D-LINK — Audit Report / Information 2021

Dec 15, 2021

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Stock Code:2332

D-LINK CORPORATION

Parent Company Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of D-LINK CORPORATION:

Opinion

We have audited the financial statements of D-LINK CORPORATION, which comprise the statements of financial position as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2021 and 2020, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of another auditor (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial performance and its cash flows for the year ended December 31, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of D-LINK CORPORATION in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the report of another auditor, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Other Matter

We did not audit the financial statements of D-Link International Ptd. Ltd., a subsidiary of D-Link Corporation as of and for the year ended December 31, 2021, and the financial statements of D-Link International Pte. Ltd. and D-Link Brazil LTDA, subsidiaries of D-Link Corporation as of and for the year ended December 31, 2020. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for above subsidiaries, is based solely on the report of other auditors. Investments accounted for using equity method of above subsidiaries reflect the total assets of $1,429,875 thousand and $1,383,283 thousand, constituting 13% and 12%, of the total assets at December 31, 2021 and 2020, respectively. Besides, the share of profit (loss) of associates accounted for using equity method of $56,946 thousand and $(108,998) thousand, constituting 24% and (8)%, of the net profit (loss) before tax for the years ended December 31, 2021 and 2020, respectively.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

3-1

Key Audit Matters

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

1. Evaluation of investments accounted for using equity method

Please refer to Note 4(h) “Summary of significant accounting policies – Investment in associates”, Note 4(i) “Summary of significant accounting policies – Investment in subsidiaries”, and Note 6(e) “Explanation of significant accounts - Investments accounted for using equity methods” of the parent-company-only financial statements.

Key Audit Matter Explanation:

Investments accounted for using equity method is a material asset to D-LINK CORPORATION, and is significant in its financial statements, with a book value amounting to $7,915,822 thousand as of December 31, 2021. Therefore, it has been identified as the key matter in our audit.

How the matter was addressed in our audit:

Our principal audit procedures included: Communicating with other auditors who audited the financial statements of the associates and subsidiaries of D-Link Corporation, including issuing group audit instruction to subsidiaries and associates, and obtaining the financial statements audited by other auditors. Another auditors performing audit procedures on inventories, accounts receivable and revenue, such as inventory evaluation, accounts receivable evaluation, as well as reviewing the correctness of value and timing of revenue recognition, reviewing and evaluating the reasonableness of main operation changes of the investments; comparing the financial statements of the Company’s investments accounted for using equity method with the group reporting information provided by other auditors, and issuing confirmation letters; as well as considering the adequacy of company’s disclosures on its accounts.

1. Revenue recognition

Please refer to Note 4(p) for accounting policy of revenue recognition and Note 6(s) for sales details of the financial statements.

Key Audit Matter Explanation:

The Company sells internet related products and services, and aims to offer high-quality internet solution proposals to global consumers and enterprises. Revenue is the key performance indicator to evaluate the Company's performance, and thus, needs significant attention in our audit.

How the matter was addressed in our audit:

We tested the effectiveness of the Company’ s controls surrounding revenue recognition; reviewed and relevant sales documents to evaluate whether terms of sales are consistent with the accounting standards; analyzed and compared the changes in sales to major customers to assess the reasonableness of revenue recognition.

3-2

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance are responsible for overseeing D-LINK CORPORATION’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

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

3-3

1. Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit.

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Hsieh, Chiu-Hua and Chou, Pao-Lian.

KPMG

Taipei, Taiwan (Republic of China) March 29, 2022

Notes to Readers

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

The independent auditors’ audit report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and parent company only financial statements, the Chinese version shall prevail.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) D-LINK CORPORATION

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Financial assets at fair value through profit or loss－current (note 6(b)) 1150 Notes receivable, net (note 6(c)) 1170 Accounts receivable, net (note 6(c)) 1180 Accounts receivable due from related parties, net (note 7) 1200 Other receivables (notes 6(c) and 7) 1220 Current tax assets 130X Inventories (note 6(d)) 1410 Other current assets (note 8) Non-current assets: 1517 Financial assets at fair value through other comprehensive income ─ non current (note 6(b)) 1550 Investments accounted for using equity method (notes 6(e) and 7) 1600 Property, plant and equipment (notes 6(g) and 7) 1755 Right-of-use assets (note 6(f)) 1760 Investment property, net (note 6(h)) 1780 Intangible assets (note 6(i)) 1840 Deferred tax assets (note 6(p)) 1900 Other non-current assets Total assets	December 31, 2021 Amount % $ 151,391 1 - - 5,283 - 143,374 1 80,855 1 240,518 2 78 - 88,874 1 56,015 1 766,388 7 - - 8,668,275 79 727,507 7 11,503 - 38,876 - 45,462 - 700,735 6 4,938 1 10,197,296 93 $ 10,963,684 100	December 31, 2020 Amount % 1,777,351 15 20,861 - 2,646 - 160,857 2 97,611 1 26,642 - 962 - 127,022 1 29,542 - 2,243,494 19 364,655 3 7,869,038 66 752,385 6 11,928 - 39,272 - 74,300 1 587,690 5 6,350 - 9,705,618 81 11,949,112 100 Liabilities and Equity Current liabilities: 2108 Other short-term loans (notes 6(j) and 7) 2120 Financial liabilities at fair value through profit or loss－current (notes 6(b) and (n)) 2130 Current contract liabilities (note 6(s)) 2150 Notes payable 2170 Accounts payable 2180 Accounts payable to related parties (note 7) 2200 Other payables (note 7) 2250 Current provisions (note 6(l)) 2280 Current lease liabilities (note 6(k)) 2300 Other current liabilities (note 6(n)) 2365 Current refund liability (note 6(m)) Non-Current liabilities: 2570 Deferred tax liabilities (note 6(p)) 2580 Non-current lease liabilities (note 6(k)) 2600 Other non-current liabilities (notes 6(e), (o) and 7) Total liabilities Equity: (note 6(q)) 3100 Capital stock 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity interest (note 6(q)) Total equity Total liabilities and equity	December 31, 2021		December 31, 2020 Amount % 845,263 7 224 - 9,079 - 11 - 128,467 1 6,151 - 405,257 3 202,212 2 3,017 - 98,901 1 32,582 - 1,731,164 14 267,896 2 9,230 - 681,327 6 958,453 8 2,689,617 22 6,519,961 54 1,523,313 13 2,053,379 17 205,562 2 566,471 5 2,825,412 24 (1,609,191) (13) 9,259,495 78 11,949,112 100
			Amount %
			$ 746,903 7 9,803 - 23,819 - 11 - 131,025 1 9,282 - 187,068 2 181,927 2 4,033 - 55,284 1 24,840 - 1,373,995 13 337,696 3 7,846 - 766,789 7 1,112,331 10 2,486,326 23 5,998,365 55 1,522,573 13 2,110,026 19 412,952 4 299,477 3 2,822,455 26 (1,866,035) (17) 8,477,358 77 $ 10,963,684 100

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese)

D-LINK CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

2021 Amount % 4000 Net operating revenues(notes 6(s) and 7) $ 1,392,575 100 5000 Operating costs(notes 6(d) and 7) 520,881 37 Gross profit from operations 871,694 63 Operating expenses:(notes 6(c), (g), (h), (i), (k), (o) and (t)) 6100 Selling expenses 367,216 26 6200 Administrative expenses 249,976 18 6300 Research and development expenses 587,011 42 6450 Expected credit loss reversal gain (note 6(c)) (208) - 1,203,995 86 Net operating loss (332,301) (23) Non-operating income and expenses: 7100 Interest income (notes 6(u) and 7) 3,549 - 7010 Other income (notes 6(u) and 7) 5,119 - 7020 Other gains and losses (notes 6(b), (n), (u) and 7) (15,914) (1) 7050 Finance costs (notes 6(k), (n), (u) and 7) (5,708) - 7060 Share of profit of associates accounted for using equity method (note 6(e)) 583,787 42 570,833 41 Profit before tax 238,532 18 7950 Less: Income (benefit) tax expenses (note 6(p)) (665) - Net profit 239,197 18 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 (Losses) gains on remeasurements of defined benefit plans (note 6(o)) (1,687) - 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 49,816 4 8330 Share of other comprehensive income of subsidiaries and associates accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss (9,248) (1) 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss - - 38,881 3 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss(notes 6(q) and (v)) 8361 Exchange differences on translation of foreign financial statements (389,612) (28) 8380 Share of other comprehensive income of subsidiaries and associates accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 871 - 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss (note 6(p)) (45,730) (3) (343,011) (25) 8300 Other comprehensive loss, net (304,130) (22) Total comprehensive income $ (64,933) (4) Basic earnings per share (New Taiwan dollars)(note 6(r)) $ 0.38 Diluted earnings per share (New Taiwan dollars)(note 6(r)) $ 0.38

2020 Amount % 1,508,054 100 639,186 42 868,868 58 373,786 25 316,865 21 806,888 54 (647) - 1,496,892 100 (628,024) (42) 1,209 - 9,394 1 1,223,881 81 (8,898) (1) 717,221 48 1,942,807 129 1,314,783 87 74,858 5 1,239,925 82 4,534 - 18,150 1 58,273 4 - - 80,957 5 (403,962) (27) 55,373 4 (68,189) (5) (280,400) (18) (199,443) (13) 1,040,482 69 1.90

1.90

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) D-LINK CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2020 Net profit Other comprehensive income (loss) Total comprehensive income (loss) Other changes in capital surplus: Changes in equity of associates accounted for using equity method Subsidiaries disposal of investments in equity instruments designated at fair value through other comprehensive loss Balance at December 31, 2020 Net profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of ordinary share Other changes in capital surplus: Changes in equity of associates for using equity method Capital reduction Disposal of investments in equity instruments designated at fair value through other comprehensive loss Subsidiaries disposal of investments in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2021	Ordinary shares		Capital surplus			Retained earnings	Retained earnings	Retained earnings	Retained earnings	Tot	Tot	al other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income Others	al other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income Others	al other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income Others	al other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income Others	Total equity
										Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income
					Legal reserve		Special reserve	Unappropriated retained earnings (Accumulated deficits)
	$ 6,519,961 - - - - - 6,519,961 - - - - - - - (521,596) - - $ 5,998,365		1,598,807		2,053,379		205,562		(499,008) 1,239,925 4,534 1,244,459 (178,907) (73) 566,471 239,197 (1,687) 237,510 (56,647) (207,390) (195,597) 729 - (54,847) 9,248 299,477		(1,236,701) - (283,884) (283,884) - - (1,520,585) - (343,011) (343,011) - - - - - - - (1,863,596)		(165,102) - 76,423 76,423 - 73 (88,606) - 40,568 40,568 - - - - - 54,847 (9,248) (2,439)		(3,484) - 3,484 3,484 - - - - - - - - - - - - - -	8,473,414
			- -		- -		- -									1,239,925 (199,443)
			-		-		-									1,040,482
					- -		- -									(254,401) -
					2,053,379 - -		205,562 - -									9,259,495 239,197 (304,130)
					-		-									(64,933)
					56,647 - - - - - -		- 207,390 - - - - -									- - (195,597) (11) (521,596) - -
					2,110,026		412,952									8,477,358

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese)

D-LINK CORPORATION

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss reversal gain Net loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Share of profit of subsidiaries and associates accounted for using equity method Gain on disposal of property, plant and equipment Gain on disposal of investments Other Total adjustments to reconcile loss Changes in operating assets and liabilities: (Increase) decrease in notes receivable Decrease in accounts receivable Decrease (increase) in accounts receivable due from related parties Decrease in other receivable Decrease in inventories (Increase) decrease in other current assets Decrease (increase) in other non-current assets Total changes in operating assets Increase in contract liabilities Decrease in notes payable Increase (decrease) in accounts payable Increase (decrease) in accounts payable to related parties (Decrease) increase in other payable Decrease in provisions Decrease in refund liabilities Decrease in other current liabilities Decrease in other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash outflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows used in operating activities Cash flows (used in) from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of investments accounted for using equity method Increase in investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Other investing activities Net cash flows (used in) from investing activities Cash flows used in financing activities: Decrease in other short-term loans Repayments of bonds Payment of lease liabilities Cash dividends paid Capital reduction payments to shareholders Net cash flows used in financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2021 $ 238,532 60,514 40,760 (208) 30,439 5,708 (3,549) (583,787) (5) - (2,114) (452,242) (2,637) 17,690 16,756 909 34,603 (26,473) 1,722 42,570 14,740 - 2,558 3,131 (218,024) (14,626) (7,742) (6,252) (1,108) (227,323) (184,753) (636,995) (398,463) 3,549 203,607 (5,873) (33,331) (230,511) - - (799,999) 267,512 (31,601) 5 (11,922) (309) (576,314) (98,360) - (3,582) (195,597) (521,596) (819,135) (1,625,960) 1,777,351 $ 151,391	2020 1,314,783 60,434 51,481 (647) 8,056 8,898 (1,209) (717,221) (306) (1,250,434) 51,984
		(1,788,964)
		6,156 80,644 (45,783) 16,958 275 626 (1,471)
		57,405
		1,247 (245) (58,526) (69,018) 28,807 (11,164) (15,100) (34) (995)
		(125,028)
		(67,623)
		(1,856,587)
		(541,804) 1,209 40,867 (6,729) (1,864)
		(508,321)
		(180,322) 2,634,803 - - (62,854) 439 (2,849) 174
		2,389,391
		(593,006) (608) (3,707) - -
		(597,321)
		1,283,749 493,602
		1,777,351

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) D-LINK CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

D-LINK CORPORATION (the “Company”) was incorporated on June 20, 1987 under the approval of Ministry of Economic Affair, Republic of China (“ROC”). The address of its registered office is No.289, Xinhu 3rd Rd., Neihu Dist., Taipei City 114, Taiwan. The main operating activities of the Company include the research, development, and sale of local area computer network systems, wireless local area computer networks ("LANs"), and spare parts for integrated circuits.

(2) Approval date and procedures of the financial statements:

The accompanying financial statements were approved and authorized for release by the Board of Directors on March 29, 2022.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

(Continued)

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D-LINK CORPORATION Notes to the Financial Statements

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

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

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Summary of significant accounting policies:

The principal accounting policies applied in the preparation of the parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented.

• (a) Statement of Compliance

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

• (b) Basis of Preparation

• (i) Basis of Measurement

Except for the following significant accounts, the financial statements have been prepared on the historical cost basis:

• 1) Financial instruments (including derivative financial instruments) at fair value through profit or loss are measured at fair value;

• 2) Financial assets at fair value through other comprehensive income are measured at fair value;

• 3) Equity-settled share-based payment are measured at fair value;

• 4) The defined benefit liabilities are measured at fair value of the plan assets less the present value of the defined benefit obligation.

• (ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment. The financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(c) Foreign currency

• (i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Company entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the

(Continued)

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D-LINK CORPORATION Notes to the Financial Statements

functional currencies using the exchange rate at the date that the fair value was determined. Nonmonetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:

• ‧ an investment in equity securities designated as at fair value through other comprehensive income;

‧ qualifying cash flow hedges to the extent that the hedges are effective.

• (ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Company’s functional currency at exchange rates at the reporting date. Income and expenses of foreign operations are translated to the Company’s functional currency at average exchange rate for the period. Foreign currency differences are recognized in other comprehensive income.

• (d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

• (i) It is expected to be realized or intends to sell or consume it in its normal operating cycle;

• (ii) It holds the asset primarily for the purpose of trading;

• (iii) It is expected to be realized within twelve months after the reporting date; or

• (iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

• (i) It expects to settle the liability in its normal operating cycle;

• (ii) It holds the liability primarily for the purpose of trading;

• (iii) The liability is due to be settled within twelve months after the reporting date; or

• (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in it is settlement by the issue of equity instruments do not affect its classification.

(Continued)

11

D-LINK CORPORATION Notes to the Financial Statements

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(f) Financial Instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI)–equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• 2) Fair value through other comprehensive income (FVOCI )

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

(Continued)

12

D-LINK CORPORATION Notes to the Financial Statements

• ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Some accounts receivables are held within a business model whose objective is achieved by both collecting contractual cash flows and selling by the Company, therefore, those receivables are measured at FVOCI. However, they are included in the ‘ trade receivables’ line item.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets and beneficiary certificate. Trade receivables that the Company intends to sell immediately or in the near term are measured at FVTPL; however, they are included in the ‘trade receivables’ line item. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4) Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

(Continued)

13

D-LINK CORPORATION Notes to the Financial Statements

• ‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

• ‧ how the performance of the portfolio is evaluated and reported to the Company’ s management;

• ‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• ‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

• ‧ the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

• 5) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘ principal’ is defined as the fair value of the financial assets on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

• ‧ contingent events that would change the amount or timing of cash flows;

• ‧ terms that may adjust the contractual coupon rate, including variable rate features;

• ‧ prepayment and extension features; and

• ‧ terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features)

(Continued)

14

D-LINK CORPORATION Notes to the Financial Statements

6) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, financial assets measured at amortized costs, notes and trade receivables, other receivables, leases receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

The Company measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

‧ debt securities that are determined to have low credit risk at the reporting date; and

‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 360 days past due or the debtor is unlikely to pay its credit obligations to the Company in full.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

(Continued)

15

D-LINK CORPORATION Notes to the Financial Statements

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being more than 90 days past due;

• ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• ‧it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• ‧ the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

• 7) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

(Continued)

16

D-LINK CORPORATION Notes to the Financial Statements

2) Exchangeable bonds

Exchangeable bonds issued by the Company are recorded as embedded derivative and host contract, respectively. The derivatives are classified into financial assets at fair value through profit or loss and financial liabilities at fair value through profit or loss.

3) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

4) Other financial liabilities

Financial liabilities that are not classified as held-for-trading or measured at fair value through profit or loss, which comprise loans and account payable, and other payables, are measured at fair value plus any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method. Interest expense not capitalized as capital cost is recognized in non-operating income and expense, and is included in other gains and losses.

5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

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

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(Continued)

17

D-LINK CORPORATION Notes to the Financial Statements

• (iii) Derivative financial instruments and hedge accounting

The Company holds derivative financial instruments to hedge its foreign currency exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the non-financial asset’ s host contract are not closely related to the embedded derivatives and the host contract is not measured at FVTPL.

The Company assigned parts of hedge instruments (derivate financial instruments) to hedge its cash flow.

At initial designated hedging relationships, the Company documents the risk management objectives and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged items and hedging instrument are expected to offset each other.

(g) Inventories

The cost of inventories shall comprise all costs of purchase and other costs incurred in bring the inventories to their present location and condition. Inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made on an item-by-item basis. Cost is determined using the weighted-average method. Net realizable value is based on the estimated selling price of inventories; less, all further costs to completion and all relevant marketing and selling costs. Related expenses/losses and incomes of inventory are included in the cost of sales.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Company holds between 20% and 50% of the voting power of another entity.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The parent company only financial statements include the Company’s share of the profit or loss and other comprehensive income of equity-accounted investees, after adjustments to align the accounting policies with those of the Company from the date that significant influence commences until the date that significant influence ceases.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated the Company’s interests in the associate.

(Continued)

18

D-LINK CORPORATION Notes to the Financial Statements

If an associate issues new shares and the Company does not acquire new shares in proportion to its original ownership percentage but still have significant effect, the change in the equity shall be used to adjust the capital surplus or retained earnings, and investments are accounted for using equity method. If it resulted in a decrease in the ownership interest, except for the adjustments mentioned above, the related amount previously recognized in other comprehensive income in relation to the associate will be reclassified proportionately on the same basis as if the Company had directly disposed of the related assets or liabilities.

(i) Investment in subsidiaries

Subsidiaries that the Company has significant influence over their financial and operating policies are accounted for using the equity method. Under equity method, profit or loss and comprehensive income in the parent company only financial statements are consistent with the profit or loss and the comprehensive income that are attributable to the owners of the parent in the consolidated financial statements. In addition, equity in the parent company only financial statements are consistent with the equity attributable to owners in the consolidated financial statements.

The Company recognizes any changes in its subsidiaries’ equity, which did not result in the changes of its influence within the transaction regarding its owners’ equity.

(j) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(k) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, less, accumulated depreciation and accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(Continued)

19

D-LINK CORPORATION Notes to the Financial Statements

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

• (iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

• 1) Buildings and improvements: 5~55 years

• 2) Transportation, office equipment and others: 2~9 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from the previous estimates, the change(s) is accounted for as a change in an accounting estimate.

• (iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

(l) Leases

The Company assesses whether a contract is or contains a lease on the date of its establishment, and a contract is or contains a lease if the contract transfers control over the use of the identified asset for a period of time in exchange for consideration.

(i) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

(Continued)

20

D-LINK CORPORATION Notes to the Financial Statements

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• －

• fixed payments, including in-substance fixed payments;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• －

• －

• amounts expected to be payable under a residual value guarantee; and

• payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• －

• there is a change in future lease payments arising from the change in an index or rate; or

• － there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee; or

• － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying assets, or

• － there is a change of its assessment on whether it will exercise a extension or termination option; or

• －

• there is any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases and leases of low-value assets, including office building and office equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(Continued)

21

D-LINK CORPORATION Notes to the Financial Statements

From January 1, 2021, when the basis for determining future lease payments changes as required by interest rate benchmark reform, the Company will remeasure the lease liability by discounting the revised lease payments using the revised discount rate that reflects the change to an alternative benchmark interest rate.

As a practical expedient, the Company elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

• －

• the rent concessions occurring as a direct consequence of the COVID-19 pandemic;

• － the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

• － any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2022; and

• －

• there is no substantive change in other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

• (ii) As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The lessor recognizes the interest income over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor’ s net investment in the lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as rental income’.

(Continued)

22

D-LINK CORPORATION Notes to the Financial Statements

(m) Intangible assets

Intangible assets are carried at cost less accumulated amortization and accumulated impairment losses.

The amortized amount is the cost of an asset less its residual value. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

• (i) Computer software: 2~8 years

• (ii) Patents: Amortization is recognized using the term of patent contract. The estimated live is 16 years

• (iii) Other intangible asset: 3 years

The residual value, amortization period, and amortization method for an intangible asset with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any change shall be accounted for as changes in accounting estimates.

• (n) Impairment – non-derivative financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

(o) Provisions

A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(Continued)

23

D-LINK CORPORATION Notes to the Financial Statements

(i) Warranties

A provision for warranties is recognized when the underlying products or services are sold, based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

(ii) Legal proceedings and royalties

Legal proceedings and royalties are estimated at the expected relevant cost based on historical experiences.

(p) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer.

The main operating activities of the Company is research, development, and sales of LANs and spare part for integrated circuits. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

The Company often offers volume discounts to its customers. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate the discounts, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A refund liability is recognized for expected volume discounts payable to customers in relation to sales made until the end of the reporting period.

The Company offers a standard warranty for the consumer electronics sold to provide assurance that the product complies with agreed-upon specifications and has recognized warranty provisions for this obligation; please refer to note 4(o).

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

In case of fixed-price contracts, the customers the fixed amount based on a payment schedule. If the services rendered by the Company exceed the payment, a contract asset is recognized.

A contract liability is a the Company’ s obligation to transfer goods to a customer for which the Company has received consideration.

(Continued)

24

D-LINK CORPORATION Notes to the Financial Statements

(q) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by the employees.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(r) Income Taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

The Company has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

(Continued)

25

D-LINK CORPORATION Notes to the Financial Statements

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred taxes shall not be recognized for the following exceptions:

• (i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• (iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset if the following criteria are met:

• (i) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(Continued)

26

D-LINK CORPORATION Notes to the Financial Statements

(s) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary equity holders. The calculation of basic earnings per share is based on the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, such as convertible notes, employee stock options, and employee bonus settled using shares that have yet to be approved by the Board of Directors meeting. The effect on net income per common share from the increase in stock from the transfer of unappropriated earnings, capital surplus, and employee profit sharing is computed retroactively.

(t) Operating segments

The Company discloses the information of operating segments in the consolidated financial statements. Therefore, the Company does not disclose such information in the parent company only financial statements.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the parent company only financial statements in conformity with the Regulations and the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next period.

(a) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories.

(b) Judgment on whether company has substantial control over invested company

The Company held 41.58% of issued shares of Cameo Communication, Inc., and the remaining shares were held by related parties including corporate shareholders and minority shareholders that have more than 5% of the shares. Based on the previous experience, it is unlikely the Company would obtain more than half of the directors’ seats and the voting rights of the shareholders meeting. As a result, the Company has no substantial control over Cameo Communication, Inc.

(Continued)

27

D-LINK CORPORATION Notes to the Financial Statements

(6) Explanation of significant accounts:

• (a) Cash and Cash Equivalents

December 31, 2021 Cash on hand $ 191 Checking and saving accounts 151,200 Cash equivalents - $ 151,391	December 31, 2020 265 227,086 1,550,000 1,777,351

Please refer to 6(w) for the currency risk in financial assets and liabilities and their sensitivity analysis.

A time deposit is qualified as a cash equivalent when it has a maturity of three months or less from the date of acquisition and it is held for the purpose of short-term cash commitments. Otherwise, they are classified as other current assets.

• (b) Financial Assets and Liabilities

• (i) Details as follows

Financial assets and liabilities at fair value through profit or loss:

December 31, 2021 Mandatorily measured at fair value through profit or loss-current Cross currency swaps $ - Financial liabilities at fair value through profit or loss – current Cross currency swaps $ 9,803 Forward foreign exchange contracts - Cross currency swaps $ 9,803 Financial assets at fair value through other comprehensive income – non-current Cameo Communication, Inc. (CAMEO) $ -	December 31, 2020 20,861 167 57 224 364,655

• 1) On February 17, 2021, the Company increased investment in Cameo and the shareholding ratio increased from 17.35% to 41.58%. The Company transferred financial assets from financial assets at fair value through other comprehensive income to investments accounted for using equity method and reclassified financial assets from other equity loss $54,847 thousand to retained earnings.

• 2) For disclosures on credit, currency and interest rate risks in financial instruments, please refer to note 6(w).

(Continued)

28

D-LINK CORPORATION Notes to the Financial Statements

3) As of December 31, 2021 and 2020, no financial assets are pledged as collateral.

(ii) Sensitivity analysis – equity market price risk:

If the security price changes, and if it is on the same basis for both years and assumes that all other variables remain the same, the impact on other comprehensive income will be as follows:

		2021		2020
	After-tax other			After-tax other
Security price at	comprehensive		After-tax	comprehensive	After-tax
reporting date		income (loss)	profit (loss)	income (loss)	profit (loss)
Increase 3%	$	-	-	10,940	-
Decrease 3%	$	-	-	(10,940)	-

• (iii) Non-hedging-derivative financial instruments

Derivative financial instruments are used to hedge certain foreign exchange and interest risk in which the Company is exposed to arising from its operating, financing and investing activities. As of December 31, 2021 and 2020, transactions that do not qualify for hedging accounting are presented as held-for-treading financial assets were as follows:

1) Derivative financial assets

		December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2020	December 31, 2020	December 31, 2020
		Contract			Contract
		amount			amount
		(thousand)	Currency	Maturity date	(thousand)	Currency	Maturity date
Cross currency swaps:
JPY	$	-	-	-	1,800,000	JPY	2021.01~
							2021.06
EUR		-	-	-	10,000	EUR	2021.01

2) Derivative financial liabilities

		December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2020	December 31, 2020	December 31, 2020
		Contract			Contract
		amount			amount
		(thousand)	Currency	Maturity date	(thousand)	Currency	Maturity date
Cross currency swaps:
USD	$	1,700	USD	2022.02	1,700	USD	2021.03
EUR		10,000	EUR	2022.02	-	-	-
JPY		1,800,000	JPY	2022.01~	-	-	-
				2022.03
Forward foreign
exchange contracts:
EUR		-	-	-	500	EUR	2021.03

(Continued)

29

D-LINK CORPORATION

Notes to the Financial Statements

(c) Notes and accounts receivable (including related parties) and other receivables

December 31, 2021 Notes receivable for operating activities $ 5,283 Accounts receivable (including related parties) for operating activities 225,117 Other receivables 240,518 470,918 Less: allowance for doubtful accounts (888) $ 470,030	December 31, 2020 2,646 259,564 26,642 288,852 (1,096) 287,756

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all notes and accounts receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information. The loss allowance provision as of 2021 and 2020 was determined as follows:

December 31, 2021 Gross carrying amount Weighted- average loss rate Current $ 455,439 0.18% 90 days or less past due 15,479 0.30% $ 470,918 December 31, 2020 Gross carrying amount Weighted- average loss rate Current $ 285,002 0.38% 90 days or less past due 2,988 0.67% 181 to 270 days past due 569 -% 271 to 360 days past due 293 -% $ 288,852	Loss allowance provision 842 46
	888
	Loss allowance provision 1,076 20 - -
	1,096

The movement in the allowance for notes and accounts receivable and other receivables were as follows:

2021 Balance at January 1, 2021 and 2020 $ 1,096 Impairment loss recognized (208) Balance at December 31, 2021 and 2020 $ 888	2020 1,743 (647) 1,096

(Continued)

30

D-LINK CORPORATION Notes to the Financial Statements

(d) Inventories

December 31, 2021 Finished goods $ 88,874	December 31, 2020 127,022

The operating cost comprises of cost of goods sold, write-down loss (reversal gain) of inventories to net realizable value, warranty costs and other loss (gain). For the year ended December 31, 2021 and 2020, the cost of goods delivered were $495,756 thousand and $620,633 thousand, respectively. The warranty expenses, inventory losses from obsolescence and others amounted to $21,580 thousand and $29,064 thousand for the year ended December 31, 2021 and 2020, respectively. Recognized loss of inventories to net realizable value is recorded as cost of goods sold by $3,545 thousand for the year ended December 31, 2021, because of increased stocking due to shortage of materials and increased logistics time. Reversal gain of inventories to net realizable value is recorded as decrease of cost of goods sold by $10,511 thousand for the year ended December 31, 2020, because of out of stock in the market and active sales of inventory.

As of December 31, 2021 and 2020, no inventories were pledged as collateral.

• (e) Investments accounted for using equity methods

Investments accounted for using equity methods were as follows:

December 31, 2021 Subsidiaries $ 7,273,419 Associates 1,394,856 8,668,275 Less: Credit balance of equity investment (In other non-current liabilities) (752,453) $ 7,915,822	December 31, 2020 7,869,038 - 7,869,038 (667,569) 7,201,469

• (i) YEOCHIA, the Company’ s the investment accounted for using equity method, reduced its capital by cash in 2021, and the Company received cash for $200,000 thousand.

• (ii) D-Link Canada, the Company’ s investment accounted for using equity method, reduced its capital by cash in 2021, and the Company received cash for $67,512 thousand (CAD$3,000 thousand).

• (iii) YEOCHIA and YEOMAO, the Company’s the investment accounted for using equity method, carried out liquidation procedure in December 2021.

• (iv) During 2020, the Company disposed of Alpha Networks Inc., an equity-accounted investee, and recognized disposal proceeds of $1,250,434 thousand.

• 1) Subsidiaries

Please refer to the 2021 consolidated financial statements.

(Continued)

31

D-LINK CORPORATION Notes to the Financial Statements

2) Associates

		Principal
		place of	Ownership		interest/
		business/	Voting rights held
Name of	Name of relationship	Registered	December 31,		December	31,
Associate	with the Company	Country	2021		2020
Alpha	The major business are	Taiwan	-	%	-	%
Networks, Inc.	research, developments,
(Alpha)	design, manufacturing and
	selling broadband
	products, wireless
	products, computer
	networks system
	equipment and its
	components.
Cameo	The major business	Taiwan	41.58	%	-	%
Communication,	activities are
Inc. (Cameo)	manufacturing and selling
	of network system
	equipment and its
	components, as well as
	researching and
	developing of related
	technologies. It is the
	supplier of the Company.

• 1) The financial information of Alpha was summarized as follows:

		November 30,
		2020
		(Unaudited)
Current assets	$	21,809,621
Non-current assets		6,198,278
Current liabilities		14,178,386
Non-current liabilities		1,320,201
Net assets	$	12,509,312
Net assets attributable to non-controlling interests	$	2,981,613
Net assets attributable to investee's shareholders	$	9,527,699

(Continued)

32

D-LINK CORPORATION Notes to the Financial Statements

			2020.1.
			~2020.11
			(Unaudited)
	Operating revenue	$	28,570,311
	Net income	$	558,270
	Other comprehensive loss		93,124
	Total comprehensive income	$	651,394
	Total comprehensive income attributable to non-controlling interest	$	134,446
	Total comprehensive income attributable to investee's shareholders	$	516,948
			2020.1.
			~2020.11
			(Unaudited)
	The Company’s share in associate’s net assets at beginning of year	$	1,920,299
	Comprehensive income attributable to the Company		109,284
	Changes in equity of associates using equity method		(170,642)
	Dividends received during the year		(36,534)
	Less: exchange of exchangeable bond and sell of shares		(1,823,805)
	The Company’s share in associate’s net assets at end of year		(1,398)
	Add: goodwill		1,398
	Carrying amounts of investments accounted for using equity method
	at ending of year	$	-
2)	The financial information on Cameo is summarized as follows:
		December 31,
			2021
	Current assets	$	1,693,178
	Non-current assets		3,397,654
	Current liabilities		875,644
	Non-current liabilities		1,084,837
	Net assets	$	3,130,351
	Net assets attributable to investee's shareholders	$	3,130,351

(Continued)

33

D-LINK CORPORATION Notes to the Financial Statements

		For the year
		ended
	December 31,
		2021
Operating revenue	$	2,479,234
Net Income	$	390,654
Other comprehensive loss		(57,188)
Total comprehensive loss	$	333,466
Total comprehensive loss attributable to investee's shareholders	$	333,466
		For the year
		ended
	December 31,
		2021
The Company's share in associate's net assets at beginning of year	$	-
Comprehensive income attributable to the Company		189,571
Increase of investment		1,111,981
The Company's share in associate's net assets at end of year		1,301,552
Less: unrealized gains		(9,185)
Add: goodwill		102,489
Carrying amounts of investments accounted for using equity method	$	1,394,856

• (v) The market value of public listed or OTC investees of the Company accounted for using equity method was as follows:

December 31, 2021 Cameo $ 1,567,876	December 31, 2020 -

The Company originally held 17.35% shares of Cameo and accounted for financial assets at fair value through other comprehensive income $414,471 thousand. The Company increased investments amounted $799,999 thousand in Cameo on February 17, 2021 and became to hold 41.58% shares of Cameo after increasing investments. Therefore, the Company had a significant influence on Cameo and accounted for investments accounted for using equity methods.

(vi) Pledges

As of December 31, 2021 and 2020, no investment accounted for using equity methods is pledged as collateral.

(Continued)

34

D-LINK CORPORATION Notes to the Financial Statements

(f) Right-of-use assets

The Company leases buildings. Information about leases is presented below:

		Buildings
Cost:
Balance at January 1, 2021	$	16,065
Increase		3,214
Decrease		(958)
Balance at December 31, 2021	$	18,321
Balance at January 1, 2020	$	19,982
Decrease		(3,917)
Balance at December 31, 2020	$	16,065
Accumulated Depreciation:
Balance at January 1, 2021	$	4,137
Increase		3,639
Decrease		(958)
Balance at December 31, 2021	$	6,818
Balance at January 1, 2020	$	751
Increase		3,901
Decrease		(515)
Balance at December 31, 2020	$	4,137
Carrying amount:
Balance at December 31, 2021	$	11,503
Balance at December 31, 2020	$	11,928
Balance at January 1, 2020	$	19,231

(g) Property, plant and equipment

Balance as of January 1, 2021 Cost: Land $ 531,453 Buildings 548,086 Others 722,347 1,801,886 Accumulated depreciation: Buildings 425,572 Others 623,929 1,049,501 $ 752,385	Increase - 717 30,884 31,601 4,992 51,487 56,479 (24,878)	2021 Decrease - - 126,777 126,777 - 126,777 126,777 -	Transfer - - - - - - - -	Balance as of December 31, 2021 531,453 548,803 626,454
				1,706,710
				430,564 548,639
				979,203
				727,507

(Continued)

35

D-LINK CORPORATION Notes to the Financial Statements

Balance as of January 1, 2020 Cost: Land $ 531,453 Buildings 546,598 Others 692,533 1,770,584 Accumulated depreciation: Buildings 420,324 Others 604,460 1,024,784 $ 745,800	Increase - 1,488 61,366 62,854 5,248 50,888 56,136 6,718	2020 Decrease - - 31,552 31,552 - 31,419 31,419 133	Transfer - - - - - - - -	Balance as of December 31, 2020 531,453 548,086 722,347
				1,801,886
				425,572 623,929
				1,049,501
				752,385

As of December 31, 2021 and 2020, no property, plant and equipment were pledged as collateral.

(h) Investment property

Balance as of January 1, 2021 Cost: Land $ 30,000 Buildings 22,196 52,196 Accumulated Depreciation: Buildings 11,924 Accumulated impairment: Buildings 1,000 $ 39,272	Increase - - - 396 - (396)	2021 Decrease - - - - - -	Transfer - - - - - -	Balance as of December 31, 2021 30,000 22,196
				52,196
				12,320
				1,000
				38,876

(Continued)

36

D-LINK CORPORATION Notes to the Financial Statements

Balance as of January 1, 2020 Cost: Land $ 30,000 Buildings 22,196 52,196 Accumulated Depreciation: Buildings 11,527 Accumulated impairment: Buildings 1,000 $ 39,669 Book value Fair value	Increase - - - 397 - (397)	2020 Decrease Transfer - - - - - - - - - - - - December 31, 2021 $ 38,876 $ 51,328	Transfer - -	Balance as of December 31, 2020 30,000 22,196 52,196 11,924 1,000 39,272 December 31, 2020 39,272 51,328	Balance as of December 31, 2020 30,000 22,196
			-		52,196
			-		11,924
			-		1,000
			-		39,272

Investment properties are commercial real estate that are leased to third parties. The lease contract includes an initial non-cancellable period of 3 years. Subsequent renewals are negotiated with the lessee and no contingent rents are charged. For further information of rental income, please refer to note 6(u). Besides, direct operating expenses related to investment property were $296 thousand and $301 thousand in 2021 and 2020, respectively.

As of December 31, 2021 and 2020, the fair value of investment property was evaluated based on the comparable deal information with similar location and category or appraisal report.

As of December 31, 2021 and 2020, no investment property was pledged as collateral.

(i) Intangible assets

Balance as of January 1, 2021 Patents $ 17,720 Computer software costs 43,113 Other intangible assets 13,467 $ 74,300	2021 Increase Decrease Amortization - - (2,692) 4,147 (2,322) (25,799) 10,097 - (12,269) 14,244 (2,322) (40,760)	Balance as of December 31, 2021 15,028 19,139 11,295
		45,462

(Continued)

37

D-LINK CORPORATION Notes to the Financial Statements

Balance as of January 1, 2020 Patents $ 20,411 Computer software costs 75,488 Other intangible assets 27,033 $ 122,932	2020 Increase Decrease Amortization - - (2,691) 2,849 - (35,224) - - (13,566) 2,849 - (51,481)	Balance as of December 31, 2020 17,720 43,113 13,467
		74,300

(j) Long-term and short-term loans

The details requirements and terms of the long-term and short-term loans of the Company were as follows:

(i) Short-term Loans

Currency Interest rate Maturity year December 31, 2021 Other short-term loans EUR 1% 2021~2022 $ 313,645 Other short-term loans JPY 0.5% 2021~2022 433,258 Total $ 746,903 Unused credit facilities $ 4,117,132	December 31, 2020 348,368 496,895
	845,263
	3,341,162

For further information on other short-term loans from the subsidiaries, please refer to note 7(b).

• (ii) Long-term Loans

As of December 31, 2021 and 2020, the Company did not have long-term loans. As of December 31, 2021 and 2020, the unused credit facilities amounted to $500,000 thousand.

(k) Lease liabilities

The amounts of lease liabilities for the Company were as follows:

December 31, 2021 Current $ 4,033 Non-current $ 7,846 The amounts recognized in profit or loss were as follows: 2021 Interests on lease liabilities $ 201 Expenses relating to short-term leases $ 2,760	December 31, 2020 3,017
	9,230
	2020 257
	2,748

(Continued)

38

D-LINK CORPORATION Notes to the Financial Statements

The amounts recognized in the statement of cash flows for the Company were as follows:

2021 Total cash outflow for leases $ 6,543 Real estate leases	2020 6,712

The Company leases buildings for its office space, and the leases of office space typically run for 2 to 5 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

－ (l) Provisions current

Balance as of January 1, 2021 Warranties $ 69,562 Legal proceedings and royalties 132,650 $ 202,212 Balance as of January 1, 2020 Warranties $ 65,783 Legal proceedings and royalties 85,079 $ 150,862 Refund liabilities Refund liabilities	Increased - 52,431 52,431 Increased 8,649 56,455 65,104	2021 Used Reversed Effect of exchange Balance as of December 31, 2021 (5,378) (1,324) - 62,860 (9,248) (55,628) (1,138) 119,067 (14,626) (56,952) (1,138) 181,927 2020 Used Reversed Effect of exchange Balance as of December 31, 2020 (4,870) - - 69,562 (6,294) - (2,590) 132,650 (11,164) - (2,590) 202,212 December 31, 2021 December 31, 2020 $ 24,840 32,582	Balance as of December 31, 2021 62,860 119,067
			181,927
			Balance as of December 31, 2020 69,562 132,650
			202,212

(m) Refund liabilities

Due to the application of IFRS 15, the provision of sales allowance was reclassified from other payable to refund liabilities.

(Continued)

39

D-LINK CORPORATION Notes to the Financial Statements

(n) Bonds payable

Exchangeable corporate bonds

Exchangeable corporate bonds
		December 31,
		2020
Exchangeable bonds	$	1,200,000
Accumulated exchanged bonds		(1,199,400)
Due payment		(600)
	$	-
		2020
Embedded derivative-loss measured at fair value, included in other gains and
losses	$	34,967
Interest expense	$	2,107

On June 17, 2020. the first unsecured exchangeable bonds with a 5-year maturity issued by the Company expired, and the OTC trading thereof was terminated on June 18, 2020. As of June 17, 2020. the day after the maturity date, the creditor has no exercised the right of exchange, the Company therefore, pursuant to Article 6 of the "Regulations Governing the Issuance and Exchange of Exchangeable Bonds", calculated the repayment amount based on the face value of the bond plus interest, totaling $608 thousand. As of the reporting date, all payments have been paid.

The issue terms for the unsecured exchangeable bonds were as follows:

(i) Total issuance amount:

Total principal amount of the bonds is $1.2 billion dollars. The par value of the bonds is one hundred thousand dollars, and they are issued at 100% of the par value. The total number of exchangeable bonds issued were 12 thousand units. As of December 31, 2021, the bondholders have already exchanged 11,994 units, and 6 units were due.

(ii) Duration:

June 17, 2015 to June 17, 2020.

• (iii) Coupon rate for the bonds is zero.

(iv) Payment term

Except for the share exchange with Alpha’ s common shares by the bondholders based on article 10, or the put option exercised by the bondholders based on article 18, or the early redemption done by the Company based on article 17, or the buy back from the security company and retired by the Company, the Company will repay the principal and interest payable refund (with interest payable refund of 1.26% of the par value, and yield rate of 0.25%) upon maturity.

(Continued)

40

D-LINK CORPORATION Notes to the Financial Statements

(v) Exchange period:

The exchangeable bonds may be exchanged into common shares of Alpha on or after July 18, 2015, and prior to June 17, 2020. For the year ended December 31, 2020, the bondholders exchanged 2,990 units amounted to $299,000 thousand for 15,444 thousand of Alpha’ s common shares at $19.36 per share and the Company recognized the profit amounted to $139,965 thousand.

(vi) Exchange price:

The exchange price is calculated by using the simple average closing price of the Company’s common shares based on either one, three or five consecutive business days before the effective date of June 9, 2015, multiplied by 105.26%. The exchange price is calculated based on the closing price (after considering the effect of ex rights or ex dividend) of Alpha’s shares. The exchange price on issuance date was $22. Since September 5, 2017, the conversion price was adjusted from $22.31 to $21.37. Since July 29, 2018 the conversion price was adjusted from $21.37 to $20.38. Since July 28, 2019 the conversion price was adjusted from $20.38 to $19.36.

(vii) Early redemption option:

From July 18, 2015 (1 month after the issuance date) to May 8, 2020 (forty days before the maturity date), if (i) the closing price of Alpha’s common shares on the TSE for a period of 30 consecutive trading days before redemption has reached at least 30% of the exchange price in effect on each such trading day, or wherein, (ii) at least 90% of the principal amount of the bonds originally outstanding has been redeemed, repurchased or exchanged, the Company may redeem all bonds for cash at face value.

(viii) Put options:

Bondholders may exercise the put option and request the Company to redeem the bonds at 100% of the par value, plus, interest payable refund two years after the issuance with a redemption date of June 17, 2017. The Company will send a “Bondholder’s Notice of Exercise of the Right to Sell” to the bondholders by registered mail 30 days before the selling back date, and instructs the counter trading center to announce that the holders of the exchange bauds have sold back. Exercising the right, the bondholder may notify the stock agency of the Company in writing within 30 days after the movement, request the Company to add the interest declutched by the denomination of the bond, and redeem the exchange bonds held by it in cash. Upon request, the Company shall redeem the bonds for cash within five trading days after the redemption date. The maturity of request that the Company redeem the bonds have been already reached. There are no Bondholder to exercise the put option till the redemption date of June 17, 2017.

(Continued)

41

D-LINK CORPORATION Notes to the Financial Statements

(o) Employee benefits

(i) The reconciliation of the present value of the defined benefit obligations and fair value of plan assets for the Company were as follows:

December 31, 2021 Present value of benefit obligations $ 86,814 Fair value of plan assets (75,551) Deficit in the plan $ 11,263	December 31, 2020 91,577 (80,892) 10,685

Based on the Company’s pension plan, each employee earns two months of salary for the first fifteen years of service, and one month of salary for each year of service thereafter. The maximum retirement benefit is forty-five months of salary. Payments of retirement benefits are based on the years of service and the average salaries for six months before the employee’s retirement.

1) Composition of plan

The Company’ s allocates 2% of each employee's monthly wage to the labor pension personal account at Bank of Taiwan in accordance with the provisions of Labor Pension Act, whereby, the labor pension personal account will make pension payment in advance.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $75,551 thousand at the date of reporting date. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Labor Pension Fund Supervisory Committee.

• 2) Movements in the present value of the defined benefit obligations in 2021 and 2020 were as follows:

2021 Defined benefit obligation at January 1 $ 91,577 Current service costs and interests 1,197 Remeasurement of the defined benefit liabilities －Actuarial gains from changes in demographic assumption 118 －Actuarial (gains) losses from changes in the financial assumptions (5,109) －Actuarial losses (gains) from changes in experience adjustments 7,971 Benefits paid by the plan (8,940) Defined benefit obligation at December 31 $ 86,814

2020 104,051 2,186 - 9,130 (10,722) (13,068) 91,577

(Continued)

42

D-LINK CORPORATION Notes to the Financial Statements

• 3) Movements in the fair value of the plan assets

The movements in the present value of the plan assets in 2021 and 2020 for the Company were as follows:

2021 Fair value of plan assets at January 1 $ 80,892 Interest income 324 Remeasurement of the defined benefit assets －Actuarial return on plan assets (excluding interests) 1,293 Contributions made 1,982 Benefits paid by the plan (8,940) Fair value of plan assets at December 31 $ 75,551	2020 87,839 995 2,942 2,184 (13,068) 80,892

• 4) Expenses recognized in profit or loss

The Company’ s expenses recognized in profit or loss for 2021 and 2020 for the Company were as follow:

2021 Current service costs $ 831 Net interest on the net defined benefit obligation 42 $ 873 2021 Operating costs $ 14 Selling expenses 485 Administrative expenses 164 Research and development expenses 210 $ 873	2020 1,019 172
	1,191
	2020 23 615 219 334
	1,191

• 5) Remeasurement of the net define benefit liabilities recognized in other comprehensive income

The Company’s remeasurement of the net define benefit liabilities recognized in other comprehensive income as of December 31, 2021 and 2020 were as follows:

2021 Balance on January 1 $ 47,330 Recognized 1,687 Balance on December 31 $ 49,017	2020 51,864 (4,534) 47,330

(Continued)

43

D-LINK CORPORATION Notes to the Financial Statements

6) Actuarial assumptions

The Company’s principal actuarial assumptions at the reporting date were as follows:

	2021.12.31		2020.12.31
Discount rate	0.800	%	0.400	%
Future salary increases	3.000	%	3.000	%

The Company shall pay the expected contributions of $1,665 thousand to the plan for the next annual reporting period.

The weighted average duration of defined benefit obligation is 14.00 years and 15.00 years in 2021 and 2020, respectively.

7) Sensitivity analysis

The impact on present value due to the changes in the actuarial assumptions in 2021 and 2020 was as follows:

		Effective of defined benefit	Effective of defined benefit
		liabilities
		Increase	Decrease
December 31, 2021
Discount rate (0.25% change)	$	(2,955)	3,080
Future salary increase (0.25% change)		2,788	(2,696)
December 31, 2020
Discount rate (0.25% change)		(3,301)	3,449
Future salary increase (0.25% change)		3,124	(3,014)

The analysis of the impact of sensitivity is based on the situation that other assumptions remain constant. In actual situation, many changes in assumption might be linked. The way the Company used to calculate sensitively analysis is as same as the one used in calculating the net pension obligation.

The assumptions used to prepare sensitively analysis in this period are the same as the previous financial statements.

(ii) Defined contribution plans

The Company set aside 6% of the contribution rate of the employee’s monthly wages to the labor pension personal account of the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. The Company set aside a fixed amount to the Bureau of the Labor Insurance without the payment of additional legal or constructive obligations.

(Continued)

44

D-LINK CORPORATION Notes to the Financial Statements

The amount of the Company’s pension expenses under defined contribution pension plan in 2021 and 2020 were as follows and the amounts were contributed to the labor pension personal accounts of Bureau of the Labor Insurance:

nts of Bureau of the Labor Insurance:
2021 Operating costs $ 138 Operating expenses 34,177 $ 34,315	2020 145 36,261
	36,406

(p) Income Taxes

Income tax (benefits) expenses for the years ended 2021 and 2020 were summarized as follows:

2021 Current income tax (benefit) expense $ (3,150) Deferred tax expense 2,485 Income tax (benefits) expenses $ (665)	2020 43,459 31,399
	74,858

The amount of income tax benefit recognized in other comprehensive income was as follows:

2021 ms that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations $ (45,730)	2020 (68,189)

Items that may be reclassified subsequently to profit or loss:

Reconciliation of income tax (benefit) expense and profit before tax was as follows:

2021 Profit before income tax $ 238,532 Income tax using the Company’s domestic tax rate $ 47,706 Share of profit of associates accounted for using equity method (22,223) Investment income from domestic company (39,764) Gains on disposals of domestic investments accounted for using equity method - Basic income tax - Unrecognized changes of temporary differences (30,713) Income tax adjustments on prior years and others 44,329 Income tax (benefits) expenses $ (665)

2020 1,314,783 262,957 (3,689) (24,860) (249,907) 42,715 14,641 33,001 74,858

(Continued)

45

D-LINK CORPORATION Notes to the Financial Statements

Deferred tax assets and liabilities

• (i) Unrecognized deferred income tax assets

The unrecognized deferred income tax assets were as follows:

December 31, 2021 Deductible temporary differences Unrealized expenses $ 24,132 Provisions for warranty 12,572 Unrealized impairment 24,318 Others 47,167 108,189 Operating loss carry forward 215,264 $ 323,453	December 31, 2020 26,622 13,913 24,318 39,784
	104,637
	249,529
	354,166

• (ii) Recognized deferred tax assets and liabilities

Intra-group transactions Exchange differences on translation of foreign financial statements Loss carry forward Others Deferred income tax assets: Balance at January 1, 2021 $ 61,681 277,881 242,431 5,697 Recognized in profit or loss (22,253) - 95,265 (5,697) Exchange differences on translation of foreign financial statements - 45,730 - - Balance at December 31, 2021 $ 39,428 323,611 337,696 - Balance at January 1, 2020 $ 77,155 209,692 143,177 5,414 Recognized in profit or loss (15,474) - 99,254 283 Exchange differences on translation of foreign financial statements - 68,189 - - Balance at December 31, 2020 $ 61,681 277,881 242,431 5,697 Investments under equity method Others Deferred income tax liabilities: Balance at January 1, 2021 $ 242,431 25,465 Recognized in profit or loss 54,147 15,653 Balance at December 31, 2021 $ 296,578 41,118	Intra-group transactions Exchange differences on translation of foreign financial statements Loss carry forward Others Deferred income tax assets: Balance at January 1, 2021 $ 61,681 277,881 242,431 5,697 Recognized in profit or loss (22,253) - 95,265 (5,697) Exchange differences on translation of foreign financial statements - 45,730 - - Balance at December 31, 2021 $ 39,428 323,611 337,696 - Balance at January 1, 2020 $ 77,155 209,692 143,177 5,414 Recognized in profit or loss (15,474) - 99,254 283 Exchange differences on translation of foreign financial statements - 68,189 - - Balance at December 31, 2020 $ 61,681 277,881 242,431 5,697 Investments under equity method Others Deferred income tax liabilities: Balance at January 1, 2021 $ 242,431 25,465 Recognized in profit or loss 54,147 15,653 Balance at December 31, 2021 $ 296,578 41,118	Total 587,690 67,315 45,730
		700,735
		435,438 84,063 68,189
		587,690
		Total 267,896 69,800
		337,696

(Continued)

46

D-LINK CORPORATION Notes to the Financial Statements

Investments under equity method Balance at January 1, 2020 $ 143,177 Recognized in profit or loss 99,254 Balance at December 31, 2020 $ 242,431	Others 9,257 16,208 25,465	Total 152,434 115,462
		267,896

In accordance with the ROC Tax laws, the operating loss carry forward assessed by the tax authorities are deductible from taxable income for a ten-year period. As of December 31, 2021, the Company’s unused loss carry forward available to offset future taxable income and the year of expiry were as follows:

Years of loss		Unused amount	Year of expiry
2017	$	1,740,912	2027
2019		162,350	2029
2020		654,895	2030
2021		206,641	2031
	$	2,764,798

The Company’s income tax return had been examined by the tax authorities through 2019.

(q) Share capital and other equity

(i) Common stock

As of December 31, 2021 and 2020, the authorized capital amounted to $8,800,000 thousand (including $750,000 thousand authorized for the issuance of the employee stock options). As of December 31, 2021 and 2020, the issued capital amounted to $5,998,365 thousand and $6,519,961 thousand, respectively. The par value of the Company’s common stock is $10 New Taiwan dollars per share. As of December 31, 2021 and 2020, the number of share is 599,837 thousand and 651,996 thousand shares respectively.

For the purpose of enhancing the return on equity and the structure of capital, the capital reduction through returning $521,596 thousand to shareholders was proposed by the Company’s Board on March 17, 2021, and the capital reduction ratio was 8%. This capital reduction was approved by the shareholders’ meeting on July 5, 2021, and had the effective registration from the competent Authority. The record date of the capital reduction is on September 1, 2021, and all relevant change registrations of the capital reduction were finished on October 5, 2021.

(Continued)

47

D-LINK CORPORATION

Notes to the Financial Statements

(ii) Capital surplus

The balances of capital surplus were as follows:

The balances of capital surplus were as follows:
December 31, 2021 Common stock in excess of par value $ 1,217,030 Treasury stock 39,310 Changes in equities of associates accounted for using equity method - Failure of employee share options 129,459 Expiry of redeemed options of convertible corporate bonds 81,454 Changes in equities of the Company's ownership interests in subsidiaries 55,320 Total $ 1,522,573	December 31, 2020 1,217,030 39,310 740 129,459 81,454 55,320
	1,523,313

According to the ROC Company Act, the capital surplus may be used to offset a deficit, or distribute as cash dividends or stock dividends by the original ownership percentage if there is no accumulated deficit. Capital surplus included the income was derived from the issuance of new shares at a premium and income from the endowments received by the company. According to the current Securities and Futures Bureau regulations, capitalization of capital surplus cannot exceed a rate of ten percent.

(iii) Retained earnings

1) Legal reserve

According to the ROC Company Act No. 237, the Company must retain 10% of its annual income as a legal reserve until such retention equals the amount of authorized common stock.

In accordance with Ruling No. 10802432410 issued by the Ministry of Economic Affairs on January 9, 2020, the amount of retained earnings allotted to legal reserve shall be calculated based on "net earnings after income taxes, plus any other amount recognized in undistributed retained earnings" since the earnings distribution in 2019. When the legal reserve has exceeded 25% of the Company’s paid in capital, the excess may be distributed as dividends in cash or stocks based on the resolution of the shareholders’ meeting if there is no accumulated deficit.

2) Special reserve

In accordance with Ruling No. 1010012865 issued by the Financial Supervisory commission on 6 April, 2012, a special reserve equivalent to the net debit balance of shareholders’ equity shall be made from the current after-tax net income and the prior unappropriated earnings pursuant to existing regulations promulgated by SFB. The Company shall not distribute the special reserve equivalent to the net debit balance of shareholders’ equity from the prior fiscal years made from the prior unappropriated earnings. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

(Continued)

48

D-LINK CORPORATION Notes to the Financial Statements

3) Earning distribution

In accordance with the Company’s articles of incorporation, if there are earnings at yearend, 10 percent should be set aside as legal reserve and special earnings reserve or reversal in accordance with the Securities and Exchange Act after the payment of income tax and offsetting accumulated losses from prior years. The remaining portion will be combined with earnings from prior years, and the board of directors can propose methods of distribution to be approved by the shareholders’ meeting.

The Company’ s appropriation of earnings for 2020 had been proposed in the board meeting held on March 17, 2021. After offsetting accumulated losses from prior years, the board of directors decided to distribute cash dividends $0.3 per share. The appropriation of earnings for 2020 was approved in the shareholders’ meeting on July 5, 2021. Information on the appropriation of earnings for 2020 was available at the Market Observation Post System website.

The Company has no earnings to distribute in 2019 due to the accumulated deficit.

4) Dividend policy

The Company has carried out its Residual Dividend Policy to align with the (i) whole market (ii) industrial growth characteristics (iii) long term financial plan (iv) talent acquisition, and (v) pursuing business development. After deducting the balance from the items mentioned above, the Board of Directors shall adopt a proposal for the residual balance and the previous year’ s earnings to be submitted for approval during the shareholders’ meeting. The total amount of dividends to be distributed to the shareholders shall be no less than 30% of the distributable earnings for the current year. According to the budget plan for its capital, the Company shall distribute stock dividends to retain the required funds; and any remainder, which should not be less than 10% of the total dividends, can be distributed by cash.

(iv) Other equity

Exchange differences on translation of foreign financial statements Balance at January 1, 2021 $ (1,520,585) The Company (343,882) Associates 871 The Company-disposal - Subsidiaries-disposal - Balance at December 31, 2021 $ (1,863,596)	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income (88,606) 49,816 (9,248) 54,847 (9,248) (2,439)	Others - - - - -
		-

(Continued)

49

D-LINK CORPORATION Notes to the Financial Statements

Exchange differences on translation of foreign financial statements Balance at January 1, 2020 $ (1,236,701) The Company (335,773) Associates 51,889 Subsidiaries-disposal - Balance at December 31, 2020 $ (1,520,585)	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income (165,102) 18,150 58,273 73 (88,606)	Others (3,484) - 3,484 - -

(r) Earnings per share

The calculation of earnings per share of the Company were as follows:

(i) Basic earnings per share

2021 Profit of the Company for the year $ 239,197 Ordinary shares outstanding 634,610 Basic earnings per share (dollar) $ 0.38 (ii) Diluted earnings per share 2021 Profit attributable to owners of ordinary shares (diluted) $ 239,197 Weighted-average number of ordinary shares outstanding (basic) $ 634,610 Employees’ bonuses have not yet been resolved by the Board meeting 1,071 Weighted average number of ordinary shares (diluted) 635,681 Diluted earnings per share $ 0.38	2020 1,239,925
	651,996
	1.90
	2020 1,239,925
	651,996 1,496
	653,492
	1.90

For calculation of the dilutive effect of the stock option, the average market value is assessed based on the quoted market price where the Company’s option is outstanding.

(Continued)

50

D-LINK CORPORATION Notes to the Financial Statements

(s) Revenue from contracts with customers

(i) The Company revenue from contracts with customers

The Company revenue from contracts with customers
Major product / service lines 2021 Network communication products $ 786,679 Services 605,896 $ 1,392,575 Primary geographical markets 2021 Asia $ 1,312,614 Others 79,961 $ 1,392,575	2020 980,422 527,632
	1,508,054
	2020 1,404,056 103,998
	1,508,054

(ii) Contract liabilities

1) The Company recognized contract revenue related to contract liabilities:

December 31, 2021 Contract Liabilities ─ current (sales) $ 23,819	December 31, 2020 9,079

2) The Company recognized $6,692 thousand and $6,536 thousand in sales from the beginning balance of contract liabilities for the year ended December 31, 2021 and 2020, respectively.

(t) Remuneration to employees and directors

The Company’s articles of incorporation require that earnings shall first be offset against any deficit, then a minimum of 1% to a maximum of 15% will be distributed as employee remuneration, and a maximum of 1% will be allocated as directors’ remuneration. The earnings shall be considered as the annual income before tax and remuneration to employees, directors and supervisors. The resolution for earnings distribution shall be decided by two-third of the voting rights exercised by the directors present at the board of directors’ meeting who represent a majority of the directors. Employees who are entitled to receive the above-mentioned employees’remuneration, in share or cash, include the employees of the subsidiaries of the Company who meet certain specific requirement.

In 2021 and 2020, the Company estimated its employees’ remuneration amounting to $12,621 thousand, and $42,936 thousand, respectively, and directors’ and supervisors’ remuneration amounting to $1,262 thousand and $0 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company’ s Articles of Association. These remunerations were expensed under operating expenses during 2021 and 2020.

(Continued)

51

D-LINK CORPORATION Notes to the Financial Statements

In 2020, the Company’s actual distribution of employees’ and directors’ remuneration were $46,800 thousand and $4,680 thousand, respectively. The actual distributions of employees’ and directors’ remuneration were higher than estimated amounts and the total difference $8,544 thousand shall be accounted for as a change in accounting estimate and shall be recognized in the current year. Related information would be available at the Market Observation Post System website.

• (u) Other income and losses

• (i) Interest income

2021 Interest income from bank deposits $ 3,508 Interest income from others 41 Total $ 3,549 (i) Other income 2021 Rental income $ 2,398 Others 2,721 Total $ 5,119 (ii) Other gains and losses 2021 Gain on disposal of property, plant and equipment $ 5 Gain on disposals of investments - Foreign currency exchange gains (loss) 14,520 Valuation losses from financial assets and liabilities (30,439) Others - $ (15,914) (iii) Financial costs 2021 Interest expense $ (5,507) Other financial costs Interest expense of bond discounts - Lease liability interests (201) (201) Net financial costs $ (5,708)

2020 1,209 - 1,209 2020 1,380 8,014 9,394 2020 306 1,250,434 (20,881) (8,056) 2,078 1,223,881 2020 (6,534) (2,107) (257) (2,364) (8,898)

(Continued)

52

D-LINK CORPORATION Notes to the Financial Statements

(v) Items that were reclassified to other comprehensive income

Details of the reclassification adjustments of other comprehensive income in 2021 and 2020 were summarized as follow:

2021 Exchange differences on translation of foreign financial statements Change in foreign currency exchange from the Company $ (389,612) Change in exchange differences on translation of foreign financial statements recognized in other comprehensive income $ (389,612) Share of other comprehensive income of subsidiaries and associates accounted for using equity method Change in foreign currency exchange from subsidiaries and associates $ 871 Reclassification to profit or loss - Change in other equity interest from associates - Share of other comprehensive income $ 871 (w) Financial instruments (i) Category of financial instruments 1) Financial Assets December 31, 2021 Cash and cash equivalents $ 151,391 Financial assets at fair value through profit or loss－ current - Financial assets at fair value through other comprehensive income－non-current - Notes receivable, accounts receivable and other accounts receivable (including related parties) 470,030 Refundable deposits 4,542 $ 625,963

2020 (403,962) (403,962) 41,254 10,913 3,206 55,373 December 31, 2020 1,777,351 20,861 364,655 287,756 4,637 2,455,260

(Continued)

53

D-LINK CORPORATION Notes to the Financial Statements

2) Financial liabilities

December 31, 2021 Short-term loans $ 746,903 Financial liabilities at fair value through profit or loss－current 9,803 Notes payable, accounts payable and other payables (including related parties) 327,386 Guarantee deposits received 3,074 Lease liability (current and non-current) 11,879 $ 1,099,045	December 31, 2020 845,263 224 539,886 3,074 12,247
	1,400,694

(ii) Credit risk

Exposure to credit risk:

The carrying amount of financial assets represents the maximum amount exposed to credit risk. As of December 31, 2021 and 2020, the maximum amount exposed to credit risk amounted to $625,963 thousand, and $2,455,260 thousand, respectively.

(iii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments but excluding the impact of netting agreements.

Carrying amount Contractual cash flows December 31, 2021 Non-derivative financial liabilities Short-term loans $ 746,903 752,132 Notes payable 11 11 Accounts payable 131,025 131,025 Accounts payable to related parties 9,282 9,282 Other payables 187,068 187,068 Lease liability 11,879 12,192 Guarantee deposits received 3,074 3,074 Derivative financial liabilities Cross currency swaps 9,803 9,803 $ 1,099,045 1,104,587	Within six months 2,690 11 131,025 9,282 187,068 2,101 3,074 9,803 345,054	6-12 months 749,442 - - - - 2,101 - - 751,543	1-2 years - - - - - 3,757 - - 3,757	2-5 years - - - - - 4,233 - - 4,233	Over five years - - - - - - - -
					-

(Continued)

54

D-LINK CORPORATION Notes to the Financial Statements

Carrying amount Contractual cash flows December 31, 2020 Non-derivative financial liabilities Short-term loans $ 845,263 851,231 Notes payable 11 11 Accounts payable 128,467 128,467 Accounts payable to related parties 6,151 6,151 Other payables 405,257 405,257 Lease liability 12,247 12,665 Guarantee deposits received 3,074 3,074 Derivative financial liabilities Cross currency swaps 167 167 Forward foreign exchange contracts 57 57 $ 1,400,694 1,407,080	Within six months 2,984 11 128,467 6,151 405,257 1,619 3,074 167 57 547,787	6-12 months 848,247 - - - - 1,578 - - - 849,825	1-2 years - - - - - 3,156 - - - 3,156	2-5 years - - - - - 6,312 - - - 6,312	Over five years - - - - - - - - -
					-

The Company does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amount.

(iv) Currency risk

1) The Company’s significant exposure to foreign currency risk was as follows:

2021 2020 Foreign currency Exchange rate TWD Foreign currency Exchange rate Financial assets : Monetary items: USD $ 5,562 27.69 $ 154,001 4,816 28.51 Derivative financial instruments: EUR $ - - - 345 34.84 JPY - - - 32,059 0.28 $ - Investment accounted for using equity method: USD $ 239,242 27.69 6,624,612 230,888 28.51 CAD 12,851 21.74 279,408 15,790 22.40 AUD 7,460 20.08 149,831 6,883 21.96 MXN 10,799 1.35 14,527 10,977 1.43 JPY 2,568,276 0.24 618,180 2,499,858 0.28 CLP 294,227 0.03 9,582 227,193 0.04 $ 7,696,140	TWD 137,293
	12,011 8,850
	20,861
	6,582,179 353,669 151,160 15,697 690,093 9,106
	7,801,904

(Continued)

55

D-LINK CORPORATION Notes to the Financial Statements

2021 2020 Foreign currency Exchange rate TWD Foreign currency Exchange rate Financial liabilities: Monetary items: USD $ 4,363 27.69 120,803 4,924 28.51 EUR 10,051 31.36 313,254 10,045 34.84 JPY 1,802,553 0.24 433,872 1,802,417 0.28 $ 867,929 Derivative financial instruments: USD $ 10 27.69 270 9 28.51 JPY 29,626 0.24 7,131 - - EUR 77 31.36 2,402 - - $ 9,803 Credit balance of equity investment: USD $ 22,915 27.69 634,518 22,428 28.51 BRL 23,777 4.96 117,935 5,635 5.49 $ 752,453	TWD 140,377 349,937 497,563
	987,877
	224 -
	-
	224
	636,656 30,913
	667,569

Note: The amounts were calculated by the net value of investees timing comprehensive shareholding ratio, except investing premium or discount and recognition of intra-group transaction.

Because the Company has various functional currencies, information of the foreign currency exchange gains and losses of the monetary financial assets and liabilities is aggregately disclosed. The total foreign exchange gains and losses, including realized and unrealized, were gains $14,520 thousand and losses $20,881 thousand for the years ended December 31, 2021 and 2020, respectively.

2) Sensitivity analysis

The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, account receivables, other receivables, loans, account payables, and other payables that are denominated in foreign currency. A 1.5% of appreciation (depreciation) of each consolidated components currency, other than the functional currency, against the functional currency as of December 31, 2021 and 2020 would have increased or decreased the net income after tax by $74,639 thousand and $75,653 thousand, respectively, assuming all other variables were held constantly.

(v) Interest rate analysis

Please refer to the notes on liquidity risk management for the risk of interest rate exposure of the Company’s financial assets and liabilities.

(Continued)

56

D-LINK CORPORATION Notes to the Financial Statements

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.5% when reporting to management internally, which also represents the Company management’ s assessment of the reasonably possible interest rate change.

• (vi) Assets and liabilities measured at fair value

• 1) The information of levels in the fair value hierarchy

the Company measures the financial instruments at fair value based on a recurring basis. The level of fair values was as follows:

			December 31, 2021	December 31, 2021
Assets and liabilities		Total	Level 1	Level 2	Level 3
Measured at fair value on recurring
basis
Derivative assets and liabilities
Liabilities:
Financial liabilities at fair value
through profit or loss－current	$	9,803	-	9,803	-
			December 31, 2020
Assets and liabilities		Total	Level 1	Level 2	Level 3
Measured at fair value on recurring
basis
Non-derivative assets and liabilities
Assets:
Financial assets at fair value through
other comprehensive income	$	364,655	364,655	-	-
Derivative assets and liabilities
Assets:
Financial assets at fair value through
profit or loss－current		20,861	-	20,861	-
Liabilities:
Financial liabilities at fair value
through profit or loss－current		224	-	224	-

• 2) Valuation techniques

The Company measures the fair value of financial instruments that are traded in active markets by a quoted price. The market price of stock exchange is based on the listed equity instruments. For other financial instruments, like forward currency option contracts, cross currency swaps and foreign currency option contracts, the Company measures the fair value of its financial assets and liabilities using the observable inputs and the valuation technique from the perspective of market participants.

(Continued)

57

D-LINK CORPORATION Notes to the Financial Statements

• 3) Transfer from Level 1 to Level 2

As of December 31, 2021 and 2020, there were no transfers between level 1 and level 2 of the fair value hierarchy.

• (vii) Assets and liabilities not measured at fair value

• 1) Information of fair value

Except for those listed in the table below, the carrying amounts of the Company’ s financial instruments not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable/payable and other receivables/payables) approximate their fair values.

Non-financial assets: Investment property Assets and liabilities	December	31, 2021		December 31, 2020	December 31, 2020
	Book value $ 38,876	Fair value		Book value 39,272 31, 2021	Fair value
		51,328			51,328
		Level 1 - December		Level 2 - 31, 2020	Level 3
Non-financial assets: Investment property Assets and liabilities					51,328
	Total $ 51,328	Level 1 -		Level 2 -	Level 3
Non-financial assets: Investment property					51,328

• 2) Valuation techniques

The assumptions used by the Company to determine the fair value are as follows:

  - a) The carrying amounts of cash and cash equivalents and other financial instruments are approximate their fair value due to their short maturities.

  - b) The fair value of investment property is based on the comparable deal information with similar location.

• (x) Financial risk management

• (i) Overview

the Company is exposed to the following risks rising from financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

(Continued)

58

D-LINK CORPORATION Notes to the Financial Statements

This note expresses the information on risk exposure and objectives, policies and process of risk measurement and management of the Company. For detailed information, please refer to the related notes of each risk in interim financial statements.

(ii) Structure of risk management

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Board has given the department directors a task to establish and dominate regulations of risk management to effectively ensure operations of risk management. The personnel change in department directors should be reported to the Board of Directors.

The Company use internal control systems, risk management procedures, and regulations of risk management as the basis of various business risk management standards. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and to be adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’ s activities. The Company, through training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board of Directors and Audit Committee oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Board of Directors is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors and Audit Committee.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers, investment securities and hedge derivatives.

1) Accounts receivable

The credit risk exposure of the Company arises from the operations and financial conditions of each customer and the demographics of the Company’ s customer base, including the default risk of the industry and country in which customers operate in. However, the Company operates worldwide, and thus, risk is diversified. As of December 31, 2021 and 2020, revenue from each foreign customer does not exceed 5% of the Company’s revenue and therefore, there is no concentration of credit risk.

The Company has completed in setting the credit risk management policies, and has established Institutional Credit Review Committee and Credit Risk Management Department, which are responsible for managing credit policies and client’s credit risk. Based on the global risk management, credit rating and analysis are required to customers on credit in advance and granted credit limits. For customers who made their payments other than cash, regular reviews on credit limits are required to ensure the creditworthiness of customers.

(Continued)

59

D-LINK CORPORATION Notes to the Financial Statements

Allowance for bad debt is set based on the lifetime expected credit loss of each customer. In order to mitigate the risk of default, the Company has purchased guarantees, with appropriate insured amount for customers in high-risk countries. High risks customers without insurance should make their payments in advance or provide sufficient credit guarantees. In addition, when the creditworthiness of customers worsens, they should be placed on a restricted customer list. The credit rating for these customers should be downgraded and the transactions on sales credit should be restricted.

The Company has set the allowance for bad debt account to reflect the possible losses on account and other receivables. The allowance for bad debt account consists of specific losses relating to individually significant exposure from customers with financial difficulties or operating conflicts. The allowance for bad debt account is based on expected credit loss and historical collection record of similar financial assets or the possibility of breaching the contracts.

2) Investment on securities and derivative financial instruments

The credit risk of bank deposits, fixed income investments and derivative financial instrument are measured and monitored by the Company’s finance department. As the Company will select financial institutions with good credit ratings as its counterparties and diversify its investment in different financial institutions, and do not expect to have any default risks and significant concentration of credit risk.

3) Guarantees

Pursuant to the Company’s policies, it is only permissible to provide financial guarantees to subsidiaries. As of December 31, 2021 and 2020, the Company has not provided any guarantees to a third party.

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. the Company’ s approach to manage liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’ s reputation. the Company aims to maintain the level of its cash and short term bank facilities at an amount in excess of expected cash flows on financial liabilities over the succeeding 60 days. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. the Company has unused short term bank facilities for $4,617,132 thousand as of December 31, 2021.

(v) Market risk

Market risk is the risk that changes in market prices, such as changes in foreign exchange rates, interest rates or equity prices that affects the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters to minimize the influence on change in market price or control within expectable scope.

(Continued)

60

D-LINK CORPORATION Notes to the Financial Statements

the Company buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines of risk management.

1) Currency risk

The Company is exposed to currency risk on sales, purchases and loans that are denominated in currencies other than its respective functional currencies. The functional currencies of the Company are primarily denominated in New Taiwan Dollars (TWD) and US Dollars (USD) and include denominated in Euro (EUR), Chinese Yuan (CNY), Japanese Yen (JPY) and Brazilian Real (BRL) of other countries in which the subsidiaries registered. Purchases are mainly denominated in USD while sales are denominated in USD, EUR, CNY, TWD, British Pounds (GBP), Australian Dollar (AUD), Canadian Dollar (CAD), JPY, South Korean Won (KRW), Russian Ruble (RUB), Indian Rupee (INR), BRL, and other currencies.

At any point in time, the Company hedges its currency risk based on its actual and forecast sales over the following six months. the Company also uses nature hedges on assets and liabilities denominated in foreign currencies and maintained the hedge ratio at 50% and above. the Company uses forward exchange contracts and foreign-exchange options, with a maturity of less than one year from the reporting date, to hedge its currency risks.

Generally, the currencies of loans in the Company are denominated in its functional currencies and are incorporated in net exposure on loan requirement denominated in foreign currencies as mentioned above to ensure the net exposure is maintained at acceptable level.

Transactions in derivative financial instruments adopt economic hedge to prevent currency risk from financial assets and liabilities denominated in foreign currencies. The gains and losses of hedged items are expected to offset gains or losses that arise from the fluctuations in exchange rates. The valuation gains and losses on financial assets consist of transactions that do not qualify as hedging accounting.

2) Interest rate risk

The Company’s bank loans are at fixed rate. Therefore, the change in market interest rate will not affect the cash flow of the future interest payment of the Company, hence, there is no significant interest rate risk.

(y) Capital management

The Company’s fundamental management objective is to maintain a strong capital base. Capital consists of ordinary shares, capital surplus, retained earnings and other equities. The Board of Directors monitors the capital structure regularly and selects the optimal capital structure by considering the capital scale, overall operating environment, operating characteristics of the industry in order to support future development of the business. The current aim for debt-to-equity ratio is set within 100%. As of the reporting date, the debt-to-equity ratio is considered appropriate.

(Continued)

61

D-LINK CORPORATION Notes to the Financial Statements

Debt-to-equity ratio:

December 31, 2021 Total liabilities $ 2,486,326 Less: cash and cash equivalents (151,391) Net debt $ 2,334,935 Total equity $ 8,477,358 Debt-to-equity ratio 27.54%	December 31, 2020 2,689,617 (1,777,351) 912,266 9,259,495 9.85%

As of December 31, 2021, the methods of the Company’s capital management remained unchanged.

• (z) Investing and financing activities not affecting current cash flow

Information of non-cash-traded investing and financing activities for the years ended December 31, 2021 and 2020 were as follows:

• (i) Requirement of right-to-use assets through lease agreement, please refer to note 6(k).

• (ii) Exchangeable corporate bonds, please refer to note 6(n).

• (iii) Reconciliation of liabilities arising from financing activities were as follows:

Short-term loan Lease liabilities Guarantee deposits received Total liabilities from financing activities Short-term loan Bonds payable Guarantee deposits received Total liabilities from financing activities	January 1, 2021 $ 845,263 12,247 3,074 $ 860,584 January 1, 2020 $ 1,438,269 19,376 301,003 3,074 $ 1,761,722	Cash flows (98,360) (3,582) - (101,942) Cash flows (593,006) (3,707) (608) - (597,321)	Non-cash changes Exchange Foreign exchange movement Fair value changes - - - - - 3,214 - - - - - 3,214 Non-cash changes Exchange Foreign exchange movement Fair value changes - - - - - (3,422) (302,502) 2,107 - - - - (302,502) 2,107 (3,422)	Non-cash changes Exchange Foreign exchange movement Fair value changes - - - - - 3,214 - - - - - 3,214 Non-cash changes Exchange Foreign exchange movement Fair value changes - - - - - (3,422) (302,502) 2,107 - - - - (302,502) 2,107 (3,422)	December 31, 2021
					746,903 11,879 3,074
					761,856
					December 31, 2020
			Exchange - - (302,502) - (302,502)	Foreign exchange movement - - 2,107 - 2,107
					845,263 12,247 - 3,074
					860,584

(Continued)

62

D-LINK CORPORATION Notes to the Financial Statements

(7) Related-party transactions:

(a) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the financial statement:

The followings are entities that have had transactions with in the financial statement:	related party during the periods covered
Name of related party	Relationship with the Company
D-Link Holding Company Ltd. (D-Link Holding)	A subsidiary
D-Link Canada Inc. (D-Link Canada)	A subsidiary
D-Link Japan K.K. (D-Link Japan)	A subsidiary
D-Link Investment Pte.Ltd. (D-Link Investment)	A subsidiary
D-Link Sudamerica S.A. (D-Link Sudamerica)	A subsidiary
D-Link Brazil LTDA (D-Link Brazil)	A subsidiary
D-Link Latin America Company Ltd.(D-Link L.A.)	A subsidiary
D-Link Mexicana S.A de C.V (D-Link Mexicana)	A subsidiary
D-Link Systems, Inc. (D-Link Systems)	A subsidiary
D-Link International Pte. Ltd. (D-Link International)	A subsidiary
D-Link Australia Pty Ltd. (D-Link Australia)	A subsidiary
D-Link Middle East FZCO (D-Link ME)	A subsidiary
D-Link Korea Limited (D-Link Korea)	A subsidiary
D-Link Trade M (D-Link Moldova)	A subsidiary
D-Link Russia Investment Co., Ltd (D-Link Russia	A subsidiary
Investment)
D-Link Malaysia SDN. BHD (D-Link Malaysia)	A subsidiary
D-Link Service Lithuania, UAB (D-Link Lithuania)	A subsidiary
Yeochia Investment Co., Ltd.	A subsidiary (Carried out
	liquidation procedure on
	December 1, 2021)
Yeomao Investment Co., Ltd.	A subsidiary (Carried out
	liquidation procedure on
	December 1, 2021)
Yeotai Investment Co., Ltd.	A subsidiary
D-Link (Europe) Ltd. (D-Link Europe)	A subsidiary
D-Link Shiang-Hai (Cayman) Inc. (D-Link Shiang-Hai	A subsidiary
(Cayman))
D-Link Holding Mauritius Inc. (D-Link Mauritius)	A subsidiary
OOO D-Link Russia (D-Link Russia)	A subsidiary
OOO D-Link Trade (D-Link Trade)	A subsidiary
Success Stone Overseas Corp. (Success Stone)	A subsidiary

(Continued)

63

D-LINK CORPORATION Notes to the Financial Statements

Name of related party	Relationship with the Company
Wishfi Pte. Ltd. (Wishfi)	A subsidiary (Cancellation of
	registration in January, 2022)
D-Link India Ltd. (D-Link India)	A subsidiary
TeamF1 Networks Private Limited (TeamF1 India)	A subsidiary
D-Link (Holdings) Ltd. and the subsidiary D-Link (UK) Ltd.	A subsidiary
(D-Link UK)
D-Link France SARL (D-Link France)	A subsidiary
D-Link AB	A subsidiary
D-Link Iberia SL (D-Link Iberia)	A subsidiary
D-Link Mediterraneo SRL (D-Link Mediterraneo)	A subsidiary
D-Link (Netherlands) BV (D-Link Netherlands)	A subsidiary
D-Link (Deutschland) GmbH (D-Link Deutschland)	A subsidiary
D-Link Polska Sp. Z.o.o. (D-Link Polska)	A subsidiary
D-Link (Magyarorszag) kft (D-Link Magyarorszag)	A subsidiary
D-Link s.r.o	A subsidiary
D-Link Adria d.o.o	A subsidiary
D Link Network	A subsidiary
D-Link (Shiang-Hai) Co., Ltd.	A subsidiary
Netpro Trading (Shiang-Hai) Co., Ltd.	A subsidiary
D-Link del Ecuador S.A.	A subsidiary
D-Link Peru S.A.	A subsidiary
D-Link de Colombia S.A.S	A subsidiary
D-Link Guatemala S.A.	A subsidiary
D-Link Argentina S.A.	A subsidiary
Alpha Networks, Inc.	An associate (Since all the equity
	shares had been sold, it became
	a non-related party after
	November 30, 2020.)
Cameo Communication, Inc.	An associate (Due to increasing
	shareholding in February 2021,
	the Company became to have
	significant influence with it and
	the relationship changed from
	the corporate director to an
	associate.)

(Continued)

64

D-LINK CORPORATION Notes to the Financial Statements

(b)	Name of related party Relationship with the Company Dongguam Mingrui An associate (Since all the equity shares in Alpha Networks, Inc. had been sold, it became a non- related party after November 30, 2020.) D-Link Asia Investment Pte Ltd. An associate (Since all the equity shares in Alpha Networks, Inc. have been sold, it became a non- related party after November 30, 2020.) Amigo Technology Inc. Other related parties Amit Wireless Inc. Other related parties T-COM, LLC (T-COM) An associate Significant related party transactions (i) Sales revenue 2021 2020 Subsidiaries $ 146,077 204,141 Associates-Cameo 191 - Other related parties-Cameo - 58 $ 146,268 204,199	Name of related party Relationship with the Company Dongguam Mingrui An associate (Since all the equity shares in Alpha Networks, Inc. had been sold, it became a non- related party after November 30, 2020.) D-Link Asia Investment Pte Ltd. An associate (Since all the equity shares in Alpha Networks, Inc. have been sold, it became a non- related party after November 30, 2020.) Amigo Technology Inc. Other related parties Amit Wireless Inc. Other related parties T-COM, LLC (T-COM) An associate Significant related party transactions (i) Sales revenue 2021 2020 Subsidiaries $ 146,077 204,141 Associates-Cameo 191 - Other related parties-Cameo - 58 $ 146,268 204,199
		204,199

The average credit terms extended to related parties and third-party customers were approximately 30-90 days. However, credit terms to related parties might be further extended when necessary.

• (ii) Service revenue

2021 Subsidiaries: D-Link International $ 527,142 Others 42,262 Associates - Others related parties－Cameo - $ 569,404	2020 455,963 31,274 328 5
	487,570

(Continued)

65

D-LINK CORPORATION Notes to the Financial Statements

(iii) Purchases

The amounts of significant purchases by the Company from related parties were as follows:

2021 Subsidiaries: $ 2,045 Associate: Alpha - Cameo 14,796 Other related-parties: Cameo - Amigo 10,124 $ 26,965	2020 1,351 93,578 - 31,432 -
	126,361

The payment term of related parties was 30-90 days. There were no significant differences in purchasing terms between related parties and third-party suppliers.

(iv) Accounts receivable due from related parties

Account Related party categories December 31, 2021 Accounts receivable Subsidiaries－D-Link International $ 52,526 Accounts receivable Subsidiaries－Others 28,243 Accounts receivable Associates－Cameo 86 Other receivables Subsidiaries－D-Link International 7,793 Other receivables Subsidiaries－Others 4,906 Other receivables Associates－Yeochia 71,169 Other receivables Associates－Yeomao 143,616 Other receivables Other related parties－Amit 5,573 Other receivables Other related parties－Cameo - $ 313,912

December 31, 2020 52,762 44,849 - - 3,199 - - - 29

100,839

－ The Company's other receivables to associates Yeochia and Yeomao were arising from the Company's liquidation equity.

(Continued)

66

D-LINK CORPORATION Notes to the Financial Statements

(v) Other income and losses

Account Related party categories 2021 Other gains and losses Associates－Alpha $ - Interest income Other related parties－Amigo 41 Rent income Subsidiaries－Other 68 Rent income Other related parties－Amigo 1,300 $ 1,409	2020 2,078 - 69 -
	2,147

Other income and losses were composed of directors' remuneration from associates, interest and rental of subsidiaries and other related parties.

• (vi) Accounts payable to related parties

The payables to related parties were as follows:

Account Related party categories December 31, 2021 Accounts payable Subsidiaries－D-Link International $ 207 Accounts payable Associates－Cameo 3,635 Accounts payable Other related parties－Amigo 5,440 Accounts payable Other related parties－Cameo - Other payables Subsidiaries－Others 6,656 Other payables Associates－Cameo 4,762 Other payables Other related parties－Cameo - Other payables Other related parties－Amit 659 $ 21,359

December 31, 2020 224 - - 5,927 744 - 18,345 -

25,240

The Company’ s accounts payable to associates were payables on equipment and others.

• (vii) Services purchased from related parties

The services purchased from related parties were as follows:

2021 Associates－Alpha $ - Associates－Cameo 12,085 Other related parties－Cameo - Other related-parties－Amigo 3,436 $ 15,521	2020 23,196 - 29,603 -
	52,799

(Continued)

67

D-LINK CORPORATION Notes to the Financial Statements

(viii) Property transaction

• 1) Property, plant and equipment, intangible assets acquired

The acquisition of property, plant and equipment, intangible assets from the related parties were as follows:

parties were as follows:
2021 Associates: Alpha $ - Cameo 3,436 Other related parties: Alpha - Amigo 5,814 $ 9,250	2020 5,464 - 10,348 -
	15,812

• (ix) Equity Transfer

On equity transfer with its related-parties, the Company recognized the deferred unrealized profit each amounting to $0 and $36,246 thousand as of December 31, 2021 and 2020. The details of the equity transfer with related-parties were as follows:

• 1) The Company sold the equity of D-Link Deutschland to D-Link Europe for $17,637 thousand in 1997 and another additional amount of $1,050 thousand in 1998, both with the disposal amount totaling $18,687 thousand. Furthermore, the Company sold the equity of D-Link AB to D-Link Europe for $5,574 thousand in June 1998. According to above transactions, the Company recognized the deferred unrealized profit in investments accounted for using equity method each amounting to $52,913 thousand as of December 31, 2021 and 2020.

• 2) For integrated overseas investment structure, the Company transferred the equity of D- Link Europe, a subsidiary directly owned by the Company, to D-Link Holding for $1 dollar in October 2002, resulting in the Company to recognize the deferred unrealized loss in investments accounted for using equity method each amounting to $16,667 thousand as of December 31, 2021 and 2020.

• (x) Borrowing from Related Parties

The borrowing from related parties were as follows:

2021 Subsidiaries－D-Link Japan $ 433,258 Subsidiaries－D-Link Europe 313,645 $ 746,903	2020 496,895 348,368
	845,263

(Continued)

68

D-LINK CORPORATION Notes to the Financial Statements

The interest paid to the related parties amounted to $5,437 thousand and $5,898 thousand for the year 2021 and 2020, respectively. The amounts were calculated based on the average interest rate imposed on related parties’ borrowings by external financial institutions. The interest-bearing borrowings provided by related parties were unsecured. In addition, the Company borrows short-term loan from D-Link International, with amounts ranging between $0 thousand and $568,140 thousand for the year 2021, and had been fully paid by the end of the year.

(xi) Guarantee

As of December 31, 2021 and 2020, the Company had provided a guarantee to its relatedparties which borrowed from financial institutions with the credit limit as follow:

2021 Subsidiaries: D-Link Europe $ 116,864 D-Link Shai-Hai 69,225 D-Link Trade 13,845 $ 199,934	2020 129,801 71,270 14,254
	215,325

As of December 31, 2021 and 2020, the Company had used its endorsement guarantees amounting to $59,987 thousand and $66,864 thousand respectively.

(c) Key management personnel compensation

Key management personnel compensation comprised:

Key management personnel compensation comprised:
2021 Short-term employee benefits $ 85,582 Post-employee benefits 5,959 $ 91,541	2020 40,666 1,228
	41,894

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets Pledged to secure December 31, 2021 Other current assets Peformance guarantee (restricted assets) $ -	December 31, 2020 222

(Continued)

69

D-LINK CORPORATION Notes to the Financial Statements

(9) Commitments and contingencies:

• (a) XR Communications, LLC and DBA Vivato Technologies filed a lawsuit against the Company's subsidiary, D-Link Systems, in April 2017, alleging that some of the D-Link Systems' products infringed its patents. D-Link Systems has retained its attorneys in the US and is currently building defense with product suppliers. Based on its evaluation, the Company believes the litigation will not have any significant impact on its current operations.

• (b) The Company’ s subsidiary, D-Link Brazil, had disputes regarding prior years' insufficient invoices attached to sales return with the local tax authorities, and had filed administrative litigation and administrative remedy. D-Link Brazil had accrued possible tax, interest and penalty.

• (c) The Company’ s subsidiary, D-Link India, had disputes regarding prior years' declaration tax on customs with the local tax authorities. Based on its evaluation, the Company believes the litigation will not have any significant impact on its current operations.

• (d) UNM RAINFOREST INNOVATIONS filed a lawsuit against the Company in February 2020, alleging that some of the D-Link’ s products infringed its patents. The Company has retained its attorneys in the US and is currently building defense with product suppliers. Based on its evaluation, 。

• the Company believes the litigation will not have any significant impact on its current operations.

• (e) Israel Consumers Council filed a group lawsuit against the Company's subsidiary D-Link International, in 2020, alleging that D-Link International was suspected of restricting product resale prices in Israel. D-Link International has appointed its attorneys to handle and negotiate a settlement. Based on its evaluation, the Company believes the litigation will not have any significant impact on its current operations.

• (f) The Company is currently under negotiations with a number of companies regarding the royalty on patents. In addition to the abovementioned lawsuits, there are other disputes that are in the negotiation process, and therefore the liabilities are unclear. The Company has accrued the possible expense.

(10) Losses Due to Major Disasters: None.

(11) Subsequent Events: None.

(Continued)

70

D-LINK CORPORATION Notes to the Financial Statements

(12) Other:

The information on employee, depreciation, and amortization expenses, by function, was summarized as follows:

follows:
By function By item		For theyear ended December 31
		2021		2020
	Cost of Goods Sold	Operating Expense	Total	Cost of Goods Sold	Operating Expense	Total
Employee benefits
Salaries	2,822	707,457	710,279	3,501	794,930	798,431
Labor and health insurance	301	62,931	63,232	290	62,381	62,671
Pension	152	35,036	35,188	168	37,429	37,597
Remuneration of directors	-	5,524	5,524	-	3,777	3,777
Others	146	21,375	21,521	149	23,225	23,374
Depreciation	1	60,513	60,514	-	60,434	60,434
Amortization	-	40,760	40,760	-	51,481	51,481

the Company for the years ended December 31, 2021 and 2020 additional information for the number of employees and employee benefits are as follows：

Number of employees Number of directors who were not employees The average employee benefit The average salaries and wages The adjustment rate of average employee salaries Supervisor's remuneration

The Company's salary and remuneration policy (including directors, managers and employees) are as follows:

Directors: The remuneration of the Company’s directors is determined by reference to the general level of agreement in the industry and shall be assess regularly to see whether the remuneration is in accordance with the Company's articles of incorporation and the industry standard managerial salary range. The above conditions are reviewed by the Compensation Committee and approved by the board of directors.

Managers: For the remuneration of the new managers and managers whose annual salary have changed in the new year, human resources department determined the remuneration according to the standard managerial salary of the industry. The payment shall be reviewed by Compensation Committee and approved by the board of directors.

Employee: The remuneration of the employees is determined by reference to the annual external salary survey, standard employee salary of the industry, annual salary adjustments, annual bonus, the Company’ s promotion system, and dividend principle. In addition, the above conditions, the Company’s overall operating performance, and the individual’s performance achievement rate and contribution to the Company are all taken into consideration to implement the reward system.

(Continued)

71

D-LINK CORPORATION

Notes to the Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company for the year ended December 31, 2021:

(i) Loans to other parties:

Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:
													(In Thousands of New Taiwan Dollars)
Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period (%)	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Individual funding loan limits (Note)	Maximum limit of fund financing (Note)
													Item	Value
1	D-Link International	D-Link (shanghai)	Other accounts receivable - related parties	Yes	43,431	43,431	16,069	4.00	2	-	Operating Capital	-	-	-	2,729,266	2,729,266
1	D-Link International	D-Link Brazil	Other accounts receivable - related parties	Yes	55,380	55,380	-	-	2	-	Operating Capital	-	-	-	2,729,266	2,729,266
1	D-Link International	D-Link (shanghai)	Other accounts receivable - related parties	Yes	532,089	532,089	532,089	-	2	-	Convert from Account receivable to loan receivable	-	-	-	2,729,266	2,729,266
2	D-Link Russia Investment	D-Link International	Other accounts receivable - related parties	Yes	681,174	681,174	678,405	-	2	-	Operating Capital	-	-	-	692,110	692,110
3	D-Link Japan K.K.	D-Link Corporation	Other accounts receivable - related parties	Yes	433,258	433,258	433,258	0.50	2	-	Operating Capital	-	-	-	618,181	618,181
4	D-Link Europe	D-Link Corporation	Other accounts receivable - related parties	Yes	313,645	313,645	313,645	1.00	2	-	Operating Capital	-	-	-	1,243,696	1,243,696
5	D-Link (Deutschland ) GmbH	D-Link Europe	Other accounts receivable - related parties	Yes	156,822	156,822	97,230	1.00	2	-	Operating Capital	-	-	-	180,707	180,707

Note 1: Purpose of fund financing for the borrower:

1. For those companies with business transaction with the Company, please fill in 1.

2. For those companies with short-term financing needs, please fill in 2.

Note 2: Total amount of loans from D-Link International to the Company and the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries shall not exceed 100% of the net worth of D-Link International.

• Note 3: Total amount of loans from D-Link Russia Investment to the Company and the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries shall not exceed 100% of the net worth of D-Link Russia Investment.

Note 4: Total amount of loans from D-Link Japan K.K. to the Company and the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries shall not exceed 100% of the net worth of D-Link Japan K.K..

Note 5: Total amount of loans from D-Link Europe to the Company and the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries shall not exceed 100% of the net worth of D-Link Europe.

Note 6: Total amount of loans from D-Link Deutschland to the Company and the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries shall not exceed 100% of the net worth of D-Link Deutschland.

Note 7: Only disclose funding loan limits that are still valid until end the year of 2021.

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0	D-Link Corporation	D-Link Europe	2	1,999,455	116,864	116,864	59,987	-	% 1.38	5,998,365	Y	N	N
0	D-Link Corporation	D-Link Shiang-Hai	2	1,999,455	69,225	69,225	-	-	% 0.82	5,998,365	Y	N	Y
0	D-Link Corporation	D-Link Trade	2	1,999,455	13,845	13,845	-	-	% 0.16	5,998,365	Y	N	N

(Continued)

72

D-LINK CORPORATION Notes to the Financial Statements

Note 1: The endorsement and guarantee amount for a single company shall not exceed 1/3 of the Company’s capital.

Note 2: The endorsement and guarantee total amount shall not exceed the Company’s capital.

Note 3: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into following categories:

1. Having business relationship.

2. The Company owns more than 50% equity shares in the entity, directly or indirectly.

3. An entity owns more than 50% equity shares in the Company, directly or indirectly.

Note 4: The amounts in New Taiwan Dollars were translated at the exchange rates at the balance sheet date.

(iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
D-Link Corporation	EHOO	None	Non current financial assets at fair value through profit or loss	749,663	-	% 4.11	-
D-Link Corporation	EWAVE	None	Non current financial assets at fair value through profit or loss	83,334	-	% 1.89	-
D-Link Corporation	TGC	None	Non current financial assets at fair value through profit or loss	500,000	-	% 1.84	-
D-Link Corporation	YICHIA Information Corporation	None	Non current financial assets at fair value through profit or loss	73,500	-	% 6.68	-
D-Link Corporation	UBICOM	None	Non current financial assets at fair value through profit or loss	926,814	-	% 3.05	-
D-Link Corporation	Purple Comm, Inc.	None	Non current financial assets at fair value through profit or loss	3,385,417	-	% 14.10	-
D-Link Corporation	Global Mobile Corp.	None	Non current financial assets at fair value through profit or loss	6,600,000	-	% 2.39	-
D-Link Holding	Best 3C	None	Non current financial assets at fair value through profit or loss	600,000	-	% 1.88	-
D-Link Holding	E2O	None	Non current financial assets at fair value through profit or loss	252,525	-	% 0.05	-
YEOTAI	Stemcyte	None	Non current financial assets at fair value through other comprehensive income	18,950	211	% 0.01	211
YEOTAI	Kaimei	None	Non current financial assets at fair value through other comprehensive income	289,178	29,207	% 0.02	29,207
D-Link India	ADITYA BIRLA MUTUAL FUND	None	Current financial assets at fair value through profit or loss	268,723	34,036	% -	34,036
D-Link India	NIPPON INDIA MUTUAL FUND	None	Current financial assets at fair value through profit or loss	14,742	28,340	% -	28,340
D-Link India	TATA MUTUAL FUND	None	Current financial assets at fair value through profit or loss	27,592	33,956	% -	33,956
D-Link India	SBI MUTUAL FUND	None	Current financial assets at fair value through profit or loss	27,641	34,017	% -	34,017
D-Link India	LIC MUTUAL FUND	None	Current financial assets at fair value through profit or loss	17,040	24,326	% -	24,326
D-Link India	HDFC MUTUAL FUND	None	Current financial assets at fair value through profit or loss	14,630	22,603	% -	22,603
D-Link India	UTI MUTUAL FUND	None	Current financial assets at fair value through profit or loss	26,253	33,804	% -	33,804
D-Link India	AXIS MUTUAL FUND	None	Current financial assets at fair value through profit or loss	39,038	33,871	% -	33,871
D-Link India	KOTAK MUTUAL FUND	None	Current financial assets at fair value through profit or loss	21,193	33,668	% -	33,668

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the Company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
D-Link Corporation	Cameo	Investment accounted under the equity method		Associate	39,852,993	364,655	97,680,000	799,999	-	-	-	-	137,532,993	1,394,856

Note 1: The ending balance includes exchange differences on translation of foreign financial statements, share of profit of associates accounted for using equity method and other equity adjustments.

Note 2: Private placement of common stock.

• (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

(Continued)

73

D-LINK CORPORATION Notes to the Financial Statements

• (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock:

capital stock:	capital stock:	capital stock:
									(In Thousands of New Taiwan Dollars)
Name of company	Related party	Nature of relationship	Transaction details				Transactions with terms different from others		Notes/Accounts receivable (payable)		Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
D-Link Corporation	D-Link International	Subsidiary	(Sale and service revenue)	(560,549)	% (40)	60 days	－	－	52,526	23%
D-Link International	D-Link Corporation	Parent Company	Purchase and service expense	560,549	% 72	60 days	－	－	(52,526)	(3)%
D-Link International	D-Link Systems	The ultimate parent company is D-Link Corporation	(Sale)	(487,759)	% (5)	75 days	－	－	-	-%
D-Link International	D-Link Canada	The ultimate parent company is D-Link Corporation	(Sale)	(333,818)	% (4)	60 days	－	－	42,391	1%
D-Link International	D-Link Europe	The ultimate parent company is D-Link Corporation	(Sale)	(2,835,786)	% (30)	60 days	－	－	620,789	17%
D-Link International	D-Link ME	The ultimate parent company is D-Link Corporation	(Sale)	(1,466,321)	% (16)	60 days	－	－	550,380	15%
D-Link International	D-Link Australia	The ultimate parent company is D-Link Corporation	(Sale)	(205,412)	% (2)	60 days	－	－	22,568	1%
D-Link International	D-Link Brazil	The ultimate parent company is D-Link Corporation	(Sale)	(228,633)	% (2)	75 days	－	－	388,126	11%
D-Link International	D-Link Japan	The ultimate parent company is D-Link Corporation	(Sale)	(494,865)	% (5)	60 days	－	－	113,826	3%
D-Link International	D-Link India	The ultimate parent company is D-Link Corporation	(Sale)	(671,294)	% (7)	45 days	－	－	127,348	4%
D-Link International	D-Link Trade	The ultimate parent company is D-Link Corporation	(Sale)	(1,124,943)	% (12)	180 days	－	－	749,994	21%
D-Link International	Cameo	Investments accounted for using equity method by D- Link Corporation	Purchase	1,029,175	% 13	90 days	－	－	(172,496)	(10)%
D-Link International	Amigo	Other related- party	Purchase	148,826	% 2	90 days	－	－	(104,495)	(6)%
D-Link Systems	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	487,759	% 93	75 days	－	－	-	-%
D-Link Canada	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	333,818	% 99	60 days	－	－	(42,391)	(95)%
D-Link Europe	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	2,835,786	% 97	60 days	－	－	(620,789)	(86)%
D-Link ME	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	1,466,321	% 55	60 days	－	－	(550,380)	(81)%

(Continued)

74

D-LINK CORPORATION Notes to the Financial Statements

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions with terms different from others	Transactions with terms different from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
D-Link Australia	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	205,412	% 91	60 days	－	－	(22,568)	(99)%
D-Link Brazil	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	228,633	% 93	75 days	－	－	(388,126)	(97)%
D-Link Japan	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	494,865	% 90	60 days	－	－	(113,826)	(98)%
D-Link India	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	671,294	% 22	45 days	－	－	(127,348)	(22)%
D-Link Trade	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	1,124,943	% 98	180 days	－	－	(749,994)	(99)%

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

					(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue		Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
D-Link International	D-Link Europe	The ultimate parent company is D-Link Corporation	620,789	7.00	-	-	124,112	-
D-Link International	D-Link L.A.	The ultimate parent company is D-Link Corporation	581,967	-	585,667	-	-	-
D-Link International	D-Link Brazil	The ultimate parent company is D-Link Corporation	388,126	0.81	381,121	-	-	-
D-Link International	D-Link Japan	The ultimate parent company is D-Link Corporation	113,826	3.12	-	-	30,741	-
D-Link International	D-Link Trade	The ultimate parent company is D-Link Corporation	749,994	1.61	-	-	-	-
D-Link International	D-Link India	The ultimate parent company is D-Link Corporation	127,348	5.19	5	-	23,720	-
D-Link International	D-Link ME	The ultimate parent company is D-Link Corporation	550,380	4.17	-	-	230	-

Note 1: Over three months during the normal credit period.

Note 2: The amount represents collections subsequent to December 31, 2021 up to January 21, 2022.

(ix) Trading in derivative instruments:

(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars
Company Name	Derivative Instruments Category	Holding Purpose	Contract Amount	Book Value	Fair Value
D-Link International D-Link International D-Link International D-Link International D-Link Corporation D-Link Corporation	Cross currency swap Forward foreign exchange contract Forward foreign exchange contract Forward foreign exchange contract Cross currency swap Cross currency swap	Non-trading： EUR EUR (Sell) CAD (Sell) JPY (Sell) USD EUR	EUR 4,000 EUR 3,000 CAD 700 JPY 448,900 USD 1,700 EUR 10,000	73 364 4 280 (270) (2,402)	73 364 4 280 (270) (2,402)

(Continued)

75

D-LINK CORPORATION Notes to the Financial Statements

Company Name	Derivative Instruments Category	Holding Purpose	Contract Amount	Book Value	Fair Value
D-Link Corporation D-Link International D-Link International D-Link International D-Link International D-Link International D-Link International D-Link India D-Link International D-Link International D-Link International D-Link International	Cross currency swap Cross currency swap Cross currency swap Cross currency swap Cross currency swap Cross currency swap Cross currency swap Forward foreign exchange contract Forward foreign exchange contract Forward foreign exchange contract Forward foreign exchange contract Forward foreign exchange contract	JPY CAD CNH EUR AUD GBP RUB INR (Sell) AUD (Sell) GBP (Sell) BRL(Sell) KRW (Sell)	JPY 1,800,000 CAD 1,100 CNH 133,670 EUR 12,000 AUD 300 GBP 1,000 RUB 150,028 INR 188,766 AUD 1,000 GBP 500 BRL 80,445 KRW 2,144,020	(7,131) (187) (1,439) (1,334) (94) (531) (334) (1,008) (149) (76) (1,309) (104)	(7,131) (187) (1,439) (1,334) (94) (531) (334) (1,008) (149) (76) (1,309) (104)

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

				(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars
Name of investor	Name of investee	Location	Main businesses and products	Original investment amount		Balance as of December 31, 2021			Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value
D-Link Corporation	D-Link Systems	USA	Marketing and after-sales service in USA	1,625,875	1,625,875	47,295,007	% 98.44	1,299,802	(64,895)	(64,895)	100% shares owned by D- Link Corporation and D- Link Holding
D-Link Corporation	D-Link Canada	Canada	Marketing and after-sales service in Canada	216,354	283,866	5,736,000	% 100.00	279,408	1,365	1,365
D-Link Corporation	D-Link International	Singapore	Global marketing, procurement and after-sale service	1,941,986	1,941,986	66,074,660	% 99.36	2,205,874	479,733	389,102	100% shares owned by D- Link Corporation and D- Link Holding Investment gains and losses recognized for the period include the recognition of gains and losses on transactions with associates
D-Link Corporation	D-Link L.A.	Cayman Island	Marketing and after-sales service in Latin America	326,600	326,600	41,000	% 100.00	(565,620)	(56,561)	(56,561)
D-Link Corporation	D-Link Sudamerica	Chile	Marketing and after-sales service in Chile	6,512	6,512	199,999	% 100.00	10,953	1,588	1,588	100% shares owned by D- Link Corporation and D- Link Holding
D-Link Corporation	D-Link Mexicana	Mexico	Marketing and after-sales service in Mexico	301,036	301,036	152,066	% 100.00	14,527	(246)	(246)	100% shares owned by D- Link Corporation and D- Link Sudamerica
D-Link Corporation	D-Link Brazil	Brazil	Marketing and after-sales service in Brazil	932,197	932,197	2,964,836,727	% 100.00	(117,935)	(94,358)	(94,358)	100% shares owned by D- Link Corporation and D- Link Holding
D-Link Corporation	D-Link ME	UAE	Marketing and after-sales service in Middle East and Africa	71,484	71,484	5	% 83.33	797,809	29,689	29,689	100% shares owned by D- Link Corporation and D- Link International
D-Link Corporation	D-Link Australia	Australia	Marketing and after-sales service in Australia and New Zealand	16,744	16,744	999,000	% 99.90	149,831	12,153	12,153	100% shares owned by D- Link Corporation and D- Link International
D-Link Corporation	D-Link Holding	B.V.I.	Investment company	2,242,837	2,242,837	68,062,500	% 100.00	1,684,899	109,748	109,748
D-Link Corporation	D-Link Deutschland	Germany	Marketing and after-sales service in Germany	120,050	120,050	- Note 2	% -	120,050	15,415	-	100% shared owned by D- Link Corporation directly and indirectly. D-Link Corporation share’s profit recognized in D-Link Europe
D-Link Corporation	D-Link Japan	Japan	Marketing and after-sales service in Japan	595,310	595,310	9,500	% 100.00	647,668	17,491	17,491
D-Link Corporation	D-Link Investment	Singapore	Investment company	67,191	67,191	2,200,000	% 100.00	(68,898)	39,892	39,892

(Continued)

76

D-LINK CORPORATION Notes to the Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value
D-Link Corporation	YEOCHIA	Taiwan	Investment company	-	122,400	- Note 2	% -	-	2,814	2,814	Carried out liquidation procedure on December 1, 2021
D-Link Corporation	YEOMAO	Taiwan	Investment company	-	70,052	-	% -	-	917	917	Carried out liquidation procedure on December 1, 2021
D-Link Corporation	YEOTAI	Taiwan	Investment company	146,000	146,000	14,600,000	% 100.00	62,598	1,690	1,690
D-Link Corporation	Cameo	Taiwan	Research, developments, design, manufacturing and sell broadband products, wireless products, computer networks system equipment end its components	1,102,479	-	137,532,993	% 41.58	1,394,856	390,654	193,398 Note 1	At the beginning of the period, D-Link corporation held 17.35% shares, which was measured in financial assets at fair value through other comprehensive income, in February 2022, increasing investment and holding to 41.58% shares, then turning into using equity methods.
D-Link Investment	D-Link Trade	Russia	Marketing and after-sales service in Russia	66,538	66,538	- Note 2	% 100.00	(67,427)	40,100	40,100
D-Link Trade	T-COM	Russia	Marketing and after-sales service in Russia	12,485	-	- Note 2	% 40.00	8,709	(6,414)	(4,047)
D-Link International	D-Link Australia	Australia	Marketing and after-sales service in Australia and New Zealand	22	22	1,000	% 0.10	18	12,153	-	D-Link Australia share’s profit recognized in D-Link Corporation
D-Link International	D-Link ME	UAE	Marketing and after-sales service in Middle East and Africa	34,260	34,260	1	% 16.67	29,241	29,689	-	D-Link ME share’s profit recognized in D-Link Corporation
D-Link International	D-Link Korea	Korea	Marketing and after-sales service in Korea	44,300	44,300	330,901	% 100.00	(31,516)	(7,132)	(7,132)
D-Link International	D-Link Trade M.	Republic of Moldova	Marketing and after-sales service in Moldova	13	13	- Note 2	% 100.00	(193)	365	365
D-Link International	D-Link Russia Investment	BVI	Investment company	789,757	789,757	25,000,000	% 100.00	692,110	3,901	3,901
D-Link International	D-Link Malaysia	Malaysia	Marketing and after-sales service in Malaysia	6,130	6,130	800,000	% 100.00	7,334	381	381
D-Link International	D-Link Lithuania	Lithuania	Marketing and after-sales service	3,574	3,574	1,000	% 100.00	3,850	634	634
D-Link Holding	D-Link Europe	UK.	Marketing and after-sales service in Europe	971,293	971,293	32,497,455	% 100.00	1,173,116	26,534	26,534
D-Link Holding	D-Link International	Singapore	Global marketing, procurement and after-sales service	8,466	8,466	425,340	% 0.64	(13,568)	479,733	-	D-Link International share’ s profit recognized in D- Link Corporation
D-Link Holding	OOO D-Link Russia	Russia	After-sales service in Russia	11,309	11,309	-	% 100.00	4,521	14	14
D-Link Holding	D-Link Mauritius	Mauritius	Investment company	186,789	186,789	200,000	% 100.00	888,913	81,537	81,537
D-Link Holding	D-Link Shiang-Hai (Cayman)	Cayman Islands	Investment company	654,974	654,974	50,000	% 100.00	(539,232)	331	331
D-Link Holding	D-Link Systems	USA	Marketing and after-sales service in USA	49,320	49,320	750,000	% 1.56	41,535	(64,895)	-	D-Link Systems share’s profit recognized in D-Link Corporation
D-Link Holding	Wishfi	Singapore	Research, development, marketing and after-sales service	-	68,566	-	% -	-	-	-	Cancellation of registration in January, 2022
D-Link Holding	Success Stone	BVI	Investment company	297,027	297,027	9,822	% 100.00	147,272	819	819
D-Link Holding	MiiiCasa Holding	Cayman Island	Investment company	61,087	61,087	21,000,000	% 28.98	-	-	812
D-Link Holding	D-Link Brazil	Brazil	Marketing and after-sales service in Brazil	-	-	100	% -	-	(94,358)	-	D Link Brazil share’s profit recognized in D-Link Corporation
D-Link Holding	D-Link Sudamerica	Chile	Marketing and after-sales service in Chile	-	-	1	% -	-	1,588	-	D-Link Sudamerica share’s profit recognized in D-Link Corporation
D-Link Mauritius	D-Link India	India	Marketing and after-sales service in India	340,319	340,319	18,114,663	% 51.02	871,378	161,114	82,201
D-Link Mauritius	TeamF1 India	India	Technical services for software and hardware system integration	8	8	1	% 0.01	13	9,326	1	100% shares owned by D- Link Mauritius and D-Link India
D-Link India	TeamF1 India	India	Technical services for software and hardware system integration	84,114	84,114	10,499	% 99.99	119,432	9,326	9,325	100% shares owned by D- Link Mauritius and D-Link India

(Continued)

77

D-LINK CORPORATION

Notes to the Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value
D-Link L.A	D-Link Peru S.A.	Peru	Marketing and after-sales service in Peru	-	-	1	% 0.03	3	708	-	D-Link Peru S.A. share’s profit recognized in D-Link Sudamerica
D-Link Sudamerica	D-Link de Colombia SAS.	Colombia	Marketing and after-sales service in Colombia	22,213	22,213	1,443,605	% 100.00	5,462	(731)	(731)
D-Link Sudamerica	D-Link del Ecuador S.A.	Ecuador	Marketing and after-sales service in Ecuador	-	26	-	% -	-	-	-	D-Link del Ecuador S.A share's profit recognized in D-Link Sudamerica Liquidation process was completed in April, 2021.
D-Link Sudamerica	D-Link Guatemala S.A.	Guatemala	Marketing and after-sales service in Guatemala	410	410	99,000	% 99.00	515	-	-
D-Link Sudamerica	D-Link Peru S.A.	Peru	Marketing and after-sales service in Peru	38	38	3,499	% 99.97	8,564	708	708
D-Link Sudamerica	D-Link Mexicana	Mexico	Marketing and after-sales service in Mexico	6	6	3	% -	6	(246)	-	D-Link Mexicana share’s profit recognized in D-Link Corporation
D-Link Sudamerica	D-Link Argentina S.A.	Argentina	Marketing and after-sales service in Argentina	2,750	2,750	100	% 100.00	113	-	-	D-Link Argentina share’s profit recognized in D-Link Sudamerica Liquidation is in process
D-Link Europe	D-Link Deutschland	Germany	Marketing and after-sales service in Germany	131,769	131,769	- Note 2	% 100.00	180,707	15,415	15,415
D-Link Europe	D-Link AB	Sweden	Marketing and after-sales service in Sweden	9,022	9,022	15,500	% 100.00	15,731	1,450	1,450
D-Link Europe	D-Link Iberia SL	Spain	Marketing and after-sales service in Spain	1,976	1,976	50,000	% 100.00	58,611	3,729	3,729
D-Link Europe	D-Link Mediterraneo SRL	Italy	Marketing and after-sales service in Italy	2,177	2,177	50,000	% 100.00	16,802	7,314	7,314
D-Link Europe	D-Link (Holdings)Ltd	UK.	Investment company	-	-	3	% 100.00	8,991	-	-
D-Link Europe	D-Link France SARL	France	Marketing and after-sales service in France	5,287	5,287	114,560	% 100.00	35,512	2,884	2,884
D-Link Europe	D-Link Netherlands	Netherlands	Marketing and after-sales service in Netherlands	2,132	2,132	50,000	% 100.00	7,453	536	536
D-Link Europe	D-Link Polska Sp Z.o.o.	Poland	Marketing and after-sales service in Poland	1,210	1,210	100	% 100.00	22,877	1,729	1,729
D-Link Europe	D-Link Magyarorszag	Hungary	Marketing and after-sales service in Hungary	523	523	300	% 100.00	5,755	209	209
D-Link Europe	D-Link s.r.o	Czech	Marketing and after-sales service in Czech	329	329	100	% 100.00	3,653	366	366
D-Link (Holdings)Ltd	D-Link UK	UK.	Marketing and after-sales service in UK	-	-	300,100	% 100.00	8,991	-	-
D-Link Mediterraneo SRL	D-Link Adria d.o.o	Croatia	Marketing and after-sales service in Croatia	326	326	- Note 2	% 100.00	1,157	12	12
D-Link ME	D Link Network	Republic of South Africa	Marketing and after-sales service in South Africa	-	-	100	% 100.00	(41)	(478)	-
YEOCHIA and YEOTAI	Xtramus Technologies Co. Ltd.	Taiwan	Research, development, manufacturing and sell of testing equipment for network	38,110	181,500	1,832,446	% 41.18	4,350	2,081	4,350

Note 1: Including recognition of profit (loss) from associates

Note 2: Limited Company

(Continued)

78

D-LINK CORPORATION Notes to the Financial Statements

(c) Information on investment in mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

					(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars	(In Thousands of New Taiwan Dollars
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows		Accumulated outflow of investment from Taiwan as of December 31, 2021	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value Note 2	Accumulated remittance of earnings in current period
					Outflow	Inflow
D-Link Shiang- Hai	Buy and sell of networking equipment and wireless system	539,955	( 2 )	539,955	-	-	539,955	(2,209)	100.00%	(2,209)	(550,438)	-
Netpro Trading	Research, development and trading business	19,383	( 2 )	18,067	-	-	18,067	2,540	100.00%	2,540	13,404	-
YouXiang	Technical Service and Import/Export trading business	61,671	( 3 )	-	-	-	-	5,539	9.86%	-	3,882	-

Note 1: Method of Investment:

Type 1: Direct investments in Mainland China

Type 2: Indirect investments in Mainland China

Type 3: Other

Note 2: The amounts in New Taiwan Dollars were translated at the exchange rates of USD 27.690, CNY 4.3430 as of December 31, 2021.

• (ii) Limitation on investment in Mainland China:

itation on investment in Mainland China:
Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
558,022	558,022	Note

Note: Since the Company has obtained the Certificate of Headquarter Operation, there is no upper limitation on investment in Mainland China.

• (iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Sapido Technology Inc.	59,818,400	% 9.97
Yitongyuan Investment Co., Ltd.	32,825,600	% 5.47

(14) Segment information:

Please refer to Consolidated Financial Statements for the years ended December 31, 2021, and 2020.

79

D-LINK CORPORATION

Statement of cash and cash equivalents

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Cash Bank deposits	Description Amount Petty cash and Foreign currency deposits $ 191 Checking and Saving accounts NTD 78,156 USD：2,091 (in thousands) 57,926 Other foreign currency deposits 15,118 $ 151,391

Note 1: The exchange rate of USD to NTD as of December 31, 2021 is 27.69.

80

D-LINK CORPORATION

Statement of notes receivable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

	Item		Amount
EVERCOM SCIENTIFIC SYSTEM CO.,LTD		$	875
Rui Yuan Co., Ltd.			3,235
OLLO CO., LTD.			772
Others (The amount of individual vendor included within“Others”does not exceed 5% of this			401
account balance.)
$			5,283

Note: Notes and accounts receivable are all generated by business activities.

81

D-LINK CORPORATION

Statement of accounts receivables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Company A	$	37,935
Company B		27,873
Company C		21,972
Company D		11,231
Company E		8,548
Company F		8,512
Others (The amount of individual vendor included within“Others”does not exceed 5% of this
account balance.)		28,188
144,259
Less: Allowance for doubtful accounts		(885)
$		143,374

Note: The accounts receivable from related parties are not included in the above payment. For details, please refer to Note 7 to the financial statements.

82

D-LINK CORPORATION

Statement of other receivables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Receivable amounts from advance payment of subsidiaries Receivable amounts from liquidation of subsidiaries Others (The amount of individual vendor included within“Others”does not exceed 5% of this account balance.)	Description Amount $ 12,699 214,785 13,034 $ 240,518

83

D-LINK CORPORATION

Statement of inventories

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Amount

Item Cost Finished goods $ 110,634 Less: Allowance for inventory write downs and obsolescence (21,760) $ 88,874

Item Finished goods

Net realizable value Note 99,351 Market price is measured at net realizable value

84

D-LINK CORPORATION

Statement of other current assets

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Prepaid software fees	$	22,578
Prepayment for purchase		16,965
Prepaid warranty fees		4,325
Input tax		3,522
Temporarily payment		2,170
Others (The amount of individual vendor included within“Others”does not exceed 5% of this
account balance.)		6,455
$		56,015

85

D-LINK CORPORATION

Statement of financial assets measured at fair value through other

comprehensive income - non-current

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name Cameo	Beginning Balance Shares (thousand) Fair value 39,853 $ 364,655	Increase Shares (thousand) Amount - -	Decrease Shares (thousand) Amount (Note) 39,853 364,655	Ending Balance Shares (thousand) Fair value Collateral - - None
	Shares (thousand) 39,853	Shares (thousand) -	Shares (thousand) 39,853	Shares (thousand) -

Note : Including the change in valuation $49,816 thousand.

86

D-LINK CORPORATION

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name of investee	Beginning Balance Shares Amount 47,295 $ 1,405,450 8,736 353,669 66,075 2,099,470 152 15,697 - 792,197 999 151,159 68,063 1,734,081 - 120,050 200 10,477 10 719,580 - - - 275,149 10,220 128,946 14,600 63,113 7,869,038 41 (524,882) 2,964,837 (30,914) 2,200 (111,773) (667,569) $ 7,201,469	Beginning Balance Shares Amount 47,295 $ 1,405,450 8,736 353,669 66,075 2,099,470 152 15,697 - 792,197 999 151,159 68,063 1,734,081 - 120,050 200 10,477 10 719,580 - - - 275,149 10,220 128,946 14,600 63,113 7,869,038 41 (524,882) 2,964,837 (30,914) 2,200 (111,773) (667,569) $ 7,201,469	Increase (Decrease) (Note1) and (Note2)	Increase (Decrease) (Note1) and (Note2)	Increase (Decrease) (Note1) and (Note2)		Net income (losses) of investee	d t	Exchange ifferences on ranslation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income (Note 3)	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income (Note 3)		Other Changes (Note4)	Ending Balance	Ending Balance	Ending Balance	Market Value or Net Asset Percentage of ownership Value (Note7) 98.44 % 1,342,017 100.00 % 279,408 99.36 % 2,729,266 100.00 % 14,527 83.33 % 832,183 99.90 % 149,831 100.00 % 1,721,146 100.00 % - 100.00 % 9,582 100.00 % 618,181 41.58 % 1,567,876 - % - - % - 100.00 % 62,598 100.00 % (568,346) 100.00 % (117,935) 100.00 % (68,898)
	Shares		Shares		Amount									Shares		Amount
Investments accounted for using equity method: D-Link Systems D-Link Canada D-Link International D-Link Mexicana D-Link Middle East(Note 6) D-Link Australia D-Link Holding D-Link Deutschland (Note 5) D-Link Sudamerica D-Link Japan Cameo Yeochia(Note 6) Yeoamo Yeotai Credit balance of equity investment: D-Link L.A. D-Link Brazil D-Link Investment	47,295 8,736 66,075 152 - 999 68,063 - 200 10 - - 10,220 14,600 41 2,964,837 2,200	$ 1,405,450 353,669 2,099,470 15,697 792,197 151,159 1,734,081 120,050 10,477 719,580 - 275,149 128,946 63,113 7,869,038 (524,882) (30,914) (111,773) (667,569) $ 7,201,469	- (3,000) - - - - - - - - 137,533 - (10,220) - - - -		- (67,512) (203,607) - - - - - - - 1,214,470 (271,169) (143,616) - 528,566 - - - - 528,566		(64,895) 1,365 389,102 (246) 29,689 12,153 109,748 - 1,588 17,491 193,398 2,814 917 1,690 694,814 (56,561) (94,358) 39,892 (111,027) 583,787		(40,753) (8,114) (79,091) (924) (24,077) (13,481) (158,604) - (1,112) (89,403) 675 - - - (414,884) 15,823 7,337 2,983 26,143 (388,741)		- - - - - - 414 - - - (14,416) 35 (2,453) (2,076) (18,496) - - - - (18,496)		- - - - - - (740) - - - 729 (6,829) 16,206 (129) 9,237 - - - - 9,237	47,295 5,736 66,075 152 - 999 68,063 - 200 10 137,533 - - 14,600 41 2,964,837 2,200		1,299,802 279,408 2,205,874 14,527 797,809 149,831 1,684,899 120,050 10,953 647,668 1,394,856 - - 62,598 8,668,275 (565,620) (117,935) (68,898) (752,453) 7,915,822

Note 1: The increase in current period is due to increased investments amounting to $799,999 thousand in Cameo, and turned financial assets at fair value through other comprehensive income into using equity methods amounting to $414,471 thousand, increased $1,214,470 thousand in total.

Note 2: The decrease in current period is due to the adoption of equity methods for cash dividends amounting to $203,607 thousand, reduced capital by cash amounting to $267,512 thousand, YEOCHIA and YEOMAO carried out liquidation procedures in December 2021, turned investment accounted for using equity methods into other receivables amounting to $214,785 thousand.

Note 3: The valuation of financial assets recognized by the investees were measured at fair value through other comprehensive income.

Note 4: The other changes were due to recognizing the investment adjustments through using equity method, resulting in the decrease of $740 thousands in capital surplus and the decrease of $9,977 thousands in retained earnings. Note 5: The investment profit or loss based on investments accounted for using equity method is recognized in D-Link Holding.

Note 6: Yeochia. is a LLC ,and has yet divided shares；D-Link ME has under a thousand shares.

Note 7: The total amount of net value is calculated by stockholders equity audited by CPAs multiplied by its shareholding ratio. Note 8: Each investment accounted for using equity method is neither guaranteed nor mortgaged.

87

D-LINK CORPORATION

Statement of changes in property, plant and

equipment

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Balance as of January 1, 2021 Land $ 531,453 Buildings 548,086 Others 722,347 $ 1,801,886	Increase - 717 30,884 31,601	Decrease - - 126,777 126,777	Transfer - - - -	Balance as of December 31, 2021
				531,453 548,803 626,454
				1,706,710

Statement of changes in accumulated depreciation of property, plant and equipment

Item Accumulated Depreciation： Buildings Others	Balance as of January 1, 2021 $ 425,572 623,929 $ 1,049,501	Increase 4,992 51,487 56,479	Decrease - 126,777 126,777	Transfer - - -	Balance as of December 31, 2021 Note 430,564 Note1 548,639 Note2 979,203

Note 1: Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight line basis over the estimated useful lives. Estimated useful lives：5~46 years.

Note 2: Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight line basis over the estimated useful lives. Estimated useful lives：2~9 years.

88

D-LINK CORPORATION

Statement of changes in right-of-use assets

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item	Balance as of January 1, 2021 $ 16,065	Increase 3,214	Decrease (958)	Balance as of December 31, 2021
Buildings				18,321

Statement of changes in accumulated depreciation of

right-of-use assets

Item	Balance as of January 1, 2021 $ 4,137	Increase 3,639	Decrease (958)	Balance as of December 31, 2021
Accumulated Depreciation： Buildings				6,818

89

D-LINK CORPORATION

Statement of changes in investment property

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Land Buildings	Balance as of January 1, 2021 $ 30,000 22,196 $ 52,196	Increase - - -	Decrease - - -	Balance as of December 31, 2021
				30,000 22,196
				52,196

Statement of changes in accumulated depreciation of investment property

Item Buildings	Balance as of January 1, 2021 $ 11,924	Increase 396	Decrease -	Balance as of December 31, 2021
				12,320

Note: Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight line basis over the estimated useful lives. Estimated useful lives：9~55 years.

Statement of changes in accumulated impairment of investment property

Item Bulidings	Balance as of January 1, 2021 $ 1,000	Increase -	Decrease -	Balance as of December 31, 2021
				1,000

90

D-LINK CORPORATION

Statement of changes in intangible assets

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Patents Computer software costs Other intangible assets Total	Balance as of January 1, 2021 $ 17,720 43,113 13,467 $ 74,300	Increase - 4,147 10,097 14,244	Decrease - (2,322) - (2,322)	Amortization (2,692) (25,799) (12,269) (40,760)	Balance as of December 31, 2021 Note 15,028 Note 1 19,139 Note 2 11,295 Note 2 45,462

• Note 1: Patents are amortized from their acquisition and are recognized in profit or loss on a straight line basis over the estimated useful lives. The estimated useful lives of patents are 16 years.

• Note 2: Amortization is calculated on the cost of the asset less its residual value and accumulated impairment, and is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets. The estimated useful lives of intangible assets are 2~8 years.

91

D-LINK CORPORATION

Statement of other non-current assets

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

	Item		Amount
Refundable deposits		$	4,542
Others			396
Total		$	4,938

92

D-LINK CORPORATION

Statement of other short-term loans

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Mortgages Term of or Type of loans Ending Balance contract Interest rate(%) Financing limit guarantees Loans from related parties $ 746,903 111 0.5~1 - None

93

D-LINK CORPORATION

Statement of financial liabilities at fair value through profit or loss - current

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name of financial instrument Derivative financial liabilities Cross currency swaps	Description	Shares -	Carrying Amount $ -	Total -	Interest Rate % -		Fair Value Total 9,803	Fair value changes are attributable to the changes of credit risk
						Unit Price -
								-

94

D-LINK CORPORATION

Statement of note and accounts payables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Suppliers name		Amount
Company A	$	9,054
Company B		8,110
Company C		22,882
Company D		22,046
Company E		23,060
Others (The amount of individual vendor included within“Others”does not exceed 5% of this
account balance.)		45,884
	$	131,036

Note 1: Note payables and account payables are both generated from operating activities.

Note 2: Payables to related parties are not included in the payments above, please refer to note 7 for further information.

95

D-LINK CORPORATION

Statement of other payables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Payables on salaries, bonuses, labor health insurances and pensions	$	99,160
Payables on research fees		5,075
Payables on equipment		17,744
Others (The amount of individual vendor included within“Others”does not exceed 30,000
thousand.)		65,089
$		187,068

96

D-LINK CORPORATION

Statement of provisions - current

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

		Item		Amount
Warranties			$	62,860
Litigations	and royalties			119,067
			$	181,927

97

D-LINK CORPORATION

Statement of other current liabilities

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

	Item		Amount
Payables on income	taxes	$	23,196
Payables in lieu of untaken annual leave			23,786
Temporary receipts			5,235
Others (The amount	of individual item within“Others” does not exceed 5% of this account
balance.)			3,067
$			55,284

98

D-LINK CORPORATION

Statement of lease liabilities

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item	Description For office use	Lease term 5 years	Discount rate% Ending Balance 1.60~1.79 $ 11,879 (4,033) $ 7,846
Buildings Less: classified as current lease liabilities Lease liabilities-non current

99

D-LINK CORPORATION

Statement of other non-current liabilities

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item			Amount
Investments accounted for using	equity method-credit balance	$	752,453
Others			14,336
$			766,789

100

D-LINK CORPORATION

Statement of operating revenue

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Sales Revenue: Network communication products Service Revenue	Quantities (per piece) Amount 507,226 $ 786,679 605,896 $ 1,392,575

101

D-LINK CORPORATION

Statement of operating costs

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Beginning Inventories	$	145,236
Add : Purchases		474,374
Less: Ending Inventories		110,634
Transferring to expenses and others		11,457
Cost of goods sold		497,519
Warranty Costs		15,460
Gains related to inventories		5,390
Others		2,512
	$	520,881

102

D-LINK CORPORATION

Statement of selling expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Personnel expenses Royalty expenses Service expenses Depreciation and amortization Others (The amount of individual item within "Others" does not exceed 5% of this account balance.)	Description	Amount Note $ 274,915 36,874 5,747 1,877 47,803 $ 367,216

103

D-LINK CORPORATION

Statement of administrative expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Personnel expenses Service Expenses Depreciation and Amortization Royalty expenses Maintenance of software Others (The amount of individual item within "Others" does not exceed 5% of this account balance.)	Description	Amount Note $ 127,627 77,867 15,710 (40,136) 19,727 49,181 $ 249,976

104

D-LINK CORPORATION

Statement of research and development expense

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Personnel expenses Outsourcing research expenses Depreciation and Amortization Others (The amount of individual item within "Others" does not exceed 5% of this account balance.)	Description	Amount Note $ 424,257 60,670 83,686 18,398 $ 587,011

105

D-LINK CORPORATION

Statement of finance costs

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Interest expense Others	Description Amount Note $ 5,507 201 $ 5,708

106

D-LINK CORPORATION

Statement of other income and other gains and

losses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Other income:
Rental income	$	2,398
Others (The amount of individual item within "Others" does not exceed 5% of this account		2,721
balance.)
	$	5,119
Other gains and losses:
Foreign currency exchange gains	$	14,520
Valuation losses from financial assets and liabilities		(30,439)
Others (The amount of individual item within "Others" does not exceed 5% of this account		5
balance.)
	$	(15,914)