CyberTAN — Audit Report / Information 2020

Nov 12, 2020

CyberTAN Technology Inc. Parent Company Only Financial Report with Independent Auditors’ Report

2019 and 2020

(Stock Code: 3062)

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

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Independent Auditors’ Report (110)Cai-Shen-Bao-Zi No.20005181

To CyberTAN Technology Inc.:

Audit opinion

We have audited the standalone balance sheet of CyberTAN Technology Inc. (hereinafter referred to as the “CyberTAN”) as at December 31, 2020 and 2019, the parent company only statement of comprehensive income, parent company only statement of changes in equity, and parent company only cash flow statement for the periods January 1 to December 31, 2020 and 2019, and the accompanying footnotes (including summary of major accounting policies).

In our opinion, based on our audit results and other independent auditors’ report (please refer to the other matter section), all material disclosures of the parent company only financial statements mentioned above were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers, and presented a fair view of the parent company only financial position of CyberTAN as at December 31, 2020 and 2019, and business performance and cash flow for the periods January 1 to December 31, 2020 and 2019.

Basis for Opinion

In 2020, we conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statement by Certified Public Accountants and Generally Accepted Auditing Standards; in 2019, we conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Letter Jin-Guan-Zheng-Shen-Zi No. 1090360805 dated February 25, 2020 issued by Financial Supervisory Commission and the Generally Accepted Auditing Standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. The personnel of the CPA Firm subject to the independence requirement have acted independently from the business operations of CyberTAN in accordance with the Code of Ethics for Professional Accountants of the Republic of China and with other responsibilities of the Code of Ethics performed. According to our audits and other independent auditors’ report, we believe to have obtained sufficient and appropriate audit evidence in order to be used as the basis for the opinion.

Key audit matters

The “key audit matters” means that the independent auditor has used their professional judgment as the basis to audit the most important matters on the 2020 parent company only financial statements of CyberTAN. These matters were addressed in the content of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on those matters.

The key audit matters of the 2020 parent company only financial statements of CyberTAN are described as follows:

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Evaluation of allowance for inventory valuation loss

Item Description

Regarding the accounting policies for the inventory valuation, please refer to Note 4(13) to the parent company only financial report; for the uncertainty to accounting estimates and assumptions, please refer to Note 5(2) to the parent company only financial report; for description of inventory accounting titles, please refer to Note 6(5) to the parent company only financial report. The balances of valuation loss regarding the inventory and allowance for inventory on December 31, 2020 were NTD 30,072 thousand and NTD 1,964 thousand, respectively.

CyberTAN mainly involves in the sale of communication products manufactured by the subsidiaries. The risk caused by loss on inventory devaluation or the obsolescence of inventory may be higher due to the short life cycle and severe market competition. Inventory is evaluated by CyberTAN and its subsidiaries on the basis of the cost and net realizable value, whichever is lower. The aforementioned loss of allowance for inventory valuation was mainly due to the inventory measured at the cost and net realizable value, whichever is lower, and identification of obsolescent or damaged inventory items. Because the large inventory amount and enormous items of CyberTAN and its subsidiaries as well as the objective judgments of the management concerned during the identification of obsolescent or damaged inventory belong to the field to be determined during the audit, we listed the evaluation for the loss of allowance for inventory valuation of CyberTAN and its subsidiaries as one of the important matters in the audit.

Responsive Audit Procedures

The responsive procedures executed by us for specific aspects specified in the preceding key audit matters are as follows:

1. Adopted the acquired allowance policy for inventory devaluation of CyberTAN and its subsidiaries during the comparative period of financial statements and evaluated the reasonableness of the allowance policy.

2. Acquired the net realizable value statement of inventory cost, randomly checked related supporting documents and recalculated its accuracy, validated the appropriateness regarding the logic of inventory aging report system used for evaluation, conducted spot check for individual inventory number to confirm the degree of inventory closeout and information and evaluated the basis of net realizable value estimated by the management and its reasonableness.

3. Checked related information acquired during inventory taking process and inquired the management and personnel related to inventory to confirm conditions of obsolescent, remaining, older, out-of-fashion or damaged inventory neglected in the inventory details.

Evaluation for the loss of accounts receivable

Item Description

Regarding the accounting policies for the loss evaluation of accounts receivable, please refer to Note 4(9) to the parent company only financial report; for the uncertainty to accounting estimates and assumptions regarding the loss evaluation of accounts receivable,

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please refer to Note 5(2) to the parent company only financial report; for description of accounts receivable accounting titles, please refer to Note 6(4) to the parent company only financial report. The balances of accounts receivable (including the related party) and its allowance loss on December 31, 2020 were NTD 1,338,695 thousand and NTD 8,882 thousand, respectively.

CyberTAN regularly assess if there is objective evidence implicating the impairment of individual accounts receivable and the assessment method includes the consideration of overdue ages of accounts receivable, customer’s financial status, historical trading record and subsequent collections. The Group also calculates loss ratio based on past aging data statement and considers expected credit losses of industrial forward-looking evaluation to estimate the amount of loss allowance to be recognized. Because the estimation process involves the objective judgment of the management toward the preceding impairment evidence, the factor impacting the recognized amount of loss allowance tends to have high uncertainty, causing significant impact on the recoverable amount of accounts receivable. Therefore, we consider CyberTAN’s evaluation for the impairment loss of accounts receivable as one of the important matters in the audit.

Responsive Audit Procedures

The responsive procedures executed by us for specific aspects specified in the preceding key audit matters are as follows:

1. Understand and evaluate the reasonableness of the allowance policy and procedure regarding the allowance loss of accounts receivables.

2. Acquire the aging data statement the management used to evaluate the expected credit loss ratio of accounts receivable, confirm its data source logic is consistently adopted and test relevant forms to confirm the correctness of its aging data.

3. Evaluate the reasonableness of the estimation used by the management to evaluate the expected credit loss ratio of accounts receivable and acquire related supporting documents, including forward-looking adjustment, disputable accounts, status of lasting aging, subsequent collection status, financial status impacting the customer and signs suggesting the customer is unable to pay as scheduled.

Other matters – Audit related to other CPAs

For the companies invested under equity method in the aforementioned parent company only financial statements of CyberTAN, we have not audited the financial statements which was prepared based on different financial report structure, instead other CPAs did. Therefore, our opinions expressed on the amount listed in said parent company only financial statements of such companies and related information disclosed in Note 13 were based on the other independent auditor’ s report. The balances of the invested company under the equity method as of December 31, 2020 and 2019 were NTD 225,691 thousand and NTD 246,592 thousand, respectively. The comprehensive income recognized under the equity method for the said companies were NTD (14,900) thousand and NTD (55,527) thousand on January 1 to December 31, 2020 and 2019, respectively.

Responsibilities of Management and the Governance Unit with Governance of the Parent Company Only Financial Statements

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The management is responsible for preparing the appropriate parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Report by Securities Issuers. Additionally, it is responsible for maintaining the internal control mechanism that is related to and necessary for the preparation of the parent company only financial statements. As a result, it can ensure material misstatement due to fraud or error is not pertained in the parent company only financial statements.

In preparing the parent company only financial statements, the management is also responsible for assessing the ability of CyberTAN to continue as a going concern, disclosing, as applicable, matters related to ongoing concerns and using the going concern basis of accounting unless management either intends to liquidate the CyberTAN or to cease operations, or there is a lack of any option except for liquidation or suspension.

The governance unit (including the audit committee) of CyberTAN is responsible for supervising the financial reporting process.

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

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

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

1. Identify and assess the risk of material misstatement of the parent company only financial statements due to fraud or error, design and adopt appropriate countermeasures for the risks assessed, and obtain sufficient and appropriate audit evidence in order to be used as the basis for the 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. We acquire necessary understanding of the internal control mechanism that is related to the audit to design appropriate audit process for the situation at the time. The purpose of the knowledge is not expressing opinions to the effectiveness of the internal control mechanism of CyberTAN.

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

4. Based on the acquired audit evidence, we decide whether the going concern accounting basis adopted by the management is suitable, whether events that might affect the going

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concern capacity of CyberTAN exist, and whether there is major uncertainty. A conclusion will be made afterwards. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inappropriate, to modify our opinion. Our conclusion is based on the audit evidence acquired as of the date of the audit report. However, future events or conditions may cause the CyberTAN to cease to continue as a going concern.

1. Evaluate the overall presentation, structure and content of the parent company only financial statements (including relevant notes), and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

2. Obtain sufficient and appropriate audit evidence on the financial information of individual companies within the CyberTAN in order to express an opinion on the parent company only financial statements. The independent auditor is responsible for guiding, supervising, and implementing the individual audit of CyberTAN, and also for forming an audit opinion for the parent company only financial statements.

We communicate with the governance units 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 in charge of governance with a statement that we have complied with the Code of Ethics for Professional Accountants of the Republic of China 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, (including related safeguards).

The independent auditor has used the communications with the governing unit as the basis to determine the key audit matters to be performed on the 2020 parent company only financial statements of CyberTAN. We clearly state all above matters in the audit report, unless the law prohibits us to publicly disclose certain matters, or under rare circumstances we decide not to include certain matters in the audit report since we can reasonably expect the resulting negative impact is greater than the public interest they bring.

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PricewaterhouseCoopers Taiwan HSU-YUNG CHIEN

CPA

FENG-MIN CHUAN

Former Securities and Futures Commission, Ministry of Finance

Approval Reference No.: (84)-Tai-Cai-Zheng-(Liu) No. 13377

Former Securities and Futures Bureau, Financial Supervisory Commission of Executive Yuan Approval Reference No.: Jin-Guan-Zheng-Liu-Zi No. 0960038033

March 25, 2021

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The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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CyberTAN Technology Inc.

Parent Company Only Balance Sheet December 31, 2019 and 2020

Unit: NTD thousand

Assets	Notes 6(1) 6(3) 6(4) 6(4) and 7 7 6(5) 6(2) 6(3) and 8 6(6) 6(7) and 7 6(8) and 7 6(24) 6(11)	December 31, 2020 Amount % $ 1,262,921 17 1,342,200 18 683,703 9 646,110 9 44,118 1 - - 28,108 - 5,307 - 4,012,467 54 1,667 - 20,636 - 2,216,952 30 631,018 9 260,214 3 126 - 38,125 1 202,782 3 3,371,520 46 $ 7,383,987 100	December 31, 2019	December 31, 2019
		Amount $ 1,262,921 1,342,200 683,703 646,110 44,118 - 28,108 5,307 4,012,467 1,667 20,636 2,216,952 631,018 260,214 126 38,125 202,782 3,371,520 $ 7,383,987	Amount $ 799,773 1,208,500 1,277,993 198,091 157,910 37,319 95,197 13,397 3,788,180 11,631 20,636 2,434,914 661,956 279,033 1,352 43,868 198,348 3,651,738 $ 7,439,918	%
Current assets 1100 Cash and Cash Equivalents 1136 Financial assets measured at amortized cost – current 1170 Accounts receivable, net 1180 Accounts receivable – the related party, net 1210 Other receivables- the related party 1220 Income tax assets in the current period 130X Inventory 1479 Other current assets – others 11XX Total current assets Non-current assets 1517 Financial assets measured at fair value through profit or loss – non-current 1535 Financial assets measured at amortized cost -non-current 1550 Investment at equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1990 Other non-current assets – others 15XX Total non-current assets 1XXX Total assets				11 16 17 3 2 1 1 -
				51
				- - 33 9 4 - - 3
				49
				100

(To be continued)

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CyberTAN Technology Inc.

Parent Company Only Balance Sheet December 31, 2019 and 2020

Unit: NTD thousand

Liabilities and equity

December 31, 2020 December 31, 2019 Notes Amount % Amount % 6(10) $ 688,413 10 $ 392,578 5 6(17) 53,483 1 38,481 1 612,340 8 474,011 7 7 83,715 1 356,690 5 69,014 1 95,986 1 7 11,095 - 19,306 - 24,695 1 12,699 - 6(12) 19,978 - 22,573 - 16,579 - 16,495 - 1,861 - 9,500 - 92,941 1 180,786 3 1,674,114 23 1,619,105 22 6(12) 17,153 - 20,275 - 6(24) 47,125 1 75,587 1 248,610 3 265,188 4 3,223 - 4,152 - 316,111 4 365,202 5 1,990,225 27 1,984,307 27 6(13) 3,286,054 45 3,286,054 44 6(14) 578,131 8 578,131 8 6(15) 816,159 11 809,235 11 126,502 2 68,007 1 774,807 10 840,686 11 6(16) ( 187,891) ( 3) ( 126,502) ( 2) 5,393,762 73 5,455,611 73 9 11 $ 7,383,987 100 $ 7,439,918 100

Current liabilities 2100 Short-term loans 2130 Contract liabilities – current 2170 Accounts payable 2180 Accounts payable – the related party 2200 Other payables 2220 Other payables – the related party 2230 Income tax liabilities in the current period 2250 Liability reserve – current 2280 Lease liabilities – current 2365 Refund liabilities – current 2399 Other current liabilities -others 21XX Total current liabilities Non-current liabilities 2550 Liability reserve – non-current 2570 Deferred income tax liabilities 2580 Lease liabilities – non-current 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Capital stock 3110 Common stock Capital reserves 3200 Capital reserves Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Undistributed earnings Other equity 3400 Other equity 3XXX Total equity Major Contingent Liabilities and Commitments Made Under Unrecognized Contracts Significant Subsequent Events 3X2X Total liabilities and equity

Please refer to the notes of the parent company only financial statements, which constitute a part of the parent company only financial report.

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CyberTAN Technology Inc.

Parent Company Only Statement of Comprehensive Income January 1 to December 31, 2019 and 2020

Unit: NTD thousand (Except the unit of earnings per share is NTD)

Item	Notes 6(17) and 7 6(5)(22) (23) and 7 6(22) (23) and 7 12(2) 6(18) 6(19) and 7 6(20) 6(21) 6(6) 6(24) 6(11) 6(2)(16) 6(6) 6(24) 6(16) 6(16) 6(16) (24) 6(25) 6(25)	2020
4000 Operating revenue 5000 Operating cost 5900 Operating gross profit Operating expense 6100 Selling expenses 6200 Administrative expenses 6300 R&D expenses 6450 Expected credit impairment losses 6000 Total operating expenses 6900 Operating profits Non-operating revenue and expenses 7100 Interest revenue 7010 Other revenue 7020 Other gains and losses 7050 Financial Costs 7070 Share of profit or loss of subsidiaries, affiliated companies and joint ventures recognized under the equity method 7000 Total non-operating income and expense 7900 Net profit before tax 7950 Income tax benefits (expenses) 8200 Current net profit Other comprehensive income Items not reclassified to profit or loss 8311 Remeasurement of defined benefit plan 8316 Unrealized valuation gains and loss from equity instrument investments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, affiliated companies and joint ventures recognized under the equity method – items not reclassified to profit or loss 8349 Income tax related to items not reclassified 8310 Total of items not reclassified to profit or loss Items may be reclassified to profit or loss subsequently 8361 Exchange difference in the financial statement translation of the foreign operation 8380 Share of other comprehensive income of subsidiaries, affiliated companies and joint ventures recognized under the equity method – items may be reclassified to profit or loss 8399 Income tax related to items may be reclassified 8360 Total of items may be reclassified to profit or loss subsequently 8300 After-tax income of other comprehensive losses for the year 8500 Total comprehensive income (losses) for the year Basic earnings per share 9750 Total basic earnings per share Diluted earnings per share 9850 Total diluted earnings per share
		$

Please refer to the notes of the parent company only financial statements, which constitute a part of the parent company only financial report.

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CyberTAN Technology Inc. Parent Company Only Statement of Changes in Equity January 1 to December 31, 2019 and 2020

2019 Balance at January 1, 2019 Current net profit Other comprehensive income for the year Total comprehensive income for the year Appropriation and allocation of earnings in 2018: Allocated legal reserve Allocated special reserve Allocation of cash dividends Recognized changes in the subsidiary Changes of affiliated companies and joint ventures under equity method Balance at December 31, 2019 2020 Balance at January 1, 2019 Current net profit Other comprehensive income for the year Total comprehensive income for the year Appropriation and allocation of earnings in 2019: Allocated legal reserve Allocated special reserve Allocation of cash dividends Recognized changes in the subsidiary Changes of affiliated companies and joint ventures under equity method Balance at December 31, 2020	Notes		Commonstock		Capital reserves			Retained earnings	Retained earnings			Other	equity
							Legal reserve		Special reserve		Undistributed earnings	Exchange difference in the financial statement translation of the foreign operation	Unrealized profit or loss of financial assets measured at fair value through other comprehensive income
	6(16) 6(15) 6(16) 6(16) 6(16) 6(15) 6(16) 6(16)		$ 3,286,054 - - - - - - - - $ 3,286,054 $ 3,286,054 - - - - - - - - $ 3,286,054		$ 578,131 - - - - - - - - $ 578,131 $ 578,131 - - - - - - - - $ 578,131		$ 792,575 - - - 16,660 - - - - $ 809,235 $ 809,235 - - - 6,924 - - - - $ 816,159		$ 3,619	$ 983,937 51,352 704 52,056 ( 16,660 ( 64,388 ( 131,442 16,410 773 $ 840,686 $ 840,686 23,575 ( 3,008 20,567 ( 6,924 ( 58,495 ( 49,291 27,948 316 $ 774,807	$ 983,937	($ 55,614 - ( 60,594 ( 60,594 ) - ) - ) - - - ($ 116,208 ($ 116,208 - ) ( 9,071 ( 9,071 ) - ) - ) - - - ($ 125,279
									- -		51,352 704
									-		52,056
									- 64,388 - - -
									$ 68,007
									$ 68,007
									- -
									-
									- 58,495 - - -
									$ 126,502		$ 774,807

Please refer to the notes of the parent company only financial statements, which constitute a part of the parent company only financial report.

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CyberTAN Technology Inc.

Parent Company Only Statement of Cash Flow January 1 to December 31, 2019 and 2020

Unit: NTD thousand

Cash flow from operating activities Net profit before tax in the current period Adjustment items Income/expenses items without impact on cash flow Depreciation expenses Miscellaneous expenses – depreciation expenses Amortization expenses Expected credit impairment losses Net profit of financial assets measured at fair value through profit or loss Interest expenses Miscellaneous expenses – interest expenses Interest revenue Dividend revenue Share of losses of from subsidiaries, affiliated companies and joint ventures recognized under the equity method Gains on disposal of property, plant and equipment Changes of assets/liabilities related to operating activities Net changes of assets/liabilities related to operating activities Accounts receivable Accounts receivable – the related party Other receivables- the related party Inventory Other current assets – others Other non-current assets Net changes of liabilities related to operating activities Contract liabilities – current Accounts payable Accounts payable – the related party Other payables Other payables – the related party Refund liabilities – current Liability reserve Other current liabilities -others Cash inflow from operations Returned (paid) income tax Net cash inflow from operating activities Cash flow from investing activities Refunds from decapitalization of financial assets measured at fair value through profit or loss Acquisition of financial assets measured at amortized cost Disposal of financial assets measured at fair value through profit or loss Acquisition of investment under equity method Refunds from decapitalization of the invested company under the equity method Acquisition of property, plant, and equipment Disposal of property, plant, and equipment proceeds Acquisition of intangible asset Interest received Dividends received Collection of cash dividend distributed by affiliated companies

Notes January 1 to December 31,2020 January 1 to December 31,2019 $ 14,368 $ 66,501 6(7)(8)(22) 46,001 44,978 6(7)(8)(20) 17,977 19,267 6(22) 1,226 1,785 12(2) 849 2,879 6(20) - ( 417 ) 6(21) 9,718 4,528 6(20) 2,555 2,496 6(18) ( 12,278 ) ( 24,939 ) 6(2)(19) ( 9,814 ) ( 2,919 ) 6(6) 180,435 40,829 6(20) ( 625 ) ( 178 ) 593,441 965,103 ( 448,019 ) 127,589 113,792 ( 153,857 ) 67,089 908,831 8,872 2,106 ( 67 ) ( 2,317 ) 15,002 3,013 138,329 ( 739,242 ) ( 272,975 ) 276,214 ( 27,507 ) ( 72,179 ) ( 8,211 ) ( 106,810 ) ( 7,639 ) ( 2,500 ) ( 5,717 ) ( 5,420 ) ( 87,845 ) ( 13,654 ) 328,957 1,341,687 36,794 ( 18,937 ) 365,751 1,322,750 - 19,740 ( 133,700 ) ( 1,212,196 ) - 786 6(6) - ( 280,565 ) 6(6) 6,000 - 6(7) ( 14,482 ) ( 24,299 ) 886 1,998 - ( 1,732 ) 11,496 25,464 9,814 2,919 6(6) - 12,185

Please refer to the notes of the parent company only financial statements, which constitute a part of the parent company only financial report.

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CyberTAN Technology Inc.

Parent Company Only Statement of Cash Flow January 1 to December 31, 2019 and 2020

Unit: NTD thousand

recognized under the equity method Net cash outflow from investing activities Cash flow from financing activities Increase in short-term loans Decrease in short-term loans Decrease in guarantee deposits Repayment of lease principal Allocation of cash dividends Interest paid Net cash inflow from financing activities Increase (decrease) in cash and cash equivalents in the current period Balance of cash and cash equivalents, beginning Balance of cash and cash equivalents, ending

Notes January 1 to December 31,2020 January 1 to December 31,2019 ( 119,986 ) ( 1,455,700 ) 4,010,143 1,032,708 ( 3,714,308 ) ( 810,130 ) ( 929 ) ( 69 ) ( 16,494 ) ( 16,169 ) 6(15) ( 49,291 ) ( 131,442 ) ( 11,738 ) ( 7,024 ) 217,383 67,874 463,148 ( 65,076 ) 799,773 864,849 $ 1,262,921 $ 799,773

Please refer to the notes of the parent company only financial statements, which constitute a part of the parent company only financial report.

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CyberTAN Technology Inc. Notes to Parent Company Only Financial Statements 2019 and 2020

Unit: NTD thousand (Unless otherwise specified)

I. Company History and Business Scope

CyberTAN Technology Inc. (hereinafter referred to as the “the Company”) was established in the Republic of China. We mainly engaged in wired communication mechanical equipment manufacturing, electronic components manufacturing, and the R&D, development and sales of broadband Internet routers, gateways, virtual private networks, firewalls, Layer 3 and Layer 4 switches, wired broadband network security router and wireless broadband network security router.

II. Approval Date and Procedures of the Financial Statements

The parent company only financial report was released after being approved by the board of directors on March 25, 2021.

III. New Standards, Amendments, and Interpretations Adopted

• (I) Effect of adopting the new promulgated or amended IFRS endorsed by the Financial Supervisory Commission (hereinafter referred to as the “FSC”)

The following are applicable new promulgated, amended and revised standards and interpretations of IFRSs endorsed by the FSC in 2020:

New,Amended,or Revised Standards and	New,Amended,or Revised Standards and	Interpretations	Effective Date per IASB
Amendments to IAS 1 and IAS		8 “Disclosure	January 1, 2020
Initiative-Definition of Material”
Amendments to IFRS 3 “Definition of a Business”			January 1, 2020
Amendments to IFRS 9, IAS 39	and IFRS	7 “Interest Rate	January 1, 2020
Benchmark Reform”
Amendments to IFRS 16	“Covid-19-Related Rent		June 1, 2020 (Note)
Concessions”
(Note) The FSC approved that the	enterprise	can apply this amendment earlier on January 1,
2020.

The Company evaluated that the above standards and interpretations applicable have no significant impact on the financial status and business results of the Company.

• (II) Effect of not adopting the new promulgated or revised IFRS, IAS, IFRIC, and SIC endorsed by the FSC

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

interpretations of IFRSs endorsed by the FSC in 2021:
New,Amended,or Revised Standards and Interpretations	Effective Dateper IASB
Amendments to IFRS 4 “Extension of the Temporary	January 1, 2021
Exemption from Applying IFRS 9”
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS	January 1, 2021
16 “Interest Rate Benchmark Reform- Phase 2”

The Company evaluated that the above standards and interpretations applicable have no significant impact on the financial status and business results of the Company.

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(III) Impacts of IFRS issued by IASB but not yet approved by FSC

The following are the IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed by the FSC:

New, Amended, or Revised Standards and Interpretations Effective Date per IASB Amendments to IFRS 3 “Reference to the Conceptual January 1, 2022 Framework” Amendments to IFRS 10 and IAS 28 “Sale or Contribution To be decided by IASB of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 “Insurance Contracts” January 1, 2023 Classification of liabilities as current or non-current January 1, 2023 (Amendments to IAS 1) Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 Amendments to IAS 16 “Property, Plant and Equipment: January 1, 2022 Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts—Cost of January 1, 2022 Fulfilling a Contract” Annual Improvements to IFRS Standards 2018 – 2020 Cycle January 1, 2022

The Company evaluated that the above standards and interpretations applicable have no significant impact on the financial status and business results of the Company.

IV. Summary of Significant Accounting Policies

The major accounting policies applied to prepare the parent company only financial statements are as follows. Unless otherwise provided, the policies have been applied during all the presentation period.

(I) Compliance Statement

The present company only financial report has been duly worked out in accordance with the Regulations Governing the Preparation of Financial Report by Securities Issuers.

(II) Basis of preparation

1. Except the following important items, the parent company only financial report has been duly prepared on the basis of historical costs:

2. (1) Financial instruments and liabilities (including derivatives) measured at fair value through profit or loss based on fair value.

3. (2) Measurement at fair value through other comprehensive income based on fair value.

4. (3) Defined benefit liability stated based on the net after pension fund assets less the present value of defined benefit obligations.

5. The preparation of financial report that complies with the IFRS, IAS, IFRIC and SIC (hereinafter referred to as the “IFRSs”) endorsed by FSC requires some important accounting estimates. The application of the Group’s accounting policy also requires the management to use their judgment during the process. For items involving high judgment or complexity or items involving important estimates and assumptions of the consolidated

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financial report, please refer to the description in Note 5.

• (III) Translation of foreign currency

Each item listed in the parent company only financial statements of the Company is measured by the currency of the primary economic environment in which the business department situated (i.e. functional currency). The parent company only financial report was prepared in the Company’s functional currency, “NTD.”

1. Foreign currency transaction and balance

2. (1) Foreign currency transaction converts the conversion difference generated by the transaction to functional currency adopting the spot exchange rate on the date of transactions or measurement date and recognizes the difference as current profit or loss.

3. (2) The monetary assets and balance of liabilities in foreign currency are adjusted based on the spot exchange rate evaluation on the balance sheet date and the conversion difference generated by adjustment is recognized as current profit or loss.

4. (3) For non-monetary assets and balance of liabilities in foreign currency, those measured at fair value through profit or loss are adjusted based on the spot exchange rate evaluation on the balance sheet date and the conversion difference generated by adjustment is recognized as current profit or loss; those measured at fair value through other comprehensive income are adjusted based on the spot exchange rate evaluation on the balance sheet date and the conversion difference generated by adjustment is recognized as other comprehensive income item; those not measured at fair value are measured at historical exchange rate on initial transaction date.

5. (4) All exchange gain or loss is listed in “Other Profit and Loss” of profit and loss statement.

6. Translation of the foreign operation

7. (1) For all Company’s entities, affiliated companies and joint agreements with differences in functional currency and presentation currency, the business result and financial status is converted to presentation currency by the following method:

   • A. The assets and liabilities presented in each balance sheet were translated based on the exchange rates closed on every balance sheet date;

   • B. The profits and losses presented in each statement of comprehensive income were translated in accordance with the average exchange rates in current period; and

   • C. All resulted exchange differences were recognized under other comprehensive income.

8. (2) When the foreign operation for partial disposal or selling is a subsidiary, the accumulated exchange differences recognized under other comprehensive income are reattributed proportionally as non-controlling equity of the subsidiaries. However, when the Company maintains partial rights of the former subsidiary but losses the control over the subsidiary included in the foreign operation institutions, it is conducted based on the disposal of all equity in the foreign operation institutions.

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(IV) Classification of assets and liabilities as current and non-current

1. Assets that match any of the following conditions shall be classified as current assets:

2. (1) Assets expected to be realized, intent to be sold or consumed over the normal operating cycles.

3. (2) Primarily for trading purposes.

4. (3) Assets expected to be realized within 12 months after the balance sheet date.

5. (4) Assets in cash or cash equivalents, except for those that are used for an exchange or to settle a liability, or otherwise remain restricted in more than 12 months after the balance sheet date.

The Company listed all assets that did not comply with the following conditions as non-current assets.

1. Assets that match any of the following conditions shall be classified as current liabilities:

2. (1) Liabilities expected to be settled in normal business cycle.

3. (2) Primarily for trading purposes.

4. (3) Liabilities expected to be settled within 12 months after the balance sheet date.

5. (4) Liabilities with settlement period which cannot be unconditionally deferred for at least 12 months after the date of the balance sheet. Liabilities under the terms that give counterparties the option repay in the form of equity instruments and without the effect on their classification due to such terms

The Company listed all assets that did not comply with the following conditions as non-current liabilities.

(V) Cash equivalents

Cash equivalent includes short-term and highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of changes in value. The time deposits that fall into the above definition and are intended to satisfy the short-term cash commitment shall be classified cash equivalents.

(VI) Financial assets measured at fair value through profit or loss

1. This refers to financial assets not measured at amortized cost or measured at fair value through other comprehensive income.

2. The Company adopts the trade date accounting for financial assets in accordance with the general trade practice measured at fair value through profit or loss.

3. It is initially recognized at fair value by the Company while the transaction cost is recognized in profit or loss upon incurred. Subsequent valuation is based on the fair value measurement and the resulting gain or loss is recognized as profit or loss.

4. When the Company is entitled to collect dividends, the economic effect related to the dividend may inflow and the amount of revenue can be measured reliably Therefore, the related dividend revenue shall be recognized as profit or loss.

(VII) Financial assets measured at fair value through other comprehensive income

1. This refers to irrevocable choice at initial recognition to recognize the later fair value change of the equity instrument investment held not for transaction in other

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comprehensive profit or loss; or at the same time the debt instrument investment meets the following conditions:

• (1) The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows or to sell.

• (2) 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.

• The Company adopts the trade date accounting for financial assets in accordance with the general trade practice measured at fair value through other comprehensive income.

• It is initially recognized at fair value plus the transaction cost by the Company and the subsequent valuation is measured at fair value:

• (1) The changes in fair value belonging to equity instrument investment is recognized as other comprehensive income. During derecognition, accumulated profit or loss previously recognized in other comprehensive income shall not be subsequently reclassified as profit or loss but classified as retained earnings. When the Company is entitled to collect dividends, the economic effect related to the dividend may inflow and the amount of revenue can be measured reliably Therefore, the related dividend revenue shall be recognized as profit or loss.

• (2) The changes in fair value belonging to equity instrument investment is recognized as other comprehensive income. The impairment loss, interest income and exchange gain or loss in foreign currency before derecognition is recognized as profit or loss. During derecognition, the accumulated profit or loss previously recognized in other comprehensive income will be reclassified from equity to profit or loss.

(VIII) Financial assets measured at amortized cost

1. This refers to those meeting the following conditions at the same time:

2. (1) The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows.

3. (2) 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.

4. The Company adopts the trade date accounting for financial assets in accordance with the general trade practice measured at amortized cost.

5. The time deposit not complying with cash equivalents held by the Company is measured at investment amount since the impact of discounting was insignificant.

(IX) Accounts receivable

1. This refers to accounts from the rights to receive consideration without any condition due to commodity transfer or labor service based on contract agreement.

2. This belongs to short-term accounts receivable with unpaid interest. The invoice payable was measured at the initial per value by the Company since the impact of discounting was insignificant.

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(X) Impairment of financial assets

For debt instrument investment measured at fair value through other comprehensive income, financial assets measured at amortized cost and accounts receivable or rentals receivable that comprises material financial parts, after taking reasonable and supporting materials into consideration (including forward-looking ones) on each balance sheet date, the Company measures the loss allowance based on 12-month expected credit losses for those without significant increase in credit risk after initial recognition; for those with significant increase in credit risk after initial recognition, the loss allowance is measured based on the amount of the expected credit losses throughout the duration; for accounts receivable excluding material financial parts or contract assets, the allowance loss is measured at the amount of the expected credit losses throughout the duration.

(XI) Derecognition of the financial assets

The Company will derecognize financial assets only in the event where the interests on a contract for financial assets-based cash flow ceased to be effective.

(XII) Operating lease (lessor)

The lease income from operating lease deducting any given incentives of the lessee is amortized and recognized as current profit or loss under straight-line method over the lease period.

(XIII) Inventory

Inventories are measured at the lower of cost or net realizable value while the cost is determined by weighted average method. The cost of finished product and goods in process includes material, direct manpower, other direct costs and manufacturing expenses related to production (amortized based on normal productivity) without loan cost. The item-by-item comparison method is adopted when comparing the cost or net realizable value, whichever is lower. Net realizable value is the estimated selling price in ordinary course of business less the estimated cost needed to complete the work and relevant variable selling expense.

(XIV) Investment/subsidiaries and affiliated companies under the equity method

1. Subsidiaries mean the entities controlled by the Company (including structured entities). When the Company is exposed to the changes of remuneration participated by the entities or is entitled to changes of remuneration, and is able to influence the remuneration by virtue of its power over the entities, the Company is held controlling the entities.

2. Unrealized gains and losses on transactions between the Company and subsidiaries were written off. Accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

3. The shares of profit or loss acquired from subsidiaries by the Company were recognized as current profit or loss and shares of other comprehensive income were recognized as other comprehensive income. In the event that the shares of loss in the subsidiaries recognized by the Company equal to or exceed its equity in the subsidiaries, the Company continues the recognition of the losses based on the shareholding ratio.

4. The affiliated companies refer to the entity in which the Company has significant impact upon and often holds more than 20% of voting shares directly or indirectly. The investment of the Company in the affiliated companies adopts the equity method for

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disposal and is recognized based on cost upon acquisition.

1. The shares in profit or loss acquired from affiliated companies by the Company was recognized as current profit or loss and shares of other comprehensive income was recognized as other comprehensive income. In the event that the Company’s shares of loss in the affiliated companies is equal to or exceed its equity in the affiliated companies (including other unsecured receivables), the Company does not recognize further losses, unless in the event of occurrence of legal obligations, presumed obligations or within the scope that the Company made payment on behalf of the affiliated companies.

2. When changes to equity irrespective of profit and loss or comprehensive income occur to affiliated companies with no impact on the shareholding ratio of the Company, all of changes in equity will be recognized as “capital reserves” based on the shareholding ratio by the Company.

3. The unrealized profit or loss deriving from the transactions between the Company and the affiliated companies were written off based on the equity ratio of the affiliated companies; the unrealized loss was written off unless the evidence displayed the impairment of transferred assets in such transaction. Accounting policies of the affiliated companies have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

4. When the Company forfeits its material influence over the affiliated companies, if the Group disposes the affiliated companies, the accounting treatment for the values related to the affiliated companies as stated into other comprehensive income previously is identical with the basis for the Company’s direct disposition of related assets or liabilities, namely, if the gain or loss stated into other comprehensive income previously would be reclassified into income when the related assets or liabilities are disposed thereof, the gain or loss shall be reclassified into income from equity, when the Company has no significant impact on the affiliated companies. Provided that where it still has material influence over the affiliated companies, the amount previously recognized in other comprehensive income is transferred according to the method stated above based on the proportion.

5. According to regulations of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the current income and other comprehensive income as presented in the parent company only financial statements shall be identical with the current income and other comprehensive income attributable to the proportion allocated to the parent shareholder as presented in the financial statement prepared on the basis of consolidation. The shareholders’ equity as presented in the parent company only financial statements shall be identical with the parent shareholders’ equity as presented in the financial statement prepared on the basis of consolidation.

(XV) Property, plant and equipment

1. Property, plant and equipment is accounted at acquisition cost at initiation and the relevant interest is capitalized during the purchase and construction period.

2. The subsequent cost is included in the book value of assets or recognized as single asset only when future economic benefits related to such item will probable inflow to the Company and the cost of such item can be measured reliably. The book value of the replaced part shall be derecognized. All other repair expenses are recognized as profit or loss upon occurring.

3. The subsequent measurement of property, plant, and equipment adopts the cost model and

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the depreciation is calculated over the estimated useful lives in accordance with the straight-line method. The property, plant and equipment are depreciated and for each and every major part individually.

1. The Company at least reviews the residual value, estimated useful years and depreciation method of each asset at the end of each fiscal year. If the expected values of the residual value and useful years are different from the previous estimate or the expected consumption pattern used in future economic benefits of such asset has significant changes, it is conducted based on the accounting estimate of IFRS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” since the date of change. The useful life of each asset are as follows:

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House and buildings	3 years to 41 years
(The useful life of interior construction is 3–10 years)
Machinery and equipment	3 years to 10 years
Transportation equipment	5 years
Office equipment	2 years to 10 years
Other equipment	2 years to 5 years

(XVI) Lease transactions of lessee – right-of-use assets/lease liabilities

1. The lease asset is recognized as right-of-use assets and lease liabilities upon the date available for use by the Company. When the lease contract is short-term lease or low-valued underlying asset lease, the lease payment is recognized as expenses on a straight-line method within the lease period.

2. The unpaid lease payment is recognized as lease liability based on present value discounted at the Company’s incremental borrowing rate of interest on the start date of lease. The lease payment includes:

Subsequently, it is measured at the amortized cost under the interest method, and the interest expense are recognized during the lease period. When changes in lease term or lease payment is not caused by contract modification, lease liabilities will be reevaluated and the remeasurement will be used to adjust right-of-use assets.

1. The right-of-use assets are recognized based on the cost on the starting date of the lease, the cost includes:

2. (1) The original measured amount of lease liability;

3. (2) Any lease payment paid before or on the starting date;

4. (3) Initial direct costs incurred; and

The subsequence is measured by cost model and the right-of-use assets provide depreciation from the starting date of lease, up to the durable life expires or the lease period expires, the earlier prevails. When the lease liabilities are reassessed, the right-of-use assets will adjust any remeasurement of the lease liabilities.

(XVII) Intangible assets

1. Computer software

The computer software is recognized by acquisition cost and is amortized under straight-line method based on 2 years of useful life.

1. Goodwill

The goodwill is generated due to acquisition method adopted for business merger.

(XVIII) Impairment of non-financial assets

1. The Company will estimate the recoverable amount of the assets which show signs of impairment on the balance sheet date, and impairment loss would be recognized if the recoverable amount falls below the asset’s face value. The recoverable amount is the fair value of an asset less the disposition cost or the use value, whichever is higher. Impairment loss recognized in previous years on assets other than goodwill may be reversed if the basis of impairment no longer existed or is reduced. Notwithstanding, the increase in book value of the asset resulting from the reversal must not exceed the face value of the asset less depreciation or amortization without impairment.

– 22 –

1. The recoverable amount of goodwill shall be estimated periodically. Impairment loss would be recognized if the recoverable amount falls below the face value. The impairment loss on goodwill shall not be reversed in following years.

2. Goodwill shall be amortized to cash generation unit for the purpose of testing impairment. The amortization is identified by operations to amortize goodwill into cash generation unit or cash generation unit group expected to benefit from the merger of businesses generating the goodwill.

(XIX) Loans

This refers to the long-term and short-term amounts borrowed from the bank. Loans of the Company is measured based on the fair value less trading cost at the time of initial recognition. The subsequent measurement of any difference between the price lessing trading cost and redemption value, its interest expenses shall be recognized in profit or loss based on amortized procedure under effective interest method within the outstanding period.

(XX) Accounts payable

1. This means debt generated from the purchase of materials, commodities or labor services on credit.

2. This belongs to short-term accounts payable with unpaid interest. The invoice payable was measured at the initial per value by the Company since the impact of discounting was insignificant.

(XXI) Derecognition of the financial liabilities

The Company will have the financial liabilities derecognized when the contractual obligation is performed, discharged, or expired.

(XXII) Offsetting of financial assets and liabilities

The financial assets and liabilities may be offset and the net amount is presented in the balance sheet when there is a legally enforceable right to offset the recognized amounts of the financial assets and liabilities and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(XXIII) Liability reserve

The reserve for warranty liabilities shall be recognized when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The reserve for liabilities is measured by best estimated present value paid to settle the obligation on the balance sheet date. The discount rate adopts the pre-tax discount rate that reflects the specific risk assessment of current market toward the time value of money and the liabilities and the discounted amortization is then recognized as interest expenses. The future operating loss shall not be recognized in the reserve for liabilities.

(XXIV) Employee benefits

1. Short-term employee benefits

Short-term employee benefits are measured at non-discounted amount expected to be paid, and stated as expenses when the relevant services are provided.

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2. Pension

• (1) Defined appropriation plan

Under the defined contribution plan, every contribution made to the pension fund is recognized as pension cost in the period occurred using the accrual basis. The prepaid contribution may be stated as assets, insofar as it may be refunded in cash or the future payment is reduced.

• (2) Defined benefit plan

  • A. The net obligation under the defined benefit pension plan is converted to the present value based on the future benefit earned from the services provided by the employees under various benefit plans in the current period or in the past, and the present value of defined benefit obligations on the balance sheet date less the fair value of the planned assets. An actuary uses the Projected Unit Credit Method estimates defined benefit obligations each year. The discount rate is based on the market yield rate of government bonds (on the balance sheet date) that have the same currency exposure and maturity date as the obligations on the balance sheet date.

  • B. The remeasurement generated from the defined benefit plan is stated as other comprehensive income in the period when it is incurred, and presented in the retained earnings.

• Remuneration to employees and directors

The remuneration to employees and directors/supervisors shall be recognized as expenses and liabilities only when legal or constructive obligation and the value thereof may be estimated reasonably. Subsequently, if the actual distributed amount resolved is different from the estimate, the difference shall be treated as a change in accounting estimate. If the remuneration to employees is paid with stock shares, the basis for calculating the number of shares shall be the closing price on the day preceding to the day of resolution made by the shareholders’ meeting.

(XXV) Income Tax

1. The income tax expenses consist of current income tax and deferred income tax. The income tax is recognized in the profit or loss except the income taxes relevant to the items which are recognized under other comprehensive income or directly counted into the items of equity, is recognized under other comprehensive income or directly counted into equity respectively.

2. The Company calculates the income tax related to the current period based on the statutory tax rate or tax rate substantially enacted in the countries where the Company is operating and generating taxable income on the balance sheet date. The management shall evaluate the status of income tax return within the statutory period defined by the related income tax laws, and shall be responsible for the income tax expected to be paid to the tax collection authority. Undistributed earnings, if any, shall be levied income tax. The income tax expenses for undistributed earnings will be stated in the year next to the year when the earnings are generated, upon approval of the motion for allocation of earnings at a shareholders’ meeting.

3. Deferred tax is stated based on the temporary differences between taxation basis for assets and liabilities and the face value thereof on the parent company only balance sheet using the balance sheet method. The deferred income tax liabilities resulting from the initial

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recognition of goodwill shall not be recognized. The deferred income tax resulting from the initial recognition of assets or liabilities in a transaction (exclusive of business merger) shall not be recognized, insofar as the accounting profit or taxable income (taxable loss) is not affected by the transaction. All taxable provisional differences generated from investment in subsidiaries and affiliated companies, of which the time of reverse is controllable by the Company and which is not likely to be reversed in the foreseeable future, shall not be recognized. The deferred income tax assets and liabilities are measured at the tax rate in the current period of which the assets are expected to be realized or liabilities to be repaid. The tax rate shall be based on the tax rate and tax laws already legislated or substantially legislated at the end of the reporting period.

1. Deferred income tax assets shall be recognized, insofar as temporary difference is very likely to credit against future taxable income, and deferred income tax assets which are recognized and unrecognized shall be reevaluated on each balance sheet date.

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

3. Unused tax credits derived from purchase of equipment or technology, R&D expenditure and equity investment can be added to deductible temporary differences and recognized as deferred tax assets, to the extent that the Company is likely to earn taxable income to offset against.

(XXVI) Capital stock

Common share is classified as equity. The net amount directly attributable to new shares issuing or additional cost of stock option is recognized as deduction of proceeds in the equity after deducting income tax.

(XXVII) Allocation of dividends

The dividends allocated to the Company’s shareholders are recognized in the financial report upon allocation of dividends resolved by the shareholders’ meeting of the Company. The distributed cash dividend is recognized as liabilities and the distributed stock dividend is recognized as stock dividend to be distributed and reclassified as common shares on the date of new share issuance.

(XXVIII) Recognition of revenue

1. Sale of goods

• (1) The Company researches and develops, manufactures and sells products related to wire communication and wireless broadband network. The sales revenue is recognized upon the transfer of product control to the customer, i.e. the timing when the product is delivered to the buyer, the buyer has the discretionary power regarding the selling channels and prices of product and the Company has no unfulfilled contract obligations that may affect the reception of such product by the buyer. When the product is delivered to the specified location, the risk of

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obsolescence and loss is transferred to the buyer and the buyer accepts the product based on the sales contract or there is objective evidence indicating all acceptance standards has been met, the commodity delivery is thus completed.

• (2) The sales revenue of communication products is recognized by net amount of contract price deducting estimated sales discount. Generally, the sales discount for the customer is calculated based on accumulated sale volume of 12 months. The Company adopts expected value method to estimate sales discount based on historical experience. The revenue amount is recognized only within the scope of height may not result in significant reversal and the estimate is updated on each balance sheet date. As of the balance sheet date, the estimated sales discount payable to the customer related to the sales is recognized as refund liabilities. The collection conditions of trading are agreed based on general business trading mode.

• (3) The Company provides standard warranty for products sold and has responsibility to provide refund for products with defect, which is recognized in reserve for liabilities upon sales.

• (4) The accounts receivable is recognized upon the delivery of product to the customer because the Company has unconditional rights to contract proceeds since that timing and can collect consideration from the customer after that time.

• Cost of acquiring customer contract

The Company expected to recover the additional cost generated from the acquisition of customer contract. However, the related contract term is less than one year so such cost shall be recognized in expenses when incurred.

(XXIX) Government grants

The government subsidies shall be stated at fair value when it is reasonable to ensure that an enterprise will comply with the conditions incident to the government subsidies and the subsidies may be received affirmatively. If the government subsidies, in nature, are intended to compensate the expenses incurred by the Company, the government subsidies shall be stated as the current income on a systematic basis when the related expenses are incurred.

V. Major sources of Uncertainty to Significant Accounting Judgments, Estimates and Assumptions

When preparing the parent company only financial report of the Company, the management decided the adopted accounting policy by their judgment and made accounting estimates and assumptions based on the reasonable expectation toward future events subject to current circumstances on the balance sheet date. The actual results might be different from the major accounting estimates and assumptions, so the historical experience and other factors will be considered for constant evaluation and adjustment. The risk description of the assumptions and estimates which may cause major adjustments to the book amount of assets and liabilities in the following financial year. The following are the description of uncertainty to significant accounting judgments, estimates and assumptions:

(I) Significant judgments on choice of accounting policy

None.

(II) Accounting estimates and assumptions

1. Valuation of inventory

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Inventory shall be evaluated on the basis of the lower the cost and net realizable value. As a result, the Company must make judgment and estimate to determine the net realizable value of the inventory on the balance sheet date. Due to the repaid transformation of technology, the Company assesses the amount of normal wearing out and phasing out of inventory or inventory with no market price and writes off the cost of inventory from net realizable value on the balance sheet date. The valuation of inventory is mainly estimated according to the product demand within a certain period in the future, therefore significant changes may occur.

As of December 31, 2020, the book value of the Company’s inventory was NTD 28,108.

1. Evaluation for the loss of accounts receivable

During the evaluation process for the impairment of accounts receivable, the Company uses the overdue ages of accounts receivable, customer’s financial status, historical trading record and subsequent collections as the basis. The Company also calculates loss ratio based on past aging data statement and considers the industrial forward-looking evaluation to estimate credit loss rate. This requires subjective judgment and the reserve matrix as the basis to estimate the possible credit loss.

As of December 31, 2020, the book value of accounts receivable (including the related party) after recognizing the credit loss by the Company was NTD 1,329,813.

VI. Explanation of Important Accounting Titles

(I) Cash and Cash Equivalents

Cash and Cash Equivalents
Cash on hand and working fund Checking deposit and current deposits Time deposit Cash equivalents – repurchase bonds Total	December 31,2020 December 31,2019
	$ 277 $ 277 35,133 179,766 931,000 234,622 296,511 385,108
	$ 1,262,921$ 799,773

1. The financial institutions trading with the Company are reputable banks and the Company trades with various financial institutions to spread the credit risk. Thus, the possibility of expected default is low.

2. The Company has reclassified time deposit with the initial maturity date over three months and limitation to item of “Financial assets measured at amortized cost.” Please refer to the description in Note 6, (3).

(II) Financial assets measured at fair value through other comprehensive income

Item	December 31,2020 December 31,2019
Non-current items: Equity instruments TWSE/TPEx unlisted stocks Valuation adjustment Total	$ 1,260 $ 1,260 407 10,371
	$ 1,667$ 11,631

1. The Company classified the equity instrument investment belonged to strategic investment as financial assets measured at fair value through other comprehensive income.

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1. The details of financial assets measured at fair value through other comprehensive income recognized in profit or loss and comprehensive income are as follows:

Equity instrument measured at fair value through other comprehensive income Fair value changes recognized in other comprehensive income Dividend income held at the end of current period recognized in profit or loss	2020 2019
	($ 9,964) ($ 2,686)
	$ 9,814$ 2,919

1. For information related to financial assets measured at fair value through other comprehensive income, please refer to Note 12, (3).

(III) Financial assets measured at amortized cost

) Financial assets measured at amortized cost
Item	December 31,2020 December 31,2019
Current items: Time deposit expired over three months Non-current items: Pledged time deposit	$ 1,342,200$ 1,208,500
	$ 20,636 $ 20,636

1. Without taking into account the collaterals or credit enhancement held by the Company, for the financial assets measured at amortized cost that best represents the Company, the maximum amounts of credit risk exposure as of December 31, 2020 and 2019 were the book balance, respectively.

2. The counterparty invested by the Company has good credit risk.

3. For pledged financial assets measured at amortized cost by the Company, please refer to Note 8.

(IV) Notes and Accounts Receivable

Note 8. ) Notes and Accounts Receivable
	December31,2020 December31,2019
Notes receivable Accounts receivable Accounts receivable – the related party Less: Allowance loss	$ - $ 4,873 692,585 1,281,153 646,110 198,091 ( 8,882) ( 8,033)
	$ 1,329,813$ 1,476,084

1. For aging analysis of notes and accounts receivable (including the related party), please refer to Note 12, (2).

2. The balances of notes and accounts receivable as of December 31, 2020 and 2019 were generated by the customer’s contract. Also, the balance of accounts receivable from the customer’s contract was NTD 2,576,809 as of January 1, 2019.

3. The notes and accounts receivable (including the related party) of the Company does not include collaterals.

4. Without taking into account the collaterals or credit enhancement held by the Company, for the notes and accounts receivable that best represents the Company, the maximum credit risk exposure amounts as of December 31, 2020 and 2019 were the book balance, respectively.

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5. For the information related to credit risks, please refer to Note 12, (2).

(V) Inventory

Inventory
		December 31,2020
	Costs	Allowance devaluation loss	Book amount
Materials	$ 109	($ 9)	$ 100
Semi-finished goods	4	( 4)	-
Finished products	18,931	( 1,951)	16,980
Inventoryin transit	11,028	-	11,028
Total	$ 30,072	($ 1,964)	$ 28,108

		December 31,2019
	Costs	Allowance devaluation loss	Book amount
Materials	$ 290	$ -	$ 290
Semi-finished goods	234	( 234)	-
Finished products	88,863	( 4,089)	84,774
Inventoryin transit	10,133	-	10,133
Total	$ 99,520	($ 4,323)	$ 95,197
The inventory cost recognized in expenses in current period by the Company: 2020 2019 Cost of sold inventory $ 4,354,039 $ 5,291,677 Revaluation gain ( 2,359) ( 45,507) $ 4,351,680$ 5,246,170

The significant changes in inventory cost and allowance devaluation loss of the Company in 2020 and 209 were due to the adjustment in the production mode between groups.

(VI) Investment at equity method

Investment at equity method
January 1 Increase in investment at equity method Refunds from decapitalization of investment under the equity method Cash dividend distributed from investment under the equity method Share of profit or loss from investment under the equity method Other comprehensive income under the equity method Exchange difference in the financial statement translation of the foreign operation December 31		2020 2019
		$ 2,434,914 $ 2,260,239 - 280,565 ( 6,000) - - ( 12,185) ( 180,435) ( 40,829) ( 20,592) ( 2,117) ( 10,935) ( 50,759)
		$ 2,216,952$ 2,434,914

For information of the Company’s subsidiaries, please refer to Note 4(3) in the 2020 consolidated financial statements of the Company and its subsidiaries.

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1. The investment gains (losses) recognized under the equity method in 2020 and 2019 are as follows:

as follows:
Subsidiaries: CyberTAN Corp.(U.S.A) CyberTAN(B.V.I) Investment Corp. Ta Tang Investment Co., Ltd. Affiliated companies: Microelectronics Technology, Inc. (Microelectronics Technology) Mega Power Ventures Inc. Total		2020 2019
		$ 2,713 ($ 1,351) ( 149,389) ( 36,601) ( 9,383) ( 4,109) ( 24,627) 1,317 251( 85)
		($ 180,435) ($ 40,829)

1. The basic information about affiliated companies important to the Company is stated as follows:

follows:
Companyname Principal businessplace	Shareholding ratio Shareholding ratio Nature of relationship Measurement method
Microelectronics Technology Taiwan	December 31, 2020 December 31, 2019 26.718% 26.718% Invested company under the equity method by the Company Equity method

1. The summarized financial information of affiliated companies important to the Company is stated as follows:

is stated as follows:
Current assets Non-current assets Current liabilities Non-current liabilities Total net assets Shares of the affiliates’ net assets Goodwill Others Book value of affiliated companies Revenue Net profit of continuing operations for the year Other comprehensive income (after tax) Total comprehensive income for the year		Microelectronics Technology
		December 31,2020 December 31,2019
		$ 3,451,306 $ 3,245,272 1,948,477 1,778,952 ( 1,916,050) ( 1,778,982) ( 1,064,203) ( 589,787)
		$ 2,419,530$ 2,655,455
		$ 646,450 $ 709,484 573,063 573,063 ( 21,303) ( 22,169)
		$ 1,198,210$ 1,260,378
		Microelectronics Technology
		2020 2019
		$ 3,949,997$ 5,798,880
		($ 95,415) $ 1,684 ( 140,510) ( 60,180)
		($ 235,925) ($ 58,496)

1. As the affiliated company important to the Company, Microelectronics Technology, Inc. has the open quotation. Its fair value as of December 31, 2020 and 2019 were NTD 2,031,835 and NTD 1,501,801, respectively.

2. The Company holds 26.718% of Microelectronics’s shares, which is the single largest shareholder of such company. However, the shareholding does not exceed half of total shares and does not exceed the majority vote of the shareholders present at the meeting. Also, the Company has no control over the financial affair, operation and personnel guidelines of Microelectronics Technology without any actual guidance of relevant

– 30 –

activities. Therefore, it is determined that the Company has no control over such company but only significant impact thereof.

(VII) Property, plant and equipment

January 1, 2020 Costs Accumulated depreciation 2020 January 1 Increase Disposal (cost) Disposal (accumulated depreciation) Depreciation expenses December 31 December 31, 2020 Costs Accumulated depreciation January 1, 2019 Costs Accumulated depreciation 2019 January 1 Increase Disposal (cost) Disposal (accumulated depreciation) Depreciation expenses December 31 December 31, 2019 Costs Accumulated depreciation		House and buildings $ 869,506 ( 256,804)	$ (	Machinery and equipment 72,216 51,977)	Machinery and equipment 72,216 51,977)	$ (	Other equipment Total 90,185 $ 1,031,907 61,170) ( 369,951)
		$ 612,702	$		20,239	$	29,015 $ 661,956
		$ 612,702 1,936 - - ( 26,328)	$ ( (		20,239 10,824 4,877) 4,616 9,660)	$ (	29,015 $ 661,956 1,722 14,482 - ( 4,877) - 4,616 9,171) ( 45,159)
		$ 588,310	$		21,142	$	21,566 $ 631,018
		$ 871,442 ( 283,132)	$ (		78,163 57,021)	$ (	91,907 $ 1,041,512 70,341) ( 410,494)
		$ 588,310	$		21,142	$	21,566 $ 631,018
		House and buildings $ 868,191 ( 230,271)	$ (	Machinery and equipment 62,573 43,768)		$ (	Other equipment Total 79,379 $ 1,010,143 51,201) ( 325,240)
		$ 637,920	$	18,805		$	28,178 $ 684,903
		$ 637,920 1,315 - - ( 26,533)	$ ( (	18,805 12,178 2,535) 715 8,924)		$ (	28,178 $ 684,903 10,806 24,299 - ( 2,535) - 715 9,969) ( 45,426)
		$ 612,702	$	20,239		$	29,015 $ 661,956
		$ 869,506 ( 256,804)	$ (	72,216 51,977)		$ (	90,185 $ 1,031,907 61,170) ( 369,951)
		$ 612,702	$	20,239		$	29,015 $ 661,956

The property, plant, and equipment of the Company were not provided as collateral or capitalized interest.

(VIII) Lease transactions – Lessee

1. The underlying assets rented by the Company include the land and the building. The term of lease contract is usually 4 to 20 years. The lease contract adopts individual negotiation and includes various different terms and conditions. Besides the rented assets shall not be used as loan guarantee, there were no other restrictions.

2. The lease terms of drinking fountain, copy machine and parking space rented by the

– 31 –

Company are less than 12 months.

1. The following information is the book value and recognized depreciation expenses of right-of-use assets:

right-of-use assets:
Land House Land House		December 31,2020 December 31,2019
		Book amount Book amount
		$ 257,706 $ 275,046 2,508 3,987
		$ 260,214$ 279,033
		2020 2019
		Depreciation expenses Depreciation expenses $ 17,340 $ 17,340 1,479 1,479
		$ 18,819$ 18,819

1. The following is information regarding the profit or loss items related to lease contracts:

Item influencing current profit or loss Interest expenses of lease liabilities Expenses for short-term lease contracts Expenses for lease of low-price assets		2020 2019
		$ 5,690 $ 6,016 160 805 207 208
		$ 6,057$ 7,029

1. The Company’s total cash outflow of lease in 2020 and 2019 were NTD 22,551 and NTD 23,198, respectively.

(IX) Lease transactions – Lessor

1. The underlying assets leased by the Company is the building and the term of lease contract is usually 1 to 5 years. The lease contract adopts individual negotiation and includes various different terms and conditions. To ensure the use condition of the leased assets, it is often required that the lessee shall not use the leased assets for loan guarantee.

2. The Company recognized NTD 55,267 and NTD 46,950 of rent revenue based on the operating lease contract in 2020 and 2019, respectively, and there were no variable lease payments.

3. The maturity analysis of lease payment based on operating lease of the Company is as follows:

follows:
Not more than 1 year More than 1 year but less than 5 years Total		December 31,2020 December 31,2019
		$ 67,602 $ 28,619 34,472 12,825
		$ 102,074$ 41,444

(X) Short-term loans

Short-term loans
Nature of loan	December31,2020 Interest rate interval Collateral
Bank loans – credit loans Nature of loan	$ 688,413 0.80%~0.90% None December 31,2019 Interest rate interval Collateral
Bank loans – credit loans	$ 392,578 2.24%~2.58% None

– 32 –

(XI) Pension

1. (1) The Company has established the regulation for retirement with welfare in accordance with the “Labor Standards Act,” which is applicable to the years of service for full-time employees before the implementation of the “Labor Pension Act” on July 1, 2005, and the employees continued to adopt the “Labor Standards Act” after the “Labor Pension Act” has come into effect. Employees who meet the retirement requirements will be paid the pension based on their years of service and average salary or wage of the last six (6) months prior to retirement. Two units are accrued for each year of service for the first 15 years and one unit is accrued for each additional year thereafter, up to a maximum of 45 units. The company contributes 2% of the total salary on a monthly basis to the pension fund and deposit at the special pension account under the title of the Pension Reserve Monitoring Committee Taiwan the Bank of Taiwan. Before the end of the fiscal year, the Company calculates the balance of the said labor pension fund account. If the pension account balance is insufficient to pay for the pension of employees expecting to meet the retirement conditions in the following year, the spread amount shall be deposited by the Company in a lump sum before the end of March in the following year.

2. (2) The amount recognized in the balance sheet is stated as follows:

Current values of the ascertained fringe benefit obligations Fair values of the planned assets Net defined benefit assets		December31,2020 December31,2019
		($ 22,598) ($ 26,042) 61,524 60,433
		$ 38,926$ 34,391

• (3) Changes in the net defined benefit liabilities are as follows:

Changes in the net	defined benefit liabilities are as follows:
2020 Balance, January 1 Service cost in the current period Interest (expenses) revenue Remeasurement amount: Return on plan assets (excluding amount included in interest income or expenses) Effects of changes in financial assumptions Adjustment through experience Pension fund paid Balance, December 31	Current values of the ascertained fringe benefit obligations Fair values of the planned assets Net defined benefit assets
	($ 26,042) $ 60,433 $ 34,391 ( 99) - ( 99) ( 195) 453 258
	( 26,336) 60,886 34,550 - 2,000 2,000 ( 995) - ( 995)
	3,362 - 3,362
	2,367 2,000 4,367
	1,371 ( 1,362) 9
	($ 22,598) $ 61,524 $ 38,926

– 33 –

2019 Balance, January 1 Service cost in the current period Interest (expenses) revenue Remeasurement amount: Return on plan assets (excluding amount included in interest income or expenses) Effects of changes in the demographic assumption Effects of changes in financial assumptions Adjustment through experience Pension fund paid Balance, December 31		Current values of the ascertained fringe benefit obligations	Fair values of the planned assets Net defined benefit assets
		($ 24,698) ( 3,082) ( 276)	$ 53,616 $ 28,918 4,717 1,635 582 306
		( 28,056)	58,915 30,859
		- 4 ( 779)	2,065 2,065 - 4 - ( 779)
		2,236	- 2,236
		1,461	2,065 3,526
		553	( 547) 6
		($ 26,042)	$ 60,433 $ 34,391

(4) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and Article 6 of the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (the scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.) The utilization of the fund is supervised by Supervisory Committee for Labor Pension Reserve. With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Any deficits thereof shall be made up by the national treasury upon approval of the competent authority. As the Company was not entitled to participate in operation and management of the Fund, it was not impossible for the Company to disclose the classification of fair value of the planned assets in accordance with Paragraph 142 of No. 19 of IAS. For the fair value of the total assets under the fund on December 31, 2019 and 2020, please refer to the labor pension fund utilization report published by the government each year.

• (5) Actuarial hypotheses about pension are summarized as follows:

Discount rate Future raise rate		2020 2019
		0.35% 0.75%
		3.00% 3.00%

– 34 –

The hypotheses of future mortality rate are estimated based on the statistics published by each country and experience.

Due to the change in principal actuarial assumptions adopted, the affected present value of the defined benefit obligation is as follows:

December 31, 2020 Effect on present value of defined benefit obligation December 31, 2019 Effect on present value of defined benefit obligation		Discount rate	Discount rate	Future raise rate
		Increase by 0.25%	Decrease by 0.25%	Increase by 0.25% Decrease by 0.25%
		($ 637)	$ 661	$ 642($ 622)
		($ 779)	$ 810	$ 790 ($ 764)

Said analysis of sensitivity refers to the analysis of the effect produced by any change of single hypothesis under the circumstance that the other hypotheses remain unchanged. In practice, a lot of changes in hypotheses might be linked with each other. The analysis of sensitivity adopted the same method used for calculation of net pension liability on the balance sheet.

The methods and hypotheses used by the analysis of sensitivity prepared in the current period are identical with those used in the previous period.

• (6) The Company schedules to contribute NTD 0 to the pension plan in 2021.

• (7) Until December 31, 2020, the weighted average duration of the pension plan has been 11 years. The maturity analysis on pension contribution is as follows:

Less than 1 year 1–2 years 2–5 years Over 5 years		$ 169 1,011 1,696 20,414
		$ 23,290

1. (1) As of July 1, 2005, the Company instituted the defined contribution pension plan according to the “Labor Pension Act” applicable to the native employees. The Company shall contribute the amount equivalent to 6% of the monthly salary of respective native employees to the individual pension accounts of the employees at Labor Insurance Bureau, with respect to the labor pension system under the “Labor Pension Act” chosen by employees. Retired employees may claim for pension disbursement in accordance with the status of their individual accounts and the cumulative contribution in the account through monthly payment or in lump sum.

2. (2) The principal of the pension cost recognized by the Company according to the said pension regulations were NTD 8,977 and NTD 9,531 in 2020 and 2019, respectively.

(XII) Liability reserve

respectively. iability reserve
Balance, January 1 Increase in liability reserve in current period Used liability reserve in current period	Warranty
	2020 2019
	$ 42,848 $ 48,268 6,971 17,016 ( 12,688) ( 22,436)

– 35 –

$ 37,131 $

Balance, December 31

42,848

– 36 –

The analysis of liability reserve is as follows:

Current Non-current		December 31,2020 December 31,2019
		$ 19,978 $ 22,573
		$ 17,153$ 20,275

The Company’s reserve for warranty liabilities is estimated according to the historical warranty information of such product to estimate possible after-sale service in the future. The warranty liabilities of the Company estimated to be used in 2021 and 2022 are NTD 19,978 and NTD 17,153 respectively.

(XIII) Capital stock

As of December 31, 2020, the Company’s authorized capital was NTD 3,630,000 which was divided into 363,000 thousand shares (including 14,000 thousand shares exercisable under employee stock options). The paid-in capital was NTD 3,286,054 at NTD 10 per share. All shares issued by the Company were paid in full.

(XIV) Capital reserves

According to the Company Act, for the capital reserves including shares issued at premium excessing the par value and the gains in the form of gifts, besides covering losses, the Company shall distribute the capital reserve by issuing new shares or in cash in proportion to the original shareholding ratio of the shareholders when the Company incurs no loss. In addition, according to relevant regulation of Securities and Exchange Act, the capital surplus mentioned above that can be capitalized annually shall not exceed 10% of the total paid-in capital. When the reserve is insufficient to cover the capital losses, the Company shall not use capital reserve for offset.

			2020
	Stockpremium	Changes in net worth of equity of affiliated companies and joint ventures recognized under equity method	New restricted employee shares	Others	Total
January1(December 31)	$ 484,632	$ 43,221	$ 41,310	$ 8,968	$ 578,131
			2019
	Stockpremium	Changes in net worth of equity of affiliated companies and joint ventures recognized under equity method	New restricted employee shares	Others	Total
January1(December 31)	$ 484,632	$ 43,221	$ 41,310	$ 8,968	$ 578,131

(XV) Retained earnings

1. If the Company has profit at the year’s final accounting, it shall first be used to pay the income tax and make up any cumulative losses in accordance with laws, and 10% of the balance shall be appropriated as legal reserve, unless the existing legal reserve reaches the amount of the Company’s paid-in capital. The rest of the balance shall be used for provision/reversal of special reserves pursuant to laws. The residual balance, if any, shall

– 37 –

be added to cumulative undistributed earnings. The Board of Directors shall draft a motion for allocation of the residual balance plus the undistributed earnings.

1. The dividend policy of the Company is as follows: The Company is now in the growth stage and will develop and expand in line with our business. The distribution of earnings shall consider the Company’s capital expense budget and needs in the future and the board of directors shall propose a motion for the distribution and submit to the shareholders’ meeting for approval before distribution. However, the dividends for the shareholders in the dividends distributed in current year shall not exceed two-thirds of the distributed dividends.

2. The legal reserve shall not be used unless for covering losses or issuing new shares or in cash in proportion to the original shareholding ratio of the shareholders. The new shares or cash allocated shall be no more than 25% of the paid-in capital.

3. Pursuant to laws, when allocating earnings, the Company shall provide the special reserve from the credit balance under other equities on the balance sheet date in current year and then may allocate the earnings. Where the credit balance under other equities is reversed, the reversed amount may be included into the allocable earnings.

4. The 2018 and 2019 earnings distribution proposals of the Company approved at the regular shareholders’ meeting held separately on June 24, 2020 and June 21, 2019 are stated as follows:

stated as follows:
Allocated legal reserve Allocated special reserve Distributed cash dividends for shareholders Total		2019	2018
		Amount Dividends per share(NTD)	Amount Dividends per share(NTD)
		$ 6,924 58,495 49,291 0.15 $ 114,710	$ 16,660 64,388 131,442 0.40 $ 212,490

1. As of March 25, 2021, the board of directors had not approved the proposal of 2020 earnings distribution.

2. (XVI) Other items of interest

earnings distribution. (XVI) Other items of interest
January 1, 2020 Valuation adjustment Valuation adjustment – Subsidiaries and affiliated companies Valuation adjustment transferred to retained earnings – Subsidiaries and affiliated companies Currency translation differences: - the Company and subsidiaries - tax of the Company and subsidiaries - Affiliated companies December 31, 2020		Financial assets measured at fair value through other comprehensive income	Translation of foreign currency Total
		($ 10,294) ( 9,964) ( 14,090) ( 28,264) - - -	($ 116,208) ($ 126,502) - ( 9,964) - ( 14,090) - ( 28,264) ( 9,318) ( 9,318) 1,864 1,864 ( 1,617) ( 1,617)
		($ 62,612)	($ 125,279) ($ 187,891)

– 38 –

January 1, 2019 Valuation adjustment Valuation adjustment – Subsidiaries and affiliated companies Valuation adjustment transferred to retained earnings – Subsidiaries and affiliated companies Currency translation differences: - the Company and subsidiaries - tax of the Company and subsidiaries -Affiliates December 31, 2019 (XVII) Operating revenue Revenue from customer contracts		Financial assets measured at fair value through other comprehensive income	Financial assets measured at fair value through other comprehensive income	Financial assets measured at fair value through other comprehensive income	Translation of foreign currency Total
		Financial assets measured at fair value through other comprehensive income			Translation of foreign currency Total
		($ ( (		12,393) 2,686) 21,968 17,183) - - -	($ 55,614) ($ 68,007) - ( 2,686) - 21,968 - ( 17,183) ( 60,667) ( 60,667) 12,133 12,133 ( 12,060) ( 12,060)
		($		10,294)	($ 116,208) ($ 126,502)
					2020 2019
				$	4,820,615$ 5,699,629

1. Details of revenue from customer contracts

The revenue of the Company is mainly from providing products transferred in certain timing and the revenue can be classified by the following main product lines and geographical area:

	Europe	America	Asia	Australia
2020	Communicatio nproduct	Communication product	Communication product	Communication product	Other departments	Total
Revenue from external customer contracts	NTD 737,046	NTD3,498,131	NTD 320,638	NTD 61,821	NTD 202,979	NTD4,820,615
	Europe	America	Asia	Australia
2019	Communicatio nproduct	Communication product	Communication product	Communication product	Other departments	Total
Revenue from external customer contracts	NTD 177,356	NTD4,702,267	NTD 466,604	NTD 63,336	NTD 290,066	NTD5,699,629

2. Contract liabilities

(1) The Company’s balance of contract liabilities – advance sale receipts related to revenue from customer contract recognized on December 31, 2020, December 31, 2019 and January 1, 2019 were NTD 53,483, NTD 38,481 and NTD 35,468, respectively.

– 39 –

(2) Contract liabilities at the beginning recognized in the revenue in current period

Balance of the contract liabilities at the beginning recognized in the revenue in current period Interest revenue Interest revenue		2020 2019
		$ 8,614$ 14,335
		2020 2019
		$ 12,278 $ 24,939

(XVIII) Interest revenue

(XIX) Other revenue

Other revenue
Dividend revenue Rental revenue Revenue from government subsidy Miscellaneous income Total		2020 2019
		$ 9,814 $ 2,919 55,267 46,950 15,689 216 9,554 8,432
		$ 90,324$ 58,517

Because the Company is applicable to the salary and operating fund subsidies of businesses in difficulty due to the impact of COVID-19 on manufacturing and technical services by the Ministry of Economic Affairs, the revenue from government subsidy recognized in 2020 was NTD 15,689.

(XX) Other gains and losses

2020 was NTD 15,689. ther gains and losses
Net profit of financial assets measured at fair value through profit or loss Foreign currency exchange gain, net Gains on disposal of property, plant and equipment Miscellaneous expenses – depreciation expenses Miscellaneous expenses – interest expenses Miscellaneous expenses Total		2020 2019
		$ - $ 417 ( 13,874) ( 44,238) 625 178 ( 17,977) ( 19,267) ( 2,555) ( 2,496) ( 3,139) ( 3,515)
		($ 36,920) ($ 68,921)

(XXI) Financial Costs

Financial Costs
Interest expenses: Bank loans Lease liabilities Financial Costs Additional Information on the Nature of Employee benefit expenses Depreciation expenses of property, plant and equipment Depreciation expenses of right-of-use assets Amortization expense of intangible assets		2020 2019
		$ 6,583 $ 1,008 3,135 3,520
		$ 9,718$ 4,528
	Expense 2020 2019
	$ 220,311 $ 230,083 34,508 33,882 11,493 11,096 1,226 1,785

(XXII) Additional Information on the Nature of Expense

– 40 –

Employee benefit expenses Salary expenses Expenses for labor and health insurance Pension expenses Other employment expenses		$ 267,538$ 276,846
		2020 2019
		$ 184,486 $ 192,044 16,173 17,816 8,818 7,590 10,834 12,633
		$ 220,311$ 230,083

(XXIII) Employee benefit expenses

1. According to the Articles of Incorporation, if there is profit after annual closing, the Company shall allocate 7%–9% thereof as the remuneration to employees. However, earnings must first be used to offset cumulative losses, if any, before being distributed to the employees and directors as their remuneration at the percentage.

2. The Company estimated the remuneration to employees was NTD 1,249 and NTD 6,186 in 2020 and 2019, respectively. Said values were stated into salary expenses.

According to the earnings gained in 2020, the estimated remuneration to employees was 8% and the actual distributed amount resolved by the board of directors was NTD 1,249, which will be distributed in cash.

The difference between the employee remuneration in 2019 approved by the board of directors and the employee remuneration of NTD 6,186 recognized in the 2018 financial report was NTD 6, which has been adjusted in the profit or loss in 2020.

1. Please refer to the “Market Observation Post System” for information related to the remuneration to employees, directors, and supervisors of the Company approved by the board of directors and resolved by a shareholders’ meeting.

(XXIV) Income Tax

1. Income tax expenses

(1) Income tax expense consisting of:

		2020			2019
Income tax in the current period:
Income tax generated from the
current income	$		27,523	$		18,255
Underestimated (overestimated)
income tax in previous year	(		15,002)			1,857
Total income tax in the current period			12,521			20,112
Deferred income tax:
Initial occurrence and reversal of
temporary difference	(		21,728)	(		4,963)
Total deferred income tax	(		21,728)	(		4,963)
Income tax (benefits) expenses	($		9,207)	$		15,149

(2)	Income tax benefits related to other comprehensive income:	Income tax benefits related to other comprehensive income:	Income tax benefits related to other comprehensive income:	Income tax benefits related to other comprehensive income:	Income tax benefits related to other comprehensive income:
				2020		2019
	Remeasurement of defined benefit
	obligation		($	873)	($		705)
	Exchange differences	on	the
	translation of the foreign	operation		1,864			12,133
			$	991	$		11,428

– 41 –

– 42 –

1. Relation between income tax and accounting profit:

Income tax calculated based on net profit before tax at the statutory tax rate Excluded expenses by the tax laws Exemption by the tax laws Realizable evaluation changes of deferred income tax assets Underestimated (overestimated) income tax in previous year Income tax (benefits) expenses		2020 2019
		$ 2,874 $ 13,300 6,756 839 ( 4,365) ( 847) 530 - ( 15,002) 1,857
		($ 9,207) $ 15,149

1. The amount of deferred income tax assets and liabilities due to temporary difference are shown in the following:

shown in the following:
		2020
	January1	Recognized into profit and/or loss	Recognized in other comprehensive netprofit	December31
Deferred income tax assets:
- Temporary difference:
Loss on inventory valuation	$ 864	($ 471)	$ -	$ 393
Warranty reserve	8,570	( 1,144)	-	7,426
Bonus payable for unused vacation	1,186	-	-	1,186
Exchange differences on the translation of the foreign operation	22,100	-	1,864	23,964
Pension fund payable	666	( 32)	-	634
Refund liabilities	1，900	( 1,528)	-	372
Unrealized exchange loss	8,052	( 3,902)	-	4,150
Net lease liabilities	530	( 530)	-	-
Subtotal	$ 43,868	($ 7,607)	$ 1,864	$ 38,125
- Deferred income tax liabilities:
Foreign investment at equity method	($ 71,513)	$ 29,335	$ -	($ 42,178)
Remeasurement of defined benefitplan	( 4,074)	-	( 873)	( 4,947)
Subtotal	($ 75,587)	$ 29,335	($ 873)	($ 47,125)
Total	($ 31,719)	$ 21,728	$ 991	($ 9,000)

– 43 –

		2019	2019
	January1	Recognized into profit and/or loss	Recognized in other comprehensive netprofit	December31
Deferred income tax assets:
- Temporary difference:
Loss on inventory valuation	$ 9,966	($ 9,102)	$ -	$ 864
Warranty reserve	9,654	( 1,084)	-	8,570
Bonus payable for unused vacation	1,186	-	-	1,186
Exchange differences on the translation of the foreign operation	9,967	-	12,133	22,100
Pension fund payable	1,054	( 388)	-	666
Refund liabilities	2,400	( 500)	-	1,900
Unrealized exchange loss	209	7,843	-	8,052
Net lease liabilities	-	530	-	530
Subtotal	$ 34,436	($ 2,701)	$ 12,133	$ 43,868
- Deferred income tax liabilities:
Gain from financial assets valuation at fair value through profit or loss	($ 74)	$ 74	$ -	$ -
Foreign investment at equity method	( 79,103)	7,590	-	( 71,513)
Remeasurement of defined benefitplan	( 3,369)		( 705)	( 4,074)
Subtotal	($ 82,546)	$ 7,664	($ 705)	($ 75,587)
Total	($ 48,110)	$ 4,963	$ 11,428	($ 31,719)

1. The Company’s profit-seeking business income tax have been certified by the tax authority up until 2018.

(XXV) Earnings per share

authority up until 2018. arnings per share
Basic earnings per share: Net profit attributable to the parent company’s common stock shareholders Diluted earnings per share Net profit attributable to the parent company’s common stock shareholders Impacts of dilutive potential common shares on employee remuneration Impacts of net profit attributable to the parent company’s common stock shareholders plus potential common stocks			2020
		After-tax income	Weighted average outstanding shares (thousand shares) Losses per share (NTD)
		$ 23,575	328,605 $ 0.07
		$ 23,575 -	328,605 193 328,798$ 0.07
		$ 23,575

– 44 –

Basic earnings per share Net profit attributable to the parent company’s common stock shareholders Diluted earnings per share Net profit attributable to the parent company’s common stock shareholders Impacts of dilutive potential common shares on employee remuneration Impacts of net profit attributable to the parent company’s common stock shareholders plus potential common stocks			2019
		After-tax income	Weighted average outstanding shares (thousand shares) Earnings per share (NTD)
		$ 51,352	328,605 $ 0.16
		$ 51,352 -	328,605 629 329,234$ 0.16
		$ 51,352

(XXVI) Changes in liability reserve from financing activities

The Group’s changes in liabilities from financing activities in 2020 and 2019 were changes in cash flow from financing without any non-cash changes. Please refer to the parent company only statement of cash flow.

VII. Transactions of the Related Party

(I) Name of the related party and relationship

Name of the related party Relationship with the Company TSE-TSAN CHEN Key management of the Company CyberTAN Corp.(U.S.A) Subsidiary of the Company Ta Tang Investment Co., Ltd. 〃 CyberTAN (B.V.I) Investment Corp. 〃 The Company is the ultimate parent company of CyberTAN Technology (HONG KONG) Limited such company Fuhongkang Technology (Shenzhen) Co., Ltd. 〃 Chongqing Hongdaofu Technology Co., Ltd. 〃 HON YAO FU Technology Company Limited 〃 (HON YAO FU) Microelectronics Technology, Inc. and its subsidiaries Affiliated companies (Microelectronics Technology and its subsidiaries) Hon Hai Precision Industry Co., Ltd. and its Groups with significant impact on the Company subsidiaries (Hon Hai and its subsidiaries) FOXCONN Technology Co., Ltd. and its Other related parties subsidiaries Fitipower Integrated Technology Inc. 〃 Innolux Corporation and its subsidiaries 〃 Garuda Technology Co., Ltd. and its subsidiaries 〃 (Garuda Technology and its subsidiaries) Pan-International Industrial Corp. 〃

– 45 –

(II) Significant transactions with the related party

1. Operating revenue

Operating revenue
Sale of goods: Subsidiaries -CyberTAN Corp.(U.S.A) - Others Groups with significant impact on the Company -Belkin -Cloud Network - Others Affiliated companies		2020 2019
		$ 89,478 $ 163,701 - 173 1,566,318 849,779 684,652 - 105,159 162,766 - 17,540
		$ 2,445,607$ 1,193,959

The Company’s unit sales price of partial goods for the related party is equivalent to the general customer’s price while partial goods are not sold to the customer. Thus, the sales prices are incomparable. The mode of collection adopts NET 20 days and the collection period is O/A 120 days. The mode of collection for general customer is O/A 60 days.

2. Purchase

Purchase
Purchase of commodities: Subsidiaries - Chongqing Hongdaofu Technology Co., Ltd. -HON YAO FU - Others Groups with significant impact on the Company -Cloud Network - Foxconn Interconnect Technology Limited - Others Affiliated companies - Microelectronics Technology and its subsidiaries Other related parties - Garuda Technology and its subsidiaries - Others		2020 2019
		$ 1,827,012 $ 3,852,573 2,197,647 - 11,119 218,767 99,186 34,298 84,705 17,510 13,698 8,089 201,698 391,886 17,735 36,712 4,003 4,623
		$ 4,456,803$ 4,564,458

The Company’s unit selling price of partial goods for the related party is equivalent to the general vendor’s price while partial unit purchase price has no other vendor’s price for comparison. The mode of collection adopts NET30 days and the collection period is O/A 120 days. The mode of collection for general vendors is O/A 60 days.

– 46 –

3. Accounts receivable

3. Accounts receivable
Accounts receivable – the related party Subsidiaries -CyberTAN Corp.(U.S.A) Groups with significant impact on the Company -Belkin -Cloud Network - Others 4. Other accounts receivable Other receivables – the related party Subsidiaries -HON YAO FU - Others Groups with significant impact on the Company - Hon Hai and its subsidiaries Affiliated companies - Microelectronics Technology and its subsidiaries Other related parties		December31,2020 December31,2019
		$ 11,041 $ 2,815 568,634 181,861 50,680 - 15,755 13,415
		$ 646,110 $ 198,091
		December 31,2020 December 31,2019
		$ 12,801 $ 145,097 2,017 8,961 986 1,683 28,314 1,440 - 729
		$ 44,118 $ 157,910

Other receivables from the related party mainly are the purchase amount on behalf of the related party.

5. Accounts payable

related party. Accounts payable
Accounts payable – the related party Subsidiaries - Chongqing Hongdaofu Technology Co., Ltd. Entities with significant impact on the Company -Cloud Network - Foxconn Interconnect Technology Limited - Others Affiliated companies - Microelectronics Technology and its subsidiaries Other related parties - Garuda Technology and its subsidiaries - Others		December31,2020 December31,2019
		$ 42,049 $ 252,989 - 21,934 9,710 5,576 2,969 1,020 23,410 70,240 4,340 4,431 1,237 500
		$ 83,715$ 356,690

– 47 –

6. Other payables

Other payables
Other payables – the related party Subsidiaries - Others Entities with significant impact on the Company -Belkin - Hon Hai Precision Ind. Co., Ltd. -Carston - Others Affiliated companies Other related parties		December31,2020 December31,2019
		$ - $ 6,527 7,141 - 1,479 1,517 1,009 2,814 - 3 798 4,384 668 4,061
		$ 11,095$ 19,306

Other payables to the related party mainly are payables of processing fee and labor service fee.

7. Lease transactions – Lessee

• (1) The Company rented buildings from FOXCONN Technology Co., Ltd. The tern of lease contract is 10 years and the rent is paid at the end of each month.

• (2) Acquisition for right-of-use assets

The right-of-use assets if the Company increased NTD 4,120 due to the adoption of IFRS 16 on January 1, 2019.

• (3) Lease liabilities

• A. Ending balance:

IFRS 16 on January 1, 2019. Lease liabilities A. Ending balance:
Other related parties B. Interest expenses Other related parties		December31,2020 December31,2019
		$ 2,101$ 3,121
		2020 2019
		$ 63 $ 83

8. Processing expenses

Processing expenses
Chongqing Hongdaofu Technology Co., Ltd. Groups with significant impact on the Company Labor service fee Groups with significant impact on the Company		2020 2019
		$ - $ 116,536 10,363 12,108
		$ 10,363$ 128,644
		2020 2019
		$ 2,281$ 271

9. Labor service fee

The fee was the provided by the Company to the affiliated companies which provided industrial information consultation service in 2019 and 2020.

– 48 –

10. Property transaction

(1) Acquisition of property, plant, and equipment

Property transaction (1) Acquisition of property, plant, and equipment	d	equipment
2020 2019 Subsidiaries - Chongqing Hongdaofu Technology Co., Ltd. $ - $ 2,064 Groups with significant impact on the Company - Hon Hai and its subsidiaries - 2,013 $ -$ 4,077 (2) Disposal of property, plant, and equipment: 2020 Disposalproceeds Disposalgain HON YAO FU $ 886 $ 625 2019 Disposalproceeds Disposalgain HON YAO FU $ 1,821$ 177 Service and repair fee 2020 2019 CyberTAN Corp.(U.S.A) $ 12,130 $ 17,016 Rental revenue 2020 2019 Affiliated companies - Microelectronics Technology and its subsidiaries $ 45,261 $ 29,315 Groups with significant impact on the Company - Hon Hai and its subsidiaries 9,682 4,457 $ 54,943 $ 33,772		2020 2019
		$ - $ 2,064 - 2,013
		$ -$ 4,077
		$ 886 $ 625
		2019
		Disposalproceeds Disposalgain
		$ 1,821$ 177
		2020 2019
		$ 12,130 $ 17,016
		2020 2019
		$ 45,261 $ 29,315 9,682 4,457
		$ 54,943 $ 33,772

11. Service and repair fee

12. Rental revenue

The Company leased property, plant and equipment to the related party in 2018 and 2019. The rent price per square meter has no significant difference with those of the non-related party. The rent is collected every quarter.

13. Other transactions

The related party Tse-Tsan Chen served as the joint guarantor of bank loans and joint writer of guaranteeing invoice by the Company in 2020 and 2019.

(III) Information on the remuneration to the key management:

Salary and other short-term employee benefits Benefits after severance/retirement Total		2020 2019
		$ 11,460 $ 13,003 403 451
		$ 11,863$ 13,454

– 49 –

VIII. Pledged Assets

The details of the Company’s assets provided as collateral are as follows:

Asset item		Book value December31,2020 December31,2019 Purpose of collateral
Time deposit (listed financial assets measured at amortized cost – non-current)		$ 20,636 $ 20,636 Guarantee deposits of superficies

IX. Major Contingent Liabilities and Commitments Made Under Unrecognized Contracts

(I) Contingency

None.

(II) Commitments

None.

X. Losses Due to Major Disasters

None.

XI. Significant Subsequent Events

None.

XII. Others

(I) Capital Management

The Company’s capital management objective is intended to protect the Company’s continued operation and maintain optimal capital structure to reduce capital cost and provide remuneration to the shareholder. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce liabilities.

(II) Financial instruments

1. Categories of financial instruments

Categories of financial instruments
Financial assets Equity instrument investment specified by financial assets measured at fair value through other comprehensive income Financial assets measured at amortized cost Financial liabilities Financial liabilities measured at amortized cost Lease liabilities		December 31,2020 December 31,2019
		$ 1,667 $ 11,631 3,999,790 3,663,015
		$ 4,001,457$ 3,674,646
		$ 1,467,800 $ 1,342,723 265,189 281,683
		$ 1,732,989 $ 1,624,406

Note: The financial assets carried at amortized cost including cash and cash equivalents,

– 50 –

financial assets measured at amortized cost, notes and accounts receivables (including the related party), other receivables – the related party and guaranteed deposits paid; the financial liabilities measured at amortized cost include the short-term loans, accounts payable (including the related party), other payables (including the related party) and deposits received.

1. Risk management policy

2. (1) Various financial risks have impact on the daily operation of the Company, including the market risk (including the exchange rate risk, interest rate risk and price risk), credit risk and liquidity risk. To reduce adverse impact of uncertainty on the Company’s financial performance, the Company used forward exchange contracts to hedge the risk of exchange rate. The derivative tools used by the Company is for hedging purpose instead of trading or speculation.

3. (2) The risk management work is executed by the Company’s financial department based on the policy approved by the board of directors. The Company’s financial department is responsible for identifying, evaluating and hedging financial risks by the close cooperation with each business unit in the Company. The board of directors has established written principles for the overall risk management while providing written policy for certain scope and matters, such as exchange rate risk, interest rate risk, credit risk, utilization of the financial and non-financial instruments and the investment principles of remained current funds.

4. Nature and degree of important financial risk

5. (1) Market risk

Exchange rate risk

• A. The Company is a multinational corporation. Therefore, the exchange rate risk resulted from transactions with functional currency relatively different from the Company mainly involve USD and RMB. Related exchange rate risks come from the future commercial transactions and recognized assets and liabilities.

• B. The management of the Company has established policy that regulates the management of the exchange rate risk which is relative to the functional currency of the companies in the Company. Each company shall adopt hedging policy against the overall exchange rate risk via the Company’s financial department. The exchange rate risk is measured by the expected transactions with high possibility to generate USD and RMB expenses which adopt forward exchange contract to reduce impact of exchange rate fluctuation on the expected purchase inventory cost.

– 51 –

• C. The Company’s business lines involved some non-functional currencies (the functional currency of the Company is NTD). Therefore, the Company would be subject to the effect produced by fluctuation in foreign exchange rate. The information about assets and liabilities denominated in foreign currency exposed to significant effect produced by fluctuation in foreign exchange rate is stated as follows:

	is stated as follows:	is stated as follows:
(Foreign currency: functional currency) Financial assets Monetary items USD : NTD RMB : NTD Financial liabilities Monetary items USD : NTD (Foreign currency: functional currency) Financial assets Monetary items USD : NTD RMB : NTD Financial liabilities Monetary items USD : NTD	December 31,2020
	Foreign currency (thousand dollars) Exchange rate Book amount (NTD)	Sensitivityanalysis
		Range of change Profit or loss affected Other comprehensive income affected
	$ 124,903 28.480 $3,557,237 1% $ 28,458 $ - 2,119 4.377 9,275 1% 74 - $ 60,980 28.480 $1,736,710 1% $ 13,894 $ - December 31,2019
	Foreign currency (thousand dollars) Exchange rate Book amount (NTD)	Sensitivityanalysis
		Range of change Profit or loss affected Other comprehensive income affected
	$ 44,866 29.980 $1,345,083 85,397 4.305 367,634 $ 61，577 29.980 $1,846,078	1% $ 10,761 $ - 1% 2,941 - 1% $ 14,769 $ -

• D. The Company’s total amount of all exchange loss (including the realized and unrealized) from monetary items due to significant impact of exchange rate fluctuation were NTD(13,874) and NTD(44,238) in 2020 and 2019, respectively.

Price risk

• A. The Company’s equity instruments exposed to price risk are the holding financial assets measured at the fair value through profit or loss and financial assets measured at the fair value through other comprehensive income. To manage the price risk of the equity instrument investment, the Company separated the investment portfolio and the separation method is based on the limited amount set by the Company.

• B. The Company mainly invested in the equity instruments issued at home and abroad and the price of such equity instrument is affected by the uncertainty of the investment’s future value. If the price of the equity instrument increase or decrease by 1% and all other factors remain unchanged, the other comprehensive income in 2020 and 2019 will increase or decrease by NTD17 and NTD116 as a result of the profit or loss in equity instrument measured at fair value through other comprehensive income.

• (2) Credit risk

• A. The Group’s credit risk is the risk of financial loss that would be incurred by the Group if its customers or financial instrument trading counterparty fail to perform the contracts. This is mainly due to the trading counterparty cannot

– 52 –

pay the notes and accounts payable based on the payment conditions and financial assets classified to be measured at amortized cost.

• B. The Company established the credit risk management in the Company’s aspect. For trading banks and financial institutes, only those with good credit can be accepted as trading counterparties. According to the loan policy defined by the Company, each business unit within the Company shall conduct the management and credit risk analysis on each new customer before setting payment and proposing the delivery terms and conditions. The internal risk control evaluates customers’ credit quality by taking into consideration the customers’ financial position, and past experience and other factors. The individual risk limit is set by the board of directors according to the internal or external ratings. The management will also control the periodic draw down of credit limits.

• C. The Company adopts IFRS 9 for presumption that when the contract payment past due for over 30 days based on the agreed payment terms, the Company takes it as a default of the contract.

• D. The following presumption provided by the Company adopts IFRS 9 as the basis to determine whether the credit risk of financial instrument increases significantly after the initial recognition:

• (A) When the contract payment past due for over 90 days based on the agreed payment terms, it is determined that the credit risk of financial instrument increased significantly after the initial recognition.

• (B) For bond investment traded in Taipei Exchange, those financial assets with investment grading rated by any external credit rating agency on balance sheet date are considered with low credit risk.

• E. The Company’s indexes used to determine the debt instrument as credit impairment are as follows:

• (A) Issuer has major financial difficulty or likely to wind up or proceed with other financial reorganizations;

• (B) The active market of financial assets might extinguish due to financial difficulty of the issuer;

• (C) Overdue or non-performance of interest or principal payment by the issuer;

• (D) National or regional adverse economic changes related to the default of issuer.

• F. The Company classified the customer’s notes and accounts receivable based on customer rating and the characteristics of customer and used the reserve matrix as the basis with simplified approach to estimate the expected credit losses.

• G. The Company offsets the amount of recoverable financial assets which cannot be reasonably expected after the recourse procedure. However, the Company will continue the legal recourse procedure to protect the creditor’s right. As of December 31, 2020, the Company does not have creditor’s right which was written off with means of recourse.

• H. The Company adopted the business indicators of National Development Council for the future forward-looking considerations to adjust the established loss ratio based on certain period of history and current information to

– 53 –

estimate the allowance loss of the notes and accounts (including the related parties) receivable. The reserve matrix on December 31, 2019 and 2020 are as follows:

			Overdue 1	– 90		Overdue 91 –	Overdue 181 –	Overdue 181 –	Overdue more	Overdue more
		Undue	days			180 days	365 days		than	365 days		Total
	December 31, 2020
	Expected loss ratio	0.36%	5.69%			8.20%		15.70%		100.00%
	Total book value	$1,338,451	$	244	$	-	$	-	$	-	$	1,338,695
	Allowance loss	8,868		14		-		-		-		8,882
			Overdue 1	– 90		Overdue 91 –	Overdue more		Overdue more
		Undue	days			180 days	than	181 days	than	365 days		Total
	December 31, 2019
	Expected loss ratio	0.52%	0.64%			2.50%		7.50%		100.00%
	Total book value	$1,483,825	$	292	$	-	$	-	$	-	$	1,484,117
	Allowance loss	8,031		2		-		-		-		8,033

• I. The aging analysis of accounts receivable (including the related party) is as follows:

follows:
Undue Within 90 days Undue Within 90 days		December 31,2020
		Notes receivable Accounts receivable
		$ - $ 1,338,451 - 244
		$ -$ 1,338,695
		December 31,2019
		Notes receivable Accounts receivable
		$ 4,873 $ 1,478,952 - 292
		$ 4,873 $ 1,479,244

The aging analysis stated above was based on the number of overdue days.

• J. The Company’s statement of changes in the allowance loss for accounts receivable using the simplified approach is as follows:

January 1 Impairment loss recognized December 31		2020 2019
		Accounts receivable (including the related party) Accounts receivable (including the related party)
		$ 8,033 $ 5,154 849 2,879
		$ 8,882$ 8,033

(3) Liquidity risk

• A. The cash flow forecast is executed by each business department in the Company and summarized by the Company’s finance department. The finance department of the Company supervises the forecast of the Company’s current fund demand to ensure there are sufficient fund to support the operating needs.

– 54 –

• B. The following table refers to the Company’s non-derivative financial liabilities and grouped subject to the relevant expiry dates. The non-derivative financial liabilities are analyzed based on the residual period from the date of balance sheet until the expiry date. The contractual cash flow amount disclosed in the following statement is the undiscounted amount.

	Non-derivative financial liabilities
	December 31,2020	Within 1year	1 to 2years	2 to 5years	Over 5years
	Deposit received	$ 76	$ 1,972	$ 719	$ 456
	Lease liabilities	21,935	21,968	61,908	204,202
		$ 22,011	$ 23,940	$ 22,627	$ 204,658
	Non-derivative financial liabilities
	December 31,2019	Within 1year	1 to 2years	2 to 5years	Over 5years
	Deposit received	$ 979	$ 745	$ 1,972	$ 456
	Lease liabilities	22,185	22,185	62,990	224,838
		$ 23,164	$ 22,930	$ 24,962	$ 225,294

Except for those specified above, the non-derivative financial liabilities of the Company will expire within the coming year.

(III) Fair value information

1. The levels of the valuation technique adopted to measure the fair value of the financial and non-financial instruments are defined as follows:

2. Level 1: The quotation of the same asset or liability in an active market on the measurement date acquired by the enterprise (before adjustment). The active market means the market in which there are frequent and large volumes of transactions to provide the information about pricing on an ongoing basis. The fair value of TPEx-listed share invested by the Company belongs to this level.

3. Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of derivatives invested by the Company belongs to this level.

Level 3: Inputs for the asset or liability that are not based on.

1. The following is the analysis regarding the Company’s classification of the financial instruments measured at fair value based on the nature, characteristics and risks of the assets and liabilities as well as the levels of fair value:

	December31,2020		Level 1	Level 2	Level3	Total
	Recurring fair value assets:
	Equity security of financial		$ -	$ -	$ 1,667	$ 1,667
	assets measured at fair value
	through other comprehensive
	income
	December31,2019		Level 1	Level 2	Level3	Total
	Recurring fair value assets:
	Equity security of financial		$ -	$ -	$ 11,631	$ 11,631
	assets measured at fair value
	through other comprehensive

– 55 –

income

1. The methods and assumptions used by the Company to measure fair value is as follows:

2. (1) The Company’s fair value inputs (i.e. Level 1) adopting the quoted market price are listed in the following based on the characteristics of the instruments:

   • TWSE/TPEx listed stocks

   • Quoted market price Closing price

3. (2) Except for the financial instrument in the active market, the fair value of other financial instruments is based on the evaluation technology or the quotation of the counterparty. The fair value acquired through the evaluation technology can take reference from other substantial conditions and similar financial instruments’ current fair value and discounted cash flow method or other evaluation technology, including the market information that can be acquired on the date of preparing the parent company only balance sheet. The information is then used on a calculation model (such as yield curve referred by Taipei Exchange and the average quotation of Reuters commercial paper rate).

4. (3) When evaluating unstandardized financial instruments with low complexity such as debt instrument without active market, interest rate swap contract, exchange swap contract and options, the Company adopts evaluation technology widely used in the market participants. The parameters used by the evaluation model of such financial instruments usually are information observable in the market.

5. (4) The Company includes the credit valuation adjustment in the consideration for the fair value calculation of financial and non-financial instruments to reflect the credit risk of the trading counterparty and the credit quality of the Company, respectively.

6. There was no transfer between level 1 and level 2 and no transfer-in and transfer-out from level 3 in 2019 and 2020.

7. The following statement is the changes in level 3 in 2019 and 2020:

January 1 Profit or loss recognized under other comprehensive income Recognized unrealized valuation gains and loss from equity instrument investments measured at fair value through other comprehensive income Refunds from decapitalization of invested equity instrument at fair value through other comprehensive income December 31			Equityinstruments
		$ (	2020 11,631 $ 9,964) ( -(	2019 34,057 2,686) 19,740)
		$	1,667$	11,631

1. There was no transfer-in and transfer-out from level 3 in 2019 and 2020.

2. For the Company’s evaluation process for fair value classified as level 3, the finance department is responsible to conduct the independent fair value validation of the financial instrument. The department confirms the reasonableness of the evaluation result by making the evaluation result closer to the market status with information from independent sources, confirming the information source is independent, reliable and consistent with other resources and represents executable price, regularly calibrating

– 56 –

evaluation model, conducting roll-back test, updating required input value and data as well as other necessary fair value adjustment for evaluation model.

1. For the evaluation model used by the measurement item of level 3 fair value, the quantitative information of unobservable major input and sensitivity analysis for the changes in unobservable major input are as follows:

	Fair value on December 31, 2020 Evaluation technology Unobservable major input Relationship between input and fairvalue	Fair value on December 31, 2020 Evaluation technology Unobservable major input Relationship between input and fairvalue
Non-derivative equity instruments:
Stocks of venture capital companies	NTD 1,667 Net asset value method N/A N/A
	Fair value on	Evaluation technology Unobservable major input Relationship between input and fair value
	December 31,
	2019
Non-derivative equity instruments:
Stocks of venture capital companies	NTD 11,631 Net asset value method N/A N/A

XIII. Noted Disclosures

(I) Information related to material transactions

1. Loans to others: None.

2. Endorsement/guarantee made for others: Table 1.

3. Marketable securities held at year-end (excluding investments in subsidiaries, affiliated companies, and joint venture): Please refer to Attachment II.

4. Accumulated amount of the same marketable security purchased or sold reaching NTD 300 million or more than 20% of the paid-in capital: None.

5. Amount on acquisition of property reaching NTD 300 million or more than 20% of the paid-in capital: None.

6. Amount on disposal of property reaching NTD 300 million or more than 20% of the paid-in capital: None.

7. Purchase/sale amount of transactions with the related party reaching NTD 100 million or more than 20% of the paid-in capital: Please refer to Attachment III.

8. Accounts receivable from the related party reaching NTD 100 million or more than 20% of the paid-in capital: Please refer to Attachment IV.

9. Transactions of derivatives: None.

10. Business relationship and major transactions between parent company and subsidiaries and among subsidiaries and amounts: Please refer to Attachment V.

11. (II) Information related to reinvested enterprises

Information related to the invested company, such as names and locations, etc. (excluding the invested company in China): Please refer to Attachment VI.

– 57 –

(III) Information about investment in Mainland China

1. Basic information: Please refer to Attachment VII.

2. Major transactions with the invested company in China either directly or indirectly with occurrence through third regions: Please refer to Attachment VIII.

(Blank)

– 58 –

CyberTAN Technology Inc. Endorsement and Guarantee for Others January 1 to December 31, 2020

Attachment I

Unit: NTD thousand (Unless otherwise specified)

		Name of endorsee/guarantee						Ratio of aggregate	Maximum amount of endorsements/ guarantees (Note 3)				Remarks
		Name of company Relation ship (Note 2)						amount of				Endorsements
			Maximum		Balance of		Amount of	endorsements/		Endorsements	Endorsements	/guarantees
			amount of	Maximum	endorsements/		endorsements/	guarantees to the		/guarantees	/guarantees	made for
			endorsements/	balance of	guarantees at		guarantees for	net amount stated		made by the	made by a	companies in
	Name of		guarantees for a	endorsements/g	ending of the	Actual drawn	which property	in the latest		parent for its	subsidiary for	Mainland
No.	endorser/guarantor		single company	uarantees in the	period	amount	is provided as	financial		subsidiary	its parent	China
(Note 1)	company		(Note 3)	period(Note 4)	(Note 5)	(Note 6)	collateral	statements		(Note 7)	(Note 7)	(Note 7)
	Chongqing	Chongqing Hongdaofu Technology Co., Ltd. $ 1
	Hongdaofu
1			$ 104,914	$ 876	$ 871	$ 871	$ 871	0.02%	$ 209,829	N	N	Y	-
	Technology Co.,
	Ltd.

• Note 1: The “No.” column is explained as follows:

• (1) 0 is reserved for issuer.

• (2) Each invested company is numbered in sequential order starting from 1.

• Note 2: The relationship between the endorser/guarantor and endorsee/guarantee is classified into seven categories as follows. It is only necessary to mark the type: (1) A business associated company.

• (2) The company with the majority shareholdings of voting rights held by the Company directly and indirectly.

• (3) The company holding the majority shareholdings of voting rights of the Company directly and indirectly,

• (4) The company with more than 90% shareholdings of voting rights held by the Company directly and indirectly.

• (5) The company needing mutual guarantee pursuant to an agreement in the same industry or between joint proprietors for undertaking engineering projects.

• (6) The company receiving endorsements/guarantees from the shareholders proportionally to their shareholding due to a joint venture relationship.

• (7) Escrow and joint and several guarantee of the contracts in the same industry that involve transaction of pre-sale houses according to the Consumer Protection Act.

• Note 3: The total endorsement/guarantee amount of the Company and subsidiaries is limited to 100% of the net value of the endorser/guarantor company. The endorsement/guarantee amount for individual companies is limited to 50% of the net value of the endorser/guarantor company. The aforesaid net value is determined based on the financial statements audited and certified by CPAs in the most recent year.

• Note 4: It is the maximum balance of endorsements/guarantees for others in the year.

• Note 5: The amount resolved by the Board of Directors should be listed. However, where the Board of Directors authorizes the Chairman to determine the amount in accordance with Paragraph 8, Article 12 of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, the amount in the column refers to the amount determined by the Chairman.

• Note 6: The actual amount drawn by the endorsee/guarantee company within the balance of the endorsement/guarantee should be listed.

• Note 7: Y is reserved for endorsements/guarantees made by the listed parent to its subsidiary, endorsements/guarantees made by a subsidiary to its listed parent, and endorsements/guarantees made for companies in Mainland China.

Attachment I

CyberTAN Technology Inc.

Securities – Ending (Excluding Those Controlled by Invested Subsidiaries, Affiliated Companies and Joint Ventures) December 31, 2020

Attachment II

Unit: NTD thousand (Unless otherwise specified)

Transaction

		Transaction	Transaction	Transaction
	Type and name of securities (Note 1) Relationship with the issuer of securities (Note 2)		Number of shares Book amount (Note 3)	Shareholding ratio Fair value		Remarks
Holdingcompany		Account title				(Note 4)
CyberTAN Technology Inc.	Chun-Yang Venture Capital -	Investment in	$ 126,000 $ 1,667	18.45% $ 1,667		-
	Investment Co., Ltd.	equity
		instruments
		measured at fair
		value through
		other
		comprehensive
		income
〃	Solutionsoft Systems, Inc. -	〃	2,500,000 -	5.25% -		-
	Ying No Wei Shen (Beijing) Software Development Co., Ltd. -	〃	41,755 22,196	2.71% 22,196		-
CyberTAN (B.V.I) InvestmentCorp.
Ta Tang Investment Co., Ltd.	A10 Networks. Inc. -	〃	51,661 14,448	0.07% 14,448		-
〃	Protop Technology Co., Ltd. -	〃	142,408 -	0.06% -

Note 1: The securities referred to in the table means the stocks, bonds, beneficiary certificates within the “Financial Instruments: Recognition and Measurement” of IAS 39 and other securities deriving from these items.

• Note 2: This column is not required if the issuer of the securities is not a related party.

• Note 3: Where fair value measurement is used, please fill in the “book value” column with the book value after the valuation adjustment of the fair value and deduction of any accumulated loss; otherwise, please complete the column with the initial acquisition cost or the book value of the amortized cost net of the accumulated loss.

• Note 4: For any securities in the table that are provided as a guarantee, pledged for loans, or restricted pursuant to any agreement, the number of stocks provided for guarantee or pledged for

Attachment II

loans, the amount of the guarantee or pledge, or the restrictions shall be indicated in the Remarks.

Attachment II

CyberTAN Technology Inc.

Purchase/Sale Amount of Transactions with Related Parties Reaching NTD 100 Million or More Than 20% of Paid-in Capital January 1 to December 31, 2020

Attachment III

Attachment III	Attachment III	Attachment III
							Unit: NTD thousand (Unless otherwise specified)
			Transaction Trading conditions different from those of regular transactions and reasons thereof
							Notes/accounts receivable
							(payable)
								Percentage in
								total
					Percentage in			notes/accounts
			Purchase		total purchases			receivable	Remarks
Purchaser/seller	Counterparty	Relationship	(sale)	Amount	(sales) Loanperiod Unitprice	Loanperiod	Balance	(payable)	(Note 2)
CyberTAN Technology Inc.	Chongqing Hongdaofu	Subsidiary of	Purchase	$ 1,827,012	19.40% Payment term: $ -	Payment term for	($ 42,049)	(4.69%)	-
	Technology Co., Ltd.	the Company			O/A 60 days	regular
						customers: O/A
						60 days
〃	HON YAO FU Technology	〃	Purchase	2,197,647	23.34% Payment term: O/A 60 days -	Payment term for	-	0.00%	-
	Company Limited					regular
						customers: O/A
						60 days
〃	Microelectronics Technology,	Affiliated	Purchase	201,698	2.14% Payment term: O/A 60 days -	Payment term for	( 23,410)	(2.62%)	-
	Inc. and its subsidiaries	companies				regular
						customers: O/A
						60 days
〃	Belkin International, Inc.	Hon Hai and its	Purchase	1,566,318	(32.40%) Collection term: Net 75 days -	Payment term for	568,634	42.50%	-
		subsidiaries				regular
						customers: O/A
						60 days
〃	Cloud Network Technology	〃	Purchase	684,652	(14.16%) Collection term: Net 75 days -	Payment term for	50,680	3.79%	-
	Singapore Pte. Ltd.					regular
						customers: O/A
						60 days

Note 1: If the conditions of trading with related parties are different from those of regular transactions, the difference and the reasons thereof shall be indicated in the “unit price” and “loan period” columns.

Note 2: In case of receipts in advance or prepayments, the reasons, agreed terms and conditions, amount, and the difference from regular transactions shall be indicated in the Remarks. Note 3: The paid-in capital means that of the parent company. For the shares of any issuer without a par value or where the par value per share is not NTD 10, the transaction amount of 20% of the paid-up capital shall be calculated as 10% of the equity attributable to the owner of the parent company shown in the balance sheet.

Attachment III

CyberTAN Technology Inc.

Accounts Receivable from Related Parties Reaching NTD 100 Million or More Than 20% of Paid-in Capital January 1 to December 31, 2020

Attachment IV

Unit: NTD thousand (Unless otherwise specified)

					Overdue accounts receivable from	Overdue accounts receivable from
					relatedparties		Subsequent
Company stating in receivables	Counterparty	Relationship	Balance of accounts	Turnover rate	Amount	Treatment	recovered amount
			receivable from				of accounts	Appropriated
			related parties				receivable from	allowance for bad
			(Note 1)				relatedparties	debt
		Hon Hai and its	$ 568,634		$ -		$ 156,111	$ -
CyberTAN Technology Inc.	Belkin International, Inc.	subsidiaries		4.32%		-

• Note 1: Please list the amount of notes/accounts receivable, other receivables, etc., from related parties, respectively.

• Note 2: The paid-in capital means that of the parent company. For the shares of any issuer without a par value or where the par value per share is not NTD 10, the transaction amount of 20% of the paid-up capital shall be calculated as 10% of the equity attributable to the owner of the parent company shown in the balance sheet.

Attachment IV

CyberTAN Technology Inc. Business Relationship and Major Transactions between the Parent Company and Its Subsidiaries and among Subsidiaries and Amounts January 1 to December 31, 2020

Attachment V

Unit: NTD thousand (Unless otherwise specified)

Attachment V			Unit: NTD thousand (Unless otherwise specified)	Unit: NTD thousand (Unless otherwise specified)
			Transaction
No. (Note 1) Trader Counterparty		Title Amount		Percentage in total
				consolidated operating
	Relationship with trader			revenue or assets
	(Note 2)		Tradingconditions	(Note 3)
0 CyberTAN Technology Inc. CyberTAN Corp. (U.S.A)	1	Sale $ 89,478	Since our goods are not sold to other	1.85%
			customers, the sales prices are incomparable.
			Collection term: Net 75 days; collection term
			for general customers: O/A 60 days.
〃 〃 〃	1	Accounts receivable 11,041	Collection term: Net 75 days; collection term	0.14%
			for general customers: O/A 60 days.
〃 〃 〃	1	After-sale service fee 12,130	The maintenance expense is collected based	0.25%
			on the actual maintenance work.
〃 〃 Chongqing Hongdaofu Technology Co., Ltd.	1	Purchase 1,827,012	Payment term: O/A 90 days; payment term	37.79%
			for regular customers: O/A 60 days.
〃 〃 〃	1	Accounts payable 42,049	Payment term: O/A 90 days; payment term	0.52%
			for regular customers: O/A 60 days
〃 〃 HON YAO FU TechnologyCompany Limited	1	Purchase 2,197,647	Payment term: O/A 90 days; payment term	45.46%
			for regular customers: O/A 60 days.
〃 〃 〃	1	Other receivables 12,801	Collection term: O/A 60 days; collection	0.16%
			term for general customers: O/A 60 days.
1 Fuhongkang Technology (Shenzhen) Co., Ltd. CyberTAN Corp. (U.S.A)	3	Other receivables 26,415	Collection term: O/A 90 days; collection	0.33%
			term for general customers: O/A 30–90 days.

• Note 1: The business transactions between the parent company and its subsidiaries shall be indicated in the “No.” column. This column shall be completed as follows:

• (1) 0 is reserved for the parent company.

• (2) Each subsidiary is numbered in sequential order starting from 1.

• Note 2: The relationship with the related parties is classified into three categories as follows. It is only necessary to mark the type. (Repeated disclosure is not necessary for the same transaction between the parent company and its subsidiaries or between the subsidiaries. In case of the transaction in the form of parent company to a subsidiary, for example, if the parent company has disclosed the transaction, the subsidiary is not necessary to disclose the same repeatedly; in case of the transaction in the form of subsidiary to subsidiary, if a subsidiary has disclosed the transaction, the other subsidiary is not necessary to disclose the same.) (1) Parent company to subsidiary. (2) Subsidiary to parent company. (3) Subsidiary to subsidiary.

• Note 3: To calculate the percentage of the transaction amount in total consolidated operating revenue or assets, the share of the balance at ending of the period in the total consolidated assets is used as the basis of the calculation under the item of assets/liabilities; the share of the interim accumulated amount in the total consolidated operating revenue is used as the basis for the calculation under the item of profit/loss.

• Note 4: The Company may decide whether to disclose the status of the major transactions shown in the table based on the materiality principle.

Attachment V

CyberTAN Technology Inc. Name and Territory of Invested Companies and Other Relevant Information (Excluding Invested Companies in China) January 1 to December 31, 2020

Attachment VI

Unit: NTD thousand (Unless otherwise specified)

				Original investment amount(Note)	Shareholdin	gat the end of theperiod			Profit (loss) from
				End of currentperiod End of lastyear					investments
								Current profit (loss)	recognized in the
								of invested company	current period
Name of investor	Name of invested company	Territory	Main business operation		Number of shares	Ratio	Book amount	(Note 2(2))	(Note 2(3))	Remarks
CyberTAN Technology Inc.	CyberTAN Corp. (U.S.A)	USA	Sales of wired and wireless	$ 18,165 $ 18,165	600,000	100.00%	$ 42,293	$ 2,714	$ 2,714	-
			communication equipment
〃	Ta Tang Investment Co., Ltd.	Taiwan	General investment business	100,000 100,000	10,000,000	100.00%	198,051	( 9,383)	( 9,383)	-
〃	CyberTAN TechnologyCorp.	British Virgin	General investment business	704,190 704,190	22,043,717	100.00%	757,482	( 149,489)	( 149,489)	-
	(B.V.I)	Islands
〃	Microelectronics Technology, Inc.	Taiwan	Design, manufacturing and	1,659,381 1,659,381	60,924,995	26.72%	1,198,210	( 95,415)	( 24,627)	-
			sale of terrestrial microwave
			communication products
〃	Mega Power Ventures Inc.	Taiwan	General investment business	19,000 25,000	1,900,000	25.00%	20,916	1,006	251	-
CyberTAN (B.V.I) Investment	CyberTAN Technology	Hong Kong	General investment business	211,072 211,072	-	100.00%	553,649	( 151,019)	( 151,019)	-
Corp.	(HONGKONG) Limited
〃	HON YAO FU	Vietnam	Development, manufacturing	277,119 277,119	-	100.00%	204,775	( 8,535)	( 8,538)	-
	TechnologyCompany Limited		and sale of high-end routers

Note 1: When the listed company has set up any holding company overseas and used the consolidated financial statements as the main financial statements pursuant to local laws, the information on overseas invested companies may be disclosed only to the extent that the information is related to the holding company.

Note 2:

Otherwise, the table shall be completed as follows:

(1) The “name of invested company,” “territory,” “main business operation,” “original investment amount” and “shareholding at the end of the period” columns should be completed sequentially based on the Company’s (listed company’s) investment and each of its reinvestments in directly or indirectly controlled-invested companies. The relationship (subsidiary or sub-subsidiary) of each invested company with the Company (listed company) should be indicated in the Remarks.

(2) The “current profit (loss) of invested company” column should be filled in with the amount of the current profit/loss of each invested company.

(3) The “profit (loss) from investments recognized in the current period” column should be filled in only with the amount, recognized by the Company (listed company), of the profit/loss from direct investments in each subsidiary and of the profit/loss of each invested company valued under the equity method, and it is not necessary to provide other profits/losses. When providing “the recognized amount of the current profit/loss from direct investments in each subsidiary,” it should ensure that the current profit/loss amount of each subsidiary includes any profit/loss from reinvestments that shall be recognized in accordance with regulations.

Attachment VI

CyberTAN Technology Inc. Information on Investments in Mainland China – Basic Information January 1 to December 31, 2020

Attachment VII

Unit: NTD thousand (Unless otherwise specified)

	Main business Method of Accumulated amount of investments from Taiwan at the beginning of current	Main business Method of Accumulated amount of investments from Taiwan at the beginning of current	Main business Method of Accumulated amount of investments from Taiwan at the beginning of current				The Company’s Profit (loss) from	The Company’s Profit (loss) from	The Company’s Profit (loss) from
				Accumulated amount			shareholding investments			Profit received
				Amount of investments of investments from		Current profit	ratio of direct or recognized in			Investment from investments
				remitted or recovered in Taiwan at the end of		(loss) of invested	indirect current period			book value – as of the end of
Name of Chinese invested				currentperiod currentperiod		company	investment (Note 2)			ending currentperiod			Remarks
company	operation Paid-in capital investment(Note 1) period			Remittance	Recovery
Fuhongkang Technology	Development, manufacturing and sale of high-end routers $ 168,188 (2) $ 212,868
(Shenzhen) Co., Ltd.
				$ -	$ - $ 212,868	($ 151,019)		100% ($ 151,019) $ 553,649			$ -			-
Chongqing Hongdaofu	Development, manufacturing and sale of high-end routers
Technology Co., Ltd.
			257,298 (3)		-	( 154,642)		100% ( 154,642) 209,829			-			-
	of high-end routers
			Investment amount approved by the Investment Commission, MOEA Limit on the amount of investments in Mainland China specified by the Investment Commission, MOEA(Note 4)
	Accumulated amount
	of investments from		approved by the
	Taiwan to Mainland		Investment
	China at the end of		Commission,
Name of company	currentperiod		MOEA
CyberTAN Technology Inc.	$212,868 (USD6,344) $217,521 (USD6,500) $ 3,236,257
Note 1: Investment is classified into following three categories. It is only necessary to mark the type:
(1) Engaged in direct investment in Mainland China. (2) Reinvested in Mainland China through a company in a third area, CyberTAN Technology (HONG KONG) Limited. (3) Others: Directly reinvested in Chinese companies through investment in the Chinese companies.
Note 2: In the “profit (loss) from investments recognized in the current period” column:
(1) An indication is needed if the investment is under preparation and there is no profit or loss. (2) There are following three profit/loss recognition bases. The appropriate one must be indicated. A. The financial statements audited and approved by an international accounting firm that has collaboration relationship with an accounting firm in the Republic of China B. The financial statements audited by a CPA of the parent company in Taiwan C. Others
Note 3: All amounts in the table should be stated in NTD.

	Limit on the
	amount of
	investments in
	Accumulated amount Investment amount Mainland China
	of investments from approved by the specified by the
	Taiwan to Mainland Investment Investment
	China at the end of Commission, Commission,
Name of company currentperiod MOEA MOEA(Note 4)
CyberTAN Technology Inc. $212,868 (USD6,344) $217,521 (USD6,500) $ 3,236,257
Note 1:	Investment is classified into following three categories. It is only necessary to mark the type:
	(1) Engaged in direct investment in Mainland China.
	(2) Reinvested in Mainland China through a company in a third area, CyberTAN Technology (HONG KONG) Limited.
	(3) Others: Directly reinvested in Chinese companies through investment in the Chinese companies.
Note 2:	In the “profit (loss) from investments recognized in the current period” column:
	(1) An indication is needed if the investment is under preparation and there is no profit or loss.
	(2) There are following three profit/loss recognition bases. The appropriate one must be indicated.
	A. The financial statements audited and approved by an international accounting firm that has collaboration relationship with an accounting firm in the Republic of China
	B. The financial statements audited by a CPA of the parent company in Taiwan
	C. Others
Note 3:	All amounts in the table should be stated in NTD.

Attachment VI

CyberTAN Technology Inc.

Information on Investments in Mainland China – Major Transactions with Invested Companies in China, either Directly or Indirectly, through A Business in A Third Area January 1 to December 31, 2020

Attachment VIII

Unit: NTD thousand (Unless otherwise specified)

				Accounts receivable	Endorsements/guarantee	Endorsements/guarantee
	Sale(purchase)	Propertytransaction		(payable)	s orpledges of collateral		Financ		ing
	Amount %			Balance %	Balance at			Balance at	Range of
Name of Chinese					ending of		Maximum	ending of	interest	Current
invested company		Amount	%		period	Purpose	balance	period	rates	interest	Others
Chongqing Hongdaofu	($ 1,827,012) ( 19.40%) - -	$ - -		($ 42,049) ( 4.69%) - -	$ - -		$ - -	$ - -		$ - -
Technology Co., Ltd.			-			-			-		-
Fuhongkang											Other
Technology											payables
(Shenzhen) Co., Ltd.			-			-			-		$26,415

Attachment VI

CyberTAN Technology Inc. Cash and Cash Equivalents December 31, 2020

Statement 1

Unit: NTD thousand

Item Summary	Amount
Cash on hand and working fund	$ 277
Checking deposit and current deposits
- Checks and current deposits in NTD	4,058
- Checks and current deposits in foreign currency Current deposit in USD 723 thousand Exchange rate 28.480	20,577
Current deposit in RMB 2,119 thousand Exchange rate 4.377	9,274
Current deposit in other foreign currency	1,224
Time deposit – NTD	931,000
Cash equivalents – repurchase bonds	296,511
Total	$ 1,262,921

Page 1 of Statement 1

CyberTAN Technology Inc. Accounts receivable, net December 31, 2020

Statement 2

Unit: NTD thousand

	Customer name	Amount	Remarks
	Accounts receivable
	Customer A	$ 631,063
	Customer B	52,022
	Others	9,500	Balance of each customer not exceeding 5% of the account amount
	Subtotal	692,585
	Less: Allowance loss	( 8,882)
	Total	$ 683,703
	Accounts receivable–the related party
	Belkin	$ 568,634
	Cloud Network	50,680
	Others	26,796	Balance of each customer not exceeding 5% of the account amount
	Subtotal	$ 646,110

Page 1 of Statement 2

CyberTAN Technology Inc. - Changes in long term equity investment under the equity method January 1 to December 31, 2020

Statement 3

Unit: NTD thousand

Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount	Balance,beginning Increases in the current period (Note 1) Decrease in the current period (Note 2) Balance,ending Total net worth of equity Collateral and mortgage Name of invested company Number of shares Amount Numb er of shares Amount Number of shares Amount Number of shares Shareholding ratio Amount
Name of invested company Number of shares	Amount Numb er of shares		Amount Number of shares		Amount Number of shares Shareholding ratio
CyberTAN Corp.(U.S.A) 600,000	$ 41,767 -		$ 2, -		($ 2,187) 600,000 100.00		$ 42,293 $ 42,29 None
Ta Tang Investment Co., Ltd. 10,000,000	195,824 -		11,610 -		( 9,383) 10,000,000 100.00		198,051 198,051 〃
CyberTAN (B.V.I)
Investment Corp. 22,043,717	914,770 -		- -		( 157,288) 22,043,717 100.00		757,482 757,482 〃
Microelectronics Technology, Inc. 60,924,995	1,260,378 -		- -		( 62,168) 60,924,995 26.718		1,198,210 646,450 〃
Mega Power Ventures Inc. 2,500,000	22,175 -		4,741 ( 600,000)		( 6,000) 1,900,000 25.00		20,916 20,916 〃
	$ 2,434,914 -		$ 19,		($ 237,026)		$ 2,216,952 〃

Note 1: This refers to the gain on investment under the equity method and share of other comprehensive income of subsidiaries, affiliated companies and joint ventures recognized under the equity method in current period.

Note2: This refers to the loss on investment under the equity method, share of other comprehensive income of subsidiaries, affiliated companies and joint ventures recognized under the equity method and refunds from decapitalization of investment under the equity method.

Page 1 of Statement 3

CyberTAN Technology Inc. Statement of short-term loans December 31, 2020

Statement 4

Unit: NTD thousand

Type of loans	Balance, ending	Loan duration Interest rate interval	Financing quota	Collateral and mortgage Remarks
Credit loans	$ 190,816	December 30, 2020 to January 30, 2021 0.90%	$ 400,000	None -
Credit loans	497,597	October8,2020to March 16,2021 0.80%~0.87	500,000	〃 -
	$ 688,413		$ 900,000

Page 1 of Statement 4

CyberTAN Technology Inc. Accounts payable December 31, 2020

Statement 5

Unit: NTD thousand

	Customer name	Amount	Remarks
	Accounts payable
	Supplier A	$ 42,619
	Supplier B	31,229
	Supplier C	30,759
	Others	507,733	Balance of each supplier not exceeding 5% of the account amount
		$ 612,340
	Accounts payable – the related party
	Chongqing Hongdaofu Technology Co., Ltd.	$ 42,049
	Microelectronics Technology and its subsidiaries	23,410
	Foxconn Interconnect Technology Limited	9,710
	Garuda Technology and its subsidiaries	4,340
	Others	4,206	Balance of each supplier not exceeding 5% of the account amount
		$ 83,715

Page 1 of Statement 5

CyberTAN Technology Inc. Operating revenue

January 1 to December 31, 2020

Statement 6			Unit: NTD thousand
Item	Quantity		Amount Remarks
Operating revenue
Communication product	10,820,600	$	4,617,636
Others			202,979
		$	4,820,615

Page 1 of Statement 6

CyberTAN Technology Inc. Operating cost January 1 to December 31, 2020

Unit: NTD thousand

CyberTAN Technology Inc. Operating cost January 1 to December 31, 2020
Statement 7	Unit: NTD thousand
Item	Amount
Raw materials, beginning	290
Less: Raw materials, ending	( 109)
Reclassified as expenses	( 181)
Materials consumed in current period	-
Manufacturingexpenses	23,633
Current manufacturing costs	23,633
Semi-finished goods, beginning	234
Less: Reclassified as expenses	( 259)
Semi-finished goods, ending	( 4)
Current finished product cost	23,604
Plus: Finished products, beginning	98,996
Current purchase	4,266,580
Less: Finished products, ending	( 29,959)
Reclassified as expenses	( 5,182)
Production and marketing costs	4,354,039
Gains from the reversal of inventory loss in valuation	( 2,359)
Operatingcost	$ 4,351,680

Page 1 of Statement 7

CyberTAN Technology Inc. Manufacturing expenses January 1 to December 31, 2020

Statement 8

Unit: NTD thousand

Item		Amount				Remarks
Salary expenses	$		9,181
Outsourced processing expenses			6,567
After-sale service expenses			2,163
			5,722	Balance	of	each	account	not
Others				exceeding	5%	of the account amount
	$		23,633

Page 1 of Statement 8

CyberTAN Technology Inc. Selling expenses January 1 to December 31, 2020

Statement 9

Unit: NTD thousand

Item	Amount	Remarks
Salary expense	$ 4,741
Freight costs	4,248
Commission expenses	2,565
Others	7,179	Balance of each account not exceeding 5% of the account amount
	$ 18,733

Page 1 of Statement 9

CyberTAN Technology Inc. Administrative expenses January 1 to December 31, 2020

Statement 10		Unit: NTD thousand
Item	Amount	Remarks
Salary expense	$ 25,880
Labor service fee	6,805
Depreciation	6,362
Insurance premium	3,964
Others	14,300	Balance of each account not exceeding 5% of the account amount
	$ 57,311

Page 1 of Statement 10

CyberTAN Technology Inc. R&D expenses January 1 to December 31, 2020

Statement 11		Unit: NTD thousand
Item	Amount	Remarks
Salary expense	$ 142,884
Depreciation	37,208
Insurance premium	13,098
Others	60,013	Balance of each account not exceeding 5% of the account amount
	$ 253,203

Page 1 of Statement 11

CyberTAN Technology Inc.

Summary of employee benefits, depreciation, depletion and amortization expenses of the year by function January 1 to December 31, 2020

Statement 12

Unit: NTD thousand

By function Bynature		2020			2019
	As operatingcosts	As operating expenses	Total	As operatingcosts	As operating expenses	Total
Employee benefit expenses
Salaryexpenses	$ 9,181	$ 173,505	$ 182,686	$ 10,785	$ 179,459	$ 190,244
Expenses for labor and health insurance	719	15,454	16,173	881	16,935	17,816
Pension expenses	417	8,401	8,818	414	7,176	7,590
Remuneration to Directors	-	1,800	1,800	-	1,800	1,800
Other employee benefit expenses	259	10,575	10,834	850	11,783	12,633
Depreciation expenses	2,059	43,942	46,001	2,012	42,966	44,978
Amortization expenses	-	1,226	1,226	-	1,785	1,785

Note:

1. The amount of the Company’s employees in current and previous years were 188 and 204, respectively; among them, six directors did not concurrently serve as employees.

2. The company whose stock is listed for trading on the stock exchange or over-the-counter securities exchange shall additionally disclose the information as follow:

3. (1) The average employee benefit expense in current year was NTD 1,201 (“total employee benefit expenses in current year - total remuneration to directors” / “number of employees in current year - number of directors not concurred as employees”).

   • The average employee benefit expense in previous year was NTD 1,153 (“total employee benefit expenses in previous year - total remuneration to directors” / “number of employees in previous year - number of directors not concurred as employees”).

4. (2) The average employee salary expense in current year was NTD 1,004 (total salary expenses in current year - “number of employees in current year - number of directors not concurred as employees”).

   • The average employee benefit expense in previous year was NTD 961 (total salary expenses in previous year - “number of employees in previous year - number of directors not concurred as employees”).

5. (3) The change in average employee salary expense was by 4.47% (“average employee salary expenses in current year - average employee salary expenses in previous year” / average employee salary expenses in previous year”).

6. The Company has established an Audit Committee to replace the authority of the supervisors; therefore, there is no remuneration to supervisors.

7. Please refer to Note 6(23) for the Company’s allowance policy of employee remuneration.

8. CyberTAN Technology pays attention to the treatment and benefit of employees and establish a reward system with internal reasonableness and external competitiveness.

9. (1) Directors and managers: The Company fully considers business performance of the Company (including financial and non-financial aspects), individual performance and duties and connection and reasonableness between industrial development trends and future economic risks to establish a reasonable remuneration after referring to the external market level. The Company also submits the individual remuneration to directors and managers reviewed by the remuneration committee to the board of directors for resolution.

Page 1 of Statement 12

CyberTAN Technology Inc. Summary of employee benefits, depreciation, depletion and amortization expenses of the year by function January 1 to December 31, 2020

Statement 12

Unit: NTD thousand

• (2) Employees: By regular market survey and review, the Company provides remuneration level better than that provided under laws with external competitiveness; for the internal salary of employees, the Company plans the competitive remuneration based on position, educational background, professional seniority and work performance while taking the comparison result of external market salary survey into consideration, regardless of factors such as gender, age, marriage, race, nationality, religion and politics. In this case, the Company is devoted to form a quality work environment with complete welfare.

Page 2 of Statement 12