CHAINTECH - Annual Report 2021 | FinancialReports.eu

Stock Code: 2425

CHAINTECH Technology Corporation

2021 Annual Report

Annual Report

Printed on May 10, 2022 Annual Report Website: http://mops.twse.com.tw Company Website: http://www.chaintech.com.tw

I. Company Spokesperson, Acting Spokesperson

Name of Spokesperson: Kao, Shu-Jung Title: General Manager Tel: (02)2913-8833 E-mail: [email protected]

Name of Acting Spokesperson: Zhang, Ya-Ling Title: Chief Auditor Tel: (02)2913-8833 E-mail: [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

Firm Name: PwC Taiwan CPA Name: 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. Company Website: http://gfortune.com.tw/

Table of Contents
Page	No.
I. Letter to Shareholders	1
II. Company Profile
1. Date of Incorporation	3
2. Company History	3
III. Corporate Governance Report
1. Organization	8
2. Information of Directors, Supervisors, General Manager, Deputy General Manager,
Assistant Manager, and Managers of Departments and Branches	12
3. Status of Corporate Governance	27
4. Information on CPAs fees	60
5. Information About Replacement of CPA	61
6. Chairman, General Manager, Manager in Charge of Financial or Accounting Affairs of
the Company, Those Who Have Worked in a Certified Public Accountant’s Firm or
Affiliated Enterprise Within the Last Year, and Name, Title and Period in a Certified
Public Accountant’s Firm or Affiliated Enterprise to be Disclosed	61
7. 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
8. 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	64
9. 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	65
IV. Funding Overview
1. Capital and Shares	65
2. Corporate Bonds	74
3. Issuance of Preferred Shares	74
4. Global Depository Receipts (GDRs)	74
5. Employee Stock Options	74
6. New Restricted Employee Stares	74
7. Issuance of New Shares in Connection with the Merger or Acquisition of Other
Companies	74
8. Capital Utilization Plan and Implementation	74
V. Operating Overview
1. Business Activities	75
2. Market, Production, and Sales Overview	84
3. Employees	93
4. Information on Environmental Protection Expenditure	94
5. Labor relations	94
6. Material Contracts	96

VI. Financial Information

VI. Financial Information
1. Condensed balance sheet and statement of comprehensive income and
audit opinion of the most recent five years	97
2. Financial Analysis of the Last Five Years	102
3. Audit report of the financial report for the most recent year from
the supervisors or audit committee	108
4. Individual financial report for the latest year audited and approved by accountants	111
5. Consolidated Financial Statements for the Most Recent Year, Certified by CPAs	111
6. 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	111
VII.Analysisfor Financial Condition and Operating Results and Risk Management
1. Comparative Analysis of Financial Conditions	111
2. Comparative Analysis of Financial Performance	113
3. Cash Flow Analysis	114
4. Impact of Major Capital Expenditures on Corporate Finances and Business
for the Most Recent Year	114
5. Policy on Reinvestment in Other Companies, the Main Reasons for Profit/
Loss Resulting Therefrom, Improvement Plan, and Investment Plans for
the Upcoming Fiscal Year	114
6. Risk Management and Assessment	115
7. Other important items	120
VIII. Special Notes
1. Information on Affiliated Companies	121
2. Private Placement Securities in the Most Recent Year to the Publication Date of this
Annual Report	126
3. Holding or Disposal of CHAINTECH's Shares by the Subsidiaries of the Most Recent
Year to the Date of Publication of this Annual Report	126
4. Other Necessary Supplements	126
IX. 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	126
Appendices
1. Individual Financial Report for the Most Recent Year	127
2. Consolidated Financial Report for the Most Recent Year	205

I． Letter to Shareholders

Dear Esteemed Shareholders:

I．2021 Business Results

CHAINTECH's consolidated revenue for 2021 was NT$ 6,518,064,000, an increase of 39.50% over the consolidated revenue of NT$ 4,672,310,000; the net profit after tax was NT$ 162,744,000, the profit (loss) attribute to the owners of parent company was NT$ 122,224,000, and the net profit per share after share was NT$ 1.27.

CHAINTECH's business results for 2021 and business plan for 2022 are summarized below:

(I) Implementation Results of Business Plan:

Unit: NT$ thousands, %

Items	2021	2020	Increase (decrease) amount	Increase (decrease) %
Operatingrevenue	6,518,064	4,672,310	1,845,754	39.50
Grossprofit	676,397	437,005	239,392	54.78
Operatingmargin	355,346	226,211	129,135	57.09
Netprofit after tax	162,744	183,413	(20,669)	(11.27)
Profit (loss), attributable to owners of parent company	122,224	145,907	(23,683)	(16.23)
Net profit on non- controllinginterest	40,520	37,506	3,014	8.04
Net profit per share after tax(NT$)	1.27	1.51	(0.24)	(15.89)

(II) Financial income and expenditure and profitability analysis:

Item	Year	2021	2020
Financial structure %	Ratio of liabilities to assets	39.52	33.59
	Ratio of long-term capital to property, plant and equipment	8,882.72	5,568.84
Solvency%	Current ratio	220.57	241.58

	Quick ratio	165.71	204.28
	Interest coverage ratio	37.37	30.16
Profitability %	Return on assets(ROA)%	5.3	7.13
	Return on shareholders' equity%	8.16	10.04
	Netprofit margin	2.5	3.93
	Earningsper share after tax(NT$)	1.27	1.51

II． Outline of 2022 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 business: Continue to strengthen the close cooperation between distributors and agents, build different types of sales channels, and strengthen the cooperative partnership 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.
Research and development policy: Develop GPU all-in-one server of work management, container management, and maintenance management system based on Docker and Kubernetes, and integrate multiple tools for AI model development to create Low-code and No-code MLOps model development maintenance and operation platforms, and deploy industrial AI application and high-efficiency information processing solutions.

(II) Estimated sales volume and supporting information

RTX40 series of NVIDIA is expected to drive new demands for electronic sports and AI application after its launching in 2022. The situation in Ukraine and Russia has brought uncertainty to the overall market and the demand for mining is not as strong as that in the last year. It is expected that the supply and demand of graphic cards will reverse in the second half of 2022, and it is hoped that the continuous convergence of the premium of the spot price will drive the supply and demand market of graphic cards to a healthy state.

(III) Important Production and Marketing Policies

Maintain multiple suppliers and establish a long-term strategic cooperative partnership with suppliers to ensure the manufacturing capacity of raw materials and the supply

stability. 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 and AI 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 of the Board: Kao, Shu-Jung

II. Company Profile

I. Establishment Date: 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.
2000 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 September 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 September 5. ] Capital reduction of NT$532,294,280, with paid-in capital reaching NT$768,522,630 on September 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 Yiland 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 ] Yiland 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 paid-in 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.
2016 The status of Zhongjie Properties as a major shareholder was revoked on October 2.
2018
After the re-election of directors and supervisors, two independent directors were elected in addition to implementing corporate governance in June.
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
2019 in-depth learning and big data analysis in September.
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.
2020 Sold Bahamas Federal Shanghai Co., Ltd. and Dongguan Kede plant in August.
2021 Invested in uSenlight Corporation in March for the 5G product layout. Acquired Baotou Yihui Information Technology Co., Ltd. through the subsidiary Siteng Heli (Tianjin) Technology Co., Ltd. and strengthened IDC Internet basic platform services.

III. Corporate Governance Report

I. Organization

(I). Organizational Structure

==> picture [663 x 275] intentionally omitted <==

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Shareholders' Meeting
Board of Directors
Remuneration Committee
Auditing Office
Chairman of the Board
General Manager
Financial Marketing Application Material Division Research and Overseas subsidiaries
Division Division Development Division Development
Division
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(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 perfecting the 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 property and 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-edge industry 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. Supervising and implementing all quality systems.
Overseas subsidiaries	Responsible for managing the overseas subsidiaries.

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. Supervising and implementing all quality systems.

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

Information of Directors and Supervisors

(I). Information on Directors and Supervisors 1. Information of Directors and Supervisors	(I). Information on Directors and Supervisors 1. Information of Directors and Supervisors	(I). Information on Directors and Supervisors 1. Information of Directors and Supervisors	(I). Information on Directors and Supervisors 1. Information of Directors and Supervisors	(I). Information on Directors and Supervisors 1. Information of Directors and Supervisors	(I). Information on Directors and Supervisors 1. Information of Directors and Supervisors
							April 17,2022 Unit: NT$thousands
Title	Nationality or Domicile	Name	Gender Average Age Note 2	Election Date	Term	First Election Date	Number of Shares Held at Election		Number of shares Now		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:			Remark
							Number of shares	Shareholding ratio Percentage	Number of shares	Shareholding ratio Percentage	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Title	Name	Relation
Chairman of the Board	Republic of China	Yiland International Development Co., Ltd. Representative: Kao, Shu-Jung	Male 60-69	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 TechnologyInc.	General Manager of CHAINTECH, Yiland International Ltd. Director of uSenlight Corporation	－	－	－	Note 1
Director	Republic of China	Yiland International Development Co., Ltd. Representative: Lu, Li-Cheng	Male 50-59	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 Administrative Management Center, General Manager of LJ Optics, Chairman and General Manager of Chaintech Technology Corporation, Corporate Supervisor Representative of Fuerte TechnologyCo.,Ltd.	Chairman of the Board of Qingyun Shixun. Independent Director of Walton Advanced Engineering, Inc.	－	－	－
Director	Republic of China	Yiland International Development Co., Ltd. Representative: Wang, Mu- Tian	Male 50-59	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 of China Merchants Bank.	CEO, Shanghai Himalayas Financial Information Services Co., Ltd.	－	－	－
Independent Director Director	Republic of China	Chen, Kuo-Chin	Male 50-59	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 Director	Republic of China	Tang, Han-Yu	Male 50-59	2019.6.14	3	2016.6.14	－	－	－	－	－	－	－	－	MBA of Peking University, General Manager of Gigabyte China Region, Consultant of Weishengxin Technology	Deputy General Manager of Business and General Manager of China Region of Weihong Technology	－	－	－
Supervisor	Republic of China	Chou Chun-Tsun	Male 60-69	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 AccountingFirm	Partner and Chief Auditor, Chia- Chia Co., Ltd.	－	－	－
Supervisor	Republic of China	Hsu Sheng-Chin	Male 60-69	2019.6.14	3	2014.2.21	1,151,048	1.13	1,151,048	1.13	－	－	－	－	School of Computer Science, Tamkang University, General Manager of Kwong Lung Enterprise Co., Ltd., Director of Inpaq Technology Co., Ltd., and Director of Yihe Information Co., Ltd.	Chairman of Win-Way Advance Technology Ltd.	－	－	－

Note 1: The Chairman and the General Manager of CHAINTECH are the same person, and the reasons, reasonableness, necessity and corresponding measures shall be explained: (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.

April 17, 2022

2. Major Shareholders of the Corporate Shareholders

	April 17,2022
Name of Corporate Shareholders	Major Shareholders of Corporate Shareholders
Yiland International Development Co., 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.
Note 3: Corporate shareholders are not organizers, and the name and shareholding ratio of shareholders, that is, the name and contribution or donation ratio of contributors or donors
(please refer to the notice of Judicial Court) should be disclosed. Donors who have died are noted with “died”.

3. Major Shareholders as Judicial Person

3. Major Shareholders as Judicial Person	3. Major Shareholders as Judicial Person
April 17,2022
Name of Corporate Shareholders	Major Shareholders of 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 1: Fill in the names of major shareholders with top-10 ownership of the institutional shareholders and their individual holding percentage.

Note 3: Corporate shareholders are not organizers, and the name and shareholding ratio of shareholders, that is, the name and contribution or donation ratio of contributors or donors (please refer to the notice of Judicial Court) should be disclosed. Donors who have died are noted with “died”.

4. Disclosure of Professional Qualification of Directors and Supervisors and Independence of Independent Directors:

Conditions Name	Professional Qualification and Experience (Note 1)	Independen ce (Note 2)	Number of Other Taiwanese Public Companies Concurrently Served as an Independent director
Director: Representative of Yiland International Development Co., Ltd. Kao, Shu-Jung	Department of Electronic Engineering, National Chin-Yi University of Technology, served as Chairman and General Manager of CHAINTECH, now is the corporate supervisor of Yiland International Ltd., corporate director of uSenlight Corporation and director of Jiangda Technology, and has at least 5 years of working experience in business, finance and company’s affairs, nearly 30 years of experience in computer peripheral related industry, and skills of business leadership, marketing, industrial knowledge and operational management.	None	None
Director: Yiland International Development Co., Ltd. Representative: Lu, Li-Cheng	Master of Computing in Bond University, served as General Manager of CHAINTECH, now is Chairman of Qingyun Shixun, Chairman of Peugeot North Region, Independent Director of Walton Advanced Engineering, Inc., and Co-executive Director of PG Rental Corp., has more than 5 years of working experience in business, finance and company’s affairs and skills of business leadership, marketing, industrial knowledge and operational management.	None	1
Director: Yiland International Development Co., Ltd.. Representative: Wang, Mu-Tian	College of Law in Taiwan University, EMBA of the Chinese University of Hong Kong, served as Assistant Manager of Credit Business Division of China CTBC Bank, Credit Card Marketing Director of Bank of Communications, Senior Deputy General Manager of CreditEase, now is CEO of Shanghai Himalayas Financial Information Services Co., Ltd., and has more than 5 years of working experience in business, finance and company’s affairs and skills of business leadership, marketing, laws and operational management.	None	None
Independent Director Tang, Han-Yu	MBA of Peking University, served as General Manger of Gigabyte China Region, now is Consultant of Weishengxin Technology, and has more than 5 years of working experience in business, finance and company’s affairs and skills of business leadership, marketing, industrial knowledge and operational management.	Compliant Independen ce	None

Independent Director Chen, Kuo-Chin	Bachelor of Computer Science of Tamkang University, Author of Five Minds for Career by Business Weekly, served as IBM Project Manager, HP Senior Deputy General Manager, now is Professional Consultant and Lecturer of Timing international Group, and has more than 5 years of working experience in business, finance and company’s affairs and skills ofbusinessleadership,marketing and operational management.	Compliant Independen ce	None
Supervisor Hsu Sheng-Chin	School of Computer Science, Tamkang University, served as General Manager of Kwong Lung Enterprise Co., Ltd., Director of Inpaq Technology Co., Ltd., and Director of Yihe Information Co., Ltd., now is Chairman of Win-Way Advance Technology Ltd., and has more than 5 years of working experience in business, finance and company’s affairs and skills of business leadership, marketing, industrial knowledge and operational management.	None	None
Supervisor Chou Chun-Tsun	NTUST EMBA Financial Research Institute, now is Partner and Chief Auditor, Chia-Chia Co., Ltd., has more than 5 years of working experience in business, finance, accounting and company’s affairs, has professional certificate of qualified accountant, specializes in corporate financial and accounting affairs, and has rich experience in industrial planning	None	1
Note 1: professional qualifications and experience: describe the professional qualifications and experience of several directors and supervisors; if they are members of the audit committee and have expertise in accounting or finance, their accounting or financial backgrounds and working experience should also be described; state whether they are involved in situations in Clause 30 of the Company Law. Note 2: for independent directors, their conformance to the independence should be stated, including but not limited to circumstance that whether they themselves, their spouses, and relatives within the second degree of kinship are directors, supervisors or employees of CHAINTECH or its affiliated enterprises; the number and percentage of shares held by themselves, their spouses, and relatives within the second degree of kinship (or in the name of other persons); whether they are directors, supervisors or employees of a company with a special relationship with CHAINTECH (please refer to Paragraphs 5-8, Item 1, Clause 3 of measures for setting up independent directors of public companies and matters to be followed); the amount of remuneration obtained in the last two years for providing business, legal, financial, accounting and other services for CHAINTECH or its affiliated enterprises. 5. Diversity and Independence of the Board of Directors: (1) Diversity of the Board of Directors: CHAINTECH advocates and respects the diversity policy of the Board of Directors. To strength the corporate governance and promote the sound development of the composition and structure of the Board of Directors, the diversity policy may help improve the overall performance of CHAINTECH. Members of the Board of Directors are selected and appointed based on the meritocracy principle, and have diverse and complementary abilities

across industries, including basic composition (such as age, gender and nationality), professional ability (such as finance, accounting, law and information technology), and business judgment, operating management, leadership, decision-making, crisis management and other abilities. To make the functions of Board of Directors achieve the ideal goal of corporate governance, it is specified in Clause 20 of CHAINTECH’s Corporate Governance Code that the Board of Directors should have the following abilities:

Business judgment ability. 2. Accounting and financial analysis ability. 3. Operating management ability. 4. Crisis management ability. 5. Industrial knowledge. 6. View of international market. 7. Leadership. 8. Decision-making ability.

Diversity policy of members of Board of Directors and implementation are as follows:

Diversity Item Director and Supervisors Name			Basi	c Composition	c Composition							Pro	fessional Ability	fessional Ability
	Nationality	Gender	Employee Identity	A	ge	Term of Offic Independent D		e of an irector	Finance	Information technology	Marketing	Law	Operating management	Accounting	Leadership and decision-making	Risk management
				51-60 years	61-70 years	Under 6 years	6-9 years	Above 9 years
Director: Representative of Yiland International Development Co., Ltd. Kao, Shu-Jung	Republic of China	Male	V	V						V	V		V		V	V
Director: Yiland International Development Co., Ltd. Representative: Lu, Li-Cheng	Republic of China	Male		V						V	V		V		V	V
Director: Yiland International Development Co., Ltd. Representative: Wang, Mu-Tian	Republic of China	Male		V					V		V	V	V			V
Independent Director Tang, Han-Yu	Republic of China	Male		V		V				V	V		V		V	V
Independent Director Chen, Kuo- Chin	Republic of China	Male		V		V				V	V		V			V
Supervisor Hsu Sheng- Chin	Republic of China	Male			V					V	V		V		V	V
Supervisor Chou Chun- Tsun	Republic of China	Male		V									V	V	V	V

CHAINTECH has 5 directors (including 2 independent directors) and 2 supervisors, including 1 employee (20%), 2 Independent Directors (40%) and 5 male Directors (100%). The age of CHAINTECH's Directors is ranging from 55 to 60. The age of supervisors is ranging from 60 to 65; CHAINTECH expects to add female Directors to its 15th Board of Directors generally re-elected in 2022 in order to implement gender diversity.
(2). Independence of the Board of Directors:
A. CHAINTECH has 2 independent directors (40%), which complies with the regulation that the number of independent directors shall not be less than 1/5 of the number of directors. The number of independent directors accounts for 2/5 of the total number of directors.
B. The term of office of the 2 independent directors has not exceeded 6 years, which complies with the regulation that the term of office shall be within 9 years.
C. Only one director is selected as the employee, which complies with the independence.
D. None of members of the Board of Directors are involved in situations in Items 3 and 4, Clause 26(3) of the Securities Exchange Act, and there is no spousal or second-degree family relationships between directors, between supervisors and between directors and supervisors.

In conclusion, the independence goal of the Board of Directors has been realized, and the

qualifications are in line with the laws.

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

													April 17,2022 Unit: share	April 17,2022 Unit: share	April 17,2022 Unit: share	April 17,2022 Unit: share
Title	Nationality	Name	Gender	Appointment Date	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			Remark End of this section
					Number of Shares	Shareholding ratio Percentage	Number of Shares	Shareholding ratio Percentage	Number of Shares	Shareholding ratio			Title	Name	Relation
General Manager	Republic of China	Kao, Shu- Jung	Male	2013.7.31	－	－	－	－	－	－	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	Republic of China	Chou, Tzu-An	Male	2016.5.1	－	－	－	－	－	－	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	－	－	－	(Note 2)
Financial/Accounting Manager	Republic of China	Yu-Nu Lai	Female	2005.9.7	－	－	－	－	－	－	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)

												2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share	2021 Unit: thousandsper share
Title	Name	Directors' remuneration								Percentage of NIAT after summing up the four items of A, B, C, and D		Compensations Paid to Concurrent Employees								Percentage of the total sums of A, B, C, D, E, F, and G on the net profit		Whether or not to have received remunerations from an invested company other than the Company’s subsidiary or parent company
		Compensations (A)		Severance pay and pension		Directors' remuneration (C)		Business expenses (D)				Salaries, bonuses and allowan (E)		Severance pay and pension		( 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	CHAINTECH	All companies listed in this financial report	CHAINTEC	H 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 Amount	Stock Amount	Cash Amount	Stock Amount
Director and General Manager	Representative of Yicheng International Ltd.: Kao, Shu-Jung	－	－	－	－	4,088	4,088	108	108	3.43	3.43	3,180	3,180	－	－	575	－	575	－	6.51	6.51	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	0.44	0.44	－	－	－	－	－	－	－	－	0.44	0.44	－
Independent Director	Chen, Kuo-Chin
1. Please state the payment policy, system, standard and structure of remuneration of independent directors, and their correlation with the paymet amount according to the responsibility, risk, investment time and other factors: 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 Company (e.g.,servingas aparent company/all companies in the financial report/a non-employee consultant in re-investment)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 as left	Kao, Shu-Jung	Same as left
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
Grand Total	5	5	5	5

2. Supervisors' remuneration (disclose the name and remuneration individually)

2021 Unit: thousands; share

Title	Name	Supervisors' remuneration	Supervisors' remuneration	Supervisors' remuneration	Supervisors' remuneration	Supervisors' remuneration	Supervisors' remuneration	Percentage of the three items A, B, C to net income after taxes	Percentage of the three items A, B, C 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
		Compensations (A)		Remuneration (B)		Business expenses (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	0.43	0.43	`－`
Supervisor	Hsu Sheng-Chin

Table of range of remuneration

	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
Grand Total	2	2

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

								2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share
Title	Name	Salary (A)		Severance pay and pension (B)		Bonuses and allowances, etc. (C)		Employees' remuneration (D)				Percentage of the total of four items A, B, C andDtonetincome aftertaxes (%)		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 Amount	Stock Amount	Cash Amount	Stock Amount
Director and General Manager	Kao, Shu-Jung	2,616	2,616	`－`	`－`	600	600	575	`－`	575	`－`	3.10	3.10	`－`

Table of range of remuneration

	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) to NT$2,000,000
NT$2,000,000 (inclusive)toNT$3,500,000
NT$3,500,000 (inclusive) to NT$5,000,000	Kao, Shu-Jung	Same asleft
NT$5,000,000 (inclusive) to NT$10,000,000
NT$10,000,000 (inclusive)toNT$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)toNT$100,000,000
Over NT$100,000,000
Grand Total	1	1

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

				2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share	2021 Unit: thousands;share
Title	Name	Salary (A)		Severance pay and pension (B)		Bonuses and allowances, etc. (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 this financial report	CHAINTECH	All companies listed in this financial repor	t CHAINTECH	All companies listed in this financial report	CHAINTECH		All companies listed in thisfinancial report		CHAINTECH	All companies listed in this financial report
								Cash Amount	Stock Amount	Cash Amount	Stock Amount
Director and General Manager	Kao, Shu-Jung	4,912	4,912	110	110	1,082	1,082	955	`－`	955	`－`	5.76	5.76	`－`
Assistant Manager of Marketing and Planning	Chou, Tzu-An (Note)
Financial/Accounting Manager	Yu-Nu Lai

Note: Assistant Manager Chou, Tzu-An resigned on January 31, 2022.

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

	December 31,2021	December 31,2021	December 31,2021	December 31,2021	December 31,2021	December 31,2021
	Title	Name	Stock Amount	Cash Amount	Grand Total	Ratio of total amount to net income (%)
Manger	Director and General Manager	Kao, Shu- Jung	`－`	955	955	0.78
	Assistant Manager of Marketing and Planning	Chou, Tzu-An (Note)
	Financial/Accounting Manager	Yu-Nu Lai

Note: Assistant Manager Chou, Tzu-An resigned on January 31, 2022.

(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:

Items Title	Ratio of total remunerations to net profit (loss) after taxes	Ratio of total remunerations to net profit (loss) after taxes	Ratio of total remunerations to net profit (loss) after taxes	Ratio of total remunerations to net profit (loss) after taxes
	2021		2020
	CHAINTECH	All companies listed in this financial report	CHAINTECH	All companies listed in this financial report
Directors (including independent directors)	6.95	6.95	7.29	7.29
Supervisor	0.43	0.43	0.36	0.36
General Manager and Deputy General Manager	3.10	3.10	2.60	2.60

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:

Remuneration: 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.
Business Execution Expenses: 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) Correlation with future risks: 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
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]	Remark
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: 2013.6.21
Director	Representative of Yiland International Ltd.: Lu, Li-Cheng	6	0	100%	Re-elected (required to attend 6 meetings) Re-election date: 2012.1.18
Director	Representative of Yiland International Ltd.: Wang, Mu-Tien	5	1	83%	Re-elected (required to attend 6 meetings) Re-election date:

					2013.6.21
Independent Director	Tang, Han-Yu	5	1	83%	Re-elected (required to attend 6 meetings) Re-election date: 2016.6.14
Independent Director	Chen, Kuo-Chin	6	0	100%	Re-elected (required to attend 6 meetings) Re-election date: 2016.6.14

Attendance of Independent Directors at each Board of Meeting ◎: present in person ☆ : present by consignor ＊ : leave

2021	1/27	3/23	5/4	7/6	8/9	11/5
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	Independ ent Directors' Opinion	The Company's handling of the opinions of independent directors	Voting results
The 11th session of the 14th Board of Directors 2021.1.27	Passed the proposal on CHAINTECH's individual salary and remuneration for managers in 2021.	None	None	Approved as proposed
	Passed the proposal on CHAINTECH's year- end bonus and special leave bonus for managers in 2020.	None	None	Approved as proposed
The 12th session of the 14th Board of Directors 2021.3.23	Passed the proposal on CHAINTECH's 2020 remuneration to Directors and Supervisors.	None	None	Approved as proposed
	Passed the proposal on CHAINTECH's remuneration to managers for 2020.	None	None	Approved as proposed
	Passed the proposal on CHAINTECH's "Evaluation of the Effectiveness of Internal Control Systems" and "Statement on Internal Control System" for 2020.	None	None	Approved as proposed
The 16th session of	Passed the proposal on regularly evaluating the independence of CPAs.	None	None	Approved as

the 14th proposed Board of Directors 2021.11.5

(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.

(I) Items listed are as follows:

Item s	Date/Term	Name of Directors	Proposal Content	Reasons of recusal
1	2021.1.27 The 11th session of the 14th Board of Directors	Kao, Shu-Jung	Discussion on the proposal on 2021 managers' remuneration	Conflict of interests
		Kao, Shu-Jung	Discussion of the 2020 managers' year-end bonus and special leaves bonus	Conflict of interests
2	2021.3.23 The 12th session 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 2020 remuneration to Directors and Supervisors.	Conflict of interests
		Kao, Shu-Jung	Discussion of the proposal for CHAINTECH's 2020 remuneration to managers	Conflict of interests

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

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	January 1 to December 31, 2021	Board of Directors, Individual Directors, and Compensation Committee	Internal self-evaluation of the Board of Directors, self- evaluation of Directors and evaluation of compensation committees	Please see the following explanatio ns for details

(I) The internal evaluation of annual performance in 2021 aimed to:
Performance evaluation of 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 evaluation of several members of Board of 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 evaluation of Compensation Committee: (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:

CHAINTECH has completed the self-evaluation of performance of the Board of Directors and Functional Committee and members of Board of Directors in 2021, among which the self-evaluation score of the Board of Directors is 90 (out of 100); the average self-evaluation score of several members of the Board of Directors is 95 (out of 100); the self-evaluation score of the Compensation Committee is 95 (out of 100), suggesting that the overall performance of the Board of Directors and Compensation Committee is good; the lack of the audit committee and no female directors in the Board of Directors are the main reason for the lack of score. It is expected that this is listed as a priority in the improvement plan in 2022.The evaluation results have been submitted to the Board Meeting on January 21, 2022 for approval.

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) CHAINTECH has passed the revision of “Organization Rules of Compensation Committee” and “Measures for Performance Evaluation of the Board of Directors” in the Board Meeting on January 27, 2021.
(II) CHAINTECH covers the “Liability Insurance of Directors, Supervisors and Managers” for all directors, supervisors and managers every year, and regularly reviews the contents of policies to ensure that the amount of compensation and coverage meet the needs.
(III) 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.
(IV) It is expected that after the re-election of the directors this year, the number of independent directors will be increased and an audit committee will be established to 25

improve the corporate governance goal.

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
2021.3.23	Operation audit report for October to December in 2020
2021.5.4	Operation audit report for January to March in 2021
2021.8.9	Operation audit report for April to June in 2021
2021.11.5	Operation audit report for July to September in 2021 2. Approved CHAINTECH's audit plan for 2022.
2022.3.23	OperationauditreportforOctobertoDecember in 2021

(III) Previous communication between Independent Directors and CPAs:

The CPAs, independent directors and supervisors conducted communication over the following

items on March 23, 2021 and March 23, 2022 before the Board Meeting:

Date	Communica tion Mode	Proposal Content	Communica tion Results
March 23, 2021	Meeting before Board Meeting	The CPA explained and discussed the scope of audit, findings, other communication matters and independence in 2020.	No objection
		Recent legislative updates of accountants and highlights of corporate governance 3.0	Execute by decree
2022/3/23	Meeting before Board Meeting	The CPA explained and discussed the scope of audit, findings, other communication matters and independence in 2021.	No objection
		Recent legislative updates of accountants and highlights ofcorporate governance 3.0	Execute by decree

CHAINTECH’s CPAs attended the Board Meeting on March 23, 2021 and August 7, 2021 (accountants attend the meeting at least twice a year) to report the audit results of financial statements, and attended for consultation, communication, discussion and exchange of opinions. 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.

VI. Succession planning for the Board of Directors and key management
1. Succession planning for the Board of Directors
CHAINTECH has five directors (including two independent directors), who have professional expertise in operation management, leadership and decision-making, finance and accounting and industrial knowledge required by CHAINTECH. The composition of the Board of Directors is planned according to CHAINTECH’s development and decree requirements.
CHAINTECH will increase talents in environmental protection or information according to CHAINTECH’s development to prepare for the succession plan of directors, so as to improve the functions of the Board of Directors and the CHAINTECH’s sustainable competitiveness.
Succession planning for key management
CHAINTECH’s employees at manager level or above are important management. CHAINTECH has formulated management standards for deputies, and each employee has his/her deputy. We arrange training course from time to time to cultivate multi-directional management talents as future reserve cadres.
(II) Operations of the Audit Committee or Supervisors' Participation in the Operations of the Board of Directors
Operation of the Audit Committee:CHAINTECH has yet to establish an Audit Committee, hence not applicable.
２ . 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]	Remark
Supervisor	Chou Chun-Tsun	6	100%	Re-elected (required to attend 6 meetings) Re-electiondate:2013.6.21
Supervisor	Hsu Sheng-Chin	6	100%	Re-elected (required to attend 6 meetings) Re-electiondate:2014.2.21
Other issues to be recorded: I. Composition and responsibilities of the supervisors: (I) Operation of supervisors and CHAINTECH’s employees (such as communication channels and methods): 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 23, 2021 and March 23, 2022 before the Board Meeting:

Date of Communication Meeting	Date of Communication Meeting	Proposal Content	Independent Directors' Opinion	Independent Directors' Opinion
2021/3/23		The CPA explained and discussed the scope of audit, findings, other communication matters and independence in 2020.	Disclaimer of Opinion
2022/3/23		The CPA explained and discussed the scope of audit, findings, other communication matters and independence in 2021.	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. 3. CHAINTECH’s CPAs attend the Board Meeting at least twice a year to report the audit results of financial statements,and attend for consultation,communication,discussion and exchange of opinions.
Date of the Board Meeting	Proposal Content			Independent Directors' Opinion
2021/3/23	Reviewed CHAINTECH's 2020 Business Report and Financial Statements.			Disclaimer of Opinion
2021/8/09	Reviewed the proposal on CHAINTECH's consolidated financial report forQ2 2021.			Disclaimer of Opinion
2022/3/23	Reviewed CHAINTECH's 2021 Business Report and Financial Statements.			Disclaimer of Opinion

(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	State of Operations	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) Has the Company formulated and implemented internal operating procedures for handling shareholders’ suggestions, doubles, disputes and litigation? (II) Has the Company kept abreast of the major shareholders of the Company and the ultimate controlling party of the major shareholders. (III) Has the Company set up and implemented risk control and firewall mechanism with affiliated enterprises? (IV) Has the Company formulated internal rules to prohibit insiders from buying and selling securities using unpublished information in the market?	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 to implement the risk control and management mechanism 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 None None None
III. Composition and Responsibilities of the Board of Directors (I)Has the Board developed,and does it implement,a	V		(I) CHAINTECH has established the "Corporate Governance Practice Principles" and "Election Procedures for the Directors and Supervisors" to stipulate the diversity	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
diversity policy and specific management goal for the composition of its members?			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. Please refer to pages 11-13 for the diversity policy and specific management goal for members of the Board of Directors and their implementation.
(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 performance evaluation to the BOD and use them as a reference for each Director's remuneration and nomination of term renewal?	V	V	(II) 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 will be set up according to the actual needs of the Company. (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' members. In the evaluation results of 2021, all scores are over 90, suggesting excellent and good. The results have been reported in the Board Meeting on January 21, 2022. Please refer to pages 21-22 for details. 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.	Not yet voluntarily established, currently under planning Currently under planning None

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
(IV) Does the Company regularly implement assessments on the independence of CPA?	V		(IV) CHAINTECH's Accounting Department assesses the competence and independence of CPAs once every year. The results of the evaluation on the recent year have been reported to the Board Meeting on November 5, 2021, 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 enough to act as CPAs for CHAINTECH. And the CPA firm has issued an independent declaration. CHAINTECH's CPA independence assessment standards.Please see page28fordetails.	None
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 Currently under planning

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
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 essentialto 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 professional stock affair agency to manage shareholders' meetings and other relevant affairs?	V		CHAINTECH has commissioned Grand Fortune Securities to handle matters related to shareholders' meetings.	None
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 andpublish and declare its financial reports for	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)CHAINTECHpublishes and declares its annual report,its financial reports for the	None None None

Evaluation Items			State of Operations	Deviations from the Practice Principles for TWSE/TPEx Listed Companies, and the Reasons
	Yes	No	Summary
the first, second, and third quarters and the operating status of each month within the prescribed time.			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/)
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 caring: 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. Rights of stakeholders: 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 audit personnel shall regularly and irregularly audit and track the implementation of the corrective actions.	None

Evaluation Items	Evaluation Items	State of Operations	State of Operations	State of Operations
		Yes	No	Summary
				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. Further study of directors and supervisors: CHAINTECH has irregularly notified directors and supervisors through letters to participate in professional knowledge educationcoursehosted by therelevant units.Pleasereferto page27forcontents.
IX. Preferential enhancement items and measures have to be proposed for what is improved and what is not for the corporate governance assessment results released in the most recent year bythe corporategovernance Center of Taiwan Stock Exchange.
Whatisimproved	1. CHAINTECH has uploadedimportantinformation in Englishsimultaneously.
Preferential enhancemen t items	1. The Company will add female directors and establish an Audit Committee, and increase the number of independent directors since 2022. 2. The Company will increase succession planning that discloses key management of members of the Board of Directors. 3. The Company will continue to evaluate and consider possible improvements for items without scores obtained. 4. The corporate governance issues will continue to update the Company’s website and 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.

Directors' continuous education in 2021:

Title	Name	Date of participatio n	Organizer	Course Name	Training Hours
Chairman of the Board	Kao, Shu- Jung	2021.12.10	Taiwan Corporate Governance Association	Practice ESG and implement govenance for sustainable development	6 hours
Director	Lu, Li- Cheng	2021.12.10	Taiwan Corporate Governance Association	Practice ESG and implement govenance for sustainable development	6 hours

	Independen t Director	Tang, Han- Yu	2021.12.10	Taiwan Corporate Governance Association	Practice ESG and implement govenance for sustainable development	3 hours

Evaluation Standards for the Independence of CPAs

Evaluation Standards for the Independence of CPAs
Evaluation Items	2021 evaluation results (Y/N)	Whether in line with the independence (Y/N)
1. The CPA has not engaged in any financial interest relations, whether directlyor 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 thepossibilityof customer loss.	Y	Y
4. There are no close business relationship or potential employment relationshipbetween 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 consecutiveyears.	Y	Y

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

Information on the members of the Remuneration Committee

1. Information on the members of the Remuneration Committee	1. Information on the members of the Remuneration Committee
		April 17, 2022
Conditions Category of identity (Note 1) Name	Professional Qualification and Experience (Note 2)	Independence (Note 3)	Number of Other Taiwanese Public Companies Concurrently Served as an Independent director

Independent Director Convener	Tang, Han-Yu	General Manager of GIGABYTE Technology China Region (1998-2002), General Manager of VIA Technologies China Region (2002-2008), President of Xinbiyou Information Asia Pacific Region (2011-2015), Business Consultant of Weishengxin Technology (2015-2022) Deputy General Manager of Business and General Manager of China Region of Weihong Technology (since February 2022)	In line with the independence	None
Independent Director	Chen, Kuo- Chin	HP Senior Deputy General Manager (1998-2014), Professional Consultants and Lecturers of Haoyu, Qunchuang, Yuyi, Chuangxin and Dun & Bradstreet (2014-2016), Professional Consultant and Lecturer of Timing international Group (since 2017)	In line with the independence	None
Other	Ke, Cong- Yuan (Note 4)	Master of Tsinghua University, Chairman of Albatron (since 1984), Director of GIGABYTE Technology (since 2012).	In line with the independence	None
Other	Yang, Hsin- Ying (Note 5)	MBA of Bernard M.Baruch College,CUNY, Bachelor of Finance Management of the Ohio State University, served as Manger of J.P. Morgan Chase & Co. (Hong Kong) (2000-2014), Assistant Manager of Corporate Finance Department of Citibank (2014-2019), Independent Director of Shun On Electronic Co.,Limited (since2020).	In line with the independence	1

Note 1: Please specify the seniority, professional qualification and experience and independence of members of the Compensation Committee in the form. Please refer to Table 1 Information of Directors and Supervisors (1) on page 9 for information of independent directors.
Note 2: Professional qualification and experience: state the professional qualification and experience of several members of the Compensation Committee.
Note 3: Conformance to the independence: state whether members of the Compensation Committee are in line with the independence, including but not limited to circumstance that whether they themselves, their spouses,
and relatives within the second degree of kinship are directors, supervisors or employees of CHAINTECH or its affiliated enterprises; the number and percentage of shares held by themselves, their spouses, and relatives within the second degree of kinship (or in the name of other persons); whether they are directors, supervisors or employees of a company with a special relationship with CHAINTECH (please refer to Paragraphs 5-8, Item 1, Clause 6 of measures for the establishment of compensation committee of a company whose stocks are listed or traded at the business premises of a securities firm and the exercise of its functions and powers); the amount of remuneration obtained in the last two years for providing business, legal, financial, accounting and other services for CHAINTECH or its affiliated enterprises.
Note 4: Mr. Ke, Cong-Yuan resigned as a member of the Remuneration Committee on March 31, 2021. Note 5: 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) Main responsibilities of the members of the Remuneration Committee:
The Committee shall meet at least twice a year and perform the following functions and powers faithfully in a professional and objective manner and with the attention of a good manager, and submit the recommendations to the Board of Directors for discussion.
Formulated and regularly reviewed the policies, systems, standards and structures for the performance evaluation standards, salary and remuneration of the directors, supervisors and managers of the Company.

Regularly evaluated and formulated the content and amount of salary and remuneration of the directors, supervisors and managers.
(3) Term of office of members of committee: 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 (2021), 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)	Actual attendance rate (%) (B/A) (Note)	Remark	Remark
Convener	Tang, Han-Yu	2	0	100%		Re-elected (required to attend 2 meetings) Re-election date: June 14, 2016
Members	Chen, Kuo- Chin	2	0	100%		Re-elected (required to attend 2 meetings) Re-election date: June 14, 2016
Members	Ke, Cong- Yuan	2	0	100%		Re-elected (required to attend 2 meetings) Resignation date: March 31, 2021
Members	Yang, Hsin- Ying	0	0	-		Newly elected (required to attend 0 meeting) By-election date: May 4, 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 of the above situation happened this year. 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. Meeting Date /Term Proposal Content Resolution Results The Company's actions in response to the opinions of the Compensation
Meeting Date /Term	Proposal Content				Resolution Results		The Company's actions in response to the opinions of the Compensation

				Committee
	2021.1.27 The 5th term of the 3rd meeting	I. Approved the proposal for the amendment to the "Remuneration Committee Organization Charter." II. Passed the proposal on the amendment to the "Performance Evaluation Measures of the Board of Directors”. III. Passed the proposal on the individual salary and remuneration for managers in 2021. IV. Passed the proposal of 2020 managers’ year-end bonus and special leaves bonus.	Passed by all attending committee members	Submitted to the Board and passed by all attending directors
	2021.3.23 The 5th term of the 4th 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 for the Company's 2020 remuneration to Directors and Supervisors IV. Passed the proposal on CHAINTECH's remunerationtomanagersfor 2020.	Passed by all attending committee members	Proposals 1~2 Resolved to continue the application of the existing measures without amendments Proposals 3~4 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.
Information and operation of members of the Nominations Committee:CHAINTECH has yet to establish a Nominations Committee, hence not applicable.

(V) Promotion of sustainable development 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 andReasons
	Yes	No	Summary
I. Has the company established the governance framework and a dedicated (part-time) unit to promote sustainable development? Has the Board of Directors authorized senior management to handle such matter and to report their supervision to the Board of Directors?		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. The Management Department is a part- time unit that is responsible for promoting CSR activities, and it has not developed the sustainable development practice code and has not reported the treatment to the Board of Directors.	Under planning
II. 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?	V		CHAINTECH’s unit for promoting sustainable development is the General Manager’s Office. 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. CHAINTECH has also implemented the corporate governance, assessed the environmental, social, and corporate governance risks related to its operations and established related risk management strategies andmeasures (pleasereferto Note1onpages 34-81)	None
III. Environmental Issues (I) Has the Company established a suitable environmental management system based on the characteristics of its industry? (II) Is the company committed to improving the efficient use of resources and utilize renewable resources to reduce	V V		(I) CHAINTECH has established the "Regulations Governing the Occupational and Environmental Safety and Health Management" in accordance with the Labor Safety and Health Act, and its subsidiary Siteng Heli (Tianjin) Technology Co. has obtained ISO9001 certification. (II) Due to the energyshortage and the carbonization of the	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 andReasons
	Yes	No	Summary
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? (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 V		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. CHAINTECH will 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 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 andReasons
	Yes	No	Summary
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? (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?	V V V		(I) The Company abides by the laws and regulations of the place where it operates, follows the International Human Rights Code, the International Labour Organization - Declaration on Fundamental Principles and Rights at Work, the Ten Principles of the United Nations Global Covenant and other internationally recognized human rights standards, and respects the guarantees specified by the human rights conventions, publicizes the internal work rules, provides the complaint channels to maintain the rights and interests of colleagues. The Company has never committed employment of child labor, forced labor or infringement. (II) The employee compensation policy is determined based on personal ability, contribution to the company, performance, and consideration of the company's future operational risks; and the Company implements the employee assessment system twice a year, and in accordance with the articles of association, if the Company makes a profit in a year, it will allocate not less than 0.1% of the profit as employee compensation. The Company pays attention to diversity and equality in the workplace. Female employees account for 42% of all employees, and female employees above the manager level account for 50%. (III) In accordance with the relevant laws and regulations on occupational safety and health, the Company provides safety protection equipment necessary for the safety and health of employees, sets up emergency escape routes and exits in the workplace,regularly disinfects the working environment,	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 andReasons
	Yes	No	Summary
(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 for products and services, and established relevant policy and appeal procedures to protect the rights of consumers or customers? (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 V V		regularly maintains elevators, prepares firefighting facilities, regularly organizes health checks, and implement various types of work safety and health education related education and trainings. The Company has formulated the “Occupational and Environmental Safety and Health Management Measures” and implemented such measures as required. There was no occupational accident in the Company in 2021. (IV) CHAINTECH organizes education and training from time to time to provide employees with effective career ability, and the duration of career training in 2021 is 26 hours. (V) CHAINTECH complies with relevant laws and regulations on intellectual property, and attaches great attention to customers' opinions. Except for maintaining communication with customers at any time, the Company also provides product information, contact window, and mailbox on its website, and set up a special zone for stakeholders as the channel for customers to make inquiries and appeal. (VI) The Company has formulated the “Supplier Management Procedures”. 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	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 andReasons
	Yes	No	Summary
			responsibility policy and the impact upon environment and society is significant, the Company is entitled to terminate or rescind the contract at any time.
V. Does the Company prepare and publish reports such as its Sustainable Responsibility 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 or certification of the aforesaid reports from a third party accreditation institution?		V	Even though CHAINTECH has not prepared its CSR report, CHAINTECH has established the "Corporate Social Responsibility Practice Principles" to fulfill its corporate social responsibility. CHAINTECH considers the interests of its stakeholders and treat its customers and suppliers in fair and reasonable manners, and has complied with the regulations under the agreement onsocialand environmental responsibility.	Has not prepared the CSR report
VI. If the Company has its own sustainable development code in accordance with the "Code of Practice for the Sustainable Development of Listed OTC Companies", please describe the differences between its operation and the code: 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 accordingto actual needs.
VII. Other important information that helps promote the implementation of sustainable development: 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 participation, social contribution, social service, social welfare, etc.: Regular assistance for socially disadvantaged groups, fulfilment of social responsibilities, and participation in public welfare in the past two years: 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. In 2020, CHAINTECH donated NT$100,000 to each of Puren Youth Care Foundation, House of Dreams, and Walsin Business Group Welfare Foundation (hearing care service),totalingNT$300,000.

Evaluation Items State of Operations Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies andReasons Yes No Summary (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 safety and enhance their understandingof health and safetyrelated knowledge.	State of Operations	State of Operations	State of Operations	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed Companies andReasons
	Yes	No	Summary

Note 1: The Company promotes sustainable development major issues and risk assessment:

Major issues	Risk assessment items	Risk management strategies and measures
Environment	Environmental protection	1. The Company does not produce and manufacture in Taiwan, so no related waste will be generated. 2. The Company implements energy conservation and carbon reduction policy, and uses recycled paper
Society	Workplace safety	1. Regularly implement safety and health education and training, hold fire safety lecture, fire, earthquake and other disaster prevention education courses. 2. Regularly check the safety measures in the workplace. 3. Regular employee health check-up subsidies.
Corporate Governance	Law compliance	Implement the internal control mechanism to ensure that all employees of the Company can truly abide by the laws and regulations.

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

Assessment Items	State of Operations	State of Operations	State of Operations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and the Reasons
	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"? (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 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 periodically examine CHAINTECH's 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 ofConductfor Directors, Supervisors and	None None None

Assessment Items	State of Operations	State of Operations	State of Operations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and the Reasons
	Yes	No	Summary
			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 implementationofethical management.
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? (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 unethicalconduct?	V	V	(I) CHAINTECH shall consider whether the counterparty has records of dishonest conduct before transactions and avoid transactions with them. When a contract is signed with others, the content will include 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) CHAINTECHstipulates policiesforpreventing the	None Under planning None

Assessment Items	State of Operations	State of Operations	State of Operations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and the Reasons
	Yes	No	Summary
(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 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 V V		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 according to relevant laws and 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 meeting from time to time	None None
III. Operation of the whistleblowing system (I) Has the company established a specific whistleblowing and reward system, set up convenient whistleblowing channels and	V		(I) CHAINTECH has established the "Report System and Measures"and set up thereportmailbox foremployees	None

Assessment Items	State of Operations	State of Operations	State of Operations	Discrepancies with the Ethical Corporate Management of TWSE/TPEx Listed Companies and the Reasons
	Yes	No	Summary
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 mechanisms? (III) Has the Company established protection measures for whistle- blower from mishandling against them?	V V		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 accordance with 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 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 anydifferences between theprescribed bestpractices and the actual activities taken bythe company: no significant difference.

Assessment Items	State of Operations	State of Operations	State of Operations
	Yes	No	Summary

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 meeting matter to be discussed shall abstain himself/herself from the discussion or voting and cannot exercise the voting right on behalf of 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.Intransactions withthemanufacturers, the Companyhas alwaysfollowed the principle ofgoodfaithand beencommitted to strengtheninginternaleducation.

(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: Home>Investors>Corporate Governance>Corporate Governance Rules (http://www.chaintech.com.tw/) for inquiry of shareholders.
(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	2021/12/10	Taiwan Corporate Governance Association	Practice ESG and implement govenance for sustainable development	6
General Manager	Kao, Shu- Jung	2022/4/22	Taishin Bank	Sustainable Net Zero Summit Forum	3
Assistant Manager of Marketing and Planning	Chou, Tzu-An	2021/1/13	Taiwan Stock Exchange	Investor Relations Forum and ESG Trends Outlook	3
Financial/Accounting Manager	Yu-Nu Lai	2021/11/9	Taiwan Stock Exchange	Corporate governance advocacy meeting	3
Financial/Accounting Manager	Yu-Nu Lai	2022/2/17	Fubon Securities	Survey of the “Acquisition or Disposal of Assets” and “Funds Lending and Endorsements” Laws	3
Financial/Accounting Manager	Yu-Nu Lai	December 20-21, 2021	Accounting Research and Development Foundation, the Republic of China	Continuous Education for Accounting Supervisors (including global corporate ESG sustainability trends and management strategies)	3
Audit Supervisor	Chang, Ya-Ling	2021/11/9	Taiwan Stock Exchange	Corporate governance advocacy meeting	3
Audit Supervisor	Chang, Ya-Ling	2022/2/17	Fubon Securities	Survey of the “Acquisition or Disposal of Assets” and “Funds Lending and Endorsements” Laws	3
Audit Supervisor	Chang, Ya-Ling	2022/3/2	Taiwan Stock Exchange	Explanation of ESG information disclosure and promotion and corporate governance regulations	3

(IX) Implementation of Internal Control System

1. Internal Control Statement

Chaintech Technology Corporation Statement on Internal Control System Date: March 23, 2022 CHAINTECH hereby states the results of the self-evaluation of the internal control system for 2021 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 operations, 4. Information and communication, and 5. Supervision operations. 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, 2021, 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, 2022, 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: Shu-Jung, Kao 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: N/A.

(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 2021
- (1) Passed CHAINTECH's 2020 Business Report and Financial Statements. Implementation status: Resolved as passed.
- (2) Passed the proposal of CHAINTECH's 2020 earnings distribution plan.
  - Implementation status: The distribution of cash dividends amounted to NT$48,249,415 (a distribution of cash dividends of NT$0.50 per share) was distributed to the shareholders. The ex-dividend date was August 21, 2021 and the distribution was fully made on September 10, 2021.
Important resolutions of the Board Meeting from January 1, 2021 to May 10, 2022 (publication date)

e)
Date	Meeting Type	Important resolutions
2021.1.27	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 bonus for managers in 2020.
2021.3.23	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 ofCHAINTECH's2021 regularshareholders' meeting.
2021.5.4	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 Salary andRemunerationCommittee.
2021.7.6	The 14th session of	1. Passed the proposal on matters concerning the reconvening of CHAINTECH's 2021 regular shareholders'meeting.

	the 14th Board of Directors
2021.8.9	The 15th session of the 14th Board of Directors	1. Passed the proposal on CHAINTECH's consolidated financial report for Q2 2021. 2. Approved the authorization of Chairman of the Board to interact with banks and securities and financial companies in the name of CHAINTECH.
2021.11.5	The 16th session of the 14th Board of Directors	1. Passed the proposal on CHAINTECH's consolidated financial report for Q3 2021. 2. Approved CHAINTECH's audit plan for 2022. 3. Passed the proposal on regularly evaluating the independence of CPAs.
2022.1.21	The 17th session of the 14th Board of Directors	1. Passed the proposal on CHAINTECH's 2022 operation plan. 2. Passed the proposal on CHAINTECH's individual salary and remuneration for managers in 2022. 3. Passed the proposal on CHAINTECH's year-end bonus and special leave bonus for managers in 2021. 4. Passed the proposal on indirect investment in “Baotou Yihui Information Technology Co., Ltd.” 5. Passed the proposal on endorsement for CHAINTECH's re-invested company.
2022.3.23	The 18th session of the 14th Board of Directors	1. Passed CHAINTECH's 2021 Business Report and Financial Statements. 2. 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. 3. Passed the proposal on CHAINTECH's 2021 remuneration to Directors and Supervisors. 4. Passed the proposal on CHAINTECH's remuneration to managers for 2021. 5. Passed the proposal on CHAINTECH's "Evaluation of the Effectiveness of Internal Control Systems" and "Statement on Internal Control System" for 2021. 6. Passed the proposal for amendment to CHAINTECH's Articles of Association. 7. Approved the proposal for the amendment to CHAINTECH's Rules of Procedure for Shareholders Meeting. 8. Passed the proposal on the amendment to the “Measures for Election of Directors and Supervisors” of CHAINTECH. 9. Passed the proposal on the amendment to the “Handling Procedures for Acquisition or Disposal of Assets” of CHAINTECH. 10. Passed the proposal on the amendment to the “Endorsement and Guarantee Operation Procedures” of CHAINTECH. 11. Passed the proposal on the amendment to the “Operating Procedures for Lending Funds to Others” of CHAINTECH. 12. Passed the proposal for the formulation of "Audit Committee Organization Charter” of CHAINTECH. 13.Passed theproposal for the re-election of directors ofCHAINTECH.

		14. Approved the authorization of Chairman of the Board to interact with banks and securities and financial companies in the name of CHAINTECH. 15. Approved the drafting of matters concerning the convening date, time, place and content of CHAINTECH's 2022 Regular Shareholders' Meeting.
2022.5.4	The 19th session of the 14th Board of Directors	1. Passed the proposal on CHAINTECH's consolidated financial report for Q1 2022. 2. Passed the proposal on the earning distribution for 2022. 3. Passed the nomination of and reviewed the list of candidates for directors (including independent directors). 4. Passed the proposal on lifting of the non-compete restriction for new directors. 5. Passed the proposal on endorsement for CHAINTECH's re-invested company.

(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

				Amount unit: NT$1,000 Non-Audit Fees (Note) Total Note 740 3,900	Amount unit: NT$1,000 Non-Audit Fees (Note) Total Note 740 3,900	Amount unit: NT$1,000 Non-Audit Fees (Note) Total Note 740 3,900
Name of Accounting Firm	Name of Certified Public Accountan ts	Audit Period	Audit Fees	Non-Audit Fees (Note)	Total	Note
PwC Taiwan	Min- Chuan, Feng	January 01, 2021 ~ December 31, 2021	3,160	740	3,900
	Ya-Hui, Lin	January 01, 2021 ~ December 31, 2021

Note: service content not covered by audit fees: Transfer valuation, information review service fee of group owner's documents and impairment report.
(II) 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.

(III) 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 About Replacement of CPA: None.
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	2021		As of April 17
		Number of shares Increase (Decrease)	Change in Shares Pledged	Number of shares Increase (Decrease)	Number of Shares Pledged Increase (Decrease)
Director	Yiland International Development Co., Ltd. Representative: Kao, Shu- Jung Representative: Lu, Li- Cheng Representative: Wang, Mu-Tian	`－` `－` `－` `－`	`－` `－` `－` `－`	`－` `－` `－` `－`	`－` `－` `－` `－`
Independent Director	Chen, Kuo-Chin	`－`	`－`	`－`	`－`
Independent Director	Tang, Han-Yu	`－`	`－`	`－`	`－`
Supervisor	Chou Chun-Tsun	`－`	`－`	`－`	`－`
Supervisor	Hsu Sheng-Chin	`－`	`－`	`－`	`－`
General Manager	Kao, Shu-Jung	`－`	`－`	`－`	`－`
Assistant Manager of Marketing and Planning	Chou, Tzu-An (Note)	`－`	`－`	`－`	`－`
Manager of Finance/Accou nting	Yu-Nu Lai	`－`	`－`	`－`	`－`
Major Shareholder	Yiland International Development Co., Ltd.	`－`	`－`	`－`	`－`

Note: Assistant Manager Chou, Tzu-An had left office on January 31, 2022.

(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,%	Unit: shares,%	Unit: shares,%	Unit: shares,%	Unit: shares,%	Unit: shares,%	Unit: shares,%
Name	I Number of Shares Held		Shares Held By Spouse and Minor Children		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)		Remark
	Number of shares	Sharehold ing ratio Percentag e	Number of shares	Share holdin g ratio	Number of shares	Shareh olding ratio	Title or Name	Relation ship
Yiland International Development Co., Ltd.	28,532,080	28.11	`－`	`－`	`－`	`－`	`－`	`－`	Director/ Major Sharehold er
Yiland International Development Co., Ltd. Representative: Chang Chi	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`
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
Customer Investment Account of Yuanta Securities under custody of Citibank	3,433,000	3.38
Account of Core Pacific - Yamaichi (HK) Co., Ltd. under custody of HSBC	4,489,000	4.42	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Li, Shih-Lung	3,000,000	2.96
Lin, Wei-Ling	2,580,468	2.54
Yang, Shun-Hsing	2,055,000	2.02	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Wu,Ming-Wei	1,979,000	1.95
PG Rental Corp.	1,885,000	1.86

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, 2021 Unit: shares; %

Reinvestment business (Note 1)	Investment of CHAINTECH	Investment of CHAINTECH	Investments of Directors, Supervisors, Managers and directly or indirectly controlled businesses	Investments of Directors, Supervisors, Managers and directly or indirectly controlled businesses	Comprehensive investment	Comprehensive investment
	Number of shares	Shareholding ratio	Number of shares	Shareholdin gratio	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) Baotou Yihui Information Technology Co., Ltd.(Note 3)	(Note 2) (Note 2) (Note 2) (Note 2)	100% 51% 100% 100%	`－` `－` `－` `－`	`－` `－` `－` `－`	(Note 2) (Note 2) (Note 2) (Note 2)	100% 51% 100% 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.

IV. Funding Overview

I. Capital and Shares

(I) Sources of share capital

1. Formation of share capital

Age Month	Issued Price	Authorized Share Capital	Authorized Share Capital	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Number of shares	Amount	Number of shares	Amount	Capital 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
1994.07	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) Business 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) Business 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) Business 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) Business 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) Business 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) Business 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) Business 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.

2. Type of Shares

	April 17,2022(shares)	April 17,2022(shares)	April 17,2022(shares)	April 17,2022(shares)
Shareholding Type	Authorized capital			Note
	Outstanding Shares	Unissued shares	Total
Common Shares	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

(II) Shareholder Structure	(II) Shareholder Structure	(II) Shareholder Structure
			April 17,2022
Shareholder Structure Quantity	Government Agencies	Finance Agencies	Other Legal Persons	Individuals	Foreign Institutions and Foreigners	Chinese Capital	Total
Number of persons	0	0	18	8,514	26	1	8,559
Number of shares	0	0	13,162,923	42,985,915	16,817,913	28,532,080	101,498,831
Shareholding Ratio (%)	0	0	12.97	42.35	16.57	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

(III) Distribution of Shares 1. Common Shares	(III) Distribution of Shares 1. Common Shares	(III) Distribution of Shares 1. Common Shares	(III) Distribution of Shares 1. Common Shares
April 17,2022 Shareholding classification Number of shareholders Number of shares Shareholding ratio (%) 1 to 999 4,291 882,555 0.87 1,000 to 5,000 3,459 6,990,693 6.89 5,001 to 10,000 420 3,367,901 3.32 10,001 to 15,000 119 1,520,152 1.50 15,001 to 20,000 80 1,478,631 1.46 20,001 to 30,000 62 1,581,275 1.56 30,001 to 40,000 27 974,318 0.96 40,001 to 50,000 15 711,949 0.70 50,001 to 100,000 33 2,370,744 2.33 100,001 to 200,000 18 2,473,128 2.44 200,001 to 400,000 9 2,396,164 2.36 400,001 to 600,000 4 2,100,000 2.07 600,001 to 800,000 7 4,827,884 4.75 800,001 to 1,000,000 0 0 0.00 1,000,001 and more Create new ranges as needed 15 69,823,437 68.79 Total 8,559 101,498,831 100.00
Shareholding classification	Number of shareholders	Number of shares	Shareholding ratio (%)
1 to 999	4,291	882,555	0.87
1,000 to 5,000	3,459	6,990,693	6.89
5,001 to 10,000	420	3,367,901	3.32
10,001 to 15,000	119	1,520,152	1.50
15,001 to 20,000	80	1,478,631	1.46
20,001 to 30,000	62	1,581,275	1.56
30,001 to 40,000	27	974,318	0.96
40,001 to 50,000	15	711,949	0.70
50,001 to 100,000	33	2,370,744	2.33
100,001 to 200,000	18	2,473,128	2.44
200,001 to 400,000	9	2,396,164	2.36
400,001 to 600,000	4	2,100,000	2.07
600,001 to 800,000	7	4,827,884	4.75
800,001 to 1,000,000	0	0	0.00
1,000,001 and more Create new ranges as needed	15	69,823,437	68.79
Total	8,559	101,498,831	100.00

Preferred Shares: N/A.

(IV) List of Major Shareholders

) List of Major Shareholders	) List of Major Shareholders	) List of Major Shareholders
April 17,2022 Shares Name of majorshareholder Number of shares Shareholding ratio Yiland International Development Co.,Ltd. 28,532,080 28.11%
Shares Name of majorshareholder	Number of shares	Shareholding ratio
Yiland International Development Co.,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	Unit: thousand shares	Unit: thousand shares
Item	Year			2020	2021	Current year, as of March 31, 2022 (Note8)
Market price per share (Note 1)	Highest			33.20	42.50	31.50
	Lowest			22.90	23.10	25.25
	Average			26.77	29.08	28.47
Net value per share (Note 2)	Before distribution			17.87	18.74	19.52
	After distribution			17.87	18.74	`－`
Earnings per share	Weighted Average		Shares	96,499	96,499	96,532
	Earnings per share (Note 3)		Before adjustment	1.51	1.27	0.71
			After adjustment	1.51	1.27	0.71
Dividends per share	Cash dividends			0.50	0.60(Note 9)	`－`
	Stock Grants	Dividend for paid- in capital		`－`	`－`	`－`
		Earnings Grants		`－`	`－`	`－`
	Accumulated dividend not paid out(note 4)			`－`	`－`	`－`
Investment Compensation Analysis	Price-to-earningratio(Note 5)			17.73	22.89(Note 9)	`－`
	Price-to-dividend ratio (Note 6)			53.54	48.47(Note 9)	`－`
	Cash dividendyield(Note 7)			0.02	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 board meeting or 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 2021 has not been resolved by the Shareholders' Meeting.

(VI) Explanation of the Company's dividend policy, implementation, and the expected significant changes
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 2021 was approved by the Board of Directors on May 4, 2022, to issue NT$0.6 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: The 2022 Shareholders Meeting did not propose free allotment of shares.
(VIII) Remuneration for Employees, Directors, and Supervisors:
1. 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, 2022, the proposed distribution of remuneration to employees, directors and supervisors of CHAINTECH for the year of 2021 is as follows:
- A. Remuneration of employees was NT$1,662,911.
- B. Remuneration of directors and supervisors was NT$4,988,732.
- C. All the above amounts have been paid in cash, which has no difference with the estimated amounts that were found in 2021.
(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: not applicable
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$
Item	Actual distribution in 2021	Listed amount in 2020	Discrepancies
Employee's compensation in cash	2,535,012	2,535,012	0
Employee compensation in shares	0	0	0
Rewards for Directors and Supervisors	7,129,722	7,129,722	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 quantity 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:

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.

V. 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).

2. Business proportion

ess proportion
	Unit: NT$thousands
Item	2021 Operatingrevenue
	Amount	Percentage
Computerperipherals	6,509,668	99.87%
Other	8,396	0.13%
Total	6,518,064	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 RTX 3080Ti and RTX 3070Ti have been officially launched in 2021. The RTX 3080 Ti is the flagship game GPU of the GeForce RTX series, with significant improvements in performance and fidelity, such as ray tracing, performance-

enhancing AI technology NVIDIA DLSS, delay-reducing NVIDIA Reflex, NVIDIA Broadcast for streaming function, and larger memory, which can also boost the processing speed of many popular creative applications.

B. The RTX 3090Ti is coming soon, is featured by NVIDIA Ampere second-generation RTX architecture with a record 10,752 CUDA cores, and is capable of 78 RTTFLOPs, 40 Shader-TFLOPs, and 320 Tensor-TFLOPs. Up to 10% improvement over 3090 in 4K game performance.
C. 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, and so on.
D. Develop display cards heat dissipation solutions in advance for NVIDIA's nextgeneration chips, the product series includes Vulcan, Neptune, Advanced, etc.
(2) Motherboard
A. Develop new Intel series products. At present, the Z690/B660/H610 series chipset products have been released, and the research and development of each product line is approaching the final stage. Next, we will continue to develop new Intel 700 series chipset products. The product series include iGame, CVN, BATTLE-AX and Geforce, and are planned to be launched from late Q3 to Q4, 2022.
B. Develop new AMD series products, develop motherboards that support the new generation AM5 processor series chipsets, adopt the new AMD 600 series chipsets, develop series of products including CVN, BATTLE-AX and Geforce and series middle end DIY motherboard, which are planned to be launched in late Q3, 2022.
C. Attach importance to the development of e-commerce, and 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. Based on Docker and Kubernetes, CHAINTECH’s high-performance data computing solutions build a complete GPU server resource management system to realize resource virtualization, optimization of scheduling, and simplification of management. For AI model development, it integrates multiple development collaboration tools to achieve smooth Low-code MLOps work management, help institutional AI developers to better manage project resources and improve development efficiency, thus shortening the development cycle and improving R&D output.
B. In 2022, we will deepen the integration of industry-specific AI application solutions and cloud services, empower industry-specific AI application solution providers to

improve cloud resource utilization efficiency and management service efficiency, and further enhance product competitiveness.

(II) Industry Overview

1. Current State and Development of the Industry

(1) Board card industry

Worldwide PC shipments rose 1% from a year earlier to 92.7 million units in Q4 2021, according to preliminary results from IDC Quarterly Personal Computing Device Tracker. For the full year of 2021, worldwide PC shipments rose by 14.8%, reaching the highest point in PC shipments since 2012.

Initial estimates of global PC manufacturers' unit shipments in Q4 2021 (Unit: 1,000 units)

	4Q21	4Q21	4Q20	4Q20	Growth Rate
Manufacturer	Shipment	Market share	Shipment	Market share	4Q21-4Q20
		(%)		(%)	(%)
Lenovo	21,701	23.4%	22,430	24.4%	-3.3%
HP	18,645	20.1%	19,266	21.0%	-3.2%
Dell	17,197	18.6%	15,797	17.2%	8.9%
Apple	7,602	8.2%	7,001	7.6%	8.6%
Asus	6,105	6.6%	5,427	5.9%	12.5%
Acer	6,036	6.5%	6,538	7.1%	-7.7%
Other	15,367	16.6%	15,285	16.7%	0.5%
Grand Total	92,653	100.0%	91,744	100.0%	1.0%

Source: IDC Quarterly Personal Computing Device Tracker, January 12, 2022

IDC stated that: “In 2021, affected by the epidemic situation and the lack of materials, although the consumption and education demand of PCs in developed countries have gradually saturated, consumption in emerging markets and global business demand are still strong, and the overall PC market grew faster than before the epidemic outbreak after reset.”

However, in the second half of 2021, the shortage of key components and the inefficiency of international transportation still exist. Fortunately, with the continuous fermentation of the existing business opportunities for e-sports and creators, the surge in cryptocurrency prices in the Q4 of 2021 drove a new wave of mining, which greatly boosted the sales momentum of graphics cards. The commercial market demand and the European and American orders for industrial system board card products also recovered simultaneously. In addition, the downstream manufacturers' stocking situation gradually improved and began to ship successively, in the second half of 2021, our computer board card manufacturing industry showed a growing

situation, and the growth in the fourth quarter was higher than that in the third quarter.

However, after entry into the first half of 2022, the demand for personal computers (PCs) gradually slowed down, and most consumer graphics card orders were cut. In addition, the demand is weakened after the outbreak of the Russia-Ukraine war, and the COVID-19 once again spreads around the world, especially in China Mainland, where Shenzhen, Shanghai, Kunshan and some other major manufacturing cities have been closed down one after another, so the graphics card companies may face heavy pressure of overstock.

(2) Artificial intelligence industry

In terms of the market size of the AI industry, according to IDC’s Worldwide Semiannual Artificial Intelligence Systems Spending Guide, 2H21, software, hardware, services and implementation cases of AI in the industry and application levels, the expenditure scale of China's AI market will reach US$8.2 billion in 2021. In the five-year forecast period from 2021 to 2025, the total AI-related expenditure in the Chinese market will grow at a CAGR of around 22%, and is expected to exceed US$16 billion in 2025. In this study, IDC's global analyst team described the key drivers that would influence IT and business decision makers to take charge of this expenditure and effectively utilize related solutions, and gave ten predictions of the artificial intelligence and automation market from 2022 to 2027:

Prediction 1: It is predicted that by 2022, 60% of China's top 1,000 enterprises will expand the use of AI/ML in the horizontal functions of all key businesses, such as marketing, legal affairs, human resources, procurement, supply chain and logistics, etc.
Prediction 2: It is predicted that by 2022, 60% of China's top 1,000 enterprises will deploy conversational AI applications in a wide range of use cases in multiple languages, 10% of which will be based on advanced language models such as BERT and GPT3.
Prediction 3: It is predicted that by 2023, Europe, the United States, and Asia will implement different AI regulations. On the one hand, these regions will encourage regional AI solutions, and on the other hand, they will think about how to achieve equilibrium among regulation, innovation and commercialization. At present, China considers AI-related applications as a strategic opportunity rather than a public issue, and AI regulation may emerge in 2025, by which time for 40% of China’s top 1,000 enterprises, AI-related applications and promotion will be delayed due to regulation and become complex.
Prediction 4: It is predicted that by 2024, the investment in business automation of 50% of China's top 1,000 enterprises will be used in multi-modal codeless automation platforms to support the digital empowerment of professional developers and business users.

Prediction 5: It is predicted that by 2024, 60% of Chinese enterprises will operate their ML

workflows through MLOps/ModelOps, and inject AI into IT infrastructure operations through AlOps function.

Prediction 6: It is predicted that by 2024, nearly 20% of IoT systems, nearly 30% of edge infrastructure systems, more than 35% of data center systems, and nearly 90% of IT client systems will support AI.
Prediction 7: It is predicted that by 2024, 50% of enterprises using computer vision will use pre-trained models that fit their needs in low-code environments, or adopt transfer learning based on sparse datasets.
Prediction 8: It is predicted that by 2025, more than 60% of Chinese enterprises will combine human expertise with AI, machine learning, NLP and pattern recognition to improve the accuracy of important decisions, enhance the foresight of enterprises, and improve the efficiency and productivity of employees by 25%.
Prediction 9: It is predicted that by 2025, 20% of China's top 1,000 enterprises will adopt process mining as the control layer for end-to-end business processes, and will be at least 20% more profitable than those that do not adopt such process.
Prediction 10: It is predicted that by 2026, 50% of China's top 1,000 enterprises will invest in climate disaster evaluation, adaptation and identification based on neural network technology, which will bring 25% of growth profits.

Yin Cheng, senior analyst of artificial intelligence at IDC, said: “Artificial intelligence is one of the seven key areas of digital industrialization in the 14th Five-Year Plan. Coupled with the promotion of continuous favorable policies including new infrastructure construction and digital economy, China's AI market will develop steadily, and the enterprises will regard intelligent transformation as the focus of work in the next few years, continue to deepen their attempts in intelligent decision-making, MLOps/AIOps, conversational AI, RPA+AI, edge intelligence, and promote the implementation of AI technology in specific business scenarios. IDC has also observed that the automation market represented by RPA continues to be hot. In the future, RPA technology suppliers should strengthen their capabilities to better empower customers. On the other hand, provide multimodal AI, codeless or featherweight coding capabilities to make RPA more and more widely used, on the other hand, utilize the process to mine the characteristics of end-to-end RPA products to deepen the application of RPA.”

==> picture [472 x 132] intentionally omitted <==

2. Correlation among upstream, midstream, and downstream of the industry

Motherboard and display cards:

==> picture [463 x 288] intentionally omitted <==

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

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

3. Product development trends and competition status

Global graphics card demand will peak in the first half of 2022, and then the supply and demand will begin to reverse. Due to the substantial improvement in the supply situation, the GPU supply in the first quarter increased by 20%~30% compared with the same period last year, and the price also decreased from January~February in 2022, and then continued to decline. According to the situation in the first quarter of 2022, the future market of the graphics card industry will resume healthy supply and demand as the premium rate continues to decrease, and the price is still expected to decrease in the short term. The reasons are as follows:

(1) NVIDIA, which has the highest market share, simultaneously purchases the processes of Samsung and TSMC to meet market demand, and Samsung is increasing its production capacity. With the supply of twice the wafer volume, the RTX 30 and RTX 40 series can be effectively supplied, which has alleviated the original short supply of the market. In addition, Alchemist GPU from Intel, a processor giant, is about to be launched. Although the exact supply remains to be seen, with the participation of a third supplier, the shortage situation should be considerably improved.

(2) After the start of the Russia-Ukraine war, the actual conditions show that the proportion of the Russian market in NVIDIA's consumer GPU products (including games and mining business) is seriously underestimated.
(3) The domestic epidemic in China Mainland has led to regional lockdown (such as Shenzhen, Shanghai, and Kunshan), which has brought considerable risks to key components and overall shipments.
(4) Ethereum 1.0 and 2.0 are expected to merge in the second quarter. Although it may lead to the rise of other cryptocurrencies, after implementation, the original proof-of-work (PoW) mechanism will be converted into proof-of-stake (PoS) mechanism. After the conversion, it cannot be resold as GPUs for mining ether, which will further weaken GPU demand and put pressure on prices.
(5) Market analysis points out that in addition to supply and demand factors, the reason for the recent decline in display card prices in Germany is that AMD Radeon RX 6500 XT adopts Navi 24-core, 6nm process, 16MB wireless temporary storage, 16 CUs, 1024 stream processors, 4GB GDDR6 display memory and a speed of 18Gbps. Because the PCIe 4.0 interface has only four channels, and the display memory capacity is 4GB and does not support 4K H.264 / H.265 encoding and AV1 decoding, which may have a greater impact on performance or usage, and the performance is much lower than expected. The congenitally deficient specification of the Radeon RX 6500 XT is also an important factor for the price decline.

(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:

I) 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:	I) 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:	I) 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:	I) 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
2021	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 schedulingsystem	20,980

		Perform optimizations usingthe UI Framework
2022 Q1	Display cards Motherboard Application software	Officially launch the RTX 3090Ti Deluxe Edition which uses NVIDIA Ampere's second-generation RTX architecture Complete the launch of Intel Z690/B660/H610 series chipset products Develop Low-code MLOps development management platform Complete the integration of AI environmental monitoring software and hardware solutions	5,142

(IV) Short-/long-term business development plans
Short-term development plans
(1) Continue to work closely with major customers to expand economic scale, maintain market share and reduce production costs.
(2) Maintain a sound financial structure and 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
(4) High-performance data computing solutions

2. Sales regions

Unit: NT$ thousands

. Sales regions					Unit: NT$thousands	Unit: NT$thousands
Item	2019		2020		2021
	Sub-total	Total	Sub-total	Total	Sub-total	Total
Domestic sales revenue	-	-	665	665	13,991	13,991
Foreign sales revenue	-	4,738,182	-	4,671,645	-	6,504,073
USA and Canada	-	-	-	-	-	-
Asia Pacific Region	4,738,182	-	4,671,645	-	6,504,073	-
Europe	-	-	-	-	-	-
Total	-	4,738,182	-	4,672,310	-	6,518,064

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.

4. Future supply and demand of the market and its growth

According to preliminary survey results by Gartner, an international research and consulting agency, global personal computer (PC) shipments totaled 88.4 million units in the fourth quarter of 2021, a decrease of 5% from the same period last year and the first slowdown after six consecutive quarters of growth, indicating that the huge demand spurred by the COVID-19 and the amazing growth force may have come to an end. The total shipments in 2021 exceeded 339.8 million units, an increase of 9.9% compared to 2020. Mikako Kitagawa, Research Director of Gartner, said the decrease in shipments in the fourth quarter of 2021 had little impact on full-year growth, and the overall PC shipments still recorded the strongest growth rate since 2013, which was generally consistent with the preliminary results of the IDC tracking report. The factors that affect the future market supply, demand and growth of the board card industry are enumerated as follows:

(1) Demand for downstream application products: computer board card is an important component of desktop computers (DT), notebook (NB), workstations and servers, so the increase in sales momentum in the downstream application product market can effectively drive the demand for upstream motherboards.
(2) Increased demand in emerging markets: In recent years, the continuous economic development of emerging markets has resulted in a significant increase in disposable income, enhanced national consumption capacity, and effectively increased local demand

for PC or NB/DT, so the basic computer board card products still have a certain production and sales momentum.

(3) Technological changes and product generation alternation: In order to cope with the continuous upgrading and updating of processor platforms and display cards, the production technology of this industry must also be continuously improved. Therefore, major technological changes and product generation alternations usually drive the replacement needs of motherboards and display cards. In addition, the successive launch of new-generation products such as All in One computers and 3D drawing professional computers will also bring new market demands to the computer board card manufacturing industry.
(4) Upgrading of operating system: With the upgrading of operating system, such as Microsoft upgrading from Windows 97 to Windows XP, Windows 7, and launching Windows 11 in 2021, the hardware equipment of related computers must also be upgraded for the best use effect. Therefore, with the launch of new processor platforms, significant upgrade of computer operating systems, or the cessation of technical support for older systems, there is usually a wave of replacements in the market, which in turn increases the demand for computer board cards.
(5) Substitutes: With the continuous enhancement of NB performance and substantial price reduction, as well as the popularization of Tablet and Mobile Device with diversified functions and portable nature, the substitutability of PC continues to improve, which reduce the demand for PC-specific board cards, so the emergence of substitutes will also affect the demand changes in this industry.
(6) Global economic climate: The industry market has spread all over the world, so the changes in the global economic environment will affect the development of the industry, and then change the expenditure decisions of multinational companies and ordinary consumers on computer peripheral equipment, and finally affect the production and sales scale of the upstream computer board card manufacturers. In addition, nearly half of the products in this industry are still directly sold to the clone market, so the prosperity of the clone market will also fully change the sales momentum of this industry.

For the future market forecasts of 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 the Shenzhen R&D Center shows that the Company has made arrangements for niche products. In 2018, we invested in SITONHOLY through Jinghong Digital. SITONHOLY is an AI and HPC infrastructure solution provider, and has its own brand GPU server and general-purpose X86 server, which are suitable for deep learning training and reasoning scenarios and cover a variety of product forms such as servers and silent workstations. It has been deeply cultivating in the market of China Mainland for more than ten years, and can meet the needs of customers in all scenarios; the application business is divided into four major business divisions, namely DGX, education industry, scientific research and AI, and it is a partner of NVIDIA NPN Elite and the agent of series products of DGX and Tesla. In 2021, Sitonholy Technology acquired Baotou Yihui Information Technology Cloud Computing Center and engaged in server leasing, public cloud and other businesses. It has the advantages of high cost performance, high performance, customization and flexibility, and is suitable for the scenarios of high security and regulatory requirements, highperformance computing and core database.

(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 the knowledge and ability related to the key technologies of the products, 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 Sitonholy (Tianjin) Technology 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. Sitonholy (Tianjin) Technology devotes itself to provision of software and hardware solutions to in-depth learning, GPU high-performance 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 highperformance computing and in-depth 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 and countermeasures

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, and sign long-term contracts with suppliers to fix the capacity, to maintain stable sales and profit.
G. Continue to invest in high-performance 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 2021 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. Personal computer, use: Clerical processing, briefing system, graphic design and drawing, spreadsheet, multi-media

B. 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 184] intentionally omitted <==

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

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

DIP FLOW CHART

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

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

Manual Visual Wave
Components insertion inspection Soldering Visual inspection
Pre-forming & Touch-up
Manual Visual Wave
Pass Pass
Functional test /Battery voltageCPU voltage ICT Test Additional
test ICT Test Components
Fail Fail Fail
Board
Memory
Pass Repair
PQC sampling Packing Stock
inspection
PQC S li
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, Superway, 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

Unit: NT$ thousands

									Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
	2020				2021				As of Q1 2022
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	1,364,010	33	`－`	005505	1,960,929	33	`－`	005505	365,449	23	`－`
2	KH-11223	`－`	`－`	`－`	KH-11223	`－`	`－`	`－`	KH-11223	256,164	16	`－`
3	005507	629,194	15	`－`	005507	718,534	12	`－`	005507	162,088	10	`－`
4	Other	2,089,754	52	`－`	Other	3,313,917	55	`－`	Other	797,870	51	`－`
	Net purchases	4,082,958	100		Net purchases	5,993,380	100		Net purchases	1,581,571	100

Explanation of changes: N/A

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
Data Unit: NT$thousands
Year	2020				2021				As of Q1 2022
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	1,703,136	36	Related parties	COLORFUL	2,178,925	33	Related parties	COLORFUL	400,360	28	Related parties
2	10F001	496,072	14	`－`	10F001	421,715	6	`－`	10F001	136,431	9	`－`
3	16L002	497,686	11	`－`	16L002	579,767	9	`－`	16L002	95,447	7	`－`
4	16N002	458,640	10	`－`	16N002	464,424	7	`－`	16N002	96,530	7	`－`
	Other	2,012,848	43	`－`	Other	2,873,233	45	`－`	Other	723,514	49	`－`
	Net sales	4,672,310	100		Net sales	6,518,064	100		Net sales	1,452,282	100%

Explanation of changes: N/A

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

Unit: Piece, NT$ thousands

				Unit: Piece,NT$thousands	Unit: Piece,NT$thousands	Unit: Piece,NT$thousands
Year	2020			2021
Production volume and value Main Products	Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
Computerperipherals	800,000	570,000	2,438,731	800,000	691,857	3,638,020
Total	800,000	570,000	2,438,731	800,000	691,857	3,638,020

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

Unit: NT$ thousands

					Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year	2020				2021
Sales volume Main Products	Domestic sales		Foreign sales		Domestic sales		Foreign sales
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Computer peripherals	0	0	1,024,326	4,664,778	118	13,991	1,154,392	6,495,677
Other	0	665	-	6,867	-	-	-	8,396
Total	0	665	1,024,326	4,671,645	118	13,991	1,154,392	6,504,073

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

Report	Report
Year		2020	2021	As of March 31, 2022
Number of employees	Direct employees	0	0	0
	Indirect employees	19	19	19
	Total	19	19	19
Average age		42.06	43.19	42.90
Average length of service		9.14	10.08	9.97
Education Distribution Ratio (%)	Doctor	0	0	0
	Master	21	21	16
	Junior college	74	74	79
	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): The Company's products are all produced by outsourced factories, so there is no environmental pollution; however, the Company still insists that the processing factories must comply with relevant environmental protection laws and regulations, and work together to solve the environmental problem of the gradual energy shortage of the 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) Training for new employees: 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) Department training: The professional training courses organized by each department.

In 2021, CHAINTECH held internal and external education and training related to ethical management (including ethical management related law compliance, food and fire safety and hygiene management, accounting system, corporate governance and internal control and other related courses) for 20 person-times. Totally 63 hours.

3. 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.

4. 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.

5. 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	January 1, 2021 ~ December 31, 2023

VI. Financial Information

I. Condensed balance sheet and statement of comprehensive income and audit opinion of the most recent five years

(I) Condensed Consolidated and Parent Company Only Balance Sheets
Consolidated Condensed Balance Sheets

Unit: NT$ thousands

Year Item	Year Item	2017	2018	2019	2020	2021	2022 As of March 31
Current assets		1,841,440	1,728,661	1,970,057	2,320,135	2,902,127	2,735,583
~~Property, Plant, and~~ Equipment(Note 2)		134,335	122,073	62,003	34,723	23,158	15,851
Funds and Investment		-	108,985	137,045	319,723	200,485	185,540
Intangible assets		-	-	188,971	180,171	168,525	179,987
Other assets		12,465	54,784	23,539	56,794	107,045	104,911
Total assets		1,988,240	2,014,503	2,381,615	2,911,546	3,401,340	3,221,872
Current Liabilities	Before distribution	263,190	279,003	650,766	960,411	1,315,737	1,046,488
	After distribution	263,190	431,252	680,122	1,008,661	(Note 1)	(Note 1)
Non-current liabilities		1,423	1,376	10,606	17,467	28,542	27,274
Liabilities Total	Before distribution	264,613	280,379	661,372	977,878	1,344,279	1,073,762
	After distribution	264,613	432,625	690,322	1,026,128	(Note 1)	(Note 1)
Equity attributable to owners of theparent		1,723,627	1,734,124	1,552,047	1,724,317	1,808,744	1,883,759
Capital		1,092,488	1,014,988	1,014,988	1,014,988	1,014,988	1,014,988
Capital surplus		-	-	-	100	100	100
Retained Earnings	Before distribution	660,442	831,650	786,346	900,677	974,651	1,043,634
	After distribution	660,442	679,404	757,396	852,427	(Note 1)	(Note 1)
Other equity		(29,303)	(112,514)	(97,541)	(39,702)	(29,249)	(23,217)
Treasury stocks		-	-	(151,746)	(151,746)	(151,746)	(151,746)
Non-controlling interests		-	-	168,196	209,351	248,317	264,351
Total Sharehold ers’ Equity	Before distribution	1,732,627	1,734,124	1,720,243	1,933,668	2,057,061	2,148,110
	After distribution	1,732,627	1,581,878	1,691,293	1,885,418	(Note 1)	(Note 1)

Note 1: The proposal of 2021 earnings distribution hasn’t been passed by resolution of shareholders' meeting. Note 2: Asset revaluation has not been performed for each year.

2. Individual Condensed Balance Sheets

$ thousands

Year Item	Year Item	2017	2018	2019	2020	2021	Deadline of year 2022 to March 31
Current assets		1,609,221	1,551,324	1,412,661	1,537,656	1,682,849	Since the first q uarter is the time to issue the con solidated review report, it is not applicable.
Property, Plant, and Equipment(Note 2)		25	-	55,272	32,489	9,590
Funds and Investment		364,473	455,185	609,394	838,275	758,325
Intangible assets		-	-	-	-	-
Other assets		1,874	11	9,413	39,854	54,085
Total assets		1,975,593	2,006,520	2,086,740	2,448,274	2,504,849
Current Liabilities	Before distribution	251,966	272,396	534,693	720,822	694,514
	After distribution	251,966	424,645	563,643	769,072	(Note 1)
Non-current liabilities		-	-	-	3,135	1,591
Liabilities Total	Before distribution	251,966	272,396	534,693	723,957	696,105
	After distribution	251,966	424,645	563,643	772,207	(Note 1)
Equity attributable to owners of theparent		1,723,627	1,734,124	1,552,047	1,724,317	1,808,744
Capital		1,092,488	1,014,988	1,014,988	1,014,988	1,014,988
Capital surplus		-	-	-	100	100
Retained Earnings	Before distribution	660,442	831,650	786,346	900,677	974,651
	After distribution	251,966	679,404	757,396	852,427	(Note 1)
Other equity		(29,301)	(112,514)	(97,541)	(39,702)	(29,249)
Treasurystocks		-		(151,746)	(151,746)	(151,746)
Non-controllinginterests		-	-		-	-
Total Shareholders ’ Equity	Before distribution	1,723,627	1,734,124	1,552,047	1,724,317	1,808,744
	After distribution	1,723,627	1,581,878	1,523,097	1,676,067	(Note 1)

Note 1: The proposal of 2021 earnings distribution hasn’t been passed by the resolution of shareholders' meeting. Note 2: Asset revaluation has not been performed for each year.

(II) Condensed, Consolidated and Individual Statements of Comprehensive Income

Consolidated and Condensed Statements of Comprehensive Income

				Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item	2017	2018	2019	2020	2021	Deadline of year 2022 to March 31
Operatingrevenue	5,772,839	4,050,310	4,738,182	4,672,310	6,518,064	1,452,281
Operating margin (including (unrealized) realized profits of affiliated companies)	104,334	372,418	332,636	437,005	676,397	138,571
Operating (loss) profit	16,831	267,295	132,133	226,211	355,346	67,169
Non-operating income andexpenses	(74,656)	39,808	19,772	(36,587)	(147,157)	29,532
Pretax net profit (loss)	(57,825)	307,103	151,905	189,624	208,189	96,701

Net profit ofthe unit from continuing operationsfor current period	-	256,644	137,224	183,413	162,744	75,607
Loss ofthe unitfrom discontinued operations	-	(12,340)	(8,545)	-	-	-
Net profit (loss) for current period	(56,914)	244,304	128,679	183,413	162,744	75,607
Other comprehensive income or loss (net amount after tax) for current period	(4,350)	(83,211)	14,973	61,488	8,899	15,442
Total comprehensive income (loss)	(61,264)	161,093	143,652	244,901	171,643	91,049
Net profit attributable to Owners of the parent	(56,914)	244,304	106,942	145,907	122,224	68,983
Net profit attributable to non- controlling equity	-	-	21,737	37,506	40,520	6,624
Total comprehensive income or loss attributable to the owner of the parent company	(61,264)	161,093	121,915	203,746	132,677	75,015
Total comprehensive income (loss) attributable to non- controlling interests	-	-	21,737	41,155	38,966	16,034
Earnings (loss) per share	(0.52)	2.39	1.06	1.51	1.27	0.71

Note 1: The proposal of 2021 earnings distribution hasn’t been passed by the resolution of shareholders' meeting. Note 2: Asset revaluation has not been performed for each year.

2. Individual Condensed Statements of Comprehensive Income

				Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item	2017	2018	2019	2020	2021	Deadline of year 2022 to March 31
Operatingrevenue	5,276,351	3,755,138	3,591,114	3,515,850	4,173,178	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)	80,824	357,955	158,267	228,826	350,104
Operating(loss)profit	32,161	270.828	79.694	154,155	270,833
Non-operating income and expenses	(90,332)	23,606	26,054	(5,381)	(111,194)
Profit before tax	(58,171)	294,434	105,748	148,774	159,639
Net profit ofthe unitfrom continuing operations for currentperiod	-	-	-	-	-
Loss ofthe unitfrom discontinued operations	-	-	-	-	-
Net profit (loss) for current period	(56,914)	244,304	106,942	145,907	122,224
Other comprehensive income or loss (net amount after tax) for current period	(4,350)	(83,121)	14,973	57,839	10,453
Total comprehensive income (loss)	(61,264)	161,093	121,915	203,746	132,677
Net profit attributable to Owners of the parent	-	-	-	-	-
Net profit attributable to Non-controlling interests	-	-	-	-	-
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	(0.52)	2.39	1.06	1.51	1.27

Note 1: The proposal of 2021 earnings distribution hasn’t been passed by 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
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	Hsu, Sheng-Chung, Wu, Han-Chi	No retained opinions
2020	PwC Taiwan	Feng, Min-Chuan and Lin, Ya-Hui	No retained opinions
2021	PwC Taiwan	Feng, Min-Chuan and Lin, Ya-Hui	No retained opinions

II. Financial Analysis of the Last Five Years

1. Consolidated financial analysis

Analysis Items Year	Analysis Items Year	2017	2018	2019	2020	2021	Deadline of year 2022 to March 31
Financial structure %	Ratio of liabilities to assets	13.31	13.92	27.77	33.59	39.52	33.33
	Ratio of long-term capital to property, plant and equipment	1283.08	1420.56	2774.45	5568.84	8882.72	13551.89
Solvency %	Currentratio	699.66	619.59	302.73	241.58	220.57	261.41
	Quick ratio	655.21	584.66	240.02	204.28	165.71	188.46
	Interest coverage ratio	(35.90)	137.18	26.82	30.16	37.37	289.68
Operating ability	Accounts receivable turnover rate (times)	4.29	4.08	5.04	4.12	4.76	4.16
	Average Collection Days	85.08	89.46	72.42	88.59	76.68	87.74
	Inventory Turnover Rate (times)	37.86	35.28	19.42	13.28	14.58	8.76
	Accounts payable turnover rate (times)	18.50	20.10	16.74	11.43	10.20	7.19
	Average days ofsales	9.64	10.34	18.79	27.48	25.03	41.66
	Property, Plant and Equipment Turnover Rate(Times)	41.33	31.85	51.48	96.61	225.22	297.84

	Total assets turnover rate (times)	2.90	2.03	1.99	1.60	1.92	1.80
Profitability	Returnonassets (%)	(2.56)	12.29	6.07	7.13	5.30	2.32
	Return on shareholders’ equity (%)	(3.23)	14.13	7.45	10.04	8.16	3.60
	Ratio of net income before tax in paid-in capital(%)	(5.29)	29.05	14.97	18.68	20.51	9.53
	Net profitrate (%)	(0.99)	5.98	2.72	3.93	2.50	5.21
	Earnings per share (NT$)	(0.52)	2.39	1.06	1.51	1.27	0.71
Cash flow	Cash flowratio (%)	134.92	159.19	(10.93)	(7.72)	45.11	(0.27)
	Cash flow adequacy ratio	60.17	335.40	107.13	214.87	166.84	124.68
	Cash reinvestment ratio (%)	18.33	25.23	Note 1	(4.38)	29.39	-0.14
Degree of leverage	Degree of operating leverage	1.72	1.05	4.24	3.00	7.11	1.13
	Degree of financial leverage	1.10	1.01	1.05	1.03	1.02	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 before tax. 2. Operating ability: The decrease in accounts receivable turnover ratio and inventory turnover ratio is mainly due to the increase in sales revenue for the current period. 3. Decrease in various profitability ratios: this is mainly due to decrease in net profit for the current period. 4. Cash flow ratio: The increase in cash flow ratio and cash reinvestment ratio is mainly due to the increase 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.

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

2. Individual financial analysis

Year	Analysis Items	2017	2018	2019	2020	2021	Deadline of year 2022 to March 31
Financial structure %	Ratio of liabilities to assets	12.75	13.58	25.62	29.57	27.79	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	6,894,508	-	2,808.02	5,307.39	18,860.73
Solvency %	Currentratio	638.67	569.51	264.20	213.63	242.31
	Quick ratio	593.11	533.91	208.26	189.07	210.18
	Interest coverage ratio	(36.12)	137.00	19.61	24.59	33.03
Operating ability	Accounts receivable turnover rate (times)	4.03	3.81	4.07	3.56	3.77
	Average Collection Days	90.57	95.80	89.68	102.52	96.81
	Inventory Turnover Rate (times)	34.70	32.26	17.35	13.72	19.00
	Payables Turnover Rate (Times)	16.98	18.41	14.42	11.46	12.57
	Average days of sales	10.51	11.31	21.03	26.60	19.21
	Property, Plant and Equipment Turnover Rate (Times)	53,567.02	300,411.04	129.94	80.12	198.35
	Total Asset Turnover Rate (Times)	2.67	1.87	1.72	1.44	1.67
Profitability	Return on assets (%)	(2.57)	12.36	5.45	6.66	5.10
	Return on shareholders’ equity (%)	(3.23)	14.13	6.51	8.91	6.92
	Ratio of net income before tax in paid-in capital (%) (Note 7)	(5.32)	29.01	10.42	14.66	15.73

	Net profitrate (%)	(1.08)	6.51	2.98	4.15	2.93
	Earnings per share (NT$)	(0.52)	2.39	1.06	1.51	1.27
Cash flow	Cash flow ratio (%)	122.75	156.83	6.45	(10.69)	58.52
	Cash flow adequacyratio	64.41	383.93	124.48	244.03	205.07
	Cash flow reinvestment ratio (%)	16.96	26.21	(8.22)	(4.88)	19.11
Degree of leverage	Degree of operatingleverage	1	1	1.19	2.13	1.68
	Degree of financial leverage	1.05	1.01	1.08	1.04	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 decrease in the current short-term borrowings. 2. Operating ability: The decrease in inventory turnover ratio and accounts receivable turnover ratio for the current period is mainly due to the increase in sales revenue for the current period. 3. Decrease in various profitability ratios: this is mainly due to decrease in net profit for the current period. 4. Cash flow ratio: The increase in cash flow ratio and cash reinvestment ratio is mainly due to the increase 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.
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＋Non-current 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.

100

(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 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 shall 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.

101

(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:
(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.

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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.

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

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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 2021 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.

Sincerely,

2022 Regular Shareholders' Meeting of CHAINTECH

Chaintech Technology Corporation

Supervisor: Chou Chun-Tsun

Supervisor: Hsu Sheng-Chin

March 25, 2022

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Chaintech Technology Corporation

Supervisors' Review Report

Whereas

The proposal for the 2021 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.

Sincerely,

2022 Regular Shareholders' Meeting of CHAINTECH

Chaintech Technology Corporation

Supervisor: Chou Chun-Tsun

Supervisor: Hsu Sheng-Chin

May 6, 2022

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IV. Individual financial report for the latest year audited and approved by accountants (please refer to pages 121 to 198 for details).

V. Consolidated Financial Statements for the Most Recent Year, Certified by CPAs (please refer to pages 199 to 291 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.

VII. Analysis for Financial Condition and Operating Results and Risk Management

I. Financial condition: 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 Item	2021	2020	Difference	Difference
			Amount	%
Current assets	2,902,127	2,320,135	581,992	25.08
Investment using equity method	-	133,573	(133,573)	(100.00)
Property, plant, and equipment	23,157	34,723	(11,566)	(33.31)
Intangible assets	168,525	180,171	(11,646)	(6.46)
Other assets	107,045	56,794	50,251	88.48
Total assets	3,401,340	2,911,546	489,794	16.82
Current liabilities	1,315,737	966,041	349,696	36.20
Non-current liabilities	28,542	17,467	11,075	63.41
Total Liabilities	1,344,279	977,878	366,401	37.47
Capital	1,014,988	1,014,988	-	-
Capital surplus	100	100	-	-
Retained earnings	974,651	900,677	73,974	8.21
Other equity	(29,249)	(39,702)	10,453	(26.33)
Treasury stocks	(151,746)	(151,746)	-	-
Total shareholders’ equity attributable to owners of the parent company	1,808,744	1,724,317	84,427	4.90
Non-controlling interests	248,317	209,351	38,966	18.61
Total equity	2,057,061	1,933,668	123,393	6.38

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Analysis of changes in percentage of increase and decrease: (more than 20% and the amount of change reaching NT$10 million) 1.Increase in current assets: this is mainly due to increase in cash and inventory in the current year. 2. Decrease in investment using equity method: this is mainly due to loss from long-term equity investment in the current year. 3. Decrease in property, plant and equipment: this is mainly due to the apportionment of depreciation expense in the current year. 4. Increase in other assets: this is mainly due to increase in use right asset and other noncurrent assets for the current period. 5. Increase in current liabilities: this is mainly due to the increase in accounts receivable in the current year. 6.Increase in retained earnings: this is mainly due to the increase in earnings in the current period. 7. Decrease in other equities: This is 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. 8. Increase in non-controlling interests: this is mainly due to the increase in the income from the reinvested company.

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II. Finance 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 Item	2021	2020	Increase (decrease) amount	Change ratio %
Net operating revenue	6,518,064	4,672,310	1,845,754	28.32
Operating costs	5,841,667	4,235,305	1,606,362	27.50
Gross profit	676,397	437,005	239,392	35.39
Operating expenses	321,051	210,794	110,257	34.34
Operating income	355,346	226,211	129,135	36.34
Non-operating income and expenses	(147,157)	(36,587)	(110,570)	75.14
Profit before tax	208,189	189,624	18,565	8.92
Tax expense	(45,445)	(6,211)	(39,234)	86.33
Current net profit	162,744	183,413	(20,669)	(12.70)
Analysis of changes in the percentage of increase or decrease: 1. Increase in operating revenue and operating cost: this is mainly due to increase in operating revenue in the current year compared with corresponding period of previous year. 2. Increase in operating margin: this is mainly due to the increase in operating margin caused by the difference in products sold in this year. 3. Increase in operating income: this is mainly due to the increase in operating revenue for the current period. 4. Decrease in non-operating revenue: this is mainly due to the long-term equity investment loss and exchange loss recognized in the current period. 5. Decrease in current net profit: this is mainly due to the long-term equity investment loss recognized in the current period.

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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 Item	2021	2020	Increases (decreases) ratio %
Cash flow ratio	45.11	(7.72)	(684.33)
Cash flow adequacy ratio	168.84	214.87	(21.42)
Cash reinvestment ratio	29.39	(4.45)	(760.45)
Analysis of changes in the percentage of increase or decrease: Increase/decrease in various cash flow ratios compared to the previous year: this is mainly due to increase in cash inflow in the currentyear compared with thepreviousperiod.

(II) Cash liquidity analysis for the following year.

Cash Flow Analysis

Unit: NT$ thousands

				Unit: NT$thousands	Unit: NT$thousands
Cash balance at beginning of the period Balance	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
692,998	108,643	121,161	680,479	0	0
Analysis of the changes in cash flow: 1. Operating activities: this is 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:

In order to become a complete leading artificial intelligence infrastructure company,

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CHAINTECH was proposed to let its subsidiary Sitonholy (Tianjin) Company acquire an under-operation IDC Company “Baotou Yihui Information Technology Co., Ltd.” with RMB 2 million at the end of 2021, and become a Tianjin 100% subsidiary, so as to improve value added of Tianjin Company.

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

	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Name of reinvestment companies	Initial amount of investment	Investee Income (loss) for the period	Reason	Improvement Plan
	December 31,2020
Shenzhen Jinghong Digital R&D Service Co., Ltd.	499,065	43,170	`－`	`－`

Investment plans for the next 12 months: in order to increase basic computing skills of cloud services and enrich consideration of capital surplus, CHAINTECH is proposed to increase capital at RMB 8.5 million to Baotou Yihui Company via its subsidiary Sitonholy (Tianjin) Company.

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

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		informationsecurityrisks.
Inventory risk	Material Division	Procure raw materials and finished products, and undertake OEM contractingbusinesses and inventorymanagement.
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 implementation of the Company's internal control system, and assist the risk management organization and operational unit in designingrisk 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, 2021, the balance of CHAINTECH's bank loan was NT$227,840 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$2,278 thousand on the condition that other factors remain unchanged, which accounted for 0.035% 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.

2. 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) CHAINTECH's consolidated profit (loss) from the exchange in 2021 was NT$(20,038) thousand, accounting for 0.31% 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.

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     - 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 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: CHAINTECH's policy is to engage in nonhigh risk and non-high leveraged investments.
Derivative 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 2021.
Capital loan to others policy: CHAINTECH's capital loan is only limited to parent company and subsidiaries, to the exclusion of shareholders or any other parties. In 2021, 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.
Endorsement/guarantee for others policy: 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 2021 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, to enable a rational proportion distribution of series products at different prices. In addition, for high-end gamers, we will develop e-sports graphics cards with core over-clocking, high power consumption and outstanding heat dissipation performance.

(2) Motherboard

A. Develop iGame series gaming motherboard, including Vulcan, Ultra and Gaming MINI

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iTX series by using the latest Intel 700 series high-end chipset.

  - B. Develop the Intel 700 LGA1700/AMD AM5 600 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.

  - D. Add development of industrial control motherboards, mainly targeting at the industrial purposes such as: tax control finance, digital sign-age, retail cashier, cloud storage, commercial game, multi-screen output, mini-computer and custom-brand complete machine, etc.

(3) High-performance data computing solutions
- A. Include application of the new-generation AI in-depth learning, machine learning, big data analysis and high-efficiency scientific computing, and continue to optimize GPU computing server cluster management and development tool software system based on the technology of Kubernetes and Docker containerization.
- 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.
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 2022, the expenditure related to R&D is expected to greatly increase compared to 2021, accounting for 0.7% of the consolidated 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

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charge of formulating the countermeasures.

(VIII) Expected Benefits and Possible Risks Associated with Any Mergers and Acquisitions, and Measures to Be Taken in Response:
(IX) Expected Benefits and Possible Risks Associated with Any Plant Expansion, and Measures to Be Taken in Response:
(X) Risks Associated with Any Consolidation of Sales or Purchasing Operations:
Purchase: 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.
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:
(XIV) Other important risks and countermeasures:

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

(1) Making 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.
(2) Management of information security:

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Management of system entity and environmental security: 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.
Management of network, communication and operation: Set up firewall and anti-virus 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 acccess control: Ensure the correctness and integrity of data input and output, and establish database and file management mechanism.
Control of information security check: 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.
(3) Information security management and reveiw: 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.

VII. Other important items: None.

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VIII. Special Notes

I. Information on Affiliated Companies

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

==> picture [189 x 409] 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%
Baotou Yihui Information
Technology Co., Ltd.
100%
----- End of picture text -----

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2. Basic information of affiliated companies:

Unit: NT$ thousands

		Unit: NT$thousands
Name of business	Date of Incorporat ion	Address	Actual paid-in capital	Main business or production items
Shenzhen Jinghong Digital R&D Service Co., Ltd.	2012.08	Room 305B, 3F, Building 3 of Meilin Duoli Industrial Plant, North Ring Road, Meili Community, Meilin Sub-district, Futian District, Shenzhen City, PRC	NT$499,065	Technology research and development and trading of electronic products, computer hardware, and peripheral devices
Sitonholy (Tianjin) Technology Co., Ltd.	2018.07	No. 1 Cuipu Road, Yixianyuan Science Industrial Park, Tianjin Economic-Technological Development Area	NT$100,162	Manufacturing and sales of electronics and computers, servers, and high- performance computingserver
Beijing Sitonholy Technology Co., Ltd.	2012.05	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
Baotou Yihui Information Technology Co., Ltd.	2012.09	A 308, Software Park of Baotou Rare Earth Development Zone, Inner Mongolia Autonomous Region	NT$28,295	Electronic products, communication products, computer software and hardware and data processing storage and support services

For those who are concluded as the existence of the controlling and subordinate relations, the information of the same shareholders: No such circumstance.
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

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peripherals.

c、 The Company invested in Sitonholy (Tianjin) Technology Co., Ltd., responsible for the production, manufacturing and sale of server products, through Jinghong.
d、 The Company invested in Beijing Sitonholy Technology Co., Ltd., responsible for the production, manufacturing and sale of server products, through Sitonholy (Tianjin) Technology Co., Ltd.
f. The Company invested in Baotou Yihui Information and Technology Co., Ltd., responsible for processing, storage and support services of computer software and hardware and data, through Sitonholy (Tianjin) Technology Co., Ltd.

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

Unit: share; %

		Unit: share;%
Name of business	Title	Name or representative	Number of Shares 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%
Baotou Yihui Information Technology Co., Ltd.	Chairman of the Board Supervisor	Sitonholy (Tianjin) technology Co., Ltd. Representative: Wang, Wei Sitonholy (Tianjin) technology Co., Ltd Representative: Cheng, Wei	Note	100%

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

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6. Operation Overview of Affiliated Companies

Unit: NT$ thousands

Name of business	Capital	Total Assets	Total Liabilities	Net value	Operating revenue	Operating income	Income (loss) for the period (after Tax)	Earnings per share (NT$) (after tax)
Shenzhen Jinghong Digital R&D Service Co., Ltd.	499,065	603,155	45,316	557,839	109,401	1,319	43,170	-
Sitonholy (Tianjin) Technology Co., Ltd.	100,162	1,108,362	614,800	493,562	2,232,993	100,931	90,404	-
Beijing Sitonholy Technology Co., Ltd.	36,824	62,438	47,257	15,181	13,879	(1,029)	(2,137)	-
Baotou Yihui Information Technology Co., Ltd.	28,295	8,301	4,577	3,724	500	(3,079)	(3,098)	-

(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.

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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.
IX. 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.

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Appendix I: Individual Financial Report for the Most Recent Year

Independent Auditors' Report

(111) Cai-Shen-Bao-Zi No. 21004529

To Chaintech Technology Corporation:

Audit Opinions

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, 2021 and 2020, 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, 2021 and 2020, 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

We perform the audit in accordance with the Rules for Auditing and Certification of Financial Statements by Accountants and the Generally Accepted Auditing Standards 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 audit of the parent company only financial statement of the Company for the year ended December 31, 2021. These matters are addressed in the context of our audit of the parent company only financial

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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, 2021 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.

122

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 that revenue recognition is recorded in the appropriate period.
Make a 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 nonfinancial 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

123

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.
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

124

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, 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.

125

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, 2021 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 Min-Chuan, Feng Certified Public Accountants Ya-Hui, Lin Former Securities and Futures Bureau, Financial Supervisory Commission Approved Certificate Number: JGZLZ No. 0960038033 Financial Supervisory Commission Approved Certificate Number: JGZSZ No. 1070323061

March 23, 2022

126

Chaintech Technology Corporation Parent Company Only Balance Sheets For the Years Ended December 31, 2021 and 2020

Unit: NT$ thousands

Assets	December31,2021 Amount % $ 353,911 14 335,199 13 736,800 29 - - 219,114 9 37,825 2 1,682,849 67 200,485 8 557,840 22 9,590 1 2,962 - 20,770 1 30,353 1 822,000 33 $ 2,504,849 100	December31,2020	December31,2020
	Amount $ 353,911 335,199 736,800 - 219,114 37,825 1,682,849 200,485 557,840 9,590 2,962 20,770 30,353 822,000 $ 2,504,849	Amount $ 149,370 361,570 770,724 24,310 174,218 57,464 1,537,656 186,150 652,125 32,489 4,444 3,132 32,278 910,618 $ 2,448,274	%
Current assets 1100 Cash and cash equivalents 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 non-current assets 15XX Total non-current assets 1XXX Total Assets			6 15 32 1 7 2
			63
			8 27 1 - - 1
			37
			100

(Continued)

127

Chaintech Technology Corporation Parent Company Only Balance Sheets For the Years Ended December 31, 2021 and 2020

Unit: NT$ thousands

Liabilities and equity

December 31, 2021
December 31, 2020
Notes
Amount
%
Amount
%
VI (XI)
$ 226,840
9
$ 402,027
17
VI(XV)
640
-
-
-
VII
353,456
14
254,683
10
VII
57,771
3
59,856
3
54,160
2
2,588
-
1,544
-
1,498
-
103
-
170
-
694,514
28
720,822
30
1,591
-
3,135
-
1,591
-
3,135
-
696,105
28
723,957
30
VI(XIII)
1,014,988
40
1,014,988
42
100
-
100
-
VI(XIV)
147,312
6
132,984
5
39,701
2
97,541
4
787,638
31
670,152
27
(
29,249 ) (
1 ) (
39,702) (
2)
VI(XIII)
(
151,746) (
6) (
151,746)(
6)
1,808,744
72
1,724,317
70
IX
$ 2,504,849
100
$ 2,448,274
100

Current liabilities
2100
Short-term borrowings
2130
Current contract liabilities
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
Capital
3110
Common stock
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Undistributed earnings
Other equity
3400
Other equity
3500
Treasury stocks
3XXX
Total equity
Significant Contingent Liabilities and
Unrecognized Contract Commitments
3X2X
Total liabilities and equity

The notes to the parent company only financial statements are part of the parent company only financial statements and should be read together.

Chairman of the Board: Shu-Jung Kao

President: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

128

Chaintech Technology Corporation Parent Company Only Statements of Comprehensive Income January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

(Except for earnings per share, which are expressed in New Taiwan Dollars)

Item	Notes VI(XV) and VII VI(V)(XIX) (XX) and VII VI(XIX)(XX) and VII XII(II) VI(XVI) VI(X)(XVII) VI(XVIII) VI(VII) VI(XXI) VI(III) VI(VII) VI(XXII) VI(XXII)	2021
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 Financial 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 Tax expense 8200 Current net 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 Current net profit Diluted earnings per share 9850 Current net profit
		$

The notes to the parent company only financial statements are part of the parent company only financial statements and should be read together.

President: Shu-Jung Kao

Chairman of the Board: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

129

Chaintech Technology Corporation Parent Company Only Statements of Changes in Equity January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

2020 Balance as of January 1, 2020 Current net profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of earnings for 2019: Provision of legal reserve Special Reserve Cash dividends paid Changes in the net worth of associates accounted for using equity method Balance as of December 31, 2020 2021 Balance as of January 1, 2021 Current net profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of earnings for 2020: Provision of legal reserve Reversed special reserve Cash dividends paid Balance as of December 31, 2021	Notes		Commonstock	Capital surplus - Change of net equity of associates and joint ventures accounted for using equity method	Capital surplus - Change of net equity of associates and joint ventures accounted for using equity method				Retained earnings			Otherequity	Otherequity	Otherequity	Otherequity	Treasury stocks	Treasury stocks		Totalequity
							Legal reserve		Special reserve		Undistributed earnings	Exchange differences on translation of financial statements of foreignoperations			Unrealised gains on valuation of financial assets at fair value through other comprehensive income
	VI(XIV) VI(VII) VI(XIV)		$ 1,014,988 - - - - - - - $ 1,014,988 $ 1,014,988 - - - - - - $ 1,014,988		$ - - - - - - - 100 $ 100 $ 100 - - - - - - $ 100		$ 122,290 - - - 10,694 - - - $ 132,984 $ 132,984 - - - 14,328 - - $ 147,312		$ 112,514 - - - - ( 14,973 ) - - $ 97,541 $ 97,541 - - - - ( 57,840 ) - $ 39,701		$ 551,542 145,907 - 145,907 ( 10,694 ) 14,973 ( 28,950 ) ( 2,626 ) $ 670,152 $ 670,152 122,224 - 122,224 ( 14,328 ) 57,840 ( 48,250 ) $ 787,638		($ 49,602 ) - 8,734 8,734 - - - - ($ 40,868 ) ($ 40,868 ) - ( 3,882 ) ( 3,882 ) - - - ($ 44,750 )		($ 47,939 ) - 49,105 49,105 - - - - $ 1,166 $ 1,166 - 14,335 14,335 - - - $ 15,501		($ 151,746 ) - - - - - - - ($ 151,746 ) ($ 151,746 ) - - - - - - ($ 151,746 )	$ 1,552,047 145,907 57,839 203,746 - - ( 28,950 ) ( 2,526 ) $ 1,724,317 $ 1,724,317 122,224 10,453 132,677 - - ( 48,250 ) $ 1,808,744

The notes to the parent company only financial statements are part of the parent company only financial statements and should be read together.

Chairman of the Board: Shu-Jung Kao

President: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

130

Chaintech Technology Corporation Parent Company Only Statements of Cash Flows January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

Cash flows from operating activities
Profit before tax
Adjustments
Income charges
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 loss of subsidiaries 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)
Inventories
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 inflows (outflows) generated from operations
Interest received
Dividends received
Interest paid
Income tax received (paid)
Net cash inflows (outflows) generated from
operating activities
Cash flows from investing activities
Acquisition of investments accounted for using equity
method

Acquisition of property, plant, and equipment

Other current assets - Decrease (Increase) in restricted
assets
Decrease in other non-current assets
Net cash inflows (outflows) generated from
investment activities
Cash flows from financing activities
Increase (Decrease) in short-term borrowings

Repayments of lease liabilities

Cash dividends paid

Net cash inflows (outflows) generated from
financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents balance at beginning of period
Cash and cash equivalents balance at end of period

Notes
January 1
to December 31,
2021
January 1
to December 31,
2020
$ 159,639 $ 148,774
VI(VIII)(XIX)
22,899
22,895
VI(IX)(XIX)
1,482
1,481
XII(II)
8,680
124
VI(II)(XVII)
- (
1,049 )
(
126 ) (
420 )
VI(XVIII)
4,984
6,306
VI(XVI)
(
5,795 ) (
3,079 )
VI(VII)
(
7,362 ) (
25,548 )
VI(VII)(X)
(XVII)
97,765
1,980
-
3,221

51,615 (
287,922 )
(
44,896 )
116,106
(
3,401 )
220
1,925
-
640
-
- (
24 )
98,773 (
64,416 )
(
1,962 )
6,820
(
67)
76
384,793 (
74,455 )
126
420
5,795
3,079
(
5,107 ) (
6,109 )
20,829(
19)
406,436(
77,084)
VI(VII)
- (
150,000 )
VI(XXIII)
- (
2,350 )
23,040 (
23,882 )
-
48
23,040(
176,184)
VI(XXIV)
(
175,187 )
245,430
VI(XXIV)
(
1,498 ) (
1,407 )
VI(XIV)
(
48,250) (
28,950)
(
224,935)
215,073
204,541 (
38,195 )
149,370
187,565
$ 353,911$ 149,370

The notes to the parent company only financial statements are part of the parent company only financial statements and should be read together.

President: Shu-Jung Kao

Chairman of the Board: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

131

Chaintech Technology Corporation

Notes to Parent Company Only Financial Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$ thousands (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 CHUNG CHIEH TECHNOLOGY LIMITED 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, CHUNG CHIEH TECHNOLOGY LIMITED 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, 2021, 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 Consolidated Financial Statements

The parent company only financial statements were approved by the Board of Directors on March 23, 2022.

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")

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

Application of New/Revised/Amended Standards and Interpretations	Effective Date of Issuance bythe IASB
Revised “Application of Extension under IFRS 9 to Temporary Exemption” under IFRS 4	January1,2021

132

Revised “Changes in Interest Rate Indicators” under IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 in the Phase II	January1,2021

New/Revised/Amended Standards and Interpretations	Effective Date of Issuance bythe IASB
Revised “Concessions of COVID-19 Related Rent after June 30, 2021” under IFRS 16	April 1,2021(Note)

Note: The FSC allows early application on January 1, 2021.

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

The following table summarizes the new, revised, and amended standards and interpretations of IFRSs endorsed by the FSC that are applicable in 2022:

New/Revised/Amended Standards and Interpretations	Effective Date of Issuance bythe IASB
Revised “Index to the Conceptual Framework” under IFRS 3	January1,2022
Revised [Property, Plant and Equipment: the Price Before Reaching the intended State of Use]of International AccountingStandards No. 16	January1,2022
Revised [Onerous Contract – the Cost of Contract Performance] of International AccountingStandards No. 37	January1,2022
Annual improvement for the 2018-2020period	January1,2022

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 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:

the IFRSs as endorsed by the FSC are as follows:
New/Revised/Amended Standards and Interpretations	Effective Date of Issuance bythe IASB
Revised “Sales or Investment of Assets between the Investor and its Affiliate or Joint Venture” under IFRS 10 and IAS 28	To be decided bythe IASB
“Contract of Insurance” under IFRS 17	January1,2023
Revision to “Contract of Insurance” under IFRS 17	January1,2023
Revised “First Application of IFRS 17 and IFRS 9 – Comparative Information” of IFRS 17	January1,2023
Revised “Current or Non-current Classification of Liabilities” under IAS 1	January1,2023
Revised “Disclosure of AccountingPolicies” under IAS 1	January1,2023
Revised “Definition of AccountingEstimate” under IAS 8	January1,2023
Revised “Deferred Income Taxes Related to Assets and Liabilities arisingfrom	January1,2023

133

a Single Transaction” under IAS 12

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

134

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 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 curre nt 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:

135

(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.

`（` 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 rece ive 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.

136

`（` 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. 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.

`（` 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.

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`（` 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 pro duction 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 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

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recognized in other comprehensive income in relation to the subsidiary are reclassifi ed 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 influenc e 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.
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 significan t 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

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previously recognized in other comprehensive income related to the related ent erprise, 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 ent erprise 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 reclas sified 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 de -recognized. All other repairs and maintenance are recognized as current gain or loss when in curred.
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, plan t 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: Furniture and fixtures 3~5 years Tooling equipment 2 years

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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.
For lease liabilities, the outstanding lease payments are recognized at the present value after discounting at the interest rate of the Group’s increased borrowings on the lease commencement date. The lease payments include fixed payments, subtracting any lease inducement that may be collected. In subsequent periods, the Company measures lease liabilities at interest based on cost after amortization and recognizes interest expenses in 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.
The right-of-use assets are recognized at cost on the lease commencement date. The cost includes 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 recogniz ed in profit or loss.

(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.

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(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 non-operating 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.

2. 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

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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 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

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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) 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

1. 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.

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(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.
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 Estimat ion 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. Uncertainties in material accounting judgments, estimates, and assumptions are addressed below:

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`（` 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 cash -generating units and the allocation of assets and liabilities and intangible assets to the r elevant cashgenerating units, and determining the recoverable amount of the relevant cash -generating units.

VI. Descriptions of Significant Accounting Items

`（` I `）` Cash

	December 31,2021	December 31,2020
Cash in hand and operatingfund	$ 57	$ 87
Cheque deposit and current deposit	353,854	149,283
	$ 353,911	$ 149,370

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

There was no balance of the Company's financial assets at fair value through profit or loss - current for the years ended December 31, 2021 and 2020.
The breakdown of profit or loss for financial assets at fair value through profit or loss - current is as follows:

current is as follows:
Item		2021		2020
Equityinstruments		$ -		$ 1,049

For information on the price risk and fair value of financial assets at fair value through profit or loss, please refer to Note XII(II)(III).
（ III ） Financial assets at fair value through other comprehensive income

Item		December 31,2021		December 31,2020
Non-current items:
Equityinstruments

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OTC companystock	$ 169,634	$ 169,634
Unlisted,OTC,emergingstock	15,350	15,350
	184,984	184,984
Valuation adjustment	15,501	1,166
Total	$ 200,485	$ 186,150

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$200,485 and NT$186,150, respectively, for the years ended December 31, 2021 and 2020.
The breakdown in profit or loss and other comprehensive income of financial assets at fair value through other comprehensive income is as follows:

	2021	2020
Equity instruments at fair value through other comprehensive income

Changes in fair value recognized in other comprehensive income(loss)
	$ 14,335	$ 49,105
Holders of dividend income recognized in the income at the end of theperiod
	$ 5,795	$ 3,050

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

`（`IV`）`Accounts receivable
		December 31,2021
	Total amount	Allowance for losses	Net amount
Accounts receivable	$ 3 ( $ ) $ 3
Accounts receivable - relatedparties	737,095 (	295 )	736,800
	$ 1,0 ( $ ) $ 1,0

		December 31,2020
	Total amount	Allowance for losses	Net amount
Accounts receivable	$ 3 ( $ )		$ 3
Accounts receivable - relatedparties	771,028 (	304 )	770,724
	$ 1,1 ( $ )		$ 1,1
1. Aging analysis of accounts receivable is stated as follows:
December 31,2021 December 31,2020

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Not OA	$ 1,056,455	$ 1,056,455	$ 1,132,741
Overdue for 1-90 days	24,671		-
	$ 1,081,126		$ 1,132,741

The aging analysis above is based on past due date.

The balance of receivables on contracts with customers as of December 31, 2021, December 31, 2020, and January 1, 2020 was NT$1,081,126, NT$1,132,741, and NT$844,819, 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, 2021 and 2020 amounted to NT$1,071,999 and NT$1,132,294, respectively.
For more information on the credit risk of accounts receivable, please refer to Note XII (II).

`（` V `）` Inventories

V`）`Inventories
		December 31,2021		Carryingamount $ 84,27 73,637 61,198 $ 219,11 Carryingamount $ 54,132 36,434 83,652 $ 174,218
	Costs	Allowance for valuation losses
Raw materials	$ 84,61 (	$ 33 )
Work-in-process	73,637	-
Finishedproducts	63,305 (	2,107	)
	$ 221,55 (	$ 2,44 )

		December 31,2020
	Costs	Allowance for valuation losses
Raw materials	$ 59,12 (	$ 4,99 )
Work-in-process	36,434	-
Finishedproducts	85,257 (	1,605 )
	$ 180,81 (	$ 6,59 )

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

		2021		2020
Cost of inventories sold		$ 3,827,22		$ 3,288,4
Gains on inventoryvalue recoveries	(	4,155	)(	1,435 )
		$ 3,823,07		$ 3,287,0

Note: The Company's reported the gain on inventories in 2021 and 2020 as a result of de - stocking.

（ VI ） Other current assets

148

				December 31,2021	December 31,2021	December 31,2021	December 31,2021	December 31,2021	December 31,2020	December 31,2020	December 31,2020
Restricted bank deposit				$ 33,847					$ 56,887
Other				3,978					577
				$ 37,825					$ 57,464
The details of the pledges of other current assets of the Company are set out in Note VIII. `（`VII`）`Investments using equity method

					2021					2020
January	1				$ 652,125					$ 472
Increase of investments accounted for usingequitymethod					-					150,000

Shares of profit and loss of investments accounted for using equitymethod					7,362					25,548


Impairment loss			(		97,765			)(		1,980 )
Changes in retained earnings					-			(		2,626 )
Changes in capital surplus					-					100
Changes in other equity			(		3,882			)		8,734
December 31					$ 557,840					$ 652

			December 31,2021				December 31,2020
			Amount recognized			Sharehold ing ratio (%)	Amount recognized				Sharehold ing ratio (%)
Subsidiary
Shenzhen Jinghong Digital R&D Service Co.,Ltd.
		$	557 100				$ 51 100
Associates
uSenlight Corporation			-			13.05	133,573				13.05
		$	557				$ 65

`（` VII `）` Investments using equity method

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:

		2021		2020
Shenzhen Jinghong Digital R&D Service Co.,Ltd.		$ 43,17		$ 37,46
uSenlight Corporation	(	35,808	)(	11,921 )
		$ 7,36		$ 25,54

For information on the Company's subsidiaries, please refer to Note IV(III) to the consolidated financial statements for the year ended December 31, 2021.

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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 decision-making, such investment is accounted for using equity method. As of December 31, 2021, 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 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 2021 and 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 impairm ent loss on investments accounted for using equity method of NT$97,765 and NT$1,980, respectively.
The basic information of the associates that are material to the Company is as follows:

	Main business	Shareholdingratio	Shareholdingratio	Measureme

CompanyName	place	December 31,2021	December 31,2020	nt methods
uSenlight	Republic of	13.05%	13.05% (Note)	Equity
Corporation	China			method

Note: The Company’s shareholding ratio decreased from 13.70% to 13.05% due to the conversion of share options by uSenlight Corporation in 2020, 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
		uSenlight Corporation
		December 31,2021		December 31,2020
Current assets		$ 229,391		$ 394,179
Non-current assets		183,046		196,520
Current liabilities	(	243,232	)(	273,142 )
Non-current liabilities	(	141,233	)(	15,197 )
Total net assets		$ 27,972		$ 302,360

Share in net assets of associates		$ 3,650		$ 39,458
Net equitydifference		94,115		96,095
provision of impairment loss	(	97,765	)(	1,980 )

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Carryingvalue of associates	Carryingvalue of associates	Carryingvalue of associates	Carryingvalue of associates	Carryingvalue of associates			$					$ 133,573	$ 133,573	$ 133,573	$ 133,573
Statement of comprehensive income
											uSenlight	Corporation
											2021				2020
Revenue								$			88,129			$	374,6
Current net loss of continuing business unit (total comprehensive income for the period)							(	$						$	89,7 )

`（`VIII`）`	Propert	, plant, and equipment

			Furniture and fixtures			Tooling equipment					Other				Total

January1,2021
Costs			$		$ $									$ 7
Accumulated depreciation		(	3,540		)(	36,212 )(					1,409			)(	41,161 )
			$			$ $									$ 3
2021
January1			$			$ $									$ 3
Depreciation expenses			-		(	22,871 )(					28			)(	22,899 )
December 31			$			$ $									$

December 31, 2021
Costs			$		$ $									$ 7
Accumulated depreciation		(	3,540		)(	59,083				)(	1,437			)(	64,060 )
			$			$				$					$

			Furniture and fixtures			Tooling									Total
						equipment					Other
January1,2020
Costs			$		$				$				$ 7
Accumulated depreciation		(	3,540	)(	13,341				)(	1,385			)(		18,266 )
			$		$				$						$ 5
2020
January1			$		$				$						$ 5
Add			-		-					112					112
Depreciation			-	(	22,871				)(	24			)(		22,895 )

（ VIII ） Property, plant, and equipment

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expenses
December 31		$		$	$		$ 3

December 31, 2020
Costs		$		$	$		$ 7
Accumulated depreciation	(	3,540	)(	36,212	)(	1,409	)(	41,161 )
		$		$	$		$ 3

（ IX ） Lease transaction - lessee

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

expenses:
	December 31,2021	December 31,2020
	Carryingamount	Carryingamount
House	$ 2,962	$ 4,444

	2021	2020
	Depreciation expenses	Depreciation expenses
House	$ 1,482	$ 1,481

The Company did not have any additions to the right-of-use assets for the years ended December 31, 2021 and 2020.
Profit or loss items in connection with lease contracts are stated as follows:

	2021	2020
Items affecting the current income (loss)
Interest expenses of lease liabilities	$ 118	$ 163
Expenses of a short-term lease contract	-	54

The cash flows used in the Company's leases for the years ended December 31, 2021 and 2020 totaled NT$1,616 and NT$1,624, respectively.
(X) Impairment of non-financial assets
The impairment loss recognized by the Company in 2021 and 2020 was NT$97,765 and NT$1,980, as detailed below.

2021

152

	Recognized as the current income(loss)		Recognized as other comprehensive income
Impairment loss - long-term equity investment usingequitymethod	$ 97,765		$ -

		2020
	Recognized as the current income(loss)		Recognized as other comprehensive income
Impairment loss - long-term equity investment usingequitymethod	$ 1,980		$ -

The Company conducted impairment tests on the invested company - uSenlight Corporation in 2021 and 2020. After assessment, the invested company - uSenlight Corporation had a small recoverable amount, so the investment was fully recognized as impairment loss of NT$97,765.

(XI) Short-term borrowings

Nature of borrowings	December 31,2021	Interest range	Collateral
Bank borrowings
Guaranteed			Other current assets - bank
borrowings	$ 191,228	0.90%~1.13%	deposits
Fiduciary
borrowings	35,612	0.96%	None
	$ 226,840

Nature of borrowings	December 31,2020	Interest range	Collateral
Bank borrowings
Guaranteed borrowings	$ 271,900	1.10%~1.61%	Other current assets - bank deposits
Fiduciary borrowings	130,127	0.97%~1.22%	None
	$ 402,027

Interest expenses recognized in profit or loss as of December 31, 2021 and 2020 were NT$4,866 and NT$6,143, respectively.

(XII) Pensions

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.

153

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, 2021 and 2020 were NT$769 and NT$751, respectively.

(XIII) Capital

As of December 31, 2021, 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:

are as follows:
		December 31,2021
Name of company holding shares	Reasons for recovery	Number of shares (1,000 shares)	Carrying amount
The Company	For transfer of shares to employees	5,000	151,746

		December 31,2020
Name of company holding shares	Reasons for recovery	Number of shares (1,000 shares)	Carrying amount
The Company	For transfer of shares to employees	5,000	151,746

(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.

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

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related assets, they are reversed according to the ratio of the recognized special reserve.

By a resolution in the shareholders' meetings on July 29, 2021 and June 18, 2020, respectively, the Company adopted the earnings distribution plan for the year ended December 31, 2020 and 2019 as follows:

	2020	2020			2019	2019
	Amount (1,000yuan)	Dividend per share(yuan)		Amount (1,000 yuan)		Dividend per share(yuan)
Legal reserve	$			$
Special reserve(reversed) (	57,840 )		(	14,973	)
Cash dividends	48,250	$		28,950		$

Please refer to Note VI (XX) for information on employees' compensation and directors' and supervisors' remuneration.
As of March 23, 2022, the Company’s Board of Directors was yet to propose the earnings distribution plan for the year ended December 31, 2021.

`（` XV `）` Operating revenue

XV`）`Operating revenue
	2021		2020
Customer contract revenue:	$ 4,173,178		$ 3,515,850

Breakdown of revenue from contracts with customers

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

me as follows:
	2021	2020
Sales revenue:
Computerperipheralproducts	$ 4,173,178	$ 3,515,850

Contract assets and contract liabilities

The contract assets and contract liabilities in relation to revenue from contracts with customers recognized by the Company are as follows:

	December 31,2021	December 31,2020	January1,2020
Contract liabilities:
Advances on sales	$ 64	$	$

	2021	2020
Dividend income	$ 5,795	$ 3,079
Other revenue	220	1,406
	$ 6,015	$ 4,485

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`（` XVII `）` Other gains and losses

XVII`）`Other gains and losses	XVII`）`Other gains and losses	XVII`）`Other gains and losses	XVII`）`Other gains and losses
					2021		2020 $ 1,0 28,597 ) - 1,980 ) $ 29,5 ) 2020 $ 6,143 163 $ 6,306 2020 $ 31,413 22,895 1,481 $ 55,789 2020 $ 26,667 1,440 751 2,555 $ 31,413
Financial assets at fair value throughprofit or loss					$

Net loss of foreign currencyexchange				(	19,710	)(
Other losses				(	2,238	)
Impairment loss				(	97,765	)(
				(	$ 119,7 )(
`（`XVIII`）`			Financial costs
					2021
Interest expenses:
Bank borrowings					$ 4,866
Lease		liabilities			118
					$ 4,984
`（`XIX`）`		Expenses by nature
					2021
Employee benefit expenses					$ 29,634
Depreciation expenses on property, plant, and equipment					22,899
Depreciation expenses on lease assets					1,482
					$ 54,015
`（`XX`）`	Employee benefit expenses
					2021
Salaries expenses					$ 24,432
Expenses on labor insurance and national health insurance					1,545
Pension expenses					769
Otherpersonal expenses					2,888
					$ 29,634

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, 2021 and 2020, the estimated amount of employees' compensation was NT$1,663 and NT$2,535, respectively, and the estimated amount of directors' and supervisors' remuneration was NT$4,988 and NT$7,129, respectively; the aforesaid amounts were recognized as wages and salaries.
For the year ended December 31, 2021, 1% and 3% were estimated according to the

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profitability of the year. The resolved amounts as approved by the Board of Directors were NT$1,663 and $4,988, respectively. The employees' compensation will be distributed in the form of cash.

The employees' compensation, NT$2,535, and directors' and supervisors' remuneration, NT$7,129, for the year ended December 31, 2020 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 expense

Components of tax expense:

	2021		2020
Current income tax:
Income tax arisingfrom current income	$	4 $
Imposed on undistributed earnings	7,058		406
Low(high)estimate of income tax forpreviousyears	893	(	43 )
Total income tax for theperiod	55,053		2,564
Deferred income tax:
Originalgeneration and reversal of temporarydifferences (	17,638	)	303
Tax expense	$	3 $

Tax expense and accounting profit

			2021	2021	2021	2020	2020
Income tax ofprofit before tax calculated at statutorytax rate			$ 31,9			$ 29,7
Expenses that should be excluded accordingto tax laws			566 (			334 )
Profit exempt from tax accordingto tax laws		(	1,159 )(			210 )
Effect of income tax from temporarydifferences		(	1,871 )(			4,709 )
Allowances for tax loss for theperiod			- (			21,997 )
Imposed on undistributed earnings			7,058			406
Low(high)estimate of income tax forpreviousyears			893 (			43 )
Tax expense			$ 37,4			$ 2,8
The amount of deferred tax assets that elow:		arise from temporary differences is set out
				2021
	January1			Recognized as the income(loss)	Recognized as other comprehensive income		December 31
Temporarydifferences:
Deferred tax assets
Allowance for inventory valuation losses and	$	(		$ )	$		$

The amount of deferred tax assets that arise from temporary differences is set out below:

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slow-movingloss
Unrealized exchange loss	2,135	(	1,482 )	-	653
Impairment loss	-		19,948	-	19,948
	$		$	$	$

			2020
	January1		Recognized as the income(loss)	Recognized as other comprehensive income	December 31
Temporarydifferences:
Deferred tax assets
Allowance for inventory valuation losses and	$	(	$ )	$	$
slow-movingloss
Unrealized exchange loss	2,148	(	13 )	-	2,135
	$	(	$ )	$	$

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

	December 31,2021	December 31,2020
Deductible temporarydifferences	$ 109,139	$ 127,572

The tax authorities have examined income tax returns of the Company through the year ended December 31, 2019.

`（` XXII `）` Earnings per share

`）`Earnings per share
		2021
	After-tax amount	Weighted average number of outstandingshares(1,000 shares)	Earnings per share (yuan)
Basic earnings per share
Current net profit attributable to common shareholders
	$ 1 96,499		$
Diluted earnings per share
Effect of potential common shares with dilution effect

Employees’ compensation	-	71
Current net profit attributable to common shareholders and effect of potential common shares

	$ 1 96,570		$

		2020
	After-tax amount	Weighted average number of outstandingshares(1,000 shares)	Earnings per share (yuan)
Basic earnings per share
Current net profit attributable to common shareholders
	$ 1 96,499		$
Diluted earnings per share
Effect of potential common shares with dilution effect

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Employees’ compensation	-
Current net profit attributable to common shareholders and effect of potential common shares

	$ 1 96,605	$

`（` XXIII `）` Supplemental cash flow information

Investing activities with partial cash payments:

	2021	2020
Purchase of property, plant, and equipment	$ -	$ 112
Add: prepayments for equipment at end ofperiod	-	2,238
Deduce: prepayments for equipment at beginningofperiod(Note)	-	-
Casepayment for theperiod	$ -	$ 2,350

Note: The equipment price prepaid in 2020 was transferred to other losses in 2021.

`（` XXIV `）` Changes in liabilities from financing activities

			2021
	Short-term borrowings		Lease liabilities		Changes in liabilities from financing activities
January1	$ 402 $			$ 40
Changes in cash flows from financingactivities (	175,187 )(		1,498	)(	176,685 )
December 31	$ 226 $			$ 22

			January1,2020
	Short-term borrowings				Total liabilities from financingactivities
			Lease liabilities
January1	$ 156 $			6 $ 162,
Changes in cash flows from financingactivities	245,430 (	1,407		)	244,023
December 31	$ 402 $			4 $ 406,

VII. Transaction with related parties

（ I ） Parent company and the ultimate controller

The Company is controlled by Yicheng International Development Co., Ltd. (incorporated

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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 relatedpartyand relationshipwith the Company		Relationshipwith the Company
Colorful TechnologyCo.,Ltd.		100% reinvestment business by Colorful Group
Shenzhen Colorful Yugong Technology and Development Co., Ltd.(Yugong)		The same person in charge as the Colorful Group
Shenzhen JinghongDigital R&D Service Co.,Ltd.(Jinghong)		Subsidiaries of the Company
Sitonholy (Tianjin)TechnologyCo.,Ltd.(Tianjin Sitonholy )		Subsidiaries of the Company
uSenlight Corporation(uSenlight)		Associates

（ III ） Significant transactions with related parties

1.
	2021	2020
Sales ofgoods:
Colorful	$ 2,178,925	$ 1,703,136

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 objects.

2. Purchases

2. Purchases
				2021				2020
Purchase ofgoods:
Colorful			$			505		$		-
The Company's transaction	prices of purchases from				related parties			are not significantly
different from those of the ordinary suppliers.
3. Accounts receivable
			December 31,2021					December 31,	2020
Colorful		$			737,095		$		770,72
Reduction: allowance for losses	(				295	)(			304	)
		$			736,800		$		770,42

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.

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4. Accounts payable

4. Accounts payable
	December 31,2021	December 31,2020 $ -
Colorful	$ 335

The payables to related parties mainly arise from purchases, which are due within 30 days after the purchase date. The payables are non-interest bearing.

5. Operating expenses

5.Operating expenses
	2021	2020 $ 7,807
Subsidiary
Jinghong	$ 9,050

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, 2021 and 2020 were NT$3,054 and NT$2,061, respectively, and recognized as "other payables."

6. Advertising expense

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 2021 and 2020 were NT$9,041 and NT$10,698, respectively; the amounts not yet paid as of December 31, 2021 and 2020 were NT$5,951 and NT$6,778, respectively, and recognized as "other payables."

7. Endorsements and guarantees made by related parties

		December 31,2021	December 31,2021
Subsidiary
Tianjin Sitonholy		$ 56,472
`（`IV`）`	Key management compensation information

			2021
Salaries and other short-term employee benefits			$ 10,59

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VIII `．` Pledged Assets

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

	Carryingvalue	Carryingvalue
Asset Name	December 31,2021	December 31,2020	Collateralpurpose
Other current assets
Bank deposits	$ 33,84	$ 56,88 Borrowingrepayment account

IX ． Significant Contingent Liabilities and Unrecognized Contract Commitments

`（` I `）` Contingencies

None.

`（` II `）` Commitments

As of December 31, 2021, the Company's guaranteed letter of credit for the purchase was US$1,500 thousand.
As of December 31, 2021, 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) 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.

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(II) Financial instruments

Category of financial instruments

ategory of financial instruments
	December 31,2021	December 31,2020
Financial assets
Cash	$ 353,91	$ 149,37
Accounts receivable(includingrelatedparties)	1,071,999	1,132,294
Other financial assets (recognized in other
current assets)	33,847	56,887
Guarantee deposits paid (recognized in other
non-current assets)`）`	5	5
	$ 1,459,76	$ 1,338,55

Financial liabilities
Short-term borrowings	$ 226,84	$ 402,02
Accountspayable(includingrelatedparties)	353,456	254,683
Otherpayables	57,771	59,856
	$ 638,06	$ 716,56
Lease liabilities	$ 3,13	$ 4,63

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.
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

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exchange rate fluctuation. The information of significant impact affected by exchange rate fluctuation for foreign assets and liabilities is as follow:

(Foreign currency: functional currency)	(Foreign currency: functional currency)	December 31,2021 Foreign currency (1,000 yuan) Exchange rate Carrying amount (NT$) $ 27.680 $ 1,45 $ 4.344 $ 55 $ 27.680 $ 53 December 31,2020 Foreign currency (1,000 yuan) Exchange rate Carrying amount (NT$) $ 28.480 $ 1,328 $ 4.377 $ 518 $ 28.480 $ 566	December 31,2021 Foreign currency (1,000 yuan) Exchange rate Carrying amount (NT$) $ 27.680 $ 1,45 $ 4.344 $ 55 $ 27.680 $ 53 December 31,2020 Foreign currency (1,000 yuan) Exchange rate Carrying amount (NT$) $ 28.480 $ 1,328 $ 4.377 $ 518 $ 28.480 $ 566
		Foreign currency (1,000 yuan)	Exchange rate
Financial assets
	Monetary item
	US$: NT$	$ 27.680
	non-monetary item
	Investments using equity method
	RMB: NT$	$ 4.344
Financial liabilities
	Monetary item
	US$: NT$	$ 27.680

(Foreign currency: functional currency)
		Foreign currency (1,000 yuan)	Exchange rate
	Financial assets
	Monetary item
	US$: NT$	$ 28.480
	Non-monetary item
	Investments using equity method
	RMB: NT$	$ 4.377
Financial liabilities
	Monetary item
	US$: NT$	$ 28.480

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$19,710 and NT$28,597, respectively, for the years ended December 31, 2021 and 2020.

D. The Company's foreign currency market risk analysis due to significant exchange rate fluctuations is as follows:

		2021	2021
		Sensitivityanalysis
(Foreign currency: functional	Amount of	Affecting income	Affecting other comprehensive income
currency)	variation	(loss)	(loss)
Financial assets

165

	Monetary item
	US$: NT$	1%		$	$ -
	Non-monetary item
	Investments using equity
	method
	RMB: NT$	1%		$	$ 5,578
Financial liabilities
	Monetary item
	US$: NT$	1%		$	$ -

			2020
			Sensitivityanalysis
(Foreign currency: functional		Amount of	Affecting income		Affecting other comprehensive income
currency)		variation		(loss)	(loss)
Financial assets
	Monetary item
	US$: NT$	1%		$	$ -
	Non-monetary item
	Investments using equity
	method
	RMB: NT$	1%		$	$ 5,168
Financial liabilities
	Monetary item
	US$: NT$	1%		$	$ -

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, other comprehensive income for the years ended December 31, 2021 and 2020 will increase or decrease by NT$2,005 and NT$1,862, 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

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issued at variable rates, which expose the Company to cash flow interest rate risk. For the years ended December 31, 2021 and 2020, 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 re-priced 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, net profit after tax for the years ended December 31, 2021 and 2020 will decrease or increase by NT$1,815 and NT$3,216, 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 t he 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.
(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.

167

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 makes individual assessments on the accounts receivable that have defaulted and recognizes 10% as allowance for losses, and includes the rest into the forward-looking consideration according to the credit extension conditions of the Company 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, 2021 and 2020 is as follows:

	Individual	Individual	Not OA	Not OA	Total
December 31, 2021
Assumed loss ratio		10%	0.04%
Total carryingvalue	$	$		1,0 $ 1,0
Allowance for losses	$	$			$

		Not OA			Total
December 31, 2020
Assumed loss ratio		0.04%
Total carryingvalue		$ 1,132,741		$	1,132,741
Allowance for losses		$ 447		$	447

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

	2021	2020
	Accounts receivable	Accounts receivable
January1	$ 447	$ 323
Provision of impairment loss	8,680	124
December 31	$ 9,127	$ 447

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(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 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.

e undiscounted amounts.
December 31,2021	Within 1year	Within 1-2 years	Within 2-5years
Non-derivative financial liabilities:
Lease liabilities	$ 1 $ $

December 31,2020	Within 1year	Within 1-2 years	Within 2-5years
Non-derivative financial liabilities:
Lease liabilities	$ 1 $ $

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

(III) 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

169

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 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 accordi ng to the nature of assets and liabilities as follows:

d liabilities as follows:
December 31,2021	Level 1	Level 2	Level 3	Total
Assets
Repeatable fair value
Financial assets at fair value through other comprehensive income
Equitysecurities	$	$	$	$
Total	$	$	$	$

December 31,2020	Level 1	Level 2	Level 3	Total
Assets
Repeatable fair value
Financial assets at fair value through other comprehensive income
Equitysecurities	$	$	$	$
Total	$	$	$	$

(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:

	OTC companystock
Marketquotes	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

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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 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 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.

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, 2021 and 2020, there were no tran sfers between Level 1 and Level 2.
The following table indicates the movement of Level 3 for the years ended December 31, 2021 and 2020:

1, 2021 and 2020:
	2021	2020
	Equityinstruments	Equityinstruments
January1(December 31)	$ 15,35	$ 15,35

For the years ended December 31, 2021 and 2020, 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 independe nt 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, reliabl e, and in line with other resources and represented as the exercisable price, and frequently

171

calibrating valuation model, performing back-testing, updating inputs used to the valuation model, and making any other 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:

ollows:
	Fair value on December 31,2021	Evaluation technique	Major non-observable input value	Relationship between input and fair value
Non-derivative equity instruments:
Non-OTC company stock	$	Market value method	Lack of market liquidity discount and expected equity value volatility	Lack of market liquidity discount and the higher the expected equity value volatility, the lower the fair value

	Fair value on December 31,2020	Evaluation technique	Major non-observable input value	Relationship between input and fair value
Non-derivative equity instruments:
Non-OTC company stock	$	Market value method	Lack of market liquidity discount and expected equity value volatility	Lack of market liquidity discount and the higher the expected equity value 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:

			December 31,2021	December 31,2021
			Recognized as other comprehensive income
	Input value	Chang e	Favorable change	Unfavorable change
Financial assets
Equity instruments	Lack of market liquidity discount and expected equity value volatility	±1%	$	$

			December 31,2020
			Recognized as other comprehensive income
	Input value	Chang e	Favorable change	Unfavorable change
Financial assets

172

Equity instruments	Lack of market liquidity discount and expected equity value volatility	±1%	$	$

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, such as name and location (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.

173

XIV. Segment Information

Exempt from disclosure.

(Below is left blank)

174

Chaintech Technology Corporation

Endorsements and Guarantees

For the Year Ended December 31, 2021

Unit: NT$ thousand (Unless specified otherwise)

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Table 1
Subject of
endorsements and
guarantees
Balanc
e of Parent
endors Endorse Ratio of providing Subsidiary Endorseme
ements Endors ments aggregated Ceiling endorsement providing nts and
No Ceiling limit on and ements and endorsements and limit on s and endorsement guarantees
. Relati endorsements and Maximum balance of guarant and guarantee guarantees to net endorsem guarantees s and involving
(N onship guarantees for a endorsements and ees at guarant s secured value in the most ents and for guarantees Mainland Re
ote Endorser/ Company (Note single entity (Note guarantees for the end of ees with recent financial guarantee subsidiary for parent China mar
1) Guarantor name 2) 3) period (Note 4) period used collateral statements s (Note 3) (Note 5) (Note 5) (Note 5) k
0 Chaintech Sitonholy 2 $ 904,372 $ 56,472 $ - 3.12% $ Y N Y
Technolo (Tianjin) $56,47 $56,47 904.372
gy Technolog 2 2
Corporati y Co., Ltd.
on
----- End of picture text -----

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.

175

Chaintech Technology Corporation and Subsidiaries

Marketable Securities Held at the End of the Period (excluding Subsidiaries, Associates, and Joint Ventures) December 31, 2021

Table 2

Unit: NT$ thousands

(Unless specified otherwise)

at the End of the Period

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_Tianli Kuaixian current net- value wealth management product Beijing Sitonholy Technology Co., Ltd. Beneficiary certificates_Tiantianli net-value 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 assets at fair value through profit or loss - current - Financial assets at fair value through profit or loss - current	Number of shares 3,050,000 $ 510,204 - -	Carrying amount 185,135 15,350 43,440 20,764	Shareholding ratio 3.61% $ 2.19% - -	Fair value 185,135 15,350 43,440 20,764	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.

176

Chaintech Technology Corporation and Subsidiaries

Purchases and sales with related parties reaching NT$100 million or 20% of paid-in capital or more January 1, 2021 to December 31, 2021 Table 3

Unit: NT$ thousands

(Unless specified otherwise)

Company Chaintech Technology Corporation Co Co Sitonholy (Tianjin) Technology Co., Ltd. Sh Yu and Co Beijing Sitonholy Technology Co., Ltd. Sh Yu and Co	Counterparty lorful Technology .,Ltd. enzhen Colorful gong Technology Development ., Ltd. T i enzhen Colorful gong Technology Development ., Ltd. T i	Relationship 100% reinvestment business by Colorful Group he same person n charge as the Colorful Group he same person n charge as the Colorful Group Co Ja Co fro	Purchases (sales) Amo Sales $ 2,178,92 Purchases $ 78,86 Purchases $ 1,40 mbined sales from nuary to June 2,775,48 mbined purchases m January to June 2,832,19	Transaction unt 5 8 2 1 0	Percentage of total purchases (sales) Credit period 33.43% OA 45~125 days 1.31% OA 30 days 0.02% OA 30 days	U	nusual trade conditions	and its reasons Credit period Not applicable $ Not applicable $ Not applicable $	Ratio of notes and accounts receiv	able (payable) Ratio of notes and accounts receivable (payable) Remark 51.76% - 0.00% - 0.00% -
							Unit price Not applicable Not applicable Not applicable		Balance 737,095 - -

177

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Chaintech Technology Corporation and Subsidiaries
Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:
December 31, 2021
Table 4 Unit: NT$ thousands
(Unless specified otherwise)
Overdue receivables from related parties
Amount recovered after
Company Counterparty Relationship Balance of receivables from related parties Turnover rate Amount Handling method receivables from related parties Allowances for losses
100% $ 737,095
Chaintech Colorful reinvestment
Technology Technology business by
Corporation Co.,Ltd. Colorful Group Accounts receivable 2.89 $ - - $ 152,338 ($ 295)
----- End of picture text -----

AR at the beginning of the period AR at the end of the period Average AR Sales revenue Conversion throughout the year Turnover rate	771,028 616786 737,095 754,062 2,178,925 2,178,925 2.89

178

Chaintech Technology Corporation and Subsidiaries

Parent-subsidiary and subsidiary-subsidiary business relations and significant transactions and amounts thereof: January 1, 2021 to December 31, 2021

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.	Relationship with counterparty (Note 2) Accounting item Parent company to a subsidiary Operating expenses $ Parent company to a subsidiary Other payables	Unit: NT$ thousands (Unless specified otherwise) Transaction status Percentage of consolidated total revenue or total assets Amount Transaction terms Percentage 9,050 Agreed by both parties 0.14% 6,518,064 3,054 Agreed by both parties 0.09% 3,401,340

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.

179

Chaintech Technology Corporation and Subsidiaries

Information on investees, such as name and location (not including investees in Mainland China)

January 1, 2021 to December 31, 2021

Unit: NT$ thousands (Unless specified otherwise)


Table 6										Unit: NT$	thousands
									(Unless specified		otherwise)
				Initial amount	of investment	Shareholding at end		of period	Investee
										Gain (loss)
			Main							on
			businesses							investment
	Investee		and	December 31,	December 31,	Number of			Income (loss) for the	for the
Investor	company	Location	products	2020	2019	shares	Percentage	Carrying amount	period	period	Remark
Chaintech	uSenlight	Republic	Electronics,	$ 150,000	$ 150,000	5,000,000	13.05	$ -	($ 274,391)	($ 35,808)	Loss for the
Technology	Corporation	of China	computers,								period
Corporation			and								reached
			peripherals								$97,765

180

Chaintech Technology Corporation and Subsidiaries

Information on Investments in Mainland China - Basic Information

January 1, 2021 to December 31, 2021

Table 7

Unit: NT$ thousands

(Unless specified otherwise)

			Met ho d of inv est me nt		Acc um ul inv est me amo unt r or re co v	a ted nt e mit te d ered
Inv est ee i n Mai nla nd Chi na	Mai n bu si nes se s an d pro duc ts	Act ual pai d -i n cap ita l	(No te 1 )	Acc um ula ted inv est me nt amo unt rem itt ed fro m Taiw an at be gi nni ng of pe ri od	Rem itt ed	Rec ove red	Acc um ula te d inv est me nt amo unt rem itt ed fro m Tai wa n at end of per iod	Pro fit or los s of inv est ee f or the p er iod	Sha reh ol din g rat io of dir ect or ind ire ct inv est me nt of th e com pan y	Gai n (l os s) o n inv est me nt f or the p er iod (No te 2 )	Car ryi ng amo unt of inv est me nts at en d o f per iod	Gai n (l os s) o n inv est me nt rec ove re d as of th e p eri od	Rem ark
She nzh en Jin gho ng Dig it al R&D Ser vi ce C o. , Ltd.	Tec hn olo gy res ear ch and dev elo pm en t and t ra din g o f ele ctr oni c p rod uc ts, com put er har dw are, and per iph er al device s	$49 9, 06 5	1	499, 065	$	$	$49 9, 06 5	$43 17 0	100	43, 1 70	557, 840	$	-
Sit onh ol y (Ti anj in ) Tec hn olo gy Co. , Ltd.	Who les al e of ele ctr oni c p rod uc ts, com mu nic ati on pro duc ts, h ou seh ol d app lia nc es, o ffi ce sup pli es, c om put er har dwa re a nd sof twa re a nd rel ate d spare p art s	100, 162	3					90, 4 04	51	46, 1 06	493, 561	-	-
Bei jin g S ito nh oly Tec hn olo gy Co. , Ltd.	Who les al e of ele ctr oni c p rod uc ts, com mu nic ati on pro duc ts, h ou seh ol d app lia nc es, o ffi ce sup pli es, c om put er har dwa re a nd sof twa re a nd rel ate d spa repart s	36, 8 24	3					(21 37)	51	(1, 0 90)	47, 2 58	-	-
Bao tou Yi hui Inf orm at ion Tec hn olo gy Co. , Ltd.	Ele ctr on ic p rod uc ts, com mu nic ati on pro duc ts, c om put er sof twa re a nd har dwa re a nd dat a pro ces si ng s tor ag e and sup port s ervic es	28, 2 95	3					(30 98)	51	(1, 5 80)	3, 72 4	-	-

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

(3) Other methods: investment in Mainland China through a reinvestment in Mainland China

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

181

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

182

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 January 1, 2021 to December 31, 2021

Table 8

Unit: NT$ thousands

(Unless specified otherwise)

Investee in Mainland China Shenzhen inghong Digital R&D Service Co., Ltd. Sitonholy Tianjin) Technology Co., Ltd.	Sales (purchases) Amount % $ - - - -	Property transactions Accounts receivable (payable) Amount % Balance % $ - - $ 3,054 - - - - -	Endorsements and guarantees or collateral provided Balance at end of period Purpose $ - - 56,742 For line of credit of suppliers	Highest balance for the period $ - -	Balance at

183

Chaintech Technology Corporation and Subsidiaries Information on major shareholders December 31, 2021

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 6,176,000	Shareholding ratio
		28.11% 8.32% 6.08%

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.
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.

184

	Chaintech Technology Corporation	Chaintech Technology Corporation	Chaintech Technology Corporation
			Statement of Cash
			December 31, 2021
Statement 1				Unit: NT$ thousands
Item	Abstract		Amount
Cash in hand and change
fund		$	57
Cheque deposit and
current deposit
-
Deposits
in NT$			15,542
-
Deposits	12,207,918.40
in	USD,
foreign	exchange rate
currency	27.68		337,915
	89,562.03
	HKD,
	exchange rate
	3.5490		318
	17,740.01
	RMB,
	exchange rate
	4.344		77
	59.91 Euro,
	exchange rate
	31.32		2
		$	353,911

Chaintech Technology Corporation - Statement of Changes in Non current Financial Assets at Fair Value through Other Comprehensive Income January 1 2021 to December 31, 2021 Statement 2

Unit: NT$ thousands

	At the beginning of the period	At the beginning of the period	Increase for		Decrease for theperiod	Decrease for theperiod	At the end of theperiod	At the end of theperiod	Provision of security or pledge
				theperiod
Name	Number of shares	Fair value	Number of shares	Amount	Number of shares	Amount	Number of shares	Fair value
Stocks_APAQ TechnologyCo.,Ltd.	3,050,000	$	-	$	-	$	3,050,000	$	None

Stocks_CloudMile Co., Ltd.(Cayman Islands)	510,204	15,350	-	-	-	-	510,204	15,350	None
		184,984		-		-		184,984
Valuation adjustment		1,166		14,335		-		15,501
		$		$		$		$

Chaintech Technology Corporation Statement of Accounts Receivable (Including Related Parties) December 31, 2021

Statement 3

Unit: NT$ thousands

Customer Name	Abstract	Amount
Non-related party
16L002		$ 103,883
16C002		90,535
16N002		81,812
10F001		67,801
Reduction: allowance for losses	(	8,832 )
		335,199
Relatedparty
Colorful Technology
Co.,Ltd.		737,095
Reduction: allowance for
losses	(	295 )
		736,800
		$ 1,071,999

187

Chaintech Technology Corporation Statement of Inventories December 31, 2021

Statement 4

Unit: NT$ thousands

	Amount	Amount
Item	Costs	Market value(Note)	Remark
Raw materials	$ 84,616	$ 84,169	Measured at replacement cost
Work-in- process	73,637	83,490	Measured at net realizable value
Finished			Measured at net realizable
products	63,305	70,064	value
	221,558	$ 237,723
Reduce: Allowance for inventory valuation
losses (	2,444 )
	$ 219,114

Note: The above net realizable value is the amount after deducting the allowance of slow-moving inventories totaling $2,334.

188

Chaintech Technology Corporation Statement of Changes in Investments Accounted for Using Equity Method January 1 2021 to December 31, 2021

Statement 5															Unit: NT$ thousands	Unit: NT$ thousands
	Balance at beginningofperiod		Increas	e for theperiod	Decrea	se for theperiod	Recognition for theperiod			Balan		period	Marketprice o		net equityvalue	Provision of security or pledge
											ce at end of			r
Name	Number of shares	Carryingvalue	Num ber of share s	Amount	Num ber of share s	Amount	Investment (loss) profit		Other(Note)	Number of shares	Equity %	Carryingvalue	Unit price (yuan)		Totalprice	Pledge
Shenzhen Jinghong Digital R&D Service Co.,Ltd.	-	$ 5	-	$	-	$	$ 43 ( $ ) -				100%	$ 55	$		$ 55	None
uSenlight Corporation	5,000,000	133,573	-	-	-	- (	35,808	)(	97,765 )	5,000,000	13%	-	-		3,650	None
		$ 65		$		$	$	7 ( $ 1 )				$ 55			$ 56

Note: items are as follows

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

(2) Impairment loss.

189

Unit: NT$ thousands

Chaintech Technology Corporation Statement of Short-term Borrowings December 31, 2021

Statement 6

Creditor	Type of borrowings	Balanc e at end of period	Term of contract	Amount of financing	Pledge or security
Bank of Taiwan	Fiduciary borrowings	$	110.10.2 7- 111.1.27	$ 11	None
Hua Nan Bank	Guaranteed borrowings	37,933	110.11.12 -111.2.10	100,000	Other current assets - bank deposits
EnTie Commercial Bank	Guaranteed borrowings	18,622	110.11.26 ~111.2.2 4	100,000	Other current assets - bank deposits
Bank One	Guaranteed borrowings	12,977	110.12.2 3~110.5. 20	55,360	Other current assets - bank deposits
Jih Sun Bank	Guaranteed borrowings	37,783	110.11.10 ~111.2.8	83,040	Other current assets - bank deposits
Jih Sun Bank	Guaranteed borrowings	35,669	110.12.2 ~111.3.2		Other current assets - bank deposits
Cathay United Bank	Guaranteed borrowings	48,244	110.9.7~ 111.1.5	50,000	Other current assets - bank deposits
		$

Note: the interest rate range is 0.90%-1.13%.

190

Chaintech Technology Corporation Statement of Accounts Payable (Including Related Parties) December 31, 2021

Unit: NT$ thousands


Statement 7			Unit: NT$ thousands
Customer Name	Abstract	Amount	Remark
Non-relatedparty
005505		$ 203,376
002886		65,701
005507		63,041
002884		20,362
Other		641	The balance of each individual customer does not exceed 5% of the balance of the subject
		353,121	Exceed 5% of the balance of the subject
Relatedparty
Colorful TechnologyCo.,Ltd.		335
		$ 353,456

191

Chaintech Technology Corporation Statement of Operating Revenue January 1 2021 to December 31, 2021

Statement 8		Unit: NT$ thousands	Unit: NT$ thousands
Item	Quantity	Amount	Remark
Operatingrevenue:
Computerperipheralproducts	4,073,000pcs	$ 4,279,089
Deduce: sales returns and allowances	(	105,911 )
Net operatingrevenue		$ 4,173,178

192

Chaintech Technology Corporation Statement of Operating Costs January 1 2021 to December 31, 2021

Statement 9

Unit: NT$ thousands

Item		Amount
Raw materials and supplies at beginningofperiod		$ 59,126
Add: net amount of materialspurchased for theperiod		2,995,555
Deduce: sales of raw materials	(	761,287 )
Raw materials and supplies at end ofperiod	(	84,616 )
Raw materials used for theperiod(1)		2,208,778
Manufacturingexpenses -processingexpenses(2)		67,917
Manufacturingexpenses - depreciation(3)		22,871
Total manufacturingcost(1)+(2)+(3)		2,299,566
Add: work-in-process at beginningofperiod		36,434
Deduce: work-in-process at end ofperiod	(	73,637 )
Cost of finishedproducts		2,262,363
Add: finishedproducts at beginningofperiod		85,257
Productspurchased for theperiod		782,473
Deduce: finishedproducts at end ofperiod	(	63,305 )
Transfer of operatingexpenses	(	846 )
Sales cost of finishedproducts		3,065,942
Gains on inventoryvalue recoveries	(	4,155 )
Sales of raw materials		761,287
Total operatingcosts		$ 3,823,074

193

Chaintech Technology Corporation Statement of Operating Expenses January 1 2021 to December 31, 2021

Statement 10

Unit: NT$ thousands

Item	Selling expenses	Administrative expenses	Research and development expenses	Total
Salaries and wages	$ $ $ $
Advertisingexpense	11,299	-	-	11,299
Service expense	11,313	4,426	-	15,739
Royalties	2,826	-	-	2,826
Transportation expense	3,665	17	-	3,682
Social expense	587	1,294	-	1,881
Depreciation	522	494	494	1,510
Other expenses(Note)	4,330	3,726	397	8,453
	$ $ $ $

Note: the amount of each individual item does not exceed 5% of the total amount of the subject

194

Chaintech Technology Corporation

Summary Statement of Current Period Employee Benefits, Depreciation, Depletion and Amortization Expenses by Function January 1 2021 to December 31, 2021

Statement 11 Unit: NT$ thousands

Function Gender		2021			2020
	Belong to operating costs	Belong to		Belong to operating costs	Belong to operating expenses	Total
		operating expenses	Total
Employee benefit expenses
Salaries expenses	$	$	$	$	$	$
Expenses on labor insurance and national health insurance	-			-	1,440	1,440
		1,545	1,545
Pension expenses	-	769	769	-	751	751
Directorsremuneration	-	5,271	5,271	-	7,411	7,411
Other personal expenses	-	2,888	2,888	-	2,555	2,555
Depreciation expenses	22,871	1,510	24,381	22,871	1,505	24,376

Notes:

There are 23 employees in this year and the previous year, among which there are 4 directors who are not employees in both years.
A company whose stocks have been listed on a stock exchange or traded in an OTC should disclose the following information:
(1) The average employee benefit expense in this year is $1,282 (total employee benefit expense in this year – directors remuneration/[number of employees in this year – number of directors who are not employees]).

The average employee benefit expense in previous year is $1,263 (total employee benefit expense in previous year – directors remuneration/[number of employees in previous year – number of directors who are not employees]).

(2) The average employee salary expense in this year is $1,008 (total employee salary expense in this year/[number of employees in this year – number of directors who are not employees]).
(1) The average employee salary expense in previous year is $1,008 (total employee salary expense in previous year/[number of employees in previous year – number of directors who are not employees]).
(3) The change in the average employee salary expense – 0.5% ([average employee salary expense in this year – average employee salary expense in previous]/average employee salary expense in previous).
(4) The supervisors renumeration in this year is $5,271, and that in previous year is $7,411.
(5) The Company’s compensation policy:

The renumeration policy of the Company’s directors, supervisors and managers is submitted to the compensation committee for deliberation according to the regulations of “Measures for the Establishment and Exercise of Functions and Powers of the Compensation Committee of a Company Whose Stocks are Listed or

195

Chaintech Technology Corporation Summary Statement of Current Period Employee Benefits, Depreciation, Depletion and Amortization Expenses by Function January 1 2021 to December 31, 2021

Statement 11

Unit: NT$ thousands

Traded at the Business Premise of a Securities Firm”. The managers renumeration policy is determined mainly based on personal experience, performance, value of contribution and the Company’s business performance; employees, directors and supervisors renumeration policies are determined according to the articles of association in the surplus year. Employee renumeration includes basic salary, subsidies, duty allowances, bonuses and so on. The salary is based on the learning experience, professional skills and the value of the employee’s post, as well as the salaries of the same trade; bonus payment is based on the Company’s annual operating surplus and the segment and personal performance.

196

Appendix II: Consolidated Financial Report for the Most Recent Year

Chaintech Technology Corporation and Subsidiaries

Declaration of Consolidated Financial Statements of Affiliated Enterprises

The companies required to be included in the consolidated financial statements of affiliated enterprises under the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" are all the same as enterprises required to be included in the consolidated financial statements of Chaintech Technology Corporation and subsidiaries for the year ended December 31, 2021 as provided in the IFRS 10 Consolidated Financial Statements. In addition, relevant information that should be disclosed in the consolidated financial statements of affiliated enterprises has all been disclosed in the consolidated financial statements of Chaintech Technology Corporation and subsidiaries. Consequently, no consolidated financial statements of affiliated enterprises are prepared separately.

Hereby declared by

Company Name: Chaintech Technology Corporation

Person in charge: Shu-Jung Kao March 23, 2022

197

Independent Auditors' Report (111) Cai-Shen-Bao-Zi No. 21004729

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, 2021 and 2020, 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, 2021 and 2020, 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

We perform the audit in accordance with the Rules for Auditing and Certification of Financial Statements by Accountants and the Generally Accepted Auditing Standards of the Republic of China. Our responsibilities under those standards are further described in the section of Responsibilities of Certified Public Accountants for Auditing the Consolidated Financial Statements. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. 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, 2021. These matters are addressed in the context of our audit of the

198

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, 2021 are stated as follows:

Sales revenue cut-off

Description

Regarding the accounting policy for recognition of sales revenues, please refer to Notes IV (XXVII) to the consolidated financial statements. For the description of sales revenue, please refer to Note VI (XVIII) 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 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.

199

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 a 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, 2021, the balance of intangible assets was NT$168,525. Please refer to Note VI (XII) 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 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 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 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

200

Technology Corporation for the years ended December 31, 2021 and 2020, 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.

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:

201

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 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 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 auditors' report. However, future events or circumstances may cause the Group to no longer continue as a going concern.
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.
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

202

other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that are of most significance in the audit of the consolidated financial statements for the year ended December 31, 2021 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

Min-Chuan, Feng

Certified Public Accountants

Ya-Hui, Lin

Former Securities and Futures Bureau, Financial Supervisory Commission

203

Approved Certificate Number: JGZLZ No. 0960038033 Financial Supervisory Commission Approved Certificate Number: JGZSZ No. 1070323061 March 23, 2022

204

Chaintech Technology Corporation and Subsidiaries Consolidated Balance Sheets For the Years Ended December 31, 2021 and 2020

Assets	December31,2021 Notes Amount % VI(I) $ 692,998 20 VI(II) 64,204 2 VI (IV) - - VI (IV) 645,541 19 VI(IV) and VII 736,800 22 6,857 - - - VI(V) 512,277 15 VI(VI) 209,603 6 VI(VIII) and VIII 33,847 1 2,902,127 85 VI(III) 200,485 6 VI(VII) - - VI(IX) 23,158 1 VI(X) 37,312 1 VI (XI) 168,525 5 VI(XXIV) 20,773 1 48,960 1 499,213 15 $ 3,401,340 100 (Continued)	Unit: NT$ thousands 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
		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
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or 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

205

Chaintech Technology Corporation and Subsidiaries Consolidated Balance Sheets For the Years Ended December 31, 2021 and 2020

Unit: NT$ thousands

Liabilities and equity

December 31, 2021
December 31, 2020
Notes
Amount
%
Amount
%
VI(XIII) and VIII
$ 226,840
7
$ 402,027
14
VI(XVIII)
111,677
3
67,620
2
773,163
23
358,229
12
VII
335
-
13,462
1
VI(XIV) and VII
119,526
4
100,834
4
54,318
2
10,952
-
14,421
-
6,719
-
VI(XXVI)
15,457
-
568
-
1,315,737
39
960,411
33
VI(XXIV)
-
-
2,592
-
23,464
1
10,623
1
5,078
-
4,252
-
28,542
1
17,467
1
1,344,279
40
977,878
34
VI(XVI)
1,014,988
30
1,014,988
35
100
-
100
-
VI(XVII)
147,312
4
132,984
4
39,701
1
97,541
3
787,638
23
670,152
23
(
29,249 ) (
1 ) (
39,702) (
1)
VI(XVI)
(
151,746 ) (
4 ) (
151,746) (
5)
1,808,744
53
1,724,317
59
248,317
7
209,351
7
2,057,061
60
1,933,668
66
IX
$ 3,401,340
100
$ 2,911,546
100

Current liabilities
2100
Short-term borrowings
2130
Current contract liabilities
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
Capital
3110
Common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Undistributed earnings
Other equity
3400
Other equity
3500
Treasury stocks
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 notes to the consolidated financial statements are part of the consolidated financial statements and should be read together.

Chairman of the Board: Shu-Jung Kao

President: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

206

Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Comprehensive Income January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

(Except for earnings per share, which are expressed in New Taiwan Dollars)

Item

2021
2020
Notes
Amount
%
Amount
%
VI(XVIII) and
VII
$ 6,518,064
100
$ 4,672,310
100
VI(V)(XXII)
(XXIII) and VII (
5,841,667) (
90)(
4,235,305 ) (
91)
676,397
10
437,005
9
VI(XXII)
(XXIII) and VII
(
174,123 ) (
3) (
105,616 ) (
2)
(
91,522 ) (
1) (
83,744 ) (
2)
(
20,980 )
- (
17,887 )
-
XII(II)
(
34,426) (
1)(
3,547 )
-
(
321,051) (
5)(
210,794 ) (
4)
355,346
5
226,211
5
823
-
794
-
VI(XIX)
10,777
-
7,115
-
VI(XX)
(
117,225 ) (
2) (
26,072 ) (
1)
VI(XXI)
(
5,724 )
- (
6,503 )
-
VI(VII)
(
35,808)
- (
11,921 )
-
(
147,157) (
2)(
36,587 ) (
1)
208,189
3
189,624
4
VI(XXIV)
(
45,445)
- (
6,211 )
-
$ 162,744
3
$ 183,413
4

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
Financial costs
7060
Share of profit or loss of
associates and joint ventures
accounted for using equity
method
7000
Total non-operating income
and expenses
7900
Profit before tax
7950
Tax expense
8200
Current net profit

(Continued)

207

Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Comprehensive Income January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

(Except for earnings per share, which are expressed in New Taiwan Dollars)

Item	2 0 2	2 0 2	0
		A m o u n t $ 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 (loss) profit 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 Earnings per share 9750 Basic earnings per share 9850 Diluted earnings per share			1
			1
			-
			-
			1
			5
			3 1
			4
			4 1
			5
			1.51
	$	$	1.51

The notes to the consolidated financial statements are part of the consolidated financial statements and should be read together.

Chairman of the Board: Shu-Jung Kao

President: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

208

Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Changes in Equity January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

Notes					Equityatt	ributable to owners of th	eparent
	Common stock	Capital surplus - Change of net equity of associates and joint ventures accounted for using equity method			Retained earnings	Undistributed earnings	Other e	quity Unrealised gains on valuation of financial assets at fair value through other comprehensive income	Treasurystocks
			Legal reserve		Special reserve		Exchange differences on translation of financial statements of foreign operations
VI(XVII) VI(VII) VI(XVII)	$ 1,014,988 - - - - - - - $ 1,014,988 $ 1,014,988 - - - - - - $ 1,014,988	$ - - - - - - - 100 $ 100 $ 100 - - - - - - $ 100	$ 122,290 - - - 10,694 - - - $ 132,984 $ 132,984 - - - 14,328 - - $ 147,312	$ 112,514 - - - - ( 14,973 ) - - $ 97,541 $ 97,541 - - - - ( 57,840 ) - $ 39,701		$ 551,542 145,907 - 145,907 ( 10,694 ) 14,973 ( 28,950 ) ( 2,626 ) $ 670,152 $ 670,152 122,224 - 122,224 ( 14,328 ) 57,840 ( 48,250 ) $ 787,638	($ 49,602 ) - 8,734 8,734 - - - - ($ 40,868 ) ($ 40,868 ) - ( 3,882 ) ( 3,882 ) - - - ($ 44,750 )	($ 47,939 ) - 49,105 49,105 - - - - $ 1,166 $ 1,166 - 14,335 14,335 - - - $ 15,501	($ 151,746 ) - - - - - - - ($ 151,746 ) ($ 151,746 ) - - - - - - ($ 151,746 )

The notes to the consolidated financial statements are part of the consolidated financial statements and should be read together.

President: Shu-Jung Kao

Chairman of the Board: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

209

Chaintech Technology Corporation and Subsidiaries Consolidated Statements of Cash Flows

January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

Cash flows from operating activities
Profit before tax
Adjustments
Income charges
Depreciation expenses

Depreciation expenses on right-of-use assets

Amortization expenses

Expected credit losses

Net gain on financial assets at fair value through profit or
loss

Interest expenses

Interest income
Dividend income

Share of loss of associates 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
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 inflows (outflows) generated from operations
Interest received
Dividends received
Interest paid
Income tax received (paid)
Net cash inflows (outflows) generated from
operating activities
Cash flows from investing activities
Net cash flows from acquisition of subsidiaries

Price for disposal of property, plant, and equipment
Acquisition of property, plant, and equipment

Other current assets - Decrease (Increase) in restricted assets
Acquisition of investments accounted for using equity method
Net cash inflows (outflows) generated from
investment activities
Cash flows from financing activities
Increase (Decrease) in short-term borrowings

Increase in guarantee deposits received

Repayments of lease principal

Cash dividends paid

Net cash inflows (outflows) generated from
financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents balance at beginning of period
Cash and cash equivalents balance at end of period

Notes
January 1
to December 31,2021
January 1
to December 31,2020
$ 208,189 $ 189,624
VI(IX)(XXII)
24,913
24,609
VI(X)(XXII)
10,638
7,193
VI(XI)(XXII)
10,281
11,670
XII(II)
34,426
3,547
VI(II)(XX)
(
3,200 ) (
6,124 )
VI(XXI)
5,724
6,503
(
823 ) (
794 )
VI(XIX)
(
5,795 ) (
3,079 )
VI(VII)
35,808
11,921
VI(VII)(XII)
(XX)
97,765
1,980
171,675 (
49,084 )
3,160 (
3,117 )
(
109,471 ) (
350,311 )
(
4,250 )
1,017
(
239,295 )
75,045
(
124,816 ) (
30,504 )
-
45
(
8,671 )
2,173
43,069
53,075
- (
24 )
402,499 (
184 )
18,156
1,655
14,889
125
584,871 (
53,039 )
823
794
5,795
3,079
(
5,527 ) (
6,306 )
7,549(
18,670)
593,511(
74,142)
VI(XXVI)
(
8,677 )
-
18
2,803
VI(XXVII)
(
7,923 ) (
2,359 )
23,040 (
23,882 )
VI(VII)
- (
150,000)
6,458(
173,438)
VI(XXVIII)
(
175,187 )
245,430
VI(XXVIII)
855
58
VI(XXVIII)
(
10,287 ) (
7,110 )
VI(XVII)
(
48,250) (
28,950)
(
232,869)
209,428
(
4,189)
8,151
362,911 (
30,001 )
330,087
360,088
$ 692,998 $ 330,087

The notes to the consolidated financial statements are part of the consolidated financial statements and should be read together.

Chairman of the Board: Shu-Jung Kao

President: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

210

Chaintech Technology Corporation and Subsidiaries Notes to Consolidated Financial Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$ thousands (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 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 CHUNG CHIEH TECHNOLOGY LIMITED 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, CHUNG CHIEH TECHNOLOGY LIMITED 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, 2021, the Colorful Group indirectly held 28.11% of the equity in the Company through Yicheng International Development Co., Ltd. As of December 31, 2021, the Group had 163 employees.

II. Approval Date and Procedures of the Consolidated Financial Statements

The consolidated financial statements were approved by the Board of Directors on March 23, 2022.

211

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")

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

2021:
New/Revised/Amended Standards and Interpretations	Effective Date of Issuance bythe IASB
Revised “Application of Extension under IFRS 9 to Temporary Exemption” under IFRS 4	January 1, 2021
Revised “Changes in Interest Rate Indicators” under IFRS 9, IAS 39,IFRS 7,IFRS 4 and IFRS 16 in the Phase II	January 1, 2021
Revised “Concessions of COVID-19 Related Rent after June 30, 2021” under IFRS 16	April 1, 2021 (Note)

Note: The FSC allows early application on 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.

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

The following table summarizes the new, revised, and amended standards and interpretations of IFRSs endorsed by the FSC that are applicable in 2022:

2022:
New/Revised/Amended Standards and Interpretations	Effective Date of Issuance bythe IASB
Revised “Index to the Conceptual Framework” under IFRS 3	January1,2022
Revised [Property, Plant and Equipment: the Price Before Reaching the intended State of Use] of International Accounting Standards No. 16	January 1, 2022
Revised [Onerous Contract – the Cost of Contract Performance] of International AccountingStandards No. 37	January 1, 2022
Annual improvement for the 2018-2020period	January1,2022

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

212

(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 and Interpretations	Effective Date of Issuance bythe IASB
Revised “Sales or Investment of Assets between the Investor and its Affiliate or Joint Venture” under IFRS 10 and IAS 28	To be decided by the IASB
“Contract of Insurance” under IFRS 17	January1,2023
Revision to “Contract of Insurance” under IFRS 17	January1,2023
Revised “First Application of IFRS 17 and IFRS 9 – Comparative Information” of IFRS 17	January 1, 2023
Revised “Current or Non-current Classification of Liabilities” under IAS 1	January 1, 2023
Revised “Disclosure of AccountingPolicies” under IAS 1	January1,2023
Revised “Definition of AccountingEstimate” under IAS 8	January1,2023
Revised “Deferred Income Taxes Related to Assets and Liabilities arisingfrom a Single Transaction” under IAS 12	January 1, 2023

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

IV. Summary of Significant Accounting Policies

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

(I)Statement of compliance

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

(II)Basis of preparation

Except for the following significant items, these consolidated financia l 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

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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.

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(III)Basis of consolidation

Principles for preparation of consolidated financial stateme nts
(1) All subsidiaries are included in the Group's consolidated financial statements. Subsidiaries refer to all entities (including structured entities) controlled by the 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 non-controlling interests even if this results in the non-controlling interests having a deficit balance.
(4) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
(5) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. For all amounts previously recognized in other comprehensive income, they shall be reclassified from equity to profit or loss.

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2. Subsidiaries included in the consolidated financial statements:

Investee	Subsidiary		Percentage of equityheld	Percentage of equityheld
Name	Name	Business nature	December 31,2021	December 31,2020	Notes
The Company	Shenzhen Jinghong Digital R&D Service Co., Ltd. (Shenzhen Jinghong)	Technology research and development and trading of electronic products, computer hardware, and peripheral devices	100%	100%	-
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%	-
Sitonholy (Tianjin) Technology Co., Ltd.	Baotou Yihui Information Technology Co., Ltd.	Electronic products, communication products, computer software and hardware and data processing storage and support services	100%	-	Note 1

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Note 1: On October 31, 2021, the Group acquired 100% equity of Baotou Yihui Information Technology Co., Ltd. through its sub - subsidiary, Sitonholy (Tianjin) Technology Co., Ltd.

Subsidiaries not included in the consolidated financial statements: none.
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, 2021 and 2020, the Group’s non-controlling interests totaled NT$248,317 and NT$209,351, respectively. What stated below is the information in respect of the Group’s significant non-controlling interests and the corresponding subsidiaries:

Subsidiary name	Main	Non-controllinginterests	Non-controllinginterests	Non-controllinginterests	Non-controllinginterests
		December 31,2021		December 31,2020
	business place	Amount	Percentage of shareholding	Amount	Percentage of
					shareholding
Tianjin Sitonholy	Mainland China	$	49	$
					49

Summarized financial information of the subsidiary:

Balance sheet

Balance sheet
		Sitonholy (Tianjin) Technology Co., Ltd. and
		its subsidiaries
		December 31,2021	December 31,2020
Current assets		$ 1,0 $ 6
Non-current assets		67,778	34,507
Current liabilities	(	603,504 )(	235,437	)
Non-current liabilities	(	15,651 )(	4,341	)
Total net assets		$ 5 $ 4

Statement of comprehensive income

		Sitonholy (Tianjin) Technology Co., Ltd.	Sitonholy (Tianjin) Technology Co., Ltd.	Sitonholy (Tianjin) Technology Co., Ltd.
		And its subsidiaries
		2021	2020
Revenue		$ 2,2 $ 1,0
Profit before tax		90,723	79,888
Tax expense	(	8,030 )(	3,345	)
Current netprofit		82,693	76,543
Other comprehensive income (net of tax)	(	3,171 )	7,447
Total comprehensive income
(loss)		$ $
Total comprehensive income

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attributable to

Non-controlling interests

$ $

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Statement of cash flows

Statement of cash flows
		Sitonholy (Tianjin) Technology Co., Ltd.
		and its subsidiaries
		2021	2020
Net cash outflows generated from
operatingactivities		$ ( $		)
Net cash outflows generated from
investment activities	(	16,580 )	-
Exchange rate changes and and cash
and equivalents
Effect of cash	(	195 )	6,589
Current cash and cash equivalents
Number of(decrease)increase		147,476	4,067
Cash and cash equivalents balance at
beginningofperiod		33,705	29,638
Cash and cash equivalents balance at end ofperiod		$ $

(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 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. Nonmonetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are

219

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 retranslated 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 losin g 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.

(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

220

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 norm al 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)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 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.

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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. 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.

(VIII)Accounts and notes receivable

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

Considering all reasonable and provable information (including forward -

222

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)Derecognition of financial assets

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

223

(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. 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

224

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 of any related enterprise, and the significant impact on the related enterprise is thereby lost, the accounting treatment provides that the Group 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.

(XIV)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

225

flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replacement is de-recognized. 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:

Transportation equipment 5 years 5 years Furniture and fixtures 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.
For lease liabilities, the outstanding lease payments are recognized at the present value after discounting at the interest rate of the Group’s increased borrowings on the lease commencement date. The lease payments include fixed payments, subtracting any lease inducement that may be collected. In subsequent periods, the Company measures lease liabilities at interest based on cost after amortization and recognizes interest expenses in the lease term. When a change in the lease term or lease payments occurs due to reasons other than lease

226

modifications, lease liabilities are reassessed and the remeasurements are adjusted to the right-of-use assets.

The right-of-use assets are recognized at cost on the lease commencement date. The cost includes 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.

(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.

227

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss should not be reversed in the future.

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)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.

(XXI)Offset of financial assets and liabilities

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

(XXII)Non-hedging and embedded derivatives

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

228

(二) 2. Under the non-financial assets, whether the hybrid contracts embedded with derivatives are accounted for separately at initial recognition is based on whether the economic characteristics and risks of an embedded derivative are closely related in the host contract. When they are closely related, the entire hybrid instrument is accounted for by its nature in accordance with the applicable standard. When they are not closely related, the derivative is accounted for differently from the host cont ract 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

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

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

(五) 3. 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

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

229

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

230

(八) 3. 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 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 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.
(九) 4. 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.
(十) 5. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

(XXV)Capital

(十一) 1. Ordinary shares are classified as equity. The incremental cost directly attributable to the issue of new shares or options is deducted from the equity in equity after deducting the income tax.
(十二) 2. When the Company bought back the issued stocks, the

231

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

(十三) 1. 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 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

232

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.

(十四) 2. Service revenue

The Group provides services related to research and development and design. Service revenue is recognized as revenue at a point in time when the services are rendered to customers.

(十五) 3. 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.

(十六) 4. 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)Business combinations

(十七) 1. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business acquisition case, the Group measures the components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either acquisition-date fair value or the ratio of non-controlling interests to the acquiree’s net identifiable

233

assets. All other components of non-controlling interests shall be measured at acquisition-date fair value.

234

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.

(XXIX)Operating segments

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

V Significant Accounting Judgments and Sources of Estimation and Assumption

Uncertainty

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

235

subjective judgment, including identifying cash-generating units and the allocation of assets and liabilities and intangible assets to the relevant cash-generating units, and determining the recoverable amount of the relevant cash-generating units.

VI Descriptions of Significant Accounting Items

(I)Cash and cash equivalents

ash and cash equivalents
	December 31,2021	December 31,2020
Cash in hand and operatingfund	$	$
Cheque deposit and current deposit	692,941	329,987
	$ 692 $ 330

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	Item	December 31,2021	December 31,2020
Financial assets at fair value
forciblythroughprofit and loss

Beneficiarycertificate		$	$
Valuation adjustment		-	-
Total		$	$
1. The breakdown of profit or loss for financial assets through profit or loss - current is as follows: Item 2021 Equityinstruments $ Beneficiarycertificate 3,200 Derivative instruments - structural deposit - $			at fair value
	Item	2021	2020
	Equityinstruments	$	$
	Beneficiarycertificate	3,200	4,043
	Derivative instruments -
	structural deposit	-	1,032
		$	$

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

236

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

Item	December 31,2021	December 31,2020
Equityinstruments
OTC companystock	$ 1	$
Unlisted,OTC,emergingstock	15,350	15,350
	184,984	184,984
Valuation adjustment	15,501	1,166
Total	$ 2	$

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:

follows:
	2021	2020
Equity instruments at fair value through other comprehensive
income (loss)

Changes in fair value recognized in other
comprehensive income(loss)
	$	$
Holders of dividend income recognized in the income at
the end of theperiod
	$	$

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

(VI)Notes and accounts receivable

		December 31,2021	December 31,2020
Notes receivable		$	$
Accounts receivable		$ 6 $
Reduction: allowance for
losses	(	41,343 )(	6,943	)
		$ 6 $
Accounts receivable -		$ 7 $

237

relatedparties
Reduction: allowance for
losses	(	295 )(	304	)
		$ 7 $
		$ 1,3 $ 1,

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

follows:
	December 31,2021		December 31,2020
	Accounts receivable	Notes receivable	Accounts receivable	Notes receivable
Not overdue	$	$	$	$
Overdue for 1-90 days	38,571	-	9,432	-
Overdue for more than 91 days	1,371	-	621	-
Total	$	$	$	$

The aging analysis above is based on past due date.

The balance of receivables (including notes receivable) on contracts with customers as of December 31, 2021, December 31, 2020, and January 1, 2020 was NT$1,423,979, NT$1,312,882, and NT$955,682, 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, 2021 and 2020 amounted to NT$0 and NT$3,187, respectively, and the maximum credit risk that best represent the Group's accounts receivable as of December 31, 2 021 and 2020 amounted to NT$1,382,341 and NT$1,302,448, respectively.
For more information on the credit risk of accounts receivable, please refer to Note XII (II).

(V)Inventories

nventories
		December 31,2021
	Costs	Allowance for valuation losses	Carryingamount
Raw materials	$ ( $ )		$
Work-in-process	73,637	-	73,637
Finishedproducts	63,305 (	2,107 )	61,198
Goods	297,827 (	4,663 )	293,164
	$ 5 ( $ ) $ 5

238

		December 31,2020
	Costs	Allowance for valuation losses	Carryingamount
Raw materials	$ ( $ ) $
Work-in-process	36,434	-	36,434
Finishedproducts	85,257 (	1,605 )	83,652
Goods	101,053 (	1,660 )	99,393
	$ 2 ( $ ) $ 2

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

period:	period:
					2021		2020
Cost of inventories sold					$ $
Gains on inventory value
recoveries(note)		(			1,136 )(		1,158	)
					$ $
Note: The Group's reported the gain on inventories in 2021 result of de-stocking. Prepayments							and 2020 as a
				December 31,2021			December 31,2020
Prepayments				$ 2			$
Others				7,347			4,435
				$		2	$
)	Investments using equity method

					2021		2020
January1					$		$
Increase of investments accounted for usingequitymethod					-		150,000

(Loss) gain shares of investments accounted for usingequitymethod					35,808	)(	11,921 )
				(
Impairment loss				(	97,765	)(	1,980 )
Changes in capital surplus					-		100
changes in retained earnings					-		( 2,626 )
December 31					$		$

			December 31,2021				December 31,2020
Associates			$				$

(VI)Prepayments

(VII) Investments using equity method

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

239

in terms of business decision-making, such investment is accounted for using equity method. As of December 31, 2021, 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 in 2021 and 2020, the Group 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$97,765 and NT$1,980, respectively.
The basic information of the associates that are material to the Group is as follows:

Company	Main busines	Shareholdingratio	Shareholdingratio	Nature of	Measure ment

Name	splace	December 31,2021	December 31,2020	relationship	methods
uSenlight	Republ	13.05%	13.05% (Note)	With great	Equity
Corporation	ic of China			influence	method

The Company’s shareholding ratio decreased from 13.70% to 13.05% due to the conversion of share options by uSenlight Corporation in 2020, resulting in an adjustment of capital surplus and retained earnings due to net equity difference of NT$2,626.

240

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

Balance sheet

	Balance sheet
I)			uSenlight Corporation
			December 31,2021			December 31,2020
	Current assets		$		22 $
	Non-current assets				183,046		196,520
	Current liabilities	(			243,232 )(		273,142	)
	Non-current liabilities	(			141,233 )(		15,197	)
	Total net assets		$		2 $

	Share in net assets of associates		$		$
	Net equitydifference				94,115		96,095
	Provision of Impairment loss	(			97,765 )(		1,980	)
	Carryingvalue of associates		$			$
	Statement of comprehensive income
					2021		2020
	Revenue				$		$
	Current net loss of continuing
	business unit
	(Total comprehensive income for
	theperiod)			(	$	)( $		)
	Other current assets

				December 31,2021		December 31,2020
Restricted bank deposit				$		$

(VIII)Other current assets

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

(IX)Property, plant, and equipment

	Machinery	Transportat ion	Furniture
	equipment	equipment	and fixtures	Others	Total
January1,2021
Costs	$	$	$	$	$
Accumulated
depreciation	- (	9,356 )(	4,007 )(	40,335 )(	53,698	)
	$	$	$	$	$
2021
January1	$	$	$	$	$
Add	4,664	2,615	-	644	7,923
Gains from business combinations	5,473	-	-	-	5,473

241

Disposal	-	-		-	(	7 )(	7 )(	11 )(	18	)
Depreciation
expenses (	1,532		)	-	(	48 )(		23,333 )(	24,913	)
Net exchange
difference (	13		)(	8	)(	1 )(		8 )(	30	)
December 31	$			$		$		$	$
December 31,
2021
Costs	$			$		$		$	$
Accumulated
depreciation (	25,538		)(	9,285	)(	4,015 )(		63,441 )(	102,279	)
	$			$		$		$	$

			Transportati on			Furniture
			equipment		and fixtures			Others	Total
January1,2020
Costs			$		$		$		$
Accumulated
depreciation		(	8,605 )(		3,963 )(		20,759 )(		33,327	)
			$		$		$		$
2020
January1			$		$		$		$
Add			-		-		121		121
Disposal			-		- (		2,803 )(		2,803	)
Depreciation
expenses		(	594 )(		35 )(		23,980 )(		24,609	)
Net exchange
difference			14		1 (		4 )		11
December 31			$		$		$		$
December 31,2020
Costs			$		$		$		$
Accumulated
depreciation		(	9,356 )(		4,007 )(		40,335 )(		53,698	)
			$		$		$		$

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

(X)Lease transaction - lessee

The Group's leased underlying assets are 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

242

recognized depreciation expenses:

	December 31,2021	December 31,2020
	Carryingamount	Carryingamount
House	$	$

	2021	2020
	Depreciation	Depreciation
	expenses	expenses
House	$	$

The Group added NT$32,746 and NT$12,781 of right-of-use assets for the years ended December 31, 2021 and 2020, respectively. The net amount of right-of-use assets acquired from business combinations was NT$1,399. For more information on business combinations, please refer to Note VI (XXVI).
Profit or loss items in connection with lease contracts are stated as follows:

follows:
	2021	2020
Items affecting the current income (loss)
Interest expenses of lease liabilities	$	$
Expenses of a short-term lease contract	1,513	416

The cash flows used in the Group's leases for the years ended December 31, 2021 and 2020 totaled NT$12,658 and NT$7,886, respectively.

(XI)Intangible assets

tangible assets
		Business	Customer
		reputation	relationship	Total
January1,2021
Costs		$ $ $
Accumulated amortization and
impairment		- (	21,928 )(	21,928	)
		$ $ $
2021
January1		$ $ $
Amortization expenses		- (	10,281 )(	10,281 )
Net exchange
difference	(	1,280 )(	85 )(	1,365	)
December 31		$ $		$

December 31,2021
Costs		$ $ 200,575

243

Accumulated amortization and
impairment	- (	32,050 )(	32,050	)
	$ $		$

	Business reputation	Customer relationship	Total
January1,2020
Costs	$ $ $
Accumulated amortization and impairment	- (	9,803 )(	9,803 )
	$ $ $
2020
January1	$ $ $
Amortization expenses	- (	11,670 )(	11,670 )
Net exchange difference	2,793	77	2,870
December 31	$ $ $

December 31,2020
Costs	$ $ $
Accumulated amortization and impairment	- (	21,928 )(	21,928 )
	$ $ $

Goodwill is allocated to the Group’s cash-generating units by operating segments:

segments:
	December 31,2021	December 31,2020
Sitonholy (Tianjin)
TechnologyCo.,Ltd.	$ 1	$

(XII) Impairment of non-financial assets

1.The impairment loss recognized by the Group in 2021 and 2020 was NT$97,765 and NT$1,980, as detailed below.

	2021	2021	2020	2020
	Recognition in the current	Recognition in other comprehensive	Recognition in the current income	Recognition in other comprehensive
	income(loss)	income(loss)	(loss)	income(loss)
Impairment loss-
Investments using
equitymethod	$	$	$	$

The Group conducted an impairment test on the invested company -

244

uSenlight Corporation in 2021. After assessment, the invested company - uSenlight Corporation had a small recoverable amount, so the investment was fully recognized as impairment loss of N T$97,765.

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:

follows:
	Sitonholy (Tianjin)TechnologyCo.,Ltd.
	2021	2020
Grossprofit rate	14.00%	16.60%
Growth rate	2.00%	4.00%
Discount rate	18.90%	15.10%

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.

(XIII)Short-term borrowings

Nature of borrowings	December 31,2021	Interest range	Collateral
Bank borrowings
Guaranteed	$ 19 0.90%~1.13%		Other current assets -
borrowings			bank deposits
Fiduciaryborrowings	35,612	0.96%	None
	$ 22
Nature of borrowings	December 31,2020	Interest range	Collateral
Bank borrowings
Guaranteed	$ 27 1.10%~1.61%		Other current assets -
borrowings			bank deposits
Fiduciaryborrowings	130,127 0.97%~1.22%		None
	$ 40

Interest expenses recognized in profit or loss as of December 31, 2021 and 2020 were NT$4,866 and NT$6,143, respectively.

245

(XIV)Other payables

	December 31,2021	December 31,2020
Salariespayable	$ $
Royaltiespayable	31,900	31,861
Others	30,138	47,869
	$ 1 $

(XV)Pensions

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 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, 2021 and 2020 were NT$6,578 and NT$2,886, respectively. (In 2020, the Group's subsidiaries in Mainland China were affected by the COVID - 19, and the local government reduced or exempted the pension by NT$2,043).

246

(XVI)Capital

As of December 31, 2021, 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:

of treasurystock are	as follows:
		December 31,2021
Name of company holding		Number of shares (one	Carrying
shares	Reasons for recovery	thousand)	amount
	For transfer of shares to
The Company	employees	5,000	$

		December 31,2020
Name of company holding		Number of shares (1,000	Carrying
shares	Reasons for recovery	shares)	amount
	For transfer of shares to
The Company	employees	5,000	$

(2) The Securities Exchange Act stipulates that the proportion of the Company's purchase of shares outstanding shall not exceed 10% of the total number of shares issued by the Company, and the total monetary amount of share purchased shall not exceed the retained earnings plus the share premium and the realized capital reserve amount.
(3) Treasury shares held by the Company may be neither pledged nor assigned shareholder rights in accordance with the Securities and Exchange Act.
(4) According to the Securities and Exchange Act, treasury shares should be 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.

247

(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 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.

248

The legal reserve shall not be used except for offsetting the loss of the Company and issuing new shares or cash in proportion to the original number of shares held by the shareholders. However, if it is issued to issue new shares or cash, the said legal reserve shall only exceed 25% at most of the paid-up capital.
4.(1) When the Company distributes the surplus, it is required by law to provide a special surplus reserve for the debit balance of other equity items on the balance sheet date of the current year. After that, when the debit balance of other equity projects is reversed, the amount of revolving will be included in the surplus available for distribution.
(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 July 29, 2021 a nd June 18, 2020, respectively, the Company adopted the earnings distribution plan for the year ended December 31, 2020 and 2019 as follows:

follows:
	2020		2019
	Amount	Dividend per	Amount	Dividend per share
	(1,000yuan)	share(yuan)	(1,000yuan)	(yuan)
Legal reserve	$		$
Special reserve
(reversed) (	57,840 )	(	14,973 )
Cash dividends	48,250	$	28,950	$

Please refer to Note VI (XXIII) for information on employees' compensation and directors' and supervisors' remuneration.
As of March 23, 2022, the Company’s Board of Directors was yet to propose the earnings distribution plan for the year ended December 31, 2021.

(XVIII)Operating revenue

Contract revenue:

2021

2020

249

Sales revenue - Computer peripheralproducts		$ $	$ $
Service revenue		8,396	6,867
		$ $

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:

Oth		December 31,2021	December 31,2020	January1,2020	January1,2020
	Contract
	liabilities:
	Advances on
	sales	$	$	$

			2021	2020
	Current balance of contract liabilities at beginning of period

	Recognized revenue
			$	$
	er revenue

			2021	2020
Rental revenue			$	$
Dividend income			5,795	3,079
Other revenue - other			4,824	3,878
			$	$
ther gains and losses
			2021	2020
Net loss of foreign currency
exchange		(	$ )(	$	)
Financial assets at fair value
throughprofit or loss			3,200	6,124

Impairment loss		(	97,765 )(	1,980	)
Other losses		(	2,622 )(	658	)
		(	$ )( $		)
Fin	ancial costs

			2021	2020
	Interest expenses		$	$
	Lease liabilities		858	360
			$	$

(XIX)Other revenue

(XX)Other gains and losses

(XXI)Financial costs

250

(XXII)Expenses by nature

penses by nature
	2021	2020
Employee benefit expenses	$ $
Depreciation expenses on property, plant,and equipment	24,913	24,609
`舊費用`
Depreciation expenses on right-of-use assets	10,638	7,193
Amortization expenses of intangible assets	10,281	11,670
	$ $
mployee benefit expenses

	2021	2020
Salaries expenses	$ $
Expenses on labor insurance and national health insurance	7,365	2,860
Pension expenses	6,578	2,886
Other personal expenses	7,108	4,767
	$ $

(XXIII)Employee benefit expenses

(十八) 1. According to the Company's Articles of Incorporation, after deducting the accumulated losses based on the profitability of the current year, if there are still some earnings left, the employee shall be granted no less than 0.1% as compensation, and the directors and supervisors shall not be paid more than 6% as remuneration.
(十九) 2. For the years ended December 31, 2021 and 2020, the estimated amount of employees' compensation was NT$1,663 and NT$2,535, respectively, and the estimated amount of directors' and supervisors' remuneration was NT$4,988 and NT$7,129, respectively; the aforesaid amounts were recognized as wages and salaries.

For the year ended December 31, 2021, 1% and 3% were estimated according to the profitability of the year. The resolved amounts as approved by the Board of Directors were NT$1,663 and $4,988, respectively. The employees' compensation will be distributed in the form of cash.

The employees' compensation, NT$2,535, and directors' and supervisors' remuneration, NT$7,129, for the year ended December

251

31, 2020 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.

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

(XXIV)Income tax

(二十一) 1. Tax expense

Components of tax expense:

Components of tax expense:
		2021	2020
Current income tax:
Income tax arising from current income		$	$
Imposed on undistributed earnings		7,058	406
Low (high) estimate of income tax for
previousyears		893 (	43	)
Total income tax for theperiod		65,675	8,805
Deferred income tax:
Original generation and reversal of
temporarydifferences	(	20,230 )(	2,594	)
Tax expense		$	$

252

2. Tax expense and accounting profit

		2021	2020
Income tax of profit before tax calculated at statutorytax rate		$	$
tax
Expenses that should be excluded according
to tax laws		566 (	334	)
Profit exempt from tax accordingto tax laws	(	1,159 )(	210	)
Temporary differences not recognized as
deferred tax assets	(	1,871 )(	7,606	)
Allowances for tax loss for theperiod		- (	21,997	)
Imposed on undistributed earnings		7,058	406
Low (high) estimate of income tax for
previousyears		893 (	43	)
Tax expense		$	$

			2021
		Recognized as the income	Recognized as other comprehensiv e income	Gains from business combina	December
	January1	(loss)	(loss)	tions	31
Temporarydifferences:
Deferred tax assets
Allowance for inventory valuation losses
and	$ (	$ 828 )	$	$	$
slow-moving
loss
Impairment loss	-	19,948	-	-	19,948
Unrealized
exchange loss	2,135	(1,482 )	-	-	653
Others	-	-	-	3	3
	3,132	17,638	-	3	20,773
Deferred tax
liabilities
Amortization of
intangible assets (	2,592 )	2,592	-	-	-
	$	$	$	$	$

253

		2020	2020	2020	2020
		Recognized as the income		Recognized as other comprehensiv e income		December
	January1		(loss)	(loss)		31
Temporarydifferences:
Deferred tax assets
Allowance for inventory valuation
losses and	$ (	$	)	$		$
slow-movingloss
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	)
(	$ )	$		$		$
amounts of deductible temporary tax assets are as follows:			differences not		recognized as
			December 31,2021		December 31,2020
Deductible temporary differences			$ 1 $

The amounts of deductible temporary differences not recognized as deferred tax assets are as follows:
The tax authorities have examined income tax returns of the Company through the year ended December 31, 2019.

(XXV)Earnings per share

rnings per share
		2021
	After-tax amount	Weighted average number of outstanding shares (1,000 shares)	Earnings per share (yuan)
Basic earnings per share
Current net profit attributable to common shareholders of parent company
Current netprofit	$	96,499	$
Diluted earnings per share
Current net profit attributable to common shareholders of parent company	$	96,499
Current netprofit
Effect of potential common shares with dilution effect
Effects
Employees’ compensation	-	71
Current net profit attributable to common shareholders of parent companyand effect ofpotential

254

common shares
	$	96,570		$

		2020
	After-tax amount	Weighted average number of outstanding shares (1,000 shares)		Earnings per share (yuan)
Basic earnings per share
Current net profit attributable to common shareholders of parent company
Current netprofit	$	96,499		$
Diluted earnings per share
Current net profit attributable to continuing business unit of parent company	$	96,499

Effect of potential common shares with dilution effect

Employees’ compensation	-	106
Effect of current net profit attributable to common shareholders of parent company and potential common shares
	$	$	$

(XXVI)Business combinations

The Group invested in Sitonholy (Tianjin) Technology Co., Ltd. through Jinghong, its subsidiary in mainland China, in December 2018, and prepaid an investment of RMB 10 million, and acquired 51% equity of Sitonholy (Tianjin) Technology Co., Ltd. on March 1, 2019. The total investment was 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.

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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:

stated as follows:
Acquisition consideration
Cash(Note 1)
Equitytransfer fund		$ 1
Payments forpurchase of shares		73,648
Contingent consideration(Note 2)		149,140
		342,466
Share of non-controlling interests in purchasers’ net
identifiable assets		157,465
		$ 4
Identifiable assets acquired and fair values of
liabilities assumed
Cash		$
Accounts receivable		182,945
Inventories		90,866
Other current assets		113,415
Intangible assets(customer relationship)		33,961
Property, plant,and equipment		797
Right-of-use assets		3,744
Other non-current assets(Note 3)		201,522
Accountspayable	(	129,566	)
Other current liabilities(Note 4)	(	184,300	)
Lease liabilities	(	3,802	)
Deferred tax liabilities	(	8,490	)
Total identifiable net assets		321,358
Business reputation		$ 1

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

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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.

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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

258

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 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%)

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(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%) The Group has received the above compensation of NT$15,353 (i.e. RMB 3.53 million) in March 2021.
The contingent consideration agreement for the audited net profit of Sitonholy (Tianjin) Technology Co., Ltd. and Beijing Sitonholy Technology Co., Ltd. in 2021 has been reached, and Shenzhen Jinghong will pay the contingent consideration and refund part of the compensation according to the original contract and supplementary agreement.
In October, 2021, the Group invested in Baotou Yihui Information Technology Co., Ltd. through its subsidiary in Mainland China, Sitonholy (Tianjin), and acquired 100% equity of Baotou Yihui Information Technology Co., Ltd. The total investment was RMB 2 million.
Information on the consideration for acquiring Baotou Yihui Information Technology Co., Ltd., acquisition-date fair value of assets acquired and liabilities assumed, and portion of non-controlling interests to the acquiree's net identifiable assets is stated as follows:

fiable assets is stated as follows:
Acquisition consideration
Cash		$

Identifiable assets acquired and fair values of liabilities assumed
Cash		$
Accounts receivable		160
Other receivables		846
Other current assets		163
Property, plant,and equipment		5,473
Right-of-use assets		1,399
Other non-current assets		3,690
Contract liabilities	(	988 )
Accountspayable	(	326 )
Otherpayables	(	341 )
Lease liabilities	(	1,399 )
Total identifiable net assets		$

The Group merged Baotou Yihui Information Technology Co., Ltd. on October 31, 2021. The operating revenue and pre-tax net loss contributed by Baotou Yihui Information Technology Co., Ltd. in 2021 were NT$255 and NT$1,580, respectively. If Baotou Yihui Information Technology Co., Ltd. were acquired by the Group in January 1, 2021, the Group's operating revenue and pre-tax net loss would be NT$1,554 and NT$3,059, respectively,

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for the year ended December 31, 2021.

(XXVII)Supplemental cash flow information

	2021	2020
Purchase of property, plant, and equipment	$ 7,923	$ 121
Add: prepayments for equipment at end ofperiod	-	2,238
deduce: prepayments for equipment at beginning of period (Note)	-	-
Casepayment for theperiod	$ 7,923	$ 2,359

Note: The equipment price prepaid in 2020 was transferred to other losses in 2021.

(XXVIII)Changes in liabilities from financing activities

		2021	2021
	Short-term	Guarantee deposits	Lease	Total liabilities from financing
	borrowings	received	liabilities	activities
January1	$	$	$	$
Change in cash flows
from financingactivities (	175,187 )	855 (	10,287 )(	184,619	)
Gains from business combinations	-	-	1,399	1,399
Effect of exchange rate
changes	-	-	160	160
Other non-cash changes	-	-	29,271	29,271
December 31	$	$	$	$

		2020	2020
	Short-term	Guarantee deposits	Lease	Total liabilities from financing
	borrowings	received	liabilities	activities
January1	$	$	$	$
Change in cash flows from
financingactivities	245,430	58 (	7,110 )	238,378
Effect of exchange rate
changes	-	-	110	110
Other non-cash changes	-	-	12,781	12,781
December 31	$	$	$	$

VII Transaction with related parties

(I)Parent company and the ultimate controller

The Company is controlled by Yicheng International Development Co.,

261

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 and relationship with	the Company
Name of relatedpartyand relationshipwith the Company	Relation with the Company
Colorful TechnologyCo.,Ltd.	100% reinvestment business by Colorful Group
Shenzhen Colorful Yugong Technology and Development Co.,Ltd.(Yugong)	The same person in charge as the Colorful Group
uSenlight Corporation(uSenlight)	Associates

(III)Significant transactions with related parties

1. Operating revenue

		2021	2020
Sales ofgoods:
Colorful		$ $

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 products.

2. Purchases

Purchases
	2021	2020
Purchase ofgoods:
Yugong	$	$
Colorful	505	-
	$	$

Goods are purchased from related parties according to general commercial terms and conditions. Purchases from related parties are mainly display cards.

3. Receivables from related parties

		December 31,2021	December 31,2020
Accounts receivable:
Colorful		$ 7 $
Reduction: allowance for
losses	(	295 )(	304	)
Total		$ 7 $

4. Payables to related parties

262

	December 31,2021	December 31,2020
Accountspayable:
Yugong	$	$ 1
Colorful	335	-
Total	$	$ 1

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

5. 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 2021 and 2020 were NT$9,041 and NT$10,698, respectively; the amounts not yet paid as of December 31, 2021 and 2020 were NT$5,951 and NT$6,778, respectively, and recognized as "other payables."

(IV)Key management compensation information

Key management compensation information
	2021	2020
Salaries and other short-term employee benefits	$	$

VIII Pledged Assets

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

	Carrying	value
Asset Name	December 31,2021	December 31,2020	Collateralpurpose
Other current assets
			Borrowing
Bank deposits	$ 33,847	$ 56,887	repayment account

IX Significant Contingent Liabilities and Unrecognized Contract Commitments

(I)Contingencies

None.

(II)Commitments

As of December 31, 2021, the Group's guaranteed letter of credit for the purchase was US$1,500 thousand.
As of December 31, 2021, the Company issued a promissory note totaling NT$100,000 for the purchase of goods as a guarantee for the purchase of loan claims.

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X Significant Disaster Loss

None.

XI Significant Events after the End of the Financial Reporting Period

None.

XII Others

(I)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.

(II)Financial instruments

1. Category of financial instruments

		December 31,2021
Financial assets
Financial assets at fair value throughprofit and loss
		$ 64,204
Financial assets at fair value through other comprehensive income (loss)


Financial assets at amortized cost

Cash
Notes receivable		-
Accounts receivable (includingrelatedparties)		1,382,341
Other receivables		6,857
Other financial assets (recognized in other current assets)		33,847

Guarantee deposits paid (recognized in other non-

264

current assets)
		9,594

Financial liabilities
Short-term borrowings
Accounts payable (includingrelatedparties)		773,498
Otherpayables		119,526
Guarantee deposits received (recognized in other non-current liabilities)
		1,275

Lease liabilities

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Risk management policies
(1) 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.
(2) 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.
The nature and degrees of significant financial risks
(1) Market risk

Exchange rate risk

(一) 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.
(二) B. Business of the Group is involved in a number of nonfunctional 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 31,2021	December 31,2021
(Foreign currency: functional currency)		Foreign currency (1,000 yuan)	Exchange rate	Carrying amount (NT$)
Financial assets
	Monetary item
	US$: NT$	$	27.68	$
Financial liabilities
	Monetary item
	US$: NT$	$	27.68	$
		December 31,2020

266

(Foreign currency: functional currency)	(Foreign currency: functional currency)	Foreign currency (1,000 yuan)	Exchange rate	Carrying amount (NT$)
Financial assets
	Monetary item
	US$: NT$	$	28.48	$
Financial liabilities
	Monetary item
	US$: NT$	$	28.48	$

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$20,038 and NT$29,558, respectively, for the years ended December 31, 2021 and 2020.

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

			2021	2021
			Sensitivityanalysis
(Foreign currency: functional currency)		Amount of variation	Affecting income (loss)	Affecting other comprehensive income(loss)
Financial assets
	Monetary item
	US$: NT$	1%	$	$
Financial liabilities
	Monetary item
	US$: NT$	1%	$	$

			2020	2020
			Sensitivityanalysis
(Foreign currency: functional currency)		Amount of variation	Affecting income (loss)	Affecting other comprehensive income(loss)
Financial assets
	Monetary item
	US$: NT$	1%	$	$
Financial liabilities
	Monetary item
	US$: NT$	1%	$	$

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.

267

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, 2021 and 2020 will increase or decrease by NT$642 and NT$2,377, 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$2,005 and NT$1,862, 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, 2021 and 2020, the Group's borrowings issued at variable rates were mainly denominated in USD.

268

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.

(2) 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 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 follows the credit risk management procedures, which stipulate that if the contract amount is overdue for more than 90-120 days in accordance with the agreed payment terms, it is regarded that a default has taken place.

D. The Group follows the credit risk management procedures, which are taken as the basis as to whether the credit risk on financial instruments since initial recognition has increased significantly:

(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.
E. The Group will group the customer's accounts receivable

269

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 Group makes individual assessments on the material accounts receivable that have defaulted and recognizes 10% as allowance for losses. The Group includes the rest accounts receivable into forward-looking consideration according to the credit extension conditions of the Group to adjust the loss rate established by historical and current information for a specific period so as to estimate the allowance loss for notes and accounts receivable by the said loss rate. The provision matrix as of December 31, 2021 and 2020 is as fol lows:

				OA more than
	Individual	Not OA	OA 1-90 days	91 days	Total
December 31, 2021
Assumbed loss				17.50%~100
ratio	10%	0.04%~9.24%	17.50%	%
Total carrying
value	$	$	$	$	$
Allowance for
losses	$	$	$	$	$

		Not OA	Overdue OA 1-90 days	OA more than 91 days 91`天以上`	Total
December 31, 2020
Assumbed loss ratio		0.04%~3.62 %	6.81%	6.81%~100 %
Total carryingvalue		$	$	$	$
Allowance for losses		$	$	$	$

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

		January1,2021	January1,2021
		Accounts receivable
January1		$ 7
Provision of
Impairment loss		34,426
Effect of exchange
rate changes	(	35		)
December 31		$ 41

			2020
			Accounts receivable
January1			$ 3

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Provision of Impairment loss		3,547
Effect of exchange rate changes		130
December 31		$ 7,

(3) Liquidity risk

271

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.

d amounts.
		Within 1-2	Within 2-5
December 31,2021	Within 1year	years	years
Non-derivative
financial liabilities:
Lease liabilities	$	$	$

		Within 1-2	Within 2-5
December 31,2020	Within 1year	years	years
Non-derivative
financial liabilities:
Lease liabilities	$	$	$

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

(III)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 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.
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

272

payables, their carrying amounts are a reasonable approximation of their fair value.

273

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

December 31,2021	Level 1	Level 2	Level 3	Total
Assets
Repeatable fair value
Financial assets at fair value throughprofit or loss

Beneficiarycertificate	$	$	$	$
Financial assets at fair value through other comprehensive income		-	-
	-
Equitysecurities	185,135	-	15,350	200,485
Total	$	$	$	$
December 31,2020	Level 1	Level 2	Level 3	Total
Assets
Repeatable fair value
Financial assets at fair value throughprofit or loss

Beneficiarycertificate	$	$	$	$
Financial assets at fair value through other comprehensive income

Equitysecurities	170,800	-	15,350	186,150
Total	$	$	$	$

(2) 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:

OTC company stock Beneficiary certificate Market quotes Closing price Net value

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

274

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 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.

For the years ended December 31, 2021 and 2020, there were no transfers between Level 1 and Level 2.
The following table indicates the movement of Level 3 for the years ended December 31, 2021 and 2020:

		2021	2020
		Equity instruments	Equity instruments
January1(December 31)		$	$

For the years ended December 31, 2021 and 2020, there were no transfers into or out of Level 3.
The finance department of the Group is in charge of valuation

275

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 back-testing, updating inputs used to the valuation model, and making any other 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 on December 31, 2021	Evaluation technique	Major non- observable input value	Relationship between input and fair value
Non-derivative equityinstruments:
Non-OTC company stock	$	Market value method	Lack of market liquidity discount and expected equity value volatility	Lack of market liquidity discount and the higher the expected equity value volatility, the lower the fair value

	Fair value on December 31, 2020	Evaluation technique	Major non- observable input value	Relationship between input and fair value
Non-derivative equityinstruments:
Non-OTC company stock	$	Market value method	Lack of market liquidity discount and expected equity value volatility	Lack of market liquidity discount and the higher the expected equity value volatility, the lower the fair value

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

December 31, 2021

276

			Recognized as other comprehensive income	Recognized as other comprehensive income
	Input value	Change	Favorable change	Unfavorable change
Financial assets
Equity instruments	Lack of market liquidity discount and expected equityvalue volatility	±1%	$	$

			December 31,2020
			Recognized as other comprehensive income
	Input value	Change	Favorable change	Unfavorable change
Financial assets
Equity instruments	Lack of market liquidity discount and expected equityvalue volatility	±1%	$	$

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.

277

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 t o 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

(I)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).

(II)Segment Information

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

2021		Consumer goods	AI server	Adjustment and write-off	Grand Total
External revenue		$	$	$	$
Internal		11,887	121,032 (	132,919 )	-

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segment revenue
Segment revenue	$	$ (	$ )	$
Segment profit or loss	$	$ (	$ )	$

2020	Consumer goods	AI server	Adjustment and write-off	Grand Total
External revenue	$	$	$	$
Internal segment revenue	10,178	33,039 (	43,217 )	-
Segment revenue	$	$ (	$ )	$
Segment profit or loss	$	$ (	$ )	$

(III)Information on the adjustment of segment profit or loss

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

(IV)Information on products and services

The breakdown of the revenue balance is as follows:

	2021	2020
Sales revenue:
Computer peripheral products	$ $
Service revenue	8,396	6,867
	$ $

(V)Geographical information

	2021	2021	2021	2020	2020
	Revenue		Non-current assets	Revenue	Non-current assets
China	$	$ $ $
Taiwan	13,991		42,905	665	66,973
	$	$ $ $

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(VI)Key accounts information

		2021	2020
10C001		$ $
16L002		579,767	497,686

280

Chaintech Technology Corporation and Subsidiaries

Endorsements and Guarantees For the Year Ended December 31, 2021

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 $56,472	s secured with collateral $ -	ents and guarantee	s for subsidiary	s for parent (Note 5) N
		s (Note 3)	(Note 5) Y
		$904,372

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.
281 -

Chaintech Technology Corporation

Marketable Securities Held at the End of the Period (excluding Subsidiaries, Associates, and Joint Ventures) December 31, 2021

Table 2

Unit: NT$ thousands (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_Tianli Kuaixian current 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 assets at fair value through profit or loss - current - Financial assets at fair value through profit or loss - current	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 assets at fair value through profit or loss - current - Financial assets at fair value through profit or loss - current	Number of shares 3,050,000 $ 510,204 - -	at the End of the Period Carrying amount Shareholding ratio 185,135 3.61% 15,350 2.19% 43,440 - 20,764 -	Fair value $ 185,135 15,350 43,440 20,764	Remark
				Carrying amount 185,135 15,350 43,440 20,764


						- - - -

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.

282

Chaintech Technology Corporation

Purchases and sales with related parties reaching NT$100 million or 20% of paid-in capital or more January 1, 2021 to December 31, 2021

Table 3

Unit: NT$ thousands (Unless specified otherwise)

Company Chaintech Technology Corporation Sitonholy (Tianjin) Technology Co., Ltd. Beijing Sitonholy Technology Co., Ltd.	Counterparty Colorful Technology Co.,Ltd. Shenzhen Colorful Yugong Technology and Development 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 The same person in charge as the Colorful Group	Transaction Purchases (sales) Amount Percentage of total purchases (sales) Credit period Sales $ 2,178,925 33.43% OA 45~125 days Purchases $ 78,868 1.31% OA 30 days Purchases $ 1,402 0.02% OA 30 days	Unusual trade conditions and its reasons Unit price Credit period Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable	Ratio of	notes	and accounts	receivable Ratio of notes and accounts receivable (payable) 51.76% 0.00% 0.00%	Remark
					(payable) Balance $ 737,095 $ - $ -
									- - -

283

Chaintech Technology Corporation

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

==> picture [770 x 136] intentionally omitted <==

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

December 31, 2021
Table 4 Unit: NT$ thousands
(Unless specified otherwise)
Overdue receivables from related Receivables from related
parties parties
Handlin
Counterpart g Allowances for
Company y Relationship Balance of receivables from related parties Turnover rate Amount method Amount recovered losses
Chaintech $ 737,095
Technology Colorful
Corporatio Technology 100% reinvestment business by Colorful
n Co.,Ltd. Group Accounts receivable 2.89 $ - - $ 197,905 ($ 295)
----- End of picture text -----

AR at the beginning of the period AR at the end of the period Average AR Sales revenue Conversion throughout the year Turnover rate	770,724 737,094
	753,909
	2,178,925 2,178,925 2.89

284

Chaintech Technology Corporation and Subsidiaries

Parent-subsidiary and Subsidiary-subsidiary Business Relations and Significant Transactions and Amounts Thereof

For the Year Ended December 31, 2021

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.	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 $ 9,050 Agreed by both parties 0.14% Parent company to a subsidiary Other payables 3,054 Agreed by both parties 0.09%

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.

285

Chaintech Technology Corporation

Information on investees, such as name and location (not including investees in Mainland China)

January 1, 2021 to December 31, 2021 Table 6

Unit: NT$ thousands (Unless specified otherwise)

Investor Investee company Chaintech Technology Corporation uSenlight Corporation	Location Main businesses and products Republic of China Electronics, computers, and peripherals	Initial amount of investment Shareholding at end of period December 31, 2020 December 31, 2019 Number of shares Percentage Carrying amount $ 150,000 $ 150,000 5,000,000 13.05% $ -	Investee Income (loss) for the period Gain (loss) on investment for the period ($ 274,391) ($ 35,808)	Remark Loss for the period reached $97,765

286

Chaintech Technology Corporation and Subsidiaries

Information on Investments in Mainland China - Basic Information For the Year Ended December 31, 2021

Table 7

Unit: NT$ thousand (Unless specified otherwise)




	Investee in Mainland China		Main	businesses and products		Actual paid-in capital	Method of investment (Note 1)	Accumulated investment amount remitted from Taiwan at beginning of period	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 investmen t recovered as of the period	Remark
									Remitta nce	Recover
										y
Dongguan Changan Fortech Electronics Co.,Ltd.		Production and manufacturing of mainboard, display card and computer products			$343,327		2	$343,327		($343,32 7)	$	($8,545)	100	(8,545)	$	$	Note 3
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	$43,170	100	$ 43,170	$ 518,552	$ -	-
Sitonholy (Tianjin) Technology Co., Ltd.		Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts			100,162		3	-	-	-	-	90,404	51	46,106	406,163	-	-
Beijing Sitonholy Technology Co., Ltd.		Wholesale of electronic products, communication products, household appliances, office supplies, computer hardware and software and related spare parts			36,824		3	-	-	-	-	(2,137)	51	1,090	49,771	-	-
Baotou Yihui Information Technology Co., Ltd.		Electronic products, communication products, computer software and hardware and data processing storage and support services			28,295		3					(3,098)	51	1,580	3,724
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.

Accumulated investment amount remitted from Taiwan to Mainland China at end of period Company name Chaintech Technology Corporation $ 499,065	Investment amount authorized by Investment Commission, M.O.E.A. Ceiling on investment in Mainland China regulated by Investment Commission, M.O.E.A. $ 544,794 $ 1,234,237

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.

287

Chaintech Technology Corporation

Table 8

Unit: NT$ thousand (Unless specified otherwise)

Investee in Mainland China Shenzhen Jinghong Digital R&D Service Co., Ltd. Sitonholy (Tianjin) Technology Co., Ltd.	Sales (purchases) Amount % $ - -	Endorsements and guarantees or collateral provided Property transactions Accounts receivable (payable) Amount % Balance % Balance at end of period Purpose Highest balance for the period $ - - ($ 3,054) - $ - - $ - 56,742 For line of credit of suppliers	Highest balance for the	Financing Balance at end of period $ -	Financing	Interest range -	Interest for the period Others $ - Operating expenses $9,050

288

Chaintech Technology Corporation Information on major shareholders December 31, 2021

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 5,099,000	Shareholding ratio
		28.11% 8.32% 5.02%

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.

289

AI assistant

CHAINTECH — Annual Report 2021

52073_rns_2022-06-23_0dd8ce12-dfd3-4bb3-909e-6e7b28e6af91.pdf

CHAINTECH Technology Corporation

2021 Annual Report

Annual Report

I. Company Spokesperson, Acting Spokesperson

III. Stock Transfer Institution

Table of Contents

VI. Financial Information

I． Letter to Shareholders

Dear Esteemed Shareholders:

I．2021 Business Results

(I) Implementation Results of Business Plan:

(II) Financial income and expenditure and profitability analysis:

(II) Estimated sales volume and supporting information

(III) Important Production and Marketing Policies

II. Company Profile

I. Establishment Date: November 17, 1986

II. Company History:

III. Corporate Governance Report

I. Organization

(II). Businesses of Major Departments

II. Information of Directors, Supervisors, General Manager, Deputy General Manager, Assistant Manager, and Managers of Departments and Branches

2. Major Shareholders of the Corporate Shareholders

3. Major Shareholders as Judicial Person

4. Disclosure of Professional Qualification of Directors and Supervisors and Independence of Independent Directors:

(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)

2. Supervisors' remuneration (disclose the name and remuneration individually)

2021 Unit: thousands; share

Table of range of remuneration

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

supervisor are summarized as below:

March 23, 2021 and March 23, 2022 before the Board Meeting:

Evaluation Standards for the Independence of CPAs

(IX) Implementation of Internal Control System

1. Internal Control Statement

IV. Information on CPAs fees

(I) CPA fees

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

shareholders to related parties.

(III) Information on equity pledge:

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:

IV. Funding Overview

I. Capital and Shares

(I) Sources of share capital

1. Formation of share capital

2. Type of Shares

(II) Shareholder Structure

(III) Distribution of Shares

1. Common Shares

(IV) List of Major Shareholders

(IX) Repurchase of Shares by CHAINTECH

(1) Completed execution

V. Operating Overview

I. Business Activities

2. Business proportion

(3) High-performance data computing solutions

(II) Industry Overview

1. Current State and Development of the Industry

(1) Board card industry

(2) Artificial intelligence industry

2. Correlation among upstream, midstream, and downstream of the industry

3. Product development trends and competition status

(III) Technology and Research Overview

II. Market, Production, and Sales Overview

2. Sales regions

3. Market share

4. Future supply and demand of the market and its growth

(1) The R&D team that is in closer contact with the market

(2) Professional management team

(3) Competitive business mode

(2) AI servers

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CHAINTECH Annual Report 2021