K LASER — Annual Report 2021

Nov 12, 2021

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

K Laser Inc.

Parent Company Only 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

Independent Auditors’ Report

K Laser Technology Inc.

Opinion

We have audited the accompanying financial statements of December 31, 2021 and 2020 of K Laser Technology Inc., which comprise the balance sheets as of Jan 1 to December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the 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 financial statements present fairly, in all material respects, the financial position of K Laser Technology Inc. as of December 31, 2021 and 2020 and its financial performance and cash flows for Jan 1 to December 31, 2021 and 2020 then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit 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 financial statements of K Laser Technology Inc. for the year ended 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Recognition of Sales Revenue

The business income of K Laser Technology Inc. mainly comes from the manufacture of laser holographic films, laser anti-counterfeiting labels, laser paper and optical instruments. The sales revenue of optical instruments in 2021 was significant, and the authenticity of the sales revenue of this product had a significant impact on the consolidated financial report. Therefore, the CPA listed the above sales revenue as the key audit items for this year.

Our key audit procedure performed in respect of the aforementioned key audit matters comprised the following:

1. We understood the internal control procedures for the recognition of sales revenue, tested and assessed the effectiveness of related internal controls.

2. We sampled the transaction details of major sales customers, and check consistency of the external shipping documents, export declarations and original transaction documents.

3. We confirmed the reasonability of the return and discount of major subsequent event.

Other Matters

The financial statements of some investee companies accounted for using the equity method for the years dated December 31, 2021 and 2020 were audited by other auditors. Thus in our opinion expressed in the aforementioned financial report, the amounts within the financial statements for those investee companies were based solely on the reports of other auditors. As of December 31, 2021 and 2020, the aforementioned investments accounted for using the equity method were NT$397,729 thousand and NT$436,955 thousand, respectively, which accounted for 7.85% and 8.88% of the 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$52,908 thousand and NT$42,475 thousand, respectively, which accounted for (14.45)% and 28.24% of the profit before tax, respectively. Refer to Note 33 to the financial statements for relevant information on the above investee companies which we have not audited but were audited by other auditors.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the ability of K Laser Technology Inc. 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. 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.

Auditors’ Responsibilities for the Audit of the Financial Statements

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Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 financial statements. As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls of K Laser Technology Inc.

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of K Laser Technology Inc. to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause K Laser Technology Inc. to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements (including the disclosures) and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the segments within K Laser Technology Inc. to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the corporate 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).

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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 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

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K Laser Technology Inc. Balance Sheet

December 31, 2021 and 2020

Unit: In Thousands of New Taiwan Dollars

Code 1100 1110 1150 1170 1180 1200 1220 130X 1460 1470 11XX 1517 1550 1600 1755 1760 1780 1840 1990 15XX 1XXX Code 2100 2110 2170 2180 2200 2280 2320 2399 21XX 2500 2530 2540 2635 2640 2670 25XX 2XXX 3110 3200 3310 3320 3350 3410 3420 3490 3500 3XXX	Assets Current assets Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss－current (Notes 4 and 7) Notes receivable (Notes 4 and 8) Trade receivables (Notes 4 and 8) Trade receivables from related parties (Notes 4, 8 and 29) Other receivables (Note 29) Current tax assets (Notes 4 and 24) Inventories (Notes 4 and 9) Current assets held for sale (Notes 4 and 10) Other current assets (Note 6 and 17) Total current assets Non-current assets Financial assets at fair value through other comprehensive income－ non-current (Notes 4 and 11) Investments accounted for using the equity method (Notes 4 and 12) Property, plant and equipment (Notes 4, 13 and 29) Right-of-use assets (Notes 4 and 14) Net investment property (Notes 4 and 15) Other intangible assets (Notes 4 and 16) Deferred tax assets (Notes 4 and 24) Other non-current assets (Notes 6 and 17) Total non-current assets Total assets Liabilities andEquity Current liabilities Short-term borrowings (Note 18) Short-term notes and bills payable (Note 18) Trade payables Trade payables to related parties (Note 29) Other payables (Notes 20 and 29) Lease liabilities－current (Notes 4 and 14) Current portion of long-term liabilities (Note 18) Other current liabilities Total current liabilities Non-current liabilities Financial liabilities at fair value through income - Non-current（Notes 4 and 7） Corporation liabilities payable（Notes 4 and 19） Long-term borrowings (Note 18) Lease liabilities－non-current (Notes 4 and 14) Net defined benefit liabilities (Notes 4 and 21) Other liabilities－others Total non-current liabilities Total liabilities Equity (Note 22) Share capital Ordinary shares Capital reserve Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Exchange differences on translation of foreign financial statements Unrealized gain on financial assets at fair value through other comprehensive income Recompense not earnt by staff Treasury shares Total equity Total liabilities and equity		December31,2021	December31,2021	％ 5 - - 1 4 - - 2 1 3 16 1 74 3 1 1 - - 4 84 100 9 3 1 4 2 - - - 19 - 11 16 1 - - 28 47 33 14 5 7 6 7 ) 1 ) 1 ) 3) 53 100		December31,2020	December31,2020
			Amount $ 272,616 3,134 8,638 73,231 201,719 3,267 208 84,650 27,960 133,354 808,777 28,733 3,751,477 165,712 70,785 36,590 1,684 9,400 194,212 4,258,593 $ 5,067,370 $ 450,000 159,948 49,347 189,979 92,636 6,023 - 3,978 951,911 855 552,053 794,000 66,131 20,158 942 1,434,139 2,386,050 1,659,694 709,559 249,257 391,852 294,763 373,245 ) 30,640 ) 72,873 ) 147,047) 2,681,320 $ 5,067,370				Amount $ 360,226 5,265 5,323 37,451 108,218 9,991 208 83,398 15,100 16,781 641,961 34,984 3,807,614 159,057 73,629 37,869 2,393 11,800 151,243 4,278,589 $ 4,920,550 $ 430,000 299,917 36,164 75,293 83,268 6,023 100,000 10,307 1,040,972 - - 1,250,000 68,598 18,888 942 1,338,428 2,379,400 1,593,246 585,347 213,042 200,987 384,752 287,085 ) 30,403 ) - 118,736) 2,541,150 $ 4,920,550		％
		( ( ( (		( ( ( (		( ( (		( (	7 - - 1 2 - - 2 - 1 13 1 77 3 2 1 - - 3 87 100 9 6 1 1 2 - 2 - 21 - - 26 1 - - 27 48 32 12 4 4 8 6 ) - - 2) 52 100

The accompanying notes are an integral part of the 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. 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 Dollar

Code 4100 Operating revenue (Notes 4 and 29) 5110 Cost of goods sold (Notes 9 and 29) 5900 Gross profit 5910 Unrealized sales profit 5920 Unrealized sales profit 5950 Gross profit Operating expenses (Note 29) 6100 Selling and marketing 6200 General and administrative 6300 Research and development 6450 Expected credit revolving benefit 6000 Total operating expenses 6900 Net profit (loss) from operation Non-operating income and expenses 7060 Share of profit or loss of subsidiaries and associates accounted for using the equity method (Note 12) 7100 Interest income (Note 29) 7190 Other income-others (Note 29) 7210 Profit (loss) on disposal of property, plant and equipment 7230 Foreign currency exchange loss		2021

(To be continued)

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(Continued)

Code 7235 Gain (loss) 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 7900 Profit before tax 7950 Income tax expense (Notes 4 and 24) 8200 Profit for the year Other comprehensive income (loss) (Notes 21 and 22) 8310 Items that will not be reclassified subsequently to profit or loss 8311 Actuarial gain (loss) on defined benefit plan 8316 Unrealized gain (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 8300 Total other comprehensive income (loss) 8500 Total comprehensive income (loss) for the year	2021	％ - ( 2 ) ( 1 ) 3 22 27 - 27 - - ( 7) ( 7) 20	2020
	Amount $ 4,594 ( 23,658 ) ( 11,789 ) 39,860 296,563 366,125 ( 2,400) 363,725 ( 1,297 ) ( 229 ) ( 86,277) ( 87,803) $ 275,922		Amount ( $ 31 ) ( 25,562 ) ( 7,590 ) 2,489 207,537 150,409 ( 6,000) 144,409 236 1,632 ( 8,874) ( 7,006) $ 137,403	％
				- ( 3 ) ( 1 ) - 26 19 ( 1) 18 - - ( 1) ( 1) 17

(To be continued)

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(Continued)

Code Earnings per share (Note 25) From continuing operations 9710 Basic 9810 Diluted		2021	％		2020
		Amount $ 2.42 $ 2.14			Amount $ 0.96 $ 0.95	％

The accompanying notes are an integral part of the 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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C o d e A1 Balance at January 1, 2020 D1 Net profit for the year ended December 31, 2020 D3 Other comprehensive income (loss) for the year ended December 31, 2020 L1 buy-back of treasury shares (Note 22) L7 Acquisition of the parent company’s shares by subsidiaries as treasury shares M5 Differences between equity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries M7 Changes in percentage of ownership interests in subsidiaries C7 Changes in associates accounted for using the equity method N1 Share-based payment transactions Z1 Balance at December 31, 2020 Appropriation and distribution of earnings (Note 22) B1 Legal reserve B3 Special reserve B5 Cash dividends to shareholders of the Company Other capital reserve changes: C5 Issue convertible corporate bonds to recognize equity components D1 Net profit for the year ended December 31, 2021 D3 Other comprehensive income (loss) for the year ended December 31, 2021 L1 Buy-back of treasury shares (Note 22) M5 Differences between equity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries M7 Changes in percentage of ownership interests in subsidiaries I1 Converting corporate bonds into common shares N1 Issue stocks that restrict employees' rights and interests（Note 26） N1 Limit the cost of employee rights stock compensation（Note 26） Z1 Balance at December 31, 2021 Chairman: Kuo Wei-Wu	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	K Laser Technology Inc. Statement of Changes in Equity For the years ended December 31, 2021 and 2020 Exchange differences on translation of financial statements of foreign operations Retained earnings p i t a l r e s e r v e Legal reserve Special reserve Unappropriated earnings $ 551,531 $ 213,042 $ 201,090 $ 255,807 ( $ 278,472 ) - - - 144,409 - - - - 236 ( 8,874 ) - - - - - 3,668 ) - - - - 22,969 - ( 103 ) ( 11,200 ) 261 3,691 - - - - - - - ( 4,500 ) - 10,824 - - - - 585,347 213,042 200,987 384,752 ( 287,085 ) - 36,215 - ( 36,215 ) - - - 190,931 ( 190,931 ) - - - - ( 225,344 ) - 20,280 - - - - - - - 363,725 - - - - ( 1,297 ) ( 86,277 ) - - - - - 23,036 - ( 66 ) 73 117 29,279 - - - - 12,704 - - - - 38,913 - - - - - - - - - $ 709,559 $ 249,257 $ 391,852 $ 294,763 ($ 373,245) The accompanying notes are an integral part of the financial statements. (Please refer to the Deloitte & Touche auditors’ report dated March 24, 2022.) Manager: Kuo Wei-Wu Accounting		Other equity
			(

Unit: In Thousands of New Taiwan Dollars

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K Laser Technology Inc. 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 (loss) before tax A20010 Incomes, expenses and losses not influencing cash flows A20100 Depreciation expense A20200 Amortization expense A20300 Expected credit reversal gain A20400 Net gain (loss) on financial assets/liabilities at fair value through profit or loss A20900 Interest expense A21200 Interest income A21900 Share-based compensation expense A22300 Share of (profit) loss of associates and joint-venture accounted for using the equity method A22500 Loss (gain) on disposal and write-down of property, plant and equipment A23100 Gain on disposal of investment A23700 Impairment loss recognized on financial assets A23800 Gain on inventory valuation and reversal A23900 Unrealized sales profit (loss) among associates A24000 Realized sales profit (loss) among associates 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 receivables A32230 Other current assets A32240 Net defined benefit liabilities－current A33000 Cash generated from operations A33100 Interest received A33300 Interest paid A33500 Income tax paid AAAA Net cash generated from (used in) operating activities	2021 $ 366,125 35,892 709 ( 61,138 ) ( 4,594 ) 23,658 ( 377 ) 4,972 ( 223,009 ) ( 31 ) ( 39,860 ) - ( 9,680 ) 47,149 ( 21,926 ) ( 3,315 ) ( 81,866 ) ( 32,451 ) 6,724 8,428 1,361 ( 12,497 ) - 13,183 114,686 9,866 ( 6,329 ) ( 27) 135,653 377 ( 6,960 ) - 129,070	2020
		$ 150,409 33,113 764 ( 694 ) 31 25,562 ( 1,291 ) - ( 202,008 ) 19 ( 2,489 ) - ( 561 ) 21,926 ( 13,622 ) ( 2,032 ) 29,152 ( 25,181 ) 3,452 16,500 ( 10,970 ) 1,172 ( 612 ) ( 16,177 ) 15,744 ( 6,457 ) 5,897 ( 6,374) 15,273 1,291 ( 24,826 ) ( 71) ( 8,333)

(To be continued)

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(Continued)

Code Cash flows from investing activities B00010 Acquisition of financial assets at fair value through other comprehensive income B00030 Capital reduction of financial assets measured at fair value through other comprehensive profit or loss and return of shares B00100 Financial assets designated at fair value through profit or loss when original recognition is obtained. B00200 Disposal of financial assets recognized initially at fair value through profit or loss B01800 Acquisition of long-term equity investment accounted for using the B02200 Cash outflows from acquisition of subsidiaries B02300 Cash inflows from disposal of subsidiaries B02400 Refunds of share payment due to decrease in capital of investee companies accounted for using the equity method B02600 Proceeds from disposal of assets held for sale B02700 Purchase of property, plant and equipment B02800 Proceeds from disposal of property, plant and equipment B03700 Decrease (increase) in refundable deposits B04500 Purchase of intangible assets B05000 Cash and cash equivalents obtained the dissolved company due to business combination B06600 Increase in other financial assets B07600 Dividends received from subsidiaries and associates BBBB Net cash generated from (used in) investing activities Cash flows from financing activities C00200 Increase (decrease) in Short-term borrowings C00600 Increase (decrease) in short-term notes and bills payable C01200 Issued corporate bonds C01600 Long-term borrowings C01700 Repayments of Long-term borrowings C04200 Repayment of principal portion of lease liabilities C04500 Dividends paid C04900 Payments for buy-back of treasury shares CCCC Net cash generated (expensed to) from financing activities EEEE Increase (decrease) in cash and cash equivalents for the year E00100 Cash and cash equivalents at the beginning of the year E00200 Cash and cash equivalents at the end of the year		2021 $ - 9,000 19,493 ) 24,857 - 22,344 ) 43,332 54,662 72,809 38,761 ) 3,411 1,121 - - 162,766 ) 152,568 118,396 20,000 140,000 ) 600,700 650,000 1,206,000 ) 6,121 ) 225,344 ) 28,311) 335,076) 87,610 ) 360,226 $ 272,616		2020
	( ( ( ( ( ( ( ( ( ( (		( ( ( ( ( ( ( ( ( ( ( (	$ 3,000 ) - 3,015 ) 3,309 5,200 ) 246,557 ) 44,925 - 2,513 10,505 ) 70 3,272 149 ) 36,464 128,445 ) 263,622 42,696) 48,234 ) 100,000 - 250,000 90,000 ) 6,310 ) - 77,812) 127,644 76,615 283,611 $ 360,226

The accompanying notes are an integral part of the 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. Notes to the Financial Report Jan 1 to 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 financial statements were adopted by the board of directors of the parent on March 24, 2022.

III. Applicability of New and Amended Regulations and Interpretations

• (1) We initially apply 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 (hereinafter referred to as the FSC) of the Republic of China.

Except as otherwise explained below, the application of the amended IFRSs, which are recognized and published by the FSC, will not cause any significant change in accounting policies of the Group. Amendments to IFRS 16 “Rent concession in COVID-19 after June 30, 2021

The Company chooses to apply this amendment, extending the applicable conditions of practical manner to the payment due before June 30, 2022. Please refer to Note 4 for relevant accounting policies of practical manner.

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(2) IFRSs recognized by the FSC, which were applied in 2022

Standards Issued / Amended / R e v i s e d a n d I n t e r p r e t a t i o n s

E f f e c t i v e n e s s D a t e Ann ou n ced by IA S B

“Annual Improvement to Standards 2018-2022 Cycle” Jan 1, 2022 (note 1) Amendments to IFRS 3 ” References to the Conceptual Framework” Jan 1, 2022 (note 2) Amendments to IAS 16 “Property, Plant and Jan 1, 2022 (note 3) ） Equipment ： Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Jan 1, 2022 (note 4) Fulfilling a Contract”

• Note1 ： Amendments to IFRS 9 are applicable to exchanges of financial liabilities or modifications of terms occurring in an annual reporting period after January 1, 2022. Amendments IAS 41 “Agriculture” are applicable to measurement of fair value in an annual reporting period after January 1, 2022. Amendments to IFRS 1 “First-time Adoption of IFRSs” are applicable to retrospectively applicable to an annual reporting period after January 1, 2022.

• Note 2 ： The amendments are applicable to a business combination, the acquisition date of which falls in an annual reporting period after January 1, 2022.

• Note 3 ： The amendments are applicable to the property, plant and equipment that are not in such locations and such conditions until January 1, 2022 as expected by the management.

• Note 4 ： The amendments are applicable to a contract under which the obligations have not been fully performed as of January 1, 2022.

As of the date of the issuance of this individual financial report, the revision of other evaluation standards and explanations of the Company will not have a significant impact on the financial status 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” Amendments to IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendment 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” Amendment to IAS 12 "Deferred income tax related to assets and liabilities arising from a single transaction"	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 ： Except that deferred income tax is recognized on January 1, 2022 for the temporary difference between lease and decommissioning obligations, this amendment is applicable to transactions occurring after 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 Company sells or

contributes assets to its associate or the Company loses its control over its subsidiary but still has a significant impact on the subsidiary, the Company 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 Company sells or contributes assets to its associate or the Company loses its control over its subsidiary in a transaction made with its associate but still has a significant impact on the subsidiary, the Company 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 Company’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.”

1. 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 Company 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 Company has such right at the end of the reporting period, the liability will be classified to be non-current no matter whether the Company is expected to exercise such right. The amendments also explain that in case the Company needs to comply with some specific conditions before being granting the right to defer repayment of liabilities, the Company is required to be in compliance with the specific conditions by or at the end of the reporting period, even when the

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lender verifies thereafter whether the company complies with the conditions.

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

1. Amendments to IAS 1 “Disclosure of Accounting Policies” The amendments expressly indicate that the Company shall disclose the information of material accounting policies based on the definition of material. If the information of accounting policies is reasonably expected to influence the decisions made by general users of financial statements based on the financial statements, then the information of accounting policies shall be regarded as material information. The amendments also explain:

Information of accounting policies relevant to immaterial transactions or immaterial other matters or circumstances is regarded as immaterial information. The Company is not required to disclose such information.

• The Company 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 Company changes accounting policies during a reporting period and the change results in material changes in the information in financial statements;

• (2) The Company chooses, from the accounting policies permitted in the standards, the accounting policy applicable to the Company;

• (3) The Company establishes accounting policies in compliance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” for a lack of specific standards;

• (4) The Company discloses relevant accounting policies that it has to exercise material judgment or assumption to determine; or

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• (5) Complicated provisions for accounting treatment are involved and users of financial statements depend on such information to understand material transactions and material other matters or circumstances.

• Amendments to IAS 8 “Definition of Accounting Estimates” The amendments expressly indicate that accounting

estimates refer to amounts in such currencies in financial statements as measured to be influenced by uncertainty. In applying an accounting policy, the Company may need to measure some items in its financial statements by using some estimated amounts that cannot be observed directly, so it needs to use measurement techniques and input values to establish accounting estimates for the 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 aforementioned impacts, the impacts of other standards, interpretations on the financial status and financial performance of the Company were still evaluated consistently by the Company as of the date when the financial report was approved to be published. Relevant impacts will be disclosed after the completion of the evaluation.

IV. Explanations of Material Accounting Policies

• (1) Declaration of Compliance

The financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (2) Preparation Basis

The 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.

When preparing the financial report, the Company treated its investee companies by using the equity method. For making the current profit (loss), other comprehensive income (loss) and equity stated in the financial report consistent with such current profit (loss), other comprehensive income (loss) and equity attributed to owners of the Company as stated in the consolidated financial report of the Company, the Company dealt with differences between separate basis and consolidated basis in accounting treatment by adjusting “investments accounted for using the equity method,” “share of subsidiaries

• 16 -

accounted for using the equity method,” “share of other comprehensive income (loss) of subsidiaries accounted for using the equity method” and relevant equity items.

• (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).

4. Current liabilities include:

5. Liabilities held primarily for transaction;

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

7. 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) Foreign Currency For the transactions completed by using a foreign currency rather

• than the functional currency of the Company, the Company 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 financial report, the Company converts the assets and liabilities of the overseas entities of the Company (including the subsidiaries and associates using, and the subsidiaries and associates operating in the countries using, any currency that differs from the currency used by the Company) to 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.

• (5) Inventories

• 17 -

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.

(6) Investments Accounted for Using the Equity Method The Company uses the equity method to deal with its investments in subsidiaries and associates.

1. Investments in Subsidiaries Subsidiaries refer to the entities over which the Company has

control.

With the equity method, investments are originally recognized at cost and the book amount after the acquisition date increases or decreases by the amount of the profits or losses, share of other comprehensive income (loss) and profit distributions to be attributed to the Company. Changes in other equity of subsidiaries to be attributed by the Company are recognized at the percentage of its shareholding.

When changes in the Company’s ownership interest in a subsidiary do not cause the Company to lose its control over the subsidiary, such changes are treated as equity transactions. The difference between the book amount of investment and the fair value of paid or received consideration is recognized as equity directly.

When the Company’s share of loss in a subsidiary equals or exceeds its equity in the subsidiary (including the book amount of the subsidiary under the equity method and other long-term equity comprising the Company’s net investment in the subsidiary), a loss is recognized continuously at the percentage of the Company’s shareholding.

The portion of acquisition cost in excess of the Company’s share of fair value of identifiable assets and liabilities of a subsidiary on the acquisition date is listed as goodwill. The goodwill is included in the book amount of the investment and shall not be amortized. The portion of the Company’s share of fair value of identifiable assets and liabilities of a subsidiary on the acquisition date in excess of the acquisition cost is listed as current income.

When losing its control over a subsidiary, the Company measures its remaining investment in the former subsidiary at fair value on the date when it loses its control. The deference between the fair value of the remaining investment and any proceeds from the disposal and the book amount of the investment on the date when it loses its control is listed as current profit or loss. The basis of accounting treatment used for all subsidiary-related amounts recognized as other comprehensive income or loss shall

• 18 -

be the same as that required to be complied with by the Company in disposing relevant assets or liabilities directly.

Unrealized profits or losses from downstream transactions between the Company and a subsidiary are written off in the financial report of the Company. Profits or losses generated from upstream, downstream and sidestream transactions between the Company and a subsidiary are recognized in the financial report of the Company only to the extent that the equity of the subsidiary owned by the Company is not influenced accordingly. Investments in Associates

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

Investments made by the Company 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 Company from associates. Besides, changes in entity of associates are recognized proportionally based on the ratio of shareholding.

Acquisition cost exceeding the Company’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 Company’s share of the identifiable assets and liabilities of associates in faire value on the date of acquisition in excess of acquisition cost is recognized as current profits or losses.

If the Company 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 incomes or losses 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 Company’s share of loss in an associate equals or exceeds its interest in the associate (including the book amount of

• 19 -

investments in the associate accounted for using the equity method, and other long-term interest substantially comprising the Company’s net investments in the associate), no loss shall be further recognized. The Company 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 Company 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 Company stops using the equity method when it does not invest in the associate anymore. Its retained interest in the associate is measured at faire value. The difference between the faire value and disposal proceeds and the book amount of investments as of the date when it stops using the equity method is listed in current profits or losses. 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 Company 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 Company and an associate are recognized in the financial report only to the extent that the equity of the associate owned by the Company is not influenced accordingly.

(7) 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. The Company 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.

(8) Investment Property Investment property refers to the property possessed for earning rents and/or capital appreciation.

Investment property is originally measured at cost (inclusive of transaction cost) and is subsequently measured based on the amount of

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cost less accumulated depreciation and accumulated impairment loss. The Company allocates depreciation on a straight-line basis.

Upon derecognition of Investment property, the difference between the net disposal proceeds and the book amount of such assets is recognized in profits or losses.

• (9) 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 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.

1. Derecongition

2. 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.

3. (10) Impairment of Property, Plant and Equipment, Right-of-use Assets, Investment Property and Intangible Assets

4. The Company evaluates on every balance sheet date whether there is any sign indicating that property, plant and equipment, right-of-use assets, investment property or intangible assets may be 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 Company 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.

(11) 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

• 21 -

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.

(12)

Financial Instruments

Financial assets and financial liabilities are recognized in the balance sheet when the Company 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.

1. Financial Assets

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

• (1) Type of Measurement

Financial assets held by the Company 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. Refer to Note 28 for the method used to determine fair value.

• B. Financial Assets at Amortized Cost

Financial assets invested by the Company 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 amortized cost, etc.) are measured at the amortized cost of the total book amount less any impairment loss determined by the

• 22 -

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 from the reporting period following the reporting period in which credit impairment occurs.

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.

• C. Investments in Equity Instruments at FVTOCI

Upon original recognition, the Company 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 Company’s right to collect payments has been established unless the dividends obviously represent part of the investment cost recovered.

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(2) Impairment of Financial Assets

The Company 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 Company 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 Company 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.

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 Company 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.

Upon derecognition of the entire financial assets measured at amortized cost, the difference between the book amount of the financial assets and the received consideration is recognized in profits or losses. Upon derecognition of the entire investments in equity instruments measured at FVTOCI, the accumulated profits or losses of the investments in equity instruments are transferred to retained earnings directly instead of being reclassified as profits or losses.

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• Equity Instruments

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

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

1. Financial Liabilities

2. (1) Subsequent Measurement

Except for the following circumstances, all financial liabilities are measured at amortized cost by effective interest method:

Financial liabilities measured at fair value through profit or loss include those held for trading and designated at fair value through profit or loss. The financial liabilities held for trading are measured at fair value, and the gains or losses arising from other remeasurements are recognized as other gains and losses.

• (2) Derecognition of Financial Liabilities

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

1. Convertible Corporate Bonds

The compound financial instruments (convertible corporate bonds) issued by the Company are classified as financial liabilities and equity respectively at the time of original recognition according to the essence of the contractual agreement and the definition of financial liabilities and equity instruments.

At the time of initial derecognition, the fair value of the components of the liability 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 components of liabilities embedded in non-equity derivatives are measured at fair value.

The compound financial instruments (convertible corporate bonds) issued by the Company are classified as financial liabilities and equity respectively at the time of original recognition according to the essence of the contractual agreement and the definition of financial liabilities and equity instruments. If the conversion right of convertible corporate bonds has not been executed on the maturity date, the amount recognized in equity will be transferred to capital reserve-issue premium.

(13) Liability Reserve

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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 o the present discounted value of the cash flows expected to repayment of obligations. (14) Revenue Recognition

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

Sales revenue comes from sale of holographic products. The Company recognizes revenue and trade receivables on the point of time when all construal obligations for the sale of products are fulfilled or the customer has obtained the right to control and use the products and assumed the risk of product obsolescence.

For the goods delivered to be processed, revenue is not recognized upon such delivery as the ownership of processed goods is not transferred.

(15) Lease

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

1. The Company 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 Company 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 Company 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.

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2. The Company 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 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 Company 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 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 Company 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 Company chose to deal with the negotiation expediently for the rents in the lease contract

• 27 -

satisfying the aforementioned conditions. The Company 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.

• (16) 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.

(17) Employee Benefits

1. 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.

1. 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.

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 year’s 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.

1. 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.

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• (18) Share-based Payment Arrangement

Shares with restricted employee rights are based on the fair value determined on the grant date and the best estimated quantity expected to be acquired. Expenses are recognized on a straight-line basis within the acquired period, and other rights and interests are adjusted at the same time (employees have not earned remuneration). If it is acquired immediately on the date of grant, the expenses shall be fully recognized on the date of grant.

When the Company issues shares with restricted employee rights, it recognizes other rights and interests (employees have not earned remuneration) on the date of grant, and adjusts the capital reserve-shares with restricted employee rights.

On each balance sheet date, the Company revised the estimated number of shares with restricted employee rights. If the original estimated quantity is revised, the affected quantity will be recognized as profit and loss, so that the accumulated expenses will reflect the revised estimated quantity, and the capital reserve-stock with restricted employee rights will be adjusted accordingly.

Shares with restricted employee rights delivered by the Company's equity instruments to the employees of subsidiaries are regarded as capital investment in subsidiaries, and measured by the fair value of the equity instruments on the given date. They are recognized as an increase in the book value of investment in subsidiaries during the vested period, and other rights and interests are correspondingly adjusted (employees are not paid).

• (19) Treasury Shares

When the Company 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 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.

Shares of the Company held by its subsidiaries are treated as treasury shares.

• (20) Income Tax

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

1. 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.

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

1. 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 carryforwards 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 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 Company expects to recover or repay the book amount of its assets or liabilities as of the balance sheet date.

1. 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.

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

For relevant information not available by the Company 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 Company has taken the recent development of the COVID-19 epidemic in Taiwan and its possible impact on the economic environment into consideration of major accounting estimates related to cash flow estimation, growth rate, discount rate, profitability, etc. The management will continuously 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 Time deposits	December31,2021 $ 6,325 266,291 - $ 272,616	December31,2020
			$ 6,552 319,498 34,176 $ 360,226

(1)	The market interest rate range of time deposits as of the	The market interest rate range of time deposits as of the	balance sheet date is as	balance sheet date is as	balance sheet date is as
	follows: (The interest rate for checking deposits is		0%.)
		December31,2021	December31,2020
	Demand deposits	0.001%-0.10%	0.001%-0.10%
	Time deposits	-		0.32%
(2)	The bank deposits of the Company for the following purposes				have
	been reclassified to other current and non-current		assets.
		December 31, 2021	December 31, 2020
	Other current assets (Note 17)
	Bank short-term loan
	guarantee	$ 112,934	$		-
	Guarantee deposits for
	land leases with Hsinchu
	Science Park	5,000			-
		$ 117,934	$		-
	Other current assets (Note 17)
	Guarantee deposits for
	land leases with
	Hsinchu
	Science Park	$ 5,000	$	5,000
	Guarantee deposits for issuance
	of debentures	173,277		128,445
		$ 178,277	$	133,445

• 31 -

VII. Financial Instruments at FVTPL

December 31, 2021 December 31, 2020

－ Financial assets current

December31,2021 Financial assets－current	December31,2021 Financial assets－current	December31,2020	December31,2020
Measured at fair value through mandatory profit and loss. Derivatives (hedging not specified) Redemption right of convertible corporate bonds (Note 19) $ 3,134 Non-derivative financial assets Beneficiary certificates of funds - $ 3,134 Financial assets－non-current Derivative instruments held for trading (hedging not specified) The right to sell back convertible corporate bonds (Note 19) $ 855 Notes Receivable and Trade Receivables December31,2021 Notes receivable at amortized cost Total book amount $ 8,638 Trade receivables at amortized cost Total book amount $ 113,051 Less: Loss allowance ( 39,820) $ 73,231 Trade receivables from related parties (Note 29) at amortized cost Total book amount $ 201,719 Less: Loss allowance - $ 201,719		$ - 5,265 $ 5,265 $ - December31,2020
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 29) at amortized cost Total book amount Less: Loss allowance
	(	( (	$ 5,323 $ 87,504 50,053) $ 37,451 $ 169,268 61,050) $ 108,218
at

VIII.Notes Receivable and Trade Receivables

• (1) Notes Receivable

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

• (2) Trade Receivables

• 32 -

As for the payments of products sold by the Company, the average credit period is between 60 and 90 days after the date of monthly settlement. No interest accrues for trade receivables. To reduce credit risk, the management of the Company 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 Company 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 Company believes that the Company’s credit risk has significantly reduced.

As shown in the history of credit loss incurred by the Company, the Company uses different standards to evaluate the 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 Company is unable to reasonably expect a recoverable amount, then the Company will write off relevant trade 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	December 31,2021 $ 277,867 12,587 6,680 13,886 3,747 3 $ 314,770	December 31,2020
			$ 171,740 15,682 8,241 34 1,582 59,493 $ 256,772

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

follows:
Beginning balance Add: Acquisition from business combinations Less: Reversal of expected credit impairment loss in the year Less: Amounts written off actually for the year Ending balance	2021 $ 111,103 - ( 61,138 ) (10,145) $ 39,820	2020
		$ 22 111,777 ( 694 ) ( 2) $ 111,103

In January, 2021, the Company converted the book amount of the accounts receivable of Boxlight Corporation to US$ 1,626,000 (which is the accounts receivable of US$ 1,983,000, less the provided

• 33 -

allowance loss of US$ 357,000) into 793,000 shares of Boxlight Corporation, and recorded them under the current assets to be sold.

IX. Inventories

Inventories
Finished goods Work in process Raw materials and supplies Merchandise	December31,2021 $ 19,994 2,472 37,214 24,970 $ 84,650	December31,2020
			$ 11,519 3,276 52,480 16,123 $ 83,398

Cost of goods sold relevant to inventories was NT$1,100,196,000 and NT$666,235,000 respectively in 2021 and 2020.

Gains on recovery of net realizable value of inventories deducted from the cost of goods sold were NT$9,680,000 and NT$561,000 respectively for the years ended on December 2021 and 2020. Recovery of net realizable value was resulted from digestion of the inventories for which depreciation loss was originally allocated.

X. Current Assets Classified as Held for Sale

==> picture [425 x 26] intentionally omitted <==

The board of the Company approved a plan on March 30, 2020 to dispose all of its equity in Boxlight Corporation, an investee company measured by using the equity method. It is expected that the punishment procedure will be completed within 12 months, but the punishment progress has been actively carried out due to the restriction of local laws and regulations. The Company conducted impairment evaluation on the date of the board meeting where the plan was approved, and its book value was less than the fair value on the date. Thus it was reclassified to current assets held for sale based on its book value and was expressed separately in the balance sheet.

As of December 31, 2021, the Company possessed equity in Boxlight Corporation with fair value of NT$63,522,000.

XI. Financial Assets at FVTOCI

Investments in Equity Instruments － Non-current

Domestic investments - non-listed (non-over-the-counter) stocks CM Visual Technology Corp. Chinese Development, Biomedicine and Venture Investment Co., Ltd. Mega Plastic Industry Co., Ltd.	December31,2021 $ - 26,726 2,007 $ 28,733	December31,2020	December31,2020
			$ 459 32,457 2,068 $ 34,984

To achieve objectives in its medium and long-term strategy, the Company has invested in common shares of the aforementioned companies and expected to acquire gains on the long-term investments.

• 34 -

The management of the Company 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.

XII. Investments Accounted for Using the Equity Method

measured at FVTOCI. Investments Accounted for Using	the Equity Method
Investments in subsidiaries Investments in associates	December31,2021 $ 3,613,532 137,945 $ 3,751,477	December31,2020
			$ 3,684,525 123,089 $ 3,807,614

(1) Investments in Associates

Subsidiaries of the Company are listed as follows:

N a m e o f i n v e s t e e c o m p a n y	M a i n b u s i n e s s a c t i v i t i e s	P l a c e o f incorporation and business	December 31,2021	December 31,2021	December 31,2021	December 31,2020	December 31,2020	December 31,2020
			Book amount		Sharehol d i ng％	Book amount		Sharehol d i ng％
Listed (OTC) company Optivision Technology Inc. Non-listed (OTC) company K Laser International Co., Ltd. K Laser China Group Co., Ltd. iWin Technology Co., Ltd. Insight Medical Solutions Inc. Guang Feng International Ltd.	Production and sale of optical instruments and electronic parts and components Reinvestment Reinvestment Reinvestment Research, development and sale of endoscopes used in gastrointestinal tracts Reinvestee company	Hsinchu City British Virgin Islands British Virgin Islands British Virgin Islands Hsinchu City Samoa		$ 574,422 743,919 2,121,577 14,851 142,474 16,289 $ 3,613,532	42 100 100 49 45 100		$ 664,562 671,315 2,065,995 18,359 224,334 39,960 $ 3,684,525	41 100 100 49 45 -

Information of the market price of equity investments in OTC companies accounted for using the equity method that was calculated at the closing price on the balance sheet date is as follows:

Companyname Optivision Technology Inc.	December31,2021 $ 817,073	December31,2020	December31,2020
			$ 1,923,066

1. K Laser International Co., Ltd., which was incorporated in British Virgin Islands in October 2000, is a subsidiary 100% owned by the Company. The Company increased its capital by USD 800,000 in 2021, and as of December 31, 2020 and 2021, the accumulated investment of the Company was USD 20,341,000 and USD 19,541,000 respectively. The Company invests in entities in America, Asia and other foreign countries through K Laser International Co., Ltd. and mainly engages in production and sale of holographic products and fiber-optic communication related components and investment-related business.

2. 35 -

3. K Laser China Group Co., Ltd., which was incorporated in British Virgin Islands in October 2000, is a subsidiary 100% owned by the Company. As of December 31, 2020 and 2021, the accumulated investments made by the Company was about USD21,289,000 and the percentage of shareholding was 100%. The Company invests in Wuxi K Laser Technology Co., Ltd., Dongguan K Laser Technology Co., Ltd., Hunan Herui Laser Technology Co., Ltd. and K Laser Technology (Hong Kong) Co., Ltd. in China indirectly through K Laser China Group Co., Ltd. and mainly engages in production and sale of laser products. The aforementioned indirect investments in China were approved by Investment Commission, MOEA.

4. Everest Display Inc., which was incorporated on July 20, 2001, mainly engages in production and sale of optical instruments and wireless communication mechanical equipment. The Company conducted a short-form merger with Everest Display on May 12, 2020. The record date of merger was June 30, 2020. The Company is the surviving company after the merger. All rights, obligations, claims and liabilities of Everest Display Inc. are assumed by the Company and detailed as follows:

Company and detailed as follows:
Assets assumed: Cash and bank deposits Notes receivable Trade receivables Inventories Prepayments Non-current assets held for sale Other current assets Investments accounted for using the equity method Property, plant and equipment Other non-current assets Liabilities assumed: Short-term borrowings Short-term notes and bills payable Notes payable Trade payables Other payables		Amount
		$ 36,464 57 40,419 62,625 386 15,418 778 25,034 2,356 5,376 188,913 244,234 49,982 612 31,292 4,966

（ To be continued ）

• 36 -

（ continued ）

Other payables - related parties Current liabilities Net assets		Amount
	(	$ 30,823 70,647 432,556 $ 243,643)

1. Guang Feng International Ltd. had been a subsidiary 100% owned by Everest Display Inc. As the Company conducted a short-form merger with Everest Display Inc., Everest International became a subsidiary directly owned by the Company.

2. On December 24, 109, the Company was approved by the board of directors to participate in the cash capital increase of Optivision Technology Incorporated, and on December 31 of the same year, it subscribed for 3,267,000 shares of ordinary shares of Optivision Technology Incorporated for USD 228,719,000, with a shareholding ratio of 41% after the capital increase.

3. (2) Investments in Associates

Associates of the Company are listed as follows:

Name of investee company Vicome Corp.	Main business activities Manufacturing, processing, purchase and sale of fluorescent pigments and dyes	Place of incorporatio n and business Yunlin County		December 31,2021 Book amount Sharehol ding％ $ 137,945 30		December 31,2020	December 31,2020
				Book amount $ 137,945		Book amount $ 123,089	Sharehol ding％
							30

The financial information of the Company’s associates is compiled as follows:

as follows:
Total assets Total liabilities Operating revenue for the year Net profit for the year Other comprehensive income (loss) for the year	December31,2021 $ 628,889 $ 172,266 2021 $ 168,523 $ 66,897 ($ 7,720)	December31,2020
			$ 622,149 $ 214,704 2020
	(	(	$ 132,317 $ 40,276 $ 5,661)

The Company’s share of the profits (or losses) and other comprehensive incomes (or losses) of its associates recognized by the Company 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.

• 37 -

Investment gains and losses recognized for long-term equity investment treated by the equity method, including the 2021 and 2020 financial statements of Vicome Corp., Insight Medical Solutions Inc., Amagic Technologies U.S.A. (Dubai), the reinvestment company of K Laser International Co., Ltd., and K Laser International Co., Ltd. (Hong Kong), the reinvestment company of K Laser China Group Holding Co., Ltd, and the 2020 financial statements of Amagic Holographics India Private Limited were not audited by the certified public accountant of the company, but by other accountants. On December 31, 2021 and 2020, the investment amount of the above equity method was NT $397.729,000 and NT $436.955,000 respectively; The amount of investment profit and loss recognized by the invested company adopting the equity method in 2021 and 2020 was NT $52,908,000 for loss and NT $42,475,000 for profit, respectively.

XIII. Property, Plant and Equipment

Property, Plant and Equipment
House and building Machinery equipment Other equipment Unfinished construction and equipment pending acceptance	December31,2021 $ 97,342 18,343 49,526 501 $ 165,712	December31,2020
			$ 103,787 23,089 26,332 5,849 $ 159,057

Cost Balance on January 1, 2021 Add Disposal Reclassification Balance at December 31, 2021 Accumulated depreciation and impairment Balance on January 1, 2021 Depreciation expense Disposal Reclassification Balance at December 31, 2021 Net amount at December 31, 2021	Houses and b u i l d i n g s $ 339,149 718 - ( 258) $ 339,609 $ 235,362 6,916 - ( 11) $ 242,267 $ 97,342	Machinery a n d equipment $ 151,133 3,282 - ( 2,305) $ 152,110 $ 128,044 8,166 - ( 2,443) $ 133,767 $ 18,343	O t h e r equipment $ 125,069 33,897 ( 175 ) 4,816 $ 163,607 $ 98,737 13,032 ( 142 ) 2,454 $ 114,081 $ 49,526	Unfinished works and equipment to be inspected $ 5,849 501 ( 3,396 ) ( 2,453) $ 501 $ - - - - $ - $ 501	T o t a l
	( (	( (			$ 621,200 38,398 ( 3,571 ) ( 200) $ 655,827 $ 462,143 28,114 ( 142 ) - $ 490,115 $ 165,712

(Continued)

• 38 -

(Continued)

ued)
Cost Balance at January 1, 2020 Addition Disposition Acquisition of business combinations Reclassification Balance at December 31, 2020 Accumulated depreciation and impairment Balance at January 1, 2020 Depreciation expense Disposition Acquisition of business combinations Reclassification Balance at December 31, 2020 Net at December 31, 2020	House and b u i l d i n g $ 316,185 162 ( 8,228 ) - 31,030 $ 339,149 $ 216,304 6,834 ( 8,228 ) - 20,452 $ 235,362 $ 103,787	Machinery equipment $ 217,655 4,038 ( 70,560 ) - - $ 151,133 $ 189,228 9,376 ( 70,560 ) - - $ 128,044 $ 23,089	O t h e r equipment $ 148,734 4,737 ( 31,881 ) 3,617 ( 138) $ 125,069 $ 120,565 8,679 ( 31,677 ) 1,261 ( 91) $ 98,737 $ 26,332	Unfinished construction a n d equipment p e n d i n g acceptance $ 3,396 2,453 - - - $ 5,849 $ - - - - - $ - $ 5,849	T o t a l
					$ 685,970 11,390 ( 110,669 ) 3,617 30,892 $ 621,200 $ 526,097 24,889 ( 110,465 ) 1,261 20,361 $ 462,143 $ 159,057

(1) Property, plant and equipment of the Company 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 2~15 years Other equipment 3~11 years

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

December 31, 2021 December 31, 2020 House and building ~~$ 97,342 $ 103,787~~ Investment property 36,590 37,869 ~~$ 133,932 $ 141,656~~

XIV. Lease Agreement

• (1) Right-of-use Assets

Right-of-use Assets
Book amount of right-of-use assets Land Building Transportation equipment	December31,2021 $ 65,148 1,713 3,924 $ 70,785	December31,2020
			$ 69,220 2,569 1,840 $ 73,629

• 39 -

Added right-of-use assets Expense of depreciation of right-of-use assets Land Building Transportation equipment		2021 $ 3,655 $ 4,072 856 1,571 $ 6,499		2020
				$ 712 $ 4,072 856 1,835 $ 6,763

• (2) Lease Liabilities

Lease Liabilities
Book amount of lease liabilities Current Non-current	December31,2021 $ 6,023 $ 66,131	December31,2020
			$ 6,023 $ 68,598

The	range of discount	rates for lease liabilities	is as follows:
		December31,2021	December31,2020
Land		1.4%	1.4%
Building		1.5%	1.5%
Machinery	equipment	1.5%～1.83%	1.5%

• (3) Other Lease Information

Other Lease Information
Low-value asset lease expenses Total cash outflow from leases		2021 $ 189 $ 7,324		2020
				$ 178 $ 7,580

The 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.

XV. Investment Property

Investment Property
Investment property	December31,2021 $ 36,590	December31,2020
			$ 37,869

• 40 -

Cost Balance at January 1 Disposition for the year Reclassification Balance at December 31 Accumulated depreciation and impairment Balance at January 1 Depreciation expense Disposition for the year Reclassification Balance at December 31		2021 $ 130,902 - - $ 130,902 $ 93,033 1,279 - - $ 94,312	2020
			$ 163,903 ( 1,971 ) ( 31,030) $ 130,902 $ 113,995 1,461 ( 1,971 ) ( 20,452) $ 93,033

The aforementioned investment property was depreciated based on the following service lives on a straight-line basis.

House and building	50 years
House furnishings	10 years

The Company appraised investment property based on the evaluation report and the fair value of investment property as of December 31, 2021 and 2020 was NT$95,386,000 and NT$98,642,000 respectively. XVI. Other Intangible Assets

Other Intangible Assets
Book amount of each category Computer software cost Cost Balance at January 1 Acquisition for the year Disposition Balance at December 31 Accumulated amortization and impairment Balance at January 1 Amortization expense Disposition Balance at December 31	December31,2021 $ 1,684 2021 $ 4,809 - ( 11) $ 4,798 $ 2,416 709 ( 11) $ 3,114	December31,2020
			$ 2,393 2020
	( (	( (	$ 5,980 148 1,319) $ 4,809 $ 2,971 764 1,319) $ 2,416

Amortization expenses of the aforementioned intangible assets were allocated base on their respective service lives on a straight-line basis of 3~5 years.

• 41 -

XVII. Other Assets

Other Assets
Refundable deposits Prepaid expenses and prepayments Restricted assets (Note 6) Others Current Non-current	December31,2021 $ 14,409 14,293 296,211 2,653 $ 327,566 $ 133,354 194,212 $ 327,566	December31,2020
			$ 15,530 15,838 133,445 3,211 $ 168,024 $ 16,781 151,243 $ 168,024

XVIII. Borrowings

• (1) Short-term Borrowings

Bank credit loan Bank guaranteed loan (see note 30)	December	31, 2021 Amount $ 350,000 100,000 $ 450,000	Decembe	r 31, 2020	r 31, 2020
	Interestrate 0.85%～1% 0.34%		Interestrate		Amount
			0.85%～1.4% -		$ 430,000 - $ 430,000

The bank credit loans of the company as of December 31, 2021 and 2020 were jointly guaranteed by the chairman of the company, Mr. Guo Weiwu, and the bank guaranteed loans were guaranteed by bank deposits. Please refer to note 30 for further details. (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

Guarantee / acceptance institution Commercial paper payable International ticket China ticket Mega ticket Dah Chung tickets	Face amount	Face amount		Discount amount		Carrying amount	Interest rate range 0.958% 0.978% 0.988% 0.950%
		$ 30,000 50,000 50,000 30,000 $ 160,000		$ 9 5 24 14 $ 52		$ 29,991 49,995 49,976 29,986 $ 159,948

• 42 -

December 31, 2020

Guarantee/acceptanc einstitution Commercial paper payable International Bills Finance Corp. China Bills Finance Corp. Mega Bills Finance Corp. Taiwan Finance Corp. Ta Ching Bills Finance Corp. Dah Chung Bills Finance Corp.		Face value $ 50,000 50,000 50,000 50,000 50,000 50,000 $ 300,000		Discount $ 29 7 13 6 21 7 $ 83	Book amount $ 49,971 49,993 49,987 49,994 49,979 49,993 $ 299,917	Interest rate range
						0.938% 0.978% 0.978% 0.958% 0.978% 0.978%

Mr. Kuo Wei-Wu, Chairman of the Company, was a joint guarantor for the short-term notes and bills payable of the Company as of December 31, 2021 and 2020.

• (3) Current Portion of Long-term Liabilities

December 31, 2021 December 31, 2020 Current portion of long-term loans $ - $ 100,000

• (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.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.	December 31,2021 Interest rate ％ Amount - $ - - - 1.08 350,000	December 31,2020
	Interest rate ％ - - 1.08	Interest rate ％ 0.66 1.79 -	Amount
			$ 400,000 400,000 -

(Continued)

• 43 -

(Continued)

d)
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. 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	December 31,2021 Interest rate ％ Amount 1.15 $ 44,000 - - 1.04 100,000 - - - - - - 1.05 100,000 - -	December 31,2020
	Interest rate ％ 1.15 - 1.04 - - - 1.05 -	Interest rate ％ 1.2 0.99 - 1.47 1.55 1.22 - 0.95	Amount
			$ 100,000 80,000 - 50,000 50,000 100,000 - 100,000

(Continued)

• 44 -

（ continued ）

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 Panshin A credit loan for the period between July 2020 and May 2022, with interest to be paid every month, and principal to be repaid averagely every season from the 13thmonth . 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	December 31,2021 Interest rate% Amount - $ - - - 0.93 150,000 1.19 50,000 - $ 794,000	December 31,2021 Interest rate% Amount - $ - - - 0.93 150,000 1.19 50,000 - $ 794,000	December 31,2020	December 31,2020	December 31,2020
	Interest rate% - - 0.93 1.19		Interest rate% 1.23 1.3 - -		Amount
				(	$ 50,000 20,000 - - 100,000) $ 1,250,000

1. For enriching its working capital and repaying corporate bonds, the Company had Taipei Fubon Bank arrange a syndicated loan. The Company then entered into a syndicated loan contract with 9 financial institutions in November 2019. The total line of credit was NT$800,000 thousand. As of December 31, 2020, the amount of drawdowns was NT$800,000 thousand and the balance of borrowed money was NT$800,000 thousand. The joint loan contract was fully repaid in advance in October 2021. According to the provisions of the joint loan contract, the company shall maintain the following financial ratios in the company's annual consolidated financial statements before paying off all the debts of the contract:

2. (1) Current ratio (i.e. the ratio of current assets to current liabilities) shall not be less than 100%.

3. (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%.

4. (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%.

5. (4) Tangible net worth shall not be less than NT$ 2,600,000 thousand.

6. 45 -

7. 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. Guo Weiwu, as the joint guarantor, and the real estate, plant and equipment and investment real estate as collateral.

XIX. 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.

• 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.

1. Conversion price and adjustment:

2. 46 -

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, 2011, 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%.

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

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. Guo Weiwu, chairman of K Laser, is the joint guarantor. Please refer to Notes 6, 29 and 30.

• 47 -

XX. Other payables

her payables
December 31, 2018 Interest payable Remuneration payable to employees and directors and supervisors Labor fee payable Processing fee payable Payable for equipment purchase Other	December31,2021 $ 19,744 301 29,800 1,752 2,548 1,143 37,348 $ 92,636	December31,2020
			$ 17,520 436 16,712 3,566 3,595 1,506 39,933 $ 83,268

XXI. Post-employment Benefit Plan

• (1) Defined Contribution Plan

The retirement pension system provided in the Labor Pension Act, which is applicable to the Company, refers to the defined contribution plan managed by the government. The 6% of the monthly wages of an employee is allocated to the specific account of the individual with Bureau of Labor Insurance.

The amounts allocated for the years ended December 31, 2021and 2020 by the Company at the specific percent provided in the defined contribution plan have been recognized as expenses in the amount of NT$5,115 thousand and NT$4,665 thousand respectively in the 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 the Company, refers to the defined benefit plan managed by the government. 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. The Company 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 Company has no right to influence its investment and management strategies.

• 48 -

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

listed as follows:
Present value of a defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December31,2021 $ 46,013 ( 25,855) $ 20,158	December31,2020
	(	(	$ 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 Actuarial losses－ Changes in demographic assumptions Actuarial losses－ Changes in financial assumptions Actuarial losses－ Experience adjustments Actuarial losses－ Changes in demographic assumptions Recognized in other comprehensive income (loss) Employer’s contributions Benefit payment Balance at December 31, 2020 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	Present value of a defined benefit obligation Fair value of plan assets $ 49,662 ($ 24,164) 488 - 372 ( 184) 860 ( 184) - ( 783 ) 843 - 989 - ( 1,285) - 547 ( 783) - ( 600 ) ( 6,450) - 44,619 ( 25,731) 459 - 223 ( 130) 682 ( 130) - ( 323 ) 1,443 - ( 509 ) - 686 - 1,620 ( 323) ( 579 ) ( 908) 908 $ 46,013 ($ 25,855)	Net defined benefit liabilities	Net defined benefit liabilities
	( ( ( (	( ( ( ( ( ( (	$ 25,498 488 188 676 783 ) 843 989 1,285) 236) 600 ) 6,450) 18,888 459 93 552 323 ) 1,443 509 ) 686 1,297 579 - $ 20,158

• 49 -

The amounts with respect to the defined benefit plan recognized in profit (loss) are complied 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 Company is exposed to the following risks with respect to the retirement pension system provided by the Labor Standards Act.

1. Investment Risk: Bureau of Labor Funds, Ministry of Labor invests the labor pension fund by itself or though 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.

2. 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.

3. 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. The present value of defined benefit obligations of the Company is

calculated by a qualified actuary. Material assumptions on the measurement date are as follows:

==> picture [411 x 52] intentionally omitted <==

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:

December 31, 2021 December 31, 2020

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

• 50 -

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 11.0年	December31,2020	December31,2020
			$ 579 11.5年

XXII. Equity

• (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 200,000 $ 2,000,000 165,969 $ 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.

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

The balance of each type of capital reserve as of December 31, 2021 and 2020 is as follows:

value of NT＄10 per share. Capital Reserve The balance of each type 2021 and 2020 is as follows:	of capital reserve as	of December 31,	of December 31,
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)~~ ~~Reco~~gnized changes in ownership interest in subsidiaries Not used for any purpose ~~Stock option~~ RSA	December 31, 2021 $ 467,997 28,216 93,210 61,961 19,262 38,913 ~~$ 709,559~~	December 31, 2020
			$ 454,275 28,216 69,189 33,667 - - ~~$ 585,347~~

• 51 -

• 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 2 and 3.

The Company 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. The company held an ordinary shareholders' meeting on May 28, 2020 and passed the resolution that due to the loss in 2019, there will be no distribution.

• 52 -

The board of directors of the company was held on March 23, 2011, and the resolution passed the 2020 annual surplus distribution plan 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:

directors as follows:
Resolution date of the board of directors Legal reserve Special 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 proposal of earning distribution for the year 2021 will be resolved at the shareholders’ meeting to be held on May 27, 2022. (4) Other Equity

1.	Exchange differences	on	translation	translation	of	foreign	financial
	statements:
				2021			2020
	Beginning balance		( $ 287,085 )			( $ 278,472 )
	Exchange differences
	arising on translating net
	assets of foreign operations		(	86,277 )		(	8,874 )
	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 Company (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

• 53 -

reclassified as profit or low upon disposal of the foreign operations.

1. Unrealized Gains (Losses) on Financial Assets at FVTOCI

Beginning balance Unrealized appraisal profit (loss) of equity instrument investment measured at fair value through other comprehensive profits and losses Share of other comprehensive income (loss) of associates accounted for using the equity method Partial interests of subsidiaries Ending balance		2021 $ 30,403 ) 2,749 2,978 ) 8) $ 30,640)		2020
	( ( ( (		( ( (	$ 33,033 ) 4,697 ) 6,329 998 $ 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).

1. 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 26.

refer to note 26.
Opening balance Current issue Changes in ownership interests of recognized subsidiaries Basic payment expenses of recognized shares Ending balance		Year 2021 $ - 88,913 ) 11,068 4,972 $ 72,873)		Year 2020
	( (			$ - - - - $ -

(5) Treasury Shares

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

Unit: Share

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

• 54 -

			2020
R e a s o n o f possessing shares Shares transferred to employees Shares of the parent company possessed by subsidiaries	N u m b e r o f shares at the beginning of the y e a r 6,000,000 2,750,000 8,750,000	t	Increase in h e y e a r 6,000,000 - 6,000,000	t	Decrease in h e y e a r 2,905,000 ) 2,750,000) 5,655,000)	N u m b e r o f shares at the end o f t h e y e a r
				( ( (			9,095,000 - 9,095,000

1. 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 Company 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.

2. 309,5000 shares transferred to employees were cancelled on February 14, 2022.

XXIII. Net Profit of Continuing Operations

Employee Benefit Expense and Depreciation and Amortization Expenses

Short-term employee benefits Post-employment benefits Other employee benefits Depreciation expense Depreciation of property, plant and equipment Depreciation of right of use assets Depreciation of investment real estate Amortization expense Short-term employee benefits Post-employment benefits Other employee benefits			Year 2021	Year 2021
	Operating costs $ 41,834 $ 2,109 $ 1,035 $ 13,155 1,601 - $ 14,756 $ -		Operating expenses Non-operating expenses and losses $ 109,313 $ - $ 3,558 $ - $ 1,037 $ - $ 14,959 $ - 3,351 1,547 - 1,279 $ 18,310 $ 2,826 $ 709 $ - 2020			Total
						$ 151,147 $ 5,667 $ 2,072 $ 28,114 6,499 1,279 $ 35,892 $ 709
	Operating costs $ 35,561 $ 1,979 $ 597		Operating expenses $ 88,656 $ 3,362 $ 698	Non-operating expenses and losses $ - $ - $ -		Total
						$ 124,217 $ 5,431 $ 1,295

(Continued)

• 55 -

(Continued)

Depreciation expense Depreciation of property, plant and equipment Depreciation of right-of-use assets Depreciation of investment property Amortization expense			Year 2020	Year 2020
	Operating costs		O p e r a t i n g e x p e n s e s $ 11,228 3,562 - $ 14,790 $ 764	Non-operating expenses and l o s s e s $ - 1,715 1,461 $ 3,176 $ -	T	o t a l
		$ 13,661 1,486 - $ 15,147 $ -				$ 24,889 6,763 1,461 $ 33,113 $ 764

The Company 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

Employees’ remuneration Directors’ remuneration Amounts Employees’ remuneration Directors’ remuneration	2021 6% 1.5% 2021 Cash Stock $ 23,840 $ - 5,960 -	2021		2020	2020
				8% 2% 2020
	Cash		Cash $ 13,370 3,342		Stock
	$ 23,840 5,960				$ - -

If any amount is changed after the date when the annual 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 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 individual financial report in 2020.

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

• 56 -

XXIV. Income Tax of Continuing Operations

(1) Income Tax Recognized in Profit or Loss

The income tax expense mainly comprises the items listed as follows:

Deferred income tax Incurred for the current year Income tax expense recognized in profit or loss		2021 $ 2,400 $ 2,400		2020
				$ 6,000 $ 6,000

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

	as follows:
			2021		2020
	Profit (loss) before tax of
	continuing operations	$	366,125	$	150,409
	Income tax expense of net
	profit before tax calculated
	at legal tax rate	$	73,000	$	30,100
	Investment interests recognized
	by equity method	(	44,700 )	(	40,400 )
	Reduction of investee
	companies’ capital to cover
	losses		-	(	25,500 )
	Dividend income from foreign
	investments		22,400		52,100
	Gains on disposals of domestic
	equity investments		-	(	500 )
	Disposal of foreign equity
	investment	(	23,900 )		-
	Deduction of losses not
	recognized in the previous
	period and used in the
	current period	(	5,900 )		-
	Other	(	8,600 )		8,100
	Withholding tax on foreign
	dividend income	(	9,900)	(	17,900)
	Income tax expense recognized
	in profit (loss)	$	2,400	$	6,000
(2)	Current Tax Assets
		December31,2021		December31,2020
	Current tax assets
	Tax refund receivable	$	208	$	208
(3)	Deferred Tax Assets
		December31,2021		December31,2020
	Temporary difference	$	9,400	$	5,800
	Loss carryforwards		-		6,000
	Deferred tax assets	$	9,400	$	11,800

• 57 -

• (4) Information relevant to the loss carryforwards not recognized as of December 31, 2021 is as follows:

December 31, 2021 is as follows:
Loss carryforwards Due in 2022 Due in 2023 Due in 2026	December31,2021
		$ 30,006 4,634 2,620 $ 37,260

• (5) Income Tax Assessment

• The profit-seeking enterprise annual income tax returns filed by the Company as of 2019 (inclusive) have been assessed by the tax authority.

• XXV. Earnings Per Share

The basic and diluted earnings per share of the company in 2021 and 2020 are calculated as follows:

Basic earnings per share Current net profit attributed to shareholders of common shares Impact of potential common shares with dilutive effect Convertible corporate bonds Employees’ remuneration RSA Diluted earnings per share Current net profit attributed to shareholders of common shares			2021		Earnings per share (NTD) After tax $ 2.42 $ 2.14			2020
		Amount (Numerator) After tax $ 363,725 2,692 - - $ 366,417	Number of shares (Thousand Shares) (Denominator) 150,243 18,825 1,086 737 170,891				Amount (Numerator) After tax $ 144,409 - - - $ 144,409	Number of shares (Thousand Shares) (Denominator) 150,947 - 686 - 151,633		Loss per share (NTD)）
										After tax
										$ 0.96 $ 0.95

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.

XXVI. Share-based Payment Arrangement

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.

• 58 -

• (1) The rights of employees who have not met the acquired conditions after being allocated new shares are as follows:

• Except for inheritance, the RSA shall not be sold, pledged, transferred, given to others, encumbered, or disposed of in other ways.

• 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.

• 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.

• 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.

• (3) The basic payment of equity settlement shares to employees is measured by the fair value of equity instruments on the day of giving.

• (4) In case of failure to meet the acquired conditions, voluntary resignation, dismissal, dismissal or violation of the issuance rules, 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:

Outstanding at the beginning of the period Current grant Outstanding at the end of the period	December31,2021	December31,2021
	Number of shares ( t h o u s a n d )
		- 5,000 5,000

The remuneration cost recognized for the year 2021 was NT$4,972 thousand.

• 59 -

XXVII. Capital Risk Management

The Company 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.

XXVIII. Financial Instruments

• －

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

The management of the Company 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 on a recurring basis

• Hierarchy of Fair Value

December 31, 2021

December 31, 2021
Financial assets measured at fair value through profit or loss Derivative instruments Financial assets measured at fair value through other comprehensive profit or loss Equity instrument investment - domestic unlisted (counter) ordinary shares Financial liabilities at fair value through profit or loss Derivative instruments December 31, 2020		Level 1 $ - $ - $ - Level 1 $ 5,265 $ -		Level 2 $ - $ - $ - Level 2 $ - $ -		Level3 $ 3,134 $ 28,733 $ 855 Level3 $ - $ 34,984		Total
								$ 3,134 $ 28,733 $ 855 Total
Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Investments in equity instruments －Domestic common shares not listed (OTC)
								$ 5,265 $ 34,984

• 60 -

• There was no transfer between level 1 and level 2 fair value measurements in 2021 and 2020.

• 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 Valuation technique and input value Domestic and foreign Market approach: Make adjustments based on investments in the price-to-earning ratio and market price/net non-listed(non-OTC) equity worth of the investee company at fair value of a observable, comparable company at the end of the year.

Derivative instruments

• 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.

• (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 (including related parties) Refundable deposits Restricted assets 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 payable (including related parties) Long-term borrowings (including current portion thereof) Corporate bonds payable Guarantee deposits received (listed as non-current liabilities-Others) Financial liabilities at fair value through profit or loss - non-current	December 31, 2021 $ 272,616 283,588 3,267 14,409 296,211 3,134 28,733 450,000 159,948 239,326 92,636 794,000 552,053 942 855	December 31, 2020
		$ 360,226 150,992 9,991 15,530 133,445 5,265 34,984 430,000 299,917 111,457 83,268 1,350,000 - 942 -

• 61 -

• (4) Purpose and Policy of Financial Risk Management

The 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 Company 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.

1. Market Risk

Main market risks assumed by the Company for its operating activities are exchange rate risk and interest rate risk. The Company 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 Company 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 31 for book amounts of monetary assets and monetary liabilities of the Company in non-functional currencies on the balance sheet date.

The sensitivity analysis conducted by the Company 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 2021 2020 Effect on profit and loss $ 2,930 $ 5,399

(2) Interest Rate Risk

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

• 62 -

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

With cash flow interest rate risk Financial assets Financial liabilities	December31,2021 $ 117,934 794,000	December31,2020
		$ - 1,350,000

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 Company would increase by NT$6,761 thousand and by NT$13,500 thousand respectively for the years ended December 31, 2021 and 2020.

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 Company.

The Company requires the counterparty to an important transaction to provide a collateral or any other guarantee, so the Company is able to reduce credit risk effectively. The management of the Company 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 Company 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 Company believes that the Company’s credit risk has significantly reduced.

1. Liquidity Risk

The working capital of the Company 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

Company as Attachment are due and repayable as follows:

Non-derivative financial liabilities Non-interest bearing liabilities Lease liabilities Floating rate liabilities Fixed rate liabilities		December31,2021	December31,2021
	Less than 1 y e a r $ 331,962 7,009 - 609,948 $ 948,919	2 ~3 years $ - 12,722 794,000 - $ 806,722	More than 3 y e a r s $ - 60,316 - 552,053 $ 612,369	T o t a l
					$ 331,962 80,047 794,000 1,162,001 $ 2,368,010

• 63 -

December31,2020 Less than 1 y e a r2～3 years Over 3 years T o t a l Non-derivative financial liabilities Liabilities without interest $ 194,725 $ - $ - $ 194,725 Lease liabilities 7,031 11,437 64,954 83,422 Floating rate liabilities 100,000 1,250,000 - 1,350,000 Fixed rate liabilities 729,917 - - 729,917 $ 1,031,673 $ 1,261,437 $ 64,954 $ 2,358,064 inancing limit December31,2021 December31,2020 Unsecured bank loan commitment -Used in the credit line $ 954,000 $ 1,280,000 -Unused in the credit line 1,211,360 585,960 $ 2,165,360 $ 1,565,960 Secured bank loan commitment -Used in the credit line $ 450,000 $ 800,000 - Unused in the credit line 610,000 - $ 1,060,000 $ 800,000 Amount of secured corporate bonds - amount used $ 600,000 $ - - unspent amount 20,000 - $ 620,000 $ -		December31,2020	December31,2020	December31,2020	December31,2020	December31,2020
	Less than 1 y e a r		Over		3 years T o t a l - $ 194,725 64,954 83,422 - 1,350,000 - 729,917 64,954 $ 2,358,064 December31,2020		T o t a l
				$
				$
						$ 1,280,000 585,960 $ 1,565,960 $ 800,000 - $ 800,000 $ - - $ -

• (2) Financing limit

XXIV. Transactions with Related Parties

• Transactions between the Company and other related parties are as

• follows:

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

Relationship with the Name of related party Company Optivision Technology Inc. (“Optivision Technology”) A subsidiary Everest Display Inc. (“Everest Display”) Subsidiary (merged with the Company on June 30, 2020) K Laser Technology (Korea) Co., Ltd. (“K Laser Korea”) A subsidiary K Laser Technology (Thailand ） Co., Ltd. (“K Laser Thailand”) A subsidiary

K Laser Technology (Korea) Co., Ltd. (“K Laser Korea”) K Laser Technology (Thailand ） Co., Ltd. (“K Laser Thailand”)

(Continued)

• 64 -

(Continued)

Relationship with the N a m e o f r e l a t e d p a r t y c o m p a n y K Laser Technology (USA ） Co., Ltd. (“K Laser USA”) A subsidiary Amagic Technologies U.S.A. (Dubai ） (“ Amagic Dubai”) A subsidiary K Laser Technology Japan Co., Ltd. (“K Laser Japan” ） A subsidiary K Laser Technology (Hong Kong) Co., Ltd. (“K Laser A subsidiary Hong Kong”) Holomagic Co., Ltd. ( “Holomagic” ） A subsidiary Treasure Access Limited (“Treasure”) A subsidiary Top Band Investment Limited ( “Top Band”) A subsidiary K Laser Technology (Wuxi) Co., Ltd. ( “K Laser (Wuxi)”) A subsidiary Herui Laser Technology Co., Ltd. ( “Herui Laser”) A subsidiary K Laser Technology (Dongguan) Co., Ltd. ( K Laser A subsidiary (Dongguan)” ） Amagic Holographics India Private Limited ( “ Amagic A subsidiary India” ） Insight Medical Solutions Inc. (“IMS”) A subsidiary Xinguang Laser Co., Ltd. (“Xinguang Laser”) It had been an associate evaluated by using the equity method, and became a subsidiary in December 2011. Guangfeng Optoelectronics (Wuxi) Co., Ltd. An associate evaluated (“Guangfeng Optoelectronics (Wuxi)”) by using the equity method

• (2) Operating Transactions

Operating Transactions
Sale Subsidiaries K Laser USA K Laser Japan Others Purchase Subsidiaries K Laser (Dongguan) K Laser (Wuxi) Treasure Top Band Others		2021 $ 494,303 105,956 26,704 $ 626,963 $ 393,771 46,111 71,798 - 1,538		2020
				$ 363,030 65,186 36,992 $ 465,208 $ 323,921 21,898 13,038 9,947 7,982

(Continued)

• 65 -

Affiliated Enterprises Guangfeng Optoelectronics (Wuxi) Operating expenses Subsidiaries Other income Subsidiaries Optivision Technology IMS Everest Display K Laser (Dongguan) K Laser (Wuxi) Others		2021 $ 11,379 $ 524,597 $ 2,109 $ 13,222 5,853 - 44,636 6,678 92 $ 70,481		2020
				$ - $ 376,786 $ 12,900 $ 13,579 5,270 2,186 21,288 1,416 19 $ 43,758

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

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

Trade receivables from related parties Subsidiaries K Laser USA K Laser Japan Others Trade payables to related parties Subsidiaries K Laser (Dongguan) Treasure K Laser (Wuxi) Others	December31,2021 $ 163,269 31,614 6,836 $ 201,719 $ 134,914 31,154 20,608 3,303 $ 189,979	December31,2020	December31,2020
			$ 80,078 23,342 4,798 $ 108,218 $ 55,467 10,971 7,237 1,618 $ 75,293

(Continued)

• 66 -

(Continued)

Other receivables Subsidiaries Optivision Technology K Laser (Wuxi) IMS Amagic India Others Other payables Subsidiaries	December31,2021 $ 1,985 - 1,002 - 126 $ 3,113 $ 159	December31,2020	December31,2020
			$ 2,006 1,437 1,008 618 132 $ 5,201 $ 343

• (4) Real estate, plant and equipment acquired

Related party category /name Subsidiaries	L o a n o b	L o a n o b	t a i n e d	t a i n e d
		2021 $ -		2020
				$ 178

• (V) Endorsement and Guarantee

As at December 31, 2021 and 2020, the balance of borrowings owed by Mr. Guo Weiwu, Chairman of the Board of directors of the Company as guarantor was NT ＄ 1,244,000 and NT ＄ 1,780,000 respectively(see note XVIII).

• (6) Rewards and remuneration for major management levels

Short-term employee benefits Post-employment benefits		Year 2021 $ 26,341 $ 718		Year 2020
				$ 19,370 $ 6,450

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

• 67 -

XXX. Pledged assets

The following assets of the Company were provided as guarantees for loans under loan contracts or land leases and for the need of business operation.

operation.
Bank deposits (Note 6) Property, plant and equipment (Note 13) Investment property (Note 13)	December31,2021 $ 296,211 97,342 36,590 $ 430,143	December31,2020
			$ 133,445 103,787 37,869 $ 275,101

XXXI. Exchange rate information of foreign currency financial assets and

liabilities

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

Unit: Per thousand in foreign currency / NT dollars

Financialassets Monetary item USD CNY Long-term equity investments accounted for using the equity method USD CNY Financial l i a b i l i t i e s Monetary item USD	December31,2021 Foreign currency Exchange rate NTD $ 18,561 27.68 $ 513,768 886 4.344 3,849 27,412 27.68 758,764 488,392 4.344 2,121,575 7,976 27.68 220,776	December31,2021 Foreign currency Exchange rate NTD $ 18,561 27.68 $ 513,768 886 4.344 3,849 27,412 27.68 758,764 488,392 4.344 2,121,575 7,976 27.68 220,776	December31,2020	December31,2020	December31,2020
	Foreign currency $ 18,561 886 27,412 488,392 7,976	Exchange rate 27.68 4.344 27.68 4.344 27.68	Foreign currency $ 22,200 394 24,358 473,314 3,242	Exchange rate 28.48 4.377 28.48 4.377 28.48	NTD
					$ 632,248 13,807 693,707 2,071,695 92,326

XXXII. Information of Segments

As the Company has disclosed information of segments in the consolidated financial report, such information is not disclosed separately in the financial report.

XXXIII. Disclosure of notes

(1) Material Transactions and Reinvestment-related Information:

N o .	Item	E x p l a n a t i o n
1	Funds lent to others	Attachment 1
2	Enforcement and guarantee for others	None
3	Negotiable securities held at the end of the year (not including investments in subsidiaries, associates and joint ventures)	Attachment 2

（ to be continued ）

• 68 -

（ continued ）

No.	Item	Explanation
4.	Accumulated purchases or sales of negotiable securities up to NT$300millionor 20% ofthe paid-incapital	None
5	Acquisition cost of real estate up to NT$300 million or 20% of the paid-incapital	None
6	Proceeds up to NT$300 million or 20% of the paid-in capital fromdisposalof realestate	None
7	Purchases from or sales to related parties up to NT$300 million or 20% ofthe paid-incapital	Attachment 3
8	Receivables from related parties up to NT$100 million or 20% ofthe paid-incapital	Attachment IV
9	Transactions of derivatives	None
10	Information of reinvestee companies	Attachment V

( 二 ) 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, current profit or loss, recognized investment gain or loss, book value of investments at the end of the year, investment gain (loss) remitted back already, and limit of investmentsin Mainland China	Attachment VI
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 relevantreceivables	Attachment VI
	(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

(3) Information of Main Shareholders:

Name of Shareholder Holding Over 5% of Equity, Number of Shares Held and Ratio of Shareholding (Attachment 7)

• 69 -

K Laser Technology Inc.

Funds of the Company and Reinvestee 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?	Maximum balance of t h e 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)	A m o u n t o f b u s i n e s s	R e a s o n o f s h o r t - t e r m f i n a n c i n g	A l l o c a t e d a m o u n t o f allowance for b a d d e b t s	Security	Security	Limit of funds lent to an individual entity (Note 3)	Total limit of lending (Note 3)	Remark
													N a m e	V a l u e
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 its 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 its 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 its 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).

• 70 -

K Laser Technology Inc.

Endorsement and Guarantee for Other Entities

From January 1 to 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		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 held for sale Current assets held for sale 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 5 and Attachment 6.

• 71 -

K Laser Technology Inc.

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 3 Unit: NT $1000

Selling (purchasing) company	Counterparty	Relation	Transaction	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	Notes receivable (payable) and trade receivables	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％
Optivision Technology Inc. 〃 K Laser Technology Inc. 〃 〃 Wuxi K Laser 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 75.75% of shares are held by the Company Subsidiary that the company indirectly holds 70% of the share 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	90 days after monthly settlement; cash to be received 120 days after monthly settlement; cash to be received 90 days after monthly settlement; cash to be received 90 days after monthly settlement; cash to be received 90 days after monthly settlement; cash to be received 60 days after monthly settlement; cash to be received 60 days after monthly settlement; cash to be received	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

• 72 -

K Laser Technology Inc.

Receivables from Related Parties Amounting to Over NT$100 Million or 20% of Paid-in Capital December 31, 2021

Attachment 4 Unit: NT $1000

Company recognizing the account as r e c e i v a b l e s	Counterparty to the t r a n s a c t i o n	R e l a t i o n	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 Technology Co., Ltd	Dongguan Guangzhi photoelectric Co., Ltd Ningpo Optivision Technology Co., Ltd. K Laser Technology (USA) Co., Ltd.	One of other related parties A subsidiary Grandson company 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 - -

• 73 -

K Laser Technology Inc.

Information of Reinvestee Companies, their Locations, etc. From January 1 to December 31, 2021

Attachment 5 Unit: New Taiwan Dollar (thousand) / foreign currency (thousand)

Name of investing company	Name of investee company	Location	Main business activities	Amount of original investment	Amount of original investment	Shares h	eld at the end of	theyear	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 (H.K.) 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 American Society for Testing Material 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 Holography product sales 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	（note1） （note2） （note 3） （note 3）

（ to be continued ）

• 74 -

（ 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 he	ld 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 Island	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.

• 75 -

K Laser Technology Inc.

Information of Investment in Mainland China

From January 1 to December 31, 2021

Attachment 6 Unit: foreign currency (thousand dollars) / New Taiwan dollar (thousand NT $)

1. 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:

Name of invested company in Mainland China	Min business activities	P a i d - i n c a p i t a l	I n v e s t m e n t m e t h o d	A c c u m u l a t e d investment amount remitted from Taiwan as of the beginning of t h e y e a r	Investment amount remi y e	tted or recovered in the a r	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 JXinguang 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 newenvironmentally- 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 ) （note2） 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 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 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 ) - - - -

• 76 -

2. Limit of Investments in Mainland China

Limit of Investments in Mainland China
Company name	Accumulated investment amount remitted from Taiwan to Mainland China as of the end of the year	Investment amount approved by Investment Commission, Ministry of Economic Affairs	Limit of investment provided by Investment Commission, Ministry of Economic Affairs (note 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: including the cash investment of USD 3,705,000 through the 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 investment equity has been disposed of, but the approved amount has not been cancelled at the investment examination committee.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.

1. Major transactions with mainland investment companies directly or indirectly through third region enterprises:

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

Name of related party	Relation between the Company and the related party	Type of transaction	Amount		Transaction conditions		Notes receivable (payable) and trade receivables(payables)	Notes receivable (payable) and trade receivables(payables)	Unrealized gain (loss)
				Price	Payment terms	Compared with general transactions	Balance	Percentage (％)
K Laser Technology (Dongguan) Co., Ltd. K Laser Technology (Dongguan) Co., Ltd. K Laser Technology (Wuxi) Co., Ltd. K Laser Technology (Wuxi) Co., Ltd.	A sub-subsidiary of which 99.60% of shares are held indirectly by the Company A sub-subsidiary of which 99.60% of shares are held indirectly by the Company A sub-subsidiary of which 99.60% of shares are held indirectly by the Company A sub-subsidiary of which 99.60% of shares are held indirectly by the Company	Sale Purchase Sale Purchase	$ 9,701 ( USD 347 ) 465,569 ( USD 16,620 ) 2,473 ( USD 88 ) 46,111 ( USD 1,647 )	Price negotiation Price negotiation Price negotiation Price negotiation	90 days after monthly settlement 60 days after monthly settlement 60 days after monthly settlement 60 days after monthly settlement	Similar Similar Similar Similar	$ 3,742 ( USD 135 ) 166,068 ( USD 6,000 ) 91 ( USD 3 ) 20,608 ( USD 745 )	1 69 - 9	( $ 398 ) - - -

1. Property transaction, and gain or loss on such transactions: None

2. Endorsement, guarantee or collateral provided directly or indirectly for investee companies in Mainland China through entities in a third region: Attachment 2

3. Funds directly or indirectly provided for investee companies in Mainland China through a third region: None

4. Other transactions that have a material impact on the current profit or loss or financial status: None

5. 77 -

K Laser Technology Inc. Information of Main Shareholders December 31, 2021

Attachment 7

Name of key shareholder	Shares	Shares
	Number of sharesheld	Ratio of shareholding
Kuo Wei-Wu K Laser Technology Inc.	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 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.

• 78 -

§ LIST OF IMPORTANT ACCOUNTING ITEMS §

ITEMS

Detailed statement of assets, liabilities and equity items Detailed statement of cash and equivalent cash Financial assets measured at fair value through profit or loss - current statement Bill receivable detailed statement Detailed statement of accounts receivable Accounts receivable - details of related parties Details of other receivables Inventory detailed statement Detailed statement of current assets to be sold Details of other current assets Financial assets measured at fair value through other comprehensive profit or loss - detailed statement of non-current changes Detailed statement of investment changes using equity method Detailed statement of changes in real estate, plant and equipment Detailed statement of changes in accumulated depreciation of real estate, plant and equipment Detailed statement of changes in use right assets Detailed statement of changes in investment real estate Detailed statement of changes in accumulated depreciation of investment real estate Detailed statement of changes in other intangible assets Detailed statement of deferred income tax assets Details of other non-current assets Detailed statement of short-term borrowings Short-term bills payable Detailed statement of accounts payable Accounts payable - details of related parties Details of other payables Detailed statement of other current liabilities Financial liabilities at fair value through profit or loss - non-current detailed statement Long-term loan detailed statement Corporate bonds payable Detailed statement of net defined benefit liabilities Detailed statement of other non-current liabilities Detailed statement of lease liabilities Detailed statement of profit and loss items Detailed statement of operating income Detailed statement of operating costs Detailed statement of marketing expenses Detailed statement of management expenses Detailed statement of research and development expenses Summary of employee welfare, depreciation and amortization expenses incurred in the current period

NO.

Detailed statement I Note 7

Detailed statement II Detailed statement III Note 29 Detailed statement IV Detailed statement V Note 10 Detailed statement VI Detailed statement VII

Detailed statement VIII Note 13

Note 13

Detailed statement IX Note 15

Note 15

Note 16

Note 24 Detailed statement X Detailed statement XI Note 18 Detailed statement XII Note 29 Note 20 Detailed statement XIII Note 7

Note 18 Note 19 Note 21 Detailed statement XIV Detailed statement XV

Detailed statement XVI Detailed statement XVII Detailed statement XVIII Detailed statement XIX Detailed statement XX Detailed statement XXI

• 79 -

K Laser Technology Inc.

Detailed statement of cash and equivalent cash

December 31, 2021

	December 31, 2021
Detailed statement I I t e m s Cash on hand and spent cash Bank deposit	Unit: NT $1000; A b s t r a c t Demand deposit - New Taiwan dollar Check deposit - New Taiwan dollars Demand deposit - foreign currency USD 7,767,852 Demand deposit - foreign currency EUR 766,081 Demand deposit - foreign currency RMB 45,450 Demand deposit - foreign currency HKD1,395 Demand deposit - foreign currency AUD71	Foreign currency A m o u n t $ 6,325 26,886 194 215,014 23,994 197 5 1 $ 272,616

Note: the exchange rate is as follows:

US $1 to NT $27.68 1 EURO to NT $31.32 1 RMB to NT $4.3440 HK $1 to NT $3.5490 1 AUD to NT $ 20.0800

• 80 -

K Laser Technology Inc.

Bill receivable Detailed statement

December 31, 2021

Detailed statement II

Unit: NT $1000

Customer name NEOWAY Ho long Glitters Shirley Chemistry Gem-year Others (note)	Abstract Goods payment 〃 〃 〃 〃		Amount
			$ 3,936 1,273 1,185 458 1,786 $ 8,638

Note: if the balance of each account does not exceed 5% of the balance of this account, it shall be reported in a consolidated manner.

• 81 -

K Laser Technology Inc.

Detailed statement of accounts receivable

December 31, 2021

Detailed statement III

Unit: NT $1000

C u s t o m e r n a m e EIKI INDUSTRIAL EIKI INTERNATIONAL M&G ENT COMMBAX SDN BHD Others (note) Less: allowance for bad debts	A b s t r a c t Goods payment 〃 〃 〃 〃	A m o u n t	A m o u n t
		(	$ 35,411 24,541 17,456 6,264 29,379 39,820) $ 73,231

Note: if the balance of each account does not exceed 5% of the balance of this account, it shall be reported in a consolidated manner.

• 82 -

K Laser Technology Inc. Details of other receivables

December 31, 2021

Detailed statement IV

Unit: NT $1000

I t e m s A b s t r a c t A m o u n t Other receivables Stakeholders $ 3,113 Others (note) 154 $ 3,267

Note: if the balance of each account does not exceed 5% of the amount of this account, it shall be reported in a consolidated manner.

• 83 -

K Laser Technology Inc.

Inventory detailed statement

December 31, 2021

Detailed statement V

Unit: NT $1000

I t e m s Raw materials Work in process Finished products Commercial products Less: allowance for inventory falling price and dead loss	C	o s t $ 57,597 2,472 22,870 25,786 24,075) $ 84,650	Mar ke t pr ic e	Mar ke t pr ic e
	(			$ 37,214 2,472 19,994 24,970 - $ 84,650

• 84 -

K Laser Technology Inc.

Details of other current assets

December 31, 2021

	December 31, 2021
Detailed statement VI Items Advance payment Restricted assets Tax allowance	Abstract Prepayment and insurance premium, etc. Short-term bank borrowings and land lease guarantees	Unit: NT $1000 Amount $ 14,293 117,934 1,127 $ 133,354

• 85 -

K Laser Technology Inc.

Financial assets measured at fair value through other comprehensive profit or loss - detailed statement of non-current changes Year 2021

Detailed statement VII I t e m s CMVT Co., Ltd China Development biomedical Venture Capital Co., Ltd Daguan Industrial Co., Ltd	O p e n i n g	a m o u n t Fai rv alu e $ 459 32,457 2,068 $ 34,984	Increaseincurrent period N u m b e r o f s h a r e s Amount (Note 1 ) 240 ( $ 459 ) - 3,269 - ( 61) $ 2,749	Decreaseincurrent period N u m b e r o f s h a r e s Amount (Note 2 ) - $ - 900,000 ( 9,000 ) - - ($ 9,000)	E n d i n	g b a	Unit: NT $ thousand / share l a n c e P r o v i d e guarantee or Fai rv alu e P l e d g e s i t u a t i o n $ - None 26,726 〃 2,007 〃 $ 28,733
	N u m b e r o f s h a r e s 138,000 3,000,000 150,000		N u m b e r o f s h a r e s 240 - -	N u m b e r o f s h a r e s - 900,000 -	N u m b e r o f s h a r e s 138,240 2,100,000 150,000	Shareholdin g r a t i o - 2 15

Note 1: it refers to the evaluation amount of allowance adjusted according to fair value at the end of this year.

Note 2: it refers to the capital reduction to make up for losses and return of shares in this year.

• 86 -

K Laser Technology Inc.

Detailed statement of investment changes using equity method

Year 2021

Detailed statement VIII

Unit: NT $ thousand / share

I t e m s K Laser China Group Co., Ltd. K Laser International Co., Ltd. iWIN Technology Co., Ltd. Optivision Technology Inc. Vicome Corp. Guang Feng International Ltd. Insight Medical Solutions Inc.	O p e n i n g	a m o u n t A m o u n t $ 2,065,995 671,315 18,359 664,562 123,089 39,960 224,334 $ 3,807,614	Increaseincurrent period N u m b e r o f s h a r e s Amount (Note 1 ) - $ 157,789 800,000 72,604 - ( 3,508 ) - ( 70,928 ) - 17,877 - 30,991 - ( 81,860) $ 122,965	Decreaseincurrent period N u m b e r o f s h a r e s Amount (Note 2 ) - $ 102,207 - - - - 697,000 19,212 - 3,021 1,975,000 54,662 - - $ 179,102	Decreaseincurrent period N u m b e r o f s h a r e s Amount (Note 2 ) - $ 102,207 - - - - 697,000 19,212 - 3,021 1,975,000 54,662 - - $ 179,102	E n d i n	g b a	l a n c e A m o u n t $ 2,121,577 743,919 14,851 574,422 137,945 16,289 142,474 $ 3,751,477	Net worth / market price $ 2,239,877 750,140 14,851 817,073 137,945 - 142,474 $ 4,102,360	P r o v i d e guarantee or p l e d g e s i t u a t i o n
	N u m b e r o f s h a r e s 21,289,005 20,361,462 157,545 24,311,835 3,021,420 6,820,810 8,995,264		N u m b e r o f s h a r e s - 800,000 - - - - -	N u m b e r o f s h a r e s - - - 697,000 - 1,975,000 -		N u m b e r o f s h a r e s 21,289,005 21,161,462 157,545 23,614,835 3,021,420 4,845,810 8,995,264	Shareholding r a t i o 100 100 49 42 30 100 45
										無 〃 〃 Yes (Note 3) 〃 〃 〃

Note 1: it includes the increased investment cost in the current period, the investment interest recognized according to the equity method, the increase or decrease of exchange difference and the adjustment of net value change arising from the conversion of foreign currency financial statements.

Note 2: it includes current disposal, cash dividend and return of capital reduction.

Note 3: 10,000,000 ordinary shares of Optivision Technology have been pledged as collateral for the issuance of convertible corporate bonds by K Laser company.

• 87 -

K Laser Technology Inc.

Detailed statement of changes in use right assets

Year 2021

Detailed statement IX

Unit: NT $1000

Items Cost Land Building Transportation equipment Accumulated depreciation Land Building Transportation equipment		Opening balance $ 77,364 4,246 5,136 $ 86,746 $ 8,144 1,677 3,296 $ 13,117	Increase in current period $ - - 3,655 $ 3,655 $ 4,072 856 1,571 $ 6,499	Decrease in current period $ - - 4,469 $ 4,469 $ - - 4,469 $ 4,469		Ending balance
						$ 77,364 4,246 4,322 $ 85,932 $ 12,216 2,533 398 $ 15,147

• 88 -

K Laser Technology Inc.

K Laser Technology Inc.	K Laser Technology Inc.	K Laser Technology Inc.
Details of other non-current assets December 31, 2021 Detailed statement X Unit: unless otherwise indicated , it is NT $1000 Name Abstract Amount Refundable deposit $ 14,409 Restricted assets Issuance of corporate bonds and land lease guarantee 178,277 Others 1,526 $ 194,212
		$ 14,409 178,277 1,526 $ 194,212

• 89 -

Detailed statement XI Items Short-term borrowings King's Town Bank Esun Bank Bank One Taishin Bank Agricultural Bank of Taiwan Taiwan Business Bank	K Laser Technology Inc. Detailed statement of short-term borrowings December 31, 2021 Abstract Loanamount Contract term Mortgage loan $ 100,000 2021.11.12~2022.02.18 Credit loan 50,000 2021.12.24~2022.03.24 〃 50,000 2021.12.17~2022.01.14 〃 50,000 2021.12.24~2021.01.24 〃 150,000 2021.10.08~2022.01.08 〃 50,000 2021.11.26~2022.05.26 $ 450,000		quota $ 150,000 50,000 130,000 100,000 150,000 50,000 $ 630,000	Unit: unless Interestrate (%) 0.34 0.90 1.00 1.00 0.85 1.00	otherwise indicated ,it is NT $1000 Pledgemortgage Bank pledged deposits None 〃 〃 〃 〃

• 90 -

K Laser Technology Inc.

Detailed Statement of Trade Payables

December 31, 2021

Unit: NT $1000

Detailed statement XII Companyname Efun Tech Agriculrural service in Taiwan Others (note)	Abstract Goods payment 〃 〃	Unit: NT $1000 Amount
			$ 27,963 9,143 12,241 $ 49,347

Note: if the balance of each account does not exceed 5% of the balance of this account, it shall be reported in a consolidated manner.

• 91 -

K Laser Technology Inc.

Detailed statement of other current liabilities

December 31, 2021

December 31, 2021
Detailed statement XIII Items Advance payment Provisional collection Withholding tax	Unit: NT $1000 A m o u n t $ 3,493 218 267 $ 3,978

• 92 -

K Laser Technology Inc.

Detailed statement of other non-current liabilities December 31, 2021

Detailed statement XIV Unit: NT $1000 Items Abstract Amount Deposits received Lease deposit $ 942

• 93 -

K Laser Technology Inc.

Detailed statement of lease liabilities

December 31, 2021

Unit: NT $1000

Detailed statement XV Name land Building Transportation equipment Less: Part listed as due within one year	Lease term 107.10.16~126.12.31 108.01.01~112.12.31 107.06.01~113.11.30	Unit: NT $1000 Discount rate% Amount 1.4 $ 66,473 1.5 1,751 1.5~1.83 3,930 72,154 ( 6,023) $ 66,131
			(	$ 66,473 1,751 3,930 72,154 6,023) $ 66,131

• 94 -

K Laser Technology Inc.

Detailed statement of operating income

December 31, 2021

Unit: NT $1000, except as otherwise indicated herein

Detailed statement XVI Unit: NT $1000, except as otherwise indicated herein Name Amount Laser paper $ 28,948 Anti-counterfeiting trademark 60,049 Holographic film 749,998 Optical instrument 469,568 Others 41,509 $ 1,350,072
		$ 28,948 60,049 749,998 469,568 41,509 $ 1,350,072

• 95 -

K Laser Technology Inc. Detailed statement of operating costs

Year 2021

Detailed statement XVII

Unit: NT $1000

Items Direct raw material Add: opening stock Current feed Transferred in goods Less: remanufacturing expenses and operating expenses re-manufacturing products re-manufacturing finished products Sale of raw materials Ending stock Direct raw material consumption Direct labor Manufacturing expenses Manufacturing cost Add: opening WIP Less: re-manufacturing expenses and operating expenses Work in progress at the end of the period Cost of finished products Add: finished products at the beginning of the period R & D transfer-in Transfer in of raw materials Less: re-manufacturing expenses and operating expenses Finished products at the end of the period Self-made cost of goods sold Cost of goods sold Add: opening goods Current purchase Transfer in of raw materials Other Less: re-manufacturing expenses and operating expenses re-manufacturing raw material Ending goods Cost of buying and selling goods Sale of raw materials Inventory decline returns profit Total operating costs

Amount

$ 84,930 445,396 128 ( 6,710 ) ( 68 ) ( 21 ) ( 352,503 ) ( 57,597) 113,555 20,884 87,516 221,955 3,276 ( 9,743 ) ( 2,472) 213,016 12,384 3,351 21 ( 1,458 ) ( 22,870) 204,444 16,564 562,036 68 266 ( 90 ) ( 128 ) ( 25,787) 552,929 352,503 ( 9,680) $ 1,100,196

• 96 -

K Laser Technology Inc.

Detailed statement of marketing expenses

Year 2021

Year 2021
Detailed statement XVIII Items Salary and bonus Freight Commission expenses Labor cost Others (note)	Unit: NT $1000 Amount $ 26,794 9,596 5,803 4,459 11,002 $ 57,654

Note: if the balance of each account does not exceed 5% of the amount of this account, it shall be reported in a consolidated manner.

• 97 -

K Laser Technology Inc.

Detailed statement of management expenses

Year 2021

Year 2021
Detailed statement XIX Items Salary and bonus Labor cost Depreciation Others (note)	Unit: NT $1000 Amount $ 52,602 18,325 5,391 13,309 $ 89,627

Note: if the balance of each account does not exceed 5% of the amount of this account, it shall be reported in a consolidated manner.

• 98 -

K Laser Technology Inc.

Detailed statement of research and development expenses

Year 2021

Year 2021
Detailed statement XX Items Salary and bonus Research and test fee Depreciation Repair cost Others (note)	Unit: NT $1000 Amount $ 25,171 17,159 12,315 4,276 10,027 $ 68,948

Note: if the balance of each account does not exceed 5% of the amount of this account, it shall be reported in a consolidated manner.

• 99 -

K Laser Technology Inc.

Detailed statement of employee welfare, depreciation and amortization expenses incurred in the current period

Year 2021 and 2020

Detailed statement XX

Unit: New Taiwan Dollar

Short-term employee benefits Salary expe nses Labor healt h insur ance expe nses Post-employme nt benefits Director's remuneratio n Other employee benefits Depreciation expense Deprecia tion of prop erty, plant and equi pme nt Deprecia tion of right of use asset s				Year	2021	2021						Year	2020	2020
	O p e c o	r a t i n g s t s	O p e e x p	r a t i n g e n s e s	Non-operatin g expenses a n d l o s s e s		T o	t a l	O p e c o	r a t i n g s t s	O p e e x p	r a t i n g e n s e s	Non-operatin g expenses a n d l o s s e s		T o	t a l
		$		$		$		$		$		$		$		$
		$		$		$		$		$		$		$		$
		$		$		$		$		$		$		$		$
		$		$		$		$		$		$		$		$
		$		$		$		$		$		$		$		$
		$		$		$		$		$		$		$		$

• 100 -

Deprecia tion of inves tmen t real estat e Amortization expense	$ $	$ $	$ $	$ $	$ $	$ $	$ $
								$
								$

Note:

1. The number of employees in this year and the previous year is 154 and 139 respectively, of which the number of directors who are not concurrently employees is 6 and 5 respectively.

2. The average employee welfare cost in 2021 was NT＄ 1,025,000, and the average employee welfare cost in 2020 was NT＄ 945,000; The average employee salary expense in 2021 was NT＄ 903000, and the average employee salary expense in 2020 was NT＄ 831000. The average employee salary expense increased by 8.7%.

3. Remuneration of employees, directors and supervisors

4. (1) The independent directors of the company receive fixed remuneration. In addition to the attendance fees for each board meeting, in accordance with Article 32 of the articles of association, if the company makes profits in the year, it shall allocate not more than 1.5% of the pre-tax profit before deducting the remuneration of employees and directors as the remuneration of directors.

According to Article 32 of the articles of association, if the company makes profits in the year, it shall allocate 4% ~ 8% of the pre-tax profit before deducting the remuneration of employees and directors as the remuneration of employees. The remuneration of managers includes salary and bonus, in which the salary refers to the level of peers and the items such as professional title, rank, academic experience, professional ability and responsibility. The bonus is considered in the performance evaluation of managers, It includes financial indicators (such as the company's revenue and the achievement rate of net profit before tax) and non-financial indicators (such as work performance, work quality, work attitude, leadership, communication and coordination, team cooperation, major deficiencies in compliance with laws and regulations and operational risk matters of the departments under its jurisdiction), which shall be approved by the chairman of the board according to the performance evaluation results according to the distribution principle recommended by the salary and remuneration committee.

The remuneration of the directors and managers of the company shall be decided by the board of directors and submitted to the report of the shareholders' meeting. However, if the company still has accumulated losses, it shall reserve the compensation amount in advance, and then allocate the remuneration of employees and directors in accordance with the preceding paragraph. The employees'

• 101 -

remuneration referred to in the preceding paragraph may include employees of subordinate companies who meet certain conditions.

• (2) The basis for the valuation of the amount of remuneration of employees and directors, the basis for the calculation of the number of shares of employee remuneration distributed by shares, and the accounting treatment in case of any difference between the actual distribution amount and the valuation amount in the current period:

• If there is any difference between the estimated remuneration and the actual remuneration paid by the company in the past years, it shall be treated as the basis for reference when the estimated remuneration and the actual remuneration paid by the company are listed in the articles of association.

• (3) The company established an audit committee on November 5, 2013 and abolished the supervisor system, which is not applicable

• 102 -