CHAINTECH — Audit Report / Information 2020

Nov 13, 2020

Chaintech Technology Corporation

Parent Company Only Financial Statements and Independent Auditors' Report

For the Years Ended December 31, 2020 and 2019

(Stock Code: 2425)

Company Address: 3F., No. 48-3, Minsheng Road, Xindian District, New Taipei City Tel: (02)2913-8833

Chaintech Technology Corporation

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

Table of Contents

Contents Page/Number/In dex Cover Page Table of Contents Independent Auditors' Report Parent Company Only Balance Sheets Parent Company Only Statements of Comprehensive Income Parent Company Only Statements of Changes in Equity Parent Company Only Statements of Cash Flows Notes to Parent Company Only Financial Statements

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

• III. Application of New and Amended Standards and Interpretations IV. Summary of Significant Accounting Policies V. Significant Accounting Judgments and Sources of Estimation and Assumption Uncertainty

• VI. Descriptions of Significant Accounting Items VII. Related Party Transactions

Contents VIII. Pledged Assets IX. Significant Contingent Liabilities and Unrecognized Contract Commitments X. Significant Disaster Loss XI. Significant Events after the End of the Financial Reporting Period XII. Others XIII. Supplementary Disclosures XIV. Segment Information List of Significant Accounting Items Statement of Cash Statement of Changes in Non-current Financial Assets at Fair Value through Other Comprehensive Income Statement of Accounts Receivable (Including Related Parties) Statement of Inventories Statement of Changes in Investments Accounted for Using Equity Method Statement of Short-term Borrowings Statement of Accounts Payable Statement of Operating Revenue Statement of Operating Costs Statement of Operating Expenses Summary Statement of Current Period Employee Benefits, Depreciation, Depletion and Amortization Expenses by Function

Page/Number/In

dex Statement 1 Statement 2 Statement 3 Statement 4 Statement 5 Statement 6 Statement 7 Statement 8 Statement 9 Statement 10 Statement 11

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

To Chaintech Technology Corp.,

Audit Opinion

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

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

Basis of Audit Opinion

For the parent company only financial statements for the year ended December 31, 2020, we conducted our audit in accordance with the "Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants" and the Generally Accepted Auditing Standards (GAAS) of the Republic of China. For parent company only financial statements for the year ended December 31, 2019, we conducted our audit in accordance with the "Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants," "Financial Supervisory Commission Letter Jin-Guan-Zheng-Shen-Zi No. 1090360805 dated February 25, 2020," and the GAAS of the Republic of China. Our responsibilities under those standards are further described in the Responsibilities of Certified Public Accountants for Auditing the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. We believe that the audit evidence we have obtained is sufficient and appropriate to serve as the foundation of our audit opinion.

Key Audit Matters

Key audit matters refer to matters that, in our professional judgment, are of most significance in our audit of the parent company only financial statement of the Company for the year ended December 31, 2020. These matters are addressed in the context of our audit of the parent company only financial

statements as a whole, and in forming out opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the parent company only financial statement of the Company for the year ended December 31, 2020 are stated as follows:

Sales revenue cut-off

Description

Regarding the accounting policy for recognition of sales revenues, please refer to Note IV(XXIV) to the parent company only financial statements. For the description of sales revenue, please refer to Note VI(XV) to the parent company only financial statements.

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

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

Corresponding audit procedures

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

1. 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.

2. 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.

3. 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.

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

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

Description

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

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

To assess whether intangible assets are impaired, Shenzhen Jinghong Digital R&D Service Co., Ltd. estimates the future cash flows based on the cash-generating units to which the intangible assets belong, and measures the recoverable amount of such cash-generating units at an appropriate discount rate. As the estimation of future cash flow involves many assumptions that may greatly affect the recoverable amount, we identify the assessment of the impairment of intangible assets by Shenzhen Jinghong Digital R&D Service Co., Ltd. as one of the key audit matters for the year.

Corresponding audit procedures

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

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

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

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

3. Adopt the evaluation models and important assumptions (including discount rate, etc.) provided by financial experts of our firm, compare the data in assumptions made by management to market

and historical data, and check the calculation to ensure the appropriateness of management's judgment.

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

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

In preparing the parent company only financial statements, the responsibility of management includes assessing the Company's ability to continue as a going concern, disclosing going concern related matters, as well as adopting going concern basis of accounting unless the management intends to liquidate the Company or terminate the business, or has no realistic alternative but to do so.

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

Responsibilities of Certified Public Accountants for Auditing the Parent Company Only Financial Statements

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

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

1. 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.

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

opinion on the effectiveness of the Company's internal control.

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that are of most significance in the audit of the parent company only financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

PwC Taiwan

Certified Public Accountants

Feng, Min-Chuan Lin, Ya-Hui

Former Securities and Futures Bureau, Financial Supervisory Commission Approved Certification Number: Jin-Guan-Zheng-Liu-Zi No. 0960038033 Financial Supervisory Commission Approved Certification Number: Jin-Guan-Zheng-Shen-Zi No. 1070323061 March 23, 2021

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

Assets	Notes VI(I) VI(II) VI (IV) VI(IV) and VII VI(V) VI(VI) and VIII VI(III) VI(VII)(X) VI(VIII) VI(IX) VI(XXI)	December 31, 2020 Amount % $ 149,370 6 - - 361,570 15 770,724 32 24,310 1 174,218 7 59,702 2 1,539,894 63 186,150 8 652,125 27 32,489 1 4,444 - 3,132 - 30,040 1 908,380 37 $ 2,448,274 100	Unit: NT$ thousands December 31, 2019	Unit: NT$ thousands December 31, 2019
		Amount $ 149,370 - 361,570 770,724 24,310 174,218 59,702 1,539,894 186,150 652,125 32,489 4,444 3,132 30,040 908,380 $ 2,448,274	Amount $ 187,565 2,172 227,710 616,786 24,267 290,324 63,837 1,412,661 137,045 472,349 55,272 5,925 3,435 53 674,079 $ 2,086,740	%
Current assets 1100 Cash and cash equivalents 1110 Financial asset at fair value through profit and loss - current 1170 Accounts receivable, net 1180 Accounts receivable from related parties, net 1220 Current tax assets 130X Inventories 1470 Other current assets 11XX Total current assets Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 1550 Investments using equity method 1600 Property, plant, and equipment 1755 Right-of-use assets 1840 Deferred tax assets 1900 Other noncurrent assets 15XX Total non-current assets 1XXX Total Assets				9 - 11 30 1 14 3
				68
				6 23 3 - - -
				32
				100

(Continued)

Chaintech Technology Corporation

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

Liabilities and equity

Unit: NT$ thousands December31,2020 December31,2019 Notes Amount % Amount % VI(XI) $ 402,027 17 $ 156,597 8 - - 24 - 254,683 10 319,099 15 VII 59,856 3 52,839 3 2,588 - - - 1,498 - 1,408 - 170 - 94 - 720,822 30 530,061 26 3,135 - 4,632 - 3,135 - 4,632 - 723,957 30 534,693 26 VI(XIII) 1,014,988 42 1,014,988 49 100 - - - VI(XIV) 132,984 5 122,290 6 97,541 4 112,514 5 670,152 27 551,542 26 ( 39,702 ) ( 2) ( 97,541) ( 5) VI(XIII) ( 151,746 ) ( 6) ( 151,746) ( 7) 1,724,317 70 1,552,047 74 IX $ 2,448,274 100 $ 2,086,740 100

Current liabilities 2100 Short-term borrowings 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current tax liabilities 2280 Current lease liabilities 2300 Other current liabilities 21XX Total current liabilities 2580 Non-current lease liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Ordinary shares 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity 3400 Other equity 3500 Treasury shares 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments 3X2X Total liabilities and equity

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

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

Unit: NT$ thousand (EPS in NT$)

Item

2020 2019 Notes Amount % Amount % VI(XV) and VII $ 3,515,850 100 $ 3,591,114 100 VI(V)(XIX) (XX) ( 3,287,024 ) ( 94 )( 3,432,847)( 96 ) 228,826 6 158,267 4 VI(XIX)(XX) and VII ( 45,525 ) ( 1 ) ( 50,243) ( 1 ) ( 26,108 ) ( 1 ) ( 24,926) ( 1 ) ( 2,914 ) - ( 3,404) - XII ( 124 ) - - - ( 74,671 ) ( 2 )( 78,573)( 2 ) 154,155 4 79,694 2 420 - 2,437 - VI(XVI) 4,485 - 3,246 - VI(X)(XVII) ( 29,528 ) ( 1 ) 14,881 1 VI(XVIII) ( 6,306 ) - ( 5,682) - VI(VII) 25,548 1 11,172 - ( 5,381 ) - 26,054 1 148,774 4 105,748 3 VI(XXI) ( 2,867 ) - 1,194 - $ 145,907 4 $ 106,942 3 VI(III) $ 49,105 2 $ 28,060 1 49,105 2 28,060 1 8,734 - ( 13,087)( 1 ) 8,734 - ( 13,087)( 1 ) $ 57,839 2 $ 14,973 - $ 203,746 6 $ 121,915 3 VI(XXII) $ 1.51 $ 1.06 VI(XXII) $ 1.51 $ 1.06

4000 Operating revenue 5000 Operating costs 5950 Gross profit from operations Operating expenses 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit losses 6000 Total operating expenses 6900 Operating income Non-operating income and expenses 7100 Interest income 7010 Other revenue 7020 Other gains and losses 7050 Finance costs 7070 Share of profit or loss of subsidiaries, associates, and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before tax 7950 Income tax expenses (benefits) 8200 Profit Other comprehensive income, net Items that will not be reclassified to profit or loss 8316 Unrealized valuation gain (loss) on equity instruments measured at fair value through other comprehensive income 8310 Total amount of items that will not be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of financial statements of foreign operation 8360 Total amount of items that may be reclassified subsequently to profit or loss 8300 Other comprehensive income, net 8500 Total comprehensive income (loss) Basic earnings per share 9750 Profit Diluted earnings per share 9850 Profit

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

Chairman: Shu-Jung Kao

Manager: Shu-Jung Kao

Accounting Officer: Yu-Nu Lai

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

Unit: NT$ thousands

Notes 2019 Balance as of January 1, 2019 Profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of earnings for 2018: VI(XIV) Legal reserve appropriated Special reserve appropriated Cash dividends paid Treasury shares repurchased Balance as of December 31, 2019 2020 Balance as of January 1, 2020 Profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of earnings for 2019: VI(XIV) Legal reserve appropriated Special reserve appropriated Cash dividends paid Changes in the net worth of associates accounted for using equity method VI(VII) Balance as of December 31, 2020	Notes		Ordinary shares	Capital surplus - changes in the net worth of associates and joint ventures accounted for using equity method	Capital surplus - changes in the net worth of associates and joint ventures accounted for using equity method				Retained earnings			Other equity	Other equity	Other equity	Other equity	Treasury shares	Treasury shares		Total equity
							Legal reserve		Special reserve		Unappropriated retained earnings	Exchange differences on translation of financial statements of foreign operation			Unrealized gains (losses) on financial assets at fair value through other comprehensive income
			$ 1,014,988 - - - - - - - $ 1,014,988 $ 1,014,988 - - - - - - - $ 1,014,988		$ - - - - - - - - $ - $ - - - - - - - 100 $ 100		$ 97,859 - - - 24,431 - - - $ 122,290 $ 122,290 - - - 10,694 - - - $ 132,984		$ 88,481 - - - - 24,033 - - $ 112,514 $ 112,514 - - - - ( 14,973 ) - - $ 97,541		$ 645,310 106,942 - 106,942 ( 24,431 ) ( 24,033 ) ( 152,246 ) - $ 551,542 $ 551,542 145,907 - 145,907 ( 10,694 ) 14,973 ( 28,950 ) ( 2,626 ) $ 670,152		($ 36,515 ) - ( 13,087 ) ( 13,087 ) - - - - ($ 49,602 ) ($ 49,602 ) - 8,734 8,734 - - - - ($ 40,868 )		($ 75,999 ) - 28,060 28,060 - - - - ($ 47,939 ) ($ 47,939 ) - 49,105 49,105 - - - - $ 1,166		$ - - - - - - - ( 151,746 ) ($ 151,746 ) ($ 151,746 ) - - - - - - - ($ 151,746 )	$1,734,124 106,942 14,973 121,915 - - ( 152,246 ) ( 151,746 ) $ 1,552,047 $ 1,552,047 145,907 57,839 203,746 - - ( 28,950 ) ( 2,526 ) $ 1,724,317

Chairman: Shu-Jung Kao

The accompanying notes are an integral part of the parent company only financial statements. Please refer to them as well. Manager: Shu-Jung Kao Accounting Officer: Yu-Nu Lai

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Chaintech Technology Corporation

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

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

Unit: NT$ thousands Notes January 1 to December 31, 2020 January 1 to December 31, 2019 $ 148,774 $ 105,748 VI(VIII)(XIX) 22,895 13,341 VI(IX)(XIX) 1,481 1,481 XII 124 - VI(II)(XVII) ( 1,049 ) ( 447 ) ( 420 ) ( 2,437 ) VI(XVIII) 6,306 5,682 VI(XVI) ( 3,079 ) ( 3,053 ) VI(VII) ( 25,548 ) ( 11,172 ) VI(XVII) - ( 25,943 ) VI(VII)(X) (XVII) 1,980 - 3,221 30 ( 287,922 ) 74,068 - 155 116,106 ( 194,491 ) 220 ( 1,657 ) ( 24 ) 24 ( 64,416 ) 162,240 6,820 ( 10,511 ) 76( 99) ( 74,455 ) 112,959 420 2,437 3,079 3,053 ( 6,109 ) ( 5,302 ) ( 19) ( 78,672) ( 77,084) 34,475 VI(VII) ( 150,000 ) ( 259,609 ) VI(VII) - 157,539 VI(XXIII) ( 2,350 ) ( 48,597 ) ( 23,882 ) ( 28,390 ) 48( 48) ( 176,184) ( 179,105) VI(XXIV) 245,430 156,597 VI(XXIV) ( 1,407 ) ( 1,570 ) VI(XIV) ( 28,950 ) ( 152,246 ) - ( 151,746) 215,073( 148,965) - ( 51) ( 38,195 ) ( 293,646 ) 187,565 481,211 $ 149,370 $ 187,565

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

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Chaintech Technology Corporation

Notes to Parent Company Only Financial Statements For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousand (Unless specified otherwise)

I. Company History

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

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

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

• The parent company only financial statements were approved by the Board of Directors on March 23, 2021.

III. Application of New and Amended Standards and Interpretations

• (I) Effect of adopting new and amended International Financial Reporting Standards ("IFRSs") endorsed by the Financial Supervisory Commission, R.O.C ("FSC") New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

New standards, interpretations and amendments endorsed 2020 are as follows:	by the FSC effective from
	Effective date by the
New/revised/amended standards, interpretations, and amendments	International Accounting
	Standards Board (IASB)
Amendments to IAS 1 and IAS 8 "Disclosure Initiative - Definition of Materiality"	January 1, 2020
Amendments to IFRS 3 "Definition of a Business"	January 1, 2020
Amendments to IFRS 9, IAS 39, and IFRS 7 "Interest Rate Benchmark Reform"	January 1, 2020
Amendments to IFRS 16 "Covid-19-Related Rent Concessions"	June 1, 2020 (Note)

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

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

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

yet adopted by the Company
	Effective date by the
New/revised/amended standards, interpretations, and	International Accounting
amendments	Standards Board (IASB)
Amendments to IFRS 4 "Temporary Exemption from	January 1, 2021
Applying IFRS 9"

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS January 1, 2021 16 "Changes in Interest Rate Benchmark Reform - Phase 2"

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

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

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

in the IFRSs as endorsed by the FSC are as follows:
New/revised/amended standards, interpretations, and amendments Amendments to IFRS 3 "Reference to the Conceptual Framework" Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture" IFRS 17 "Insurance Contracts" Amendments to IFRS 17 "Insurance Contracts" Amendments to IAS 1 "Classification of Liabilities as Current or Non-Current" Amendments to IAS 1 "'Disclosure of Accounting Policies" Amendments to IAS 8 "Definition of Accounting Estimates" Amendments to IAS 16 "Property, Plant and Equipment – Proceeds before Intended Use" Amendments to IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" Annual Improvements to IFRSs 2018-2020 Cycle	Effective date by the International Accounting
	Standards Board (IASB) January 1, 2021 January 1, 2022 To be determined by the IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 January 1, 2022 January 1, 2022

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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).

1. Foreign currency transactions and balances

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

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

4. (3) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are retranslated at the

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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

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

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

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

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

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

Assets that do not meet the aforementioned conditions are classified as non-current.

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

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

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

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

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date.

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

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

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

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

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

• At initial recognition, the Company measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

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

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

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

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

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

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

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

• (VII) Accounts receivable

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1. Accounts receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

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

3. (VIII) Impairment of financial assets

4. 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.

5. (IX) Derecognition of financial assets

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

7. (X) Operating leases - lessor

8. 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.

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

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

1. 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.

2. 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.

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1. 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.

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

3. Associates are all entities over which the Company has significant influence but does not control. In general, it is presumed that the investor has significant influence if an investor holds directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.

4. 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.

5. 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.

6. 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.

7. 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

~21~

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.

1. When the Company disposes of any related enterprise, and the significant impact on the related enterprise is thereby lost, the accounting treatment provides that the Company directly dispose of the relevant assets or liabilities for all the amounts previously recognized in other comprehensive income related to the related enterprise, on the same basis, that is, if the interests or losses previously recognized as other comprehensive income are reclassified as profit or loss when the relevant assets or liabilities are disposed, then when the significant impact on the related enterprise is lost, the benefit or loss in equity is concomitantly reclassified as profit or loss. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

2. 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

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

2. 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 incurred.

3. 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

~22~

equipment is material, it is depreciated separately.

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

Derivative instruments 3~5 years

Tooling equipment 2 years Other equipment 3 years

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

1. A right-of-use asset and a lease liability are recognized for a leased asset on the date when it becomes readily available for the 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.

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

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

4. 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.

(XV) Impairment of non-financial assets

The Company estimates the recoverable amount of assets with signs of impairment on

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

(XVI) Borrowings

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

(XVII) Accounts payable

1. Accounts payable refer to the debts incurred by purchase of materials, goods, or services on credit, and the notes payable incurred by both operating and nonoperating activities.

2. 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.

1. Pensions

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

1. Employees' compensation and directors' and supervisors' remuneration

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

(XXI) Income tax

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

2. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the country domicile where the 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.

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 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.

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.

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

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

(XXII) Share capital

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

2. 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

2. (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.

3. (2) Sales revenue is recognized the net amount of contract price minus estimated sales allowance. The amount of revenue recognition is limited to the extent that it is very unlikely to see a significant reversal in the future, and is updated on the balance sheet date. The terms of sales transactions are mainly due to the expiry of 30 to 90 days after the transfer date. It is consistent with the

~26~

market practice. Therefore, it is judged that the contact does not contain significant financial component.

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

• Service revenue

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

1. 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.

1. Costs to acquire contracts from customers

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

(XXV) Government grants

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

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

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

(I) Significant judgments in applying accounting policies None.

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• (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 relevant cashgenerating units, and determining the recoverable amount of the relevant cashgenerating units.

VI. Descriptions of Significant Accounting Items

(I) Cash

Cash on hand and revolving funds Checking deposits and demand deposits	December 31, 2020 $ 87 149,283 $ 149,370	December 31, 2019 $ 105 187,460 $ 187,565

1. 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.

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

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

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

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

Item Equity instruments	2020 $ 1,049	2019
		$ 447

1. The Company's financial assets at fair value through profit or loss - current were not provided as pledged assets or guarantees for the years ended December 31, 2020 and 2019.

2. For information on the price risk and fair value of financial assets at fair value through profit or loss, please refer to Note XII(III)(IV).

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

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

1. The Company elects to classify the strategic investments in equity as financial assets at fair value through other comprehensive income. The fair value of such investments was NT$186,150 and NT$137,045, respectively, for the years ended December 31, 2020 and 2019.

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

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

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

2. (IV) Accounts receivable

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

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December 31, 2019

		December 31, 2019	December 31, 2019
		Total Allowance loss			Net
Accounts receivable	$	227,847 ($	137)	$	227,710
Accounts receivable from related parties		616,972 (	186)		616,786
	$	844,819 ($	323)	$	844,496
1. Aging analysis of accounts	receivable is stated as follows:
		December 31, 2020	December 31, 2019
Not overdue		$ 1,132,741	$		844,819
Overdue for 1~90 days		-			-
Overdue for 91~180 days		-			-
		$ 1,132,741	$		844,819

The aging analysis above is based on past due date.

1. The balance of receivables on contracts with customers as of December 31, 2020, December 31, 2019, and January 1, 2019 was NT$1,132,741, NT$844,819, and NT$918,887, respectively.

2. Without consideration of the collateral held or other credit enhancements, the maximum credit risk that best represent the Company's accounts receivable as of December 31, 2020 and 2019 amounted to NT$1,132,294 and NT$844,496, respectively.

3. For more information on the credit risk of accounts receivable, please refer to Note XII(III).

(V) Inventories

December 31, 2020

Inventories	Inventories		December 31, 2020	December 31, 2020	December 31, 2020
Raw materials Work in progress Finished goods Raw materials Work in progress Finished goods			Cost Allowance for valuation loss $ 59,126 ($ 4,994) 36,434 - 85,257 ( 1,605) $ 180,817 ($ 6,599) December 31, 2019			Carrying amount $ 54,132 36,434 83,652 $ 174,218 Carrying amount $ 196,918 78,771 14,635 $ 290,324
		Cost Allowance for loss $ 203,353 ($ 78,771 16,234 ( $ 298,358 ($			valuation 6,435) - 1,599) 8,034)
				($

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

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

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

(VI) Other current assets

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

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

(VII) Investments using equity method

(VII) Investments using equity method
January 1 Investments using equity method Disposal of investments accounted for using equity method Share of profit or loss of Investments using equity method Impairment loss Changes in retained earnings Changes in capital surplus Changes in other equity Effect of exchange rate changes December 31	$ ( (	2020 472,349 150,000 - 25,548 1,980) 2,626) 100 8,734 -	$ ( (	2019 346,200 259,609 131,596) 11,172 - - - 13,087) 51
	$	652,125	$	472,349

Subsidiary Shenzhen Jinghong Digital R&D Service Co., Ltd. Associate uSenlight Corporation	$	December 31, 2020 Shareholding Amount ratio (%) 518,552 100 133,573 13.05 652,125	$	December 31, 2019 Shareholding Amount ratio (%) 472,349 100 - - 472,349
	$		$

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1. 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:

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

1. For information on the Company's subsidiaries, please refer to Note IV(III) to the consolidated financial statements for the year ended December 31, 2020.

2. The Company invested US$5 million in the subsidiary, Shenzhen City Jinghong Digital Research & Development Service Co., Ltd., approved by the Ministry of Economic Affairs Investment Commission on November 26, 2015. The Company has remitted US$3 million (equivalent to NT$$96,760), and remitted the balance of US$2 million (equivalent to NT$61,430) on January 3, 2019.

3. The Company increased capital of Shenzhen Jinghong Digital R&D Service Co., Ltd. by US$6.4 million, which was approved by the Investment Commission, Ministry of Economic Affairs on January 31, 2019. US$4.9 million (equivalent to NT$151,116) was remitted on April 1, 2019, and US$1.5 million (equivalent to NT$47,063) was remitted on August 26, 2019.

4. On May 9, 2019, the Board of Directors resolved to dispose of its 100% equity interest in Bahamas Federal Shanghai Co., Ltd. The Company completed the transfer of equity in July 2019. Proceeds from disposal amounted to US$4,880,000 (equivalent to NT$151,565), with a gain on disposal of NT$26,313 recognized.

5. Wise Providence Limited was liquidated on April 25, 2019, and an investment fund of HK$1,483,184 (equivalent to NT$5,974) was remitted back, with a loss on disposal of NT$370 recognized.

6. 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, 2020, the Company held a 13.05% equity interest in uSenlight Corporation, making the Company its single largest shareholder. As the other two largest shareholders (not the Company's related parties) held more than the Company’s shares, the Company had no ability to direct the relevant business activities of uSenlight Corporation.

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Accordingly, the Company had significant influence but had no control over uSenlight Corporation.

1. For the above investment accounted for using equity method in 2020, the Company carried out an impairment test based on the recoverable amount of such investment. Based on the above valuation result, the Company recognized a impairment loss on investments accounted for using equity method of NT$1,980.

2. The basic information of the associates that are material to the Company is as follows:

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

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

Balance sheet

Balance sheet
Current assets Non-current assets Current liabilities Non-current liabilities Total net assets Share of net assets of associates Difference in net equity Carrying value of associates	uSenlight Corporation December 31, 2020 $ 394,179 196,520 ( 273,142) ( 15,197) $ 302,360
	$
	$	39,458 94,115
	$	133,573

Statement of comprehensive income Revenue Profit from continuing operations (total comprehensive income or loss)	uSenlight Corporation 2020 $ 374,660	uSenlight Corporation 2020 $ 374,660
	($	89,749)

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(VIII) Property, plant, and equipment

Derivative

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

(IX) Lease transaction - lessee

1. 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

~34~

terms and conditions. Except for the term where the leased assets cannot be used as collateral for loans, there are no other restrictions.

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

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

1. The Company did not have any additions to the right-of-use assets for the years ended December 31, 2020 and 2019.

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

3. The cash flows used in the Company's leases for the years ended December 31, 2020 and 2019 totaled NT$1,624 and NT$1,942, respectively.

(X) Impairment of non-financial assets

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

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

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

(XI) Short-term borrowings

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

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

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

(XII) Pension

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

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

(XIII) Share capital

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

2. Treasury shares

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

Company holding shares Reason for recovery The Company Transfer to employees Company holding shares Reason for recovery The Company Transfer to employees		December Number of shares	December Number of shares	December	31, 2020 Carrying amount
					151,746
					31, 2019 Carrying amount
			(in thousands) 5,000
					151,746

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

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

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

• (XIV) Retained earnings

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

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

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

• (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

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sheet date of the current year. After that, when the debit balance of other equity projects is reversed, the amount of revolving will be included in the surplus available for distribution.

• (2) When the Company adopted the IFRSs at first time, for the special reserve listed in the Official Letter of the Financial Management Certificate No. 1010012865 issued on April 6, 2012, the Company reversed the original portion of the said special reserve, and when the Company subsequently uses, disposes of, or reclassifies related assets, they are reversed according to the ratio of the recognized special reserve.

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

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

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

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

3. (XV) Operating revenue

Revenue from contracts with customers	$	2020 3,515,850 $	2019 3,591,114

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:

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

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(XVI) Other revenue

Other revenue
Dividend income $ Other revenue $ Other gains and losses Gain on financial assets at fair value through profit or loss Gain on disposal of investments Net foreign exchange losses Impairment loss	$	2020 2019 3,079 $ 3,053 1,406 193 4,485 $ 3,246 2020 2019 $ 1,049 $ 447 - 25,943 ( 28,597)( 11,509) ( 1,980) - ($ 29,528) $ 14,881
	$
			$ ( (
			($	29,528) $	14,881

(XVII) Other gains and losses

(XVIII) Finance costs

) Finance costs
Interest expense: Bank loans $ Lease liabilities $ Expenses by nature Employee benefit expenses $ Depreciation expenses on property, plant and equipment Depreciation expenses on leased assets $	$		2020 6,143 $ 163		2019 5,478 204
	$			6,306 $	5,682
				2020 31,413 $ 22,895 1,481	2019 26,090 13,341 1,481
		$		55,789 $	40,912

(XIX) Expenses by nature

(XX) Employee benefit expenses

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

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

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

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

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

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

1. 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

1. Tax (benefit) expense

Components of tax (benefit) expense:

Current income tax: Income tax incurred in the period Surtax on unappropriated earnings Underestimated (overestimated) income tax in previous years Total income tax in the period Deferred income tax: Origination and reversal of temporary differences Income tax expense (benefit) Tax expense and accounting profit Income tax calculated based on profit before tax and at the	$ (	2020 2,201 $ 406 43)	2019 - 2,180 55
		2,564	2,235
		303 (	3,429)
	$ $	2,867 ($	1,194)
		2020 29,754 $	2019 21,150

1. Tax expense and accounting profit

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statutory rate Deductible losses pursuant to the taxation law Expenses that should be excluded pursuant to the taxation law Tax exempted income pursuant to the taxation law Tax effects of temporary differences Tax losses not recognized as deferred tax assets Deduction of tax losses Surtax on unappropriated earnings Underestimated (overestimated) income tax in previous years Income tax expense (benefit)

- ( 43,503) ( 334) 546 ( 210)( 701) ( 4,709) ( 2,918) - 21,997 ( 21,997) - 406 2,180 ( 43) 55

$ 2,867 ($ 1,194)

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

Temporary differences: Deferred tax assets Allowance for inventory valuation and obsolescence loss Unrealized exchange loss				2020	2020	2020	2020
	$	January 1 1,287 2,148	Recognized in profit or loss ($ 290) ( 13)	Recognized in		Recognized in		December 31 $ 997 2,135
						other comprehensive
						$	income - - -
	$	3,435	($ 303)			$		$ 3,132

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Temporary differences: Deferred tax assets Allowance for inventory valuation and obsolescence loss $ Unrealized exchange loss $				2019	2019	2019	December 31 $ 1,287 2,148 $ 3,435
		January 1 6 -		Recognized in	Recognized in other comprehensive
				profit or loss $ 1,281 2,148	$	income - -
	$	6		$ 3,429	$	-

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

December 31, 2020 December 31, 2019 Deductible temporary differences $ 127,572 $ 252,049 5. The tax authorities have examined income tax returns of the Company through the year ended December 31, 2018. ) Earnings per share 2020 After-tax amount Weighted average number of outstanding shares (thousand shares) Earnings per share (NT$) Basic earnings per share Net income attributable to ordinary shareholders $ 145,907 96,499$ 1.51 Diluted earnings per share Effects of dilutive potential ordinary shares Employees' compensation - 106 Net income attributable to ordinary shareholders plus effects of potential ordinary shares $ 145,907 96,605 $ 1.51	December 31, 2020 December 31, 2019 Deductible temporary differences $ 127,572 $ 252,049 5. The tax authorities have examined income tax returns of the Company through the year ended December 31, 2018. ) Earnings per share 2020 After-tax amount Weighted average number of outstanding shares (thousand shares) Earnings per share (NT$) Basic earnings per share Net income attributable to ordinary shareholders $ 145,907 96,499$ 1.51 Diluted earnings per share Effects of dilutive potential ordinary shares Employees' compensation - 106 Net income attributable to ordinary shareholders plus effects of potential ordinary shares $ 145,907 96,605 $ 1.51	December 31, 2020 December 31, 2019 Deductible temporary differences $ 127,572 $ 252,049 5. The tax authorities have examined income tax returns of the Company through the year ended December 31, 2018. ) Earnings per share 2020 After-tax amount Weighted average number of outstanding shares (thousand shares) Earnings per share (NT$) Basic earnings per share Net income attributable to ordinary shareholders $ 145,907 96,499$ 1.51 Diluted earnings per share Effects of dilutive potential ordinary shares Employees' compensation - 106 Net income attributable to ordinary shareholders plus effects of potential ordinary shares $ 145,907 96,605 $ 1.51	December 31, 2020 December 31, 2019 Deductible temporary differences $ 127,572 $ 252,049 5. The tax authorities have examined income tax returns of the Company through the year ended December 31, 2018. ) Earnings per share 2020 After-tax amount Weighted average number of outstanding shares (thousand shares) Earnings per share (NT$) Basic earnings per share Net income attributable to ordinary shareholders $ 145,907 96,499$ 1.51 Diluted earnings per share Effects of dilutive potential ordinary shares Employees' compensation - 106 Net income attributable to ordinary shareholders plus effects of potential ordinary shares $ 145,907 96,605 $ 1.51
	After-tax amount $ 145,907 -	Weighted average number of outstanding shares
		(thousand shares) 96,499 106
			$
Effects of dilutive potential ordinary shares Employees' compensation Net income attributable to ordinary shareholders plus effects of potential ordinary shares
	$ 145,907	96,605

(XXII) Earnings per share

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

(XXIII) Supplemental cash flow information

Investing activities with partial cash payments:

Purchase of property, plant, and equipment Add: Advance on equipment, end of year Less: Advance on equipment, beginning of year Cash paid in the period	$	2020 112 2,238 - 2,350	$ (	2019 68,613 - 20,016) 48,597
	$		$

(XXIV) Changes in liabilities from financing activities

January 1 Changes in cash flows from financing activities December 31			2020
	Short-term borrowings $ 156,597 245,430 $ 402,027	Lease liabilities $ 6,040 ( 1,407) $ 4,633		Total liabilities from the financing activities $ 162,637 244,023 $ 406,660
				$
				$

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2019

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

VII. Related Party Transactions

(I) Parent company and the ultimate controller

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

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

Name of related party Relationship with the Company Colorful Technology Co, Ltd (Colorful) 100% reinvestment business by Colorful Group Shenzhen Colorful Yugong Technology and Development The same person in charge as the Co., Ltd. (Yugong) Colorful Group Shenzhen Jinghong Digital R&D Service Co., Ltd. Subsidiary of the Company (Jinghong) Sitonholy (Tianjin) Technology Co., Ltd. (Tianjin Sitonholy) Subsidiary of the Company uSenlight Corporation (uSenlight) Associate

(III) Significant transactions with related parties

1. Operating revenue

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

The Company's transaction prices to related parties are not significantly different from those of the unrelated parties. The payment terms are OA 45~125 days depending on the different transaction object.

1. Accounts receivable

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Colorful Yugong Less: Allowance for loss	$	December 31, 2020 770,728 - 770,728 304) 770,424	$	December 31, 2019 614,258 2,714 616,972 186) 616,786
	(		(
	$		$

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

1. Operating expenses

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

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

1. Advertising fees

After the launch of the products jointly developed by the Company and Colorful, both sides have agreed to pay no more than US$60,000 per month as advertising expenses for the related parties. The amounts of advertising expense incurred in 2020 and 2019 were NT$10,698 and NT$10,740, respectively; the amounts not yet paid as of December 31, 2020 and 2019 were NT$6,778 and NT$5,886, respectively, and recognized as "other payables."

1. Endorsements and guarantees made by related parties

December 31, 2020 December 31, 2019

Subsidiary Tianjin Sitonholy	$ 56,901	$ 55,965

(IV) Key management compensation information

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

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VIII. Pledged assets

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

Carrying amount

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

IX. Significant contingent liabilities and unrecognized contract commitments

• (I) Contingencies None.

(II) Commitments

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

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

X. Significant Disaster Loss None.

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

None.

XII. Others

• (I) The Group’s major sales markets are located in Mainland China. As a result of the COVID-19 pandemic, the government of the People's Republic of China put a ban on the movements of people between certain provinces and cities and requested employees to work at home. This caused the Group to delay the delivery and thus reflected on revenue. At present, economy activity in Mainland China is resuming. As the Group adopts a make-to-order model, there is no significant impact on the Group's financial position and financing risk. The Group will continue assessing the future impact of containment.

(II) Capital management

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

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(III) Financial instruments

1. Category of financial instruments

ancial instruments Category of financial instruments
Financial assets Cash Accounts receivable (including related parties) Other financial assets (recognized in other current assets) Refundable deposits (recognized in other non-current assets) Financial liabilities Short-term borrowings Notes payable Accounts payable Other payables Lease liabilities		December 31, 2020	December 31, 2019
		$ 1,338,556 $ 1,065,066 $ 402,027 $ 156,597 - 24 254,683 319,099 59,856 52,839 $ 716,566 $ 528,559 $ 4,633 $ 6,040

1. Risk management policies

2. (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.

3. (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.

4. The nature and degrees of significant financial risks

5. (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.

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• B. Business of the Company is involved in a number of non-functional currency (the functional currency of the Company is NTD) and deeply affected by the exchange rate fluctuation. The information of significant impact affected by exchange rate fluctuation for foreign assets and liabilities is as follow:

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

• C. The Company's material monetary items affected by the exchange rate fluctuations were recognized as net exchange losses (including realized and unrealized), which amounted to NT$28,597 and NT$11,509, respectively, for the years ended December 31, 2020 and 2019.

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

(Foreign currency: Functional currency) Financial assets	2020	2020	2020
	Sensitivityanalysis
	Range of change	Effect on profit or Loss	Effect on other comprehensive income

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Monetary items USD:NTD Non-monetary projects Investments using equity method CNY:NTD Financial liabilities Monetary items USD:NTD (Foreign currency: Functional currency) Financial assets Monetary items USD:NTD Non-monetary projects Investments using equity method CNY:NTD Financial liabilities Monetary items USD:NTD	1% 1% 1%	$ 13,288 $ - $ - $ 5,186 $ 5,667 $ - 2019	$ 13,288 $ - $ - $ 5,186 $ 5,667 $ - 2019
		Sensitivityanalysis
	Range of change 1% 1% 1%	Effect on profit	Effect on other ~~c~~omprehensive income $ - $ 4,723 $ -
		or Loss $ 10,609 $ - $ 4,757

Price risk

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

• B. The Company's equity instruments issued by the Company are mainly invested in equity instruments issued by the domestic companies, which are affected by the uncertainty of the future value of the investment underlying the investment target. If the prices of these equity instruments increase or decrease by 1%, with all other factors remaining unchanged, profit after tax for the years ended December 31, 2020 and 2019 will increase or decrease by NT$0 and NT$22, respectively due to the gain or loss on equity instruments at fair value through profit or loss, and other comprehensive income for the years then ended will increase or decrease by NT$1,862 and

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NT$1,370, respectively due to the gain or loss on equity instruments at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

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

• B. The Company's borrowings are measured at amortized cost and are 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, profit before tax for the years ended December 31, 2020 and 2019 will decrease or increase by NT$3,216 and NT$1,253, respectively. Changes in interest expense mainly result from floating-rate borrowings.

• (2) Credit risk

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

• B. The Company manages their credit risk taking into consideration the Company's concern. For banks and financial institutions, only those with good credit rating can be accepted as our transaction counterparties. For credit policies established internally, the individual operating entities within the Company shall undergo management and credit risk analysis before setting the terms and proposing the shipment terms and conditions for each new customer. Internal risk control is evaluated by considering its financial position, historical experience and other factors to assess the credit quality of customers. Limits on individual risks are formulated by the Board of Directors based on internal or external ratings and regularly monitored by the Board of Directors.

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

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

~50~

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

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

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

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

December 31, 2020 Expected loss rate Total carrying amount Allowance loss December 31, 2019 Expected loss rate Total carrying amount Allowance loss	Not overdue 0.04% $ 1,132,741 $ 447 Not overdue 0.03% $ 844,819 $ $ 323 $	Not overdue 0.04% $ 1,132,741 $ 447 Not overdue 0.03% $ 844,819 $ $ 323 $		$	Total 1,132,741 447 Total 844,819 323
				$
		$

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

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

(3) Liquidity risk

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

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

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

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

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

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

(IV) Fair value information

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

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

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

4. Level 3: Unobservable inputs for the asset or liability. The Company's investment in equity instruments without active market is included.

5. 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.

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1. 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:

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

December 31, 2020 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through other comprehensive income Equity securities $ 170,800 $- $ 15,350 $ Total $ 170,800 $- $ 15,350 $ December 31, 2019 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through profit or loss Equity securities $ 2,172 $ - $ - $ Financial assets at fair value through other comprehensive income Equity securities 121,695 - 15,350 Total $ 123,867 $- $ 15,350 $	December 31, 2020 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through other comprehensive income Equity securities $ 170,800 $- $ 15,350 $ Total $ 170,800 $- $ 15,350 $ December 31, 2019 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through profit or loss Equity securities $ 2,172 $ - $ - $ Financial assets at fair value through other comprehensive income Equity securities 121,695 - 15,350 Total $ 123,867 $- $ 15,350 $	December 31, 2020 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through other comprehensive income Equity securities $ 170,800 $- $ 15,350 $ Total $ 170,800 $- $ 15,350 $ December 31, 2019 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through profit or loss Equity securities $ 2,172 $ - $ - $ Financial assets at fair value through other comprehensive income Equity securities 121,695 - 15,350 Total $ 123,867 $- $ 15,350 $	December 31, 2020 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through other comprehensive income Equity securities $ 170,800 $- $ 15,350 $ Total $ 170,800 $- $ 15,350 $ December 31, 2019 Level 1 Level 2 Level 3 Assets Recurring fair value Financial assets at fair value through profit or loss Equity securities $ 2,172 $ - $ - $ Financial assets at fair value through other comprehensive income Equity securities 121,695 - 15,350 Total $ 123,867 $- $ 15,350 $	Total 186,150 186,150 Total 2,172 137,045 139,217
		Level 2 - $ -	Level 3 - $ 15,350
	$ 123,867 $	- $	15,350 $

• (2) Methods and assumptions the Company used to measure the fair value are as follow:

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

Stocks of listed companies

Market quoted price Closing price

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

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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, 2020, and 2019, there were no transfers between Level 1 and Level 2.

• The following chart indicates the movement of Level 3 for the years ended December 31, 2020, and 2019:

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

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

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

3. Quantitative information and sensitivity analysis of significant unobservable inputs

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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:

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

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

1. 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, 2020

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

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

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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 paidin capital or more: Please refer to Table 3.

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

• Derivative transactions: None.

• Parent-subsidiary and subsidiary-subsidiary business relations and significant transactions and amounts thereof: Please refer to Table 5.

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

• (III) Information on investments in Mainland China

• Basic information: Please refer to Table 7.

• Significant transactions between the Company and investees in Mainland China directly or indirectly through entities in a third area: Please refer to Table 8.

• (IV) Information on major shareholders

Information on major shareholders: Please refer to Table 9.

XIV. Segment Information

Exempt from disclosure.

(Below is left blank)

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Chaintech Technology Corporation

Endorsements and Guarantees

For the Year Ended December 31, 2020

Unit: NT$ thousand (Unless specified otherwise)

Table 1

Subject of endorsements and guarantees

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

Note 1: Explanations are as follows:

• (1) The issuer shall fills in 0.

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

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

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

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

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

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

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

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

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

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

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

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Chaintech Technology Corporation

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

Table 2

Unit: NT$ thousand (Unless specified otherwise)

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

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

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Chaintech Technology Corporation

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

For the Year Ended December 31, 2020

Table 3

Unit: NT$ thousands

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

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Chaintech Technology Corporation

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

As of December 31, 2020

Table 4

Unit: NT$ thousand (Unless specified otherwise)

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

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Chaintech Technology Corporation

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

For the Year Ended December 31, 2020

Table 5

Unit: NT$ thousand (Unless specified otherwise)

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

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

(1) The parent company is coded 0.

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

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

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Chaintech Technology Corporation

Information on Investees (Not Including Investees in Mainland China)

For the Year Ended December 31, 2020

Table 6

Unit: NT$ thousand (Unless specified otherwise)

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

~62~

Chaintech Technology Corporation

Information on Investments in Mainland China - Basic Information

For the Year Ended December 31, 2020

Table 7

Unit: NT$ thousand (Unless specified otherwise)

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

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

(1) Direct investment;

(2) Investment in Mainland China through a company set up in a third area; or (3) Others: Investment in Mainland China through an reinvestment in Mainland China. Note 2: The valuation is recognized in the financial statements audited by the CPAs of the parent company in Taiwan.

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

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

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Chaintech Technology Corporation

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

For the Year Ended December 31, 2020

Table 8

Unit: NT$ thousand (Unless specified otherwise)

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

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

Table 9

Name of major shareholder

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

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

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

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

~65~

Chaintech Technology Corporation

Statement of Cash

As of December 31, 2020 Statement 1 Item Description Cash on hand and petty cash Checking deposits and demand deposits - NTD deposits - Foreign currency deposits US$5,064,304.54, exchange rate at 28.48 HK$32,885.50, exchange rate at 3.6730 RMB69,674.99, exchange rate at 4.3770 EUR59.91, exchange rate at 35.02	Unit: NT$ thousands Amount $ 87 4,624 144,231 121 305 2 $ 149,370

Statement 1 P1

Chaintech Technology Corporation

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

Statement 2

Unit: NT$ thousands

Name Beginning of period Increase in the period Decrease in the period End of Number of shares Fair value Number of shares Amount Number of shares Amount Number of shares Shares of APAQ Technology Co., Ltd. 3,050,000 $ 169,634 - $ - - $ - 3,050,000 Shares of CloudMile Co., Ltd. (Cayman Islands) 510,204 15,350 - - - - 510,204 184,984 - - Valuation adjustments ( 47,939) 49,105 - $ 137,045 $ 49,105 $-

period Collateral or pledge Fair value $ 169,634 None 15,350 None 184,984 1,166 $ 186,150

Statement 2 P1

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

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

Statement 3 P1

Chaintech Technology Corporation Statement of Inventories

	Statement of Inventories	Statement of Inventories	Statement of Inventories
Statement 4 Item Raw materials Work in progress Finished goods Minus: Allowance for loss in inventory valuation	As of December 31, 2020 Unit: NT$ thousands Amount Cost Market price Remark $ 59,126 $ 59,054 Net realizable value as the market price 36,434 46,041 85,257 101,681 180,817 $ 206,776 ( 6,599) $ 174,218
		$ $	Cost

Statement 4 P1

Chaintech Technology Corporation

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

Unit: NT$ thousands

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

Note: Others include the following:

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

(2) Adjustments of differences in net equity; and

(3) Impairment loss.

Statement 5 P1

Chaintech Technology Corporation

Statement of Short-term Borrowings As of December 31, 2020

Statement 6

Unit: NT$ thousands

Creditor Type of loan Balance at end of period Contract period Bank of Taiwan Credit loans $ 67,202 109.11.27~110.2.25 KGI Bank Credit loans 31,910 109.11.5~110.2.5 Far Eastern International BankCredit loans 20,677 109.10.29~110.1.27 Far Eastern International BankCredit loans 10,338 109.10.28~110.1.26 First Commercial Bank Letter of credit loans 14,875 109.11.4~110.4.5 Bank of Kaohsiung Secured loans 50,000 109.12.8~110.3.7 Chang Hwa Bank Secured loans 40,000 109.12.24~110.2.23 Cathay United Bank Secured loans 28,480 109.11.13~110.2.9 Bank Sinopac Secured loans 26,145 109.11.27~110.2.26 Citibank Secured loans 17,088 109.10.15~110.1.12 Entie Commercial Bank Secured loans 21,146 109.12.9~110.3.9 Entie Commercial Bank Secured loans 17,776 109.12.10~110.3.10 Entie Commercial Bank Secured loans 15,324 109.12.14~110.3.12 Jih Sun International Bank Secured loans 24,773 109.12.16~110.3.16 Jih Sun International Bank Secured loans 16,293 109.12.17~110.3.17

Line of credit Pledge or guarantee Remark

• $ 113,920 None

• 80,000 None None

• 80,000 None

• 56,960 Other current assets - bank deposits 60,000 Other current assets - bank deposits 50,000 Other current assets - bank deposits 56,960 Other current assets - bank deposits 60,000 Other current assets - bank deposits

• 85,440 Other current assets - bank deposits Other current assets - bank deposits Other current assets - bank deposits

• 100,000 Other current assets - bank deposits Other current assets - bank deposits

• 42,720 Other current assets - bank deposits

$ 402,027

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

Statement 6 P1

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

Unit: NT$ thousands

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

Statement 7 P1

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

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

Statement 8 P1

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

Statement 9	Unit: NT$	thousands
Item	Amount
Raw materials and materials at beginning of period	$	203,353
Add: Input amount, net		2,429,843
Less: Disposal of raw materials	(	536,289)
Raw materials and materials at end of period	(	59,126)
Raw materials consumed during the current period (1)		2,037,781
Manufacturing costs - processing cost (2)		61,672
Manufacturing costs - depreciation (3)		22,871
Total manufacturing costs (1)+(2)+(3)		2,122,324
Add: Work-in-progress at beginning of period		78,771
Acquired during the period		21,746
Less: work-in-process at end of period	(	36,434)
Cost of finished goods		2,186,407
Add: Finished products at beginning of period		16,234
Acquired during the period		634,786
Less: Finished products at end of period	(	85,257)
Cost of finished goods		2,752,170
Loss (gain) on inventories	(	1,435)
Sale of raw materials		536,289
Total operating costs	$	3,287,024

Statement 9 P1

Chaintech Technology Corporation Statement of Operating Expenses

For the Year Ended December 31, 2020

Unit: NT$ thousands

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

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

Statement 10 P1

Chaintech Technology Corporation

	Chaintech Technology Corporation	Chaintech Technology Corporation	Chaintech Technology Corporation	Chaintech Technology Corporation	Chaintech Technology Corporation	Chaintech Technology Corporation	Chaintech Technology Corporation	Chaintech Technology Corporation
	Summary Statement of Current Period Employee Benefits, Depreciation, Depletion and Amortization Expenses by Function
			For the Year Ended December		31, 2020
	Statement 11							Unit: NT$ thousands
		2020			2019
	Function
	Type	Operating costs		Operating expenses	Total	Operating costs		Operating expenses Total
Employee benefit expenses
Salary expenses		$	- $ 19,256 $ 19,256			$	- $ 18,755 $		18,755
Labor and health insurance premiums			-	1,440	1,440		-	1,472	1,472
Pension costs			-				-
				751	751			733	733
Directors' remuneration			-	7,411	7,411		-	2,514	2,514
Other personnel costs			-	2,555	2,555		-	2,616	2,616
Depreciation expenses			22,871	1,505	24,376	13,341		1,481	14,822

Note:

1. The number of employees for the current and previous years was 23 and 21, respectively, of which 4 employees were not directors concurrently.

2. Companies listed on the Taiwan Stock Exchange Corporation or Taipei Exchange are required to disclose the following information:

3. (1) The average employee benefit expense for the current year was NT$1,263 (Total employee benefit for the current year - Directors' remuneration / "Number of employees for the current year - Number of employees who are not directors concurrently").

The average employee benefit expense for the previous year was NT$1,387 (Total employee benefit for the previous year - Directors' remuneration / "Number of employees for the previous year - Number of employees who are not directors concurrently").

(2) The average salary expense for the current year was NT$1,013 (Total salary expense for the current year / "Number of employees for the current year - Number of employees who are not directors concurrently").

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

(3) The rate of adjustment in average salary expenses was -0.08% = [ (Average salary expense for the current year - Average salary expense for the previous year) / Average salary expense for the previous year].

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

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

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

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

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

Statement 11 P1