COSMO — Annual Report 2021

Jul 13, 2022

Stock code: 2466

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Cosmo Electronics Corporation 2021 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail

Printed on June 1, 2022 Taiwan Stock Exchange Market Observation Post System: http: //mops.twse.com.tw Cosmo Electronics Corporation Annual Report is available at: Website: https://www.cosmo-ic.com MOPS: https://mops.twse.com.tw

1. Spokesman

Name: Chao Chia-chi Title: General Manger Tel: 886 (2) 8226-9893 Email: kevin_chao@cosmo-inc.com

2. Acting Spokeswoman

Name: Hung Yu-han Title: Chief Financial Officer Tel: 886 (2) 8226-9893 Email: Sophia_hung@cosmo-inc.com

3. Company and Factory address and telephone

Headquarters: 11F, No.258,Lian Chen Rd.,Chung-Ho, New Taipei City 235,Taiwan R.O.C. TEL: 886-2-8226-9893

Longde factory 2: No 16, Ziqiang Rd., Da Hsing Village, Dongshan Township, Yilan County, Taiwan (R.O.C.) TEL:886-3-990-2276

Dongshan factory: No 396, Lupu Rd., Dongshan Township, Yilan County, Taiwan (R.O.C.) TEL:886-3-958-3455

4. Securities Dealing Institution

Stock transfer agent department, CTBC 5F, No 83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City , Taiwan (R.O.C.) 886 (2) 6636-5566 Website:www.ctbcbank,.com

5. Auditors

PwC Taiwan

Tsai I-tai and Liang Chan-nu 27 floor, No 333, Sec. 1, Keelung Rd., Xinyi Dist., World Trade Center, Taipei City, Taiwan (R.O.C.) 886 (2) 2729-6666 http://www.pwc.tw/

6. Overseas Trade Places for Listed Negotiable Securities: Not applicable

7. Company website : http://www.cosmo-ic.com

Contents

Page I. Letter to Shareholders ......................................................................................................... 1 II. Company Profile 2.1 Date of Incorporation .................................................................................................. 6 2.2 Company History ........................................................................................................ 6 III. Corporate Governance Report 3.1 Organization .............................................................................................................. 11 3.2 Directors, Supervisors and Management Team ......................................................... 13 3.3 The Compensation of the Directors, Supervisors and Management team ................ 21 3.4 Implementation of Corporate Governance ................................................................ 27 3.5 Information Regarding the Company’s Audit Fee and Independence ...................... 65 3.6 Replacement of CPA ................................................................................................. 65 3.7 The Company’s Chairperson, President, Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any position in the Company’s independent auditing firm or its affiliates during the most recent year ............................................................................................................... 65 3.8 Changes in the transfer of shareholdings and pledge of shareholdings of directors, supervisors, managerial personnel and shareholders holding more than 10% of the shares in the most recent year and up to the date of publication of the financial statement ........................................................................................ 65 3.9 Relationship among the Top Ten Shareholders ......................................................... 67 3.10 The number of shares held by the Company, its directors, supervisors, managerial personnel, and entities under the direct or indirect control of the Company in the same investee company shall be aggregated and calculated as a percentage of the consolidated shareholding ........................................................ 68 IV. Capital Overview 4.1 Capital and Shares ..................................................................................................... 69 4.2 Corporate Bonds ........................................................................................................ 75 4.3 Preferred Shares ........................................................................................................ 76 4.4 Global Depository Receipts ...................................................................................... 76 4.5 Employee Stock Options & New Restricted Employee Shares ................................ 76 4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions ........ 76 4.7 Financing Plans and Implementation ........................................................................ 76 V. Operational Highlights 5.1 Business Activities .................................................................................................... 77 5.2 Market and Sales Overview ...................................................................................... 87 5.3 Human Resources .................................................................................................... 100 5.4 Environmental Protection Expenditure ................................................................... 100 5.5 Labor Relations ....................................................................................................... 100 5.6 Important Contracts ................................................................................................. 104

VI. Information Security Risk Management 6.1 Information Security Risk Management Framework .............................................. 105 6.2 Information Security Policies and Specific Management Plans ............................. 105 6.3 Investments on the Cyber Security Management .................................................... 107 6.4 Information Security Incident Notification Procedures .......................................... 108 6.5 Other Important Matters .......................................................................................... 108

VII. Financial Information 7.1 Condensed Balance Sheet and Income Statement for the Most Recent Five Years - IFRS .................................................................................................................... 109 7.2 Financial Analysis for the Most Recent Five Years - IFRS ..................................... 113 7.3 Audit Committee’s Audit Report for the Most Recent Year ................................... 117 7.4 Financial Statements for the Most Recent Year ...................................................... 118 7.5 The Parent Company Only Financial Statements for the Most Recent Year Which Were Audited and Certified by the Independent Auditors ........................... 205 7.6 If the Company and Its Affiliated Companies Encountered Difficulties in Financial Turnover in the Most Recent Year and up to the Date of Publication of the Annual Report, the Impact on the Company’s Financial Position Shall be Specified .................................................................................................................. 278

VIII. Review of Financial Conditions, Financial Performance, and Risk Management 8.1 Analysis of Financial Status .................................................................................... 279 8.2 Analysis of Financial Performance ....................................................................... 280 8.3 Analysis of Cash Flow ............................................................................................. 280 8.4 Impact of the Major Capital Expenditure Items on Financial Operations .............. 281 8.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year ............................................. 281 8.6 Risks and Assessments for the Latest Year and Up to the Date of Publication of the Annual Report ................................................................................................... 281 8.7 Other Important Matters .......................................................................................... 283 IX. Special Disclosure 9.1 Information of Affiliated Companies ...................................................................... 284 9.2 Private Placement of Securities for the Most Recent Year and up to the date of Publication of the Annual Report ............................................................................ 289 9.3 Holding or Disposal of the Company’s Stock by Subsidiaries for the Most Recent Year and up to the date of Publication of the Annual Report ...................... 289 9.4 Other Necessary Supplements ................................................................................. 289

X. Events with Material Impact on Shareholders’ Equity or on Prices of Securities as Specified in Subparagraph 2, Paragraph 3 of Article 36 of the Securities and Exchange Act in the Most Recent Year and up to the date of Publication of the Annual Report ................................................................................................................ 289

I. Letter to Shareholders

Dear Shareholders,

1.1 2021 Business Report

1.1.1 Results of business plan implementation

The Company’s net operating revenues for fiscal 2021 were $1,341,812 thousand, operating costs were $1,108,883 thousand, operating expenses were $232,204 thousand, non-operating net income was $65,666 thousand, and income tax benefit was $11,452 thousand. After offsetting income and expenses, the net income for the period was $54,939 thousand, an increase of $48,571 thousand compared to the net income of $6,368 thousand in fiscal 2020, mainly due to an increase in revenue and gross profit.

1.1.2 Budget implementation

For fiscal 2021, operating revenues reached 95% of the estimated goal, and the estimated performance of each accounting item is as follows:

Unit: NT$ thousands

Item	Actual amount in FY2021	Estimated amount for FY2021	Achievement rate (%)
Operatingrevenues	1,341,812	1,407,036	95%
Operatingcosts	1,108,883	1,153,770	96%
Operatingexpenses	232,929	196,985	118%
Net operatingloss	725	56,281	1%
Net non-operating revenues and expenses	65,666	11,881	553%
Net income after tax	54,939	81,795	67%

1.1.3 Analysis of financial income and expenses and profitability

Unit: NT$ thousands

			Unit:	NT$thousands
	Item		Actual amount in FY2021	Actual amount in FY2020
Financial income and expenses	Operatingloss		725	(86,828)
	Net non-operating income and expenses		65,666	92,172
	Profit before tax		66,391	5,344
	Profit after tax		54,939	6,368
Profitability	Return on assets(%)		2.09	0.96
	Return on equity (%)		3.32	0.38
	Ratio to capital stock (%)	Operating (loss) income	0.04	(5.55)
		Profit before tax	4.11	0.34
	Profit margin(%)		4.09	0.51
	Earningsper share(NT$)		0.35	0.04

1.1.4 Research and development status

The Company’s Optoelectronics Division is always ready to develop various specifications of products according to market supply and demand, technology trends and individual customer needs. More investments have put into the high speed photo coupler and automotive applications products in recently years.

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1.2 Summary of 2021 Business Plan and Future Development Strategy

• 1.2.1 Business Policy

• 1.2.1.1 Optoelectronics Department

As a specialist manufacturer of optocouplers and relays, we are able to react and make decisions quickly in response to market dynamics. Our main target markets are those with large users and a wide range of channels, but lacking product design capabilities, where we can provide complete product specifications, or design and production services to address the specific needs of our customers. Going forward, we will capitalize on our core technology to develop new products in line with the trend of lighter, thinner, shorter and smaller products, and continue to improve the quality of our products to ensure our dominant position. In view of the cost, the Company’s operational strategy, we have successively established new production bases in Southern China and Indonesia to strengthen local marketing and services, also introducing new equipment and carry out product restructuring with the aim at increasing the sales ratio of high-margin products and profits. To ambitiously expand into the automotive electronics supply chain and shall seize the opportunity in the automotive market after obtaining the product certification.

• 1.2.1.2 LED Lighting

• In recent years, the price–performance ratio of LED lighting has improved and its penetration rate in the total lighting market is gradually on the rise. While the market economy has been affected by the trade dispute between the US and China, the Company’s two bases in Southern China and Indonesia have allowed us to adjust our production capacity in order to secure the best tariff concessions and to keep up with our customers’ orders and mitigate the impact of the trade dispute. In the US market, we have also taken measures to protect our patent and enhance our competitiveness in an effort to increase the market share of our products.

• 1.2.1.3 Clean Steam Department

• Driven by the global development of bioenergy, energy security and autonomy, and the reduction of CO2 emissions, we will sustain research and development of highly efficient, low-cost and long-life energy sources to jointly cut carbon emissions and global pollution. The Clean Steam Department is expected to bring advantages and niches to the growth of the industry.

• 1.2.1.4 Industrial Park Development The investment environment in China has changed as a result of the New Southbound Policy promoted by the Taiwanese government and the Investment Act promulgated by the Indonesian government, as well as the impact of the USChina trade dispute. Indonesia’s demographic dividend, the removal of a number of barriers to foreign investment under the new Act and tax incentives have all added to its investment attractiveness.

• By accelerating the diversification of business operations to increase the profitability of the Group/shareholders, the Company has decided to invest in the development and construction of industrial parks, and at the same time, to help various Taiwanese SMEs to quickly gain a foothold in the Indonesian market, and to jointly polish up the image of the Taiwanese industry and create visibility worldwide.

The Group since 2008 has been proactive in looking for suitable plots of land for industrial development and has acquired approximately 200 hectares of land and

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obtained ground breaking permits in 2021. The public construction of road and drainage in the industrial park starts in 2022, and will continue to search for desirable lots in the vicinity of the development area.

1.2.1.5 Smart Street Lighting

The cities in Taiwan have been gradually getting more and more intelligent and systematic. With the government’s vigorous promotion, the combination of lighting and security management systems aims to achieve the goal of supporting urban governance, reinforcing system effectiveness, improving residents’ lives and maintaining environmental sustainability. The construction of smart streetlights in the female dormitory area of Asia University was completed in 2021 and serves as a demonstration for the public. The benefits of the project have started to be seen in 2022, and we will continue to work on it in order to secure cooperation projects in the future.

1.2.2 Expected sales volumes of major products in the Optoelectronics Department

Unit: Thousand pcs

	Unit:Thousandpcs
Major Products	Sales Volume
Optocoupler series	612,569
Relay series	9,108

1.2.3 Expected sales volumes of LED lighting products

Unit: Thousand pcs

	Unit:Thousandpcs
Major Product	Sales Volume
LED lighting	11,722

1.2.4 Expected sales volumes of major products in the Clean Steam Department

Unit: Ton

	Unit:Ton
Major Products	Sales Volume
Clean steam (t)	35,400
Palm kernel shells (thousandpcs)	7,050

1.2.5 Expected sales volumes in the Smart Street Lighting Department

Unit: pcs

	Unit: pcs
Major Product	Sales Volume
Smart street lighting	410

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1.2.6 Important production and marketing policies:

1.2.6.1 Marketing strategy:

• (1) Strengthening services and sales networks through the regional integration of a network of distributors and agents.

• (2) By participating in international expositions and brand/product advertising and marketing campaigns, we are able to reach out to the market and expand business opportunities, while raising the visibility of new products and keeping abreast of market demand.

• (3) The addition of production bases in South China and Indonesia allows us to adjust our production capacity to gain the best tariff preferences while meeting customer orders, reducing the impact of the trade war and strengthening our local marketing and services.

• (4) Increase in OEM customers and expansion of automotive electronics products to increase in sales ratio.

1.2.6.2 Production strategy:

• (1) Executing effective production management to continuously enhance product quality, improve production yields and strengthen product reliability.

• (2) Mastering key product technologies, increasing automation rates, shortening production cycles, raising production line capacity, and seeking to reduce costs and boost company profitability.

• (3) Cultivating the specialist knowledge and competence of our staff to satisfy the service and quality needs of our customers with a positive and efficient service attitude and to foster customer loyalty.

1.2.6.3 Product orientation:

• (1) Developing new product specifications for existing product lines, increasing the added value of our products in response to the development of technologies, and making continued efforts to reduce costs in an attempt to boost the competitiveness and market share of our products.

• (2) Strengthening the development mechanism of customized OEM products by applying current technologies to the technical specifications of products that are in high demand and satisfy customers’ needs.

• (3) Investing in new categories of products with strong technological linkages, actively pursuing R&D and innovation to enrich the Company’s overall product portfolio, increase sales and enhance brand awareness.

• (4) The introduction of new equipment to enter into high-end product manufacturing and improve production efficiency, increase production yields and boost profitability.

• (5) Smart street lights are the key infrastructure in a city. To pay attention closely to the global trends and policy support, those external changes accompanied with government’s propelling the intellectualization and systematization of the cities that combines the lighting and security management system to improve the public safety, traffic and environment in the cities. With continuing research, master the key technology of digitalization and connection building which enable us to aggressively seize for the cooperation opportunities.

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• 1.2.7 Influence by the external competitive environment, the regulatory environment and the general business environment:

The COVID-19 pandemic continued to plague the world into 2021, but the pandemic has gradually subsided as global vaccination coverage has risen, with the hope that COVID lockdown will gradually be lifted in the second half of 2022. However, with the outbreak of the Russia-Ukraine war in 2022, another bomb has been dropped on the global economy, causing the rebound in the consumer and raw material markets to stall once again. As such, the Company remains highly alert to this uncertainty and will make operational adjustments as necessary.

Over the past year, all business entities have been adjusting their management strategies and product structures on a rolling basis to improve production efficiency in response to the current market structural changes and the impact on the economic climate. The management has actively deepened its innovative thinking and capabilities, strengthened its operational structure, improved its governance mechanism, and developed its technological competitive edge, adhering to a pragmatic business strategy of value creation and moving forward with solutions and new application areas. In addition, with the spirit of seeking innovation and change, the Company makes every product in a serious and pragmatic manner, and has been working hard to develop its core areas of expertise and to enhance its competitiveness in response to external competition and the overall business environment.

In the future, the Company will comply with the law and make appropriate adjustments in the face of changes in the legal and regulatory environment, and will actively adapt to the policies and accelerate its multi-faceted operation to cope with changes in external factors, seize its own strengths, reasonably modify its business policies and formulate flexible strategies to enable the Company to grow continuously.

Looking ahead, the management team and staff of the Company will continue to devote themselves to creating greater benefits for our shareholders.

I would like to wish you all good health and all the best.

TSAI, NAI-CHENG, Chairperson

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II. Company Profile

2.1 Date of Incorporation : May 25, 1981

2.2 Company History

• 1981  Approved by the Ministry of Economic Affairs to establish the Company, with a capital of NT$1 million.

• The Company was incorporated in Yonghe.

• 1985  A factory was set up in Yonghe to produce temperature switches.

• 1986  Manufactured solid-state relays and reed relays and started to expand into export markets.

• 1987  Increased capital to NT$8 million and began production of IC-type reed relays.

• 1990  The Yilan plant was built and the Company relocated to Zhonghe City, Taipei County. In line with the expansion plan, the capital was increased to NT$10 million and the MOEA approved the change of the Company’s organization to a company limited by shares.

• 1991  Our products were recognized by UL and CUL, and were endorsed by a number of TWSE-listed electronics manufacturers for their quality.

• 1993  To expand the scale of business and improve the financial structure, the capital was raised to NT$29 million.

• 1994  Purchased the Yilan Longde factory to produce reed relays and solid-state relays, and obtained ISO-9002 certification in the same year.

• 1995  The Company moved to Renai Rd. in Taipei and increased its capital to NT$59 million in the same year.

• In addition, we purchased a factory in Dongshan, Yilan County and established a semiconductor division to produce photo couplers. In the same year, the products were awarded UL and CUL certifications.

• 1996  The Company was renamed Cosmo Electronics Corporation in English in 1996 and increased its capital to NT$107.6 million.

• Launched the photo coupler and marketed it worldwide under the Kuanhsi and Cosmo brands.

• 1997  The photo IC product was unveiled in 1997 and the photo coupler received VDE certification in August of the same year.

• Reed relays were certified by FIMKO to EN60950 and IEC950 safety standards.

• Restructured the Company by changing the Semiconductor Division into the Dongshan Branch, the Yilan Plant into the Relay Production Dept, strengthened product R&D and changed the Engineering Dept into the Engineering R&D Dept.

• Increased capital to NT$153.74 million to expand the scale of business and

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enhance competitiveness.

• 1998  Extended the Dongshan branch plant to expand the production capacity of new products and to provide space for future development.

• Rolled out the Photo ED MOS Relay.

• The capital increase was NT$49,000,000 in cash, NT$8,560,520 in capital increase through capitalization of retained earnings and NT$15,374,000 in capital increase through capitalization of capital reserve. After the capital increase, the paid-up capital was NT$226,674,520.

1999

• Released Electromechanical relays.

• The Company was reorganized and the Relay Production Dept and the Dongshan Branch were merged into one unit and transformed into the Production Division.

• ISO-9001 certified.

• Photo ED MOS Relay was certified for safety by FIMKO, UL and CUL.

• Ranked 48th in the “100 Fastest Growing Medium-sized Companies” by CommonWealth Magazine.

• NT$15,145,980 in capital increase through capitalization of retained earnings and NT$22,667,450 in capital increase through capitalization of capital reserve. After the capital increase, the paid-up capital was NT$264,487,950.

• The capital increase was NT$35,512,050 in cash. After the capital increase, the paid-up capital was NT$300,000,000.

2000

• Shares were listed over the counter at NT$50.

• NT$39,422,720 in capital increase through capitalization of retained earnings and NT$30,000,000 in capital increase through capitalization of capital reserve. After the capital increase, the paid-up capital was NT$369,422,720.

• 2001  The capital increase was NT$75,000,000 in cash. After the capital increase, the paid-up capital was NT$444,422,720.

• The Company’s shares were listed on the Taiwan Stock Exchange (TWSE) on Sept. 17.

• NT$87,601,900 in capital increase through capitalization of retained earnings and NT$5,777,380 in capital increase through capitalization of capital reserve. After the capital increase, the paid-up capital was NT$537,802,000.

• Introduced tantalum capacitor manufacturing technology and raw materials for successful trial production.

• 2002  Launched the ultra-compact photocouplers.

• The capital increase was NT$178,000,000 in cash. After the capital increase, the paid-up capital was NT$715,802,000.

• Issued first domestic unsecured convertible bonds of NT$200,000,000, of which NT$18,500,000 was converted into 1,456,690 common shares of the Company upon the offer of the bondholders. The paid-up capital after conversion was NT$730,368,900.

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• 2003  Of the first domestic unsecured convertible bonds, NT$11,000,000 were converted into 999,979 common shares of the Company upon the offer of the bondholders. The paid-up capital after conversion was NT$740,368,690.

• 2004  Of the first domestic unsecured convertible bonds, NT$130,100,000 were converted into 15,586,030 common shares of the Company upon the offer of the bondholders. The paid-up capital after conversion was NT$896,228,990.

• Approved by the Investment Commission of the MOEA to invest indirectly in Cosmo Electronics Technology (Kunshan) Co through its third-region overseas subsidiary

• 2006  ISO-14001 certified.

• Established the New Energy Dept to undertake turnkey projects and after-sales services for wind power plants.

• Purchased 100% equity interest in Pro Global Electronics of America (HK) Co., Limited to engage in the import and export trading of electronic products and to develop the channel business.

• 30 million common shares in private placement with a paid-up capital of NT$1,196,228,990 after the capital increase.

• 2007  Invested indirectly through Grand Concept Group Limited, Grandway International Limited, True Glory Investments Limited and Truly Top Investments Limited to establish Pt Cosmo Technology to engage in the manufacture and trading of LED decorative lamps and lighting sources.

• Invested indirectly through Grandway International Limited and individual directors of Pt Cosmo Technology to establish Renown Boom Limited to engage in the trading of raw materials such as LED decorative lamps.

• Invested indirectly through Pro Global Electronics of America (HK) Co., Limited to establish Cosmo Lighting Inc. and Cosmo Europe Limited to engage in the trading of LED decorative lamps and lighting sources.

• Invested indirectly through Grand Concept Group Limited to establish Real Bonus Limited to engage in the trading of LED decorative lamps and lighting sources.

• 2008  NT$72,186,220 in capital increase through capitalization of retained earnings and NT$59,811,440 in capital increase through capitalization of capital reserve. After the capital increase, the paid-up capital was NT$1,328,226,650.

• 2010  NT$39,846,800 in capital increase through capitalization of retained earnings. After the capital increase, the paid-up capital was NT$1,368,073,450.

• 2013  Established Guan Hong Energy Co, Guan Hao Energy Co and Bao Jin Energy Co via re-investment and joint venture to engage in clean steam business.

• Invested indirectly through Grand Concept Group Limited, Grandway International Limited, True Glory Investments Limited and Truly Top Investments Limited in Pt Green to engage in the clean steam business.

• 2014  Established Hua Hao Energy Co and Guan Bai Energy Co as a joint venture

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through Guan Hong Energy Co to engage in the clean steam business.

• Re-invest to establish Dongguan Guan Zhen Xing Energy Trading Co through Renown Boom Limited to engage in the clean steam business.

• 7 million common shares in private placement with a paid-up capital of NT$1,438,073,450 after the capital increase.

• 2015  Re-invest to establish Cosmo Green Power Vietnam Ltd. to engage in the clean steam business.

• The shareholding in Bao Jin Energy Co, a joint venture, was increased from 65% to 75%.

• The shareholding in Hua Hao Energy Co, a joint venture, was increased from 60% to 100%.

• The capital increase was NT$125,000,000 in cash. After the capital increase, the paid-up capital was NT$1,563,073,450.

• Issued a second domestic secured convertible bond for NT$200,000,000.

• 2016  Acquired 80% equity interest in Dongguan Yi Fa Concrete Limited through Dongguan Guan Zhen Xing Energy Trading Co.

• Guan Hao Energy Co. was renamed Conix International Co. and added the educational/recreational items to its business for wholesale and retail purposes.

• The shareholding in Yi Fa Concrete Limited, a joint venture, was reduced from 80% to 60%.

• Pro Global Electronics of America (HK) Co., Limited was renamed Cosmo Electronics (HK) Company Limited.

• Guan Bai Energy Co, a joint venture, was dissolved in liquidation.

• 2017  Re-invested through Dongguan Guan Zhen Xing Energy Trading Co. to establish Shaoguan Guan Wang Electronic Technology Co. to engage in the R&D, production and sales of electronic products and digital TV set-top boxes.

• Guan Hong Energy Co. absorbed and merged with Hua Hao Energy Co. which it had reinvested in.

• Re-invested and established Chen Jin Co to engage in the general investment business and trading of plastic pellets.

• Re-invested and established Cosmo Recycling, Inc. through Cosmo Electronics (HK) Company Limited to engage in the business of general waste recycling and sales.

• Disposal of the entire shareholdings in the reinvestment and joint venture companies - Guan Hong Energy Co, Conix International Co and Bao Jin Energy Co.

• Disposed the entire shareholding in a joint venture company, Yi Fa Concrete Limited.

• 2018  Re-invested through Dongguan Guan Zhen Xing Energy Trading Co to

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establish Guizhou Guan Wang Electronic Technology Co to engage in the R&D, production and sales of electronic products and digital TV set-top boxes.

• Of the second domestic secured convertible bonds, NT$1,000,000 was converted into 26,881 common shares of the Company upon the offer of the bondholders. The paid-up capital after conversion was NT$1,563,342,260.

• Acquired 49% stake in PT. CIJAMBE INDAH through True Glory Investments Limited.

• Cosmo Green Power Vietnam Ltd. increased its import and sale of plastic materials and other business items.

• 2019  Acquired 51% stake in PT. CIJAMBE INDAH through Renown Boom Limited.

• Disposed the entire shareholding in the reinvestment company, Chen Jin Co.

• Re-invested through Dongguan Guan Zhen Xing Energy Trading Co to establish Dongguan Guan Wang Electronic Technology Co to engage in the R&D, production and sales of electronic products and digital TV set-top boxes.

• 2020  Issued the third domestic secured convertible bond for NT$300,000,000.

• 2021  NT$46,900,270 in capital increase through capitalization of capital reserve, after the capital increase, the paid-up capital was NT$1,610,242,530.

• Issued the third secured convertible bond of NT$22,600,000, the bondholders proposed converting to the common shares of 599,125 shares, the paid-up capital was NT$1,616,233,780 after conversion.

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III. Corporate Governance Report

3.1 Organization 3.1.1 Organizational Chart

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3.1.2 Major Corporate Functions

Department	Functions
Auditing Office	Keep tracking of the evaluation, audit, suggestion and improvement of the Company’s internal control system.
Administration Office	Provide administrative support for production, sales and engineering systems.
Management Department	Coordinate the Company’s human resources, general affairs and legal affairs.
Finance and Accounting Division	Financial planning; execution of stock operations; planning and execution of fund raising and financial management activities; promotion and execution of budgeting operations; establishment and execution of accountingsystem.
Overseas Business Division	Gather and understand information on overseas investment contracts, tax laws and regulations, research on industry trends and market conditions,and overseas operations.
Investment and Development Division	Investment case search and preliminary evaluation, research on industry trends and market conditions, and overseas operations.
Production Division	Capacity planning; production planning and execution; strengthening production mobility and flexibility.
Engineering Department	Design and improvement of manufacturing process; maintenance of production equipment; improvement of product quality.
Procurement Department	Management and execution of procurement of raw materials and equipment.
Material Department	Planning and maintenance of production scheduling and inventory management.
Production Department	Execution of production plan; management of in-process products; product manufacturing process control and management.
R&D Center	Improvement of product specifications and design changes.
Quality Assurance Center	Establishment and maintenance of quality control system; quality control of raw materials, in-process products and finished products; analysis of product variation and follow-up of improvement; handling andtracking ofcustomercomplaints.
Sales Department	Customer sales policy development; sales plan development and implementation; business information collection and analysis; market and customer development and maintenance; marketing management and after-sales service provision.

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3.2 Directors and Management Team

3.2.1 Directors

3.2.1.1 Information of the Directors

																April 25,2021	April 25,2021	April 25,2021	April 25,2021	April 25,2021
Title	Nationality/ Place of Incorporation	Name	Gender Age	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship			The Chairperson and the President or an Equivalent Position (Top Manager) are the Same Person, Spouses or Relatives within One Degree of Kinship
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chairperson	Taiwan	TSAI, NAI- CHENG	M 41-50	July 20, 2021	3	June 16, 2009	476,190	0.30%	491,158	0.30%	106	0	0	0	1. Department of Economics, UCLA 2. Sales Assistant Manager of GLOBAL BRANDS MANUFACTURE LTD. 3. Chairperson of DIGICROWN TECHNOLOGIES LTD.	1. Chairperson of Cosmo Electronics Corporation 2. Chairperson of PT Cosmo Technology 3. Chairperson of PT Cosmo Green Technology 4. Chairperson of DONG GUAN GUAN ZHEN XING TRADING LIMITED 5. Chairperson of DIGICROWN TECHNOLOGIES LTD. 6. Chairperson of Kuan Chia Investment Ltd. 7. Director of Tingyuan Co., Ltd.	None	None	None	None
Director	Taiwan	DIGICROWN TECHNOLOGIE SLTD.	17	July 20, 2021	3	June 23, 2006	14,566,775	9.32%	15,002,531	9.28%	0	0	0	0	None	None	None	None	None	None
Representative of institutional shareholder Independent director	Taiwan	Chao Chia-chi	M 51-60	July 20, 2021	3	-	50,000	0.03%	51,495	0.03%	0	0	0	0	1. Department of Money and Banking, NCCU 2. Assistant Manager of Jin Sun International Commercial Bank Co., Ltd. 3. Vice President of Taishin International Bank (HK)	1. President of Cosmo Electronics Corporation 2. Director of PT Cosmo Technology 3. Chairperson of Cosmo Electronics Technology (Kunshan) Co., Ltd. 4. Director of DONG GUAN GUAN ZHEN XING TRADING LIMITED 5. Chairperson of Tinglin Co., Ltd. 6. Chairperson of Tingyuan Co., Ltd. 7. Chairperson of Juyang Technology Co., Ltd. 8. Chairperson of Ming-Jin Medical Technology Co., Ltd.	None	None	None	None

13

	Taiwan	Hung Yu-han	F 51-60	July 20, 2021	3	-	0	0.00%	0	0.00%	0	0	0	0	1. Graduate School of Accountancy, NTPU 2. Supervisor of Ernst & Young Global Limited 3. Junior Manager of PACIFIC SECURITIES CO., LTD. 4. Division Chief of APEX SCIENCE & ENGINEERING CORP.	1. Finance and Accounting Supervisor of Cosmo Electronics Corporation 2. Director of Tinglin Co., Ltd. 3. Director of Tingyuan Co., Ltd. 4. Director of Juyang Technology Co., Ltd.	None	None	None	None
	Taiwan	Ho Wei-chuan	M 41-50	July 20, 2021	3	-	0	0.00%	0	0.00%	0	0	0	0	1. Department of Business Administration, Tatung Institute of Technology 2. Vice President of Cosmo Electronics Corporation 3. Vice President of DIGICROWN TECHNOLOGIES LTD.	1. Chairperson of PT CIJAMBE INDAH 2. Director of Cosmo Electronics Technology (Kunshan) Co., Ltd.	None	None	None	None
Director	British Virgin Islands	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (note1)	16	July 20, 2021	3	June 23, 2006	1,075,217	0.69%	1,107,381	0.69%	0	0	0	0
Representati ve of institutional shareholder Independent director	Taiwan	Liu Chin-mu	M 61-70	July 20, 2021	3	-	0	0.00%	0	0.00%	0	0	0	0	1. School of Medicine, TMU 2. Attending Physician, Shu-Ming Clinic 3. Former part-time attending physician at the Taichung East District Branch of China Medical UniversityHospital	1. Vice President of CHEN JIN CO., LTD.	None	None	None	None
	Taiwan	Lee Chih-chin	M 51-60	July 20, 2021	3	-	0	0	0	0	0	0	0	0	1. Department of Industrial Management, NCKU 2. Assistant Manager of GLOBAL BRANDS MANUFACTURE LTD. 3. Material Manager of Elitegroup Computer Systems Co., Ltd. 4. Assistant Manager of DIGICROWN TECHNOLOGIES LTD.	1. Vice President of Cosmo Electronics Corporation 2. Chairperson of Shaoguan Woncrown Electronics Technology Co., Ltd.	None	None	None	None

14

Independent director	Taiwan	Wu Yong-fu	M 51-60	July 20, 2021	3	June 23, 2015	0	0	0	0	0	0	0	0	1. Graduate School of Accountancy, NCCU 2. Assistant Manager of KPMG Audit Office 3. Sales Manager of Yuanta Securities Co., Ltd. Underwriting Department 4. Adjunct Lecturer, Department of Accounting, O.C.U.	1. Assistant Manager of Finance Division, SUNSPRING METAL CORPORATION 2. Independent Director of PAIHO SHIH HOLDINGS CORPORATION 3. Independent Director of KOAN HAO TECHNOLOGY CO., LTD. 4. Supervisor of SUNSPRING METAL (Zhuhai) CORPORATION 5. Supervisor of Zhaoqing Baoxin Metaleare Industries Co., Ltd. 6. Supervisor of SUNSPRING AUTOMATION CORPORATION	None	None	None	None
Independent director	Taiwan	Xu Bo-yu	M 41-50	July 20, 2021	3	June 19, 2018	0	0	0	0	0	0	0	0	1. Graduate School of Accountancy, Chung Yuan Christian University 2. Assistant Manager of PwC Taiwan	1. CPA of QMCPA 2. Director of CHING RONG CEREAL CO., LTD.	None	None	None	None
Independent director	Taiwan	Li Dan	F 51-60	July 20, 2021	3	July 20, 2021	0	0	0	0	0	0	0	0	1. Ph.D. in International Business, NTU/ Master of International Trade, NCCU 2. Professor, Department of Finance, NCU 3. The University of Auckland, New Zealand Senior Lecturer 4. Assistant Professor and Associate Professor, Department of International Business, Yuan Ze University	1. Professor, Department of Finance, NCU	None	None	None	None

15

3.2.1.2 Major shareholders of the institutional shareholders April 26, 2022

3.2.1.2 Major shareholders of the institutional sh	areholdersApril 26, 2022
Name of InstitutionalShareholder	MajorShareholder(s)
Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account	SONG Man Kuai (100%)
DIGICROWN TECHNOLOGIES LTD.	TSAI, NAI-CHENG (89.48%), Jennifer Tasi (3.76%), Vincent Yu (1.69%), Cindy Tasi (3.38%), Yuan Fu InvestmentCorp.(1.69)

Note 1: If a director or supervisor is a representative of a corporate shareholder, the name of the corporate shareholder should be entered. Note 2: Provide the names of the major shareholders of the corporate shareholder (the top ten in terms of shareholding) and their shareholding ratios. If a major shareholder is a corporation, the following table 2 should be completed.

Note 3: If the institutional shareholder is not a company, the names and shareholding ratio of shareholders to be disclosed are the names of people who contributed or donated the capital and the ratio of their contribution or donation. If the donor is deceased, mark “deceased”.

3.2.1.3 Major shareholders of the Company’s major institutional shareholders:

3.2.1.4 Professionalqualificationsandindependenceanalysis ofdirectorsand supervisors: Name of InstitutionalShareholder MajorShareholder(s) Yuan Fu InvestmentCorp. TSAI,NAI-CHENG(100%)	3.2.1.4 Professionalqualificationsandindependenceanalysis ofdirectorsand supervisors: Name of InstitutionalShareholder MajorShareholder(s) Yuan Fu InvestmentCorp. TSAI,NAI-CHENG(100%)	3.2.1.4 Professionalqualificationsandindependenceanalysis ofdirectorsand supervisors: Name of InstitutionalShareholder MajorShareholder(s) Yuan Fu InvestmentCorp. TSAI,NAI-CHENG(100%)	3.2.1.4 Professionalqualificationsandindependenceanalysis ofdirectorsand supervisors: Name of InstitutionalShareholder MajorShareholder(s) Yuan Fu InvestmentCorp. TSAI,NAI-CHENG(100%)
Criteria Name	Professional Qualifications and Experiences (note 1)	Status of Independence	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
TSAI, NAI-CHENG	 Production, operation and factory management  The electronics related industries experiences	Conform with note 2:1,3,6,8,9,10,11	0
DIGICROWN TECHNOLOGIES LTD. (Representative: Chao Chia- chi)	 Production, operation and factory management  The electronics related industries experiences	Conform with note 2:2,3,4,5,6,7,8,9,10	0
DIGICROWN TECHNOLOGIES LTD. (Representative: Hung Yu- han)	 Accounting and auditing, investment analysis  Finance and electronics related industries experiences	Conform with note 2:2,3,4,5,6,7,8,9,10	0
DIGICROWN TECHNOLOGIES LTD. (Representative: Ho Wei- chuan)	 Factory operation and management  Medical related industries experiences	Conform with note 2: 1,2,3,4,5,6,7,8,9,10	0
Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Liu Chin- mu)	 Production, operation and factory management  The electronics related industries experiences	Conform with note 2: 2,3,4,5,6,7,8,9,10	0
Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Lee Chih- chin)	 Production, operation and factory management  The electronics related industries experiences	Conform with note 2:2,3,4,5,6,7,8,9,10	0
Wu Yong-fu	 Accounting and auditing  Finance and electronics related industries experiences	Conform with note2&3	2

16

Xu Bo-yu	 Accounting and auditing  Certified public accountant	Conform with note2&3	0
Li Dan	 Accounting and auditing, investment analysis  UniversityProfessor	Conform with note2&3	0

3.2.1.5 Board Diversity and Independence:

• (1) Board Diversity: Directors should possess expertise which include corporate strategy, accounting and taxation, finance, legal, administration and production management in accordance with Diversified management goals . 44.44% of the Company’s directors are employees while 33.33% are independent directors, we attentive to gender equality and aim to increase female members to 1/3(33%) with current 22.22% of that while male members are 77.78%, we will strive for reaching our goal. The independent director years of service ： One has less than three years and two have four to nine years of service.

• (2) Board Independence: The Board of Directors consists of 9 members who possess with different professional backgrounds, the members include 3 independent directors, 4 concurrent directors who are managers. All members of the Board of Directors have no circumstances set forth in the Subparagraph 3 & 4, Article 26-3 of the Securities and Exchange Act, please refer to the “Professional qualifications and independence analysis of directors and supervisors” on p.1617.

Note 1. A person who is under any of the following circumstances shall not act as a managerial personnel of a company. If he has been appointed as such, he shall certainly be discharged:

1. Having committed an offence as specified in the Statute for Prevention of Organizational Crimes and subsequently convicted of a crime, and has not started serving the sentence, has not completed serving the sentence, or five years have not elapsed since completion of serving the sentence, expiration of the probation, or pardon;

2. Having committed the offence in terms of fraud, breach of trust or misappropriation and subsequently convicted with imprisonment for a term of more than one year, and has not started serving the sentence, has not completed serving the sentence, or two years have not elapsed since completion of serving the sentence, expiration of the probation, or pardon;

3. Having committed the offense as specified in the Anti-corruption Act and subsequently convicted of a crime, and has not started serving the sentence, has not completed serving the sentence, or two years have not elapsed since completion of serving the sentence, expiration of the probation, or pardon;

4. Having been adjudicated bankrupt or adjudicated of the commencement of liquidation process by a court, and having not been reinstated to his rights and privileges;

5. Having been dishonored for unlawful use of credit instruments, and the term of such sanction has not expired yet; or

6. Having no or only limited disposing capacity.

7. Having been adjudicated of the commencement of assistantship and such assistantship having not been revoked yet.

Note 2

1. Does not employed by the Company or its affiliates.

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

17

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

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

3. A spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.

4. If a majority of the company's director seats or voting shares and those of any other company are not controlled by the same person: a director, supervisor, or employee of that other company. (does not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)

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

6. Not the director, supervisor, managers or shareholders who hold five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company. (but this does not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)

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

8. 10.For any such person who is not the spouse of, or related within the second degree of kinship to the Board of Directors.

9. Does not have government agency, a juristic person or representative been elected set forth in the Article 27 of the Company Act.

10. Note 3︰ Article 3 of Regulations Governing Appointment of Independent Directors and

11. Compliance Matters for Public Companies issued by Financial Supervisory Commission.

12. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

13. Not serving concurrently as an independent director on more than three other public companies in total.

14. During the two years before being elected and during the term of office, meet any of the following situations:

15. (1) Not an employee of the company or any of its affiliates;

16. (2) Not a director or supervisor of the company or any of its affiliates;

18

• (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;

• (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding (1) subparagraph, or of any of the above persons in the preceding subparagraphs (2) and (3);

• (5) Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five shareholders, or has representative director(s) serving on the company’s board based on Article 27 of the Company Law;

• (6) Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;

• (7) Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent);

• (8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company; and

• (9) Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, and the service provided is an “audit service” or a “non-audit service which total compensation within the recent two years exceeds NT$500,000”.

19

3.2.2 Management Team

April 26, 2022

Title	National ity	Name	Gender	Date Effective	Shareholding	Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience（Education）	Other Position	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	Managers who are Spouses or Within Two Degrees of Kinship	The Chairperson and the President or an Equivalent Position (Top Manager) are the Same Person, Spouses or Relatives within One Degree of Kinship
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
President	Taiwan	Chao Chia- chi	M	July 1, 2018	51,495	0.03%	0	0	0	0	1. Department of Money and Banking, NCCU 2. Assistant Manager of Jin Sun International Commercial Bank Co., Ltd. 3 Vice President of Taishin International Bank (HK)	1. Director of PT Cosmo Technology 2. Chairperson of Cosmo Electronics Technology (Kunshan) Co., Ltd. 3. Director of DONG GUAN GUAN ZHEN XING TRADING LIMITED 4. Chairperson of Tinglin Co., Ltd. 5. Chairperson of Tingyuan Co., Ltd. 6. Chairperson of Juyang Technology Co., Ltd. 7. Chairperson of Ming-Jin Medical TechnologyCo.,Ltd.	None	None	None	None
Finance and Accounting Supervisor	Taiwan	Hung Yu- han	F	July 1, 2018	0	0.00%	0	0	0	0	1. Graduate School of Accountancy, NTPU 2. Supervisor of Ernst & Young Global Limited 3. Junior Manager of PACIFIC SECURITIES CO., LTD. 4. Division Chief of APEX SCIENCE & ENGINEERING CORP.	1. Director of Tinglin Co., Ltd. 2. Director of Tingyuan Co., Ltd. 3. Director of Juyang Technology Co., Ltd.	None	None	None	None
Deputy General Manager	Taiwan	Liu Chin- mu	M	June 1, 2020	0	0.00%	0	0	0	0	1. Feng Ye Information 2. Clientron 3. GUO TING TECHNOLOGY 4. ZhongyingElectronic	1. The Board of Director of Cosmo Electronics Technology (Kunshan) Co., Ltd.	None	None	None	None
Deputy General Manager & Corporate Governance Officer	Taiwan	Lee Chih- chin	M	June 1, 2020	0	0.00%	0	0	0	0	1. Department of Industrial Management, NCKU 2. Assistant Manager of GLOBAL BRANDS MANUFACTURE LTD. 3. Material Manager of Elitegroup Computer Systems Co., Ltd. 4. Assistant Manager of DIGICROWN TECHNOLOGIES LTD.	1. Chairman of Shaoguan Guan Wang Electronic Technology Co.	None	None	None	None

20

3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands	3.2.3 Compensation of Directors, Independent Directors, Supervisors, President, and Vice Presidents 3.2.3.1Compensation of Directors and Independent DirectorsDec. 31,2021;Unit: NT$ thousands
Title	Name				Compensation					Ratio of Total (A+B+C+D) to		Compensation Net Income (%)		Relevant Compensation Received by Directors Who are Also Employees								Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)				Compens ation from ventures other than subsidiari es or from the parent company
		Base Compensation (A)		Severa	nce Pay (B)	Directors Compensation (C)		Allow	ances (D)					Salary, Bonuses, and Allowances (E)		Severa	nce Pay (F)	Employee Compensation (G)
		The comp any	All companies in the consolidate d financial statements	The compa ny	All companies in the consolidate d financial statements	The comp any	All companies in the consolidate d financial statements	The comp any	All compani es in the consolid ated financial statemen ts	The c	ompany	All companies in the consolidated financial statements		The compan y	All compani es in the consolid ated financial statemen ts	The compa ny	All companies in the consolidat ed financial statements	The co	mpany	All companies in the consolidated financial statements		The co	mpany	All companies in the consolidated financial statements
																		Cash	Stock	Cash	Stock
Chairperson	TSAI,NAI-CHENG	0	0	0	0	213	213	0	0	213	0.39%	213	0.39%	0	0	0	0	0	0	0	0	213	0.39%	213	0.39%	0
Director & President	DIGICROWN TECHNOLOGIES LTD. (Representative: Chao Chia-chi) (Note 2)	0	0	0	0	213	213	0	0	213	0.39%	213	0.39%	2,689	2,689	87	87	0	0	0	0	2,989	5.44%	2,989	5.44%	0
Director	DIGICROWN TECHNOLOGIES LTD. (Representative: Hung Yu-han) (Note 2)	0	0	0	0	213	213	0	0	213	0.39%	213	0.39%	1.699	1.699	66	66	0	0	0	0	1,978	3.60%	1,978	3.60%	0
Director	DIGICROWN TECHNOLOGIES LTD. (Representative: Ho Wei-chuan)(Note 2)	0	0	0	0	213	213	0	0	213	0.39%	213	0.39%	0	0	0	0	0	0	0	0	213	0.39%	213	0.39%	0

21

Director & Deputy General	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Liu Chin-mu) (Note 2&3)	0	0	0	0	212	212	0	0	212	0.39%	212	0.39%	841	841	33	33	0	0	0	0	1,086	1.98%	1,086	1.98%	0
Director & Deputy General Manager/Cor porate Governance Officer	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Lee Chih-chin ) (Note 2 &3)	0	0	0	0	212	212	0	0	212	0.39%	212	0.39%	1,662	1,662	66	66	0	0	0	0	1,940	3.53%	1,940	3.53%	0
Independent director	Wu Yong-fu	600	600	0	0	0	0	0	0	600	1.09%	600	1.09%	0	0	0	0	0	0	0	0	600	1.09%	600	1.09%	0
Independent director	Xu Bo-yu	480	480	0	0	0	0	0	0	480	0.87%	480	0.87%	0	0	0	0	0	0	0	0	480	0.87%	480	0.87%	0
Independent director	Li Dan	117	117	0	0	0	0	0	0	117	0.21%	117	0.21%	0	0	0		0	0	0	0	117	0.21%	117	0.21%	0
1. Please describe the policy, system, standard, and structure of compensation to independent directors, and the correlation between duties, risk, and time input with the amount of compensation: In order to improve the compensation management system for directors and functional members and to reasonably reward the members of the Board of Directors, the compensation to all directors and supervisors is delegated to the Board of Directors in accordance with Article 16 of the Company’s Articles of Incorporation; independent directors are paid fixed compensation and business execution fees for attending the Board of Directors’ meetings in person. 2. In addition to the above compensation, director compensation shall be disclosed as follows when received from companies included in the consolidated financial statements in the most recent year to compensate directors for their services, (e.g., acting as a non- employee consultant for theparent company/all companies in the financial statement/investment business,etc.): None

Description:

Note 1: The remuneration to the directors and the compensation to employees for the year 2021 have been approved by the board of directors on March 29, 2022, and the amount of $1,275,666 has been appropriated as compensation to directors for the year. Note 2: Terminated on July 20, 2021. Note 3 Assigned on July 20, 2021, was the representative of DIGICROWN TECHNOLOGIES LTD before the assignment.

22

3.2.3.2 Compensation of Supervisors

						Dec. 31,2021;Unit: NT$thousands	Dec. 31,2021;Unit: NT$thousands	Dec. 31,2021;Unit: NT$thousands	Dec. 31,2021;Unit: NT$thousands	Dec. 31,2021;Unit: NT$thousands	Dec. 31,2021;Unit: NT$thousands	Dec. 31,2021;Unit: NT$thousands
Title	Name			Compensation				Ratio of Total Compensation (A+B+C) to Net Income(%)				Compensation from ventures other than subsidiaries or from the parent company
		Base Compensation (A)		Bonus to Supervisors (B) (Note 1)		Allowances (C)
		The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements
Supervisor	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Allen Zang)(Note 1)	0	0	0	0	0	0	0	0	0	0	0
Supervisor	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Lai Rong- sheng) (Note 1)	0	0	0	0	0	0	0	0	0	0	0

Note 1: The audit committee was established on July 20, 2021, the supervisor committees were discharged.

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3.2.3.3 Compensation of the President and Vice Presidents

Dec. 31, 2021; Unit: NT$ thousands

Title	Name	Salary (A)	Salary (A)	Severance Pay (B) (Note 1)	Severance Pay (B) (Note 1)	Bonuses and Allowances(C)	Bonuses and Allowances(C)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Compensation from ventures other than subsidiaries or from the parent company
		The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company		Companies in the consolidated financial statements
								Cash	Stock	Cash	Stock
President	Chao Chia- chi	2,689	2,689	87	87	0	0	0	0	0	0	2,776	5.05%	2,776	5.05%	0
Chief Financial Officer	Hung Yu-han	1,699	1,699	66	66	0	0	0	0	0	0	1,765	3.21%	1,765	3.21%	0
Vice President	Liu Chin-mu	841	841	33	33	0	0	0	0	0	0	874	1.59%	874	1.59%	0
Vice President	Lee Chih- chin	1,662	1,662	66	66	0	0	0	0	0	0	1,728	3.15%	1,728	3.15%	0

Note 1: There is no actual pension payment in 2021, and the amount contributed to the “new pension system” is $252 thousand.

3.2.3.4 Compensation for the top five highest paid executives of the Company: Not applicable

3.2.3.5 Name of manager who distributes employee compensation and the distribution status

Dec.31, 2021; Unit: NT$ thousands

	Title	Name	Employee Compensation - inStock	Employee Compensation - inCash	Total	Ratio of Total Amount to Net Income(%)
Executive Officers	President	Chao Chia-chi	0	0	0	0
	Chief Financial Officer	Hung Yu-han	0	0	0	0
	Vice President	LiuChin-mu	0	0	0	0
	Vice President	LeeChih-chin	0	0	0	0

3.2.4 An analysis of the total compensation paid to the Company’s directors, supervisors, presidents and vice presidents as a percentage of parent company only and consolidated net income for the most recent two years, and a description of the policy, criteria and composition of compensation payments, the process for determining compensation, and the relationship to operating performance and future risk, for the Company and all companies in the consolidated financial statements, respectively.

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3.2.4.1 The ratio of total compensation paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, president and Vice Presidents of the Company, to the net income.

Title	Ratio of total compensation paid to directors, supervisors, president and Vice Presidentstonet income	Ratio of total compensation paid to directors, supervisors, president and Vice Presidentstonet income	Ratio of total compensation paid to directors, supervisors, president and Vice Presidentstonet income	Ratio of total compensation paid to directors, supervisors, president and Vice Presidentstonet income
	2021		2020
	The company	Companies in the consolidated financialstatements	The company	Companies in the consolidated financialstatements
Directors	4.50%	4.50%	25.64%	25.64%
Supervisors	0.00%	0.00%	3.72%	3.72%
President and Vice President	13.00%	13.00%	124.81%	124.81%

• 3.2.4.2 The policies, standards, and portfolios for the payment of compensation:

• A. The independent directors of the Company receive fixed compensation and no other compensation.

• B. Directors who are involved in the Company’s business affairs are paid monthly in accordance with the Company’s salary plan, regardless of profit or loss.

• C. The compensation of directors is appropriated according to the business performance of the Company in the year and the stipulated percentage in Article 19 of the Articles of Incorporation, which stipulate that: “From the profit earned by the Company as shown through the annual account closing, not more than 3% of the gross profit shall be taken for directors’ and supervisors’ compensation, provided that the amount of accumulated loss, if any, be first withheld.”

3.2.4.3 Procedures for setting compensation:

• A. Compensation for President and Vice President consists of salary and bonus. Salary is paid with reference to industry standards, title, rank, education, professional ability and responsibilities, and is based on the scope of authority and responsibility of the position within the Company and its contribution to the Company’s operating objectives and performance. The bonus is based on the performance evaluation items of managerial personnel, which include financial indicators (such as the achievement rate of the Company’s revenue, profit before tax and profit after tax) and non-financial indicators (such as the preservation and management of assets, quality control of production, and significant deficiencies in compliance with laws and regulations and operational risks of the departments under the management).

• B. The compensation of directors and managers shall be evaluated and set by the Compensation Committee of the Company on a regular basis and approved by the Board of Directors, in addition to the provisions of the Company’s Articles of Incorporation.

3.2.4.4 Correlation of operating performance and future risks:

• A. The bonus and compensation of directors and managers take into account the Company’s operating objectives and financial condition, as well as their professional competence and responsibilities.

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• B. Important decisions by the Company’s management are made after weighing various risk factors. The performance of these important decisions is reflected in the Company’s profitability, which in turn is related to the management’s compensation, i.e., the compensation of the Company’s directors, and managers is related to the performance of future risk management.

• C. In order to regularly evaluate the managerial personnel’s bonus based on his or her participation in the Company’s operations and personal performance contributions, and in accordance with the Company’s “Regulations Governing the Year-End Bonus and Operating Performance Bonus”, the “Regulations Governing the Year-End Bonus and Operating Performance Bonus” will be reviewed from time to time in accordance with the actual operating conditions and relevant laws and regulations, including financial indicators (such as the achievement rate of the Company’s revenue, profit before tax and profit after tax) and non-financial indicators (such as asset preservation and management, product quality control, and significant deficiencies in compliance with laws and regulations and operational risks of the departments under the supervision of the Company) in order to provide reasonable compensation.

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3.4 Implementation of Corporate Governance

3.3.1 Operation of the Board of Directors

A. A total of 8 (A) meetings of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows: (Jan. 1, 2021– Dec. 31 2021)

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) 【B/A】	Remarks
Chairperson	TSAI, NAI-CHENG	8	0	100.00%	Re-elected on July 20, 2021 Attendance required: 8 times
Director	DIGICROWN TECHNOLOGIES LTD. (Representative: Chao Chia-chi)	8	0	100.00%	Re-elected on July 20, 2021 Attendance required: 8 times
Director	DIGICROWN TECHNOLOGIES LTD. (Representative: Hung Yu-han)	8	0	100.00%	Re-elected on July 20, 2021 Attendance required: 8 times
Director	DIGICROWN TECHNOLOGIES LTD. (Representative: Liu Chin-mu)	3	0	75.00%	Discharged on July 20, 2021 Attendance required:4 times
Director	DIGICROWN TECHNOLOGIES LTD. (Representative: Lee Chih-chin)	3	1	75.00%	Discharged on July 20, 2021 Attendance required: 4 times
Director	DIGICROWN TECHNOLOGIES LTD. (Representative: Ho Wei-chuan)	4	0	100.00%	Elected on July 20, 2021 Attendance required: 4 times
Director	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Liu Chin-mu)	4	0	100.00%	Elected on July 20, 2021 Attendance required: 4 times
Director	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Lee Chih-chin)	4	0	100.00%	Elected on July 20, 2021 Attendance required: 4 times
Independent director	Wu Yong-fu	8	0	100.00%	Re-elected on July 20, 2021 Attendance required: 8 times
Independent director	Xu Bo-yu	8	0	100.00%	Re-elected on July 20, 2021 Attendance required: 8 times
Independent director	Li Dan	4	0	100.00%	Elected on July 20, 2021 Attendance required: 4 times

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Other mentionable items:

1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: i. Matters referred to in Article 14-3 of the Securities and Exchange Act.: The Audit Committee was stablished in accordance with the Article 14-3 and 14-5 of the Securities and Exchange Act. Please refer to the” Operation of Audit Committee, or the Participation of Supervisors in the Board’ on page 29. ii. Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors: None 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:

Date of Board Meeting	Session	Contents of Motion	Causes for avoidance and condition of voting
2021.02.03	1016	 Discussed and reviewed the awarding of year- end bonuses to managerial officers and directors with employee status in 2020.	 With the exception of the Directors who had their own interests involved (Chao Chia-chi, Lee Chih-chin, Hung Yu-han, and Liu Chin- mu) and who did not participate in the meeting on account of recusal, the Chairperson consulted all the other Directors present and the motion was carried without dissent.
2021.05.12	1018	 Discussed and reviewed the compensation of 2nd grade senior-level executives in the capacity of director.	 With the exception of the Directors who had their own interests involved (Liu Chin-mu and Lee Chih-chin) and who did not participate in the meeting on account of recusal, the Chairperson consulted all the other Directors present and the motion was carried without dissent.
2021.08.12	1102	 Appointed to the Company’s Compensation Committee.	 With the exception of the Directors who had their own interests involved (Wu Yung-fu, Hsu Po-yu and Lee Tan) and who did not participate in the meeting on account of recusal, the Chairperson consulted all the other Directors present and the motion was carried without dissent.
2022.01.18	1105	 Reviewed the awarding of year-end bonuses to managerial officers and directors with employee status in 2021.	 With the exception of the Directors who had their own interests involved (Chao Chia-chi, Hung Yu-han, Liu Chin-mu, Lee Chih-chin and who did not participate in the meeting on account of recusal, the Chairperson consulted all the other Directors present and the motion was carried without dissent.
2022.03.29	1107	 Assignment of Corporate Governance Officer.	 With the exception of the Directors who had their own interests involved, (Lee Chih-chin) who did not participate in the meeting on account of recusal, the Chairperson consulted all the other Directors present and the motion was carried without dissent..

1. TWSE/TPEx-listed companies are required to disclose the evaluation cycle and period, scope of evaluation, evaluation method, and evaluation items of the self (or peer) evaluations conducted by the Board of Directors:

Evaluation cycle	Evaluation period	Scope of evaluation (Note)	Evaluation method	Evaluation items
Once a year	2021.1.1 ~2021.12.31	1.Board of Directors 2.Individual directors 3.Functional committees	1.Internal self- evaluation by the Board of Directors 2.Self-assessment by directors, or peer evaluation 3.Internal self- evaluation by the functional committees	1. The evaluation items of five major aspectsfor board performance evaluation 2. The evaluation items of six major aspects for the individual director (self or peer) performance evaluation 3. The evaluation items of five major aspects for functional committee performance evaluation

 The Board of Directors has evaluated on Jan 18/2022 and will be submitted to the 11[th] Board of Directors for approval. 4. Measures taken to strengthen the functionality of the board (e.g., establishing an audit committee, improving information transparency,

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etc.) and performance evaluation.:

1. The “Rules of Procedure for Board of Directors Meetings” are established to provide guidelines for the operation of the Board of Directors, and after the Board of Directors’ meetings are held, important resolutions are disclosed and significant information is announced on the Company’s website in accordance with the law.

2. The Board of Directors has established a “Compensation Committee” and an “Audit Committee” to assist the board in carrying out its various duties.

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3.3.2 Operation of Audit Committee, or the Participation of Supervisors in the Board:

• 3.3.2.1 A total of 2 (A) Audit Committee meetings were held in the previous period. The attendance of the independent directors was as follows: (2021.01.01~2021.12.31)

Title	Name	Attendance in Person(B)	By Proxy		Attendance Rate (%) (B/A)	Remarks
Independent director	Wu Yong-fu	2	0		100%	Established on July 20, 2021 Attendance required: 2 times. The convener of the Audit Committee
Independent director	Xu Bo-yu	2	2		100%	Established on July 20, 2021 Attendance required: 2 times.
Independent director	Li Dan	2	2		100%	Established on July 20, 2021 Attendance required: 2 times.
Other mentionable items: 1. If any of the following circumstances occur, the dates ofAudit Committeemeetings, sessions, contents of motion,the contents of objections, reservations or significant recommendations of independent directors,resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified: (1)Matters referred to in Article 14-5 of the Securities and Exchange Act. Date of Board Meeting Session Contents of Motion Other matters involving objections, expressed reservations or major events presented by independent directors All the Opinions of Audit Committee Members and the Company’s Response to them 2021.8.12 1001  The Company’s consolidated financial statements for the second quarter of 2021. Approved by all attendees All the audit committee members have no objection against the motions. 2021.11.11 1002  The Company’s consolidated financial statements for the third quarter of 2021.  Internal audits performed from August to September 2021.  The Company issued a guarantee for the credit line of a subsidiary.  The Company’s third domestic secured convertible bond issuance.  The Company’s internal audit plan for fiscal year 2022.  Acquisition of machinery andequipment from a subsidiary. Approved by all attendees All the audit committee members have no objection against the motions. 2022.01.18 1003  Internal audits performed from October to November 2021.  Set the base date for the third domestic secured convertible bond issuance. Approved by all attendees All the audit committee members have no objection against the motions.

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2022.03.18 1004  Submission of Internal Audit Results from
December of 2021 to January of 2022.  Amendment to the Management of Endorsement and Guarantees.  Proposal of Syndicated Loan.  Acquisition and Disposal of Assets of the SubsidiaryCompany. Approved by all attendees All the audit committee members have no objection against the motions.
2022.03.29 1005  Business report and Financial report of
2021.
 The distribution of the surplus of 2021. All the audit
 The Effectiveness of Implementation of Internal Control and the Statement.  Amendments to the “Procedures for the Approved by all attendees committee members have no objection against
Acquisition or Disposal of Assets.” the motions.
 Assignment of Corporate Governance
Officer.
2022.5.11 1006  Submission of the Internal Audit Results
from February to March of 2022.
 Discussion of the appointment and audit fee of the Company’s CPA firm for 2022.  Discussion of 2022Q1 consolidated financial statements approved by the Board of Directors.  Submission of the new common share Approved by all attendees All the audit committee members have no objection against the motions.
issuance through the increase of capital
bycapitalization of capital reserve.
(2) Other matters which were not approved by the Audit Committee but were approved by
two-thirds or more of all the directors: None
2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’
names, contents of motion, causes for avoidance and voting should be specified: None
3. Communications between the independent directors, the Company’s chief internal auditor and
CPAs (e.g. the material items, methods and results of audits of corporate finance or
operations, etc.):
1.) The internal audit except for the monthly audit report submission with the items need to
be improved to the independent directors, the chief auditor should also at least summon
an audit committees meeting quarterly reporting the audit scopes, results and follow-up
updates.
2.) The CPA conducts individual meeting with independent directors at least once yearly
with the financial spreadsheets reviews, major discoveries found on audit results of the
Company and its subsidiaries, together with other relevant regulations on a written report
to the independent directors.
3.) The communication between the chief auditor, CPA and independent directors should be
smooth.
4.) The communication results can be found at The company website:http://www.cosmo-
ic.com
4.COSMO ELECTRONICS established an Audit Committee on July 20, 2021, consisting of all
independent directors, with the following main responsibilities:
1. Establish or amend the internal control system in accordance with Article 14-1 of the
Securities and Exchange Act.

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1. Evaluation of the effectiveness of the internal control system.

2. Establish or amend procedures for handling significant financial transactions involving the acquisition or disposal of assets, derivative transactions, lending of funds to others, or endorsement or guarantee for others in accordance with Article 36-1 of the Securities and Exchange Act.

3. Matters involving the directors’ own interests.

4. Significant asset or derivative transactions.

5. Significant loaning funds to others, endorsements and guarantees.

6. The raising, issuance or private placement of securities of an equity nature.

7. The appointment, termination or compensation of CPAs

8. Appointment or removal of financial, accounting or internal audit officers. 10. The annual financial statement signed or sealed by the Chairperson, managerial personnel and accounting officers, and the financial statement for the second quarter that is subject to audit and certification by the CPA.

9. Other significant matters as required by the Company or the competent authorities.

10. Evaluation status of the performance evaluation of the Audit Committee

Self-assessment of theperformance of the Audit Committee: Excellent
Evaluation Items	Items	Scoring Rate
1. Participation in company operations	16 items	94%
2. Responsibility awareness of functional committees
3. Enhancement of the quality of functional committee decision making
4. Composition and selection of functional committee members
5. Internal control

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3.3.2.2 Attendance of Supervisors at Board Meetings

A total of 8 meetings of the Board of Directors were held in the previous period. The attendance of supervisors was as follows: (2021.1.1~2021.12.31)

Title	Name	Attendance in Person	By Proxy	Attendance Rate(%)	Remarks
Supervisor	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Allen Zang)	3	0	75.00%	Elected on July 20 2020 Attendance required: 4 times
Supervisor	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account (Representative: Lai Rong- sheng)	3	0	75.00%	Elected on July 20 2020 Attendance required: 4 times
Supervisor	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account: None	0	0	0%	No proxy was appointed.
Other mentionable items: 1. Composition and responsibilities of supervisors: (1) Communications between supervisors and the Company’s employees and shareholders: The supervisors may contact employees and shareholders directly and attend shareholders’ meetings to talk with shareholders if deemed necessary. (2) Communications between supervisors and the Company’s chief internal auditor and CPA: The supervisors may at any time investigate the business and financial situation of the company and may request the chairperson or manager to make a report and, if necessary, to contact the CPA; The chief internal auditor regularly submits audit reports to the supervisors and attends the board of directors’ meeting to give business reports, and the supervisors can consult and communicate with the audit business in person. 2. If a supervisor expresses an opinion during a meeting of the Board of Directors, the dates of the meetings, sessions, contents of motion, resolutions of the directors’ meetings and the company’s response to the supervisor’s opinion should be specified: None

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3.3.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

Listed Companies” and Reasons
Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?	V		The Company has laid down the “Corporate Governance Best Practice Principles,” which have been approved by the Board and are available on the Company’s website and the Market Observation Post System.	None
2. Shareholding structure & shareholders’ rights 1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? 2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? 3) Does the company establish and execute the risk management and firewall system within its conglomerate structure? 4) Does the company establish internal rules against insiders trading with undisclosed information?	V V V V		1) The Company has established a spokesperson and deputy spokesperson system to ensure timely and appropriate disclosure of information affecting shareholders’ decisions and has appointed the Transfer Agency Dept of CTBC Bank to handle matters relating to shareholder services. A contact email is available on the Investor Information section of the Company’s website to receive suggestions, queries and disputes from shareholders. 2) Changes in the shareholdings of insiders (directors, managerial officers and major shareholders holding more than 10% of the shares) are reported monthly in accordance with the law on the Market Observation Post System, a website designated by the competent authorities, and the names of shareholders holding more than 5% of the shares (or the top ten shareholders if there are less than ten), the amount and proportion of their shareholdings are published on the Company’s website. 3) The Company has formulated the “Regulations Governing the Handling of Transactions with Related Parties, Specified Companies and Group Enterprises” and related internal control systems to establish and carry out risk control and firewall mechanisms with affiliates. 4) The Company has laid down internal regulations such as “Management of Prevention of Insider Trading” and “Procedures for Handling Significant Information in the Company,” and has simultaneously disclosed the specific implementation details on the Company’s website to prohibit insiders from tradingmarketable securities usingunpublished information in the market.	1) None 2) None 3) None 4) None
3. Composition and Responsibilities of the Board of Directors 1) Does the Board develop and implement a diversified policy and specific objectives of management for the composition of its members?	V		(1) According to the Company’s “Corporate Governance Best Practice Principles,” the composition of the Board of Directors shall take into account diversity and shall develop an appropriate diversity approach with respect to its operations, business model and development needs: (2) The individual directors’ implementation of the Board diversity policy is disclosed on the Company’s website and on the Market Observation Post System, with the policy as follows: 1.In line with the objective of diversified management, the overall expertise of the Board of	1) None

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Evaluation Item			Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			Directors should include corporate strategy, accounting and taxation, finance, legal, administration and production management. 44.44% of the Company’s directors are employees, 33.33% are independent directors, we attentive to gender equality and aim to increase female members to 1/3(33%). Currently the female members are 22.22% while male members are 77.78%, we will strive for reaching our goal. The independent director years of service：One has less than three years and two have four to nine years of service. 2.The Company re-elected its Board of Directors of eleventh term in July 2021 according to its diversity policy, with the diversity of directors being realized as follows:
			Title	Name	Gender age	Natio nality	Appointment date	Education	Experience	Expertise
			Chairpe rson	Tsai Nai- cheng	M 41-50	ROC	2021.07.20	Economic s Dept, UCLA	SYSTEX Solutions Corp	Production managemen t, operations managemen t, factory managemen t
			Director	Chao Chia- chi	M 51-60	ROC	2021.07.20	Dept of Money and Banking, National Chengchi University	Taishin Bank Hong Kong Branch, JihSun Bank Central District	Production managemen t, operations managemen t, factory managemen t
			Director	Liu Chin- mu	M 61-70	ROC	2021.07.20	Dept of Business Managem ent, Tatung Institute of Technolog y	Pou Chen Group, Global Brands Manufactur e Ltd., Group	Production managemen t, operations managemen t, factory managemen t
			Director	Ho Wei- chua n	M 41-50	ROC	2021.07.20	School of Medicine, Taipei Medical	Attending Physician, Shumin Clinic	Operations managemen t, factory managemen

35

Evaluation Item						Implementation Status	Implementation Status	Implementation Status			Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No				Abstract Illustration
								University	Former part-time attending physician, China Medical University Hospital Taichung East District Branch	t
			Director	Lee Chih- chin	M 51-60	ROC	2021.07.20	Dept of Industrial Managem ent, National Cheng Kung University	Elitegroup Computer Systems Co Nan Ya Plastics Corp	Production managemen t, operations managemen t, factory managemen t
			Director	Hung Yu- han	F 51-60	ROC	2021.07.20	Graduate Institute of Accounta ncy, National Taipei University	Director, Apex Science & Engineerin g Corp Assistant President, Pacific Securities Director, Ernst & Young Taiwan	Accounting audit, investment analysis
			Indepe ndent Direct or	Wu Yung- fu	M 51-60	ROC	2021.07.20	Master of Accounta ncy, National Chengchi University	Manager, Sunspring Metal Corp Business Manager, Underwriti ng Dept., Yuanta	Accounting audit

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Evaluation Item						Implementation Status	Implementation Status	Implementation Status			Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No				Abstract Illustration
2) Does the company voluntarily establish other functional committees in addition to the Compensation Committee	V								Securities Assistant Manager, Audit Dept, KPMG Taiwan
			Indepe ndent Direct or	Hsu Po-yu	M 41-50	ROC	2021.07.20	Graduate Institute of Accountin g, Chung Yuan Christian University	CPA Partner, Qin-Mei Co., CPAs Supervisor, New Taipei City Tax Agents Association	Accounting audit
			Indepe ndent Direct or	Lee Tan	F 51-60	ROC	2021.07.20	Ph.D. in Internatio nal Business, National Taiwan University / M.A. in Internatio nal Trade, National Chengchi University	Professor of Finance, National Central University, Assistant Prof and Associate Prof of Internationa l Business, Yuan Ze University / The University of Auckland, New Zealand Senior Lecturer	Accounting audit, investment analysis
			2) The Company does not have any committees of other functions other than the Compensation Committee and the Audit Committee.

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Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
and the Audit Committee? 3) Does the company establish a standard to measure the performance of the Board and implement it annually, and are performance evaluation results submitted to the Board of Directors and referenced when determining the compensation of individual directors and nominations for reelection? 4) Does the company regularly evaluate the independence of CPAs?	V V		3)The Company has developed the Self-Evaluation or Peer Evaluation of the Board of Directors, and the manner in which it is evaluated. The board performance evaluation is conducted on a regular basis every year and the results are presented to the board upon completion of the evaluation. These results will serve as a reference for individual director’s compensation and nomination for reappointment. The results from the evaluation of the performance of the board of directors, board members and committees of functions of the Company for 2021 are as follows. Boardperformance self-evaluation result: Excellent Item Qty Score 1. Level of involvement in companyoperations 30 95% 2. Enhancingthequalityof board decisions 3. Composition and structure of the board of directors 4. Appointment and continuingeducation of directors 5. Internal control Board memberperformance self-evaluation result: Excellent Item Qty Score 1. Understandingof the company’s objectives and tasks 17 98% 2. Knowledge of directors’ responsibilities 3. Level of involvement in company’s operations 4. Internal relationshipmanagement and communication 5. Expertise and continuingeducation of directors 6. Internal control Compensation Committee operationalperformance self-evaluation result: Excellent Item Qty Score 1. Level of involvement in company’s operations 15 99% 2. Awareness of duties of committees of functions 3. Enhancing the quality of decision-making in the committees of functions 4. Composition of the committees of functions and appointment of committee members 5. Internal control 4) The Company’s Finance Dept regularly evaluates the independence of the CPAs on an annual basis and the evaluation was completed in May2022 and submitted to the board of directors	3) None 4) None

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Evaluation Item			Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			and approved in May 11,2022. The Company’s Finance Dept has assessed that PwC Taiwan CPAs Tsai I-tai and Liang Chan-nu have met the Company’s independence assessment criteria (Note 1).
4. Does the company appoint a suitable number of competent personnel and a supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, assisting directors and supervisors with compliance, handling work related to meetings of the board of directors and the shareholders’ meetings, and producing minutes of board meetings and shareholders’ meetings)?	V		The Company’s 7th meeting of the 11th board of directors’ meeting appointed Lee Chih-chin, Vice President of the administration division, as the director of corporate governance, who has more than 3 years of expertise in managerial position and possesses of qualifications which required to manage the company. The Liability： 1.Assistance to the duty execution of independent directors and general directors, providing necessary information and arrange continuing education for the directors： (1) To modify the company business scope and governance rules in accordance with the up-to- date corporate laws and regulations which need to notify the board of directors regularly. (2) To provide all the information needed for the board of directors in order to maintain a smooth, barrier-free communication between the board of directors and heads of business groups. (3) To assist independent directors and general directors to map out annual continuing education plans based on the industry features along with board of directors’ education and experiences. 2.Assistance of procedures and resolutions of board of directors and shareholder’s meeting in compliance with the laws： (1) To report the updated company governance matters to the board of directors, independent board of directors and audit committees, verifying shareholder’s meeting and board of directors’ meeting in compliance with the relevant laws and regulations. (2) To assist and advise the board of directors’ responsibilities and the resolutions made in the meeting should comply with the laws and regulations. (3) To verify the official announcement made by the board of directors’ meeting before posting on the TWSE to ensure the investors obtain an accurate, sync up and legality information. 3. To schedule a board of directors' meeting 7 days prior, to provide meeting materials, also notify the directors regarding avoid conflicts of interest if any. Complete the meeting minutes within 20 days. 4. To announce the shareholders meeting, preparing the meeting notice, agenda and meeting minutes in accordance with the regulations. To register any amendments or board of directors’ re-election made in the meeting. Continuing education：not applicable (the director of corporate governance was assigned on March 29,2022)		It will be implemented in accordance with the policy considering the operating conditions, size and system of the company.
5. Does the companyestablish a communication channel and	V		The Companyhas set upa stakeholder’s section as required on its website at	http://www.cosmo-	None

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Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues theycare for in terms of corporate social responsibilities?			ic.com/sta.asp.
6. Does the company appoint a professional shareholder service agencyto deal with shareholder affairs?	V		The Company commissioned the Transfer Agency Dept of CTBC Bank to handle matters regarding the shareholders’ meeting.	None
7. Information Disclosure 1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? 2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? 3) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?	V V	V	1)The Company has disclosed the implementation of relevant financial operations and corporate governance information on its website at:www.cosmo-ic.com. 2) 1. Designating a person responsible for the collection and disclosure of information about the Company: A person is designated to collect and disclose information about the Company and to keep the public informed of the latest and accurate information about the Company from time to time through important news. 2. Implementing the spokesperson system: The spokesperson for the Company is President Chao Chia-chi and the acting spokesperson is CFO Hung Yu-han. 3. Investor Conference information and content is available on the company website: The slides for the Investor Conference (in English and Chinese) are available in the Investors’ section on the Company’s website for easy reference. The financial and operational information at the Investor Conference is not only published in the Investors’ section, but also entered into the Market Observatory Post System (MOPS) in accordance with the requirements of the TWSE. 3)The Company publicly announced and filed its Q1, Q2 and Q3 financial statements and monthly operations well in advance of the prescribed deadlines. However, the Company was unable to publicly announce and file its annual financial statement within two months after the end of the fiscal year, but still completed the public announcement and filing within the deadline stipulated in Article 36 of the Securities and Exchange Act.	1) None 2) None 3) It will be implemented in accordance with the policy considering the operating conditions, size and system of the company.
8. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights,employee wellness,investor relations,supplier	V		1) Employee rights/interests and care: The Company respects humanity and cares for its employees as one of its management philosophies, and has formulated various welfare plans and formed a welfare committee by Company staff. See V. Labor Relations under the Overview of Business Operations in thisyear’s Annual Report for employee rights and interests.	1) None

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Evaluation Item			Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?			2) Investor relations: The Company has instructed its staff to make real-time announcements of material information on finance, business and insider shareholding changes on the MOPS pursuant to the relevant regulations, and has commissioned the Transfer Agency Dept of CTBC Bank to handle share-related matters. 3) Supplier relations: The Company implements the relevant procurement operations in accordance with the Company’s “Procurement and Management Procedures” and maintains good relations and close contact with domestic and overseas suppliers. 4) Rights of stakeholders: The Company has complied with relevant laws and regulations and has revealed all relevant information without prejudice to the rights of stakeholders. 5) Liability insurance for the Board of Directors：The Board of Directors is insured with liability insurance from April 15,2022 ~ April 15,2023.
			5) Continuing education for directors: Name Title Job Commence ment Date Class Date Chao Chia-chi Director 2021.07.20 2022.02.17 Chao Chia-chi Director 2021.07.20 2022.02.18 Liu Chin-mu Director 2021.07.20 2022.3.22 Liu Chin-mu Director 2021.07.20 2022.4.26 Lee Chih- chin Director 2021.07.20 2022.3.28 Wu Yung-fu Independ ent Director 2021.07.20 2021.11.25 Wu Yung-fu Independ ent Director 2021.07.20 2021.11.18 2021.11.19						Course Title Hr ESG Sustainable Finance Trends and Coping Strategies 3 Liability and Case Studies on the New “Commercial Case Adjudication Act” 3 Green Industry Development - Low Carbon Investment Outlook and Business Strategies 3 Labor Dispute Prevention and Corporate Governance 3 The climate of internet technology and internal auditor’s innovative thinking. 3 The influence of the post-pandemic and the China–United States trade war has on the information security 3 Continuing Education Course for Principal Accounting Officers of Issuers, Securities Firms, and Securities Exchanges 12
				Name	Title	Job Commence ment Date	Class Date	Organized by	Course Title		Hr
				Chao Chia-chi	Director	2021.07.20	2022.02.17	Accounting Research and Development Foundation in Taiwan	ESG Sustainable Finance Trends and Coping Strategies		3
				Chao Chia-chi	Director	2021.07.20	2022.02.18	Accounting Research and Development Foundation in Taiwan	Liability and Case Studies on the New “Commercial Case Adjudication Act”		3
				Liu Chin-mu	Director	2021.07.20	2022.3.22	Taiwan Corporate Governance Association	Green Industry Development - Low Carbon Investment Outlook and Business Strategies		3
				Liu Chin-mu	Director	2021.07.20	2022.4.26	Taiwan Corporate Governance Association	Labor Dispute Prevention and Corporate Governance		3
				Lee Chih- chin	Director	2021.07.20	2022.3.28	ROC Securities and Futures Institute	The climate of internet technology and internal auditor’s innovative thinking.		3
				Wu Yung-fu	Independ ent Director	2021.07.20	2021.11.25	Securities and futures Institute	The influence of the post-pandemic and the China–United States trade war has on the information security		3
				Wu Yung-fu	Independ ent Director	2021.07.20	2021.11.18 2021.11.19	Accounting Research and Development Foundation in Taiwan	Continuing Education Course for Principal Accounting Officers of Issuers, Securities Firms, and Securities Exchanges		12

41

Evaluation Item						Implementation Status	Implementation Status	Implementation Status		Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No					Abstract Illustration
			Wu Yung-fu Hsu Po- yu Hsu Po- yu Hsu Po- yu Hsu Po- yu Hsu Po- yu Li Dan Li Dan Li Dan Li Dan Li Dan Continuing	Wu Yung-fu	Independ ent Director	2021.07.20	2021.10.29	Taiwan Corporate Governance Association	How the Board can Raise the Value of the Company - Ethical Corporate Management is Crucial		3
				Hsu Po- yu	Independ ent Director	2021.07.20	2021.12.13	National Federation of CPA Associations of the R.O.C.	Registration Special Practice Issues		4
				Hsu Po- yu	Independ ent Director	2021.07.20	2021.11.29	National Federation of CPA Associations of the R.O.C.	Business Tax Case Selection and Common Errors		3
				Hsu Po- yu	Independ ent Director	2021.07.20	2021.11.29	National Federation of CPA Associations of the R.O.C.	Analysis of Various Tax Dispute Cases		3
				Hsu Po- yu	Independ ent Director	2021.07.20	2021.11.26	National Federation of CPA Associations of the R.O.C.	Company Registration Practice Workshop		2
				Hsu Po- yu	Independ ent Director	2021.07.20	2021.03.17	National Federation of CPA Associations of the R.O.C.	Essentials of Profit-Seeking Enterprise Income Tax Returns and Questions		7
				Li Dan	Independ ent Director	2021.07.20	2022.2.18	Accounting Research and Development Foundation in Taiwan	New “ Commercial Case Adjudication Act” relevant legal liability and case study		3
				Li Dan	Independ ent Director	2021.07.20	2021.12.24	Taiwan Corporate Governance Association	A Case Study of Corporate Financial Statement Fraud		3
				Li Dan	Independ ent Director	2021.07.20	2021.12.02	Taiwan Association of Board Governance	Management of Managerial Control and Corporate Sustainability		3
				Li Dan	Independ ent Director	2021.07.20	2021.11.25	Taiwan Corporate Governance Association	How the Audit Committee Implements Financial Reviews		3
				Li Dan	Independ ent Director	2021.07.20	2021.01.14	Taiwan Association of Board Governance	Shareholders’ Meeting, Managerial Control and Equity Strategy		3
					education for managerial officers:

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Evaluation Item						Implementation Status	Implementation Status	Implementation Status		Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No					Abstract Illustration
			Name Title Job Commence ment Date Class Date Organized by Course Title Hr Hung Yu-han Director 2018.06.19 2021.01.14 Accounting Research and Development Foundation in Taiwan “The capital flow” - financial statement scandal chasing and relevant legal liabilitycase study 3 Hung Yu-han Director 2018.06.19 2021.01.25 Accounting Research and Development Foundation in Taiwan “Securities fraud” - legal liability and case study 3 Hung Yu-han Director 2018.06.19 2021.01.26 Accounting Research and Development Foundation in Taiwan “Real estate transaction” - finance and tax and case study 3 Hung Yu-han Director 2018.06.19 2022.04.22 TAISE Transform to Net Zero Forum 3 Chao Chia-chi Director 2021.07.20 2022.02.17 Accounting Research and Development Foundation in Taiwan Tendency and Coping strategy on the ESG sustainability 3 Chao Chia-chi Director 2021.07.20 2022.02.18 Accounting Research and Development Foundation in Taiwan New Commercial Case Adjudication Act relevant legal liability and case study 3 Liu Chin-mu Director 2021.07.20 2022.03.22 Taiwan Corporate Governance Associate The development tendency of the Green Industry – Prospects on the low carbon investment and strategy 3 Liu Chin-mu Director 2021.07.20 2022.04.26 Taiwan Corporate Governance Associate Labor dispute prevention and Corporate Governance 3 Lee Chih- chin Director 2021.07.20 2022.03.28 Accounting Research and Development Foundation in Taiwan The climate of internet technology and internal auditor’s innovative thinking.(video course) 3 7) Risk management policy and risk measurement standard implementation: The Company’s risk management policy is to recognize, analyze and measure the potential risks faced by each unit, select appropriate methods to control, handle, manage and monitor them, and further improve the risk management plan, which is carried out centrally or hierarchically according to the characteristics and levels of risks, so that all risks can be effectively kept under control at all times. On the financial side, exchange rates and related derivatives are closely monitored and hedging measures are taken to reduce risk, and the financial structure is kept under scrutiny from time to time to avoid excessive financial exposure. In respect of internal controls, auditors are in place to conduct regular and ad hoc audits of the Company’s internal control system and to submit audit reports. The implementation of risk identification and mitigation measures in 2021 are described in Item 5) The state of the company’s promotion of sustainable development, any variance from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance. 8) Customer policy implementation: Signing contracts with customers to offer services and guarantees, and setting up a quality assurance dept to handle customer complaints and after-sales services.	Name	Title	Job Commence ment Date	Class Date	Organized by	Course Title		Hr
				Hung Yu-han	Director	2018.06.19	2021.01.14	Accounting Research and Development Foundation in Taiwan	“The capital flow” - financial statement scandal chasing and relevant legal liabilitycase study		3
				Hung Yu-han	Director	2018.06.19	2021.01.25	Accounting Research and Development Foundation in Taiwan	“Securities fraud” - legal liability and case study		3
				Hung Yu-han	Director	2018.06.19	2021.01.26	Accounting Research and Development Foundation in Taiwan	“Real estate transaction” - finance and tax and case study		3
				Hung Yu-han	Director	2018.06.19	2022.04.22	TAISE	Transform to Net Zero Forum		3
				Chao Chia-chi	Director	2021.07.20	2022.02.17	Accounting Research and Development Foundation in Taiwan	Tendency and Coping strategy on the ESG sustainability		3
				Chao Chia-chi	Director	2021.07.20	2022.02.18	Accounting Research and Development Foundation in Taiwan	New Commercial Case Adjudication Act relevant legal liability and case study		3
				Liu Chin-mu	Director	2021.07.20	2022.03.22	Taiwan Corporate Governance Associate	The development tendency of the Green Industry – Prospects on the low carbon investment and strategy		3
				Liu Chin-mu	Director	2021.07.20	2022.04.26	Taiwan Corporate Governance Associate	Labor dispute prevention and Corporate Governance		3
				Lee Chih- chin	Director	2021.07.20	2022.03.28	Accounting Research and Development Foundation in Taiwan	The climate of internet technology and internal auditor’s innovative thinking.(video course)		3

43

Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			9) Liability insurance for directors: The Company has taken out liability insurance for directors for the period from April 15, 2022 ~ April 15,2023.
9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures. (It is not necessary for a companywhich is not evaluated to fill this column)	V		None

Note 1: CPA Independence Evaluation Standards

Note1: CPA IndependenceEvaluationStandards
Evaluation Item	Evaluation Results
1. Not an employee of the Companyor its affiliates.	Yes
2. Not a director or supervisor of the Company or its affiliates (except for independent directors of the Company or its parent companyor subsidiaries in which the Companydirectlyor indirectlyholds more than 50% of the votingshares)	Yes
3. Not a natural person shareholder who holds more than one percent of the total issued shares or a top ten shareholder in the name of himself/herself,his/her spouse,minor children or others.	Yes
4. Not a spouse, a relative within the second degree of kinship or a relative within the third degree of kinship of a person listed in the precedingthreeparagraphs.	Yes
5. Not a director, supervisor or employee of a corporate shareholder who directly holds more than 5% of the total issued shares of the Company,or a director,supervisor or employee of a corporate shareholder who is a topfive shareholder.	Yes
6. Not a director, supervisor, manager, or shareholder holding more than 5% of the shares of a specific company or organization that has financial or business relationshipwith the Company.	Yes
7. Not related to other directors as spouses or relativeswithin the second degree of kinship.	Yes
8. Not havinganyof the circumstances specified in Article 30 of the CompanyAct.	Yes
9. Not agovernment agencyor ajuristicperson or its representative elected as stipulated in Article 27 of theCompanyAct.	Yes
10. Whether to obtain the“Declarationof Independence” issued bytheappointedaccountant andaudit team.	Yes

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3.3.4 Composition, Responsibilities and Operations of the Compensation Committee

1. The Company’s Board of Directors establishes a Compensation Committee in accordance with the approved Compensation Committee Charter. The Compensation Committee faithfully performs the following duties and responsibilities with the attention of a good administrator, and submits the recommendations to the Board of Directors for discussion.

2. (1) To establish and regularly review the policies, systems, standards and structures for performance evaluation and compensation of directors, president, chief financial officer, and second-level executives.

3. (2) To periodically evaluate and set the salary and compensation for directors, president, chief financial officer and second-level executives.

4. On August 12, 2021, the Board of Directors approved the appointment of Wu Yong-fu, Xu Bo-yu and Li Dan as members of the 5th Compensation Committee for the same term as the current Board of Directors, and elected Wu Yong-fu as the convener and chairperson of meetings.

3.3.4.1 Information of the Members in the Compensation Committee

			Date:	Date:
Title (Note 1)	Criteria Name	Professional Qualification and Experience (Note 2)	Independence Criteria (Note 3)	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Compensation Committee Member
Independent director (convener)	Wu Yong- fu	The Compensation Committee consists of all the Board of Directors, please refer to the 3.2 Directors and Management Team/3.2.1 Directors and Supervisors/ 3.2.1.1 Information of the Directors for their expertise. (P13~15)	All the Compensation committees are conform with the following： 1.Article14-6 “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” of Securities and Exchange Act issued by the Financial Supervisory Commission (Note 4) 2. The members of the Board of Directors and his/her spouse and minor children do not hold shares of the Company. 3. Did not receive any compensation for the provision of business, legal, financial, and accounting services from the Company or its affiliates in the last two years.	2
Independent director	Xu Bo-yu			None.
Independent director	Li Dan			None (Aug 12, 2021 Appointed)
Other	JYChuan			None (Aug 12, 2021 Discharged)

Note 1: Please specify in the form the relevant years of experience, professional qualifications and experience and independence of each member of the Compensation Committee; in the case of independent directors, please note the relevant content under “(1) Information on Directors and Supervisors” (see Table 1 on page 13-15). Please indicate whether you are an independent director or other (if you are a convener, please note).

Note 2: Professional qualifications and experience: Specify the professional qualifications and experience of the individual compensation committee members.

Note 3: Independence Compliance: The independence of a compensation committee member shall be described, including but not limited to whether he/she, his/her spouse, or a relative within the second degree of kinship is a director, supervisor, or employee of the Company or its affiliates; The number and proportion of shares of the Company held by the independent director, his/her spouse or a relative within the second degree of kinship (or by using the name of another person); whether he/she is a director, supervisor or employee of a company with a specific relationship with the Company (refer to Article 6, paragraph 1, subparagraphs 5~8 of 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); the amount of compensation received for the provision of business, legal, financial, and accounting services from the Company or its affiliates in the last two years.

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Note 4 ： During the two years before being elected and during the term of office, meet any of the following situations:

• (1) Not an employee of the company or any of its affiliates;

• (2) Not a director or supervisor of the company or any of its affiliates;

• (3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranks as one of its top ten shareholders;

• (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in the preceding (1) subparagraph, or of any of the above persons in the preceding subparagraphs (2) and (3);

• (5) Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of issued shares of the company, ranks as of its top five shareholders, or has representative director(s) serving on the company’s board based on Article 27 of the Company Law;

• (6) Not a director, supervisor, or employee of a company of which the majority of board seats or voting shares is controlled by a company that also controls the same of the company;

• (7) Not a director, supervisor, or employee of a company of which the chairman or CEO (or equivalent) themselves or their spouse also serve as the company’s chairman or CEO (or equivalent);

• (8) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the company; and

• (9) Other than serving as a compensation committee member of the company, not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof, and the service provided is an “audit service” or a “non-audit service which total compensation within the recent two years exceeds NT$500,000”.

3.3.4.2 Implementation Status of the Compensation Committee

1. There are 3 members in the Compensation Committee of the Company.

2. The term of office of the current members: August 12, 2021 to July 19, 2024.

3. Attendance: The Compensation Committee of the Company held 5 meetings from January 1, 2021 to March 31, 2022, and all members attended in person.

4. The Compensation Committee held 3 meetings in 2021, with an average attendance rate of 100%, and the attendance of members was as follows:

Title	Name	Attendance in	By proxy	Attendance Read (%)	Remarks
Convener	Wu Yong-fu	3	0	100%	Re-elected on August 12, 2021 Attendance required: 3 time(s)
Member	Xu Bo-yu	3	0	100%	Re-elected on August 12, 2021 Attendance required: 3 time(s)
Member	Li Dan	-	0	-	Elected on August 12, 2021 Attendance required: 0 time(s)
Member	JYChuan	3	0	100%	Resigned on August 12, 2021 Attendance required: 3 time(s)
Compensation Committee Meeting Information: Information on the most recent year of the Compensation Committee meeting, review and evaluation of the Company’s compensation report is as follows: Meeting Date Motion Content and Follow-up Results of the Compensation Committee The Company’s Handling of the Compensation Committee’s Opinions February 3, 2021 Discussion of 2020 year-end bonus payment to managerial personnel. Approved by all committee members Submitted to the 16th meeting of the 10th Board of Directors on February 3, 2021 for review and approved byall directorspresent. March 30, 2021 Discussion of the Company’s 2020 distribution of compensation to directors and supervisors and compensation to managers. Approved by all committee members Submitted to the 17th meeting of the 10th Board of Directors on March 30, 2021 for review and approved by all directors present. May 12, 2021 Review of the compensation to second-level executives who are also directors. Approved by all committee members Submitted to the 18th meeting of the 10th Board of Directors on May 12, 2021 for review and approved byall directorspresent.

46

Other 1. 2.	January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonuspayment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved byall directorspresent. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present. mentionable items: If the board of directors declines to adopt or modifies a recommendation of the compensation committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the compensation committee’s opinion: None Resolutions of the compensation committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified. Meeting Date Motion Content and Follow-upResults of the Compensation Committee The Company’s Handling of the Compensation Committee’s Opinions February 3, 2021 Discussion of managerial personnel’s 2020 year-end bonus payment. Approved by all committee members Submitted to the 16th meeting of the 10th Board of Directors on February 3, 2021 for review and approved by all directors present. March 30, 2021 Discussion of the Company’s 2020 distribution of compensation to directors and supervisors and compensation to managers. Approved by all committee members Submitted to the 17th meeting of the 10th Board of Directors on March 30, 2021 for review and approved by all directors present. May 12, 2021 Review of the compensation to second-level executives who are also directors. Approved by all committee members Submitted to the 18th meeting of the 10th Board of Directors on May 12, 2021 for review and approved by all directors present. January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonus payment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved by all directors present. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members. Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present.	January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonuspayment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved byall directorspresent. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present. mentionable items: If the board of directors declines to adopt or modifies a recommendation of the compensation committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the compensation committee’s opinion: None Resolutions of the compensation committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified. Meeting Date Motion Content and Follow-upResults of the Compensation Committee The Company’s Handling of the Compensation Committee’s Opinions February 3, 2021 Discussion of managerial personnel’s 2020 year-end bonus payment. Approved by all committee members Submitted to the 16th meeting of the 10th Board of Directors on February 3, 2021 for review and approved by all directors present. March 30, 2021 Discussion of the Company’s 2020 distribution of compensation to directors and supervisors and compensation to managers. Approved by all committee members Submitted to the 17th meeting of the 10th Board of Directors on March 30, 2021 for review and approved by all directors present. May 12, 2021 Review of the compensation to second-level executives who are also directors. Approved by all committee members Submitted to the 18th meeting of the 10th Board of Directors on May 12, 2021 for review and approved by all directors present. January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonus payment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved by all directors present. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members. Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present.	January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonuspayment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved byall directorspresent. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present. mentionable items: If the board of directors declines to adopt or modifies a recommendation of the compensation committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the compensation committee’s opinion: None Resolutions of the compensation committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified. Meeting Date Motion Content and Follow-upResults of the Compensation Committee The Company’s Handling of the Compensation Committee’s Opinions February 3, 2021 Discussion of managerial personnel’s 2020 year-end bonus payment. Approved by all committee members Submitted to the 16th meeting of the 10th Board of Directors on February 3, 2021 for review and approved by all directors present. March 30, 2021 Discussion of the Company’s 2020 distribution of compensation to directors and supervisors and compensation to managers. Approved by all committee members Submitted to the 17th meeting of the 10th Board of Directors on March 30, 2021 for review and approved by all directors present. May 12, 2021 Review of the compensation to second-level executives who are also directors. Approved by all committee members Submitted to the 18th meeting of the 10th Board of Directors on May 12, 2021 for review and approved by all directors present. January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonus payment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved by all directors present. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members. Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present.	January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonuspayment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved byall directorspresent. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present. mentionable items: If the board of directors declines to adopt or modifies a recommendation of the compensation committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the compensation committee’s opinion: None Resolutions of the compensation committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified. Meeting Date Motion Content and Follow-upResults of the Compensation Committee The Company’s Handling of the Compensation Committee’s Opinions February 3, 2021 Discussion of managerial personnel’s 2020 year-end bonus payment. Approved by all committee members Submitted to the 16th meeting of the 10th Board of Directors on February 3, 2021 for review and approved by all directors present. March 30, 2021 Discussion of the Company’s 2020 distribution of compensation to directors and supervisors and compensation to managers. Approved by all committee members Submitted to the 17th meeting of the 10th Board of Directors on March 30, 2021 for review and approved by all directors present. May 12, 2021 Review of the compensation to second-level executives who are also directors. Approved by all committee members Submitted to the 18th meeting of the 10th Board of Directors on May 12, 2021 for review and approved by all directors present. January 18, 2022 Discussion of the managerial personnel’s 2021 year-end bonus payment. Approved by all committee members Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved by all directors present. March 29, 2022 Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021. Approved by all committee members. Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present.
	Meeting Date	Motion Content and Follow-up	Results of the Compensation Committee	The Company’s Handling of the Compensation Committee’s Opinions
	February 3, 2021	Discussion of managerial personnel’s 2020 year-end bonus payment.	Approved by all committee members	Submitted to the 16th meeting of the 10th Board of Directors on February 3, 2021 for review and approved by all directors present.
	March 30, 2021	Discussion of the Company’s 2020 distribution of compensation to directors and supervisors and compensation to managers.	Approved by all committee members	Submitted to the 17th meeting of the 10th Board of Directors on March 30, 2021 for review and approved by all directors present.
	May 12, 2021	Review of the compensation to second-level executives who are also directors.	Approved by all committee members	Submitted to the 18th meeting of the 10th Board of Directors on May 12, 2021 for review and approved by all directors present.
	January 18, 2022	Discussion of the managerial personnel’s 2021 year-end bonus payment.	Approved by all committee members	Submitted to the 5th meeting of the 11th Board of Directors on January 18, 2022 for review and approved by all directors present.
	March 29, 2022	Discussion of distribution of the Board of Directors’ remuneration and the managers’ and employees’ bonus of 2021.	Approved by all committee members.	Submitted to the 7th meeting of the 11th Board of Directors on March 31, 2022 for review and approved by all directors present.

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3.3.5 Implementation of Sustainable Development and Deviations from the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies” and Reasons

Evaluation Item			Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?	V		An annual risk assessment of the internal control system is conducted based on environmental, social and corporate governance issues related to the Company’s operations. Risk assessment meetings are also held in case of unexpected and significant events to address environmental, social and corporate governance issues related to the Company’s operations. The company has assigned the administration department as the dedicated unit to commit the sustainable development and the vice president as the convener in 2021, we will integrate the sustainable development into our business strategy by using a purposeful, systematic and organized approach to a long-term fulfilled Corporate Social Responsibility.	No material difference.
2. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies? (Note 2)	V		1. In Nov 2021, the board of directors approved the establishment of the “Risk Management Policies and Procedures” as the Company’s overarching guiding principle for risk management. The Company would evaluate risks on an annual basis and formulate and implement risk management policies covering mechanisms such as management objectives, organizational structure, division of authority and responsibility and risk management procedures to effectively identify, measure and control the various risks of the Company and to contain the risks arising from business activities within an acceptable range. The 2021 Risk Identification and Mitigation Measures report has been submitted to the Board of Directors on January 18, 2022. 2. The Company undertakes to integrate and manage all potential strategic, operational, financial and hazard risks that may affect its operations and profitability in a proactive and cost-effective manner, to assess annually the frequency of risk events and the severity of their impact on the Company’s operations, to define the priority and level of risk, and to adopt corresponding risk management strategies according to the level of risk. 3.The Company’s risk management system covers “strategic risk,” “operational risk,” “financial risk,”	No material difference.

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Evaluation Item			Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			“hazard risk” and “other risks.” The Company’s risk identification and mitigation measures for 2021 are as follows: Risk Issues Risk Mitigation Measures Strategy Changes in industry markets/comp etitors  Accelerating the deployment of production lines in South East Asia and continuing to automate production lines to reduce manpower demand.  Continuing to upgrade technology and production processes both domesticallyand internationally. Policies and regulations  Continuously watching and keeping abreast of changes in laws and regulations in the countries where the Company’s production sites are located to avoid operational risks arising from such changes. Operation Customers  Promoting projects in line with customers’ energy saving and carbon reduction targets to meet their expectations.  Encouraging strategic suppliers to promote energy saving and carbon reduction initiatives as part of their corporate social responsibility. Supply chain  Including risk-taking capability in the selection of suppliers and strengtheningsupplier management. Production/ manufacturing /R&D  Developing documentary guidelines for various process items and strictly carrying out SOPs.  Boosting the energy efficiency of equipment; working with equipment suppliers regarding high energy-consuming machines and equipment to research and develop, introduce energy-savingmodels and carryoutprocurement control in

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Evaluation Item					Implementation Status(Note 1)	Implementation Status(Note 1)	Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No				Abstract Illustration
						order to effectively improve energy efficiency.  Phasing out existing high energy-consuming machines according to their age or retrofitting them according to the results of effectiveness analysis.
					Staff	 Mapping out and carrying out employee training and development programs.  Designing competitive compensation and employee benefit plans.
					Information security	 Continuously strengthening the management of computer equipment, network security, virus protection and system access control.  Enhancingcybersecurity promotion and education training.
					Intellectual property	 Signing Non-Disclosure Agreements (NDAs) for the development of production technology to reinforce product patenting.
				Finances	Interest rates, exchange rates, taxes, strategic investments	 Regularly assessing market funding conditions and bank interest rates.  Avoiding systemic and liquidity risks in financial markets by adopting a high degree of liquidity as the basis for capital allocation.  Keeping abreast of tax changes in different countries and proposingtimelyresponses.
				Hazard	COVID-19	 Setting up a task force in each factory to draw up an pandemic prevention plan and implement it, and revising the virus control measures on a rollingbasis.

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Evaluation Item					Implementation Status(Note 1)	Implementation Status(Note 1)	Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No				Abstract Illustration
						 Remote offices usinginformation tools.
3. Environmental issues 1) Does the company establish proper environmental management systems based on the characteristics of its industry? 2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment? 3) Does the company evaluate the potential risks and opportunities in climate change with regard to the present and future of its business, and take appropriate action to counter climate change issues? 4) Does the company take inventory of its greenhouse gas emissions, water consumption, and total weight of waste in the last two years, and implement policies on energy efficiency and carbon dioxide reduction, greenhouse gas reduction, water reduction, or waste management?	V V V V V		1) 1. The Company’s waste is collected and recycled by an operator with a waste clearance and disposal permit. 2. The Company has obtained ISO14001 certification, the validity period and the scope of coverage for which are available on its websitehttp://www.cosmo-ic.com/Certificates_detail.asp 2) The Company strives to push for digitization and to reduce the amount of paper used for documents. In addition, the production activities in Taiwan affect the environment by generating harmful environmental factors such as dust, sewage, waste, toxicity and noise, which are all tested in accordance with the regulations and the results are reported to the competent authorities, but we continue to minimize the environmental impact produced by domestic and business activities. 3) The measures taken to address the potential risks of climate change assessed to the Company now and in the future are as follows: 1. Incorporating climate risk into the location and construction of the new plant, including the design of the raised foundations, cisterns and own power generation, to avoid disruptions to production due to climate hazards. 2. Providing diesel power supply units at sites prone to power shortages to cater for temporary power interruptions. 3. Keeping abreast of international climate change risk warning information, as well as climate change risk mitigation and adaptation recommendations. 4)1. The Company’sgreenhousegas(CO2)emissions are as follows: 2021 2020 2019 Gas emissions 1,479,353 2,357,187 2,379,960 Water consumption 15,960m3 8,648m3 16,757m3 Total weight of waste 47,230 KG 40,870 KG 57,199 KG 2.The Company continues to promote energy efficiency and carbon reduction, cutting greenhouse gas emissions by approx. 37% in 2021 compared to 2020 as a result of eliminating old and high power consumption machine, and aiming for a 1% annual reduction in the future to help bring down total GHG emissions. The relevant greenhouse gas emissions information is disclosed on the MOPS for public inquiry. 3.The Company’s ongoing policyinitiatives topush for GHG reduction and water conservation					1) No material difference. 2) No material difference. 3) No material difference. 4) No material difference.

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Evaluation Item			Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			management are as follows: (1) The Company has introduced an electronic document system for a paperless office, making it easy to operate, saving time and significantly reducing paper consumption. (2) Switching to electronic signatures for regular processes saves time and cuts paper consumption. (3) Lights are turned off when leaving and checked again at the end of the day to ensure that the power is off. (4) The room air conditioning temperature is set at 26 °C. (5) To achieve the energy saving and carbon reduction targets, high efficiency facilities such as LED lamps,automated sensor lights and related energysavinglabeledproducts will be used.
4. Social issues 1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?	V		1) Cosmo Electronics Corp. is committed to the Responsible Business Alliance (RBA), and to fulfill its CSR and protect the basic human rights of all its employees, it upholds and respects the principles enshrined in the UN Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, the UN Global Compact and the UN International Labor Organization, and it will not commit any human rights violations or infringements and clearly states that it will treat all employees with fairness and equity. Cosmo Electronics Corp.’s human rights policy applies to the Company and each of its operating locations, and complies with labor and gender equality in employment laws and regulations where it operates, and it has formulated and enforces human rights protection and labor policies. Human Rights Issue Management Diversity and inclusion (D&I) and Equity 1.To provide employees with a gender equality, diverse work place, upholding the openness, fairness and no discrimination is allowed on the basis of age, sex, physical and mental disabilities, race, religion, political stance or pregnancy. 2.To eliminate any form of forced labor, employment discrimination, sexual harassment and disrespect of privacy to create an equal opportunity, respectful, safe, equitable and free of discrimination and harassment work environment. 3.To fulfill internal control in recruitment process, the hiring posts will comply with the discrimination rules, prior to an interview, the interviewer is well informed that anynon-job-relatedpersonal	1) No material difference.

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Evaluation Item				Implementation Status(Note 1)	Implementation Status(Note 1)	Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No			Abstract Illustration
					information shall be avoided and will be monitored by the internal control unit.
				Against child labor	1.In conformity with the local laws on minimum age requirements and the company’s internal control rules, the interviewee is required to present identity document to prevent from child laboring. 2.The Companydid not hire children as labor in 2021.
				Meet the minimum wage	To provide more than required minimum wage and employee welfare in accordance with the localgovernment requirements.
				Reasonable working hours	The Internal control of the performance appraisal and employee management stipulate the attendance and work overtime. No mandatory overtime is allowed without employees’ consent and will provide overtime pay or compensatory leave. The working hours meet the local government requirements and will care and manage employees’ attendance regularly.
				Safety in the work place	1.A well-implemented safety and hygiene measures to create a heathy, safe and caring work environment for the employees, therefore they can benefit from this spiritually and mentally. The adaptation of a zero tolerance approach for occupational accident in the factory. 2. The Prevention and Management of Unlawful Infringement in the Performance of Duties put in place to ensure the work place is safe. 3.Training for the occupational safety includes：fire safety, first aid personnel training, CPR and AED, personnel assignment in charge of occupational safety and health. 4.A well-planned anti-sexual harassment prevention and appropriate disciplinary measures have been mapped out, an emailhr@cosmo- ic.com is dedicated to file a complaint in order to protect the employee’s right and ensure a safe work environment. 5.In response to COVID pandemic and to ensure the employees have a healthy and safe work environment, below actions are taken： A. Daily temperature check and record. B. Freequick test kits are available for conductinga regular test.

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Evaluation Item				Implementation Status(Note 1)	Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No			Abstract Illustration
2) Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries? 3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?	V V		C. For those with suspected symptoms will be WFH till symptoms relieved. D. Regular free health checkups for employees. Labor-management Consultation 1.To provide a diverse communication channel, a regular labor- management meeting is scheduled to cover company policy, employment benefits and activities. The meeting allows employees to fully express themselves to provide the immediate and necessary assistance they need. 2.The Employees' Welfare Committee is established to hold regular/ irregular activities which aims to enhance the interaction and a healthybody& mind between employees. 2) 1. The Company has devised and implemented reasonable staff welfare measures, details of which are set out in this Annual Report V. Description of Labor Relations, which are also available on the Company’s website and the MOPS for public inquiry. 2. The Company has laid down the “Year-end bonus / Guidelines for Operating Performance Bonus” as the basis for the operating achievements of each business unit, and then adjusts the compensation of employees properly according to the following conditions: (1) Industry salary levels: Salaries are adjusted annually by reference to industry salary surveys and in line with industry salary levels and economic trends. (2) Performance criteria: Salaries are adjusted according to the operational performance of the Company and the performance of individuals, and operational results are duly reflected in the compensation of employees. (3) Promotion criteria: When a staff member is recognized for promotion, the salary will be increased immediately to encourage excellence. 3) (1) We hold regular safety training sessions on the use of equipment, workshops, and fire drills for all staff every year. (2) All new recruits are trained in labor safety courses on arrival. (3) Annual testing of organic solvents, exhaust, drainage, heavy metals, etc. by a professional institution is commissioned and control or protective measures are taken immediately when the levels are in excess of what is required by law. (4)As stipulated in the labor safetyand health regulations,a labor safetycommittee and a labor safety		C. For those with suspected symptoms will be WFH till symptoms relieved. D. Regular free health checkups for employees.	2) No material difference. 3) No material difference.
				Labor-management Consultation	1.To provide a diverse communication channel, a regular labor- management meeting is scheduled to cover company policy, employment benefits and activities. The meeting allows employees to fully express themselves to provide the immediate and necessary assistance they need. 2.The Employees' Welfare Committee is established to hold regular/ irregular activities which aims to enhance the interaction and a healthybody& mind between employees.

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Evaluation Item			Implementation Status(Note 1)	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
4) Does the company provide its employees with career development and training sessions? 5) Do the company’s products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented? 6) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights? If so,describe the results.	V V V		and health specialist are in place to regularly monitor and carry out safety inspections in the workplace and improve their duties, and to regularly send staff to vocational training institutions for training as provided for in the regulations. (5) Regular staff health checks are carried out and, in the case of staff working in special environments, special health checks are conducted to enable them to keep track of their condition. (6) Specialist tests on the workplace are regularly undertaken by qualified agents and any abnormalities are promptly rectified. (7) Through systematic execution and regular audits, the Company ensures that environmental and safety protection aspects are properly carried out. The implementation is as follows: Item 2020 2021 Labor safety and health training Total 202 hrs / 4,450 persons Total 231 hrs /7,083 persons Fire safety 4) We organize regular and occasional employee training to enhance their career development capabilities and help the Company grow with its staff. 5) We have dedicated staff and an email address on our website to handle this. 6) The Company has developed the Ethical Corporate Management Best Practice Principles and the Procedures for Ethical Management and Guidelines for Conduct, which include a supplier management policy that requires suppliers to follow relevant guidelines on environmental, occupational safety and health or labor human rights issues.	4) No material difference. 5) No material difference. 6) No material difference.

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5. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third party verification unit?		V	The Company has not yet prepared a CSR report and will do so in the future depending on actual needs.	It will be implemented in accordance with the policy considering the operating conditions, size and system of the company.
6. Describe the difference, if any, between actual practice and the corporate social responsibility principles, if the company has implemented such principles based on the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies: Not applicable.
7. Other significant information for explaining the implementation status of sustainable development practices: The Board of Directors shall be elected pursuant to the candidate nomination system and are nominated by shareholders and the Board of Directors in consultation with appropriate candidates, then the elected candidates will assemble the Board of Directors. The Company advocates the principle of fairness, justness and openness to fulfill the diversity based on the company's business operations, operating model and development needs pursuant to the “Corporation by-laws”,” Corporate Governance Best Practice Principles” and “Procedures for Election of Directors”. The re-election of the Board of the Directors held in 2021 with 9 members which 3 independent directors included. The professional knowledge (ex. legal, accounting, industry, financing, marketing or technology), professional skills (ex. operational judgement, accounting and financing analytic ability, management ability, crisis management, industry knowledge, going globally, leadership, decision-making ability) and whether are capable of the related industry experience, those are being considered when selecting the Board of Directors. The establishment of selecting the candidates for the Board of Directors meets with the criterion and related regulations to ensure the suitable candidates can be identified effectively. The preparation for successor of the managerial level In favor of the company management and operation, the continuing education is scheduled for the important managerial level to ensure they keep abreast of the lateimportant information, the education information includes hours and relevant records are available on the annual report. The Company will conduct the internal education training annually for the managerial level and encourage staff taking external training to strengthen their capabilities for the talent cultivation. Apart from that, the Company conducts performance appraisal every 6 months via observation and interviews to better understand what areas need to be improved and expectations of the staff, the results will be utilized as the reference for the successorplanning.

• Note: 1. If “Yes” is checked under implementation, please describe the key policies, strategies, and measures and results adopted. If “No” is checked under implementation, please give reasons and describe relevant strategies and measures to be adopted in the future.

• The materiality principle refers to environmental, social, or corporate governance issues that have a material impact on the investors or other stakeholders of the company.

• Please refer to the best practice reference examples on the website of the Corporate Governance Center of the Taiwan Stock Exchange for the method of disclosure.

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3.3.6 Fulfillment of Ethical Corporate Management and Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and Reasons

TWSE/GTSM Listed Companies” and Reasons
Evaluation Item			Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Establishment of ethical corporate management policies and programs 1) Does the company have a Board-approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy? 2) Does the company have mechanisms in place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? 3) Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectivelyandperform regular reviews and amendments?	V V V		1) On May 12, 2015, April 10, 2019 and November 10, 2021, the Company’s board of directors approved and revised the establishment of the “Ethical Corporate Management Best Practice Principles” and the “Procedures for Ethical Management and Guidelines for Conduct,” which are available on the Company’s website and the MOPS. 2) The Company has formulated the “Ethical Corporate Management Best Practice Principles” and the “Procedures for Ethical Management and Guidelines for Conduct,” which contain safeguards against unethical conduct and specify procedures, sanctions and grievance systems for non- compliance. 3) The Company has prepared the “Ethical Corporate Management Best Practice Principles” and the “Procedures for Ethical Management and Guidelines for Conduct,” and has defined and implemented precautionary measures and regularlyreviews and revises the aforementionedprograms.	1) No material difference. 2) No material difference. 3) No material difference.
2. Fulfill operations integrity policy 1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? 2) Does the company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical	V V		1) The Company shall require suppliers, contractors and other partners who have business dealings with the Company to comply with the Company’s Code of Conduct for Employees and to conduct themselves with integrity and honesty. The Company has an ethical conduct clause in all external contracts entered into by the Company in connection with its business activities. The Company may downgrade, suspend or remove from the list of eligible suppliers any party with a record of unethical conduct. 2) (1)The Company’s administration division acts as the dedicated unit of the	1) No material difference. 2) No material difference.

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Evaluation Item			Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and Reasons
	Yes	No	Abstract Illustration
corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations?			Ethical Management Working Group, with the Vice President of the administration division as the convener. According to the unit’s work duties and scope, it is responsible for assisting the board of directors and management in formulating and overseeing the implementation of ethical management policies and preventive programs to ensure the enforcement of the ethical corporate management best practice principles, which was reported to the board of directors on 2021/11/11. (2) The Company’s ethical management policy was enforced in 2021 as follows: 1. Legal compliance promotion: The administration division promoted the awareness education among all directors/employees, compiled the ethical corporate management best practice principles and the important rules for handling internal material information, and educated directors/employees on the points to note in conducting business. 2. Periodic review The Company’s annual self-audit and self-assessment of compliance with laws and regulations are performed by each unit to achieve effective control and implementation, with independent audits by an auditing entity to ensure the operation of the overall mechanism to jointly manage and prevent the occurrence of unethical conduct. Zero external reports were filed in fiscal 2021. 3. Whistleblower system and whistleblower protection The Company has set up a specific whistleblower system under the Corporate Governance Best Practice Principles, the Ethical Corporate Management Best Practice Principles and the Procedures for Ethical Management and Guidelines for Conduct to actively prevent unethical conduct and encourage internal and external staff to report unethical conduct or misconduct, and has designated the President’s Office as the dedicated unit to receive reports of unethical conduct from our employees. If the report

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Evaluation Item			Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and Reasons
	Yes	No	Abstract Illustration
3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? 4) Does the company have effective accounting and internal control systems in place to implement ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct, or hire outside accountants to perform the audits? 5) Does the company regularly hold internal and external educational trainings on operational integrity?	V V V		involves a director or a senior executive, it will be referred to the independent director, and the identity of the whistleblower and the content of the report will be kept confidential, and the whistleblower will be protected from improper treatment as a result of the report. Zero external reports were filed in fiscal 2021. 3) To avoid prejudice to the Company’s interests, its “Code of Conduct for Employees,” “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct” all contain policies on the avoidance of conflicts of interest. For suppliers who have business dealings with the Company, they are also required to observe the Company’s code of conduct for employees, not to engage in any illegal business practices and not to offer improper benefits or bribes to the Company’s staff in all transactions with the Company. The Company has a reporting system on its intranet site for employees and related personnel to report any improper practice. 4) In order to establish an effective accounting and internal control system, the Company has fully computerized its operations, linking all management functions from computer to computer, and performing exception management at every level. 5) Internal and external training on ethical management: In fiscal 2021, the Company held internal and external training sessions on ethical management issues (including courses on ethical management regulations compliance, safety and health training, accounting system and internal control), for 7,144 persons totaling445 hours.	3) No material difference. 4) No material difference. 5) No material difference.
3. Operation of the integrity channel 1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?	V		1) 2) A whistleblower system is set up on the Company’s intranet site to receive reports of any unlawful or unethical activity, with an independent and dedicated unit responsible for investigatingthe matter and keepingthe	1) 2) No material difference.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies” and Reasons
	Yes	No	Abstract Illustration
2) Does the company have in place standard operating procedures for investigating accusation cases, as well as follow-up actions and relevant post-investigation confidentiality measures? 3) Does the company provide proper whistleblower protection?	V V		identity of the whistleblower and the content of the report confidential. 3) The Company does not tolerate any threats or reprisals against whistleblowers. If the whistleblower wishes to remain anonymous, the Company will use anonymityinstead of the name of the whistleblower duringthe investigation.	3) No material difference.
4. Strengthening information disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?	V		The Company’s board of directors approved and revised on May 12, 2015 April 10, 2019 and November 10, 2021 the formulation of the “Ethical Corporate Management Best Practice Principles” and the “Procedures for Ethical Management and Guidelines for Conduct,” which are available on the Company’s website and the MOPS. Internal and external training on ethical management: In fiscal 2021, the Company held internal and external training sessions on ethical management issues (including courses on ethical management regulations compliance, safety and health training, accounting system and internal control), for 7,144 persons totaling445 hours.	No material difference.
5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancybetween thepolicies and their implementation: None
6. Other important information to facilitate a better understandingof the company’s ethical corporate managementpolicies: None

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• 3.3.7 Corporate Governance Guidelines and Regulations:

Please refer to the website at http://www.cosmo-ic.com/InvestorSH.asp.

• 3.3.8 Other Important Information Regarding Corporate Governance: None

• 3.3.9 Implementation Status of Internal Control System

• 3.3.9.1 Statement of Internal Control

Cosmo Electronics Corporation Declaration of Internal Control System

Date: March 29, 2022

Based on the findings of a self-check, the Company states the following with regard to its internal control system during the year of 2021:

• I. The Company acknowledges that the Company’s Board of Directors and the managerial officers are responsible for establishing, implementing, and maintaining an adequate internal control system, and the Company has established such system. The objectives of internal control system include achieving various objectives in business benefits and efficiency (including profitability, performance, and protection of security for assets), ensuring the reliability, timeliness, transparency, and regulatory compliance of reporting, and providing reasonable assurance.

• II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can only provide reasonable assurance of accomplishing the three aforementioned objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.

• III. The Company evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the “Regulations”). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities. Each component comprises a few different items. For more information concerning the items, please refer to the Regulations.

• IV. The Company has already adopted the aforementioned Regulations to evaluate the effectiveness of its internal control system design and operating effectiveness.

• V. Based on the findings of the aforementioned evaluation, the Company believes that, on December 31, 2021, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries) to provide reasonable assurance over our operating effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.

• VI. This Declaration is an integral part of the Company’s annual report and prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

• VII. This Declaration was passed by the Board of Directors in the meeting held on March 29, 2022, with none of the nine attending Directors expressing dissenting opinions. The remainder all affirmed the content of this Declaration.

Cosmo Electronics Corporation

Chairperson: TSAI, NAI-CHENG signature President: Chao Chia-chi signature

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• 3.3.9.2 If a CPA was engaged to conduct a special audit of internal control system, the audit report shall be disclosed: None

• 3.3.10 If there has been any legal penalty against the company and its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder interests or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement: None

• 3.3.11 Major Resolutions of Shareholders’ Meetings and Board Meetings and the Implementation Status of Them During the Most Recent Fiscal Year or During the Current Fiscal Year Up to the Publication Date of the Annual Report;

• 3.3.11.1 Major Resolutions of Shareholders’ Meetings in 2021 and the Implementation Status of Them:

Them:
Date	Major Resolutions and	ImplementationStatus
July 20, 2021 General Shareholders’ Meeting	1. Approved the 2020 Annual Business Report and FinancialStatements.	Approved by the shareholders’ meeting and executed accordingly.
	2. Approved the surplus distribution for 2020.	Approved by the shareholders’ meeting and executed accordingly.
	3. The issuance of new shares by way of capital increase through capitalization of capital reserve.	NT$0.03 per share, the ex-rights date was on Sep 28,2021, and the registration was approved by the Ministry of Economic Affairs on Oct. 19,2021.
	4. Amendments to the “Articles of Incorporation.”、 “Rules and Procedures of Shareholders’ Meetings”、 “Regulations for the Election of Directors and Supervisors.”、“Procedures for the Acquisition or Disposal of Assets.”、“Procedures for the Acquisition or Disposal of Assets.”、“Operational Procedures for Loaning Funds to Others.”、 “Endorsements/Guarantees Regulations.	Approved by the shareholders’ meeting and posted on the MPOS.
	5.The re-election of the board of directors and lifted the non-competition clauses	1.The elected board of the Directors: TSAI, NAI-CHENG,DIGICROWN TECHNOLOGIES LTD representative: Chao Chia-chi, Hung Yu-han, Ho Wei-chuan; Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account Representative: Liu Chin-mu, Lee Chih-chin . The elected independent directors: Wu Yong-fu, Xu Bo-yu, Li Dan. 2.Approved by the Ministry of Economic Affairs on Aug 12, 2021 and posted on the Company’s website..

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3.3.11.2 Major Resolutions of Board Meetings in Fiscal Year 2021 and During the Current Fiscal Year Up to the Publication Date of the Annual Report:

YearUp to	thePublication Date oftheAnnual Report:
Date	Summary of Discussion
Feb. 3, 2021	1. Submitted the performance of the internal audit from Oct. to Dec. 2020. 2. Submitted the 2020 Board performance evaluation report. 3. Discussed the application of the credit and pre-settlement risk limits in the transactions between the Company and financial institutions. 4. Discussed amendments to the “Internal Audit Implementation Rules.” 5. Discussed the formulation of the “Audit Committee Charter.” 6. Discussed and reviewed the awarding of year-end bonuses to managerial officers and directors with employee status in 2020.
Mar. 30, 2021	1. Submitted the 2021 CPA Independence and Competence Assessment Report. 2. Submitted a report on the implementation of the Company’s sound operating plan 3. Discussed the application of the credit and pre-settlement risk limits in the transactions between the Company and financial institutions. 4. Discussed the distribution of compensation to employees, directors and supervisors for 2020. 5. Discussed the 2020 Annual Business Report and Financial Statements. 6. Discussed the surplus distribution for 2020. 7. Discussed the “Internal Control System Effectiveness Assessment” and the “Statement on Internal Control System” for 2020. 8. Discussed amendments to the “Articles of Incorporation.” 9. Discussed the complete re-election of directors. 10. Discussed the acceptance of shareholders’ proposals for the 2021 General Shareholder’s Meeting and nomination of candidates for directors (including independent directors). 11. Discussed the matters related to the holding of 2021 General Shareholders’ Meeting of the Company.
May 12, 2021	1. Submitted the Company’s 2021Q1 Consolidated Financial Statements. 2. Submitted the performance of the internal audit from Jan. to March 2021. 3. Submitted directors’ and supervisors’ liability insurance coverage. 4. Discussed the application of the credit and pre-settlement risk limits in the transactions between the Company and financial institutions. 5. Discussed the appointment and audit fee of the Company’s CPA firm for 2021. 6. Discussed and reviewed the compensation of 2nd grade senior-level executives in the capacity of director. 7. Discussed amendments to the “Rules and Procedures of Shareholders’ Meetings” 8. Discussed amendments to the “Regulations for the Election of Directors and Supervisors.” 9. Discussed amendments to the “Procedures for the Acquisition or Disposal of Assets.” 10. Discussed amendments to the Article 20 of “Procedures for the Acquisition or Disposal of Assets.” states that a company engaging in derivatives trading shall adopt the risk management measures. 11. Discussed amendments to the “Operational Procedures for Loaning Funds to Others.” 12. Discussed amendments to the “Endorsements/Guarantees Regulations.” 13. Discussed the passage of the slate of candidates for directors (including independent directors) nominated by the Board. 14. Discussed the lifting of the non-compete clause for new directors. 15. Discussed the issuance of new shares by way of capital increase through capitalization of capital reserve. 16. Discussed the addition of the convening of the Company’s 2021 General Shareholder’s Meeting ofShareholders.
July2,2021	Re-scheduled the date and the venue for holdingthe 2021general shareholders’ meeting.
July 20, 2021	1.Elected Chairperson of the Board. 2. Signed a contract with National Central University for industry-academia collaboration and academicfeedback mechanism.
Aug. 12, 2021	1. Submitted the Company’s Q2 2021 consolidated financial statements. 2. Submitted the performance of the internal audit from April to July 2021. 3. The application of the credit and pre-settlement risk limits in the transactions between the Company and financial institutions. 4. Appointed to theCompany’sCompensationCommittee.

63

Date	Summary of Discussion
Aug. 31, 2021	1. Set the base date for the issue of new shares by way of capital increase through capitalizationofcapital reserve, as wellasrelevantmatters.
Nov. 11, 2021	1. Submitted the Company’s Q3 2021 consolidated financial statements. 2. The performance of the internal audit from Aug. to Sep. 2021. 3. The application of the credit and pre-settlement risk limits in the transactions between the Company and financial institutions. 4. The Company issued a guarantee for a credit facility to a subsidiary. 5. Set the Company’s base date for the issuance of new shares for the 3rd domestic secured convertible bonds. 6. The Company’s internal audit plan for 2022. 7. Addition of “Risk Management Rules and Procedures”. 8. Amendments to “Good Faith Principles,” “Procedures for Application for Suspension and Resumption of Trading” and “Rules of Procedure for Board Meetings.” 9. Acquired machinery and equipment from subsidiaries. 10. Changed business address ofthe Company.
Jan. 18, 2022	1. Submitted the performance of the internal audit from Oct. to Nov. 2021. 2. Submitted the 2021 Board performance evaluation report. 3. Submitted the 2021 Board performance evaluation report. 4. Set the Company’s base date for the issuance of new shares for the 3rd domestic secured convertible bonds. 5. Reviewed the awarding of year-end bonuses to managerial officers and directors with employee status in 2021. 6. Amendments to the Compensation Committee Charter.” 7. Amendments to the “RulesGoverningthe Duties of Independent Directors.”
Mar.18, 2022	1. Submitted the performance of the internal audit from Dec. 2021 to Jan. 2022. 2. Amendment to the Management of Endorsement and Guarantees. 3. Proposal of Syndicated Loan. 4.AcquisitionandDisposalof Assets ofthe Subsidiary Company.
Mar. 29, 2022	1.Discussed the application of the credit and pre-settlement risk limits in the transactions between the Company and financial institutions. 2.Discussed the distribution of compensation to employees, directors and supervisors for 2021. 3. Discussed the 2020 Annual Business Report and Financial Statements. 4. Discussed the surplus distribution for 2020. 5. Discussed the “Internal Control System Effectiveness Assessment” and the “Statement on Internal Control System” for 2021. 6. Discussed amendments to the “Articles of Incorporation.” 7. Discussed amendments to the “Procedures for the Acquisition or Disposal of Assets.” 8. Amendment to the Rules of Procedures for Shareholders’ Meeting. 9. Discussed the matters related to the holding of 2021 General Shareholders’ Meeting of the Company. 10. Discussed the acceptance of shareholders’ proposals for the 2021 General Shareholders’ Meeting. 11.Assignment ofCorporate Governance Officer.
May 11, 2022	1. Submitted the performance of the internal audit from Feb.to Mar. 2022 2. Report the Board of Directors liability insurance coverage. 3. Proposal of CPA’s independency and suitability review report of 2021. 4. The application of the credit and pre-settlement risk limits in the transactions between the Company and financial institutions. 5. Discussed the appointment and audit fee of the Company’s CPA firm for 2022. 6. Discussed the consolidated financial statement of Q12022. 7. Discussed the greenhouse gas verification and schedule planning. 8. Discussed “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies” amendment. 9. Discussed “A TWSE listed company shall establish a standard operational protocol for responding to requests from directors” amendment. 10.Disucssed the new common share issuance through the increase of capital by capitalization of capital reserve. 11.Discussed thegeneral shareholders’ meetingof 2022.

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• 3.3.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None

• 3.3.13 Resignation or Dismissal of the Company’s Key Individuals: None

3.5 Information Regarding the Company’s Audit Fee and Independence

Unit: NT$ thousands

Name of Accounting Firm	Name of CPA	Period Covered by CPAs’ Audit	Audit Fee	Non-audit Fee (note)	Total	Remark
PwC Taiwan	Tsai, I-tai	Jan. 2021 - Dec. 2021	4,600	20	4,620
	Liang, Chan- nu	Jan. 2021 - Dec. 2021
Deloitte & Touche	Chang, chung-min	Jan. 2021 - Dec. 2021		180	180

Note: The non-audit services: transfer pricing, capital review and report.

• (2) If the audit fee paid in the year of change of accounting firm is less than the audit fee in the year before the change, the amount of the audit fee before and after the change and the reasons for the difference should be disclosed: Not applicable.

• (3) If the audit fee is decreased by 10% or more from the previous year, the amount, percentage and reasons for the decrease should be disclosed: Not applicable.

3.6 Replacement of CPA: None

• 3.7 The Company’s Chairperson, President, Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any position in the Company’s independent auditing firm or its affiliates during the most recent year: None

• 3.8 Changes in the transfer of shareholdings and pledge of shareholdings of directors, supervisors, managerial personnel and shareholders holding more than 10% of the shares in the most recent year and up to the date of publication of the financial statement 3.8.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

Title	Name	2021	2021	ByApril 26,2022	ByApril 26,2022
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairperson	TSAI,NAI-CHENG	14,968	0	0	0
Director	DIGICROWN TECHNOLOGIES LTD.	435,756	0	0	0
	Representative: Chao Chia-chi
Director	DIGICROWN TECHNOLOGIES LTD.
	Representative: HungYu-han
Director	DIGICROWN TECHNOLOGIES LTD.
	Representative: Ho Wei-chuan
Director	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account	32,164	0	0	0
	Representative: Liu Chin-mu

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Title	Name	2021	2021	ByApril 26,2022	ByApril 26,2022
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Director	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account
	Representative: Lee Chih-chin
Independent director	Wu Yong-fu	0	0	0	0
Independent director	Xu Bo-yu	0	0	0	0
Independent director	Li Dan (assumed on 7/20/2021)	0	0	0	0
Supervisor	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account	32,164	0	0	0
	Representative: Lai Rong- sheng (discharged 7/20/2021)
Supervisor	Bank SinoPac as Custodian for Fine Asia Int’l Ltd. Investment Account
	Representative: Allen Zang(discharged 7/20/2021)
President	Chao Chia-chi	1,495	0	0	0
CFO	HungYu-han	0	0	0	0
Vice President	Lee Chih-chin (assumed on 6/1/2021)	0	0	0	0
Chief Corporate Governance Officer	Lee Chih-chin (assumed on 3/29/2022)
Deputy General Manger	Liu Chin-mu (assumed on 6/1/2021)	0	0	0	0

3.8.2 Information on the transfer of shares: None

3.8.3 Information on pledge of shares: None

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3.9 Relationship among the Top Ten Shareholders

Name	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Remark
	Shares	%	Shares	%	Shares	%	Name	Relationship
DIGICROWN TECHNOLOGIES LTD.	15,002,531	9.28%					1. Kuan Chia Investment Ltd. 3. Da Liang Investment Ltd.	1. Chairperson of each company is the same person 2. Related to the person in charge of the Company in the first degree of kinship	─
Representative: Chao Chia-chi	51,495	0.03%	0	0	0	0	None	None	─
Representative: HungYu-han	0	0	0	0	0	0	None	None	─
Representative: Ho Wei-chuan	0	0	0	0	0	0	None	None	─
Wei Jia Investment Co.,Ltd.	13,853,431	8.57%					None	None	─
Representative: ChengMei Hua	0	0	0	0	0	0	None	None	─
Da Liang Investment Ltd.	13,600,400	8.41%					1. Hsieh Shu Chuan 2. Kuan Chia Investment Ltd. 3. DIGICROWN TECHNOLOGIES LTD.	1. The person in charge of the company 2. Related to the person in charge of the Company in the first degree of kinship 3. Related to the person in charge of the Company in the first degree of kinship	─
Representative: Hsieh Shu Chuan	3,046,486	1.88%	0	0	0	0	1. DIGICROWN TECHNOLOGIES LTD. 2. Kuan Chia Investment Ltd. 3. Da Liang Investment Ltd.	1. Related to the person in charge of the Company in the first degree of kinship 2. Related to the person in charge of the Company in the first degree of kinship 3. The person in charge of the company	─
Hung Yi Investment Ltd.	13,204,532	8.17%					None	None	─
Representative: Ho Wei-chuan	0	0	0	0	0	0	None	None	─
Tsan Hua Investment Co., Ltd.	12,506,249	7.74%					None	None	─
Representative: Brook Lin	10,299	0.01%	0	0	0	0	None	None	─
Kuan Che Investment Ltd.	12,194,722	7.55%					None	None	─
Representative: Johnson Tsao	1,042,312	0.64%	0	0	0	0	None	None	─
Tai Sung Investment Co., Ltd.	11,688,124	7.23%					None	None	─
Representative: Ernest Song	4,099,580	2.54%	0	0	0	0	None	None	─

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Kuan Chia Investment Ltd.	11,580,937	7.17%					1. DIGICROWN TECHNOLOGIES LTD. 2. Hsieh Shu Chuan 3. Da Liang Investment Ltd.	1. Chairperson of each company is the same person 2. Related to the person in charge of the Company in the first degree of kinship 3. Related to the person in charge of the Company in the first degree of kinship	─
Representative: TSAI, NAI- CHENG	491,158	0.30%	106	0	0	0	1. DIGICROWN TECHNOLOGIES LTD. 2. Kuan Chia Investment Ltd. 3. Hsieh Shu Chuan 4. Da Liang Investment Ltd.	1. The person in charge of the company 2. The person in charge of the company 3. Related to the person in charge of the Company in the first degree of kinship 4. Related to the person in charge of the Company in the first degree of kinship	─
Cathay United Bank as Custodian for Fei Da Co., Ltd. Investment Account	10,580,537	6.55%					None	None	─
Ming Sheng Investment Co., Ltd.	7,666,772	4.74%					None	None	─
Representative: Collin HY Wang	0	0	0	0	0	0	None	None	─

3.10 The number of shares held by the Company, its directors, supervisors, managerial personnel, and entities under the direct or indirect control of the Company in the same investee company shall be aggregated and calculated as a percentage of the consolidated shareholding

March 31, 2022 Unit: shares / %

Name	Investment by the Company	Investment by the Company	Direct or Indirect Ownership by Directors/Supervisors/Managers	Direct or Indirect Ownership by Directors/Supervisors/Managers	Total Ownership	Total Ownership
	Shares	%	Shares	%	Shares	%
Cosmo Electronics Co.,Ltd.	5,500,038	100%	0	0	5,500,038	100%
COSMO ELECTRONICS (HK） COMPANY LIMITED	63,180,000	100%	0	0	63,180,000	100%
GRAND CONCEPT GROUP LIMITED	7,950,000	100%	0	0	7,950,000	100%
GRANDWAY INTERNATIONAL LIMITED	30,080,000	100%	0	0	30,080,000	100%
PT COSMO TECHNOLOGY	21,100,000	100%	0	0	21,100,000	100%
Cosmo Green Power Ltd.	-	100%	0	0	-	100%

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IV. Capital Overview

4.1 Capital and Shares

4.1.1 Sources of Capital

Month/ Year	Par Value (NT$)	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Shares	Amount (NT$ thousands)	Shares	Amount (NT$ thousands)	Sources of Capital	Capital Increased by Assets Other thanCash	Other
Aug. 1995	1,000	59,000	59,000,000	59,000	59,000,000	Cash capital increase: $30,000,000	－	Jing(84)-Shang-Zi No. 01008237
Dec. 1996	10	10,760,000	107,600,000	10,760,000	107,600,000	Cash capital increase: $48,600,000	－	Jing(86)-Shang-Zi No. 101454
Sep. 1997	10	15,374,000	153,740,000	13,374,000	133,740,000	Cash capital increase: $10,000,000 Capitalization of retained earnings: $16,140,000	－	Jing(86)-Shang-Zi No. 121515
Sep. 1997	10	15,374,000	153,740,000	15,374,000	153,740,000	Cash capital increase: $20,000,000	－	Jing(86)-Shang-Zi No. 121515
Oct. 1998	10	44,500,000	445,000,000	22,667,452	226,674,520	Cash capital increase: $49,000,000 Capitalization of retained earnings: $8,560,520 Capitalization of capital reserves: $15,374,000	－	Tai-Cai-Zheng (Yi) No. 57083
June 1999	10	44,500,000	445,000,000	26,448,795	264,487,950	Capitalization of retained earnings: $15,145,980 Capitalization of capital reserves: $22,667,450	－	Tai-Cai-Zheng (Yi) No. 55844
Nov. 1999	10	44,500,000	445,000,000	30,000,000	300,000,000	Cash capital increase: $35,512,050	－	Tai-Cai-Zheng (Yi) No. 82841
April 2000	10	44,500,000	445,000,000	36,942,272	369,422,720	Capitalization of retained earnings: $39,422,720 Capitalization of capital reserves: $30,000,000	－	Tai-Cai-Zheng (Yi) No. 32118
Jan. 2001	10	44,500,000	445,000,000	44,442,272	444,422,720	Cash capital increase: $75,000,000	－	Tai-Cai-Zheng (Yi) No. 79433
Dec. 2001	10	101,600,000	1,016,000,000	53,780,200	537,802,000	Capitalization of retained earnings: $87,601,900 Capitalization of capital reserves: $5,777,380	－	Tai-Cai-Zheng (Yi) No. 165285
Nov. 2002	10	101,600,000	1,016,000,000	71,580,200	715,802,000	Cash capital increase: $178,000,000	－	Tai-Cai-Zheng-Yi No. 0910129807
Feb. 2003	10	101,600,000	1,016,000,000	73,036,890	730,368,900	Convertible bonds: $14,566,900	－	Tai-Cai-Zheng-Yi No. 0910129807
April 2003	10	101,600,000	1,016,000,000	73,327,798	733,277,980	Convertible bonds: $2,909,080	－	Tai-Cai-Zheng-Yi No. 0910129807
Oct. 2003	10	101,600,000	1,016,000,000	73,436,883	734,368,830	Convertible bonds: $1,090,850	－	Tai-Cai-Zheng-Yi No. 0910129807
Dec. 2003	10	101,600,000	1,016,000,000	74,036,869	740,368,690	Convertible bonds: $5,999,860	－	Tai-Cai-Zheng-Yi No. 0910129807
June 2004	10	101,600,000	1,016,000,000	77,355,032	773,550,320	Convertible bonds: $33,181,630	－	Tai-Cai-Zheng-Yi No. 0910129807
Nov. 2004	10	101,600,000	1,016,000,000	89,622,899	896,228,990	Convertible bonds: $122,678,670	－	Tai-Cai-Zheng-Yi No. 0910129807
Jan. 2007	10	170,000,000	1,700,000,000	119,622,899	1,196,228,990	Private cash capital increase: $300,000,000	－	Jing-Shou-Shang- Zi No. 96.1.15 09601009090
Sep. 2008	10	170,000,000	1,700,000,000	132,822,665	1,328,226,650	Capitalization of retained earnings: $72,186,220 Capitalization of capital reserves: $59,811,440	－	Jing-Shou-Shang- Zi No. 97.9.9 09701228260
Sep. 2010	10	170,000,000	1,700,000,000	136,807,345	1,368,073,450	Capitalization of retained earnings: $39,846,800	－	Jing-Shou-Shang- Zi No. 99.9.27 09901216670
Oct. 2014	10	170,000,000	1,700,000,000	143,807,345	1,438,073,450	Private cash capital increase: $70,000,000	－	Jing-Shou-Shang- Zi No. 103.10.17 10301215500

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Dec. 2015	10	170,000,000	1,700,000,000	156,307,345	1,563,073,450	Cash capital increase: $125,000,000	－	Jing-Shou-Shang- Zi No. 104.12.04 10401261000
Aug. 2018	10	170,000,000	1,700,000,000	156,334,226	1,563,342,260	Convertible bonds: $268,810	－	Jing-Shou-Shang- Zi No.107.08.17 10701081730
July 2019	10	200,000,000	2,000,000,000	156,334,226	1,563,342,260	(Capital approved)	－	Jing-Shou-Shang- Zi No. 108.07.12 10801085090
Oct 2021	10	200,000,000	2,000,000,000	161,024,253	1,610,242,530	New common share issuance through the increase of capital by capitalization of capital reserve:$46,900,270	－	Jing-Shou- Shang-Zi No. 110.10.19 11001189830
Nov 2021	10	200,000,000	2,000,000,000	161,471,617	1,614,716,170	Convertible bonds: $4,473,640	－	Jing-Shou- Shang-Zi No. 110.11.29 11001221890
March 2022	10	200,000,000	2,000,000,000	161,623,378	1,616,233,780	Convertible bonds: $1,517,610	－	Jing-Shou- Shang-Zi No. 111.03.02 1110101918

	Issued shares	Issued shares		Authorized	Authorized	Authorized			Remark
				Un-issued shares			Total shares
	161,623,378			38,376,622			200,000,000		None
			None
Status of Shareholders Qty.	Government Agencies	Financial Institutions	Other Juridical Persons		Domestic Natural Persons	Foreign Institutions & Natural Persons		Total
Number of Shareholders	0	0	19		1,993	18		2,030
Shareholding (shares)	0	0	125,722,821		19,375,063	16,525,494		161,623,378
Percentage	0.00%	0.00%	77.79%		11.99%	10.22%		100.00%

4.1.3 Shareholding Distribution Status

April 26, 2022

			April 26,2022
Class of Shareholding (Unit:Share) 1-999 1,000-5,000 5,001-10,000 10,001-15,000 15,001-20,000 20,001-30,000 30,001-40,000 40,001-50,000 50,001-100,000 100,001-200,000 200,001-400,000 400,001-600,000 600,001-800,000 800,001-1,000,000 1,000,001 or over	Number of Shareholders	Shareholding (Shares)	Percentage
	1,521	226,972	0.14%
	397	736,346	0.46%
	42	279,833	0.17%
	15	180,408	0.11%
	3	52,497	0.03%
	6	145,512	0.09%
	6	213,173	0.13%
	1	42,986	0.03%
	6	345,160	0.21%
	7	1,047,778	0.65%
	2	597,341	0.37%
	1	491,158	0.30%
	0	0	0.00%
	1	837,320	0.52%
	22	156,426,894	96.79%
Total	2,030	161,623,378	100.00%

Note: This is the shareholding distribution status of common shares. The Company has not issued any preferred share.

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4.1.4 List of Major Shareholders

.1.4 List of Major Shareholders	.1.4 List of Major Shareholders	.1.4 List of Major Shareholders
April 26,2022
Shareholding Name of Major Shareholder	Shares held	Shareholding percentage
DIGICROWN TECHNOLOGIES LTD.	15,002,531	9.28%
Wei Jia Investment Co.,Ltd.	13,853,431	8.57%
Da LiangInvestment Ltd.	13,600,400	8.41%
HungYi Investment Ltd.	13,204,532	8.17%
Tsan Hua Investment Co.,Ltd.	12,506,249	7.74%
Kuan Che Investment Ltd.	12,194,722	7.55%
Tai SungInvestment Co.,Ltd.	11,688,124	7.23%
Kuan Chia Investment Ltd.	11,580,937	7.17%
Cathay United Bank as Custodian for Fei Da Co., Ltd. Investment Account	10,580,537	6.55%
MingShengInvestment Co.,Ltd.	7,666,772	4.74%

4.1.5 Market Prices, Net Worth, Earnings, and Dividends per Share in the Most Recent Two Years

Item	FY	FY	2020	2021	By March 31, 2022(Note 5)
Market Price per Share	Highest		35.45	47.00	36.75
	Lowest		28.10	31.10	32.95
	Average		30.52	37.01	34.49
Net Worth per Share	Before Distribution		10.49	10.31	10.69
	After Distribution		10.19	(註1)	-
Earnings per Share	Weighted Average Shares (thousand shares)		161,024	161,087	161,623
	Earnings per Share Before Retroactive Adjustment		0.04	0.35	0.08
	Earnings per Share After Retroactive Adjustment		0.04	(註1)	0.08
Dividends per Share	Cash Dividends		-	-	-
	Stock Divid ends	Earnings allotment	-	-	-
		Capital surplus allotment	-	-	-
	Accumulated Undistributed Dividends		0.3	(註1)	-
Return on Investment Analysis	Price / Earnings Ratio(Note 2)		771.5	104.83	431.13
	Price / Earnings Ratio(Note 3)		-	-	-
	Cash Dividend Yield Rate (%) (Note 4)		-	-	-

Note 1: The distribution of earnings for fiscal 2021 is subject to the resolution of the shareholders’ meeting. Note 2: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 3: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share

Note 4: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

Note 5: The net value per share and earnings per share for the first quarter of 2022 have been reviewed by the CPAs.

Note 6: The calculation of yearl’s average market price based upon that year's transaction value and transaction volume.

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4.1.6 Dividend Policy and Implementation Status

4.1.6.1 Dividend policy

The Company shall use the current year’s profit before tax to deduct the profit before compensation distribution to employees and directors and supervisors, and reserve the amount to cover accumulated losses in advance. If there is any remaining balance, 5% to 12% shall be set aside as compensation to employees and not more than 3% shall be set aside as compensation to directors and supervisors. The distribution of compensation must be approved by a resolution of the board of directors with at least two-thirds of the directors present and agreed by a majority of the directors present, and reported to the shareholders’ meeting.

The aforementioned employee compensation may be made in the form of stock or cash, and may be paid to employees of subsidiaries of the Company meeting certain specific requirements.

The Company shall, after its losses have been covered and all taxes and dues have been paid and at the time of allocating surplus profits, first set aside ten percent of such profits as a legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply. If necessary, special reserve may be set aside or reversed in accordance with laws and regulations. If there is any undistributed earnings from prior years, the Board of Directors shall prepare a proposal for the distribution of earnings and submit it to the shareholders’ meeting for resolution.

The Company’s dividend policy will take into account the Company’s environment and growth stage, future capital requirements and long-term financial planning, and the Board of Directors will prepare a proposal for the distribution of earnings and submit it to the shareholders’ meeting for approval.

Since the Company is in a fast-changing industry and development trend and is in a growth stage, it needs to continue to invest capital. In the future, depending on the Company’s working capital position and considering the shareholders’ demand for cash inflow, the Company will allocate 15% or more of the distributable earnings to shareholders as dividends, except that if the distributable earnings are less than 20% of the paid-in capital, they may not be distributed. The distribution of dividends to shareholders may be made in cash or in shares, with cash dividends not less than 10% of the total dividends paid in the year, provided that if the amount of cash dividends is less than $0.10 per share, the entire amount may be paid as stock dividends instead.

4.1.6.2 Dividend distribution at this shareholders’ meeting

The Company pays dividends in accordance with the relevant laws and regulations and the Company’s Articles of Incorporation. The Company’s profit after tax for fiscal 2021 was NT$ 5 4,938,866; comprehensive income of NT$1,217,191; set aside NT$5,615,606 for legal reserve; set aside NT$50,540,451 for special reserve; the remaining undistributed earnings at the end of the year were NT$0. There were no earnings available for distribution.

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• 4.1.7 The effect of dividend distributions contemplated for the current fiscal year on company operating performance and earnings per share:

Year	Year	Year	2022
Item
Opening paid-in capital (NT$)			1,616,233,780
Dividend distribution for the year (Note 1)	Cash dividends per share (NT$)		0
	Dividends per share of capitalization of retained earnings (shares)		0
	Dividends per share of capitalization of capital reserves (shares)		0.04
Changes in operating performance	Operating income		Note 2
	Increase (decrease) in operating income over the same period last year
	Profit after tax
	Increase (decrease) in profit after tax over the same period last year
	Earnings per share (NT$)
	Ratio of increase (decrease) in earnings per share over the same period lastyear
	Annual average return on investment (inverse of annual average PE ratio)
Proposed mandatory earnings per share and P/E ratio	If the capitalization of retained earnings is fully transferred to cash dividends	Proposed earnings per share (NT$)	Note 2
		Proposed average annual return on investment
	If no capitalization of capital reserves is made	Proposed earnings per share (NT$)
		Proposed average annual return on investment
	If no capitalization of capital reserves is made and the capitalization of retained earnings is fully transferred to cash dividends	Proposed earnings per share (NT$)
		Proposed average annual return on investment

Note 1: The estimated distribution of shares for fiscal 2022 is based on the resolution of the board of directors’ meeting on May 11, 2022, and will be processed in accordance with the relevant regulations after the approval of this year’s regular shareholders’ meeting.

Note 2: The Company’s financial forecast for fiscal 2022 is not publicly available and therefore no disclosure is required.

4.1.8 Compensation to employees and compensation to directors

1. The percentage or scope of compensation to employees and remuneration to directors as set forth in the Articles of Incorporation:

2. The Company shall use the current year’s profit before tax to deduct the profit before compensation distribution to employees and directors and supervisors, and reserve the amount to cover accumulated losses in advance. If there is any remaining balance, 5% to 12% shall be set aside as compensation to employees and not more than 3% shall be set aside as compensation to directors and supervisors.

The aforementioned employee compensation may be made in the form of stock or cash, and may be paid to employees of subsidiaries of the Company meeting certain specific requirements.

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1. The basis for estimating the amount of compensation to employees and directors, the basis for calculating the number of shares to be distributed as stock dividends, and the accounting treatment for any difference from the actual amount of distribution:

The compensation to employees and directors is estimated in accordance with the Accounting Research and Development Foundation (ARDF) Interpretation (96)Ji-Mi-Zi No. 052, and is recorded as an appropriate accounting item under operating costs or operating expenses depending on the nature of the compensation to employees and directors. Any subsequent differences between the resolution of the shareholders’ meeting and the estimates in the financial statements are accounted for as changes in estimates and recognized as profit or loss for the current period.

1. Information on the proposed compensation to employees approved by the Board of Directors:

2. (1) Amount of compensation to employees and directors and supervisors: The Company’s profit for fiscal year 2021 is NT$127,566,618. The Company’s board of directors’ meeting on March 29, 2022 proposed to provide compensation to employees in the amount of NT$6,378,332 and remuneration to directors in the amount of NT$1,275,666 in cash.

3. (2) Proposed employee stock bonus and its proportion to the total profit after tax and total employee bonus for the period: No employee stock bonus was distributed.

4. Actual distribution of employee bonus and remuneration to directors in the previous year (includes distributed shares, amount and share price) did not match with the recognized ones please specify the difference, cause and how to address:

The Resolution of the Board of Item Directors (March 30, 2021) The distributed amount to the Employee 3,947,595 compensation in cash The distributed amount to the Board of 789,519 Directors’ remuneration in cash

Note: The distributed amount matched with the recognized amount.

4.1.9 Buyback of the Company’s Shares: None

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4.2 Corporate Bonds:

4.2.1 Corporate Bonds

4.2.1 Corporate Bonds	4.2.1 Corporate Bonds
Types of Corporate Bond		The Third Domestic Secured Convertible Bond
Issue date		Feb. 27,2020
Denomination		NT$100,000
Issuingand transaction location		R.O.C.
Issueprice		Issue by104.50% of the denomination
Totalprice		NT$300,000,000
Coupon rate		0%
Tenor		3years;Maturity: Feb. 27,2023
Guarantee agency		CTBC Bank Co.,Ltd.
Consignee		Yuanta Commercial Bank Co.,Ltd.
Underwritinginstitution		CTBC Securities Co.,Ltd.
Certified lawyer		Lawyer Chiu,Ya-wen
CPA		Deloitte & Touche Cho,Ming-hsin,Shih,Ching-pin
Repayment method		Repayment in lump sum upon maturity
Outstanding principal		NT$277,400,000
Terms of redemption or advance repayment		Please refer to the third domestic guaranteed convertible bond issuance and conversion regulations.
Restrictive clause		None
Name of credit rating agency, rating date,ratingof corporate bonds		None
Other rights attached	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	0
	Issuance and conversion (exchange or subscription)method	Please refer to the third domestic guaranteed convertible bond issuance and conversion regulations.
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existing shareholders’ equity		The issuance of convertible bonds is in the best interest of the shareholders as it avoids profit erosion and reduces the dilution of the original shareholders’ equity and the dilution of earnings per share due to the substantial increase in capital stock.
Transfer Agent		None

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4.2.2 Convertible Bonds:

Corporate bond	type	3rdSecured Convertible Corporate Bond	3rdSecured Convertible Corporate Bond	3rdSecured Convertible Corporate Bond
Item	Year	2020	2021	As of 4/30/2022
Market price of the convertible bond	Highest	105.20	120.00	113.00
	Lowest	100.90	104.00	104.95
	Average	102.34	110.32	108.61
Convertible Price			38.00 per share 36.90 per share	No yet
Issue date and conversion price at issuance		Date: 02/27/2020 Price: 38.00
Conversion methods		Issuance of new shares in accordance with the regulations

4.3 Preferred Shares: None

4.4 Global Depository Receipts: None

4.5 Employee Stock Options & New Restricted Employee Shares: None

4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None

4.7 Financing Plans and Implementation: None

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V. Operational Highlights

5.1 Business Activities

5.1.1 Business scope

• 5.5.1.1 Principal elements of our business

The Company is a manufacturer and distributor of the following products in the relay and optoelectronic components and clean steam business:

• (1) Manufacture and sale of photocoupler series and relay series products.

• (2) Import and export trade business related to the above.

• (3) Acting as an agent for domestic and overseas suppliers in quotation, tender and distribution business.

• (4) LED manufacturing and sales.

• (5) LED smart street light (with security camera), indoor bay light (with smart lighting control), digital control unit (DCU), light control unit (LCU),

• cloud platform management, face and license plate recognition and traffic controller.

• (6) Renewable energy self-generating equipment and thermal energy supply.

• (7) Businesses not prohibited by law, in addition to those permitted.

• (8) Land development business.

5.5.1.2 Main products and their share of turnover:

Unit: NT$’000

5.5.1.2 Main products and their	share of turnover:	Unit: NT$’
Product Name	Turnover in 2021	% of total turnover
Optoelectronics	1,241,019	92.49
Energyand materials trading	88,969	6.63
Trading,channels & others	11,824	0.88
Land development business	-	-
Total	1,341,812	100.00

5.5.1.3 New products (services) planned for development

• (1) Enhanced optical couplers

• (2) Development of lighter, thinner, shorter and smaller optical components

• (3) Appearance design and customization of decorative lamps

5.1.2 Industry Overview

5.1.2.1 Current Status and Development of the industry

The Company and its subsidiaries are principally engaged in the photo coupler series, relay series, electronic components, decorative lighting, street lighting, industrial control and bioenergy production and sale. The main products include optical components, decorative lighting, street lighting, power control panels, power controllers, switch controllers, face recognition devices and clean steam, etc. Therefore, the following is an analysis of the current situation and development trends of the optical components, decorative lighting and electronic manufacturing and bioenergy industries or their applications:

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A. Optoelectronics Department

Our products are divided into two major product lines, the photo-coupler series and the relay series. The main raw materials include optical semiconductor chips and reed switches produced by the semiconductor industry, which are widely used in the consumer electronics industry, communications industry computer peripherals products, medical and industrial equipment industries.

Upstream	Upstream	Midstream(Cosmo Electronics)	Midstream(Cosmo Electronics)	Midstream(Cosmo Electronics)	Downstream	Downstream
Semiconductor		Package Testing Design			Consumer electronics	Communications
Wafer fabrication & dicing	IC design	Product design	Package design	Package, test, production	Computer peripherals	Medical
					Industrial equipment	Automotive (in the works)

B. Clean Steam Department

With global climate change, environmental awareness has been on the rise in recent years, and governments have initiated various energy-saving policies to reduce environmental pollution. The pressure on countries to reduce carbon emissions under the Kyoto Protocol has also led them to seek to develop low-carbon energy businesses. The advantages of biomass over renewable energy include mature technology, commercial viability, high economic efficiency, and the dual benefits of waste recycling and energy production as the materials used are waste. Taken together, it is clear that the bioenergy industry has great potential for future development. Taiwan has now passed a third reading of the “Greenhouse Gas Reduction and Management Act” at the Legislative Yuan in June 2015, expressly regulating our long-term greenhouse gas reduction target of less than 50% of the 2005 GHG emissions level by 2050. In addition, in August 2015, President Barack Obama of the United States, the world’s leading industrial power, proposed the “Clean Energy Plan,” which aims to reduce carbon emissions from power plants in the US, and stated in the published brochure that the Clean Energy Plan will cut carbon emissions by 32% from 2005 levels by 2030, and that this would be the largest measure ever taken by the US to combat climate change, and it is clear that the use of new energy sources is a major trend for the future.

C. LED Lighting Department

In the decorative string lighting industry today, the main applications are in Europe and North America, and mainly for Christmas. Christmas is a traditional and important festival in Europe and the United States. It is as meaningful to the people of Europe and US as Lunar New Year is to the Chinese speaking communities, so there is often a rush to buy Christmas decorations before the festive season. The sales of decorative lighting are mostly in large shopping malls, department stores and retail outlets, and there is often a significant correlation between product sales and economic

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growth, changes in consumer confidence, changes in unemployment rates and purchasing power in the region. When the purchasing power of consumers increases, it is more likely to boost the sales of these products. As a result, end-use spending in this sector is closely linked to the general economic development and consumer confidence trends across the region. The recent optimistic outlook for the US economy is expected to boost Christmas spending.

In the past, most of the decorative lights were composed of incandescent light bulbs, which had the drawbacks of power consumption, high loss rate and short service life. However, with the rising awareness of environmental protection in recent years, LED decorative lights have gained considerable advantages in the decorative lighting market due to their power saving and long service life, and have gradually expanded their application in toys and decorative light strings, and gradually taken the place of incandescent lamps. In summary, the market for LED decorative lighting is expected to remain strong as the economy in Europe and the US picks up, with the advantages of high reliability, high flexibility and low pollution.

The tariff on decorative lighting products exported from China has risen from 8% to 25% in two years due to the ongoing US-China trade dispute. The Company’s Indonesian-based lighting products have continued to benefit from transfer of orders.

D. Development District

The Chinese market has recently been affected by rising raw material prices, rising wages, labor shortages, the appreciation of the Renminbi and the trade conflict between the United States and China, which has led to the export-oriented manufacturing industry beginning to ponder what the future holds for it. Among them, the furniture industry, toy industry, leather industry, chemical engineering industry and other highly polluting industries are the most hit, and the closure of factories or relocation of manufacturing industries has become a trend and a signpost to the future.

The New Southbound Policy initiated by the Taiwanese government has strengthened ties with the economic markets of Southeast Asia, and many Taiwanese companies have begun to trade and invest in the region. In recent years, a large number of Taiwanese businesses have moved into Vietnam, which seems to have become another big labor market after China, but the swarm has created a new wave of challenges. The total population of Vietnam is only about 80 million, which is only comparable to the population of the province of Guangdong in China. Considering the limited land resources (331,689 square kilometers), the influx of foreign capital and the varying quality of human resources in North and South Vietnam, the supply and cost of labor for Taiwanese companies intended to locate to Vietnam will be a major concern in the future.

Also in Southeast Asia, neighboring Cambodia (with a population of around 15.5 million) and Laos (with a population of around 7.45 million) are also unable to satisfy the huge demand for labor due to their limited population size. Furthermore, the Indonesian government has introduced a number of laws to improve the investment environment, effectively removing many barriers to foreign investment. For all these reasons, Indonesia is considered to be the best place in the coming years.

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Driven by the international trend, resource environment, labor market and policy backing, the Industrial Development District will show good prospects.

E. Smart streetlighting

There are 360 million street lighting poles in a world of 7.6 billion people, signifying the infrastructure of a modern civilization that has spread across the globe. With 5G and AIoT driving the development of smart cities in various countries, the trend of smart cities is on the rise. Only 2% of the world’s light poles, or 7 million units in total, have now been made intelligent, and it is predicted that in the next 10 years, close to 100 million light poles worldwide will be made smart, allowing the idea of smart cities to be translated into more specific product. Many countries have promoted smart city related infrastructure and applicable measurements with the increasing of environmental protection awareness, every city has replaced the traditional streets lights with a large amount of LED smart lights which hold not only the key infrastructure of smart cities but also the important part of AI and IoT. The smartlighting is no more a mere lighting, it has combined with communications, city security, environmental monitoring, information releasing and charging etc..

On top of that the street lights will no long a lighting tool in the dark, it has evolved into a smart home keeper and can be applied to traffic control, environmental monitoring, information releasing, charging piles, 5G small scale station. In the foreseeable future the demand of 5G-build-in light pole and IoV will increase which makes smart street lights an essential part in our cities with its increasing diversity.

5.1.2.2 Upstream, Midstream and Downstream Industry Linkages A. Optoelectronics Department:

Optical electronic components include photocoupler, SSR-MOSFET Output, reed relays, solid state relays etc. The upstream industry includes the metal, plastic, electronic components and printed circuit board industries, mainly providing raw materials for the organization of optical electronic components, while the midstream industry assembles the raw materials, packages and tests them into modules for use in downstream products for various electronic industries. The Company and its subsidiaries are primarily engaged in the manufacture and sale of optical electronic components, such as photocouplers and relays, and are in the midstream of the industry, with the capability of in-house upgrading of packaging and testing equipment, and the continued development of lightweight, thin, short and small components. Overall, the optical electronic components industry is a mature sector with a complete upstream, midstream and downstream supply chain. Changes in the upstream, midstream and downstream are not significant and the supply chain linkages are listed below:

Upstream: Metal industry (copper wires, sheets, enameled wires), plastic industry (plastic pellets, epoxy resin), electronic components industry (magnetic reed tubes, diodes, transistors, integrated circuits), printed circuit board industry (printed circuit boards).

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Midstream: photo coupler 、 SSR-MOSFET Output 、 Reed Relay 、 Solid State Relay(Cosmo Electronics Corp.)

Downstream: Computer and peripheral industry (monitors, power supplies, modems, PCMCIA cards, data cards), telecommunications and communications industry (wireless telephone sets, network systems, computer motherboards, multipliers, high frequency telephone sets), machine automation (program control, motor control, traffic instrument control, automatic control), home appliance industry (refrigerators, washing machines, air conditioners, VCDs), consumer electronics industry (photocopiers, chargers, anti-theft devices, ticketing systems, vending systems, remote controls), precision instrument industry (testers, medical instrument systems).

==> picture [450 x 348] intentionally omitted <==

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B. Clean Steam Department

The biofuels industry comprises upstream raw materials, midstream biofuels production, and downstream blending, sales and applications. Upstream raw materials include animal and vegetable oils and fats, waste cooking oil, energy crops, agricultural and forestry waste, industrial waste, etc. Midstream biofuel production can be divided into liquid fuels such as bioethanol and bio-diesel, solid fuels such as biomass pellets and refuse derived fuels (RDF-5) and gaseous fuels such as biogas, while downstream applications can be split into transportation fuels and electricity and gas supply from biomass heat.

At this stage in the upstream, midstream and downstream changes in the industry, bio-diesel is the most mature, while the bio-thermal power industry chain is still under development. The future of the global biofuel market is still dependent on government policies and the development of second-generation biofuel technologies to provide the industry with sufficient low-cost raw materials for full market application in the future. The supply chain linkages of the industry are outlined below:

==> picture [452 x 236] intentionally omitted <==

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

Animal Fats and Used Cooking Agricultural and Industrial
UPSTREAM Vegetable Oils Oils Energy Crops Forestry Residues Residues
Bioethanol and Biodiesel Biomass Pellets and RDF-5 Marsh Gas
MIDDLESTREAM
(Liquid Fuels) (Solid Fuels) (gaseous fuels)
DOWNSTREAM Transport Fuels Heat and Gas Supply Biomass for Power
----- End of picture text -----

C. LED Lighting Department

The upstream, midstream and downstream of the decorative lighting industry include the manufacture of incandescent and LED lamps in the upstream, the use of light bulbs to design festive lighting or decorative lighting in the midstream, and the sales at domestic and international hypermarkets and online channels in the downstream. The decorative lighting industry has already developed into a mature sector. As festive lighting is still widely sold in Europe and North America, and is mainly used for Christmas festivities, midstream and upstream shipments are at their peak in the third quarter, while downstream is mostly dominated by hypermarkets, department stores and retail outlets and online channels. Growth momentum is mainly driven by the consumer confidence index, economic growth rate and other macroeconomic indicators, with the industry supply chain linkages listed below:

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==> picture [416 x 259] intentionally omitted <==

D. Smart streetlighting

The supply chain of smart street lighting involves local government, industrial parks and schools, telecommunication carriers, street lighting controller suppliers and lighting fixture suppliers.

5.1.2.3 Product Development Trends

A. Opto-electronic components industry

The photo coupler uses “light” as the medium to transmit electrical signals and has strong anti-jamming ability which enables photo coupler an ideal insulation for switch current and is widely applied; the demand for photo coupler has been driven rapidly as a result of the increase of wearable device, communication networks, smart home appliances, consumer electronics, electric car, cloud server and 5G base station while relays are one of the passive elements required in almost all electronic products. With demand for quality home appliances and the integration of various electrical appliances and burglar alarm systems into smart homes, and with the advent of the Internet of Things, demand for a large number of connected devices and major applications has created a smart city that comprises smart commercial complexes, smart homes and other applications, including many IoT devices and hardware devices, thus creating another wave of business opportunities for passive control elements such as relays.

B. Bioenergy industry

In the overall bioenergy market, bio-liquid fuels, mainly bio-alcohol and biodiesel, will continue to be the focus of industry development in the coming years, primarily in the Americas, such as the United States, Brazil, Argentina and other countries with advantages in raw materials. In terms of biomass and thermal energy, since Europe and the USA have a demand for thermal energy in winter, biomass and thermal energy development are principally in those two regions, which, together with the sparsely populated areas, are more suitable for decentralized, small-scale combined heat and power supply systems. Biomass raw materials such as agricultural and forestry crops and waste materials can be collected, dried and

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compressed to produce a small, high-density derived fuel. This treated biomass fuel is easily transportable and has a high calorific value per unit volume, making it suitable for wide use in small-scale boilers, district heat supply, combined heat and power plants and power stations.

C. Decorative lighting industry

With environmental awareness on the rise, the ratio of traditional incandescent to LED Christmas lights is now very different. Due to the excellent light source of LEDs, many traditional Christmas lights have been phased out and the penetration rate of LEDs has soared. The price differential between LED Christmas lights and traditional Christmas lights in the market has leveled off and the price differential is not too wide. In addition, LED lighting has more advantages than traditional incandescent lighting, such as energy saving and longer life span, which has significantly increased consumers’ willingness to purchase.

D. Industrial park development

As part of its efforts to attract more foreign investments to promote economic and trade exchanges and local economic development, the Indonesian government has recently been actively improving the investment environment by providing special economic zones, setting up the Indonesian Investment Coordinating Board (BKPM), strengthening infrastructure such as highways, railways, ports and airports to better the environment and removing barriers to investment. In early 2020, the Indonesian authorities launched the “Omnibus Law on Job Creation,” widely known as Omnibus Law, which aims to streamline Indonesia’s cumbersome business regulations, boost administrative efficiency, expand investment, enhance human resources and create more employment opportunities. Both local and foreign companies can benefit from the flexibility offered by the new Omnibus Law. In addition, the Indonesian government offers investment incentives such as Tax Holiday and Tax Allowance. According to Indonesian government regulations, foreign companies that meet the requirements are entitled to corresponding investment incentives.

Meanwhile, the government is advocating relevant investment policies. Through the promotion of the New Southbound Policy, it can also effectively encourage Taiwanese companies to expand their investment in Southeast Asian and South Asian markets.

In line with the Taiwanese government’s new southbound policy and the Indonesian government’s investment decree, areas such as industrial zones are being developed and built. In the coming years, it is expected that more Taiwanese SMEs will start to base themselves in Indonesia and work together to expand into overseas markets.

E. Smart streetlighting

Over the past few years, street lighting systems in Taiwan have been extensively replaced with LED lights from traditional mercury-vapor lamps, and in recent years, intelligent control modules have been added gradually, which not only allow intelligent dimming and significantly reduce power consumption, but also shift from manual control and inspection to intelligent management, using a unified management platform for monitoring and control to raise the quality of lighting and maintenance. Taiwan is at the forefront of the evolution of street lighting due to the flourishing LED industry, and recently the US, China, Europe, Japan and other countries in the Asia Pacific Region have also been pushing for smart street lighting, with increasingly diverse and advanced features.

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In Taiwan, many cities have expanded smart light trials and incorporated the uniqueness of each city respectively. Taoyuan City government has put NT$4.59 billion total budget into replacing 160 thousand smart lights which expect to save NT$2.3 billion in electricity and fulfillment of smart management, the malfunction report can be reduced from 48 hours to 24 hours, the effective lighting rate can maintain over 99.7%, meanwhile the smart lights can integrate with Big data to build up AI model which provide pedestrian-car traffic analysis, image recognition, air detection etc. that can apply for the development of innovative power backup transportation, providing electric car charging needs and expanding into a micro weather station with business model, also can be equipped for a 5G-build-in micro station.

Furthermore, the biggest smart light demonstration area has been established in Taoyuan Qingpu by the Bureau of Industry, Ministry of Economic Affairs covered with 1,800 smart lights in 3 square kilometers, integrating environment detection, electronic sign, electric car charging piles. The smart lights not only integrate AI monitoring to verify accidents but also report automatically when street trees and telephone poles fall down, potholes in the road are verified, in addition to that, the smart lights can also detect water levels and connect with the city government water system, can be used as charging piles for electric car, in the future also providing additional assistance in self-driving car positioning with high precision digital map. 5.1.2.4 Product Competition

The Company and its subsidiaries are principally engaged in the R&D, manufacturing and sales of photoelectric components and relay, decorative lighting and clean steam, with its main product lines being optoelectronics, energy and materials trading, distribution and others. The major products accounted for 92.4%, 6.63% and 0.88% of revenue in FY2021 respectively, with optoelectronic components taking the highest share. Most of the rivals for photocouplers in optoelectronics are Japanese companies, such as SHARP, TOSHIBA, NEC, as well as other European and American competitors such as VISHAY, AVAGO and FAIRCHILD. The main competitors in the relay product segment are from Japan, including MATSUSHITA, OMROM, NEC and many other players. As the above-mentioned major international corporations are known for their large economic scale, competition in this sector is relatively fierce. However, in recent years, the Company has achieved considerable success in cost control and will continue to develop lightweight, thin, short and small devices and seek sales opportunities for specialist OEMs with competitive cost control to make our products more competitive in the market.

Fast product renewal: With the ongoing breakthroughs in artificial intelligence, Internet of Things, Internet and other new-generation information technologies, smart hardware has realized the transformation of traditional equipment into smart ones, creating new product forms. As products continue to be updated and market demand varies, the ancillary products industry is undergoing rapid changes and a variety of technologies co-exist. The product mix and technical standards of the relevant equipment manufacturers need to keep pace with the development trends and changes in demand in the sector in order to cope with the increasingly fierce competition in the industry.

With the fast growth of the industry in recent years, the lack of senior interdisciplinary talents has posed a bottleneck to the progress of the industry due to the rapid renewal of technology. As social values evolve, the supply of entry-level employees is also generally inadequate. Labor recruitment costs and production costs are gradually going up, but the shortening of product development cycles in the industry and the increasing demand for production have led to a simultaneous rise in

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demand for entry-level labor. On the other hand, fast economic growth in the country and the hike in salary levels for employees have resulted in a sharp jump in labor costs, placing stricter requirements on the cost control capabilities of companies in the sector.

5.1.3 Technology and R&D overview

1. R&D expenditure for the years 2021 and 2022 first quarter up to the date of publication of the annual report:

of the annual report:	of the annual report:	of the annual report:
Unit: NT$’000 Year Item 2021 2022 As of March 31 R&D Expenses 5,614 1,468
Year Item	2021	2022 As of March 31
R&D Expenses	5,614	1,468

• 5.1.3.4 Long- and short-term business development plans

• The Company will keep devoting itself to R&D in a bid to expand the breadth and depth of its original product line and develop various specifications of application products at any time according to market supply and demand, technology trends and individual customer needs, with the following priorities expected for the future:

• (1) Short-term business plan:

• A. Set up agency and distribution bases according to the market potential to facilitate the development of customer sources and expand the market.

• B. Focus on target industries and actively develop new products.

• C. Improve the accuracy of delivery.

• D. Meet our customers’ needs for products and services and be a partner in their growth in order to maintain order stability.

• E. Increase automation and reduce the use of manpower.

• 、

• F. To put focus on 3C industrial automation control and medical product in all aspects.

• G. Raise product yields and delivery accuracy.

• H. Reduce costs and improve service quality on a continuous basis to maintain order stability.

• I. Boost the attractiveness of our product display area and actively pursue collaborative projects.

• J. To expand aggressively in the automotive applications supply chain.

• (2) Long-term business plan:

• A. Build an international marketing network and strengthen our marketing skills.

• B. Provide a wide range of products to meet customer needs and services to increase product share.

• C. Step up efforts to diversify the distribution of high-end products and markets in order to mitigate the impact of fluctuations in a single market.

• D. Cut the cost of purchased materials on an ongoing basis to enhance the competitiveness of our OEM products.

• E. Shorten production lead times to increase competitiveness in order taking.

• F. Keep abreast of international trends and relevant policies continually to adjust our business development direction in a timely manner to enhance our competitiveness.

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5.2 Market and Sales Overview

5.2.1 Market analysis

5.2.1.1 Main product sales regions:

The Company’s products are mostly optoelectronic components and decorative lamps, with the regions and amounts of sales of major products in the last two years as follows:

follows:	follows:
		Unit: NT$’000;% 2020 2021 Amount % Amount % 70,325 5.65 94,323 7.03 499,542 40.12 592,927 44.19 675,298 5.43 654,562 48.78 1,174,840 45.55 1,247,489 92.97 1,245,165 100.00 1,341,812 100.00
		2020		2021
Sales Regions
		Amount	%	Amount	%
Domestic - Taiwan		70,325	5.65	94,323	7.03
	Other Asian regions	499,542	40.12	592,927	44.19
Export	Americas	675,298	5.43	654,562	48.78
	Sub-total	1,174,840	45.55	1,247,489	92.97
Total		1,245,165	100.00	1,341,812	100.00

5.2.1.2 Key competitors and market share

The major global rivals of the photocoupler series include SHARP, TOSHIBA, OMROM, FAIRCHILD and other companies, which are known for their large economic scale, and in which competition is relatively intense. In recent years, the Company has achieved considerable success in strengthening cost control, enhancing its competitiveness and quality, as well as developing high value-added product lines such as high-end digital optocouplers to expand its product portfolio to the mainstream of international manufacturers.

The decorative lighting range is mainly used for Christmas festivities, with a large proportion of festive lighting being sold in Europe and North America, as well as in hypermarkets, department stores and retail outlets and online.

5.2.1.3 Market supply, demand and growth in the future

• (1) Optoelectronics Department

Photo-coupler series products are essential components for electronic and electrical products and instrumentation, and are used in a wide range of industries including consumer electronics, communication industry, computer peripherals, medical and industrial industries etc. Optocouplers provide excellent isolation and perform simple transmission functions, and will hold market potential with the rapid evolution of the information industry and the maturation of technology.

(2) Clean Energy Department

After careful consideration of the risks of the industry, the management team decided to devote itself to reform and add the bioenergy and eco-friendly fuel business, which is primarily applied to power plants, cement industry, printing and dyeing industry, paper industry, textile industry, food industry, chemical engineering industry and other industries as a heat-generating and eco-friendly fuel. Palm kernel shells (PKS) are a popular eco-fuel for the next century because not only is it a green energy source, but it can also reduce costs. Its combustion conditions can shut out the air from carbonizing a solid fuel similar to charcoal at temperatures above 400°C, and its unique chemical properties reduce GHG emissions, and it has superior properties to biomass pellet fuels. It is small in size, light in quality, unbreakable, easy to transport, and will not spontaneously combust when exposed to the open air. It also has a high heat of combustion of 4,200-4,600 calories/KG, with a moisture content of less than 15%, and can be fully combusted, making it ideal for burning in large boilers, and its thermal efficiency is much higher than that of traditional coal, which will create new revenue opportunities and profitability.

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(3) LED Lighting Department

The market for Christmas lights is still dominated by the European and American markets, and is already very stable and mature, with demand maintaining a stable and slight growth, except for very large fluctuations in the market due to special conditions.

Despite the low variability in total market demand, the ratio of traditional incandescent to LED Christmas lighting is very different in terms of environmental awareness and cost changes. The proportion of LED Christmas lights is increasing year on year, and LED products are the Company’s most competitive mainstay, so with this trend and years of hard work, the future should be even more favorable. (4) Industrial Park Development

Indonesia is a virgin land rich in natural resources, with 74.5% of the country’s total land area available for agriculture, and has the largest number of islands in the world, with over 4,000 nautical miles of coastline to the east and west. With a population of over 270 million according to the October 2020 census, Indonesia is a hardworking, kind and optimistic nation. The country is the biggest economy in the ASEAN region, with a large territory and labor market.

According to the Central Bureau of Statistics, the manufacturing sector accounts for the highest share of Indonesia’s GDP in the industrial structure, at around 21%. The Indonesia Investment Coordinating Board (BKPM) has also identified a number of investment priorities based on economic strengths, growth factors and productivity, with export-oriented industries such as electronics and machinery manufacturing among them. Industrial parks, special economic zones and tourist attractions also create good investment opportunities. The Indonesian government has set out priority sectors for investment that will help underpin sustainable economic growth on the one hand, and create more jobs on the other.

In order to attract more foreign investment to promote economic and trade exchanges and local economic growth, the Indonesian government has recently shown a friendly attitude towards foreign investors by actively improving the investment environment and publishing relevant legislation to ensure fair treatment between foreign and local manufacturers as far as possible. In particular, the democratically elected President Joko Widodo has made great efforts in recent years to develop Indonesia’s economy and build up the country’s infrastructure, and is gradually shaking off the negative perception of its anti-Chinese past. In early 2020, the Indonesian government introduced the “Omnibus Law on Job Creation,” which aims to remove a number of barriers to foreign investment and make it more attractive.

The internal corporate environment is also driving investment in the Indonesian market. In recent years, the market demand has grown. In order to meet the demand, enhance production capacity and increase profitability, overseas investment has become the direction of development for Taiwanese enterprises. Since 2007, Cosmo Electronics Corp. has set up a subsidiary in Indonesia and has been in contact with the Indonesian market for many years. Cosmo is familiar with its local market conditions and has its own advantages that make it easier for Taiwanese SMEs to gain a foothold in the market.

(5) Smart streetlighting

Taipei City, as the capital of Taiwan, has already achieved a high level of smart street lighting, and in recent years has been discussing the feasibility of a sharedpole smart system, with inter-office communication within the city government and requests from various units to attach functional modules to street lights. In 2017, the Taipei City Government began installing shared-pole street lights in Neihu,

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gradually extending to other administrative districts and expanding the scale of the project. Over the past few years, more than 200 experimental functional items have been undertaken.

Moreover, according to the deployment of 5G infrastructure of domestic telecom carriers, the coverage of 5G signals will be established first, and in a few years, when 5G users become mainstream and high traffic applications are widely introduced, demand for bandwidth will be more keen, then more dense small cells will be built to strengthen the signal integrity and support the demand for highspeed connection, and the combination with smart streetlights will come to fruition. The time for mass introduction will come when the relevant services of the operators are up and running, and when the technical and cost issues at this stage are further overcome.

Street lighting plays an indispensable role in people’s lives, from creating urban landscapes on a large scale to lighting up street corners on a small scale, the level of street lighting going intelligent also shows the development of a smart city in a concrete and subtle way. Traditional street lighting has much room for improvement in terms of lighting operation, monitoring and maintenance, and information management, so energy saving, flexible control, and manpower saving are the primary objectives of its smartization. As a matter of fact, these basic functions have been gradually put in place. Regarding the future of shared-pole value-added smart services, the key to the development of smart street lighting will be how to integrate different suppliers and authorities smoothly through the characteristics of street lighting distributed throughout the city, and how to integrate software and hardware structures through an open platform to enhance the smart life of the residents.

The Ministry of Education has stressed and announced on the importance of school lighting and monitoring issues ever since a tragedy happened as a Malaysian student was killed in Chang Jung Christian University Tainan campus in 2020, and has asked all campuses to install smart lights with subsidy. Hence, the Universities in Asia were put emphasis on female dormitory and safety management in campuses, this contributes to the interests in our LED smart light and LED smart light with monitoring (Trimax-R3) which promote the tender invitation and cooperation with Chang Jung Christian University.

5.2.1.4 Competitive niche

(1) Product quality advantage

The Company has gradually boosted the popularity of its products with excellent quality, and with its meticulous production process and competitive price conditions, it has been well received by famous domestic and foreign companies. It has been awarded numerous international safety certifications such as UL, CUL, VDE, FIMKO, SEMKO, NEMKO, etc., and has also obtained ISO9001 and ISO14001 quality certifications, and its stable and reliable products have been recognized and adopted by renowned domestic and international corporations.

(2) Manufacturing strengths

Since its incorporation, the Company has been engaged in the production and sale of related products. On top of its many years of experience in manufacturing processes, the Company has devoted itself to the refinement of production technology, the upgrading of production equipment and the strengthening of cost control, and has attained considerable success. Our technical team has many years of experience and expertise in the product trend and production technology. We have not only boosted our competitiveness in the industry, but also expanded our

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services to specialized OEMs and developed high value-added product lines such as high-end digital optocouplers to broaden our product portfolio to the international mainstream manufacturers. As a result of the trade war between the United States and China since March 2018, tariffs have been imposed on products manufactured in China, and the Company’s lighting products, which are manufactured in Indonesia, have directly benefited from the transfer of orders.

• (3) R&D strengths

Since 1991, we have been dedicated to the research of optoelectronic elements and have been working on photorelays and optocouplers for many years. With the accumulation of professional production experience and the cultivation of R&D manpower, we understand the importance of mastering the key technologies of our products, including software and hardware technology integration, IC packaging technology, mechanism development technology and material science technology. In recent years, the LED Lighting Dept. has successfully developed the direct coating of LEDs with enameled wires and applied for patents with its unique technology. The flexibility of this technology has significantly increased the breadth and depth of applications, and its excellent R&D capabilities have made the Company’s products more competitive in the market.

• (4) Green alternative effect

The global bioenergy industry has been growing rapidly in recent years, driven by energy security and autonomy as well as CO2 reduction. In terms of environmental factors, people are beginning to realize that the global environment has been deteriorating as a result of the development of the industrial economy, which in turn has started to jeopardize the survival of humans and animals, thus leading people to switch to low-carbon biomass energy. In economic terms, global fossil energy reserves are diminishing and the cost of extraction is rising, resulting in an increase in production costs, while biomass energy is becoming cost competitive. Moreover, the advantages of biomass energy include mature technology, the ability to operate commercially, high economic efficiency, and the fact that the material used is waste, so it has the dual benefits of waste recycling and energy generation. In summary, it is apparent that the biomass energy industry has great potential for future development.

• 5.2.1.5 Factors favorable and unfavorable to development prospects and response measures (1) Prospects for the Optoelectronics Department

With many years of efforts in the field of optocouplers and photo relay series, we have acquired extensive experience and expertise, ranging from product development to process technology, and have the leading R&D and production technology capability. Through years of R&D and continued refinement of product quality and product yield, the product lineup has become complete and has received international safety certifications such as UL, CUL, VDE, FIMKO, SEMKO, CQC and ISO 9001 and ISO 14001 certifications. To put effort into applying for the IATF 16949 certification recently, this will make us grow steadily among international competitors and become a major manufacturer of optocoupler series products in the market.

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(2) Prospects for the Clean Steam Department

The global bioenergy market was at a size of approx. US$29.3 billion in 2007 and grew at an average annual rate of 26.6% between 2004 and 2007, bringing a new impetus to the development of the global bioeconomy. Despite the controversy of the last two years over the use of raw materials that compete with the people for food, the industry is projected to continue to grow, backed by an escalation in crude oil prices and the government’s focus on energy autonomy and security. Total global biomass energy production was estimated to reach US$93 billion by 2020. In the overall bioenergy market, bio-liquid fuels, mostly bio-alcohol and bio-diesel, will continue to be the focus of the industry in the coming years, mainly in the Americas, such as the United States, Brazil and Argentina, which have advantages in terms of raw materials. The market for biomass heat and power is dominated by Europe, the US and China. On the technological front, the development of bioenergy technologies is centered on the use of non-edible raw materials such as cellulose and algae, as well as diversified sources. Cellulose hydrolysis, algae bioenergy and biomass liquefaction are the highlights of the development. Taiwan’s bioenergy industry has been gaining ground in recent years, thanks to the promotion of policies. In terms of biomass power generation, the installed capacity reached 626,000 kilowatts as at the end of Dec 2007. As regards biomass fuels, the fullscale launch of B1 biodiesel commenced in July 2007.

In the biomass and thermal energy sector, the market grew at an average annual rate of 10.8% from 2004 to 2007, with a market size of approx. US$1.6 billion in 2007. Since Europe and the US have a demand for thermal energy in winter, biomass and thermal energy development are principally in those two regions, which, coupled with the sparsely populated areas, are suitable for decentralized, small-scale combined heat and power supply systems. Biomass raw materials such as agricultural and forestry crops and waste materials can be collected, dried and compressed to produce a small, high-density derived fuel. This treated derived fuel is easily transportable and has a high calorific value per unit volume, making it suitable for wide use in small-scale boilers, district heat supply, combined heat and power plants and power stations.

Green energy is inexhaustible, has less impact on the environment than conventional energy and reduces the greenhouse effect. Recently, gas-fired boilers have been developed by harnessing the properties of biomass fuels, which use pyrolysis, oxidation and reduction to produce CO (carbon monoxide), H2 (hydrogen) and CH4 (methane) for gas supply to minimize dust and dioxin emissions. Gas boilers are less expensive than pellet boilers and the use of crushed biomass material eliminates the need to crush it into pellets, saving the machine’s power.

(3) Prospects for the LED Lighting Department

Since entering the lighting industry in 2009, the Company’s product portfolio has been split between traditional incandescent and LED Christmas lights, with each accounting for 50% of turnover. With environmental awareness on the rise, the Company has gradually reduced the proportion of conventional incandescent lamps to below 10% of turnover in 2014, moving towards the higher margin LED products. In 2015, conventional incandescent products were brought down to under 5%, and in 2016, the Company is on track to lower its proportion to below 4%.

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With the general awareness of the importance of patent rights in the European and American markets, increasing our own patent protection measures will not only consolidate our customers, but will also be of great benefit to our business development, and the actual benefits are gradually taking shape. From the very beginning of our entry into the market, it was part of our strategy to build on our quality and differentiate the market. After several years of hard work, this reputation has been affirmed by customers in the sector and based on the above, the Company has set its sights on expanding its market share.

(4) Prospects for the Development District

Over the years, the market demand has seen an increase. To satisfy the demand, boost production capacity and raise profitability, overseas investment has become the way forward for Taiwanese enterprises. Cosmo Electronics Corp has had a presence in Indonesia since 2007 and has been in touch with the Indonesian market for many years now. The Company is familiar with the local market conditions, which gives it added advantages. Indonesia’s abundant local labor force, international investment environment and the enforcement of relevant policies can also help facilitate the development progress. The Phase I industrial park was sold out in the first half of 2018 and delivered to Taiwan Paiho Limited for use. Going forward, land preparation, construction of industrial parks, residential complexes, commercial districts and infrastructures will proceed, with a view to attracting companies to move in and boosting profitability for the Group and its shareholders.

(5) Smart street lighting

The world is currently dealing with “light poles without intelligent devices,” “markets without standards.” The absence of standard specifications worldwide and in the of industry means that the smart light poles may not work together with the next 2 blocks of that on the information consolidation because of the different contractors and differ in technical specifications. As such, there is still a lot of room for the integration and growth of intelligent light poles in the future.

(6) Favorable factors

(A) Leading R&D and production technology capabilities

With more than 10 years of specialized and rich experience in the field of relays, our Company is able to stand on its own from product development to process technology. As each product line is developed in-house and transferred to the production line for mass production, the Company has amassed a wealth of process and production technologies.

(B) Stable and excellent products

The Company and its subsidiaries have been awarded a number of international safety and quality certifications. Owing to the excellent quality, its products have been accepted by renowned domestic and international corporations and have broken the monopoly of Japanese products.

(C) Cost competitive products

In view of the trend towards lower prices for downstream products, the Company is committed to improving machine availability/uptime and product yields, capitalizing on flexible manufacturing and adopting a production method of small quantities and multiple products to meet customers’ needs, with the aim of reducing product costs.

(D) International competitive advantage

After years of efforts, we have developed a complete product lineup of optical couplers and optical relays, except for the ultra-small and high speed photocouplers products development. In addition to enriching our product portfolio, we have particularly invested in the development of IC-based optocouplers with high-

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density circuit design in recent years, thereby polishing up our brand image and keeping our technology in line with international trends.

(E) Decorative lighting appearance design capabilities

We keep an eye on the trendy elements in the decorative lighting market and consider the sales of our best-selling products in the past, in order to attract the attention of consumers and provide them with customized designs. Further, with the widespread awareness of the importance of patent rights in the European and American markets, the Company’s continued focus on patent enforcement not only consolidates its existing customers, but also provides a significant benefit to its business development and strengthens its quality and market differentiation.

(F) Response to the government’s New Southbound Policy

We operate in tandem with the Taiwanese government’s New Southbound Policy and the Indonesian government’s investment decree to develop and build industrial parks and other areas to help Taiwanese SMEs quickly gain a foothold in the Indonesian market and avoid fighting alone, while working together to improve the image of Taiwan’s industries and create visibility on an international scale.

• (G) Intelligent street lighting solutions

Local city governments have been faced with challenges such as pedestrian safety, monitoring traffic flow and how to reduce hazards and accidents. People need better lighting management solutions.

• (H) High energy efficiency

By installing energy-efficient street lighting, the city governments and the energy authorities will be able to significantly decrease the consumption of resources. The enhanced functionality of the lights will effectively reduce electricity consumption.

(7) Unfavorable factors and responses

• (A) At present, the main raw materials for our products are imported from overseas and are susceptible to fluctuations in exchange rates.

Responses

The Company and its subsidiaries have long maintained good cooperative relationships with overseas suppliers of raw materials and have adopted a policy of diversifying the sources of supply to avoid material shortages. We will continue to look for new sources for contingency purposes and adjust for natural hedging by importing and selling goods. In addition to strengthening our hedging measures, we are expanding our foreign operations to avert greater exchange rate impacts.

(B) Wage costs have been escalating in recent years, while overseas counterparts have been relocating their production bases to low-wage regions, resulting in falling prices.

Responses

The Company and its subsidiaries have increased automated equipment to improve capacity utilization, and are using a flexible manufacturing method with small quantities and multiple products and making continual improvements in production methods to keep costs down, minimize impact and provide a cost competitive advantage. In line with the Company’s future development plan, products with low added value and low technology will be relocated to production sites with low labor cost, with the aim of achieving international division of labor and staying close to the market to serve customers.

• (C) The severe infectious disease COVID-19 outbreak from 2019 onwards has disrupted the global supply chain and affected the administrative work of relevant government agencies in various countries, hampering the progress of

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projects. Responses

The Company and its subsidiaries have stayed abreast of the updates and progress of the relevant regulations issued by the government agencies to facilitate the progress of the project.

5.2.2 Key product applications and production processes

5.2.2.1 Key product applications

Product	Uses/Functions	Applications
Photocoupler Series	Feedback isolation, high voltage isolation, protection and switching of electronic circuits	consumer electronics, automatic detection equipment, telecommunications equipment, measuring instrument, medical equipment, communication equipment, computer peripherals, security monitor, O/A equipment, PLC, I/O control hub,etc.
Relay Series	Control, protection and switching of circuits with high voltage and current	communication equipment, security monitor, measuring instrument, O/A equipment, machinery equipment,industrial control,etc.
Decorative Lighting	Festive decoration	Christmas lighting products
Clean Steam	For heating, humidifying, power or equipment driving, cooling of high temperature metal materials, cleaning of oil contamination,etc.	Products to be dried or sterilized, facilities to be steamed or heated/warmed, conversion to power generation or cogeneration systems, high temperature water sources for cleaning operators, heat sources for coolingsystems,steam ovens,etc.
Smart Street Lighting	-Designated place and monitoring management (road/industrial park/school / warehouse/port terminal) -face recognition and flow calculation in parking lots and public places. -With advanced, high efficiency proprietary wireless mesh network technology.	LED smart street lights (with monitoring), indoor bay light (with smart lighting control), digital control unit (DCU), light control unit (LCU), cloud platform management, face and license plate recognition and traffic controller.

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5.2.2.2 Production/manufacturing process

• A. Optocoupler series product manufacturing process:

==> picture [354 x 290] intentionally omitted <==

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

cementing chips &
burr removal electrical testing
welding wires
one-time compression
electroplating printing
molding
trimming/bending &
burr removal packaging
forming
secondary compression
high voltage testing QC
molding
----- End of picture text -----

B. Relay series product manufacturing process:

==> picture [206 x 183] intentionally omitted <==

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

Assembly Electric Test
Molding Packing
Marking Quality Check
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----- End of picture text -----

• C. Palm kernel shell product manufacturing process:

==> picture [408 x 185] intentionally omitted <==

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

PKS acquisition feeding screening
drying testing packaging
warehousing quarantine shipment
----- End of picture text -----

• D. Decorative lighting manufacturing process:

• Light strip manufacturing process:

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==> picture [422 x 371] intentionally omitted <==

5.2.2.3 Battery holder manufacturing process:

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==> picture [225 x 280] intentionally omitted <==

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

SMT
Battery Holder
DIP
Injection
Quality Inspection Quality Inspection
Assembly
Quality Inspection
----- End of picture text -----

5.2.2.4 Finished lighting assembly

==> picture [217 x 307] intentionally omitted <==

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

Light Strips Battery Holders
Assembly
Quality Inspection
Forming
Quality Inspection
Packaging
----- End of picture text -----

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5.2.3 Supply status of major raw materials

• 5.2.3.1 The main raw materials used in Optoelectronics’ production of optical coupler series

• and relay series are shown in the table below.

Main raw materials	Main use / Supplystatus
Transistor	photo coupler material/ sufficient supply
Reed switch	Raw materials for relayseries / sufficient supply
Lead frame	Raw materials for optical coupler series and relay series / sufficient supply

5.2.3.2 Supply of main raw materials for decorative lights

Main raw materials	Main use / Supplystatus
Wafer	Raw materials for light strips / sufficient supply
Enameled wire	Raw materials for light strips / sufficient supply
HIPS	Raw material for batterybox / sufficient supply

5.2.3.3 Supply of main raw materials for steamer

Main raw materials	Main use / Supplystatus
PKS	Raw materials for steamers / sufficient supply

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5.2.4 The name of the company that has accounted for more than 10% of the sales and purchases in the last two years

5.2.4.1 Information on major suppliers in the last two years:

Unit: NT$ thousands

									Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
	2020				2021				As of the firstquarter of fiscal 2022
Item	Name	Amount	Percentage of net purchases for the year (%)	Relationship with the issuer	Name	Amount	Percentage of net purchases for the year (%)	Relationship with the issuer	Name	Amount	Percentage of net purchases as of the first quarter of the current year (%)	Relationship with the issuer
1	Company D	374,075	57.68	Substantial relatedparty	Subsidiary	264,170	31.86	Substantial relatedparty	Subsidiary	38,181	13.92	Substantial relatedparty
2
3
4
5	Other	274,425	42.32		Other	564,980	68.14		Other	236,031	86.08
	Net Purchases	648,500	100.00		Net Purchases	829,150	100.00		Net Purchases	274,212	100.00

5.2.4.2 Information on major buyers in the last two years:

Unit: NT$ thousands

									Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
	2020				2021				As of the firstquarter of fiscal 2022
Item	Name	Amount	Percentage of net sales for the year (%)	Relationship with the issuer	Name	Amount	Percentage of net sales for the year (%)	Relationship with the issuer	Name	Amount	Percentage of net sales as of the first quarter of the current year (%)	Relationship with the issuer
1	Client X	417,488	33.53	None	Client X	434,064	32.35	None
2	Client E	125,625	10.09	None
3
4	Other	702,052	56.38	None	Other	907,748	67.65	None	Other	208,181	100.00	None
	Net Sales	1,245,165	100.00		Net Sales	1,341,812	100.00		Net Sales	208,181	100.00

5.2.5 Production volume table for the last two years

Unit: NT$ thousands; 1,000; ton

Year	2020	2020	2020		2021
Production volume Mainproducts	Production capacity	Output	Output value	Production capacity	Output	Output value
Optoelectronic components	450,000	276,095	314,429	566,472	551,089	444,191
Decorative lights	7,883	7,883	445,164	87,950	87,950	638,560
STB	4,124	4,124	8,218	-	-	-
Steamer(Unit: ton)	31,489	31,489	71,160	33,724	33,724	37,679
Total	493,495	319,591	838,971	688,146	672,763	1,120,430

5.2.6 Sales volume table for the last two years

Unit: NT$ thousands; 1,000; ton

Year	2020	2020	2020	2020		2021	2021	2021
Sales volume Mainproducts	Domestic sales		Export		Domestic	sales	Export
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Optoelectronic components	39,003	67,987	335,029	372,724	50,348	105,552	381,179	476,488
Decorative lights			13,211	674,663			87,571	658,979
STB			4,282	11,665	-	-	-	-
Steamer(Unit: ton)			31,489	101,267			41,105	88,969
Trade & access				16,859				11,825
Total	39,003	67,987	384,011	1,177,178	50,348	105,552	509,855	1,236,260

Note: 1. The above sales volume and value include sales and purchases.

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5.3 Human Resources

Year	Year	2020	2021	As of March 31,2022
Total number ofpersons		888	790	2,705
Average age		31.09	37.55	33.33
Averagejob tenure(year)		7.86	8.02	8.39
Education distribution ratio	PhD	0.00%	0.00%	0.00%
	Master	0.56%	0.76%	0.18%
	College	20.16%	23.54%	8.13%
	High School	33.45%	45.45%	60.74%
	Below High School	45.83%	30.25%	30.94%

5.4 Environmental Protection Expenditure

• 5.4.1 Total losses (including compensation) and penalties for environmental pollution in the most recent year and up to the date of publication of the annual report: None

• 5.4.2 Future corresponding measures (including improvement measures) and possible expenditures: Not applicable.

5.5 Labor Relations

• 5.5.1 The Company’s various employee benefits, education, training and retirement systems and their implementation, as well as agreements on labor issues and measures to protect the rights and interests of employees:

• 5.5.1.1 Employee benefits

Insurance

• Labor insurance, health insurance, group insurance.

Leave system

• Special leave (annual leave). (After six months of employment, employees are entitled to three days of special leave; after one year, the seven days of special leave will be granted)

• Maternity/Paternity leave.

• Marriage leave, funeral leave, menstrual leave, family care leave. Bonuses/Gifts

• Holiday bonuses

• Birthday bonuses and discounts

• Hospitalization subsidies

• Major emergency subsidies

• Funeral subsidies

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Subsidies

• Marriage bonuses

• Childbirth subsidies

• Travel subsidies

• Regular health checkups for employees

• Year-end party activities

• Provide parking space for cars and motorcycles

• Departmental activities from time to time

• Senior employee awards

• Discount for contracted stores

The status of implementation is as follows:

• For the year 2021, the holiday bonuses, wedding and funeral subsidy, childbirth subsidy, birthday bonuses and discounts, hospitalization subsidies, major emergency subsidies, and funeral subsidies have all been paid according to schedule or application received.

• 5.5.1.2 Employee education and training

• (1) In order to enhance the professional skills of the employees and improve the work flow to strengthen the competitiveness of the Company. Each year the HR department will formulate an educational training plan to meet the educational needs of each department and arrange the employees to participate in internal training or external training courses.

(2) Employee training for the year 2021

Training type	Implementation method	Implementation method	Trainingmethod	Trainingmethod	Total training hours	Total training cost (NT$)	Total participants
	Self- organized training	External training	Pre- employme nt training	in‑service training
New employee training	v		v		382	15,370	3,404
Senior management training	v	v		v	152	24,730	132
Internal audit course	v	v		v	85	7,000	17
Management course	v	v		v	129	14,690	14
Safety and health training	v	v	v	v	231	86,322	7,083

• Note: The acquisition of relevant licenses specified by the competent authorities for personnel related to the transparency of financial information:

• The Enterprise Internal Control Basic Ability examination held by the Securities and Futures Institute: 1 person from the auditing department.

• The Junior Professional and Technical Certified Public Bookkeeper Examination held by the Examination Yuan: 1 person from the finance department.

• The Certified Financial Specialist for Small and Medium Enterprises held by the Small and Medium Enterprise Administration, MOEA: 4 persons from the finance department.

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5.5.1.3 Employee retirement system

In order to have a secure retirement life of employees, the Labor Pension Act provides that employees who were employed before June 30, 2005 and were in service on July 1, 2005 may choose to continue to be subject to the pension provisions of the Labor Standards Act or to be subject to the pension system of the Labor Pension Act and retain the years of service prior to the application of the Labor Pension Act. New employees hired after July 1, 2005 will be subject to the pension system under the Labor Pension Act.

For those who are subject to the old pension system under the Labor Standards Act, a monthly pension reserve of 2% shall be allocated in accordance with the Labor Standards Act and shall be supervised by the Supervisory Committee of Labor Retirement Reserve of the Company and deposited in the name of the Committee in the Bank of Taiwan, which is responsible for the receipt, custody and utilization of the pension fund. For those who are subject to the new pension system under the Labor Pension Act, the Company shall pay a monthly contribution rate of not less than 6% to the labor pension fund in accordance with the Labor Pension Act and shall pay the monthly contribution in accordance with the monthly wage scale approved by the Executive Yuan and deposit it in the individual labor pension account set up by the Bureau of Labor Insurance for the employee.

Pension payment:

Employees who meet the retirement requirements and are subject to the Labor Standards Act shall be paid in accordance with Article 55 of the Labor Standards Act; those who are subject to the Labor Pension Act may apply to the individual labor pension account established by the Bureau of Labor Insurance.

Operation of the Supervisory Committee of Labor Retirement Reserve:

The Supervisory Committee is composed of representatives selected by the employees and employers respectively, and each term of office is four years, and is re-elected in accordance with the law upon expiration. When an employee is eligible for retirement, he or she shall submit an application in accordance with the regulations. The HR unit shall first examine the relevant information and then submit it to the Supervisory Committee of Labor Retirement Reserve for a resolution at a meeting, and then send the application to the relevant unit after the resolution is passed.

The implementation is as follows:

For those employees who are eligible for retirement benefits in fiscal year 2021 and have submitted applications in accordance with the Company’s procedures, all payments have been made.

• 5.5.1.4 Agreement between labor and management and various measures to protect employees’ rights and interests

The Company has stable labor relations and holds labor-management coordination meetings from time to time to reduce the number of labor disputes.

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• 5.5.1.5 Work environment and employee safety protection measures:

• (1) The Company holds safety training and lectures on the use of equipment and fire drills for all employees from time to time each year.

• (2) All new employees are trained in labor safety courses upon their arrival.

• (3) Every year, we commission professional organizations to conduct organic solvents, exhaust, drainage, and heavy metal testing, and to take control or protective measures immediately when regulations are violated.

• (4) In accordance with Occupational Safety and Health Act, a labor safety committee and labor safety and health personnel have been established to regularly monitor and conduct safety inspections and improve the work environment. In addition, we regularly send our employees to vocational training institutions to receive training in accordance with the regulations.

• (5) Regular health check-ups are conducted for employees, and special health check-ups are conducted for those who work in special environments so that employees can keep track of their health status.

• (6) The relevant professional inspection of the working environment is regularly commissioned to a qualified agency for inspection and immediate improvement if there is any abnormality.

• (7) Through systematic implementation and regular audits, the Company ensures that the environmental and safety protection aspects are properly implemented.

The implementation is as follows:

Item	2020	2021
Labor safety and health training	382 hours / 4,585 persons	360 hours / 7,097 persons
Fire safety

• 5.5.2 Losses incurred due to labor disputes in the most recent year and up to the date of publication of the annual report: None

• 5.5.3 Current and future estimated amounts and contingency measures: Not applicable.

• 5.5.4 Employee conduct and code of ethics:

• 5.5.4.1 The Company has formulated a “Service Rules” in the employee handbook to regulate employee behavior; the following are some of the excerpts:

• (1) All employees of the Company shall recognize the purpose of the Company’s management, and shall work together to serve sincerely and faithfully for the development of the Company.

• (2) All employees of the Company shall comply with all reasonable regulations and matters announced or notified by the Company.

• (3) Employees shall not disclose the business secrets of the Company, whether they are in charge of the business or not.

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• (4) Employees shall be responsible for the protection and care of the Company’s machinery, equipment, tools, raw materials, items, plant and documents, etc., and shall not arbitrarily place, dispose of or occupy them for personal us; those who intentionally damage them shall be fined in accordance with the law.

• (5) Employees must work together cooperatively and understand each other, and in case of disputes, they should immediately report to the supervisor for determination and mediation, and should not cause trouble by tilting.

• (6) Employees of the Company shall work conscientiously internally, take care of public property, reduce losses, improve quality and increase production, and keep business or duty secrets.

• (7) Employees shall not hold any other positions related to the Company’s business or competing companies.

• (8) Employees shall not accept hospitality or gifts, kickbacks, or other unlawful benefits for or against the performance of their duties.

• (9) Employees shall not make any remarks that are derogatory to the Company or that may damage the reputation of the Company through misconduct.

• (10) Employees shall not participate in illegal organizations, gatherings, or post notices or distribute flyers without the consent of the Company.

• 5.5.4.2 In order to establish a guarantee system for new employees, the Company has established the “Employee Guarantee Policy”, which requires employees to comply with the rules and regulations established by the Company during their employment with the Company. If the Company suffers financial losses due to violations of the rules and regulations, or misappropriation of financial resources, payments, dereliction of duty, negligence, or other unlawful acts during their employment, the joint guarantors are willing to fully indemnify the Company.

• 5.5.4.3 Confidential information of the Company shall not be delivered, shared, transferred or leaked in any way to a third party or released to the public without the written consent of the Company, nor shall it be used or utilized for oneself or for a third party, as provided in the employment agreement signed by the employee at the time of employment.

5.6 Important Contracts

None

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VI. Information Security Risk Management

6.1 Information Security Risk Management Framework

1. The Company’s information security authority is the Information Technology Department, which has a chief information officer and professional information personnel who are responsible for formulating internal information security policies, planning and implementing information security operations and promoting and implementing information security policies, and reporting regularly to the board of directors on the Company’s information security governance.

2. The Company’s Auditing Office is the supervisory unit for information security monitoring. The Office has an auditing supervisor and full-time auditors who are responsible for supervising the implementation of internal information security, and if audits reveal deficiencies, they will immediately request the inspected unit to propose relevant improvement plans and specific actions, and regularly track the effectiveness of improvements to reduce internal information security risks.

3. Operational Mode of Organization—PDCA (Plan-Do-Check-Act) cycle management is adopted to ensure the achievement of reliability targets and continuous improvement.

==> picture [372 x 296] intentionally omitted <==

6.2 Information Security Policies and Specific Management Plans

To ensure the effective operation and execution of the Company’s information management system, strengthen information security management, ensure the availability, integrity, and confidentiality of information, and protect it from internal and external threats, whether intentional or accidental, to ensure the safe maintenance of information systems and equipment networks, and to achieve the goal of sustainable management.

Management measures are described below:

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• A. Computer equipment security management

• The Company’s computer hosts, servers, and other equipment are located in a dedicated server room, and the door to the server room must be accessed by access control cards, and access records are kept.

• The server room is equipped with independent air conditioning to maintain the computer equipment in a proper temperature environment and fire extinguishers for general or electrical fires are provided.

• The host computer of the server room is equipped with uninterruptible power system and voltage stabilization equipment to prevent the system from crashing due to an accidental power failure or to ensure that the operation of the computer application system will not be interrupted during a temporary power failure.

• B. Network security management

• Configure an enterprise-grade firewall at the entrance of external network connection to block hackers from illegal intrusion.

• Internet behavior management and filtering devices are configured to control access to the Internet and block access to harmful or policy-unacceptable network addresses and content to strengthen network security and prevent bandwidth resources from being improperly occupied.

• C. Virus protection and management

• Endpoint protection software is installed on the server and employee terminal equipment. Virus codes are automatically updated to ensure that the latest viruses are blocked and to detect and prevent the installation of potentially threatening system executable files.

• The email server is equipped with email anti-virus and spam filtering mechanisms to prevent viruses or spam from entering the user’s computer equipment.

• D. System access control

• The use of each application system shall be authorized by the system administrator according to the requested functional authority after the internal system authority application procedure is approved by the responsible supervisor and the system account is established by the information office.

• When an employee applies for leave (disciplinary suspension) procedures, he/she must contact the information office to delete the system accounts.

• E. Ensure the sustainable operation of the system.

• System backup: A backup management system is set up and a daily backup mechanism is adopted. There are two copies of backup media, one is kept in the server room and the other is stored in a different location.

• Disaster recovery drill: An annual drill is conducted for each system to ensure the correctness and validity of the backup media by selecting a restoration date and then storing the backup media on the system host to confirm the correctness of the restored data.

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• F. Information security promotion and education training

• All newly joined employees are required to attend the information security and protection classes.

• Regular advocacy: Require employees to change their system passwords regularly every quarter to maintain account security.

• Lectures: Provide information security related education and training courses to internal employees from time to time.

• Joined TWCERT/CC to access the information security consulting, to gather and provide the information to the employees.

The information security management measures implemented by the Company are as follows:

	information security management measures	information security management measures
Type	Description	Related Operations
Authority Management	Management measures for personnel accounts, authority management and system operation behavior	-Personnel account authority management and audit -Regular inventory of personnel account authority
Access Control	Control measures for personnel access to internal and external systems and data transmission channels	-Internal/external access control measures -Operation behavior track record
External Threats	Potential internal vulnerabilities, virus and protective measures	-Host/computer vulnerability detection and update measures -Virusprotection and malware detection
System Availability	System availability and handling measures in case of service interruption	-System/network availability monitoring and notification mechanism -Contingency measures for service interruptions -Information backup measures, local/offsite backup mechanism -Regular disaster recoverydrills

6.3 Investments on the Cyber Security Management

The implementation of the 6 categories of the Cyber Security Management are as follows:

1. Networking hardware

2. 1.) Next-Generation Firewall: possess the internet user behavior analysis

3. 2.) Layer 2 network switch

4. Software system

5. 1.) Server endpoint detection and response

6. 2.) User endpoint detection and response

7. 3.) Backup management software

8. 4.) Email antivirus

9. 5.) Spam filtering

10. 6.) VPN certification

11. Service provided from Telecom Operator

12. 1.) Intrusion Prevention System

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2.) DDOS Prevention System

1. Manpower investment

2. 1.) Each system been checked daily

3. 2.) Practicing backup and off-site media backup weekly

4. 3.) Conducting information security educational classes twice yearly

5. 4.) Disaster recovery drill yearly

6. 5.) Information recycle be audited internally and by CPA.

2021 Corporate information Security Implementation Results

Scope	Items	Status
Management	Amendment to the cyber securitymanagement rules	completed
	Implementation of cyber system count, classification and evaluation	completed
	Amendment to the cyber security report mechanism and respondingdrill	completed
	Conduction of internal audit	completed
	Conduction of external audit	completed
Training	New joined employees are required to complete the information securitytrainingclass	completed
	Announcement of information protection and security regulations andprecautions	completed

6.4 Information Security Incident Notification Procedures

6.5

==> picture [440 x 315] intentionally omitted <==

Other Important Matters: None

109

110

VII. Financial Information

7.1 Condensed Balance Sheet and Income Statement for the Most Recent Five Years - IFRS

7.1.1 Condensed Consolidated Balance Sheet for the Most Recent Five Years

Unit: NT$ thousand

		Unit:	Unit:	Unit:	Unit:	Unit:	NT$thousand
Year Item		Financial information in the most recent five years (Note 1)					Financial information of the current year as of March 31, 2022
		2017	2018	2019	2020	2021
Current assets		2,697,950	2,316,139	1,912,926	1,879,357	1,478,984	1,635,078
Property, plant, and equipment		684,075	740,253	706,542	601,177	740,479	747,006
Investmentproperty		374,145	413,560	1,237,555	1,301,016	1,465,874	1,483,758
Intangible assets		15,587	16,507	14,836	15,256	13,581	13,542
Other assets		244,145	481,601	324,518	263,208	290,626	290,848
Total assets		4,015,902	3,968,060	4,196,377	4,060,014	3,989,544	4,170,232
Current liabilities	Before distribution	1,009,956	2,103,680	876,503	878,931	1,644,051	1,174,830
	After distribution	1,009,956	2,103,680	876,503	878,931	(Note 6)	(Note 7)
Non-current liabilities		1,292,803	161,157	1,616,520	1,540,691	679,447	1,268,658
Total liabilities	Before distribution	2,302,759	2,264,837	2,493,023	2,419,622	2,323,498	2,443,088
	After distribution	2,302,759	2,264,837	2,493,023	2,419,622	(Note 6)	(Note 7)
Equity attributable to owners ofparent company
Capital stock		1,563,073	1,563,342	1,563,342	1,563,342	1,616,234	1,616,234
Capital surplus		253,658	253,248	253,248	272,535	241,891	272,535
Retained	Before distribution	(1,132)	5,160	5,160	13,687	69,843	81,000
	After distribution	0	0	0	0	(Note 6)	(Note 7)
Other equities			(118,527)	(118,396)	(209,172)	(261,922)	(212,981)
Treasurystock		0	0	0	0	0	0
Non-controllingequity		0	0	0	0	0	0
Total equity	Before distribution	1,713,143	1,703,223	1,703,354	1,640,392	1,666,046	1,727,144
	After distribution	1,713,143	1,703,223	1,703,354	1,640,392	(Note 6)	(Note 7)

Note 1: The financial information in these years was audited and certified by the independent auditors.

Note 2: After offsetting the deficit with capital reserve in 2017, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 3: After offsetting the deficit with capital reserve in 2018, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 4: After the provision of legal reserve, special reserve and other adjustments in 2019, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 5: After the provision of legal reserve, special reserve and other adjustments in 2020, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 6: The appropriation of earnings for 2021 is subject to the resolution of the shareholders’ meeting.

Note 7: The financial information for 2022Q1 of the current year was reviewed by the independent auditors.

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7.1.2 Condensed Consolidated Statement of Comprehensive Income for the Most Recent Five Years

Unit: NT$ thousand

Year Item	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)	Financial information of the current year as of March 31, 2022(Note 2)
	2017	2018	2019	2020	2021年
Operatingrevenue	2,163,439	2,626,834	2,294,655	1,245,165	1,341,812	208,181
Grossprofit	206,428	210,643	180,748	146,826	232,929	72,691
Operating profit or loss	(72,372)	(70,228)	(89,117)	(86,828)	725	10,878
Non-operatingincome and expenses	120,186	91,226	199,908	92,172	65,666	(2,312)
Pretaxprofit	47,814	20,998	110,791	5,344	66,391	8,566
Net Income for Continuing Operations	256	3,502	27,532	6,368	54,939	12,157
Loss of discontinued operations	0	0	0	0	0	0
Netprofit(loss)	256	3,502	27,532	6,368	54,939	12,157
Other comprehensive income (loss) for theperiod(net,after tax)	(92,522)	(14,413)	(27,401)	(88,617)	(51,533)	48,941
Total comprehensive income(loss)	(92,266)	(10,911)	131	(82,249)	3,406	61,098
Net income attributable to owners of parent company	1,602	3,502	27,532	6,368	54,939	12,157
Net income attributable to non- controllinginterests	(1,346)	0	0	0	0	0
Total comprehensive income or loss attributable to the owner of the parent company	(91,510)	(10,911)	131	(82,249)	3,406	61,098
Total comprehensive income attributable to non-controlling interests	(756)	0	0	0	0	0
Earningsper share	0.01	0.02	0.18	0.04	0.35	0.08

Note 1: The financial information in these years was audited and certified by the independent auditors. Note 2: The financial information for 2022Q1 of the current year was reviewed by the independent auditors.

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7.1.3 Condensed Parent Company Only Balance Sheet for the Most Recent Five Years

Unit: NT$ thousand

Year Item	Year Item	Financial information	Financial information	in the most recent five years (Note 1)	in the most recent five years (Note 1)	in the most recent five years (Note 1)
		2017	2018	2019	2020	2021
Current assets		697,322	532,897	647,705	512,904	431,865
Property, plant, and equipment		336,237	353,432	324,328	290,378	465,566
Investmentproperty		26,990	27,030	27,460	27,840	85,347
Intangible assets		1,570	2,928	2,456	4,411	3,931
Other assets		1,981,682	2,006,475	2,166,431	2,509,710	2,418,147
Total assets		3,043,801	2,922,762	3,168,380	3,345,243	3,404,856
Current liabilities	Before distribution	719,069	1,167,448	551,923	770,753	1,145,292
	After distribution	719,069	1,167,448	551,923	770,753	(Note 6)
Non-current liabilities		611,589	52,091	913,103	934,098	593,518
Total liabilities	Before distribution	1,330,658	1,219,539	1,465,026	1,704,851	1,738,810
	After distribution	1,330,658	1,219,539	1,465,026	1,704,851	(Note 6)
Equity attributable to owners ofparent company
Capital		1,563,073	1,563,342	1,563,342	1,563,342	1,616,234
Capital surplus		253,658	253,248	253,248	272,535	241,891
Retained earnings	Before distribution	(1,132)	5,160	5,160	13,687	69,843
	After distribution	0	0	0	0	(Note 6)
Other equities		(102,456)	(118,527)	(118,396)	(209,172)	(261,922)
Treasurystock		0	0	0	0	0
Non-controllingequity		0	0	0	0	0
Total equity	Before distribution	1,713,143	1,703,223	1,703,354	1,640,392	1,666,046
	After distribution	1,713,143	1,703,223	1,703,354	1,640,392	(Note 6)

Note 1: The financial information in these years was audited and certified by the independent auditors.

Note 2: After offsetting the deficit with capital reserve in 2017, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 3: After offsetting the deficit with capital reserve in 2018, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 4: After the provision of legal reserve, special reserve and other adjustments in 2019, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 5: After the provision of legal reserve, special reserve and other adjustments in 2020, the ending undistributed earnings balance was NT$0 and thus was not distributed.

Note 6: The appropriation of earnings for 2021 is subject to the resolution of the shareholders’ meeting.

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7.1.4 Condensed Parent Company Only Statement of Comprehensive Income for the Most Recent Five Years

Unit: NT$ thousand

Year Item	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)	Financial information in the most recent five years (Note 1)
	2017	2018	2019	2020	2021
Operatingrevenue	572,247	518,786	376,361	444,833	590,564
Grossprofit	67,059	85,575	13,263	33,001	139,373
Operating profit or loss	(38,182)	(25,566)	(75,631)	(56,129)	42,878
Non-operating income and expenses	48,453	37,208	131,380	130,344	77,035
Pretaxprofit	10,271	11,642	55,749	74,215	119,913
Net Income for Continuing Operations	1,602	3,502	27,532	6,368	54,939
Loss of discontinued operations	0	0	0	0	0
Netprofit(loss)	1,602	3,502	27,532	6,368	54,939
Other comprehensive income (loss) for the period (net,after tax)	(93,112)	(14,413)	(27,401)	(88,617)	(51,533)
Total comprehensive income(loss)	(91,510)	(10,911)	131	(82,249)	3,406
Net income attributable to owners ofparent Company	1,602	3,502	27,532	6,368	54,939
Net income attributable to non- controllinginterests	0	0	0	0	0
Total comprehensive income or loss attributable to the owner of the parent company	(91,510)	(10,911)	131	(82,249)	3,406
Total comprehensive income attributable to non- controllinginterests	-	-	-	-	-
Earningsper share	0.01	0.02	0.18	0.04	0.35

Note 1: The financial information in these years was audited and certified by the independent auditors.

7.1.5 Names of the Auditors and Their Audit Opinions in the Most Recent Five Years

1. Names of the CPAs and Their Audit Opinions in the Most Recent Five Years

Year	Name of AccountingFirm	Name of CPA	Audit opinion
2017	Deloitte Taiwan	Chiang, Ming-nan, Yeh,Shu-chuan	Unqualified opinions with other matters
2018	Deloitte Taiwan	Chiang, Ming-nan, Yeh,Shu-chuan	Unqualified opinions with other matters
2019	Deloitte Taiwan	Shih, Ching-pin Cho, Ming-hsin,	Unqualified opinions with other matters
2020	PwC Taiwan	Tsai, I-tai, Liang,Chan-nu	Unqualified opinions with other matters
2021	PwC Taiwan	Tsai, I-tai, Liang,Chan-nu	Unqualified opinions with other matters

1. The Reason for the Change of CPAs in the Most Recent Five Years:

2. From 2017 to 2019, the Company complied with the adjustment due to the internal job rotation of Deloitte Taiwan. In 2020, the change of CPAs was to meet the future operational and internal management needs of the Company.

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7.2 Financial Analysis for the Most Recent Five Years - IFRS

7.2.1 Consolidated Financial Analysis for the Most Recent Five Years

		Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Year (Note 1) Item (Note 2)		Financial analysis for the most recent five years					Current year as of March 31, 2022
		2017	2018	2019	2020	2021
Financial structure (%)	Debt-asset ratio	57.34	57.08	59.41	59.60	58.24	58.58
	Ratio of long-term capital to property, plant and equipment	439.42	251.86	469.88	529.14	316.75	400.99
Solvency (%)	Current ratio	267.14	110.10	218.25	213.82	89.96	139.18
	Quick ratio	186.52	69.27	146.26	157.63	58.64	72.04
	Interest coverage ratio	2.17	1.37	3.06	1.13	2.81	1.97
Operating performance	Accounts receivable turnover(times)	4.25	3.95	3.86	3.34	4.04	2.85
	Average collection days	85.88	92.40	94.55	109.28	90.34	128.07
	Inventory turnover (times)	3.00	3.25	3.25	2.26	2.47	0.94
	Accounts payable turnover(times)	9.60	8.09	9.57	10.72	8.72	2.98
	Average days in sales	121.66	112.30	112.30	161.5	147.77	388.29
	Property, plant and equipment turnover (times)	2.68	3.69	3.17	1.90	2.00	1.26
	Total assets turnover (times)	0.57	0.66	0.56	0.30	0.33	0.21
Profitability	Return on total assets (%)	0.94	1.27	1.73	0.96	2.09	0.48
	Return on stockholders’ equity (%)	0.09	0.21	1.62	0.38	3.32	0.73
	Ratio of profit before income tax to paid-in capital(%)	3.06	1.34	7.09	0.34	0.04	0.53
	Profit ratio(%)	0.07	0.13	1.20	0.51	4.09	5.84
	Earnings per share (NT$)	0.01	0.02	0.18	0.04	0.35	0.08
Cash flow	Cash flow ratio (%)	(12.06)	(4.68)	21.37	30.53	3.45	(10.06)
	Cash flow adequacy ratio(%)	44.53	43.10	62.89	67.73	36.20	62.97
	Cash reinvestment ratio (%)	(2.89)	(3.14)	4.02	5.83	1.51	(2.66)
Leverage	Degree of operating leverage	(4.77)	(4.81)	(4.52)	(3.74)	544.54	10.64
	Degree of financial leverage	0.64	0.55	0.62	0.68	(0.02)	5.40

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7.2.2 Parent Company Only Financial Analysis

Unit: NT$ thousand

Year (Note 1) Item (Note 2)	Year (Note 1) Item (Note 2)	Financial analysis for the most	Financial analysis for the most	Financial analysis for the most	recent five years	recent five years
		2017	2018	2019	2020	2021
Financial structure (%)	Debt-asset ratio	43.72	41.73	46.24	50.96	51.07
	Ratio of long-term capital to property, plant and equipment	691.40	496.65	806.73	886.60	485.34
Solvency (%)	Current ratio	96.98	45.65	117.35	66.55	37.71
	Quick ratio	62.74	21.52	69.20	41.52	20.86
	Interest coverage ratio	1.57	1.48	2.98	3.91	5.56
Operating performance	Accounts receivable turnover (times)	4.95	4.79	4.37	5.30	6.81
	Average collection days	73.66	76.12	83.44	68.89	53.59
	Inventoryturnover(times)	2.04	1.65	1.33	1.81	2.38
	Accountspayable turnover(times)	3.38	3.26	3.59	4.61	4.37
	Average days in sales	178.86	220.78	273.57	201.58	153.14
	Property, plant and equipment turnover(times)	1.68	1.50	1.11	1.45	1.56
	Total assets turnover(times)	0.19	0.18	0.12	0.13	0.17
Profitability	Return on total assets(%)	0.58	0.79	1.65	0.82	2.25
	Return on stockholders’ equity (%)	0.09	0.21	1.62	0.38	3.32
	Ratio of profit before income tax to paid-in capital(%)	0.66	0.74	3.57	4.75	7.42
	Profit ratio(%)	0.28	0.68	7.32	1.43	9.30
	Earningsper share(NT$)	0.01	0.02	0.18	0.04	0.35
Cash flow	Cash flow ratio (%)	(0.59)	0.11	(7.02)	8.39	5.58
	Cash flow adequacy ratio (%)	11.02	14.92	6.67	3.09	7.39
	Cash reinvestment ratio (%)	(0.14)	0.04	(1.17)	1.76	1.68
Leverage	Degree of operating leverage	(3.71)	(5.74)	(1.02)	(1.62)	4.57
	Degree of financial leverage	0.68	0.51	0.73	0.69	2.59

Note 1: All the financial information provided above was audited and certified by the independent auditors. Note 2: Formulas for calculating the financial analysis information:

1. Financial structure

2. (1) Debt-asset ratio = Total liabilities / total assets.

3. (2) Ratio of long-term capital to property, plant, and equipment = (total equity + non-current liabilities) / net amount of property, plant, and equipment.

4. Solvency

5. (1) Current ratio = Current assets / current liabilities.

6. (2) Current ratio = Current assets / current liabilities.

7. (3) Interest coverage ratio = Net profit before tax and interest / interest expenses.

8. Operating performance

9. (1) Accounts receivable (including accounts receivable and Note s receivable resulting from operation) turnover = Net sales / balance of average accounts receivable (including accounts receivable and Note s receivable resulting from operation).

10. (2) Average collection days = 365 / receivables turnover rate.

11. (3) Inventory turnover rate = Cost of sales / average inventory.

12. (4) Accounts payable (including accounts payable and Notes payable resulting from operation)

116

turnover = Cost of sales / balance of average accounts payable (including accounts payable and Notes payable resulting from operation).

• (5) Average days for sale = 365 / Inventory turnover rate.

• (6) Property, plant, and equipment turnover rate = Net sales / Average net property, plant, and equipment.

• (7) Total asset turnover rate = Net sales / Average total assets.

• Profitability

• (1) Return on assets (ROA) = [Net income after income tax + Interest expenses * (1 - tax rate)] / Average total assets.

• (2) Return on equity = Net income after tax / Average equity.

• (3) Net margin = Net income after tax / Net sales.

• (4) Earnings per share = (Net income (loss) attributable to owners of parent company – Dividends on preferred shares) / Weighted average number of issued shares.

• Cash flow

• (1) Cash flow ratio = Net operating cash flow / Current liabilities.

• (2) Net cash flow adequacy ratio = Net cash flow from operating activities in the most recent five years / (Capital expenditure + Increase in inventory + Cash dividends) in the most recent five years.

• (3) Cash reinvestment ratio = (Net cash flow from operating activities - Cash dividends) / (Gross of property, plant and equipment + Long-term investment + Other non-current assets + Working capital).

• Leverage:

• (1) Degree of operating leverage = (Net operating revenue - Variable operating costs and expenses) / Operating income

• (2) Degree of financial Leverage = Operating profit / (Operating profit - Interest expenses).

• Note 3: If the Company’s stock has no par value or the par value of each share is not NT$10, the calculation related to its ratio to the paid-in capital in the preceding paragraph shall be the ratio to the equity attributable to owners of parent company in the balance sheet.

• 7.2.3 Reasons for the changes (change of 20% or more) in financial ratios in the financial analysis - IFRS (consolidated) for the last two years:

• Decrease of the ratio of long-term capital to property, plant and equipment in interest coverage ratio: mainly due to the one-year syndicated loan is increased and the purchase of the office located in Zhonghe district.

• Decrease of the current ratio: mainly due to the increase of the long-term liabilities due within one year.

• Decrease of the quick ratio: mainly due to the increase of the long-term liabilities due within one year.

• Increase of the interest coverage ratio: mainly due to the improved profits contribution of photoelectric components.

• Increase of the accounts receivable turnover: mainly due to the increased sales of the photoelectric components.

• Increase of the return on total assets: manly due to the profits from the photoelectric components and the purchase of the office located in Zhonghe district.

• Increase of the return on stockholders’ equity: mainly due to the improved gross profit and increased profits of the photoelectric components.

• Increase of the ratio of profit before income tax to paid-in capital: mainly due to the improved gross profit and increased profits of the photoelectric components.

• Increase of the profit ratio: mainly due to the improved gross profit and increased profits of the photoelectric components.

• Increase of the earnings per share: mainly due to the improved gross profit from the photoelectric components.

• Decease of the cash flow ratio: mainly due to the increase of the long-term liabilities due within one year.

• Decrease of the cash flow adequacy ratio: mainly due to the purchase of the real estate in Zhonghe district.

117

1. Increase of the cash reinvestment ratio: mainly due to the increase of the long-term liabilities due within one year.

2. Increase of operating leverage: mainly due to the improved gross profit and increased profits of the photoelectric components.

3. Increase of the of financial leverage: mainly due to the improved gross profit and increased profits of the photoelectric components.

4. Changes in other ratios are not material and therefore are not analyzed comparatively.

7.2.4 Reasons for the changes (change of 20% or more) in financial ratios in the financial analysis - IFRS (parent company only) for the last two years:

1. Decrease of the ratio of long-term capital to property, plant and equipment in interest coverage ratio: mainly due to the one-year syndicated loan is increased and the purchase of the office located in Zhonghe district.

2. Decrease of the current ratio: manly due to the increase of the long-term liabilities due within one year.

3. Decrease of the quick ratio: mainly due t the increase of the long-term liabilities due within one year.

4. Increase of the interest coverage ratio: mainly due to the improved profits contribution of the photoelectric components.

5. Increase of the turnover ratio of receivables: mainly due to the increased sales of the

6. photoelectric components.

7. Decrease of the average collection days in sales: mainly due to the increased sales of the photoelectric components.

8. Increase of the inventory turnover: mainly due to the improved gross profit of the photoelectric components.

9. Decrease of the average days in sales: mainly due to the increased revenue of the photoelectric components and decreased inventory.

10. Increase of the total assets turnover: mainly due to the purchase of the office in Zhonghe district and the increased revenue.

11. Increase of the return on total assets: mainly due to the profits of the photoelectric components and the purchase of the office in Zhonghe district.

12. Increase of the return on stockholders’ equity: mainly due to the improved gross profit and the increased profit of the photoelectric components.

13. Increase of the ratio of profit before income tax to paid-in capital: mainly due to the improved gross profit and the increased profit of the photoelectric components.

14. Increase of the profit ratio: mainly due to the improved gross profit and the increased profit of the photoelectric components.

15. Increase of the earnings per share: mainly due to the improved gross profit of the photoelectric components.

16. Decease of the cash flow ratio: mainly due to the increase of the long-term liabilities due within one year.

17. Increase of the cash flow adequacy ratio: mainly due to the purchase of the office in Zhonghe district.

18. Increase of operating leverage: mainly due to the improved gross profit of the photoelectric components.

19. Increase of financial leverage: mainly due to the improved gross profit of the photoelectric components.

20. Changes in other ratios are not material and therefore are not analyzed comparatively.

118

7.3 Audit Committee’s Audit Report for the Most Recent Year

Audit Committee's review report of 2021.

Audit Committee's Review Report of Cosmo Electronics Corporation.

The Board of Directors has prepared the Cosmo Electronics Corporation. (“the Company”) 2021 Business Report, financial statements, and proposal for earnings distribution. The CPA firm of PwC was retained to audit the Company’s financial statements and has issued an audit report relating to financial statements by Tsai, I-tai and Liang, Chan-nu . The above Business Report, financial statements, and earnings distribution proposal have been examined and determined to be correct and accurate by the Audit Committee of Cosmo Electronics Corporation. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we hereby submit this report.

Cosmo Electronics Corporation 2022 Shareholders’ Meeting

Audit Committee Convener ： Wu Yong-fu

March 29,2022

119

7.4. Financial Statements for the Most Recent Year

120

7.5 The Parent Company Only Financial Statements for the Most Recent Year Which Were Audited and Certified by the Independent Auditors

• 7.6 If the Company and Its Affiliated Companies Encountered Difficulties in Financial Turnover in the Most Recent Year and up to the Date of Publication of the Annual Report, the Impact on the Company’s Financial Position Shall be Specified: None

205

VIII. Review of Financial Conditions, Financial Performance, and Risk Management

8.1 Analysis of Financial Status

Unit: NT$ thousands

8.1 Analysis of Financial Status			Unit: NT$thousands	Unit: NT$thousands
Year Item	2020	2021	Difference
			Amount	%
Current assets	1,879,357	1,478,984	-400,373	-21.30%
Property, plant and equipment	601,177	740,479	139,302	23.17%
Investment property	1,301,016	1,465,874	164,858	12.67%
Intangible assets	15,256	13,581	-1,675	-10.98%
Other assets	263,208	290,626	27,418	10.42%
Total assets	4,060,014	3,989,544	-70,470	-1.74%
Current liabilities	878,931	1,644,051	765,120	87.05%
Non-current liabilities	1,540,691	679,447	-861,244	-55.90%
Total liabilities	2,419,622	2,323,498	-96,124	-3.97%
Share capital	1,563,342	1,616,234	52,892	3.38%
Capital reserve	272,535	241,891	-30,644	-11.24%
Retained earnings	13,687	69,843	56,156	410.29%
Other interests	-209,172	-261,922	-52,750	25.22%
Non-controlling interests	0	0	0	-
Total stockholders’ equity	1,640,392	1,666,046	25,654	1.56%
Analysis of changes in ratios: 1. Increase of the property, plant and equipment: mainly due to the purchase of the office in Zhonghe district in 2022. 2. Increase of the Investment property: mainly due to the fair value adjustment of the invested property. 3. Increase of the current liabilities: mainly due to the transfer of the syndicated loan to the long- term liabilities. 4. Increase of the share capital: manly due to the allotment of shares from the capital surplus and corporate bonds convertible into shares. 5. Increase of the retained earnings: mainly due to the improved gross profit and the fair value adjustment of the land in the development zone.

1. Increase of the property, plant and equipment: mainly due to the purchase of the office in Zhonghe district in 2022.

2. Increase of the Investment property: mainly due to the fair value adjustment of the invested property.

3. Increase of the share capital: manly due to the allotment of shares from the capital surplus and corporate bonds convertible into shares.

4. Increase of the retained earnings: mainly due to the improved gross profit and the fair value adjustment of the land in the development zone.

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8.2 Analysis of Financial Performance

8.2.1 Analysis of Financial Performance

Analysis of Financial Performance 8.2.1 Analysis of Financial Performance	Analysis of Financial Performance 8.2.1 Analysis of Financial Performance	Analysis of Financial Performance 8.2.1 Analysis of Financial Performance	Analysis of Financial Performance 8.2.1 Analysis of Financial Performance	Analysis of Financial Performance 8.2.1 Analysis of Financial Performance
Unit: NT$thousands
Year Item	2020	2021	Increase (Decrease)	Percentage of Change(％)
Net sales revenue Net operating revenue Operating costs	1,245,165 1,245,165 1,098,339	1,341,812 1,341,812 1,108,883	96,647 96,647 10,544	7.76% 7.76% 0.96%
Gross profit	146,826	232,929	86,103	58.64%
Operating expenses	233,654	232,204	-1,450	-0.62%
Operating losses	-86,828	725	87,553	-100.83%
Non-operating income and
	92,172	65,666	-26,506	-28.76%
expenses
Income before tax Income tax expense Netprofit for theperiod	5,344 1,024 6,368	66,391 -11,452 54,939	61,047 -12,476 48,571	1,142.35% -1,218.36% 762.74%
I. Analysis of the changes in the percentage of increase and decrease: 1. Increase of the net operating revenues and gross profit: mainly due to the increased revenue and the improved gross profit of the photoelectric components. 2. Decrease of the operating expenses: mainly due to the austerity. 3. Increase of the operating profit, income before tax and net profit for the period: mainly due to the increased profit of the photoelectric components, and the recognition of the fair value adjustment of the invested property.
II. The expected sales volume in the coming year and its basis and the main factors affecting the
Company’s expected sales volume to continue to grow or decline: Please refer to pages 1-6 of the “Report to Shareholders”.

8.2.2 Analysis of the change in gross profit: The rise of the gross profit from 11.79% in 2020 to 17.36% in 2021, mainly due to the improved gross profit of the photoelectric components.

8.3 Analysis of Cash Flow

8.3.1 Cash Flow Analysis for the Current Year

					Unit: NT$thousands	Unit: NT$thousands
Cash and Cash Equivalents, Beginning of Year	Net Cash Flow from Operating Activities	Net Cash Flow in Investment and Financing Activities	Exchange rate changes	Cash Surplus	Remedy for Cash Deficit
					Investment Plans	Financing Plans
1,007,732	56,741	(475,286)	(2,941)	586,246	-	-

Cash inflow from operating activities of $56,741 thousand: mainly due to operating income for the year. Cash outflow from investing activities of $361,944 thousand: mainly due to purchase of the office. Cash outflow from financing activities of $113,342 thousand: mainly due to the repay of the syndicated loan.

8.3.2 Remedy for Cash Deficit: None

280

8.3.3 Cash Flow Liquidity Analysis for the Coming Year

Unit: NT$ thousands

				Unit: NT$thousands	Unit: NT$thousands
Cash and Cash Equivalents, Beginning of Year (1)	Estimated Net Cash Flow from Operating Activities (2)	Estimated Cash Inflow (Outflow) (3)	Cash Surplus (Deficit) (1)+(2)-(3)	Remedy for Cash Deficit
				Investment Plans	Financing Plans
586,246	180,000	230,000	996,246	-	-

8.3.3.1 Analysis of changes in cash flows in the coming year:

• (1) Operating activities: expected net cash inflow is $180,000 thousand, mainly from operating income.

• (2) Investing activities: expected net cash outflow is $ 220,000 thousand, mainly from capital increase to subsidiaries, investment in purchasing of fixed assets.

• (3) Financing activities: expected to repay $450,000 thousand to banks.

• 8.3.3.2 Remedial measures for cash shortage: Not applicable.

8.4 Impact of the Major Capital Expenditure Items on Financial Operations: None

• 8.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year

• 8.5.1 Reinvestment policy for the most recent year: Capital increase in subsidiaries.

• 8.5.2 Analysis of gain on reinvestment: To recognize the benefit of fair value adjustment of invested properties by the subsidiaries in the current year.

• 8.5.3 Investment plans for the coming year: Capital increase in PT Cijambe.

8.6 Risks and Assessments for the Latest Year and Up to the Date of Publication of the Annual Report

8.6.1 Organizational structure of risk management:

The main risk management organizations and responsible units for risk management execution are as follows:

• 8.6.1.1 President’s Office: To coordinate and direct the promotion and operation of decision making under risk, and to evaluate the effectiveness of medium and long-term investments in order to reduce strategic risks.

• 8.6.1.2 Finance: Responsible for the financial planning and utilization, under the risk control and supervision mechanism, emphasizing safety, liquidity and profitability, so as to establish a hedging mechanism to reduce financial risks.

• 8.6.1.3 Accounting: Responsible for the revision and promotion of the internal control system to strengthen the internal control function and ensure its continuous effectiveness to achieve the purpose of reliability of financial statementing, effectiveness and efficiency of operation and compliance with relevant laws and regulations.

• 8.6.1.4 Legal Affairs: Responsible for legal affairs management, review contracts and internal legal consultation, and follow government supervision policies and handle contract and litigation disputes to reduce legal risks.

281

• 8.6.1.5 Labor Safety and Health: Responsible for safety and health supervision and management, and follow labor safety regulations to reduce the risk of accidents.

• 8.6.1.6 Human Resources: Responsible for the selection, employment, training, and retention of human resources, establishing a performance-based salary system, and strengthening the organizational team of division of labor and cooperation to reduce the risk of human resources management.

• 8.6.1.7 Information: Responsible for network planning, construction and maintenance, continuously measuring network quality to reduce network operation risks, reducing and avoiding risks arising from the company’s system and various information projects, and providing management with fast and effective operation management information to reduce information security risks.

• 8.6.1.8 Audit: To evaluate and consider the potential risks of the company’s operations and internal control system, and to prepare an annual audit plan based on the risk orientation to assist the board of directors and managers to check and review the deficiencies of the internal control system and to measure the effectiveness and efficiency of operations and compliance with relevant laws and regulations to ensure that the internal control system is continuously and effectively implemented.

• 8.6.1.9 Business Department: Responsible for marketing strategy, product promotion, market information collection and establishment, customer relationship establishment and handling, and receivables tracking to reduce business operation risk.

• 8.6.1.10 Financial Accounting Department: To develop strategies based on financial risk, liquidity risk, and credit risk, and to take various countermeasures based on laws, policies, and analysis of market changes to reduce financial risk.

• 8.6.1.11 R&D Department: Responsible for risk assessment of new product development and control of R&D progress.

• 8.6.1.12 Manufacturing Department: Responsible for the management of production, manufacturing, equipment maintenance, and labor safety and health to reduce production risks.

• 8.6.2 The impact of changes in interest rates, exchange rates and inflation on the Company’s profit and loss and future corresponding measures:

• 8.6.2.1 Changes in interest rates The Company’s bank loans are all at floating interest rates that fluctuate based on the market changes.

• 8.6.2.2 Changes in exchange rates The net foreign exchange gain in the most recent year was recognized when accounts receivable and payable in U.S. dollars were received or paid, mainly due to the fluctuation of the appreciation of the U.S. dollar. In order to reduce the risk of exchange rate fluctuations on the Company’s profit and loss, the Company collects exchange rate information to keep abreast of exchange rate trends, regularly evaluates foreign currency positions and expects future foreign currency positions to hedge the net position of foreign currency assets and liabilities.

• 8.6.2.3 Inflation The impact of inflation on the Company’s profit or loss: Since there is a significant global inflation, the rising raw material costs and the product prices adjustments, all of these have no significant impact on the Company’s operating results in fiscal 2021.

282

• 8.6.3 The policy of engaging in high-risk, highly leveraged investments, lending of funds to others, endorsement and guarantee, and derivative transactions, the main reasons for profit or loss, and future corresponding measures:

• 8.6.3.1 Engaging in high-risk, highly leveraged investments: None

• 8.6.3.2 Lending of funds to others and endorsement and guarantee: In accordance with the “Procedures for Loaning of Funds” and “Regulations Governing Making of Endorsements and Guarantees” established by the Company, which are subject to regular internal audits.

• 8.6.3.3 The Company’s policy on derivative transactions, the main reasons for profit and loss, and future corresponding measures:

• (1) Derivatives trading policy: The policy is for hedging rather than trading purposes. The selection of trading commodities is based on hedging the risks arising from the Company’s business operations, and the currencies held must be consistent with the Company’s actual foreign currency requirements for import and export transactions, and the Company’s overall internal position (foreign currency income and expenses) is squared off on its own in order to reduce the Company’s overall foreign exchange risk and save foreign exchange operation costs.

• (2) Main reasons for gain or loss on derivative transactions: None The Company has not engaged in derivative transactions for fiscal 2021 and the year ending March 31, 2022.

• (3) Future corresponding measures:

  • The Company uses derivatives with strong negative correlation with changes in fair value of the hedged item and lower risk as hedging instruments, which are evaluated periodically.

• 8.6.4 Research and development plan and expected investment in research and development The Company currently has the technology of DIP, SOP and SSOP type IC packaging, recently we have been putting effort into the IC-based photocoupler products development to enhance brand image and keep in sync with global tendency, and will meet with the customer’s application specifications individually in order to fully satisfy the customer’s needs and provide more comprehensive services. In fiscal 2022, the estimated R&D expenses will be NT$925 thousand.

• 8.6.5 Impact of significant changes in domestic and foreign policies and laws on the Company’s financial operations and corresponding measures:

• The Company follows national policies and laws, and pays attention to changes in foreign policies and laws at all times. When there are important changes in policies and laws, the relevant units will adjust the Company’s internal systems and business operations to ensure the Company’s smooth operation.

• 8.6.6 Impact of technological changes and industry changes on the Company’s financial operations and corresponding measures:

8.7 Other Important Matters: None

283

IX. Special Disclosure

9.1 Information of the Affiliated Companies

9.1.1 Summary of the Affiliated Companies

• 9.1.1.1 Organizational Chart of the Affiliated Companies

==> picture [483 x 324] intentionally omitted <==

284

9.1.1.2 Basic Information of the Affiliated Companies

December. 31, 2021

Unit: NT$ thousands

				December. 31, 202 Unit: NT$thousand
Company Name	Date of Establishment	Address	Paid-in Capital	Business Item
Cosmo Electronics Co., Ltd.	93.03.10	Offshore Chambers, P.O. Box 217, Apia,Samoa	NT193,912	Investment
Cosmo Electronics Technology Co., Ltd.	93.04.29	2ndFloor, Felix House, 24 Dr. Joseph Riviere Street, Port Louis, Republic of Mauritius	NT193,912	Investment
Cosmo Electronics Technology (Kunshan) Co., Ltd.	93.06.02	No.339, Qingyang North Road, Zhou Shi Town, Kunshan City No.339, Qing Yang Highway, Zhoushi Town,Kunshan,Jiansu,China	NT193,912	New electronic device processing and manufacturing
COSMO ELECTRONICS (HK) COMPANY LIMITED	94.12.15	Unit B,22/F.,Chung Pont Commercial Building,300 Hennessy Road,Wanchai,HongKong	USD8,100	Import and export of electronic products
Grand Concept Group Limited	95.12.18	Offshore Chambers, P.O. Box 217, Apia,Samoa		Investment
			USD7,950
Grandway International Limited	95.12.18	Offshore Chambers, P.O. Box 217, Apia,Samoa		Investment
			USD30,080
True Glory Investments Limited	95.12.18	Offshore Chambers, P.O. Box 217, Apia, Samoa	USD7,950	Investment and printed circuit board processing and trading
Truly Top Investments Limited	95.12.18	Offshore Chambers, P.O. Box 217, Apia,Samoa	USD16,850	Investment
PT Cosmo Technology	96.02.20	Jl.Raya Segog No.14 Desa Batununggal Kecarmatan Cibadak Kabupaten Sukabumi	USD21,100	Decorative lights manufacturing and sales
PT Cosmo Green Technology	102.04.11	JL. HM. SALIM NO. 27,KEL. WAY LUNIK KEC. PANJANG BANDAR LAMPUNG 35244 INDONESIA	USD3,000	Self-usage power generation equipment utilizing renewable energy industry
Renown Boom Limited	96.01.08	Offshore Chambers, P.O. Box 217, Apia,Samoa	USD13,230	Investment
Real Bonus Limited	96.01.03	Offshore Chambers, P.O. Box 217, Apia,Samoa	-	Decorative lights sales
Cosmo Lighting Inc.	96.07.03	385 South Lemon Ave., E277, Walnut, CA 91789	USD1,620	Decorative lights sales
DONG GUAN GUAN ZHEN XING TRADING LIMITED	103.03.25	Room 202, Building 2, No.6, Yu Yuan 2nd Road, Huang Jiang Town, Dongguan City, Guangdong Province	USD6,000	Self-usage power generation equipment utilizing renewable energy industry
Cosmo Green Power Ltd.	104.01.26	436A/24 Đường 3/2, Phường 12, Quận 10, Thành phố Hồ Chí Minh	USD1,000	Self-usage power generation equipment utilizing renewable energy industry; import and sale of plastic materials
Shaoguan Woncrown Electronics Technology Co., Ltd.	106.02.28	No. 227 (Plant B), Mu Xi Avenue, Mu Xi Industrial Park, Wujiang District, Shaoguan City	CNY20,000	Research, development, production and sales of electronicproducts
COSMO RECYCLING,INC.	106.08.22	727 BREA CANYON ROAD STE #4 WALUNT CA USA	USD800	General waste recycling and sales
Guizhou Woncrown Electronics Technology Co., Ltd.	107.01.04	East of Industrial Avenue, Economic Development Zone Liping	CNY35,210	Research, development, production and sales of electronicproducts
PT CIJAMBE INDAH	100.05.25	Jl.Perintis Kemerdekaan No.6 Desa Sukamulya Kecamatan Cikembar Kabupaten Sukabumi	IDR55,413,000	Land development
Dongguan Guanwang Electronic Technology Co., Ltd.	108.06.21	Room 102, Building 1, No.6, Yu Yuan 2nd Road, Huang Jiang Town, Dongguan City,GuangdongProvince	CNY6,200	Research, development, production and sales of electronicproducts

285

• 9.1.1.3 Information on the same shareholders as those presumed to be in a controlling or subordinate relationship: Not applicable.

• 9.1.1.4 The following industries are covered by the overall affiliates’ operations:

• (1) Processing, assembling, manufacturing and trading of optoelectronic components and relay components.

• (2) Import and export of electronic products and other electronics business.

• (3) Manufacture, sale and purchase of decorative lights.

• (4) Self-usage power generation equipment utilizing renewable energy industry.

• (5) Streetlights, power control boards, power controllers, switch controllers, and face recognition devices.

9.1.1.5 Information on directors, supervisors and presidents of affiliates:

			December 31,2021	December 31,2021	December 31,2021
			Shares held
Name of enterprise	Title	Name or representative	Shares		Shareholding ratio(%)
Cosmo Electronics Co., Ltd.	Director	Cosmo Electronics Corporation	5,500,038		100%
		Representative: TSAI,NAI-CHENG
Cosmo Electronics Technology Co., Ltd.	Director	Cosmo Electronics Co., Ltd.	5,500,038		100%
		Representative: TSAI,NAI-CHENG
Cosmo Electronics Technology (Kunshan) Co., Ltd.	Director	Chao Chia-chi, Liu Chin-mu, Lin, Hong-mao	-		100%
	Supervisor	Lee Chih-chin
COSMO ELECTRONICS (HK) COMPANY LIMITED	Director	Cosmo Electronics Corporation Representative: TSAI,NAI-CHENG	63,180,000		100%
					100%
Grand Concept Group Limited	Director	Cosmo Electronics Corporation Rtti TSAINAICHENG	7,950,000
		epresenave:,-
					100%
Grandway International Limited	Director	Cosmo Electronics Corporation Rtti TSAINAICHENG	30,080,000
		epresenave:,-
					100%
True Glory Investments Limited	Director	Grand Concept Group Limited Rtti TSAINAICHENG	7,950,000
		epresenave:,-
					100%
Truly Top Investments Limited	Director	Grandway International Limited Rtti TSAINAICHENG	16,850,000
		epresenave:,-
PT Cosmo Technology	Director	TSAI, NAI-CHENG, Barry Chia, Chao	21,100,000		100%
		Chia-chi
	Supervisor	Allen Zang
PT Cosmo Green Technology	Director	TSAI, NAI-CHENG, Horse Wang,	30,000		100%
		BarryChia
	Supervisor	Allen Zang
					100%
Renown Boom Limited	Director	Grandway International Limited Rtti TSAINAICHENG	13,230,000
		epresenave:,-
			-		100%
Real Bonus Limited	Director	Grand Concept Group Limited Rtti TSAINAICHENG	-
		epresenave:,-
					100%
Cosmo Lighting Inc.	Director	Cosmo Electronics Technology LtdRtti JhH	1,620,000
		.epresenave: onnyuang
DONG GUAN GUAN ZHEN XING TRADING LIMITED	Director	TSAI, NAI-CHENG, Ernest Song, Chao Chia-chi	-		100%
	Supervisor	Allen Zang
Cosmo Green Power Ltd.	Chairperson	TSAI,NAI-CHENG	-		100%
Shaoguan Woncrown Electronics	Chairperson	Lee Chih-chin	-		100%
TechnologyCo.,Ltd.	Supervisor	Allen Zang
COSMO RECYCLING,INC.	Chairperson	Ho Wei-chuan	800,000		100%
Guizhou Woncrown Electronics TechnologyCo.,Ltd.	Chairperson	Comer Zou	-		100%
PT CIJAMBE INDAH	Chairperson	LIU, CHING-MU	55,413		100%
Dongguan Guanwang Electronic TechnologyCo.,Ltd.	Chairperson	Cesar Tsai	-		100%

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9.1.1.6 Operation of Affiliates

December. 31, 2021

Unit: NT$ thousands

Name of enterprise	Capital	Total assets	Total liabilities	Net worth	Operating income	Operating profit (loss)	Profit (loss) for theperiod	Loss per share (NT$)
Cosmo Electronics Co.,Ltd.	193,912	196,543	0	196,543	0	0	-10,215	-
Cosmo Electronics TechnologyCo.,Ltd.	193,912	196,527	0	196,527	0	0	-10,215	-
Cosmo Electronics Technology (Kunshan) Co., Ltd.	193,912	224,466	27,940	196,526	81,538	-8,121	-10,216	-
COSMO ELECTRONICS (HK）COMPANY LIMITED	269,412	192,911	56,143	136,768	6,868	3,430	-1,670	-
Grand Concept GroupLimited	240,734	1,034,064	0	1,034,064	0	0	81,231	-
Grandway International Limited	941,532	872,805	0	872,805	0	0	32,526	-
True GloryInvestments Limited	240,734	1,050,667	63,842	986,825	320	18	79,752	-
TrulyTopInvestments Limited	538,516	526,454	0	526,454	0	0	53,466	-
PT Cosmo Technology	668,240	1,174,941	511,011	663,930	602,069	-4,336	69,055	-
Renown Boom Limited	402,983	346,351		346,351		-1	-20,941	-
Real Bonus Limited	0	62,877	15,573	47,304	152,791	164	1,475	-
Cosmo LightingInc.	49,046	41,061	2,710	38,351	53,332	-5,716	-129	-
PT Cosmo Green Technology	89,468	93,274	6,368	86,906	62,567	11,911	8,600	-
DONG GUAN GUAN ZHEN XING TRADING LIMITED	187,563	248,278	26,749	221,529	158,870	4,985	-30,097	-
Cosmo Green Power Ltd.	31,760	9,316	180	9,136		-521	-2,104	-
Shaoguan Woncrown Electronics Technology Co.,Ltd.	90,751	36,365	-8,506	44,871	0	0	-1,723	-
PT CJAMBE INDAH	112,815	1,058,490	173,445	885,045	0	-6,745	77,068	-
COSMO RECYCLING,INC.	24,270	333	49	284	11,504	-2,443	-2,466	-
Guizhou Woncrown Electronics Technology Co., Ltd.	158,446	135,710	-23	135,733	0	-541	-4,823	-
Dongguan Guanwang Electronic Technology Co.,Ltd.	26,958	77,330	131,309	-53,979	63,694	-34,459	-34,426	-

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9.1.2 Consolidated Financial Statements of Affiliated Companies

Declaration of Consolidated Financial Statements of Affiliated Companies

For the year ended December 31, 2021 (from January 1, 2021 to December 31, 2021), pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the entities that are required to be included in the consolidated financial statements of affiliates, are the same as the entities required to be included in the consolidated financial statements under International Financial statementing Standards 10. In addition, information required to be disclosed in the consolidated financial statements of affiliates is included in the aforementioned consolidated financial statements. Accordingly, it is not required to prepare a separate set of consolidated financial statements of affiliates.

Hereby declared by

Company name: Cosmo Electronics Corporation

Person in charge: TSAI, NAI-CHENG

March 29, 2022

288

9.2 Private Placement of Securities for the Most Recent Year and up to the date of Publication of the Annual Report: None

9.3 Holding or Disposal of the Company’s Stock by Subsidiaries for the Most Recent Year and up to the date of Publication of the Annual Report: None

9.4 Other Necessary Supplements: None

X. Events with Material Impact on Shareholders’ Equity or on Prices of Securities as Specified in Subparagraph 2, Paragraph 2 of Article 36 of the Securities and Exchange Act in the Most Recent Year and up to the date of Publication of the Annual Report: None

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