EDISON OPTO - Annual Report 2022 | FinancialReports.eu

Stock Code: 3591

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Edison Opto Corporation

2022 Annual Report

Date of Publication: May 8, 2023 Website: www.edison‐opto.com Market Observation Post System: https://mops.twse.com.tw

I. Names, Titles, Telephone Numbers and Emails of Spokesperson and Deputy Spokesperson:

Spokesperson: Cheng‐Tien Hsu

Title: Vice President, Admin Divison Telephone: +886 2 8227 6996 ext 1103

E‐mail: Adenhsu@edison‐opto.com.tw

Deputy Spokesperson: XI‐Quan Hu

Title: Senior Assistant Manager, Financial and Accounting Department Telephone: +886 2 8227 6996 ext. 3301

E‐mail: Jerryhu@edison‐opto.com.tw

II. Addresses and Telephone Numbers of Headquarters, Branches and Plants:

Address of Headquarters: 17F, No. 17, Qiaohe Rd., Zhonghe Dist., New Taipei City Telephone: +886 2 8227 6996

Address of Zhonghe Plant: 5F, No. 800, Zhongzheng Rd., Zhonghe Dist., New Taipei City Telephone: +886 2 8227 6996

Address of Yangzhou Plant: No. 101, Huayang West Rd., Yangzhou City, Jiangsu Province, China

Telephone: +86 514 8777 7101

Address of Dongguan Plant: District 1, Xicheng Industrial Park, Hengli Town, Dongguan City, Guangdong Province, China

Telephone: +86 769 8101 1898

III. Name, Address, Telephone Number and Website of Stock Transfer Agent:

Name: Department of Shareholder Services, Fubon Securities Co., Ltd.

Address: 2F, No. 17, Xuchang St., Zhongzheng Dist., Taipei City Telephone: +886 2 2361 1300

Website: https://www.fubon.com

IV. Name(s), Firm, Address, Telephone Number and Website of Certified Public Accountant(s) Certifying the Financial Statements of the Most Recent Year:

CPA(s): Heng‐Sheng Lin, Pei‐Chi Chen

Firm: KPMG Taiwan

Address: 68F, No. 7, Sec. 5, Xinyi Rd., Taipei City Telephone: +886 2 8101 6666 Website: http://kpmg.com/tw

V. Name of Exchange where Foreign Securities are Listed and Traded, and Manner of Access to the Information of such Foreign Securities: None

VI. Company Website: http://www.edison‐opto.com

Page

	Page	Page
I.	Letter to Shareholders ............................................................................................................ 1
II.	Company Profile ..................................................................................................................... 4
	1.	Date of Incorporation ............................................................................................................ 4
	2.	Company History .................................................................................................................... 4
III.	Corporate governance report ................................................................................................. 9
	1.	Organizational system ............................................................................................................ 9
	2.	Profiles of directors, presidents, vice presidents, associate managers and heads of
		departments and branches .................................................................................................. 12
	3.	Operation of Corporate Governance ................................................................................... 27
	4.	Information about public expense items of CPA ................................................................. 90
	5.	Information about CPA replacement: .................................................................................. 91
	6.	If the Chairman, General Manager or Managers in charge of financial or accounting
		affairs of the Company had worked in a firm to which the CPA belonged or its affiliated
		enterprise in the most recent year, his name, title and service term in the firm to
		which the certified public accountant belonged or its affiliated enterprise should be
		disclosed ............................................................................................................................... 91
	7.	In the most recent year and by the end of the date of publishing the annual report,
		changes in equity transfer and equity pledge of the Directors, Managers and
		shareholders holding more than 10% of shares of the Company ....................................... 92
	8.	Information about the relationship between the shareholders whose shareholding
		ratio was in the top 10 one .................................................................................................. 93
	9.	The number of shares held by the Company, its Directors, Managers and enterprises
		directly or indirectly controlled by the Company in the same enterprises reinvested,
		and the comprehensive shareholding ratio should be consolidated to be calculated ....... 94
IV.	Capital Overview .................................................................................................................. 95
	1.	Capital and shares ................................................................................................................ 95
	2.	Corporate bonds ................................................................................................................ 105
	3.	Preferred shares ................................................................................................................. 106
	4.	Overseas depositary receipts ............................................................................................. 106
	5.	Employee stock option ....................................................................................................... 106
	6.	Restricted stock awards ..................................................................................................... 106
	7.	Issuance of New Shares with Shares Acquired or Assigned from Other Companies ........ 106
	8.	Implementation of the Fund Usage Plan ........................................................................... 106
V.	Business Review ................................................................................................................. 107
	1.	Business Activities ............................................................................................................... 107

	2.	Market, production, and sales overview ............................................................................ 127
	3.	Employee ............................................................................................................................ 139
	4.	Contribution to environmental protection ......................................................................... 139
	5.	Labor‐management relations ............................................................................................. 141
	6.	Cybersecurity management ................................................................................................ 143
	7.	Major contracts ................................................................................................................... 145
VI.	Financial Highlights ............................................................................................................. 146
	1.	Condensed Balance Sheet and Statement of Comprehensive Income for the most
		recent five years ................................................................................................................. 146
	2.	Financial data for the most recent five years .................................................................... 150
	3.	The Audit Committee’s Review Report .............................................................................. 153
	4.	Consolidated Financial Statements with Independent Auditors’ Report of the most
		recent year. ........................................................................................................................ 153
	5.	Parent Company only Financial Statements with Independent Auditors’ Report for the
		most recent year ................................................................................................................ 153
	6.	Any financial difficulties experienced by the Company and its affiliate businesses
		during the most recent year up to the publication date of this report need to be stated
		as well as the impact on the Company’s financial position need to be outlined .............. 153
VII.	Review and Analysis of Financial Position and Financial Performance, and Risk
	Management ...................................................................................................................... 154
	1.	Financial position Analysis ................................................................................................. 154
	2.	Financial performance ....................................................................................................... 155
	3.	Cash flow ............................................................................................................................ 156
	4.	Major Capital Expenditure Items and Source of Capital: ................................................... 158
	5.	The annual report shall describe the company’s reinvestment policy for the most
		recent fiscal year, the main reasons for the profits/losses generated thereby, the plan
		for improving re‐investment profitability, and investment plans for the coming year. ... 158
	6.	Matters for Analysis and Assessment for Risks ................................................................. 160
	7.	Other material matters ...................................................................................................... 165
VIII.	Affiliated companies and special Notes .............................................................................. 166
	1.	Summary of affiliated companies: ..................................................................................... 166
	2.	Private Placement Securities in the Most Recent Years .................................................... 171
	3.	Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years: .. 171
	4.	Other supplementary information .................................................................................... 171
	5.	Any of the situations listed in Article 36, paragraph 3, subparagraph 2 of the Securities
		and Exchange Act, which might materially affect shareholders’ equity or the price of
		the company’s securities, has occurred during the most recent fiscal year or during the
		current fiscal year up to the date of publication of the annual report ............................. 171

Appendices:

Statement of Internal Control System
Audit Committee’s Review Report for the Financial Report of the Most Recent Year
Consolidated Financial Statements of Affiliates
Financial Report (Consolidated Financial Report of the Parent Company and Subsidiaries) for the Most Recent Year
Parent‐only Financial Report Audited and Certified by CPAs in the Most Recent Year

Letter to Shareholders

Dear shareholders:

In 2022, the COVID‐19 pandemic broke out domestically, international geopolitical risk increased, the impact of the Russia‐Ukraine War led to more serious bottlenecks in the supply chain, the lack of energy supply drove up global inflation, and the strong interest rate rise of the Federal Reserve Board led to a significant increase in exchange rate risk, all of which affected the growth of the global economy.The Group continued to make transformation to develop lighting modules, finished products, and automotive modules, reduce orders of low‐margin component products, and increase the sales proportion of high‐margin products. Impacted by the above international factors, the consolidated operating revenues of the Group were NTD 1.84 billion, decreased by 13% compared with the previous year. However, the gross profit rate still increased by 1% compared with the previous year through changes to the product portfolio and controlling production costs. With the gradual release of controls due to the pandemic situation in the second half of the year, in order to expand the market, costs of exhibition and business trips increased in the second half of the year, so the operating expenses in the current period increased compared with the previous period.Due to the decrease of operating revenues and the increase of operating expenses, although the gross operating profit rate continued to rise, the net operating profit still decreased, and the net profit after tax also decreased compared with that in the previous year.

Due to intense competition in the LED industry, the Group continued to make developments into fields of high‐level commercial lighting, automotive lighting, and special plant lighting, and constructed a differentiated operation mode which was different from other competitors and could be rapidly adjusted with market changes, in order to avoid the hard bargaining and competitive Red Sea market and strive for the best interests for all shareholders.The Business Report for 2022 and the summary for the Business Plan for 2023 are reported as follows:

Consolidated Business Report for 2022
(1) Implementation Results of the Business Plan
1. In terms of consolidated operating revenues, the net consolidated operating revenues in 2022 were NTD 1,841,983 thousand (the same below), decreased by NTD 263,881 thousand compared with NTD 2,105,864 thousand in 2021.
2. In terms of consolidated operating profit, the consolidated net operating profit in 2022 was NTD 43,561 thousand, decreased by NTD 106,512 thousand compared with the consolidated net operating profit of NTD 150,073 thousand in 2021.
3. In terms of consolidated net profit after tax, the consolidated net profit after tax (including non‐controlling interests) in 2022 was NTD 33,843 thousand, decreased by NTD 93,902 thousand compared with the consolidated net profit after tax of NTD 127,745 thousand in 2021.

(2) Budget Implementation

The Company did not announce its financial forecast for 2022, so its implementation need not be disclosed.

(3) Analysis of Financial Revenues, Expenditures, and Profitability (consolidated companies)

	Items	Items	2022	2021
Financial structure	Ratio of liabilities to assets(%)		27.41	31.20
	Ratio of long‐term capital to real estate, plants,and equipment(%)		196.78	198.66
Profitability	Return on assets(%)		1.21	3.68
	Return on equity (%)		1.22	4.70
	Proportion in paid‐in capital(%)	Net operating profit	3.22	11.65
		Netprofit before tax	3.76	11.10
	Netprofit margin(%)		1.84	6.07
	Earningsper share(yuan)		0.20	0.95

(4) Research and Development Status

The Consolidated Companies invested NTD 115,059 thousand in research and development in 2022, increased by NTD 13,194 thousand compared with that in 2021, which was mainly due to the continuous investment in product development of automotive lighting and new products, and the increase in expenditures of sample delivery demand in 2022. The proportion of the overall research and development expenses increased to more than 6% of the consolidated revenues. The Company focuses on the research and development of lighting and automotive products and the improvement of packaging technology. The professional research and development team has accumulated rich technical experience, obtained patents for many components and finished products at home and abroad, continued to develop highly cost‐effective LED components, intelligent lighting system with AC modules, finished products for long‐effective energy‐saving street lamps and LED component modules for vehicles, and other products that meet market demand and future orientation.

2. Summary of Annual Business Plan for 2023

With the continuous expansion of LED lighting applications and the continuous participation of competitors, the Company’s products have been transformed from LED components to customer demand‐oriented modules and finished products services, and the Company will also actively expand the application of other LED plant lighting, medical lighting, interconnection lighting, commercial lighting, automotive lighting, etc.According to the TrendForce report, the scale of the global LED lighting market fell to USD 61.4 billion in 2022, decreased by 5% year‐on‐year. Looking forward to 2023, with the continuous promotion of energy conservation projects in Europe, the United States, and Japan, the replacement of LEDs will enter a peak period, and users’ demand for high‐quality lighting and human centric health lighting will enter a rapid development stage, and in conjunction with the comprehensive opening of the Chinese market, the market demand for global LED lighting is expected to recover. TrendForce estimates that the global LED lighting market will grow by 4% to USD 63.8 billion in 2023. In addition, according to the estimate of Research and Markets, the global automotive lighting market is expected to increase from USD 12.11 billion

in 2022 to USD 38.85 billion by 2031, and grow at a compound annual growth rate of 13.83% in the forecast period of 2022‐2031. The Company has actively transformed to develop LED automotive lighting and LED special application lighting to avoid excessive price competition in the market.

Future Company Development Strategies

Looking forward to 2023, although the COVID‐19 pandemic has developed towards influenza, and economic activities of various countries are gradually reopening, it is predicted that the global economy will still tend towards a slow down in 2023 due to the continued interest rate increases of the US Federal Reserve, the ongoing conflict between Russia and Ukraine, supply chain bottlenecks, inflationary pressures, and other factors.At the present stage, the Company is still focusing on maintaining its flexibility as its main operational objective, and meanwhile, paying attention to the continuous transformation of products and the improvement and increasing efficiency of internal processes, enhancing its R&D strength and core technology and moving towards the goal of becoming an international professional optoelectronic manufacturing and service plant.

Impact of the External Competitive Environment, Regulatory Environment, and Overall Business Environment

Due to intense market competition, profit has seriously declined due to the low prices in the market. When supply and demand are not balanced, it easily leads to overcapacity and profit decline.In the face of this situation, in addition to prudently evaluating various investments, the Company will continuously launch new products, reduce production costs, improve product quality, shorten lead time for customers, and develop new application markets, such as intelligent applications, etc, for the purpose of promoting the substantial growth of its business.In addition, with the rise of global environmental awareness and the change of laws and regulations, the Company will be committed to re‐increasing the efficiency, recycling, and reuse of resources, keeping an eye on changes in domestic and foreign policies and laws from time to time, and timely proposing countermeasures for the purpose of minimizing the adverse impacts of the external competitive environment and regulatory environment on the Company.

Thanks for the support of all shareholders in the past year. Although the market competition is intense, facing successive challenges, all the management teams of the Company, in addition to focusing on the research and development field and maximization of the interests of shareholders, are also committed to improving corporate governance and enhancing the mission of social responsibility.

Best wishes to you all,

Chairperson: Jason Wu

Company Profile

i. Date of Incorporation: October 4, 2001

ii. Company History:

October 2001 Edison Opto Corporation (Edison Opto) was officially established with a paid‐in capital of NT$78,000 thousand. The Company was located in Zhonghe Dist., Taipei County, specializing in the manufacturing of light transmitting, lighting, and light sensing components, modules, and various LED components.
March 2002 Edison Opto successfully developed 8M and 13M Datalink light transmitting units and introduced automated equipment for mass production.
April 2002 Edison Opto initiated an investment plan on the production of “Light Transmitting and Receiving Modules,” which was approved by the Industrial Development Bureau under the Ministry of Economic Affairs as a project of “Newly emerging, Important and Strategic Industries.”
November 2002 Edison Opto carried out a cash capital increase of NT$17,000 thousand. Total paid‐in capital was NT$95,000 thousand.
December 2002 Edison Opto’s products passed the lead‐free test (SGS).
May 2003 Edison Opto received the international accreditation of SGS ISO 9001 Quality Management.
June 2003 Edison Opto successfully developed 25M Datalink light transmitting units and began mass production.
December 2003 Edison Opto successfully developed EdiSensor optical mouse sensors and began mass production.
December 2003 Edison Opto carried out a cash capital increase of NT$55,000 thousand. Total paid‐in capital was NT$150,000 thousand.
January 2004 Edison Opto successfully developed 50M Datalink light transmitting units and began mass production.
May 2004 Edison Opto purchased an additional property, plant, and equipment of a five‐story factory in Zhonghe Dist., expanding its total plant area to 1350 pings, and meanwhile committed to the manufacturing of high‐power LED products.
June 2004 Edison Opto successfully developed 1W–5W high‐power LED components and began mass production.
September 2004 Edison Opto carried out a capital increase of NT$32,700 thousand through capitalization of earnings. Total paid‐in capital was NT$182,700 thousand.
November 2004 Edison Opto successfully developed Tensor rotary sensors and began mass production.
January 2005 Edison Opto successfully developed EdiPower 5W–20W high‐power LED products and began mass production.
May 2005 Edison Opto received the accreditation of SGS ISO 14001 Environmental Management System.
June 2005 Edison Opto successfully developed 5W LED MR16 and began mass production.

August 2005 Edison Opto carried out a capital increase of NT$29,325 thousand through capitalization of earnings. Total paid‐in capital was NT$212,025 thousand.
August 2005 Edison Opto obtained the European Union’s RoHS certification.
November 2005 The “100W Ultra‐High Power LED Project” was approved for subsidy by the Department of Industrial Technology of the Ministry of Economic Affairs.
June 2006 Edison Opto made an investment in Ledison Opto Corporation, indirectly investing in Edison Opto (Dong Guan) Co., Ltd.
October 2006 Edison Opto (Dong Guan) Co., Ltd. announced its grand opening and officially operated for production.
October 2006 Edison Opto carried out a capital increase of NT$20,975 thousand through capitalization of earnings and a cash capital increase of NT$47,000 thousand. Total paid‐in capital was NT$280,000 thousand.
October 2006 Edison Opto successfully developed 50W EdiStar high‐power LED products and began mass production.
November 2006 Edison Opto made an investment in Best Opto Corporation, indirectly investing in Yangzhou Edison Opto Corporation (formerly named as Yangzhou Ledison Opto Corporation).
December 2006 Edison Opto published its research and development result of the “100W Ultra‐High Power LED Project” and successfully developed 100W EdiStar high‐power LED products.
January 2007 Edison Opto was accredited by Chinese Management Association for research and development management.
February 2007 Edison Opto successfully developed EdiLine, the linear packaging high‐power LED products, and began mass production.
April 2007 Edison Opto passed the evaluation of “100W Ultra‐High Power LED Project.”
August 2007 Edison Opto carried out a capital increase of NT$67,000 thousand through capitalization of earnings. Total paid‐in capital was NT$357,000 thousand.
September 2007 Edison Opto was authorized for IPO by the Financial Supervisory Commission of the Executive Yuan.
October 2007 Edison Opto was registered on the emerging stock board at the Taipei Exchange (TPEx, formerly known as GreTai Securities Market).
January 2008 Edison Opto carried out a cash capital increase of NT$48,000 thousand. Total paid‐in capital was NT$405,000 thousand.
September 2008 Edison Opto carried out a capital increase of NT$94,200 thousand through capital surplus and capitalization of earnings. Total paid‐in capital was NT$499,200 thousand.
November 2008 Edison Opto successfully developed Federal series products and began mass production.
January 2009 Edison Opto successfully developed the ultra‐high power 100W EdiStar modules and began mass production.
June 2009 Yangzhou Edison Opto Corporation announced its grand opening and officially operated for production.
September 2009 Edison Opto carried out a capital increase of NT$100,800 thousand

through capital surplus and capitalization of earnings. Total paid‐in capital was NT$600,000 thousand.

October 2009 Edison Opto successfully developed high‐power PLCC 1W 5050 products and flash LED products (Flash Series).
November 2009 Edison Opto carried out a cash capital increase of NT$60,000 thousand. Total paid‐in capital was NT$668,100 thousand.
June 2010 Edison Opto carried out a capital increase of NT$110,215 thousand through capitalization of earnings, profit sharing bonus to employees, and capital surplus. Total paid‐in capital was NT$778,315 thousand.
September 2010 Edison Opto carried out an issuance of common shares of NT$3,803 thousand from the exercise of employee stock options. Total paid‐in capital was NT$782,118 thousand.
November 2010 Edison Opto carried out a cash capital increase of NT$105,882 thousand. Total paid‐in capital was NT$888,000 thousand.
November 2010 Edison Opto’s shares was publicly listed on the Taiwan Stock Exchange.
March 2011 Edison Opto invested in Edison Fund Investment Corporation.
July 2011 Edison Opto carried out a capital increase of NT$133,200 thousand through capital surplus and capitalization of earnings. Total paid‐in capital was NT$1,021,200 thousand.
September 2011 Edison Opto issued first‐time unsecured domestic convertible bonds with a total issue amount of NT$850,000 thousand.
October 2011 Edison Opto carried out a capital increase of NT$2,492 thousand from the exercise of employee stock options. Total paid‐in capital was NT$1,023,692 thousand.
November 2011 The Company’s Opto Testing Laboratory was certified by Taiwan Accreditation Foundation (TAF) for LED LM‐80 (LMF) verification.
March 2012 Edison Opto carried out a capital increase of NT$56,781 thousand from the exercise of employee stock options and the conversion of convertible bonds. Total paid‐in capital was NT$1,080,473 thousand.
April 2012 Edison Opto carried out a capital increase of NT$22,973 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,103,446 thousand.
July 2012 Edison Opto carried out a capital increase of NT$1,567 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,105,013 thousand.
August 2012 Edison Opto carried out a capital increase of NT$55,500 thousand from capital surplus. Total paid‐in capital was NT$1,160,513 thousand.
September 2012 Edison Opto obtained UL’s safety certification for testing laboratories.
October 2012 Edison Opto carried out a capital increase of NT$30 thousand from the exercise of employee stock options. Total paid‐in capital was NT$1,160,543 thousand.
January 2013 Edison Opto carried out a capital increase of NT$202 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,160,745 thousand.
November 2013 Edison Opto issued second‐time unsecured domestic convertible

bonds with a total issue amount of NT$1,000,000 thousand.

March 2014 Edison Opto carried out a capital increase of NT$57,341 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,218,086 thousand.
June 2014 Edison Opto carried out a capital increase of NT$109,545 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,327,632 thousand.
February 2015 The first‐time unsecured domestic convertible bonds were fully redeemed and ceased trading on the OTC.
March 2015 Edison Opto issued a total of 2,000 thousand shares as employee restricted stock awards. Total paid‐in capital was NT$1,347,632 thousand.
June 2015 Yangzhou Edison Opto Corporation’s phase II plant began mass production. Yangzhou Edison‐Litek Opto Corporation announced its grand opening and officially operated for production.
October 2015 Edison Opto cancelled 120 thousand new restricted stock. Total paid‐in capital was NT$1,346,432 thousand.
January 2016 Edison Opto cancelled 20 thousand new restricted stock and 2,000 thousand treasury stock. Total paid‐in capital was NT$1,326,232 thousand.
February 2016 The second‐time unsecured domestic convertible bonds were fully redeemed and ceased trading on the OTC.
May 2016 Ledionopto Lightning, Inc. was included in the consolidated entity.
July 2016 Edison Opto cancelled 86.8 thousand new restricted stock. Total paid‐in capital was NT$1,325,364 thousand.
October 2016 Edison Opto obtained the Operation Headquarters Certificates issued by the Industrial Development Bureau of the Ministry of Economic Affairs.
January 2017 Edison Opto cancelled 154 thousand new restricted stock. Total paid‐in capital was NT$1,323,824 thousand.
May 2017 Edison Opto was awarded the Best Improvement Award in the 3rd Corporate Governance Evaluation.
November 2017 Edison Opto invested in the establishment of Edison‐Litek Opto Corporation.
February 2018 Edison Opto cancelled 80 thousand new restricted stock and 2,000 thousand treasury stock. Total paid‐in capital was NT$1,303,024 thousand.
July 2018 Edison Opto cancelled 282 thousand new restricted stock. Total paid‐in capital was NT$1,300,204 thousand.
August 2018 Edison Opto cancelled 5,000 thousand treasury stock. Total paid‐in capital was NT$1,250,204 thousand.
November 2018 Edison Opto invested in the establishment of Edison‐Egypt Opto Corporation.
January 2019 Edison Opto cancelled 19 thousand new restricted stock. Total paid‐in capital was NT$1,250,014 thousand.
May 2019 Edison Opto cancelled 2,000 thousand treasury stock. Total paid‐in capital was NT$1,230,014 thousand.

  - July 2019 Edison Opto issued a total of 2,000 thousand shares as employee restricted stock awards. Total paid‐in capital was NT$1,250,014 thousand.

September 2019 Edison Opto obtained the Operation Headquarters Certificates issued by the Industrial Development Bureau of the Ministry of Economic Affairs.
October 2019 Edison Opto invested in the establishment of Yangzhou Aichuang Electronic Trade Corporation.
August 2020 Edison Opto cancelled 827 thousand new restricted stock and 1,618 thousand treasury stock. Total paid‐in capital was NT$1,225,564 thousand.
November 2020 Edison Opto purchased a new office at Taiwan Technology Plaza as its operation headquarters.
January 2021 Edison Opto issued third‐time unsecured domestic convertible bonds with a total issue amount of NT$300,000 thousand.
- July 2021 Edison Opto carried out a capital increase of NT$52 thousand from the conversion of convertible bonds and cancelled restricted stock of NT$330 thousand. Total paid‐in capital was NT$1,225,286 thousand.
October 2021 Edison Opto carried out a capital increase of NT$56,787 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,282,073 thousand.
January 2022 Edison Opto relocated to the operation headquarters (Qiaohe Rd., Zhonghe Dist.)
March 2022 Edison Opto carried out a capital increase of NT$6,544 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,288,617 thousand.
August 2022 Edison Opto cancelled NT$264 thousand new restricted stock . Total paid‐in capital was NT$1,288,353 thousand.
August 2022 Edison Opto obtained the Operation Headquarters Certificates issued by the Industrial Development Bureau of the Ministry of Economic Affairs.
September 2022 Edison Opto carried out a capital increase of NT$65,000 thousand from capital surplus. Total paid‐in capital was NT$1,353,353 thousand.
March 2023 Edison Opto carried out a capital increase of NT$23,799 thousand from the conversion of convertible bonds. Total paid‐in capital was NT$1,377,152 thousand.

Corporate governance report

I. Organizational system

Corporate structure

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Shareholders’
Meeting
Board of
Audit Committee Directors
Audit Office
Remuneration
Chairperson:
Committee
Jason Wu
President:
Jason Wu
Legal Office President Office
Management Business
Marketing Business Group R&D Business Group Production Business Group
Group
Engineering
Division
IT Center Accounting Administrative Business Business Business Business Project R&D R&D R&D Division 3 Quality Materials Manufacturing
Center Management Management Division 1 Division 2 Division 3 Business Division 1 Division 2 Assurance Division Division
Division Division Division Division
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2. Businesses operated by major departments

Businesses operated	by major departments
Department	Job responsibilities
Audit Office	 Planning, implementation and revision of the internal control system.  Preparation and implementation of the Group’s annual audit plan.  Other matters to be implemented in accordance with laws and regulations.
President Office	 Assist the president in managing the Company’s businesses.  The formulation and promotion of business objectives and market strategies.  Promotion and implementation ofprofessional businesses.
Legal Office	 Formulation and review of various contract, implementation of legal litigation consulting services and others.  Preparation, implementation, management, maintenance and negotiation of various intellectualpropertyoperations.
IT Center	 Supervision of the management and implementation of the Company’s information system and information security policy.  Analysis, planning, assessment, introduction, development and maintenance of information system.  Software and hardware equipment maintenance.
Accounting Center	 Planning and implementation of the Company’s financial accounting management and capital management businesses.  Group tax planning and budget preparation and implementation and other related activities.  Subsidiary supervision and investment appraisal operations.  Handling of investor relations.  Responsible for the implementation and management of corporategovernance related matters.
Administrative Management Division	 Promotion and management of human resource and corporate culture.  Execution and management of general affairs, industrial safety and other logistics related operations.  Promotion, implementation and management of corporate social responsibilityand corporate integrity.
Business Division	 Product promotion, sales and market information collection.  Development and management of customers and agents.  Development, implementation and management of customer service system
Business Management Division	 Planning and implementation of various business processes.  Operation and management of various logistics and import/export businesses.  Business order and administrative operation management.
Project Business Division	 Collection of market information, analysis of development trend, and research of customer development directions.  Execute the planning, implementation, design and development progress control, cost control and closing procedures of new product development projects.  Assist various departments and facilities inpromoting project

Department	Job responsibilities
	execution, management, problem tracking and resolution.
R&D Division	 Feasibility assessment of the development projects  Planning and design of product marketing media  Market survey for new products  Research, development and design of new products.  Improvement of product functions and increase of added value.
Quality Assurance Division	 Establishment of the Company’s quality management system and formulation of each inspection specifications.  Improvement and tracking of quality abnormalities and customer complaints.  Third‐party quality audit, restriction of raw materials and finished products, and investigation of prohibited substances.  Product reliability verification and lumen maintenance rate estimation.  Calibration of gauge instrument and establishment of standard parts.
Materials Division	 Procurement of raw materials, production equipment, consumable supplies.  Development and management of suppliers and third‐party manufacturers.  Management of production scheduling, inventory and warehousingoperations.
Manufacturing Division	 Evaluation, planning and management of process technology and production workflow.  Development and management of machine equipment.  Responsible for the introduction of new products into the production line, capacity improvement, and product yield improvement.  Analysis ofproduction abnormalities and improvementplans.

II. Profiles of directors, presidents, vice presidents, associate managers and heads of departments and branches

1. Director

(1) Information about directors and number of shares held

April 1, 2023; Unit: thousand shares

Position	Nationality or place of registration	Name	Gender	Date elected (inaugurated)	Term of office	Date first elected	Shareholding while elected	Shareholding while elected	Current shareholding	Current shareholding	Current shareholding of spouse and minor children	Current shareholding of spouse and minor children	Shareholding in the name of others	Shareholding in the name of others	Main experience (education)	Concurrent positions in the Company and other companies	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Remarks
							Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %			Position	Name	Relation
Chairperson	Taiwan, Republic of China	Jason Wu	Male	June 22,2022	3 years	September 13, 2001	1,798	1.36	3,494	2.54	999	0.73	0	0.00	Master of Chemistry, National Sun Yat‐sen University Assistant Manager of R&D Department, Everlight Electronics Co., Ltd Chairperson/President, Yangzhou Ledison Trading Limited. Chairperson, Edison Opto USA Corp President, Edison Opto (Dong Guan) Co., Ltd./ Yangzhou Edison Opto Corp./Yangzhou Edison‐Litek Opto Corp.	President, Edison Opto Corp. Chairperson/President, Yangzhou Aichuang Electronic Trade Corporation Chairperson, Dongguan Edison Opto Corp./Yangzhou Edison Opto Corp./Yangzhou Edison‐Litek Opto Corp. Chairperson, Weixin Investment Limited Representatives of corporate directors, Edison Opto Corp./Ledison Opto Corp./Best Opto Corp./Best Led Corp. Representatives of corporate directors, Edison FundInvestment Limited Chairperson, Edison‐litek Opto Corp.Ltd. Chairperson/President, Edison‐Litek Opto Corp./LEDIONOPTO Intelligent Technology Co., Ltd/EDISON‐EGYPT OPTO CORP/EDISON AUTO LIGHTING CORP	None	None	None	Due to the lack of suitable candidates, the chairperson and the president are currently the same person, but more than half of the directors are not concurrently employees or managers, and an additional independent director is participate in the operation of the Board of Directorslpds
Corporate Director	Taiwan, Republic of China	YOUNGTEK ELECTRONICS CORP.	‐	June 22,2022	3 years	September 13, 2001	2,424	1.83	2,549	1.85	0	0.00	0	0.00	‐	‐	None	None	None	‐
	Taiwan, Republic of China	Representative: June Wung	Female	‐	‐	‐	0	0.00	0	0.00	0	0.00	0	0.00	Master of Economics, University of Southern California Manager, Huacheng Capital Corporation	Chief Manager, General Administrative Division, YOUNGTEK ELECTRONICS CORP.	None	None	None	‐

Position	Nationality or place of registration	Name	Gender	Date elected (inaugurated)	Term of office	Date first elected	Shareholding while elected	Shareholding while elected	Current shareholding	Current shareholding	Current shareholding of spouse and minor children	Current shareholding of spouse and minor children	Shareholding in the name of others	Shareholding in the name of others	Main experience (education)	Concurrent positions in the Company and other companies	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Remarks
							Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %			Position	Name	Relation
Corporate Director	Taiwan, Republic of China	Weixin Investment Limited	‐	June 22,2022	3 years	June 21, 2007	3,041	2.29	4,827	3.51	0	0.00	0	0.00	‐	‐	None	None	None	‐
	Taiwan, Republic of China	Representative: Po‐Chung Wang	Male	‐	‐	‐	36	0.03	38	0.03	1	0.00	0	0.00	Bachelor of Electrical Engineering, Tamkang University Manager of Procurement Division, Powerchip Semiconductor Corp Director of Operations Division, Yuanheng Semiconductor Co., Ltd. President, Ledionopto Intelligent Technology Corp	Head of Kaiwei Investment Limited Representatives of corporate directors, LedionoptoIntelligent Technology Corp Representatives of corporate directors, Qiyi Medical Electronics Co., Ltd.	None	None	None	‐
Director	Taiwan, Republic of China	Wen‐Ruei Cheng	Male	June 22,2022	3 years	June 13, 2013	1,101	0.95	1,164	0.84	0	0.00	0	0.00	Master of Education Technology, West Michigan University, USA Optec Display Inc. Project Leader Chairperson, Light Vision Corp. Supervisor, Juji Investment Development Co., Ltd.	Chairperson/President, Edison Opto USA Corp.	None	None	None	‐
Director	Taiwan, Republic of China	Nan‐Yang Wu	Male	June 22,2022	3 years	June 13, 2013	0	0.00	0	0.00	0	0.00	0	0.00	Master, Stanford University, USA Director, Epistar Corporation Director, PROLIGHT OPTO TECHNOLOGY CORPORATION	Director, Wafer Works Corporation Director, Guangdong Jinko Electronics Co., Ltd. Director, Advanced Photoelectronic TechnologyLtd.	None	None	None	‐
Independent Director	Taiwan, Republic of China	Wen‐Chao Wang	Male	June 22,2022	3 years	June 18, 2019	0	0	0	0.00	0	0.00	0	0.00	Doctor of Business Administration, Nova Southeastern University, USA Supervisor, MORTECH CORPORATION Supervisor, AMAZING MICROELECTRONIC CORP.	President, Wenkai Network Technology Marketing Limited Supervisor, Chingxingwang Industry Co., Ltd.	None	None	None	‐
Independent Director	Taiwan, Republic of China	Tung‐Hsiung Hung	Male	June 22,2022	3 years	June 18, 2019	0	0.00	0	0.00	0	0.00	0	0.00	Bachelor of Laws, Department of Law, National Taiwan University Supervisor, JARLLYTEC CO., LTD. Partner Attorney, Chienyeh Law Firm	Practicing Attorney, Lidong Law Firm Independent Director, NAN JUEN INTERNATIONAL CO., LTD.	None	None	None	‐

Position	Nationality or place of registration	Name	Gender	Date elected (inaugurated)	Term of office	Date first elected	Shareholding while elected	Shareholding while elected	Current shareholding	Current shareholding	Current shareholding of spouse and minor children	Current shareholding of spouse and minor children	Shareholding in the name of others	Shareholding in the name of others	Main experience (education)	Concurrent positions in the Company and other companies	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Other officers, directors or supervisors who are spouses or relatives within the second degree of kinship	Remarks
							Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %			Position	Name	Relation
Independent Director	Taiwan, Republic of China	Yin‐Fei Liu	Female	June 22,2022	3 years	June 18, 2019	0	0.00	0	0.00	0	0.00	0	0.00	EMBA, National Chengchi University Partner, Audit Services Department, PwC	Senior Consultant, Audit Services Department, PwC Independent Director, Waffer Technology Corp. Independent Director, TYNTEK CORPORATION	None	None	None	‐
Independent Director	Taiwan, Republic of China	Tseng‐Nan Chou	Male	June 22,2022	3 years	June 22,2022	0	0.00	0	0.00	0	0.00	0	0.00	Department of Accounting, Tunghai University Associate Manager of Everlight Electronics Industry co., Ltd. CFO of Tons Ligtology Inc. Supervisor of Hongyuan Securities Co., Ltd.	Director of Fan Texi Minimally Invasive Culture Co., Ltd. Independent Director of Junxing Electromechanical International co., Ltd	None	None	None	‐

April 1, 2023

(2) The directors are the major shareholders of the corporate shareholders

Name of corporate The major shareholder of corporate shareholder shareholder Chung Shih Industrial Corporation (6.60%) Lizi Investment Limited (5.23%) Li‐Yang Investment Corporation (4.53%) Binglong Wang (3.73%) ATEN Investment Corporation (2.03%) YOUNGTEK Li Fa Investment Limited (1.25%) ELECTRONICS CORP. Li Wei Investment Limited (1.08%) Chinatrust Commercial Bank subject to Employee Stock Ownership Association of Youngtek Electronics Corp. (0.81%) Taipei Fubon Commercial Bank Corporation (0.66%) Yu Wang (0.60%) Weixin Investment Jason Wu (100%) Limited

(3) The directors are the major shareholders of the corporate shareholders

April 1, 2023

(3) The directors are the majo	r shareholders of the corporate shareholders April 1,2023
Name of legal person	Major shareholder of legal person
Chung Shih Industrial Corporation	Lizi Investment Limited (99.44%)
Lizi Investment Limited	Binglong Wang (90%), Yu Wang (10%)
Li‐Yang Investment Corporation	Yu Wang (15.50%), Jingru Li (77.03%)
ATEN Investment Corporation	Harvatek Corporation (41.60%) – special shares, Lizi Investment Limited (26.62%), Li Fa Investment Limited (31.61%)
Lizi Investment Limited	Li‐Yang Investment Corporation (99.91%)
Li Wei Investment Limited	Peishi Chen (100%)

(4) Expertise and independence of directors:

(4) Exper	tise and independence of directors:
Name	Professional Qualifications and Experience (Note 1)	Independence Situation	Number of concurrent independent directors in other public companies
Jason Wu	 Organizational Leadership and Strategic Management  LED Related IndustryExperience	Not applicable	0
June Wung	 Financial Investment and Risk Management  LED Industryexperience	Not applicable	0
Po‐Chung Wang	 Engineering Technology and Strategic Management  LED Industryexperience	Not applicable	0
Wen‐Ruei Cheng	 Organizational Leadership and Strategic Management  LED Industryexperience	Not applicable	0
Nan‐Yang Wu	 Financial Investment and Risk Management  LED Industryexperience	Not applicable	0
Wen‐Chao Wang	 Financial Accounting and Strategic Management  LED Industryexperience	Compliance with independence (Note 2)	0
Tung‐Hsiung Hung	 Law and Strategy Management  Risk management	Compliance with independence(note 2)	1
Yin‐Fei Liu	 Financial Accounting and Strategic Management  Operational Judgment and Risk Management	Compliance with independence (note 2)	2
Tseng‐Nan Chou	 Financial Accounting and Strategic Management  LED Industryexperience	Compliance with independence (note 2)	1

Diversification and Independence of the Board of Directors:

(I) Diversification of the Board of Directors: The nomination and selection of the members of the Board of Directors of the Company follows the provisions of the Articles of Association and adopts the candidate nomination system. In addition to evaluating the academic qualifications of each candidate, the Company's own operation, operational mode, development needs, and opinions of interested parties are considered, and the Measures for Election of Directors and Supervisors and the Code of Practice for Corporate Governance are observed to ensure the diversity and independence of directors. At present, there are two female directors (accounting for 22%) on the Board of Directors, and the number of female directors will be gradually increased according to the principle of gender equality in the future. Three of the company's four independent directors were newly elected at the Shareholders' Meeting on June 18, 2019, and one was newly elected at the Shareholders' Meeting on June 22, 2022, with a term of office not exceeding 4 years. The members of the Board of Directors of the Company have diverse backgrounds, including professionals in the LED industry, financial experts in financial accounting and strategic management, legal experts in the law field, and professionals in strategic management in the investment field. In addition to having basic conditions and professional knowledge and skills, through the operation of various functional committees, directors' experience can be used in corporate governance, environmental sustainability, corporate social responsibility, compliance with laws and regulations, and human rights protection. For information about the diversification policy of the Board of Directors of the Company, please refer to our website: https://www.edison‐opto.com/board‐organization/.

(II) Independence of the Board of Directors: The Board of Directors of the Company is composed of nine directors with different professional backgrounds, including four independent directors, three directors who are not part‐time managers of the Company, and two directors who are part‐time managers of the Company. The number of independent directors accounts for more than one third (44.4%) of all directors.
(Note 1) The Audit Committee of the Company consists of four independent directors, including two financial experts, Wang Wen‐chao and Liu Yin‐Fei, one legal expert, Hong Tung‐Hsiung, and one industrial expert, Chou Zhou ‐Nan. None of the directors are involved in any of the Paragraphs of Article 30 of the Company Act. For information about the diversification policy of the Board of Directors of the Company, please refer to the pages 12 to 14 and our website: https://www.edison‐opto.com/board‐organization/.
(Note 2)None of the independent directors of the Company, their spouses or relatives within the second degree of kinship, are directors, supervisors, or employees of the Company or its affiliated enterprises; none of the independent directors, their spouses or relatives within the second degree of kinship (or in the name of others) hold shares in the Company, nor have they served as directors, supervisors, or employees of the Company with a specific relationship with the Company; the independent director him’herself, his/her spouse, and relatives within the second degree of kinship have not provided services such as business, legal affairs, finance, and accounting for the Company or its affiliated enterprises in the last two years.

2. Profiles of presidents, vice presidents, assistant managers, heads of departments and branches:

April 1, 2023; Unit: thousand shares

Position	Nationality	Name	Gender	Date elected (inaugurated)	Shareholding	Shareholding	Shareholding of spouse and minor children	Shareholding of spouse and minor children	Shareholding in the name of others	Shareholding in the name of others	Main experience (education)	Concurrent positions in other companies	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Remarks
					Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %			Position	Name	Relation
President	Taiwan, Republic of China	Jason Wu	Male	Nov 1,2011	3,494	2.54	999	0.73	0	0.00	Master of Chemistry, National Sun Yat‐sen University Assistant Manager of R&D Department, Everlight Electronics Co., Ltd Chairperson/President, Yangzhou Ledison Trading Limited. Chairperson, Edison Opto USA Corp d President, Edison Opto (Dong Guan) Co., Ltd. /Yangzhou Edison Opto Corp./Yangzhou Edison‐Litek Opto Corp	President, Edison Opto Corp. Chairperson/President, Yangzhou Aichuang Electronic Trade Corporation Chairperson, Dongguan Edison Opto Corp./Yangzhou Edison Opto Corp./Yangzhou Edison‐Litek Opto Corp Chairperson, Weixin Investment Limited Representatives of corporate directors, Edison Opto Corp./Ledison Opto Corp./Best Opto Corp./Best Led Corp. Representatives of corporate directors, Edison FundInvestment Limited Chairperson, Edison‐litek Opto Corp.Ltd. Chairperson/President, Edison‐Litek Opto Corp./LEDIONOPTO Intelligent Technology Co., Ltd /EDISON‐EGYPT OPTO CORP/EDISON AUTO LIGHTING CORP	None	None	None	Due to the lack of suitable candidate, the chairperson and the president are currently the same person, but more than half of the directors are not concurrently employees or managers, and an additional independent director is participate in the operation of the Board of Directors
Vice President, R&D Division and Sales Division	Taiwan, Republic of China	Guolun Liao	Male	Jan 1,2022	98	0.07	0	0.00	0	0.00	Institute of Marine Environmental Engineering, Sun Yat‐Sen University Head of Facilities Division, Yangzhou Edison‐Litek Opto Corporation Head of Quality Assurance Division, Edison Opto Corp. Representatives of corporate directors/associate manager of Business Division, Ledionopto Intelligent Technology Co., Ltd Head of Facilities Division/Vice President, Yangzhou Edison Opto Corporation	.None	None	None	None	‐

Position	Nationality	Name	Gender	Date elected (inaugurated)	Shareholding	Shareholding	Shareholding of spouse and minor children	Shareholding of spouse and minor children	Shareholding in the name of others	Shareholding in the name of others	Main experience (education)	Concurrent positions in other companies	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Remarks
					Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %			Position	Name	Relation
Vice President, Facilities Division	Taiwan, Republic of China	Qingyuan Liu	Male	Jan 1,2021	90	0.07	0	0.00	0	0.00	Department of Electrical Engineering, Feng Chia University Head of Process Engineering Department, COMPEQ MANUFACTURING CO., LTD. Facility Manager, Edison Opto Corporation Representatives of corporate directors, Edison Opto Corporation Head of Facilities Division/Associate Manager, Vice President/Director, Yangzhou Edison Opto Corporation Associate Facility Manager/Vice President, Dongguan Edison Opto Corporation Associate Facility Manager, Edison‐Egypt Opto Corporation	President, Yangzhou Edison Opto Corporation Director, Yangzhou Aichuang Electronic Trade Corporation	None	None	None	‐
Vice President, Admin Division ,	Taiwan, Republic of China	Cheng‐Tien Hsu	Male	Jan 16,2011	59	0.04	2	0.00	0	0.00	Institute of Accounting, Tamkang University Manager of Audit Department, KPMG Manager of Accounting Department, TAIWAN OASIS TECHNOLOGY CO., LTD Special Assistant to the General Manager/Manager of Accounting Department/Director of Finance/ Senior Associate Manager of Accounting Department, Edison Opto Corporation Director, Yangzhou Edison‐Litek Opto Corporation. Director, LEDLike Co., Ltd.	Supervisor, Yangzhou Edison Opto Corp./Yangzhou Aichuang Electronic Trade Corporation/Yangzhou Edison‐Litek Opto Corp. Representatives of corporate supervisors, Edison‐Litek Opto Corp. Representatives of corporate supervisors, Edison FundInvestment Limited Representatives of corporate supervisors, LEDIONOPTO Intelligent Technology Co., Ltd /EDISON‐EGYPT OPTO CORP/EDISON AUTO LIGHTING CORP Director, Taiwan Hydroxy Technology Co., Ltd.	None	None	None	‐
Senior Associate Manager ,Fa cilities Division	Taiwan, Republic of China	Yaochuan Hong	Male	Jan 1,2010	245	0.18	0	0.00	0	0.00	Department of Electronics, Oriental Institute of Technology Director of Manufacturing Department, Everlight Electronics Co., Ltd Vice Manager of Manufacturing Department, Lenovo Optoelectronics Co., Ltd. Head of Facilities Division/Representatives of corporate directors, Edison Opto Corp. Director, Yangzhou Ledison Trading Limited Vice President, Edison Opto (Dong Guan) Co., Ltd.	Director, Dongguan Edison Opto Corp./Yangzhou Edison Opto Corporation President, Edison Opto (Dong Guan) Co., Ltd. Representatives of corporate directors,Edison Fund Investment Limited	None	None	None	‐

Position	Nationality	Name	Gender	Date elected (inaugurated)	Shareholding	Shareholding	Shareholding of spouse and minor children	Shareholding of spouse and minor children	Shareholding in the name of others	Shareholding in the name of others	Main experience (education)	Concurrent positions in other companies	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Managers who are spouses or relatives within the second degree of kinship	Remarks
					Shares	Shareholding percentage %	Shares	Shareholding percentage %	Shares	Shareholding percentage %			Position	Name	Relation
Associate Manager ,Sal es dept	Taiwan, Republic of China	Kundian He	Male	Jan 1,2021	105	0.08	0	0.00	0	0.00	Institute of Business Administration, National Taiwan University of Science and Technology R&D engineer, Tepo International Co., Ltd Business Manager, Edison Opto Corporation Associate Business Manager, Edison‐Egypt Opto Corporation	Director, Yangzhou Aichuang Electronic Trade Corporation	None	None	None	‐
Audit Supervisor	Taiwan, Republic of China	Xiaojun Wang	Female	Oct 28,2006	57	0.04	0	0.00	0	0.00	Department of Management, Tunghai University Audit Supervisor, BIOSTAR MICROTECH INT’L CORP.	None	None	None	None	‐

3. Remuneration paid to directors, presidents and vice presidents in the last year

(1) Remuneration for general directors and independent directors (individual disclosure of names and remuneration methods)

Unit: TWD 1,000: thousand shares

Position	Name	Remuneration for directors	Remuneration for directors	Remuneration for directors	Remuneration for directors	Remuneration for directors	Remuneration for directors	Remuneration for directors	Remuneration for directors	The total amount of A, B, C and D as a percentage of the net profit after tax	The total amount of A, B, C and D as a percentage of the net profit after tax	Remuneration for part‐time employees	Remuneration for part‐time employees	Remuneration for part‐time employees	Remuneration for part‐time employees	Remuneration for part‐time employees	Remuneration for part‐time employees	Remuneration for part‐time employees	Remuneration for part‐time employees	The total amount of A, B, C, D, E, F and G as a percentage of the net profit after tax	The total amount of A, B, C, D, E, F and G as a percentage of the net profit after tax	Any remuneration from reinvestment businesses other than subsidiaries received?
		Remunerati on (A)		Retirement pension (B)		Remunerati on for directors (C)		Expenses on business operation (D)				Salary, bonus and special expenses, etc. (E)		Retirement pension (F)		Remuneration for employees (G)
		The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Company %	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Compan		All companies in the financial report		The Company	All companies in the financial report
																Cash amount	Stock amount	Cash amount	Stock amount
Chairperson	Jason Wu	0	0	0	0	0	0	0	0	0 0.00	0 0.00	7,007	11,566	108	108	0	0	0	0	7,115 27.74	11,674 45.52	None
Corporate Director	YOUNGTEK ELECTRONICS CORP.	0	0	0	0	0	0	0	0	0 0.00	0 0.00	0	0	0	0	0	0	0	0	0 0.00	0 0.00	None
	YOUNGTEK ELC. CORP Rept.: June Wung	0	0	0	0	0	0	42	42	42 0.16	42 0.16	0	0	0	0	0	0	0	0	42 0.16	42 0.16	None
Corporate Director	Weixin Investment Ltd	0	0	0	0	0	0	0	0	0 0.00	0 0.00	0	0	0	0	0	0	0	0	0 0.00	0 0.00	None
	Weixin Investment Ltd. Representative: Po‐ChungWang	0	0	0	0	0	0	42	42	42 0.16	42 0.16	0	0	0	0	0	0	0	0	42 0.16	42 0.16	None
Director	Wen‐Ruei Cheng	0	0	0	0	0	0	42	42	42 0.16	42 0.16	303	3,759	18	18	0	0	0	0	363 1.42	3,819 14.89	None
Director	Nan‐Yang Wu	0	0	0	0	0	0	42	42	42 0.16	42 0.16	0	0	0	0	0	0	0	0	42 0.16	42 0.16	None
Independent director	Wen‐Chao Wang	300‐	300	0	0	0	0	42	42	342 1.33	342 1.33	0	0	0	0	0	0	0	0	342 1.33	342 1.33	None
Independent director	Tung‐Hsiung Hung	300‐	300	0	0	0	0	42	42	342 1.33	342 1.33	0	0	0	0	0	0	0	0	342 1.33	342 1.33	None
Independent director	Yin‐Fei Liu	300‐	300	0	0	0	0	42	42	342 1.33	342 1.33	0	0	0	0	0	0	0	0	342 1.33	342 1.33	None
Independent director	Tseng‐Nan Chou	150	150	0	0	0	0	30	30	180 0.70	180 0.70	0	0	0	0	0	0	0	0	180 0.70	180 0.70	None
Note 1: The remuneration policy, system, standard and structure for independent directors, and the correlation between the remuneration paid according to the responsibilities, risks, investment time and other factors undertaken: see Page 19 for details. Note 2: Except as disclosed in the above table, the remuneration received by the directors of the Company for providing services to all companies in the financial report (such as serving as a consultant for non‐employees, etc. the lastyear: None.

Table of remuneration level

Unit: TWD

	Table of remuneration level Unit: TWD	Table of remuneration level Unit: TWD	Table of remuneration level Unit: TWD	Table of remuneration level Unit: TWD
Level of remuneration for directors	Name of director
	Total amount of the first four remunerations(A+B+C+D)		Total amount of the first seven remunerations(A+B+C+D+E+F+G)
	The Company	All companies in the financial report	The Company	All companies in the financial report
Less than TWD 1,000	Jason Wu, YOUNGTEK ELECTRONICS CORP. and its representative June Wung Weixin Investment Limited and its representatives Po‐Chung Wang, Wen‐Ruei Cheng Nan‐Yang Wu, ,Wen‐Chao Wang, Tung‐Hsiung Hung， Yin‐Fei Liu,Tseng‐Nan Chou	Jason Wu, YOUNGTEK ELECTRONICS CORP. and its representative June Wung Weixin Investment Limited and its representatives Po‐Chung Wang, Wen‐Ruei Cheng, Nan‐Yang Wu, Wen‐Chao Wang, Tung‐Hsiung Hung，Yin‐Fei Liu, Tseng‐Nan Chou	YOUNGTEK ELECTRONICS CORP and its representative June Wung, Weixin Investment Limited and its representatives Po‐Chung Wang, Wen‐Ruei Cheng, Nan‐Yang Wu, Wen‐Chao Wang, Tung‐Hsiung Hung, Yin‐Fei Liu, Tseng‐Nan Chou	YOUNGTEK ELECTRONICS CORP and its representative June Wung, Weixin Investment Limited and its representatives Po‐Chung Wang, Nan‐Yang Wu,Wen‐Chao Wang, Tung‐Hsiung Hung, Yin‐Fei Liu, Tseng‐Nan Chou
TWD 1,000,000(incl.)– TWD 2,000,000(excl.)
TWD 2,000,000(incl.)– TWD 3,500,000(excl.)
TWD 3,500,000(incl.)– TWD 5,000,000(excl.)				Wen‐Ruei Cheng
TWD 5,000,000(incl.)– TWD 1,000,000(excl.)			Jason Wu
TWD 10,000,000(incl.)– TWD 15,000,000(excl.)				Jason Wu
TWD 15,000,000(incl.)– TWD 30,000,000(excl.)
TWD 30,000,000(incl.)– TWD 50,000,000(excl.)
TWD 50,000,000(incl.)– TWD 100,000,000(excl.)
more than TWD 100,000,000
Total	9	9	9	9

A: Remuneration for directors in 2022 (including director’s salary, position bonus, severance pay, various bonuses and incentives).
B: The amount allocated for withdrawal.
C: The amount of remuneration for directors in 2022 is the amount distributed through the resolution of the Board of Directors on February 23, 2023.
D: Expenses related to business execution of directors in 2022 (including travel expenses, special expenses, various allowances, provision of dormitories, vehicles).
E: Expenses including salaries, job bonuses, severance pay, various bonuses, incentives, travel expenses, special expenses, various allowances, dormitories, vehicles and other in‐kind provision, as well as the salary expenses as according to IFRS2 “Share‐based payment” received by directors and part‐time employees (including concurrently presidents, vice presidents, other managers and employees) in 2022.
F: The amount allocated for withdrawal.
G: The amount of remuneration for employees in 2022 is the amount distributed through the resolution of the Board of Directors on February 23, 2023. Net profit after tax: refers to the net profit after tax of the standalone financial report in 2022, which is NT$25,648 thousand.

(2) Remuneration for supervisor: N/A. On June 13, 2013, when the Regular Shareholders’ Meeting passed the general re‐election of the Board of Directors, the Company established an Audit Committee and abolished the Supervisor.
(3) Remuneration for president and vice president (and the individual remuneration of the top five remuneration executives)

Unit: TWD 1,000

Position	Name	Salary (A)	Salary (A)	Retirement pension (B)	Retirement pension (B)	Bonus and special expenses, etc. (C)	Bonus and special expenses, etc. (C)	Remuneration for employees (D)	Remuneration for employees (D)	Remuneration for employees (D)	Remuneration for employees (D)	The total amount of A, B, C and D as a percentage of the net profit after tax	The total amount of A, B, C and D as a percentage of the net profit after tax	Remuneration from reinvestment businesses other than subsidiaries or from parent company received
		The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Company		All companies in the financial report		The Company	All companies in the financial report
								Cash amount	Stock amount	Cash amount	Stock amount
President	Jason Wu	4,908	9,467	108	108	2,099	2,099	0	0	0	0	7,115 27.74	11,674 45.52	None
Vice President	Guolun Liao	1,901	2,080	99	99	592	592	0	0	0	0	2,592 10.11	2,771 10.80	None
Vice President	Qingyu an Liu	1,030	1,871	60	60	520	723	0	0	0	0	1,610 6.28	2,654 10.35	None
Vice President	ChengTi en Hsu	1,587	1,587	95	95	404	404	0	0	0	0	2,086 8.13	2,086 8.13	None
Senior Director	Yaochu an Hong	1,235	1,968	75	75	476	741	0	0	0	0	1,786 6.96	2,784 10.85	None

A: Salaries, position bonuses, severance pay for president and vice president in 2022

B: The amount allocated for withdrawal.

C: Various bonuses, incentives, travel expenses, special expenses, various allowances, dormitories, vehicles and other in‐kind provision, as well as the salary expenses as according to IFRS2 “Share‐based payment” received by president and vice president in 2022.

D: The amount of remuneration for employees in 2022 is the amount distributed through the resolution of the Board of Directors on May 4, 2023.

Net profit after tax: refers to the net profit after tax of the standalone financial report in 2022, which is NT$25,648 thousand.

(Note) The contents of the remuneration disclosed in this table are different from the income concept in the Income Tax Act, so this table is intended for information disclosure and not for taxation purposes.

(4) Name of the manager who distributes remuneration for employees and the situation of distribution:

	May4,2023;Unit: TWD 1,000	May4,2023;Unit: TWD 1,000	May4,2023;Unit: TWD 1,000	May4,2023;Unit: TWD 1,000	May4,2023;Unit: TWD 1,000	May4,2023;Unit: TWD 1,000
Manager	Position	Name	Stock amount	Cash amount	Total	Proportion of total amount to net profit after tax(%)
	President	Jason Wu	0	0	0	0.00
	Vice President	Guolun Liao
	Vice President	Qingyuan Liu
	Vice President	Cheng‐Tien Hsu
	Senior Associate Manager	Yaochuan Hong
	Associate Manager	Kundian He
	Audit Supervisor	Xiaojun Wang

Note 1: The amount of remuneration for employees in 2022 is the amount distributed through the resolution of the Board of Directors on May 4, 2023.

Note 2: Net profit after tax: refers to the net profit after tax of the standalone financial report in 2022, which is NT$25,648thousand.

An analysis of the total remuneration paid to the Company’s directors, presidents and vice presidents as a percentage of net income after tax for the last two years for the Company and all companies included in the consolidated financial statements, and an explanation of the policy, criteria and mix of remuneration payments, the process for

setting remuneration, and the correlation with operating performance and future risks.

etting remuneration, and the	correlation with operating performance and future risks.	correlation with operating performance and future risks.	correlation with operating performance and future risks.	correlation with operating performance and future risks.
Year Position	Total amount of remuneration as a percentage of net income (loss) after tax in the standalone financial statements
	2021		2022
	The Company	All companies in the financial report	The Company	All companies in the financial report
Director	6.72	18.22	34.33	65.58
President and Vice President	6.14	14.54	52.26	74.80

Note: The net profit after tax of the standalone financial report for the year 2021 was NT$120,258 thousand; the net profit after tax of the individual financial report for the year 2022 was NT$25,648 thousand.

(1) Remuneration for directors: The remuneration for directors is recommended by the Remuneration Committee and submitted to the Board of Directors for resolution; the remuneration for directors is determined by the Board of Directors in accordance with Article 18 of the Company’s Articles of Incorporation (i.e. no more than 3% of the Company’s profit for the year) and is distributed by a resolution of two‐thirds of the Board of Directors with a majority of the directors present, and reported to the shareholders’ meeting; the rest of the remuneration is paid only for attendance fees and no other additional variable remuneration is charged. For 2021 and 2022, the Board of Directors decided on February 24, 2022 and May 4, 2023, respectively, to set aside 1% as directors' remuneration according to the profit situation of each year, with an amount of NTD 1,500 thousand and NTD 0 thousand respectively, which will be paid in cash.
(2) Remuneration for independent directors: The remuneration for independent directors is proposed by the Remuneration Committee and submitted to the Board of Directors for resolution by the management team with reference to the salary level in the industry market and the Company’s operating conditions, but the members of the Remuneration Committee are not allowed to vote on their individual remuneration decisions and must be submitted to the Board of Directors for discussion and decision. After considering the Company’s operating conditions, the Board of Directors shall pay the directors’ remuneration for the year fiscal year 2022 based on the profitability of the Company, in addition to the basic monthly compensation and the travel expenses for attending meetings.
(3) Remuneration of the General Manager and Deputy General Manager: Remuneration shall be given in accordance with the Company's Salary Management Measures and the salary level of the position in the peer market, with reference to the personal performance achievement rate and contribution to the Company's performance. Relevant performance appraisal and salary rationality shall be reviewed by the Salary Remuneration Committee and the Board of Directors, and the remuneration system shall be reviewed in due course according to the actual operating conditions and relevant laws and regulations. As of the publication date of the Annual Report, due to the addition of two deputy general managers from the previous year, the proportion of total remuneration to the after‐tax net profit of individual financial statements has increased compared with the previous year because the calculation basis is different. Employees' remuneration is determined by the Board of Directors according to the Articles of Association, that is, 5%‐15% of the current year’s income, which is decided by two‐thirds of the Board of Directors and more than half of the directors present, and reported to the Shareholders’ Meeting. For 2021 and 2022, the Board of

Directors decided on February 24, 2022 and May 4, 2023, respectively, to set aside 5% as employee compensation according to the profit situation of each respective year, with an amount of NTD 6,500 thousand and NTD 0 thousand respectively, which were paid in cash. However, no compensation was given to managers, including the General Manager.

(4) Relationship between remuneration and future risk: The remuneration of the directors and managers of the Company shall be in accordance with the scope of the Company’s Articles of Incorporation and the provisions of the “Organizational Regulations of the Remuneration Committee” and the “Performance Evaluation Measures of the Board of Directors” adopted by the Board of Directors. The performance of the directors shall be based on the results of the performance evaluation of the directors, while the managers shall be based on factors such as the Company’s business strategy, profitability, performance and contribution to their positions, as well as the market level of salaries, and shall be recommended by the Remuneration Committee and approved by the Board of Directors.

The Remuneration Committee and the Board of Directors regularly review the reasonableness of the remuneration, and review the relevant provisions of the remuneration from time to time in light of the actual operating conditions and relevant laws and regulations, and shall not lead the directors and president to engage in acts that exceed the Company’s risk appetite in pursuit of remuneration, so as to avoid improper situations such as the company suffering losses after paying remuneration. In addition to the directors of the Company receiving travel expenses for the execution of business and the basic remuneration received by the independent directors on a monthly basis, the remuneration for directors is distributed according to the profits of the company, so there is no risk of significant impact on the company; as for the president and vice president as well as managers, in addition to the fixed salary, the rest of the bonuses is distributed according to the performance of the company, so there is no risk of significant impact on the company.

III. Operation of Corporate Governance

i. Operation of the Board of Directors
Last year (2022), the Board of Directors held 7(A) meetings, and the attendances of Directors and Independent Directors as voting and nonvoting delegates were shown as follows:

All the Directors (including the Independent Directors) should attend 61 meetings in total, and the number of actual attendances was 60 in total, with an average attendance rate of 98.36%.

98.36%.
Position	Name	Number of actual attendances as voting (and nonvoting) delegates (B)	Number of attendances by proxy (A)	Rate of actual attendances as voting (and nonvoting) delegates (%) (B/A)	Remarks
Chairperson	Jason Wu	7	0	100%
Director	YOUNGTEK ELECTRONICS CORP. Representative: June Wung	7	0	100%
Director	Weixin Investment Limited Representative: Po‐Chung Wang	7	0	100%
Director	Wen‐Ruei Cheng	7	0	100%
Director	Nan‐YangWu	7	0	100%
Independent director	Wen‐Chao Wang	6	1	100%
Independent director	Tung‐Hsiung Hung	7	0	85.7%
Independent director	Yin‐Fei Liu	7	0	100%
Independent director	Tseng‐Nan Chou	5	0	100%	Newly elected

Note: Upon the expiration of the term of office of the Company's directors for the 7th term on June 22, 2022, the Company had a full re‐election of the new directors for the eighth term, while all the directors from the 7th term were re‐elected, one new independent director was added

Attendance of the Independent Directors at each meeting of the Board of Directors in

2022:

V: attendance in person O: attendance by proxy X: Not attendance

2022	2/24	5/5	6/22	7/15	8/4	11/4	12/22
Wen‐Chao Wang	V	V	V	V	V	O	V
Tung‐Hsiung Hung	V	V	V	V	V	V	V
Yin‐Fei Liu	V	V	V	V	V	V	V
Tseng‐Nan Chou(Note)	Not applicable	Not applicable	V	V	V	V	V

Note: Independent Director Tseng‐Nan Chou was elected on June 22, 2022 and was expected to attend five Board meetings during the year 2022.

Other items which should be recorded:

In case of any of the following circumstances in the operation of the Board of Directors, the date and session of the meeting of the Board of Directors, contents of proposals, opinions of all the Independent Directors and the Company’s treatment on the opinions of the Independent Directors should be stated:

(1) Items listed in Article 14‐3 of the Securities and Exchange Act

Session / Date	Contents of Proposals and Subsequent Treatment	Items listed in § 14‐3 of the Secur‐ ities & Exc hange Act	Independent Directors had objections or reservations
The 21st meeting of the seventh term 02/24/2022	1. 2021 achievement and assessment results of performance objectives of the Directors and Managerial Officers.	V	None
	2. Approval of 2021 remuneration of the Directors and employees bythe Company.	V	None
	3. Amendments to the Company’s “Procedures for Acquisition or Disposal of Assets	V	None
	Opinions of the Independent Directors: none.
	The Company’s Treatment on the opinions of Independent Directors: not applicable.
	Resolution results: all the Directors present adopted the resolution without dissent.
The 3th meeting of the eighth term	1. The company’s plan to buy back treasury shares and transfer them to employees	V	None
	Opinions of the Independent Directors: none.
	The Company’s Treatment on the opinions of Independent Directors: not applicable.
08/04/2022	Resolution results: all the Directors present adopted the resolution without dissent.
The 4th	1. The Company’s plan to purchase directors'	V	None

Session / Date	Contents of Proposals and Subsequent Treatment	Items listed in § 14‐3 of the Secur‐ ities & Exc hange Act	Independent Directors had objections or reservations
meeting of	liabilityinsurance for 2023
the eighth	Opinions of the Independent Directors: none.
term 11/04/2022	The Company’s Treatment on the opinions of Independent Directors: not applicable.
	Resolution results: all the Directors present adopted the resolution without dissent.
The 5th meeting of the eighth	1. Approval of the limit of lending of funds between the companies within the Group for 2023.	V	None
	2. Purchase of short‐term derivatives by subsidiaries in 2023	V	None
	3. Appointment and remuneration of certified public accountants of the Groupfor 2023.	V	None
term	Opinions of the Independent Directors: none.
12/22/2022	The Company’s Treatment on the opinions of Independent Directors: not applicable.
	Resolution results: all the Directors present adopted the resolution without dissent.

(2) In addition to the above items, other resolutions of the board meeting with objections or reservations of the Independent Directors and records or written statements: none.
The Directors should state the name of the Directors, contents of proposals, reasons for avoidance of interests and participation in voting with respect to the execution of avoidance for proposals with related interests:

Session / Date The 21st meeting of the serveth Board of Directors 02/24/2022	Contents of proposals	Avoidance for proposals Name of director	Reasons for avoidance of interests	Participation in voting
	Proposal for the Company’s 2021 director and employee remuneration	Recusal of Managerial Officer and Chairperson Jason Wu	The Chairperson Jason Wu also acts as the President	No such situation
The 1st meeting of the eighth Board of Directors 06/22/2022	Proposal for the appointment of members of the Remuneration Committee for the 5th term	Recusal of four independent directors (Wen‐ Chao Wang, Tung‐Hsiung Hung, Yin‐Fei Liu, Tseng‐Nan Chou)	Appointment of indepen‐ dent directors as members of the Remuneration Committee for the 5th term	No such situation

The 1st meeting of the eighth Board of Directors 06/22/2022	Proposal for the appointment of members of the Audit Committee for the 4th term	Recusal of four independent directors (Wen‐ Chao Wang, Tung‐Hsiung Hung, Yin‐Fei Liu, Tseng‐Nan Chou)	Appointment of indepen‐ dent directors as members of the Audit Committee for the 4th term	No such situation
The 5th meeting of the eighth Board of Directors 12/22/2022	Proposal for the Company’s 2022 managerial officer bonus	Recusal of Managerial Officer and Chairperson Jason Wu	The Chairperson Jason Wu also acts as the President	No such situation

The objectives of strengthening the functions of the Board of Directors in the current year and the recent years (such as establishing an Audit Committee, and improving information transparency,) and the evaluation on the implementation:
(1) The Company had established the Audit Committee in June 2013, to replace the functions and powers of supervisors. In addition, the Company entrusted KPMG to regularly audit and verify the financial statements of the Company, could correctly and promptly complete the information disclosure required by the laws, and designated a special person to be responsible for the collection and disclosure of the Company’s information, so as to ensure that all major information could be disclosed in a timely and appropriate manner to improve the transparency of information.
(2) The Company adopted the performance assessment methods of the Board of Directors on April 28, 2015, and revised it on August 4, 2020. As of the date of publication of the annual report, the 2022 performance assessment on the Board of Directors, Directors and functional committees had been completed in the mid of February 2023. According to the assessment methods, the internal self‐assessment questionnaires were adopted, all the assessment results were “Excellent” or above, and the performance assessment results had been submitted to the Board of Directors on February 23, 2023. The functions and efficiency of the Board of Directors and functional committees were strengthened through the performance assessment system.
(3) The Company established a Remuneration Committee to assist the Board of Directors in regularly evaluating and determining the salary and remuneration of the Directors and Managers, and regularly reviewing the policies, systems, standards and structures of performance assessment and salary and remuneration of the Directors and managers.
The listed or OTC Company should disclose information such as the assessment cycle and term, scope, methods and contents of the self‐assessment (or peer assessment) of the Board of Directors, and fill in the implementation of the assessment on the Board of Directors:

2022 performance assessment results were shown as follows

Assessment cycle	Assessment term	Assessment scope	Assessment methods	Assessment contents	Assessment results
Made once each year	from January 1, 2022, to December 31, 2022	The overall Board of Directors	Internal self‐assessment of the Board of Directors	1. Participation in the operation of the Company. 2. Improvement of decision‐making quality of the Board of Directors. 3. Composition and structure of the Board of Directors. 4. Election and continuing education of Directors. 5. Internal control.	The results of performance assessment: excellent or above, which was still good. The improvement schemes were recommended as follows: Contents of items: The Board of Directors set up enough seats for the Independent Directors, and the number of Independent Directors met the relevant provisions (for example, if the Chairman or General Manager and officers at the equivalent level (top manager) were the same person, or spouses or first‐degree relatives to each other, it was appropriate to increase the number of the Independent Directors, and more than half of the Directors did not have the status of employees or Managers) Action plans: As the Company's Chairperson also concurrently serving the Company as the President, the Company added one independent director to the Board of Directors for the 8th term on June 22, 2022, and a majority of the directors are not concurrently employees or managerial officers in order to comply with the spirit of corporategovernance.

Assessment cycle	Assessment term	Assessment scope	Assessment methods	Assessment contents	Assessment results
Made once each year	from January 1, 2022 to December 31, 2022	Individual Directors	Self‐assessment of the Directors	1. Participation in the operation of the Company. 2. Awareness of the responsibilities of the functional Committees. 3. Improvement of the decision‐making quality of functional committees. 4. Composition and member election of the functional Committees. 5. Internal control.	The performance assessment results of the Remuneration Committee: excellent or above, which was still good. No improvement scheme was recommended this time.
Made once each year	from January 1, 2022, to December 31, 2022	Functional committees (Remuneration Committee)	Self‐assessment of the Directors	1. Participation in the operation of the Company. 2. Awareness of the responsibilities of the functional Committees. 3. Improvement of the decision‐making quality of functional committees. 4. Composition and member election of the functional Committees. 5. Internal control.	The performance assessment results of the Remuneration Committee: excellent or above, which was still good. No improvement scheme was recommended this time.

Assessment cycle	Assessment term	Assessment scope	Assessment methods	Assessment contents	Assessment results
Made once each year	from January 1, 2022, to December 31, 2022	Functional committees (Audit Committee)	Self‐assessment of the Directors	1. Participation in the operation of the Company. 2. Awareness of the responsibilities of the functional Committees. 3. Improvement of the decision‐making quality of functional committees. 4. Composition and member election of the functional Committees. 5. Internal control.	The performance assessment result of the Audit Committee: excellent or above, which was still good. No improvement scheme was recommended this time.

5. Succession plan for board members and important management:

(1) Succession plan for board members and its operation

Many years ago, the Company introduced an enterprise inheritance perspective of corporate governance and honest operation. The independent director system was introduced in 2008, the Remuneration Committee was established in 2011, and the Audit Committee was voluntarily established in advance in 2013. When the Directors were completely re‐elected in 2019, the candidate nomination system was adopted by the shareholders, and the principle that the tenure of the Independent Directors should not exceed at most 9 years was carried out to avoid damaging the independence of the Independent Directors.

In addition to having the knowledge, skills and quality necessary for the performance of their duties, the members of the Board of Directors carried out diversification policies as the election conditions for the members of the Board of Directors (the election standards for the Directors had been disclosed on the Company’s website: Investors > corporate governance > board of directors > organization of board of directors, website: https://www.edison‐opto.com/board‐organization/). In order to achieve the ideal goal of corporate governance, the Company made many practices ahead of the requirements of government laws and regulations, and gradually promoted the process of optimizing the efficiency of the Board of Directors.

In addition to having professional background and professional skills, the members of the Board of Directors of the Company should also have expertise in the Company’s business planning and undertakings. In order to enable the members of the Board of Directors to improve their professionalism and make continuous improvement, considering the scope beyond the professional ability of each Director, they should

choose to study the relevant courses covering the finance, risk management, business, commerce, legal affairs, accounting, corporate social responsibilities or internal control system, and responsibilities for financial reports related to the nature of the Company’s industry, each member should take continuing education courses of at least 6 hours for himself every year to ensure that the members of the Board of Directors had a considerable degree of industrial knowledge and acquire new knowledge.

The Company launched a chairman succession plan in 2020 to cultivate senior managers in the Company, and arranged them to attend meetings of the Board of Directors as nonvoting delegates, made them familiar with the operation of the Board of Directors, and increased their experience in participation and work rotation in various operating entities of the group, and assignment to subsidiaries.

(2) Succession plan for important management and its operation

The Company emphasized that in addition to having certain professional skills, words and deeds of important management should be highly consistent with the enterprise business philosophy of “Integrity and Honesty, Pragmatic Action, Modesty and Sureness” and “Doing by yourself and doing what you say,” and they should carry out such philosophy indeed. Therefore, the cultivation of their ideas and their own practice from the heart needed long‐term cultivation, edification and implementation. The Company had several members of important management (General/Deputy General Managers), who were responsible for leading the operation of production, marketing and research and development in each factory; the experience was taught and tutored to them one‐to‐one in the form of work rotation and assignment, and heads of finance, audit, legal affairs, human resources and information units were assigned to assist the management in taking education and training in relevant fields other than production, marketing and research and development, including future strategic planning and various professional courses and discussions on topics such as performance management, sustainability reporting and carbon footprint and carbon tariff. In 2022, eight management training courses were held to strengthen the all‐round management ability of the president/vice president. Through management meetings and cross‐departmental functional meetings, we deepened our understanding of management concepts and developed various management skills to help select key members of the succession ladder. According to the Group’s organizational development and growth momentum, in addition to recruiting excellent cadres, the Company would also continue to actively cultivate potential middle and senior managerial officers, strengthen individual tutorship and work communication, and from time to time carry out work rotation and assignment plans to select all‐round talents and strengthen the future operation team in a planned and targeted manner.

ii. Information about the operation of the Audit Committee:
Operation of the Audit Committee: The Audit Committee of the Company was composed of three members of all Independent Directors. It held a meeting before a meeting of the Board of Directors to examine the Company’s important proposals and major financial and business activities, to truly supervise the Company’s operation and risk control. The Audit Committee held five meetings in 2022, and the items deliberated mainly included: (1) Financial statements auditing and accounting policies and procedures.

(2) Internal control system and related policies and procedures.
(3) Significant assets or derivatives transactions.
(4) Compliance with laws and regulations.
(5) Whether the Managers and the Directors made related party transactions and had possible conflict of interests.
(6) Complaint reports.
(7) Fraud prevention plan and fraud investigation report.
(8) Information security.
(9) Corporate risk management.
(10) Qualification, independence and performance assessment of certified public accountants.
(11) Appointment, dismissal or remuneration of certified public accountants.
Review of financial reports

The Board of Directors prepared the Company’s 2022 business report, financial statements, earnings distribution and other proposals, among which the financial statements were audited by KPMG and an audit report was issued. The above‐mentioned business report, financial statements and earnings distribution proposal had been audited by the Audit Committee and were not found to be inconsistent.

Evaluation on effectiveness of the Internal Control System

The Audit Committee evaluated the effectiveness of the policies and procedures of the Company’s Internal Control System (including finance, operation, risk management, information security, outsourcing, compliance with laws and regulations and other control measures), and reviewed the regular reports of the Company’s audit unit, certified public accountants and management, including risk management and compliance with laws and regulations. The Audit Committee believed that the Company’s risk management and Internal Control System were effective, and the Company had adopted necessary control mechanisms to monitor and correct violations.

Appointment of Certified Public Accountants

The Audit Committee was vested with duties to supervise the independence of certified public accountants to ensure the fairness of financial statements. Generally, except for tax related services or items specially approved, a certified public accountant firm should not provide the Company with other services. All services provided by the certified public accountant firm must be approved by the Audit Committee.

The Audit Committee of the Company annually evaluates the independence and suitability of the CPAs to which they belong, and in addition to requesting the CPAs to provide a "Statement of Independence" and "Audit Quality Indicators (AQIs)", the Audit Committee also evaluates the CPAs based on 13 AQI indicators. It has been confirmed that the CPA has no other financial interests or business relationship with the company except for financial statement visa and taxation fees, and the CPA's family members do not violate the independence requirements. With reference to AQI index information. We also confirmed that the CPAs and the firm are better than the industry average in terms of audit experience and training hours with reference to the AQI indicators, and

that we will continue to implement digital audit tools to improve the audit quality in the last three years, and that they meet the independence and appropriateness standards to be able to perform the audit and review of the Company's financial statements. The results of the most recent annual evaluation were discussed and approved by the Audit Committee on May 4, 2023, and were presented to the Board of Directors on May 4, 2023, for approval of the independence and appropriateness evaluation of CPAs.

In 2022 the Audit Committee held 5 meetings (A), and the number of attendances of the Independent Directors was shown as follows:

Position	Name	The number of actual attendances (B)	The actual attendance rate (%) (B/A)	Remarks
Independent director	Wen‐Chao Wang	5	100%	Convening member
Independent director	Tung‐Hsiung Hung	5	100%
Independent director	Yin‐Fei Liu	5	100%
Independent director	Tseng‐Nan Chou	3	100%	Newly Elected(Note)

Note: Independent Director Tseng‐Nan Chou was elected on June 22, 2022 and was expected to attend 3 Audit Committee meetings during the year 2022.

Other items which should be recorded:

In case of any of the following circumstances in the operation of the Audit Committee, the date and session of the meeting of the Audit Committee, contents of proposals, resolution results of the Audit Committee and the Company’s treatment on the opinions of the Audit Committee should be stated.

(1) Items listed in Article 14‐5 of the Securities and Exchange Act:

Audit Committee	Contents of Proposals and Subsequent Treatment	Items listed in Article 14‐5 of the Securities and Exchange Act:	Resolutions not adopted by the Audit Comm‐ ittee but adop ted by more than two thirds of all Directors
The 15th meeting of the third term 2/24/2022	1. The Company’s 2021 final accounting reports and business report.	V	None
	2. The Company’s 2021 “Statement of Internal Control System”	V	None
	3 Amendments to the Company’s “Procedures for Acquisition or Disposal of Assets	V	None
	Results of the resolution of the Audit Committee: it was adopted byall

Audit Committee	Contents of Proposals and Subsequent Treatment	Items listed in Article 14‐5 of the Securities and Exchange Act:	Resolutions not adopted by the Audit Comm‐ ittee but adop ted by more than two thirds of all Directors
	members of the Audit Committee without dissent.
	The Company’s treatment on the opinions of the Audit Committee: not applicable.

The 16th meeting of the third term 5/5/2022	1. The consolidated financial statements of the Company for the first quarter of 2022	V	None
	Results of the resolution of the Audit Committee: it was adopted by all members of the Audit Committee without dissent.
	The Company’s treatment on the opinions of the Audit applicable.		Committee: not

	1. The Company’s consolidated financial statements for the second quarter of 2022.	V	None
	2. The Company’s plan to buy back treasury shares and transfer them to employees	V	None
	Results of the resolution of the Audit Committee: it was adopted by all members of the Audit Committee without dissent.
	The Company’s treatment on the opinions of the Audit Committee: not applicable.

The 2nd meeting of the fourth term 11/4/2022	1. The Company’s consolidated financial statements for the third quarter of 2022	V	None
	2. Capital reduction by a significant	V	None
	subsidiaryof the Company
	Results of the resolution of the Audit Committee: it was adopted by all members of the Audit Committee without dissent.
	The Company’s treatment on the opinions of the Audit Committee: not applicable.

The 3rd meeting of the fourth term 12/22/2022	1. Auditplan for 20223	V	None
	2. The limit of lending of funds between the companies within the Group for 2023.	V	None
	3. Purchase of short‐term derivatives by subsidiaries in 2023	V	None
	4. Appointment and remuneration of certified public accountants of the Groupfor 2023.	V	None
	5. Formulation of the general principles of the Company'spre‐approvalpolicyfor	V	None

Audit Committee	Contents of Proposals and Subsequent Treatment	Items listed in Article 14‐5 of the Securities and Exchange Act:	Resolutions not adopted by the Audit Comm‐ ittee but adop ted by more than two thirds of all Directors
	non‐assurance services provided by the attestingCPA firm
	Results of the resolution of the Audit Committee: it was adopted by all members of the Audit Committee without dissent.
	The Company’s treatment on the opinions of the Audit Committee: not applicable.

(2) Except for the previous items, other items that had not been adopted by the Audit

Committee but had been agreed by more than two‐thirds of all the Directors: none.

For implementation of avoidance of interests related to the proposals by the Independent Directors, the name of the Independent Directors, contents of proposals, reasons for avoidance of interests and voting situation should be stated: no such situation.
Communication between the Independent Directors and the head of internal audit and certified public accountants (including major items, methods and results of communication on the Company’s financial and business conditions):
(1) The head of internal audit of the Company regularly (once each quarter) conducted audit business reports and discussions with the Independent Directors to submit the audit report results and the implementation of the follow‐up report. When the meeting of the Audit Committee was held, the head of internal audit should attend and report as a nonvoting delegate;

		Suggestions
Date	Communication items
		and results

	1. Audit business execution report of the Group for
		No objection
2/24/2022	January 2022

Audit	2. Audit business execution report of the subsidiaries for
		No objection
Committee	2021

	3. Description for 2021 self‐assessment result report	No objection
	1. Audit business execution report of the Group for
		No objection
	February to March 2022
5/5/2022

	2. Audit business execution report of the subsidiaries for
Audit		No objection
	1Q2022
Committee
	3. Greenhouse gas inventory planning for TWSE‐listed
		No objection

	companies

	1. Audit business execution report of the Group for the
8/4/2022		No objection
	second quarter of 2022
Audit
	2. Audit business execution report of the subsidiaries for
Committee		No objection
	2Q2022

	1. Audit business execution report of the Group for the
11/4/2022		No objection
	third quarter of 2022

		Suggestions
Date	Communication items
		and results

Audit	2. Audit business execution report of the subsidiaries for
		No objection
Committee	3Q2022

	3. Description for corporate governance promotion and
		No objection
	execution for the 2022

	1. Audit business execution report of the Group for
12/22/2022		No objection
	October to November 2022

Audit	2. Description for corporate governance and sustainable
Committee		No objection
	development promotion and execution for the 2022

(2) The head of internal audit should hold an audit workshop at least once a year (the audit workshop had been held on June 22, 2022) to communicate and discuss the internal control system, internal audit, corporate governance, operational risk management and other contents; therefore, the communication between the Independent Directors and the head of internal audit of the Company was still good.

Communication of the head of audit with the Independent Directors in a separate meeting in 2022

meeting in 2022
			Suggestions
Date	Attendants	Communication items
			and results

6/22/2022	Independent Director	1. Description for key points
Audit Workshop	Wen‐Chao Wang	of corporate governance	No objection
	Independent Director	evaluation in 2022
	Tung‐Hsiung Hung	2. Description for current
	Independent Director	situation and planning of	No objection
	Yin‐Fei Liu	audit organization in 2022
	Independent Director	3. Description for key points
	Tseng‐Nan Chou	and planning of audit in
			No objection
	Audit Officer Xiaojun	2022

	Wang

(3) The certified public accountants of the Company and the Independent Directors, communicated the audit and review results of the current quarter’s financial statements (including consolidated financial statements) and other items as required by the relevant laws and regulations in the meeting of the Audit Committee. In addition to discussing the audit or review results of the annual and quarterly financial reports, key audit items and other items as required by the securities and tax laws and regulations, they fully exchanged views and gave suggestions on the topics communicated with the management unit.

			Communication
Date	Attendants	Communication items
			results

2/24/2022	Independent Director	The CPA explained the
Pre‐meeting	Wen‐Chao Wang	responsibility and independence
of the Audit	Independent Director	of the auditors in auditing the
Committee	Tung‐Hsiung Hung	financial statements, the key audit
	Independent Director	matters, the scope of the audit	No objection
	Yin‐Fei Liu	and other audit results, and the
	Certified public	discussion and communication
	accountant	were good.
	Heng‐Sheng Lin
11/4/2022	Independent Director	The CPA reported on the items
Pre‐meeting	Wen‐Chao Wang	found in the review of the third
of the Audit	Independent Director	quarter’s reports, the audit plan
Committee	Tung‐Hsiung Hung	for 2022, the major impact of
	Independent Director	Statement of Auditing Standards
	Yin‐Fei Liu	No. 75 on the Company, and	No objection
	Independent Director	update of important laws and
	Tseng‐Nan Chou	regulations, and the discussion
	Certified public	and communication with the
	accountant	meeting participants were good
	Heng‐Sheng Lin
12/20/2022	Independent Director	The CPA explained the analysis of
Separate	Wen‐Chao Wang	recent financial statements and
communicati	Independent Director	significant issues, interim internal
on between	Tung‐Hsiung Hung	control findings and
CPA and the	Independent Director	recommendations, and key audits,
Audit	Yin‐Fei Liu	and the communication was good.	No objection
Committee	Independent Director
	Tseng‐Nan Chou
	Certified public
	accountant
	Heng‐Sheng Lin

(4) The Independent Directors had fulfilled the obligation of perfect supervision with respect to the proper representations of the Company’s financial statements and the compliance of the Company with relevant laws and rules.
The Supervisors’ participation in the operation of the Board of Directors: after the shareholders’ meeting on June 13, 2013, the Company established the Audit Committee to replace the functions and powers of supervisors, so it was not applicable.

iii. Deviation and causes of deviation of the Company’s actual governance from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies:

Assessment criteria			Actual governance	Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
i. Has the Company established and disclosed its corporate governance principles based on "Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies"?	V		The Company has established its own "Corporate Governance Best‐Practice Principles" based on "Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies," and implemented them with the Board of Directors' approval on November 4, 2014. This policy is revised in a timely manner to conform with legal requirements; the most recent revision was approved by the Board on December 22, 2022 and has been disclosed on: (1) Company website (https://www.edison‐opto.com/important‐rules‐and‐regulations/) (2) Market Observation Post System (https://mops.twse.com.tw/mops/web/t100sb04_1)		No material deviation is found
ii. Shareholding structure and shareholders’ interests (i) Has the Company implemented a set of internal procedures to handle shareholders' suggestions, queries, disputes, and litigations? (ii) Is the Company constantly informed of the identities of its major shareholders and the ultimate controller? (iii) Has the Company established and implemented risk management practices and firewalls for companies it is affiliated with? (iv) Has the Company established internal policies that prevent insiders from trading securities against non‐public information?	V V V V		(i) (ii) (iii) (iv)	The Company has implemented a spokesperson and acting spokesperson system to handle related issues, as required by laws. The Company has also set up contact windows and grievance channels on the Investors section of its website. Mail box for investor relations is investor@edison‐opto.com.tw. The Company is constantly informed of changes in directors' and major shareholders' shareholding position, and the identity of its ultimate controller. The Company has set up clear boundaries to distinguish between its responsibilities and those of the affiliates, and implemented "Related Party Transaction Management Policy," "Transaction Procedures for Group Affiliates, Special Entities, and Related Parties," and "Asset Acquisition and Disposal Procedures" for governance. All related party transactions are handled according to relevant laws and the internal control system. The Company has implemented "Insider Trading Management Procedures" to prevent insider trading. 1. Directors, managers, and employees are subjected to awareness enhancement on "Insider Trading Management Procedures" and relevant regulations; details of this procedure have been published on the Company's website. 2. In addition to annual awareness campaigns, the Company has created an "e‐College" under the Employees section of the corporate intranet that offers online "Insider Trading Prevention" courses for all employees. Existing employees may access the courses at any time to learn new knowledge, whereas new employees are introduced to the concept during orientation. 3. The Company conveys awareness on an unscheduled basis usingEMAIL.	No material deviation is found No material deviation is found No material deviation is found No material deviation is found
iii. Composition and responsibilities of board of directors

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(i) Has the board devised and implemented policies to ensure diversity of its members?	V		(i) 1 The Board of Directors passed the establishment of " Corporate Governance Best‐Practice Principles " during the meeting held on November 4, 2014, and the diversity guidelines were mentioned in Chapter 3 ‐ Enhancement of Board Function. Nomination and selection of Board members are carried out according to the Articles of Incorporation, using the candidate nomination approach that takes into consideration the career and academic backgrounds of each candidate, the nature of the Company's operations, growth requirements, and stakeholders' opinions. This process observes the "Director Election Policy" and "Corporate Governance Code of Conduct" to ensure diversity and independence of Board members. 2 The Company's Board of Directors for the 8th term consists of nine directors, including four independent directors, and two female directors (2/9 of the total number of directors). Among them, 5 specialize in the field of LED and lighting; 5 in the field of financial investment and analysis; 2 in the field of legal affairs; and 4 independent directors specialize in the field of LED packaging and lighting, financial investment analysis and legal affairs, and are knowledgeable in the LED industry, CPA and attorney practices. They have been very helpful to the Company in the development of LED field, legal compliance and operational risk management. All Board members possess the knowledge, skills, and character needed to execute their duties:	No material deviation is found

Assessment criteria					Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No			Summary
			Board member		Basic composition								Industry experience				Professional capabilities
				Nationality	Gender	Concurrent employment at the Company	Age			Terms and years as independen t director			LED	Lamp and Lighting	Asset management	Treasury investment	Accounting and financial analysis	Familiarity with regulations and laws	Operational judgment	Risk Management
							40 and below	41 to 60	61 to 70	Below 3 years	3 to 9 years	More than 9 years
			Jason Wu	The Republic of China	Male	V		V					V	V	V				V	V
			Wen-Ruei Cheng	The Republic of China	Male	V		V					V	V	V				V	V
			June Wang	The Republic of China	Female		V								V	V	V			V
			Po-Chung Wang	The Republic of China	Male			V					V	V	V				V	V
			Nan-Yang Wu	The Republic of China	Male				V				V	V	V	V	V	V	V	V
			Wen-Chao Wang	The Republic of China	Male			V			V		V	V	V	V	V		V	V
			Tung-Hsiung Hung	The Republic of China	Male			V			V				V			V		V
			Yin-Fei Liu	The Republic of China	Female			V			V				V	V	V		V	V
			Tseng‐Nan Chou	The Republic of China	Male				V	V					V	V	V		V	V
			3 22% of Board members held concurrent positions as employee (lower than 25% in the previous Board); independent directors represented 44% of director seats (higher than 38% in the previous Board); and female directors represented 22% of director seats (lower than the 25% in the previous Board). Of the four independent directors, one was newly elected on June 22, 2022 and will serve for a term of office less than three years and the remaining three were re‐elected. They had less than 6 years of service, while 2 directors were aged 61 or older, and 7 were aged 41‐60. The Company values gender equality of its Board members, and requires female director(s) to account for at least 20% of director seats. Following the addition of one female director, the 7th Board of Directors has met the above requirement. 4 The Company has devised policy to promote diversity of its board members and disclosed thispolicyon website and on MOPS.
(ii) Apart from the Remuneration Committee and Audit Committee, has the Company assembled other functional committees at its own discretion?		V	(ii) Aside from assembling a Remuneration Committee (as required by law) and an Audit Committee (voluntarily ahead of legal requirements), the Company has no other functional committee and has assigned corporate governance responsibilities to accountable departments. The Company will assemble other functional committees according to legal and practical requirements in the future.																		As explained in the summary

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(iii) Has the Company established a set of policies and assessment tools for evaluating board performance, and conducted performance evaluations on a yearly basis? Are performance evaluation results reported to the board of directors and used as reference for compensation and nomination decisions?	V		(iii) The Company passed its Board of Directors Performance Evaluation Policy on April 28, 2015 and later revised on August 4, 2020. The policy requires performance valuation to be performed on the board, individual board members, the Audit Committee, and the Remuneration Committee at least once a year. The board is required to complete internal performance assessment for the current year before the end of the first quarter of the following year. The Company completed the 2022 performance assessment for the Board of Directors, individual Board members, the Audit Committee, and the Remuneration Committee in mid‐February 2023; outcomes of the assessment and improvements for 2023 were reported during the Board of Directors meeting held on February 23, 2023. Performance assessment of the Board of Directors covers the five main aspects below:Level of participation in the Company's operations. 1. The degree of participation in company’s operations 2. Improvement of board decision quality. 3. Composition of the board of directors. 4. Election and continuing education of directors. 5. Internal control. Directors' individual performance assessment covers the following six main aspects: 1. Comprehension of the Company's targets and missions. 2. Directors' duty awareness. 3. Level of participation in the Company's operations. 4. Management and communication of internal relations. 5. Professionalism and ongoing education of directors. 6. Internal control. Assessment of functional committee (Audit Committee and Remuneration Committee) performance covers the following five main aspects: 1. Level of participation in the Company's operations. 2. Awareness towards duties of the functional committee. 3. Improvements to the quality of decisions made by functional committees. 4. Composition of the functional committee and selection of committee members. 5. Internal control. This assessment had proceeded using self‐assessment questionnaire, in which the directors were asked to rate how the Board, the Remuneration Committee, and the Audit Committee had functioned and their individual participation. Outcome of the above performance evaluation will be taken into consideration when electing and nominating directors. Performance evaluation of individual directors and functional committees will be taken into consideration when compensating and nominating individual members. All ratings for 2022 were "Excellent and above," indicating good performance. For recommendations and improvements on Board of Directors and functional committee performance, please refer to the annual report: 3. Corporate governance (1)4. TWSE/TPEX listed companies are required to disclose the cycle, duration, scope, method, and details of board performance self (or peer) evaluations performed, and complete Execution of Board Performance Evaluation:	No material deviation is found
(iv) Are external auditors' independence assessed on a	V		(iv) In accordance with Article 29 of the "Corporate Governance Best Practice Principles",the Financial AccountingCenter regularly	No material deviation is

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
regular basis?			evaluates the independence and suitability of the CPAs on an annual basis, and confirms that the CPAs do not hold any shares of the Company or have control over the Company, and the CPAs do not hold any position in the Company. The Company also requested the CPAs to provide the "Transcendental Independent Statement" and "Audit Quality Indicators (AQIs)" and evaluated them against 13 AQI indicators of audit quality, while the Company, at the same time,evaluated a total of 10 items as follows: Assessment criteria Assessment result Compliance of independence (1) As of the most recent audit, there was no incident where CPA was not reappointed for 7years Yes Yes (2) CPAs do not have any financial stake and inappropriate relationshipwith the client Yes Yes (3) CPAs shall instruct their assistants to be honest, fair, and independent Yes Yes (4) CPAs did not audit financial statements of companies they were formerly employed under during the two years prior topractice Yes Yes (5) CPAs do not hold shares in the Company and affiliated enterprises, and are not related to the Company's management personnel in any relationship characterized as spouse, direct blood relative, relative by affinity, or relative of 2nd degree or closer Yes Yes (6) CPAs neither borrow nor lend money with the Company and affiliated enterprises, and do not charge commission for anyservice offered Yes Yes (7) CPAs do not concurrently hold permanent positions at the Company or affiliated enterprises, for which they are compensated with regular salary Yes Yes (8) CPAs do not undertake decision‐making managerial roles within the Companyor affiliated enterprises Yes Yes (9) Do not operate any other business that may compromise independence Yes Yes (10) Free of penalty and conducts that compromise independence Yes Yes Assessment outcomes in the last two years are as follows: Outcomes of assessments conducted in the last two years were reviewed and passed by the Board of Directors on February 24, 2022 and May 4, 2023. The reports mentioned no finding that indicated the financial statement auditors being incompetent or having compromised independence.	found
iv. Has the TWSE/TPEX listed company allocated adequate number of competent corporate governance staff and appointed a corporate governance officer to oversee corporate governance affairs (including but not limited to providing directors/supervisors with the information needed to perform their duties, convention of board meetings and shareholder meetings,	V		The Company has assigned its Finance and Accounting Division to undertake concurrent duty of overseeing corporate governance. On May 6, 2019, the board of directors passed the resolution to introduce a corporate governance officer, and the position is currently undertaken by Mr. Cheng‐Tien Hsu, the head of Finance and Accounting Division. Hsu meets the requirements of the abovementioned regulation and has more than 10 years of managerial experience in financial affairs of public companies to ensure proper execution of corporate governance duties. Furthermore, Hsu exhibits no history of conflicting interest and violation of internal control system. Corporate governance personnel of the Company are mainly responsible for the following tasks: 1. Handling of board meeting and shareholder meeting affairs. 2. Preparation of board/shareholder meeting minutes. 3. Assistingdirectors with their duties and ongoingeducation.	No material deviation is found

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
and preparation of board/shareholder meeting minutes)?			4. Providing directors with the information needed to perform duties. 5. Assisting directors with compliance issues. 6. Other tasks specified in Articles of Incorporation or contract. Key corporate governance tasks completed in 2022: 1. Company registration and change of registration. 2. Matters related to Board, functional committee, and shareholder meetings. 3. Assisting with Board, functional committee, and shareholder meeting minutes and directors' continuing education. 4. Setting the date for annual shareholder meeting in accordance with law, and preparing meeting advice, conference handbook, and minutes before the statutory due date. 5. Assisting directors with compliance issues. 6. Maintaining investor relations and communicating with major shareholders and institutional investors. Two investor seminars were held in August 5, 2022 and November 11, 2022 to provide institutional investors and corporate entities with better understanding of the Company's operations. Education of the corporate governance officer in 2022: Mr. Cheng‐Tien Hsu continued to undergo corporate governance‐related training throughout 2022, as detailed in page 84 of the annual report. Subsequent updates will be disclosed on the corporate website.
v. Has the Company provided proper communication channels and created dedicated sections on its website to address corporate social responsibility issues that are of significant concern to stakeholders (including but not limited to shareholders, employees, customers and suppliers)?	V		The Company respects stakeholders' interests and regularly identifies stakeholders and engages them in appropriate communication to learn their expectations and needs. By creating a Stakeholders section on website and setting up communication channels such as contact person, FAQ, and opinion box, the Company responds to issues that are of concern to stakeholders, and in doing so protects stakeholders' interests. Stakeholders including shareholders/investors, banks and other creditors, employees, suppliers, customers, community/non‐profit organizations, the authority, media, and any party that holds stake in the Company may raise opinions and responses through the Stakeholders section for the protection of their interests. Dedicated personnel have been assigned to oversee each communication channel, and relevant information has been disclosed on the Company's website. (https://www.edison‐opto.com /stakeholder‐area/) The company communicates on the issues that are of concern to the different stakeholders listed above on a yearly basis. Outcomes of the communication are disclosed on website and reported to the Board of Directors at least once a year. Stakeholder communication in the most recentyear was reported to the Board of Directors on December 22,2022.	No material deviation is found
vi. Does the Company engage a stock transfer agent to handle shareholder meetingaffairs?	V		The Company commissions the Shareholder Service Department of Fubon Securities Co., Ltd. to handle matters relating to shareholder meetings and ownershipregistration.	No material deviation is found
vii. Information disclosure (i) Has the Company established a website that discloses financial, business, and corporate governance‐related information?	V		(i). The Company's website(www.edison‐opto.com)has an Investors section that discloses financial, business, and corporate governance‐related information.	No material deviation is found
(ii) Has the Company adopted other means to disclose information (e.g. English website, assignment of dedicated personnel to collect and disclose corporate information,implementation	V		(ii). The Company has spokesperson and acting spokesperson in place to address queries and needs of investors and shareholders. The Company was invited to participate in 2 investor seminars on August 5, 2022 and November 11, 2022. Relevant info_r_mation has been disclosed on Market Observation Post System and the corporate website. The Company has assigned dedicated personnel togather and disclose information,and to ensure that all	No material deviation is found

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
of a spokesperson system, and broadcasting of investor conferences via the Company website)?			information relevant to shareholders' and stakeholders' decisions is adequately disclosed on website.
(iii) Does the Company publish and make official filing of annual financial report within two months after the end of an accounting period, and publish/file Q1, Q2 and Q3 financial reports along with monthly business performance before the required due dates?	V		(iii) The Company completed the preparation of its 2022 unaudited annual financial statements at the end of January 2023, which were later signed/sealed by the Chairperson, President, and Chief Accountant and passed by the Board of Directors on February 23, 2023. After the Board meeting, the Company published the material information of the 2022 self‐assessed financial statements as approved by the Board of Directors and completed the announcement and filing of the annual financial statements after CPAs officially issued the audit report on March 9; 2022’s Q1, Q2, and Q3 financial statements were published on May 4, August 4, and November 4, 2022, respectively; all of which were earlier than the statutory due dates stipulated by the authority. Furthermore, monthly operational results were published before the 5th day of the following month, which were earlier than the due date (the 10th of each month) stipulated by the authority.	No material deviation is found
viii. Does the Company have other information that enables a better understanding of the Company's corporate governance practices (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders' interests, continuing education of directors/supervisors, implementation of risk management policies and risk measurements, implementation of customer policy, and liability insurance for directors and supervisors)?	V		Driven by its mission towards innovation, profitability, and mutual benefit, the Company has been able to achieve consistent growth in performance while supporting sustainability values by creating job opportunities and enforcing good corporate governance practices. By maintaining business operations at the optimal state, the Company is able to cater for the interests of all stakeholders at the right balance, and create values to the gains of its shareholders. 1. Employees' rights and care to employees: The Company and subsidiaries are motivated by sustainability values, and place great emphasis on employees' wellbeing as they expand and create job opportunities in the society. "Work Rules" have been established to enforce compliance and commercial ethics; an "Employee Welfare Committee" has been assembled to arrange group insurance coverage and other benefits for employees; and "labor‐management meetings" are being held regularly to learn employees' needs, discuss employment issues, build consensus, promote bilateral communication, and enhance employment relations. Regular "health checkups," fitness activities, and health seminars are organized to keep employees healthy and informed of relevant health knowledge; domestic/overseas trips and club activities are arranged as a form of stress relief, team‐building, and gratitude for employees' service; training courses are held regularly to improve employees' character, skills, and capacity while helping them adapt; and Family Day events are organized on an unscheduled basis to help strengthen family bond and as a gratitude to family members for supporting employees in their work. 2. Investor relations: Shareholders' interests are something that the Company values highly upon. In addition to a dedicated investor relations unit, the Company also has an Investors section created on website to bridge communication with its investors. The Company hosts investor seminars on an unscheduled basis, during which it assigns dedicated personnel to answer queries from individual shareholders. Directors, supervisors, and major shareholders take part in the Company's board meetings from time to time, and their involvements provide investors with better understandingof how the Company performs and its	No material deviation is found

		Actual governance
Yes	No	Summary
		development strategies. Financial information is disclosed while observing principles of completeness, immediacy, accuracy, and transparency. Owing to strong business performance in recent years, the Company has been able to deliver excellent results in terms of dividendpayout,return on equity,andyields.
		3. Supplier relations and stakeholders' interests: The Company adopts a corporate culture of "Integrity, Pragmatism, and Modesty," and strictly upholds its duty of commercial morality to suppliers and customers with "customer satisfaction" in mind. All suppliers are required to sign an "Integrity Commitment" as a show of commitment to this mindset, and the Company has reporting hotlines and mail boxes in place to enforce independence. The Company conducts regular "supplier assessments" on key suppliers, and evaluates different aspects of their services including price, quality, technology, delivery, and scope of service while offering appropriate guidance. Through these assessments, the Company is able to manage supply and demand of key parts more effectively to reduce risks. The Company fully understands customers' needs, helps them resolve problems, and strives to deliver more satisfactory products and services. The Company maintains open communication channels with banks, employees, customers, and suppliers, and respects and protects their rightful interests. The Company respects stakeholders' interests and regularly identifies stakeholders and engages them in appropriate communication to learn their expectations and needs. By creating a Stakeholders section on website and setting up communication channels such as a contact person, FAQ, and opinion box, the Company responds to issues that are of concern to stakeholders, and in doing so protects stakeholders' interests. Communication with stakeholders is reported to the Board of Directors at least once a year, and progress of the most recent year was reported during the Board of Directors meeting held on December 22, 2022 website:(https://www.edison‐opto.com /stakeholder‐area/) 4. Directors' and supervisors' ongoing education: All directors of the Company have undergone training according to policies; please see "Directors' education" for details. 5.Execution of risk management policies and risk assessment standards (1) The Company has established "Risk Management Policy" and "Risk Management Rules" and implemented them with approvals sought from the Board of Directors on May 12, 2020, to serve as the ultimate risk management guidelines. Together, they cover everything related to risk management from management objectives, organization, accountability, scope to operating procedures and are implemented to enable the Company to effectively identify, measure, and control risk exposures within tolerable levels. (2) The Company risk management efforts cover six main categories of risk, namely: "Business risks," "Cybersecurity risks," "Hazard risks," "Environmental risks," "Financial risks," and "Other risks." (3) Each risk response organization is responsible for identifying the risk factors it may face, setting appropriate risk measurements (quantitative and non‐quantitative), thresholds, and standards to evaluate the frequency of risk incidents as well as the severity of impact on operations, so that risk management measures can be taken in response. (4) Organizational structur

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			(5) Progress is reported to the Board of Directors on a regular basis (at least once a year). Execution and outcomes of risk assessment were last reported to the Board of Directors on December 22, 2022. Relevant information has been disclosed on the Company's website: 6. Customer policy The Company provides customized design and manufacturing services, and prides itself for being able to satisfy customers with perfect solutions in various lighting applications while catering for the four most important elements of LED lighting (thermal, electrical, mechanical, and lighting). The Company has transparent and effective customer complaint procedures in place to support the products and services offered. Customer satisfaction surveys are conducted on a yearly basis to gather customers' opinions and feedbacks, and thereby enhance customer relations. 7.Liability insurance for directors The Company purchases liability insurance from Fubon Insurance Co., Ltd. to cover all directors and managerial officers for a sum of US$5 million. The duration of coverage lasted: From December 10, 2021, to December 10, 2022; it was arranged in an attempt to enhance Board functionality, and has been renewed upon maturity for a sum of US$5 million to cover the period from December 10, 2022 to December 10, 2023. All details of the insurance policy including sum assured, scope of coverage, and premium rate were approved during the 4th meeting of the 8th Board of Directors convened on November 4, 2022. 8. Intellectual property management plan The Company has devised an intellectual property strategy that takes into consideration its operational goals and R&D resources, and implemented an intellectual property management system that aims to create values, protect business secrets, enhance competitive advantages, and improve profitability. (1) Intellectual property strategy The Company targets vehicle, commercial, and industrial lighting as the primary segments, and its intellectual property strategy mainly focuses on acquiring high‐quality patents that are relevant to supporting its main product portfolio, and using patents as defense for product value and as means of gaining customers' trust. The Company also plans to claim R&D‐related tax credits and subsidies through patent acquisition, which in turn raises profitabilitywhile supporting operationalgoals. Board of directors/Chairman President/Plant manager Business risks Responsible units of various plants Cybersecurity risks IT Center Hazard risks Administration Environmental risks Administration Financial risk Finance and Accounting Division Other risks Responsible units of various plants Corporate Governance Officer

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			(2) Intellectual property management system The Company has been developing intellectual property‐related policies and systems since 2013, and has implemented "Intellectual Property Management Policy," "Patent and Trademark Application Policy," and "Reward Policy for Intellectual Property and Design Competitions" to date. In 2021, the Company implemented "Package Label and Trademark Management Policy" to support finished goods and customization. The "Reward Policy for Intellectual Property and Design Competitions," in particular, introduces the use of rewards to encourage innovation and development of invention patents, raise the quality and quantity of intellectual property rights proposals, and ensure optimal execution of intellectual properties. Dedicated personnel have been assigned to oversee the list of intellectual properties held on hand and the pipeline. Business secret, too, presents another critical control point, for which the Company has created online courses on business secrets management and made them accessible to employees over "e‐College." Through creation, promotion, and execution of the above systems, the Company is able to protect its R&D outcomes and secure technological leadership over peers. (3)Possible intellectual property risks and response measures Edison Group cooperates with world‐renowned business leaders including: LED Chip suppliers Epistar, San'an Optoelectronics, and Epileds and phosphor suppliers Mitsubishi and Intematix to avoid the risk of patent infringement of Edison Group's products by choosing materials that are free from the risk of patent infringement; and has dedicated personnel responsible for the layout and maintenance of intellectual property rights, such as the strategic planning of patents related to the Group's key products, such as automotive lighting, plant lighting, and infrared sensors, in addition to general lighting. (4) Intellectual property list or progress Edison Group had as of December 2022 acquired 198 patents including 34 invention patents that are mostly registered in Europe, USA, and Mainland China. By acquiring new technologies, the Company aims to avoid risk of patent infringement. The Company a strategic plan of patents for AC module, laser module and UVC component technologies: For AC module, we have obtained 38 patents from various countries, including 17 patents for inventions in Europe, US and China. For laser modules and UVC components: we have obtained 37 patents from various countries, including 1 U.S. patent for invention in the US. (5) Progress The Company had reported its intellectual property plan and execution to the Board of Directors on November 4, 2022. The following are the promotion and training on intellectual property rights in 2022. March ‐ Notes for signing contracts in North America terms on intellectual property rights), May ‐ Trade secret promotion, June ‐ Basic concepts of patent application, patent infringement case studies, August ‐ Import and export trademark management and promotion, October ‐ Rules for using R&D software...etc. 9.Cybersecurity risk management framework (1) Cybersecurity responsibilities and training The IT Center oversees cybersecurity within the Company. All resigned and transferred employees will have system access canceled and restricted according to procedures. The Company promotes internal cybersecurity awareness and conducts cybersecurity checks on a yearly basis; outcomes of which are circulated to the Chairman.

Assessment criteria			Actual governance	Deviation and causes of deviation from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			(2)Internet security control: The Company has set up firewalls tocontrol transmission and access of data outside the organization. Virus codes are regularly updated at terminals and are centrally controlled established. (3) Cybersecurity response: The Company examines emergency response plans on a regular basis and organizes annual drills to ensure the effectiveness of data recovery procedures. A backup mechanism has been implemented, thereby allowing data and systems to be covered in the shortest time possible if an incident occurs. (4) Data access control: Addition and change of access to application systems are carried out according to the procedures outlined in the IT Cycle. Each department is granted different access rights depending on their duties and functions. 10. Cybersecurity policy The Company has implemented Computer System Cycle and cybersecurity rules to enforce cybersecurity management. The IT Center oversees execution of cybersecurity tasks and operates with the following goals in mind: A. To maintain integrity and usability of data. B. To ensure that data is accessed by departments within their duties and functions. C. To prevent unauthorized use of data and system. D. To reduce intrusion risk for the Company's networks and systems. E. To prevent inappropriate use of network resources. F. To apply strict controls in accordance with the Personal Data Protection Act over access of any system where personal data is stored. (1) Management solutions The Company has adopted the following cybersecurity management actions to minimize cybersecurity risks and ensure that abnormalities are resolved and operations resumed in the shortest time possible when an incident occurs: A. External risk preventions: firewalls for filtering external access and blocking intrusions; spam filters for blocking social engineering mails; dual factor authentication for remote office sign‐in. B. Equipment management and protection: update of antivirus software, operating system vulnerability scan and enhancement, continuous monitoring of cybersecurity trends, and timely responses and training. C. Response and recovery: establishment of system backups and recovery drill, and implementation of response plans (for hacker intrusion, power outage etc.). (2) 2022 progress: A. The IT Center examined the cybersecurity policy regularly, and made a report to the Board of Directors on November 4, 2022, concerning evaluation of the cybersecurity risk management framework, the cybersecurity policy, cybersecurity risks, and outcomes of existing management measures. B. Promotion of information security awareness in 2022 (a) In 2022, arranged for the Group’s IT employees to attend external training courses on information security and internal information security technology exchange. (b) New employees were requested to attend information security seminar and training.

Assessment criteria	Actual governance	Actual governance	Actual governance
	Yes	No	Summary
			(c) The IT department pays constant attention to cybersecurity issues, gathers information on the latest threats, and shares them with all employees in a timely manner. C. Considering that cybersecurity is a new risk category, the Company had temporarily forgone cybersecurity insurance in light of the ongoing pandemic and the costs and yields associated with the new insurance. Nevertheless, the Company had undertaken the three management solutions and preventive measures mentioned above to effectively reduce cybersecurity risks amidst the new challenge. D. The Company did not fall victim to hacker attack or encounter any cybersecurity incident in 2021 that impacted operations.
(IX) Please explain the improvements made, based on the latest Corporate Governance Evaluation results published by TWSE Corporate Governance Center, and propose enhancement measures for any issues that are yet to be rectified. (i) The Company scored 92.53 during Taiwan Stock Exchange Corporation's 8th (2021) corporate governance evaluation, up from the 85.97 attained in the 7th (2020) evaluation but still managed to maintain same ranking in the top 6%‐20% tier among TWSE‐listed companies. With respect to the scoring indicators, the Company made improvements to "Board structure and functionality" and "Board structure and functionality" in 2021, and will continue seeking balanced improvement on all five aspects in the future out of respect for sound corporate governance. (ii) Improvements made in 2022: 1. To upload shareholder conference handbook and supplementary information in English 30 days before annual general meeting. 2. To upload English annual report 16 days before annual general meeting. 3. To disclose future R&D plans and expected expenses in annual reports. (iii) Expected improvements for 2023: 1. To publish material information both in English and Chinese simultaneously from the second half of 2023. 2. To continue enhancing corporate governance practices and implementing robust governance policies. (iv) All directors had completed the required training hours stipulated in "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies" in 2021. For more information, please see (8) Other information material to the understanding of corporate governance within the Company. (v)The Company schedules regular board meetings ahead of time each year. Directors who are unable to attend the scheduled meeting may communicate on the proposed motions in advance and present opinions through the use of proxy form. If there is a need to reschedule the date of board meeting at the last minute, the Company would try to arrange a time when all board members are able to attend for the highest attendance rate.

iv. Composition, responsibilities and operation of the Remuneration Committee:

1. Information about members of the Remuneration Committee

Type of identity	Qualifications Name	Work experience and professional qualifications	Number of other public companies in which they served as members of the remuneration committee	Remarks
Independent director	Wen‐Chao Wang	Please refer to page 16‐17 for information on professional qualifications of directors and independence of independent directors	0	Convener
Independent director	Tung‐ Hsiung Hung		1
Independent director	Yin‐Fei Liu		2
Independent director	Tseng‐Nan Chou		1

Note: On June 22, 2022, the Company's shareholders' meeting re‐elected the eighth term of directors and added one new independent director.

Information about the responsibilities of the Remuneration Committee
The main duty of the Salary and Remuneration Committee is to faithfully perform the following functions and powers with the attention of a good manager,and submit the recommendations to the board of directors for discussion：
(1) Formulate and regularly review the organizational regulations of the Salary and Remuneration Committee and propose amendments.
(2) Formulate and regularly review the policies, systems, and standards for directors and managers’ annual and long‐term performance goals and salary remuneration.
(3) Regularly evaluate the achievement of the performance goals of directors and managers, and determine the content and amount of their individual salaries。
Information about the operation of the Remuneration Committee
(1) The Remuneration Committee of the Company had 4 members, all of whom were held by the Independent Directors
(2) Term of office of the current members: The directors for the new term was re‐elected at the shareholders' meeting on June 22, 2022, so in 2022, there were two terms of the Remuneration Committee, namely the fourth and the fifth term, in which the term of office for the fourth Remuneration Committee was from June 18, 2019 to June 17, 2022, and the fifth Remuneration Committee was from June 22, 2022 to June 21, 2025. During the most recent year (2022), the Remuneration Committee met 2 times (A), and the qualifications and attendance of the members were as follows：

Position	Name	The number of actual attendances (B)	Number of attendances by proxy (A)	Actual attendance rate (%) (B/A) (Note)	Remarks
Convener	Wen‐Chao Wang	2	0	100%
Committee member	Tung‐Hsiung Hung	2	0	100%
Committee member	Yin‐Fei Liu	2	0	100%
Committee member	Tseng‐Nan Chou	1		100%	Note3
Other items which should be recorded: 1. If the Board of Directors did not adopt or amended the recommendations of the Remuneration Committee, it should state the date and session of the meeting of the Board of Directors, contents of proposals, resolution results and the Company’s treatment on the opinions of the Remuneration Committee (if the remuneration adopted by the Board of Directors was better than the one recommended by the Remuneration Committee, it should state the difference and reasons): no such situation. 2. If the members of the Remuneration Committee had objections or reservations and had records or written statements, they should state the date and session of the meeting of the Remuneration Committee, contents of proposals, opinions of all the members and treatment on the opinions of members: no such situation.

Note: (1) if a member of the Remuneration Committee left before the end of a year, the date of his resignation should be indicated in the remark column. The actual attendance rate (%) was calculated based on the number of meetings of the Remuneration Committee and his actual attendances during his tenure.
(2) Before the end of the year, if any member of the Remuneration Committee was re‐elected, the new and former members of the Remuneration Committee should be filled in, and the information that the member was formerly elected, newly elected or continuously elected and the re‐election date should be indicated in the remark column. The actual attendance rate (%) was calculated based on the number of meetings of the Remuneration Committee and their actual attendances during their tenure.
(3) The Company's shareholders' meeting on June 22, 2022 re‐elected the 8th term of directors and added one new independent director. Therefore, Independent Director Tseng‐Nan Chou was expected to attend one Remuneration Committee’s meeting in 2022.

(3)Regular review of salary and remuneration

The function of the Remuneration Committee of the Company was to assess the salary and remuneration policies and systems for the Directors and Managers of the Company in a professional and objective position. It met at least twice a year and may hold meetings at any time as necessary to make recommendations to the Board of Directors for reference upon its decision‐making.

A. Functions and powers of the Remuneration Committee of the Company
(a) To regularly review the remuneration measures of the Company and make suggestions for amendment.
(b) To formulate and regularly review the policies, systems, standards and structure of the performance and salary and remuneration of the Directors and Managers of the Company.
(c) To regularly evaluate the salary and remuneration of Directors and Managers of the Company.
B. When the Remuneration Committee performed its functions and powers, it should follow the following standards:
(a) The remuneration management should conform to the remuneration concept of the Company.
(b) The performance assessment on and salary and remuneration of the Directors and Managers should refer to the general level of payment in the industry, and consider the rationality of the connection between personal performance and the Company’s operating performance and future risks.
(c) The Directors and Managers should not be guided to be engaged in any acts beyond the risk appetite of the Company in pursuit of remuneration.
(d) The proportion of dividends paid to the Directors and senior Managers for short‐term performance and the payment time of some changeable remuneration should be decided by considering the characteristics of the industry and the nature of the Company’s business.
(e) The members of the Remuneration Committee should not participate in the discussion and voting on their personal remuneration decisions.

(4) The date and session of the meeting of the Remuneration Committee, contents of proposals, resolution results and the Company’s treatment on the opinions of the Remuneration Committee in the most recent year:

Remuneration Committee	Contents of Proposals and Subsequent Treatment	Resolution results	The Company’s treatment on the opinions of the Remuneration Committee
The 6th meeting of the fourth session (2022.02.24)	1. 2021 achievement and assessment results of performance objectives of the Directors and Managers. 2. Remuneration distribution to employees, Managers and Directors of the Companyin 2021.	All the members of the Remuneration Committee agreed to adopt	Submitted to the Board of Directors and adopted by all the Directors present
The 1th meeting of the fivth session (2022.12.22)	1. Nominated the convener of the fifth remuneration committee of the company 2. The Company’s 2021 Manager’s bonus proposal. 3. The Company’s manager promotion.	All the members of the Remuneration Committee agreed to adopt	Submitted to the Board of Directors and adopted by all the Directors present

Other items which should be recorded:

If the Board of Directors did not adopt or amended the recommendations of the Remuneration Committee: none.
If the members had objections or reservations on the resolutions of the Remuneration Committee and had records or written statements: none.
The Company adjusted the employees’ salary every year with reference to the market salary level and economic trend, and according to the Company’s operating performance and personal performance. In the past, the salary adjustment range was higher than the increase of market salary in order to narrow the gap between the market salary and the benchmark salary of the Company. However, the current gap had been narrowed. Therefore, the annual salary adjustment range was recommended to be set at the increase of market salary, and the changeable bonus was provided as a tool for incentive reward; in addition, when the employees were promoted, their salary would also be immediately adjusted to encourage and retain outstanding talents.

(V)Enforcement of sustainable development: The Company’s policies, measures, and fulfillment towards environmental protection, community engagement, society contribution, social services, public interests, consumers’ rights, human rights, safety, health and other social responsibilities.

Assessment criteria			Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
一、 Has the Company implemented a governance framework that supports sustainable development, and designated a unit that specializes (or is involved) in the promotion of sustainable development? Is the unit empowered by the board of directors and run by senior management, and how does the board supervise progress?	V		The Company has established the "Sustainable Development Task Force" as part of the governance structure for sustainable development (the Chairperson will serve as the chief convener, and the heads of relevant departments are responsible for each task force) for overseeing sustainable development within the organization. In addition to the proposal and execution of policies, systems, management guidelines, and plans relating to sustainable development, the task force is also responsible for the ongoing review of sustainable development practices and compliance, and promoting awareness within the organization. Any major violation or concern for material harm to the Company will be reported to the independent directors in writing immediately upon discovery, and brought to attention during regular Audit Committee and Board of Directors' meetings. (i) The Company has assembled 4 teams to support sustainable development; responsibilities and operation of each team are explained below 1. Operational Management Team: Business/financial risk and performance, corporate governance/internal audit and control, stakeholder communication, and compliance/ethics and integrity. 2. Social Care Team: Community feedback/charity, workers' rights/workplace care, employee salary/benefits, and employee training/talent development and management. 3. Environmental Sustainability Team: Energy efficiency/climate change, energy and carbon reduction/gas management, greenhouse gas/industrial waste management, occupational safety and health/environmental risk management. 4. Green Product Team: Product planning/product quality, promotion of green product/R&D and technological innovation, green production/reducing pollution from manufacturing, procurement, and supply chain management. (ii).Four meetings were held in 2022, and the contents of proposals include： 1. Identify sustainable issues that need attention and formulate corresponding action plans. 2. Goals and Policy Revisions on Sustainability‐related Issues. 3. Supervise the implementation of sustainable management matters and evaluate the implementation status. (iii). Progress is reported to the board of directors at least once a year 1. CSR report made to the board of directors on November 7, 2017 2. CSR report made to the board of directors on November 6, 2018 3. CSR report made to the board of directors on November 12, 2019 4. CSR report made to the board of directors on November 10, 2020 5. ESG(CSR) report made to the board of directors on November 12, 2021 6.ESG report made to the board of directors on December 22,2022	No material deviation is found
二、 Has the Company conducted risk assessment on environmental, social, and corporate	V		The Company's "Risk Management Policy" and "Risk Management Rules" were passed during the 8th meeting of the 7th board of directors held on May 12, 2020. By applying principles of materiality on corporate social responsibilities and assessing risks of important issues, the Company has devised the following risk management policies or strategies for environmental, social, and governance issues that are likelyto affect its operations,based on the outcomes of the	No material deviation is found

Assessment criteria			Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)
	Yes	No				Summary (Note 2)
governance issues that are relevant to its operations, and implemented risk management policies or strategies based on principles of materiality? (Note 3)			assessment: Material issues Scope of risk assessment Environment Environmental protection and ecosystem conservation Social Occupational safety Product safety			Risk management policy and strategy 1. The Company signs contracts with legally established general/industrial waste service providers. The office building is cleaned with resources recycled on a daily basis to enforce environmental protection and reuse. The Company also supports energy and carbon reduction and water resource protection initiatives through action. Toilets are fitted with sensor faucets, and employees are reminded to turn off light when not in use, adopt paperless processes, and conserve use of water. Greenhouse gas and water usage surveys are conducted on a yearly basis, and goals have been set to progressively reduce CO2emission and water consumption intensity. 2. The Company has obtained ISO14001 ‐ Environmental Management System certification. 3. All products offered by the Company have complied with product and service regulations imposed by government agencies, and conform with EU RoHS standards to be free of hazardous substances. The EU Energy‐Related Products Directive (ErP), the US CEC Title 20 and CEC Title 24 energy efficiency certification standards, and the Taiwan Environmental Energy Conservation Label are also incorporated to reduce the impact of production on the environment. 4. The TCFD framework is used to establish the Company's climate risk identification process, and the results of inter‐departmental discussions on climate risks and opportunities are used to identify the corresponding opportunities and risks. The Company devotes great attention to issues concerning workers' health and healthy work environment. It complies with occupational safety and health regulations by hosting occupational safety and health training courses and "Fire Safety Seminars" on a regular basis. Exclusive parking lots, dormitories, nursing spaces, 24‐hour security system, diners etc. have been provided for the comfort and health of employees. The Company recognizes how significantly a healthy workforce contributes to the organization's competitiveness, which is why it arranges regular health checkups and has medical personnel stationed on‐site for health management and consultation. 1. All products offered by the Company have complied with local government rules and regulations, obtained certifications (such as BSMI, UL, CE etc.) that are necessary for sale in
				Material issues	Scope of risk assessment	Risk management policy and strategy
				Environment	Environmental protection and ecosystem conservation	1. The Company signs contracts with legally established general/industrial waste service providers. The office building is cleaned with resources recycled on a daily basis to enforce environmental protection and reuse. The Company also supports energy and carbon reduction and water resource protection initiatives through action. Toilets are fitted with sensor faucets, and employees are reminded to turn off light when not in use, adopt paperless processes, and conserve use of water. Greenhouse gas and water usage surveys are conducted on a yearly basis, and goals have been set to progressively reduce CO2emission and water consumption intensity. 2. The Company has obtained ISO14001 ‐ Environmental Management System certification. 3. All products offered by the Company have complied with product and service regulations imposed by government agencies, and conform with EU RoHS standards to be free of hazardous substances. The EU Energy‐Related Products Directive (ErP), the US CEC Title 20 and CEC Title 24 energy efficiency certification standards, and the Taiwan Environmental Energy Conservation Label are also incorporated to reduce the impact of production on the environment. 4. The TCFD framework is used to establish the Company's climate risk identification process, and the results of inter‐departmental discussions on climate risks and opportunities are used to identify the corresponding opportunities and risks.
				Social	Occupational safety	The Company devotes great attention to issues concerning workers' health and healthy work environment. It complies with occupational safety and health regulations by hosting occupational safety and health training courses and "Fire Safety Seminars" on a regular basis. Exclusive parking lots, dormitories, nursing spaces, 24‐hour security system, diners etc. have been provided for the comfort and health of employees. The Company recognizes how significantly a healthy workforce contributes to the organization's competitiveness, which is why it arranges regular health checkups and has medical personnel stationed on‐site for health management and consultation.
					Product safety	1. All products offered by the Company have complied with local government rules and regulations, obtained certifications (such as BSMI, UL, CE etc.) that are necessary for sale in

			Compliance(Note 1)	Compliance(Note 1)
Yes	No			Summary (Note 2)
				local regions, and are entirely free of hazardous substances (such as RoHS, REACH etc.). The Company also passes quality management systems to ensure the quality of products and services delivered to customers. Service hotlines and websites are used to communicate with customers for improved satisfaction, and the Company takes initiative in conducting annual satisfaction surveys to enhance business relationship with customers. It is the organization's belief that a mutually beneficial relationship provides the foundation for sustainable development. 2. In an attempt to transfer product liability risk, minimize property losses, improve product safety, enhance corporate image, and protect consumers as part of corporate social responsibilities, the Company has even purchased global liability insurance on modules and final products for a coverage of US$1.5 million (insurance certificate: 70‐110‐09559062‐00007‐PDL).
		Corporate governance	Socioeconomics and compliance	The Company enforces corporate governance according to its internal audit and internal control systems. Compliance courses covering a variety of issues and targeting all employees or senior managers are organized on a yearly basis. Through compliance education, the Company aims to promote legal awareness across employees of all levels and therebyavoid risk of violation..
			Enhancement of the functions of directors Fulfillment of the responsibilities of directors	1. The Company keeps directors up‐to‐date on their legal duties by organizing training courses covering issues such as the latest regulations, systems, and policies each year. 2. The Company purchases liability insurance to protect directors from litigations and claims that may arise as a result of performing duties as a prudent manager.
			Stakeholder engagement	1. The Company used to favor relationship with investors, but as other stakeholders become more significant to the Company's growth, it is critical to communicate and respond adequately to issues that are of concern to key stakeholders, and therefore eliminate risk of conflict or litigation that may arise due to differences in stakeholders' perceptions from those of the Company. 2. A broad range of communication channels have been created to support productive communication and reduce conflict and misunderstanding. The Company has created an investor mailbox and assigned the spokesperson to handle and respond to queries. 3. Stakeholder grievance channels have been implemented. The Company and subsidiaries

Assessment criteria				Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No		Summary (Note 2)
				have issued statements that: All business activities must be carried out while observing corporate social responsibilities, corporate ethics, and government regulations. All employees are prohibited from engaging in any form of unfair commercial practice, and must refrain from any form of bribery, improper gain, fraud, coercion, illegal conduct, and possible conflict of interest for long‐lasting partnership.
三、 Environmental issues (1) Has the company developed an appropriate environmental management system, given its distinctive characteristics? (2) Is the Company committed to making efficient use of energy, and using renewable materials that produce less impact on the environment?	V V		(1)All major plant sites of the Company have been certified for ISO 14001 ‐ Environmental Management System, and implemented environmental management systems, policies, and standards to enforce control and ensure compliance with respect to pollution sources and production process, and thereby minimize environmental impact across all types of pollutants. The Company has a specialized unit in place to educate and train new recruits as well as existing employees. By raising employees' awareness, the Company is able to enforce its environmental, safety, and health policies and goals. The Company’s certification for ISO 14001 Environmental Management System Validity: June 19, 2020, to May 16, 2023 Date of certification: July 22, 2008 Certificate number: TW11/10239. (2)The Company is committed to increasing energy efficiency. Some of the actions taken include: 1. Introducing LED solutions in line with EU Eco‐Design Directives for Energy‐relative Products (ErP; formerly EuP). 2. Introducing LED solutions in line with U.S. CEC Title 20 and CEC Title 24. 3. Introducing LED solutions in line with Taiwan's environmental protection/Green mark and energy labels 4. The Company commits significant resources to increasing energy conversion efficiency, and continually develops advanced power converters that offer high conversion efficiency. The Company uses resources in ways that have the least impact on the environment, including: 1. Recycling and reuse of packaging materials. 2. Recycling of used paper; printing of drafts and internal documents on used paper; and double‐sided printing or multi‐page shrink‐printing for promotional documents and reports. 3. Total ban on the use of disposable/plastic utensils. The Company orders custom‐made utensil sets made with Grade 304 stainless steel and gives them to employees as an encouragement for taking actions toward reducing energy, carbon, and pollution. 4. Implementation of an online, digital signature system to reduce the use of paper and promote a paperless office environment. 5. Implementation of active room temperature control and changing lighting equipment to LED solutions in office and plant areas for energy conservation.		No material deviation is found No material deviation is found

Assessment criteria			Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
			6. The Company engages professional environmental service providers to recycle and reuse general as well as industrial waste at all plant sites, and therefore prevents secondary pollution and wastage of viable resources. 7.Signs are being placed in office and plant areas to promote environmental protection awareness, and to serve as reminder for the importance of energyand carbon reduction.
(3) Does the Company assess potential risks and opportunities associated with climate change, and undertake measures in response to climate issues?	V		(3)In response to climate change, the Company follows the recommendations of the Task Force on Climate‐Related Financial Disclosures (TCFD) and adopts low‐carbon transformations and climate adaptations through four main aspects (see the chart below). Driven by the conviction to grow in coexistence with nature, the Company not only implements a series of green manufacturing, green product, green innovation, and green management measures, but also continues to enforce energy management and water management practices in routine operations, thereby contributing toward global sustainability TCFD disclosure comparison chart				No material deviation is found
			Aspect	The 11 disclosure	Management strategies
				recommendations of	and action plans of the	Execution progress in 2022
				TCFD	Company
			Governance	 The Board’s	A Sustainable	1. The corporate governance officer
				oversight of	Development Task Force	held regular work meetings in 2022
				climate‐related	comprising the	to monitor the outcomes of energy
				risks and	Chairperson and the	and carbon reduction solutions.
				opportunities	management team has	Meeting conclusions were
				 Management’s	been assembled. The	subsequently reported to the
				role in assessing	Chairperson serves as	Chairperson.
				and managing	convener while the	2. Energy and carbon reduction
				climate‐related	corporate governance	plans and execution were reported
				risks and	officer serves as deputy	in two Board of director meetings in
				opportunities	convener of the task force,	2022:
					and their responsibilities	2‐1. During the Board meeting held
					are to determine the	on November 4, 2022, a report was
					long‐term goals and	made on the planning, execution,
					management strategies for	and certification of the GHG
					climate change and	inventory for Q3 2022.
					execute related actions.	2‐2. During the Board meeting held
					The task force makes	on December 22, 2022, a report
					regular reports to the	was made on the potential risks and
					Board of Directors (at least	opportunities of climate change on
					once a year).	the Company's current and future
						operations, and response
						measures.
			Strategy	 Climate‐related	Scenario analyses will be	1. Climate‐related risks and
				risks and	used more extensively to	opportunities in the short, medium,
				opportunities the	learn the effect of climate	and long term, as well as their
				organization has	change on the Company's	effects on the Company's business
				identified over	operations.	model, strategy, and financial plan,
				the short,	In response to the nation's	have been identified for 2022 (see
				medium, and long	emission reduction policy,	the following chart).
				term	the Company will make	2. Develop LED production
				 Impact of climate	progressive plans and	technologies with low‐carbon
				related risks and	adjustments for future	footprints, and explore low‐carbon
				opportunities on	operations, and	materials that are friendly to the
				the organization’s	incorporate policy	environment.
				businesses,	concerns into the	3. Develop energy‐efficient,
				strategy, and	decision‐making process.	low‐carbon, and smart lamp for
				financial planning		lower environmental impact.
				 Resilience		4. Begin assessment of

				Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)
Yes	No					Summary (Note 2)
				(including a 2°C or				upstream/downstream supply
				more severe				chain partners
				scenario)
		Risk		 The processes for		Take into consideration the		Set short, medium, and long‐term
		management		identifying and		industry TCFD report and		goals and devise solutions for each
				assessing		identify and evaluate risk		of the goals. The corporate
				climate‐related		issues that are applicable		governance officer holds regular
				risks		to the Company.		work meetings to monitor the
				 The processes for				outcomes of energy and carbon
				managing				reduction solutions. All findings are
				climate‐related				reported to the Chairperson and
				risks				compiled into attachments of the
				 How the above				Board meeting agenda to serve as
				processes for				reference.
				identifying,
				assessing, and
				managing
				climate‐related
				risks are
				integrated into
				the organization’s
				overall risk
				management
		Metrics and		 Whether the		1. Plans have been made		1. GHG reduction
		targets		metrics used are		to adopt ISO 14064‐1 in		Using 2020 as the base year, CO2
				in line with the		2023, conduct internal		emission intensity is to be reduced
				organization's		inventory in 2024, and		by 10% in 2025 compared to 2020.
				strategy and risk		obtain external		(As of 2022, CO2emission intensity
				management		certification in 2025.		has already been reduced by
				process		2. Considering that the		33.19%)
				 Scope 1, Scope 2,		Company's capital is less		2. Water management:
				and, if		than NT$2 billion and given		Using 2020 as the base year, water
				appropriate,		the state of its operations,		intensity is to be reduced by 10% in
				Scope 3		the Company only		2025.
				greenhouse gas		discloses Scope 1 and		(As of 2022, water intensity has
				(GHG) emissions,		Scope 2 emissions at the		already been reduced by 46.03%)
				and the related		moment, and will		3. Ongoing development of
				risks		progressively include		energy‐efficient LED road lamps and
				 The targets used		Scope 3 emissions in the		automotive LED lighting
				to manage		future.
				climate‐related
				risks and
				opportunities
		In May 2020, the Company passed its own "Risk Management Policy" to facilitate response to the impact of climate change on business operations. By recognizing extreme weather and climate change as "environmental risks," we not only address them as part of the risk management framework, but also make annual reports to the Board of Directors on the risk assessment factors involved, the effects they have on the organization, and the responses taken so that the Board is constantly informed on related issues. The Company last presented its report to the Board of Directors on climate‐related risks and opportunities for the short, medium, and long term, as well as the effects they have on the Company's business model, strategy, and financial plan, on December 22, 2022. Potential risks and opportunities of climate change on the Company's short, medium, and long‐term operations, and response measures for climate‐related issues
		c a t	Climate		Potential risks		Impact on business		Opportunities	Response

				Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
Yes	No			Summary (Note 2)
			change issue			operations	identified	measures
			of concern
				Current	Future


		Environmental risks	Impact of	1. Typhoons	More frequent	1. Emergency	1. Replacement of	1. The Company
			typhoons and	disrupt	extreme weathers	response measures	outdated	makes rolling
			floods on	power to the	> more frequent	for power outage	machinery entitles	adjustments and
			production	plant chiller	extreme Typhoons	and equipment	the Company to	reviews response
			activities	and cause	> heavy rains that	damage have been	incentives and	measures to
				damage to	impact supply and	implemented and	energy‐saving	strengthen its
				water tower	shipment	are rehearsed,	subsidies from the	resilience against
				2. Floods		whereas equipment	local government	force majeure
				disrupt		is routinely	2. Floods in China	events. Actions
				suppliers'		maintained and	in 2022 prompted	such as
				production,		serviced	customers to	replacement of
				traffic, and		2. The Company has	make advance	outdated
				sales		identified 2‐3	purchases, which	machinery,
				activities		alternative suppliers	increased sales	advance inventor	y
						for each material and	opportunities	purchase, capacit	y
						diversified sources of		re‐allocation etc.
						supply to minimize		have been
						impact.		adopted.
						Arrangements such		2. Regular disaste	r
						as split shipment		prevention
						have been		training,
						implemented		emergency
								response teams,
								and recovery plan	s
								have been adopte	d
								to ensure
								continuity of
								business
								operations if
								disaster occurs.
								3. The Company
								insures its assets	to
								mitigate the
								possible loss
								caused by extrem	e
								weather
								abnormalities, an	d
								uses insurance to
								transfer the risks
								and make up for
								the loss. Heavy
								rainfall occurred i	n
								the vicinity of
								Yangzhou Plant in
								2022, causing
								damage to plant
								gates, windows,
								and the water
								tower. All damag	e
								has already been
								covered by
								insurance.
								4. A supply chain
								backup system ha	s
								been established.
			Carbon	1. The	1. Increased risk of	1. Energy control	Replacement of air	1. Green energy
			reduction	energy	investing in	policies in China	compressors and	and green
			Emissions	control	high‐carbon assets	impact related	energy‐intensive	procurement
			management	policies	2. Increased cost	supply and shipment	machinery	solutions have
			Water	implemented	of greenhouse gas	activities	presents	been adopted to
			management:	in China in an	emissions	2. GHG reduction	opportunities for	support the
				attempt to	3. The Company	The Company has	technological	Company's goal o	f
				suppress	acknowledges the	been monitoring and	upgrade, local	becoming a
				carbon	ongoing climate	inventorying	subsidy, energy	low‐carbon
				emission	change and	greenhouse gases	conservation,	business.
				have led to a	recognizes	since 2014. Using	cost‐saving	2. The new factor	y
				halt in	consistent water	2020 as the base	benefits, and	and office comple	x

			Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
Yes	No			Summary (Note 2)
			production	supply as a	year, goals have	production	of the Taiwan
			activities, or	common goal in	been set to reduce	efficiency	headquarters is a
			caused	countries around	CO2intensity by 10%	improvements	silver‐grade
			suppliers to	the world	in 2025.		earthquake‐resist	a
			suspend		3. The Company is		nt green building
			supply		required to pay a		equipped with
			2. Excessive		VOC surcharge on		total heat
			power		quarterly emissions		exchanger and CO	2
			consumption		that exceed the		outdoor air
			and		threshold (1 MT);		control;
			management		emissions are		furthermore, the
			of outdated		currently under		basement has be	en
			equipment		sound control.		designed to
			3. The		4. Water		recover and store
			production		management:		rainwater and
			process uses		Motivated by social		condensed water
			organic		responsibility and		for plant watering
			solvents such		the shortage of		of the entire
			as acetone		water resources, the		building. These
			and		Company has set the		design features
			isopropyl		goal of reducing		help reduce wate	r
			alcohol for		water intensity by		consumption and
			cleaning		10% by 2025		increase energy
			purpose,		compared to the		efficiency for a
			which may		base year 2020.		lower
			give rise to				environmental
			volatile				impact.
			organic				3. In response to
			compounds				the energy contro	l
			(VOCs) and				policies in China,
			require				the Company has
			adequate				been conducting
			monitoring				ongoing
			and control				evaluations and
							replacing outdate	d
							machinery and ai	r
							compressors to
							reduce power
							consumption, cos	t,
							and carbon
							emissions and
							improve
							production
							efficiency.
		Low‐carbon	Countries	1. Considering	Increased costs and	1. Increased	The Company
		products and	around the	how the US and	expenses	support for	actively promotes
		services	world are	European		low‐carbon and	digital services as
			actively	countries are		environmentally‐fr	well as the
			reducing	phasing out the		iendly industries	research and
			greenhouse	sale of fossil fuel		such as electric	development of
			gas emission,	vehicles by 2030,		vehicles, bicycles,	low‐carbon
			exploring	the cost of		and road lamps, in	products, and has
			low‐carbon	transitioning to		which the	been increasingly
			products and	low‐carbon		Company has	purchasing green
			applications,	technology has		accumulated	label‐certified,
			and	increased		extensive	energy‐efficient,
			supporting	substantially.		experience	and low‐carbon
			new product	2. Introduction of		through previous	supplies.
			development	carbon tax (such		project
			and	as on high‐carbon		involvements and
			diversificatio	imports)		by supplying
			n in response			energy‐saving
			to the Paris			products to
			Agreement			customers.
						2. The Company
						joined the MIH
						alliance in 2021
						3. LEDs are
						considered a
						green product for
						their energy

Assessment criteria					Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)			Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No				Summary (Note 2)
								efficiency and low
								carbon emissions,
								and they are used
								for lighting,
								electric vehicles,
								and medical
								applications at an
								increasingrate.
				Purchase of	1. Saving of	1. Net‐zero	Investment in green	Installed	Project teams hav	e
				renewable	power	transformation in	energy equipment	ground‐mounted	been assembled t	o
				energy (green	expense	alignment with	and maintenance	solar power	evaluate the
				equipment)	2. Stabilized	the nation's "2050	costs	equipment (such	potential of a
					power	Net Zero		as rooftop panels)	"Distributed
					source	Emissions" policy		at factories in	rooftop PV projec	t"
								China to power	in the factories in
								the Company's	China.
						2. Long‐term (20		facilities and
						years) contracts		occasionally sell
						with equipment		excess electricity
						vendors pose		to local power
						additional		companies.
						variables.

(4) Does the Company maintain statistics on greenhouse gas emission, water usage, and total waste volume in the last two years, and implement policies aimed at reducing greenhouse gas, water, and waste?	V		(4)	The Company persistently enforces greenhouse gas emission policy as part of its corporate social responsibilities, and has waste management rules in place to encourage resource recycling and reduce pollution to the environment. The Company conducts annual greenhouse gas monitoring and survey, and engages Yu Da Technical Consultant Co., Ltd. to perform random tests on a regular basis. Item 2020 2021 2022 Greenhouse gas emission (kg)(Note) 1,242 1,352 1,445 Water usage (cubic meters) 13,111 13,200 11,365 Total waste volume (tonnes) 13.46 8.47 7.91 Note 1: Data between 2020 and 2022 has been verified by the testing agent ‐ Yu Da Technical Consultant Co., Ltd. Note 2: Data coverage: All of Edison Opto's plants located in Zhonghe plus the Zhonghe Plant of the subsidiary Edison‐Litek set the following quantitative goals on greenhouse gasreduction and water management (1) Greenhouse gas reduction: CO2emission intensity (power usage/$1 million of production value) to reduce 10% by 2025 compared to 2020. (2) Water management: The Company acknowledges the ongoing climate change and recognizes consistent water supply as a common problem in countries around the world. Motivated by social responsibilities and shortage of water resources, the Company has set the goal of reducing water intensity (water usage/$1 million of production value) by 10% by 2025 compared to 2020 (the base year). Measures for accomplishing goals: (1) Greenhouse gas reduction: Energy‐saving measures are being implemented on three main aspects: air conditioning, electrical lighting, and others. Energy‐intensive equipment is being inspected on a regular basis and replaced when appropriate. (2) Water management: Water conservation measures such as the use of sensor faucets, reduction of water dispense volume, etc. have been implemented to save water.						No material deviation is found

Assessment criteria			Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
			Current progress: (1) CO2emission intensity in 2022 had reduced by 33% compared to 2020 (the base year). (2) Water intensity in 2022 had reduced by 46% compared to 2020 (the baseyear).
四、 Social issues (1) Has the Company developed its policies and procedures in accordance with laws and International Bill of Human Rights?	V		(1) The Company respects and supports globally recognized human rights standards including "Universal Declaration of Human Rights," "The UN Global Compact," and "Conventions of International Labor Organization," and prohibits any action that violates human rights. All individuals within and outside the organization are treated fairly with dignity. Our human rights policy encompasses the following commitments: 1. Recruitment policy: Edison Opto does not use child labor, forced labor, bonded labor, or involuntary labor. Furthermore, the Company enforces diversity and openness of the workplace and offers equal work opportunities without discrimination whether in terms of ethnicity, skin color, age, gender, sexual orientation, illness, disability, nationality, pregnancy, religion, political background, family profile, marital status, or other differences prohibited by laws. 2. Respect for human rights at workplace: The Company complies with the requirements of local regulations, such as Labor Standards Act and Act of Gender Equality in Employment, by eliminating all forms of forced labor, employment discrimination, and harassment. The Company respects privacy and is committed to creating a fair, dignified, safe, and equal work environment that is free of discrimination and harassment. 3. Reasonable work hours: Work hours are set according to local regulations, and rules on work time and overtime have been clearly outlined. 4. Healthy workplace: Employees are given several forms of assistance to maintain health and work‐life balance. Health‐related seminars are held on a regular basis whereas health checkups and employee care events are organized annually. 5. Labor‐management communication: Opinion boxes have been made available and labor‐management meetings are being held regularly to facilitate communication, so that issues can be resolved for the benefit of both sides. 6. Training: Courses have been arranged to train employees on relevant legal knowledge and technical skills. Through internal and external training, employees are given the knowledge and skills needed to grow. In 2022, the Company organized 57 internal and external training courses covering a wide variety of topics from regulations, product introductions, quality management, and introduction of suppliers' materials to health. These courses received a total of 1,523 enrollments	No material deviation is found
(2) Has the Company developed and implemented reasonable employee welfare measures (including compensation, leave of absence	V		(2) It has been clearly stated in the Company's compensation policy that employees' compensation includes a performance bonus that is calculated based on attainment of performance targets on the organization level. Furthermore, to ensure that business results are shared with employees, it has been stated in the Articles of Incorporation that net profits reported in any given year are subject to employee remuneration of 5%‐15%, which the board of directors may resolve to distribute in shares or in cash. Employees of subsidiaries who meet certain criteria are also entitled to receive remuneration.	No material deviation is found

Assessment criteria			Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
and other benefits), and appropriately reflected business performance or outcome in employees' compensations?			The Company has established work rules, attendance policy, and personnel management policy in accordance with Labor Standards Act, and implemented reasonable compensation policy and performance evaluation system that includes the use of performance interview. The outcome of which is taken into account to support decisions such as promotion and remuneration. The Company has implemented its own retirement policy in accordance with "Labor Standards Act" and "Labor Pension Act" to accommodate employees' life after retirement. A Labor Pension Fund Supervisory Committee has also been assembled to oversee management of pension fund, as well as execution of pension contributions and benefits. 1. Employees who adopt pension rules of the Labor Standards Act shall have years of service compensated using the following standards: two basis points are awarded for every year of service rendered. However, one basis point is awarded for every full year of service rendered beyond 15 years, subject to a maximum of 45 basis points. Services less than six months are counted as one half year, whereas services more than six months are counted as one full year. 2. For employees who opted to continue adopting pension rules of the "Labor Standards Act" after the Labor Pension Act came into effect and those who opted to carry forward years of service from before enactment of Labor Pension Act, pension benefits are paid according to the rules outlined in the preceding Subparagraph. 3. Employees who opted for pension rules of the Labor Standards Act and are compelled to retire under Subparagraph 2, Paragraph 1, Article 35 shall be given 20% additional pay if their mental or physical disability was caused while performing job duties. 4. For employees who are subject to the pension rules of the Labor Pension Act, the Company makes contributions equal to 6% of their monthly salary into their personal pension accounts. Benefit claims are subject to the rules imposed by the authority. An Employee Welfare Committee has been assembled to promote labor‐management relations, unite employees, and cater for employees' benefits. The committee is responsible for the planning and execution of welfare programs, as well as the planning and payment of annual employee benefits. The Company offers the following benefits to employees: 1. Occasion‐based benefit: includes birthday cash, Labor Day cash, Duanwu Festival cash, Mid‐autumn Festival cash, new year cash, year‐end banquet and lottery. 2. Long service reward: employees are given long service rewards upon accumulating 5 years or 10 years of service as a gratitude for their dedication. 3. Allowances and subsidies: employees are entitled to a comprehensive range of subsidies from wedding, funeral, child birth, hospitalization, on‐job training, children's education, dormitory to car parking lot. 4. Work‐life balance: the Company values employees' family relations, and organizes activities that employees may engage with family members, such as domestic/overseas group trip, barbecue in forest, mountain cleanuphike,karaoke competition,table tennis tournament,Wii

Assessment criteria			Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
			tournament etc. These activities not only relieve employees' stress from work,but alsopromote stronger unitytowards the Company.
(3) Does the Company provide employees with a safe and healthy work environment? Are employees trained regularly on safety and health issues?	V		(3) The Company provides employees with a safe and healthy work environment according to rules, and has made the following arrangements: 1. Group omnibus insurance: Each employee is covered by Labor Insurance and National Health Insurance from the day onboard as required by laws. In addition, the Company offers a group omnibus insurance package covering term life, accident, accident treatment, cancer treatment, and critical illness with 100% subsidized premiums to provide employees with more comprehensive protection. 2. Employee health checkup: The Company complies with Regulations Governing Worker Health Protection by subjecting employees to bi‐annual health checkups and follow‐ups. Physicians are invited to provide consultation and interpret reports one‐to‐one on‐site the work premise. 3. On‐site services provided by contracted medical personnel: The Company has contracted medical personnel to take care of health management, occupational disease prevention and other labor health protection matters. 4. Exclusive nursery room: Nursery rooms have been established exclusively for postpartum employees, thereby making the workplace friendly to child bearers. 5. Smoke‐free workplace: The Company supports the government's smoke‐free workplace policy and organizes a series of smoking cessation seminars, competitions, and incentives. 6. Premise security: All plant sites are protected with surveillance, access control, and security guards 24 hours a day, including night time and holidays. 7. Servicing and cleaning of air conditioners: Service providers have been contracted to clean and service air conditioners on all floors of plant premise each year. Doing so not only increases energy efficiency of the central air conditioning system, but also reduces build‐up of dust and fungus inside ventilation ducts to improve office air quality and prevent harm to employees' health. 8. Testing of drinking water: Service providers have been contracted to replace filter and service water fountains on a quarterly basis. E. coli count and total bacteria count are tested regularly to ensure that water quality conforms with legal standards. Test results are posted beside each water fountain for employees' reference. 9. Hazard‐free work hours: The Company has 174 workers participating in the "Hazard‐free Work Hours Campaign" introduced by the Occupational Safety and Health Administration, Ministry of Labor, and accumulated 1,973,299 hazard‐free hours between February 2017 and November 2022. 10. Key safety and health management tasks: (1) The Company has designated "Safety and Health Officer/First‐aid Officer/Fire Safety Officer/Organic Solvent Operations Officer" inside plant premises according to the Occupational Safety and Health Act. (2) All employees exposed to chemical substance are required to undergo training in order to develop proper knowledge on the use of chemical substance. (3) Allplantpremises are equipped with emergencyeye wash stations	No material deviation is found

Assessment criteria	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
			that workers may use of wash off incidental contact of alcohol/acetone in the eye or face. (4) All plants are equipped with robust fire safety systems and equipment that are inspected and reported regularly according to the Fire Services Act. Fire safety training and emergency response drills are carried out every six months at all plant premises. (5) All plants are required to conduct 5S environment inspections on a weekly basis, and exercise proper supervision and improvement over environment safety. (6) All plants are required to conduct regular inspections and tests on wiring and power usage to ensure electrical safety and prevent hazard. (7) All plants are required to conduct their own inspections and maintenance over machinery and equipment, and do so in daily, weekly, monthly, or yearly cycles as deemed appropriate to ensure the safety of machinery and equipment. 11. Occupational safety and health progress: (1) Worker environment monitoring: Work environment test is conducted twice a year to gather information on workers' environmental exposure, and thereby protect them from hazardous substances, giving them a healthy and comfortable environment to work in. (2) Equipment safety management: The Company classifies its machinery and equipment, and tightens management over hazardous machinery and equipment. (3) Safety and health training and promotion: All new and transferring workers are required to undergo 3 hours of general safety and health training before commencing duty. (4) Work safety performance in the last 3 years ‐ There was zero case of disablinginjury.
(4) Has the Company implemented an effective training program that helps employees develop skills over their career?	V		(4) The Company values employees' career development, and budgets and executes internal as well as external training programs on a yearly basis. Required skills and training courses have been outlined for each job role, so that line managers and employees themselves may take progressive steps toward improving practices or skills to ensure target accomplishment. The Company has well‐defined plans in place to train and develop critical talents, and support their progression toward their desired positions. Besides promotion, the Company also offers job rotation and expatriate opportunities as viable career paths. Furthermore, the Company encourages employees to develop learning habits and build up professional knowledge in their free time, and offers on‐job training incentives and subsidizes English language studies on a monthly basis.	No material
				deviation is
				found

(5) Has the Company complied with laws and international standards with respect to customers'	V		(5) The Company takes responsibility in the products offered and values marketing ethics. All research, development, procurement, production, operation, and service processes observe government regulations and international rules. The Company has established consumer protection policies and created a Stakeholders section on its website where visitors may access grievance channels and e‐mail links. The Company is able to resolve consumers' complaints in relatively short time, and has "Customer	No material deviation is found

Assessment criteria	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
health, safety, and privacy, marketing and labeling in all products and services offered, and implemented consumer/custo mer protection policies and complaint procedures? (6) Has the Company implemented a supplier manage‐ ment policy that regulates sup‐ liers' conducts with respect to environmental protection, occupational safety and health or work rights/ human rights issues, and tracked suppliers' performance on a regular basis?	V		Complaint Handling Procedures" in place to analyze causes of complaint and make improvements to prevent similar occurrence. (6) The Company has implemented "Supplier Management Procedures" and disclosed "Supplier Management Policy" on its website that outlines suppliers' compliance requirements with respect to environmental protection, occupational safety and health, and work rights/human rights issues. The procurement form is printed with the Company's environmental goals of "Resource Conservation, Compliance, Pollution Prevention, and Carbon Reduction," for which suppliers are constantly reminded to observe and take part in the creation of a green, environment‐friendly, safe, healthy, and sustainable supply chain. The Company evaluates suppliers once a year on the quality, timeliness, and services delivered. Outcomes of the evaluation will determine how the Company maintains its relationship with each supplier. The Group conducted on‐site or online audits on a total of 39 suppliers in 2022, and continued to enforce supplier management.	No material deviation is found
五、 Does the Company prepare sustainability report or any report of non‐ financial informa‐ tion based on international reporting standards or guidelines? Are the abovemen tioned reports supported by assurance or opinion of a third‐ party certifier?		V	The Company has not adopted such practice	As explained in the summary
六、 If the Company has established sustainability policies in accordance with "Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies" please describe its current practices and any deviations from the Best Practice Principles: No material deviation is found.

Assessment criteria	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary (Note 2)
七、 Other information useful to the understanding of sustainable practice: All of the Company's business activities are carried out according to laws and in line with social responsibilities. The Company has been observant of laws and social responsibilities since the day it was founded. The following is an overview of the practices currently adopted to fulfill social responsibilities: (一) Business performance The Company has effective internal control system, independent directors, and Audit Committee in place to enforce corporate governance. In addition to leveraging independent directors' professional expertise and the management's practical experience, the Company has also implemented Board of Directors Conference Rules and Board of Directors Performance Evaluation Policy, and purchased liability insurance for directors and supervisors to enhance board functionality. For protection of shareholders' interest and information transparency, the Company has designated a spokesperson and an acting spokesperson to make timely disclosure of material information. Dedicated personnel have been assigned to handle communication with shareholders. Furthermore, as the Company transitions from selling components to selling customized modules and products based on customers' needs, more attention is being directed toward innovation, research, development, new applications, and core competitiveness. These are the areas where the Company will commit its sustainability efforts and pursue performance improvements to maximize values for shareholders. (二) Environmental protection 1. As far as environmental protection is concerned, Edison Opto's high power LED is undoubtedly one of the most energy efficient and environment‐friendly solutions in the lighting industry. Following the ban of energy‐intensive light bulbs in many countries in 2010, LED lights have received immense support from governments around the world for their energy efficiency and environment friendliness. Edison Opto's high power LEDs are being sold in many parts of the world. The Company is dedicated to developing efficient and environment‐friendly light sources and lighting equipment, and has been building up the technological capacity needed to assist customers in the design of environment‐friendly lighting equipment. By making meaningful changes to people's lifestyle, the Company contributes to energy conservation and environmental protection as part of its social responsibilities. Furthermore, all floor lighting equipment within the office building have been replaced with LED lighting panels, whereas lighting in common areas are being replaced with LED alternatives to take full advantage of energy efficiency. 2. The Company actively promotes lead‐less production and the creation of green supply chain. All LED products sold to the EU conform with RoHS and REACH requirements. The Company has long been observant of changes in environmental protection laws around the world, and constantly redesigns products to conform with global trends. By reducing use of hazardous substances, the Company contributes efforts to the cause. 3. The Company places great emphasis on product quality and has set goals to raise customers' satisfaction over time. The Company is dedicated to the development and promotion of LDMS; all products are made according to relevant procedures and policies, so that only the safest, most trusted, and best quality products are delivered to customers. 4. To enforce the Company's environmental goals toward "Resource Conservation, Compliance, Pollution Prevention, and Waste Reduction," the Administration Department has provided each employee with a set of reusable dining utensils, and instructed all catering partners to discontinue use of disposable dining utensils (including disposable chopsticks and plastic spoons). All floors occupied by the Company have been replaced with LED lighting panels to take full advantage of energy efficiency. 5. The Company has been certified for ISO14001 ‐ Environmental Management System since 2005, and follows government rules in the treatment and recycling of wastewater, waste, and resources. The Company will continue making refinements to its management system, and create a safer work environment for employees as part of its social responsibilities. 6. Recycling bins have been made available on each floor to recover different types of waste such as paper, aluminum can, PET bottle etc.; approximately KG of resources are recycled each year. 7. As an advocate for environmental protection, the Company persistently promotes the idea of "bringing reusable utensils and reducing use of disposable utensils." When ordering food (lunch and dinner), caterers are reminded not to include disposable utensils (disposable chopsticks and plastic spoons). 8. Dispense of toilet tissues and hand towels is being limited, and more intensive efforts are being taken to promote environmentalprotection,energyconservation,and forestpreservation throughpaper reduction. Usage ofpaper has

Assessment criteria	Assessment criteria	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)	Compliance(Note 1)
		Yes	No	Summary (Note 2)
(三) (四) (五) (六) (七) (八)	been reduced by more than 50%. Community engagement, social contribution, social service, and charity Donation of rapid COVID test kits to children's institution: In 2022, we sponsored the charitable rapid COVID test event of the "Tatung Nursery School" and collected 779 rapid COVID test kits in this event. We take actions to protect the health and safety of these disadvantaged children and make them feel our warmth. Consumer interests In addition to purchasing insurance coverage such as non‐life insurance and freight insurance, the Company and subsidiaries also offer adequate warranty on products to satisfy customers' needs. Human rights protection The Company has assembled an Employee Welfare Committee, implemented a Sexual Harassment Prevention, Reporting and Disciplinary Policy, and amended its work rules to include requirements of the Act of Gender Equality in Employment. Labor‐management meetings and seminars are held regularly to promote awareness on prevention of sexual harassment and workplace violence. The Company has effective and appropriate grievance systems in place to reflect matters that violate workers' interests, and additional care is taken to ensure fairness and transparency of the grievance process while addressing employees' welfare, rights, and privacy. Investment in energy saving and green energy related equipment The Company’s plants in Mainland China have set up project teams to evaluate ground‐mounted solar power equipment (such as rooftop panels) to power the Company's facilities and occasionally sell excess electricity to local power companies。 Workplace diversity policy We are committed to providing a dignified and safe work environment for our employees. We are committed to employment diversity and fairness in compensation and advancement opportunities to ensure that employees are not discriminated against, harassed or treated unequally on the basis of race, sex, religion, age, political affiliation or any other status protected by applicable laws and regulations Indicator Percentage (%)(Note) 2030 target Female share of total employees(%) 52% 60% Female share of all Management(%) 34% 40% Female share of senior management(%) 25% 30% Note: Statistics covering all Edison plants in Taiwan. Support for local education To support local education, increase students' practical work experience, and reduce the phenomenon of population migration, the Company actively cooperates with domestic universities and colleges to arrange students to receive practical work training. The following table summarizes the industrial‐academic cooperation in 2023。 Type School Number of persons Period Industrial‐academic cooperation Department of Industrial and Systems Engineering, Chung Yuan University 4 3/1/2022 to 6/30/2022 Note: All students who participated in the internship have signed a non‐disclose agreement on trade secret。
	Type			School	Number of persons	Period
	Industrial‐academic cooperation			Department of Industrial and Systems Engineering, Chung Yuan University	4	3/1/2022 to 6/30/2022
	Note: All students who participated in the internship have signed a non‐disclose

Note 1: If Actual Governance is specified "Yes," please explain the key policies, strategies, and measures taken and the

execution progress. If Actual Governance is specified "No," please explain deviation and cause of deviation in the field titled "Deviation and causes of deviation from Sustainable Development Best Practice Principles for TWSE/TPEx Listed

Companies," and provide any policy, strategy and measure planned for the future.

Note 2: Materiality principle refers to environmental, social and corporate governance issues that are of material impact to the Company's investors and stakeholders.
Note 3: For method of disclosure, please refer to the best practice examples presented on the website of Taiwan Stock Exchange Corporate Governance Center.

(VI) Integrity policies and practices.

Assessment criteria			Actualgovernance	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
1. Establishment of integrity policies and solutions (1) Has the Company established a set of board‐approved business integrity policy, and stated in its Memorandum or external correspondence about the polices and practices it implements to maintain business integrity? Are the board of directors and the senior management committed to fulfilling this commitment? (2) Has the Company developed systematic practices for assessing integrity risks? Does the Company perform regular analyses and assessments on business activities that are prone to higher risk of dishonesty, and implement preventions against dishonest conducts that include at least the measures mentioned in Paragraph 2, Article 7 of "Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies"? (3) Has the Company defined and enforced operating procedures, behavioral guidelines, penalties, and grievance systems as part of its preventive measures against dishonest conducts? Are the above measures reviewed and revised on a regular basis?	V V V		(1)The Company adopts a corporate culture of "Integrity, Pragmatism, and Modesty," and conveys its integrity commitments to the public. The Company has established "Business Integrity Code of Conduct" and "Employee Ethics Code of Conduct" with the approval of the board of directors; they outline the Company's integrity policies and practices, and convey integrity commitments from the board of directors, the senior management, and all employees. (2)The Company has "Ethical Behavior Guidelines for Directors, Managers, and Employees," "Employee Ethics Guidelines," and "Fraud and Violation Reporting Policy" in place that specifically prohibit directors, managers, agents, and employees from engaging in any activities listed in Paragraph 2, Article 7 of "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies" or any other business activities that are prone to higher integrity risk. (3)The Company has "Ethical Behavior Guidelines for Directors, Managers, and Employees," "Employee Ethics Guidelines," and "Fraud and Violation Reporting Policy" in place that outline relevant operating procedures, behavioral guidelines, and penalties and grievance systems for violations. All of which are being enforced as intended. The Company has stated on its website the following contact methods that can be used to report illegal conducts involving any group employee or representative of the Company over the course of transaction: (1) Telephone: +886‐2‐8227‐6996 ext 3320; Legal Affairs Office ‐ Ms Wang (2) E‐mail:law@edison‐opto.com.tw The above preventions against dishonest conduct are evaluated in the first quarter of each year for appropriate amendments at the time when previousyear's financial statements arepassed.	No material deviation is found No material deviation is found No material deviation is found

Assessment criteria	Actualgovernance	Actualgovernance	Actualgovernance	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
2. Enforcement of business integrity (1) Does the Company evaluate the integrity of all counterparties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners? (2) Does the Company have a unit that enforces business integrity directly under the board of directors? Does this unit report its progress (regarding implementation of business integrity policy and prevention against dishonest conducts) to the board of directors on a regular basis (at least once a year)?	V V		(1)Prior to commencing business relationship, the Company would evaluate its business partner for legitimacy and history of dishonest conduct, and thereby avoid dealing with vendors of poor integrity. Before making the initial transaction, the Company requires each supplier to sign an "Integrity Commitment" and comply with commercial ethics. The Company may, at any time, terminate or cancel contract with any counterparty that violates policy or terms of agreement or is involved in dishonest conduct, and blacklist them from future dealings. (2) Below are the current arrangements: The Company's "General Administrative Division" assumes the concurrent role of business integrity enforcer directly under the Board of Directors. It assists the Board and the management in the establishment, supervision, and execution of business integrity policies as well as preventive measures, ensures that the Business Integrity Code of Conduct is duly implemented throughout the organization, and oversees division of responsibilities. The division reports its progress to the Board of Directors at least once per year, and progress for 2022 had already been reported to the Board of Directors on December 22, 2022. Progress for 2022: 1. Education and training In 2022, the Company organized 57 sessions of training on compliance, internal control, and risk management. Enrollment count for internal and external training courses totaled 1,523. Furthermore, the Company continues to advocate and enforce business integrity management, and encourages employees to participate in the management and prevention of dishonest conducts. Relevant information has been disclosed on the corporate website. 2. Compliance awareness The General Administrative Division is responsible for promoting awareness among employees. In 2022, it introduced "Integrity	No material deviation is found No material deviation is found

Assessment criteria	Actualgovernance	Actualgovernance	Actualgovernance	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(3) Does the Company have any policy that prevents conflict of interest, and channels that facilitate the report of conflictinginterests?	V		and Sustainable Growth" as the main theme, and used short videos and case studies to highlight areas that employees should pay attention to, particularly with regards to Business Integrity Code of Conduct and material insider information, while carrying out business activities. 3. Annual awareness campaigns The Company organizes online courses each year to promote employee' awareness on various topics such as: Business Integrity Code of Conduct, Business Integrity Procedures and Behavioral Guidelines, prohibition against dishonest conducts and harms to stakeholders' interests, and confidentiality over intellectual property rights. 4. Regular inspections The Company assesses corruption risk of business activities taking place at all locations. Relevant business units are required to conduct self‐audits and compliance self‐assessments each year to ensure effective control and proper execution of existing systems. Additionally, the Company has a separate auditing unit that conducts independent audits to prevent dishonest conducts. 5. Whistleblower system and protection The Company has implemented a whistleblower system in its "Corporate Governance Code of Conduct" and "Business Integrity Code of Conduct" as a pro‐active way of preventing dishonest conducts. Internal and external personnel may use various grievance channels to report dishonest or inappropriate conducts. The Legal Affairs Office has been designated as the unit responsible for handling misconduct reports. The Company also has a whistleblower protection system in place to maintain confidentiality over whistleblowers' identity and nature of report, and to protect informants from retaliation as a result of their report. The Company received 0 misconduct report from external sources and 0 misconduct report from employees in 2021. No dishonest action was found during the year. (3)The Company has established "Business Integrity Code of Conduct," "Ethical Behavior Guidelines for Directors and Managers," "Employee Ethics Guidelines" with conflictinginterestpreventionpolicy,	No material deviation is found

Assessment criteria	Actualgovernance	Actualgovernance	Actualgovernance	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
			and "Fraud and Violation Reporting Policy," and implemented appropriate reporting channels and practices for enforcement.
(4) Has the Company implemented effective accounting policy and internal control system to maintain business integrity? Has an internal or external audit unit been assigned to devise audit plans based on the outcome of integrity risk assessment, and to audit employees' compliance with various preventions against dishonest conduct?	V		(4)The Company has established effective accounting policies and internal control system to enforce business integrity throughout the organization. Internal auditors are assigned to conduct regular audits to ensure compliance of the abovementioned policies/system, and thereby enforce the business integrity policy.	No material deviation is found
(5) Does the Company organize internal or external training on a regular basis to maintain business integrity?	V		(5) The Company organizes integrity training on a regular basis, and uses various meetings to convey the corporate culture and duties toward business integrity. The Company organized 289 sessions of training on compliance, financial security, and information security between 2014 and 2022 as part of its business integrity efforts. Enrollment count for internal and external training courses totaled 3,042 during this period. Each department head has been tasked with the responsibility for promoting anti‐corruption awareness among employees within their departments.	No material deviation is found
3. Whistleblowing system (1) Does the Company provide incentives and means for employees to report misconducts? Does the Company assign dedicated personnel to investigate the reported misconducts? (2) Has the Company implemented any standard procedures for handling reported misconducts, and subsequent actions and confidentiality measures to be undertaken upon completion of an investigation? (3) Has the Company adopted any measures to prevent whistleblowers from retaliation for filing reports?	V V V		(1)The Company has outlined in its "Employee Ethics Guidelines" and "Fraud and Violation Reporting Policy" a whistleblower system along with accessible reporting channels, and made available a broad variety of reporting channels over the corporate website including an integrity reporting hotline, physical mailing address, email address, and online opinion section. The Company has designated the Legal Affairs Office as the unit responsible for handling misconduct reports. (2)The Company has a "Fraud and Violation Reporting Policy" in place that outlines standard procedures and confidentiality measures for investigating misconduct reports. (3)The Company has established a set of "Employee Ethics Guidelines" that contains protection measures for whistleblowers. The guidelines explicitly protect whistleblowers against retaliation that may arise as a result of their misconduct report.	No material deviation is found No material deviation is found No material deviation is found
4. Enhanced information disclosure

Assessment criteria	Actualgovernance	Actualgovernance	Actualgovernance	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
(1) Has the Company disclosed its integrity principles and progress onto its website and MOPS?	V		(1)The Company conveys its corporate culture over its website and makes relevant disclosures on Market Observation Post System. Information is consolidated into annual shareholder meeting reports.	No material deviation is found
5. If the Company has established business integrity policies in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/TPEX‐Listed Companies," please describe its current practices and any deviations from the Best Practice Principles: No deviation is found.
6. Other information useful to the understanding of integrity in business dealings: (1) Business integrity ‐ training and performance The Company established "Ethical Behavior Guidelines for Directors and Managers" and "Employee Ethics Code of Conduct" in 2014. Its "Business Integrity Code of Conduct" was approved during the 7th meeting of the 6th board of directors held on March 6, 2017 and was later reported during the annual general meeting on June 22, 2017. The Company organized 232 sessions of training on compliance, financial security, and information security between 2014 and 2021 as part of its business integrity efforts. Enrollment count for internal and external training courses totaled 1519 during this period. The Company persistently promotes and enforces integrity management, and encourages employees to take part in the management and prevention of dishonest conducts. Each department head has been tasked with the responsibility of promoting anti‐corruption awareness among employees within their departments. Owing to the Company's effective awareness promotion efforts, no violation of Business Integrity Code of Conduct has occurred to date. (2) Business integrity ‐ execution progress and approach 1. Promotion of integrity philosophy: "Integrity" forms part of Edison Opto's corporate culture. The Company not only conveys its respect for corporate social responsibilities using the corporate website, but also enforces business integrity, fairness, and ethics as a righteous organization. The Company complies with government regulations and does not tolerate any form of bribery, fraud, coercion, improper gain, or illegal conduct. Furthermore, it has confidential and secured whistleblowing channels in place to facilitate misconduct reports. 2. Business integrity ‐ commercial cooperations: (1) Prior to commencing business relationship, the Company would evaluate its business partner for legitimacy and history of dishonest conduct, and thereby avoid dealing with vendors of poor integrity. The Company would cease further dealings with any counterparty that violates policy, and blacklist them from future dealings. (2) The Company requires suppliers to sign "Integrity Commitment" for compliance with commercial ethics. Completion of this commitment is checked by the Audit Office on a quarterly basis with findings reported to the Chairman and the management. The Company may terminate or cancel contract at any time if a supplier is found to exhibit dishonest conduct or breach of contract terms. 3. Work ethics ‐ all employees: Starting from 2016, all existing and new employees are being required to comprehend "Employee Ethics Guidelines" and sign "Integrity Commitment." Meanwhile, employees are reminded to stay alert for any conduct that violates work ethics, and are obligated to report to their line managers when in doubt or upon discovering any violations. The Company requires all employees to comply with the guidelines, and thereby protect the interests of Edison Opto and all stakeholders. 4. Violation of business integrity: The Company has "Ethical Behavior Guidelines for Directors and Managers" and "Employee Ethics Guidelines" available to guide directors, managers, and employees. Violators of business integrity will be disciplined according to the Company's "Fraud and Violation Reporting Policy." 5. Business integrity training: Corporate governance and insider courses are arranged for directors and supervisors

Assessment criteria	Actualgovernance	Actualgovernance	Actualgovernance	Deviation and causes of deviation from Ethical Corporate Management Best Practice Principles for TWSE/TPEX Listed Companies
	Yes	No	Summary
on a regular basis. The Company also organizes training programs to help employees develop awareness towards business integrity. (3) Business integrity ‐ Whistleblowing system All business activities must be carried out while observing corporate social responsibilities, corporate ethics, and government regulations. All employees are prohibited from engaging in any form of unfair commercial practice, and must refrain from any form of bribery, improper gain, fraud, coercion, illegal conduct, and possible conflict of interest for long‐lasting partnership.

(7) If the Company had formulated the codes of corporate governance and relevant rules, it should disclose their inquiry methods: The Company had formulated the codes of practice on corporate governance and other relevant rules, which should be announced on the Company’s website. (website: https://www.edison‐opto.com/important‐rules‐and‐regulations)
(8) Other important information sufficient to enhance the understanding on the operation of corporate governance could be disclosed together:
The Company’s operation procedures for internal major information processing: the “Operation Procedures for Management on Preventing Insider Transactions” was set forth in the Company’s operation procedures for internal major information processing, which should be the principle followed by the Directors, Managers and employees.

The Directors’ Continuing Education in 2022:

Course name (Note 1)	Organizer	Date of appointment	Continuing education date	Position	Name	Continuing education hours
International Twin Peaks Online Forum	Taiwan Stock Exchange Co.,Ltd.	2022.06.22	2022.05.12	Chairperson	Jason Wu	2.0
2022 Advocacy Meeting for Preventing Insider Transaction	Taiwan Stock Exchange Co., Ltd.	2022.06.22	2022.06.10	Chairperson	Jason Wu	3.0
Episode 1 of Personal Confrontation with CFC: Knowing Your Enemy	Taiwan Corporate Governance Association	2022.06.22	2022.06.29	Chairperson	Jason Wu	3.0
ESG Governance ‐ From Knowing to Practicing	Taiwan Corporate Governance Association	2022.06.22	2022.08.12	Director	Representative of YOUNGTEK ELECTRONICS CORP.: June Wung	3.0
Corporate Sustainability and Domestic and Foreign Tax Trends	Union Bank of Switzerland	2022.06.22	2022.10.25	Director	Representative of YOUNGTEK ELECTRONICS CORP.: June Wung	3.0
2022 Advocacy and Instruction meeting for Compliance of Insider Equity Transactions with Laws	Taiwan Stock Exchange Co., Ltd.	2022.06.22	2022.10.05	Director	Wen‐Ruei Cheng	3.0
Corporate Sustainability and Domestic and Foreign Tax Trends	Union Bank of Switzerland	2022.06.22	2022.10.25	Director	Wen‐Ruei Cheng	3.0
2022 Advocacy Meetingfor	Taiwan Stock Exchange	2022.06.22	2022.06.10	Director	Representative of Weixin	3.0

Course name (Note 1)	Organizer	Date of appointment	Continuing education date	Position	Name	Continuing education hours
Preventing Insider Transaction	Co., Ltd.				Investment Co., Ltd.: Po‐ChungWang
Corporate Sustainability and Domestic and Foreign Tax Trends	Union Bank of Switzerland	2022.06.22	2022.10.25	Director	Representative of Weixin Investment Co., Ltd.: Po‐ChungWang	3.0
Corporate Sustainability and Domestic and Foreign Tax Trends	Union Bank of Switzerland	2022.06.22	2022.10.25	Director	Nan‐Yang Wu	3.0
2022 Advocacy Meeting for Preventing Insider Transaction	Taiwan Stock Exchange Co., Ltd.	2022.06.22	2022.10.28	Director	Nan‐Yang Wu	3.0
Corporate Sustainability and Domestic and Foreign Tax Trends	Union Bank of Switzerland	2022.06.22	2022.10.25	Independent Director	Wen‐Chao Wang	3.0
2022 Advocacy Meeting for Preventing Insider Transaction	Taiwan Stock Exchange Co., Ltd.	2022.06.22	2022.10.28	Independent Director	Wen‐Chao Wang	3.0
Corporate Governance and Securities Regulation	Taiwan Corporate Governance Association	2022.06.22	2022.08.10	Independent Director	Tung‐Hsiung Hung	3.0
2022 Advocacy Meeting for Preventing Insider Transaction	Taiwan Stock Exchange Co., Ltd.	2022.06.22	2022.10.21	Independent Director	Tung‐Hsiung Hung	3.0
Taishin 30 Sustainable Net Zero	Taiwan Institute for Sustainable	2022.06.22	2022.04.22	Independent Director	Yin‐Fei Liu	3.0

Course name (Note 1)	Organizer	Date of appointment	Continuing education date	Position	Name	Continuing education hours
Summit Forum ‐ Serious Net Zero	Energy Research
How ESG Enhances Corporate Resilience ‐ Transformation and Opportunities	Taiwan Institute for Sustainable Energy Research	2022.06.22	2022.10.14	Independent Director	Yin‐Fei Liu	3.0
2022 Cathay Sustainable Finance and Climate Change Summit	Taiwan Stock Exchange Co., Ltd.	2022.06.22	2022.11.14	Independent Director	Yin‐Fei Liu	3.0
Corporate Performance Management and Reward Mechanism Operation Practice	Taiwan Corporate Governance Association	2022.06.22	2022.11.24	Independent Director	Tseng‐Nan Chou	3.0
How Directors and Supervisors Oversee Risk Management and Crisis Management to Strengthen Corporate Governance	Taiwan Corporate Governance Association	2022.06.22	2022.11.24	Independent Director	Tseng‐Nan Chou	3.0

Note 1: The continuing education hours of the serving Directors met the hours as specified in the “Key Points for Implementation of Continuing Education on Directors and Supervisors of Listed and OTC Companies.”

Note 2: In accordance with the provisions of paragraph 2 of Article 3 of the “Key Points for Implementation of Continuing Education on Directors and Supervisors of Listed and OTC Companies”: those who continued to serve should take the continuing education for at least six hours a year during their tenure. However, if he acted as a lecturer of course relevant to corporate governance in a training institution listed in Paragraph 4 of Point 3 “Training System” (1) in the current year, and the provisions of the preceding paragraph for 12 hours of training for new electees in the current year had been complied with, when he taught the course once, one hour for his continuing education could be deducted, and the total hours deducted should be limited to three hours.

2022 Managers’ (and their position agents’) participation in continuing education and training related to corporate governance:

Position	Name	Continuing education date	Organizer	Course name	Continuing education hours
Corporate governance and accounting officer	Cheng‐Tien Hsu	2022.04.14~ 2022.04.15	Accounting Research and Development Foundation of the Republic of China	Continuing Education Course for Accounting Head of Issuers, Securities Firms and Stock Exchanges	12.0
Corporate governance and accounting officer	Cheng‐Tien Hsu	2022.06.10	Taiwan Stock Exchange	2022 Advocacy Meeting for Preventing Insider Transaction	3.0
Corporate governance and accounting officer	Cheng‐Tien Hsu	2022.10.05	Securities & Futures Institute of the Republic of China	2022 Advocacy and Instruction meeting for Compliance of Insider Equity Transactions with Laws	3.0
Corporate governance and accounting officer	Cheng‐Tien Hsu	2022.10.25	PwC Taiwan	Corporate Sustainability and Domestic and Foreign Tax Trends	3.0
Corporate governance and accounting officer	Cheng‐Tien Hsu	2022.10.28	Securities & Futures Institute of the Republic of China	2022 Advocacy Meeting for Preventing Insider Transaction (Online Seminar)	3.0
Corporate governance and accounting officer	Cheng‐Tien Hsu	2022.11.18	Taiwan Stock Exchange	2022 Business Advocacy Meeting of Listed Companies	3.0
Corporate governance and accounting officer	Cheng‐Tien Hsu	2022.11.18	Securities & Futures Institute of the Republic of China	2022 Advocacy Meeting for Preventing Insider Transaction	1.0
Accounting head and his position agent	Xi‐Quan Hu	2022.08.25~ 2022.08.26	Accounting Research and Development Foundation of the Republic of China	Continuing Education Course for Accounting Head of Issuers, Securities Firms and Stock Exchanges	12.0

Audit Officer	Xiaojun Wang	2022.05.12	Accounting Research and Development Foundation of the Republic of China	2022 Greenhouse Gas Inventory and Disclosure Online Seminar	2.0
Audit Officer	Xiaojun Wang	2022.10.06	The Institute of Internal Auditors of Chinese Taiwan	The impact of ESG risk on corporate internal control and countermeasures in the face of climate change and sustainable development (digital course)	6.0
Acting person for audit officer	Pei‐Yu Liao	2022.11.07	Accounting Research and Development Foundation of the Republic of China	Common Internal Control Deficiencies and Case Studies	6.0
Acting person for audit officer	Pei‐Yu Liao	2022.11.15	The Institute of Internal Auditors of Chinese Taiwan	Practice of Cross‐Strait Tax Auditing and Law Analysis	6.0

Note 1: All the above‐mentioned personnel met the qualification conditions for the accounting head of issuers, securities firms and stock exchanges, and provisions for each year’s continuing education in the Professional Continuing Education Measures, the Guidelines for Establishment of Internal Control Systems by Public Companies and the provisions of Article 29 of the Company’s Practical Codes for Corporate Governance. The accounting personnel related to the preparation of financial reports also took professional courses for more than 6 hours every year.

Note 2: The “Practical Codes for Corporate Governance” was adopted by the Board of Directors on November 4, 2014, and according to the resolution adopted by the Board of Directors on May 6, 2019, Mr. Zheng‐Dian Xu was concurrently appointed as the head of corporate governance. He had at least 3 years of experience in acting as the head of legal, financial, stock or corporate governance related units of public companies, could ensure the effective implementation of his duties for corporate governance and other duties, and did not involve any conflict of interests or violation of the Internal Control System.
Purchase of liability insurance by the Company for the Directors in 2022

Insured object	Insurance company	Insurance amount	Insurance term
All the Directors	Fubon Property Insurance Co., Ltd.	USD 5 million	From December 10, 2021 to December 10, 2022
All the Directors	Fubon Property Insurance Co., Ltd.	USD 5 million	From December 10, 2022 to December 10, 2023

Note: The insurance amount, coverage and premium rate of the renewed director liability insurance had been submitted to the Board of Directors on November 4, 2022.

(9) Execution situation of internal control
For the statement of Internal Control Systems, see Appendix 1
If a CPA was entrusted to conduct a special audit of the Internal Control System, the CPA’s audit report should be disclosed: none.
(10) In the most recent year and by the end of the date of publishing the annual report, the punishment on the Company and its internal personnel in accordance with the law, punishment on its internal personnel by the Company for violating the provisions of the Internal Control System, main deficiencies and improvements: none.
(11) In the most recent year and by the end of the date of publishing the annual report, important resolutions of the shareholders’ meeting and the Board of Directors:
Contents and execution situation of important resolutions of the 2022 shareholders’ general meeting:

Date

Contents and execution situation of important resolutions

2022.06.22

．Adoption of 2021 final accounting reports.
Execution situation: the business report and financial statements had been
recognized and adopted by the shareholders’ general
meeting.
. Adoption of the 2021 earnings distribution proposal.
Execution situation: Approved by vote as proposed.
. Approval of the Company’s 2021 capital increase from capital surplus with
issuance of new shares
Execution situation: the original proposal was adopted by voting, and
according to the resolution of the Board of Directors on
July 15, 2022, August 30, 2022 was set as the ex‐right
date, and the stockdividends were paid on September
28, 2022 (51.6439 shares distributed for every thousand
shares).
. Adoption of the Company’s 2021 cash dividend distribution from capital
surplus
Execution situation: the original proposal was adopted by voting, and
according to the resolution of the Board of Directors on
July 15, 2022, August 30, 2022 was set as the ex‐dividend
date, and the cash dividends were paid on September 28,
2022 (0.27814129 dollardistributed for every thousand
shares).
. Adoption of the amendments to the Company’s “Procedures for Acquisition
or Disposal of Assets

Date

Contents and execution situation of important resolutions

Execution situation: the original proposal was adopted by voting, the
amendment measures had been uploaded onto the
Company’s website and the Market Observation Post
System, and the amendments were made according to
the amendment procedures.
. Election of the directors and independent directors for the 8th term.
Execution situation: A total of nine directors (including four independent
directors) were elected for the term of office from June 22, 2022
to June 21, 2025.
. Approval of the release of the Company's 8th term directors and their
representatives from the non‐compete restriction.
Execution situation: Approved byvote asproposed.

In the most recent year and by the end of the date of publishing the annual report, important resolutions of the Board of Directors

Meetings	Date	Resolution Items
The 21st meeting of the seventh Board of Directors	2022.02.24	.Approval of the 2021 achievement and assessment results of the performance objectives of the Directors and managerial officers . Approval of the remuneration of employees and Directors of the Company in 2021 . Approval of the Company’s 2021 final accounting reports and business report . Approval of the Company’s 2021 earnings distribution proposal . Approval of the Company’s 2021 “Statement of Internal Control System” . Approval of the Issuance of new shares by the Company through the conversion of capital reserve into capital increase in 2021 . Approval of the distribution of cash dividend by the Company from capital reserve in 2021 . Approval of the amendments to the Company’s “Procedures for Acquisition or Disposal of Assets . Approval of the amendments to the Company’s “Practice on corporate governance” . Approval of the amendments to the Company’s “Operating Procedures for Management of Preventing Insider Transactions” . Approval of the amendments to the Company’s “Operating

Meetings	Date	Resolution Items
		Procedures for Applying for Suspension and Resumption of Trading” . Approval of the regular evaluation on the independence of certified public accountants . Approval of the change registration of convertible corporate bonds converted into ordinary shares in the fourth quarter of 2021 . Approval of the election of directors and independent directors for the 8th term of the Company . Approval of the submission to the shareholders’ meeting for approval the removal of restrictions on non‐compete of new Directors and their representatives of the Company . Approval of the issues relevant to holding the 2022 shareholders’general meeting
The 22nd meeting of the seventh Board of Directors	2022.05.05	. Approval of the consolidated financial statements of the Company for the first quarter of 2022 . Approval of the 2021 earnings distribution proposals of the Company’s important subsidiaries . Approval of the review of the qualifications of directors and independent directors . Approval of the review of the shareholders' proposals for the 2022 shareholders' meeting . Approval of greenhouse gas inventory and verification operations bythe Companyand its subsidiaries
The 1st meeting of the eighth Board of Directors	2022.06.22	. Election of the Chairperson of the 8th Board of Directors of the Company . Appointment of members of the Remuneration Committee for the 5th term . Appointment of members of the Audit Committee for the 4th term
The 2nd meeting of eighth Board of Directors	2022.07.15	. Approval of the recovery and retirement of the 2nd new employee restricted stocks issued by the Company for capital reduction in 2Q2022 . Approval of the base date for capital increase from capital surplus through issuance of new shares and cash dividends from capital surplus for 2021
The 3rd meeting of eighth Board of Director	2022.08.04	. Approval of the Company’s consolidated financial statements for the second quarter of 2022 . Approval of the Company’s plan to buy back treasury shares and transfer them to employees

Meetings	Date	Resolution Items
The 4th meeting of eighth Board of Directors	2022.11.04	. Adopted the Company’s consolidated financial statements for the third quarter of 2022 . Approval of the Company’s purchase of directors' liability insurance for 2023 . Approval of the amendments to the Company's "Regulations Governing the Transfer of Purchased Shares to Employees". . Approval of the amendments to the “Rules of Procedure for Meeting of the Board of Directors” . Approval of the formulation of the "Operating Procedures for Handling Material Inside Information" of the Company. . Approval of the capital reduction by a significant subsidiary of the Company . Approval of the earnings distribution by the Company's subsidiaries
The 5th meeting of eighth Board of Directors	2022.12.22	Approval of the formulation of the 2023 audit plan . Approval of the limit of lending of funds between the companies within the Group for 2023. . Approval of the renewal of contract after the expiration of the Company’s bank limit . Approval of the purchase of short‐term derivatives by subsidiaries in 2023 . Approval of the acquisition of right‐of‐use assets by the subsidiaries of the Company from related parties in 2022. . Approval of the intended acquisition of right‐of‐use assets by the subsidiaries of the Company from related parties in 2023. . Approval of the amendments to the Company’s “Corporate Governance Best Practice Principles” . Approval of the appointment and remuneration of certified public accountants of the Group for 2023. . Approval of the formulation of the general principles of the Company's pre‐approval policy for non‐assurance services provided by the attesting CPA firm . Approval of the submission of the Company’s managerial officers’ appraisal and bonus for 2022. . Approved the promotion of the Company's managerial officers . Approval of the adjustments to the duties of the Company's spokesperson and acting spokesperson . Approval of the Company’s 2023 business plan and budget report

Meetings	Date	Resolution Items
The 6th meeting of eighth Board of Directors	2023.02.23	. Approval of the 2022 achievement and assessment results of the performance objectives of the Directors and managerial officers . Approval of the Company’s 2022 employee and director remuneration . Approval of the Company’s 2022 final accounting reports . Approval of the Company’s 2022 “Statement of Internal Control System” . Approval of the amendments to the Company’s “Articles of Association” . Approval of the amendments to the Company’s “Rules of Procedure for Shareholders’ Meetings” . Approval of the regular evaluation on the independence of certified public accountants . Approval of the issues relevant to holding the 2023 shareholders’general meeting
The 7th meeting of eighth Board of Directors	2023.03.09	. Approval of the Company’s 2022 final accounting reports and business report . Approval of the Company’s 2022 earnings distribution proposal . Approval of the distribution of cash dividend by the Company from capital reserve in 2022
The 8th meeting of eighth Board of Directors	2023.05.04	. Approval adjustmet of the Company’s 2022 employee and director remuneration . Approval of the Company’s consolidated financial statements for 2023 Q1 . Approval subsidiaries of the Company’s 2022 earnings distribution proposal . Approval of the regular evaluation on the independence of certified public accountants . Approval of the review shareholders’ proposals the 2023 shareholders’ general meeting . Approval of the change registration of convertible corporate bonds converted into ordinary shares in the first quarter of 2023

(12) In the most recent year and by the end of the date of publishing the annual report, if the Directors or Supervisors had different opinions on the important resolutions adopted by the Board of Directors and had records or written statements, their main contents were: none.

(13) In the most recent year and the current year up to the date of publication of the annual report, the resignation and dismissal of the Company’s Chairperson, President, accounting officer, finance officer, internal audit officer, corporate governance officer and R&D officer were summarized as follows: None.

4. Information about public expense items of CPA

(1) If the proportion of non‐audit public expenses paid to the certified public accountants, the firm to which the certified public accountants belonged and its affiliated enterprises accounted for more than one fourth of the audit public expenses, the amount of audit and non‐audit public expenses and the contents of non‐audit services should be disclosed:

non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:	non‐audit public expenses and the contents of non‐audit services should be disclosed:
Amount unit: NT $1000
Name of CPA firm	Name of CPA	CPA Audit Term	Audit public expenses	Non‐audit public expenses					Total	Remarks
				System design	Industrial and commercial registration	Human resources	Others	Subtotal
KPMG	Heng‐Sheng Lin	2022.01.01‐	3,810	0	0	0	350	350	4,160	Other non‐audit public expenses were reviewed for transferpricing
	Bei‐Qi Chen	2022.12.31

(2) If the CPA firm was replaced and the audit public expenses paid in the year of replacement were lower than those in the previous year, the amount and reasons of audit public expenses before and after the replacement should be disclosed: no such situation.
(3) If the audit public expenses were reduced by more than 15% compared to the previous year, the amount, proportion and reasons for the reduction of audit public expenses should be disclosed: no such situation.

5. Information about CPA replacement:

(1) For former CPA:

(1) For former CPA:

Replacement date	Not applicable

Replacement reason and
	Not applicable
description

	party
				Certified Public
					Principal
	Situation			Accountant

To state that the appointment
was terminated or not accepted	To voluntarily termi‐			Not applicable	Not applicable
by the principal or CPA	nate the appointment
	To no longer accept			Not applicable	Not applicable
	(continue) the
	appointment
Opinions and reasons for issuing
audit reports other than the one
with unqualified opinions within	No such situation
the latest twoyears
			Accounting principles orpractices
			Disclosure of financial reports

Was there any disagreement	Yes		Audit scope or steps

with the issuer?			Others
	None	V
	Description
Other disclosures
(Items 1‐4 to 1‐7 of paragraph 6
	No such situation
of Article 10 of the Standards

should be disclosed)

(2) For the CPA succeeded:

(2) For the CPA succeeded:
Firm name	Not applicable

Name of CPA	Not applicable
Appointment date	Not applicable
Items and results of consultation on accounting
treatment methods or accounting principles for
	Not applicable
specific transactions and possible opinions issued

for the financial reports before appointment
Written opinions of the CPA succeeded on items
	Not applicable
on which the former CPA disagreed

(3) The reply of the former CPA to items 1 and 2‐3 of paragraph 6 of Article 10 of the Standards: not applicable.

6. If the Chairman, General Manager or Managers in charge of financial or accounting affairs of the Company had worked in a firm to which the CPA belonged or its affiliated enterprise in the most recent year, his name, title and service term in the firm to which the certified public accountant belonged or its affiliated enterprise should be disclosed: None.

7. In the most recent year and by the end of the date of publishing the annual report, changes in equity transfer and equity pledge of the Directors, Managers and shareholders holding more than 10% of shares of the Company:

(1) Changes in equity of the Directors, Managers and shareholders holding more than 10% of shares of the Company

of shares of the Company	of shares of the Company	of shares of the Company	of shares of the Company	of shares of the Company	of shares of the Company
April 1, 2022unit: shares
Position	Name	2022		For the year ended April 1, 2023
		Increase (decrease) in number of shares held	Increase (decrease) in number of shares pledged	Increase (decrease) in number of shares held	Increase (decrease) in number of shares pledged
Chairman / General Manager	Jason Wu	706,710	0	0	0
Director	YOUNGTEK ELECTRONICS CORP.	125,218	0	0	0
	Representative: June Wung	0	0	0	0
Director	Weixin Investment Limited	487,288	0	0	0
	Representative: Po‐Chung Wang	1,854	0	0	0
Director	Wen‐Ruei Cheng	57,153	0	0	0
Director	Nan‐Yang Wu	0	0	0	0
Independent director	Wen‐Chao Wang	0	0	0	0
Independent director	Tung‐Hsiung Hung	0	0	0	0
Independent director	Yin‐Fei Liu	0	0	0	0
Independent director	Tseng‐Nan Chou	0	0	0	0
Vice President, R&D Division and sales Division	Guolun Liao	21,334	0	0	0
Vice President, Facilities Divison	Qingyuan Liu	57,066	0	8,000	0
Vice‐President, Admin Division	Cheng‐Dian Hsu	13,392	0	0	0
Senior Associate Manager, Facilities Division	Yaochuan Hong	120,072	0	0	0
Assistant manager of business department	Kundian He	56,958	0	0	0
Audit Supervisor	Xiaojun Wang	13,308	0	0	0
Major shareholder	Liangdian Investment Co., Ltd.	855,206‐	0	0	0

(II) Information that the counterparty of equity transfer was a related party: none.

(III) Information of the counterparty of the equity pledge was a related party: none.

8. Information about the relationship between the shareholders whose shareholding ratio was in the top 10 one:

April 1, 2023; unit: thousand shares

Name	Number of shares held by himself	Number of shares held by himself	Shareholding of spouse and minor children	Shareholding of spouse and minor children	Total number of shares held in the name of others	Total number of shares held in the name of others	If the top 10 shareholders were a related person or a spouse or a relative within the second degree of kinship to each other,their name and relationship	If the top 10 shareholders were a related person or a spouse or a relative within the second degree of kinship to each other,their name and relationship	Remarks
	Shares	Shareholding Ratio %	Shares	Shareholding percentage %	Shares	Shareholding percentage %	Name (or name)	Relation
Liangdian Investment Company Person in charge: Jin‐YongFan	17,411	12.64	0	0.00	0	0.00	Epistar Corporation	Mother and son Company	‐
Epistar Corporation Person in charge: Bing‐Jie Li	6,043	4.39	0	0.00	0	0.00	Liangdian Investment Co., Ltd.	Mother and son Company
Weixin Investment Limited Person in charge: Jason Wu	4,827	3.51	0	0.00	0	0.00	Jason Wu	The same Chairman
Weixin Investment Limited Representative: Po‐ChungWang	38	0.03	1	0.00	0	0.00	None	None
Harvatek Corporation Person in charge: Bing‐LongWang	4,176	3.03	0	0.00	0	0.00	Youngtek Electronics Corporation	The same Chairman
Fang‐Long Huang	3,996	2.90	0	0.00	0	0.00	None	None
Jason Wu	3,494	2.54	999	0.73	0	0.00	Weixin Investment Limited	The same Chairman
Xiu‐Mei Hsu	3,156	2.29	0	0.00	0	0.00	None	None
Chu Chi Investment and Development Co., Ltd. Person in charge: Wen‐TingZheng	2,834	2.06	0	0.00	0	0.00	None	None	‐
Bi Ling Lee	2,571	1.87	0	0.00	0	0.00	None	None	‐
Youngtek Electronics Corporation Person in charge: Bing‐Long Wang	2,549	1.85	0	0.00	0	0.00	Harvatek Corporation	The same Chairman	‐
							Youngtek Electronics Corporation Representative: June Wung	First‐degree relative	‐
Youngtek Electronics Corporation Representative: June Wung	0	0.00	0	0.00	0	0.00	Harvatek Corporation Person in charge: Bing‐LongWang	First‐degree relative	‐
							Youngtek Electronics person in charge of the Company: Wang Binglong	First‐degree relative

9. The number of shares held by the Company, its Directors, Managers and enterprises directly or indirectly controlled by the Company in the same enterprises reinvested, and the comprehensive shareholding ratio should be consolidated to be calculated:

March 31, 2023 unit: thousand shares; %

Enterprises reinvested	Investment of the Company	Investment of the Company	Investment of the Directors, managers and enterprises directly or indirectly controlled	Investment of the Directors, managers and enterprises directly or indirectly controlled	Comprehensive investment	Comprehensive investment
	Shares	Shareholding ratio	Shares	Shareholding ratio	Shares	Shareholding ratio
Edison Opto Corporation	30	100%	0	0%	30	100%
Ledison Opto Corporation	4,500	100%	0	0%	4,500	100%
Best Opto Corporation	41,000	100%	0	0%	41,000	100%
Best Led Corporation (Note 2)	41,000	100%	0	0%	41,000	100%
Alpha Tree Investment Limited	25,000	100%	0	0%	25,000	100%
Edison‐Litek Opto Corp. Limited	5,500	45%	3,463	28%	8,963	73%
Dongguan Edison Opto Co., Ltd.	(Note 1)	100%	0	0%	(Note 1)	100%
Yangzhou Edison Opto Co., Ltd. (Note 4)	(Note 1)	100%	0	0%	(Note 1)	100%
Yangzhou Aichuang Electronic Trading Co., Ltd.(Note 5)	(Note 1)	100%	0	0%	(Note 1)	100%
Edison Opto USA Corporation (Note 6)	220	55%	0	0%	220	55%
Yangzhou Edison‐Litek Opto Co., Ltd. (Note 7)	(Note 1)	73%	0	0%	(Note 1)	73%
Leidiyang Intelligent Technology Co., Ltd. (Note 8)	2,200	100%	0	0%	2,200	100%
Aitong Opto Corp. (Note 9)	1,000	100%	0	0%	1,000	100%
Edison‐Litek Opto Corp.	11,000	79%	1,120	8%	12,120	87%
Edison‐Egypt Opto Corporation	2,500	100%	0	0%	2,500	100%

Note 1: it is a limited Company, so there are no shares.

Note 2: Best Led Corporation is a 100% owned subsidiary of Best Opto Corporation.

Note 3: Dongguan Edison Opto Co., Ltd., is a 100% owned subsidiary of Ledison Opto Corporation. Note 4: Yangzhou Edison Opto Co., Ltd., is a 100% owned subsidiary of Best Led Corporation.

Note 5: Yangzhou Aichuang Electronic Trading Co., Ltd. Is a 100% owned subsidiary of Yangzhou Edison Opto Co., Ltd. Note 6: Edison Opto USA Corporation is a 55% subsidiary of Alpha Tree Investment Limited

Note 7: Yangzhou Edison‐Litek Opto Co., Ltd., is a 100% owned subsidiary of Edison‐Litek Opto Corporation Ltd. Note 8: Leidiyang Intelligent Technology Co., Ltd., is a 100% subsidiary of Alpha Tree Investment Limited Note 9: Aitong Opto Corp., is a 100% owned subsidiary of Alpha Tree Investment Limited

Capital Overview

1. Capital and shares

(1) Source of share capital

Year/Mo nth	Issue Price	Authorized Shares	Authorized Shares	Paid‐in Capital	Paid‐in Capital	Remarks	Remarks	Remarks
		Shares	Amount	Shares	Amount	Source of capital	Non‐cash assets in lieu of capital	Others
2001.10	10	20,000,000	200,000,000	7,800,000	78,000,000	Capital established	None	Note1
2002.11	10	20,000,000	200,000,000	9,500,000	95,000,000	Issuance of common stock of NT$17,000,000	None	Note2
2003.12	15	20,000,000	200,000,000	15,000,000	150,000,000	Issuance of common stock of NT$55,000,000	None	Note3
2004.09	10	20,000,000	200,000,000	18,270,000	182,700,000	Common stock dividends of NT$32,700,000	None	Note4
2005.08	10	30,000,000	300,000,000	21,202,500	212,025,000	Common stock dividends of NT$29,325,000	None	Note5
2006.10	10	50,000,000	500,000,000	23,300,000	233,000,000	Common stock dividends of NT$20,975,000	None	Note6
2006.10	41	50,000,000	500,000,000	28,000,000	280,000,000	Issuance of common stock of NT$47,000,000	None	Note6
2007.08	20	50,000,000	500,000,000	29,000,000	290,000,000	Stock warrant of NT$10,000,000	None	Note7
2007.08	10	50,000,000	500,000,000	35,700,000	357,000,000	Common stock dividends of NT$67,000,000	None	Note8
2008.02	90	50,000,000	500,000,000	40,500,000	405,000,000	Issuance of common stock of NT$48,000,000	None	Note9
2008.09	10	100,000,000	1,000,000,000	49,920,000	499,200,000	Common stock dividends and capital reserve transferred to capital of NT$94,200,000	None	Note10
2009.09	10	100,000,000	1,000,000,000	60,000,000	600,000,000	Common stock dividends and capital reserve transferred to capital of NT$100,800,000	None	Note11
2009.10	15.4	100,000,000	1,000,000,000	60,810,000	608,100,000	Stock warrant of NT$8,100,000	None	Note12
2009.11	80	100,000,000	1,000,000,000	66,810,000	668,100,000	Issuance of common stock of NT$60,000,000	None	Note13
2010.07	10	100,000,000	1,000,000,000	77,831,500	778,315,000	Common stock dividends, employee stock bonus and capital reserve transferred to capital of NT$110,215,000	None	Note14
2010.09	11	100,000,000	1,000,000,000	78,211,750	782,117,500	Stock warrant of NT$3,802,500	None	Note15
2010.11	108	100,000,000	1,000,000,000	88,800,000	888,000,000	Issuance of common stock of NT$105,882,500	None	Note16
2011.08	10	150,000,000	1,500,000,000	102,120,000	1,021,200,000	Common stock dividends and capital reserve transferred to capital of NT$133,200,000	None	Note17
2011.10	10	150,000,000	1,500,000,000	102,369,200	1,023,692,000	Stock warrant of NT$2,492,000	None	Note18
2012.03	10	150,000,000	1,500,000,000	108,047,309	1,080,473,090	Stock warrant of NT$475,500 and convertible bond conversion of NT$56,305,590	None	Note19
2012.04	10	150,000,000	1,500,000,000	110,344,583	1,103,445,830	Convertible bond conversion of NT$22,972,740	None	Note20
2012.07	10	150,000,000	1,500,000,000	110,501,336	1,105,013,360	Convertible bond conversion of NT$1,567,530	None	Note21
2012.08	10	200,000,000	2,000,000,000	116,051,336	1,160,513,360	Capital reserve transferred to capital of NT$55,500,000	None	Note22

Year/Mo nth	Issue Price	Authorized Shares	Authorized Shares	Paid‐in Capital	Paid‐in Capital	Remarks	Remarks	Remarks
		Shares	Amount	Shares	Amount	Source of capital	Non‐cash assets in lieu of capital	Others
2012.10	10	200,000,000	2,000,000,000	116,054,336	1,160,543,360	Stock warrant of NT$30,000	None	Note23
2013.01	10	200,000,000	2,000,000,000	116,074,538	1,160,745,380	Convertible bond conversion of NT$202,020	None	Note24
2014.03	10	200,000,000	2,000,000,000	121,808,652	1,218,086,520	Convertible bond conversion of NT$57,341,140	None	Note25
2014.07	10	200,000,000	2,000,000,000	132,763,179	1,327,631,790	Convertible bond conversion of NT$109,545,270	None	Note26
2015.05	10	200,000,000	2,000,000,000	134,763,179	1,347,631,790	Issuance of restricted stock awards of NT$20,000,000	None	Note27
2015.10	10	200,000,000	2,000,000,000	134,643,179	1,346,431,790	Retirement of restricted stock awards of NT$1,200,000	None	Note28
2016.01	10	200,000,000	2,000,000,000	132,623,179	1,326,231,790	Retirement of treasury stocks and restricted stock awards of NT$20,200,000	None	Note29
2016.07	10	200,000,000	2,000,000,000	132,536,379	1,325,363,790	Retirement of restricted stock awards of NT$868,000	None	Note 30
2017.01	10	200,000,000	2,000,000,000	132,382,379	1,323,823,790	Retirement of restricted stock awards of NT$1,540,000	None	Note 31
2017.05	10	200,000,000	2,000,000,000	132,354,379	1,323,543,790	Retirement of restricted stock awards of NT$280,000	None	Note 32
2018.02	10	200,000,000	2,000,000,000	130,302,379	1,303,023,790	Retirement of treasury stocks and restricted stock awards of NT$20,520,000	None	Note 33
2018.07	10	200,000,000	2,000,000,000	130,020,379	1,300,203,790	Retirement of restricted stock awards of NT$2,820,000	None	Note 34
2019.08	10	200,000,000	2,000,000,000	125,020,379	1,250,203,790	Retirement of treasury stocks of NT$50,000,000	None	Note 35
2019.01	10	200,000,000	2,000,000,000	125,001,379	1,250,013,790	Retirement of restricted stock awards of NT$190,000	None	Note 36
2019.05	10	200,000,000	2,000,000,000	123,001,379	1,230,013,790	Retirement of treasury stocks of NT$20,000,000	None	Note 37
2019.07	10	200,000,000	2,000,000,000	125,001,379	1,250,013,790	Issuance of restricted stock awards of NT$20,000,000	None	Note 38
2020.08	10	200,000,000	2,000,000,000	122,556,379	1,225,563,790	Retirement of treasury stocks and restricted stock awards of NT$24,450,000	None	Note 39
2021.07	10	200,000,000	2,000,000,000	122,528,560	1,225,285,600	Retirement of restricted stock awards of NT$330,000 and convertible bond conversion of NT$51,810	None	Note 40
2021.10	10	200,000,000	2,000,000,000	128,207,278	1,282,072,780	Convertible bond conversion of NT$56,787,180	None	Note 41
2022.03	10	200,000,000	2,000,000,000	128,861,726	1,288,617,260	Convertible bond conversion of NT$6,544,480	None	Note 42
2022.08	10	200,000,000	2,000,000,000	128,835,236	1,288,353,260	Retirement of restricted stock awards of NT$264,000	None	Note 43
2022.09	10	200,000,000	2,000,000,000	135,335,326	1,353,353,260	Capital reserve transferred to capital of NT$65,000,000	None	Note 44
2023.03	10	200,000,000	2,000,000,000	137,715,192	1,377,151,920	Convertible bond conversion of NT$23,798,660	Noe	Note 45

Note1: Approval document, MOEACRO (90) No. 09032876610 dated October 4, 2001 issued by Central Region Office, Ministry of Economic Affairs.

Note2: Approval document, MOEACRO No. 09132999770 dated November 19, 2002 issued by Central Region Office, Ministry of Economic Affairs.

Note3: Approval document, MOEACRO No. 09233049910 dated December 3, 2003 issued by Central Region Office, Ministry of Economic Affairs.

Note4: Approval document, MOEACRO No. 09332725070 dated September 22, 2004 issued by Central Region Office, Ministry of Economic Affairs.

Note5: Approval document, MOEACRO No. 09432618530 dated August 8, 2005 issued by Central Region Office, Ministry of Economic Affairs.
Note6: Approval document, MOEACRO No. 09533032650 dated October 25, 2006 issued by Central Region Office, Ministry of Economic Affairs.
Note7: Approval document, MOEACRO No. 09632544990 dated August 6, 2007 issued by Central Region Office, Ministry of Economic Affairs.This was the first employee stock option (ESO) for 2006 issued in November 2006 of 1,000 units. Each unit subscribed amounted to 1,000 ordinary shares. The subscription price amounted to NT$20 per share (in year end of 2005, EPS indicated in the audited financial statement amounted to NT$13.0 per share). The subscribers were employees who had 3.5 month lapse since restricted stock awards were vested. The duration period amounted to 6.5months.
Note8: Approval document, MOEACRO No. 09632676610 dated August 27, 2007 issued by Central Region Office, Ministry of Economic Affairs.
Note9: Approval documents, FSC I No. 0960067553 dated November 30, 2007 issued by Financial Supervisory Commission, and MOEAC No. 09731736800 issued by MOEA dated February 18, 2008.
Note10: Approval documents, FSC I No. 0970035161 dated July 14, 2008 issued by Financial Supervisory Commission, and MOEAC No. 09733000070 issued by MOEA dated September 15, 2008.
Note11: Approval documents, FSCF No. 0980033755 dated July 7, 2009 issued by Financial Supervisory Commission, and MOEAC No. 09801201710 issued by MOEA dated September 3, 2009.
Note12: Approval document, FSC I No. 0960051593 dated September 27, 2007 issued by Financial Supervisory Commission.This was the first ESO for 2007 issued in 2,000 units. Each unit subscribed amounted to 1,000 ordinary shares. The subscription price amounted to NT$25 per share (as of the year end of 2005, EPS indicated in the audited financial statement amounted to NT$19.8 per share). The subscribers were employees who had 2 year lapse since restricted stock awards were vested. They may subscribe according to schedule and proportion. The duration period amounted to 6 years. This was the first
exercise. A total of 810 thousand shares, with a striking price of NT$15.4 per share (subsequent to earnings distribution for 2009, the subscription price dropped from NT$19.47 per share to NT$15.4 per share).
Note13: Approval documents, FSCF No. 0980050701 dated September 28, 2009 issued by Financial Supervisory Commission, and MOEAC No. 09801272850 issued by MOEA dated November 25, 2010.
Note14: Approval documents, FSCF No. 0990024463 dated May 14, 2010 issued by Financial Supervisory Commission, and MOEAC No. 09901141920 issued by MOEA dated July 6, 2010.
Note15: Approval document, MOEAC No. 09901234190 issued by MOEA dated October 18, 2010. This was the second exercise for ESO issued in 2007 of 380 thousand shares with a striking price of NT$11.0 per share (subsequent to earnings distribution for 2010, the subscription price dropped from NT$15.4 per share to NT$11.0 per share).
Note16: Approval documents, FSCF No. 0990039027 dated July 26, 2010 issued by Financial Supervisory Commission, and MOEAC No. 09901266400 issued by MOEA dated October 18, 2010.
Note17: Approval documents, FSCF No. 1000027166 dated June 17, 2011 issued by Financial Supervisory Commission, and MOEAC No. 10001171160 issued by MOEA dated August 1, 2011.
Note18: Approval document, MOEAC No. 10001242400 issued by MOEA dated October 21, 2011. This was the third exercise for ESO issued in 2007 of 249 thousand shares with a striking price of NT$10 per share (subsequent to earnings distribution for 2011, the subscription price dropped from NT$11.0 per share to NT$10 per share).
Note19: Approval document, MOEAC No. 10101038520 issued by MOEA dated March 8, 2012. This was the fourth exercise for ESO issued in 2007 and a conversion of corporate bonds of 5,679 thousand shares in total with a striking price of NT$10 per share and a conversion price of NT$55.5per share.
Note20: Approval document, MOEAC No. 10101061950 issued by MOEA dated April 11, 2012. A conversion of corporate bonds of 2,297 thousand shares was performed, with a conversion price of NT$55.5 per share.
Note21: Approval document, MOEAC No. 10101140680 issued by MOEA dated July 17, 2012. A conversion of corporate bonds of 157 thousand shares was performed, with a conversion price of NT$55.5 per share.
Note22: Approval documents, FSCF No. 1010028684 dated June 28, 2012 issued by Financial Supervisory Commission, and MOEAC No. 10101181490 issued by MOEA dated August 31, 2012.
Note23: Approval document, MOEAC No. 10101211200 issued by MOEA dated October 12, 2012. This was the fifth exercise for ESO issued in 2007 of 3 thousand shares in total with a striking price of NT$10 per share.
Note24: Approval document, MOEAC No. 10201002490 issued by MOEA dated January 8, 2013. A conversion of corporate bonds of 20 thousand shares was performed, with a conversion price of NT$49.50 per share.
Note25: Approval document, MOEAC No. 10301053520 issued by MOEA dated March 26, 2014. A conversion of corporate bonds of 5,734 thousand shares was performed, with a conversion price of NT$34.46 per share.
Note26: Approval document, MOEAC No. 10301142680 issued by MOEA dated July 18, 2014. A conversion of corporate bonds of 10,955 thousand shares was performed, with a conversion price of NT$34.46 per share.
Note27: Approval document, MOEAC No. 10401069270 issued by MOEA dated May 5, 2015. Restricted stock awards of 2,000 thousand shares were issued, with a par value of NT$10 per share.
Note28: Approval document, MOEAC No. 10401218730 issued by MOEA dated October 30, 2015. Restricted stock awards of 120 thousand shares were canceled, with a par value of NT$10 per share.
Note29: Approval document, MOEAC No. 10501002430 issued by MOEA dated January 12, 2016. Treasury stocks and restricted stock awards of 2,000 thousand shares and 20 thousand shares respectively were canceled, both of which with a par value of NT$10 per share.
Note30: Approval document, MOEAC No. 10501175540 issued by MOEA dated July 29, 2016. Restricted stock awards of 86.8 thousand shares were canceled, with a par value of NT$10 per share.
Note31: Approval document, MOEAC No. 10601002440 issued by MOEA dated January 18, 2017. Restricted stock awards of 154 thousand shares were canceled, with a par value of NT$10 per share.
Note32: Approval document, MOEAC No. 10601065050 issued by MOEA dated May 22, 2017. Restricted stock awards of 28 thousand shares were canceled, with a par value of NT$10 per share.

Note33: Approval document, MOEAC No. 10701003310 issued by MOEA dated February 2, 2018. Treasury stocks and restricted stock awards of 2,000 thousand shares and 52 thousand shares respectively were canceled, both of which with a par value of NT$10 per share.
Note34: Approval document, MOEAC No. 10701075880 issued by MOEA dated July 6, 2018. Restricted stock awards of 282 thousand shares were canceled, with a par value of NT$10 per share.
Note35: Approval document, MOEAC No. 10701102410 issued by MOEA dated August 13, 2018. Treasury stocks of 5,000 thousand shares were canceled, with a par value of NT$10 per share.
Note36: Approval document, MOEAC No. 10801002990 issued by MOEA dated January 11, 2019. Restricted stock awards of 19 thousand shares were canceled, with a par value of NT$10 per share.
Note37: Approval document, MOEAC No. 10801055070 issued by MOEA dated May 16, 2019. Treasury stocks of 2,000 thousand shares were canceled, with a par value of NT$10 per share.
Note38: Approval document, MOEAC No. 10801092600 issued by MOEA dated July 19, 2019. Restricted stock awards of 2,000 thousand shares were issued, with a par value of NT$10 per share.
Note39: Approval document, MOEAC No. 10901156910 issued by MOEA dated August 27, 2020. Treasury stocks and restricted stock awards of 1,618 thousand shares and 827 thousand shares respectively were canceled, both of which with a par value of NT$10 per share.
Note 40: Approval document, MOEAC No. 11001130500 issued by MOEA dated July 27, 2021. Restricted stock awards were canceled and capital reduced by 33 thousand shares. A conversion of corporate bonds of 5 thousand shares were performed, with a conversion price of NT$19.30 per share and a par value of NT$10 per share.
Note 41: Approval document, MOEAC No. 11001190150 issued by MOEA dated October 21, 2021. A conversion of corporate bonds of 5,679 thousand shares was performed, with a conversion price of NT$19.30 per share.
Note 42: Approval document, MOEA No. 11101036760 issued by MOEA dated March 24, 2022. A conversion of corporate bonds of 654 thousand shares was performed, with a conversion price of NT$19.10 per share.
Note43: Approval document, MOEAC No. 11101140870 issued by MOEA dated August 2, 2022. Treasury stocks and restricted stock awards of 26 thousand shares with a par value of NT$10 per share.
Note44: Approval document, MOEAC No. 11101173850 issued by MOEA dated September 6, 2022. Capital reserve transferred to capital of 6.500 thousand shares with a par value of NT$10 per share.
Note45: A conversion of corporate bonds of 2,380 thousand shares was performed, with a conversion price of NT$17.90 per share in March 2023. The board of directors approved the change registration of convertible corporate bonds into ordinary shares on May 4, 2023. As of the date of publication of the annual report, the approval of the Ministry of Economic Affairs is still pending.

April 1, 2023; unit: share

Type of shares	Authorized Shares	Authorized Shares	Authorized Shares	Remarks
	Outstanding shares	Unissued shares	Total
Common share	137,715,192	62,284,808	200,000,000	Publicly traded shares

(2) Shareholder structure

Shareholding record date: April 1, 2023 Unit: Person; Share; %

Shareholder structure; Volume	Government institution	Financial institution	Other juristic person	Foreign institution and foreigner	Individual	Total
Number of persons	0	1	252	49	33,603	33,905
Shares held	0	10,748	47,227,665	5,674,392	84,802,387	137,715,192
Shareholding ratio	0.00%	0.01%	34.92%	4.12%	61.58%	100.00%

(3)Distribution of shares

April 1, 2023; unit: share

ution of shares		April 1,	2023; unit: share
Shareholding bracket	Number of shareholders	Shares held	Shareholding percentage(%)
1 to 999	23,946	617,653	0.45%
1,000 to 5,000	7,550	14,687,213	10.66%
5,001 to 10,000	1,220	8,314,689	6.04%
10,001 to 15,000	486	5,659,388	4.11%
15,001 to 20,000	161	2,854,431	2,07%
20,001 to 30,000	202	4,818,884	3.50%
30,001 to 40,000	95	3,329,157	2.42%
40,001 to 50,000	45	2,010,166	1.46%
50,001 to 100,000	100	6,800,531	4.94%
100,001 to 200,000	46	6,447,990	4,68%
200,001 to 400,000	21	5,600,345	4.07%
400,001 to 600,000	10	5,292,961	3.84%
600,001 to 800,000	3	2,084,000	1.51%
800,001 to 1,000,000	2	1,882,620	1.37%
More than 1,000,001	18	67,315,164	48.88%
Total	33,905	137,715,192	100.00%

(4)List of major shareholders:

April 1, 2023

		April 1, 2023
Share Major shareholder	Shares held	Shareholding percentage (%)
Liangdian Investment Co., Ltd.	17,411,388	12.64%
Epistar Corporation	6,042,808	4.39%
Weixin Investment Limited	4,827,428	3.51%
Harvatek Corporation	4,176,453	3.03%
Fang‐Long Huang	3,996,288	2.90%
Jason Wu	3,494,107	2.54%
Xiu‐Mei Hsu	3,156,000	2.29%
Chu Chi Investment and Development Co., Ltd.	2,833,524	2.06%
Bi‐Ling Li	2,571,000	1.87%
YOUNGTEK ELECTRONICS CORP.	2,549,367	1.85%
Total	51,058,363	37.08%

(5) Information relating to market price, net worth, earnings, and dividends per share for the last 2 years:

Unit: NT$

the last 2 years:	the last 2 years:	the last 2 years:			Unit: NT$
Year Item			2021	2022	2023, as of March 31(Note 8)
Market price per share (Note 1)	Highest		31.50	23.90	25.30
	Lowest		16.05	12.45	15.20
	Average		21.51	17.18	21.85
Net worth per share (Note 2)	Before distribution		20.49	19.50	19.58
	After distribution		19.25	(Note 9)	Not applicable
Earnings per share	Weighted average number of shares(thousand shares)		127,037	131,149	130,309
	Earnings per share (Note 3)	Before Retrospectively Adjustment	1.00	0.20	0.10
		After Retrospectively Adjustment	0.95	(Note 9)	Not applicable
Cash dividend per share	Cash dividends		0.27814129	0.30572782 (Note 9)	‐
	Stock dividend	Stock dividend from retained earnings	‐	‐	‐
		Capital reserve dividend	0.51654800	‐	‐
	Accumulated unpaid dividend(Note 4)		‐	‐	‐
Profitability analysis	Price‐to‐Earning Ratio (Note 5)		21.51	85.90	Not applicable
	Price‐to‐Dividend Ratio (Note 6)		77.33	56.19	Not applicable
	Cash dividend yield (Note 7)		1.29	1.78	Not applicable

Note 1: To indicate the highest and lowest market price for common shares. The yearly average market price is computed using yearly transaction amount and volume.
Note 2: Please indicate based on the number of shares issued as of year end and the distribution resolved by the Shareholders’ Meeting in the following year.
Note 3: In the event that no retrospective adjustment is required due to issuance of stock dividend, indicate the EPS before and after adjustment.
Note 4: In the event that the criteria of equity securities issuance provide that undistributed dividend for the year may be accumulated and distributed in a profitable year, please disclose respectively the accumulated unpaid dividend for the year.
Note 5: Price / earnings ratio = average closing price per share for the year / earnings per share.
Note 6: Price / dividend ratio = average closing price per share for the year / cash dividend per share.
Note 7: Cash dividend yield rate = cash dividend per share / average closing price per share for the year. Note 8: Please indicate the net worth per share and EPS based on information as of the publication date of the audited (reviewed) financial report for the latest quarter; for other information, please indicate based on information as of the publication date of the annual report. Financial statements for 2023Q1 have been audited.
Note 9: The proposal for 2022 earnings distribution awaited the approval of 2023 Shareholders’ Meeting by resolution.

(6) Dividend Policy and Implementation Status

1. Dividend policy:

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If the Company has any surplus in the earnings as concluded by the annual accounting book close, the Company shall pay tax and make up for the accumulated losses first, and then set aside 10% as legal reserve, but if the legal reserve has reached the amount of the Company’s paid‐in capital, no further provision shall be made, and the remainder shall be set aside or reversed as special reserve in accordance with the Securities and Exchange Act; if there is any remaining balance, the Board of Directors shall, together with the accumulated undistributed earnings, prepare an earnings distribution proposal and submit it to the shareholders’ meeting for resolution on the distribution of dividends to shareholders.

The Company’s dividend policy is to distribute dividends to shareholders at a rate of not less than 60% of the available‐for‐distribution earnings each year, with the capital, financial structure, operating conditions, future development plans, capital requirements, domestic and international competition taken into account, as well as the interests of shareholders. If the accumulated available‐for‐distribution earnings are less than 20% of the paid‐in capital, no earnings distribution should be made. Dividends may be distributed to shareholders in cash or in stock, with cash dividends not less than 10% of the total dividends.

2. Distribution of dividend:

(1) As per the Board of Directors resolution on March 9, 2023, the profit distribution table for 2023 submitting to the Shareholders’ Meeting is as follows:

Edison Opto Corporation

PROFIT DISTRIBUTION TABLE

Unit: NT$

	Unit: NT$	Unit: NT$
Item	Amount
	Subtotal	Total
Undistributed earnings at the beginning of the period Undistributed earnings for 2022 Plus: 2022 net profit after tax Changes in actuarial gains and losses during this period Minus：Losses from the disposal of equity instrument investments measured at fair value through other comprehensive gains and losses, which were included in retained earnings Losses to be made up items for making up losses： Statutory reserves Special reserves Unappropriated retained earnings at the end of the period	25,647,817 877,000 (149,718,800)	0 (123,193,983)
	11,068,489 112,125,494	(123,193,983) 123,193,983
		0

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(2) Proposed dividend distribution in 2023 Shareholders’ Meeting

Unit: NT$

		Unit: NT$	Unit: NT$	Unit: NT$	Unit: NT$
Divid end Year	Dividend distribution date resolved by the Board resolution	Stock dividend
		Cash dividends	Cash dividend from capital reserve	Stock dividend from capital reserve	Stock dividend from retained earnings
2022	2023.03.09	0	40,000,000 (NT$0.30572782 per share)	0	0

Anticipated major change in dividend policy: None.
(7) Effect of the proposed stock dividends at the shareholders’ meeting on the Company’s operating results and earnings per share: Not applicable. As per the “Regulations Governing the Publication of Financial Forecasts of Public Companies,” the Company is not required to disclose financial forecast.
(8) Amount or scope of employee compensation and Director remuneration
Amount or scope employee compensation and Director remuneration as per the Articles of Incorporation

Item

Amount or scope

Employee
compensation

Each year, if the Company is profitable, 5% to 15% of the profit
shall be appropriated as employee compensation. The Board of
Directors shall determine by resolution to distribute the
compensation in stock or cash. The eligible party shall be
employees of the Company or its affiliates that meet certain
criteria. However, if the Company has accumulated losses, the
amount of losses make‐up shall be reserved in advance and then
the employees and Directors’ profit‐sharing remuneration shall be
appropriated in accordance with the aforementioned
percentages.

Director
remuneration

The Board of Directors shall determine by resolution to distribute
not more than 3% of the aforementioned profit amount as the
Director remuneration.

The basis for the estimation of the amount of employee compensation and Director remuneration, computation basis of number of stock dividend for the current period (2022), and the accounting treatment in the event of a difference between the estimated amount and the actual compensation and remuneration paid in shares or cash:

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For a profitable fiscal year (a profitable fiscal year refers to the annual profit before tax before deducting the profit‐sharing remuneration for employees and profit‐sharing remuneration for directors), the Company shall first offset the accumulated losses before appropriating and recognizing 5% and 1% of the profit as profit‐sharing remuneration for employees and profit‐sharing remuneration for directors, which are expenses for the year. In the event that the actual disbursement differs from the estimated amount, the deviation amount shall be recognized as a profit or loss in the following year.

Compensation and remuneration resolved by the Board of Directors:
(1) Profit‐sharing remuneration for employees and profit‐sharing remuneration for directors in cash or shares. In the event that the actual disbursement differs from the estimated amount, the deviation amount, causes and measures taken shall be disclosed:

On May 4, 2023, the Board of Directors approved 2022 profit‐sharing remuneration for employees and profit‐sharing remuneration for directors by resolution as follows. The difference is recognized loss from disposal of equity instrument investment measured at fair value through other comprehensive gains and losses, which were included in retained earnings. Accumulated losses need to be made up, so it is not planned to appropriate employee remuneration and director remuneration, and the difference will be adjusted in 2023 as estimated changes:

			Unit: NT$
Item	Board resolution	Recognition of compensation and remuneration for the year	Deviation
Employee compensation (cash)	0	1,500,000	1,500,000
Director remuneration (cash)	0	300,000	300,000
Total	0	1,800,000	1,800,000

(2) Employee compensation distributed in stock, and the said compensation as a percentage of the sum of after‐tax profit and total employee compensation in the standalone financial statements: Not applicable as no distribution has been made.
Actual disbursement of employee compensation and Director remuneration for the preceding year (2021; including employee stocks, cash disbursement and share prices). Where the actual disbursed amount differs from the recognized amount, the deviation amount, causes and measures shall be disclosed:

Unit: NT$

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Item	Shareholders’ Meeting (2022.06.22) Disbursed amount	Proposed distributed amount (2022.02.24) by the Board of Directors previously	Cause of deviation
Employee compensation(cash)	6,500,000	6,500,000	None
Director remuneration(cash)	1,500,000	1,500,000	None
Total	8,000,000	8,000,000	None

(9) Repurchase of the Company’s shares:

(9) Repurchase of the Company’s shares:	(9) Repurchase of the Company’s shares:	(9) Repurchase of the Company’s shares:	(9) Repurchase of the Company’s shares:
March 31,2023
Repurchase round	5th round	6th round	7th round
Purpose for repurchase	Transfer of shares to employees	Protection of corporate credit and shareholders’ interests	Transfer of shares to employees
Repurchase period	2018/11/7‐2018/12/21	2020/04/01‐2020/05/31	2022/9/5~2022/10/4
Repurchase price range	NT$12 to NT$19 per share	NT$7.5 to NT$15 per share	NT$13 to NT$22 per share
Type and number of shares repurchased	Common stock 3,000 thousand shares	Common stock 1,618 thousand shares	Common stock 1,500 thousand shares
Number of shares repurchased	NT$42,337 thousand	NT$19,832 thousand	NT$24,847 thousand
Actual shares repurchased as a percentage ofpredetermined shares repurchased(%)	100.00%	53.93%	50%
Number of shares retired and transferred	0 thousand shares	1,618 thousand shares	0 thousand shares
Cumulative number of shares held in the Company	3,000 thousand shares	3,000 thousand shares	4,500 thousand shares
Cumulative number of shares held in the Company as a percentage of total issued shares (%)	2.45%	2.45%	3.33%

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2. Corporate bonds:

Corporate bonds:	Corporate bonds:
Types of corporate bonds		Third domestic secured convertible corporate bonds
Date of issuance		2021/01/25
Issuance and tradinglocation		Taipei Exchange
Issueprice		Issued at 101% of the face value
Totalprincipal		NT$300,000,000
Interest rate		0% coupon rate
Tenure		Three‐year;maturitydate: January25,2024
Creditguarantee institution		Taipei Fubon Commercial Bank Co.,Ltd.
Underwriter		Fubon Securities Co. Ltd.
Legal counsel		Not applicable
CPA		Not applicable
Repayment method		Apart from the bondholders exercising conversion to common shares as per article 10 and redemption as per article 18 of the terms of corporate bond issuance and conversion, and the Company recalling and retiring the bonds as per article 19, the repayment upon maturity shall be made with a bullet payment in cash at 100.7519% of the face value.
Unpaidprincipal		NT$300,000,000
Criteria of redemption or early repayment		Please see article 18 of the terms of corporate bond issuance and conversion
Covenants		None
Credit rating agency, date of rating and ratingof corporate bond		Not applicable
Other equity	The amount of converted (exchanged or subscribed) common shares	None
	Issuance and conversion	Please see the terms of corporate bond issuance and conversion
Dilution effect and other adverse effects on existingshareholders		Please see page 78 to 79of the bond issuance prospectus.
Custodian		None

Convertible corporate bonds

Types of corporate bonds	Types of corporate bonds	Third domestic secured convertible corporate bonds	Third domestic secured convertible corporate bonds
Year Item		2022	As of March 31, 2023
Market price of convertible corporate bonds	Highest	NT$129.50	NT$139.30
	Lowest	NT$104.00	NT$105.20
	Average	NT$115.24	NT$124.61
Conversionprice		NT$17.90	NT$17.90
Date of issuance and conversion price at issuance		Date of issuance: January 25, 2021 Conversionprice at issuance: NT$19.30
Underwriter		Fubon Securities Co. Ltd.
Method by which conversion obligations will be satisfied		Issuance of new shares

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3. Preferred shares: None.

4. Overseas depositary receipts: None.

5. Employee stock option: None.

6. Restricted stock awards:

(1) Restricted stock awards that have yet to meet the vesting conditions and effect on existing shareholders：None
(2) Name and accumulated restricted stock award acquisition of top ten managers and employees：None

7. Issuance of New Shares with Shares Acquired or Assigned from Other Companies: None.

8. Implementation of the Fund Usage Plan:

For the period as of the quarter preceding the date of publication of the annual report, with respect to each uncompleted public issue or private placement of securities, and to such issues and placements that were completed in the most recent three years but have yet fully yielded the planned benefits: None.

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Business Overview

i. Business activities

(i) Scope of business
Principal business activities of the Company and subsidiaries:
(1)Lighting Facilities Manufacturing.
(2)Electronic Parts and Components Manufacturing
(3)Traffic Signs Installation Engineering
(4)Traffic Marking Engineering
(5)Wholesale of Electronic Materials
(6)Retail Sale of Traffic Sign Equipments and Materials
(7)Retail Sale of Electronic Materials
(8)International Trade
(9)All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Main products of the Company and subsidiaries and percentage relative to consolidated revenues ‐ 2022:

Unit: NTD thousands; %

		Unit: NTD thousands; %

Main products	Operating revenues	Weight of operating revenues

Sensor element	219,292	10.41
LED lightingcomponents	545,581	25.91
LED lighting modules and
	812,993	38.61
products

Automotive LED lighting modules	461,900	21.93
Others	66,098	3.14
Consolidated operating revenues	2,105,864	100.00

Current main products of the Company and subsidiaries:
(1)LED lighting components
- A. High power LED components

High power LED offers several advantages including lighting efficiency and energy efficiency. The high power LED components mass‐produced by the Company and subsidiaries have been developed with a special emphasis on optical design, which makes them suitable for professional lighting applications that require higher luminance and higher efficiency. The component covers high power products ranging from 1W to 30W and is used in several professional lighting applications (such as commercial lighting, automotive lighting, stage/photography/studio lighting, aquarium lighting etc.), making it a versatile solution for virtually all types of needs. For stage/photography/studio lighting, Edison Opto offers high color rendering index (CRI) design to support flexible light mixing. As for the emerging electric vehicles market, the Company offers a

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comprehensive range of automotive lighting solutions that uses a specialized eutectic process and component array to minimize light‐emitting surface while solving common issues of conventional LED head lamp (i.e. low luminance in low beam and short distance in high beam). All product lines have been designed in accordance with ISO14001 not only to conform with legal requirements on colors and specifications, but also to offer high degree of reliability under extreme conditions. To accommodate market demand, the Company and subsidiaries have been actively developing the COB/DOB series that offer low thermal resistance and high luminance. Products featuring different wattage and color temperature have been introduced to the market, thereby allowing customers to more easily and more quickly design next generation of lighting solutions.

B. LED (PLCC) components

PLCC component offers several advantages including low cost, favorable price‐to‐performance, and broad applications. The Company and subsidiaries have persistently improved their mid power and low power PLCC‐assembled SMD LED offerings to accommodate customers that demand lighting solutions for different types of electronics. The PLCC series also has high efficiency, high stability, and high luminance selections to choose from. Most products have passed the LM‐80 standard to provide customers with the best assurance. PLCCs are mainly used for signage, lightbox, landscape light, downlight, bulletin/signboard backlight, meter readings and tracking light, machine vision lighting, and indoor supplementary lighting. PLCCs can also be used on vehicles as decorative light, headlamp, fog light, turn signal, brake light, tail light etc. Factory quality has passed IATF16949 certification, whereas product quality has passed AEC‐Q standards for more high‐end services and applications.

(2)LED lighting modules and products

With respect to lighting modules and products, all of the Company's offerings have been designed to conform with the world's latest legal requirements (such as UL/ETL/CE/BSMI). The Company would also seek special safety certifications for different lighting equipment as requested by customers, and support customers' new lighting designs or replacement solutions as ways to optimize the product lineup.

Being the provider of professional LED solutions, the Company and subsidiaries not only invest extensive amounts of capital and manpower into developing the latest LED components and modules, but are also committed to promoting proprietary LDMS (Lighting Design Manufacturing Service) for LED lighting solutions. LDMS is an integrated, customized design and manufacturing service that helps customers resolve technical challenges such as heat dissipation, circuitry, structural design, optical design etc. in their LED lighting equipment, so that customers can more easily and more quickly develop next generation of stationary lighting solutions.

(3)Automotive LED lighting modules

LED was first used in automotive lighting as brake lights for its short response time. As technologies evolve, high luminance LED lights become available and are now used for all lighting applications on a vehicle, including tail light, turn signal, daytime running lamp (DRL), low and high beam, in‐vehicle reading lamp, dashboard lighting, ambient lighting, and a growing number of uses. Automotive LED lights not

108

only meet stringent demands for environment friendliness and energy efficiency, they are also capable of supporting the latest technologies and new circuitry designs, which make LED superior to conventional automotive lighting in every aspect. As use and production of incandescent lamps are banned around the world, demand for LEDs in automotive lighting will continue rising. According to LEDinside, new energy vehicles have exhibited rapid growth in 2020 despite uncertainties of the global economy, and will continue to be the main driver of car sales in the future. By 2023, automotive LED lighting solutions are estimated to reach a market size of US$4.21 billion worldwide.

(4)Sensor element

Transducer encompasses a broad number of components including datalink, optical incremental encoder, photo‐interrupter (ITR), and infrared receiver module (IRM).

(5)Special lighting

The Company constantly explores new LED applications. With regards to special lighting, the Company offers eye protection components that are intended to protect against vertical cavity surface‐emitting lasers (VCSEL), a light source commonly used in the 3D sensing industry and for applications such as facial recognition, payment, and AR/VR. The Company has also developed UVC anti‐microbial molds and solutions for COVID‐19, with anti‐microbial performance certified by reputable institution in Korea. Some of the final products are even shipped with the Company's patented eye protection devices.

New products planned for the future:
(1) LED components, modules, and products
A. Small‐size high luminance, adjustable, high matching high‐voltage linear module.
B. High power factor, low‐frequency flashover high‐voltage linear module
C. Wide angle slim downlight module with lens
D. Commercial LED lighting module (including high lighting efficiency and high CRI LED components) for embedded light and ceiling light applications. The lamp can reach a high‐quality of light source with 140 lm/W or above, and above CRI 95.
E. High power, high CRI, and high performance LED lighting components with power ratings ranging from 9W to 35W, which enable indoor lighting equipment (such as: embedded light, light bulb etc.) to achieve luminance of 160 lm/W and average CRI of 90 and above.
F. SWIR short‐wave infrared LEDs, including applications for detecting and monitoring vision, improving product automation and medical‐related semi‐conductor type detection and measurement equipment capability enhancement.
G. Various LED car light modules (such as: Headlights, reading lights, Turn signals, etc.), with ultra‐thin miniature design, provide excellent design flexibility for lamp manufacturers.
H. High‐penetration, daylight color sealed beam fog light module.
(2) Transducer components and modules.
(3) Components with human eye protection are mainly VCSEL light sources required by the 3D sensing industry for face recognition, payment, and AR/VR scenes.

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  - (4) Smart streetlights with various functions such as streetlight lighting, monitoring, management, and information transmission through internet networking and management platform.

  - (5) Green energy supply lighting system

     - A. Various energy‐saving lamps, such as outdoor lighting, streetlights, floodlights, and patio lights, etc.

     - B. Various green energy related accessories, such as solar panels.

     - C. Various green energy battery accessories, such as battery accessories with standard battery capacity setting.

     - D. Charge controllers, such as charge controllers that convert charge output to room power.

  - (6) Environmentally friendly lighting equipment by using environmentally friendly materials to design reusable or recyclable lamps.

(ii) ii Industry Overview
1.Current and future industry prospects

Edison Opto and subsidiaries are mainly involved in the research, development, production, and sale of LED lighting components and modules, automotive LED lighting modules, sensor element , and special lighting solutions. LED lighting components, LED lighting modules, and automotive modules are primarily used in various forms of lighting equipment including: portable lights, vehicle lights, building lights, commercial lights, entertainment lights, street lamps, and indoor/outdoor lighting. Sensor element are used as transmission interface for digital audio signals in multimedia products, and their resistance against electromagnetic wave interference improves overall audio quality, which makes them suitable for sound systems, DVD players, STB, MP3, PS3 game consoles, desktop PCs, and laptops. Special lighting solutions are mainly used in applications such as facial recognition, AR/VR, automobiles, drones, biometrics, robotics, gaming devices, laptops, household equipment with TOF light source, anti‐microbial and health protection.

Main business activities and products of Edison Opto and subsidiaries:

Main business activities and products	of Edison Opto and subsidiaries:
Companyname	Main business activities orproducts
Edison Opto Corp.	Development, manufacturing, and sale of LED lighting components, modules, products, automotive components,and special lighting
Edison Opto (Dong Guan) Co., Ltd.	Research, development, manufacturing and sale of sensor element , LED modules and products
Yangzhou Edison Opto Corporation	Research, development, manufacturing, and sale of automotive LED components, LED lighting modules/products, and LED lighting components
Yangzhou Aichuang Electronic Trade Corporation	Supports Yangzhou Edison in the sale of LED lighting products
Alpha Investment Limited	Supports Edison Opto's business strategies and invests into strategic partners for vertical and horizontal cooperation

110

Companyname	Main business activities orproducts
Edison Opto USA Corporation	Development and sale of LED lighting components and modules in USA
Ledionopto Intelligent Technology Co., Ltd.	Development and sale of commercial lighting products
Yangzhou Edison‐Litek Opto Corporation	Research, development, manufacturing, and sale of automotive LED modules and products
Edison‐Litek Opto Corp.	Manufacturing and sale of automotive LED modules andproducts
Edison‐Egypt Opto Corporation	Sale ofprofessional lighting products
Edison Auto LightingCorporation	Sale of automotive LED modules

Overall, Edison Opto and subsidiaries are mainly involved in the research, development, production, and sale of LED lighting components, modules, and products, automotive components and modules, sensor element , and special lighting solutions. Below is a description of business risks for Edison Opto and subsidiaries, given their distinctive industry characteristics:

(1)Current and future industry prospects
A. Overview of the LED industry

"LED Manufacturing" refers to the business of producing various forms of LED components. Taiwan Industry Economics Services has classified "LED (Light Emitting Diode) Manufacturing" as "Other Optical Components Manufacturing" under "Optical Materials and Components Manufacturing" based on Version 10 of "Standard Industrial Classification System of the Republic of China" published by the Directorate‐General of Budget, Accounting and Statistics, Executive Yuan.

LED is an electronic component made from semiconductor materials that emits light when electricity passes through. These materials use chemicals from groups III‐V of the periodic table (such as: gallium phosphide (GaP), gallium arsenide (GaAs) etc.) to convert electrical energy into light. By applying electrical current on semiconductor compounds made with different materials and taking advantage of electrons and electron holes, excess energy can be released in the form of light to achieve illumination. Different materials produce light at different wavelengths, and are perceived by the eye as different colors. LED is a luminescent light source and has a life span of more than 100,000 hours. LED offers significant advantages including zero idling time, fast response (about 10 seconds), small size, power efficiency, low pollution, and scalable production. It is also highly reliable to be used in miniaturized components or arrays, and is therefore highly versatile in terms of application. LEDs are mainly used in lighting, LCD backlight, and signage; lighting application can be further distinguished into general lighting, commercial lighting, automotive lighting, outdoor lighting, landscape lighting, and horticulture lighting. Global demand for lighting has the following characteristics:

○1Wide variety in small volume

There is such a wide variety of lighting products that the market can be generally classified not only by light source and equipment, but also by shape and purpose into: down light, spotlight, street lamp, floodlight, in‐ground light, light steel frame, desk lamp, floor lamp etc. By light source, lighting solutions can be

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classified into incandescent lamp, halogen lamp, fluorescent tube, fluorescent bulb, high pressure mercury lamp, metal halide lamp, LED, OLED etc. Diversity of product line combined with endless possibilities of lighting design for different scenarios causes lighting equipment to be produced in wide variety and in small volume.

Considering how lighting equipment is less standardized and highly diversified, it is common for manufacturers to develop a broad spectrum of products but produce them in small quantities. Back‐end vertical system integration and acquisition of sales channels and brands in local manufacturers are some of the strategies taken to accomplish the above. Distribution and brand are among the many critical elements that are critical to success in the industry, and cost is never the only determining factor.

○2Significance of localization

Lighting equipment tend to be bulky, costly to transport, highly diversified, and different depending on consumers' needs. As demands and product features vary from region to region, production has to be localized or carried out in the form of a regional manufacturing center in order to meet the different needs.

○3Consumers are highly price sensitive

Lighting products are closely related to people's lives that consumers have become highly sensitive to price change. LED bulbs, for example, was unpopular when it was first introduced because the unit price far exceeded fluorescent bulbs. Today, the price of LED bulb is close to if not lower than fluorescent bulb, and has emerged to become the mainstream light source in just a few years.

Global demand for lighting has been growing at a slow rate in recent years. Population growth, economic growth, urbanization, and energy conservation needs are some of the key demand drivers. The faster the economic growth and the higher the rate of urbanization, the higher the demand for office buildings, plants, services, and residence. Furthermore, increased wealth is often associated with the need to travel at night, and higher demand for lighting. Lighting is a highly localized business and there are only few global players. Vertical integration efforts in recent years have opened up opportunities and diversity for smart lighting solutions, which may change the future of lighting products and market. Faced with the uprise of smart lighting, global players are actively changing their existing business models to transform into lighting system providers. In addition to refining the current lighting technology, these global players have committed additional resources into developing visible light communication and accurate indoor positioning, and devised a series of strategies to transition from supplying standalone products to providing integrated solutions, systems, platforms, and services, while at the same time expand application from lighting to smart building/campus/city solutions. Overall, the lighting industry as a whole is transforming toward sustainability by incorporating digital, networking, and smart features, and had made noticeable efforts to carbon neutrality in 2030.

In 2022, the world faced the war between Russia and Ukraine, China's city‐lockdown, high inflation, high downstream inventory and other unfavorable factors, seriously affecting the performance of the LED industry. For the panel market, panel prices fell sharply and the industry cut production on a large scale, and

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it was estimated that the annual growth rate of production value for 2022 would decline significantly by 15.17%, which seriously affected the demand for backlight LEDs. As for the automotive market, although facing a poor economic environment and high inflation, which affected consumer’s purchasing power, fortunately the demand still remained stable, and the shortage of automotive chips was gradually resolved, which was conducive to car shipments as a result. As such, it was estimated that the global car shipments for 2022 would still reach 81 million units, showing a flat trend. The lighting market benefited from the growth of niche markets such as smart lighting, health lighting, and plant lighting, and the global market size was estimated to grow slightly by 1.54% in 2022. Although its growth rate was expected to slow down compared with the past, thanks to the solid demand for Mini LED/Micro LED and other small pitch LEDs, the LED display market was expected to grow by 6.31% in 2022. Overall, although the global LED display market size was expected to grow slightly in 2022, there would be a significant reduction in production compared to 2021, and the lighting market size and automobile sales would remain relatively flat and the panel production value would decline significantly, affecting the panel backlight demand, so it was pessimistic about the business environment of Taiwan's LED industry in 2022 (see Table 1).

Table 1 Trends in the global LED market demand

Application market	2018	2019	2020	2021	2022(E)
Lighting market size (US$100 million)	656.15	677.15	667.67	669.24	679.57
Annualgrowth rate(%)	5.30%	3.20%	‐1.40%	0.24%	1.54%
Panel production value (US$100 million)	1,073	1,040	1,070	1,326	1,125
Annualgrowth rate(%)	‐14.36%	‐3.06%	2.82%	23.99%	‐15.17%
LED display market size (US$ million)	‐	6,335	5,525	6,800	7,229
Annualgrowth rate(%)	‐	‐	‐12.79%	23.08%	6.31%
Car shipment (10,000 units)	9,479	9,027	7,766	8,100	8,100
Annualgrowth rate(%)	‐0.55%	‐4.77%	‐13.97%	4.30%	0.00%

Source: Frost&Sullivan, TrendForce, China Zhongshang Industry Research Institute Co., Ltd., Industrial Economics & Knowledge Center, ITRI, Markines

In 2021, Taiwan's LED industry benefited from the global economic recovery and the obvious growth of the panel industry, coupled with the ongoing pandemic, which led to higher demand for UV LEDs, sensors and other invisible light applications, as well as the growth of demand for smart lighting, plant factories, automotive lighting and other new technology applications such as Mini LEDs. For the LED industry in Taiwan in 2021, driven by better price and higher volume, the annual growth rate of domestic and foreign production value increased significantly by 12.53% to $81.96 billion, showing a prominent industry boom grew significantly.

However, in 2022, the industry's economic climate took a significant turn for the worse. In addition to the decline in demand for the panel industry, the industry faced a significant reduction in production, and the new Mini LED products suffered the competition from China while demand was not as strong as expected. In addition, the global economic environment obviously deteriorated, under the impact of a series of negative factors such as war, city lockdown, inflation, etc., all of which seriously affected the purchasing power of consumers, resulting in the poor

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performance of Taiwan's LED industry production value, especially because Taiwan LED companies had nearly half of the production capacity in China, so China's successive city lockdown measures also further affected the industry's production value. Therefore, it was estimated that in 2022 Taiwan's LED industry production value would decline by 18.25% in 2022, and the industry would be in an obvious recession (see Figure 2).

==> picture [366 x 209] intentionally omitted <==

Note: The statistics include the production value of the overseas production bases of Taiwanese companies. Source: Industrial Economics & Knowledge Center, ITRI, Taiwan Industry Report (2023.01)

Figure 2: Trends in the production value of Taiwan's LED industry

(2)Association between upstream, midstream, and downstream industry participants

LED manufacturing can be generally divided into EPI wafer production in the upstream, LED chip production in the midstream, LED assembly and module in the downstream, and end‐user application. The Company offers LED modules, assembly services, and Lampsand applications, which places it in the downstream of the industry chain. Association between upstream, midstream, and downstream participants is illustrated below:

Upstream (raw materials) Midstream (manufacturing) Downstream (application)

==> picture [563 x 174] intentionally omitted <==

----- Start of picture text -----

LED module
Single wafer and EPI wafer LED chip production and LED
LED assembly
production wafer testing
Lamps/application
----- End of picture text -----

Source: LED manufacturers database, Taiwan Institute of Economic Research (2019/12)

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(3) Product trends

Taiwan's LED components industry has flourished owing to the extensive investments made by industry participants. Today, Taiwan leads the world in LED technology and production scale. However, the spread of COVID‐19 in 2020 severely impacted the global economy, and as the pandemic subsided in 2021, the relaxation of restrictive measures, too, had significant effect on industry development. Future trends of LED products are explained below:

○1LED market share continues to increase
A. Rising market share of LED lighting

The introduction of LED as a lighting solution has significantly increased the price‐to‐performance ratio of energy‐efficient lighting products over a short period of time. They play a major role in the energy conservation and environmental protection movements of governments around the world, and are regarded as viable alternatives over old, energy‐intensive lighting solutions such as incandescent and halogen bulbs. As lighting efficiency and environmental protection policies tighten around the world, growth of LED lights should continue to rise at a compound annual growth rate (CAGR) of about 15.5% between 2018 and 2022. Meanwhile, conventional lighting products are estimated to decline at a (CAGR) of ‐13.7% between 2018 and 2022. Overall, LED lighting solutions continue to offer better value and surpass conventional lighting solutions in lighting efficiency as industry participants commit greater resources into development. Combined with policy support for energy‐efficient lighting by countries around the world, LED is estimated to achieve market penetration of more than 80% by 2024.

B.Low cost and high efficiency of LED puts a ceiling on lighting technologies

Today, the lighting efficiency of LED has far surpassed all other light sources, and continues to improve with time. According to the technological roadmap published by the U.S. Department of Energy below, lighting efficiency of cool whites may reach 240 lm/W in 2025. Meanwhile, as prices of LED components fall and manufacturers invest additional resources into development, many indoor LED lighting products are now priced more competitively than conventional lighting products.

In summary, LED lighting far surpasses other lighting products in terms of price‐to‐performance ratio, and is being regarded as the ceiling of high efficiency lighting technology. Other light sources such as OLED and laser will have to overcome the current efficiency and price barriers in order to compete with LED, and new products will have to offer better efficiency at similar pricing to have a chance of being accepted by the market. For these reasons, LED's should secure its dominance as the mainstream light source in the next 5 years.

==> picture [272 x 143] intentionally omitted <==

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Source: U.S. Department of Energy (2020)

C.Increasing application of UV‐LED

Growth of the LED industry has so far been centered around white LEDs and applications simply because of the immense demand and growth opportunities. However, given the excess supply and low technological barrier of entry, there is virtually no meaningful margin on the production of pure blue and white LEDs. In the future, manufacturers will shift focus toward special lighting applications to take advantage of a more expansive supply chain and broader revenue base while avoiding competitive pressure from mass production. For this reason, ultraviolet LEDs (UV‐LEDs) will see broader applications and increasing demands in the future; in fact, LED manufacturers with system integration capabilities are already getting into action.

Considering how UV‐LEDs, which emit light at wavelengths of 350‐380nm, are too costly to convert into white or blue color through phosphor mixing, only a handful of LED manufacturers had pioneer the development before applications became viable. Today, rising environmental protection awareness combined with substantial drop in the price of UV‐LEDs and new designs such as heat dissipation, equipment function, and lenses have opened up opportunities for UV‐LEDs in medical use. The UV‐LED factory jointly established by Japanese company Nikkiso and Taiwanese company Formosa Plastics in Taiwan, for example, is intended to produce components for water purification plants, factory clean rooms, and household water purifiers.

D. Evolution of micro LED technology

Apple acquired LuxVue Technology in May 2014 with the intent of adopting new display light source for all its products. This made micro LED a worthy contender to OLED as the next generation display technology. In June 2016, Sony exhibited the prototype of an ultra‐large micro LED TV that signified the commercialization of micro LED technology.

From a technological standpoint, micro LED involves assembling micrometer RGB LEDs into one light‐emitting component, and arranging multiple light‐emitting components into one display area at very high density. With regards to EPI wafer production, all blue and green LEDs are currently made from sapphire or GaN substrates, meaning that EPI wafers for both types of LED can be manufactured on the same production line. However, red LEDs can only be made from GaAs substrate, and manufacturers can not simply apply different procedures on an existing production line to produce red LEDs. This limitation prevents red, green, and blue micro LEDs from being made in the same EPI wafer production line, and the main technical challenge now lies in moving these microscopic LEDs in batches and on large scale onto the assembly line for mass production.

The small size of micro LEDs also presents difficulties in the assembly stage, as display devices would require an enormous number of LEDs, and a slight decrease in LED yields would have significant impact on the quality of

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image displayed. The best solution to this problem is to first assemble micro (RGB) LEDs into smaller sub‐panels, and then assemble sub‐panels into a full display, so that if a small number of micro LEDs fail on a later date, manufacturers can simply swap out the defective sub‐panel.

In summary, while micro LED has the potential to succeed as the next‐generation display technology, the production procedures still have many difficulties to overcome. Successful commercialization of micro LED technology will depend largely on the integration of late‐stage production procedures and the stability of wafer suppliers in both quality and quantity. For these reasons, LED manufacturers will work more closely with downstream partners or even resolve to merger and acquisition to achieve vertical integration.

○2Stabilized industry structure

The second revolution of the lighting industry following the introduction of LEDs presented enormous opportunities to such a degree that attracted waves and waves of new comers. In recent years, LED light manufacturers from Asia have emerged as key players due to their cost advantage, and stirred up competition in what used to be an inert industry. Even century‐old lighting brands such as Philips, Osram, and GE are forced to adjust strategies by divesting and selling parts of their business. Furthermore, due to the high degree of localization, manufacturers in the lighting industry are widely dispersed and every country has its own leader. As big players leave the market, new comers join in to fill the void. This is why diversity in the lighting market has intensified in the last few years, causing a substantial decrease in market concentration. This industry restructuring will come to an end once the large players cease to divest and sell their businesses.

○3Increasing market influence from AI technologies
A. AI growing in significance

LED lighting has continually improved in efficiency and decreased in pricing in recent years to create a technological ceiling that make it difficult to compete for new lighting technologies such as OLED. Low price and high efficiency of LED lighting also mean that the industry offers little margin in return. Given the ongoing price competition and uprise of smart city and IoT applications, the lighting industry will compete on integrated LED lighting equipment, IoT lighting, lighting management system, and light as a service (LaaS) for the next growth phase. As AI becomes a part of lighting new features such as smart technology, sensor, communication module, interoperability/compatibility, safety technology, integrated technology etc. will receive greater attention in the future, as illustrated in the following figure.

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==> picture [351 x 257] intentionally omitted <==

----- Start of picture text -----

LED alternative light source LED integrated lighting equipment Lighting‐integrated loT
Lighting management system Light as a service
Market influence of technology
----- End of picture text -----

Source: Industrial Technology Research Institute, IEK Consulting (2019/3)

B. Increasing technological barrier

IoT and smart city projects will invite more innovative suppliers to develop lighting equipment into connection hubs that transmit data and make cities/building smart. To realize this vision, manufacturers will have to find ways of integrating smart technologies into lighting products and bring "intelligence" into lighting. Considering how demand for lighting system varies between residential, commercial, and industrial applications, it is crucial for suppliers to explore customers' needs and satisfy them with lighting control systems that offer favorable price‐to‐performance ratio and stability. Smart lighting technology is more than just manufacturing and selling lighting equipment, but also involves integration of computing technology, wireless communication, automated control, and database. These integrations make products more difficult to develop by any single manufacturer, and would require strategic alliance or business partnership to succeed. Today, dominant manufacturers of lighting and light control solutions such as Osram, Lutron, and Legrand have made noticeable progress in terms of business acquisition or strategic alliance, which raised capital barrier of entry and made the technology too sophisticated to be single‐handedly mastered by any single manufacturer. The industry has changed so much that it is no longer appropriate to classify LED as a conventional "hardware" industry. Instead, it should be recognized as an important part of smart city, for it integrates communication, sensor, computing, and cloud technologies. The prospect of smart lighting has attracted not only lighting manufacturers, but also manufacturers from non‐lighting industries, as they, too, try to expand application of their products and score an early win in the race. This conflict has prompted participants to form collaborative yet competitive business relationships within the smart lighting industry.

○4Uprise of new business models
A. Transition toward lighting system service

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Smart lighting technology presents a new blue ocean for reputable lighting manufacturers in the world. Driven by mankind's pursuit for convenience and comfort, lighting designs in the future will be custom‐tailored to personal needs, and in order to achieve personalized design, lights will have to be combined with sensors to form smart systems, thereby allowing consumers to control and adjust according to preference. This level of customization means that light can no longer be presented in only one color as it used to, but diversified to accommodate system integrations and lighting

==> picture [435 x 233] intentionally omitted <==

----- Start of picture text -----

Smart
lighting
Pretty
Basic lighting  Smart lighting through
addition of sensors and
connectivity features
lighting  Internet connectivity involves
 Appeal is the key such a wide range of products
and technologies that no single
 Personalized design and business is able to accomplish
 broader variety of on its own
Reliable and adequate products are made  Good product does not
luminance is the key available guarantee demand, and
 A good product brings requires support of adequate
demand service
----- End of picture text -----

designs. They may even incorporate AI technology in the future to further satisfy human needs. Faced with the uprise of smart lighting, large manufacturers are changing their business models progressively and taking the initiative to transform into lighting system providers. In other words, they are transitioning from selling lighting equipment to selling "light," as illustrated in the figure below.

Source: Industrial Technology Research Institute, IEK Consulting (2019/3)

To provide the above products and services, Signify (formerly Philips Lighting) has made aggressive changes to its existing business model and transformed into a lighting system provider. For instance, the urban street lamp system and asset management service called City Touch launched in 2016 was one of its major offerings as a lighting system provider. In March 2018, Signify launched a new IoT platform called "Interact" that processes data gathered through connected lighting devices, sensors, transmission equipment, and systems, and uploads data onto Signify Lighting Cloud where administrators may access, analyze, and make use of to create value and exercise better energy control. U.S. lighting manufacturer, Acuity Brands, also mentioned the arrival of artificial intelligence and IoT as part of its future roadmap, and in addition to refining its current lighting technology, Acuity Brands has committed additional resources into developing visible light communication and accurate indoor positioning, and devised a series of strategies to transition from supplying standalone products to providing integrated solutions, systems, platforms, and services.

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B. Development of new business model

Promising as smart lighting may be, the concept is relatively new to the lighting market and solutions are still under development, not to mention the issues concerning consumers' awareness and user habits. So far, smart lighting is seen primarily in government projects (such as smart street lamp) or government‐initiated demonstrations, and is therefore financed mainly by way of Private Finance Initiative (PFI). While PFI is a common model for public infrastructures in the past, it is not an innovative model developed specifically for smart lighting. There are also some conglomerates that develop smart lighting projects in collaboration with local governments using a leasing model (where long‐term contracts are signed with local governments to lease out street lamp operations), but neither of the above methods devote much attention to data applications and opportunities given rise by AI or IoT technologies.

From the figure below, it can be seen that innovative business models and new opportunities associated with smart lighting are still under development, and that system operation and data analysis are where the most values can be derived. It is evident that future business models for smart lighting will focus on creating values from the massive volume of data gathered over a long period of time to the benefit of consumers and manufacturers/operators.

Source: Industrial Technology Research Institute, IEK Consulting (2019/3)

==> picture [503 x 293] intentionally omitted <==

----- Start of picture text -----

High
Layer 5: Analysis and
statistics Mass data and user analysis
Gather
Layer 4: Application digital
and service data
Cloud computing, data center, server, storage
Layer 3: Computing
and storage
Middleware, protocol, standards Analyze
digital
data
Layer 2:
Communication and
network
Standards and protocols
MQTT, D2D, D2S, S2S, CoAP, SOAP, DTLS… Business
Layer 1: Object
model
(street lamp, power,
protocol)
Low
Profit margin
----- End of picture text -----

(4). Product competition

① Changes in market supply and demand

Research, development, manufacturing, and sale of LED lighting components make up the group's primary business activities, whereas datalinks are the secondary business activities. The Company and subsidiaries are

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positioned at the end of the industry chain, which means that any change in domestic or overseas demands for downstream application would affect competitiveness of the group's products. Current supply and demand are explained below:

A. Supply

(A)Global market

In the past few years, Mainland China has been able to emerge as the country with the largest production capacity of LED components due to the use of government subsidies. Its industry structure is similar to that of Taiwan, adopting a specialization approach (where the upstream produces EPI wafers and the downstream performs assembly). For this reason, the uprise of Mainland manufacturers has had direct impact on Taiwanese counterparts and decreased Taiwan's production value in the last few years. Considering how Chinese manufacturer San'an Optoelectronics has been expanding production capacity in Ezhou, Hubei, since the second half of 2019, excess supply will inevitably worsen once the new capacity is in full production, making it more difficult for Taiwanese manufacturers to compete. For this reason, Taiwanese manufacturers should explore niche markets that offer sustainable margins instead of competing Chinese counterparts head‐on.

(B) Domestic market

The immense opportunities presented by LEDs have attracted investors from both within and outside the lighting industry. Not only are LED assembly plants eager to introduce new variants of LED bulb and LED street lamp, LED chip manufacturers, too, have invested into the development of LED lighting solutions. There is without a doubt that domestic LED chip manufacturers and LED assembly plants are optimistic toward the prospects of LED lighting, and have invested extensively into end‐user applications. LED lighting presents such immense opportunities that it attracts not only upstream peers, but also manufacturers from different industries such as optics, power supply, and heat dissipation modules. The keys to overcoming competition in the future will depend largely upon manufacturer's technological capacity, distribution, product quality, and service reliability.

B.Demand

(A)Global market

As LED surpasses incandescent bulb, halogen bulb, and even fluorescent lamp in lighting efficiency, LED lighting applications have enjoyed a period of rapid growth, particularly when the public became more aware toward environmental protection and energy conservation issues and governments became more active in banning inefficient light sources and rewarding high efficiency light sources. According to the reports by IHS and IEK, demand for LED lighting was estimated at US$40 billion worldwide in 2015, and had grown to US$92.3 billion in 2019 with a penetration rate of 58.6%. The progressive phase‐out of inefficient light sources by governments around the world not only created demand for

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LED lighting, but also educated consumers on the importance of saving energy on lighting and using high efficiency lighting equipment.

The life of a LED lamp may reach 50,000 hours; compared to incandescent bulbs (1,000 hours) and fluorescent lamps (10,000 hours), LED greatly reduces replacement cost and provides strong incentives for people to switch from ordinary light bulbs to LED lights. Many public and private environments that could not stay lit all day long due to financial concerns can now use LED lights to provide additional security. In comparison, compact fluorescent lamps (CFL) still offer inferior light quality and take longer time to start than incandescent bulbs while being unable to adjust light output; whereas LED offers more energy‐saving benefits compared to CFL and is able to deliver the required level of light quality. As more LED manufacturers begin mass production, prices will fall and make LED lighting equipment more accessible to the public, which in turn supports the growth of the lighting market. The potential to replace conventional light sources has made lighting the biggest market for LED applications.

Global markets of portable devices and TVs have saturated and are unlikely to exhibit significant growth in the future, thereby limiting demand for LED backlight. Lighting applications, on the other hand, is characterized by intensive price competition, and the difficulty of maintaining product unit price makes it difficult to profit. Backlight and lighting are currently the two largest applications of LED in Taiwan with an aggregate weight of approximately 60%. It is therefore imperative for manufacturers to explore new applications such as micro LED to diversify risks and increase product value.

(B) Domestic market

LED applications have broadened continually in recent years due to improvements in LED production technology and reduced pricing that made LED a viable alternative to existing solutions. From cellphone buttons, smartphone panel backlight, laptop backlight, automotive lighting, street lamp to indoor lighting, Taiwan's LED industry has grown persistently with every turn of event. Meanwhile, increased public spending from the government has made LED a highlight in infrastructure projects such as street lamp, urban landscape, and indoor/outdoor lighting of public buildings. Many infrastructure projects choose to incorporate LED street lamps mainly because the price has reduced significantly with improved performance, thereby shortening the payback period of investment. Furthermore, being an outdoor installation, it is easier for people to appreciate for themselves the performance of LED street lamps. Given that LED street lamp is a relatively mature technology, demand for LED street lamps and LED‐based landscape lighting, signage, and traffic signals have increased as a result.

② Product competition

A. LED lighting components and modules

Currently, world's major manufacturers of high power LED include Nichia, Orsam, Matsushita, Lumileds, Toyota Gosei, Stanley, Toshiba, and Citizen. In terms of market competitiveness and positioning, Nichia, Toyota Gosei, and

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Cree currently take the lead in high‐end technologies such as blue light and white light; whereas European and American companies Lumileds and Osram are well‐established in vertical integration. Considering the versatility of LEDs to be used in lighting, signage, and automotive applications, being able to secure market trends, distribution channels, and raw materials is critical to future success.

LED is currently the world's best energy‐saving lighting solution. Offering lighting efficiency of 80‐100 lm/W (compare to 15‐25 lm/W for incandescent bulbs), LED bulbs have the potential to replace conventional light sources. Lighting efficiency alone provides LED lights the reason to popularize, and as production cost and selling price reduce, they are making way into the average household. LED lights should continue to maintain dominant competitive advantage in the foreseeable future, and may even achieve higher degree of popularity among average households.

The domestic LED industry has many assembly plants operating in the downstream, but most of which are involved in low power or conventional LED assembly and matured applications such as smartphone backlight, signage, and traffic signals. The Company, on the other hand, prioritizes on the assembly of high power LEDs (with operating current greater than 350mA) that are designed specifically for lighting. Driven by the LDMS (Lighting Design Manufacturing Service) concept, the Company provides a TEMO (Thermal Management, Electrical Driving Conditions, Mechanical Refinement and Optical Optimization) platform that helps customers develop all sorts of lighting equipment using LED light source, and contributes to the expansion of LED lighting applications. High power LEDs manufactured by the Company and subsidiaries are mainly used for lighting in applications such as: stage lighting, commercial lighting, building/landscape lighting, street lamp, decorative lighting, automotive lighting, general indoor lighting, and special applications including curing light, horticulture lamp, medical light, and surgical light.

The Company and subsidiaries are currently capable of manufacturing high power LEDs at 120‐150 lumen per watt or above, demonstrating a level of technological capacity equivalent to world‐renowned manufacturers. Being able ship products at economy of scale means that LEDs are produced at lower cost to offer greater price‐to‐performance. In terms of product development and application, the Company has been successful at convincing customers to incorporate high power LED into their designs, and has developed strong brand awareness to support the competitiveness of its products. Application of high luminance LEDs in exterior vehicle lights will increase in weight and scope, which can already be observed in new cars where LED headlamps and tail lights are designed as part of the vehicle body. It is reasonable to expect LED lighting modules become standard equipment on vehicles.

B. Automotive LED lighting modules

Having earned the trust of headlamp manufacturers in North America, the group was able to receive ODM and OEM orders for multiple car models, and continues to grow its customer base. Due to safety concerns, automobile manufacturers require genuine LED lighting modules to pass rigorous design and safety tests, and it takes as long as 1‐2 years to design, develop, and

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certify a module. First‐time dealing with Tier I manufacturer may take 2‐3 years or longer just to review, certify, and deliver samples. However, it is because of the time‐consuming and costly nature that deters competitors in the short term, and the rigorous automotive lighting standards imposed by Tier I manufacturers are not something that can be met by manufacturers of general consumer LED lights.

For Tier I manufacturers, discontinuing relationship with an existing supplier in favor of parts from an alternative supplier incurs additional time and cost to certify, not to mention that it is difficult to assess how the change of parts will affect lighting performance. Out of conservatism and concerns for cost and risk, it is unlikely for Tier I manufacturers to change part suppliers.

Sensor element Sensor element transmit information using light and optic fiber. As technologies evolve, light has become an important medium for transmitting data. Rapid growth in multimedia applications in recent years has raised consumers' demand for high‐quality data audiovisual experience, and using light to transmit audio yields better quality, which satisfies consumers' needs.

As bandwidth increases, sensor elementare made smaller and used in high‐end products that require higher bandwidths. Currently, plastic optic fiber modules are widely used as transmission interfaces for audio data on sound systems, Mini Disc (MD) devises, DVD players, PS2 consoles, PC motherboards, and laptop computers. Optic fiber transmission modules/systems are commonly used on consumer products as transmission interface for high definition digital audio, and serve as one of the standardized interfaces on IT products such as PC motherboards and laptops.

Considering how the concept of digital home will grow popular in the next few years, there will be additional needs to transmit data between various types of digital appliance. However, the need to transmit data at higher speed (bit rate) over longer distance makes conventional copper cables inadequate, whereas glass optic fibers are too expensive to be adopted in digital homes. This leaves a gap that can be filled in by plastic optic fiber connectors, and the market may expect at least 20% growth in light transmission products per year until demand saturates. The Company's datalink solutions have been widely used on sound systems, DVD players, and NB and PC motherboards. The Company currently ranks first in Taiwan in terms of shipment, and has accumulated substantial competitive advantage through economies of scale and low cost.

(iii)Technology and R&D overview:

1. R&D expenses made in the last year up until the publication date of annual report

Unit: NTD thousands

Item	2021	2022	2023Q1
Consolidated R&D expense	101,865	115,059	29,079
Consolidated operatingrevenues	2,105,864	1,841,983	449,388
Percentage of R&D expense	4.84%	6.25%	6.47%

2. Technologies or products successfully developed

The Company and subsidiaries have built up their existing production portfolio and developed their current competitive advantage after accumulating many years of

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technical know‐how and making innovative designs and improvements according to customers' requirements. Aside from high power LED components, automotive applications such as headlamp and fog light modules will be the Group's next big focus. Recent development outcomes, future projects, and estimated budgets are explained below:

			Unit: NTD thousands
Year	Project ID	Development project	Additional amounts to be committed intoproject
2021	S310020002	Ultraviolet Module with High Disinfection Rate	5,500
	S310020011	Full Voltage LED Down Light	2,500
	S310018004	High CRI and High Optical Efficiency Stonehenge Module for Filmingand Television Lighting	3,000
2022	S310018004	High CRI and High Optical Efficiency Stonehenge Module for Filmingand Television Lighting	5,000
	S310020002	UVA SterilizingPanel Light	3,000
	RD3	RFI immunity and Intelligent Control Dimming Street Light System	5,000
	RD4	SWIR short‐wave infrared LED development	5,000
2023	RD5	Green energysupplylightingsystem	6,000
	RD6	Environmentallyfriendlylightingequipment	4,000

(iv)Long and short‐term business plans
Short‐term business plans
- (1)Continue new product development; explore technologies that increase luminance and evenness; and develop LED headlamp modules according to the needs of automobile manufacturers.
- (2)Continue optimization of production procedures; increase the level of automation and adopt digital management; and consolidate manpower for efficiency and product competitiveness.
- (3)Introduce new production procedures and measuring instruments; increase production capacity, improve product stability, and support new product development.
- (4)Develop application modules for LED products; provide usage and application instructions that facilitate adoption of LED products.
- (5)Adopt modular production procedures for customization opportunities; adopt flexible production procedures to accommodate the needs of different customers.
- (6)Develop LED controller IC and circuitry design capabilities for improved structure, heat dissipation, and integration.
- (7)Enhance business and operational management for reduced operating cost and improved competitiveness.
- (8)Continue adopting the LDMS (Lighting Design Manufacturing Service) approach to provide professional lighting design, manufacturing, and technical support; apply the T.E.M.O. platform and the concept of system integration to helping customers

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resolve problems in every stage of product development, and satisfy customers' needs.

(9)SWIR short‐wave infrared LEDs can be used with sensor imaging to obtain clearer images of objects at high temperatures of 200 to 500 degrees or in rain and fog, for semiconductor‐based inspection and medical‐related applications in the industry.
(10) Green energy supply lighting system
- A. Energy‐saving landmark luminaires, such as outdoor luminaires, street lights, floodlights, and patio lights with a power of less than 120W, and luminaires with a luminous efficiency of 200lm/W or more.
- B. Green energy related accessories, such as 12V / 24V solar panels as power generation accessories to produce standard wattage settings of 60W and 120W; Develop power generation accessories that can be used with horizontal and vertical wind turbines, etc.
- C. Various green energy battery accessories, such as battery accessories with standard battery capacity setting of 12V/24V and 24Ah.
- D. Develop charging controllers, such as PWM or MPPT controllers to switch the charging output to room power
(11) Environmentally friendly lighting equipment
- A. Lamps made of environmentally friendly materials (such as recycled materials,
  - biodegradable materials, natural materials, non‐toxic materials, etc.)
- B. Reusable or recyclable lamp systems to reduce product waste to promote the
  - development policy of circular economy.
(12) Enhance corporate governance practices and raise visibility of the Company through marketing and participation in major exhibitions.
Long‐term business plans

The Company and subsidiaries are dedicated to developing energy‐efficient, environment‐friendly, and high luminance LEDs, and providing customers with the most speedy services and best quality products that meet their needs. In light of future standards on energy‐efficient lighting, the group will aim to develop LEDs of high luminance and high CRI that meet energy‐saving requirements, and contribute to the competitiveness of Taiwan's LED industry.

With regards to production procedures, the Company will form stronger long‐term relationship with upstream and downstream partners of Taiwan's LED industry as well as equipment suppliers to further reduce production cost, increase profitability, raise competitiveness, and improve market share.

Solar green power system with high performance outdoor lamp project, such as street light, patio light, flood light, etc., to provide the unit to the environment, society, corporate governance of ESGsolutions. High‐efficiency lighting equipment to reduce energy consumption and greatly extend the duration of green lighting, and the project is powered by solar energy, which does not require the consumption of traditional energy,

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and is very helpful in reducing carbon emissions and pollution to the environment, in line with the requirements of sustainable development. Solar green power system combined with high efficiency outdoor lamp, its plan can be introduced to government agencies, enterprises, schools, parks and other public places, and private homes, etc., become an important part of the future green energy market. The outdoor solar lighting lamp, for example, can intelligently monitor and adjust the lighting intensity, detect the surrounding environment and road conditions, etc., further promoting the market development of solar green power system combined with high efficiency outdoor lamp.

Smart street light project: a. Market expansion: Through cooperation with government departments and city construction companies, we will expand the market for smart street lights and apply them to public places such as city roads, parks, and communities. b. Strengthen technical innovation: continuously improve the technical level and functions of smart streetlights, enhance the ability of remote monitoring, automatic control and intelligent energy saving of smart streetlights, and develop more innovative products. c. Strengthen brand building: Increase brand exposure, improve brand awareness, expand domestic and international market share, and establish a solid brand advantage. d. Provide complete solutions: Provide comprehensive intelligent street lighting products and solutions, including street lighting, intelligent monitoring, intelligent energy saving, intelligent management and other services. e. Strengthen after‐sales service: Provide perfect after‐sales service, solve customers' problems in a timely manner, and provide customers with high‐quality pre‐sales, in‐sales, and after‐sales services. f. Develop international markets: Develop international markets to further expand the scale and market share of our products and increase international awareness. In general, the market for smart streetlamps has a promising prospect and will continue to grow in the next few years. By enhancing technological innovation, brand building, providing complete solutions, and strengthening after‐sales services, we can effectively improve the market competitiveness of smart streetlights and achieve sustainable business development.

ii.Market, production, and sales overview

(i) Market analysis

1. Locations where products are mainly sold

Unit: NTD thousands

		2021	2021	2022	2022	2023Q1	2023Q1
Location		Sales	Percentage	Sales	Percenta	Sales	Percentage
		amount	(%)	amount	ge(%)	amount	(%)
Domestic sale		182,293	8.66	220,508	11.97	63,243	14.07
	America and
		804,207	38.19	792,467	43.02	193,275	43.01
	Europe
Export
	China	796,012	37.80	587,416	31.89	140,731	31.32
sale
	Africa	31,533	1.50	29,039	1.58	9,175	2.04

	Others	291,819	13.85	212,553	11.54	42,964	9.56
	Total	2,105,864	100.00	1,841,983	100.00	449,388	100.00

Market share of main products

Main products sold by Edison Opto include LED lighting components/modules/products, automotive LED lighting modules, transducers, and electronic parts. The Company and subsidiaries are positioned in the midstream and downstream of the LED packaging industry, which is why LED lighting components,

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modules, and products account for the largest revenues, at about 66% in 2022. Due to the vast diversity of products sold, the Company was unable to obtain sufficient amount of direct and objective data to support calculation of product market share. Based on IEK's statistics on the production value of LEDs in Taiwan, the Company accounts for approximately 1.5‐2.0% of LED production value in Taiwan. Faced with intensifying competition from around the world, the Company will continue to respond by focusing on innovative R&D, marketing products under the proprietary brand, and introducing products of exceptional quality and innovative features ahead of competitors to capture a higher market share.

Future market supply, demand and growth
(1)Demand for LED lighting
- A. Future demand of the global market

Despite the continued impact of the pandemic in 2022, with the popularity of vaccines and the recovery of economic activities in various countries, coupled with the lighting market as a necessity for people with immediate demand and the fact that global demand for carbon neutrality and energy saving is increasingly on the agenda, major countries have in recent years adopted measures such as energy efficiency and low carbon heating to achieve net zero emissions. However, LEDs will further penetrate into the market, driven by the high demand for energy saving and the upgrade of policies and regulations. In addition, smart lighting can also achieve the purpose of timely energy saving, so commercial lighting, home lighting, outdoor lighting and industrial lighting, such as the introduction of LED lighting and smart lighting upgrade demand is strong, further pushing up the demand for regular LED products, including high luminous efficiency, high color rendering and color saturation, low blue light human factors lighting and smart lighting.

B. Future demand of the domestic market

As more LED manufacturers begin mass production, prices will fall and make LED lighting equipment more accessible to the public, which in turn supports the growth of the lighting market. The potential to replace conventional light sources has made lighting the biggest market for LED applications.

Global markets of portable devices and TVs have saturated and are unlikely to exhibit significant growth in the future, thereby limiting demand for LED backlight. Lighting applications, on the other hand, is characterized by intensive price competition, and the difficulty of maintaining product unit price makes it difficult to profit. Therefore, we should actively look for other high‐end applications such as micro LED, automotive, sensing, plant lighting and other new application markets, which are relatively high threshold and not easy for competitors to enter. With application diversification, we can maintain business resilience to diversify risks and increase the added value of products.

(2)Supply of LED lighting

A. Future supply of the global market

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According to the reports by IHS and IEK, demand for LED lighting was estimated at US$40 billion worldwide in 2015, and had grown to US$92.3 billion in 2019 with a penetration rate of 58.6%. The progressive phase‐out of inefficient light sources by governments around the world not only created demand for LED lighting, but also educated consumers on the importance of saving energy on lighting and using high efficiency lighting equipment.

B. Future supply of the domestic market

Competitive advantage
(1)Strong management team and proprietary technology

The Company and subsidiaries specialize in the research and development of LED lighting for general purpose as well as automotive use. The management team averages more than 10 years of experience in the LED industry, and has extensive knowledge on industry changes, product trends, production procedures, and marketing to help raise overall competitiveness and ensure sustainability of business operations.

Optics, structural design, heat dissipation, and circuitry are some of the technologies involved in the development of LED products. Through LDMS, the Company and subsidiaries are able to provide professional lighting design, manufacturing, and technical support services to help customers resolve problems in every stage of product development. Using the T.E.M.O. platform, the group is able to apply the concept of system integration and help address customers' most critical concerns in LED lighting application (namely heat, electricity, structure, and optics), and thereby helping customers design new generation of semiconductor lighting products in the shortest time possible. The group already leads domestic peers in the research and development of high power LEDs and PLCC components, and has been expanding its involvement to automotive LED lighting in recent years to great results.

All of the group's technologies and products have been self‐developed by a research team that possesses multiple years of practical experience in LED. From components to modules, the group has acquired multiple patents to protect the products developed. The Company and subsidiaries were the first in the industry to establish a LM‐80 laboratory, which has been certified by UL for safety and energy efficiency. This laboratory allows products to be validated quickly for fast

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introduction to the international market. Most product lines today have passed certification and the scope of which is increasing continuously. The Company and subsidiaries have also introduced MES (manufacturing execution system) in recent years to optimize production procedures and strengthen the group's competitive advantage in LED lighting. The extensive experiences accumulated over time have enabled the Company and subsidiaries to develop unrivaled competitive advantage in the research, development, and innovation of high power LED components/modules and PLCC components.

(2)Diverse and complete product line

Main product lines of the Company and subsidiaries include: high power LED and PLCC components/modules, which can be used in a broad variety of lighting equipment such as portable lighting, building lighting, commercial lighting, entertainment lighting, street lamp, and indoor lighting; and datalinks, which can be used as transmission interface for digital audio signals in devices such as sound system, DVD player, PS2 console, and laptop computer. This broad diversity of product applications makes the Company less susceptible to the cyclicality of any single industry, which supports long‐term stability. In terms of high power LEDs, the Company offers high power components ranging from 1W to 150W, and makes modules and products with thoroughly designed exterior based on these components. In addition to being the assembly plant with the most comprehensive lineup of high power and PLCC components, the Company also invests aggressively into automotive LED modules and products for greater competitiveness as well as the ability to satisfy customers' needs in any application.

(3)International marketing channels and sound customer relation

The Company and subsidiaries sell products to the domestic and overseas markets under the proprietary brand ‐ "Edison." Having recognized the importance of globalization and the vastness and diversity of LED applications, the group actively explores global markets through distributors located in Europe and Asia, and offers professional services to help customers resolve issues concerning design and application in the shortest time possible. After many years of hard work, the group now has more than 70 sales locations worldwide and supplies LED components to reputable lighting brands on the foundation of strong business relationship. A complete marketing and after‐sale service network have also been established to maintain reputation of the Edison brand.

In addition to providing customers with high‐quality products at low cost, the Company and subsidiaries also offer professional planning on product and technical aspects as a value‐adding service through a proprietary program called LDMS. From quality, yield, delivery to after‐sale service, the group maintains positive, long‐term relationship with customers in ways that shorten product development timeline and builds marketing channels that support mutual business growth.

(4)Economy of scale and high production efficiency

The Company and subsidiaries produce different lighting products at 3 locations (4 companies), including Taipei Zhonghe Plant in Taiwan and Dongguan Plant and Yangzhou Plant in Mainland China (2 companies). Being able to produce at economies of scale and having strong production management capabilities are the keys to reducing production cost and increasing competitiveness. For many years,

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the Company has devoted attention to improving production procedures and production line management, while shifting low‐margin, standardized, and mass production activities to overseas locations where local resources can be used for maximum yield. By applying stringent production management in overseas plants, the group is able to mass‐produce at economies of scale to maintain profit margin and compete for higher market share.

(5)Creation of LDMS platform

The Company and subsidiaries specialize in the development and design of LED lighting components, assembly processes, modules, products, and applications. High power LEDs achieve far higher luminance than conventional LEDs, and therefore require very different designs in terms of heat dissipation, circuitry, structure, and optics. Inspired by customers' needs and the concept of system integration, the Company and subsidiaries jointly introduced a new service called LDMS that emphasizes on bilateral communication with customers as a means to help them resolve technical issues that may arise during product development.

Future opportunities, threats, and response strategies

(1)Opportunities

A. LED lighting and applications continue to expand, which present growth potentials for the Company

LED bulbs offer several advantages including energy efficiency, environment friendliness, and longer lifespan. Not only do they require one‐tenth of the power to generate the same luminance compared to incandescent bulbs, the light source contains no hazardous substance such as mercury and lead, and has been widely recognized as a "green lighting solution." Furthermore, the potential to increase luminance continuously in the future has made LED the best replacement for incandescent bulbs in countries around the world. Australia, Canada, UK, Japan, and EU countries are progressively phasing out sale of incandescent bulbs. In Taiwan, the government has introduced LED subsidies for street lamps and certain constructions that will prove beneficial to the LED lighting industry. LED can also be used in a broad range of applications from displays, automobiles, laser treatment, retina scan to indoor/outdoor lighting, and is gradually replacing fluorescent lamp and other indoor lights as the preferred lighting solution due to price drops. As lighting efficiency and luminous flux improve, cost‐per‐lumen (lm) falls while issues concerning heat and structural integrity are resolved, thereby allowing LEDs to replace fluorescent lamps and tungsten bulbs at a faster rate particularly in a period of rising energy expenses and environmental/energy awareness, and support growth of the LED industry.

B. Complete supply chain

LED manufacturing in Europe, America, and Japan is dominated by few global players; Taiwan, on the other hand, has many participants in the LED industry that operate with high degree of specialization and form a complete supply chain. There are drastic differences in the types of business models adopted. Taiwan's LED industry is characterized by high level of specialization between upstream, midstream, and downstream participants, which presents advantages in terms of agility and flexibility. The industry as a whole is considered self‐dependent and self‐sufficient, whereas individual participants exercise exceptional production

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management and make up a complete supply chain to rival European, American, Japanese, and Korean competitors in pricing. For downstream assembly plants, almost all raw materials such as LED chip, lead frame, frame, and resin can be sourced from domestic suppliers, and compared to international competitors, Taiwanese assembly plants have adequate control over product quality, delivery time, and cost, and therefore are able to minimize risk of supply disruption and logistics delay.

C. R&D capability and LDMS platform

The domestic LED industry has many assembly plants operating in the midstream and downstream, but most of which are involved in low power or conventional LED assembly and matured applications such as smartphone backlight and traffic signals. The Company and subsidiaries, on the other hand, prioritizes on the assembly of high power LEDs and PLCC components, and constantly explores new lighting applications to tap into the immense opportunities of LED lighting in the future. High power LEDs achieve far higher luminance than conventional LEDs, and therefore require very different designs in terms of heat dissipation, optics, structure, and circuitry. These differences provide clear distinction between Edison group and other domestic LED assemblers in the downstream. The Company and subsidiaries share many years of practical experience in research and development, and specialize in the development, design, and manufacturing of high power LEDs and semiconductor lighting modules, applications, and products. The Company's technology team has accumulated extensive experience and built up strong knowledge in high power LEDs through proprietary research, making it the earliest pioneer and the most technologically advanced manufacturer among domestic peers that rivals global competitors. Furthermore, in an attempt to help users minimize challenges over the course of development, Edison also introduces the industry's first "LDMS (Lighting Design Manufacturing Service)" that uses a modular system combined with the T.E.M.O (thermal, electrical, mechanical, and optical) platform to provide customers with professional customization, design, and manufacturing services. From heat dissipation, circuitry layout, structural planning to optical simulation, LDMS address the critical issues of lighting application all in one package. This gives Edison the ability to propose solutions on a per‐product or per‐application basis, and manufacture/develop new generation of lighting products with great efficiency while assuring customers with the best and highest quality alternative lighting solutions.

(2)Threats and response measures

A. Patent infringement risk

Patent has always been a major issue to the LED industry. Taiwan's LED development efforts began later than Japan, USA, and European nations, and considering the vast number of patents associated with LEDs, it is essential for businesses to acquire patents as a means to secure intellectual property rights. Patents also enable businesses to develop monopoly in the market, and serve as competitive advantage as competitors are forced to forgo use of critical technology and take more time to establish presence in the market. For this reason, patent infringement litigations are commonly used as a means to disrupt

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competitors, and as Edison group grows in size, it becomes more susceptible to patent infringement claim from global competitors.

Response strategies:

Edison Group cooperates with world‐renowned business leaders including: LED chip suppliers Samsung, Bridgelux, Epistar, San'an Optoelectronics, and Epileds and phosphor suppliers Mitsubishi and Intematix to avoid the risk of patent infringement of Edison Group's products by choosing materials that are free from the risk of patent infringement; and has dedicated personnel responsible for the strategic planning and maintenance of patent rights, such as the strategic planning of patents related to the Group's key products. Besides general lighting, the Company also commits resources into developing patents on products such as vehicle lighting, horticulture lighting, and infrared sensors. Edison Group currently has 198 patents including 34 invention patents that are mostly registered in Europe, USA, and Mainland China. By acquiring new technologies, the Company aims to avoid risk of patent infringement.

B. Incoming competitors, price competition, and lower margins
Chinese manufacturers such as BMTC have been able to establish new plants and acquire advance equipment in recent years with local government subsidies, and emerged as prominent competitor in small size chips to existing manufacturers such as San'an, Changelight, and Focus Lightings in the upstream. These Chinese players produce entirely in‐house from chip to assembly, and are vertically integrated at a very high degree that make it difficult for standalone assembly plants to compete, even in a market as large as India.
Bridgelux, a major player, has acquired such a comprehensive portfolio of patents from around the world that it approached Chinese manufacturers Forest Lighting and Zhongshun Semiconductor for OEM service in the last two years. This change of business model not only gives Bridgelux the absolute advantage in terms of pricing, its comprehensive patent coverage allows the organization to dominate in general lighting molds and equipment even in markets such as India and North America.
LED lighting application presents such a large opportunity that manufacturers have emerged all over the world. Not only are existing LED manufacturers setting up barriers of entry, global non‐LED players, too, are eager for a share of the market and have established their own semiconductor lighting subsidiaries. As far as the Company is concerned, increasing competitors in the market will ultimately result in price war.

Response strategies:

Most listed companies resolve to capital investment, joint venture, and business acquisition as ways to develop competitive advantage. Edison group, on the other hand, has been avoiding direct competition by targeting niche markets and special applications outside of basic portfolio and engaging large players in strategic collaboration in recent years. By relying on good market instinct, thorough planning, and unique sales channel, the group has been able to deliver favorable results in areas such as full‐spectrum lighting, high luminance outdoor EMC, and horticulture lighting.

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The Company and subsidiaries will continue developing new products and product lines to improve the diversity and completeness of the portfolio. Meanwhile, more efforts will be directed toward vertical technology integration and helping customers resolve the four most critical technical bottlenecks in LED lighting (namely thermal, electrical, mechanical, and optical). In order to provide added value to customers and avoid competing on price, the Company will continue exploring opportunities in components and products for special applications. Meanwhile, additional resources will be invested into new production technologies and procedure improvements to reduce production cost and widen technological advantage over competitors. For overseas markets, the Company and subsidiaries will aim to expand marketing channels and raise the quality of after‐sale services for customer satisfaction as well as enhancements to corporate image and brand awareness.

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(ii) Main product applications and production processes
Main product applications

LED products manufactured by the Company and subsidiaries are used for general lighting, automotive lighting, and datalink. The main uses are as follows:

Mainproducts	Purpose
	Street lamp, horticulture lighting, biomedicine lighting,
LED lighting
	landscape lighting, stage lighting, commercial lighting, office
components, modules,
	lighting, household lighting, freezer lighting, emergency
and products
	lighting,warninglight,road lightingetc.

Automotive LED	In‐vehicle reading light, turn signal, fog light, brake light, tail
lightingmodules	light,and headlamp.
	Sensor element are used to send and receive audio signals in
	the form of LED‐generated infrared light. Sensor element
Sensor element	produced by the Company conform with the SPDIF standard,
	and are widely used in consumer multimedia products such as:
	DVD,MP3,CD,MD,TV,cellphone,PC,NB,andgame console.

Production processes of main products
(1)LED lighting components

==> picture [487 x 113] intentionally omitted <==

----- Start of picture text -----

Wire Silicone Trim
Die attach Testing
Bonding Injection Form
(2)LED lighting modules and products
Chip Reflow Packaging
Assembly Testing
Mounting soldering
----- End of picture text -----

(3)Sensor element

==> picture [479 x 42] intentionally omitted <==

----- Start of picture text -----

Die attach Wire Trim Testing
Molding
Bonding Form
----- End of picture text -----

(iii)Supply of key materials

materials
Main materials	Supply status
LED Chip	Good; quality is stable
PCB	Good; quality is stable
Phosphor	Good; quality is stable
Electronic parts	Good; quality is stable
Metal Hardware	Good; quality is stable

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(iv) Customers accounting for 10 % or more of the company's total procurement (sales) volume in either of the 2 most recent fiscal years

1. Suppliers accounting for 10 % or more of the company's total procurement volume in either of the 2 most recent fiscal years

Unit: TWD 1,000

		2021	2021			2022	2022		2023 up until March 31	2023 up until March 31	2023 up until March 31	2023 up until March 31
											As a % of
				Relation				Relation				Relation
		Sales	As a % of			Sales	As a % of			Sales	Sales in 1Q
Item	Supplier			with the	Supplier			with the	Supplier			with the
		Amount	Sales			Amount	Sales			Amount	for the
				Company				Company				Company
											period

1	Other	1,209,987	100.00	None	Other	1,008,319	100.00	None	Other	232,884	100.00	None
	Total	1,209,987	100.00		Total	1,008,319	100.00		Total	232,884	100.00

Explanation of the changes:

Important materials for our core products, covering LED lighting components/modules, datalinks, automotive LED lighting components, and special lighting, range from LED chips, lead frames, metal wire, fluorescent powder, PCB substrates, IC components, plastic injections, etc. As shipments of LED modules continue to grow, procurement percentages of finished parts and ICs have risen as well. In 2022, due to the global shortage of IC materials and the continuing pandemic, the transportation and logistics were affected to a certain extent, and our revenue did not increase compared to 2021. The amount of purchases from suppliers decreased slightly due to a conservative approach to material preparation.

Material procurements from suppliers changed according to our shipment mix over the past two years. To ensure stable sourcing, product quality, pricing, as well as risk diversification, the Company maintained its policy that the purchase amount from a single supplier is controlled below 10%, except for one particular supplier. No other significant changes occurred during the period.

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2. Customers accounting for 10 % or more of the company's total procurement volume in either of the 2 most recent fiscal years:(IV) Customers accounting for 10 % or more of the company's total procurement (sales) volume in either of the 2 most recent fiscal years:

Unit: TWD 1,000

										Unit: TWD 1,000	Unit: TWD 1,000	Unit: TWD 1,000
		2021				2022				2023 up until March 31
											As a % of
				Relation				Relation				Relation
		Sales	As a % of			Sales	As a % of			Sales	Sales in Q1
Item	Supplier			with the	Supplier			with the	Supplier			with the
		Amount	Sales			Amount	Sales			Amount	for the
				Company				Company				Company
											period

1	104304	387,361	18.39	None	104304	341,584	18.54	None	104304	74,707	16.62	None
2	Others	1,718,503	81.61	None	Others	1,500,399	81.46	None	Other	374,681	83.38	None
	Total	2,105,864	100.00		Total	1,841,983	100.00		Total	449,388	100.00

Explanation of the changes:

The Company and its subsidiaries operate in LED lightening fields, as manufacturers of and agents for automotive LED modules and datalinks. The top‐customer ranking changes according to product mix. In light of its continuing application expansion in LED’s downstream applications, the Company increased its focus on LED modules with the end products and application developments and automotive LED lighting modules to diversify customer concentration risks.

For LED automotive lighting modules, as the automotive industry requires more stringent quality of components from suppliers, it is not easy to change the relationship between car manufacturers and suppliers, so that we can maintain a more long‐term and stable relationship with them. In 2021, the end‐use automotive market continued to recover with increased shipments, and the proportion of shipments to this customer was above 10% for the whole year. In 2022, due to the shortage of materials from upstream suppliers and shipping congestion, the overall shipment amount in 2022 was lower than the previous period. However, the proportion of shipments to this customer remained at over 10% for the whole year. Other than the Tier 1 carmaker customer mentioned above, no other single customer reached more than 10% of the sales value for the Group.

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(v) Production value in the 2 most recent fiscal years

Unit: KPCS; TWD 1,000

Year
		2021			2022
Production
		Production	Production		Production	Production
	Capacity			Capacity
		Unit	value		Unit	value
Item

Sensor element	144,000	110,163	193,053	144,000	68,051	127,286
LED lightingcomponents	960,000	664,294	339,111	960,000	512,111	258,243
LED lighting modules and	‐	8,572	529,918
				‐	5,672	518,666
products

Automotive LED lighting	‐	4,381	359,381
				‐	5,352	437,817
modules

Other	‐	2,977	35,181	‐	2,825	19,185
Total	1,104,000	790,387	1,456,644	1,104,000	594,011	1,361,197

Thanks to the needs from various infrastructure projects worldwide and a trend toward automotive LED lightings, demands for LED products have inched up in recent years. Moreover, through global governmental efforts to eliminate incandescent‐bulb products and growth in automotive applications, the LED industry has been further bolstered. To reduce impacts from excessive competition and rapid price drops, the Company and its subsidiaries will continue developments in LED module segments for lighting modules and automotive applications. In 2022, due to high inflation and supply chain issues, market competition intensified, so the production value of sensor components and LED lighting components decreased compared to the previous year; the finished LED lighting modules and LED automotive lighting modules increased slightly compared to the previous year due to the strong substitution of LEDs and their entry into the mainstream market.

(vi) Sales value in the two most recent fiscal years

Unit: KPCS; TWD 1,000

Year			2021	2021			2022	2022
Sales
	Domestic sale		Export sale		Domestic sale		Export sale
Item	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Sensor element	0	0	107,993	220,021	0	0	68,436	133,689
LED lighting
	55,374	68,296	1,911,227	481,459	37,616	50,220	1,418,028	354,357
components

LED lighting
modules and	722	94,662	18,777	758,889	933	160,572	12,254	656,070
products

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Year			2021	2021			2022	2022
Sales
	Domestic sale		Export sale		Domestic sale		Export sale
Item	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Automotive LED
	161	5,949	26,866	438,795	0	0	5,038	465,836
lightingmodules

Other	1,081	12,437	673,190	25,356	(319)	1,495	12,024	19,744
Total	57,338	181,344	2,738,053	1,924,520	38,230	212,287	1,515,780,	1,629,697

In 2022, the price of LED components decreased compared to the previous year, and the demand from end‐users weakened due to high inflation. Sales were lower than the previous year due to a strategy of reducing sales in lower‐priced markets, as customers continue to be price‐driven; the automotive market continued to be affected by material shortages, so revenue increased slightly compared to 2021. The Company continues to develop its business in the field of modules and finished products. However, in 2022, the overall revenue declined compared to 2021 due to the strong changes in the global economic situation, which affected consumers’ willingness to spend. However, overall, LED lighting modules and automotive modules remain the focus of the Company's development. We are currently working on adjusting the supply chain and continue to develop the domestic market in China to diversify risks.

iii. Employees

mployees
				2023 up until
	Year	2021	2022
				March 31


	Direct employees	349	274	278
Employee
	Indirect employees	386	416	425
count
	Total	735	690	703
Average age		34.69	37.12	36.70
Averageyears of service		4.99	5.47	5.40
	Doctoral Degree	0.00%	0.00%	0.00%
	Master’s Degree	4.35%	4.20%	4.69%

Academic	Bachelor Degree	40.68%	46.53%	46.24%
background
	Senior high school	27.76%	27.97%	28.02%
	Below senior high school	27.21%	21.30%	21.05%

iv. Contribution to environmental protection

(i) Any losses (including compensations) or fines incurred due to pollution in the last year up till the publication date of annual report. State any future response strategies (including improvement measures) and possible expenses (including possible losses due to absence of response strategy, estimated amount of penalties and compensations etc.; provide explanation if amounts can not be reasonably estimated):

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The Company and subsidiaries have devoted significant efforts to wastewater treatment and waste reduction since incorporated. The following is a description of accomplishments to date:
(1) Wastewater treatment

Pollutive facility installation permit or pollutant discharge permit relating to water treatment:

Pollutive facility water treatment:	installation permit or pollutant discharge permit relating to
Company	Permit number
	Wastewater and pollution permit No.: Jing‐Huan‐03201‐00
Edison Opto
	(Class B water treatment technician certificate
(Zhonghe Plant)
	Responsibleperson: 80‐Huan‐Shu‐Shui‐B‐0354)

Yangzhou Edison	Wastewater discharge permit:31321091793826207B001Y
	Fixed Source Pollution Registration Number:
Edison Opto
	91441900787972902A001W
(Dong Guan)
	Permit No. Yue‐Guan‐Pai‐(2020)‐Zi No. 1060149

(2) Industrial waste reduction

The Company and subsidiaries support the government's industrial waste reduction initiatives by sorting and recycling waste and implementing relevant management policies. Valuable resources are sold, whereas recyclable materials are reused or handed over to qualified waste disposal service providers, thereby reducing the amount of waste produced. Approved permits and reference number:

EPA control No.: H43A7657

EPA approval No.: 2019‐Taoyuan City‐Fei‐A‐Qing‐0010

Company	Category	Permit number
	D‐1801 waste from	Clearance permit No.: 2018‐New Taipei
	livingactivities	City‐Fei‐A‐Qing‐0055
		Clearance permit No.: 2019‐Taoyuan
	E‐0218, E‐0221 Stable	City‐Huan‐Yi‐Qing‐Zi 0010
Edison Opto
(Zhonghe Plant)	solid waste	Treatment permit No.: 2020‐Taichung
and Edison‐Litek		City‐Fei‐Chu‐011‐13
Opto		Clearance permit No.: 2019‐Taoyuan
	C‐0301
		City‐Huan‐Yi‐Qing‐Zi 0010
	Flammable industrial
		Reuse permit No.: Jing‐Shou‐Gong‐Zi No.
	waste (liquid)
		11020446840

		Changzhou Dawei Environmental Technology
		Co., Ltd.: disposal of chemicals, waste package,
		bottles, and wipe
		(Permit No.: JSCZ0412OOI043‐4)
Yangzhou Edison	Hazardous chemicals
		Jiangsu KinViho Recycling Co., Ltd.: disposal of

		exhaust treatment facilities and activated
		carbon waste
		(Permit No.: JSYZ108400D031‐4)

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Company	Category	Permit number
		Dongguan City Prime Environment Corporation
		Business license: 91441900MA54WRD6XD
		Hazardous waste operation permit:
Edison Opto
	Hazardous chemicals	4419000015
(Dong Guan)
		Dongguan Hua Yue Smart Logistics Co., Ltd.
		Business license No.: 91441900MA539AARXX
		Road transportpermit No.: 441900138003
		Jiangsu Run Lian Renewable Resources
		Technology Co., Ltd.
Yangzhou	Waste solder paste
Edison‐Litek		(Permit No.: JSCZ0411OOD063‐3)
	Waste PCB
Opto
		CEP (Yangzhou)

		(Permit No.: JS1081OO1127‐16)

Investment in pollution prevention equipment, the purpose of equipment, and possible benefits: None.
(ii) Describe the current state of pollution and how improvements may affect the Company's earnings, competitiveness, and capital expenditure; estimate major capital expenditures on environmental protection in the next 2 years: None.

v.Labor‐management relations:

(i) Availability and execution of employee welfare, education, training and retirement policies. Elaborate on the agreements between employers and employees, and protection of employees' rights

1. Employee welfare

The Company and subsidiaries have established their own work rules and assembled employee welfare committees in accordance with the Labor Standards Act to promote labor‐management relations, unite employees, and cater for employees' benefits. The committee is responsible for the planning and execution of welfare programs, as well as the planning and payment of annual employee benefits. The committee also arranges the following measures:

(1)Employee insurance:

Each employee is covered by Labor Insurance and National Health Insurance from the day onboard as required by laws. In addition, the Company offers a group omnibus insurance package covering term life, accident, accident treatment, cancer treatment, and critical illness, and business travel insurance covering medical and emergency aid for employees on overseas business trips, with 100% subsidized premiums to provide employees with more comprehensive protection.

(2)Pension system:

The Company has implemented its own retirement policy in accordance with "Labor Standards Act" and "Labor Pension Act" to accommodate employees' life after retirement.

(3)Employee health checkup:

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Permanent employees are entitled to annual health checkups and follow‐ups. Physicians are invited to provide consultation and interpret reports one‐to‐one on‐site the work premise.

(4)Occasion‐based benefit:

It includes birthday cash, Labor Day cash, Dragon Boat Festival cash, Mid‐autumn Festival cash, year‐end banquet and lottery as well as year‐end bonus

(5)Long service reward:

The employees are given long service rewards upon accumulating 5 years, 10 years, 15 years and 20 years of service as a gratitude for their dedication.

(6)Allowances and subsidies:

The employees are entitled to a comprehensive range of subsidies for birthday, wedding, funeral, child birth, hospitalization, on‐job training to children's education.

(7)Work‐life balance:

The Company values employees' family relations, and organizes activities that employees may engage with family members, such as domestic/overseas group trip, barbecue in forest, mountain cleanup hike, parental cycling, group exercise at sports center etc and other club activities (yoga). These activities not only relieve employees' stress from work, but also promote stronger unity towards the Company.

2. Retirement system and implementation

The Company has implemented its own retirement policy in accordance with "Labor Standards Act" and "Labor Pension Act" to accommodate employees' life after retirement. A Labor Pension Fund Supervisory Committee has also been assembled to oversee management of pension fund, as well as execution of pension contributions and benefits. Pension benefit and standards:

(1)Employees who adopt pension rules of the Labor Standards Act shall have years of service compensated using the following standards: two basis points are awarded for every year of service rendered. However, one basis point is awarded for every full year of service rendered beyond 15 years, subject to a maximum of 45 basis points. Services less than six months are counted as one half year, whereas services more than six months are counted as one full year.
(2)For employees who opted to continue adopting pension rules of the "Labor Standards Act" after the Labor Pension Act came into effect and those who opted to carry forward years of service from before enactment of Labor Pension Act, pension benefits are paid according to the rules outlined in the preceding Subparagraph.
(3)Employees who opted for pension rules of the Labor Standards Act and are compelled to retire under Subparagraph 2, Paragraph 1, Article 35 shall be given 20% additional pay if their mental or physical disability was caused while performing job duties.
(4)For employees who are subject to the pension rules of the Labor Pension Act, the Company makes contributions equal to 6% of their monthly salary into their personal pension accounts. Benefit claims are subject to the rules imposed by the authority.

142

3. Training and continuing education

The Company and subsidiaries have "Human Resources Control Procedures" in place to serve as guidance for employees' development and training. New recruits are given orientation training to familiarize with the Company's history, culture, work environment, policies, and systems. Internal management and specialist training courses are held on an unscheduled basis, and employees are assigned to training events organized by external institutions as necessary to complement the Company's own training and education program.

Employees' behavior and moral principles
(1)Employees shall uphold professional ethics and comply with all policies and orders when carrying out services. All employees shall be modest and sincere to customers, and carry out tasks meticulously and efficiently without arrogance, negligence, and delay. Employees are expected to tidy up workplace and return any retrieved documents back to the designated places before leaving work for the day. Employees shall pay constant attention to maintaining ethics, presentable appearance, and proper etiquette. Employees shall also refrain from undesirable habits and are expected to make good use of company assets.
(2)The Company has "Business Integrity Code of Conduct," "Ethical Behavior Guidelines for Directors, Managers and Mandataries" and "Employee Ethics Guidelines" available to guide directors, managers, and employees.

5. Enforcement of labor agreements and employee rights

The Company and subsidiaries have maintained harmonic employment relations, and use e‐mail, employee opinion box, and labor‐management meeting as ways to exchange opinions and maintain relationship between labor and management.

(ii) Actual or estimated losses arising as a result of employment dispute in the last year up until the publication date of annual report, and any response measures taken. State the reasons if losses can not be reasonably estimated:

The Company did not suffer any loss due to employment dispute in the last two years up until the publication of annual report. Current and future response measures undertaken by the Company and subsidiaries to enhance employment relations:

Promoting employment ethics under the concept of a big family.
Implementation of interactive communication and grievance channels: The Company adopts a humane management approach that respects employees, and uses a number of communication channels such as opinion box and department meeting to facilitate one‐way or bilateral communication or exchange of opinions between employees and managers.
Full compliance with employment regulations and enhanced welfare measures.
Current and future potential losses: The Company and subsidiaries adopt a rational management approach, and consider current employment relations to be harmonious and unlikely to incur monetary losses in the absence of other external variables.

vi. Cybersecurity management:

(i) Explain the cybersecurity risk management framework, cybersecurity policy, management practices, and resources committed.

143

Cybersecurity risk management framework:
(1)Cybersecurity responsibilities and training:

The IT Center oversees cybersecurity within the Company. All resigned and transferred employees will have system access canceled according to procedures. The Company promotes internal cybersecurity awareness and conducts cybersecurity checks; outcomes of which are reported to the Chairperson.

(2)Internet security control:

The Company has set up firewalls to control transmission and access of data outside the organization. Virus codes are regularly updated at terminals and are centrally controlled established.

(3)Cybersecurity response:

The Company examines emergency response plans on a regular basis and organizes annual drills to ensure the effectiveness of data recovery procedures. A backup mechanism has been implemented, thereby allowing data and systems to be covered in the shortest time possible if an incident occurs.

(4)Data access control:

Addition and change of access to application systems are carried out according to the procedures outlined in the IT Cycle. Each department is granted different access rights depending on their duties and functions.

Cybersecurity policy:

The Company has implemented Computer System Cycle and cybersecurity rules to enforce cybersecurity management. The IT Center oversees execution of cybersecurity tasks and operates with the following goals in mind:

(1) To maintain integrity and usability of data.
(2)To ensure that data is accessed by departments within their duties and functions.
(3)To prevent unauthorized use of data and system.
(4)To reduce intrusion risk for the Company's networks and systems.
(5)To prevent inappropriate use of network resources.
(6)To apply strict controls in accordance with the Personal Data Protection Act over access of any system where personal data is stored.
(7)To promote cybersecurity awareness among new and existing employees
Management practices:

The Company has adopted the following cybersecurity management actions to minimize cybersecurity risks and ensure that abnormalities are resolved and operations resumed in the shortest time possible when an incident occurs.

(1)External risk preventions: firewalls for filtering external access and blocking intrusions; spam filters for blocking social engineering mails; dual factor authentication for remote office sign‐in.
(2)Equipment management and protection: update of antivirus software, operating system vulnerability scan and enhancement, continuous monitoring of cybersecurity trends, and timely responses.

144

(3)Response and recovery: establishment of system backups and recovery drill, and implementation of response plans (for hacker intrusion, power outage etc.).
Execution progress:
(1)The IT Center examined the cybersecurity policy regularly, and made a report to the Board of Directors on November 4, 2022 concerning evaluation of the cybersecurity risk management framework, the cybersecurity policy, cybersecurity risks, and outcomes of existing management measures.
(2)Promotion of cybersecurity awareness:
- ① Arranged for the Group’s IT employees to attend external training courses on information security and internal information security technology exchange in 2022
- ② New recruits have been subjected to cybersecurity seminar and training.
- ③ The IT department pays constant attention to cybersecurity issues, gathers information on the latest threats, and shares them with all employees in a timely manner.
(3)Considering that cybersecurity is a new risk category, the Company had temporarily forgone cybersecurity insurance in light of the ongoing pandemic and the costs and yields associated with the new insurance. Nevertheless, the Company had undertaken the three management solutions and preventive measures mentioned above to effectively reduce cybersecurity risks amidst the new challenge.
(ii) Losses arising as a result of major cybersecurity incident in the last year and the current year up to the date of publication of the annual report, and possible impacts and response measures; state the reasons if losses can not be reasonably estimated: The Company did no succumb to hacker attack or encounter any cybersecurity incident in 2022 that affected company operations

vii. Major contracts:

List the parties, main details, restrictive clauses, and duration of any material contractual arrangement (that are relevant to shareholders' interest), such as supply/sale agreement, technological collaboration contract, construction contract, long‐term borrowing contract etc., that is currently effective or had expired in the last year: None.

145

Financial Highlights

1. Condensed Balance Sheet and Statement of Comprehensive Income for the most recent five years

(1) Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Comprehensive Income
1. Condensed Consolidated Balance Sheet

Unit: TWD 1,000

Year	Year	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)	Financial data for the most recent fiveyears(Note 1)
							As of March

		2018	2019	2020	2021	2022	31, 2023
Item

Current Assets		1,996,850	1,922,659	2,138,080	2,154,583	1,977,443	1,888,739
Property, plant and
		1,608,052	1,244,786	1,206,246	1,666,064	1,671,722	1,651,616
equipment

Intangible asset		27,684	6,354	3,757	4,559	2,793	2,530
Other Assets		225,575	281,402	416,170	221,547	181,298	185,598
Total Assets		3,858,161	3,455,201	3,764,253	4,046,753	3,833,256	3,728,483
	Before
		805,846	793,136	1,028,187	737,010	543,654	698,168
Current	distribution

liability	After
		841,846	805,436	1,068,187	772,010	(Note 2)	(Note 2)
	distribution

Current liability		77,589	63,577	82,404	525,680	507,103	189,892
	Before
		883,435	856,713	1,110,591	1,262,690	1,050,757	888,060
Total	distribution

Liabilities	After
		919,435	869,013	1,150,591	1,297,690	(Note 2)	(Note 2)
	distribution

Equity attributable to
		2,865,439	2,485,682	2,564,821	2,640,411	2,637,085	2,696,281
owners of theparent

Share capital		1,250,014	1,250,014	1,225,564	1,288,617	1,353,353	1,377,152
	Before
Additional		1,883,244	1,841,558	1,553,577	1,619,038	1,519,350	1,536,755
	distribution
paid‐in
	After
capital		1,847,244	1,546,518	1,553,577	1,519,038	(Note 2)	(Note 2)
	distribution

	Before
		7,014	(289,754)	48,411	129,029	5,835	18,496
Retained	distribution

Earnings	After
		7,014	0	8,411	129,029	5,835	18,496
	distribution

Other equity		(181,263)	(264,273)	(200,829)	(337,225)	(155,037)	(149,245)
Treasurystock		(93,570)	(58,877)	(61,902)	(59,048)	(86,416)	(86,416)
Non‐controlling
		109,287	112,806	88,841	143,652	145,414	144,142
interests

	Before
		2,974,726	2,598,488	2,653,662	2,784,063	2,782,499	2,840,423
Total	distribution

Equity	After
		2,938,726	2,586,188	2,613,662	2,749,063	(註2)	(註2)
	distribution

Note 1: The accompanying financial data has been audited and attested by CPAs.

Note 2: Resolution of 2022 earning distribution at the 2023/3/9 BOD Meeting, and then the company will report it for approval of the shareholders’ meeting.

146

2. Condensed Consolidated Comprehensive Income

Unit: TWD 1,000 Earnings per share (dollars)

						As of
Year	Financial data for the most recent five years (Note 1)
						March 31,

Item	2018	2019	2020	2021	2022	2023


Revenue	2,614,351	2,259,604	1,901,238	2,105,864	1,841,983	449,388
Gross profit	446,658	396,357	365,372	510,208	462,564	123,091
Net operating profit
	21,232	(57,300)	3,844	150,073	43,561	19,243
(Loss)

Non‐operating income
	34,541	(231,843)	39,882	(7,092)	7,382	(6,960)
and expenses

Net profit before tax	55,773	(289,143)	43,726	142,981	50,943	12,283
Profit (Loss) from
continuing operations for	44,302	(277,723)	32,823	127,745	33,843	11,363
the year
Losses from discontinued
	0	0	0	0	0	0
operations

Profit (loss) for the year	44,302	(277,723)	32,823	127,745	33,843	11,363
Other comprehensive
income (loss), net of	(86,252)	(67,361)	56,251	(142,295)	37,008	5,357
taxes (net of taxes)
Total comprehensive
income (loss) for the	(41,950)	(345,084)	89,074	(14,550)	70,851	16,720
year
Profit attributable to
	37,233	(286,302)	42,154	120,258	25,648	12,661
owners of the parent

Profit attributable to
	7,069	8,579	(9,331)	7,487	8,195	(1,298)
noncontrolling interests

Total comprehensive
income (loss)
	(47,831)	(349,522)	98,658	(20,779)	57,617	17,992
attributable to owners of

the parent
Total comprehensive
income (loss)
	5,881	4,438	(9,584)	6,229	13,234	(1,272)
attributable to

non‐controlling interests
Earnings (Losses) Per
	0.30	(2.39)	0.35	1.00	0.20	0.10
Share(EPS)

Note 1: The accompanying financial data has been audited and attested by CPAs.

147

3. Condensed Parent Company Only Balance Sheet

Unit: TWD 1,000

		Unit: TWD 1,000	Unit: TWD 1,000	Unit: TWD 1,000	Unit: TWD 1,000	Unit: TWD 1,000

Year		Financial data for the most recent five years (Note 1)


Item		2018	2019	2020	2021	2022

Current Assets		494,695	388,084	643,776	606,015	722,196
Property, plant and
		449,555	408,822	414,447	934,220	964,974
equipment

Intangible asset		1,647	715	257	88	40

Other Assets		2,583,035	2,204,287	2,016,211	1,911,564	1,679,900

Total Assets		3,528,932	3,001,908	3,074,691	3,451,887	3,367,110
	Before
		617,843	494,293	494,638	341,814	270,194
Current	distribution

liability	After
		653,843	506,593	534,638	376,814	(Note 2)
	distribution

Current liability		45,650	21,933	15,232	469,662	459,831
	Before
		663,493	516,226	509,870	811,476	730,025
Total	distribution

Liabilities	After
		699,493	528,526	549,870	846,476	(Note 2)
	distribution

		Not	Not	Not	Not	Not
Equity attributable to
		applicable	applicable	applicable	applicable	applicable
owners of the parent


Share capital		1,250,014	1,250,014	1,225,564	1,288,617	1,355,353

Addition	Before	1,883,244	1,841,558	1,553,577	1,619,038	1,519,350
	ditibti
al paid‐in	sruon
	After
capital		1,847,244	1,546,518	1,553,577	1,519,038	(Note 2)
	distribution

	Before
		7,014	(289,754)	48,411	129,029	5,835
Retained	distribution

Earnings	After
		7,014	0	8,411	129,028	(Note 2)
	distribution

Other equity		(181,263)	(264,273)	(200,829)	(337,225)	(155,037)
Treasury stock		(93,570)	(58,877)	(61,902)	(59,048)	(86,416)
Non‐controlling		Not	Not	Not	Not	Not
interests		applicable	applicable	applicable	applicable	applicable
	Before
		2,865,439	2,485,682	2,564,821	2,640,411	2,637,085
Total	distribution

Equity	After
		2,865,439	2,473,382	2,524,821	2,605,411	(Note 2)
	distribution

Note 1: The accompanying financial data has been audited and attested by CPAs.

Note 2: Resolution of 2022 earning distribution at the 2023/3/9 BOD Meeting, and then the company will report it for approval of the shareholders’ meeting.

148

4. Condensed Parent Company Only Comprehensive Income

Unit: TWD 1,000 Earnings per share (dollars)

	Unit: TWD 1,000 Earningsper share(dollars)	Unit: TWD 1,000 Earningsper share(dollars)	Unit: TWD 1,000 Earningsper share(dollars)	Unit: TWD 1,000 Earningsper share(dollars)	Unit: TWD 1,000 Earningsper share(dollars)
Year
	Financial data for the most recent five years (Note 1)

Item	2018	2019	2020	2021	2022
Revenue	1,789,447	998,160	917,985	959,314	908,361
Gross profit	125,840	100,464	106,536	170,291	145,897
Profit (Loss) from
	(30,380)	(54,219)	(16,311)	16,319	(32,302)
operations

Non‐operating income
	67,613	(258,132)	58,465	105,629	59,556
and expenses

Net profit before tax
	37,233	(312,351)	42,154	121,948	27,254
(Loss)

Profit (Loss) from
continuing operations	37,233	(312,351)	42,154	120,258	25,648
for the year
Losses from
	0	0	0	0	0
discontinued operations

Profit (loss) for the year	37,233	(286,302)	42,154	120,258	25,648
Other comprehensive
income (loss), net of	(85,064)	(63,220)	56,504	(141,037)	31,969
taxes (net of taxes)
Total comprehensive
income (loss) for the	(47,831)	(349,522)	98,658	(20,779)	57,617
year
Earnings (Losses) Per
	0.30	(2.39)	0.35	1.00	0.20
Share(EPS)

Note 1: The accompanying financial data has been audited and attested by CPAs.

(2) The names of CPA and their opinions for the most recent five years.

Year	Accounting firm	Names of CPA	Opinion and content
2018	KPMG	LIN, HENG‐SHENG; YANG,SHU‐CHIH;	Unqualified opinion
2019	KPMG	LIN, HENG‐SHENG; YANG,SHU‐CHIH	Unqualified opinion
2020	KPMG	LIN, HENG‐SHENG; CHEN,PEI‐CHI	Unqualified opinion
2021	KPMG	LIN, HENG‐SHENG; CHEN,PEI‐CHI	Unqualified opinion
2022	KPMG	LIN, HENG‐SHENG; CHEN,PEI‐CHI	Unqualified opinion

149

2. Financial data for the most recent five years (Note 1)

(1) Consolidated Financial Analysis

Year	Year	Year	Financial	analysis for the most recent fiveyears(Note 1)	analysis for the most recent fiveyears(Note 1)	analysis for the most recent fiveyears(Note 1)	analysis for the most recent fiveyears(Note 1)	As of
								March 31,
			2018	2019	2020	2021	2022
Item analyzed								2023

Financial structure
	Ratio of debts to assets (%)		22.90	24.79	29.50	31.20	27.41	23.82

	Ratio of long‐term capital to
	property, plant and equipment		189.81	213.86	226.82	198.66	196.78	183.48
	(%)
So
	Current ratio (%)		247.80	242.41	207.95	292.34	363.73	270.53

lve	Quick ratio(%)		196.54	205.03	175.85	238.17	296.99	214.99
ncy
	Interest coverage ratio		8.16	(24.15)	5.65	8.17	3.96	3.31

Operating a	Receivables turnover rate
			5.04	4.98	4.28	4.58	3.94	3.97
	(times)

	Average collection days for
			72	73	85	80	92	92
	receivables

	Inventory turnover rate
			5.00	5.29	5.18	4.83	4.10	3.90
	(times)

	Payable turnover rate(times)		4.76	5.11	4.45	4.66	4.96	5.19
bili	Average days for sales		73	69	70	76	89	93
ty	Property, plant and equipment
			1.56	1.58	1.55	1.47	1.10	1.08
	turnover rate (times)

	Total asset turnover rate
			0.66	0.62	0.53	0.54	0.47	0.48
	(times)

	Return on	assets(%)	1.27	(7.34)	1.12	3.68	1.21	1.65
Pro	Return on	equity (%)	1.44	(9.97)	1.25	4.70	1.22	1.62
fitability	Ratio of profit before income
			4.46	(23.13)	3.57	11.10	3.76	3.57
	tax to paid‐in capital (%)

	Profit margin(%)		1.69	(12.29)	1.73	6.07	1.84	2.53
	Earningsper share(NT$)		0.30	(2.39)	0.35	0.95	0.20	0.10
C	Cash flow ratio(%)		27.32	28.77	14.58	17.23	29.95	20.48
ash flow
	Cash flow adequacy ratio (%)		93.65	143.89	161.25	81.68	89.68	85.95

	Cash flow reinvestment ratio
			5.52	5.01	3.64	1.93	2.80	3.32
	(%)

Leveraging
	Operating leverage		28.28	(9.41)	124.68	4.35	12.85	8.10


	Financial leverage		1.58	0.83	(0.69)	1.15	1.65	1.38

Reasons for changes in financial ratios in the most recent two annual periods. (if the difference exceeds
20%)
1. The increases in current ratio and quick ratio were due to the significant decrease in current
liabilities, mainly driven by the repayment of short‐term loans in 2022.
2. The decrease in interest coverage multiplier, compared to the previous period, was due to the
decrease in profits in 2022.
3. The decrease in property, plant and equipment turnover rate was due to the decrease in operating
revenues in 2022.
4. The decreases in return on assets, return on equity, net profit before tax to paid‐in capital ratio, net
profit margin, and earnings per share were due to the decrease in net profit after tax in 2022
compared to the previous period.

The increases in current ratio and quick ratio were due to the significant decrease in current liabilities, mainly driven by the repayment of short‐term loans in 2022.
The decrease in interest coverage multiplier, compared to the previous period, was due to the decrease in profits in 2022.
The decrease in property, plant and equipment turnover rate was due to the decrease in operating revenues in 2022.
The decreases in return on assets, return on equity, net profit before tax to paid‐in capital ratio, net profit margin, and earnings per share were due to the decrease in net profit after tax in 2022 compared to the previous period.

150

The increase in cash flow ratio was due to the increase in cash inflow from operating activities and the decrease in current liabilities due to the repayment of short‐term loans in 2022 compared to 2021.
The increase in cash reinvestment ratio, compared to the previous period, was mainly due to the cash inflows from operating activities in fiscal 2022 compared to the previous period.
The increase in operating leverage, compared to the previous period, was due to the decrease in operating profits in 2022.
The increase in financial leverage was due to the amount of operating profit minus interest expenses in 2022 decreased compared to 2021.

Note 1: The accompanying financial data has been audited and attested by CPAs.

Note 2: Below are calculations:

Financial structure
(1) Ratio of debts to asset = Total liabilities / Total assets
(2) Ratio of long‐term capital to property, plant, and equipment = (Total equity + Non‐current liabilities) / Net property, plant and equipment
Solvency
(1) Current ratio = Current assets / Current liabilities.
(2) Quick ratio = (Current assets ‐ Inventories ‐ Prepaid expenses) / Current liabilities
(3) Interest coverage ratio = Net income before income tax and interest expense / Interest expenses over this period.
Operating ability
(1) Receivable (including accounts receivable and notes receivable due to business operations) turnover rate = Net sales / Balance of average accounts receivable for various periods (including accounts receivable and notes receivable due to business operations).
(2) Average collection days for receivables = 365/Receivables turnover rate.
(3) Inventory turnover rate = Cost of goods sold / Average inventory.
(4) Payable (including accounts payable and notes payable due to business operations) turnover rate
- = Cost of goods sold / Balance of average accounts payables of various periods (including accounts payable and notes payable due to business operations).
(5) Average days for sales = 365 / Inventory turnover rate.
(6) Property, plant and equipment turnover rate = Net sale/Average net property, plant and equipment.
(7) Total asset turnover rate = Net sales / Average total assets
Profitability
(1) Return on assets = [Net income after taxes + interest expense x (1 ‐ tax rate)] / Average total assets
(2) Return on equity = Net income after taxes / Average total equity
(3) Profit margin = Net income after taxes / Net sales
(4) Earnings per share = (Net income attributable to shareholders of the parent company ‐ preferred stock dividend) / Weighted average number of shares outstanding

5. Cash flow

(1) Cash flow ratio = Net cash flow of operating activities / Current liabilities.
(2) Cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (Capital expenditures + inventory increase + cash dividend) for the most recent five years.
(3) Cash flow reinvestment ratio = (Net cash flow from operating activities ‐ cash dividends) / (Gross value of property, plant, and equipment + Long‐term investments + Other non‐current assets + working capital).

6. Leveraging

(1) Operating leverage = (Net operating revenue ‐ variable operating cost and expenses) / Operating profit.
(2) Financial leverage = Operating profit / (Operating profit ‐ interest expenses).

151

(2) Parent Company Only Financial Analysis

Year	Year	Financial analysis for the most recent five years	Financial analysis for the most recent five years	Financial analysis for the most recent five years	Financial analysis for the most recent five years	Financial analysis for the most recent five years
				(Note 1)
Item analyzed		2018	2019	2020	2021	2022
Financial structure
	Ratio of debts to assets (%)	18.80	17.20	16.58	23.51	21.68

	Ratio of long‐term capital to
	property, plant and	647.55	613.38	622.53	332.91	320.93
	equipment (%)
Solvency
	Current ratio (%)	80.07	78.51	130.15	177.29	267.29


	Quick ratio (%)	73.27	72.62	121.47	157.09	235.92


	Interest coverage ratio	7.65	(61.63)	11.48	10.16	3.25

Operating ability	Receivables turnover rate
		5.93	5.15	5.56	5.77	5.40
	(times)

	Average collection days for
		62	71	66	64	68
	receivables

	Inventory turnover rate
		29.37	20.11	21.68	15.74	10.82
	(times)


	Payable turnover rate (times)	4.45	3.59	5.57	5.87	5.16


	Average days for sales	12	18	17	23	34

	Property, plant and
	equipment turnover rate	3.78	2.33	2.23	1.42	0.96
	(times)
	Total asset turnover rate
		0.49	0.31	0.30	0.29	0.27
	(times)

Profitability
	Return on assets (%)	1.14	(8.64)	1.50	4.02	1.05


	Return on equity (%)	1.27	(10.7)	1.67	4.62	0.97

	Ratio of profit before income
		2.98	(24.99)	3.44	9.46	2.01
	tax to paid‐in capital (%)


	Profit margin (%)	2.08	(28.68)	4.59	12.54	2.82


	Earnings per share (NT$)	0.30	(2.39)	0.35	1.00	0.20

Cash flow
	Cash flow ratio (%)	5.62	(3.13)	(19.15)	39.22	(33.44)


	Cash flow adequacy ratio (%)	284.44	351.59	134.99	14.80	(4.83)

	Cash flow reinvestment ratio
		1.08	(1.84)	(3.72)	2.75	(3.65)
	(%)

Leveraging
	Operating leverage	(5.01)	(2.27)	(7.38)	10.91	(4.20)


	Financial leverage	0.84	0.92	0.80	5.44	0.73

152

Reasons for changes in financial ratios in the most recent two annual periods. (if the difference exceeds 20%)

The increases in current ratio and quick ratio were due to the decrease in current liabilities in 2022, mainly driven by the repayment of short‐term loans in 2022.
The decrease in interest coverage multiplier was due to the decrease in profits in 2022.
The decrease in inventory turnover rate and the increase in average sales days compared to the previous period were due to the advance stocking of materials due to material shortage in 2022.
The decrease in property, plant and equipment turnover rate compared with the previous period was due to the decrease in operating revenues in 2022.
The decreases in return on assets, return on equity, net profit before tax to paid‐in capital ratio, net profit margin, and earnings per share were due to the decrease in profit in 2022.
The decrease in return on assets, cash flow ratio, cash flow adequacy ratio, and cash reinvestment ratio compared with the previous period was due to a larger cash outflows from operating activities in 2022 compared to the net cash inflows in 2021.
The decreases in operating leverage and financial leverage were due to the net operating loss in 2022.

Note 1: The accompanying financial data has been audited and attested by CPAs. Note 2: Below are calculations:

3. The Audit Committee’s Review Report: please refer to Appendices 2.

4. Consolidated Financial Statements with Independent Auditors’ Report of the most recent year: please refer to Appendices 3 and 4.

5. Parent Company only Financial Statements with Independent Auditors’ Report for the most recent year: Please refer to Appendices 5.

6. Any financial difficulties experienced by the Company and its affiliate businesses during the most recent year up to the publication date of this report need to be stated as well as the impact on the Company’s financial position need to be outlined: None.

153

Review and Analysis of Financial Position and Financial Performance, and Risk Management

1. Financial position Analysis

nancial position Analysis	nancial position Analysis
			Unit: TWD 1,000
Year			Difference
	2022	2021
Item			Amount	%

Current Assets	1,977,443	2,154,583	(177,140)	(8.22)
Property, plant and equipment	1,671,722	1,666,064	5,658	0.34
Intangible asset	2,793	4,559	(1,766)	(38.74)
Other Assets	181,298	221,547	(40,249)	(18.17)
Total Assets	3,833,256	4,046,753	(213,497)	(5.28)
Current liability	543,654	737,010	(193,356)	(26.24)
Non‐Current liability	507,103	525,680	(18,577)	(3.53)
Total Liabilities	1,050,757	1,262,690	(211,933)	(16.78)
Equity attributable to owners	2,637,085		(3,326)	(0.13)
		2,640,411
of theparent

Share capital	1,353,353	1,288,617	64,736	5.02
Additionalpaid‐in capital	1,519,350	1,619,038	(99,688)	(6.16)
Retained earnings	5,835		(123,194)	(95.48)
		129,029
unappropriated

Other equity	(155,037)	(337,225)	182,188	54.03
Treasurystock	(86,416)	(59,048)	(27,368)	(46.35)
Non‐controllinginterests	145,414	143,652	1,762	1.23
Total Equity	2,782,499	2,784,063	(1,564)	(0.06)
Reasons for changes in proportion exceeding 20% and over NT$10 million in the most
recent two years:
1. The decrease in current liabilities was due to the repayment of short‐term loans in
2022.
2. The decrease in unappropriated earnings was due to the decrease in net profit in
2022.
3. The increase in other equity was due to the increase in cumulative translation
adjustments calculated in accordance with SFAS No. 14, "Accounting for Foreign
Currency Translation", as a result of exchange rate fluctuations.
4. The increase in treasury stock was due to the repurchase of 1,500 thousand shares
of treasury stock in 2022.

154

2. Financial performance

(1) Financial performance analysis

Unit: TWD 1,000

Year			Difference	Difference
Item	2022	2021	Amount	%
Revenue	1,841,983	2,105,864	(263,881)	(12.53)
Grossprofit	462,564	510,208	(47,644)	(9.34)
Operatingexpenses	419,003	360,135	58,868	16.35
Net operating profit	43,561	150,073	(106,512)	(70.97)
Non‐operating income and expenses	7,382	(7,092)	14,474	(204.09)
Netpre‐taxprofit	50,943	142,981	(92,038)	(64.37)
Income tax expense	17,100	15,236	1,864	12.23
Profit for theyear	33,843	127,745	(93,902)	(73.51)

Reasons for changes in proportion exceeding 20% and over NT$10 million in the most recent two years:

The decrease in operating income: Mainly due to the decrease in revenue and increase in operating expenses in 2022 compared to 2021.
The increase in Non‐operating income and expenses: Mainly due to the 2022 fluctuation of exchange rate compared to the previous year.
The decrease in net profit before tax and net profit for the period: Due to the significant decrease in 2022 operating profit compared to the previous year.
(2) A sales volume forecast and the basis therefor, and describe the effect upon the Company’s financial operations as well as measures to be taken in response. Information of research institutions such as PIDA, research of company’s business department indicates that:
LED lighting components and modules: In recent years, governments around the world have started to realize issues of energy saving and environmental protection, with the rising global energy prices. As for rapid development of the concept of energy saving and environmental protection, and alternative lighting technologies, European, American and Japanese countries have promoted LED illumination. However, as affected by the low‐price competition of Mainland Chinese players, the Company and its subsidiaries continue to focus on the module product market. With the existing production capacity and collaboration with outsourcd manufacturers as well as consideration for profitability, sales of components in 2023 are expected to increase by 27% compared to 2022 while sales of lighting modules and finished products are expected to increase by 20% compared to 2022.
LED automotive lighting modules: Global automotive market continued to be affected by the epidemic and lack of materials in 2022, and shipments stopped to increase, but the growth of new energy vehicles are still a trend in the future. We expect sales of automotive lighting modules may increase by 20% in 2023, compared to 2022.

155

Optical transmission components: Due to rapid development of multimedia products, electronic products have much higher requirements for the quality of audio and video, with upcoming 5G era and popularity of digital audio sources, the use of optical transmission components has been increased. Sales of audio‐visual devices, such as DVD, PC, NB, STB, mobile phones and others, in 2023 will be the same as 2022, as it has slowly grown and by lower‐price competition from manufacturers of China.

3. Cash flow

(1) Change in consolidated cash flow in 2022

Year Item	2022	2021	Change in proportion
Cash flow ratio	29.95%	17.23%	74%
Cash flow adequacyratio(%)	89.68%	81.68%	10%
Cash flow reinvestment ratio(%)	2.80%	1.93%	45%

Remarks for analysis of changes:

The increase in cash flow ratio was due to the increase in cash inflow from operating activities and the decrease in current liabilities due to the repayment of short‐term loans in 2022.
The increase in cash reinvestment ratio, compared to the previous period, was mainly due to the cash inflows from operating activities in fiscal 2022 compared to the previous period.
(2) Liquidity improvement plan:

The net cash flows from operating activities are stable, and the net cash inflows from operating activities are higher than the cash outflows from investing activities such as plant, machinery and equipment and prepayment for equipment, so there is no liquidity problem yet. In case of cash shortage in the future, the Company will give priority to bank borrowings. The borrowing facilities negotiated with banks can still meet the Group's operating requirements.

(3) Analysis of cash liquidity in the coming year:

such as plant, machinery and equipment and prepayment for equipment, so there is no liquidity problem yet. In case of cash shortage in the future, the Company will give priority to bank borrowings. The borrowing facilities negotiated with banks can still meet the Group's operating requirements. Analysis of cash liquidity in the coming year:	such as plant, machinery and equipment and prepayment for equipment, so there is no liquidity problem yet. In case of cash shortage in the future, the Company will give priority to bank borrowings. The borrowing facilities negotiated with banks can still meet the Group's operating requirements. Analysis of cash liquidity in the coming year:	such as plant, machinery and equipment and prepayment for equipment, so there is no liquidity problem yet. In case of cash shortage in the future, the Company will give priority to bank borrowings. The borrowing facilities negotiated with banks can still meet the Group's operating requirements. Analysis of cash liquidity in the coming year:	such as plant, machinery and equipment and prepayment for equipment, so there is no liquidity problem yet. In case of cash shortage in the future, the Company will give priority to bank borrowings. The borrowing facilities negotiated with banks can still meet the Group's operating requirements. Analysis of cash liquidity in the coming year:	such as plant, machinery and equipment and prepayment for equipment, so there is no liquidity problem yet. In case of cash shortage in the future, the Company will give priority to bank borrowings. The borrowing facilities negotiated with banks can still meet the Group's operating requirements. Analysis of cash liquidity in the coming year:	such as plant, machinery and equipment and prepayment for equipment, so there is no liquidity problem yet. In case of cash shortage in the future, the Company will give priority to bank borrowings. The borrowing facilities negotiated with banks can still meet the Group's operating requirements. Analysis of cash liquidity in the coming year:
Unit: TWD 1,000
Cash balance at the beginning of 2021	Expected net cash flow from business activities	Expected cash outflow	Expected surplus or shortage in cash	Expected remedies for shortage in cash
				Investment plan	Wealth management plan
1,154,337	150,000	120,000	1,044,337	0	0

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Remarks:

Cash Flow Analysis for the Coming Year
(1) Operating activities: Inflow in cash flow from operating activities was mainly due to continuous adjustment of combination of the product for improving profit margin and profits for 2023.
(2) Investing activities: Outflows in cash from investing activities are mainly due to the Group’s continuous development of the automotive lighting and commercial lighting markets in 2023, the purchase in the capital expenditure of machinery of production line and experimental equipment and other fixed assets for approximately 60,000 thousand, and Expenses of replacing old machinery and equipment, totaling approximately 20,000 thousand.
(3) Financing activities: the cash outflow from financing activities was mainly due to distribution of cash dividends of 40,000 thousand and repayment of Long‐term loans 140,000 thousand in 2022.
Expected remedies for shortage in cash and liquidity analysis: As we expected shortage in cash, we will make bank loans in priority.

157

4. Major Capital Expenditure Items and Source of Capital:

(1) The situation of utilization of major Capital Expenditure Items and Source of Capital

Unit: TWD 1,000

				Unit: TWD 1,000	Unit: TWD 1,000	Unit: TWD 1,000	Unit: TWD 1,000	Unit: TWD 1,000
Project items	Actual or expected capital sources	Expected completi on Date	Total capital required	Schedule of utilization of actual or expected capital
				2022	2023	2024	2025	2026
Fixed assets	Own funds	2022.01‐ 2026.12	351,836	91,836	80,000	60,000	60,000	60,000

(2) Expected benefits:

We focused on sales of finished modules and automotive modules, continue to improve production efficiency and improve manufacturing processes, for cooperation with the Group’s business development and transition, hence the Group increased capital expenditures on machinery and equipment in 2022. In addition, we also purchased assembly lines of production and testing equipment in 2022, and also started to receive benefits in 2022, for development of the automotive LED Module Market. We expected to deploy more complete automotive LED modules and assembly lines of finished products, in order to increase the Group’s plan in the automotive lighting market, in 2023 and the following year.

5. The annual report shall describe the company’s reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re‐investment profitability, and investment plans for the coming year.

(1) The company’s reinvestment policy

According to factors, such as operational requirements and consideration of future growth, The management team of the company and its subsidiaries conduct reinvestment, set a detailed assessment and evaluation recommendations for reinvestment cases, by the organization type, investment purpose, setting location, market conditions, business development, possible joint venture partners, shareholding ratio, reference price and financial status of the reinvested enterprises, for management making investment decisions. As for the invested enterprises, we can keep understand their operating conditions at times, and analyze investment results, so as to help management conduct due diligence.

The re‐investment enterprises of the company and its subsidiaries are based on suppliers or customers who transact with the company, directly or indirectly. We can acquire capacity required for production, or keep a cooperative relationship in the present markets, through investments. The group has changed from component manufacturing of LED to the trend of cooperation between modules of the downstream and applications of the finished product. By a relationship of re‐investments, we keep a stable source of supplies, and support customers to increase the scale of the markets, to achieve a win‐win purpose. At present, the Company and its subsidiaries have no plans for reinvestment companies for financial operations.

158

(2) The main reasons for the profits/losses generated thereby, the improvement plan

2022/12/31 Unit: NT$1000

Reinvested Company	Shareholding ratio	Amount of long‐term investment	Investment Profit (loss) in 2021	Major reasons for profit or loss	Improvement plan	Other future investment plan
Edison Opto Corporation	100%	10,345	3,360	Mainly due to exchange gains or losses	None	None
Ledison Opto Corporation	100%	236,204	1,355	Recognized investment profits of Edison Opto (Dong Guan)Co.,Ltd.	None	None
Edison Opto (Dong Guan) Co., Ltd. (Note 1)	100%	242,578	3,303	Mainly due to the product combination with higher margin, so profitswill be increased.	None	None
Best Opto Corporation	100%	953,391	29,968	Recognized investment profits of Best Led	None	None
Best Led Corporation (Note 2)	100%	963,331	31,965	Recognized investment profits of Edison Opto (Dong Guan)Co.,Ltd.	None	None
Edison Opto (Yangzhou) Co., Ltd. (Note 3)	100%	963,327	31,964	Mainly due to integration of resources and the product combination with higher margin, so profits will be increased.	None	None
Yangzhou Aichuang Electronic Trade Corporation (Note 4)	100%	2,308	41	Mainly due to interest income recognized	None	None
Alpha Tree Investment Limited	100%	83,004	1,172	Mainly due to investment gains of subsidiaries and sales and purchases of stock.	None	None
Edison Opto USA Corporation (Note 5)	55%	32,931	5,483	Mainly due to transaction partners with higher gross margin, profits will be increased.	None	None
Ledionopto Intelligent Technology Co., Ltd (Note 5)	100%	16,212	99	Mainly the dividend income from holding the parent company's shares	None	None

159

Reinvested Company	Shareholding ratio	Amount of long‐term investment	Investment Profit (loss) in 2021	Major reasons for profit or loss	Improvement plan	Other future investment plan
Edison Auto Lighting Corporation (Note 5)	100%	4,154	134	Mainly due to exchange gains or losses	To expand markets	None
Edison‐Litek Opto Corporation Limited (Note 6)	73%	170,744	(11,786)	Investment losses recognized by Yangzhou Edison Opto Corporation	To help earn profits of subsidiaries	None
Yangzhou Edison‐Litek Opto Corporation (Note 6)	73%	140,450	(3,871)	Losses induced by revenues that do not reach economic scales	To expand markets	None
Edison‐Litek Opto Corp.	79%	198,629	29,268	Mainly due to automotive lighting products reach economic scales and continue to develop, profits will be increased.	None	None
Edison‐Egypt Opto Corporation	100%	26,047	4,843	Mainly the net profit from sales of finished lighting products	To collect receivables	None

Note 1: The company holds shares of Edison Opto (Dong Guan) Co., Ltd. through Ledison Opto Corporation. Note 2: The Company holds shares of Best Led Corporation through Best Opto Corporation.

Note 3: The company holds shares of Yangzhou Edison Opto Corporation through Best Led Corporation. Note 4: The company holds shares of Yangzhou Aichuang Electronic Trade Corporation through Yangzhou Edison Opto Corporation.

Note 5: The company invests and holds shares of Edison Opto USA Corporation, Ledionopto Intelligent Technology Co., Ltd, and Edison Auto Lighting Corporation through Alpha Tree Investment Limited.

Note 6: Edison‐Litek Opto Corporation Limited is jointly invested and established by the company and two shareholders. The company and its subsidiary, Edison‐Litek Opto Corp., hold 73% of shares, and 100% invested Yangzhou Edison‐Litek Opto Corporation through it.

(3) Investment plans for the coming year:

The company and its subsidiaries have improved their competitiveness by considering conditions of the market and operating, for business expansion and global layout, changing from component sales to the finished product of modules in various fields such as LED lighting and automotive applications in the markets, leading requirements of customers in the LED lighting of end‐users’ market, and improving the operating strategy by transformation of old business model as component manufacturers of LED. Taiwan and China will continue to invest in research and development of new equipment in new application fields in the future. As the group has a certain production capacity, we will reduce the investment in equipment of packaging components and increase automotive modules and SMT equipment.

6. Matters for Analysis and Assessment for Risks

160

(1) Risk factors:
The impact of recent changes in interest rates, exchange rate changes and inflation on the profit and loss of the Company and its subsidiaries and future countermeasures
(1) Interest rate: Interest expenses of the Company and its subsidiaries were 19,945 thousand and 17,183 thousand, separately, in 2021 and 2022, accounting for 0.95% and 0.93% of sales revenues, with a less ratio, and no significant impact on profit or loss of the consolidated financial statements. With the growth of performance and the expansion of the operating scale, it is necessary to continuously invest in capital expenditures such as R&D equipment to increase the company’s competitiveness. However, the company and its subsidiaries reference opinions of various research institutions, pay attention to the trend of interest rates, and establish good cooperative relations with financial institutions to receive lower capital costs. Except for keeping conservative principles and sincere use of working capital, we will continue to improve the financial structure to control the cost of capital.
(2) Exchange rate: Exchange losses of the company and its subsidiaries accounted for 0.38% and 1.51% of the operating revenues, in 2021 and 2022. The company and its subsidiaries have a high proportion of export sales and are mostly denominated in US dollars. Thus, changes in the exchange rate of NTD and RMB may affect the profit or loss. Management of exchange risks adopts the conservative principle and stable balance of assets and liabilities to reduce the impact of fluctuations of exchange rates on the company’s operating profits. The group’s countermeasures in exchange changes:
- A. As the business division makes a quotation to the customer, it will consider the trend of the exchange rate, by comprehensive consideration of the impact, with a more stable quotation, in order to avoid the huge change in the company’s profits, triggered by the change in the exchange rate.
- B. The financial division keeps a close relationship with financial institutions, observes changes in exchange rates, adjusts foreign currency assets and liabilities at times, manages foreign exchange positions, and adjusts foreign currency positions held to balance assets and liabilities of the foreign currency. Hence, we expect to decrease the impact on the profit and loss.
(3) Inflation: The company and its subsidiaries pay close attention to inflation, continue to reduce costs, pay attention to the supply and demand of raw materials and price changes, adjust inventories at times, and develop high value‐added products, etc., for countermeasures.
The company’s policy regarding high‐risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future.
(1) The company and its subsidiaries have set “Regulations Governing the Acquisition and Disposal of Assets,” “Regulations Governing Making of Endorsements/Guarantees” and “Regulations Governing Loaning of Funds to others,” approved by the shareholders’ meeting, as for the company to do relevant transactions.
(2) The Company and its subsidiaries haven’t invested high‐risk and high‐leverage investments in 2022 and the current year as of the date of publication of the annual report.

161

(3) In 2022 and 2023 up to the date of publication of the annual report of the Company and its subsidiaries, Yangzhou Edison Opto Corporation made loans of RMB 10 million to Edison Opto (Dong Guan) Co., Ltd, for short‐term financing. As of the publication date of the annual report, it has actually used 10 million. Edison‐Litek Opto Corporation Limited made loans of USD 1.1 million to Edison‐Litek Opto Corp, for short‐term financing, and it has actually used USD 0.7 million as of the publication date of the annual report, according to the “Regulations Governing Loaning of Funds to others” of the Company and its subsidiaries.
(4) The Company and its subsidiaries haven’t made endorsements/guarantees in 2022 and the current year as of the date of publication of the annual report.
(5) In 2022 and the current year up to the date of publication of the annual report, the Company purchased short‐term (within 3 months) principal‐guaranteed wealth management products denominated in RMB to receive higher gains. As its income is relevant to SHIBOR interest rate, exchange rate or gold, etc., it shall be seemed a derivative, according to the Company’s “Regulations Governing the Acquisition and Disposal of Assets” for derivatives, with regular evaluation and report to the Board of Directors and do public announcements. Except for the above operations, the Company and its subsidiaries have not invested in other derivatives transactions.
Research and development work to be carried out in the future, and further expenditures expected for research and development work.
(1) The company and its subsidiaries engage in the research, development and production of high‐power LED components, LED lighting and automotive module products, optical transmission components and invisible light (infrared and ultraviolet) products, etc. The relevant plans in the future go as follows:
A. High luminous efficiency of LED element (150lm/W or above).
B. Ultra‐small LED, for high‐efficiency of secondary optical design and improvement of cost structure, development of the smallest‐sized and high‐power LED.
C. LED modules for commercial lighting (including LED components with high luminous efficacy, high CRI, low‐frequency and wide voltage, in line with EU and US safety regulations) are used in wall lamps, ceiling lamps and other applications. The lamp can reach a high‐quality of light source with 90lm/W or above, and above CRI 90.
D. A component of surface source of LED with high‐power, high‐CRI, high‐efficiency, ranging from 9W to 35W, are designed for indoor lighting (recessed lights, bulbs, etc.), with an efficiency of more than 140lm/W, and an average CRI of 90.
E. The company has acquired the IATF 16949 for LED module of car lamp, for assuring the stable quality of automotive products to customers. At present, the company has launched a series of components and modules for automotive headlights, fog lights and turn signals, with thin miniature designs and provide manufacturers of the automotive with flexibility of design.
F. Specific lighting components and modules, except for general lighting products, the company also increases the application field of LED and develops various special lighting products, such as street lighting, medical

162

beauty, situational decoration, plant lighting, intelligent lighting, UVC cleaning, and LD IR laser.

(2) The Company and its subsidiaries have always been committed to improvement of the luminous efficiency, light output quality and production procedure of LED, and applied for patents of the component packaging technology, module low‐frequency flicker technology, and module wide voltage of LED in many countries, in order to improve Industrial competitiveness of LED packaging and module technologies in Taiwan. In addition, we also develop new packaging materials with hardware and software equipment with high‐stability, high‐precision, to decrease the difficulty of the packaging process of LED, and time for LED development, promote upgrading the industries of LED, and get closer to the international markets. In the future, we will continue to focus on the development of core technologies, research and development of innovative product lines, related to LED lighting technology. We expect that expenses and capital expenditure on equipment of research and development in 2023 will be over 5% of the operating revenues, for enhancing the competitive advantage.
Effect on the Company’s financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response.

The operation of the Company and its subsidiaries obey relevant domestic and foreign laws and regulations, and always aware of changes in domestic and foreign policies and laws, and has a profession for legal and intellectual property and pays attention to changes in important domestic and foreign policies and laws at any time, and provides countermeasures. In 2022 and the current year up to the date of publication of the annual report, the Company and its subsidiaries have not been affected by changes in important domestic and foreign policies and laws, which affect the Company’s financial and business.

Effect on the Company’s financial operations of developments in science and technology (including cyber security risks) as well as industrial change, and measures to be taken in response.

The required technical level shall be different from ordinary LEDs, as requirements of global environmental protection, energy saving and changes in technology, the application field of energy‐saving and environmentally friendly high‐power of LED lighting has increased. The Company and its subsidiaries improve and innovate their own technology, and focus on research and development of new products and technologies. Our developed technologies are applied for multi‐national patents to correspond to changes in the technological environments, and we will continue to invest in technological research and development in the future. The Company and its subsidiaries have concentrated on the market for many years, and have a high degree of understand of the demand and changes in the market. We can adjust the business strategies for changes in industries, in order to keep the Company’s competitiveness and decrease the impact on our finance and business. In 2022 and the current year up to the date of publication of the annual report, changes in science and technology as well as industrial change has no significant impact on the Company.

Effect on the company’s crisis management of changes in the company’s corporate image, and measures to be taken in response.

163

Since our establishment, the company and its subsidiaries have taken the corporate culture of “Integrity & honesty, action & pragmatism, modesty & steadfastness” as our development goals. Except for the development of the industry, the company continues to focus on development of energy‐saving LED lighting, and pays attention to quality of products, promotes customer service, and we have established a good market reputation. By putting much effort in public welfare activities, we committed to keeping corporate image, and obey relevant laws and regulations. As of now, we don’t have any matters which make changes in the company’s corporate image.

Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken.

As of the recent year and the date of publication of the annual report of the company and its subsidiaries, we don’t have any plan of acquisition. Except for conducting a plan of acquisition in the future, we will follow relevant laws and regulations, and our internal management procedures, with a sincere attitude, in order to consider if it brings synergies for the company, and assure rights of ordinaries shareholders.

Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken.

.Edison’s have any matters which make changes in the company’s corporate image

Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken.

The company and its subsidiaries purchased materials, such as chips, phosphors, brackets, PCB substrates, semiconductor ICs, electronic parts, lenses, heat sinks, mechanical components, plastic injection materials, and lighting modules required by customers. As for the purchases in the recent two years, it has no single supplier whose purchase amount accounted for over 10%, hence no risk of concentration of purchases.

In order to maintain the stability, quality, price and delivery time of our supply, the company not only pays on time to win trust of suppliers, but also keeps a good relationship with purchasers. Due to factors, such as the cost, scale of economical procurement, and cooperation between the two parties, we purchase from suppliers with good quality, a good application with production, and stable supplies. The company and its subsidiaries are also actively developing other suppliers. At present, raw materials come from more than two suppliers, to reduce the risk of concentration of material sources, and kept a good cooperative relationship with suppliers. The quality and delivery time of each supplier are normal over years, with no shortage or interruption of the supply.

The company and its subsidiaries sell products, such as LED lighting components and modules, LED automotive modules and optical transmission components. For the last two years, except for a customer of Tier I of automotive modules whose sales amount accounted for more than 10% of revenues, there is no other customer whose sales ratio exceeds 10% of revenues. Hence, there is no risk of concentration on sales.

Effect upon and risk to the Company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the Company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken. In 2022 and the current year up to the date of publication of the Annual Report, there were no significant

164

transfers of shares in excess of 10% of the capital of the Company by the directors and major shareholders holding more than 10% of the shares.

Effect upon and risk to company associated with any change in governance personnel or top management, and mitigation measures being or to be taken. As for the establishment of the company, management has held important

positions related to the company for a long while. For spirit of corporate governance, the directors and supervisors were re‐elected on June 13, 2013, and we voluntarily adopted the audit committee (it will be 4th period after re‐election of the shareholders’ meeting in 2022) for Supervision of the decision‐making content of the board of directors and the operation of the company. The management of the company will support the company’s business philosophy and good ethic, improve the company’s operating performance and profit growth to earn shareholders’ recognition of the management team in the future. As of now, the company’s management rights are stable. As of the publication date of the annual report, the Company has no change in governance personnel or top management.

Litigious and non‐litigious matters. List major litigious, non‐litigious or administrative disputes that: (1) involve the company and/or any company director, any company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappealable judgment, or are still under litigation. Where such a dispute could materially affect shareholders’ equity or the prices of the company’s securities, the annual report shall disclose the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of publication of the annual report.
Other important risks, and mitigation measures being or to be taken.

7. Other material matters: None.

165

Affiliated companies and special Notes

1. Summary of affiliated companies:

(1) Affiliated companies chart (2022/12/31)

==> picture [520 x 395] intentionally omitted <==

----- Start of picture text -----

EDISON OPTO
CORPORATION
78.57% 44.58% 100% 100% 100% 100%
Edison‐Litek Edison‐Litek Opto Best Opto Ledison Opto Edison Fund Edison Opto
Opto Corp. Corporation Limited Corporation Corporation Investment Limited Corporation
28.06% 100% 100% 100% Edison‐Egypt
Opto
Yangzhou Edison Best Led Edison Opto 100% Corporation
‐ Litek Opto Corporation (Dong Guan)
CorporationCorp Co., Ltd.
100%
Ledionopto
Yangzhou 100% Intelligent
Edison Opto Technology Co., Ltd
Corporation
100% Edison Opto USA
55%
Corporation
Yangzhou
Aichuang
Electronic Trade
Edison Auto Lighting
Corporation
100% Corporation
----- End of picture text -----

166

(2) Information of affiliated companies

2022/12/31 Unit: NT$1,000

				Main business
	Date of		Capital Stock
Company		Place of Registration		or production
	Incorporation		(NT$)
				activities

Ledison Opto		Offshore chambers, Po Box
	2005.08.11		USD 4,500	Investment
Corporation		217,Apia,Samoa

				Sales of
Edison Opto		Offshore chambers, Po Box
	2003.06.19		USD 30	optoelectronic
Corporation		217, Apia, Samoa
				products

Best Opto		Portcullis TrustNet chambers,
	2006.08.04		USD 41,000	Investment
Corporation		Po Box 1225,Apia,Samoa

Best LED		Portcullis TrustNet chambers,
	2006.08.08		USD 41,000	Investment
Corporation		Po Box 1225,Apia,Samoa

				Optoelectronic
		Section 1, Xicheng Industrial,
Edison Opto (Dong				products’
	2006.05.17	Hengli Town, Dongguan City,	USD 4,500
Guan) Co., Ltd.				production and
		Guangdong Province, China
				sales

				Optoelectronic
		No. 101, Huayang West Road,
Yangzhou Edison				products’
	2006.11.10	Yangzhou City, Jiangsu	USD 41,000
Opto Corporation				production and
		Province, China
				sales

Yangzhou Aichuang		No. 101, Huayang West Road,		Sales of
Electronic Trade	2019.09.23	Yangzhou City, Jiangsu	RMB 500	optoelectronic
Corporation		Province,China		products
		17F., No. 17, Qiaohe Rd.,
Alpha Tree
	2011.04.22	Zhonghe Dist., New Taipei	NTD 250,000	Investment
Investment Limited
		City

				Sales of
Edison Opto USA		1809 Excise Avenue,Suite
	2009.10.15		USD 400	optoelectronic
Corporation		201,Ontario CA 91761
				products

Edison‐Litek Opto		Units 3306‐12 33/F Shui On
Corporation	2014.06.30	CTR 6‐8 Harbour Rd	USD 12,338	Investment
Limited		Wanchai Honh Kong
				Optoelectronic
Yangzhou		No. 101, Huayang West Road,
				products’
Edison‐Litek Opto	2014.07.22	Yangzhou City, Jiangsu	USD 8,875
				production and
Corporation		Province, China
				sales

Ledionopto		17F., No. 13, Qiaohe Rd.,		Sales of
Intelligent	2008.06.05	Zhonghe Dist., New Taipei	NTD 22,000	optoelectronic
TechnologyCo.,Ltd		City		products
				Optoelectronic
		17F., No. 13, Qiaohe Rd.,
Edison‐Litek Opto				products’
	2017.11.14	Zhonghe Dist., New Taipei	NTD 140,000
Corp.				production and
		City
				sales

		17F., No. 13, Qiaohe Rd.,		Sales of
Edison‐Egypt Opto
	2018.11.08	Zhonghe Dist., New Taipei	NTD 25,000	optoelectronic
Corporation
		City		products

Edison Auto		17F., No. 13, Qiaohe Rd.,		Sales of
Lighting	2019.10.03	Zhonghe Dist., New Taipei	NTD 10,000	optoelectronic
Corporation		City		products

167

(3) Information on the same shareholders, who have control and affiliated relationship with the company, according to Article 369‐3 of the Company Act: None.
(4) The type of industries and its connection of the affiliated companies: investment,

holding, manufacturing, and merchandising‐sector companies.

	the orientation		Among affiliated
Company	strategy of the	Main products	enterprises business	Sales partners
	company		relationship
Ledison Opto		Ordinary
	Holding company		Holding company	‐
Corporation		investments

			Sales of	The sales partner is
Edison Opto		Optoelectronic
	Sales company		optoelectronic	the company around
Corporation		products
			products	the world

Best Opto		Ordinary
	Holding company		Holding company	‐
Corporation		investments

		Ordinary
Best LED Corporation	Holding company		Holding company	‐
		investments

	Foreign		Produces and sales	Selling to EDISON
Edison Opto (Dong		Optoelectronic
	production and		of Optoelectronic	OPTO and the
Guan) Co., Ltd.		products
	sales		products	companyin China

	Foreign		Produces and sales	Selling to EDISON
Yangzhou Edison		Optoelectronic
	production and		of Optoelectronic	OPTO and the
Opto Corporation		products
	sales		products	companyin China

Yangzhou Aichuang			Sales of	Selling to Yangzhou
		Optoelectronic
Electronic Trade	Sales company		optoelectronic	Edison Opto
		products
Corporation			products	Corporation

Alpha Tree	Reinvested	Ordinary
			Holding company	‐
Investment Limited	Company	investments

			Sales of	The sales partner is
Edison Opto USA		Optoelectronic
	Sales company		optoelectronic	the company in
Corporation		products
			products	America

Edison‐Litek Opto		Ordinary
	Holding company		Holding company	‐
Corporation Limited		investments

Yangzhou	Foreign		Produces and sales	The sales partner is
		Optoelectronic
Edison‐Litek Opto	production and		of Optoelectronic	the company around
		products
Corporation	sales		products	the world

Ledionopto			Sales of	The sales partner is
		Optoelectronic
Intelligent	Sales company		optoelectronic	the company around
		products
TechnologyCo.,Ltd			products	the world

			Produces and sales	The sales partner is
Edison‐Litek Opto	production and	Optoelectronic
			of Optoelectronic	the company around
Corp.	sales	products
			products	the world

			Sales of	The sales partner is
Edison‐Egypt Opto		Optoelectronic
	design and sales		optoelectronic	the company around
Corporation		products
			products	the world

			Sales of	The sales partner is
Edison Auto Lighting		Optoelectronic
	design and sales		optoelectronic	the company around
Corporation		products
			products	the world

168

(5) Directors, supervisors, and presidents of affiliates:

2022/12/31 Unit: NT$1,000 shares

												Shares held	Shares held
													Shareholding
Company	Position	Name or representative
												Shares	percentage

													(%)
Ledison Opto
	Director	Jason Wu										4,500	100
Corporation

Edison Opto
	Director	Jason Wu										30	100
Corporation

Best Opto
	Director	Jason Wu										41,000	100
Corporation

Best LED
	Director	Jason Wu										41,000	100
Corporation

Edison Opto									Director
		Jason				Yaochuan					CHEN,
(Dong Guan)	Chairperson			Director								‐	100
		Wu				Hong					CHIEN‐MING
Co.,Ltd.

Yangzhou		Jason				Yaochuan					CHEN,

Edison Opto	Chairperson	Wu		Director		Hong			Director		CHIEN‐MING	‐	100

Corporation	Supervisor	Cheng‐Tien Hsu
Yangzhou		Jason				Qingyuan			Director
	Chairperson			Director							Kundian He
Aichuang		Wu				Liu

Electronic												‐	100
Trade	Supervisor	Cheng‐Tien Hsu
Corporation
	Chairperson	Edison Opto Corp.,representative: WU,CHIEN‐JUNG
Alpha Tree
	Director	Edison Opto Corp.,representative: WU,CHIEN‐JUNG
Investment												25,000	100
	Director	Edison Opto Corp.,representative: CHEN,CHIEN‐MING
Limited
	Supervisor	Edison Opto Corp.,representative: HSU,CHENG‐TIEN

Edison Opto	Chairperson	Wen‐Ruei Cheng

USA Corp.	Director	Wang,Li‐Li					Director		AshleyCheng			220	55

Edison‐Litek
Opto Corpo‐	Chairperson	Jason Wu										8,963	73
ration Limitd
Yangzhou		Jason			KAO,
								Director		YOO JUN SANG
Edison‐Litek	Chairperson	Wu	Director		CHANG‐CHIN							‐	73

Opto Corp.	Supervisor	Cheng‐Tien Hsu
Ledionopto	Chairperson	Edison Opto Corp.,representative: WU,CHIEN‐JUNG
Intelligent	Director	Edison Opto Corp.,representative: WANG,LI‐LI

Technology	Director	Edison Opto Corp.,representative: WANG,PO‐CHUNG										2,200	100

Co., Ltd	Supervisor	Edison Opto Corp.,representative: HSU,CHENG‐TIEN
	Chairperson	WU,CHIEN‐JUNG										650	5
Edison‐Litek	Director	KAO,CHANG‐CHING										685	5
Opto Corp.	Director	Edison Opto Corp.,representative: XI‐Quan Hu										11,000	79
	Supervisor	HSU,CHENG‐TIEN										30	‐
Edison‐Egypt	Chairperson	Edison Opto Corp.,representative: WU,CHIEN‐JUNG

Opto Corp.	Supervisor	Edison Opto Corp.,representative: HSU,CHENG‐TIEN										2,500	100

Edison Auto	Chairperson	Edison Opto Corp.,representative: WU,CHIEN‐JUNG

LightingCorp.	Supervisor	Edison Opto Corp.,representative: HSU,CHENG‐TIEN										1,000	100

169

(6) Consolidated financial statements of affiliated companies

						2022/12/31 Unit: NT$1,000	2022/12/31 Unit: NT$1,000	2022/12/31 Unit: NT$1,000
								Proforma
								earnings
							Profit or loss
								per share
	Capital Stock		Total			Operating	for the year
Company		Total Assets		Net worth	Revenue			(NT$)
	(NT$)		Liabilities			profit	(After income
								(After
							tax)
								income

								tax)
Ledison Opto			USD 0	USD 7,905	USD 0
	USD 4,500	USD 7,905				USD 0	USD 111	‐
Corporation

Edison Opto			USD 209	USD 337	USD 0
	USD 30	USD 546				USD (6)	USD 113	‐
Corporation

Best Opto			USD 0	USD 31,369	USD 0
	USD 41,000	USD 31,369				USD 0	USD 1,072	‐
Corporation

Best LED			USD 0	USD 31,369	USD 0
	USD 41,000	USD 31,369				USD 0	USD 1,072	‐
Corporation

Edison Opto			RMB 25,694	RMB 55,006	RMB 120,999
(Dong Guan)	RMB 33,534	RMB 80,700				RMB 977	RMB 742	‐
Co.,Ltd.
Yangzhou			RMB 29,314	RMB 218,444	RMB 142,857
Edison Opto	RMB 272,681	RMB 247,758				RMB 1,586	RMB 7,183	‐
Corporation
Yangzhou			RMB 0	RMB 523	RMB 0
Aichuang
Electronic	RMB 500	RMB 523				RMB 0	RMB 9	‐
Trade
Corporation
Alpha Tree			NTD 3	NTD 91,233	NTD 0
Investment	NTD 250,000	NTD 91,236				NTD (66)	NTD 1,311	‐
Limited
Edison Opto			USD 542	USD 1,950	USD 3,189
USA	USD 400	USD 2,492				USD 455	USD 334	‐
Corporation
Edison‐Litek			USD 0	USD 7,654	USD 0
Opto	USD 10,000	USD 7,654				USD (360)	USD (544)	‐
Corporation
Yangzhou			RMB 13,985	RMB 47,801	RMB 53,573
Edison‐Litek
	RMB 55,259	RMB 61,786				RMB (2,088)	RMB (1,306)	‐
Opto

Corporation
Ledionopto
Intelligent	NTD 22,000	NTD 16,341	NTD 129	NTD 16,212	NTD 0	NTD (181)	NTD 99	‐
Technology

Co.,Ltd
Edison‐Litek	NTD 140,000	NTD 381,494	NTD 128,770	NTD 252,724	NTD 384,036	NTD 32,666	NTD 38,025	2.72
Opto Corp.
Edison‐Egypt	NTD 25,000	NTD 26,641	NTD 593	NTD 26,048	NTD 26,209	NTD 2,441	NTD 4,843
Opto
Corporation
Edison Auto	NTD 10,000	NTD 12,660	NTD 8,506	NTD 4,154	NTD 23,315	NTD 341	NTD 134
Lighting								‐
Corporation

170

(7) Consolidated financial statements of affiliated companies: Please refer to Appendices 3.
(8) Report of affiliated companies: None.

2. Private Placement Securities in the Most Recent Years: None.

3. Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years:

The company’s subsidiary – Radi Young Lighting Co., Ltd. – held 500 thousand shares of the company, which were acquired before 2016. As of October 31, 2021, it carrying amount was 11,800 thousand, and it hasn’t been disposed in the most recent year and as of the date of publication of the annual report. Stock not under pledge, the company has not made guarantee/endorsement or lent funds to the subsidiary as of the date of publication of the annual report.

4. Other supplementary information: None.

5. Any of the situations listed in Article 36, paragraph 2, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders’ equity or the price of the company’s securities, has occurred during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report: None.

171

Edison Opto Corporation Statement of Internal Control System

Date: February 23, 2023

Based on the findings of a self‐assessment, the company states the following with regard to its internal control system during the year 2022:

The company’s board of directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency of our reporting, and compliance with applicable rulings, laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self‐monitoring mechanisms, and the company takes immediate remedial actions in response to any identified deficiencies.
The company evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing Establishment of Internal Control Systems by Public Companies (herein below, the Regulations). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communications, and (5) monitoring activities. each element includes each item. Please see regulations for the above items.
Sysage has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.
Based on the findings of such evaluation, the company believes that, on December 31, 2022, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.
This Statement is an integral part of the company’s annual report for the year 2022and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
This statement was passed by the board of directors in their meeting held on February 23, 2023, with nine attending directors all affirming the content of this Statement.

Edison Opto Corporation

Chairperson: Jason Wu

President: Jason Wu

172

Edison Opto Corporation

Audit Committee’s Report

The Board of Directors has prepared the 2022 Business Report, financial statements and earnings distribution proposal, where the financial statements have been audited by CPAs Heng‐Sheng Lin and Bei‐Chi Chen from KPMG Taiwan with the Auditor’s Report issued. The above report, statements and proposal have been reviewed by the Audit Committee and found to be in conformity. We hereby present the above in accordance with Article 14‐4 of the Securities and Exchange Act and Article 219 of the Company Act for your scrutiny.

Sincerely,

The 2023 Regular Shareholders’ Meeting of Edison Opto Corp.

Audit Committee

Convener: Wen‐Chao Wang

March 9, 2023

173

Stock Code:3591

EDISON OPTO CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

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

Address: 5F., No. 800, Chung-Cheng Rd., Chung-Ho Dist., New Taipei City Telephone: (02)8227-6996

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

174

Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. 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) 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 9 9 9～10 10～26 26 27～61 61 62 62 62 62 63 63～66 67 67～68 68 69～70

175

Representation Letter

The entities that are required to be included in the combined financial statements of EDISON OPTO CORPORATION as of and for the year ended December 31, 2021 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 ,"Consolidated Financial Statements." endored by the Financial Supervisory Commission of the Republic of China. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, EDISON OPTO CORPORATION and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: EDISON OPTO CORPORATION Chairman: Jason Wu Date: Febuary 24, 2022

176

Independent Auditors’ Report

To the Board of Directors of Edison Opto Corporation:

Opinion

We have audited the consolidated financial statements of Edison Opto Corporation and its subsidiaries (“the Edison Group”), which comprise the consolidated statement of financial position as of December 31, 2021 and 2020, and the consolidated statement of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Edison Opto Corporation and subsidiaries as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the year ended December 31, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Edison Opto Corporation in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

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

177

4-1

Impairment evaluation of accounts receivable

Please refer to Note 4(g) “Financial instruments”, Note 5(b) “Significant accounting assumptions and judgments, and major sources of estimation uncertainty ” , and Note 6(c) “ Notes and accounts ” receivable .

For the year ended December 31, 2021, the accounts receivable accounted for 11% of the total assets are material to the financial statements. In addition, the provision of bad debt allowance is a subject to the management’s judgment. Therefore, it has been identified as a key audit matter.

Our principal audit procedures included:

‧ Assess the impairment of accounts receivable and whether the impairment has been modified by policy.
‧ Examine the aging analysis table, analyze the reason of overdue collection and the situation of subsequent collection.
‧ Evaluate the adequacy of impairment on the financial report date Edison Opto Corporation and subsidiaries.
2.Revenue recognition

“ ” Please refer to Note 4(m) Revenue from contracts with customers, and Note 6(u) Revenue .

The major business activities of Edison Opto Corporation and subsidiaries are manufacturing, selling, research and development of LED components and modules. Operating Revenue is the main indicator for the management of Edison Consolidated Company and investor to evaluate the financial and business performance of Edison Consolidated Company. Therefore, it has been identified as a key audit matter.

Our principal audit procedures included:

’
‧ Evaluate the Consolidated Company s accounting policy of revenue recognition.
‧ Test the design and implementation of internal controls related with revenue recognition.
‧ A sample of the whole year is selected, and the income transaction records and various vouchers are checked to confirm that the operating income is recognized.
‧ Analyzing the change in sales revenue from top ten clients and examining significant contracts to assess whether there are significant exceptions.
‧ Choose the period between the financial reporting, then examine the recognition of income transactions and vouchers cover for the appropriate period.

Other Matter

Edison Opto Corporation has prepared its parent-company-only financial report for the year 2021 and 2020, on which we have issued an unmodified opinion.

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

178

4-2

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

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Edison Opto Corporation’s financial reporting process.

Auditor ’ s Responsibilities for the Audit of the Consolidated Financial Statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Edison Opto Corporation Limited’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Edison Opto Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Edison Opto Corporation and subsidiaries.to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

179

4-3

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Edison Opto Corporation to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Consolidated Company audit.

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are HENG-SHEN LIN and PEI-CHI CHEN.

KPMG

Taipei, Taiwan (Republic of China) Febuary 24, 2022

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 audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

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

180

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

EDISON OPTO CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

December 31, 2021	December 31, 2021	December 31, 2020 Amount % 482,352 13 369,907 10 110,128 3 18,361 - 11,916 - - - 35,523 1
Amount % $ 1,176,003 29 1,582 - 444,266 11 6,205 - 316,107 8 83,152 2 127,268 3	Amount %
	$ 214,456 6 315,614 8 111,795 3 14,775 - 16,117 - 16,080 - 48,173 1
2,154,583 53	737,010 18	1,028,187 27
574 - - - 8,720 - 1,666,064 41 67,117 2 4,559 - 60,488 1 22,335 1 62,313 2	163,588 4 290,780 7 2,460 - 25,173 1 43,679 1	- - - - 2,035 - 39,229 1 41,140 1
	525,680 13	82,404 2
	1,262,690 31	1,110,591 29
	1,288,617 32 1,225,564 33 1,619,038 40 1,553,577 41 4,841 - - - 124,188 3 48,411 1 (183,608) (5) (177,025) (4) (152,240) (4) (17,426) - (1,377) - (6,378) - (59,048) (1) (61,902) (2)
1,892,170 47
	2,640,411 65 2,564,821 69
	143,652 4 88,841 2
	2,784,063 69 2,653,662 71
$ 4,046,753 100	$ 4,046,753 100 3,764,253 100

181

See accompanying notes to consolidated financial statements.

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

EDISON OPTO CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

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

4000 Operating revenue (note 6(u)) 5000 Operating costs (notes 6(f)(i)(j)(p)) Gross profit from operations Operating expenses (note 6(e)(i)(j)(n)(p)(s)(v)): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected impairment loss (reversed) Total operating expenses 6900 Net operating income Non-operating income and expenses (note 6(h)(k)(l)(m)(n)(o)(w)): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs Total non-operating income and expenses 7900 Profit from continuing operations before tax 7950 Less: Income tax expenses (note 6(q)) Profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans (note 6(p)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (note 6(c)) 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income 8500 Total comprehensive income Profit (loss), attributable to: 8610 Attributable to owners of parent 8620 Attributable to non-controlling interests Comprehensive income attributable to: 8710 Attributable to owners of parent 8720 Attributable to non-controlling interests Earnings per share (note 6(t)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021	2020
	Amount % $ 2,105,864 100 1,595,656 76	Amount % 1,901,238 100 1,535,866 81
	510,208 24	365,372 19
	103,834 5 160,495 7 101,865 5 (6,059) -	82,358 4 150,617 8 102,909 5 25,644 1
	360,135 17	361,528 18
	150,073 7	3,844 1
	14,621 1 9,535 - (11,303) - (19,945) (1)	18,922 1 24,537 1 5,821 - (9,398) -
	(7,092) -	39,882 2
	142,981 7 15,236 1	43,726 3 10,903 1
	127,745 6	32,823 2
	360 - (134,814) (7) - -	6,257 - 28,354 1 - -
	(134,454) (7)	34,611 1
	(7,841) - - -	21,640 1 - -
	(7,841) -	21,640 1
	(142,295) (7)	56,251 2
	$ (14,550) (1)	89,074 4
	$ 120,258 6 7,487 -	42,154 2 (9,331) -
	$ 127,745 6	32,823 2
	$ (20,779) (1) 6,229 -	98,658 5 (9,584) (1)
	$ (14,550) (1)	89,074 4
	$ 1.00	0.35
	$ 0.95	0.35

See accompanying notes to consolidated financial statements.

182

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) EDISON OPTO CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the years ended December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

			Equity attri	Equity attri	butable to owners of parent	butable to owners of parent				Non-controlling interests	Total equity
Ordinary shares	Capital surplus		Retained earnings			Other equity		Treasury shares	Total equity attributable to owners of parent
		Legal reserve	Special reserve	Unappropriated retained earnings (accumulated deficit))	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Employees unrealized reward
$ 1,250,014	1,841,558	701	6,313	(289,754)	(198,918)	(45,780)	(19,575)	(58,877)	2,485,682	112,806	2,598,488
‐ ‐	‐ ‐	(701) ‐	‐ (6,313)	701 6,313	‐ ‐	‐ ‐	‐ ‐	‐ ‐	‐ ‐	‐ ‐	‐ ‐
		(701)	(6,313)	7,014
‐ ‐	‐ ‐	‐ ‐	‐ ‐	42,154 6,257	‐ 21,893	‐ 28,354	‐ ‐	‐ ‐	42,154 56,504	(9,331) (253)	32,823 56,251
‐	‐	‐	‐	48,411	21,893	28,354	‐	‐	98,658	(9,584)	89,074
‐ ‐ ‐ (16,180) ‐ ‐ ‐ (8,270)	(282,740) (12,300) ‐ (3,652) ‐ 51 14,381 (3,721)	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐	282,740 ‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐ 13,197	‐ ‐ (19,832) 19,832 (3,025) ‐ ‐ ‐	‐ (12,300) (19,832) ‐ (3,025) 51 14,381 1,206	‐ ‐ ‐ ‐ ‐ ‐ (14,381) ‐	‐ (12,300) (19,832) ‐ (3,025) 51 ‐ 1,206
1,225,564 ‐ ‐	1,553,577 ‐ ‐	‐ 4,841 ‐	‐ ‐ ‐	48,411 (4,841) (40,000)	(177,025) ‐ ‐	(17,426) ‐ ‐	(6,378) ‐ ‐	(61,902) ‐ ‐	2,564,821 ‐ (40,000)	88,841 ‐ ‐	2,653,662 ‐ (40,000)
		4,841		(44,841)					(40,000)		(40,000)
‐ ‐	‐ ‐	‐ ‐	‐ ‐	120,258 360	‐ (6,583)	‐ (134,814)	‐ ‐	‐ ‐	120,258 (141,037)	7,487 (1,258)	127,745 (142,295)
‐	‐	‐	‐	120,618	(6,583)	(134,814)	‐	‐	(20,779)	6,229	(14,550)
‐ 63,383 ‐ ‐ ‐ ‐ (330)	31,990 47,381 ‐ 159 78 (13,998) (149)	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ 5,001	‐ ‐ 2,854 ‐ ‐ ‐ ‐	31,990 110,764 2,854 159 78 (13,998) 4,522	‐ ‐ ‐ ‐ (2,548) 51,130 ‐	31,990 110,764 2,854 159 (2,470) 37,132 4,522
$ 1,288,617	1,619,038	4,841	‐	124,188	(183,608)	(152,240)	(1,377)	(59,048)	2,640,411	143,652	2,784,063

See accompanying notes to consolidated financial statements.

183

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

EDISON OPTO CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expecte impairment loss (reversed) Net loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Share-based payments Gain on disposal of property, plant and equipment Loss on disposal of intangible assets Gain on disposal of other assets Total adjustments to reconcile profit Changes in operating assets and liabilities: Accounts and notes receivable Other receivables Inventories Prepayments Other current assets Other operating assets Accounts and notes payable Other payable Other current liabilities Net defined benefit liability Total changes in operating assets and liabilities Cash inflow generated from (used in) operations Interest received Interest paid Income taxes Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at amortised cost Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Acquisition of intangible assets Decrease in other financial assets Increase in restricted deposits Decrease in restricted deposits Increase in other non-current assets Increase in prepayments for business facilities Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term loans Decrease in short-term loans Proceeds from issuing bonds Proceeds from long-term debt Repayments of long-term debt Increase in guarantee deposits received	2021	2020 43,726
	$ 142,981
	121,970 2,344 (6,059) (6,295) 19,945 (14,621) 4,522 (2,972) ‐ (22)	123,075 2,495 25,644 ‐ 9,398 (18,922) 1,206 (9,189) 144 ‐
	118,812	133,851
	(13,579) (4,006) (50,585) (14,161) 61 (37) (54,293) 4,685 12,650 488	(25,666) (553) (20,808) (14,223) (3,842) (337) 50,167 (30,476) 8,281 401
	(118,777)	(37,056)
	143,016 14,226 (11,705) (18,539)	140,521 20,240 (9,389) (1,477)
	126,998	149,895
	(8,788) (51,916) 56,629 (462,728) 4,216 (1,700) (2,372) ‐ ‐ 4,342 (31,501) (21,938)	‐ ‐ ‐ (31,998) 15,175 (573) ‐ 123,890 (53,600) ‐ (111,934) (4,756)
	(515,756)	(63,796)
	1,423,571 (1,692,986) 297,503 321,600 (14,740) 3,402	1,919,977 (1,719,760) ‐ ‐ ‐ ‐

See accompanying notes to consolidated financial statements

184

Decrease in guarantee deposits received Payment of lease liabilities Cash dividends paid Payments to acquire treasury shares Acquisition of ownership interests in subsidiaries Change in non-controlling interests Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	‐ (9) (14,059) (12,498) (39,841) (12,249) ‐ (19,832) (2,470) ‐ 34,140 ‐
	316,120 155,629
	(1,114) 7,491
	(73,752) 249,219 1,249,755 1,000,536
	$ 1,176,003 1,249,755

See accompanying notes to consolidated financial statements

185

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

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements For the years ended December 31, 2021 and 2020

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

(1) Company history

Edison Opto Corporation (the “Company”) was approved by the Ministry of Economic Affairs on October 4, 2001 and incorporated in 5F, No.800, Chung-Cheng Rd., Chung-Ho Dist., New Taipei City, Taiwan. The Company’s shares were listed on the Taiwan Stock Exchange in November 2000. The company and its subsidiaries (hereinafter referred as Group) are mainly engaged in manufacturing, selling, research and development of LED components and modules in general lighting and automotive lighting area.

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

These consolidated financial statements were authorized for issuance by the Board of Directors on Febuary 24, 2022.

(3) New standards, amendments and interpretations adopted:

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

The Group 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

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

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 Group 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)

186

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group 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. Except for those specifically indicated, 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 “Regulations Governing the Preparation of Financial Reports by Securities Issuers” (hereinafter referred to as the Regulations) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed by the FSC (hereinafter referred to as the IFRSs endorsed by the FSC).

(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 at fair value through profit or loss are measured at fair value;
2) Fair value through other comprehensive income (Available-for-sale financial) are assets measured at fair value;
3) The defined benefit asset is recognized as plan assets, plus unrecognized past service cost and unrecognized actuarial losses, less the present value of the defined benefit obligation.

(Continued)

187

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Functional and presentation currency

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

(c) Basis of consolidation

(i) Principles of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and subsidiaries. Subsidiaries are entities controlled by the Group. The Group ‘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 Group 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 Group prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. Changes in the Group’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 Group will attribute it to the owners of the parent.

(ii) List of subsidiaries in the consolidated financial statements

Shareholding

Name of investor The Company The Company The Company The Company The Company The Company The Company Ledison Opto Corporation Best Opto Corporation	Name of subsidiary Edison Opto Corporation Ledison Opto Corporation Best Opto Corporation Edison Fund Investment Corporation Edison-Litek Opto Corporation Limited (note 1) Edison-Litek Opto Corporation (note 4) Edison-Egypt Opto Corporation Edison Opto (Dong Guan) Co., Ltd. Best Led Corporation	Principal activity Business of opto-electronics Business of opto-electronics Business of opto-electronics Investment Investment Business of opto-electronics Business of opto-electronics Business of opto-electronics Investment	December 31, 2021 100.00% 100.00% 100.00% 100.00% 44.58% 78.57% 100.00% 100.00% 100.00%	December 31, 2020
				100.00% 100.00% 100.00% 100.00% 44.58% 100.00% 100.00% 100.00% 100.00%

(Continued)

188

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Shareholding

Name of investor Best Led Corporation Yangzhou Edison Opto Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation Ledionopto Intelligent Technology Co., Ltd. (note 5) Edison-Litek Opto Corporation Limited Edison-Litek Opto Corporation	Name of subsidiary Yangzhou Edison Opto Corporation Yangzhou Aichuang Electronic Trade Corporation Edison Opto USA Corporation Edison Auto Lighting Corporation Davinci Opto Corporation (note 2) Ledionopto intelligent Technology Co., Ltd. Led Plus Co., Ltd. (note 3) Yangzhou Edison-Litek Opto Corporation Edison-Litek Opto Corporation Limited (note 1)	Principal activity Business of opto-electronics Business of opto-electronics Business of opto-electronics Business of opto-electronics Business of opto-electronics Business of opto-electronics Investment Business of opto-electronics Investment	December 31, 2021 100.00% 100.00% 55.00% 100.00% - % 100.00% - % 100.00% 28.06%	December 31, 2020
				100.00% 100.00% 55.00% 51.00% 100.00% 100.00% - % 100.00% 28.06%

Note 1: The Company and Edison-Litek Opto Corporation held 72.64% of Edison-Litek Opto Corporation Limited in Total.
Note 2: The dissolution of the Company has been registered in 2021.
Note 3: The dissolution of the Company has been registered in 2020.
Note 4: Edison-Litek Opto Corporation issued a total of 155 thousand shares in March 2021 as employee remuneration. Furthermore, 4,145 thousand shares were issued for cash capital increase in December 2021, wherein the Company acquired 1,300 thousand shares in cash amounting to $15,600 thousand, resulting in the shareholding ratio of the Company to decrease from 100% to 78.57%.
Note 5: In December 2021, the Company has been renamed from Ledionopto lightning, Inc. to Ledionopto Intelligent Technology Co., Ltd.
(iii) Subsidiaries excluded from the consolidated financial statements: None.

(Continued)

189

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of Group 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. Nonmonetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

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

an investment in equity securities designated as at fair value through other comprehensive income;
(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(Continued)

190

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Assets and liabilities classified as current and non-current

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

(i) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
(ii) It holds the asset primarily for the purpose of trading;
(iii) It expects to realize the asset within twelve months after the reporting period; or
(iv) The asset is cash or a 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 expects to settle the liability in its normal operating cycle;
(ii) It holds the liability primarily for the purpose of trading;
(iii) The liability is due to be settled within twelve months after the reporting period.
(iv) The Group 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 the issue of equity instruments do not affect its classification.
(f) 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 which 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.

(g) Financial instruments

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

(Continued)

191

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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) debt investment; FVOCI equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group 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
‧ it is contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

(Continued)

192

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 Group’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. On initial recognition, the Group 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 are recognized in profit or loss.

4) Impairment of financial assets

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

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

‧ Bank balances for which credit risk (i.e . the risk of default occuring over the expected life of the financial instrument) has not increased significantly since initial recognition.

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

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group 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 Group’ s historical experience and informed credit assessment as well as forward-looking information.

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

The Group considers a financial asset to be in default when the financial asset is unlikely to pay its credit obligations to the Group in full.

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

(Continued)

193

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

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

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

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 charge 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 Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

Debt and equity instruments issued by the Group 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) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital suplus is not sufficient to be written down).

(Continued)

194

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Compound financial instruments

Compound financial instruments issued by the Group comprise convertible bonds denominated in NTD that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured.

Interest related to the financial liability is recognized in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

5) 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.

6) Derecognition of financial liabilities

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

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 Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(Continued)

195

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average method and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) 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 Group.

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straightline 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 construction	3 to 45 years
2)	Machinery and equipment	3 to 10 years
3)	Molding Equipment	2 to 6 years
4)	Office and Other equipment	2 to 6 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(Continued)

196

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Leases

(i) Identifying a lease

At inception of a contract, the Group 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.

(ii) As a leasee

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

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

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 Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

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

－
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 Group s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
－ there is any lease modifications

(Continued)

197

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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 Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

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

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

(k) Intangible assets

(i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Other intangible assets, including customer relationships, patents and trademarks, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) 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.

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and 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 current and comparative periods are as follows:

1) Computer software 3~4 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(Continued)

198

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(l) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties and biological assets, measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

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

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

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

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(m) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

1)

Sale of goods

The Group manufactures and sells LED components. The Group 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 Group has objective evidence that all criteria for acceptance have been satisfied.

2) The average credit term for sale of goods is 60 days to 90 days. It is consistent with industry practice. so it does not contain financing element.

(Continued)

199

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group recognized accounts receivables while delivery, because the Group has the right to collect the consideration.

3) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the group does not adjust any of the transaction prices for the time value of money

(n) Government grants and government assistance

The Company recognizes an unconditional government grant related to a biological asset in profit or loss as other income when the grant becomes receivable. Other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant; they are then recognized in profit or loss as other income on a systematic basis over the useful life of the asset.

(o) ––Employee benefits
(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

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

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

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

(Continued)

200

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group 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.

(p) Share-based payment

The grant-date fair value of share-based payment awards granted to employees is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards whose related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense 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 share based 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 of the amount payable to employees in respect of shar 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.

(q) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.The Group has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

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

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

(Continued)

201

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

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

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

(i) the Group has a legally enforceable right to set off currenttax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(r) Earnings per share

The Group discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. Diluted earnings per share is calculated as 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 potentially dilutive ordinary shares, such as employee remuneration and convertible corporate bonds.

(Continued)

202

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) 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 segment are regularly reviewed by the Consolidated Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

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

In preparing these consolidated financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

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

Information about judgments made in applying accounting policies that have no significant effects.

Information about assumptions and estimation uncertainty that have significant effect on the amounts recognized in the consolidated financial statements is as follow:

(a) Fair value of financial instruments

The fair value of non-active market or non-quoted financial instruments is determined using valuation techniques. The management had to determine the valuation techniques and the non-observable market parameters to ensure the output result reflects the actual market price. Please refer to note 6(w).

(b) The loss allowance of trade receivable

The Company has estimated the loss allowance of trade receivable that is based on the risk of a default occurring and the rate of expected credit loss.

The Company has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. The relevant assumptions and input values, please refer to note 6(d).

(Continued)

203

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash Demand Deposit Time Deposit	December 31, 2021 $ 5,917 848,656 321,430	December 31, 2020 7,922 912,421 329,412
	$ 1,176,003	1,249,755

For bank deposit which original maturity date of bank deposit is less than a year is not for investment but to meet its short-term commitment. It could be transferred into cash and the risk is considered low so was classified as cash and cash equivalents.

Please refer to note 6(x) for interest rate risk and sensitive analysis of financial assets and financial liabilities for the Group.

(b) Financial assets at fair value through profit or loss

Current financial assets at fair value through profit or loss: Listed common shares—Domestic Companies Non-current financial assets at fair value through profit or loss Convertible corporate bonds - call options	December 31, 2021 $ 1,582	December 31, 2020 -
	$ 574	-

The above financial assets of the Group were not pledged.

Debt investments at fair value through other comprehensive income Unlisted common shares—Foreign Company– LEDLitek Co., Ltd.	December 31, 2021 $ -	December 31, 2020 131,960

(Continued)

204

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(Continued)

205

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group holds 15.39% of common shares of LEDLitek Co., Ltd, and the main operating activities of the Company are Sales car lighting module. The Group designated the investments shown above should recognize as fair value through other comprehensive income, because these investments were intended to be held for long-term strategic purposes. Since the Company incurred significant losses due to the operation of the company in 2021. The Group recognized an evaluation loss at fair value amounting to $131,960 thousand as unrealized other comprehensive income (loss) from investments in equity instruments measured at fair value.

There were no disposed of investments for the years ended December 31, 2021 and 2020 and there were no transfers of any cumulative gain or loss within equity relating to these investments.

The above financial assets of the Group were not pledged.

(d) Financial assets measured at amortized cost

Government international bonds	December 31, 2021 $ 8,720	December 31, 2020 -

The Group have assessed that the financial assets are held to maturity to collect contractual cash flows, which consists of payments of principal and interest on principal amount outstanding. Therefore, the investments were classified as financial assets measured at amortized costs.

The above financial assets of the Group were not pledged.

(e) Notes and accounts receivable

Notes receivable Accounts receivable Overdue receivable Less: Loss allowance	December 31, 2021 $ 10,856 450,951 10,615 (28,156)	December 31, 2020 23,068 433,748 2,027 (34,265)
	$ 444,266	424,578

(Continued)

206

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

December 31, 2021	December 31, 2021	Loss allowance provision 158 70 309 17,004
Gross carrying amount $ 434,833 6,103 3,867 17,004	Weighted-aver age loss rate
	0.03% 1.15% 8.00% 100% Weighted-aver age loss rate
$ 461,807		17,541
Gross carrying amount $ 10,615		Loss allowance provision 10,615
	100%

December 31, 2020	December 31, 2020	Loss allowance provision 1,553 530 45 30,110
Gross carrying amount $ 412,255 12,506 437 31,618	Weighted-aver age loss rate
	0.38% 4.24% 10.30% 95.23%
$ 456,816		32,238

Past due over 180 days

Gross carrying amount $ 2,027	Weighted-aver age loss rate	Loss allowance provision 2,027
	100%

(Continued)

207

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(Continued)

208

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Movements of the loss allowance for notes and accounts receivable were as follows:

Balance at January 1 Impairment losses recognized (reversed) Amounts written off due to unconectible this year Net income (losses) on foreign exchange Balance at December 31	2021
	$ 28,156 34,265

Note and account receivables of the Group were not pledged.

(f) Inventories

Raw materials Supplies Work in progress Finished goods	December 31, 2021 $ 122,107 3,232 88,945 101,823	December 31, 2020 100,716 3,084 70,037 91,685
	$ 316,107	265,522

The details of the cost of sales were as follows:

Inventory that has been sold Write-down of inventories (gain on reversal) Unallocated production overheads	2021 $ 1,559,677 (10,275) 46,254	2020 1,489,923 8,849 37,094
	$ 1,595,656	1,535,866

The Group did not provide any inventories as collateral for its loans.

(g) Changes in ownership interests in subsidiaries
(i) Edison-Litek Opto Corporation issued a total of 155 thousand shares in March 2021 as employee remuneration. Furthermore, 4,145 thousand shares were issued for cash capital increase in December 2021, wherein the Company acquired 1,300 thousand shares in cash

(Continued)

209

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

amounting to $15,600 thousand, resulting in the shareholding ratio of the Company to decrease from 100.00% to 78.57%.

The effect of changes in shareholdings was as follows:

2021 Capital surplus differences between consideration and carrying amounts $ (13,998) subsidiaries acquired

(Continued)

210

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Edison-Litek Opto Corporation Limited had processed a cash capital increase in July, 2020. The Group purchased all the shares issued with the amount of $32,417 thousand by cash through Edison-Litek Opto Corporation, which makes an increase of the total equity of The Company and Edison-Litek Opto Corporation from 62.08% to 72.64%.
Capital surplus differences between consideration and carrying amounts subsidiaries acquired

2020 $ 14,381

(h) Material non-controlling interests of subsidiaries

Subsidiaries Edison-Litek Opto Corporation Limited Edison-Litek Opto Corporation	Main operationplace Hong Kong Taiwan	Parentage of non-controlling interests	Parentage of non-controlling interests
		December 31, 2021 27.36% 21.43%	December 31, 2020
			27.36% - %

The following information of the aforementioned subsidiaries have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Included in these information are the fair value adjustment made during the acquisition and relevant difference in accounting principles between the Consolidated Company as at the acquisition date. Intra-Consolidated Company transactions were not eliminated in this information.

(i) Edison-Litek Opto Corporation Limited’s collective financial information

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests	December 31, 2021 $ 221,137 85,002 (61,467) -	December 31, 2020 260,583 95,714 (107,492) -
	$ 244,672	248,805
	$ 66,943	68,073

2021

2020

(Continued)

211

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Sales revenue Net loss Other comprehensive income Comprehensive income Profit, attributable to non-controlling interests Comprehensive income, attributable to non-controlling	$ 237,233 224,219
	$ (1,947) (28,835) (2,186) 15,638
	$ (4,133) (13,197)
	$ (533) (10,388)
	$ (1,131) (9,732)

(Continued)

212

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents	2021 $ 10,382 13,540 (17,175) 2,864	2020
		(40,003) (6,527) 53,399 2,117
	$ 9,611	8,986

(ii) Edison-Litek Opto Corporation collective financial information

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests Sales revenue Net income Other comprehensive income Comprehensive income Profit, attributable to non-controlling interests Comprehensive income, attributable to non-controlling	December 31, 2021 $ 304,942 110,788 (174,886) -	December 31, 2020
		227,501 96,670 (146,062) (4,343)
	$ 240,844	173,766
	$ 51,609	-
	2021 $ 406,486	2020
		317,398
	$ 37,259 (614)	32,445 680
	$ 36,645	33,125
	$ 540	-
	$ 479	-

Net cash flows from operating activities Net cash flows from investing activities	2021 $ 33,477 (29,023)	2020
		32,397 (49,865)

(Continued)

213

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Net cash flows from financing activities Net increase in cash and cash equivalents	46,961 33,348
	$ 51,415 15,880

(Continued)

214

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Consolidated Company for the years ended December 31, 2021 and 2020, were as follows:

Land $ 260,051 351,073 - 26,738 - $ 637,862	Building and construction 815,073 78,386 - 77,775 (3,543) 967,691	Machinery and equipment 1,229,332 26,190 (79,125) 3,875 (5,910) 1,174,362	Molding equipment 38,871 80 (436) 186 (219) 38,482	Other facilities 204,881 6,999 (3,574) - (1,166) 207,140	Total 2,548,208 462,728 (83,135) 108,574 (10,838) 3,025,537
$ 260,051 - - - - $ 260,051	803,349 1,731 (3,230) 3,605 9,618 815,073	1,367,864 26,197 (205,962) 27,679 13,554 1,229,332	38,611 224 (554) - 590 38,871	214,443 3,846 (16,346) 366 2,572 204,881	2,684,318 31,998 (226,092) 31,650 26,334 2,548,208
$ - - - - $ -	231,044 26,077 - (429) 256,692	1,014,435 64,044 (78,155) (4,830) 995,494	30,964 2,484 (392) (138) 32,918	65,519 12,908 (3,344) (714) 74,369	1,341,962 105,513 (81,891) (6,111) 1,359,473

$ - - - - $ -	208,227 88,789 (2,921) (63,051) 231,044	1,138,279 (2,940) (202,174) 81,270 1,014,435	27,468 3,308 (408) 596 30,964	65,558 19,292 (14,603) (4,728) 65,519	1,439,532 108,449 (220,106) 14,087 1,341,962

$ 637,862	710,999	178,868	5,564	132,771	1,666,064
$ 260,051	595,122	229,585	11,143	148,885	1,244,786
$ 260,051	584,029	214,897	7,907	139,362	1,206,246

(i) Guarantee

Some of the property, plant and equipment that belongs to the Group had been pledged as collateral for long-term borrowings and the issuance of the corporate bonds; please refer to note 8.

(Continued)

215

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Prepaid payments for land and buildings

The Company purchased a new office with $536,000 thousand and had prepaid $107,571 thousand as of December 31, 2020, which was recognized under other non-current assets-other. The remaining balances were paid, and the transferring procedures were completed on January 22, 2021.

(j) Right-of-use assets

The Group leases many assets including land and buildings, machinery and vehicles. Information about leases for which the Group as a lessee was presented below:

Cost: Balance at January 1, 2021 Additions Disposal Effect of changes in foreign exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposals	Land $ 32,468 - - (192)	Building and Construction 57,424 3,874 (1,612) (328)	Machinery equipment - - - -	Vehicles 5,821 1,134 (582) -	Total 95,713 5,008 (2,194) (520)
	$ 32,276	59,358	-	6,373	98,007
	$ 31,948 - -	31,091 38,179 (12,256)	173 - (176)	4,659 1,162 -	67,871 39,341 (12,432)

(Continued)

216

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Effect of changes in foreign exchange rates Balance at December 31, 2020 Accumulated depreciation: Balance at January 1, 2021 Depreciation Disposal Effect of changes in foreign exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Depreciation Disposals Effect of changes in foreign exchange rates	520 410 3 - 933
	$ 32,468 57,424 - 5,821 95,713
	$ 1,712 12,264 - 2,235 16,211 852 13,723 - 1,882 16,457 - (1,544) - (146) (1,690) (11) (77) - - (88)
	$ 2,553 24,366 - 3,971 30,890
	$ 842 12,208 112 657 13,819 858 12,127 63 1,578 14,626 - (12,256) (176) - (12,432) 12 185 1 - 198

(Continued)

217

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Balance at December 31, 2020 Carrying amount: Balance at December 31, 2021 Balance at January 1, 2020 Balance at December 31, 2020	$ 1,712 12,264 - 2,235 16,211
	$ 29,723 34,992 - 2,402 67,117
	$ 31,106 18,883 61 4,002 54,052
	$ 30,756 45,160 - 3,586 79,502

(Continued)

218

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(k) Short-term borrowings

The short-term borrowings were summarized as follows:

December 31, 2021 $ 145,005 69,451	December 31, 2021 $ 145,005 69,451	December 31, 2020
		141,853 340,499
$ 214,456		482,352
$ 1,437,822		1,152,195
	0.155%~1.0358%	0.16%~1.23%

For the collateral for short-term borrowings, please refer to note 8.

A key management personnel provided a joint guarantee for the borrowings of the Group from certain financial institutions. Please refer to note 7.

(l) Long-term borrowings

	December 31, 2021	December 31, 2021	Amount $ 306,860 (16,080)
Currency TWD	Rate 1.1966%~ 1.2011%	Maturity year
		2041
			$ 290,780

For the collateral for long-term borrowings, please refer to note 8.

(m) Bonds payable

Total convertible corporate bonds issued Unamortized discounted corporate bonds payable	December 31, 2021
	$ 300,000 (14,212)

(Continued)

219

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Cumulative converted amount Convertible bonds issued balance Embedded derivative-call options (included in financial assets at fair value through profit or loss) Equity components－conversion options (included in capital surplus－share options) Interest expense	(122,200)
	$ 163,588
	$ 574
	$ 18,960
	2021 $ 8,266

(Continued)

220

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Items 1.Total issue amount 2.Par value 3.Maturity date 4.Outstanding period 5.Coupon rate	Third secured domestic convertible bonds
	300,000 thousand 100 thousand January 25, 2021 ~ January 25, 2024 3 years 0%

[6.Redemption at maturity ] The Company redeems the convertible bond at par value by cash from the bondholders when it meets maturity.
[7.Redemption method ]
(1) If the closing price of shares for each of 30 consecutive trading days is at least 130% of the conversion price between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem all the outstanding bonds at their par vale.
(2) If the amount outstanding of bonds is less than 10% of the principal amount between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem the outstanding bonds at their principal amount within five business days before the maturity date.

[8.Conversion period ]

(1) The bondholder can convert its bonds into shares at any time between 3 months after the issuance date and the day before the maturity day.
(2) For the circumstances below, the conversion terminates in compliance with the method issued by the Company.

The closing period in accordance with the applicable laws. The period that starts from the fifteen business days prior to the date of record for determination wherein the shareholders are entitled to receive the distributions or rights to subscribe for new shares in a capital increase for cash, and ends on the date of record for the distribution of the rights/benefits. The period starts from the date of record of the capital decrease and ends one day prior to the reissuance of the trading of shares after the capital decrease.

[9.Conversion price ] The conversion price is 19.3 per share when issuance.

The company announced on July 29th 2021 that due to the allotment of cash dividends on the ordinary shares, the conversion price has been adjusted from NTD 19.1 since August 21st 2021.

[10. Pledge ] For the collateral for bonds payable, please refer to note 8.

(Continued)

221

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(n) Lease liability

The carrying values of the lease liabilities were as follows:

Current Non-current	December 31, 2021 $ 16,117	December 31, 2020 11,916
	$ 25,173	39,229

For the maturity analysis, please refer to note 6(x).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	2021 2020 $ 6,316 4,162
	$ 1,296 2,298
	$ 282 219

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

Total cash outflow for leases

	2021	2020
$	21,953	19,177

(i) Real estate leases

The Group leases building for its employee dormitories and plant offices. The lease terms ranged for a period of 1 to 2 years and 2 to 5 years for employee dormitories and plant offices, respectively. Some of the terms can be extended upon maturity. However, if the option of extension is uncertain, the related expenditures incurred in the covered period cannot be accounted for as lease liabilities.

(ii) Other leases

The Group leases machinery and vehicle, with lease terms ranging for a period of 4 to 5 years. Some of the terms can be extended upon maturity. However, if the option of extension is uncertain, the related expenditures incurred in the covered period would not be accounted for as lease liabilities.

Some buildings leased by the Group have a term with no more than a year are considered as short-term leases. Therefore, the Group decided to apply the exemption for recognition to recognize its right of use assets and lease liabilities.

(Continued)

222

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) Deferred income

The agreement between Yangzhou Edison Opto Corporation and Yangzhou Land And Resources Bureau entitled right of land use of Yangzhou Economic Development Zone, from December, 2006 to December, 2056. The right of land use of CNY 9,788 thousand is subsidized by the Administrative Commission of Yangzhou Economic Development Zone, generating the long-term deferred revenue of CNY 9,393 thousand recognized under other non-current liabilities and is amortized for 50 years to recognize revenue. As of December 31, 2021 and December 31, 2020 the amount of unamortized deferred revenue was $28,523 thousand and $29,514 thousand, respectively.

(p) Employee benefits

(i) Defined benefit plans

The Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:

Present value of the defined benefit obligations Fair value of plan assets	December 31, 2021 $ 20,345 (8,635)	December 31, 2020 21,118 (9,536)
	$ 11,710	11,582

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Group's Bank of Taiwan labor pension reserve account amounted to $8,635 thousand as of December 31, 2021. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(Continued)

223

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

2) Movements in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Consolidated Company were as follows:

Defined benefit obligations at January 1 Current service costs and interest cost Re-measurements of the net defined benefit liability Payment of benefit obligation Defined benefit obligations at December 31	2021 $ 21,118 624 (263) (1,134)	2020 27,168 761 (5,978) (833)
	$ 20,345	21,118

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Consolidated Company were as follows:

Fair value of plan assets at January 1 Interest income Re-measurements of the net defined benefit liability Contributed to plan Payment of benefit obligation Fair value of plan assets at December 31	2021 $ 9,536 73 97 63 (1,134)	2020 9,731 110 279 249 (833)
	$ 8,635	9,536

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Consolidated Company were as follows:

Current service costs Net interest of net liabilities (assets) for defined benefit Operating cost	2021 $ 466 85	2020 457 194
	$ 551	651
	$ 119	302

(Continued)

224

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Operating expenses	432 349
	$ 551 651

(Continued)

225

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

5) Re-measurement of net defined benefit liability (asset) recognized in other comprehensive income

The Group's re-measurement of the net defined benefit liability (asset) recognized in other comprehensive income, was as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	2021 $ 5,345 (360)	2020
		11,602 (6,257)
	$ 4,985	5,345

6) Actuarial assumptions

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

Discount rate Future salary increase rate	December 31, 2021 0.750% 2.500%	December 31, 2020
		0.750% 2.500%

The expected allocation payment to be made by the Consolidated Company to the defined benefit plans for the one-year period after the reporting date is $566 thousand.

The weighted-average lifetime of the defined benefits plans is 15.16 years.

7) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2021 Discount rate (movement of 0.25%) Future salary increasing rate (movement of 0.25%) December 31, 2020	Influences of defined benefit obligation	Influences of defined benefit obligation
	Increased 0.25% (614) 608	Decreased 0.25%
		635 (596)

(Continued)

226

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Discount rate (movement of 0.25%)	(618)	707
Future salary increasing rate (movement of 0.25%)	683	(660)

(Continued)

227

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(ii) Defined contribution plans

The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contribution to the Bureau of the Labor Insurance amounted to $19,767 thousand and $8,378 thousand in 2021 and 2020.

(q) Income taxes

(i) The components of income tax were as follows:

The components of income tax were as follows:
Current tax expense Current period Tax effect of deductible temporary differences Change in unrecognized deductible temporary differences Recognition of unrecognized tax loss in prior periods Income tax expense	For the years ended December 31, 2021 2020 $ 13,546 10,903
		10,903
	7,897 (932) (5,275)	- - -
	$ 15,236	10,903

(Continued)

228

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Reconciliation of income tax and income before tax in 2021 and 2020, was as follows:

Gain before income tax Income tax using subsidiaries tax rate Effect of tax rate in foreign jurisdiction Tax-exempt income Loss of investing foreign company Unrecognized tax loss Changes in unrecognized temporary differences Investment credit Basic income tax Others Total	2021	2020
	$ 142,981 43,726
	$ 28,596 8,745 (1,273) 3,702 (12,084) 6,706 (7,479) (2,004) 9,161 (6,544) (2,709) 6,052 - (1,647) 541 - 483 (4,107)
	$ 15,236 10,903

(ii) Deferred tax assets and liabilities
1) Unrecognized deferred tax liabilities

The consolidated entity is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as at 31 December 2021 and 2020. Also, management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

Aggregated amount of temporary differences related to investment subsidiaries	December 31, 2021 $ 103,895	December 31, 2020
		95,435

2) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Tax effect of deductible Temporary Differences	December 31, 2021 $ 86,210	December 31, 2020
		101,875

(Continued)

229

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Unrecognized tax loss	544,770 543,820
	$ 630,980 645,695

The R.O.C Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Consolidated Company can utilize the benefits therefrom.

(Continued)

230

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

3) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2021 and 2020 were as follows:

Deferred tax assets ：

January 1, 2021

Recognized in profit or loss December 31, 2021 December 31, 2020(as beginnings of year)

Allowance for obsolete inventory	Others	Tax deduction	Total
$ 3,815 (1,271)	7,584 (5,269)	50,354 5,275	61,753 (1,265)
$ 2,544	2,315	55,629	60,488
$ 3,815	7,584	50,354	61,753

Deferred tax liabilities ：

January 1, 2021 Recognized in profit or loss December 31, 2021 December 31, 2020(as beginnings of year)

Equity investment	Others	Total 2,035 425 2,460 2,144
$ 2,035 (878)	- 1,303
$ 1,157	1,303
$ 2,035	109

4) As at December 31, 2021, the expiry years of the Company's unutilized business losses for which no deferred tax assets were recognized are as follows:

Year of loss			Unutilized business loss	Unutilized business loss		Total 82,096 84,365 99,913 93,672 106,788 185,404 101,276	Expiry year
	Edison Opto Corporation $ - 79,911 75,078 93,672 90,158 47,537 28,818	Edison Fund Investment Corporation 82,096 - 2,451 - - 123,117 66,135	Ledionopto Intelligent Technology Corporation - 4,454 22,384 - 16,630 14,670 316	Edison-Egypt Opto Corporation - - - - - 80 5,810	Edison Auto Lighting Corporation - - - - - - 197
2013 2014 2015 2016 2017 2018 2019							2023 2024 2025 2026 2027 2028 2029

(Continued)

231

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2020 2021	- 171 53,303 5,927 4,522 63,923 2030 - 4,043 175 - 1,260 5,478 2031 $ 415,174 278,013 111,932 11,817 5,979 822,915

(Continued)

232

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Assessment of tax

The Company’s tax returns for the years through 2019 were assessed by the Taipei National Tax Administration.

(r) Capital and other equity

As of December 31, 2021 and 2020, the number of authorized ordinary shares were 2,000,000 thousand shares with par value of $10 per share. The total value of authorized ordinary shares was amounted to 200,000 thousand shares . As of December 31, 2021 and 2020, 128,862 thousand and 122,556 thousand of ordinary shares were issued, respectively. All issued shares were paid up upon issuance.

(in thousands of shares) Balance on January 1 Converting corporate bonds Retirement of treasury stocks Retirement of restricted stocks Balance on December 31		Ordinary shares	Ordinary shares
		December 31, 2021	December 31, 2020
		122,556 6,339 - (33)	125,001 - (1,618) (827)
		128,862	122,556

(i) Issuance and cancellation of ordinary shares

The Company cancelled 827 thousand new restricted stock and 1,618 thousand treasury stocks in August 2020. In addition, the Company cancelled 33 thousand new restricted stock in July 2021. All the statutory registration procedures above had been completed as of the reporting date.

The unsecured domestic convertible bonds issued by the Company were converted into 5 thousand shares, 5,679 thousand shares and 655 thousand ordinary shares in the 2[nd] , 3[rd] and 4[th] quarter, respectively, of 2021, with the first two relevant statutory registration procedures had been completed in July and August of 2021.

(ii) Capital surplus

The balances of capital surplus were as follows:

Share capital Employee share options	December 31, 2021 $ 1,500,428 72,142	December 31, 2020 1,439,858 72,142

(Continued)

233

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Difference arising from subsidiary’s share price and its carrying value Restricted stock Conversion options	461 14,381 27,047 27,196 18,960 -
	$ 1,619,038 1,553,577

(Continued)

234

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

According to the ROC Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock, and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring paid-in capital in excess of par value should not exceed 10% of the total common stock outstanding.

On June 16, 2020, the Company’s shareholders approved to distribute the cash dividend of $12,300 thousand by capital surplus. Each share could receive a cash dividend of $0.10081853 from capital reserve.

(iii) Retained earnings

The Company’s article of incorporation stipulate that Company’s net earnings should first be used to offset the prior years’ deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

The dividend policy of the Company is coordinated with the share capital, financial structure, operating status, future development plan, fund requirements, competitions, shareholders’ benefits, etc. by distributing no less than 60% of the distributable earnings every year. Nonetheless, when the distributable earnings are lower than 20% of the common stock outstanding, no distribution shall be made during the year. Dividends may be distributed either by cash or by share. However, if the dividends are to be distributed in cash, it shall be no less than 10% of the total dividends issued.

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

In accordance with the regulation of the Financial Supervisory Commission, a portion of the current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during the earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve, which does not qualify for earnings distribution, to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions.

(Continued)

235

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Earnings distribution

A resolution was made during the shareholders' meeting held on July 15, 2021, to distribute a cash dividend of $40,000 thousand. Each share could receive a cash dividend of $0.33457. A resolution was approved during the shareholders' meeting held on June 16, 2020, to cover the deficit, so there were no earnings distribution.

(iv) Treasury shares
1) The Group purchased $1,618 thousand treasury shares to maintain the credit of the Company and shareholders’ benefits through April to May 2020. The Company decided to retire 1,618 thousand treasury shares, at the amount of $19,832 thousand, via the Board Meeting in August 2020. The related registration procedures were completed as of the reporting date. As of December 31, 2021, 3,000 thousand shares of treasury share has yet to be sold.
2) Ledionopto Lighting Inc., sub-subsidiary of the Company, held 500 thousand shares of the Company’s treasury share. The book value on December 31, 2021 and 2020 were $6,796 thousand and $9,650 thousand, respectively. As of December 31, 2021, all treasury shares were not sold. The market price on December 31, 2021 and 2020, were $23.60 and $19.30 per share, respectively.
3) In compliance with the Securities and Exchange Act, treasury shares held by the Group should not be pledged, and shareholder rights are not entitled before the transfer.
(v) OCI accumulated in reserves, net of tax

Balance at January 1, 2021 Share-based payment Exchange differences on foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (17,426) - - (134,814)	Deferred compensation arising from issuance of restricted stock	Total
	$ (177,025) - $ (6,583) -		(6,378) 4,522 - -	(200,829) 4,522 (6,583) (134,814)

(Continued)

236

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Restrict employee rights stock failure - - 479 479 Balance at December 31, 2021 $ (183,608) (152,240) (1,377) (337,225)

(Continued)

237

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Balance at January 1, 2020 Share-based payment Exchange differences on translation of foreign financial statements Unrealized loss of financial assets measured at fair value through other comprehensive income Balance at December 31, 2020	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (45,780) - - 28354	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (45,780) - - 28354	Deferred compensation arising from issuance of restricted stock	Total
	$ (198,918) - 21,893 -			(19,575) 13,197 - -	(264,273) 13,197 21,893 28,354
	$ (177,025)	, (17426)		(6,378)	(200,829)

(s) Share-based payment
(i) Restricted stocks
- 1) At the board of directors’ meeting held on June 20, 2018, the Company decided to award 2,000 thousand new shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the Financial Supervisory Commission, R.O.C.. On July 2, 2019, the board of directors issued all the restricted stock. The fair value on the grant date was 14.50 per share.

Employees with restricted stock awards are entitled to purchase the Company’s shares at the price of 10 with the condition that these employees continue to work for the Company for the following four years. 40%, 30% and 30%of the restricted shares of stock is vested in year 1, 2 and 3 respectively. The restricted stock is kept by a trust, which is appointed by the Company, before it is vested. These shares of stock shall not be sold, pledged, transferred, gifted or by any other means of disposal to third parties during the custody period. If the shares remain unvested after the vesting period, the Company will repurchase all the unvested shares at the issue price, and cancel the shares thereafter.

Details of the restricted stock of the Company were as follows:

(Continued)

238

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Outstanding at January 1 (number) Granted during the year (number) Forfeited during the year (number) Outstanding at December 31 (number)	For the three months ended December 31, 2021 2020 $ 1,173 2,000 (570) - (33) (827)	For the three months ended December 31, 2021 2020 $ 1,173 2,000 (570) - (33) (827)
	2021 $ 1,173 (570) (33)
	$ 570	1,173

(Continued)

239

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Expense recognized in profit or loss

The Group incurred expenses of share-based arrangements in 2021 and 2020 as follows:

Expenses resulting from restriction of employee stock options	For the years ended December 31, 2021 2020 $ 4,522 1,206
	2021 $ 4,522

(t) Earnings per share

The calculation of basic earnings per share and diluted earnings per share is as follows:

Basic earnings per share Profit of the Company for the year Weighted average number of ordinary shares (in thousands of shares) Basic earnings per share Diluted earnings per share Profit of the Company for the year Effect of dilutive potential ordinary share Profit attributable to common stockholders of the Company (including effect of dilutive potential ordinary share) Weighted average number of ordinary shares (in thousands of shares) Effect of employee share bonus (in thousands of shares) Effect of convertible bonds (in thousands of shares) Effect of restricted employee shares unrested (in thousands of shares) Weighted average number of ordinary shares (in thousands of shares) Diluted earnings per share (in New Taiwan Dollars)	For the years ended December 31, 2021 2020 $ 120,258 42,154	For the years ended December 31, 2021 2020 $ 120,258 42,154
	2021 $ 120,258
		42,154
	120,537	119,058
	$ 1.00	0.35
	$ 120,258 6,613	42,154 -
	$ 126,871	42,154
	120,537 296 11,965 871	119,058 140 - 1,589
	133,669	120,787
	$ 0.95	0.35

(Continued)

240

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(u) Revenue from contracts with customers

(i) Revenue detail

		2021			Total 796,012 804,207 182,293 31,533 291,819
The Company	Yangzhou Edison Opto Corporation 290,231 - - - 3,605	Yangzhou Edison-Litek Opto Corporation 42,023 1,352 - - -	Edison-Litek Opto Corporation - 394,652 5,950 - 4,002	Other 7,559 132,691 949 1,257 16,205
$ 823,156 382,232	293,836	43,375	404,604	158,661	2,105,864
$ 36,955 182,337 261,668 11,829 494,111 167,938 - - 30,422 20,128	- 230,750 52,061 - 11,025	- - - 42,983 392	- - - 400,602 4,002	- 41,334 98,883 18,315 129	219,292 545,581 812,993 461,900 66,098
$ 823,156 382,232	293,836	43,375	404,604	158,661	2,105,864

		2020			Total 714,930 591,347 99,593 172,190 323,178
The Company	Yangzhou Edison Opto Corporation 269,985 - - - 336	Yangzhou Edison-Litek Opto Corporation 52,706 2,583 - - 17	Edison-Litek Opto Corporation - 293,828 625 - 22,182	Other 3,429 102,729 573 17,789 12,248
$ 780,292 341,916	270,321	55,306	316,635	136,768	1,901,238
$ 35,217 189,064 269,977 9,111 464,950 141,997 - - 10,148 1,744	- 221,882 40,098 - 8,341	- - - 54,351 955	- - - 316,037 598	- 24,701 86,034 23,861 2,172	224,281 525,671 733,079 394,249 23,958
$ 780,292 341,916	270,321	55,306	316,635	136,768	1,901,238

(Continued)

241

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Contract balances

Contract balances
Note receivables Accounts receivables Less: Loss allowance Total	December 31, 2021 $ 10,856 450,951 (17,541)	December 31, 2020
		23,068 433,748 (32,238)
	$ 444,266	424,578

For details on accounts receivable and allowance for impairment, please refer to note 6(e).

(v) Remuneration to employees, directors

In accordance with the Articles of incorporation, the Company should contribute 5%~15% of the profit as employee remuneration and less than 3% as directors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The amount of remuneration of each director and of remuneration for employees entitled to receive the abovementioned employee remuneration is approved by the Board of Directors. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

For the years ended December 31, 2021 and 2020, the Company accrued and recognized its employee remuneration amounting to $6,500 thousand and $2,250 thousand, respectively; as well as its remuneration to directors amounting to $1,500 thousand and $450 thousand, respectively. These amounts were calculated by using the Company’s pre-tax net profit for the period before deducting the amounts of the remuneration to employees and directors, multiplied by the distribution of ratio of the remuneration to employees and directors based on the Company’s articles of incorporation, and expensed under operating costs or expenses. If there would be any changes after the reporting date, the changes shall be accounted for as changes in accounting estimates and recognized as profit or lost in the following year. The amounts, as stated in the consolidated financial statements, are identical to those of the actual distributions for 2021 and 2020. The related information can be accessed from the Market Observation Post System website.

(w) Non-operating income and expenses

(i) Interest income

The details of net other income were as follows:

For the years ended	For the years ended
December 31,
2021	2020

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Interest income from bank deposits Other interest income	$ 7,304 7,754 7,317 11,168
	$ 14,621 18,922

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Other income

Other income-others	For the years ended December 31, 2021 2020 $ 9,535 24,537
	2021 $ 9,535

(iii) Other gains and losses

The details of other gains and losses were as follows:

Net gain on disposal of Property, plant, and equipment Net gain on financial assets at fair value Net losses on foreign exchange Others	For the years ended December 31, 2021 2020 $ 2,972 9,189 6,295 - (8,052) (566) (12,518) (2,802)	For the years ended December 31, 2021 2020 $ 2,972 9,189 6,295 - (8,052) (566) (12,518) (2,802)
	2021 $ 2,972 6,295 (8,052) (12,518)
	$ (11,303)	5,821

(iv) Finance costs

The details of finance costs were as follows:

Interest expenses	For the years ended December 31, 2021 2020 $ 19,945 9,398
	2021 $ 19,945

(x) Financial instruments
(i) Credit risk
- 1) Credit risk exposure

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

2) Concentration of credit risk

Accounts receivable were due from many customers. Therefore, there was no concentration of credit risk. In order to reduce the credit risk of accounts receivable, the Company continually evaluates each customer’s financial situation. Otherwise, the customer will have to provide bank guarantees or collaterals.

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Receivable

For credit risk exposure of note and trade receivables, please refer to note 6(e). Other financial assets at amortized cost includes other receivables and time deposits.

All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. Regarding how the financial instruments are considered to have low credit risk, please refer to note 4(g).

(ii) Liquidity risk

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

Carrying amount $ 451,865 69,451 41,290 315,614 111,795 163,588	Contractual cash flows Within 6 months (487,200) (155,018) (69,605) (69,605) (50,081) (10,376) (315,614) (315,614) (111,795) (111,795) (177,800) -	6-12 months	1-2years	2-5years Over 5years (57,256) (245,644) - - (16,871) - - - - - (177,800) -
		(9,812) - (10,218) - - -	(19,470) - (12,616) - - -
$ 1,153,603	(1,212,095) (662,408)	(20,030)	(32,086)	(251,927) (245,644)
$ 161,853 320,499 51,145 369,907 110,128	(161,999) (161,999) (320,622) (320,622) (65,684) (9,663) (369,907) (369,907) (110,128) (110,128)	- - (9,204) - -	- - (18,051) - -	- - - - (28,766) - - - - -
$ 1,013,532	(1,028,340) (972,319)	(9,204)	(18,051)	(28,766) -

The Group does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(Continued)

246

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Currency risk
1) Exposure to foreign currency risk

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

Fi		December 31, 2021			December 31, 2020
	Foreign currency	Exchange rate	TWD	Foreign currency	Exchange rate	TWD
	$ 11,161 10,264 31,420 15,932 2,709 2	USD/TWD= 27.6800 USD/CNY= 6.5757 CNY/TWD= 4.3440 USD/TWD= 27.6800 USD/CNY= 6.3757 CNY/TWD= 4.3440	308,936 284,272 136,488 440,988 75,029 9	6,769 4,448 28,045 15,722 3,424 129	USD/TWD= 28.4800 USD/CNY= 6.5249 CNY/TWD= 4.3770 USD/TWD= 28.4800 USD/CNY= 6.5249 CNY/TWD= 4.3770	192,781 126,679 122,753 447,763 97,516 565
Fi

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade and other receivables, financial assets at fair value through other comprehensive income, loans and borrowings; and trade and other payables that are denominated in foreign currency. A strengthening (weakening) of 5% of the TWD against the USD and CNY as at December 31, 2021 and 2020 would have increased (decreased) the equity by $10,684 thousand and $(5,182) thousand due to cash flow hedges. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for prior year.

Since the Consolidated Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2021 and 2020, foreign exchange loss (including realized and unrealized portions) amounted to $(8,052) thousand and $(566) thousand, respectively.

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Fair value of financial instruments

1) The fair value of financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income (available for sale financial assets) is ’
measured on a recurring basis. The carrying amount and fair value of the Group s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required :

	December 31, 2021	December 31, 2021	December 31, 2021	Total 1,582
Book Value $ 1,582		Fair Value
	Level 1 1,582	Level 2 -	Level 3 -
$ 574	-	574	-	574
$ 1,176,003 444,266 6,205 8,720	- - - -	- - - -	- - - -	- - - -
1,635,194	-	-	-	-
$ 1,637,350	1,582	574	-	2,156
$ 214,456 306,860 315,614 111,795 163,588 41,290	- - - - - -	- - - - - -	- - - - - -	- - - - - -
$ 1,153,603	-	-	-	-

(Continued)

248

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	December 31, 2020	December 31, 2020	December 31, 2020	Total 131,960
Book value $ 131,960		Fair value
	Level 1 -	Level 2 -	Level 3 131,960
$ 1,249,755 424,578 2,028	- - -	- - -	- - -	- - -
1,676,361	-	-	-	-
$ 1,808,321	-	-	131,960	131,960
$ 482,352 369,907 110,128 51,145	- - - -	- - - -	- - - -	- - - -
$ 1,013,532	-	-	-	-

2) Reconciliation of Level 3 fair values

January 1, 2021 Total gains and losses recognized: In other comprehensive income December 31, 2021 January 1, 2020 Total gains and losses recognized: In other comprehensive income December 31, 2020	Fair value through other comprehensive income $ 131,960 (131,960)
	$ -
	$ 106,631 25,329
	$ 131,960

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 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 years	ended
		December	31,
		2021	2020
Total gains and losses recognized:
In other comprehensive income, and presented	$	(131,960)	25,329
in“unrealized gains and losses from
financial assets at fair value through other
comprehensive income”

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

The Group’s financial instruments that use Level 3 inputs to measure fair value include “ – ” financial assets measured at fair value through profit or loss debt investments and “ fair value through other comprehensive income (available-for-sale financial assets) – equity investments”.

Most fair values in Level 3 include one significant unobservable input, and the fair values of investments in equity instrument without active market consist of multiple significant unobservable inputs. Therefore, significant unobservable inputs of investments in equity instrument without active market are independent with no inter-relationship.

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income equity investments without an active market	Valuation technique Weighted average of market comparable companies and asset-based approach	Significant unobservable inputs ‧equity ratio multiple ‧Discount for lack of marketability ‧Discount of control	Inter-relationship between significant unobservable inputs and fair value measurement
			‧The higher multiple, the higher the fair value ‧The higher the discount for lack of marketability, the lower the fair value ‧The higher the discount of control, the lower the fair value

(Continued)

250

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Fair value measurements in Level 3 － sensitivity analysis of reasonably possible alternative assumptions

The fair value measurement of financial instruments by the Consolidated Company is reasonable, but the use of different evaluation models or evaluation parameters may result in different evaluation results. For fair value measurements in Level 3, if the evaluation parameters change, would have the following effects of profit or loss or other comprehensive income:

comprehensive income:
December 31, 2021 Financial assets fair value through other comprehensive income December 31, 2020 Financial assets fair value through other comprehensive income	Input	Change	Recognized in other comprehensive income
			Favorable change	Unfavorable change
	1.76 2.28	1% 1%	219 1,320	(219) (1,320)

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

(y) Financial risk management

(i) Overview

The Consolidated Company have exposures to the following risks from its 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.

(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 established the Risk Management Committee, which is responsible for developing and monitoring the Consolidated Company’s risk management policies. The committee reports regularly to the Board of Directors on its activities.

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(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 and investments in debt securities.

As the Consolidated Company has a large number of Consolidated Company of customers, not significantly focused on dealing with a single customer and the sales area are scattered, so there is no significant concentration of the risk of account receivable. In order to reduce the credit risk, the Company also regularly assess the financial status of customers, if necessary, will require customers to provide security or guarantee.

The credit risk of bank deposits and other financial instruments is measured and monitored by the Consolidated Company finance department. As a result of the Consolidated Company's transactions and compliance with others are good credit banks, no significant compliance concerns, so there is no significant credit risk.

(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 managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Consolidated Company’s reputation. At present, the capital and working capital of the merged company is sufficient to meet all the contractual obligations, so there is no liquidity risk due to the inability to raise funds to meet the contractual obligations.

(Continued)

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EDISON OPTO 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, and equity prices, will affect 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, while optimizing the return.

1) Currency risk

The Consolidated Company is exposed to currency risk on sales, purchases, and borrowings. The functional currency of the Consolidated Company is dominated by TWD and also has USD and CNY. The main currency of the transaction is TWD, USD and CNY.

The Consolidated Company borrows money in USD from banks to balance the accounts receivable against USD and reduces the risk of loss of USD accounts receivable assets due to exchange rate fluctuations.

The monetary assets and liabilities denominated in other foreign currencies, when a short-term imbalance occurs, the Consolidated Company is required to buy or sell foreign currency at instant exchange rate to ensure that the net risk is maintained at an acceptable level.

The Consolidated Company do not use derivative financial assets for hedging.

2) Interest rate risk

The borrowing of the Consolidated Company is a floating interest rate debt, so the market interest rate changes will make the effective interest rate changes, and the future cash flow fluctuations. The Consolidated Company do not hedge through interest rate swap contracts.

3) Other market price risk

In addition to supporting the expected consumption and sales demand, the Consolidated Company did not sign a commodity contract.

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(z) Capital management

The Group’s objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders, to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilities.

The Group and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt.

The Group’s debt-to-equity ratio at the end of the reporting period as at December 31, 2021 and 2020, were as follows:

December 31, 2021 $ 1,262,690 (1,176,003)	December 31, 2021 $ 1,262,690 (1,176,003)	December 31, 2020 1,110,591 (1,249,755)
$ 86,687		(139,164)
$ 2,784,063 -		2,653,662 -
$ 2,784,063		2,653,662
	3.17%	- %

(aa) Financing activities not affecting current cash flow

The Group’s financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020, were as follows:

Non-cash changes

Short-term borrowings Lease liabilities Long-term borrowings	January 1, 2021 Cash Flows Foreign exchange movement Changes in lease payments Discount and premium amortization Conversition options December 31, 2021 $ 482,352 (269,415) 1,519 - - - 214,456 51,145 (20,375) (338) 10,858 - - 41,290 - 306,860 - - - - 306,860

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(including current portion) Bonds payable Total liabilities from financing activities	- 303,000 - - (17,212) (122,200) 163,588
	$ 533,497 320,070 1,181 10,858 (17,212) (122,200) 726,194

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Non-cash changes

Short-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2020 Cash Flows Foreign exchange movement Changes in lease payments December 31, 2020 $ 283,395 200,217 (1,260) - 482,352 24,315 (12,498) (13) 39,341 51,145
	$ 307,710 187,719 (1,273) 39,341 533,497

(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 statements:

Name of related party Relationship with the Group Wu, Chien-Jung The Company’s chairman

(b) Significant transactions with related parties
(i) Guarantee

A key management personnel provided a joint guarantee for the borrowings of the Group from certain financial institutions.

Key management personnel compensation comprised:

Short-term employee benefits Post employment benefits Share-based payments	For the years ended December 31, 2021 2020 $ 30,445 34,848 766 732 1,554 273	For the years ended December 31, 2021 2020 $ 30,445 34,848 766 732 1,554 273
	2021
	$ 30,445 766 1,554	34,848 732 273
	$ 32,765	35,853

Please refer to note 6(s) for further explanations related to share-based payment transactions.

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets	Object	December 31, 2021 $ 12,259 20,000 94,987 10,376 199,931 529,083	December 31, 2020 17,312 - 114,278 8,179 202,015 -
Deposits (classified under current assets) Deposits (classified under current assets) Deposits (classified under current assets) Deposits (classified under non-current assets) Property, plant, and equipment Property, plant, and equipment	The guarantee letter of credit Tender deposit (note) Short-term loans Deposit to customs Guarantee of Corporate Bonds Long-term loans
		$ 866,636	341,784

note: please refer to note 9 for further explainations.

(9) Commitments and contingencies:

(a) The Consolidated Company’s unrecognized contractual commitments are as follows:

Acquisition of property, plant and equipment	December 31, 2021 $ 32,639	December 31, 2020 429,869

(b) The Company won the bid for “The third District of Tainan’s city LED light construction project” in May 2021, and according to the agreement between both parties, the pledge of the fixed deposit is provided as a performance bond amounting to $20,000 thousand, recognized as “other current asset”. However, the Company failed to meet certain conditions stipulated in the contract. Hence, in November 2021, the Company received a letter from the Tainan City Government Works Bureau stating that the aforesaid contract will be terminated; moreover, implementing that the pledged deposit of $20,000 thousand will be confiscated, plus, an additional of $5,000 thousand will be demanded from the Company as compensation. In January 2022, the Company has filed an objection against the decision made by the Tainan City Government Work, and demanded a full refund of its pledged deposit and the disregard of the compensation amounting to $5,000 thousand. The Company evaluated that it has a big probability of winning the case. A legal process has yet to

(Continued)

258

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

be carried out depending on the outcome of the situation.

(10) Losses Due to Major Disasters: None.

(11) Subsequent Events:

Please refer to note 9 for details.

(Continued)

259

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(12) Other:

(a) A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

follows:
By function By item	For the years ended December 31,
	2021			2020
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Directors’remuneration Others Depreciation Amortization	154,798 8,975 11,821 ‐ 16,183 89,617 52	156,642 10,728 8,497 2,457 8,955 32,353 2,292	311,440 19,703 20,318 2,457 25,138 121,970 2,344	152,708 7,825 3,991 ‐ 15,367 95,184 140	145,422 9,702 5,038 924 8,865 27,891 2,355	298,130 17,527 9,029 924 24,232 123,075 2,495

(Continued)

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EDISON OPTO 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:

(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(Note 2)	Ending balance (Note 2)	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 twoparties	Reasons for short-term financing	Allowance for bad debt	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1 2 3	Yangzhou Edison Opto Corporation Yangzhou Edison Opto Corporation Edison-litek Opto Corporation Limited	Yangzhou Edison-Litek Opto Corporation Edison- Opto (Dong Guan) Co., Ltd. Edison-litek Opto Corporation	Other receivables due from related parties Other receivables due from related parties Other receivable due from related parties	Yes Yes Yes	26,318 (CNY6,000 thousand) 43,863 (CNY10,000 thousand) 31,389 (USD1,100 thousand)	26,064 (CNY6,000 thousand) 43,440 (CNY10,000 thousand) 30,448 (USD1,100 thousand)	- - -	1% 1% 1%	2 2 2	- - -	Short-term financing Short-term financing Short-term financing	- - -	- - -	- - -	237,762 (Note1) 237,762 48,934 (Note1)	475,525 (Note1) 475,525 97,868 (Note1)

Note 1: The allowable aggregate amount of financing provided to others cannot exceed 40% of the lender's stockholders' equity, the maximum amount of financing provided to an individual counterparty cannot exceed 20% of the lender's stockholders' equity.
Note 2: The amount was the financing facility approved by the Board of Directors.

Note 3: Based on the Company's guidelines, the allowable amounts of financing are as follows:

(1) Loan arrangement for business transaction
(2) Short-term financing purpose

Note 4: The amount was eliminated in the consolidated financial statements.

(ii) Guarantees and endorsements for other parties: None.

(Continued)

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EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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

(In Thousands of shares)

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Highest Percentage of ownership (%)	Note
				Shares/Units (thousands)	Carryingvalue	Percentage of ownership (%)	Fair value
Edison Fund Investment Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation	Everlight Electronics Co., Ltd. Taipei Fubon Bank-Qatar Government International Bonds LED Litek Co., Ltd.	NO NO NO	Current financial assets at fair value through profit or loss Financial assets measured at amortized cost-current Financial assets through other fair value measurements- non- current	30 - 124	1,582 8,720 -	- % - % 15.39%	1,582 8,720 -	- % - % 15.39%

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

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
Yangzhou Edison Opto Corporation Yangzhou Edison Opto Corporation	Bank of Communications Co., Ltd. RMB structured deposits of Bank of Communications - RMB financial product (exchange rate related) Bank of Communication Co., Ltd. RMB structured deposits of Bank of communications-R MB financial product (exchange rate and binary option related)	Current financial assets at fair value through profit or loss Current financial assets at fair value through profit or loss	Bank of Communication Co., Ltd. Bank of Communication Co., Ltd.	- -	- -	- -	- -	1,492,164 (RMB343,500 thousand) 364,896 (RMB84,000 thousand)	- -	1,496,212 (RMB344,432 thousand) 365,361 (RMB84,107 thousand)	1,492,164 364,896	4,048 465	- -	- -

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	If the counter-party is a related party, disclose theprevious transfer information	If the counter-party is a related party, disclose theprevious transfer information	If the counter-party is a related party, disclose theprevious transfer information	If the counter-party is a related party, disclose theprevious transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Taiwan Tech. Square 17F	2020.11	536,000	536,000	Telin Construction Group	Non-related				-	Appraisal of real estate	Group operating demand	None

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

(Continued)

262

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(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	Relatedparty	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	Unitprice	Payment terms	Endingbalance	Percentage of total notes/accounts receivable (payable)
Edison Opto (Dong Guan) Co., Ltd. The Company Yangzhou Edison Opto Corporation The Company Yangzhou Edison-Litek Opto Corporation Edison-Litek Opto Corporation	The Company Edison Opto (Dong Guan) Co., Ltd. The Company Yangzhou Edison Opto Corporation Edison-Litek Opto Corporation Yangzhou Edison-Litek Opto Corporation	Parents Subsidiary Parent Company Subsidiary Sub-subsidiary Sub-subsidiary	Sales Purchase Sales Purchase Sales Purchase	(254,343) 254,343 (329,985) 329,985 (193,857) 193,857	(42.46)% 31.24% (49.05)% 40.53% (81.72)% 69.46%	60 days 60 days 60 days 60 days 60 days 60 days	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	- - - - - -	7,183 (7,183) 106,686 (106,686) 34,694 (34,694)	7.49% (4.14)% 61.19% (47.75)% 56.31% (59.07)%

Note: The above transactions have been written off during the preparation of the consolidated report.

(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)

Name of company	Counter- party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period(note 1)	Allowance for bad debts
					Amount	Action taken
Yangzhou Edison Opto Corporation	The Company	Sub-subsidiary company	106,686 (USD3,854 thousand)	5.07	-		86,956 (USD 3,141 thousand)	-

Note 1: As of February 10, 2022. Note 2 : The amount was eliminated in the consolidated financial statements.

(ix) Trading in derivative instruments: None
(x) Business relationships and significant intercompany transactions:

(In Thousands of New Taiwan Dollars)

Nature of Intercompany transactions

(Continued)

263

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

No.	Name of company	Name of counter-party	relationship	Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 0 0 0 1 1	The Company The Company The Company The Company Yangzhou Edison Opto Corporation Yangzhou Edison Opto Corporation	Yangzhou Edison Opto Corporation Edison Opto (Dong Guan) Co., Ltd. Edison Opto USA Corporation Edison- Opto USA Corpotation The Company The Company	1 1 1 1 2 2	Sales Accounts receivable Accounts receivable Accounts receivable Sales Accounts receivable	26,604 54,118 51,563 8,045 329,985 106,686	60 days 60 days 60 days 60 days 90 days 90 days	1.26% 12.57% 2.45% 0.20% 15.71% 2.63%

(Continued)

264

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

==> picture [462 x 229] intentionally omitted <==

----- Start of picture text -----

Nature of Intercompany transactions
Percentage of the
No. Name of company Name of counter-party relationship Account name Amount Trading terms revenue or total assetsconsolidated net
1 Yangzhou Edison Opto Edison-Egypt Opto 3 Sales 47,579 90 days 2.26%
Corporation Corporation
1 Yangzhou Edison Opto Edison-Egypt Opto 3 Accounts 15,234 90 days 0.38%
Corporation Corporation receivable
1 Yangzhou Edison Opto Edison Opto (Dong Guan) 3 Sales 24,241 90 days 1.15%
Corporation Co., Ltd.
1 Yangzhou Edison Opto Edison Opto (Dong Guan) 3 Accounts 18,401 90 days 0.45%
Corporation Co., Ltd. receivable
2 Edison Opto (DongThe Company 2 Sales 254,343 90 days 12.13%
Guan) Co., Ltd.
3 Edison Opto (DongThe Company 2 Accounts 7,183 90 days 0.18%
Guan) Co., Ltd. receivable
3 Yangzhou Edison-Litek Edison Litek Opto 3 Sales 193,857 90 days 9.21%
Opto Corporation Corporation
3 Yangzhou Edison-Litek Edison Litek Opto 3 Accounts 34,694 90 days 0.86%
Opto Corporation Corporation receivable
4 Edison Opto The Company 2 Accounts 11,109 90 days 0.27%
Corporation receivable
----- End of picture text -----

Note 1: (a) 0 represents The Company (b) 1 and thereafter represent subsidiaries
Note 2: The relationships between guarantor and guarantee are as follows: (a) 1 represents parent to subsidiary
(b) 2 represents subsidiary to parent
(c) 3 represents subsidiary to subsidiary

Note 3: Disclose only operating revenue and accounts receivable; related purchase, expense, and prepayment are neglected.

(b) Information on investees:

The following is the information on investees of The Company (excluding information on investees in Mainland China):

(In Thousands of Shares)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Highest	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value	Percentage of ownership
The Company The Company The Company The Company The Company The Company The Company Best Opto Corporation Edison Fund Investment Corporation	Edison Opto Corporation Ledison Opto Corporation Best Opto Corporation Edison Fund Investment Corporation Edison-Litek Opto Corporation Limited Edison-Litek Opto Corporation Edison-Egypt Opto Corporation Best Led Corporation Edison Opto USA Corporation	Samoa Samoa Samoa Taiwan I Hong Kong I Taiwan Taiwan Samoa I USA	Selling of LED components and modules Selling of LED components and modules Selling of LED components and modules nvestment nvestment Selling of LED components and modules Selling of LED components and modules nvestment Selling of LED components and modules	1,041 145,991 1,550,826 686,000 167,661 64,500 25,000 1,550,826 6,392	1,041 145,991 1,550,826 655,000 167,661 48,900 47,940 1,550,826 6,392	30 4,500 50,000 25,000 5,500 11,000 2,500 50,000 220	100.00% 100.00% 100.00% 100.00% 44.58% 78.57% 100.00% 100.00% 55.00%	6,204 229,348 1,177,189 77,945 109,074 189,903 21,204 1,188,816 30,679	100.00% 100.00% 100.00% 100.00% 61.80% 100.00% 100.00% 100.00% 55.00%	(140) 10,957 29,214 8,647 (1,948) 37,259 12,432 29,214 16,710	(140) 10,425 27,249 8,488 (868) 36,712 12,432 29,214 9,191	- - - - - - - - -

(Continued)

265

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Name of investor Edison Fund Investment Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation Edison-Litek Opto Corporation	Name of investee	Location	Main businesses and products	Original inv	estment amount	Balance	as of December 31	, 2021	Highest	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value	Percentage of ownership
	Ledionopto Intelligent Technology Corpoation Davinci Opto Corporation (Note 1) Edison Auto Lighting Corporation Edison-Litek Opto Corporation Limited	Taiwan Taiwan Taiwan Hongkong	Selling of LED components and modules Selling of LED components and modules Selling of LED components and modules Investment	113,185 - 7,570 33,187	113,185 5,000 5,100 33,187	2,200 - 1,000 3,463	100.00% - % 100.00% 28.06%	19,684 - 4,020 68,654	100.00% 100.00% 100.00% 28.06%	(4,221) - (1,260) (1,948)	(4,221) - (1,221) (547)	- - - -

Note 1: The dissolution of Company has registered in February, 2021.

(c) Information on investment in mainland China:
(i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment (Note 1)	Accumulated outflow of investment from Taiwan as of January1,2021	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31,2021	Net income (losses) of the investee	Percentage of ownership	Highest Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in currentperiod
					Outflow	Inflow
Edison Opto (Dong Guan) Co., Ltd. DongGuan Davinci Opto Co., Ltd. (note ) Yangzhou Edison Opto Corporation Yangzhou Aichuan Electronic Trade Corporation Yangzhou Edison-Litek Opto Corporation	Manufacturing and selling of LED components and modules Manufacturing and selling of LED components and modules Manufacturing and selling of LED components and modules Selling of LED components and modules Manufacturing and selling of LED components and modules	145,991 (USD 4,500 thousand) - 1,550,826 (USD 50,000thousand) 2,148 (RMB 500thousand) 270,552 (USD 8,875thousand)	(b) (b) (b) (c) (b)	111,408 (USD 3,317 thousand) 52,255 (USD 1,714thousand) 1,550,826 (USD 50,000thousand) - 167,661 (USD 5,500thousand)	- - - - -	- - - - -	111,408 (USD 3,317thousand) 52,255 (USD 1,714thousand) 1,550,826 (USD 50,000thousand) - 167,661 (USD 5,500thousand)	10,957 (USD 391 thousand) - 29,214 (USD 1043 thousand) 40 (RMB 9 thousand) (2,241) (USD (80)thousand)	100.00% -% 100.00% 100.00% 72.64%	100.00% 100.00% 100.00% 100.00% 72.64%	10,957 (USD 391 thousand) - 29,214 (USD 1,043thousand) 40 (RMB 9 thousand) (1,628) (USD (58)thousand)	235,521 (USD 8,509 thousand) - 1,188,812 (USD 42,948thousand) 2,233 (RMB 514 thousand) 154,821 (USD 5,593thousand)	34,583 (USD 34,583 thousand) - - - -

Note 1: Investments are made through one of three ways:

(a) Direct investment from Mainland China
(b) Indirect investment from third-party country
Edison Opto (Dong Guan) Co., Ltd. is indirectly invested by the company through Ledison Opto Corporation.
Dong Guan Davinci Opto Corporation is indirectly invested by Ledion Opto Lighting Inc. through Led Plus Limited.
Yangzhou Edison Opto Corporation is indirectly invested by Best Opto Corporation and Best Led Corporation.
Yangzhou Edison-Litek Opto Corporation is indirectly invested by the Company and Edison-Litek Opto Corporation Limited.

Yangzhou Aichuan Trade Corporation is 100% invested by Yangzhou Edison Opto Corporation.
Note 2: The dissolution has registered in 2020.

(Continued)

266

EDISON OPTO CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

Company Name	Accumulated Investment in Mainland China as of December31,2021	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
The Company	1,829,895 (USD58,817 thousand)	1,654,434 (note 3) (USD59,770 thousand)	Note 1
Ledionopto Intelligent Technology Corpoation	52,255 (note 2) (USD1,714 thousand)	47,444 (USD1,714 thousand)	-

Note 1: Since the Company acquired the permission from Industrial Development Bureau at September 9, 2019, Ministry of Economic Affairs, the upper limit on investment is not applicable, under “Regulations Governing The Permission of Commercial Behavior in Mainland China”, Article 3 (documentation reference number: 10820423850).
Note 2: DongGuan Davinci Opto Co., Ltd., in which Ledionopto Intelligent Technology Corpoation indirectly invested USD2,000 thousand, had completed the cancellation of its business registration and liquidation with the approval of Investment Commission in June 2020. The investment capital amounting to USD286 thousand had been remitted to Ledionopto. However, according to the regulation, the remittance to Mainland China amounting to USD1,714 thousand had been included in the accumulated investment amount.
Note 3: The indirect investment in Yangzhou Ledison Opto Corporation through the Company, with the amount of USD1,000 thousand, was authorized by the Investment Commission. Yangzhou Ledison had completed its liquidation in 2017 and the remitted capital amount of USD1,230 thousand had been cancelled by the Investment Commission. Therefore, the difference between the Accumulated Investment in Mainland China and Investment Amounts Authorized by Investment Commission amounting to USD230 thousand had been deducted by the Company.

(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” and "Business relationships and significant intercompany transactions."

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Lighting Investment Corporation	16,556,182	13.50%
Epistar Corporation	9,424,000	7.68%

(Continued)

267

EDISON OPTO CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

(a) General information

The Company uses the income from operations as the measurement for segment profit and the basis of performance assessment. the Consolidated Company has six reportable segments, which are respectively the Company, Edison Opto (Dong Guan) Co., Ltd., Yangzhou Edison Opto Corporation, Yangzhou Edison-Litek Opto Corporation, Edison-Litek Opto Corporation and other subsidiaries. The Company engages mainly in the research, manufacturing, and selling of the LED components and modules, and lightning transmitter; Edison Opto (Dong Guan) Co., Ltd. engages mainly in the manufacturing and selling of the lightning transmitter; Yangzhou Edison Opto Corporation mainly engages in selling and manufacturing of LED components and modules; Yangzhou Edison-Litek Opto Corporation mainly engages in selling and manufacturing of lightning devices for vehicle.

The reportable segments are the Consolidated Company’s strategic divisions. They offer different products and services, and are managed separately because they require different technology and marketing strategies. Most of the strategic divisions were acquired separately. The management of the acquired divisions remains employed by the Consolidated Company.

(b) Information about reportable segments and their measurement and reconciliations

The Consolidated Company uses the internal management report that the chief operating decision maker reviews as the basis to determine resource allocation and make a performance evaluation. The internal management report includes profit before of taxation, but not includes any extraordinary activity and foreign exchange gain or losses because of taxation, extraordinary activity, and foreign exchange gain or losses are managed on a Consolidated Company basis, and hence they are not able to be allocated to each reportable segment. In addition, not all reportable segments include depreciation and amortization of significant non-cash items. The reportable amount is similar to that in the report used by the chief operating decision maker.

The operating segment accounting policies are similar to those described in note 4 “significant accounting policies” except for the recognition and measurement of pension cost, which is on a cash basis.

The Consolidated Company treated intersegment sales and transfers as third-party transactions. They are measured at market price.

The Consolidated Company operating segment information and reconciliation are as follows:

		Fo	r theyears ended	December 31, 20	21
The Company l $ 823,156 136,158	Edison Opto (Dong Guan) Co., Ltd. 382,232 312,866	Yangzhou Edison Opto Corporation 293,836 427,965	Yangzhou Edison-Litek Opto Corporation 43,375 193,858	Edison-Litek Opto Corporation 404,604 1,882	Others 158,661 8,908	Reconciliation and elimination Total - 2,105,864 (1,081,637) -
$ 959,314	695,098	721,801	237,233	406,486	167,569	(1,081,637) 2,105,864
$ 121,948	9,381	28,566	(1,947)	46,352	33,792	(95,111)	142,981

268

		Fo	r theyears ended	December 31, 20	20
The Company l $ 780,292 137,693	Edison Opto (Dong Guan) Co., Ltd. 341,916 188,878	Yangzhou Edison Opto Corporation 270,321 444,409	Yangzhou Edison-Litek Opto Corporation 55,306 168,912	Edison-Litek Opto Corporation 316,635 763	Others 136,768 -	Reconciliation and elimination Total - 1,901,238 (940,655) -
$ 917,985	530,794	714,730	224,218	317,398	136,768	(940,655) 1,901,238
$ 42,154	23,327	8,164	(28,531)	39,482	(24,971)	(15,899)	43,726

Note: The eliminated amount among reportable segments for the year ended December 31, 2021 and 2020 were $1,081,637 and $940,655 respectively.

For revenue from the external customers of the Consolidated Company please refer to note 6(u).

(d) Geographic information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers in the note 6(u) and segment assets are based on the geographical location of the assets.

Geographical information Revenue from external customers: China Taiwan Other countries Total	2021 $ 804,786 1,007,155 72	2020 875,252 548,850 179
	$ 1,812,013	1,424,281

Non-current assets include property, plant and equipment, investment property, intangible assets, rental prepayment, and other assets, not including financial instruments, deferred tax assets, and other non-current assets.

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

269

(e) Major customers

As of December 31, 2021 and 2020, the customer contributing 10% or higher of Consolidated ’ Company s revenue.

2021 2020 Customer 104304 $ 387,361 284,017

270

Stock Code:3591

EDISON OPTO CORPORATION

Parent Company Only Financial Statements

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

Address: 5F., No. 800, Chung-Cheng Rd., Chung-Ho Dist., New Taipei City Telephone: (02)8227-6996

271

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

Page

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272

Independent Auditors’ Report

To the Board of Directors of Edison Opto Corporation:

Opinion

We have audited the financial statements of Edison Opto Corporation, which comprise the statement of financial position as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

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

Key Audit Matters

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

Description of key audit matter:

Impairment evaluation of accounts receivable

Please refer to Note 4(f) “Financial instruments”, Note 5(a) “Significant accounting assumptions and judgments, and major sources of estimation uncertainty ” , and Note 6(b) “ Notes and accounts ” receivable .

For the year ended December 31, 2021, the accounts receivable accounted for 5% of the total assets are material to the financial statements. In addition, the provision of bad debt allowance is a subject to the management’s judgment. Therefore, it has been identified as a key audit matter.

273

3-1

How the matter was addressed in our audit:

Our principal audit procedures included:

‧Assess the impairment of accounts receivable and whether the impairment has been modified by policy.
‧Examine the aging analysis table, analyze the reason of overdue collection and the situation of subsequent collection.
‧Evaluate the adequacy of impairment on the financial report date.
Revenue recognition

“ ” Please refer to Note 4(m) Revenue from contracts with customers, and Note 6(s) Revenue .

Description of key audit matter:

The major business activities of Edison Opto Corporation are manufacturing, selling, research and development of LED components and modules. Operating Revenue is the main indicator for the management of Edison Opto Corporation and investor to evaluate the financial and business performance of Edison Opto Company. Therefore, it has been identified as a key audit matter.

How the matter was addressed in our audit:

Our principal audit procedures included:

’
‧ Evaluate the Company s accounting policy of revenue recognition.
‧ Test the design and implementation of internal controls related with revenue recognition.
‧ A sample of whole year is selected, and the income transaction records and various vouchers are checked to confirm that the operating income is recognized.
‧ Analyzing the change in sales revenue from top ten clients and examining significant contracts to assess whether there are significant exceptions.
‧ Choose the period between the financial reporting, then examine the recognition of income transactions and vouchers cover for the appropriate period.

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

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

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Edison Opto Corporation’s financial reporting process.

274

3-2

Auditor ’ s Responsibilities for the Audit of the Financial Statements

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Edison Opto Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Edison Opto Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Edison Opto Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

275

3-3

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

The engagement partners on the audit resulting in this independent auditors’ report are HENG-SHEN LIN and PEI-CHI CHEN.

KPMG

Taipei, Taiwan (Republic of China) Febuary 24, 2022

Notes to Readers

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

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

276

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

EDISON OPTO CORPORATION

Balance Sheets December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollar)

December 31, 2021	December 31, 2021	December 31, 2020 Amount % 340,499 11 669 - 44,573 1 49,139 2 34,250 1 1,941 - - - 23,567 1
Amount % $ 338,165 10 4,797 - 145,348 5 9,851 - 3,335 - 48,163 1 20,896 1 3,149 - 32,311 1	Amount %
	$ 69,200 2 17 - 43,938 1 130,408 4 44,508 1 3,708 - 16,080 1 33,955 1
	341,814 10	494,638 16
606,015 18	163,588 5 290,780 8 2,460 - 1,099 - 11,735 -	- - - - 2,035 - 1,579 - 11,618 -
574 - 1,810,867 52 934,220 27 4,438 - 88 - 60,488 2 122 - 35,075 1
	469,662 13	15,232 -
	811,476 23	509,870 16
	1,288,617 37 1,225,564 40 1,619,038 47 1,553,577 51 4,841 - - - 124,188 4 48,411 2 (183,608) (5) (177,025) (6) (152,240) (4) (17,426) (1) (1,377) - (6,378) - (59,048) (2) (61,902) (2)
2,845,872 82
	2,640,411 77 2,564,821 84
$ 3451887 100	$ 3,451,887 100 3,074,691 100

277

See accompanying notes to consolidated financial statements.

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

EDISON OPTO CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

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

4000 Operating revenue (note 6(s) and 7) 5000 Operating costs (note 6(e)(h)(i)(m) and 7) 5900 Gross profit from operations 5910 Unrealized profit (loss) from sales (note 7) 5950 Gross profit from operations, net Operating expenses (note 6(h)(i)(k)(m)(n)(q)): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss(reversed) (note 6(c)) Total operating expenses 6900 Net operating income (loss) Non-operating income and expenses (note 6(g)(l)(u) and 7): 7100 Total interest income 7010 Other income 7020 Other gains and losses, net 7050 Finance costs, net 7070 Share of profit (loss) of associates and joint ventures accounted for using equity method, net (note 6(f)) Total non-operating income and expenses 7900 Profit from continuing operations before tax 7950 Less: Income tax expenses (note 6(o)) Profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans (note 6(n)) 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (note 6(p)) 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income (loss) 8500 Total comprehensive income (loss) Earnings per share (note 6(r)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021 Amount % $ 959,314 100 788,442 82	2020 Amount % 917,985 100 808,998 88
	170,872 18 (581) -	108,987 12 (2,451) -
	170,291 18	106,536 12
	48,870 5 76,236 8 29,227 3 (361) -	37,193 4 54,750 6 30,750 3 154 -
	153,972 16	122,847 13
	16,319 2	(16,311) (1)
	733 - 20,931 2 2,984 - (13,317) (1) 94,298 10	1,799 - 42,040 5 6,369 1 (4,024) - 12,281 1
	105,629 11	58,465 7
	121,948 13 1,690 -	42,154 6 - -
	120,258 13	42,154 6
	360 - (134,814) (14) - -	6,257 1 28,354 3 - -
	(134,454) (14)	34,611 4
	(6,583) (1) - -	21,893 2 - -
	(6,583) (1)	21,893 2
	(141,037) (15)	56,504 6
	$ (20,779) (2)	98,658 12
	$ 1.00	0.35
	$ 0.95	0.35

See accompanying notes to consolidated financial statements.

278

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

EDISON OPTO CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollar)

Ordinary shares	Capital surplus		Retained earnings		Tot	al other equity inte	rest	Treasury shares	Total equity 2,485,682
					Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Employees unrealized reward
		Legal reserve	Special reserve	Retained earnings (Unappropriated retained earnings)
$ 1,250,014	1,841,558	701	6,313	(289,754)	(198,918)	(45,780)	(19,575)	(58,877)
‐ ‐ ‐ ‐	‐ ‐ (282,740) (12,300)	(701) ‐ ‐ ‐	‐ (6,313) ‐ ‐	701 6,313 282,740 ‐	‐ ‐ ‐ ‐	‐ ‐ ‐ ‐	‐ ‐ ‐ ‐	‐ ‐ ‐ ‐	‐ ‐ ‐ (12,300)
	(295,040)	(701)	(6,313)	289,754					(12,300)
‐ ‐	‐ ‐	‐ ‐	‐ ‐	42,154 6,257	‐ 21,893	‐ 28,354	‐ ‐	‐ ‐	42,154 56,504
‐	‐	‐	‐	48,411	21,893	28,354	‐	‐	98,658
	‐ (3,652) ‐ 51 14,381 (3,721)	‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ 13,197	(19,832) 19,832 (3,025) ‐ ‐ ‐	(19,832) ‐ (3,025) 51 14,381 1,206
1,225,564	1,553,577	‐	‐	48,411	(177,025)	(17,426)	(6,378)	(61,902)	2,564,821
‐ ‐	‐ ‐	4,841 ‐	‐ ‐	(4,841) (40,000)	‐ ‐	‐ ‐	‐ ‐	‐ ‐	‐ (40,000)
		4,841		(44,841)					(40,000)
‐ ‐	‐ ‐	‐ ‐	‐ ‐	120,258 360	‐ (6,583)	‐ (134,814)	‐ ‐	‐ ‐	120,258 (141,037)
‐	‐	‐	‐	120,618	(6,583)	(134,814)	‐	‐	(20,779)
	31,990 47,381 ‐ 159 78 (13,998) (149)	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ ‐	‐ ‐ ‐ ‐ ‐ ‐ 5,001	‐ ‐ 2,854 ‐ ‐ ‐ ‐	31,990 110,764 2,854 159 78 (13,998) 4,522
$ 1,288,617	1,619,038	4,841	‐	124,188	(183,608)	(152,240)	(1,377)	(59,048)	2,640,411

See accompanying notes to consolidated financial statements.

279

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

EDISON OPTO CORPORATION

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollar)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss (reversal) Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Share-based payments Share of profit of subsidiaries,associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Gain on disposal of other assets Unrealized profit from sales Realized profit on from sales Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Notes receivable Accounts receivable Accounts receivable due from related parties Other receivable Other receivable due from related parties Inventories Prepayments Other current assets Notes payable Accounts payable Accounts payable to related parties Other payable Other current liabilities Net defined benefit liability Total changes in operating assets and liabilities Cash flows from (used in) operations Interest received Interest paid Income taxes refund (paid) Net cash flows from (used in) operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of subsidiaries Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Increase in restricted deposits Increase in other non-current assets Increase in prepayments for business facilities Dividends received Net cash flows from (used in) investing activities Cash flows from (used in) financing activities:	2021	2020 42,154
	$ 121,948
	22,458 169 (361) (1,002) 13,317 (733) 4,522 (94,298) (7,567) (3) 6,213 (5,632)	19,343 458 154 ‐ 4,024 (1,799) 1,206 (12,281) (2,731) ‐ 5,632 (3,181)
	(62,917)	10,825
	(3,738) (18,050) 39,914 ‐ 1,046 (24,141) 1,069 (14,917) (652) (635) 81,269 10,232 10,388 488	(988) (1,271) (23,556) 62 5,531 (8,344) (5,452) (8,114) (6) (14,767) (87,126) (8,440) 6,797 400
	82,273	(145,274)
	141,304 670 (5,025) (2,897)	(92,295) 1,759 (4,024) (160)
	134,052	(94,720)
	(8,305) 9,307 (46,600) ‐ ‐ (434,022) 10 ‐ (23) (29,302) (122) 22,300	‐ ‐ ‐ 34,583 291,138 (9,120) 10,271 (321) (25) (107,571) (297) 20,220
	(486,757)	238,878

See accompanying notes to consolidated financial statements

280

Increase in short-term loans Decrease in short-term loans Proceeds from issuing bonds Proceeds from long-term debt Repayments of long-term debt Decrease in guarantee deposits received Payment of lease liabilities Cash dividends paid Payments to acquire treasury shares Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	1,038,492 1,257,043 (1,312,020) (1,153,250) 297,503 ‐ 321,600 ‐ (14,740) ‐ (12) (9) (3,303) (2,278) (40,000) (12,300) ‐ (19,832)
	287,520 69,374
	2,228 (18) (62,957) 213,514 401,122 187,608
	$ 338,165 401,122

See accompanying notes to consolidated financial statements

281

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

EDISON OPTO CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

Edison Opto Corporation (the “Company”) was approved by the Ministry of Economic Affairs on October 4, 2001 and incorporated in 5F, No.800, Chung-Cheng Rd., Chung-Ho Dist., New Taipei City, Taiwan. The Company’s shares were listed on the Taiwan Stock Exchange in November 2000. The company are mainly engaged in manufacturing, selling, research and development of LED components and modules.

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

These financial statements were authorized for issuance by the Board of Directors on Febuary 24, 2022.

(3) New standards, amendments and interpretations adopted:

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

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

Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark — ”
Reform Phase 2

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

Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”
(b) The impact of IFRS issued by the FSC but not yet effective

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

“ － ”
● Amendments to IAS 16 Property, Plant and Equipment Proceeds before Intended Use
“ － ”
● Amendments to IAS 37 Onerous Contracts Cost of Fulfilling a Contract
● Annual Improvements to IFRS Standards 2018 2020
Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

282

EDISON OPTO CORPORATION

Notes to the Financial Statements

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

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
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 financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “ the Regulations”).

(b) Basis of preparation
(i) Basis of measurement

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

1) Financial assets at fair value through other comprehensive income are measured at fair value;
2) The defined benefit liabilities are measured at fair value of the plan assets less the present value of the defined benefit obligation.
(ii) Functional and presentation currency

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

(Continued)

283

EDISON OPTO CORPORATION Notes to the Financial Statements

(c) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of 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. Nonmonetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for investments in equity securities designated as at fair value through other comprehensive income, which are recognized in other comprehensive income:

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

(ii) Foreign operations

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interests. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

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

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

(i) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
(ii) It holds the asset primarily for the purpose of trading;

(Continued)

284

EDISON OPTO CORPORATION

Notes to the Financial Statements

(iii) It expects to realize the asset within twelve months after the reporting period; or
(iv) The asset is cash or a 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 expects to settle the liability in its normal operating cycle;
(ii) It holds the liability primarily for the purpose of trading;
(iii) The liability is due to be settled within twelve months after the reporting period.
(iv) The 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 the issue of equity instruments do not affect its classification.
(e) Cash and cash equivalents

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

(f) Financial instruments

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

(i) Financial assets

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

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

(Continued)

285

EDISON OPTO CORPORATION

Notes to the Financial Statements

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.

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.

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

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

3) Fair value through profit or loss (FVTPL)

These assets are subsequently measured at fair value. Net gains and losses are recognized in profit or loss.

(Continued)

286

EDISON OPTO CORPORATION Notes to the Financial Statements

4) Impairment of financial assets

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

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

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

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

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

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

The Company considers a financial asset to be in default when the debtor is unlikely to pay its credit obligations to the Company in full.

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

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

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

(Continued)

287

EDISON OPTO CORPORATION

Notes to the Financial Statements

5) Derecognition of financial assets

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

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

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

2) Equity instrument

3) Treasury shares

4) Compound financial instruments

Compound financial instruments issued by the Company comprise convertible bonds denominated in NTD that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

(Continued)

288

EDISON OPTO CORPORATION

Notes to the Financial Statements

Interest related to the financial liability is recognized in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

5) Financial liabilities

6) Derecognition of financial liabilities

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

7) Offsetting of financial assets and liabilities

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

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using the weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(Continued)

289

EDISON OPTO CORPORATION

Notes to the Financial Statements

(h) Investment in subsidiary

When making the Parent-only Financial Report, the Company evaluates its investees who have controlling power by using equity method. According to equity method, the amount of amortization in current profit or loss and other profit or loss in Parent-only Financial Report is the same with Parent Company in the Financial Report, and the equity on Parent-only Financial Report is the same with Parent Company in Financial Report.

Changes in a parent’s ownership interest in a subsidiary, that do not result in the Parent losing control of the subsidiary, are considered transaction of interests between businesses.

(i) 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 Company.

(iii) Depreciation

Land is not depreciated.

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

1)	Buildings and construction	3 to 45 years
2)	Machinery and equipment	3 to 10 years
3)	Molding Equipment	2 to 6 years
4)	Office and Other equipment	2 to 6 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(Continued)

290

EDISON OPTO CORPORATION Notes to the Financial Statements

(j) Leases

At inception of a contract, the 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.

(i) As a lessee

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

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

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

－
fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

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

－
there is a change in future lease payments arising from the change in an index or rate; or
－
there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or
－
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
－
there is any lease modifications

(Continued)

291

EDISON OPTO CORPORATION

Notes to the Financial Statements

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

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

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery and plant that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a lessor

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

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

(k) Intangible assets

(i) Recognition and measurement

Intangible assets acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) 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 is recognized in profit or loss as incurred.

(Continued)

292

EDISON OPTO CORPORATION Notes to the Financial Statements

(iii) Amortization

The estimated useful lives for current and comparative periods are as follows:

1) Computer software 3~4 years

Amortization methods, useful lives and residual values are reviewed at each annual reporting date and adjusted if appropriate.

(l) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, and deferred tax assets, measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

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

(m) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

(Continued)

293

EDISON OPTO CORPORATION Notes to the Financial Statements

(i) Sale of goods

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

The average credit term for sale of goods is 60 days to 90 days, which is consistent with the industry practice, thus, it does not contain any financing element.

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

(ii) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(n) Government grant

The Company recognizes an unconditional government grant in profit or loss as other income when the grant becomes receivable.

(o) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Defined benefit plans

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

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

(Continued)

294

EDISON OPTO CORPORATION Notes to the Financial Statements

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

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

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided.

(p) Share-based payment

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.

Grant date of a share-based payment award is the date which the Company and its employees reach a consensus on the subscription price and the number of subscription shares.

(q) Income taxes

(Continued)

295

EDISON OPTO CORPORATION Notes to the Financial Statements

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

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

(i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(r)

Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as 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 potentially dilutive ordinary shares, such as employee remuneration and convertible corporate bonds.

(Continued)

296

EDISON OPTO CORPORATION Notes to the Financial Statements

(s) Segment information

Please refer to the financial report of Edison Opto Corporation for the years ended December 31, 2021 and 2020, for operating segments information.

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

The preparation of the financial statements in conformity with IFRSs 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.

Information about judgments made in applying accounting policies that have no significant effects.

Information about assumptions and estimation uncertainty that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

(a) The loss allowance of trade receivable

The Company has estimated the loss allowance of trade receivable that is based on the risk of a default occurring and the rate of expected credit loss.

The Company has considered historical experience, current economic conditions and forward looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. The relevant assumptions and input values, please refer to note 6(c).

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash Demand Deposit Time Deposit	December 31, 2021 $ 4,050 281,615 52,500	December 31, 2020 6,005 263,192 131,925
	$ 338,165	401,122

Please refer to note 6(u) for the disclosure of the interest rate risk and the sensitivity analysis for financial assets and liabilities.

(Continued)

297

EDISON OPTO CORPORATION

Notes to the Financial Statements

(b) Financial assets measured at cost

Debt investments at fair value through profit or loss: Convertible corporate bonds-call options	December 31, 2021 $ 574	December 31, 2020 -

Please refer to note 6(l) for financial assets of faie value through profit or loss and the disposal of cost benefits. The financial assets of the Group were not pledged.

Notes receivable Accounts receivable Accounts receivable from related parties Overdue receivable Less: Loss allowance	December 31, 2021 $ 4,797 145,395 9,851 2,198 (2,245)	December 31, 2020 1,059 127,516 49,765 2,027 (2,606)
	$ 159,996	177,761

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

December 31, 2021	December 31, 2021	Loss allowance provision 4 14 29
Gross carrying amount	Weighted-aver age loss rate 0% 0.69% 11.42%
$ 157,764 2,025 254
$ 160,043		47

180 days past due

Gross carrying amount	Weighted-aver age loss rate 100%		Loss allowance provision 2,198
$ 2,198

(Continued)

298

EDISON OPTO CORPORATION Notes to the Financial Statements

(Continued)

299

EDISON OPTO CORPORATION

Notes to the Financial Statements

December 31, 2020	December 31, 2020	Loss allowance provision 3 530 46
Gross carrying amount	Weighted-aver age loss rate 0% 2.68% 10.53% Weighted-aver age loss rate 100%
$ 158,123 19,780 437
$ 178,340		579
Gross carrying amount		Loss allowance provision 2,027
$ 2,027

Movements of the loss allowance for notes and accounts receivable were as follows:

Balance at January 1 Impairment losses recognized Impairment loss reversal Amounts write-off Balance at December 31	2021 $ 2,606 - (361) -	2020 31,910 154 - (29,458)
	$ 2,245	2,606

Note and account receivables of the Company were not pledged.

(d) Other receivables

Other accounts receivable Other accounts receivable from related parties Total	December 31, 2021 $ 120 3,215	December 31, 2020 57 4,261
	$ 3,335	4,318

Other receivables of the Company were not pledged.

(Continued)

300

EDISON OPTO CORPORATION

Notes to the Financial Statements

(e) Inventories

Raw materials Supplies Work in progress Finished goods	December 31, 2021 $ 27,699 160 6,938 13,366	December 31, 2020 8,522 200 6,757 8,543
	$ 48,163	24,022

The details of the cost of sales were as follows:

Inventory that has been sold Write-down of inventories (reversal of write-downs) Unallocated production overheads	2021
	$ 788,442 808,998

The Company did not provide any inventories as collateral for its loans.

(f) Investments accounted for using equity method

A summary of the Company’s financial information for investments accounted for using the equity method at the reporting date is as follows:

Subsidiary	December 31, 2021 $ 1,810,867	December 31, 2020 1,837,597

The Company did not provide any investments accounted for using the equity method as collateral for its loans.

(g) Changes in a parent's ownership interest in a subsidiary

(i) Edison-Litek Opto Corporation issued a total of 155 thousand shares in March 2021 as employee remuneration. Furthermore, 4,145 thousand shares were issued for cash capital increase in December 2021, wherein the Company acquired 1,300 thousand shares in cash amounting to $15,600 thousand, resulting in the shareholding ratio of the Company to decrease from 100% to 78.57%.

The effect of changes in shareholdings was as follows:

Capital surplus differences between consideration and carrying amounts subsidiaries acquired	2021 $ (13,998)

(Continued)

301

EDISON OPTO CORPORATION

Notes to the Financial Statements

(ii) Edison-Litek Opto Corporation Limited had processed a cash capital increase in July 2020. The Group purchased all the shares issued with the amount of $32,417 thousand by cash through Edison Litek Opto Corporation, which makes an increase of the total equity of The Company and Edison-Litek Opto Corporation from 62.08% to 72.64%.

Carrying amount of non-controlling interest on acquisition

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2020
$ 14,381
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(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2021 and 2020, were as follows:

Land $ 260,051 351,073 - 26,738	Building and construction 214,350 76,584 - 77,775	Machinery and equipment 286,825 5,917 (3,601) 111	Molding equipment 1,216 80 - 186	Other facilities 17,024 368 (1,498) -	Total 779,466 434,022 (5,099) 104,810
$ 637,862	368,709	289,252	1,482	15,894	1,313,199
$ 260,051 - - -	213,215 1,265 (130) -	288,171 7,775 (22,744) 13,623	1,136 80 - -	17,495 - (471) -	780,068 9,120 (23,345) 13,623
$ 260,051	214,350	286,825	1,216	17,024	779,466
$ - - -	86,982 8,132 -	259,940 10,671 (3,601)	1,142 159 -	16,955 97 (1,498)	365,019 19,059 (5,099)
$ -	95,114	267,010	1,301	15,554	378,979
$ - - - -	81,387 5,725 (130) -	271,550 11,029 (22,639) -	1,000 142 - -	17,309 57 (411) -	371,246 16,953 (23,180) -
$ -	86,982	259,940	1,142	16,955	365,019
$ 637,862	273,595	22,242	181	340	934,220
$ 260,051	127,368	26,885	74	69	414,447
$ 260,051	131,828	16,621	136	186	408,822

(Continued)

302

EDISON OPTO CORPORATION

Notes to the Financial Statements

(i) Guarantee

Some of the property, plant and equipment that belongs to the Company had been pledged as collateral for long-term borrowings and the issuance of corporate bonds; please refer to note 8.

(ii) Prepaid payments for land and buildings

(i) Right-of-use asset

The company leases many assets including land and buildings, machinery and vehicles. Information about leases for which the company as a lessee was presented below:

Building and construction $ 1,503 3,523 (1,503)	Vehicles 4,421 1,134 -	Total 5,924 4,657 (1,503)
$ 3,523	5,555	9,078
1,761 1,190 (1,448)	3,842 579 -	5,603 1,769 (1,448)
$ 1,503	4,421	5,924
$ 844 1,854 (1,439)	1,836 1,545 -	2,680 3,399 (1,439)
$ 1,259	3,381	4,640
$ 1,127 1,165 (1,448)	611 1,225 -	1,738 2,390 (1,448)
844	1,836	2,680
$ 2,264	2,174	4,438
$ 659	2,585	3,244
$ 634	3,231	3,865

The company leases offices, warehouse and dormitory for the year 2021 and 2020, please refer to note 6(m).

(Continued)

303

EDISON OPTO CORPORATION

Notes to the Financial Statements

(j) Short-term borrowings

The short-term borrowings were summarized as follows:

December 31, 2021	December 31, 2021	December 31, 2020 340,499
$ 69,200
$ 69,200		340,499
$ 1,347,822		1,139,219
	0.9%	0.16%~1.23%

A key management personnel provided a joint guarantee for the borrowings of the Group from certain financial institutions. Please refer to note 7.

(k) Long-term borrowings

	December 31, 2021	December 31, 2021	Amount $ 306,860 (16,080)
Currency NTD	Rate 1.1966~1.2011%	Maturity year
		2041
			$ 290,780

For the collateral for long-term borrowings, please refer to note 8.

(l) Bonds payable

Total convertible corporate bonds issued Unamortized discounted corporate bonds payable Cumulative converted amount Convertible bonds issued balance Embedded derivative-call options (included in financial assets at fair value through profit or loss) Equity components－conversion options (included in capital surplus－share options) Interest expense	December 31, 2021
	$ 300,000 (14,212) (122,200)
	$ 163,588
	$ 574
	$ 18,960
	2021 $ 8,266

Items

Third secured domestic convertible bonds

Items	Third secured domestic convertible bo
1.Total issue amount	300,000 thousand
2.Par value	100 thousand
3.Maturity date	January 25, 2021 ~ January 25, 2024
4.Outstanding period	3 years
5.Coupon rate	0%

(Continued)

304

EDISON OPTO CORPORATION

Notes to the Financial Statements

	Items	Third secured domestic convertible bonds
6.Redemption at maturity		The Company redeems the convertible bond at par value by cash
		from the bondholders when it meets maturity.
7.Redemption method		(1) If the closing price of shares for each of 30 consecutive
		trading days is at least 130% of the conversion price between
		the 3 months after the share issuance date and the 40th day
		before the maturity date, the Company may redeem all the
		outstanding bonds at their par vale.
		(2) If the amount outstanding of bonds is less than 10% of the
		principal amount between the 3 months after the share
		issuance date and the 40th day before the maturity date, the
		Company may redeem the outstanding bonds at their principal
		amount within five business days before the maturity date.
8.Conversion	period	(1) The bondholder can convert its bonds into shares at any time
		between 3 months after the issuance date and the day before
		the maturity day.
		(2) For the circumstances below, the conversion terminates in
		compliance with the method issued by the Company.
		The closing period in accordance with the applicable laws.
		The period that starts from the fifteen business days prior to
		the date of record for determination wherein the shareholders
		are entitled to receive the distributions or rights to subscribe
		for new shares in a capital increase for cash, and ends on the
		date of record for the distribution of the rights/benefits. The
		period starts from the date of record of the capital decrease
		and ends one day prior to the reissuance of the trading of
		shares after the capital decrease.
9.Conversion	price	The conversion price is $19.3 per share when issuance.
		The Company announced on July 29, 2021 that due to the
		allotment of cash dividends on the ordinary shares, the conversion
		price has been adjusted from $19.3 to $19.1 since August 21,
		2021.
10. Pledge		For the collateral for bonds payable, please refer to note 8.

(Continued)

305

EDISON OPTO CORPORATION

Notes to the Financial Statements

(m) Lease liabilities

The Company’s finance lease liabilities was as follows：

Current Non-current For the maturity analysis, please refer to note 6(t).	December 31, 2021 $ 3,708	December 31, 2020 1,941
	$ 1,099	1,579

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short term leases Expenses relating to leases of low value assets, excluding short term leases of low value assets	2021 $ 676	2020 529
	$ 235	-
	$ 137	156

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

Total cash outflow for leases

2021 $ 4,351	2020 2,963

(i) Real estate leases

As of December 31, 2021, the Company leases building as employees’ dormitories, the lease terms are ranged for a period of one to two years. Some of the terms can be extended upon maturity. However, if the option of extension is uncertain, the related expenditures occurred in the covered period would not be accounted for as lease liabilities.

(ii) Other leases

The Company leases machinery and vehicle, the lease terms are ranged for a period of three to four years. Some of the terms can be extended upon maturity. However, if the option of extension is uncertain, the related expenditures occurred in the covered period would not be accounted for as lease liabilities.

Some buildings leased by the Company have a term of less than a year and are considered as short-term leases. The Company decided to apply the exemption of recognition and not to recognize its right-of-use assets and lease liabilities.

(Continued)

306

EDISON OPTO CORPORATION

Notes to the Financial Statements

(n) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2021 $ 20,345 (8,635)	December 31, 2020 21,118 (9,536)
	$ 11,710	11,582

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’s Bank of Taiwan labor pension reserve account amounted to $8,635 thousand. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in present value of the defined benefit obligations

The movement in present value of the defined benefit obligations for the Company were as follows:

Defined benefit obligations at January 1 Current service costs and interest cost Re-measurements of the net defined benefit liability Payment of benefit obligations Defined benefit obligations at December 31	2021 $ 21,118 624 (263) (1,134)	2020 27,168 761 (5,978) (833)
	$ 20,345	21,118

(Continued)

307

EDISON OPTO CORPORATION

Notes to the Financial Statements

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets at January 1 Interest income Re-measurements of the net defined benefit liability Contributed to plan Payment of benefit obligations Fair value of plan assets at December 31 Expenses recognized in profit or loss Current service costs Net interest of net liabilities (assets) for defined benefit Operating cost Operating expense	2021 $ 9,536 73 97 63 (1,134)	2020 9,731 110 279 249 (833)
	$ 8,635	9,536
	2021 $ 466 85	2020 457 194
	$ 551	651
	2021 $ 119 432	2020 302 349
	$ 551	651

4) Expenses recognized in profit or loss
5) Re-measurement of net defined benefit liability (asset) recognized in other comprehensive income

The Company’s re-measurement of the net defined benefit liability (asset) recognized in other comprehensive income were as follows:

Accumulated amount at January 1 Recognized during the period Accumulated amount at December 31	2021 $ 5,345 (360)	2020 11,602 (6,257)
	$ 4,985	5,345

(Continued)

308

EDISON OPTO CORPORATION Notes to the Financial Statements

6) Actuarial assumptions

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

Discount rate Future salary increase rate	December 31, 2021 0.750% 2.500%	December 31, 2020
		0.750% 2.500%

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $566 thousand.

The weighted average lifetime of the defined benefits plans is 15.16 years.

7)

Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2021 Discount rate (movement of 0.25%) Future salary increasing rate (movement of 0.25%) December 31, 2020 Discount rate (movement of 0.25%) Future salary increasing rate (movement of 0.25%)	Influences of defined benefit obligation	Influences of defined benefit obligation
	Increased 0.25% (614) 608 (618) 683	Decreased 0.25%
		635 (596) 707 (660)

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(ii) Defined contribution plans

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $5,406 thousand and $4,747 thousand in 2021 and 2020.

(Continued)

309

EDISON OPTO CORPORATION

Notes to the Financial Statements

(o) Income taxes

(i) The components of income tax in the years 2021 and 2020 were as follows:

Current tax expense Current period Deferred tax income Occurences and reversal of temporary differences Tax effect if deductible temporary differences Recognition of unrecognized tax loss in prior periods Tax income	2021	2020 - - - - -
	$ - - 7,897 (932) (5,275)
	$ 1,690	-

Reconciliation of income tax and income before tax for 2021 and 2020, were as follows:

Gain before income tax Income tax using subsidiaries tax rate Non-deductible expense Loss of investing foreign company Change in unrecognized temporary difference Current-year losses for which no deferred tax asset was recognized Income tax on foreign repatriations of surplus Investment allowance Other Total	2021	2020
	$ 121,948 42,154
	$ 24,390 8,431 (12,178) 6,706 (7,833) (2,004) (932) 1,201 (2,769) (8,434) - (3,843) - (1,647) 1,012 (410)
	$ 1,690 -

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax liabilities

Aggregated amount of temporary differences related to investment subsidiaries	December 31, 2021 $ 103,896	December 31, 2020 95,435

(Continued)

310

EDISON OPTO CORPORATION Notes to the Financial Statements

2) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Tax effect of deductible Temporary Differences The carry forward of unused tax losses	December 31, 2021 $ - 137,029	December 31, 2020 6,785 195,730
	$ 137,029	202,515

The R.O.C. Income Tax Act allows net losses, as assessed by the tax authorities, to offset taxable income over a period of ten years for local tax reporting purposes.

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.

3) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2021 and 2020 were as follows:

Allowance for obsolete inventory	Others	Tax deduction	Total
$ 3,815 (1,271)	7,584 (5,269)	50,354 5,275	61,753 (1,265)
$ 2,544	2,315	55,629	60,488
$ 3,815	7,584	50,354	61,753
Equity investment	Others	Total
$ 2,035 (878)	- 1,303	2,035 425
$ 1,157	1,303	2,460
$ 2,035	-	2,035

(Continued)

311

EDISON OPTO CORPORATION

Notes to the Financial Statements

4) As at December 31, 2021, the expiry years of the Company’s unutilized business losses for which no deferred tax assets were recognized are as follows:

Year of loss	Before loss deduction $ 79,911 75,078 93,672 90,158 47,537 28,818	Year after deduction
2014 2015 2016 2017 2018 2019		2024 2025 2026 2027 2028 2029
	$ 415,174

(iii) Assessment of tax

The Company’s tax returns for the year through 2019 were assessed by the Taipei National Tax Administration.

(p) Capital and other equity

As of December 31, 2021 and 2020, the number of authorized ordinary shares were 2,000,000 thousand shares with par value of $10 per share. The total value of authorized ordinary shares was amounted to 200,000 thousand shares. As of December 31, 2021 and 2020, 128,862 thousand and $122,556 thousand of ordinary shares were issued, respectively. All issued shares were paid up upon issuance.

Reconciliation of shares outstanding for 2021 and 2020 was as follows:

(in thousands of shares) Balance at January 1 converting corporate bonds Retirement of treasury stock Retirement of restrict employee stock Balance at December 31	Ordinary shares 2021 2020 122,556 125,001 6,339 - - (1,618) (33) (827) 128,862 122,556	Ordinary shares 2021 2020 122,556 125,001 6,339 - - (1,618) (33) (827) 128,862 122,556	Ordinary shares 2021 2020 122,556 125,001 6,339 - - (1,618) (33) (827) 128,862 122,556


	128,862		122,556

(i) Ordinary shares

The unsecured domestic convertible bonds issued by the Company were converted into 5 thousand shares, 5,679 thousand shares and 655 thousand ordinary shares in the 2[nd] , 3[rd] and 4[th]

(Continued)

312

EDISON OPTO CORPORATION

Notes to the Financial Statements

quarter, respectively, of 2021, with the first two relevant statutory registration procedures had been completed in July and August of 2021.

(Continued)

313

EDISON OPTO CORPORATION

Notes to the Financial Statements

(ii) Capital surplus

The balances of capital surplus as of December 31, 2021 and 2020, were as follows:

Premium on issuance of capital stock Difference arising from subsidiary’s share price and its carrying value Employee share options Restricted employee Treasury share transactions	December 31, 2021 $ 1,500,428 461 72,142 27,047 18,960	December 31, 2020 1,439,858 14,381 72,142 27,196 -
	$ 1,619,038	1,553,577

(iii) Retained earnings

(Continued)

314

EDISON OPTO CORPORATION Notes to the Financial Statements

and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

In order to bring about stability in the payment of dividends, the Company distributes dividends depending on the level of earnings of the each years. The Company is facing ’ a rapidly changing industrial environment. In consideration of the Company s long-term operating plan and funding needs, the Company adopts a stable dividends policy. Therefore, dividend distributions should not be less than 60% of distributable earnings. However, when the accumulated earnings were lower than 20% of capital stocks, then the Company could not to distribute the dividends. The Company could distribute the dividend by cash or stocks, but the cash dividend should not be less than 10% of dividends.

(Continued)

315

EDISON OPTO CORPORATION

Notes to the Financial Statements

1) Legal reserve

2) Special reserve

3) Earnings distribution

(iv) Treasury shares
1) The Group purchased 1,618 thousand treasury shares to maintain the credit of the Company and shareholders’ benefits through April to May 2020. The Company decided to retire 1,618 thousand treasury shares, at the amount of $19,832 thousand, via the Board Meeting in August 2020. The related registration procedures were completed as of the reporting date. As of December 31, 2021, 3,000 thousand shares of treasury share has yet to be sold.
2) Ledionopto Lighting Inc., sub subsidiary of the Company, held 500 thousand shares of the Company’ s treasury share. The book value on of December 31, 2021 and 2020 were $6,796 thousand and $9,650 thousand. As of December 31, 2021, all treasury stocks were not sold. The market price on December 31, 2021 and 2020 were $23.60 and $19.30 per share, respectively.
3) In compliance with the Securities and Exchange Act, treasury shares held by the Group should not be pledged, and shareholder rights are not entitled before the transfer.

(Continued)

316

EDISON OPTO CORPORATION

Notes to the Financial Statements

(v) OCI accumulated in reserves, net of tax

Balance at January 1, 2021 Share-based payment Exchange differences on foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Restrict employee rights stock failure Balance at December 31, 2021	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (17,426) - - (134,814) -	Deferred compensation arising from issuance of restricted stock	Total
	$ (177,025) - (6,583) - -		(6,378) 4,522 - - 479	(200,829) 4,522 (6,583) (134,814) -
	$ (183,608)	(152,240)	(1,377)	(337,225)

Balance at January 1, 2020 Share based payment Exchange differences on foreign operations	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income (45,780) - -	Deferred compensation arising from issuance of restricted stock	Total
	$ (198,918) - 21,893		(19,575) 13,197 -	(264,273) 13,197 21,893

(Continued)

317

EDISON OPTO CORPORATION Notes to the Financial Statements

Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income： Balance at December 31, 2020	- 28,354	- 28,354
	$ (177,025) (17,426) (6,378) (200,829)

According to the Company's subsidiary, Edison Fund Investment Corporation, which holds 15.39% of the ordinary shares of LEDLitek Co., Ltd., the Company's main operating activities are research and development, manufacturing, and sales of automotive lighting modules. These equity instrument investments held by Edison Fund Investment Corporation are long-term strategic investments and are not held for trading purposes, hence, they have been designated as financial assets measured at fair value through other comprehensive gains and losses. In 2021, Edison Fund Investment Corporation incurred a significant loss on its business operation, resulting in a recognition of fair value evaluation loss of $131,960 thousand, recognized as equity measured by using the fair value through other comprehensive gains and losses.

(Continued)

318

EDISON OPTO CORPORATION Notes to the Financial Statements

(q) Share-based payment
(i) Restricted stock
- 1) At the Board of Directors’ meeting held on June 20, 2018, the Company decided to award 2,000 thousand new shares of restricted stock to those full-time employees who meet the Company’s requirements. The restricted stock has been registered with and approved by the Securities and Futures Bureau of the Financial Supervisory Commission, R.O.C.. On July 2, 2019, the Board of Directors issued all the restricted stock. The fair value on the grant date was 14.50 per share.

Employees with restricted stock awards are entitled to purchase the Company’s shares at the price of 10 with the condition that these employees continue to work for the Company for the following three years. 40%, 30% and 30% of the restricted shares of stock is vested in year 1, 2 and 3 respectively. The restricted stock is kept by a trust, which is appointed by the Company, before it is vested. These shares of stock shall not be sold, pledged, transferred, gifted or by any other means of disposal to third parties during the custody period. If the shares remain unvested after the vesting period, the Company will repurchase all the unvested shares at the issue price, and cancel the shares thereafter.

2) Details of the restricted stock of the Company were as follows:

Outstanding at January 1 (number) Granted during the year (number) Forfeited during the year (number) Outstanding at December 31 (number)	2021 $ 1,173 (570) (33)	2020 2,000 - (827)
	$ 570	1,173

(ii) Expense recognized in profit or loss

The Company incurred expenses and liabilities of share-based arrangements in 2021 and 2020 were as follows:

Expenses resulting from restriction of employee stock options	2021 $ 4,522	2020 1,206

(Continued)

319

EDISON OPTO CORPORATION

Notes to the Financial Statements

(r) Earnings per share

The calculation of basic earnings per share and diluted earnings per share were as follows:

Basic earnings per share Profit of the Company for the year Weighted average number of ordinary shares (in thousands of shares) Basic earn per share (in New Taiwan Dollars) Diluted earnings per share Profit of the Company for the year Effect of dilutive potential ordinary shares: Profit attributable to common stockholders of the Company (including effect of dilutive potental ordinaryshare) Weighted average number of ordinary shares (in thousand of shares) Effect of employee share bonus (in thousand of shares) Effect of convertible bonds (in thousand of shares) Effect of restricted employee shares unrested (in thousand of shares) Weighted average number of ordinary shares (diluted) Diluted earn per share (in New Taiwan Dollars) (s) Revenue from contracts with customers (i) Revenue detail Major market: China America and Europe Taiwan Africa Others Major product: LED transmitter component LED lighting component	2021 $ 120,258	2020 42,154
	120,537	119,058
	$ 1.00	0.35
	2021 $ 120,258 6,613	2020 42,154 -
	$ 126,871	42,154
	120,537 296 11,965 871	119,058 140 - 1,589
	133,669	120,787
	$ 0.95	0.35
	2021 $ 156,226 327,075 179,268 30,276 266,469	2020 136,488 233,461 113,484 154,402 280,150
	$ 959,314	917,985
	$ 36,956 305,318	35,217 300,138

(Continued)

320

EDISON OPTO CORPORATION

Notes to the Financial Statements

LED lighting module and product Other	527,505 505,874 89,535 76,756
	$ 959,314 917,985

(Continued)

321

EDISON OPTO CORPORATION

Notes to the Financial Statements

(ii) Contract balances

ontract balances
Note receivables Accounts receivables Accounts receivables-related party Less: loss allowances Total	December 31, 2021 $ 4,797 145,395 9,851 (47)	December 31, 2020 1,059 127,516 49,765 (579)	January 1, 2020
			71 126,245 26,209 (425)
	$ 159,996	177,761	152,100

For details on accounts receivables and allowance for impairment, please refer to note 6(c).

(t) Remuneration to employees, directors

In accordance with the Articles of incorporation, the Company should contribute 5%~15% of the profit as employee remuneration and less than 3% as directors' remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The amount of remuneration of each director and of remuneration for employees entitled to receive the above-mentioned employee remuneration is approved by the Board of Directors. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

(u) Non-operating income and expenses

(i) Interest income

The details of interest income were as follows:

Interest income	2021 $ 733	2020 1,799

(Continued)

322

EDISON OPTO CORPORATION Notes to the Financial Statements

(Continued)

323

EDISON OPTO CORPORATION

Notes to the Financial Statements

(ii) Other income

The details of other income were as follows:

Other income	2021 $ 20,931	2020 42,040

(iii) Other gains and losses

The details of other gains and losses were as follows:

Net losses on disposal of property, plant. and equipment Net gains (losses) on foreign exchange Net gain on financial assets at fair value through profit or loss Other Finance costs The details of finance costs were as follows: Interest expense	2021 $ 7,567 (771) 1,002 (4,814)	2020 2,731 4,239 - (601) 6,369 2020 (4,024)
	$ 2,984
	2021 $ (13,317)

(iv) Finance costs

The details of finance costs were as follows:

(v) Financial instruments
(i) Credit risk
- 1) Credit risk exposure

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

2) Concentration of credit risk

(Continued)

324

EDISON OPTO CORPORATION

Notes to the Financial Statements

As the Company has a large number of customers, not significantly focuses on dealing with a single customer and the sales area is scattered, so there is no significant concentration of the risk of accounts receivable. In order to reduce the credit risk, the Company also regularly assesses the financial status of customers, if necessary, will require customers to provide security or guarantee.

(Continued)

325

EDISON OPTO CORPORATION Notes to the Financial Statements

3) Receivable

For credit risk exposure of note and trade receivables, please refer to note 6(c).

Other financial assets at amortized cost includes other receivables and deposit.

(ii) Liquidity risk

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

Carrying amount December 31, 2021 Non-derivative financial liabilities Secured short and long term loans $ 306,860 Unsecured short term loans 69,200 Lease liabilities 4,807 Notes payable and accounts payable (including related parties) 174,363 Other payable (including related parties) 44,508 163,588 Bonds payable $ 763,326 December 31, 2020 Non-derivative financial liabilities	Contractual cash flows Within 6 months (342,043) (9,860) (69,354) (69,354) (5,261) (2,104) (174,363) (174,363) (44,508) (44,508) (177,800) -	6-12 months	1-2years	2-5years Over 5years (57,256) (245,645) - - (71) - - - - - (177,800) -
		(9,812) - (2,001) - - -	(19,470) - (1,085) - - -
$ 763,326	(813,329) (300,189)	(11,813)	(20,555)	(235,127) (245,645)

(Continued)

326

EDISON OPTO CORPORATION

Notes to the Financial Statements

Secured short term loans Secured short term loans Notes payable and accounts payable (related parties included) Lease liabilities Notes payable and accounts payable (including related parties)	$ 20,000 (20,001) (20,001) - - - - 320,499 (320,622) (320,622) - - - - 3,520 (3,951) (1,360) (901) (1,560) (130) - 94,381 (94,381) (94,381) - - - - 34,250 (34,250) (34,250) - - - -
	$ 472,650 (473,205) (470,614) (901) (1,560) (130) -

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(Continued)

327

EDISON OPTO CORPORATION Notes to the Financial Statements

(iii) Currency risk

1) Exposure to foreign currency risk

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

Fi		December 31, 2021			December 31, 2020
	Foreign currency	Exchange rate	TWD	Foreign currency	Exchange rate	TWD
	$ 6,389 12,516 8,581 2	USD/TWD= 27.680 CNY/TWD= 4.3440 USD/TWD= 27.680 CNY/TWD= 4.3440	176,848 54,370 237,522 9	3,647 17,873 10,931 129	USD/TWD= 28.480 CNY/TWD= 4.3770 USD/TWD= 28.480 CNY/TWD= 4.3770	103,867 78,230 311,315 565
Fi

2) Sensitivity analysis

The Company’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade and other receivables, loans and borrowings; and trade and other payables that are denominated in foreign currency.

A strengthening (weakening) of 5% of the TWD against the USD and CNY as at December 31, 2021 and 2020 would have increased (decreased) the equity by $(316) thousand and $(6,489) thousand due to cash flow hedges. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the reporting date. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for prior year.

3) Foreign exchange gain and loss on monetary items

2021 2020 Exchange Exchange losses/gains Exchange rate losses/gains Exchange rate NTD $ (771) - 4,239 -

(Continued)

328

EDISON OPTO CORPORATION Notes to the Financial Statements

(iv) Interest rate analysis

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

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

If the interest rate had increased / decreased by 50 basis points, the Company’s net income would have increased / decreased by $1,880 thousand and $1,702 thousand for the year ended December 31, 2021 and 2020, with all other variable factors remaining constant. This is mainly due to the Company’s borrowing at variable rates and investment in variable-rate bills.

(v) Fair value of financial instruments

The management of the Company considers that the carrying amount of the financial assets and financial liabilities of the Company in this financial report approximates its fair value.

(w) Financial risk management
(i) Overview

The Company have exposures to the following risks from its financial instruments:

1) credit risk
2) liquidity risk
3) market risk

The following likewise discusses the Company’s objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risk exposures, please refer to the respective notes in the accompanying 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 established the Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The committee reports regularly to the Board of Directors on its activities.

(Continued)

329

EDISON OPTO CORPORATION Notes to the Financial Statements

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

(iii) Credit risk

Credit risk is the risk of financial loss to the Company rations, and arises principally from the Company’s receivables from customers and investments in debt securities.

As the Company has a large Company of customers, not significantly focused on dealing with a single customer and the sales area are scattered, so there is no significant concentration of the risk of account receivable. In order to reduce the credit risk, the Company also regularly assess the financial status of customers, if necessary, will require customers to provide security or guarantee.

The credit risk of bank deposits and other financial instruments is measured and monitored by the Company finance department. As a result of the Company ’ s transactions and compliance with others are good credit banks, no significant compliance concerns, so there is no significant credit risk.

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed ’ conditions, without incurring unacceptable losses or risking damage to the Company s reputation. At present, the capital and working capital of the merged company is sufficient to meet all the contractual obligations, so there is no liquidity risk due to the inability to raise funds to meet the contractual obligations.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Company is exposed to currency risk on sales, purchases, and borrowings. The functional currency of the Company is dominated by TWD and also has USD and CNY. The main currency of the transaction is TWD, USD and CNY.

The Company borrows money in USD from banks to balance the accounts receivable against USD and reduces the risk of loss of USD accounts receivable assets due to exchange rate fluctuations.

(Continued)

330

EDISON OPTO CORPORATION Notes to the Financial Statements

The monetary assets and liabilities denominated in other foreign currencies, when a short-term imbalance occurs, the Company is required to buy or sell foreign currency at instant exchange rate to ensure that the net risk is maintained at an acceptable level.

The Company do not use derivative financial assets for hedging.

2) Interest rate risk

The borrowing of the Company is a floating interest rate debt, so the market interest rate changes will make the effective interest rate changes, and the future cash flow fluctuations. The Company do not hedge through interest rate swap contracts.

3) Other market price risk

In addition to supporting the expected consumption and sales demand, the Company did not sign a commodity contract.

(x) Capital management

The Company’s objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders, to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilities.

The Company and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings, and other equity plus net debt.

The Company’s debt-to-equity ratio at the end of the reporting period as at December 31, 2021 and 2020, were as follows:

December 31, 2021 $ 811,476 (338,165)	December 31, 2021 $ 811,476 (338,165)	December 31, 2020 509,870 (401,122)
$ 473,311		108,748
$ 2,640,411 -		2,564,821 -
$ 2,640,411		2,564,821
	17.93%	4.24%

(Continued)

331

EDISON OPTO CORPORATION

Notes to the Financial Statements

(y) Investing activities not affecting current cash flow

The Company’s financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020, were as follows:

Short-term borrowings Lease liabilities Long term borrowings Bonds payable Total liabilities from financing activities	January 1, 2021 Cash Flow $ 340,499 (273,528) 3,520 (3,979) - 306,860 - 303,000	Non-cash changes Foreign exchange movement Changes in lease payments Discount and premium amortization Conversion option December 31, 2021 2,229 - - - 69,200 - 5,266 - - 4,807 - - - - 306,860 - - (17,212) (122,200) 163,588
	$ 344,019 332,353	2,229 5,266 (17,212) (122,200) 544,455

Short-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2020 Cash Flow $ 236,940 103,793 4,029 (2,807)	Non-cash changes Foreign exchange movement Changes in lease payments December 31, 2020 (234) - 340,499 - 2,298 3,520
	$ 240,969 100,986	(234) 2,298 344,019

(7) Related-party transactions:

(a) Parent company and ultimate controlling company

The Company is the ultimate controller of the Company and its subsidiaries.

(b) Names and relationship with related parties

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

the financial statements:
Name of relatedparty Best Opto Corporation	Relationship with the Group
	Subsidiary of the company

(Continued)

332

EDISON OPTO CORPORATION Notes to the Financial Statements

Ledison Opto Corporation

Subsidiary of the company Subsidiary of the company Subsidiary of the company Subsidiary of the company Subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company

Edison Opto Corporation Subsidiary of the company Edison Fund Investment Corporation Subsidiary of the company Edison-Litek Opto Corporation Subsidiary of the company Edison-Egypt Opto Corporation Subsidiary of the company Edison Opto USA Corporation Sub-subsidiary of the company Ledionopto Intelligent Technology Co., Ltd. Sub-subsidiary of the company Yangzhou Edison-Litek Opto Corporation Sub-subsidiary of the company Davinci Opto Corporation (Note 2) Sub-subsidiary of the company

(Continued)

333

EDISON OPTO CORPORATION

Notes to the Financial Statements

Name of relatedparty DongGuan Davinci Opto Co., Ltd. (Note 1) Edison Opto (Dong Guan) Co., Ltd. Yangzhou Edison Opto Corporation Best Led Corporation Led Plus Co., Ltd (Note 1) Edison-Litek Opto Corporation Limited Edison Auto Lighting Corporation Yangzhou Aichuang Electronic Trade Corporation Wu Chien-Jung	Relationship with the Group
	Sub-subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company Sub-subsidiary of the company Chairman of the company

Note 1: The dissolution of the Company has been registered in 2020.

Note 2: The dissolution of the Company has been registered in 2021.

(c) Significant transactions with related parties
(i) Sale

Sub-subsidiary-Edison Opto USA Sub-subsidiary-Edison Opto (Dong Guan) Sub-subsidiary-Yangzhou Edison Opto Sub-subsidiary-Edison-Egypt Opto Other	2021	2020
	$ 51,563 54,118 26,604 - 3,873	41,230 60,709 20,546 12,158 3,116
	$ 136,158	137,759

The raw materials which the Company sells to subsidiaries are not sold to other customers, and the sales price is not comparable to other customers, the collection conditions and sales are not significantly different from those of ordinary customers.

The sales prices and collection terms of the Company's sales of finished goods to subsidiaries and other related parties are not significantly different from those of ordinary customers.

The receivables of the related parties are not pledged, and no impairment loss (bad debt expenses) is required after the assessment.

(Continued)

334

EDISON OPTO CORPORATION

Notes to the Financial Statements

(ii) Purchases

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

Subsidiary company-Edison Opto Subsidiary company-Edison Opto (Dong Guan) Subsidiary company-Yangzhou Edison Opto Other	2021	2020
	$ - 254,343 329,985 8,914	126,595 143,290 357,161 -
	$ 593,242	627,046

The products which the Company purchases from the above-mentioned subsidiaries are not purchased from other vendors, resulting in no purchase price to compare with other vendors. The payment terms are not significantly different from general vendors.

The Company sold raw materials to the subsidiaries, repurchased some of the finished products then sold them to the Company’s customers, which is not considered as purchases and sales.

The sales amount in 2021 and 2020 was $63,451 thousand and $50,236 thousand respectively, the repurchased amount of finished products in 2021 and 2020 were $69,998 thousand and $56,235 thousand respectively.

(iii) Property transactions

The disposals of property, plant and equipment to related parties are summarized as follows:

Subsidiary company-	2020 Disposal price Gain (loss) from disposal $ 9,979 9,874
	Disposal price $ 9,979

(iv) Guarantee

The Company’s borrowing from financial institutions is provided by a key management in accordance with the requirements of the loan contract.

(v) Other

1) Manager service revenue

Subsidiary company-Edison-Litek Opto Subsidiary company-Edison-Egypt Opto Other	2021	2020
	$ 5,162 2,340 -	5,816 7,368 849
	$ 7,502	14,033

(Continued)

335

EDISON OPTO CORPORATION

Notes to the Financial Statements

2) Rental revenue

Rental revenue
Subsidiary company-Edison-Litek Opto Other	2021	2020 12,343 218
	$ 12,438 136
	$ 12,574	12,561

The rent collected by the company is based on the market of neighborhood office.

3) As of December 31, 2021 and 2020, the unrealized gains of deferred transactions between the parent and subsidiary companies were $9,152 thousand and $14,687 thousand respectively, which were included under long-term equity investment.
4) As of December 31, 2021 and 2020, the unrealized gains of deferred transactions between the parent and subsidiary companies were $3,746 thousand and $1,248 thousand, respectively, which were included under long-term equity investment and share of profit of associates & joint ventures accounted for using equity method, respectively.
(vi) Receivables from Related Parties

The receivables from related parties were as follows:

Account Relationship	December 31, 2021 December 31, 2020 $ 8,045 14,439 - 34,887 1,766 - 40 439
Accounts receivable Sub-subsidiary-Edison Opto USA Accounts receivable Sub-subsidiary-Edison Opto (Dong Guan) Accounts receivable Sub-subsidiary-Edison-Litek Opto Accounts receivable Other Subtotal Other receivables Subsidiary company-Edison-Litek Opto
	9,851 49,765
	(Continued) 2,883 3,220

336

EDISON OPTO CORPORATION Notes to the Financial Statements

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----- Start of picture text -----

Other receivables
Subsidiary
company-Edison-Egypt Opto 161 642
Other receivables
Other 171 399
Subtotal
3,215 4,261
$ 13,066 54,026
----- End of picture text -----

(Continued)

337

EDISON OPTO CORPORATION Notes to the Financial Statements

(vii) Payables to Related Parties

The payables to related parties were as follows:

Account Relationship	December 31, 2021 December 31, 2020 $ 106,686 23,469 - 25,670 23,722 -
Accounts payable Sub-subsidiary-Yangzhou Edison Opto Accounts payable Subsidiary company-Edison Opto Accounts payable Other Total
	$ 130,408 49,139

(viii) Guarantee

The Company's loan from financial institutions is guaranteed by the key management in accordance with the requirements of the loan contract.

(d) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits Post-retirement benefits Share-based payments	2021	2020
	$ 14,304 628 1,554	13,239 - 273
	$ 16,486	13,512

Please refer to note 6(q) for further explanations related to share-based payment transactions.

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets	Object	December 31, 2021 $ 12,259 20,000 2,836 199,931	December 31, 2020 17,312 - 2,813 202,015
Deposits (classified under other current financial assets) Deposits (classified under other non-current financial assets) Deposits (classified under other non-current financial assets) Property, plant, and equipment	The guarantee letter of credit Performance deposit (note) Deposit to customs Issuance of corporate bonds guarantee

(Continued)

338

EDISON OPTO CORPORATION

Notes to the Financial Statements

Property, plant, and equipment Long-term borrowing 529,083 - $ 764,109 222,140

Note: please refer to note 11 for details.

(Continued)

339

EDISON OPTO CORPORATION

Notes to the Financial Statements

(9) Commitments and contingencies:

(a) The Company’s unrecognized contractual commitments are as follows:

Acquisition of property, plant and equipment	December 31, 2021 $ 20,181	December 31, 2020 428,767

(b) The Company won the bid for “The third District of Tainan’s city LED light construction project” in May 2021, and according to the agreement between both parties, the pledge of the fixed deposit is provided as a performance bond amounting to $20,000 thousand, recognized as “other current asset”. However, the Company failed to meet certain conditions stipulated in the contract. Hence, in November 2021, the Company received a letter from the Tainan City Government Works Bureau stating that the aforesaid contract will be terminated; moreover, implementing that the pledged deposit of $20,000 thousand will be confiscated, plus, an additional of $5,000 thousand will be demanded from the Company as compensation. In January 2022, the Company has filed an objection against the decision made by the Tainan City Government Work, and demanded a full refund of its pledged deposit and the disregard of the compensation amounting to $5,000 thousand. The Company evaluated that it has a big probability of winning the case. A legal process has yet to be carried out depending on the outcome of the situation.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events:

Please refer to note 9 for details.

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

By function By item	2021	2021	2021	2020	2020	2020
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits

(Continued)

340

EDISON OPTO CORPORATION

Notes to the Financial Statements

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----- Start of picture text -----

Salary 33,279 80,192 113,471 31,488 60,998 92,486
Labor and health insurance 3,749 6,995 10,744 3,636 5,668 9,304
Pension 1,690 4,267 5,957 1,956 3,442 5,398
’
Director s remuneration ‐ 2,457 2,457 ‐ 924 924
Others 2,446 3,469 5,915 2,660 3,583 6,243
Depreciation 13,809 8,649 22,458 10,743 8,600 19,343
Amortization 39 130 169 86 372 458
----- End of picture text -----

(Continued)

341

EDISON OPTO CORPORATION

Notes to the Financial Statements

Further information of the number of employees and employee benefits as of December 31, 2021 and 2020 were as follows:

Employees Directors not in concurrent employment Average employee benefits Average employee salary Average raise of employee salary Supervisors’remuneration	2021 152	2020 149
	7	6
	$ 939	793
	$ 783	647
	21.02% $ -	0.94%
		-

The Company’s compensation policies for directors, managements and employees are as follows, which include basic salary (principal salary, food allowance, special environmental allowance), year-end bonus and performance bonus.

(a) Principles of compensation policies

The salary payment standard considers the market average, operation of the Company and company structure, the standard will be adjusted when necessary. The compensation of employees is determined by their professionality and experience. Bonuses will be granted considering the Company’s operation and personal performance. The basic salary payment for graduates and foreign employees complies with government regulations.

(b) Connection among compensation policies, procedure of determination and operating results

According to the policy, the Company will appropriate 5% to 15% of the net income as employees' compensation, but the Company has to recover the accumulated deficit first in any. Compensation policy for general manager, deputy general manager and the equivalents is determined by the remuneration committee considering the operating results of the Company, personal contribution and market average, then agreed by the Board of Directors.

The Company has a reward system by giving performance bonus to employee who meets the condition, and year-end bonus will be granted considering the Company’s profitability.

(Continued)

342

EDISON OPTO CORPORATION

Notes to the Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) 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(Note 2)	Ending balance (Note 2)	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 twoparties	Reasons for short-term financing	Allowance for bad debt	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1 2 3	Yangzhou Edison Opto Corporation Yangzhou Edison Opto Corporation Edison-Litek Opto Corporation Limited	Yangzhou Edison-Litek Opto Corporation Edison Opto (Dong Guan) Co., Ltd. Edison-Litek Opto Corporation	Other receivables due from related parties Other receivables due from related parties Other receivables due from related parties	Yes Yes Yes	26,318 (CNY6,000 thousand) 43,863 (CNY10,000 thousand) 31,389 (USD1,100 thousand)	26,064 (CNY6,000 thousand) 43,440 (CNY10,000 thousand) 30,448 (USD1,100 thousand)	- - -	1% 1% 1%	2 2 2	- - -	Short-term financing Short-term financing Short-term financing	- - -	- - -	- - -	237,762 (Note1) 237,762 (Note1) 48,934 (Note1)	475,525 (Note1) 475,525 (Note1) 97,868 (Note1)

Note 1: The allowable aggregate amount of financing provided to others cannot exceed 40% of the lender's stockholders' equity, the maximum amount of financing provided to an individual counterparty cannot exceed 20% of the lender's stockholders' equity.
Note 2: The amount was the financing facility approved by the Board.
Note 3: Based on the Company's guidelines, the allowable amounts of financing are as follows:
- (1) Loan arrangement for business transaction
- (2) Short-term financing purpose
(ii) Guarantees and endorsements for other parties: None
(iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures): None
(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter-p arty	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
Yangzhou Edison Opto Corporation Yangzhou Edison Opto Corporation	Bank of Communications Co., Ltd. RMB structured deposits of Bank of Communications - RMB financial product (exchange rate related) Bank of Communication Co., Ltd. RMB structured deposits of Bank of communications-R MB financial product (exchange rate and binary option related)	Current financial assets at fair value through profit or loss Current financial assets at fair value through profit or loss	Bank of C Bank of C	o - o -	- -	- -	- -	1,492,164 (RMB343,500 thousand) 364,896 (RMB84,000 thousand)	- -	1,496,212 (RMB344,432 thousand) 365,361 (RMB84,107 thousand)	1,492,164 364,896	4,048 465	- -	- -

(Continued)

343

EDISON OPTO CORPORATION

Notes to the Financial Statements

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Name of property	Transaction date	Transactio amount	n Status of payment	Counter-party	Relationship with the Company	If the counter-party is a related party, disclose theprevious transfer information	If the counter-party is a related party, disclose theprevious transfer information	If the counter-party is a related party, disclose theprevious transfer information	If the counter-party is a related party, disclose theprevious transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
The Company	Taiwan Tech. Square 17F	2020.11	536,00	0 107,571	Telin Construction Group	Non-related				-	Appraisal of real estate	Group operating demand	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)

==> picture [467 x 301] intentionally omitted <==

----- Start of picture text -----

Transaction details Transactions with terms different from others Notes/Accounts receivable (payable)
Name of company Related party relationship Nature of Purchase/Sale Amount Percentage of total purchases/sales Payment terms Unit price Payment terms Ending balance receivable Percentage of total notes/accounts (payable) Note
Edison Opto The company Parents Sales (254,343) (42.46)% 90 days No significant - 7,183 7.49%
(Dong Guan) Co., difference
Ltd.
The Company Edison Opto Subsidiary Purchase 254,343 31.24% 90 days No significant - (7,183) (4.14)%
(Dong Guan) Co., difference
Ltd.
Yangzhou Edison The company Parents Sales (329,985) (49.05)% 90 days No significant - 106,686 61.19%
Opto Corporation difference
The company Yangzhou Edison Subsidiary Purchase 329,985 40.53% 90 days No significant - (106,686) (47.75)%
Opto Corporation difference
Yangzhou Edison-Litek Opto Sub-subsidiary Sales (193,857) (81.72)% 90 days No significant - 34,694 56.31%
Edison-Litek Corporation difference
Opto Corporation
Edison-Litek Yangzhou Sub-subsidiary Purchase 193,857 69.46% 90 days No significant - (34,694) (59.07)%
Opto Corporation Edison-Litek Opto difference
Corporation
----- End of picture text -----

(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)

Name of company	Counter- party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequentperiod	Allowance for bad debts
					Amount	Action taken

(Continued)

344

EDISON OPTO CORPORATION

Notes to the Financial Statements

==> picture [442 x 63] intentionally omitted <==

----- Start of picture text -----

Yangzhou Edison The Company Subsidiary 106,686 5.07 - 86,956 -
Opto Corporation company (USD3,854 (USD3,141 thousand )
thousand)
Note 1: As of February 15, 2021.
----- End of picture text -----

(ix) Trading in derivative instruments: None

(Continued)

345

EDISON OPTO CORPORATION

Notes to the Financial Statements

(b) Information on investees:

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

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2021	Balance as of December 31, 2021	Balance as of December 31, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value
The Company The Company The Company The Company The Company The Company The Company Best Opto Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation Edison Fund Investment Corporation Edison-Litek Opto Corporation	Edison Opto Corporation Ledison Opto Corporation Best Opto Corporation Edison Fund Investment Corporation Edison-Litek Opto Corporation Limited Edison-Litek Opto Corporation Edison-Egypt Opto Corporation Best Led Corporation Edision Opto USA Corporation Ledionopto Intelligent Technology Corporation Davinci Opto Corporation Edison Auto Lighting Corporation Edison-Litek Opto Corporation Limited	Samoa Samoa Samoa Taiwan Hong Kong Taiwan Taiwan Samoa USA Taiwan Taiwan Taiwan Hong Kong	Selling of LED components and modules Selling of LED components and modules Selling of LED components and modules Investment Investment Selling of LED components and modules Selling of LED components and modules Investment Selling of LED components and modules Selling of LED components and modules Selling of LED components and modules Selling of LED components and modules Investment	1,041 145,991 1,550,826 686,000 167,661 64,500 25,000 1,550,826 6,392 113,185 - 7,570 33,187	1,041 145,991 1,550,826 655,000 167,661 48,900 47,940 1,550,826 6,392 113,185 5,000 5,100 33,187	30 4,500 50,000 25,000 5,500 11,000 2,500 50,000 220 2,200 - 1,000 3,463	100.00% 100.00% 100.00% 100.00% 44.58% 78.57% 100.00% 100.00% 55.00% 100.00% - % 100.00% 28.06%	6,204 229,348 1,177,189 77,945 109,074 189,903 21,204 1,188,816 30,679 19,684 - 4,020 68,654	(140) 10,957 29,214 8,647 (1,948) 37,259 12,432 29,214 16,710 (4,221) - (1,260) (1,948)	(140) 10,425 27,249 8,488 (868) 36,712 12,432 29,214 9,191 (4,221) - (1,221) (547)	Note 1

Note 1: The dissolution of the Company has been registered in 2021.

(c) Information on investment in mainland China:

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

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment (Note 1)	Accumulated outflow of investment from Taiwan as of January1,2020	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31,2021	Net income (losses) of the investee	Percentage of ownership	Book value	Investment income (losses)	Accumalated remittance of earnings in current period
					Outflow	Inflow
Edison Opto (Dong Guan) Co., Ltd. DongGuan Davinci Opto Co., Ltd. (note 2)	Manufacturing and selling of LED components and modules Manufacturing and selling of LED components and modules	145,991 (USD 4,500 thousand) -	(2) ( (2) (	111,408 USD 3,317 thousand) 52,255 USD 1,714thousand)	- -	- -	111,408 (USD 3,317thousand) 52,255 (USD 1,714thousand)	10,957 (USD 391 thousand) -	100.00% -%	10,957 (USD 391 thousand) -	235,521 (USD 8,509 thousand) -	34,583 (USD 1,183 thousand) -

(Continued)

346

EDISON OPTO CORPORATION

Notes to the Financial Statements

==> picture [467 x 166] intentionally omitted <==

----- Start of picture text -----

Main Total Method Accumulated outflow of Investment flows Accumulated outflow of income Net Accumalated
Name of investee businesses products and of paid-in capitalamount investment (Note 1of ) investment fromJanuarTaiwan as of y 1, 2020 Outflow Inflow December 31 investment fromTaiwan as of , 2021 of the investee(losses) Percentage ownershiof p Book value income (losses)Investment earnings in current remittance of period
Yangzhou Manufacturing 1,550,826 (2) 1,550,826 - - 1,550,826 29,214 100.00% 29,214 1,188,812 -
Edison Opto and selling of (USD (USD (USD (USD (USD (USD
Corporation LED 50,000thousand) 50,000thousand) 50,000thousand) 1,043 thousand) 1,043 thousand) 42,938 thousand)
components
and modules
Yangzhou Selling of LED 2,148 (3) - - - - 40 100.00% 40 2,233 -
Aichuan components (RMB (RMB 9 thousand) (RMB 9 thousand) (RMB
Electronic and modules 500 thousand) 514 thousand)
Trade
Corporation
Yangzhou Manufacturing 270,552 (2) 167,661 - - 167,661 (2,241) 72.64% (1,628) 154,821 -
Edison Litek and selling of (USD (USD (USD (USD (USD (USD
Opto LED 8,875thousand) 5,500 thousand) 5,500thousand) (80) thousand) (58) thousand) 5,593 thousand)
Corporation components
and modules
----- End of picture text -----

Note 1: Investments are made through one of three ways:

(a) Direct investment from Mainland China
(b) Indirect investment from third-party country

i) Edison Opto (Dong Guan) Co., Ltd. is indirectly invested by the Company through Ledison Opto Corporation. ii) Dong Guan Davinci Opto Corporation is indirectly invested by Ledion Opto Lighting Inc. through Led Plus Limited. iii) Yangzhou Edison Opto Corporation is indirectly invested by Best Opto Corporation and Best Ltd. Corporation. iv) Yangzhou Edison-Litek Opto Corporation is indirectly invested by the Company and Edison-Litek Opto Corporation Limited.

i) Yangzhou Aichuan Trade Corporation is 100% invested by Yangzhou Edison Opto Corporation. Note 2: The dissolution has registered in 2020.

(ii) Limitation on investment in Mainland China:

Company Name	Accumulated Investment in Mainland China as of December31,2021	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
The Company	1,829,895 (USD58,817 thousand)	1,654,434 (note 3) (USD59,770 thousand)	Note 1
Ledionopto Intelligent Technology Corporation	52,255 (note 2) (USD1,714 thousand)	47,444 (USD1,714 thousand)	-

Note 1: Since The Company acquired the permission from Industrial Development Bureau at September 9 2019, Ministry of Economic Affairs, the upper limit on investment is not applicable, under “Regulations Governing The Permission of Commercial Behavior in Mainland China”, Article 3 (documentation reference number: 10820423850).

Note 2: DongGuan Davinci Opto Co., Ltd., in which Ledionopto Intelligent Technology Corporation indirectly invested USD2,000 thousand, had completed the cancellation of its business registration and liquidation with the approval of Investment Commission in June 2020. The investment capital amounting to USD286 thousand had been remitted to Ledionopto. However, according to the regulation, the remittance to Mainland China amounting to USD1,174 thousand had been included in the accumulated investment amount.
Note 3: The indirect investment in Yangzhou Ledison Opto Corporation through the Company, with the amount of USD1,000 thousand, was authorized by the Investment Commission. Yangzhou Ledison had completed its liquidation in 2017 and the remitted capital amount of USD1,230 thousand had been cancelled by the Investment Commission. Therefore, the difference between the Accumulated Investment in Mainland China and Investment Amounts Authorized by Investment Commission amounting to USD230 thousand had been deducted by the Company.

(Continued)

347

EDISON OPTO CORPORATION

Notes to the Financial Statements

(iii) Significant transactions:

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

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Lighting Investment Corporation	16,556,182	13.50%
Epistar Corporation	9,424,000	7.68%

(14) Segment information:

Please refer to 2021 consolidated financial report.

(Continued)

348

EDISON OPTO CORPORATION

Cash and cash equivalent

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Cash Bank deposit Total	Description Cash Petty cash Subtotal Check deposit Demand deposit Foreign currency ([email protected]；USD1,954 @27.68；[email protected]；[email protected]； JPY2,[email protected]) Subtotal Time deposit	Amount $ 3,775 275
		4,050
		39 174,586 106,990 281,615
		52,500
		$ 338,165

Note: The time deposit duration were 100~136 days, and interest rate range from 0.49~0.70%.

349

EDISON OPTO CORPORATION

Trade receivable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item 104628 100714 100002 Others(less than 5%) Subtotal Less: Allowance for uncollectible accounts Total	Amount $ 45,612 22,854 10,140 66,789
	145,395 (47)
	$ 145,348

Inventories

Item Finished goods Work in process Raw materials Supplies Inventories in Transit Less：Allowance to reduce inventory to market Total	Amount Cost Market Price $ 20,386 25,197 7,468 7,653 28,388 28,404 231 236 4,407 4,407 (12,717) - $ 48,163 65,897	Note
	Cost $ 20,386 7,468 28,388 231 4,407 (12,717)
		Net Realizable Value Net Realizable Value Net Realizable Value Net Realizable Value Market Price
	$ 48,163

350

EDISON OPTO CORPORATION

Prepayments

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Prepaid fee Tax credit Prepayment Prepaid rent Prepaid insurance Others(less than 5%) Total	Account $ 6,067 4,814 4,062 3,227 1,296 1,430
	$ 20,896

Other current asset

Item Restricted bank deposit Other Total	Account $ 32,259 52
	$ 32,311

351

EDISON OPTO CORPORATION

Changes in investment

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name of investee	Beginning Balance Shares Amount 30,000 $ 6,525 4,500,000 220,457 50,000,000 1,149,610 21,900,000 166,872 5,500,000 110,917 9,700,000 174,444 4,794,000 8,772	Addit	ion Amount - - - 31,000 - 15,600 -	Decr	ease Amount - - - - - - -	Profit or Cost	Others (181) (1,534) 330 (128,415) (975) (36,853) -	Ending Balance	Ending Balance	Amount 6,204 229,348 1,177,189 77,945 109,074 189,903 21,204	Guarantee or Collateral
		Shares - - - 3,100,000 - 1,300,000 -		Shares - - - - - - 2,294,000				Shares 30,000 4,500,000 50,000,000 25,000,000 5,500,000 11,000,000 2,500,000 98,530,000	Holding Percentage
Edison Opto Corporation Ledison Opto Corporation Best Opto Corporation Edison Fund Investment Corporation Edison-Litek Opto Corporation Limited Edison-Litek Opto Corporation Edison-Egypt Opto Corporation Total						(140) 10,425 27,249 8,488 (868) 36,712 12,432			100.00% 100.00% 100.00% 100.00% 44.58% 78.57% 100.00%		None None None None None None None
	96,424,000 $ 1,837,597	4,400,000	46,600	2,294,000	-	94,298	(167,628)			1,810,867

352

EDISON OPTO CORPORATION

Other non-current assets

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item

Prepaid decoration Refunable deposit Total

	Account
$	32,140
	2,935
$	35,075

353

EDISON OPTO CORPORATION

Short term borrowing

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Loan Ending Range of Type Description Balance Contract Period Interest Rate Commitment Collateral Unsecured loans CTBC Bank Co., Ltd $ 69,200 2020.10.16～2021.1.15 0.98% 276,800 None

Trade payables

Manufacturer 101231 100001 Others(less than 5%) Total	Amount
	$ 26,011 8,600 9,327
	$ 43,938

Note: According to the non-disclosure agreement, suppliers' name are substituted by the supplier code.

354

EDISON OPTO CORPORATION

Other payables

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Payroll expense and bonus Accrued expense-factory Others(less than 5%) Total	Amount $ 24,245 17,866 2,397
	$ 44,508

Other current liabilities

Item Advance payment Provisions for Employee benefits Others(less than 5%) Total

Amount $ 29,880 3,404 671 $ 33,955

355

EDISON OPTO CORPORATION

Long term borrowings

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Range of Interest Loan Type Description Rate Commitment Loan Amount Real estate and plant long CTBC bank Co., Ltd 1.1966%~ 2021.1.18-20 $ 306,860 term secured 1.2011% 41.1.18 Less: due within one year (16,080) Total $ 290,780

Other non-current liabilities

Item

Accrued pension liabilities Others(less than 5%) Total

	Account
$	11,710
	25
$	11,735

356

EDISON OPTO CORPORATION

Operating revenue

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item LED transmitter component LED lighting component LED lighting module and product Others Net revenue	Quantity(thousands) 18,580 859,441 12,777 282,120	Amount $ 36,956 305,318 527,505 89,535
		$ 959,314

357

EDISON OPTO CORPORATION

Operating costs

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Raw material Raw-material inventory, January 1 Add: Purchase Less: Raw-material, December 31 Sales Raw material used Suppliers Suppliers, January 1 Add: Purchase of suppliers Less: Suppliers, December 31 Sales Transfered to expenses Suppliers used Manufacturing overhead Manufacturing expenses Manufacturing cost Work in progress, January 1 Add：Purchase Finish goods transfer in Less：Work in process, December 31 Sales Transfered to expenses Manufacturing cost Add：Finish goods, January 1 Purchase Less：Finished goods, December 31 Transfer to work in progress Transfered to expenses Cost of sales－finished goods Cost of sales－materials and suppliers and work in progress Allowance to reduce inventory to market Revenue from sale of scraps Other operating cost Operating cost	Amount $ 9,397 178,516 (28,388) (116,350)
	43,175
	266 780 (231) (105) (13)
	697
	20,663 37,529
	102,064 7,186 1,916 18,763 (7,469) (1,356) (10,825)
	110,279 17,752 572,497 (20,386) (18,763) (177)
	661,202 117,811 (2,539) (19) 11,987
	$ 788,442

358

EDISON OPTO CORPORATION

Selling expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Payroll expense and bonus Import and export expenses Others(less than 5%) Total	Amount $ 27,434 3,479 17,957
	$ 48,870

Administrative expenses

Item Payroll expense, bonus and compensations Professional service fees Depreciation Others(less than 5%) Total	Amount $ 45,517 7,334 4,695 18,690
	$ 76,236

359

EDISON OPTO CORPORATION

Statement of Research and Development Expense

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Payroll expense and bonus Material expense Depreciation Expense Labor expense Research and developement expense Others(less than 5%) Total	Account $ 14,448 1,817 2,522 1,448 1,453 7,539
	$ 29,227

For Statement of Changes in Property, Plant and Equipment, please refer to note 6(h) in financial report.

For Statement of changes in accumulated depreciation of property, plant and equipment, please refer to note 6(h) in financial report.

For Statement of Changes in Right-of-use assets, please refer to note 6(i) in financial report.

For Statement of changes in accumulated depreciation of Right-of-use assets, please refer to note 6(i) in financial report.

For Statement of Change in deferred tax assets, please refer to note 6(o) in financial report.

For Statement of Changes in other income, please refer to note 6(u) in financial report.

For Statement of Other Gains and Losses, please refer to note 6(u) in financial report.

For Statement of Financial Cost, please refer to 6(u) in financial report.

360

AI assistant

EDISON OPTO — Annual Report 2022

52349_rns_2023-05-31_4248b43a-ce4f-42d8-a57c-ed1c343c7d28.pdf

Edison Opto Corporation

2022 Annual Report

I. Names, Titles, Telephone Numbers and Emails of Spokesperson and Deputy Spokesperson:

II. Addresses and Telephone Numbers of Headquarters, Branches and Plants:

III. Name, Address, Telephone Number and Website of Stock Transfer Agent:

IV. Name(s), Firm, Address, Telephone Number and Website of Certified Public Accountant(s) Certifying the Financial Statements of the Most Recent Year:

V. Name of Exchange where Foreign Securities are Listed and Traded, and Manner of Access to the Information of such Foreign Securities: None

VI. Company Website: http://www.edison‐opto.com

Table of Contents

Appendices:

Letter to Shareholders

Dear shareholders:

(2) Budget Implementation

2. Summary of Annual Business Plan for 2023

Company Profile

i. Date of Incorporation: October 4, 2001

ii. Company History:

Corporate governance report

I. Organizational system

2. Businesses operated by major departments

II. Profiles of directors, presidents, vice presidents, associate managers and heads of departments and branches

1. Director

(1) Information about directors and number of shares held

2. Profiles of presidents, vice presidents, assistant managers, heads of departments and branches:

April 1, 2023; Unit: thousand shares

3. Remuneration paid to directors, presidents and vice presidents in the last year

(1) Remuneration for general directors and independent directors (individual disclosure of names and remuneration methods)

Table of remuneration level

III. Operation of Corporate Governance

Attendance of the Independent Directors at each meeting of the Board of Directors in

Other items which should be recorded:

(1) Items listed in Article 14‐3 of the Securities and Exchange Act

5. Succession plan for board members and important management:

Other items which should be recorded:

iii. Deviation and causes of deviation of the Company’s actual governance from Corporate Governance Best‐Practice Principles for TWSE/TPEX Listed Companies:

iv. Composition, responsibilities and operation of the Remuneration Committee:

1. Information about members of the Remuneration Committee

(3)Regular review of salary and remuneration

Other items which should be recorded:

(VI) Integrity policies and practices.

4. Information about public expense items of CPA

5. Information about CPA replacement:

8. Information about the relationship between the shareholders whose shareholding ratio was in the top 10 one:

Capital Overview

1. Capital and shares

(1) Source of share capital

(2) Shareholder structure

(3)Distribution of shares

(4)List of major shareholders:

(6) Dividend Policy and Implementation Status

1. Dividend policy:

2. Distribution of dividend:

Edison Opto Corporation

PROFIT DISTRIBUTION TABLE

(9) Repurchase of the Company’s shares:

2. Corporate bonds:

3. Preferred shares: None.

4. Overseas depositary receipts: None.

5. Employee stock option: None.

6. Restricted stock awards:

7. Issuance of New Shares with Shares Acquired or Assigned from Other Companies: None.

8. Implementation of the Fund Usage Plan:

Business Overview

i. Business activities

B. LED (PLCC) components

(2)LED lighting modules and products

(3)Automotive LED lighting modules

(4)Sensor element

(5)Special lighting

○2Significance of localization

○3Consumers are highly price sensitive

(3) Product trends

C.Increasing application of UV‐LED

D. Evolution of micro LED technology

○2Stabilized industry structure

(4). Product competition

① Changes in market supply and demand

EDISON OPTO Annual Report 2022