D-LINK — Interim / Quarterly Report 2021

Dec 15, 2021

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Stock Code:2332

D-LINK CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Nine Months Ended September 30, 2021 and 2020

The independent auditors’ review report and the accompanying consolidated 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’ review report and consolidated 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’ Review Report 4. Consolidated Balance Sheets 5. Consolidated Statements of Comprehensive Income 6. Consolidated Statements of Changes in Equity 7. Consolidated Statements of Cash Flows 8. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated 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) Significant 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

Page

1 2 3 4 5 6 7 8 8 8～9 9～31 31 32～74 74～78 78 78～79 79 79 79 80～86 87～88 89 89 90～91

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Independent Auditors’ Review Report

To the Board of Directors D-LINK CORPORATION:

Introduction

We have reviewed the accompanying consolidated balance sheets of D-LINK CORPORATION and its subsidiaries as of September 30, 2021 and 2020, and the related consolidated statements of comprehensive income for the three months and nine months ended September 30, 2021 and 2020, as well as the changes in equity and cash flows for the nine months ended September 30, 2021 and 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordance with Statement of Auditing Standard 65, “ Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As stated in Note 4(c), the consolidated financial statements included the financial statements of certain nonsignificant subsidiaries, which were not reviewed by independent auditors. These financial statements reflect total assets amounting to $4,062,592 thousand and $4,985,518 thousand, constituting 27% and 34% of consolidated total assets as of September 30, 2021 and 2020, respectively, total liabilities amounting to $901,526 thousand and $1,556,356 thousand, constituting 14% and 25% of consolidated total liabilities as of September 30, 2021 and 2020, respectively, and total comprehensive income amounting to $17,641 thousand, $57,981 thousand, $1,351 thousand and $42,471 thousand, constituting (25)%, 51%, 0% and (166)% of consolidated total comprehensive income (loss) for the three months and nine months ended September 30, 2021 and 2020, respectively.

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Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of D-LINK CORPORATION and its subsidiaries as of September 30, 2021 and 2020, and of its consolidated financial performance for the three months and nine months ended September 30, 2021 and 2020, as well as its consolidated cash flows for the nine months ended September 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors’ review report are Chou, PaoLian and Hsieh, Cho-Ha.

KPMG

Taipei, Taiwan (Republic of China) November 5, 2021

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated 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 review such consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ review report and the accompanying consolidated 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’ review report and consolidated financial statements, the Chinese version shall prevail.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of September 30, 2021 and 2020

D-LINK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2021, December 31, 2020, and September 30, 2020

(Expressed in Thousands of New Taiwan Dollar)

September 30, 2021 Assets Amount % Current assets: 1100 Cash and cash equivalents (note 6(a)) $ 3,214,449 22 1110 Financial assets at fair value through profit or loss －current (note 6(b)) 300,571 2 1150 Notes receivable, net (note 6(c)) 1,702 - 1170 Accounts receivable, net (note 6(c)) 3,263,409 22 1180 Accounts receivable due from related parties, net (note 7) 1,774 - 1197 Finance lease payment receivable (note 6(d)) 25,526 - 1200 Other receivables (notes 6(c) and 7) 70,576 1 1220 Current tax assets 19,365 - 130X Inventories (note 6(e)) 3,484,944 23 1410 Advance payment (note 7) 281,972 2 1470 Other current assets (notes 7 and 8) 375,255 2 11,039,543 74 Non-current assets: 1517 Financial assets at fair value through other comprehensive income-non current (note 6(b)) 72,869 - 1550 Investments accounted for using equity method (note 6(f)) 1,027,828 7 1600 Property, plant and equipment (note 6(h)) 982,499 7 1755 Right-of-use assets (note 6(i)) 302,066 2 1760 Investment property, net (note 6(j)) 38,975 - 1780 Intangible assets (note 6(k)) 475,224 3 1840 Deferred tax assets (note 6(s)) 804,922 5 1990 Other non-current assets (note 8) 137,877 1 194D Long-term lease payment receivable, net (note 6(d)) 137,650 1 3,979,910 26 Total assets $ 15,019,453 100	December 31, 2020 Amount % 6,216,327 39 238,951 2 2,647 - 3,061,366 19 - - - - 55,821 - 38,744 - 2,442,783 16 106,007 1 389,276 2 12,551,922 79 454,435 3 - - 1,029,671 6 470,158 3 39,272 - 511,329 3 745,635 5 147,808 1 - - 3,398,308 21 15,950,230 100	September 30, 2020 Amount % 3,603,190 24 211,663 1 4,774 - 3,236,416 22 217 - - - 26,745 - 46,421 - 2,238,443 15 162,911 1 369,405 3 9,900,185 66 432,688 3 1,519,823 10 1,008,207 7 526,972 4 39,372 - 531,062 4 755,833 5 132,607 1 - - 4,946,564 34 14,846,749 100 Liabilities and Equity Current liabilities: 2120 Financial liabilities at fair value through profit or loss－current (notes 6(b)) 2130 Contract liabilities ─ current (note 6(v)) 2150 Notes payable 2170 Accounts payable 2180 Accounts payable to related parties (note 7) 2200 Other payables (note 7) 2230 Current tax liabilities 2250 Provisions ─ current (note 6(n)) 2280 Current lease liabilities (note 6(m)) 2399 Other current liabilities (note 6(p)) 2365 Refund liability-current (note 6(o)) Non-Current liabilities: 2570 Deferred tax liabilities (note 6(s)) 2580 Non-current lease liabilities (note 6(m)) 2600 Other non-current liabilities (notes 6(r) and 7) Total liabilities Equity attributable to owners of parent: (note 6(t)) 3110 Ordinary shares 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings (Accumulated deficit) 3400 Other equity interest Total equity attributable to owners of parent: 36XX Non-controlling interests (notes 6(g) and (t)) Total equity Total liabilities and equity		September 30, 2021		December 31, 2020	December 31, 2020		September 30, 2020 Amount % 23,202 - 118,330 1 413 - 1,703,302 11 980,260 7 1,350,247 9 25,589 - 273,451 2 140,408 1 51,619 - 568,429 4 5,235,250 35 256,875 2 415,739 3 197,166 1 869,780 6 6,105,030 41 6,519,961 44 1,580,833 11 2,053,379 14 205,562 1 (389,667) (3) 1,869,274 12 (1,705,494) (11) 8,264,574 56 477,145 3 8,741,719 59 14,846,749 100
						Amount	%
						18,324 123,995 230 2,376,692 367,482 1,380,725 63,179 259,953 147,068 53,059 555,409
						5,346,116
						282,833 349,906 231,020
						863,759
						6,209,875
						6,519,961
						1,523,313
						2,053,379 205,562 566,471
						2,825,412

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

D-LINK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and nine months ended September 30, 2021 and 2020

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

4000 Net operating revenues(notes 6(v) and 7) 5000 Operating costs (notes 6(e), (r) and 7) Gross profit from operations Operating expenses: (notes 6(c), (h), (i), (j), (k), (m), (q), (r) and (w)) 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss (gain) (note 6(c)) Net operating income (loss) Non-operating income and expenses: 7100 Interest income (note 6(x)) 7010 Other income (note 6(x)) 7020 Other gains and losses (notes 6(f), (p), (x), (z) and 7) 7050 Finance costs (notes 6(m), (p) and (x)) 7060 Share of profit (loss) of associates accounted for using equity method (note 6(f)) Total non-operating income and expenses Profit (loss) before tax 7950 Less: Income tax expenses (note 6(s)) Net profit (loss) 8300 Other comprehensive income (loss): 8310 Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Less: income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive loss that will be reclassified to profit or loss (notes 6(t) and (y)) 8361 Exchange differences on translation of foreign financial statements 8370 Share of other comprehensive income of associates accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Less: income tax related to components of other comprehensive income that will be reclassified to profit or loss (note 6(s)) 8300 Other comprehensive loss, net Total comprehensive income (loss) of tax Net profit (loss) attributable to: 8610 Owners of parent 8620 Non-controlling interests Comprehensive income (loss) attributable to: 8710 Owners of parent 8720 Non-controlling interests Basic earnings per share (New Taiwan dollars) (note 6(u)) Diluted earnings per share (New Taiwan dollars) (note 6(u))	For the three months ended September 30 2021 2020 Amount % Amount % $ 3,957,707 100 4,161,488 100 2,942,841 74 2,800,122 67 1,014,866 26 1,361,366 33 592,211 15 644,493 16 142,506 4 256,614 6 188,417 5 258,439 6 (1,266) - 1,002 - 921,868 24 1,160,548 28 92,998 2 200,818 5 4,609 - 2,643 - 590 - 1,231 - 11,125 - 106,695 3 (6,416) - (6,652) - (94,079) (2) 40,679 1 (84,171) (2) 144,596 4 8,827 - 345,414 9 10,854 - 24,551 1 (2,027) - 320,863 8 (22,436) (1) (103,219) (2) (737) - 1,961 - - - - - (23,173) (1) (101,258) (2) (47,604) (1) (154,379) (4) (852) - 18,414 - 3,186 - 29,642 - (45,270) (1) (106,323) (4) (68,443) (2) (207,581) (6) $ (70,470) (2) 113,282 2 $ (26,978) (1) 302,839 8 24,951 1 18,024 - $ (2,027) - 320,863 8 $ (95,997) (3) 92,957 2 25,527 1 20,325 - $ (70,470) (2) 113,282 2 $ (0.04) 0.46 $ (0.04) 0.46	For the nine months ended September 30 2021 2020 Amount % Amount % 11,224,288 100 11,024,577 100 8,031,781 72 7,551,472 68 3,192,507 28 3,473,105 32 1,795,677 16 1,935,345 18 591,097 5 720,653 7 693,179 6 769,490 7 (12,569) - (1,566) - 3,067,384 27 3,423,922 32 125,123 1 49,183 - 13,323 - 13,059 - 1,468 - 2,190 - 12,570 - 288,213 3 (20,483) - (23,723) - (182,378) (1) 57,660 1 (175,500) (1) 337,399 4 (50,377) - 386,582 4 73,598 1 82,025 1 (123,975) (1) 304,557 3 39,057 - (4,896) - (13,262) - 20,984 - - - - - 25,795 - 16,088 - (307,204) (2) (413,969) (4) (2,749) - 5,812 - 33,350 - 61,883 1 (276,603) (2) (346,274) (3) (250,808) (2) (330,186) (3) (374,783) (3) (25,629) - (185,373) (2) 250,131 3 61,398 1 54,426 - (123,975) (1) 304,557 3 (417,139) (3) (50,149) - 42,356 - 24,520 - (374,783) (3) (25,629) - (0.29) 0.38 (0.29) 0.38
	2021 Amount % $ 3,957,707 100 2,942,841 74 1,014,866 26 592,211 15 142,506 4 188,417 5 (1,266) - 921,868 24 92,998 2 4,609 - 590 - 11,125 - (6,416) - (94,079) (2) (84,171) (2) 8,827 - 10,854 - (2,027) - (22,436) (1) (737) - - - (23,173) (1) (47,604) (1) (852) - 3,186 - (45,270) (1) (68,443) (2) $ (70,470) (2) $ (26,978) (1) 24,951 1 $ (2,027) - $ (95,997) (3) 25,527 1 $ (70,470) (2) $ (0.04) $ (0.04)	2021 Amount % 11,224,288 100 8,031,781 72 3,192,507 28 1,795,677 16 591,097 5 693,179 6 (12,569) - 3,067,384 27 125,123 1 13,323 - 1,468 - 12,570 - (20,483) - (182,378) (1) (175,500) (1) (50,377) - 73,598 1 (123,975) (1) 39,057 - (13,262) - - - 25,795 - (307,204) (2) (2,749) - 33,350 - (276,603) (2) (250,808) (2) (374,783) (3) (185,373) (2) 61,398 1 (123,975) (1) (417,139) (3) 42,356 - (374,783) (3) (0.29) (0.29)

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

D-LINK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the nine months ended September 30, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollar)

Equity attributable to owners of parent

Ordinary shares Balance at January 1, 2020 $ 6,519,961 Net profit for the nine months ended September 30, 2020 - Other comprehensive income (loss) for the nine months ended September 30, 2020 - Total comprehensive income (loss) for the nine months ended September 30, 2020 - Other changes in capital surplus: Changes in equity of associates accounted for using equity method - Disposal of investments in equity instruments designated at fair value through other comprehensive income - Balance at September 30, 2020 $ 6,519,961 Balance at January 1, 2021 $ 6,519,961 Net profit (loss) for the nine months ended September 30, 2021 - Other comprehensive income (loss) for the nine months ended September 30, 2021 - Total comprehensive income (loss) for the nine months ended September 30, 2021 - 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 accounted for using equity method - Capital reduction (521,596) Changes in non-controlling interests - Disposal of investments in equity instruments designated at fair value through other comprehensive income - Balance at September 30, 2021 $ 5,998,365	Ordinary shares		Capital surplus			Retained earnings	Retained earnings	Retained earnings	Retained earnings	Total other equity interest	Total other equity interest	Total other equity interest	Total other equity interest				Total equity attributable to owners of parent		Non- controlling interests	Total equity
										Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income			Others
					Legal reserve		Special reserve	Unappropriated retained earnings (Accumulated deficits)
			1,598,807		2,053,379		205,562		(499,008) 250,131 - 250,131 (140,717) (73) (389,667) 566,471 (185,373) - (185,373) (56,647) (207,390) (195,597) - - - (56,662) (135,198)		(1,236,701) - (319,852) (319,852) - - (1,556,553) (1,520,585) - (257,561) (257,561) - - - - - - - (1,778,146)		(165,102) - 16,088 16,088 - 73 (148,941) (88,606) - 25,795 25,795 - - - - - - 56,662 (6,149)		(3,484) - 3,484 3,484 - - - - - - - - - - - - - - -		8,473,414		452,625 54,426 (29,906) 24,520 - - 477,145 480,860 61,398 (19,042) 42,356 - - - - - (11,858) - 511,358	8,926,039
			- -		- -		- -													304,557 (330,186)
			-		-		-													(25,629)
					- -		- -													(158,691) -
					2,053,379		205,562													8,741,719
					2,053,379		205,562													9,740,355
					- -		- -													(123,975) (250,808)
					-		-													(374,783)
					56,647 - - - - - -		- 207,390 - - - - -													- - (195,597) (740) (521,596) (11,858) -
					2,110,026		412,952													8,635,781

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

Reviewed only, not audited in accordance with generally accepted auditing standards

D-LINK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the nine months ended September 30, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollar)

Cash (used in) generated from operating activities: Profit (loss) before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Reversal of expected credit losses Net loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of loss (profit) of associates accounted for using equity method Gain on disposal of investments Write-down loss (reversal gain) of inventories to net realizable value Other Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Increase in financial assets at fair value through profit or loss Decrease in notes receivable (Increase) decrease in accounts receivable Increase in accounts receivable due from related parties (Increase) decrease in other receivables Decrease in lease payment receivable (Increase) decrease in inventories Increase in prepayment for purchase Decrease (increase) in other current assets Decrease in other non-current assets Total changes in operating assets Increase in current contract liabilities Decrease in notes payable Increase (decrease) in accounts payable (Decrease) increase in accounts payable to related parties Decrease in other payable Decrease in current provisions Decrease in current refund liabilities Increase 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 (used in) generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash (used in) generated from operating activities Cash (used in) generated from investing activities: Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Acquisition of intangible assets Other investing activities Net cash (used in) generated from investing activities Cash flows used in financing activities: Increase (decrease) in guarantee deposits received Payment of lease liabilities Cash dividends paid (including subsidiaries) Payment of bonds payable Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period

For the nine months ended September 30 2021 2020 $ (50,377) 386,582 175,651 185,171 34,577 43,729 (12,569) (1,566) 3,984 27,302 20,483 23,723 (13,323) (13,059) - (880) 182,378 (57,660) (4,112) (227,155) 149,636 (198,662) (15,168) 21,513 521,537 (197,544) (63,267) (127,589) 945 4,028 (185,842) 357,230 (1,774) - (14,755) 35,060 10,401 - (1,176,009) 918,357 (175,965) (86,380) 41,018 (110,708) 8,671 51,648 (1,556,577) 1,041,646 18,107 887 (32) (163) 175,688 (282,281) (200,144) 53,493 (156,606) (127,316) (25,621) (14,308) (69,096) (16,760) 2,715 1,916 (23,932) (37,153) (278,921) (421,685) (1,835,498) 619,961 (1,313,961) 422,417 (1,364,338) 808,999 13,323 13,059 - 40,027 (22,374) (17,160) (82,119) (75,392) (1,455,508) 769,533 (812,484) - - 217,173 (25,307) (39,886) 212 647 1,260 (1,116) (10,581) (3,544) (24,676) 60,292 (871,576) 233,566 5,225 (2,892) (165,361) (123,724) (207,455) - - (608) (367,591) (127,224) (307,203) (413,969) (3,001,878) 461,906 6,216,327 3,141,284 $ 3,214,449 3,603,190

2021 $ (50,377) 175,651 34,577 (12,569) 3,984 20,483 (13,323) - 182,378 (4,112) 149,636 (15,168) 521,537 (63,267) 945 (185,842) (1,774) (14,755) 10,401 (1,176,009) (175,965) 41,018 8,671 (1,556,577) 18,107 (32) 175,688 (200,144) (156,606) (25,621) (69,096) 2,715 (23,932) (278,921) (1,835,498) (1,313,961) (1,364,338) 13,323 - (22,374) (82,119) (1,455,508) (812,484) - (25,307) 212 1,260 (10,581) (24,676) (871,576) 5,225 (165,361) (207,455) - (367,591) (307,203) (3,001,878) 6,216,327 $ 3,214,449

See accompanying notes to consolidated financial statements.

8

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

D-LINK CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollar, 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 and its subsidiaries (collectively referred as the “Consolidated 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 consolidated financial statements:

The accompanying consolidated financial statements were approved and authorized for release by the Board of Directors on November 5, 2021.

(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. (“FSC”) which have already been adopted.

The Consolidated Company has initially adopted the following new amendments, which do not have a significant impact on its consolidated 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 Consolidated 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 consolidated 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”

(Continued)

9

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The Consolidated 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 consolidated financial statements:

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

• ●IFRS 17 “ Insurance Contracts” 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 significant accounting policies presented in the consolidated financial statements are summarized below. The following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

(a) Statement of Compliance

These consolidated financial statements have been prepared in accordance with the preparation and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed and issued into effect by FSC, and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC (hereinafter referred to IFRS endorsed by the FSC) for a complete set of the annual consolidated financial statements.

• (b) Basis of Preparation

• (i) Basis of Measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on a 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.

(Continued)

10

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ii) Functional and presentation currency

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

(c) Basis of consolidation

• (i) Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Consolidated Company. The Consolidated Company ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from Intragroup transactions are eliminated in preparing the consolidated financial statements. The Consolidated Company attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The Consolidated Company prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. Changes in the Consolidated Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Consolidated Company will attribute it to the owners of the parent.

(ii) List of subsidiaries in the consolidated financial statements

Name of investor	Name of subsidiary	Principal activity		Shareholding	September 30, 2020 Note
			September 30, 2021	December 31, 2020
The Company The Company The Company The Company The Company and D-Link Holding The Company and D-Link Holding	D-Link Holding Company Ltd. (D- Link Holding) D-Link Canada Inc. (D-Link Canada) D-Link Japan K.K. (D-Link Japan) D-Link Investment Pte. Ltd. (D-Link Investment) D-Link Sudamerica S.A. (D-Link Sudamerica) D-Link Brazil LTDA (D-Link Brazil)	Investment company Marketing and after- sales service Marketing and after- sales service Investment company Marketing and after- sales service Marketing and after- sales service	% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) (Continued)

11

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investor	Name of subsidiary	Principal activity		Shareholding	September 30, 2020 Note
			September 30, 2021	December 31, 2020
The Company The Company and D-Link Sudamerica The Company and D-Link Holding The Company and D-Link Holding The Company and D-Link International The Company and D-Link International D-Link International D-Link International D-Link International D-Link International D-Link International The Company The Company The Company D-Link Holding D-Link Holding D-Link Holding D-Link Holding D-Link Investment D-Link Holding	D-Link Latin America Company Ltd. (D-Link L.A.) D-Link Mexicana S.A de C.V (D-Link Mexicana) D-Link Systems, Inc. (D-Link Systems) D-Link International Pte. Ltd. (D-Link International) D-Link Australia Pty Ltd. (D-Link Australia) D-Link Middle East FZCO (D-Link ME) D-Link Korea Limited (D-Link Korea) D-Link Trade M (D- Link Moldova) D-Link Russia Investment Co., Ltd (D-Link Russia Investment) D-Link Malaysia SDN. BHD (D-Link Malaysia) D-Link Service Lithuania, UAB (D-Link Lithuania) Yeo-Chia Investment Ltd. (Yeochia) Yeo-Mao Investment Inc. (Yeomao) Yeo-Tai Investment Inc. (Yeotai) D-Link (Europe) Ltd. (D-Link Europe) D-Link Shiang-Hai (Cayman) Inc. (D- Link Shiang-Hai (Cayman)) D-Link Holding Mauritius Inc. (D- Link Mauritius) OOO D-Link Russia (D-Link Russia) OOO D-Link Trade (D-Link Trade) Success Stone Overseas Corp. (Success Stone)	Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing, purchase and after sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Investment Company Marketing and after- sales service Marketing and after- sales service Investment company Investment company Investment company Marketing and after- sales service Investment company Investment company After-sales service Marketing and after- sales service Investment company	% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 100.00 (Note) % 100.00 (Note) % 100.00 % 100.00 % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note)

(Continued)

12

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investor	Name of subsidiary	Principal activity		Shareholding	September 30, 2020 Note
			September 30, 2021	December 31, 2020
D-Link Holding D-Link Mauritius D-Link Mauritius and D-Link India D-Link Europe D-Link Europe D-Link Europe D-Link Europe D-Link Europe D-Link Europe The Company and D-Link Europe D-Link Europe D-Link Europe D-Link Europe D-Link Shiang- Hai (Cayman) D-Link Shiang- Hai (Cayman) D-Link Mediterraneo D-Link Sudamerica and D-Link L.A.	Wishfi Pte. Ltd. (Wishfi) D-Link India Ltd. (D- Link India) TeamF1 Networks Private Limited (TeamF1 India) D-Link (Holdings) Ltd. and its subsidiary D-Link (UK) Ltd. (D-Link UK) D-Link France SARL (D-Link France) D-Link AB D-Link Iberia SL (D- Link Iberia) D-Link Mediterraneo SRL (D-Link Mediterraneo) D-Link (Netherlands) BV (D-Link Netherlands) D-Link (Deutschland) GmbH (D-Link Deutschland) D-Link Polska Sp. Z.o.o. (D-Link Polska) D-Link (Magyarorszag) kft (D-Link Magyarorszag) D-Link s.r.o D-Link (Shiang-Hai) Co., Ltd (D-Link Shiang- Hai) Netpro Trading (Shiang-hai) Co., Ltd (Netpro Trading ) D-LINK ADRIA d.o.o D Link del Ecuador S.A.	Research, development, marketing and after- sales service Marketing and after- sales service Research and development Investment company, marketing and after-sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after sales service Research, development and trading Marketing and after- sales service Marketing and after- sales service	% 100.00 % 51.02 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % -	% 100.00 % 51.02 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 100.00 (Note) % 51.02 It becomes a significant subsidiary since 2021. % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 (Note) % 100.00 Liquidation was completed in April, 2021 (Note)

(Continued)

13

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investor	Name of subsidiary	Principal activity		Shareholding	September 30, 2020 Note
			September 30, 2021	December 31, 2020
D-Link Sudamerica and D-Link L.A. D-Link Sudamerica D-Link Sudamerica D-Link Sudamerica D-Link ME	D-Link Peru S.A. D Link de Colombia S.A.S D-Link Guatemala S.A. D-Link Argentina S.A. D Link Network	Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service Marketing and after- sales service	% 100.00 % 100.00 % 99.00 % 100.00 % 100.00	% 100.00 % 100.00 % 99.00 % 100.00 % 100.00	% 100.00 (Note) % 100.00 (Note) % 99.00 (Note) % 100.00 (Note) % 100.00 (Note)

Note: It was a non-significant subsidiary and the financial statements were not reviewed by independent auditors.

(iii) Subsidiaries excluded from the consolidated financial statement: None.

(d) Business combination

The Consolidated Company accounts for business combinations using the acquisition method. The goodwill arising from an acquisition is measured as the excess of (i) the consideration transferred (which is generally measured at fair value) and (ii) the amount of non-controlling interest in the acquiree, both over the identifiable net assets acquired at the acquisition date. If the amount calculated above is a deficit balance, the Consolidated Company recognized that amount as a gain on a bargain purchase in profit or loss immediately after reassessing whether it has correctly identified all of the assets acquired and all of the liabilities assumed.

All acquisition-related transaction costs are expensed as incurred, except for the issuance of debt or equity instruments.

(e) Foreign currency

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Consolidated 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 functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary 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;

(Continued)

14

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

‧ 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 into the Consolidated Company’s functional currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the Consolidated Company’s functional currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

• (f) 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 intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held the primarily for the purpose of trading;

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

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

• (i) It is expected to be settled, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

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

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

• (g) 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.

(Continued)

15

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Financial Instruments

Accounting receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Consolidated Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an accounts 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. An accounts 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.

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 Consolidated 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:

• ‧ 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.

(Continued)

16

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

On initial recognition of an equity investment that is not held for trading, the Consolidated 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 Consolidated 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. On initial recognition, the Consolidated 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 Consolidated 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:

• ‧ 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;

(Continued)

17

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ‧ how the performance of the portfolio is evaluated and reported to the Consolidated 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 Consolidated 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 Consolidated 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 Consolidated 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 Consolidated Company’s claim to cash flows from specified assets (e.g. non-recourse features)

• 6) Impairment of financial assets

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

(Continued)

18

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ‧ 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 accounts receivables and contract assets are always measured at an amount equal to lifetime ECL.

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

12-month ECL are the portion of ECL 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 ECL is the maximum contractual period over which the Consolidated 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 Consolidated 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 Consolidated Company’s historical experience and informed credit assessment as well as forward-looking information.

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

The Consolidated 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 Consolidated Company in full.

ECL 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 Consolidated Company in accordance with the contract and the cash flows that the Consolidated Company expects to receive). ECL are discounted at the effective interest rate of the financial asset.

At each reporting date, the Consolidated 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 asset 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 365 days past due;

(Continued)

19

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ‧ 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 Consolidated 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 Consolidated Company’s procedures for recovery of amounts due.

• 7) Derecognition of financial assets

The Consolidated 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 Consolidated 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 Consolidated 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 Consolidated 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.

• 2) Exchangeable bonds

Exchangeable bonds issued by the Consolidated 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.

(Continued)

20

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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, accounts 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 expenses, and is included in other gains and losses.

5) Derecognition of financial liabilities

The Consolidated Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Consolidated 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 Consolidated 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.

• (iii) Derivative financial instruments and hedge accounting

The Consolidated 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.

(Continued)

21

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 Consolidated Company designates certain hedging instruments (derivate financial instruments) as cash flow hedges.

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

Cash flow hedges

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognized in other － comprehensive income and accumulated under ‘ other equity gains (losses) on hedging instruments’, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.

Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognized in other comprehensive income and accumulated in equity are removed from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. Furthermore, if the Consolidated Company expects that some or all of the loss accumulated in other equity will not be recovered in the future, that amount is immediately reclassified to profit or loss.

If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains in equity until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial item’s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss. If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified to profit or loss.

(Continued)

22

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) 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 measured at the lower of cost and net realizable value. Cost is calculated 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.

(j) Investment in associates

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

Investments in associates 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 consolidated financial statements include the Consolidated Company’s share of the profit or loss and other comprehensive income of the associates, after adjustments to align the accounting policies with those of the Consolidated Company, from the date on which significant influence commences until the date on which significant influence ceases.

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

When the Consolidated Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Consolidated Company’s proportionate interest in the net assets of the associate. The Consolidated Company records such a difference as an adjustment to investments, with the corresponding amount charged or capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. 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 Consolidated Company had directly disposed of the related assets or liabilities.

(k) 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.

(Continued)

23

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 non-operating income 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.

• (l) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any 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.

• (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 Consolidated 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: 5~60 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 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.

(Continued)

24

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Leases

• (i) Identifying a lease

At inception of a contract, the Consolidated Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Consolidated Company assesses whether:

• 1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and

• 2) the Consolidated Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• 3) the Consolidated Company has the right to direct the use of the asset throughout the period of use only if either:

• ‧ the Consolidated Company has the right to direct how and for what purpose the asset is used throughout the period of use.

• ‧ the relevant decisions about how and for what purpose the asset is used are predetermined and:

  • － the Consolidated Company has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or

  • － the Consolidated Company designed the asset in a way that predetermines how and for what purpose it will be used throughout the period of use.

On the lease date or when reassessing whether the contract contains a lease, the company allocates the value in the contract to individual lease components based on the stand-alone price.

• (ii) As a lessee

The Consolidated 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.

(Continued)

25

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

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 Consolidated Company’s incremental borrowing rate. Generally, the Consolidated 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 Consolidated 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 an 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 Consolidated Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-ofuse 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.

(Continued)

26

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The Consolidated Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases of office building that have a lease term of 12 months or less and leases of low-value assets, including office equipment. The Consolidated Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. As a practical expedient, the Consolidated 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.

• (iii) As a lessor

When the Consolidated 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 Consolidated 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 Consolidated Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Consolidated 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. If a head lease is a short-term lease to which the Consolidated 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 Consolidated Company applies IFRS15 to allocate the consideration in the contract.

(Continued)

27

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Consolidated Company 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 interest income is recognized over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment in the lease. The Consolidated Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of other income.

(n) Intangible assets

• (i) Goodwill and trademark

• 1) Recognition

Goodwill and trademark arise from acquisition of subsidiaries are included in intangible assets.

• 2) Subsequent measurement

Goodwill is carried at cost less accumulated impairment losses. As regards to the investments accounted for using equity method, the carrying value of goodwill consists of the carrying value of its investment. The impairment loss is attributed to parts of investments accounted for using equity method other than goodwill or other assets.

(ii) Other intangible assets

Other intangible assets are measured at cost less accumulated amortization and accumulated impairment losses.

• (iii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iv) Amortization

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, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

1) Computer software: 1~8 years

• 2) Patents: Amortization is recognized using the term of patent contract. The estimated live is 11~16 years

• 3) Other intangible asset: 3 years

(Continued)

28

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(o) Impairment of non-financial assets

At each reporting date, the Consolidated 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 cash-generating units (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.

(p) Provisions

A provision is recognized if, as a result of a past event, the Consolidated 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.

(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.

(q) Revenue from contracts with customers

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

(Continued)

29

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The main operating activities of the Consolidated Company is research, development, and sales of LANs and spare part for integrated circuits. The Consolidated 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 Consolidated Company has objective evidence that all criteria for acceptance have been satisfied.

The Consolidated Company grants its customers the right to return the product. Therefore, the Consolidated Company reduces revenue by the amount of expected returns and recognizes a refund liability. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value method). Because the number of products returned has been steady for years, it is highly probable that a significant reversal in the cumulative revenue recognized will not occur. At each reporting date, the Consolidated Company reassesses the estimated amount of expected returns.

The Consolidated 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. As of the reporting date, all expected payment of the related sale discounts paid to the customers is recognized under return liabilities.

The Consolidated 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(p).

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

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

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

• (r) Employee benefits

• (i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are employee benefit expense as the related service is provided.

(Continued)

30

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Defined benefit plans

The pension cost for an interim period was calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events.

(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 Consolidated 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.

(s) Share-based payment

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period during which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the liability are recognized in profit or loss.

(t) Income Taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of International Financial Reporting Standards 34, Interim Reporting.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period using the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period, and tax related to other comprehensive income should be recognized as other comprehensive income.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled.

(Continued)

31

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

In accordance with the laws of each country, the income tax of each entity should be declared individually. The amount of consolidated income tax should be the total amount of income tax of each entity.

(u) Earnings per share

The Consolidated Company discloses the Company’ s basic and diluted earnings per share attributable to ordinary shareholders of the Company. 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 bonds, employee stock options, and employee bonus settled using shares that have yet to be approved by the Board of Directors meeting. Increasing shares from the transfer of unappropriated earnings or capital surplus.

(v) Operating segments

An operating segment is a component of the Consolidated Company that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Consolidated Company). Operating results of the operating segments are regularly reviewed by the Consolidated Company’ s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Each operating segment consists of standalone financial information.

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

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs (in accordance with IAS 34 “Interim Financial Reporting” and 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.

Except for the following, the preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, 2020. For the related information, please refer to note 5 of the consolidated financial statements for the year ended December 31, 2020.

(a) Judgment on substantial control over the investee

The Company held 41.58% of issued shares of Cameo Communication, Inc., and is the single largest shareholder of the investee. However, the Cameo Communication, Inc.’ s manufacturing, product development and business development are different from the Company. Besides, the main management of Cameo Communication, Inc. is not appointed by the Company, which shows that the company has no actual ability to lead the relevant business activities. As a result, the Company has no substantial control over Cameo Communication, Inc., only significant influence.

(Continued)

32

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

Except for the following disclosures, there were no material differences in the disclosures of significant accounts between the 2020 annual consolidated financial statements. Please refer to Note 6 of the 2020 annual consolidated financial statements.

• (a) Cash and Cash Equivalents

September 30, 2021 Cash on hand $ 3,396 Checking and saving accounts 2,123,853 Time deposit 1,087,200 Cash and Cash Equivalents $ 3,214,449	December 31, 2020 3,170 3,042,387 3,170,770 6,216,327	September 30, 2020 5,472 2,037,709 1,560,009
		3,603,190

Please refer to 6(z) for the exchange rate risk and sensitivity analysis of financial assets and liabilities of the Consolidated Company.

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, it is classified as other current assets.

(b) Financial Assets and Liabilities

• (i) Details as follows

September 30, 2021 Mandatorily measured at fair value through profit or loss-current Beneficiary certificates – mutual funds $ 284,555 Cross currency swaps 4,240 Forward foreign exchange contracts 11,776 $ 300,571 Financial liabilities at fair value through profit or loss - current Cross currency swaps $ 16,534 Forward foreign exchange contracts 15 $ 16,549	December 31, 2020 217,316 20,861 774 238,951 8,469 9,855 18,324	September 30, 2020 198,647 4,358 8,658
		211,663
		18,922 4,280
		23,202

(Continued)

33

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

September 30, 2021 Financial assets at fair value through other comprehensive income - non- current Cameo Communication, Inc. (Cameo) $ - Z-Com, Inc. (Z-Com) 20,030 YouXiang Electronic Technology (Beijing) Co., Ltd. (YouXiang) 3,907 Kaimei Electronic Corp. (Kaimei) 48,720 StemCyte International. LTD (Stemcyte) 212 $ 72,869	December 31, 2020 364,655 33,165 3,504 52,876 235 454,435	September 30, 2020 378,861 26,625 2,833 24,129 240 432,688

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

• 2) The Consolidated Company sold 721,000 shares of Z-Com in September 2021, disposed at the price of $6,087 thousand, and reclassified from other equity loss 1,815 thousand to retained earnings.

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

• 4) As of September 30, 2021, December 31, 2020 and September 30, 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:

For the nine months ended September 30,

		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%	$	2,157	6,659	12,959	4,648
Decrease 3%	$	(2,157)	(6,659)	(12,959)	(4,648)

(Continued)

34

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iii) (Non-hedging) derivative financial instruments

Derivative financial instruments are used to hedge certain foreign exchange and interest risk arising from the Consolidated Company’s operating, financing and investing activities. As of September 30, 2021, December 31, 2020 and September 30, 2020, transactions that did not qualify for hedging accounting have been presented as the following held-for-trading financial assets:

1) Derivative financial assets

		September 30, 2021	September 30, 2021	September 30, 2021	December 31, 2020	December 31, 2020	December 31, 2020	September 30, 2020	September 30, 2020	September 30, 2020
		Contract			Contract			Contract
		amount		Maturity	amount		Maturity	amount		Maturity
		(thousand)	Currency	date	(thousand)	Currency	date	(thousand)	Currency	date
Cross currency swaps:
JPY	$	100,000	JPY	2021.10	1,800,000	JPY	2021.01	1,000,000	JPY	2020.12
							~2021.06
EUR		9,000	EUR	2021.10	10,000	EUR	2021.01	10,000	EUR	2020.10
CAD		-	-	-	-	-	-	1,000	CAD	2020.11
USD		-	-	-	-	-	-	1,700	USD	2020.12
RUB		150,028	RUB	2021.10	-	-	-	-	-	-
GBP		1,000	GBP	2021.10	-	-	-	-	-	-
Forward foreign exchange
contracts:
AUD (sell)		1,000	AUD	2021.10	-	-	-	1,500	AUD	2020.10
										~2020.12
CAD (sell)		600	CAD	2021.10	-	-	-	3,000	CAD	2020.10
										~2020.11
EUR (sell)		7,000	EUR	2021.10	-	-	-	4,400	EUR	2020.10
										~2020.11
BRL (sell)		58,565	BRL	2021.10	15,502	BRL	2021.02	34,061	BRL	2020.10
										~2020.11
JPY (sell)		50,000	JPY	2021.10	-	-	-	200,000	JPY	2020.10
										~2020.11
KRW (sell)		2,120,155	KRW	2021.10	-	-	-	1,165,600	KRW	2020.11
INR (sell)		129,085	INR	2021.10	-	-	-	92,066	INR	2020.10
RUB (buy)		-	-	-	150,028	RUB	2021.01	-	-	-
GBP (sell)		500	GBP	2021.10	-	-	-	-	-	-

(Continued)

35

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Derivative financial liabilities

		September 30, 2021	September 30, 2021	September 30, 2021	December 31, 2020	December 31, 2020	December 31, 2020	September 30, 2020	September 30, 2020	September 30, 2020
		Contract			Contract			Contract
		amount		Maturity	amount		Maturity	amount		Maturity
		(thousand)	Currency	date	(thousand)	Currency	date	(thousand)	Currency	date
Cross currency swaps:
USD	$	21,700	USD	2021.10	1,700	USD	2021.03	20,000	USD	2020.12
CNH		133,670	CNH	2021.10	110,588	CNH	2021.01	79,267	CNH	2020.10
							~2021.02			~2020.11
EUR		10,000	EUR	2021.10	1,000	EUR	2021.02	52	EUR	2020.11
JPY		1,800,000	JPY	2021.10	-	-	-	800,000	JPY	2020.12
				~2021.11
CAD		3,000	CAD	2021.10	-	-	-	-	-	-
Forward foreign exchange
contracts:
EUR (sell)		-	-	-	4,200	EUR	2021.01	1,500	EUR	2020.10
							~2021.03			~2020.11
BRL (sell)		-	-	-	3,740	BRL	2021.01	-	-	-
INR (sell)		37,163	INR	2021.10	221,346	INR	2021.01	55,476	INR	2020.10
AUD (sell)		-	-	-	2,500	AUD	2021.01	1,000	AUD	2020.10
							~2021.03
KRW (sell)		-	-	-	1,877,735	KRW	2021.01	1,181,000	KRW	2020.10
							~2021.02
JPY (sell)		50,000	JPY	2021.10	700,000	JPY	2021.01	200,000	JPY	2020.10
							~2021.02			~2020.11
CAD (sell)		-	-	-	2,000	CAD	2021.01	-	-	-
							~2021.03
CNH (sell)		-	-	-	-	-	-	31,321	CNH	2020.11

(c) Notes and accounts receivable and other receivables

September 30, 2021 Notes receivable for operating activities $ 1,702 Accounts receivable 3,346,432 Other receivables 70,576 3,418,710 Less: Loss allowance (83,023) $ 3,335,687	December 31, 2020 2,647 3,166,320 55,821 3,224,788 (104,954) 3,119,834	September 30, 2020 4,774 3,347,395 26,745 3,378,914 (110,979) 3,267,935

(Continued)

36

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Consolidated 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 receivable and other receivables. To measure the expected credit losses, notes and accounts receivable and other receivables have been grouped based on shared credit risk characteristics and ability to pay all due, as well as incorporated forward looking information. The loss allowance provision as of September 30, 2021, December 31, 2020 and September 30, 2020 was determined as follows:

September 30, 2021 Gross carrying amount Weighted-average loss rate Current $ 2,910,987 0.34% 90 days or less past due 412,997 0.28% 91 to 180 days past due 8,751 22.66% 181 to 270 days past due 2,096 43.16% 271 to 360 days past due 1,448 71.92% More than 360 days past due 82,431 82.70% $ 3,418,710 December 31, 2020 Gross carrying amount Weighted-average loss rate Current $ 2,638,059 0.33% 90 days or less past due 470,478 0.29% 91 to 180 days past due 4,096 14.97% 181 to 270 days past due 1,220 47.09% 271 to 360 days past due 4,382 81.23% More than 360 days past due 106,553 84.50% $ 3,224,788 September 30, 2020 Gross carrying amount Weighted-average loss rate Current $ 2,805,909 0.56% 90 days or less past due 447,475 0.51% 91 to 180 days past due 11,802 14.96% 181 to 270 days past due 5,024 56.86% 271 to 360 days past due 1,136 83.18% More than 360 days past due 107,568 81.19% $ 3,378,914

Loss allowance provision 9,761 1,159 1,983 905 1,041 68,174 83,023 Loss allowance provision 8,791 1,381 613 575 3,560 90,034 104,954 Loss allowance provision 15,773 2,303 1,766 2,856 945 87,336 110,979 (Continued)

37

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

follows:
		For the nine months ended
		September	30,
		2021	2020
Balance at January 1, 2021 and 2020	$	104,954	197,721
Expected credit loss reversed		(12,569)	(1,566)
Amounts written off		(5,730)	(68,721)
Others		(3,632)	(16,455)
Balance at September 30, 2021 and 2020	$	83,023	110,979

• (d) Finance lease payment receivable

The Consolidated Company leased out its office building and warehouse. It classified the sub-lease as a finance lease because the sub-lease is for the whole of the remaining term of the head lease.

A maturity analysis of lease payments, which reflects the undiscounted lease payments to be received after the reporting date, is as follows:

September 30, 2021 Less than one year $ 30,221 One to two years 32,067 Two to three years 35,101 Three to four years 36,191 Four to five years 37,313 Five years and above 6,330 Total lease payments receivable 177,223 Unearned finance income (14,047) Total lease payments receivable (Present value of lease payments receivable) $ 163,176	December 31, 2020 - - - - - - - - -	September 30, 2020 - - - - - - - - -

(Continued)

38

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Inventories

September 30, 2021 Finished goods $ 3,484,944	December 31, 2020 2,442,783	September 30, 2020 2,238,443

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 three months ended and the nine months ended September 30, 2021 and 2020, the cost of goods delivered were $2,797,214 thousand, $2,772,248 thousand, $7,677,857 thousand and $7,477,373 thousand, respectively. The warranty expenses, inventory losses from obsolescence and others amounted to $55,329 thousand, $92,767 thousand, $204,288 thousand, and $272,761 thousand for the three months ended and the nine months ended September 30, 2021 and 2020, respectively. Recognized loss of inventories to net realizable value is recorded as cost of goods sold by $90,298 thousand and $149,636 thousand for the three months and nine months ended September 30, 2021, respectively, due to shortage of materials and increased logistics time to increase stocking. Reversal gain of inventories to net realizable value is recorded as decrease of cost of goods sold by $64,893 thousand and $198,662 thousand for the three months and nine months ended September 30, 2020, respectively, because of out of stock in the market and active sales of inventory.

As of September 30, 2021, December 31, 2020 and September 30, 2020, no inventories were pledged as collateral.

• (f) Investments accounted for using equity methods

Investments accounted for using equity methods were as follows:

September 30, 2021 Associates $ 1,027,828	December 31, 2020 -	September 30, 2020 1,519,823

(Continued)

39

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Associates

			Main operating
		Name of relationship	location	Ownership			interest/Voting			rights held
			Registered
	Name of	with the Consolidated	Country of the	September			December		31,	September	30,
	Associate	Company	Company	30, 2021				2020		2020
Alpha Networks,		The major business activities	Taiwan		-	%		-	%	16.28	%
	Inc. (Alpha)	are research, developments,
		design, manufacturing and
		selling broadband products,
		wireless products, computer
		networks system equipment
		and its components.
	Cameo	The major business activities	Taiwan		41.58	%		-	%	-	%
Communication,		are manufacturing and selling
	Inc. (Cameo)	of network system equipment
		and its components, as well as
		researching and developing of
		related technologies. It is the
		supplier of the Consolidated
		Company.
	T-COM,LLC	The major business activity is	Russia		40.00	%		-	%	-	%
		selling network switch
		products. It is the seller of the
		Consolidated Company.
1)	The financial information on Alpha		is summarized	as follows:
				November				30,
					2020				September 30,
					(Unaudited)					2020
	Current assets			$	21,809,621					20,109,930
	Non-current assets					6,198,278				6,478,987
	Current liabilities				14,178,386					13,060,761
	Non-current liabilities					1,320,201				1,183,605
	Net assets			$	12,509,312					12,344,551
	Net assets	attributable to non-controlling interests		$		2,981,613				2,963,480
	Net assets	attributable to investee's	shareholders	$		9,527,699				9,381,071

1) The financial information on Alpha is summarized as follows:

(Continued)

40

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

		For the three		For the nine
	months ended		months ended
	September 30,		September 30,
		2020		2020
Operating revenue	$	9,671,467		22,380,652
Net income	$	263,820		402,942
Other comprehensive income		102,620		3,337
Total comprehensive income	$	366,440		406,279
Total comprehensive income attributable to non-
controlling interests	$	27,280		70,989
Total comprehensive income attributable to investee's
shareholders	$	339,160		335,290
				For the nine
			months ended
			September 30,
				2020
The Consolidated Company’s share in associate’s net	assets at
beginning of year			$	2,024,443
Comprehensive income attributable to the Consolidated		Company		54,091
Changes in equity of associates using equity method				(143,692)
Dividends received from associates				(39,148)
Less: exchange of exchangeable bond and sell of shares				(400,213)
The Consolidated Company’s share in associate’s net	assets at end of
year				1,495,481
Less: unrealized gains or losses				(92,238)
Add: goodwill				116,580
Carrying amounts of investments accounted for using	equity method		$	1,519,823

(Continued)

41

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) The financial information on Cameo is summarized as follows:

			September 30,	September 30,
				2021
Current assets			$	2,223,106
Non-current assets				1,995,895
Current liabilities				981,232
Non-current liabilities				1,010,920
Net assets			$	2,226,849
Net assets attributable to investee's shareholders			$	2,226,849
		For the three		For the nine
	months ended		months ended
	September 30,		September 30,
		2021		2021
Operating revenue	$	535,141		1,861,396
Net loss	$	(212,005)		(504,557)
Other comprehensive loss		(5,091)		(65,479)
Total comprehensive loss	$	(217,096)		(570,036)
Total comprehensive loss attributable to investee's
shareholders	$	(217,096)		(570,036)
				For the nine
			months ended
			September 30,
				2021
The Consolidated Company’s share in associate’s net assets at
beginning of year			$	-
Comprehensive loss attributable to the Consolidated Company				(186,092)
Increase of investment				1,111,982
The Consolidated Company’s share in associate’s net assets at end of
year				925,890
Less: unrealized gains or losses				(12,163)
Add: goodwill				102,489
Carrying amounts of investments accounted for using equity method			$	1,016,216

(Continued)

42

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) The financial information on T-COM is summarized as follows:

				September 30,	September 30,
					2021
Current assets				$	32,206
Non-current assets					991
Current liabilities					3,940
Non-current liabilities					15
Net assets attributable to investee's shareholders				$	29,242
	For the three				For the nine
	months ended			months ended
	September		30,	September 30,
		2021			2021
Operating revenue	$		393		393
Net loss	$	(2,004)			(3,282)
Other comprehensive loss		-			-
Total comprehensive loss	$	(2,004)			(3,282)
Total comprehensive loss attributable to investee's
shareholders	$	(2,004)			(3,282)
					For the nine
				months ended
				September 30,
					2021
The Consolidated Company’s share in associate’s net assets at
beginning of year				$	-
Comprehensive loss attributable to the Consolidated Company					(873)
Increase of investment					12,485
The Consolidated Company’s share in associate’s net assets at end			of
year					11,612
Less: unrealized gain					-
Add: goodwill					-
Carrying amounts of investments accounted for using equity method				$	11,612

(Continued)

43

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

September 30, 2021 Alpha $ - Cameo $ 1,650,396	December 31, 2020 - -	September 30, 2020 2,274,720
		-

The Consolidated Company originally held 17.35% shares of Cameo and accounted for financial assets at fair value through other comprehensive income 414,472 thousand. The Consolidated 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 Consolidated Company had a significant influence on Cameo and accounted for investments accounted for using equity methods.

• 5) In 2020, the Consolidated Company disposed the investments of Alpha Networks Inc. and gain on disposals by using the equity method was $1,292,494 thousand.

• 6) The Consolidated Company invested 12,485 thousand in T-COM in April 2021, with a shareholding ratio of 40%. Therefore, the Consolidated Company had a significant influence on T-COM and accounted for investments accounted for using equity methods.

(ii) Pledges

As of September 30, 2021, December 31, 2020 and September 30, 2020, no investment accounted for using equity methods has been pledged as collateral.

(g) Subsidiaries have material non-controlling interests

Non-controlling interests of subsidiary that are material to the Consolidated Company were as follows:

	Main operating
	location	Ownership	interests/voting rights held by NCI
	Registered country	September 30,		December 31,	September	30,
Name of subsidiary	of the Company	2021		2020	2020
D-Link India	India	48.98	%	% 48.98	48.98	%

The following summarizes the financial information for D-Link India prepared in accordance with the IFRS (modified for the fair value adjustments on acquisition) and the differences in the Consolidated Company’s accounting policies. The information incurred prior to the inter-company eliminations with other companies in the Consolidated Company.

(Continued)

44

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The financial information of D-Link India was summarized as follows:

		September 30,	September 30,		December 31,	September 30,
			2021		2020	2020
Current assets		$	1,535,788		1,374,919	1,274,162
Non-current assets			545,017		561,306	571,087
Current liabilities			691,053		594,912	501,880
Non-current liabilities			19,129		25,432	27,831
Net assets		$	1,370,623		1,315,881	1,315,538
Net assets attributable to non-controlling
interests		$	511,358		480,860	477,145
		For the three months ended			For the nine months ended
		September	30,		September 30,
		2021	2020		2021	2020
Operating revenues	$	910,522	715,924		2,323,006	1,854,922
Net profit	$	50,940	36,799		125,352	111,118
Other comprehensive
income (loss)		1,176	4,698		(38,878)	(61,057)
Total comprehensive
income	$	52,116	41,497		86,474	50,061
Net income attributable to
non-controlling interests	$	24,951	18,024		61,398	54,426
Total comprehensive
income attributable to
non-controlling interests	$	25,527	20,325		42,356	24,520
Cash flows (used in) from
operating activities				$	(839)	246,698
Cash flows used in
investing activities					(66,994)	(131,033)
Cash flows used in
financing activities					(24,061)	(73)
Net (decrease) increase in
cash and cash
equivalents				$	(91,894)	115,592

(Continued)

45

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Property, plant and equipment

Balance at January 1, 2021 Cost: Land $ 544,586 Buildings 875,425 Others 1,360,132 2,780,143 Accumulated depreciation: Buildings 534,595 Others 1,215,877 1,750,472 $ 1,029,671 Balance at January 1, 2020 Cost: Land $ 548,005 Buildings 920,936 Others 1,386,319 Equipment to be inspected and construction in process - 2,855,260 Accumulated depreciation: Buildings 527,920 Others 1,245,586 1,773,506 $ 1,081,754	For the nine months ended September 30, 2021 Increase Decrease Others - - (98) 436 - (6,532) 24,871 (114,917) (25,407) 25,307 (114,917) (32,037) 11,739 - (2,397) 53,268 (114,322) (22,763) 65,007 (114,322) (25,160) (39,700) (595) (6,877) For the nine months ended September 30, 2020 Increase Decrease Others - - (4,111) 1,488 - (50,378) 35,579 (19,493) (29,407) 2,819 - (69) 39,886 (19,493) (83,965) 13,266 - (10,173) 53,033 (19,022) (27,129) 66,299 (19,022) (37,302) (26,413) (471) (46,663)	Balance at September 30, 2021 544,488 869,329 1,244,679 2,658,496 543,937 1,132,060 1,675,997 982,499 Balance at September 30, 2020 543,894 872,046 1,372,998 2,750 2,791,688 531,013 1,252,468 1,783,481 1,008,207

As of September 30, 2021, December 31, 2020 and September 30, 2020, no property, plant and equipment has been pledged as collateral.

(Continued)

46

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Right-of-use assets

The Consolidated Company leases buildings, office equipment and transportation equipment. Information about leases is presented below:

Buildings Cost: Balance at January 1, 2021 $ 644,005 Increase 132,392 Decrease (278,281) Others (26,391) Balance at September 30, 2021 $ 471,725 Balance at January 1, 2020 $ 655,620 Increase 95,308 Decrease (33,168) Others (14,284) Balance at September 30, 2020 $ 703,476 Accumulated Depreciation: Balance at January 1, 2021 $ 212,885 Increase 95,643 Decrease (103,380) Others (8,442) Balance at September 30, 2021 $ 196,706 Balance at January 1, 2020 $ 139,283 Increase 104,046 Decrease (28,699) Others (4,471) Balance at September 30, 2020 $ 210,159 Carrying amount: Balance at January 1, 2021 $ 431,120 Balance at September 30, 2021 $ 275,019 Balance at September 30, 2020 $ 493,317	Office equipment 8,047 3,863 (2,771) (490) 8,649 6,206 - (574) (105) 5,527 3,080 1,726 (2,651) (157) 1,998 2,421 1,797 (574) (7) 3,637 4,967 6,651 1,890	Transportation equipment 58,254 3,256 (6,593) (4,156) 50,761 49,336 11,315 (7,311) (452) 52,888 24,183 12,978 (4,687) (2,109) 30,365 15,381 12,732 (7,311) 321 21,123 34,071 20,396 31,765	Total 710,306 139,511 (287,645) (31,037) 531,135 711,162 106,623 (41,053) (14,841) 761,891 240,148 110,347 (110,718) (10,708) 229,069 157,085 118,575 (36,584) (4,157) 234,919 470,158 302,066 526,972

The Consolidated Company leases offices and warehouses under an operating lease from January 1 to September 30, 2021 and 2020, please refer to note 6(q).

(Continued)

47

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Investment property

For the nine months ended September Balance at January 1, 2021 Increase Decrease Cost: Land $ 30,000 - - Buildings 22,196 - - 52,196 - - Accumulated Depreciation: Buildings 11,924 297 - Accumulated impairment: Buildings 1,000 - - $ 39,272 (297) - For the nine months ended September Balance at January 1, 2020 Increase Decrease Cost: Land $ 30,000 - - Buildings 22,196 - - 52,196 - - Accumulated Depreciation: Buildings 11,527 297 - Accumulated impairment: Buildings 1,000 - - $ 39,669 (297) - September 30, 2021 December 31, 2020 Book value $ 38,975 39,272 Fair value $ 51,328 51,328	30, 2021 Balance at September 30, 2021 30,000 22,196
	52,196
	12,221
	1,000
	38,975
	30, 2020 Balance at September 30, 2020 30,000 22,196
	52,196
	11,824
	1,000
	39,372
	September 30, 2020 39,372 51,328

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(x). Besides, direct operating expenses related to investment property were $0 thousand, $0 thousand, $290 thousand and $294 thousand for the three months and nine months ended September 30, 2021 and 2020.

(Continued)

48

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As of September 30, 2021, December 31, 2020 and September 30, 2020, the fair value of investment property has been evaluated based on the comparable transactions of property similar in location and category.

As of September 30, 2021, December 31, 2020 and September 30, 2020, no investment property has been pledged as collateral.

(k) Intangible assets

For the nine months ended September 30, 2021 Balance at January 1, 2021 Increase Decrease Amortization Others Goodwill $ 295,459 - - - (6,365) Trademark 136,579 - - - (3,076) Patents 17,719 - - (2,019) - Computer software costs 43,113 3,689 (2,321) (19,517) - Other intangible assets 18,459 6,892 - (13,041) (347) $ 511,329 10,581 (2,321) (34,577) (9,788) For the nine months ended September 30, 2020 Balance at January 1, 2020 Increase Decrease Amortization Others Goodwill $ 308,477 - - - (9,126) Trademark 144,235 - - - (4,695) Patents 20,411 - - (2,019) - Computer software costs 72,667 2,749 - (25,390) - Other intangible assets 40,518 795 - (16,320) (1,240) $ 586,308 3,544 - (43,729) (15,061)	Balance at September 30, 2021 289,094 133,503 15,700 24,964 11,963
	475,224
	Balance at September 30, 2020 299,351 139,540 18,392 50,026 23,753
	531,062

• (l) Long-term and short-term borrowings

As of September 30, 2021, December 31, 2020 and September 30, 2020, the Consolidated Company had no long term and short term loans. The Consolidated Company’s unused line of credit for longterm and short-term loans were as follows:

September 30, 2021 Short-term loans $ 4,252,977 Long-term loans $ 500,000	December 31, 2020 3,464,541 500,000	September 30, 2020 3,839,816
		500,000

(Continued)

49

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Lease liabilities

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

September 30, 2021 Current $ 149,594 Non-current $ 321,487	December 31, 2020 147,068 349,906	September 30, 2020 140,408 415,739

The amounts recognized in profit or loss were as follows:

For the three months ended September 30, 2021 2020 Interests on lease liabilities $ 4,140 4,998 Expenses relating to short- term leases $ 11,956 10,974 COVID-19-related rent concessions $ (21) (260)	For the nine months ended September 30, 2021 2020 12,948 15,986 35,262 38,681 (43) (341)	For the nine months ended September 30, 2021 2020 12,948 15,986 35,262 38,681 (43) (341)
		38,681
		(341)

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

		For the nine months ended	For the nine months ended
		September	30,
		2021	2020
Total cash outflow for leases	$	213,571	178,132

(i) Real estate leases

As of September 30, 2021, the Consolidated Company leases buildings for its office space. The leases of office space typically ran for one to ten 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.

(ii) Other leases

The Consolidated Company also leases office equipment with contract terms of one to three years. In some cases, the Consolidated Company has options to purchase the assets at the end of the contract term; in other cases, the Consolidated Company guarantees the residual value of the leased assets at the end of the contract term.

(Continued)

50

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Provisions-current

For the nine months ended September 30, 2021

Balance at January 1, 2021 Warranties $ 127,303 Legal proceedings and royalties 132,650 $ 259,953 Balance at January 1, 2020 Warranties $ 122,656 Legal proceedings and royalties 85,079 $ 207,735	Increase Used Reversed Effect of exchange 8,639 (16,373) - (3,056) 8,127 (9,248) (55,628) (663) 16,766 (25,621) (55,628) (3,719) For the nine months ended September 30, 2020 Increase Used Reversed Effect of exchange 12,247 (8,014) (760) (4,259) 72,777 (6,294) - 19 85,024 (14,308) (760) (4,240)	Balance at September 30, 2021 116,513 75,238
		191,751
		Balance at September 30, 2020 121,870 151,581
		273,451

(o) Refund liabilities

September 30, 2021 Refund liabilities $ 486,313	December 31, 2020 555,409	September 30, 2020 568,429

Refund liabilities were predicted payments to the customers based on expected volume discounts and the right to the returned goods.

(p) Bonds payable

Exchangeable corporate bonds

December 31, 2020 Exchangeable bonds $ 1,200,000 Accumulated exchanged bonds (1,199,400) Due for repayment (600) Balance of exchangeable bonds $ - Embedded derivatives:	September 30, 2020 1,200,000 (1,199,400) (600) -

(Continued)

51

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

		For the three	For the nine
	months ended		months ended
	September 30,		September 30,
		2020	2020
Embedded derivative-loss measured at fair value, included in
other gains and losses Interest expense	$ $	- -	34,967 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 not 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 had been made.

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 were issued 12 thousand units. As of December 31, 2020, 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.

(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. For the nine months ended September 30, 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.

(Continued)

52

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 bonds have sold back. Exercising the right, the bondholder may notify the stock agency of the Company in writing within 30 days after the announcement, 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.

(q) Operating leases

The Consolidated Company leased out its investment property. The Consolidated Company has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(j) for the operating leases of investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date were as follows:

(Continued)

53

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

September 30, 2021 Within one year $ 578 One to two years - Total undiscounted lease payments $ 578	September 30, 2020 771 546
	1,317

(r) Employee benefits

In the prior fiscal year, there was no material volatility of the market, no material reimbursement and settlement or other material one-time events. As a result, pension costs in the interim consolidated financial statements were measured and disclosed according to the actuarial report for the years ended December 31, 2020 and 2019.

(i) Defined benefit pension plans

The expenses recognized in profit or loss were as follows:

For the three months ended September 30, 2021 2020 Operating costs $ 4 - Operating expenses $ 215 297	For the nine months ended September 30, 2021 2020 11 - 644 893	For the nine months ended September 30, 2021 2020 11 - 644 893
		893

(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.

The Company’s mainland subsidiaries have the basic endowment insurance in accordance with the pension regulations in China. Monthly contributions to an independent fund administered by the government are based on certain percentage of employees’ monthly salaries and wages and recognize as the current year’ s expenses. D-Link Europe and other consolidated subsidiaries’ pension expenses are based on the current contributions.

The amount of the Consolidated Company’ s pension expenses under defined contribution pension plans were as follows:

For the three months ended September 30, 2021 2020 Operating costs $ 1,522 1,371 Operating expenses $ 32,040 25,337	For the nine months ended September 30, 2021 2020 4,396 4,726 96,928 80,652	For the nine months ended September 30, 2021 2020 4,396 4,726 96,928 80,652
		80,652

(Continued)

54

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) Income Taxes

Income tax expenses are measured by the profit before tax in the interim consolidated financial statements multiplied by the effective tax rate for the whole year of the management’ s best estimation.

Income tax expenses for the Consolidated Company were summarized as follows:

For the three months ended September 30, 2021 2020 Current income tax expense $ 17,066 27,934 Deferred tax expense (benefit) Origination and reversal of temporary differences (6,212) (3,383) Income tax expenses $ 10,854 24,551	For the nine months ended September 30, 2021 2020 45,735 53,548 27,863 28,477 73,598 82,025	For the nine months ended September 30, 2021 2020 45,735 53,548 27,863 28,477 73,598 82,025
		82,025

The amount of income tax benefit recognized in other comprehensive income for the Consolidated Company was as follows:

Items that may be reclassified subsequently to profit or loss:

For the three months ended September 30, 2021 2021 $ (3,186) (29,642)	For the nine months ended September 30, 2021 2020 (33,350) (61,883)

The income tax returns of the Company has been examined by the tax authority through 2018. The income tax return of Yeochia, Yeotai and Yeomao has been examined by the tax authority through 2019.

(t) Capital and other equity

(i) Common stock

As of September 30, 2021, December 31, 2020, and September 30, 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 September 30, 2021, December 31, 2020, and September 30, 2020, the paid-in Consolidated Company’s authorized common stock consisted 599,837 thousand, 651,996 thousand and 651,996 thousand shares, with a par value of $10 per share, amounting to $5,998,365 thousand, $6,519,961 thousand and $6,519,961 thousand.

For the purpose of enhancing the return on equity and the structure of capital, the capital reduction through cashes 521,596 thousand return to shareholders was proposed by the Company’s Board on March 17, 2021, capital reduction 8% of common shares. This capital reduction was approved by the shareholders’ meeting on July 5, 2021, and had the effective

(Continued)

55

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

registration by the competent Authority. The record date of the capital reduction is on September 1, 2021, and all relevant change registrations of the capital reduction was finished on October 5, 2021.

(ii) Capital surplus

The balances of capital surplus for the Consolidated Company were as follows:

September 30, 2021 Common stock in excess of par value $ 1,217,030 Treasury share transactions 39,310 Changes in equities of associates accounted for using equity method - Expiry of share-based payment transactions 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	September 30, 2020 1,217,030 39,310 58,260 129,459 81,454 55,320
		1,580,833

According to the R.O.C. Company Act, realized capital surplus can only be reclassified as share capital or be distributed as cash dividends after offsetting against losses. The aforementioned realized capital surplus includes share premium and donation gains. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the amount of capital surplus to be reclassified under share capital should not exceed 10% of the paid-in capital each year.

(iii) Retained earnings

1) Legal reserve

According to the R.O.C. Company Act No. 237, the Company must retain 10% of its net profit as a legal reserve until such retention equals the total paid-in capital.

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.

(Continued)

56

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Special reserve

In accordance with Ruling No. 1010012865 issued by the Financial Supervisory commission on April 6, 2012, a special reserve equivalent to the net debit balance of other shareholders’ equity shall be set aside from the current earnings and the prior unappropriated earnings. The Company shall not distribute the special reserve equivalent to the net debit balance of shareholders’ equity from the prior fiscal years set aside from the prior unappropriated earnings. The amount of subsequent reversals pertaining to the net debt balance of other shareholders’ equity shall qualify for distribution.

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 until such retention equals the total paid-in capital after the payment of income tax and offsetting accumulated losses from prior years. Also set aside from or reverse special reserve in accordance with the Securities and Exchange Act. The remaining portion will be combined with earnings from prior years, and the Board of Directors can propose appropriations of earnings 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 by 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 for 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 sustainable 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.

(Continued)

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D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Other equity

Exchange differences on translation of foreign financial statements Balance at January 1, 2021 $ (1,520,585) The Consolidated Company (254,812) Associates (2,749) The Consolidated Company-disposal - Balance at September 30, 2021 $ (1,778,146) Balance at January 1, 2020 $ (1,236,701) The Consolidated Company (322,180) Associates 2,328 The Consolidated Company-disposal - Balance at September 30, 2020 $ (1,556,553)	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income (88,606) 39,057 (13,262) 56,662 (6,149) (165,102) (4,896) 20,984 73 (148,941)	Others - - - - - (3,484) - 3,484 - -

(v) Non-controlling interests

		For the nine months ended	For the nine months ended
		September	30,
		2021	2020
Balance at the beginning of the period	$	480,860	452,625
Net income attributable to non-controlling interest:
Net income		61,398	54,426
Exchange differences on translation of foreign financial
statements		(19,042)	(29,906)
Cash dividends distributed by subsidiaries		(11,858)	-
Balance at the end of the period	$	511,358	477,145

(u) Earnings per share

(i) The calculation of basic earnings per share of the Consolidated Company were as follows:

For the three months ended September 30, 2021 2020 Net (loss) income of the parent company for the year $ (26,978) 302,839 Outstanding ordinary shares 634,610 651,996 Basic (loss) earnings per share $ (0.04) 0.46	For the nine months ended September 30, 2021 2020 (185,373) 250,131 646,201 651,996 (0.29) 0.38 (Continued)

58

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Diluted earnings per share

For the three months ended September 30, 2021 2020 Net (loss) income of the parent company for the year $ (26,978) 302,839 Weighted average number of outstanding ordinary shares (based) 634,610 651,996 Employees’ compensation have not been resolved by the Board meeting - - Weighted average number of ordinary shares (diluted) 634,610 651,996 Diluted earnings (loss) per share $ (0.04) 0.46	For the nine months ended September 30, 2021 2020 (185,373) 250,131 646,201 651,996 542 - 646,743 651,996 (0.29) 0.38	For the nine months ended September 30, 2021 2020 (185,373) 250,131 646,201 651,996 542 - 646,743 651,996 (0.29) 0.38
		651,996 -
		651,996
		0.38

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

(v) Revenue from contracts with customers

• (i) Revenue from customer contract

For the three months ended September 30, Major product / service lines 2021 2020 Network communication products $ 3,918,061 4,123,904 Services 39,646 37,584 $ 3,957,707 4,161,488	For the nine months ended September 30, 2021 2020 11,113,913 10,906,573 110,375 118,004 11,224,288 11,024,577	For the nine months ended September 30, 2021 2020 11,113,913 10,906,573 110,375 118,004 11,224,288 11,024,577
		11,024,577

(Continued)

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D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the three months ended September 30, Primary geographical markets 2021 2020 Europe $ 813,967 818,072 Others 3,143,740 3,343,416 $ 3,957,707 4,161,488	For the nine months ended September 30, 2021 2020 2,608,601 2,145,940 8,615,687 8,878,637 11,224,288 11,024,577	For the nine months ended September 30, 2021 2020 2,608,601 2,145,940 8,615,687 8,878,637 11,224,288 11,024,577
		11,024,577

• (ii) Contract liabilities

• 1) Contract liabilities related to revenue recognized by customer contract:

September 30, 2021 Current contract liabilities (sales) $ 142,102	December 31, 2020 123,995	September 30, 2020 118,330

• 2) The amount of revenue recognized for the three months and nine months ended September 30, 2021 and 2020 were included in the contract liability balance at the beginning of the period were $14,649 thousand, $12,418 thousand, $63,188 thousand and $73,148 thousand, respectively.

(w) Employee compensation and directors’ remuneration

In accordance with the articles of incorporation, if the Company incur profit for the year, the Company should contribute a minimum of 1% to a maximum of 15% of annual profit as employee compensation and less than 1% of annual profit as directors’ remuneration. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficits. The profit shall be considered as the annual income before tax, excluding employee compensation and director’ s remuneration. The amount of remuneration of directors and the compensation for employees 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 and reported at stockholders’ meeting. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain specific conditions.

The Company was not required to accrue employee compensation and directors’ remuneration due to the loss for the nine months ended September 30, 2021. Also, the Company was not required to accrue employee compensation and director’s remuneration for the nine months ended September 30, 2020 after evaluation. Until the end of year, the Company’s management would report to the Board of Directors for the scope of allocation, according to the articles of incorporation and actual profit for the year ended.

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

(Continued)

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D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (x) Other income and losses

• (i) Interest income

For the three months ended September 30, 2021 2020 Interest income from bank deposits $ 4,609 2,643	For the nine months ended September 30, 2021 2020 13,323 13,059

• (ii) Other income

For the three months ended September 30, 2021 2020 Rent income $ 590 351 Dividend income - 880 Total $ 590 1,231 Other gains and losses For the three months ended September 30, 2021 2020 Gain on disposals of investments $ 1,593 84,673 Foreign exchange gains (losses) (1,081) 18,533 Valuation gains (losses) from financial assets and liabilities 3,658 (6,901) Others 6,955 10,390 Total $ 11,125 106,695

For the nine months ended September 30, 2021 2020 1,468 1,310 - 880 1,468 2,190 For the nine months ended September 30, 2021 2020 4,112 227,155 (26,302) 8,958 (3,984) (27,302) 38,744 79,402 12,570 288,213

• (iii) Other gains and losses

(iv) Finance costs

For the three months ended September 30, 2021 2020 Interest expense $ (2,276) (1,654) Lease liability interests (4,140) (4,998) Total $ (6,416) (6,652)	For the nine months ended September 30, 2021 2020 (7,535) (7,737) (12,948) (15,986) (20,483) (23,723)

(Continued)

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D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(y) Reclassification adjustments of components of other comprehensive income

Details of the reclassification adjustments of components of other comprehensive income were summarized as follow:

							For the nine months ended	For the nine months ended
							September 30,
							2021	2020
	Exchange differences on translation of foreign financial
		statements
		Change in exchange from the Consolidated Company				$	(288,162)	(384,063)
		Change in exchange from non-controlling interests					(19,042)	(29,906)
	Change in exchange differences on translation of foreign
		financial statements recognized in other comprehensive
		income				$	(307,204)	(413,969)
	Share of other comprehensive income of associates accounted
		for using equity method
		Change in foreign currency exchange from associates				$	(2,749)	(13,219)
		Reclassification to profit or loss					-	15,832
		Change in other comprehensive income from associates					-	3,199
	Share of other comprehensive income from associates					$	(2,749)	5,812
(z)	Financial instruments
	(i)	Category of financial instruments
		1) Financial Assets
			September 30,				December 31,	September 30,
				2021			2020	2020
		Cash and cash equivalents	$	3,214,449			6,216,327	3,603,190
		Financial assets at fair value
		through profit or loss - current		300,571			238,951	211,663
		Notes receivable, accounts
		receivable and other receivables
		(including related parties)		3,337,461			3,119,834	3,268,152
		Financial lease payment receivable		163,176			-	-
		Financial assets at fair value
		through other comprehensive
		income - non-current			72,869		454,435	432,688
		Refundable deposits and other
		current assets			78,174		222,152	53,918
			$	7,166,700			10,251,699	7,569,611

(Continued)

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D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Financial liabilities

September 30, 2021 December 31, 2020 Financial liabilities at fair value through profit or loss - current $ 16,549 18,324 Notes payable, accounts payable and other payables (including related parties) 4,463,740 4,125,129 Guarantee deposits received 75,509 70,284 Lease liability (current and non- current) 471,081 496,974 $ 5,026,879 4,710,711	September 30, 2020 23,202 4,034,222 66,230 556,147
	4,679,801

• (ii) Credit risk

Exposure to credit risk:

The carrying amount of financial assets represents the maximum amount exposed to credit risk. As of September 30, 2021, December 31, 2020 and September 30, 2020, the maximum exposure to credit risk has amounted to $7,166,700 thousand, $10,251,699 thousand and $7,569,611 thousand, respectively.

(iii) Liquidity risk

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

Book value September 30, 2021 Non-derivative financial liabilities Notes payable $ 198 Accounts payable 2,552,380 Accounts payable - related parties 167,338 Other payables 1,743,824 Lease liability 471,081 Guarantee deposits received 75,509 Derivative financial liabilities Cross currency swaps Outflow 16,534 Inflow - Forward foreign exchange contracts Outflow 15 Inflow - $ 5,026,879	Contractual cash flows 198 2,552,380 167,338 1,743,824 503,192 75,509 2,955,807 2,432,074 715,282 728,016 11,873,620	Within six months 198 2,552,380 167,338 1,743,824 84,735 75,509 2,955,807 2,432,074 715,282 728,016 11,455,163	6-12 months - - - - 77,734 - - - - - 77,734	1-2 years - - - - 107,248 - - - - - 107,248	2-5 years - - - - 214,629 - - - - - 214,629	Over five years - - - - 18,846 - - - - -
						18,846

(Continued)

63

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Book value December 31, 2020 Non-derivative financial liabilities Notes payable $ 230 Accounts payable 2,376,692 Accounts payable - related parties 367,482 Other payables 1,380,725 Lease liability 496,974 Guarantee deposits received 70,284 Derivative financial liabilities Cross currency swaps Outflow 8,469 Inflow - Forward foreign exchange contracts Outflow 9,855 Inflow - $ 4,710,711 Book value September 30, 2020 Non-derivative financial liabilities Notes payable $ 413 Accounts payable 1,703,302 Accounts payable - related parties 980,260 Other payables 1,350,247 Lease liability 556,147 Guarantee deposits received 66,230 Derivative financial liabilities Cross currency swaps Outflow 18,922 Inflow - Forward foreign exchange contracts Outflow 4,280 Inflow - $ 4,679,801	Contractual cash flows 230 2,376,692 367,482 1,380,725 534,623 70,284 565,924 558,265 595,458 586,896 7,036,579 Contractual cash flows 413 1,703,302 980,260 1,350,247 606,400 66,230 1,156,162 1,135,933 313,116 307,658 7,619,721	Within six months 230 2,376,692 367,482 1,380,725 82,029 70,284 565,924 558,265 595,458 586,896 6,583,985 Within six months 413 1,703,302 980,260 1,350,247 80,006 66,230 1,156,162 1,135,933 313,116 307,658 7,093,327	6-12 months - - - - 79,850 - - - - - 79,850 6-12 months - - - - 77,112 - - - - - 77,112	1-2 years - - - - 132,514 - - - - - 132,514 1-2 years - - - - 141,541 - - - - - 141,541	2-5 years - - - - 185,190 - - - - - 185,190 2-5 years - - - - 199,672 - - - - - 199,672	Over five years - - - - 55,040 - - - - -
						55,040
						Over five years - - - - 108,069 - - - - -
						108,069

(Continued)

64

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

September 30, 2021 December 31, 20 Foreign currency Exchange rate TWD Foreign currency Exchange rate Financial assets (note): Monetary items: CLP $ 102,435 0.04 3,516 203,714 0.04 JPY 876,563 0.25 219,483 1,438,073 0.28 CAD 11,190 21.98 245,940 16,704 22.40 USD 166,761 27.87 4,646,968 218,439 28.51 MXN 2,386 1.38 3,244 2,218 1.43 BRL 26,502 5.12 135,772 25,011 5.49 AUD 5,324 20.12 107,111 7,530 21.96 $ 5,362,034 Non-monetary items: USD $ 10,359 27.87 288,674 7,754 28.51 Derivative instruments: GBP $ 17 37.54 644 - - AUD 12 20.12 246 - - EUR 249 32.27 8,026 345 34.84 USD 12 27.87 321 - - JPY 2,125 0.25 532 32,059 0.28 RUB 44 0.38 17 569 0.39 BRL 1,148 5.12 5,881 101 5.49 CAD 3 21.98 64 - - KRW 10,595 0.03 285 - - $ 16,016	20 September 30, 2 TWD Foreign currency Exchange rate 8,165 87,952 0.04 396,985 1,079,096 0.28 374,126 17,775 21.87 6,227,244 193,263 29.13 3,171 2,153 1.30 137,208 33,958 5.16 165,355 7,831 20.87 7,312,254 221,056 6,926 29.13 - - - - 21 20.87 12,011 158 34.14 - 10 29.13 8,850 3,954 0.28 220 - - 554 883 5.16 - 51 21.87 - 3,988 0.03 21,635	020 TWD 3,267 298,025 388,781 5,628,970 2,805 175,342 163,405
		6,660,595
		201,719
		- 445 5,404 297 1,092 - 4,562 1,109 107
		13,016

(Continued)

65

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

September 30, 2021 December 31, 20 Foreign currency Exchange rate TWD Foreign currency Exchange rate Financial liabilities (note): Monetary items: JPY $ 1,914,981 0.25 479,494 2,022,386 0.28 CAD 1,038 21.98 22,818 1,359 22.40 EUR 10,047 32.27 324,218 10,045 34.84 BRL 22,975 5.12 117,699 26,604 5.49 USD 145,224 27.87 4,046,809 120,732 28.51 CLP 159,136 0.04 5,462 180,271 0.04 AUD 2,212 20.12 44,505 2,740 21.96 MXN 115 1.38 156 104 1.43 $ 5,041,161 Derivative instruments: EUR $ 155 32.27 4,994 91 34.84 CAD 14 21.98 301 36 22.40 JPY 30,536 0.25 7,646 5,040 0.28 KRW - - - 30,795 0.03 BRL - - - 103 5.49 USD 76 27.87 2,117 32 28.51 CNH 345 4.32 1,491 1,863 4.37 AUD - - - 114 21.96 $ 16,549	20 September 30, 2 TWD Foreign currency Exchange rate 557,803 1,945,891 0.28 30,440 1,529 21.87 349,937 10,020 34.14 145,944 28,650 5.16 3,441,834 139,556 29.13 7,226 182,307 0.04 60,160 2,664 20.87 148 116 1.30 4,593,492 3,184 33 34.14 797 - - 1,391 3,789 0.28 828 10,571 0.03 565 - - 917 358 29.13 8,140 2,321 4.29 2,502 17 20.87 18,324	020 TWD 537,417 33,452 342,100 147,936 4,064,704 6,771 55,596 151
		5,188,127
		1,130 - 1,047 284 - 10,429 9,956 356
		23,202

Note: Disclosure in the consolidated financial statements of the financial assets and liabilities in foreign currency is limited to information on subsidiaries directly held by the Company.

Since the Consolidated Company has various functional currencies, the information on foreign currency exchange gains and losses on monetary items is aggregately disclosed by total amount. The total foreign currency exchange gain and losses, including realized and unrealized, were losses $1,081 thousand, gain $18,533 thousand, losses $26,302 thousand and gain $8,958 thousand for the three months and nine months ended September 30, 2021 and 2020, respectively.

The Consolidated Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans, accounts payable 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 for the nine months ended September 30, 2021 and 2020 would have increased or decreased the net income (loss) after tax by $7,259 thousand and $19,931 thousand and increased or decreased the equity by $62 thousand and $46 thousand, respectively, assuming all other variables were held constant.

(Continued)

66

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (v) Assets and liabilities measured at fair value

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

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

			September 30, 2021	September 30, 2021
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
profit or loss - current	$	284,555	284,555	-	-
Financial assets at fair value through
other comprehensive income		72,869	68,750	-		4,119
Derivative assets and liabilities
Assets:
Financial assets at fair value through
profit or loss - current		16,016	-	16,016	-
Liabilities:
Financial liabilities at fair value
through profit or loss - current		16,549	-	16,549	-
			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
profit or loss - current	$	217,316	217,316	-	-
Financial assets at fair value through
other comprehensive income		454,435	450,696	-		3,739
Derivative assets and liabilities
Assets:
Financial assets at fair value through
profit or loss - current		21,635	-	21,635	-
Liabilities:
Financial liabilities at fair value
through profit or loss - current		18,324	-	18,324	-

(Continued)

67

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

			September 30, 2020	September 30, 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
profit or loss - current	$	198,647	198,647	-	-
Financial assets at fair value through
other comprehensive income		432,688	429,615	-		3,073
Derivative assets and liabilities
Assets:
Financial assets at fair value through
profit or loss - current		13,016	-	13,016	-
Liabilities:
Financial liabilities at fair value
through profit or loss - current		23,202	-	23,202	-

• 2) Valuation techniques

The Consolidated 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 Consolidated 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.

• 3) Transfer between Level 1 and Level 2

For the three months and nine months ended September 30, 2021 and 2020, there were no transfers between level 1 and level 2 of the fair value hierarchy.

• 4) Reconciliation of level 3 fair values

Balance at January 1, 2021 Recognized in other comprehensive income Balance at September 30, 2021 Balance at January 1, 2020 Recognized in other comprehensive income Balance at September 30, 2020	Financial assets at fair value through other comprehensive income
	$ 3,739 380 $ 4,119 $ 2,560 513 $ 3,073

(Continued)

68

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the nine months ended September 30, 2021 and 2020, total gains and losses that were included in unrealized gains and losses from financial assets at fair value through other comprehensive income were as follows:

For the three months ended For the nine months ended September 30, September 30, 2021 2020 2021 2020 Total gains and losses recognized: In other comprehensive income, and presented in “unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income” $ 1,600 (15) 380 513

Total gains and losses recognized:

• 5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Consolidated Company’s financial instruments that use Level 3 inputs to measure fair value include fair value through other comprehensive income – equity investments.

Quantified information of significant unobservable inputs was as follows:

Inter-relationship between significant unobservable inputs Valuation Significant and fair value Item technique unobservable inputs measurement Financial assets at fair Net Asset Value Net Asset Value Not applicable value through other Method comprehensive incomeequity investments without an active market

• (vi) 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 Consolidated 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. Moreover, lease liabilities are not measured at fair value.

fair value.
Non-financial assets: Investment property	September	30, 2021 Fair value 51,328	December	31, 2020 Fair value 51,328	September 30, 2020
	Book value $ 38,975		Book value 39,272		Book value 39,372	Fair value
						51,328

(Continued)

69

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Assets and liabilities		September	30, 2021
	Total $ 51,328	Level 1 - December	Level 2 Level 3 - 51,328 31, 2020
Non-financial assets: Investment property Assets and liabilities
	Total $ 51,328	Level 1 - September	Level 2 Level 3 - 51,328 30, 2020
Non-financial assets: Investment property Assets and liabilities
	Total $ 51,328	Level 1 -	Level 2 Level 3 - 51,328
Non-financial assets: Investment property

• 2) Valuation techniques

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

  - a) The carrying amount of cash and cash equivalents and other financial instruments that approximate their fair value due to their short maturities or similar to the future receipt and payment price.

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

• (aa) Financial risk management

• (i) Overview

The Consolidated Company was exposed to the following risks rising from financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

The following likewise discusses the Consolidated Company’ s objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risks exposures, please refer to the respective notes in the accompanying consolidated financial statements.

(Continued)

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D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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 Consolidated Company use internal control systems, risk management procedures, and regulations of risk management as the basis of various business risk management standards. The Consolidated Company’s risk management policies are established to identify and analyze the risks faced by the Consolidated Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Consolidated Company’s activities. The Consolidated 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 Independent Directors oversee how management monitors compliance with the Consolidated Company’s risk management policies and procedures and review the adequacy of the risk management framework in relation to the risks faced by the Consolidated 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 Independent Directors.

(iii) Credit risk

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

1) Accounts receivable

The credit risk exposure of the Consolidated Company arises from the operations and financial conditions of each customer and the political and economic stability of the Consolidated Company’s customer base, including the default risk of the industry and country in which customers operate in. However, the Consolidated Company operates worldwide, and thus, risk is diversified. As of September 30, 2021, December 31, 2020 and September 30, 2020, revenue from each customer does not exceed 10% of the Consolidated Company’s revenue and therefore, there is no concentration of credit risk.

The Consolidated 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)

71

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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 Consolidated 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 Consolidated Company has set the allowance for bad debt account to reflect the possible losses on accounts 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 in securities and derivative financial instruments

The credit risk exposure in the bank deposits, fixed income investments and derivative financial instrument are measured and monitored by the Consolidated Company’ s finance department. As the Consolidated 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

The Consolidated Company’s policies is to provide financial guarantees only to wholly owned subsidiaries. As of September 30, 2021, December 31, 2020 and September 30, 2020, the Consolidated Company has not provided any guarantees to a third party.

(iv) Liquidity risk

Liquidity risk is the risk that the Consolidated Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Consolidated Company’ s approach to manage liquidity is to ensure, as far as possible, that it always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Consolidated Company’s reputation. The Consolidated 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 Consolidated Company had unused credit facilities for $4,752,977 thousand as of September 30, 2021.

(Continued)

72

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates or equity prices that affects the Consolidated 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.

The Consolidated 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 Consolidated 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 Consolidated 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 so on.

At any point in time, the Consolidated Company hedges its currency risk based on its actual and forecast sales over the following six months. The Consolidated Company also uses nature hedges on assets and liabilities denominated in foreign currencies and maintained the hedge ratio at 50% and above. The Consolidated 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 Consolidated 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 Consolidated 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 Consolidated Company, hence, there is no significant interest rate risk.

(Continued)

73

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 3) Other price risks

The Consolidated Company holds both monetary funds and bond funds, where their prices are affected by changes in mutual funds. The abovementioned mutual funds are widely used as fixed income investments in domestic, with large market scale, stable market prices, and high liquidity. The Consolidated Company is held for the purpose of short-term capital allocation with a period of approximately 3 months. The finance department will monitor the changes in market and dispose of the investments, if necessary.

(ab) Capital management

The Consolidated 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.

Debt-to-equity ratio:

Debt-to-equity ratio:
September 30, 2021 Total liabilities $ 6,383,672 Less: cash and cash equivalents (3,214,449) Net debt $ 3,169,223 Total equity $ 8,635,781 Debt-to-equity ratio 36.70%	December 31, 2020 6,209,875 (6,216,327) (6,452) 9,740,355 % (0.07)	September 30, 2020 6,105,030 (3,603,190) 2,501,840 8,741,719 28.62%

As of September 30, 2021, the methods of the Consolidated Company’ s capital management remained unchanged.

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

Information of non-cash-traded investing and financing activities for the nine months ended September 30, 2021 and 2020 were as follows:

• (i) For right-to-use assets, please refer to note 6(i).

• (ii) For exchangeable corporate bonds, please refer to note 6(p).

(Continued)

74

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

January 1, 2021 Lease liabilities $ 496,974 Others 70,284 Total liabilities from financing activities $ 567,258 January 1, 2020 Bonds payable $ 301,003 Lease liabilities 604,474 Others 69,121 Total liabilities from financing activities $ 974,598	Cash flows (165,361) 5,225 (160,136) Cash flows (608) (123,724) (2,892) (127,224)	Non-cash changes Exchange Fair value changes Others September 30, 2021 - - 139,468 471,081 - - - 75,509 - - 139,468 546,590 Non-cash changes Exchange Fair value changes Others September 30, 2020 (302,502) 2,107 - - - - 75,479 556,229 - - - 66,229 (302,502) 2,107 75,479 622,458	September 30, 2021 471,081 75,509
			546,590
			622,458

(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 consolidated financial statement:

Name of related party Relationship with the Consolidated Company Alpha Networks, Inc. An associate (Since all the equity shares have been sold, it became a non-related party after November 30, 2020.) Dongguam Mingrui An associate (Since all the equity shares in Alpha Networks, Inc. have 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.) Cameo Communication, Inc. An associate (Due to increasing shareholding in February 2021, the Consolidated Company became to have significant influence with it and the relationship changed from the corporate director to an associate.) Amigo Technology Inc. Other related party Amit Wireless Inc. Other related party T-COM, LLC An associate

(Continued)

75

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Significant related party transactions

• (i) Sales and service revenue

For the three months ended September 30, 2021 2020 Associates $ 1,465 109 Others - - $ 1,465 109	For the nine months ended September 30, 2021 2020 1,579 325 - 63 1,579 388	For the nine months ended September 30, 2021 2020 1,579 325 - 63 1,579 388
		388

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) Purchases

For the three months ended September 30, 2021 2020 Associates: Alpha $ - 419,983 Cameo 240,914 - Other related parties: Cameo - 479,210 Amit 1,373 - Amigo 26,068 - $ 268,355 899,193	For the nine months ended September 30, 2021 2020 - 1,060,549 806,115 - - 1,020,648 1,373 - 26,204 - 833,692 2,081,197	For the nine months ended September 30, 2021 2020 - 1,060,549 806,115 - - 1,020,648 1,373 - 26,204 - 833,692 2,081,197
		2,081,197

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

(iii) Receivables from related parties

		September 30,	September 30,	December 31,	September	30,
Account	Relationship		2021	2020	2020
Accounts	Associates－Alpha
receivable		$	-	-		217
Accounts	Associates－Others
receivable			1,774	-	-
Other receivables	Associates－Alpha		-	-	1,682
Other receivables	Associates－Others		-	-		123

(Continued)

76

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Account Relationship September 30, 2021 Other receivables Other related parties －Cameo - Other receivables Other related parties －Amigo 17,254 Other receivables Other related parties －Amit 474 Prepayment for purchase Associates－Alpha - Prepayment for purchase Other related parties －Cameo - Prepayment for purchase Associates－Cameo 10,919 $ 30,421	December 31, 2020 September 30, 2020 29 - - - - - - 33,515 18,520 36,630 - - 18,549 72,167	December 31, 2020 September 30, 2020 29 - - - - - - 33,515 18,520 36,630 - - 18,549 72,167
		72,167

－ The Consolidated Company’ s other receivables to Associates Alpha were cash dividends receivable and others.

(iv) Payables to related parties

Account Relationship September 30, 2021 Accounts payable Associates－Alpha $ - Accounts payable Associates－Cameo 132,504 Accounts payable Other related parties －Cameo - Accounts payable Other related parties －Amigo 33,405 Accounts payable Other related parties －Amit 1,429 Other payables Associates－Alpha - Other payables Associates－Cameo 3,971 Other payables Other related parties －Cameo - Other payables Other related parties －Amigo 312 $ 171,621	December 31, 2020 - - 367,482 - - - - 18,560 - 386,042	September 30, 2020 466,803 - 513,457 - - 4,860 - 6,217 -
		991,337

－ The Consolidated Company’ s accounts payables to other related parties Amigo were purchases, and temporary payment on behalf of a third-party. The payment term of related parties was 30-90 days. There were no significant differences in payment terms between related parties and third-parties suppliers.

(Continued)

77

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Services purchased from related parties

The services purchased from related-parties were as follows:

For the three months ended September 30, 2021 2020 Associates: Alpha $ - 2,585 Cameo 324 - Others - - Other related parties: Cameo - 3,172 Amigo 297 - $ 621 5,757	For the nine months ended September 30, 2021 2020 - 17,620 10,721 - - 150 - 16,388 605 - 11,326 34,158	For the nine months ended September 30, 2021 2020 - 17,620 10,721 - - 150 - 16,388 605 - 11,326 34,158
		34,158

(vi) Property transaction

Property, plant and equipment acquired

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

		For the three months ended	For the three months ended	For the three months ended	For the nine months ended	For the nine months ended	For the nine months ended	For the nine months ended
		September		30,		September 30,
		2021		2020	2021			2020
Associates:
Alpha	$	-		-		-		1,869
Cameo		-		-		321		-
Other related parties:
Cameo		-		2,632		-		6,178
	$	-		2,632		321		8,047
Other gains and losses
				For the three	months	For the nine months
				ended September 30,		ended September 30,
Account		Relationship		2021	2020	2021		2020
Other gains and losses	Associates－Alpha		$	-	400		-	1,679
Other gains and losses	Other related parties－
	Other			412	-		412	-
			$	412	400		412	1,679

(vii) Other gains and losses

(Continued)

78

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Key management personnel compensation

Key management personnel compensation comprised:

Key management personnel compensation comprised:
For the three months ended September 30, 2021 2020 Short-term employee benefits $ 15,016 22,866 Post-employee benefits 2,497 700 $ 17,513 23,566	For the nine months ended September 30, 2021 2020 50,498 32,911 3,255 1,177 53,753 34,088
		34,088

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets Object September 30, 2021 Other current assets and other non-current assets Rental deposits, performance bond and time deposits $ 78,174	December 31, 2020 52,436	September 30, 2020 54,141

(9) Significant 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 Consolidated Company believes the litigation will not have any significant impact on its current operations.

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

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

(Continued)

79

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (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 retained its attorneys to handle and negotiate a settlement. Based on its evaluation, the Consolidated Company believes the litigation will not have any significant impact on its current operations.

• (f) The Consolidated 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 amount of liabilities is unclear. The Consolidated Company has accrued the possible expense.

(10) Losses Due to Major Disasters: None.

(11) Subsequent Events: None.

(12) Other:

• (a) The information on employee benefits, depreciation, and amortization expenses, by function, is summarized as follows:

summarized as follows:
By function By item		For the three months ended September 30,
		2021		2020
	Cost of Goods Sold	Operating Expense	Total	Cost of Goods Sold	Operating Expense	Total
Employee benefits
Salaries	14,576	479,026	493,602	16,687	545,628	562,315
Labor and health insurance	582	31,656	32,238	683	29,740	30,423
Pension	1,526	32,255	33,781	1,371	25,634	27,005
Others	1,980	55,200	57,180	1,960	55,890	57,850
Depreciation	3,121	53,164	56,285	3,932	57,408	61,340
Amortization	9	9,579	9,588	13	14,627	14,640
By function By item		For the nine months ended September 30,
		2021		2020
	Cost of Goods Sold	Operating Expense	Total	Cost of Goods Sold	Operating Expense	Total
Employee benefits
Salaries	46,196	1,572,693	1,618,889	51,586	1,647,406	1,698,992
Labor and health insurance	1,765	98,928	100,693	2,044	93,159	95,203
Pension	4,407	97,572	101,979	4,726	81,545	86,271
Others	6,449	182,201	188,650	6,252	177,419	183,671
Depreciation	10,549	165,102	175,651	11,353	173,818	185,171
Amortization	27	34,550	34,577	45	43,684	43,729

• (b) Seasonality of operations

The Consolidated Company's operations were not affected by seasonality or cyclicality factors.

(Continued)

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D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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 Consolidated Company:

(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:	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 Corporation	Other receivables- related parties	Yes	557,320	557,320	557,320	-	2	-	Operating Capital	-	-	-	2,691,186	2,691,186
1	D-Link International	D-Link (Shiang Hai)	Other receivables- related parties	Yes	43,226	43,226	15,994	4.00	2	-	Operating Capital	-	-	-	2,691,186	2,691,186
1	D-Link International	D-Link Brazil	Other receivables- related parties	Yes	55,732	55,732	-	-	2	-	Operating Capital	-	-	-	2,691,186	2,691,186
1	D-Link International	D-Link (Shiang Hai)	Other receivables- related parties	Yes	531,112	531,112	531,112	-	2	-	Convert from Account receivables to loan receivable	-	-	-	2,691,186	2,691,186
2	D-Link Russia Investment	D-Link International	Other receivables- related parties	Yes	685,504	685,504	682,717	-	2	-	Operating Capital	-	-	-	696,508	696,508
3	D-Link Japan K.K.	D-Link Corporation	Other receivables- related parties	Yes	450,704	450,704	450,704	0.50	2	-	Operating Capital	-	-	-	703,708	703,708
4	D-Link Europe	D-Link Corporation	Other receivables- related parties	Yes	322,716	322,716	322,716	1.00	2	-	Operating Capital	-	-	-	1,273,156	1,273,156
5	D-Link (Deutschland ) GmbH	D-Link Europe	Other receivables- related parties	Yes	161,358	161,358	100,042	1.00	2	-	Operating Capital	-	-	-	179,768	179,768

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. The ending amount and the funding loan limits are calculated by the unaudited balance.

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. The ending amount and the funding loan limits are calculated by the unaudited balance.

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. The ending amount and the funding loan limits are calculated by the unaudited balance.

Note 7: Only disclose funding loan limits that are still valid until September 30, 2021.

(Continued)

81

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

		(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)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	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	120,244	120,244	61,722	-	% 1.48	5,998,365	Y
0	D-Link Corporation	D-Link Shiang-Hai	2	1,999,455	69,665	69,665	-	-	% 0.86	5,998,365	Y		Y
0	D-Link Corporation	D-Link Trade	2	1,999,455	13,933	13,933	-	-	% 0.17	5,998,365	Y

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 September 30, 2021 (excluding investment in subsidiaries, associates and joint ventures):

Securities held as of September 30, 2021 (excluding investment in	Securities held as of September 30, 2021 (excluding investment in	Securities held as of September 30, 2021 (excluding investment in	Securities held as of September 30, 2021 (excluding investment in	subsidiaries, associates and joint ventures):	subsidiaries, associates and joint ventures):	subsidiaries, associates and joint ventures):	subsidiaries, associates and joint ventures):	subsidiaries, associates and joint ventures):
				(In Thousands of New Taiwan Dollars/shares)
Name of holder	Category and name of security	Relationship with company	Account title	Ending balance				Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
D-Link Corporation	EHOO	None	Financial assets at fair value through profit or loss-non-current	749,663	-	% 4.11	-
D-Link Corporation	EWAVE	None	Financial assets at fair value through profit or loss-non-current	83,334	-	% 1.89	-
D-Link Corporation	TGC	None	Financial assets at fair value through profit or loss-non-current	500,000	-	% 1.84	-
D-Link Corporation	YICHIA Information Corporation	None	Financial assets at fair value through profit or loss-non-current	73,500	-	% 6.68	-
D-Link Corporation	UBICOM	None	Financial assets at fair value through profit or loss-non-current	926,814	-	% 3.05	-
D-Link Corporation	Purple	None	Financial assets at fair value through profit or loss-non-current	3,385,417	-	% 14.10	-
D-Link Corporation	Global Mobile Corp.	None	Financial assets at fair value through profit or loss-non-current	6,600,000	-	% 2.39	-
D-Link Holding	Best 3C	None	Financial assets at fair value through profit or loss-non-current	600,000	-	% 1.88	-
D-Link Holding	E2O	None	Financial assets at fair value through profit or loss-non-current	252,525	-	% 0.05	-
Yeochia	STEMCYTE	None	Financial assets at fair value through other comprehensive income-non-current	18,950	212	% 0.02	212
Yeochia	Z-Com	None	Financial assets at fair value through other comprehensive income-non-current	2,343,041	19,611	% 3.23	19,611
Yeochia	Quie Tek	None	Financial assets at fair value through profit or loss-non-current	6,257,896	-	% 12.63	-
Yeomao	Kaimei	None	Financial assets at fair value through other comprehensive income-non-current	577,251	48,720	% 0.42	48,720
Yeomao	Quie Tek	None	Financial assets at fair value through profit or loss-non-current	286,016	-	% 0.58	-
Yeomao	ITEX	None	Financial assets at fair value through profit or loss-non-current	60,000	-	% 0.26	-
Yeotai	Z-Com	None	Financial assets at fair value through other comprehensive income-non-current	50,000	419	% 0.07	419

(Continued)

82

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units	Carrying value	Percentage of ownership (%)	Fair value
Yeotai	Quie Tek	None	Financial assets at fair value through profit or loss-non-current	3,143,224	-	% 6.34	-
D-Link India	MIRAE ASSET MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	9,059	7,509	-	7,509
D-Link India	ICICI MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	227,593	26,466	-	26,466
D-Link India	ADITYA BIRLA MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	268,734	34,001	-	34,001
D-Link India	NIPPON INDIA MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	17,686	33,967	-	33,967
D-Link India	TATA MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	27,633	33,985	-	33,985
D-Link India	SBI MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	24,619	30,266	-	30,266
D-Link India	LIC MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	5,264	7,509	-	7,509
D-Link India	HDFC MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	18,248	28,167	-	28,167
D-Link India	UTI MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	29,194	37,553	-	37,553
D-Link India	AXIS MUTUAL FUND	None	Financial assets at fair value through profit or loss-current	43,395	37,623	-	37,623
D-Link India	L&T LIQUID FUND	None	Financial assets at fair value through profit or loss-current	7,016	7,509	-	7,509

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

the capital stock:	the capital stock:	the capital stock:	the capital stock:	the capital stock:
					(In Thousands of New Taiwan Dollars/shares)
Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginning Balance		Purchases (Note 2)		Sales				Ending Balance (Note 1)
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
D-Link Corporation	Cameo	Investment accounted for using equity method		Associate	39,852,993	364,655	97,680,000	799,999	-	-	-	-	137,532,993	1,016,216

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

• (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$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

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/ (Sales)	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	(Sales and service revenue)	(427,444)	% (40)	60 days	－	－	2,149	1%
D-Link International	D-Link Corporation	Parent Company	Purchase and service expense	427,444	% 72	60 days	－	－	(2,149)	-%
D-Link International	D-Link Systems	The ultimate parent company is D-Link Corporation	(Sales)	(333,525)	% (5)	75 days	－	－	-	-%
D-Link International	D-Link Canada	The ultimate parent company is D-Link Corporation	(Sales)	(281,864)	% (4)	60 days	－	－	32,961	1%
D-Link International	D-Link Europe	The ultimate parent company is D-Link Corporation	(Sales)	(2,348,971)	% (33)	60 days	－	－	656,037	20%

(Continued)

83

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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/ (Sales)	Amount	Percentage of total purchases/ (Sales)	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
D-Link International	D-Link ME	The ultimate parent company is D-Link Corporation	(Sales)	(1,016,554)	% (14)	60 days	－	－	383,426	12%
D-Link International	D-Link Australia	The ultimate parent company is D-Link Corporation	(Sales)	(157,273)	% (2)	60 days	－	－	32,240	1%
D-Link International	D-Link Brazil	The ultimate parent company is D-Link Corporation	(Sales)	(229,178)	% (3)	75 days	－	－	390,906	12%
D-Link International	D-Link Japan	The ultimate parent company is D-Link Corporation	(Sales)	(335,599)	% (5)	60 days	－	－	54,594	2%
D-Link International	D-Link India	The ultimate parent company is D-Link Corporation	(Sales)	(491,430)	% (7)	45 days	－	－	125,060	4%
D-Link International	D-Link Trade	The ultimate parent company is D-Link Corporation	(Sales)	(767,184)	% (11)	180 days	－	－	719,688	22%
D-Link International	Cameo	Cameo is an associate of the consolidated corporation	Purchase	795,367	% 13	90 days	－	－	(128,786)	(6)%
D-Link Systems	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	333,525	% 89	75 days	－	－	-	-%
D-Link Canada	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	281,864	% 99	60 days	－	－	(32,961)	(90)%
D-Link Europe	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	2,348,971	% 97	60 days	－	－	(656,037)	(84)%
D-Link ME	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	1,016,554	% 58	60 days	－	－	(383,426)	(80)%
D-Link Australia	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	157,273	% 92	60 days	－	－	(32,240)	(98)%
D-Link Brazil	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	229,178	% 92	75 days	－	－	(390,906)	(99)%
D-Link Japan	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	335,599	% 90	60 days	－	－	(54,594)	(95)%
D-Link India	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	491,430	% 23	45 days	－	－	(125,060)	(25)%
D-Link Trade	D-Link International	The ultimate parent company is D-Link Corporation	Purchase	767,184	% 97	180 days	－	－	(719,688)	(99)%

Note : The transactions had been eliminated in the consolidated financial statements.

(Continued)

84

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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	Related party	Nature of relationship	Ending balance	Turnover rate	Overdue (Note 1)		Amounts received in subsequent period (Note 2)	Allowance for bad debts
					Amount	Action taken
D-Link International	D-Link Europe	The ultimate parent company is D-Link Corporation	656,037	7.41	-	-	112,634	-
D-Link International	D-Link L.A.	The ultimate parent company is D-Link Corporation	585,572	-	585,572	-	-	-
D-Link International	D-Link Brazil	The ultimate parent company is D-Link Corporation	390,906	1.08	326,767	-	-	-
D-Link International	D-Link Trade	The ultimate parent company is D-Link Corporation	719,688	1.50	-	-	-	-
D-Link International	D-Link India	The ultimate parent company is D-Link Corporation	125,060	5.11	5	-	54,794	-
D-Link International	D-Link ME	The ultimate parent company is D-Link Corporation	383,426	5.06	-	-	7	-

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

Note 2: The amount represents collections subsequent to September 30, 2021 up to Nonember 15, 2021.

Note 3: The transactions had been eliminated in the consolidated financial statements.

• (ix) Trading in derivative instruments:

(In Thousands of New Taiwan Dollars)

Company Name	Derivative Instruments Category	Holding Purpose	Contract Amount	Contract Amount	Book Value	Fair Value
D Link International D Link International D Link International D Link International 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 Corporation D-Link Corporation D-Link Corporation D-Link International D-Link International	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 Forward foreign exchange contract Forward foreign exchange contract Forward foreign exchange contract Cross currency swap Cross currency swap Cross currency swap Cross currency swap Cross currency swap	Non-trading: EUR GBP JPY RUB AUD (Sell) EUR (Sell) GBP (Sell) CAD (Sell) JPY (Sell) BRL (Sell) INR (Sell) KRW (Sell) USD EUR JPY CAD CNH	EUR GBP JPY RUB AUD EUR GBP CAD JPY BRL INR KRW USD EUR JPY CAD CNH	9,000 1,000 100,000 150,028 1,000 7,000 500 600 50,000 58,565 129,085 2,120,155 21,700 10,000 1,800,000 3,000 133,670	3,112 640 471 17 246 4,914 4 64 61 5,881 321 285 (2,114) (4,994) (7,635) (301) (1,490)	3,112 640 471 17 246 4,914 4 64 61 5,881 321 285 (2,114) (4,994) (7,635) (301) (1,490)

(Continued)

85

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Company Name	Derivative Instruments Category	Holding Purpose	Contract Amount	Contract Amount	Book Value	Fair Value
D-Link International D-Link India	Forward foreign exchange contract Forward foreign exchange contract	JPY (Sell) INR (Sell)	JPY INR	50,000 37,163	(11) (4)	(11) (4)

(x) Business relationships and significant intercompany transactions:

(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)
No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0	D-Link Corporation	D-Link Systems	1	Investments accounted for using equity method	1,339,212	-	9%
0	D-Link Corporation	D-Link Canada	1	Investments accounted for using equity method	283,455	-	2%
0	D-Link Corporation	D-Link International	1	Investments accounted for using equity method	2,129,011	-	14%
0	D-Link Corporation	D-Link Holding	1	Investments accounted for using equity method	1,708,808	-	11%
0	D-Link Corporation	Yeochia	1	Investments accounted for using equity method	268,757	-	2%
0	D-Link Corporation	D-Link ME	1	Investments accounted for using equity method	832,113	-	6%
0	D-Link Corporation	D-Link Japan	1	Investments accounted for using equity method	733,196	-	5%
0	D-Link Corporation	D-Link L.A.	1	Investments accounted for using equity method-credit	(569,138)	-	(4)%
0	D-Link Corporation	Cameo	1	Investments accounted for using equity method	1,016,216	-	7%
0	D-Link Corporation	D-Link International	1	Sales and service revenue	427,444	60 days	4%
1	D-Link Holding	D-Link Mauritius	3	Investments accounted for using equity method	876,899	-	6%
1	D-Link Holding	D-Link Europe	3	Investments accounted for using equity method	1,202,127	-	8%
1	D-Link Holding	Success Stone	3	Investments accounted for using equity method	150,425	-	1%
1	D-Link Holding	D-Link Shiang-Hai (Cayman) Inc.	3	Investments accounted for using equity method-credit	(536,018)	-	(4)%

(Continued)

86

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

No.	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
2	D-Link International	D-Link L.A.	3	Accounts receivable–related party	585,572	75 days	4%
2	D-Link International	D-Link India	3	Accounts receivable–related party	125,060	45 days	1%
2	D-Link International	D-Link Brazil	3	Accounts receivable–related party	390,906	75 days	3%
2	D-Link International	D-Link Europe	3	Accounts receivable–related party	656,037	60 days	4%
2	D-Link International	D-Link ME	3	Accounts receivable–related party	383,426	60 days	3%
2	D-Link International	D-Link Trade	3	Accounts receivable–related party	719,688	60 days	5%
2	D-Link International	D-Link Systems	3	Sales	333,525	75 days	3%
2	D-Link International	D-Link Europe	3	Sales	2,348,971	60 days	21%
2	D-Link International	D-Link Brazil	3	Sales	229,178	75 days	2%
2	D-Link International	D-Link Canada	3	Sales	281,864	60 days	3%
2	D-Link International	D-Link Trade	3	Sales	767,184	180 days	7%
2	D-Link International	D-Link India	3	Sales	491,430	45 days	4%
2	D-Link International	D-Link ME	3	Sales	1,016,554	60 days	9%
2	D-Link International	D-Link Australia	3	Sales	157,273	60 days	1%
2	D-Link International	D-Link Japan	3	Sales	335,599	60 days	3%
2	D-Link International	D-Link Russia Investment	3	Investments accounted for using equity method	696,508	-	5%
3	D-Link Mauritius	D-Link India	3	Investments accounted for using equity method	859,254	-	6%
4	D-Link Shiang-Hai (Cayman) Inc.	D-Link Shiang-Hai	3	Investments accounted for using equity method-credit	(553,341)	-	(4)%
5	D-Link Europe	D-Link Deutschland	3	Investments accounted for using equity method	179,768	-	1%

Note 1: Parties to the intercompany transactions are identified and numbered as follows:

1. “0” represents the Company.

2. Subsidiaries are numbered from “1”.

Note 2: Intercompany relationships and significant intercompany transactions are disclosed only for the amounts that exceed 1% of consolidated net revenue or total assets. Note 3: Nature of relationship are listed as below:

No. 1 represents the transaction from parent company to subsidiary

No. 2 represents the transaction from subsidiary to parent company

No. 3 represents the transaction from subsidiary to subsidiary

Note 4: The transactions have been eliminated in the consolidated financial statements.

(Continued)

87

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees:

The following is the information on investees for the nine months ended September 30, 2021 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars/shares)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of September 30, 2021	Balance as of September 30, 2021	Balance as of September 30, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				September 30, 2021	December 31, 2020	Shares	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	1,339,212	(33,908)	(33,908)	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	283,455	2,401	2,401
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	2,129,011	199,800	75,773	100% shares owned by D-Link Corporation and D-Link Holding. Share of profit of investee includes the amount of transactions between affiliated companies
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	(569,138)	(56,592)	(56,592)
D-Link Corporation	D-Link Sudamerica	Chile	Marketing and after-sales service in Chile	6,512	6,512	199,999	% 100.00	10,534	1,406	1,406	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	14,821	(104)	(104)	100% shares owned by D-Link Corporation and D-Link Sudamerica S.A.
D-Link Corporation	D-Link Brazil	Brazil	Marketing and after-sales service in Brazil	932,197	932,197	2,964,836,727	% 100.00	(31,699)	(2,913)	(2,913)	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	832,113	59,003	59,003	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	135,491	(3,180)	(3,180)	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	1,708,808	93,804	93,804
D-Link Corporation	D-Link Deutschland	Germany	Marketing and after-sales service in Germany	120,050	120,050	(Note 2)	% -	120,050	9,198	-	100% shares owned by D-Link Corporation directly and indirectly. Share of profit (loss) of associates accounted for using equity method was 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	733,196	80,479	80,479
D-Link Corporation	D-Link Investment	Singapore	Investment company	67,191	67,191	2,200,000	% 100.00	(111,929)	(1,010)	(1,010)
D-Link Corporation	Yeochia	Taiwan	Investment company	122,400	122,400	(Note 2)	% 100.00	268,757	566	566
D-Link Corporation	Yeomao	Taiwan	Investment company	70,052	70,052	10,220,271	% 100.00	124,864	76	76
D-Link Corporation	Yeotai	Taiwan	Investment company	146,000	146,000	14,600,000	% 100.00	63,057	58	58
D-Link Corporation	Cameo	Taiwan	Manufacturing and sell computer networks system equipment and its components and related technology research and development	1,102,479	-	137,532,993	% 41.58	1,016,216	(407,979)	(181,795) (Note 1)	D-Link Corporation originally held 17.35% shares and accounted for financial assets at fair value through other comprehensive income. The Company increased investments on February 17, 2021 to hold 41.58% and accounted for investments accounted for 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	(110,605)	(960)	(960)
D-Link Trade	T-COM LLC	Russia	Marketing and after sales service in Russia	12,485	-	(Note 2)	% 40.00	11,612	(3,282)	(1,397)
D-Link International	D-Link Australia	Australia	Marketing and after sales service in Australia and New Zealand	22	22	1,000	% 0.10	19	(3,180)	-	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	29,426	59,003	-	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	(29,751)	(4,984)	(4,984)
D-Link International	D-Link Trade M.	Republic of Moldova	Marketing and after sales service in Moldova	13	13	(Note 2)	% 100.00	(446)	116	116
D-Link International	D-Link Russia Investment	BVI	Investment company	789,757	789,757	25,000,000	% 100.00	696,508	(10,645)	(10,645)
D-Link International	D-Link Malaysia	Malaysia	Marketing and after sales service in Malaysia	6,130	6,130	800,000	% 100.00	7,231	247	247
D-Link International	D-Link Lithuania	Lithuania	Marketing and after sales service	3,574	3,574	1,000	% 100.00	3,931	612	612
D-Link Holding	D-Link Europe	UK.	Marketing and after sales service in Europe	971,293	971,293	32,497,455	% 100.00	1,202,127	28,614	28,614

(Continued)

88

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of September 30, 2021	Balance as of September 30, 2021	Balance as of September 30, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				September 30, 2021	December 31, 2020	Shares	Percentage of ownership	Carrying value
D-Link Holding	D-Link International	Singapore	Global marketing, procurement and after sales service	8,466	8,466	425,340	% 0.64	(8,267)	199,800	-	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	(Note 2)	% 100.00	4,601	(30)	(30)
D-Link Holding	D-Link Mauritius	Mauritius	Investment company	186,789	186,789	200,000	% 100.00	876,900	63,289	63,289
D-Link Holding	D-Link Shiang- Hai (Cayman)	Cayman Islands	Investment company	654,974	654,974	50,000	% 100.00	(536,018)	963	963
D-Link Holding	D-Link Systems	USA	Marketing and after sales service in USA	49,320	49,320	750,000	% 1.56	41,799	(33,908)	-	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	-	% 100.00	-	-	-	In liquidation process
D-Link Holding	Success Stone	BVI	Investment company	297,027	297,027	9,822	% 100.00	150,425	284	284
D-Link Holding	MiiiCasa Holding	Cayman Island	Investment company	61,087	61,087	21,000,000	% 28.98	-	-	814
D-Link Holding	D-Link Brazil	Brazil	Marketing and after sales service in Brazil	-	-	100	% -	-	(2,913)	-	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	% -	-	1,406	-	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	859,254	125,352	63,955
D-Link Mauritius	TeamF1 India	India	Technical services for software and hardware system integration	8	8	1	% 0.10	13	7,035	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	118,056	7,035	7,034	100% shares owned by D-Link Mauritius and D-Link India
D-Link L.A	D-Link Peru S.A.	Peru	Marketing and after sales service in Peru	-	-	1	% 0.03	2	460	-	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	5,556	(430)	(430)
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	467	-	-
D-Link Sudamerica	D-Link Peru S.A.	Peru	Marketing and after sales service in Peru	38	38	3,499	% 99.97	7,703	460	460
D-Link Sudamerica	D-Link Mexicana	Mexico	Marketing and after sales service in Mexico	6	6	3	% -	6	(104)	-	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	110	-	-	D-Link Argentina share's profit recognized in D-Link Sudamerica. In liquidation process
D-Link Europe	D-Link Deutschland	Germany	Marketing and after sales service in Germany	131,769	131,769	(Note 2)	% 100.00	179,768	9,198	9,198
D-Link Europe	D-Link AB	Sweden	Marketing and after sales service in Sweden	9,022	9,022	15,500	% 100.00	16,355	1,384	1,384
D-Link Europe	D-Link Iberia SL	Spain	Marketing and after sales service in Spain	1,976	1,976	50,000	% 100.00	60,512	3,993	3,993
D-Link Europe	D-Link Mediterraneo SRL	Italy	Marketing and after sales service in Italy	2,177	2,177	50,000	% 100.00	10,385	4,316	4,316
D-Link Europe	D-Link (Holdings)Ltd	UK.	Investment company	-	-	3	% 100.00	9,160	-	-
D-Link Europe	D-Link France SARL	France	Marketing and after sales service in France	5,287	5,287	114,560	% 100.00	39,023	40,645	40,645
D-Link Europe	D-Link Netherlands	Netherlands	Marketing and after sales service in Netherlands	2,132	2,132	50,000	% 100.00	7,363	225	225
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	22,837	1,123	1,123
D-Link Europe	D-Link Magyarorszag	Hungary	Marketing and after sales service in Hungary	523	523	300	% 100.00	6,299	472	472
D-Link Europe	D-Link s.r.o	Czech	Marketing and after sales service in Czech	329	329	100	% 100.00	3,566	248	248
D-Link (Holdings)Ltd	D-Link UK	UK	Marketing and after sales service in UK	-	-	300,100	% 100.00	9,160	-	-
D-Link Mediterraneo SRL	D-LINK ADRIA d.o.o.	Croatia	Marketing and after sales service in Croatia	326	326	(Note 2)	% 100.00	1,183	-	-
D-Link Middle East FZCO	D LINK NETWORK	Republic of South Africa	Marketing and after sales service in South Africa	361	361	100	% 100.00	665	223	-
Yeochia and Yeotai	Xtramus Technologies Co. Ltd.	Taiwan	Research, development, manufacturing and sell of testing equipment for network	181,500	181,500	1,832,446	% 41.18	-	355	-

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

Note 2: Limited Company

Note 3: The transactions have been eliminated in the consolidated financial statements.

(Continued)

89

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated 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:

The names of investees in Mainland China, the main	The names of investees in Mainland China, the main	The names of investees in Mainland China, the main	The names of investees in Mainland China, the main	The names of investees in Mainland China, the main	businesses and products, and other information:	businesses and products, and other information:	businesses and products, and other information:	businesses and products, and other information:	businesses and products, and other information:	businesses and products, and other information:	businesses and products, and other information:	businesses and products, and other information:
					(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 September 30, 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	543,387	2	543,387	-	-	543,387	(7,730)	100.00%	(7,730)	(553,341)	-
Netpro Trading	Research, development and trading business	19,506	2	18,182	-	-	18,182	8,693	100.00%	8,693	19,468	-
YouXiang	Technical Service and Import/Export trading business	61,381	3	-	-	-	-	5,927	9.86%	-	3,907	-

Note 1: Method of Investment:

Type 1: Direct investments in Mainland China

Type 2: Indirect investments in Mainland China

Type 3: Others

Note 2: The amounts in New Taiwan Dollars were translated at the exchange rates of USD 27.8660, CNY 4.3226 as of September 30, 2021.

• (ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of September 30, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
561,569	561,569	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:
Shareholder’s Name	Shares	Percentage
Sapido Technology Inc.	65,020,000	% 9.97
Yitongyuan Investment Co., Ltd.	35,680,000	% 5.47

(Continued)

90

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

The Consolidated Company has three reportable segments: American markets, European markets, Emerging markets and others. Those reportable segments are primarily operated in research, development and selling of computer network and equipment and wireless communication products.

The Consolidated Company's reportable segments are strategic business units that offer geographical products and services.

The income tax expenses are managed on a group basis, and operating income (losses) is determined by the profit before taxation. The reportable amount is similar to the report used by the chief operating decision and make a performance evaluation.

The Consolidated Company’s operating segment information and reconciliation were as follows:

For the three months ended September 30, 2021 American markets European markets Emerging markets and others Adjustments and eliminations Revenue: Third-party customers $ 400,625 813,967 2,743,115 - Inter-company 6,035 538 1,064,667 (1,071,240) Total revenue $ 406,660 814,505 3,807,782 (1,071,240) Reportable segment profit (loss) $ (58,975) (6,499) 205,493 (131,192) For the three months ended September 30, 2020 American markets European markets Emerging markets and others Adjustments and eliminations Revenue: Third-party customers $ 640,108 818,071 2,703,309 - Inter-company 3,604 1,283 839,903 (844,790) Total revenue $ 643,712 819,354 3,543,212 (844,790) Reportable segment profit (loss) $ 43,208 25,785 614,935 (338,514)	Total 3,957,707 -
	3,957,707
	8,827
	Total 4,161,488 -
	4,161,488
	345,414

91

D-LINK CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the nine months ended September 30, 2021 American markets European markets Emerging markets and others Adjustments and eliminations Revenue: Third-party customers $ 1,203,622 2,608,601 7,412,065 - Inter-company 17,182 694 3,280,075 (3,297,951) Total revenue $ 1,220,804 2,609,295 10,692,140 (3,297,951) Reportable segment profit (loss) $ (76,054) 38,276 476,745 (489,344) For the nine months ended September 30, 2020 American markets European markets Emerging markets and others Adjustments and eliminations Revenue: Third-party customers $ 1,679,674 2,145,939 7,198,964 - Inter-company 10,024 6,260 2,118,710 (2,134,994) Total revenue $ 1,689,698 2,152,199 9,317,674 (2,134,994) Reportable segment profit (loss) $ 13,067 (76,759) 889,519 (439,245) American markets European markets Emerging markets and others Adjustments and eliminations Reportable segment assets: September 30, 2021 $ 2,288,884 2,659,686 22,788,410 (12,717,527) December 31, 2020 $ 2,966,181 2,348,024 23,385,657 (12,749,632) September 30, 2020 $ 2,129,623 2,197,698 21,975,256 (11,455,828)

Total 11,224,288 - 11,224,288 (50,377) Total 11,024,577 - 11,024,577 386,582 Total 15,019,453 15,950,230 14,846,749