FSP — Annual Report 2021

Nov 4, 2021

Stock Code: 3015

FSP Technology Inc. and Subsidiaries Consolidated Financial Statements and Independent Auditors' Report

2021 and 2020

Address: No. 22, Jianguo E. Rd., Taoyuan Dist., Taoyuan City Tel: (03)3759888

1

Table of Contents

Item

**Page **

I. Cover Page II. Table of Contents III. Statement IV. Independent Auditors’ Report V. Consolidated Balance Sheets VI. Consolidated Statements of Comprehensive Income VII. Consolidated Statements of Changes in Equity VIII. Consolidated Statements of Cash Flows IX. Notes to Consolidated Financial Statements (I) Company History (II) Date of Authorization for Issuance of the Parent Company Only Financial Statements and Procedures for Authorization (III) Application of New and Amended Standards and Interpretations (IV) Summary of Significant Accounting Policies (V) Primary Sources of Uncertainties in Material Accounting Judgments, Estimates, and Assumptions (VI) Details of Significant Accounts (VII) Related Party Transactions (VIII) Pledged Assets (IX) Significant Contingent Liabilities and Unrecognized Contract Commitments (X) Significant Disaster Loss (XI) Significant Events after the Balance Sheet Date (XII) Others (XIII) Supplementary Disclosures 1. Information on Significant Transactions 2. Information on Invested Companies 3. Information on Investments in Mainland China 4. Information on Major Shareholders (XIV) Segment Information

1 2 3 4-7 8 9 10 11 12 12 12-14 14-30 30 31-68 69-71 71 72-73 73 73 73 74-77 77-78 78-79 79 79-81

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Statement

In 2021 (from January 1 to December 31, 2021), pursuant to "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises," the Company's entities that shall be included in preparing the Consolidated Financial Statements of Affiliates and the Parent-Subsidiary Consolidated Financial Statements for International Financial Reporting Standards (IFRS) 10 recognized by the Financial Supervisory Commission are the same. Moreover, the disclosure information required for the Consolidated Financial Statements of Affiliates has been fully disclosed in the aforementioned Parent-Subsidiary Consolidated Financial Statements; hence, the Consolidated Financial Statements of Affiliates will not be prepared.

Sincerely,

Name of Company: FSP Technology Inc. Chairman: Cheng, Ya-Jen Date: March 18, 2022

3

Independent Auditors' Report

To the Board of Directors of FSP Technology Inc.:

Opinions

We have audited the Consolidated Financial Statements of FSP Technology Inc. and its subsidiaries (the “Group”), which comprise the Consolidated Balance Sheets as of December 31, 2021 and 2020, and the Consolidated Statements of Comprehensive Income, the Consolidated Statements of Changes in Equity, the Consolidated Statements of Cash Flows, and Notes to the Consolidated Financial Statements (including a summary of significant accounting policies) from January 1 to December 31, 2021 and 2020.

In our opinion, based on our audit results and the audit reports prepared by other independent auditors (please refer to Other Matters section), the accompanying Consolidated Financial Statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2021 and 2020, and its consolidated financial performance and consolidated cash flows for the periods from January 1 to December 31, 2021 and 2020, 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”), and interpretations from International Financial Reporting Interpretations Committee (“IFRIC”) and Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinions

We conducted our audits in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards (GAAS). 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 other ethical responsibilities in accordance with the Code. Based on our audit results and the reports of other independent auditors, 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 the audit of the Consolidated Financial Statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and forming our opinion thereon, and we do not provide a separate opinion on these matters. In our judgment, revenue recognition is the key audit matter that should be communicated in the audit report.

Please refer to Note IV(XVI) for the accounting policy of revenue recognition and Note VI((XXII) for the related disclosure of revenue.

Description of key audit matter:

The Sales revenue of the Group is a key indicator for investors and management to evaluate financial or business performance. As a listed company, there is a high inherent risk of misrepresentation for the Group. In addition, the timing of revenue recognition and transfer of control over goods is critical to the presentation of financial statements. Therefore, we have identified revenue recognition as a key audit matter in the audit of the Consolidated Financial Statements.

4

Audit procedure to address the matter:

We performed the following audit procedure in respect of the above key audit matter:

• Tested the effectiveness of the design and implementation of the internal control mechanism in relation to revenue recognition.

• Conducted trend analysis for the top ten customers, including comparison of customer lists and sales revenue between the current period and the most recent period as well as the same period last year, in order to assess whether there is any significant irregularity, and to identify and analyze the reasons for any material changes.

• Performed random sample checking on the sales transactions of the year to evaluate the authenticity of these transactions, the correctness of the recognized amount of sales revenue and the reasonableness of the timing of recording.

• Reviewed samples of sales transactions for a specified period before and after the end of the year to assess whether the timing of revenue recognition is appropriate.

Other Matters

We did not audit the financial statements of certain consolidated subsidiaries. Those financial statements were audited by other independent auditors. Our opinion expressed herein, insofar as it relates to the amounts included in the Consolidated Financial Statements relative to these consolidated subsidiaries was based solely on the reports of other independent auditors. Total assets of these consolidated subsidiaries amounted to NT$1,723,959 thousand and NT$1,489,303 thousand, accounting for 8.14% and 8.07% of the total consolidated assets as of December 31, 2021 and 2020, respectively. Total operating revenue of these consolidated subsidiaries amounted to NT$1,605,629 thousand and NT$1,534,865 thousand, representing 9.64% and 10.37% of the total consolidated operating revenue for the years ended December 31, 2021 and 2020.

FSP Technology Inc. has prepared its parent-company-only financial statements for the years ended December 31, 2021 and 2020, on which we have issued an unqualified opinion with the section of Other Matters in the audit report.

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 conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, as well as IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission, and maintain internal controls which are necessary for the preparation of the Consolidated Financial Statements so as to avoid material misstatements due to fraud or errors therein.

In preparing the Consolidated Financial Statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing related matters and adopting the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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

5

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 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 Misstatements are considered material if misstated individual or aggregate amounts could reasonably be expected to influence the economic decisions of users taken based on 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 perform the following tasks:

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. Assess the appropriateness of the accounting policies adopted by the management, as well as the reasonableness of their accounting estimates and relevant disclosures.

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, 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 and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision, and performance of the Group audit. We remain solely responsible for our audit opinion.

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.

6

From the matters communicated with those charged with governance, we determine the key audit matters in the audit of the Group's Consolidated Financial Statements for the year ended December 31, 2021. 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 Chang, Chun-I and Chao, Min-Ju.

KPMG Taipei, Taiwan (Republic of China) March 18, 2022

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with 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 applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

7

FSP Technology Inc. and Subsidiaries

Consolidated Balance Sheets

December 31, 2021 and 2020

Unit: NT$ thousands

Assets 11xx Current Assets: 1100 Cash and cash equivalents (Note VI(I)) 1110 Financial assets at fair value through profit or loss - current (Note VI(II)) 1136 Financial assets at amortized cost - current (Note VI(IV)) 1150 Notes receivable, net (Note VI(V) and (XXII)) 1170 Accounts receivable, net (Note VI(V) and (XXII)) 1180 Accounts receivable - related parties, net (Notes VI(V) and (XXII), and VII) 1200 Other receivables (Note VI(VI) & VII) 1220 Current income tax assets 130x Inventories (Note VI(VII)) 1410 Prepayments 1470 Other current assets Total current assets 15xx Non-current Assets: 1517 Financial assets at fair value through other comprehensive income - non- current (Note VI(III) and (XX)) 1550 Investments Recognized Through the Equity Method (Note VI(IX)) 1600 Property, plant and equipment (Notes VI(XI), (XIII), (XIV) and (XV), VIII and IX) 1755 Right-of-use assets (Notes VI(XII) and (XVI), and VII) 1780 Intangible assets (Note VI(XI) and (XIII)) 1840 Deferred income tax assets (Note VI(XIX)) 1900 Other non-current assets (Notes VI(XI) and (XVIII), VIII and IX) Total non-current assets 1xxx Total assets	2021.12.31	％ 13 3 - - 19 4 - - 17 - -	2020.12.31 Amount ％ 3,051,117 17 565,732 3 - - 85,453 - 3,606,974 20 616,753 3 65,054 - 5,574 - 2,655,331 15 70,938 - 23,981 - 10,746,907 58 5,273,176 29 25,319 - 1,523,809 9 513,420 3 221,038 1 72,381 - 72,429 - 7,701,572 42 18,448,479 100 Liabilities and Equity 21xx Current Liabilities: 2100 Short-term borrowings (Notes VI(XI) and (XIV), and VIII) 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties (Note VII) 2200 Other payables (Notes VI(XVIII) and (XXIII), and VII) 2230 Current income tax liabilities 2250 Provisions for liabilities - current (Note VI(XVII)) 2280 Lease liabilities - current (Notes VI(XVI) and VII) 2300 Other current liabilities (Note VI(XV) & (XXII)) 2320 Current portion of long-term debt (Notes VI(XI) and (XV), and VIII) Total current liabilities 25xx Non-current Liabilities: 2540 Long-term borrowings (Notes VI(XI) and (XV), and VIII) 2570 Deferred income tax liabilities (Note VI(XIX)) 2580 Lease liabilities - non-current (Notes VI(XVI) and VII) 2640 Net defined benefit liabilities (Note VI(XVIII)) 2645 Guarantee deposits received 2670 Other non-current liabilities (Note VI(XV)) Total non-current liabilities 2xxx Total liabilities 31xx Equity Attributable to Owners of the Parent (Note VI(III), (IX), (X), (XVIII), (XIX) & (XX)) 3100 Capital Stock 3200 Capital surplus 3300 Retained earnings: 3310 Legal reserve 3350 Unappropriated earnings Total retained earnings 34xx Other Equity: 3410 Exchange differences on translation of financial statements of foreign operations 3420 Unrealized gains (losses) on financial assets at fair value through other comprehensive income Total other equity Total equity attributable to shareholders of the parent 36xx Non-controlling Interests 3xxx Total equity 2-3xxxTotal liabilities and equity	2021.12.31 Amount ％ $ 16,315 - 14,445 - 4,986,689 24 90,024 - 1,151,339 5 167,169 1 146,223 1 166,758 1 92,137 1 73,014 -	2020.12.31 Amount ％ 32,162 - 15,001 - 4,842,867 27 80,004 - 948,782 5 104,500 1 157,190 1 151,461 1 67,839 - 12,559 -
	Amount $ 2,794,253 516,074 10,800 62,112 3,864,730 801,748 73,406 5,779 3,590,546 77,899 34,848
				6,904,113 33	6,412,365 35
	11,832,195	56		199,334 1 2,919 - 474,996 2 44,234 - 500 - 3,970 -	110,684 1 2,039 - 371,116 2 57,218 - 503 - 1,894 -
	6,763,138 26,947 1,544,427 635,433 223,496 82,240 69,666	32 - 8 3 1 - -
				725,953 3	543,454 3
				7,630,066 36	6,955,819 38
				1,872,620 9	1,872,620 10
	9,345,347	44
				1,011,016 5	1,011,016 5
				1,033,544 5 3,209,195 15	940,416 5 2,446,328 13
				4,242,739 20	3,386,744 18
				(117,703) (1) 6,200,289 29	(89,678) - 5,004,114 27
				6,082,586 28	4,914,436 27
				13,208,961 62	11,184,816 60
				338,515 2	307,844 2
	$ 21,177,542	100		13,547,476 64	11,492,660 62
				$ 21,177,542 100	18,448,479 100

(Please see accompanying notes to the Consolidated Financial Statements) Managerial Officer: Cheng, Ya-Jen

Chief Accounting Officer: Sang, Hsi-Yun

Chairman: Cheng, Ya-Jen

8

FSP Technology Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

4000 Operating revenue (Notes VI(XXII) and VII) 5000 Operating costs (Notes VI(VII), (XI), (XII), (XIII), (XVI), (XVII) and (XVIII), VII and XII) 5920 Add: Unrealized sales gains (losses) 5900 Gross profit 6000 Operating expenses (Notes VI(V), (VI), (XI), (XII), (XIII), (XVI), (XVIII) and (XXIII), VII and XII): 6100 Selling and marketing expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment losses (gains) Total operating expenses 6900 Net operating income 7000 Non-operating income and expenses (Notes VI(II), (III), (VIII), (IX), (X), (XVI) and (XXIV), and VII): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profits (losses) of associates and joint ventures under equity method Total non-operating income and expenses 7900 Income before income tax from continuing operations 7950 Less: Income tax expense (Note VI(XIX)) 8200 Net Income 8300 Other comprehensive income: 8310 Items that will not be reclassified subsequently to profit or loss (Note VI(XVIII), (XIX) and (XX)) 8311 Gains (losses) on re-measurements of defined benefit plans 8316 Unrealized gains (losses) on investments in equity instruments at fair value through other comprehensive income 8349 Less: Income tax related to items that will not be reclassified subsequently Total items that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss (Note VI(IX) and (XX)) 8361 Exchange differences on translation of financial statements of foreign operations 8370 Share of other comprehensive income (losses) of associates and joint ventures under equity method 8399 Less: Income tax related to items that may be reclassified subsequently Total items that may be reclassified subsequently to profit or loss 8300 Other Comprehensive Income 8500 Total Comprehensive Income Net income (losses) attributable to: 8610 Shareholders of the parent 8620 Non-controlling Interests Total comprehensive income (losses) attributable to: 8710 Shareholders of the parent 8720 Non-controlling Interests Earnings per share (unit: NT$) (Note VI(XXI)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021	％ 100 85 -	2020 Amount ％ 14,796,460 100 12,730,131 86 (2,781) - 2,063,548 14 531,862 4 609,160 4 451,578 3 8,611 - 1,601,211 11 462,337 3 23,883 - 208,551 1 249,554 2 (13,330) - 3,049 - 471,707 3 934,044 6 241,969 1 692,075 5 (7,791) - 2,088,968 14 (1,558) - 2,082,735 14 24,762 - (1,400) - - - 23,362 - 2,106,097 14 2,798,172 19 669,314 5 22,761 - 692,075 5 2,784,736 19 13,436 - 2,798,172 19 3.55 3.52
	Amount $ 16,650,252 14,225,200 (847)
	2,424,205	15
	620,915 676,460 455,887 (966)	4 4 3 -
	1,752,296	11
	671,909	4
	23,348 198,340 75,065 (11,346) 3,284	- 1 1 - -
	288,691	2
	960,600 159,321	6 1
	801,279	5
	7,076 1,854,340 1,415	- 11 -
	1,860,001	11
	(29,332) (809) -	- - -
	(30,141)	-
	1,829,860	11
	$ 2,631,139	16
	$ 754,082 47,197	5 -
	$ 801,279	5
	$ 2,585,931 45,208	16 -
	$ 2,631,139	16
	$	4.03
	$	3.99

(Please see accompanying notes to the Consolidated Financial Statements)

Chairman: Cheng, Ya-Jen Managerial Officer: Cheng, Ya-Jen Chief Accounting Officer: Sang, Hsi-Yun

9

FSP Technology Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

Balance as of January 1 2020 Appropriation and distribution of earnings: Legal reserve Cash dividends of common stock Changes in other capital surplus: Cash dividends appropriated from capital surplus Net Income Other Comprehensive Income Total Comprehensive Income Purchase of treasury shares Retirement of treasury shares Changes in ownership interests in subsidiaries Disposal of investment in equity instruments at fair value through other comprehensive income Balance as of December 31, 2020 Appropriation and distribution of earnings: Legal reserve Cash dividends of common stock Net Income Other Comprehensive Income Total Comprehensive Income Distribution of cash dividends to non- controlling interests Increase in non-controlling interests Disposal of equity instruments at fair value through other comprehensive income Balance as of December 31, 2021			Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent			Non- controlling Interests	Total Equity
	Capital stock - common shares	Capital surplus 1,131,801 - - (96,131) - -	Retained earnings Legal reserve Unappropria ted earnings Total 902,027 1,745,698 2,647,725 38,389 (38,389) - - (192,262) (192,262) - - - - 669,314 669,314 - (6,241) (6,241)			Other equity items			Treasury shares	Total equity attributable to shareholders of theparent
						Exchange differences on translation of financial statements of foreign operations	Unrealized gains (losses) on financial assets at fair value through other comprehensive income	Total
				Unappropria ted earnings 1,745,698 (38,389) (192,262) - 669,314 (6,241)	Total
	$ 1,922,620 - - - - -				2,647,725 - (192,262) - 669,314 (6,241)	(116,514) - - - - 26,836	3,199,064 - - - - 2,094,827	3,082,550 - - - - 2,121,663	- - - - - -	8,784,696 - (192,262) (96,131) 669,314 2,115,422	304,971 - (10,563) - 22,761 (9,325)	9,089,667 - (202,825) (96,131) 692,075 2,106,097
	-	-	-	663,073	663,073	26,836	2,094,827	2,121,663	-	2,784,736	13,436	2,798,172
	- (50,000) - -	- (29,434) 4,780 -	- - - -	- (21,569) - 289,777	- (21,569) - 289,777	- - - -	- - - (289,777)	- - - (289,777)	(101,003) 101,003 - -	(101,003) - 4,780 -	- - - -	(101,003) - 4,780 -
	1,872,620 - - - -	1,011,016 - - - -	940,416 93,128 - - -	2,446,328 (93,128) (561,786) 754,082 5,534	3,386,744 - (561,786) 754,082 5,534	(89,678) - - - (28,025)	5,004,114 - - - 1,854,340	4,914,436 - - - 1,826,315	- - - - -	11,184,816 - (561,786) 754,082 1,831,849	307,844 - - 47,197 (1,989)	11,492,660 - (561,786) 801,279 1,829,860
	-	-	-	759,616	759,616	(28,025)	1,854,340	1,826,315	-	2,585,931	45,208	2,631,139
	- - -	- - -	- - -	- - 658,165	- - 658,165	- - -	- - (658,165)	- - (658,165)	- - -	- - -	(16,901) 2,364 -	(16,901) 2,364 -
	$ 1,872,620	1,011,016	1,033,544	3,209,195	4,242,739	(117,703)	6,200,289	6,082,586	-	13,208,961	338,515	13,547,476

(Please see accompanying notes to the Consolidated Financial Statements) Managerial Officer: Cheng, Ya-Jen

Chief Accounting Officer: Sang, Hsi-Yun

Chairman: Cheng, Ya-Jen

10

FSP Technology Inc. and Subsidiaries Consolidated Statements of Cash Flows

January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

Cash flows from operating activities: Income before income tax Adjustments for: Adjustments to reconcile profit or loss Depreciation expenses Amortization expenses Expected credit impairment losses (gains) Interest expenses Interest income Dividend income Share of profits (losses) of associates and joint ventures under equity method Loss on disposal of property, plant, and equipment Gains on disposal of non-current assets held for sale Unrealized sales gains (losses) Gains on lease modifications Rent concessions reclassified to revenue Gains on bargain purchase Total adjustments for profit or loss Changes in operating assets and liabilities: Changes in operating assets: Financial assets at fair value through profit or loss Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Prepayments Other current assets Other Non-Current Assets Total changes in operating assets Changes in operating liabilities: Notes payable Accounts payable Accounts payable - related parties Other payables Provisions for liabilities Other current liabilities Net defined benefit liabilities Other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash flows generated by operating activities Interest received Interest paid Income tax paid Net cash flows generated from operating activities Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortized cost Acquisition of subsidiaries (deducting cash obtained) Disposal of non-current assets held for sale Acquisition of property, plant, and equipment Disposal of property, plant and equipment Acquisition of intangible assets Decrease (increase) in refundable deposits Increase in prepayments for equipment Dividends received Increase in restricted deposits Net cash flows from investing activities Cash flows from financing activities: Decrease in short-term loans Proceeds from long-term loans Repayments of long-term loans Repayment of the principal of lease liabilities Cash dividends paid Purchase cost of treasury shares Cash dividends paid to non-controlling interests Net cash flows used in financing activities Effects of exchange rate changes on the balance of cash held in foreign currencies Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	2021 $ 960,600	2020 934,044 316,857 3,891 8,611 13,330 (23,883) (107,452) (3,049) 2,495 (326,059) 2,781 (18) (14,763) - (127,259) (174,486) (3,842) 146,410 (89,674) (18,435) (542,332) (4,542) 655 6,762 (679,484) 619 312,715 (7,656) 172,211 11,853 5,183 (8,942) 2,994 488,977 (190,507) (317,766) 616,278 25,001 (13,690) (205,594) 421,995 (118,419) 301,443 - - 291,414 (224,212) 973 (1,513) (13,108) (2,153) 107,452 (18,821) 323,056 (73,461) 108,076 (1,923) (134,460) (288,393) (101,003) (10,563) (501,727) 23,864 267,188 2,783,929 3,051,117
	339,849 4,732 (966) 11,346 (23,348) (122,933) (3,284) 530 (72,399) 847 (97) - (2,523)
	131,754
	49,658 23,835 (249,685) (184,995) (3,530) (918,687) (789) (10,558) (3,222)
	(1,297,973)
	(556) 135,026 10,020 185,539 (10,967) 16,159 (6,374) 3,591
	332,438
	(965,535)
	(833,781)
	126,819 23,320 (11,335) (107,486)
	31,318
	(296,047) 660,425 (10,959) 3,832 87,067 (214,977) 450 (7,190) 2,464 (3,475) 122,933 -
	344,523
	(15,847) 181,989 (32,884) (162,242) (561,786) - (16,901)
	(607,671)
	(25,034) (256,864) 3,051,117
	$ 2,794,253

(Please see accompanying notes to the Consolidated Financial Statements) Managerial Officer: Cheng, Ya-Jen

Chief Accounting Officer: Sang, Hsi-Yun

Chairman: Cheng, Ya-Jen

11

FSP Technology Inc. and Subsidiaries Notes to Consolidated Financial Statements

2021 and 2020

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

I. Company History

FSP Technology Inc. (the “Company”) was incorporated on April 15, 1993, and registered under the Ministry of Economic Affairs, R.O.C. The Company is listed on the Taiwan Stock Exchange since October 16, 2002. The Company and its subsidiaries (the “Group”) are primarily engaged in the manufacturing, processing and trading of power supplies and various electronic components.

II. Date of Authorization for Issuance of the Parent Company Only Financial Statements and Procedures for Authorization

These Consolidated Financial Statements were authorized for issue by the Board of Directors on March 18, 2022.

III. Application of New and Amended Standards and Interpretations

• (I) Impact of adoption of new or amended standards and interpretations endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”).

The Group has initially adopted the following new amendments to IFRS since January 1, 2021, and there was no 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”

The Group has adopted the following new amendments, which do not have a significant impact on the Consolidated Financial Statements, since April 1, 2021.

• Amendment to IFRS 16 “COVID-19 Related Rent Concessions beyond 30 June 2021”

• (II) The impact of IFRS endorsed by the FSC but not yet adopted by the Group

The Group assesses that the adoption of the following new amendments effective from January 1, 2022 will not have a significant impact on the Consolidated Financial Statements.

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

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

• Annual Improvements to IFRS Standards 2018-2020

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

12

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

• (III) IFRSs issued by the International Accounting Standards Board (“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 IASB, but not yet endorsed by the FSC:

		Effective Date
		per International
New or Amended		Accounting
Standards	Content of Amendment	Standards Board
Amendments to IFRS	When the investor sells or contributes its	To be determined
10 and IAS 28 “Sale	subsidiary to an associate or a joint venture and	by International
or Contribution of	the asset sold or contributed constitutes a	Accounting
Assets Between an	business, full gain or loss should be recognized	Standards Board
Investor and Its	on the loss of control of a business. If the asset
Associate or Joint	sold or contributed does not constitute a
Venture”	business, unrealized gains and losses should be
	calculated according to the shareholding
	percentage and partial gain or loss should be
	recognized.
Amendments to IAS	The amendments are intended to improve	January 1, 2023
1 “Classification of	consistency in the application of the standard to
liabilities as current	assist companies in determining whether debts or
or non-current”	other liabilities with uncertain maturity dates
	should be classified as current (or to be due
	within one year) or non-current on the balance
	sheets.
	The amendments also clarify the classification
	requirements for debts that companies may settle
	by conversion into equity.
Amendments to IAS	Amendments to IAS 1 mainly include:	January 1, 2023
1 “Disclosure of	‧ Requiring companies to disclose their
Accounting Policies”	material accounting policies rather than
	their significant accounting policies;
	‧ Accounting policy information in relation to
	insignificant transactions, other matters or
	conditions shall be deemed as immaterial
	and the Group is not required to disclose
	such information; and
	‧ Not all accounting policy information
	relating to significant transactions, other
	matters or conditions is considered material
	for the financial statements of a company.
Amendments to IAS	The amendments introduce a new definition of	January 1, 2023
8 “Definition of	accounting estimates, clarifying that accounting
Accounting	estimates are monetary amounts in the financial
Estimates”	statements that are subject to the uncertainty of
	measurement. The amendments also clarify the
	relationship between accounting policies and
	accounting estimates by stating that companies
	are required to establish accounting estimates for
	the purposes of the accounting policies they
	apply.

13

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

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

The Group expects that the following new and amended standards, which have not been endorsed by the FSC, will not have a significant impact on the Consolidated Financial Statements.

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

• Amendments to IAS 12 “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”

IV. Summary of Significant Accounting Policies

The significant accounting policies adopted in the Consolidated Financial Statements are summarized as follows. The following accounting policies have been applied consistently to all periods presented in the Consolidated Financial Statements.

• (I) Compliance declaration

The Group's accompanying Consolidated Financial Statements have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, and International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”), and interpretations from International Financial Reporting Interpretations Committee (“IFRIC”) and Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China (collectively as “IFRSs”).

• (II) Preparation basis

1. Measurement basis

The Consolidated Financial Statements have been prepared on a historical cost basis except for the following items:

• (1) Financial assets measured at fair value through profit or loss;

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

• (3) Defined benefit liability (assets), which are measured based on pension fund assets plus unrecognized service costs in the previous period and unrecognized actuarial losses, less unrecognized actuarial gains, the present value of defined benefit obligations and effect of the asset ceiling as mentioned in Note IV(XVIII).

• Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The Consolidated Financial Statements are presented in New Taiwan Dollars, which is the Company's functional currency. All financial information presented in New Taiwan Dollars has been rounded to the nearest thousand.

14

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(III) Basis of consolidation

1. Principles of preparation of the Consolidated Financial Statements

The entities in the Consolidated Financial Statements include the Company and its subsidiaries.

The financial statements of the subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases. Profit or loss attributable to the non-controlling interests of the subsidiaries is attributed to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. If the Group loses control over a subsidiary, the Group derecognizes the assets and liabilities of the subsidiary, as well as any carrying amount of non-controlling interests at the date of loss of control. In addition, the Group recognizes the fair value of the retained investment in the former subsidiary at the date of loss of control, and also recognizes the resulting difference in profit or loss as income or loss attributable to the Company.

All inter-company transactions, balances and resulting unrealized income and loss are eliminated on consolidation.

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.

1. Subsidiaries included in the Consolidated Financial Statements

Subsidiaries included in the Consolidated Financial Statements are as follows:

Name of Investor Name of Subsidiary Main Business Activities

Percentage of Ownership Description 2021.12.31 2020.12.31

The Company FSP International Inc. (BVI) Investment holdings 〃 FSP Group Inc. Engaged in safety certification 〃 Amacrox Technology Co., Ltd. (BVI) Investment holdings 〃 3Y Power Technology (TAIWAN) Inc. (“3Y Power”) Trading and manufacturing of power supplies and related electronic products 〃 Harmony Trading (HK) Ltd. Trading of power supplies and related electronic products 〃 FSP Technology USA Inc. Business development and product technical service 〃 FSP Turkey Dis Tic. Ltd. Sti.(“FSP Turkey”) Business development and product technical service FSP International Inc. (BVI) Shenzhen Huili Electronic Co., Ltd. (“Huili”) Manufacturing of power supplies and related electronic products

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 65.87% 65.87% 100.00% 100.00% 100.00% 100.00% 91.41% - % Note 3 100.00% 100.00%

15

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Name of Investor Name of Subsidiary Main Business Activities

Percentage of Ownership Description 2021.12.31 2020.12.31

〃 FSP Technology Inc. (BVI) Investment holdings 〃 Proteck Electronics (Samoa) Corp. Investment holdings 〃 Power Electronics Co., Ltd. (BVI) Investment holdings 〃 Famous Holding Ltd. Investment holdings 〃 FSP International (HK) Ltd. Investment holdings FSP Technology Inc. (BVI) FSP-C R&D Center (“FSP Jiangsu”) Research & development and design of various energy saving technology Protek Electronics (Samoa) Corp. Protek Electronics (China) Corp. (“Protek Dongguan”) Manufacturing of power supplies and related electronic products Power Electronics Co., Ltd. (BVI) Zhonghan Electronics (Shenzhen) Co., Ltd. (“Zhonghan”) Manufacturing of power supplies and related electronic products Famous Holding Ltd. WUXI SPI Technology Co., Ltd. (“WUXI SPI”) Manufacturing of power supplies and related electronic products 〃 WUXI Zhonghan Technology Co., Ltd. (“WUXI Zhonghan”) Trading and manufacturing of power supplies and related electronic products FSP International (HK) Ltd. Hao Han Electronic Technology (Jian) Co., Ltd. (“Hao Han”) Trading and manufacturing of electronic components WUXI Zhonghan Shenzhen Zhonghan Technology Co., Ltd. (“Zhonghan Tech.”) Trading and manufacturing of power supplies and related electronic products Amacrox Technology Co., Ltd. (BVI) Amacrox GmbH Trading of power supplies and related electronic products 〃 Proteck Power North America, Inc. Trading of power supplies and related electronic products

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Note 2 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

16

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Name of Investor Name of Subsidiary Main Business Activities	Percentage of Ownership Description 2021.12.31 2020.12.31
3Y Power 3Y Power Technology (USA) Inc.(“3Y Power USA”) Trading of power supplies and related electronic products 〃 Luckyield Co., Ltd. Investment holdings Luckyield Co., Ltd. WUXI 3Y Technology Co., Ltd. (“WUXI 3Y”) Design, manufacturing and trading of power supplies	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Note 1

Note 1. The Company invested in WUXI 3Y through Luckyield Co., Ltd., and the shareholding percentage as of December 31, 2021 and 2020 was 65.87%.

Note 2. Famous Holding Ltd. invested additional capital of RMB25,000 thousand and RMB10,405 thousand in WUXI SPI in June 2020 and November 2020, respectively.

Note 3. The Company acquired a 91.41% stake in FSP Turkey for NT$22,640 thousand (US$800 thousand) on May 31, 2021 and it became a subsidiary of the Company since then.

1. Subsidiaries which are not included in the Consolidated Financial Statements: None.

2. (IV) Foreign currencies

1. Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. At the end of each reporting period (“the reporting date”), monetary items denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on that date.

Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currency based on the exchange rates at the date when the fair value is determined, whereas non-monetary items denominated in foreign currencies measured at historical costs are translated using the exchange rates at the dates of the transactions. The resulting exchange differences are generally recognized in profit or loss, except for the equity instruments designated to be measured at fair value through other comprehensive income, whose exchange differences are recognized in other comprehensive income.

1. Foreign operations

The assets and liabilities of foreign operations are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rates for the period and the resulting exchange differences are recognized in other comprehensive income.

• (V) Classification criteria for current and non-current assets and liabilities

Assets are classified as current assets when one of the following criteria is met, and all other assets are classified as non-current assets:

1. Assets that are expected to be realized, or intended to be sold or consumed within the normal operating cycle.

17

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Assets held mainly for trading purpose.

2. Assets that are expected to be realized within twelve months after the balance sheet date.

3. Cash or cash equivalents, excluding restricted cash or cash equivalents that are reserved for exchange, debt repayment or under other restrictions for more than twelve months after the balance sheet date.

Liabilities are classified as current liabilities when one of the following criteria is met, and all other liabilities are classified as non-current liabilities:

1. Liabilities that are expected to be settled within the normal operating cycle.

2. Assets held mainly for trading purpose.

3. Liabilities that are expected to be settled upon maturity within twelve months after the balance sheet date.

4. The Group is unable to extend the repayment date unconditionally for at least twelve months after the balance sheet date.

5. (VI) Cash and cash equivalents

Cash consists of cash on hand, checking account deposits and saving account deposits. Cash equivalents refer to short-term and highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of changes in value. Time deposits that meet the criteria and are held for the purpose of fulfilling short-term cash commitment rather than other purposes are classified as cash equivalents.

Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents in the Consolidated Statements of Cash Flows.

• (VII) Financial instruments

Accounts receivables are initially recognized when they are incurred. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the financial instruments. Financial assets (excluding accounts receivable without a significant financing component) and financial liabilities that are not measured at fair value through profit or loss, are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition or issue of these financial assets or financial liabilities. Accounts receivable without a significant financing component is initially measured at the transaction price.

1. Financial assets

The Group applies trade date accounting to all regular way purchases or sales of financial assets that are classified in the same way.

At initial recognition, financial assets are classified into the following categories: Financial assets at amortized cost, investments in equity instruments at fair value through other comprehensive income and financial assets at fair value through profit or loss. When the Group changes its business model for managing financial assets, all affected financial assets are reclassified on the first day of the next reporting period.

18

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

• (1) Financial assets at amortized cost

Financial assets are measured at amortized cost if all of the following conditions are met and the financial assets are not designated as measured at fair value through profit or loss:

• Financial assets are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows.

• The contractual terms of the financial assets 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, using initial recognized amount plus or minus cumulative amortization calculated by adopting the effective interest method and taking into account the adjustment of allowance for impairment loss as well. 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.

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

At initial recognition of investments in equity instruments that are not held for trading, the Group may make an irrevocable election to present subsequent changes in fair value of the investments in other comprehensive income. This election is made on an instrument-by-instrument basis.

Investments in equity instruments are subsequently measured at fair value. Dividend income is recognized in profit or loss unless the dividend clearly represents the recovery of part of the investment cost. Other net gains or losses are recognized in other comprehensive income and will not be reclassified to profit or loss.

Dividend income from equity investments is recognized on the date that the Group is eligible to receive the dividends (usually the ex-dividend date).

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

Financial assets that are not classified as measured at amortized cost or at fair value through other comprehensive income as described above are measured at fair value through profit or loss. At initial recognition, the Group may irrevocably designate a financial asset, which meets the criteria to be measured at amortized cost or at fair value through other comprehensive income, to the category measured at fair value through profit or loss if doing so eliminates or significantly reduces the accounting mismatch that would otherwise arise.

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

• (4) Impairment of financial assets

The Group recognizes loss allowance for expected credit loss on financial assets at amortized cost, including cash and cash equivalents, financial assets at amortized cost, notes and accounts receivable, other receivables and refundable deposits.

19

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The Group measures loss allowance for notes and accounts receivable at the amount equal to lifetime expected credit loss. Taking into account reasonable and supportable information available without undue cost or effort, including both quantitative and qualitative information and analysis based on the Group's historical experience, credit assessment, as well as forward-looking information, the Group measures the impairment of financial assets at amortized cost according to 12-month expected credit loss when the credit risk of the financial assets has not increased significantly since initial recognition. If there has been a significant increase in credit risk since initial recognition, the impairment is measured based on lifetime expected credit loss.

Lifetime expected credit loss refers to the expected credit loss resulting from all possible default events over the expected life of the financial instrument.

12-Month expected credit loss refers to the expected credit loss resulting from default events of the financial instrument that are likely to occur within the 12 months after the reporting date (or a shorter period if the expected life of the financial instrument is less than 12 months).

The maximum period considered when estimating expected credit loss is the maximum contractual period over which the Group is exposed to credit risk.

Expected credit loss is the probability-weighted estimate of credit loss over the expected life of financial instruments. Credit loss is measured at the present value of all cash shortfalls (i.e., the difference between the cash flows due to the Group in accordance with the contracts and the cash flows that the Group expects to receive). Expected credit loss is discounted at the effective interest rate of the financial assets.

Loss allowance for financial assets at amortized cost is deducted from the carrying amount of the assets. The amount of provision or reversal of loss allowance is recognized in profit or loss.

The carrying amount of the financial assets is written off when the Group has no reasonable expectation of recovering the entire or part of the financial assets. The Group individually makes the assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects there will be no significant reversal on the write-off amount. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedure for collecting overdue amount.

(5) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or the Group transfers the financial asset in which almost all of the risks and returns associated with the ownership of the financial asset are transferred to other companies or in which the Group neither transfers nor retains nearly all of the risks and returns of ownership and it does not hold control on the financial asset.

20

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

When the Group enters into transactions of financial asset transfer, if all or almost all of the risks and returns associated with the ownership of the transferred asset is retained, the transferred asset continues to be recognized in the balance sheet.

2. Financial liabilities and equity instruments

• (1) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the amount of consideration received, less the direct issuing cost.

(2) Treasury shares

When the Group buys back its shares recognized as equity, the amount of consideration paid, including directly attributable costs, is recognized as a deduction from equity. Shares bought back 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 offset).

When the treasury shares are retired, the capital surplus - premium on stock account and capital stock account should be debited proportionately according

to the shareholding. The carrying value of treasury shares in excess of the sum of the par value and premium on stock should first be offset against capital surplus from the same class of treasury share transactions, and the remainder, if any, debited to retained earnings. The sum of the par value and premium on treasury shares in excess of the carrying value should be credited to capital surplus from the same class of treasury share transactions.

(3) Financial liabilities

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 gains or losses on derecognition is also recognized in profit or loss.

(4) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligation has been fulfilled or cancelled, or has expired. The Group also derecognizes a financial liability when its terms are amended and the cash flows of the amended liability are substantially different, in which case a new financial liability based on the amended terms is recognized at fair value.

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

21

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

• (5) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and presented on a net basis only when the Group has the legally enforceable right to offset and intends to settle on a net basis or to liquidate asset for settling the liabilities simultaneously.

(VIII) Inventories

The cost of inventories comprises all costs incurred in bringing the inventories to their present location and condition ready for sale. The variable manufacturing expenses are allocated based on the actual production volume. Fixed manufacturing expenses are allocated to finished goods and work in process based on the normal capacity of the production equipment. Unallocated fixed manufacturing expenses resulting from lower production capacity or idle equipment shall be recognized as cost of goods sold in the period in which they are incurred. If actual production volume is higher than the normal production capacity, the difference is recognized as a reduction of cost of goods sold. The monthly weighted-average method is adopted for the calculation of the costs.

Inventories are measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the normal course of business, less the estimated costs of completion and selling expenses at the end of the period. When the cost of inventories is higher than the net realizable value, inventories are written down to net realizable value, and the write-down amount is recognized in cost of goods sold. If net realizable value increases in the future, the cost of inventories is reversed within the original write-down amount, and such reversal is treated as a reduction of cost of goods sold for the period.

• (IX) Non-current assets held for sale

When the Board of Directors resolves to sell part of the property, plant and equipment and right-of-use assets, the Group begins to apply the accounting policies related to noncurrent assets held for sale.

Non-current assets that are highly probable to be recovered primarily through a sale transaction, rather than through continuing use, are classified as non-current assets held for sale. Before the initial classification of the non-current assets held for sale, the carrying amount of the assets is measured in accordance with the Group's applicable accounting policies. Afterwards, the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses for assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Nevertheless, the reversal gains are not recognized in excess of any cumulative impairment loss.

Property, plant and equipment, and right-of-use assets are no longer amortized or depreciated when they are classified as held for sale.

• (X) Investments in associates

An associate is an entity in which the Group has significant influence, but not control over their financial and operating policies. The Group is deemed to have significant influence when it holds 20% to 50% of the voting rights of the investee company.

22

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Investments in associates are accounted for using the equity method. Under the equity method, investments in associates are recognized initially at cost. Subsequent adjustments are based on the changes in the Group's share of net assets. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

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

When the Group's share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. Additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group discontinues the use of the equity method and measures the retained interest at fair value from the date when its investment ceases to be an associate. The difference between the fair value of retained interest and proceeds from disposing of a part of interest in the associate, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Group accounts for all the amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss or retained earnings on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss or retained earnings when the equity method is discontinued. If the Group's ownership interest in an associate is reduced while it continues to apply the equity method, the Group reclassifies the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to the reduction in ownership interest to profit or loss or retained earnings.

(XI) Property, Plant, and Equipment

1. Recognition and measurement

Property, plant and equipment are measured at cost, 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 gains or losses on disposal of property, plant and equipment are recognized in profit or loss.

1. Subsequent costs

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

1. Depreciation

Depreciation is calculated on the cost of assets less their residual values and is recognized in profit or loss using the straight-line method over the estimated useful lives of each component of property, plant and equipment.

23

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Land is not depreciated.

Land is not depreciated.	Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
Housing and Construction	1~50 years
Buildings and Building Improvements	5~15 years
Machinery	1~24 years
Transportation Equipment	4~19 years
Other Equipment	1~26 years
Leasehold Improvements	3~11 years

The Group reviews depreciation methods, useful lives and residual values on each reporting date and makes appropriate adjustments when necessary.

• (XII) Leases - Lessee

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.

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 Group periodically assesses whether the right-of-use asset is impaired and recognizes any impairment loss that has occurred. The right-of-use asset is adjusted when the remeasurement of the lease liabilities takes place.

The lease liability is initially measured at the present value of the lease payments that have not been paid on the commencement date. If the interest rate implied by the lease is easy to determine, it would be used as the discount rate. If the implied interest rate is not easy to determine, the Group's incremental borrowing rate is applied. Generally, the Group uses its incremental borrowing rate as the discount rate.

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

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 at the commencement date;

3. Amounts expected to be payable under residual value guarantees; and

4. The exercise price of a purchase option or payments of penalties for exercising the option to terminate the lease, if the lessee is reasonably certain to exercise that option.

24

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The interests of lease liabilities are subsequently calculated using the effective interest method and lease liabilities are 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 estimate of the amount expected to be payable under a residual value guarantee;

3. There is a change in the assessment on the purchase option of the underlying asset;

4. There is a change in the lease term assessment resulting from a change in the estimate regarding whether the extension or termination option will be exercised;

5. There is any modification in lease subject, scope of the lease or other clauses.

When the lease liability is remeasured under the above-mentioned circumstances other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset. If the carrying amount of the right-of-use asset is reduced to zero, the remaining remeasurement amount is recognized in profit or loss.

When the lease liability is remeasured due to lease modification that decreases the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognizes the difference between the carrying amount of the right-of-use asset and the remeasurement amount of lease liability in profit or loss.

The Group presents right-of-use assets that do not meet the definition of investment properties, and lease liabilities as a separate line item respectively in the Consolidated Balance Sheets.

The Group has elected not to recognize right-of-use assets and lease liabilities for certain short-term leases of buildings and construction, machinery and equipment, and transportation equipment leases and for leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The Group applies the practical expedient to the rent concessions that meet all of the following criteria without assessing if they are lease modification.

1. Rent concession is a direct consequence of the COVID-19 pandemic;

2. As a result of the change in lease payments, revised consideration for the lease is almost the same as, or less than, the consideration for the lease prior to the change;

3. Any reduction in lease payments affects only payments originally due on or before June 30, 2022; and

4. There is no change in substance to the other terms and conditions of the lease.

With the application of practical expedient, the amount of changes in lease payments arising from rent concessions is recognized in profit or loss for the reporting period.

25

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(XIII) Intangible assets

1. Recognition and measurement

Goodwill of the Group occurred in the business combination prior to the date of IFRS adoption. Upon conversion to IFRS endorsed by the FSC, the Group elected to restate only those business combinations that occurred after January 1, 2012 (inclusive). For acquisitions made before January 1, 2012, the amount of goodwill was recognized in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers issued by the FSC on January 10, 2009, and Accounting Standards and related interpretations (hereinafter referred to as "previously generally accepted accounting principles") issued by the Accounting Research and Development Foundation of the Republic of China.

Group's other separately acquired intangible assets with finite useful lives, including software and patents, are carried at cost less accumulated amortization and accumulated impairment losses.

1. Subsequent expenditures

Subsequent expenditures are capitalized only when they increase the future economic benefits of the specific asset to which they relate. All other expenditures are recognized in profit or loss as incurred, including internally developed goodwill and brands.

1. Amortization

Except for goodwill, amortization is calculated based on the cost of the asset less the estimated residual value, and is recognized in profit or loss using the straightline method over the estimated useful life of the intangible asset when it becomes available for use.

The estimated useful lives for the current and comparative periods are as follows:

Software cost 1~5 years Patent 91 months

The Group reviews the amortization method, useful life and residual value of the intangible assets on each reporting date and makes appropriate adjustments when necessary.

• (XIV) Impairment of non-financial assets

The Group assesses on each reporting date whether there is any indication that the carrying amount of non-financial assets (excluding inventories, deferred income tax assets, employee benefit related assets) may be impaired. If any such indication exists, then the recoverable amount of the asset is estimated. Goodwill is tested for impairment on an annual basis.

For the purpose of impairment testing, assets are divided into the smallest group of identifiable assets that generates cash inflows largely independent of the cash inflows from other individual asset or groups of assets. Goodwill arising from a business combination is allocated to cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the combination.

26

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The recoverable amount of an individual asset or cash-generating unit is the higher of its value in use and its fair value less costs to sell. An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds the 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 cash-generating unit, and then to reduce the carrying amount of the other assets in the cash-generating unit on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other non-financial assets, an impairment loss is reversed only to the extent that the asset's carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the assets in prior years.

(XV) Provisions for liabilities

Provisions are recognized when the Group has a present obligation as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

A provision for maintenance is recognized when the underlying products or services are sold. The provision is estimated based on historical maintenance rates and maintenance cost per unit.

(XVI) Revenue recognition

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 goods or services to a customer. Transfer of control of the product occurs 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 are shipped to the specific location, the risks of obsolescence and loss are transferred to the customer, and either the customer accepts the products according to the sales contract with the acceptance provisions being invalid or the Group has objective evidence that all criteria for acceptance have been satisfied.

(XVII) Government grant

When the Group can receive the government grant relating to the operating activities, such grant with no conditions attached is recognized as non-operating income. The Group recognizes the grant relating to assets as deferred income at fair value when there is reasonable assurance that the Group will comply with the conditions attached to the grant and that the grant will be received. The above deferred income is recognized as non-operating income over the estimated useful lives of the related assets on a systematic basis. If the government grant is used to compensate the Group's expenses or losses, such government grant is recognized in profit or loss over the period necessary to match it with the related expenses, for which it is intended to compensate, on a systematic basis.

(XVIII) Employee benefits

1. Defined contribution plans

Obligations for contributions to defined contribution pension plans are expensed during the period in which employees render services.

27

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

2. Defined benefit plans

The Group's net obligation in respect of defined benefit pension plans is calculated separately for each 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 defined benefit obligation is calculated annually by qualified actuaries using the projected unit credit method. When the calculation result may be beneficial to the Group, the recognized assets shall be limited to the present value of any economic benefits available in the form of refunding the contribution from the plan or reducing the future contribution to the plan. When calculating the present value of economic benefits, the minimum contribution requirements are considered.

The remeasurements of the net defined benefit liability comprise actuarial gains and losses, return on plan assets (excluding interest), and any changes in the effect of the asset ceiling (excluding interest). The remeasurements of the net defined benefit liability are recognized in other comprehensive income and reflected in retained earnings. The net interest expense (income) of the net defined benefit liabilities (assets) is calculated based on the net defined benefit liabilities (assets) and the discount rate determined at the beginning of the annual reporting period. The net interest expense and other expenses of the defined benefit plan are recognized in profit or loss.

When the plan is revised or reduced, the amount of changes in benefits related to the past service costs or reduced benefits or losses is recognized in profit or loss. When the settlement occurs, the Group shall recognize the settlement gain or loss of the defined benefit plan.

1. Short-term employee benefits

Short-term employee benefit obligations are expensed during the period in which employees render services. If the Group has a present legal or constructive obligation to make such payments as a result of past service provided by the employees and the obligation can be estimated reliably, the amount of payments is recognized as a liability.

(XIX) Income Tax

Income taxes comprise current taxes and deferred income taxes. Current and deferred income taxes are recognized in profit or loss unless they relate to business combinations or items recognized directly in equity or other comprehensive income.

Current income 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 based on tax rates enacted or substantively enacted at the reporting date.

Deferred income taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred income taxes are not recognized for the following temporary differences:

28

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

2. 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

3. Taxable temporary differences arising from the initial recognition of goodwill.

Deferred income tax assets are recognized for unused tax losses, 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 reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred income taxes are measured at tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred income tax assets and deferred income tax liabilities are offset when the following criteria are met:

1. The Group has a legally enforceable right to set off current income tax assets against current income tax liabilities; and

2. The deferred income tax assets and the deferred income tax liabilities relate to income taxes levied by the same taxation authority on either:

3. (1) The same taxable entity; or

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

(XX) Business combinations

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

Acquisition-related costs are expensed as incurred except for the costs related to issuance of debt or equity instruments.

29

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

On an transaction-by-transaction basis, the Group measures any non-controlling interests in the acquiree at the non-controlling interest's proportionate share of the acquiree's identifiable net assets, if the non-controlling interests are present ownership interests and entitle their holders to a proportionate share of the acquiree's net assets in the event of liquidation.

(XXI) Earnings per Share

The basic and diluted EPS attributable to stockholders of the Company are disclosed in the Consolidated Financial Statements. Basic EPS of the Group is calculated by dividing net income attributable to stockholders of the Company by the weighted-average number of common shares outstanding during the year. In calculating diluted EPS, the net income attributable to stockholders of the Company and weighted-average number of common shares outstanding during the year are adjusted for the effects of dilutive potential common shares. The Group's dilutive potential common shares include estimates of employee compensation.

(XXII) Segment Information

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 key operation decision maker, who determine the allocation of resources to the segment and assesses its performance.

V. Primary Sources of Uncertainties in Material Accounting Judgments, Estimates, and Assumptions

The preparation of the Consolidated Financial Statements in conformity with IFRS endorsed by the Financial Supervisory Commission 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 the estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in the future periods affected.

The Consolidated Financial Statements involve material judgment as to whether the Group has substantive control over the investee, FSP Group USA Corp. and it has a material impact on the amounts recognized in the Consolidated Financial Statements. The related information is as follows:

The Group holds 45% of the shares of FSP Group USA Corp., and the remaining 55% of the shares are held by the other three shareholders. In the past years, these three shareholders attended each shareholders’ meeting and hence the Group did not have more than half of the voting rights. These three shareholders may jointly exercise the right of consent at the shareholders’ meeting due to the same position. In addition, the Group did not assume the position of director, so it was determined that the Group only has significant influence over FSP Group USA Corp.

In the Consolidated Financial Statements, there is no accounting policy that involves significant estimates and assumptions, and the information on accounting policies does not have a material impact on the amounts recognized in the Consolidated Financial Statements.

30

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

VI. Details of Significant Accounts

Details of Significant Accounts
(I) Cash and cash equivalents Cash on hand Cash equivalents Money market funds Repurchase agreements Deposits in saving accounts and checking accounts Time deposits	2021.12.31 $ 10,346 21,651 - 1,772,124 990,132	2020.12.31 7,111 21,763 114,435 1,368,659 1,539,149 3,051,117
	$ 2,794,253

Please refer to Note VI(XXV) for the disclosure of interest rate risk of the Group’s financial assets and liabilities.

(II) Financial assets at fair value through profit or loss 2021.12.31 Financial assets mandatorily measured at fair value through profit or loss Non-derivative financial assets Beneficiary certificates $ 232,758 Private equity funds 12,000 Foreign unlisted stocks 71,632 Structured deposits 199,684 Total $ 516,074	(II) Financial assets at fair value through profit or loss 2021.12.31 Financial assets mandatorily measured at fair value through profit or loss Non-derivative financial assets Beneficiary certificates $ 232,758 Private equity funds 12,000 Foreign unlisted stocks 71,632 Structured deposits 199,684 Total $ 516,074	2020.12.31 210,388 - 67,232 288,112 565,732
	$ 516,074

As of December 31, 2021 and 2020, the Group held structured deposits and expected yields ranged from 1.40% to 3.30% with maturity from January 2022 to March 2022, and 1.65% to 4.25% with maturity from January 2021 to February 2021, respectively.

The Group recognized dividend income of NT$420 thousand and NT$0 in 2021 and 2020 respectively from the above financial assets at fair value through profit or loss.

Please refer to Note VI(XXIV) for the amounts recognized in profit or loss arising from remeasurement at fair value.

Please refer to Note VI(XXV) for the information of market risk.

31

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(III) Financial assets at fair value through other comprehensive income 2021.12.31 Equity instruments at fair value through other comprehensive income Domestic listed stock - Voltronic Power Technology Corp. $ 6,213,715 Domestic listed stock - JESS-LINK Products Co., Ltd. 351,144 Domestic listed stock - WT Microelectronics Co., Ltd. 48,950 Domestic listed stock - Taiwan Cement Corp. 2,400 Domestic listed stock - Taiwan Semiconductor Manufacturing Co., Ltd. 6,150 Foreign listed stocks 18,118 Foreign unlisted stocks 26,494 Domestic unlisted stocks 96,167 Total $ 6,763,138	(III) Financial assets at fair value through other comprehensive income 2021.12.31 Equity instruments at fair value through other comprehensive income Domestic listed stock - Voltronic Power Technology Corp. $ 6,213,715 Domestic listed stock - JESS-LINK Products Co., Ltd. 351,144 Domestic listed stock - WT Microelectronics Co., Ltd. 48,950 Domestic listed stock - Taiwan Cement Corp. 2,400 Domestic listed stock - Taiwan Semiconductor Manufacturing Co., Ltd. 6,150 Foreign listed stocks 18,118 Foreign unlisted stocks 26,494 Domestic unlisted stocks 96,167 Total $ 6,763,138	2020.12.31 5,040,921 109,200 48,550 - - 19,344 26,494 28,667
	$ 6,763,138	5,273,176

1. Investments in equity instruments at fair value through other comprehensive income

The Group holds these investments in equity instruments as long-term strategic investments and are not held for trading purposes, so these investments have been designated to be measured at fair value through other comprehensive income.

The Group recognized dividend income of NT$122,513 thousand and NT$107,452 thousand in 2021 and 2020 respectively from the above investments in equity instruments designated as measured at fair value through other comprehensive income.

In order to meet the needs of funding plan, the Group divested the shares of Voltronic Power Technology Corp. designated at fair value through other comprehensive income in 2021 and 2020 and the fair value at the time of disposal was NT$660,425 thousand and NT$216,963 thousand with disposal gains of NT$658,165 thousand and NT$215,901 thousand, respectively. The Group also divested the shares of FSP-Powerland Technology Inc. in July 2020 and the fair value at the time of disposal was NT$84,480 thousand with disposal gains of NT$73,876 thousand.

1. Please refer to Note VI(XXV) for the information of market risk.

(IV) Financial assets at amortized cost

Corporate bond - Novaland Group (NVL) Less: Allowance for impairment loss Total	2021.12.31 $ 10,800 - $ 10,800	2020.12.31 - -
		-

32

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The Group assesses that the asset is held to maturity to receive contractual cash flows. The asset is classified as financial assets at amortized cost because the cash flows from the financial asset are solely the payment of principal and interest on the outstanding principal amount.

1. In June 2021, the Group purchased the corporate bond of Novaland Group (NVL) due in 18 months at a face value of NT$10,959 thousand with a coupon rate of 10.00%.

2. Please refer to Note VI(XXV) for the information of credit risk.

(V)

Notes receivable and accounts receivable

Notes receivable Accounts receivable Accounts receivable - related parties Less: Allowance for impairment loss	2021.12.31 $ 62,112 3,904,501 801,748 (39,771)	2020.12.31 85,453 3,649,003 616,753 (42,029)
	$ 4,728,590	4,309,180

Group's notes receivable and accounts receivable were not discounted or provided as collaterals.

The Group applies the simplified approach to estimate expected credit loss for all notes receivable and accounts receivable, i.e. the use of lifetime expected credit loss for all receivables. For the measurement purpose, notes receivable and accounts receivable are grouped according to common credit risk characteristics that represent the customer's ability to pay all amounts due under the terms of the contract. Forwardlooking information, including macro economy and related industry information, is taken into consideration as well.

Analysis of expected credit loss on notes receivable and accounts receivable of the Group's operating entity in Taiwan was as follows:

Not Past Due Past due within 30 days Past due 31-60 days Past due 61-90 days Past due 91-120 days Past due over 121 days		2021.12.31		Allowance for expected credit loss 10,532 15,748 1,000 1,978 64 2,412 31,734
	Carrying amount of notes receivable and accounts receivable	Weighted- average expected credit loss rate (%) 0~0.35 14.41 40.57 72.80 82.48 100.00
	$ 3,511,925 109,271 2,464 2,717 78 2,412
	$ 3,628,867

33

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The carrying amount of the above notes and accounts receivable did not include the account receivable due from a specific customer, amounting to NT$5,361 thousand. Due to poor recovery of the account receivable due from this customer, the Group has specifically recorded an allowance for loss of NT$1,072 thousand for this uncollected payment, net of insurance claims, and therefore the amount was excluded from the above calculation of allowance for expected credit loss.

Not Past Due Past due within 30 days Past due 31-60 days Past due 61-90 days Past due 91-120 days Past due over 121 days		2020.12.31		Allowance for expected credit loss 5,385 2,241 2,294 2,982 677 12,272 25,851
	Carrying amount of notes receivable and accounts receivable $ 3,135,248 18,100 6,053 4,068 823 12,272	Weighted- average expected credit loss rate (%)
		0~0.20 12.38 37.90 73.31 82.27 100.00
	$ 3,176,564

The carrying amount of the above notes and accounts receivable did not include the account receivable due from a specific customer, amounting to NT$19,793 thousand. Due to poor recovery of the account receivable due from this customer, the Group has specifically recorded an allowance for loss of NT$3,959 thousand for this uncollected payment, net of insurance claims, and therefore the amount was excluded from the above calculation of allowance for expected credit loss.

The analysis of the expected credit loss on notes receivable and accounts receivable for the Group's operating entities in Mainland China is provided below:

2021.12.31

Not Past Due Past due within 30 days Past due 31-60 days Past due 61-90 days Past due 91-120 days Past due over 121 days	Carrying amount of notes receivable and accounts receivable $ 939,699 21,821 5,407 2,497 - 13	Weighted- average expected credit loss rate (%) 0.04 0.04 0.04 0.04 0.04 0.04	Weighted- average expected credit loss rate (%) 0.04 0.04 0.04 0.04 0.04 0.04	Allowance for expected credit loss 366 8 2 1 - - 377
	$ 969,437

34

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Not Past Due Past due within 30 days Past due 31-60 days Past due 61-90 days Past due 91-120 days Past due over 121 days		2020.12.31	2020.12.31	Allowance for expected credit loss 5,759 229 125 10 - 38
	Carrying amount of notes receivable and accounts receivable $ 997,880 39,604 21,725 1,756 - 6,542	Weighted- average expected credit loss rate (%) 0.58 0.58 0.58 0.58 0.58 0.58
	$ 1,067,507			6,161

The analysis of the expected credit loss on notes receivable and accounts receivable for other operating entities of the Group is provided below:

Not Past Due Past due within 30 days Past due 31-60 days		2021.12.31		Allowance for expected credit loss - - -
	Carrying amount of notes receivable and accounts receivable $ 139,257 17,666 1,185	Weighted- average expected credit loss rate (%)
		- - -
	$ 158,108			-

The carrying amount of the above notes and accounts receivable did not include the accounts receivable due from certain customers, amounting to NT$6,588 thousand. As the accounts receivable due from these customers were unlikely to recover, the Group has recognized allowance for full losses, and therefore they were excluded from the above calculation of allowance for expected credit loss.

35

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Not Past Due Past due within 30 days Past due 31-60 days Past due 61-90 days		2020.12.31		Allowance for expected credit loss - - - -
	Carrying amount of notes receivable and accounts receivable	Weighted- average expected credit loss rate (%) - - - -
	$ 63,485 11,455 5,809 538
	$ 81,287			-

The carrying amount of the above notes and accounts receivable did not include part of account receivable due from a specific customer, amounting to NT$6,058 thousand. As the accounts receivable due from these customers were unlikely to recover, the Group has recognized allowance for full losses, and therefore they were excluded from the above calculation of allowance for expected credit loss.

Changes in the allowance for notes receivable and accounts receivable were as follows:

Beginning balance Acquired through business combination Impairment losses recognized Write-off Effect of exchange rate changes Ending balance (VI) Other receivables Other receivables Less: Loss allowances Changes in loss allowance for other receivables: Beginning balance Reversal of impairment loss Effect of exchange rate changes Ending balance	2021 $ 42,029 1,073 3,828 (6,613) (546)	2020 37,515 - 8,611 (3,953) (144) 42,029 2020.12.31 70,402 (5,348) 65,054 2020 5,629 - (281) 5,348
	$ 39,771
	2021.12.31 $ 73,866 (460)
	$ 73,406
	2021 $ 5,348 (4,794) (94)
	$ 460

36

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(VII) Inventories Finished goods Work in process Raw materials Breakdown of cost of goods sold: Inventories sold Inventory valuation loss (reversal gain) Loss (gain) on inventory counts Unallocated manufacturing expense Loss on inventory obsolescence Income from sales of scraps	2021.12.31 $ 1,844,900 712,743 1,032,903	2020.12.31 1,465,495 582,371 607,465 2,655,331 2020 12,689,669 (21,110) (2) 12,515 49,312 (253) 12,730,131
	$ 3,590,546
	2021 $ 14,070,012 9,910 171 87,495 57,613 (1)
	$ 14,225,200

As of December 31, 2021 and 2020, the Group did not pledge any inventories as collateral.

(VIII) Non-current assets held for sale

In line with the land acquisition reserve plan of Wuxi Xinwu District Land Reserve Center, on June 28, 2019, the Board of Directors of the Group resolved to sell the right-of-use assets - land, buildings and construction of its subsidiary, WUXI Zhonghan. In August 2019, the Group entered into a sale contract with Wuxi Xinwu District Land Reserve Center for NT$421,714 thousand for the above-mentioned right-of-use, buildings and construction. In accordance with the contract, the first installment of NT$130,300 thousand was received in September 2019, and the second installment of NT$161,114 thousand was received in June 2020. The transfer registration was completed and disposal gain of NT$326,059 thousand was recognized. The final payment of NT$130,300 thousand has been received in November 2020.

To cooperate with the Jian National High-tech Industrial Development Zone Management Committee of Jian County in Jiangxi Province for its Land Acquisition and Reserve plan, the Group's Board of Directors resolved on August 7, 2021 to sell the right-of-use assets - land, buildings and construction of its subsidiary, Hao Han. In August 2021, the Group signed a sales contract with Asap Electronics (Jiangxi) Co., Ltd., and the disposal amount of above-mentioned right-of-use, buildings and construction was NT$87,067 thousand. In accordance with the contract, the first installment of NT$34,827 thousand was received in August 2021. The transfer registration was completed in December 2021 and disposal gain of NT$72,399 thousand was recognized. The final payment of NT$52,240 thousand was also received in December 2021.

37

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(IX) Investments Accounted for Using the Equity Method

A summary of the Group's investments accounted for using the equity method at the reporting date is provided below:

Associate	2021.12.31 $ 26,947	2020.12.31 25,319

1. Associate

Aggregated financial information on associates that were accounted for using the equity method and were not individually material to the Group is summarized below. These financial information was included in the amount of the Consolidated Financial Statements.

below. These financial information was Consolidated Financial Statements.	included in the	amount of the
The carrying amount of investments in associates that were not individually material to the Group at the end of the period Attributable to the Group: Income from Continuing Operations Other comprehensive income Total comprehensive income	2021.12.31 $ 26,947	2020.12.31 25,319
	2021 $ 3,284 (809)	2020 3,049 (1,400)
	$ 2,475	1,649

2. Collateral

As of December 31, 2021 and 2020, the Group did not pledge any investments accounted for under the equity method as collateral.

(X) Acquisition of subsidiaries and non-controlling interests

In order to expand the business in Turkey, the Group acquired 91.41% of the shares of FSP Turkey for NT$22,640 thousand (US$800 thousand) on May 31, 2021, and gained control over the company.

For the seven-month period from the acquisition date to December 31, 2021, the revenue and net profit contributed by FSP Turkey amounted to NT$49,700 thousand and NT$4,951 thousand, respectively. If the acquisition had occurred on January 1, 2021, management estimates that the Group's revenue in 2021 would have reached NT$16,694,312 thousand with a net income of NT$802,525 thousand. When estimating these amounts, management has assumed that the fair value adjustments on the date of acquisition had been the same and the acquisition had occurred on January 1, 2021.

The fair values of the major categories of consideration transferred at the date of acquisition were as follows: Cash $ 22,640

38

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

As of May 31, 2021, the fair value of identifiable assets and liabilities was as follows:	As of May 31, 2021, the fair value of identifiable assets and liabilities was as follows:	As of May 31, 2021, the fair value of identifiable assets and liabilities was as follows:
Cash and cash equivalents	$	26,472
Net notes receivable		494
Net accounts receivable		11,899
Inventories		16,528
Prepayments		6,172
Other current assets		309
Property, Plant, and Equipment		736
Other Non-Current Assets		2
Accounts payable		(8,796)
Other payables		(19,665)
Other current liabilities		(6,624)
	$	27,527
Gains on bargain purchase arising from acquisition:
Transfer Price	$	22,640
Add: Non-controlling interests (measured by non-controlling
interest's proportionate share of identifiable net assets)		2,364
Less: The fair value of identifiable net assets		(27,527)
Gains on bargain purchase (recognized in other income)	$	(2,523)

(XI) Property, Plant, and Equipment

The changes in costs, depreciation and impairment loss of property, plant and equipment for the years ended December 31, 2021 and 2020 were as follows:

Cost or deemed cost: Balance as of January 1, 2021 Acquired through business combinations (Note VI (X)) Addition Disposal and obsolescence Reclassification (Note 1) Effect of exchange rate changes Balance as of December 31, 2021 Balance as of January 1, 2020 Addition Disposal and obsolescence Reclassification (Note 1) Effect of exchange rate changes Balance as of December 31, 2020 Depreciation and impairment loss: Balance as of January 1, 2021 Acquired through business		Land $ 310,476 - - - - -	Housing and Construction 1,098,471 - 56,261 (2,295) 5,685 (2,383)	Buildings and Building Improvements 27,416 - 351 - - (178) 27,589 24,402 2,670 (85) - 429 27,416 5,371 -	Buildings and Building Improvements 27,416 - 351 - - (178) 27,589 24,402 2,670 (85) - 429 27,416 5,371 -	Machinery 1,110,067 222 80,919 (7,804) 2,279 (8,596)	Transportation Equipment 16,812 - 3,460 (1,111) - (130) 19,031 16,638 - - - 174 16,812 13,354 -	Transportation Equipment 16,812 - 3,460 (1,111) - (130) 19,031 16,638 - - - 174 16,812 13,354 -	Other Equipment 435,223 533 40,487 (5,872) 5,513 (1,582)	Leasehold Improvements 66,062 - 6,684 - 2,112 (651) 74,207 59,361 8,747 (3,517) 273 1,198 66,062 21,343 -	Leasehold Improvements 66,062 - 6,684 - 2,112 (651) 74,207 59,361 8,747 (3,517) 273 1,198 66,062 21,343 -	Construction in progress and equipment under installation 78,707 - 24,157 - (74,989) -	Total 3,143,234 755 212,319 (17,082) (59,400) (13,520)
		$ 310,476	1,155,739		27,589	1,177,087		19,031	474,302		74,207	27,875	3,266,306
		$ 310,476 - - - -	1,090,077 3,000 (233) 103 5,524		24,402 2,670 (85) - 429	1,006,278 110,093 (28,661) 7,905 14,452		16,638 - - - 174	419,807 19,679 (6,544) 961 1,320		59,361 8,747 (3,517) 273 1,198	3,417 75,308 - (18) -	2,930,456 219,497 (39,040) 9,224 23,097
		$ 310,476	1,098,471		27,416	1,110,067		16,812	435,223		66,062	78,707	3,143,234
		$ - -	479,797 -		5,371 -	751,234 -		13,354 -	348,326 19		21,343 -	- -	1,619,425 19

39

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

combinations (Note VI (X)) Recognition in current period Disposal and obsolescence Reclassification (Note 1) Effect of exchange rate changes Balance as of December 31, 2021 Balance as of January 1, 2020 Recognition in current period Disposal and obsolescence Reclassification (Note 1) Effect of exchange rate changes Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020		Land - - - -	Housing and Construction 46,470 (1,790) (53,634) (1,781)	Buildings and Building Improvements 2,044 - - (28) 7,387 3,418 1,871 (16) - 98 5,371 20,202 22,045	Buildings and Building Improvements 2,044 - - (28) 7,387 3,418 1,871 (16) - 98 5,371 20,202 22,045	Machinery 86,989 (7,395) - (6,482)	Transportation Equipment 952 (1,102) - (119) 13,085 12,325 904 - - 125 13,354 5,946 3,458	Transportation Equipment 952 (1,102) - (119) 13,085 12,325 904 - - 125 13,354 5,946 3,458	Other Equipment 37,011 (5,815) - (877)	Leasehold Improvements 8,368 - - (376) 29,335 15,478 6,799 (1,437) 93 410 21,343 44,872 44,719	Leasehold Improvements 8,368 - - (376) 29,335 15,478 6,799 (1,437) 93 410 21,343 44,872 44,719	Construction in progress and equipment under installation - - - -	Total 181,834 (16,102) (53,634) (9,663)
		$ -	469,062		7,387	824,346		13,085	378,664		29,335	-	1,721,879
		$ - - - - -	428,775 47,077 (168) - 4,113		3,418 1,871 (16) - 98	692,475 77,459 (27,580) 84 8,796		12,325 904 - - 125	319,147 35,591 (6,371) (912) 871		15,478 6,799 (1,437) 93 410	- - - - -	1,471,618 169,701 (35,572) (735) 14,413
		$ -	479,797		5,371	751,234		13,354	348,326		21,343	-	1,619,425
		$ 310,476	686,677		20,202	352,741		5,946	95,638		44,872	27,875	1,544,427
		$ 310,476	618,674		22,045	358,833		3,458	86,897		44,719	78,707	1,523,809

Note 1. For the years ended December 31, 2021 and 2020, the amount transferred from equipment prepayment was NT$7,606 thousand and NT$9,959 thousand, respectively.

Note 2. For the year ended December 31, 2021, the cost and accumulated depreciation transferred to non-current assets held for sale were NT$67,006 thousand and NT$53,634 thousand, respectively. Note 3. For the year ended December 31, 2020, the cost and accumulated depreciation transferred to intangible assets were NT$735 thousand and NT$735 thousand, respectively.

Please refer to Note VIII for the details of property, plant and equipment that have been pledged as collaterals for long-term and short-term borrowings and credit facilities as of December 31, 2021 and 2020.

(XII) Right-of-use assets

The changes in the costs and depreciation of land, buildings and construction, transportation equipment and office equipment leased by the Group were as follows:

Costs of right-of-use assets: Balance as of January 1, 2021 Addition Reduction (contract expired and early termination of contract) Reclassification to non- current assets held for sale Effect of exchange rate changes Balance as of December 31, 2021 Balance as of January 1, 2020 Addition Reduction (contract modification, contract expired and early termination of contract) Effect of exchange rate changes Balance as of December 31,	Land $ 29,112 - - (1,435) (131)	Housing and Construction	Transportation Equipment 3,404 716 (661) - (8) 3,451 3,104 784 (501) 17 3,404	Transportation Equipment 3,404 716 (661) - (8) 3,451 3,104 784 (501) 17 3,404	Office Equipment - - - - -	Total 816,145 300,151 (14,458) (1,435) (22,746)
		783,629 299,435 (13,797) - (22,607)
	$ 27,546	1,046,660		3,451	-	1,077,657
	$ 29,018 - (197) 291	769,019 12,727 (6,593) 8,476		3,104 784 (501) 17	229 - (229) -	801,370 13,511 (7,520) 8,784
	$ 29,112	783,629		3,404	-	816,145

40

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

2020 Depreciation of right-of-use assets: Balance as of January 1, 2021 Depreciation in current period Reduction (contract expired and early termination of contract) Reclassification to non- current assets held for sale Effect of exchange rate changes Balance as of December 31, 2021 Balance as of January 1, 2020 Depreciation in current period Reduction (contract expired and early termination of contract) Effect of exchange rate changes Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020	Land $ 2,154 1,055 - (139) (8)	Housing and Construction 299,010 155,932 (9,837) - (7,860)	Transportation Equipment 1,561 1,028 (661) - (11) 1,917 1,005 1,049 (501) 8 1,561 1,534 1,843	Transportation Equipment 1,561 1,028 (661) - (11) 1,917 1,005 1,049 (501) 8 1,561 1,534 1,843	Office Equipment - - - - -	Total
						302,725 158,015 (10,498) (139) (7,879)
	$ 3,062	437,245		1,917	-	442,224
	$ 1,073 1,066 - 15	150,443 144,983 (2,553) 6,137		1,005 1,049 (501) 8	171 58 (229) -	152,692 147,156 (3,283) 6,160
	$ 2,154	299,010		1,561	-	302,725
	$ 24,484	609,415		1,534	-	635,433
	$ 26,958	484,619		1,843	-	513,420

(XIII) Intangible assets

The changes in costs, amortization and impairment loss of intangible assets for the years ended December 31, 2021 and 2020 were as follows:

Costs: Balance as of January 1, 2021 Addition in current period Reduction in current period Effect of exchange rate changes Balance as of December 31, 2021 Balance as of January 1, 2020 Addition in current period Reduction in current period Reclassification (Note)	Goodwill	Patent 15,863 - - -	Total 247,386 7,190 (4,437) (1) 250,138 245,336 1,513 (200) 735
	$ 218,672 15,603	15,863
	$ 218,672 10,801 - 1,513 - (200) - 735	15,863 - - -

41

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Effect of exchange rate changes Balance as of December 31, 2020 Amortization and impairment loss: Balance as of January 1, 2021 Amortization for the period Reduction in current period Effect of exchange rate changes Balance as of December 31, 2021 Balance as of January 1, 2020 Amortization for the period Reduction in current period Reclassification (Note) Effect of exchange rate changes Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020	Goodwill	Software cost 2	Patent -	Total 2 247,386 26,348 4,732 (4,437) (1) 26,642 21,920 3,891 (200) 735 2 26,348 223,496 221,038
	-
	$ 218,672 12,851		15,863
	$ - 10,485 - 4,732 - (4,437) - (1)		15,863 - - -
	$ - 10,779		15,863
	$ - 6,057 - 3,891 - (200) - 735 - 2		15,863 - - - -
	$ - 10,485		15,863
	$ 218,672 4,824		-
	$ 218,672 2,366		-

Note: Transferred from property, plant and equipment.

1. Amortization expenses

The amortization of intangible assets was included in the following items of the Statements of Comprehensive Income for the years ended December 31, 2021 and 2020:

Operating costs Operating expenses	2021 $ 378 4,354	2020 355 3,536

1. Impairment test for goodwill

(1) For the purpose of impairment test, goodwill is allocated to the Group's operating units, which are the smallest levels used by the Group to monitor goodwill for internal management purposes and shall not be larger than the operating departments of the Group. Allocation of the carrying amount of goodwill as of December 31, 2021 and 2020 was as follows:

42

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

FSP Technology Inc., Kaohsiung Branch 3Y Power	2021.12.31 $ 114,411 104,261	2020.12.31 114,411 104,261 218,672
	$ 218,672

• (2) The recoverable amount of the cash-generating unit is based on its value in use. Value in use is determined by discounting the future cash flows arising from the continuing use of the unit. The calculation of the value in use (including goodwill) is based on the following key assumptions:

• A. The cash flow projections were based on historical figures, actual operating results and 5-year business plan. Cash flows beyond 5 years have been projected with zero growth rate.

• B. The Group estimated the pre-tax discount rate based on the weightedaverage cost of capital, which was 9.10% and 9.44% for the years ended December 31, 2021 and 2020, respectively.

• (3) According to the asset impairment test conducted in 2021 and 2020, no impairment losses were recognized as the recoverable amount of cashgenerating unit was higher than the carrying amount.

(XIV)

Short-term loans

The details of the Group's short-term borrowings are provided below:

Credit loans Unused facility Interest rate range	2021.12.31 $ 16,315	2020.12.31 32,162
	$ 803,882	927,046
	1.00~2.26	0.98~4.32

Please refer to Note VIII for the details of the Group's assets pledged as collateral for bank borrowings.

(XV) Long-term loans

The details of the Group's long-term borrowings are provided below:

Secured bank borrowings Less: current portion of long-term debt Total Unused facility Interest rate range	2021.12.31 $ 272,348 73,014	2020.12.31 123,243 12,559
	$ 199,334	110,684
	$ 20,000	259,930
	1.41~1.58	1.41~1.58

1. Collateral for bank borrowings

Please refer to Note VIII for the details of the Group's assets pledged as collateral for bank borrowings.

43

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Government-subsidized loan with preferential interest rate

In August 2020, the Group obtained a NT$371,000 thousand low-interest loan from Mega International Commercial Bank under the "Guidelines of Project Loans for Returning Overseas Taiwanese Businesses". Drawdown period was until December 31, 2021 and multiple drawdowns were allowed. For the periods from January 1, 2021 to December 31, 2021 and from August 3, 2020 to December 31, 2020, the amount of actual utilization was NT$185,580 thousand and NT$111,070 thousand respectively. Based on market interest rate of 1.58% to recognize and measure the loan, the difference between the actual repayment preferential interest rate of 0.65% and the market interest rate was NT$3,591 thousand and NT$2,994 thousand respectively, which were treated as government subsidies and recognized as deferred income under other current liabilities and other non-current liabilities.

(XVI) Lease liabilities

The carrying amount of lease liabilities were as follows:

Current Non-current Total	2021.12.31 $ 166,758 474,996	2020.12.31 151,461 371,116 522,577
	$ 641,754

Please refer to Note VI(XXV) Financial Instrument for the maturity analysis. The amounts recognized in profit or loss were as follows:

		2021	2020
Interest expense on lease liabilities	$	7,933	10,041
Variable lease payments not included in the
measurement of lease liabilities	$	1,675	1,208
Expenses of short-term leases	$	10,821	5,938
Expenses relating to leases of low-value assets
(excluding short-term leases of low-value
assets)	$	102	63
Rent concession arising from the COVID-19
pandemic (recognized in other income)	$	-	14,763
Amount recognized in the Statements of Cash Flows		was as follows:
		2021	2020
Total cash outflow in operating activities	$	20,531	17,250
Total cash outflow in financing activities		162,242	134,460
Total cash flows on lease	$	182,773	151,710

44

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Lease of land, buildings and construction

The Group leases land, buildings and construction as factories, office premises, staff quarters and warehouses with lease terms ranging from 1 to 10 years. Some of these leases include the option to extend the lease term for the same period as the original contract at the end of the lease term.

The lease payments for some of the warehouses are based on the actual floor area used each month.

For these lease contracts, the variable lease payments paid by the Group in 2021 were as follows:

Lease contracts with variable payment calculated based on the actual floor area used per month	Variable payment $ 1,675	Estimated impact on lease payment for each 1% increase in the actual floor area used 17

1. Other leases

The Group leases machinery and transportation equipment with the lease terms ranging from three months to eight years.

The lease terms of some of Group's leases of buildings, construction, machinery and transportation equipment are within 1 year. These leases are considered as short-term leases or leases of low-value assets and the Group elected to apply exemption and did not recognize related right-of-use assets and lease liabilities.

(XVII) Provisions for liabilities

Balance at January 1 Addition of provision during the year Amount utilized during the year Balance at December 31	2021 $ 157,190 116,273 (127,240)	2020 145,337 88,886 (77,033) 157,190
	$ 146,223

The provision of the Group is mainly for sales-related maintenance obligation. The provision is estimated based on historical maintenance rates and maintenance cost per unit of specific products.

(XVIII) Employee benefits

1. Defined benefit plans

The reconciliation between the present value of defined benefit obligations and the fair value of plan assets was as follows:

45

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities Recorded under other non-current assets Recorded under net defined benefit liabilities	2021.12.31 $ 214,365 (176,113)	2020.12.31 218,482 (165,115) 53,367 3,851 57,218
	$ 38,252
	$ 5,982
	$ 44,234

The Group makes contribution of defined benefit plan to the labor pension reserve account at Bank of Taiwan. Under the Labor Standards Act, pension benefit of each eligible employee is calculated based on the number of units accrued from service years and the average monthly salaries of the last 6 months prior to retirement.

(1) Composition of plan assets

The pension fund contributed by the Group is managed and administered by the Bureau of Labor Funds of the Ministry of Labor (the “Bureau of Labor Funds”). According to the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund”, with regard to the utilization of the Fund, minimum returns per year shall not be lower than the earnings attainable from two-year time deposits with interest rates offered by local banks.

As of December 31, 2021, the balance of the labor pension reserve account at Bank of Taiwan was NT$175,295 thousand. For information on the labor pension fund assets, including yield of the fund and the asset portfolio, please refer to the website of the Bureau of Labor Funds.

• (2) Changes in present value of the defined benefit obligations

Changes in present value of the defined benefit obligations in 2021 and 2020 were as follows:

Defined benefit obligations at January 1 Service costs and interest in the year Remeasurement on the net defined benefit liabilities (assets) - Actuarial loss arising from experience adjustments - Actuarial loss arising from changes in demographic assumption - Actuarial loss (gain) arising from changes in financial assumption Benefits paid by the plan Effect of plan curtailment Defined benefit obligations at December 31	2021 $ 218,482 3,452 3,327 459 (8,418) (2,937) -	2020 209,840 2,680 2,900 294 9,629 (5,694) (1,167) 218,482
	$ 214,365

46

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

• (3) Changes in fair value of plan assets

Changes in fair value of defined benefit plan assets for the years ended December 31, 2021 and 2020 were as follows:

Fair value of plan assets on January 1 Interest income Remeasurement on the net defined benefit assets - Return on plan assets (excluding interests) Amount contributed to the plan Benefits paid by the plan Fair value of plan assets on December 31	2021 $ (165,115) (486) (2,444) (11,005) 2,937	2020 (153,663) (1,125) (5,032) (10,460) 5,165 (165,115)
	$ (176,113)

(4) Expenses recognized in profit or loss

Details of expenses (gains) recognized in profit or loss for the years ended December 31, 2021 and 2020:

Service costs for the current period Net interest expense of net defined benefit liabilities Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	2021 $ 2,812 154	2020 (20) 408 388 (1) - 389 - 388
	$ 2,966
	$ 279 394 1,013 1,280
	$ 2,966

(5) Actuarial assumptions

The major assumptions of the actuarial valuation to calculate the present value of the defined benefit obligation at the end of reporting period were as follows:

Discount rate Future salary increases	2021.12.31 0.70% 2.00%	2020.12.31
		0.30% 2.00%

The Group estimates to make contribution of NT$4,084 thousand to the defined benefit plan in the year following December 31, 2021.

The weighted-average duration of the defined benefit plan is 9 years.

• (6) Sensitivity analysis

47

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The impact of a change in assumptions on the present value of the defined benefit obligation as of December 31, 2021 and 2020 is summarized below:

December 31, 2021 Discount rate (change by 0.25%) Future salary adjustment rate (change by 0.25%) December 31, 2020 Discount rate (change by 0.25%) Future salary adjustment rate (change by 0.25%)	Impact on the defined benefit obligation Increase by 0.25% Decrease by 0.25% (5,051) 5,256 5,125 (4,951) (5,458) 5,680 5,513 (5,325)

The above sensitivity analysis considers the change in one assumption at a time, leaving other assumptions unchanged. In practical terms, many assumptions are interrelated and changing one individual assumption may trigger the changes in other assumptions. The method used to conduct the sensitivity analysis is consistent with the calculation of the net pension liabilities recognized in the balance sheets.

The method and assumptions used to conduct the sensitivity analysis are the same as those in the previous year.

2. Defined contribution plans

Per Group's defined contribution plan, the Group contributes monthly an amount equal to 6% of each employee's monthly wages to the employee’s individual pension fund account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Group has no legal or constructive obligation to pay additional amounts after contributing a fixed amount to the Bureau of Labor Insurance.

For the years ended December 31, 2021 and 2020, in relation to the defined contribution plan, the Group recognized pension expenses of NT$31,582 thousand and NT$31,833 thousand, respectively, which had been contributed to the Bureau of Labor Insurance.

In accordance with local regulations, other consolidated subsidiaries recognized pension expenses of NT$95,554 thousand and NT$51,483 thousand, respectively, for the years ended December 31, 2021 and 2020.

For the years ended December 31, 2021 and 2020, the Group contributed NT$12,595 thousand and NT$0 respectively to a specific trust account for employee incentives, which were recognized as operating costs and operating expenses.

As of December 31, 2021 and 2020, the Group had accrued unused leave bonuses of NT$44,230 thousand and NT$42,250 thousand, respectively, which were recorded under other payables.

48

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(XIX) Income Tax

1. Details of income tax expense (benefit) for the years ended December 31, 2021 and 2020 were as follows:

and 2020 were as follows:
Income tax expense for the period Income tax expense incurred Adjustment for prior year Deferred income tax benefit Origination and reversal of temporary differences Income tax expense	2021 $ 167,546 2,404	2020 251,256 (6,740) 244,516 (2,547) 241,969
	169,950
	(10,629)
	$ 159,321

Details of income tax expense (benefit)	recognized in other	recognized in other	comprehensive
income for the years ended December 31,	2021	and 2020 were as follows:
		2021	2020
Items that will not be reclassified to profit
or loss:
Gains (losses) on re-measurements of
defined benefit plans	$	1,415	(1,558)

Reconciliation between the expected income tax expense calculated based on the Group's statutory tax rate and the actual income tax expense reported in the Consolidated Statements of Comprehensive Income was as follows:

Income before Tax Income tax using the Company's statutory tax rate Effect of different tax rates in foreign jurisdictions Non-deductible expenses Cash dividend income Gains on securities transactions Gains on exemption from securities transaction tax Adjustments in respect of prior years Tax on undistributed earnings (5%) Land value increment tax Tax incentives Basic income tax amount Others Total	2021 $ 960,600	2020 934,044 186,809 (12,765) 12,563 (21,490) 43,180 (44,229) (6,740) 4,645 86,311 (4,460) - (1,855) 241,969
	$ 192,120 (16,676) 7,540 (24,586) 131,633 (133,335) 2,404 11,505 - (12,006) 722 -
	$ 159,321

49

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Deferred income tax assets and liabilities

2. (1) Unrecognized deferred income tax assets

Group's unrecognized deferred income tax assets:

Tax loss	2021.12.31 $ 160,083	2020.12.31 145,746

In accordance with the U.S. federal tax laws, losses approved by the tax authority may be deducted from the net income of the current year before income tax is assessed. Losses incurred in 2018 and subsequent years can be deducted indefinitely against the taxable income of future years, provided that the amount of offsetting in any profitable year is limited to 80% of the taxable income of that year. Losses incurred before 2018 can be deducted for 20 years, and there is no limit to the deductible amount in a single tax year. The above deferred income tax asset was not recognized as the Group believed that it is not probable that future taxable income will be available against which the Group can utilize the temporary differences.

As of December 31, 2021, the expiry years of unused tax losses were as follows:

Loss year	Unused tax loss $ 20,435 55,006 9,534 6,111 3,499 3,823 9,763 37,575 14,337	Year of expiry
2009 2010 2013 2014 2015 2017 2018 2019 2020 Total		2029 2030 2033 2034 2035 2037 No expiry date No expiry date No expiry date
	$ 160,083

• (2) Recognized deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities in 2021 and 2020 were as follows:

Deferred income tax liabilities: January 1, 2021 Debit income statement December 31, 2021 January 1, 2020 Debit income statement December 31, 2020	Unrealized valuation gains $ (2,039) (880)
	$ (2,919)
	$ (443) (1,596)
	$ (2,039)

50

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Deferred income tax assets: January 1, 2021 (Debit)/Credit income statement Debit other comprehensive income Foreign exchange differences arising from translation of foreign operations Foreign exchange differences arising from translation of foreign operations December 31, 2021 January 1, 2020 (Debit)/Credit income statement Credit other comprehensive income Foreign exchange differences arising from translation of foreign operations Foreign exchange differences arising from translation of foreign operations December 31, 2020	Allowance for inventory valuation loss		Pension provision		Unrealized foreign exchange gain or loss		Others		Total
	$ 21,138 2,776 - (99) $ 23,815 $ 26,438 (5,103) - (197) $ 21,138		9,858 (1,275) (1,415) - 7,168 9,982 (1,682) 1,558 - 9,858		21,855 7,785 - - 29,640 17,193 4,662 - - 21,855		19,530 2,223 - (136) 21,617 13,545 6,266 - (281) 19,530		72,381 11,509 (1,415) (235) 82,240 67,158 4,143 1,558 (478) 72,381

3. Income tax assessment

The tax returns for the years up to 2019 filed by the Company have been approved by the tax authority.

(XX) Capital and other equity

1. Common stock issuance

As of December 31, 2021 and 2020, the Company’s authorized common stock was NT$3,600,000 thousand with the par value of NT$10 per share. 187,262 thousand shares were issued.

The changes in outstanding shares of common stock in 2021 and 2020 were as follows:

follows:
Balance at January 1 Retirement of treasury shares Balance at December 31	Unit: Thousands of shares 2021 2020 187,262 192,262 - (5,000) 187,262 187,262
	187,262

51

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Capital surplus

Capital surplus	Capital surplus
The Company’s capital surplus was as follows: 2021.12.31 Paid-in capital in excess of par value $ 1,006,236 Adjustments arising from changes in percentage of ownership in subsidiaries 4,780 $ 1,011,016		2020.12.31 1,006,236 4,780 1,011,016
	$ 1,011,016

Pursuant to the Company Act, any realized capital surplus is initially used to cover accumulated deficit, and the balance, if any, can be transferred to common stock as stock dividends or distributed by cash based on the original shareholding percentage. Realized capital surplus includes the premium derived from the issuance of shares of stock in excess of par value and donations received by the Company. In accordance with the “Regulations Governing the Offering and Issuance of Securities by Securities Issuers”, distribution of stock dividends from capital surplus in each year shall not exceed 10% of paid-in capital.

3. Retained earnings

The Company's Articles of Incorporation stipulate that at least 10% of annual net income, after deducting tax and accumulated deficit, if any, must be retained as legal reserve until such retention equals the amount of paid-in capital. In addition, a special reserve shall be set aside in accordance with applicable laws and regulations. The remaining balance, along with the unappropriated earnings from the previous years, can be distributed as dividends to stockholders after the shareholders’ meeting approves the distribution plan submitted by the Board of Directors.

As per the dividend policy set forth in the Company's Articles of Incorporation, the Company's dividend policy is based on the assessment of the Company's future capital budget, planning of future capital requirements, financial structure and earnings, etc. The Board of Directors shall prepare a proposal for the distribution of earnings, which shall be approved by the shareholders' meeting. As the Company is in a stable growth stage in its business life cycle, under the trend of concentration in the industry, in order to continue to expand its scale for sustainable operation and stable growth, the residual dividend policy is adopted. Future earnings will be distributed in the form of stock dividends or cash dividends as appropriate depending on the Company's operating performance, and cash dividends distributed shall not be lower than 5% of the total dividend distribution.

(1) Legal reserve

If the Company has no accumulated deficit, it may, subject to a resolution approved by the shareholders’ meeting, distribute its legal reserve by issuing new shares or distributing cash for the portion of legal reserve which exceeds 25% of the paid-in capital.

52

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(2) Special reserve

Pursuant to the Ruling issued by the FSC, a special reserve equal to the total amount of items that are accounted for as deductions from other stockholders’ equity shall be set aside from current and prior year earnings. If it is the deduction amount of other shareholders' equity accumulated in the previous period, the special reserve of the same amount shall not be distributed from the undistributed earnings of the previous period. When the amount of the deduction of shareholders' equity is reversed subsequently, the reversed amount can be included in the distributable earnings.

(3) Earning distribution

On July 20, 2021 and June 16, 2020, the Company's shareholders’ meeting resolved on the distribution of earnings for the years ended December 31, 2020 and 2019, and the amount of dividends distributed to shareholders was as follows:

Cash dividend distributed to the shareholders of common stock	2020

In addition, on June 16, 2020, the shareholders' meeting of the Company resolved to distribute the capital surplus of NT$96,131 thousand in cash, at NT$0.5 per share.

On March 18, 2022, the shareholders’ meeting resolved on the distribution of earnings for the year ended December 31, 2021, and the amount of dividends distributed to shareholders was as follows:

Cash dividend distributed to the shareholders of common stock	2021 $ 617,964

Information related to earning distribution approved and resolved by the Company's Board of Directors and shareholders’ meeting is available on the Market Observation Post System website of the Taiwan Stock Exchange.

4. Treasury stock

As resolved by the Board of Directors on March 19, 2020, the Company planed to purchase 5,000 thousand shares of its common stock from March 20, 2020 to May 19, 2020 in order to maintain the Company's credit and shareholders’ right at the price range between NT$15 to NT$25 per share. The Company purchased back 5,000 thousand shares of common stock from March 23, 2020 to May 5, 2020 at the average price of NT$20.20 per share with total amount of NT$101,003 thousand. The Company's Board of Directors resolved that June 25, 2020 was the capital reduction effective date and related statutory registration has been completed.

53

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries

(Continued)

1. Other equity items (net after tax)

Balance as of January 1, 2021 Exchange differences on translation of financial statements of foreign operations Share of other comprehensive income of associates and joint-ventures under the equity method Unrealized gains (losses) on investments in equity instruments at fair value through other comprehensive income Disposal of equity instruments at fair value through other comprehensive income Balance as of December 31, 2021 Balance as of January 1, 2020 Exchange differences on translation of financial statements of foreign operations Share of other comprehensive income of associates and joint-ventures under the equity method Unrealized gains (losses) on investments in equity instruments at fair value through other comprehensive income Disposal of equity instruments at fair value through other comprehensive income Balance as of December 31, 2020	Exchange differences on translation of financial statements of foreign operations $ (89,678) (27,216) (809) - -	Unrealized gains (losses) on financial assets at fair value through other comprehensive income 5,004,114 - - 1,854,340 (658,165)	Total 4,914,436 (27,216) (809) 1,854,340 (658,165)
	$ (117,703)	6,200,289	6,082,586
	$ (116,514) 28,236 (1,400) - -	3,199,064 - - 2,094,827 (289,777)	3,082,550 28,236 (1,400) 2,094,827 (289,777)
	$ (89,678)	5,004,114	4,914,436

54

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Non-controlling interests (net after tax)

Beginning balance Net income for the year attributable to non-controlling interests Gains (losses) on re-measurements of defined benefit plans Unrealized gains (losses) on investments in equity instruments at fair value through other comprehensive income Exchange differences on translation of financial statements of foreign operations Distribution of cash dividends to non- controlling interests Increase in non-controlling interests (XXI) Earnings per Share Basic earnings per share: Net income attributable to the ordinary shareholders of the Company Weight-average number of ordinary shares outstanding Basic earnings per share (Unit: In New Taiwan Dollars) Diluted earnings per share: Net income attributable to the ordinary shareholders of the Company Weight-average number of ordinary shares outstanding Employee compensation Weight-average number of ordinary shares outstanding Diluted earnings per share (Unit: In New Taiwan Dollars)	2021 $ 307,844 47,197 127 - (2,116) (16,901) 2,364
	$ 338,515
	187,262
	$ 4.03
	$ 754,082
	187,262 1,627
	188,889
	$ 3.99

55

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(XXII) Revenue from contracts with customers

1. Breakdown of revenue

				2021	2021
	The Company
	and its
	processing					WUXI
	subsidiaries	3Y Power	Zhong Han			Zhonghan	Others		Total
Primary geographical markets:
Taiwan	$ 3,059,269	484,470	-			-		-	3,543,739
China	2,860,099	520,649	2,352,506			747,527		20,861	6,501,642
U.S.A.	1,322,295	19,767	-			-		587,839	1,929,901
Germany	2,161,664	73,655	-			-		-	2,235,319
Other countries	2,332,235	57,716	-			-		49,700	2,439,651
	$ 11,735,562	1,156,257	2,352,506			747,527		658,400	16,650,252
Major product/service line:
Sales of power supply	$ 11,735,562	1,156,257	2,352,506			747,527		658,400	16,650,252
					2020
	The Company
	and its
	processing					WUXI
	subsidiaries	3Y Power	Zhong Han			Zhonghan		Others	Total
Primary geographical markets:
Taiwan	$ 2,311,723	556,312	-			-		-	2,868,035
China	2,878,880	546,795	1,958,213			822,759		29,977	6,236,624
U.S.A.	1,179,718	29,203	-			-		346,772	1,555,693
Germany	1,924,441	89,795	-			-		-	2,014,236
Other countries	2,114,576	7,296	-			-		-	2,121,872
	$ 10,409,338	1,229,401	1,958,213			822,759		376,749	14,796,460
Major product/service line:
Sales of power supply	$ 10,409,338	1,229,401	1,958,213			822,759		376,749	14,796,460
2.	Contract balance
		2021.12.31				2020.12.31		2020.1.1
	Notes and accounts
	receivable (including
	related parties)	$	4,768,361			4,351,209			4,408,200
	Less: Allowance for
	impairment loss		(39,771)			(42,029)			(37,515)
	Total	$	4,728,590			4,309,180			4,370,685
	Contract liabilities
	(recognized in other
	current liabilities)	$	52,856				40,188		42,801

The amount of revenue recognized in 2021 and 2020 that was included in the contract liability balance at January 1, 2021 and 2020, was NT$13,526 thousand and NT$15,044 thousand, respectively.

Please refer to Note VI(V) for notes receivable, accounts receivable and related impairment.

56

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(XXIII) Remuneration of Employees and Directors

The Company's Articles of Incorporation stipulate that a minimum of 6% of annual profit, if any, shall be allocated to employee remuneration and a maximum of 3% of annual profit shall be allocated to Directors’ remuneration. However, if the Company has accumulated losses, the Company shall set aside a part of the surplus profit first for making up the losses. Employees who are entitled to receive the employee remuneration in shares or cash include the employees of subsidiaries of the Company who meet certain specific requirements.

For the years ended December 31, 2021 and 2020, the Company accrued its remuneration to employees amounting to NT$65,000 thousand and NT$50,000 thousand, respectively, and the remuneration for Directors of NT$7,000 thousand and NT$5,600 thousand, respectively. The said amounts, which were recognized as operating expenses in 2021 and 2020, were calculated based on pre-tax net profit for each year before deducting the amount of the remuneration to employees and Directors, multiplied by the distribution percentage specified in the Company's Articles of Incorporation. The difference between accrual and actual payment is treated as the change in accounting estimate and recognized in profit or loss in the following year. There was no difference between the amount of the remuneration to employees and Directors resolved by the Board of Directors and the accrual amount recognized in the Consolidated Financial Statements for the years ended December 31, 2021 and 2020. Information related to remuneration to employees and Directors resolved by the Board of Directors is available on the Market Observation Post System website of Taiwan Stock Exchange.

(XXIV) Non-operating income and expenses

System website of Taiwan Stock Exchange. Non-operating income and expenses
1. Interest income Bank deposits 2. Other income Gains on bargain purchase Dividend income Other income Government grant Rent concessions reclassified to revenue Tax refund Others	2021 $ 23,348	2020 23,883 2020 - 107,452 53,697 14,763 13,417 19,222 208,551
	2021 $ 2,523 122,933 35,993 - 11,082 25,809
	$ 198,340

57

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Other gains and losses

3. Other gains and losses
Foreign currency exchange loss Gain on financial assets measured at fair value through profit or loss Loss on disposal of property, plant and equipment Gains on disposal of non-current assets held for sale Gains on lease modifications Others 4. Finance costs Interest expense: Bank borrowings Lease liabilities Others	2021 $ (9,116) 12,910 (530) 72,399 97 (695)	2020 (89,088) 13,224 (2,495) 326,059 18 1,836 249,554 2020 3,226 10,041 63 13,330
	$ 75,065
	2021 $ 3,152 7,933 261
	$ 11,346

(XXV) Financial instruments

1. Credit risk

2. (1) Exposure to credit risk

The maximum exposure to credit risk is equal to the carrying amount of the financial assets.

• (2) Concentration of credit risk

As of December 31, 2021 and 2020, top three customers accounted for 28% and 25% of the Group's accounts receivable balance.

• (3) Credit risk from receivables and debt securities

Please refer to Note VI(V) for credit risk exposure of notes receivable and accounts receivable. For the details of other receivables, please refer to Note VI(VI). Other financial assets measured at amortized cost include other receivables and corporate bonds. Above-mentioned financial assets are considered low credit risk financial assets, and the loss allowance is measured using 12-month expected credit loss.

1. Liquidity risk

The Group manages and maintains sufficient cash and cash equivalents to support the Group's operations and mitigate the impact of cash flow fluctuations. The management of the Group supervises the use of the credit line and ensures compliance with the terms of the loan contracts.

58

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The table below shows the contractual maturity dates for financial liabilities, including the effect of estimated interest.

December 31, 2021 Non-derivative financial liabilities Short-term loans Long-term loans Notes payable Accounts payable Accounts payable - related parties Other payables Lease liabilities December 31, 2020 Non-derivative financial liabilities Short-term loans Long-term loans Notes payable Accounts payable Accounts payable - related parties Other payables Lease liabilities	Carrying amount	Contractual cash flows 23,332 280,391 14,445 4,986,689 90,024 1,151,339 670,148 7,216,368 32,291 128,523 15,001 4,842,867 80,004 948,782 550,873 6,598,341	Within 6 months 16,406 37,791 14,445 4,986,689 90,024 1,151,339 88,163 6,384,857 32,262 1,434 15,001 4,842,867 80,004 948,782 82,766 6,003,116	6 to 12 months 6,926 38,953 - - - - 88,427 134,306 29 12,983 - - - - 76,543 89,555	1-2 years - 77,529 - - - - 182,148 259,677 - 30,479 - - - - 93,834 124,313	2-5 years - 126,118 - - - - 250,601 376,719 - 78,796 - - - - 222,386 301,182	Over 5 years - - - - - - 60,809 60,809 - 4,831 - - - - 75,344 80,175
	$ 16,315 272,348 14,445 4,986,689 90,024 1,151,339 641,754 $ 7,172,914 $ 32,162 123,243 15,001 4,842,867 80,004 948,782 522,577 $ 6,564,636

The Group does not expect that the cash flows included in the maturity analysis will occur significantly earlier or at significantly different amounts.

1. Foreign exchange risk

2. (1) Exposure to foreign exchange risk

The Group's financial assets and liabilities exposed to significant foreign currency exchange risk were as follows:

Financial assets Monetary items RMB USD HKD EUR Non-monetary items USD USD RMB HKD Financial liabilities Monetary items RMB USD HKD		2021.12.31			2020.12.31	NTD 896,392 4,564,632 41,777 9,841 67,232 27,426 26,494 19,344 513,895 3,603,888 45,240
	Foreign currencies	Exchange Rate	NTD	Foreign currencies	Exchange Rate
	$ 263,138 161,337 7,725 444 2,534 1,080 6,322 5,104 111,426 138,025 13,709	4.344 27.680 3.549 31.320 28.268 27.680 4.191 3.549 4.344 27.680 3.549	1,143,071 4,465,808 27,416 13,906 71,632 29,894 26,494 18,118 484,035 3,820,532 48,653	204,796 160,275 11,374 281 2,361 963 6,322 5,271 117,408 126,541 12,317	4.377 28.480 3.673 35.020 28.476 28.480 4.191 3.670 4.377 28.480 3.673

59

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(2) Sensitivity analysis

The Group's exposure to foreign exchange risk arises from cash and cash equivalents, accounts receivable (including related parties), other receivables, financial assets measured at amortized cost, financial assets measured at fair value through profit or loss, non-current financial assets measured at fair value through other comprehensive income, short-term borrowings, accounts payable (including related parties) and other payables that are denominated in foreign currencies and subject to foreign exchange loss in currency translation. As of December 31, 2021 and 2020, if the New Taiwan Dollar had depreciated or appreciated by 5% against the US Dollar, Renminbi, Hong Kong Dollar and Euro with all other factors remaining unchanged, net income would have increased or decreased by NT$51,879 thousand and NT$53,985 thousand respectively in 2021 and 2020. The analysis of the two periods was conducted on the same basis.

• (3) Foreign exchange gain (loss) on monetary items

Due to various functional currencies within the Group, the Group disclosed the information on foreign exchange gain (loss) on monetary items on an aggregated basis. For the years ended December 31, 2021 and 2020, the foreign exchange loss (including realized and unrealized) was NT$9,116 thousand and NT$89,088 thousand, respectively.

4. Market risk

If the prices of equity securities with active market quotations at the reporting date had changed (using the same basis for both periods and assuming no change in other variables), the impact on the comprehensive income would have been as follows:

follows:
Security price at the reporting date	2021			2020
	Other comprehens ive income (pre-tax)	Pre-tax income		Other comprehens ive income (pre-tax)	Pre-tax income
Increase by 5% Decrease by 5%	$ 332,024	-		260,901	-
	$ (332,024)	-		(260,901)	-

Please refer to Note VI(IV) “Measurement of the fair value of Level 3, the sensitivity analysis of the fair value using reasonably possible alternative assumptions”for details of the price changes of the Level 3 equity securities.

5. Interest rate analysis

The Group's demand deposits, time deposits and short-term liabilities are subject to floating interest rates. However, changes in market interest rates are not significant and thus changes in interest rates do not give rise to significant cash flow risk.

60

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Fair value information

2. (1) Category of financial instruments and their fair value

Group's financial instruments measured at fair value on a recurring basis include the financial assets at fair value through profit or loss and the financial assets at fair value through other comprehensive income. Carrying amount and fair value of various financial assets and financial liabilities (including fair value level information, except for financial instruments whose carrying amount is a reasonable approximation of fair value, and lease liabilities which are not required to disclose their fair value information) were as follows:

2021.12.31

Financial assets at fair value through profit or loss Beneficiary certificates Private equity funds Non-publicly quoted equity instruments measured at fair value Structured deposits Subtotal Financial assets at fair value through other comprehensive income Domestic listed stock Foreign listed stock Non-publicly quoted equity instruments measured at fair value Subtotal Financial assets at amortized cost Corporate bond Cash and cash equivalents Notes receivable and accounts receivable Other receivables Restricted bank deposits (classified in other non-current assets) Refundable deposits (classified in other non-current assets) Subtotal Total Financial liabilities measured at amortized cost Bank borrowings Notes payable and accounts payable Other payables Lease liabilities Total		Carrying amount $ 232,758 12,000 71,632 199,684				Fair value	Fair value	Fair value		Total 232,758 12,000 71,632 199,684
				Level 1 232,758 - - -		Level 2 - - - -		Level 3 - 12,000 71,632 199,684
		516,074		232,758		-		283,316		516,074
		6,622,359 18,118 122,661 6,763,138		6,622,359 18,118 - 6,640,477		- - - -		- - 122,661 122,661		6,622,359 18,118 122,661 6,763,138
		$ 10,800 2,794,253 4,728,590 73,406 18,779 39,290		- - - - - -		- - - - - -		- - - - - -		- - - - - -
		7,665,118		-		-		-		-
		$ 14,944,330		6,873,235		-		405,977		7,279,212
		$ 288,663 5,091,158 1,151,339 641,754		- - - -		- - - -		- - - -		- - - -
		$ 7,172,914		-		-		-		-

61

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries

(Continued)

2020.12.31

Financial assets at fair value through profit or loss Beneficiary certificates Non-publicly quoted equity instruments measured at fair value Structured deposits Subtotal Financial assets at fair value through other comprehensive income Domestic listed stock Foreign listed stock Non-publicly quoted equity instruments measured at fair value Subtotal Financial assets at amortized cost Cash and cash equivalents Notes receivable and accounts receivable Other receivables Restricted bank deposits (classified in other non-current assets) Refundable deposits (classified in other non-current assets) Subtotal Total Financial liabilities measured at amortized cost Bank borrowings Notes payable and accounts payable Other payables Lease liabilities Total		Carrying amount $ 210,388 67,232 288,112				Fair value	Fair value	Fair value		Total 210,388 67,232 288,112
				Level 1 210,388 - -		Level 2 - - -		Level 3 - 67,232 288,112
		565,732		210,388		-		355,344		565,732
		5,198,671 19,344 55,161		5,198,671 19,344 -		- - -		- - 55,161		5,198,671 19,344 55,161
		5,273,176		5,218,015		-		55,161		5,273,176
		$ 3,051,117 4,309,180 65,054 18,921 36,826 7,481,098		- - - - - -		- - - - - -		- - - - - -		- - - - - -
		$ 13,320,006		5,428,403		-		410,505		5,838,908
		$ 155,405 4,937,872 948,782 522,577		- - - -		- - - -		- - - -		- - - -
		$ 6,564,636		-		-		-		-

(2) Valuation techniques for financial instruments measured at fair value - nonderivative financial instruments

If there is an active market for a financial instrument, the fair value is based on the quoted price in the active market. The market prices announced by major exchanges are the basis for the fair value of listed (over-the-counter) equity instruments and debt instruments that are publicly quoted in the active market.

A financial instrument has an active market for public quotations if public quotations can be obtained from an exchange, broker, underwriter, industry association, pricing service agencies or competent authority in a timely manner and on a regular basis, and if the price fairly represents actual and frequent market transactions. If the above conditions are not met, the market is deemed inactive. Generally speaking, a large bid-ask spread, a significant increase in the bid-ask spread, or a low volume of transactions are all indicators of an inactive market.

62

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Among the financial instruments held by the Group, the listed stocks and beneficiary certificates are financial assets with standard terms and conditions that are traded in the active market, and their fair values are determined with reference to quoted market prices.

Except for the above-mentioned financial instruments with active markets, the fair values of the remaining financial instruments are obtained using valuation techniques or by referencing to quoted prices from counterparties. The fair value of financial instruments measured by using valuation techniques can refer to current fair value of instruments with similar terms and

characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the Consolidated Balance Sheets date.

The fair value of financial instruments held by the Group that are not publicly quoted equity instruments with no active market is estimated using the market comparable company method. The key assumptions of the market comparable company method are based on the earnings or equity net worth multiplier derived from the quoted market prices of comparable listed companies. This estimate of the equity securities has been adjusted for the effect of lack of market liquidity.

• (3) Quantitative information of significant unobservable inputs (Level 3) relating to fair value measurement

The Level 3 of fair value measurements mainly includes financial assets measured at fair value through profit or loss - investments in equity securities, investments in private equity funds and financial assets measured at fair value through other comprehensive income.

The Group's equity instrument investment with no active market has multiple significant unobservable inputs. Significant unobservable inputs for investments in equity instruments with no active market are not correlated with each other because they are independent of each other.

Because the correlation between significant unobservable input value and fair value cannot be fully identified in practice, Group's structured deposits are not included in the disclosure of quantitative information of significant unobservable input values and the sensitivity analysis of fair value for reasonably possible alternative assumptions.

63

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Table of quantitative information of significant unobservable inputs is provided below:

Item Financial assets measured at fair value through profit or loss - Investment in equity instrument without an active market Financial assets measured at fair value through profit or loss - private equity fund investment Financial assets measured at fair value through other comprehensive income - Investment in equity instrument without an active market	Valuation technique Comparable company valuation method Net assets value method Comparable company valuation method	Significant unobservable inputs ‧ Net worth multiple (2.59 and 1.94 for the years ended December 31, 2021 and 2020) ‧ Discount for lack of market liquidity (29.39% as of December 31, 2021 and 2020) ‧ Net asset value ‧ P/E ratio multiple (9.69- 29.67 and 10.15 for the years ended December 31, 2021 and 2020) ‧ Net worth multiple (2.40- 5.42 and 6.81 for the years ended December 31, 2021 and 2020) ‧ Discount for lack of market liquidity (29.39% as of December 31, 2021 and 2020)	Relationship between significant unobservable inputs and fair value
			‧ The higher the multiple, the higher the fair value ‧ The higher the discount for lack of market liquidity, the lower the fair value ‧ The higher the net assets value, the higher the fair value ‧ The higher the multiple, the higher the fair value ‧ The higher the discount for lack of market liquidity, the lower the fair value

• (4) Fair value measurement in Level 3 - sensitivity analysis of reasonably possible alternative assumptions

The Group's measurement on the fair value of financial instruments is considered reasonable. However, the fair value may change if different valuation models or inputs are used. For financial instruments classified in Level 3, changing the valuation assumptions would have the following effects on other comprehensive income:

64

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries

(Continued)

December 31, 2021 Financial assets at fair value through profit or loss Investment in equity instrument without an active market Financial assets at fair value through other comprehensive income Investment in equity instrument without an active market Investment in equity instrument without an active market Investment in equity instrument without an active market Investment in equity instrument without an active market December 31, 2020 Financial assets at fair value through profit or loss Investment in equity instrument without an active market Financial assets at fair value through other comprehensive income Investment in equity instrument without an active market Investment in equity instrument without an active market	Input	Upward or downward change	Fair value change reflected in current profit or loss	Fair value change reflected in current profit or loss	Fair value change reflected in other comprehensive income	Fair value change reflected in other comprehensive income
			Favorable change	Unfavorable change	Favorable change	Unfavorable change
	Net worth ratio Price-to- earnings ratio Price-to- earnings ratio Net worth ratio Net worth ratio Net worth ratio Price-to- earnings ratio Net worth ratio	5% 5% 5% 5% 5% 5% 5% 5%	4,363 - - - - 3,362 - -	(4,363) - - - - (3,362) - -	- 475 552 3,234 347 - 1,036 1,433	- (475) (552) (3,234) (347) - (1,036) (1,433)

The favorable and unfavorable effects represent the changes in fair value, which is based on a variety of unobservable inputs calculated using the valuation technique. If the fair value of a financial instrument is subject to more than one input, the analysis above reflects only the effect of the change in a single input and does not consider the interrelationship between inputs.

65

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(XXVI) Financial risk management

1. Overview

The Group is exposed to the following risks arising from financial instruments:

• (1) Credit risk

• (2) Liquidity risk

• (3) Market risk

In this Note, the Group has disclosed the information on exposure to the aforementioned risks, and the Group’s objectives, policies and procedures to measure and manage these risks.

1. Risk management framework

The Board of Directors is responsible for developing and overseeing the Group's risk management framework.

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, to monitor the risk and to manage the exposure within the risk limits. Risk management policies and systems are reviewed on a regular basis to reflect the changes in market conditions and the Group's operations. The Group develops a disciplined and constructive control environment through training, management guidelines and operating procedures so that all employees understand their roles and responsibilities.

3. Credit risk

Credit risk refers to the risk of financial loss to the Group resulting from the failure of a customer or counterparty of a financial instrument to meet their contractual obligations, and arises primarily from the Group's accounts receivable and security investment.

• (1) Accounts receivable and other receivables

The Group's customers are concentrated in a wide range of power supplyrelated industries. To mitigate the credit risk of accounts receivable, the Group continuously evaluates the financial position of customers and purchases insurance for the accounts receivable of customers in high-risk areas or with special characteristics to reduce the Group's accounts receivable risk. The Group regularly evaluates the possibility of receivables collection and makes provision for bad debts accordingly; overall, management is able to effectively manage the risk of accounts receivable.

The Group has established the credit policy under which it is required to analyze the credit rating of each new customer individually before granting standard payment and delivery terms and conditions. Purchasing limits are established for each individual customer and limits are reviewed periodically. Customers who do not meet the requirement of credit rating can only trade with the Group on an prepayment basis.

66

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

(2) Investment

The credit risk of bank deposits, fixed income investments and other financial instruments is measured and monitored by the financial department of the Group. Since the counterparties of transactions and obligations of the Group are banks with good credit standing, and financial institutions, corporate and government with investment grade and above, default risk is limited and hence there is no significant credit risk.

• (3) Guarantee

It is the policy of the Group to provide financial guarantees only to wholly owned subsidiaries. As of December 31, 2021 and 2020, the Group did not provide any guarantee.

4. Liquidity risk

Liquidity risk is the risk that the Group encounters difficulty in settling its financial liabilities by delivering cash or other financial assets and fails to fulfill its related obligations. The Group manages its liquidity by ensuring that the Group has sufficient liquidity to meet its liabilities as they fall due under normal and stressful circumstances without incurring unacceptable losses or damaging the Group's reputation.

The Group ensures that it has sufficient cash to meet all contractual obligations. In addition, the Group had unused facilities in the amount of NT$823,882 thousand and NT$1,186,976 thousand as of December 31, 2021 and 2020, respectively.

5. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Group's income or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable level, while optimizing the return of investment.

• (1) Foreign exchange risk

The Group is exposed to foreign exchange risk on sales, procurement and loans that are denominated in a currency other than the respective functional currencies of the Group's entities. Group's functional currencies mainly include New Taiwan Dollar, US Dollar and Renminbi. The currencies used in these transactions are mainly New Taiwan Dollar, Hong Kong Dollar, US Dollar and Renminbi.

There is no significant difference or significant change in the receivables and payables of the Group, so the Group currently adopts natural hedge as the main exchange rate hedging policy to mitigate the risk.

• (2) Interest rate risk

The Group’s financial assets exposed to the risk of fair value change arising from interest rate changes are bank deposits; financial liabilities are bank borrowings, but the impact of changes in interest rates on the fair value of the related financial assets is not significant.

67

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

• (3) Other market price risk

Group's current financial assets at fair value through profit or loss and noncurrent financial assets at fair value through other comprehensive income mainly consist of investment in domestic funds, private equity funds, listed stocks, unlisted stocks, foreign listed stocks and foreign unlisted stocks. Because they are measured at fair value, the Group is exposed to the risk of changes in the market price of equity securities. In order to manage market risk, the Group selects investment targets carefully and controls its position in order to mitigate the market risk.

(XXVII) Capital management

It is the policy of the Board of Directors to maintain a sound capital base to sustain the confidence of investors, creditors and the market and to support the development of future operations. Capital consists of the Group's share capital, capital surplus, retained earnings, other equity and non-controlling interests. The Board of Directors is responsible for controlling the debt-to-equity ratio and the level of common stock dividends.

As of December 31, 2021 and 2020, debt-to-equity ratio was as follows:

Total Liabilities Less: cash and cash equivalents Net liability Equity Debt-to-equity ratio	2021.12.31 $ 7,630,066 (2,794,253)	2021.12.31 $ 7,630,066 (2,794,253)	2020.12.31 6,955,819 (3,051,117)
	$ 4,835,813		3,904,702
	$ 13,547,476		11,492,660
		35.70%	33.98%

As of December 31, 2021, there was no material change in the Group's capital management.

(XXVIII) Investing and financing activities not affecting cash flows

The reconciliation of liabilities arising from financing activities in 2021 and 2020 was as follows:

Long-term loans Short-term loans Lease liabilities Total liabilities from financing activities		2021.1.1 $ 123,243 32,162 522,577 $ 677,982	Cash flows from: 149,105 (15,847) (162,242) (28,984)		N	on-cash changes	on-cash changes	Others - - - -	2021.12.31 272,348 16,315 641,754
				Addition - - 300,151 300,151	Disposal and obsolescence - - (4,057) (4,057)	Changes in foreign exchange rate - - (14,675) (14,675)	Changes in lease payment - - - -
									930,417

Long-term loans Short-term loans Lease liabilities Total liabilities from financing activities		2020.1.1 $ 16,713 105,623 659,923 $ 782,259	Cash flows from: 106,153 (73,461) (134,460) (101,768)		N	on-cash changes	on-cash changes	Others 377 - - 377	2020.12.31 123,243 32,162 522,577
				Addition - - 13,511 13,511	Disposal and obsolescence - - (4,255) (4,255)	Changes in foreign exchange rate - - 2,621 2,621	Changes in lease payment - - (14,763) (14,763)
									677,982

68

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

VII. Related Party Transactions

• (I) Related party name and relationship

Related parties that had transactions with the Group during the reporting periods were listed below:

Related Party FSP Group USA Corp. Sparkle Power Inc. Amacrox Technology Inc. (“Amacrox”) Voltronic Power Technology Corp. (“Voltronic”) Fortron/Source (Europa) GmbH FSP(GB) Ltd. FSP North America FSP Power Solution GmbH 3Y Power Exchange Cheng, Ya-Jen Li, Hung-Neng	Relationship with the Group
	Group's associate The entity's Chairman is the second-degree relatives of the Chairman of the Company The entity's Chairman is the second-degree relatives of the Chairman of the Company Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Substantive related party Chairman of the Company Director of the Company

• (II) Significant related party transactions

• Operating revenue

The amounts of significant sales to related parties were as follows:

Associate Other related party	2021 $ 57,170 2,288,464	2020 67,749 1,949,311
	$ 2,345,634	2,017,060

The prices and credit terms of the Group's sales to the above related parties were not significantly different from those of its regular customers.

1. Purchases

The amounts of purchases from related parties were as follows:

Other related party	2021 210,723	2020 180,020

The Group purchased goods from the above-mentioned related parties, and did not purchase similar products from other manufacturers, so there was no transaction price from regular manufacturers for comparison. The payment terms were not significantly different from those of regular manufacturers.

69

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

3. Receivables from related parties

The details of the receivables of the Group arising from sales transactions, business needs and disbursement of dividend receivables were as follows:

Accounting Subject	Related party category/name	2021.12.31 $ 15,710 786,038 801,748 680 7,297 13,673 21,650 $ 823,398	2020.12.31 32,561 584,192
Accounts receivable Other receivables	Associate Other related party Associate Other related party FSP Power Solution GmbH Others
			616,753
			474 12,463 16,806
			29,743
			646,496

For the details of the loss allowance for accounts receivable - related party for the years ended December 31, 2021 and 2020, please refer to Note VI(V). Please refer to Note VI(VI) for the details of the loss allowance for other receivables - other related party, 3Y Power Exchange.

1. Payables to related parties

The details of the payables arising from the purchase of goods and the purchase via related parties were as follows:

Accounting Subject	Related party category/name	2021.12.31 $ 90,024	2020.12.31 80,004
Accounts payable	Other related party

1. Purchase of services from related parties

The details of the technical service fee, labor fee and commission paid by the Group to the related parties were as follows:

Associate FSP Group USA Corp. Other related party Amacrox Sparkle Power Inc. Others	2021 8,933 8,496 4,665 6,595	2020 10,515 6,830 5,360 5,564 28,269
	28,689

70

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

The details of the Group's recognized payable amounts due to related parties as a result of the above transactions and payments/collections on behalf of related parties were as follows:

Accounting Subject	Related party category/name	2021.12.31 $ 574 6,924	2020.12.31 658 9,618 10,276
Other payables	Associate Other related party
		$ 7,498

6. Leases

In 2020, the Group leased an office building from the Director of the Company and entered into a three-year lease agreement with reference to the rental rate of offices in the neighboring areas, with a total contract amount of NT$2,800 thousand. The interest expense recognized in the year ended December 31, 2020 was NT$260 thousand and the balance of lease liabilities as of December 31, 2020 was NT$14,386 thousand.

In addition, the Group leased an office from the Chairman of the Company and entered into a one-year lease agreement in January 2019 at a price agreed by both parties. This lease transaction was recognized as a right-of-use asset and lease liability of NT$9,487 thousand on January 1, 2020, in accordance with IFRS 16. The recognized interest expense in 2021 and 2020 was NT$145 thousand and NT$147 thousand respectively.The balance of lease liabilities as of December 31, 2021 and 2020 were NT$7,710 thousand and NT$8,600 thousand, respectively.

(III) Compensation for key management personnel

Compensation for key management personnel
Short-term employee benefits Post-employment benefits	2021 $ 69,479 709	2020 66,339 640 66,979
	$ 70,188

VIII. Pledged Assets

The carrying amount of pledged assets for custom duty performance guarantee, litigation guarantee and borrowings was as follows:

Assets	Pledged to secure	2021.12.31 $ 100 18,679 161,077 186,447	2020.12.31 100 18,821 173,844 114,755 307,520
Restricted time deposits (recognized in other non- current assets) Restricted demand deposits (recognized in other non- current assets) Land Housing and Construction Total	Custom duty performance guarantee Litigation guarantee Long-term and short-term borrowings Long-term and short-term borrowings
		$ 366,303

71

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

IX. Significant Contingent Liabilities and Unrecognized Contract Commitments

• (I) As of December 31, 2021 and 2020, the guarantee facilities extended by banks for customs and excise duties were NT$215,000 thousand, and utilized facilities were NT$63,000 thousand and NT13,000 thousand, respectively.

• (II) The consolidated company purchased products of Beyond Innovation Technology Co., Ltd. (hereinafter referred to as Beyond Innovation) through a distributor in Taiwan. O2 Micro International Limited (hereinafter referred to as O2), a competitor of Beyond Innovation, states that such products infringe upon its patent rights in the United States, and therefore filed a civil lawsuit against three companies including the merged company in the Marshall Division, United States District Court for the Eastern District of Texas (hereinafter referred to as the United States District Court).

O2 withdrew all claims for monetary compensation against all defendants in the preceding civil lawsuit on April 24, 2006. The United States District Court subsequently rendered a first-instance judgment and injunction prohibiting the sale of the products to the United States on March 21, 2007. It also ruled that the attorneys' fees and litigation costs incurred in this lawsuit, totaling US$2,268,402.22, should be borne jointly by the merged company, Beyond Innovation, and Lien Chang Electronic Enterprise Co., Ltd. After the defendants filed an appeal to the United States Court of Appeals for the Federal Circuit, the Federal Circuit issued a decision on April 3, 2008. It found the lower court's ruling, in which the defendants were found to be in violation of patent rights, did not meet requirements for legal proceedings and therefore reversed and remanded to the original court for retrial. As for the ruling regarding the litigation expenses, although it was not reviewed by the court of appeals, the reversal of the first-instance judgment means that the ruling has lost its basis and is therefore nullified.

After the case was remanded to the United States District Court, the Court only reviewed the lawsuit between O2 and Beyond Innovation, and rendered a judgment on September 27, 2010, which found that although Beyond Innovation had infringed upon O2's patent rights, the infringement was not based on malicious intent. Beyond Innovation later filed an appeal and the United States Court of Appeals for the Federal Circuit (CAFC) rejected Beyond Innovation's appeal and affirmed the decision of the lower court on November 18,2011.

The litigation between the merged company and O2 was separated from the aforementioned litigation between O2 and Beyond Innovation on July 21, 2009. However, the merged company has not yet received a notice of hearing from the US Court.

The consolidated company was implicated by the use of Beyond Innovation's products, and after learning that Beyond Innovation's products involved in such disputes, we have switched to alternative materials that do not involve infringement disputes. According to the intellectual property right guarantee signed by the merged company and Beyond Innovation, Beyond Innovation shall bear all liabilities, losses, damages, costs, or other expenses incurred by the merged company as a result of the use of its products. As a result, Beyond Innovation shall bear the adjudication costs borne by the merged company. Therefore, the attorneys' fees and litigation costs incurred in the above patent litigation do not have a significant impact on the merged company's financial statements. The merged company recognized the aforementioned expenses in as expenses for the year in which they occurred based on fiscal conservatism.

72

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

• (III) The consolidated company believes that since a ruling was rendered in the litigation between O2 and Beyond Innovation in the United States, we filed a civil lawsuit against Beyond Innovation based on the intellectual property rights guarantee provided by Beyond Innovation. We first requested the partial payment of the litigation costs and related expenses incurred by the O2 lawsuit in the United States in connection with the use of Beyond Innovation's products. However, on December 26, 2008, the Taiwan Taipei District Court rejected the claim for damages, and merged company did not approve the rejection. On January 16, 2019, the merged company filed an appeal to Taiwan High Court and obtained a judgment in its favor on November 27, 2019. However, Beyond Innovation filed an appeal to the Supreme Court on December 30, 2019, and the merged company is still waiting for the final decision of the Supreme Court before enforcing the decision.

• (IV) The merged company received a court notice on July 20, 2020 regarding a lawsuit filed by the merged company's customer Jiangsu Lemote Tech Co., Ltd. (hereinafter referred to as Lemote) for transaction contract disputes. Lemote claimed that there were anomalies in the merged company's products and requested the refund of payments already made and payment for related damages with a total amount of RMB 4,266,789.46. It also filed for a property preservation ruling with Changshu People's Court for freezing bank deposits equivalent to the aforementioned value totaling RMB 4,300,000 (listed under other noncurrent assets). The Court rendered a ruling on August 27, 2021 that required Lemote to return the products of the merged company and required the merged company to refund payments totaling RMB 2,822,600 paid by Lemote, pay a compensation of RMB 900,000, and pay RMB litigation expenses of 374,581, totaling more than RMB 4.09 million. The merged company rejected the product anomaly stated by Lemote and the court ruling and filed an appeal to the Suzhou Intermediate People's Court in September 2021.

• (V) As of December 31, 2021 and 2020, the Group had entered into purchase agreements for property, plant and equipment amounting to NT$53,386 thousand and NT$176,364 thousand, respectively, and had paid NT$30,759 thousand and NT$83,158 thousand, respectively, which were recorded as construction in progress of property, plant and equipment as well as other non-current assets.

X. Significant Disaster Loss: None.

XI. Significant Events after the Balance Sheet Date: None.

XII. Others

A summary of employee benefits, depreciation, and amortization by function is provided below:

By function By nature	2021	2021	2021	2020	2020	2020
	Operation Costs	Operation Expenses	Total	Operation Costs	Operation Expenses	Total
Employee benefits Salary expense Insurance expense Pension expense Other employee benefit expense Depreciation expenses Amortization expenses	1,749,820 6,454 89,111 51,320 251,182 378	951,198 65,571 40,991 37,001 88,667 4,354	2,701,018 72,025 130,102 88,321 339,849 4,732	1,592,340 5,789 49,132 37,783 228,503 355	882,424 61,535 34,572 34,849 88,354 3,536	2,474,764 67,324 83,704 72,632 316,857 3,891

73

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

XIII. Supplementary Disclosures

• (I) Information on Significant Transactions

In accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, information on significant transactions is disclosed as follows:

1. Financing provided to other parties: None.

2. Guarantees and endorsements provided to other parties: None.

3. Marketable securities held at the end of the period (excluding investments in subsidiaries, associates and joint ventures):

Securities Holding Company	Type and Name of Securities	Relationship with Issuer of Securities	Ledger Account		Ending Balance	Ending Balance	Ending Balance	Maximum shareholding percentage during the period	Remark
				Shares/Units	Carrying amount	Percentage of shareholding	Fair value
The Company The Company WUXI Zhonghan FSP Jiangsu The Company	Stock: Mekong Resort Development Construction Co., Ltd. Beneficiary certificates: Fuh Hwa Ruei Neng Fund I Fuh Hwa Ruei Neng Fund I Fuh Hwa Guardian Fund Fuh Hwa Ruei Hua Fund Fuh Hwa Jhih Neng Fund I Taiwan ESG Private equity fund: Mesh Cooperative Ventures Fund Stock: Voltronic Power Technology Corp. JESS-LINK Products Co., Ltd. WT Microelectronics Co., Ltd. Taiwan Cement Corp. Taiwan Semiconductor Manufacturing Co., Ltd. TOT BIOPHARM International Co., Ltd. Eastern Union Interactive Corp. Stock: Guoyu Global Co., Ltd. Taiwan Truewin Technology Co., Ltd. Wuxi Lead Solar Energy Co., Ltd. Powerland Technology Inc. Bond: Novaland Group (NYL)	－ － － － － － － － Other related party － － － － － － － － － － －	Financial assets at fair value through profit or loss 〃 〃 〃 〃 〃 〃 〃 Financial assets at fair value through other comprehensive income 〃 〃 〃 〃 〃 〃 Financial assets at fair value through other comprehensive income 〃 〃 〃 Financial assets at amortized cost	1,905,750 5,000,000 4,000,000 3,504,199 1,961,169 3,000,000 400,000 12,000,000 4,021,822 8,492,000 1,000,000 50,000 10,000 1,195,200 880,000 50,000 50,000 - - 9,000	71,632 55,589 45,058 64,647 21,182 31,918 14,364 12,000 316,390 6,213,715 351,144 48,950 2,400 6,150 18,118 58,667 5,000 32,500 6,736,644 - 26,494 6,763,138 10,800	8.25 - - - - - - 2.46 4.60 6.96 0.74 - - 0.19 4.43 16.67 2.85 12.04 3.54 -	71,632 55,589 45,058 64,647 21,182 31,918 14,364 12,000 316,390 6,213,715 351,144 48,950 2,400 6,150 18,118 58,667 5,000 32,500 6,736,644 - 26,494 6,763,138 10,800	8.25 - - - - - - 2.46 - 5.15 6.96 0.74 - - 0.20 4.43 16.67 2.85 12.04 4.22 - -

74

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries

(Continued)

1. Marketable securities for which the accumulated purchase or sale amounts for the period exceed NT$300,000 thousand or 20% of the paid-in capital:

					Unit: Shares	Unit: Shares	Unit: Shares	Unit: Shares	Unit: Shares	Unit: Shares	Unit: Shares	Unit: Shares	Unit: Shares	Unit: Shares
Company Name	Marketable Securities Type and Name	Ledger Account	Counterparty	Relationshi	Beginning of Period		Purchase		Sale				Ending Balance
					p Shares	Amount	Shares	Amount	Shares	Selling Price	Carrying Cost	Gains (Losses) on **Disposal **	Shares	Amount
The Company	Stock: Voltronic Power Technology Corp.	Financial assets at fair value through other comprehensive income			4,500,822	5,040,921	-	-	479,000	660,425	2,260	658,165	4,021,822	6,213,715 (Note)

Note: Ending balance includes unrealized valuation gain (loss) of financial assets.

1. Acquisition of real estate at costs which exceed NT$300,000 thousand or 20% of the paid-in capital: None.

2. Disposal of real estate at prices which exceed NT$300,000 thousand or 20% of the paid-in capital: None.

3. Total purchases from and sales to related parties which exceed NT$100,000 thousand -

or 20% of the paid in capital:

Company	Related Party	Relationship		Transaction Si	tuation	tuation	Unusua Terms	l Transaction and Reasons	Notes an Receivabl	d Accounts e (Payable)	Remark
			Purchases (Sales)	Amount	Percentage of Total Purchases (Sales) (%)	Credit Period	Unit Price	Credit Period	Balance	Percentage of total notes and accounts receivable (payable)
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Sparkle Power Inc. FSP North America FSP Power Solution GmbH Fortron/ Source (Europa) GmbH WUXI Zhonghan FSP Technology USA Inc. Huili Zhonghan WUXI SPI Voltronic	The Chairman of the Company is the second- degree relatives of the entity's Chairman Substantive related party of the Company Substantive related party of the Company Substantive related party of the Company 100% owned investment via indirect shareholding 100% owned investment via direct shareholding 100% owned investment via indirect shareholding 100% owned investment via indirect shareholding 100% owned investment via indirect shareholding The Company is the Director of this company	(Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases (Note 2) Purchases (Note 2) Purchases (Note 2) Purchases	(497,301) (586,236) (589,751) (418,581) (328,551) (131,045) 939,867 433,479 237,150 210,723	(4.04) (4.76) (4.79) (3.40) (2.67) (1.06) 10.80 4.98 2.72 2.42	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 4 Note 4 Note 4 Note 5		Note 4 Note 4 Note 4	176,243 147,782 305,772 75,109 138,416 56,617 (104,088) (Note 3) (42,251) (Note 3) (17,971) (Note 3) (90,024)	5.21 4.37 9.05 2.22 4.09 1.67 (2.77) (1.12) (0.48) (2.39)	Note 6 Note 6 Note 6 Note 6 Note 6

75

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries

(Continued)

Company	Related Party	Relationship	Transaction Situation	Transaction Situation	Transaction Situation	Transaction Situation	Unusual Transaction Terms and Reasons	Unusual Transaction Terms and Reasons	Notes and Accounts Receivable (Payable)	Notes and Accounts Receivable (Payable)	Remark
			Purchases (Sales)	Amount	Percentage of Total Purchases (Sales) (%)	Credit Period	Unit Price	Credit Period	Balance	Percentage of total notes and accounts receivable (payable)
The Company 3Y Power 3Y Power	3Y Power 3Y Power Technologh Inc. Huili	65.87% owned investment via direct shareholding 100% owned investment via direct shareholding Affiliate	Purchases (Sales) Purchases (Note 2)	260,047 (315,435) 247,178	2.99 (17.16) 17.99	Note 1 Note 1 Note 4		Note 4	(81,547) 80,601 (22,094) (Note 3)	(2.17) 12.03 (3.82)	Note 6 Note 6 Note 6

Note 1. The Company's trading terms for this related party are not significantly different from those of other customers. Note 2. Including purchases of products, purchases of raw materials and processing. Note 3. Including accounts payable arising from purchases of products and raw materials and processing fee. Note 4. The transaction price is not available for regular customers for comparison, and the credit term is 5 days after the monthly settlement. Note 5. The Group does not purchase similar products from other manufacturers, so there is no transaction price from regular manufacturers for comparison. The payment terms were not significantly different from those of regular manufacturers.

Note 6. Eliminated under consolidation.

8. Receivables from related parties which exceed NT$100,000 thousand or 20% of the - paid in capital:

Company with accounts receivable	Related Party	Relationship	Balance of receivables from related parties	Turnover rate	Overdue receivables from related parties	Overdue receivables from related parties	Recovery from overdue receivables from related parties (Note)	Loss allowance
					Amount	Action taken
The Company The Company The Company The Company Huili	Sparkle Power Inc. FSP Power Solution GmbH FSP North America WUXI Zhonghan The Company	The Chairman of the Company is the second-degree relatives of the entity's Chairman Substantive related party of the Company Substantive related party of the Company 100% owned investment via indirect shareholding 100% owned investment via indirect shareholding	176,243 305,772 147,782 138,416 104,088	2.98 2.71 4.85 2.20 9.19	- - - - -		126,119 122,751 34,022 109,459 104,088	- - - - -

Note: As of March 4, 2022.

9. Derivative instruments transactions: None.

10. Business relationship and significant intercompany transactions:

Number (Note 1)	Company	Counterparty	Nature of Relationship (Note 2)	Description of Transactions	Description of Transactions	Description of Transactions	Description of Transactions
				Ledger Account	Amount	Transaction Term	Percentage of Consolidated operating income or total assets (Note 3)
0 0 0 0 0 1 1	The Company The Company The Company The Company The Company 3Y Power 3Y Power	3Y Power Huili Zhonghan WUXI SPI WUXI Zhonghan 3Y Power Tochnology Inc. Huili	1 1 1 1 1 3 3	Cost of goods sold Cost of goods sold Cost of goods sold Cost of goods sold Operating revenue Operating revenue Cost of goods sold	260,047 939,867 433,479 237,150 328,551 315,435 247,178	No significant difference from other suppliers No comparison is available No comparison is available No comparison is available No significant difference from other customers No significant difference from other customers No comparison is available	1.56％ 5.64％ 2.60％ 1.42％ 1.97％ 1.89％ 1.48％

76

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Note 1. Fill in the number per below:

1. 0 represents the Company.

2. Subsidiaries are sorted in a numerical order starting from 1.

3. Note 2. The relationships with counterparty are as follows:

4. The parent company to subsidiaries.

5. Subsidiaries to the parent company.

6. Subsidiaries to subsidiaries.

Note 3. Information is disclosed only for the amounts that exceed 1% of total consolidated assets (balance sheet items) and 1% of total revenue (income statement items).

(II) Information on Invested Companies:

Investment information in 2021 is as follows:

Name of Investor	Name of Investee	Location	Main Business Activities	Initial Investment Amount	Initial Investment Amount	Ending Balance	Ending Balance	Ending Balance	Maximum shareholding during the period	Profit (Loss) of Investee for the Period (Note 1 & 2)	Investment gain (loss) recognized for the period (Note 1 & 2)	Remark
				Ending Balance for the Current Period	At the end of last year	Shares	Shareholding (%)	Carrying amount
The Company FSP International Inc. (BVI) Amacrox Technology Co., Ltd. (BVI) 3Y Power	FSP International Inc. (BVI) FSP Group Inc. Amacrox Technology Co., Ltd. (BVI) 3Y Power Harmony Trading (HK) Ltd. FSP Technology USA Inc. FSP Turkey FSP Technology Inc. (BVI) Power Electronics Co., Ltd. (BVI) Famous Holding Ltd. Proteck Electronics (Samoa) Corp. FSP International (HK) Ltd. Amacrox GmbH FSP Group USA Corp. Proteck Power North America Inc. 3Y Power Technology Inc. Luckyield Co., Ltd.	British Virgin Islands British Cayman Islands British Virgin Islands Taiwan Hong Kong U.S.A. Turkey British Virgin Islands British Virgin Islands Samoa Samoa Hong Kong Germany U.S.A. U.S.A. U.S.A. Samoa	Investment holdings Engaged in safety certification Investment holdings Manufacturing and trading of power supply Investment holdings Business development and product technical service Business development and product technical service Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Trading of power supply Trading of power supply Investment holdings Trading of power supply Investment holdings	1,241,751 1,752 40,925 304,406 45 3,143 22,640 62,883 217,707 807,483 32,984 141,042 18,181 14,903 3,279 233,850 4,500	1,241,751 1,752 40,925 304,406 45 3,143 - 62,883 217,707 807,483 32,984 141,042 18,181 14,903 3,279 233,850 4,500	32,202,500 50,000 1,109,355 16,309,484 10,000 100,000 6,673,000 2,100,000 7,000,000 27,000,000 1,100,000 4,770,000 25,000 247,500 1,000 600,000 45,000	100.00 100.00 100.00 65.87 100.00 100.00 91.41 100.00 100.00 100.00 100.00 100.00 100.00 45.00 100.00 100.00 100.00	2,199,388 372 60,168 663,717 1,788 1,853 16,989 121,029 217,707 1,358,711 16,069 72,009 2,871 26,947 14,778 220,428 3,768	1,241,751 1,752 40,925 304,406 45 3,143 22,640 62,883 217,707 807,483 32,984 141,042 18,181 14,903 3,279 233,850 4,500	108,773 (110) 850 134,172 (86) 276 4,951 3,791 437 58,092 (7,993) 58,126 332 7,299 (2,469) 37,349 26	108,773 (110) 850 88,389 (86) 276 4,526 - - - - - - 3,284 - - -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Sub- subsidiary Sub- subsidiary Sub- subsidiary Sub- subsidiary Sub- subsidiary Sub- subsidiary Associate Sub- subsidiary Sub- subsidiary Sub- subsidiary

77

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries

(Continued)

Note 1. The investment gain or loss recognized by the company is based on the financial statements of the investees audited by the CPA of the parent company in Taiwan and accounted for under the equity method, except for the financial statements of 3Y Power, 3Y Power Technology Inc. and Luckyied Co. which are audited by other CPA.

Note 2. The profit and loss of the sub-subsidiary has been consolidated into the profit and loss of the subsidiary. The transactions between the Company and each subsidiary of the Group including sales transaction amount, accounts receivable and payable, carrying amount of long-term equity investment and investment profit and loss recognized in the current period, have been eliminated in preparing the consolidated financial statements.

(III) Information on investment in Mainland China:

1. Information on the name of investee company in Mainland China and their main businesses and products

**Investee Company **	**Main Business Activities **	**Paid-inCapital **	Method of Investments (Note 1)	Accumulated Amount of Investments Remitted from Taiwan at Beginning of Period	Amount of Investments Remitted or Repatriated for the Period	Amount of Investments Remitted or Repatriated for the Period	Accumulated Amount of Investments Remitted from Taiwan at End of Period	Maximum shareholding during the period	Profit (Loss) of Investee for the Period	Percentage of ownership of direct or indirect investment	Share of profits/losses for the period (Note 3 & 4)	Carrying amount of investment at the end of the period (Note 3 & 4)	Accumulated Investment Income Repatriated at End of Period
					**Remitted **	Repatriated
Huili Zhonghan WUXI SPI WUXI Zhonghan Zhong Han FSP Jiangsu Protek Dongguan Hao Han WUXI 3Y	Processing of power supply Processing of power supply Processing of power supply Manufacturing and trading of power supply Manufacturing and trading of power supply Research & development and design of various energy saving technology Processing of power supply Transformer processing Design, manufacturing and trading of power supplies	145,090 224,107 (註二) 722,364 (Note 2) 416,099 130,320 69,009 (Note 2) 39,391 163,673 (Note 2) 4,122	(II), 1 (II), 1 (II), 1 (II), 1 (II), 1 (II), 1 (II), 1 (II), 1 (II), 2	176,873 104,342 508,326 380,595 20,196 13,380 38,038 - -	- - - - - - - - -	- - - - - - - - -	176,873 104,342 508,326 380,595 20,196 13,380 38,038 - -	176,873 104,342 693,140 380,595 20,196 13,380 38,038 - -	(6,735) 465 (46,442) 104,499 86,745 3,791 (7,988) 58,126 26	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 65.87	(6,735) 465 (46,442) 104,499 86,745 3,791 (7,988) 58,126 17	334,217 210,110 124,058 1,240,577 747,135 122,715 15,892 72,009 3,768	197,299 75,044 - - - - - - -

Note 1. Method of investment can be divided into the following 3 categories:

(I) Direct investment in mainland China.

(II) Indirect investment in mainland China through a holding company established in other countries

1. Through FSP International Inc. to invest in mainland China.

2. Through 3Y Power to invest in mainland China.

(III) Others.

Note 2. This includes the amount of capital contributed by a foreign subsidiary from its earnings or dividends from an investee company in China.

Note 3. The investment profits and losses and the carrying amount of the investment at the end of the period recognized by the company are based on the financial statements of the investee company audited by the CPA of Taiwan's parent company, except for WUXI 3Y, whose financial statements are audited by other CAP in Taiwan.

Note 4. Eliminated under consolidation.

2. The limit of investment in mainland China:

Accumulated investment in mainland China at the end of period	Investment amounts approved by Investment Commission, MOEA	Limit of investment in mainland China approved by Investment Commission, MOEA
1,241,750 (Note 2) (HK$12,500 thousand and US$35,640 thousand)	1,486,767 (Note 2) (HK$12,500 thousand and US$52,110 thousand)	7,925,377 (Note 1)

Note 1. 60% of net worth.

Note 2. For the amounts of the above investment in mainland China, except that the accumulated investment amount remitted from Taiwan to the mainland China at the end of the current period is based on the historical exchange rate, the investment profit and loss recognized in the current period is based on the weighted average exchange rate (USD/TWD: 1:28.0088, CNY/TWD: 1:4.3413, HKD/TWD: 1:3.6031). Paid-in capital, investment amount approved by the Investment Commission of MOEA, and the carrying amount at the end of the period is based on the exchange rates on December 31 2021 (USD/TWD: 1:27.6800, CNY/TWD: 1:4.3440, HKD/TWD: 1:3.5490).

78

Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

1. Significant transactions with the investee company in mainland China:

For the direct or indirect significant transactions between the Group and its investee companies in mainland China in 2021 (which were eliminated when preparing the consolidated report), please refer to the description of "Information on Significant Transactions".

• (IV) Information on Major Shareholders:

Transactions". Information on Major Shareholders:
Shareholding Name of Major Shareholders	Shares	Percentage of Ownership
Chuan Han Investment Co., Ltd. Cheng, Ya-Jen Yang, Fu-An Wang, Tsung-Shun	15,091,766 12,167,477 11,792,834 11,605,794	8.05% 6.49% 6.29% 6.19%

1. The information of major shareholders in this table was calculated by Taiwan Depository & Clearing Corporation on the last business day at the end of each quarter, and the shareholders who held more than 5% of the common shares and preferred shares of the Company that have been delivered (including treasury shares) were disclosed. The number of shares recorded in the Company's financial statements and the number of shares actually delivered by the Company without physical registration may differ due to different basis of preparation of the calculations.

2. If a shareholder delivers its shareholding information to the trust, the aforesaid information shall be disclosed by the individual trustee who opened the trust account. As for the insider declaration for shareholding more than 10% of total shares in accordance with the Securities and Exchange Act, their shareholding shall include the shares held by themselves plus the shares that they have delivered to the trust and have the right to exercise decision-making power over the trust property. For more information, please refer to Market Observation Post System website.

3. The percentage of shareholding is calculated by rounding to two decimal places.

XIV. Segment Information

• (I) General information

In 2020, because WUXI Zhonghan reached the quantification threshold, the Group's segment increased to four as follows: The Company and its processing subsidiaries (including Huili, Zhonghan, WUXI SPI and Protek Dongguan), Zhonghan Tech., WUXI Zhonghan and 3Y Power, manufacture and sell their own products separately. The reportable segment of the Group is a product-specific business unit, and provides different products according to the functional requirements of customers. Since each productspecific business unit requires different technologies and marketing strategies, it has to be managed separately. The Group does not allocate income tax expenses to reportable segments. The reported amounts are consistent with the reports used by operation decision makers. The accounting policies of the operating segments are the same as the summary of significant accounting policies described in Note IV. Profit or loss of the operating segments of the Group is measured at net income before income taxes and are used as the basis for evaluating performance.

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Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

• (II) Information on segment's profit or loss, assets, liabilities and reconciliation

The Group's operating segment information and reconciliation were as follows:

Revenue: Revenue from external customers Intersegment revenue Total revenue Segment profit (loss) Revenue: Revenue from external customers Intersegment revenue Total revenues Segment profit (loss)				2021
	The Company and its processing subsidiaries	3Y Power	Zhong Han	WUXI Zhonghan	Others		Adjustment and elimination		Consolidation
	$ 11,735,562 2,496,855 $ 14,232,417 $ 611,229	1,156,257 662,467 1,818,724 117,881	2,352,506 16,135 2,368,641 96,410	747,527 27,740 775,267 23,641 2020	658,400 78,539 736,939 110,461		- (3,281,736) (3,281,736) 978		16,650,252 - 16,650,252 960,600
	The Company and its processing subsidiaries	3Y Power	Zhong Han	WUXI Zhonghan	Others		Adjustment and elimination		Consolidation
	$ 10,409,338 2,351,685 $ 12,761,023 $ 525,302	1,229,401 632,293 1,861,694 110,428	1,958,213 10,492 1,968,705 24,613	822,759 14,785 837,544 351,769	376,749 13,147 389,896 (73,883)		- (3,022,402) (3,022,402) (4,185)		14,796,460 - 14,796,460 934,044

Note: As the total assets of the segment are not provided to the operation decision makers, it is not intended to disclose the measured amounts of the assets.

• (III) Export sales information

• Product and service information

The Group is engaged in the single electronics business and does not operate in other industries. Its revenue from external customers is provided in the operating segment's financial information.

1. Geographic information

Revenue from external customers:

Region Taiwan China U.S.A. Germany Others (below 5%) Total	2021 $ 3,543,739 6,501,642 1,929,901 2,235,319 2,439,651	2020 2,868,035 6,236,624 1,555,693 2,014,236 2,121,872
	$ 16,650,252	14,796,460

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Notes to Consolidated Financial Statements of FSP Technology Inc. and Subsidiaries (Continued)

Non-current Assets:

Non-current Assets:
Region Taiwan Mainland China Other countries Total	2021.12.31 $ 1,376,605 1,001,599 30,767	2020.12.31 1,324,324 910,647 36,127 2,271,098
	$ 2,408,971

Non-current assets include property, plant and equipment, right-of-use assets, intangible assets and other assets, but exclude financial instruments, deferred tax assets and retirement benefits assets.

• (IV) Major customer information

In 2021 and 2020, there were no customers whose sales revenue accounted for more than 10% of the revenue on the income statement.

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