FSP — Annual Report 2021

Nov 4, 2021

Stock Code: 3015

FSP Technology Inc.

Parent Company Only Financial Statements and Independent Auditors' Report

2021 and 2020

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

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Table of Contents

Item

**Page **

I. Cover Page II. Table of Contents III. Independent Auditors’ Report IV. Parent Company Only Balance Sheets V. Parent Company Only Statements of Comprehensive Income VI. Parent Company Only Statements of Changes in Equity VII. Parent Company Only Statements of Cash Flows VIII. Notes to Parent Company Only 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 IX. Statements of Significant Accounting Subjects

1 2 3-6 7 8 9 10 11 11 11-13 13-28 29 29-65 65-69 70 70-71 71 71 72-73 73-76 76 77 78 78 79-92

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Independent Auditors' Report

To the Board of Directors of FSP Technology Inc.:

Opinions

We have audited the Parent Company Only Financial Statements of FSP Technology Inc. (the “Company”), which comprise the Parent Company Only Balance Sheets as of December 31, 2021 and 2020, and the Parent Company Only Statements of Comprehensive Income, the Parent Company Only Statements of Changes in Equity, the Parent Company Only Statements of Cash Flows, and Notes to the Parent Company Only 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 Parent Company Only Financial Statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial performance and 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.

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 Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (the “Code”), and we have fulfilled 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 Parent Company Only Financial Statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the Parent Company Only 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(XV) for the accounting policy of revenue recognition and Note VI((XXI) for the related disclosure of revenue.

Description of key audit matter:

The Sales revenue of the Company 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 Company. 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.

Audit procedure to address the matter:

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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 investee companies under long-term investment using the equity method for the years ended December 31, 2021 and 2020. Those financial statements were audited by other independent auditors. Our opinion expressed herein, insofar as it relates to the amounts included in the Parent Company Only Financial Statements relative to these investee companies was based solely on the reports of other independent auditors. Total investment amount in these investee companies amounted to NT$663,717 thousand and NT$610,088 thousand, accounting for 3.58% and 3.78% of the total assets as of December 31, 2021 and 2020, respectively. Total recognized gains on these investments amounted to NT$88,389 thousand and NT$50,138 thousand, representing 10.11% and 6.73% of the total income before taxes for the years ended December 31, 2021 and 2020.

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

Management is responsible for the preparation and fair presentation of the Parent Company Only Financial Statements in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and maintain internal controls which are necessary for the preparation of the Parent Company Only Financial Statements so as to avoid material misstatements due to fraud or errors therein.

In preparing the Parent Company Only Financial Statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the Parent Company Only Financial Statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error 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 Parent Company Only Financial Statements.

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

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

3. 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the Parent Company Only Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the Parent Company Only Financial Statements, including the disclosures, and whether the Parent Company Only Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investee companies under the equity method to express an opinion on the Parent Company Only Financial Statements. We are responsible for the direction, supervision, and performance of the Company 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.

From the matters communicated with those charged with governance, we determine the key audit matters in the audit of the Company's Parent Company Only 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.

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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.

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FSP Technology Inc.

Parent Company Only 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 (XXI)) 1170 Accounts receivable, net (Note VI(V) and (XXI)) 1180 Accounts receivable - related parties, net (Notes VI(V) and (XXI), and VII) 1200 Other receivables (Note VI(VI)) 1210 Other receivables - related parties (Notes VI(VI) and VII) 130x Inventories (Note VI(VII)) 1410 Prepayments (Note VII) 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 (XIX)) 1550 Investments recognized through the equity method (Note VI(VIII) and (IX)) 1600 Property, plant and equipment (Notes VI(X), (XIII), and (XIV), VIII and IX) 1755 Right-of-use assets (Notes VI(XI) and (XV), and VII) 1780 Intangible assets (Note VI(XII)) 1840 Deferred income tax assets (Note VI(XVIII)) 1900 Other non-current assets (Notes VI(X), VIII and IX) Total non-current assets 1xxx Total assets	2021.12.31 Amount ％ $ 1,683,746 9 316,390 2 10,800 - 2,682 - 2,359,536 13 985,345 5 16,480 - 40,968 - 2,162,501 12 65,083 - 14,822 -	2020.12.31 Amount ％ 1,961,278 12 277,620 2 - - 426 - 2,233,285 14 749,248 5 19,966 - 49,665 - 1,627,409 10 29,057 - 15,641 - 6,963,595 43 5,246,682 33 2,787,840 17 901,411 6 56,710 - 114,860 1 56,606 - 7,162 - 9,171,271 57 16,134,866 100 Liabilities and Equity 21xx Current Liabilities: 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties (Note VII) 2200 Other payables (Note VI(XVII) and (XXII)) 2220 Other payables - related parties (Note VII) 2230 Current income tax liabilities 2250 Provisions for liabilities - current (Note VI(XVI)) 2280 Lease liabilities - current (Notes VI(XV) and VII) 2300 Other current liabilities (Notes VI(XIV) and (XXI), and VII) 2320 Current portion of long-term debt (Notes VI(X) and (XIV), and VIII) Total current liabilities 25xx Non-current Liabilities: 2540 Long-term borrowings (Notes VI(X) and (XIV), and VIII) 2570 Deferred income tax liabilities (Note VI(XVIII)) 2580 Lease liabilities - non-current (Notes VI(XV) and VII) 2640 Net defined benefit liabilities - non-current (Note VI(XVII)) 2670 Other non-current liabilities - others (Notes VI(XIV) and VII) Total non-current liabilities 2xxx Total liabilities 31xx Equity (Note VI(III), (VIII), (XVII), (XVIII) and (XIX)): 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 3xxx Total equity 2-3xxxTotal liabilities and equity	2021.12.31 Amount ％ $ 14,445 - 3,417,288 19 330,210 2 825,993 5 47,611 - 111,599 1 146,223 1 3,040 - 64,258 - 73,014 -	2020.12.31 Amount ％ 15,001 - 3,460,547 21 323,444 2 609,379 4 41,852 - 57,628 1 157,190 1 6,264 - 53,892 - 10,608 -
			5,033,681 28	4,735,805 29
	7,658,353 41		199,334 1 2,919 - 49,239 - 44,234 - 6,312 -	97,845 1 2,039 - 52,619 - 57,218 1 4,524 -
	6,736,644 37 2,944,275 16 966,351 5 49,919 - 117,968 1 67,326 - 3,844 -
			302,038 1	214,245 2
			5,335,719 29	4,950,050 31
			1,872,620 10	1,872,620 12
	10,886,327 59		1,011,016 5	1,011,016 6
			1,033,544 6 3,209,195 17	940,416 6 2,446,328 15
			4,242,739 23	3,386,744 21
			(117,703) (1) 6,200,289 34	(89,678) (1) 5,004,114 31
			6082586 33	4914436 30
	$ 18,544,680 100
			,, 13,208,961 71	,, 11,184,816 69
			$ 18,544,680 100	16,134,866 100

Chairman: Cheng, Ya-Jen

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

Chief Accounting Officer: Sang, Hsi-Yun

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FSP Technology Inc.

Parent Company Only Statements of Comprehensive Income

January 1 to December 31, 2021 and 2020

Unit: NT$ thousands

4000 Operating revenue (Notes VI(XXI) and VII) 5000 Operating costs (Notes VI(VII), (X), (XI), (XII), (XVI), and (XVII), VII and XII) 5910 Add: Unrealized sales gains (losses) 5900 Gross profit 6000 Operating expenses (Notes VI(V), (X), (XI), (XII), (XV), (XVII), and (XXII), VII and XII): 6100 Selling and marketing expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit loss Total operating expenses 6900 Net operating income 7000 Non-operating income and expenses (Notes VI(II), (III), (VIII), (IX), (XV) and (XXIII), and VII): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profits (losses) of subsidiaries, 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(XVIII)) 8200 Net Income 8300 Other comprehensive income: 8310 Items that will not be reclassified to profit or loss (Note VI(XVII), (XVIII) and (XIX)) 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 8330 Share of other comprehensive income (losses) of subsidiaries, associates and joint ventures under equity method 8349 Less: Income tax related to components that will not be reclassified to profit or loss Total items that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss (Note VI(VIII) and (XIX)) 8361 Exchange differences on translation of financial statements of foreign operations 8380 Share of other comprehensive income (losses) of subsidiaries, 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 Earnings per share (unit: NT$) (Note VI(XX)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021	％ 100 85 -	2020	％ 100 86 - 14 4 4 3 - 11 3 - 1 - - 3 4 7 1 6 - 19 1 - 20 - - - - 20 26 3.55 3.52
	Amount $ 12,319,833 10,483,687 (10,948)		Amount 10,873,018 9,306,280 (25,953)
	1,825,198	15	1,540,785
	445,124 487,276 363,444 3,828	4 4 3 -	385,878 417,538 350,383 4,614
	1,299,672	11	1,158,413
	525,526	4	382,372
	2,375 148,325 (512) (3,867) 202,618	- 1 - - 2	7,358 123,787 (50,588) (2,250) 284,687
	348,939	3	362,994
	874,465 120,383	7 1	745,366 76,052
	754,082	6	669,314
	6,610 1,854,340 246 1,322	- 15 - -	(7,821) 2,044,026 50,817 (1,564)
	1,859,874	15	2,088,586
	(27,216) (809) -	- - -	28,236 (1,400) -
	(28,025)	-	26,836
	1,831,849	15	2,115,422
	$ 2,585,931	21	2,784,736
	$	4.03
	$	3.99

(Please see accompanying notes to the Parent Company Only Financial Statements) Chairman: Cheng, Ya-Jen Managerial Officer: Cheng, Ya-Jen Chief Accounting Officer: Sang, Hsi-Yun

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FSP Technology Inc.

Parent Company Only 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 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 Disposal of equity instruments at fair value through other comprehensive income Balance as of December 31, 2021	Capital stock - common shares Capital surplus $ 1,922,620 1,131,801 - - - - - (96,131) - - - -	Retained earnings	Other equity items	Other equity items	Treasury shares	Total Equity 8,784,696 - (192,262) (96,131) 669,314 2,115,422
			Exchange differences on translation of financial statements of foreign operations Unrealized gains (losses) on financial assets at fair value through other comprehensive income (116,514) 3,199,064 - - - - - - - - 26,836 2,094,827	**Total **
		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)
				3,082,550 - - - - 2,121,663	- - - - - -
	- -	- 663,073 663,073	26,836 2,094,827	2,121,663	-	2,784,736
	- - (50,000) (29,434) - 4,780 - -	- - - - (21,569) (21,569) - - - - 289,777 289,777	- - - - - - - (289,777)	- - - (289,777)	(101,003) 101,003 - -	(101,003) - 4,780 -
	1,872,620 1,011,016 - - - - - - - -	940,416 2,446,328 3,386,744 93,128 (93,128) - - (561,786) (561,786) - 754,082 754,082 - 5,534 5,534	(89,678) 5,004,114 - - - - - - (28,025) 1,854,340	4,914,436 - - - 1,826,315	- - - - -	11,184,816 - (561,786) 754,082 1,831,849
	- -	- 759,616 759,616	(28,025) 1,854,340	1,826,315	-	2,585,931
	- -	- 658,165 658,165	- (658,165)	(658,165)	-	-
	$ 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

Chairman: Cheng, Ya-Jen

(Please see accompanying notes to the Parent Company Only Financial Statements) Managerial Officer: Cheng, Ya-Jen Chief Accounting Officer: Sang, Hsi-Yun

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FSP Technology Inc.

Parent Company Only 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 loss Interest expenses Interest income Dividend income Share of profits of subsidiaries, associates and joint ventures Loss on disposal of property, plant, and equipment Unrealized sales gains (losses) Unrealized foreign currency exchange gain Gains on lease modifications 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 Other receivables - related parties Inventories Prepayments Other current assets Total changes in operating assets Changes in operating liabilities: Notes payable Accounts payable Accounts payable - related parties Other payables Other payables - related parties 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 provided by operations Interest received Interest paid Income tax paid Net cash provided by 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 investments accounted for using the equity method Acquisition of property, plant, and equipment Disposal of property, plant and equipment Decrease (increase) in refundable deposits Acquisition of intangible assets Increase in prepayments for equipment Dividends received Net cash flows from investing activities Cash flows from financing activities: 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 Net cash flows used in financing activities 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 $ 874,465	2020 745,366 62,770 1,260 4,614 2,250 (7,358) (107,452) (284,687) 58 25,953 (13,831) - - (316,423) (123,224) 2,221 118,596 (84,784) 1,616 10,275 (391,394) 8,421 (2,948) (461,221) 619 409,473 (22,799) 145,274 3,789 11,853 4,282 (8,942) 2,994 546,543 85,322 (231,101) 514,265 8,317 (1,873) (62,339) 458,370 (118,419) 216,963 - - (103,155) - (300) (436) (335) 127,840 122,158 108,076 - (6,469) (288,393) (101,003) (287,789) 292,739 1,668,539 1,961,278
	62,893 2,576 3,828 3,867 (2,375) (122,933) (202,618) 656 10,948 20,737 (80) (2,523)
	(225,024)
	(38,770) (2,256) (89,006) (236,097) 4,035 8,697 (535,092) (35,691) 819
	(923,361)
	(556) (101,854) 2,907 219,472 5,747 (10,967) 8,235 (6,374) 3,919
	120,529
	(802,832)
	(1,027,856)
	(153,391) 2,441 (3,867) (77,574)
	(232,391)
	(296,047) 660,425 (10,959) (22,640) (124,320) 7 1,503 (5,684) - 155,552
	357,837
	181,989 (18,094) (5,087) (561,786) -
	(402,978)
	(277,532) 1,961,278
	$ 1,683,746

(Please see accompanying notes to the Parent Company Only Financial Statements) Chairman: Cheng, Ya-Jen Managerial Officer: Cheng, Ya-Jen

Chief Accounting Officer: Sang, Hsi-Yun

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FSP Technology Inc.

Notes to Parent Company Only 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 is 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

The Parent Company Only 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 Company has initially adopted the following new amendments to IFRS since January 1, 2021, and there was no significant impact on the Parent Company Only 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 Company has adopted the following new amendments, which do not have a significant impact on the Parent Company Only 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 Company assesses that the adoption of the following new amendments effective from January 1, 2022 will not have a significant impact on the Parent Company Only 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”

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Notes to Parent Company Only Financial Statements of FSP Technology Inc. (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 Company, have been issued by the IASB, but not yet endorsed by the FSC:

New or Amended Standards Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture” Amendments to IAS 1 “Classification of liabilities as current or non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates”	Content of Amendment When the investor sells or contributes its subsidiary to an associate or a joint venture and the asset sold or contributed constitutes a business, full gain or loss should be recognized on the loss of control of a business. If the asset sold or contributed does not constitute a business, unrealized gains and losses should be calculated according to the shareholding percentage and partial gain or loss should be recognized. The amendments are intended to improve consistency in the application of the standard to assist companies in determining whether debts or 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 1 mainly include:  Requiring companies to disclose their 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. The amendments introduce a new definition of accounting estimates, clarifying that accounting estimates are monetary amounts in the financial 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.	Effective Date per International Accounting Standards Board
		To be determined by International Accounting Standards Board January 1, 2023 January 1, 2023 January 1, 2023

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Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

The Company 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 Company completes the evaluation.

The Company expects that the following new and amended standards, which have not been endorsed by the FSC, will not have a significant impact on the Parent Company Only 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 Parent Company Only Financial Statements are summarized as follows. The following accounting policies have been applied consistently to all periods presented in the Parent Company Only Financial Statements.

• (I) Compliance declaration

The Company's accompanying Parent Company Only Financial Statements have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

• (II) Preparation basis

• Measurement basis

The Parent Company Only 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, 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(XVII).

• Functional and presentation currency

The functional currency of each Company entity is determined based on the primary economic environment in which the entity operates. The Parent Company Only 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.

13

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (III) Foreign currencies

• 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.

• (IV) 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:

• It is expected to be realized, or intended to be sold or consumed in the normal operating cycle.

• Assets held mainly for trading purpose.

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

• 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. It is expected to be settled in the normal operating cycle.

2. Assets held mainly for trading purpose.

14

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

2. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

3. (V) Cash and cash equivalents

4. 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.

5. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents.

6. (VI) Financial instruments Accounts receivables are initially recognized when they are incurred. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the financial instrument. 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.

7. Financial assets

   • The Company 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 Company changes its business model for managing financial assets, all affected financial assets are reclassified on the first day of the next reporting period.

   • (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.

15

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• 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 Company 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 Company 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 Company 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 Company 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.

16

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (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 Company's historical experience, credit assessment, as well as forwardlooking information, the Company 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 Company 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 Company in accordance with the contracts and the cash flows that the Company 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 Company has no reasonable expectation of recovering the entire or part of the financial assets. The Company 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 Company 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 Company's procedure for collecting overdue amount.

17

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (5) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or the Company 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 Company neither transfers nor retains nearly all of the risks and returns of ownership and it does not hold control on the financial asset.

When the Company 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.

1. Financial liabilities and equity instruments

2. (1) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company 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.

18

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (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 Company derecognizes a financial liability when its contractual obligation has been fulfilled or canceled, 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.

• (5) Offsetting of financial assets and liabilities Financial assets and financial liabilities are offset and presented on a net basis only when the Company has the legally enforceable right to offset and intends to settle on a net basis or to liquidate asset for settling the liabilities simultaneously.

• (VII) 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.

19

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

(VIII) Investments in associates

An associate is an entity in which the Company has significant influence, but not control over their financial and operating policies. The Company is deemed to have significant influence when it holds 20% to 50% of the voting rights of the investee company. 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 Company'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 Company and an associate are recognized only to the extent of unrelated investors’ interests in the associate.

When the Company'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 Company has incurred legal or constructive obligations or made payments on behalf of the associate. The Company 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 Company's ownership interest in an associate is reduced while it continues to apply the equity method, the Company 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.

20

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (IX) Investments in subsidiaries

When preparing the Parent Company Only Financial Statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under the equity method, profit or loss and other comprehensive income recognized in the Parent Company Only Financial Statements are in line with profit or loss and other comprehensive income attributable to owners of the Parent in the consolidated financial statements. In addition, shareholder's equity in the Parent Company Only Financial Statements is in line with the equity attributable to the shareholders of the parent in the consolidated financial statements.

Changes in a parent's ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity.

• (X) Property, Plant, and Equipment

• 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 Company.

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.

Land is not depreciated.

lives of each component of property, plant and equipment. Land is not depreciated.	lives of each component of property, plant and equipment. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
Housing and Construction	2~50 years
Buildings and Building Improvements	5~10 years
Machinery	1~19 years
Transportation Equipment	4~11 years
Other Equipment	1~26 years

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

21

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (XI) Leases - Lessee

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

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

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the Company 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 Company's incremental borrowing rate is applied. Generally, the Company uses its incremental borrowing rate as the discount rate.

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

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.

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;

22

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

2. 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;

3. 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 Company 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 Balance Sheets. The Company 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 Company recognizes the lease payments associated with these leases as an expense on a straightline basis over the lease term.

The Company 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.

5. 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.

6. (XII) Intangible assets

7. Recognition and measurement

Goodwill of the Company occurred in the business combination prior to the date of IFRS adoption. Upon conversion to IFRS endorsed by the FSC, the Company elected to restate only those business combinations that occurred after January 1, 2012 (inclusive). For acquisitions made before January 1, 2012, the amount of

23

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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.

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

• (XIII) Impairment of non-financial assets

The Company 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.

24

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (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.

• (XIV) Provisions for liabilities

Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that the Company 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.

• (XV) 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 Company 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 Company has objective evidence that all criteria for acceptance have been satisfied.

• (XVI) Government grant

When the Company can receive the government grant relating to the operating activities, such grant with no conditions attached is recognized as non-operating income. The Company recognizes the grant relating to assets as deferred income at fair value when there is reasonable assurance that the Company 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 Company's expenses

25

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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.

(XVII) Employee benefits

1. Defined contribution plans

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

1. Defined benefit plans

The Company'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 Company, 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 Company 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 Company 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.

26

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

(XVIII) 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:

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 Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

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:

27

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (1) The same taxable entity; or

• (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.

(XIX) Business combinations

The Company 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 Company 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.

On an transaction-by-transaction basis, the Company 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.

• (XX) Earnings per Share

The basic and diluted EPS attributable to stockholders of the Company are disclosed in the Parent Company Only Financial Statements. Basic EPS of the Company is calculated by dividing net income attributable to stockholders of the Company by the weightedaverage 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 Company's dilutive potential common shares include estimates of employee compensation.

(XXI) Segment Information

The Company discloses the operating segment information in the consolidated financial statements. Therefore, the Company does not disclose the operating segment information in the Parent Company Only Financial Statements.

28

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

The preparation of the Parent Company Only Financial Statements in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers 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 Parent Company Only Financial Statements involve material judgment as to whether the Company has substantive control over the investee, FSP Group USA Corp. and it has a material impact on the amounts recognized in the Parent Company Only Financial Statements. The related information is as follows:

In the Parent Company Only 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 Parent Company Only Financial Statements.

VI. Details of Significant Accounts

(I) Cash and cash equivalents

Cash on hand Cash equivalents - Repurchase agreements Deposits in saving accounts Deposits in checking accounts Time deposits	2021.12.31 $ 1,458 - 940,156 2,021 740,111	2020.12.31 1,014 114,435 623,782 2,969 1,219,078
	$ 1,683,746	1,961,278

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

(II) Financial assets at fair value through profit or loss

Financial assets mandatorily measured at fair value through profit or loss Non-derivative financial assets Beneficiary certificates Private equity funds Foreign unlisted stocks Total	2021.12.31 $ 232,758 12,000 71,632	2020.12.31 210,388 - 67,232
	$ 316,390	277,620

The Company 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.

29

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

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

(III) Financial assets at fair value through other comprehensive income

Equity instruments at fair value through other comprehensive income Domestic listed stock - Voltronic Power Technology Corp. Domestic listed stock - JESS-LINK Products Co., Ltd. Domestic listed stock - WT Microelectronics Co., Ltd. Domestic listed stock - Taiwan Cement Corp. Domestic listed stock - Taiwan Semiconductor Manufacturing Co., Ltd. Foreign listed stocks Domestic unlisted stocks Total	2021.12.31 $ 6,213,715 351,144 48,950 2,400 6,150 18,118 96,167	2020.12.31 5,040,921 109,200 48,550 - - 19,344 28,667
	$ 6,736,644	5,246,682

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

The Company 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 Company 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 Company 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.

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

30

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (IV) Financial assets at amortized cost

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

The Company 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 Company 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(XXIV) 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 $ 2,682 2,392,342 985,345 (32,806)	2020.12.31 426 2,263,095 749,248 (29,810)
	$ 3,347,563	2,982,959

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

The Company 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 Company was as follows:

31

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (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		2021.12.31	2021.12.31	Allowance for expected credit loss 10,532 15,748 1,000 1,978 64 2,412
	Carrying amount of notes receivable and accounts receivable $ 3,007,546 109,271 2,464 2,717 78 2,412	Weighted- average expected credit loss rate (%) 0.35 14.41 40.57 72.80 82.48 100.00
	$ 3,124,488			31,734

The carrying amount of the above notes and accounts receivable did not include the account receivable due from subsidiaries and a specific customer, amounting to NT$250,520 thousand and NT$5,361 thousand, respectively. The above-mentioned accounts receivable was not overdue.

Due to poor recovery of the account receivable due from this customer, the Company 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	2020.12.31	Allowance for expected credit loss 5,385 2,241 2,294 2,982 677 12,272
	Carrying amount of notes receivable and accounts receivable $ 2,755,699 18,100 6,053 4,068 823 12,272	Weighted- average expected credit loss rate (%) 0.20 12.38 37.90 73.31 82.27 100.00
	$ 2,797,015			25,851

32

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

The carrying amount of the above notes and accounts receivable did not include the account receivable due from subsidiaries and a specific customer, amounting to NT$195,961 thousand and NT$19,793 thousand, respectively. The above-mentioned accounts receivable was not overdue.

Due to poor recovery of the account receivable due from this customer, the Company 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.

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

(VI)

Beginning balance Impairment losses recognized Write-off Ending balance Other receivables Other receivables Other receivables - related parties Less: Allowance for impairment loss	2021 $ 29,810 3,828 (832)	2020 29,149 4,614 (3,953)
	$ 32,806	29,810
	2021.12.31 $ 16,480 40,968 -	2020.12.31 19,966 49,665 -
	$ 57,448	69,631

As of December 31, 2021 and 2020, there were no overdue for all other receivables (including related parties).

(VII)

Inventories

Finished goods Work in process Raw materials	2021.12.31 $ 1,039,194 491,915 631,392	2020.12.31 851,759 371,510 404,140
	$ 2,162,501	1,627,409

Breakdown of cost of goods sold:

Inventories sold Inventory valuation loss (reversal gain) Unallocated manufacturing expense Loss on inventory obsolescence Loss (gain) on inventory counts	2021 $ 10,347,849 14,795 87,786 33,086 171	2020 9,293,633 (32,975) 9,768 35,856 (2)
	$ 10,483,687	9,306,280

33

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

• (VIII) Investments Accounted for Using the Equity Method

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

he reporting date is provided below:
Subsidiary Associate invested through subsidiary	2021.12.31 $ 2,917,328 26,947	2020.12.31 2,762,521 25,319
	$ 2,944,275	2,787,840

1. Subsidiary

Please refer to the consolidated financial statements for the year ended December 31, 2021.

1. Associate invested through subsidiary

The financial information of insignificant associates that are invested through subsidiary and the Company adopts the equity method for recognition is summarized below. The amount is included in the Parent Company Only Financial Statements.

Statements.
The carrying amount of investments in associates that were not individually material to the Group at the end of the period Attributable to the Company: 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

3. Collateral

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

(IX) Business combinations

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

34

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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 Company's net income in 2021 would have reached NT$755,328 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.

and the acquisition had occurred on January 1, 2021.	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
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)

(X) 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:

35

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

Cost or deemed cost: Balance as of January 1, 2021 Addition Disposal and obsolescence Reclassification (Note 1) Balance as of December 31, 2021 Balance as of January 1, 2020 Addition Disposal and obsolescence Reclassification Balance as of December 31, 2020 Depreciation and impairment loss: Balance as of January 1, 2021 Recognition in current period Disposal and obsolescence Balance as of December 31, 2021 Balance as of January 1, 2020 Recognition in current period Disposal and obsolescence Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020		Land $ 264,211 - - - $ 264,211 $ 264,211 - - - $ 264,211 $ - - - $ - $ - - - $ - $ 264,211 $ 264,211	Housing and Construction 686,117 53,120 (2,295) 72,691	Buildings and Building Improvements 3,725 351 - - 4,076 3,143 582 - - 3,725 1,127 447 - 1,574 702 425 - 1,127 2,502 2,598	Buildings and Building Improvements 3,725 351 - - 4,076 3,143 582 - - 3,725 1,127 447 - 1,574 702 425 - 1,127 2,502 2,598	Machinery 209,814 20,533 (1,274) -	Transportation Equipment 1,908 1,585 - - 3,493 1,908 - - - 1,908 1,908 159 - 2,067 1,908 - - 1,908 1,426 -	Transportation Equipment 1,908 1,585 - - 3,493 1,908 - - - 1,908 1,908 159 - 2,067 1,908 - - 1,908 1,426 -	Other Equipment 222,081 21,917 (774) 1,665 244,889 217,391 4,706 (16) - 222,081 186,989 18,152 (721) 204,420 167,614 19,381 (6) 186,989 40,469 35,092	Construction in progress and equipment under installation 76,595 24,156 - (72,876)	Total 1,464,451 121,662 (4,343) 1,480
			809,633		4,076	229,073		3,493		27,875	1,583,250
			683,924 2,193 - -		3,143 582 - -	195,184 15,027 (415) 18		1,908 - - -		1,305 75,308 - (18)	1,367,066 97,816 (431) -
			686,117		3,725	209,814		1,908		76,595	1,464,451
			204,109 26,807 (1,790)		1,127 447 -	168,907 11,974 (1,169)		1,908 159 -		- - -	563,040 57,539 (3,680)
			229,126		1,574	179,712		2,067		-	616,899
			178,736 25,373 -		702 425 -	158,473 10,801 (367)		1,908 - -		- - -	507,433 55,980 (373)
			204,109		1,127	168,907		1,908		-	563,040
			580,507		2,502	49,361		1,426		27,875	966,351
			482,008		2,598	40,907		-		76,595	901,411

Note 1. For the year ended December 31, 2021, the amount transferred from equipment prepayment was NT$1,480 thousand.

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.

• (XI) Right-of-use assets

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

36

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

Costs of right-of-use assets: Balance as of January 1, 2021 Addition Reduction (contract expired and early termination of contract) Balance as of December 31, 2021 Balance as of January 1, 2020 Addition Reduction (contract modification and contract expired) Balance as of December 31, 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) Balance as of December 31, 2021 Balance as of January 1, 2020 Depreciation in current period Reduction (contract modification and contract expired) Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020	Land		Housing and Construction		Transportation Equipment		Office Equipment		Total
	$ 11,375 - - $ 11,375 $ 11,572 - (197) $ 11,375 $ 1,098 544 - $ 1,642 $ 554 544 - $ 1,098 $ 9,733 $ 10,277		56,877 - (10,496) 46,381 56,877 - - 56,877 11,067 4,188 (8,343) 6,912 5,533 5,534 - 11,067 39,469 45,810		1,452 716 (661) 1,507 1,559 394 (501) 1,452 829 622 (661) 790 676 654 (501) 829 717 623		- - -		69,704 716 (11,157) 59,263 70,237 394 (927) 69,704 12,994 5,354 (9,004) 9,344 6,934 6,790 (730) 12,994 49,919 56,710
							-
							229 - (229)
							-
							- - -
							-
							171 58 (229)
							-
							-
							-

(XII) 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 Balance as of December 31, 2021 Balance as of January 1, 2020	Goodwill	Patent 15,863 - -	Total 136,095 5,684 (4,437)
	$ 114,411 7,068	15,863	137,342
	$ 114,411 5,585	15,863	135,859

37

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

Addition in current period Reduction in current period Balance as of December 31, 2020 Amortization and impairment loss: Balance as of January 1, 2021 Amortization for the period Reduction in current period Balance as of December 31, 2021 Balance as of January 1, 2020 Amortization for the period Reduction in current period Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020	Goodwill	Software cost 436 (200)	Patent - -	Total 436 (200)
	- -
	$ 114,411 5,821		15,863	136,095
	$ - 5,372 - 2,576 - (4,437)		15,863 - -	21,235 2,576 (4,437)
	$ - 3,511		15,863	19,374
	$ - 4,312 - 1,260 - (200)		15,863 - -	20,175 1,260 (200)
	$ - 5,372		15,863	21,235
	$ 114,411 3,557		-	117,968
	$ 114,411 449		-	114,860

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 $ 348 2,228	2020 290 970

2. Impairment test for goodwill

(1) In accordance with IAS 36, goodwill acquired through a business combination should be tested for impairment at least annually. Goodwill is tested for impairment by allocating goodwill to the cash-generating unit that is expected to benefit from the synergy of consolidation. Goodwill arising from the business combination is fully attributed to the Company's Kaohsiung Branch. Therefore, the impairment of goodwill is assessed by calculating the value in use and the carrying amount of net assets of the Company's Kaohsiung Branch to determine whether an impairment loss should be recorded.

38

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (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 Company estimated the pre-tax discount rate based on the weighted-average 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.

(XIII) Short-term loans

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

Secured bank borrowings Unused facility Interest rate range	2021.12.31 $ -	2020.12.31 -
	$ 678,500	808,750
	-	0.98

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

• (XIV) Long-term loans

The details of the Company'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	2020.12.31 108,453 10,608
	$ 199,334	97,845
	$ -	259,930
	1.58	1.58

1. Collateral for bank borrowings

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

1. Government-subsidized loan with preferential interest rate

In August 2020, the Company 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

39

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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.

(XV) Lease liabilities

The carrying amount of lease liabilities were as follows:

Current Non-current Total	2021.12.31 $ 3,040 49,239	2020.12.31 6,264 52,619
	$ 52,279	58,883

Please refer to Note VI(XXIV) Financial Instrument for the maturity analysis.

The amounts recognized in profit or loss were as follows:

Interest expense on lease liabilities Variable lease payments not included in the measurement of lease liabilities Expenses of short-term leases Rent concession arising from the COVID-19 pandemic (recognized in other income)	2021 $ 980	2020 1,096
	$ 149	419
	$ 438	1,139
	$ -	66

Amount recognized in the Statements of Cash Flows was as follows:

Total cash outflow in operating activities Total cash outflow in financing activities Total cash flows on lease	2021
	$ 6,654 9,123

1. Lease of land, buildings and construction

The Company leases land, buildings and construction as factories, office premises, staff quarters and warehouses with lease terms ranging from 3 to 10 years for factories and 1 to 3 years for office premises and warehouses. 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.

40

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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 Company in 2021 were as follows:

Lease contracts with variable payment calculated based on the actual floor area used per month	Variable payment $ 149	Estimated impact on lease payment for each 1% increase in the actual floor area used 1

1. Other leases

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

The lease terms of some of Company'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 Company elected to apply exemption and did not recognize related right-of-use assets and lease liabilities.

(XVI) 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)
	$ 146,223	157,190

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

(XVII) 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:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	2021.12.31 $ 198,693 (154,459)	2020.12.31 201,796 (144,578) 57,218
	$ 44,234

41

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

The Company 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 Company 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$153,741 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:

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 $ 201,796 3,405 2,911 420 (7,793) (2,046) -	2020 193,824 2,569 3,003 294 8,967 (5,694) (1,167)
	$ 198,693	201,796

42

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (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 $ (144,578) (426) (2,148) (9,353) 2,046	2020 (135,485) (997) (4,443) (8,818) 5,165
	$ (154,459)	(144,578)

• (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 benefit for the period Net interest expense of net defined benefit liabilities Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	2021 $ 2,812 167	2020 (20) 425
	$ 2,979	405
	$ 280 394 1,025 1,280	- - 405 -
	$ 2,979	405

(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 Company estimates to make contribution of NT$3,711 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.

43

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (6) Sensitivity analysis

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% (4,673) 4,864 4,739 (4,576) (5,040) 5,246 5,087 (4,912)

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.

1. Defined contribution plans

Per Company's defined contribution plan, the Company 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 Company 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 Company recognized pension expenses of NT$26,702 thousand and NT$26,950 thousand, respectively, which had been contributed to the Bureau of Labor Insurance.

44

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

1. Short-term employee benefits

For the years ended December 31, 2021 and 2020, the Company contributed NT$11,430 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 Company had accrued unused leave bonuses of NT$22,213 thousand and NT$20,433 thousand, respectively, which were recorded under other payables.

(XVIII) Income Tax

1. Income tax expense

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

Income tax expense (benefit) 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 $ 125,927 5,618	2020 81,479 (3,816)
	131,545	77,663
	$ (11,162)	(1,611)
	$ 120,383	76,052

Details of income tax expense (benefit) recognized in other comprehensive income for the years ended December 31, 2021 and 2020 were as follows:

Items that will not be reclassified to profit or loss: Gains (losses) on re-measurements of defined benefit plans	2021 $ 1,322	2020 (1,564)

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

45

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

2021 Income before Tax $ 874,465 Income tax using the Company's statutory tax rate $ 174,893 Invest gain on long-term investment under the equity method (40,524) Cash dividend income (24,586) Non-deductible expenses 7,540 Gains on securities transactions 131,633 Gains on exemption from securities transaction tax (133,335) Adjustments in respect of prior years 5,618 Tax on undistributed earnings (5%) 10,428 Tax incentives (12,006) Basic income tax amount 722 Others - Total $ 120,383	2021 $ 874,465	2020 745,366
		149,073 (56,937) (21,490) 9,716 43,180 (44,229) (3,816) 4,645 (4,460) - 370
	$ 120,383	76,052

1. Deferred income tax assets and liabilities

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

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

46

Notes to Parent Company Only Financial Statements of FSP Technology Inc.

(Continued)

Allowance for inventory valuation loss Deferred income tax assets: January 1, 2021 $ 13,202 (Debit)/Credit income statement 2,959 Debit other comprehensive income - December 31, 2021 $ 16,161 January 1, 2020 $ 19,797 (Debit)/Credit income statement (6,595) Credit other comprehensive income - December 31, 2020 $ 13,202	Allowance for inventory valuation loss Deferred income tax assets: January 1, 2021 $ 13,202 (Debit)/Credit income statement 2,959 Debit other comprehensive income - December 31, 2021 $ 16,161 January 1, 2020 $ 19,797 (Debit)/Credit income statement (6,595) Credit other comprehensive income - December 31, 2020 $ 13,202	Pension provision	Unrealized foreign exchange gain or loss 22,828 7,949 -	Others 12,417 2,409 -	Total 56,606 12,042 (1,322)
		8,159 (1,275) (1,322)
		5,562	30,777	14,826	67,326
	$ 19,797 (6,595) -	8,277 (1,682) 1,564	17,325 5,503 -	6,436 5,981 -	51,835 3,207 1,564
		8,159	22,828	12,417	56,606

3. Income tax assessment

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

(XIX) 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:

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

1. Capital surplus

The Company’s capital surplus was as follows:

Paid-in capital in excess of par value Adjustments arising from changes in percentage of ownership in subsidiaries	2021.12.31 $ 1,006,236 4,780	2020.12.31 1,006,236 4,780
	$ 1,011,016	1,011,016

47

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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.

1. 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.

• (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

48

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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.

1. 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.

49

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (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 (losses) of associates and joint ventures under 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 (losses) of associates and joint ventures under equity method Unrealized gains (losses) on investments in equity instruments at fair value through other comprehensive income Share of other comprehensive income (losses) of subsidiaries, associates and joint ventures under equity method 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 - - 2,044,026 50,801 (289,777)	3,082,550 28,236 (1,400) 2,044,026 50,801 (289,777)
	$ (89,678)	5,004,114	4,914,436

50

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

(XX) 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) (XXI) Revenue from contracts with customers 1. Breakdown of revenue Primary geographical markets: Taiwan China U.S.A. Germany Other countries Major product/service line: Sales of power supply 2. Contract balance 2021.12.31 Notes and accounts receivable (including related parties) $ 3,380,369 Less: Loss allowances (32,806) Total $ 3,347,563 Contract liabilities (recognized in other current liabilities) $ 41,625	(XX) 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) (XXI) Revenue from contracts with customers 1. Breakdown of revenue Primary geographical markets: Taiwan China U.S.A. Germany Other countries Major product/service line: Sales of power supply 2. Contract balance 2021.12.31 Notes and accounts receivable (including related parties) $ 3,380,369 Less: Loss allowances (32,806) Total $ 3,347,563 Contract liabilities (recognized in other current liabilities) $ 41,625	Unit: Thousands of shares 2021 2020 $ 754,082 669,314 187,262 188,632 $ 4.03 3.55 $ 754,082 669,314 187,262 188,632 1,627 1,373 188,889 190,005 $ 3.99 3.52 2021 2020 $ 3,082,102 2,321,157 3,181,832 3,207,349 1,535,740 1,305,495 2,161,664 1,924,441 2,358,495 2,114,576 $ 12,319,833 10,873,018 $ 12,319,833 10,873,018 2020.12.31 2020.1.1 3,012,769 3,021,417 (29,810) (29,149) 2,982,959 2,992,268 33,487 34,952
		187,262
		$ 4.03
		$ 754,082
		187,262 1,627
		188,889
		$ 3.99
		2021 $ 3,082,102 3,181,832 1,535,740 2,161,664 2,358,495
		$ 12,319,833
		$ 12,319,833
		2020.12.31 3,012,769 (29,810)
	$ 3,380,369 (32,806)
	$ 3,347,563	2,982,959
	$ 41,625	33,487

51

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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$9,217 thousand and NT$8,665 thousand, respectively.

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

• (XXII) 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 Parent Company Only 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.

• (XXIII) Non-operating income and expenses

• Interest income

Bank deposits

2021 2020 $ 2,375 7,358

52

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

2. Other income Gains on bargain purchase Dividend income Other income Government grant Rent concessions reclassified to revenue Income of management fee / service fee Others 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 lease modifications 4. Finance costs Interest expense: Bank borrowings Lease liabilities Others	2021 $ 2,523 122,933 1,006 - 6,733 15,130	2020 - 107,452 310 66 7,099 8,860
	$ 148,325	123,787
	2021 $ (12,846) 12,910 (656) 80	2020 (63,754) 13,224 (58) -
	$ (512)	(50,588)
	2021 $ 2,626 980 261	2020 1,091 1,096 63
	$ 3,867	2,250

(XXIV) Financial instruments

1. Credit risk

• (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 31% of the Company's accounts receivable balance.

53

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (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.

2. Liquidity risk

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

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

December 31, 2021 Non-derivative financial liabilities Long-term loans Notes payable Accounts payable Accounts payable - related parties Other payables Other payables - related parties Lease liabilities December 31, 2020 Non-derivative financial liabilities Long-term loans Notes payable Accounts payable Accounts payable - related parties Other payables Other payables - related parties Lease liabilities	Carrying amount	Contractu al cash flows	Within 6 months	6 to 12 months	1-2years	2-5years	Over 5 years
	$ 272,348 14,445 3,417,288 330,210 825,993 47,611 52,279	280,391 14,445 3,417,288 330,210 825,993 47,611 60,556	37,791 14,445 3,417,288 330,210 825,993 47,611 1,989	38,953 - - - - - 1,943	77,529 - - - - - 3,706	126,118 - - - - - 10,406	- - - - - - 42,512
	$ 4,960,174	4,976,494	4,675,327	40,896	81,235	136,524	42,512
	$ 108,453 15,001 3,460,547 323,444 609,379 41,852 58,883	112,956 15,001 3,460,547 323,444 609,379 41,852 68,136	360 15,001 3,460,547 323,444 609,379 41,852 3,640	11,909 - - - - - 3,607	28,332 - - - - - 4,530	72,355 - - - - - 10,385	- - - - - - 45,974
	$ 4,617,559	4,631,315	4,454,223	15,516	32,862	82,740	45,974

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

54

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

1. Foreign exchange risk

2. (1) Exposure to foreign exchange risk

The Company's financial assets and liabilities exposed to significant foreign

currency exchange risk were as follows:

F	inancial assets Monetary items RMB USD Non-monetary items USD USD HKD inancial liabilities Monetary items RMB USD HKD		2021.12.31			2020.12.31	NTD 625,198 4,126,154 67,232 27,426 19,344 501,363 3,337,657 45,042
		Foreign currencies	Exchange Rate	NTD	Foreign currencies	Exchange Rate
		$ 148,772 142,279 2,534 1,080 5,104 104,427 119,810 12,417	4.344 27.680 28.268 27.680 3.549 4.344 27.680 3.549	646,266 3,938,283 71,632 29,894 18,118 453,631 3,316,341 44,068	142,837 144,879 2,361 963 5,271 114,545 117,193 12,263	4.377 28.480 28.476 28.480 3.670 4.377 28.480 3.673
F

• (2) Sensitivity analysis

The Company'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, 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, and Hong Kong Dollar with all other factors remaining unchanged, net income would have increased or decreased by NT$30,820 thousand and NT$34,692 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

The information regarding foreign exchange gain or loss (including realized and unrealized) on monetary items translated into the functional currencies is as follows:

55

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

NTD	2021 Foreign exchange gain (loss) Average exchange rate $ (12,846) -	2020	2020
	Foreign exchange gain (loss) $ (12,846)	Foreign exchange gain (loss) (63,754)	Average exchange rate
			-

1. 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 Increase by 5% Decrease by 5%	2021	Pre-tax income -	2020		Pre-tax income -
	Other comprehensive income (pre- tax) $ 332,024		Other comprehensive income (pre- tax)
			260,901 (260,901)
	$ (332,024)	-			-

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.

1. Interest rate analysis

The Company's demand deposits and time deposits 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.

1. Fair value information

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

56

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

Financial assets at fair value through profit or loss Beneficiary certificates Private equity funds Non-publicly quoted equity instruments measured at fair value 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						2021.12.31	2021.12.31	2021.12.31		Total 232,758 12,000 71,632
		Carrying amount $ 232,758 12,000 71,632				Fair value
				Level 1 232,758 - -		Level 2 - - -		Level 3 - 12,000 71,632
		316,390		232,758		-		83,632		316,390
		$ 6,622,359 18,118 96,167 6,736,644		6,622,359 18,118 -		- - -		- - 96,167 96,167		6,622,359 18,118 96,167
				6,640,477		-				6,736,644
		10,800 1,683,746 3,347,563 57,448 100 3,284		- - - - - -		- - - - - -		- - - - - -		- - - - - -
		5,102,941		-		-		-		-
		$ 12,155,975		6,873,235		-		179,799		7,053,034
		$ 272,348 3,761,943 873,604 52,279		- - - -		- - - -		- - - -		- - - -
		$ 4,960,174		-		-		-		-

57

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

Financial assets at fair value through profit or loss Beneficiary certificates Non-publicly quoted equity instruments measured at fair value 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					2020.12.31
	Carrying amount				Fair	value
			Level 1		Level 2		Level 3		Total
	$ 210,388 67,232 277,620 $ 5,198,671 19,344 28,667 5,246,682 1,961,278 2,982,959 69,631 100 4,787 5,018,755 $ 10,543,057 $ 108,453 3,798,992 651,231 58,883 $ 4,617,559		210,388 - 210,388 5,198,671 19,344 - 5,218,015 - - - - - - 5,428,403 - - - - -		- - - - - - - - - - - - - - - - - - -		- 67,232 67,232 - - 28,667 28,667 - - - - - - 95,899 - - - - -		210,388 67,232 277,620 5,198,671 19,344 28,667 5,246,682 - - - - - - 5,524,302 - - - - -

58

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (2) Valuation techniques for financial instruments measured at fair value - non-derivative 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.

Among the financial instruments held by the Company, 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 Balance Sheets date.

The fair value of financial instruments held by the Company 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.

59

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (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 Company'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.

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  Net worth multiple (2.40-5.42 and 6.81 for the years ended December 31, 2021 and 2020)  P/E ratio multiple (29.67 for the year ended December 31, 2021)  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

60

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

The Company'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:

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 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	Input	Upward or downward **change **	Fair value change reflected in current profit or loss Favorable change Unfavorable change 4,363 (4,363) - - - - - - 3,362 (3,362) - -	Fair value change reflected in current profit or loss Favorable change Unfavorable change 4,363 (4,363) - - - - - - 3,362 (3,362) - -	Fair value change reflected in other comprehensive income	Fair value change reflected in other comprehensive income
			Favorable change		Favorable change	Unfavorable change
	Net worth ratio Net worth ratio Net worth ratio Price-to- earnings ratio Net worth ratio Net worth ratio	5％ 5% 5% 5% 5% 5%	4,363 - - - 3,362 -	(4,363) - - - (3,362) -	- 3,234 347 475 - 1,433	- (3,234) (347) (475) - (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.

61

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (XXV) Financial risk management

• Overview

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

• (1) Credit risk

• (2) Liquidity risk

• (3) Market risk

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

1. Risk management framework

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

The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, 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 Company's operations. The Company develops a disciplined and constructive control environment through training, management guidelines and operating procedures so that all employees understand their roles and responsibilities.

1. Credit risk

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

• (1) Accounts receivable and other receivables The Company's customers are concentrated in a wide range of power supply-related industries. To mitigate the credit risk of accounts receivable, the Company continuously evaluates the financial position of customers and purchases insurance for the accounts receivable of customers in highrisk areas or with special characteristics to reduce the Company's accounts receivable risk. The Company 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.

62

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

The Company 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 Company on an prepayment basis.

• (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 Company. Since the counterparties of transactions and obligations of the Company 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 Company to provide financial guarantees only to wholly owned subsidiaries. As of December 31, 2021 and 2020, the Company did not provide any guarantee.

1. Liquidity risk

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

The Company ensures that it has sufficient cash to meet all contractual obligations. In addition, the Company had unused facilities in the amount of NT$678,500 thousand and NT$1,068,680 thousand as of December 31, 2021 and 2020, respectively.

1. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company's income or the value of its 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.

63

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (1) Foreign exchange risk

The Company is exposed to foreign exchange risk on sales, procurement and loans that are denominated in a currency other than the functional currencies of the Company. Company's functional currencies mainly include New Taiwan Dollar. 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 Company, so the Company currently adopts natural hedge as the main exchange rate hedging policy to mitigate the risk.

• (2) Interest rate risk

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

• (3) Other market price risk

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

(XXVI) 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 Company's share capital, capital surplus, retained earnings, other equity. 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 $ 5,335,719 (1,683,746)	2021.12.31 $ 5,335,719 (1,683,746)	2020.12.31 4,950,050 (1,961,278)
	$ 3,651,973		2,988,772
	$ 13,208,961		11,184,816
		27.65%	26.72%

64

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

(XXVII) 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 Lease liabilities Total liabilities from financing activities Long-term loans Lease liabilities Total liabilities from financing activities		2021.1.1 $ 108,453 58,883	Cash flows from: 163,895 (5,087)	Addition - 716	Non-cash changes	Non-cash changes	Non-cash changes	Non-cash changes	Others - -	2021.12.31 272,348 52,279
					Disposal and obsolescence Changes in foreign exchange rate Changes in lease payment - - - (2,233) - - (2,233) - - Non-cash changes		Changes in foreign exchange rate - -	Changes in lease payment - -
		$ 167,336	158,808	716		(2,233)	-	-	-	324,627
		2020.1.1 $ - 65,155	Cash flows from: 108,076 (6,469)	Addition - 394		Non-cash changes			Others 377 -	2020.12.31 108,453 58,883
					Disposal and obsolescence - (197) (197)		Changes in foreign exchange rate - -	Changes in lease payment - -
		$ 65,155	101,607	394		(197)	-	-	377	167,336

VII. Related Party Transactions

• (I) Related party name and relationship

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

Related Party

FSP Group USA Corp. Sparkle Power Inc.

Amacrox Technology Inc. (“Amacrox”)

Voltronic Power Technology Corp. Fortron/Source (Europa) GmbH FSP(GB) Ltd. FSP North America FSP Power Solution GmbH 3Y Power Exchange FSP International Inc. (BVI) FSP Group Inc. Amacrox Technology Co., Ltd. (BVI) Power Electronics Co., Ltd. (BVI) FSP Technology Inc. (BVI) Harmony Trading (HK) Ltd. FSP Technology USA Inc.

Relationship with the Company

Associate of the Company

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 Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

65

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

Related Party

FSP Turkey Dis Tic.Ltd.Sti. FSP International (HK) Ltd. Proteck Electronics (Samoa) Corp. Luckyield Co., Ltd.

Famous Holding Ltd.

Amacrox GmbH

Proteck Power North America, Inc.

3Y Power Technology Inc.

3Y Power Technology (TAIWAN) Inc. (“3Y Power”)

FSP-C R&D Center (“FSP Jiangsu”) Shenzhen Huili Electronic Co., Ltd. (“Huili”)

Dongguan Protek Electronics Corp. Zhonghan Electronics Shenzhen Co., Ltd.

• WUXI SPI Technology Co., Ltd. (“WUXI SPI”)

Wuxi Zhonghan Technology Co., Ltd. Haohan Electronic Technology (Ji'an) Co., Ltd.

Shenzhen Zhong Han Science & Tech. Co., Ltd.

Wuxi Xiangyuan Electronics Co., Ltd. Li, Hung-Neng

Relationship with the Company

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company

Subsidiary of the Company Director of the Company

• (II) Significant related party transactions

• Operating revenue

Significant sales amount to related parties was as follows:

Subsidiary Associate Other related party	2021 $ 584,271 57,170 2,133,125	2020 463,680 67,381 1,818,841
	$ 2,774,566	2,349,902

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

66

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

1. Purchases

The amounts of goods purchased from related parties, raw materials purchased by related parties on behalf of the Company and processing of products were as follows:

Subsidiary Other related party	2021 $ 1,935,359 210,723	2020 1,920,517 180,020
	$ 2,146,082	2,100,537

The Company 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 except that the payment term for some subsidiaries was 5 days after the monthly settlement.

3. Receivables from related parties

The details of the receivables and prepayment of the Company arising from sales transactions and business needs were as follows:

Accounting Subject	Related party category/name	2021.12.31 $ 250,520 15,710 719,115	2020.12.31 195,961 32,561 520,726
Accounts receivable Accounts receivable Accounts receivable Other receivables Other receivables Other receivables	Subsidiary Associate Other related party Subsidiary Famous Holding Ltd. FSP Jiangsu Others Associate Other related party FSP Power Solution GmbH Others
		985,345	749,248
		8,307 258 10,756 680 7,297 13,670	8,312 10,028 7,468 447 11,960 11,450
		40,968	49,665
		$ 1,026,313	798,913

As of December 31, 2021 and 2020, loss allowance for the above accounts receivable was recognized based on the expected credit loss rate. As of December 31, 2021 and 2020, there was no loss allowance recognized for other receivables.

67

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

1. Payable and prepayment to related parties

Accounts payable and prepayment arising from purchases of goods and raw materials and processing of products:

Accounting Subject	Related party category/name	2021.12.31 $ 240,186 90,024	2020.12.31 243,440 80,004
Accounts payable Accounts payable Other payables Prepayments	Subsidiary Other related party Subsidiary WUXI SPI
		330,210	323,444
		14,829	13,382
		$ 345,039	336,826
		$ 7,383	-

1. Service from related party

The Company entered into a billing management service contract with 3Y Power, a subsidiary of the Company, to provide management guidance on the establishment of related departments, application systems and professional information services to 3Y Power at an annual cost of US$240 thousand. The Company also provides machinery and equipment services to 3Y Power.

The breakdown of the above income from the provision of management and equipment services to 3Y Power is as follows:

equipment services to 3Y Power is as follows:
Income from management service Income from machinery and equipment service	2021 $ 6,733 616	2020 7,099 648
	$ 7,349	7,747

The details of technical service fees, labor costs and commissions paid by the Company to the related parties are as follows:

Subsidiary FSP Technology USA Inc. Others Associate FSP Group USA Corp. Other related party Amacrox Sparkle Power Inc. Others	2021 $ 4,966 2,174 8,933 8,496 4,665 5,855	2020 7,071 1,507 10,515 6,830 5,360 3,628
	$ 35,089	34,911

68

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

The Company recognized the following payables to related parties and advance receipts (recorded as other current liabilities and other non-current liabilities) as a result of the above transactions:

Accounting Subject	Related party category/name	2021.12.31 $ 25,601 574 6,607	2020.12.31 18,331 658 9,481
Other payables Other payables Other payables Other current liabilities Other non-current liabilities	Subsidiary Associate Other related party Subsidiary 3Y Power Subsidiary 3Y Power
		32,782	28,470
		620 2,014	620 2,630
		$ 35,416	31,720

1. Leases

In 2020, the Company 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.

• (III) Compensation for key management personnel

Compensation for key management personnel

thousand. Compensation for key management personnel Compensation for key management personnel
Short-term employee benefits Post-employment benefits	2021 $ 57,163 596	2020 52,776 527
	$ 57,759	53,303

69

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

VIII. Pledged Assets

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

was as follows:
Assets	Pledged to secure	2021.12.31 $ 100 161,077 186,447	2020.12.31 100 161,077 96,509
Restricted time deposits (recognized in other non- current assets) Land Housing and Construction Total	Custom duty performance guarantee Long-term and short- term loan facilities Short-term loan facilities
		$ 347,624	257,686

• 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$200,000 thousand, and utilized facilities were NT$60,000 thousand and NT10,000 thousand, respectively.

• (II) The 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 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 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

70

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

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

• (III) The Company believes that since a ruling was rendered in the litigation between O2 and Beyond Innovation in the United States, the Company filed a civil lawsuit against Beyond Innovation based on the intellectual property rights guarantee provided by Beyond Innovation. The Company 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 the Company did not agree with the rejection. On January 16, 2019, the 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 Company is still waiting for the final decision of the Supreme Court before enforcing the decision.

• (IV) As of December 31, 2021 and 2020, the Company had entered into purchase agreements for property, plant and equipment amounting to NT$47,218 thousand and NT$168,935 thousand, respectively, and had paid NT$26,798 thousand and NT$76,452 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.

71

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

XII. Others

XII. Others	XII. Others	XII. Others	XII. Others	XII. Others	XII. Others	XII. Others
A summary of employee benefits, depreciation, and amortization by function is provided below:
By function By nature	2021			2020
	Operation Costs	Operation Expenses	Total	Operation Costs	Operation Expenses	Total
Employee benefits Salary expense Insurance expense Pension expense Remuneration Paid to Directors Other employee benefit expense Depreciation expenses Amortization expenses	62,610 6,103 2,264 - 3,802 5,417 348	709,559 50,158 27,417 9,150 24,756 57,476 2,228	772,169 56,261 29,681 9,150 28,558 62,893 2,576	56,164 5,430 2,092 - 3,166 4,606 290	647,300 46,362 25,263 7,390 24,302 58,164 970	703,464 51,792 27,355 7,390 27,468 62,770 1,260

Information regarding the number of employee and employee benefit expenses as of December 31, 2021 and 2020 is as follows:

Number of Employees Directors not in concurrent employment Average employee benefits expense Average employee salary expense Average adjustment of employee salary Supervisor's remuneration	2021 762	2021 762	2020 759
	7		7
	$ 1,174		1,077
	$ 1,023		935
	9.41% $ -	9.41%	-

The Company's compensation policy, including Directors, Supervisors, managers and employees, is as follows:

• (I) Remuneration Paid to Directors

According to the Article 20 of the Company's Articles of Incorporation, if there is any profit in the year, no more than 3% shall be allocated as the Director's remuneration. The payment standard of transportation fee is in accordance with the regulations on the payment of remuneration for Directors and functional members, and the transportation fee is NT$5 thousand per person each time. If Director is also an employee, remuneration shall be paid in accordance with the provision of (3).

• (II) Remuneration of Independent Directors

The Company's independent directors do not participate in the distribution of Directors' remuneration under Article 20 of the Company's Articles of Incorporation. However, the Company is required to pay each independent director a fixed quarterly compensation regardless of profit or loss. If an Independent Director resigns during the quarter, his or her remuneration shall be calculated proportionally based on the period of services in the quarter.

72

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

• (III) Remuneration of Managerial Officers

The remuneration of the Company's managers is based on the Company's "Manager Salary and Remuneration Management Regulations", taking into account the salary level of the position in the market, the scope of roles and responsibilities of the position in the Company and the contribution to the Company's business goals. The remuneration of the managers is reviewed by the Remuneration Committee and implemented after the approval by the Board of Directors. When determining reasonable remuneration, the Company considers its overall operating performance, future business risks, development trends of the industry, individual performance achievement and contribution to the Company's financial results. Manager's performance and reasonableness of the remuneration are reviewed by the Remuneration Committee and the Board of Directors, who will also revise the remuneration policy if deemed appropriate according to the actual operating conditions and relevant laws and regulations.

• (IV) Remuneration of Employees

• Employee salaries are determined in accordance with the Company's "Salary Management Guidelines" and with reference to average salary in the market and organizational structure. Employee salaries are adjusted in a timely manner according to market salary trends and government regulations. According to the Article 20 of the Company's Articles of Incorporation, the Company should allocate a minimum of 6% of annual profit, if any, to employee remuneration. But if there is any accumulated deficit, the Company's profit should be reserved to cover the deficit in the first place. Remuneration of employees can be paid in stock or cash, and the distribution of stock or cash to employees may include subsidiary’s employees who meet certain criteria. The Board of Directors is authorized to determine the method of distribution. To retain talented employees, the Company has created an employee stock ownership trust and makes fixed monthly contributions to the Company's incentive fund as rewards for employees.

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:

• Financing provided to other parties: None.

• Guarantees and endorsements provided to other parties: None.

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

73

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

Securities Holding Company	Type and Name of Securities	Relationship with Issuer of Securities	Ledger Account		Ending Balance	Ending Balance	Ending Balance	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. 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 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 1,195,200 880,000 500,000 500,000 - - 9,000	71,632 55,589 45,058 64,647 21,182 31,918 14,364 12,000	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
					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

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

Company Name	Type and Name of Securities	Ledger Account	Counterparty	Relationship	Beginning of Period	Beginning of Period	Purc	hase	Sale	Sale	Sale		Ending Balance	Ending Balance
					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: The ending balance includes unrealized gain or loss on financial assets.

1. Acquisition of real estate at costs which exceed NT$300,000 thousand or 20% of the

2. paid-in capital: None.

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

74

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

1. 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 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 The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company 3Y Power 3Y Power	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 3Y Power 3Y Power Technologh Inc. Huili	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 65.87% owned investment via direct shareholding 100% owned investment via direct shareholding Affiliate	(Sales) (Sales) (Sales) (Sales) (Sales) (Sales) Purchases (Note 2) Purchases (Note 2) Purchases (Note 2) Purchases Purchases (Sales) Purchases	(497,301) (586,236) (589,751) (418,581) (328,551) (131,045) 939,867 433,479 237,150 210,723 260,047 (315,435) 247,178	(4.04) (4.76) (4.79) (3.40) (2.67) (1.06) 10.80 4.98 2.72 2.42 2.99 (17.16) 17.99	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 4 Note 4 Note 4 Note 5 Note 1 Note 1 Note 4		Note 4 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) (81,547) 80,601 (22,094)	5.21 4.37 9.05 2.22 4.09 1.67 (2.77) (1.12) (0.48) (2.39) (2.17) 12.03 (3.82)

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.

75

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

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

	paid-in	capital:
Company with accounts receivable	Related Party	Relationship	Balance of receivables from related parties	Turnover rate	Overdue receivables from relatedparties		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.

1. Derivative instruments transactions: None.

(II) Information on Invested Companies:

Investment information in 2021 is as follows:

Name of Investor	Name of Investee	Location	Main Business Activities	Initial Invest	ment Amount	Ending Balance	Ending Balance	Ending Balance	Profit (Loss) of Investee for the Period (Note)	Investment gain (loss) recognized for the period (Note)	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 Dis Tic.Ltd.Sti. 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	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

Note: 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.

76

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

(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-in Capital	Method of Investments (Note 1)	Accumulated Amount of Investments Remitted from Taiwan at Beginning of Period	Amo Investmen or Repatr Pe	unt of ts Remitted iated for the riod	Accumulated Amount of Investments Remitted from Taiwan at End of 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)	Carrying amount of investment at the end of the period (Note 3)	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 (Note 2) 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 - -	(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.

3. (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.

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).

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, please refer to the description of "Information on Significant Transactions".

77

Notes to Parent Company Only Financial Statements of FSP Technology Inc. (Continued)

(IV) Information on Major Shareholders:

rmation 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

Please refer to the consolidated financial statements for the year ended December 31, 2021.

78

FSP Technology Inc.

Details of cash and cash equivalents

December 31, 2021

Unit: In thousands of New Taiwan Dollars, Foreign currency in dollars

Item Cash Bank deposits	Summary Patty cash Cash in foreign currencies: JPY (JPY147,000元@0.2407) EUR (EUR1,400元@31.33) USD (USD44,000元@27.90) CNY (CNY11,700元@4.330) Subtotal Time deposits： NTD USD (USD22,080,000.00元@27.90) Deposits in checking accounts Demand deposits: NTD EUR (EUR409,196.55元@31.33) AUD (AUD897.90元@20.050) USD (USD18,813,232.33元@27.90) HKD (HKD474,955.79元@3.550) JPY (JPY515,507元@0.2407) CNY (CNY26,123,103.47元@4.330) VND (VND428,671,232.85元@0.0012) GBP (GBP0.57元@37.3000) Subtotal		Amount $ 100 35 44 1,228 51
			1,458
			124,079 616,032 2,021 286,992 12,820 18 524,889 1,686 124 113,113 514 -
			1,682,288
			$ 1,683,746

79

FSP Technology Inc.

Statement of Notes Receivable

December 31, 2021

Unit: NT$ thousands

Customer Name Non-related party: Protech Systems Co., Ltd. Comlink Electronic Co., Ltd. LEX Computech Co., Ltd. Winsson Enterprises Co., Ltd. Others (the amount of individual item in others does not exceed 5% of the account balance)	Summary Business 〃 〃 〃 〃	Amount $ 1,245 524 419 367 127 $ 2,682	Remark

80

FSP Technology Inc.

Breakdown of accounts receivable

December 31, 2021

Unit: NT$ thousands

Customer Name Related party: Sparkle Power Inc. Fortron/Source (Europa) GmbH FSP (GB) Ltd. 3Y Power Technology Inc. FSP Group USA Corp. FSP North America FSP Power Solution GmbH FSP Technology USA Inc. Wuxi Zhonghan Technology Co., Ltd. 3Y Power Technology (Taiwan) Inc. FSP Turkey Subtotal Non-related party: EVGA Corporation Shenzhen Zhencheng Wangshi Imp. & Exp. Co., Ltd. Listan GmbH Others (the amount of individual item in others does not exceed 5% of the account balance) Subtotal Less: Allowance for impairment loss Subtotal	Summary Business 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 Business 〃 〃 〃	Amount $ 176,243 75,109 14,209 25,285 15,710 147,782 305,772 56,617 138,416 10,716 19,486 985,345 415,820 411,603 226,158 1,338,761 2,392,342 32,806 2,359,536 $ 3,344,881	Remark

81

FSP Technology Inc.

Statement of Inventories

December 31, 2021

Unit: NT$ thousands

Item Finished goods Work in process Raw materials Total Lee: allowance for inventory valuation loss	Amount Cost Net realizable value $ 1,085,723 1,328,596 502,282 491,915 655,301 631,668	Amount Cost Net realizable value $ 1,085,723 1,328,596 502,282 491,915 655,301 631,668	Amount Cost Net realizable value $ 1,085,723 1,328,596 502,282 491,915 655,301 631,668	Remark Market value refers to the estimated net realizable value 〃 〃
	Cost $ 1,085,723 502,282 655,301
	2,243,306 80,805		2,452,179
	$ 2,162,501

Breakdown of prepayment

Customer Name Prepayment for purchase: Non-related party Related party - WUXI SPI Subtotal Prepaid expenses Tax overpaid retained for offsetting the future tax payable	Summary	Amount $ 23,288 7,383 30,671 22,993 11,419 $ 65,083	Remark

82

FSP Technology Inc.

Statement of Other Current Assets

December 31, 2021

Unit: NT$ thousands

Item	Summary	Amount $ 13,536 1,213 73	Remark
Payments on behalf of others Short-term borrowings Others (the amount of individual item in others does not exceed 5% of the account balance)
		$ 14,822

83

FSP Technology Inc.

Changes in financial assets at fair value through other comprehensive income - Non-current

January 1 to December 31, 2021

Unit: NT$ thousands

Name 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. Guoyu Global Co., Ltd. Taiwan Truewin Technology Co., Ltd.	Beginning of Period shares Fair value 4,500,822 $ 5,040,921 3,000,000 109,200 1,000,000 48,550 - - - - 1,195,200 19,344 480,000 28,667 - - - - $ 5,246,682	Increase for theperiod shares Amount - 1,833,219 (Note 1) 5,492,000 241,944 (Note 2) - 400 (Note 1) 50,000 (Note 4) 2,492 (Note 4) 10,000 (Note 3) 6,150 (Note 3) - - 300,000 (Note 4) 30,000 (Note 4) 500,000 (Note 4) 5,000 (Note 4) 500,000 (Note 4) 32,500 (Note 4) 2,151,705	Increase for theperiod shares Amount - 1,833,219 (Note 1) 5,492,000 241,944 (Note 2) - 400 (Note 1) 50,000 (Note 4) 2,492 (Note 4) 10,000 (Note 3) 6,150 (Note 3) - - 300,000 (Note 4) 30,000 (Note 4) 500,000 (Note 4) 5,000 (Note 4) 500,000 (Note 4) 32,500 (Note 4) 2,151,705	Reduction in current period shares Amount 479,000 660,425 - - - - - 92 (Note 1) - - - 1,226 (Note 1) - - - - - - 661,743	Ending Balance shares Fair value 4,021,822 6,213,715 8,492,000 351,144 1,000,000 48,950 50,000 2,400 10,000 6,150 1,195,200 18,118 780,000 58,667 500,000 5,000 500,000 32,500 6,736,644	Guarant ee or Pledge None None None None None None None None None	Remark
		shares - 5,492,000 - 50,000 (Note 4) 10,000 (Note 3) - 300,000 (Note 4) 500,000 (Note 4) 500,000 (Note 4)		shares 479,000 - - - - - - - -	shares 4,021,822 8,492,000 1,000,000 50,000 10,000 1,195,200 780,000 500,000 500,000

Note 1. Unrealized valuation gain (loss) for the period Note 2. Including new investment cost of NT$220,145 thousand for the period and unrealized valuation gain of NT$21,799 thousand. Note 3. Including new investment cost of NT$5,910 thousand for the period and unrealized valuation gain of NT$240 thousand. Note 4. It is new investment cost for the period.

84

FSP Technology Inc.

Statement of Changes in Investments Accounted for Using the Equity Method

January 1 to December 31, 2021

Unit: NT$ thousands

Name FSP International Inc. (BVI) FSP Group Inc. Amacrox Technology Co., Ltd. (BVI) 3Y Power Harmony Trading (HK) Ltd. FSP Technology USA Inc. FSP Turkey Dis Tic.Ltd.Sti.	Beginning balance Shares Amount 32,202,500 $ 2,111,966 50,000 482 1,109,355 61,804 16,309,484 610,088 10,000 1,874 100,000 1,626 - - $ 2,787,840	Beginning balance Shares Amount 32,202,500 $ 2,111,966 50,000 482 1,109,355 61,804 16,309,484 610,088 10,000 1,874 100,000 1,626 - - $ 2,787,840	Increase for theperiod Shares Amount - 108,773 - - - 850 - 88,635 - - - 276 6,673,000 29,689 228,223	Increase for theperiod Shares Amount - 108,773 - - - 850 - 88,635 - - - 276 6,673,000 29,689 228,223	Increase for theperiod Shares Amount - 108,773 - - - 850 - 88,635 - - - 276 6,673,000 29,689 228,223	Reduction in current period Shares Amount - 21,351 - 110 - 2,486 - 35,006 - 86 - 49 - 12,700 71,788	Reduction in current period Shares Amount - 21,351 - 110 - 2,486 - 35,006 - 86 - 49 - 12,700 71,788	Reduction in current period Shares Amount - 21,351 - 110 - 2,486 - 35,006 - 86 - 49 - 12,700 71,788		Ending balance	Ending balance	Amount 2,199,388 372 60,168 663,717 1,788 1,853 16,989	Market price or net worth Guarantee or Pledge Unit Price Total 68.99 2,221,594 None 7.44 372 None 59.56 66,075 None 40.22 655,983 None 178.80 1,788 None 18.53 1,853 None 2.92 19,470 None 2,967,135	Market price or net worth Guarantee or Pledge Unit Price Total 68.99 2,221,594 None 7.44 372 None 59.56 66,075 None 40.22 655,983 None 178.80 1,788 None 18.53 1,853 None 2.92 19,470 None 2,967,135	Remar k
			Shares			Shares			Shares 32,202,500 50,000 1,109,355 16,309,484 10,000 100,000 6,673,000	Percentage of Ownership 100.00% 100.00% 100.00% 65.87% 100.00% 100.00% 91.41%			Unit Price 68.99 7.44 59.56 40.22 178.80 18.53 2.92
			- - - - - - 6,673,000			- - - - - - -
		$ 2,787,840			228,223			71,788				2,944,275

Note: Including investment income of NT$202,618 thousand, exchange differences on translation of financial statements of foreign operations of NT$(28,025) thousand, benefit from defined benefit plans of subsidiaries of NT$246 thousand, net change in deferred credits - unrealized gain or loss on sales of NT$(10,948) thousand, cash dividends from investees of NT$(32,619) thousand, increase in investment by cash of NT$22,640 thousand and benefit from bargain purchase of NT$2,523 thousand.

85

FSP Technology Inc.

Breakdown of other non-current assets

December 31, 2021

Unit: NT$ thousands

Item	Summary	Amount $ 3,284 560 $ 3,844	Remark
Refundable deposits Others (the amount of individual item in others does not exceed 5% of the account balance)	Deposits for factories, office premises, and staff quarters Others

Breakdown of notes payable

Customer Name Hey Bro International Corp. Chroma ATE Inc. TUV Rheinland Taiwan Ltd. KPMG Taiwan 168 Food Co., Ltd. Others (the amount of individual item in others does not exceed 5% of the account balance)	Summary Business 〃 〃 〃 〃 〃	Amount $ 4,009 3,986 2,184 835 806 2,625 $ 14,445	Remark

86

FSP Technology Inc.

Statement of Accounts Payable

December 31, 2021

Unit: NT$ thousands

Customer Name Related party: Shenzhen HuiLi Electronics Co., Ltd. Zhonghan Electronics Shenzhen Co., Ltd. Wuxi SPI Technology Co., Ltd. Wuxi Zhonghan Technology Co., Ltd. 3Y Power Technology (Taiwan) Inc. Dongguan Protek Electronics Corp. Harmony Trading (HK) Ltd. Voltronic Power Technology Corp. Subtotal Non-related party: Yuen Tai Electrical Co., Ltd. Avnet Asia Pte Ltd., Taiwan Branch Others (the amount of individual item in others does not exceed 5% of the account balance) Subtotal	Summary Business 〃 〃 〃 〃 〃 〃 〃 Business 〃 〃	Amount $ 93,414 38,318 17,748 3,502 81,547 5,406 251 90,024 330,210 337,392 254,750 2,825,146 3,417,288 $ 3,747,498	Remark

87

FSP Technology Inc.

Statement of Other Payables

December 31, 2021

Unit: NT$ thousands

Item	Summary	Amount $ 370,986 72,190 75,565 105,798 56,683 144,771 $ 825,993
Non-related party: Salaries and bonuses payable Remuneration payable to employees and directors Advertising fees payable Safety test fee payable Commission Payable Others (the amount of individual item in others does not exceed 5% of the account balance)	Business 〃 〃 〃 〃 〃

Statement of Other Current Liabilities

Item	Summary	Amount	Remark
Advance payment received Collection for others Others (the amount of individual item in others does not exceed 5% of the account balance)		$ 41,625 12,712 9,921
		$ 64,258

88

FSP Technology Inc.

Statement of Operating Revenue

January 1 to December 31, 2021

Unit: NT$ thousands

Item Power supplies: Personal computer Consumer application Industrial use Medical use Semi-finished goods Raw material	Item	Amount $ 7,059,175 4,184,970 599,241 301,383 26,832 148,232	Remark
		$ 12,319,833

89

FSP Technology Inc.

Statement of Operating Costs

January 1 to December 31, 2021

Unit: NT$ thousands

Item Cost of self-produced goods sold Direct raw material Add: raw materials - beginning of the period Purchase Less: raw materials - end of the period Sales of raw materials Loss on inventory obsolescence Loss on raw materials Used by departments Director labor Manufacturing overheads Manufacturing overheads Add: work in process - beginning of the period Purchase Less: work in process - end of the period Sales of semi-finished goods Loss on inventory obsolescence Loss on semi-finished goods Used by departments Cost of finished goods Add: finished goods - beginning of the period Finished goods purchased Loss on finished goods Less: finished goods - end of the period Loss on inventory obsolescence Used by departments Total cost of goods sold Cost of raw material sold Cost of semi-finished goods sold Loss on inventory obsolescence Loss on inventory write-down Loss on inventory Total operating costs	Amount Subtotal Total $ 7,746,683 427,226 8,126,733 (655,301) (138,700) (10,442) (94) (2,739) 30,742 2,300,786 10,078,211 377,610 7,364 (502,282) (18,094) (4,797) (78) (250) 9,937,684 888,583 572,200 1 (1,085,723) (17,847) (16,057) 10,278,841 138,700 18,094 33,086 14,795 171 $ 10,483,687	Amount Subtotal Total $ 7,746,683 427,226 8,126,733 (655,301) (138,700) (10,442) (94) (2,739) 30,742 2,300,786 10,078,211 377,610 7,364 (502,282) (18,094) (4,797) (78) (250) 9,937,684 888,583 572,200 1 (1,085,723) (17,847) (16,057) 10,278,841 138,700 18,094 33,086 14,795 171 $ 10,483,687
		$ 10,483,687

90

FSP Technology Inc.

Statement of Selling and Marketing Expenses

January 1 to December 31, 2021

Unit: NT$ thousands

Item	Summary	Amount $ 111,325 105,987 98,909 31,839 26,904 70,160	Remark
Salary expenses Shipping expense Commission expense Advertising expense Insurance expenses Others (the amount of individual item in others does not exceed 5% of the account balance)
		$ 445,124

Statement of General and Administrative Expenses

Item	Summary	Amount $ 341,557 27,003 118,716	Remark
Salary expenses Depreciation Others (the amount of individual item in others does not exceed 5% of the account balance)
		$ 487,276

91

FSP Technology Inc.

Breakdown of R&D expenses

January 1 to December 31, 2021

Unit: NT$ thousands

Item	Summary	Amount $ 265,827 25,894 18,184 53,539	Remark
Salary expenses Insurance expenses Depreciation Others (the amount of individual item in others does not exceed 5% of the account balance)
		$ 363,444

For the table of financial assets at amortized cost - current, please refer to Notes VI(IV) and XIII(I). For the table of changes in property, plant and equipment, please refer to Note VI(X). For the table of changes in accumulated depreciation of property, plant and equipment, please refer to Note VI(X).

For the table of changes in right-of-use assets, please refer to Notes VI(XI).

For the table of changes in intangible assets, please refer to Notes VI(XII).

For the table of lease liabilities, please refer to Notes VI(XV).

For the table of provisions, please refer to Notes VI(XVI).

For the table of interest income, please refer to Note VI(XXIII).

For the table of other income, please refer to Note VI(XXIII).

For the table of other gains and losses, please refer to Note VI(XXIII). For the table of financial costs, please refer to Note VI(XXIII).

92