K LASER - Annual Report 2021 | FinancialReports.eu

English Translation of a Report and Financial Statements Originally Issued in Chinese

K Laser Inc. and Subsidiaries

Consolidated Financial Statements with Report of Independent Accountants for the years ended December 31, 2021 and 2020

Address: No. 1, Lishin 6th Road, Hsinchu City, Hsinchu Science Park Tel: (03)577-0316

Declaration of Consolidation of Financial Statements of Affiliates

The companies that are required to be included in the consolidated financial statements of associates in accordance with the “Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Associated Enterprises” for the year ended December 31, 2021 are all the same as those included in the consolidated financial statements of parent and subsidiary companies prepared in conformity with the International Financial Reporting Standard No. 10. In addition, relevant information that should be disclosed in the consolidated financial statements of associates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, K Laser Technology Inc. and Subsidiaries did not prepare a separate set of consolidated financial statements of associates.

Company Name: K Laser Technology Inc.

Chairman: Kuo Wei-Wu

March 24, 2022

Independent Auditors’ Report

Submitted to K Laser Technology Inc.

Opinion

We have audited the accompanying consolidated financial statements of K Laser Technology Inc. and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements (including a summary of significant accounting policies).

In our opinion, based on our audits and the report of other auditors (as referred to in the Other Matters section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of K Laser Technology Inc. and Subsidiaries as of December 31, 2021 and 2020 and their consolidated financial performance and consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

The opinion is conducted in accordance with the rules for auditing and certifying financial statements and the generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit section of the auditors’ report. We are independent of K Laser Technology Inc. in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China and have fulfilled our other responsibilities in accordance with the Norm. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of K Laser Technology Inc. and Subsidiaries for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Recognition of Sales Revenue

The operating income of K Laser Technology Co., Ltd. and Subsidiaries mainly comes from the manufacture of laser holographic film, laser anti-counterfeiting label, laser paper, precision optical components and optical instruments. The sales target in the year of 2021 was significantly concentrated in a single customer, and the sales revenue of backlight modules applied to mobile phones was obvious, and the authenticity of the sales revenue had a great impact on the consolidated financial report. Therefore, the CPA listed the above sales revenue as the key audit items of the current year. Please refer to note 4 to the consolidated financial statements for the accounting policies for revenue recognition.

Our key audit procedures performed in respect of the aforementioned key audit matters includes:

Understand the internal control procedures for the recognition of sales revenue, and confirm and evaluate whether the internal control is effective.
Take samples from the transaction details of backlight module applied to mobile phones by major sales customers to check whether the external freight documents, export declaration and original transaction documents are consistent.
Send a letter to confirm the backlight module transaction applied to mobile phones by major sales customers.

Other Matters

We did not audit the financial statements of some subsidiaries included in the consolidated financial statements of K Laser Technology Inc. and Subsidiaries, but such statements were instead audited by other auditors. Our opinion stated in the consolidated financial statements, insofar as it relates to the amounts included in the financial statements of some subsidiaries, is based solely on the report of other auditors. As of December 31, 2021 and 2020, the total assets of the aforementioned subsidiaries amounted to NT$391,788 thousand and NT$439,989 thousand, respectively, which accounted for 4.77% and 5.53% of the consolidated total assets, respectively. For the years ended December 31, 2021 and 2020, the net operating revenue of these subsidiaries were NT$272,765 thousand and NT$285,507 thousand, respectively, which accounted for 4.44% and 5.25% of the consolidated net operating revenue, respectively. The financial statements of some investee companies accounted for using the equity method were audited by other auditors. The amounts within the consolidated financial statements for those investee companies were based solely on the reports of other auditors. As of December 31, 2021 and 2020, investments of the aforementioned investee companies accounted for using the equity method were NT$137,945 thousand and NT$123,089 thousand, respectively, which accounted for 1.68% and 1.55% of the consolidated total assets, respectively. For the years ended December 31, 2021 and 2020, the amounts of investment gain recognized by the aforementioned investee companies and accounted for using the equity method

were NT$20,210 thousand and NT$13,315 thousand, respectively, which accounted for 4.94% and 5.74% of the consolidated net profit or loss before tax, respectively. Refer to Note 36 to the consolidated financial statements for relevant information of the above investee companies which we have not audited but were audited by other auditors.

We have also audited the financial statements of K Laser Technology Inc. as of and for the years ended December 31, 2021 and 2020 on which we have issued an unqualified opinion and the auditors’ report mentioned in the Other Matters section for reference.

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

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

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

Those charged with governance (including the audit committee) are responsible for overseeing the financial reporting process of K Laser Technology Inc. and Subsidiaries.

Auditors’ Responsibilities for the Audit of the Consolidated Financial

Statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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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 internal controls of K Laser Technology Inc. and Subsidiaries.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of K Laser Technology Inc. and Subsidiaries to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause K Laser Technology Inc. and Subsidiaries to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements (including the disclosures) and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit, and also 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 that those matters of most significance in the audit of the consolidated financial statements for the year ended December 31, 2021 are the key audit matters. We describe these matters in our auditors’ report unless any 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.

Deloitte & Touche Huang Yi-Min, CPA Hsu Wen-Ya, CPA

Financial Supervisory Commission Approval No.: Jin-Guan-Zheng-Shen-Zi-1030024438

Securities and Futures Bureau Approval No.: Tai-Cai-Zheng-6-Zi-0920123784

March 24, 2022

K Laser Technology Inc. and Subsidiaries

Consolidated Balance Sheet

December 31, 2021 and 2020

Unit: In Thousands of New Taiwan Dollars

				December31,2021					December31,2020
Code	Assets			Amount		％			Amount		％
	Current assets
1100	Cash and cash equivalents (Notes 4 and 6)		$	2,128,842		26		$	2,629,811		33
1110	Financial assets at fair value through profit or loss - current (Notes 4 and
	7)			3,134		-			27,150		-
1150	Notes receivable (Notes 4 and 8)			101,895		1			35,457		1
1170	Trade receivables (Notes 4 and 8)			1,295,840		16			855,955		11
1180	Trade receivables from related parties (Notes 4, 8 and 32)			189,050		2			670,406		8
1200	Other receivables (Note 32)			25,710		-			58,048		1
1220	Current tax assets (Notes 4 and 26)			12,413		-			7,552		-
130X	Inventories (Notes 4 and 9)			1,408,054		17			993,440		13
1460	Current assets held for sale (Notes 4 and 10)			29,865		1			28,154		-
1470	Other current assets (Notes 6, 18 and 33)			324,733		4			188,677		2
11XX	Total current assets			5,519,536		67			5,494,650		69
	Non-current assets
1517	Financial assets at fair value through other comprehensive income－
	non-current (Notes 4 and 11)			96,045		1			118,244		2
1550	Investments accounted for using the equity method (Notes 4 and 11)			441,409		5			591,940		7
1600	Property, plant and equipment (Notes 4 and 13)			1,389,369		17			1,131,375		14
1755	Right-of-use assets (Notes 4 and 15)			313,064		4			263,580		3
1805	Goodwill (Notes 4, 16 and 29)			42,724		1			85,752		1
1821	Other intangible assets (Notes 4 and 17)			42,307		1			44,672		1
1840	Deferred tax assets (Notes 4 and 26)			20,000		-			21,094		-
1990	Other non-current assets (Notes 6, 18 and 33)			350,720		4			208,183		3
15XX	Total non-current assets			2,695,638		33			2,464,840		31
1XXX	Total assets		$	8,215,174		100		$	7,959,490		100
Code	Liabilities andEquity
	Current liabilities
2100	Short-term borrowings (Note 19)		$	747,545		9		$	810,164		10
2110	Short-term notes and bills payable (Note 19)			159,948		2			299,917		4
2150	Notes payable			268,422		3			257,027		3
2170	Trade payables			639,088		8			507,491		7
2180	Trade payables to related parties (Note 32)			3,709		-			43,535		1
2200	Other payables (note 21)			516,737		6			415,897		5
2220	Other payables to related parties (Note 32)			117		-			1,753		-
2230	Current tax liabilities (Notes 4 and 26)			15,768		-			13,559		-
2280	Lease liabilities－current (Notes 4 and 15)			51,701		1			51,244		1
2320	Current portion of long-term liabilities (Note 19)			-		-			100,000		1
2399	Other current liabilities			11,373		-			24,509		-
21XX	Total current liabilities			2,414,408		29			2,525,096		32
	Non-current liabilities
2500	Financial liabilities measured at fair value through profit or loss - non-current
	(notes 4 and 7)			855		-			-		-
2530	Corporate bonds payable (note 20)			552,053		7			-		-
2540	Long-term borrowings (Note 19)			794,000		10			1,250,000		16
2580	Lease liabilities－non-current (Notes 4 and 15)			162,844		2			199,582		2
2640	Net defined benefit liabilities－non-current (Notes 4 and 22)			20,158		-			18,888		-
25XX	Total non-current liabilities			1,529,910		19			1,468,470		18
2XXX	Total liabilities			3,944,318		48			3,993,566		50
	Equity (Note 23)
	Share capital
3110	Ordinary shares			1,659,694		20			1,593,246		20
3200	Capital reserve			709,559		9			585,347		7
	Retained earnings
3310	Legal reserve			249,257		3			213,042		3
3320	Special reserve			391,852		5			200,987		2
3350	Unappropriated earnings			294,763		4			384,752		5
	Other equity
3410	Exchange differences on translation of foreign financial statements	(		373,245 )	(	5 )	(		287,085 )	(	4 )
3420	Unrealized gain on financial assets at fair value through other
	comprehensive income	(		30,640 )		-	(		30,403 )		-
3490	Unpaid employees award	(		72,873 )	(	1 )			-		-
3500	Treasury shares	(		147,047)	(	2)	(		118,736)	(	1)
31XX	Total equity attributable to the Company			2,681,320		33			2,541,150		32
36XX	Non-controlling interests (23)			1,589,536		19			1,424,774		18
3XXX	Total equity			4,270,856		52			3,965,924		50
	Total liabilities and equity		$	8,215,174		100		$	7,959,490		100

The accompanying notes are an integral part of the consolidated financial statements. (Please refer to the Deloitte & Touche auditors’ report dated March 24, 2022.)

Chairman: Kuo Wei-Wu

Manager: Kuo Wei-Wu

Accounting Manager: Hung Ya-Ching

K Laser Technology Inc. and Subsidiaries Consolidated Statement of Comprehensive Income For the years ended December 31, 2021 and 2020

Unit: In Thousands of New Taiwan Dollars; Earnings Per Share: In New Taiwan Dollars

C o d e 4000 Operating revenue (Notes 4 and 32) 5110 Cost of goods sold (Notes 9 and 32) 5950 Gross profit Operating expenses (Notes 8 and 32) 6100 Selling and marketing 6200 General and administrative 6300 Research and development 6450 Expected credit (reversal interest) impairment loss 6000 Total operating expenses 6900 Profit from operations Non-operating income and expenses 7060 Share of profit or loss of associates accounted for using the equity method (Note 13) 7100 Interest income (Note 32) 7130 Dividend income 7190 Other income-others (Note 32) 7210 Loss on disposal of real estate, plant and equipment 7225 Impairment loss 7230 Loss on foreign exchange 7235 Gain on financial assets (liabilities) at fair value through profit or loss 7510 Interest expense 7590 Miscellaneous expense 7625 Gain on disposal of investment 7000 Total non-operating income and expenses		2021	％ 100 80 20 6 7 4 ( 1) 16 4 - - - 1 - ( 1 ) - - - - 3 3		2020
		Amount $ 6,146,290 4,908,947 1,237,343 375,660 448,339 261,625 64,719) 1,020,905 216,438 25,137 19,724 1,031 46,908 4,154 ) 43,028 ) 2,599 ) 4,594 31,678 ) 32,572 ) 209,269 192,632			Amount $ 5,439,230 4,175,137 1,264,093 328,332 435,814 254,895 16,330 1,035,371 228,722 31,550 10,175 2,354 42,242 2,212 ) 8,739 ) 23,648 ) 31 ) 38,560 ) 32,425 ) 22,673 3,379	％
	( ( ( ( ( (			( ( ( ( ( (		100 77 23 6 8 5 - 19 4 1 - - 1 - - - - ( 1 ) ( 1 ) - -

(to be continued)

(continued)

Code 7900 Profit (loss) before tax 7950 Income tax expense (Notes 4 and 26) 8200 Profit for the year Other comprehensive income (loss) (Note 23) 8310 Items that will not be reclassified subsequently to profit or loss 8311 Remeasurement of defined benefit plans 8316 Unrealized loss on investments in equity instruments at fair value through other comprehensive income 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign financial statements 8370 Share of other comprehensive loss of subsidiaries, associates and joint ventures accounted for using the equity method 8300 Total other comprehensive income (loss) 8500 Total comprehensive income for the year Net profit (loss) attributed to 8610 Owners of the company 8620 Non-controlling interests 8600 Total comprehensive income (loss) attributed to 8710 Owners of the company 8720 Non-controlling interests 8700 Earnings per share (Note 27) From continuing operations 9710 Basic 9810 Diluted		2021	％ 7 ( 1) 6 - - ( 2 ) - ( 2) 4 6 - 6 5 ( 1) 4		2020
		Amount $ 409,070 66,996) 342,074 1,297 ) 4,487 ) 96,373 ) 2,332) 104,489) $ 237,585 $ 363,725 21,651) $ 342,074 $ 275,922 38,337) $ 237,585 $ 2.42 $ 2.14			Amount $ 232,101 40,962) 191,139 236 12,617 9,186 ) 1,872) 1,795 $ 192,934 $ 144,409 46,730 $ 191,139 $ 137,403 55,531 $ 192,934 $ 0.96 $ 0.95	％
	( ( ( ( ( ( ( (			( ( (		4 - 4 - - - - - 4 3 1 4 3 1 4

The accompanying notes are an integral part of the consolidated financial statements. (Please refer to the Deloitte & Touche auditors’ report dated March 24, 2022.)

Chairman: Kuo Wei-Wu Manager: Kuo Wei-Wu Accounting Manager: Hung Ya-Ching

Unit: In Thousands of New Taiwan Dollars

K Laser Technology Inc. and Subsidiaries Consolidated Statement of Changes in Equity For the years ended December 31, 2021 and 2020

					EquityAttribu				Non-controlling interests $ 842,432 - - 46,730 8,801 - 25,153 - 62,941 - - 438,717 1,424,774 - - - - ( 21,651 ) ( 16,686 ) - - 17,728 - - - 185,371 $ 1,589,536		Total equity
O r	d i n a r y s h a r e s $ 1,593,246 - - - - - - - - - - - 1,593,246 - - - - - - 16,448 - - - 50,000 - - $ 1,659,694	C a	p i t a l r e s e r v e $ 551,531 - - - - - 3,668 ) 10,824 22,969 3,691 - - 585,347 - - - 20,280 - - 12,704 - 23,036 29,279 38,913 - - $ 709,559 The Manage		Retained earnings	Other equity	Unpaid employees award $ - - - - - - - - - - - - - - - - - - - - - - - ( 88,913 ) 16,040 - ($ 72,873) ger: Hung Ya-Chin	Tr
				Legal reserve $ 213,042 - - - - - - - - - - - 213,042 36,215 - - - - - - - - - - - - $ 249,257 accompanying n (Please refer to r: Kuo Wei-Wu
		(					( ( ger	( ( ( ( (	( (	( ( ( ( (	$ 3,243,521 - - 191,139 1,795 77,812 ) 44,270 49,237 75,866 3,691 4,500 ) 438,717 3,965,924 - - 225,344 ) 20,280 342,074 104,489 ) 29,152 28,311 ) 40,880 29,279 - 16,040 185,371 $ 4,270,856

Manager: Kuo Wei-Wu

Accounting Manager: Hung Ya-Ching

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K Laser Technology Inc. and Subsidiaries Consolidated Statement of Cash Flows

For the years ended December 31, 2021 and 2020

Unit: In Thousands of New Taiwan Dollars

Code Cash flows from operating activities A10000 Profit before tax A20010 Income and expense adjustments A20100 Depreciation expense A20200 Amortization expense A20300 Expected credit (reversal interest) impairment loss A20400 Net (profit) loss of financial assets measured at fair value through profit or loss A20900 Interest expense A21200 Interest income A21300 Dividend income A21900 Share-based compensation expense A22300 Share of loss of associates and joint ventures accounted for using the equity method A22500 Loss on disposal and write-down of property, plant and equipment A23100 Gain on disposal of investment A23700 Impairment loss recognized on non-financial assets A23800 Loss on inventory valuation and obsolescence A29900 Gain on lease modification A30000 Net change in operating assets and liabilities A31130 Notes receivable A31150 Trade receivables A31160 Trade receivables from related parties A31180 Other receivables A31200 Inventories A31240 Other current assets A31990 Other non-current assets A32130 Notes payable A32150 Trade payables A32160 Trade payables to related parties A32180 Other payables	2021 $ 409,070 223,916 5,963 ( 64,719 ) ( 4,594 ) 31,678 ( 19,724 ) ( 1,031 ) 16,575 ( 25,137 ) 4,154 ( 209,269 ) 43,028 21,138 - ( 5,102 ) ( 242,003 ) 486,099 25,165 ( 344,953 ) ( 75,843 ) 1,465 11,396 63,432 ( 39,827 ) 69,122	2020
		$ 232,101 231,574 5,028 16,330 31 38,560 ( 10,175 ) ( 2,354 ) 9,301 ( 31,550 ) 2,212 ( 22,673 ) 8,739 126 ( 246 ) 70,382 31,956 ( 201,462 ) ( 27,680 ) ( 78,740 ) ( 28,796 ) ( 7,383 ) 98,312 64,793 ( 4,933 ) 34,137

(to be continued)

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(continued)

Code A32230 Other current liabilities A32240 Net defined benefit liabilities - non-current A33000 Cash generated from operations A33100 Interest received A33300 Interest paid A33500 Income tax paid AAAA Net cash generated from operating activities Cash flows from investing activities B00010 Financial assets measured at fair value through other comprehensive profit or loss B00030 Refund of shares for increases in capital stocks on financial assets at fair value through profit or loss B00100 Acquisition of financial assets recognized initially at fair value through profit or loss B00200 Disposal of financial assets recognized initially at fair value through profit or loss B00200 Dispose of financial assets designated as measured at fair value through other comprehensive profits and losses at the time of original recognition B01800 Acquisition of long-term equity investment accounted for using the equity method B02200 Acquisition of subsidiaries (net of cash obtained) B02600 Price for disposal of assets to be sold B02700 Purchase of property, plant and equipment B02800 Proceeds from disposal of property, plant and equipment B03700 (increase) decrease in deposit B04100 Decrease in other receivables B04500 Purchase of intangible assets B06600 Increase in other financial assets B07600 Dividends received BBBB Net cash used in investing activities Cash flows from financing activities C00200 (decrease) increase in short-term borrowings C00500 (decrease) increase in short-term bills payable C01200 Issuance of convertible corporate bonds C01600 Long-term borrowings C01700 Repayments of Long-term borrowings		2021 $ 13,371 ) 27) 366,601 19,724 28,572 ) 72,779) 284,974 - 9,000 19,493 ) 47,688 8,688 3,924 ) 135,253 ) 237,238 352,182 ) 14,371 1,590 ) 7,660 3,598 ) 44,832 ) 8,275 227,952) 157,329 ) 140,000 ) 600,700 650,000 1,206,000 )		2020
	( ( ( ( ( ( ( ( ( ( ( ( ( ( (		( ( ( ( ( ( ( ( ( ( (	$ 3,449 6,374) 424,665 10,175 38,435 ) 39,114) 357,291 3,000 ) - 584,470 ) 764,621 - 9,005 ) - 19,762 137,993 ) 5,415 7,888 6,458 1,235 ) 128,028 ) 7,045 52,542) 9,017 130,000 - 250,000 90,000 )

(to be continued)

12 -

(continued)

Code C04500 Payment of cash dividends C04800 Employee exercise of stock option C04900 Treasury stock repurchase cost C05000 Disposition of treasury stock C05400 Acquisition of equity of subsidiaries C05500 Investment price for sale of subsidiaries C05800 Changes in non-controlling interests C04020 Repayment of the principal portion of lease liabilities CCCC Net cash inflow (outflow) from financing activities DDDDEffects of exchange rate changes on the balance of cash and cash equivalents EEEE Increase (decrease) in cash and cash equivalents in the current period E00100Cash and cash equivalents at the beginning of the year E00200Cash and cash equivalents at the end of the year	2021 ( $ 225,344 ) 833 ( 28,311 ) - ( 1,074 ) 43,332 21,868 ( 59,643) ( 500,968) ( 57,023) ( 500,969 ) 2,629,811 $ 2,128,842	2020
		$ - - ( 77,812 ) 45,507 ( 13,235 ) 44,925 498,218 ( 51,331) 745,289 ( 8,406) 1,041,632 1,588,179 $ 2,629,811

The accompanying notes are an integral part of the consolidated financial statements. (Please refer to the Deloitte & Touche auditors’ report dated March 24, 2022.)

Chairman: Kuo Wei-Wu Manager: Kuo Wei-Wu Accounting Manager: Hung Ya-Ching

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K Laser Technology Inc. and Subsidiaries

Notes to the Consolidated Financial Report

For the years ended December 31, 2021 and 2020

(In thousands of New Taiwan Dollars, except as otherwise indicated herein)

I. Corporate History
K Laser Technology Co., Ltd. (“K Laser” or the “Company”) was incorporated in Hsinchu Science Industrial Park in April 1988. Its main business items are research and development, production, manufacturing and sales of laser holographic packaging materials, products and optical instruments.

On December 9, 1999, the Company’s shares began trading on the Taipei Exchange (TPEx), and were subsequently listed on the Taiwan Stock Exchange (TWSE) on September 17, 2001.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

II. Date and Procedure of Adoption of Financial Statements

The consolidated financial statements were adopted by the board of directors of the parent on March 23, 2021.

III. Applicability of New and Amended Regulations and Interpretations

(1) Apply for the first time the IFRS, IAS, IFRIC and SIC (hereinafter referred to as "IFRSs") approved and issued by the financial supervision and regulation committee (hereinafter referred to as "FSC")
Except for the following explanations, the application of the revised IFRSs approved and issued by the FSC to the company and the individuals controlled by the company (hereinafter referred to as the "consolidated company") will not cause significant changes in the accounting policies of the consolidated company.

Amendment to IFRS 16 "rent concession related to Covid-19 after June 30, 2021"

The consolidated company chose to apply the amendment and extended the applicable conditions of the practical expedient method to the payment due before June 30, 2022. Please refer to note 4 for the relevant accounting policies of the practical expedient method.

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(2) IFRSs recognized by the FSC, which were applied in 2020

Standards Issued / Amended / Revised and Effectiveness Date Interpretations Announced by IASB "Annual improvement of IFRSs 2018-2020" January 1, 2022 (Note 1) Amendments to IFRS 3 "citation of conceptual framework" January 1, 2022 (Note 2) Amendment to IAS 16 "property, plant and January 1, 2022 (Note 3) equipment: price before reaching the intended state of use" Amendments to IAS 37 "loss making contracts - January 1, 2022 (Note 4) costs of performing contracts"

Note 1: the amendments to IFRS 9 apply to the exchange or modification of terms of financial liabilities incurred during the annual reporting period beginning after January 1, 2022; The amendment to IAS 41 "agriculture" applies to fair value measurement for annual reporting periods beginning after 1 January 2022; The amendment to IFRS 1 "first adoption of IFRS" applies retroactively to the annual reporting period beginning after January 1, 2022.
Note 2: this amendment is applicable to business combinations starting from the acquisition date during the annual reporting period and after January 1, 2022.
Note 3: this amendment applies to the plant, real estate and equipment that reach the necessary location and state of the expected operation mode of the management after January 1, 2021.
Note 4: this amendment applies to contracts that have not fulfilled all obligations on January 1, 2022.

As of the date of issuance of the consolidated financial report, the amendments to other standards and interpretations for the evaluation of the consolidated company will not have a significant impact on the financial position and financial performance.

(3) IFRSs that have been announced by IASB but have not been recognized or announced yet by the FSC

or announced yet by the FSC
Standards Issued / Amended / Revised and Interpretations Amendments to IFRS 10 and IAS 28 ”Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17”Insurance contract” IFRS 17 Amendments to Amendments to IFRS 17 "initial application of IFRS 17 and IFRS 9 - comparative information" Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 "deferred income tax relating to assets and liabilities arising from a single exchange"	Effectiveness Date Announced by IASB (Note 1)
	Not decided yet January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (note 2) January 1, 2023 (note 3) January 1, 2023 (note 4)

or announced yet by the FSC

Standards Issued / Amended / Revised and
Interpretations
Amendments to IFRS 10 and IAS 28 ”Sale or
Contribution of Assets between an Investor and its
Associate or Joint Venture”
IFRS 17”Insurance contract”
IFRS 17 Amendments to
Amendments to IFRS 17 "initial application of IFRS
17 and IFRS 9 - comparative information"
Amendments to IAS 1 “Classification of Liabilities
as Current or Non-current”
Amendments to IAS 1 “Disclosure of Accounting
Policies”
Amendments to IAS 8 “Definition of Accounting
Estimates”
Amendments to IAS 12 "deferred income tax relating
to assets and liabilities arising from a single
exchange"

Effectiveness Date
Announced by IASB
(Note 1)

Not decided yet
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (note 2)
January 1, 2023 (note 3)
January 1, 2023 (note 4)

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Note 1: Except otherwise as indicated herein, the standards newly issued/amended/revised or interpretations come into effect from the annual reporting period after the indicated date.
Note 2: The amendments are applicable to postponement of an annual reporting period after January 1, 2023.
Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies to be made in an annual reporting period after January 1, 2023.
Note 4: this amendment applies to transactions occurring after January 1, 2022, except that deferred income tax is recognized for temporary differences in lease and decommissioning obligations on January 1, 2022.
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” According to the amendments, when the Group sells or

contributes assets to its associate or the Group loses its control over its subsidiary but still has a significant impact on the subsidiary, the consolidated is required to recognize the income or loss generated from the transaction if the assets or subsidiary mentioned above falls in the definition of “business” stated in IFRS 3 “Business Combinations.”

In addition, when the Group sells or contributes assets to its associate or the Group loses its control over its subsidiary in a transaction made with its associate but still has a significant impact on the subsidiary, the Group is required to recognize the income or loss generated from the transaction to the extent that the equity of investors is irrelevant to the associate, that is to say, by writing off the Group’s share of the income or loss, if the assets or subsidiary mentioned above is not defined as the “business” as stated in IFRS 3 “Business Combinations.”

Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments explain that to determine whether a liability is classified to be non-current, the Group should be evaluated to see whether it has the right at the end of a reporting period to defer the repayment deadline to at least 12 months beyond the reporting period. If the Group has such right at the end of the reporting period, the liability will be classified to be non-current no matter whether the Group is expected to exercise such right. The amendment also clarifies that if the consolidated company is required to comply with specific conditions before it has the right to deferred settlement of liabilities, the consolidated company must have complied with specific conditions on the end of the reporting period, even if the lender tests whether the consolidated company complies with these conditions on a later date.

According to the amendments, for the purpose of liability classification, the aforementioned repayment refers to transfer of cash, other economic resources or the Group’s equity instrument to the counterparty so as to eliminate the liabilities. However, if the counterparty may at its option request the Group to transfer its

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equity instrument so as to repay the liabilities in accordance with the terms provided for the liabilities, and if the option is separately recognized in equity in compliance with the provisions of IAS 32 “Financial Instruments: Presentation,” then the aforementioned terms do not influence classification of liabilities.

Amendments to IAS 1 “Disclosure of Accounting Policies” The amendments expressly indicate that the Group shall disclose the information of material accounting policies based on the definition of material. Accounting policy information is material if it can be reasonably expected to affect the decisions made by the main users of general-purpose financial reports on the basis of such financial reports. The amendment clarifies:
●Information of accounting policies relevant to immaterial transactions or immaterial other matters or circumstances is regarded as immaterial information. The Group is not required to disclose such information.
●The Group may determine that the information of accounting policies is material based on the nature of the transactions or other matters or circumstances even though the amount is not significant.
●Not all information of accounting policies relevant to material transactions or material other matters or circumstances is regarded as material information.

In addition, examples are also given in the amendments to explain the information of accounting policies that is relevant to material transactions or material other matters or circumstances may be regarded as material information in any of the following situations:

(1) The consolidated company changed its accounting policies during the reporting period, and the change resulted in significant changes in the financial reporting information;
(2) The Group chooses, from the accounting policies permitted in the standards, the accounting policy applicable to the Group;
(3) The Group establishes accounting policies in compliance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” for a lack of specific standards;
(4) The Group discloses relevant accounting policies that it has to exercise material judgment or assumption to determine; or
(5) Complicated accounting treatment regulations are involved, and users of financial reports rely on such information to understand such major transactions, other matters or situations.
Amendments to IAS 8 “Definition of Accounting Estimates” The revised explicit accounting estimate refers to the monetary amount affected by measurement uncertainty in the financial report. When applying accounting policies, the consolidated company may have to measure the financial reporting items with monetary amounts that cannot be directly observed but must be estimated. Therefore, it is necessary to use measurement techniques and input values to establish accounting estimates to
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achieve this purpose. If the influence of changes in measurement techniques and input values on accounting estimates is not related to correction of an error occurring in the previous period, then such changes are regarded as changes in accounting estimates. In addition to the above effects, as of the date of issuance of this consolidated financial report, the consolidated company continues to evaluate the impact of amendments to other standards and interpretations on its financial position and financial performance, and the relevant impact will be disclosed when the evaluation is completed.

IV. Explanations of Material Accounting Policies

(1) Declaration of Compliance
The consolidated financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs recognized and published by the FSC.

(2) Preparation Basis

 - The consolidated financial report is prepared on the basis of

 - historical cost, except for financial instruments, which are measured at fair value.

 - Fair value measurement is classified from level 1 to level 3 based

 - on observable level and importance of relevant inputs.

 1. Level 1 inputs: They refer to the prices of the same assets or liabilities obtained in the active market on measurement date (not adjusted).

 2. Level 2 inputs: They refer to direct inputs (i.e. prices) or indirect inputs (presumed from prices) observable, except level 1 prices, for assets or liabilities.

 3. Level 3 inputs: They refer to inputs not observable for assets or liabilities.

(3) Standards of Distinguishing Current Assets and Liabilities from Non-current Assets and Liabilities

 - Current assets include:

 1. Assets held primarily for transaction;

 2. Assets expected to be realized within 12 months after the balance sheet date; and

 3. Cash and cash equivalents (not including the same that would be used to exchange or pay off liabilities 12 months after the balance sheet date and be therefore restricted).

 - Current liabilities include:

 1. Liabilities held primarily for transaction;

 2. Liabilities due and repaid within 12 months after the balance sheet date

 3. Liabilities for which the repayment period is not unconditionally allowed to be postponed to at least 12 months after the balance sheet date. The assets and liabilities which are not listed as current assets and current liabilities above are classified as non-current assets and non-current liabilities.

(4) Consolidation Basis

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This consolidated financial report includes the financial reports of the company and the individuals (subsidiaries) controlled by the company.

The financial report of each subsidiary has been adjusted in order to cause the accounting policies used by each subsidiary to be consistent with those used by the Group.

The transactions, account balances, incomes and expenses among individual entities were already deleted completely during the preparation of the consolidated financial report.

Refer to Note 12 and Attachments 6 and 7 for the detailed information, shareholding and business activities of each subsidiary. (5) Business Combinations

Business combinations are processed by using the acquisition method. Acquisition-related costs are listed as expenses for the year when the costs occur and services are obtained.

Goodwill refers to the net worth, measured based on the fair value of transfer pricing, the amount of the acquiree’s non-controlling interests and the total equity of the acquiree in fair value previously possessed by the acquirer as of the acquisition date, and in excess of the identifiable assets obtained and the liabilities assumed on the acquisition date.

Non-controlling interests for which the acquirer has the acquiree’s current ownership interest and of which the acquirer is entitled, upon liquidation, to enjoy the acquiree’s net assets are measured by the percentage share of the recognized amount of net identifiable assets of the acquiree enjoyed by the acquirer. Other non-controlling interests are measured in fair value.

(6) Foreign Currency

For the transactions completed by using a foreign currency rather than the functional currency of an entity of the Group, the entity shall convert the foreign currency to the functional currency at the exchange rate prevailing on the date of transaction in preparing the financial report.

Foreign monetary items are converted at the closing rate on the balance sheet date. Exchange differences generated from the transfer or conversion of monetary items are recognized in profits or losses for the current year when the differences occur.

Foreign currency non-monetary items measured at fair value are converted at the exchange rate on the date when fair value is determined. Exchange differences generated are listed as current profits or losses. However, in case of changes in fair value recognized in other comprehensive incomes or losses, the exchange differences generated are listed as other comprehensive incomes or losses.

Foreign currency non-monetary items measured at historical cost are converted at the exchange rate on the date of transaction and will not be re-converted.

In preparing the consolidated financial report, K Laser converts the assets and liabilities of the entities operating overseas (including the subsidiaries using, and the subsidiaries operating in the countries using, any currency that differs from the currency used by K Laser) to

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NT dollars at the exchange rate on the balance sheet date. Incomes and expenses are converted at the average exchange rate of the current year. Exchange differences generated are recognized as other comprehensive incomes or losses. (and vested in the owners and non-controlling interests of the company respectively).

If the consolidated company disposes of all the interests of the foreign operating institution, or disposes of part of the interests of the subsidiary of the foreign operating institution but loses control of it, or the retained interests after disposing of the joint agreement or affiliated enterprise of the foreign operating institution are financial assets and treated in accordance with the accounting policies of financial instruments, all the accumulated exchange differences attributable to the owner of the company and related to the foreign operating institution will be reclassified to profit and loss.

When the disposal of part of the equity of the subsidiary operating overseas does not cause the Group to lose its control over the subsidiary, the accumulate exchange differences are proportionally returned to non-controlling interests of the subsidiary, instead of being recognized as profits or losses. In any other situation where any part of the equity of a subsidiary is disposed, the accumulate exchange differences are reclassified to profits or losses at the ratio of disposal. (7) Inventories

Inventories include merchandise, raw materials, finished goods and work in process. Inventories are measured by using the lower of cost or net realizable value method. Cost and net realizable value are compared base on each individual item, except the same type of inventories. Net realizable value refers to the amount of the selling price, estimated in normal circumstances, from which the estimated cost required to be put in prior to the completion and the estimated cost needed for the completion of sale are subtracted. Cost of inventories is calculated by using the weighted average method.

(8) Investments in Associates

An associate refers to an enterprise on which the Group has a significant influence and that is not a subsidiary or joint venture of the Group.

Investments made by the Group in associates are measured by using the equity method. With the equity method, investments in associates are originally recognized at cost. After the date of acquisition, the book amount increases or decreases correlatively subject to the profits or losses, share of other comprehensive incomes or losses and profit distribution enjoyed by the Group from associates. Besides, changes in entity of associates are recognized proportionally based on the ratio of shareholding.

Acquisition cost exceeding the Group’s share of the identifiable assets and liabilities of associates in fair value on the date of acquisition is recognized as goodwill. The goodwill is included in the book amount of the investments and shall not be amortized. The Group’s share of the identifiable assets and liabilities of associates in fair value on the date of acquisition in excess of acquisition cost is recognized as current profits or losses.

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If the Group fails, when an associate issues new shares, to subscribe for the shares proportionally at the rate of its shareholding so that the rate of its shareholding changes and the net equity of the investment increases or decreases accordingly, then capital reserve shall be adjusted by such increase or decrease – changes in net equity of associates and joint ventures accounted for using the equity method, and investments accounted for using the equity method. However, in case of its failure to subscribe for or obtain shares proportionally at the rate of its shareholding so that its ownership interest in the associate decreases, then the associate-related amount recognized as other comprehensive income or loss shall be reclassified at the ratio of decrease in the amount, and the basis of accounting treatment used shall be the same as that required to be complied with by the associate if it was required to dispose relevant assets or liabilities directly. If the aforementioned adjustment is debited to capital reserve and the balance of capital reserve generated from the investments accounted for using the equity method is not sufficient, the difference shall be debited to retained earnings.

When the Group’s share of loss in an associate equals or exceeds its interest in the associate (including the book amount of investments in the associate accounted for using the equity method, and other long-term interest substantially comprising the Group’s net investments in the associate), no loss shall be further recognized. The Group recognizes additional losses and liabilities only to the extent of legal obligations or constructive obligations incurred or payments made on behalf of the associate.

In evaluating impairment, the Group regards the entire book amount of investments (including goodwill) as single assets and compares the recoverable amount with the book amount to perform the impairment test. The impairment loss recognized is part of the book amount of investments. Any revere of impairment loss is recognized to the extent of the subsequent increase in the recoverable amount of the investments.

The consolidated company shall cease to adopt the equity method on the date when its investment is no longer an affiliated enterprise, and its retained interests in the original affiliated enterprise shall be measured at fair value. The difference between the fair value and disposal price and the book amount of investment on the date when the equity method is ceased shall be included in the current profit and loss. For all amounts relevant to the associate and recognized as other comprehensive income or loss, the basis of accounting treatment used shall be the same as that required to be complied with by the associate if it was required to dispose relevant assets or liabilities directly. If investments originally made in an associate become investments in a joint venture, or investments originally made in a joint venture become investments in an associate, then the Group will use the equity method continuously and will not measure separately for the retained interest. Profits or losses generated from upstream, downstream and sidestream transactions between the Group and an associate are recognized in the consolidated financial report only to the extent that

21 -

the equity of the associate owned by the Group is not influenced accordingly.

(9) Property, Plant and Equipment

Property, plant and equipment are recognized at cost and measured subsequently based on the amount of cost less both accumulated depreciation and accumulated impairment loss.

Each important portion of the property, plant and equipment within service life is depreciated by using the straight line method. When the lease period is shorter than the service life, the depreciation is allocated within the lease period. The Group reviews the estimated service life, residual value and depreciation method at least at the end of every year and put off the impact on applicable changes in accounting estimates.

Upon derecognition of property, plant and equipment, the difference between the net proceeds on disposal and the book amount of the assets is recognized in profits or losses. (10) Goodwill

For the goodwill obtained from a business combination, the amount of goodwill recognized on the acquisition date is taken as cost. Such goodwill is measured subsequently based on the amount of the cost less accumulated impairment loss.

For the purpose of the impairment test, goodwill is amortized to each cash-generating unit or cash-generating unit group (hereinafter referred to as CGU) expected by the Group to be benefited from effects of the business combination.

For CGUs of the amortized goodwill, the impairment test is conducted by comparing the book amount of CGUs of goodwill with the recoverable amount of goodwill every year and when a sign shows that the CGUs may be impaired. If the goodwill amortized to CGUs is obtained from a business combination in the current year, then the impairment test shall be conducted prior to the end of the current year. If the recoverable amount of the CGUs of the amortized goodwill is less than its book amount, then the book amount of the goodwill amortized to CGUs shall be reduced by the impairment loss first, and the book amount of each of the concerned assets shall be reduced at the ratio of the book amount of each of the assets in CGUs. Impairment loss, if any, is recognized as current loss directly. Goodwill impairment loss shall not be reversed in any subsequent period.

Upon disposal of any operation in the CGUs of the amortized goodwill, the amount of goodwill relevant to the disposed operation is included in the book amount of the operation in order to determine the gain or loss on the disposal.

(11) Intangible Assets

Individual Acquisition

Intangible assets with limited service life acquired individually are originally measured at cost and measured subsequently based on the amount of cost less accumulated amortization and accumulated impairment loss. Intangible assets are amortized within service life by

22 -

using the straight line method. Estimated service life, residual value and amortization method shall be reviewed at least at the end of every year and the impact on applicable changes in accounting estimates shall be put off. Intangible assets without defined service life are listed at cost less accumulated impairment loss.

Derecongition

Upon derecongition of intangible assets, the difference between the net disposal proceeds and the book amount to such assets is recognized in current profits or losses.

(12) Impairment of real estate, plant and equipment, right of use assets, investment real estate and intangible assets

On each balance sheet date, the consolidated company assesses whether there is any indication that real estate, plant and equipment, right of use assets, investment real estate and intangible assets may have been impaired. In case of any sign of impairment, a recoverable amount is estimated for the assets. If a recoverable amount cannot be estimated for any individual asset, the Group will estimate the recoverable amount of the CGU of the concerned asset.

As for the intangible assets without defined service life and that have not been available for use, the test is conducted at least every year and upon occurrence of a sign of impairment.

The recoverable amount is the higher of fair value less costs to sell and use value. If the recoverable amount of individual assets or CGUs is less than the book amount thereof, then the book amount of the assets or CGUs will be reduced to the recoverable amount, and the impairment loss will be recognized in profits or losses.

Upon subsequent reverse of impairment loss, the book amount of the assets or CGUs is increased to the revised recoverable amount. However, the increased book amount shall not exceed the book value (less amortization or depreciation) determined if the impairment loss of the assets or CGUs was not recognized in the previous year. Reverse of impairment loss is recognized in profits or losses.

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(13) Non-current Assets Held for Sale

The book amount of non-current assets are classified as assets held for sale when they are expected to be traded instead of being used continuously and then recycled. The non-current assets as classified above shall be available for sale immediately in their current status and such sale shall be highly possible. The sale is highly possible when proper levels of management commit to a plan of selling such assets and the sale transaction is expected to be completed within a year after the date of classification.

(14) Financial Instruments

Financial assets and financial liabilities are recognized in the consolidated balance sheet when the Group becomes a party to the contract concerning the instruments.

If financial assets or financial liabilities are not measured at fair value through profit or loss (“FVTPL”), the financial assets or financial liabilities, upon original recognition, are measured at fair value plus transaction cost attributable directly to the obtained or issued financial assets or financial liabilities. Transaction cost attributable directly to the obtained or issued financial assets or financial liabilities at FVTPL is recognized as profits or losses immediately.

Financial Assets

Routine transactions of financial assets are recognized and derecognized on transaction date.

(1) Type of Measurement

Types of financial assets held by the Group are financial assets at FVTPL, financial assets measured at amortized cost, and investments in equity instruments measured at fair value through other comprehensive income (“FVTOCI”).

A. Financial Assets at FVTPL

Financial assets at FVTPL include the financial assets that are enforced or designated to be measured at FVTPL. The financial assets enforced to be measured at FVTPL include the investments in equity instruments not designated by the Company to be measured at FVTOCI, and the investments in debt instruments not classified as those measured at amortized cost or measured at FVTOCI. Financial assets at FVTPL are measured at fair value while the incomes or losses generated from remeasurement (including any dividend or interest generated from the

24 -

financial assets) are recognized in profits or losses. Please refer to note 31 for the determination method of fair value. B. Financial Assets at Amortized Cost

Financial assets invested by the Group are classified
as the financial assets measured at amortized cost if both of the following conditions are satisfied simultaneously:
a. The financial assets are possessed in a specific business model, and the model is used to acquire contractual cash flows by possessing financial assets; and

b. Cash flows generated on the specific date as provided in contractual terms are completely used for payment of principals and the interest on the outstanding principals. After being recognized originally, the financial assets measured at amortized cost (including cash and cash equivalents, trade receivables measured at mortised cost, etc.) are measured at the amortized cost of the total book amount less any impairment loss determined by the effective interest method. Foreign exchange gains or losses are recognized in profits or losses.

Interest income is computed at the effective interest rate multiplied by the total book amount of financial assets, except in either of the following situations:

a. For the credit-impaired financial assets purchased or established, interest income is computed at the effective interest rate, after credit adjustment, multiplied by the amortized cost of the financial assets.
b. If the financial assets without credit impairment upon purchase or establishment become credit-impaired subsequently, then interest income is computed at the effective interest rate multiplied by the amortized cost of the financial assets.

Credit-impaired financial assets refer to the financial assets, the issuer or debtor of which has serious financial difficulty or violates the contract, or the debtor of which may apply for bankruptcy or financial restructuring, or the active market of which disappears due to financial difficulty.

Cash equivalents include the time deposits lasting for no more than 3 months, or for a period between 3 and 12 months, after the acquisition date, with the interest, obtained in case of early termination, higher than that for current deposits, and the time deposits that are highly liquid and may be transferred to a fixed amount of cash any time with minimal risk of changes in value to fulfill short-term cash commitments.

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C. Investments in Equity Instruments at FVTOCI

Upon original recognition, the Group may irrevocably choose to indicate that the investments in equity instruments which are not possessed for sale and not recognized by acquirers of business combinations or for which considerations are provided shall be measured at FVTOCI.

Investments in equity instruments at FVTOCI are measured at fair value, and the subsequent changes in fair value are listed in other comprehensive incomes or losses and accumulated in other equity. Upon disposal of investments, accumulated profits or losses are transferred directly to retained earnings and will not be reclassified as profits or losses.

Dividends for investments in equity instruments at FVTOCI are recognized in profits immediately when the Group’s right to collect payments has been established unless the dividends obviously represent part of the investment cost recovered.

(2) Impairment of Financial Assets

The Group evaluates impairment loss of financial assets at amortized cost based on the expected credit loss every balance sheet date.

Loss allowances for trade receivables are recognized based on the expected credit loss for the duration of trade receivables. As for other financial assets, the Group determines whether credit risks increases significantly after the original recognition of such other financial assets. If the risk does not increase significantly, then loss allowances for other financial assets are recognized based on the expected credit loss for 12 months. If the risk increases significantly, loss allowances are recognized based on the expected credit loss for the duration of such other financial assets.

The expected credit loss refers to the weighted average credit loss computed by weighting the risk of a breach of contract. The expected credit loss for 12 months means the expected credit loss incurred due to violation of a financial instrument within 12 months after the date of reporting. The expected credit loss for the duration means the expected credit loss incurred due to all violations of a financial instrument for the duration of the financial instrument.

For internal credit risk management, the Group determines, without taking any collateral it possesses into account, that a breach of contract with respect to financial assets occurs in case of any of the following situations:

A. Internal or external information indicates that it is impossible for the debtor to repay debts.
B. Financial assets have expired unless any reasonable and supporting information indicates that the postponed violation basis is more appropriate.
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For all financial assets, impairment loss is reflected by reducing the book amount of the financial assets through the allowance account.

(3) Derecognition of Financial Assets

The Group derecognizes financial assets only when their rights to cash flows from financial assets under a contract expire or when financial assets have been transferred and almost all risks of ownership of the assets and payments of the assets have been transferred to other enterprises. When financial assets measured at amortized cost are de-listed as a whole, the difference between their book amount and the consideration received is recognized in profit or loss. When the equity instrument investment measured at fair value through other comprehensive profits and losses is de-listed as a whole, the accumulated profits and losses are directly transferred to retained earnings and are not reclassified as profits and losses.

Equity Instruments

The debt and equity instruments issued by the Group are classified as financial liabilities or equity based on the substance of the contractual agreement and the definitions of a financial liability and an equity instrument.

The equity instruments issued by the Group are recognized based on the obtained consideration less the cost of direct issuance.

The equity instruments of the Group taken back are recognized as and subtracted from equity. No purchase, sale, issuance or annulment of equity instruments of the Group shall be recognized as profit or loss.

Financial liabilities
(1) Follow-up measurement

All financial liabilities are measured at amortized cost using the effective interest method, except for the following circumstances:

Financial liabilities measured at fair value through profit or loss include held for trading and designated as measured at fair value through profit or loss. Financial liabilities held for trading are measured at fair value, and benefits or losses arising from other re-measurements are recognized in other benefits and losses.

(2) Exclusion of financial liabilities

When financial liabilities are excluded, the difference between the book amount and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized as profit or loss.

Convertible corporate bonds

The composite financial instruments (convertible corporate bonds) issued by the company are classified into financial liabilities and equity respectively at the time of initial recognition

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according to the essence of the contract agreement and the definition of financial liabilities and equity instruments.

At the time of initial recognition, the fair value of the liability component is estimated at the current market interest rate of similar non-convertible instruments and measured at the amortized cost calculated by the effective interest method before the conversion or maturity date. The component of liabilities embedded in non-equity derivatives is measured at fair value.

The conversion right classified as equity is equal to the remaining amount of the overall fair value of the composite instrument minus the fair value of the separately determined liability component, which is recognized as equity after deducting the impact of income tax and will not be measured later. When the conversion right is exercised, the relevant liability components and the amount of equity will be transferred to share capital and capital reserve - issue premium. If the conversion right of convertible corporate bonds has not been exercised on the maturity date, the amount recognized in equity will be transferred to capital reserve - issuance premium.

(15) Liability reserve

The amount recognized as liability reserve is the best estimate of the amount needed, in consideration of the risk of obligations and uncertainty into account, to repay obligations on the balance sheet date. Liability reserve is measured based on the present discounted value of the cash flows expected to repayment of obligations.

(16) Revenue recognition

After identifying its obligations under a contract made with a customer, the Group amortizes the transaction price to each obligation and recognizes revenue upon fulfillment of each obligation. Sales Revenue

Sales revenue comes from sale of holographic and photonics products. The revenue is recognized when the customer controls the committed assets, that is to say, the point of time when construal obligations are fulfilled by delivering products to the designated place. For the goods delivered to be processed, revenue is not recognized upon such delivery as the ownership of processed goods is not transferred.

(17) Lease

Upon establishment of a contract, the Group evaluates whether the contract is (or includes) a lease.

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The Group is a lessor.

If almost all of the risks pertaining to the ownership of the assets and the compensation are required to be transferred to the lessee in accordance with the terms of the lease, then the lease is classified as a financed lease. All other leases are classified as operating leases.

When subleasing right-of-use assets, the Group determines the classification of the sublease (instead of the subject assets). However, if the master lease is applicable to the short-term leases for which the Group recognizes exemptions, then the sublease is classified as an operating lease.

Lease payments less lease incentives are recognized as incomes under the operating lease for the lease period on a straight-line basis.

The Group is a lessee.

For other leases, right-of-use assets and lease liabilities are recognized on the date of lease commencement, except for leases of low-value assets for which exemptions can be recognized and short-term leases, in which case, lease payments are recognize as expenses for the lease period on a straight-line basis.

Right-of-use assets are originally measured at cost (including the amount of originally measured lease liabilities, lease payments made before the date of lease commencement less the received lease incentives, the original direct cost and the estimated cost of restored subject assets). They are subsequently measured based on the cost less accumulated depreciation and accumulated impairment loss, and the remeasured amount of lease liabilities is adjusted accordingly. Right-of-use assets are expressed separately in the consolidated balance sheet. Right-of-use assets are depreciated on a straight-line basis between the date of lease commencement and the expiration of the service life or expiration of the lease period, whichever comes first.

Lease liabilities are originally measured based on the current value of lease payments (including periodical payments, substantially periodical payments, lease payments subject to changes in the index or rate, amounts expected to be paid by the leasee to the extent of the guaranteed residual value, prices exercising based on call options ensured reasonably, and penalties for lease termination reflected already in the lease period less the received lease incentives). If a lease implies an interest rate that can be determined easily, then lease payments are discounted at the interest rate. If the interest rate cannot be determined easily, then the lessee’s incremental borrowing rate of interest is used.

After that, lease liabilities are measured at amortized cost by using the effective interest method, and interest expenses are amortized for the leasing. In case the lease period, the amount expected to be paid to the extent of the guaranteed residual value, the evaluation of call options for subject assets, or the index or rate determined for lease payments changes, then the Group

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remeasures lease liabilities and adjusts right-of-use assets accordingly. However, if the book amount of right-of-use assets has been reduced to zero, then the rest of the remeasured amount is recognized in profits or losses. Lease liabilities are expressed separately in the consolidated balance sheet.

Variable rents that are not subjected to the index or rate under the lease agreement are recognized as expenses for the year when the rents occur.

The Group negotiated with the lessor for the rents directly relevant to Covid 19 and adjusted the rents due before June 30, 2022 so that the adjusted rents were almost equal to the rents before the negotiation. The negotiation has not caused any change in other terms of the lease. The Group chose to deal with the negotiation expediently for the rents in the lease contract satisfying the aforementioned conditions. The Group did not evaluate whether the negotiation was conducted to amend the lease, but intended to recognize the decrease in rent payments as profits upon occurrence of such decrease and reduce lease liabilities accordingly.

(18) Borrowing cost

The borrowing cost directly attributable to the acquired assets is part of the cost of the assets until almost all activities necessary for the assets to be used or sold as expected have been completed.

If specific borrowings are used for temporary interments prior to the occurrence of the capital expenditure that meets requirements, then any and all investment incomes earned accordingly are subtracted from the borrowing costs satisfying the condition of capitalization.

Except otherwise as stated above, all other borrowing costs are recognized as losses for the year when the costs occur.

(19) Government subsidy

A government subsidy is recognized only when the Group is reasonably believed to comply with the conditions attached to the government subsidy and will receive the subsidy.

A government subsidy is recognized as profit on a systemic basis for the year in which the Group recognizes as expenses the costs to be covered by the subsidy.

If a government subsidy is used to cover the expenses or losses occurring already or is just granted, as financial support, to the Group and no relevant cost will occur in the future, then the subsidy is recognized as profit for the year when the subsidy is received.

(20) Employee benefits
Short-term Employee Benefits Liabilities relevant to short-term employee benefits are

measured based on non-discounted amounts expected to pay to exchange for employees’ service.

Post-employment Benefits
As for retirement pensions under the defined contribution plan, the pension amounts allocated for the period when employees provide service are recognized as expenses.
30 -

Defined costs (including service costs, net interest and remeasurements) of the defined benefit plan are calculated by using the projected unit credit method. Service costs, the previous years’ service costs and net interest on defined benefit liabilities (assets) are recognized as employee benefit expenses upon their occurrence or when the plan is amended or reduced. Remeasurements (including actuarial gains and losses, changes in effects on asset ceiling, and return on plan asset less interest) are recognized in other comprehensive incomes or losses upon their occurrence and listed in other equity, and they are subsequently will not be reclassified to profits or losses.

Net defined benefit liabilities (assets) are allocated shortage (surplus) of the defined benefit plan. Net defined benefit assets shall not exceed the current value of the refund of contributions from the plan or the reduction in future contributions.

Other long-term Employee Benefits

The accounting treatment of other long-term employee benefits is the same as that of the defined benefit plan. However, relevant remeasurements are recognized in profits or losses.

(21) Share-based payment agreement

Employee stock options or shares with restricted employee rights are recognized as expenses on a straight-line basis during the acquired period according to the fair value determined on the grant date and the best estimate of the expected acquired employee stock options, and the capital reserve - employee stock options or other rights and interests (employees do not earn remuneration) are adjusted at the same time. If it is given at the giving date, the fee shall be fully recognized on the day of giving.

When the merged company issues restricted employee rights shares, it recognizes other rights and interests (employees do not earn remuneration) on the date of grant, and adjusts the capital reserve - restricted employee rights shares at the same time.

The consolidated company shall revise the estimated number of employee stock options expected to be acquired on each balance sheet date. If the original estimated quantity is revised, the affected amount is recognized as profit or loss, so that the accumulated expenses can reflect the revised estimate, and the capital reserve - employee stock options or other rights and interests (employees do not earn remuneration) are relatively adjusted.

(22) Treasury shares

When the Group buys back its outstanding shares to be treasury shares, the cost paid is debited to treasury shares, as a subtrahend under shareholders’ equity.

Transfer of treasury shares to employees is treated in compliance with IFRS 2 “Share-based Payment.” Upon cancellation of treasury － shares, “treasures shares” are credited and “capital reserve premium on shares” and “capital stock” are debited at equity ratio. If the book value of treasury shares is higher than the sum of par value and premium, then the difference writes off the capital reserve generated from the same type of treasury shares. In case of any shortage, retained

31 -

earnings are debited again. If the book value is lower, then the difference is credited to the capital reserve generated from the same type of treasury shares. The book value of treasury shares is computed by using the weighted average method.

(23) Income tax

Income tax expense is the sum of current income tax and deferred income tax.

Current Income Tax

The income tax on unappropriated earnings computed in accordance with the Income Tax Act of the Republic of China is recognized for the year when the resolution is adopted at the shareholders’ meeting.

Adjustment made for the previous year’s income tax payable is listed in current income tax.

Deferred Income Tax

Deferred income tax is computed based on temporary differences generated from the book amounts of assets and liabilities and the tax base used to compute taxable income.

Deferred income tax liabilities are generally recognized based on taxable temporary differences. Deferred income tax assets are recognized when there may probably be taxable incomes from which the tax credits generated from temporary differences and loss carry forwards can be subtracted.

Taxable temporary differences relevant to investments in

subsidiaries and associates are recognized as deferred income tax liabilities, except when the Company is able to control the point of reverse of temporary differences and the taxable temporary differences will not be reversed in the foreseeable future. Deductible temporary differences relevant to the investments are recognized as deferred income tax assets only to the extent of the foreseeable reverse expected in the future when there is taxable income sufficient to realize temporary differences.

The book amount of deferred income tax assets is reviewed again on every balance sheet date. For all or part of assets that taxable income may probably not be sufficient to recover, the book value is reduced. Those that are not originally recognized as deferred income tax assets are also reviewed again on every balance sheet date. The book value is increased when there may be any taxable income used to recover all or part of the assets.

Deferred income tax assets and liabilities are measured at the tax rate applicable to the year when liabilities are expected to be

32 -

repaid or assets are expected to be realized. The interest rate refers to the interest rate determined by the tax law that is enacted or substantially enacted as of the balance sheet date. Deferred income tax liabilities and assets are measured to reflect the tax consequences generated in the way that the Group expects to recover or repay the book amount of its assets or liabilities as of the balance sheet date.

Current and Deferred Income Taxes

Current and deferred income taxes are recognized in profits or losses. However, the current and deferred income taxes relevant to the items recognized in other comprehensive incomes or losses or those included directly in equity are recognized in other comprehensive incomes or losses or included directly in equity respectively.

V. Main Sources of Material Accounting Judgments, Estimates and Assumption Uncertainty

For relevant information not available by the Group from other resources in applying accounting policies, the management must make relevant judgments, estimates and assumptions based on historical experience and other relevant factors. The actual result may probably differ from the estimate.

The consolidated company takes the recent development of the Covid-19 pandemic in Taiwan and its possible impact on the economic environment into consideration of major accounting estimates such as cash flow estimation, growth rate, discount rate and profitability. The management will continue to review the estimates and basic assumptions. If a revised estimate only influences the current year, the estimate will be recognized in the year when it is revised. If a revised accounting estimate influences the current and future years, the estimate will be recognized in the year when it is revised and in the future year. VI. Cash and Cash Equivalents

Cash and Cash Equivalents
Cash on hand and Revolving funds Bank checks and saving deposits of bank Cash equivalents Time deposits	December31,2021 $ 25,451 1,379,197 724,194 $ 2,128,842	December31,2020
			$ 26,889 2,128,693 474,229 $ 2,629,811

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(1) The market interest rate range of time deposits as of the balance sheet date is as follows: (The interest rate for checking deposits is 0 %.)

December 31, 2021 December 31, 2020 Demand deposits 0.001%-0.3% 0.001%-0.3% Time deposits 0.002%-2.85% 0.03%-1.4%

(2) The bank deposits of the Group for the following purposes have been reclassified to other current assets and other non-current assets.

Other current assets (Note 18) Guarantee deposits for bank acceptance Performance bond Deposit for land lease of Hsinchu Science Park Bank short-term loan guarantee Other non-current assets (Note 18) Guarantee deposits for land leases with Hsinchu Science Park Customs Duty Deposit Guarantee deposits for issuance of debentures	December 31, 2021 $ 86,380 - 5,000 112,934 $ 204,314 $ 5,000 2,606 173,277 $ 180,883	December 31, 2020	December 31, 2020
			$ 105,698 1,482 - - $ 107,180 $ 5,000 2,619 128,445 $ 136,064

VII. Financial Instruments at FVTPL

December 31, 2021 December 31, 2020 Financial assets - current Mandatory measurement at fair value through profit or loss Derivatives (unspecified hedging) Redemption right of convertible corporate bonds (note 20) $ 3,134 $ - Non-derivative financial assets Beneficiary certificates of funds - 5,265 Mixed financial assets - structured - 21,885 $ 3,134 $ 27,150 Financial liabilities - non-current Held for trading Derivatives (unspecified hedging) Resale right of convertible corporate bonds (note 20) $ 855 $ -

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VIII. Notes Receivable and Trade Receivables

Notes receivable at amortized cost Total book amount Trade receivables at amortized cost Total book amount Less: loss allowance Trade receivables from related parties (Note 32) at amortized cost Total book amount Less: loss allowance Non-accrual loans Non-accrual loans Less: loss allowance	December31,2021 $ 101,895 $ 1,396,178 ( 100,338) $ 1,295,840 $ 195,300 ( 6,250) $ 189,050 $ 7,705 ( 7,705) $ -	December31,2020	December31,2020
	( ( (	( ( (	$ 35,457 $ 931,365 75,410) $ 855,955 $ 737,706 67,300) $ 670,406 $ 7,705 7,705) $ -

(1) Notes Receivable

The notes receivable of the Group as of December 31, 2021 and 2020 were not overdue.

(2) Trade Receivables

As for the payments of products sold by the Group, the average credit period is between 90 and 150 days after the date of monthly settlement. No interest accrues for trade receivables. To reduce credit risk, the management of the Group designates a team to be responsible for a decision of credit line, credit approval and other monitoring procedures to ensure that proper measures are taken to recover overdue receivables. In addition, the Group reviews recoverable amounts of receivables on a case-by-case basis on the balance sheet date to ensure that a proper amount of impairment loss is allocated for unrecoverable receivables. Accordingly, the management of the Group believes that the Group’s credit risk has significantly reduced.

As shown in the history of credit loss incurred by the Group, the Group’s subsidiaries located in different areas use different standards to evaluate their respective expected loss, and credit loss to customers in different fields of industry also varies. Thus different expected credit loss rates are determined in the provision matrix for customers in different areas and different fields of industry and for trade receivables overdue/with different payment periods.

If evidence shows that the counterparty encounters serious financial difficulties and the Group is unable to reasonably expect a recoverable amount, then the Group will write off relevant trade

35 -

receivables directly; however, claiming activities will still continue. Amounts claimed and recovered are recognized in profits. The analysis on aging of trade receivables based on days past due is as follows:

is as follows:
Not overdue 1～60 days 61～90 days 91～180 days 181～360 days Over 361 days Total	December31,2021 $ 1,319,128 158,617 32,096 34,555 12,046 35,036 $ 1,591,478	December31,2020
			$ 1,389,971 133,975 24,245 35,314 16,058 69,508 $ 1,669,071

Information of changes in trade receivables loss allowance is as follows:

follows:
Beginning balance Plus: acquired through merger Add: provision for expected credit impairment loss in current period (reversal) Less: Amounts written off actually for the year Amounts reclassified to non-accrual loans Foreign exchange differences Ending balance	2021 $ 142,710 39,500 ( 64,719 ) ( 10,923 ) - 20 $ 106,588	2020
		$ 221,186 - 16,330 ( 87,555 ) ( 7,705 ) 454 $ 142,710

As of December 31, 2021, the total individual non-accrual loans amounting to NT$7,705 thousand were liquidated or in material financial difficulties. The Group has proceeded with legal proceedings for collection and has allocated adequate allowance for bad debts. The consolidated company converted 793,000 shares and 1,333,000 shares of Boxlight Corporation in January 2021 and March 2020, respectively, with the book value of accounts receivable of US $1,626,000 (US $1,983 thousand of accounts receivable deducting US $357,000 of accrued loss) and 320,000 (US $3,000,000 of accounts receivable deducting US $2,680,000 of accrued loss), consolidated under current assets to be sold.

IX. Inventories

under current assets to be sold. Inventories
Finished goods Work in process Raw materials and supplies Merchandise	December31,2021 $ 851,493 62,669 377,117 116,775 $ 1,408,054	December31,2020
			$ 570,120 64,927 265,056 93,337 $ 993,440

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Cost of goods sold relevant to inventories was NT$4,908,947 thousand and NT$4,175,137 thousand respectively in 2021 and 2020. Cost of goods sold included an inventory valuation loss amounting to NT$21,138 thousand and NT$126 thousand respectively in 2021 and 2020.

X. Current assets to be sold and disposal groups to be sold

Foreign investment - Boxlight Corporation	December31,2021 $ 29,865	December31,2020	December31,2020
			$ 28,154

On March 30, 2020, the board of directors of the consolidated company approved the plan to dispose of all the equity of Boxlight Corporation, an investment company originally adopting the equity method. It was originally expected to complete the disposal procedure within 12 months. So far, except the part that is the restricted by local laws and regulations, the disposal progress has been actively carried out. The consolidated company conducts impairment assessment on the day of passing the board of directors, and its book value is lower than the fair value on that day. Therefore, it is reclassified to the current assets to be sold according to the book value and expressed separately in the consolidated balance sheet.

As of December 31, 2021, the Group possessed equity in Boxlight Corporation with fair value of NT$73,949 thousand.

XI. Financial Assets at FVTOCI

Investments in Equity Instruments

Non-current Domestic investments -non-listed (non-over-the-counter) stocks Chinese Development, Biomedicine and Venture Investment Co., Ltd. Mega Plastic Industry Co., Ltd.	December31,2021 $ 26,726 2,007	December31,2020
		$ 32,457 2,068

(Continued)

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(Continued)

ued)
Aether Precision Co., Ltd CMVT Co., Ltd Foreign investments -non-listed (non-over-the-counter) stocks Guangcan Optoelectronic (Cayman) Holding Company Dongguan Guangzhi photoelectric Co., Ltd Shenzhen City Zhenhuajia Environmental Energy Co., Ltd.	December 31, 2021 $ 1,249 - - 66,063 - $ 96,045	December 31, 2020
			$ 1,249 459 73,090 - 8,921 $ 118,244

To achieve objectives in its medium and long-term strategy, the Group has invested in common shares of the aforementioned companies and expected to acquire gains on the long-term investments. The management of the Group believes that such investments will be inconsistent with the aforementioned long-term investment planning if the short-term fluctuation in fair value of such investments is listed in profit or loss, so the management determines that such investments are measured at FVTOCI.

The consolidated company originally invested in Guangcan Optoelectronics (Cayman) Holding Co., Ltd. and indirectly invested in Dongguan Guangzhi Photoelectric Co., Ltd. since September 2021, the organizational structure has been adjusted to directly invest in Dongguan Guangzhi Photoelectric Co., Ltd.

XII. Subsidiaries

(1) Subsidiaries Listed in the Consolidated Financial Report

The subjects that the consolidated financial report is prepared for are as follows:

follows:
Name of investing company K Laser K Laser K Laser K Laser K Laser K Laser and China Group Holding	Name of subsidiary K Laser International Co., Ltd. (hereinafter referred to as International) K Laser China Group Co., Ltd. (hereinafter referred to as China Group) Optivision Technology Inc. (hereinafter referred to as Optivision Technology) Insight Medical Solutions Inc. (hereinafter referred to as Insight Medical) (Note 2) Guang Feng International Ltd. iWin Technology Co., Lt (hereinafter referred to as iWin)	Nature of business	S h a r e h	o l d i n g
			December 31, 2021 100% 100% 42% 45% 100% 100%	December 31, 2020
		Reinvestment business Reinvestment business Research, development and manufacturing of precision optical components Research, development and sale of endoscopes used in gastrointestinal tracts Reinvestment business Reinvestment in companies		100% 100% 41% 45% 100% 100%

(Continued)

38 -

(Continued)

Name of investment company International International International International International International International China Group China Group China Group Holding China Group Holding China Group Holding Holomagic Top Band Optivision Technology Inc. Bright Triumph Limited Treasure Treasure Treasure Xinguang Laser Union	Name ofsubsidiary K Laser Technology (Korea) Co., Ltd.(hereinafter referred to as Korea K Laser) K Laser Technology (Thailand) Co., Ltd. (hereinafter referred to as K Laser Thailand) K Laser Technology (USA) Co., Ltd. (hereinafter referred to as K Laser USA) K Laser IMEA Co., Ltd. (hereinafter referred to as IMEA) Amagic Technologies U.S.A. (Dubai) (hereinafter referred to as Amagic Dubai) K Laser Technology Japan Co., Ltd. (hereinafter referred to as K Laser Japan) Amagic Holographics India Private Limited(hereinafter referred to as Indian K Laser) K Laser China Group Holding Co., Limited (hereinafter referred to as China Group Holding) Holoprint Co., Ltd. (hereinafter referred to as Holoprint) K Laser (H.K.) Co., Ltd. (hereinafter referred to as K Laser(H.K.)) Holomagic Co., Ltd. (hereinafter referred to as Holomagic) Top Band Investment Limited (hereinafter referred to as Top Band) Treasure Access Limited (hereinafter referred to as Treasure)) Union Bloom Limited (hereinafter referred to as Union) Bright Triumph Limited Ningbo Optivision Technology Co., Ltd. K Laser Technology (Wuxi) Co., Ltd. (hereinafter referred to as K Laser (Wuxi)) Herui Laser Technology Co., Ltd. (hereinafter referred to as Herui Laser) Xinguang Laser Co., Ltd. (hereinafter referred to as Xinguang Laser) (Note 2) Jiangyin Teruida Packaging Technology Co., Ltd. (Note 2) Dongguan K Laser Technology Co., Ltd. (hereinafter referred to as K Laser(Dongguan))	Nature ofbusiness Manufacturing and sale of holographic products Manufacturing and sale of holographic products Sale of holographic products Reinvestment in companies As an agent to sell holographic products Manufacturing and sale of holographic products Manufacture and sales of holography products Reinvestment in companies Reinvestment in companies Sales and agency of holography products Reinvestment in companies Reinvestment in companies Reinvestment in companies Reinvestment in companies Reinvestment business Processing of optical films Manufacturing and sale of holographic products Manufacturing and sale of holographic products Manufacture and sales of holography products Manufacture and sales of holography products Manufacturing and sale of holographic products	Percentage ofequityheld	Percentage ofequityheld
			December 31,2021 100% 83% 80% (Liquidated) 100% 70% 100% 93.78% 100% 100% 100% 100% 100% 100% 100% 100% 100% 49% 65% 100% 100%	December 31,2020
				100% 83% 80% 100% 100% 70% (note 1) 99.60% 100% 100% 100% 100% 100% 100% 100% 100% 100% 49% - - 100%

(Continued)

39 -

(Continued)

Name of investment company IMEA iWin Insight Medical IMS Holding K Laser Thailand	Name of subsidiary Amagic Holographics India Private Limited(hereinafter referred to as India K Laser) Finity Laboratories (hereinafter referred to as Finity) Insight Medical Solutions Holdings Inc. (hereinafter referred to as IMS Holding) Glory Group Medical (Wuxi) Co., Ltd K Laser Technology (Indonesia) Co., Ltd. (hereinafter referred to as K Laser Indonesia) (Note 1)	Nature of business Manufacture and sales of holography products Research and development of holography Reinvestment business Research, development and sale of endoscopes used in gastrointestinal tracts Manufacturing and sale of holographic products	Percentage of equityheld	Percentage of equityheld
			December 31, 2021 (note 1) 100% 100% 100% 70%	December 31, 2020
				100% 100% 100% 100% 70%

Note 1: it refers to the adjustment of the group's investment structure, which is transferred from IMEA to International.
Note 2: Jiangyin Teruida Packaging Technology Co., Ltd. was established on September 3, 2003. It is mainly engaged in the research, development, production and sales of aluminized paper, laser transfer paper, composite paper and other high-grade paper. Its parent company is Xinguang Laser. Established on August 3, 1990, Xinguang Laser is mainly engaged in the R & D, production and sales of special film coating, decorative film and composite paper. It is an affiliated enterprise originally evaluated by the equity method of the consolidated company. The consolidated company acquired 31.75% equity from non-related parties with RMB 40,000,000 in October 2021. After obtaining the equity, the shareholding ratio of the consolidated company increased to 65% and gained control. Therefore, it has been merged into the consolidated company since October 2021.

Among the subsidiaries included in the consolidated statements, the 2021 and 2020 financial statements of Insight Medical Solutions Inc., the subsidiary of K laser China Group Co., Ltd., K Laser Technology Co., Ltd. (H.K.) Co., Ltd., the subsidiary of K laser International Co., Ltd., Amagic Technologies U.S.A. (Dubai), and the 2020 financial statements of Amagic holdings India Private Limited were not audited by the certified public accountant of the company, but were based on the financial statements audited by other accountants. The total assets of these subsidiaries audited by other accountants as of December 31, 2021 and 2020 were NT $391,788,000 and NT $439,989,000, respectively; the net operating income of such subsidiaries audited by other CPAs in the years 2021 and 2020 was NT $272,765,000 and NT $285,507,000, respectively.

40 -

(2) Information of the Subsidiaries with Material Non-controlling Interests

	Ratio of shareholding with	Ratio of shareholding with	Ratio of shareholding with	Ratio of shareholding with	Ratio of shareholding with
	non-controlling interests and voting
	r	i g	h	t	s
Name of subsidiary	Main place of business	December 31, 2021	December 31, 2020
Optivision Technology Inc.	Hsinchu City	58%		59%
	Profit or loss distributed to
	non-controllinginterests	Non-controllinginterests
Name of subsidiary	2021 2020	December 31, 2021		December 31, 2020
Optivision Technology
Inc. ($	19,414) $ 72,475 $ 794,462			$ 937,534
The following	summary financial	information	of	Optivision
Technology Inc. was prepared based on the amounts				before the
elimination of intracompany transactions.

Optivision Technology Inc. and Subsidiaries

Optivision Technology Inc. and	Subsidiaries
Current assets Non-current assets Current liabilities Non-current liabilities Equity Operating revenue Current net (loss) profit of continuing business unit Current net (loss) profit Other comprehensive income (loss) Total comprehensive income (loss) Cash flows Operating activities Investing activities Financing activities Effect of exchange rate changes Net cash flow in (and out)	December31,2021 $ 1,606,649 385,418 ( 593,505 ) ( 29,732) $ 1,368,830 2021 $ 1,726,892 ($ 32,168) ( 32,168 ) ( 7,687) ($ 39,855) $ 316,434 ( 114,395 ) ( 405,178 ) ( 623) ($ 203,762)	December31,2020
		$ 2,059,623 320,491 ( 740,937 ) ( 37,062) $ 1,602,115 2020
		$ 1,833,577 $ 130,960 130,960 19,406 $ 150,366 $ 27,565 ( 38,888 ) 805,163 635 $ 794,475

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XIII. Investments Accounted for Using the Equity Method (1) Investments in Associates

Name of investee company	Main business activities	Place of incorporati on and business		December 31, 2021	December 31, 2021		December 31, 2020	December 31, 2020
				Book amount	Shareh olding ％		Book amount	Shareh olding ％
Individual immaterial associates Vicome Corp. Guangfeng Optoelectronics (Wuxi) Co., Ltd.. Xinguang Laser Co., Ltd. Foshan Donglin Packaging Materials Co., Ltd. Hunan Hexin Packaging Materials Co., Ltd. CIO Tech Ltd.	Manufacturing, processing, purchase and sale of fluorescent pigments and dyes Production and sale of optical instruments Production of specific film coating, decorative films and environmentally friendly transfer paper Production of packaging materials for tobacco and extended products Mainly engaging in producing, processing and selling films and cigarette packs, and division of rolling paper Investment holding	Yunlin County China China China China Cayman Islands		$ 137,945 41,993 - 22,513 223,980 14,978 $ 441,409	30 45 - 25 49 22		$ 123,089 38,501 158,478 36,350 218,231 17,291 $ 591,940	30 45 33 25 49 22

Xinguang Laser is mainly engaged in the R & D, production and sales of special film coating, decorative film and composite paper. It is an affiliated enterprise originally evaluated by the equity method of the consolidated company. The consolidated company purchased equity from external shareholders in October 2021.After acquiring the equity, the shareholding ratio of the consolidated company increased to 65% and gained control. Therefore, it has been incorporated into the consolidated individual since October 2021. Please refer to note XII.

(2) Information of Individual Immaterial Associates

Share enjoyed by the Group Current net profit of continuing business unit Other comprehensive income (loss) Total comprehensive income (loss)		2021 $ 25,137 2,332) $ 22,805		2020
	(		(	$ 31,550 1,872) $ 29,678

The Group’s share of the profits (or losses) and other comprehensive incomes (or losses) of its associates recognized by the Group in 2021 and 2020 using the equity method were recognized based on the financial statements of the same years audited by CPAs of the associates. However, financial reports of some investee companies were audited by other CPAs instead of CPAs of the Group. The amount of investments made by the aforementioned investee companies and accounted for by using the equity method was NT$137,945 thousand and NT$123,809 thousand respectively as of December 31, 2021 and 2020. The amount of investment gains recognized by the aforementioned investee companies using the equity method for the years ended on December 31, 2021 and 2020 was NT$20,210 thousand and NT$13,315 thousand respectively.

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XIV. Property, Plant and Equipment

operty, Plant and Equipment
Land Building Machinery equipment Other equipment Unfinished construction and equipment pending acceptance	December31,2021 $ 89,964 482,609 502,638 215,823 98,335 $ 1,389,369	December31,2020 $ 102,994 374,603 405,407 142,543 105,828 $ 1,131,375
			$ 102,994 374,603 405,407 142,543 105,828 $ 1,131,375

Cost Balance on January 1, 2021 Obtained by company merge Add Disposal Reclassification Net exchange difference Balance at December 31, 2021 Accumulated depreciation and impairment Balance on January 1, 2021 Obtained by company merge Depreciation expense Disposal Reclassification Net exchange difference Balance at December 31, 2021 Net amount at December 31, 2021 Cost Balance at January 1, 2020 Addition Disposition Acquisition of business combinations Reclassification Net exchange differences Accumulated depreciation and impairment Balance at January 1, 2020 Depreciation expense Impairment loss Disposition Acquisition of business combinations Reclassification Net exchange differences Balance at December 31, 2020		Land $ 105,670 - - - - 13,155) $ 92,515 $ 2,676 - - - - 125) $ 2,551 $ 89,964 $ 111,734 - - - 6,064) $ 105,670 $ - - 2,676 - - - $ 2,676 $ 102,994	Building $ 1,013,820 221,081 36,133 ( 154 ) ( 13,253 ) ( 21,491) $ 1,236,136 $ 639,217 98,137 35,214 ( 132 ) ( 8,473 ) ( 10,436) $ 753,527 $ 482,609 $ 1,012,956 13,058 ( 13,608 ) - 1,414 $ 1,013,820 $ 613,795 32,433 1,968 ( 10,826 ) - 1,847 $ 639,217 $ 374,603	Machinery equipment $ 1,744,952 149,287 145,293 ( 47,404 ) 29,998 ( 38,625) $ 1,983,501 $ 1,339,545 121,860 87,233 ( 33,683 ) ( 2,525 ) ( 31,567) $ 1,480,863 $ 502,638 $ 1,805,803 49,155 ( 141,277 ) 27,487 3,784 $ 1,744,952 $ 1,377,018 94,841 3,747 ( 137,281 ) ( 529 ) 1,749 $ 1,339,545 $ 405,407	Other equipment $ 619,580 86,658 74,438 ( 19,955 ) 12,726 ( 4,411) $ 769,036 $ 477,037 46,092 49,986 ( 18,569 ) 2,536 ( 3,869) $ 553,213 $ 215,823 $ 677,651 21,109 ( 74,867 ) ( 5,590 ) 1,277 $ 619,580 $ 498,515 50,982 348 ( 74,018 ) 477 733 $ 477,037 $ 142,543	Unfinished construction and equipment pending acceptance $ 105,828 34,841 102,684 ( 3,396 ) ( 140,991 ) ( 631) $ 98,335 $ - - - - - - $ - $ 98,335 $ 70,861 57,558 - ( 22,144 ) ( 447) $ 105,828 $ - - - - - - $ - $ 105,828	Total
	( ( (						$ 3,589,850 491,867 358,548 ( 70,909 ) ( 111,520 ) ( 78,313) $ 4,179,523 $ 2,458,475 266,089 172,433 ( 52,384 ) ( 8,462 ) ( 45,997) $ 2,790,154 $ 1,389,369 $ 3,679,005 140,880 ( 229,752 ) ( 247 ) ( 36) $ 3,589,850 $ 2,489,328 178,256 8,739 ( 222,125 ) ( 52 ) 4,329 $ 2,458,475 $ 1,131,375

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(1) Property, plant and equipment of the Group is depreciated based on the following service lives on a straight-line basis.

Building
House and building	25-50 years
House furnishings	2-10 years
Machinery equipment	2-10 years
Other equipment	2-11 years

( 二 ) The balance of property, plant and equipment not depreciated yet by the Group and the investment property mortgaged to the bank as security for loans as of December 31, 2021 and 2020 are detailed as follows:

Land House and building	December31,2021 $ 33,747 288,900 $ 322,647	December31,2020	December31,2020
			$ 38,635 154,614 $ 193,249

XV. Lease Agreement

(1) Right-of-use Assets

Right-of-use Assets
Book amount of right-of-use assets Land Building Machinery equipment Transportation equipment Added Right-of-use assets Expense of depreciation of right-of-use assets Land Building Machinery equipment Transportation equipment	December31,2021 $ 229,861 67,731 7,516 7,956 $ 313,064 2021 $ 31,782 $ 11,041 34,140 2,100 4,202 $ 51,483	December31,2020
			$ 155,490 89,676 10,907 7,507 $ 263,580 2020
			$ 69,312 $ 10,746 35,686 2,263 4,623 $ 53,318

In addition to the above additions and recognized depreciation expenses, there was no significant sublease and impairment of the right to use assets of the consolidated company from January 1 to December 31 in 2021 and 2020.

44 -
(2) Lease Liabilities

December 31, 2021 December 31, 2020 Book amount of lease liabilities Current $ 51,701 $ 51,244 Non-current $ 162,844 $ 199,582

The range of discount rates for lease liabilities is as follows:

December 31, 2021 December 31, 2020 Land 1.4%~3.63% 1.4%~3.63% Building 1.5%~5.5% 1.5%~5.5% Machinery equipment 1.5% 1.5% Transportation equipment 1.5%~2.36% 1.5%~2.36%

(III) Important leasing activities and terms

In 2020, due to the severe impact of the Covid-19 pandemic on the market economy, the merged company negotiated the building lease with some lessors and agreed to unconditionally exempt all the rent from April 1 to May 31, 2020.The consolidated company recognized the impact of the above rent reduction of NT$ 637,000 in 2020 and recorded it under non-operating income.

(IV) Other leasing information

her leasing information
Short-term lease expenses Low-value asset lease expenses Total cash outflow from leases		2021 $ 26,980 $ 1,448 $ 92,742)		2020
	(		(	$ 22,623 $ 1,168 $ 80,699)

The consolidated company chose to recognize exemptions applicable to the asset leases that are in line with short-term leases and did not recognize right-of-use assets or lease liabilities relevant to such leases.

On December 31, 2021 and December 31, 2020, the following right of use assets of the consolidated company have been mortgaged to the bank as the guarantee for the issuance of bank acceptance bills and loans. The details are as follows:

December 31, 2021 December 31, 2020 Land $ 79,604 $ -

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XVI. Commercial reputation

ommercial reputation
Cost Beginning balance Ending balance Accumulated impairment loss Beginning balance Recognized impairment loss Ending balance Net at the end of the year	December31,2021 $ 85,752 $ 85,752 $ - 43,028 $ 43,028 $ 42,724	December31,2020
			$ 85,752 $ 85,752 $ - - $ - $ 85,752

The Group had control over Insight Medical Solutions Inc. on December 23, 2019 and recognized Insight Medical-related goodwill amounting to NT$85,752 thousand, which mainly resulted from the expected growth of operating revenue with respect to capsule endoscope products in Taiwan. The recoverable amount of the company was assessed to be less than the book value in the year of 2021, so it was recognized that the goodwill was reduced by NT＄ 43,028,000.

The amount recoverable by Insight Medical Solutions Inc. was determined based on value of use and estimated based on the cash flows expected for its finance for the following 5 years, approved by the management of the Group and computed at the annual discount rate 13.75%. Cash flows for the future after the 5 years were expanded at the growth rate 2% consistently. Other key assumptions included operating revenue and gross profit forecasts. These forecasts were made by taking into account the past operation of the cash-generating units and expectation of the management for the market.

XVII. Other intangible assets

Other intangible assets
Book amount of each category Computer software cost Expertise Cost Balance at January 1 Acquisition for the year Disposition for the year Net exchange differences Balance at December 31	December31,2021 $ 3,850 38,457 $ 42,307 2021 $ 66,212 3,598 ( 11 ) - $ 69,799	December31,2020
			$ 3,257 41,415 $ 44,672 2020
		$ 66,296 1,235 ( 1,320 ) 1 $ 66,212

(to be continued)

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(continued)

Accumulated amortization and impairment Balance at January 1 Amortization expense Disposition for the year Net exchange differences Balance at December 31	2021 $ 21,540 5,963 ( 11 ) - $ 27,492	2020
		$ 17,831 5,028 ( 1,320 ) 1 $ 21,540

Amortization expenses were allocated base on the following service lives on a straight-line basis:

lives on a straight-line basis:
Computer software Expertise Other assets Tax overpaid retained for offsetting the future tax payable Prepaid expenses and prepayments Refundable deposits Restricted assets (Note 6) Others Current Non-current	2-5 years 15years December31,2021 December31,2020 $ 25,828 $ 21,871 162,922 66,348 34,620 33,030 385,197 243,244 66,886 32,367 $ 675,453 $ 396,860 $ 324,733 $ 188,677 350,720 208,183 $ 675,453 $ 396,860
			$ 21,871 66,348 33,030 243,244 32,367 $ 396,860 $ 188,677 208,183 $ 396,860

XVIII. Other assets

XIX. Loan

(1) Short-term Borrowings

Bank credit loan Loans payable for usance L/Cs Bank guaranteed loan	December31,2021 December31,2020 Interestrate amount Interestrate amount 0.85%~4.35% $ 398,440 0.85%~1.60% $ 500,000 0.68%~1.21% 196,977 0.64%~1.52% 310,164 0.34%~5.10% 152,128 - - $ 747,545 $ 810,164	December31,2021 December31,2020 Interestrate amount Interestrate amount 0.85%~4.35% $ 398,440 0.85%~1.60% $ 500,000 0.68%~1.21% 196,977 0.64%~1.52% 310,164 0.34%~5.10% 152,128 - - $ 747,545 $ 810,164	December31,2021 December31,2020 Interestrate amount Interestrate amount 0.85%~4.35% $ 398,440 0.85%~1.60% $ 500,000 0.68%~1.21% 196,977 0.64%~1.52% 310,164 0.34%~5.10% 152,128 - - $ 747,545 $ 810,164
	Interestrate 0.85%~4.35% 0.68%~1.21% 0.34%~5.10%		amount
			$ 500,000 310,164 - $ 810,164

Some of the bank credit loans of the merged company as of December 31, 2021 and 2020 were guaranteed by K Laser company, and some were jointly and severally guaranteed by Mr. Kuo Wei-Wu, chairman of K Laser company and Mr. Kuo Weibin, director of K Laser company.

47 -

The bank guaranteed loans of the consolidated company on December 31, 2021 are guaranteed by bank deposits, land and housing construction. Please refer to note 33.

(2) Short-term Notes and Bills Payable

Commercial paper payable Less: Discount on short-term notes and bills payable	December31,2021 $ 160,000 ( 52) $ 159,948	December31,2020	December31,2020
	(	(	$ 300,000 83) $ 299,917

Short-term notes and bills payable not due yet are as follows:

December 31, 2021

December 31, 2021	1	1
Guarantee / acceptance institution Face amount Commercial paper payable China Bills Finance Corp. $ 50,000 Mega Bills Finance Co., Ltd. 50,000 International Bills Finance Corp. 30,000 Dah Chung Bills Finance Corp. 30,000 $ 160,000 December 31, 2020 Guarantee/acceptance institution Face value Commercial paper payable Taiwan Finance Corp. $ 50,000 China Bills Finance Corp. 50,000 Mega Bills Finance Co., Ltd. 50,000 International Bills Finance Corp. 50,000 Ta Ching Bills Finance Corp. 50,000 Dah Chung Bills Finance Corp. 50,000 $ 300,000	Face amount		Discount amount $ 5 24 9 14 $ 52 Discount $ 6 7 13 29 21 7 $ 83	Carrying amount	Interest rate range
		$ 50,000 50,000 30,000 30,000 $ 160,000 Face value		$ 49,995 49,976 29,991 29,986 $ 159,948 Book amount	0.978% 0.988% 0.958% 0.950% Interest rate range
Guarantee/acceptance institution Commercial paper payable Taiwan Finance Corp. China Bills Finance Corp. Mega Bills Finance Co., Ltd. International Bills Finance Corp. Ta Ching Bills Finance Corp. Dah Chung Bills Finance Corp.
		$ 50,000 50,000 50,000 50,000 50,000 50,000 $ 300,000		$ 49,994 49,993 49,987 49,971 49,979 49,993 $ 299,917	0.958% 0.978% 0.978% 0.938% 0.978% 0.978%

(3) Current Portion of Long-term Liabilities

Current portion of long-term loans	December31,2021 $ -	December31,2020	December31,2020
			$ 100,000

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(4) Long-term Borrowings

Long-term Borrowings
Guaranteed loans Taipei Fubon Bank (Arranger of the syndicated loan) The period of mortgage loan is 2019 / 12 ~ 2022 / 12. The interest is paid quarterly and used in installments. It can be used circularly, but each use shall not exceed 6 months. It was fully paid off in advance in October 2021. Taipei Fubon Bank (Arranger of the syndicated loan) The period of mortgage loan is 2019 / 12 ~ 2022 / 12. The interest is paid monthly and used in installments. It can be used circularly, but each use shall not exceed 6 months. The principal shall be repaid in a lump sum upon maturity. It was fully paid off in advance in September 2021. Hua Nan Bank For mortgage loan, the interest shall be paid monthly during the period from 2021 / 11 to 2023 / 11, and the principal shall be repaid at one time when due. Loans without collateral JihSun Bank Credit loan, with a period of 2018 / 11 ~ 2020 / 11, the interest is paid monthly, and the principal is repaid once due. It has been extended since November 2020 and 2021, and the maturity date is November 2023.Part of the loan was repaid in March and November, 2021. KGI Bank A credit loan for the period between November 2019 and November 2021, with interest to be paid every month, and principal to be repaid in full when due, which was extended for additional 2 years from December 2020 with the maturity date in December 2022. It was fully paid off in advance in December 2021. Taipei Fubon Commercial Bank Credit loan, with a period of 2021 / 12 ~ 2023 / 5, the interest is paid monthly, and the principal is repaid once due. Taipei Fubon Bank A credit loan for the period between July 2018 and May 2020, with interest to be paid every month, and principal to be repaid in full when due, which was extended for additional 2 years from May 2019 with the maturity date in May 2021. It was fully paid off in advance in March 2021. Taipei Fubon Bank A credit loan for the period between June 2020 and May 2022, with interest to be paid every month, and principal to be repaid in full when due. It was fully paid off in advance in March 2021.	December 31, 2021 Interest rate％ Amount - $ - - - 1.08 350,000 1.15 44,000 - - 1.04 100,000 - - - -	December 31, 2020
	Interest rate％ - - 1.08 1.15 - 1.04 - -	Interest rate％ 0.66 1.79 - 1.2 0.99 - 1.47 1.55	Amount
			$ 400,000 400,000 - 100,000 80,000 - 50,000 50,000

(Continued)

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(Continued)

d)
Chinatrust Commercial Bank A credit loan for the period between February 2019 and October 2020, with interest to be paid every month, and principal to be repaid in full when due, which was extended for additional 2 years from August 2020 with the maturity date in August 2022.It was fully paid off in advance in March 2021. Yuanta bank Credit loan, with a period of 2021 / 7 ~ 2023 / 3, the interest is paid monthly, and the principal is repaid once due. Yuanta Commercial Bank A credit loan for the period between March 2019 and March 2021, with interest to be paid every month, and principal to be repaid in full when due E. Sun Bank A credit loan for the period between March 2020 and September 2021, with interest to be paid every month, and principal to be repaid in full when due, which was extended for additional 2 years from October 2020 with the maturity date in October 2022.It was fully paid off in advance in March 2021. Bank of Panhsin Credit loan, with a period of 2018 / 4 ~ 2020 / 4, the interest is paid monthly, and the principal is amortized quarterly from the 13th month. It was extended for 2 years from June 2019 and July 2020, and the maturity date was May 2022.It was fully paid off in advance in March 2021. Cathay Pacific Bank Credit loan, period 2021 / 1 ~ 2022 / 10 , the interest is paid monthly and the principal is repaid in a lump sum when due. It is extended for 2 years from October 2021, and the maturity date is October 2023. O-Bank Credit loan, period 2021 / 10 ~ 2023 / 10 , the interest is paid monthly and the principal is repaid in a lump sum when due. Less: Current portion of long-term loans	December31,2021 Interest rate% Amount - $ - 1.05 100,000 - - - - - - 0.93 150,000 1.19 50,000 - $ 794,000	December31,2020
	Interest rate% - 1.05 - - - 0.93 1.19	Interest rate% 1.22 - 0.95 1.23 1.3 - -		Amount
			(	$ 100,000 - 100,000 50,000 20,000 - - 100,000) $ 1,250,000

50 -
The participating loans sponsored by Taipei Fubon Commercial Bank is a joint loan contract signed by the company with 9 financial institutions in November 2019 in order to enrich working capital and repay corporate bonds, with a total credit line of NT ＄ 800,000,000.As of December 31, 2021, the actual amount of active allocation was NT ＄ 800,000,000.The participating loan was fully repaid in advance in October 2021. According to the provisions of the joint loan contract, the consolidated company shall maintain the following financial ratios in the consolidated company's annual consolidated financial statements before paying off all the debts of the contract:
(1) Current ratio (i.e. the ratio of current assets to current liabilities) shall not be less than 100%.
(2) Debt ratio (i.e. the ratio of total liabilities less cash and cash equivalents to tangible net worth) shall not be more than 100%.
(3) Times interest earned (i.e. the ratio obtained from net profit before tax plus interest expense, depreciation and amortization divided by interest expense) shall not be less than 300%.
(4) Tangible net worth shall not be less than NT$ 2,600,000 thousand.
The long-term loans listed above are the participating loans of Taipei Fubon Commercial Bank and Hua Nan Bank with the chairman of the company, Mr. Kuo Wei-Wu, as the joint guarantor, and the real estate, plant and equipment as collateral.

XX. Corporate bonds payable

December 31, 2021

Debt components of the sixth domestic secured convertible corporate bonds $ 552,053

On March 24, 2011, K Laser company issued 6000 new Taiwan dollar denominated secured convertible corporate bonds with a nominal amount of 101% and a nominal interest rate of 0%, with a total amount of 606 million.

(I) The conditions for the sixth domestic issuance of secured convertible corporate bonds by K Laser are as follows:
Issuance period: 5 years, from March 24, 2021 to March 24, 2026.
Denomination: NT $100 thousand
Place of issue and transaction: Domestic
Issue price: 101%
Total issue amount: NT $600 million
Coupon rate: 0%; Effective interest rate: 0.75%
Conversion right and subject matter: convert into ordinary shares of K Laser company according to the conversion price at the time of request.
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Collateral: Bank pledged deposits of NT $173,277,000 and 10,000,000 ordinary shares of the subsidiary Optivision Technology.
Redemption and resale of bonds:
(1) Redemption at maturity: after the issuance of this bond expires, the principal shall be repaid according to the face value.
(2) Early redemption:
- K Laser company may, from the day following the issuance of the bonds for three months to 40 days before the expiration of the issuance period, if the closing price of K Laser company's common shares on the Taiwan Stock Exchange exceeds the current conversion price by more than 30% (inclusive) for 30 consecutive business days, or the outstanding balance of this conversion company's bonds is less than 10% of the original issuance amount, K Laser company may, at any time thereafter, recover all bonds in cash according to the face value of the bonds.
(3) Resale method:
- The bondholders can ask the optical group laser company to pay off in advance with 101.51% at the expiration of 3 years after the issuance of the bonds.
Conversion price and adjustment:
The conversion price of this convertible corporate bond is set on March 16, 2021 as the base date for setting the conversion price, and the conversion price is calculated as NT $19.8 per share. After the issuance of the convertible corporate bonds, the conversion price shall be adjusted in accordance with the issuance and conversion measures of the convertible corporate bonds; On December 31, 2021, the conversion price was NT $18.3.

(2)	The convertible corporate bonds include assets,	liabilities and equity
	components, and the equity components are	expressed in capital
	reserve stock option under equity; The constituent elements of assets
	are embedded derivative financial products,	and the constituent
	elements of liabilities are listed as embedded derivative financial
	products and non-derivative financial liabilities respectively. The
	effective interest rate originally recognized for non-derivative
	financial liabilities is 0.75%.
	Issue price (deduct transaction cost of NT＄5.3 million)	$ 600,700
	Equity component	( 20,280 )
	Financial assets - redemption rights	960
	Financial liabilities - resale option	( 3,540)
	Composition of liabilities on the issue date	577,840
	Conversion of corporate bonds payable into ordinary
	shares	( 29,152 )
	Interest at effective interest rate of 0.75%	3,365
	Composition of liabilities as at December 31, 2021	$ 552,053

52 -

The changes in financial assets / liabilities of principal contract debt instruments, redemption rights and call backs in the year 2021 are as follows:

follows:
Issue date interest expense Changes in fair value (profit or loss) Conversion of corporate bonds payable into ordinary shares Balance at December 31, 2021	Master contract d e b t i n s t r u m e n t p a r t $ 577,840 3,365 - ( 29,152) $ 552,053	Financial assets - redemption right $ 960 - 2,174 - $ 3,134	F i n a n c i a l liabilities - re s aler ight
	(		( $ 3,540 ) - 2,685 - ($ 855)

The above balance of convertible corporate bonds is guaranteed by Taichung Commercial Bank Co., Ltd., and the consolidated company provides bank deposits as the guarantee of convertible corporate bonds. Mr. Kuo Wei-Wu, chairman of K Laser, is the joint guarantor. Please refer to Notes 6, 32 and 33

XXI. Other payables

Mr. Kuo Wei-Wu, chairman of refer to Notes 6, 32 and 33 ther payables	K Laser, is the joint	guarantor. Please	guarantor. Please
Salary payable Interest payable Pension payable Remuneration payable to employees and directors and supervisors Labor fee payable Payable for equipment purchase Dividend payable Tax payable Expenses payable Other	December31,2021 $ 137,552 476 37,448 29,800 2,014 18,112 - 45,242 203,300 42,793 $ 516,737	December31,2020
			$ 125,567 765 39,975 27,895 4,325 4,045 596 29,206 182,314 1,209 $ 415,897

XXII. Retirement welfare plan

(1) Defined Contribution Plan

The pension system of the Labor Pension Act applicable to K Laser company and Optivision Technology in the merged company is a determined retirement plan managed by the government, and the pension is allocated to the individual account of the labor insurance bureau according to 6% of the employee's monthly salary.

The amounts allocated for the years ended December 31, 2021 and 2020 by the Group at the specific percent provided in the defined

53 -

contribution plan have been recognized as expenses in the amount of NT$13,283 thousand and NT$13,187 thousand respectively in the consolidated statement of comprehensive income.

(2) Defined Benefit Plan

The retirement pension system provided in the Labor Standards Act of the Republic of China, which is applicable to K Laser, a company in the Group, refers to the defined benefit plan. The retirement pension to an employee is computed based on the employee’s service time and average wage of the 6 months immediately before the date of retirement approval. K Laser allocates the 2% of the monthly wages of an employee to be the employees’ retirement funds and transfers it to Supervisory Committee of Business Entities’ Labor Retirement Reserve. The committee then deposits it to the specific account with Bank of Taiwan in the name of the committee. If the balance of the specific account at the end of a fiscal year is estimated not to be enough to be paid to the employees who will meet the requirements of retirement in the next year, the difference will be allocated in full by the end of March in the next year. The specific account is entrusted to Bureau of Labor Funds, Ministry of Labor to manage. The Group has no right to influence its investment and management strategies.

Amounts for the defined benefit plan in the consolidated balance sheet are listed as follows:

sheet are listed as follows:
Present value of a defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31,2021 $ 46,013 ( 25,855) $ 20,158	December 31,2020
	(	(	$ 44,619 25,731) $ 18,888

Changes in net defined benefit liabilities (assets) are as follows:

Balance at January 1, 2020 Service cost Current service cost Interest expense (income) Recognized in profit (loss) Remeasurements Return on plan assets Actuarial losses- Changes in demographic assumptions Actuarial losses－ Changes in financial assumptions Actuarial losses－ Experience adjustments Recognized in other comprehensive income (loss) Employer’s contributions Benefit payment Balance at December 31, 2020	Present value of a defined benefit obligation $ 49,662 488 372 860 - 843 989 ( 1,285) 547 - ( 6,450) 44,619	Fair value of plan assets ($ 24,164) - ( 184) ( 184) ( 783 ) - - - ( 783) ( 600 ) - ( 25,731)	Net defined benefit liabilities	Net defined benefit liabilities
	( (	( ( ( ( ( ( (	( ( ( ( (	$ 25,498 488 188 676 783 ) 843 989 1,285) 236) 600 ) 6,450) 18,888

(Continued)

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(Continued)

Service cost Current service cost Interest expense (income) Recognized in profit or loss Re-measurement Return on planned assets Actuarial losses - changes in demographic assumptions Actuarial losses - changes in financial assumptions Actuarial loss - Empirical adjustment Recognized in other comprehensive profit or loss Employer appropriation Welfare payment Balance at December 31, 2021	Determine the present value of welfare obligations $ 459 223 682 - 1,443 ( 509 ) 686 1,620 - ( 908) $ 46,013	Fair value of plan assets $ - ( 130) ( 130) ( 323 ) - - - ( 323) ( 579 ) 908 ($ 25,855)	Net defined benefit liabilities	Net defined benefit liabilities
	( (	( ( ( ( ( (	( ( ( (	$ 459 93 552 323 ) 1,443 509 ) 686 1,297) 579 ) - $ 20,158

The amounts with respect to the defined benefit plan recognized in profit (loss) are compiled by functions as follows:

By functions: Operating cost Selling and marketing General and administrative R&D expense		2021 $ 210 82 200 60 $ 552		2020
				$ 256 97 253 70 $ 676

The Group is exposed to the following risks with respect to the retirement pension system provided by the Labor Standards Act.

Investment Risk: Bureau of Labor Funds, Ministry of Labor invests the labor pension fund by itself or through an agent in domestic (foreign) domestic equity securities and debt securities, bank deposits and other subject matters. However, the distributable amount of the Company’s plan assets is the income calculated at an interest rate not inferior to that announced by the local bank for 2-year time deposits.
Interest Rate Risk: Interest rates for government bonds are reduced so that the present value of defined benefit obligations increases. However, the return on debt investments with respect to plan assets increases accordingly. Both offset the impact on the net defined benefit liabilities partially.
Wage Risk: The present value of defined benefit obligations is calculated by taking future wages of plan members into account. Thus the increase in wages of plan members will result in an increase in the present value of defined benefit obligations.
55 -

The present value of defined benefit obligations of the Group is calculated by a qualified actuary. Material assumptions on the measurement date are as follows:

Discount rate Expected rate of wage increments	December31,2021 0.625% 2.00%	December31,2020
		0.50% 2.00%

In case of a reasonable and possible change in any material actuarial assumption, the increase (decrease) in the present value of defined benefit obligations on the premise that other assumptions remain unchanged is as follows:

Discount rate Increased by 0.25% Decreased by 0.25% Expected rate of wage increments Increased by 0.25% Decreased by 0.25%	December31,2021 ($ 1,025) $ 1,064 $ 1,034 ($ 1,001)	December31,2020	December31,2020
	( (	( (	$ 1,009) $ 1,049 $ 1,016 $ 983)

The aforementioned sensitivity analysis may probably not reflect actual changes in the present value of defined benefit obligations as actuarial assumptions may correlate mutually and changes in only one assumption are not quite possible.

Amount expected to be contributed in one year Average expiration period of defined benefit obligations	December31,2021 $ 556 11.03 years	December31,2020	December31,2020
			$ 579 11.50 years

XXIII. Rights and interests

(1) Capital Stock

Capital Stock
Common Shares Authorized number of shares (Thousand shares) Authorized capital stock Number of issued and paid-in shares (Thousand shares) Capital stock issued	December31,2021 300,000 $ 3,000,000 165,969 $ 1,659,694	December31,2020
			200,000 $ 2,000,000 159,325 $ 1,593,246

Common shares are issued with par value NT$10. A shareholder is entitled to one vote for each share the shareholder holds and has the right to receive dividends.

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K Laser company issued 5 million new shares of RSA and 1.644 million ordinary shares converted from corporate bonds in 2021, with a par value of NT＄ 10 per share.

(2) Capital Reserve

par value of NT＄10 per share. Capital Reserve
Used to make good of loss, distribute cash or appropriate to be capital stock(1) Additional paid-in capital in excess of par - common shares Transactions of treasury shares Differences between equity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries Used to make good of losses only(2) Recognized changes in ownership interest in subsidiaries Not used for any purpose Stock option RSA	December31,2021 $ 467,997 28,216 93,210 61,961 19,262 38,913 $ 709,559	December31,2020
			$ 454,275 28,216 69,189 33,667 - - $ 585,347

Such capital reserve may be used to make good of loss and may be used to distribute cash or expand capital stock when the company has not loss; however, the amount used to expend capital stock is limited to a certain percentage of the paid-in capital.
Such capital reserve is either the equity transaction effect recognized for changes in the equity of the subsidiary or the capital surplus adjustment of the subsidiary accounted for using the equity method when the Company does not acquire or dispose the equity in the subsidiary, and shall be used only to make good of loss.
(3) Retained Earnings and Dividend Policies

In accordance with the earnings distribution policy of the articles of association of K Laser, the earnings, if any, at the final settlement of each season, shall be used to pay tax, make good of the previous year’s loss and cover the retained employees’ remuneration. Then the 10% of the rest of the earnings is allocated as legal reserve (however, no legal reserve shall be allocated if it reaches the amount of the total capital of the Company). Special reserve shall be allocated or reversed in accordance with regulations or as required by the competent authority. In case of any earnings left, the remaining earnings plus each season’s accumulated undistributed earnings are accumulated and distributable earnings, for which the board of directors may prepare a proposal of earning distribution. The aforementioned earnings are distributed by issuing new shares and shall be distributed after being resolved at the shareholders’ meeting. In case that the earnings are distributed in cash, the earning distribution is adopted only when more than two-thirds of directors shall appear at the meeting and more than a half of directors present approve. Then the approved earning distribution is reported at the shareholders’ meeting. For the remuneration distribution policy of employees and directors, please refer to note 25.

57 -

K Laser allocated special reserve based on the approval letters with Ref. No. 1010012865, Ref. No. 1010047490 and Ref. No. 1030006415 issued by the Financial Supervisory Commission and pursuant to the rules provided in the Questions and Answers Applicable to Special Reserve Allocated After Implementation of International Financial Reporting Standards (IFRSs). When the balance of the subtrahend under other shareholders’ equity is reserved, earnings may be distributed for the reserved part.

Legal reserve shall be allocated until the balance thereof reaches the total paid-in capital of the company. Legal reserve may be used to make good of loss. When the company has no loss, the portion of legal reserve in excess of 25% of paid-in capital can be used to expand capital stock or be distributed in cash.

K Laser held a general meeting of shareholders on May 28, 2020 and adopted the resolution of earning distribution for the year 2019 as follows:

The board of directors of K Laser Company held a meeting on March 23, 2021 and resolved that the profit distribution plan for 2020 is as follows:

follows:
Legal reserve Special reserve Cash dividends	Earning distribution 2020 $ 12,894 $ 116,501 $ 144,220	Dividend per share (NTD)
		2020
		$ - - 0.96

The above cash dividends were distributed by the resolution of the board of directors on March 23, 2021, and the remaining surplus distribution items were also approved by the resolution of the ordinary meeting of shareholders on July 2, 2021.

The company's 2021 year quarterly earnings distribution plan and cash dividend per share have been respectively resolved by the board of directors as follows:

of directors as follows:
Resolution date of the board of directors Legal reserve special surplus reserve Cash dividends Cash dividend per share (NT＄)	Quarter 4,2021 March 24, 2022 $ 12,929 ($ 62,397) $ 182,115 1.20	Quarter 2of 2021
		August 10, 2021 $ 23,321 $ 74,430 $ 81,124 0.54

The remaining items of surplus distribution in 2021 years have yet to be resolved at the ordinary meeting of shareholders expected to be held on May 27, 2022.

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(4) Other Equity

Exchange differences	translation	translation	foreign	financial
statements:
		2021		2020
Beginning balance	( $	287,085 )	( $	278,472 )
Exchange differences
arising on translating net
assets of foreign
operations	(	83,945 )	(	7,002 )
Share of other
comprehensive income
(loss) of associates
accounted for using the
equity method	(	2,332 )	(	1,872 )
Disposal of partial equity in
subsidiaries		117		261
Ending balance	($	373,245)	($	287,085)

Exchange differences arising on translating the net assets of foreign operations in the functional currency to those in the presentation currency used by the Group (i.e. NTD) are recognized directly as other comprehensive income (loss) and accumulated in exchange differences on translation of foreign financial statements. The previously accumulated exchange differences on translation of foreign financial statements are reclassified as profit or low upon disposal of the foreign operations.

Unrealized Gains (Losses) on Financial Assets at FVTOCI

Beginning balance Unrealized gains (losses) from investments in equity instruments measured at FVTOCI Disposal of partial equity in subsidiaries Ending balance	2021 ( $ 30,403 ) ( 229 ) ( 8) ($ 30,640)	2020
		( $ 33,033 ) 1,632 998 ($ 30,403)

Investments in equity instruments at FVTOCI are measured at fair value. Changes in fair value are subsequently listed in other comprehensive income (loss) and accumulated in other equity. Upon disposal of investments, the accumulated gain (loss) is transferred directly to retaining earnings and will not be reclassified as profit (loss).

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3. Unpaid employees’ award

The shareholders' meeting of the company decided to issue new shares with restricted employee rights on July 2, 2021. Please refer to note 28.

refer to note 28.
Opening balance Current issue Basic payment expenses of recognized shares Ending balance		Year 2021 $ - 88,913 ) 16,040 $ 72,873)		Year 2020
	( (			$ - - - $ -

(5)Non-controlling interest

on-controlling interest
Opening balance Shares attributable to non-controlling interests Current net (loss) profit Exchange differences in the translation of financial statements of foreign operating institutions Unrealized profit or loss of financial assets measured at fair value through other comprehensive profit or loss New in current period Obtained by company merge Partial interests of subsidiaries Acquisition of non-controlling interests in subsidiaries Dividends paid by subsidiaries Subsidiaries sell (hold) shares of the parent company Repurchase of treasury shares by subsidiaries Other Ending balance		Year 2021 $ 1,424,774 21,651 ) 12,428 ) 4,258 ) 134,584 189,827 19,212 1,484 ) 72,945 ) - 69,230 ) 3,135 $ 1,589,536		Year 2020
	( ( ( ( ( (		( ( (	$ 842,432 46,730 2,184 ) 10,985 475,815 - 44,925 14,033 ) 6,689 ) 26,390 - 403 $ 1,424,774

(6) Treasury stock

1. Information of changes in treasury shares is as follows:

Unit: Share

Year 2021 N u m b e r o f shares at the N u m b e r o f R e a s o n s f o r beginning of the I n c r e a s e i n D e c r e a s e i n shares at the end s h a r e h o l d i n g p e r i o d current period current period of the period Transfer of shares to employees 9,095,000 - - 9,095,000 Protect the company's credit and shareholders' rights and interests - 1,181,000 - 1,181,000 9,095,000 1,181,000 - 10,276,000

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			2020
Reason of possessing shares Shares transferred to employees Shares of the parent company possessed by subsidiaries	Number of shares at the beginning of the year		Increase in the year 6,000,000 - 6,000,000	Decrease in the year ( 2,905,000 ) ( 2,750,000) ( 5,655,000)	Number of shares at the end of the year
		6,000,000 2,750,000 8,750,000		( ( (		9,095,000 - 9,095,000

According to Article 28-2 of the Securities and Exchange Act, The number of shares bought back by a company shall not exceed 10% of the total number of issued and outstanding shares of the company. The total amount of the shares bought back shall not exceed the sum of retained earnings, premium on capital stock and realized capital reserve. The treasury shares held by the Group in accordance with Securities and Exchange Act shall not be pledged and shall not be attached with any right to distributed dividends or voting. The K Laser shares possessed by its subsidiaries are deemed as treasury shares, the rights attached to which are the same as those attached to general shares, except that treasury shares do not entitle their holders to participate in any seasoned equity offering conducted by K Laser or have the voting right.
3,095,000 shares transferred to employees were cancelled on February 14, 2022.

XXIV. Operating income

February 14, 2022. Operating income
Holographic income Photoelectric income Revenue from optical instruments Other income		2021 $ 3,939,891 1,731,887 469,568 4,944 $ 6,146,290		2020
				$ 3,314,272 1,840,501 284,060 397 $ 5,439,230

XXV. Net profit of continuing business units

Employee Benefit Expense and Depreciation and Amortization Expenses

Short-term employee benefits Post-employment benefits Termination benefits Other employee benefits Depreciation expense Depreciation of property, plant and equipment Depreciation of right of use assets Amortization expense				Year 2021	Year 2021
	Operating costs			Operating expenses $ 417,371 $ 7,210 $ 59 $ 13,189 $ 65,268 19,772 $ 85,040 $ 5,760	Non-operating expenses and losses $ - $ - $ - $ - $ 1,279 313 $ 1,592 $ -		Total
		$ 429,532 $ 6,625 $ 199 $ 12,217 $ 105,886 31,398 $ 137,284 $ 203					$ 846,903 $ 13,835 $ 258 $ 25,406 $ 172,433 51,483 $ 223,916 $ 5,963

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2020

Short-term employee benefits Post-employment benefits Termination benefits Other employee benefits Depreciation expense Depreciation of property, plant and equipment Depreciation of right of use assets Amortization expense	Operating cost	Operating cost		Operating expenses $ 384,754 $ 7,739 $ 19 $ 12,429 $ 66,837 25,822 $ 92,659 $ 4,814	Non-operating expenses and losses $ - $ - $ - $ - $ 1,461 313 $ 1,774 $ -		Total
		$ 365,461 $ 6,124 $ 145 $ 5,464 $ 109,958 27,183 $ 137,141 $ 214					$ 750,215 $ 13,863 $ 164 $ 17,893 $ 178,256 53,318 $ 231,574 $ 5,028

K Laser allocates employees’ remuneration and directors’ remuneration, from its profit computed before deduction of employees’ remuneration and directors’ remuneration, at a rate from 4% to 8% and at a rate no more than 2% respectively in accordance with the articles of incorporation. The staff remuneration and directors' remuneration assessed in 2021 and 2020 were resolved by the board of directors on March 24, 2022 and March 23, 2021 respectively as follows: Estimated Percentage

Estimated Percentage
Employees’ remuneration Directors’ remuneration	2021 6% 1.5%	2020
		8% 2%

Amounts

Amounts
Employees’ remuneration Directors’ remuneration	2021 Cash Stock $ 23,840 $ - 5,960 -	2020
	Cash	Cash $ 13,370 3,342	Stock
	$ 23,840 5,960		$ - -

If any amount is changed after the date when the annual consolidated financial report is announced, then such change is treated as a change in accounting estimate and entered into the account for the following year after adjustment.

The board of directors of the consolidated company held on March 30, 2020 and passed a resolution that the remuneration of employees and directors will not be distributed due to losses in 2019.

There is no difference between the actual distribution amount of employee remuneration and director remuneration in 2020 and the amount recognized in the consolidated financial report in 2020.

For information on the remuneration of employees and directors decided by the board of directors of the K Laser company, please go to the "public information observatory" of the TWSE.

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XXVI. Income tax of continuing business units

(1) Income Tax Recognized in Profit or Loss

The income tax expense mainly comprises the items listed as

follows:

follows:
Current income tax Incurred for the current year Adjustment of the previous year Others Deferred income tax Incurred for the current year Income tax expense recognized in profit or loss	2021 $ 70,826 ( 7,113 ) - 3,283 $ 66,996	2020
		$ 47,949 ( 13,373 ) ( 10 ) 6,396 $ 40,962

The accounting income and the income tax expense are reconciled as follows:

as follows:
Profit (loss) before tax of continuing operations Income tax expense computed based on the net profit before tax at the legal tax rate Investment interests recognized by equity method Investment gain recognized by using the equity method Dividend income from foreign investments Disposal of foreign equity investment interests The invested company reduces its capital to make up for its losses Tax withheld from foreign dividend income Deferred income tax assets not recognized in the previous period but used in the current period Used loss carry forwards not recognized for the previous year Current adjustment of the income tax expense of the previous year Others Income tax expense recognized in profit (loss)		2021 $ 409,070 $ 137,104 45,429 ) 22,400 - 23,900 ) - 9,900 ) 633 7,971 ) 7,113 ) 1,172 $ 66,996		2020
	( ( ( ( (		( ( ( ( ( ( (	$ 232,101 $ 104,233 40,425 ) 52,100 500 ) 25,500 ) 17,900 ) 3,978 ) 19,989 ) 13,373 ) 6,294 $ 40,962

The tax rate applicable to entities subject of consolidated company to the income tax law of the Republic of China is 20%.The tax rate applicable to subsidiaries in China is 25%; The tax generated in other jurisdictions is calculated at the tax rate applicable in each relevant jurisdiction.

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(2) Current Tax Assets and Liabilities

December 31, 2021 December 31, 2020 Current tax assets Tax refund receivable $ 12,413 $ 7,552 Current tax liabilities Income tax payable $ 15,768 $ 13,559

(3) Deferred Tax Assets and Liabilities

December 31, 2021 December 31, 2020 Deferred tax assets Temporary difference $ 20,000 $ 15,094 - Loss carry forwards 6,000 Deferred tax assets $ 20,000 $ 21,094

(4) Information relevant to the loss carry forwards not recognized as of December 31, 2020 is as follows:
Balance not carried

Last year for carried forward f o r w a r d $ 30,006 2022 4,634 2023 2,620 2026 13,149 2029 $ 50,409

(5) Income Tax Assessment
The profit-seeking enterprise annual income tax returns filed by K
Laser as of 2019 (inclusive) have been assessed by the tax authority.
XXVII. Earnings per share

The numerator and denominator used to calculate earnings per share are disclosed as follows:

	2021		2020
Amount (Numerator) Attributed to shareholders of the Company; aftertax $ 363,725 2,692 - $ 366,417	Number of shares (Thousand Shares) (Denominator) 150,243 18,825 1,086 737 170,891	Amount (Numerator) Attributed to shareholders of the Company; aftertax $ 144,409 - - - $ 144,409	Number of shares (Thousand Shares) (Denominator) 150,947 - 686 - 151,633	Loss per share (NTD)
				Attributed to shareholders of the Company; aftertax
					$ 0.96 $ 0.95

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If the Company chooses to distribute employees’ remuneration by stock or cash, then for calculation of diluted earnings per share, employees’ remuneration is assumed to be distributed by stock and the weighted average number of common shares is included when potential common shares have dilutive effect. When calculating diluted earnings per share before the number of shares distributed as employees’ remuneration is resolved at the shareholders’ meeting in the next year, the Company shall continue to consider dilutive effect of the potential common shares.

XXVIII Share-based payment agreement

(1) RSA

On July 2, 2021, the shareholders' meeting of K Laser company decided to issue RSA, with a total amount of NT$ 50,000,000 and a total of 5,000,000 shares. After being reported and effective by the FSC on July 28, 2021, it will adopt one-time reporting and issuance.

The rights of employees who have not met the acquired conditions after being allocated new shares are as follows:
(1) Except for inheritance, the RSA shall not be sold, pledged, transferred, given to others, encumbered, or disposed of in other ways.
(2) The rights to attend, propose, speak, put to vote and vote at the shareholders' meeting shall be the same as the ordinary shares issued by the company, and shall be implemented in accordance with the trust custody contract.
(3) There is no right of surplus distribution (including but not limited to: stock dividend, dividend, statutory reserve and capital reserve distribution right) and stock option for cash capital increase.
(4) If the cash is returned due to the cash reduction handled by the company, the capital reduction refund not obtained due to the allocation shall be delivered to the trust, and shall be delivered to the employees without interest together with the acquired shares when the acquired conditions and time limit are reached; However, if the acquired conditions are not met within the expiration period, the company will recover the cash.
(2) For the RSA issued by K Laser, the employees who are assigned to remain in office for 1 to 5 years from the giving date (i.e. August 10, 2021) and achieve the operating objectives set by the company can obtain 15%, 15%, 20%, 20% and 30% respectively. If the acquired conditions are not met during the period, the RSA in that year will not recover and continue to deliver it to the trust for custody. After reaching the operating objectives set by the company in the fifth year, it can still be acquired in full.
The basic payment of equity settlement shares to employees is measured by the fair value of equity instruments on the day of giving.
In case of failure to meet the acquired conditions, voluntary resignation, dismissal, dismissal or violation of the issuance rules,
65 -

the company will recover the unacquired shares free of charge and cancel them.

As of December 31, 2021, the relevant information of RSA is as follows:

December 31, 2021 Number of shares ( t h o u s a n d )

Outstanding at the beginning of the period Current grant Outstanding at the end of the period	- 5,000 5,000

The remuneration costs recognized in the year 2021 were all NT$ 1,604,000.

(2) Employee Stock Option

Optivision Technology, a subsidiary of the Company, resolved at its board meeting on November 3, 2017 to issue employee stock warrants in accordance with Article 167 of the Company Act. A total of 1,000 thousand units were issued. Each unit of stock warrants entitled its holder to subscribe for 1 common share. The price of each subscribed share was NT$22. Optivision Technology would issue new shares to give the shares to subscribers. Upon completion of 2 years after obtaining stock warrants, employees may exercise the stock option to subscribe for up to 50% of the shares as provided for stock warrants. Upon completion of 3 years after obtaining stock warrants, they may exercise the stock option to subscribe for up to 75% of the shares as provided for stock warrants. Upon completion of 4 years after obtaining stock warrants, they may exercise the stock option to subscribe for all of the shares as provided for stock warrants. The stock option survives for 6 years. If an employee fails to exercise the stock option in the period, the employee shall be deemed to have waived the stock option. Optivision Technology issued all employee stock warrants on May 10, 2018. In case of ex-rights, ex-dividends, seasoned equity offering or cash capital reduction, the subscription price is adjusted based on the formula. As of December 31, 2021, the outstanding employee stock warrants could be used to subscribe for 339 thousand units at the subscription price NT$19.3.

Information relevant to employee stock options is as follows:

Employee stock option Outstanding at the beginning of the year Current execution Current resignation invalid Outstanding at the end of the year Exercisable at the end of the year	2021 Number of shares available for subscription (Thousand shares) Weighted average exercise price (NTD) 412 $20.2 ( 43 ) 19.3~20.2 ( 30) 19.3~20.2 339 19.3 166 19.3	2020	2020
	Number of shares available for subscription (Thousand shares) 412 ( 43 ) ( 30) 339 166	Number of shares available for subscription (Thousand shares) 828 ( 311 ) ( 105) 412 51	Weighted average exercise price (NTD)
	( (	( (	$20.7 20.2~20.7 20.7 20.2 20.2

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Information relevant to the employee stock options outstanding as of the balance sheet date is as follows:

Share options outstanding as of the balance sheet date Exercise options now available

2021 2020	Number of outstanding shares (thousand shares) 339 412	Weighted average expected remaining duration(years) 2.35 3.35	Weighted average exercise price(NT＄) $ 19.3 $ 20.2	Number of exercisable employee stock options (thousand shares) 166 51	Weighted average exercise price(NT＄)	Weighted average exercise price(NT＄)
						$ 19.3 $ 20.2

The employee stock options granted by Optivision Technology on May 10, 2018 were evaluated base on the Black-Scholes model. The input values used in the evaluation model are as follows: Stock price on the grant

date NT$22 Exercise price NT$22 Expected ratio of stock price fluctuation 49.56% Expected duration 4~5 years Expected dividend rate 0 % Risk-free interest rate 0.68~0.73%

The remuneration cost recognized for the years ended December 31, 2021 and 2020 was NT$535 thousand and NT$1,081 thousand respectively.

(3) Employee Stock Option Plan for Seasoned Equity Offering

Optivision Technology, a subsidiary of the Company, was approved by Securities and Futures Bureau, FSC on November 30, 2020 to issue 10,000 thousand shares for its seasoned equity offering. The board of directors resolved to retain 15% of the issued shares for employees to subscribe. The number of shares retained for employees to subscribe and the subscription price were confirmed on December 21, 2020. Optivision Technology recognized the remuneration cost NT$8,220 thousand on the grant date at the fair value computed based on the option evaluation model Black-Scholes.

The share-based payment arrangement of Optivision Technology as of December 31, 2020 is as follows:

Type of agreement
Grant date
Quantity
granted
Vesting
conditions
Shares from seasoned equity
offering retained for
employees to subscribe
2020.12.21
1,500
thousand
shares
Vesting
immediately
Optivision
Technology
used
the
option
evaluation
model
Black-Scholes to calculate fair value for employee stock options
with respect to seasoned equity offering on the grant date, that is
to say, December 21, 2020. Relevant information is as follows:
Stock price
on the grant
date(NTD)
Exercise
price (NTD)
Expected
ratio of
stockprice
Expected
duration
Expected
dividend
rate
Risk-free
interest rate
Fair value
per share
(NTD)

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fluctuation $74.3 $70 70.98% 7 days 0.00% 0.19% $5.48

XXIX. Business combination

(1) The consolidated company purchased 31.75% of the equity of Xinguang Laser Co., Ltd., an affiliated enterprise originally evaluated by the equity method, from Sunderray Investment Holding Co., Ltd. through its subsidiary treasure access limited in October 2021. After obtaining it, the shareholding ratio of the consolidated company increased to 65% and gained control power. It was included in the consolidated individual since October 2021. Transfer Pricing A m o u n t Cash $ 172,200 Fair value of the shares possessed originally 180,335 $ 352,535 (2) Amounts of Assets Acquired and Liabilities Assumed on the Acquisition Date

Acquisition Date
Current assets Cash Trade receivables and notes receivable Other receivables Inventories Other current assets Non-current assets Fixed assets Right of use assets Other non-current assets Current liabilities Short-term borrowings Trade payables and notes payable Other payables Other current liabilities Ending balance	XinguangLaser
	$ 36,947 245,435 644 90,798 31,047 225,777 79,370 15,984 ( 94,710 ) ( 68,165 ) ( 16,305 ) ( 4,460) $ 542,362

(3) Non-controlling Interests

The non-controlling interests of Xinguang Laser are measured by the fair value of the non-controlling interests on the acquisition date of NT＄ 189,827,000, which is estimated by the identifiable net asset value method on the acquisition date.

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(4) Goodwill Generated from Acquisition

Xin gua n g L ase Transfer pricing $ 352,535 Add: Non-controlling interests 189,827 Less: Fair value of identifiable net assets available ( 542,362 ) Amount of goodwill arising from - acquisition $

(5) Net Cash Inflow from Acquisition of Subsidiaries

Xin gua n g L ase Balance of cash from acquisition of subsidiaries $ 172,200 Less: cash balance obtained from subsidiaries ( 36,947 ) $ 135,253

XXX. Capital risk management

The Group manages capital risk to ensure that it has necessary financial resources and business plans to cover any working capital, capital expenditure, research and development, debt repayment and dividend payment required in the following 12 months.

XXXI. Financial instruments

－
(1) Information of Fair Value Financial Instruments Not Measured at Fair Value

The management of the Group believes that the book amounts of the financial assets and financial liabilities not measured at fair value are still close to fair value. (2) Information of Fair Value-Financial Instruments Measured at Fair Value

Hierarchy of Fair Value

December 31, 2021		Level 1 $ - $ - - $ -		Level 2 $ - $ - - $ -		Level 3 $ 3,134 $ 66,063 29,982 $ 96,045		Total
Financial assets at fair value through profit or loss Derivative instruments Financial assets measured at fair value through other comprehensive profit or loss Equity instrument investment - foreign unlisted (counter) ordinary shares - domestic unlisted (counter) ordinary shares
								$ 3,134 $ 66,063 29,982 $ 96,045

(Continued)

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(continued)

		Level 1					Level3			Total	Total	Total
Financial liabilities at fair
value through profit or
loss
Derivative instruments	$		-	$	-	$	855		$			855
December 31, 2020
	L e v e l		1	L e v e l	2	L e v e l		3	T	o	t	a	l
Financial assets measured
at fair value through
profit or loss
Fund trust certificate	$	27,150		$	-	$		-	$		27,150
Financial assets at fair
value through other
comprehensive income
Investments in equity
instruments
－Foreign common
shares not listed
(OTC)	$		-	$	-	$	82,011		$		82,011
－Domestic common
shares not listed
(OTC)			-		-		36,233				36,233
	$		-	$	-	$	118,244		$		118,244

There was no transfer between level 1 and level 2 fair value measurements in 2020 and 2019.
For the financial assets with Level 3 changes in fair value, there was no adjustment except the changes in fair value recognized in other comprehensive income or loss.
Valuation technique and input value measured at level 3 fair value

Category of financial instrument

Domestic and foreign investments in non-listed(non-OTC) equity Derivative instruments

Valuation technique and input value

Market approach: Make adjustments based on the price-to-earning ratio and market price/net worth of the investee company at fair value of a observable, comparable company at the end of the year.

Binary tree convertible bond evaluation model: to measure the duration of corporate bonds, the stock price and fluctuation of the underlying stock of convertible bonds, conversion price, risk-free interest rate, risk discount rate and liquidity risk of convertible bonds.

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(3) Type of Financial Instrument

Type of Financial Instrument
Financial assets At amortized cost Cash and cash equivalents Notes receivable and trade receivables (including those from related parties) Other receivables Refundable deposits Restricted assets (current & non-current) Financial assets at fair value through profit or loss－current Financial assets at fair value through other comprehensive income－non-current Financial liabilities At amortized cost Short-term borrowings Short-term notes and bills payable Notes payable and trade payables (including those to related parties) Other payables (including those to related parties) Long-term borrowings (including current portion thereof) Corporate bonds payable Financial liabilities at fair value through profit or loss - non-current	December31,2021 $ 2,128,842 1,586,785 25,710 34,620 385,197 3,134 96,045 747,545 159,948 911,219 516,854 794,000 552,053 855	December31,2020
		$ 2,629,811 1,561,818 58,048 33,030 243,244 27,150 118,244 810,164 299,917 808,053 417,650 1,350,000 - -

(4) Purpose and Policy of Financial Risk Management

The consolidated company's main financial instruments include equity and debt investments, accounts receivable, accounts payable, other receivables, other payables, loans and corporate bonds payable. Financial management departments of the Group provide service for each business, master and coordinate operations in domestic and international financial markets, and supervise and manage the financial risks relevant to business operation based on the level and extent of each risk and the internal risk report that analyzes risk exposure. Such risks include market risk, credit risk and liquidity risk.

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1. Market Risk

Main market risks assumed by the Group for its operating activities are exchange rate risk and interest rate risk.

The Group does not change the methods that it has adopted to manage and measure risk exposure with respect to market risk for financial instruments.

(1) Currency Risk

The Group manages the exchange risk generated from its foreign currency transactions by using forward exchange agreements to manage the risk within the scope permitted by the Procedure of Treating Transactions of Derivatives.

Refer to Note 35 for book amounts of monetary assets and monetary liabilities of the Group in non-functional currencies on the balance sheet date.

The sensitivity analysis conducted by the Group only includes outstanding foreign currency monetary items, and the amounts in foreign currencies are converted at the exchange rate plus 1% of appreciation against the NTD at the end of the year to adjust the increase in the profit before tax. In case of 1% of depreciation, the impact on the profit before tax will be a negative value of the same amount.

Effect of USD Effect of Japanese Yen Effect of CNY 2021 2020 2021 2020 2021 2020

Effect on profit and loss $ 9,964 $ 9,072 ( $ 1,125 ) ( $ 2,131 ) $ 7,909 $ 7,354

(2) Interest Rate Risk

Interest rate risk of the Group mainly comes from floating-rate time deposits and loans.

The book amounts of financial assets and financial liabilities of the Group exposed to interest rate risk on the balance sheet date are as follows:

December 31, 2021 December 31, 2020

With cash flow interest rate risk Financial assets $ 204,314 $ 105,698 Financial liabilities 863,612 1,439,085

The sensitivity analysis for interest rate risk is based on changes in fair value of floating-rate financial assets and liabilities at the end of the financial reporting period. If the interest rate rises by a percentage point, then the cash outflow of the Group would increase by NT$6,593 thousand and by NT$13,334 thousand respectively for the years ended December 31, 2021 and 2020.

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2. Credit Risk

Credit risk refers to the risk incurred when the counterparty to the transaction delays contractual obligations and thus causes financial loss of the Group.

The Group requires the counterparty to an important transaction to provide a collateral or any other guarantee, so the Group is able to reduce credit risk effectively. The management of the Group has designated a team to be responsible for a decision of credit line, credit approval and other monitoring procedures to ensure that proper measures are taken to recover overdue receivables. In addition, the Group reviews recoverable amounts of receivables on a case-by-case basis on the balance sheet date to ensure that a proper amount of impairment loss is allocated for unrecoverable receivables. Accordingly, the management of the Group believes that the Group’s credit risk has significantly reduced.

3. Liquidity Risk

The working capital of the Group is sufficient, so there is no liquidity risk from its being unable to raise funds to perform contractual obligations.

(1) The non-derivative financial liabilities to be repaid by the Group as scheduled are due and repayable as follows:

	December 31, 2021	December 31, 2021
Less than 1 year $ 1,428,073 44,974 69,612 837,881 $ 2,380,540 Less than 3 years $ 82,704	2~3 years More than 3 years $ - $ - 37,730 133,375 794,000 - - 552,053 $ 831,730 $ 685,428 3-5 years 5~10 years $ 46,611 $ 58,926 December 31, 2020		T o t a l
			$ 1,428,073 216,079 863,612 1,389,934 $ 3,897,698 Over 10 years
				$ 27,838
Less than 1 year $ 1,225,703 50,821 189,085 1,020,996 $ 2,486,605	2～3 years $ - 45,298 1,250,000 - $ 1,295,298	Over 3 years $ - 161,193 - - $ 161,193		Total
				$ 1,225,703 257,312 1,439,085 1,020,996 $ 3,943,096

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Less than 3 years 3～5years 5～10years More than 10 years Lease liabilities $ 96,119 $ 65,174 $ 57,463 $ 38,556 inancing limit December 31, 2021 December 31, 2020 Unsecured bank loan commitment -Used in the credit line $ 1,199,417 $ 1,660,164 -Unused in the credit line 1,875,463 786,676 $ 3,074,880 $ 2,446,840 Secured bank loan commitment - Used in the credit line $ 502,128 $ 800,000 - Unused in the credit line 707,740 - $ 1,209,868 $ 800,000 Amount of secured corporate bonds - amount used $ 600,000 $ - - unspent amount 20,000 - $ 620,000 $ -	Less than 3 years 3～5years 5～10years More than 10 years Lease liabilities $ 96,119 $ 65,174 $ 57,463 $ 38,556 inancing limit December 31, 2021 December 31, 2020 Unsecured bank loan commitment -Used in the credit line $ 1,199,417 $ 1,660,164 -Unused in the credit line 1,875,463 786,676 $ 3,074,880 $ 2,446,840 Secured bank loan commitment - Used in the credit line $ 502,128 $ 800,000 - Unused in the credit line 707,740 - $ 1,209,868 $ 800,000 Amount of secured corporate bonds - amount used $ 600,000 $ - - unspent amount 20,000 - $ 620,000 $ -	Less than 3 years 3～5years 5～10years More than 10 years Lease liabilities $ 96,119 $ 65,174 $ 57,463 $ 38,556 inancing limit December 31, 2021 December 31, 2020 Unsecured bank loan commitment -Used in the credit line $ 1,199,417 $ 1,660,164 -Unused in the credit line 1,875,463 786,676 $ 3,074,880 $ 2,446,840 Secured bank loan commitment - Used in the credit line $ 502,128 $ 800,000 - Unused in the credit line 707,740 - $ 1,209,868 $ 800,000 Amount of secured corporate bonds - amount used $ 600,000 $ - - unspent amount 20,000 - $ 620,000 $ -	More than 10 years
		$ 1,660,164 786,676 $ 2,446,840 $ 800,000 - $ 800,000 $ - - $ -

(2) Financing limit

XXXII. Related party transactions

Transactions, account balances, incomes and expenses among K Laser and Subsidiaries (i.e. related parties of K Laser) have been eliminated completely upon business combination, so they are not disclosed in the Notes.

Transactions between the Group and other related parties are as follows:

(1) Name of each Related Party and Relationship with the Related Party

Name of related party Relationship with the Group Dongguan City Guangzhi Other related parties, who have not been Photoelectric Co., Ltd. related parties since November 2021 (the chairman of Optivision Technology, a subsidiary of the original consolidated company, served as the director of the parent company of the company) Hunan Heshuo Packaging Materials One of other related parties Co., Ltd. Guangfeng Optoelectronics (Wuxi) An associate evaluated by using the Co., Ltd. equity method Xinguang Laser Co., Ltd. Affiliated enterprises evaluated by equity method (consolidated subsidiaries since October 1, 2021) Hunan Hexin Packaging Materials An associate evaluated by using the Co., Ltd. equity method Boxlight Corporation An associate evaluated by using the equity method (transferred to assets held for sale in March 2020) Kuo Wei-Wu Chairman of K Laser Kuo Wei-Pin Director of K Laser

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(2) Operating Transactions

Operating Transactions
Sale Other related parties Dongguan Guangzhi Photoelectric Co., Ltd. Associates Purchase Other related parties Associates Manufacturing expenses Associates Operating expenses Associates Interest income Associates Hunan Hexin Packaging Materials Co., Ltd. Other incomes Affiliated Enterprises		2021 $ 830,821 1,181 $ 832,002 $ 429 263,677 $ 264,106 $ 10,716 $ 3,821 $ 728 $ 1,716		2020
				$ 1,205,671 9,916 $ 1,215,587 $ 5,041 198,376 $ 203,417 $ 10,301 $ 3,033 $ 913 $ 592

There is no material difference between the transaction terms provided for the related parties and those provided for general customers.

(3) The outstanding balance as of the balance sheet date is as follows:

Trade receivables from related parties Other related parties Dongguan Guangzhi Photoelectric Co., Ltd. Associates Less: Loss allowance	December31,2021 $ 195,300 - 195,300 ( 6,250) $ 189,050	December31,2020	December31,2020
	(	(	$ 676,582 61,124 737,706 67,300) $ 670,406

(to be continued)

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(continued)

Notes payable and trade payables to related parties Other related parties Xinguang Laser Others Other related parties: Other receivables(not including loans) Other related parties Associates Guangfeng Optoelectronics (Wuxi) Other payables Associates Hanns Touch Solution Inc. Others	December31,2021 $ - 3,709 - $ 3,709 $ - 669 $ 669 $ 117 - $ 117	December31,2020	December31,2020
			$ 40,489 1,472 1,574 $ 43,535 $ 58 844 $ 902 $ 1,728 25 $ 1,753

There is no material difference between the transaction terms provided for the related parties and those provided for general customers.

(4) Real estate, plant and equipment acquired

Related party category /name Other related parties:		Acquisitionprice	Acquisitionprice	Acquisitionprice
		2021 $ 4,900		2020
				$ -

(V) Financing

The capital loans to related parties of the consolidated company in years 2021 and 2020 are as follows:

Name of related party Associates -Hanns Touch Solution Inc.	Year 2021 M a x i m u m b a l a n c e E n d i n g b a l a n c e o f dra w d o wn $ 35,072 $ 20,634	Year 2021 M a x i m u m b a l a n c e E n d i n g b a l a n c e o f dra w d o wn $ 35,072 $ 20,634	Year 2020	Year 2020	Year 2020
	M a x i m u m b a l a n c e		M a x i m u m b a l a n c e $ 41,078	E n d i n g b a l a n c e o f dra w d o wn
		$ 35,072			$ 28,451

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(6) Endorsement and guarantee

The joint guarantors for the loans to the Group were the related parties of the Group. The joint guarantee is as follows:

Name of related party Main managements	Nature of joint g u a r a n t e e Short-term borrowings Commercial paper payable Corporate bonds payable Long-term borrowings		December 31, 2021 $ 747,545 159,948 552,053 794,000 $ 2,253,546	December 31, 2020
				$ 810,164 299,917 - 1,350,000 $ 2,460,081

(7) Rewards and remuneration for major management levels

The benefits and remunerations given by the Group to its directors and main managements for the years ended December 31, 2021 and 2020 respectively are as follows:

==> picture [411 x 40] intentionally omitted <==

The remunerations to directors and main managements are determined by the remuneration committee based on individual performance and market trends.

XXXIII. Pledged assets

The following assets of the Group were provided as guarantees for loans under loan contracts and for the need of business operation.

December 31, 2021 December 31, 2020 Bank deposits $ 385,197 $ 243,244 Property, plant and equipment 322,647 193,249 - Right of use assets 79,604 $ 787,448 $ 436,493

In addition, K Laser company provided 10,000,000 ordinary shares of its subsidiary Optivision Technology as guarantee for the issuance of convertible corporate bonds. Please refer to note 20 for more details. XXXIV. Significant subsequent events

(1) The subsidiary Optivision Technology Inc. received a civil complaint from the intellectual property court of the intellectual property and Commercial Court on February 22, 2022. LGS Co., Ltd. of Korea accused Optivision Technology Inc. of using the reverse prism process that infringes its patent right in the Republic of China Patent Notice No. 583422.Optivision Technology has entrusted professional lawyers to assist in handling this case, which has no significant impact on the company's operation, finance and business.
(2) The merged company decided by the board of directors in January 2022 to dispose of the real estate, plant and equipment and use right assets of
77 -

its subsidiary K Laser (Dongguan), with a sale price of about RMB 100,000,000.

XXXV. Information of Exchange Rates for Financial Assets and Liabilities in Foreign Currencies

Information of the foreign currency financial assets and liabilities that have a material impact on the Group is as follows:

Unit: Per thousand in foreign currency / 1000 NT dollars

Financial assets Monetary item USD JPY CNY Long-term equity investments accounted for using the equity method USD Financial l i a b i l i t i e s Monetary item USD JPY CNY	December 31,2021 Foreign c u r r e n c y Exchange rate N T D $ 56,510 27.68 $ 1,564,197 388 0.2405 93 189,820 4.344 824,578 2,058 27.68 56,971 20,512 27.68 567,772 468,250 0.2405 112,614 7,754 4.344 33,683	December 31,2021 Foreign c u r r e n c y Exchange rate N T D $ 56,510 27.68 $ 1,564,197 388 0.2405 93 189,820 4.344 824,578 2,058 27.68 56,971 20,512 27.68 567,772 468,250 0.2405 112,614 7,754 4.344 33,683	December 31,2020	December 31,2020
	Foreign c u r r e n c y $ 56,510 388 189,820 2,058 20,512 468,250 7,754	Exchange rate 27.68 0.2405 4.344 27.68 27.68 0.2405 4.344	F o r e i g n c u r r e n c y $ 44,605 54 175,151 7,106 12,750 771,150 7,135	Exchange rate N T D 28.48 $ 1,270,350 0.2763 15 4.377 766,636 28.48 202,389 28.48 363,120 0.2763 213,069 4.377 31,230

XXXVI. Disclosures in the Notes

(1) Material Transactions and Reinvestment-related Information:

No.	Item	Explanation
1	Funds lent to others: Attachment 1	Attachment 1
2	Enforcement andguarantee for others	None
3	Negotiable securities held at the end of the year (not including investments in subsidiaries, associates and jointventures)	Attachment 2
4	Accumulated purchases or sales of negotiable securities up to NT$300 million or 20% ofthe paid-incapital	None
5	Acquisition cost of real estate up to NT$300 million or 20% of the paid-in capital	Attachment 3
6	Proceeds up to NT$300 million or 20% of the paid-in capital from disposal of realestate	None
7	Purchases from or sales to related parties up to NT$300 million or 20% of the paid-incapital	Attachment 4
8	Receivables from related parties up to NT$100 million or 20% of the paid-in capital	Attachment 5
9	Transactions of derivatives	Note20
10	Others: Business relationship between the parent company and subsidiaries, and between subsidiaries, and important transactions among them and transactionamounts	Attachment 8
11	Information of investee companies	Attachment 6

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(2) Information of investments in Mainland China:

No.	Item	Explanation
1	Name of investee company in Mainland China, main business activities, paid-in capital, investment method, funds remitted in and out, shareholding, investment gain or loss, book value of investments at the end of the year, investment gain (loss) remitted back already, and limit of investments in Mainland China	Attachment 7
2	Following material transactions with investee companies in Mainland China directly or through a third region, and price, payment terms and unrealized gain (loss) with respect to the transactions: (1) Amount and percentage of purchase, and ending balance and percentage of relevant payables (2) Amount and percentage of sale, and ending balance and percentage of relevant receivables (3) Amount of property transaction, and profit (loss) generated (4) Ending balance of endorsement or collateral provided for notes, and purposes (5) Maximum balance of financing, ending balance, range of interest rates and total interest for the current year (6) Other transactions that have material influence on the profit (loss) for the current year or financial status, such as provisionor receipt ofservice	Attachment 7

(3) Information of Main Shareholders:

Name of Shareholder Holding Over 5% of Equity, Number of Shares Held and Ratio of Shareholding (Attachment 9)

XXXVII. Financial Information of Operating Segments

The Group produces and sells holographic products, provides information of single industry for main decision makers to distribute resources and evaluate performance of each segment, and emphasizes every area where products are delivered or provided.

－ China K Laser Technology (Wuxi) Co., Ltd. － K Laser Technology (Dongguan) Co., Ltd. － K Laser Technology (H.K.) Co., Ltd. － Herui Laser Technology Co., Ltd. － Ningbo Optivision Technology Co., Ltd. － Insight Medical Solutions(Wuxi) Inc. － Xinguang Laser Co., Ltd. － Jiangyin Teruida Technology Co., Ltd

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－ Other regions of Asia K Laser Technology Inc.

－ K Laser Technology (Thailand) Co., Ltd.
－ K Laser Technology (Indonesia) Co., Ltd.
－ K Laser Technology (Korea) Co., Ltd.
－ K Laser Technology Japan Co., Ltd.
－ Amagic Holographics India Private Limited
－ Optivision Technology Inc.
－ Insight Medical Solutions Inc.

－ Other areas Amagic Technologies U.S.A. (Dubai)

－ K Laser Technology (USA) Co., Ltd.
－ Finity Laboratories
(1) Revenue of Segments and Business Results

The revenue and business results of the Group’s continuing operations are analyzed by the reportable segment as follows:

Financial information of the Group’s segments for the years ended December 31, 2021 and 2020 is listed as follows:

		Year 2021
	China region $ 3,642,528 2,992,168 650,360 435,701 214,659 9,925 1,534 20,669 $ 243,719	Others $ 750,759 627,873 122,886 114,997 7,889 212 1,363 640,798 $ 647,536 2020	Adjustment and write-off ( $ 1,727,229 ) (1,741,483) 14,254 ( 10,927) 25,181 - ( 195 ) ( 833,257) ($ 807,881)	Total
				$ 6,146,290 4,908,947 1,237,343 1,020,905 216,438 19,724 31,678 204,586 $ 409,070
	China $ 2,876,303 2,282,830 593,473 376,676 216,797 6,415 419 8,453) $ 214,340	Others $ 744,505 597,064 147,441 115,243 32,198 893 1,767 376,288 $ 407,612		Total
(				$ 5,439,230 4,175,137 1,264,093 1,035,371 228,722 10,175 38,560 31,764 $ 232,101

Inter-departmental transactions in 2021 and 2020 have been written off.

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(II) Departmental assets

Cash and cash equivalents Notes and accounts receivable Stock Other current assets Total current assets Funds and investments Property, plant and equipment Right of use assets Intangible assets Other assets Total assets		December 31,2021	December 31,2021	December 31,2021	December 31,2021
	China region $ 784,603 1,190,495 779,153 176,969 2,931,220 312,556 663,253 100,636 - 91,265 $ 4,098,930	Other Asian r e g i o n s		O t h e r s $ 94,301 86,828 391,632 24,812 597,573 5,370,365 49,713 27,050 - 28,781 $ 6,073,482	A d j u s t m e n t and write-off $ - ( 673,148 ) ( 129,262 ) ( 24,113) ( 826,523) ( 9,097,689 ) 36,591 ( 24,584 ) 81,181 ( 47,016) ($ 9,878,040)	T o t a l
			$ 1,249,938 982,610 366,531 218,187 2,817,266 3,952,222 639,812 209,962 3,850 297,690 $ 7,920,802				$ 2,128,842 1,586,785 1,408,054 395,855 5,519,536 537,454 1,389,369 313,064 85,031 370,720 $ 8,215,174

Cash and cash equivalents Notes receivable and trade receivables Inventories Other current assets Total current assets Funds and investments Property, plant and equipment Right-of-use assets Intangible assets Other assets Total assets		December 31,2020	December 31,2020	December 31,2020	December 31,2020
	C h i n a $ 778,609 716,148 538,122 217,792 2,250,671 495,069 438,538 22,021 - 33,067 $ 3,239,366	Other regions o f A s i a		O t h e r s $ 203,443 80,285 215,877 18,446 518,051 4,832,848 26,025 25,036 - 21,775 $ 5,423,735	A d j u s t m e n t and write-off $ - ( 378,221 ) ( 72,635 ) ( 9,245) ( 460,101) ( 8,628,188 ) 37,802 ( 5,624 ) 127,167 ( 50,138) ($ 8,979,082)	T o t a l
			$ 1,647,759 1,143,606 312,076 82,588 3,186,029 4,010,455 629,010 222,147 3,257 224,573 $ 8,275,471				$ 2,629,811 1,561,818 993,440 309,581 5,494,650 710,184 1,131,375 263,580 130,424 229,277 $ 7,959,490

(III) Main customer information

The revenue from a single customer that accounts for more than 10% of

the total revenue of the consolidated company is as follows:

Name ofcustomer Dongguan Guangzhi Photoelectric Co., Ltd.		Year 2021		％ 17		Year 2020
		Amount $ 1,034,875				Amount $ 1,205,671		％
								19

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K Laser Technology Inc. and Subsidiaries

Funds of the Company and Reinvested Companies to Other Entities

From January 1 to December 31, 2021

Attachment 1

Unit: In Thousands of New Taiwan Dollars ／ Thousands in Foreign Currency

No. ( N o t e 1 )	C o m p a n y lending funds	C o m p a n y receiving the l o a n	A c c o u n t	Is it a related p a r t y?	M a x i m u m balance of the y e a r	Ending balance	D r a w d o w n	I n t e r e s t rate range	Nature of l e n d i n g (Note 2)	Amount of business	Reason of short-term financing	Allocated amount of allowance for bad debts	Security	Security	Limit of funds lent to an individual entity (Note 3)	Total limit of lending (Note 3)	Remark
													Name	Value
1	K Laser Technology (Dongguan) Co., Ltd.	Hunan Hexin Packaging Materials Co., Ltd.	Other receivables	Yes	$ 35,072 ( RMB 8,000 )	$ 26,064 ( RMB 6,000 )	$ 20,634 ( RMB 4,750 )	3.85%	2	$ -	Capital turnover	$ -	No	No	$ 457,514 ( RMB105,321 )	$ 457,514 ( RMB105,321 )

Note 1: Information of funds loaned by the Company and Subsidiaries to other entities shall be provided separately in two forms and indicated in the “No.” section. Numbers shall be given as follows:

(1) For the Company, please indicate “0.”
(2) For subsidiaries, number in numerical order from 1 by the type of company.
Note 2: Information of funds loaned by the Company and Subsidiaries to other entities shall be provided separately in two forms and indicated in the “No.” section. Numbers shall be given as follows:
(1) In case of business with the entity, please indicate “1.”
(2) In case of necessary short-term financing, indicate “2.”
Note 3 ： Limits and types of the funds loaned by the Company and Subsidiaries to other entities are as follows:
(1) As provided in the Company’s procedure of loaning funds to other entities, the total limit of funds loaned to other entities shall not exceed 25% of the current net worth of the Company, and the limit of funds loaned to a single entity shall not exceed 10% of the current net worth.
(2) As provided in the Company’s procedure for a subsidiary to loan funds to other entities and provide endorsement and guarantee, the total amount loaned by a Group company (subsidiary) shall not exceed 40% of the net worth of the Group company (subsidiary), and the total amount loaned to other entities based on necessary short-term financing shall not exceed 40% of the net worth of the Group company (subsidiary).
82 -

K Laser Technology Inc. and Subsidiaries

Marketable Securities Held at the End of the Year

December 31, 2021

Attachment 2

Unit: In thousands of New Taiwan Dollars, except as otherwise indicated herein

Holding company	Type and name of marketable securities	Relation with the issuer of marketable securities	Items on books	End of the year	End of the year	End of the year	End of the year	Remark
				Number of shares	Book amount	Ratio of shareholding	Fair value
K Laser Technology Inc. Guang Feng International Ltd. Insight Medical Solutions Inc. Bright Triumph Limited	Stocks Minton Optic Industry Co., Ltd. CM Visual Technology Corp. China Development Biotechnology Co., Ltd. Mega Plastic Industry Co., Ltd. Boxlight Corporation Boxlight Corporation Aether Precision Technology Inc. Dongguan Guangzhi photoelectric Co., Ltd	None None None None None None None None	Financial assets at fair value through profit or loss－Non-current Financial assets at fair value through profit or loss－Non-current Financial assets at fair value through profit or loss－Non-current Financial assets at fair value through profit or loss－Non-current Current assets to be sold Current assets to be sold Financial assets at fair value through profit or loss－Non-current Financial assets at fair value through profit or loss－Non-current	857,900 138,240 2,100,000 150,000 1,662,940 272,957 240,000 5,385,628	$ - - 26,726 2,007 27,960 1,905 1,249 66,063	1 - 2 15 3 - 10 9	$ - - 26,726 2,007 63,522 10,427 1,249 66,063

Note 1: For information of investments in subsidiaries and associates, please refer to attachment 7 and attachment 8.

83 -

K Laser Technology Inc. and Subsidiaries

The amount of real estate acquired reaches NT $300 million or more than 20% of the paid in capital

Year 2021

Attachment 3 Unit: NT $1000

Company acquiring real estate	Property name	Date of fact	Transaction amount	Payment of price	Trading partner	Relationship	If the trading partner is a related party, the previous transfer information	If the trading partner is a related party, the previous transfer information	If the trading partner is a related party, the previous transfer information	If the trading partner is a related party, the previous transfer information	Reference basis for price determination	Purpose of acquisition and use	Other agreements
							Everyone	Relationship with the issuer	Transfer date	Amount
Optivision Technolog y Inc.	Land No. 668, Datong section, Zhunan Town, Miaoli County	Resolution date of the board of directors: 2021 / 11 / 09	$ 290,000	$ 29,000	Safeway Industrial Co., Ltd	None	-	-	-	$ -	According to the appraisal report of real estate appraiser's office	For business use	None

84 -

K Laser Technology Inc. and Subsidiaries

Purchase from or Sale to Related Parties Amounting to Over NT$100 Million or 20% of Paid-in Capital From January 1 to December 31, 2021

Attachment 4

Unit: In Thousands of New Taiwan Dollars

Selling (purchasing) company	Counterparty	Relation		Transaction	Transaction	Transaction	Transaction terms different from those for general transactions, and reasons	Transaction terms different from those for general transactions, and reasons	Notes receivable (payable) and trade receivables (payables)	Notes receivable (payable) and trade receivables (payables)	Remark
			Sale (purchase)	Amount	Ratio to total sale (purchase) ％	Credit period	Unit price	Credit period	Balance	Ratio to total notes receivable (payable) and trade receivables (payables)％
Optivision Technology Inc. 〃 K Laser Technology Inc. 〃〃 K Laser Technology (Wuxi) Co., Ltd. 〃	Dongguan Guangzhi photoelectric Co., Ltd Ningpo Optivision Technology Co., Ltd. K Laser Technology (Dongguan) Co., Ltd. K Laser Technology (USA) Co., Ltd. K Laser Technology Japan Co., Ltd. Xinguang Laser Co., Ltd. K Laser Technology (H.K.) Co., Ltd.	One of other related parties A subsidiary A sub-subsidiary of which 100% of shares are held by the Company A sub-subsidiary of which 79.75% of shares are held by the Company A sub-subsidiary of which 70% of shares are held by the Company The original affiliated enterprise that has become a brother company since October 2021 A sister company	Sale Sale Purchase Sale Sale Purchase Sale	$ 825,154 281,393 ( 393,771 ) 494,303 105,956 ( RMB 46,064 ) RMB 34,083	51 17 39 37 8 45 24	Cash received 90 days after monthly settlement Cash received 120 days after monthly settlement Cash received 90 days after monthly settlement Cash received 90 days after monthly settlement Cash received 90 days after monthly settlement Cash payment within 60 days of monthly settlement Cash received 60 days after monthly settlement	N/A N/A N/A N/A N/A N/A N/A	N/A N/A N/A N/A N/A N/A N/A	$ 182,959 146,153 ( 134,914 ) 163,269 31,614 ( RMB 13,540 ) RMB 6,410	30 24 56 50 10 48 16

Note: Dongguan Guangzhi Photoelectric Co., Ltd. has not been a related party since November 110. It only discloses the amount and outstanding balance of related party

transactions.

85 -

K Laser Technology Inc. and Subsidiaries

Receivables from Related Parties Amounting to Over NT$100 Million or 20% of Paid-in Capital

December 31, 2021

Attachment 5

Unit: In Thousands of New Taiwan Dollars

Company recognizing the account as receivables	Counterparty to the transaction	Relation	B a l a n c e o f receivables from related parties	T u r n o v e r	Receivables from related parties due and unpaid	Receivables from related parties due and unpaid	Amount of receivables from related parties that are recovered after the year	Amount of allowance for bad debts allocated on books
					Amount	Treatment method
Optivision Technology Inc. 〃 K Laser Co., Ltd	Dongguan Guangzhi photoelectric Co., Ltd Ningpo Optivision Technology Co., Ltd. K Laser Technology (USA) Co., Ltd.	One of other related parties Subsidiary A sub-subsidiary with 79.95% of its shares indirectly held by the company	$ 182,959 146,153 163,269	1.93 2.13 4.05	$ - - -	- - -	$ 85,104 54,889 40,921	$ 6,250 - -

86 -

K Laser Technology Inc. and Subsidiaries Information of Reinvested Companies, their Locations, etc. From January 1 to December 31, 2021

Attachment 6

Unit: In Thousands of New Taiwan Dollars ／ Thousands in Foreign Currency

Name of investing company	Name of investee company	Location	Main business activities	Amount of original investment	Amount of original investment	Shares he	ld at the end o	f the year	Profit (loss) of the investee company	Investment gain (loss) recognized for the year	Remark
				End of the year	End of last year	Number of shares	Ratio％	Book amount
K Laser Technology Inc. 〃〃〃〃〃 K Laser International Co., Ltd. 〃〃〃〃〃〃〃 K Laser Technology (Thailand) Co., Ltd. K Laser China Group Co., Ltd. 〃 K Laser China Group Holding Co., Limited 〃〃〃 Holomagic Co., Ltd. Top Band Investment Ltd. K Laser IMEA Co., Ltd.	K Laser China Group Co., Ltd. K Laser International Co., Ltd. Optivision Technology Inc. iWin Technology Co., Ltd. Vicome Corp. Insight Medical Solutions Inc. Guang Feng International Ltd. K Laser Technology (USA) Co., Ltd. K Laser Technology (Thailand) Co., Ltd. K Laser Technology (Korea) Co., Ltd. K Laser IMEA Co., Ltd. Amagic Technologies U.S.A. (Dubai) Ltd. K Laser Technology Japan Co., Ltd. CIO Tech Ltd. Amagic Holographics India Private Limited K Laser Technology (Indonesia) Co., Ltd. K Laser China Group Holding Co., Limited Holoprint Co., Ltd. K Laser Technology (Hongkong) Co., Ltd Holomagic Co., Ltd. Top Band Investment., Ltd. iWin Technology Co., Ltd. Treasure Access Limited Union Bloom Co., Ltd. Amagic Holographics India Private Limited	British Virgin Islands British Virgin Islands Hsinchu City British Virgin Islands Yunlin County Hsinchu City Samoa United States Thailand Korea Mauritius Dubai Japan Cayman Islands India Indonesia Cayman Islands British Virgin Islands Hong Kong British Virgin Islands British Virgin Islands British Virgin Islands Hong Kong Hong Kong India	Reinvestment in companies Reinvestment in companies Production and sale of optical instruments and electronic parts and components Reinvestment in companies Manufacturing, processing, purchase and sale of fluorescent pigments and dyes R & D and sales of gastrointestinal endoscopy and other businesses Reinvestment company Sale of holographic products Manufacture and sales of holography products Manufacture and sales of holography products Reinvestment company Sales and agency of holography products Manufacture and sales of holography products Reinvestment company Manufacture and sales of holography products Manufacture and sales of holography products Reinvestment company Reinvestment company Sales and agency of holography products Reinvestment company Reinvestment company Reinvestment in companies Reinvestment in companies Reinvestment in companies Manufacture and sales of holography products	$ 722,454 726,200 499,497 97,372 35,494 269,813 162,463 USD 6,500 USD 1,839 USD 2,946 - USD 2,297 USD 830 USD 750 USD 2,508 THB 21,168 RMB 180,503 RMB 1 RMB 1,092 RMB 112,440 RMB 130,106 RMB 20,825 RMB 69,243 RMB 113,329 -	$ 722,454 703,856 514,219 97,372 35,494 269,813 217,125 USD 6,500 USD 1,801 USD 2,946 USD 2,600 USD 1,094 USD 830 USD 750 USD - THB 21,168 RMB 180,503 RMB 1 RMB 1,092 RMB 72,440 RMB 130,106 RMB 20,825 RMB 29,243 RMB 113,329 USD 2,508	21,289,005 21,161,462 23,614,835 157,545 3,021,420 8,995,264 4,845,810 6,500,000 9,337,984 677,040 - - 1,344 11,000,000 10,915,594 266,000 89,096,401 1 1,283,500 30,000 50,000 163,975 10,000 10,000 -	100 100 42 49 30 45 100 80 83 100 - 100 70 22 100 70 94 100 100 100 100 51 100 100 -	$ 2,121,577 743,919 574,422 14,851 137,945 142,474 16,289 USD 8,611 USD 8,085 USD 1,886 - USD 3,507 USD 3,063 USD 541 USD 420 THB 23,332 RMB 515,622 RMB - RMB 4,659 RMB 280,233 RMB 261,044 RMB 3,558 RMB 277,889 RMB 257,018 USD -	$ 208,450 99,315 ( 32,168 ) ( 6,190 ) 66,897 ( 76,734 ) 30,506 USD 3,193 USD 366 USD 165 ( USD 12 ) USD 169 USD 618 ( USD 300 ) ( USD 33 ) THB - RMB 49,005 RMB - RMB 787 RMB 13,019 RMB 34,879 ( RMB 1,426 ) RMB 13,058 RMB 34,913 USD 12	$ 169,972 99,315 ( 12,692 ) ( 3,033 ) 20,209 ( 81,270 ) 30,506 USD 2,547 USD 303 USD 165 ( USD 12 ) USD 169 USD 432 ( USD 66 ) ( USD 45 ) THB - RMB 48,001 RMB - RMB 787 RMB 12,989 RMB 34,930 ( RMB 727 ) RMB 13,058 RMB 34,913 USD 12	（note 1）（note 2）（note 3）（note 3）

(to be continued)

87 -

(continued)

N a m e o f i n v e s t i n g c o m p a n y	Name of investee company	L o c a t i o n	Main business activities	Amount of original investment	Amount of original investment	Shares held at the end of theyear	Shares held at the end of theyear	Shares held at the end of theyear	Profit (loss) of the investee company	Investment gain (loss) recognized for theyear	Remark
				End of the year	End of last year	Number of shares	Ratio％	Book amount
iWin Technology Co., Ltd. Optivision Technology Inc. Insight Medical Solutions Inc.	Finity Laboratories Bright Triumph Limited Insight Medical Solutions Holdings Inc.	USA Mauritius Cayman Islands	Research and development of holography Reinvestment in companies Reinvestment in companies	USD 700 242,173 USD 2,500	USD 700 242,173 USD 2,500	700,000 7,913,767 2,500,000	100 100 100	USD 951 149,461 63,029	( USD 219 ) 3,645 ( 6,620 )	( USD 219 ) 3,645 ( 6,620 )

Note 1: 10,000,000 ordinary shares of Optivision Technology have been pledged as collateral for the issuance of convertible corporate bonds by K Laser company. Note 2: K Laser IMEA Co., Ltd. entered the liquidation procedure in May 2021.

Note 3: for the adjustment of the group's investment structure, it is transferred from K Laser IMEA Co., Ltd. to K Laser International Co., Ltd.

88 -

K Laser Technology Inc. and Subsidiaries Information of Investment in Mainland China From January 1 to December 31, 2021

Attachment 7

Unit: In Thousands in Foreign Currency: /Thousands of New Taiwan Dollars

Name of investee company, main business activities, paid-in capital, investment method, capital remittance, shareholdings, profit or loss of the year, investment gain (loss) recognized, ending book value of investment, investment gain remitted back, and limit of investment in Mainland China:

N a m e o f i n v e s t e d company in Mainland C h i n a	M i n b u s i n e s s a c t i v i t i e s	Paid-in capit al	Investment method	A c c u m u l a t e d investment amount r e m i t t e d f r o m Taiwan as of the beginning of the y e a r	Investment amount remitted or recovered in the year	Investment amount remitted or recovered in the year	Accumulated investment amount remitted from Taiwan as of the end of the year	Ratio of shares held by the Company through direct or indirect investment％	Investee company’s profit (loss) of the year	Investment gain (loss) recognized for the year	Ending book value of investment	Investment gain remitted back to Taiwan as of the end of the year
					Remitted	Recovered
K Laser Technology (Wuxi) Co., Ltd. K Laser Technology (Dongguan) Co., Ltd. Dongguan Zhimmei Laser Printing Co., Ltd. (Note 5) Herui Laser Technology Co., Ltd. Foshan Donglin packaging material Co., Ltd Hunan Hexin packaging material Co., Ltd Xinguang Laser Co., Ltd. Guangfeng Optoelectronics (Wuxi) Co., Ltd. Insight Medical Solutions(Wuxi) Inc. Ningbo Optivision Technology Co., Ltd Dongguan Guangzhi photoelectric Co., Ltd	Research, development, production of laser holographic products, electro-optics apparatus and optoelectronic materials Production and sale of other polyethylene and rigid polyvinyl chloride films and foils Production and sale of printed paper packaging boxes and laser printed paper Research, development and production of laser paper, anodized aluminum and other new environmentally-friendly packaging materials and anti-counterfeit products Production of tobacco series packaging materials and extension products Mainly engaged in the production, processing and sales of films and cigarette bags, and the segmentation of cigarette paper Production of special film coating, decorative film and environmental protection transfer paper Research, development and production of large LCDs, and optical engines and projection tubes for LCDs Research, development and sale of endoscopes used in gastrointestinal tracts Manufacturing, processing and production of brightening film, prism, diffusion film and optical film R & D and manufacturing of precision components	$ 548,817 ( RMB 126,339 ) 719,458 ( RMB 165,621 ) 110,068 ( RMB 25,338 ) 225,019 ( RMB 51,800 ) （note 1） 115,060 ( RMB 26,487 ) （note 3） 80,798 ( RMB 18,600 ) （note 4） 347,520 ( RMB 80,000 ) （note 2） 188,221 ( RMB 43,329 ) 69,200 ( USD 2,500 ) 145,905 ( RMB 33,607 ) 271,344 ( RMB 62,500 )	Reinvestment in the company in Mainland China through reinvestments in an existing company in a third region Reinvestment in the company in Mainland China through reinvestments in an existing company in a third region Investment in the company in Mainland China through remittance from a third region Reinvestment in the company in Mainland China through reinvestments in an existing company in a third region Reinvestment in the company in Mainland China through reinvestments in an existing company in a third region Reinvest in Chinese companies through reinvestment in existing companies in the third region Reinvest in Chinese companies through reinvestment in existing companies in the third region Reinvestment in the company in Mainland China through reinvestments in an existing company in a third region Reinvestment in the company in Mainland China through reinvestments in an existing company in a third region Reinvest in Chinese companies through reinvestment in existing companies in the third region Reinvest in Chinese companies through reinvestment in existing companies in the third region	$ 185,179 ( USD 6,690 ) 56,993 ( USD 2,059 ) 59,512 ( USD 2,150 ) - - - - 97,351 ( USD 3,517 ) 69,200 ( USD 2,500 ) 145,541 ( USD 5,258 ) 62,003 ( USD 2,240 )	$ - - - - - - - 3,848 ( USD 139 ) - - -	$ - - - - - - - - - - -	$ 185,179 ( USD 6,690 ) 56,993 ( USD 2,059 ) 59,512 ( USD 2,150 ) - - - - 101,198 ( USD 3,656 ) 69,200 ( USD 2,500 ) 145,541 ( USD 5,258 ) 62,003 ( USD 2,240 )	100 100 - 49 25 49 65 45 100 100 9	$ 21,520 ( RMB 4,954 ) 165,572 ( RMB 38,115 ) - 14,118 ( RMB 3,250 ) ( 37,358 ) ( RMB - 8,600 ) 18,136 ( RMB 4,175 ) 34,769 ( RMB 8,004 ) - USD - ( 4,589 ) 6,245 ( USD 222 ) -	$ 21,520 ( RMB 4,954 ) 165,572 ( RMB 38,115 ) - 6,916 ( RMB 1,592 ) ( 9,340 ) ( RMB - 2,150 ) 7,155 ( RMB 1,647 ) 3,675 ( RMB 846 ) - USD - ( 4,589 ) 6,245 ( USD 222 ) -	$ 665,992 ( RMB 153,313 ) 1,143,788 ( RMB 263,303 ) - 170,411 ( RMB 39,229 ) 22,513 ( RMB 5,183 ) 223,981 ( RMB 51,561 ) 359,840 ( RMB 82,836 ) 41,993 ( USD 1,517 ) 63,054 79,580 ( USD 2,875 ) 66,063 ( USD 2,387 )	$ 211,957 ( RMB 48,793 ) 708,676 ( RMB 163,139 ) - 16,520 ( RMB 3,803 ) - - 37,645 ( RMB 8,666 ) - - - -

89 -

2. Limit of Investments in Mainland China

Limit of Investments in Mainland China
Company name	Accumulated investment amount remitted from Taiwan to M a i n l a n d C h i n a a s o f t h e e n d o f t h e y e a r	Investment amount approved by Investment Commission, M i n i s t r y o f E c o n o m i c A f f a i r s	Limit of investment provided by Investment Commission, M i n i s t r y o f E c o n o m i c A f f a i r s ( n o t e 7 )
K Laser	$347,135 (USD 12,541)	$1,694,348 (USD 61,212)（note 6）	$1,608,792
Optivision Technology	$207,545 (USD 7,948)	$236,830 (USD 8,556)	$821,298
IMS	$69,200 (USD 2,500)	$69,200 (USD 2,500)	$80,000

Note 1: including the cash investment of USD 2,512,000 through the third region.

Note 2: It contains the investment in cash USD3,705 thousand through a third region.

Note 3: including 8,253,000 RMB of cash investment from enterprises in the third region.

Note 4: including 48,100,000 RMB of cash investment from enterprises in the third region.

Note 5: The invested equity has been disposed, but an application for cancellation of the amount has not been filed to Investment Commission, MOEA. With the approval of the operation headquarters in accordance with the regulations, the investment amount is not limited to 60% of the net value or NT $80 million.

Note 6: amount of surplus transferred to investment is 11,748,000 USD.
Note 7: With the approval of the operation headquarters in accordance with the regulations, the investment amount is not limited to 60% of the net value or NT $80 million for K Laser.Other companies are limited to 60% of their net worth or NT $80 million, whichever is higher.
Material Transactions directly or indirectly with Investee Companies in Mainland China through Entities in a Third Region : Please refer to attachment 4 and 8 。
Property transaction, and gain or loss on such transactions: None
Endorsement, guarantee or collateral provided directly or indirectly for investee companies in Mainland China through entities in a third region: Attachment 2
Funds directly or indirectly provided for investee companies in Mainland China through a third region: None
Other transactions that have a material impact on the current profit or loss or financial status: None
90 -

K Laser Technology Inc. and Subsidiaries Business Relations and Important Transactions between Parent Company and Subsidiaries From January 1 to December 31, 2021

Attachment 8

Unit: In Thousands of New Taiwan Dollars/Thousands in Foreign Currency

2021

2021
No.	Name of trader	Transaction object	Relationship with traders	Transactions
				Subject	Amount	Terms of transaction	of total consolidated revenue or total assetsc
0 0 0 0 0 0 0 0 0 0 1 2 2 2 2 2 2 2 2 3 3	K Laser K Laser K Laser K Laser K Laser K Laser K Laser K Laser K Laser K Laser Top Band K Laser (Dongguan) K Laser (Dongguan) K Laser (Dongguan) K Laser (Dongguan) K Laser (Dongguan) K Laser (Dongguan) K Laser (Dongguan) K Laser (Dongguan) K Laser (Wuxi) K Laser (Wuxi)	K Laser (USA) K Laser (Japan) K Laser (Dongguan) K Laser (Wuxi) Treasure K Laser (Dongguan) K Laser (Wuxi) Treasure K Laser (USA) K Laser (Japan) K Laser (Dongguan) Dubai Magic Dubai Magic K Laser (Wuxi) Herui laser K Laser (Korea) K Laser (Wuxi) Xinguang Laser Xinguang Laser Xinguang Laser Xinguang Laser	Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary	Accounts receivable Accounts receivable Trade payable Accounts payable Accounts payable Purchase Purchase Purchase Sale Sale Other receivables Accounts receivable Sale Sale Sale Sale Purchase Purchase Accounts payable Accounts payable Pruchase	$ 163,269 31,614 134,914 20,608 31,154 393,771 46,111 71,798 494,303 105,956 RMB 2,891 RMB 3,711 RMB 6,477 RMB 4,016 RMB 2,961 RMB 6,325 RMB 2,436 RMB 7,277 RMB 15,029 RMB 13,540 RMB 10,969	－－－－－－－－－－－－－－－－－－－－－	2 - 2 - - 6 1 1 8 2 - - - - 1 - - 1 1 1 1

(Continued)

91 -

(Continued)

No.	Name of trading party	Counterparty to the transaction	Relation with trading party	Transactiondetails	Transactiondetails	Transactiondetails	Transactiondetails
				Account	Amount	Transaction conditions	Ratio to total consolidated revenue or total assets％
3 3 4 4 4 5 5	K Laser (Wuxi) K Laser (Wuxi) Optivision Technology Optivision Technology Optivision Technology Treasure Treasure	K Laser Hong Kong K Laser Hong Kong Ningpo Optivision Ningpo Optivision K Laser (Dongguan) K Laser (Dongguan) K Laser(Dongguan)	Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiary to subsidiary Subsidiaryto subsidiary	Trade receivables Sale Trade receivables Sale Sale Accounts payable Purchase	RMB 6,410 RMB 34,083 $ 146,153 281,393 10,931 RMB 6,645 RMB 10,737	－－－－－－－	- 2 2 3 - - 1

Note 1: Information of business between the parent company and Subsidiaries shall be indicated in the “No.” section. Numbers shall be given as follows: 1.For the Company, please indicate “0.”
2.For subsidiaries, number in numerical order from 1 by the type of company.
Note 2: There are 3 types of relations with the counterparty to a transaction. Please indicate the type.
Parent company vs subsidiary
Subsidiary vs parent company
Subsidiary vs subsidiary
Note 3: For calculation of the ratio of transactions to the total revenue or total assets, in case of assets or liabilities, the ratio of the ending balance of such assets or liabilities to the total consolidated assets is calculated instead, and in case of profits or losses, the ratio of the accumulated amount of such profits or losses in the interim to the total consolidated revenue is calculated instead.
Note 4: Whether the transaction details are shown in the form is determined by the Company pursuant to the materiality principle.
92 -

K Laser Technology Inc. and Subsidiaries

Information of Main Shareholders

December 31, 2021

Attachment 9

Name of key shareholder	Share	Share
	Number of shares held	Ratio of shareholding
Kuo Wei-Wu K Laser Technology Inc. (note 3)	10,997,756 10,156,000	6.6% 6.1%

Note 1: Information of main shareholders contained in the form is the data calculated by Taiwan Depository & Clearing Corporation based on the common shares and preferred shares (including treasury shares) that have been recorded and delivered, without physical substance, by the Company and held by shareholders on the last business day at the end of the current season so as to indicate the shareholders holding over 5% of such shares. The capital stock recorded in the consolidated financial report of the Company may differ from the number of the aforementioned shares recorded and delivered without physical substance because different bases of preparation and calculation are used.
Note 2: If the above information contains any shareholder holding shares through a trust, then trust settlors will be disclosed in their respective accounts under the trust account opened by the trustee. As for a shareholder declaring equity based on the shares more than 10% possessed by the shareholder as an insider in accordance with the Securities and Exchange Act, the shares possessed by the shareholder should contain the shares possessed and the shares in trust and the shares that entitle the shareholder to exercise rights to determine how to use trust property. For information of equity declarations made by insiders, please visit the Market Observation Post System.
Note 3: another 120,000 shares were settled in January 2022.
93 -

AI assistant

K LASER — Annual Report 2021

52100_rns_2021-11-12_3df22090-2ba5-44ea-9163-d33bf254836f.pdf

English Translation of a Report and Financial Statements Originally Issued in Chinese

Declaration of Consolidation of Financial Statements of Affiliates

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Other Matters

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial

Statements

K Laser Technology Inc. and Subsidiaries

Consolidated Balance Sheet

December 31, 2021 and 2020

(continued)

K Laser Technology Inc. and Subsidiaries Consolidated Statement of Changes in Equity For the years ended December 31, 2021 and 2020

K Laser Technology Inc. and Subsidiaries Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Report

II. Date and Procedure of Adoption of Financial Statements

III. Applicability of New and Amended Regulations and Interpretations

(13) Non-current Assets Held for Sale

(14) Financial Instruments

(18) Borrowing cost

VII. Financial Instruments at FVTPL

VIII. Notes Receivable and Trade Receivables

X. Current assets to be sold and disposal groups to be sold

XI. Financial Assets at FVTOCI

Investments in Equity Instruments

(Continued)

XII. Subsidiaries

(Continued)

(Continued)

XIII. Investments Accounted for Using the Equity Method (1) Investments in Associates

(2) Information of Individual Immaterial Associates

XIV. Property, Plant and Equipment

XV. Lease Agreement

(III) Important leasing activities and terms

(IV) Other leasing information

XVI. Commercial reputation

(continued)

XVIII. Other assets

XIX. Loan

(4) Long-term Borrowings

(Continued)

XXI. Other payables

(Continued)

(4) Other Equity

3. Unpaid employees’ award

(5)Non-controlling interest

1. Information of changes in treasury shares is as follows:

Amounts

XXVI. Income tax of continuing business units

(1) Income Tax Recognized in Profit or Loss

XXIX. Business combination

(3) Non-controlling Interests

XXXI. Financial instruments

(3) Type of Financial Instrument

1. Market Risk

2. Credit Risk

3. Liquidity Risk

XXXII. Related party transactions

(2) Operating Transactions

(6) Endorsement and guarantee

XXXVI. Disclosures in the Notes

(2) Information of investments in Mainland China:

XXXVII. Financial Information of Operating Segments

(II) Departmental assets

(III) Main customer information

K Laser Technology Inc. and Subsidiaries

Attachment 1

K Laser Technology Inc. and Subsidiaries

Marketable Securities Held at the End of the Year

Attachment 2

K Laser Technology Inc. and Subsidiaries

K Laser Technology Inc. and Subsidiaries

Attachment 4

Unit: In Thousands of New Taiwan Dollars

K Laser Technology Inc. and Subsidiaries

K LASER Annual Report 2021