COSMO — Audit Report / Information 2021

Nov 12, 2021

COSMO ELECTRONICS CORPORATION

PARENT COMPANY ONLY FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2021 AND 2020

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two version, the Chinese-language auditors’ report and financial statements shall prevail.

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Independent Auditors’ Report Translated from Chinese

To the Board of Directors and Shareholders of Cosmo Electronics Corporation

Opinion

We have audited the accompanying parent company only financial statements of Cosmo Electronics Corporation (the “Company”), which comprise the parent company only balance sheets as of December 31, 2021 and 2020, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to the Other matter section), the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the year then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits of the parent company only financial statements in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants ,and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

The key audit matters in relation to the parent company only financial statements for the year ended December 31,2021, are outlined as follows:

Valuation of inventory

Description

Please refer to Note 4(11) for the description of accounting policy on inventory valuation. Please refer to Note 5(2) for accounting estimates and assumption uncertainty in relation to inventory valuation. Please refer to Note 6(4) for details of inventory.

The Company has a higher risk of inventory market value decline since technology evolution affecting the market value and the possibility of inputs for obsolete products. Inventory are stated at the lower of cost or net realizable value. Providing valuation loss for obsolete inventories bases on net realizable value.

As the evaluation of inventory requires critical judgement and the amount of inventory is significant, we consider the valuation of inventory a key audit matter.

How our audit addressed the matter:

We performed the following audit procedures in respect of the above key audit matter:

1. Obtained the policies of inventory valuation and determined whether the policies have been applied consistently.

2. Inspected and performed annual physical count to evaluate whether management identifies and controls obsolete inventories effectively.

3. Validated whether the logic of inventory aging reports used for valuation has been applied adequately in order to ensure the information of the parent ~3~

company only financial statement would be align with policies.

1. Evaluated and calculated to supporting documents of inventory losses providing from aging over a certain period, and discussed with management the accuracy.

2. Sampled the sources of market value for recalculation of net realization value.

Assessment the fair value of investment property

Description

Please refer to Note 4(15) for the description of accounting policy on investment property. Please refer to Note 5(2) for accounting estimates and assumption uncertainty in relation to investment property. Please refer to Note 6(8) for details of investment property.

The Company held investment property to earn rentals from rental. The investment property was measured subsequently using the fair value model. The fair value was based on appraisal report issued by external valuers.

As the evaluation of the fair value requires future prediction and the assumptions are unobservable inputs and highly uncertainty as well as the amount of valuation is significant, we consider the valuation of investment property a key audit matter.

How our audit addressed the matter:

We performed the following audit procedures in respect of the above key audit matter:

1. Evaluated whether valuers and appraisal firms were engaged by the Company were qualified and independent.

2. Reviewed the appraisal report issued by the valuer and checked valuation approach to comply with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

3. For the investment property evaluated by the income approach, evaluated the valuer's rationality of the future cash flow of the Company, and compared the rent used in the valuation approach with the lease agreement signed at present.

4. For the investment property evaluated by land development analysis method, examined the prices of various comparison targets used, and compared them with

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the prices of similar assets available from public information.

1. Evaluated the correctness of the model calculation, and confirmed that the recognized amount is consistent with the appraisal report.

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

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

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence

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the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with the generally accepted auditing standards in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the

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entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Tsai, Yi Tai Liang, Chan Nyu

For and on behalf of PricewaterhouseCoopers, Taiwan March 29, 2022

The accompanying parent company only financial statements are not intended to present to financial position and results of operations and cash flow in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such parent company only financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two version, the Chinese-language auditors’ report and parent company only financial statements shall prevail.

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COSMO ELECTRONICS CORPORATION PARENT COMPANY ONLY BALANCE SHEET DECEMBER 31,2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Assets	December31,2021 Notes Amount % 6(1) $ 106,658 3 6(3) 81,294 3 7(2) 47,153 1 2,353 - 7(2) - - 9 - 6(4) 187,856 6 5,047 - 1,495 - 431,865 13 6(2) 13,484 - 6(5) 2,344,181 69 6(6) 465,566 14 6(7) - - 6(8) 85,347 2 6(9) 3,931 - 6(25) 5,965 - 32,569 1 3,553 - 6(14) 18,395 1 - - 2,972,991 87 $ 3,404,856 100 (Continued)	December31,2020	December31,2020
		Amount $ 223,450 92,136 1,088 2,250 73 9 190,750 2,137 1,011 512,904 3,678 2,429,094 290,378 2,309 27,840 4,411 48,049 5,458 2,024 17,178 1,920 2,832,339 $ 3,345,243	%
Current assets 1100 Cash and cash equivalents 1170 Accounts receivable, net 1180 Accounts receivable from related parties, net 1200 Other receivables 1210 Other receivables from related parties 1220 Current income tax assets 130X Inventories 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1535 Financial assets at amortized cost-non current 1550 Investments accounted for under the equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1915 Prepayments for equipment 1920 Refundable deposits 1975 Net defined benefit assets-non current 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets			6 3 - - - - 6 - -
			15
			- 73 9 - 1 - 1 - - 1 -
			85
			100

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COSMO ELECTRONICS CORPORATION PARENT COMPANY ONLY BALANCE SHEET DECEMBER 31,2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities and Equity

December31,2021 December31,2020 Notes Amount % Amount % 6(10) $ 417,090 12 $ 340,000 10 6(10) 49,887 2 49,868 2 2,943 - 1,313 - 6(11) 1,047 - - - 6(11) 81,403 3 66,808 2 7(2) 28,346 1 28,724 1 40,052 1 34,396 1 7(2) 2,754 - 4,014 - 6(7) - - 2,340 - 519,000 15 241,000 7 2,770 - 2,290 - 1,145,292 34 770,753 23 6(12) 273,484 8 292,180 9 6(11)(13) 174,000 5 519,000 15 6(25) 145,592 4 122,773 4 442 - 145 - 593,518 17 934,098 28 1,738,810 51 1,704,851 51 6(15) 1,616,234 48 1,563,342 47 6(16) 241,891 7 272,535 8 6(17) 1,203 - 350 - 12,484 - 4,810 - 56,156 2 8,527 - 6(18) ( 261,922) ( 8 ) ( 209,172) ( 6) 1,666,046 49 1,640,392 49 9 11 $ 3,404,856 100 $ 3,345,243 100

Current liabilities 2100 Short-term borrowings 2110 Short-term bills payable 2130 Contract liabilities-current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable to related parties 2200 Other payables 2220 Other payables to related parties 2280 Lease liabilities-current 2320 Long-term liabilities-current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2530 Convertible bonds payable 2540 Long-term borrowings 2570 Deferred income tax liabilities 2600 Others non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant subsequent events 3X2X Total liabilities and equity

The accompanying notes are an integral part of these parent company only financial statements.

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COSMO ELECTRONICS CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31,2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Items

2021 2020 Notes Amount % Amount % 6(19) and 7 $ 590,564 100 $ 444,833 100 6(4)(24) and 7 ( 451,191)( 76)( 411,832)( 92) 139,373 24 33,001 8 ( 1,104) - 1,571 - 138,269 24 34,572 8 6(24) ( 16,739) ( 3) ( 14,824) ( 3) ( 77,802) ( 13) ( 74,333) ( 17) ( 853) - ( 1,544) - 3 - - - ( 95,391)( 16)( 90,701)( 20) 42,878 8 ( 56,129)( 12) 6(20) 1,664 - 1,616 - 6(21) ( 7,720) ( 1) ( 5,742) ( 1) 6(22) ( 26,295) ( 4) ( 25,535) ( 6) 6(5) 109,386 18 160,005 36 77,035 13 130,344 29 119,913 21 74,215 17 6(25) ( 64,974)( 11)( 67,847)( 15) $ 54,939 10 $ 6,368 2 6(14) ($ 359) - $ 5,939 1 - - - - 1,504 - ( 2,592) ( 1) 6(25) 72 - ( 1,188) - 1,217 - 2,159 - (Continued)

4000 Operating revenue 5000 Operating costs 5900 Gross profit 5910 Unrealized (profit) loss from sales 5950 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment gain 6000 Total operating expenses 6900 Operating profit (loss) Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for under the equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Components of other comprehensive income(loss) that will not be reclassified to profit or loss 8311 (Loss)Gain on remeasurements of defined benefit plans 8316 Unrealized gain (loss) on valuation of equity investment at fair value through other comprehensive income 8330 Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for under the equity method that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Other comprehensive income(loss) that will not be reclassified to profit or loss

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COSMO ELECTRONICS CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31,2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Items

2021 2020 Notes Amount % Amount % 6(18) ( 52,750)( 9)( 90,776)( 20) ( 52,750)( 9)( 90,776)( 20) ($ 51,533)( 9)($ 88,617)( 20) $ 3,406 1 ($ 82,249)( 18) 6(26) $ 0.35 $ 0.04 $ 0.35 $ 0.04

Components of other comprehensive income(loss) that will be reclassified to profit or loss 8380 Share of other comprehensive income (loss) of subsidiaries, associates and joint ventures accounted for under the equity method that will be reclassified to profit or loss 8360 Other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive loss for the year 8500 Total comprehensive income(loss) for the year Basic earnings per share 9750 Basic earnings per share Diluted earnings per share 9850 Diluted earnings per share

The accompanying notes are an integral part of these parent company only financial statements.

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COSMO ELECTRONICS CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31,2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Retained earnings

2020 Balance at January 1, 2020 Profit for the year Other comprehensive income(loss) for the year Total comprehensive income(loss) for the year Issuance of convertible bonds Balance at December 31, 2020 2021 Balance at January 1, 2021 Profit for the year Other comprehensive income(loss) for the year Total comprehensive income(loss) for the year Legal reserve Special reserve Issuance of share from capital surplus Conversion of convertible bonds Balance at December 31, 2021	Notes		Share capital- commonstock		Capitalsurplus		Legal reserve		Special reserve		Unappropriated retained earnings	Financial statements translation differences of foreign operations		Totalequity
	6(12) 6(12)		$1,563,342 - - - - $1,563,342 $1,563,342 - - - - - 46,900 5,992 $1,616,234	$ 253,248 - - - 19,287 $ 272,535 $ 272,535 - - - - - ( 46,900 ) 16,256 $ 241,891			$ 350 - - - - $ 350 $ 350 - - - 853 - - - $ 1,203		$ 4,810 - - - - $ 4,810 $ 4,810 - - - - 7,674 - - $ 12,484	$ - 6,368 2,159 8,527 - $ 8,527 $ 8,527 54,939 1,217 56,156 ( 853 ) ( 7,674 ) - - $ 56,156		($ 118,396 ) - ( 90,776 ) ( 90,776 ) - ($ 209,172 ) ($ 209,172 ) - ( 52,750 ) ( 52,750 ) - - - - ($ 261,922 )	$ 1,703,354 6,368 ( 88,617 ) ( 82,249 ) 19,287 $ 1,640,392 $ 1,640,392 54,939 ( 51,533 ) 3,406 - - - 22,248 $ 1,666,046

The accompanying notes are an integral part of these parent company only financial statements.

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COSMO ELECTRONICS CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31,2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax for the year Adjustments Income and expenses having no effect on cash flows Depreciation 6(6)(7) Amortization 6(9) Finance cost 6(22) Interest income 6(20) ( Share of profit of subsidiaries, associates and joint ventures accounted for under the equity method 6(5) ( Provision for inventory and obsolescence 6(4) ( Gain on fair value changes of investment property 6(8) ( Changes in assets and liabilities relating to operating activities Net changes in assets relating to operating activities Notes receivable Accounts receivable Accounts receivable from related parties ( Other receivables from related parties Inventories Prepayments ( Other current assets ( Other non-current assets Net defined benefit assets ( Net changes in liabilities relating to operating activities Contract liabilities-current Notes payable Accounts payable Accounts payable to related parties ( Other payables Other payables to related parties ( Other current liabilities Cash inflow generated from operations Interest received Income taxes received Unrealized profit (loss) from sales Net cash flows generated from operating activities	Notes	2021 $ 119,913 45,004 1,158 26,295 80 ) ( 109,386 ) ( 7,157 ) ( 2,178 ) ( - 10,842 ( 46,065 ) ( 73 10,051 2,910 ) ( 484 ) ( 1,920 1,576 ) ( 1,630 1,047 14,595 378 ) ( 1,335 1,260 ) 480 ( 62,869 88 - 1,004 ( 63,961	2020 $ 74,215 46,899 975 25,535 127 ) 160,005 ) 12,730 ) 380 ) 635 16,991 ) 1,088 ) 6,330 86,132 504 ) 621 ) 1,090 1,590 ) 339 - 25,450 13,017 ) 2,714 4,014 63 ) 67,212 120 29 1,572 ) 65,789

(Continued)

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COSMO ELECTRONICS CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31,2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of financial assets at amortized cost Acquisitions of investments accounted for under the equity method Proceeds from capital reduction investments accounted for under the equity method Acquisitions of property, plant and equipment Proceeds from disposal of property, plant and equipment (Increase) decrease in refundable deposits Increase in other receivables Acquisitions of intangible assets Acquisitions of investment property Increase in prepayments for equipment Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in short-term borrowings Lease principal repayment Issuance of convertible bonds Unpaid for disposal of investments accounted for under the equity method Repayment for long-term borrowings Proceeds from long-term borrowings Increase in others non-current liabilities Interest paid Net cash flows generated from financing activities Net(decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes 2021 2020 ( $ 9,802 ) $ - - ( 305,317 ) 6(5) 142,050 - 6(27) ( 209,663 ) ( 8,533 ) - 2,410 ( 1,529 ) 440 ( 115 ) ( 678 ) 6(9) ( 678 ) ( 2,930 ) 6(8) ( 55,329 ) - ( 31,155 ) ( 3,043 ) ( 166,221 ) ( 317,651 ) 6(27) 902,090 - 6(27) ( 825,000 ) - ( 2,340 ) ( 4,531 ) 6(10) - 308,510 - 120,000 6(27) ( 247,000 ) ( 100,000 ) 6(27) 180,000 - 297 - ( 22,579 ) ( 22,732 ) ( 14,532 ) 301,247 ( 116,792 ) 49,385 223,450 174,065 $ 106,658 $ 223,450

The accompanying notes are an integral part of these parent company only financial statements.

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COSMO ELECTRONICS CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

1. History and Organization

Cosmo Electronics Corporation (“The Company”) was established in May 1981. The Company is primarily engaged in manufacture and sales of relays and photocouplers. The Company's shares have been traded on the Taipei Exchange(OTC) since January 15, 2000, and were listed on the Taiwan Stock Exchange(TWSE) on September 17, 2001.

2. The Date of Authorization for Issuance of the parent company only Financial Statements and

Procedures for Authorization

These parent company only financial statements were authorized for issuance by the Board of Directors on March 29, 2022.

3. Application of New Standards, Amendments and Interpretations

A. Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC effective from 2021 are as follows:

New Standards,Interpretations and Amendments follows:	Effective date by International Accounting Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest Rate Benchmark Reform— Phase 2’ Amendment to IFRS 16, ‘Covid-19-related rent concessions beyond 30 June 2021’ Note：Earlier application from January 1, 2021 is allowed by FSC.	January 1, 2021 January 1, 2021 April 1, 2021(Note)

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

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B. Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted

by the Company

New standards, interpretations and amendments endorsed by the FSC effective from 2022 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts— cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

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

C. Effect of IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the

IFRSs as endorsed by the FSC are as follows:

IFRSs as endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, 'Insurance contracts' Amendments to IAS 1, ‘Classification of liabilities as current or non- current’ Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’ Amendments to IAS 12, ‘Deferred tax related to assets and liabilities arising from a single transaction’	To be determined by International Accounting January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023

The above standards and interpretations have no significant impact to the Company’s financial

condition and financial performance based on the Company’s assessment.

4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these parent company only financial

statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

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(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

• A. Except for the following items, the parent company only financial statements have been prepared under the historical cost convention:

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

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

  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

• (3) Foreign currency translation

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in New Taiwan dollars, which is the Company’s functional and presentation currency.

• A. Foreign currency transactions and balances

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

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange

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differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

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

• (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within other gains and losses.

• B. Translation of foreign operations

• (a) The operating results and financial position of all the subsidiaries and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • iii. All resulting exchange differences are recognized in other comprehensive income.

• (b) When the foreign operation partially disposed of or sold is an associate or joint arrangement, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Company retains partial interest in the former foreign associate or joint arrangement after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangement, such transactions should be accounted for as disposal of all interest in these foreign operations.

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

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(4) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realized within twelve months from the balance sheet date;

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

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (a) Liabilities that are expected to be settled within the normal operating cycle;

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be settled within twelve months from the balance sheet date;

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

(5) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(6) Financial assets at amortized cost

• A. Financial assets at amortized cost are those that meet all of the following criteria:

• A. The objective of the Company’s business model is achieved by collecting contractual cash flows.

• B. The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortized cost are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the

~20~

effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.

• D. The Company’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

(7) Accounts and notes receivable

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

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

(8) Impairment of financial assets

For financial assets at amortized cost and accounts receivable that have a significant financing component, at each reporting date, the Company recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognizes the impairment provision for lifetime ECLs.

(9) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

－ (10) Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease term.

(11) Inventories

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

~21~

(12) Investments accounted for using equity method / subsidiaries and associates

• A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• B. Inter-company transactions, balances and unrealized gains or losses on transactions between the Company and subsidiaries are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognize losses proportionate to its ownership.

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

• E. When the Company loses control of a subsidiary, the Company remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Company loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

• F. Pursuant to the Regulations Governing the Preparation of Financial Statements by Securities Issuers, profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only

~22~

financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements.

(13) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

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

lant and equipment are as follows:
Buildings and structures	8 ~ 55 years
Machinery	2 ~ 10 years
Transportation equipment	5 ~ 8 years
Office equipment	3 ~ 10 years
Other equipment	2 ~ 10 years

(14) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

• A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognized as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease

~23~

payments are fixed payments, less any lease incentives receivable. The Company subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

• (a) The amount of the initial measurement of lease liability;

• (b) Any initial direct costs incurred by the lessee; and

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right-of-use asset.

• D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset and remeasure the lease liability to reflect the partial or full termination of the lease, and recognize the difference in profit or loss.

(15) Investment property

An investment property is stated initially at its cost and measured subsequently using the fair value model. A gain or loss arising from a change in the fair value of investment property is recognized in profit or loss.

(16) Intangible assets

Computer software is stated at cost and amortized on a straight-line basis over its estimated useful life of 2 to 10 years.

(17) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

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(18) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

(19) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Convertible bonds payable

Convertible bonds issued by the Company contain conversion rights (that is, the bondholders have the right to convert the bonds into the Company’s common shares by exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Company classifies the convertible bonds upon issuance as a financial asset, a financial liability or an equity instrument in accordance with the contract terms. They are accounted for as follows:

• A. The embedded call options and put options are recognized initially at net fair value as ‘financial assets or financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognized as ‘gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss’.

• B. The host contracts of bonds are initially recognized at fair value. Any difference between the initial recognition and the redemption value is accounted for as the premium or discount on bonds payable and subsequently is amortized in profit or loss as an adjustment to ‘finance costs’ over the period of circulation using the effective interest method.

• C. The embedded conversion options which meet the definition of an equity instrument are initially recognized in ‘capital surplus-share options’ at the residual amount of total issue price less the amount of financial assets or financial liabilities at fair value through profit or loss and bonds payable as stated above. Conversion options are not subsequently remeasured.

• D. Any transaction costs directly attributable to the issuance are allocated to each liability or equity component in proportion to the initial carrying amount of each abovementioned item.

• E. When bondholders exercise conversion options, the liability component of the bonds

~25~

(including bonds payable and ‘financial assets or financial liabilities at fair value through profit or loss’) shall be remeasured on the conversion date. The issuance cost of converted common shares is the total book value of the abovementioned liability component and ‘capital surplus-share options’.

(21) Derecognition of financial liabilities

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

(22) Offsetting financial instruments

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

(23) Employee benefits

• A. Short-term employee benefits

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

• B. Pensions

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expense when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

• (b) Defined benefit plans

• i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

• ii. Remeasurements arising on defined benefit plans are recognized in other

~26~

comprehensive income in the period in which they arise and are recorded as other equity.

iii.Past service costs are recognized immediately in profit or loss.

• C. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ compensation and directors’ and supervisors’ remuneration are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

• (24) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related

~27~

deferred tax asset is realized or the deferred tax liability is settled.

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

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

• (25) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• (26) Revenue recognition

Sales of goods

• A. The Company manufactures and sells a range of electronic products such as photocouplers and relays. Sales are recognized when control of the products has transferred, being when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

• B. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

• Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such

~28~

assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Critical judgements in applying the Company’s accounting policies

None.

(2) Critical accounting estimates and assumptions

• A. Valuation of inventories

As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of inventories with normal consumption, obsolescence or no market value on balance sheet date, and writes down the cost of inventories to the net realizable value. The valuation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the valuation.

As of December 31, 2021, the carrying amount of inventories was $187,856.

• B. Assessment the fair value of investment property

As the investment property is subsequently measured at fair value, the investment property held by the Company is mainly land and buildings, that experts must be entrusted to use their professional judgements and estimates to determine the fair value on the balance sheet date. The Company will adjust the cost to fair value base on the appraisal report issued by the experts. The assessment of investment property is mainly based on the reports issued by experts, so the measurement of fair value may be affected by product demand in a specific period in the future, real estate transaction prosperity and changes in experts' judgments and estimates.

As of December 31, 2021, the carrying amount of investment property was $85,347.

6. Details of Significant Accounts

(1) Cash and cash equivalents

nd cash equivalents
Cash on hand Checking accounts and demand deposits	December 31
	2021 $ 420 106,238 $ 106,658	2020
		$ 460 222,990
		$ 223,450

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• A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. Time deposits were pledged as collateral for custom duties of the imported materials and restricted bank accounts for Reimbursement of bank loan , and were classified as financial assets at amortized cost. Details are provided in Note 8.

(2) Financial assets at amortized cost

cial assets at amortized cost
Items Non-current items: Pledged time deposits (Note 8) Restricted bank accounts	December 31
	2021 $ 3,682 9,802 $ 13,484	2020
		$ 3,678 -
		$ 3,678

• A. Amounts recognized in profit or loss in relation to financial assets at amortized cost are listed below:

w:
Interest income	Year ended December 31
	2021 $ 8	2020
		$ 9

• B. Details of the Company’s financial assets at amortized cost pledged to others as collateral are provided in Note 8.

• C. Information relating to credit risk of financial assets at amortized cost is provided in Note 12(2).

(3) Accounts receivable

counts receivable
Accounts receivable Less: Allowance for uncollectible accounts The ageing analysis of accounts receivable is as Not past due 1 to 90 days 91 to 180 days Over 181 days	December 31
	2021 2020 ($ 81,711 $ 92,556 ($ 417) ($ 420) ($ 81,294 ($ 92,136 follows: Accounts receivable	2020
		$ 92,556 ($ 420)
		($ 92,136
	December 31
	2021 ($ 81,217 ( 101 ( - ( 393 ($ 81,711	2020
		$ 92,136 - - 420
		($ 92,556

• A. The ageing analysis of accounts receivable is as follows:

The above ageing analysis was based on past due date.

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• B. As of December 31, 2021 and 2020, accounts receivable were all from contracts with customers. And as of January 1, 2020, the balance of receivables from contracts with customers amounted to $82,599.

• C. As of December 31, 2021 and 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’s notes and accounts receivable was $81,711 and $92,556, respectively.

• D. Information relating to credit risk of accounts receivable is provided in Note 12.

(4) Inventories

entories
Raw materials Work in progress Finished goods Merchandise	December 31
	2021 $ 44,965 32,488 109,968 435 $ 187,856	2020
		$ 33,313 41,395 116,038 4
		$ 190,750

The cost of inventories recognized as expense for the year:

Cost of goods sold Gains on reversal of decline in market value Revenue from sale of scraps	Year ended December 31	Year ended December 31
	2021 ($ 461,408 ($7,157) ($3,060) ($ 451,191	2020
		($ 425,522 ($ 12,730) ( 960)
		($ 411,832

The Company reversed from a previous inventory write-down and accounted for as reduction of cost of goods sold because sales price raised.

(5) Investments accounted for using equity method

estments accounted for using equity method
At January 1 (Disposal)Addition of investments accounted for using equity method Share of profit or loss of investments accounted for using equity method Change in other equity items Others At December 31	2021 ($ 2,429,094 ($142,050) 109,386 ($51,245) ($1,004) ($ 2,344,181	2020
		$ 2,055,568 305,317 160,005 ($93,367) 1,571
		($ 2,429,094

~31~

Subsidiaries Cosmo Electronics Samoa Cosmo Electronics (HK) Company Limited (Cosmo Electronics (HK)) Grand Concept Group Limited (Grand Concept) Grandway International Limited. (Grandway) PT Cosmo Technology (PT Cosmo) Cosmo Green Power Limited (Cosmo Green)	December 31	December 31
	2021 $ 196,544 136,767 1,034,064 873,272 94,398 9,136 $ 2,344,181	2020
		$ 349,451 142,418 699,513 1,140,087 87,143 10,482
		$ 2,429,094

• A. Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s 2021 consolidated financial statements.

• B. The total investment in PT Cosmo by the Company and its subsidiaries is 100% so that the investment accounted for using equity method.

• C. The Company increased the investment of Grandway and Grand Concept in 2020, and the total investment was 240,647 and 64,670, respectively.

• D. The Company reduced the investment of Cosmo Electronics Samoa in 2021, and its total amount of investment reduction was 142,050.

• E. Details of Share of profit or loss of investments accounted for using equity method as follows:

Cosmo Electronics Samoa Cosmo Electronics (HK) Company Limited (Cosmo Electronics (HK)) Grand Concept Group Limited (Grand Concept) Grandway International Limited. (Grandway) PT Cosmo Technology (PT Cosmo) Cosmo Green Power Limited (Cosmo Green)	Year ended December 31	Year ended December 31
	2021 ($ 10,215) ($1,670) 81,231 32,525 9,619 ($2,104) $ 109,386	2020
		($ 9,531) ($4,640) 88,920 79,449 7,890 ($2,083)
		$ 160,005

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(6) Property, plant and equipment

At January 1 Cost Accumulated depreciation and impairment 2021 Opening net book amount Additions Transfers from prepayment Transfer Depreciation Closing net book amount At December 31 Cost Accumulated depreciation and impairment				2021	2021
	Land $ 58,178 - $ 58,178 $ 58,178 22,932 - - - $ 81,110 $ 81,110 - $ 81,110	Buildings and structures $ 118,326 ( 44,270) $ 74,056 $ 74,056 6,468 38 - ( 2,557) $ 78,005 $ 124,833 ( 46,828) $ 78,005	Machinery $ 768,879 ( 628,937) $ 139,942 $ 139,942 28,168 3,926 4,014 ( 35,467) $ 140,583 $ 779,001 ( 638,419) $ 140,582	Transportation equipment $ 7,048 ( 6,356) $ 692 $ 692 660 - - ( 187) $ 1,165 $ 7,051 ( 5,885) $ 1,166	Office equipment $ 13,212 ( 11,477) $ 1,735 $ 1,735 - - - ( 595) $ 1,140 $ 12,068 ( 10,928) $ 1,140	Other equipment $ 157,344 ( 145,583) $ 11,761 $ 11,761 559 80 - ( 3,889) $ 8,511 $ 136,613 ( 128,102) $ 8,511	Unfinished construction $ 4,014 - $ 4,014 $ 4,014 155,052 - ( 4,014) - $ 155,052 $ 155,052 - $ 155,052	Total
								$ 1,127,001 ( 836,623)
								$ 290,378
								$ 290,378 213,839 4,044 - ( 42,695)
								$ 465,566
								$ 1,295,728 ( 830,162)
								$ 465,566

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At January 1 Cost Accumulated depreciation and impairment 2021 Opening net book amount Additions Disposals Transfers from prepayment Depreciation Closing net book amount At December 31 Cost Accumulated depreciation and impairment				2020	2020
	Land $ 58,178 - $ 58,178 $ 58,178 - - - - $ 58,178 $ 58,178 - $ 58,178	Buildings and structures $ 118,081 ( 41,744) $ 76,337 $ 76,337 - - 246 ( 2,527) $ 74,056 $ 118,326 ( 44,270) $ 74,056	Machinery $ 763,382 ( 593,963) $ 169,419 $ 169,419 2,378 - 3,119 ( 34,974) $ 139,942 $ 768,879 ( 628,937) $ 139,942	Transportation equipment $ 12,737 ( 9,289) $ 3,448 $ 3,448 - ( 2,409) - ( 347) $ 692 $ 7,048 ( 6,356) $ 692	Office equipment $ 12,866 ( 10,853) $ 2,013 $ 2,013 345 - - ( 623) $ 1,735 $ 13,212 ( 11,477) $ 1,735	Other equipment $ 156,559 ( 141,626) $ 14,933 $ 14,933 785 - - ( 3,957) $ 11,761 $ 157,344 ( 145,583) $ 11,761	Unfinished construction $ - - $ - $ - 4,014 - - - $ 4,014 $ 4,014 - $ 4,014	Total
								$ 1,121,803 ( 797,475)
								$ 324,328
								$ 324,328 7,522 ( 2,409) 3,365 ( 42,428)
								$ 290,378
								$ 1,127,001 ( 836,623)
								$ 290,378

Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

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－ (7) Leasing arrangements lessee

• A. The Company leases various assets including land, buildings and structures. Rental contracts are typically made for periods of 2 to 3 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. Short-term leases with a lease term of 12 months or less and low-value assets comprise company dormitories and cars.

• C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Buildings and structures Buildings and structures	December 31	December 31
	2021 2020 Carryingamount Carryingamount $ - $ 2,309 Year ended December 31	2020
		Carryingamount
		$ 2,309
	2021 Depreciation $ 2,309	2020
		Depreciation
		$ 4,472

• D. For the years ended December 31, 2021 and 2020, there were no additions to right-of-use assets.

• E. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on lease of low-value assets	Year ended December 31	Year ended December 31
	2021 $ 28 3,559 1,199	2020
		$ 118 1,555 1,125

For the years ended December 31, 2021 and 2020, the Company’s total cash outflow for leases were $7,098 and $7,330, respectively.

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(8) Investment property

estment property
At January 1 Additions－from acquisitions Gain on fair value adjustment At December 31	Year ended December 31
	2021 $ 27,840 55,329 2,178 $ 85,347	2020
		$ 27,460 - 380
		$ 27,840

• A. Rental income from investment property is shown below:

Rental income from investment property	Year ended December 31	Year ended December 31
	2021 $ 1,114	2020
		$ 800

• B. Information about the fair value of the investment property is provided in Note 12.

• C. The fair value of the investment property held by the Company was measured on recurring basis. The fair value at December 31, 2021 was based on the valuation carried out on March 23, 2022 by the independent qualified professional valuers, Mr. Chou , Shih Yuan, Certified Real Estate Appraisers in the ROC, from Euro-Asia Real Estate Appraisers Firm and Mr. Chung, Shao Yu and Mr. Hsieh, Kun Lung, both Certified Real Estate Appraisers in the ROC, from Zone Tai Real Estate Appraisers Firm, respectively. The fair value at December 31, 2020 was based on the valuation carried out on March 23, 2021 by the independent qualified professional valuers, Mr. Chou , Shih Yuan, a Certified Real Estate Appraisers in the ROC, from Euro-Asia Real Estate Appraisers Firm.

• D. The fair value of the investment property held by the Company was valued by independent valuers. Valuations were made using the income approach which is categorized within Level 3 in the fair value hierarchy. Unrealized profit or loss from fair value adjustment on investment property in 2021 and 2020 are included in other gains and losses.

• E. The fair value of investment properties was measured using the income approach. The significant assumptions used are stated as follows. An increase in estimated future net cash inflows or a decrease in discount rates would result in an increase in the fair value.

Expected future cash inflows Expected future cash outflows Expected future cash inflows, net Discount rate	December 31	December 31
	2021 $ 109,195 4,686 $ 104,509 2.2%~2.345%	2020
		$ 36,174 1,642
		$ 34.532
		2.345%

~36~

• F. The expected future cash inflows generated by investment properties included rental income and disposal value. The rental income was extrapolated using the Company’s current rental rate, while taking into account the annual rental growth rate. The income analysis covers a 10-year period. The disposal value was determined using the direct capitalization method under the income approach. The expected future cash outflows incurred by investment properties included expenditures such as land value taxes, house taxes, insurance premiums, maintenance costs, replacement and agency fee for investment inviting. These expenditures were extrapolated on the basis of the current level of expenditures, taking into account future adjustments to the government-announced land value, the tax rate promulgated under the House Tax Act. The market rentals in the area where the investment property is located were between $500 to $850 per ping.

• G. As at December 31, 2021 and 2020, the discount rate was determined using the interest rate for 2-year time deposits, as posted by Chunghwa Post Co., Ltd., plus any asset-specific risk premiums 0.75% and 0.75%, respectively.

(9) Intangible assets

angible assets
At January 1 Cost Accumulated amortization and impairment Opening net book amount Additions Amortization Closing net book amount At December 31 Cost Accumulated amortization and impairment	Computer software
	2021 $ 7,599 ( 3,188) $ 4,411 $ 4,411 678 ( 1,158) $ 3,931 $ 8,226 ( 4,295) $ 3,931	2020
		$ 7,419 ( 4,963)
		$ 2,456
		$ 2,456 2,930 ( 975)
		$ 4,411
		$ 7,599 ( 3,188)
		$ 4,411

~37~

(10) Short-term borrowings

)	Short-term borrowings
	Type of borrowings Bank borrowings Unsecured borrowings Secured borrowings Short-term bills payable Commercial paper Less: Unamortized discounts on bills payable Type of borrowings Bank borrowings Unsecured borrowings Secured borrowings Short-term bills payable Commercial paper Less: Unamortized discounts on bills payable	December 31, 2021 $ 336,090 81,000 $ 417,090 $ 50,000 ( 113) $ 49,887 December 31, 2020 $ 259,000 81,000 $ 340,000 $ 50,000 ( 132) $ 49,868	Interest rate range 1.56%~1.75% 1.50%~1.58% 0.80% Interest rate range 1.564%~1.76% 1.5%~1.58% 0.75%	Collateral
				None. Property, plant and investment property None. Collateral
				None. Property, plant and investment property None.

The chairman of the Company, Tsai, Nai Chen and Tsai, Chi Hu, were the sureties of the above unsecured and secured borrowings agreements in their personal names.

(11) Notes and accounts payable

tes and accounts payable
Notes payable Accounts payable Estimated accounts payable	December 31
	2021 ($ 1,047 ($ 81,040 $ 363 ($ 81,403	2020
		($ -
		($ 66,591 217
		($ 66,808

(12) Convertible bonds payable

nvertible bonds payable
Convertible bonds payable Less: Discount on convertible bonds payable	December 31
	2021 ($ 277,400 ($3,916) ($ 273,484	2020
		($ 300,000 ( 7,820)
		($ 292,180

~38~

• A. The issuance of domestic convertible bonds by the Company:

• (a) The terms of the 3[rd] domestic secured convertible bonds issued by the Company are as follows:

  • i. The regulatory authority has approved the 3rd domestic secured convertible bonds issued by the Company. The total issuance amount is $300,000 with coupon rate of 0%, covering a 3-year period of issuance and a circulation period from February 27, 2020 to February 27, 2023. The convertible bonds will be redeemed in cash at face value at the maturity date.

  • ii. The bondholders have the right to ask for conversion of the bonds into ordinary shares of the Company during the period from 3 months after the bonds issuance date to the maturity date, except for the suspended transfer period as specified in the terms of the bonds or the regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding ordinary shares.

  • iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution triggered subsequently. Subsequently, on the base date set by the regulations, the conversion price will be re-determined according to the pricing model stipulated by the conversion regulations.

  • iv. the Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any time when the outstanding balance of the bonds is less than 10% of total initial issuance amount during the period from the date after 3 months of the bonds issuance to 40 days before the maturity date.

  • v. Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.

  • vi. After the issuance of the convertible bonds, in the event of an increase in the number of issued ordinary shares of the Company or the distribution of cash dividends on ordinary shares, or re-issuance or private placement at a conversion or subscription price lower than the current price per share ,or a decrease in ordinary shares due to various securities or capital reduction not due to cancellation of treasury shares, the Company shall adjust the conversion price according to the formula listed in the Issuance Regulations.

• (b) As of December 31, 2021, the bonds totaling $22,600 had been converted into 599

~39~

thousand shares of common stock.

• B. Regarding the issuance of convertible bonds, the equity conversion options amounting to $19,287 were separated from the liability component and were recognized in ‘capital surplus—share options’ in accordance with IAS 32. The call options embedded in bonds payable were separated from their host contracts and were recognized in ‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with IFRS 9 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts. The effective interest rates of the bonds payable after such separation is 1.227%.

- (13) Long term borrowings

	Type of borrowings Long-term bank borrowings Revolving unsecured borrowings(i) Secured borrowings-buildings Less: Current portion	December 31	December 31
		2021 ($ 519,000 174,000 693,000 ($ 519,000) ($ 174,000	2020
			($ 760,000 -
			760,000 ( 241,000)
			($ 519,000

• A. Revolving unsecured borrowings

• (a) On April 10, 2019, the Company and PT Cosmo entered into a 3-year syndicated loan agreement with bank group , Yuanta Bank as the lead bank and obtained a credit line in the amount of $1,250,000, and the credit period was 3 years from the first drawdown date (April 25, 2019).

The condition of borrowings as follows:

• i. Revolving unsecured borrowings

The borrower was the Company, and the credit line was $865,000 that could be used revolving during the contract period. The period of each use was 3 months or 6 months, but the maximum limit was 6 months and shall not exceed the expiry date of the credit period. The credit line shall be reduced by 5% from the first drawdown date by 18 months; by 5% by the date of full 24 months; by 30% by the date of full 30 months; by 60% by the date of full 36 months. For each use, the expiry date of the credit period was the maturity date. Interest would be paid one month from drawdown date, and the interest rate would be re-negotiated every 3 months. As at December 31, 2021 and 2020, the interest rate was 2.3050% and 2.0929%, respectively.

~40~

• ii. Revolving unsecured borrowings

The borrower was PT Cosmo, and the credit line was US$12,500 that could be used revolving during the contract period. The period of each use was 3 months or 6 months, but the maximum limit was 6 months and shall not exceed the expiry date of the credit period. Interest would be paid monthly, and the interest rate would be re-negotiated every 3 months. As at December 31, 2021 and 2020, the interest rate was 2.0283% and 1.8658%, respectively.

• (b) The Company promised to maintain the following financial ratios in the annual and semi-annual consolidated financial statements of the Company before all borrowings were repaid during the duration of the syndicated loan.

• i. Current ratio (current assets divided by current liabilities) shall not be lower than 100%.

• ii. Tangible net equity shall not be lower than $1,500,000. Tangible net equity is calculated as shareholders' equity less intangible assets.

• iii. Net financial debt ratio shall not be higher than 100%. Net financial debt ratio is calculated as financial debt less cash and cash equivalent divided by tangible net equity. Net financial debt is calculated as the sum of long-term and short-term bank borrowings (including current portion) , short-term bills and domestic and foreign bonds (including convertible bonds).

• iv. The interest coverage ratio shall not be lower than 120%. The interest coverage ratio is calculated as the ratio of the sum of net profit before tax, finance cost, depreciation and amortization divided by finance cost.

  • The above financial ratios were calculated based on its annual parent company only financial statements audited by independent auditors and semi-annual parent company only financial statements reviewed by independent auditors . If it did not meet the above financial ratios, there would be an improvement period of half a year from the current period of non-compliance. If the above financial ratio restrictions were met within the improvement period, it did not breached of the agreement; if the Company failed, it shall constitute an event of default in the syndicated loan. Until the day before the improvement of the above ratio, the balance of each credit line would be calculated according to the agreed interest rate plus 0.25%.

• (c) The chairman of the Company, Tsai, Nai Chen and Tsai, Chi Hu, were the sureties of the above syndicated loan agreements in their personal names.

~41~

• (d) On March 18, 2022, the Company entered into a 3-year syndicated loan agreement with bank group , O-Bank as the lead bank, and the related information is provided in Note 11.

• B. Secured borrowings

• (a) On April 8, 2021, the Company entered into a 7-year secured loan agreement with KGI Bank and obtained a credit line in the amount of $180,000, and could not be used revolving during the contract period. The credit period was 7 years from the first drawdown date (April 8, 2021).

• (b) The expiry date of the credit period was the maturity date. Interest would be paid one month from drawdown date, and the interest rate would be re-negotiated every 3 months. As at December 31, 2021, the interest rate was 1.3534% to 1.3537%.

• (c) The Company provided land and buildings as collateral (please refer to Note 8 for pledge details).

• (d) The chairman of the Company, Tsai, Nai Chen, was the surety of the above secured loan agreements in his personal names.

(14) Pensions

• A. Defined benefit pension plan

• (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

• (b) The amounts recognized in the balance sheet are as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit assets	December 31	December 31
	2021 $ 16,964 ( 35,359) ($ 18,395)	2020
		$ 19,622 ( 36,800)
		($ 17,178)

~42~

(c) Movements in net defined benefit (assets) liabilities are as follows:

At January 1 Interest (expense) income Remeasurements: Return on plan assets( excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension At December 31 At January 1 Interest (expense) income Remeasurements: Return on plan assets( excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension At December 31		2021
	Present value of defined benefit obligations $ 19,622 147 19,769 - 226 549 775 - ( 3,580) 16,964	Fair value of plan assets ($ 36,800) ( 281) ( 37,081) ( 416) - - ( 416) ( 1,442) 3,580 ( 35,359) 2020	Net defined benefit assets
			($ 17,178) ( 134)
			( 17,312)
			( 416) 226 549
			359
			( 1,442) -
			($ 18,395)
	Present value of defined benefit obligations $ 30,761 307 31,068 - 459 ( 5,193) ( 4,734) - ( 6,712) 19,622	Fair value of plan assets ($ 40,410) ( 412) ( 40,822) ( 1,205) - - ( 1,205) ( 1,485) 6,712 ( 36,800)	Net defined benefit assets
			($ 9,649) ( 105)
			( 9,754)
			( 1,205) 459 ( 5,193)
			( 5,939)
			( 1,485) -
			($ 17,178)

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity

~43~

securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from 2-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2021 and 2020 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

• (e) The principal actuarial assumptions used were as follows:

The principal actuarial assumptions used were	as follows:	as follows:
Discount rate Future salary increases	Year ended December 31
	2021 0.60% 2.75%	2020
		0.75%
		2.75%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

December 31,2021 Effect on present value of defined benefit obligation December 31,2020 Effect on present value of defined benefit obligation	Discount rate Increase 0.25% Decrease 0.25% ($ 374) $ 388 ($ 459) $ 476	Discount rate Increase 0.25% Decrease 0.25% ($ 374) $ 388 ($ 459) $ 476	Future salaryincreases	Future salaryincreases
	Increase 0.25% ($ 374) ($ 459)		Increase 1% $ 1,605 $ 1,965	Decrease 1%
				($ 1,413)
		$ 476		($ 1,730)

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analyzing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not

~44~

change compared to the previous period.

• (f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2022 amount to zero.

• (g) As of December 31, 2021, the weighted average duration of the retirement plan is 11.8 years.

• B. Defined contribution pension plan

• (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The pension costs under defined contribution pension plans of the Company for the years ended December 31, 2021 and 2020, were $4,025 and $3,919, respectively.

(15) Share capital

• A. As of December 31, 2021, the Company’s authorized capital was $2,000,000, consisting of 200,000 thousand shares of ordinary stock, and the paid-in capital was $1,616,234 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

• B. There were 3,000 thousand shares reserved for employee stock options in authorized capital.

• C. The annual stockholders’ meeting on June 6, 2014 had resolved to raise additional cash through private placement. The maximum number of shares to be issued through the private placement is 7,000 thousand shares, and the amount of the private placement was $208,600 which the relevant statutory registration procedures have not been completed as of December 31, 2021.

• D. The annual stockholders’ meeting on July 20, 2021 had resolved that the capital surplus arising from paid-in capital in excess of par value on issuance of ordinary stocks used in the issuance of 4,690,027 ordinary shares, with par value of $10 per share, amounting to $46,900,270. The shares were issued on October 19, 2021, and the relevant statutory registration procedures have been completed.

• E. For the years ended December 31, 2021, the Company issued 599 thousand shares of ordinary shares because of conversion of convertible bonds.

~45~

(16) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of ordinary stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

legal reserve is insufficient.
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital Issuance of ordinary shares Conversion of bonds May only be used to offset a deficit Employee share options Options expired May not be used for any purpose Options	December 31
	2021 $ 196,810 18,467 1,396 7,383 17,835 $ 241,891	2020
		$ 243,710 759 1,396 7,383 19,287
		$ 272,535

(17) Retained earnings

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. The remainder, if any, to be retained or to be appropriated shall be resolved by the stockholders at the stockholders’ meeting.

• B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• C. Unappropriated retained earnings

• (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

~46~

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate-1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

• D. On July 20, 2021, the stockholders’ meeting resolved that no dividends for the distribution of earnings for the year of 2020.

(18) Other equity items

her equity items
At January 1 Group At December 31	Currencytranslation
	2021 ($ 209,172) ( 52,750) ($ 261,922)	2020
		($ 118,936) ( 90,776)
		($ 209,712)

(19) Operating revenue

erating revenue
Revenue from contract with customers Operating revenue	Year ended December 31
	2021 $ 590,564	2020
		$ 444,833

The Company has recognized the following revenue-related contract liabilities:

Contract liabilities	December 31, 2021 $ 2,943	December 31, 2020 $ 1,313	January 1, 2020
			$ 974

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

eriod:
Revenue recognized that was included in the contract liability balance at the beginning of the period	Year ended December 31
	2021 $ 1,313	2020
		$ 974

~47~

(20) Other income

Year ended December 31

Interest income Rent income Other income, others	2021 $ 80 1,114 470 $ 1,664	2020
		$ 120 800 696
		$ 1,616

(21) Other gains and losses

Year ended December 31

Gains on disposal of property, plant and equipment Foreign exchange losses Gain on fair value adjustment of investment property Other gains and losses, net	2021 $ - ( 8,078) 2,178 ( 1,820) ($ 7,720)	2020
		$ 225 ( 6,671) 380 324
		($ 5,742)

(22) Finance costs

Gain on fair value adjustment of investment property Other gains and losses, net ance costs	2,178 380 ( 1,820) 324 ($ 7,720) ($ 5,742)	2,178 380 ( 1,820) 324 ($ 7,720) ($ 5,742)
Bank borrowings Lease liabilities Convertible bonds payable Short-term bills payable	Year ended December 31
	2021 $ 22,358 1 3,551 385 $ 26,295	2020
		$ 21,972 214 2,957 392
		$ 25,535

(23) Depreciation and amortization

Lease liabilities Convertible bonds payable Short-term bills payable preciation and amortization	1 214 3,551 2,957 385 392 $ 26,295 $ 25,535	1 214 3,551 2,957 385 392 $ 26,295 $ 25,535
Property, plant and equipment Right-of-use assets Other intangible assets Operating costs and operating expenses	Year ended December 31
	2021 $ 42,695 2,309 1,158 $ 46,162	2020
		$ 42,428 4,472 975
		$ 47,875

(24) Employee benefit expense

ployee benefit expense
Pension Defined contribution pension plan Defined benefit pension plan Wages and salaries Other personnel expenses	Year ended	December 31
	2021 $ 4,025 ( 134) 3,891 81,088 22,042 $ 107,021	2020
		$ 3,919 -
		3,919 82,313 17,758
		$ 103,990

~48~

Year ended December 31

	Year ended	December 31
An analysis of employee benefit expense by function Operating costs Operating expenses	2021 $ 43,508 63,513 $ 107,021	2020
		$ 43,099 60,891
		$ 103,990

• A. According to the Company’s Articles, the Company accrued employees’ compensation and remuneration of directors and supervisors at rates of 5% to 12% and no higher than 3%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors and supervisors.

• B. For the years ended December 31, 2021 and 2020, employees’ compensation was accrued at $6,378 and $3,948, respectively; while directors’ and supervisors’ remuneration was accrued at $1,276 and $790, respectively. The aforementioned amounts were recognized in salary expenses. The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 5% and 1% of distributable profit of current year as of the end of reporting period. On March 29,2022, the employees’ compensation and directors’ and supervisors’ remuneration resolved by the Board of Directors consisted with accrual amount, and the employees’ compensation will be distributed in the form of cash. Employees’ compensation and directors’ and supervisors’ remuneration of 2020 as resolved by the Board of Directors were in agreement with those amounts recognized in the Company 2020 parent company only financial statements.

• C. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(25) Income tax

A. Income tax expense

(a) Components of income tax expense:

e tax expense omponents of income tax expense:
Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	Year ended	December 31
	2021 $ - 64,974 $ 64,974	2020
		$ - 67,847
		$ 67,847

~49~

(b) The income tax relating to components of other comprehensive income is as follows:

he income tax relating to components of	other comprehensive income is as follows:	other comprehensive income is as follows:
Remeasurement of defined benefit obligations	Year ended December 31
	2021 $ 72	2020
		($ 1,188)

B. Reconciliation between income tax expense and accounting profit:

econciliation between income tax expense and	accounting profit:	accounting profit:
Tax calculated based on profit before tax and statutory tax rate Expenses disallowed by tax regulation Taxable loss not recognized as deferred tax assets Change in assessment of realization of deferred tax assets Income tax expense	Year ended December 31
	2021 $ 23,983 - 471 40,520 $ 64,974	2020
		$ 14,843 4,296 20,940 27,768
		$ 67,847

• C. Amounts of deferred tax assets or liabilities as a result of temporary differences and tax losses are as follows:

re as follows:
Deferred tax assets: - Temporary differences: Unrealized inventory losses Allowance for uncollectible accounts Others Tax losses Deferred tax liabilities: Unrealized gains on investments accounted for using the equity method Defined benefit assets Unrealized gross profit from sales Investment property		2021
	January1 $ 6,504 84 971 40,490 $ 48,049 ($ 114,117) ( 3,436) ( 294) ( 4,927) ($ 122,774) ($ 74,725)	Recognized in profit or loss ($ 1,431) ( 1) ( 162) ( 40,490) ($ 42,084) ($ 21,877) ( 341) ( 206) ( 466) ($ 22,890) ($ 64,974)	Recognized in other comprehensive income $ - - - - $ - $ - 72 - - $ 72 $ 72	December 31
				$ 5,073 83 809 -
				$ 5,965
				($ 135,994) ( 3,705) ( 500) ( 5,393)
				($ 145,592)
				($ 139,627)

~50~

Deferred tax assets: - Temporary differences: Unrealized inventory losses Allowance for uncollectible accounts Others Tax losses Deferred tax liabilities: Unrealized gains on investments accounted for using the equity method Defined benefit assets Unrealized gross profit from sales Investment property		2020	2020
	January1 $ 9,050 1,058 1,403 68,257 $ 79,768 ($ 82,116) ( 1,930) 3,411 ( 4,823) ($ 85,458) ($ 5,690)	Recognized in profit or loss ($ 2,546) ( 974) ( 432) ( 27,767) ($ 31,719) ($ 32,001) ( 318) ( 3,705) ( 104) ($ 36,128) ($ 67,847)	Recognized in other comprehensive income $ - - - - $ - $ - ( 1,188) - - ($ 1,188) ($ 1,188)	December 31
				$ 6,504 84 971 40,490
				$ 48,049
				($ 114,117) ( 3,436) ( 294) ( 4,927)
				($ 122,774)
				($ 74,725)

• D. Expiration dates of unused taxable loss and amounts of unrecognized deferred tax assets are as follows:

December 31, 2021

Year incurred Amount filed/assessed 101 Amount assessed 102 Amount assessed 103 Amount assessed 104 Amount assessed 105 Amount assessed 106 Amount assessed 107 Amount assessed 108 Amount filed 109 Amount filed 110 Amount estimated	Unused amount $ 92,606 55,033 109,633 80,283 52,729 154,071 35,773 61,975 100,873 2,354	Unrecognized deferred tax assets $ 92,606 55,033 109,633 80,283 52,729 154,071 35,773 61,975 100,873 2,354	Expiry year
			111 112 113 114 115 116 117 118 119 120

December 31, 2020

	December 31,2020
Year incurred Amount filed/assessed 100 Amount assessed 101 Amount assessed 102 Amount assessed 103 Amount assessed 104 Amount assessed 105 Amount assessed 106 Amount assessed 107 Amount assessed	Unused amount $ 20,318 92,606 55,033 109,633 80,283 52,729 154,071 35,773	Unrecognized deferred tax assets $ 20,318 92,606 55,033 109,633 80,283 52,729 154,071 -	Expiry year
			110 111 112 113 114 115 116 117

~51~

December 31, 2020

Year incurred Amount filed/assessed 108 Amount filed 109 Amount estimated	Unused amount 61,975 104,701	Unrecognized deferred tax assets - -	Expiry year
			118 119

• E. The amounts of deductible temporary difference that are not recognised as deferred tax assets are as follows:

Deductible temporary difference	Year ended December 31	Year ended December 31
	2021 $ 153,130	2020
		$ 112,935

• F. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

(26) Earnings per share

(26) Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Year ended December 31,2021
	Amount after tax $ 54,939 54,939 - $ 54,939	Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) 157,541 $ 0.35 157,541 174 157,715 $ 0.35

~52~

Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Year ended December 31,2020	Year ended December 31,2020
	Amount after tax $ 6,368 6,368 - $ 6,368	Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) 156,334 $ 0.04 156,334 121 156,455 $ 0.04

(27) Supplemental cash flow information

Investing activities with partial cash payments:

vesting activities with partial cash payments:
Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid during the year	Year ended December 31
	2021 $ 213,839 285 ( 4,461) $ 209,663	2020
		$ 7,522 1,296 ( 285)
		$ 8,533

(28) Changes in liabilities from financing activities

At January 1 Changes in cash flow from financing activities Changes in other non-cash items At December 31			2021	2021
	Short-term borrowings $ 340,000 77,090 - $ 417,090	Short-term billspayable $ 49,868 - 19 $ 49,887	Long-term borrowings $ 760,000 ( 67,000 ) - $ 693,000	Lease liabilities $ 2,340 ( 2,340) - $ -	Convertible bonds payable $ 292,180 - ( 18,696) $ 273,484	Liabilities from financing activities
						$ 1,444,388 ( 219,130) 46,900
						$ 1,433,461

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2020

At January 1 Changes in cash flow from financing activities Changes in other non-cash items At December 31	Short-term borrowings $ 340,000 - - $ 340,000	Short-term billspayable $ 49,914 - ( 46) $ 49,868	Long-term borrowings $ 860,000 ( 100,000 ) - $ 760,000	Lease liabilities $ 6,871 ( 4,531) - $ 2,340	Convertible bonds payable $ - 308,510 ( 16,330) $ 292,180	Liabilities from financing activities
						$ 1,206,871 203,979 ( 16,330)
						$ 1,444,388

7. Related Party Transactions

(1) Names and relationship of related parties

Names of related parties Relationship with the Company Cosmo Electronics Technology Subsidiaries (KunShan) Co., Ltd. PT Cosmo Technology Subsidiaries Real Bonus Limited Subsidiaries Guizhou Guanwang International Subsidiaries Digicrown Electronic Technology Co., Ltd. Dong Guan Guan Zhen Xing Trading Subsidiaries Limited Dong Guan Guanwang Electronic Subsidiaries Technology Co., Ltd. Ding Wang Electronics Technology Substantive related parties Corporation City Orient Limited Substantive related parties Ever Merit Trading Limited Substantive related parties Evermerit Technology Electronic Co., Substantive related parties Ltd. Tinglin Co.,Ltd. Substantive related parties Fairsky International Limited Substantive related parties Tsai, Chi Hu Substantive related parties Tsai, Nai Chen Chairman of the Company Digicrown Technologies Ltd. Significant investor Chen Jin Co,Ltd

Substantive related parties Substantive related parties Substantive related parties Chairman of the Company Significant investor Subsidiary(Sold on December 25, 2019, please refer to Note 30 of the 2019 consolidated financial statements)

Pt Cijambe Indah

Associate(Included in the Group on October 1, 2019. please refer to Note 29 of the 2019 consolidated financial statements)

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(2) Significant transactions and balances with related parties

• A. Operating revenue

perating revenue
Sales of goods: Dong Guan Guanwang Electronic Technology Co., Ltd. Dong Guan Guan Zhen Xing Trading Limited	Year ended December 31
	2021 $ 63,256 - $ 63,256	2020
		$ 1,088 4,199
		$ 5,287

There is no material difference between the transaction price and payment terms for the sale of goods and those of non-related parties.

• B. Purchases of goods

urchases of goods
Operation costs - processing costs Cosmo Electronics Technology (KunShan) Co., Ltd. Purchases of raw material: Dong Guan Guanwang Electronic Technology Co., Ltd.	Year ended December 31
	2021 $ 81,319 9,213 $ 90,532	2020
		$ 106,904 -
		$ 106,904

Raw material and services are purchased from associates and an entity controlled by key management personnel on normal commercial terms and conditions. Processing costs are in general price and the payment is within 60 days of monthly settlement.

C. Receivables from related parties

eceivables from related parties
Accounts receivable: Dong Guan Guanwang Electronic Technology Co., Ltd. Other receivables from related parties Real Bonus Limited	December 31
	2021 $ 47,153 $ -	2020
		$ 1,088
		$ 73

The receivables from related parties arise mainly from sale transactions and other receivables transactions. Sales transaction payment is due two months after the date of sales. The receivables are unsecured in nature and bear no interest. There are no allowances for uncollectible accounts held against receivables from related parties.

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D. Payables to related parties

ayables to related parties
Accounts payable: Cosmo Electronics Technology (KunShan) Co., Ltd. Dongguan Guanwang Electronic Technology Co., Ltd. Other payables to related parties: Cosmo Electronics Technology (KunShan) Co., Ltd.	December 31
	2021 $ 26,702 1,644 $ 28,346 $ 2,754	2020
		$ 28,724 -
		$ 28,724
		$ 4,014

The payables to related parties arise mainly from purchase transactions and property transactions, and are due 2 months after the date of purchase. The payables bear no interest.

E. Deposits received

eposits received
Digicrown Technologies Ltd. cquisition of property, plant and equipment Cosmo Electronics Technology (KunShan) Co., Ltd.	December 31
	2021 2020 $ 22 $ 22 Year ended December 31	2020
		$ 22
	2021 $ 4,887	2020
		$ 5,216

F. Acquisition of property, plant and equipment

(3) Key management compensation

ey management compensation
Short-term employee benefits Post-employment benefits	Year ended December 31
	2021 $ 6,891 253 $ 7,144	2020
		$ 9,090 345
		$ 9,435

The remuneration of directors and other key management levels is determined by the Remuneration Committee in accordance with individual performance and market trends.

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8. Pledged Assets

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

Asset item Pledged time deposits (shown as financial assets at amortized cost) Restricted bank accounts(shown as financial assets at amortized cost) Property, plant and equipment Investment property	Bookvalue December31 2021 2020 $ 3,682 $ 3,678 9,802 - 314,998 132,233 85,347 27,840 $ 413,829 $ 163,751	Purpose
	2021 $ 3,682 9,802 314,998 85,347 $ 413,829
		Collateral for import duties Reimbursement account of bank loan Credit facility Credit facility

9. Significant Contingent Liabilities And Unrecognized Contract Commitments

None.

10. Significant Casualty Loss

None.

11. Significant Events After The Balance Sheet Date

• (1) For operations, it was resolved by the Board of Directors that the Company entered into a 3-year syndicated loan agreement with bank group , O-Bank as the lead bank on March 18,2022.

• (2) The Company entered into a 3-year syndicated loan agreement with bank group, O-Bank as the lead bank and obtained a credit line in the amount of $1,326,000, and the credit period was 3 years from the first drawdown date.

• (3) On March 29,2022, the distribution of earnings for the year of 2021 resolved by the Board of Directors. Information for resolution is provided in Note 6(24).

12. Others

(1) Capital management

• The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the parent company only balance sheet) less cash and cash equivalents. Total capital is calculated as

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‘equity’ as shown in the parent company only balance sheet plus net debt. The gearing ratios were as follows:

Total borrowings Less: Cash and cash equivalents Net debt Total equity Total capital Gearing ratio	December 31	December 31
	2021 $ 1,433,461 106,658 1,326,803 1,666,046 $ 2,992,849 44%	2020
		$ 1,442,048 223,450
		1,218,598 1,640,393
		$ 2,858,991
		42%

(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets Financial assets at amortized cost Cash and cash equivalents Accounts receivable (including related parties) Other receivables (including related parties) Refundable deposits Financial liabilities Financial liabilities at amortized cost Short-term borrowings Short-term bills payable Notes payable Accounts payable (including related parties) Other payables (including related parties) Convertible bonds payable (including current portion) Long-term borrowings (including current portion) Lease liabilities	December 31
	2021 $ 106,658 128,447 2,353 3,553 $ 241,011 $ 417,090 49,887 1,047 109,749 42,806 273,484 693,000 $ 1,587,063 $ -	2020
		$ 223,450 93,224 2,323 2,024
		$ 321,021
		$ 340,000 49,868 - 95,532 38,410 292,180 760,000
		$ 1,575,990
		$ 2,340

B. Financial risk management policies

The Company’s activities expose it to a variety of financial risks: market risk (including

foreign exchange risk and interest rate risk), credit risk and liquidity risk. Risk management is

carried out by the Company treasury under policies approved by the Board of Directors. The Company treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units.

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• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Company operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Exchange rate risk arises from future commercial transactions and recognized assets and liabilities.

• ii. The Company’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December 31, 2021

	December 31,2021	December 31,2021
Foreign currency amount (in thousands) Financial assets Monetary items USD:NTD $ 5,119 Financial liabilities Monetary items USD:NTD $ 340 Foreign currency amount (in thousands) Financial assets Monetary items USD:NTD $ 8,052 Financial liabilities Monetary items USD:NTD $ 115	Exchange rate Book value (NTD) 27.68 $ 141,686 27.68 $ 9,415 December 31,2020		Sensitivityanalysis
			Degree of variation 5% 5%	Effect on profit or loss
				$ 7,084 $ 471
	Exchange rate 28.48 28.48	Book value (NTD) $ 229,325 $ 3,275	Sensitivityanalysis
			Degree of variation 5% 5%	Effect on profit or loss
				$ 11,466 $ 164

iii. Total exchange gain, including realized and unrealized, arising from significant

• foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2021 and 2020 amounted to ($8,078) and ($6,671), respectively.

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Cash flow and fair value Interest rate risk

• i. The Company’s borrowings are measured at amortized cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.

• ii. As at December 31, 2021 and 2020, if the interest rate increases or decreases by 50 basis point, with all other variables held constant, profit, net of tax would have decreased or increased by $9,382 and $7,210, respectively. The main factor is that changes in interest expense result from floating rate borrowings.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full accounts receivable ,notes receivable and financial assets at amortized cost, that based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost.

• ii. The Company for banks and financial institutions, only well rated parties are accepted. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored.

• iii. The Company assume if the contract payments are past due over 180 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. If there is evidence that the counterparty is facing serious financial difficulties and the Company cannot reasonably expect the recoverable amount, for example, the counterparty is in liquidation, the Company will directly write off the relevant accounts receivable, but will continue to pursue activities to recover the recovered amount are recognized in profit or loss.

• iv. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

  • (i.) It becomes probable that the issuer will enter bankruptcy or other financial

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reorganization due to their financial difficulties;

• (ii.) The disappearance of an active market for that financial asset because of financial difficulties;

• (iii.) Default or delinquency in interest or principal repayments;

• (iv.) Adverse changes in national or regional economic conditions that are expected to cause a default.

• v. The Company classifies customer's accounts receivable in accordance with geographic area, product types and credit rating of customer. The Company applies the simplified approach using the provision matrix based on the loss rate methodology to estimate expected credit loss.

• vi. The Company uses the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable. On December 31, 2021 and 2020, the provision matrix and loss rate methodology is as follows:

December 31, 2021 Expected loss rate Total book value Loss allowance December 31, 2020 Expected loss rate Total book value Loss allowance	Notpast due 0.03% $ 81,217 ($ 24) 0.03% $ 92,163 ($ 27)	1-90 days past due 0.00% $ 101 $ - 0.00% $ - $ -	90-180 days past due 0.00% $ - $ - 0.00% $ - $ -	Over 180 dayspast due 100.00% $ 393 ($ 393) 100.00% $ 393 ($ 393)	Total
					$ 81,711 ($ 417 ) $ 92,556 ($ 420 )

• vii. Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts receivable are as follows:

At January 1 Reversal of impairment loss Write-downs during the year At December 31	Accounts receivable	Accounts receivable
	2021 $ 420 ( 3) - $ 417	2020
		$ 6,819 - ( 6,399)
		$ 420

(c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or

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covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets.

• ii. The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31,2021 Non-derivative financial liabilities Short-term borrowings Short-term bills payable Accounts payable Other payables Convertible bonds payable Long-term borrowings (including current portion) December 31,2020 Non-derivative financial liabilities Short-term borrowings Short-term bills payable Accounts payable Other payables Lease liabilities Convertible bonds payable Long-term borrowings (including current portion)	Less than 1year $ 418,136 50,000 109,749 42,806 - 519,000 $ 341,783 50,000 95,532 3,410 2,368 - 245,118	1 and5 years over5 years $ - $ - - - - - - - 277,400 - 199,240 - $ - $ - - - - - - - - - 300,000 - 533,284 -	over5 years

(3) Fair value information

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

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

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the

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asset or liability, either directly or indirectly. The fair value of the Company’s investment in convertible bonds is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in investment property is included in Level 3.

• B. Financial instruments not measured at fair value

• (a) Except for those listed in the table below, the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, financial assets at amortized cost, short-term borrowings, notes payable, accounts payable, other payables, long-term notes payable and long -term borrowings are approximate to their fair values.

December 31,2021 Financial liabilities: Convertible bonds payable December 31,2020 Financial liabilities: Convertible bonds payable	Bookvalue $ 273,484 Bookvalue $ 292,180		Fair value
		Level 1 $ -	Level 2 $ 273,484 Fair value	Total
				$ -
		Level 1 $ -	Level 2 $ 292,004	Total
				$ -

• (b) The methods and assumptions of fair value estimate are as follows:

  • i. Corporate bonds: They are measured at present value, which is calculated based on the cash flow expected to be received from the objective asset and discounted using a market rate prevailing at balance sheet date.

  • ii. Bonds payable: They are measured at present value, which is calculated based on the cash flow expected to be paid and discounted using a market rate prevailing at balance sheet date.

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

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December 31,2021 Assets Recurring fair value measurements Investment property December 31,2020 Assets Recurring fair value measurements Investment property	Level 1 $ - Level 1 $ -	Level 2 $ - Level 2 $ -	Level 3 $ 85,347 Level3 $ 27,840	Total
				$ 85,347
				Total
				$ 27,840

• D. For the years ended December 31, 2021 and 2020, there was no transfer between Level 1 and Level 2.

• E. The following chart is the movement of Level 3 for the years ended December 31, 2021 and

2020:

20:
At January 1 Additions－from acquisitions Recorded as other gains and losses At December 31	Investment	property
	2021 ($ 27,840 55,329 2,178 ($ 85,347	2020
		($ 27,460 - 380
		($ 27,840

F. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

value measurement:
Fairvalue December 31,2021 Non-financial instruments Investment property $ 85,347 December 31,2020 Non-financial instruments Investment property $ 27,840	Valuation technique Discounted cash flow method Discounted cash flow method	Significant unobservable input Discount rate Discount rate	Range (Weighted average) 2.20% ~2.345% 2.345% ~4.5%	Relationship of inputs to fairvalue
				The higher discount rate, the lower fair value The higher the discount rate, the lower the fair value

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13. Supplementary Disclosures

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 3.

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

• I. Trading in derivative instruments undertaken during the reporting periods: None.

• J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 6.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 7.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(4) Major shareholders information

Major shareholders information: Please refer to table 8.

14. Segment Information

None.

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COSMO ELECTRONICS CORPORATION STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS )

	Item Cash Cash on hand -NTD -non-NTD (Note) Bank accounts: Checking accounts Demand deposits Foreign currency deposits (Note)	Description	Amount
			$ 175 245
			420
			574 27,753 77,911
			$ 106,658

Note: Including USD 2,707 thousand, RMB 638 thousand, HKD 45 thousand, EUR 1 thousand, JPY 0.57 thousand.

The exchange rates prevailing at December 31,2021 are as follows.

Currency USD HKD EUR JPY RMB	Exchange rate 27.68 3.55 31.32 0.24 4.34

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COSMO ELECTRONICS CORPORATION STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS )

Client Name Description A B C D E F G H I J Others Less: Allowance for uncollectible accounts	Amount $ 8,465 6,905 6,163 5,575 5,304 4,986 4,964 4,947 4,829 4,366 25,207 81,711 ( 417) $ 81,294	Note
		Note

Note: None of the balances of each remaining client is greater than 5% of this account balance.

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COSMO ELECTRONICS CORPORATION STATEMENT OF INVENTORIES

DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS )

Item Finished goods Work in progress Raw materials Merchandise	Description	$	Amount Cost Net Realizable Value 127,469 $ 109,968 33,075 32,488 50,120 44,965 2,554 435 213,218 $ 187,856
			Cost 127,469 33,075 50,120 2,554 213,218	Note
		$

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COSMO ELECTRONICS CORPORATION

STATEMENT OF CHANGES IN INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD YEAR ENDED DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS )

Name Cosmo Electronics Samoa Cosmo Electronics (HK) Company Limited Grand Concept Group Limited Grandway International Limited. PT Cosmo Technology Cosmo Green Power Limited	Beginning	Balance Amount $ 349,451 142,418 699,513 1,140,087 87,143 10,482 $2,429,094	Decrease Shares (in shares) Amount (5,000,000) ($ 142,050) - - - - - - - - - - ($142,050)		EndingBalance	Amount $ 196,544 136,767 1,034,064 873,272 94,398 9,136 $ 2,344,181	Net Equity $ 196,544 136,767 1,034,064 872,805 94,398 9,136 $2,343,714	Collateral None None None None None None	Note
	Shares (in shares) 10,500,038 63,180,000 7,950,000 30,080,000 3,000,000 -		Shares (in shares) (5,000,000) - - - - -	Shares (in shares) 5,500,038 63,180,000 7,950,000 30,080,000 3,000,000 -	Percentage of Ownership 100.00% 100.00% 100.00% 100.00% 14% 100.00%
									Note Note

Note: The differences between the ending balance and net equity are the adjustments for unrealized profit of downstream transactions.

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COSMO ELECTRONICS CORPORATION STATEMENT OF CHANGES OF PROPERTY, PLANT AND EQUIPMENT YEAR ENDED DECEMBER 31, 2021 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS )

Item Land Buildings and structures Machinery Transportation equipment Office equipment Other equipment Unfinished construction	Beginning Balance $ 58,178 74,056 139,942 692 1,735 11,761 4,014 $ 290,378	Addition $ 22,932 6,506 36,108 660 - 639 155,052 $ 221,897	Decrease $ - ( 2,557) ( 35,467) ( 187) ( 595) ( 3,889) ( 4,014) ($ 46,709)	Ending Balance $ 81,110 78,005 140,583 1,165 1,140 8,511 155,052 $ 465,566	Collateral Note Note	Note

Note: Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

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COSMO ELECTRONICS CORPORATION STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

	Nature Unsecured borrowings The Shanghai Commercial & Savings Bank, Ltd. Chang Hua Commercial Bank, Ltd. O-Bank Co., Ltd. Taishin International Bank First Commercial Bank Co., Ltd. Hua Nan Commercial Bank, Ltd. Secured borrowings Hua Nan Commercial Bank, Ltd. First Commercial Bank Co., Ltd. Chang Hwa Commercial Bank, Ltd.	EndingBalance $ 97,090,000 40,000,000 80,000,000 80,000,000 25,000,000 14,000,000 16,000,000 55,000,000 10,000,000 $ 417,090,000	Contract Period 2021/10/07~2022/02/18 2021/07/27~2022/01/27 2021/10/01~2022/03/30 2021/12/23~2022/03/23 2021/10/06~2022/01/28 2021/11/05~2022/01/28 2021/11/05~2022/01/28 2021/10/06~2022/01/28 2021/09/23~2022/05/24	Range of Interest Rate 1.70% 1.73% 1.56% 1.75% 1.64% 1.61% 1.58% 1.50% 1.55%	Credit Line $ 98,000,000 50,000,000 80,000,000 80,000,000 25,000,000 14,000,000 16,000,000 55,000,000 10,000,000	Mortgage or Pledge Mortgage Mortgage Mortgage	Note
							1 2 2

Note 1: The net value of investment property were pledged is $27,220.

Note 2: The net value of property, plant and equipment were pledged is $130,585.

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COSMO ELECTRONICS CORPORATION STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Supplier Name A B C D E F G Others	Description	Amount $ 28,436 10,595 9,933 6,759 5,192 4,963 4,183 11,342 $ 81,403	Note
			Note

Note: None of the balances of each remaining client is greater than 5% of this account balance.

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COSMO ELECTRONICS CORPORATION STATEMENT OF CONVERTIBLE BONDS PAYABLE DECEMBER 31, 2021 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Bonds Name The 3rd domestic secured convertible bonds	Trustee Yuanta Commercial Bank Co., Ltd.	Issuance Date 2020/02/27	Interest Payment Date -	Interest Rate 0%			Amount		Carrying Amount $ 273,484	Redeem Cash at face value at the maturity date	Collateral	Note
					Issuance Amount $ 300,000	Converted Amount ($ 22,600)	Ending Balance $ 277,400	Premiums (Discounts) ($ 3,916)

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COSMO ELECTRONICS CORPORATION STATEMENT OF LONG-TERM BORROWINGS DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Creditor Yuanta Commercial Bank Co., Ltd. Cathay United Bank Chang Hwa Commercial Bank, Ltd. Far Eastern International Bank Co., Ltd. Hua Nan Commercial Bank, Ltd. Bank of Kaohsiung Co., Ltd The Shanghai Commercial & Savings Bank, Ltd. KGI Commercial Bank Co., Ltd. KGI Commercial Bank Co., Ltd. KGI Commercial Bank Co., Ltd.	Amount $ 124,560 62,280 62,280 62,280 62,280 62,280 41,520 41,520 172,312 1,688 $ 693,000	Contract Period 2019/04/25~2022/04/25 2019/04/25~2022/04/25 2019/04/25~2022/04/25 2019/04/25~2022/04/25 2019/04/25~2022/04/25 2019/04/25~2022/04/25 2019/04/25~2022/04/25 2019/04/25~2022/04/25 2021/04/15~2028/04/15 2021/04/21~2028/04/01	Interest Rate 2.3050% 2.3050% 2.3050% 2.3050% 2.3050% 2.3050% 2.3050% 2.3050% 1.3534% 1.3537%	Current Portion $ 124,560 62,280 62,280 62,280 62,280 62,280 41,520 41,520 - - $ 519,000	Non-Current Portion $ - - - - - - - - 172,312 1,688 $ 174,000	Collateral Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 3 Note 3	Note
							2 2 2 2 2 2 2 2 4 4

Note 1: The chairman of the Company, Tsai, Nai Chen and Tsai, Chi Hu, were the sureties of the syndicated loan agreements in their personal names.

Note 2: For each use, the expiry date of the credit period was the maturity date( April 25, 2022), but this credit line shall be one period from the date of first drawdown date of 18 months, and thereafter every 6 months shall be a period, and the credit line shall be reduced during 4 periods with a certain proportion, by 5% from the first drawdown date by 18 months; by 5% by the date of full 24 months; by 30% by the date of full 30 months; by 60% by the date of full 36 months. If the drawdown balance exceeds the limit after reduced, the borrower shall repay the excess amount in advance.

Note 3: The net value of investment property were pledged is $58,127.

The net value of property, plant and equipment were pledged is $184,413.

Note 4:The chairman of the Company, Tsai, Nai Chen, was the surety of the secured loan agreements in his personal names.

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COSMO ELECTRONICS CORPORATION STATEMENT OF OPERATING REVENUE YEAR ENDED DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Item Sales Photocouplers Reed relay Photoelectric relay Semi-finished goods Others Less: Sales return Sales allowance Operating revenue	Volume (thousands) 333,618 6,829 14,109 120,750	Amount $ 345,975 73,294 109,935 55,696 7,874 592,774 ( 1,218) ( 992) ( 2,210) $ 590,564	Note
			Note

Note: None of the balances of each remaining client is greater than 5% of this account balance.

~75~

COSMO ELECTRONICS CORPORATION STATEMENT OF CHANGE IN RIGHT-OF-USE ASSETS YEAR ENDED DECEMBER 31, 2021 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Item Buildings	Beginning Balance $ 2,309	Addition $ -	Decrease ($ 2,309)	Ending Balance $ -	Note

~76~

COSMO ELECTRONICS CORPORATION STATEMENT OF OPERATING COSTS YEAR ENDED DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Item Beginning raw materials Add(Less): Raw materials purchased Ending raw materials Raw materials used Direct labor Manufacturing expense Total manufacturing cost Add(Less): Beginning work in progress Ending work in progress Cost of finished goods Add(Less): Beginning finished goods Ending finished goods Finished goods - inventory surplus Others Cost of finished goods sold Gains on reversal of decline in market value Inventory surplus Revenue from sale of scraps Others Operating costs	Amount
	$ 34,912 350,004 ( 50,120)
	334,796 22,182 88,335
	445,313 44,008 ( 33,062)
	456,259 142,308 ( 127,470) 151 ( 9,075)
	462,173 ( 7,157) ( 151) ( 3,060) ( 614)
	$ 451,191

~77~

COSMO ELECTRONICS CORPORATION STATEMENT OF OPERATING EXPENSES YEAR ENDED DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Item Salaries and Wages (Including post-employment benefits) Rent Traveling expense Depreciation Import/export (customs) expense Certification expense Service expense Others	SellingExpenses $ 12,368 - 204 6 734 1,887 474 1,067 $ 16,740	General and administrative Expenses $ 50,873 4,402 211 2,950 - - 5,649 13,704 $ 77,789	Research and Development Expenses $ 672 - - - - - - 180 $ 852	Total
				$ 63,913 4,402 415 2,956 734 1,887 6,123 14,951
				$ 95,381

~78~

COSMO ELECTRONICS CORPORATION

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION YEAR ENDED DECEMBER 31, 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Function Nature		2021			2020
	Classified as Operating Costs	Classified as Operating Expenses	Total	Classified as Operating Costs	Classified as Operating Expenses	Total
Employee benefit expense
Salaries and Wages	35,435	45,653	81,088	35,756	46,557	82,313
Insurance	4,093	4,891	8,984	3,772	4,563	8,335
Pension	1,501	2,390	3,891	1,466	2,453	3,919
Directors' remuneration	-	2,472	2,472	-	1,870	1,870
Others	2,479	8,107	10,586	2,105	5,448	7,553
Depreciation	41,987	3,017	45,004	41,555	5,372	46,927
Amortization	-	1,158	1,158	-	975	975

• Note 1: As of December 31, 2021 and 2020, the Company had 147 and 133 employees (including part time) , respectively, both including 5 and 3 non-employee directors.

• Note 2: For the years ended December 31, 2021 and 2020, average employee benefit expense were $736 and $786, respectively, and average employee salaries were $571 and $633, respectively. Adjustments of average employee salaries were (9.79)%.

• Note 3: The principal of the Company’s compensation is equal pay for equal work. Individual raises and rewards are based on each employee’s job responsibility, performance and contribution and annually review the overall rewards level to ensure they are competitive in the labor market.

~79~

COSMO ELECTRONICS CORPORATION

Loans to others

Year ended December 31, 2021

Number (Note 1) Table 1	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2021	Balance at December 31, 2021	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Expressed in thousands of NTD (Except as otherwise indicated) Limit on loans granted to a Ceiling on total singleparty loansgranted Footnote	Expressed in thousands of NTD (Except as otherwise indicated) Limit on loans granted to a Ceiling on total singleparty loansgranted Footnote	Expressed in thousands of NTD (Except as otherwise indicated) Limit on loans granted to a Ceiling on total singleparty loansgranted Footnote
													Item	Value
1 1 1 1 2	True Glory Investments Limited True Glory Investments Limited True Glory Investments Limited True Glory Investments Limited Guizhou Guanwang International Digicrown Electronic Technology Co., Ltd.	PT Cijambe Indah Cosmo Recycling Inc. PT Cosmo Technology Cosmo Electronics (HK) Company Limited Evermerit Technology Electronic Co., Ltd.	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties	Y Y Y Y Y	$ 24,912 16,608 27,680 74,736 18,348	$ 24,912 - - 27,680 18,348	$ 24,912 - - 27,680 18,348	0.00% 0.00% 3.00% 0.00% 0.00%	Short- term financing Short- term financing Short- term financing Short- term financing Short- term financing	- - - - -	Operations Operations Operations Operations Operations	$ - - - - -	- - - - -	$ - - - - -	333,209 333,209 333,209 333,209 54,293	666,418 666,418 666,418 666,418 54,293	Note 2 Note 2 Note 2 Note 2 Note 2

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

• (1) The Company is ‘0’. 。

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Limit on total loans for financing granted by and to subsidiaries of which the ultimate parent directly or indirectly holds 100% of its voting shares is 200% of the lender's net assets based on the latest audited or reviewed financial statements, and limit on loans to each entity is 200% of the lender's net assets based on the latest audited or reviewed financial statements. However, inn accordance with the Operational Procedures for Loans to Others of the Company, the total loans for financing granted by and to subsidiaries of which the ultimate parent directly or indirectly holds 100% of its voting shares must not exceed 40% of the lender's net assets based on the latest audited or reviewed financial statements, and the loans to each entity for financing must not exceed 20% of the lender's net assets based on the latest audited or reviewed financial statements. Therefore, limit on loan is the smaller one of above conditions.

Table 1

COSMO ELECTRONICS CORPORATION

Provision of endorsements and guarantees to others

Year ended December 31, 2021

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note1)	Endorser/guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party	Maximum outstanding Outstanding endorsement/ endorsement/ guarantee amountguarantee amount as of December as of December 31,2021 31,2021	Maximum outstanding Outstanding endorsement/ endorsement/ guarantee amountguarantee amount as of December as of December 31,2021 31,2021	Actual amount drawndown	Ratio of accumulated Amount of endorsement/ endorsements/ guarantee amount guarantees to net asset value secured with of the endorser/ collateral guarantor	Ratio of accumulated Amount of endorsement/ endorsements/ guarantee amount guarantees to net asset value secured with of the endorser/ collateral guarantor	Ceiling on total Provision of amount of endorsements/ endorsements/ guarantees by guarantees parent company provided to subsidiary	Ceiling on total Provision of amount of endorsements/ endorsements/ guarantees by guarantees parent company provided to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/guarantor (Note2)
0 1 2	Cosmo Electronics Corporation PT Cosmo Technology PT Cjambe Indah	True Glory Investments Limited True Glory Investments Limited Cosmo Electronics Corporation	(2) (4) (3)	666,418 $ 833,023 833,023	117,640 $ 117,640 300,000	117,640 $ 117,640 300,000	63,664 $ 63,664 300,000	N N N	3.82% 3.82% 18.01%	833,023 $ 1,666,046 1,666,046	Y N N	N N Y	N N N	Note 3 and 5 Note 4 and 5 Note 4 and 6

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

• (1) The Company is ‘0’. 。

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories:

• (1) Having business relationship.

• (2) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.

• (3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.

• (4) The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.

• (5) Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.

• (6) Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

• (7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

Note 3: Limit on total endorsements is 50% of the Company's net assets , and limit on endorsements to a single party is 40% of the Company's net assets .

Note 4: When endorser is the Company or any subsidiary, limit on total endorsements is 100% of the Company's net assets, and limit on endorsements to a single party is 50% of the Company's net assets. Note 5: The Company and PT Cosmo Technology were joint endorsements for True Glory Investments Limited.

Note 6: PT Cjambe Indah endorsed for convertible bonds issued by the Company.

Table 2

COSMO ELECTRONICS CORPORATION

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

Year ended December 31, 2021

Table 3

Expressed in thousands of NTD

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		compared Differences in	to thirdparty transaction terms	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Cosmo Electronics (HK) Company Limited PT Cosmo Technology Dong Guan Guan Zhen Xing Trading Limited Cosmo Electronics (HK) Company Limited	PT Cosmo Technology Real Bonus Limited Cosmo Electronics (HK) Company Limited Ever Merit Trading Limited	Group Group Group Substantive related parties	Sales Sales Sales Purchases	452,329) ($ 100,408) ( 132,468) ( 263,058	100.00% 16.68% 0.08% 59.29%	According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties According to the terms agreed by both parties	- $ - - -	- - - -	117,557 $ 2,372 2,212 3,044) (	100.00% 0.01% 6.46% 10.69%	Note Note Note

Note : The transactions were eliminated in the preparation of consolidated financial statements.

Table 3

COSMO ELECTRONICS CORPORATION

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

Year ended December 31, 2021

Table 4 Creditor	Counterparty	Relationship with the counterparty	Balance as at December31,2021	Turnover rate	Overdue receivables	Overdue receivables	Expressed in thousands of NTD Amount collected subsequent to the Allowance for balance sheet date doubtful accounts (Except as otherwise indicated)	Expressed in thousands of NTD Amount collected subsequent to the Allowance for balance sheet date doubtful accounts (Except as otherwise indicated)
					Amount	Action taken
Cosmo Electronics (HK) Company Limited	PT Cosmo Technology	Group	117,557 $	3.94	- $		11,179 $	- $

Table 4

Table 5

COSMO ELECTRONICS CORPORATION

Significant inter-company transactions during the reporting periods

Year ended December 31, 2021

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Percentage of consolidated total operating revenues Transaction terms or total assets
0 0 1 2 2 3 3 4 5 6	Cosmo Electronics Corporation Cosmo Electronics Corporation Cosmo Electronics Technology (KunShan) Co., Ltd. PT Cosmo Technology PT Cosmo Technology Cosmo Electronics (HK) Company Limited Cosmo Electronics (HK) Company Limited Dong Guan Guan Zhen Xing Trading Limited PT Cjambe Indah Guizhou Guanwang International Digicrown Electronic Technology Co., Ltd.	Dongguan Guanwang Electronic Technology Co., Ltd. Dongguan Guanwang Electronic Technology Co., Ltd. Cosmo Electronics Corporation Real Bonus Limited Cosmo Lighting Inc. PT Cosmo Technology PT Cosmo Technology Cosmo Electronics (HK) Company Limited PT Cosmo Technology Dongguan Guanwang Electronic Technology Co., Ltd.	(1) (1) (2) (3) (3) (3) (3) (3) (3) (3)	Sales Accounts receivable Process revenue Sales Sales Accounts receivable Sales Sales Other unearned revenue Accounts receivable	63,256 $ 47,153 81,319 100,408 48,806 117,557 452,329 132,468 75,600 66,788	- 4.71% Collection terms are 60 days 1.19% According to the terms agreed by both parties 6.06% - 7.48% - 3.64% Irregularly payment 2.96% - 33.71% - 9.87% - 1.90% Irregularly payment 1.68%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

• (3) Subsidiary to subsidiary.

Table 5

Table 6

COSMO ELECTRONICS CORPORATION

The related information on investees are as follows (not including investees in Mainland China)

Year ended December 31, 2021

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor	Investee	Location	Mainbusiness activities	Initial investment amount	Initial investment amount	Sharesheld as	atDecember31,2021	atDecember31,2021	Net profit (loss) of the investee for the year ended December 31,2021	Investment income (loss) recognised by the Company for the year ended December 31,2021	Footnote
				Balance as at Balance as at December31,2021 December31,2020 Numberofshares			Ownership (%) Bookvalue
Cosmo Electronics Corporation Cosmo Electronics Corporation Cosmo Electronics Corporation Cosmo Electronics Corporation Cosmo Electronics Corporation Cosmo Electronics Corporation Cosmo Electronics Samoa Cosmo Electronics (HK) Company Limited Cosmo Electronics (HK) Company Limited Grand Concept Group Limited Grand Concept Group Limited Grandway International Limited Grandway International Limited True Glory Investments Limited True Glory Investments Limited	Cosmo Electronics Samoa Cosmo Electronics (HK) Company Limited Grand Concept Group Limited Grandway International Limited PT Cosmo Technology Cosmo Green Power Limited Cosmo Electronics Technology Co., Ltd. Cosmo Lighting Inc. Cosmo Recycling Inc. True Glory Investments Limited Real Bonus Limited Truly Top Investments Limited Renown Boom Limited PT Cosmo Technology PT Cosmo Green Technology	Samoa Islands Hong Kong Samoa Islands Samoa Islands Indonesia Vietnam Mauritius Islands U.S.A U.S.A Samoa Islands Samoa Islands Samoa Islands Samoa Islands Indonesia Indonesia	Investment activities Trading of electronic products Investment activities Investment activities Manufacturing and selling of LED lighting Manufacturing and selling of material of biomass energy Investment activities Selling of LED lighting Recycling and selling of waste Investment activities and processing and trading of PCBs Selling of LED lighting Investment activities Investment activities and processing and selling of routers Manufacturing and selling of LED lighting Manufacturing and selling of material of	193,912 $ 269,412 240,734 941,532 87,075 31,760 193,912 49,046 24,270 240,734 - 538,516 402,983 87,514 44,603	335,962 $ 269,412 240,734 941,532 87,075 31,760 335,962 49,046 24,270 240,734 - 538,516 402,983 87,514 44,603	5,500,038 63,180,000 7,950,000 30,080,000 3,000,000 - 5,500,038 1,620,000 800,000 7,950,000 - 16,850,000 13,230,000 2,750,000 15,000	100% 100% 100% 100% 14% 100% 100% 100% 100% 100% 100% 100% 100% 13% 50%	196,544 $ 136,767 1,034,064 873,272 94,398 9,136 196,527 38,351 283 986,825 47,304 526,454 346,351 86,531 43,453	10,215) ($ 1,670) ( 81,231 32,525 67,656 2,104) ( 10,215) ( 129) ( 2,466) ( 79,752 1,475 53,466 20,941) ( 67,656 8,600	10,215) ($ 1,670) ( 81,231 32,525 9,619 2,104) ( 10,215) ( 129) ( 2,466) ( 79,752 1,475 53,466 20,941) ( 8,818 4,300	Note 1 Note 2 Note 2 Note 1 Note 1

Table 6-1

COSMO ELECTRONICS CORPORATION

The related information on investees are as follows (not including investees in Mainland China)

Year ended December 31, 2021

Table 6

Investor Table 6	Investee	Location	Mainbusiness activities	Initial investment amount		Sharesheld as	atDecember31,2021		Net profit (loss) of the investee for the year ended December 31,2021	Investment income (loss) recognised by the Company for the year ended December 31,2021 Footnote (Except as otherwise indicated) Expressed in thousands of NTD
				Balance as at Balance as at December31,2021 December31,2020 Numberofshares			Ownership (%) Bookvalue
True Glory Investments Limited Truly Top Investments Limited Truly Top Investments Limited Renown Boom Limited	PT Cijambe Indah PT Cosmo Technology PT Cosmo Green Technology PT Cijambe Indah	Indonesia Indonesia Indonesia Indonesia	Land development Manufacturing and selling of LED lighting Manufacturing and selling of material of Land development	240,875 $ 493,651 44,865 266,944	155,879 $ 493,651 44,865 266,944	48,834 15,350,000 15,000 6,579	88% 73% 50% 12%	779,967 $ 483,001 43,453 105,078	77,068 $ 67,656 8,600 77,068	67,918 $ 49,219 4,300 9,150	Note 1 Note 1 Note 1 Note 1

Note 1: The difference between the profit and loss of the investee company and the investment income and loss recognized by the Company is the investment income and loss recognized according to the ownership ratio of the current period. Note 2: It is limited company.

Note 3: The relevant information of the invested companies in mainland China is provided in Table 7.

Table 6-2

COSMO ELECTRONICS CORPORATION

Information on investments in Mainland China Year ended December 31, 2021

Investee in Mainland China Table 7	Main business activities	Paid-in capital	Investment method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2021	year ended De Amount remit to Mainland remitted back	cember 31, 2021 ted from Taiwan China/Amount to Taiwan for the	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2021	Net income of investee as of December 31, 2021	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2021 (Note 2)	Accumulated Book value of amount of investments in investment income Mainland China as remitted back to of December 31, Taiwan as of 2021 December 31, 2021 Footnote Expressed in thousands of NTD (Except as otherwise indicated)	Accumulated Book value of amount of investments in investment income Mainland China as remitted back to of December 31, Taiwan as of 2021 December 31, 2021 Footnote Expressed in thousands of NTD (Except as otherwise indicated)	Accumulated Book value of amount of investments in investment income Mainland China as remitted back to of December 31, Taiwan as of 2021 December 31, 2021 Footnote Expressed in thousands of NTD (Except as otherwise indicated)
					Remitted to MainlandChina	Remitted back to Taiwan
Cosmo Electronics Technology (KunShan) Co., Ltd. Dong Guan Guan Zhen Xing Trading Limited Shaoguan Woncrown Electronics Technology Co.,Ltd. Guizhou Guanwang International Digicrown Electronic Technology Co., Ltd. Dongguan Guanwang Electronic Technology Co., Ltd. Companyname	Manufacturing and selling of new electronic parts 193,912 $ Manufacturing and selling of material of biomass energy 187,563 Developing, manufacturing and selling of electronic products 90,751 Developing, manufacturing and selling of electronic products 158,446 Developing, manufacturing and selling of electronic products 26,958 Accumulated amount of remittance from Taiwan to Mainland China as of December31,2021		(1) 335,962 $ (2) 85,367 (2) - (2) - (2) - by the Investment Commission of the Ministry of Economic Affairs(MOEA)(Note3) Investment amount approved		- $ - - - - Ceiling on invest China imposed Commission o	142,050 $ - - - - ments in Mainland by the Investment f MOEA(Note 4)	193,912 $ 85,367 - - -	10,216) ($ 30,097) ( 1,723) ( 4,823) ( 34,426) (	100% 100% 100% 100% 100%	10,216) ($ 30,097) ( 1,723) ( 4,823) ( 34,426) (	196,526 $ 221,529 44,871 135,732 53,979) (	- $ - - - -
Cosmo Electronics Corporation	279,279 $		$ 456,720		$	999,628

Note 1: Investment methods are classified into the following two categories:

(1)Through investing and establishment in Cosmo Electronics Co., Ltd.(Samoa) and Cosmo Electronics Technology Co., Ltd.(Mauritius) in the third area, which then invested in the investee in Mainland China.

(2)Through investing in an existing company, Renown Boom Limited, in the third area, which then invested in the investee in Mainland China.

Note 2: The company recognised investment income / loss based on the audited financial statements. Note 3: Investment amount approved by the Investment Commission of the Ministry of Economic Affairs was US$16,500 thousand. Note 4: It was calculated by the limit of the combined net asstes in accordance with Order No. MOEA-09704604680. Note 5: Relevant figures in this table should be expressed in thousands of NTD.

Table 7

Table 8

COSMO ELECTRONICS CORPORATION

Major shareholders information

Year ended December 31, 2021

Name of major shareholders	Shares	Shares
	No. of shares held	Ownership (%)
Digicrown Technologies Ltd. Wei Jia Investment Co., Ltd. Da Liang Investment Ltd. Hung Yi Investment Ltd. Tsan Hua Investment Co., Ltd. Kuan Che Investment Ltd. Tai Sung Investment Co., Ltd. Kuan Chia Investment Ltd. Flyachieve Limited.	15,002,531 13,832,624 13,600,400 13,204,532 12,506,249 12,194,722 11,688,124 11,580,937 10,580,537	9.28% 8.55% 8.41% 8.16% 7.73% 7.54% 7.23% 7.16% 6.54%

Table 8

COSMO ELECTRONICS CORPORATION

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

Year ended December 31, 2021

Securities held by Table 9	Marketable securities	Relationship with the securities issuer	General ledger account		As of December31,2021	As of December31,2021	Fairvalue Footnote Expressed in thousands of NTD (Except as otherwise indicated)	Fairvalue Footnote Expressed in thousands of NTD (Except as otherwise indicated)
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
True Glory Investments Limited	Corporate bonds-CFE	-	Financial assets at amortized cost - non current	-	5,566 $	N/A	6,979 $

Table 9