CyberPower — Annual Report 2021

Nov 12, 2021

Cyber Power Systems, Inc.

Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Cyber Power Systems, Inc.

Opinion

We have audited the accompanying financial statements of Cyber Power Systems, Inc. (the “Company”), which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and other regulations.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the 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.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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The key audit matter of the Company’s financial statements for the year ended December 31, 2021 is described as follows:

Assessment of Inventory

As of December 31, 2021, the balance of inventory amounted to $1,823,840 thousand. As the Company sells its products to the American and European regions with a focus on the retail market, a sufficient level of safety stock is required to be maintained at the retail outlets, and this results in the net amount of inventory accounting for 19% of the Company’s total assets. Since the assessment of the net realizable value of inventories is subject to management’s judgment, it has been identified as the key audit matter for the year ended December 31, 2021.

Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. When the net realizable value is lower than the cost of inventory, the Company recognizes the loss on the write-down; besides, the loss on obsolete inventory is estimated according to the aging and the physical conditions of the inventory.

We understood the effectiveness of internal controls as follows:

1. Whether inventory valuation and obsolescence losses were regularly recognized based on the Company’s policy.

2. Whether the assessment of inventory valuation and obsolescence losses was reviewed by responsible personnel.

We selected samples from the inventory list on the balance sheet date, verified the data used to calculate the net realizable value, and recalculated the inventory valuation loss amount and compared it to the recognized amount based on the data. We also analyzed the actual inventory turnover situation to assess the sufficiency and appropriateness of the policy for the recognition of obsolescence losses, and calculated the obsolescence losses based on the policy and compared this to the recognized amount.

For other relevant disclosures, refer to Note 4(e): Summary of significant accounting policies and Note 10: Inventories.

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

Management is responsible for the preparation and fair presentation of the 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 financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the 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, including the supervisors, are responsible for overseeing the Company’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 auditing standards generally accepted 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 the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted 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 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 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 financial statements, including the disclosures, and whether the 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 entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

We also provide those charged with governance with a statement that we have complied with the 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 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.

The engagement partners on the audit resulting in this independent auditors’ report are Wen-Hsiang Chen and Te-Chen Cheng.

Deloitte & Touche Taipei, Taiwan Republic of China

March 23, 2022

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent 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. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

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CYBER POWER SYSTEMS, INC.

BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4, 6 and 29) Financial assets at fair value through profit or loss - current (Notes 4, 7 and 29) Financial assets at amortized cost - current (Notes 4, 8 and 29) Notes receivable from unrelated parties (Notes 4, 9, 24 and 29) Trade receivables from unrelated parties (Notes 4, 9, 24 and 29) Trade receivables from related parties (Notes 4, 9, 24, 29 and 30) Other receivables from unrelated parties (Notes 9 and 29) Other receivables from related parties (Notes 4, 9, 29 and 30) Current tax assets(Notes 4 and 26) Inventories (Notes 4 and 10) Other current assets (Notes 16 and 30) Total current assets NON-CURRENT ASSETS Investments accounted for using the equity method (Notes 4, 11 and 30) Property, plant and equipment (Notes 4, 12 and 31) Right-of-use assets (Notes 4 and 13) Investment properties (Notes 4, 14 and 31) Other intangible assets (Notes 4 and 15) Deferred tax assets (Notes 4 and 26) Other non-current assets (Note 16) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 17, 29 and 31) Trade payables to unrelated parties (Notes 19 and 29) Trade payables to related parties (Notes 19, 29 and 30) Other payables (Notes 20 and 31) Current tax liabilities (Notes 4 and 26) Provisions - current (Notes 4 and 21) Lease liabilities - current (Notes 4, 13 and 31) Other current liabilities (Note 20) Total current liabilities NON-CURRENT LIABILITIES Bonds payable (Notes 18 and 31) Long-term borrowings (Notes 17, 29 and 31) Current tax liabilities (Notes 4 and 26) Deferred tax liabilities (Notes 4 and 26) Lease liabilities - non-current (Notes 4, 13 and 29) Net defined benefit liabilities - non-current (Notes 4 and 22) Other non-current liabilities (Note 20) Total non-current liabilities Total liabilities EQUITY (Note 23) Share capital Ordinary shares Capital surplus Share premium Employee share options Convertible bond options Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Exchange differences on translating foreign operations Total equity TOTAL		2021 Amount % $ 954,983 10 120 - - - 7,500 - 543,570 6 1,663,542 17 15,446 - 49,551 1 40 - 1,823,840 19 30,412 - 5,089,004 53 1,625,895 17 1,364,823 14 14,837 - 1,300,445 14 2,800 - 161,971 2 2,326 - 4,473,097 47 $ 9,562,101 100 $ 2,190,000 23 662,626 7 789,562 8 386,485 4 62,891 1 67,750 1 8,824 - 7,012 - 4,175,150 44 1,203,723 13 145,481 1 16,706 - 31 - 6,084 - 14,465 - 8,188 - 1,394,678 14 5,569,828 58 809,510 8 1,359,259 14 38,983 1 83,747 1 711,637 8 132,269 1 1,053,630 11 (196,762) (2) 3,992,273 42 $ 9,562,101 100		2020
				Amount % $ 1,364,286 14 120 - 28,480 1 1,905 - 474,592 5 2,262,066 23 21,730 - 91,270 1 - - 1,172,995 12 22,789 - 5,440,233 56 1,492,738 15 1,378,736 14 15,764 - 1,317,789 14 2,800 - 117,351 1 1,674 - 4,326,852 44 $ 9,767,085 100 $ 1,898,000 19 547,922 6 671,114 7 439,697 4 79,400 1 85,142 1 8,168 - 10,848 - 3,740,291 38 1,189,526 12 207,830 2 34,379 1 16 - 7,659 - 13,886 - 7,469 - 1,460,765 15 5,201,056 53 809,510 8 1,359,259 14 38,983 - 83,747 1 665,361 7 114,928 1 1,626,510 17 (132,269) (1) 4,566,029 47 $ 9,767,085 100

The accompanying notes are an integral part of the financial statements.

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CYBER POWER SYSTEMS, INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 24 and 30) OPERATING COSTS (Notes 10, 25 and 30) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4, 22, 25 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses (LOSS) PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 25, 30 and 33) Interest revenue Other income Other gains and losses Finance costs Share of profit of subsidiaries, associates and joint ventures Total non-operating income and expenses (LOSS) PROFIT BEFORE INCOME TAX INCOME TAX BENEFIT (EXPENSE) (Notes 4 and 26) NET (LOSS) PROFIT FOR THE YEAR		2021 Amount % $ 5,591,204 100 4,769,035 85 822,169 15 (173,642) (3) 236,359 4 884,886 16 571,077 10 221,060 4 294,827 6 41 - 1,087,005 20 (202,119) (4) 1,040 - 59,851 1 (78,598) (1) (31,801) - 134,904 2 85,396 2 (116,723) (2) 45,032 1 (71,691) (1)		2020
				Amount % $ 5,287,892 100 4,260,681 81 1,027,211 19 (236,359) (4) 374,478 7 1,165,330 22 272,942 5 244,837 5 323,174 6 3,407 - 844,360 16 320,970 6 4,229 - 65,977 1 (166,414) (3) (31,050) - 303,319 6 176,061 4 497,031 10 (34,350) (1) 462,681 9

(Continued)

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CYBER POWER SYSTEMS, INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE (LOSS) INCOME Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 22) Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 26) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE YEAR (LOSS) EARNINGS PER SHARE (Note 27) From continuing operations Basic Diluted		2021 Amount % $ (582) - 29 - 116 - (437) - (64,493) (1) (64,930) (1) $ (136,621) (2) $ (0.89) $ (0.89)		2020
				Amount % $ (204) - 240 - 41 - 77 - (17,341) (1) (17,264) (1) $ 445,417 8 $ 5.72 $ 5.19
				$

The accompanying notes are an integral part of the financial statements.

(Concluded)

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CYBER POWER SYSTEMS, INC.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2020 Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends distributed by the Company Issued convertible bonds - equity component Net profit for the year ended December 31, 2020 Other comprehensive loss for the year ended December 31, 2020, net of income tax Total comprehensive income for the year ended December 31, 2020 BALANCE AT DECEMBER 31, 2020 Appropriation of 2020 earnings Legal reserve Special reserve Cash dividends distributed by the Company Actual disposals or acquisitions of interests in subsidiaries Net loss for the year ended December 31, 2021 Other comprehensive loss for the year ended December 31, 2021 net of income tax Total comprehensive income for the year ended December 31, 2021 BALANCE AT DECEMBER 31, 2021	Share Capital Ordinary Shares $ 809,510 - - - - - - - 809,510 - - - - - - - $ 809,510	Capital Surplus Share Premium Employee Share Options Convertible Bond Options $ 1,359,259 $ 38,983 $ - - - - - - - - - - - - 83,747 - - - - - - - - - 1,359,259 38,983 83,747 - - - - - - - - - - - - - - - - - - - - - $ 1,359,259 $ 38,983 $ 83,747	Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 614,750 $ 75,088 $ 1,687,291 50,611 - (50,611) - 39,840 (39,840) - - (433,088) - - - - - 462,681 - - 77 - - 462,758 665,361 114,928 1,626,510 46,276 - (46,276) - 17,341 (17,341) - - (437,135) - - - - - (71,691) - - (437) - - (72,128) $ 711,637 $ 132,269 $ 1,053,630	Other Equity Exchange Differences on Translating Foreign Operations $ (114,928) - - - - - (17,341) (17,341) (132,269) - - - - - (64,493) (64,493) $ (196,762)	Total Equity $ 4,469,953 - - (433,088) 83,747 462,681 (17,264) 445,417 4,566,029 - - (437,135) - (71,691) (64,930) (136,621) $ 3,992,273

The accompanying notes are an integral part of the financial statements.

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CYBER POWER SYSTEMS, INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES (Loss) income before income tax Adjustments to: Depreciation expenses Expected credit loss recognized on trade receivables Net loss on fair value changes of financial assets at fair value through profit or loss Finance costs Interest income Share of profit of subsidiaries, associates and joint ventures (Reversal) recognition of provisions Write-down of inventories Unrealized gain on transactions with subsidiaries, associates and joint ventures Realized gain on transactions with subsidiaries, associates and joint ventures Net loss on foreign currency exchange Changes in operating assets and liabilities Notes receivable Trade receivables Other receivables Inventories Other current assets Other items of operating activities Trade payables Other payables Other current liabilities Cash (used in) generated from operations Interest received Interest paid Income tax paid Net cash (used in) generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at amortized cost Payments for property, plant and equipment Increase in refundable deposits Decrease in prepayments for equipment Net cash outflow on acquisition of subsidiaries Net cash generated from (used in) investing activities	2021 $ (116,723) 46,806 41 - 31,801 (1,040) (134,904) (17,392) 16,373 173,642 (236,359) 39,416 (5,595) 518,594 46,316 (667,218) (5,081) - 239,434 (55,295) (3,836) (131,020) 1,421 (17,306) (33,679) (180,584) 28,480 (7,109) (652) - - 20,719	2020 $ 497,031 46,494 3,407 120 31,050 (4,229) (303,319) 2,579 27,288 236,359 (374,478) 117,400 3,625 362,720 (45,168) (98,510) 3,386 2,637 297,889 46,491 2,464 855,236 4,429 (17,315) (19,429) 822,921 14,763 (13,330) (482) 302 (73,836) (72,583) (Continued)

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CYBER POWER SYSTEMS, INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from issuance of convertible bonds Repayment of long-term borrowings Proceeds from guarantee deposits received Repayment of the principal portion of lease liabilities Dividends paid to owners of the Company Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2021 $ 292,000 - - (62,349) 719 (8,432) (437,135) (215,197) (34,241) (409,303) 1,364,286 $ 954,983	2020 $ - (142,000) 1,259,004 (712,170) 893 (7,481) (433,088) (34,842) (59,758) 655,738 708,548 $ 1,364,286

The accompanying notes are an integral part of the financial statements.

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CYBER POWER SYSTEMS, INC.

1. GENERAL INFORMATION

Cyber Power Systems, Inc. (the “Company”) was established in the Republic of China (ROC) in 1997. The Company mainly manufactures and sells uninterruptible power systems (UPS).

The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since December 2009.

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 23, 2022.

3. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

• a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies.

• b. The IFRSs endorsed by the FSC for application starting from 2022

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” 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”	Effective Date Announced by IASB
	January 1, 2022 (Note 1) January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4)

• Note 1: The amendments to IFRS 9 are applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” are applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” are applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

• Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

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• Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

• Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

• c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs 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 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - Comparative Information” 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”

Effective Date Announced by IASB (Note 1)

To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 2) January 1, 2023 (Note 3) January 1, 2023 (Note 4)

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

• Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

• Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

• 1) Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Company should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

• Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;

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• The Company may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and

• Not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

• a) The Company changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;

• b) The Company chose the accounting policy from options permitted by the standards;

• c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;

• d) The accounting policy relates to an area for which the Company is required to make significant judgements or assumptions in applying an accounting policy, and the Company discloses those judgements or assumptions; or

• e) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

2) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Company may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Company uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value.

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The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for the asset or liability.

When preparing these financial statements, the Company used the equity method to account for its investment in subsidiaries, associates and joint ventures. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same as the amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries, associates and joint ventures, the share of other comprehensive income of subsidiaries, associates and joint ventures and related equity items, as appropriate, in these parent company only financial statements.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

• d. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than the Company’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

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Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purpose of presenting the Company’s financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries, associates, joint ventures and branches in other countries or those that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognized in other comprehensive income.

• e. Inventories

Inventories consist of raw materials, supplies, finished goods and work in process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.

• f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity (including structured entities) that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries attributable to the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are accounted for as equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses, if any.

• 15 -

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the financial statements of the invested company as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company only financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company’s financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

• g. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

h. Investment properties

Investment properties are properties held to earn rental and/or for capital appreciation.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

• i. Intangible assets

Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

• 16 -

• j. Impairment of property, plant and equipment, right-of-use assets, and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use assets and intangible assets (excluding goodwill), to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

• k. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

• a) Measurement category

Financial assets are classified into the following categories: Financial assets at FVTPL and financial assets at amortized cost

Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria

Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• 17 -

• ii. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable, trade receivables and other receivables at amortized cost, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset.

A financial asset is credit impaired when one or more of the following events have occurred:

• i. Significant financial difficulty of the issuer or the borrower;

• ii. Breach of contract, such as a default;

• iii. It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

• iv. The disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Company determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company):

• i. Internal or external information show that the debtor is unlikely to pay its creditors.

• ii. When a financial asset is more than 360 days past due unless the Company has reasonable and corroborative information to support a more lagged default criterion.

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The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

• c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

• 2) Financial liabilities

• a) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

• 3) Convertible bonds

The component parts of compound instruments (i.e., convertible bonds) issued by the Company are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or upon the instrument’s maturity date. Any embedded derivative liability is measured at fair value.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised; in which case, the balance recognized in equity will be transferred to capital surplus - share premiums. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premiums.

Transaction costs that relate to the issuance of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component.

• l. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

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m. Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

For contracts where the period between the date on which the Company transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Company does not adjust the promised amount of consideration for the effects of a significant financing component.

Revenue from the sale of goods

Revenue from the sale of goods comes from sales of uninterruptible power systems. Sales of uninterruptible power systems are recognized as revenue when the goods are delivered to the customer’s specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

n. Leasing

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

For a contract that contains a lease component and non-lease components, the Company allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

1) The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

Variable lease payments that do not depend on an index or a rate are recognized as income in the periods in which they are incurred.

2) The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets.

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Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

o. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

p. Government grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.

Government grants related to income are recognized in other income on a systematic basis over the periods in which the Company recognizes as expenses the related costs that the grants intend to compensate. Specifically, government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss in the period in which they are received.

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q. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

• 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

• r. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

According to the Income Tax Act, an additional tax on unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

• 22 -

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

• 3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Company considers the possible impact of the recent development of the COVID-19 and its economic environment implications when making its critical accounting estimates on cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2021 $ 671 954,312 $ 954,983	2020 $ 745 1,363,541 $ 1,364,286

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial liabilities at FVTPL-current Financial liabilities designated as at FVTPL Convertible options (Note 18 - convertible bonds)		December	31
		2021 $ 120	2020 $ 120

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8. FINANCIAL ASSETS AT AMORTIZED COST

Current Domestic investments Time deposits with original maturities of more than 3 months		December	31
		2021 $ -	2020 $ 28,480

The market rate intervals of financial assets at amortized cost at the end of the reporting period were as follows:

Time deposits with original maturities of more than 3 months	**December 31 **
	2021 2020 - 0.38%

9. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Notes receivable - operating Trade receivables At amortized cost Gross carrying amount Gross carrying amount from related parties Less: Allowance for impairment loss Other receivables Loans receivable - floating rate Tax refund receivables Others		December 31	December 31
		2021 $ 7,500 - $ 7,500 $ 7,500 $ 547,108 1,663,542 (3,538) $ 2,207,112 $ 47,838 616 16,543 $ 64,997	2020 $ 1,905 - $ 1,905 $ 1,905 $ 478,089 2,262,066 (3,497) $ 2,736,658 $ 90,715 818 21,467 $ 113,000

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• a. Trade receivables

At amortized cost

The Company has a set credit period for the sale of goods, and no interest was charged on trade receivables. The Company uses other publicly available financial information or its own trading records to rate its major customers. In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk was significantly reduced.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default records of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, when the debtor has been placed under liquidation, or when the trade receivables are days past due. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of trade receivables based on the Company’s provision matrix:

December 31, 2021

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2020	Up to 90 Days Credit Classification 0%-1% $ 484,248 (296) $ 483,952	**9 **	1to 180 Days Credit lassification 0%-5% $ 67,117 - $ 67,117	18	1to 270 Days Credit lassification 5%-30% $ 1 - $ 1	27	1to 364 Days Credit lassification 0%-100% $ - - $ -	1	Year or More Credit lassification 0%-100% $ 3,242 (3,242) $ -	Total $ 554,608 (3,538) $ 551,070
	C	C		C		C		C

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Up to 90 Days Credit Classification 0%-1% $ 393,105 (162) $ 392,943	**9 **	1to 180 Days Credit lassification 0%-5% $ 83,168 - $ 83,168	18	1to 270 Days Credit lassification 0%-30% $ 40 - $ 40	27	1to 364 Days Credit lassification 0%-100% $ 51 - $ 51	1	Year or More Credit lassification 0%-100% $ 3,630 (3,335) $ 295	Total $ 479,994 (3,497) $ 476,497
	C	C		C		C		C

The above aging schedule was based on the invoice date.

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The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Add: Expected credit loss recognized Less: Expected credit loss reversed Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 3,497 41 - $ 3,538	2020 $ 90 3,407 - $ 3,497

The movements of the loss allowance of overdue receivables were as follows:

Balance at January 1 Foreign exchange translation gains and losses Less: Amounts written off Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ - - - $ -	2020 $ 2,637 66 (2,703) $ -

Overdue receivables were classified under other assets and an allowance for doubtful accounts was recognized.

b. Other receivables

Loans receivable - floating rate comprised of short-term financing provided to Cyber Power Systems (India) Pvt. Ltd., CyberPower Systems GmbH and Cyber Power Systems S.A. DE C.V., refer to Note 30 for the details.

10. INVENTORIES

Finished goods Semi-finished goods Work in process Raw materials		December 31	December 31
		2021 $ 1,087,342 83,238 1,280 651,980 $ 1,823,840	2020 $ 852,207 36,114 11 284,663 $ 1,172,995

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2021 and 2020 amounted to $4,769,035 thousand and $4,260,681 thousand, respectively.

The cost of goods sold included inventory write-downs of $16,373 thousand and $27,288 thousand for the years ended December 31, 2021 and 2020, respectively.

• 26 -

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Name of Subsidiaries Unlisted companies Cyber Power Systems (USA), Inc. Broad Win International Investment Co., Ltd. Fast Wind International Limited Cliquefie Co., Ltd. Cyber Power Systems Manufacturing, Inc.		December 31	December 31
		2021 $ 317,226 964,456 317,054 5,961 21,198 $ 1,625,895	2020 $ 362,039 840,308 253,408 17,032 19,951 $ 1,492,738

As of the end of the reporting period, the proportions of ownership and voting rights in subsidiaries held by the Company were as follows:

Name of Subsidiaries Cyber Power Systems (USA), Inc. Broad Win International Investment Co., Ltd. Fast Wind International Limited Cliquefie Co., Ltd. Cyber Power Systems Manufacturing, Inc.	December 31
	2021 2020 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.7% 96.7% 100.0% 100.0%

Refer to Table 5 of Note 35 for the details of the subsidiaries indirectly held by the Company.

The share of profit or loss and other comprehensive income of the investments accounted for using the equity method for the years ended December 31, 2021 and 2020 was based on the subsidiaries’ audited financial statements for the same years.

12. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2021 Additions Disposals Reclassifications Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Disposals Reclassifications Balance at December 31, 2021 Carrying amounts at December 31, 2021 Cost Balance at January 1, 2020 Additions Disposals Reclassifications Balance at December 31, 2020	Freehold Land $ 880,655 - - 4,990 $ 885,645 $ - - - - $ - $ 885,645 $ 1,020,857 - - (140,202) $ 880,655	Buildings $ 526,890 - 2,633 $ 529,523 $ 51,659 14,861 - 217 $ 66,737 $ 462,786 $ 599,191 1,692 - (73,993) $ 526,890	Machinery Equipment $ 55,834 3,695 (60 ) - $ 59,469 $ 46,315 4,490 (60 ) - $ 50,745 $ 8,724 $ 48,638 7,196 - - $ 55,834	Office Equipment Leasehold Improvements $ 56,436 $ 922 1,508 - (446 ) - - - $ 57,498 $ 922 $ 44,782 $ 922 7,624 - (446 ) - - - $ 51,960 $ 922 $ 5,538 $ - $ 52,857 $ 922 3,959 - (380 ) - - - $ 56,436 $ 922	Other Equipment Total $ 155,552 $ 1,676,289 1,906 7,109 (370 ) (876 ) - 7,623 $ 157,088 $ 1,690,145 $ 153,875 $ 297,553 1,453 28,428 (370 ) (876 ) - 217 $ 154,958 $ 325,322 $ 2,130 $ 1,364,823 $ 155,069 $ 1,877,534 483 13,330 - (380 ) - (214,195) $ 155,552 $ 1,676,289 (Continued)

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Accumulated depreciation Balance at January 1, 2020 Depreciation expense Disposals Reclassifications Balance at December 31, 2020 Carrying amounts at December 31, 2020	Freehold Land $ - - - - $ - $ 880,655	Buildings $ 40,701 16,295 - (5,337) $ 51,659 $ 475,231	Machinery Equipment $ 42,547 3,768 - - $ 46,315 $ 9,519	Office Equipment Leasehold Improvements $ 38,142 $ 865 7,020 57 (380 ) - - - $ 44,782 $ 922 $ 11,654 $ -	Other Equipment Total $ 150,638 $ 272,893 3,237 30,377 - (380 ) - (5,337) $ 153,875 $ 297,553 $ 1,677 $ 1,378,736 (Concluded)

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings 5-47 years Machinery equipment 3-4 years Office equipment 3-6 years Leasehold improvements 2-5 years Other equipment 3 years

Reclassifications are mainly transfers from investment properties.

The material components of buildings primarily include office and interior construction which are depreciated on a straight-line basis over their estimated useful lives of 5-47 years.

All of the Company’s property, plant and equipment are held under freehold interests. Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 31.

13. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amount Buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Buildings Transportation equipment		December	31
	2021 2020 $ 10,492 $ 9,917 4,345 5,847 $ 14,837 $ 15,764 **For the Year Ended December 31 **
		2021 $ 7,513 $ 5,864 2,576 $ 8,440	2020 $ 13,871 $ 4,832 2,749 $ 7,581

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b. Lease liabilities

Carrying amount Current Non-current Range of discount rate for lease liabilities was as follows: Buildings Transportation equipment		December	31
		2021 $ 8,824 $ 6,084 December	2020 $ 8,168 $ 7,659 31
	2021 2020 0.80%-0.93% 0.85%-0.93% 0.80%-1.2% 0.85%-1.2%

• c. Material lease activities and terms (the Company is lessee)

The Company also leases buildings for the use of plants and offices with lease terms of 1 to 3 years. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Lease arrangements for the leasing out of investment properties under operating leases are set out in Note 14.

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 3,302 $ 63 $ (11,915)	2020 $ 3,692 $ 169 $ (11,480)

The Company’s leases of certain office equipment qualify as short-term leases and certain computer equipment qualify as low-value asset leases. The Company has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

14. INVESTMENT PROPERTIES

Cost Balance at January 1, 2021 Reclassified as property, plant and equipment Balance at December 31, 2021	Completed Investment Properties $ 1,364,376 (7,623) $ 1,356,753 (Continued)

• 29 -

Accumulated depreciation and impairment Balance at January 1, 2021 Depreciation expenses Reclassified as property, plant and equipment Balance at December 31, 2021 Carrying amount at December 31, 2021 Cost Balance at January 1, 2020 Additions Reclassified from property, plant and equipment Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Depreciation expenses Reclassified from property, plant and equipment Balance at December 31, 2020 Carrying amount at December 31, 2020

Completed Investment Properties $ (46,587) (9,938) 217 $ (56,308) $ 1,300,445 $ 1,150,181 - 214,195 $ 1,364,376 $ (32,714) (8,536) (5,337) $ (46,587) $ 1,317,789 (Concluded)

The investment properties were leased out for 3 to 6 years. The lease contracts contain market review clauses in the event that the lessees exercise their options to extend. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

The maturity analysis of lease payments receivable from the leasing of investment properties under operating leases as of December 31, 2020 was as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards		December 31	December 31
		2021 $ 33,041 28,816 23,102 14,997 4,551 - $ 104,507	2020 $ 32,007 28,305 22,591 14,547 4,441 - $ 101,891

• 30 -

The investment properties held by the Company are depreciated using the straight-line method over their estimated useful lives of 47 years.

The fair values of the Company’s investment properties as of December 31, 2021 and 2020 were $1,325,162 thousand and $1,343,185 thousand, respectively. Management of the Company used the valuation model that market participants would use in determining the fair value. The valuation was arrived at by reference to market evidence of transaction prices for similar properties.

All of the Company’s investment properties were held under freehold interests. The investment properties pledged as collateral for bank borrowings are set out in Note 31.

15. OTHER INTANGIBLE ASSETS

Cost Balance at January 1, 2020 Additions Balance at December 31, 2020 Additions Balance at December 31, 2021 Accumulated amortization and impairment Balance at January 1, 2020 Amortization expense Balance at December 31, 2020 Amortization expense Balance at December 31, 2021	Amount $ 2,800 - 2,800 - $ 2,800 $ - - - - $ -

Other intangible assets that are considered to have an indefinite useful life will not be amortized until its useful life is determined to be finite. Instead, it will be tested for impairment annually whether or not there are any indications of impairment.

16. OTHER ASSETS

Current Prepayments Others Non-current Refundable deposits		December	31
		2021 $ 12,058 18,354 $ 30,412 $ 2,326	2020 $ 5,281 17,508 $ 22,789 $ 1,674

• 31 -

17. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Line of credit borrowings Secured borrowings (Note 31) Bank loans		**December 31 **	**December 31 **
		2021 $ 1,290,000 900,000 $ 2,190,000	2020 $ 1,148,000 750,000 $ 1,898,000

The range of weighted average effective interest rates on bank loans was 0.68%-0.83% and 0.75%-0.85% per annum as of December 31, 2021 and 2020, respectively.

• b. Long-term borrowings

Secured borrowings (Note 31) Fubon Bank* Less: Current portions		December 31	December 31
		2021 $ 145,481 - $ 145,481	2020 $ 207,830 - $ 207,830

• As of December 31, 2021 and 2020, the weighted average effective interest rate of the bank borrowings secured by the Company’s freehold land and buildings (see Note 31) was 1.048% and 1.043% per annum, and the borrowings are repayable by April 7, 2024. The principal of borrowings due within a year have been fully repaid by the Company in advance in 2021.

18. BOND PAYABLE

Unsecured domestic convertible bonds		December 31	December 31
		2021 $ 1,203,723	2020 $ 1,189,526

On January 15, 2020, the Company issued 12 thousand units of 0% NTD-denominated unsecured convertible bonds in Taiwan, with an aggregate principal amount of $1,200,000 thousand.

At the time of issuance of the bonds, each bond entitles the holder to convert it into ordinary shares of the Company at a conversion price of $122. After the conversion price is determined, in the event of ex-rights or ex-dividend, it shall be adjusted according to the conversion price adjustment formula. Conversion may occur at any time between April 16, 2020 and January 15, 2023. If the bonds have not been converted, they will be redeemed at 101.5075% of face value on January 15, 2023.

• 32 -

The convertible bonds contain both liability and equity components. The equity component was presented in equity under the heading of capital surplus - options. The effective interest rate of the liability component was 1.1935% per annum on initial recognition.

Proceeds from issuance (less transaction costs of $3,745 thousand) Equity component (less transaction costs allocated to the equity component of $241 thousand) Account on current financial assets at fair value through profit or loss at the date of issue Liability component at the date of issue (less transaction costs allocated to the liability component of $3,504 thousand) Interest charged at an effective interest rate of 1.1935% Liability component at December 31, 2020

$ 1,259,004 (83,747) 240 1,175,497 28,226 $ 1,203,723

19. TRADE PAYABLES

Trade payables Operating		December 31	December 31
		2021 $ 1,452,188	2020 $ 1,219,036

The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

20. OTHER LIABILITIES

Current Other payables Payables for employees’ compensation and remuneration of directors and supervisors Payables for salaries and bonuses Payables for freight Others Other liabilities Advance receipts Receipts under custody Non-current Other liabilities Guarantee deposits received		**December 31 **	**December 31 **
		2021 $ - 90,251 116,510 179,724 $ 386,485 $ 2,560 4,452 $ 7,012 $ 8,188	2020 $ 67,713 86,370 58,145 227,469 $ 439,697 $ 6,685 4,163 $ 10,848 $ 7,469

• 33 -

21. PROVISIONS

Current Warranties Balance at January 1, 2020 Additional provisions recognized Balance at December 31, 2020 Balance at January 1, 2021 Decreasing provisions recognized Balance at December 31, 2021		December	31
		2021 2020 $ 67,750 $ 85,142 Warranties $ 82,563 2,579 $ 85,142 $ 85,142 (17,392) $ 67,750

The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic benefits that will be required under the Company’s obligations for warranties under the legislation on the local sale of goods. The estimate had been made on the basis of historical warranty trends and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality.

22. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Company makes monthly contributions to employees’ individual pension accounts at 6% of monthly wages and salaries.

b. Defined benefit plan

The defined benefit plan adopted by the Company in accordance with the Labor Standards Act is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

• 34 -

The amounts included in the balance sheets in respect of the Company’s defined benefit plan were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December	31
		2021 $ 16,040 (1,575) $ 14,465	2020 $ 21,503 (7,617) $ 13,886

Movements in net defined benefit liabilities were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liabilities
Balance at January 1, 2020	$ 20,748	$ (7,064)	$ 13,684
Service cost
Current service cost	168	-	168
Interest expense (income)	132	(30)	102
Recognized in profit or loss	300	(30)	270
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(251)	(251)
Actuarial loss
Changes in demographic assumptions	321	-	321
Changes in financial assumptions	29	-	29
Experience adjustments	105	-	105
Recognized in other comprehensive income	455	(251)	204
Contributions from the employer	-	(272)	(272)
Balance at December 31, 2020	21,503	(7,617)	13,886
Service cost
Current service cost	166	-	166
Interest expense (income)	108	(39)	69
Recognized in profit or loss	274	(39)	235
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(89)	(89)
Actuarial loss
Changes in demographic assumptions	665	-	665
Changes in financial assumptions	-	-	-
Experience adjustments	6	-	6
Recognized in other comprehensive income	671	(89)	582
Contributions from the employer	-	(238)	(238)
Benefits paid	(6,408)	6,408	-
Balance at December 31, 2021	$ 16,040	$ (1,575)	$ 14,465

• 35 -

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plan is as follows:

Selling and marketing expenses General and administrative expenses Research and development expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 27 36 172 $ 235	2020 $ 30 40 200 $ 270

Through the defined benefit plans under the Labor Standards Act, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase	December 31
	2021 2020 0.5% 0.5% 3.25% 3.25%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase/decrease 0.25% increase 0.25% decrease		**December **	**31 **
		2021 $ (565) $ 590 $ 565 $ (544)	2020 $ (613) $ 641 $ 615 $ (591)

• 36 -

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		**December **	**31 **
	2021 2020 $ 243 $ 278 14.28 years 11.39 years

23. EQUITY

• a. Share capital

Ordinary shares

Shares authorized (in thousands of shares) Shares authorized (in thousands of dollars) Shares issued and fully paid (in thousands of shares) Shares issued and fully paid (in thousands of dollars)		**December 31 **	**December 31 **
		2021 360,000 $ 360,000 80,951 $ 809,510	2020 360,000 $ 360,000 80,951 $ 809,510

The authorized shares include 20,000 thousand shares allocated for the exercise of employee share options.

• b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital* Issuance of ordinary shares May be used to offset a deficit only Issuance of ordinary shares (reclassified by capital surplus - employee share options) May not be used for any purpose Employee share options Convertible bonds with warrant		December 31	December 31
		2021 $ 1,330,733 28,526 38,983 83,747 $ 1,481,989	2020 $ 1,330,733 28,526 38,983 83,747 $ 1,481,989

• Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

• 37 -

• c. Retained earnings and dividend policy

The proposal for profit distribution or offsetting of losses should be made at the end of every six months of the fiscal year. The board of directors shall prepare a proposal for profit distribution and submit it to the audit committee for inspection, after which it is submitted to the board of directors for approval.

Under the dividend policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders.

For the policies on the distribution of employees’ compensation and remuneration of directors and supervisors after the amendment, refer to employees’ compensation and remuneration of directors and supervisors in Note 25-g.

The Company’s Articles also stipulate a dividend policy whereby the total cash dividends distributed should not be lower than 10% of the total shareholders’ bonuses.

Appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The special reserve is appropriated from the prior unappropriated earnings.

The appropriations of earnings for 2020 and 2019 were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)	Appropriation of Earnings	Appropriation of Earnings	Appropriation of Earnings
	For the Year Ended		December 31
		2020 $ 46,276 $ 17,341 $ 437,135 $ 5.40	2019 $ 50,611 $ 39,840 $ 433,088 $ 5.35

The above appropriations for cash dividends were resolved by the Company’s board of directors on March 23, 2021 and March 24, 2020, respectively; the other proposed appropriations were resolved by the shareholders in their meetings on August 30, 2021 and June 12, 2020, respectively.

The offset of losses for 2021 is expected to be resolved by the shareholders in the shareholders’ meeting to be held on June 15, 2022.

• 38 -

d. Special reserve

Balance at January 1 Appropriation in respect of: Debit to other equity items Reversals: Reversal of the debits to other equity items Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2021 $ 114,928 17,341 - $ 132,269	2020 $ 75,088 39,840 - $ 114,928

24. REVENUE

Revenue from contracts with customers Revenue from the sale of goods	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,591,204	2020 $ 5,287,892

a. Contract information

For information about warranty liabilities on defective electronic equipment, refer to Notes 4 and 21.

b. Contract balances

Trade receivables (Note 9)		December 31	December 31
		2021 $ 2,214,612	2020 $ 2,738,563

25. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

• a. Interest income

Bank deposits Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 1,028 12 $ 1,040	2020 $ 4,047 182 $ 4,229

b. Other income

Rental income government grants Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 35,174 120 24,557 $ 59,851	2020 $ 30,092 21,056 14,829 $ 65,977

• 39 -

c. Other gains and losses

Net foreign losses Loss on valuation of financial liability	For the Year Ended	For the Year Ended	December 31
		2021 $ (78,598) - $ (78,598)	2020 $ (166,294) (120) $ (166,414)

d. Finance costs

Interest on bank loans Convertible bond interest Interest on lease liabilities Other finance costs e. Depreciation and amortization Property, plant and equipment Right-of-use assets Investment property An analysis of depreciation by function Operating costs Operating expenses	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2021 2020 $ 17,425 $ 16,813 14,197 14,029 118 138 61 70 $ 31,801 $ 31,050 For the Year Ended December 31
		2021 $ 28,428 8,440 9,938 $ 46,806 $ 6,413 40,393 $ 46,806	2020 $ 30,377 7,581 8,536 $ 46,494 $ 3,420 43,074 $ 46,494

• 40 -

f. Employee benefits expense

Post-employment benefits (Note 22) Defined contribution plans Defined benefit plans Short-term benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2021 $ 16,367 235 16,602 418,373 $ 434,975 $ 4,718 430,257 $ 434,975	2020 $ 15,205 270 15,475 463,378 $ 478,853 $ 3,555 475,298 $ 478,853

g. Employees’ compensation and remuneration of directors and supervisors

The Company accrued employees’ compensation and remuneration of directors and supervisors at rates of no less than 2% and no higher than 2%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors and supervisors. The employees’ compensation and remuneration of directors and supervisors for the year ended December 31, 2020, which has been approved by the Company’s board of directors on March 23, 2021, was as follows:

Accrual rate

Employees’ compensation Remuneration of directors and supervisors Amount Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31, 2020 10.65% 1.11% For the Year Ended December 31, 2020
	Cash $ 60,000 6,273

The Company incurred a net loss after tax in 2021; therefore, employees’ compensation and remuneration of directors and supervisors are not expected to be accrued.

If there is a change in the amounts after the annual financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.

• 41 -

The employees’ compensation and remuneration of directors and supervisors for the years ended December 31, 2020 and 2019 which have been approved by the Company’s board of directors on March 23, 2021 and March 24, 2020, respectively, were as follows:

Employees’ compensation Remuneration of directors and supervisors	**For the Year Ended December 31 **
	2020 2019 $ 60,000 $ 57,605 6,273 7,260

There was no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2020 and 2019.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2022 and 2021 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• h. Gains or losses on foreign currency exchange

Foreign exchange gains Foreign exchange losses	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 45,510 (124,108) $ (78,598)	2020 $ 38,966 (205,260) $ (166,294)

26. INCOME TAXES RELATING TO CONTINUING OPERATIONS

• a. Major components of tax expense recognized in profit or loss

Current tax In respect of the current year Adjustments for prior years Deferred tax In respect of the current year Adjustments for prior years Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ - (543) (543) (44,489) - $ (45,032)	2020 $ 21,007 (12,666) 8,341 26,007 2 $ 34,350

• 42 -

A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Permanent differences Unrecognized deductible temporary differences Adjustments for prior years’ tax Adjustments for prior years’ deferred tax Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2021 $ (116,723) $ (23,345) 3,699 (24,843) (543) - $ (45,032)	2020 $ 497,030 $ 99,406 (219) (52,173) (12,666) 2 $ 34,350

Affected by the global outbreak of the COVID-19, the Company applied for and received approval from the local tax authorities to pay income tax in installments in accordance with Article 26 of the Tax Collection Act and Rule No. 10904533690 issued by the Ministry of Finance of Taiwan (MOF), of which the profit-seeking enterprise income tax more than 12 months after the balance sheet date shall be recognized as non-current income tax liabilities in the current year.

• b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current period Remeasurement of defined benefit plans Total income tax recognized in other comprehensive income Current tax assets and liabilities Current tax assets Tax refund receivable Current tax liabilities Income tax payable - current Income tax payable - non-current	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 116 $ 116 December	2020 $ 41 $ 41 31
		2021 $ 40 $ 62,891 $ 16,706	2020 $ - $ 79,400 $ 34,379

• c. Current tax assets and liabilities

• 43 -

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2021

Deferred tax assets Temporary differences Unrealized profit from subsidiaries Defined benefit obligation Unrealized loss on write-down of inventories Unrealized exchange loss Loss on valuation of financial asset Bonds payable discount amortization Expenses Loss deduction Deferred tax liabilities Temporary differences Issuance cost of the equity for issuance bonds	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 60,586 $ (14,681) $ - 2,611 - 116 20,914 3,275 - 15,041 (7,391) - 24 - - 2,575 2,606 - 15,600 (15,600) - - 76,295 - $ 117,351 $ 44,504 $ 116 $ (16) $ (15) $ -	Closing Balance $ 45,905 2,727 24,189 7,650 24 5,181 - 76,295 $ 161,971 $ (31)

• 44 -

For the year ended December 31, 2020

Deferred tax assets Temporary differences Unrealized profit from subsidiaries Defined benefit obligation Unrealized loss on write-down of inventories Unrealized exchange loss Loss on valuation of financial asset Bonds payable discount amortization Expenses Deferred tax liabilities Temporary differences Issuance cost of the equity for issuance bonds	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 96,701 $ (36,115) $ - 2,570 - 41 15,456 5,458 - 12,976 2,065 - - 24 - - 2,575 - 15,600 - - $ 143,303 $ (25,993) $ 41 $ - $ (16) $ -	Closing Balance $ 60,586 2,611 20,914 15,041 24 2,575 15,600 $ 117,351 $ (16)

• e. Information on unused loss carryforwards

Loss carryforwards as of December 31, 2021 comprised:

Unused Amount	Expiry Year
$ 381,482	2031

• f. The aggregate amount of temporary differences associated with investments for which deferred tax liabilities have not been recognized

No deferred tax liabilities were recognized as the share of profit associated with investments in subsidiaries was not distributed.

• g. Income tax assessments

The Company’s tax returns through 2019 have been assessed by the tax authorities.

• 45 -

27. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic (loss) earnings per share Diluted loss earnings per share	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ (0.89) $ (0.89)	2020 $ 5.72 $ 5.19

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share were as follows:

Net (Loss) Profit for the Year

(Loss) earnings used in the computation of basic (loss) earnings per share Effect of potentially dilutive ordinary shares Interest on convertible bonds (Loss) earnings used in the computation of diluted (loss) earnings per share Weighted Average Number of Ordinary Shares Outstanding Weighted average number of ordinary shares used in the computation of basic (loss) earnings per share Effect of potentially dilutive ordinary shares: Convertible bonds Employees’ bonuses issued in the form of shares Weighted average number of ordinary shares used in the computation of diluted (loss) earnings per share	**For the Year Ended **	**For the Year Ended **	**December 31 **
	2021 2020 $ (71,691) $ 462,681 - 11,344 $ (71,691) $ 474,025 Unit: In Thousands of Shares **For the Year Ended December 31 **
		2021 80,951 - - 80,951	2020 80,951 9,443 866 91,260

Since the Company offered to settle compensation or bonuses paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

• 46 -

28. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Company’s overall strategy remains unchanged.

The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and other equity).

The Company is not subject to any externally imposed capital requirements.

29. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments not measured at fair value

Management believes the carrying amounts of financial assets and financial liabilities recognized in the financial statements which are not measured at fair value approximate their fair values.

• b. Fair value of financial instruments measured at fair value

• 1) Fair value hierarchy

December 31, 2021 Financial assets at FVTPL Redemption right of convertible corporate bonds December 31, 2020 Financial assets at FVTPL Redemption right of convertible corporate bonds	Level 1 $ - Level 1 $ -	Level 2 $ 120 Level 2 $ 120	Level 3 $ - Level 3 $ -	Total $ 120 Total $ 120

There were no transfers between Levels 1 and 2 in the current and prior years.

• 2) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instrument

Valuation Technique and Inputs

Redemption right of	Binary tree convertible bond evaluation model: According to the
convertible corporate bonds	evaluation date, stock price, stock price volatility, risk-free
	interest rate equivalent to the duration of the convertible bond,
	risk discount rate considering credit risk discount and
	liquidity reduction factor.

• 47 -

• c. Categories of financial instruments

Financial assets Financial assets at amortized cost (1) Financial assets at FVTPL Financial liabilities Amortized cost (2)	December 31
	2021 2020 $ 3,233,976 $ 4,243,511 120 120 5,310,722 4,823,304

• 1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable and trade receivables, other receivables, financial assets at amortized cost, and other financial assets.

• 2) The balances include financial liabilities measured at amortized cost, which comprise short-term borrowings, notes and trade payables, other payables, long-term loans, guarantee deposits received and lease liabilities.

• d. Financial risk management objectives and policies

The Company’s major financial instruments included trade receivables, trade payables and borrowings. The Company’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Company through internal risk reports that analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The Company sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Company’s policies approved by the board of directors, which provided written principles on foreign currency risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis. The Company did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There has been no change to the Company’s exposure to market risk or the manner in which these risks were managed and measured.

• a) Foreign currency risk

The Company had foreign currency sales and purchases, which exposed the Company to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts.

The Company uses foreign exchange forward contracts to reduce foreign currency risk. It is the Company’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximize hedge effectiveness.

• 48 -

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities are set out in Note 34.

Sensitivity analysis

The Company is mainly exposed to the U.S. dollar and the Chinese Yuan.

The following table details the Company’s sensitivity to a 5% increase and decrease in the New Taiwan dollar (the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 5%. A positive (negative) number indicates an increase (decrease) in pre-tax profit associated with the New Taiwan dollar weakening (strengthening) 5% against the relevant foreign currencies. Conversely, there would be an equal and opposite impact on pre-tax profit for a 5% strengthening (weakening) of the New Taiwan dollar against the relevant foreign currencies.

Profit or loss	USD Impact For the Year Ended December 31 2021 2020 $ 60,118 (i) $ 153,924 (i)	CNY Impact
		**For the Year Ended December 31 **
		2021 2020 $ (30,729) (ii) $ (33,158) (ii)

• i. This was mainly attributable to the exposure on outstanding USD bank deposits, and receivables and payables which were not hedged at the end of the reporting period.

• ii. This was mainly attributable to the exposure on outstanding CNY bank deposits and payables which were not hedged at the end of the reporting period.

• b) Interest rate risk

The Company was exposed to interest rate risk because the Company borrowed funds at both fixed and floating interest rates. The risk is managed by the Company based on the management’s knowledge and insight obtained from the financial markets to maintain an appropriate mix of fixed and floating rate borrowings.

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Cash flow interest rate risk Fair value interest rate risk	December 31
	2021 2020 $ 145,481 $ 207,830 2,190,000 1,898,000

The Company was also exposed to cash flow interest rate risk in relation to variable-rate bank borrowings.

Sensitivity analysis

The sensitivity analysis below was based on the Company’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 100 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

• 49 -

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2021 and 2020 would decrease/increase by $1,455 thousand and $2,078 thousand, respectively.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk (without consideration of the collaterals held as security or other credit enhancements, and irrevocable maximum exposure amounts), which would cause a financial loss to the Company due to the failure of the counterparty to discharge its obligation and due to the financial guarantees provided by the Company, could be equal to the total of the following:

• a) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and

• b) The maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised.

In order to minimize credit risk, the management of the Company has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for irrecoverable amounts.

The counterparties of trade receivables cover a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of the counterparties of the trade receivables and credit insurance will be purchased if necessary.

The Company’s credit risk was mainly concentrated on their two largest customers, Customers A and B. As of December 31, 2021 and 2020, the proportion of total trade receivables - non-related parties from Customer A was 18% and 26%, respectively; while the proportion of total trade receivables - non-related parties from Customer B was 9% and 22%, respectively.

• 3) Liquidity risk

The Company manages liquidity risk by maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

• a) Liquidity and interest rate risk table for non-derivative financial liabilities

The following tables detail the Company’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are at floating rates, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

• 50 -

December 31, 2021

b)	Less than 1 Year Non-derivative financial liabilities Non-interest bearing liabilities $ 1,752,183 Lease liabilities 8,824 Payable bonds - Variable interest rate liabilities - Fixed interest rate liabilities 2,190,000 $ 3,951,007 December 31, 2020 Less than 1 Year Non-derivative financial liabilities Non-interest bearing liabilities $ 1,505,415 Lease liabilities 8,168 Payable bonds - Variable interest rate liabilities - Fixed interest rate liabilities 1,898,000 $ 3,411,583 Financing facilities Unsecured bank loan facilities Amount used Amount unused Secured bank loan facilities Amount used Amount unused	1-2 Years $ 2,344 6,084 1,203,723 105,481 - $ 1,317,632 1-2 Years $ 732 7,441 - 167,830 - $ 176,003	2-5 Years More than 5 Years Total $ 2,083 $ - $ 1,756,610 - - 14,908 - - 1,203,723 40,000 - 145,481 - - 2,190,000 $ 42,083 $ - $ 5,310,722 2-5 Years More than 5 Years Total $ 5,974 $ - $ 1,512,121 218 - 15,827 1,189,526 - 1,189,526 40,000 - 207,830 - - 1,898,000 $ 1,235,718 $ - $ 4,823,304 December 31 2021 2020 $ 1,290,000 $ 1,148,000 3,280,568 3,640,648 $ 4,570,568 $ 4,788,648 $ 1,045,481 $ 957,830 763,519 851,170 $ 1,809,000 $ 1,809,000	2-5 Years More than 5 Years Total $ 2,083 $ - $ 1,756,610 - - 14,908 - - 1,203,723 40,000 - 145,481 - - 2,190,000 $ 42,083 $ - $ 5,310,722 2-5 Years More than 5 Years Total $ 5,974 $ - $ 1,512,121 218 - 15,827 1,189,526 - 1,189,526 40,000 - 207,830 - - 1,898,000 $ 1,235,718 $ - $ 4,823,304 December 31 2021 2020 $ 1,290,000 $ 1,148,000 3,280,568 3,640,648 $ 4,570,568 $ 4,788,648 $ 1,045,481 $ 957,830 763,519 851,170 $ 1,809,000 $ 1,809,000	2-5 Years More than 5 Years Total $ 2,083 $ - $ 1,756,610 - - 14,908 - - 1,203,723 40,000 - 145,481 - - 2,190,000 $ 42,083 $ - $ 5,310,722 2-5 Years More than 5 Years Total $ 5,974 $ - $ 1,512,121 218 - 15,827 1,189,526 - 1,189,526 40,000 - 207,830 - - 1,898,000 $ 1,235,718 $ - $ 4,823,304 December 31 2021 2020 $ 1,290,000 $ 1,148,000 3,280,568 3,640,648 $ 4,570,568 $ 4,788,648 $ 1,045,481 $ 957,830 763,519 851,170 $ 1,809,000 $ 1,809,000	More than 5 Years Total $ - $ 1,756,610 - 14,908 - 1,203,723 - 145,481 - 2,190,000 $ - $ 5,310,722 More than 5 Years Total $ - $ 1,512,121 - 15,827 - 1,189,526 - 207,830 - 1,898,000 $ - $ 4,823,304 December 31	More than 5 Years Total $ - $ 1,756,610 - 14,908 - 1,203,723 - 145,481 - 2,190,000 $ - $ 5,310,722 More than 5 Years Total $ - $ 1,512,121 - 15,827 - 1,189,526 - 207,830 - 1,898,000 $ - $ 4,823,304 December 31
					2021 $ 1,290,000 3,280,568 $ 4,570,568 $ 1,045,481 763,519 $ 1,809,000		2020 $ 1,148,000 3,640,648 $ 4,788,648 $ 957,830 851,170 $ 1,809,000

• 51 -

30. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Company and other related parties are disclosed below.

• a. Related party name and category

Related Party Name Related Party Category

Cyber Power Systems (USA), Inc. Subsidiary Cyber Power Systems B.V. Subsidiary Nitram SAS Subsidiary Cyber Power Systems GmbH Subsidiary Cyber Power Systems S.A. DE C.V. Subsidiary Cyber Power Systems (INDIA) PVT, Ltd. Subsidiary Cyber Power Systems K. K. Subsidiary Cyber Power Technology (Shenzhen) Inc. Subsidiary Cyber Power Systems (HK) Limited Subsidiary Cyber Power (Shenzhen), Inc. Subsidiary Cyber Power Systems Manufacturing, Inc. Subsidiary CliqueFie Co., Ltd. Subsidiary Phisonic Technology Corporation Subsidiary Broad Win International Investment Co., Ltd Subsidiary Best Top (Shenzhen), Inc. Substantive related party Cyber Energy Co., Ltd. Substantive related party

• b. Sales of goods

Line Items Related Party Category/Name Sales Subsidiary/Cyber Power Systems (USA), Inc. Subsidiary/others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 2,724,853 839,742 $ 3,564,595	2020 $ 2,950,525 561,442 $ 3,511,967

The Company’s pricing strategy for the sale of goods to related parties varies according to their scope of the market and competitiveness. The period of collection of trade receivables from the related parties is 90-180 days. The situation of the use of funds by associates is also taken into consideration when deciding the collection period of receivables from associates, while the collection period for third parties is 30-120 days.

• c. Purchases of goods

Related Party Category/Name Subsidiary/Cyber Power Systems (HK) Limited Subsidiary/others Substantive related parties/others	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 831,054 16,236 8,012 $ 855,302	2020 $ 609,556 11,083 11,173 $ 631,812

Subsidiary: Prices are determined through negotiations after referring to the market prices, and the payment term is 60 days.

• 52 -

Substantive related party: Prices are determined through negotiations after referring to the market prices. Prepayment of the current estimated merchandise cost is made at the beginning of each month, and then the amount is offset against the actual processing cost at the end of each month.

• d. Operating costs

Line Item Related Party Category/Name Processing cost Subsidiary/Cyber Power (Shenzhen), Inc. Subsidiary/Cyber Power Systems Manufacturing, Inc. Subsidiary/others Substantive related party/Best Top (Shenzhen), Inc.	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 761,620 71,595 24,243 - $ 857,458	2020 $ 727,112 55,711 29,202 5,767 $ 817,792

Subsidiary: Managed by the cost-plus method, and the estimated processing cost is prepaid at the beginning of each month, and offset against the actual processing cost at the end of month.

Substantive related party: After referencing the market price, the Company will follow the contract specifications set by both parties, and prepay the current estimated processing amount at the beginning of each month, and then offset against the actual processing cost at the end of month.

• e. Other operating costs

Line Item Related Party Category/Name Inventory processing Subsidiary/Cyber Power (Shenzhen), Inc. cost Substantive related party/others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 23,458 2,142 $ 25,600	2020 $ 23,636 1,810 $ 25,446

The price is set according to the contract. The Company prepays the estimated amount at the beginning of every month, and then offset against the actual processing cost at the end of every month.

• f. Operating expenses

Line Item Related Party Category/Name Commission expense Subsidiary/CliqueFie Co., Ltd.	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,049	2020 $ 7,385

The price is set in accordance with the contract specifications set by both parties, and the actual amount payable will be offset at the end of the month.

• 53 -

• g. Other income

Related Party Category/Name Subsidiary/Cyber Power Systems B.V. Subsidiary/others Substantive related party/Cyber Energy Co., Ltd.	For the Year Ended	For the Year Ended	December 31
		2021 $ 14,638 613 5,829 $ 21,080	2020 $ 8,035 792 5,658 $ 14,485

• h. Receivables from related parties (excluding loans to related parties)

Line Item Related Party Category/Name Trade receivables Subsidiary/Cyber Power Systems (USA), Inc. Subsidiary/others Substantive related party/others		**December 31 **	**December 31 **
		2021 $ 1,432,033 231,503 6 $ 1,663,542	2020 $ 2,147,099 114,492 475 $ 2,262,066

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2021 and 2020, no impairment loss was recognized on trade receivables from related parties.

December 31 Line Item Related Party Category/Name 2021 2020 Other receivables Substantive related party/others $ 1,713 $ 555 Payables to related parties (excluding borrowings from related parties) December 31 Line Item Related Party Category/Name 2021 2020 Trade payables Subsidiary/Cyber Power (Shenzhen), Inc. $ 501,294 $ 454,881 Subsidiary/Cyber Power Systems (HK) Limited 287,224 212,153 Subsidiary/others 1,044 4,080 Substantive related party/others - - $ 789,562 $ 671,114		December 31	December 31
		2021 $ 501,294 287,224 1,044 - $ 789,562	2020 $ 454,881 212,153 4,080 - $ 671,114

• i. Payables to related parties (excluding borrowings from related parties)

The outstanding trade payables to related parties are unsecured.

j. Prepayments Related Party Category/Name Subsidiary/Cyber Power Systems Manufacturing, Inc. Subsidiary/Phisonic Technology Corporation	For the Year Ended	For the Year Ended	December 31
		2021 $ - 3,136 $ 3,136	2020 $ 1,072 - $ 1,072

• 54 -

k. Loans to related parties

Related Party Category/Name Other receivables (including principal and interest) Subsidiary/Cyber Power Systems (INDIA) PVT. Ltd. Subsidiary/CyberPower Systems GmbH Subsidiary/Cyber Power Systems S.A. DE C.V. Related Party Category/Name Interest revenue Subsidiary/Cyber Power Systems (INDIA) PVT. Ltd. Subsidiary/CyberPower Systems GmbH Subsidiary/Cyber Power Systems S.A. DE C.V.		December 31	December 31
	2021 $ 16,201 23,490 8,147 $ 47,838 For the Year Ended		2020 $ 8,095 26,265 56,355 $ 90,715 December 31
		2021 $ - - - $ -	2020 $ 9 87 72 $ 168

For the years ended December 31, 2021 and 2020, the Company provided financing to CyberPower Systems GmbH at interest rates of 0%.

The Company reclassified trade receivables aged over 90 days and with normal credit terms from Cyber Power Systems S.A. DE C.V. and Cyber Power Systems (India) Pvt. Ltd. to other receivables, and imputed interest based on the interest rate of 0%.

• l. Acquisition of additional interest in related parties

In May 2020, the Company acquired newly issued shares of Broad Win International Investment Co., Ltd. for $73,836 thousand, and the ownership percentage remained at 100%.

• m. Endorsements and guarantees

Endorsements and guarantees provided by the Company

Related Party Category/Name Subsidiary n. Remuneration of key management personnel Short-term employee benefits	December 31	December 31	December 31
	2021 2020 US$ 14,900 US$ 14,900 EUR 150 EUR 150 For the Year Ended December 31
		2021 $ 24,212	2020 $ 24,604

The remuneration of directors and key executives was determined by the remuneration committee based on the performance of individuals and market trends.

• 55 -

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

Property, plant and equipment and investment properties		December 31	December 31
		2021 $ 2,269,333	2020 $ 2,234,661

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

• a. The Group’s customer, Arris Group, Inc. (“Arris Group”), has sued Cyber Power Systems (USA), Inc. and the Company for violating the contract, claiming that the product’s specifications failed to meet the requirements and the warranty obligations were not fulfilled. After careful evaluation, it was found that both the use and design of components of the products produced by the Company met the product specifications as set by the customer, and Arris Group’s consent was obtained before production. In addition, since the installation and operating environment was unpredictable, the wear and tear of the internal components should be the normal life cycle of the components. Furthermore, to date Arris Group was unable to prove that there were abnormalities in the functionality or performance of the Group’s products within the warranty period. The Group would then propose the following arguments to the court:

• 1) The litigation that implicates Cyber Power Systems (USA), Inc. should be dismissed due to no cause of action.

• 2) Since the Company did not sign any contract with the plaintiff and did not lead nor directly carry out business activities in the Illinois state, the court has no jurisdiction to rule on the prosecution towards the Company.

The case was won by Arris Group as ruled by the court of first instance of the Illinois District Court in the United States on August 14, 2019. After the management of the Group discussed with the lawyer appointed in this case, the case was determined to be a factual dispute. In accordance with the local laws and regulations of the United States and the past contract litigation and infringement litigation cases, the trial judge of the first instance in this case should send the ruling of this case to the jury for the determination of the facts of the litigation, rather than make a judgment on the case. On June 19, 2020, the Company and Cyber Power Systems (USA), Inc. reached an agreement with Arris Group on the amount of the appeal bond to be deposited, where Cyber Power Systems (USA), Inc. had to deposit $18,157 thousand (recognized as other financial assets - non-current) in the designated bank account for the appeal bond, with Arris Group as the beneficiary.

On November 13, 2021, the court of first instance of the Illinois District Court in the United States ruled that Cyber Power Systems (USA), Inc. should compensate Arris Group according to the first-instance judgment, but the Court of Appeal found that there was a de facto dispute between the Company as a co-defendant, and annulled part of the judgment of the Court of First Instance against the Company, and remanded it to the Court of First Instance for retrial.

The case was finally settled on December 21, 2021; the Group and CommScope, Inc. (Note) reached a settlement, through the completion of signing a global settlement agreement with confidentiality obligations between the three parties, in addition to retaining possible business cooperation opportunities in the future. After the Company and Cyber Power Systems (USA) paid a settlement amount of confidentiality to CommScope, Inc., the three parties withdrew the lawsuit against each other. The Company and Cyber Power Systems (USA), Inc. had completed all transactions and accounting operations related to the settlement agreement on December 27, 2021, and received a formal appeal court order from the three trial appellate judges in this case on January 18, 2022, indicating that they had received a motion from the parties in this case to notify the court of the settlement and requested the issuance of an authorization order. The order would authorize the trial court to formally dismiss the case.

• 56 -

• Note: CommScope, Inc. entered into an acquisition agreement with Arris Group, Inc. on November 8, 2018, which was completed on April 4, 2019.

• b. The Company issued checks as guarantees for loan commitments; the amounts as of December 31, 2021 and 2020 were as follows:

Financial guarantees to banks USD NTD		December 31	December 31
		2021 $ 24,300 $ 4,614,000	2020 $ 24,300 $ 4,114,000

33. OTHER ITEMS

Due to the impact of the COVID-19 pandemic, some of the Company’s customer orders were cancelled or postponed since the end of the first quarter of 2020. However, increased temperature screenings, mandatory quarantines of infected people, and stringent border controls imposed by governments both locally and worldwide, as well as the workplace adjustments made by companies in response to the pandemic have changed people’s consumption habits; therefore, the pandemic did not have a significant impact on the Company’s overall financial position and market demand. The Group’s consolidated revenue for the whole year of 2021 had slightly increased compared with the year of 2020.

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Company’s significant financial assets and liabilities denominated in foreign currencies (aggregated by the foreign currencies) other than functional currencies and the related exchange rates between the foreign currencies and the respective functional currencies were as follows:

December 31, 2021

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	77,682	27.68	$ 2,150,239
EUR		3,196	31.32	100,091
CNY		32	4.344	142
Non-monetary items
Investments accounted for using the equity
method
USD		11,460	27.68	317,226
EUR		10,123	31.32	317,054
CNY		222,020	4.344	964,456
PHP		39,600	0.5353	21,198
Financial liabilities
Monetary items
USD		34,244	27.68	947,868
HKD		25,796	3.549	91,550
CNY		141,512	4.344	614,728

• 57 -

December 31, 2020

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	138,592	28.48	$ 3,947,109
EUR		3,375	35.02	118,181
CNY		1,954	4.377	8,555
Non-monetary items
Investments accounted for using the equity
method
USD		12,712	28.48	362,039
EUR		7,236	35.02	253,408
CNY		191,982	4.377	840,308
PHP		34,040	0.5861	19,951
Financial liabilities
Monetary items
USD		30,499	28.48	868,622
HKD		25,430	3.673	93,404
CNY		153,466	4.377	671,723

For the years ended December 31, 2021 and 2020, realized and unrealized net foreign exchange losses were $(78,598) thousand and $(166,294) thousand, respectively. It is impractical to disclose net foreign exchange losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies.

35. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees:

• 1) Financing provided to others: Table 1 (attached)

• 2) Endorsements/guarantees provided: Table 2 (attached)

• 3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): None

• 4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None

• 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None

• 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 3 (attached)

• 58 -

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4 (attached)

• 9) Trading in derivative instruments: None

• 10) Information on investees: Tables 5 to 7 (attached)

• b. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 8 (attached)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: Table 9 (attached)

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

  • c) The amount of property transactions and the amount of the resultant gains or losses.

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.

  • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to the financing of funds.

  • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

• c. Information of major shareholders:

List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder: Table 10 (attached).

• 59 -

TABLE 1

CYBER POWER SYSTEMS, INC.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limit	Note
													Item	Value
0	Cyber Power Systems, Inc.	CyberPower Systems GmbH Cyber Power Systems (INDIA) PVT, Ltd. Cyber Power Systems S.A. DE C.V. Cyber Power Systems (USA), Inc.	Other receivables from related parties Other receivables from related parties Other receivables from related parties Other receivables from related parties	Yes Yes Yes Yes	$ 52,530 17,106 56,355 68,660	$ 46,980 (Note E) 16,201 8,147 -	$ 23,490 16,201 8,147 -	- - - -	Short-term financing Business relationship Business relationship Business relationship	$ - Sales 19,458 Sales 139,783 Sales 2,950,525	Operating capital - - -	$ - - - -	- - - -	$ - - - -	Note B Note A Note A Note A	Note D Note C Note C Note C

Note A: The limit is the business transaction amount for the previous year.

The business transaction amount for Cyber Power Systems (INDIA) PVT, Ltd. for the previous year comprises Sales of $19,458 thousand. The business transaction amount for Cyber Power Systems S.A. DE C.V. for the previous year comprises Sales of $139,783 thousand. The business transaction amount for Cyber Power Systems (USA), Inc. for the previous year comprises Sales of $2,950,525 thousand.

Note B: Financing limit for each borrower is 10% of the net value of the financing company = $3,992,273 x 10% = $399,227.

Note C: Aggregate financing limits is 20% of the net value of the financing company = $3,992,273 x 20% = $798,455.

Note D: Aggregate financing limits is 40% of the net value of the financing company = $3,992,273 x 40% = $1,596,909.

Note E: The highest financing limit to the entity resolved in the board of directors’ meeting which is still effective.

• 60 -

TABLE 2

CYBER POWER SYSTEMS, INC.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, In Thousands of Foreign Currencies)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	Note
		Name	Relationship
0	Cyber Power Systems, Inc.	Cyber Power Systems (USA), Inc. CyberPower Systems GmbH	A company in which the Company directly holds 100 percent of the voting shares A company in which the Company directly holds 100 percent of the voting shares	The limit is 30% of the net value of the financing company based on the latest audited financial statements. The limit is 30% of the net value of the financing company based on the latest audited financial statements.	$ 410,904 (US$ 14,400) 19,493 (US$ 500 and Euro 150)	$ 398,592 (US$ 14,400) Note B 18,538 (US$ 500 and Euro 150) Note B	$ - -	$ - -	9.98 0.46	Note A Note A	Y Y	N N	N N

Note A: Aggregate endorsement/guarantee limit is 50% of the net value of the financing company = $3,992,273 x 50% = $1,996,137.

Note B: The calculation of the maximum amount endorsed/guaranteed during the period and outstanding endorsement/guarantee at the end of the period was based on the average buy/sell closing exchange rate for the year ended December 31, 2021.

• 61 -

TABLE 3

CYBER POWER SYSTEMS, INC.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Related Party	Relationship	Transaction Details	Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/Sale	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
Cyber Power Systems, Inc.	Cyber Power Systems (USA), Inc. Cyber Power System S.A.DE C.V. Cyber Power Systems B.V. Nitram SAS Cyber Power Systems (HK) Limited Cyber Power (Shenzhen), Inc.	Subsidiary Second-tier subsidiary Third-tier subsidiary Third-tier subsidiary Third-tier subsidiary Third-tier subsidiary	Sale Sale Sale Sale Purchase Processing cost	$ (2,724,853) (237,565) (219,549) (188,712) 831,054 761,620	(49) (4) (4) (3) 24 82	Note Note Note Note Note Note	Note Note Note Note Note Note	Note Note Note Note Note Note	Accounts receivable $ 1,432,033 Accounts receivable 114,178 Other receivable 8,147 Accounts receivable 15,373 Accounts receivable 59,087 Accounts payable (287,224) Accounts payable processing cost (501,294)	65 5 16 1 3 (20) (35)

Note: Terms of the transactions are as follows:

1. Purchases

Cyber Power Systems (HK) Limited

Cyber Power Systems (HK) Limited: After referring to market practices, the payment term is 60 days.

1. Processing cost

Cyber Power (Shenzhen), Inc.

Managed by the cost-plus method. The estimated processing cost is prepaid at the beginning of each month, and offset against the actual processing cost at the end of month.

1. Sales

Cyber Power Systems (USA), Inc.

Cyber Power Systems B.V.

Nitram SAS

Cyber Power System S.A.DE C.V.

The Company’s pricing strategy for the sale of goods to related parties varies according to their scope of the market and competitiveness. The period of collection of trade receivables from related parties is 120 to 180 days. The situation of the use of funds by associates is also taken into consideration when deciding the collection period of receivables from associates, while the collection period for third parties is 30 to 120 days.

• 62 -

TABLE 4

CYBER POWER SYSTEMS, INC.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Cyber Power Systems, Inc.	Cyber Power Systems (USA), Inc. Cyber Power Systems S.A. DE C.V	Subsidiary Subsidiary	Accounts receivable $ 1,432,033 Accounts receivable 114,178 Other accounts receivable 8,147	1.52 2.36 (Note) -	$ - - -	- - -	$ 487,983 24,704 -	$ - - -

Note: Turnover rate include other accounts receivable.

• 63 -

TABLE 5

CYBER POWER SYSTEMS, INC.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of	December 31, 2021	December 31, 2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2021	December 31, 2020	Number of Shares	%	Carrying Amount
Cyber Power Systems, Inc. Cliquefie Co., Ltd. Broad Win International Investment Co., Ltd. Join Master Co., Ltd. Shining Pearl Co., Ltd. Fast Wind International Limited Global Way Co., Ltd. Full Star Co., Ltd. Grown Tech Co., Ltd. Global Win Co., Ltd.	Broad Win International Investment Co., Ltd. Cyber Power Systems (USA), Inc. Fast Wind International Limited Cliquefie Co., Ltd. Cyber Power Systems Manufacturing, Inc. Phisonic Technology Corporation Planet Technology Limited Join Master Co., Ltd. Portal Star Co., Ltd. Cyber Power Systems (HK) Limited Shining Pearl Co., Ltd. Cyber Power Systems K.K. Cyber Power Systems (INDIA) PVT, Ltd. Global Way Co., Ltd. Full Star Co., Ltd. Grown Tech Co., Ltd. Global Win Co., Ltd. Cyber Power Systems B.V. Nitram SAS CyberPower Systems GmbH Cyber Power Systems S.A. DE C.V.	Samoa. U.S.A. Mauritius Taiwan Philippines Philippines Samoa. British Virgin Islands Mauritius Hong Kong Mauritius Japan India Mauritius Mauritius Mauritius Belize City Netherlands France Germany Mexico	Investment Selling of uninterruptible power systems Investment Selling of electronic products Production of uninterruptible power systems Production of uninterruptible power systems Investment Investment Investment Selling of uninterruptible power systems Investment Selling of uninterruptible power systems Selling of uninterruptible power systems Investment Investment Investment Investment Selling of uninterruptible power systems Selling of uninterruptible power systems Selling of uninterruptible power systems Selling of uninterruptible power systems	$ 687,712 412,870 165,900 17,600 9,181 6,224 24,638 13,235 222,040 373 427,426 13,235 427,426 20,674 80,747 1,058 63,421 20,674 80,747 1,058 63,421	$ 687,712 412,870 165,900 17,600 9,181 6,224 24,638 13,235 222,040 373 427,426 13,235 427,426 20,674 80,747 1,058 63,421 20,674 80,747 1,058 63,421	22,495,329 13,000,000 4,438,245 1,760,000 15,600 10,000 1,000,000 3,944 7,338,000 100,000 14,000,000 3,800 91,665,685 430,000 1,870,400 25,000 1,700,831 7,000 1,819 1 1,700,831	100.0 100.0 100.0 96.7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0	$ 964,456 317,226 317,054 5,961 21,198 2,855 492,708 34,856 307,957 115,303 22,079 34,856 22,079 116,817 146,740 18,045 89,232 116,817 146,740 18,045 89,232	$ 134,976 (98,074) 105,297 (10,773) 3,122 (9,321) 58,738 4,650 64,790 21,709 (14,911) 4,650 (14,911) 37,862 23,259 16,834 27,342 37,862 23,259 16,834 27,342	$ 134,976 (98,074) 105,297 (10,417) 3,122	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Third-tier subsidiary Third-tier subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Second-tier subsidiary Third-tier subsidiary Third-tier subsidiary Third-tier subsidiary Third-tier subsidiary

• 64 -

TABLE 6

CYBER POWER SYSTEMS, INC.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Related Party	Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)		Note
			Purchase/Sale	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
Cyber Power Systems (USA), Inc. Cyber Power Systems B.V. Cyber Power Systems S.A. DE. C.V. Nitram SAS Cyber Power Systems (HK) Limited Cyber Power (Shenzhen), Inc. Ning Yuan Xian Cyber Power, Inc. Dongguan Cyber Energy Co., Ltd. Ning Yuan Xian Cyber Power, Inc. Best Top (Shenzhen), Inc. Cyber Power Systems (HK) Limited Cyber Energy Co., Ltd.	Cyber Power Systems, Inc. Cyber Power Systems, Inc. Cyber Power Systems, Inc. Cyber Power Systems, Inc. Cyber Power Systems, Inc. Cyber Power Systems, Inc. Ning Yuan Xian Cyber Power, Inc. Best Top (Shenzhen), Inc. Cyber Power Systems (HK) Limited Cyber Power Systems (HK) Limited Cyber Energy Co., Ltd. Cyber Power (Shenzhen), Inc. Cyber Power (Shenzhen), Inc. Ning Yuan Xian Cyber Power, Inc. Dongguan Cyber Energy Co., Ltd. Dongguan Cyber Energy Co., Ltd.	The parent company that directly holds 100% of the voting shares The parent company that directly holds 100% of the voting shares The parent company that directly holds 100% of the voting shares The parent company that directly holds 100% of the voting shares Investments accounted for using the equity method The parent company that directly holds 100% of the voting shares The same parent company Substantive related party The same parent company The same parent company Substantive related party The same parent company Substantive related party The same parent company The same parent company Substantive related party	Purchase Purchase Purchase Purchase Sale Processing revenue Processing cost Processing cost Sale Sale Sale Processing revenue Processing revenue Purchase Purchase Purchase	$ 2,724,853 219,549 237,565 188,712 (831,054) (761,620) 152,649 114,093 (225,152) (584,176) (445,236) (152,649) (114,093) 225,152 584,176 445,236	97 99 99 100 (93) (97) 57 43 (59) (54) (41) (40) (88) 25 66 99	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note	Accounts payable $ (1,432,033) Accounts payable (15,373) Accounts payable (122,325) Accounts payable (59,087) Accounts receivable 287,224 Accounts receivable - processing revenue 501,294 Accounts payable - processing cost (3,300) Accounts payable - processing cost (21,271) Accounts payable (10,414) Accounts receivable 84,585 Accounts receivable 106,229 Accounts receivable 164,291 Accounts receivable - processing revenue 3,300 Accounts receivable - processing revenue 21,271 Accounts receivable 10,414 Accounts payable (84,585) Accounts payable (106,229) Accounts payable (164,291)	(100) (100) (100) (94) 90 100 (9) (61) (15) 89 36 56 3 67 33 (41) (52) (100)

Note A: Refer to Table 3.

Note B: Refer to Table 9.

• 65 -

TABLE 7

CYBER POWER SYSTEMS, INC.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Cyber Power (Shenzhen), Inc. Dongguan Cyber Energy Co., Ltd. Cyber Power Systems (HK) Limited Dongguan Cyber Energy Co., Ltd.	Cyber Power Systems, Inc. Cyber Energy Co., Ltd. Cyber Power Systems, Inc. Cyber Power Systems (HK) Limited	The parent company that directly holds 100% of the voting shares Substantive related party The parent company that directly holds 100% of the voting shares The same parent company	Accounts receivable - processing cost $ 501,294 Accounts receivable 164,291 Accounts receivable 287,224 Accounts receivable 106,229	1.43 1.41 3.33 3.62	$ - - - -	- - - -	$ 156,312 146,428 212,306 105,272	$ - - - -

• 66 -

TABLE 8

CYBER POWER SYSTEMS, INC.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, In Thousands of Foreign Currencies)

Investee Company	Main Businesses and Products	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investments from Taiwan as of December 31, 2021	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note E)	Carrying Amount as of December 31, 2021	Accumulated Repatriation of Investment Income as of December 31, 2021	Note
					Outflow	Inflow
Cyber Power (Shenzhen), Inc. Cyber Energy (Shenzhen), Inc. Ning Yuan Xian Cyber Power, Inc. Cyber Power Technology (Shenzhen), Inc. Dongguan Cyber Energy Co., Ltd.	Production of uninterruptible power systems Production of uninterruptible power systems Production of uninterruptible power systems Selling of uninterruptible power systems Production of uninterruptible power systems	$ 34,025 (US$ 1,000) 149,533 (US$ 5,000) 286,619 (RMB 62,000) 72,526 (US$ 2,338) 27,228 (RMB 6,000)	Note A Note B Note C Note D Note E	$ 24,638 (US$ 750) 150,716 (US$ 5,037) - - 71,324 (US$ 2,301) - -	$ - - - - -	$ - - - - -	$ 24,638 (US$ 750) 150,716 (US$ 5,037) - - 71,324 (US$ 2,301) - -	$ 58,738 66,499 (16,580) (1,709) 56,568	100 100 100 100 100	$ 58,738 66,499 18,080 (1,709) 56,568	$ 492,708 293,558 309,424 14,399 190,666	$ - - - - -

Note A: Parent company: Cyber Power Systems, Inc.; subsidiary: Broad Win International Investment Co., Ltd.; second-tier subsidiary: Planet Technology Limited; third-tier subsidiary: Cyber Power (Shenzhen), Inc.

Note B: Parent company: Cyber Power Systems, Inc.; subsidiary: Broad Win International Investment Co., Ltd.; second-tier subsidiary: Portal Star Co., Ltd.; third-tier subsidiary: Cyber Energy (Shenzhen), Inc.

Note C: The investment was made directly from Cyber Power (Shenzhen), Inc.

Note D: Parent company: Cyber Power Systems, Inc.; subsidiary: Broad Win International Investment Co., Ltd.; second-tier subsidiary: Portal Star Co., Ltd.; third-tier subsidiary: Cyber Power Technology (Shenzhen), Inc.

Note E: Dongguan Cyber Energy Co., Ltd. was established by Cyber Energy (Shenzhen), Inc. from its own fund.

Note F: Financial statements of these companies, which were audited by the accounting firm of the parent company.

Accumulated Outward Remittance for Investments in Mainland China as of December 31, 2021	Investment Amounts Authorized by the Investment Commission, MOEA	Upper Limit on the Amount of Investment Stipulated by the Investment Commission, MOEA
$ 246,678 (US$ 8,088)	$ 301,823 (US$ 10,088)	$ 2,395,364

• 67 -

TABLE 9

CYBER POWER SYSTEMS, INC.

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES

FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Relationship	Transaction Type	Amount		Transaction Details	Transaction Details	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Unrealized (Gain) Loss	Note
				Price	Payment Terms	Comparison with Normal Transactions	Ending Balance	%
Cyber Power Systems, Inc. and Cyber Power (Shenzhen), Inc. Cyber Power Systems, Inc. and Dongguan Cyber Energy Co., Ltd. Cyber Power Systems, Inc. and Ning Yuan Xian Cyber Power, Inc. The transactions between Cyber Power Systems (HK) Limited and Ning Yuan Xian Cyber Power, Inc. Cyber Power (Shenzhen), Inc. and Best Top (Shenzhen), Inc. The transactions between Cyber Power (Shenzhen), Inc. and Ning Yuan Xian Cyber Power, Inc. Dongguan Cyber Energy Co., Ltd. and Cyber Power Systems (HK) Limited	A subsidiary of the Company indirectly holding 100% of the voting shares A subsidiary of the Company indirectly holding 100% of the voting shares A subsidiary of the Company indirectly holding 100% of the voting shares The same parent company Substantive related party The same parent company The same parent company	Processing cost Inventory processing cost Purchases Purchases Sales Purchases Processing cost Processing cost Sales Purchases	$ 761,620 23,458 14,852 1,384 45,647 225,152 114,093 152,649 584,176 30,499	Note A Note A Note B Note A Note C Note C Note A Note A Note D Note D	Note A Note A Note B Note A Note C Note C Note A Note A Note D Note D	Note A Note A Note B Note A Note C Note C Note A Note A Note D Note D	Accounts payable - processing cost $ (501,294) Prepayments - Accounts payable - Accounts payable - Accounts receivable 21,357 Accounts payable (84,585) Accounts payable - processing cost (21,271) Accounts payable (10,414) Accounts payable (3,300) Accounts receivable 106,229 Accounts payable (9,718)	(35) - - - 7 (41) (61) (15) (9) 36 (4)	$ - - - - - (19,920) - - - - -
									(Continued)

• 68 -

Investee Company	Relationship	Transaction Type	Amount		Transaction Details	Transaction Details	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Unrealized (Gain) Loss	Note
				Price	Payment Terms	Comparison with Normal Transactions	Ending Balance	%
Dongguan Cyber Energy Co., Ltd. and Best Top (Shenzhen), Inc. Dongguan Cyber Energy Co., Ltd. and Cyber Power Technology (Shenzhen), Inc. Dongguan Cyber Energy Co., Ltd. and Cyber Energy Co., Ltd.	Substantive related party The same parent company Substantive related party	Purchases Sales Sales	$ 1,383 44,031 445,236	Note E Note F Note G	Note E Note F Note G	Note E Note F Note G	Accounts payable - Accounts receivable 12,929 Accounts receivable 164,291	- 4 56	$ - - -

Note A: Processing cost: Managed by the cost-plus method, and the estimated processing cost is prepaid at the beginning of each month, and offset against the actual processing cost at the end of month.

Inventory processing cost: According to the specifications set by both parties in the contract, the current estimated processing amount is prepaid at the beginning of each month, and then offset against the actual processing cost at the end of month.

• Note B: After referring to market price, according to the specifications set by both parties in the contract, and offset against the actual payables at the middle of each month.

• After referring to market price, and offset against the actual processing cost at the end of month.

• Note C: The payment term is 60 days, the collection term is 60 days, according to the specifications set by both parties. For sales, the current estimated accounts are pre-collected at the beginning of each month, and the actual payment will be offset within 90 days of the monthly settlement.

• Note D: The payment term is 60 days, the collection term is 60 days, according to the specifications set by both parties. For sales, the current estimated accounts are pre-collected at the beginning of each month, and the actual payment will be offset within 60 days of the monthly settlement.

Note E: The collection term is 30 days, according to the specifications set by both parties in the contract.

Note F: The collection term is 60 days, according to the specifications set by both parties in the contract.

Note G: The payment term is 60 days, according to the specifications set by both parties.

Note H: Financing provided to an investee company in mainland China, either directly or indirectly through a third party: None.

(Concluded)

• 69 -

TABLE 10

CYBER POWER SYSTEMS, INC.

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
Hsien Yueh Investment Co., Ltd. Ning Yuan Investment Co., Ltd. Jie Cheng Investment Co., Ltd. Li Heng Investment Co., Ltd. Mao Fei Investment Co., Ltd. Chih Yuan Investment Ltd.	5,418,089 5,400,000 5,329,551 4,555,574 4,379,072 4,261,880	6.69 6.67 6.58 5.62 5.40 5.26

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• 70 -

CYBER POWER SYSTEMS, INC.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item Major Accounting Items in Assets, Liabilities and Equity Statement of cash and cash equivalents Statement of trade receivables from unrelated parties Statement of trade receivables from related parties Statement of other receivables from unrelated parties Statement of other receivables from related parties Statement of inventories Statement of other current assets Statement of changes in investments accounted for using the equity method Statement of changes in property, plant, and equipment Statement of changes in accumulated depreciation of property, plant and equipment Statement of changes in investment properties Statement of changes in accumulated depreciation of investment properties Statement of changes in other intangible assets Statement of deferred income tax assets Statement of other assets Statement of changes in right-of-use assets Statement of short-term borrowings Statement of bonds payable Statement of trade payables to unrelated parties Statement of trade payables to related parties Statement of other payables Statement of provisions - current Statement of other current liabilities Statement of long-term borrowings Statement of lease labilities Statement of deferred income tax liabilities Statement of other non-current liabilities Major Accounting Items in Profit or Loss Statement of operating revenue Statement of cost of goods sold Statement of manufacturing expenses Statement of operating expenses Statement of labor, depreciation and amortization by function

**Statement Index **

1 2 3 4 5 6 7 8 Note 12 Note 12 Note 14 Note 14 Note 15 Note 26 Note 16 9 10 Note 18 11 12 Note 20 Note 21 Note 20 13 14 Note 26 Note 20 15 16 17 18 19

• 71 -

STATEMENT 1

CYBER POWER SYSTEMS, INC.

STATEMENT OF CASH AND CASH EQUIVALENTS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Cash on hand Petty cash Bank deposits Checking accounts Cash deposits Foreign currency deposits US$32,581 thousand @ exchange rate of 27.68 JPY110 thousand @ exchange rate of 0.2405 HK$255 thousand @ exchange rate of 3.549 EUR216 thousand @ exchange rate of 31.32 RMB178 thousand @ exchange rate of 4.344 AUD72 thousand @ exchange rate of 20.08 THD1,518 thousand @ exchange rate of 0.8347

Amount $ 521 150 $ 671 $ 381 40,907 901,839 26 906 6,772 774 1,440 1,267 $ 954,312

• 72 -

STATEMENT 2

CYBER POWER SYSTEMS, INC.

STATEMENT OF TRADE RECEIVABLES FROM UNRELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Description Company A Payment of goods Company B Payment of goods Company C Payment of goods Company D Payment of goods Others (Note) Payment of goods Less: Allowance for impairment loss	Amount $ 97,600 72,142 58,674 51,374 267,318 547,108 (3,538) $ 543,570

Note: The amounts from individual clients included in others each do not exceed 5% of the account balance.

• 73 -

STATEMENT 3

CYBER POWER SYSTEMS, INC.

STATEMENT OF TRADE RECEIVABLES FROM RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Description Cyber Power Systems (USA), Inc. Payment of goods Cyber Power Systems S.A. DE C.V. Payment of goods Others Payment of goods Less: Allowance for impairment loss	Amount $ 1,432,033 114,178 117,331 1,663,542 - $ 1,663,542

Note: The amounts from individual clients included in others each do not exceed 5% of the account balance.

• 74 -

STATEMENT 4

CYBER POWER SYSTEMS, INC.

STATEMENT OF OTHER RECEIVABLES FROM UNRELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Receivables from tax refunds Receivables from tax refunds - business tax Others Receivables from rents etc.	Amount $ 616 14,830 $ 15,446

• 75 -

STATEMENT 5

CYBER POWER SYSTEMS, INC.

STATEMENT OF OTHER RECEIVABLES FROM RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Cyber Power Systems (INDIA) PVT, Ltd. Financing needed due to business dealings Cyber Power Systems S.A. DE C.V. Financing needed due to business dealings Cyber Power Systems GmbH Short-term financing Others	Amount $ 16,201 8,147 23,490 1,713 $ 49,551

Note: The amounts from individual clients included in others each do not exceed 5% of the account balance.

• 76 -

STATEMENT 6

CYBER POWER SYSTEMS, INC.

STATEMENT OF INVENTORIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Items Description Raw materials Work in process Semi-finished goods Finished goods Less: Allowance for loss due to market price decline and obsolete and slow-moving inventories		Amount	Amount
		Cost $ 735,567 1,282 95,417 1,112,514 1,944,780 (120,940) $ 1,823,840	Fair Value $ 651,980 1,280 83,238 1,087,342 $ 1,823,840

Note: Inventories are measured at the lower of cost and net realizable value, and the Company inspects the inventories on an item-by-item basis.

• 77 -

STATEMENT 7

CYBER POWER SYSTEMS, INC.

STATEMENT OF OTHER CURRENT ASSETS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Prepayments Prepaid vendor payments Others Tax credits, payment on behalf of others and provisional payments etc.	Amount $ 12,058 18,354 $ 30,412

• 78 -

STATEMENT 8

CYBER POWER SYSTEMS, INC.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Name of Investee Company Broad Win International Investment Co., Ltd. (Note 1) Cyber Power Systems (USA), Inc. (Note 2) Fast Wind International Limited (Note 3) Cliquefie Co., Ltd. Cyber Power Systems Manufacturing, Inc.	Balance, January 1, 2021 Number of Shares Amount 22,495,329 $ 840,328 13,000,000 362,039 4,438,245 253,408 1,760,000 17,032 15,600 19,951 $ 1,492,738,	Increase in the Current Year Number of Shares Amount - $ 12,924 - 176,484 - 46,980 - - - - $ 236,388	Decrease in the Current Year Number of Shares Amount - $ (8,822) - (109,627) - (55,193) - - - - $ (173,642)	Accumulated Exchange Differences on Translating Investment Gain (Loss) Foreign Operations $ 134,976 $ (14,930) (98,074) (13,596) 105,297 (33,438) (10,417) (654) 3,122 (1,875) $ 134,904 $ (64,493)	Balance, December 31, 2021 Number of Shares % Amount 22,495,329 100.0 $ 964,456 13,000,000 100.0 317,226 4,438,245 100.0 317,054 1,760,000 96.7 5,961 15,600 100.0 21,198 - $ 1,625,895	Market Price or Net Asset Value Unit Price (Dollars) Total Value Collateral 42.86 $ 964,082 None 23.36 303,742 None 71.12 315,642 None 3.39 5,964 None 1,358.83 21,198 None $ 1,610,628
	Number of Shares 22,495,329 13,000,000 4,438,245 1,760,000 15,600	Number of Shares - - - - -	Number of Shares - - - - -		Number of Shares % 22,495,329 100.0 13,000,000 100.0 4,438,245 100.0 1,760,000 96.7 15,600 100.0 -	Unit Price (Dollars) 42.86 23.36 71.12 3.39 1,358.83

Note 1: Realized gain on transactions with subsidiaries, associates and joint ventures of $12,895 thousand, share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using the equity method of $29 thousand; while the decrease in the current year is due to the unrealized gain on transactions with subsidiaries, associates and joint ventures of $8,822 thousand.

Note 2: The increase in the current year is due to the realized gain on transactions with subsidiaries, associates and joint ventures of $176,484 thousand; while the decrease in the current year is due to the unrealized gain on transactions with subsidiaries, associates and joint ventures of $109,627 thousand.

Note 3: The increase in the current year is due to the realized gain on transactions with subsidiaries, associates and joint ventures of $46,980 thousand; while the decrease in the current year is due to the unrealized gain on transactions with subsidiaries, associates and joint ventures of $55,193 thousand.

• 79 -

STATEMENT 9

CYBER POWER SYSTEMS, INC.

STATEMENT OF RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Cost Balance at January 1, 2021 Additions Disposal Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Additions Disposal Balance at December 31, 2021 Carrying amount at December 31, 2021	Buildings Transportation Equipment $ 14,894 $ 8,424 6,439 1,074 (244) (760) $ 21,089 $ 8,738 $ 4,977 $ 2,577 5,864 2,576 (244) (760) $ 10,597 $ 4,393 $ 10,492 $ 4,345	Total Remark $ 23,318 7,513 (1,004) $ 29,827 $ 7,554 8,440 (1,004) $ 14,990 $ 14,837

• 80 -

STATEMENT 10

CYBER POWER SYSTEMS, INC.

STATEMENT OF SHORT-TERM BORROWINGS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Creditor Description Taishin Bank Secured loan CITI Bank Unsecured loan E.SUN Bank Unsecured loan Fubon Bank (1) Unsecured loan Fubon Bank (2) Secured loan Cathay United Bank Unsecured loan Yuanta Bank Unsecured loan Shin Kong Bank Unsecured loan

Ending Balance Contract Period Range of Interest Rate (%) Credit Limit Collateral $ 500,000 2021.5.4-2022.4.30 0.83 $ 500,000 Secured 190,000 2021.10.29-2022.10.29 0.68 US$ 22,600 None 100,000 2021.12.6-2022.12.6 0.78 300,000 None 200,000 2021.10.25-2022.10.25 0.76 210,000 None 400,000 2021.10.25-2022.10.25 0.76 790,000 Secured 250,000 2021.12.17-2022.12.17 0.80 300,000 None 250,000 2021.3.9-2022.4.27 0.78 300,000 None 300,000 2021.5.27-2022.5.27 0.75 300,000 None $ 2,190,000

• 81 -

STATEMENT 11

CYBER POWER SYSTEMS, INC.

STATEMENT OF TRADE PAYABLES TO UNRELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Description Company A Payable for goods Company B Payable for goods Company C Payable for goods Company D Payable for goods Company E Payable for goods Others (Note) Payable for goods	Amount $ 62,875 58,705 48,512 42,203 30,135 420,196 $ 662,626

Note: The amount from each individual vendor in others does not exceed 5% of the account balance.

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STATEMENT 12

CYBER POWER SYSTEMS, INC.

STATEMENT OF TRADE PAYABLES TO RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Description Cyber Power (Shenzhen), Inc. Payable for goods and processing cost Cyber Power Systems (HK) Limited Payable for goods Others (Note)	Amount $ 501,294 287,224 1,044 $ 789,562

Note: The amount from subject does not exceed 5% of the accounts balance.

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STATEMENT 13

CYBER POWER SYSTEMS, INC.

STATEMENT OF LONG-TERM BORROWINGS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Creditor Description (Repayment Method) Contract Period Range of Interest Rate (%) Fubon Bank Interest is payable monthly. The grace period is the 1st to 24th months starting from the date of the loan, and the principal is repayable in equal amounts starting from the 25th month. 2017.04-2024.04 1.048	Amount Due Within One Year Due Within After one Year Total Amount Collateral $ - $ 145,481 $ 145,481 Refer to Note 31

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STATEMENT 14

CYBER POWER SYSTEMS, INC.

STATEMENT OF LEASE LIABILITIES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

			Discount	Balance,	Balance,
Item	Description	Lease Term	Rate (%)	End	of Year Remark
Buildings	Mainly for the use of	1-3 years	0.80-0.93	$	10,530
	plants and offices
Transportation equipment	For operating use	1-3 years	0.80-1.20		4,378
					14,908
Less: Current portion					(8,824)
Lease liabilities - non-current				$	6,084

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STATEMENT 15

CYBER POWER SYSTEMS, INC.

STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Description Sales revenue Less: Sales returns Sales allowances	Amount $ 5,610,472 (8,611) (10,657) $ 5,591,204

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STATEMENT 16

CYBER POWER SYSTEMS, INC.

STATEMENT OF COST OF GOODS SOLD FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Raw materials Balance, beginning of the year Add: Raw materials purchased Less: Raw materials, end of the year Raw materials transferred to expenses Manufacturing expenses Manufacturing cost Add: Work in process and semi-finished goods, beginning of the year Work in process and semi-finished goods purchased Less: Work in process and semi-finished goods, end of the year Transferred to other segments Cost of work in process Cost of finished goods Add: Finished goods, beginning of the year Finished goods purchased Less: Finished goods, end of the year Transferred to other segments Cost of finished goods sold Discount on processing cost Loss due to market price decline and obsolete and slow-moving inventories Revenue from sale of scraps

Amount $ 343,043 3,563,918 (735,567) (8,402) 3,162,992 969,476 4,132,168 56,507 11,012 (96,699) (3,714) 4,099,574 878,012 920,231 (1,112,514) (13,722) 4,771,581 (18,111) 16,373 (808) $ 4,769,035

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STATEMENT 17

CYBER POWER SYSTEMS, INC.

STATEMENT OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Name Processing cost Salary expenses Pension Meal expenses Employee benefits Amortization Consumables Miscellaneous purchases Miscellaneous expenses	Total $ 943,458 4,184 197 228 109 6,413 3,179 312 11,396 $ 969,476

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STATEMENT 18

CYBER POWER SYSTEMS, INC.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Name Description Payroll and related expenses Rental expenses Stationery expenses Traveling expenses Shipping expenses Postage expenses Repair and maintenance expenses Advertisement expenses Utilities expenses Insurance expenses Entertainment expenses Taxes Traffic expenses Depreciation expenses Sampling Meal expenses Employee benefits Testing expenses Consumables expenses Pension expenses Internet expenses Professional service fees After-sales service maintenance fees Miscellaneous purchases Tooling model expenditure Overtime pay Books and magazines Commission expenses Training expenses Other expenses Gain on reversal of expected credit loss	Selling Expense General and Administrative Expense Research and Development Expenses $ 89,716 $ 93,518 $ 186,754 3,177 294 77 69 172 6 708 973 100 87,116 3,638 1,747 438 - 257 - 268 431 64,731 39 40 114 2,837 450 5,928 35,569 17,745 774 321 13 5,337 9,868 - 284 81 402 510 33,449 6,434 1,518 - 1 1,787 2,302 5,607 854 1,873 2,712 - - 19,542 - - 12,785 3,307 4,038 9,060 - 2,418 - 4,380 12,521 9,185 284,400 - - 497 4,125 1,916 - - 993 125 58 628 - 3 - 10,093 - - - 199 42 5,214 12,496 17,900 $ 571,077 $ 221,060 $ 294,827	Total $ 369,988 3,548 247 1,781 92,501 695 699 64,810 3,401 59,242 1,108 15,205 767 40,393 1,519 9,696 5,439 19,542 12,785 16,405 2,418 26,086 284,400 6,538 993 811 3 10,093 241 35,610 1,086,964 41 $ 1,087,005

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STATEMENT 19

CYBER POWER SYSTEMS, INC.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Classified By Function Classified By Nature Labor cost (Note) Salaries and bonuses Labor and health insurance Pension Board compensation Others Depreciation expenses	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2021 Classified as Operating Cost Classified as Operating Expenses Total $ 4,184 $ 367,319 $ 371,503 - 27,677 27,677 197 16,405 16,602 - 3,480 3,480 337 15,376 15,713 6,413 40,393 46,806	2020
		Classified as Operating Cost Classified as Operating Expenses Total $ 3,217 $ 407,392 $ 410,609 - 26,760 26,760 58 15,417 15,475 - 9,715 9,715 280 16,014 16,294 3,420 43,074 46,494

Note:

1. For the years ended December 31, 2021 and 2020, the Company had an average of 363 and 351 employees, respectively, which included 6 non-employee directors for both years.

2. Average labor cost for the years ended December 31, 2021 and 2020 was $1,209 thousand and $1,360 thousand, respectively.

3. Average salaries and bonuses for the years ended December 31, 2021 and 2020 were $1,041 thousand and $1,190 thousand, respectively.

4. Average salaries and bonuses decreased by 12.52% year over year.

5. For the years ended December 31, 2021 and 2020, the Company did not have any supervisors.

The Company’s remuneration and compensation policies are as follows:

1. Remuneration of directors and executive officers: regularly assessed and inspected by the compensation committee.

2. Compensation of employees: salaries are adjusted based on market salary levels that are reviewed annually, and the salaries and bonuses are distributed based on the Company’s operating results.

3. 90 -