KYE - AGM Information 2021 | FinancialReports.eu

Stock Code: 2365

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KYE Systems Corp.

2021 Annual Shareholders’ Meeting

Meeting Agenda (Translation)

June 23, 2021

Page 2021 Annual Shareholders’ Meeting Agenda ............................................................................1 Reports .......................................................................................................................................2 Ratifications ...............................................................................................................................3 Discussions ................................................................................................................................4 Extempore Motions ....................................................................................................................4

[Attachment]

I. 2020 Business Report .........................................................................................................5 II. 2020 Audit Committee’s Review Report ............................................................................7 III. Independent Auditors’ Report and Financial Statements for 2020 .....................................8 IV. Implementation of the Proposal for Treasury Stocks ........................................................28 V. Table of Profit Distribution for 2020 ................................................................................29

[Appendix]

I.	The “Articles of Incorporation” ........................................................................................30
II.	The “Rules of Procedure for Shareholders’ Meeting” ......................................................38
III.	Information on Shareholdings by Directors ......................................................................41

KYE Systems Corp. 2021 Annual Shareholders’ Meeting Agenda

I. Time: June 23, 2021 (Wednesday) at 9:00 a.m.
II. Location: Jen Hour Restaurant No. 67, Sec. 1, Guangfu Rd., Sanchong Dist., New Taipei City

III. Opening statement by the chairperson.

IV. Reports.
2020 Business Report.
Report on review of the 2020 final accounts by the Audit Committee.
Report on distribution of the remuneration for employees and directors in 2020.
Report on distribution of profits for the first three Qs of 2020.
Implementation of the proposal for treasury stocks.
V. Ratifications.
2020 Business Report and financial statements.
Distribution of the profits for 2020.
VI. Discussions.
Distribution of cash dividends from capital reserves.

VII. Extempore motions.

VIII. Adjournment.

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Reports

[Item 1]

Proposal: The 2020 Business Report is hereby presented for your review. (Submitted by the Board of Directors)

Description: I. For the Business Report, see Attachment 1 on p. 5–6. II. Respectfully submitted for your review and reference.

[Item 2]

Proposal: The report on review of the 2020 final accounts by the Audit Committee is hereby presented for your review. (Submitted by the Board of Directors) Description: I. For the Audit Committee’s Review Report, see Attachment 2 on p. 7. II. Respectfully submitted for your review and reference.

[Item 3]

Proposal: The report on distribution of the remuneration for employees and directors in 2020 is hereby presented for your review. (Submitted by the Board of Directors)

Description: I. The Board of Directors decided to distribute NTD5,663,000 as remuneration for employees and NTD1,887,000 as remuneration for directors. The recipients of remuneration for employees may include the employees of any affiliate which have met certain requirements.

II. Respectfully submitted for your review and reference.

[Item 4]

Proposal: The report on distribution of profits for the first three Qs of 2020 is hereby presented for your review. (Submitted by the Board of Directors)

Description: I. In consideration of the operational development and capital needs of the business group, the Company will make no distribution of profits for the first three Qs of 2020.

II. Respectfully submitted for your review and reference.

[Item 5]

Proposal: The report on implementation of the proposal for treasury stocks is hereby presented for your review. (Submitted by the Board of Directors)

Description: I. For the shares repurchased as decided by the Board of Directors and the status of actual implementation, see Attachment 4 on p. 28.

II. Respectfully submitted for your review and reference.

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Ratifications

[Item 1]

Proposal: The 2020 Business Report and financial statements are hereby submitted for your ratification. (Submitted by the Board of Directors)

Description: I. The Company’s 2020 financial statements were audited by MEI-HUI WU and YAO-LIN HUANG, the accountants Deloitte Taiwan, and the Business Report and financial statements were audited by the Audit Committee of the Company, with audit reports issued respectively thereafter.
II. For the reports and statements mentioned above, please refer to Attachment 1–3 on p. 5–27.
III. Submitted for your ratification as legally required.

Resolution:

[Item 2]

Proposal: The proposal for distribution of the profits for 2020 is hereby submitted for your ratification. (Submitted by the Board of Directors)

Description: I. The Company’s net profit after tax in 2020 was NTD146,235,786. After the addition of the adjusted amount of retained profits and the setting aside of profits as legal and special reserves as required by law, there are no profits distributable for the current period. For the table of profit distribution, see Attachment 5 on p. 29.
II. Submitted for your ratification as legally required.

Resolution:

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Discussions

[Item 1]

Proposal: The proposal for distribution of cash dividends from capital reserves is hereby submitted for your decision. (Submitted by the Board of Directors)

Description:

I. It is proposed that the Company appropriate a total of NTD67,358,600 from capital reserves for distribution of cash dividends to shareholders at NTD0.30 per share.
II. Total distributions made at less than NTD1 will, after distribution to shareholders, be carried out in descending order based on the decimal value until distributed to zero.
III. If subsequently the number of the outstanding shares is affected due to the repurchase by the Company of its shares, which results in a change in the shareholder dividend payout ratio that requires adjustment, the Chairman will be granted full authority over related matters.
IV. Upon the approval of this proposal by the annual shareholders’ meeting, the Chairman will be authorized to determine the ex-dividend date and granted full authority over related matters.
V. Respectfully submitted for your decision.

Resolution:

Extempore Motions

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[Attachment 1]

KYE Systems Corp. 2020 Business Report

For people around the world, 2020 was a year of pain and hardship. It was a year that KYE has never experienced since the company was founded, and in which the overall external environment was totally uncertain. The two-year old US–China conflict escalated from a trade war to mutual sanctions and confrontations in national security and technology. The COVID-19 pandemic which broke out at the beginning of the year has spread worldwide, causing more than 100 million cases of infection and over two million deaths. Many countries locked down major cities, closed their borders, and ceased all social activities. Such attempts to keep the pandemic under control through a stay-at-home lifestyle led to a halt in global economic activities for nearly six months and resulted in big recessions in most countries. Since the second half of the year, lockdowns have been gradually lifted, and governments have introduced unprecedented monetary easing measures and bailout plans to save the economy. Following the Chinese New Year holidays, KYE was faced with a difficult situation where factories were closed at the production end, logistics were stalled and customer demands and capital payments came to a halt. Nevertheless, KYE gradually overcame such challenges by ensuring sufficient materials for supply chains, resuming factory production and logistics and getting customer demands to return. Operations and shipments were finally back to normal. Beginning from the second half of the year, KYE has benefited from the demands generated by people living a new lifestyle and economic way under the pandemic with high-speed Internet connection (5G & WiFi 6). Traditional computer business has thrived again thanks to remote teaching and working, online learning, stay-at-home economy and gaming, which have also spurred the sales of computer peripherals including mice, keyboards, webcams, speakers and headsets. Since July, KYE’s revenue has turned around from its weak state during recent years to annual growth driven by orders generated by a surge in customer demands and has continued to increase on a monthly basis. This has not only proved that opportunities always rise amid difficulties but has also given us a rare chance for a pressure test, showing customers, users and all stakeholders that KYE is a brand company capable of ensuring stable supply of materials and products and creating revenues and cash flows under such an adverse environment like that of last year. The 2020 net profit after tax attributable to the parent company was over NTD146 million, with a net profit per share of NTD0.64. The operating performance of 2020 is summarized as follows: I. Results of implementation of the business plan

The Company’s 2020 consolidated net operating revenue was more than NTD1.653 billion, an increase by 3% from NTD1.605 billion in 2019. The 2020 net profit after tax attributable to the parent company was over NTD146 million, a slight decrease from 2019. However, the operating profit from the primary business saw significant growth more than twice that of 2019, with a net profit after tax per share of NTD0.64.

Unit: NTD thousand

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Item 2020 2019 Growth rate
Operating revenue 1,653,269 1,605,479 3%
Operating gross profit 515,571 455,092 13%
Operating expenses 353,776 401,811 (12%)
Operating profit 161,795 53,281 204%
Profit before tax 184,672 175,192 5%
Profit after tax 146,905 154,664 (5%)
Net profit attributable to the owner
146,236 151,480 (3%)
of parent company
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II. Status of budget implementation

In accordance with the “Regulations Governing the Publication of Financial Forecasts of Public Companies,” this item is not applicable due to non-publication of any financial forecast by the Company in 2020.

III. Revenue, expense and profitability analysis (I) Revenue and expense analysis

Revenue, expense and profitability analysis I) Revenue and expense analysis
		Unit: NTD thousand
Item	2020	2019	Amount of change
Net cash inflow from operating activities	158,859	241,665	(82,806)
Net cash inflow (outflow) from investing activities	(164,791)	1,026,201	(1,190,992)
Net cash outflow from financing activities	(72,834)	(1,055,039)	982,205

The Company’s interest income in 2020 was NTD8,954,000, mostly the interest income from operating activities. The interest expenses were NTD4,156,000, and the net exchange loss was NTD32,161,000. Furthermore, the net cash inflow from operating activities in 2020 was NTD158,859,000, while the consolidated net cash outflow from investing and financing activities was NTD237,625,000. The cash and cash equivalents (including the impact of change in exchange rate) in this year decreased by NTD81,000,000, and the balance of consolidated cash and cash equivalents at the end of the year was NTD1,403,681,000.

(II) Profitability analysis

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Year
2020 2019
Item
Liabilities to assets ratio 18.81% 14.71%
Financial structure
Ratio of long-term capital to property, plant and
analysis 480.11% 673.21%
equipment
Current ratio 524.47% 577.06%
Solvency analysis
Quick ratio 442.95% 506.20%
Operating ability Collection days for receivables 25 34
analysis Average sales days 78 64
Return on assets 3.97% 3.81%
Return on equity 4.72% 4.76%
Profitability analysis
Net profit margin 8.90% 9.47%
Earnings per share (NTD) 0.64 0.65
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IV. Performance in research and development

KYE will stay committed to the ideas and appeals of convenience, easy-to-use and high quality and provide a series of cost-effective products that are user-friendly, intuitively applicable and eco-friendly and which are integrated with environmentally friendly processes for the purpose of creating better digital life experience for users. For example, KYE has developed rechargeable, eco-friendly and energy-efficient mice with extended battery life and safety design, which do not require battery replacement and can reduce damage to the natural environment. KYE has also developed smart computer peripherals which have integrated software or apps to provide better user experience for consumers and increase user productivity. In addition, KYE’s capacitive stylus pens which can be used in an iOS or Android operating system to meet market demands have received the honor of the Taiwan Excellence Awards, and the products are able to provide consumers with whole-new experience in drawing and writing.

Chairman: SHIH-KUN TSO

Manager: SHIH-KUN TSO Accounting Manager: AN-MIN KAO

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[Attachment 2]

Audit Committee’s Review Report

The Company’s 2020 business report, financial statements and proposal for profit distribution were prepared and submitted by the Board of Directors, and the financial statements were audited by Deloitte Taiwan with an audit report issued thereafter. The review of the above-mentioned business report, financial statements and proposal for profit distribution by the Audit Committee did not find any inconsistencies. Therefore, in accordance with the Securities and Exchange Act and the Company Act, we hereby present this report for further examination.

Convener of the Audit Committee: HUNG-TSU HSU

March 25, 2021

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[Attachment 3]

Independent Auditors’ Report

To KYE Systems Corp.:

Audit Opinions

We audited the consolidated balance sheets of KYE Systems Corp. and subsidiaries as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flow for the period from January 1 to December 31, 2020 and 2019, and the notes to consolidated financial statements (including the summary of significant accounting policies).

In our opinion, the said consolidated financial statements were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the International Financial Reporting Standards, International Accounting Standards, interpretations and the statements of interpretation approved and released by the Financial Supervisory Commission, and thus presented fairly, in all material aspects, the consolidated financial position of KYE Systems Corp. and subsidiaries as of December 31, 2020 and 2019, and consolidated business performance and cash flow for the period from January 1 to December 31, 2020 and 2019.

Basis of Audit Opinions

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards. Our responsibilities under such standards are further described in the “Responsibilities of Accountants for the Audit of Consolidated Financial Statements” section in this report. We were independent of KYE Systems Corp. and subsidiaries in accordance with the Norms of Professional Ethics for Certified Public Accountants and fulfilled our other responsibilities thereunder. We believe that we acquired sufficient and appropriate audit evidence to use as the basis of our audit opinions.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the individual financial statements of KYE Systems Corp. and subsidiaries for the year of 2020. Such matters were addressed during the overall audit of the consolidated financial statements and the process of forming the audit opinions, and thus we did not provide opinions separately towards such matters.

The key audit matters in the consolidated financial statements of KYE Systems Corp. and subsidiaries for the year of 2020 are as follows:

Occurrence of recognition of sales revenue

The sales revenue of KYE Systems Corp. and subsidiaries in 2020 was higher than that in 2019, and the sales revenue from certain sales customers in the current year saw a significant increase from that in the previous year. Since the amount and proportion thereof are a matter of significance, we have deemed the occurrence of recognition of the sales revenue from that certain sales customers to be a key audit matter of the individual financial statements of KYE Systems Corp. and subsidiaries for 2020. For the accounting policy on recognition of revenue, see Notes 4 and 22 to the consolidated financial statements.

The audit procedures we performed for the above-mentioned key audit matter included understanding and testing of the design and implementation effectiveness of the internal controls related to the recognition of sales revenue. We analyzed the reasons for change in the amount of the sales revenue from the above-mentioned sales customers. We conducted an audit by sampling the transaction details of the sales revenue from the above-mentioned sales customers. We also reviewed the relevant shipment certificates and payment receipts to confirm the occurrence of the sales revenue. We reviewed whether there were significant sales returns or discounts subsequently on the part of the above-mentioned sales customers.

Other Matters

KYE Systems Corp. has prepared the individual financial statements for 2020 and 2019, and an audit report with unqualified opinions was issued by us for reference.

Responsibilities of the Management and Governing Bodies for Consolidated Financial Statements

The management was responsible for preparation of the consolidated financial statements with fair

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presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, interpretations and the statements of interpretation approved and released by the Financial Supervisory Commission and maintaining the necessary internal control related to preparation of the consolidated financial statements to ensure that the consolidated financial statements were free of material misstatement due to fraud or errors.

During preparation of the consolidated financial statements, the management was also responsible for evaluating KYE Systems Corp. and subsidiaries’ ability as a going concern, disclosure of the relevant matters and application of the going concern basis of accounting unless the management intended to make KYE Systems Corp. and subsidiaries enter into liquidation or terminate their operations, or there was no other actual and feasible solutions other than liquidation or termination of their operations.

KYE Systems Corp. and subsidiaries’ governance unit (including the Audit Committee) was responsible for supervising the financial reporting procedures.

CPA’s responsibility for the audit of the consolidated financial statements

The purpose of our audit of the consolidated financial statements is to obtain reasonable assurance about whether the consolidated financial statements were free of material misstatements due to fraud or error, with an audit report issued thereafter. Reasonable assurance means high assurance. However, it cannot be guaranteed that no material misstatement contained in the consolidated financial statements will be discovered during an audit conducted in accordance with generally accepted auditing standards. Any misstatement may be due to fraud or error. A misstatement is deemed material if the individual or aggregate amount misstated is reasonably expected to affect the economic decisions made by users of the consolidated financial statements.

We used our professional judgment to be skeptical during the audit conducted based on the generally accepted auditing standards. We also performed the following tasks:

We identified and assessed the risk of any misstatement in the consolidated financial statements due to fraud or error, designed and implemented response measures suitable for the evaluated risks, and acquired sufficient and appropriate audit evidence to use as the basis of our audit opinions. Since fraud may involve collusion, forgery, omission on purpose, fraudulent statements or violation of internal control, we did not find that the risk of misstatement due to fraud was higher than the same due to errors.
We understood the internal control related to the audit to an extent necessary to design audit procedures applicable to the current circumstance. However, the purpose of such work was not to express opinions towards the effectiveness of KYE Systems Corp. and subsidiaries’ internal control.
We evaluated the appropriateness of the accounting policies adopted by the management and the rationality of the accounting estimates and relevant disclosures made by the management.
We drew a conclusion about the appropriateness of the application of the going concern basis of accounting by the management and whether the event or circumstances which might cause major doubts about KYE Systems Corp. and subsidiaries’ ability as a going concern had any material uncertainty. If any material uncertainty was deemed to exist in such event or circumstance, we must provide a reminder in the consolidated financial statements for the users to pay attention to the relevant disclosure therein, or amend our audit opinions when such disclosure was inappropriate. Our conclusion was based on the audit evidence obtained as of the date of this audit report. However, future events or circumstances might result in a situation where KYE Systems Corp. and subsidiaries would no longer have the ability as a going concern.
We evaluated the overall presentation, structure, and contents of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements presented relevant transactions and events fairly.
We acquired sufficient and appropriate audit evidence of the financial information of the entities comprising the Group to provide opinions towards the consolidated financial

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statements. We were responsible for guidance, supervision and implementation in relation to the Group’s audit cases and formation of audit opinions for the Group.

The matters for which we communicated with the governing bodies include the planned audit scope and time, as well as major audit findings (including the significant deficiencies of the internal control identified during the audit).

We also provided a declaration of independence to the governing bodies, which assured that we complied with the requirements related to independence in the Norm of Professional Ethics for Certified Public Accountant, and communicated all relationships and other matters (including relevant protective measures) which we deemed to be likely to cause an impact on the independence of CPAs to the governing bodies.

The key audit matters in the audit of the consolidated financial statements of KYE Systems Corp. and subsidiaries for 2020 were determined by us from the matters addressed in our communication with the governing bodies. We specified such matters in the audit report except when public disclosure of certain matters was prohibited by related laws or regulations, or in very exceptional circumstances, we determined not to cover such matters in the audit report as we could reasonably expect that the negative impact of the coverage would be greater than the public interest brought.

Deloitte Taiwan CPA Mei-Hui Wu CPA Yao-Lin Huang

Approval No. from the Securities and Futures Commission Tai-Cai-Zheng-Liu-Zi No. 0920123784

Approval No. from the Financial Supervisory Commission Jin-Guan-Zheng-Shen-Zi No. 1060004806

March 25, 2021

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KYE Systems Corp. and Subsidiaries Consolidated Balance Sheet December 31, 2020 and 2019

Unit: NTD thousand

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December 31, 2020 December 31, 2019
Code Asset Amount % Amount %
Current assets
1100 Cash and cash equivalents (Notes 4 and 6) $ 1,403,681 38 $ 1,484,681 39
1110 Financial assets measured at fair value through profit or loss – current
(Notes 4 and 7) 1,713 - - -
1120 Financial assets measured at fair value through other comprehensive
income – current (Notes 4 and 8) 43,724 1 71,056 2
1170 Notes and accounts receivable (Notes 4, 9 and 22) 126,219 4 97,197 2
1197 Finance leases receivable – current (Notes 4 and 10) 8,159 - 4,378 -
1200 Other receivables (Note 4) 4,735 - 9,354 -
130X Inventory (Notes 4 and 11) 264,415 7 222,782 6
1470 Other current assets 94,126 3 78,173 2
11XX Total current assets 1,946,772 53 1,967,621 51
Non-current assets
1517 Financial assets measured at fair value through other comprehensive
income – non-current (Notes 4, 8, and 13) 199,242 6 375,520 10
1550 Investment under the equity method (Notes 4 and 13) 286,435 8 284,928 8
1600 Property, plant and equipment (Notes 4, 14 and 29) 666,311 18 494,591 13
1755 Right-of-use assets (Notes 4 and 15) 46,541 1 91,301 2
1760 Investment property – net (Notes 4, 16 and 29) 337,099 9 369,143 10
1840 Deferred income tax assets (Notes 4 and 24) 118,889 3 141,022 4
194D Finance leases receivable – non-current (Notes 4 and 10) 8,783 - 10,093 -
1990 Other non-current assets (Notes 4 and 30) 87,470 2 93,467 2
15XX Total non-current assets 1,750,770 47 1,860,065 49
1XXX Total assets $ 3,697,542 100 $ 3,827,686 100
Code Liability and equity
Current liabilities
2170 Notes and accounts payable (Notes 18 and 28) $ 145,870 4 $ 139,801 4
2200 Other payables (Note 19) 97,499 2 119,046 3
2230 Current income tax liabilities (Notes 4 and 24) 24,264 1 3,345 -
2280 Lease liabilities – current (Notes 4, 15 and 28) 30,604 1 35,456 1
2320 Long-term loans maturing within one year (Notes 17 and 29) 8,095 - - -
2399 Other current liabilities 64,855 2 43,325 1
21XX Total current liabilities 371,187 10 340,973 9
Non-current liabilities
2540 Long-term loans (Notes 17 and 29) 229,905 6 100,000 3
2570 Deferred income tax liabilities (Notes 4 and 24) 24,554 1 16,688 -
2580 Lease liabilities – non-current (Notes 4, 15 and 28) 34,481 1 70,831 2
2640 Net defined benefit liabilities – non-current (Notes 4 and 20) 31,654 1 31,723 1
2670 Other non-current liabilities – others (Note 4) 3,586 - 2,782 -
25XX Total non-current liabilities 324,180 9 222,024 6
2XXX Total liabilities 695,367 19 562,997 15
Equity attributable to the owner of the parent company (Note 21)
Share capital
3110 Common stock 2,245,285 61 2,345,385 61
3200 Capital reserves 382,898 10 456,206 12
Retained earnings
3310 Legal reserves 428,064 11 452,988 12
3320 Special reserves 429,317 12 496,095 13
3350 Undistributed earnings (losses to be covered) (Notes 4, 8 and 13) 144,615 4 ( 91,702 ) ( 3 )
3300 Total retained earnings 1,001,996 27 857,381 22
3400 Other equity (Notes 4, 8 and 13) ( 661,077 ) ( 18 ) ( 429,317 ) ( 11 )
31XX Total equity of the owner of parent company 2,969,102 80 3,229,655 84
36XX Non-controlling equity 33,073 1 35,034 1
3XXX Total equity 3,002,175 81 3,264,689 85
Total liabilities and equity $ 3,697,542 100 $ 3,827,686 100
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Chairman: Shih-Kun Tso

The attached notes are part of the consolidated financial statements. Manager: Shih-Kun Tso

Accounting Manager: An-Min Kao

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KYE Systems Corp. and Subsidiaries Consolidated Statement of Comprehensive Income January 1 to December 31, 2020 and 2019

Unit: NTD thousand; EPS unit: NTD

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2020 2019
Code Amount % Amount %
Operating revenue (Notes 4, 22
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and 28) 4100 Sales revenue 4800 Other operating revenues 4000 Total operating revenues Operating costs 5110 Cost of sales (Notes 4, 11, 23 and 28) 5000 Total operating costs 5900 Operating gross profit Operating expenses (Notes 4, 9, 20 and 23) 6100 Marketing expenses 6200 Administrative expense 6300 R&D expense 6450 Expected profit on reversal of credit impairment ( 6000 Total operating expenses 6900 Net operating profit Non-operating revenue and expense 7020 Other profits and losses (Notes 4, 23 and 32) 7060 Share of profit/loss of associates under equity method (Notes 4 and 13)	$ 1,643,434 9,835 1,653,269 1,137,698 1,137,698 515,571 106,373 253,154 2,131 7,882 ) 353,776 161,795 28,407 1,224	99 $ 1,598,927 100 1 6,552 - 100 1,605,479 100 69 1,150,387 72 69 1,150,387 72 31 455,092 28 6 143,323 9 15 256,004 16 - 4,308 - - ( 1,824 ) - 21 401,811 25 10 53,281 3 2 67,020 4 - ( 38,050 ) ( 2 )

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2020 2019
Code Amount % Amount %
7100 Interest income (Note 4) $ 8,954 - $ 15,743 1
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Code 7100	Interest income (Note 4)	Interest income (Note 4)	$	Amount 8,954			% -		$	Amount 15,743			% 1
7215	Profit (loss) on disposal of
		investment property
		(Notes 4 and 16)	(	9,000	)	(	1	)		148,639			9
7510	Interest expense (Notes 4
		and 28)	(	4,156	)		-		(	12,739	)	(	1	)
7670	Impairment loss (Notes 4,
		13 and 16)	(	2,552	)		-		(	58,702	)	(	3	)
7000		Total of other
		non-operating
		revenues and
		expenses		22,877			1			121,911			8
7900	Net profit before tax			184,672			11			175,192			11
7950	Income tax expense (Notes 4 and
	24)			37,767			2			20,528			1
8200	Net profit in the year			146,905			9			154,664			10
	Other comprehensive income
	(Note 4)
	Titles not reclassified as
		profit or loss:
8311		Remeasurement of the
		defined benefits
		plan (Note 20)	(	21	)		-		(	2,778	)		-
8316		Unrealized profit/loss
		on valuation of
		investment in
		equity instruments
		measured at fair
		value through other
		comprehensive
		income	(	183,432	)	(	11	)	(	7,072	)	(	1	)
8320		Share of other
		comprehensive
		income of
		associates under
		the equity method
		(Note 13)	(	17,609	)	(	1	)	(	3,676	)		-
8349		Income tax relating to
		non-reclassified
		items (Note 24)	(	21,947	)	(	2	)		26,837			2
8310			(	223,009	)	(	14	)		13,311			1

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2020 2019
Code Amount % Amount %
Titles potentially
reclassified as profit or
loss subsequently:
8361 Exchange differences
from the translation
of foreign
operations’
financial
statements ( $ 24,913 ) ( 1 ) ( $ 27,057 ) ( 2 )
8370 Share of other
comprehensive
income of
associates under
the equity method
(Note 13) 1,654 - ( 2,863 ) -
8399 Income tax related to
items likely to be
reclassified as
profit or loss (Note
- -
24) 4,631 4,297
8360 ( 18,628 ) ( 1 ) ( 25,623 ) ( 2 )
8300 Other net
comprehensive
income ( 241,637 ) ( 15 ) ( 12,312 ) ( 1 )
8500 Total comprehensive income in
the year ( $ 94,732 ) ( 6 ) $ 142,352 9
Net profit/loss is attributable to:
8610 the owner of parent
company $ 146,236 9 $ 151,480 10
8620 non-controlling equity 669 - 3,184 -
8600 $ 146,905 9 $ 154,664 10
Total comprehensive income
attributable to:
8710 the owner of parent
company ( $ 95,331 ) ( 6 ) $ 139,730 9
8720 non-controlling equity 599 - 2,622 -
8700 ( $ 94,732 ) ( 6 ) $ 142,352 9
EPS (Note 25)
9710 Basic EPS $ 0.64 $ 0.65
9810 Diluted EPS $ 0.64 $ 0.64
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The attached notes are part of the consolidated financial statements.

Chairman: Shih-Kun Tso Manager: Shih-Kun Tso Accounting Manager: An-Min Kao

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KYE Systems Corp. and Subsidiaries Consolidated Statement of Changes in Equity January 1 to December 31, 2020 and 2019

Unit: NTD thousand

Code A1 Balance on January 1, 2019 Earning allocation and distribution in 2018: B1 Legal reserves appropriated B3 Special reserves appropriated B5 Cash dividend for common stocks D1 Net profit in 2019 D3 Other comprehensive income in 2019 D5 Total comprehensive income in 2019 M7 Changes in equity ownership in subsidiaries O1 Non-controlling equity Q1 Disposal of equity instruments measured at fair value through other comprehensive income Z1 Balance on December 31, 2019 Earning allocations and distribution in 2019: B13 Legal reserves for covering losses B17 Special reserves for reversal B5 Cash dividend for common stocks D1 Net profit in 2020 D3 Other comprehensive income in 2020 D5 Total comprehensive income in 2020 L1 Purchase of treasury stock L3 Cancellation of treasury stock M7 Changes in equity ownership in subsidiaries O1 Non-controlling equity Q1 Disposal of equity instruments measured at fair value through other comprehensive income Z1 Balance on December 31, 2020							Equityattributable to the owner of theparent company	Equityattributable to the owner of theparent company						Total equity
		Share capital $ 2,345,385 - - - - - - - - - 2,345,385 - - - - - - - 100,100 ) - - - $ 2,245,285		Capital reserves $ 503,164 - - 46,908 ) - - - 50 ) - - 456,206 - - 93,815 ) - - - - 21,348 841 ) - - $ 382,898			Retained earnings			Treasury stocks $ - - - - - - - - - - - - - - - - - 78,752 ) 78,752 - - - $ -

	(		( ( ( (	$		(			(		( ( ( ( ( ( (	( ( (	( ( ( ( ( ( ( (	$ 3,168,811 - - 46,908 ) 154,664 12,312 ) 142,352 50 ) 484 - 3,264,689 - - 93,815 ) 146,905 241,637 ) 94,732 ) 78,752 ) - 7,345 2,560 ) - $ 3,002,175





				$

Chairman: Shih-Kun Tso					Manager: Shih-Kun Tso			AccountingManager: An-Min Kao

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KYE Systems Corp. and Subsidiaries Consolidated Statement of Cash Flow January 1 to December 31, 2020 and 2019

Unit: NTD thousand

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----- Start of picture text -----

Code 2020 2019
----- End of picture text -----

Cash flow from operating activities A00010 Net profit before tax in the year A20010 Profit and expense/loss: A20100 Depreciation expense A29900 Reversal of allowances for inventory devaluation losses ( A20200 Amortization expenses A22700 Loss (profit) on disposal of investment property – net A21200 Interest income ( A20300 Expected profit on reversal of credit impairment ( A24100 Unrealized profit (loss) of foreign currency exchange – net ( A21300 Dividend income ( A20900 Interest expenses A20400 Profit on the valuation of financial assets measured at fair value through profit or loss ( A22300 Share of profit/loss of associates under equity method ( A22500 Loss (profit) on the disposal and obsolescence of property, plants, and equipment – net A23100 Profit on investment disposal – net ( A23500 Impairment loss from financial assets A23700 Impairment loss from non-financial assets A30000 Net changes in operating assets and liabilities A31115 Financial assets mandatorily measured at fair value through profit or loss A31150 Notes and accounts receivable ( A31180 Other receivables A31200 Inventory ( A31240 Other current assets ( A32150 Notes and accounts payable A32180 Other payables ( A32230 Other current liabilities A32240 Net defined benefit liabilities ( A33000 Cash inflow from operations A33100 Interest received A33200 Dividend received A33500 Income tax paid ( AAAA Net cash inflow from operating activities	$ 184,672 61,724 48,636 ) ( 10,086 9,000 ( 8,954 ) ( 7,882 ) ( 4,438 ) 4,164 ) ( 4,156 1,713 ) 1,224 ) 590 ( 412 ) ( - - 412 15,733 ) 4,492 2,902 ) 17,167 ) 4,091 ( 18,699 ) 942 ( 51 ) ( 148,190 8,993 4,164 2,488 ) ( 158,859	$ 175,192 62,955 73,605 ) 17,019 148,639 ) 15,743 ) 1,824 ) 2,448 838 ) 12,739 - 38,050 21,633 ) 3,369 ) 38,202 20,500 21,611 103,477 26,709 23,444 6,501 19,496 ) 3,489 15,467 ) 7,378 ) 244,344 15,491 838 19,008 ) 241,665

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(Continued from previous page)

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Code 2020 2019
Cash flows from investing activities
B02700 Acquisition of property, plants, and
equipment ( $ 196,939 ) ( $ 39,425 )
B05500 Disposal of investment property 26,851 1,150,895
B06700 Increase in other non-current assets ( 14,383 ) ( 49,760 )
B00020 Disposal of financial assets measured at fair
value through other comprehensive
income 13,005 -
B06100 Decrease in finance leases receivable 5,519 4,527
B03700 Decrease (increase) in guarantee deposits
paid 3,938 ( 2,244 )
B05400 Acquisition of investment property ( 2,843 ) ( 148,749 )
B02800 Disposal of property, plants, and equipment 95 155,417
B00010 Acquisition of financial assets measured at
fair value through other comprehensive
income ( 34 ) ( 44,460 )
BBBB Net cash inflows (outflows) from
investing activities ( 164,791 ) 1,026,201
Cash flows from financing activities
C01600 Borrowing of long-term loans 138,000 -
C04500 Distribution of cash dividends ( 93,815 ) ( 46,908 )
C04900 Cost of repurchasing treasury stocks ( 78,752 ) -
C04020 Repayment of the principal of lease
liabilities ( 34,927 ) ( 31,103 )
C05600 Interest paid ( 4,109 ) ( 11,984 )
C03000 Increase (Decrease) in guaranteed deposits
received 766 ( 2,481 )
C04300 Increase (Decrease) in other liabilities 3 ( 3 )
C00200 Decrease in short-term loans - ( 500,000 )
C01700 Repayment of long-term loans - ( 312,576 )
C00600 Decrease in short-term notes payable - ( 149,984 )
CCCC Net cash outflow from financing
activities ( 72,834 ) ( 1,055,039 )
DDDD Effect of changes in exchange rate on cash and
cash equivalents ( 2,234 ) ( 23,684 )
EEEE Increase (decrease) in cash and cash equivalents
in the year ( 81,000 ) 189,143
E00100 Balance of cash and cash equivalents – beginning
of the year 1,484,681 1,295,538
E00200 Balance of cash and cash equivalents – ending of
the year $ 1,403,681 $ 1,484,681
----- End of picture text -----

The attached notes are part of the consolidated financial statements.

Chairman: Shih-Kun Tso

Manager: Shih-Kun Tso Accounting Manager: An-Min Kao

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Independent Auditors’ Report

To KYE Systems Corp.:

Audit Opinions

We audited the individual balance sheets of KYE Systems Corp. as of December 31, 2020 and 2019, its individual statements of comprehensive income, individual statements of changes in equity and individual statements of cash flows for the periods from January 1 to December 31, 2020 and 2019, and the notes to its individual financial statements (including the summary of significant accounting policies).

In our opinion, the said individual financial statements were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and thus presented fairly, in all material aspects, the individual financial positions of KYE Systems Corp. as of December 31, 2020 and 2019, and the individual financial performance and cash flows for the periods from January 1 to December 31, 2020 and 2019.

Basis of Audit Opinions

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the generally accepted auditing standards. Our responsibilities under such standards are further described in the “Responsibilities of Accountants for the Audit of Individual Financial Statements” section in this report. We were independent of KYE Systems Corp., in accordance with the Norms of Professional Ethics for Certified Public Accountants and fulfilled all other responsibilities thereunder. We believe that we acquired sufficient and appropriate audit evidence to use as the basis of our audit opinions.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the individual financial statements of KYE Systems Corp. for the year of 2020. Such matters were addressed in the context of our audit of the individual financial statements as a whole and, in forming our opinions thereon, we do not provide any separate opinion on these matters.

The key audit matters in the individual financial statements of KYE Systems Corp. for the year of 2020 are as follows:

Occurrence of recognition of sales revenue

The sales revenue of KYE Systems Corp. in 2020 was higher than that in 2019, and the sales revenue from certain sales customers in the current year saw a significant increase from that in the previous year. Since the amount and proportion thereof are a matter of significance, we have deemed the occurrence of recognition of the sales revenue from that certain sales customers to be a key audit matter of the individual financial statements of KYE Systems Corp. for 2020. For the accounting policy on recognition of revenue, see Notes 4 and 19 to the individual financial statements.

Responsibilities of the Management and Governing Bodies for Individual Financial Statements

The management was responsible for preparation of the financial statements with fair presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and maintaining the necessary internal control related to the preparation of the

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individual financial statements to ensure that the individual financial statements were free of material misstatement due to fraud or error.

During preparation of the individual financial statements, the management was also responsible for evaluating KYE Systems Corp.’s ability as a going concern, disclosure of relevant matters, and application of the going concern basis of accounting unless the management intended to make KYE Systems Corp. enter into liquidation or terminate its operations, or there were no other actual or feasible solutions other than liquidation or termination of its operations.

The governing bodies (including the Audit Committee) of KYE Systems Corp. are responsible for supervising the process of financial reporting.

Responsibilities of Accountants for the Audit of Individual Financial Statements

The purpose of our audit of the individual financial statements is to obtain reasonable assurance about whether the individual financial statements were free of material misstatements due to fraud or error, with an audit report issued thereafter. Reasonable assurance means high assurance. However, it cannot be guaranteed that no material misstatement contained in the individual financial statements will be discovered during an audit conducted in accordance with generally accepted auditing standards. Any misstatement may be due to fraud or error. A misstatement is deemed material if the individual or aggregate amount misstated is reasonably expected to affect the economic decisions made by users of the individual financial statements.

We used our professional judgment to be skeptical during the audit conducted based on the generally accepted auditing standards. We also performed the following tasks:

We identified and assessed the risk of any misstatement in the individual financial statements due to fraud or error, designed and implemented response measures suitable for the evaluated risks, and acquired sufficient and appropriate audit evidence to use as the basis of our audit opinions. Since fraud may involve collusion, forgery, omission on purpose, fraudulent statements or violation of internal control, we did not find that the risk of misstatement due to fraud was higher than the same due to errors.
We understood the internal control related to the audit to the extent necessary to design audit procedures appropriate for the current circumstances. However, the purpose of such work was not to express opinions regarding the effectiveness of KYE Systems Corp.’s internal control.
We evaluated the appropriateness of the accounting policies adopted by the management and the rationality of the accounting estimates and relevant disclosures made by the management.
We drew a conclusion about the appropriateness of the application of the going concern basis of accounting by the management and whether the event or circumstances which may cast significant doubt about KYE Systems Corp.’s ability as a going concern had a material uncertainty. If any material uncertainty was deemed to exist in such event or circumstances, we must provide a reminder in the audit report for the users of the individual financial statements to pay attention to the relevant disclosure therein, or amend our audit opinions when such disclosure is inappropriate. Our conclusion was based on the audit evidence obtained as of the date of this audit report. However, future events or circumstances might result in a situation where KYE Systems Corp. would no longer have its ability as a going concern.
We evaluated the overall presentation, structure, and contents of the individual financial statements (including relevant notes), and whether the individual financial statements presented the relevant transactions and events fairly.
We acquired sufficient and appropriate audit evidence for the financial information of the entities forming KYE Systems Corp. to provide opinions regarding the individual financial statements. We were responsible for guidance, supervision and implementation in relation to audit cases and formation of audit opinions for KYE Systems Corp.

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The key audit matters in the audit of the individual financial statements of KYE Systems Corp. for 2020 were determined by us from the matters addressed in our communication with the governing bodies. We specified such matters in the audit report except when public disclosure of certain matters was prohibited by related laws or regulations, or in very exceptional circumstances, we determined not to cover such matters in the audit report as we could expect that the negative impact of the coverage would be greater than the public interest brought thereby.

Deloitte Taiwan CPA Mei-Hui Wu

CPA Yao-Lin Huang

Approval No. from the Securities and Futures Commission Tai-Cai-Zheng-Liu-Zi No. 0920123784

Approval No. from the Financial Supervisory Commission Jin-Guan-Zheng-Shen-Zi No. 1060004806

March 25, 2021

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KYE Systems Corp. Individual Balance Sheet December 31, 2020 and 2019

Unit: NTD thousand

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December 31, 2020 December 31, 2019
Code Asset Amount % Amount %
Current assets
1100 Cash and cash equivalents (Notes 4 and 6) $ 588,481 18 $ 546,690 15
1110 Financial assets measured at fair value through profit or loss – current
(Notes 4 and 7) 1,713 - - -
1120 Financial assets measured at fair value through other comprehensive
income – current (Notes 4 and 8) - - 23,039 1
1170 Notes and accounts receivable (Notes 4, 9, 19 and 25) 102,874 3 93,555 3
1197 Finance leases receivable – current (Notes 4 and 10) 3,729 - - -
1200 Other receivables (Notes 4, 16 and 25) 536,848 17 648,044 18
130X Inventory (Notes 4 and 11) 165,599 5 159,346 5
1410 Prepayments 6,276 - 13,806 -
1470 Other current assets 34,094 1 34,878 1
11XX Total current assets 1,439,614 44 1,519,358 43
Non-current assets
1517 Financial assets measured at fair value through other comprehensive
income – non-current (Notes 4, 8 and 12) 82,267 3 157,860 4
1550 Investment under the equity method (Notes 4 and 12) 1,236,632 37 1,265,510 35
1600 Property, plant and equipment (Notes 4, 13 and 26) 421,949 13 423,189 12
1755 Right-of-use assets (Notes 4 and 14) 2,998 - 19,156 1
1840 Deferred income tax assets (Notes 4 and 21) 108,732 3 129,812 4
194D Finance leases receivable – non-current (Notes 4 and 10) 3,150 - - -
1990 Other non-current assets (Notes 4 and 27) 11,960 - 48,213 1
15XX Total non-current assets 1,867,688 56 2,043,740 57
1XXX Total assets $ 3,307,302 100 $ 3,563,098 100
Code Liability and equity
Current liabilities
2170 Notes and accounts payable (Notes 15 and 25) $ 102,446 3 $ 95,290 2
2219 Other payables (Notes 16 and 25) 61,156 2 68,299 2
2230 Current income tax liabilities (Notes 4 and 21) 24,216 1 3,298 -
2280 Lease liabilities – current (Notes 4 and 14) 6,044 - 8,299 -
2399 Other current liabilities (Note 25) 80,612 2 96,985 3
21XX Total current liabilities 274,474 8 272,171 7
Non-current liabilities
2570 Deferred income tax liabilities (Notes 4 and 21) 24,554 1 16,688 1
2580 Lease liabilities – non-current (Notes 4 and 14) 4,790 - 10,834 -
2640 Net defined benefit liabilities – non-current (Notes 4 and 17) 31,654 1 31,723 1
2670 Other non-current liabilities (Note 4) 2,728 - 2,027 -
25XX Total non-current liabilities 63,726 2 61,272 2
2XXX Total liabilities 338,200 10 333,443 9
Other equity (Note 18)
Share capital
3110 Common stock 2,245,285 68 2,345,385 66
3200 Capital reserves 382,898 12 456,206 13
Retained earnings
3310 Legal reserves 428,064 13 452,988 13
3320 Special reserves 429,317 13 496,095 14
3350 Undistributed earnings (losses to be covered) (Notes 4, 8 and 12) 144,615 4 ( 91,702 ) ( 3)
3300 Total retained earnings 1,001,996 30 857,381 24
3400 Other equity (Notes 4, 8 and 12) ( 661,077 ) ( 20) ( 429,317 ) ( 12)
3XXX Total equity 2,969,102 90 3,229,655 91
Total liabilities and equity $ 3,307,302 100 $ 3,563,098 100
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The attached notes are part of the individual financial statements.

Chairman: SHIH-KUN TSO Manager: SHIH-KUN TSO

Accounting Manager: AN-MIN KAO

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KYE Systems Corp. Individual Statement of Comprehensive Income January 1 to December 31, 2020 and 2019

Unit: NTD thousand; EPS unit: NTD

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2020 2019
Code Amount % Amount %
4110 Total operating revenue $ 1,261,146 103 $ 1,024,321 104
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4170	Less: Sales returns and discounts		36,627		3		38,887			4
4100	Net operating revenue (Notes 4,
	19 and 25)		1,224,519		100		985,434			100
5110	Operating costs (Notes 4, 11, 20
	and 25)		884,351		72		712,945			72
5900	Operating gross profit		340,168		28		272,489			28
5920	Realized profits from sales (Note
	4)		1,550		-		2,735			-
5950	Net operating gross profit		341,718		28		275,224			28
	Operating expenses (Notes 4, 9,
	17, 20 and 25)
6100	Marketing expenses		61,367		5		81,150			8
6200	Administrative expense		106,150		9		100,632			10
6300	R&D Expense		2,131		-		4,308			1
6450	Expected profit on reversal
	of credit impairment	(	230	)	-	(	742	)		-
6000	Total operating
	expenses		169,418		14		185,348			19
6900	Net operating profit		172,300		14		89,876			9
	Non-operating revenue and
	expense
7070	Share of profit/loss of
	subsidiaries and
	associates under the
	equity method (Notes 4
	and 12)	(	1,708	)	-	(	63,135	)	(	6 )
7020	Other profits and losses
	(Notes 4, 20 and 29)		8,714		1		29,215			3

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2020 2019
Code Amount % Amount %
7100 Interest income (Note 4) $ 2,141 - $ 1,681 -
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Code 7100	Interest income (Note 4)	$	Amount 2,141			% -		$	Amount 1,681			% -
7510	Interest expense (Note 4)	(	230	)		-		(	8,939	)	(	1	)
7215	Profits on the disposal of
	investment property
	(Note 4)		-			-			159,342			16
7670	Impairment loss from
	financial assets (Notes 4
	and 12)		-			-		(	38,202	)	(	4	)
7000	Total of other
	non-operating
	revenues and
	expenses		8,917			1			79,962			8
7900	Net profit before tax		181,217			15			169,838			17
7950	Income tax expense (Notes 4 and
	21)		34,981			3			18,358			2
8200	Net profit in the year		146,236			12			151,480			15
	Other comprehensive income
	(Note 4)
	Titles not reclassified as
	profit or loss:
8311	Remeasurement of the
	defined benefit
	plan (Note 17)	(	21	)		-		(	2,778	)		-
8316	Unrealized profit/loss
	on valuation of
	investment in
	equity instruments
	measured at fair
	value through other
	comprehensive
	income	(	86,937	)	(	7	)	(	144,049	)	(	15	)
8320	Share of other
	comprehensive
	income from
	subsidiaries and
	associates under
	the equity method
	(Note 12)	(	113,688	)	(	9	)		133,382			13
8349	Income tax relating to
	non-reclassified
	items (Note 21)	(	21,947	)	(	2	)		26,837			3
8310		(	222,593	)	(	18	)		13,392			1
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The attached notes are part of the individual financial statements.

Chairman: SHIH-KUN TSO Manager: SHIH-KUN TSO Accounting Manager: AN-MIN KAO

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KYE Systems Corp. Individual Statement of Changes in Equity January 1 to December 31, 2020 and 2019

Unit: NTD thousand

==> picture [1070 x 497] intentionally omitted <==

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Other equity
Unrealized profit/loss
Retained earnings from the financial
Undistributed earnings Exchange differences assets measured at fair
Code Share capital Capital reserves Legal reserves Special reserves (Losses to be covered) from the translation of value through other Treasury stocks Total equity
foreign operations’ comprehensive
financial statements income
A1 Balance on January 1, 2019 $ 2,345,385 $ 503,164 $ 443,264 $ 113,622 $ 392,197 $ 207 ( $ 660,956 ) $ - $ 3,136,883
Earning allocations and distribution in 2018
B1 Legal reserves appropriated - - 9,724 - ( 9,724 ) - - - -
B3 Special reserves appropriated - - - 382,473 ( 382,473 ) - - - -
B5 Cash dividend for common stocks - ( 46,908 ) - - - - - - ( 46,908 )
D1 Net profit in 2019 - - - - 151,480 - - - 151,480
D3 Other comprehensive income in 2019 - - - - ( 2,222 ) ( 25,142 ) 15,614 - ( 11,750 )
D5 Total comprehensive income in 2019 - - - - 149,258 ( 25,142 ) 15,614 - 139,730
M7 Changes in equity ownership in subsidiaries - ( 50 ) - - - - - - ( 50 )
Q1 Disposal of equity instruments measured at fair
- - - - - - -
value through other comprehensive income ( 240,960 ) 240,960
Z1 Balance on December 31, 2019 2,345,385 456,206 452,988 496,095 ( 91,702 ) ( 24,935 ) ( 404,382 ) - 3,229,655
Earning allocations and distribution in 2019
B13 Legal reserves for covering losses - - ( 24,924 ) - 24,924 - - - -
B17 Special reserves for reversal - - - ( 66,778 ) 66,778 - - - -
B5 Cash dividend for common stocks - ( 93,815 ) - - - - - - ( 93,815 )
D1 Net profit in 2020 - - - - 146,236 - - - 146,236
D3 Other comprehensive income in 2020 - - - - ( 17 ) ( 18,974 ) ( 222,576 ) - ( 241,567 )
D5 Total comprehensive income in 2020 - - - - 146,219 ( 18,974 ) ( 222,576 ) - ( 95,331 )
L1 Purchase of treasury stock - - - - - - - ( 78,752 ) ( 78,752 )
L3 Cancellation of treasury stock ( 100,100 ) 21,348 - - - - - 78,752 -
M7 Changes in equity ownership in subsidiaries - ( 841 ) - - - 8,186 - - 7,345
Q1 Disposal of equity instruments measured at fair
- - - - - - -
value through other comprehensive income ( 1,604 ) 1,604
Z1 Balance on December 31, 2020 $ 2,245,285 $ 382,898 $ 428,064 $ 429,317 $ 144,615 ( $ 35,723 ) ( $ 625,354 ) $ - $ 2,969,102
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The attached notes are part of the individual financial statements.

Chairman: SHIH-KUN TSO

Manager: SHIH-KUN TSO

Accounting Manager: AN-MIN KAO

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KYE Systems Corp. Individual Statement of Cash Flows January 1 to December 31, 2020 and 2019

==> picture [469 x 27] intentionally omitted <==

----- Start of picture text -----

Unit: NTD thousand
Code 2020 2019
----- End of picture text -----

Code						2020			2019
	Cash flow from operating activities
A10000	Net profit before tax in the year					$ 181,217			$ 169,838
A20010	Profit and expense/loss:
A23700	Profit on reversal of impairment loss
	from non-financial assets				(	28,700	)	(	68,198	)
A29900	Material preparation			losses
	appropriated (reversed)				(	9,200	)		18,570
A20100	Depreciation expense					12,395			12,719
A20200	Amortization expenses					3,954			11,694
A24100	Unrealized profit	from		the
	translation of foreign currencies				(	2,555	)	(	1,251	)
A21200	Interest income				(	2,141	)	(	1,681	)
A20400	Profit on the valuation	of	financial
	assets measured at	fair		value
	through profit or loss				(	1,713	)		-
A22300	Share of profit/loss of	subsidiaries
	and associates under	the		equity
	method					1,708			63,135
A21300	Dividend income				(	1,604	)	(	727	)
A24000	Realized sales profit			on
	inter-affiliate accounts				(	1,550	)	(	2,735	)
A20900	Interest expenses					230			8,939
A20300	Expected profit on reversal		of	credit
	impairment				(	230	)	(	742	)
A22700	Profit on disposal of	investment
	property					-		(	159,342	)
A23500	Impairment loss from		financial
	assets					-			38,202
A22500	Profit on disposal of property, plant
	and equipment					-			1,257
A30000	Net changes in operating	assets and
	liabilities
A31150	Notes and accounts receivable				(	6,310	)		66,041
A31180	Other receivables					111,157			27,113
A31200	Inventory					22,447			41,532
A31230	Prepayments					7,619		(	5,590	)
A31240	Other current assets				(	2,947	)		3,848
A32150	Notes and accounts payable					5,500		(	19,284	)
A32180	Other payables				(	5,876	)	(	9,980	)
A32230	Other current liabilities				(	7,096	)	(	6,877	)
A32240	Net defined benefit liabilities				(	55	)	(	7,934	)
A33000	Cash inflow from operations					276,250			178,547
A33500	Income tax paid				(	2,433	)	(	18,348	)
A33100	Interest received					2,180			1,679
A33200	Dividend received					1,604			727
AAAA	Net cash inflow from operating
	activities					$ 277,601			$ 162,605

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Code 2020 2019
Cash flows from investing activities
B01800 Acquisition of long-term equity
investments under the equity method ( $ 220,775 ) ( $ 21,335 )
B01900 Disposal of long-term equity investments
under the equity method 98,313 -
B06700 Decrease (Increase) in other non-current
assets 36,953 ( 16,401 )
B02400 Refunds from decapitalization of the
invested company under the equity
method 19,022 -
B00020 Disposal of proceeds from financial assets
measured at fair value through other
comprehensive income 11,510 -
B02700 Acquisition of property, plants, and
equipment ( 2,800 ) ( 2,650 )
B07600 Dividend received 2,397 -
B05500 Disposal of investment property - 1,094,863
B00010 Acquisition of financial assets measured
at fair value through other
comprehensive income - ( 44,460 )
B02800 Disposal of property, plants, and
equipment - 543
BBBB Net cash inflows (outflows) from
investing activities ( 55,380 ) 1,010,560
Cash flows from financing activities
C04500 Distribution of cash dividends ( 93,815 ) ( 46,908 )
C04900 Cost of repurchasing treasury stocks ( 78,752 ) -
C04020 Repayment of the principal of lease
liabilities ( 8,299 ) ( 3,899 )
C03000 Increase (decrease) in guaranteed deposits
received 666 ( 1,901 )
C05600 Interest paid ( 230 ) ( 9,226 )
C00200 Decrease in short-term loans - ( 500,000 )
C01700 Repayment of long-term loans - ( 225,499 )
C00600 Decrease in short-term notes payable - ( 149,984 )
CCCC Net cash outflow from financing
activities ( 180,430 ) ( 937,417 )
EEEE Increase in cash and cash equivalents of the
year 41,791 235,748
E00100 Balance of cash and cash equivalents –
beginning of the year 546,690 310,942
E00200 Balance of cash and cash equivalents – ending
of the year $ 588,481 $ 546,690
----- End of picture text -----

The attached notes are part of the individual financial statements.

Chairman: SHIH-KUN TSO Manager: SHIH-KUN TSO Accounting Manager: AN-MIN KAO

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[Attachment 4]

Shares Repurchased as Decided by the Board of Directors and the Status of Actual Implementation

		May1,2021 2nd time in 2020 Maintenance of the Company’s credit and shareholders’ equity 5,000,000 common stocks NTD6–10 per share May 21 to July 8, 2020 5,000,000 common stocks NTD43,914,841 8.78 common stocks 5,000,000 common stocks 0 common stocks `－` `－`
Time of repurchase	1st time in 2020	2nd time in 2020
Purpose of repurchase	Maintenance of the Company’s credit and shareholders’ equity	Maintenance of the Company’s credit and shareholders’ equity
Expected types and numbers of repurchased shares	10,000,000 common stocks	5,000,000 common stocks
Repurchase range price	NTD5–8 per share	NTD6–10 per share
Repurchase period	March 19 to May 15, 2020	May 21 to July 8, 2020
Types and numbers of repurchased shares	5,010,000 common stocks	5,000,000 common stocks
Value of repurchased shares	NTD34,837,401	NTD43,914,841
Average repurchase price pershare	6.95 common stocks	8.78 common stocks
Number of shares cancelled	5,010,000 common stocks	5,000,000 common stocks
Cumulative number of the Company’s shares held	0 common stocks	0 common stocks
Ratio of cumulative number of the Company’s shares held to the number of total outstandingshares	`－`	`－`
Reason for non-completion of implementation	After the current repurchase of shares was implemented, the share price quickly rebounded and stayed above the maximum repurchase range price of NTD8 for most of the time after mid-April. Therefore, repurchase was not possible, and implementation was not completed after an overall consideration of the Company’s financial conditions and shareholders’ equity.	`－`

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[Attachment 5]

KYE Systems Corp. Table of Profit Distribution 2020

==> picture [444 x 40] intentionally omitted <==

----- Start of picture text -----

Unit: NTD
Item Amount
----- End of picture text -----

Undistributed profits at the beginning of the period Remeasurement of defined benefit plans recognized as retained profits Retained profits adjusted by investment accounted for using the equity method Adjusted undistributed profits at the beginning of the period Disposal of investments in equity instruments measured at fair value through other comprehensive profit/loss, cumulative gains and losses directly transferred to retained profits. Current net profit Profits set aside as legal reserves (10%) Profits legally set aside as special reserves Distributable profits for the current period	$0 (16,544) 184,650
	168,106 (1,789,499) 146,235,786 (14,461,439) (130,152,954)
	$0

Undistributed profits at the beginning of the period
Remeasurement of defined benefit plans recognized as retained
profits
Retained profits adjusted by investment accounted for using the
equity method
Adjusted undistributed profits at the beginning of the period
Disposal of investments in equity instruments measured at fair
value through other comprehensive profit/loss, cumulative gains
and losses directly transferred to retained profits.
Current net profit
Profits set aside as legal reserves (10%)
Profits legally set aside as special reserves
Distributable profits for the current period

$0
(16,544)
184,650

168,106
(1,789,499)
146,235,786
(14,461,439)
(130,152,954)

Chairman: SHIH-KUN TSO President: SHIH-KUN TSO Accounting Manager: AN-MIN KAO

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[Appendix 1]

KYE Systems Corp. Articles of Incorporation

Chapter 1 General Provisions

Article 1 The Company has been duly incorporated in accordance with the provisions of the Company Act governing companies limited by shares, under the name of “KYE Systems Corp.”
Article 2 The Company’s business shall include the following:
CC01030 Electrical Appliances and Audiovisual Electronic Products Manufacturing
CC01060 Wired Communication Mechanical Equipment Manufacturing 3. CC01070 Wireless Communication Mechanical Equipment Manufacturing
CC01080 Electronics Components Manufacturing
CC01110 Computer and Peripheral Equipment Manufacturing
CC01120 Data Storage Media Manufacturing and Duplicating
CE01010 General Instrument Manufacturing
F113020 Wholesale of Electrical Appliances
F113030 Wholesale of Precision Instruments
F113070 Wholesale of Telecommunication Apparatus
F113110 Wholesale of Batteries
F119010 Wholesale of Electronic Materials
F401010 International Trade
I501010 Product Designing
F401021 Restrained Telecom Radio Frequency Equipment and Materials Import
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Article 2-1 The Company may, based on its business needs, provide guarantees externally.
Article 2-2 The Company’s investments in other businesses shall not be restrained by the provisions of the Company Act related to the total amount of investments. However, investments related to long-term equity shall be made in accordance with the “Procedures for the Acquisition or Disposal of Assets” of the Company.
Article 3 The Company has its headquarters located in New Taipei City, and may establish branches at proper locations around the world if required by business.

Chapter 2 Shares

Article 4 The Company has stated capital of NTD3.9 billion (NTD3,900,000,000) equally divided into 390 million shares (390,000,000) at NTD10 per share. The shares are issued in tranches and may be issued at face value if required by business. NTD250,000,000 from the capital amount referred to in the preceding paragraph may be the amount of shares converted from

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employee stock options and issued in tranches. The Board of Directors is authorized to handle it in accordance with the Company Act and applicable laws and regulations.

Article 5 The stocks of the Company are registered. They shall be signed by or affixed with the stamps of at least three directors. The stocks may be issued only after being authenticated in accordance with relevant laws. However, when the Company issues shares without printing physical stock certificates, the aforementioned provision shall not apply, and the Company shall register with a centralized securities depository enterprise.
Article 6 Any share transfer shall be suspended within 60 days prior to a regular shareholders’ meeting, or within 30 days prior to a special shareholders’ meeting, or within 5 days prior to the dividend or bonus announcement day or the day on which other benefits are released.
Article 7 The Company shall handle the transfer, loss report, inheritance and gifting of stocks, changes and losses of seals or changes to address, etc., in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies” announced by the Securities and Futures Commission, Ministry of Finance, unless the law provides otherwise.

Chapter 3 Shareholders’ Meeting

Article 8 The shareholders’ meeting may be convened on a regular or special basis. A regular meeting shall be convened by the Board of Directors annually within 6 months after the end of each fiscal year by giving a 30-day prior notice to all shareholders. A special meeting may be legally convened whenever necessary by giving a 15-day prior notice to all shareholders.
Article 9 Except as otherwise provided by the Company Act, any resolution of a shareholders’ meeting shall be adopted by a majority of the voting rights held by the shareholders attending the meeting at which shareholders representing a majority of the total outstanding shares are present.
Article 9-1 If the Company is to transfer the shares repurchased by the Company to employees at a price lower than the actual average price of repurchase, the resolution to be made thereto shall be adopted by a large majority representing two thirds or more of the votes at a recent shareholders’ meeting attended by shareholders representing a majority of the total number of issued shares shall be required, and the following shall be explained in the notice to convene a meeting of shareholders, and shall not be brought up as impromptu motions:
I. Transferring price identified, discount rate, calculation basis, and reasonableness.
II. Number of shares transferred, purpose, and reasonableness.
III. Qualifications that employees have to meet for subscription and the allowed number of subscriptions.
IV. Effect on shareholders’ equity:

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  - (I) Amount that might be expensed and status of potential dilution of the company’s earnings per share.

  - (II) Explanation of the financial burden that share transfers to employees at an average price lower than the actual repurchase may cause to the company.

Article 9-2 If the Company is to offer the employee stock warrants at a subscription price lower than the closing price on the issuance date, the resolution to be made thereto shall be adopted by a large majority representing two thirds or more of the votes at a recent shareholders’ meeting attended by shareholders representing a majority of the total number of issued shares shall be required, and the following shall be explained in the notice to convene a meeting of shareholders, and shall not be brought up as impromptu motions:
I. Number of units offering employee stock warrants, number of shares exercisable through employees’ warrants, and number of new shares must be issued due to the exercise of employees’ stock warrants or a number of shares must be repurchased.
II. The basis for subscription price setting and reasonableness.
III. Qualifications of stock option owners and the number of shares subscribable.
IV. Reasons necessary for this employee share subscription warrant issuance.
V. Effect on shareholders’ equity: (I) Amount that might be expensed and status of potential dilution of the company’s earnings per share.
- (II) In case the contract is performed via issued shares, the financial burden brought to the company shall be explained.
Article 10 Where the Board of Directors may call for the General Meeting, the Chairman of the Company shall preside over the meeting. In the absence of the Chairman or if the Chairman cannot perform their duties, the Vice Chairman shall act on behalf of and in the name of the Chairman to preside over the meeting. Where there is no seat of a Vice Chairman, in the absence of the Vice Chairman or where the Vice Chairman cannot perform their duties, the Chairman shall appoint one director to preside over the meeting. If the Chairman does not have a representative appointed to preside over the meeting, the Directors shall nominate one among themselves to preside over the meeting.
Where a shareholders’ meeting is convened by another convener beyond the Board of Directors, such meeting shall be chaired by that convener. In the event that there are two or more conveners, one shall be elected from among themselves to chair the meeting.
Article 11 Shareholders are entitled to one vote for each share of holding. Article 12 Any shareholder who is unable to attend the shareholders’ meeting in person may appoint a proxy to attend each session of the General Meeting by presenting the authorization of proxy document prepared by the Company indicating the scope of authorization. Except for trust enterprises

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or stock agencies approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting powers represented by him/her shall not exceed 3% of the total number of voting shares of the company, otherwise, the portion of excessive voting power shall not be counted.

The written proxy specified in the preceding paragraph shall be served to the Company no later than 5 days prior to the meeting date of the shareholders’ meeting. In case two or more written proxies are received from one shareholder, the first one received by the company shall prevail, unless an explicit statement to revoke the previous written proxy is made in the proxy which comes later.

Article 13 Resolutions adopted at a shareholders’ meeting shall be recorded in the minutes of the meeting, and the minutes shall contain information on the date, month, year, venue, name of chairman, method of resolution, the process of discussion, the summary, and result of the meeting. The minutes shall be affixed with the signature or seal of the chairman of the meeting, distributed by means of a public notice, and kept persistently throughout the life of the company.

The attendance book bearing the signatures of the shareholders present at the meeting and the powers of attorney of the proxies shall be kept by the company for a minimum period of at least one year. However, if legal action is instituted by shareholders pursuant to Article 189 of the Company Act, the ballots shall be retained until the final ruling of the action.

Chapter 4 Directors, Supervisors and Managers

Article 14 The Company shall have 7–11 directors and at least 3 independent directors. The Board of Directors shall be authorized to determine the number of directors, who shall be elected from persons of legal competence for a three-year term. The directors may be reelected for consecutive terms.

The Company shall take out directors’ liability insurance with respect to the liabilities resulting from exercising their duties during their term of office.

The percentage of shareholdings of all the directors of the Company is pursuant to the regulations of the authority in charge of securities exchange.

Article 14-1 The directors shall be elected by the candidates nomination system in accordance with Article 192-1 of the Company Act. The acceptance and announcement of the director candidates nomination shall be handled pursuant to the related laws in the Company Act and the Securities and Exchange Act. Independent directors and directors are elected at the same time but with the elected seats counted separately.
Article 14-2 The Company has the Audit Committee set up in accordance with Article 14-4 of the Securities and Exchange Act to substitute for the duty and power of supervisors. The Audit Committee shall be composed by all independent directors.

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Article 15 The Company’s Board of Directors shall be organized by the directors exercising their powers according to law, one of whom shall be elected as the chair in a session with the presence of at least two-thirds of the directors and the consent under a simple majority. A Vice Chairman shall also be elected likewise. The chair shall externally represent the Company.
Article 16 Unless otherwise provided for in the Company Act, the first meeting of each term of the Board of Directors shall be convened by the director who received a ballot representing the largest number of votes at the election of directors within 15 days after the reelection. The subsequent meetings of the Board of Directors shall be convened by the chairman, and the meeting notice shall be sent to each director at least 7 days in advance with specification of meeting date, location and agenda of the calling. In emergency circumstances, however, a meeting may be convened at any time. The meeting notice may be sent in writing or by e-mail or fax to inform each director.
Article 17 The Board of Directors meetings shall be chaired by the Chairman. In case the Chairman of the Board of Directors is on leave or absent or cannot exercise his power and authority for any cause, Article 10 of the Articles of Incorporation shall apply mutatis mutandis.
Article 18 Unless the Company Act and the Articles of Incorporation specifies otherwise, resolutions of the Board of Directors shall be adopted by a majority of the directors present at a meeting attended by a majority of all directors.
Article 19 Directors may appoint another director in writing to attend a board meeting and exercise voting right for all the matters proposed in the meeting on his/her behalf. Each director may appoint only one director to act as a proxy in the meeting.
The Board may convene via teleconferencing and the Directors participating in the teleconference shall be deemed attending the Board session in person.
Article 20 The duties and powers of the Board of Directors are as follows:
I. Establishment of business plans II. Proposal for earnings distribution or loss off-setting
III. Establishment of the capitalization and decapitalization of the company
IV. Proposal for amendment to the Articles of Incorporation
V. Review and approval of essential contracts
VI. Appointment or discharge of employees higher than general manager, vice general managers and positions on equivalent job grades
VII. Establishment and replacement of branch offices
VIII. Approval of budget and preparation of final accounting statements
IX. Decision on real estate trades and investments in other businesses over the amount authorized by the Board of Directors
X. Decision on authorization pursuant to the regulations of the competent authorities and the Company’s internal regulations

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Article 21 The Board of Directors shall be authorized to determine the remuneration for directors based on the extent of their participation in and contributions to the operations of the Company, taking into consideration the domestic general standards of the industry.
Article 22 The managers referred to in Subparagraph 6, Paragraph 1, Article 20 of the Articles of Incorporation shall be appointed or discharged by a majority vote of the directors at a meeting of the Board of Directors attended by a majority of all directors.
Article 23 The President shall handle all the business of the Company in accordance with the instructions of the board and appoint or discharge employees that are not specified in Subparagraph 6, Paragraph 1, Article 20 of the Articles of Incorporation.

Chapter 5 Final Accounting and Profit Distribution

Article 24 The Company’s fiscal year shall be from January 1 to December 31. Final accounting shall be handled at the end of each fiscal year. After the year’s final accounting, the following statements and records shall be prepared in compliance with law, submitted to the Audit Committee for audit 30 days before convening the shareholders’ meeting, and then presented in the general shareholders’ meeting for recognition after resolved and approved by the Board of Directors.
I. Business Report.
II. Financial Statements. III. Proposal for Earnings Distribution or Loss Off-setting.
Article 25 1%–15% of the Company’s annual profits, if any, shall be appropriated as employee remuneration which may be distributed in shares or in cash as decided by the Board of Directors. Such employee remuneration may be distributed to the employees of affiliated companies who have met certain requirements. The Board of Directors may decide to appropriate a maximum of 1% of the amount of the said profits as directors’ remuneration. The proposals for distribution of the remuneration for employees and directors shall be submitted in a report to the shareholders’ meeting.

If the Company has accumulated losses, an equivalent amount from the profits shall be reserved as compensation for such losses before the remuneration for employees and directors is appropriated by the aforementioned percentages.

Article 25-1 The distribution of the Company’s profits or the compensation for its losses may be made after the end of each quarter. The Company’s proposals for earning allocation or loss off-setting for the first three quarters along with the business report and the financial statements audited or reviewed by accountants shall be submitted to the Board of Directors for resolution after being reviewed by the Audit Committee.

When the Company allocates earnings in accordance with the provisions

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referred to above, such earnings shall be estimated and taken to pay any due tax payment, offset losses and provide for legal reserves as required by the laws. Where such legal reserve amounts to the total paid-in capital, this provision shall not apply.

The Company distributing surplus earning in the form of new shares to be issued thereby shall follow the provisions of Article 240 under the Company Act; if such surplus earning is distributed in the form of cash, it shall be approved by the Board of Directors.

Article 25-2 If the Company has a profit at the year’s final accounting, it shall first pay the income tax and make up any cumulative losses in accordance with laws, and then make a 10% contribution of the balance to the legal reserve, unless the legal reserve reaches the amount of the Company paid-in capital, and also make provision/reversal of special reserves pursuant to laws. The residual balance shall be added to undistributed earnings. The Board of Directors shall draft a motion for allocation of the residual balance plus the undistributed earnings, and submit the same to a shareholders’ meeting to resolve whether shareholder bonus shall be allocated.

Where distribution of shareholders’ dividends pursuant to the preceding article and the preceding paragraph is made in cash, the Board of Directors is authorized to make this decision which shall be resolved with more than two-thirds of the board present, voted in favor by more than half of all attending directors, and subsequently reported in a shareholders’ meeting. The dividend policy is adopted by the Company in consideration of the current and future development plans, investment environment, financing needs and domestic and international competition as well as the shareholders’ interests and other factors. The Company’s shareholders’ dividends are allocated in the form of cash dividend or stock dividend. The cash dividend shall be no less than 10% of the total shareholders’ dividends, and the residual balance is paid in shares. However, all shareholders’ dividends shall be distributed in stock dividends when the cash dividend per share is NTD0.1 or lower.

Chapter 6 Supplementary Provisions

Article 26 Matters not provided in this Articles of Incorporation shall be subject to the Company Act.

Article 27 This Articles of Incorporation was established on October 13, 1983. The 1st amendment was on November 24, 1983. The 2nd amendment was on October 5, 1985. The 3rd amendment was on April 8, 1988. The 4th amendment was on November 15, 1988. The 5th amendment was on January 4, 1989. The 6th amendment was on July 10, 1990. The 7th amendment was on May 20, 1991. The 8th amendment was on April 22, 1992. The 9th amendment was on November 23, 1992. The 10th amendment was on July 1, 1995. The 11th amendment was on March 2, 1997. The 12th amendment was on June 7, 1997.

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The 13th amendment was on May 7, 1998. The 14th amendment was on June 7, 1999. The 15th amendment was on June 7, 2000. The 16th amendment was on May 31, 2001. The 17th amendment was on June 4, 2002. The 18th amendment on June 9, 2004. The 19th amendment was on June 13, 2007. The 20th amendment was on June 13, 2008. The 21st amendment was on June 16, 2009. The 22nd amendment was on June 25, 2010. The 23rd amendment was on June 22, 2012. The 24th amendment was on June 18, 2014. The 25th amendment was on June 10, 2015. The 26th amendment was on June 6, 2016. The 27th amendment was on June 21, 2019.

KYE Systems Corp.

Chairman: SHIH-KUN TSO

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[Appendix II]

KYE Systems Corp. Rules of Procedure for Shareholders’ Meetings

I. The Company’s Shareholders’ Meeting, unless otherwise provided by law, shall be handled in accordance with the Rules of Procedure for Shareholders’ Meetings.
II. The Company shall specify in the shareholders’ meeting notice the shareholder registration time, registration location, and any other relevant matters. Shareholders are required to check in for the shareholders’ meeting thirty minutes prior to the time scheduled to start the meeting. The check-in point shall be expressly remarked and shall be adequately staffed to serve participating shareholders.
Shareholders or representatives appointed thereby (hereinafter referred to the shareholders) shall bring with them the attendance card, sign-in card, or other documents for attending the meeting. Persons requesting for authorization of proxy shall bring their ID documents for confirmation.
A sign-in book shall be prepared for the participating shareholders to sign. A participating shareholder may, as well, present his or her sign-in card instead of signing to prove presence.
The attendees’ shareholding is calculated in accordance with the attendance register or the attendance cards collected.
III. The presence and voting in a shareholders’ meeting shall be duly calculated based on the number of shares.
IV. The venue for a shareholders’ meeting shall be the premises of the Company, or a place easily accessible to shareholders and suitable for a shareholders’ meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.
V. Where the Board of Directors may call for the General Meeting, the Chairman of the Company shall preside over the meeting. In the absence of the Chairman or if the Chairman cannot perform their duties, the Vice Chairman shall act on behalf of and in the name of the Chairman to preside over the meeting. Where there is no seat of a Vice Chairman, in the absence of the Vice Chairman or where the Vice Chairman cannot perform their duties, the Chairman shall appoint one director to preside over the meeting. If the Chairman does not have a representative appointed to preside over the meeting, the Directors shall nominate one among themselves to preside over the meeting.
Where a director acts as the chair as mentioned in the preceding paragraph, such director shall only be the managing director or director who has served with the Company for more than 6 months and has been well aware of the Company’s financial standing and business operation. This same provision is applicable mutatis mutandis to an event where the chairperson is the representative of a juristic person director.
Where a shareholders’ meeting is convened by another convener beyond the Board of Directors, such meeting shall be chaired by that convener. In the event that there are two or more conveners, one shall be elected from among themselves to chair the meeting.
VI. The Company may appoint the retained attorney(s), certified public accountant(s) or relevant personnel to participate in a shareholders’ meeting. The personnel administering the shareholders’ meeting shall wear ID badges or badges.

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VII.	Shareholder’s meetings of the Company must be recorded in video and audio,
	and kept for at least one (1) year. If legal action is instituted by shareholders
	pursuant to Article 189 of the Company Act, the ballots shall be retained until the
	final ruling of the action.
VIII.	The chair shall announce opening of the meeting when the time schedule is due.
	When the present shareholders do not constitute a majority of the aggregate total
	of outstanding shares, nevertheless, the chair may announce a deferment in
	opening of the meeting. The deferments shall not exceed the maximum of twice
	and not exceed an hour in accumulation. If attending shareholders represent
	more than one-third but less than half of outstanding shares after two deferments,
	the attending shareholders may reach a tentative resolution according to the
	Company Act.
	When, prior to conclusion of the meeting, the attending shareholders represent a
	majority of the total number of issued shares, the chair may resubmit the
	tentative resolution for a vote by the shareholders’ meeting pursuant to the
	Company Act.
IX.	If a shareholders’ meeting is convened by the Board of Directors, the meeting
	agenda shall be set by the Board of Directors. The meeting shall proceed in the
	order set by the agenda, which may not be changed without a resolution of the
	shareholders’ meeting.
	The provision set forth under the preceding paragraph is equally mutatis
	mutandis applicable to a shareholders’ meeting that is convened by a convener
	beyond the Board of Directors.
	The chair may not announce the meeting is adjourned until a resolution is
	reached for the two procedures (including impromptu motions) referred to
	above.
	After the meeting is adjourned, unless otherwise regulated under the Paragraph 2,
	Article 182-1 of the Company Act, shareholders cannot nominate another
	chairman or seek another venue for continuation of the meeting.
X.	Before making a speech, the attending shareholders must fill out and submit the
	statement slip stating the purpose of the speech, the shareholder account number
	(or attendance card number) and account name for the chair to determine the
	order of speakers.
	The attending shareholders who have submitted a speaker’s slip but do not speak
	shall be deemed to have not spoken. In case the content of the speech delivered
	on the floor is irrelevant with the content in the speech memo, the former shall
	prevail.
	When a shareholder is having the floor, all other shareholders shall not interfere
	unless at the consent of the chair or the shareholder who is taking the floor. Any
	unrestrained action shall be discouraged by the chair.
XI.	Except with the consent of the chair, a shareholder may not speak more than
	twice on the same proposal, and a single speech may not exceed 5 minutes.
	If the shareholder’s speech violates the rules or exceeds the scope of the agenda
	item, the chair may terminate the speech.
XII.	Where a juristic person may be appointed as a proxy to attend the shareholders’
	meeting, such juristic person may appoint only one representative to the meeting.
	For corporate shareholders appointing two (2) or more representatives to the
	shareholders’ meeting, only one representative may express opinions on the
	same motion.

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XIII.	After a present shareholder completes their speech, the chair may respond either
	in person or through a relevant person designated.
XIV.	The chair of the board meeting is to have the motion in discussion that is ready
	for balloting put to the vote.
XV.	The ballot monitor(s) and counting staff for a voting or election process shall be
	appointed by the chair. A monitor shall be appointed only out of shareholders.
	The ballots for the voting or election process in a shareholders’ meeting shall be
	counted in an open manner inside the venue, and the outcome shall be
	announced on the spot after the counting process is completed, including the
	statistics for the voting rights which shall be covered into the written records.
	Where directors and supervisors are elected in a shareholders’ meeting, the
	election shall be duly conducted in accordance with relevant election guidelines
	defined by the Company. The outcome of the election, including the names of
	elected directors and supervisors and the number of election powers so won by
	them, shall be announced on-the-spot.
XVI.	When a meeting is in progress, the chair may announce a break based on time
	considerations.
XVII.	Unless otherwise provided for in the Company Act and in the Company’s
	Articles of Incorporation, the decision of an issue shall be resolved by a majority
	vote in the meeting that is attended by shareholders who represent a majority of
	the total outstanding shares. The chair is to consult the motion ready for balloting
	with the attendees at the meeting and it is deemed as having been passed if there
	are no objections raised.
XVIII.	The motions, or amendment or alternative motions of the original motions
	proposed by the shareholders shall have the support of more than one
	shareholder. The same shall apply to any changes to agenda and any motions of
	adjournment.
XIX.	Where a same issue is accompanied with an amendment or alternative, the chair
	shall resolve the order of voting along with the initial issue. In the event that one
	among them is satisfactorily resolved, other issues are deemed to have been
	vetoed and calling for no voting process anymore.
XX.	The chair may instruct the marshals (or security guards) to maintain order of the
	meeting. The marshals (or security) at the meeting venue assisting with
	maintenance of order shall wear armbands marked “Marshal.”
XXI.	These Rules of Procedure for Shareholders’ Meetings shall come into
	enforcement being duly resolved in the shareholders’ meeting. This same is
	applicable the amendment of the Rules.
XXII.	The Articles of Incorporation were instituted on May 20, 1991.
	The 1st amendment was on May 7, 1998.
	The 2nd amendment was on June 4, 2002.
	The 3rd amendment was on June 9, 2004.
	The 4th amendment was on June 13, 2013.
	The 5th amendment was on June 21, 2019.

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[Appendix III]

Shareholding Information of Directors

I. In accordance with Article 26 of the Securities and Exchange Act, the minimum number of shares held by all directors is 12,000,000.
II. As of the book closure date for the annual shareholders’ meeting, the total number of shares held by directors as recorded in the shareholder register is as follows:

Unit: Shares

==> picture [368 x 148] intentionally omitted <==

----- Start of picture text -----

Title Name Number of shares
Chairman SHIH-KUN TSO 5,877,815
Director CHING-HSIN CHO 11,959,488
Director YUNG-FAR WEI 250,061
Director HAN-LIANG HU 0
Independent director HUNG-TSU HSU 0
Independent director JENNYUMR KAO 0
Independent director ANTI TSAI 0
Total directors’ shareholdings 18,087,364
----- End of picture text -----

III. Director(s) discharged:

Unit: Shares

			Unit: Shares
Title	Name	Number of common stocks held at the time of discharge	Reason for discharge
Director	CHING-HUEI WU	0	Resignation due to personal reason, effective as of January19,2021.

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AI assistant

KYE — AGM Information 2021

52033_rns_2021-07-19_6924627d-cc00-4638-92d9-3fa6f639c135.pdf

KYE Systems Corp.

2021 Annual Shareholders’ Meeting

Table of Contents

[Attachment]

[Appendix]

KYE Systems Corp. 2021 Annual Shareholders’ Meeting Agenda

III. Opening statement by the chairperson.

VII. Extempore motions.

Reports

[Item 1]

[Item 2]

[Item 3]

[Item 4]

[Item 5]

Ratifications

[Item 1]

[Item 2]

Discussions

[Item 1]

Extempore Motions

[Attachment 1]

KYE Systems Corp. 2020 Business Report

II. Status of budget implementation

(II) Profitability analysis

IV. Performance in research and development

[Attachment 2]

Audit Committee’s Review Report

[Attachment 3]

Independent Auditors’ Report

Audit Opinions

Basis of Audit Opinions

Key Audit Matters

Occurrence of recognition of sales revenue

Other Matters

Responsibilities of the Management and Governing Bodies for Consolidated Financial Statements

CPA’s responsibility for the audit of the consolidated financial statements

KYE Systems Corp. and Subsidiaries Consolidated Balance Sheet December 31, 2020 and 2019

KYE Systems Corp. and Subsidiaries Consolidated Statement of Comprehensive Income January 1 to December 31, 2020 and 2019

(Continued from previous page)

(Continued from previous page)

KYE Systems Corp. and Subsidiaries Consolidated Statement of Changes in Equity January 1 to December 31, 2020 and 2019

KYE Systems Corp. and Subsidiaries Consolidated Statement of Cash Flow January 1 to December 31, 2020 and 2019

(Continued from previous page)

Independent Auditors’ Report

Audit Opinions

Basis of Audit Opinions

Key Audit Matters

Occurrence of recognition of sales revenue

Responsibilities of the Management and Governing Bodies for Individual Financial Statements

Responsibilities of Accountants for the Audit of Individual Financial Statements

KYE Systems Corp. Individual Balance Sheet December 31, 2020 and 2019

KYE Systems Corp. Individual Statement of Comprehensive Income January 1 to December 31, 2020 and 2019

(Continued from previous page)

(Continued from previous page)

KYE Systems Corp. Individual Statement of Cash Flows January 1 to December 31, 2020 and 2019

(Continued from previous page)

[Attachment 4]

Shares Repurchased as Decided by the Board of Directors and the Status of Actual Implementation

[Attachment 5]

KYE Systems Corp. Table of Profit Distribution 2020

[Appendix 1]

KYE Systems Corp. Articles of Incorporation

Chapter 1 General Provisions

Chapter 2 Shares

Chapter 3 Shareholders’ Meeting

Chapter 4 Directors, Supervisors and Managers

Chapter 5 Final Accounting and Profit Distribution

Chapter 6 Supplementary Provisions

[Appendix II]

KYE Systems Corp. Rules of Procedure for Shareholders’ Meetings

[Appendix III]

Shareholding Information of Directors

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