are impaired, Shenzhen Jinghong Digital R&D Service Co., Ltd. estimates the future cash flows based on the cash-generating 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 assessment of the impairment of intangible assets by Shenzhen Jinghong Digital R&D Service Co., Ltd. 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:

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.
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.

122

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

Responsibility of Management and Those Charged with Governance for the Parent Company Only Financial Statements

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

In preparing the parent company only financial statements, the responsibility of management includes assessing the Company's ability to continue as a going concern, disclosing going concern related matters, as well as adopting going concern basis of accounting unless the management intends to liquidate the Company 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 Company's financial reporting process.

Responsibilities of Certified Public Accountants for Auditing the Parent Company Only 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 auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the GAAS of Republic of China will always detect a material misstatement when it exists. Misstatements may arise from fraud or 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 parent company only 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:

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

123

misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies adopted by the management and the reasonableness of the accounting estimates and related disclosures made accordingly.

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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent company only financial statements; or, if such disclosures are inadequate, we are required to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or circumstances may cause the Company to no longer continue as a going concern.Evaluate the overall expression, structure, and contents of the parent company only financial statements (including related notes) and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient and appropriate audit evidence with regard to the financial information of the entities within the Company to express an opinion about the parent company only 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 parent company only 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.

124

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

125

Chaintech Technology Corporation Parent Company Only Balance Sheets For the Years Ended December 31, 2020 and 2019

Assets	December 31, 2020 Amount % $ 149,370 6 - - 361,570 15 770,724 32 24,310 1 174,218 7 59,702 2 1,539,894 63 186,150 8 652,125 27 32,489 1 4,444 - 3,132 - 30,040 1 908,380 37 $ 2,448,274 100	Unit: NT$ thousands December 31, 2019	Unit: NT$ thousands December 31, 2019
	Amount $ 149,370 - 361,570 770,724 24,310 174,218 59,702 1,539,894 186,150 652,125 32,489 4,444 3,132 30,040 908,380 $ 2,448,274	Amount $ 187,565 2,172 227,710 616,786 24,267 290,324 63,837 1,412,661 137,045 472,349 55,272 5,925 3,435 53 674,079 $ 2,086,740	%
Current assets 1100 Cash and cash equivalents 1110 Financial asset at fair value through profit and loss - current 1170 Accounts receivable, net 1180 Accounts receivable from related parties, net 1220 Current tax assets 130X Inventories 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 1840 Deferred tax assets 1900 Other noncurrent assets 15XX Total non-current assets 1XXX Total Assets			9 - 11 30 1 14 3
			68
			6 23 3 - - -
			32
			100

(Continued)

126

Chaintech Technology Corporation

Parent Company Only Balance Sheets For the Years Ended December 31, 2020 and 2019

Liabilities and equity

Unit: NT$ thousands
December31,2020

December31,2019
Notes
Amount

%
Amount
%
VI(XI)
$ 402,027
17
$ 156,597
8
-
-
24
-
254,683
10
319,099
15
VII
59,856
3
52,839
3
2,588
-
-
-
1,498
-
1,408
-
170
-
94
-
720,822
30
530,061
26
3,135
-
4,632
-
3,135
-
4,632
-
723,957
30
534,693
26
VI(XIII)
1,014,988
42
1,014,988
49
100
-
-
-
VI(XIV)
132,984
5
122,290
6
97,541
4
112,514
5
670,152
27
551,542
26
(
39,702) (
2) (
97,541) (
5)
VI(XIII)
(
151,746) (
6) (
151,746) (
7)
1,724,317
70
1,552,047
74
IX
$ 2,448,274
100
$ 2,086,740
100

Current liabilities
2100
Short-term borrowings
2150
Notes payable
2170
Accounts payable
2200
Other payables
2230
Current tax liabilities
2280
Current lease liabilities
2300
Other current liabilities
21XX
Total current liabilities
2580
Non-current lease liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
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
3XXX
Total equity
Significant contingent liabilities and
unrecognized contract commitments
3X2X
Total liabilities and equity

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

Chairman: Shu-Jung Kao Manager: Shu-Jung Kao Accounting Officer: Yu-Nu Lai

127

Chaintech Technology Corporation Parent Company Only Statements of Comprehensive Income For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousand (EPS in NT$)

Item

2020
2019
Notes
Amount
%
Amount
%
VI(XV) and VII
$ 3,515,850
100
$ 3,591,114
100
VI(V)(XIX)
(XX)
(
3,287,024) (
94)(
3,432,847)(
96 )
228,826
6
158,267
4
VI(XIX)(XX)
and VII
(
45,525 ) (
1 ) (
50,243) (
1 )
(
26,108 ) (
1 ) (
24,926) (
1 )
(
2,914 )
-
(
3,404)
-
XII
(
124)
-
-
-
(
74,671) (
2)(
78,573)(
2 )
154,155
4
79,694
2
420
-
2,437
-
VI(XVI)
4,485
-
3,246
-
VI(X)(XVII)
(
29,528 ) (
1 )
14,881
1
VI(XVIII)
(
6,306 )
-
(
5,682)
-

VI(VII)
25,548
1
11,172
-
(
5,381)
-
26,054
1
148,774
4
105,748
3
VI(XXI)
(
2,867)
-
1,194
-
$ 145,907
4
$ 106,942
3
VI(III)
$ 49,105
2
$ 28,060
1
49,105
2
28,060
1
8,734
-
(
13,087)(
1 )
8,734
-
(
13,087)(
1 )
$ 57,839
2
$ 14,973
-
$ 203,746
6
$ 121,915
3
VI(XXII)
$ 1.51
$ 1.06
VI(XXII)
$ 1.51
$ 1.06

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
Expected credit losses
6000
Total operating expenses
6900
Operating income
Non-operating income and
expenses
7100
Interest income
7010
Other revenue
7020
Other gains and losses
7050
Finance costs
7070
Share of profit or loss of
subsidiaries, associates, and joint
ventures accounted for using
equity method
7000
Total non-operating income
and expenses
7900
Profit before tax
7950
Income tax expenses (benefits)
8200
Profit
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)
Basic earnings per share
9750
Profit
Diluted earnings per share
9850
Profit

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

Manager: Shu-Jung Kao

Chairman: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

128

Chaintech Technology Corporation Parent Company Only Statements of Changes in Equity For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands

Notes 2019 Balance as of January 1, 2019 Profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of earnings for 2018: VI(XIV) Legal reserve appropriated Special reserve appropriated Cash dividends paid Treasury shares repurchased 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: VI(XIV) Legal reserve appropriated Special reserve appropriated Cash dividends paid Changes in the net worth of associates accounted for using equity method VI(VII) Balance as of December 31, 2020	Notes		Ordinary shares	Capital surplus - changes in the net worth of associates and joint ventures accounted for using equity method	Capital surplus - changes in the net worth of associates and joint ventures accounted for using equity method				Retained earnings			Other equity	Other equity	Other equity	Other equity	Treasury shares	Treasury shares		Total equity
							Legal reserve		Special reserve		Unappropriated retained earnings	Exchange differences on translation of financial statements of foreign operation			Unrealized gains (losses) on financial assets at fair value through other comprehensive income
			$ 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 )	$1,734,124 106,942 14,973 121,915 - - ( 152,246 ) ( 151,746 ) $ 1,552,047 $ 1,552,047 145,907 57,839 203,746 - - ( 28,950 ) ( 2,526 ) $ 1,724,317

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

Chairman: Shu-Jung Kao

Manager: Shu-Jung Kao Accounting Officer: Yu-Nu Lai

~129~

Chaintech Technology Corporation

Parent Company Only Statements of Cash Flows For the Years Ended December 31, 2020 and 2019

Cash flows from operating activities
Profit before tax
Adjustments
Income charges (credits)
Depreciation expenses
Depreciation expenses on right-of-use assets
Expected credit losses
Valuation adjustment for financial assets at fair
value through profit or loss
Interest income
Interest expenses
Dividend income
Share of profit or loss of subsidiaries accounted
for using equity method
Gain on disposal of investments accounted for
using equity method
Impairment loss
Changes in operating assets and liabilities
Net changes in operating assets
Financial assets at fair value through profit or
loss
Accounts receivable (including related parties)
Other receivables
Inventories
Other current assets
Net changes in operating 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 generated from (used in)
operating activities
Cash flows from investing activities
Acquisition of investments accounted for using equity
method
Disposal of investments accounted for using equity
method
Acquisition of property, plant, and equipment
Decrease in other current assets
Increase (decrease) in other non-current assets
Net cash flows used in investing activities
Cash flows from financing activities
Increase in short-term borrowings
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 balance at beginning of period
Cash and cash equivalents balance at end of period

Unit: NT$ thousands
Notes
January 1 to
December31,2020
January 1 to
December31,2019
$ 148,774 $ 105,748
VI(VIII)(XIX)
22,895
13,341
VI(IX)(XIX)
1,481
1,481
XII
124
-
VI(II)(XVII)
(
1,049 ) (
447 )
(
420 ) (
2,437 )
VI(XVIII)
6,306
5,682
VI(XVI)
(
3,079 ) (
3,053 )
VI(VII)
(
25,548 ) (
11,172 )
VI(XVII)
- (
25,943 )
VI(VII)(X)
(XVII)
1,980
-
3,221
30

(
287,922 )
74,068
-
155
116,106 (
194,491 )
220 (
1,657 )
(
24 )
24
(
64,416 )
162,240
6,820 (
10,511 )
76(
99)
(
74,455 )
112,959
420
2,437
3,079
3,053
(
6,109 ) (
5,302 )
(
19) (
78,672)
(
77,084)
34,475
VI(VII)
(
150,000 ) (
259,609 )
VI(VII)
-
157,539
VI(XXIII)
(
2,350 ) (
48,597 )
(
23,882 ) (
28,390 )
48(
48)
(
176,184 ) (
179,105)
VI(XXIV)
245,430
156,597
VI(XXIV)
(
1,407 ) (
1,570 )
VI(XIV)
(
28,950 ) (
152,246 )
- (
151,746)
215,073(
148,965)
- (
51 )
(
38,195 ) (
293,646 )
187,565
481,211
$ 149,370 $ 187,565

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

Chairman: Shu-Jung Kao

Manager: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

130

Chaintech Technology Corporation

Notes to Parent Company Only 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 Co., Ltd. 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 OTC-listed 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 is 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.

II. Approval Date and Procedures of the Parent Company Only Financial Statements

The parent company only 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 Financial Supervisory Commission, R.O.C ("FSC")

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

New standards, interpretations and amendments endorsed 2020 are as follows:	by the FSC effective from
	Effective date by the
New/revised/amended standards, interpretations, and amendments	International Accounting
	Standards Board (IASB)
Amendments to IAS 1 and IAS 8 "Disclosure Initiative - Definition of Materiality"	January 1, 2020
Amendments to IFRS 3 "Definition of a Business"	January 1, 2020
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)

131

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

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

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

yet adopted by the Company
	Effective date by the
New/revised/amended standards, interpretations, and	International Accounting
amendments	Standards Board (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 January 1, 2021 16 "Changes in Interest Rate Benchmark Reform - Phase 2"

The above standards and interpretations have no significant impact to the Company's financial condition and financial performance based on the Company'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
amendments
Amendments to IFRS 3 "Reference to the Conceptual
Framework"
Amendments to IFRS 10 and IAS 28 "Sale or Contribution
of Assets between an Investor and its Associate or Joint
Venture"
IFRS 17 "Insurance Contracts"
Amendments to 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
International Accounting
Standards Board (IASB)
January 1, 2021
January 1, 2022
To be determined by the
IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022

132

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

IV. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of the parent company only 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 parent company only financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(II) Basis of preparation

The parent company only financial statements have been prepared based on historical cost convention.
The financial statements prepared in accordance with IFRSs, international accounting standards, interpretations and interpretations (hereinafter referred to as the IFRSs) are required to be used for the preparation of financial statements. The financial statements of the Company shall also require the use of certain critical accounting estimates. Management requires the use of judgment in applying the Company’s accounting policies. For items involving a higher degree of judgment or complexity, or items where assumptions and estimates are significant to the parent company only financial statements, please refer to Note V for details.

(III) Foreign currency translation

The Company's items listed in the parent company only financial statements are measured and presented in the currency of the primary economic environment in which the Company operates (i.e., functional currency).

Foreign currency transactions and balances
(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.
(2) Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing at the balance sheet date. Exchange differences arising upon the re-transaction 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

133

retranslated 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;
(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 Company 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.

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

Assets that meet one of the following criteria are classified as current assets:
(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.
(2) Liabilities held mainly for trading purposes.
(3) Assets that are expected to be realized within twelve months from the balance sheet date.
(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 non-current.

Liabilities that meet one of the following conditions are classified as current liabilities:
(1) Liabilities that are expected to be paid off within the normal operating cycle.
(2) Liabilities held mainly for trading purposes.
(3) Liabilities that are to be paid off within twelve months from the balance sheet

134

date.

(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.

(V) Financial assets at fair value through profit or loss

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.
Financial assets at fair value through profit or loss that follow regular way purchase or sale are recognized by the Company using trade date accounting.
At initial recognition, the Company measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.
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 Company and the amount of dividends can be measured reliably.

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

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:
(1) The financial asset is held for the purpose of obtaining the contractual cash flows and the sales of the contract.
(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.
The Company adopts trade date accounting for financial assets measured at fair value through other comprehensive income.
At initial recognition, the Company measures the financial assets at fair value plus transaction costs; the Company 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 Company and the amount of the dividend can be measured reliably.

135

(VII) Accounts receivable

Accounts receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.
Short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(VIII) Impairment of financial assets

Considering all reasonable and provable information (including forward-looking information), the Company measured the credit risk that increased insignificantly since original recognition vie the 12-month expected credit loss amount through financial debt instrument at fair value through other comprehensive income, financial asset at amortized cost and accounts receivable significant financial components. For those credit risk increased 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.

(IX) Derecognition of financial assets

Financial assets are de-recognized when the Company's contractual rights to receive cash flows from financial assets are lapsed.
(X) 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.
(XI) 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.

(XII) Investments accounted for using equity method - subsidiaries/associates

Subsidiaries refer to all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company 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.
Unrealized gains and losses resulting from transactions between the Company and its subsidiaries are eliminated. Accounting policies of subsidiaries have been

136

changed where necessary to ensure consistency with the policies adopted by the Company.

The share of gain or loss and other comprehensive income generated from the subsidiary was recognized as profit or loss of the period and other comprehensive income (loss), respectively. If the Company's share of loss recognized on the subsidiary is equal to or exceeds the equity interest in the subsidiary, the Company will not recognize further losses unless the Company has statutory obligations or deferred obligations or has paid for the subsidiary.
When the Company disposes its investment in an subsidiary and loses significant influence over the subsidiary, the amounts previously recognized in other comprehensive income in relation to the subsidiary 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 the subsidiary, the amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
Associates are all entities over which the Company has significant influence but does not control. In general, it is presumed that the investor has significant influence if an investor holds directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
The Company'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. When the Company's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
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 Company’s ownership percentage of the associate, the Company recognizes the change in ownership interests in the associate in "capital surplus" in proportion to its ownership.
Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company's interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates are adjusted, when necessary, to remain consistent with those of the Company.

137

Where an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company's ownership percentage of the associate but maintains significant influence on the associate, the "capital surplus" and "investments accounted for under the 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.
When the Company disposes of any related enterprise, and the significant impact on the related enterprise is thereby lost, the accounting treatment provides that the Company directly dispose of the relevant assets or liabilities for all the amounts previously recognized in other comprehensive income related to the related enterprise, on the same basis, that is, if the interests or losses previously recognized as other comprehensive income are reclassified as profit or loss when the relevant assets or liabilities are disposed, then when the significant impact on the related enterprise is lost, the benefit or loss in equity is concomitantly reclassified as profit or loss. 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.
According to the "Rules Governing the Preparations of Financial Statements by Securities Issuers," profit for the current period and other comprehensive income for the current period reported in an entity's parent company only statement of comprehensive income shall be equal to profit for the current period and other comprehensive income attributable to owners of the parent reported in that entity's consolidated statement of comprehensive income. Total equity reported in an entity's parent company only financial statements shall be equal to equity attributable to owners of parent reported in that entity's consolidated financial statements.

(XIII) Property, plant, and equipment

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

138

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.
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:

Derivative instruments 3~5 years

Tooling equipment 2 years

Other equipment 3 years

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

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 Company'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.
On the commencement date, the Company measures lease liabilities by the present value of outstanding lease payments, using the Company's incremental borrowing rate. Lease payments include fixed payments less any lease incentives receivable. In subsequent periods, the Company 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 are reassessed and the remeasurements are adjusted to the right-of-use assets.
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 Company 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.
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.

139

(XV) Impairment of non-financial assets

The Company estimates the recoverable amount of assets with signs of impairment on the balance sheet date. When the recoverable amount is lower than its book value, the impairment loss is recognized. The recoverable amount is the higher of an asset's fair value less costs of disposal and its value in use. Where an impairment loss of assets recognized in previous years does not exist or decrease, the impairment loss is reversed. However, the carrying amount of the asset increased by the impairment loss shall not exceed the book value of the asset after abatement the depreciation or amortization if the impairment loss is unrecognized.

(XVI) 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.

(XVII) Accounts payable

Accounts payable refer to the debts incurred by purchase of materials, goods, or services on credit, and the notes payable incurred by both operating and nonoperating activities.
Short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(XVIII) Derecognition of financial liabilities

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

(XIX) 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.

(XX) Employee benefits
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.

Pensions

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

140

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.
(XXI) Income tax
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.
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 Company 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 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 Company shall recognize the distribution of earnings and expenses, and recognize the earnings and expenses for the actual earnings.
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 parent company only balance sheets. 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 Company, 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.
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

141

income tax assets are reassessed.

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.

(XXII) Share capital

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.
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.

(XXIII) 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.

(XXIV) Revenue recognition

Sales of goods
(1) The Company 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 Company 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.

142

(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.
(3) Accounts receivable are recognized when the control right of commodities is transferred to the customs; that is because the Company has unconditional rights to the contract price since that point in time, and the Company can collect the consideration from the customer once upon the contractual time is expired.
Service revenue

The Company 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.

Financial composition

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

Costs to acquire contracts from customers

The Company 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.

(XXV) Government grants

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

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

The preparation of the Company's parent company only financial statements requires management to make critical judgments in applying the Company'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.

143

Uncertainties in material accounting judgments, estimates, and assumptions are addressed below:

(I) Significant judgments in applying accounting policies None.
(II) Significant accounting estimates and assumptions Assessment of impairment of intangible assets by Shenzhen Jinghong Digital R&D -
Service Co., Ltd. investments accounted for using the equity method
The assessment of impairment of intangible assets relies on Shenzhen Jinghong Digital R&D Service Co., Ltd.’s subjective judgment, including identifying cashgenerating 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 Cash on hand and revolving funds Checking deposits and demand deposits	December 31, 2020 $ 87 149,283 $ 149,370	December 31, 2019
			$ 105 187,460 $ 187,565

The Company 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.
The Company does not provide any cash as pledges to others.

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

Item Stocks of listed companies Valuation adjustments Total	December 31, 2020 $ - - $-	December 31, 2019
		$ 2,568 ( 396) $ 2,172

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

Item Equity instruments	2020 $ 1,049	2019
		$ 447

The Company's financial assets at fair value through profit or loss - current were not provided as pledged assets or guarantees for the years ended December 31, 2020 and 2019.
For information on the price risk and fair value of financial assets at fair value through profit or loss, please refer to Note XII(III)(IV).

144

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

Item Non-current items: Equity instruments Stocks of listed companies Stocks unlisted at stock exchange market, over counter market or emerging stock market Valuation adjustments Total	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

The Company elects to classify the strategic investments in equity as financial assets at fair value through other comprehensive income. The fair value of such investments was NT$186,150 and NT$137,045, respectively, for the years ended December 31, 2020 and 2019.
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 Fair value changes recognized in other comprehensive income Dividend income recognized in profit or loss at end of period	2020 $ 49,105 $ 3,050	2019 $ 28,060 $ 3,005

For more information on the price risk and fair value of financial assets at fair value through other comprehensive income, please refer to Note XII(III)(IV).

(IV) Accounts receivable

Accounts receivable
Accounts receivable Accounts receivable from related parties	December 31, 2020
	Total $ 361,713 771,028 $ 1,132,741	Allowance loss ($ 143) ( 304) ($ 447)	Net
			$ 361,570 770,724 $ 1,132,294

145

December 31, 2019

Accounts receivable Accounts receivable from related parties		Total $ 227,847 616,972 $ 844,819	Allowance loss ($ 137) ( 186) ($ 323)	Net
				$ 227,710 616,786 $ 844,496

Aging analysis of accounts receivable is stated as follows:

Not overdue Overdue for 1~90 days Overdue for 91~180 days	$	December 31, 2020 1,132,741 - - 1,132,741	$	December 31, 2019
				844,819 - - 844,819
	$		$

The aging analysis above is based on past due date.

The balance of receivables on contracts with customers as of December 31, 2020, December 31, 2019, and January 1, 2019 was NT$1,132,741, NT$844,819, and NT$918,887, respectively.
Without consideration of the collateral held or other credit enhancements, the maximum credit risk that best represent the Company's accounts receivable as of December 31, 2020 and 2019 amounted to NT$1,132,294 and NT$844,496, respectively.
For more information on the credit risk of accounts receivable, please refer to Note XII(III).

(V) Inventories

December 31, 2020

Raw materials Work in progress Finished goods	$	Cost 59,126 36,434 85,257 180,817	Allowance for valuation loss ($ 4,994) - ( 1,605) ($ 6,599)	$	Carrying amount
					54,132 36,434 83,652 174,218
	$			$

December 31, 2019

Raw materials Work in progress Finished goods	$	Cost Allowance for loss 203,353 ($ 78,771 16,234 ( 298,358 ($	valuation 6,435) - 1,599) 8,034)	$	Carrying amount
					196,918 78,771 14,635 290,324
	$			$

146

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

Cost of inventories sold Loss from price decline in inventories	2020 $ 3,288,459 ( 1,435) $ 3,287,024	2019 $ 3,426,441 6,406 $ 3,432,847

Note: The Company's reported the gain on inventories in 2020 as a result of destocking.

(VI) Other current assets

December 31, 2020 December 31, 2019 Restricted bank deposits $ 56,887 $ 33,005 Tax - overpaid retained 30,080 Others 2,815 752 $ 59,702 $ 63,837

The details of the pledges of other current assets of the Company are set out in Note VIII.

(VII) Investments using equity method

				2020	2020		2019
January 1			$	472,349		$	346,200
Investments using equity method				150,000			259,609
Disposal of investments accounted		for using equity		-		(	131,596)
method
Share of profit or loss of Investments using equity				25,548			11,172
method
Impairment loss			(	1,980)			-
Changes in retained earnings			(	2,626)			-
Changes in capital surplus				100			-
Changes in other equity				8,734		(	13,087)
Effect of exchange rate changes				-			51
December 31			$	652,125		$	472,349
		December 31,	2020			December 31, 2019
		Shareholding					Shareholding
		Amount	ratio (%)		Amount		ratio (%)
Subsidiary
Shenzhen Jinghong Digital
R&D Service Co., Ltd.	$	518,552	100	$	472,349		100
Associate
uSenlight Corporation		133,573	13.05			-	-
	$	652,125		$	472,349

147

The share of profit and loss of subsidiaries (losses) recognized by the Company using the equity method is derived from the evaluation of the financial report data from the audited financial statement for the same period. The breakdown is as follows:

Shenzhen Jinghong Digital R&D Service Co., Ltd. Bahamas Federal Shanghai Co., Ltd. uSenlight Corporation	2020 $ 37,469 - ( 11,921) $ 25,548	2019 $ 19,717 ( 8,545) - $ 11,172

For information on the Company's subsidiaries, please refer to Note IV(III) to the consolidated financial statements for the year ended December 31, 2020.
The Company invested US$5 million in the subsidiary, Shenzhen City Jinghong Digital Research & Development Service Co., Ltd., approved by the Ministry of Economic Affairs Investment Commission on November 26, 2015. The Company has remitted US$3 million (equivalent to NT$$96,760), and remitted the balance of US$2 million (equivalent to NT$61,430) on January 3, 2019.
The Company increased 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 January 31, 2019. US$4.9 million (equivalent to NT$151,116) was remitted on April 1, 2019, and US$1.5 million (equivalent to NT$47,063) was remitted on August 26, 2019.
On May 9, 2019, the Board of Directors resolved to dispose of its 100% equity interest in Bahamas Federal Shanghai Co., Ltd. The Company completed the transfer of equity in July 2019. Proceeds from disposal amounted to US$4,880,000 (equivalent to NT$151,565), with a gain on disposal of NT$26,313 recognized.
Wise Providence Limited was liquidated on April 25, 2019, and an investment fund of HK$1,483,184 (equivalent to NT$5,974) was remitted back, with a loss on disposal of NT$370 recognized.
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 Company 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 Company held a 13.05% equity interest in uSenlight Corporation, making the Company its single largest shareholder. As the other two largest shareholders (not the Company's related parties) held more than the Company’s

148

shares, the Company had no ability to direct the relevant business activities of uSenlight Corporation. Accordingly, the Company had significant influence but had no control over uSenlight Corporation.

For the above investment accounted for using equity method in 2020, the Company carried out an impairment test based on the recoverable amount of such investment. Based on the above valuation result, the Company recognized a impairment loss on investments accounted for using equity method of NT$1,980.
The basic information of the associates that are material to the Company is as follows:

Company name Main business premise Shareholding ratio December 31, 2020 uSenlight Corporation Republic of China 13.05% (Note)	Nature of relationship Significant influence	Measurement Equity method

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

Balance sheet

Balance sheet
Current assets Non-current assets Current liabilities Non-current liabilities Total net 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)	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)

149

(VIII) Property, plant, and equipment

(VIII) Property, plant, and equipment	(VIII) Property, plant, and equipment	(VIII) Property, plant, and equipment	(VIII) Property, plant, and equipment	(VIII) Property, plant, and equipment
Derivative instruments Tooling equipment January 1, 2020 Cost $ 3,540 $ 68,613 $ Accumulated depreciation ( 3,540) ( 13,341) ( $- $ 55,272 $ 2020 January 1 $ - $ 55,272 $ Additions - - Depreciation expenses - ( 22,871) ( December 31 $- $ 32,401 $ December 31, 2020 Cost $ 3,540 $ 68,613 $ Accumulated depreciation ( 3,540) ( 36,212) ( $- $ 32,401 $ Derivative instruments Tooling equipment Others January 1, 2019 Cost $ 3,540 $ - $ 1,385 Accumulated depreciation ( 3,540) - ( 1,385) $- $- $- 2019 January 1 $ - $ - $ - Additions - 68,613 - Depreciation expenses - ( 13,341) - December 31 $- $ 55,272 $- December 31, 2019 Cost $ 3,540 $ 68,613 $ 1,385 Accumulated depreciation ( 3,540) ( 13,341) ( 1,385) $- $ 55,272 $-					Others 1,385 $ 1,385) (			Total 72,153 16,881)
				$	- $ - $ 112 24) ( 88 $ 1,497 $ 1,409) (		$	55,272 55,272 112 22,895)
				$ (			$ (
				$			$	32,489 73,650 41,161)
				$ (
				$		88 $ (	$

	$ - - $- $ - 68,613 ( 13,341) $ 55,272 $ 68,613 ( 13,341) $ 55,272
		$	- - - - - 1,385 1,385)			$
		$				$ (
		$				$
		$ (				$ (
		$	-			$

(IX) Lease transaction - lessee

The Company's leased underlying assets are buildings, of which the lease term is

150

usually 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.

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

	December 31, 2020	December 31, 2019
	Carrying amount	Carrying amount
Buildings	$ 4,444	$ 5,925
	2020	2019
	Depreciation expenses	Depreciation expenses
Buildings	$ 1,481	$ 1,481

The Company did not have any additions to the right-of-use assets for the years ended December 31, 2020 and 2019.
Profit or loss items in connection with lease contracts are stated as follows:
The cash flows used in the Company's leases for the years ended December 31, 2020 and 2019 totaled NT$1,624 and NT$1,942, respectively.

(X) Impairment of non-financial assets

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

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

The Company 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.

(XI) Short-term borrowings

Loan type Bank loans Secured loans Unsecured loans	December 31, 2020 $ 271,900 130,127 $ 402,027	Interest range Collateral 1.10%~1.61% Other current assets - bank deposits 0.97%~1.22% None

151

Loan type Bank loans Secured loans Unsecured loans	December 31, 2019 $ 127,317 29,280 $ 156,597	Interest range Collateral 2.71%~3.30% Other current assets - bank deposits 3.17% None

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

(XII) Pension

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.
The pension costs recognized by the Company in accordance with the aforesaid pension regulations for the years ended December 31, 2020 and 2019 were NT$751 and NT$733, respectively.

(XIII) Share capital

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.
Treasury shares
(1) The reason for share re-acquisition and movements in the number of treasury stock are as follows:

Company holding shares Reason for recovery The Company Transfer to employees Company holding shares Reason for recovery The Company Transfer to employees		December Number of shares (in thousands) 5,000 December Number of shares (in thousands) 5,000	December	31, 2020 Carrying amount

				151,746 31, 2019 Carrying amount


				151,746

152

(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 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.

(XIV) Retained earnings

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 Company 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.
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.
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.

153

(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.
(2) When the Company adopted the 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 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.
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:

2019 Amount (NT$ thousands) Dividends per share (NT$) Legal reserve $ 10,694 Special reserve (reversed) ( 14,973) Cash dividends 28,950 $ 0.30	2018 Amount (NT$ thousands) Dividends per share (NT$) $ 24,431 24,033 152,246 $ 1.5	2018 Amount (NT$ thousands) Dividends per share (NT$) $ 24,431 24,033 152,246 $ 1.5
	$	share (NT$) $ 1.5

Please refer to Note VI(XX) for information on employees' compensation and directors' and supervisors' remuneration.
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.
(XV) Operating revenue

Operating revenue
Revenue from contracts with customers $ Breakdown of revenue from contracts with customers	$	2020 3,515,850 $	2019 3,591,114

The Company derives revenue from the transfer of goods over time and at a point in time as follows:

ollows:
Dividend income Other revenue	$	2020 3,079 $ 1,406	2019 3,053 193 3,246
	$	4,485 $

154

(XVI) Other revenue

Other revenue
Dividend income Other revenue	2020 $ 3,079 1,406 $ 4,485	$	2019 3,053 193 3,246
		$

(XVII) Other gains and losses

d losses
Gain on financial assets at fair value through profit or loss Gain on disposal of investments Net foreign exchange losses Impairment loss	$ ( (	2020 1,049 $ - 28,597) ( 1,980) 29,528) $	$ (	2019 447 25,943 11,509) - 14,881
	($

(XVIII) Finance costs

Interest expense: Bank loans Lease liabilities	$ $	$	2020 6,143 $ 163 6,306 $	2019 5,478 204 5,682

(XIX) Expenses by nature

ature	ature
Employee benefit expenses $ Depreciation expenses on property, plant and equipment Depreciation expenses on leased assets $		2020 31,413 $ 22,895 1,481 55,789 $	2019 26,090 13,341 1,481 40,912
	$

(XX) Employee benefit expenses

it expenses
Wages and salaries Labor and health insurance premiums Pension expense Other personnel costs	$	2020 26,667 $ 1,440 751 2,555 31,413 $	2019 21,269 1,472 733 2,616 26,090
	$

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

155

compensation, and the directors and supervisors shall not be paid more than 6% as remuneration.

For the years ended December 31, 2020 and 2019, the estimated amount of employees' compensation 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 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' compensation will be distributed in the form of cash.

The employees' compensation, 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.

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

(XXI) Income tax

Tax (benefit) expense

Components of tax (benefit) expense:

$ (	2020 2,201 $ 406 43) 2,564	2020 2,201 $ 406 43) 2,564
	2,564
	303 ( 2,867 ($	(
$

156

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 Tax effects of temporary differences Tax losses not recognized as deferred tax assets Deduction of tax losses Surtax on unappropriated earnings Underestimated (overestimated) income tax in previous years Income tax expense (benefit)	$ ( ( ( ( (	2020 29,754 $ - ( 334) 210) ( 4,709) ( - 21,997) 406 43) 2,867 ($	2020 29,754 $ - ( 334) 210) ( 4,709) ( - 21,997) 406 43) 2,867 ($	2019 21,150 43,503) 546 701) 2,918) 21,997 - 2,180 55 1,194)
	$		($

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

			2020	2020
$	January 1 1,287 2,148 3,435	Recognized in profit or loss ($ 290) ( 13) ($ 303)	Recognized in	Recognized in other comprehensive income $ - - $-	December 31
					$ 997 2,135 $ 3,132
$				$

157

		2019	2019	2019
	January 1 6 - 6	Recognized in profit or loss $ 1,281 2,148 $ 3,429	Recognized in other comprehensive income $ - - $-		December 31
				income - - -
					$ 1,287 2,148 $ 3,435
$			$

The amounts of deductible temporary differences not recognized as deferred tax assets are as follows:

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

The tax authorities have examined income tax returns of the Company through the year ended December 31, 2018.

(XXII) Earnings per share

) Earnings per share
Basic earnings per share Net income attributable to ordinary shareholders Diluted earnings per share		2020
	After-tax amount $ 145,907 - $ 145,907	Weighted average number of outstanding shares (thousand shares) 96,499 106 96,605	Earnings per share (NT$) $ 1.51 $ 1.51
			$
Effects of dilutive potential ordinary shares Employees' compensation Net income attributable to ordinary shareholders plus effects of potential ordinary shares

158

2019

		2019
Basic earnings per share Net income attributable to ordinary shareholders Diluted earnings per share Effects of dilutive potential ordinary shares Employees' compensation Net income attributable to ordinary shareholders plus effects of potential ordinary shares	After-tax amount $ 106,942 - $ 106,942	Weighted average number of outstanding shares (thousand shares) 100,703 73 100,776	Earnings per share (NT$) $ 1.06 $ 1.06
			$

(XXIII) 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 112 $ 2,238 - ( 2,350 $	$ (	2019 68,613 - 20,016)
	$			48,597

(XXIV) Changes in liabilities from financing activities

		2020
Short-term borrowings $ 156,597 245,430 $ 402,027	$ (	Lease liabilities 6,040 1,407) 4,633	Total liabilities from the financing activities $ 162,637 244,023 $ 406,660
			$

	$		$

159

2019

				2019
January 1 Changes in cash flows from financing activities December 31	$	Short-term borrowings - 156,597 156,597	$ (	Lease liabilities 7,610 1,570) 6,040	Total liabilities from the financing activities $ 7,610 155,027 $ 162,637
	$		$		$

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 Company

Name of related party Colorful Technology Co, Ltd (Colorful)

Relationship with the Company 100% reinvestment business by Colorful Group The same person in charge as the Colorful Group Subsidiary of the Company

Shenzhen Colorful Yugong Technology and The same person in charge as the Development Co., Ltd. (Yugong) Colorful Group Shenzhen Jinghong Digital R&D Service Co., Ltd. Subsidiary of the Company (Jinghong) Sitonholy (Tianjin) Technology Co., Ltd. (Tianjin Subsidiary of the Company Sitonholy) uSenlight Corporation (uSenlight) Associate

(III) Significant transactions with related parties

Operating revenue

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

The Company'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.

Accounts receivable

160

$	$	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.

Operating expenses

Subsidiary Jinghong	2020 $ 7,807	2019 $ 7,328	2019

The Company has commissioned a subsidiary to assist the Company in providing technical assistance such as market research and after-sales services and testing and business expansion. Expenses incurred in the aforementioned transactions shall be recorded in the operating expenses. The amounts not yet paid as of December 31, 2020 and 2019 were NT$2,061 and NT$2,011, respectively, and recognized as "other payables."

4. Advertising fees

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

Endorsements and guarantees made by related parties

December 31, 2020 December 31, 2019

Subsidiary Tianjin Sitonholy $ 56,901 $ 55,965

(IV) Key management compensation information

Salaries and other short-term employee benefits	$	2020 15,061 $	2019 9,494

161

VIII. Pledged assets

The Company'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 $ 33,005	Guarantee use Reserve accounts

IX. Significant contingent liabilities and unrecognized contract commitments

(I) Contingencies None.

(II) Commitments

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

XII. Others

(I) The Group’s major sales markets are located in Mainland China. As a result of the COVID-19 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.

(II) Capital management

The Company's objectives in capital management are to safeguard its 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 Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

162

(III) Financial instruments

Category of financial instruments

ncial instruments ategory of financial instruments
Financial assets Cash Accounts receivable (including related parties) Other financial assets (recognized in other current assets) Refundable deposits (recognized in other non-current assets) Financial liabilities Short-term borrowings Notes payable Accounts payable Other payables Lease liabilities	December 31, 2020 December 31, 2019
	$ 149,370 1,132,294 56,887 5 $ 1,338,556 $ 402,027 - 254,683 59,856 $ 716,566 $ 4,633	$ 187,565 844,496 33,005 - $ 1,065,066 $ 156,597 24 319,099 52,839 $ 528,559 $ 6,040

Risk management policies
(1) The Company'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.
(2) The risk management is carried out by the Company's finance department according to the policies approved by the Board of Directors. The Company's finance department identifies, evaluates and hedges financial risks in close cooperation with the Company's internal 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.
The nature and degrees of significant financial risks
(1) Market risk

Exchange rate risk

A. The Company is a multinational operation and is exposed to exchange rate risk, which is mainly denominated in USD and CNY. The related exchange rate risk arises from future commercial transactions and recognized assets and liabilities.

163

B. Business of the Company is involved in a number of non-functional currency (the functional currency of the Company is NTD) 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:

liabilities is as follow:
(Foreign currency: Functional currency) Financial assets Monetary items USD:NTD Non-monetary projects Investments using equity method CNY:NTD Financial liabilities Monetary items USD:NTD (Foreign currency: Functional currency) Financial assets Monetary items USD:NTD Non-monetary projects Investments using equity method CNY:NTD Financial liabilities Monetary items USD:NTD	December 31, 2020
	Foreign currency (in thousands) Exchange rate Carrying amount (NT$) $ 46,659 28.480 $ 1,328,848 $ 118,472 4.377 $ 518,552 $ 19,899 28.480 $ 566,724 December 31, 2019
	Foreign currency (in thousands) $ 35,387 $ 109,721 $ 15,867	Exchange rate Carrying amount (NT$) 29.980 $ 1,060,902 4.305 $ 472,349 29.980 $ 475,693

C. The Company's material monetary items affected by the exchange rate fluctuations were recognized as net exchange losses (including realized and unrealized), which amounted to NT$28,597 and NT$11,509, respectively, for the years ended December 31, 2020 and 2019.
D. The Company's foreign currency market risk analysis due to significant exchange rate fluctuations is as follows:

2020	2020	2020
Sensitivityanalysis
Range of change	Effect on profit or Loss	Effect on other comprehensive income

164

Monetary items
USD:NTD	1%	$ 13,288	$ -
Non-monetary
projects
Investments using
equity method
CNY:NTD	1%	$ -	$ 5,186
Financial liabilities
Monetary items
USD:NTD	1%	$ 5,667	$ -

	2019	2019
	Sensitivityanalysis
Range of change 1% 1% 1%	Effect on profit	Effect on other comprehensive income $ - $ 4,723 $ -
	or Loss $ 10,609 $ - $ 4,757

Price risk

A. The Company'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 Company diversifies its portfolio with its diversification method based on limits set by the Company.
B. The Company's equity instruments issued by the Company are mainly invested in equity instruments issued by the domestic companies, which are affected by the uncertainty of the future value of the investment underlying 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$0 and NT$22, 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

165

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 Company's interest rate risk arises primarily from short-term borrowings issued at variable rates, which expose the Company to cash flow interest rate risk. For the years ended December 31, 2020 and 2019, the Company's borrowings issued at variable rates were mainly denominated in USD.
B. The Company's borrowings are measured at amortized cost and are repriced at the contract annual rate every year. Therefore, the Company 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.
(2) Credit risk
A. The Company'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.
B. The Company manages their credit risk taking into consideration the Company's concern. For banks and financial institutions, only those with good credit rating can be accepted as our transaction counterparties. For credit policies established internally, the individual operating entities within the Company shall undergo management and credit risk analysis before setting the terms and proposing the shipment terms and conditions for each new customer. 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 Company 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.

166

(B) There are actual or expected significant changes in external credit ratings of financial instruments.
D. The Company 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.
E. The Company 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.
F. The Company 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 Allowance loss December 31, 2019 Expected loss rate Total carrying amount Allowance loss	Not overdue Total 0.04% $ 1,132,741 $ 1,132,741 $ 447 $ 447 Not overdue Total 0.03% $ 844,819 $ 844,819 $ 323 $ 323

G. The statement of allowance loss for accounts receivable of the Company using simplified approach is as follows:

January 1 Provision of impairment loss December 31	$	2020 Accounts receivable 323 124 447	$	2019 Accounts receivable
				323 - 323
	$		$

(3) 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

167

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 Company'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 the table below are undiscounted amounts.

December 31, 2020 Within 1 year Within 1~2 years Within 2~5 years Non-derivative financial liabilities: Lease liabilities $ 1,617 $ 1,617 $ 1,616 December 31, 2019 Within 1 year Within 1~2 years Within 2~5 years Non-derivative financial liabilities: Lease liabilities $ 1,570 $ 1,617 $ 3,233

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

(IV) Fair value information
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 Company’s investment in listed stocks is included in 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 Company's investment in equity instruments without active market is included.
For financial instruments not measured at fair value, including cash, accounts receivable (including related parties), short-term borrowings, accounts payable, and other payables, their carrying amounts are a reasonable approximation of their

168

fair value.

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:
(1) The Company classifies its assets and liabilities according to the nature of assets and liabilities as follows:

Level 1 Level 2 Level 3 $ 170,800 $- $ 15,350 $	Level 1 Level 2 Level 3 $ 170,800 $- $ 15,350 $	Level 1 Level 2 Level 3 $ 170,800 $- $ 15,350 $	Level 1 Level 2 Level 3 $ 170,800 $- $ 15,350 $	Level 1 Level 2 Level 3 $ 170,800 $- $ 15,350 $	Total 186,150

$ 170,800 $			- $ 15,350 $		186,150
$	Level 2 - - -	$	Level 3 - 15,350 15,350	Total $ 2,172 137,045 $ 139,217
$		$

(2) Methods and assumptions the Company used to measure the fair value are as follow:
A. The instruments that the Company uses market-quoted prices as their fair values (i.e., Level 1) are listed below by characteristics:

Stocks of listed companies

Market quoted price Closing price

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.

169

The fair value obtained through evaluation techniques can refer to the current fair value of 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 output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company'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 Company'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 nonfinancial 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.
D. The Company absorbs the adjustment of credit risk assessment into the fair value measurement of financial and non-financial instruments to reflect the credit risk of counterparties and the credit quality of the Company.
For the years ended December 31, 2020, and 2019, there were no transfers between Level 1 and Level 2.
The following chart indicates the movement of Level 3 for the years ended December 31, 2020, and 2019:

2020 2019

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

For the years ended December 31, 2020, and 2019, there were no transfers into or out of Level 3.
The finance department of the Company is in charge of valuation procedures for fair value 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 backtesting, updating inputs used to the valuation model, and making any other

170

necessary adjustments to the fair value.

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

The Company 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:

losses is as follows:
Input Financial assets Equity instruments Lack of marketability discount, expected equity volatility Input Financial assets	Change	December 31, 2020
		Recognized in other comprehensive income
		Favorable change Unfavorable change $ 154 $ 154 December 31, 2019
	±1% Change
		Recognized in other comprehensive income
		Favorable change	Unfavorable change

171

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

XIII. Supplementary Disclosures

(I) Information on significant transactions
Capital loans to others: None.
Endorsements and guarantees: Please refer to Table 1.
Marketable securities held at the end of the period (excluding investment in subsidiaries): Please refer to Table 2.
Accumulated purchase or disposal of the same securities amount reaching NT$300 million or 20% of the paid-in capital: None.
Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
Purchases and sales with related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 3.
Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 4.
Derivative transactions: None.
Parent-subsidiary and subsidiary-subsidiary business relations and significant transactions and amounts thereof: Please refer to Table 5.
(II) Information on investees
Information on investees (not including investees in Mainland China): Please refer to Table 6.
(III) Information on investments in Mainland China
Basic information: Please refer to Table 7.
Significant transactions between the Company and investees in Mainland China directly or indirectly through entities in a third area: Please refer to Table 8.
(IV) Information on major shareholders

Information on major shareholders: Please refer to Table 9.

XIV. Segment Information

Exempt from disclosure.

(Below is left blank)

172

Chaintech Technology Corporation

Endorsements and Guarantees

For the Year Ended December 31, 2020

Table 1

Unit: NT$ thousand (Unless specified otherwise)

Subject of endorsements and guarantees

No.	Endorser/Gu arantor Company name Chaintech Technology Corporation Sitonholy (Tianjin) Technology Co., Ltd.	Relatio nship (Note 2) Ceiling limit on endorsements and guarantees for a single entity (Note 3) 2 $ 862,159	Maximum balance of endorsements and guarantees for the period (Note 4) $ 56,901	Balance of endorse ments and guarante es at end of period $56,901	Endorse ments and guarante es used $56,901	Endorseme nts and guarantees secured with collateral $ -	Ratio of aggregated endorsements and guarantees to net value in the most recent financial statements 3.30%	Ceiling limit on endorsemen ts and guarantees (Note 3) $ 862,159	Parent providing endorsements and guarantees for subsidiary (Note 5) Y	Subsidiary providing endorsements and guarantees for parent (Note	Endorsements and guarantees involving Mainland China (Note 5) Rem ark Y
(No
te 1) 0
										5) N

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 Company conducts business;
(2) Subsidiaries in which the Company 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.

173

Chaintech Technology Corporation

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)

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

174

Chaintech Technology Corporation

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$ thousands

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	Transaction Percentage of total purchases (sales) Purchases (sales) Amount Sales $ 1,703,136 36.45% Purchases $ 123,173 3.01%	Unusual trade conditions and its reasons Credit period Unit price Credit period OA 45~125 days Not applicable Not applicable OA 30 days Not applicable Not applicable	Ratio	of notes

175

Chaintech Technology Corporation

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

176

Chaintech Technology Corporation

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)

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	Transaction status 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 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.

177

Chaintech Technology Corporation

Information on Investees (Not Including Investees in Mainland China)

For the Year Ended December 31, 2020

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

178

Chaintech Technology Corporation

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 Shenzhen Jinghong Digital R&D Service Co., Ltd. Technology research and development and trading of electronic products, computer hardware, and peripheral devices $ Sitonholy (Tianjin) Technology Co., Ltd. Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts Beijing Sitonholy Technology Co., Ltd. Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts	Accumulated investment amount remitted from Taiwan at beginning of period Method of investment (Note 1) Actual paid-in capital 499,065 1 $ 499,065 100,162 3 - 36,824 3 -	Accumulated investment amount remitted or recovered Accumulated investment amount remitted from Taiwan at end of period Percentage of ownership (direct or indirect) Profit or loss of investee for the period 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 -	Remar
			k - - -

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.

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

179

Chaintech Technology Corporation

Information on Investments in Mainland China - Significant Transactions between the Company and Investees in Mainland China Directly or Indirectly through Entities in a Third Area

For the Year Ended December 31, 2020

Table 8

Unit: NT$ thousand (Unless specified otherwise)

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

180

Chaintech Technology Corporation

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 28,532,080 8,444,841 6,335,000	Shareholding	Shareholding ratio
			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 nonphysical 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 shall 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.

181

Chaintech Technology Corporation Statement of Cash

As of December 31, 2020

Statement 1 Item Description Cash on hand and petty cash Checking deposits and demand deposits - NTD deposits - Foreign currency deposits US$5,064,304.54, exchange rate at 28.48 HK$32,885.50, exchange rate at 3.6730 RMB69,674.99, exchange rate at 4.3770 EUR59.91, exchange rate at 35.02	Unit: NT$ thousands Amount $ 87 4,624 144,231 121 305 2 $ 149,370

Statement 1 P1

182

Chaintech Technology Corporation

- Statement of Changes in Non current Financial Assets at Fair Value through Other Comprehensive Income For the Year Ended December 31, 2020

Statement 2

Unit: NT$ thousands

Name Beginning of period Increase in Number of shares Fair value Number of shares Shares of APAQ Technology Co., Ltd. 3,050,000 $ 169,634 Shares of CloudMile Co., Ltd. (Cayman Islands) 510,204 15,350 - 184,984 Valuation adjustments ( 47,939) $ 137,045	the period Decrease in the period End of Amount Number of shares Amount Number of shares - $ - - $ - 3,050,000 - - - 510,204 - - 49,105 - $ 49,105 $-	period Collateral or pledge Fair value $ 169,634 None 15,350 None 184,984 1,166 $ 186,150

Statement 2 P1

183

Chaintech Technology Corporation Statement of Accounts Receivable (Including Related Parties) As of December 31, 2020

Statement 3 Customer Description Non-related parties 16L002 16C002 10F001 16N002 Others Less: Allowance for loss Related parties Colorful Technology Co., Ltd. Less: Allowance for loss	Unit: NT$ thousands Amount Remark $ 97,688 93,991 85,375 84,227 432 Each customer's balance did not exceed 5% of the account balance. ( 143) 361,570 771,028 ( 304) 770,724 $ 1,132,294

Statement 3 P1

184

Chaintech Technology Corporation Statement of Inventories As of December 31, 2020

Unit: NT$ thousands


Statement 4					Unit: NT$ thousands
			Amount
Item	Cost		Market price		Remark
Raw materials	$		59,126	$ 59,054	Net realizable value as the market price
Work in progress			36,434	46,041
Finished goods			85,257	101,681
		180,817		$ 206,776
Minus: Allowance for loss in inventory
valuation		(	6,599)
	$	174,218

Statement 4 P1

185

Chaintech Technology Corporation

Statement of Changes in Investments Accounted for Using Equity Method For the Year Ended December 31, 2020

Statement 5 Balance, beginning of period Title Number of shares Carrying amount Shenzhen Jinghong Digital R&D Service Co., Ltd. - $ 472,349 uSenlight Corporation - - $ 472,349	Increase in the period Number of shares Amount - $ - 5,000,000 150,000 $ 150,000	Decrease in the period Number of shares Amount - $ - - - $-	Investment income (loss) recognized in the period Others (Note) $ 37,469 $ 8,734 ( 11,921) ( 4,506) $ 25,548 $ 4,228	Balance, end of period	Equity % 100% 13.05%	Carrying amount $ 518,552 133,573 $ 652,125	Market value or n	Unit: NT$ thousands et equity value Collateral or Total or pledge $ 518,552 None 133,573 None $ 652,125
	Number of shares - 5,000,000	Number of shares - -		Number of shares - 5,000,000			Unit price (NT$)
			$ 37,469 ( 11,921) $ 25,548				$ - -

Note: Others include the following:

(1) Share of other comprehensive income of subsidiaries accounted for using equity method;

(2) Adjustments of differences in net equity; and

(3) Impairment loss.

Statement 5 P1

186

Chaintech Technology Corporation Statement of Short-term Borrowings As of December 31, 2020

Statement 6

Unit: NT$ thousands

Creditor	Type of loan	Balance at end of period Contract period	Balance at end of period Contract period	Line of credit	Line of credit	Pledge or guarantee
Bank of Taiwan	Credit loans	$ 67,202	109.11.27~110.2.25	$	113,920	None
KGI Bank	Credit loans	31,910	109.11.5~110.2.5		80,000	None
Far Eastern International BankCredit loans		20,677	109.10.29~110.1.27			None
Far Eastern International BankCredit loans		10,338	109.10.28~110.1.26		80,000	None
First Commercial Bank	Letter of credit loans 14,875		109.11.4~110.4.5		56,960	Other current assets - bank deposits
Bank of Kaohsiung	Secured loans	50,000	109.12.8~110.3.7		60,000	Other current assets - bank deposits
Chang Hwa Bank	Secured loans	40,000	109.12.24~110.2.23		50,000	Other current assets - bank deposits
Cathay United Bank	Secured loans	28,480	109.11.13~110.2.9		56,960	Other current assets - bank deposits
Bank Sinopac	Secured loans	26,145	109.11.27~110.2.26		60,000	Other current assets - bank deposits
Citibank	Secured loans	17,088	109.10.15~110.1.12		85,440	Other current assets - bank deposits
Entie Commercial Bank	Secured loans	21,146	109.12.9~110.3.9			Other current assets - bank deposits
Entie Commercial Bank	Secured loans	17,776	109.12.10~110.3.10			Other current assets - bank deposits
Entie Commercial Bank	Secured loans	15,324	109.12.14~110.3.12		100,000	Other current assets - bank deposits
Jih Sun International Bank	Secured loans	24,773	109.12.16~110.3.16			Other current assets - bank deposits
Jih Sun International Bank	Secured loans	16,293	109.12.17~110.3.17		42,720	Other current assets - bank deposits
		$ 402,027

Note: Interest rates range from 0.97% to 1.61%.

Statement 6 P1

187

Chaintech Technology Corporation Statement of Accounts Payable As of December 31, 2020

Statement 7 Customer Description Non-related parties 005505 005507 002884 Others	Unit: NT$ thousands Amount Remark $ 122,012 71,691 51,475 9,505 Each customer's balance did not $ 254,683 exceed 5% of the account balance.

Statement 7 P1

188

Chaintech Technology Corporation Statement of Operating Revenue For the Year Ended December 31, 2020

Statement 8 Item Quantity Operating revenue: Computer peripherals 1,128 thousand pcs Others Less: Sales return and allowances Net operating revenue	Unit: NT$ thousands Amount Remark $ 3,666,118 2,289 3,668,407 ( 152,557) $ 3,515,850

Statement 8 P1

189

Chaintech Technology Corporation Statement of Operating Costs For the Year Ended December 31, 2020

Unit: NT$ thousands

Statement 9
U
Item
Raw materials and materials at beginning of period
Add: Input amount, net
Less: Disposal of raw materials
Raw materials and materials at end of period
Raw materials consumed during the current period (1)
Manufacturing costs - processing cost (2)
Manufacturing costs - depreciation (3)
Total manufacturing costs (1)+(2)+(3)
Add: Work-in-progress at beginning of period
Acquired during the period
Less: work-in-process at end of period
Cost of finished goods
Add: Finished products at beginning of period
Acquired during the period
Less: Finished products at end of period
Cost of finished goods
Loss (gain) on inventories
Sale of raw materials
Total operating costs

nit: NT$ thousa
Amount
$ 203,353
2,429,843
( 536,289)
( 59,126)
2,037,781
61,672
22,871
2,122,324
78,771
21,746
( 36,434)
2,186,407
16,234
634,786
( 85,257)
2,752,170
( 1,435)
536,289
$ 3,287,024

Statement 9 P1

190

Chaintech Technology Corporation Statement of Operating Expenses For the Year Ended December 31, 2020

Unit: NT$ thousands

Statement 10 Item Payroll expenses Advertising fees Labor fees Test fees Royalties Freight Public relations allowances Depreciation expenses Other expenses (Note)	Selling expenses $ 11,507 12,130 2,311 - 2,501 3,769 690 517 12,100 $ 45,525	Unit: NT$ thousands Administrative expenses Research and development expenses Total $ 14,992 $ 919 $ 27,418 - - 12,130 5,644 - 7,955 - 1,084 1,084 - - 2,501 10 - 3,779 1,580 - 2,270 494 494 1,505 3,388 417 15,905 $ 26,108 $ 2,914 $ 74,547

Note: The amount of each individual item did not exceed 5% of the total amount of the account.

Statement 10 P1

191

Chaintech Technology Corporation

Summary Statement of Current Period Employee Benefits, Depreciation, Depletion and Amortization Expenses by Function

For the Year Ended December 31, 2020

Statement 11

Unit: NT$ thousands

		2020			2019
	Function
	Type	Operatin g costs	Operatin g expenses	Total	Operatin g costs	Operatin g expenses	Total
Employee benefit expenses
Salary expenses		$	$	$	$	$	$
		-	19,256	19,256	-	18,755	18,755
Labor and health insurance premiums		-			-
			1,440	1,440		1,472	1,472
Pension costs		-			-
			751	751		733	733
Directors' remuneration		-			-
			7,411	7,411		2,514	2,514
Other personnel costs		-			-
			2,555	2,555		2,616	2,616
Depreciation expenses
		22,871	1,505	24,376	13,341	1,481	14,822

Note:

The number of employees for the current and previous years was 23 and 21, respectively, of which 4 employees were not directors concurrently.
Companies listed on the Taiwan Stock Exchange Corporation or Taipei Exchange are required to disclose the following information:
(1) The average employee benefit expense for the current year was NT$1,263 (Total employee benefit for the current year - Directors' remuneration / "Number of employees for the current year - Number of employees who are not directors concurrently"). The average employee benefit expense for the previous year was NT$1,387 (Total employee benefit for the previous year - Directors' remuneration / "Number of employees for the previous year - Number of employees who are not directors concurrently").
(2) The average salary expense for the current year was NT$1,013 (Total salary expense for the current year / "Number of employees for the current year - Number of employees who are not directors concurrently").

The average salary expense for the previous year was NT$1,103 (Total salary expense for the previous year / "Number of employees for the previous year - Number of employees who are not directors concurrently").

(3) The rate of adjustment in average salary expenses was -0.08% = [ (Average salary

expense for the current year - Average salary expense for the previous year) / Average salary expense for the previous year].

(4) In 2020 and 2019, supervisors’ remuneration amounted to NT$7,411 and NT$2,514,

192

respectively.

(5) The Company's remuneration policy is stated as follows:

The remuneration policies for directors, supervisors and managerial officers shall be submitted to the Remuneration Committee for deliberations in accordance with the "Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange."

Remuneration for managerial officers shall be determined based on the individual’s experience and performance, participation in and contribution to the Company's operations, and the business performance of the Company; If the Company makes a profit in a year, employee compensation and directors' and supervisors' remuneration shall be distributed in accordance with the Articles of Incorporation.

Employee compensation includes the basic salary, allowances, supplementary pay, and bonuses. The base salary shall be determined based on the individual's education and work experience, expertise, and position held, as well as the industry standards; bonuses shall be distributed based on the Company's surplus in a year, if any, and the departmental and personal performances.

Statement 11 P1

193

Appendix II: Consolidated Financial Report for the Most Recent Year

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

194

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. 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:

Understand revenue recognition and adjustment procedures for revenue cut-off for

195

shipment from the depository of warehouse of the Group. Then, inspect the appropriateness of the revenue's recognition from the warehouse, including understanding of the relevant internal control procedures, obtaining information and the statements provided by the depository.

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.
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.
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:

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.
Understand and evaluate the process and the basis where management has made its

196

projections of the growth rate of the future operations in terms of sales and profit margin.

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

197

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:

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

198

Evaluate the overall expression, structure, and contents of the consolidated financial statements (including related notes) and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence 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.

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

199

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

Unit: NT$ thousands

Assets	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	December31,2019	December31,2019
	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			15 8 - 14 26 - - 15 2 3
			83
			6 - 3 - 8 - -
			17
			100

(Continued)

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

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

(Continued)

Items	2020	2019
	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

203

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

Unit: NT$ thousands

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.

President: Shu-Jung Kao

Chief Accounting Officer: Yu-Nu Lai

Chairman: Shu-Jung Kao

204

Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands

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

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

205

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)

XV. 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.

XVI. Approval Date and Procedures of the Consolidated Financial Statements

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

XVII. 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:

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

206

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

New/revised/amended standards, interpretations, and amendments Amendments to IFRS 9, IAS 39, and IFRS 7 "Interest Rate Benchmark Reform"

Effective date by the International Accounting Standards Board (IASB)

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

207

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.

XVIII. 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

Except for the following significant items, these consolidated financial statements have been prepared under the historical cost convention:
(1) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(2) Financial assets measured at fair value through other comprehensive income.
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

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

208

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 non-controlling 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
				-

209

Name of Investor
company
Name of Subsidiary
Business activities
Percentage of ownership
December 31, 2020
December 31, 2019
Shenzhen
Jinghong
Sitonholy (Tianjin)
Technology Co., Ltd.
Wholesale of
electronic products,
communication
products, household
appliances, office
supplies, computer
hardware and software
and related spare parts
51%
51%
Sitonholy (Tianjin)
Technology Co.,
Ltd.
Beijing Sitonholy
Technology Co., Ltd.
(Beijing Sitonholy)
Wholesale of
electronic products,
communication
products, household
appliances, office
supplies, computer
hardware and software
and related spare parts
100%
100%
3.
Subsidiaries not included in the consolidated financial statements: None.

Explanation

-
-

Adjustments for subsidiaries with different balance sheet dates: None.
Significant restrictions: None.
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:	Explanati
	on

Balance sheet

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
	subsidiaries December 31, 2020 $ 632,518 34,507 ( 235,437) ( 4,341) $ 427,247

210

Statement of comprehensive income

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

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

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

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

Foreign currency transactions and balances
(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

211

which they arise.

(2) Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing at the balance sheet date. Exchange differences arising upon the re-transaction 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.

212

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

Assets that meet one of the following criteria are classified as current assets:
(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.
(2) Liabilities held mainly for trading purposes.
(3) Assets that are expected to be realized within twelve months from the balance sheet date.
(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.

Liabilities that meet one of the following conditions are classified as current liabilities:
(1) Liabilities that are expected to be paid off within the normal operating cycle.
(2) Liabilities held mainly for trading purposes.
(3) Liabilities that are to be paid off within twelve months from the balance sheet date.
(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 non-current.

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

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

213

and 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.

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

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:
(1) The financial asset is held for the purpose of obtaining the contractual cash flows and the sales of the contract.
(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.
The Group adopts trade date accounting for financial assets measured at fair value through other comprehensive income.
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

Accounts receivables and notes receivables are accounts and notes of which the contractual right to consideration for goods sold or services rendered is unconditional.
Short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

214

(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

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.
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.

215

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.

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.
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.
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.
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.

(XIV) Property, plant, and equipment

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

216

cost.

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.
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.
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:

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

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.
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

217

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 are reassessed and the remeasurements are adjusted to the right-ofuse assets.

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.
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.
(XVI) Intangible assets
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.
Goodwill arises from the difference between the purchase price set in the equity purchase contract and the net identifiable assets.
(XVII) Impairment of non-financial assets
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.
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

218

reversed in the future.

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

(XVIII) Borrowings

(XIX) Accounts payable

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

(XXII) Non-hedging and embedded derivatives

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.
Under the non-financial assets, whether the hybrid contracts embedded

219

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 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

Short-term employee benefits

Pensions

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

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

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.
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

220

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 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.

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.
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.
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.

221

(XXV) Share capital

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.
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

(XXVII) Revenue recognition

Sales of goods
(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.
(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

222

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.

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

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.

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

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

223

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 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 noncontrolling interests to the acquiree’s net identifiable assets. All other components of non-controlling interests shall be measured at acquisitiondate fair value.

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 non-controlling interests, and (iii) the fair value of the acquirer's previously-held 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.

XIX. 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

224

judgments, estimates, and assumptions are addressed below:

(I) Significant judgments in applying accounting policies

None.

(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.

XX. 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
	$		$

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.
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
			(
	$		$

225

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 6,124	$ $	2019 447 2,345 - 2,792

The Group's financial assets at fair value through profit or loss - current have never been provided as pledged assets or guarantees.
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.
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	December 31, 2020	December 31, 2019
Equity instruments
Stocks of listed companies		$ 169,634	$ 169,634
Stocks unlisted at stock exchange market, over the counter
market or emerging	stock market	15,350	15,350
		184,984	184,984
Valuation adjustments		1,166	( 47,939)
Total		$ 186,150	$ 137,045
1.	The Group elects to classify the strategic investments in		equity as financial
	assets at fair value through other comprehensive income.

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 3,050	$	2019 28,060 3,005
	$		$

226

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.

(IV) Notes and accounts receivable

December 31, 2020

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

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, Accounts receivable $ 1,299,642 $ 9,432 264 357 $ 1,309,695 $	December 31, Accounts receivable $ 1,299,642 $ 9,432 264 357 $ 1,309,695 $	2020 Notes receivable 3,187 - - - 3,187	December 31, Accounts receivable $ 945,302 $ 10,380 - - $ 955,682 $	December 31,	December 31,	2019 Notes receivable - - - - -
		$				$
		$				$

The aging analysis above is based on past due date.

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.
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,

227

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.

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

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

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

2020 $ -

150,000

228

Share of profit or loss of Investments using equity method Impairment loss Changes in capital surplus Changes in retained earnings December 31

Associates

( 11,921) ( 1,980) 100 ( 2,626) $ 133,573 December 31, 2020 $ 133,573

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.
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.
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 relationshipMeasurement 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.

229

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	uSenlight Corporation
	December 31, 2020 $ 394,179 196,520 ( 273,142) ( 15,197) $ 302,360 $ 39,458 94,115 $ 133,573

Revenue Profit from continuing operations (total comprehensive income or loss) (VII) Other current assets	uSenlight Corporation
	2020 $ 374,660 ($ 89,749)

(VII) Other current assets
Restricted bank deposits Tax reserve	December 31, 2020 $ 56,887 - $ 56,887	December 31, 2019
		$ 33,005 30,080 $ 63,085

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

230

(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	Others Total $ 80,979 $ 95,330 ( 20,759) ( 33,327) $ 60,220 $ 62,003 $ 60,220 $ 62,003 121 121 ( 2,803) ( 2,803) ( 23,980) ( 24,609) ( 4) 11 $ 33,554 $ 34,723 $ 73,889 $ 88,421 ( 40,335) ( 53,698) $ 33,554 $ 34,723 Derivative instruments Others Total $ 6,249 $ 55,288 $ 255,891 ( 5,791) ( 31,134) ( 121,082) ( 10) ( 5,054) ( 12,736) $ 448 $ 19,100 $ 122,073 $ 448 $ 19,100 $ 122,073 - 69,010 69,010 - 797 797 ( 78) ( 15,943) ( 21,219) ( 202) ( 12,687) ( 109,637) ( 4) ( 57) 979 $ 164 $ 60,220 $ 62,003 $ 4,127 $ 80,979 $ 95,330 ( 3,963) ( 20,759) ( 33,327) $ 164 $ 60,220 $ 62,003
		n equipment $ 11,124 ( 7,025) - $ 4,099 $ 4,099 - - ( 2,367) ( 51) ( 62) $ 1,619 $ 10,224 ( 8,605) $ 1,619
	$
	$ ( (
	$
	$
	$

231

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

	December 31, 2020	December 31, 2019
	Carrying amount	Carrying amount
Buildings	$ 17,060	$ 11,364
	2020	2019
	Depreciation expenses	Depreciation expenses
Land use rights (Note)	$ -	$ 164
Buildings	7,193	5,752
	$ 7,193	$ 5,916

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

2020

2019

232

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

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

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

233

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:

Sitonholy (Tianjin) Technology Co., Ltd. (XI) Impairment of non-financial assets	December 31, 2020 $ 169,805	December 31, 2019 $ 167,012	December 31, 2019

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	$	Recognized in	Recognized in	2020 Recognized in other comprehensive income $-
			profit or loss 1,980

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.
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:

Sitonholy (Tianjin) Technology Co.,


	2020	2019
Profit margin	16.60%	17.85%
Growth rate	4.00%	8.78%

234

15.10%

15.80%

Discount rate

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

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.

2019.
2. C a s h flows of discontinued operations are stated as follows: Cash flows from (used in ) operating activities	2019 ($ 2,096)

Revenues or expenses cumulatively recognized in other comprehensive income in relation to disposal groups classified as held for sale:

Adjustments in foreign currency conversion	2019 $ 1,437

Business results of discontinued operations are stated as follows:

Operating revenues Operating costs Gross loss from operations	2019 $ 11,026 ( 16,394) ( 5,368)

235

Operating expenses Total non-operating income and expenses Loss from discontinued operations before tax Income tax Loss from discontinued operations after tax	( 8,981) 5,864 ( 8,485) ( 60) ($ 8,545)

The Group completed the transfer of its equity interest in Bahamas Federal Shanghai and its subsidiary, Fortech Electronics, in July 2019. Proceeds from disposal amounted to US$4,880 thousand, and the gain on disposal was NT$$26,313.

(XIII) Short-term borrowings

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

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

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

236

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.

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 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.
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

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.
Treasury shares
(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 The Company Transfer to employees 5,000 $ 151,746

December 31, 2019

Company

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

237

(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 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

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.
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.
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

238

legal reserve shall only exceed 25% at most of the paid-up capital.

(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.
(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 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.
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

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

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

239

The Group derives revenue from the transfer of goods and services over time and at a point in time.
The contract liabilities in relation to revenue from contracts with customers recognized by the Group are as follows:

	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019	January 1, 2019
Contract liabilities:
Receipts in advance	$ 67,620			$ 14,545		$-
Revenue recognized that		was included in the contract liability balance at the beginning
of the period:
				2020		2019
Opening balance of contract
liabilities recognized as revenue
for the period
Receipts in advance		$	13,916		$	-
(XIX) Other income
				2020		2019
Rental income		$		158	$	6,018
Dividend income			3,079			3,053
Other income - others			3,878			740
			7,115			9,811
Less: Other income from				-	(	5,860)
discontinued operations
		$		7,115	$	3,951
(XX) Other gains and	losses
				2020		2019
Loss on disposal of property,		$		-	($	474)
plant, and equipment
Gain (loss) on disposal of				-	(	370)
investments
Income from disposal of non-				-		26,313
current assets held for sale
Net foreign exchange gain (loss)		(	29,558)		(	7,086)

240

Gain on financial assets at fair
value through profit or loss
6,124
Impairment loss
( 1,980)
Other losses
( 658)
($ 26,072)
(XXI)
Financial costs
2020
Bank loans
$ 6,143
Finance costs
-
Lease liabilities
360
$ 6,503
(XXII) Expenses by nature
2020
Employee benefit expenses
$ 96,457
Depreciation expenses on
property, plant and equipment
24,609
Depreciation expenses on
right-of-use assets
7,193
Amortization expenses on
intangible assets
11,670
139,929
Less: Employee benefit
expenses from discontinued
operations
-
Less: Depreciation expenses
on property, plant and
equipment from discontinued
operations
-
$ 139,929
(XXIII) Employee benefit expenses
2020
Wages and salaries
$ 85,944

2,792
( 3,927)
$ 17,248
2019
$ 5,478
22
384
$ 5,884
2019
$ 102,186
21,219
5,916
10,184
139,505
( 7,967)
( 4,277)
$ 127,261
2019
$ 88,519

241

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

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.
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 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.

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

242

(XXIV) Income tax

1. Tax expense

Components of tax expense:

2020 Current income tax: Income tax incurred in the current period $ 8,442 Surtax on unappropriated earnings 406 Underestimated (overestimated) income tax in previous years ( 43) Total income tax in the period 8,805 Deferred income tax: Origination and reversal of temporary differences ( 2,594) Total deferred income tax ( 2,594) Less: Tax expense from discontinued operations - Tax expense $ 6,211 2. Tax expense and accounting profit 2020 Income tax calculated based on profit before tax and at the statutory rate $ 35,995 Deductible losses pursuant to the taxation law - Expenses that should be excluded pursuant to the taxation law ( 334) Tax exempted income pursuant to the taxation law ( 210) Temporary differences not recognized as deferred tax assets ( 7,606) Tax losses not recognized as deferred tax assets - Deduction of tax losses ( 21,997) Surtax on unappropriated earnings 406 Underestimated (overestimated) income tax in previous years ( 43) 6,211 Less: Tax expense from discontinued operations - Tax expense $ 6,211	$



	(
	$

243

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

					2020
						Recognized in other
	January		Recognized in profit or				comprehensive	December
		1			loss		income		31
Temporary differences:
Deferred tax assets
Allowance for valuation loss	$	1,287	($ 290)			$	-	$	997
and
slow-moving loss
Unrealized exchange loss		2,148	(	13)			-	2,135
		3,435	(	303)			-	3,132
Deferred tax liabilities
Amortization of intangible
assets	( 5,489)			2,897			-	( 2,592)
	($ 2,054)		$	2,594		$	-	$	540
						2019
						Recognized in other
	January		Recognized in profit or			comprehensive		December
	1		loss			income		31
Temporary differences:
Deferred tax assets
Allowance for valuation loss	$ 6		$	1,281		$	-	$	1,287
and
slow-moving loss
Unrealized exchange loss		-		2,148			-	2,148
		6		3,429			-	3,435
Deferred tax liabilities
Amortization of intangible
assets		-	(	5,489)			-	(	5,489)
	$ 6		($ 2,060)			$	-	($	2,054)

244

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

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

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 Basic earnings per share from ( 8,545) - ( 0.08)	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 ( 0.08)

245

$ 1.06

discontinued operations of the parent Net income attributable to ordinary shareholders of the parent plus potential - ordinary shares $ 106,942

(XXVI) Business combinations

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 noncontrolling 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

246

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 ended December 31,

247

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

248

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	2020 Guarantee deposits received $ 362 58 - $ 420	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

				$

249

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 $ 1,375 362 - ( 1,375) - $ 362		Lease liabilities $ - ( 5,949) 62 3,802 13,646 $ 11,561	Total liabilities from the financing activities $ 1,375 151,010 62 2,427 13,646 $ 168,520


			$ ( $

XXI. Related Party Transactions

(I) Parent company and the ultimate controller

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

Name of related party Relationship with the Group 100% reinvestment business by Colorful Group

Colorful Technology Co., Ltd. (Colorful)

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

Operating revenue

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

250

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.

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.

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
			(
			$

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.

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 for the related parties. The amounts of advertising expense incurred in 2020 and

251

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

XXII. 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

XXIII. Significant contingent liabilities and unrecognized contract commitments

(I) Contingencies

None.

(II) Commitments

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

XXIV. Significant Disaster Loss

None.

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

None.

252

XXVI. Others

The Group’s major sales markets are located in Mainland China. As a result of the COVID-19 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 maketo-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.
Capital management 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

253

(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.
(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

254

	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:
(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 change 1% 1% Range of change 1% 1%	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 $ -
			Effect on profit or Loss $ 10,960 $ 4,757

255

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.
(B) The Group has established credit risk management in the Group's

256

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 Allowance loss	Not overdue 0.04%~3.62% $ 1,302,829 $ 6,230	Overdue for 1~89 days 6.81% $ 9,432 $ 642	Overdue for 90~120 days 6.81% $ 264 $ 18	Overdue for 121 days or more 100% $ 357 $ 357	Overdue for 121 days or more 100% $ 357 $ 357	Total $ 1,312,882 $ 7,247

257

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



							$	3,570

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 the table below are undiscounted amounts.

258

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

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

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

4. Fair value information

(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.
(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.
(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:

259

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:

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 other substantial financial instruments with similar conditions and characteristics, discounted cash flow method or other

260

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:

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

261

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:

Input Financial assets Equity instruments Lack of marketability discount, expected equity volatility	December 31, 2020 Recognized in other comprehensive income Change Favorable change Unfavorable change ±1% $ 154 $ 154	December 31, 2020 Recognized in other comprehensive income	December 31, 2020 Recognized in other comprehensive income	December 31, 2020 Recognized in other comprehensive income
			Favorable change $ 154	Unfavorable change $ 154

262

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

XXVII. Supplementary Disclosures

1. Information on significant transactions

(1) Capital loans to others: None.
(2) Endorsements and guarantees: Please refer to Table 1.
(3) Marketable securities held at the end of the period (excluding investment in subsidiaries): Please refer to Table 2.
(4) Accumulated purchase or disposal of the same securities amount reaching NT$300 million or 20% of the paid-in capital: None.
(5) Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
(6) Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
(7) Purchases and sales with related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 3.
(8) Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 4.
(9) Derivative transactions: Please refer to Note 6 b.
(10) Parent-subsidiary and subsidiary-subsidiary business relations and significant transactions and amounts thereof: Please refer to Table 5.
Information on investees

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

Information on investments in Mainland China
(1) Basic information: Please refer to Table 7.

263

(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.
Information on major shareholders

Information about major shareholders: Please refer to Table 9.

XXVIII. 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).

2. Segment information

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

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

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

264

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 in the financial statements.

4. Information on products and services

The breakdown of the revenue balance is as follows:

Sales revenue: Computer peripherals Service revenue	2020 $ 4,665,443 6,867 $ 4,672,310	2019 $ 4,716,750 21,432 $ 4,738,182

5. Geographical information

Revenue China $ 4,671,645 Taiwan 665 $ 4,672,310 6. Key accounts information 10C001 16L002	2020 Non-current assets $ 201,583 66,973 $ 268,556 2020 $ 1,703,136 497,686	$	Revenue 4,738,182 - 4,738,182 $	2019 Non-current assets $ 209,828 61,250 $ 271,078 2019 2,026,018 473,302
		$

265

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

Endorseme	Endorsem	Ceiling limit on endorsem	Parent providing	Subsidiar y providing
			endorsem	endorsem
	ents and guarantee		ents and guarantee	ents and guarantee
nts and guarantees used $56,901	s secured with collateral $ -	ents and guarantee	s for subsidiary	s for parent (Note 5) N
		s (Note 3)	(Note 5) Y
		$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.

266

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 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 - - -	Unit: NT$ thousand (Unless specified otherwise) End of period Carrying amount Shareholding ratio Fair value Remark 170,800 3.61% 10,800 - 15,350 2.19% 15,350 - 164,137 - 164,137 - 24,074 - 24,074 - 49,460 - 49,460 -	Unit: NT$ thousand (Unless specified otherwise) End of period Carrying amount Shareholding ratio Fair value Remark 170,800 3.61% 10,800 - 15,350 2.19% 15,350 - 164,137 - 164,137 - 24,074 - 24,074 - 49,460 - 49,460 -
			- - - - -

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.

267

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	Transaction Percentage of total purchases (sales) Purchases (sales) Amount Sales $ 1,703,136 36.45% Purchases $ 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
			OA 45~125 days OA 30 days

268

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 Group Accounts receivable $ 770,724	Turnover rate 2.45 $	Overdue receivables from related parties Receivables from related parties recoverable after period Amount Handling method Allowances for losses - - $ 276,226 ($ 304)	Allowances for
		Amount -

269

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

Unit: NT$ thousand (Unless specified otherwise)

Table 5 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.	Unit: NT$ thousand (Unless specified otherwis Transaction status Percentage of consolidated total revenue or total assets Relationship with counterparty (Note 2) Accounting item Amount Transaction terms Parent company to a subsidiary Operating expenses $ 7,807 Agreed by both parties 0.17% Parent company to a subsidiary Other payables 2,061 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.

270

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 Corporation Republic 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

271

Chaintech Technology Corporation and Subsidiaries

Information on Investments in Mainland China - Basic Information

For the Year Ended December 31, 2020

Table 7	Table 7	Table 7						Unit: NT$ thousand (Unless specified otherwise)	Unit: NT$ thousand (Unless specified otherwise)	Unit: NT$ thousand (Unless specified otherwise)	Unit: NT$ thousand (Unless specified otherwise)	Unit: NT$ thousand (Unless specified otherwise)	Unit: NT$ thousand (Unless specified otherwise)	Unit: NT$ thousand (Unless specified otherwise)	Unit: NT$ thousand (Unless specified otherwise)	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	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 investme nt recovered as of the period	Remark
								Remittance	Recovery
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	$ -	$ -	$ 499,065	$37,469	100	$ 37,469	$ 518,552	$ -	-
Sitonholy (Tianjin) Technology Co., Ltd.		Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spareparts		100,162		3	-	-	-	-	85,318	51	43,512	406,163	-	-
Beijing Sitonholy Technology Co., Ltd.		Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spareparts		36,824		3	-	-	-	-	41	51	21	49,771	-	-

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.
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.

272

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

Unit: NT$ thousand (Unless specified otherwise)

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

273

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	Shareholding Number of shares 28,532,080 8,444,841 6,335,000	Percentage
		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.

274

AI assistant

CHAINTECH — Annual Report 2020

52073_rns_2021-08-04_f689ed74-6000-453d-9542-d2fc74cbab90.pdf

CHAINTECH Technology Corporation

2020 Annual Report

(Translation)

Notice to Readers:

Table of Contents

Page

Chapter 1 Letter to Shareholders

(II) Financial income and expenditure and profitability analysis:

II. Outline of 2021 Business Plan

(I) Business Policy

Chapter 2 Company Profile

I. Date of Founding: November 17, 1986

II. Company History:

Chapter 3 Corporate Governance Report

I. Organization

(I) Organizational Structure

(II) Businesses of Major Departments

2. Major Shareholders of the Corporate Shareholders

3. Major Shareholders as Judicial Person

3. Remuneration for the General Manager and Deputy General Manager (disclose the name and remuneration individually)

4. Remuneration for the Five Senior Officers with the Highest Remuneration (disclose the name and remuneration individually)

4. Names of Managers and for Distribution of Employees Remunerations and Distribution Status

III. Status of Corporate Governance

(I) Implementation of Board of Directors

1. The Board of Directors convened 6 meetings in the most recent year (A). The attendance of Directors and Supervisors is as follows:

2. Attendance of Independent Directors at each Board mMeeting

II. Recusal of directors from voting due to conflicts of interest: a total of two such occasions.

III. Disclose the evaluation cycle and period, scope of evaluation, method, and content of

(II) Evaluation results:

(III) Previous communication between Independent Directors and CPAs:

(IV) The composition, duties and operations of the Remuneration Committee, if the Company has:

1. Information on the members of the Remuneration Committee

(IX) Implementation of Internal Control System

1. Internal Control Statement

IV. Information on CPAs fees

(I) CPA fees

(I) Information on the previous CPA

(II) About the successor CPA

(II) Equity transfer information:

(III) Information on equity pledge:

Chapter 4 Funding Overview

I. Capital and Shares

(I) Sources of share capital:

2. Type of Shares

(II) Shareholder Structure

(III) Distribution of Shares

1. Common Shares

2. Preferred Shares: Not applicable.

(IV) List of Major Shareholders

(2) Undergoing: None.

Chapter 5 Operating Overview

I. Business Activities

3. Product development trends and competition status

II. Market, Production, and Sales Overview

2. Sales regions

3. Market share

C. New application layers

D. Limited supply

(2) Motherboard

SMT flow chart

DIP flow chart

(III) Supply of Major Raw Materials

Major suppliers in the past two years

Major sales customers for the most recent two fiscal years

III. Number of Employees in the Last Two Years Up to the Printing of this Annual Report

IV. Information on Environmental Protection Expenditure

V. Labor Relations

VI. Material Contracts:

Chapter 6 Financial Information

2. Consolidated Condensed Balance Sheet - Adoption of IFRS

(II) 1. Standalone Condensed Consolidated Statement of Comprehensive Income or Profit - Adoption of IFRS

2. Consolidated condensed statement of comprehensive income - Adoption of IFRS

II. Financial Analysis of the Last Five Years

1. Financial analysis for the most recent five years - Adopt IFRS

Chaintech Technology Corporation Supervisors' Review Report

Whereas

2021 Regular Shareholders' Meeting of CHAINTECH

CHAINTECH Annual Report 2020