EDT — Annual Report 2021

Jul 29, 2021

Stock Code: 3038

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Emerging Display Technologies Corp. Annual Report 2020

Notes to Readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

• Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw

• Annual Report is available at: http://www.edtc.com

• Printed on April 23, 2021

Spokesperson and Deputy Spokesperson

Name: Hsieh, Wen-Hsiung Kuo, Kun-He Title: Vice President of Chairman’s Office Section Manager of Finance Dept. Tel: 886-7-812-4832 ext. 1689 886-7-812-4832 ext. 3005 E-mail: frank@edt.com.tw ryankuo@edt.com.tw

Headquarters, Branches and Plant

Headquarters: No. 5, Central 1[st] Road, Cianjhen Dist., Kaohsiung, Taiwan, R.O.C. Plant: No. 5, South 3[rd] Road, Cianjhen Dist., Kaohsiung, Taiwan, R.O.C. Tel: 886-7-812-4832

Stock Transfer Agent

Yuanta Securities - Stock Transfer Agent

Address: B1F, No. 210, Sec. 3, Chengde Rd., Taipei, Taiwan Tel: 886-2-2586-5859 Website: http://www.yuanta.com.tw

Auditors

KPMG

Auditors: Po Jen, Yang / Yen Ta, Su Address: 12F.-6, No. 211, Chung Cheng 4[th] Rd., Kaohsiung, Taiwan Tel: 886-7-213-0888 Website: http://www.kpmg.com.tw

Overseas Securities Exchange

Not Applicable.

Corporate Website

http://www.edtc.com

Contents

I. Letter to Shareholders…………………………………………………………….……..	1
II. Company Profile
2.1 Date of incorporation………………………………………….……………………...	6
2.2 Company history………………………………………………….……………….….	6
III. Corporate Governance Report
3.1 Organization……………………………………………….……………………….….	8
3.2 Directors, supervisors and management team……………...……………………..	11
3.3 Remuneration paid to directors, supervisors, the general manager, and
assistant general managers……..……………………..………………………….	14
3.4 Implementation of corporate governance…………….……………………….......	18
3.5 Information on CPA professional fees………………….………………………….	49
3.6 Information on replacement of CPA……………….……………………………….	49
3.7 The company’s chairperson, general manager, or any managerial officer in
charge of finance or accounting matters has in the most recent year held a
position at the accounting firm of its certified public accountant or at an
affiliated enterprise of such accounting firm…………………………………....	49
3.8 Any transfer of equity interests and/or pledge of or change in equity interests
by a director, supervisor, managerial officer, or shareholder with a stake of
more than 10 percent………………..……………………………………………….	50
3.9 Relationship among the company’s 10 largest shareholders…………………..	51
3.10 The total number of shares and total equity stake held in any single
enterprise by the company, its directors and supervisors, managerial
officers, and any companies controlled either directly or indirectly by the
company…………….………………………………………………………..….......	51
IV. Capital Overview
4.1 Capital and shares……………………………………….…………………...………	52
4.2 Issuance of corporate bonds……………………………………………………….	58
4.3 Preferred shares……………………………………….……………………………..	58
4.4 Global depository receipts…………………….…………………………………….	58
4.5 Status of employee stock options………………………………………………….	58
4.6 Status of employee retricted stock…………….…………………………………..	58
4.7 Status of new shares issuance in connection with mergers and acquisitions..	58
4.8 Financing plans and implementation…………..………..……………………..…..	58

V. Operational Highlights
5.1 Business activities………………………………….……………….…..……………	59
5.2 Market and sales overview…………………………………………………………	65
5.3 Human resources…………………………………………………….………………	72
5.4 Disbursements for environmental protection……………………………………..	72
5.5 Labor relations………………………………………………………....…………….	72
5.6 Important contracts…………………………………………………………………..	76
VI. Financial Information
6.1 Five-year financial summary…………………………………………...……..…..…	77
6.2 Five-year financial analysis……………………………………………….…..……..	81
6.3 Supervisors’ review report for the most recent year……………………………..	83
6.4 Consolidated financial statements for the years ended December 31,
2020 and 2019, and independent auditors’ report………………….…….………	84
6.5 Parent-company-only financial statements for the years ended
December 31, 2020 and 2019, and independent auditors’ report………..……...	161
6.6 If the company or its affiliates have experienced financial difficulties in the
most recent fiscal year or during the current fiscal year up to the date of
printing of the annual report, the annual report shall explain how said
difficulties will affect the company’s financial situation………………….…….…	237
VII. Review of Financial Conditions, Operating Results, and Risk Management
7.1 Financial position………….……………….…………………………………………	238
7.2 Financial performance……………….……...……………………………………….	239
7.3 Cash flows…………………......……….……………………………………………..	240
7.4 Major capital expenditure items…………..…………………………………………	240
7.5 Investment policy in last year, main causes for profits or losses,
improvement plans and the investment plans for the coming year…….………	240
7.6 Risk analysis and assessment……………………..……..…………………………	241
7.7 Other important matters……………………………….……………………………..	243
VIII. Special Disclosure
8.1 Summary of affiliated companies…………………………….……………………..	244
8.2 Private placement securities in the most recent years…….……………………	246
8.3 The shares in the company held or disposed of by subsidiaries in the
most recent years……………………………………………………………………..	246
8.4 Other matters that require additional description………………………………….	246
IX. 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 printing of the annual report…………….……………….	246

I. Letter to Shareholders

Dear Shareholders,

First and foremost, I would like to thank you for taking time from your busy schedule to attend this shareholders’ meeting. On behalf of edt, I would like to express my upmost appreciation for your support and encouragement.

The results of our operating performance in 2020 and outlook for the future are as following:

2020 Business Report

1. Operating Performance

Our consolidated net operating revenue in 2020 totaled NT$3,737,299 thousand, a mere decline of 9.01% from NT$4,107,559 thousand registered a year ago. Mainly benefited by the growing shipments in smart home appliances in 2019, both revenue and profit enjoyed historical high records in recent years. However, the impact of COVID-19 epidemic in 2020 weakened the sales performance in the end market of both Europe and the U.S. as sales of smart home appliances were not so hectic when such products launched in 2019, and its revenue declined somewhat considerably. Meanwhile, the unfavorable exchange rates affected the consolidated net profits, which declined by 9.36% with the earnings per share (EPS) standing at NT$1.57. In individual products, the sales ratio of LCD modules (LCM) declined to below 40%, while the demand for Capacitive Touch Panel (CTP) and its modules comparatively increased with a ratio exceeding 60% out of total shipments. After our adjustment of product portfolio, the gross profit margin performed better than the previous year, and it has a positive effect on long-term set profit growth and effective capacity utilization.

Looking back on the past year, although there were still many unfavorable macroenvironmental elements, we continued to enhance and improve the touch function of Capacitive Touch Panel (CTP) for diverse small niche markets to service the market demand of various emerging applications that accompany the growth of the “Internet of Things” and expect to achieve stable profit growth.

Combining CTP and TFT-LCD were generally called “Touch Display” which had the diverse development of touch function and will be deepened with the growth of emerging application markets. Encouraged by the improvement of various wireless information transmission technologies and medium-high end mobile computing products, simple and intuitive user interface design has become the mainstream for interactive information display system. Innovation in projected capacitive technology still awaits the touch panel industry to research and develop.

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In the competitive environment of the diversified customized demand market, we have corresponded material application and software design with manufacturing process innovation, implemented professional and technical services, and is committed to the improvement of production yield rate and efficiency as well as effective operating cost control. Holding up to the support of our shareholders, we facilitate the best allocation of company resources and strive to achieve the set operating goals.

2. Consolidated financial results & profitability analysis

2. Consolidated financial results & profitability analysis	2. Consolidated financial results & profitability analysis	2. Consolidated financial results & profitability analysis
Unit: NT$ thousands
	2020	2019
Operating profit	333,952	314,590
Non-operatingincome and expenses	(59,843)	(10,690)
Profit before tax	274,109	303,900
Netprofit	232,996	257,047
Return on assets	6.68%	7.63%
Return on shareholders’ equity	11.84%	13.66%
Pre-tax income topaid-in capital	16.87%	18.71%
Profit ratio	6.23%	6.25%
Earningsper share(NT$)	1.57	1.73

1. Research and development Status

2. (1) From the establishment of edt, the research and development of new technology has been highly valued. We spare no effort in improving product quality and developing new varieties. Research and development results of 2020 are as following:

Item	R&D Results	Description of Benefits
1	Capacitive Touch Integrated with EMR(Electro Magnetic Resonance) Pen Technology	Finish the development of 10.1” demo box with capacitive and electromagnetic pen dual-mode touch display. It is a mixed-sensor integration able to seamlessly and accurately switch between pen and finger input, mainly applies to electronic signature pads, medical instruments, professional graphics tablets or tablets for education.
2	Air Touch Technology for Capacitive Touch Panel	Through the development of the Air Touch algorithm with the external MCU with the capacitive touch IC, edt has successfully developed the first-generation technology that can perform normal non-contact man-machine interface control when the finger is floating at a height of 20mm above the panel. We will continue to develop the second- generation technology and expect to increase the Air Touch floatingsensingheight to 40mm.
3	Microchip maXTouch Solution Development	Through the establishment of independent sensor simulation and firmware parameter adjustment resources by maXTouch Solution, 5” and 12.1” CTP have been approved by customers to enter massproduction.

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4	CTP Water Tolerance Improvement with AI	Improve the water tolerance of the capacitive touch panel through better layout design, and assist customers to solve the problem of false touch or inoperability caused by the shower head flushing on the panel with the touch IC to build a water-tolerance algorithm in the MCU. We will continue to study the MCU built-in AI algorithm to solve the problem of coupling capacitance effect interference caused by the edge wiringwhen there is water on thepanel.
5	2D Touch Display Module + AI Edge Computing in MCU + Simple Audio Recognition Technology Development	Finish the development of capacitive touch display module with 2D touch function and short-voice control function through the establishment of short voice command pre- processing algorithms and AI algorithms in the MCU. We can expand the short voice command recognition function on the existingcapacitive touch displaymodule for customers.
6	Wide Viewing Angle Embedded Product	Finish 4 types of wide viewing angle embedded products on STM32F750 and STM32H750platform.
7	Add-On Board for Embedded Product	Finish the development of 3 types of “Add-On board”, which can help customers to verify concepts and product integration applications. It also realizes the expansion of wired and wireless applications.
8	Integration Air Touch Embedded Product	Finish the integration of various air touch technology in embeddedproduct applications.
9	Intellectual Property Rights (include Patents and Trade Secret)	Number of intellectual property right proposals totaled 24, which include 18 patent proposals and 6 trade secret proposals. Number of intellectual property rights granted totaled 18(proposals accumulated in thepreviousyears).

• (2) Future research and development projects and corresponding budget

In response to the vast market of increasingly popular interaction displays, we plan on investing NT$164,440 thousand into research and development in 2021. In addition to sparing no effort in the research and development of existing areas, we are also quite prepared for new application related software / hardware technologies, such as touch function, somatosensory technology, and embedded system software. Future research and development projects are as follows:

• Floating Imaging with Air Touch Technology Development

• Light Field Floating Image Technology Development

• Flexible Liquid Crystal Device Technology Development

• Touchless Solution Technology Development

• Embedded System Development

• Microchip maXTouch Solution Development

• CTP Water Tolerance Improvement with AI

• Capacitive Touch Panel with Pressure Sensing Function

• AIoT + Audio/3D Gesture Recognition Technology Application Development

• Collecting Big Data for AI Application with Collaborative Robot (Cobot/Co-robot)

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Summary of Business Plan for 2021

1. Business objectives

2. (1) Develop new technologies and products to expand market.

   • Develop technology of black and white color panel effect.

   • Optimize optical bonding process.

3. (2) Develop innovative business model for touch display solution.

   • Develop smart embedded solution.

   • Enhance the service ability of software / firmware.

4. (3) Upgrade digital production information and construct intelligent factory.

   • Digitalization of production management ang lean manufacturing process.

   • Intelligent manufacturing to lower human factors.

5. (4) Enhance efficacy of research and development.

   • Develop human machine somatosensory technology.

   • Establish the development ability of machine learning technology.

2. Expected sales numbers and its basis

• (1) Expected sales numbers for 2021:

• LCD modules 2,300 thousand units

• CTP and its modules 2,200 thousand units

• (2) Basis for expected sales numbers of 2021:

• With the emerging trend of various pan-intelligent products, applications for internet of things, smart home, and wearable devices, the future market demand and application of touch panels will continue to grow.

• The considerable growth potential for small and medium size TFT panels in consumer and pan-industrial electronic products can drive up the sale of TFT modules.

• Integrated touch display design has become the mainstream gradually with various application market and the customization requirements are relatively high. We believe that there will be a yearly double-digit growth for solutions of touch function combined with display panel.

3. Key sales strategies

• (1) Continuous technological development of the CTP manufacturing process and its material, as well as lamination technology / surface treatment / free form cutting technology of related touch sensors and display panels.

• (2) Actively develop new high value-added products and markets, such as large size products and small and medium size displays with embedded systems, and combined with optical bonding, water tolerance, antibacterial touch, 3D gesture control and so on.

• (3) Both business model of low-volume high-mix and high-volume low-mix has pros and cons. Under the principle of 50/50, edt will adopt the sales strategy with most appropriate percentage of above two business models according to supply chain and new technology appliance.

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Future Development Strategies

1. Focus on the innovative technology development of Capacitive Touch Panel (CTP) and continuous proportional increase of niche type Capacitive Touch Panel product structure.

2. Enhance differentiation design ability of TFT-LCD module, actively seek out sales orders for TFT, and satisfy the different customized needs of clients.

3. Continuously enhance design development of pan-industrial control and medical application products to maintain future growth and profitability. Develop embedded system solution, assist the customer in integrated software, firmware and hardware design, and further differentiate and provide high value-added.

4. Actively build IP strategies and invest in research and development to develop futuristic product technology such as 3D gesture, water tolerance touch and intelligent algorithm, so as to seize prior opportunity into high margin markets.

5. Improve the localized and immediate service quality for major clients via the technical service function of overseas channels.

The Impact of the External Competitive Environment, Regulatory Environment and Macroeconomic Conditions

1. In response to EU RoHS and REACH regulations as well as consideration of environmental climate change caused by the greenhouse effect, we will actively work with supplies and venders in corresponding managerial activities that save energy and reduce carbon emission to comply with environmental trends and enhance product competitiveness.

2. In response to trade war, we will effectively readjust and reallocate production line in each area to lower tariff influence to zero.

3. A trend under the COVID-19 epidemic is “work from home” and “remote teaching”. This brings a strong demand in the end market and the production of LCD panels continues to be tight, maintaining an upward situation in panel prices. And the short of materials has remained the price at its high points. Regarded as long-term supply chain relationship, we enable to minimize the impact of material shortages to an extent; and to this end, we prepare materials in advance so as to reduce the pressure of rising prices, and adjust the capacity allocation with more flexibilities to meet customer’s requirements at the same time.

4. During the post-epidemic era, the supply shortage under the globalized economic system is impacting all walks of life for the moment. Aided by long and stable cooperation ties with customers, we have now made an effort into a sustained growth in revenue and profit in the years to come by providing the optimized product portfolio, improving the manufacturing process, and strengthening supply chain communication with effective management.

5. Over 90% of total operating revenue of edt is export in 2020. Since exchange rate fluctuations have a significant impact on us, efficient and stable financial operations will be used for risk aversion.

With dedication to becoming the leading brand with the most complete solutions of small and medium size interaction displays, edt stride to hold up to shareholders’ expectations and achieve the basis for sustainability and stable development.

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Chairman
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II. Company Profile

2.1 Date of incorporation: September 23, 1994.

2.2 Company history:

Year	Milestones
1994	Invested USD250,000 for the merger and acquisition of US distributor EMERGING DISPLAY TECHNOLOGIES CORP., leading to 100% shareholdings ownershipof the subsidiary.
1996	Achieved ISO 9002QualityCertification.
1997	Achieved ISO 9001QualityCertification.
1999	Achieved QS 9000 Quality Certification, the first LCD manufacturer in Taiwan to obtain such status.
2001	Companystock listed TPEx.
2002	Converge from TPEx listed companyto TWSE listed company.
2003	Corporate headquarters moved to No.5, Central 1st Road, K.E.P.Z. Kaohsiung.
2005	Manufacturing headquarters moved to No.5, South 3rd Road, K.E.P.Z. Kaohsiung. First stage expansion of China DongGuan factorycompleted.
2006	Achieved TS16949QualityCertification.
2012	Achieved OHSAS 18001 Quality Certification. Full lamination optical bonding manufacturing process of Thin Film Transistor Liquid Crystal Display (TFT) and Capacitive Touch Panel (CTP) modules development completed. Extended cooperation with current major e-book clients to develop CTP for their full range of tabletproducts.
2013	Co-development of Touch On Lens (TOL) technology with a major Japanese glass manufacturer and expansion into the automotive market. Mass production of TFT and CTP full lamination, shipments totaled 100,000pieces for one month.
2014	Import of laser etching dry process to manufacture Film Sensor. Development of embedded touch technology application for manufacturing process to strengthen the application competitiveness of futureproducts.
2015	Mass production and shipment of touch module designed for an internationally renowned robot, thus elevating the company’s visibility and expanding into market applications of relevant products for Internet of Things (IoT). Achieved compliance and obtained product design from top three rugged tablet clients, thus deepening the high-end market and improvingthegross margin ofproducts.

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2016	Mass production of monitor module supplied for internationally renowned large plants, confirming the capability of strict quality level in medical market and long-term supply guarantee. Obtained AVN touch module design of international brands, improving the market visibilityfor the capabilityof supplyingon-vehicleproducts.
2017	Successfully developed the renowned white goods case, implemented automatic equipment of optical bonding assemble, and further elevated and expanded the customized service. Successfully obtained the cases of hardware and software embedded design in netcom phone brand to expand the appliance in the Embedded Displaymarket.
2018	Participated the partnership with the tier one IC supplier for UI software to enhance the software capability and service support to Embedded products. Succeeded to get the electric car charging station project, whichedt achieves to provide high value added Embedded product including the displaywith touch,assembly,and software design.
2019	Dual-touch design for car dashboard application moved to mass production successfully, way to penetrate the high-end automobile display/touch market. Won 2019 Smart Innovation Application Award by integration of “floating touch” and “smart window” energy saving technology through hand gesture or blue-tooth remote control design. Established regional sales branch in Frankfurt of Germany, aim to expand and raise thepan European market share.
2020	Successfully got the cases of the touch panel module to respond the ventilator application urgent demand for COVID-19. Achieved ISO 13485: 2016 Quality Certification for medical application. Provided the embedded solution to US COVID-19 rapid tester company, which awarded by National Institutes of Health(NIH), Rapid Acceleration of Diagnostics(RADxSM).

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III. Corporate Governance Report

3.1 Organization

3.1.1 Organization structure

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Shareholders’ Meeting
Supervisors
Board of Directors
Compensation Committee Audit Office
Chairman
Chairman’s Office
CSR Committee President & CEO
R&D Center
Quality Assurance
Finance System
LCD Panel
Procurement LCD Module Manufacturing Development Administration
Production Equipment Production Process Business Planning Industrial Safety & Legal Affairs & Market
Research & Development Research & Development Production Management Management Information
Global Business Development
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3.1.2 Major corporate functions

• Chariman: Overall management of all company affairs in accordance with the resolutions of Shareholders’ Meetings and meetings of the Board of Directors.

• Audit Office: Audit and improvement proposals for the internal control systems of sales, finance, accounting, and general affairs.

• Compensation Committee: Policy and structure evaluation of salaries to directors, supervisors, and managerial personnel. Also, suggestions to the board of directors may be references for decisions.

• Chairman’s Office: Corporate governance affairs, public relations, organization communication and coordination.

• President & CEO: By order of the board of directors and the chairman to engage and manage all company policies, systems, and decisions, as well as strategy planning and integration of technical units.

• CSR Committee: Coordination of overall corporate social responsibility policy and strategy goal settings, matters such as follow up of progress in action and performance improvements, and preparation as well as issuance of annual corporate social responsibility report.

• Quality Assurance: Quality assurance and control as well as reliability evaluation and assurance.

• Procurement: Purchase of materials, assets and miscellaneous goods, supplier management.

• Global Business Development: Development and expansion of demand market as well as technical support of business development.

• LCD Module Research & Development: Design and development of new products for module.

• LCD Panel Research & Development: Design and development of new products for panel.

• R&D Center: Design and development of new technologies and embedded products.

• Manufacturing: Manufacturing of various products.

• Production Management: Overall production and processing schedule planning, resources planning management, and warehouse management.

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• Production Equipment: Evaluating / planning / examining production equipments.

• Production Process Development: Introducing the mass production, setting and improving the production process, developing and introducing new process.

• Industrial Safety & Business Planning: Industrial safety and hygiene, waste disposal, and regular maintenance of environmental and electronic facilities.

• Finance: Financial planning, capital allocation, interaction with banks, budget preparation and control, cost control, accounting, stock-related affairs, major investments, and overseas subsidiaries management.

• Administration: Overall matters such as company personnel, general affairs, documentation, and on-the-job training.

• Management Informantion System: Provision of software and hardware equipment as well as support and backup of relevant system.

• Legal Affairs & Market: Domestic and foreign regulation compliance, contract review, IPRs management, litigation, as well as collection and analysis of industry information.

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3.2 Directors, supervisors and management team 3.2.1 Directors and supervisors

3.2.1 Directors and supervisors	3.2.1 Directors and supervisors	3.2.1 Directors and supervisors	3.2.1 Directors and supervisors	3.2.1 Directors and supervisors	3.2.1 Directors and supervisors	3.2.1 Directors and supervisors
																	As of April 17, 2021
Title	Nationality/ Country of Origin	Name	Gender	Date Elected	Term (Years)	Date First Elected	Shareholding when Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by NomineeArrangement		Experience (Education)	Other Position	Executives, Directors or Supervisors who are spouses or withintwo degrees of kinship			Remarks (Note 4)
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chairman	R.O.C.	Tseng, Jui-Ming	Male	Jun. 12, 2018	3	Sep. 14, 1994	11,043,723	6.02%	11,043,723	6.80%	256,759	0.16%	0	0.00%	MBA, CSU, Taiwan / Hitachi / Sharp	None	Director Supervisor	Hsieh, Hui-Tai Tseng, Shu-Ling	In-law Siblings	None
Director	R.O.C.	Hsieh, Hui-Tai	Female	Jun. 12, 2018	3	Jun. 8, 2006	6,486,867	3.53%	6,386,867	3.93%	0	0.00%	0	0.00%	San Sin High School, Taiwan / Director of Jen Da Transportation	None	Chairman	Tseng, Jui-Ming	In-law	None
Director	R.O.C.	Huang, Mao- Hsiung	Male	Jun. 12, 2018	3	Jun. 12, 2018	1,674,536	0.91%	1,674,536	1.03%	0	0.00%			EMBA, NSYU, Taiwan / Hitachi	Executive Vice President of the Company	None	None	None	None
Director	R.O.C.	Ying Dar Investment Development Corp.	None	Jun. 12, 2018	3	Jun. 8, 2006	5,346,672	2.91%	5,346,672	3.29%	0	0.00%	0	0.00%	None	None	None	None	None	None
Representative of Director	R.O.C.	Ying Dar: Wang, Tai-Kuang	Male	Jun. 12, 2018	3	Jun. 8, 2006	1,626,487	0.89%	1,666,487	1.03%	1,802,813	1.11%	0	0.00%	Master, Physics and Astronomy, NCU, Taiwan / Business Manager class of Taiwan AI Academy / Solomon Technologies Corp.	President & CEO of the Company	Supervisor	Lin, Yu-Fen	Spouse	None
Director	R.O.C.	Bae Haw Investment Development Corp.	None	Jun. 12, 2018	3	Jun. 8, 2006	3,447,716	1.87%	3,447,716	2.12%	0	0.00%	0	0.00%	None	None	None	None	None	None
Representative of Director	R.O.C.	Bae Haw: Hsieh, Wen-Hsiung	Male	Jun. 12, 2018	3	May 2, 2013	261,253	0.14%	261,253	0.16%	0	0.00%	0	0.00%	Bachelor, Accounting, FCU, Taiwan / Yuanta Securities Corp.	Vice President & Chairman’s Special Assistant & Corporate Governance Officer of the Company	None	None	None	None
Independent Director	R.O.C.	Li, Chi-Cheng	Male	Jun. 12, 2018	3	Jun. 2, 2015	0	0.00%	0	0.00%	0	0.00%	0	0.00%	Ph.D, MBA, NCKU, Taiwan / Professor of Cheng Shiu University / Representative of supervisor of Yung Chi Paint &Varnish Mfg.Co.,Ltd.	None	None	None	None	None
Independent Director	R.O.C.	Huang, Fu-Di	Male	Jun. 12, 2018	3	Jun. 2, 2015	0	0.00%	0	0.00%	0	0.00%	0	0.00%	Bachelor, Statistics, FCU, Taiwan / KPMG / Representative of supervisor of Taiwan Fushing Industry Corp.	None	None	None	None	None
Supervisor	R.O.C.	Lin, Yu-Fen	Female	Jun. 12, 2018	3	May 23, 2000	1,702,047	0.92%	1,802,813	1.11%	1,666,487	1.03%	0	0.00%	Master, Industrial Economics, NCU, Taiwan / Hotung Investment Co. Ltd.	None	President & CEO	Wang, Tai-Kuang	Spouse	None
Supervisor	R.O.C.	Tseng, Shu-Ling	Female	Jun. 12, 2018	3	May 27, 2004	1,621,209	0.88%	1,186,209	0.73%	1,553	0.00%	0	0.00%	Bachelor, Insurance, MCU, Taiwan	None	Chairman	Tseng, Jui-Ming	Siblings	None
Supervisor	R.O.C.	Ting, Hung-Hsun	Male	Jun. 12, 2018	3	Jun. 12, 2018	0	0.00%	0	0.00%	0	0.00%	0	0.00%	Bachelor, Accounting, CCU, Taiwan / Baker Tilly Clock & CO	Partnership Accountant of Baker Tilly Clock & CO / Independent Director of ShunSin Technology Holdings Limited & CyberTAN Technology, Inc. / Director of CEN LINK Co.,Ltd.	None	None	None	None

Note 1: Huang, Mao-Hsiung did not serve as Director during June 10, 2009 to June 11, 2018.

Note 2: Tseng, Shu-Ling did not serve as Supervisor during June 12, 2001 to May 26, 2004.

Note 3: Ting, Hung-Hsun did not serve as Supervisor during June 2, 2015 to June 11, 2018.

Note 4: Where the chairperson of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto.

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Major shareholders of the institutional shareholders

Major shareholders of the institutional	shareholders
Name of Institutional Shareholders	Major Shareholders
YingDar Investment Development Corp.	EmergingDisplayTechnologies Corp.(100%)
Bae Haw Investment Development Corp.	EmergingDisplayTechnologies Corp.(100%)

Major shareholders of the Company’s major institutional shareholders

Name of Institutional Shareholders	Major Shareholders
Not Applicable

Professional qualifications and independence analysis of directors and supervisors

Criteria Name	Meet One of the FollowingProfessional Qualification Requirements,Together with at Least Five Years Work Experience	Meet One of the FollowingProfessional Qualification Requirements,Together with at Least Five Years Work Experience	Meet One of the FollowingProfessional Qualification Requirements,Together with at Least Five Years Work Experience	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Independence Criteria(Note)	Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessaryfor the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Tseng,Jui-Ming			✓						✓	✓	✓	✓		✓	✓	0
Hsieh,Hui-Tai			✓	✓	✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Huang,Mao-Hsiung			✓		✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Ying Dar Investment Development Corp. Representative: Wang,Tai-Kuang			✓			✓			✓	✓	✓	✓		✓		0
Bae Haw Investment Development Corp. Representative: Hsieh,Wen-Hsiung			✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓		0
Li,Chi-Cheng	✓			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0
Huang,Fu-Di			✓	✓	✓	✓	✓	✓	✓		✓	✓	✓	✓	✓	0
Lin,Yu-Fen			✓	✓	✓			✓	✓	✓	✓	✓		✓	✓	0
Tseng,Shu-Ling			✓	✓	✓			✓	✓	✓	✓	✓		✓	✓	0
Ting,Hung-Hsun		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	2

• Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

• Not an employee of the Company nor any of its related companies.

• Not a director or supervisor of the Company or its affiliates. (However, this does not apply, in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of issued shares of the Company or ranking as one of the top-10 shareholders.

• Not a spouse, relative within the second-degree of kinship, or lineal relative within the third degree of kinship, of any of the persons specified in the preceding three notes.

• Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total number of issued shares of the Company or that ranks among the top-5 in shareholding or the representatives served as directors or supervisors appointed in accordance with Article 27, Paragraph 1 or 2 of the Company Act. (It does not apply in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a director, supervisor or employees of other companies controlled by the same person had shares over half of the Company’s director seats or voting rights. (It does not apply in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a director, supervisor or employees of other companies or institutions whom or his/her spouse is also the chairman, general manager or employee of equivalent position in the Company. (It does not apply in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• 12 -

• Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution that has financial or business relations with the Company. (This does not apply, in the cases where a specific company or institution held more than 20% of the total issued shares of the Company, but less than 50%, and also served as an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a professional individual, sole proprietor, partner, owner of a company or institution, director, supervisor, manager or a spouse thereof of a sole proprietorship, partnership, company, or institution providing auditing or services including commercial, legal, financial, accounting or consultation services to the Company or its related companies withcumulative remuneration less than NT$500,000 in the past two years. However, this does not apply, in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions who performed their functions in accordance with the relevant laws of the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

• Not a spouse or a relative within the second degree of kinship to any other director of the Company.

• Not having any of the conditions defined in Article 30 of the Company Law.

• Not a governmental or judicial person, or a representative of such institutions as defined in Article 27 of the Company Law.

3.2.2 Management team

3.2.2 Management team	3.2.2 Management team	3.2.2 Management team	3.2.2 Management team	3.2.2 Management team
													As of April 17,2021
Title	Nationality/ Country of Origin	Name	Gender	Date Effective	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Managers who are Spouses or Within Two Degrees of Kinship			Remarks (Note)
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
President & CEO	R.O.C.	Wang, Tai-Kuang	Male	Mar. 10, 2004	1,666,487	1.03%	1,802,813	1.11%	0	0.00%	Master, Physics and Astronomy, NCU, Taiwan / Business Manager class of Taiwan AI Academy / Solomon Technologies Corp.	None	None	None	None	None
Executive Vice President	R.O.C.	Huang, Mao- Hsiung	Male	Mar. 1, 2003	1,674,536	1.03%	0	0.00%	0	0.00%	EMBA, NSYU, Taiwan / Hitachi	None	None	None	None	None
Vice President	R.O.C.	Yu, Cheng-Chung	Male	Mar. 1, 2014	1,002,000	0.62%	0	0.00%	0	0.00%	Bachelor, International Business, CYCU, Taiwan / Citizen Watch / Grand Pacific Optoelectronics Corp.	None	None	None	None	None
Vice President & Chairman’s Special Assistant & Corporate Governance Officer	R.O.C.	Hsieh, Wen- Hsiung	Male	Mar. 8, 2017	261,253	0.16%	0	0.00%	0	0.00%	Bachelor, Accounting, FCU, Taiwan / Yuanta Securities Corp.	None	None	None	None	None
Vice President	R.O.C.	Kao, Neng-Sen	Male	Mar. 1, 2018	43,459	0.03%	0	0.00%	0	0.00%	Master, Material Science and Engineering, ISU, Taiwan / Yu-Chun Corp.	None	None	None	None	None
Financial Officer	R.O.C.	Huang, Hsiu-Wen	Female	Mar. 8, 2017	220,862	0.14%	17,404	0.01%	0	0.00%	MBA, CUNY, Baruch College, USA / Yuanta Securities Corp.	None	None	None	None	None
Accounting Officer	R.O.C.	Kuo, Kun-He	Male	Mar. 8, 2017	20,000	0.01%	0	0.00%	0	0.00%	Bachelor, Accounting, THU, Taiwan / Gallant Ocean International Inc.	None	None	None	None	None

Note: Where the chairperson of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of

kinship, an explanation shall be given of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto.

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3.3 Remuneration paid to directors, supervisors, the general manager, and assistant general managers

3.3.1 Remuneration of directors and independent directors

Unit: NT$ thousands / thousand shares

Title	Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Ratio of Total Remuneration (A+B+C+D) to Net Income(%)	Ratio of Total Remuneration (A+B+C+D) to Net Income(%)	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Relevant Remuneration Received by Directors Who are Also Employees	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (%)	Receiving Compensation from an Invested Company Other Than the Company’s Subsidiary or from the Company’s Parent
			Base Compensation (A)		Severance Pay (B)		Bonus to Directors (C)		Allowances (D)				Salary, Bonuses, and Allowances (E)		Severance Pay (F)		Employee Compensation(G)
			The company	All companies in the consolidated financial statements	The company	All companies in the consolidated financial statements	The company	All companies in the consolidate d financial statements	The company	All companies in the consolidated financial statements	The company	All companies in the consolidated financial statements	The company	All companies in the consolidate d financial statements	The company	All companies in the consolidated financial statements	The company		All companies in the consolidated financial statements		The company	All companies in the consolidated financial statements
																	Cash	Stock	Cash	Stock
Director	Chairman	Tseng,Jui-Ming	5,622	5,622	None	None	4,772	4,772	200	200	4.54%	4.54%	9,888	9,888	273	273	1,364	None	1,364	None	9.47%	9.47%	None
	-	Hsieh,Hui-Tai
	-	Huang, Mao- Hsiung
	-	Ying Dar Investment Development Corp.
	Representative of Ying Dar Investment Development Corp.	Wang, Tai- Kuang
	-	Bae Haw Investment Development Corp.
	Representative of Bae Haw Investment Development Corp.	Hsieh, Wen- Hsiung
Independent Director	-	Li, Chi-Cheng	None	None	None	None	1,615	1,615	80	80	0.73%	0.73%	None	None	None	None	None	None	None	None	0.73%	0.73%	None
	-	Huang, Fu-Di
1. Please describe the policies, systems, standards and structure of independent directors’ remuneration, and explain the relevance with the amount of remuneration based on their responsibilities, risks, and time investment: By Article 16 of Articles of Incorporation, the remuneration of independent directors is referred to the level of the related public companies, the Company’s operation status, their value of contribution, and performance evaluations of the Board. Their remunerations were linked with the rationality and fairness of their performance and risk, then submitted to the Compensation Committee for review and to the Board of Directors for approval. 2. In addition to the above remuneration, director remuneration shall be disclosed as follows when received from companies included in the consolidated financial statements in the most recentyear to compensate directors for their services (e.g. actingas a non-employee consultant, etc.): None.

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Range of Remuneration	Name of Directors	Name of Directors	Name of Directors	Name of Directors
	Total of(A+B+C+D)		Total of(A+B+C+D+E+F+G)
	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements
Below NT$ 1,000,000	Hsieh, Hui-Tai / Huang, Mao-Hsiung / Wang, Tai-Kuang / Hsieh, Wen-Hsiung / Li,Chi-Cheng/ Huang,Fu-Di	Hsieh, Hui-Tai / Huang, Mao-Hsiung / Wang, Tai-Kuang / Hsieh, Wen-Hsiung / Li,Chi-Cheng/ Huang,Fu-Di	Hsieh, Hui-Tai / Li, Chi-Cheng / Huang, Fu-Di	Hsieh, Hui-Tai / Li, Chi-Cheng / Huang, Fu-Di
NT$1,000,000 (inclusive) ~ NT$2,000,000 (exclusive)	Ying Dar Investment Development Corp. / Bae Haw Investment Development Corp.	Ying Dar Investment Development Corp. / Bae Haw Investment Development Corp.	Ying Dar Investment Development Corp. / Bae Haw Investment Development Corp.	Ying Dar Investment Development Corp. / Bae Haw Investment Development Corp.
NT$2,000,000(inclusive)~ NT$3,500,000(exclusive)	None	None	Hsieh,Wen-Hsiung	Hsieh,Wen-Hsiung
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive)	None	None	Huang,Mao-Hsiung	Huang,Mao-Hsiung
NT$5,000,001(inclusive)~ NT$10,000,000(exclusive)	Tseng,Jui-Ming	Tseng,Jui-Ming	Tseng,Jui-Ming/ Wang,Tai-Kuang	Tseng,Jui-Ming/ Wang,Tai-Kuang
NT$10,000,001(inclusive)~ NT$15,000,000(exclusive)	None	None	None	None
NT$15,000,001(inclusive)~ NT$30,000,000(exclusive)	None	None	None	None
NT$30,000,001(inclusive)~ NT$50,000,000(exclusive)	None	None	None	None
NT$50,000,001(inclusive)~ NT$100,000,000(exclusive)	None	None	None	None
Over NT$100,000,000	None	None	None	None
Total	9	9	9	9

3.3.2 Remuneration of supervisors

		Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Title	Name	Remuneration						Ratio of Total Remuneration (A+B+C) to Net Income(%)		Receiving Compensation from an Invested Company Other Than the Company’s Subsidiary or from the Company’s Parent
		Base Compensation(A)		Bonus to Supervisors(B)		Allowances(C)
		The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements
Supervisor	Lin,Yu-Fen	None	None	2,423	2,423	120	120	1.09%	1.09%	None
Supervisor	Tseng,Shu-Ling
Supervisor	Ting,Hung-Hsun

Range of Remuneration	Name of Supervisors	Name of Supervisors
	Total of(A+B+C)
	The company	Companies in the consolidated financial statements
Below NT$1,000,000	Lin,Yu-Fen / Tseng,Shu-Ling/ Ting,Hung-Hsun	Lin,Yu-Fen / Tseng,Shu-Ling/ Ting,Hung-Hsun
NT$1,000,000(inclusive)~ NT$2,000,000(exclusive)	None	None
NT$2,000,000(inclusive)~ NT$3,500,000(exclusive)	None	None
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive)	None	None
NT$5,000,001(inclusive)~ NT$10,000,000(exclusive)	None	None
NT$10,000,001(inclusive)~ NT$15,000,000(exclusive)	None	None
NT$15,000,001(inclusive)~ NT$30,000,000(exclusive)	None	None
NT$30,000,001(inclusive)~ NT$50,000,000(exclusive)	None	None
NT$50,000,001(inclusive)~ NT$100,000,000(exclusive)	None	None
Over NT$100,000,000	None	None
Total	3	3

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3.3.3 Remuneration of the general manager, and assistant general managers

Unit: NT$ thousands / thousand shares

Title	Name	Salary (A)	Salary (A)	Severance Pay (B)	Severance Pay (B)	Bonuses and Allowances (C)	Bonuses and Allowances (C)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Ratio of total compensation (A+B+C+D)to net income(%)	Ratio of total compensation (A+B+C+D)to net income(%)	Receiving Compensation from an Invested Company Other Than the Company’s Subsidiary or from the Company’s Parent
		The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
								Cash	Stock	Cash	Stock
President & CEO	Wang, Tai- Kuang	11,530	11,530	415	415	3,932	3,932	2,033	None	2,033	None	7.67%	7.67%	None
Executive Vice President	Huang, Mao- Hsiung
Vice President	Yu, Cheng- Chung
Vice President & Chairman’s Special Assistant & Corporate Governance Officer	Hsieh, Wen- Hsiung
Vice President	Kao, Neng-Sen

Range of Remuneration	Name of President and Vice President	Name of President and Vice President
	The company	Companies in the consolidated financial statements
Below NT$ 1,000,000	None	None
NT$1,000,000(inclusive)~ NT$2,000,000(exclusive)	None	None
NT$2,000,000(inclusive)~ NT$3,500,000(exclusive)	Huang, Mao-Hsiung/ Hsieh, Wen-Hsiung/ Kao, Neng-Sen	Huang, Mao-Hsiung/ Hsieh, Wen-Hsiung/ Kao, Neng-Sen
NT$3,500,000(inclusive)~ NT$5,000,000(exclusive)	Yu, Cheng-Chung	Yu, Cheng-Chung
NT$5,000,001(inclusive)~ NT$10,000,000(exclusive)	Wang, Tai-Kuang	Wang, Tai-Kuang
NT$10,000,001(inclusive)~ NT$15,000,000(exclusive)	None	None
NT$15,000,001(inclusive)~ NT$30,000,000(exclusive)	None	None
NT$30,000,001(inclusive)~ NT$50,000,000(exclusive)	None	None
NT$50,000,001(inclusive)~ NT$100,000,000(exclusive)	None	None
Over NT$100,000,000	None	None
Total	5	5

• 16 -

Unit: NT$ thousands

						Unit: NT$thousands
	Title	Name	Employee Compensation - in Stock(Fair Market Value)	Employee Compensation - in Cash	Total	Ratio of Total Amount to Net Income(%)
Executive Officers	President & CEO	Wang,Tai-Kuang	None	2,356	2,356	1.01%
	Executive Vice President	Huang,Mao-Hsiung
	Vice President	Yu,Cheng-Chung
	Vice President & Chairman’s Special Assistant & Corporate Governance Officer	Hsieh, Wen-Hsiung
	Vice President	Kao,Neng-Sen
	Financial Officer	Huang,Hsiu-Wen
	AccountingOfficer	Kuo,Kun-He

3.3.4 Separately compare and describe total remuneration, as a percentage of net income stated in the parent company only financial reports or individual financial reports, as paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, supervisors, general managers, and assistant general managers, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure

	Year 2020	Year 2019	The analysis of the ratio variation / The policies, standards, and packages, the procedure for determining remuneration, anditslinkage to operating performance andfutureriskexposure
Ratio of total remuneration paid to directors, supervisors, general managers, and assistant general managers to net income (%)	14.02%	12.95%	1. The ratio became higher due to 2020 net income was decreased by 9.27% than 2019, even total remuneration was decreased by 1.76%. 2. In accordance with Article 22-1 of the Articles of Incorporation, the Company shall allocate 5 percent or more as employees’ compensation and 3 percent or less as remuneration for directors and supervisors when there is profit for the current year. The remuneration of directors and supervisors was approved by the Board of Directors based on the industry’s standard, the Company’s operation status and the performance evaluation. The evaluation items regulated in “Evaluation Regulations of the Board’s Performance” contain alignment of the goals and missions of the company, awareness of the duties of a director, participation in the operation of the Company, management of internal relationship and communication, director’s professionalism and continuing education, internal control, and so on. The evaluation of president, vice presidents and managers’ is based on the “Codes for assessment”. In addition, the industry’s standard, their professional competence, personal goal achievement rate, contribution to the Company’s performance and the overall operation performance of the Company are considerate when giving out reasonable remuneration. If there is any significant negative event (e.g. internal maladministration, staff fraud) resulted from directors, supervisors and managerial personnel, the evaluation of their remuneration will be affected. Related performance evaluation and reasonable remuneration are reviewed by Compensation Committee and the Board of Directors. They will timely review and adjust remuneration system according to the actual operation status and related regulations, so a balance between sustainable operation and risk management is reached.

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3.4 Implementation of corporate governance 3.4.1 Board of Directors

A total of 6 (A) meetings of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%) 【B/A】	Remarks
Chairman	Tseng,Jui-Ming	6	0	100%	Re-elected on June 12,2018
Director	Hsieh,Hui-Tai	4	0	67%	Re-elected on June 12,2018
Director	Huang,Mao-Hsiung	6	0	100%	Newlyelected on June 12,2018
Director	Ying Dar Investment Development Corp. Representative: Wang,Tai-Kuang	6	0	100%	Re-elected on June 12, 2018
Director	Bae Haw Investment Development Corp. Representative: Hsieh,Wen-Hsiung	6	0	100%	Re-elected on June 12, 2018
Independent Director	Li, Chi-Cheng	6	0	100%	Re-elected on June 12, 2018
Independent Director	Huang, Fu-Di	6	0	100%	Re-elected on June 12, 2018
Supervisor	Lin,Yu-Fen	6	0	100%	Re-elected on June 12,2018
Supervisor	Tseng,Shu-Ling	2	0	33%	Re-elected on June 12,2018
Supervisor	Ting,Hung-Hsun	3	0	50%	Newlyelected on June 12,2018
Other mentionable items: 1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (1) Matters referred to in Article 14-3 of the Securities and Exchange Act. (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writingthat require a resolution bythe board of directors. The dates of the meetings and sessions Contents of motion and the company’s responses Matters referred to in Article 14-3 of the Securities and Exchange Act Matters involving objections or expressed reservations by independent directors March 10, 2020 11thof 9thsession To discuss the amendment of internal control system, version 18, and internal audit system and rules,version 7. ✓ To discuss remuneration adjustments of 2020 for the Chairman and managerial employees. ✓ Independent directors’ opinions: None. The company’s responses: None. Resolution: All motions were passed unchanged by all directors present excluding those directors avoidingof motions in conflict of interest on above 2ndmotion. August 5, 2020 15thof 9thsession To discuss the adoption of “Procedures for Share Repurchase” and the amendments of “Financing Cycle” of internal control system. ✓ To discuss the amendments of “Procedures for Loaning Funds to Others”. ✓ Independent directors’ opinions: None. The company’s responses: None. Resolution: Passed unchanged byall directorspresent. November 3, 2020 16thof 9thsession To discuss and review of all remunerations of 2021 for directors, supervisors,and managerialpersonnel. ✓ To discuss year-end remunerations and bonuses to the Chairman and managerialpersonnel for 2020. ✓ Independent directors’ opinions: None. The company’s responses: None. Resolution: All motions were passed unchanged by all directors present excluding those directors avoidingof motions in conflict of interest.

• 18 -

• If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:

The dates of the meetings and sessions	Contents of motion	The directors’ names	Causes for avoidance	Voting
March 10, 2020 11thof 9thsession	To discuss remuneration adjustments of 2020 for the Chairman and managerial personnel.	Tseng, Jui-Ming / Huang, Mao-Hsiung / Ying Dar Investment Development Corp. Representative: Wang, Tai-Kuang / Bae Haw Investment Development Corp. Representative: Hsieh, Wen-Hsiung	Because the mentioned directors served as the Chairman or managers of the Company, they should be avoidance in accordance with the “Rules of Procedure for Board of Directors Meetings”.	This motion was approved by the remaining directors.
November 3, 2020 16thof 9thsession	To discuss and review of all remunerations of 2021 for directors, supervisors, and managerial personnel. To discuss year-end remunerations and bonuses to the Chairman and managerial personnel for 2020.	Tseng, Jui-Ming / Huang, Mao-Hsiung / Ying Dar Investment Development Corp. Representative: Wang, Tai-Kuang / Bae Haw Investment Development Corp. Representative: Hsieh, Wen-Hsiung	Because the mentioned directors served as the Chairman or managers of the Company, they should be avoidance in accordance with the “Rules of Procedure for Board of Directors Meetings”.	This motion was approved by the remaining directors.

1. The evaluation cycle and period, evaluation scope, method and evaluation content and other information of the self (or peer) evaluation of the Board of Directors:

Cycle	Period	Evaluation scope	Evaluation method	Evaluation content
Once a year	January 1, 2020 ~ December 31, 2020	Overall Board	Internal evaluation of the Board	Participation in the operation of the company Improvement of the quality of the board of directors’ decision making Composition and structure of the board of directors Election and continuing education of the directors Internal control
		Each director	Self-evaluation by each director	Alignment of the goals and missions of the company Awareness of the duties of a director Participation in the operation of the company Management of internal relationship and communication The director’s professionalism and continuing education Internal control
		Compensation Committee	Self-evaluation by each member of the Compensation Committee	Participation in the operation of the company Awareness of the duties of the functional committee Improvement of quality of decisions made by the functional committee Makeup of the compensation committee and election of its members Internal control

1. Measures taken to strengthen the functionality of the board: (1) Enhancement for function of the Board of Directors

2. Election of directors and supervisors was held on June 12, 2018. Directors and supervisors have neither a spousal relationship nor a relationship within the second degree of kinship with any other supervisor or with any director, with the exceptions of company representative Wang, Tai-Kuang and supervisor Lin, Yu-Fen (spouse), director Tseng, Jui-Ming and supervisor Tseng, Shu-Ling (siblings), director Tseng, Jui-Ming and director Hsieh, Hui-Tai (in-laws).

In accordance with the “Regulations Governing Procedure for Board of Directors Meeting of Public Companies” released by the Financial Supervisory Commission, “Rules of Procedure for Board of Directors Meetings” was adopted and followed by the Board of Directors. “Evaluation Regulations of the Board’s Performance” was also adopted and the Corporate Governance Officer was appointed to implement corporate governance and enhance the Company’s board functions. In addition, several members of the Board have attended continuing education courses that are related to corporate governance during their term in office. The courses are organized by institutions designated in the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE/TPEx Listed Companies.

(2) Establishment of the Audit Committee

The Company is scheduled to hold a Shareholders’ Meeting on June 15, 2021 for election of all directors. Of elected directors, three independent directors will form the Audit Committee to assist the Board of Directors in enhancing the Company’s governance efficiencies.

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3.4.2 Audit Committee or attendance of Supervisors at Board Meetings: An audit

committee has not been established. The state of participation in board meetings by the supervisors are as following:

A total of 6 (A) meetings of the Board of Directors were held in the previous period. The attendance of supervisors was as follows:

Title	Name	Attendance in Person (B)	Attendance Rate (%) 【B/A】	Remarks
Supervisor	Lin,Yu-Fen	6	100%	Re-elected on June 12,2018
Supervisor	Tseng,Shu-Ling	2	33%	Re-elected on June 12,2018
Supervisor	Ting,Hung-Hsun	3	50%	Newlyelected on June 12,2018
Other mentionable items: 1. Composition and responsibilities of supervisors: (1) Communications between supervisors and the Company’s employees and shareholders (e.g. communication channels and methods, etc.): Specialist will contact the supervisors whenever necessary and supervisors will attend shareholders’ meeting, thus establishing the channel of communication between company employees and shareholders. (2) Communications between supervisors and the Company’s chief internal auditor and CPA (e.g. items, methods and results of the audits of corporate finance or operations, etc.): Supervisors can communicate with internal auditor and CPA regarding finance and business, and attend the Board Meetings to hear reports from directors and managerial employees as well as participate in discussions and decision making. Communication status during2020 was as follows: Communicator Date Communication ways Communication points Results of communication Chief internal auditor March 10, 2020 Board of Directors 2019 Q4 internal audit report. Implementation report of ethical corporate management. No comment May 5, 2020 Board of Directors 2020 Q1 internal audit report. Report of communication with stakeholders. Management report of intellectualproperty. No comment August 5,2020 Board of Directors2020 Q2 internal audit report. No comment November 3, 2020 Board of Directors 2020 Q3 internal audit report. Management report of information security risk. Implementation report of risk management. No comment November 3, 2020 Forum Making and implementation method of internal auditplan for 2021. No comment CPA March 10, 2020 Forum Responsibilities of auditing financial statements, audit scope, audit findings, and independence declaration of auditors. Self-compiling of financial report by the company Important revision of laws and regulations. No comment December 28, 2020 E-mail Audit plan. The items attended by the authorities. Other notice. Important revision of laws, regulations and accounting principals. No comment 2. If a supervisor expresses an opinion during a meeting of the Board of Directors, the dates of the meetings, sessions, contents of motion, resolutions of the directors’ meetings and the company’s response to the supervisor’s opinion should be specified: None.

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3.4.3 The state of the Company’s implementation of corporate governance, any variance from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies”?	✓		The Company has established the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”. The information has been disclosed on the Market Observation Post System website and the Company’s website.	None.
2. Shareholding structure & shareholders’ rights (1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3) Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4) Does the company establish internal rules against insiders trading with undisclosed information?	✓ ✓ ✓ ✓		The Company has designated a spokesperson and deputy spokesperson responsible for the handling of issues such as suggestions or dispute from shareholders. Stock related divisions handle related matters and accurately perceive significant shares transactions of shareholders. The Company and its affiliated companies operate independently. Codes for the establishment and management of subsidiaries have been set forth. Regular and timely auditing will be conducted by audit office, finance department or CPA. The “Codes for Ethical Management” and “Procedures for Preventing Insider Trading” implemented, regulates the Company’s employees to follow provision of the Securities and Exchange Act and not to use undisclosed information to engage in insider trading.	None. None. None. None.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop and implement a diversified policy for the composition of its members? (2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Whether the company formulates the regulations and method for the performance evaluation of the board of directors, conducts performance evaluation regularly every year, reports the results of the performance evaluation to the board of directors, and takes it as a reference for the remuneration, nomination and re- appointment of each director?	✓ ✓	✓	The Company has set up the policy of diversified members of the Board under Article 20 of the “Corporate Governance Practice Principles”, including considerations of the basic condition and value of the members of the Board (e.g. gender, age, nationality, and culture) and the professional knowledge and skills (e.g. law, accounting, industry, finance, marketing, or technology). In order to reach the ideal goal of corporate governance, the Board shall have the overall capability of operation management, leadership and decision making, knowledge in the industry, and financial accounting. The management objective, achievement of objective and implementation of this policy are listed in Note 1 and disclosed on the Company’s website. The Company currently only has the Compensation Committee and is planning on establishing the Audit Committee in June 2021. There are no committees of any other function. “Evaluation Regulations of the Board’s Performance” were implemented after the approval of the Board on November 8, 2017, and made revisions continuously. Regulation stated that evaluation of the Board’s performance shall be completed before the end of the first quarter of the following year, including the overall Board performance, each director and Compensation Committee. Evaluation method includes self-evaluation of the Board, each director/member of Compensation Committee.	None. Not in accordance with Article 27 of “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”. Considering the simplicity of the current business volume, there is no urgent need. Once business volume has expanded to a certain extent, establishment will be as required. None.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
(4) Does the company regularly evaluate the independence of CPAs?	✓		The deliberative unit of Board of Directors is responsible for the performance evaluation which was conducted by questionnaire survey. First, the deliberative unit collects information related to Board of Directors and conducts an overall evaluation, then each director/member of Compensation Committee would make a self- evaluation.The result of performance evaluation will also be a criterion for review and improvement of directors/members of Compensation Committee, and a reference for remuneration, nomination and re- appointment. 2020 evaluation of the Board’s performance was completed in the beginning of 2021, and its result was proposed at the Board meeting on March 10, 2021. The measurement items and evaluation result are listed in Note 2 and disclosed on the Company’s website. The CPA accounting firm for the Company is KPMG. Referencing “Statements of Auditing Standards(SAS)” and “The Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China No.10”, the Company assesses the independence and suitability of CPAs annually through questionnaires to ensure the Company and its subsidiaries or affiliated companies have no conflicting interests with CPAs. Items of assessment include the independence and objectiveness of their financial interests, business relations as well as family and personal relations. Yang, Po-Jen and Su, Yen-Ta, CPAs for year 2020 and 2021, have achieved the Company’s standards of the independence after evaluation. The evaluation result (as Note 3) and “confirmation of independence” provided by CPAs were submitted to and passed by the board meeting held on March 10, 2020 and March 10,2021.	None.

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Evaluation Item		Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
4. Whether TWSE/TPEx listed companies have deployed appropriate numbers of suitable corporate governance personnel, and designated corporate governance directors responsible for corporate governance-related matters (including but not limited to providing directors, supervisors with information required to perform business, assisting directors, supervisors in complying with laws, handled matters related to of the board meetings and shareholders’ meeting on the basis of the laws, prepared the minutes of the board of directors and shareholders’ meetings, etc.)?	✓		The Company appointed Hsieh, Wen- Hsiung, Vice President & Chairman’s Special Assistant, as the ” Corporate Governance Officer” and approved by the Board of Directors on May 8, 2019 to protect the rights of shareholders and enhance the function of the Board of Directors. Another corporate governance personnel was not deployed yet. That officer was with a minimum of three year experience in financial management in a public company, and has participated in appropriate educational training courses to comply with the stipulations of the regulations (as Note 5). The main responsibilities of “Corporate Governance Officer” are as below: A. Handling matters relating to board meetings and shareholders’ meetings according to laws. B. Producing minutes of board meetings and shareholders’ meetings. C. Furnishing information required for business execution by directors and supervisors. D. Assisting in onboarding and continuous development of directors and supervisors. E. Assisting directors and supervisors with legal compliance. The corporate governance operation status of year 2020 was listed below and proposed at the Board meeting on March 10, 2021: A. Assisting directors and supervisors for business execution, furnishing information required by them, and assisting them for continuous education. ‧Irregularly revising the internal procedures in accordance with the latest corporate governance- related laws and regulations and furnishing those to directors and supervisors as references when they took office. ‧Furnishing information required for business execution by directors and supervisors. Keeping a smooth communication channel between directors, supervisors and the Company’s staff.	None.

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Evaluation Item		Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
			‧Arranging communication forums with independent directors, supervisors, chief internal auditor and CPAs. (Communication status is disclosed on the Company’s website and “3.4.2 Audit Committee or attendance of Supervisors at Board Meetings” in this report.) ‧Furnishing education information to directors and supervisors. B. Handling matters relating to board meetings and shareholders’ meetings. ‧Confirming the convention of board meetings and shareholders’ meetings in accordance with related laws and Corporate Governance Practice Principles. ‧Planning the agenda for a Board meeting and send notice to directors and supervisors seven days before the meeting. Conducting the meeting and provide meeting data. Sending notice ahead on proposal items with conflicts of interest and completing the meeting minutes with twenty days after the meeting. ‧Preparing the meeting notice, handbook, and meeting minutes of shareholders’ meeting before the deadline. ‧Reporting corporate governance operation status to directors and supervisors. C. Performance evaluation of the Board for year 2020. D. Noticing the Board members immediately after releasing important message to make sure the Board members were informed immediately of the Company’s important message. E. Purchasing the “Directors & Supervisors Liability Insurance” for directors and supervisors. F. Assisting directors and supervisors with legal compliance by irregularly sending related laws and regulations.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?	✓		The Company respects the rights of the stakeholders. By identifying the stakeholders and with proper communication and involvement of stakeholders, the Company can understand the reasonable expectations and needs and therefore response properly to the major corporation social responsibility issue that concerned the stakeholders. The Company has set up a section for the stakeholders on the official website to disclose and communicate the major issues that concerned the stakeholders, and submitted the communication status with stakeholders to the board meeting periodically. The recent report to the board meeting is scheduled in May 2021, and its details is in Note 4. Besides, the Company has posted phone number and email contact information of the spokesperson and deputy spokesperson on the Market Observation Post System and the Company’s website for communication with the stakeholders. Also prepare the corporation social responsibility report on the Company’s website of reference for the stakeholders yearly.	None.
6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?	✓		The Company has commissioned the professional stock affairs agent - Yuanta Securities Stock Transfer Agent to handle matters of shareholders’ meetings.	None.
7. Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?	✓ ✓		The Company has established a website where information on financial operations and corporate governance is disclosed timely. The Company has websites in Chinese and English. In addition to a designated specialist responsible for the collection and disclosure of company information, persons with comprehensive understanding of the company’s finance and business or are able to coordinate departments to provide relevant information are chosen as the spokesperson and deputy spokesperson and provide statements on behalf of the Company. Besides, the movie of investor conference was put on the Company’s website. All above measures are to insure the timely and full disclosure of information that may influence the decisions of shareholders and stakeholders.	None. None.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
(3)Whether the company announced and reported the annual financial report within two months after the end of the fiscal year, and announced and reported the first, second and third quarter financial reports and operation of each month in advance before the prescribed period?		✓	The Company did not announce and report the annual financial report within two months after the end of the fiscal year, but already announced and reported the first, second and third quarter financial reports and operation of each month in advance before the prescribed period.	Not in accordance with Article 55 of the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies due to the complicated process of preparing annual consolidated financial report. The Company will continuously improve it.
8. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?	✓		A. In addition to paying tax for annual earnings, the Company fulfils its national and social responsibility by purchasing group accident insurance for its employees and allowing employees and their families to have peace of mind. B. Significant information of the Company are handled according to the regulations of the “Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Companies with Listed Securities” to ensure the rights of stakeholders and investors. C. Suitable educational courses are selected by directors, supervisors, and managerial personnel (including corporate governance officer) according to their time and professional background. Status of continuing education in recent years is listed in Note 5. D. Important matters, such as major operational decisions, investments, endorsements and guarantees, loans, and financing, should be evaluated and analyzed by responsible departments and executed according to resolutions of the meeting of the Board of Directors. Responsible departments should reference the results of self-assessment to take measures and make improvements for risk control. E. Liability insurance purchased for directors and supervisors has a compensation limit of US$5 million. Current insurance period is one year starts from January 18, 2021. The details of liability insurance has been submitted to the board meetingheld on March 10,2021.	None.

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	Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the reason
		Yes		No	Abstract Explanation
9.	Detail the improvement based on the corporate governance assessment result announced by the TWSE Corporate Governance Center in the latest year; propose the urgent matters and actions for the itemsnotimproved.(The companynotlistedforassessmentisnotrequired tolist) Indicators Assessmentresults Improvements Whether the Audit Committee of the Company discloses its annual task focuses and operation situations or not? The Audit Committee is not yet established for the moment. The Company is scheduled to establish the Audit Committee and abides by indicators in June 2021. Whether the Company’s annual report discloses the link between performance evaluation and remuneration of directors and managers or not? In the annual report, it is not stated that the remuneration payment procedures have taken into account of relevant results of the performance evaluation of directors and managers. The Company expects to implement indicators stipulated in 2021.
	Indicators		Assessmentresults			Improvements
	Whether the Audit Committee of the		The Audit Committee is not yet established for			The Company is scheduled to
	Company discloses its annual task		the moment.			establish the Audit Committee
	focuses and operation situations or not?					and abides by indicators in June
						2021.
	Whether the Company’s annual report		In the annual report, it is not stated that the			The Company expects to
	discloses the link between performance		remuneration payment procedures have taken			implement indicators stipulated in
	evaluation and remuneration of directors		into account of relevant results of the			2021.
	and managers or not?		performance evaluation of directors and
			managers.

Note 1: There are total of seven directors in the 9[th] Board of Directors of the Company. Among them, directors (including their representatives) with employees accounted for 43%, independent directors accounted for 29%, and female directors accounted for 14%. The directors are all in the prime and having comprehensive experience in the field of manufacturing and operation management. The Company emphasizes on the gender equality in the composition of the Board of Directors with the proportion of women accounting for a target of 30% and up. To this end, two more female directors (representatives of legal person directors included) will be nominated in the 10[th] tenure of Board of Directors. The implementation of the diversified policy for the composition of members of the Board of Directors is listed as below:

Core items of diversified policy Name of director	Basic composition	Basic composition	Basic composition	Basic composition	Basic composition	Industryexperience /professional skills	Industryexperience /professional skills	Industryexperience /professional skills	Industryexperience /professional skills
	Nationality	Gender	Age	Seniority of independent director	As employees concurrently	Manufacturing	Operation management	Finance and accounting	Securities and insurance
Tseng,Jui-Ming	R.O.C.	Male	Average 59			✓	✓
Hsieh,Hui-Tai	R.O.C.	Female						✓
Huang,Mao-Hsiung	R.O.C.	Male			✓	✓	✓
Ying Dar Investment Development Corp. Representative: Wang,Tai-Kuang	R.O.C.	Male			✓	✓	✓
Bae Haw Investment Development Corp. Representative: Hsieh,Wen-Hsiung	R.O.C.	Male			✓		✓	✓	✓
Li,Chi-Cheng	R.O.C.	Male		6years			✓
Huang,Fu-Di	R.O.C.	Male		6years				✓	✓

Note 2: The measurement items and evaluation result of the Board’s performance in year 2020 are listed as below:

Evaluation scope	Measurement items	Evaluation result	Items to be improved	Improvement plan or actions
Overall Board	Participation in the operation of the company Improvement of the quality of the board of directors’ decision making Composition and structure of the board of directors Election and continuing education of the directors Internal control	The achieving rate is 98%. It still looks good.	Increase the frequency of board meeting Increase the number of training hours for directors	The improvement actions are as follows which have already been adopted by the Board of Directors and is now in full operation since 2021: Increase the frequency of board meeting −The board meeting shall be held at least 5 times a year, which is higher than the statutory frequency required. −Directors may communicate with company management and other board members at any time via telephone or e-mail outside of the board of directors meeting time to provide a good channel for information exchange. −The Corporate Governance Officer shall be responsible for handling the directors’ demands to ensure that the needs of the board members are met immediately. Increase the number of training hours for directors −It is expected to actively provide the appropriate education and training information to the board members each quarter in order to strengthen prior notice and planning for education and training, and increase directors’ willingness and training hours. −Evaluate whether to hire external lecturers to teach in the Company and facilitate education and training participation bythe board members.
Each director	Alignment of the goals and missions of the company Awareness of the duties of a director Participation in the operation of the company Management of internal relationship and communication The director’s professionalism and continuing education Internal control	The achieving rate is 98%. It still looks good.

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Evaluation scope	Measurement items	Evaluation result	Items to be improved	Improvement plan or actions
Compensation Committee	Participation in the operation of the company Awareness of the duties of the functional committee Improvement of quality of decisions made by the functional committee Makeup of the compensation committee and election of its members Internal control	The achieving rate is 99%. It looks great.	None.	None.

Note 3: The key items of the CPA’s independence assessment standards are listed as below:

Assessment item	Assessment result	Comply with independence or not
The CPA has rotated regularly (generally not more than 7 years per term) for at least a certain period(generallynot less than 2years)before returning.	Yes	Yes
The CPA has no spousal, direct kinship, direct in-law, or relative relationship of second degree or closer with the responsiblepersons or managers of the Company.	Yes	Yes
The CPA or his/her spouse or minor children have no investment, financial benefit sharing, or financial loan relationshipwith the Company.	Yes	Yes
The CPA has completed all financial statement audits for the Companyon schedule.	Yes	Yes
The CPA hasprovided financial and tax consultation services for the Companyirregularly.	Yes	Yes
The CPA has handled no accounts on behalf of the Company.	Yes	Yes
The CPA is not currently employed by the Company to handle regular affairs, not receiving a fixed salary,and not servingas a director or supervisor.	Yes	Yes
The CPA has not served as a director, supervisor, manager, or as a staff member who has a significant influence on the financial statement audit cases; and has resigned for less than two years.	Yes	Yes
The CPA is not involved in major decisions of the Company.	Yes	Yes
The Companyhas not threatened to file legalproceedings against the CPA.	Yes	Yes
The Company has not threatened to revoke appointment for non-audit cases or force the CPA firm to accept an inappropriate accounting policyfor a specific transaction.	Yes	Yes
The Companyhas not threatened to terminate the appointment or renewal for audit cases.	Yes	Yes
The Company has not exerted pressure on the CPA to improperly reduce the audit work that should have beenperformed in order to lowerprofessional fees.	Yes	Yes
The Company’s personnel have not oppressed the auditors with professional attitudes to force them to accept a matter under dispute.	Yes	Yes
The Companyhas obtained the “confirmation of independence” issued bythe CPA every year.	Yes	Yes

Note 4: The major issues that concerned the stakeholders, main communication channels and response method are listed as below:

Stakeholders	Major issues	Main communication channels, response method and frequency	Communication with the stakeholders inyear 2020
Employee	‧Economy performance ‧Market image ‧Waste water and waste ‧Work health and safety	‧Convene employee welfare committee (irregularly) ‧Hold labor-management meeting (quarterly) ‧Convene occupational safety and health committee (quarterly) ‧Annouce on the Company’s internal and external website (irregularly) ‧Convene catering service committee (2~3 months) ‧Compile corporate social responsibility report (yearly) ‧Contact person: Admistration Dept.—Ms. Lo (E-mail: may@edt.com.tw)	‧Assist the health center of Export Processing Zone Administration in Kaohsiung in screening four cancers and actively promote and encourage employees to participate the event to take care of their health and family happiness. There were total 26 people participated. ‧Subsidize employees to participate in the “Kaohsiung Happiness and Healthy Walk” event due to promotion of employee health. A total of 120 people participated. ‧Hold one leisure travel activitie for employees, a total of 84 people participated.

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Stakeholders	Major issues	Main communication channels, response method and frequency	Communication with the stakeholders inyear 2020
Customer	‧Economy performance ‧Market image ‧Supplier’s environment evaluation ‧Conflict minerals ‧Compliance of environmental regulations ‧Waste water and waste ‧Employer-employee relations ‧Industrial relations ‧Trainingand education	‧Conduct the Customer Satisfaction Survey (yearly) ‧Communicate via e-mail, conference, and audit (irregularly) ‧Annouce on the Company’s external website (irregularly) ‧Compile corporate social responsibility report (yearly) ‧Contact person: Global Business Development Division—Mr. Wu (E-mail: service@edt.com.tw)	‧Participate on-line “Electronica 2020” in Munich and “Embedded World” to communicate with customers face to face. ‧Customer satisfaction acceptance index reaches 4.16 (full mark is 5).
Supplier	‧Economy performance ‧Compliance of environmental regulations ‧Waste water and waste ‧Work health and safety	‧Conduct supplier evaluation and on-site audit (irregularly) ‧Annouce on the Company’s external website (irregularly) ‧Compile corporate social responsibility report (yearly) ‧Contact person: Procurement Division—Mr. Chen (E-mail: chencc@edt.com.tw)	‧Total 229 suppliers has signed “edt Supplier Quality and Transportation Agreement”, which contains responsibility of society and environment, and compliance of laws and regulations requested by the Company. 98% of main suppliers have signed this agreement.
Government	‧Economy performance ‧Market image ‧Compliance of environmental regulations ‧Waste water and waste ‧Water resource management ‧Employer-employee relations ‧Work health and safety ‧Training and education	‧Feedback related data for government’s request (irregularly) ‧Audit the compliance of regulations ‧Participate related union / association (irregularly) ‧Compile corporate social responsibility report (yearly) ‧Contact person: Admistration Dept.—Mr. Tan (E-mail: thomas@edt.com.tw)	‧Participate in the forums held by the competent authority, including the Prevention of Insider-Trading Conference, the TWSE(Taiwan Stock Exchange) Corporate Governance Conference, the Labor Standards Act Institute, etc. ‧Irregularly cooperate with the TWSE to check the routine requirements according to laws and regulations. ‧Irregularly meet the request of the TWSE to fill in various online questionnaire.
Stockholder / Investor	‧Economy performance ‧Market image ‧Waste water and waste ‧Employer-employee relations ‧Work health and safety	‧Hold stockholders’ meeting and investor conference (yearly) ‧Set up hotline and e-mail of spokesperson (irregularly) ‧Annouce on the Market Observation Post System (irregularly) ‧Annouce on the Company’s external website (irregularly) ‧Compile corporate social responsibility report (yearly) ‧Contact person: Spokesperson—Mr. Hsieh (E -mail: frank@edt.com.tw), deputy spokesperson—Mr. Kuo (E- mail: ryankuo@edt.com.tw), and stock affairs—Ms. Liu (E-mail: molly@edt.com.tw)	‧Total 32 announcemtnts of material information in Chinese and English. ‧Hold an investor conference. ‧Receive over 25 analysts from domestic institution.
Community resident	‧Economy performance ‧Market image ‧Green gas emission ‧Waste water and waste ‧Employer-employee relations	‧Communicate via telephone (irregularly) ‧Annouce on the Company’s external website (irregularly) ‧Compile corporate social responsibility report (yearly) ‧Contact person: Admistration Dept.—Mr. Tan (E-mail: thomas@edt.com.tw)	‧Donate 13 computers to participate the activity “The Second Life for Computers - Empowering People in Need” initiated by ASUS Foundation. ‧A blood donation event and a charitable event on Moon Festival Holiday were held. There were total 130 employees participated and 100 thousand dollars and 470 gifts donated. ‧In response to the cross- departmental greenhouse gas reduction activity promoted by the Environmental Protection Bureau of the Kaohsiung City Government, the Company donated NT$50 thousand to replace energy-saving lamps of the Kaohsiung Municipal Chung-Cheng Industrial High School.

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Note 5: Continuing education of directors, supervisors, and managerial personnel (including Corporate Governance Officer):

Title	Name	Time of education	Sponsoring Organization	Name of Course	Hours
Independent Director	Li, Chi-Cheng	Sep. 3, 2020	Securities and Futures Institute	Propaganda for preventing insider trading and law compliance of insider stock trading	3
Independent Director	Huang, Fu-Di	Sep. 3, 2020	Securities and Futures Institute	Propaganda for preventing insider trading and law compliance of insider stock trading	3
		Sep. 22, 2020	Taiwan Institute of Directors	KPMG Leadership Academy Forum: Combating the risk of upheaval, upgrading corporate governance	3
Representative of Director / Vice President & Chairman’s Special Assistant / Corporate Governance Officer	Hsieh, Wen- Hsiung (Note)	Mar. 4, 2020	Internal Audit Institute	Operation activities with the risk of unethical conduct and case study	6
		Apr. 28, 2020	Accounting Research and Development Foundation	Enhancing the self-compiling ability of financial reports: internal control/audit and information technology	3
Supervisor	Ting, Hung- Hsun	Apr. 1,2020	CPA Associations	Business taxdeclarationessentials and doubtfulpoints	7
		May 15, 2020	Zhong Dao Association of Leadership & Culture	Guiding corporate governance and social responsibility into company culture	3
		May 22, 2020	Zhong Dao Association of Leadership & Culture	Corporate governance on talent cultivation and succession planning	3
		Jun. 20, 2020	Securities and Futures Institute	Forum of practices of directors (independent directors included), supervisors and corporate governance officers	3
		Jun. 23,2020	CPA Associations	Virtualcurrencyregulationanalyses	3
		Aug. 7,2020	CPA Associations	Statements of Auditing StandardsNO.61	3
		Sep. 28,2020	CPA Associations	Consolidated statement compiling practices	3
		Oct. 21,2020	CPA Associations	Probes on fraud practice of financialstatements	3
		Nov. 17,2020	CPA Associations	Specialpractice cases ofcompanyregistration	4
		Dec. 3, 2020	CPA Associations	The prevention of money laundering for the Accounting Industry	3
Accounting Officer	Kuo, Kun-He	Apr. 28, 2020	Accounting Research and DevelopmentFoundation	Enhancing the self-compiling ability of financial reports: internalcontrol/audit andinformationtechnology	3
		Nov. 12, 2020	Accounting Research and Development Foundation	Competent authority’s policy analyses and internal control management practices of “Assisting corporate to improve self- compiling capability on financialstatement”	6
		Nov. 24, 2020	Accounting Research and Development Foundation	Case study on false financial report and how to find the critical information from financial report	3

Note: Completed 18 hours of education within one year from the date served as the Corporate Governance Officer. 12-hour continuing education shall be exempt in the next year because the time of education is spanning over two years.

3.4.4 Composition, responsibilities and operations of the Compensation Committee

A.Professional qualifications and independence analysis of Compensation Committee members

Position (Note 1)	Criteria Name	Meets one of the following professional qualification requirements, together with at least five years’ work experience	Meets one of the following professional qualification requirements, together with at least five years’ work experience	Meets one of the following professional qualification requirements, together with at least five years’ work experience	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Independence criteria (Note 2)	Number of other public companies in which the individual is concurrently serving as an Compensation Committee member	Remarks
		An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university	A judge, public prosecutor, attorney, Certified Public Accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	Li, Chi- Cheng	✓			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0	None
Other	Hung, Kuang-Te			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0	None
Independent Director	Huang, Fu- Di			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	0	None

Note 1: Please fill in “Director”, “Independent Director” or “Other” in the “Position” section.

• Note 2: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

• Not an employee of the Company nor any of its related companies.

• Not a director or supervisor of the Company or its affiliates. (However, this does not apply, in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of issued shares of the Company or ranking as one of the top-10 shareholders.

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• Not a spouse, relative within the second-degree of kinship, or lineal relative within the third degree of kinship, of any of the persons specified in the preceding three notes.

• Not a director, supervisor, or employee of a corporate shareholder that directly holds 5 percent or more of the total number of issued shares of the Company or that ranks among the top-5 in shareholding or the representatives served as directors or supervisors appointed in accordance with Article 27, Paragraph 1 or 2 of the Company Act. (It does not apply in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a director, supervisor or employees of other companies controlled by the same person had shares over half of the Company’s director seats or voting rights. (It does not apply in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a director, supervisor or employees of other companies or institutions whom or his/her spouse is also the chairman, general manager or employee of equivalent position in the Company. (It does not apply in cases where the person is also an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution that has financial or business relations with the Company. (This does not apply, in the cases where a specific company or institution held more than 20% of the total issued shares of the Company, but less than 50%, and also served as an independent director of the Company or its parent company, subsidiary or the subsidiaries of the same parent company are set up according to this Act or local country ordinances).

• Not a professional individual, sole proprietor, partner, owner of a company or institution, director, supervisor, manager or a spouse thereof of a sole proprietorship, partnership, company, or institution providing auditing or services including commercial, legal, financial, accounting or consultation services to the Company or its related companies withcumulative remuneration less than NT$500,000 in the past two years. However, this does not apply, in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions who performed their functions in accordance with the relevant laws of the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

• Not having any of the conditions defined in Article 30 of the Company Law.

B. Attendance of members at Compensation Committee meetings There are 3 members in the Compensation Committee. The term of office is from June 12, 2018 to June 11, 2021. A total of 3 (A) Compensation Committee meetings were held in the previous period. The attendance record of the Compensation Committee members was as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%)【B/A】	Remarks
Convener	Li,Chi-Cheng	3	0	100%	Re-elected on June 29,2018
Committee Member	Hung,Kuang-Te	2	0	67%	Re-elected on June 29,2018
Committee Member	Huang,Fu-Di	3	0	100%	Re-elected on June 29,2018
Other mentionable items: 1. If the Board of Directors declines to adopt or modifies a recommendation of the Compensation Committee, it should specify the date of the meeting, session, content of the motion, resolution by the Board of Directors, and the Company’s response to the Compensation Committee’s opinion (e.g. the remuneration passed by the Board of Directors exceeds the recommendation of the compensation committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the Compensation Committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None. 3. The contents of motion, resolutions, and the Company’s responses to Compensation Committee were listed as below: The dates of the meetings and sessions Contents of motion Resolutions The Company’s responses March 10, 2020 6thof 4thsession To discuss the distribution of 2019 employees’ compensation and remuneration fordirectors and supervisors. Passed unchanged by all members present. Submitted to the Board meeting and passed unchanged by all directors present. To discuss remuneration adjustments of 2020 for the Chairman and managerial employees. Passed unchanged by all members present. Submitted to the Board meeting and passed unchanged by all directors present excluding 4 directors avoiding of motions in conflict of interest. August 5, 2020 7thof 4thsession To discuss the distribution details of 2019 employees’ compensation and remuneration fordirectors and supervisors. Passed unchanged by all members present. Submitted to the Board meeting and passed unchanged by all directors present. November 3, 2020 8thof 4thsession To review of all remunerations of 2021 for directors, supervisors, and managerial personnel. Passed unchanged by all members present. Submitted to the Board meeting and passed unchanged by all directors present excluding 4 directors avoiding of motions in conflict of interest. To discuss year-end remunerations and bonuses to the Chairman and managerial personnel for 2020. Passed unchanged by all members present. Submitted to the Board meeting and passed unchanged by all directors present excluding 4 directors avoiding of motions in conflict of interest.

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3.4.5 The state of the Company’s performance of social responsibilities, any variance from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
1. Whether the company have conducted risk assessments of environmental, social and corporate governance issues related to its operations in accordance with the materiality principles, and formulated relevant risk management policies or strategies?	✓		The Company has conducted risk assessments of important issues in accordance with the materiality principles, and formulated relevant risk management policies as Note 1.	None.
2. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?	✓		The Company sets up the CSR Committee under President & CEO, in which the executive committee is composed of one person respectively assigned by Finance Dept., Administration Dept., Industrial Safety & Business Planning Dept., Procurement Section, the Staff Benefits Committee. It holds meeting in a non-scheduled way to integrate the resources of each department to promote various CSR operations. The Committee members should hold a discussion meeting in the beginning of the year, then propose an execution plan of the year. An execution result shall be consolidated after the year ends, and be proposed to the Board of Directors once a year. The recent proposal of the execution result was on March 10, 2021. The duties of the Committee are as following: A. Consolidation on corporation social responsibility and goal setting for sustainable operation for the whole Company. B. In the beginning of every year, propose the execution plan of the year on corporation social responsibility and the execution result of the previous year to the Board of Directors. C. Consolidate comments of the stakeholders, also identify and manage the effect, risk, and opportunity of the corporation social responsibility to evaluate and discuss the adaptive strategy. D. Assist in communication with the stakeholders. E. Compiling the CSR report. (2019 CSR report has been completed and disclosed on the Company’s website, and 2020 CSR report is expected to be done in the 3rd quarter of 2021.)	None.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
3. Issues of Environment (1) Does the company establish proper environmental management systems based on the characteristics of their industries? (2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment? (3) Whether the company have assessed the current and future potential risks and opportunities of climate change to the company, and adopted measures to respond to climate-related issues? (4) Whether the company counted the gas emissions of greenhouse, water consumption and total weight of waste in the past two years, and whether the company formulated policies on energy saving and carbon reduction, reduction of greenhouse gas and water consumption or other waste management?	✓ ✓ ✓ ✓		To do the best of corporation responsibilities for the environmental protection and caring for employee’s safety and health, the Company has set up an environmental management system on 2004 in accordance with requirements in ISO 14001. The Company was certified by the ISO 14001 on November 4, 2005, then certified by the ISO 14001 2015 revision on 2017 (validity period is from October 22, 2020 to October 21, 2023). Includes RoHS cleaner production in IECQ QC080000 system on 2006, so it can set up goals for sustainable environment and review regularly. The Company has commissioned qualified firms to handle the recycling of waste. The Company has also introduced energy-saving equipment in the office, used LED lighting fixtures with power-saving marks, and specified upper temperature limits for air- conditioning equipment. In addition, recycling bins with classification of recyclable materials have been placed and internal propaganda on recycling conducted. The Company has assessed the potential present and future climate change related risks and opportunities from three aspects: the policy and regulations, market trends, and climate disaster, then took measures to cope with the climate-related issues. The Company has disclosed them in the “7.1 Environmental Sustainability Management” section of 2019 Corporate Social Responsibility Report. The Company has counted the gas emissions of greenhouse, water consumption and total weight of waste in the past two years, and disclosed them in the “7.3 Greenhouse gas and energy management”, “7.4 Water resource management” and “7.7 Waste management” section of 2019 Corporate Social Responsibility Report. The relevant management policies and implementation results are summarized as follows:	None. None. None. None.

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Evaluation Item			Implementation Status	Variance from the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
			A. Energy saving and carbon reduction, reduction of greenhouse gas: In the past three years, the average annual carbon reduction rate was 3.56%. The target had been set at 2.2% or higher for 2020, which has already been met. The specific measures were: add timers for staircase lighting, shut down wastewater mixers and top-floor’s pressurized motors on holidays, replace new air compressors and air pressure pipelines, adjust pressure difference on cooling-processed water motors, and install timers for fan coil unit sin offices. The total electricity consumption reached 20,147 kilowatts in 2020, saving 964 kilowatts or 4.57% after implementing the measures above. Nevertheless, its total electricity consumption in 2020 was higher than 19,871 kilowatts registered in 2019, attributing to a result of varied sales portfolio. The total carbon emission in 2020 was 12,370 tons. After implementing the measures above, carbon emission was reduced by 571 tons (or 4.55%), but the total carbon emission for 2020 increased by 170 tons compared to that of 2019 due to the same reasons stated above. Using 2019 as the benchmark, the Company has set the target to reach the average annual energy conservation and average annual carbon reduction rate of over 2.5% by 2024 (with the average annual carbon reduction rate increase of 0.5%). B. Water consumption: In the past three years, the average annual water conservation rate was 1.46%. The target was set at 0.36% or higher for 2020, which has already been met. The specific measure was pure water system resin renewal. In 2020, the total water consumption was 291,493 degrees. After implementing the measure above, the water conservation was 7,911 degrees (or 2.64%). However, the total water consumption for 2020 was higher than that of 2019 by 10,876 degrees attributing to a result of varied sales portfolio. Using 2019 as the benchmark, the Company has set the target to reach the average annual water conservation rate of over 0.4% by 2024 (with the average annual water conservation rate increase of 0.05%).

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Evaluation Item			Implementation Status	Variance from the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
			C. Waste reduction: In 2020, each standard working hour produced 0.25 kg of waste, and the target was set at under 0.44 kg, so the target has been met. The specific measure was continuing to improve the production process. Because the Company’s products were converted from traditional LCD modules to touch displays, the use of raw materials was reduced, and the amount of waste generated was relatively reduced as well. In 2020, the total waste was 186 tons. After implementing the measure above, each standard working hour produced waste was reduced by 19.35%, and the total waste for 2020 was lower than that of 2019 by 64 tons. Using 2019 as the benchmark, the Company has set a target to achieve a waste output of less than 0.42 kg per standard working hour by 2024 (the target waste output per standard working hour is reduced by 0.03% annually).
4. Issues of Society (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (2) Does the company formulate and implement reasonable employee benefits measures (including salary, leave, other benefits, etc.), and appropriately reflect the operating performance or results on the compensation of employees?	✓ ✓		The Company strictly observes all local laws and regulations in each global location, and sets up human rights policy in reference to the recognized standards such as Universal Declaration of Human Rights (UDHR), International Labour Organization (ILO), and Ethical Trading Initiative (ETI). This policy applies to all labors including temporary workers, immigrated workers, students, contractors, direct hired and any other types of labors. It covers seven sections: freedom of job choosing, young workers, working hour, wages and benefits, humane treatment, non-discrimination/non- harassment, and freedom of association. The Company has minutely disclosed the human-rights policy, human-rights assessment, human rights risk mitigating measures and other related educational training on the Company’s website. The Company has complied with the “Labor Standards Act” and the relevant laws and regulations to establish and implement the provisions such as the Codes for Salary, Codes for Performance Assessment, and Codes for Work Attendance, in order to provide employees with reasonable or even better welfare measures than those required by the laws, and which are disclosed in detail on the Company’s website. In an attempt to attract and keep outstanding talented employees to share the Company’s operating results, a sound salary structure which includes monthly payment, performance and year-end bonuses is furnished as competitive tools and	None. None.

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Evaluation Item			Implementation Status	Variance from the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
(3) Does the compny provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis? (4) Does the company provide its employees with career development and training sessions? (5) Does the company complie with relevant laws and regulations and international standards for the health and safety of customers, customer privacy, marketing and labeling of products and services, and formulate relevant consumer protection policies and complaint procedures?	✓ ✓ ✓		remuneration incentives. Among this, the monthly salary is mainly awarded by the past experience of employees, abilities possessed, and job values. The performance bonus is granted according to the work contribution and absence status of individuals in each month, while the year- end bonus considers the entire operating performance of the Company and individual performance of employees. In addition, pursuant to Article 22-1 of the Company’s “Articles of Incorporation”, the Company shall allocate 5 percent or more as employees’ compensation to share the profit results with the employees when there is profit for the current year. In regards to labor safety and health, the Company has achieved ISO45001: 2018 Certification and established the industrial safety and business planning department to regularly review the implementation of environmental, safety, and fire prevention of all internal divisions. “Regulations on Employee Physical Examination Management” have been adopted and the Company regularly holds physical examinations for its employees. “Regulations for Emergency Response Procedures” have been adopted to minimize damage in the event of an emergency situation. The Company infirmary is equipped with on-site nurses and occupational doctors to provide the appropriate medical assistance. “Codes for Employee Education and Training” have been adopted. Internal speeches lectured by senior staff are irregularly held to share experiences and elevate knowledge. Employees are encouraged to participate in education and training courses organized by external institutions to gain new knowledge and enhance skills. The Company complies with related laws and regulations as well as quality certifications such as ISO9001 and IECQ QC080000. The use of environmentally hazardous substances is prohibited in all company products. Restrictions of dangerous substances and other hazardous substances follow EU standards for product regulation to suppress the environmental and social harm caused in the product life cycle. To ensure the consumer rights of clients, company products are all passed by quality inspection before being shipped to clients.	None. None. None.

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Evaluation Item			Implementation Status	Variance from the “Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies” and the reason
	Yes	No	Abstract Explanation
(6) Does the company formulate a supplier management policy which requires suppliers to comply with the relevant regulations on issues such as environmental protection, occupational safety and health, or labor rights, and how their implementation is.	✓		The Company has signed employment contracts with all employees, the contents of which include the employee’s confidentiality agreement at work in order to protect customer privacy and intellectual property rights. “Codes for the Management of External Communication” have been adopted to improve customer service satisfaction levels and regulate the procedures of product complaint, suggestions or dissatisfaction from clients and take care of the problems encountered by clients. In addition, a customer satisfaction survey is conducted annually to understand the level of affirmation for the Company from clients as well as to receive opinions and issues from clients to understand the gap between customer needs and expectations. This is used as the basis for improving the quality system, thus achieving a more harmonious relation between the Company and its client and a win-win situation. The Company has adopted “Codes for Management of Contractors” and “edtSocial and Environmental Responsibility (SER) Code of Conduct”, which contains labor rights, occupational safety and health, environment, corporate ethics, prohibitions of conflict minerals, anti-corruption, etc. Before interacting with suppliers, the Company will conduct evaluations based on “Codes for Management of Contractors” and assess the environmental and social impact of the supplier. Once qualified, the materials supplier must sign a “edtSupplier Quality and Transportation Agreement” and commit to strictly follow request from “edtSocial and Environmental Responsibility (SER) Code of Conduct” / Responsible Business Alliance(RBA) Code of Conduct / Responsible Minerals Initiative(RMI) to jointly preserve human rights and protect the environment. Total 229 suppliers (including 98% of main suppliers) has signed “edt Supplier Quality and Transportation Agreement” as of December 31,2020.	None.

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				Variance from the
			Implementation Status	“Corporate Social
				Responsibility Best
	Evaluation Item			Practice Principles for
		Yes	No Abstract Explanation	TWSE/TPEx Listed Companies” and the
				reason
5.	Does the company refer to the	✓	The Company has finished the “Corporate	None.
	reporting standards or		Social Responsibility Report” of 2019. The
	guidelines which are accepted		content of report was compiled in
	internationally for compiling		accordance with GRI Standards set up by
	reports which disclosed the non-		Global Reporting Initiative(GRI), but was not
	financial information of the		verified by external certification institutions
	company, such as the corporate		yet.
	social responsibility report?
	Does the previous report obtain
	the assurance or verification
	statement of a verification unit
	from the thirdparty?
6.	If the Company has established the corporate social responsibility principles based on “the Corporate Social
	Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy
	between the Principles and their implementation: “Corporate Social Responsibility Practice Principles” has
	been adopted and continuously revised. There is no significant departure between implementation and the
	principles.

1. Other important information to facilitate better understanding of the company’s corporate social responsibility practices: In response to environmental protection and reduce the waste of resources, the Company requests employees to use digital documents whenever possible, use tablets instead of paper in the cleanroom, reuse the blank backside of obsolete documents, and also encourages employees to bring their own tableware. The Company regularly gives back to the public. Activities in 2020 are as follows:

2. (1) The Company was actively involved and provided free gifts in a blood donation event initiated by neighborhood companies. 32 employees had participated in blood donation and 470 gifts were sponsored. By paying it forward, the Company expect to attract more people sharing great love to help others.

3. (2) Assist the health center of Kaohsiung Municipal Min-Sheng Hospital in screening four cancers and actively promote and encourage employees to participate the event to take care of their health and family happiness. There were total 9 employees participated in oral cancer screening, 6in breast cancer screening, 6 in cervical cancer screening, and 5 in colorectal cancer screening.

4. (3) In response to the cross-departmental greenhouse gas reduction activity promoted by the Environmental Protection Bureau of the Kaohsiung City Government, the Company donated NT$50 thousand to replace energy-saving lamps of the Kaohsiung Municipal Chung Cheng Industrial Vocational High School.

5. (4) In response to Kaohsiung City Government’s Mid-Autumn Festival gift subscription for people with disabilities event, the Company has held the Mid-Autumn Festival charity event whereby 98 colleagues raised a total of NT$100 thousand. The fund was used to order 390 Mid-Autumn Festival gift boxes from the “Youth-Care-Center Kaohsiung”, and then donated to the Social Affairs Bureau of Kaohsiung City Government Central District Comprehensive Social Welfare Service Center to give to low-income households and elderly people living alone in Kaohsiung City.

6. (5) Donate 13 computers to participate in the ASUS Foundation’s “The Second Life for Computers - Empowering People in Need” activity. Through the assistance of foundation, the recycled PCs with refurbished information are donated to disadvantaged groups, an effort to eliminate the digital gap and to achieve a win-win situation for environmental protection and social welfare at the same time.

Note 1: The risk management policies are listed as below:

Major issues	Risk assessment items	Risk management department	Risk description	Risk management policies
Environment	Climate change and environment	Industrial Safety & Business Planning / Procurement	Environmental pollution or energy waste	◼Reduce greenhouses gas and lower energy usage continuously. ◼Has set up the IECQ QC080000 hazardous substance management system, thus complying with laws and international specifications. ◼Use low-toxicitymaterials so as to meet RoHS standards.

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Major issues	Risk assessment items	Risk management department	Risk description	Risk management policies
		Industrial Safety & Business Planning	Occurrence of climate disasters	◼Both “Emergency Response Management Measures” and “Disaster Recovery Plan Management Measures” are available to quickly respond to emergencies and effectively perform after-treatments. This move expects to minimize personnel injuries, finance, and equipment losses at a lowest level. ◼An all-round emergency escape drill in each factory area is held once per year. Many occupational safety and health education trainings are also implemented to make employees becoming more familiar with emergency responses and enhance theirpost-disaster capabilities.
Society	Occupational safety	Industrial Safety & Business Planning / Administration / Procurement	Unsafe working conditions or endangered employee health	◼Certified for ISO45001: 2018 Occupational Safety and Health Management System. ◼The “Occupational Safety and Health Committee” is established with President & CEO serving as its chairman. At least one time per quarter, this committee will discuss on environmental safety and health issues, and map out relevant projects considerably. ◼Promote the “Responsible Business Alliance (RBA) Code of Conduct” and entrust professional third-parties for verification and auditing to commit to the health and safety of employees. ◼Arrange safety and health training courses for both new staff and in- service employees, an effort to increase the awareness of hazard prevention and bring down the occurrence of industrial safety accidents. ◼In addition to the regular employee health check every year, irregular trainings, and/or announcements are implemented to promote the awareness of employee health. On a regular basis, expertise doctors are stationed at the factoryto offer health consultancies.
Corporate governance	Legal risk	Audit Office / Finance / Legal Affairs & Market / Administration / Industrial Safety & Business Planning / Employee Welfare Committee	Illegal punishment	◼Legal personnel to provide legal consultation and handling advices on internal systems, compliances with laws/regulations, commercial disputes, and intellectual property rights management. ◼A “Codes for Compliance with Laws/Regulations” is implemented so that the Company’s three business fields in production, sales, and management is complied with the Company’s operation-related laws and regulations. ◼Both “Antitrust and Fair Competition Principles” and “Procedures for Preventing Insider Trading” are formulated for employees to specifically regulate precautions in performing business and trading stocks of the Company.
		Legal Affairs & Market	Transaction risk	◼The “Codes for the Use of Seals” is made to control the signing of various types of contracts and related risks, and stipulate the application, use, storage, and cancellation of seals to reduce overall legal risks of the Company.
		Administration	Personal information leakage	◼The “Codes for Personal Data Protection” is formulated aiming to standardize the planning, implementation, operation, supervision, inspection, maintenance, and improvement of the personal information management system.
		Audit Office	Improper employee behaviors	◼Both “Ethical Management Principles” and “Codes for Ethical Management” are implemented to ensure the values of ethical corporate management, and prevent employees from engaging in improper behaviors,thus improvingthe entire corporategovernance.
	Company image	Chairman’s Office	Bad company image	◼Build up a good crisis management and response mechanism during the ordinary days, and in the very first time activate the response system needed to cope with any operational risks that may affect the Company’s image. The spokesperson speaks to the outside world in an unified manner, or clarifies false information through significant information platforms, as well as to maintain the Company’s image and communicate well with all stakeholders.

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3.4.6 The state of the Company’s performance in the area of ethical corporate management, any variance from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and reasons
	Yes	No	Abstract Explanation
1. Establishment of Ethical Corporate Management Policies and Programs (1) Does the company develop ethical corporate management policies approved by the board of directors and clearly state its policies and practices of ethical corporate management in the regulations and external documents? Are the board of directors and the senior management implementing the commitment to business policies? (2) Does the company establish the assessment system for the risks of unethical behaviors and regularly analyze and assess the business activities with higher risks of unethical behaviors within its business scope? Furthermore, does the company establish prevention programs against unethical behaviors, which at least covered the prevention measures for the behaviors in Article 7, Paragraph 2 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”? (3) Does the company clearly establish and implement operating procedures, code of conduct, penalties for violation and complaint system in the prevention programs against unethical behaviors as well as reviewed and revised the aforementioned programs regularly?	✓ ✓ ✓		On November 4, 2014, the Company’s Board of Directors passed the “Ethical Management Principles” as well as “Codes for Ethical Management” and successively revised their contents, which are disclosed via the Market Observation Post System and the Company’s website. In addition, the Company has prepared a corporate social responsibility report each year since 2014 to highlight the Company’s corporate social responsibility and contribution efforts for the stakeholders. The Company’s business philosophy is “quality, honor, sincerity, creativity”. All members of the Board of Directors and senior management are honest and responsible for supervision to create a sustainable business environment. The Company has established the assessment system for the risks of unethical behaviors, and adopted “Codes for Ethical Management” to prohibit those behaviors in Article 7, Paragraph 2 of “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”. Both a concrete reporting and rewards system has been regulated in above codes. In addition, the Company has established an effective accounting system and internal control system with internal auditors periodically verifying the compliance of the aforementioned systems for implementing ethical management. The Company has established the “Codes for Ethical Management” and disclosed it on the Company’s website. The codes provide the operating procedures, code of conduct, penalties for violation, and whistleblowing methods; fully regulated employee business operation precautionary items; and strengthened education, training, and guidance for new employees. In addition, the need for revision is regularly reviewed based on the actual company operation status and the revision of the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”.	None. None. None.

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Evaluation Item			Implementation Status	Variance from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and reasons
	Yes	No	Abstract Explanation
2. Fully Implementing Ethical Corporate Management (1) Does the company evaluate business partners’ ethical records and include ethics- related clauses in business contracts? (2) Does the company establish units exclusive for the promotion of ethical corporate management, which are affiliated under board of directors and will report regularly (at least once a year) to board of directors about the programs, supervision and execution situations for the ethical corporate management policies and the prevention against unethical behaviors? (3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?	✓ ✓ ✓		The Company embraces the principle of integrity in trading with a business partner. The Company will look into the integrity status of the partner and include the compliance of ethical corporate management in a contract, which will include the following: A. If either party involves with any unethical behaviors in business activity, the other party may unconditionally terminate the contract at anytime. B. If either party discovers any personnel violating contract articles about prohibitions of commission, brokerage, or any other benefit, it shall inform the other party of the personnel’s identification, methods of offer, promise, request or receive, and the amount or other benefit. Relevant evidence shall be provided and cooperate on the investigation. If it causes damage in one party, the other party shall request for compensation for the damage. The Company has established the concurrent unit - “Business Integrity Promotion Team” responsible for promoting of ethical corporate management affiliated to the Board of Directors, which should report the implementation status to the Board of Directors at least once a year. The recent proposal to the Board meeting was on March 10, 2021. The implementation status of ethical corporate management policies are listed in Note 1 and disclosed on the Company’s website. Mutual reviews between departments and multi-layered decision approval is used in the internal control system to avoid malpractice and intentional manipulation. The Company has adopted “Codes for Ethical Management” to regulate the methods of informing unethical behaviors and related handling procedures. To prevent interest conflict, the Company has established the channel of “improper conduct complaint” on the official website externally for the manufacturers, customers and employees. Internally, the Administration Dept. and Audit Office of the Company provided hotline, e-mail and special mailbox as the statement channels for the employees. However, no event of improper conduct was complained in 2020.	None. None. None.

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Evaluation Item			Implementation Status	Variance from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and reasons
	Yes	No	Abstract Explanation
(4) Has the company established effective accounting systems and internal control systems for implementing ethical corporate management and has its internal audit unit developed relevant audit programs according to the assessment results for the risks of unethical behaviors as well as reviewed compliance to prevention against unethical behaviors or entrusted accountants to conduct the review? (5) Does the company regularly hold internal and external educational trainings regarding ethical corporate management?	✓ ✓		The Company has established a complete and effective control mechanism for the accounting and internal control systems to target business activities and operating procedures with high potential risks of unethical behaviors. The internal auditors shall list high-risk operations as the top audit items in the annual audit plan according to the risk assessment in order to strengthen preventive measures, and regularly report the implementation status of audit plan to the Board of Directors. In addition, the Company and our key subsidiaries must perform internal control self-assessment each year to examine the internal control system design and implementation effectiveness. To implement ethical corporate management, the Company has held “Responsible Business Alliance (RBA) Code of Conduct” training internally. The content includes ethical management, no dishonest profit, identification protection, retaliation preventing, and so on. In 2020, 824 trainees participated the training with 1,648 training hours in total. In the part of law safety, it opened a total of 66 classes.	None. None.
3. Operation of Status of the Reporting System (1) Does the company establish a concrete reporting and rewards system and provided convenient channels for reporting in addition to assigning appropriate personnel dedicated to handling the matters reported?	✓		The Company has adopted “Regulations on Reflecting Employee Complaint and Opinion” and placed a comment box in the cafeteria. Employees may fill a complaint via the comment box, e-mail to the Administration Dept. or directly notify the Audit Office, and provide supporting information. Besides, the Company has established the channel of “improper conduct complaint” on the official website externally for the manufacturers, customers and employees. “Codes for Ethical Management” regulate the methods of informing unethical behaviors and related handling procedures. Investigations will be carried out after notification is received by the Audit Office. If unethical behaviors have been verified, the matter will be reported to the Chairman to decide on the appropriate measures. Penalties for violation of ethical management have been stated in the “Codes for Ethical Management” and “Employee Handbook”.	None.

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Variance from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and reasons
	Yes	No	Abstract Explanation
(2) Does the company establish standard operating procedures for the investigation on complaints and the follow-up measures to be adopted after the investigation is completed as well as the relevant confidentiality mechanisms? (3) Does the company adopt measures to safeguard the personnel who filed the report from receiving any unfair or inappropriate treatment?	✓ ✓		In the “Codes for Ethical Management”, the Company has regulated all records about the reception of whistleblowing, investigation process, investigation results, and related documentations shall be kept by the Audit Office. If a whistleblowing case has been verified, the relevant units of the Company will review the relevant internal control system and operating procedures, and propose improvement measures to prevent the same behaviors from reoccurring. Moreover, the Audit Office shall report the whistleblowing cases, its handling methods, and the subsequent review and improvement measures to the Board of Directors. In addition, all participating personnel must sign a “Declaration of Confidentiality” to keep confidential the whistleblowers and their reports. The Company has adopted a zero tolerance policy for retaliation. The whistleblowers and their reports will be kept confidential to protect the whistleblowers from any retaliation due to reporting unethical behaviors. The Company will follow-up regularly with whistleblowers whose identities have been disclosed and respond to situation that are reasonably suspected to be retaliation.	None. None.
4. Strengthening Information Disclosure (1) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?	✓		“Ethical Management Principles” and “Codes for Ethical Management” have been disclosed on the Company’s website and the Market Observation Post System. Also, the implementation status of Business Integrity Promotion Team has been disclosed on the Company’s website.	None.
5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation: “Ethical Management Principles” and “Codes for Ethical Management” have been adopted and continuously revised. There is no significant departure between implementation and theprinciples.
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g. review and amend its policies): The Company irregularly revises related ethical management regulations according to the latest laws and regulations as well as the state of implementation. The recent revision was “Ethical Management Principles” revised on August 6,2019.

1. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g. review and amend its policies): The Company irregularly revises related ethical management regulations according to the latest laws and regulations as well as the state of implementation. The recent revision was “Ethical Management Principles” revised on August 6, 2019.

2. 44 -

Note 1: The implementation status of ethical corporate management policies are listed as below:

Note 1: The implementation	status of ethical corporate managementpolicies are listed as below:
Items	The implementation status
Educational trainings	The Company has held “Responsible Business Alliance (RBA) Code of Conduct” training for all employees. The content includes ethical management, no dishonest profit, identification protection, retaliation preventing, and so on. In 2020, 824 trainees participated the training with 1,648 training hours in total. In the part of law safety, it opened a total of 66 classes.
Annual test	The Company has administered the annual test to all employees, and the range of the tests includes “Ethical Management Principles” and “Codes for Ethical Management”. The key point of the annual test in 2020 was to keep integrity in operation, prohibit dishonest profit and damage to the interests of stakeholders, respect to intellectual propertyrights of the Companyand secure the customer’s data in business activities.
Compliance propaganda	The Company has set up a “legal compliance zone” on internal website to integrate the laws related to business activities. Also, the Company has promoted advocacy education for ethical management to remind new employees and active employees of precautions when theyare doingthe business through teachingmaterials.
Regular check	The Company has assessed the risk of corruption to the operational activities of important operating bases. The internal audit and the compliance-based self-evaluation were leaded by the Audit Office every year to achieve effective control and implementation, jointly manage and prevent the occurrence of unethical behaviors. There is no corruption and anti-competition activityin 2020.
Communication channel	The employees may respond to the Administration Dept. via multiple and smooth channels. The Company has also actively announced the ethical corporate management policies and implementation status of that by the external documents or activities such as the Company’s website, annual report and investor conference. There is no response from employees in 2020.
Reporting system / whistleblower protection	The Company has adopted “Codes for Ethical Management” which regulate the whistleblowing methods to prevent unethical behaviors actively and to encourage internal and external persons to report unethical behaviors or improper conduct. Also, the Audit Office is appointed to accept the report. The Company has established the channel of “improper conduct complaint” on the official website externally for the manufacturers, customers and employees. Internally, the Administration Dept. and Audit Office has provided hotline, e-mail and special mailbox as the statement channels for employees. The Company has established a whistleblower protection system to keep confidential the whistleblowers and their reports, and promise to protect the whistleblowers from any retaliation due to reporting unethical behaviors. However, no improper conduct was reported in 2020.

3.4.7 If the company has adopted corporate governance best-practice principles or related bylaws, disclose how these are to be searched Please refer to the Company’s website at http://www.edtc.com/

3.4.8 Other significant information that will provide a better understanding of the state of the company’s implementation of corporate governance: None.

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3.4.9 Internal control system 3.4.9.1 Statement on internal control

Emerging Display Technologies Corp. Statement on Internal Control

Date: March 10, 2021

Based on the findings of a self-assessment, Emerging Display Technologies Corp. (edt) states the following with regard to its internal control system during the year 2020:

1. edt’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 of our financial reporting, and compliance with applicable laws and regulations.

2. 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 edt takes immediate remedial actions in response to any identified deficiencies.

3. edt evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the 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 communication, and (5) monitoring.

4. edt has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.

5. Based on the findings of such evaluation, edt believes that on December 31, 2020, 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 of financial reporting, and compliance with applicable laws and regulations.

6. This Statement will be an integral part of edt’s Annual Report for the year 2020 and 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 Law.

7. This Statement has been passed by the Board of Directors in their meeting held on March 10, 2021, with none of the seven attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Emerging Display Technologies Corp.

Chairman President & CEO

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• 3.4.9.2 Where a CPA has been hired to carry out a special audit of the internal control system, furnish the CPA audit report: The Company did not hire a CPA to carry out a special audit of the internal control system.

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3.4.10 If there has been any legal penalty against the company or its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system where the result of such penalty could have a material effect on shareholder equity or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement: None.

3.4.11 Material resolutions of a shareholders’ meeting or a board of directors meeting:

	3.4.11 Material resolutions of a shareholders’ meeting or a board of directors **meeting: **	3.4.11 Material resolutions of a shareholders’ meeting or a board of directors **meeting: **	3.4.11 Material resolutions of a shareholders’ meeting or a board of directors **meeting: **
	Shareholders’ meeting
Date	Description	Resolutions	Implementation
Jun. 12, 2020	1. Adoption of the Business Report and Financial Statements of 2019.	Passed without objection by all shareholderspresent.	Not applicable.
	2. Adoption of the proposal for distribution of 2019 profits.	Passed without objection by all shareholders present.	The profit to be distributed among shareholders shall be NT$188,889,124 in cash dividends. The ex- dividend date was July 13, 2020 resoluted by the Chairman. The cash dividend was NT$1.2 per share and fully paid on July24,2020.
	3. Amendment to the Company’s “Articles of Incorporation”.	Passed without objection by all shareholderspresent.	Approved by Ministry of Economic Affairs on June 24, 2020 and announced on the Company’s website.
	4. Amendment to the Company’s “Rules for Making of Endorsements/Guarantees”.	Passed without objection by allshareholders present.	Announced on the Company’s website on June 12, 2020 andimplementedhenceforth.
	5. Amendment to the Company’s “Procedures for LoaningFunds to Others”.	Passed without objection by allshareholders present.	Announced on the Company’s website on June 12, 2020 andimplementedhenceforth.
	Board of Directors meeting
Date	Description		Resolution
Mar. 10, 2020	1. To discuss business plan for 2020.		Passed unchanged by alldirectors present.
	2. To discuss business report, financial statements, and consolidated financialstatementsfor 2019.		Passed unchanged by all directors present.
	3. To discuss the distribution of 2019 employees’ compensation and remuneration for directors and supervisors.		Planned compensation for employees totals NT$16,361,542 and remuneration for directors and supervisors totals NT$9,816,925. Total amounts will be paid in cash.
	4. To discuss the proposal for distribution of 2019 profits.		The profit to be distributed among shareholders shall be NT$188,889,124 in cash dividends (NT$1.2 per share).
	5. To discuss the amendment of “Articles of Incorporation”.		Passed unchanged by alldirectors present.
	6. To discuss time, date, location and agenda of shareholders’ meeting for 2020, submission period of proposals and nominations from shareholders with 1% or more shares, and related matters.		Shareholders’ meeting is set to be held on June 12, 2020 at 9amin the 1F conference hall. Submission of proposals from shareholders with 1% or more shares willbe acceptedfrom April5 toApril 15.
	7. To discuss self-assessment and statement on internalcontrol for 2019.		Passed unchanged by alldirectors present.
	8. To discuss the amendment of internal control system, version 18, and internalaudit system with itsimplementingregulations,version 7.		Passed unchanged by all directors present.
	9. To discuss the amendment ofaccounting system,version5.		Passed unchanged by alldirectors present.
	10. To discuss the independence and suitability assessment of 2020 for CPA.		The audit partner Yang, Po-Jen and Su, Yen-Ta have achieved the Company’s standards of the independence and suitability after evaluation.
	11. To discuss remuneration adjustments of 2020 for the Chairman and managerialemployees.		Passed unchanged by directors present excluding fourdirectors avoidingvoteinconflict of interest.
	12. To discuss additional amounts and annual renewal of financing from financial institutions.		Passed unchanged by all directors present.
Mar. 24, 2020	1. To discuss 20thtime repurchase of company stock.		Planned to buy back 7,000,000 shares. Repurchase priceis atNT$12toNT$20.
	2. To discuss the adoption of “Rules of Year 2020 Share Repurchase for Transferring to Employees”		Passed unchanged by all directors present.
Apr. 23, 2020	1. The Company plan to ask for a bank syndicated loan of NT$800 million. (The Company may increase or decrease the total amount and each sub- itemamountinthe20%range depending onthe condition).		Plan to enter into a syndicated loan agreement with banks leaded by E.SUN Bank for the period from the date of first borrowing to thefive-yearterm.
	2. To discuss annual renewal of financingfrom financial institutions.		Passed unchanged byall directorspresent.
May 5, 2020	1. To discuss the amendment of“Corporate Governance Principles”.		Passed unchanged by alldirectors present.
	2. To discuss the amendment of “Corporate Social Responsibility Practice Principles”.		Passed unchanged by all directors present.
Aug. 5, 2020	1. To discuss the distribution details of 2019 employees’ compensation and remuneration for directors and supervisors.		The compensation for employees totals NT$16,361,542 and remuneration for directors and supervisors totals NT$9,816,925. The distribution details were passed unchanged by all directors present.
	2. To discuss the amendment of “Evaluation Regulations of the Board’s Performance”.		Passed unchanged by all directors present.
	3. To discuss the amendment of “Compensation Committee Charter”.		Passed unchanged byall directorspresent.
	4. To discuss the adoption of “Procedures for Share Repurchase” and the amendments of “FinancingCycle” of internal control system.		Passed unchanged by all directors present.
	5. To discuss the amendment of “Procedures for LoaningFunds to Others”.		Passed unchanged byall directorspresent.
	6. To discuss additional amounts and annual renewal of financing from financial institutions.		Passed unchanged by all directors present.

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Nov. 3, 2020	1. To discuss and review of all remunerations of 2021 for directors, supervisors,and managerialpersonnel.	Passed unchanged by directors present excluding four directors avoidingvote in conflict of interest.
	2. To discuss year-end remunerations and bonuses to the Chairman and managerialpersonnel for 2020.	Passed unchanged by directors present excluding four directors avoidingvote in conflict of interest.
	3. To adopt the “Risk Management Policies and Procedures”.	Passed unchanged byall directorspresent.
	4. To discuss the proposed audit plan for 2021 in accordance with Article 13 of “Regulations Governing Establishment of Internal Control Systems by Public Companies”.	Passed unchanged by all directors present.
	5. To discuss additional amounts and annual renewal of financing from financial institutions.	Passed unchanged by all directors present.
Mar. 10, 2021	1. To discuss businessplan for 2021.	Passed unchanged byall directorspresent.
	2. To discuss business report, financial statements, and consolidated financial statements for 2020.	Passed unchanged by all directors present.
	3. To discuss the distribution of 2020 employees’ compensation and remuneration for directors and supervisors.	Planned compensation for employees totals NT$14,683,111 and remuneration for directors and supervisors totals NT$8,809,867. Total amounts will bepaid in cash.
	4. To discuss the proposal for distribution of 2020 profits.	Net profit of 2020 was NT$233,466,089. By adding previous years’ retained earnings of NT$165,017,293, proceeds from disposal of equity instruments at fair value through other comprehensive income of NT$8,537,363, and deducting changes of remeasurement from defined benefit plans of NT$1,286,000, special reserve for equity deduction of NT$15,203,479, total distributable earnings for year amounted to NT$390,531,266. After setting aside 10% of net profit as legal reserve of NT$24,071,745, the profit to be distributed among shareholders shall be NT$188,889,124 in cash dividends (NT$1.2 per share).
	5. To discuss the amendment of “Articles of Incorporation”.	Passed unchanged byall directorspresent.
	6. To discuss the adoption of “Procedures for Election of Directors” and repeal of “Directors and Supervisors Election Rule”.	Passed unchanged by all directors present.
	7. To discuss the adoption of “Audit Committee Charter”.	Passed unchanged byall directorspresent.
	8. To discuss the amendment of “Procedures for LoaningFunds to Others”.	Passed unchanged byall directorspresent.
	9. Election of all directors the Company.	Nine directors (including three independent directors) shall be elected this time. Newly elected directors will take office from the election date, the term of office from June 15, 2021 to June 14, 2024 for a term of three years. The Company will repeal the setup of supervisors at the same time.
	10. To dismiss the non-competition obligation of the newly elected directors and its representatives.	Passed unchanged by all directors present.
	11. To discuss time, date, location and agenda of shareholders’ meeting for 2021, submission period of proposals and nominations from shareholders with 1% or more shares, and related matters.	Shareholders’ meeting is set to be held on June 15, 2021 at 9amin the 1F conference hall. Submission of proposals from shareholders with 1% or more shares will be accepted from April 9 to April 19.
	12. To discuss self-assessment and statement on internal control for 2020.	Passed unchanged byall directorspresent.
	13. To discuss the amendment of internal control system, version 19, and internal audit system with its implementingregulations,version 8.	Passed unchanged by all directors present.
	14. To discuss the re-adoption of “Corporate Governance Principles”.	Passed unchanged byall directorspresent.
	15. To discuss the independence and suitability assessment of 2021 for CPA.	The audit partner Yang, Po-Jen and Su, Yen-Ta have achieved the Company’s standards of the independence and suitabilityafter evaluation.
	16. To discuss remuneration adjustments of 2021 for the Chairman and managerial employees.	Passed unchanged by directors present excluding four directors avoidingvote in conflict of interest.
	17. To discuss additional amounts and annual renewal of financing from financial institutions.	Passed unchanged by all directors present.

3.4.12 A director or supervisor has expressed a dissenting opinion with respect to a material resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration, disclose the principal content thereof: None.

3.4.13 A summary of resignations and dismissals of the company’s chairperson, general manager, chief accounting officer, chief financial officer, chief internal auditor, chief corporate governance officer, and chief research and development officer: None.

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3.4.14 Certification of employees whose jobs are related to the release of the

company’s financial information: Certified Public Accountants(CPA) – Audit Office: 1 person.

3.5 Information on CPA professional fees

AccountingFirm	AccountingFirm	Name of CPA	Name of CPA	Period Covered byCPA’s Audit	Period Covered byCPA’s Audit	Period Covered byCPA’s Audit	Remarks
KPMG		Yang,Po-Jen		Year 2020			None
		Su,Yen-Ta
Fee Range		Fee Items	Audit Fee		Non-audit Fee	Total
1	Under NT$2,000,000				✓	✓
2	NT$2,000,001 ~ NT$4,000,000
3	NT$4,000,001 ~ NT$6,000,000		✓			✓
4	NT$6,000,001 ~ NT$8,000,000
5	NT$8,000,001 ~ NT$10,000,000
6	Over NT$100,000,000

3.5.1 Non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto: Non-audit fees listed as below was not over 25% of the total audit fees.

Unit: NT$ thousand

									Unit: NT$ thousand
Accounting Firm	Name of CPA	Audit Fee	Non-audit Fee					Period Covered by CPA’s Audit	Remarks
			System of Design	Company Registration	Human Resource	Others	Subtotal
KPMG	Yang, Po-Jen	4,250	0	0	0	720	720	Year 2020	“Others” was service fees of transfer pricing report .
	Su, Yen-Ta

3.5.2 The company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year: Not applicable.

3.5.3 The audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 10 percent or more: Not applicable.

3.6 Information on replacement of CPA: Not applicable.

3.7 The company’s chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm: Not applicable.

• 49 -

3.8 Any transfer of equity interests and/or pledge of or change in equity interests by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent

Unit: Shares

percent				Unit: Shares	Unit: Shares
Title	Name	2019		As of April 17,2021
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	Tseng,Jui-Ming	0	0	0	0
Director	Hsieh,Hui-Tai	0	0	(100,000)	0
Director	Huang,Mao-Hsiung	0	0	0	0
Director	Ying Dar Investment Development Corp. Representative: Wang,Tai-Kuang	0	0	0	0
Director	Bae Haw Investment Development Corp. Representative: Hsieh,Wen-Hsiung	0	0	0	0
Independent Director	Li,Chi-Cheng	0	0	0	0
Independent Director	Huang,Fu-Di	0	0	0	0
Supervisor	Lin,Yu-Fen	100,766	0	0	0
Supervisor	Tseng,Shu-Ling	(325,000)	0	(70,000)	0
Supervisor	Ting,Hung-Hsun	0	0	0	0
President & CEO	Wang,Tai-Kuang	0	0	0	0
Executive Vice President	Huang, Mao-Hsiung	0	0	0	0
Vice President	Yu,Cheng-Chung	155,000	0	0	0
Vice Presidnet & Chairman’s Special Assistant & Corporate Governance Officer	Hsieh, Wen-Hsiung	0	0	0	0
Vice President	Kao,Neng-Sen	0	0	0	0
Financial Officer	Huang,Hsiu-Wen	0	0	0	0
AccountingOfficer	Kuo, Kun-He	0	0	0	0

3.8.1 Transfer of equity interests with related parties

Name	Reason for Transfer	Date of Transaction	Transferee	Relationship between Transferee and Directors, Supervisors, Managers and Major Shareholders	Shares	Transaction Price (NT$)
None

3.8.2 Pledge of equity interests with related parties

Name	Reason for Pledge	Date of Transaction	Transferee	Relationship between Transferee and Directors, Supervisors, Managers and Major Shareholders	Shares	Shares holding %	Shares Pledged %	Pledged Amount
None

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As of April 17, 2021

3.9 Relationship among the company’s 10 largest shareholders

Name	Current Shareholding	Current Shareholding	Spouse’s/minor’s Shareholding	Spouse’s/minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relationship
Tseng,Jui-Ming	11,043,723	6.80%	256,759	0.16%	0	0.00%	Hsieh,Hui-Tai	In-law	None
Hsieh,Hui-Tai	6,386,867	3.93%	0	0.00%	0	0.00%	Tseng,Jui-Ming	In-law	None
Ying Dar Investment Development Corp.	5,346,672	3.29%	0	0.00%	0	0.00%	Tseng, Jui-Ming	Responsible person of the Company	None
Representative of Ying Dar Investment Development Corp.: Wang, Tai-Kuang	1,666,487	1.03%	1,802,813	1.11%	0	0.00%	Lin,Yu-Fen	Spouse	None
							Ying Dar Investment Development Corp.	Director	None
							Bae Haw Investment Development Corp.	Director	None
Bae Haw Investment Development Corp.	3,447,716	2.12%	0	0.00%	0	0.00%	Tseng, Jui-Ming	Responsible person of the Company	None
Representative of Bae Haw Investment Development Corp.: Hsieh,Wen-Hsiung	261,253	0.16%	0	0.00%	0	0.00%	Bae Haw Investment Development Corp.	Director	None
Lin,Yu-Fen	1,802,813	1.11%	1,666,487	1.03%	0	0.00%	Wang,Tai-Kuang	Spouse	None
Huang,Mao-Hsiung	1,674,536	1.03%	0	0.00%	0	0.00%	None	None	None
Hung,Chih-Yuan	1,500,000	0.92%	1,500,000	0.92%	0	0.00%	Hung,Feng-Yuan	Spouse	None
Hung,Feng-Yuan	1,500,000	0.92%	1,500,000	0.92%	0	0.00%	Hung,Chih-Yuan	Spouse	None
Chang, Chih-Feng	1,351,000	0.83%	0	0.00%	0	0.00%	None	None	None

3.10 The total number of shares and total equity stake held in any single enterprise by the company, its directors and supervisors, managerial officers, and any companies controlled either directly or indirectly by the company

Unit: Shares / %

					Unit: Shares / %	Unit: Shares / %
Affiliated Enterprises	Ownership by the Company		Direct or Indirect Ownership by Directors, Supervisors, Managerial Officers		Total Ownership
	Shares	%	Shares	%	Shares	%
EmergingDisplayTechnologies Corp.,U.S.A.	3,500,000	100.00%	0	0.00%	3,500,000	100.00%
EmergingDisplayInternational(Samoa)Corp.	5,984,071	78.49%	1,320,000	17.31%	7,304,071	95.80%
EDT-Europe ApS	125,000	100.00%	0	0.00%	125,000	100.00%
EmergingDisplayTechnologies Korea	58,212,500	100.00%	0	0.00%	58,212,500	100.00%
EDT-Japan Corp.	5,000	100.00%	0	0.00%	5,000	100.00%
YingDar Investment Development Corp.	8,900,000	100.00%	0	0.00%	8,900,000	100.00%
Bae Haw Investment Development Corp.	8,900,000	100.00%	0	0.00%	8,900,000	100.00%
YingChengInvestment Corp.	8,400,000	52.50%	0	0.00%	8,400,000	52.50%

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IV. Capital Overview

4.1 Capital and shares

4.1.1 Source of capital

Month/ Year	Par Value (NT$)	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark
		Shares (Thousand)	Amount (NT$ thousand)	Shares (Thousand)	Amount (NT$ thousand)	Sources of Capital (NT$ thousand)	Capital Increased by Assets Other than Cash	Approval document No. and Approval date
09/1994	10	1,800	18,000	1,800	18,000	Set upinitial cash capital injection	None	None
12/1996	10	2,573	25,725	2,573	25,725	Cash capital injection NT$7,725	None	None
11/1997	10	4,579	45,791	4,579	45,791	Cash capital injection NT$20,066	None	None
03/1998	10	19,990	199,896	19,990	199,896	Cash capital injection NT$142,200 Retained earnings capital injection NT$11,905	None	None
07/1998	10	60,000	600,000	30,000	300,000	Cash capital injection NT$100,104	None	Approval No. 58863 issued byFSC on 23/07/1998
07/1999	10	60,000	600,000	43,500	435,000	Retained earnings capital injection NT$60,000 Employee bonus capital injection NT$15,000 Capital surplus injection NT$60,000	None	Approval No. 59752 issued by FSC on 01/07/1999
07/2000	10	80,000	800,000	65,000	650,000	Retained earnings capital injection NT$61,770 Employee bonus capital injection NT$15,442.5 Capital surplus injection NT$60,030 Cash capital increased NT$77,757.5	None	Approval No. 59505 issued by FSC on 12/07/2000
11/2000	10	80,000	800,000	80,000	800,000	Cash capital increased NT$150,000	None	Approval No. 95331 issued byFSC on 21/11/2000
07/2001	10	200,000	2,000,000	98,200	982,000	Retained earnings capital injection NT$88,000 Employee bonus capital injection NT$14,000 Capital surplus injection NT$80,000	None	Approval No. 144159 issued by FSC on 12/07/2001
07/2002	10	200,000	2,000,000	114,000	1,140,000	Retained earnings capital injection NT$49,100 Employee bonus capital injection NT$10,700 Capital surplus injection NT$98,200	None	Approval No. 0910141489 issued by FSC on 25/07/2002
10/2003	10	200,000	2,000,000	131,520	1,315,198	Employee bonus capital injection NT$900 Capital surplus injection NT$109,100 Capital injection byCB NT$65,198	None	Approval No. 0920130747 issued by FSC on 09/07/2003
12/2003	10	200,000	2,000,000	143,870	1,438,700	Capital injection byCB NT$123,502	None	Approval No. 09300300090 issued byK.E.P.Z.
04/2004	10	200,000	2,000,000	147,704	1,477,044	Capital injection byCB NT$38,343	None	Approval No. 09300300660 issued byK.E.P.Z.
07/2004	10	200,000	2,000,000	148,825	1,488,246	Capital injection byCB NT$11,201	None	Approval No. 09300301350 issued byK.E.P.Z.
09/2004	10	200,000	2,000,000	175,004	1,750,036	Retained earnings capital injection NT$74,410 Employee bonus capital injection NT$38,560 Capital surplus injection NT$148,820	None	Approval No. 0930132882 issued by FSC on 22/07/2004
10/2004	10	200,000	2,000,000	175,433	1,754,329	Capital injection byCB NT$4,293	None	Approval No. 09300302220 issued byK.E.P.Z.
01/2005	10	200,000	2,000,000	175,490	1,754,900	Capital injection byCB NT$571	None	Approval No. 09400300130 issued byK.E.P.Z.
04/2005	10	200,000	2,000,000	175,501	1,755,014	Capital injection byCB NT$114	None	Approval No. 09400300660 issued byK.E.P.Z.

• 52 -

Month/ Year	Par Value (NT$)	Authorized Capital	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Paid-in Capital	Remark	Remark	Remark	Remark	Remark
		Shares (Thousand)		Amount (NT$ thousand)	Shares (Thousand)	Amount (NT$ thousand)		Sources of Capital (NT$ thousand)			Capital Increased by Assets Other than Cash	Approval document No. and Approval date
07/2005	10	260,000		2,600,000	175,507	1,755,072		Capital injection byCB NT$58			None	Approval No. 09400301470 issued byK.E.P.Z.
08/2005	10	260,000		2,600,000	193,910	1,939,096		Retained earnings capital injection NT $84,587 Employee bonus capital injection NT $14,850 Capital surplus injection NT$84,587			None	Approval No. 0940126503 issued by FSC on 01/07/2005
10/2005	10	260,000		2,600,000	194,131	1,941,313		Capital injection byCB NT$2,217			None	Approval No. 09400302240 issued byK.E.P.Z.
07/2006	10	260,000		2,600,000	199,701	1,997,008		Capital injection byCB NT$55,695			None	Approval No. 09500301880 issued byK.E.P.Z.
08/2006	10	350,000		3,500,000	220,282	2,202,822		Retained earnings capital injection NT$93,907 Employee bonus capital injection NT$18,000 Capital surplus injection NT$93,907			None	Approval No. 0950128449 issued by FSC on 05/07/2006
07/2007	10	350,000		3,500,000	220,632	2,206,319		Capital injection byCB NT$3,497			None	Approval No. 09600301980 issued byK.E.P.Z.
08/2007	10	350,000		3,500,000	214,315	2,143,149		Treasurystocks cancellation NT$63,170			None	Approval No. 09600302080 issued byK.E.P.Z.
08/2007	10	350,000		3,500,000	225,013	2,250,132		Capital surplus injection NT$106,983			None	Approval No. 0960036230 issued byFSC on 12/07/2007
11/2007	10	350,000		3,500,000	225,157	2,251,569		Capital injection byCB NT$1,437			None	Approval No. 09600303090issued byK.E.P.Z.
01/2008	10	350,000		3,500,000	225,214	2,252,144		Capital injection byCB NT$575			None	Approval No. 09700300130 issued byK.E.P.Z.
08/2008	10	350,000		3,500,000	225,249	2,252,489		Capital injection byCB NT$345			None	Approval No. 09700302030 issued byK.E.P.Z.
08/2008	10	350,000		3,500,000	217,749	2,177,489		Treasurystocks cancellation NT$75,000			None	Approval No. 09700301230 issued byK.E.P.Z.
01/2009	10	350,000		3,500,000	211,108	2,111,076		Capital injection by CB NT$517 Treasurystocks cancellation NT$66,930			None	Approval No. 09800300100 issued by K.E.P.Z.
10/2010	10	350,000		3,500,000	241,108	2,411,076		Cash capital injection NT$300,000			None	Approval No. 0990047548issued byFSC on 28/09/2010
12/2010	10	350,000		3,500,000	234,108	2,341,076		Treasurystocks cancellation NT$70,000			None	Approval No. 09900303390 issued byK.E.P.Z.
02/2011	10	350,000		3,500,000	226,108	2,261,076		Treasurystocks cancellation NT$80,000			None	Approval No. 10000300470 issued byK.E.P.Z.
08/2015	10	350,000		3,500,000	221,108	2,211,076		Treasurystocks cancellation NT$50,000			None	Approval No. 10400301780 issued byK.E.P.Z.
10/2015	10	350,000		3,500,000	214,908	2,149,076		Treasurystocks cancellation NT$62,000			None	Approval No. 10400302130 issued byK.E.P.Z.
01/2016	10	350,000		3,500,000	200,908	2,009,076		Treasurystocks cancellation NT$140,000			None	Approval No. 10540010110 issued byK.E.P.Z.
12/2016	10	350,000		3,500,000	194,908	1,949,076		Treasurystocks cancellation NT$60,000			None	Approval No. 10540013030 issued byK.E.P.Z.
02/2017	10	350,000		3,500,000	189,408	1,894,076		Treasurystocks cancellation NT$55,000			None	Approval No. 10640010260 issued byK.E.P.Z.
05/2017	10	350,000		3,500,000	183,408	1,834,076		Treasurystocks cancellation NT$60,000			None	Approval No. 10640010950 issued byK.E.P.Z.
06/2018	10	350,000		3,500,000	179,408	1,794,076		Treasurystocks cancellation NT$40,000			None	Approval No. 10740011280 issued byK.E.P.Z.
11/2018	10	350,000		3,500,000	174,408	1,744,076		Treasurystocks cancellation NT$50,000			None	Approval No. 1074001202 issued byK.E.P.Z.
04/2019	10	350,000		3,500,000	162,408	1,624,076		Treasurystocks cancellation NT$120,000			None	Approval No. 1084100047 issued byK.E.P.Z.
			Authorized Capital Remarks OutstandingShares(Note) Un-issued Shares Total Shares 157,407,603 192,592,397 350,000,000 TWSE Listed Company
Share Type			Authorized Capital							Remarks
			OutstandingShares(Note)				Un-issued Shares		Total Shares
Common Stock			157,407,603				192,592,397		350,000,000	TWSE Listed Company

Note: Buyback shares are deducted.

• 53 -

4.1.2 Status of shareholders

		As of April 17,2021	As of April 17,2021	As of April 17,2021	As of April 17,2021	As of April 17,2021
Item	Government Agencies	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	0	0	248	33,785	56	34,089
Shareholding (shares)	0	0	16,802,862	142,862,371	2,742,370	162,407,603
Percentage	0.00%	0.00%	10.35%	87.96%	1.69%	100.00%

4.1.3 Shareholding distribution status

As of April 17, 2021

Class of Shareholding (Unit: Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1 ~ 999	19,198	802,900	0.49%
1,000 ~ 5,000	10,915	24,039,832	14.80%
5,001 ~ 10,000	2,122	17,559,641	10.81%
10,001 ~ 15,000	537	6,882,442	4.24%
15,001 ~ 20,000	455	8,639,252	5.32%
20,001 ~ 30,000	336	8,827,738	5.44%
30,001 ~ 50,000	235	9,726,930	5.99%
50,001 ~ 100,000	165	12,141,844	7.48%
100,001 ~ 200,000	66	9,589,908	5.91%
200,001 ~ 400,000	28	7,507,728	4.62%
400,001 ~ 600,000	6	3,099,304	1.91%
600,001 ~ 800,000	5	3,350,211	2.06%
800,001 ~ 1,000,000	7	6,092,850	3.75%
1,000,001 or over	14	44,147,023	27.18%
Total	34,089	162,407,603	100.00%

4.1.4 List of major shareholders

As of April 17, 2021

4.1.4 List of major shareholders	As of April 17,2021	As of April 17,2021
Shareholder's Name	Shareholding
	Shares	Percentage
Tseng,Jui-Ming	11,043,723	6.80%
Hsieh,Hui-Tai	6,386,867	3.93%
YingDar Investment Development Corp.	5,346,672	3.29%
Bae Haw Investment Development Corp.	3,447,716	2.12%
Lin,Yu-Fen	1,802,813	1.11%
Huang,Mao-Hsiung	1,674,536	1.03%
Wang,Tai-Kuang	1,666,487	1.03%
Hung,Chih-Yuan	1,500,000	0.92%
Hung,Feng-Yuan	1,500,000	0.92%
Chang,Chih-Feng	1,351,000	0.83%

• 54 -

4.1.5 Market price, net worth, earnings, and dividends per share

Items	Period	Period	2020	2019	Jan. 1, 2021~ Apr. 23,2021
Market Price per Share	Highest Market Price		25.50	21.45	23.30
	Lowest Market Price		11.70	9.40	17.40
	Average Market Price		19.37	16.99	20.49
Net Worth per Share	Before Distribution		13.05	12.73	(Note 4)
	After Distribution		Undistributed	11.46
Earnings per Share	Weighted Average Shares (thousand shares)		148,613	148,848	(Note 4)
	Earnings per Share	Before Adjustment	1.57	1.73	(Note 4)
		After Adjustment	Undistributed	1.73
Dividends per Share	Cash Dividends		1.20	1.20
	Stock Dividends	Dividends from Retained Earnings	0	0
		Dividends from Capital Surplus	0	0
	Accumulated Undistributed Dividends		0	0
Return on Investment	Price / Earnings Ratio(Note 1)		11.52	9.28	(Note 4)
	Price / Dividend Ratio(Note 2)		15.07	13.38
	Cash Dividend Yield Rate(Note 3)		6.64%	7.47%

Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 4: The financial statement of 1[st] quarter of 2021 was not reviewed by Certified Public Accountant yet.

4.1.6 Dividend policy and implementation status

4.1.6.1 Dividend policy

The Company, when allocating its surplus profits after having paid all taxes and dues and covered accumulated losses, shall first set aside legal reserve and special reserve in accordance with relevant laws, rules and regulations. The said special reserve shall require to be reversed before distribution of earnings. If there is a remaining balance, the Board of Directors shall propose an earning distribution plan which distribution amount is no more than 80 percent of retained earnings available for distribution for the current year, then summit it to the shareholders ’ meeting for concurrence.

The Company, in accordance with paragraph 5 of Article 240 of the Company Act, authorizes the distributable dividends and bonuses or legal reserve and special reserve stipulated in paragraph 1 of Article 241 of the Company Act in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the Shareholders’ Meeting.

• 55 -

The Company is at the steady growth stage of its business development. Residual dividend policy shall be adopted for dividend distribution of the Company, taking into consideration the future capital budget plans and operational capital needs of the Company, as well as the extent of dilution on earnings per share and influence upon return on equity. Hence, future distribution of earnings shall be made priority by way of cash dividend over stock dividend, provided the ratio for cash dividend shall be fifty percent or more of the total annual distribution.

4.1.6.2 Proposed distribution of dividend

• A. In Fiscal Year 2020, the Company made a net profit of NT$233,466,089. By adding previous years’ retained earnings of NT$165,017,293, proceeds from disposal of equity instruments at fair value through other comprehensive income of NT$8,537,363, and deducting changes of remeasurement from defined benefit plans of NT$1,286,000, special reserve for equity deduction of NT$15,203,479, total distributable earnings for year amounted to NT$390,531,266. After setting aside 10% of net profit as legal reserve of NT$24,071,745, the profit to be distributed among shareholders shall be NT$188,889,124 in cash dividends (NT$1.2 per share). The cash dividends will be distributed according to the percent of shareholding on ex-dividend date and fully distributed until last integer and preclude fraction of dollar. The remainder of undistributed net earnings will be recorded as the Company’s other income.

• B. In the event that, the proposed dividend distribution ratio is affected due to share buyback program, transfer of treasury stocks to employees, reduction of shares or any other reasons affecting the number of outstanding shares, it is proposed that the Chairman be fully authorized to handle such distribution.

• C. Upon reporting to the 2021 shareholders’ meeting, it is proposed that the Chairman be authorized to resolve the ex-dividend date and payment date.

4.1.7 Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders’ meeting: None.

4.1.8 Employee bonus and directors’ and supervisors’ remuneration

• 4.1.8.1 Information relating to employee bonus and directors’ and supervisors’ remuneration in the articles of incorporation: In accordance with Article 22-1 of the Articles of Incorporation, the Company shall allocate 5 percent or more as employees’ compensation and 3 percent or less as remuneration for directors and supervisors when there is profit for the current year. By Articles 16 and 20 of Articles of Incorporation, the remuneration of the directors, supervisors, and managers are referred to the level of the related public companies, the Company’s operation status, and their value of contribution.

• 56 -

4.1.8.2 The basis for estimating the amount of employee, director, and supervisor compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period: The Company has determined to allocate 3 percent as remuneration for directors and supervisors and 5 percent as employees’ bonus. The amount will be fully paid in cash. There is no difference between the amount proposed to be distributed and estimated figure.

4.1.8.3 Profit distribution for employee bonus and directors’ and supervisors’ remuneration for 2020 approved in board of directors meeting:

• A. The amount of any employee compensation distributed in cash or stocks and compensation for directors and supervisors. If there is any discrepancy between that amount and the estimated figure for the fiscal year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed.

Unit: NT$ thousands

Item	Item	Amount Approved in BOD Meeting	Estimated Figure For The Fiscal Year	Discrepancy	Cause	Treatment
Employee Bonus	Cash	14,683	14,683	0	－	－
	Stock	0	0	0	－	－
Directors’ and Supervisors’ Remuneration		8,810	8,810	0	－	－
Total		23,493	23,493	0	－	－

• B. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation:

B. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation:	B. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation:	B. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation:
Unit: NT$ thousands
Item	Amount	Percentage of The Sum of The After-tax Net Income Stated in The Parent Company Only Financial Reports or Individual Financial Reports For The Current Period And Total Employee Compensation
Employee Bonus - Stock	0	0%

4.1.8.4 The actual distribution of employee, director, and supervisor compensation for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor compensation, additionally the discrepancy, cause, and how it is treated:

Unit: NT$ thousands

Item	Item	Actual Distribution	Estimated Figure For The Fiscal Year	Discrepancy	Cause	Treatment
Employee Bonus	Cash	16,362	16,362	0	－	－
	Stock	0	0	0	－	－
Directors’ and Supervisors’ Remuneration		9,817	9,817	0	－	－
Total		26,179	26,179	0	－	－

• 57 -

4.1.9 Buyback of treasury stock

A. Already completed

Buyback of treasury stock A. Already completed	Buyback of treasury stock A. Already completed
As of April 23,2021
Time of the buyback	1sttime of 2020
Thepurpose of the buyback	Transfer to employees
Theperiod for the buyback	Mar. 24,2020~May23,2020
Theprice range of the shares to be bought back	NT$12~20
The type and number of the shares alreadybought back	Common stock / 0 shares
The monetaryamount of the shares alreadybought back	NT$0
The ratio of the number of shares bought back to the planned number of shares to be bought	0%
The number of shares that have been canceled and that have been transferred	-
The cumulative number of shares held bythe Corporation	5,000,000 shares
The ratio of the cumulative number of shares held by the Corporation to the total number of the Corporation’s issued shares	3.08%

B. Still in progress: None.

4.2 Issuance of corporate bonds: None.

4.3 Preferred shares: None.

4.4 Global depository receipts: None.

4.5 Status of employee stock options: None.

4.6 Status of employee retricted stock: None.

• 4.7 Status of new shares issuance in connection with mergers and acquisitions: None.

4.8 Financing plans and implementation: None.

• 58 -

V. Operational Highlights

5.1 Business activities

5.1.1 Business scope

• A. Main areas of business operations

• a. Manufacturer of electronic components

• b. Manufacturer of computer and related equipment

• c. Distributor of electronic materials

• B. Revenue distribution

Liquid crystal displays, capacitive touch panels and modules make up 100% of business operations.

• C. Main products

The design, manufacturing, and application of liquid crystal displays and capacitive touch panels.

• D. New products development

• a. One glass capacitive touch panels (OGS and TOL)

• b. TFT-LCD Backend products

• c. Full lamination products of TFT modules, sensor and cover lens

5.1.2 Industry overview

• A. Current status and future development of industry of the Company Key products of the Company are the domains of liquid crystal displays (LCD) and capacitive touch panels (CTP). Respective illustrations are as follows: a. LCD

Applications for LCD include commercial use, computer information use, communications, consumer electronics, industrial use, transportation entertainment, and so on. Various types of LCD have different applied use for different specification requirements. With the advances in technology and consumer stimulated demand, display panels have gradually evolved, from the early monochrome TN/STN technology displays gradually to TFTLCD technology. The world’s economic activities suffered severe changes under the outbreak of the COVID-19 epidemic during early 2020, but a “home economy” was derived from the increasing demand for TVs, computer screens, and laptops. Sales of above products continued to rise while the market in mobile phone applications posted a downward trend. The capacity demand of large-sized LCD panels (diagonal nine inches or above) kept climbing as a result of the epidemic. DIGITIMES statistics show that the compound annual growth rate of the large-sized LCD panel production capacity would reach 2.2% during the 2020-2025 period. Of this, the expansion of TV’s average panel size expects to bring a compound annual growth rate of over 3% for large-sized LCD panels.

Based on the increasing demand on panel, manufacturers in the field in China have actively expanded their production capacities and engaged in merges. The production capacity of both BOE Technology Group and TCL China Star Optoelectronics probably increases its proportion from 24.5% in 2019 and be doubled by 2025. Meanwhile, the unmatched competition against their Chinese counterparts forced South Korean panel makers to withdraw from the large-sized LCD market and switch to the market of small and medium AMOLEDs instead. Thus, Chinese panel makers will gradually enjoy a dominance situation with shares of approximately 60% in the whole panel production capacity.

• 59 -

b. CTP

Due to the consumer preference and formed habits for the intuitive operation of touch interface, smartphones and tablets not only have become the main operating interface, but they have also experienced rapid growth. The product development combined with the touch technique and panels has been over 10 years. The development of touch market is tending towards maturity, but with the changes in the communication mode between the new application market and the Internet of Things(IoT), artificial intelligence(AI), and smart home, the development of human-machine interface tends to be diverse. For example: the water tolerance touch could be applied in the field of medical institution, nautical ship or bathroom; while the 3D gesture recognition technology could be applied in automobile market, smart window with adaptive high-beam system, panels for vending machine and medical appliance based on the rules of public health. In conclusion, the touch technique is a basic for human-machine interface. With the continuous integration of technologies, a brand new humanmachine communicating interface has been developed, and the assistance and mechanical learning of various AI algorithms have enabled the development of the overall human-machine communicating interface to present an infinite vision.

• B. Relationship with up-, middle- and downstream companies a. LCD

Upstream	Midstream	Downstream
Glass substrate		Video products
Conductive glass	TN-LCD	Consumer products
Color filter	STN-LCD	Information technology products
Polarizer	TFT-LCD	Communication products
Backlight module	T/P	Instrumentation products
Liquid crystal		Electronic products
Driver IC		Commercial products
		Automotive products

b. CTP

Upstream Midstream Downstream Adhesive (liquid adhesive, Video products optical adhesive) Consumer products ITO target material Capacitive touch Information technology products ITO film panel / module Communication products ITO glass Instrumentation products PET film Electronic products Surface glass Commercial products Flexible print circuit (FPC) Automotive products Driver IC

• 60 -

C. Product trends

• a. Small and medium size of LCD

Small and medium size of consumer displays are mainly applying for smart phones, tablets, NBs, smart home devices and screens of automobiles, etc. Niche non-consumer displays are applying for industrial equipment, instrument, medicine, etc. The Company focuses on customized niche displays, and the characteristic of the product’s size, weight, function, and even the brand all presents quite different customization features. The description as below:

• High resolution and wide viewing angle

Due to the technical demand of large size and high fidelity visual effects stimulated by LCD TVs, TFT panel prices have gradually come down with the large scale investments by several liquid crystal panel manufacturers. Owing to this, the development of small and medium size display panels is also in the direction of high resolution and wide viewing angle and shall lead to new end use application.

• High brightness and wide color gamut

React to the high-brightness demand of industrial control display and color accuracy of medical display, the industry has dispersed or coated fluorescent quantum dots in polymers to form film which so called “Quantum Dot Enhancement Film”(QDEF). The color accuracy of quantum dot could filter blue light into pure white light, and overcome the congenital defect of LCD to effectively reduce the dependence on color compensation to the filter layer. Thus, the luminance and color gamut all get an effective promotion. The actual performance is even comparable to OLED panels.

• Touch screen replace conventional keypad

• As the smartphone market become mainstream for mobile phones, the conventional keypad has been gradually replaced by touch screen to make full use of the space on the phone. Recent launches of iPad seem to be on the trend of replacing small-size NB and prompt medium size LCD to become touch screen. Because of the popularization of the internet, networking has become more diverse and complex. The structure of resistive touch mode is no longer compatible with the demands of future development and the capacitive touch screen, with multi-touch function and high transmittance, gradually becomes the mainstream in the next wave of innovation.

b. CTP

Although projected CTP has already become mainstream, manufacturers continue to research and develop the technology to make touch panel lighter, thinner, cheaper, and less power consuming. With expectations to meet consumer preferences with product specifications and widen the gap with competitors, touch panel manufacturers must accelerate the pace of new generation material or structure to meet the rapidly growing demand of mobile devices. Key directions of research and development are as follows:

• 61 -

◆ Water tolerance touch

The applied field of water tolerance touch is considerably extensive. For example: the outdoor access security system, the garage switch, the bathroom, kitchen and medical equipment. When the screen accumulates a certain area of water drops, it will seriously interfere with the touch signal, and the correction and adjustment of the algorithm can effectively reduce the situation of touch misjudgment.

• Capacitive 3D gesture recognition technology

• With the change between new application market and in the Internet of Things(IoT), artificial intelligence(AI), and visual communication modes, the development of human-machine interface tends to be diverse. The evolution of 2D touch turned into 3D gesture will become a trend. The 3D gesture technique is similar to capacitive touch technique, which detects gestures by electric field sensing to detect gesture move in three dimensional space. The electrode of capacitive sensing technique covers in the incrustation of equipment, compared with infrared sensing technique, the electrode of capacitive sensing technique could make a beautiful industrial design without additional cutouts.

D. Product competition

Global supply and demand and product structure of small and medium size LCD have stabilized. Quality and prices of upstream and downstream critical components are integrated and transparent. Competitiveness lies the product design, marketing channels, cost control, production yield rates, and equipment utilization rate of manufacturers. Generally speaking, Taiwanese manufacturers still have a competitive advantage in automotive, industrial equipment, medical equipment, high-end communication products, and special niche products. Large scale standard consumer electronics markets and Chinese markets are no longer profitable for Taiwanese manufacturers, as they are now dominated by Hong Kong and Chinese manufacturers.

The OLED panel in consumer market especially the mobile phone panel will gradually replace LCD panel. Thus, many panel factories abandoned the attitude of massing capital in expanding of production in the past, and turned to make a technology investment which is more progressive than OLED, such as Mini LED and Micro LED. Especially the Micro LED are integrated the technical advantage of the existing semiconductor, LED and display by Taiwan factories. Once the mass production of Micro LED is successful, it will form the situation of industrial competition with OLED. The Company will intently pay attention to its long-term development, and would equip the module products with display technology required by the market. However, the major needs of industrial control and medical market are still LCD.

• 62 -

Besides, many traditional display-related companies gradually abandon the thought of component suppliers in the past on market positioning, turn to emphasize multicultural concordance in the field of electron, electrical engineering, optics, mechanism, communication, software and artificial intelligence(AI), and provide high value added product and service, even become the provider of “solution”. In addition to making the display presents more diversification and differentiation, it also enables customers to save resources and shorten development time to create a win-win situation. Depending on customer needs, some component suppliers sell not only hardware applications, but turn to provide the integration of software and hardware in overall units or some stages to increase gross profit and sales unit price by solving more needs of customers. Through value transformation, technological innovation and smart manufacturing, the Company fits the industrial tendency of smart life, Internet of Things(IoT) and Internet of Vehicle (loV) in the future.

5.1.3 Research and development

A. The Company has invested NT$115,565 thousand into research and development for 2020, and planned to invest NT$164,440 thousand for 2021.

B. Successfully developed technologies or products:

Item	R&D Results	Description of Benefits
1	Capacitive Touch Integrated with EMR(Electro Magnetic Resonance) Pen Technology	Finish the development of 10.1” demo box with capacitive and electromagnetic pen dual-mode touch display. It is a mixed-sensor integration able to seamlessly and accurately switch between pen and finger input, mainly applies to electronic signature pads, medical instruments, professional graphics tablets or tablets for education.
2	Air Touch Technology for Capacitive Touch Panel	Through the development of the Air Touch algorithm with the external MCU with the capacitive touch IC, edt has successfully developed the first-generation technology that can perform normal non-contact man-machine interface control when the finger is floating at a height of 20mm above the panel. We will continue to develop the second-generation technology and expect to increase the Air Touch floatingsensingheight to 40mm.
3	Microchip maXTouch Solution Development	Through the establishment of independent sensor simulation and firmware parameter adjustment resources by maXTouch Solution, 5” and 12.1” CTP have been approved bycustomers to enter massproduction.
4	CTP Water Tolerance Improvement with AI	Improve the water tolerance of the capacitive touch panel through better layout design, and assist customers to solve the problem of false touch or inoperability caused by the shower head flushing on the panel with the touch IC to build a water-tolerance algorithm in the MCU. We will continue to study the MCU built-in AI algorithm to solve the problem of coupling capacitance effect interference caused by the edge wiring when there is water on thepanel.
5	2D Touch Display Module + AI Edge Computing in MCU + Simple Audio Recognition Technology Development	Finish the development of capacitive touch display module with 2D touch function and short-voice control function through the establishment of short voice command pre-processing algorithms and AI algorithms in the MCU. We can expand the short voice command recognition function on the existing capacitive touch displaymodule for customers.

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Item	R&D Results	Description of Benefits
6	Wide Viewing Angle Embedded Product	Finish 4 types of wide viewing angle embedded products on STM32F750 and STM32H750platform.
7	Add-On Board for Embedded Product	Finish the development of 3 types of “Add-On board”, which can help customers to verify concepts and product integration applications. It also realizes the expansion of wired and wireless applications.
8	Integration Air Touch Embedded Product	Finish the integration of various air touch technology in embeddedproduct applications.
9	Intellectual Property Rights (include Patents and Trade Secret)	Number of intellectual property right proposals totaled 24, which include 18 patent proposals and 6 trade secret proposals. Number of intellectual property rights granted totaled 18 (proposals accumulated in the previous years).

5.1.4 Long-term and Short-term Development

• A. Short-term development

• a. Provide variation design of TFT-LCD module to satisfy different customized needs from customers, increase the proportion of niche-type display products in pan-industrial control and medical to diversify product types, and maintain the growth and earning power of the Company in the future.

• b. Develop solutions of embedded system to help customers integrate development needs such as software, firmware, and hardware design, further to make it differentiate and high-added valuing. Increase gross profit and sale price through technical integration.

• c. Import advanced engineering technology and new featured material, change product module configuration and enhance production technology to allow product design abilities of the Company to correspond with the trends of light, thin, short, small, and refined, as well as meet the standards of design required for the harsh operating environment of the pan-industrial control market.

• d. Enhance function of technical services in overseas stronghold and increase business ratio of “total solution” to satisfy the quality of prompt service required by customers.

• B. Long-term development

• a. Enhance the Company’s R&D energy, cultivate developing potential of industries, build the R&D center of somatosensory technology, establish self-application capabilities of software and firmware development, and lock prospective advanced technology for doing research and development.

• b. Optimize the cost of optical bonding process and display technology such as surface treatment and free form laser cutting, strength the existing capacitive touch technique, develop water tolerance touch to utilize it in the outdoor access security system, the device in parking lot, the bathroom, kitchen and medical equipment.

• c. Develop 3D gesture, intelligent algorithms and expand diversified technology of interactive human-machine interface display. Realize a smart home and take the preemptive opportunities of high gross profit market in the future.

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5.2 Market and sales overview

5.2.1 Market analysis

A. Sales region

End customers of the Company are mainly located in North America and Europe. Geographic areas of ordering clients and the percentages are: Asia 10.72%, Europe 56.03%, Americas 23.80%, other areas and domestic sales 9.45%.

B. Market share

Small and medium-sized liquid crystal displays, capacitive touch panels, and modules are main product of the Company and components for liquid crystal display product. According to Ministry of Economic Affairs statistics, gross output value of Taiwan’s display industry for 2020 was US$24.62 billion. The operating revenue of the Company for that year was US$126 million, accounting for about 0.51% of Taiwan’s panel module output value. Additionally, according to DIGITIMES statistics, gross output of the global small and medium-sized display industry for 2020 was US$50.35 billion. The operating revenue of the Company was accounting for about 0.25% of the total global small and medium-sized display module output value.

C. Future demand, supply, and growth potential of the market The demand for IT products, including LCD products, has become increasingly hectic as a result of the “home economy” deriving from the COVID-19 epidemic, according to latest researches released by the Display Research Department of TrendForce. However, the supply of LCD panels encountered squeezing by the capacity of other products. This, coupled with serious IC shortage, continues to lead an expansion gap between the supply and demand recently. Despite the epidemic is under a situation of without complete control, prospects for the “home economy” are still bright. Several panel makers have revised up their targets of panel shipment in 2021. The wellknown market research agency Omdia estimated that the shipment volume of notebook PC panels would total 229 million units in 2021, up 7% from previous year, and the shipment of display panels will reach 173 million units in 2021 with an annual growth rate of 8.8%. In comparison, TV panel shipments will decline to 255 million units for the year, down by 5.2%.

By ushering in new business models and vertical applications, the Internet of Things (IoT) is driving the industrial ecosystem transformation. Related applications of IoT are including industrial control, automotive, smart speaker, smart home appliances, and so on. The IoT technology started from improving user experiences to gradually developing new solutions such as thin and light designs, flexible displays, and transparent screens to redefine the humanmachine interface. The focus of the industry will also move from the previous scale competition to value competition. Affected by the raging of COVID-19, the global shipment of small and medium-sized TFT-LCDs will reach only 1.81 billion units in 2020, down by 19.7% from 2019, according to DIGITIMES Research. Though the demand for smart phone panels will recover in 2021, the mainstream size of tablets accelerates to large-scaled models, the demand for digital cameras continues to shrink, and smart phone panels continue to switch to AMOLED, enabling the automotive applications and IoT to become a main growth driver behind the global shipment of small and medium-sized TFT-LCDs beginning in 2022.

• 65 -

In terms of medical device products, the medical-related market will maintain long-term and continuous growth as the global population grows, the aging population increases, the economy for developing countries strengthens, and the influence of infectious diseases magnifies under the globalization trend. The outbreak of the COVID-19 epidemic helps to drive the structural transformation of global medical device and relevant medical device demands. According to BMI Research estimations, the global medical device market will be valued at US$475.3 billion in 2022, reaching an average annual compound growth rate of 5.6%. The Company has carefully cultivated the medical industry for many years, and is cautiously optimistic that the ratio of applications for medical products is expected to grow annually.

• D. Competitive niche, advantages and disadvantages for future development, and corresponding policies

• a. Competitive niche

  • Strong management team

    • With over 25 years of experience in LCD related industries, the business team of the Company has seasoned technical and managerial personnel whom are highly sensitive to technology and market demands, and can therefore fully grasp LCD market trends. The Company not only values product research and development as well as quality improvement, but also innovates and expands into upstream and high added value products. Company employees have a strong sense of unity and stability. After the experience of recent financial turmoil, company policies have further foresight. The Company has successfully crossed into touch panel domain following existing pace of research and development, and become one of the leading manufacturers in the domestic LCD industry.

  • Completed production and distribution system with major international company creating stable supply source and product channel In aspect of quality, international quality certifications ISO 9001 and ISO 9002 have already been achieved in the early years. The Company is also the first manufacturer in the domestic LCD industry to achieve quality certification QS 9000 of the three major car manufacturers. In addition, upstream suppliers undergo strict selections to ensure the excellent quality of products.

In aspect of order delivery date, the Company has overcome LCD, LCM industry characteristics of numerous product range and specifications as well as short delivery date by relying flexible production process and good cooperating relations with critical material suppliers obtained over the years. Accurate delivery dates and stable quality from production lines has allowed the Company to obtain orders from major international companies and even become a long term cooperating strategic partner of these companies.

• 66 -

• Development towards vertical integration of applications, increase product added value, and enhance competitiveness The Company has always expanded market and clients via quality, technology, and service and has very competitive performance in “Interactive Display Solution”, which derives from the integration of display and touch panel functions. Whether it is the optical bonding production capability and yield rate, which the product itself is high demanding, or the technical support of client application software compatibility testing, the Company performs far beyond average industry standards.

• Excellent quality and stable orders

In addition to company managerial personnel, who are all from well-known international and domestic manufacturers with years of technology experience, use of technically advanced equipment and strict control of product flow to improve yield rate from the very beginning has allowed the quality of company products to remain stable and achieve certification from international companies for niche products such as the internet phone, mobile clinic, high end servers, industrial human-machine interface, and home automated security systems. Once certified, entry to their long-term supplier system is allowed and along with opportunities for stable orders. Hence, performance of the Company is supported by a long term and stable client basis.

• b. Advantages for future development

• Steady growth in demand for touch panel and modules

Driven by the emerging application products such as 2-in-1 tablet, onvehicle and wearable devices, plus the increasing demands for automotive touch panels, it is estimated that the scale of touch panel market would keep stable growth. Moreover, applications of capacitive touch panels continue to increase, covering game machines, educational tablets, white goods, GPS, public information inquiry system (KIOSK), ATM, POS system, vending machines, and so on. Extensive use of capacitive touch panels shows that there is considerable growth potential in the panindustrial control market for the touch panel industry.

• Rise of the Internet of Things(IoT) boosts development of smart wearable devices

With the rapid developments of the IoT and big data analysis technology, the demand for the smart wearable devices that are able to sense and collect data is getting obvious. Whether it is retail business, transportation and logistics, agricultural and stock farming, smart city developing, or medical service, they all need this data collecting and analysing process in order to make the best decision from the latest update. However, the smart wearable devices such as smart glasses, smart watch, and smart bracelet, are unable to go viral in the consumption market like smart phone did. Try to make its way into other niche markets is an important way out for the smart wearable devices in the future.

• 67 -

With the improving internet medical technology, the wearable devices with sensors for collecting human body related information make personalized accurate treatment achievable. In the aspects of disease prevention and care management, it enables long distance and home care services to improve life quality for the patient and lower medical burden, therefore found the blue ocean for the wearable devices. Smart wearable devices work effectively in medical appliance, and make the associated technology such as sensor and AMOLED panel develop rapidly. Mainly aided by the development of AI and 5G innovative technologies, the IoT will be booming in the next ten years and becomes its “golden decade”. Statistics from the Institute of Industrial Technology International Strategy Development (ITRI) show that the global IoT output is estimated to stand at US$1.7 trillion in 2024, while the domestic IoT output value reached NT$1 trillion for the first time in 2018, and has the opportunity to exceed NT$2 trillion in 2023. Its goal is to represent 5% of the global IoT market share by 2024. Therefore, the IoT is considered the biggest business opportunity followed by the mobile device, and will drive the continuing growth of small and medium-sized display market as well as broaden future development.

• Establishment and formation of upstream critical components and materials industry supply system

The key upstream components include chemicals (photoresist, ITO targets, etc.), backlight sources (light-emitting diodes, cold cathode tubes, etc.), backlight modules (referring to integrated modules comprised of backlight source, prismatic lens, brightness enhancement film, diffusion film, light guide plate, etc.), photomask, ITO conductive substrate, plastic frame, prismatic lens, diffusion film, brightness enhancement film, light guide plate, driver IC, and so on. At present, Taiwanese manufacturers have gained a place in the industrial supply chain for some components such as backlight modules, color filters, prismatic lens, brightness enhancement films, diffusion films, polarizers, and driver ICs. However, TFT-LCD industry upstream materials such as glass substrates, ITO targets, and PVA polarizer films still rely mainly on Japanese manufacturer supply.

• c. Disadvantages for future development and corresponding policies

• Touch panel industry gradually enters the highly mature stage. Due to good prospects on applications, competitors continue expansion of new production lines and increasing the risk of imbalance between production and distribution

Diverse development of application product market stimulates continued growth in touch panel market demand. However, market competition has become increasingly fierce, especially over markets with lower technical threshold. Overall market price for products is pressured to go down.

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Corresponding policies:

Actively improve and change the production process and design to increase the value of product portfolio and satisfy the diverse needs of clients. Also, enhance flexibility and speed of product assembly to shorten production schedule and enhance product competiveness. In addition, import of automated production equipment and improvement of production process as well as implementation of lean management and production division to fully achieve the complementary effect of compared interests, lower production costs and enhance company competiveness.

• Supply of critical materials is periodic unbalance

The supply of upstream materials such as the control IC and ITO conductive glass cannot meet the growth of the LCD and CTP industries, leading to tight supply of upstream materials and affecting the production and delivery time.

Corresponding policies:

Maintain at least two or more main material suppliers and establish close partnerships within the critical upstream supply chain.

5.2.2 Main uses and production processes of main products

• A. Main uses of products

• (1) Industrial equipment application

• (2) Smart home device application

• (3) Automotive related application

• (4) Medical equipment application

• (5) Commercial equipment & OA application

• B. Production processes

LCD, LCM, and T/P are the Company’s main products. The manufacturing processes are as follows:

a. LCD

•  Front-end engineering

LCD Photo process → Insulator coating → PI coating → PI rubbing →

Seal printing → Spacer spread → Assembly → Hard press → Curing inspection

 Back-end engineering

LCD cutting → LC sealing → Function inspection → Polarizer attachment → Cosmetic inspection → Warehousing

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b. LCM

•  Assembly

SMT process → LCM assembly process → Final inspection → OQC → Packing SMT process → COB process → LCM assembly process → Final inspection → OQC → Packing

 COG

SMT process → COG process → LCM assembly process → Final inspection → OQC → Packing

•  TAB

SMT process → TAB process → LCM assembly process → Final inspection → OQC → Packing

c. T/P

ITO Sputtering → Photo etching → OC coating → ITO Sputtering → Photo etching → Metal Sputtering → Metal etching → OC coating → ITO Sputtering → Sensor cutting → FPC bonding → C/L+Sensor lamination → Inspection → Warehousing

5.2.3 Supply status of main materials

Main Materials	Source of Supply
Backlight Module	Taiwan / China
Driver IC & Touch IC	Taiwan
ITO Glass	Taiwan
Liquid Crystal	Japan / China
Polarizer	Taiwan / China
Panel	Taiwan / China
Cover Lens	Taiwan / China
TFT Module	Taiwan / China

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5.2.4 Major suppliers and clients

A. Major suppliers in the last two calendar years

Unit: NT$ thousands

					Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
	2020				2019
Item	Company Name	Amount	Percent (%)	Relation With Issuer	Company Name	Amount	Percent (%)	Relation With Issuer
1	AAA	415,295	18.46	None	AAA	545,148	22.40	None
	Others	1,834,494	81.54		Others	1,889,071	77.60
	Net Total Supplies	2,249,789	100.00		Net Total Supplies	2,434,219	100.00

Purchased amount from supplier AAA decreased due to total purchased amount decreased in 2020 caused by the decline of sales.

B. Major clients in the last two calendar years

Unit: NT$ thousands

					Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
	2020				2019
Item	Company Name	Amount	Percent (%)	Relation With Issuer	Company Name	Amount	Percent (%)	Relation With Issuer
1	CCC	1,032,571	27.63	None	CCC	1,135,284	27.64	None
2	DDD	399,887	10.70	None	DDD	404,362	9.84	None
	Others	2,304,841	61.67		Others	2,567,913	62.52
	Net Sales	3,737,299	100.00		Net Sales	4,107,559	100.00

The sales to client CCC and DDD decreased due to the demand from end customers.

5.2.5 Production in the last two years

Unit: NT$ thousands / thousand pcs

Year Major Products		2020	2020	2019	2019
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
LCM Module	30,480	4,100	1,158,600	30,480	4,505	1,380,063
T/P Sensor & Module	7,524	5,378	2,633,776	7,524	4,407	2,535,506
Total	(Note)	(Note)	3,792,376	(Note)	(Note)	3,915,569

Note: Can not be added up due to different kinds of units.

5.2.6 Shipments and sales in the last two years

Unit: NT$ thousands / thousand pcs

					Unit: NT$ thousands / thousand pcs	Unit: NT$ thousands / thousand pcs	Unit: NT$ thousands / thousand pcs	Unit: NT$ thousands / thousand pcs
Year Major Products	2020				2019
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
T/P & LCD Module	178	249,250	4,306	3,413,628	236	336,337	4,963	3,699,467
Others	—	8,815	—	65,606	—	6,733	—	65,022
Total	178	258,065	4,306	3,479,234	236	343,070	4,963	3,764,489

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5.3 Human resources

		Dec. 31,2020	Dec. 31,2019	Mar. 31,2021
Number of Employees	Management Employee	73	75	75
	Indirect Employee	293	308	294
	R&D Employee	128	129	127
	Operator	536	534	544
	Total	1,030	1,046	1,040
	Average Age	42.86	41.90	42.87
Average Years of Service		13.14	12.26	13.17
Education	Ph.D.	0.10%	0.10%	0.10%
	Masters	5.53%	5.64%	5.48%
	Bachelor’s Degree	34.66%	33.17%	34.81%
	Senior High School	42.91%	43.12%	42.59%
	Below Senior High School	16.80%	17.97%	17.02%

5.4 Disbursements for environmental protection:

The Company produces and sales liquid crystal display panels, capacitive touch panels, and its modules. The waste and other hazardous materials generated during the production process are handled in accordance with related air pollution prevention and environmental protection laws and regulations. There is no issue of industrial pollution. Furthermore, there is no loss (including no compensation paid and no violation of environmental protection laws or regulations found in environmental inspection) suffered by the Company in the most recent fiscal year and up to the annual report publication date due to environmental pollution incidents.

5.5 Labor relations

5.5.1 Employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labormanagement agreements and measures for preserving employees’ rights and interests

A. Employee benefits

and interests A. Employee benefits
Bonus / Subsidy	Insurance	Leave
⚫Year-end bonus ⚫Employee bonus ⚫Employee stock options ⚫KPI performance bonus ⚫Subsidy for marriage / childbirth ⚫Subsidy for hospitalization / funeral ⚫Gift for holiday and birthday ⚫Scholarship for employee / offspring of employee ⚫Subsidy for cafeteria meals ⚫Company-paid regular physical examination ⚫Subsidy for leisure travel ⚫Subsidy for enjoying artistic and cultural activities	⚫Labor insurance ⚫National health insurance ⚫Appropriated labor pension ⚫Group insurance for employees and their dependents ⚫Endowment insurance ⚫Medical insurance ⚫Unemployment insurance ⚫Work injury insurance ⚫Maternity insurance ⚫Housing provident fund	⚫Paid annual leave ⚫Personal leave with pay ⚫Sick leave ⚫Maternity leave ⚫Parental leave ⚫Bereavement leave ⚫Leave for prenatal visits ⚫Accompanying maternity leave ⚫Menstrual leave

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• B. Education and training

• a. Expenses for education and training of 2020 were NT$47 thousand. Education and training focused on course regarding financial accounting, environment / safety / health and specific equipment operation.

• b. Human resources are the greatest asset in the sustainable company. The Company implements training for all employees and provides long term training of personnel to allow for continuous improvements and innovation. The main purpose of education and training is to enhance managerial ability and share professional skills. The most effective use of themed planning of education and training each year will cultivate employees more compatible with the corporate culture.

• c. In addition to general professional training for new employees, managerial training for management of all levels, and professional training within departments, implementation of key courses planned in accordance with annual company strategies will enhance the abilities of employees and also achieve the annual goal.

• C. Retirement system

• a. The Company follow the government’s related regulations to monthly allocate retirement preparation funds based on 2% of the total salary to a saving account in the Bank of Taiwan as retirement payment for the employee’s seniority in old pension system of the Labor Standard Laws. For employee (including informal employee) with the Labor Pension Act in new pension system, 6% of the total salary will be allocated monthly to a personal account of retirement fund in the Bureau of Labor Insurance.

• b. Labor pension supervisory committee has been established and government organizations notified in accordance with regulations. The committee is responsible for matters related to allocations of the employee retirement reserve funds.

• c. The Company has adopted codes for employee retirement and full-time employees are all applicable from their date of employment. The conditions and procedures for employees applying for retirement are as follows:

  • An employee may apply for voluntary retirement under any of the following conditions:

    • ‧ An employee attains the age of 55 and has worked for 15 years.

    • ‧ An employee has worked for more than 25 years.

    • ‧ An employee attains the age of 60 and has worked for 10 years.

  • An employer shall not force a worker to retire unless any of the following situations has occurred:

    • ‧ An employee attains the age of 65. The Company may request the central competent authority to adjust the age prescribed if the specific job entails risk, requires substantial physical strength or otherwise of a special nature; provided, that the age shall not be reduced below 55.

    • ‧ An employee who is unable to perform his/her duties due to disability.

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  • The criteria for payment of employee pensions:

    • ‧ According to old pension system of the Labor Standard Laws, two bases are given for each full year of service rendered. But for the rest of the years over 15 years, one base is given for each full year of service rendered. The total number of bases shall be no more than 45. The length of service is calculated as half year when it is less than six months and as one year when it is more than six months, however, an additional 20% on top of the amount calculated according to the preceding subparagraph shall be given to workers forced to retire due to disability incurred from the execution of their duties.

    • ‧ According to new pension system of the Labor Pension Act, the Company allocates 6% of the monthly salary which according to Salary Grading Table as retirement benefit and this amount shall be deposited to the employee’s pension account. An employee shall contribute voluntarily no more than 6% of his/her monthly salary to above account as retirement pension.

  • The procedure of pension payment:

    • The Company shall pay the pensions within 30 days from the day of retirement according to old pension system of the Labor Standard Laws. Employees claiming retirement benefits shall open a specific account with necessary documents at a financial institution for the deposit of retirement benefits.

• d. Pension for overseas subsidiaries are of defined contribution plan and social security payments for pension and health care are made each month in accordance with local government regulations.

• e. For the labors who are adapting to old pension system of the Labor Standard Laws, the Company has accumulated NT$122,161 thousand as retirement preparation funds by the end of 2020; while the Company totally allocates NT$24,820 thousand for the labors who are adapting to new pension system of the Labor Pension Act in 2020.

• f. In 2020, two persons have retired and departed according to relevant retirement regulations.

• g. Other important agreements: None.

• 5.5.2 List any losses suffered by the Company in the most recent 2 fiscal years and up to the annual report publication date due to labor disputes (including any violations of the Labor Standards Act found in labor inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

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• A. The Company pays close attention to the welfare of employees and emphasizes two-way communication between employers and employees to promote harmonious labor relations. There are no labor disputes during the most recent year or during the current fiscal year up to the date of printing of the annual report and no losses suffered from disputes. As the Company believes in mutual benefits for both parties, possibility of future labor disputes and losses are minute.

• B. Estimated amount and corresponding measures for current and future possibilities: None.

5.5.3 Employee behavior or ethnic codes

The Company has adopted several codes and regulations regarding employee behavior and ethnics to allow employees to follow on for their ethnics, rights, obligations, and behaviors. The regulations are summarized as follows:

• A. Codes of authorization: To improve work efficiency, strengthen level responsibility management, and effectively regulate the rights of all employees.

• B. Job description of departments: Clear specification of the job description and organization function of each unit.

• C. Rules of work: Reward or punishment based on employee behavior or action resulting in company gains or losses.

• D. Regulations for new employee education and training: Arrangements for new employees will be made as soon as possible to eliminate the anxiety of an new environment and allow the new employees to become familiar with the work environment and colleagues as well as fulfill their productivity and lower departure rate of new employees.

• E. Codes for attendance: Reference to follow for employee leave and absence.

• F. Codes for assessment: To improve the assessment system and establish employee discipline. Annual assessment of employee performance will be used as basis for raise, promotion, bonuses, and the arrangement of education and training.

• G. Sexual harassment prevention and measures: To prevent sexual harassment in the workplace and maintain gender equality as well as human dignity, the speech and behavior of employees are regulated.

• H. Codes for intellectual property rights: To protect trade secrets, commercial interests and competitiveness of the Company as well as to prevent losses caused by leaks.

• I. Codes for Ethical Management: To implement ethnical management policy and actively prevent misconduct, the code specifies and regulates employees when performing their duties.

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5.5.4 Protection measures for the work environment and personal safety of employees

• A. Adopt codes for environmental safety management.

• B. Establish managerial unit and personal for safety and hygiene:

• a. Establish safety and hygiene managerial unit in accordance with the Occupational Safety and Health Act.

• b. Equip operating site with emergency personnel and arrange refresher training in accordance with the Occupational Safety and Health Act.

• c. Operators of organic solvents, specific chemicals, dangerous machinery and equipment, and high pressure gas equipment must be trained and has licensed certificate. Refresher training is to be arranged in accordance with the Occupational Safety and Health Act.

• d. Hold monthly environment safety meetings and discuss issues related to environment safety.

• e. Arrange fire and safely audit every month.

• C. Fire prevention and facility safety

• a. Monthly maintenance and inspection of lift by commissioned

  • maintenance company, annual review by qualified inspection agency.

• b. Fire equipment inspection by faculty division, annual review by qualified inspection agency.

• c. High pressure gas equipment inspection by faculty division, annual review by qualified inspection agency.

• D. Health and hygiene

• a. Biannual operations environment check.

• b. Annual physical examinations and particular physical checkups for employees.

• c. Infirmary equipped with on-site nurses and occupational doctors to provide the appropriate medical assistance.

• E. Achieved ISO45001: 2018 Certification for labor safety and health.

5.6 Important contracts

Agreement	Counterparty	Period	Major Contents	Restrictions
Syndicated loan	7 banks, including E.SUN Bank	May 15, 2020 ~ May 14, 2025	Syndicated loan totaling NT$800 million	Maintenance of specific financial ratio
Liability insurance for directors and supervisors	Fubon Insurance	January 18, 2021 ~ January 18, 2022	Liability insurance for directors and supervisors	None
Liability insurance of technology	Hotai Insurance	November 1, 2020~ November 1,2021	Errors & omissions insurance	None
Commercial general liabilityinsurance	Hotai Insurance	November 1, 2020~ November 1,2021	Product liability insurance	None
Transportation cargo insurance	Hotai Insurance	November 1, 2020~ November 1,2021	Transportation insurance	None

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VI. Financial Information

6.1 Five-year financial summary

6.1.1 Consolidated condensed balance sheet – based on IFRS

Unit: NT$ thousands

			Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item			Financial Summaryfor The Last Five Years
			2020	2019	2018	2017	2016
Current assets			3,010,069	2,950,694	2,744,601	2,906,821	2,752,789
Property, plant and equipment			331,314	365,955	455,838	391,411	459,027
Intangible assets			4,111	3,777	2,471	3,540	3,868
Other assets			263,695	316,440	191,158	233,351	238,164
Total assets			3,609,189	3,636,866	3,394,068	3,535,123	3,453,848
Current liabilities	Before distribution		1,478,103	1,528,241	1,096,599	1,136,283	1,321,702
	After distribution		Undistributed	1,717,130	1,175,303	1,204,632	1,391,727
Non-current liabilities			150,521	156,644	488,310	481,278	91,477
Total liabilities	Before distribution		1,628,624	1,684,885	1,584,909	1,617,561	1,413,179
	After distribution		Undistributed	1,873,774	1,663,613	1,685,910	1,483,204
Equity attributable to shareholders of theparent			1,939,757	1,892,106	1,742,230	1,835,532	1,960,302
Capital stock			1,624,076	1,624,076	1,744,076	1,834,076	1,949,076
Capital surplus			15,423	4,397	28,226	23,873	33,663
Retained earnings (accumulated deficit)		Before distribution	591,094	539,266	355,707	325,664	338,384
		After distribution	Undistributed	350,377	277,003	257,315	268,359
Other equityinterest			(117,815)	(102,612)	(112,570)	(74,872)	(87,612)
Treasurystock			(173,021)	(173,021)	(273,209)	(273,209)	(273,209)
Non-controllinginterest			40,808	59,875	66,929	82,030	80,367
Total equity		Before distribution	1,980,565	1,951,981	1,809,159	1,917,562	2,040,669
		After distribution	Undistributed	1,763,092	1,730,455	1,849,213	1,970,644

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

Note 2: The amounts after distribution was in accordance with the resolution of shareholders’ meeting in next year.

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6.1.2 Consolidated condensed statement of comprehensive income – based on IFRS

Unit: NT$ thousands

	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item	Financial Summaryfor The Last Five Years
	2020	2019	2018	2017	2016
Operatingrevenue	3,737,299	4,107,559	2,818,735	3,005,136	3,178,919
Grossprofit	785,867	801,020	479,351	510,662	627,726
Income from operations	333,952	314,590	60,968	104,516	184,395
Non-operating income and expenses	(59,843)	(10,690)	65,661	(37,308)	31,589
Income before tax	274,109	303,900	126,629	67,208	215,984
Net income	232,996	257,047	112,163	55,571	187,846
Other comprehensive income (loss) (after tax)	(26,549)	10,820	(29,069)	16,137	5,387
Total comprehensive income	206,447	267,867	83,094	71,708	193,233
Net income attributable to shareholders of the parent	233,466	257,325	111,926	54,314	187,772
Net income (loss) attributable to non- controllinginterest	(470)	(278)	237	1,257	74
Comprehensive income attributable to Shareholders of the parent	225,514	274,921	82,274	70,045	193,108
Comprehensive income (loss) attributable to non- controllinginterest	(19,067)	(7,054)	820	1,663	125
Earningsper share(NT$)	1.57	1.73	0.71	0.33	1.03

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

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6.1.3 Parent-company-only condensed balance sheet – based on IFRS

Unit: NT$ thousands

		Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item		Financial Summaryfor The Last Five Years
		2020	2019	2018	2017	2016
Current assets		2,891,257	2,852,695	2,651,613	2,762,047	2,633,944
Property, plant and equipment		278,747	309,051	340,513	324,512	383,070
Intangible assets		4,091	3,760	2,448	3,425	3,868
Other	assets	403,771	423,352	352,910	375,943	377,976
Total	assets	3,577,866	3,588,858	3,347,484	3,465,927	3,398,858
Current liabilities	Before distribution	1,489,274	1,543,804	1,117,174	1,149,117	1,347,079
	After distribution	Undistributed	1,732,693	1,195,878	1,217,466	1,417,104
Non-current liabilities		148,835	152,948	488,080	481,278	91,477
Total liabilities	Before distribution	1,638,109	1,696,752	1,605,254	1,630,395	1,438,556
	After distribution	Undistributed	1,885,641	1,683,958	1,698,744	1,508,581
Capital stock		1,624,076	1,624,076	1,744,076	1,834,076	1,949,076
Capital surplus		15,423	4,397	28,226	23,873	33,663
Retained earnings (accumulated deficit)	Before distribution	591,094	539,266	355,707	325,664	338,384
	After distribution	Undistributed	350,377	277,003	257,315	268,359
Other equityinterest		(117,815)	(102,612)	(112,570)	(74,872)	(87,612)
Treasurystock		(173,021)	(173,021)	(273,209)	(273,209)	(273,209)
Total equity	Before distribution	1,939,757	1,892,106	1,742,230	1,835,532	1,960,302
	After distribution	Undistributed	1,703,217	1,663,526	1,767,183	1,890,277

Note: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

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6.1.4 Parent-company-only condensed statement of comprehensive income – based on IFRS

Unit: NT$ thousands

	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item	Financial Summaryfor The Last Five Years
	2020	2019	2018	2017	2016
Operatingrevenue	3,642,433	3,991,472	2,708,895	2,934,938	3,045,089
Grossprofit	681,192	674,877	364,548	399,068	500,801
Income from operations	323,241	298,793	50,932	102,666	187,179
Non-operating income and expenses	(53,072)	2,259	72,426	(38,700)	24,428
Income before tax	270,169	301,052	123,358	63,966	211,607
Net income	233,466	257,325	111,926	54,314	187,772
Other comprehensive income (loss) (after tax)	(7,952)	17,596	(29,652)	15,731	5,336
Total comprehensive income	225,514	274,921	82,274	70,045	193,108
Earningsper share(NT$)	1.57	1.73	0.71	0.33	1.03

Note: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed.

6.1.5 Auditors’ opinions for the last five years

Year	AccountingFirm	CPA	Audit Opinion
2016	KPMG	Po Jen, Yang/ Kuo Tsung, Chen	Unqualified
2017	KPMG	Po Jen, Yang/ Kuo Tsung, Chen	Unqualified
2018	KPMG	Po Jen, Yang / Kuo Tsung, Chen	Unmodified opinion plus an emphasis of matterparagraph
2019	KPMG	Po Jen, Yang/ Yen Ta, Su	Unqualified
2020	KPMG	Po Jen, Yang/ Yen Ta, Su	Unqualified

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6.2 Five-year financial analysis

6.2.1 Consolidated financial analysis – based on IFRS

Item	Year	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
		2020	2019	2018	2017	2016
Financial structure (%)	Debt ratio	45.12	46.32	46.70	45.76	40.92
	Ratio of long-term capital to property, plant and equipment	643.22	576.19	504.01	612.87	464.49
Solvency (%)	Current ratio	203.64	193.07	250.28	255.82	208.28
	Quick ratio	139.26	136.81	168.37	183.01	149.59
	Interest earned ratio(times)	2512.29	2231.88	1132.36	719.14	1936.29
Operating performance	Accounts receivable turnover(times)	6.49	7.85	5.62	6.58	7.19
	Average collectionperiod	56.24	46.49	64.94	55.47	50.76
	Inventoryturnover(times)	3.31	3.74	2.65	2.93	2.90
	Accountspayable turnover(times)	7.08	7.41	5.81	7.21	7.13
	Average days in sales	110.27	97.59	137.73	124.57	125.86
	Property, plant and equipment turnover(times)	10.71	9.99	6.65	7.07	6.38
	Total assets turnover(times)	1.03	1.16	0.81	0.86	0.88
Profitability	Return on total assets(%)	6.68	7.63	3.52	1.85	5.48
	Return on stockholders’ equity (%)	11.84	13.66	6.02	2.81	9.04
	Pre-tax income topaid-in capital(%)	16.87	18.71	7.26	3.66	11.08
	Profit ratio(%)	6.23	6.25	3.98	1.85	5.91
	Earningsper share(NT$)	1.57	1.73	0.71	0.33	1.03
Cash flow	Cash flow ratio(%)	11.08	25.91	26.44	(8.64)	30.35
	Cash flow adequacyratio(%)	133.30	215.11	251.01	321.24	483.50
	Cash reinvestment ratio(%)	(Note 2)	6.16	4.06	(Note 2)	6.31
Leverage	Operatingleverage	1.23	1.27	2.11	1.83	1.61
	Financial leverage	1.04	1.05	1.25	1.12	1.07
Analysis of financial ratio differences for the last two years: (Not required if the difference does not exceed 20%) 1. Average collection period was higher due to a decline of 9.01% in operating revenue impacted by COVID-19 epidemic in 2020. 2. Cash flow ratio, cash flow adequacy ratio and cash reinvestment ratio were lower due to net cash inflows from operating activities decreased by58.63% to NT$232,233 thousand and distributingcash dividends increased by140% than 2019.

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed. Note 2: It is not applicable because net cash flows from operating activities minus cash dividends is negative.

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6.2.2 Parent-company-only financial analysis – based on IFRS

Item	Year	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
		2020	2019	2018	2017	2016
Financial structure (%)	Debt ratio	45.78	47.27	47.95	46.85	42.32
	Ratio of long-term capital to property, plant and equipment	749.27	661.72	654.99	713.94	535.61
Solvency (%)	Current ratio	194.13	184.78	237.35	241.89	195.53
	Quick ratio	135.87	135.50	168.78	183.68	147.21
	Interest earned ratio(times)	2589.34	2374.66	1106.26	690.20	1899.69
Operating performance	Accounts receivable turnover(times)	5.62	6.68	4.61	5.30	5.50
	Average collectionperiod	64.94	54.64	79.35	68.87	66.36
	Inventoryturnover(times)	3.68	4.27	3.10	3.50	3.46
	Accountspayable turnover(times)	7.97	8.41	6.79	8.71	8.48
	Average days in sales	99.18	85.48	116.99	104.29	105.49
	Property, plant and equipment turnover(times)	12.39	12.28	8.15	8.30	7.28
	Total assets turnover(times)	1.01	1.15	0.80	0.86	0.86
Profitability	Return on total assets(%)	6.75	7.72	3.57	1.85	5.58
	Return on stockholders’ equity (%)	12.18	14.16	6.26	2.86	9.40
	Pre-tax income topaid-in capital(%)	16.63	18.53	7.07	3.49	10.86
	Profit ratio(%)	6.40	6.44	4.13	1.85	6.17
	Earningsper share(NT$)	1.57	1.73	0.71	0.33	1.03
Cash flow	Cash flow ratio(%)	8.88	22.43	23.61	(5.49)	28.75
	Cash flow adequacyratio(%)	129.18	226.85	281.72	317.74	442.62
	Cash reinvestment ratio(%)	(Note 2)	5.67	3.79	(Note 2)	6.39
Leverage	Operatingleverage	1.19	1.23	2.24	1.72	1.52
	Financial leverage	1.03	1.05	1.32	1.12	1.07
Analysis of financial ratio differences for the last two years: (Not required if the difference does not exceed 20%) 1. Cash flow ratio, cash flow adequacy ratio and cash reinvestment ratio were lower due to net cash inflows from operating activities decreased by61.79% to NT$124,000 thousand and cash dividendpayment increased by140% than 2019.

Note 1: Until the date of annual report issuance, the financial data of the latest period audited or reviewed by the CPA are fully disclosed. Note 2: It is not applicable because net cash flows from operating activities minus cash dividends is negative.

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6.3 Supervisors’ review report for the most recent year

Emerging Display Technologies Corp. Supervisors’ Review Report

The Board of Directors report the business report, consolidated financial statements, parent-company-only financial statements and profit allocation proposal of 2020. Of the said documents, the financial statements have been duly audited by Certified Public Accountants Po Jen, Yang and Yen Ta, Su of KPMG Taiwan.

The above business report, consolidated financial statements, parent-company-only financial statements and profit allocation proposal have been audited by us as Supervisors of the Company. We deem no inappropriateness on these documents. Pursuant to Article 219 of the Company Act, we hereby present the audited report. Please review.

Submitted to:

2021 Shareholders’ Meeting of the Company

Emerging Display Technologies Corp.

Supervisor: Lin, Yu-Fen Supervisor: Tseng, Shu-Ling Supervisor: Ting, Hung-Hsun

==> picture [34 x 34] intentionally omitted <==

==> picture [34 x 34] intentionally omitted <==

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March 17, 2021

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6.4 Consolidated financial statements for the years ended December 31, 2020 and 2019, and independent auditors’ report

Representation Letter

The entities that are required to be included in the combined financial statements of Emerging Display Technologies Corp. as of and for the year ended December 31, 2019, 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 the International Financial Reporting Standard 10, “Consolidated Financial Statements.”

In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Emerging Display Technologies Corp. and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

Emerging Display Technologies Corp.

By Ray Tseng Chairman March 10, 2021

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Independent Auditors’ Report

To the Board of Directors of Emerging Display Technologies Corp.:

Opinion

We have audited the accompanying consolidated financial statements of Emerging Display Technologies Corp. and subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the Group's consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards(IFRS), International Accounting Standards(IAS), IFRIC Interpretations(IFRIC), and SIC Interpretations(SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the 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 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 audit matters we judged shall be presented in the consolidated financial report as follows:

1. Valuation of accounts receivable

Please refer to Note 4(g) for accounting policy of accounts receivable valuation and Note 5(a) for accounting assumption and estimation uncertainty of impairment of accounts receivable. Information regarding accounts receivable is shown in Note 6 (d) of the consolidated financial statements.

Description of key audit matters:

The Group’s customers are the manufacturers of industrial equipment, smart home devices, handheld devices, and information appliance products. The customers’ delayed payments were due to the need to clarify the responsibility of problematic products resulted from failure of process or usage of end products, and global economic turmoil. Because of the inherent credit risk of receivables, the financial statements users value the collection results. Since the accounts receivable is significant to the financial statements, they are one of the key areas our audit focused on.

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How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding the process of account checking and collection with customers; analyzing the receivable aging report; reviewing the historical receipt and bad debt records; and understanding the forward looking industrial economy status and concentration of credit risk of the customers. In addition, we also evaluated the appropriateness of related disclosures in the consolidated financial statements.

2. Valuation of obsolete inventory

Please refer to Note 4(h) for accounting policy of obsolete inventory and Note 5(b) for accounting assumption and estimation uncertainty of obsolete inventory valuation. Information regarding obsolete inventory valuation is shown in Note 6(f) of the consolidated financial statements.

Description of key audit matters:

Obsolete inventory is carried at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The Group is engaged in the manufacture and sale of liquid crystal displays and capacity touch panels. It focuses on the small and medium sized niche markets of non-consumable area. The products are used in industrial equipment, smart home devices, handheld devices, and information appliance products. The development strategy of the Group is diversifying and customizing its products which may result in having an impact on its obsolete inventory cost. As a consequence, there is a risk that the net realizable value of obsolete inventory may turn out to be lower than it’s carrying value. Therefore, the valuation of obsolete inventory is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included selecting samples to test the accuracy of inventory aging report; analyzing the changes of inventory aging, and examining the provision of inventory by reviewing the historical accuracy on provision. We assessed the changes of obsolescence inventory in the subsequent events and the basis of net realizable value to evaluate the accuracy of the Group’s provisions. In addition, we also assessed the appropriateness of the provisions and disclosures made by the management.

Other Matters

We have also audited the parent company only financial statements of Emerging Display Technologies Corp. as of and for the year ended December 31, 2020 and 2019, on which we have issued an unmodified opinion.

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

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 the IFRS, IAS, IFRIC, and 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 consolidated financial statements, the management is responsible for assessing the Group’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 the management either intends to liquidate the Group or to cease its operations, there is no realistic alternative but to do so.

Those charged with governance including supervisors are responsible for overseeing the Group’s financial reporting process.

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Auditors’ 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 misstatements, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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 the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the 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.

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’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, we have to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. 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.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on this consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

7. 87 -

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 Po Jen, Yang and Yen Ta, Su.

KPMG

Taipei, Taiwan (Republic of China) March 10, 2021

Notes to Readers

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

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(English Translation of Financial Statements and Report Originally Issued in Chinese)

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES

Consolidated Balance Sheets December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: Cash and cash equivalents (Note 6(a)) Financial assets at fair value through profit or loss, current (Note 6(b)) Financial assets at fair value through other comprehensive income, current (Note 6(c)) Accounts receivable, net (Note 6(d) and 6 (v)) Other receivables (Note 6(e)) Income tax assets Inventories (Note 6(f)) Other current assets (Note 6(g) and 8) Total current assets Non-current assets: Financial assets at fair value through other comprehensive income, non-current (Note 6(c)) Property, plant and equipment (Notes 6(i) ,8 and 9) Right-of-use assets (Notes 6(j) Investment property (Notes 6(k) Intangible assets (Note 6(l)) Deferred income tax assets (Note 6(s)) Other non-current financial assets (Notes 6(g) and 8) Total non-current assets TOTAL	2020.12.31	2020.12.31	2019.12.31 Amount ％ 1,368,252 38 54,094 1 109,554 3 537,591 15 18,684 - 95 - 803,035 22 59,389 2 2,950,694 81 140,762 4 365,955 10 77,207 2 57,834 2 3,777 - 33,003 1 7,634 - 686,172 19 3,636,866 100 Liabilities and equity Current liabilities: Short-term loans (Notes 6(m)) Financial liabilities at fair value through profit or loss, current (Notes 6(b)) Notes payable Accounts payable Other payables (Notes 6(n)) Income tax liabilities Lease liabilities, current (Notes 6(p)) Long-term loans, current portion (Notes 6(o) and 8) Other current liabilities (Notes 6(v)) Total current liabilities Non-current liabilities: Deferred income tax liabilities (Note 6(s)) Lease liabilities, non-current (Notes 6(p)) Net defined benefit liabilities, non-current (Note 6(r)) Guarantee deposits received Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to shareholders of the parent (Note 6 (c) and 6 (t)): Common stock Capital surplus Retained earnings Other equity interest Treasury stock Total equity attributable to shareholders of the parent Non-controlling interests (Note 6(h)) Total equity TOTAL	2020.12.31	2020.12.31	2019.12.31 Amount ％ 400,000 11 994 - 307 - 431,437 12 283,605 8 57,038 2 11,907 - 319,555 9 23,398 - 1,528,241 42 - - 66,575 2 88,546 2 587 - 936 - 156,644 4 1,684,885 46 1,624,076 45 4,397 - 539,266 15 (102,612) (3) (173,021) (5) 1,892,106 52 59,875 2 1,951,981 54 3,636,866 100
	Amount	％	Amount	Amount	％	Amount
	$ 1,242,331 58,817 159,760 589,550 6,090 18 870,501 83,002	34 2 5 16 - - 24 2		$ 700,000 195 1,234 400,068 274,518 51,559 7,325 - 43,204	19 - - 11 8 2 - - 1	400,000 994 307 431,437 283,605 57,038 11,907 319,555 23,398
	3,010,069	83	2,950,694
	98,691 331,314 67,228 55,158 4,111 31,928 10,690	3 9 2 2 - 1 -		1,478,103	41	1,528,241
				354 61,833 87,048 558 728	- 2 2 - -	- 66,575 88,546 587 936
				150,521	4	156,644
	599,120	17	686,172	1,628,624	45	1,684,885
				1,624,076 4,397 539,266 (102,612) (173,021)	45 - 15 (3) (5)	1,624,076 4,397 539,266 (102,612) (173,021)
				1,892,106 59,875	52 2	1,892,106 59,875
				1,951,981	54	1,951,981
				$ 3,609,189	100	3,636,866
	$ 3,609,189	100	3,636,866

See accompanying notes to consolidated financial statements.

• 89 -

(English Translation of Financial Statements and Report Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Operating revenue (Note 6(v)) Operating cost (Note 6(f, l, r & w) and 12) Gross profit Operating expenses (Note 6(d, l, r & w) 7 and 12): Selling expenses General and administrative expenses Research and development expenses Expected credit impairment loss (gain) (Note 6(d)) Total operating expenses Net other income (expenses) (Note 6(q, x)) Operating profit Non-operating income and expenses (Note 6(q, x)): Interest income Other income Other gains and losses Finance costs Total Non-operating income and expenses Profit before income tax Income tax expense (Note 6(s)) Profit Other comprehensive income: Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit obligation Unrealized losses on investments in equity instruments at fair value through other comprehensive income (Note 6(t)) Less: Income tax related to items that will not be reclassified subsequently (Note 6(s)) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation (Note 6(t)) Less: Income tax related to items that will be reclassified subsequently (Note 6(s)) Other comprehensive income, net Comprehensive income Profit (loss) attributable to Shareholders of the parent Non-controlling interests Net Profit (loss) Comprehensive income attributable to Shareholders of the parent Non-controlling interests Total comprehensive income Earnings per share (Note 6(u)) (expressed in New Taiwan Dollars) Basic earnings per share Diluted earnings per share	2020		2019	％ 100 80 20 6 3 3 - 12 - 8 1 - (1) - - 8 1 7 - - - - - - - - 7 7 - 7 7 - 7 1.73 1.72
	Amount	％	Amount
	$ 3,737,299 2,951,432	100 79	4,107,559 3,306,539
	785,867	21	801,020
	200,931 133,865 115,565 5,618	5 4 3 -	244,031 132,038 112,855 (1,560)
	455,979	12	487,364
	4,064	-	934
	333,952	9	314,590
	9,699 15,496 (73,675) (11,363)	- - (2) -	20,636 12,025 (29,096) (14,255)
	(59,843)	(2)	(10,690)
	274,109 41,113	7 1	303,900 46,853
	232,996	6	257,047
	(1,286) (20,822) 298	- (1) -	(2,876) 19,699 -
	(22,406)	(1)	16,823
	(4,143) -	- -	(6,003) -
	(4,143)	-	(6,003)
	(26,549)	(1)	10,820
	206,447	5	267,867
	233,466 (470)	6 -	257,325 (278)
	232,996	6	257,047
	225,514 (19,067)	6 (1)	274,921 (7,054)
	$ 206,447	5	267,867
	$	1.57
	$	1.56

See accompanying notes to consolidated financial statements.

• 90 -

(English Translation of Financial Statements and Report Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2019 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve Cash dividends of common stock Special reserve Purchase of treasury stock Retirement of treasury stock Cash dividends to subsidiaries Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2019 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve Cash dividends of common stock Reversal of special reserve Exercise of disgorgement Cash dividends to subsidiaries Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2020			Equity attributable	Equity attributable	Equity attributable	to shareholders of parent	to shareholders of parent	to shareholders of parent			Total equity 1,809,159 257,047 10,820
	Common stock	Capital surplus	Retained earnings			Other equity interest			Total equity attributable to shareholders of parent	Non-controlling interests
							Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Treasury stock
			Legal capital reserve	Special capital reserve
	$ 1,774,076 - -	28,226 - -	45,822 - -	109,212 - -	200,673 257,325 (2,876)	(8,271) - (5,840)	(104,299) - 26,312	(273,209) - -	1,742,230 257,325 17,596	66,929 (278) (6,776)
	-	-	-	-	254,449	(5,840)	26,312	-	274,921	(7,054)	267,867 - (78,704) - (50,738) - 4,397 -
	- - - - (120,000) - -	- - - - (28,226) 4,397 -	11,193 - - - - - -	- - 42,095 - - - -	(11,193) (78,704) (42,095) - (2,700) - 10,514	- - - - - - -	- - - - - - (10,514)	- - - (50,738) 150,926 - -	- (78,704) - (50,738) - 4,397 -	- - - - - - -
	1,624,076	4,397	57,015	151,307	330,944	(14,111)	(88,501)	(173,021)	1,892,106	59,875	1,951,981
	- -	- -	- -	- -	233,466 (1,286)	- (4,185)	- 2,481	- -	233,466 (7,952)	(470) (18,597)	232,996 (26,549)
	-	-	-	-	232,180	(4,185)	2,481	-	255,514	(19,067)	206,447
	- - - - - -	- - - 473 10,553 -	25,733 - - - - -	- - (48,695) - - -	(25,733) (188,889) 48,695 - - 8,537	- - - - - -	- - - - - (8,537)	- - - - - -	- (188,889) - 473 10,553 -	- - - - - -	- (188,889) - 473 10,553 -
	$ 1,624,076	15,423	82,748	102,612	405,734	(18,296)	(99,519)	(173,021)	1,939,757	40,808	1,980,565

See accompanying notes to consolidated financial statements.

• 91 -

(English Translation of Financial Statements and Report Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities Profit before tax Adjustments : Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit impairment loss (gain) Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Gain on disposal of property, plant, equipment Unrealized foreign exchange loss Total adjustments to reconcile profit Changes in operating assets and liabilities Changes in operating assets: Accounts receivable Other accounts receivable Inventories Other current assets Total net changes in operating assets Net changes in operating liabilities: Notes payable Accounts payable Other payables Other current liabilities Net defined benefit liability Other non-current liabilities Total net change in operating liabilities Total net change in operating assets and liabilities Total adjustments Cash inflow generated from (used in) operating activities Interest received Dividends received Interest paid Income taxes paid Net cash flows from (used in) operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income 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, equipment Acquisition of intangible assets Acquisition of investment property Other financial assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Short-term loans Repayments of long-term loans Increase in guarantee deposits received Disgorgement received Cash dividends Payments to acquire treasury stock Repayment of lease liabilities Net cash flows from (used in) financing activities Effects of changes in foreign exchange rates Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	2020	2019
	$ 274,109	303,900
	74,705 1,447 5,618 (7,336) 11,363 (9,611) (9,320) - 33,909	83,955 1,055 (1,560) (4,809) 14,255 (20,472) (8,716) (568) 31,256
	100,775	94,396
	(68,996) 3,688 (71,387) (22,263)	(77,928) 4,957 38,403 (5,599)
	(158,958)	(40,167)
	927 (28,037) (4,896) 18,739 (2,784) (208)	(413) (19,702) 44,049 9,712 (2,556) 936
	(16,259)	32,026
	(175,217)	(8,141)
	(74,442)	86,255
	199,667 11,303 9,287 (10,908) (45,463)	390,155 19,869 8,716 (13,376) (9,245)
	163,886	396,119
	(101,773) 80,033 (60,350) 62,165 (32,763) - (1,780) (886) (3,006)	- 121,298 (95,030) 173,198 (37,320) 568 (2,361) - (22)
	(58,360)	160,331
	300,000 (320,000) - 591 (178,330) - (11,616)	30,000 (80,000) 339 - (74,307) (50,738) (12,826)
	(209,355)	(187,532)
	(22,092)	(29,779)
	(125,921) 1,368,252	339,139 1,029,113
	$ 1,242,331	1,368,252

See accompanying notes to consolidated financial statements.

• 92 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements For the years ended December 31, 2020 and 2019

(All amounts expressed in thousands of New Taiwan dollars, unless otherwise specified)

(1) Organization and Business Scope

Emerging Display Technologies Corp.(the Company) and its subsidiaries was incorporated as a limited liability Group under the laws of the Republic of China (ROC) on September 23, 1994. The address of its registered office and principal place of business is No.5, Central 1st Rd, Kaohsiung Economic Processing Zone, Kaohsiung City, Taiwan. The Consolidated financial statements comprise Emerging Display Technologies Corp. and its subsidiaries (jointly referred to as the Group). The Group is engaged in the manufacture and sale of Capacity Touch Panel and liquid crystal displays (LCDs).

• (2) Financial Statements Authorization Date and Authorization Process

The consolidated financial statements were authorized for issuance by the Board of Directors on March 10, 2021.

• (3) Application of New and Revised International Financial Reporting Standards and Interpretations

• (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 details of impact on the Group’s adoption of the new amendments beginning January 1, 2020 are as follows:

• (i) Amendments to IFRS 16 “COVID 19 Related Rent Concessions”

As a practical expedient, a lessee may elect not to assess whether a rent concession that meets certain conditions is a lease modification, rather any changes in lease liability are recognized in profit or loss. The amendments have been endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) in July 2020, earlier application from January 1, 2020 is permitted. Related accounting policy is explained in Note 4(k).

The Group has elected to apply the practical expedient for property, plant and equipment rents that meet the criteria beginning on January 1, 2020, with early adoption. No adjustment was made upon the initial application of the amendments. The amounts recognized in profit or loss for the year ended December 31, 2020 was $1,418.

• (ii) Other amendments

The following new amendments, effective January 1, 2020, do not have a significant impact on the consolidated financial statements:

• Amendments to IFRS 3 “Definition of a Business”

• Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform”

• Amendments to IAS 1 and IAS 8 “Definition of Material”

• (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, 2021, would not have a significant impact on its consolidated financial statements:

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

• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2

• 93 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

by the FSC:
Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Content of amendment	Effective date per **IASB **
	The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of balance sheet, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. January 1, 2023 The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss. January 1, 2022 The amendments clarify that the ‘costs of fulfilling a contract’ comprises the costs that relate directly to the contract as follows: ● the incremental costs - e.g. direct labor and materials; and ● an allocation of other direct costs - e.g. an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract. January 1, 2022

The Group is evaluating the impact on its financial position and financial performance upon its initial adoption of the above mentioned standards or interpretations. The results, thereof, will be disclosed when the Group completes its evaluation.

The Group does not expect the following other 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”

• Annual Improvements to IFRS Standards 2018-2020

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

• 94 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(4) Summary of Significant Accounting Policies

The accompanying 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 consolidated financial statements, the Chinese version shall prevail.

The significant accounting policies presented in the financial statements are summarized as follows. Except for those specifically indicated in Note 3 and Note 4(k), the following accounting policies were applied consistently throughout the presented periods in the financial statements.

• (a) Statement of compliance

These consolidated annual 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 IFRS endorsed by the FSC).

• (b) Basis of preparation

• (i) Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis except for the following significant items:

• 1) Financial instruments measured at fair value through profit or loss are measured at fair value;

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

• 3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(q).

• (ii) Functional and presentation currency

The functional currency of each 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 Group’s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

• (c) Basis of consolidation

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

The Group consolidated financial statements include the accounts of the Company and all directly owned subsidiaries of the Company. The investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those return through its power over the investee.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that the Group’s control commences until the date that control ceases. Intergroup balances and transactions, and any unrealized income and expenses arising from intergroup transactions are eliminated in preparing the consolidated financial statements. Subsidiaries contribute total comprehensive income to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interest having a deficit balance.

• 95 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Financial statements of subsidiaries had been adjusted to use uniform accounting policies as the Group.

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 is recognized directly in equity and attributed to the owners of the parent.

• (ii) Subsidiaries included in the consolidated financial statements are as follows:

Name of investor	Name of the subsidiaries	Business activity	Percentage ownership	Percentage ownership	Remarks
			December 31, 2020	December 31, 2019
The Company The Company The Company The Company The Company The Company The Company The Company The Company Ying Dar Investment Development Corp. Bae Haw Investment Development Corp. Emerging Display International (Samoa) Corp.	Emerging Display Technologies Corp., U.S.A Emerging Display International (Samoa) Corp. EDT-Europe ApS Tremendous Explore Corp. Emerging Display Technologies Korea EDT-Japan Corp. Ying Dar Investment Development Corp. Bae Haw Investment Development Corp. Ying Cheng Investment Corp. Emerging Display International (Samoa) Corp. Emerging Display International (Samoa) Corp. Dong Guan Emerging Display Limited	Sale of CTP and LCDs Investment holding Customer service and business support Trading Sale of CTP and LCDs Customer service and business support Investment Investment Investment Investment holding Investment holding Manufacturing of CTP and LCDs	100.00% 78.49% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 52.50% 5.90% 11.41% 100.00%	100.00% 78.49% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 52.50% 5.90% 11.41% 100.00%	Major Subsidiary

Note: Tremendous Explore Corp. was liquidated in July, 2020. The related liquidation procedures had been completed.

(iii) Subsidiaries which are not included in the consolidated financial statements: None.

• 96 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (d) Foreign currency

• (i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation.

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

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

• 2) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• 3) qualifying cash flow hedges to the extent that the hedges are effective.

• (ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustment arising on acquisition, are translated to New Taiwan dollar at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to New Taiwan dollar at the average rate. Foreign currency 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 any part of its interest in a subsidiary, association or join venture that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income.

• (e) 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) The asset is expected to be realized or is intended to be sold or consumed in the normal operating cycle;

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

• (iii) The asset is expected to be realized 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.

• 97 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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

• (i) The liability is expected to be settled in the normal operating cycle;

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

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

• (iv) The entity 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 issuance of equity instruments do not affect its classification.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and demand deposits that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. The time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations rather than for investment or other purposes should be recognized as cash equivalents.

• (g) Financial instruments

Account receivable 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 accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A accounts receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost-equity investment; 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 amount 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, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• 98 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• 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 amount 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 investment-byinvestment basis.

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

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

Dividend income derived from equity investments is recognized on the date that the Group’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date.

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

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which otherwise meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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

• 4) Business model assessment

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

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

• ‧ how the performance of the portfolio is evaluated and reported to the Group's management;

• 99 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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

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

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

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

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

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

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

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

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

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

• ‧ prepayment and extension features; and

• ’

• ‧ terms that limit the Group s claim to cash flows from specified assets (e.g. non recourse features)

• 6) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on its financial assets measured at amortized cost (including cash and cash equivalents, notes receivable and accounts receivable, other receivables, refundable deposits and other financial assets) and debt investment measured at fair value through other comprehensive income (FVOCI).

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:

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

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

• 100 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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

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

12-month ECL is the portion of ECL that results from default events that is 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 ECL is the maximum contractual period over which the Group is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition, 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, informed credit assessment and including forwardlooking information.

If there is a low risk of default on financial asset, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations, the financial asset would be considered low credit risk.

When the contract amount is past due or the borrower is unlikely to pay its credit obligations to the Group in full, the Group considers the credit risk on a financial asset has increased significantly or a financial asset to be in default.

ECLs are a probability-weighted estimate of the expected lifetime credit losses on financial assets. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flow due to the Group in accordance with the contracts and the cash flow the Group expects to receive). ECLs are discounted based on the effective rate of financial assets.

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

Evidence that a financial assets is credit impaired includes the following observable data:

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being overdue;

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

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

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

• 101 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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.

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 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 amount due.

• 7) Derecognition of financial assets

The Group 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 Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

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

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

Debt and equity instruments issued by the 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 stock

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 stocks. When treasury stocks 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 surplus is not sufficient to be written down).

• 4) 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.

• 102 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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.

• 5) 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.

• 6) Offsetting of financial assets and liabilities

Financial assets and liabilities are presented on a net basis when the Group has the legally enforceable rights to offset, and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

• (iii) Derivative financial instruments

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

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

• (h) Inventories

Inventories are measured individually at the lower of cost and net realizable value. The cost of inventories includes all necessary costs of purchase, costs of conversion, and other costs in bringing the inventories to a salable and useable location and condition. The production overhead is allocated to the finished goods and work in progress based on the normal capacity of production facilities.

Net realizable value is determined based on the estimated selling price in the ordinary course of business, less, the estimated costs of completion and selling expenses at the end of the period.

• 103 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(i) Investment Property

Investment property is a property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost less accumulated depreciation and accumulated impairment loss.

Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

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

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

• (j) 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 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 cost

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 has an unlimited useful life, and therefore, is not depreciated.

The estimated useful lives, for the current and comparative years, of significant items of property, plant and equipment are as follows:

Buildings	2～50 years
Machinery and equipment	2～10 years
Furniture and fixtures	3～5 years
Other equipment	1～10 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

• (iv) Reclassification to investment property

The property is reclassified to investment property at its carrying amount when the use of the property changes from private to investment property.

• 104 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (k) 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. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

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

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

• 3) the Group has the right to direct the use of the asset if either:

• ‧ the Group has the right to direct the use of the identified asset when it has the decision-making rights that are most relevant to the changes on how and for what purpose the asset is used throughout the period.

• ‧ the decision on how and for what purpose, the asset is used is predetermined:

  • the Group has the right to operate the asset and the providers do not have the right to vary; or

  • the Group designed the asset in a way that predetermines how and for what purpose, it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, at the time of lease of land and construction, the Group chooses to treat the lease component and the non-lease component as part of a single lease without distinguishing between non-lease components.

• (ii) As a lessee

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.

• 105 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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

• 1) Fixed payments, including in-substance fixed payments;

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

• 3) Amounts expected to be payable under a residual value guarantee; and

• 4) Payments or penalties 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:

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

• 2) there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee;

• 3) there is a change in the assessment regarding the purchase options;

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

• 5) there is any lease modifications in lease subject, scope of the lease or other terms.

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 there right-ofuse asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets and lease liabilities that do not meet the definition of investment as a separate line item respectively in the balance sheets.

For short-term lease of office equipment and low-value underlying asset lease, the Group chooses not to recognize the right-of-use asset and lease liability, and the related lease payments are recognized as expenses on a straight-line method over the lease term.

As a practical expedient, the Group elects not to assess whether property, plant and equipment rents that meets all the following conditions are lease modifications or not:

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

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

• 3) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2021; and

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

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

• 106 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (iii) As a lessor

When the Group 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 Group 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 lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

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

If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract.

• (l) Intangible assets

• (i) Recognition and measurement

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Group include patents and computer software costs 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 life of intangible assets for the current and comparative periods is as follows:

Patents 9 ～ 20 years Computer software cost 3 months ～ 4 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if it’s necessary.

• 107 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(m) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amount 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.

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.

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.

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.

• (n) Provision

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

• (o) Revenue

• (i) 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 good

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.

• 108 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The Group provides standard warranties for goods sold and has obligation to replace or maintain for the defective goods, in which the Group has recognized provisions for warranties to fulfill the obligation.

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

Contract liability is primarily generated from advanced receipts of commodity sales contract. The Group will recognize revenue when deliver commodity to customers.

• 2) 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.

• (ii) Contract cost with customers

• 1) Incremental cost of obtaining a contract

If the Group is expected to receive the incremental cost of obtaining customer’s contract, the cost should recognize as asset. Incremental costs are costs that would not have been incurred had that individual contract not been obtained. Any other costs of obtaining a contract are expensed when incurred, unless they are explicitly chargeable to the customer regardless of whether the contract is obtained. As a practical expedient, incremental costs of obtaining a contract can be expensed if the amortization period would be one year or less.

• 2) Costs to fulfil a contract

In accounting for costs to fulfil a contract, the Group must first assess whether the costs fall within the scope of another IFRS (e.g. IAS 2 Inventories, IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets) and, if so, account for them in accordance with that standard. The Group can only recognize the cost as an asset only if they:

• Relate directly to a contract, or to an anticipated contract that can be specifically identified;

• Generate or enhance resources to be used to satisfy performance obligations in future; and

• Are expected to be recovered.

General and administrative costs that are not explicitly chargeable to the customer and the costs of wasted materials, labor and other resources that were not reflected in the price of the contract do not qualify. Costs relating to satisfied or partially satisfied performance obligations must be expensed.

• 109 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(p) Government grants

The Group recognizes an unconditional government grant 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. Grants that compensate the Group for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(q) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are expensed as the related service is provided. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

(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.

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 g in or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gams and losses on the settlement of a defined benefit plan when the settlement occurs.

• 110 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

• (iv) 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 pain under short-term cash bonus or profitsharing plans if the Consolidated 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.

(r) Share-based payment

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

For share-based payment awards with non-vesting conditions, the grant-date fair value of the 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 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 that the employees become unconditionally entitled to payment. The liability is re-measured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any change in the liability is recognized in profit or loss.

• (s) 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 shall be 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 IAS 37.

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.

• 111 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Deferred taxes arise due to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) The initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); or

• (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.

The Group shall offset deferred tax assets and deferred tax liabilities if, and only if:

• (i) The Group 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, but where each such entity intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or to realize the assets and settle the liabilities simultaneously.

A deferred tax asset shall be recognized for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. At the end of each reporting period, an entity reassesses unrecognized deferred tax assets; such reductions are reversed when the probability of future taxable profits improves.

(t) Earnings per share

The Group discloses the basic and diluted earnings per share attributable to common equity holders of the Company. The calculation of basic earnings per share is based on the profit attributable to the common shareholders of the Company divided by the weighted-average number of common stocks outstanding. The calculation of diluted earnings per share is based on the profit attributable to common shareholders of the Company, divided by the weightedaverage number of common shares outstanding after adjustment for the effects of all dilutive potential common stock, such as convertible bonds.

• (u) Operating segments

An operating segment is a component of the Group 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 Group. Operating results of the operating segment are regularly reviewed by the Group’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.

• 112 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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

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

Management is required to constantly examine the fairness of those estimates and assumptions. The effect of change in accounting estimate shall be recognized prospectively by including it the profit or loss in the current period or future periods.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID 19 pandemic:

• (a) Impairment of accounts receivables

The Group has estimated the loss allowance of accounts receivable that is based on the risk of a default occurring and the rate of expected credit loss. The Group 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. Please refer to note 6(d) for relevant assumptions and input values.

• (b) Valuation of obsolete inventories

As obsolete inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the obsolete inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of obsolete inventories. Please refer to note 6(f) for further description of the valuation of inventories.

(6) Explanation of Significant Accounts

• (a) Cash and cash equivalents

Cash and cash equivalents Demand deposits Check deposits Time deposits Repurchase agreement Total	2020.12.31 $ 328 565,624 82 273,962 402,335 $ 1,242,331	2019.12.31 366 272,823 15 1,063,943 31,105 1,368,252

Please refer to Note 6(z) for the analysis of sensitivity and interest rate risk of the financial assets.

• 113 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (b) Financial assets at fair value through profit or loss

Current financial assets mandatorily measured at fair value through profit or loss:

Open-end mutual funds Swap contract Total	2020.12.31	2019.12.31 54,018 76
	$ 58,817 - $ 58,817
		54,094

Current financial liabilities measured at fair value through profit or loss:

Swap contract	2020.12.31 $ 195	2019.12.31
		994

Please refer to Note 6(y) for the recognition of gain or loss at fair.

The abovementioned financial assets were not pledged as collateral.

The Group entered into derivative instruments to manage exposure to currency risk arising from operating activities and doesn’t applicable to hedge accounting. The Group’s derivative instruments were as follows presented under financial assets mandatorily measured at FVTPL and financial liabilities measured at FVTPL; presented under financial assets held for trading:

2020.12.31

		2020.12.31
Swap contract Swap contract	Contract amount (Thousand Dollar) USD 1,000	Currency TWD to USD 2019.12.31	Maturity period
			2021.01.17
	Contract amount (Thousand Dollar) USD 5,000	Currency TWD to USD	Maturity period
			2020.01.17~2020.03.31

Please refer to Note 6(z) for credit risk and market risk.

• 114 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (c) Financial assets at fair value through other comprehensive income

Equity instruments at fair value through other comprehensive income-current: Common stocks listed on domestic markets -current: Innolux Corp. Fubon Financial Holding Co., Ltd. Synnex Technology International Co., Ltd. Nan Ya Plastics Corporation Pegatron Co., Ltd. CoAsia Electronics Corp. E.SUN Financial Holding Co., Ltd. Far Eastern New Century Corp. Shian Yih Electronic Co., Ltd. AGV Products Corporation Total Common stocks listed on foreign markets -current: Becton, Dickinson and Company Total Equity instruments at fair value through other comprehensive income-noncurrent: Common stocks unlisted on domestic markets -noncurrent: Ascendax Venture Capital Corp. Chenfeng Optronics Corp. Total Preference stocks listed on domestic markets -noncurrent: Fubon Financial Holding Co., Ltd Total	2020.12.31	2019.12.31 9,555 13,920 17,175 15,288 14,775 5,055 - - 33,064 722 109,554 - 109,554 15,832 124,040 139,872 890 140,762
	$ 16,174 14,025 - 15,099 14,537 5,764 19,310 28,950 30,637 1,011
	$ 145,507
	14,253
	$ 159,760
	$ 19,566 78,260
	97,826
	865 $ 98,691

The purpose that the Group invests in the abovementioned equity instruments is for long term strategies, but rather for trading purpose, and therefore, is accounted for as FVOCI.

For the years ended December 31, 2020 and 2019, the Group has recognized the dividend income of $9,320 and $8,716 from equity instruments designated at fair value through other comprehensive income, respectively,

• 115 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

For the years ended December 31, 2020 and 2019, the Group with the objective of investment and financial management had sold financial assets at fair value of $72,815 and $128,516, and accumulated gain on disposal of investments were $8,537 and $10,514, which had been reclassified from other equity interest to retained earnings, respectively.

Please refer to Note 6(z) for market risk.

The abovementioned financial assets were not pledged as collateral.

For the purpose of increasing investment profits, the Group entrusts partial listed companies as the beneficiary. According to the terms of the contract, the Group does not transfer risk and remuneration of these financial assets, and they had not been derecognized. As of December 31, 2020, and 2019, the carrying amount of the listed stocks which were entrusted to financial institutions for security lending amounted to $16,174 and $9,555, respectively.

• (d) Accounts receivable

Accounts receivable
Accounts receivable-measured at amortized cost Allowance for impairment	2020.12.31 $ 595,163 (5,613)	2019.12.31 556,362 (18,771) 537,591
	$ 589,550

The Group applies the simplified approach to provide for the loss allowance used for expected credit losses, which permit the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, accounts receivables have been grouped based on past default experience of the customers and shared credit risk characteristics, as well as incorporate forward looking information, including macroeconomic and relevant industry information. The loss allowance provision was determined as follows:

2020.12.31

		**2020.12.31 **
Not overdue Overdue less than 90 days Overdue 91~180 days Overdue over 181 days	Carrying amount of accounts receivable	Weighted- average expected credit loss rate 0.12 % 0.96 % 100.00% -	Loss allowance for lifetime expected credit losses
	$ 495,965 95,060 4,138 - $ 595,163		574 908 4,131 - 5,613

• 116 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Not overdue Overdue less than 90 days Overdue 91~180 days Overdue 181~365 days Overdue over 365 days		**2019.12.31 **	Loss allowance for lifetime expected credit losses
	Carrying amount of accounts receivable	Weighted- average expected credit loss rate - - - - 100.00%
	$ 392,384 144,425 782 - 18,771		- - - - 18,771 18,771
	$ 556,362

The movement in the provision for impairment loss with respect to trade receivables was as follows:

Balance at January 1 Recognition (reversal) of impairment loss Written off unrecoverable amount Effect of changes in foreign currency exchange rates Ending balance	For the years ended December 31 2020 2019 $ 18,771 20,327 5,618 (1,560) (18,771) - (5) 4 $ 5,613 18,771
	2020 $ 18,771 5,618 (18,771) (5) $ 5,613

The abovementioned financial assets were not pledged as collateral.

Please refer to Note 6(z) for credit risk.

• (e) Other receivables

Loans to employee Receivable resulting from selling equity investments at fair value through other comprehensive income Others Allowance for impairment	2020.12.31 $ 5,154 - 936 - $ 6,090	2019.12.31 8,834 7,218 2,632 - 18,684

Please refer to Note 6(z) for credit risk.

• 117 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(f) Inventories

Raw materials and supplies Work in process Finished goods Inventories in transit Total The details of cost of sales are as follows:	2020.12.31	2019.12.31 246,804 293,737 251,522 10,972 803,035
	$ 346,225 299,441 215,535 9,300
	$ 870,501

Reclassification to cost of sales and expenses Inventory loss of write-down (gain on reversal of inventory) Unamortized manufacturing expenses Loss on scrap Others Total	For the years ended December 31 2020 2019 $ 2,866,527 3,201,298 (8,532) (3,905) 19,392 18,253 74,194 91,260 (149) (367) $ 2,951,432 3,306,539
	2020 $ 2,866,527 (8,532) 19,392 74,194 (149)
	$ 2,951,432

The above gain from price recovery of inventory was due to, the previous write-down inventories had been sold, therefore, the net realizable value of inventories lowered than cost was no longer existed, the reversal was recorded as operating costs.

Inventories were not pledged as collaterals.

• (g) Other current assets

The details of other current assets are as follows:

Tax refund receivables Prepayment for purchases Prepaid expenses Input VAT Restricted time deposits Refundable deposits Others	2020.12.31 $ 1,954 63,725 6,757 5,496 2,051 10,164 3,545 $ 93,692	2019.12.31 2,659 39,259 5,374 6,438 2,096 7,080 4,117 67,023

• 118 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Book as: Other current assets Other financial assets-noncurrent	$ 83,002 10,690	59,389 7,634 67,023
	$ 93,692

The above mentioned restricted time deposits had been pledged as collateral. Please refer to note 8.

• (h) Major non-controlling interests’ share of subsidiaries

Significant to the Group of the non-controlling interest subsidiaries are as follows:

Name of subsidiaries Ying Cheng Investment Corp. Emerging Display International (Samoa) Corp.	Principal place of business Taiwan Samoa	Proportion of non-controlling interest voting equity 2020.12.31 2019.12.31 47.5% 47.5% 4.2% 4.2%

Summarize above subsidiaries financial information as below which had prepared based on International Financial Reporting Standards endorsed by FSC. The below financial information was prior to the offset amount with the Group.

Summarized financial information for Ying Cheng Investment Corp. is as follows:

Current asset Non-current asset Current liability Net asset Non-controlling equity closing book amount Operating revenue Net profit(loss) Other comprehensive income Comprehensive income Profit attributable to non-controlling interest Comprehensive income attributable to non- controlling interest Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Net increase(decrease) in cash and cash equivalents	2020.12.31	2019.12.31 10,102 106,320 (50)
	$ 10,002 67,080 (50)
	$ 77,032	116,372
	$ 36,591	55,277
	2020	2019 (104) - -
	$ (100) - -
	$ (100)	(104)

• 119 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Summarized financial information for Emerging Display International (Samoa) Corp. is as follows:

Current asset Non-current asset Current liability Non-current liabilities Net asset Non-controlling equity closing book amount Operating revenue Net profit(loss) Other comprehensive income Comprehensive income Profit attributable to non-controlling interest Comprehensive income attributable to non- controlling interest Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Effects of changes in foreign exchange rates Net increase(decrease) in cash and cash equivalents	2020.12.31 $ 138,640 15,264 (53,503) -
	$ 100,401
	$ 4,217
	2020
	$ 5,990 (1,854) (5,070) 172
	$ (762)

(i) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Group were as follows:

Cost or deemed cost: Balance at January 1, 2020 Additions Reclassification Disposals Effect of movements in exchange rates Balance at December 31, 2020	Land	Building and construction	Machinery and equipment	Office equipment	Other	Total
	$ 25,201 - - - (1,261) $ 23,940	1,047,550 462 274 - (197)	2,384,197 5,403 9,717 - 3,262	28,331 168 - (107) (119)	133,476 23,052 (9,991) (174) 98	3,618,755 29,085 - (281) 1,783
		1,048,089	2,402,579	28,273	146,461	3,649,342

• 120 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Balance at January 1, 2019 Additions Reclassification to investment property Reclassification Disposals Effect of movements in exchange rates Balance at December 31, 2019 Depreciation: Balance at January 1, 2020 Depreciation Disposals Effect of movements in exchange rates Balance at December 31, 2020 Balance at January 1, 2019 Depreciation Reclassification to investment property Disposals Effect of movements in exchange rates Balance at December 31, 2019 Carrying amount: Balance at December 31,2020 Balance at January 1, 2019 Balance at December 31,2019	Land	Building and construction	Machinery and equipment	Office equipment	Other	Total
	$74,709 - (50,323) - - 815	1,026,177 5,896 (16,258) 33,653 - (1,918)	2,398,090 4,185 - 9,017 (19,561) (7,534)	28,164 678 - - (242) (269)	148,931 30,039 - (42,670) (2,575) (249)	3,676,071 40,798 (66,581) - (22,378) (9,155)
	$ 25,201	1,047,550	2,384,197	28,331	133,476	3,618,755
	$ - - - -	800,136 17,021 - 570	2,330,684 21,815 - 3,171	26,927 509 (107) (83)	95,053 22,423 (174) 83	3,252,800 61,768 (281) 3,741
	$ -	817,727	2,355,670	27,246	117,385	3,318,028
	$ - - - - -	790,562 16,617 (5,419) - (1,624)	2,332,102 25,411 - (19,561) (7,268)	26,642 772 - (242) (245)	70,927 26,869 - (2,575) (168)	3,220,233 69,669 (5,419) (22,378) (9,305)
	$ -	800,136	2,330,684	26,927	95,053	3,252,800
	$ 23,940	230,362	46,909	1,027	29,076	331,314
	$ 74,709	235,615	65,988	1,522	78,004	455,838
	$ 25,201	247,414	53,513	1,404	38,423	365,955

• i. Please refer to Note 6(y) for detail of disposal gain and loss.

• ii. Reclassification to investment property

The Group signed lease contract in August 2019, and the term of the lease start from October 2019. Reclassified to investment property per its book value at the time of change of use. Please refer to Note 6(k).

• iii. Property, plant and equipment pledged as collateral for long-term loans and finance were disclosed in Note 8.

• 121 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(j) Right-of-use assets

The movements in the cost and depreciation of the leased land, buildings, transportation equipment were as follows:

Right-of-use assets cost: Balance at January 1, 2020 Additions Disposals Other Effect of changes in foreign exchange rates Balance at December 31, 2020 Balance at January 1, 2019 Additions Effect of changes in foreign exchange rates Balance at December 31, 2019 Depreciation: Balance at January 1, 2020 Depreciation Disposals Effect of changes in foreign exchange rates Balance at December 31, 2020 Balance at January 1, 2019 Depreciation Effect of changes in foreign exchange rates Balance at December 31, 2019 Carrying amount: Balance at December 31, 2020 Balance at January 1, 2019 Balance at December 31, 2019	Land	Building and construction	Transportation equipment	Total 90,949 4,661 (211) (817) 57
	$ 67,226 - - (817) -	23,509 4,323 - - 72	214 338 (211) - (15)
	$ 66,409	27,904	326	94,639
	$ 67,226 - -	23,065 1,589 (1,145)	219 - (5)	90,510 1,589 (1,150)
	$ 67,226	23,509	214	90,949
	$ 2,757 2,725 - -	10,857 10,848 - 188	128 122 (211) (3)	13,742 13,695 (211) 185
	$ 5,482	21,893	36	27,411
	$ - 2,757 -	- 11,227 (370)	- 132 (4)	- 14,116 (374)
	$ 2,757	10,857	128	13,742
	$ 60,927	6,011	290	67,228
	$ 67,226	23,065	219	90,510
	$ 64,469	12,652	86	77,207

(k) Investment property

Investment property includes assets owned by the Group such as office buildings leased to third party.

The Group signed a lease contract in August 2019 to lease original office building of the USA subsidiary to a third party since October 2019. Hence, the above mentioned properties, plants and equipments were reclassified to investment property. Please refer to Note 6(i).

Based on original lease terms of investment property, non-cancellable lease term is four years and the lessee has the right to extend upon expiry. Subsequent lease term will consult with the lessee and didn't charge contingent rental. Please refer to Note 6(w) for information of the rental income.

Rental income of leased investment property has a fixed amount.

• 122 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Investment property cost and depreciation of the Group were as follows:

Cost or deemed cost: Balance at January 1, 2020 Additions Effect of changes in foreign exchange rates Balance at December 31, 2020 Balance at January 1, 2019 Reclassification from property, plant and equipment Effect of changes in foreign exchange rates Balance at December 31, 2019 Depreciation: Balance at January 1, 2020 Depreciation for the year Effect of changes in foreign exchange rates Balance at December 31, 2020 Balance at January 1, 2019 Depreciation for the year Reclassification from property, plant and equipment Effect of changes in foreign exchange rates Balance at December 31, 2019 Carrying amount: Balance at December 31, 2020 Balance at January 1, 2019 Balance at December 31, 2019 Fair value: Balance at December 31, 2020 Balance at December 31, 2019	Land	Building and construction	Total 63,138 886 (3,191) 60,833 - 66,581 (3,443) 63,138 5,304 660 (289) 5,675 - 170 5,419 (285) 5,304 55,158 - 57,834 $ 63,485 $ 66,945
	$ 47,720 - (2,387)	15,418 886 (804)
	$ 45,333	15,500
	$ - 50,323 (2,603)	- 16,258 (840)
	$ 47,720	15,418
	$ - - -	5,304 660 (289)
	$ -	5,675
	$ - - - -	- 170 5,419 (285)
	$ -	5,304
	$ 45,333	9,825
	$ -	-
	$ 47,720	10,114

When measuring the fair value of investment property, the Group considered the present value of net cash flows to be generated from leasing the property. The expected net cash flows were discounted using the yield to reflect the inherent risk of the net cash flows. As of December 31, 2020 and 2019, the yields applied to the net annual rentals to determine the fair value of investment property were both 5.5%, its fair value evaluation technology makes the input value belong level 3.

The investment property were not pledged as collateral.

• 123 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(l) Intangible assets

Initial cost and accumulated amortization for intangible assets were as follows:

Initial cost: Balance as of January 1, 2020 Individual acquisition Disposals Effects of changes in foreign exchange rates Balance as of December 31, 2020 Balance as of January 1, 2019 Individual acquisition Disposals Effects of changes in foreign exchange rates Balance as of December 31, 2019 Amortization: Accumulated balance as of January 1, 2020 Amortization Disposals Effects of changes in foreign exchange rates Accumulated balance as of December 31, 2020 Accumulated balance as of January 1, 2019 Amortization Disposals Effects of changes in foreign exchange rates Accumulated balance as of December 31, 2019 Book value: Balance as of December 31, 2020 Balance as of January 1, 2019 Balance as of December 31, 2019	Patent and other	Computer software cost	Total amount 11,575 1,780 (965) (25) 12,365 9,960 2,361 (723) (23) 11,575 7,798 1,447 (965) (26) 8,254 7,489 1,055 (723) (23) 7,798 4,111 2,471 3,777
	$ 3,557 296 (965) -	8,018 1,484 - (25)
	$ 2,888	9,477
	$ 4,141 139 (723) -	5,819 2,222 - (23)
	$ 3,557	8,018
	$ 2,137 261 (965) -	5,661 1,186 - (26)
	$ 1,433	6,821
	$ 2,438 422 (723) -	5,051 633 - (23)
	$ 2,137	5,661
	$ 1,455	2,656
	$ 1,703	768
	$ 1,420	2,357

The amortization expenses of intangible assets included in statement of comprehensive income were as follows:

Operating cost Operating expense	For the years ended December 31 2020 2019 $ 308 562 1,139 493 $ 1,447 1,055
	2020
	$ 308 1,139
	$ 1,447

Intangible assets were not pledged as collateral.

• 124 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(m) Short-term loans

The details of short-term loans were as follows:

The details of short-term loans were as follows:
Unsecured bank loans Unused lines of credit Range of interest rates	2020.12.31 $ 700,000	2019.12.31 400,000 1,272,106 0.95%~1.04%
	$ 1,173,097
	0.80%~0.85%

Please refer to Note 8 for assets pledged as collateral for short-term loans.

Please refer to Note 6(y) for the interest rate risk, currency risk and sensitivity analysis of the financial liabilities of the Group.

• (n) Other payables

Salaries and wages payables Year-end bonus payables Employee remuneration payables Directors’ and supervisors’ remuneration payables Employee benefits liabilities Others	2020.12.31 $ 68,735 68,000 14,683 8,810 23,409 90,881 $ 274,518	2019.12.31 67,266 63,800 16,362 9,817 21,728 104,672 283,645

• (o) Long-term loans

The details of long-term loans were as follows:

Secured bank loans Less: discount on long-term loans Total Recognized in: Long-term loans, current portion Unused long-term credit lines Range of interest rates	December 31, 2020	December 31, 2019
	$ - - $- $-	320,000 (445)
		319,555
		319,555
	$ 800,000	320,000
	-	1.8085%

On November 17, 2016, the Group entered into a syndicated loan agreement with eight banks leaded by Tai Shin Bank for the period from the date of first borrowing to the three-year term with cycle use lines of credit. The credit line will decrease every 6 months since two years after the first appropriation date. The first and second phase will decrease by 20% of the effective credit line, and the third phase will decrease by 60%. The Group will repay the total borrowing upon maturity. Restrictions related to the contract are as follows:

• 125 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Pursuant to the loan contract, for the duration of the loan, the Group must conform to the predetermined financial covenants involving special financial ratios calculated based on the annual consolidated financial statements. If the special financial ratios cannot meet the requirement, the Group should improve within nine months after the end of the fiscal year. If the adjusted financial ratios reviewed by the certified accountant meet the requirements, it will not be regarded as breach of the contract. During the period for adjustment, unused lines of credit, excluding the revolving credit extension, will be suspended until such ratios are in compliance with the contract requirement. But during the said period, the interest rate would increase to 0.125% unless the majority of the consortium agreed the exemption proposed by the Company. The financial covenants were as follows:

• (i) A maximum debt ratio of 150% should be maintained.

• (ii) A minimum current ratio of 100% should be maintained.

• (iii) A minimum times interest earned ratio of 2.5 should be maintained.

• (iv) Minimum net tangible assets of $1,600,000 should be maintained.

The Group borrowed the amount of $400,000 on August 15, 2017. As of December 31, 2020, the contract had expired and the borrowed amount had been fully repaid.

The Group signed a 5-year syndicated loan contract with E.SUN bank and seven other banks on May 15, 2020, with a revolving credit line of $800,000 from the first appropriation date to maturity date, wherein $800,000 can be appropriated by using the Company's own fund and $600,000 by using commercial paper, and the combined credit line should not exceed $800,000. According to the loan contract, the Group should repay the syndicated loan contract signed on November 17, 2016 before the first appropriation date. Additionally, the date after 9 months when the contract was signed will be considered as the first appropriation date to calculate the revolving credit even if the credit line is unused after 9 months. As of December 31, 2020, the credit line had not been used.

Assets pledged as collateral for long-term loans are disclosed in note 8.

• (p) Lease liabilities

The details of lease liabilities were as follows:

The details of lease liabilities were as follows:
Current Non-current	2020.12.31 $ 7,325	2019.12.31 11,907 66,575
	$ 61,833

For maturity analysis, please refer to Note 6 (z) Financial Instruments. 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 COVID-19-related rent concessions (recognized as deduction of depreciation expenses of right-of-use assets)	For the years ended December 31, 2020	For the years ended December 31, 2019 3,177 1,267 284 -
	$ 2,581
	$ 1,915
	$ 243 $ 1,418

• 126 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The amounts recognized in the statement of cash flows for the Group were as follow:

Total cash outflow for leases	For the years ended December 31, 2020 $ 16,413	For the years ended December 31, 2019 17,716

(i) Lease of land, building and construction

The Group leases land and buildings for its office use. The leases of land and buildings run for approximately 2 to 10 years, and the lease period of office premises is usually 2 to 3 years.

Lease payments for certain contracts are subject to changes in the local price index, which usually occur once a year.

Part of the lease includes an option to extend the same period of the original contract at the end of the lease term.

The lease agreements for some of the equipment include the option to extend the lease or terminate the lease, which are managed separately by each region, and therefore the individual terms and conditions agreed upon are different within the Group. These options are only for the Group to have enforceable rights and the lessor does not have this right. In the event that it is not possible to reasonably determined the period of the extended lease that will be exercisable, the related payments over the period covered by the option are not included in the lease liability.

• (ii) Other leases

The lease period for the Group leased transportation equipment is one to two years.

The Group supervises the use of such transportation equipment and re-measures the lease liability and right-of-use assets on the reporting date.

In addition, the lease term of the Group leased machinery and equipment is one to three years. These leases are short-term or low-value leases. The Group chooses to apply the exemption recognition requirement without recognizing its related right-of-use assets and lease liabilities.

(q) Operating lease

The Group rent its investment property. Since almost all the risks associated with the ownership of the underlying assets are not transferred, this lease contract was classified as an operating lease. Please refer to Note 6 (k) Investment property.

The maturity analysis of lease payments was the total undiscounted lease payments to be received in the future disclosed as of December 31, 2019, as below:

Less than one year Between one and two years Between two and four years Undiscounted total lease payments	2020.12.31	2019.12.31 3,746 3,888 7,022 14,656
	$ 3,689 3,799 2,913
	$ 10,401

For the years ended December 31, 2019 and 2020, the investment property rental income recognized in other income amounting to $3,570 and $934, respectively. No significant maintenance and repair costs for investment property.

• 127 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(r) Employee benefits

(i) Defined benefit plan

The defined benefit obligation was as follows:

Present value of defined benefit obligations Fair value of plan assets Net liabilities of defined benefit obligations	2020.12.31	2019.12.31 202,792 (114,246) 88,546
	$ 209,209 (122,161)
	$ 87,048

The Group makes defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plan (covered by the Labor Standards Law) entitles a retired employee to receive a lump-sum payment based on years of service and average salary for the six months prior to retirement.

• 1) Composition of plan assets

The Group set aside pension funds in accordance with the legislation from the Ministry of Labor and managed by the Bureau of Labor Funds. The annual budget for the allocation of the minimum income cannot be lower than the income calculated based on the interest rate of the banks’ two-year time deposit in accordance with the legislation “Management and Utilization of the Labor Pension Funds”.

The Group’s labor pension reserve account balance in Bank of Taiwan amounted to $122,161 as of December 31, 2020. The utilization of the labor pension fund assets includes 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

Changes in present value of the defined benefit obligation were as follows:

Balance at January 1 Current service and interest cost Remeasurement of the net defined benefit liability －Actuarial loss (gain) on financial assumptions change －Experience Employee benefits paid Balance at December 31	**For the years ended December 31 **	**For the years ended December 31 **
	2020	2019
	$ 202,792 2,834 (3,486) 8,013 (944)	193,445 3,197 194 5,956 - 202,792
	$ 209,209

• 128 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

3) Movements of defined benefit plan assets:

Balance at January 1 Plan expected return Remeasurement of net defined benefit liability (assets) －Return on plan assets (excluding current interest cost) Contributions made by employer Employee benefit paid Balance at December 31	For the years ended December 31 2020 2019 $ 114,246 105,219 1,305 1,474 3,241 3,273 4,313 4,280 (944) - $ 122,161 114,246	For the years ended December 31 2020 2019 $ 114,246 105,219 1,305 1,474 3,241 3,273 4,313 4,280 (944) - $ 122,161 114,246
	2020
	$ 114,246 1,305 3,241 4,313 (944)	105,219 1,474 3,273 4,280 - 114,246
	$ 122,161

4) Cost recognized in profit or loss

Current service cost Interest cost on net defined benefit liability (asset) Operating cost Selling expenses General and administrative expenses Research and development expenses Actual return on assets	For theyears ended December 31 2020 2019 $ 556 540 973 1,183 $ 1,529 1,723 $ 1,156 1,317 58 60 180 193 135 153 $ 1,529 1,723 $ 4,546 4,747
	2020
	$ 556 973
	$ 1,529
	$ 1,156 58 180 135
	$ 1,529
	$ 4,546

• 129 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• 5) Actuarial assumptions

The following are the Group’s principal actuarial assumptions:

Discount rate at December 31 Future salary increases	2020.12.31 0.750% 2.000%	2019.12.31
		1.125% 2.500%

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date is $4,339.

The weighted-average lifetime of the defined benefits plans is 17.27 years.

• 6) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

defined benefit obligation shall be as follows:
December 31, 2020 Discount rate (change of 0.25%) Change in future salary (change of 0.25%) December 31, 2019 Discount rate (change of 0.25%) Change in future salary (change of 0.25%)	Present value of defined benefit obligation Increased Decreased (7,562) 7,907 7,692 (7,388) (7,679) 8,047 7,827 (7,488)
	Increased (7,562) 7,692 (7,679) 7,827

The above sensitivity analysis analyzing the effects of changes in single assumptions is based on other assumptions remaining unchanged. In actuality, changes in some assumptions may be linked together. The sensitivity analysis and calculation of the net pension liability on the balance sheet were performed using the same approach.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plan

The Group allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Group allocates a fixed amount to the Bureau of the Labor Insurance without additional legal or constructive obligations.

The pension benefit of Dong Guan Emerging Display Limited, Emerging Display Technologies Corp., U.S.A., EDT-Europe Aps, Emerging Display Korea and EDTJapan Corp. are based on their respective local regulation of defined contribution plan. The accrued expenses should be recognized as current expenses. Besides, Ying Dar Investment Development Corp., Bae Haw Investment Development Corp., Ying Cheng Investment Corp., Emerging Display International (Samoa) Corp. and Tremendous Explore Corp. (Tremendous Explore Corp. was liquidated in July, 2020) do not have any employee and pension plan. Therefore, there is no pension benefit obligation required.

• 130 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Details of the Group’s pension costs under the defined contribution method were as follows:

Operating Cost Selling expenses General and administrative expenses Research and development expenses	For theyears ended December 31 2020 2019 $ 19,576 23,287 5,215 5,191 1,689 2,151 2,784 2,615 $ 29,264 33,244
	2020
	$ 19,576 5,215 1,689 2,784
	$ 29,264

(s) Income tax

(i) The amounts of income tax expense (benefit) were as follows:

		For theyears ended December 31	For theyears ended December 31
		2020	2019
Current tax expense
Current	$	42,807	56,712
Adjust previous current tax		(2,818)	(4,056)
		39,989	52,656
Deferred tax expense
Origination and reversal of temporary		1,680	(6,853)
differences
Change in unrecognized deductible		(556)	1,050
temporary differences
		1,124	(5,803)
Income tax expense	$	41,113	46,853
No income tax was recognized directly in equity in 2019. The amount of income tax
recognized directly in equity for 2020 was as follows:

recognized directly in equity for 2020 was as	follows:
			Amount
Capital surplus - disgorgement		$		118
The amount of income tax recognized in other comprehensive		income for 2020		and
2019 was as follows:
	2020		2019
Items that will not be reclassified
subsequently to profit or loss:
Unrealized gains (losses) from investment in
equity instruments measured at fair value through other comprehensive income	$ 298		-

• 131 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Reconciliation of income tax and profit before tax is as follows:

Income before income tax Income tax calculated based on the Group’s tax rate Effect of overseas income tax differences Tax-exempt income for dividend income Tax-exempt income for gains derived from the securities transactions Change in unrecognized temporary differences Investment tax credits Additional tax on undistributed earnings Adjustment for prior periods Others Total	For the years ended December 31 2020 2019 $ 274,109 303,900 $ 54,822 60,780 2,051 (2,054) (1,862) (1,715) (1,295) 27 (556) 1,050 (10,900) (7,650) 1,894 - (2,818) (4,056) (223) 471 $ 41,113 46,853
	2020 $ 274,109 $ 54,822 2,051 (1,862) (1,295) (556) (10,900) 1,894 (2,818) (223) $ 41,113

• (ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Pension expense Temporary variances related to invest subsidiaries	2020.12.31 $ 73,130 157,380 $ 230,510	2019.12.31 77,500 155,198 232,698

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 Group can utilize the benefits therefrom.

• 132 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

2) Recognized deferred tax assets and liabilities:

Changes in the amount of deferred tax assets and liabilities were as follows: Deferred tax liabilities:

Deferred tax liabilities:
Balance at January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income Balance at December 31, 2020 Balance at January 1, 2019 Recognized in profit or loss Balance at December 31, 2019	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Others - 56 - 56 76 (76) -	Total
	$ - - 298		- 56 298
	$ 298		354
	$ 856 (856)		932 (932)
	$ -		-

Deferred tax assets:

Balance at January 1, 2020 Recognized in profit or loss Effect of exchange rate changes Balance at December 31, 2020 Balance at January 1, 2019 Recognized in profit or loss Balance at December 31, 2019	Inventory valuation loss	Unrealized salesprofit	Unrealized foreign exchange loss	Others	Total
	$ 11,046 (1,756) $-	2,713 349 -	6,076 238 -	13,168 101 (7)	33,003 (1,068) (7)
	$ 9,290	3,062	6,314	13,262	31,928
	$ 11,804 (758)	1,937 776	- 6,076	14,391 (1,223)	28,132 4,871
	$ 11,046	2,713	6,076	13,168	33,003

(iii) Approval of income tax

The Company’s income tax returns for all fiscal years up to 2018 have been examined and approved by the R.O.C. tax authority.

(t) Share capital and other equities

(i) Common stock

As of December 31, 2020, and 2019, the authorized share capital of the Company amounted to $3,500,000, comprising 350,000 thousand shares with a par value of TWD10 per share.

• 133 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Issued shares are as follows:

(Expressed in thousands of shares)

	(Expressed in thousands of shares)	(Expressed in thousands of shares)
Balance at January 1 Retirement of treasury stock Balance at December 31	Common Stock 2020 2019 162,408 174,408 - (12,000) 162,408 162,408
	2020
	162,408 -
	162,408	162,408

As of December 31, 2020, and 2019, excluding shares of treasury stock that had been purchased by the Company and shares of stock held by the subsidiaries, outstanding shares of stock were both 148,613 thousand shares..

(ii) Capital surplus

Capital surplus was as follows:

Capital surplus was as follows:
Treasury share transactions Disgorgement Total	2020.12.31	2019.12.31 4,397 - 4,397
	$ 14,950 473
	$ 15,423

According to the Company Act, any realized capital surplus is initially used to cover any deficit, and the balance, if any, could be transferred to common stock as stock dividend or distributed as cash based on a resolution approved by the stockholders. Realized capital surplus includes the premium derived from the issuance of shares of stock in excess of par value and endowments received by the Company. According to the “Regulations Governing the Offering and Issuance of Securities by Securities Issuers”, the combined amount of any portions capitalized in any one year may not exceed 10% of paid-in capital.

(iii) Retained earnings

Base on the regulations of our Company, if the Company’s annual final accounts show surplus, it shall first pay the taxes, offset past annual loss, and then set 10% as regulatory surplus reserve. However, it is not applicable if the statutory surplus reserve has reached our Company’s paid-up capital. Also based on the Company’s operational needs and regulatory requirements, provisions shall be made for special reserve. If there are still surplus, the board of directors shall draft a surplus distribution proposal by combining it with the undistributed surplus at the beginning of period, on not more than 80% of the year’s distributable surplus, and submit to the shareholders meeting for approval.

The Company’s industry is in a stable growth phase. It has adopted a residual dividend policy based on its future capital budget plan and operating capital needs. The Company also takes the effects of dilutive potential shares and the effect on ROE into consideration in calculating EPS. Therefore, the distribution policy gives priority to cash dividends and then stock dividends. However, the cash dividend distribution should not be lower than 50 percent of the total dividend distribution of the current year.

• 134 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

1) Legal reserve

According to the ROC Company Act, when a Company incurs no loss, it may, pursuant to a resolution approved by the shareholders, distribute its legal reserve by issuing new shares or distributing cash for the portion in excess of 25% of the paid-in capital.

2) Special reserve

In accordance the Ruling NO.1010012865 issued by the Financial Supervisory Commission on April 6, 2012, a portion of undistributed prior-period earnings shall be reclassified as a special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholder’s equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholder’s equity were for additional distributions. As of December 31, 2020, and 2019 the special reserve $102,612 and $112,571, have been approved by the annual shareholders’ meeting, respectively.

In accordance with Ruling No. 1010047490 issued by the Financial Supervisory Commission on November 21, 2012, if the market value of the Company’s shares is lower than the carrying value of the Company’s shares held by the subsidiaries at year-end, the Company should retain a special reserve amounting to the difference between the market value and the carrying value, based upon the Company’s ownership percentage in the subsidiaries. When market value rebounds, the Company could reverse the special reserve. As of December 31, 2020, and 2019, the special reserve $0 and $38,736 have been approved by the annual shareholders’ meeting, respectively.

3) Earnings distribution

The appropriation from the retained earnings of 2019 and 2018, have been approved by the annual shareholders meeting on June 12, 2020 and June 4, 2019. The appropriation and dividend per share were as follows:

Dividends distributed to common shareholders(New Taiwan dollar): Cash	**For the years ended December 31 **	**For the years ended December 31 **
	2019 $ 1.2	2018
		0.5

• (iv) Other equity

Other equity
Balance at January 1, 2020 －Changes of the Group －Disposal of investments in equity instrument designated at FVOCI Balance at December 31, 2020 Balance at January 1, 2019 －Changes of the Group －Disposal of investments in equity instrument designated at FVOCI Balance at December 31, 2019	Foreign exchange differences arising from foreign operation	Unrealized gains (losses) on financial assets measured at FVOCI	Total (102,612) (6,666) (8,537) (117,815) (112,570) 20,472 (10,514) (102,612)
	$ (14,111) (4,185) -	(88,501) (2,481) (8,537)
	$ (18,296)	(99,519)
	$ (8,271) (5,840) -	(104,299) 26,312 (10,514)
	$ (14,111)	(88,501)

• 135 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(v) Treasury stock

The changes of treasury stocks were as follows:

Reason to buy back For theyears ended December 31, 2020 Transfer to employees For theyears ended December 31, 2019 Transfer to employees	Beginning shares 5,000 12,000	Increase shares -	(Expressed in thousands of shares) Decrease shares Ending shares - 5,000 (12,000) 5,000
			-
		5,000	(12,000)

The Board of Directors had resolved during the board meeting held on January 8, 2019 for the Company to repurchase its share as treasury shares. The Company’s Board of Directors approved resolutions to retire treasury stocks amounting to 12,000 thousand shares on March 8, 2019. The related registration procedures had been completed.

In accordance with Article 28 2 of the Securities and Exchange Act requirements as stated above, the number of shares repurchased should not exceed 10 percent of all shares outstanding. Also, the value of the repurchased shares should not exceed the sum of the Company’s retained earnings, share premium, and realized capital reserves. The aforementioned repurchased shares and amount did not exceed statutory limit.

As of December 31, 2020 and 2019, the costs of treasury shares both amounted to $50,739.

In accordance with the requirements of Securities and Exchange Act, treasury shares held by the Company should not be pledged, and do not hold any shareholder rights before their transfer.

Ying Dar Corp. and Bae Haw Corp., subsidiaries of the Company, held the Company’s common stock. In 2020 and 2019, Ying Dar Corp. and Bae Haw Corp. did not purchase or dispose of any of the Company’s shares. As of December 31, 2020 and 2019, Ying Dar Corp. and Bae Haw Corp. together held 8,794 thousand shares of the Company’s common stock. The cost was $122,282 which was recognized in treasury shares. As of December 31, 2020 and 2019, their market values amounted to $169,292 and $154,781, respectively.

(u) Earnings per share

The calculation of basic earnings per share and diluted earnings per share were as follows:

Basic earnings per share Profit (loss) attributable to owners of parent Weighted-average number of common stocks at end of year (expressed in thousands of shares) Expressed in New Taiwan dollars Diluted earnings per share Profit (loss) attributable to owners of parent Weighted-average number of common stocks (expressed in thousands of shares) Effect of potentially dilutive common stock – employee bonus (expressed in thousands of shares) Weighted-average number of common stocks – diluted (expressed in thousands of shares) Expressed in New Taiwan dollars	For the years ended December 31 2020 2019 $ 233,466 257,325 148,613 148,848 $ 1.57 1.73 $ 233,466 257,325 148,613 148,848 962 1,023 149,575 149,871 $ 1.56 1.72
	2020
	$ 233,466
	148,613
	$ 1.57
	$ 233,466
	148,613 962
	149,575
	$ 1.56

• 136 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

In computing basic earnings (loss) per share of common stock for the years ended December 31, 2020 and 2019, the weighted-average numbers of shares of common stock outstanding excluded 8,794 thousand shares of common stock held by the Group’s subsidiaries as treasury stock.

• (v) Revenue from Contracts with Customers

• (i) Disaggregation of revenue

Primary geographical markets: Europe USA Others Total Major products: Liquid crystal display modules Capacitive touch panel and capacitive touch panel module Others Total Primary geographical markets: Europe USA Others Total Major products: Liquid crystal display modules Capacitive touch panel and capacitive touch panel module Other Total	For theyears ended December 31, 2020 Domestic North America Other operating department Total $ 2,091,963 1,724 437 2,094,124 536 889,092 - 889,628 482,622 270,480 445 753,547 $ 2,575,121 1,161,296 882 3,737,299 $ 731,741 513,857 - 1,245,598 1,814,737 602,543 - 2,417,280 28,643 44,896 882 74,421 $ 2,575,121 1,161,296 882 3,737,299 For theyears ended December 31, 2019 Domestic North America Other operating department Total $ 2,255,803 2,869 387 2,259,059 86 940,570 - 940,656 601,891 305,559 394 907,844 $ 2,857,780 1,248,998 781 4,107,559 $ 835,651 774,281 - 1,609,932 1,958,902 466,970 - 2,425,872 63,227 7,747 781 71,755 $ 2,857,780 1,248,998 781 4,107,559	For theyears ended December 31, 2020 Domestic North America Other operating department Total $ 2,091,963 1,724 437 2,094,124 536 889,092 - 889,628 482,622 270,480 445 753,547 $ 2,575,121 1,161,296 882 3,737,299 $ 731,741 513,857 - 1,245,598 1,814,737 602,543 - 2,417,280 28,643 44,896 882 74,421 $ 2,575,121 1,161,296 882 3,737,299 For theyears ended December 31, 2019 Domestic North America Other operating department Total $ 2,255,803 2,869 387 2,259,059 86 940,570 - 940,656 601,891 305,559 394 907,844 $ 2,857,780 1,248,998 781 4,107,559 $ 835,651 774,281 - 1,609,932 1,958,902 466,970 - 2,425,872 63,227 7,747 781 71,755 $ 2,857,780 1,248,998 781 4,107,559	For theyears ended December 31, 2020 Domestic North America Other operating department Total $ 2,091,963 1,724 437 2,094,124 536 889,092 - 889,628 482,622 270,480 445 753,547 $ 2,575,121 1,161,296 882 3,737,299 $ 731,741 513,857 - 1,245,598 1,814,737 602,543 - 2,417,280 28,643 44,896 882 74,421 $ 2,575,121 1,161,296 882 3,737,299 For theyears ended December 31, 2019 Domestic North America Other operating department Total $ 2,255,803 2,869 387 2,259,059 86 940,570 - 940,656 601,891 305,559 394 907,844 $ 2,857,780 1,248,998 781 4,107,559 $ 835,651 774,281 - 1,609,932 1,958,902 466,970 - 2,425,872 63,227 7,747 781 71,755 $ 2,857,780 1,248,998 781 4,107,559
	Domestic	North America	Other operating department
	$ 2,255,803 86 601,891	2,869 940,570 305,559	387 - 394
	$ 2,857,780	1,248,998	781
	$ 835,651 1,958,902 63,227	774,281 466,970 7,747	- - 781
	$ 2,857,780	1,248,998	781

• 137 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(ii) Contract balance

i) Contract balance
Accounts receivable (including related parties) Less: Allowance for impairment Total Contract liability－unearned revenue(recognized in other current liabilities)	2020.12.31 $ 595,163 (5,613)	2019.12.31	2019.1.1 489,171 (20,327) 468,844 5,348
		556,362 (18,771)
	$ 589,550	537,591
	$ 33,286	13,031

Please refer to Note 6(d) for accounts receivables and impairment.

The amount of revenue recognized for the year ended December 31, 2020 and 2019, that was included in the contract liability balance at the beginning of the period were $5,031 and $4,210, respectively.

(w) Employee compensation, and directors’ and supervisors’ remuneration

According to the Company’s articles of association, the Company should contribute no less than 5% of the profit as employee compensation and a maximum of 3% as directors’ and supervisors’ remuneration when there is profit for the year. However, certain amounts of the earnings should be reserved if there is an accumulated loss from operations in previous years in advance of the appropriation of the employee bonuses. The aforementioned employee bonuses will be distributed in cash or stock to employees who satisfy certain specifications of the Company and its affiliates.

For the year ended December 31, 2020 and 2019, the Company accrued the compensation of employees amounted to $14,683 and $16,362, respectively and the remuneration of directors’ and supervisors’ amounted to $8,810 and $9,817, respectively. The compensation of employees, remuneration of directors and supervisors were estimated as the Company’s net income before tax, excluding compensation of employees and remuneration of directors and supervisors, multiplied by the appropriate percentage in compliance with the Company’s articles. These expenses were recognized in operating costs and operating expenses for the respective period. The previous distribution of compensation to employees, remuneration of directors and supervisors approved by Board of Directors had no difference with the accrued amount for year 2020 and 2019 consolidated financial reports. Related information would be available at the Market Observation Post System website. http://emops.twse.com.tw

(x) Net other income (expenses)

Net other income (expenses) consists of rental income from investment property and lending space .

(y) Non-operating income and expenses

• (i) Interest income

The details of interest income were as follows:

• 138 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Interest income Bank deposits Others	For theyears ended December 31 2020 2019 $ 9,611 20,472 88 164 $ 9,699 20,636
	2020
	$ 9,611 88
	$ 9,699

• (ii) Other income

The details of other income were as follows:

Dividend income Others	For theyears ended December 31 2020 2019 $ 9,320 8,716 6,176 3,309 $ 15,496 12,025	For theyears ended December 31 2020 2019 $ 9,320 8,716 6,176 3,309 $ 15,496 12,025
	2020
	$ 9,320 6,176	8,716 3,309 12,025
	$ 15,496

• (iii) Other gains and losses

Details of other gains and losses were as follows:

Foreign exchange gains (losses) Net gains (losses) on disposal of financial assets (liabilities) measured at fair value through profit or loss Net gains on disposal of property, plant and equipment Others	For theyears ended December 31 2020 2019 $ (75,156) (32,890) 1,818 3,795 - 568 (337) (569) $ (73,675) (29,096)	For theyears ended December 31 2020 2019 $ (75,156) (32,890) 1,818 3,795 - 568 (337) (569) $ (73,675) (29,096)
	$ (75,156) 1,818 - (337)	(32,890) 3,795 568 (569) (29,096)
	$ (73,675)

• (iv) Finance costs

Details of finance costs were as follows:

Interest expenses Bank loans Lease liabilities Management fee of syndicated loan	For theyears ended December 31 2020 2019 $ 8,482 10,828 2,581 3,177 300 250 $ 11,363 14,255
	$ 8,482 2,581 300
	$ 11,363

• 139 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (z) Financial instruments

• (i) Credit risk

  • 1) Exposure to credit risk

The Group’s maximum exposure to credit risk was the carrying amount of financial assets.

• 2) Concentration of credit risk

As of December 31, 2020, one customer accounted for 45.56% of total accounts receivables.

As of December 31, 2019, the Group has no significant concentration of its accounts receivable.

• 3) Accounts receivable of credit risk

Please refer to Note 6(d).

Other financial assets at amortized cost include other receivables, refundable deposits, and restricted time deposits. All of these financial assets are considered to have low risk, and thus, the credit loss allowance recognized during the period was limited to 12 months expected credit losses. There was no loss allowance recognized. Please refer to Note 6(e).

(ii) Liquidity risk

Details of financial liabilities categorized by due dates were as follows. The amounts include interest expenses but exclude the impacts of negotiated net amounts.

December 31, 2020 Non-derivative financial liabilities Secured loans (floating rate) Accounts payable (no interest) Notes payable (no interest) Other payable (no interest) Lease liability (fixed interest) Guarantee deposits received (no interest) Derivative financial liabilities Swap Contract: Cash in Cash out December 31, 2019 Non-derivative financial liabilities Secured loans (floating rate) Unsecured loans (floating rate) Accounts payable (no interest) Notes payable (no interest) Other payable (no interest) Lease liability (fixed interest) Guarantee deposits received (no interest) Derivative financial liabilities Swap Contract: Cash in Cash out	Carrying amount	Contracted cash flows	Due within 6 months	Due in 6-12months	Due in 1-2years	Due in 2-5year	Due in over 5years
	$ 700,000 400,068 1,234 274,518 69,158 558 195	(700,756) (400,068) (1,234) (274,518) (102,319) (558) 28,480 (28,703)	(700,756) (400,068) (1,234) (274,518) (5,700) - 28,480 (28,703)	- - - - (3,737) - - -	- - - - (5,068) - - -	- - - - (11,996) (558) - -	- - - - (75,818) - - -
	$ 1,445,731	(1,479,676)	(1,382,499)	(3,737)	(5,068)	(12,554)	(75,818)
	$ 319,555 400,000 431,437 307 109,644 78,482 587 994	(323,599) (400,534) (431,437) (307) (109,644) (114,543) (587) 89,940 (91,191)	(2,886) (400,534) (431,437) (307) (109,644) (7,843) - 89,940 (91,191)	(320,713) - - - - (6,602) - - -	- - - - - (7,224) (34) - -	- - - - - (12,070) (553) - -	- - - - - (80,804) - - -
	$ 1,341,006	(1,381,902)	(953,902)	(327,315)	(7,258)	(12,623)	(80,804)

The Group does not expect that the cash flows could occur significantly earlier or at significantly different amounts.

• 140 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (iii) Foreign currency risk

• 1) Exposure to foreign currency risk

Significant financial assets and liabilities exposed to foreign currency risk were as follows:

as follows:
Financial assets Monetary items USD JPY CNY EUR Non-monetary items USD Financial liabilities Monetary items USD JPY EUR Non-monetary items USD	2020.12.31		TWD amount		2019.12.31		TWD amount 2,079,789 5,104 757 225 113,978 423,768 11,246 386 89,940
	Foreign currency $ 62,555 52,538 4,021 75 2,566 14,997 16,437 72 1,000	Exchange rate 28.48 0.2763 4.377 35.02 28.48 28.48 0.2763 35.02 28.48			Foreign currency 69,372 18,491 176 7 3,802 14,135 40,745 11 3,000	Exchange rate
						29.98 0.2760 4.305 33.59 29.98 29.98 0.2760 33.59 29.98

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the cash and cash equivalents, accounts receivables, other receivables, financial assets and liabilities measured at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, accounts payables, and other payables. As of December 31, 2020 and 2019, if the exchange rate of the TWD versus the USD, CNY, JPY, and EUR have increased or decreased by 1%, given no changes in other factors, profit after tax would have increased or decreased by $9,710 and $11,205, and other comprehensive income after tax would have increased or decreased by $114 and $0, respectively. The analysis is performed on the same basis of prior year.

• 3) Exchange gain or loss

The Group has variety kinds of functional currencies, hence we use summarized method to disclose exchange gain (loss) of monetary items. For year 2020 and 2019, foreign exchange loss (including realized and unrealized) amounted to gain (loss) $(75,156) and $(32,890), respectively.

• (iv) Interest rate analysis

Please refer to liquidity risk management for the detail of the Group’s financial assets and financial liabilities’ interest exposure.

The sensitivity analysis of interest was made based on the interest rate of derivative and non-derivative instruments at the reporting date. The analysis of liabilities bearing floating interest rates was prepared based on the assumption that the outstanding amount at the reporting date had existed for the whole year.

• 141 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The rate of change used by the Group as interest to report to the management lever is ±0.25% of the interest rate. This also represents the management’s assessment of the reasonable scope of change.

If interest rates on loans had increased or decreased by 0.25% with all other variables held constant. Profit after tax for the years 2020 and 2019 would have been decreased or increased by $1,400 and $1,440, respectively, mainly as a result of liabilities bearing floating interest rates.

• (v) Other price risk

If the equity price changes on the reporting date (adopt the same basis of analysis for both periods, with the assumption that other variable factors remain unchanged), the impact on the comprehensive gain or loss items are as follows:

Equity price at reporting date Increase 3% Decrease 3%	For theyears ended December 31 2020 2019 After tax amount of other comprehensive income After tax profit/loss After tax amount of other comprehensive income After tax profit/loss $ 7,668 1,412 7,512 1,296 $ (7,668) (1,412) (7,512) (1,296)	For theyears ended December 31 2020 2019 After tax amount of other comprehensive income After tax profit/loss After tax amount of other comprehensive income After tax profit/loss $ 7,668 1,412 7,512 1,296 $ (7,668) (1,412) (7,512) (1,296)	For theyears ended December 31 2020 2019 After tax amount of other comprehensive income After tax profit/loss After tax amount of other comprehensive income After tax profit/loss $ 7,668 1,412 7,512 1,296 $ (7,668) (1,412) (7,512) (1,296)
		7,512	1,296
		(7,512)	(1,296)

• (vi) Fair value

• 1) Categories and fair values of financial instruments

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income, are 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 are stated below; 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:

Financial assets at fair value through profit or less Debt investment with quoted market price Subtotal Financial assets at fair value through other comprehensive income Equity instrument with quoted market prices Equity instrument at fair value without quoted market prices Subtotal Financial assets at amortized cost Cash and cash equivalents Accounts receivable Other receivable Restricted time deposits		De	cember 31, 2020
	Carrying amount		Fair va	lue
		Level 1 58,817 160,625 - - - - -	Level 2 - - - - - - -	Level 3 - - 97,826 - - - -	Total
	58,817 58,817 160,625 97,826 258,451 1,242,331 589,550 6,090 2,051				58,817 160,625 97,826 - - - -

• 142 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Refundable deposits (recognized in other non-current financial assets) Subtotal Total financial assets Financial liabilities at fair value through profit or less Derivative financial liabilities Financial liabilities at amortized cost Bank loans Notes payable Accounts payable Other payable Lease liabilities Guarantee deposits Subtotal Total financial liabilities		De	cember 31, 2020
	Carrying amount		Fair	value
		Level 1	Level 2	Level 3	Total
	10,164	- - - - - - - -	- 195 - - - - - -	- - - - - - - -	- 195 - - - - - -
	1,850,186
	$ 2,167,454
	$ 195
	$ 700,000 1,234 400,068 274,518 69,158 558
	1,445,536
	$ 1,445,731

Financial assets at fair value through profit or less Derivative financial assets Debt investment with quoted market price Subtotal Financial assets at fair value through other comprehensive income Equity instrument with quoted market prices Equity instrument at fair value without quoted market prices Subtotal Financial assets at amortized cost Cash and cash equivalents Accounts receivable Other receivable Restricted time deposits Refundable deposits (recognized in other non-current financial assets) Subtotal Total financial assets Financial liabilities at fair value through profit or less Derivative financial liabilities Financial liabilities at amortized cost Bank loans Notes payable Accounts payable Other payable Lease liabilities Guarantee deposits Subtotal Total financial liabilities		D	ecember 31, 201	9
	Carrying amount		Fair	value
		Level 1	Level 2 76 - - - - - - - - 994 - - - - - -	Level 3 - - - 139,872 - - - - - - - - - - - -	Total
	$ 76 54,018	- 54,018 110,444 - - - - - - - - - - - - -			76 54,018 110,444 139,872 - - - - - 994 - - - - - -
	54,094
	110,444 139,872
	250,316
	1,368,252 537,591 18,684 2,096 7,080
	1,933,703
	$ 2,238,113
	$ 994
	$ 719,555 307 431,437 109,644 78,482 587
	1,340,012
	$ 1,341,006

• 143 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

The Group measures its assets and liabilities use input observable market data. The fair value hierarchy categorizes the inputs used in valuation techniques are as follows:

• Level 1: quoted prices (unadjusted) in the active markets for identified assets or liabilities.

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

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

• 2) Valuation techniques and assumptions unused in fair value determination

• A. Financial assets measured at amortized cost

If the quoted prices in active markets are available, the market price is established as the fair value. However, if quoted prices in active markets are not available, the fair value will be estimated by valuation technique or the prices quoted by competitors.

• B. Financial assets and financial liabilities measured at amortized cost

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

• 3) Valuation techniques and assumptions used in fair value determination

Non-derivative instruments

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. Quoted prices of major stock exchanges and quoted prices of government bonds are the basis for measuring the fair value of stocks listed on an exchange, stocks listed on the OTC, and debt instruments with quoted prices in an active market.

The fair values of the Group’s listed securities and open-end funds with standard terms and conditions and traded in active markets are determined by the quoted market prices.

Measurements of fair value of financial instruments without active market are based on valuation technique or quoted price from competitor. Fair value measured by valuation technique can be extrapolated from similar financial instruments, discounted cash flow method or other valuation technique. Using discounted cash flow method to calculate fair value, the main assumption is to reflect monetary time value and return of invest risk to discount and measure based on investee’s estimated future cash flow.

Derivative instruments

The fair value of Swap contracts is based on quoted prices from the counterparty.

• 4) Transfer between level 1 and level 2

There was no transfer between the fair value hierarchy levels for the year ended December 31, 2020 and 2019.

• 144 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• 5) Movement of financial assets at fair value through other comprehensive income categorized as Level 3

categorized as Level 3
Balance on January 1, 2020 Recognized in other comprehensive income Balance on December 31, 2020 Balance at January 1, 2019 Reclassification from prepayment for investments Recognized in other comprehensive income Balance at December 31, 2019	Financial assets at fair value through other comprehensive income
	Unquoted equity instruments
	$ 139,872 (42,046) $ 97,826 $ 151,668 2,700 (14,496) $ 139,872

• 6) 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 other comprehensive income– equity investments.

The Group’s equity investments without active market in Level 3 have more than one significant unobservable input. The significant unobservable inputs of equity investments without active market are individually independent, and there is no correlation between them.

Quantified information of significant unobservable inputs was as follows:

• 145 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Item Fair value through other comprehensive income- equity investments without active market Financial assets at fair value through other comprehensive income- equity investments without an active market	Valuation technique Discounted Cash Flow Method Net Asset Value Method	Significant unobservable inputs ‧Continuing growth rate (0.48% and 2.10%, respectively, as of December 31, 2020 and 2019) ‧Weighted average cost of capital (10.52% and 9.47%, respectively, as of December 31, 2020 and 2019) ‧Market illiquidity discount rate (60.73% and 37.21%, respectively, as of December 31, 2020 and 2019) ‧Non-controlling interests discount rate (29.87% for both December 31, 2020 and 2019) ‧Net Asset Value	Inter-relationship between significant between significant fair value measurement
			‧The higher the continuing growth rate is, the higher the estimated fair value would be. ‧The higher the weighted average cost of capital is, the lower the estimated fair value would be. ‧The higher the market illiquidity discount rate is, the lower the estimated fair value would be. ‧The higher the non-controlling interests discount is, the lower the estimated fair value would be. N/A

• 7) Fair value measurements in Level 3 – sensitivity analysis of reasonably possible alternative assumptions

The Group’s measurement on the fair value of financial instruments is deemed reasonable despite different valuation models or assumptions may lead to different results.

For fair value measurements in Level 3, changing one or more of the assumptions would have the following effects on other comprehensive income:

	Inputs December31,2020 Continuing growth rate 0.48% Weighted average cost of capital 10.52% Market illiquidity discount rate 60.73% Non controlling interests discount rate 29.87% December31,2019 Continuing growth rate 2.10% Weighted average cost of capital 9.47% Market illiquidity discount rate 37.21% Non-controlling interests discount rate 29.87%	Changes in fair value reflected inOCI Fluctuation in inputs Favorable Unfavorable 0.1% $ 700 700 0.1% 350 350 1% 1,960 1,960 1% 1,120 1,120 0.1% $ 1,890 1,750 0.5% 2,380 2,240 1% 1,960 1,960 1% 1,750 1,750	Changes in fair value **reflected inOCI **	Changes in fair value **reflected inOCI **
				Unfavorable
				700 350 1,960 1,120 1,750 2,240 1,960 1,750

The favorable and unfavorable effects represented the changes in fair value, and fair value was based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflected the effects of changes in a single input, and it did not include the interrelationships and variances with another input.

• 146 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (aa) Financial risk management

• (i) Overview

The extent of risk exposure arising from the use of financial instruments was as follows:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

The Group’s risk management objective, policies and procedures and the exposure risk arising from the aforementioned risks are disclosed below. For more quantitative information, please refer to other notes to the consolidated financial statements.

• (ii) Risk management framework

The Board of Directors has the overall responsibility for the establishment and oversight of the Group’s risk management framework. Every department is responsible for planning and controlling the risk management of the Group’s operation and reports it to the Board regularly.

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, 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, products and services offered. The Group, through its training and management standards and procedures, aim to develop a disciplined and constructive control environment, in which all employees understand their roles and obligations.

The supervisor of the Group oversees how the management complies in monitoring the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The supervisor is assisted in its oversight role by an internal Audit. An Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors.

• (iii) Credit risk

Credit risk is the risk of financial loss of the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, which arises principally from the Group’s accounts receivable, bank deposits and foreign exchange derivative instruments.

1) Accounts receivable and other receivables

The credit risk is impacted by the individual situation of each client. The Group continuously monitors the information concerning client credit risk factors, such as the default risk of the industries and countries in which the customers operate.

According to the credit policy, the Group has to evaluate the credit of each new customer before setting the payment and delivery terms. The evaluations include external credit ratings, if available, and bank references. The Group reviews credit limits periodically and requires customers to pay in advance when the customers’ credit ratings did not meet the benchmark.

• 147 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

2) Investments

The credit risk exposure in the bank deposits and derivative financial instruments are measured and monitored by the finance department. Since the Group’s transactions were with financial institutions with good credit ratings, there were no noncompliance issues, and therefore, there is no significant credit risk. Investments in other financial instruments are measured and monitored by the finance department with the instruction from the chairman to ensure each risk of investment target is under the Group’s affordable level.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liability when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group reputation.

As of December 31, 2020 and 2019, the Group has unused credit facilities for short-term loan amounting to $1,973,097 and $1,592,106, respectively.

• (v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, which will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control the market risk exposures within acceptable parameters, while optimizing the return.

The Group engages in derivative financial instruments trading in order to manage the market risk, thus, generating financial liabilities or financial assets, all the execution of those transactions were under the Board’s instruction.

1) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the New Taiwan dollar TWD), US dollar (USD), Japan Yen (JPY), Danish Krone (DKK), China Yuan (CNY) and Korean Won (KRW). The currencies used in these transactions are the TWD, USD, JPY, EUR and CNY.

At any point of time, the Group’s principle is to hedge using the net values after offsetting payables and receivables or assets and liabilities which are generated by business operation. The Group mainly hedges its currency risk using the foreign exchange agreements wherein the maturity date is less than 6 months.

2) Interest risk

The Group adopts a policy to ensure the exposure of changes in interest rates on borrowings is evaluated by the trend in market interest rates. The Group can manage its interest risk through maintaining an appropriate portfolio of floating interest rate and fixed interest rate.

• 148 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

3) Other market price risk

The Group is exposed to equity price risk due to the investments in equity instruments and mutual funds that contain uncertainty of future prices risk. Therefore, the Group monitors and manages the equity investments by holding different investment portfolio and regularly updating the information of equity instruments and mutual funds investment.

(ab) Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of common stocks, non-redeemable preference stocks, retained earnings and noncontrolling interests of the Group. The Board of Directors monitors the return on capital as well as the level of dividends to common shareholders.

The Group meets its objectives in managing its capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders and 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 their capital. This ratio is the total net debt divided by the total capital. The net debts from the balance sheet are derived from the total liabilities, less cash and cash equivalents. The total capital and equity include stock capital, capital surplus, retained earnings, other equity, and non-controlling interest. In 2020, the Group’s capital management strategy is consistent with the prior year. The Group’s debt-to-equity ratio at the end of the reporting period as of December 31, 2020 and 2019, is as follows:

December 31, 2020 and 2019, is as follows:
Net debt Total equity Debt-to-equity ratio	2020.12.31	2019.12.31
	$ 386,293	316,633
	$ 1,980,565 19.50%	1,951,981 16.22%

• 149 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

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

The Group’s investing and financing activities which did not affect the current cash flow were as follows:

• (i) Please refer to Note 6(j) for right of use assets.

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

Short-term loans Long-term loans (including long term loans, current portion) Lease liabilities Guarantee deposits Total liabilities from financing activities Short-term loans Long-term loans (including long term loans, current portion) Lease liabilities Guarantee deposits Total liabilities from financing activities	January 1, 2020	Cash flows	Cash flows			Non-cash changes	Non-cash changes	Non-cash changes	Non-cash changes		December 31, 2019 December 31, 2020 700,000 - 69,158 558 769,716
				Foreign exchange movement		Amortized		Other		Changes in lease payments
	January 1, 2019 $ 400,000 319,555 78,482 587 $ 798,624		300,000 (320,000) (11,616) -	- -	(134) (29)	- 445 - -		- - 3,844 (Note) - 3,844		- - (1,418) -
			(31,616)		(163)	445				(1,418)
										Other - - 1,589 (Note) - 1,589
							Amortized
	$ 370,000 398,888 90,510 264 $ 859,662		30,000 (80,000) (12,826) 339 (62,487)		- - (791) (16)		- 667 - - 642				400,000 319,555 78,482 587
					(807)						798,624

Note: Obtain the right-of-use assets

• 150 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(7) Transactions with Related Parties

Compensation of key management personnel

The information on key management personnel compensation was as follows:

Short-term employee benefits Post-employment benefits Termination benefits Other long-term benefits Share-based payments	**For the years ended December 31 **	**For the years ended December 31 **
	2020	2019
	$ 27,401 415 - - -	28,057 513 - - -
	$ 27,816	28,570

In 2020, according to the requirement under Section 157 Short swing Trading of the Securities and Exchange Act, the amount arising from the exercise of disgorgement after tax was $473, which was recognized as capital surplus.

• (8) Pledged Assets

The details and carrying value of pledged assets were as follows:

Pledged Assets Restricted time deposits-current Restricted time deposits-non-current Property, plant and equipment- buildings	Purpose Guarantee for customs Performance guarantee Guarantee for long-term loans	2020.12.31		2019.12.31 1,543 553 225,474 227,570
		$ 1,525 526 -
		$ 2,051

(9) Commitments and Contingencies

• (a) As of December 31, 2020 and 2019, the Group’s unused letters of credit for purchases of raw materials and equipment amounted to $4,422 and $16,074, respectively.

• (b) As of December 31, 2020 and 2019, the Group has signed contracts for the purchase of equipment. The unrecognized contingencies of those contracts amounted to $1,995 and $806, respectively.

• (10) Losses Due to Major Disasters: None.

(11) Significant Subsequent Events: None.

• 151 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(12) Other

The details of the Group’s employee benefits, depreciation, and amortization were as follows:

By function By item	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31	For theyears ended December 31
	2020			2019
	Recorded as operating cost	Recorded as operating expenses	Total	Recorded as operating cost	Recorded as operating expenses	Total
Employee benefits (NOTE) Salary Labor and health insurance Pension expense Remuneration of directors Other personnel cost Depreciation Amortization	413,701 41,950 20,732 - 4,513 61,536 308	219,648 15,422 10,061 11,540 1,481 13,169 1,139	633,349 57,372 30,793 11,540 5,994 74,705 1,447	415,384 42,053 24,604 - 6,353 71,099 562	206,925 15,152 10,363 11,425 2,389 12,856 493	622,309 57,205 34,967 11,425 8,742 83,955 1,055

NOTE: The Government subsidy related to COVID-19 for December 31, 2020, amounted to $4,511 was recognized in decrease of Employee benefits.

(13) Supplementary Disclosure Requirements

• (a) Information on significant transactions:

In accordance with the ROC “Guidelines Governing the Preparation of Financial Reports by Securities Issuers”, the required disclosures for the year ended December 31, 2020 were as follows:

• (i) Loans extended to other parties:

No.	Lender	Counter- party	Financial statement account	Related party	Maximum balance for the period (Note1)	Ending balance **(Note 1) **	Actual amount provided (Note 1)	Interest rate	Nature of financing	Amount of sales to (purchases from) counter- party	Reason for financing	Loss allowance	Collateral	Collateral	Limit of financing amount for individual counter- party	Limit of total financing amount	Remark
													Item	Value
0	The Company	Emerging Display Technologies Corp., U.S.A.	Other receivable -related parties	Yes	41,296 (USD 1,450,000)	-	-	3.96%	The need for short-term financing	-	Working capital	-	-	-	193,976 (Note 2)	775,903 (Note 2)	Note 3

Note 1: It used the rate of exchange at December 31, 2020.

Note 2: Limit of financing amount for individual counterparty shall not exceed 10% of the lender's net assets value as of the period. Limit of total financing amount shall not exceed 40% of the Company’s net asset value.

Note 3: It was eliminated in the consolidation.

• (ii) Guarantees provided to other parties: None.

• (iii) Securities owned as of December 31, 2020 (subsidiaries, associates and joint ventures not included):

• 152 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

Name of security holder	Name of security and type	Relationship between issuer of security and the security holder	Financial statement account		December 31, 2020	December 31, 2020	December 31, 2020	Highest in	the mid-term	Remarks
				Units (shares)	Carrying value	Percentage of ownership	Fair value	Units (shares)	Highest percentage of ownership during the year
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Ying Dar Investment Development Corp. Ying Dar Investment Development Corp. Ying Dar Investment Development Corp.. Bae Haw Investment Development Corp. Bae Haw Investment Development Corp. Bae Haw Investment Development Corp. Ying Cheng Investment Corp.	Ascendax Venture Capital Corp. stock Chenfeng Optronics Corp. stock Fubon Financial Holding Co., Ltd. preference stock Innolux Corp. stock Fubon Financial Holding Co., Ltd. stock E.SUN Financial Holding Co., Ltd. stock Far Eastern New Century Corp. Nan Ya Plastics Corporation stock Pegatron Co., Ltd. stock Coasia Microelectronics Corp. stock Shian Yih Electronic Co., Ltd. stock Becton, Dickinson and Company stock JPMorgan Multiple Income Fund (USD) Shian Yih Electronic Co., Ltd. stock AGV Products Corporation stock The Company's stock Everest Technology Inc. Shian Yih Electronic Co., Ltd. stock The Company's stock Chenfeng Optronics Corp. stock	- - - - - - - - - - - - - - - Parent Company - - Parent Company -	Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent	1,470,000 1,000,000 13,845 1,147,089 300,000 755,785 1,000,000 210,000 216,000 450,338 480,000 2,000 10,053.08 550,000 101,500 5,346,672 1,000,000 395,000 3,447,716 6,000,000	19,566 11,180 865 16,174 14,025 19,310 28,950 15,099 14,537 5,764 10,320 14,253 58,817 11,825 1,011 102,923 - 8,492 66,369 67,080	5.25% 1.56% - 0.01% - 0.01% 0.02% - 0.01% 0.32% 0.78% 0.01% - 0.90% 0.02% 3.29% 1.47% 0.65% 2.12% 9.38%	19,566 11,180 865 16,174 14,025 19,310 28,950 15,099 14,537 5,764 10,320 14,253 58,817 11,825 1,011 102,923 - 8,492 66,369 67,080	1,470,000 1,000,000 13,845 1,147,089 300,000 755,785 1,000,000 210,000 216,000 450,338 480,000 2,000 10,053.08 550,000 101,500 5,346,672 1,000,000 395,000 3,447,716 6,000,000	5.25% 1.56% - 0.01% - 0.01% 0.02% - 0.01% 0.32% 0.78% 0.01% - 0.90% 0.02% 3.29% 1.47% 0.65% 2.12% 9.38%	- - - - - - - - - - - - - - - (Note) - (Note) -

Note: It was eliminated in the consolidation.

• (iv) Accumulated trading amount of a single security in excess of $300 million or 20% of the Group’s issued stock capital: None

• (v) Acquisition of property, plant and equipment in excess of $300 million or 20% of issued stock capital: None.

• (vi) Disposal of property, plant and equipment in excess of $300 million or 20% of issued stock capital: None.

• (vii) Sales to and purchases from related parties in excess of $100 million or 20% of issued stock capital was as follows:

• 153 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES

Notes to consolidated financial statements

Purchasing (selling) company	Related party	Nature of Relation-ship	Details of transaction	Details of transaction	Details of transaction	Details of transaction	Circumstances of and reasons for deviation from regular trading conditions	Circumstances of and reasons for deviation from regular trading conditions	Resulting receivables (payables)	Resulting receivables (payables)	Remarks
			Purchase (sale)	Amount	Percentage of net Purchases (sales)	Credit line	Unit price	Payment terms	Balance	Percentage of notes and accounts receivable (payable)
The Company Emerging Display Technologies Corp., U.S.A. The Company Dong Guan Emerging Display Limited	Emerging Display Technologies Corp., U.S.A. The Company Dong Guan Emerging Display Limited The Company	Subsidiary of the Company Subsidiary of the Company Sub-subsidiary of the Company Sub-subsidiary of the Company	Sale Purchase Purchase (processing expense) Sale (processing revenue)	1,066,651 1,066,651 179,986 179,986	29.28% 100.00% 7.92% 100.00%	3 months 3 months 1-3 months 1-3 months	Sales prices offered to Emerging Display Technologies Corp., U.S.A. were not significantly different from those offered to other customers. The Company is the major supplier for Emerging Display Technologies Corp., U.S.A. There is no comparable transaction The Company is the only entity the sub-subsidiary provides processing service to. There is no comparable transaction. The Company is the only entity the sub-subsidiary provides processing service to. There is no comparable transaction.	Considering the special trading practices in North American market, the Company set credit duration as three months for North American market, which is slightly longer than one to three months set in other markets. The Company is the major supplier for Emerging Display Technologies Corp., U.S.A. The Company is the only entity the sub-subsidiary provides processing service to. The Company is the only entity the sub-subsidiary provides processing service to.	202,276 202,276 90,862 90,862	30.40% 100.00% 20.35% 100.00%	- - - -

Note: It was eliminated in the consolidation.

• 154 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (viii) Receivables from related parties in excess of $100 million or 20% of issued stock capital were as follows:

Name of company the has the receivables	Counterparty	Relationship	Balance of amount	Turnover ratio	Overdue	Overdue	Amount collected in the subsequent period	Allowance for doubtful accounts	Remarks
					Amount	Status
The Company	Emerging Display Technologies Corp.,U.S.A.	Subsidiary of the Company	Accounts receivable of $202,276	4.34	-	-	138,684	-	(Note)

Note: It was eliminated in the consolidation.

• (ix) Derivative financial instrument transactions:

Please refer to Note 6(b).

• (x) Significant inter-Group transactions:

No.	Name	Counterparty	Relationship (Note)		Details of transaction	Details of transaction
				Subject	Amount	Term of trading	% of total consolidated revenue or total asset
0	The Company	Emerging Display Technologies Corp., U.S.A.	1	Sales revenue Accounts receivable	1,066,651 202,276	Considering the trading practices in North American market, the Group set credit duration as three months for North American market, which is slightly longer than one to three months set in other markets. The price in North American market is not significantly different from that in general market.	28.54% 5.60%
0	The Company	Emerging Display Technologies Corp.,U.S.A.	1	Selling expenses - Commission Otherpayable	157 64	No non-related-party transaction to compare to.	- -
0	The Company	EDT-Europe ApS	1	Selling expenses - Commission Otherpayable	56,204 7,920	No non-related-party transaction to compare to.	1.50% 0.22%
0	The Company	Emerging Display Technologies Korea	1	Selling expenses - Commission	3,965	No non-related-party transaction to compare to.	0.11%
0	The Company	EDT-Japan Corp.	1	Selling expenses - Commission	14,547	No non-related-party transaction to compare to.	0.39%
0	The Company	Emerging Display Technologies Corp.,U.S.A.	1	Interest revenue	103	Adjust by floating interest rate of Bank of America.	-
0	The Company.	Dong Guan Emerging Display Limited	1	Processing cost Purchase material Accountspayable	179,986 90,862	No non-related-party transaction to compare to.	4.82% 2.52%

Note: Relationship notes as follows,

1) Parent Group to subsidiary

• 2) Subsidiary to parent Group

• 3) Subsidiary to subsidiary

• 155 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(b) Information on investees

Relevant information about investees is as follows: (excluding information on investees in Mainland China)

Name of investor	Name of investee	Location	Business Scope	Original cost of investment	Original cost of investment	Held at the end of term	Held at the end of term	Held at the end of term	Highest percentage owned during the **year **	Net income (loss) of the investee	Investment income (loss) recognized	Remarks
				December 31, 2020	December 31, 2019	Shares owned	Percentage owned	Carrying value
The Company	Emerging Display Technologies Corp., U.S.A.	USA	Trading	121,656	121,656	3,500,000	100.00%	77,351 (Note 1)	100.00%	8,284	8,153	Subsidiary (Note 4)
The Company	Emerging Display International (Samoa) Corp.	Samoa	Investment holding	180,503	180,503	5,984,071	78.49%	78,804	78.49%	(10,058)	(7,895)	Subsidiary (Note 4)
The Company	EDT-Europe ApS	Denmark	Customer service and business support	2,077	2,077	125,000	100.00%	2,031	100.00%	180	180	Subsidiary (Note 4)
The Company	Tremendous Explore Corp.	BVI	Trading	-	-	-	-	- (Note 2)	100.00%	(66)	(66)	Subsidiary (Note 4)
The Company	Emerging Display Technologies Korea	Korea	Customer service and business support	1,677	1,677	58,212,500	100.00%	1,472	100.00%	266	266	Subsidiary (Note 4)
The Company	EDT-Japan Corp.	Japan	Customer service and business support	17,401	17,401	5,000	100.00%	6,099	100.00%	1,767	1,767	Subsidiary (Note 4)
The Company	Ying Dar Investment Development Corp.	Taiwan	Investment	89,000	89,000	8,900,000	100.00%	26,932	100.00%	8,458	2,042 (Note 3)	Subsidiary (Note 4)
The Company	Bae Haw Investment Development Corp.	Taiwan	Investment	89,000	89,000	8,900,000	100.00%	40,634	100.00%	5,350	1,213 (Note 3)	Subsidiary (Note 4)
The Company	Ying cheng Investment Corp.	Taiwan	Investment	84,000	84,000	8,400,000	52.50%	40,442	52.50%	(100)	(52)	Subsidiary (Note 4)
Ying Dar Investment Development Corp.	Emerging Display International (Samoa) Corp.	Samoa	Investment holding	13,234	13,234	450,000	5.90%	5,924	5.90%	(10,058)	(593)	Subsidiary (Note 4)
Bae Haw Investment Development Corp.	Emerging Display International (Samoa) Corp.	Samoa	Investment holding	25,488	25,488	870,000	11.41%	11,456	11.41%	(10,058)	(1,148)	Subsidiary (Note 4)

• Note 1: It was deducted unrealized profit from sales $15,309.

• Note 2: Tremendous Explore Corp. was liquidated in July, 2020.

• Note 3: Cash dividends to subsidiaries, which were reclassified as capital surplus, were deducted.

• Note 4: It was eliminated in the consolidation.

• (c) Information on investments in Mainland China:

• (i) Information on investments in Mainland China

Investee company	Main businesses and products	Received capital	Investment method	Accumulated amount invested in Mainland China as of Jan. 1, 2020	Invested capital remitted from or repatriated to **Taiwan **	Invested capital remitted from or repatriated to **Taiwan **	Accumulated amount invested in Mainland China as of Dec. 31, 2020	Net income of investee	The Group’s direct or indirect investment ratio	Investment gain (loss) recognized by the Group	Book value of the investment as of Dec. 31, 2020	Accumulated investment income repatriated to Taiwan as of Dec. 31, 2020
					Remittance	Repatriation
Dong Guan Emerging Display Limited	Manufacturing of LCDs and Touch panel	248,516 (US$ 7,625,300)	Investing through a third country by establishing a holding Group in a third country.	219,225 (US$6,746,936) (Note1)	-	-	219,225 (US$6,746,936)	(9,628)	95.80% (Note2)	(9,224) Based on the investee’s financial statements audited by the same auditor as the Group (Note 3)	87,524 (Note 4)	-

• 156 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

(ii) Limitation on investment in Mainland China:

Accumulated investment amount remitted from Taiwan to Mainland China as of December 31, 2019	Investment amount approved by the Investment Commission, Ministry of Economic Affairs	Limit on investment in Mainland China set by the Investment Commission, Ministry of Economic Affairs
197,499 (Note 8) (US$6,934,668) (Note5)	397,345 (Note 8) (US$13,951,732) (Note6)	1,305,969 (Note7)

• Note 1: The amount includes $13,234 which was invested by Ying Dar Investment Development Corp. and $25,488 which was invested by Bae Haw Investment Development Corp.

• Note 2: The ratio includes 5.90% which was held by Ying Dar Investment Development Corp. and 11.41% which was held by Bae Haw Investment Development Corp.

• Note 3: The amount includes a loss of $568 which was recognized by Ying Dar Investment Development Corp. and a loss of $1,099 which was recognized by Bae Haw Investment Development Corp.

• Note 4: The amount includes $5,390 which was invested by Ying Dar Investment Development Corp. and $10,424 which was invested by Bae Haw Investment Development Corp.

• Note 5: The amount includes the remaining capital amounting to US$187,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. didn’t remit back after it had completed liquidation in 2009 due to net loss.

• Note 6: The approved amount includes US$637,732 obtained from Ying Dar Investment Development Corp. and US$870,000 obtained from Bae Haw Investment Development Corp. The amount obtained from Ying Dar Investment Development Corp. includes the remaining capital amounting to US$187,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. didn’t remit back after it had completed liquidation in 2009 due to net loss.

• Note 7: The amount includes $77,914 for Ying Dar Investment Development Corp. and $64,201 for Bae Haw Investment Development Corp.

• Note 8: Transactions denominated in foreign currencies were recorded using the rate of exchange at December 31, 2020.

(iii) Significant transactions:

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

• 157 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Tseng, Jui-Ming	11,043,723	6.8%

• Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, refer to Market Observation Post System.

(14) Segment Information

(a) General information

The Group has three reportable segments: the domestic segment, the North America segment and the mainland China segment. The domestic segment includes sales division, research develop division and manufacturing division. It engages in designing, manufacturing and selling of liquid crystal displays modules and capacitive touch panel, and functions as operating headquarters of the Group. The North America segment engages mainly in expanding the North American trading business and implements marketing function in North America. The North America segment engages in the sale of liquid crystal displays provided by the domestic segment. The mainland China segment engages in the manufacture of processing raw materials and supplies provided by the domestic segment and it deals mainly in the business of manufacturing liquid crystal display modules and capacitive touch panel.

• 158 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (b) Information which should be reported includes the segment income, segment assets, and segment liabilities, and their measurement basis and reconciliation information

The reported amounts are consistent with the management reports adopted by decision makers. There was no material inconsistency between the accounting policies of reportable segments and the accounting policies described in Note 4. The reportable segments’ income was measured using the operating income before tax, which was also used as the basis for performance evaluation. Sales and other transactions among consolidated entities were considered as transactions with third parties and they are measured based on the market value.

Reportable segment information is as follows:

Revenue Sales to customers other than consolidated entities Sales among consolidated entities Interest revenue Total revenue Interest expenses Depreciation and amortization Segment income Segment assets Segment liabilities		For theyears ended December 31, 2020	For theyears ended December 31, 2020	For theyears ended December 31, 2020	For theyears ended December 31, 2020
	Domestic $ 2,575,121 1,067,312 9,764 $ 3,652,197 $ 10,853 $ 61,469 $ 285,731 $ 3,441,342 $ 1,639,092	North America 1,161,295 157 1 1,161,453 221 2,983 10,430 310,291 217,736	Mainland China - 179,987 37 180,024 282 8,185 (9,028) 144,865 53,503	Other operating department 883 74,716 - 75,599 110 3,515 2,416 31,559 21,956	Adjustments and elimination - (1,322,172) (103) (1,322,275) (103) - (15,440) (318,868) (303,663)	Total
						3,737,299 - 9,699 3,746,998 11,363 76,152 274,109 3,609,189 1,628,624

Revenue Sales to customers other than consolidated entities Sales among consolidated entities Interest revenue Total revenue Interest expenses Depreciation and amortization Segment income Segment assets Segment liabilities		For theyears ended December 31, 2019	For theyears ended December 31, 2019	For theyears ended December 31, 2019	For theyears ended December 31, 2019
	Domestic $ 2,857,780 1,133,461 21,914 $ 4,013,155 $ 13,235 $ 69,692 $ 302,109 $ 3,465,228 $ 1,544,022	North America 1,248,998 288 1 1,249,287 1,507 2,793 9,560 413,535 324,510	Mainland China - 321,030 34 321,064 689 8,958 5,002 162,884 62,618	Other operating department 781 72,058 - 72,839 137 3,567 755 24,805 17,042	Adjustments and elimination - (1,526,837) (1,313) (1,528,150) (1,313) - (13,526) (429,586) (263,307)	Total
						4,107,559 - 20,636
						4,128,195
						14,255
						85,010
						303,900
						3,636,866
						1,684,885

The following is the explanation of material reconciliation item:

• (i) For the years ended December 31, 2020 and 2019, the operating segments revenue eliminated from the consolidated entities were $1,322,275 and $1,528,150, respectively.

• (ii) For the years ended December 31, 2020 and 2019 the operating segments profit and loss eliminated from the consolidated entities were $15,440 and $13,526, respectively.

• (iii) For the years ended December 31, 2020 and 2019, the operating segments assets eliminated from the consolidated entities were $318,868 and $429,586, respectively.

• 159 -

EMERGING DISPLAY TECHNOLOGIES CORP. AND SUBSIDIARIES Notes to consolidated financial statements

• (iv) For the years ended December 31, 2020 and 2019, the operating segments liabilities eliminated from the consolidated entities were $303,663 and $263,307, respectively.

(c) Products and services information

Sales to customers other than consolidated entities, classified by products and services, were as follows:

Production Liquid crystal display modules Capacitive touch panel and capacitive touch panel module Others Total	For theyears ended December 31 2020 2019 $ 1,245,598 1,609,932 2,417,280 2,425,872 74,421 71,755 $ 3,373,299 4,107,559
	2020 $ 1,245,598 2,417,280 74,421 $ 3,373,299

(d) Geographic information

Sales to customers other than consolidated entities, classified by location of customers, were as follows:

Geographic Area Mainland China Europe USA Japan Taiwan Korea Others Total	For theyears ended December 31 2020 2019 $ 257,393 371,185 2,094,124 2,259,059 889,628 940,656 77,541 97,144 319,368 361,433 65,791 45,875 33,454 32,207 $ 3,737,299 4,107,559	For theyears ended December 31 2020 2019 $ 257,393 371,185 2,094,124 2,259,059 889,628 940,656 77,541 97,144 319,368 361,433 65,791 45,875 33,454 32,207 $ 3,737,299 4,107,559
		2019 371,185 2,259,059 940,656 97,144 361,433 45,875 32,207
	$ 257,393 2,094,124 889,628 77,541 319,368 65,791 33,454
	$ 3,737,299	4,107,559

Non-current assets, classified by location of assets, were as follows:

Geographic Area Taiwan Mainland China USA Europe Others Total	2020.12.31	2019.12.31
	$ 343,765 12,724 97,604 966 2,752	377,280 20,233 104,357 1,134 1,769
	$ 457,811	504,773

Non-current assets included in property, plant and equipment, investment property, intangible assets and other assets, excluding financial instrument and deferred income tax assets.

(e) Major customers’ information

Major customers’ information
A customer from domestic segment	For theyears ended December 31 2020 2019 $ 1,032,571 1,135,284
	2020 $ 1,032,571

• 160 -

6.5 Parent-company-only financial statements for the years ended December 31, 2020 and 2019, and independent auditors’ report

Independent Auditors’ Report

To the Board of Directors of Emerging Display Technologies Corp.:

Opinion

We have audited the financial statements of Emerging Display Technologies Corp. (“the Company”), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, changes in equity and cash flows for the years then ended December 31, 2020 and 2019, and notes to the parent-company-only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent-company-only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company 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 audit matters we judged shall be presented in the financial report as follows:

1. Valuation of accounts receivable

Please refer to Note 4(f) for accounting policy of accounts receivable valuation and Note 5(a) for accounting assumption and estimation uncertainty of impairment of accounts receivable. Information regarding accounts receivable is shown in Note 6 (d) of the parent-company-only financial statements.

Description of key audit matters:

The Company’s customers are the manufacturers of industrial equipment, smart home devices, handheld devices, and information appliance products. The customers’delayed payments were due to the need to clarify the responsibility of problematic products resulted from failure of process or usage of end products, and global economic turmoil. Because of the inherent credit risk of receivables, the financial statements users value the collection results. Since the accounts receivable is significant to the financial statements, they are one of the key areas our audit focused on.

• 161 -

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding the process of account checking and collection with customers; analyzing the receivable aging report; reviewing the historical receipt and bad debt records; and understanding the forward-looking industrial economy status and concentration of credit risk of the customers. In addition, we also evaluated the appropriateness of related disclosures in the parent-company-only financial statements.

2. Valuation of obsolete inventory

Please refer to Note 4(g) for accounting policy of obsolete inventory and Note 5(b) for accounting assumption and estimation uncertainty of obsolete inventory valuation. Information regarding obsolete inventory valuation is shown in Note 6(f) of the parent-company-only financial statements.

Description of key audit matters:

Obsolete inventory is carried at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The Company is engaged in the manufacture and sale of liquid crystal displays and capacity touch panels. It focuses on the small and medium sized niche markets of non-consumable area. The products are used in industrial equipment, smart home devices, handheld devices, and information appliance products. The development strategy of the Company is diversifying and customizing its products which may result in having an impact on its obsolete inventory cost. As a consequence, there is a risk that the net realizable value of obsolete inventory may turn out to be lower than its carrying value. Therefore, the valuation of obsolete inventory is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included selecting samples to test the accuracy of inventory aging report; analyzing the changes of inventory aging, and examining the provision of inventory by reviewing the historical accuracy on provision. We assessed the changes of obsolescence inventory in the subsequent events and the basis of net realizable value to evaluate the accuracy of the Company’s provisions. In addition, we also assessed the appropriateness of the provisions and disclosures made by the management.

Responsibilities of Management and Those Charged with Governance for the Financial

Statements

Management is responsible for the preparation and fair presentation of the parent-company-only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parent-company-only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent-company-only financial statements, the management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting. Unless the management either intends to liquidate the Company or to cease its operations, there is no realistic alternative but to do so.

Those charged with governance (including the Supervisors) are responsible for overseeing the Company’s financial reporting process.

• 162 -

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent-company-only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that 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 parent-company-only financial statements.

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

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

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

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

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

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

6. Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on these parent-company-only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

7. 163 -

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 parent-company-only 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 Po Jen, Yang and Yen Ta, Su.

KPMG

Taipei, Taiwan (Republic of China) March 10, 2021

Notes to Readers

The accompanying parent company only financial statements are intended only to present the statement of 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’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.

• 164 -

(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP.

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Financial assets at fair value through profit or loss, current (note 6(b)) 1120 Financial assets at fair value through other comprehensive income, current (note 6(c)) 1170 Accounts receivable, net (notes 6(d) and (u)) 1180 Accounts receivable - related parties, net (notes 6(d), (u), and 7) 1200 Other receivables (note 6(e)) 1210 Other receivables - related parties (notes 6(e) and 7) 130X Inventories (note 6(f)) 1470 Other current assets (notes 6(g), (y) and 8) Total current assets Non-current assets: 1517 Financial assets at fair value through other comprehensive income, non-current (note 6(c)) 1550 Investments accounted for using equity method (notes 6(h) and 7) 1600 Property, plant and equipment (notes 6(j), 8 and 9) 1755 Right-of-use assets (note 6(k)) 1780 Intangible assets (note 6(m)) 1840 Deferred income tax assets (note 6(r)) 1980 Other non-current financial assets (notes 6(g) and (y)) Total non-current assets Total assets	**December 31, **	2020	**December 31, **	2019 % 36 2 2 9 8 - 1 20 1 79 1 8 9 2 - 1 - 21 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(m)) 2120 Financial liabilities at fair value through profit or loss, current (note 6(b)) 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties (note 7) 2200 Other payables (note 6(n)) 2220 Other payables - related parties (note 7) 2230 Income tax liabilities 2280 Lease liabilities, current (note 6(p)) 2322 Long-term borrowings, current portion (notes 6(o) and 8) 2300 Other current liabilities (note 6(u)) Total current liabilities Non-Current liabilities: 2570 Deferred income tax liabilities (note 6(r)) 2580 Lease liabilities, non-current (note 6(p)) 2640 Net defined benefit liability, non-current (note 6(q)) 2645 Guarantee deposits received 2670 Other non-current liabilities Total non-current liabilities Total liabilities Equity attributable to owners of parent (notes 6(c), (s) and 7): 3100 Common stock 3200 Capital surplus 3300 Retained earnings 3400 Other equity interest 3500 Treasury stock Total equity Total liabilities and equity	December 31, 2020	December 31, 2020	**December 31, **	2019
	Amount	%	Amount		Amount	%	Amount	%
	$ 1,159,414 58,817 138,432 457,575 202,276 5,510 - 794,173 75,060	32 2 4 13 6 - - 22 2	1,298,535 54,094 87,024 321,107 289,755 18,066 20,986 712,294 50,834		$ 700,000 195 1,234 355,622 90,862 240,354 7,984 49,083 1,966 - 41,974	20 - - 10 3 7 - 1 - - 1	400,000 994 307 385,101 96,640 253,878 7,471 55,631 1,928 319,555 22,299	11 - - 11 3 7 - 2 - 9 1
	2,891,257	81	2,852,695
	31,611 273,765 278,747 60,927 4,091 31,634 5,834	1 7 8 2 - 1 -	34,442 288,846 309,051 64,469 3,760 32,729 2,866		1,489,274	42	1,543,804	44
					354 60,671 87,048 34 728	- 2 2 - -	- 63,432 88,546 34 936	- 2 2 - -
					148,835	4	152,948	4
					1,638,109	46	1,696,752	48
	686,609	19	736,163		1,624,076 15,423 591,094 (117,815) (173,021)	45 - 17 (3) (5)	1,624,076 4,397 539,266 (102,612) (173,021)	45 - 15 (3) (5)
					1,939,757	54	1,892,106	52
	$ 3,577,866	100	3,588,858		$ 3,577,866	100	3,588,858	100

See accompanying notes to financial statements.

• 165 -

(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP.

Statements of Comprehensive Income For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

4000 Operating revenue (notes 6(u) and 7) 5000 Operating costs (notes 6(f), (l), (q), (v), 7 and 12) Gross profit 5910 Less: Unrealized profit (loss) from sales (note 7) 5920 Add: Realized profit (loss) from sales (note 7) Gross profit Operating expenses (notes 6(d), (l), (q), (v), 7 and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit impairment loss (gain) (note 6(d)) Net operating income 6500 Net other income (expenses) (note 6(w)) Net operating income Non-operating income and expenses (notes 6(c), (k), (s) and 7): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for using equity method Total non-operating income and expenses 7900 Profit from continuing operations before tax 7950 Less: Income tax expenses (note 6(r)) 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 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (note 6(s)) 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss (note 6(s)) 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (note 6(r)) 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements (note 6(s)) 8380 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss (note 6(s)) 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss (note 6(r)) Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income 8500 Comprehensive income Earnings per share (New Taiwan Dollars) (note 6(t)): 9750 Basic net income per share (New Taiwan Dollars) 9850 Diluted net income per share (New Taiwan Dollars)	2020		% 100 81	2019		% 100 83 17 - - 17 4 2 3 - 9 - 8 1 - (1) - - - 8 2 6 - 1 - - 1 - - - - 1 7 1.73
	Amount			Amount
	$ 3,642,433 2,959,499			3,991,472 3,312,715
	682,934 15,309 13,567		19 - -	678,757 13,567 9,687
	681,192		19	674,877
	137,735 99,698 115,565 5,481		4 3 3 -	173,432 90,719 112,856 (923)
	358,479		10	376,084
	528		-	-
	323,241		9	298,793
	9,663 11,190 (68,680) (10,853) 5,608		- - (2) - -	21,651 9,601 (30,175) (13,235) 14,417
	(53,072)		(2)	2,259
	270,169 36,703		7 1	301,052 43,727
	233,466		6	257,325
	(1,286) 19,932 (22,115) 298		- 1 (1) -	(2,876) 30,292 (3,980) -
	(3,767)		-	23,436
	(4,355) 170 -		- - -	(5,166) (674) -
	(4,185)		-	(5,840)
	(7,952)		-	17,596
	$ 225,514		6	274,921
	$		1.57
	$		1.56			1.72

See accompanying notes to financial statements.

• 166 -

(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP.

Statements of Changes in Equity For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2019 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve Cash dividends on common stock Special reserve Purchase of treasury stock Retirement of treasury stock Cash dividends to subsidiaries Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2019 Profit Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve Cash dividends on common stock Reversal of special reserve Exercise of disgorgement Cash dividends to subsidiaries Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2020	Common stock $ 1,744,076 - - - - - - - (120,000) - - 1,624,076 - - - - - - - - - $ 1,624,076	Capital surplus 28,226 - - - - - - - (28,226) 4,397 - 4,397 - - - - - - 473 10,553 - 15,423	**Retained earnings **	**Retained earnings **	**Retained earnings **	Total other	equity interest	Treasury stock (273,209) - - - - - - (50,738) 150,926 - - (173,021) - - - - - - - - - (173,021)	Total equity 1,742,230 257,325 17,596 274,921 - (78,704) - (50,738) - 4,397 - 1,892,106 233,466 (7,952) 225,514 - (188,889) - 473 10,553 - 1,939,757
						Exchange differences on translation of foreign financial statements (8,271) - (5,840) (5,840) - - - - - - - (14,111) - (4,185) (4,185) - - - - - - (18,296)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income
			Legal reserve	Special reserve	Unappropriated retained **earnings **
			45,822 - - - 11,193 - - - - - - 57,015 - - - 25,733 - - - - - 82,748	109,212 - - - - - 42,095 - - - - 151,307 - - - - - (48,695) - - - 102,612	200,673 257,325 (2,876) 254,449 (11,193) (78,704) (42,095) - (2,700) - 10,514 330,944 233,466 (1,286) 232,180 (25,733) (188,889) 48,695 - - 8,537 405,734		(104,299) - 26,312 26,312 - - - - - - (10,514) (88,501) - (2,481) (2,481) - - - - - (8,537) (99,519)

See accompanying notes to financial statements.

• 167 -

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

EMERGING DISPLAY TECHNOLOGIES CORP.

Statements of Cash Flows

For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit impairment loss (gain) Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries, associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Unrealized profit from sales Realized profit from sales Unrealized foreign exchange loss Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Increase in accounts receivable Decrease in accounts receivable－related parties Decrease in other receivable Decrease (increase) in inventories Increase in other current assets Total changes in operating assets Changes in operating liabilities: Increase (decrease) in notes payable Decrease in accounts payable Decrease in accounts payable－related parties Increase (decrease) in other payable Increase in other payable－related parties Increase in other current liabilities Decrease in net defined benefit liability Increase (decrease) in other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Proceeds from residuals of long-term investments under equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in other receivables due from related parties Decrease in other receivables due from related parties Increase in other financial assets Dividends received Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term loans Repayments of long-term borrowings Disgorgement received Cash dividends paid Payments to acquire treasury stock Repayments of lease liabilities Net cash flows used in 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	2020	2019 301,052
	$ 270,169
	60,103 1,365 5,481 (7,336) 10,853 (9,575) (7,646) (5,608) - 15,309 (13,567) 31,606	68,672 1,020 (923) (4,809) 13,235 (21,487) (7,600) (14,417) (367) 13,567 (9,687) 30,378
	80,985	67,582
	(145,315) 82,869 3,679 (81,879) (24,543)	(118,554) 42,015 5,581 13,632 (9,105)
	(165,189)	(66,431)
	927 (25,713) (3,020) (9,603) 818 19,675 (2,784) (208)	(413) (10,597) (7,793) 41,576 3,962 9,670 (2,556) 936
	(19,908)	34,785
	(185,097)	(31,646)
	(104,112)	35,936
	166,057 11,266 7,613 (10,398) (42,218)	336,988 20,884 7,600 (12,355) (6,797)
	132,320	346,320
	(101,460) 80,033 (60,350) 62,165 194 (30,825) - (1,696) - 20,951 (2,950) 3,006	- 121,297 (95,030) 173,198 - (31,111) 367 (2,332) (44,603) 67,608 (7) 3,434
	(30,932)	192,821
	300,000 (320,000) 591 (188,883) - (1,558)	30,000 (80,000) - (78,704) (50,738) (1,866)
	(209,850)	(181,308)
	(30,659)	(27,301)
	(139,121) 1,298,535	330,532 968,003
	$ 1,159,414	1,298,535

See accompanying notes to financial statements.

• 168 -

(English Translation of Financial Statements Originally Issued in Chinese) EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Emerging Display Technologies Corp. (the “Company”) was incorporated as a limited liability company under the laws of the Republic of China (R.O.C.) on September 23, 1994. The address of its registered office and principal place of business is No. 5, Central 1st Rd, Kaohsiung Economic Processing Zone, Kaohsiung City, Taiwan. The Company is engaged in the manufacture and sale of Capacity Touch Panels and liquid crystal displays (LCDs).

(2) Approval date and procedures of the financial statements

These parent-company-only financial statements were authorized for issuance by the Board of Directors on March 10, 2021.

(3) New standards, amendments and interpretations adopted:

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

The details of impact on the Company’s adoption of the new amendments beginning January 1, 2020 are as follows:

• (i) Amendments to IFRS 16 “COVID-19-Related Rent Concessions”

As a practical expedient, a lessee may elect not to assess whether a rent concession that meets certain conditions is a lease modification, rather any changes in lease liability are recognized in profit or loss. The amendments have been endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) in July 2020, earlier application from January 1, 2020 is permitted. Related accounting policy is explained in Note 4(j).

The Company has elected to apply the practical expedient for property, plant and equipment rents that meet the criteria beginning January 1, 2020, with early adoption. No adjustment was made upon the initial application of the amendments. The amounts recognized in profit or loss for the year ended December 31, 2020 was $348.

(ii) Other amendments

The following new amendments, effective January 1, 2020, do not have a significant impact on the Company’s parent-company-only financial statements:

• Amendments to IFRS 3 “Definition of a Business”

• Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”

• Amendments to IAS 1 and IAS 8 “Definition of Material”

• 169 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• (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, 2021, would not have a significant impact on its financial statements:

• 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”

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

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 16 “Property, Plant and Equipment－Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts－Cost of Fulfilling a Contract”	Content of amendment The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of balance sheet, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss. The amendments clarify that the ‘costs of fulfilling a contract’ comprises the costs that relate directly to the contract as follows:	Effective date per IASB
		January 1, 2023 January 1, 2022 January 1, 2022

• the incremental costs–e.g. direct labor and materials; and

• an allocation of other direct costs–e.g. an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract.

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EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

The Company does not expect the following other 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”

• Annual Improvements to IFRS Standards 2018-2020

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

(4) Summary of significant accounting policies:

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 parent-company-only financial statements, the Chinese version shall prevail.

The significant accounting policies presented in the parent-company-only financial statements are summarized as follows. Except for those specifically indicated in note 3 and note 4(j), the following accounting policies were applied consistently throughout the periods presented in the parent-company-only financial statements.

• (a) Statement of compliance

These annual parent-company-only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the parent-company-only 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) Financial assets at fair value through other comprehensive income are measured at fair value;

• 3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(p).

• (ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entities operate. The parent-company-only 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.

• 171 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(c) Foreign currencies

(i) Foreign currency transaction

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

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

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

• 2) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• 3) qualifying cash flow hedges to the extent that the hedges are effective.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economics, 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 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 non-controlling 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 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.

• 172 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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

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

• (i) It is expected to be realized, or intended to be sold or consumed in the normal operating cycle;

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

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

• (iv) The asset is cash 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. An entity shall classify a liability as current when:

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

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

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

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

• (e) Cash and cash equivalents

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

• 173 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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.

• 1) Financial assets measured at amortized cost

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

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

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

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

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

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

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

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

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

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

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

• 174 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Dividend income derived from equity investments is recognized on the date on which the Company’s right to receive payment is established, which in the case of quoted securities, is normally the ex-dividend date.

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

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, or at FVTPL, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

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

4)

Business model assessment

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

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

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

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

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

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

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

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

• 175 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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

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

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

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

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

• ‧ prepayment and extension features; and

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

• 6)

• Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on its financial assets measured at amortized cost (including cash and cash equivalents, accounts receivable, other receivables, refundable deposits and other financial assets) and debt investments measured at FVOCI.

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

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

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

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

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

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

• 176 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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

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

If there is a low risk of default on financial asset, the borrower has a strong capacity to meet its contractual cash flow obligations in the near term, and the adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations, the financial asset would be considered low credit risk.

When the contract amount is past due or the borrower is unlikely to pay its credit obligations to the Company in full, the Company considers the credit risk on a financial asset has increased significantly or a financial asset to be in default.

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.

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

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being overdue;

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

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

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

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

• 177 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. 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.

• 7) Derecognition of financial assets

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

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

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

• 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 surplus is not sufficient to be written down).

4) 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.

• 178 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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.

• 5) Derecognition of financial liabilities

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

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

• 6) Offsetting of financial assets and liabilities

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

• (iii) Derivative financial instruments

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

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

• (g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on weighted average costing principle 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.

(h) Investment in subsidiaries

The Company evaluates a controlled investee company under the equity method when preparing its parent-company-only financial statements. Under the equity method, the profit and other comprehensive income in the parent-company-only financial statements are the same as the profit and other comprehensive income belonging to the parent company in the

• 179 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

consolidated financial statements. Also, the equity in the parent-company-only financial statements is the same as equity belonging to parent company in the financial statements on a consolidated basis.

Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity.

• (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 when it is probable that the future economic benefits associated with the expenditure will flow to the Company.

• (iii) Depreciation

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

Land is not depreciated.

The estimated useful lives for current and comparative years are as follows:

Buildings and construction	2～50 years
Machinery and equipment	2～10 years
Office equipment	3～5 years
Other equipment	1～10 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Leases

• (i) Identifying a lease

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. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

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EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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

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

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

• ‧ the customer has the right to direct how and for what purpose the asset is used throughout the period of use; or

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

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

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

At inception of a contract or when reassessing whether a contract contains a lease, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land, the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

• (ii) As a leasee

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

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

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:

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EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• 1) fixed payments, including in-substance fixed payments;

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

• 3)

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

• 4) 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:

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

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

• 3) 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

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

• 5) there are any lease modifications.

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

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

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

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases of office equipment 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.

As a practical expedient, the Company elects not to assess whether property, plant and equipment rents that meets all the following conditions are lease modifications or not:

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

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

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EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• 3) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2021; and

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

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

• (iii) As a lessor

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

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

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

• (k) Intangible assets

• (i) Recognition and measurement

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including patent and computer software, that are 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, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

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EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(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) Patents 9 ～ 20 years 2) Computer software cost 3 months ～ 4 years

Amortization methods, useful lives and residual values are reviewed at each 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) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

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.

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) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost, except when the recognition of finance cost for a short-term provision is insignificant.

• 184 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(n) Revenue

(i) Revenue from contracts with customers

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

1) Sale of goods

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

The Company’s obligation to provide a refund for faulty products under the standard warranty terms is recognized as a provision for warranty.

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.

The contract liabilities primarily relate to the advance consideration received from customers, for which revenue is recognized when products are delivered to customers.

2) 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.

(ii) Contract costs

• 1) Incremental costs of obtaining a contract

The Company recognizes as an asset the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Costs to obtain a contract that would have been incurred regardless of whether the contract was obtained shall be recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.

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EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The Company applies the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

• 2) Costs to fulfil a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Company recognizes an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

• ‧ the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify;

• ‧ the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and

• ‧ the costs are expected to be recovered.

General and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Company cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations(or partially satisfied performance obligations), the Company recognizes these costs as expenses when incurred.

(o) Government grants

The Company recognizes an unconditional government grant 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. Grants that compensate the Company for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(p) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

(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.

• 186 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings 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) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

(iv) Short-term employee benefits

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

(q) Share-based payment

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

For share-based payment awards with non-vesting conditions, the grant-date fair value of the 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 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.

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EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• (r) Income taxes

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

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

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

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their 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 Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

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

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

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

• (i) the 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.

• 188 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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.

(s) Earnings per share

The Company discloses the basic and diluted earnings per share attributable to ordinary equity holders of the Company. Basic earnings per share is calculated as the profit attributable to the 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 dilutive potential ordinary shares.

• (t) Operating segments

The Company discloses the operating segment information in the consolidated financial statements. Therefore, the Company does not disclose the operating segment information in the financial statement.

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

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

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

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(a) Impairment of accounts receivables

The Company has estimated the loss allowance of accounts 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. Please refer to note 6(d) for relevant assumptions and input values.

• 189 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(b) Valuation of obsolete inventories

As obsolete inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the obsolete inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of obsolete inventories. Please refer to note 6(f) for further description of the valuation of inventories.

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

December 31, 2020 December 31, 2019 Cash $ 231 256 Demand deposits 491,843 212,684 Checking accounts 82 15 Time deposits 264,923 1,054,475 Notes under repurchase agreement 402,335 31,105 Cash and cash equivalents in the statement of cash flows $ 1,159,414 1,298,535 Please refer to note 6(y) for the exchange rate risk and sensitivity analysis of the financia assets of the Company. Financial assets and liabilities at fair value through profit or loss December 31, 2020 December 31, 2019 Financial assets mandatorily measured at fair value through profit or loss-current: Open-end mutual funds $ 58,817 54,018 Swap contract - 76 $ 58,817 54,094 Financial liabilities measured at fair value through profit or loss-current: Swap contract $ 195 994	December 31, 2020	December 31, 2019
	$ 231 491,843 82 264,923 402,335
	$ 1,159,414
		54,018 76 54,094 994
	$ 58,817
	$ 195

Please refer to note 6(y) for the exchange rate risk and sensitivity analysis of the financial assets of the Company.

• (b) Financial assets and liabilities at fair value through profit or loss

Please refer to note 6(x) for the recognition of gain or loss at fair value.

The aforementioned financial assets were not pledged as collaterals.

• 190 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The Company uses the derivative instruments to hedge the certain currency the Company is exposed to, arising from its operating activities. The following derivative instruments, without the application of hedge accounting, were classified as financial assets mandatorily measured at fair value through profit or loss and held-for-trading financial liabilities:

Swap contract Swap contract		December 31, 2020	December 31, 2020
	Contract amount (in thousands) USD 1,000	Currency Maturity Date NTD to USD 2021.01.07 December 31, 2019	Maturity Date
	Contract amount (in thousands) USD 5,000	Currency NTD to USD	Maturity Date
			2020.01.17~ 2020.03.31

Please refer to note (y) for the market risk and credit risk.

(c) Financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income-current: Common stocks listed on domestic markets- current Innolux Corp. Fubon Financial Holding Co., Ltd. Synnex Technology International Co., Ltd. Nan Ya Plastics Corporation Pegatron Co., Ltd. CoAsia Electronics Corp. E.SUN Financial Holding Co., Ltd. Far Eastern New Century Corp. Shian Yih Electronic Co., Ltd. Total Common stocks listed on foreign markets- current: Becton, Dickinson and Company Total	December 31, 2020	December 31, 2019
	$ 16,174 14,025 - 15,099 14,537 5,764 19,310 28,950 10,320	9,555 13,920 17,175 15,288 14,775 5,055 - - 11,256 87,024 - 87,024
	124,179
	14,253
	$ 138,432

• 191 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Equity investments at fair value through other comprehensive income-noncurrent: Common stocks unlisted on domestic markets- noncurrent Ascendax Venture Capital Corp. Chenfeng Optronics Corp. Total Preference stocks listed on domestic markets- noncurrent: Fubon Financial Holding Co., Ltd. Total	December 31, 2020 $ 19,566 11,180	December 31, 2019 15,832 17,720 33,552 890 34,442
	30,746
	865
	$ 31,611

The Company designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes.

During the years ended December 31, 2020 and 2019, the dividends of $7,646 and $7,600, respectively, related to equity investments at fair value through other comprehensive income held on the years then ended, were recognized.

During the years ended December 31, 2020 and 2019, the Company has sold part of equity investments at fair value through other comprehensive income as a result of financial management purpose. The shares were sold at fair value of $72,815 and $128,516, respectively; and the Company realized a gain of $8,537 and $10,514, respectively. The gain has been transferred from other equity interest to retained earnings.

Please refer to note 6(y) for the market risk.

The aforementioned financial assets were not pledged as collaterals.

For the purpose of increasing investment benefits, the Company entrusted part of the listed stocks to banks. In accordance with the contract, the Company did not lose control of those financial assets. Therefore, those financial assets had not been derecognized. As of December 31, 2020 and 2019, the carrying amount of the listed stocks which were entrusted to financial institutions for security lending amounted to $16,174 and $9,555, respectively.

(d) Accounts receivables

Accounts receivables-measured as amortized cost Accounts receivables-subsidiaries-measured as amortized cost Loss allowance Recognized in: Accounts receivables, net Accounts receivables-related parties	December 31, 2020	December 31, 2019 339,878 289,755 (18,771) 610,862 321,107 289,755 610,862
	$ 463,056 202,276 (5,481)
	$ 659,851
	$ 457,575 202,276
	$ 659,851

• 192 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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, 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 was determined as follows:

Not overdue Overdue 1~90 days Overdue 91~180 days Overdue 181 days Not overdue Overdue 1~90 days Overdue 91~180 days Overdue 181~365 days Overdue 365 days		December 31, 2020	Loss allowance provision 452 898 4,131 - 5,481 Loss allowance provision - - - - 18,771
	Gross carrying amount $ 521,255 139,946 4,131 - $ 665,332	Weighted-average loss rate 0.09% 0.64% 100.00% - December 31, 2019
	Gross carrying amount $ 490,070 120,012 780 - 18,771 $ 629,633	Weighted-average loss rate - - - - 100.00%
			18,771

The movement in the allowance for accounts receivables was as follows:

Balance on January 1 Impairment losses recognized (reversed) Amounts written off Balance on December 31	2020 $ 18,771 5,481 (18,771)	2019 19,694 (923) - 18,771
	$ 5,481

The aforementioned financial assets were not pledged as collaterals.

Please refer to note 6(y) for other credit risk information.

• 193 -

EMERGING DISPLAY TECHNOLOGIES CORP.

Notes to the Parent-Company-Only Financial Statements

(e) Other receivables

December 31, 2020 Other receivables-loans to subsidiaries $ - Other receivables: Loans to employee 5,154 Receivables resulting from selling financial assets at fair value through other comprehensive income - Interest and dividend receivables 356 5,510 Loss allowance - $ 5,510 Please refer to note 6(y) for other credit risk information.	December 31, 2020	December 31, 2019
	$ -	20,986 8,834 7,218 2,014 18,066 - 39,052
	5,154 - 356
	5,510
	-
	$ 5,510

(f) Inventories Raw materials and supplies Work in process Finished goods Inventories in transit The details of the cost of sales were as follows: Inventory that has been sold Reversal of write-downs Unallocated production overheads Scrap loss Others	December 31, 2020	December 31, 2019
	$ 340,560 293,269 151,044 9,300	243,826 280,261 177,235 10,972 712,294 2019 3,216,520 (3,790) 13,440 86,805 (260) 3,312,715
	$ 794,173
	2020
	$ 2,887,905 (8,781) 13,792 66,725 (142)
	$ 2,959,499

The previous write-down inventories were sold, therefore, the net realizable value of inventories lowered than cost no longer existed. The reversal of write-down was recognized as a reduction of operating costs.

The inventories of the Company were not pledged as collaterals.

• 194 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(g) Other assets

The details of other assets were as follows:

Tax refund receivables Prepayment for purchases Prepaid expenses Restricted time deposits Refundable deposits Others Recognized in: Other current assets Other non-current financial assets	December 31, 2020	December 31, 2019 2,422 39,259 3,677 1,543 2,866 3,933 53,700 50,834 2,866 53,700
	$ 1,562 63,424 5,198 1,525 5,834 3,351
	$ 80,894
	$ 75,060 5,834
	$ 80,894

The above-mentioned restricted time deposits had been pledged as collateral. Please refer to note 8.

(h) Investments accounted for using equity method

A summary of the Company’s financial information for equity-accounted investees at the reporting date is as follows:

Subsidiaries	December 31, 2020	December 31, 2019 288,846
	$ 273,765

During the years ended December 31, 2020 and 2019, cash dividends from above-mentioned subsidiaries were $3,006 and $3,434, respectively.

For the related information, please refer to the consolidated financial statements for the year ended December 31, 2020.

The investments accounted for using equity method of the Company were not pledged as collaterals.

• (i) Non-controlling interests’ share of subsidiaries

Please refer to the consolidated financial statements for the year ended December 31, 2020.

• 195 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(j) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Company were as follows:

Cost or deemed cost: Balance on January 1, 2020 Additions Reclassification Disposals Balance on December 31, 2020 Balance on January 1, 2019 Additions Reclassification Disposals Balance on December 31, 2019 Depreciation: Balance on January 1, 2020 Depreciation Disposals Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Disposals Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019	Buildings and construction	Machinery and equipment	Office equipment	Other	Total
	$ 978,660 - - -	2,210,574 5,097 9,439 -	19,727 - - (60)	127,163 22,325 (9,439) -	3,336,124 27,422 - (60)
	$ 978,660	2,225,110	19,667	140,049	3,363,486
	$ 940,244 5,668 32,748 -	2,201,962 3,922 4,690 -	19,635 92 - -	142,030 24,771 (37,438) (2,200)	3,303,871 34,453 - (2,200)
	$ 978,660	2,210,574	19,727	127,163	3,336,124
	$ 753,186 15,490 -	2,163,941 20,143 -	19,154 305 (60)	90,792 21,788 -	3,027,073 57,726 (60)
	$ 768,676	2,184,084	19,399	112,580	3,084,739
	$ 738,168 15,018 -	2,139,876 24,065 -	18,550 604 -	66,764 26,228 (2,200)	2,963,358 65,915 (2,200)
	$ 753,186	2,163,941	19,154	90,792	3,027,073
	$ 209,984	41,026	268	27,469	278,747
	$ 202,076	62,086	1,085	75,266	340,513
	$ 225,474	46,633	573	36,371	309,051

1. Please refer to note 6(x) for gain (loss) on disposal of property, plant and equipment.

2. Property, plant and equipment pledged as collateral for long-term loans and finance as of December 31, 2020 and 2019, are disclosed in note 8.

(k) Right-of-use assets

The Company leases land. Information about leases for which the Company as a lessee was presented below:

Cost: Balance on January 1, 2020 Other reduction Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019	Amount
	$ 67,226 (817) $ 66,409 $ 67,226 $ 67,226

• 196 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Accumulated depreciation: Balance on January 1, 2020 Depreciation Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019		Amount $ 2,757 2,725 $ 5,482 $ - 2,757 $ 2,757 $ 60,927 $ 67,226 $ 64,469

(l) Intangible assets

The cost and accumulated amortization for intangible assets were as follows:

Cost: Balance on January 1, 2020 Individual acquisition Disposal Balance on December 31, 2020 Balance on January 1, 2019 Individual acquisition Disposal Balance on December 31, 2019 Amortization: Balance on January 1, 2020 Amortization Disposal Balance on December 31, 2020 Balance on January 1, 2019 Amortization Disposal Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on January 1, 2019 Balance on December 31, 2019	Patent	Computer software cost	Total amount 10,739 1,696 (965) 11,470 9,130 2,332 (723) 10,739 6,979 1,365 (965) 7,379 6,682 1,020 (723) 6,979 4,091 2,448 3,760
	$ 3,557 296 (965)	7,182 1,400 -
	$ 2,888	8,582
	$ 4,141 139 (723)	4,989 2,193 -
	$ 3,557	7,182
	$ 2,137 261 (965)	4,842 1,104 -
	$ 1,433	5,946
	$ 2,438 422 (723)	4,244 598 -
	$ 2,137	4,842
	$ 1,455	2,636
	$ 1,703	745
	$ 1,420	2,340

• 197 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The amortization expenses of intangible assets included in the statement of comprehensive income were as follows:

Operating costs Operating expenses Total	2020	2019 562 458 1,020
	$ 308 1,057
	$ 1,365

The intangible assets of the Company were not pledged as collaterals.

• (m) Short-term borrowings

The short-term borrowings were summarized as follows:

The short-term borrowings were summarized	as follows:
Unsecured bank loans Unused short-term credit lines Range of interest rates	December 31, 2020	December 31, 2019
	$ 700,000	400,000
	$ 1,173,097	1,272,106
	0.80%~0.85%	0.95%~1.04%

There were no collaterals for the short-term borrowings of the Company.

Please refer to note 6(y) for the interest rate risk, currency risk and sensitivity analysis of the financial liabilities of the Company.

(n) Other payables

Salaries and wages payables Year-end bonus payables Employee remuneration payables Directors’ and supervisors’ remuneration payables Employee benefits liabilities Others	December 31, 2020	December 31, 2019 33,016 63,800 16,362 9,817 21,728 109,155 253,878
	$ 34,458 68,000 14,683 8,810 23,409 90,994
	$ 240,354

(o) Long-term borrowings

The long-term borrowings were summarized as follows:

Secured bank loans Less: discount on long-term borrowings Total	December 31, 2020 $ - -	December 31, 2019
		320,000 (445)
	$ -	319,555

• 198 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Recognized in: Long-term borrowings, current portion Unused long-term credit lines Range of interest rates	December 31, 2020	December 31, 2019 319,555
	$ -
	$ 800,000	320,000
	-	1.8085%

The Company signed a 3-year syndicated loan contract with Taishin International Bank and seven other Banks on November 17, 2016, with a credit line which decreases every 6 months since two years after the first appropriation date. The first and second phase will decrease by 20% of the effective credit line, and the third phase will decrease by 60%. The Company will repay the total borrowing upon maturity. Restrictions related to the contract are as follows:

Pursuant to the loan contract, for the duration of the loan, the Company must conform to the predetermined financial covenants involving special financial ratios calculated based on the annual consolidated financial statements. If the special financial ratios cannot meet the requirement, the Company should improve within nine months after the end of the fiscal year. If the adjusted financial ratios reviewed by the certified accountant meet the requirements, it will not be regarded as breach of the contract. During the period for adjustment, unused lines of credit, excluding the revolving credit extension, will be suspended until such ratios are in compliance with the contract requirement. But during the said period, the interest rate would increase to 0.125% unless the majority of the consortium agreed the exemption proposed by the Company. The financial covenants were as follows:

• (i) A maximum debt ratio of 150% should be maintained.

• (ii) A minimum current ratio of 100% should be maintained.

• (iii) A minimum times interest earned ratio of 2.5 should be maintained.

• (iv) Minimum net tangible assets of $1,600,000 should be maintained.

The Company borrowed the amount of $400,000 on August 15, 2017. As of December 31, 2020, the contract had expired and the borrwed amount had been fully repaid.

The Company signed a 5-year syndicated loan contract with E.SUN bank and six other banks at May 15, 2020, with a revolving credit line of $800,000 from the first appropriation date to maturity date, wherein $800,000 can be appropriated by using the Company's own fund and $600,000 by using commercial paper, and the combined credit line should not exceed $800,000. According to the loan contract, the Company should repay the syndicated loan contract signed on November 17, 2016 before the first appropriation date. Additionally, the date after 9 months when the contract was signed will be considered as the first appropriation date to calculate the revolving credit even if the credit line is unused after 9 months. As of December 31, 2020, the credit line had not been used.

Assets pledged as collateral for long-term loans are disclosed in note 8.

• 199 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(p) Lease liabilities

Lease liabilities
December 31, 2020 Current $ 1,966 Non-current $ 60,671 For the maturity analysis, please refer to note 6(y). The amounts recognized in profit or loss were as follows:	December 31, 2020	December 31, 2019
	$ 1,966	1,928 63,432
	$ 60,671

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 COVID-19-related rent concessions (recognized as deduction of depreciation expenses of right-of-use assets)	2020	2019
	$ 2,071	2,157
	$ 300	300
	$ 144 $ 348	144 -

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

Total cash outflow for leases	2020	2019
	$ 4,073	4,542

1. Lease of land

The Company leases land for its office space and factory. The leases of land typically run for a period of 10 years.

Lease payments for certain contracts are subject to changes in the local price index, which usually occur once a year.

The lease agreements of the Company include the options to extend the lease or terminate the lease. These options are only for the Company to have enforceable rights and the lessor does not have these rights. In the event that it is not possible to reasonably determined the period of the extended lease that will be exercisable, the related payments over the period covered by the option are not included in the lease liability.

2. Other leases

The Company leases office supplies and other equipment with lease terms of one to three years. These leases are short-term or leases of low-value items. The Company has elected not to recognize right-of-use assets and lease liabilities for these leases.

• 200 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(q) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligations at present value and plan asset at fair value are as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2020	December 31, 2019 202,792 (114,246) 88,546
	$ 209,209 (122,161)
	$ 87,048

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for its employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on the years of service and average 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 balance amounted to $122,161 as of December 31, 2020. 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 movements in present value of defined benefit obligations for the Company were as follows:

Defined benefit obligations at January 1 Current service and interest cost Remeasurement of the net defined benefit liabilities (assets) －Actuarial loss (gain) on financial assumptions change －Experience adjustment Employee benefits paid Defined benefit obligations at December 31	2020 $ 202,792 2,834 (3,486) 8,013 (944) $ 209,209	2019
		193,445 3,197 194 5,956 -
		202,792

• 201 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only 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 Remeasurement of the net defined benefit liabilities (assets) －Return on plan assets (excluding current interest cost) Contributions made by employer Employee pensions paid Fair value of plan assets at December 31	2020 $ 114,246 1,305 3,241 4,313 (944) $ 122,161	2019 105,219 1,474 3,273 4,280 - 114,246

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

Current service costs Net interest costs on net defined benefit liabilities (assets) Operating costs Selling expenses General and administrative expenses Research and development expenses Actual return on assets	2020 $ 556 973 $ 1,529 $ 1,156 58 180 135 $ 1,529 $ 4,546	2019 540 1,183 1,723 1,317 60 193 153 1,723 4,747

• 5) Actuarial assumptions

The following are the Company’s principal actuarial assumptions:

Discount rate Future salary increases	December 31, 2020 0.750% 2.000%	December 31, 2019
		1.125% 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 $4,339.

• 202 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The weighted-average lifetime of the defined benefits plans is 17.27 years.

6)

• Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

As of December 31, 2020 Discount rate (changed 0.25%) Future salary increasing rate (changed 0.25%) As of December 31, 2019 Discount rate (changed 0.25%) Future salary increasing rate (changed 0.25%)	Influences of defined benefit obligations Increased Decreased $ (7,562) 7,907 7,692 (7,388) (7,679) 8,047 7,827 (7,488)	Influences of defined benefit obligations Increased Decreased $ (7,562) 7,907 7,692 (7,388) (7,679) 8,047 7,827 (7,488)
	Increased $ (7,562) 7,692 (7,679) 7,827
		7,907 (7,388) 8,047 (7,488)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain 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 the pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2020 and 2019.

• (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 this defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligations.

Details of the Company’s pension costs under the defined contribution method were as follows:

follows:
Operating cost Selling expenses General and administrative expenses Research and development expenses	2020	2019 18,389 1,287 1,308 2,615 23,599
	$ 19,215 1,350 1,471 2,784
	$ 24,820

• 203 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(r) Income taxes

(i) Income tax expenses

The amount of income tax expenses was as follows:

Current tax expense Current period Adjustment for prior periods Deferred tax expense (benefit) Origination and reversal of temporary differences Change in unrecognized deductible temporary differences Income tax expenses	2020	2019 53,900 (4,405) 49,495 (4,072) (1,696) (5,768) 43,727
	$ 39,130 (3,578)
	35,552
	2,149 (998)
	1,151
	$ 36,703

No income tax was recognized directly in equity in 2019. The amount of income tax recognized directly in equity for 2020 was as follows:

Capital surplus - disgorgement	Amount
	$ 118

The amount of income tax recognized in other comprehensive income for 2020 and 2019 was as follows:

2019 was as follows:
Items that will not be reclassified subsequently to profit or loss: Unrealized gains (losses) from investment in equity instruments measured at fair value through other comprehensive income	2020 $ 298	2019
		-

Reconciliation of income tax and profit before tax was as follows:

• 204 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Income before income tax Income tax calculated based on the Company’s domestic tax rate Domestic investment gain under the equity method Tax-exempt income - dividend income Tax-exempt income - gains derived from the securities transactions Change in unrecognized temporary differences Investment tax credit Additional tax on undistributed earnings Adjustment for prior periods Others Total	2020 $ 270,169 $ 54,034 (641) (1,501) (1,295) (998) (10,900) 1,894 (3,578) (312) $ 36,703	2019 301,052 60,210 (137) (1,522) 27 (1,696) (7,650) - (4,405) (1,100) 43,727

• (ii) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Pension expense Temporary differences related to investment on subsidiaries	December 31, 2020 $ 73,130 157,380 $ 230,510	December 31, 2019 77,500 155,198 232,698

As of December 31, 2020 and 2019, 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.

• 2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities were as follows:

Deferred tax liabilities:

Balance on January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2020	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Others	Total
	$ - - 298	- 56 -	- 56 298
	$ 298	-	354

• 205 -

EMERGING DISPLAY TECHNOLOGIES CORP.

Notes to the Parent-Company-Only Financial Statements

Balance on January 1, 2019 Recognized in profit or loss Balance on December 31, 2019 Deferred tax assets: Balance on January 1, 2020 Recognized in profit or loss Balance on December 31, 2020 Balance on January 1, 2019 Recognized in profit or loss Balance on December 31, 2019	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income $ 856 (856)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income $ 856 (856)		Others			Total 932 (932)
	$				76 (76)
	$ -			-			-
	Inventory valuation loss			Unrealized exchange loss			Total 32,729 (1,095) 31,634 27,893 4,836 32,729
	$ 11,046 (1,756)	2,713 349		6,076 238	12,894 74
	$ 9,290	3,062		6,314	12,968
	$ 11,804 (758)	1,937 776		- 6,076	14,152 (1,258)
	$ 11,046	2,713		6,076	12,894

(iii) Assessment of tax

The Company’s tax returns for the years through 2018 were assessed by the R.O.C tax authority.

(s) Capital and other equities

(i) Ordinary shares

As of December 31, 2020 and 2019, the authorized share capital of the Company amounted to $3,500,000, comprising 350,000 thousand shares with a par value of New Taiwan dollars (TWD) 10 per share.

Reconciliation of shares issued by the Company was as follows:

(Unit: thousands of shares)

Balance on January 1 Treasury shares retired Balance on December 31	Ordinary shares 2020 2019 162,408 174,408 - (12,000) 162,408 162,408
	2020
	162,408 -
	162,408

As of December 31, 2020 and 2019, the weighted-average numbers of shares of common stock outstanding excluded treasure stock and the common stock held by the Company’s subsidiaries were both 148,613 thousand shares.

• 206 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(ii) Capital surplus

The balances of capital surplus were as follows:

Treasury share transactions Disgorgement Total	December 31, 2020 $ 14,950 473	December 31, 2019 4,397 - 4,397
	$ 15,423

According to the Company Act, any realized capital surplus is initially used to cover any deficit, and the balance, if any, could be transferred to common stock as stock dividend or distributed as cash based on a resolution approved by the stockholders. Realized capital surplus includes the premium derived from the issuance of shares of stock in excess of par value and endowments received by the Company. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the combined amount of any portions capitalized in any one year may not exceed 10% of paid-in capital.

(iii) Retained Earning

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. Only if the legal reserve has attained to the paid-in capital could be the exception, besides, special reserves are supposed to set aside or reversed in accordance with the relevant regulations or as required by the government. And then any remaining profit together with any undistributed retained earnings, no more than 80% of current year’s distributable earnings, shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

The Company’s industry is currently in a steady growth phase. The Company’s dividend policy is to pay dividends from surplus considering the future capital budget requirement and cash requirements, and taking into the extent of dilution on earnings per share and influence upon returns on equity. Therefore, the future distribution of earnings shall be distributed in cash dividends and/or stock dividends. The ratio of cash dividends shall not be less than 50% of the Company’s total dividends for the year.

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 Rule No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as a special earnings reserve during earnings distribution. The amount to be reclassified should equal to the current-period total net reduction of other shareholders’ equity. Similarly, a portion of undistributed prior-period earnings

• 207 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

shall be reclassified as a special earnings reserve (and 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. As of December 31, 2020 and 2019, resolutions were passed during the board meeting for the Company to reclassify $102,612 and $112,571, respectively, as a special earnings reserve.

In accordance with Rule No. 1010047490 issued by the FCS on November 21, 2012, if the market value of the Company’s shares is lower than the carrying value of the Company’s shares held by the subsidiaries at year-end, the Company should retain a special reserve amounting to the difference between the market value and the carrying value, based upon the Company’s ownership percentage in the subsidiaries. When market value rebounds, the Company could reverse the special reserve. As of December 31, 2020 and 2019, resolutions were passed during the board meeting for the Company to reclassify $0 and $38,736, respectively, as a special earnings reserve.

3) Earnings distribution

According to the resolutions of the annual stockholders’meetings held on June 12, 2020, and June 4, 2019, the appropriations of dividend from the distributable retained earnings of 2019 and 2018 were as follows:

retained earnings of 2019 and 2018	were as follows:
Dividends distributed to ordinary shareholders (New Taiwan Dollar) Cash	2019	2018 0.5
	$ 1.2

• (iv) Other equity (net of tax)

Balance on January 1, 2020 The Company Subsidiaries The company - disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2020	Foreign exchange differences arising from foreign operation	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Total
	$ (14,111) (4,355) 170 -	(88,501) 19,634 (22,115) (8,537)	(102,612) 15,279 (21,945) (8,537)
	$ (18,296)	(99,519)	(117,815)

• 208 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Balance on January 1, 2019 The Company Subsidiaries The company - disposals of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2019	Foreign exchange differences arising from foreign operation	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Total
	$ (8,271) (5,166) (674) -	(104,299) 30,292 (3,980) (10,514)	(112,570) 25,126 (4,654) (10,514)
	$ (14,111)	(88,501)	(102,612)

(t) Treasury shares

The movements of treasury shares of the Company were as follows:

Reason to repurchase January to December, 2020 To transfer shares to the Company’s employee January to December, 2019 To transfer shares to the Company’s employee	January 1	Shares repurchase -	(Unit: thousands) Shares retired December 31 - 5,000 12,000 5,000
	5,000 12,000		-
		5,000	12,000

The Board of Directors had resolved during the board meeting held on January 8, 2019 for the Company to repurchase its share as treasury shares. The Company’s Board of Directors approved resolutions to retire treasury stocks amounting to 12,000 thousand shares on March 8, 2019. The related registration procedures had been completed.

In accordance with Article 28-2 of the Securities and Exchange Act requirements as stated above, the number of shares repurchased should not exceed 10 percent of all shares outstanding. Also, the value of the repurchased shares should not exceed the sum of the Company’s retained earnings, share premium, and realized capital reserves. The aforementioned repurchased shares and amount did not exceed statutory limit.

As of December 31, 2020 and 2019, the costs of treasury shares both amounted to $50,739.

In accordance with the requirements of Securities and Exchange Act, treasury shares held by the Company should not be pledged, and do not hold any shareholder rights before their transfer.

Ying Dar Corp. and Bae Haw Corp., subsidiaries of the Company, held the Company’s common stock. In 2020 and 2019, Ying Dar Corp. and Bae Haw Corp. did not purchase or dispose of any of the Company’s shares. As of December 31, 2020 and 2019, Ying Dar Corp. and Bae Haw Corp. together held 8,794 thousand shares of the Company’s common stock. The cost was $122,282 which was recognized in treasury shares. As of December 31, 2020 and 2019, their market values amounted to $169,292 and $154,781, respectively.

• 209 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(u) Earnings per share

The calculation of basic earnings per share and diluted earnings per share were as follows:

Basic earnings per share Profit attributable to ordinary shareholders of the Company Weighted-average number of ordinary shares (expressed in thousands of shares) Expressed in New Taiwan dollars Diluted earnings per share Profit attributable to ordinary shareholders of the Company Weighted-average number of ordinary shares (expressed in thousands of shares Effect of potentially dilutive ordinary stock- Employee share bonus (expressed in thousands of shares) Weighted-average number of ordinary shares - diluted (expressed in thousands of shares) Expressed in New Taiwan dollars	2020	2020	2019
	$ 233,466		257,325
	148,613		148,848
	$ 1.57		1.73
	$ 33,466		257,325
		148,613 962	148,848 1,023 149,871
		149,575
	$ 1.56		1.72

In computing above earnings per share of ordinary shares, the weighted-average numbers of shares of ordinary shares outstanding excluded 8,794 thousand shares of ordinary shares held by the Company’s subsidiaries as treasury shares.

(v) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets: Europe America Others Total	2020 $ 2,092,088 1,067,849 482,496 $ 3,642,433	2019 2,254,107 1,133,778 603,587 3,991,472

• 210 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Major products: Liquid crystal display modules Capacitive touch panel and capacitive touch panel module Others Total	2020	2019 1,542,823 2,376,660 71,989 3,991,472
	$ 1,189,224 2,379,730 73,479
	$ 3,642,433

(ii) Contract balances

(ii) Contract balances
Accounts receivables (including related parties) Less: allowance for impairment Total Contract liabilities-unearned revenue (recognized in other current liabilities)	December 31, 2020	December 31, 2019	January 1, 2019
	$ 665,332 (5,481)	629,633 (18,771)	563,879 (19,694)
	$ 659,851	610,862	544,185
	$ 33,286	12,942	5,348

For details on accounts receivables and allowance for impairment, please refer to note 6 (d).

The amounts of revenue recognized for the years ended December 31, 2020 and 2019 that were included in the contract liability balance at the beginning of the period were $4,942 and $4,210, respectively.

• (w) Employee remuneration and directors’ and supervisors’ remuneration

In accordance with the Articles of incorporation, the Company should contribute no less than 5% of the profit as employee remuneration and less than 3% as directors’ and supervisors’ 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 recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

For the year ended December 31, 2020 and 2019, the Company estimated its employee remuneration amounting to $14,683 and $16,362, and directors’ and supervisors’ remuneration amounting to $8,810 and $9,817, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company’s articles. These remunerations were expensed under operating costs or operating expenses during 2020 and 2019. The aforementioned amounts, as stated in the parent-company-only financial statements, are identical to those of the actual distributions approved by Board of Director for 2020 and 2019. Related information would be available at the Market Observation Post System website.

• 211 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(x) Net other income (expenses)

Net other income (expenses) consists of income from lending space.

• (y) Non-operating income and expenses

• (i) Interest income

The details of interest income were as follows:

Interest income from bank deposits Interest income from loans to subsidiaries Others (ii) Other income The details of other income were as follows: Dividend income Others (iii) Other gains and losses The details of other gains and losses were as Foreign exchange losses Net gains on financial assets (liabilities) measured at fair value through profit or loss Gains on disposals of property, plant and equipment Others (iv) Finance costs The details of finance costs were as follows: Interest expenses Bank loans Lease liabilities Management fee of syndicated loan	2020 $ 9,472 103 88 $ 9,663 2020 $ 7,646 3,544 $ 11,190 follows: 2020	2019 20,175 1,312 164 21,651 2019 7,600 2,001 9,601 2019 (33,768) 3,795 367 (569) (30,175) 2019 10,828 2,157 250 13,235
	$ (70,170) 1,818 - (328)
	$ (68,680)
	2020 8,482 2,071 300
	$ 10,853

• 212 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(z) Financial Instruments

• (i) Credit risk

• 1) Credit risk exposure

The Company’s maximum amount exposed to credit risk was the carrying amount of financial assets and contract assets.

• 2) Concentration of credit risk

As of December 31, 2020, two customers accounted for 71% of total accounts receivables. As of December 31, 2019, one customer accounted for 46% of total accounts receivables.

• 3) Credit risk of accounts receivables

For credit risk exposure of accounts receivables, please refer to note 6(d).

Other financial assets at amortized cost include other receivables, refundable deposits, and restricted time deposits. All of these financial assets are considered to have low risk, and thus, the credit loss allowance recognized during the period was limited to 12 months expected credit losses. There was no loss allowance recognized. Please refer to Note 6(e).

(ii) Liquidity Risk

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

December 31, 2020 Non-derivative financial liabilities Unsecured loans (floating rate) Accounts payables (no interest) Accounts payables-related parties Notes payables (no interest) Other payables (no interest) Other payables-related parties (no interest) Lease liabilities (fixed interest) Guarantee deposits (no interest) Derivative financial liabilities Swap Contract: Cash in Cash out	Carrying amount	Contractual cash flows	Within 6 months	6-12 months	1-2 years	2-5 years	Over 5years
	$ 700,000 355,622 90,862 1,234 240,354 7,984 62,637 34 195 -	(700,756) (355,622) (90,862) (1,234) (240,354) (7,984) (95,682) (34) 28,480 (28,703)	(700,756) (355,622) (90,862) (1,234) (240,354) (7,984) (1,986) 28,480 (29,703)	- - - - - - (1,986) - -	- - - - - - (3,973) - -	- - - - - - (11,919) (34) - -	- - - - - - (75,818) - -
	$ 1,458,922	(1,492,751)	(1,399,021)	(1,986)	(3,973)	(11,953)	(75,818)

• 213 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

December 31, 2019 Non-derivative financial liabilities Secured loans (floating rate) Unsecured loans (floating rate) Accounts payables (no interest) Accounts payable-related parties Notes payables (no interest) Other payables (no interest) Other payables-related parties (no interest) Lease liabilities (fixed interest) Guarantee deposits (no interest) Derivative financial liabilities Swap Contract: Cash in Cash out	Carrying amount	Contractual cash flows	Within 6 months	6-12 months	1-2 years	2-5 years	Over 5 years
	$ 319,555 400,000 385,101 96,640 307 98,087 7,471 65,360 34 994 -	(323,599) (400,534) (385,101) (96,640) (307) (98,087) (7,471) (100,921) (34) 89,940 (91,191)	(2,886) (400,534) (385,101) (96,640) (307) (98,087) (7,471) (2,012) 89,940 (91,191)	(320,713) - - - - - - (2,012) - -	- - - - - - - (4,023) (34) - -	- - - - - - - (12,070) - -	- - - - - - - (80,804) - -
	$ 1,373,549	(1,413,945)	(994,289)	(322,725)	(4,057)	(12,070)	(80,804)

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

• (iii) Currency risk

• 1) Exposure to foreign currency risk

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

Financial assets Monetary items USD JPY CNY EUR Non-Monetary items USD Financial liabilities Monetary items USD JPY EUR Non-Monetary items USD	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2019 Foreign currency Exchange rate TWD 64,391 29.98 1,930,451 18,491 0.2760 5,104 176 4.305 757 7 33.59 225 3,802 29.98 113,978 11,055 29.98 331,418 40,745 0.2760 11,246 11 33.59 386 3,000 29.98 89,940	December 31, 2019 Foreign currency Exchange rate TWD 64,391 29.98 1,930,451 18,491 0.2760 5,104 176 4.305 757 7 33.59 225 3,802 29.98 113,978 11,055 29.98 331,418 40,745 0.2760 11,246 11 33.59 386 3,000 29.98 89,940	December 31, 2019 Foreign currency Exchange rate TWD 64,391 29.98 1,930,451 18,491 0.2760 5,104 176 4.305 757 7 33.59 225 3,802 29.98 113,978 11,055 29.98 331,418 40,745 0.2760 11,246 11 33.59 386 3,000 29.98 89,940
	Foreign currency	Exchange rate	TWD	Foreign currency	Exchange rate
	$ 57,282 52,538 4,021 75 2,566 11,735 15,991 72 1,000	28.48 0.2763 4.377 35.02 28.48 28.48 0.2763 35.02 28.48	1,631,396 14,516 17,601 2,627 73,070 334,207 4,418 2,534 28,480	64,391 18,491 176 7 3,802 11,055 40,745 11 3,000	29.98 0.2760 4.305 33.59 29.98 29.98 0.2760 33.59 29.98	1,930,451 5,104 757 225 113,978 331,418 11,246 386 89,940

• 2) Sensitivity analysis

The Company’s exposure to foreign currency risk arises from the translation of the cash and cash equivalents, accounts receivables, other receivables, financial assets and liabilities measured at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, accounts payables, and other payables. As of December 31, 2020 and 2019, if the exchange rate of the TWD versus the USD, CNY, JPY, and EUR have increased or decreased by 1%, given no changes in other factors, profit after tax would have increased or decreased by $10,843 and $11,981, and other comprehensive income after tax would have increased or decreased by $114 and $0, respectively. The analysis is performed on the same basis of prior year.

• 214 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• 3) Exchange gains and losses on monetary items

For the years 2020 and 2019, foreign exchange gains (losses) (including realized and unrealized portions) amounted to $(70,170) and $(33,768), respectively.

• (iv) Interest rate analysis

For the Company’s financial liabilities exposed to interest rate risk, please refer to the attached note about liquidity risk.

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 0.25% when reporting to management internally, which also represents the Company management’s assessment of the reasonably possible interest rate change.

If interest rates had increased or decreased by 0.25% basis points, with all other variables held constant, the Company’s profit after tax for the years ended 2020 and 2019 would have been decreased or increased by $1,400 and $1,440, respectively. This is mainly as a result of liabilities bearing floating interest rates.

(v) Other price risk

If the prices of equity securities change at reporting date, with all other variables held constant, the influences were as follows:

Prices of securities at reporting date Increase 3% Decrease 3%	2020 Other comprehensive income after tax		2019	Net income after tax 1,296 (1,296)
		Net income after tax	Other comprehensive income after tax
	$ 5,016	1,412	3,646
	$ (5,016)	(1,412)	(3,646)

• (vi) Fair value

1) Fair value hierarchy

The fair value of financial assets and liabilities at fair value through profit or loss and financial assets at fair value through other comprehensive income are measured on a recurring basis. The carrying amount and fair value of the Company’s financial assets and liabilities, including the information on fair value hierarchy are stated below; 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:

• 215 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Financial assets at FVTPL Debt investment with quoted market price Financial assets at FVOCI Equity instrument with quoted market prices Equity instrument at fair value without quoted market prices Subtotal Financial assets at amortized cost Cash and cash equivalents Accounts receivables (including related parties) Other receivables Restricted time deposits Refundable deposits (recognized in other non-current financial assets) Subtotal Total financial assets Financial liabilities at FVTPL Derivative financial liabilities Financial liabilities at amortized cost Bank loans Notes payable Accounts payables (including related parties) Other payables (including related parties) Lease liabilities Guarantee deposits Subtotal Total financial liabilities Financial assets at FVTPL Derivative financial assets Debt investment with quoted market price Subtotal		December 31, 2020	December 31, 2020	December 31, 2020
	Carrying amount $ 58,817 139,297 30,746 170,043 1,159,414 659,851 5,510 1,525 5,834 1,832,134 $ 2,060,994 $ 195 700,000 1,234 446,484 248,338 62,637 34 1,458,727 $ 1,458,922		Fair Value
		Level 1 Level 2 Level 3 58,817 - - 139,297 - - - - 30,746 - - - - - - - - - - - - - - - - 195 - - - - - - - - - - - - - - - - - - - December 31, 2019			Total
					58,817 139,297 30,746 - - - - - 195 - - - - - -
	Carrying amount $ 76 54,018 54,094		Fair Value
		Level 1 - 54,018	Level 2 76 -	Level 3 - -	**Total **
					76 54,018

• 216 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

Financial assets at FVOCI Equity instrument with quoted market prices Equity instrument at fair value without quoted market prices Subtotal Financial assets at amortized cost Cash and cash equivalents Accounts receivables (including related parties) Other receivables (including related parties) Restricted time deposits Refundable deposits (recognized in other non-current financial assets) Subtotal Total financial assets Financial liabilities at FVTPL Derivative financial liabilities Financial liabilities at amortized cost Bank loans Notes payables Accounts payables (including related parties) Other payables (including related parties) Lease liabilities Guarantee deposits Subtotal Total financial liabilities		December 31, 2019	December 31, 2019	December 31, 2019
	Carrying amount		Fair Value
		Level 1 87,914 - - - - - - - - - - - -	Level 2 - - - - - - 994 - - - - - -	Level 3 - 33,552 - - - - - - - - - - -	Total
	87,914 33,552				87,914 33,552 - - - - 994 - - - - - -
	121,466
	1,298,535 610,862 39,052 1,543 2,866
	1,952,858
	$ 2,128,418
	$ 994
	$ 719,555 307 481,741 105,558 65,360 34
	1,372,555
	$ 1,373,549

The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

• － Level 1: quoted prices (unadjusted) in the active markets for identified assets or liabilities.

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

• － Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

• 217 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• 2) Valuation techniques for financial instruments not measured at fair value

• 2.1 Financial assets measured at amortized cost

If the quoted prices in active markets are available, the market price is established as the fair value. However, if quoted prices in active markets are not available, the fair value will be estimated by valuation technique or the prices quoted by competitors.

2.2 Financial assets and financial liabilities measured at amortized cost

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

• 3) Valuation techniques for financial instruments measured at fair value

Non-derivative financial instruments

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. Quoted prices of major stock exchanges and quoted prices of government bonds are the basis for measuring the fair value of stocks listed on an exchange, stocks listed on the OTC, and debt instruments with quoted prices in an active market.

The fair values of the Company’s listed stocks and open-end funds with standard terms and conditions traded in an active markets were determined by the quoted market prices.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments using the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date. Using discounted cash flow method to calculate fair value, the main assumption is to reflect monetary time value and return of invest risk to discount and measure based on investee’s estimated future cash flow.

Derivative financial instruments

The fair value of swap contracts is based on quoted prices from the counterparty.

• 4)

• Transfer between level 1 to level 2

There was no transfer between the fair value hierarchy levels for the years ended December 31, 2020 and 2019.

• 5) Movement of financial assets measured at fair value through other comprehensive income categorized as Level 3.

Balance on January 1, 2020 Recognized in other comprehensive income Balance on December 31, 2020	Financial assets measured at FVOCI Unquoted equity instruments $ 33,552 (2,806) $ 30,746

• 218 -

EMERGING DISPLAY TECHNOLOGIES CORP.

Notes to the Parent-Company-Only Financial Statements

Balance on January 1, 2019 Reclassification from prepayment for investments Recognized in other comprehensive income Balance on December 31, 2019	Financial assets measured at FVOCI Unquoted equity instruments $ 31,428 2,700 (576)
	$ 33,552

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

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

The Company’s equity investments without active market in Level 3 have more than one significant unobservable inputs. The significant unobservable inputs of equity investments without active market are individually independent, and there is no correlation between them.

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 Financial assets at fair value through other comprehensive income-equity investments without an active market	Valuation technique Discounted Cash Flow Method Net Asset Value Method	Significant unobservable inputs ‧Continuing growth rate (0.48% and 2.10%, respectively, as of December 31, 2020 and 2019) ‧Weighted average cost of capital (10.52% and 9.47%, respectively, as of December 31, 2020 and 2019) ‧Market illiquidity discount rate (60.73% and 37.21%, respectively, as of December 31, 2020 and 2019) ‧Non-controlling interests discount rate (29.87% for both December 31, 2020 and 2019) ‧Net Asset Value	Inter-relationship between significant unobservable inputs and fair value measurement
			‧The higher the continuing growth rate is, the higher the estimated fair value would be. ‧The higher the weighted average cost of capital is, the lower the estimated fair value would be. ‧The higher the market illiquidity discount rate is, the lower the estimated fair value would be. ‧The higher the non-controlling interests discount is, the lower the estimated fair value would be. N/A

• 219 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• 7) Fair value measurements in Level 3 - sensitivity analysis of reasonably possible alternative assumptions

For fair value measurements in Level 3, changing one or more of the assumptions to reflect reasonably possible alternative assumptions would have the following effects on other comprehensive income:

Inputs December 31,2020 Continuing growth rate 0.48% Weighted average cost of capital 10.52% Market illiquidity discount rate 60.73% Non-controlling interests discount rate 29.87% December 31,2019 Continuing growth rate 2.10% Weighted average cost of capital 9.47% Market illiquidity discount rate 37.21% Non-controlling interests discount rate 29.87%	Fluctuation in inputs 0.1% 0.1% 1% 1% 0.1% 0.1% 1% 1%	Other comprehensive income Favorable Unfavorable $ 100 100 50 50 280 280 160 160 $ 270 250 340 320 280 280 250 250
		Favorable $ 100 50 280 160 $ 270 340 280 250

The favorable and unfavorable effects represent the changes in fair value, which 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.

• (aa) Financial risk management

• (i) Overview

The Company has exposures to the following risks arising from its financial instruments ：

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

In this note expressed the information of risk exposure and objectives, policies and process of risk measurement and management. For detailed information, please refer to the related notes of each risk.

• 220 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(ii) Structure of risk management

The Board of Directors has the overall responsibility for the establishment and oversight of the Company’s risk management framework. Every department is responsible for planning and controlling the risk management of the Company’s operation and reports to the Board of Directors regularly.

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 in products and services offered. 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.

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

• (iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, bank deposits, derivative financial instruments, and investment securities.

1) Accounts receivables and other receivables

The credit risk is impacted by the individual situation of each client. The Company continuously monitors the information concerning client credit risk factors, such as the default risk of the industries and countries in which the customers operate.

According to the credit policy, the Company has to evaluate the credit of each new customer before setting the payment and delivery terms. The evaluations include external credit ratings, if available, and bank references. The Company reviews credit limits periodically and requires customers to pay in advance when the customers’credit ratings do not meet the benchmark.

2) Investment

The credit risk exposed in the bank deposits, derivative financial instruments, and other financial instruments is measured and monitored by the finance department. Since the Company’s transactions were with financial institutions with good credit ratings, there were no noncompliance issues, and therefore, there is no significant credit risk. Investments in other financial instruments are measured and monitored by the finance department with the instruction from the chairman to ensure each risk of the investment target is under the Company’s acceptable level.

• 221 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• (iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with 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.

As of December 31, 2020 and 2019, the Company had unused credit lines amounting to $1,973,097 and $1,592,106, respectively.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, which 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 the market risk exposures within acceptable parameters, while optimizing the return.

The Company engages in derivative financial instrument trading in order to manage the market risk, thus generating financial liabilities or financial assets. The execution of those transactions was under the Board of Directors’instruction.

• 1) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Company, primarily the NTD. The currencies used in these transactions are the NTD, USD, JPY, and EUR.

At any point in time, the Company’s principle is to hedge using the net values after offsetting payables and receivables or assets and liabilities which are generated by business operations. The Company mainly hedges its currency risk using foreign exchange agreements wherein the maturity date is less than six months.

2)

Interest rate risk

The Company adopts a policy to ensure the exposure to changes in interest rates on borrowings is evaluated based on the trend in market interest rates. The Company can manage its interest rate risk through maintaining an appropriate portfolio of floating interest rates and fixed interest rates.

• 3) Other market price risk

The company is exposed to equity price risk due to the investments in equity instruments and mutual funds that contain unsure future prices. Therefore, the Company monitors and manages the equity investments by holding a varied investment portfolio and regularly updating the information on equity instruments and mutual funds investment.

• 222 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(ab) Capital management

The Board of Directors’policy is to maintain a strong capital base so as to maintain investors, creditors and market confidence and to sustain future development of the business. Capital consists of ordinary shares, capital surplus, retained earnings, and other equity of the Company. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Company manages its 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, repurchase treasury shares, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilities.

The Company use the debt-to-equity ratio to manage their capital. This ratio is the total net debt divided by the total capital. The net debts from the balance sheet are 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. As in 2020, the Company’s capital management strategy is consistent with the prior year. The Company’s debt-to-equity ratio at the end of the reporting period were as follows:

Net debt Total equity Debt-to-equity ratio	December 31, 2020	December 31, 2019 398,217 1,892,106 21.05%
	$ 478,695
	$ 1,939,757
	24.68%

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

Reconciliation of liabilities arising from financing activities were as follows:

Short-term borrowings Long-term borrowings (including long-term borrowings, current portion) Lease liabilities Total liabilities from financing activities Short-term borrowings Long-term borrowings (including long-term borrowings, current portion) Lease liabilities Total liabilities from financing activities	January 1, 2020	Cash flows	Cash flows	Non-Cash changes Amortization Others Changes in lease payments December 31, 2020 - - - 700,000 445 - - - - (817)(Note) (348) 62,637 445 (817) (348) 762,637 Non-Cash changes Cash flows Amortization December 31, 2019 30,000 - 400,000 (80,000) 667 319,555 (1,866) - 65,360 (51,866) 667 784,915	Non-Cash changes Amortization Others Changes in lease payments December 31, 2020 - - - 700,000 445 - - - - (817)(Note) (348) 62,637 445 (817) (348) 762,637 Non-Cash changes Cash flows Amortization December 31, 2019 30,000 - 400,000 (80,000) 667 319,555 (1,866) - 65,360 (51,866) 667 784,915	Non-Cash changes Amortization Others Changes in lease payments December 31, 2020 - - - 700,000 445 - - - - (817)(Note) (348) 62,637 445 (817) (348) 762,637 Non-Cash changes Cash flows Amortization December 31, 2019 30,000 - 400,000 (80,000) 667 319,555 (1,866) - 65,360 (51,866) 667 784,915	Non-Cash changes Amortization Others Changes in lease payments December 31, 2020 - - - 700,000 445 - - - - (817)(Note) (348) 62,637 445 (817) (348) 762,637 Non-Cash changes Cash flows Amortization December 31, 2019 30,000 - 400,000 (80,000) 667 319,555 (1,866) - 65,360 (51,866) 667 784,915	Non-Cash changes Amortization Others Changes in lease payments December 31, 2020 - - - 700,000 445 - - - - (817)(Note) (348) 62,637 445 (817) (348) 762,637 Non-Cash changes Cash flows Amortization December 31, 2019 30,000 - 400,000 (80,000) 667 319,555 (1,866) - 65,360 (51,866) 667 784,915
					Others		Changes in lease payments
	$ 400,000 319,555 65,360	300,000 (320,000) (1,558)		- 445 -	- - (817)(Note) (817)		- - (348)
	$ 784,915	(21,558)		445			(348)
				Cash flows		Non-Cash	changes
						Amortization
	$ 370,000 398,888 67,226			30,000 (80,000) (1,866)		- 667 -
	$ 836,114			(51,866)		667		784,915

Note: Reduction of right-of-use assets

• 223 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(7) Related-party transactions:

• (a) Names and relationship with related parties

The followings are subsidiaries and other entities that have had transactions with the Company during the periods covered in the parent-company-only financial statements.

Name of related party Emerging Display Technologies Corp., U.S.A. (EDTA) Emerging Display International (Samoa) Corp. (EDTS) EDT-Europe ApS (EDTE) Tremendous Explore Corp. (EDT-B.V.I) (Note) Emerging Display Technologies Korea (EDTK) EDT-Japan Corp. (EDTJ) Ying Dar Investment Development Corp. (Ying Dar Corp.) Bae Haw Investment Development Corp. (Bae Haw Corp.) Ying Cheng Investment Development Corp. (Ying Cheng Corp.) Dong Guan Emerging Display Limited (EDT-Dong Guan)

Relationship with the Company

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Sub-subsidiary

Note: Tremendous Explore Corp. was dissolved in July, 2020. The related liquidation procedures had been completed.

• (b) Significant transactions with related parties

• (i) Operating revenue

The amounts of significant sales by the Company to related parties were as follows:

Subsidiaries - EDTA	2020	2019 1,133,461
	$ 1,066,651

As of December 31, 2020 and 2019, the unrealized profit from sales to related parties amounted to $15,309 and $13,567, respectively, which were included in adjustment to investments accounted for using equity method in the accompanying balance sheets.

• 224 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The selling prices for sales to subsidiaries were not significantly different from those for third-party customers. The collection terms were three months, which were not significantly different from those of other customers.

• (ii) The receivables from related parties were as follows:

	Relationship Subsidiaries - EDTA	December 31, 2020	December 31, 2019 289,755
		$ 202,276

• (iii) Consigned for processing

The Company’s sales of raw material (including the Company purchased on behalf of the related parties) and semi-finished products through EDT-B.V.I to EDT-Dong Guan were considered as contracted processing. The processing cost and material cost in 2020 and 2019 amounted to $179,986 and $210,727, respectively. The payables resulting from the above transactions were as follows, and were included in accounts payables-related parties in the accompanying balance sheets.

Sub-subsidiary - EDT-Dong Guan	December 31, 2020 $ 90,862	December 31, 2019 96,640

• (iv) Commission expenses

The details of commission expenses paid to subsidiaries were as follows:

Subsidiaries EDTE EDTJ Other subsidiaries	2020	2019 54,292 13,683 4,371
	$ 56,204 14,547 4,122
	$ 74,873	72,346

The details of commission expenses payables to subsidiaries, included in accounts payables-related parties in accompanying balance sheets, were as follows:

Subsidiaries EDTE EDTA	December 31, 2020	December 31, 2019 7,409 62
	$ 7,920 64
	$ 7,984	7,471

• 225 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

(v) Loans to related parties

The loans to related parties were as follows:

The loans to related parties were as follows:
Subsidiaries－EDTA	December 31, 2020	December 31, 2019
	$ -	20,986

The interest is based on US dollars and floating rate. In 2020 and 2019, the interest rates ranged between 3.96% and 3.85%~4.79%, with the interest revenue amounting to $103 and $1,312, respectively. The loans to related parties were unsecured. There are no expected credit losses required after the management’s assessment. As of December 31, 2020, the loans to related parties had been fully collected. Also, the interest receivables had been received by the Company as of December 31, 2020 and 2019.

(vi) Others

Ying Dar Corp., Bae Haw Corp., and Ying Cheng Corp. have used the Company’s address as their office addresses since July 1, 2019. In 2020 and 2019, the Company received $12 and $6, respectively, from each of them, with a total of $36 and $18, respectively, which were included in other income in the accompanying statements of comprehensive income.

During the years ended December 31, 2020 and 2019, cash dividends paid to subsidiaries were $10,553 and $4,397, respectively. In addition, cash dividends received from subsidiaries were $3,006 and $3,434, respectively, which were recognized as the deduction of investments accounted for using equity method in the accompanying balance sheets.

Ying Dar Corp. and Bae Haw Corp. are the directors of the Company. In 2020, the estimated and actual directors’ and supervisors’ remuneration amounted to $4,417, including the estimated remuneration payable of $1,800, which was recognized in other payables in the accompanying balance sheets.

• (c) Key management personnel compensation

• (i) Key management personnel compensation comprised:

Short-term employee benefits Post-employment benefits Termination benefits Other long-term benefits Share-based payments	2020	2019
	$ 27,401 415 - - -	28,057 513 - - - 28,570
	$ 27,816

• 226 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• (ii) In 2020, according to the requirement under Section 157 Short-swing Trading of the Securities and Exchange Act, the amount arising from the exercise of disgorgement after tax was $473, which was recognized as capital surplus.

(8) Pledged assets:

The carrying values of pledged assets were as follows:

Pledged assets Restricted time deposits-current Property, plant and equipment-buildings	Purpose Guarantee for customs Guarantee for long-term borrowings	December 31, 2020	December 31, 2019 1,543 225,474 227,017
		$ 1,525 -
		$ 1,525

(9) Commitments and contingencies:

• (a) As of December 31, 2020 and 2019, the Company’s unused letters of credit for purchases of raw materials and equipment amounted to $4,422 and $16,074, respectively.

• (b) As of December 31, 2020 and 2019, the Company has signed contracts for the purchase of equipment. The unrecognized contingencies of those contracts amounted to $1,995 and $590, respectively.

(10) Losses Due to Major Disasters: None.

(11) Subsequent Events: None.

(12) Other:

The followings were the summary statement of current period employee benefits, depreciation and amortization expenses by function:

By function By item	2020	2020	2020	2019	2019	2019
	Cost of sales	Operating expenses	Total	Cost of sales	Operating expenses	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	381,695 41,252 20,371 - 3,267 55,461 308	126,777 8,383 5,978 11,540 618 4,642 1,057	508,472 49,635 26,349 11,540 3,885 60,103 1,365	375,273 40,878 19,706 - 4,039 64,697 562	114,236 7,688 5,616 11,425 677 3,975 458	489,509 48,566 25,322 11,425 4,716 68,672 1,020

• 227 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

The additional information of number of employees and employee benefits was as follows:

Number of employees Number of non-employee directors Average employee benefits Average employee salary Adjustment of average employee salary Remuneration of supervisors	2020	2019
	870	855
	6	6
	$ 681	669
	$ 589	577
	2.1% $ 2,945	2,934

The Company’s remuneration policy including directors, supervisors, managers, and employees is stated below:

1. Remuneration policy for directors and supervisors

Directors’ and supervisors’ remuneration includes transportation allowance and remuneration of earnings distribution. The transportation allowance is based on the number of attendance of the directors and supervisors, which is $10 each time. In accordance with section 221 in the Articles of incorporation, the remuneration of earnings distribution should be contributed no more than 3% of the earnings. The amount is first stipulated by the salary and remuneration committee to be approved by the Board of Directors, and then proposed during the shareholders’ meeting for approval. The amount of final payment depends on the decision made at the shareholders’ meeting.

2. Remuneration policy for managers

Managers’ remuneration includes salary, bonus, and employee remuneration, which is calculated based on the position and responsibility of the individual. Industry level will also be taken into consideration.

• (1) Salary:

The salary is based on personal experiences, performance, evaluation of work, market salary level, seniority, position, and contract.

• (2) Year-end bonus:

Yearend bonus is paid based on the performance of the individual or the Company, historical experiences, and retention of professional employees.

• (3) Employee remuneration:

Employee remuneration is distributed based on personal performance, overall contribution, and special achievements.

• 228 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

1. Remuneration policy for employees:

Considering the benefit level in same industry and personal ability, contribution, and performance, the employee’s remuneration policy, which is enacted according to Salary Management Regulation of the Company, is positively correlated to business performance. The overall remuneration portfolio mainly contains basic salary, bonus, and dividends.

The standards of remuneration are the basic salary, which is decided based on the policy of the Company and the competitiveness of its position in the market, as well as bonus and dividends, which are paid according to the achievement of each employee and department goals along with business operation. The remuneration policy of the Company is in compliance with the law and regulations, taking into consideration the needs of employees and business operation goals to create a harmonious working relationship.

• 229 -

EMERGING DISPLAY TECHNOLOGIES CORP.

Notes to the Parent-Company-Only Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company for 2020:

• (i) Loans to other parties:

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period (Note 1)	Ending balance (Note 1)	Actual usage amount during the period (Note 1)	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Loss allowance	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing	Remark
													Item	Value
0	The Company	Emerging Display Technologies Corp., U.S.A.	Other receivables-related parties	YES	41,296 (USD1,450,000)	-	-	3.96%	The need for short- term financing	-	The need for working capital	-	-	-	193,976 (Note 2)	775,903 (Note 2)

• Note 1: The amounts denominated in foreign currencies were translated using the rate of exchange at December 31, 2020.

• Note 2: The allowable amount of financing provided to individual company cannot exceed 10% of the net worth of the Company. The total allowable amount of financing provided to others cannot exceed 40% of the net worth of the Company.

• (ii) Guarantees and endorsements for other parties: None.

• 230 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• (iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

Name of security holder	Name of security and type	Relationship between issuer of security and the security holder	Financial statement account		December 31, 2020	December 31, 2020	December 31, 2020	Remarks
				Units (shares)	Carrying value	Percentage of ownership	Fair value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Ying Dar Investment Development Corp. Ying Dar Investment Development Corp. Ying Dar Investment Development Corp.. Bae Haw Investment Development Corp. Bae Haw Investment Development Corp. Bae Haw Investment Development Corp. Ying Cheng Investment Corp.	Ascendax Venture Capital Corp. stock Chenfeng Optronics Corp. stock Fubon Financial Holding Co., Ltd. preference stock Innolux Corp. stock Fubon Financial Holding Co., Ltd. stock E.SUN Financial Holding Co., Ltd. stock Far Eastern New Century Corp. Nan Ya Plastics Corporation stock Pegatron Co., Ltd. stock Coasia Microelectronics Corp. stock Shian Yih Electronic Co., Ltd. stock Becton, Dickinson and Company stock JPMorgan Multiple Income Fund (USD) Shian Yih Electronic Co., Ltd. stock AGV Products Corporation stock The Company's stock Everest Technology Inc. Shian Yih Electronic Co., Ltd. stock The Company's stock Chenfeng Optronics Corp. stock	- - - - - - - - - - - - - - - Parent Company - - Parent Company -	Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through profit or loss-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-current Financial assets at fair value through other comprehensive income-noncurrent Financial assets at fair value through other comprehensive income-noncurrent	1,470,000 1,000,000 13,845 1,147,089 300,000 755,785 1,000,000 210,000 216,000 450,338 480,000 2,000 10,053.08 550,000 101,500 5,346,672 1,000,000 395,000 3,447,716 6,000,000	19,566 11,180 865 16,174 14,025 19,310 28,950 15,099 14,537 5,764 10,320 14,253 58,817 11,825 1,011 102,923 - 8,492 66,369 67,080	5.25% 1.56% - 0.01% - 0.01% 0.02% - 0.01% 0.32% 0.78% 0.01% - 0.90% 0.02% 3.29% 1.47% 0.65% 2.12% 9.38%	19,566 11,180 865 16,174 14,025 19,310 28,950 15,099 14,537 5,764 10,320 14,253 58,817 11,825 1,011 102,923 - 8,492 66,369 67,080	- - - - - - - - - - - - - - - - - - - -

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NTD$300 million or 20% of the capital stock: None.

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

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

• 231 -

EMERGING DISPLAY TECHNOLOGIES CORP.

Notes to the Parent-Company-Only Financial Statements

(vii) Related-parties transactions for purchases to and sales from with amount exceeding the lower of NTD$100 million or 20% of the capital stock:

Purchasing (selling) company	Related party	Nature of Relationship	Details of transaction	Details of transaction	Details of transaction	Details of transaction	Circumstances of and reasons for deviation from regular trading conditions	Circumstances of and reasons for deviation from regular trading conditions	Resulting receivables (payables)	Resulting receivables (payables)	Remarks
			Purchase (sale)	Amount	Percentage of net Purchases (sales)	Credit line	Unit price	Payment terms	Balance	Percentage of notes and accounts receivable (payable)
The Company Emerging Display Technologies Corp., U.S.A. The Company Dong Guan Emerging Display Limited	Emerging Display Technologies Corp., U.S.A. The Company Dong Guan Emerging Display Limited The Company	Subsidiary of the Company Subsidiary of the Company Sub-subsidiary of the Company Sub-subsidiary of the Company	Sale Purchase Purchase (processing expense) Sale (processing revenue)	1,066,651 1,066,651 179,986 179,986	29.28% 100.00% 7.92% 100.00%	3 months 3 months 1-3 months 1-3 months	Sales prices offered to Emerging Display Technologies Corp., U.S.A. were not significantly different from those offered to other customers. The Company is the major supplier for Emerging Display Technologies Corp., U.S.A. There is no comparable transaction The Company is the only entity the sub-subsidiary provides processing service to. There is no comparable transaction. The Company is the only entity the sub-subsidiary provides processing service to. There is no comparable transaction.	Considering the special trading practices in North American market, the Company set credit duration as three months for North American market, which is slightly longer than one to three months set in other markets. The Company is the major supplier for Emerging Display Technologies Corp., U.S.A. The Company is the only entity the sub-subsidiary provides processing service to. The Company is the only entity the sub-subsidiary provides processing service to.	202,276 202,276 90,862 90,862	30.40% 100.00% 20.35% 100.00%	- - - -

• 232 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

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

Name of company that has the receivables	Counterparty	Relationship	Balance of amount	Turnover ratio	Overdue	Overdue	Amount collected in the subsequent period	Allowance for doubtful accounts	Remarks
					Amount	Status
The Company	Emerging Display Technologies Corp.,U.S.A.	Subsidiary of the Company	Accounts receivable of $202,276	4.34	-	-	138,684	-	-

(ix) Trading in derivative instruments:

Please refer to note 6(b).

(b) Information on investees:

The following is the information on investees for the year 2020 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Business scope	Original cost of investment	Original cost of investment	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Net income (loss) of the investee	Investment income (loss) recognized	Remarks
				December 31, 2020	December 31, 2019	Shares owned	Percentage owned	Carrying value
The Company	Emerging Display Technologies Corp., U.S.A.	USA	Trading	121,656	121,656	3,500,000	100.00%	77,351 (Note 1)	8,284	8,153	Subsidiary
The Company	Emerging Display International (Samoa) Corp.	Samoa	Investment holding	180,503	180,503	5,984,071	78.49%	78,804	(10,058)	(7,895)	Subsidiary
The Company	EDT-Europe ApS	Denmark	Customer service and business support	2,077	2,077	125,000	100.00%	2,031	180	180	Subsidiary
The Company	Tremendous Explore Corp.	BVI	Trading	-	-	-	-	- (Note 2)	(66)	(66)	Subsidiary
The Company	Emerging Display Technologies Korea	Korea	Customer service and business support	1,677	1,677	58,212,500	100.00%	1,472	266	266	Subsidiary
The Company	EDT-Japan Corp.	Japan	Customer service and business support	17,401	17,401	5,000	100.00%	6,099	1,767	1,767	Subsidiary
The Company	Ying Dar Investment Development Corp.	Taiwan	Investment	89,000	89,000	8,900,000	100.00%	26,932	8,458	2,042 (Note 3)	Subsidiary
The Company	Bae Haw Investment Development Corp.	Taiwan	Investment	89,000	89,000	8,900,000	100.00%	40,634	5,350	1,213 (Note 3)	Subsidiary
The Company	Ying Cheng Investment Corp.	Taiwan	Investment	84,000	84,000	8,400,000	52.50%	40,442	(100)	(52)	Subsidiary
Ying Dar Investment Development Corp.	Emerging Display International (Samoa) Corp.	Samoa	Investment holding	13,234	13,234	450,000	5.90%	5,924	(10,058)	(593)	Subsidiary
Bae Haw Investment Development Corp.	Emerging Display International (Samoa) Corp.	Samoa	Investment holding	25,488	25,488	870,000	11.41%	11,456	(10,058)	(1,148)	Subsidiary

Note 1 ： Unrealized sales profit amounting to $15,309 was deducted.

Note 2 ： Tremendous Explore Corp. was dissolved in July, 2020. The related liquidation procedures had been completed. Note 3 ： Cash dividends to subsidiaries, which were reclassified as capital surplus, were deducted.

• 233 -

EMERGING DISPLAY TECHNOLOGIES CORP.

Notes to the Parent-Company-Only Financial Statements

(c) Information on overseas branches and representative offices:

(i) Information on investment in Mainland China:

Investee company	Main businesses and products	Received capital	Investment method	Accumulated amount invested in Mainland China as of January 1, 2020	Invested capital remitted from or repatriated to Taiwan	Invested capital remitted from or repatriated to Taiwan	Accumulated amount invested in Mainland China as of December 31, 2020	Net income of investee	The Company’s direct or indirect investment ratio	Investment gain (loss) recognized by the Company	Book value of the investment as of December 31, 2020	Accumulated investment income repatriated to Taiwan as of December 31, 2020
					Remittance	Repatriation
Dong Guan Emerging Display Limited	Manufacturing of LCDs	248,516 (USD$7,625,300)	Investing through a third country by establishing a holding company, Emerging Display International (Samoa) Corp., in a third country.	219,225 (USD$6,746,936) (Note 1)	-	-	219,225 (USD$6,746,936)	(9,628)	95.80% (Note 2)	9,224 Based on the investee's financial statements audited by the same auditor of the Company (Note 3)	87,524 (Note 4)	-

• 234 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• (ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission of Ministry of Economic Affairs	Upper Limit on investment in Mainland China by Investment Commission of Ministry of Economic Affairs
197,499 (Note 8) (USD$6,934,668) (Note 5)	397,345 (Note 8) (USD$13,951,732) (Note 6)	1,305,969 (Note 7)

• Note 1: The amount includes $13,234 which was invested by Ying Dar Investment Development Corp. and $25,488 which was invested by Bae Haw Investment Development Corp.

• Note 2: The ratio includes 5.90% which was held by Ying Dar Investment Development Corp. and 11.41% which was held by Bae Haw Investment Development Corp.

• Note 3: The amount includes a loss of $568 which was recognized by Ying Dar Investment Development Corp. and a loss of $1,099 which was recognized by Bae Haw Investment Development Corp.

• Note 4: The amount includes $5,390 which was invested by Ying Dar Investment Development Corp. and $10,424 which was invested by Bae Haw Investment Development Corp.

• Note 5: The amount includes the remaining capital amounting to US$187,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. not remitted back after it had completed liquidation in 2009.

• Note 6: The approved amount includes US$637,732 obtained from Ying Dar Investment Development Corp. and US$870,000 obtained from Bae Haw Investment Development Corp. The amount obtained from Ying Dar Investment Development Corp. includes the remaining capital amounting to US$187,732 of Emerging Technologies Int’l Trading (Shanghai) Co., Ltd. not remitted back after it had completed liquidation in 2009.

• Note 7: The amount includes $77,914 for Ying Dar Investment Development Corp. and $64,201 for Bae Haw Investment Development Corp.

• Note 8: Transactions denominated in foreign currencies were recorded using the rate of exchange at December 31, 2020.

• (iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China in 2020 are disclosed in “Information on significant transactions”.

• 235 -

EMERGING DISPLAY TECHNOLOGIES CORP. Notes to the Parent-Company-Only Financial Statements

• (d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Tseng, Jui-Ming	11,043,723	6.8%

• Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, refer to Market Observation Post System.

(14) Segment information:

Please refer to the consolidated financial statements for the year ended December 31, 2020.

• 236 -

6.6 If the company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, the annual report shall explain how said difficulties will affect the company’s financial situation: None.

• 237 -

VII. Review of Financial Conditions, Operating Results, and Risk Management

7.1 Financial position

Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands
	Year			Difference
		2020	2019
	Item			Amount	%
	Current assets	3,010,069	2,950,694	59,375	2.01%
	Property, plant and equipment	331,314	365,955	(34,641)	-9.47%
	Intangible assets	4,111	3,777	334	8.84%
	Other assets	263,695	316,440	(52,745)	-16.67%
	Total Assets	3,609,189	3,636,866	(27,677)	-0.76%
	Current liabilities	1,478,103	1,528,241	(50,138)	-3.28%
	Non-current liabilities	150,521	156,644	(6,123)	-3.91%
	Total Liabilities	1,628,624	1,684,885	(56,261)	-3.34%
	Equity attributable to
		1,939,757	1,892,106	47,651	2.52%
	shareholders of the parent
	Capital stock	1,624,076	1,624,076	0	0%
	Capital surplus	15,423	4,397	11,026	250.76%
	Retained earnings	591,094	539,266	51,828	9.61%
	Other equity interest	(117,815)	(102,612)	(15,203)	-14.82%
	Treasury stock	(173,021)	(173,021)	0	0%
	Non-controlling interest	40,808	59,875	(19,067)	-31.84%
	Total Equity	1,980,565	1,951,981	28,584	1.46%

Analysis of changes in financial ratios:

• A. The increase of capital surplus was due to distributing dividends to the subsidiary be recorded as capital surplus.

• B. The decrease of non-controlling interest was due to decreasing net assets of Ying Cheng Investment Corp.(52% owned by the Company).

• 238 -

7.2 Financial performance

7.2.1 Analysis of financial performance

Unit: NT$ thousands

			Unit: NT$ thousands	Unit: NT$ thousands
Year			Difference
	2020	2019
Item			Amount	%
Operatingrevenue	3,737,299	4,107,559	(370,260)	-9.01%
Grossprofit	785,867	801,020	(15,153)	-1.89%
Operatingincome	333,952	314,590	19,362	6.15%
Non-operating income
	(59,843)	(10,690)	(49,153)	-459.80%
and expenses
Income before tax	274,109	303,900	(29,791)	-9.80%
Tax expense	41,113	46,853	(5,740)	-12.25%
Net income	232,996	257,047	(24,051)	-9.36%
Other comprehensive
	(26,549)	10,820	(37,369)	-345.37%
income(after tax)
Total comprehensive
	206,447	267,867	(61,420)	-22.93%
income

Analysis of changes over 20% in financial ratios:

• A. The decrease of non-operating income and expenses were due to unfavorable exchange rates, thus caused foreign exchange losses increased NT$42,266 thousand than 2019.

• B. The decrease of other comprehensive income (after tax) and total comprehensive income were due to unrealized loss from financial assets measured at fair value through other comprehensive income and net income decreased in 2020.

7.2.2 Analysis of gross profit

		Unit: NT$ thousands	Unit: NT$ thousands
Year
	2020	2019	Change %
Item
Grossprofit	785,867	801,020	-1.89%

Analysis of change:

The decrease of gross profit was mainly due to operating revenue slightly decreased in 2020.

7.2.3 Sales volume forecast and the basis therefor: Refer to page 4.

• 239 -

7.3 Cash flows

7.3.1 Analysis of cash flows for 2020

Unit: NT$ thousands

						Unit: NT$ thousands	Unit: NT$ thousands
Cash and Cash Eilt	Net Cash Flow f Oti	Net Cash Flow f Iti	Net Cash Flow f Fii	Effects of Ch i	Cash Surplus Dfiit	Leverage of Cash Deficit
quvaens, Beginning of Year (1)	rom perang Activities	rom nvesng Activities	rom nancng Activities	anges n Foreign Exchange	(ec) (1)+(2)+(3)	Investment	Financing
	(2)	(3)	(4)	Rates(5)	+(4)+(5)	Plans	Plans
1,368,252	163,886	(58,360)	(209,355)	(22,092)	1,242,331	－	－

• A. Analysis of cash flow:

• ‧ Operating activities: Net cash inflow was mainly due to there was income before tax in 2020.

• ‧ Investing activities: Net cash outflow was mainly due to the acquisition of financial assets at fair value through other comprehensive income.

• ‧ Financing activities: Net cash outflow was mainly due to the distribution of cash dividends and repayment of long-term borrowings.

• B. Corrective measures to be taken in response to illiquidity: Not applicable.

7.3.2 Analysis of liquidity for 2021

Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands
Cash and Cash Eilt Bii	Estimated Net Cash Fl f Oti	Estimated Net Cash Ud i Iti d	Ch Sl Dfiit	Leverage of Cash Deficit
quvaens, egnnng of Year	ow rom perang Activities	se n nvesng an Financing Activities	as urpus (ec) (1)+(2)+(3)	Investment	Financing
(1)	(2)	(3)		Plans	Plans
1,242,331	320,117	(268,336)	1,294,112	－	－

• A. Liquidity analysis: It is estimated that the Company will generate cash inflow from operating activities NT$320,117 thousand in 2021. Further, it is estimated NT$268,336 thousand net cash used in investing activities and financing activities, are primarily for repayment of borrowings for materials and working capital, payment for cash dividends, and so on. The balance of cash at the end of year is estimated to be NT$1,294,112 thousand.

• B. Remedial actions for liquidity shortfall: Not Applicable.

7.4 Major capital expenditure items: None.

7.5 Investment policy in the last year, main causes for profits or losses, improvement plans and investment plans for the coming year

The Company’s investment strategy is mainly focus on vertical integration of flat display industry or related industry that is beneficial for the upgrade of technologies or management of production and sales. The Company will remain focus on the above said investment to upgrade production lines and enhance competitive advantages for the coming year. The decrease of recent year’s investment profit was due to the Company transferred a part of products to manufacture in Taiwan caused the lower capacity utilization of the subsidiary in China. The Company will remain focus on investment that is beneficial to technology development or evaluate if it is beneficial to our industry before investment for unrelated industry.

• 240 -

7.6 Risk analysis and assessment

7.6.1 The effect upon the company’s profits (losses) of interest and

exchange rate fluctuations and changes in the inflation rate, and response measures to be taken in the future

• A. Interest rate

The increase of interest rate will drive the higher capital cost, but its effect for short-term borrowing is smaller.

• B. Exchange rate

The sales of the Company’s products are mainly export abroad and the critical materials such as liquid crystal, driver IC, LCD or backlight modules are denominated primarily in foreign currencies. The Company receives net foreign currencies when export abroad, therefore, any significant fluctuation in such exchange rate would have an effect on the Company’s revenue and profit.

To avoid the foreign exchange volatility, the Company takes protection steps as follows:

•  Asset offset with liabilities of foreign currency: Foreign currencies received from sales directly pay off the import materials to lower the exchange rate exposure.

•  Utilize hedged derivative financial instruments: Utilize currency forward contracts or options to avoid foreign currency risk of assets and liabilities due to its fluctuation.

•  Collect exchange rate information at any time to monitor the trend of exchange rate and decide the best timing to convert from foreign currency to NTD or retain in foreign currency account.

•  Enhance quality and added value of products to adjust cost and price in time during foreign currency fluctuation.

7.6.2 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

The Company did not engage in any high-risk or high-leveraged investments. The transactions and procedures related to lending and endorsement are based on the Company’s “Procedures for Lending” and “Procedures for Endorsement Guarantee”. Furthermore, derivative

transactions follow the “Regulations Governing the Acquisition and Disposal of Assets”.

7.6.3 Research and development work to be carried out in the future, and further expenditures expected for research and development work: Refer to page 3.

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7.6.4 Effect on the company’s financial operations of developments in science and technology as well as industrial change, and measures to be taken in response

The Company consistently pays close attention to any changes in local and foreign regulations and makes appropriate amendments to our systems such as Corporate Governance Practice Principles and Article of Corporation. During 2016 and as of the date of publication of this annual report, changes in related laws have not had a significant impact on our operations.

7.6.5 Effect on the company’s financial operations of developments in science and technology as well as industrial change, and measures to be taken in response

The package technologies of flat panel display have been upgraded for the recent years. Further, the global individual business operation system and the application of flat panel displays keep expanding. This will encourage the Company to further develop the related business opportunities.

7.6.6 Effect on the company’s crisis management of changes in the company’s corporate image, and measures to be taken in response. The Company has consistently maintained an ethical business philosophy and pay attention to corporate image and risk control. There is no foreseeable risk currently.

• 7.6.7 Expected benefits and possible risks associated with any merger and acquisitions, and mitigation measures being or to be taken: None.

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

The Company has layout detail capital, technologies, source of customers, talented persons and site planning for factory expansion and management to expand CTP production lines and develop total solutions for flat display technologies. In this way, the Company can not only keep the competitive advantage within this industry but also meet customer’s demand.

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

The change of quantities demand from customers will affect the operation, so the Company had improved the risk of sales concentration and continue to develop new customers. As to the material purchase, the Company acquire multiple sources of suppliers to minimize suppliers’ risk.

• 7.6.10 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: None.

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7.6.11 Effect upon and risk to company associated with any change in governance personnel or top management, and mitigation measures being or to be taken: Not applicable.

7.6.12 Litigious and non-litigious matters: None.

7.6.13 Other important risks, and mitigation measures being or to be taken:

None.

7.7 Other important matters

7.7.1 Risk management

The Company formulated the “Risk Management Policies and Procedures” and approved by the Board of Directors on November 3, 2020. This expects to conduct risk management against uncertain factors that may threaten the enterprise’s business operations, and is jointly implemented by the Board of Directors, Audit Office, President, all risk management departments, all units, and subsidiary companies.

The Company implements a risk assessment every year with the heads of each risk management department to be in charge of analyzing and monitoring the risks faced by their business jurisdictions. All risk management policies and major decisions have to report to the Board of Directors for approvals. In accordance with the results of risk assessment, an annual audit plan is mapped out by the Audit Office for this purpose. The President is in charge of coordinating and supervising the implementation and coordination of the entire risk management. Each unit and subsidiary companies must abide by the regulations when performing necessary operations and risk management, ensuring that the risks involved are controlled within the affordable range.

As an attempt to review business and operating characteristics, the Company has now included a total of 12 risk categories under management. They are: interest rate change risk, exchange rate change risk, climate change and environmental risk, occupational safety risk, raw material price and supply chain risk, information security risk, strategy and operation risk, investment risk, legal risk, technology risk, management risk, and corporate image risk. For more details of the risk control measures mentioned above, please refer to the contents of the Company regulations “Risk Management Policies and Procedures" under the “Corporate Governance” section of the Company’s website.

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VIII. Special Disclosure

8.1 Summary of affiliated companies

8.1.1 Consolidated business report of affiliated companies

A. Organization structure

==> picture [432 x 257] intentionally omitted <==

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

Emerging Display Technologies Corp.
100% 78.49% 100% 100% 100% 100% 100% 52.50%
Emerging Emerging Bae Haw Ying Dar
EDT- EDT- Ying Cheng
Display Display Investment Investment
Japan Europe Investment
Technologies Technologies Development Development
Corp. ApS Corp.
Corp., U.S.A. Korea Corp. Corp.
11.41%
5.90%
Emerging
Display
International
(Samoa) Corp.
100%
Dong Guan
Emerging
Display Ltd.
----- End of picture text -----

B. The profile of affiliated companies:

Company Name	Date of Incorporation	Address	Paid-in Capital (NT$thousands)	Main Areas of Business Operations
Emerging Display Technologies Corp.,U.S.A.	Sep. 23, 1994	390 Goddard, Irvine, CA 92618, U.S.A.	116,731	Sales channel of North America
Emerging Display International (Samoa)Corp.	Feb. 7, 2000	Offshore Chambers,PO Box 217, Apia, Samoa	248,063	Investment holding
Dong Guan Emerging Display Ltd.	Aug 11, 2000	E2 Junda Industrial Park, Dong Keng Town DongGuan City,GuangDong,China	248,516	Manufacturing of CTP and LCDs
EDT-Europe ApS	Oct. 26, 2000	Raadhustorvet 3 3520 Farum, Denmark	451	Sales channel of Pan- Europe
Bae Haw Investment Development Corp.	Jun. 6, 2001	3F, No. 5, Central 1st Road, K.E.P.Z. Kaohsiung,Taiwan	89,000	Investment
Ying Dar Investment Development Corp.	Jun. 7, 2001	3F, No. 5, Central 1st Road, K.E.P.Z. Kaohsiung,Taiwan	89,000	Investment
Emerging Display Technologies Korea	Jun. 11, 2004	A-1111, Pyungchon Acro Tower, 1591, Gwanyang-Dong, Dongan-Ku, Anyang-Si, Kyunggi-Do,Korea	1,677	Sales channel of Korea
EDT-Japan Corp.	Sep. 10, 2012	2-21-41 Takanawa Minatoku Tokyo, Japan108-0074 Takanawa No.1 Building	17,401	Sales channel of Japan
Ying Cheng Investment Corp.	Jul. 23, 2013	3F, No. 5, Central 1st Road, K.E.P.Z. Kaohsiung,Taiwan	160,000	Investment

C. The particulars for companies presumed to have a relationship of control and subordination where the shareholders in common: Not applicable.

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D. The industries covered by the business operated by the affiliated

companies overall: Refer to “The profile of affiliated companies”.

E. Directors, supervisors and general manager of affiliated companies:

Company Name	Title	Name or Representative	Shareholding	Shareholding
			Shares	%
Emerging Display Technologies Corp., U.S.A.	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	3,500,000	100%
Emerging Display International (Samoa)Corp.	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	5,984,071	78.49%
Dong Guan Emerging Display Ltd.	Director	Emerging Display International (Samoa) Corp. Representative: Tseng,Jui-Ming	－	100%
EDT-Europe ApS	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	125,000	100%
Bae Haw Investment Development Corp.	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	8,900,000	100%
Ying Dar Investment Development Corp.	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	8,900,000	100%
Emerging Display Technologies Korea	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	58,212,500	100%
EDT-Japan Corp.	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	5,000	100%
Ying Cheng Investment Corp.	Director	Emerging Display Technologies Corp. Representative: Tseng,Jui-Ming	8,400,000	52.50%

8.1.2 Financial statement of affiliated companies

		Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Company Name	Paid-in Capital	Total Assets	Total Liabilities	Net Worth	Operating Revenue	Income (Loss) From Operations	Net Income (Loss)	Earnings per Share (NT$)
Emerging Display Technologies Corp.,U.S.A.	116,731	310,291	217,736	92,555	1,161,453	10,650	8,284	2.37
Emerging Display International (Samoa)Corp.	248,063	153,904	53,503	100,401	179,986	(4,644)	(10,058)	(1.32)
Dong Guan Emerging Display Ltd.	248,516	144,865	53,503	91,362	179,986	(4,597)	(9,628)	－
Tremendous Explore Corp. (Note)	－	－	－	－	－	－	(66)	－
EDT-Europe ApS	451	20,069	18,037	2,032	54,641	1,254	179	1.44
Bae Haw Investment Development Corp.	89,000	130,340	485	129,856	0	(120)	8,459	0.95
Ying Dar Investment Development Corp.	89,000	107,451	448	107,002	0	(108)	5,350	0.60
Emerging Display Technologies Korea	1,677	1,831	359	1,472	3,965	293	266	－
EDT-Japan Corp.	17,401	9,660	3,561	6,099	14,993	1,875	1,767	353.44
Ying Cheng Investment Corp.	160,000	77,082	50	77,032	0	(102)	(100)	(0.00)

Note: Tremendous Explore Corp. was liquidated in July, 2020.

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8.1.3 Loans extended to other parties, guarantees provided to other parties and derivative financial instrument transactions of affiliated companies: None.

8.2 Private placement securities in the most recent years: None.

8.3 Shares in the company held or disposed of by subsidiaries in the most recent years:

				Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Name of Subsidiary	Paid-in Capital	Fund Source	Shareholding Ratio of the Company	Date of Acquisition or Disposition	Shares and Amount Acquired	Shares and Amount Disposed	Investment Gain (Loss)	Shareholdings and Amount in Most Recent Year	Mortgage	Endorsement Amount Made for the Subsidiary	Amount Loaned to the Subsidiary
Ying Dar Investment Development Corp.	$89,000	Capital Increase by Cash	100%	－	－	－	－	5,346,672 shares $65,183	－	－	－
				As of Apr. 23, 2021	－	－	－	5,346,672 shares $65,183	－	－	－
Bae Haw Investment Development Corp.	$89,000	Capital Increase by Cash	100%	－	－	－	－	3,447,716 shares $45,210	－	－	－
				As of Apr. 23, 2021	－	－	－	3,447,716 shares $45,210	－	－	－

8.4 Other matters that require additional description: None.

IX. 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 printing of the annual report: None.

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