LOOP — Annual Report 2022

Jul 17, 2023

Stock Code: 3025

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Loop Telecommunication International, Inc.

2022 Annual Report

Published on June 8, 2023

Annual Report’s website: http://mops.twse.com.tw/mops/web/index

I. Name, title, and contact No. of the spokesperson of the Company: Spokesperson: Tsai Hsing-Chuan Title: Assistant Vice President of the Business Development Department Tel.: (03)5787696 ext. 1068 E-mail: sandy_tsaih@looptelecom.com Acting spokesperson: Chiang Hui-Ping Title: Assistant manager of the Sales Department Tel.: (03)5787696 ext. 8101 E-mail: joyce@looptelecom.com

II. Address and phone number of headquarters, branch offices and plants

Headquarters Address: 6F, No.8, Xin’an Road, Hsinchu Science Park. Tel: (03)5787696 Fax: (03)5787695 Taipei Office Address: 6F, No.36, Alley 38, Lane 358, Ruiguang Road, Neihu District, Taipei City. Tel: (02)26590399 Fax: (02)26592324 Tainan Office Address: 10F, No.88, Zhongshan Road, West Central District, Tainan City. Tel: (06)2226860 Fax: (06)2226870 Plant Address: 7F, No.8, Xin’an Road, Hsinchu Science Park Tel: (03)5787696 Fax: (03)5787695

III. Name, address, Tel., and website of the stock transfer agency

Name: Register & Transfer Agency Department of Yuanta Securities Co., Ltd Address: B1, No.210, Sec.3, Chengde Road, Datong District, Taipei City Tel: (02)25863117 Website: http://www.yuanta.com.tw

• IV. Names of CPAs for the most recent year and the name, address, Tel., and website of the CPA’s firm:

CPA: Huang Yu-Feng and Tseng Jian-Ming Firm: Deloitte & Touche Taiwan Address: 6F, No.2, Zhanye 1[st] Road, Hsinchu Science Park. Tel: (03)5780899 Website: www.deloitte.com.tw

• V. Name of any exchanges where the Company’s securities are traded offshore and the method by which to access information on said offshore securities: None.

• VI. Company’s website: www.looptelecom.com

(I) Business Report to Shareholders ........................................................................................................................... 1 1. The 2022 operating results .................................................................................................................................. 3 2. Summary of the Business Plan of the Year (2023) ................................................................................................. 8 3. Future development strategies.............................................................................................................................. 9 4. Effects of the external competitive environment .................................................................................................. 10 5. Effects of the regulatory environment and macroeconomic environment ............................................................... 10 (II) Company Profile ................................................................................................................................................. 11 1. Establishment Date ........................................................................................................................................... 11 2. Company History ............................................................................................................................................. 11 (III) Corporate Governance Report ......................................................................................................................... 22 1. Organization .................................................................................................................................................... 22 2. Data on Directors, President, Vice Presidents, Assistant Vice Presidents, and directors of departments and branches 25 3. Corporate governance implementation ............................................................................................................... 38 4. Information on CPA fees ................................................................................................................................... 71 5. Information on replacement of CPAs ................................................................................................................. 71 6. The Chairman, President, or managers in charge of financial or accounting matters of the Company working in the CPA’s firm or its affiliates in the most recent year: ............................................................................................ 73 7. Transfer of equity and changes in equity pledges of Directors, supervisors, managers, and shareholders with a shareholding of 10% and above in the most recent year and up to the date of publication of the annual report ......... 73 8. Information on relationships between shareholders with the top ten shareholdings ................................................. 74 9. The total number of shares held in any single investee by the Company, its Directors, managers, or any companies controlled either directly or indirectly by the Company: ..................................................................................... 76 (IV) Capital and shares ............................................................................................................................................. 77 1. Capital and shares ............................................................................................................................................. 77 2. Issuance of corporate bonds, conversion of corporate bonds, exchange of corporate bonds, corporate bonds issued under shell registry, and corporate bonds with options: ....................................................................................... 85 3. Issuance of preferred shares and preferred shares with options: ............................................................................ 85 4. Global depository receipts: ................................................................................................................................ 85 5. Employee stock options and restricted stock awards: ........................................................................................... 85 6. Mergers or receipt of new shares issued by other companies ................................................................................ 86 7. Implementation status of the capital utilization plan: ........................................................................................... 86 (V) Operational Highlights ....................................................................................................................................... 86 1. Scope of business ............................................................................................................................................. 86 2. Overview of market and production and marketing ........................................................................................... 102 3. The number of employees for the most recent two years and up to the date of publication of the annual report, their average years of service, average age, and education distribution ratio:.............................................................. 112 4. Information on environmental expenditure ...................................................................................................... 112 5. Labor-capital relations .................................................................................................................................... 113 6. Cybersecurity management ............................................................................................................................ 116 7. Important contracts: ...................................................................................................................................... 118 (VI) Finance overview ............................................................................................................................................. 119 1. Condensed balance sheet and statement of consolidated income for the most recent five years .............................. 119 2. Financial analysis for the most recent five years ................................................................................................ 123 3. Audit Committee's Review Report of the financial statements of the most recent year: ......................................... 127 4. Financial statements of the most recent year ..................................................................................................... 128 5. Parent company only financial statements of the most recent year audited and certified by CPAs .......................... 128 6. KPIs of the Company ...................................................................................................................................... 128 7. If the Company and its affiliates have experienced financial difficulties in the most recent year and up to the date of publication of the annual report, explain how said difficulties affect the Company's financial conditions .............. 128

(VII) Review and analysis of financial condition and financial performance and risk management .................... 129 1. Financial position .......................................................................................................................................... 129 2. Financial performance: .................................................................................................................................. 130 3. Cash flow analysis: ....................................................................................................................................... 130 4. Effect of major capital expenditures on finance and business in the most recent year ............................................ 131 5. Investment policy for the most recent year, the main reasons for profit or loss, improvement plan, and investment plan for the coming year ....................................................................................................................................... 131 6. Analysis and evaluation of risks shall be performed for the following matters in the most recent year and up to the publication date of the annual report ............................................................................................................... 131 7. Risk management structure.............................................................................................................................. 135 (VIII) Special Items ................................................................................................................................................. 137 1. Information on affiliates .................................................................................................................................. 137 2. Private placement of securities processing status during the most recent year and up to the publication date of the annual report ................................................................................................................................................ 141 3. Holding or disposal of the Company’s shares by its subsidiaries in the most recent year and up to the publication date of the annual report: ...................................................................................................................................... 141 4. Other matters that require additional explanation:. ............................................................................................. 141 (IX) Any of the circumstances listed in subparagraph 2, paragraph 2, Article 36 of the Securities and Exchange Act, which may materially affect shareholders' interest or the price of the Company's securities, that have occurred in the most recent year (2022) and up to the publication date of the annual report: ............................. 141 Attachment 1 Procedures for Handling Material Inside Information ................................................................... 142 Attachment 2 Code of Conducts or Ethics of Employees ....................................................................................... 145 Attachment 3 Code of Ethical Conduct .................................................................................................................. 146 Attachment 4 Regulations for Employees’ Complaints .......................................................................................... 148 Attachment 5 Procedures for Protection of Personal Data .................................................................................... 151

(I) Business Report to Shareholders

Dear shareholders,

In 2022, with uncertainties derived from the continuation of the war and geopolitics, there were material impacts on production capacity and revenue as the issues of lacking crucial parts and components, the delay in shipping schedule of different countries, lack of containers, and port congestion could not be solved effectively. Due to the US-China trade war and changes in the international environment, together with inflation, interest rate, and other macroeconomic factors, the communication industry was under effect; the growth recorded in the emerging market was not as expected, and the market turned to conservatism, affecting the revenue of the Company last year. Fortunately, Loop Telecommunication made appropriate responses and responded to the transformation of the industry pattern in advance, and our long-established brand was highly recognized. In recent years, we have promoted the use of MCC (Mission Critical Communication) in particular application fields, and there was a breakthrough reflected in our profit margin and overall performance. Facing the ever-changing market revolution, the Company will achieve the objective of low-cost and high performance through effective resource management and perform product transformation to become a contractor for value-added MCC solutions, which will have significant effects on the increase in subsequent revenue.

The consolidated revenue of the Company throughout the year was NT$438,242 thousand, representing a decrease of 15% from 2021; net income was NT$67,403 thousand, and earnings per share were NT$0.95. The profit margin of Loop Telecommunication has been maintained stably above 50%, which is a relatively outstanding performance in the network and communication industry. With the effects achieved through focusing on the market in Taiwan and the continual growth in different regions, Loop Telecommunication has adopted global sales and arrangements, and the regional ratio of the overall revenue will become more comprehensive. In addition, we maintained favorable performance in terms of financial structure, solvency, accounts receivable turnover, and other financial indicators.

Regarding our business, there were 52 countries having business dealings with the Company worldwide last year. Our export sales accounted for approximately 70% of the revenue throughout the year. In particular, we recorded growth in America, the EU, and Southeast Asia. For the market in Taiwan, the project has proceed to the next stage, and there has been a slight decrease for the Indian market. In terms of industry, electricity and governmental agencies account for 70% of our total revenue, and transportation and private corporate markets account for approximately 15%. In 2022, 80% of our revenue was from 13% of countries having dealings with us. Among all 32 product lines, 80% of the revenue was from 10% of the sales products. With the stabilization of the outbreak, it is likely to maintain the growth in the European and American region as in prior years, and the market in Southeast Asia also recovered. We continued to develop emerging markets to flexibly satisfy customers’ requirements. Loop Telecommunication has long been cooperating with large-scale international SI companies to develop new markets and promote the MCC market, which is deemed as the market driver under the trend of the new norms.

In 2013, Loop commenced its strategic transformation, strongly promoted mission-critical solutions, and successfully entered multiple domestic and foreign markets in recent years. As the bandwidth hungry applications in the mission-critical communication (MCC) network continued to increase TDM-based network backbone is gradually replaced by Packet-based one. Facing the transition period from existing technologies to new technologies, the provision of the new generation packet transport network technologies and concurrently accessing the existing legacy services have become the

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solutions most required by MCC users. Loop’s product line includes over 60 products, and it has been committed to the R&D of new products (i.e., G7860A, WDM1800, O9400-PTN10G, O9500-PTN10G, and other mixed service multiplexers for the abovementioned requirements. Meanwhile, it also upgraded the access service product line (AM3440-CCPB, IP6704A, and G7820) and developed Loop proprietary ultra-low latency and zero-packet-loss protection switching technologies to solve two major hindrances faced by MCC users in terms of the packet transport network. Combining the network management system with point-to-point circuit management capability.

The Loop-G7800 product line, the key development project of the Company for the year (2023), will be the highlight in the future. Loop-G7800 supports 100G optical transmission and possesses 400G exchange capacity, which significantly improves the backbone transmission bandwidth for customers. G7800 integrates Loop’s self-owned FPGA development capacity with various traditional TDM and the new generation L2/L2.5/L3 packet transport network technologies. Apart from being the backbone node, G7800 can also serve as the gateway for PDH/SDH/SONET/PTN network. The Nx64K interface card used over the years for AM3440 and O9500 may be used on the G7800 system platform, and Loop has also developed over ten kinds of interface cards for multiple speeds that support SDH/SONET/MPLS-TP/Carrier Ethernet. The comprehensive feature allows customers to have more flexibility for network planning in the future; regardless of phased budgeting projects increased based on requirements or the new era overall transmission network solutions that wish to be settled at one go, the Loop-G7800 product line will be able to satisfy such customers. At present, multiple partners have been actively inquiring about the formal launch of G7800. It is expected that the Loop-G7800 product line will become the next-generation star product to force into the MCC market.

Except for the major backbone and access network product series used worldwide, Loop has explored Information Security System (ISS), Artificial Intelligence (AI), corporate new era office network, corporate 5G private network, and other new technologies in recent years to expand into new markets of corporate and governmental information safety network overall solution development. In recent years, due to frequent information security events, the requirements for information of corporations and the government have been increasing. Loop has obtained the ISO27001 information security certification and performed a firmware upgrade for different products catering to the MCC market to support FIPS 140-3. Meanwhile, the Company also plans to launch the Loop-ISS2180 mission-critical network firewall and Loop-ISS2110 government configuration baseline network setting management system to assist customers in establishing the optimized MCC information safety protection environment.

Looking into the year ahead, the Company will continue to launch the following products and services.

1. Primarily used in the MCC market

2. General access aggregation multiplexer

3. Cross-connect multiplexer

4. SDH/SONET-MPLS mixed transmission equipment

5. L2/CE/L3/MPLS carrier packet-switching equipment

6. Solutions primarily used in the conversion from TDM transmission to packet switching transmission

7. TDM over Ethernet (TDMoE)

8. Solutions primarily used in exclusive MCC’s 5G for enterprises

9. MCC 5G-CPE and 5G CPE corporate core network service

10. Information security solutions primarily used in new-generation corporate offices

11. New era corporate LAN equipment

12. IIoT and video monitoring equipment

13. OT operating technology information security equipment

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The MCC market is enormous, and it requires customized overall solutions. At present, many countries have initiated dedicated acts for major infrastructure. For the strategies in the future market, Loop’s network transmission equipment and solutions are highly competitive, and it has become one of a few overall solution providers that can integrate optical communication, Ethernet transmission, multiprotocol label switching (MPLS) transmission, and dense wavelength division multiplexing (DWDM) worldwide with international partners and local system integration suppliers; it has successfully transformed into a communication and information system integration supplier and occupies a leading position in the MCC overall solution market. Next, the Company will expand its market development team and improve its income from vertical integration maintenance services. It will commit to becoming a one-stop MCC network solution provider and entering the global market through close cooperation with partners worldwide with continual growing momentum continues.

Regarding the marketing strategy for sharing the experience of the successful new backbone transmission case of Loop Telecommunication with the international society, it may develop new customers and spare no effort in creating critical new customer groups within three years; it is believed that the strategy will bring more orders and potential tenders for our layout. The MCC Networking Product Portfolio under the new business will enhance its utilization of automated testing systems and leverage the niche of various products, making it a potential key driver for future operational growth. At present, Loop Telecommunication is one of the top three companies for MCC solutions around the world. Based on the existing foundation, the Company continues to reinforce its management and makes constant efforts by adhering to the philosophy of continuing to develop new products and explore new markets. In the future, the Company will become a leader, grasp business opportunities, create excellent performance, and continues to strive for the maximized operating performance for all shareholders.

The 2022 operating results, the summary of the 2023 business plan, future development strategies of the Company, and effects of the external competitive environment, regulatory environment, and macroeconomic environment are summarized and reported as follows:

1. The 2022 operating results

(1) Implementation achievement of the business plan

The consolidated revenue of the Company throughout the year was NT$438,242 thousand, representing a decrease of 15% from 2021; net income was NT$67,403 thousand, and earnings per share were NT$0.95. The profit margin of Loop Telecommunication has been maintained stably above 50%, which is a relatively outstanding performance in the network and communication industry. With the effects achieved through focusing on the market in Taiwan and the continual growth in different regions, Loop Telecommunication has adopted global sales and arrangements, and the regional ratio of the overall revenue will become more comprehensive. In addition, we maintained favorable performance in terms of financial structure, solvency, accounts receivable turnover, and other financial indicators.

(2) Budget execution:

The actual revenue declined by approximately 23% as compared to the internal estimates of the Company, primarily due to the effects of overseas outbreaks. In 2022, considerably high uncertainties continued to exist; our projects in the Taiwanese market have developed into the next phase, and we recorded a mild decline in the Indian market.

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(3) Analysis of financial income and expenses, and profitability:

		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	Item	2021	2022	Ratio of increase (decrease)
Financial income and expenses	Net revenue	515,510	438,242	-14.99%
	Gross profit	266,319	240,564	-9.67%
	Net operating (loss) profit	39,999	14,509	-63.73%
	Interest income	196	4,029	1955.61%
	Interest expenses	1,337	1,248	-6.66%
Profitability	Return on assets (%)	3.30	6.60	100.00%
	Return on equity (%)	4.00	8.13	103.25%
	Ratio of net profit before tax to paid-in capital (%)	5.62	11.76	109.25%
	Net margin (%)	6.41	15.38	139.94%
	Earnings per share (NT$)	0.47	0.95	102.13%

(4) R&D status:

In response to the industrial trends, the Company has always been focusing on the spirit of R&D; the R&D funding invested in 2022 was NT$134,715 thousand, representing a decrease of NT$6,014 thousand (approximately 4%) from the R&D amount in 2021.

(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Year Item	2021	2022
Research and development expenses	140,729	134,715
Net revenue	515,510	438,242
Ratio to net revenue	27%	31%

From May 2019 to April 2023, equipment successfully developed by the Company is as follows:

May 2018 Completed the R&D of Loop-O9500R PTN/SDH/SONET/PDH IMAP and added PTN10G Interface Card to support MPLS-TP and Carrier Ethernet for Packet Transport Network (PTN) services.

June 2018 Loop-AM3440 Access DCS-MUX passed the Alstom Systems India Private Limited Type Test and Factory Acceptance Test.

Loop-iNMS Integrated Network Management System supported the Loop-O9500R PTN10G card MPLS VPLS/VPWS circuit management module.

July 2018 Loop-iNET Intelligent Network Element Management System (EMS) supported the TDM circuit diagnosis and management module.

August 2018 Completed the R&D of Loop-AM3430 Access DCS-MUX.

Completed the R&D of Loop-O9400R PTN/SDH/SONET ADM/TM and added PTN10G Interface Card to support MPLS-TP and Carrier Ethernet for Packet Transport Network (PTN) services.

September 2018 Completed the R&D of Loop-AM3440 ABRA card and added the support for the Voice Bridge function.

Completed the R&D of Loop-AM3440 Access DCS-MUX and added the support for the MQT1 board function.

Completed the Loop-G7860A mPTN MPLS/CE Packet Transport Network to support MPLS-TP and Carrier Ethernet for Packet Transport Network (PTN) services.

October 2018 Completed the R&D of Loop-AM3440 ABRA card for combination use with OCUDP card and added the support for the Data Bridge (MJU) function.

Completed the R&D of Loop-AM3440 ABRA for combination use with 12FXSA

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card and added the support for the Voice Conference function. Loop-iNET Intelligent Network Element Management System (EMS) supported the Loop-O9500R PTN10G card MPLS VPLS circuit management module.

• November 2018 Completed the R&D of Loop-O9500R and added the support for the 4C37SFP LSFiber Optical interface card.

• Completed the R&D of Loop-O9500R and added the support for the 8-port GbE over SDH/SONET Interface Card with Switch (8GESW) interface card.

• Completed the R&D of Loop-O9500R 6UDTEA interface card and added the support for the Mode 5 RS422 interface and Local Loopback/Remote Loopback functions.

• Loop-O9500R passed the phase 1 plant acceptance test procedures for the RY MUX project of Taipower Company.

• December 2018 Completed the R&D of Loop-AM3440-E IP/TDM DCS-MUX. January 2019 Completed the R&D of Loop-O9610S-GE Gigabit Ethernet Electrical/Optical Converter.

• February 2019 Completed the R&D of Loop-AM3440 CCPA Packet controller module with two Combo GbE (SFP/RJ45) interfaces for TDMoE uplink.

• Completed the R&D of Loop-G7820 L2/L3 Intelligent Switch.

• Loop-iNMS Integrated Network Management System supported the Loop-O9400R PTN10G card MPLS VPLS/VPWS circuit management module.

• March 2019 Completed the R&D of Loop- IP6820 and added the support for the I4GEPOE+ interface, including 4 GbE ports, 2 dry contact ports, and IEEE802.3at PoE + over 8 LAN ports.

• April 2019 Loop-IP6704A TDMoEthernet passed the Alstom Systems India Private Limited Type Test and Factory Acceptance Test.

Completed the R&D of Loop-O9400R and added the support for the 8-port GbE over SDH/SONET Interface Card with Switch (8GESW) interface card. Completed the R&D of Loop-O9400R PTN10G card and added the support for the L3 function. May 2019 Loop-IP6810, Loop-IP6820, and Loop-O9500R passed the Kenya Power & Lightning Co.Ltd Factory Acceptance Test. Completed the R&D of Loop-O9400R and added the support for the 8-port GbE over SDH/SONET Interface Card with Switch (8GESW) interface card. Completed the R&D of Loop-O9400R PTN10G card and added the support for the L3 function.

Loop-iNET Intelligent Network Element Management System (EMS) supported the Loop-O9500R PTN10G card MPLS VPWS circuit management module and Loop-AM3440 TTA card Protection Profile.

	Completed the R&D of Loop-O9400R PTN10G card and added the support for the L3 function. Loop-iNET Intelligent Network Element Management System (EMS) supported the Loop-O9500R PTN10G card MPLS VPWS circuit management module and Loop-AM3440 TTA card Protection Profile.
June 2017	Completed the R&D of Loop-AM3440 and added the support for the VoIPGA
	interface card.
	Completed the R&D of Loop-O9550 and added the support for the VoIPGA
	interface card.
	Loop-iNET Intelligent Network Element Management System (EMS) supported the
	Loop-O9500R PTN10G card MPLS VPLS circuit management module.
July 2019	Completed the R&D of Loop-O9400R and added the support for the PTNext interface
	card.
March 2020	Completed the R&D of the new model Loop-O9150S SDH STM-1 TM/ADM.
April 2020	Completed the R&D of the new product Loop-WDM1800 Wavelength Division
	Multiplexing Multi-Service Platform.
June 2020	Completed the R&D of the new Loop-O9500R-8GES16SWA board.
August 2020	Completed the R&D of Loop-IP6704A and added support for the M4E1 and ODP
	interface cards.
December 2020	Completed the R&D of new model Loop-IP6704A-DACS (Digital Access Cross
	Connect System(DACS).
December 2020	Completed the R&D of Loop-AM3440 8EMA/12FXSA/12FXOA/12MAGA/OCUDP
	and supported the TELCO50 interface.
April 2021	Completed the R&D of new product Loop-AM3430 Access DCS-MUX.
June 2021	Completed the R&D of the new generation model of Loop-AM3440, including the
	new CCPB, supported TDMoE, TDMoIP and TDMoMPLS functions, and
	accommodated the interface cards of older models.
July 2021	Completed the R&D of Loop-iNMS, added the support for the Pseudowire Circuit
	Management (PWCKT), and provided Loop PTN networking management solutions.
December 2021	Completed the R&D of the new model Loop-G7820-24S and supported 8 x

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1/10GbESFP+ports 24x1 GbE SFP ports and 8 x 10/100M/1GbERJ45 ports. January 2022 Completed the R&D of the new product Loop-WDM1800; the WDM module includes the following cards/boards: Transponder Modules Wavelength Division Multiplexing (Mux/Demux) Modules Optical Link Protection Modules Amplifier Modules Dispersion Compensation Modules (DCM) Optical Time-Domain Reflectometer (OTDR) Modules May 2022 Completed the R&D of the new generation Dry Contact type C board, which may be used with Loop-O9500R PTN/SDH/SONET/PDH IMAP products. September 2022 Completed the R&D of the new generation model of Loop-AM3440, including the new CCPB-8GEHSWa, supported TDMoE, TDMoIP and TDMoMPLS functions, and accommodated the interface cards of older models.

 Packet controller module

 Support cross-connect function

 4 x GbE and 4 x FE/GbE SFP interface with built-in L2 switch

 Supports SAToP, CESoPSN, and MEF-8

 Up to 64 pseudowires  Supports SyncE September 2022 Completed the R&D of the new product Loop-AM3440-E IP/TDM DCS-MUX MPLS-TP/CE SWITCH.

January 2023 Completed the R&D of the new board Muxponder, which can be used with LoopWDM1800.

The R&D Department completed a total of 12 brand-new and derived new products during the year, with products primarily focusing on iNET, iNMS, IP, PDH, SDH, MPLS, and TDMoE. Apart from iNMS, G7860A, O9400R-PTN10G, O9500R-PTN10G and other series products, Loop-G7800 is the future development focus. In accordance with the market demand, the Company will continue to develop new products and new technologies to satisfy customers’ requirements.

Current status of existing products and new products of the Company and future sales application and development are as follows:

Access multiplexer series products:

Loop-AM3440 of the Company is widely adopted worldwide, including the power system, transportation, governmental and military communication network, and other markets in Taiwan. Its high reliability, stability, various access interfaces, and the application cards developed based on customers’ application requirements allow Loop-AM3440 to continue to maintain the leading position in the access multiplexer market.

Broadband packet backbone networks have become popular; however, the tradition TDM access service for end equipment is still generally being used. In response to the actual requirements of the market, the Company developed cards that carry TDM via packet transport network by using the self-owned FPGA technologies to allow AM3440 to satisfy the point-to-point communication of access to TDM and IP-mixed networks. Meanwhile, we also tested and verified that AM3440 is able to satisfy the stringent requirements in terms of delay of the end operations in the packet networking environment with large-scale international companies. The outstanding performance and reliable quality will make it an indispensable access multiplexer for the new generation NGSDH and PTN backbone network.

Optical communication equipment:

For optical communication equipment, the Company primarily provides transmission communication equipment, telecommunication broadband products, optical fiber network access equipment, local end equipment, and other products; at present, the Company’s optical communication transmission equipment continues to maintain its mainstream position.

The Company’s optical communication transmission equipment continues to maintain its mainstream position. Loop-O9100, Loop-O93XX, Loop-O9400R, Loop-O9400S, Loop-O9500R,

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Loop-O9400 PTN10G, Loop-O9500 PTN10G, and other products will become the main force of the Company in the market. In addition, the development of optical communication products in recent years has turned from bottom speed, high speed, to high speed and large bandwidth. FOM products of low threshold are low speed. STM-16 products are high speed up to 2.5Gbps LoopO9400R and Loop-O 9500R will improve from STM-4 (a speed of 622Mbps) to STM-16 (a speed of 2.5Gbps) to align with the SDH international standards for optical fiber transmission equipment and packet transport network (PTN) with high speed and large bandwidth of up to 10Gbps. Furthermore, LOOP-AM 3440, one of the major sales products, was redesigned, and the SDH/SONET interface was added, and it became Loop-O 9550, the new generation SDH and IP-mixed equipment. Apart from this, the Company has completed the development of the new product PTN10G card for the Loop-O9500 PTN10G and O9400 PTN10G series products. PTN transport equipment possesses a transfer capacity of up to 100G for PTN, is equipped with automated path routing ability, and provides multiple service integration platform interfaces that are organized based on customers' requirements for applications. The connection of optical fiber interfaces will be adopted to form the transmission relay to comprehensively integrate and accommodate various service interfaces and various functions for satisfying customers’ requirements. This will allow the product lines of optical communication transmission equipment of the Company to become more comprehensive and allow it to provide total solutions as an optical communication transmission equipment supplier.

IP transmission equipment series products:

The Company has launched Loop-IP6704A/IP6702A/AM3440-E TDMoIP that can transmit T1, E1, and Voice signals on IP networks and Loop-IP 6416 Inverse Mux TDMoIP that can transmit IP data and Voice signals on PDH network. For Loop-IP 6704A products, we have successfully developed the increase in multiple different interface channels and added TDMoIP function cards for Loop-AM 3440 and Loop-O 9500. The Company directly developed TDM over Ethernet; under the segregation of adding the FPGA design, it maintained its advantages through maintaining the upgrades of product functions, uniqueness of customization, and the timeliness of time to market. The Company has always been attaching its attention to the development of new products. For the TDM over Ethernet product and equipment market, it is confident that it can develop products that compete with large-scale international companies; by doing so, it hopes to bring up the trend for the R&D capacity of the communication system industry in Taiwan to make further breakthroughs, and to secures a seat as a top-tier large-scale international company. In addition, the design of LOOP-IP6750 is the first network equipment of the Company that combines PDH E1, TDMoIP, Gigabit, Ethernet, and IEEE 1588 V2 functions. The development of IP6750 not only satisfies the functional requirements of the third-generation ED. With our R&D experience accumulated over two decades, we decided to introduce the FPGA design to improve the flexibility for customization and functional upgrades of products in the future, which is the segregation with the design of large-scale companies at present. Due to the introduction of the FPGA design, we possess mobility, timeliness, and uniqueness of customization for the R&D of new functions in the future to satisfy the requirements of customers in the market. The Company focused on the R&D of CO-end and CPE-end equipment. For the R&D segregation, apart from placing the standardized IC into the design, as the existing standards and protocols are not sufficient for the application of actual circuits and functions, peripheral circuit designs and the innovation of FPGA system functions are required to be introduced. The Company adopted the existing standards as the foundation and introduced the peripheral circuit design to create new functionality and innovation breakthroughs.

Corporate grade network management and integration solution:

With the booming development of network technologies and the constant new development of network management technologies, the heterogeneity, diversification, and complexity of network systems have gone far beyond the level that can be understood by network management professionals in the past. The third-generation network management system of the Company provides integrated smart network management solutions. Based on the logical layer network management structure formulated by ITU-T, the iNMS flagship network management system supports the newly launched MPLS-TP and PTN-10G innovative products and equipment, provides point-to-point operation planning, remote route building, built-in diagnosis, and other automated functions that can significantly reduce the costs of users generating from operating expenses and effectively improve the business execution efficiency. In addition, the developing

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iNET network management system has low coupling and high integration features. We were contracted for the metro network management integration of Orlando and Tampa airports in the U.S., the parallel integrations of NEC train marks, and the CCTV safety control monitoring systems in Taiwan, providing comprehensive turnkey solutions for customers. The Company is the OEM/ODM network equipment and network management system supplier of GE in the U.S. (power applications account for approximately 50% of the total turnover of the Company). Apart from actively participating in material domestic and foreign power system projects leveraging its network management system, the Company has been selected as the supplier for the network management solutions of material transportation constructions (i.e., metro in Singapore and metro in Indonesia). For network element management, in response to the market trends, the Company has launched brand-new graphical network management setting tools to replace local craft terminal (LCT) setting tools in the form of orders in the past, providing convenient and friendly user experiences and operating environments for customers. Adhering to its reputation and faith as the top brand of network communication equipment in Taiwan, the Company seeks advances in the field of network management and has been actively pursing the improvement in the awareness of Taiwan in the international market.

4G LTE base station transmission equipment:

Customers of the Company are mostly from developing countries (i.e., India, Southeast Asia, and the Middle East); countries in such regions have an increasing demand for the communication equipment of the Company at present. Furthermore, the Company is actively developing smart network equipment management systems and IP transmission equipment to satisfy the requirements of the future market. Currently, the development of the MPLS-TP 10G carrier Ethernet equipment we invested in is completed, and we continue to explore relevant product lines. In the future, the Company will also make arrangements for the design of 5G communication products.

2. Summary of the Business Plan of the Year (2023)

(1) Business policy

The consolidated revenue in 2023 Q1 was NT$152,243 thousand, representing a mild growth of 22% as compared to revenue of NT$124,754 thousand in the same period last year, and the earnings per share was NT$0.61. The profit margin of Loop Telecommunication has been maintained stably above 50%, which is a relatively outstanding performance in the network and communication industry. With the effects achieved through focusing on the market in Taiwan and the continual growth in different regions, Loop Telecommunication has adopted global sales and arrangements, and the regional ratio of the overall revenue will become more comprehensive. In addition, we maintained favorable performance in terms of financial structure, solvency, accounts receivable turnover, and other financial indicators. With the stabilization of the outbreak, it is likely to maintain the growth in the European and American region as in prior years, and the development of the market in Southeast Asia and different regions has also recovered. We continued to develop emerging markets to flexibly satisfy customers’ requirements. Loop Telecommunication has long been cooperating with large-scale international SI companies to develop markets and new products, which is deemed as the market driver under the trend of the new norms.

(2) Estimated sales volume and its basis, and material production and marketing policy

Due to the transition in the industry pattern of Loop, it will achieve the objectives of low costs and high performance, leveraging its product R&D capacity accumulated for nearly 30 years and through effective resource management. In recent years, we have promoted the use of MCC (Mission Critical Communication) in particular application fields, and there was a breakthrough reflected in our profit margin and overall performance.

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For the business, there are 52 countries worldwide having business dealings with the Company. Benefiting from the recovery plan in Europe and the infrastructure act in the U.S., export sales accounted for approximately 80% of our revenue throughout the year. By industry, the power market accounts for 40%, and governmental agencies account for 30% of the total revenue. In 2022, 80% of our revenue was from 13% of countries having dealings with us. Among all 32 product lines, 80% of the revenue was from 10% of the sales products.

3. Future development strategies

The Loop-G7800 product line, the key development project of the Company for the year (2023), will be the highlight in the future. Loop-G7800 supports 100G optical transmission and possesses 400G exchange capacity, which significantly improves the backbone transmission bandwidth for customers. G7800 integrates Loop’s self-owned FPGA development capacity with various traditional TDM and the new generation L2/L2.5/L3 packet transport network technologies. Apart from being the backbone node, G7800 can also serve as the gateway for PDH/SDH/SONET/PTN network. The Nx64K interface card used over the years for AM3440 and O9500 may be used on the G7800 system platform, and Loop has also developed over ten kinds of interface cards for multiple speeds that support SDH/SONET/MPLSTP/Carrier Ethernet. The comprehensive feature allows customers to have more flexibility for network planning in the future; regardless of phased budgeting projects increased based on requirements or the new era overall transmission network solutions that wish to be settled at one go, the Loop-G7800 product line will be able to satisfy such customers. At present, multiple partners have been actively inquiring about the formal launch of G7800. It is expected that the Loop-G7800 product line will become the nextgeneration star product to force into the MCC market.

Except for the major backbone and access network product series used worldwide, Loop has explored Information Security System (ISS), Artificial Intelligence (AI), corporate new era office network, corporate 5G private network, and other new technologies in recent years to expand into new markets of corporate and governmental information safety network overall solution development. In recent years, due to frequent information security events, the requirements for information of corporations and the government have been increasing. Loop has obtained the ISO27001 information security certification and performed a firmware upgrade for different products catering to the MCC market to support FIPS 140-3. Meanwhile, the Company also plans to launch the Loop-ISS2180 mission-critical network firewall and Loop-ISS2110 government configuration baseline network setting management system to assist customers in establishing the optimized MCC information safety protection environment.

Looking into the year ahead, the Company will continue to launch the following products and services.

1. Primarily used in the MCC market

2. General access aggregation multiplexer

3. Cross-connect multiplexer

4. SDH/SONET-MPLS mixed transmission equipment

5. L2/CE/L3/MPLS carrier packet-switching equipment

6. Solutions primarily used in the conversion from TDM transmission to packet switching transmission

7. TDM over Ethernet (TDMoE)

8. Solutions primarily used in exclusive MCC’s 5G for enterprises

9. MCC 5G-CPE and 5G CPE corporate core network service

10. Information security solutions primarily used in new-generation corporate offices

11. New era corporate LAN equipment

12. -IIoT and video monitoring equipment

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- OT operating technology information security equipment

Regarding the marketing strategy for sharing the experience of the successful new backbone transmission case of Loop Telecommunication with the international society, it may develop new customers and spare no effort in creating critical new customer groups within three years; it is believed that the strategy will bring more orders and potential tenders for our layout. Combining the MCC networking product portfolio under the new business and the niche of various products, it is likely to become the growth focus for operations in the future. At present, Loop Telecommunication is one of the top three companies for MCC solutions around the world. Based on the existing foundation, the Company continues to reinforce its management and makes constant efforts by adhering to the philosophy of continuing to develop new products and explore new markets. In the future, the Company will become a leader, grasp business opportunities, create excellent performance, and continues to strive for the maximized operating performance for all shareholders.

4. Effects of the external competitive environment

During the period of uncertain prospects due to the sluggish economy in the external environment, the Company continued to strive to achieve its objective of annual growth for different operations. In 2022, 80% of the revenue came from the 13% of countries having dealings with the Company. Among all 32 product lines, 80% of the revenue was from 10% of the sales products. Adhering to the continuous development of new products and new markets is the way to maintain competitive. In terms of market and industry, we have achieved the effects of dispersed revenue and healthy development in regions worldwide. Certain competitors within the industry exited the market successively, and the dependence of existing customers on Loop has increased instead of decreased.

5. Effects of the regulatory environment and macroeconomic environment

The management team has been keeping abreast of policies and laws, and regulations that may affect the business and operations of the Company. In 2022, changes in relevant laws and regulations had no material effect on the Company’s operations.

We wish you, ladies and gentlemen, good health and the best of luck.

Chairman: Yeh Maw-Lin President: Yeh Maw-Lin Chief Accountant: Chang Xiao-Ling

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(II) Company Profile

1. Establishment Date

December 3, 1991

Address and phone number of headquarters, branch offices and plants

Headquarter: 6F, No.8, Xin’an Road, Hsinchu Science Park Tel: (03)5787696

Plant: 7F, No.8, Xin’an Road, Hsinchu Science Park Tel: (03)5787696

Taipei Office: 6F, No.36, Alley 38, Lane 358, Ruiguang Road, Neihu District, Taipei City Tel: (02)26590399

Tainan Office: 10F, No.88, Zhongshan Road, West Central District, Tainan City Tel: (06)2226860

2. Company History

Year/month July 1991 December 1991 February 1992 April 1992 November 1992 February 1993 April 1993 November 1993 December 1993 June 1994 August 1994 September 1994 February 1995

Milestone

With the approval of the Science Park Bureau, the preparatory office of the Company applied with the Bureau to invest in the establishment of “Loop Telecommunication International, Inc." in May 1991. Rented a plant at 1F, No.11, Gongye East 9thRoad, Hsinchu Science Park. Formally established Loop Telecommunication International, Inc.. The registered capital was NT$225 million. The paid-in capital was NT$56.25 million. Performed a capital increase in cash of NT$9.9 million. Formally commenced feeding and pilot production. The “general and private line user telemetering maintenance terminator” received innovative technology research plan subsidies from the Park Bureau. Performed a capital increase in cash and from technology contribution of NT$53.85 million. The “network access equipment” received crucial part and component R&D product subsidies from the Park Bureau. Rented a plant at 2F, No.22, Zhangye 2ndRoad, Hsinchu Science Park. The “subtitle telephone and multi-function front-end processor” received innovative technology research plan subsidies from the Park Bureau. The “smart high-speed digital network service system” received innovative technology research plan subsidies from the Park Bureau. The “second generation digital wireless CT2 base and handphone” received the crucial par and component R&D product subsidies from the Park Bureau. The “T-2200 network access equipment" produced by the Company passed the production capacity inspection of the Telecommunications Bureau in Taiwan. The “high-speed T1/E1 digital network access equipment” produced by the Company won the Innovative Product Award from the Science Park in 1994. Our phone telemetering interface processors obtained a patent from the Bureau of Standards, Metrology and Inspection, Ministry of Economic Affairs.

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Year/month March 1995 May 1995 June 1995 August 1995 April 1997 August 1997 September 1997 December 1997 May 1998 July 1998 November 1998 January 1999 July 1998 June 1999 September 1999 November 1999 December 1999 March 2000 April 2000 May 2000 August 2000 September 2000

Milestone

FT1 CSU/DSU 100/200 won the Excellence Award from the Ministry of Economic Affairs. The testing method of our high-speed data transmission machine obtained a patent from the Bureau of Standards, Metrology and Inspection, Ministry of Economic Affairs. Passed the ISO-9001 quality assurance certification. The "frame-relay transmission network equipment with data compression functions" received the crucial par and component R&D product subsidies from the Park Bureau. The “European high-speed symmetric user line transmission equipment” received innovative subsidies. The “IDSL high-speed multiplexer” received innovative subsidies. Performed a capital increase in cash and from technology contribution of NT$75 million, and the paid-in capital became NT$195 million. Became a public company. Re-elected Directors and supervisors, and Mr. Jin Shi-Tian was the newly elected Chairman. Completed the R&D of “European E1 secured communication transmission equipment” and obtained innovative technology subsidies from the Park Bureau. E1200 obtained the CE168X and BABT certifications. The Ministry of Economic Affairs approved investments in Tianjin Xingtong and Hangzhou Xingtong in Mainland China via a business in a third-party region. Completed the R&D of the “multi-media consolidation time slot exchanger” and received the SME R&D promotion product subsidies from the Ministry of Economic Affairs. The registered capital was NT$365 million. The “corporate Internet telephone and data system” received the dominating new product development subsidies from the Industrial Development Bureau, Ministry of Economic Affairs. Performed a capital increase in cash and from technology contribution of NT$30 million and a capital increase from earnings in 1998 of NT$65 million, and the paid-in capital became NT$290 million. Entered into a plant construction contract with Futsu Construction Co., Ltd.; the Company possesses a self-built plant of 2,200 pings. Received the Rising Star Award from the Asia Pacific Industry Research and Development Fund. Received the mentoring program subsidiaries for the “CE label” of industrial products from the Industrial Development Bureau, Ministry of Economic Affairs. Rated as a “level A” company in terms of technology management and financial position by the Ministry of Economic Affairs. LOOP-4200 products won the Excellence Award from the Ministry of Economic Affairs. The Ministry of Economic Affairs approved investments in Zhejiang Quark Software Co., Ltd. in Mainland China via a business in a third-party region. The Ministry of Economic Affairs approved investments in Tianjin Xingtong Smart Instruments Co., Ltd. in Mainland China via a business in a third-party region. The registered capital was NT$471.6 million. The SFC approved the shares of the Company to be traded on the Taipei Stock Exchange. Performed a capital increase from earnings in 1999 of NT$101.65 million, and the paid-in capital became NT$391.65 million. Received the 9thNational Award of Outstanding SMEs.

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Year/month December 2000 February 2001 March 2001 April 2001 June 2001 August 2001 September 2001 October 2001 December 2001 June 2002 August 2002 November 2002 September 2003 November 2004 June 2006 December 2006 June 2007 August 2007 December 2007 August 2009 October 2009

Milestone

The self-built plant of 2,200 pings was completed. IMAP passed the NEBS certification of the U.S.. Our shares were listed on TPEx. The “Loop-V 4200-9” obtained the EN60950, UL1950, and CSA22.2 certifications. The “data and digital audio message identification method” obtained a certification from the United States Patent and Trademark Office. The “Loop-V 4200-28” obtained the NEBS:GR-63-Core/ESU certification. The “Loop-V 4200-28” obtained the NEBS: GR-1089-CORE / Telecom, GR-63- CORE / ESU, and EMC certifications. Performed a capital increase from earnings in 2000 of NT$130.35 million, and the paid-in capital became NT$522 million. The “Loop-H3900” obtained the India Interface Approval Certificate. Loop-V 4200-28 IMAP won the 8thTaiwan SMEs Innovation Award. Won the 9thIndustrial Technology Advancement Award from the Ministry of Economic Affairs. Won the Excellent Company Innovative Product Award of the Science Park The “network access equipment with IP-VPN” received innovative technology subsidies from the Park. Loop-V 4200-28 IMAP won the Innovative Product Award of the Science Park in 2001. The Ministry of Economic Affairs approved investments in Suzhou Loop Co., Ltd. in Mainland China via a business in a third-party region. The SFC approved the shares of the Company to be transferred from the Taipei Stock Exchange to the Taiwan Stock Exchange for trading. The “high-density optical fiber time slot exchange equipment” received the Innovative Technology R&D Award from the Hsinchu Park Bureau. Issued the first tranche of secured domestic convertible corporate bonds. The “EFM access network system and crucial module vertical integration technology development project” obtained funding and subsidies under the science R&D project of the Ministry of Economic Affairs. Completed the R&D of the second generation C5500 Mizar Controller and obtained the certification from Chunghwa Telecom. Completed the development of Loop-H 3308-4 multi-wire ultra-broadband to transmit 10/100 M Ethernet/IP and a patent application had been made for the technology, which is the first in Taiwan. Purchased the Taipei Neihu Plant of a total of 448m2to establish the second R&D center. Purchased the 6th floor of the building of a total of 3,129m2to expand the production capacity. Acquired the equity of Tianjin Loop Electron Technology Co., Ltd. from the initial shareholders, and the equity held increased from 50% to 75%. Issued the second tranche of employee stock options in the amount of 2,000 thousand shares. Sold 649 thousand treasury shares to employees. The Loop-O 9400-6R STM-16/OC-48 high-speed interface has a speed of up to 2.5Gbps, and the product won the “Hsinchu Science Park 2009 Product Innovation Award.” Completed the Integrated Network Management System (iNMS). The Loop-O 9340 LEAPS product won subsidies from the “Hsinchu Science Park Foundation Solidification and Advancement Research Project Subsidized by the National Science and Technology Council, Executive Yuan.”

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Year/month June 2000 January 2011 February 2011 March 2011 April 2011 May 2011 July 2011 July 2011 September 2011 October 2011 October 2011 February 2012 March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 November 2012 March 2013 April 2013

Milestone

Chairman Jin Shi-Tian’s term of office expired, and the Board elected Mr. Yeh Maw- Lin as the new Chairman. Completed the R&D of Loop-AM 3440 and added the 1FOMA interface. Completed the R&D of Loop-W 8220 2.5/3.5GHz Outdoor WiMAX CPE. Completed the R&D of Loop-ACC-RSSI-Meter Receiver signal strength indicator tool. Completed the R&D of Loop-IP 6702 to adopt the use of IP to transmit traditional E1/T1 communication signals. Completed the R&D of Loop-O 9500 and added the MAG interface. Completed the R&D of Loop-W 8140 WiFi integration wireless system that supports the IEEE 802.11a/b/g/n standards. Completed the R&D of the second generation Loop-IP 7920 Gbps Ethernet demarcation equipment. The Loop-IP 7920 Gbps Ethernet demarcation equipment ring application equipment and development plan received the subsidies under the “Small-scale Enterprise Innovative R&D Project of the Ministry of Economic Affairs.” Completed the R&D of Loop-ACC RSSI Meter. Completed the R&D of Loop-AM 3440 and added the PLM card. Completed the R&D of Loop-V 4200-9 and added the PLM card. Completed the R&D of Loop-G 1701 Powerline 500M Wall Plug Ethernet Bridge. Completed the R&D of Loop-C 5600 and added the H3304RA card. Completed the R&D of Loop-H 3310 2BRH interface. Completed the R&D of Loop-W 8210 WiMAX 3.5G Outdoor BS/SS. Completed the R&D of Loop-IP 6820 Self-Healing Ring NTU. Completed the R&D of Loop-IP 7920 Optical Bypass Module. Completed the R&D of Loop-O 9150S SDH STM-1 TM/ADM. Completed the R&D of Loop-AM 3440 and added the 8UDTE card. Completed the R&D of Loop-W 8150 WiFi integration wireless system that supports the IEEE 802.11a/b/g/n standards. Completed the R&D of Loop-W 8210 WiMAX 5.8G Outdoor BS/SS. Completed the R&D of Loop-iNET web-based intelligent network management system. Completed the R&D of Loop-O 9500 and added the 8DBRA card. Completed the R&D of Loop-IP 6510-LN Multiple WAN Router. The Ministry of Economic Affairs approved an indirect capital increase in Chongqing Loop Technology Co., Ltd. in Mainland China via a business in a third-party region, and the share capital increased from US$2.1 million to US$2.4 million. Completed the R&D of Loop-AM 3440-8UDTEA card. Completed the R&D of Loop-V 4150 high capacity DS0 Cross Connect System. Completed the R&D of Loop-V 4150 Relay Protection Shelf that supports 1:N board protection. Completed the R&D of Loop-O 9500 and added the 3E1 card. Completed the R&D of Loop-IP 6702 and added the IP optical port transmission of E1/T1 communication signals. Completed the R&D of Loop-E 15002S and added the 8-channel Alarm Input interface.

14

Year/month May 2013 May 2013 June 2013 July 2013 August 2013 September 2013 October 2013 November 2013 December 2013 February 2014 March 2014 April 2014 May 2014

Milestone

The Loop-G 7860 (general label PTN project) received "subsidies under the Dominating New Product Development Project” of the Institute for Information Industry. Completed the R&D of Loop-IP 6820 Self-Healing Ring NTU and added the DTE (RS232/RS422/RS485) interface. Completed the R&D of Loop-iNET web-based intelligent network management system that supports traditional Chinese and simplified Chinese interfaces. Completed the R&D of Loop-O 9500 and added the CONF card. Completed the R&D of Loop-IP 7925 Carrier Ethernet Transport with CFM & ERPS. Completed the R&D of Loop-V 4150 and added the 3 port T3 card with MX3 functions. Completed the R&D of Loop-O 9500 and added the 8UDTE card. Completed the R&D of Loop-O 9550 SDH/SONET IMAP. Completed the R&D of Loop-W 8171 2.4G WiFi Module. Completed the R&D of Loop-iNET web-based intelligent network management system that supports the File Transfer Tool to provide users with convenient equipment software and equipment backup with an upgraded interface. Completed the R&D of Loop-O 9500 and added the DC 48V~125V power module. Completed the R&D of Loop-iNET web-based intelligent network management system that supports Graphical Cross Connection Tool to provide users with convenient graphical interface settings and circuit inquiries. Purchased the Tainan Plant of a total of 940.43m2to use as an R&D center. Completed the R&D of Loop-AM 3440 and added the Echo Canceller (ECA) card. Completed the R&D of Loop-AM 3440 8UDTE card and added the Terminal Server and Omnibus functions. Completed the R&D of Loop-iNET web-based intelligent network management system that supports network system backup and protection functions. Completed the R&D of Loop-IP 6610 that supports the industry-grade working temperature of -40oC~70oC. Completed the R&D of Loop-IP 6763 to maximize the support for 512 Pseudowires. Completed the R&D of Loop-O 9550-CGC 3U Chassis. Completed the R&D of Loop-ACC-RPT Radio Planning Tool. Completed the R&D of Loop-V 4150 3 port T3 card and added the 1:1 protection functions. Completed the R&D of Loop-AM 3440 and added the V.110 card. Completed the R&D of Loop-iNMS integrated network management system that supports the Pseudowire Circuit Management function. Completed the R&D of Loop-O 9550-CGD 2U Chassis. Completed the R&D of Loop-O 9400R-CHAA 6U Chassis that supports up to 2.5G Mbps mapping bandwidth and the new card 4GESW. Completed the R&D of Loop-O 9550 and added the Fiber Optical (FOM) card. Completed the R&D of Loop-AM 3440 and added the Analog Bridge (ABRA) card.

15

Year/month July 2014 September 2014 November 2014 December 2014 January 2015 February 2015 March 2015 April 2015 May 2015 June 2015 July 2015 August 2015

Milestone

Completed the R&D of Loop-iNET integrated network management system that supports NE Firmware Upgrade and Configuration Upload/Download functions and Auto Discovery functions. Completed the R&D of Loop-AM 3440 and added the Mini LS-Fiber Optical (M1C37) card. Completed the R&D of Loop-AM 3440 and added the iXC3440 Craft GUI Mapping Tool. Completed the R&D of Loop-AM O9400R and added the 4GESW card. Completed the R&D of Loop-O 9550 and added the Mini LS-Fiber Optical (M1C37) card. Completed the R&D of Loop-V 4150 and added the STM-1/OC3 (B155) card. Completed the R&D of Loop-W 8140 and added the Router function and the built-in Iperf Throughput Diagnostic function. Completed the R&D of Loop-iNET integrated network management system that supports Cross Connect Mapping Export/Import functions. Completed the R&D of Loop-IP7930 Ethernet Demarcation Device (EDD). Completed the R&D of Loop-iNET integrated network management system that supports eCFM functions and Log Server functions. Completed the R&D of Loop-O9170 SDH STM-1 MUX system. Completed the R&D of Loop-AM3440 8UDTE card to support Half Duplex mode under the Terminal Server and Omnibuse functions. Completed the R&D of Loop-IP6320 L2/L3 Intelligent Switch. Completed the R&D of Loop-W8150 802.11 a/n and b/g/n Wireless Device. Completed the R&D of Loop-IP6830 Industrial Ethernet Device. The Tainan R&D Center is formally put into use. Completed the R&D of Loop-AM3440 and added the 3T1 card. Completed the R&D of Loop-iNET integrated network management system that supports the Loop-IP6320 management functions and provides Loop-O9170 Graphical Cross connection tool. Completed the R&D of the introduction tools for the Loop-iNET integrated network management system for users to carry out circuit marker and Performance management. Completed the R&D of the full introduction of the Loop-iNET integrated network management system to the LoopView network management System. Completed the R&D of Loop-O9170 SDH STM-1 MUX and added RS232/RS485 and FXS/FXO/E&M interfaces to the TG4/TG5 expansion card slot. Completed the R&D of Loop-AM3440 and added the SDA-24Vdc/-48Vdc (-18 to –75 Vdc) 150W power module. Completed the R&D of Loop-IP6330 GbE Intelligent Switch. Completed the R&D of Loop-AM3440 TDMoE card and added the MEF8 function. Completed the R&D of Loop-O9550 and added the 6-channel RS232 with V.110 encoding (6RS232A) card. Completed the R&D of Loop-O9400R Fanless CHAA Chassis. Completed the R&D of Loop-O9400R and added the TDMoG card.

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Year/month October 2015 November 2015 December 2015 January 2016 February 2016 April 2016 May 2016 June 2016 July 2016 August 2016 September 2016 October 2016 November 2016 December 2016

Milestone

Completed the R&D of Loop-O9500R and added the STM-1/4/16 (OC-3/12/48) Controller (CC16). Completed the R&D of Loop-G7860 mPTN MPLS/CE Packet Transport Network equipment. Completed the R&D of Loop-AM3440 and added the Mini Quad E1/T1 (4-channel E1/T1 interfaces) card (M4TE). Completed the R&D of Loop-iNMS Integrated Network Management System and added the Pseudowire Circuit Management Subsystem, including Pseudowire Circuit for TDMoIP, TDMoE and MPLS-TP. Completed the R&D of IP7930-B and added 2 pairs of Ethernet Bonding ports. Completed the R&D of Loop-AM3440 and added the Transfer Trip card (TTA). Completed the R&D of Loop-O9500R and added the Fanless CHAA Chassis. Completed the R&D of Loop-O9500R and added the 6-channel UDTEA (6UDTEA) card. Completed the R&D of Loop-G7860 and added Two port 10GbE cards with SFP+ interfaces (2XG). Completed the R&D of Loop-O9400R and added the Multiplex Section-Shared Protection Rings (MS-SPRINGs) function. Completed the R&D of Loop-W8230 Packet Microwave Radio equipment. Completed the R&D of Loop-G7860 and added the STM-1/OC3 or STM-4/OC12 interfaces (B16) card. Completed the R&D of Loop-iNET and added the TDM tools. Completed the R&D of Loop-iNMS, added the Pseudowire management tools, and provided the Loop-G7860 PTN product integration management platform. Completed the R&D of Loop-AM3440 and added the 6-channel G.703 (6CDA) card. Supported Co-directional and Contra-directional models. Completed the R&D of Loop-AM3440 6-channel UDTEA (6UDTEA) cards and added X.21, RS422, RS232, and V110 sub-rate interfaces. Completed the R&D of Loop-IP6702A TDMoEthernet equipment. Completed the R&D of Loop-O9400R and added the STM16/OC-48 Interface Module (B2G5) card. Completed the R&D of Loop-iNET and added the third-party equipment connection interface; the Intrusion Alarm System (IAS) utilizes an alert to trigger CCTV; when an alert occurs, the image of CCTV will immediately show on the CCTV management interface. Completed the R&D of Loop-O9340S Multi-Services Gigabit FOM that complied with the information safety requirements of Chunghwa Telecom and passed the tests of the Chunghwa Telecom laboratories. Completed the R&D of Loop-O9500R SDH/SONET IMAP that supports 4 port GbE card (4GESW). Completed the R&D of Loop-G7860 mPTN MPLS/CE Packet Transport Network that supports 8 port GbE/FE card with SFP interfaces (8SFP) Completed the R&D of Loop-LCT Graphical Configuration Tool. Completed the R&D of Loop-IP7930T Ethernet Demarcation Device that supports the real-time packet monitor functions.

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Year/month January 2017 February 2017 April 2017 July 2017 August 2017 September 2017 October 2017

Milestone

Completed the R&D of Loop-AM3440 3E1 card and added E1 1+1 protection functions. Completed the R&D of Loop-AM3440 6-channel UDTEA (6UDTEA) card and added V54 Loopback functions to V.35/V.36/EIA530/RS449 interfaces. Completed the R&D of Loop-AM3440 8-channel Data Bridge Card (6UDTEA) card and added the UART interface. Completed the R&D of Loop-AM3440 12FXOA Voice Card. Completed the R&D of Loop-G7860 mPTN MPLS/CE Packet Transport Network equipment that supports fan-free designs and complies with the hardening temperature specifications (-20 to 55 ºC). Completed the R&D of Loop-IP6320A L2/L3 Intelligent Switch. Completed the R&D of Loop-O9500 that supports the Transfer Trip Card (TTA). Completed the R&D of Loop-O9550 that supports the Quad FXSA Voice Card (QFXSA). Completed the R&D of Loop-O9550 that supports the Quad E&M Voice Card (QEMA). Completed the R&D of Loop-IP6702A TDMoEthernet and added the T1 interface. Completed the R&D of Loop-IP6704A TDMoEthernet and added T1, Quad FXSA (QFXSA), and Quad FXO (QFXO) Voice interfaces. Completed the R&D of Loop-iNET, which supports Language Localization Tools to provide multiple language translation tools. Completed the R&D of Loop-O9500 and added the 6-channel G.703 (6CDA) card. Completed the R&D of Loop-O9500 and added the 6-channel UDTEA (6UDTEA) card. Completed the R&D of Loop-LCT Graphical Configuration Tool to provide simple graphical management tools. Completed the R&D of Loop-O9500 and added the B2G5 STM16/OC-48 card. Completed the R&D of Loop-AM3440 and added the 4-port Magneto (QMAGA) card. Completed the R&D of Loop-IP6750 Service Aggregation & Access Device, including E1/T1 and Gigabit Ethernet tributary that supports MEF-8 CESoETH, SyncE and IEEE1588v2 Precision Timing, G.8031 Ethernet Linear Protection Switching, and a RFC2544 built-in traffic generator, and passed the CE 1.0 MEF certification. Completed the R&D of Loop-iNET that supports IP6750 equipment and provides management method of point-to-point and point-to-multiple points. Completed the R&D of Loop-AM3440 and added the CCB. Completed the R&D of Loop-O9400R SDH/SONET ADM/TM and added the CHPA frame and CCPA to support the PTN10G board and accommodate older boards. Completed the R&D of Loop-O9500R PTN/SDH/SONET/PDH IMAP and added the CHPA frame and CCPA to support the PTN10G board and accommodate older boards. Completed the R&D of Loop-IP6340 24 Giga+4 1000 SFP Ports Smart Managed Switch. Completed the R&D of Loop-O9500R PTN/SDH/SONET/PDH IMAP and added the Transfer Trip Card (TTA). Completed the R&D of Loop-O9550 SDH/SONET IMAP and added the 6-port Universal Data Interface Card (6UDTEA ).

18

Year/month December 2017 January 2018 March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September 2018 October 2018 November 2018

Milestone

Completed the R&D of Loop-O9550 SDH/SONET IMAP and added the Transfer Trip Card (TTA). Completed the R&D of Loop-AM3440 and added the TDMoEA Interface Card. Completed the R&D of Loop-AM3440 and added the 12 port Magneto Interface Card (12MAGA). Completed the R&D of Loop-AM3440 TTA and added the support for the multiplex of all four inputs into one 64k channel function. Completed the R&D of Loop-IP6820 and added the I4DTEISO Card that supports 4 DTE (RS232) ports with isolated circuit, RJ45 interfaces and 2 Dry Contact ports Completed the R&D of Loop-AM3440 6UDTEA card and added the support for the Through Clock function. Completed the R&D of Loop-AM3440 ABRA card and added the support for the Data Bridge function. Completed the R&D of Loop-IP6704A and added support for the MEF8 and SyncE functions. Completed the R&D of Loop-O9500R PTN/SDH/SONET/PDH IMAP and added PTN10G Interface Card to support MPLS-TP and Carrier Ethernet for Packet Transport Network (PTN) services. Loop-AM3440 Access DCS-MUX passed the Alstom Systems India Private Limited Type Test and Factory Acceptance Test. Loop-iNMS Integrated Network Management System supported the Loop-O9500R PTN10G card MPLS VPLS/VPWS circuit management module. Loop-iNET Intelligent Network Element Management System (EMS) supported the TDM circuit diagnosis and management module. Completed the R&D of Loop-AM3430 Access DCS-MUX. Completed the R&D of Loop-O9400R PTN/SDH/SONET ADM/TM and added PTN10G Interface Card to support MPLS-TP and Carrier Ethernet for Packet Transport Network (PTN) services. Completed the R&D of Loop-AM3440 ABRA card and added the support for the Voice Bridge function. Completed the R&D of Loop-AM3440 Access DCS-MUX and added the support for the MQT1 board function. Completed the Loop-G7860A mPTN MPLS/CE Packet Transport Network to support MPLS-TP and Carrier Ethernet for Packet Transport Network (PTN) services. Completed the R&D of Loop-AM3440 ABRA card for combination use with OCUDP card and added the support for the Data Bridge (MJU) function. Completed the R&D of Loop-AM3440 ABRA for combination use with 12FXSA card and added the support for the Voice Conference function. Loop-iNET Intelligent Network Element Management System (EMS) supported the Loop-O9500R PTN10G card MPLS VPLS circuit management module. Completed the R&D of Loop-O9500R and added the support for the 4C37SFP LS- Fiber Optical card. Completed the R&D of Loop-O9500R and added the support for the 8-port GbE over SDH/SONET Interface Card with Switch (8GESW) interface card. Completed the R&D of Loop-O9500R 6UDTEA interface card and added the support for the Mode 5 RS422 interface and Local Loopback/Remote Loopback functions. Loop-O9500R passed the phase 1 plant acceptance test procedures for the RY MUX project of Taipower Company.

19

Year/month December 2018 January 2019 February 2019 March 2019 April 2019 May 2019 June 2017 July 2019 March 2020 April 2020 June 2020 August 2020 December 2020 December 2020 April 2021 June 2021 July 2021 December 2021

Milestone

Completed the R&D of Loop-AM3440-E IP/TDM DCS-MUX. Completed the R&D of Loop-O9610S-GE Gigabit Ethernet Electrical/Optical Converter. Completed the R&D of Loop-AM3440 CCPA Packet controller module with two Combo GbE (SFP/RJ45) interface for TDMoE uplink. Completed the R&D of Loop-G7820 L2/L3 Intelligent Switch. Loop-iNMS Integrated Network Management System supported the Loop-O9400R PTN10G card MPLS VPLS/VPWS circuit management module. Completed the R&D of Loop- IP6820 and added the support for the I4GEPOE+ interface, including 4 GbE ports, 2 dry contact ports, and IEEE802.3at PoE + over 8 LAN ports. Loop-IP6704A TDMoEthernet passed the Alstom Systems India Private Limited Type Test and Factory Acceptance Test. Completed the R&D of Loop-O9400R and added the support for the 8-port GbE over SDH/SONET Interface Card with Switch (8GESW) interface card. Completed the R&D of Loop-O9400R PTN10G card and added the support for the L3 function. Loop-IP6810, Loop-IP6820, and Loop-O9500R passed the Kenya Power & Lightning Co.Ltd Factory Acceptance Test. Completed the R&D of Loop-O9400R and added the support for the 8-port GbE over SDH/SONET Interface Card with Switch (8GESW) interface card. Completed the R&D of Loop-O9400R PTN10G card and added the support for the L3 function. Loop-iNET Intelligent Network Element Management System (EMS) Support Loop-O9500R PTN10G card MPLS VPWS circuit management module and Loop-AM3440 TTA card Protection Profile. Completed the R&D of Loop-AM3440 and added the support for the VoIPGA interface card. Completed the R&D of Loop-O9550 and added the support for the VoIPGA interface card. Loop-iNET Intelligent Network Element Management System (EMS) supported the Loop-O9500R PTN10G card MPLS VPLS circuit management module. Completed the R&D of Loop-O9400R and added the support for the PTNext interface card. Completed the R&D of the new model Loop-O9150S SDH STM-1 TM/ADM. Completed the R&D of the new product Loop-WDM1800 Wavelength Division Multiplexing Multi-Service Platform. Completed the R&D of the new Loop-O9500R-8GES16SWA board. Completed the R&D of Loop-IP6704A and added support for the M4E1 and ODP interface cards. Completed the R&D of the new model Loop-IP6704A-DACS (Digital Access Cross Connect System(DACS). Completed the R&D of Loop-AM3440 8EMA/12FXSA/12FXOA/12MAGA/OCUDP and supported the TELCO50 interface. Completed the R&D of new product Loop-AM3430 Access DCS-MUX. Completed the R&D of the new generation model of Loop-AM3440, including the new CCPB supported TDMoE, TDMoIP and TDMoMPLS functions, and accommodated the interface cards of older models. Completed the R&D of Loop-iNMS, added the support for the Pseudowire Circuit Management (PWCKT), and provided Loop PTN networking management solutions. Completed the R&D of the new model Loop-G7820-24S and supported 8 x 1/10GbESFP+ports 24x1 GbE SFP ports and 8 x 10/100M/1GbERJ45 port.

20

Year/month January 2022 May 2022 September 2022 September 2022 January 2023

Milestone

Completed the R&D of the new product Loop-WDM1800; the WDM module includes the following cards/boards: Transponder Modules Wavelength Division Multiplexing (Mux/Demux) Modules Optical Link Protection Modules Amplifier Modules Dispersion Compensation Modules (DCM) Optical Time-Domain Reflectometer (OTDR) Modules Completed the R&D of the new generation Dry Contact type C board, which may be used with Loop-O9500R PTN/SDH/SONET/PDH IMAP products. Completed the R&D of the new generation model of Loop-AM3440, including the new CCPB-8GEHSWa, supported TDMoE, TDMoIP and TDMoMPLS functions, and accommodated the interface cards of older models.  Packet controller module  Support cross-connect function  4 x GbE and 4 x FE/GbE SFP interface with built-in L2 switch  Supports SAToP, CESoPSN, and MEF-8  Up to 64 pseudowires  Supports SyncE Completed the R&D of the new product Loop-AM3440-E IP/TDM DCS-MUX MPLS- TP/CE SWITCH. Completed the R&D of the new board Muxponder, which can be used with Loop- WDM1800.

21

(III) Corporate Governance Report

1. Organization

(1) Organizational chart

==> picture [533 x 421] intentionally omitted <==

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

Shareholders’
meeting
Remuneration Board of Audit
Committee Directors Committee
Audit Office
Chairman
President
President’s
Office
Engineering Department Management Department
Sales Department Production Department
Department System Design Department Development Development Technology New Product Department New Product Data Center Administration Procurement Department Development Manufacturing Quality control
Financial accounting Sales Department 1 Sales Department 2 Sales Department 3 Technical Document
IP Software Technology Technology Integration Resources and materials
----- End of picture text -----

22

(2) Scope of Business of Major Departments

Shareholders’ meeting

• A. Establishing and amending the Articles of Incorporation.

• B. Determining the capital increase/reduction of the Company.

• C. Auditing and ratifying the reports of the Board and the Audit Committee.

• D. Electing Directors.

• E. Other permissions authorized under laws and regulations

Board of Directors meeting

• A. Reviewing and determining material rules and regulations of the Company.

• B. Determining the business policy.

• C. Determining budgets and final accounts.

• D. Formulation of earning distribution.

• E. Formulation of the capital increase/reduction.

• F. Determining material candidates of the Company.

• G. Determining adjustments to the organization and other material matters of the Company.

• H. Preparation and review of annual business reports.

• I. Determining material matters of joint ventures.

J. Other permissions authorized under the Company Act and the shareholders’ meeting.

Audit Committee

A. Investigation of the Company’s financial position.

B. Audit of the Company’s accounts and books.

C. Inquiring about the operating status of the Company.

D. Monitoring the execution of operations by the Company’s employees and correcting violations of laws and dereliction of duty.

E. Other permissions authorized under the Company Act and the shareholders’ meeting.

Remuneration Committee.

A. Reviewing the remuneration of Directors and managers.

Managerial officer

A. The President shall execute its duties by adhering to the orders of the Board and the Chairman.

B. Managers of all levels shall execute their duties by adhering to the orders of the President.

President’s Office

A. Strategical planning.

B. Operating analysis.

C. Investigating and evaluating the healthiness, reasonableness, and effectiveness of the Company’s internal control system and various management systems.

D. Matters for the affairs of Board meetings and shareholders’ meetings, issuance of shares, and public offerings.

Audit Office

A. Responsible for the planning of the internal audit operations and the follow-up on execution and improvement achievements.

23

Management Department

• A. Coordinating general affairs, human affairs, safety, plant affairs, and administration.

• B. Preparation of the data on capital allocation, budgets, final accounts, receipt and pay-out, accounting, calculation of costs, and handling of accounting affairs.

• C. Procurement of raw materials and machinery, and equipment.

• D. Bonded operations, accounting handling and import/export, and freight operations.

• E. Planning and management of the information system of the entire Company.

Engineering Department (digital transmission, communication network, users’ end, and system integration)

• A. R&D of new products.

• B. Introduction of new technologies.

• C. Formulation of the material list of procedures and products.

• D. Improving production technologies, providing service technologies, and improving procedures.

• E. Control and management of engineering data.

Production Department

• A. Intake quality and finished good testing, analysis, and processing.

• B. Testing and follow-up for the reasons for returned products.

• C. Promoting the quality activities of the entire Company (i.e., ISO9001 and ISO14001).

D. Collecting materials and investing personnel and machinery, and equipment to produce products according to the production plan.

• E. Repair of returned products.

• F. Improvement recommendations for procedures.

• G. Production scheduling and planning and supplies requirement determination.

• H. Warehouse management, raw material and finished goods preservation, and account handling.

I. Raw material distribution and shipping and packaging of finished goods.

Sales Department

A. Studying domestic and foreign business sales and markets and understanding new product trends.

B. Formulating production and marketing activity strategies, promotional advertisements, and expanding markets.

C. Transportation, storage, and promotion of products, collection of payments for goods, and contact for domestic and foreign distribution operations.

D. Operation management of subsidiaries.

24

2. Data on Directors, President, Vice Presidents, Assistant Vice Presidents, and directors of departments and branches

(1) Data on Directors

																	April 29, 2023 Other directors of departments , Directors or supervisors who are spouses or relatives within the second degree of kinship Remar ks Tit le Na me Rel atio nsh ip Dir ect or Ch en Hu a- Lin g Wi fe Note1 Ch air ma n Ye h Ma w- Lin Hu sba nd No ne No ne No ne	April 29, 2023 Other directors of departments , Directors or supervisors who are spouses or relatives within the second degree of kinship Remar ks Tit le Na me Rel atio nsh ip Dir ect or Ch en Hu a- Lin g Wi fe Note1 Ch air ma n Ye h Ma w- Lin Hu sba nd No ne No ne No ne	April 29, 2023 Other directors of departments , Directors or supervisors who are spouses or relatives within the second degree of kinship Remar ks Tit le Na me Rel atio nsh ip Dir ect or Ch en Hu a- Lin g Wi fe Note1 Ch air ma n Ye h Ma w- Lin Hu sba nd No ne No ne No ne	April 29, 2023 Other directors of departments , Directors or supervisors who are spouses or relatives within the second degree of kinship Remar ks Tit le Na me Rel atio nsh ip Dir ect or Ch en Hu a- Lin g Wi fe Note1 Ch air ma n Ye h Ma w- Lin Hu sba nd No ne No ne No ne
																	Other
																	directors of
Title	Nati onali ty or Plac e of Regi strati on	Nam e	Gen der												Major career		departments
																	, Directors
													Shares				or
											Current shareholding		held in				supervisors
							Shareholding when elected		Current shareholding
											of spouse and		the name				who are
				Date elected	Tenure	Date initially					underage children		of other persons		achievements	Concurrent duties in the Coman and	spouses or relatives			Remar
				(appointed)		elected									(academic	py other companies	within the			ks
															background)		second
																	degree of
																	kinship
													Shar es	Shar ehol ding ratio			Tit le	Na me	Rel atio nsh ip
												Shareh
								Shareholdi		Shareholdi
							Shares		Shares		Shares	olding
								ng ratio		ng ratio
												ratio
Chai rman	Repu blic of Chin a	Yeh Maw -Lin	Male	June 29, 2022	Three	October 28,	7,268,230	10.25%	7,032,306	9.92%	1,888,922	2.66%	Non e	Non e	Bachelor’s degree in	Chairman and	Dir ect or	Ch en Hu a- Lin g	Wi fe	Note1
					years	1991									telecommunication,	President, Loop
															National Chiao Tung	Telecommunication
															University	International, Inc.
															Ph.D. in electrical	Director, Chongqing
															engineering, The	Loop Technology
															University of Notre	Co., Ltd.
															Dame	Director, Tianjin
															Senior management,	Loop Technology
															NYNEX	Co.,Ltd.
Dire ctor	Repu blic of Chin a	Chen Hua- Ling	Fem ale	June 29, 2022	Three	June 29, 2022	1,888,922	2.66%	1,888,922	2.66%	7,032,306	9.92%	Non e	Non e	Department of Public	None	Ch air ma n	Ye h Ma w- Lin	Hu sba nd
					years										Administration,
															National Chung Hsing
															University
Dire ctor	Repu blic of Chin a	Fan Zhen g- Chu n	Male	June 29, 2022	Three	June 25, 2013	243,000	0.34%	243,000	0.34%	42	0.00%	Non e	Non e	Institute of Business	Director, Jiin Yeeh	No ne	No ne	No ne
					years										Management, Tatung	Ding Enterprise
															University	Corp.
																Independent
																Director, Hantic
																precision
																technology, Inc
																Director, Tianjin
																Loop Electron
																Technology Co.,
																Ltd.

25

																	Other	Other	Other
																	directors of
Title	Nati onali ty or Plac e of Regi strati on	Nam e	Gen der												Major career		departments
																	, Directors
													Shares				or
											Current shareholding		held in				supervisors
							Shareholding when elected		Current shareholding
											of spouse and		the name				who are
				Date elected	Tenure	Date initially					underage children		of other persons		achievements	Concurrent duties in the Coman and	spouses or relatives			Remar
				(appointed)		elected									(academic	py other companies	within the			ks
															background)		second
																	degree of
																	kinship
													Shar es	Shar ehol ding ratio			Tit le	Na me	Rel atio nsh ip
												Shareh
								Shareholdi		Shareholdi
							Shares		Shares		Shares	olding
								ng ratio		ng ratio
												ratio
Dire ctor	Repu blic of Chin a	Chiu Don g- Shen g	Male	June 29, 2022	Three	June 29, 2022	370,607	0.52%	370,607	0.52%	None	None	Non e	Non e	Department of	Director of the	No ne	No ne	No ne
					years										Business	management
															Administration,	department,
															Doshisha University	Shimamura Co., Ltd.
Inde pend ent direc tor	Repu blic of Chin a	Hua ng Yun- Min g	Male	June 29, 2022	Three	June 29, 2022	None	None	None	None	None	None	Non e	Non e	1. AT&T Consultant,	None	No ne	No ne	No ne
					years										2007-2016
															2. Quintum
															Technology Director
															of Engineering, 2000-
															2007
															3. Lucent Technology
															Technical Manager,
															1994-2000
Inde pend ent direc tor	Repu blic of Chin a	Jiang Min- Shiu ng	Male	June 29, 2022	Three	June 29, 2022	None	None	None	None	None	None	Non e	Non e	1. Assistant manager,	None	No ne	No ne	No ne
					years										Quan Ya Computer
															Co., Ltd.
															2. Chairman, Acrosser
															Technology Co., Ltd.
Inde pend ent Dire ctor	Repu blic of Chin a	Chan g Guo- Hua	Male	June 29, 2022	Three	June 29, 2022	None	None	None	None	None	None	Non e	Non e	1. StarVox Comm.	None	No ne	No ne	No ne
					years										Inc. (U.S.A),
															Co-founder, CTO VP
															Engineering
															2. Centrify Corp.
															(U.S.A)
															System Quality
															Architect.
Inde pend ent Dire ctor	Repu blic of Chin a	Ko Shu- Mei	Fem ale	June 29, 2022	Three	June 29, 2022	None	None	None	None	None	None	Non e	Non e	1. Chief of the finance	None	No ne	No ne	No ne
					years										section, United Fiber
															Optic Communication
															Inc.
															2. Associate vice
															president of the
															management section,
															Aquaoptics Corp.

26

Note 1: If the Chairman and the President or an equivalent position (senior management) of the Company are the same person, spouse, or relatives within the first degree of kinship, the information related to the reason, reasonableness, necessity, and countermeasures (i.e., increasing the number of Independent Directors and having over half of the Directors who are not concurrently employees or managers) shall be specified. The Chairman is concurrently the President of the Company to improve the operating efficiency and decision-making enforcement. To reinforce the independence of the Board, the Company intends to plan for improving the Board’s functions and enhancing the supervisory functions in the future. Substantial measures are as follows:

• (1) The current Independent Directors possess expertise in finance and accounting and the communication industry field and are able to exert their duties of supervision.

(2) Independent Directors may have comprehensive discussions at different functional committee meetings and provide professional recommendations to the Board for reference to implement the specifications of corporate governance.

• (3) Over half of the Board members are not concurrently the Company’s employees or managers.

A. Major shareholder of a corporate shareholder: None.

• B. Major shareholder of a corporate shareholder major shareholder who is a corporation: None.

27

C. Do Directors or supervisors possess five years of working experience required for business, law, finance, or corporate operations and comply with the following circumstances:

following circumstances:	following circumstances:
1. Disclosure of professional qualification of Directors and supervisors and independence of Independent Directors:
(1) Professional qualification of Directors Name	Professional qualifications and experience (Note 1)
Chairman Yeh Maw-Lin	Bachelor’s degree in telecommunication from National Chiao Tung University and Ph.D. in electrical engineering from The University of Notre Dame Used to the a senior manager of NYNEX. Currently, he is the Chairman and the President of the Company; he is familiarized with the development trends in the communication and semiconductor industries. Circumstances specified in Subparagraphs of Article 30 of the CompanyAct do not exist.
Director Fan Zheng-Chun	Institute of Business Management of Tatung University. He used to be a director of Jiin Yeeh Ding Enterprise Corp. and an independent director of Hantic precision technology, Inc, and he possesses the working experience required for business, law, finance, accounting, and corporate operations and complies with the following circumstances. Circumstances specified in Subparagraphs of Article 30 of the CompanyAct do not exist.
Director Chen Hua-Ling	Department of Public Administration of National Chung Hsing University Possess the working experience required for business, finance, and corporate operations. Circumstances specified in Subparagraphs of Article 30 of the CompanyAct do not exist.
Director Chiu Dong-Sheng	Department of Business Administration of Doshisha University He used to be the director of the management department of Shimamura Co., Ltd., and he possesses the working experience required for business, law, finance, and corporate operations and complies with the followingcircumstances.Circumstances specified in Subparagraphs of Article 30 of the CompanyAct do not exist.
Independent Director Huang Yun-Ming	He possesses a master’s degree and Ph.D. in metallurgy and materials engineering from The University of Notre Dame. He is the convener of the Remuneration Committee of the Company and possesses the working experience required for business and corporate operations. Circumstances specified in Subparagraphs of Article 30 of the Company Act do not exist. None of the government, corporation,or its representative is elected.
Independent Director Jiang Min-Shiung	National Taipei Institute of Technology. He used to be the assistant manager of Quan Ya Computer Co., Ltd. and the chairman of Acrosser Technology Co., Ltd.. Possess the working experience required for finance, accounting, business, and corporate operations. Circumstances specified in Subparagraphs of Article 30 of the Company Act do not exist. None of the government, corporation, or its representative is elected.
Independent Director Chang Guo-Hua	Master’s degree from National Chiao Tung University and Arizona State University. He used to be StarVox Comm. Inc. (U.S.A) Co- founder, CTO VP Engineering and Centrify Corp. (U.S.A) System Quality Architect. He possesses the working experience required for business, law, finance, and corporate operations. Circumstances specified in Subparagraphs of Article 30 of the Company Act do not exist.
Independent Director Ko Shu-Mei	Department of Business Administration, Providence University. Used to be the chief of the finance section of United Fiber Optic Communication Inc. and the associate vice president of the management section of Aquaoptics Corp.. Possess the working experience required for finance, accounting, business, and corporate operations. Circumstances specified in Subparagraphs of Article 30 of the CompanyAct do not exist.

28

(2) Condition disclosures for the independence of Independent Directors Name	Number of concurrent duties as an independent director at a public company	Independence (Note 2)
Independent Director Huang Yun-Ming Jiang Min-Shiung Chang Guo-Hua Ko Shu-Mei	0	Compliant with the independence specifications before being elected and during the term of office: 1. Not an employee of the company or any of its affiliates. 2. Not a Director or supervisor of the Company or any of its affiliates. 3. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of 1% or more of the total number of issued shares of the Company or ranking in the top 10 in holdings. 4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of any person set out in the three preceding subparagraphs. 5. Not a director, supervisor, or employee of a corporate shareholder who directly holds over 5% of the total issued shares of the Company, or has top five ranking in shareholding, or is a representative appointed as the Director or supervisor of the Company according to paragraph 1 or paragraph 2, Article 27 of the Company Act. 6. If over half of the number of employees or shares with voting rights of the Company and another company are held by the same person, not a director, supervisor, or employee of another company. 7. If the Chairman, President, or equivalent positions of the Company or another company or institution are the same person or spouses, not a director, supervisor, or employee of another company or institution. 8. Not a Director, supervisor, manager, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company. 9. Not a proprietor, partner, director, supervisor, manager, or its spouse of a professional, proprietorship, partnership, company, or institution that provides audit services to, or receives an accumulated compensation of over NT$0.5 million within the most recent two years through providing business, legal, finance,accounting,and relevant services to theCompanyor its affiliates.

Note 1: Professional qualification and experience: Describe the professional qualifications and experience of the individual Directors and supervisors. For members of the Audit Committee with accounting or financial expertise, the accounting or financial backgrounds and working experience shall be specified. In addition, the existence of any circumstances set out in subparagraphs under Article 30 of the Company Act shall be specified.

Note 2: For an Independent Director, specify their independence status, including but not limited to whether the Independent Director, its spouse, or relatives within the second

29

degree of kinship is a Director, supervisor, or employee of the Company or its affiliates, the number of shares held by the Independent Director, its spouse, or relatives within the second degree of kinship (or held in the name of others) and the ratio, whether the Independent Director is a director, supervisor, or employee of a company with particular relationships with the Company (please refer to subparagraphs 5 to 8, paragraph 1, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies), and the compensation received in the most recent two years for providing business, legal, financial, and accounting services to the Company or its affiliates.

2. Board diversification and independence:

Board diversification:

To implement Board diversification, the Company clearly stated in Article 19 of its “Corporate Governance Best Practice Principles” that diversification shall be considered for the composition of Board members, an appropriate diversification policy shall be formulated based on its operations, operating patterns, and long-term development requirements, and members shall possess knowledge, skills, and literacy required to execute their duties.

To achieve the ideal objective of corporate governance, the overall Board shall possess the following abilities:

• I. The ability to make judgments about operations.

• II. Accounting and financial analysis ability.

• III. Business management ability.

• IV. Crisis management ability.

• V. Knowledge of the industry.

• VI. An international market perspective.

• VII. Leadership ability.

• VIII. Decision-making ability.

30

The Company also adheres to the principles of meritocracy when selecting members of the Board with reference to gender, age, nationality, culture, and other diverse aspects. The implementation status is as follows:

Core of diversification Name	Core of diversification Name				Basic composition	Basic composition			Professional background	Professional background					Expertise and skills	Expertise and skills
		Nat ion alit y	Gen der	Conc urren tly an empl oyee		Age		Term of office and seniorit y of Indepen dent Directo r	Financi al account ing	Industr y experie nce	Technol ogy	The ability to make judgme nts about operati ons	Accoun ting and financi al analysi s	Busine ss manage ment ability	Crisis manage ment ability	Industr y knowle dge	Cosmo politan market view	Leader ship	Decisio n- making ability
					<60	61-70	>70
Director	Yeh Maw-Lin	Rep ubli c of Chi na	Male																
	Chen Hua- Ling		Femal e																
	Chiu Dong- Sheng		Male																
	Fan Zheng- Chun		Male																
Independent Director	Huang Yun- Ming		Male																
	Jiang Min- Shiung		Male																
	Chang Guo-Hua		Male																
	Ko Shu- Mei		Femal e																

31

																December 31,2022
Criteria Name (Note 1)	Possession of over five years of working experience and the following professional qualification							Independence (Note 1)								Number of concurrent duties as an independent director at a public company
	Positions above lecturers in business, law, finance, accounting, or relevant departments required for corporate operations at a public or private university or college.	Judges, prosecutors, lawyers, accountants, or other professionals and technicians passing national exams with certificates required for corporate operations.	Possess the working experience required for business, law, finance, accounting, business, and corporate operations.	1	2	3	4	5	6	7	8	9	10	11	12
Yeh Maw-Lin	-	-		-	-	-	-						-			None
Fan Zheng-Chun	-	-														1
Chiu Dong-Sheng	-	-														None
Chen Hua-Ling	-	-	-			-	-						-			None
HuangYun-Ming	-	-														None
JiangMin-Shiung	-	-														None
ChangGuo-Hua	-	-														None
Ko Shu-Mei	-	-														None

Note 1: If a Director or supervisor complies with the following conditions two years before being elected and during the term of office, please check “  ” in the space below.

(1) Not an employee of the company or any of its affiliates.

(2) Not a Director or supervisor of the Company or any of its affiliates (however, this shall not include the concurrent position of independent directors of its parent company, subsidiaries, or subsidiaries of the same parent company established according to the Act or local laws and regulations of the countries).

(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of 1% or more of the total number of issued shares of the Company or ranking in the top 10 in holdings.

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of any person set out in the three preceding subparagraphs.

(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds over 5% of the total issued shares of the Company, or has top five ranking in shareholding, or is a representative appointed as the Director or supervisor of the Company according to paragraph 1 or paragraph 2, Article 27 of the Company Act (however, this shall not include the concurrent position of independent directors of its parent company, subsidiaries, or subsidiaries of the same parent company established according to the Act or local laws and regulations of the countries).

(6) If over half of the number of employees or shares with voting rights of the Company and another company are held by the same person, not a director, supervisor, or employee of another company (however, this shall not include the concurrent position of independent directors of its parent company, subsidiaries, or subsidiaries of the same parent company established according to the Act or local laws and regulations of the countries).

(7) If the Chairman, President, or equivalent positions of the Company or another company or institution are the same person or spouses, not a director, supervisor, or employee of another company or institution (however, this shall not include the concurrent position of independent directors of its parent company, subsidiaries, or subsidiaries of the same parent company established according to the Act or local laws and regulations of the countries).

(8) Not a Director, supervisor, manager, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company (however, if a specified company or institution holds over 20% (but less than 50%) of the Company’s total issued shares, this shall not include the concurrent position of independent directors of its parent company, subsidiaries, or subsidiaries of the same parent company established according to the Act or local laws and regulations of the countries).

(9) Not a proprietor, partner, director, supervisor, manager, or its spouse of a professional, proprietorship, partnership, company, or institution that provides audit services to, or receives an accumulated compensation of over NT$0.5 million within the most recent two years through providing business, legal, finance, accounting, and relevant services to the Company or its affiliates. However, this shall

32

not apply to members of the Remuneration Committee, acquisition review committee, or special merger committee who exercise their powers according to the Securities and Exchange Act, the Business Mergers and Acquisitions Act, or other relevant laws and regulations.

(10) Not a spouse or a relative within the second degree of kinship of another Director.

• (11) Note having any circumstances specified in subparagraphs of Article 30 of the Company Act.

(12) No government, corporation, or its representative who is not an employee of the Company or its affiliates is elected according to Article 27 of the Company Act.

(2) Data on President, Vice Presidents, Assistant Vice Presidents, and directors of departments and branches

													April	April	April	29,2023
									Shares held in				Managers who are
							Shareholding of spouse and
					hhli				the name of				spouses or relatives
					Sareodng		d hild
	Natio		Ge	D ld			unerage c	ren	other persons		Major career achievements (academic	Concurrent duties in	within the second degree			Remark
Title				ate eecte
	nality	Name	nd er	(appointed)							background)	the Company and				s
												other companies
										Shareh
						Sharehol		Shareholdi							Relatio
					Shares		Shares		Shares	olding			Title	Name
						ding ratio		ng ratio							nship
										ratio
Chairman	Repu	Yeh	Ma le	1991.10.28	7,032,306	9.92%	1,888,922	2.66%	None	None	Bachelor’s degree in	Director, Chongqing	None	None	None	Note1
and President	blic	Maw-Lin									telecommunication, National Chiao	Loop Technology Co.,
	of										Tung University	Ltd.
	China										Ph.D. in electrical engineering, The	Director, Tianjin Loop
											University of Notre Dame	Technology Co.,Ltd.
											Senior manager,NYNEX
Vice	Repu	Ceng	Ma le	2006.08.07	4,100	0.01%	None	None	None	None	Master’s degree in physics, Fu Jen	None	None	None	None
President,	blic	Qing-Lin									Catholic University
Sales	of										President, SDO Communications
Department	China										Corp.
Vice	Repu	Liu	Ma le	2005.02.14	None	None	None	None	None	None	Master’s degree in electrical	Supervisor, Tianjin	None	None	None
President,	blic	Dong-Jie									machinery, University of Southern	Loop Electron
Engineering	of										California	Technology Co., Ltd.
Department	China										Assistant manager, Syncom Networks
											Inc.
Vice	Repu	Lai	Ma le	1992.09.01	53,749	0.08%	192,000	0.27%	None	None	Bachelor’s degree in electronics,	Director, Loop Telecom	None	None	None
President,	blic	Yong-									Tamkang University	NA, Inc.
Production	of	Zan									Director, Acer Incorporated
Department	China
Financial	Repu	Chang	Fe ma le	2021.03.25	None	None	None	None	None	None	Bachelor’s degree in accounting, Fu	None	None	None	None
manager,	blic	Xiao-									Jen Catholic University
Management	of	Ling									Chief accountant, Taiwan Mobile Co.,
Department	China										Ltd.

Note 1: If the Chairman and the President or an equivalent position (senior management) of the Company are the same person, spouse, or relatives within the first degree of kinship, the information related to the reason, reasonableness, necessity, and countermeasures (i.e., increasing the number of Independent Directors and having over half of the Directors who are not concurrently employees or managers) shall be specified. The Chairman is concurrently the President of the Company to improve the operating efficiency and decision-making enforcement. To reinforce the independence of the Board, the Company intends to plan for improving the Board’s functions and enhancing the supervisory functions in the future. Substantial measures are as follows:

(1) The current Independent Directors possess expertise in finance and accounting and the communication industry field and are able to exert their duties of supervision.

• (2) Independent Directors may have comprehensive discussions at different functional committee meetings and provide professional recommendations to the Board for reference to implement the specifications of corporate governance.

(3) Over half of the Board members are not concurrently the Company’s employees or managers.

33

(3) Remunerations of the Directors, Supervisors ,President, and Vice Presidents

A. Remunerations of the Directors

												December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)
										Total remuneration (A+B+C+D) as a % of net												Remuneratio
		Directo				rs’ remuneration						Remuneration for concurrent duty as an				employee
						Directors’ compensation (C)														Total Remuneration (A+B+C+D+E+F+G)
		Compensation (A) All		Disability retirement benefits (B) All companie		(Note 1)		Fees for professional practice (D) All		profit after tax All		Salary, bonus, and special reimbursement (E) All companies		Retirement pension (F) All companies		Employee compensation (G) (Note 2) The Company All companies within the				as a % of the Net Income All companie		n received from an investee
Title	Name					All companies																other than a subsidiary or from the
		The Company	companies within the financial statements	The Company	s within the financial statements	The Company	within the financial statements	The Company	companies within the financial statements	The Company	companies within the financial statements	The Company	within the financial statements	The Company	within the financial statements	Amoun t in cash Amoun t in shares		financial statements Amoun t in cash Amoun t in shares		The Company	s within the financial statements	parent company
Chairman and	Yeh Maw-	0	0	0	0	328	328	0	0	0.49	0.49	7,394	7,394	0	0	135	0	135	0	11.66	11.66	None
President	Lin
Director	Huang	0	0	0	0	148	148	0	0	0.22	0.22	0	0	0	0	0	0	0	0	0.22	0.22	None
	Hong-
	Jiang
	(Note 2)
Director	Fan	0	0	0	0	143	143	0	0	0.21	0.21	0	0	0	0	0	0	0	0	0.21	0.21	None
	Zheng-
	Chun
Independent	Hu Cheng-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
Director	Di
	(Note 2)
Independent	We Qian-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
Director	Xian
	(Note 2)
Director	Chen Hua-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
	Ling
	(Note 3)
Director	Chiu	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
	Dong-
	Sheng
	(Note 3)
Independent	Huang	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
Director	Yun-Ming
	(Note 4)
Independent	Jiang Min-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
Director	Shiung
	(Note 4)
Independent	Chang	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
Director	Guo-Hua
	(Note 4)
Independent	Ko Shu-	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	None
Director	Mei
	(Note 4)
1. Please describe the policy, system, standards, and structure of the remunerati						on of Independent Directors and describe the linkage of duties and risks assumed, time invested, and other factors to the amount of remuneration: The Company refers to the results of Directors’ performance evaluation for the
remuneration of Independent Directors. In addition, according to Article 31 of t						he Articles of Incorporation, to provide incentives to Directors for their active participation in the Company’s operations, the Board is authorized to determine the remuneration of Independent Directors based on their level of
participation and the value of contributions with reference to domestic and foreign standards within the industry.
2. Except for the disclosures in the table above, compensation received by Directors of the Company by providing services (i.e., being a non-employee consultant of the parent company/all companies in the financial report/investee): None.

Note 1: The Company recorded earnings after tax in 2022; the proposal for earning distribution is to be resolved at the shareholders’ meeting on June 28, 2023. Note 2: Director Huang Hong-Jiang , independent directors Hu Cheng-Di and We Qian-Xian dismissed after directors and supervisors re-election on June 29, 2022. Note 3: Directors Chen Hua-Ling and Chiu Dong-Sheng newly appointed after directors and supervisors re-election on June 29, 2022. Note 4: Independent directors Huang Yun-Ming, Jiang Min-Shiung, Chang Guo-Hua and Ko Shu-Mei newly appointed after directors and supervisors re-election on June 29, 2022.

34

B. Remuneration of supervisors

						December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)
Title	Name			Remuneration of supervisors				Total remuneration (A+B+C) as a % of net profit after tax		Remuneration received from an investee other than a subsidiary or from the parent company
		Compensation (A)		Remuneration (B) (Note 2)		Fees for business execution (C)
		The Company	All companies within the financial statements	The Company	All companies within the financial statements	The Company	All companies within the financial statements	The Company	All companies within the financial statements
Supervisor	Chen Hua- Ling (Note 2)	0	0	143	143	0	0	0.21	0.21	None
Supervisor	Chiu Dong- Sheng (Note 2)	0	0	143	143	0	0	0.21	0.21	None

Note 1: The Company recorded earnings after tax in 2022; the proposal for earning distribution is to be resolved at the shareholders’ meeting on June 28, 2023.

Note 2: Supervisors Chen Hua-Ling and Chiu Dong-Sheng resigned after directors and supervisors re-election on June 29, 2022.

C. Remunerations of the President and Vice Presidents

								December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)
		Salary (A)		Disability retirement benefits (B)		Bonus and allowance (C)		Employee compensation (D) (Note 2)				Total remuneration (A+B+C+D) as a % of net profit after tax		Remuneration received from an investee
Title	Name		All companies		All companies		All companies	Th C		All companies within the			All companies	other than a subsidiary or
		The Company	within the financial statements	The Company	within the financial statements	The Company	within the financial statements	e ompany		financial statements		The Company	within the financial statements	from the parent company
								Amount in cash	Amount in shares	Amount in cash	Amount in shares
Chairman and President	Yeh Maw- Lin	5,778	5,778	0	0	1,616	1,616	135	0	135	0	11.17	11.17	None
Vice president	Lai Yong- Zan	1,875	1,875	0	0	506	506	46	0	46	0	3.06	3.06	None
Vice president	Liu Dong- Jie	2,309	2,309	0	0	530	530	62	0	62	0	4.30	4.30	None
Vice president	Ceng Qing- Lin	2,279	2,279	0	0	1,221	1,221	100	0	100	0	5.34	5.34	None

Note : The Company recorded earnings after tax in 2022; the proposal for earning distribution is to be resolved at the shareholders’ meeting on June 28, 2023.

35

D. Names of managers who distribute employee remuneration and the distribution status

			December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)	December 31,2022 (In Thousands of New Taiwan Dollars)
	Title	Name	Amount in shares	Amount in cash (Note 2)	Total	Total as % of net profit after tax
Managerial officer	Chairman and President	Yeh Maw-Lin	0	135	135	0.20
	Vice president	Lai Yong-Zan	0	46	46	0.07
	Vice president	Liu Dong-Jie	0	62	62	0.09
	Vice president	Ceng Qing-Lin	0	100	100	0.15

Note : The Company recorded earnings after tax in 2022; the proposal for earning distribution is to be resolved at the shareholders’ meeting on June 28, 2023.

E. Remuneration of senior management with the top five remunerations of the listed company (disclosure of name and remuneration individually)

		December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)	December 31,2022(In Thousands of New Taiwan Dollars)
		Salary (A)		Disability retirement benefits (B)		Bonus and allowance (C)		Employee compensation (D) (Note)				Total remuneration (A+B+C+D) as a % of net profit after tax		Remuneration received from an investee
Title	Name		All companies		All companies		All i	The Coman		All companies within the			All i	other than a subsidiary or
		The Company	within the financial statements	The Company	within the financial statements	The Company	companes within the financial statements	py		financial statements		The Company	companes within the financial statements	from the parent company
								Amount in cash	Amount in shares	Amount in cash	Amount in shares
Chairman and President	Yeh Maw- Lin	5,778	5,778	0	0	1,616	1,616	135	0	135	0	11.17	11.17	None
Vice president	Lai Yong- Zan	1,875	1,875	0	0	506	506	46	0	46	0	3.06	3.06	None
Vice president	Liu Dong- Jie	2,309	2,309	0	0	530	530	62	0	62	0	4.30	4.30	None
Vice president	Ceng Qing-Lin	2,279	2,279	0	0	1,221	1,221	100	0	100	0	5.34	5.34	None

36

(4) The comparison of total remuneration, as a percentage of net profit after tax, as paid by the Company and by all other companies included in the consolidated statements during the most recent two years to Directors, supervisors, President, and Vice Presidents, and description of the remuneration policies, standards, and packages, the procedures for determining remunerations, and its linkage to operating performance and future risks

	Ratio of total remuneration to netprofit after tax in 2021(%)	Ratio of total remuneration to netprofit after tax in 2021(%)	Ratio of total remuneration to net income in 2022(%)	Ratio of total remuneration to net income in 2022(%)	Description
	The Company	The Company	The Company	All companies within the financial statements
Director(Note)	26.91	26.91	12.09	12.09	1. If the Company has net income for the period after the final account of the year, it shall compensate cumulative losses (including the adjustments to undistributed earnings), appropriate 10% as the legal reserve according to the law; however, this shall not apply when the legal reserve has reached the paid-in capital of the Company. Then, it shall appropriate or reverse the special reserve according to the requirements under laws and regulations and of the competent authority. The Company shall appropriate no less than 10% and no more than 5% of the net profit before tax of the period before deducting remuneration of employees and remuneration of Directors and supervisors as the remuneration of employees and remuneration of Directors and supervisors, respectively; however, if the Company has cumulative losses (including adjusted undistributed earnings), it shall preserve the compensation amount. 2. Remuneration paid to Directors and supervisors is the remuneration of Directors and supervisors appropriated based on the requirements of the Articles of Incorporation Remuneration paid to the President and Vice Presidents is distributed based on their individual performance. 3. According to the above, the remuneration of Directors, supervisors, President, and Vice Presidents is implemented based on the existing specifications of the Company, which has no material effect on the operating risks of the Company in the future. 4. Except for collecting reasonable remuneration from the Company, the Directors, supervisors, President, and Vice Presidents of the Company had not collected any remuneration from other companies in the consolidated statements. 5. Major changes in the remuneration of Directors, supervisors, President, and Vice Presidents were due to the increase in netprofit in 2022.
Supervisor	2.20	2.20	0.42	0.42
President and vice president	48.55	48.55	24.41	24.41

Note: Include President and Vice Presidents who are concurrently employees.

37

3. Corporate governance implementation

(1) Operation of the Board:

Four Board meetings were held in the most recent year, and there were four meetings for the 12[th] session; the attendance/presence of Directors and supervisors is as follows:

Title	Name	Number of attendance (presence)	Number of attendance by proxy	Attendance (presence) rate (%)	Remarks
Chairman	Yeh Maw-Lin	4	0	100
Director	Fan Zheng-Chun	4	0	100
Director	Chiu Dong-Sheng	4	0	100
Director	Chen Hua-Ling	4	0	100
Independent Director	Huang Yun-Ming	4	0	100
Independent Director	Chang Guo-Hua	4	0	100
Independent Director	Jiang Min-Shiung	4	0	100
Independent Director	Ko Shu-Mei	4	0	100
Other matters to be recorded: 一、 In the event of any of the following in a Board of Directors meeting, the dates of meeting, session, contents of motions, the opinions of independent directors, and the Company’s response to the opinions should be specified: (I) Matters specified in Article 14-3 of the Securities and Exchange Act: None. (II) Any objections or qualified opinions raised by an Independent Director against a Board resolution with records or written statements other than the abovementioned matters: None. 二、 For the execution status regarding the recusal of Directors for proposals of conflict of interests, describe the name of the Director, the content proposals, the reason for the recusal for conflict of interests, and voting status.

38

Meeting title	Date	Name of Director	Motion content	Recusal for the conflicts of interest and votingstatus
The 4th meeting of the 12th session of the Board.	2023.03.28	Director Yeh Maw-Lin	1. Proposal for the remuneration of managers and Directors. 2. Proposal for the remuneration of other managers.	Director Yeh Maw-Lin recused himself from the venue due to the conflicts of interests and consigned the Board to elect Director Huang Yun-Ming to host the meeting for the discussion of the proposal; the proposal was approved by the remaining attending Directors with no dissenting opinion. The same as the above

三、 A company listed on TWSE or TPEx shall disclose information on the Director’s self-evaluation (or peer evaluation) in terms of the cycle, period, scope, method, and content and shall complete the Questionnaire of Self-Performance Evaluation of Board Members in the table enclosed.

Evaluation periodicity	Evaluation period	Evaluation scope	Evaluation method	Evaluation content
Once each year	2022.01.01~ 2022.12.31	1. Board 2. Individual Directors 3. Remuneration Committee and Audit Committee	Internal self- evaluation of the Board Self-evaluation of Director	1. Performance evaluation of the Board 2. Performance evaluation of individual Directors 3. Performance evaluation of functional committees

• (1) Functional objectives of the Board

• To implement corporate governance and improve the functions of the Board, the Company has established the “Regulations for the Performance Evaluation of the Board” to reinforce the functions of the Board.

• The Company regularly arranges for Directors to participate in professional continuing education programs to maintain their core values, professional advantages, and abilities.

• (2) Execution evaluation:

• The Company established its Remuneration Committee in 2011 to assist the Board in executing its duties.

• The Company immediately uploads material resolutions to MOPS after Board meetings to protect shareholders’ interests. It has established a spokesperson system to ensure timely and adequate disclosures of material information for shareholders and stakeholders to refer to information related to the finance and business of the Company.

• 四、 Targets (i.e., establishing the Audit Committee and improving information transparency) to improve the functions of the Board and the execution evaluations for the year and the most recent year.

• (I) Board meetings of the Company comply with the “Regulations Governing Procedure for Board of Directors Meetings of Public Companies” to realize corporate governance.

• (II) The Company established its “Remuneration Committee” in 2011, and the composing members are Huang Yun-Ming, Chang Guo-Hua, Jiang Min-Shiung, and Ko Shu-Mei; member Huang Yun-Ming is the convener.

39

(2) Operation of the Audit Committee

• A. The Audit Committee of the Company was established on June 29, 2022.

• B. Term of office of members of the 1[st] session: The term of office from June 29, 2022 to June 28, 2025 for a total of 4 persons. The 4 meetings were held for the 1st session of the Audit Committee in the most recent year; the attendance/presence of Independent Directors is as follows:

Title	Name	Number of attendance (B)	Number of attendance by proxy by proxy	Attendance rate (%) (B/A)	Remarks
Independent Director	Huang Yun- Ming	4	0	100
Independent Director	Chang Guo-Hua	4	0	100
Independent Director	Jiang Min- Shiung	4	0	100
Independent Director	Ko Shu-Mei	4	0	100
Other matters to be recorded: 一、 If any of the following circumstances occurs to the operations of the Audit Committee, the date of the Audit Committee meeting, session, content of proposals, opposing opinions or qualified opinions of Independent Directors, or the content of material recommendations, resolutions of the Audit Committee, and the Company’s response to the opinions of the Audit Committee shall be specified. (一) Matters specified in Article 14-5 of the Securities and Exchange Act. (二) Any other proposals not approved by the Audit Committee that were approved by two-thirds of all Directors other than the abovementioned matters. 二、 For the execution status regarding the recusal of Independent Directors for proposals of conflict of interests, describe the name of the Independent Director, the content of the proposal, reason for the recusal for conflict of interests, and voting status: None. 三、 Communication between Independent Directors and the chief audit and CPAs: 1. The internal auditor of the Company regularly communicates with Independent Directors regarding the results of the audit report and carries our internal audit reporting at the quarterly Board meetings; if there is any special circumstance, the chief auditor will immediately notify Independent Directors. The communication between Independent Directors and the chief auditor is healthy. 2. Independent Directors carry out communications regarding the financial position in person or in writing with CPAs as theydeem necessary.

40

(3) Implementation of corporate governance and the differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the reasons therefor

Evaluation Items			The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
I. Has the Company formulated and disclosed its corporate governance best practice principles in accordance with the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies?			The Company has established the following according to the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”: 1. Procedures for the Acquisition or Disposal of Assets. 2. Procedures for Loans to Others. 3. Regulations for Endorsements/Guarantees. 4. Rules and Procedures of Shareholders’ Meeting. 5. Rules of Procedure of Board Meetings. 6. Regulations for the Election of Directors and Supervisors. 7. Code of Ethical Conduct. 8. Procedures for Handling Material Inside Information. 9. Code of Conducts or Ethics of Employees. 10. Charter of Remuneration Committee. 11. Regulations for Employees’ Complaints. 12. Regulations for the Performance Evaluation of the Board. The items above have been placed under corporate governance in the investor section on the Company’s website for stakeholders to refer to.	None

41

Evaluation Items	The State of Operation	The State of Operation	The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
II. The Company's equity structure and shareholder equity (I) Has the Company established internal operating procedures to handle shareholder recommendations, doubts, disputes and litigations and implemented them in accordance with the procedures? (II) Does the Company have a list of the major shareholders who actually control the Company and those who ultimately have control over the major shareholders? (III) Has the Company established and implemented risk control and firewall mechanisms between affiliated companies?	  		(I) The Company has established a spokesperson system according to the requirements to handle relevant matters; if there is any dispute, the Company will engage the attorney of its attorney’s firm for handling. (II) The professional stock affairs agency is responsible for the list and regular declaration of relevant information according to the requirements. The Company keeps abreast of the shareholding status of Directors, managers, and shareholders with 10% of shareholding or above at all times. (III) Apart from the independent operations, if the Company has business dealings with an affiliate, it is deemed as an independent third party. Upholding the principles of fairness and reasonableness, the Company has established the Regulations for Monitoring and Control of Subsidiaries and established appropriate risk control systems and firewalls.	None None None

42

Evaluation Items	The State of Operation	The State of Operation	The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
(IV) Has the Company formulated internal regulations to prevent insiders from trading securities using undisclosed information on the market?			(IV) The Company has established its Procedures for Handling Material Inside Information, Code of Conduct or Ethics of Employees, Code of Ethical Conduct, and Regulations for Employees’ Complaints according to laws and regulations. It provides educational training to Directors, managers, and employees upon the establishment of relevant laws and regulations and provides educational training to new Directors, managers, and employees in due course. Please refer to Attachments 1, 2, 3, and 4 of the handbook.	None
III. Composition and responsibilities of the Board of Directors (I) Is a diversification policy formulated and implemented for the composition of Board members? (II) In addition to the Remuneration Committee and the Audit Committee established in accordance with law, has the company voluntarily set up other functional committees?	 		(I) Five Directors (including Independent Directors) of the Company possess operating experience or academic experiences; stringent procedures are adopted for the nomination of members, with their expertise taken into consideration. The election of the Directors of the Company adheres to the diversification policy according to the “Regulations for the Election of Directors and Supervisors,” including professional knowledge and skills: professional background (i.e., law, accounting, industry, finance, marketing, or technology), professional skills, and industry experiences. (II) The Company has established its “Remuneration Committee” and established its duties in accordance with the spirit of the Securities and Exchange Act for operations. In the future, it will establish other functional committees according to laws and regulations and the operating scale of the Company.	None None

43

Evaluation Items	The State of Operation	The State of Operation	The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
(III) Has the Company established its Rules for Performance Evaluation of Board of Directors and the evaluation methods, conducted regular performance evaluation each year and provided the results to the Board as the reference for individual Directors' remuneration and nomination for re-appointment? (IV) Has the Company regularly evaluated the independence of CPAs?	 		(III) The Company has established Regulations for the Performance Evaluation of the Board and periodically carries out the performance evaluation each year according to the law. It has also amended the provisions of Article 31 of the Articles of Incorporation and established the Regulations for the Performance Evaluation of Directors and Supervisors and intended to periodically evaluate Board performance at the end of each year, regularly examine the efficacy of the Board, and report to the Board. (IV) The Company regularly evaluates the independence of CPAs each year and reports to the Board regarding the evaluation results. 1. The evaluation system is as follows: Regularly evaluate the independence of CPAs and obtain the Statement of Independence issued by CPAs each year. 2. The evaluation results are as follows: The Company has executed the independence and adequacy evaluation of CPAs. On March 30, 2022, the Board has approved the resolution that CPAs are not related parties of the Company and that there was no interest between them and the Company and has obtained the Statement of Independence issued by CPAs.	None None

44

Evaluation Items			The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
IV. Has the Company allocated an appropriate number of qualified persons and appointed a chief of corporate governance in charge of corporate governance affairs (including but not limited to furnishing information required for business execution by Directors and supervisors, assisting Directors and supervisors to comply with laws, handling matters relating to Board meetings and shareholders’ meetings according to laws, and preparing minutes of Board meetings and shareholders’ meetings)?			The Management Department of the Company is responsible for handling and assisting in legal affairs and legal compliance of the Company; the President’s Office is responsible for providing data required by Directors for the implementation of operations, handling matters related to Board meetings, committee meetings, and shareholders’ meeting, and preparing meetingminutes.	None
			The Management Department is responsible for the company registration and alteration registration of the Company, and all relevant registration documents require the Finance Department to sign for approval.
V. Has the Company established communication channels with stakeholders (including but not limited to shareholders, employees, customers, and suppliers), set up a section for stakeholders on its corporate website, and responded appropriatelyto important			The Company has established a spokesperson system that is dedicated to handling relevant matters. For suppliers, customers, banks, investors, and other stakeholders, the Company has established appropriate communication channels and set up a stakeholder section on its website.	None

45

Evaluation Items	The State of Operation	The State of Operation	The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
corporate social responsibility issues that are of concern to stakeholders?
VI. Has the company appointed a professional stock affairs agency to handle matters for shareholder meetings?			The Company engages the Register & Transfer Agency Department of Yuanta Securities.	None
VII. Public disclosure of information (I) Has the Company set up a website to disclose finance and business matters and corporate governance information? (II) Has the Company adopted other means of information disclosure (such as setting up an English website, appointing dedicated personnel responsible for the collection and disclosure of Company information, implementing a spokesperson system, postingthe	 		(I) The Company has established an English website and updated the latest product information and relevant information at all times, and disclosed information on finance and business regularly according to relevant requirements. (II) The Company has disclosed relevant finance and business information on MOPS regularly or from time to time according to the requirements of the TWSE, established an English website that discloses the latest product information, and established and implemented a spokesperson system that is responsible for providing services to investors.	None None

46

Evaluation Items			The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
Company's earnings calls on its website, etc.)?
(III) Has the Company published and declared its annual financial statements within two months from the end of the fiscal year and published and declared its Q1, Q2 and Q3 financial statements along with the monthly business performance statements before the prescribed deadline?			(III) The Company declared its Q1, Q2 and Q3 financial statements, along with the monthly business performance statements, before the prescribed deadline and intended to announce and declare its annual financial statements within two months from the end of the fiscal year.	None
VIII. Does the Company have other important information that is helpful to understand its implementation of corporate governance (including but not limited to employees’ interest, employee care, investor relations, supplier relations, stakeholder rights, continuing education of Directors and supervisors,			(I) Employees’ interest: The Company has been protecting employees’ legal interests according to the Labor Standard Act and treated employees with integrity. (II) Employee care: We have established a healthy relationship of mutual trust with employees through improving the benefits system that stabilizes employees' life and a favorable educational training system (i.e., subsidies for employees’ club activities, provision of cultural, entertainment, and health inspection subsidies, and parking lot). (III) Investor relations: There is a spokesperson in place who is dedicated to handling shareholders’ recommendations.	None

47

Evaluation Items			The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
implementation of risk management policies and risk measurement standards, implementation of customer policies, the Company’s purchase of liability insurance for Directors and supervisors)?			(IV) Supplier relations: The Company has maintained healthy relations with suppliers. (V) Stakeholders’ interest: Stakeholders may have communication with and recommendations to the Company to protect their legal interest. (VI) Directors’ continuing education: Directors of the Company possess industry and professional backgrounds and experiences in operating and management practices. (VII) Implementation of risk management policies and risk measurement standards: The Company has established its Procedures for Handling Material Inside Information, Code of Conduct or Ethics of Employees, Code of Ethical Conduct, Regulations for Employees’ Complaints, and Procedures for the Protection of Personal Data; please refer to Attachments 1, 2, 3, 4, and 5 of the handbook. (VIII) Implementation of customer policies: The Company maintains stable and healthy relationships with customers to create its profits. (IX) Purchase of liability insurance for Directors of the Company: The Company has purchased liability insurance for Directors. (X) Post-employment benefit plan 1. Defined contribution plan: The pension system under the “Labor Pension Act” applicable to the Company is a defined contribution plan managed by the government, and the Company appropriates 6% of the monthly salaries of employees to the personal accounts with the Bureau of Labor Insurance. 2. Defined benefit plan: The pension system, organized in accordance with the “Labor Standards Act” of Taiwan,is a defined benefitplan managed bythegovernment. The

48

Evaluation Items			The State of Operation	The differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies for TWSE/GTSM Listed Companies and the reasons therefor.
	Yes	No	Summary description
			payment of an employee’s retirement pension is calculated based on the service seniority and average wages during the six months before the approved retirement date. The Company appropriates 2% of the total monthly salaries of employees as the pension for the Supervisory Committee of Labor Retirement Reserve to deposit in the account with the Bank of Taiwan in the name of the Committee. At the end of the year, if it is estimated that the balance of the account is not sufficient to make the payments for laborers who are estimated to fulfill the retirement conditions in the following year, the Company will appropriate the difference in a lump sum by the end of March in the following year. The Bureau of Labor Funds, Ministry of Labor, is entrusted with the management of the account, and the Company has no right to affect the investment and management strategies.

IX. Please explain improvements that have been made based on the latest results of the Corporate Governance Evaluation issued by the Taiwan Stock Exchange Corporation Governance Center, and propose matters and measures for matters not yet improved.

49

Category of indicator	Content of indicator	Whether any improvement is made	Descriptions of matters not yet improved
	Has the Company reported the remuneration collected by Directors at the annual shareholders’	No	The Company will decide in accordance with relevant specifications based on the operating
	meeting (including the remuneration policy, individual remuneration content, and amount)?		status of the Company.
	Has the annual shareholders’ meeting been attended by over half of the Directors (including at	Yes	Execute according to relevant specifications.
	least one Independent Director) and the convener of the Audit Committee (or at least one
Protect	supervisor)? Has the list of attendance been disclosed in the meetingminutes?
shareholders’		No	The Company will decide in accordance with relevant specifications based on the operating
	Has the Company convened its annual shareholders’ meeting by the end of May?
interest			status of the Company.
	Has the Company uploaded the meeting handbook and supplementary information for the	Yes	Execute according to relevant specifications.
	shareholders’ meeting30 days before the annual shareholders’ meeting?
		Yes	Execute according to relevant specifications.
	Has the Company uploaded the annual report 18 days before the annual shareholders’ meeting?
	Has the Company concurrently uploaded the English meeting notice 30 days before the annual	No	The Company’s operating scale is relatively small, and the foreign investment ratio is
Treat
	shareholders’ meeting?		relativelylow;therefore,the English meetingnotice is notprovided atpresent.
shareholders
	Has the Company uploaded the English meeting handbook and supplementary information 30	Yes	The Company has provided the English meeting handbook and supplementary information in
fairly
	days before the annual shareholders’ meeting?		2023 accordingto relevant specifications.
	Has the Company uploaded the English annual report seven days before the annual	Yes	The Company has provided the English annual report in 2023 according to relevant
	shareholders’ meeting?		specifications.
	Has the Company established and disclosed the internal specifications on its website regarding	No	The Company will decide in accordance with relevant specifications based on the operating
Treat	the prohibition of trading securities by Directors employees or other insiders by using		status of the Company.
shareholders	, , information undisclosed to the market that includes (but is not limited to) the prohibition of
fairly
	trading shares by Directors during the lock-up period 30 days and 15 days before the
	announcement of the financial statements and quarterly financial statements) and specify the
	implementation status?
		Yes	The Company has established relevant corporate governance policies; please refer to the
	Has the Company formulated its Corporate Governance Best Practice Principles that are
			corporate governance implementation in the annual report and the regulations of the
	approved by the Board?
			Companyunder corporategovernance on its Chinese website.
		No	Four Directors and four Independent Directors of the Company possess operating experience
	Has the Company established the diversification policies of its Board members and disclosed the		or academic experiences; stringent procedures are adopted for the nomination of members,
	substantial management objectives and implementation status of the diversification policies on		with their expertise taken into consideration. The Company will continue to promote relevant
	its website and in the annual report?		diversification policies according to the Regulations for the Performance Evaluation of the
Strengthen			Board.
the Board’s	Are the Chairman and President or a osition of the same level (to-level manaer) the same	No	The Company will decide in accordance with relevant specifications based on the operating
structure and	p p g person, or a spouse or a relative within the first degree of kinship?		status of the Company.
operation:
	Has the Company established the succession plan for Board members and the important	No	The Company will decide in accordance with relevant specifications based on the operating
	management and disclosed the operations on its website or in the annual report?		status of the Company.
		Yes	The Company has established the Audit Committee according to the law; for the qualification
	Has the Company disclosed the qualification and experience of members of the Audit
			and experience of members of the Audit Committee, the annual working highlight, and
	Committee, the annual working highlight, and operating status?
			operatingstatus, please refer to the corporategovernance implementation in the annual report.
		Yes	The 2022 interim report of the Company has received the consent of the Audit Committee
	Has the interim report of the Company received the consent of the Audit Committee and been
			and has been proposed to the Board for discussion and resolution.
	proposed to the Board for discussion and resolution?

50

		Whether any
Category of
	Content of indicator	improvement	Descriptions of matters not yet improved
indicator
		is made
		No	The Company will decide in accordance with relevant specifications based on the operating
	Has the Company established a Nomination Committee, Risk Management Committee,
			status of the Company.
	Sustainable Development Committee, or other functional committees not specified by the law
	with a number of members no less than three persons, over half of the members being
	Independent Directors, and one member or above possessing the professional ability required by
	the committee, and disclosed the composition, duties, and operating status?
		Yes	The Company has disclosed the communication status between Independent Directors with
	Has the Company disclosed the separate communication status (i.e. communication methods for
	, the financial statements and the finance and business status of the Company matters and		the chief auditor and CPAs under the Board of corporate governance in the investor section
	, , results) between Independent Directors with the chief auditor and CPAs on its website?		on its Chinese website.
	Has the Board of the Company regularly (at least once a year) evaluated the independence of	No	Currently, there are no sufficient internal/external resources.
	CPAs and dulydisclosed the evaluationprocedures in its annual report?
		Yes	The Company has a chief of corporate governance in place to be responsible for matters
	Does the Company have a chief of corporate governance in place to be responsible for matters
			related to corporate governance, and it will specify its scope of powers and continuing
	related to corporate governance? Has the Company specified its scope of powers and continuing
			education status on its website and in the annual report.
	education status on its website and in the annual report?
	Has the Company regularly performed internal performance evaluations of functional	Yes	The Company has regularly performed internal performance evaluations of functional
	committees (at least including the Audit Committee and the Remuneration Committee) each		committees and disclosed the implementation status and evaluation results in the annual
	year and disclosed the implementation status and evaluation results on its website or in the		report; please refer to the corporate governance operation in the annual report.
	annual report?
Strenthen
g the Board’s	Has the Company established risk management policies and procedures that are approved by the	No	The Company will decide in accordance with relevant specifications based on the operating
structure and	Board, disclosed the scope of risk management, structure, and implementation status, and		status of the Company.
operation:	reported to the Board at least once a year?
	Has the Regulations for the Performance Evaluation of the Board formulated by the Company	Yes	The Company has established Regulations for the Performance Evaluation of Directors and
	been approved by the Board and stated that it shall execute an external evaluation at least every		Supervisors and intends to periodically evaluate Board performance at the end of each year,
	three years? Has the Company executed the evaluations in the year under evaluation or the past		regularly examine the efficacy of the Board, and report to the Board.
	two years and disclosed the implementation status and evaluation results on its website or in the
	annual report?
	Have Independent Directors of the Company completed the continuing education based on the	No	The Company has encouraged Independent Directors to participate in relevant continuing
	number of hours specified in the “Directions for the Implementation of Continuing Education		education programs; however, it is subject to their own decisions.
	for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”?
		No	The Company will decide in accordance with relevant specifications based on the operating
	Has the Company established an intellectual property management plan that is linked to the
	operating objectives, disclosed the implementation status on its website or in the annual report,		status of the Company.
	and reported to the Board at least once a year?
		No	The Company will decide in accordance with relevant specifications based on the operating
	Is there at least one person among the company’s internal auditors who possesses the certificate		status of the Company.
	as a CIA or CISA, or has passed the CPA examination by holding a qualification certificate?
		No
			The Company’s operating scale is relatively small, and the foreign investment ratio is
	Has the Company concurrently declared material information in English?
			relatively low; therefore, material information in English is not provided at present.

51

		Whether any
Indicator
	Content of indicator	improvement	Descriptions of matters not yet improved
Category
		is made
	Has the Company announced its annual financial statements audited and certified by CPAs	No	The Company will decide in accordance with relevant specifications based on the operating
	within two months from the end of a fiscalyear?		status of the Company.
		Yes	The Company has provided English annual financial statements in 2023 according to relevant
	Has the Company uploaded the English annual financial statements seven days before the
			specifications.
	annual shareholders’ meeting?
		No	The Company will decide in accordance with relevant specifications based on the operating
	Has the Company disclosed its English interim financial statements within two months after the
			status of the Company.
	declaration deadline for the Chinese interim financial statements?
	Has the Company voluntarily announced the Q4 financial forecast report? Are relevant	No	The Company will decide in accordance with relevant specifications based on the operating
	operations free from any correction by the competent authority or any record deficiency by		status of the Company.
	TWSE or TPEx?
			The Company will decide in accordance with relevant specifications based on the operating
	Has the Company disclosed the substantial and accurate dividend policy in its annual report?	No
			status of the Company.
Improve	Has the Company voluntarily disclosed the individual remuneration of Directors and supervisors		The Company has disclosed the individual remuneration of Directors according to relevant
		Y
information	in its annual report?	es	specifications.
transparency	Has the Company disclosed the linkage between the performance evaluation and remuneration		The Company will decide in accordance with relevant specifications based on the operating
		No
	of Directors and managers in its annual report?		status of the Company.
	Has the Company established an English website that includes information related to finance,		The Company has established its English website; however, the disclosures are insufficient,
		No
	business,and corporategovernance?		and it will activelymake improvements.
	Has the Company been invited (initiated) to convene at least two investor conferences? Is the	No	The Company will decide in accordance with relevant specifications based on the operating
	gap between the first and the last investor conferences during the year under evaluation over		status of the Company.
	three months?
		Yes	The Company has disclosed the individual remuneration of the President and Vice Presidents
	Has the Company voluntarily disclosed the individual remuneration of the President and Vice
			in its annual report according to relevant specifications.
	Presidents in its annual report?
	Has the Company established a dedicated (concurrent) department for sustainable development	No	The scale of the Company is relatively small, and the Company will make additions based on
	to carry out risks assessments for environmental, social, or corporate governance issues related		the circumstances in the future.
	to the Company’s operations based on the principle of materiality and establish relevant risk
	management policies or strategies with the Board monitoring the promoting status of sustainable
	development,and disclosed them on its website and in the annual report?
	Has the Company established a dedicated (concurrent) department for ethical corporate	No	The scale of the Company is relatively small, and the Company will make additions based on
	management to be responsible for the formulation and supervision of ethical corporate		the circumstances in the future.
	management policies and preventive plans? Has the Company described the operation and
	implementation status of the department established on its website or in the annual report and
	reported to the Board at least once ayear?
		No	The scale of the Company is relatively small, and the Company will make additions based on
Promote	Has the Company regularly disclosed the substantial plans and implementation achievements of		the circumstances in the future
sustainable	ESG on its website, or in the annual report or Sustainability Report?		.
development	Has the Company prepared its Sustainability Report in accordance with the GRI standards	No	The scale of the Company is relatively small, and the Company will make additions based on
	issued bythe GRI and uploaded it to MOPS or its website before the end of September?		the circumstances in the future.
	Has the Sustainability Report prepared by the Company been verified by a third-party certifying		The scale of the Company is relatively small, and the Company will make additions based on
		No
	institution?		the circumstances in the future.
	Has the Company established policies and substantial management plans to protect human rights	Yes	The Company has disclosed the protection policies related to working environments and
	with reference to the International Bill of Human Rights and disclosed them on its website or in		personal safety under the declaration of human rights protection of corporate governance in
	the annual report?		the investor section on its Chinese website.

52

Indicator Category		Whether any
	Content of indicator	improvement	Descriptions of matters not yet improved
		is made
Promote sustainable development		No	The Company’s scale is relatively small, and the foreign investment ratio is relatively low,
	Has the Company uploaded the English Sustainability Report on MOPS and its website?		and the Company will make additions based on the circumstances in the future.
		Yes	The Company has disclosed the employee benefit measures, retirement systems, and
	Has the Company disclosed various employee benefit measures, retirement systems, and the
			implementation status in the annual report.
	implementation status on its website and in the annual report?
		No	At present, the Company has no sufficient internal/external resources to evaluate the
	Has the Company disclosed the annual emissions of GHGs, water consumption, and the total
			emissions of CO2or other GHGs, and it will make additions according to laws, regulations,
	weight of wastes in the past two years?
			andpolicies in the future.
	Has the Company established management policies for GHG reduction or water consumption, or	No	At present, the Company has no sufficient internal/external resources to evaluate the
	other waste reduction (including the reduction objective, promoting measures, and the		emissions of CO2or other GHGs, and it will make additions according to laws, regulations,
	achievement)?		andpolicies in the future.
	Has the Company obtained ISO 14001, ISO50001, or similar environmental or energy		The scale of the Company is relatively small, and the Company will make additions based on
		No
	management system verification?		the circumstances in the future.
	Has the Company disclosed the identification of stakeholders, issues of concern, communication		The scale of the Company is relatively small, and the Company will make additions based on
		No
	channels, and response methods on its website or in the annual report?		the circumstances in the future.
	Has the Company established and disclosed the details of the whistleblowing system for illegal		The scale of the Company is relatively small, and the Company will make additions based on
		No
	(including corruption) and unethical conduct of internal and external personnel on its website?		the circumstances in the future.
	Has the Company disclosed the supplier management policies it formulated that require
	suppliers to comply with relevant specifications on environmental protection, occupational		The scale of the Company is relatively small, and the Company will make additions based on
		No
	safety and health, or labor rights issues on its website or in the annual report or the		the circumstances in the future.
	Sustainability Report and described the implementation status?
	Has the Company disclosed the governing status, strategies, risk management, indicators,
			The scale of the Company is relatively small, and the Company will make additions based on
	objectives, and relevant information regarding risks and opportunities related to climate based	No
			the circumstances in the future.
	on the TCFD structure?

53

(4) If the Company has established its Remuneration Committee, the composition, responsibilities, and operations of the Committee shall be disclosed:

A. Information on members of the Remuneration Committee

Criteria Identity Name	Criteria Identity Name	Professional qualifications and experience	Independence	Number of concurrent duty as a Remunerati on Committee member at a public company
Convener	Huang Yun- Ming	Ph.D. in differential dynamical, University of Minnesota Used to be a consultant for AT&T and a chief engineer for Quintum. Possess the working experience required for business and corporate operations.	1. The person, his spouse, or his second-degree relatives do not serve as directors, supervisors or employees of the Company. 2. No share of the Company is held by the person, spouse, or relatives within the second degree of kinship (or in others’ name). 3. Not a director, supervisor, or employee of a company which has a specific relationship with the Company. 4. No compensation is received for providing business, legal, financial, accounting, and other services to the Company or its affiliates for the most recent two years.	0
Independent Director
Independent Director	Jiang Min- Shiung	National Taipei Institute of Technology. Used to be the chairman of Acrosser Technology Co., Ltd.. Acrosser Technology Co., Ltd.	1. The person, his spouse, or his second-degree relatives do not serve as directors, supervisors or employees of the Company. 2. No share of the Company is held by the person, spouse, or relatives within the second degree of kinship (or in others’ name). 3. Not a director, supervisor, or employee of a company which has a specific relationship with the Company. 4. No compensation is received for providing business, legal, financial, accounting, and other services to the Companyor its affiliates for the most recent twoyears.	0
Independent Director	Chang Guo- Hua	Bachelor's degree from Chiao Tung University and a master's degree from Arizona State University. Used to be the co-founder of StarVox and the engineering vice president of CTO. Possess the working experience required for business and corporate operations.	1. The person, his spouse, or his second-degree relatives do not serve as directors, supervisors or employees of the Company. 2. No share of the Company is held by the person, spouse, or relatives within the second degree of kinship (or in others’ name). 3. Not a director, supervisor, or employee of a company which has a specific relationship with the Company. 4. No compensation is received for providing business, legal, financial, accounting, and other services to the Company or its affiliates for the most recent two years.	0
Independent Director	Ko Shu- Mei	Department of Business Administration, Providence University. Used to be the assistant vice president of the management section of AquaOptics. Acrosser Technology Co., Ltd.	1. The person, his spouse, or his second-degree relatives do not serve as directors, supervisors or employees of the Company. 2. No share of the Company is held by the person, spouse, or relatives within the second degree of kinship (or in others’ name). 3. Not a director, supervisor, or employee of a company which has a specific relationship with the Company. 4. No compensation is received for providing business, legal, financial, accounting, and other services to the Companyor its affiliates for the most recent twoyears.	0

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B. Information on the operation of the Remuneration Committee

• a. The Company’s Remuneration Committee comprises four members.

• b. Term of office of the 5[th] session members: The term of office is from June 29, 2022 to June 28,

• Two meetings were held for the 5th session of the Remuneration Committee in the most recent

year, and the qualification and attendance of members are as follows:

Title	Name	Number of attendance in person (B)	Number of attendance by proxy	Attendance rate (%) (B/A)	Remarks
Convener	Huang Yun- Ming	2	0	100
Committee member	Jiang Min- Shiung	2	0	100
Committee member	Chang Guo- Hua	2	0	100
Committee member	Ko Shu-Mei	2	0	100
Other matters to be recorded: 一、 If the Board does not adopt or amend the recommendations from the Remuneration Committee, the date, session, content of proposals, resolution of the Board, and the Company’s response to the recommendations of the Remuneration Committee shall be specified (if the remuneration approved by the Board is more favorable than the recommendation of the Remuneration Committee, the differences and reasons shall be specified): None. 二、 For any objections or qualified opinions raised by a member of the Remuneration Committee against a resolution with records or written statements, the date of the Remuneration Committee meeting, session, content of proposals, opinions of all members, and the Company’s response to the opinions of members shall be described: None.

C. Disclose the 2022 date of meetings, content of proposals, resolutions, and the Company’s response to

the Remuneration Committee’s opinion

Remuneration Committee.	Content of proposals and the subsequent response	Resolution	Company's handling of the remuneration committee's opinions
2022.11.10	1. Review and discussion of the proposal for the distribution of remuneration of Directors and supervisors and employee bonuses for 2021 2. Proposal for the remuneration policy of managers 3. Proposal for the remuneration policy of other managers 4. Proposal for the working plan in 2023	Approved by all members of the Remuneration Committee	Proposed to the Board and approved by receiving the consent of all attending Directors
2023.03.28	1. Review and discussion of the proposal for the distribution of remuneration of Directors for 2022 2. Proposal for the distribution of remuneration of managers 3. Proposal for the distribution of remuneration of other managers	Approved by all members of the Remuneration Committee	Proposed to the Board and approved by receiving the consent of all attending Directors

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(5) Implementation of promoting sustainable development and the differences from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies and the reasons therefor

Evaluation Items			The State of Operation	Differences between the fulfillment of corporate social responsibility and the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the reasons therefor:
	Yes	No	Summary description
I. Has the Company established a governance framework for promoting sustainable development, and established an exclusively (or concurrently) dedicated unit to be in charge of promoting sustainable development? Has the board of directors authorized senior management to handle related matters under the supervision of the board?			The Company has not established a governing structure for the promotion of sustainable development or a dedicated (concurrent) department.	The Company will establish the governing structure for the promotion of sustainable development or the dedicated (concurrent) department based on the actual requirements in the future.
II. Has the Company conducted risk assessments on environmental, social and corporate governance issues related to the Company's operations in accordance with the materiality principle, and formulated relevant risk management policies and strategies?			The Company has established evaluations of environmental, social and corporate governance issues related to the Company's operations and relevant risk management policies or strategies, and environmental, social and corporate governance issues have no material effect on investors and other stakeholders of the Company. The Company complies with relevant labor regulations and respects basic labor human rights principles generally recognized internationally, protects the legal interest of employees, and has established relevant management rules and systems.	None

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Evaluation Items	The State of Operation	The State of Operation	The State of Operation	Differences between the fulfillment of corporate social responsibility and the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the reasons therefor:
	Yes	No	Summary description
III. Environmental Issues (I) Has the Company set up an appropriate environmental management system based on the characteristics of its industry?			The Company has established the ISO14001 environmental management system. Measurement of operating environments: The Company implements measures for factors in operating environments every six months to ensure the health of employees. The measurement items include noise, air quality, lead operations, and illuminance. All measurement items shall comply with the requirements under laws and regulations, or improvement measures shall be adopted. The Company has established emergency management measures: The Company has established emergency management measures to ensure the reduction of the possibility of impacts and hazards on the environment and safety upon the occurrence of emergencies and the immediate response upon the occurrence of any disaster. The Company also cooperates with the fire control exercise once every six months of the building and appoints personnel to join the program according to the management committee of the building.	None
(II) Is the Company committed to improving energy efficiency and to the use of renewable materials with low environmental impact?			Saving water and electricity resource: To effectively utilize limited water resources in Taiwan, the Company promotes the water-saving concept with employees at all times and changes to water-saving faucets to avoid wasting water resources. For electricity, apart from installing automated power factor adjustment equipment, high power is the key condition for selecting power consumption equipment to improve power consumption efficiency. We maintain sufficient lighting for the operating areas. For non-operating areas, turn off or only keep lighting that will not affect the safety of personnel; personnel shall turn off the light to save power consumption when leaving. The A/C of offices and meeting rooms shall maintain the setting of an appropriate temperature; when there are fewer persons or when they leave, the temperature of A/Cs shall be appropriately adjusted or turned off. For waste management and recycling, in response to the energy-saving and carbon dioxide reduction policies for the achievements of sustainable use of resources, the Company prioritizes the reduction of garbage volume for the management waste, followed by the consideration for outsourced reutilization. To duly grasp the flow of waste, we carefully selected the waste clearingsupplier and confirmed the certifications,on-site operations,and	None

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Evaluation Items			The State of Operation	Differences between the fulfillment of corporate social responsibility and the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the reasons therefor:
	Yes	No	Summary description
(III) Has the Company evaluated the potential risks and opportunities of climate change to the Company at present and in the future and adopted countermeasures for climate-related issues? (IV) Has the Company made statistics on GHGs emissions, water consumption, and the total weight of wastes for the past two years and formulated policies for GHGs emissions reduction, water consumption reduction, or other waste management?	 		the traffic route to ensure all wastes are duly processed or reused legally, avoiding a second time of pollution to the environment. The Company is a network equipment solution supplier, and major potential risks, including the increase in raw material costs and exchange rate fluctuations, may cause impacts and affect its operations. However, in terms of recycling efficacy, the Company encourages employees to recycle waste paper for reuse, save electricity, and reduce water consumption to minimize operating costs. Saving water and electricity resource: To effectively utilize limited water resources, the Company promotes the water-saving concept with employees at all times and changes to water-saving faucets to avoid wasting water resources. For electricity, apart from installing automated power factor adjustment equipment, high power is the key condition for selecting power consumption equipment to improve power consumption efficiency. We maintain sufficient lighting for the operating areas. For non-operating areas, turn off or only keep lighting that will not affect the safety of personnel; personnel shall turn off the light to save power consumption when leaving. The A/C of offices and meeting rooms shall maintain the setting of an appropriate temperature; when there are fewer persons or when they leave, the temperature of A/Cs shall be appropriately adjusted or turned off to achieve energy-saving and carbon dioxide reduction and reduce damage to climate and environments.	None None

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Evaluation Items	The State of Operation	The State of Operation	The State of Operation	Differences between the fulfillment of corporate social responsibility and the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the reasons therefor:
	Yes	No	Summary description
IV. Social Issues (I) Has the Company formulated relevant management policies and procedures in accordance with relevant regulations as well as the International Bill of Human Rights?			The Company complies with relevant labor regulations and respects basic labor human rights principles generally recognized internationally, protects the legal interest of employees, and has established relevant management rules and systems.	None
(III) Does the Company provides employees with a safe and healthy working environment and regularly organize safety and health education for employees? (IV) Has the Company established an effective career development training program for employees?	 		According to the requirements under labor safety and health regulations, the Company provides standard operating environments, performs environmental factor tests for CO2, lead operations, and illuminance regularly according to the requirements, and tests drinking water regularly according to the requirements to comply with the requirements under regulations; it also organizes safety and health education regularly for employees. Relevant labor safety personnel of the Company have participated in educational training, and there are a total of 16 persons who have obtained certificates related to labor safety and health. The Company has a comprehensive employee training plan and organizes diverse educational training based on different duties, expertise, and requirements. Meanwhile, it assists in the functional development of employees, improves their professional literacy, and provides secondary specialty development plans in due course to enrich employees’ careers. Internal and external educational training of ethical corporate management organized by the Company: In 2022, regarding the internal and external educational training of ethical corporate management organized (including compliance with ethical corporate management regulations, occupational safety and health management, information safety incident identification and handling, accounting system, internal control, and other relevant programs), the number ofparticipants was 243,with a total number of man-hour reaching235,491 hours.	None None

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Evaluation Items			The State of Operation	Differences between the fulfillment of corporate social responsibility and the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the reasons therefor:
	Yes	No	Summary description
(V) Has the Company complied with relevant regulations and international standards with regard to customer health and safety, customer privacy, marketing, and labeling of products and services, and established relevant policies to protect the interests of consumers or customers and complaintprocedures?			In 2006, in response to the Restriction of Hazardous Substances (RoHS) of the EU and the requirements of customers regarding hazardous substance management, the Company continued to implement the management plans for suppliers’ environmental protection, safety, and health and linked them with the sustainable indicators of three major factors of environmental protection, social responsibility, and risk management.	None
(VI) Has the Company formulated supplier management policies that require suppliers to comply with relevant specifications on environmental protection, occupational safety and health, or labor rights issues? What is the implementation status?			The Company has established the non-corruption commitment terms and procurement order contract terms for suppliers to provide specifications related to issues of direct or indirect offering, bribery, commission provision, rebates, or other inappropriate measures. If any violation occurs, the Company may directly terminate or cancel orders or all contracts, and suppliers shall compensate all damages and expenses that occurred thereof.	None
V. Has the Company referred to international reporting standards or guidelines in its preparation of the sustainability report and other reports which disclose the Company's non- financial information? Has			The Company’s scale is relatively small, and the Company will make additions based on the circumstances in the future.	The Company will establish a dedicated (concurrent) department for corporate social responsibility based on the actual

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==> picture [693 x 271] intentionally omitted <==

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

The State of Operation Differences between
the fulfillment of
corporate social
responsibility and
the Corporate Social
Evaluation Items Responsibility Best
Yes No Summary description Practice Principles
for TWSE/GTSM
Listed Companies
and the reasons
therefor:
the Company obtained the requirements in the
assurance or certification of a future.
certifying institution for the
reports above?
VI. If the Company has adopted its own Sustainable Development Best Practice Principles based on the Sustainable Development Best Practice Principles for
TWSE/TPEx Listed Companies, please describe any differences from the principles in the Company’s operations:
The Company has always been complying with laws and regulations and spared no effort in environmental protection and public safety; however, it has not
established the “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies”; it will establish such principles as soon as possible
according to laws and regulations.
VII. Other important information to facilitate a better understanding of the Company’s promotion of sustainable development:
For details, please refer to pages 56 to 61 of the handbook.
----- End of picture text -----

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(6) Implementation of ethical corporate management and differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx

Listed Companies and the reasons therefor	Listed Companies and the reasons therefor	Listed Companies and the reasons therefor	Listed Companies and the reasons therefor	Listed Companies and the reasons therefor
Evaluation Items	The State of Operation			Differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons for the differences
	Yes	No	Summary description
I. Formulate ethical corporate management policy and plan (I) Does the Company have an ethical corporate management policy approved by its Board, and bylaws and publicly available documents addressing its policy and measures of ethical corporate management, and commitment regarding active implementation of such policy from the Board and the senior management? (II) Has the Company established a risk assessment mechanism against unethical conduct, analyzed and assessed on a regular basis business activities within their business scope which are at a higher risk of being involved in unethical conduct, and established prevention programs accordingly which at least cover theprevention	 		The Company has established terms of ethical conduct in contracts entered into with external parties due to business activities. For those with records of unethical conduct, the Company may perform a demotion, cease their rights, or exclude them from the list of qualified suppliers; the Company has established its “Ethical Corporate Management Best Practice Principles,” which was implemented after being approved by the shareholders’ meeting in 2015. The Company has formulated its working rules and regulations for rewards and punishments and implements educational training for new employees. The Management Department reviews contracts to prevent the risk related to the violation of laws of contracts entered into, and the Audit Office audits and continues to follow up on the implementation status from time to time.	Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies

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Evaluation Items			The State of Operation	Differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons for the differences
	Yes	No	Summary description
measures against the conducts listed in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies?
(III) Has the Company clearly set the operating procedures, behavior guidelines, and punishment and complaint system for violations in its unethical conduct prevention program, implemented it, and regularly reviewed and revised it?			The Company has established the “Ethical Corporate Management Best Practice Principles,” which states that persons shall not have any private business conduct with companies having dealings with the Company or accept gifts, rebates, or other illegal benefits leveraging their duties or engage in other conducts that damage the Company’s interest.	Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies
II. The implementation of ethical corporate management (I) Does the company assess the ethics records of whom it has business relationship with and include business conduct and ethics related clauses in the business contracts? (II) Has the Company set up a dedicated department that is subordinated to the Board to promote ethical corporate management, and does it regularly (at least once ayear)	 		The Company duly evaluates the credit of customers to avoid engaging in transactions with those with unethical conduct, and it has established the “Ethical Corporate Management Best Practice Principles,” which was implemented after being approved by the shareholders’ meeting in 2015 and disclosed in the corporate governance section on its website. If there are any matters related to the promotion of ethical corporate management, the Management Department is responsible for the promotion, and it shall report to the Board regarding the policies of ethical corporate management, plans for preventing unethical conduct, and supervisory and implementation status at the end of each year.	Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies

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Evaluation Items report to the Board on its ethical corporate management policy and unethical conduct prevention program and monitor their implementation? (III) Does the Company establish policies to prevent conflict of interests, provide appropriate communication and complaint channels and implement such policies properly? (IV) Has the Company established effective accounting and internal control systems in place for the implementation of ethical corporate management? Has the internal audit department formulated relevant audit plans based on the assessment results of unethical conduct risk to perform audits on compliance with the unethical conduct prevention program or engage CPAs to perform such audits?			The State of Operation	Differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons for the differences
	Yes	No	Summary description
	 		The Company has established and implemented its “Ethical Corporate Management Best Practice Principles,” which mentioned the recusal of stakeholders. To ensure the implementation of ethical corporate management, the Company has established an effective accounting system and internal control system. In addition, our internal auditors regularly perform audits on compliance with the abovementioned system and communicate with CPAs for the performance of improvement plans.	Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies

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Evaluation Items		The State of Operation	The State of Operation	Differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons for the differences
	Yes	No	Summary description
(V) Does the Company provide internal and external education and training in ethical corporate management on a regular basis?			The Company will keep abreast of the development of specifications related to ethical management, examine and amend relevant specifications of the Company, and promote to employees and announce for general acknowledgment.	Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies
III. The operation of the Company's whistleblower reporting system (I) Does the Company establish specific whistleblowing and reward procedures, set up conveniently accessible whistleblowing channels and designate responsible individuals to handle the complaints received? (II) Has the Company established its SOP for investigating the complaints received, subsequent measures to be adopted, and the related confidentiality system after the investigation? (III) Has the Company adopted proper measures to protect whistleblowers from inappropriate disposals due to whistleblowing?	  		The Company has established its “Regulations for Employees’ Complaints” (please refer to Attachment 4); after the initial circumstances were verified for the opinion or complaint of employees, the Company will make arrangements based on the working rules or regulations for rewards and punishments. The “Code of Ethical Conduct” states that the Company has established relevant procedures or systems and allowed employees to acknowledge the safety protection of whistleblowers without suffering from any revenge. The “Code of Ethical Conduct” states that the Company has established relevant procedures or systems and allowed employees to acknowledge the safety protection of whistleblowers without suffering from any revenge.	Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies Compliant with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies

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Evaluation Items	The State of Operation	The State of Operation	The State of Operation	Differences from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons for the differences
	Yes	No	Summary description
IV. Enhance Information Disclosure Has the Company disclosed the content and implementation results of its Ethical Corporate Management Best Practice Principles on its website and MOPS?			The Company has disclosed the content of its “Ethical Corporate Management Best Practice Principles,” and the promotional achievements shall be arranged subject to the requirements under laws and regulations in due course.	Disclosures will be made based on the actual requirements in the future
V. If the Company has adopted its own Ethical Corporate Management Best Practice Principles based on the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, please describe any differences from the principles in the Company’s operations: The Company has established its “Ethical Corporate Management Best Practice Principles,” which was submitted to and approved by the shareholders’ meetingand implemented in June 2015. Disclosed as above,and there is no supplementarydisclosure atpresent.
VI. Other important information to facilitate a better understanding of the Company’s implementation of ethical corporate management (i.e., the examination and modification to the Ethical Corporate Management Best Practice Principles established by the Company): The Company complies with the Company Act, relevant specifications of TWSE/TPEx, and relevant laws and regulations as the foundation of implementing ethical corporate management;for business dealings with externalparties,it forbids anycounterpartyfrom involvingin anyunethical conduct.

(7) The inquiry method for the Corporate Governance Best Practice Principles and relevant rules established by the Company: http://www.looptelecom.com .

(8) Other important information to facilitate a better understanding of the Company’s implementation of corporate governance: None.

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(9) Implementation of internal control system

A. Statement of internal control:

Loop Telecommunication International, Inc.

The Statement of Internal Control System

Date: March 28, 2023 The Company makes the following statement according to the self-evaluation conducted of the internal control system for 2022: I. The Company acknowledges that it is the responsibility of the Board and managerial officers to establish, implement, and maintain the established internal control system. Its purpose is to reasonably ensure that operational effectiveness and efficiency (including profits, performance, and asset safety) and reporting are reliable, timely, and transparent, as well as to ensure compliance with relevant regulations and laws, where financial records and statements are prepared in accordance with the Insurance Act and relevant requirements with a consistent basis of preparation; this shall serve as a part of the results for the internal control system of financial reporting. II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the stated objectives above. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond control. Nevertheless, the internal control system of the Company contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies. III. The Company evaluates the design and operating effectiveness of the internal control system based on the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Public Companies” (the “Regulations”). The criteria adopted by the “Regulations” identify five components of internal control based on the process of management control: 1. control environment; 2. risk assessment; 3. control activities; 4. information and communication; and 5. monitoring operations. Each key component includes several items. Please refer to the “Regulations” for the aforementioned items. IV. The Company has evaluated the design and implementation effectiveness of the internal control system according to the determining items for the internal control system above. V. In accordance with the results of the aforementioned evaluation, the Company has found that the design and implementation of the internal control system (including the overall execution status and legal compliance for operations, financial reporting, and information security) as of December 31, 2022 are effective; apart from the matters set out in the schedule, it can be reasonably assured that the Board and the managers understand that the objectives for operations, financial reporting, and compliance with the relevant guidelines and laws are achieved, and it is considered that the financial records and statements are prepared in accordance with the Insurance Act and relevant requirements with a consistent basis of preparation, and the accuracy is adequate. VI. The statement is an integral part of the Company's annual report and prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act. VII. The statement was approved by the Board on March 28, 2023. Among the eight attending Directors, none of them held an opposing opinion, and all of them agreed with the content of the statement, which is hereby issued. Loop Telecommunication International, Inc. Chairman: Yeh Maw-Lin President: Yeh Maw-Lin

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B. Where a CPA has been engaged to carry out a project review of the internal control system, the

CPA’s review report shall be disclosed: None.

(10) If there has been any legal penalty imposed against the Company or its internal personnel, or any disciplinary penalty imposed by the Company against its internal personnel for violation of the requirements under its internal control system, during the most recent year and up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder equity or securities prices, specify the penalty, the main shortcomings, and condition of improvement: None.

• (11) Material resolutions of shareholders’ meetings or Board meetings during the most recent year and up to the publication date of the annual report:

A. Material resolutions of the annual shareholders’ meeting and the implementation status

Time	Material resolution of the shareholders’ meeting:	Execution
2022.06.29 M	aterial resolution of the 2022 annual shareholders’ meeting: Report Items 1. The 2021 business report 2. The 2021 supervisor’s review report 3. The report of the distribution of remuneration of employees and remuneration of Directors and supervisors in 2021 Ratification 1. Approved the 2021 business report, consolidated financial statements, and parent company only financial statements 2. Approved the proposal for earning distribution for 2021 Discussion 1. Proposal for the amendment to the “Articles of Incorporation." 2. Proposal for the amendments to the “Procedures for Acquisitions or Disposals of Assets.” 3. Proposal for the amendments to the “Procedures for Derivative Transactions.” 4. Proposal for the amendments to the “Procedures for Endorsements and Guarantees.” 5. Proposal for the amendments to the “Proceduresfor Loansto Others.”	Approved as a resolution. September 12, 2022 was set as the ex-dividend date, and September 29, 2022 was the cash dividends distribution date.

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B. Board meeting

Meeting date (session)	Motion content	Opinions of all Independent Directors and the Company’s response to the opinions of Independent Directors
2022/08/11 (The 3rdregular meeting in 2022)	Reviewed and discussed the 2022 Q2 consolidated financial statements and parent company only financial statements. Proposal for the qualification of members appointed for the 5thsession of the “Remuneration Committee.” The Company intends to apply for the rollover of the comprehensive loan limits with Mega International Bank in the amount of NT$40 million. The Company intends to apply for the rollover of the pre-purchase/pre-sale forward exchange transactions and currency exchange exposure transaction limits with Mega International Bank in the amount of US$0.15 million. Cumulative performance for contracting operations of derivatives (pre-sale forward exchange). The CompanyMatters related to the ex-dividend date in 2022.	Approved by receiving the consent of all attending Directors
2022/11/10 (The 4thregular meeting in 2022)	Reviewed and discussed the 2022 Q3 consolidated financial statements and parent company only financial statements. Proposal for the 2023 annual audit plan of the Company. Proposal for the distribution of remuneration of employees and remuneration of Directors and supervisors in 2021. Proposal for the remuneration of managers and Directors in 2021. Proposal for the remuneration of other managers in 2021. Proposal for the working plan of the Remuneration Committee in 2023. Proposal for the amendment to the “Procedures for Handling Material Inside Information and Insider TradingPrevention.”	Approved by receiving the consent of all attending Directors
2023/03/28 (The 1stregular meeting in 2023)	Reviewed and discussed the 2022 Q4 consolidated financial statements and parent company only financial statements. Proposal for the 2023 business plan. Proposal for the distribution of employee remuneration and Director remuneration in 2022. Proposal for earning distribution for 2022. Proposal for the discussion of cash dividends distribution from the capital reserve in 2022. Proposal for the remuneration of managers and Directors. Proposal for the remuneration of other managers. The CompanyProposal for the performance evaluation of the Board in 2022. Proposal for the amendment to the “Articles of Incorporation." The Company intends to apply for the rollover of short- term comprehensive loan limits and short-term comprehensive loan limits with Yuanta Commercial Bank in the amount of NT$80 million and NT$72 million, respectively. Cumulativeperformance for contractingoperations of	Approved by receiving the consent of all attending Directors

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Meeting date (session)	Motion content	Opinions of all Independent Directors and the Company’s response to the opinions of Independent Directors
	derivatives (pre-sale forward exchange). Evaluation of the effectiveness of the internal control system and the “Statement of Internal Control” in 2022. Proposal for the setting of the “chief of corporate governance” of the Company. Proposal for the capital reduction in cash of the Company. Proposal for establishing matters related to the acceptance of shareholders’proposals in 2023.
2023/05/11 (The 2ndregular meeting in 2023)	Reviewed and discussed the 2023 Q1 consolidated financial statements and parent company only financial statements. Cumulative performance for contracting operations of derivatives (pre-sale forward exchange). The report of the acceptance of shareholders’ proposals for the2023annualshareholders’ meeting.	Approved by receiving the consent of all attending Directors

• a. Any objections or qualified opinions raised by an Independent Director against a Board resolution with records or written statements: None.

• b. Implementation status of the recusal of Independent Directors for proposals in which they have interest: None.

• c. Communication between the Independent Directors and chief auditor and CPAs (e.g., material matters, methods, and results of communication regarding the Company's financial and business status):

  1. The chief auditor and CPAs have pre-meetings with particular Independent Directors to discuss the finance and business status before the regular Board meeting each quarter. There was no circumstance above in 2022. The communication between Independent Directors and the chief auditor is healthy.

  2. CPAs and Independent Directors carry our meetings in person regarding the finance and business status of the Company; Independent Directors may have communication via phone calls or e-mails with the Finance Department at all times.

  3. CPAs of the Company report the auditing or reviewing the status of the quarterly financial statements and other communication matters requirements under relevant laws and regulations at Board meetings each quarter; if there is any special circumstance, they will also immediately report to Board members; in 2022, there were no abovementioned special circumstances. The communication between Independent Directors and CPAs is healthy.

• (12) During the most recent year and up to the publication date of the annual report, where a Director

has expressed a dissenting opinion with respect to a material resolution passed by the Board, and the said dissenting opinion with records or written statements, disclose the principal content thereof: None.

• (13) A summary of resignations and dismissals of the Company's Chairman, President, chief accountant, chief financial officer, chief internal auditor, chief of corporate governance, and chief of research and development during the most recent year and up to the publication date of the annual report: None.

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4. Information on CPA fees

• (1) The amount of audit fees and non-audit fees paid to CPAs and its firm and affiliates and the

content of non-audit services shall be disclosed:

Information on CPA fees

(In Thousands of New Taiwan Dollars)

CPA firm	CPA name	Audit fee (Note 1)	Non-audit fee	Non-audit fee	Non-audit fee	Non-audit fee	Non-audit fee	CPA audit period	Remar ks
			System design	Business registration	Human resources	Others	Subtotal
Deloitte & Touche Taiwan	Huang Yu-Feng Tseng Jian- Ming	3,090	0	0	0	102 (Note 2)	102	2022/1/1~ 2022/12/31

Note 1: Audit fees refer to fees paid by the Company to CPAs related to the audit, review, re-inspection of financial statements, and the review of financial forecast.

1. Taxation certification, assurance, or other financial advisory services.

2. (2) When the Company changes its CPA’s firm and the audit fees paid for the year in which such

change took place are lower than those for the preceding year, the amount of the audit fees before and after the change and the reasons shall be disclosed: None.

(3) When the audit fees paid for the current year are lower than those for the preceding year by 10% or more, the reduction in the amount of audit fees, reduction percentage, and reasons shall be disclosed: None.

5. Information on replacement of CPAs

(1) Former CPAs

1) Former CPAs
Date of change	From 2021 Q4
Reason for the change and description	Internal operational rotation of the firm
Description of whether the Company or CPAs terminate or reject the appointment	Party Circumstances	CPAs	The Company
	Propose to terminate the appointment	Not applicable
	Reject the (continued) appointment	Not applicable

71

Opinions in the auditor’s report issued other than unqualified opinions within the most recent two years and reason	Not applicable	Not applicable	Not applicable
Whether CPAs have any opinion different from the issuer	Yes		Accounting principles or practices
			Disclosure of financial reports
			Scope or step of audit
			Others
	None
	Description: Not applicable
Other disclosures (disclosures to be made in accordance with items 1-4 to 1-7, subparagraph 6, Article 10 of the Regulations)

72

(2) Successor CPAs

(2) Successor CPAs
CPA firm	Deloitte & Touche Taiwan
CPA name	Huang Yu-Feng and Tseng Jian-Ming
Appointment date	From 2021 Q4
Consultation matters regarding the treating method or accounting principles of particular transactions and opinions that may be issued for the financial statements and results	Not applicable
Written opinion of succession CPAs for matters with opinions different from the former CPAs	Not applicable

• (3) Response letter of the former CPAs regarding matters stated in item 1 and point 2, item 3, subparagraph 6, Article 10 of the Regulations: None.

6. The Chairman, President, or managers in charge of financial or accounting matters of the Company working in the CPA’s firm or its affiliates in the most recent year: None.

7. Transfer of equity and changes in equity pledges of Directors, supervisors, managers, and shareholders with a shareholding of 10% and above in the most recent year and up to the date of publication of the annual report

Changes in equity of Directors, supervisors, managers, and major shareholders

Title	Name	2022	2022	Current year as of April 29	Current year as of April 29
		Increase (decrease) in the number of shares held	Increase (decrease) in the number of shares pledged	Increase (decrease) in the number of shares held	Increase (decrease) in the number of shares pledged
Chairman	Yeh Maw-Lin	0	0	0	0
Director	Fan Zheng-Chun	0	0	0	0
Director	HuangHong-Jiang (Note 2)	0	0	0	0
Independent Director	Hu Cheng-Di (Note 2)	0	0	0	0
Independent Director	We Qian-Xian (Note 2)	0	0	0	0
Supervisor	Chiu Dong-Sheng (Note 2)	0	0	0	0
Director	Chiu Dong-Sheng (Note 1)	0	0	0	0
Supervisor	Chen Hua-Ling (Note 2)	0	0	0	0
Director	Chen Hua-Ling (Note 1)	(41,000)	0	(9,000)	0

73

Title	Name	2022	2022	Current year	as of April 29
		Increase (decrease) in the number of shares held	Increase (decrease) in the number of shares pledged	Increase (decrease) in the number of shares held	Increase (decrease) in the number of shares pledged
Independent Director	Huang Yun-Ming (Note 1)	0	0	0	0
Independent Director	Jiang Min-Shiung (Note 1)	0	0	0	0
Independent Director	Chang Guo-Hua (Note 1)	0	0	0	0
Independent Director	Ko Shu-Mei (Note 1)	0	0	0	0
Chief of corporate governance	Cai Xing-Juan (Note 3)	0	0	0	0
Director of the Finance and Accounting Department	Chang Xiao-Ling	0	0	0	0
Vicepresident	Lai Yong-Zan	24,294	0	0	0
Vicepresident	Liu Dong-Jie	(5,756)	0	0	0
Vicepresident	Ceng Qing-Lin	45,000	0	(45,000)	0

Note 1: Directors newly elected from the full re-election on June 29, 2022. Note 2: Directors dismissed after the full re-election on June 29, 2022. Note 3: Newly appointed on March 28, 2023.

(1) Information on the transfer of equity: None.

(2) Information on the pledge of equity: None.

8. Information on relationships between shareholders with the top ten shareholdings

Data on shareholders with the top ten shareholdings who are related parties

Name	Shareholder Shareholding	Shareholder Shareholding	Shareholding of spouse and underage children	Shareholding of spouse and underage children	Total shares held in the name of others	Total shares held in the name of others	The title or name of the top ten shareholders who are spouses or relatives within the second degree of kinship with related parties and their relationship	The title or name of the top ten shareholders who are spouses or relatives within the second degree of kinship with related parties and their relationship	Remarks
	Shares (thousand shares)	Sharehold ing % Percentag e	Shares (thousand shares)	Sharehold ing % Percentag e	Shares (thousand shares)	Shareh olding ratio	Name	Relationship
Yeh Maw-Lin	7,032	9.92%	1,889	2.66%	0	0	Chen Hua- Ling Yeh Li- Tong	Spouse Father- Daughter
Chen Hua-Ling	1,889	2.66%	7,032	9.92%	0	0	Yeh Maw- Lin	Spouse Mother and daughter

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Name	Shareholder Shareholding	Shareholder Shareholding	Shareholding of spouse and underage children	Shareholding of spouse and underage children	Total shares held in the name of others	Total shares held in the name of others	The title or name of the top ten shareholders who are spouses or relatives within the second degree of kinship with related parties and their relationship	The title or name of the top ten shareholders who are spouses or relatives within the second degree of kinship with related parties and their relationship	Remarks
	Shares (thousand shares)	Sharehold ing % Percentag e	Shares (thousand shares)	Sharehold ing % Percentag e	Shares (thousand shares)	Shareh olding ratio	Name	Relationship
							Yeh Li- Tong
Yeh Li-Tong	1,822	2.57%	0	0	0	0	Yeh Maw- Lin Chen Hua- Ling	Father- Daughter Mother and daughter
Chang Shi-Long	1,233	1.74%	0	0	0	0	None	None
Account of Loop Telecommunicati on International, Inc. for the entrusted properties of employees in the custodianship of Yuanta Commercial Bank	931	1.31%	0	0	0	0	None	None
Cai He-Jin	758	1.07%	0	0	0	0	None	None
Xu Mei-Yu	669	0.94%	0	0	0	0	None	None
Lin Kun-Zhen	471	0.66%	0	0	0	0	None	None
Investment account of J.P. Morgan Asset Management in the custodianship of JPMorgan Chase & Co.	468	0.66%	0	0	0	0	None	None
Chang Jun-Sheng	459	0.65%	0	0	0	0	None	None

75

9. The total number of shares held in any single investee by the Company, its Directors, managers, or

any companies controlled either directly or indirectly by the Company:

Consolidated shareholding ratio

			Unit: Share;%	Unit: Share;%	Unit: Share;%	Unit: Share;%
Investee (Note)	Ownership by	the Company	Investments of Directors, managers and any companies controlled either directly or indirectly by the Company		Total Ownership
	Shares	Ownership	Shares	Ownership	Shares	Ownership
Tech-Plan (BVI) Ltd.	4,016,000 shares	100%	0	0	4,016,000 shares	100%
Loop Telecom NA, Inc.	5,000 shares	100%	0	0	5,000 shares	100%

Note: Refer to long-term investments of the Company accounted for by adopting the equity method.

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(IV) Capital and shares

1. Capital and shares

(1) Source of share capital

		(In New Taiwan Dollars)	(In New Taiwan Dollars)	(In New Taiwan Dollars)	(In New Taiwan Dollars)	(In New Taiwan Dollars)	(In New Taiwan Dollars)	(In New Taiwan Dollars)
Year/ month	Issue price	Authorized capital stock		Paid-in capital		Remarks
		Shares	Amount	Shares	Amount	Source of share capital	Capital paid in by properties other than cash	Others
1995.01	NT$10	22,500,000 shares	225,000,000	12,000,000 shares	120,000,000	-	-	-
1997.09	NT$10	22,500,000 shares	225,000,000	19,500,000 shares	195,000,000	Capital increase	14,550,000	Note1
1999.09	NT$10	36,500,000 shares	365,000,000	22,500,000 shares	225,000,000	Capital increase	5,587,500	Note2
1999.09	NT$10	36,500,000 shares	365,000,000	29,000,000 shares	290,000,000	Capital increase from earnings	None	Note 3
2000.09	NT$10	47,160,000 shares	471,600,000	39,165,000 shares	391,650,000	Capital increase from earnings	None	Note 4
2001.09	NT$10	97,320,000 shares	973,200,000	52,200,000 shares	522,000,000	Capital increase from earnings	None	Note 5
2002.08	NT$10	128,000,000 shares	1,280,000,000	63,654,000 shares	636,540,000	Capital increase from earnings	None	Note 6
2004.02	NT$10	128,000,000 shares	1,280,000,000	64,927,266 shares	649,272,660	Convertible corporate bonds	None	Note 7
2004.11	NT$10	128,000,000 shares	1,280,000,000	65,239,998 shares	652,399,980	Convertible corporate bonds	None	Note 7
2005.07	NT$10	128,000,000 shares	1,280,000,000	68,909,100 shares	689,091,000	Convertible corporate bonds	None	Note 8
2005.11	NT$10	128,000,000 shares	1,280,000,000	69,371,204 shares	693,712,040	Convertible corporate bonds	None	Note 8
2006.04	NT$10	128,000,000 shares	1,280,000,000	70,544,948 shares	705,449,480	Convertible corporate bonds	None	Note 8
2006.08	NT$10	128,000,000 shares	1,280,000,000	70,591,158 shares	705,911,580	Convertible corporate bonds	None	Note 8
2006.10	NT$10	128,000,000 shares	1,280,000,000	71,663,242 shares	716,632,420	Convertible corporate bonds	None	Note 8
2007.02	NT$10	128,000,000 shares	1,280,000,000	75,570,735 shares	755,707,350	Convertible corporate bonds and employee stock options	None	Note 9
2007.06	NT$10	128,000,000 shares	1,280,000,000	78,727,983 shares	787,279,830	Convertible corporate bonds and employee stock options	None	Note 9
2007.08	NT$10	128,000,000 shares	1,280,000,000	80,294,832 shares	802,948,320	Convertible corporate bonds and employee stock options	None	Note 9
2007.10	NT$10	128,000,000 shares	1,280,000,000	81,712,562 shares	817,125,620	Convertible corporate bonds and employee stock options	None	Note 9
2008.01	NT$10	128,000,000 shares	1,280,000,000	82,155,298 shares	821,552,980	Convertible corporate bonds and employee stock options	None	Note 9
2008.07	NT$10	128,000,000 shares	1,280,000,000	82,210,750 shares	822,107,500	Convertible corporate bonds	None	Note 9
2008.12	NT$10	128,000,000 shares	1,280,000,000	79,210,750 shares	792,107,500	Cancelation of treasury stock	None	Note 10

77

Year/ month	Issue price	Authorized capital stock	Authorized capital stock	Paid-in capital	Paid-in capital	Remarks	Remarks
		Shares	Amount	Shares	Amount	Source of share capital	Capital paid in by properties other than cash	Others
2009.10	NT$10	128,000,000 shares	1,280,000,000	78,176,650 shares	781,766,500	Capital reduction through treasuryshares	None	Note 11
2009.12	NT$10	128,000,000 shares	1,280,000,000	77,639,650 shares	776,396,500	Cancelation of treasury stock	None	Note 12
2010.03	NT$10	128,000,000 shares	1,280,000,000	78,192,750 shares	781,927,500	Employee stock options	None	Note 13
2010.07	NT$10	128,000,000 shares	1,280,000,000	78,194,750 shares	781,947,500	Employee stock options	None	Note 14
2010.09	NT$10	128,000,000 shares	1,280,000,000	78,209,900 shares	782,099,000	Employee stock options	None	Note 15
2011.01	NT$10	128,000,000 shares	1,280,000,000	78,222,550 shares	782,225,500	Employee stock options	None	Note 16
2011.12	NT$10	128,000,000 shares	1,280,000,000	72,885,550 shares	728,855,500	Cancelation of treasury stock	None	Note 17
2012.06	NT$10	128,000,000 shares	1,280,000,000	70,920,550 shares	709,205,500	Cancelation of treasury stock	None	Note 18

• Note 1: 1997/09/30 Capital increase: ordinary shares of NT$60,450,000 and technology shares of NT$14,550,000. (1997.10.06 Letter (86)-Yuan-Tou-Zi No.20538)

• Note 2: 1999/09/06 Capital increase: ordinary shares of NT$24,412,500 and technology shares of NT$5,587,500. (Letter (88)-Tai-Cai-Zheng-(Yi) No.62181).

• Note 3: 1999/09/06 Capital increase from earnings: ordinary shares of NT$65,000,000. (Letter (88)-Tai-Cai-Zheng-(Yi) No.62181).

• Note 4: 2000/09/02 Capital increase from earnings: ordinary shares of NT$101,650,000. (Letter (89)-Tai-Cai-Zheng-(Yi) No.71850).

• Note 5: 2001/09/07 Capital increase from earnings: ordinary shares of NT$130,350,000. (Letter (90)-Tai-Cai-Zheng-(Yi) No.141585).

• Note 6: 2002/08/12 Capital increase from earnings: ordinary shares of NT$114,540,000. (Letter (91)-Tai-Cai-Zheng-(Yi) No.0910138722).

• Note 7: 2003/08/15 Issued convertible corporate bonds of NT$200,000,000 with a conversion price of NT$13.43; a total of 14,892,833 ordinary shares may be converted into (i.e., NT$148,928,330). The conversion price of NT$13.43; 171 bonds were converted in 2004/02, and 42 bonds were converted in 2004/11. (Letter (92)-Tai-Cai-Zheng-(Yi) No.0920134849).

• Note 8: 2004/07/06 The conversion price was reduced from NT$13.43 to NT$10.82; 397 bonds were converted in 2005/07, 50 bonds were converted in 2005/11, 127 bonds were converted in 2006/04, 5 bonds were converted in 2006/08, and 116 bonds were converted in 2006/10. (Letter (93)Zheng-Zai-Zi No.1898).

• Note 9: 2007/02/05 The convertible price of the corporate bonds was NT$10.82, and 411 bonds were converted. In addition, employee stock options for 109,000 shares were exercised with an execution price of NT$14.55. 335 corporate bonds were converted, and 61,150 shares of employee stock options were exercised in 2007/06, 155 corporate bonds were converted, and 134,325 shares of employee stock options were exercised in 2007/08, 129 corporate bonds were converted, and 225,500 shares of employee stock options were exercised in 2007/10, 46 corporate bonds were converted, and 17,600 shares of employee stock options were exercised in 2008/01, and 46 corporate bonds were converted, and 55,452 shares of employee stock options were exercised in 2008/07.

• Note 10: 2008/10-11 Repurchased 3,000,000 treasury shares, which were fully canceled on 97/12/18.

• Note 11: The Company repurchased a total of 1,683,000 treasury shares in 2006 and transferred 648,900 shares to employees in 2007, with 1,034,100 shares left, which were fully canceled in October 2009.

• Note 12: The Company repurchased a total of 537,000 treasury shares in 2009, which were fully canceled in December 2009.

• Note 13: In 2010 Q1, a total of 553,100 shares were subscribed by employees.

• Note 14: In 2010 Q2, a total of 2,000 shares were subscribed by employees.

• Note 15: In 2010 Q3, a total of 15,150 shares were subscribed by employees.

Note 16: In 2010 Q3, a total of 12,650 shares were subscribed by employees.

• Note 17: The Company repurchased a total of 5,337,000 treasury shares in 2011, which were fully canceled in December 2011.

Note 18: The Company repurchased a total of 1,965,000 treasury shares in 2012, which were fully canceled in June 2012.

78

April 29, 2023/ unit: share

T	ype of equity	Authorized capital stock	Authorized capital stock	Authorized capital stock	Authorized capital stock		Remarks
		Shares outstanding			Unissued shares	Total
		Listed	Unlisted	Total
	Common shares	70,920,550	0	70,920,550	57,079,450	128,000,000

Information related to shell registry: Not applicable.

(2) Shareholder structure

(2) Shareholder structure	(2) Shareholder structure	(2) Shareholder structure	(2) Shareholder structure	(2) Shareholder structure	(2) Shareholder structure	(2) Shareholder structure
April 29,2023(Date)
Shareholder structure Quantity	Governme nt agencies	Financial institutions	Other legal persons	Individuals	Foreign institutions and foreigners	Total
Number of people	0	1	143	25,245	29	25,405
No. of Shares Held	0	415,000	1,408,650	65,957,848	3,139,052	70,920,550
Ownership	0	0.59%	1.98%	93.01%	4.42%	100%

79

(3) Diffusion of ownership:

Ordinary shares

NT$10 per share

	NT$10 per share	NT$10 per share	NT$10 per share
	April 29, 2023 (Note)
Shareholding tier	Number of Shareholders	No. of Shares Held	Ownership
1 to 999 1,000 to 5,000 5,001 to 10,000 10,001 to 15,000 15,001 to 20,000 20,001 to 30,000 30,001 to 40,000 40,001 to 50,000 50,001 to 100,000 100,001 to 200,000 200,001 to 400,000 400,001 to 600,000 600,001 to 800,000 800,001 to 1,000,000 Over NT$1,000,001	16,752 6,802 960 271 201 161 71 45 77 34 18 6 2 1 4	219,540 13,941,775 7,946,412 3,569,677 3,807,390 4,214,830 2,585,000 2,118,549 5,455,887 4,950,654 5,094,070 2,681,883 1,427,000 931,215 11,976,668	0.31% 19.68% 11.20% 5.03% 5.37% 5.94% 3.64% 2.99% 7.69% 6.98% 7.18% 3.78% 2.01% 1.31% 16.89%
Total	25,405	70,920,550	100.00%

Note: Refer to the date for the latest equity dispersion provided by the stock affairs agency.

Preferred shares: Not applicable.

(4) List of major shareholder

Shares Name of major shareholder	No. of Shares Held	Ownership
	(thousand shares)	(%)
Yeh Maw-Lin	7,032	9.92%
Chen Hua-Ling	1,889	2.66%
Yeh Li-Tong	1,822	2.57%
Chang Shi-Long	1,233	1.74%
Account of Loop Telecommunication International, Inc. for the entrusted properties of employees in the custodianshipof Yuanta Commercial Bank	931	1.31%
Cai He-Jin	758	1.07%
Xu Mei-Yu	669	0.94%
Lin Kun-Zhen	471	0.66%
Investment account of J.P. Morgan Asset Management in the custodianship of JPMorgan Chase & Co.	468	0.66%
Chang Jun-Sheng	459	0.65%

80

(5) Market price, net value, earnings, and dividends per share and the relevant information for the

most recent two years

	Item	Item	2021	2022	2023 As of March 31 (Note 6)
Market price per share	Highest		NT$42.95	NT$27.85	NT$29.05
	Lowest		NT$17.95	NT$15.70	NT$19.50
	Average		NT$30.63	NT$23.34	NT$25.94
Net value per share (Note 5)	Before distribution		NT$11.37	NT$12.01	NT$12.62
	After distribution		-	-	-
Earnings per share (Note 1)	Weighted average number of shares (thousand shares)		70,921	70,921	70,921
	Earnings per share		NT$0.47	NT$0.95
					NT$0.61
Earnings per share (Note 7)	Weighted average number of shares (thousand shares)		71,176	71,433	71,252
		Earnings per share	NT$0.46	NT$0.94
					NT$0.60
Dividends per share		Cash dividends	NT$0.40	NT$1.00	-
	Stock dividends	-	-	-	-
		-	-	-	-
	Accumulated unpaid dividends		-	-	-
Investment return analysis	Price-to-earnings ratio (Note 2)		56.13	21.61	Not applicable
	Price-to-dividend ratio (Note 3)		65.95	20.53	Not applicable
	Cash dividend yield (Note 4)		1.52%	4.87%	Not applicable

Note 1: Earnings per share that are basic earnings after tax. Note 2: Price/earnings ratio = average closing price per share for the year/earnings per share. Note 3: Price/dividend ratio = average closing price per share for the year/cash dividends per share. Note 4: Cash dividend yield = cash dividend per share/average closing price per share for the year. Note 5: The proposal for the 2022 earning distribution has not been resolved by the annual shareholders’ meeting; therefore, it is not presented at present. Note 6: As the book closure date period for the shares of the Company is from 2023/04/30 to 2023/06/28, the data in the column only disclosed up to 2023/03/31. Note 7: Earnings per share that are diluted earnings after tax.

(6) The Company's dividend policy and implementation:

Dividend policy

To continue to expand its scale and improve profitability with equal considerations given to the capital adequacy ratio, the Company adopts the residual dividend policy. The market where the Company operates is the information and communication industry with high growth. In response to the long-term business development, future capital requirements, and long-term financial planning of the Company, and satisfying the cash inflow requirements of shareholders, if the Company records any earnings from its final account, apart from paying all taxes according to the law, it shall first compensate cumulative losses from prior years. It may appropriate special reserve based on the Company’s requirements. Then, the remaining balance shall be combined with the cumulative undistributed earnings from prior years; after retaining partial earnings based on the operating status and for a balanced dividend policy, the Company may make distribution after a resolution is made by the shareholders’ meeting based on the following principles:

A . Remuneration of employees shall be no less than 10% ; remuneration of employees may be made in

81

shares or cash; upon the distribution of remuneration of employees, the distribution targets may include employees, who fulfill certain conditions, of subordinated companies; such conditions shall be established by the Board.

• B. Remuneration of Directors shall be no more than 5%.

• C. The remaining shall be shareholders’ bonuses.

Based on the capital budget planning of the Company, it distributes share dividends to retain the capital required, and the remaining portion may be distributed in cash dividends. The total cash dividend distribution mentioned above shall not be lower than 10% of the total dividend distribution, in principle. If the Company has no earnings or retained earnings of the year, no dividend or bonus shall be distributed. For earning distribution, the Company distributes cash dividends to shareholders. In 2022, earnings available for distribution was NT$ 68,106,475, and the Company intends to distribute NT$0.94 per share (totaling NT$66,665,317). In addition, according to the requirements under Article 241 of the Company Act, the Company intends to distribute cash from capital surplus arising from the premium of the issuance of ordinary shares at a price exceeding the par value. On March 28, 2023, the Board proposed to distribute a cash dividend of NT$0.06, totaling NT$4,255,233; the cash of NT$1 per share is distributed for the year in total. To be proposed at the 2023 shareholders’ meeting for ratification. The calculation of cash dividends shall be rounded to NT$1 based on the distribution ratio; the total fractional amount less than NT$1 is included in other income of the Company.

Based on the Company Act amended in May 2015 and the amended Articles approved by the shareholders’ meeting in June 2016, the Company distribute no less than 10% and no more than 5% of the net profit before tax of the period before deducting remuneration of employees and remuneration of Directors and supervisors as the remuneration of employees and remuneration of Directors, respectively. The proposal for the earning distribution of 2022 is expected to be resolved at the annual shareholders’ meeting to be convened in 2023.

82

Loop Telecommunication International, Inc.

Table of Earning Distribution

2022

(In New Taiwan Dollars)

	(In New Taiwan Dollars)	(In New Taiwan Dollars)
Item	Amount
Undistributed earnings at the beginning of the period Net income in 2022 Add: Remeasurement of defined benefit obligation recognized in retained earnings Amount of net income of the period plus items other than net income of the period included in the undistributed earnings of the year Less: Legal reserve Add: Reversal of special reserve according to the law Earnings available for distribution for the year Less: Cash dividends of shareholders (Note 6) Undistributed earnings at the end of the period	1,303,868 67,403,101 6,486,535 73,889,636 (7,388,964) 301,935 68,106,475 (66,665,317) 1,441,158
		68,106,475 (66,665,317)
		1,441,158

Remarks:

Remuneration of employees at 10% (NT$ 9,477,674) was otherwise distributed. Remuneration of Directors at 2% (NT$1,895,535) was otherwise distributed.

1. After the distribution of the abovementioned dividends, if there are changes in the payout ratio due to changes in the number of outstanding shares, the Company intends to authorize the Board to make adjustments and arrange relevant matters.

2. The abovementioned dividend distribution was reported to and approved by the shareholders’ meeting as a resolution. The Company intends to authorize the Board to arrange the date for dividend distribution and other relevant matters based on actual circumstances according to relevant laws and regulations.

3. If changes are required for matters related to the abovementioned dividend distribution due to regulatory requirements, amendments to the approval of the competent authority, or the operating evaluation of the objective environment, the Company intends to authorize the Board to make arrangements based on actual circumstances.

4. Article 29 of the Articles of Incorporation: The Company shall appropriate no less than 10% and no more than 5% of the net profit before tax of the period before deducting remuneration of employees and remuneration of Directors as the remuneration of employees and remuneration of Directors, respectively; however, if the Company has cumulative losses (including adjusted undistributed earnings), it shall preserve the compensation amount.

5. The abovementioned shareholders’ dividends and remuneration of employees and Directors are distributed in cash.

6. Combining the dividends distribution from earnings of the year of NT$0.94 per share with the cash distribution from the capital reserve of NT$0.06 per share, the Company distributes NT$1 per share in cash for the year in total.

83

(7) Effect of stock grants proposed or at the shareholders' meeting on business performance and

earnings per share of the Company: Not applicable.

(8) Remunerations of employees and Directors

A. Based on the percentage or scope of remuneration of employees and Directors stipulated in the

Company’s Articles of Incorporation:

Based on the distribution policy of remuneration of employees and Directors stipulated in the Articles of Incorporation. If the Company records any earnings from its final account, apart from paying all taxes according to the law, it shall first compensate cumulative losses from prior years. It may appropriate special reserve based on the Company’s requirements. Then, the remaining balance shall be combined with the cumulative undistributed earnings from prior years; after retaining partial earnings based on the operating status and for a balanced dividend policy, the Company may make distribution after a resolution is made by the shareholders’ meeting based on the following principles:

• a. Remuneration of employees shall be no less than 10%: Remuneration of employees may be made in shares or cash, and the distribution targets may include employees, who fulfill certain conditions, of subordinated companies; such conditions shall be resolved by the Board.

• b. Remuneration of Directors shall be no more than 5%.

• c. The remaining shall be shareholders’ bonuses.

B. The estimation basis for the amount of employee and Director remunerations shall be subject

to the calculation basis for the number of shares of employee remuneration through stock distribution and the accounting for differences between the actual distribution amount and the estimated amount:

If there is any material change in the distribution amount resolved by the Board before the date on which the consolidated annual financial statements are approved for publication, adjustments shall be made to the consolidated annual expenses initially provided regarding such changes. If there is any change in the amount after the date on which the annual financial statements are approved for publication, it shall be processed as changes in accounting estimation and adjusted and accounted for in the following year. If the shareholders’ meeting resolved to distribute employee bonuses in share dividends, the number of shares of share dividends shall be determined by dividing the amount of bonuses resolved by the fair value of shares; the calculation basis of the fair value of shares is the closing price on the day before the day on which a resolution was made by the shareholders’ meeting, taking into account the effects of ex-right and ex-dividend.

C. Remuneration distribution approved by the Board:

• a. Amount of remuneration for employees and Directors distributed in cash or shares. If there is any difference from the estimated amount in the year of expense recognition, the difference, reason, and measures adopted in response shall be disclosed: The proposal of the 2022 earning distribution of the Company was approved by the Board as a resolution on March 28, 2023; the intended earning distribution approved by the Board is as follows. Treatment for the amount of differences: None.

Item	Estimated amount in 2022	Approved by the Board for distribution in 2022	Difference
Remuneration of employees	9,477,674	9,477,674	0
Directors' remuneration	1,895,535	1,895,535	0
Total	11,373,209	11,373,209	0

• b. The amount of any employee compensation distributed in shares and the size of that amount as a percentage of the sum of the after-tax net income stated in the unconsolidated financial statements

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for the current period and total employee compensation: None.

• c. The estimated earnings per share after considering the intended remuneration of employees and Directors to be distributed: In 2008, the Company expensed the remuneration of employees and the remuneration of Directors. In 2008, the Company accounted for the estimation of expenses of remuneration of employees and remuneration of Directors in the financial statements. In 2022, the estimated earnings per share were equivalent to the amount accounted for in the financial statements.

D. The actual distribution of employee, Director, and supervisor remunerations in the preceding

year (including the number of shares, the amount distributed, and stock price), and, if there

is any difference from the actual distribution and the employee, Director, and supervisor

remunerations recognized, the differences, reasons, and handling status shall be described:

• a. Amount of remuneration for employees, Directors, and supervisors distributed in cash or shares. If there is any difference from the estimated amount in the year of expense recognition, the difference, reason, and measures adopted in response shall be disclosed: The proposal of the 2021 earning distribution of the Company was approved by the Board as a resolution on March 30, 2022; the intended earning distribution approved by the Board is as follows. Treatment for the amount of differences: None.

Item	Estimated amount in 2021	Approved by the Board for distribution in 2021	Difference
Remuneration of employees	4,527,844	4,527,844	0
Remuneration of Directors and supervisors	905,569	905,569	0
Total	5,433,413	5,433,413	0

• b. The amount of any employee compensation distributed in shares and the size of that amount as a percentage of the sum of the after-tax net income stated in the unconsolidated financial statements for the current period and total employee compensation: None.

• c. The estimated earnings per share after considering the intended remuneration of employees, Directors, and supervisors to be distributed: In 2008, the Company expensed the remuneration of employees and the remuneration of Directors and supervisors. In 2008, the Company accounted for the estimation of expenses of remuneration of employees and remuneration of Directors and supervisors in the financial statements. In 2021, the estimated earnings per share were equivalent to the amount accounted for in the financial statements.

(9) Repurchase of shares by the Company: None.

2. Issuance of corporate bonds, conversion of corporate bonds, exchange of corporate bonds, corporate

bonds issued under shell registry, and corporate bonds with options: None.

3. Issuance of preferred shares and preferred shares with options: None.

4. Global depository receipts: None.

5. Employee stock options and restricted stock awards:

(1) Employee stock options

• A. Status of unexpired employee stock options of the Company as of the publication date of the

• annual report shall be disclosed, and the effects on shareholders’ interest: None.

• B. Name, acquisition, and subscription status of managers who acquired employee stock options and the top ten employees in terms of the number of shares that may be subscribed based on

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the options acquired as of the publication date of the annual report: None.

(2) Restricted stock awards:

• A. Status of unvested restricted stock awards as of the publication date of the annual report shall

• be disclosed, and the effects on shareholders’ interest: None.

• B. Name and acquisition status of managers who acquired restricted stock awards and the top ten employees in terms of the number of shares that may be acquired as of the publication date of the annual report: None.

6. Mergers or receipt of new shares issued by other companies: None.

• (1) For any merger or receipt of shares newly issued by other companies completed in the most recent year and up to the publication date, the following matters shall be disclosed:

• A. For companies with shares listed on TWSE (the “TWSE-listed companies”) or companies with shares approved to be traded at TPEx (the “TPEx-listed companies”) according to the requirements under Article 3 or Article 3-1 of the Taipei Exchange Rules Governing the Review of Securities for Trading on the TPEx, the evaluation opinion of the underwriter for any merger or receipt of shares newly issued by other companies in the most recent quarter shall be disclosed: None.

• B. Except for companies stated in the preceding item, the implementation status in the most recent quarter shall be disclosed; if the implementation progress or the benefit has not achieved the estimated objective, substantially describe the effects on shareholders’ interest and the improvement plan: None.

• (2) If the Board approved a merger or receipt of shares newly issued by other companies as a resolution in the most recent year and up to the publication date of the annual report, disclose the implementation status and the basic information of the company of the merger or receipt; for any on-going merger or receipt of shares newly issued by other companies, disclose the implementation status and effects on shareholders’ interest: None.

7. Implementation status of the capital utilization plan: None.

(V) Operational Highlights

1. Scope of business

• (1) Scope of business:

Major content of scope of business:

F401021 Restrained Telecom Radio Frequency Equipments and Materials Import [limited to radio transmitters, radio transceivers, industrial, scientific, medical equipment with radio waves, and other electrical machinery that generates radio waves].

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CC01101 Controlled Telecommunications Radio-Frequency Devices and Materials Manufacturing [limited to radio transmitters, radio transceivers, industrial, scientific, medical equipment with radio waves, and other electrical machinery that generates radio waves].

I301010 Information Software Services.

CC01120 Data Storage Media Manufacturing and Duplicating.

I. Research, development, production, manufacturing, and sales of the following products:

1. User remote line disconnectors, protectors and their components.

2. Line reactors and their components.

3. Subtitle phones and their components.

4. Smart network resource management multiplexer, network access equipment (including T1/E1, FT1/FE1 CSU, and CSU/DSU) and its components, PCM carrier terminal (including D4/AD4) and its components, 64K/56Kbps transmission equipment (including DDS) and its components, high-speed digital user transmission systems and their components, and DLCs.

5. LAN/WAN equipment, network management systems, their sub-systems, and their components.

6. Overall service for digital network terminal connectors, their sub-systems, and their components.

7. Convertors, remote controls for cable TVs, and their components.

8. Communication system power supply units and their components.

9. Radio communication systems and their components.

II. Consultation, design, installation and repair related to the abovementioned businesses.

III. Import/export trading operations related to the businesses of the Company.

(2) Industry overview

A. Current status and development of the industry

Regarding the performance of the communication industry in Taiwan in 2021, the continual expansion of IoT and cloud application requirements and the development of emerging technologies (i.e., network virtualization, LPWAN, AI, 5G, and edge computing will drive the demand for wired and wireless communication products. In 2021, it was estimated that the overall communication industry in Taiwan would reach NT$4.38 trillion, with a growth rate of 26.7%; looking into 2022, the overall communication industry in Taiwan will reach NT$4.55 trillion, with an annual growth rate of 3.8%.

2020 is the first year of 5G commercialization. The U.S., Korea, the U.K., Mainland China, and other countries sought to initiate the service first. In the initial period, it will give rise to the first wave of business opportunities for 5G stations, network equipment, mobile phones, RF front-end, and other part and component markets. The phone replacement trend for 5G mobile phones will bring about new market requirements, and together with the popularization of the value-added application of 5G and IoT, it is likely to provide growing momentum for the operations of the communication industry. In the initial development period of 5G, there are issues of small signal coverage, unstable signal shifting, poor consumer experience, thermal treatment of products, and interference of high-frequency mm-wave; the solutions to such issues have become the material topics to secure the early opportunities in the market.

With the rapid development of cloud applications, global communication has entered the era of 5G. It is estimated that 5G applications will bring about the computing demand. In 5G networks, multiplayer cloud games, AR/VR, smart manufacturing, V2X, and other applications that are supported by low latency and IoT will give rise to the demand for distributed computing and storage. In particular, great attention is attached to the edge computing market, benefiting the growth in the scale of the network equipment market.

B. Connectivity between the upstream, midstream, and downstream of the industry

The communication and networking industry utilizes wired or wireless transmission or accepts symbols, signals, text, video, audio, and other messages. The upstream of the industry chain are suppliers who assemble parts and components of various communication terminals, and the downstream are suppliers of

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various terminal application products.

==> picture [447 x 196] intentionally omitted <==

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

Semiconductor Electronic parts Metal material Plastic material Cable industry
industry and components industry industry
Network product R&D
manufacturing
industry
General user Computer Computer Computer system Corporate
network network product integration network system
equipment distributor company planning and
supplier installation
----- End of picture text -----

Source: Compiled by the Company

a. Upstream

The upstream of the communication and networking industry includes network IC chips, microprocessors, GPS and sensor chips, memory, active/passive elements, PCBs, cooling fans and antenna, plastic and metal cover, and other parts and components of relevant communication products that are primarily used in the equipment of the downstream of the communication and networking industry.

Taiwanese companies occupy a material position in the global broadband terminal industry, including the upstream chips and parts and components for xDSL modems, Cable Modem, PON CPE, Wi-Fi routers, LTE CPE, exchanger, and other products, and the downstream brand terminal or foundry businesses. For main chips, wired network chips may be divided into wide area network (WAN) and local area network (LAN) chips. WAN terminals include xDSL, cable modem, and FTTH; the mainstream LAN terminals are PLC and MoCA.

b. Downstream

The downstream of the communication and networking industry can be divided into network equipment, optical communication equipment, wireless communication equipment, wired communication equipment, and telecommunication service industries.

b-1 network equipment: Major products are modems, network cards, gateways, routers, and STBs. With the continual popularization of the 4K video and audio content and the fast penetration of IoT and mobile devices in markets of all countries, the requirements for 4G LTE modems, wireless modules, VDSL Modem, Cable Modem, PON ONU, and high-end home gateway continued to increase. In addition, the emergence of smart home applications and home network connection video services has driven the shipping of OTT network STBs, smart Wi-Fi routers, broadband power cables, smart speakers, and other smart household end products. b-2 Optical communication equipment: Major products include optical cable, optical active and passive elements, and optical transmission terminal equipment. Due to the continual increase the global broadband users and the emergence of the cloud calculation industry, telecommunication companies worldwide have been actively providing various integrated services (i.e., network TV, video conference, video surveillance, and smart household applications) to improve the average revenue contributions of users. Internet companies have also accelerated the establishment of global data centers, which brought about the growth in the demand for high bandwidth equipment and allows the global communication industry to attache attention to the development of FTTH and optical communication parts and components. FTTH networks and mobile broadband networks have driven the growth in PON terminals and optical receiver module industries. The demand for intranet and external connection of data centers brought about the development of 40G/100G optical receivers, AOCs, and other elements. At the current stage, multiple optical communication companies in Taiwan have invested in active and passive optical elements, and the major products include GPON/EPON terminal products, BOSA on Board, and optical receivers for FTTH, data centers, and mobile stations.

b-3 Wireless communication equipment: Major products include mobile phones, GPS systems, satellite and micro-communication equipment. The development of hand-held devices will turn to simple and humanized interfaces and integration with back-end application service trends, and application software and content service will be valued. Furthermore, with the complete wireless communication infrastructure and the

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increase in transmission speed, device and vertical markets turned to network connection and smart IoT applications, facilitating the rapid expansion of the scale of the wireless communication equipment market. At present, the mainstream wireless communication equipment is smartphones, and large-scale international companies, including Apple, Huawei, and Samsung, occupy the leading position. Chinese companies, including Xiaomi, Oppo, and Vivo, rose to catch up and have successfully entered the international market; the intense competition continued. In other fields, many Taiwanese companies actively invested in the vehicle information/communication and entertainment market and launched automotive wireless modules, GPS, vehicle video and audio, vehicle sensors, and other equipment.

b-4 Wired communication equipment: Include analog and Internet telephones, facsimile, and network cameras. Within the scope, major products developed by communication companies in Taiwan include Internet telephones, entire sets of network communication systems (i.e., network telephone exchangers and Internet telephone gateways), online video conference meeting devices, and other user products. Due to the software development of the Internet telephone industry and the popularization of social media communication, large-scale international companies took the lead in the market. The room for the development of relevant domestic hardware producers was compressed, and they are attempting to integrate mobile and social media communication application models to launch new products.

b-5 Telecommunication industry: As of 2019 Q2, there are 570 telecommunication companies in over 180 countries worldwide that provide 4G LTE commercial network services, and the number of accumulated users reached 3.6 billion, with an annual growth rate of 43%; LET users accounted for 42% of total mobile users, giving rise to over 5,000 user devices. The enormous data flows generated after the high-speed growth of mobile users continued to pose challenges to telecommunication companies in terms of connection speed and transmission quality, and signal optimization systems upon network congestion. Governments in different countries have also opened up for mobile telecommunication companies to introduce commercial small-cell equipment to provide high-quality mobile network services.

C. Development trends of products

In terms of wired broadband service constructions, broadband service providers in different countries are actively carrying out a new wave of high-speed broadband network constructions in response to the broadband popularization policies of governments and the stimulation of competition within the industry by adopting a 1Gbps connection as the target. Overall, telecommunication companies worldwide are focusing on improving the existing communication quality and exploring new application services to satisfy the basic requirements of users for high-speed connection by adopting both fixed network and 4G LTE communication; the new generation smart household services have also been launched and is marketed by using the all-in-one mobile/fixed network packaging service model.

Observing the development trends of the wired broadband market in 2019, for FTTH, three major telecommunication companies were actively making arrangements for FTTx and selectively upgrading to 10G PON network in urban areas; European and American telecommunication companies have also followed up in response to the demand in the local markets. For xDSL, AT&T in the U.S., British Telecom, Deutsche Telekom, Chunghwa Telecom, and leading telecommunication companies worldwide have continued to purchase VDSL equipment of G.fast specifications for network upgrades. In terms of cable modems, large-scale wired television broadcasting companies in Europe and America (i.e., Comcast and Liberty Global) continued to expand the procurement of DOCSIS3.1 Cable Modem and network constructions; the advances in technologies and the development trends of Gigabit broadband will bring about the continual growth of the global wired broadband market.

Regarding mobile broadband networks, global telecommunication companies continued to make arrangements for the advanced version of the 4G LTE (LTE-Advanced/LTE-Advanced Pro) network in 2019 and introduced corresponding small-scale stations for enterprises and large indoor/outdoor public areas, giving rise to the demand for mobile communication equipment and parts and components. In addition, the lower power wide area network (LPWAN) has become the new leverage for telecommunication companies to develop IoT services; apart from LoRa and Sigfox successively secured the opportunities for system installation in North America, Europe, and Asia, Vodafone, SK Telecom, T-Mobile, and other major mobile telecommunication companies in Europe and America have also commenced the commercial services by adopting the NB-IoT technologies launched by 3GPP in 2017, becoming new business opportunities worthy of attention in the wireless WAN industry.

Lastly, for LAN, Wi-Fi remains the most popular technology. With the continual expansion of the scope of application products, the scale of the overall Wi-Fi market continued to create a new high. Due to the slowdown of shipping of major application products, including smartphones, PC, tablets, smart TV, other home appliance products, and IoT devices used in various smart fields have become the material growing momentum of Wi-Fi. In particular, the market of emerging wearable devices (i.e., smart watches, VR headwear displays, smart speakers, and other products) recorded favorable performance, which will give rise to

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the global shipping of Wi-Fi equipment in 2019.

When 5G enters the stage of commercialization, despite the gaps between 5G proprietary technologies and the mobile communication industry in Taiwan, we hope to actively prepare the 5G innovative technologies and product R&D in the future based on relevant R&D experience of WiMAX/LTE, 3G/4G ODM/OEM experience and ability foundation, and the R&D and manufacturing advantages of parts and components for the semiconductor and information/communication terminal electronics to create innovative application services, in the hope of developing products, systems, sub-systems, elements, and innovative applications with advantages of the Taiwanese industries in the 5G era.

For instance, establish the prototype of proprietary 5G product systems, including mm-wave ultra-high frequency communication system, software virtualization technologies (i.e., small station virtualization, iMEC, and light vEPC) in the initial development period of 5G, make arrangements for crucial technologies of products, and target the improvement of the proprietary technologies of the domestic 5G network communication industry and the arrangements for core patents in Taiwan to support the R&D gaps (i.e., core network and IoT application platform) of the communication industry in Taiwan, and in turn, bring about the entrance into the system integration field of the network communication industry.

D. Product competitive status

Major competitors of the Company worldwide include ABB, Siemens, Nokia (Alcatel-Lucent), Cisco, Huawei, and other major equipment companies. Facing the intense industry competition and market changes, the communication system integration solutions developed, produced, marketed, and established by Loop have spread across Asia, Europe, America, Australia, the Middle East, and other countries, proving that the reliability, stability, and durability are recognized and supported worldwide.

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(3) Technology and R&D overview

A. R&D expenses invested and technologies or products successfully developed in each of the most

recent five years

a. R&D expenses invested in each of the most recent five years

Since the establishment of the Company, its R&D strategic target has been focusing on the R&D of the “Local Loop Access” field, and it constantly developed new technologies, new products, new software platforms, and made innovations. The experience of R&D over the years has successfully established the core technologies for digital transmission equipment. Therefore, R&D expenses each year maintain at a certain level.

certain level.
	(In Thousands of New Taiwan Dollars)
Item/year	2017	2018	2019	2020	2021	2022
Net revenue	528,026	548,039	544,995	598,096	515,510	438,242
Research and development expenses	127,616	125,973	133,994	139,363	140,729	134,715
Ratio of R&D expenses to net operatingincome	24%	23%	24%	23%	27%	31%

b. Technologies or products successfully developed in the most recent five years

b-1. 2006-2008

The demand in the global communication industry has recovered to normal from mid-2006, and the regional and product markets with requirements are different from the bubble economy before 2002. The R&D efforts and achievements of the Company during 2002 and 2007 well fit. In particular, Loop-iNMS can help telecommunication companies to more effectively manage the entire network system. The Company will develop more products for the application of Loop-iNMS in the following years to achieve success by way of total solutions, avoiding the vicious cycle of haggling after the popularization of hardware products. In 2007, we successfully developed Loop-IP 6700 and Loop-IP 6416, which can provide transmission IP for copper wire TDM systems and transmission of TDM for IP networks to serve as the connection of new and old networks. Due to the popularization of the Internet and the consideration of installation costs, users mostly connect to their corporate network via Ethernet; therefore, reliable Ethernet line services in line with economic benefits are required. The SDH backbone network operated by operators for years undoubtedly is the most reliable backbone transmission network in line with economic benefits for Ethernet. In recent years, optical communication products have become mainstream, and the Company has developed Loop-O 9100S, Loop-O 9400S, Loop-O 9400R, and Loop-O 9500 in 2008 and upgraded to STM-16/OC-48 and products with a higher speed to align with the international mainstream.

b-2. 2008-2010

In the future, the Company will continue to develop new products and reinforce new technologies; it is estimated to have the following series of products:

2.1 Copper family:

Copper wire transmission is no longer the mainstream application in the market at present. Due to the increase in the demand for network bandwidth speed, network transmission has turned from the traditional copper wire to optical communication products (i.e., SDH and IP). However, in the third world, Southeast Asia, and South Asia markets, and for particular users (i.e., military customers), there is potentially enormous market demand. Currently, we majorly focus on overseas and domestic tenders. Due to the product stability, the copper wire transmission products of the Company are the first choices for many telecommunication companies.

In the past, the Company has developed a series of copper wire transmission access products. For example: Loop-H 3900S/H 3900R, Loop-H 3300S/H3300R, Loop-H 3310S/H3310R, Loop-H 3300-3S, and other products. The design is for 1-pair (2 wires) and 2-pair (4 wires) copper wire transmission access products. At present, it develops multi-pair copper cables (4-pair or 8-pair) for point-to-point applications. They can improve the effective transmission bandwidth of Ethernet to 20-40Mbps with a transmission distance of 5km or above. Loop-H 3304R-Eth-2bis is applied to bonding protocol that is developed and designed by us using FPGA; it provides high capacity G.SHDSL (rack cards) and supports Ethernet transmission interfaces. Future sales and application:

As the demand for optical over copper wire communication has become the mainstream strategy of

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telecommunication companies worldwide, the ratio of the copper wire access product market has been decreasing on a yearly basis; alongside the matured product technologies, the Company will not invest additional R&D human resources to the series products; at present it focuses on the sales via domestic and foreign tenders. However, if a tender has special functional requirements, the Company will provide additional customized services to satisfy customers’ requirements, which is something that general largescale telecommunication equipment companies are incapable of.

2.2 PDH family:

Multiplexers performing 64K time-slot exchanges by using the E1 interface are extensively used by global telecommunication companies and public utility and private network companies due to multiple low-speed (N x 64K) interface daughter cards and flexible use. The Company developed and designed daughter cards by using FPGA to provide diverse functional interfaces for users to access applications. In the past, the Company has developed low-speed (64K) time-slot exchange multiplexers, such as AM3410, AM3420, AM3420-5U, and AM3440-A/B/C/D. In particular, the AM3440 series can compete with products from large-scale companies (i.e., ALCATEL-LUCENT 1511MAX), and the product functions went even further. Currently: relevant product series developed by the Company are as follows:

Loop-AM 3440-A: 5U exchange multiplexers with multiple low-speed daughter cards to connect to the interface.

Loop-AM 3440-B: 2.5U exchange multiplexers with multiple low-speed daughter cards to connect to the interface.

Loop-AM 3440-C: 3U exchange multiplexers with multiple low-speed daughter cards to connect to the interface.

Loop-AM 3440-D: 2U exchange multiplexers with multiple low-speed daughter cards to connect to the interface.

Loop-V 4200-9: 1U exchange multiplexers with multiple low-speed daughter cards to connect to the interface.

Loop-V 4200-28: exchange multiplexers with multiple low-speed daughter cards and high-speed (STM1/DS3/E3) connections to the interface.

Future sales and application:

The revenue from the AM 3440 series products is the main force of the Company currently. It will continue to add cards based on the interface requirements of major customers in the hope of recording continual growth of its revenue, providing customized services for system functions, and improving the core functions of products to fulfill the application-oriented requirements of customers. So far, the development of the TDMoE interface card (used in Loop-AM 3440-A /B /C) for Loop-AM 3440 is completed, and the development of the new product Loop-O9550 (with additional SDH/SONET interface) is completed to strengthen the comprehensiveness of system application functions of series products, which will have substantial help for the sales in the global market, create outstanding performance, and stimulate the continual growth of revenue in the future.

The TDMoE interface allows Loop-AM 3440 series products to become cross-field products that not only support traditional TDM uploading interface (E1/T1) but also support IP uploading interface (TDM data/voice over IP network). In particular, Loop-AM 3440 further provided a mutual protection system between TDM and IP; the material functional innovation allows the field of sales of the series products to spread to the telecommunication market, electricity market, transportation, and other transportation networks. Based on the market demand, before the backbone of the telecommunication transmission network upgrades to IP, the demand for PDH transmission equipment increased instead of decreased. Also, as large-scale equipment companies were focusing on the development of IP backbone development, the Company grasped the opportunities arising thereof and actively cooperated with large-scale equipment companies, allowing them to provide overall system transmission solutions, and provided ODM services for large-scale companies to secure and grasp additional business opportunities for the Company. Furthermore, for air traffic and electric power communication, the Company also designed customized products for customers in the hope of improving its sales performance.

2.3 Hybrid transmission products:

For transmission and access equipment that can connect to the traditional TDM network and the latest Ethernet, as the traditional TDM network has been used for years, it is unable to fully replace them in a short period of time. The latest Ethernet has features of low costs and high bandwidth that significantly exceed the traditional TDM network. Hybrid transmission products are transmission and access products required for the succession of IP and TDM transmission markets.

The transmission equipment (Loop-IP 6700-TDMoE/IP6716-TDMoE/IP6702-TDMoE/AM3440-TDMoE /IP6440-EoPDH/IP6416-EoPDH) developed by the Company at present allows the existing TDM users to connect to Ethernet or Ethernet users to connect to TDM network, achieving the best economic benefits. The

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substantial benefits are as follows:

Transmit traditional TDM data (E1/T1/V.35) via Ethernet (TDMoE); transmit data on Ethernet via TDM network (EoPDH-IP inverse multiplexer); TDMoE (TDM over Ethernet daughter cards): provide hybrid equipment for Loop-AM 3440 to transform from the initial TDM transmission equipment to TDM and IP uploading interface.

Future sales and application:

Ethernet has become the mainstream technology of global telecommunication companies. In the future, the major development of the series products is to transmit traditional TDM data (E1/T1/V.35) via Ethernet (circuit simulation). In the future, the demand in the power and telecommunication markets will be considerable. However, Loop-IP 6716 is currently available for the 16-E1 TDMoE circuit simulator. In 2011, the Company completed the Loop-IP 6702, which is a 2-E1 TDMoE circuit simulator with low costs. The development of the product focuses on the 2-E1 TDMoE circuit simulators required in the markets of developing countries. In 2014, the Company developed Loop-IP 6763, which provides 63E1/STM-1 TDMoE circuit simulators. Therefore, the Company is able to provide comprehensive TDMoE solutions. Moreover, the Company is developing Loop-G 7860, equipment for To10G.

b-3. 2010-2014

3.1 IP access:

IP transmission equipment has been the trend in recent years; gigabit service access network products, IPaccess demarcation devices, IP-based mobile backhaul, industrial ethernet, and pure optical fiber WDM have been our R&D focuses.

Currently, the Company is actively developing the LOOP OS system that can perform the modulization of the functions required by the IP network. Leveraging the feature, developing modules may be shared; the development system will also be able to effectively shorten the development period of products. For future applications, the development of new IP products will focus on the time to market; therefore, the development of the LOOP OS system is in line with the requirement. In the future, as high-speed Ethernet has become the mainstream access network of global telecommunication companies, the major product development of the series products will focus on the following future applications. (1) Ethernet demarcation device (2) IP mobile backhaul) (3) 1G/10Gbps gigabit multi-access platform) (4) industrial Ethernet. (5) High-speed 10G L2/L3 industrial Ethernet switch.

3.2 Wireless family:

The Company has been actively developing high-performance wireless access equipment of low price; therefore, apart from developing the 2.4/5.8G, multi-SSID Loop-W 8150 WiFi with instant detection of transmission speed, it also developed a built-in function module to respond to the demand for LTE transmission. The launch of LTE provided a new market, and there will be a series of new applications structure based on the LTE 4G network in the following three to five years. As such, the Company invested in the R&D of LTE 4G to respond to the immense business opportunities.

3.3 SDH family:

It is estimated that traditional communication products, including CSU/DSU, MUX, DLC, Channel Bank, and other products, will enter the latter stage of the product lifecycle with an insignificant growth rate, and optical communication equipment will rise. After experiencing the technology bubbles in 2000, the optical communication market showed a stable recovery in recent years. In the long run, the emergence of multimedia applications will stimulate the increase in the demand of household and corporate users for transmission speed; it is estimated that the global optical communication market will maintain a stable growth momentum. According to the estimation of Gartner, a research and survey institution, the number of global optical fiber users will formally exceed 100 million in 2011 and reach 200 million by 2014, giving rise to immense business opportunities.

The Company’s optical communication transmission equipment continues to maintain its mainstream position. Loop-O9100, Loop-O93XX, Loop-O9400R, Loop-O9400S, Loop-O9500R, Loop-O9400R PTN, LoopO9500R PTN, and other products will become the main force of the Company in the market. In addition, the development of optical communication products in recent years has turned from bottom speed, high speed, and to high speed and large bandwidth. FOM products of low threshold are low speed. STM-16 products are high speed up to 2.5Gbps Loop-O9400R and Loop-O 9500R will improve from STM-4 (a speed of 622Mbps) to STM-16 (a speed of 2.5Gbps) to align with the SDH international standards for optical fiber transmission equipment and packet transport network (PTN) with high speed and large bandwidth of up to 10Gbps to provide high-capacity fiber loop backbone applications for Loop-O9400R PTN and LoopO9500R PTN.

Furthermore, LOOP-AM 3440, one of the major sales products, was redesigned, and the SDH/SONET

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interface was added, and it became Loop-O 9550, the new generation SDH and IP-mixed equipment. Moreover, the Company has developed

new PTN10G interface cards and provided more ports in PTNext for Loop-O 9500R PTN and O 9400R PTN series products to satisfy customers' requirements and offer flexible applications.

Loop-O9400R PTN and Loop-O9500R PTN transport equipment possesses a transfer capacity of up to 100G for PTN, is equipped with automated path routing ability, and provides multiple service integration platform interfaces that are organized based on customers' requirements for applications. The connection of optical fiber interfaces will be adopted to form the transmission relay to comprehensively integrate and accommodate various service interfaces and various functions for satisfying customers’ requirements. This will allow the product lines of optical communication transmission equipment of the Company to become more comprehensive and allow it to provide total solutions as an optical communication transmission equipment supplier.

3.4 EMS/NMS and iNMS: Integrated Network Management/iNET/LCT

For over 50 communication transmission products developed by the Company and new equipment to be developed in the future, we have completed a set of smart integrated network management software, LoopiNMS, to concurrently monitor such equipment. Regarding TDM channel equipment, SDH/SONET equipment, and Ethernet (i.e., MPLS-TP) equipment, the feature is that the single system can concurrently manage different types of network, provides smart routing and point-to-point creation functions; the network management integration may also connect to the upper layer OSS/BSS network management system through a northbound interface. The network management system of the Company has been sold to over 50 countries/regions worldwide. The Company is the one and only communication equipment manufacturer in Taiwan that developed smart network equipment management systems. Loop-iNMS successfully drove the sales of the full series products of the Company and became the top seller of Loop; it provides the best solution for network management. The initial user interface of iNMS design was in English (minor parts also in other languages); adhering to the spirit and faith of local products and local services in Taiwan, the Company actively invested in human resources to support the localization of the network management system in traditional Chinese. Our major customers in Taiwan include Chunghwa Telecom, Taipower, and Taiwan Railways (all are installations around the island), and we provide original, local, and professional services and customer-oriented customized solutions.

b-4. 2016-2020

With over two decades of R&D experience accumulated, the Company integrated multiple service interfaces of PDH, SDH fiber technologies, Ethernet router technologies, and MPLS technologies as a comprehensive network solution. It included the cross-field and cross-company product integration into the Company’s network system to directly face end users (i.e., electric power communication and military network of the government), directly cooperate with large-scale international SI companies (i.e., NEC), and directly cooperate with IoT customers (i.e., power plants, public transport, and governmental agencies) to develop new products in the hope of providing popular products and comprehensive solutions under the trends of the IoT industry.

b-5 2021-2025

MCC solutions are closely related to people’s daily lives. Infrastructure, including the emergency communication networks of the transportation industry, railway driving signal control networks, aerospace traffic control, airport passenger transport systems, power grid transmission and distribution control systems, energy monitoring systems, national defense communication networks, and public safety systems (911), requires the highly reliable MCC networks with low latency; the accurate time control benefits the grasping of the operations of systems at all times. When any disaster occurs or any operating system malfunctions, the MCC system will immediately submit relevant alerting signals to the control center, allowing companies to adopt instant countermeasures to avoid the occurrence of disasters. Loop Telecommunication has been focusing on the R&D of relevant products and solutions for nearly three decades, and it fully fulfills the requirements in the unfavorable environment of the user market and is highly recognized by customers

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worldwide.

The MCC solution of Loop has been extensively used in emergency communication networks of the transportation industry, railway driver communication networks, railway driving signal control networks, airport passenger transport systems, safety monitoring transmission systems of access control, fire alarm, and unknown objects, power transmission monitoring systems, public safety (911) systems, backbone network of military, police, and governmental departments, SCADA systems of oil and natural gas companies, school network, and remote teaching systems, and has gained high recognition from different sectors.

For the development strategies in the future, Loop will continue to promote advances in the corporate development model and effective resource management for the benefit of achieving the objectives of low costs and high performance. By launching integrated product services and the continual expansion of the successful global sales channel cases, it will continue to reinforce the development of MCC, assist overseas partners in becoming significant suppliers in the local MCC market via Loop-Webinars and Loop-Trainings, and commit to becoming the leading role in the market.

B. Current plant for the most recent year and new products being developed

The Loop-G7800 product line, the key development project of the Company for the year (2023), will be the highlight in the future. Loop-G7800 supports 100G optical transmission and possesses 400G exchange capacity, which significantly improves the backbone transmission bandwidth for customers. G7800 integrates Loop’s self-owned FPGA development capacity with various traditional TDM and the new generation L2/L2.5/L3 packet transport network technologies. Apart from being the backbone node, G7800 can also serve as the gateway for PDH/SDH/SONET/PTN network. The Nx64K interface card used over the years for AM3440 and O9500 may be used on the G7800 system platform, and Loop has also developed over ten kinds of interface cards for multiple speeds that support SDH/SONET/MPLS-TP/Carrier Ethernet. The comprehensive feature allows customers to have more flexibility for network planning in the future; regardless of phased budgeting projects increased based on requirements or the new era overall transmission network solutions that wish to be settled at one go, the Loop-G7800 product line will be able to satisfy such customers. At present, multiple partners have been actively inquiring about the formal launch of G7800. It is expected that the Loop-G7800 product line will become the next-generation star product to force into the MCC market.

Except for the major backbone and access network product series used worldwide, Loop has explored Information Security System (ISS), Artificial Intelligence (AI), corporate new era office network, corporate 5G private network, and other new technologies in recent years to expand into new markets of corporate and governmental information safety network overall solution development. In recent years, due to frequent information security events, the requirements for information of corporations and the government have been increasing. Loop has obtained the ISO27001 information security certification and performed a firmware upgrade for different products catering to the MCC market to support FIPS 140-3. Meanwhile, the Company also plans to launch the Loop-ISS2180 mission-critical network firewall and Loop-ISS2110 government configuration baseline network setting management system to assist customers in establishing the optimized MCC information safety protection environment.

a. Access multiplexer series products

Loop-AM3440 of the Company is widely adopted worldwide, including the power system, transportation, governmental and military communication network, and other markets in Taiwan. Its high reliability,

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stability, various access interfaces, and the application cards developed based on customers’ application requirements allow Loop-AM3440 to continue to maintain the leading position in the access multiplexer market.

Broadband packet backbone networks have become popular; however, the tradition TDM access service for end equipment is still generally being used. In response to the actual requirements of the market, the Company developed cards that carry TDM via packet transport network by using the self-owned FPGA technologies to allow AM3440 to satisfy the point-to-point communication of access to TDM and IP-mixed networks. Meanwhile, we also tested and verified that AM3440 is able to satisfy the stringent requirements in terms of delay of the end operations in the packet networking environment with large-scale international companies. The outstanding performance and reliable quality will make it an indispensable access multiplexer for the new generation NG-SDH and PTN backbone network.

b. Optical communication equipment

Due to the development of optoelectronic technologies, optoelectronic cables with high transmission bandwidth with an attenuation of less than 1dB each km may be produced in mass. Together with the development of high-order digital multiplex technologies and the development of high-performance “optoelectronic devices,” high-speed, high-capacity optical communication systems with a transmission speed per second reaching 90million “bits,” even 400 million “bits” per second have entered the stage of practical use. Light can also generate a series of patterns by flashing (i.e., on and off of the flashlight), which is called the “optical signal.” Light possesses greater transmission information capacity than power; that is, light can surely generate shorter pulses and form patterns of high density and abundant information within the same period of time. Under such speed, “stacks” are formed by combining such graphic units to transmit multiple different information within one fiber. This is the reason why “optical fiber” is able to concurrently accommodate much information for transmission.

Advantages of optical fiber communication

• A. Long-distance communication with a reduction in costs:

• If an optical fiber with a 1.3µm wavelength for transmission, there is a loss of approximately 0.40.5dB per km, an optical fiber with a 1.5µm wavelength has a low transmission loss of approximately 0.2-0.25dB per km.

• Compared to traditional copper cable transmission systems, the distance between repeaters for optical communication is lengthened to tens of kilometers, and optical communication can significantly reduce the number of repeaters, reducing the costs of communication systems.

• For example, the distance between Taipei and Keelung is slightly over 20 kilometers; if an optical fiber connection is adopted, the establishment of a large-scale machine room in Keelung is not required. The low transmission loss of optical fibers lengthens the transmission distance between repeaters and reduces the costs and complexity of systems; therefore, optical fibers are more suitable for long-term transmission.

• B. Optical fibers are delicate, light, and flexible and may be easily bounded; therefore, when optical fibers are bounded as optical cables for laying and installation, they save room for pipes. Optical fibers effectively improve the use rate of pipes, possess high economic efficiency for allocation rooms, and are suitable for aircraft, satellites, and vessels.

• C. Optical fibers possess enormous communication bandwidth reaching 1-2GHz or above. The bandwidth of general cable modems is approximately 330MHz-550MHz; in comparison, optical fibers possess ultra-high signal carrier capacity.

• D. Optical fiber materials are generally quartz glass, which has non-corrosive, fire-proof, and water-proof characteristics and long, useful life. In addition, optical fibers have favorable flexibility and adaptability to perfectly protect wrappers and tensile substances, allowing optical fiber transmission to save operating costs.

• E. They are not affected by electromagnetic waves, applicable to fields that may be easily stroke by lightning or high power fields, significantly improving the fidelity for communication.

• F. With high confidentiality, signals will not radiate outside of optical fibers, which is suitable for military, bank connections, and computer networks.

Due to the abovementioned advantages of optical fiber systems, countries are optimistic about the prospects of optical fiber communication and have invested major capital and human resources in R&D. With the arrival of the information era, communication networks of high capacity, low loss, and favorable reliability are fundamental, and optical fiber communication systems are the best options. Therefore, it is estimated that the majority of the copper cable will be replaced with optical fibers in the near future.

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The scope of the overall optical fiber communication industry is relatively extensive, from local end equipment, transmission equipment, parts and components in transmission equipment, and user network equipment have proprietary products of optical fiber communication. Even though there are many diverse products, categorization may be made based on products that can have commercial mass production at present; parts and components can be roughly divided into three categories: optical fibers and optical cables made with optical fibers, active optical elements, and passive optical elements.

Loop-O9500 PTN and Loop-O9400 PTN are also new-generation optical fiber transmission network multiplexers that can concurrently support two transmission networks in one frame. For example, optical fibers synchronize the SDH/SONET transmission network and MPLS-TP packet switching transmission network to use as the applications of transmission backbone, and the equipment possesses add-drop, multiplex and de-multiplex functions that can support low-speed audio/data, Teleprotection interface, and the exchange capacity and other interface signal compilation and multiplexing of the high-speed STM-4/OC12, STM-1/OC-3, DS3, E1, T1, Ethernet, MPLS-TP PTN for long-term transmission through optical cables. The transmission equipment system possesses protection systems and abilities, provides the automated routing function and multi-service integration platform (PDH/SONET/SDH/PTN) to connect services of each point via the optical fiber interface, constituting the transmission repeater to complete, integrate, and accommodate various service interfaces, achieving data exchange requirements of different regions. The transmission equipment protocol and the protection system switching time is less than 50ms, which is fully in compliance with the structural specifications of the International Telecommunication Union (ITU): and in compliance with the new generation synchronized transmission equipment technologies; the system provides complete applications for high-capacity optical fiber loop backbone networks and comprehensive solutions and is in line with the MCC market.

With the constant growth in the demand for bandwidth, equipment functions, and network management, the trend of optical fiber communication has been formed. Certainly, the Company will actively invest a great amount of R&D personnel to constantly develop new series products (i.e., G7800) to satisfy the enormous demand for communication equipment for the business opportunities in the market. The optical fiber industry will become the star industry in Taiwan and the global MCC market in the future.

c. IP transmission equipment series products

The Company has launched Loop-IP6704/AM3440-E/G7860A TDMoIP, which can transmit T1, E1, and Voice signals on IP networks and IP6510, which can transmit IP data and Voice signals on PDH networks. For Loop-IP 6704/AM3440-E products, we have successfully developed the increase in multiple different interface channels and added TDMoIP function cards for Loop-AM 3440 and Loop-O 9500. IP6704/AM3440-E DACS products combined the FPGA design, special TDM over Ethernet, and TDM DACS, which increased the design difficulty; however, functional upgrades and customization uniqueness of the product are maintained to achieve the timeliness of time to market, possessing advantages. The Company has always been attaching its attention to the development of new products. For the TDM over Ethernet product and equipment market, it is confident that it can develop products that compete with largescale international companies; by doing so, it hopes to bring up the trend for the R&D capacity of the communication system industry in Taiwan to make further breakthroughs, and to secures a seat as a top-tier large-scale international company. In addition, the design of LOOP G7860A is the first network equipment of the Company that combines SDH/SONET, PDH E1, TDMoIP, Gigabit, Ethernet, POE/POE+, T3, Stackable, and IEEE 1588 V2 functions. The development of G7860A not only satisfies the functional requirements of 2G/3G/4G/5G telecom. With our R&D experience accumulated over two decades and the market penetration capacity of marketing in markets of over 80 countries, we decided to introduce the FPGA design to improve the flexibility for customization and functional upgrades of products in the future, which is the segregation with the design of large-scale companies at present. Due to the introduction of the FPGA design, we possess mobility, timeliness, and uniqueness of customization for the R&D of new functions in the future to satisfy the requirements of customers in the market. The Company focused on the R&D of COend and CPE-end equipment. For the R&D segregation, apart from placing the standardized IC into the design, as the existing standards and protocols are not sufficient for the application of actual circuits and functions, peripheral circuit designs and the innovation of FPGA system functions are required to be introduced. The Company adopted the existing standards as the foundation and introduced the peripheral circuit design to create new functionality and innovation breakthroughs. In addition, 61850 switch products for power are equipped with HSR/PRP modules of high availability and are compliant with the majority of the stringent and redundant requirements to ensure no data packet is lost and guarantee that goose data packets will arrive at their destination.

d. Corporate grade network management and integration solution

With the booming development of network technologies, the heterogeneity, diversification, and complexity

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of network systems have gone beyond the level that can be understood by network management personnel in the past; the accelerated infusion of IT/OT has also brought brand-new challenges to the resilience and safety of network management systems. The third-generation network management system developed by the Company provides integrated smart network management solutions. Based on the logical layer network management structure formulated by ITU-T, the iNMS flagship network management system, based on TDM network management, integrates the second generation MPLS-TP innovative products and equipment, provides point-to-point operation planning, remote route building, diagnosis, and other automated functions that significantly reduce costs of operations and capital expenditures and effectively improve the business execution efficiency. We developed a newly designed iNET network management system based on agile software, which has product features of high-speed delivery and continuous integration. In the past, we were contracted for automated people mover (APM) projects in Orlando and Tampa airports in the U.S., the parallel integrations of NEC train marks, and the CCTV safety control monitoring systems in Taiwan, providing comprehensive turnkey solutions for customers. The Company is the OEM/ODM network equipment and network management system supplier of GE in the U.S.. Apart from actively participating in material domestic and foreign power system projects leveraging its network management system, the Company has been selected as the supplier for the network management solutions of crucial infrastructure, including material transportation, aerospace energy, military, emergency, and public safety constructions, and our solutions are sold in over 80 countries worldwide. We made a debut on the stage of the international market with intense competition to actively seek improvements in the awareness of Taiwan.

e. 4G LTE base station transmission equipment

Customers of the Company are mostly from developing countries (i.e., India, Southeast Asia, and the Middle East); countries in such regions have an increasing demand for the communication equipment of the Company at present. Furthermore, the Company is actively developing smart network equipment management systems and IP transmission equipment to satisfy the requirements of the future market. Currently, the development of the MPLS-TP 10G carrier Ethernet equipment we invested in is completed, and we continue to explore relevant product lines. In the future, the Company will also make arrangements for the design of 5G communication products.

C. Estimated completion progress of the unfinished R&D plan

Project	Estimated completion time
iNMS_PW Protection	Estimated to complete the development in March 2023
AM3440_CCPB_8GEHSWa	Estimated to complete the development in April 2023
AM3440_IPv6_Phase1	Estimated to complete the development in April 2023
G7800 Phase 2-a	Estimated to complete the development in April 2023
G7800_Phase 1	Estimated to complete the development in April 2023
iNET V5.01.00	Estimated to complete the development in May 2023
iNMS V9.02.02 New Featur	Estimated to complete the development in May 2023
iNMS_G7800 Projrct	Estimated to complete the development in May 2023
G7800_Phase 2	Estimated to complete the development in June 2023
G7860A_DS3_Phase 3	Estimated to complete the development in July 2023

Other major factors that affect the success of the R&D regarding the R&D plans in the above table are as follows:

a. Adopt accurate market strategies and accuracy evaluation to align with the requirements of major customers.

• b. Provide customization functions in accordance with the demand in the market to satisfy the requirements of major customers.

• c. Increase R&D human resources and improve the excellent R&D technologies of the Company to build a stable and healthy R&D team.

• d. Duly introduce the IBM system to effectively control the development progress of products so as to complete the development based on the existing budgets and the target timeline required by customers, ensuring the time to market of our R&D achievements.

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D. R&D expenses expected to be invested in the following three years

Item/year Net revenue (the Company did not disclose its financial forecast) Research and development expenses Ratio of R&D expenses to net operatingincome	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	2022	2023	2024
	Not applicable	Not applicable	Not applicable
	155,115	162,871	171,015
	Not applicable	Not applicable	Not applicable

E. Current progress of uncompleted R&D plans and R&D expenses required to be invested:	E. Current progress of uncompleted R&D plans and R&D expenses required to be invested:	E. Current progress of uncompleted R&D plans and R&D expenses required to be invested:	E. Current progress of uncompleted R&D plans and R&D expenses required to be invested:	E. Current progress of uncompleted R&D plans and R&D expenses required to be invested:
Project	Commenceme nt date of plan	Initial completion date	Estimated completion date	Current completion progress
AM3440_CCPB_8GEHSWa	2022/8/25	2023/4/28	2023/4/28	81.50%
AM3440_IPv6_Phase1	2022/7/5	2023/4/28	2023/4/28	71.70%
G7800 Phase 2-a	2022/10/3	2023/3/31	2023/4/14	80.30%
G7800_Phase 1	2022/7/6	2023/4/18	2023/4/28	63.60%
G7800_Phase 2	2023/3/20	2023/6/30	2023/6/30	5.50%
G7860A_DS3_Phase 3	2023/1/9	2023/7/3	2023/7/3	40.90%
iNET V5.01.00	2022/9/15	2023/3/31	2023/5/4	86.50%
iNMS V9.02.02 New Featur	2022/10/3	2022/12/30	2023/5/26	83.80%
iNMS_G7800 Projrct	2023/2/1	2023/4/28	2023/5/3	41.20%
iNMS_PW Protection	2022/9/1	2022/12/30	2023/3/20	72.30%

F. Major factors and risks affecting the success of R&D in the future

Item	R&D plans in the most recent year	Major factors affecting the success of R&D
1	AM3440_CCPB_8GEHSWa	a. Refactor functions to improve efficiency and robustnessNew firmware design b. SyncE support c. Add AutoIt and ROBOT for regression test
2	AM3440_IPv6_Phase1	a. New Http server glue to ISS module that ISS module don’t have b. AutoTest for IPv6 Protocol verification c. RT module migration to ISS module with new cpu ZYNQ
3	G7800 Phase 2-a	a. New Software and Architecture design b. Free RTOS System debug c. Si5348 Dpll Study and configuration d. Verify of tributary cards e. Add AutoIt Test.
4	G7800_Phase 1	a. New switch chip, which is never used in LOOP before. b. 100G Ethernet interfaces. c. First chassis product using LOOPOS. d. New MACsec design. e. Manpower management
5	G7800_Phase 2	a. New software architecture to manage AM3440 system through LOOPOS b. Variety of tributary cards c. Manpower management
6	G7860A_DS3_Phase 3	a. Backward Compatibility b. Regression Issues c. Testing Foundation d. Interoperabilitywith otherplug-in cards
7	iNET V5.01.00	a. New Hardware and Layout design b. New Mechanism c. New TestingMethod

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Item	R&D plans in the most recent year	Major factors affecting the success of R&D
8	iNMS V9.02.02 New Feature	a. New Software and Architecture design b. New Mechanism/Platform c. New TestingMethod
9	iNMS_G7800 Projrct	a. New Software and Architecture design b. New Mechanism/Platform c. New TestingMethod
10	iNMS_PW Protection	a. New Software and Architecture design b. New Mechanism/Platform c. New TestingMethod

(4) Long-term and short-term business development plans:

A. Development of long-term and short-term business

a. Development of short-term business

a-1 Products and services:

The short-term development is primarily order production. The Company continues to make improvements and adopts customers’ requirements as the core to developing new products with high added value. In terms of technologies, we will establish technological capacity for our self-owned brands, reinforce the R&D of products and software with high gross profits, and expand regional and other industrial development to effectively grasp business opportunities.

a-2 Finance:

The consolidated revenue of the Company throughout the year was NT$438,242 thousand; net income was NT$67,403 thousand, and earnings per share were NT$0.95. The benefits of focusing on the Taiwanese market have been recorded, together with the constant reinforcement of internal management and optimization and reformation of the organization of the Company; the Company will improve its efficiency and continue to explore new customers, new products, and the SI market, to allow its overall profit margin to achieve 50% or above. We maintained favorable performance in terms of financial structure, solvency, accounts receivable turnover, and other financial indicators.

a-3 Investment:

In 2013, Loop commenced its strategic transformation, strongly promoted mission-critical solutions, and successfully entered multiple domestic and foreign markets in recent years. As the bandwidth hungry applications in the mission-critical communication (MCC) network continued to increase TDM-based network backbone is gradually replaced by Packet-based one. Facing the transition period from existing technologies to new technologies, the provision of the new generation packet transport network technologies and concurrently accessing the existing legacy services have become the solutions most required by MCC users. Loop’s product line includes over 60 products, and it has been committed to the R&D of new products (i.e., G7860A, WDM1800, O9400-PTN10G, O9500-PTN10G, and other mixed service multiplexers for the abovementioned requirements. Meanwhile, it also upgraded the access service product line (AM3440-CCPB, IP6704A, and G7820) and developed Loop proprietary ultra-low latency and zero-packet-loss protection switching technologies to solve two major hindrances faced by MCC users in terms of the packet transport network. Combining the network management system with point-to-point circuit management capability.

b. Long-term business plan

In the future, we will reinforce the development capacity for new products, improve product R&D efficiency, and shorten the development time of products. Also, we will promote the logo of Loop’s self-own brands. Apart from satisfying the functional requirements of customers for products, we may continue to maintain the high added value of product customization, avoiding price competition within the industry. Meanwhile, we will enhance our ODM and OEM operations by focusing on major customers, and we intend to actively secure cooperating opportunities with major customers in the future. In terms of industry, electricity and governmental agencies account for 70% of our total revenue, and transportation and private corporate markets account for approximately 15%. To expand our operations, we have also entered the oil industry, power industry, public utilities, and private enterprises. For example, Taiwan Railway, HK MRT, India railway, India power, European power, oil and natural gas, Shell Oil Company, Basin power, Internexa, and other relevant industries. The Company will continue to expand its overall marketing channels and improve its production and marketing integration capacity and put new products into mass production to continue to contribute to the future profits of the Company.

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Moreover, based on the tender cooperating model, the Company continues to cooperate with large-scale international companies and SI companies of different marketing countries and provide customized designs as advantages to secure new tenders. Implement the R&D model of Time to Market and enhance the application systems to provide integrated services to customers, which not only provides single products to customers but also provides integrated application service consultation, improving the cooperating relationships with customers and the development of new ODM customers.

It is estimated that the global macroeconomic environment will improve successively. With our existing basis, the Company will strive to improve its marketing, R&D management, production management, and competitive strength in other aspects. At present, the Company has 32 product lines and has business dealings with 52 countries; our operations are market demand-oriented. Apart from the communication industry, the Company will continue to actively explore power, transportation, oil, natural gas, banks, governmental agencies, and other relevant communication markets, grasp business opportunities, and create a favorable performance.

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2. Overview of market and production and marketing

(1) Market analysis:

A. Sales regions of main products of the Company

80% of our revenue was from 13% of countries having dealings with us. We primarily focus on domestic tenders for domestic sales; the major sales region of export sales is Europe, America, and Southeast Asia.

Dollars)

Dollars)	Dollars)
Year		2020		2021		2022
Sales region		Sales amount	%	Sales amount	%	Sales amount	%
Domestic		282,014	47	252,119	49	107,240	24
Overseas	America	56,656	9	54,651	12	101,558	23
	Europe	72,156	12	71,234	14	85,562	20
	Asia	139,577	23	115,254	24	102,028	23
	Others	47,693	8	22,252	1	41,854	10
	Subtotal	316,082	53	263,973	51	331,002	76
Total		598,096	100	598,096	100	438,242	100

B. Market share and the supply/demand in the market and the potential of growth in the future

The product sales in the main market of the Company in 2021 and 2022 and the future insight into the market sales are as follows.

• a. Sales (provision) region of major products (services):

Region/year	2021	2022
Domestic	49%	24%
Asia	24%	23%
Africa	0%	1%
America	12%	23%
Europe	14%	20%
Others	1%	9%
Total	100%	100%

b. Market share:

The Company is a dedicated communication network equipment manufacturer, and the overall products account for approximately 0.055% of the market share of the overall production value of the communication industry in Taiwan. The sales ratio of main products throughout the year and the domestic market share of communication equipment are as follows: PDH series 48%/0.026%, SDH series 44%/0.024%, iNMS 6.3%/0.003%, MPT series

2%/0.001%, and others 6%/0.004%.

c. Insight into the demand/supply and growth potential of the market in the future

In 2021, the production value of the communication industry in Taiwan grew stably, and it is likely to grow further in 2023. Despite the trade war between the U.S. and China, other changes in the international environment, and the effects of inflation, interest rates, and other macroeconomic factors on the communication industry, the global communication market is expected to maintain positive growth. Operators transfer the focus on network-building from the coverage rate to capacity, low latency, and user experience, bringing about the further technological development of products related to the network infrastructure of operators (i.e., [macro cell, small cell, and switch router], CA, Wi-Fi, LWA (LTE/Wifi

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aggregation and high-end small cell technologies). The application requirements and network challenges of the next-generation mobile communication network call for high-speed mobile bandwidth, broad coverage, IoT, and low latency, facilitating the active arrangements by leading international companies for highfrequency access technologies, network virtualization, software open source, customized application, edge computing, IoT connection technologies, and other focuses.

Apart from deepening our existing product lines (i.e., SDH, PDH multiplexer, and the entire series of iNET/iNMS), the Company will invest a greater portion of its R&D capacity in the future trending technologies and the expansion of the bandwidth of products. The bandwidth has been upgraded from 2.5G to 10G, and the Company is aiming at 100G, allowing the Company to have mature and comprehensive technologies for PTN, MPLS, carrier Ethernet, DWDM, and other products and comply with the requirements of IoT in the future.

C. Competition advantages, favorable and unfavorable factors in the long term, and countermeasures

a. Competition advantages

The Company focuses on the development of communication and telecommunication systems. With over three decades of R&D experience, the Company is one of a few companies with vertical R&D capacity from downstream to upstream and is the only local provider of overall solutions for the backbone networks of telecommunication transmission in Taiwan. Products developed by Loop include communication transmission technologies of 64Kbps in the early stage to PDH, SDH, and to the latest PTN technologies. It has accumulated over 100 types of communication interface cards and over 50 kinds of products of different categories. By adopting the integrated network management system in traditional Chinese that we developed, we integrated hardware, software, equipment, and network management and became a reliable provider of integrated solutions for communication and information systems.

Our communication system integration solutions have spread across Asia, Europe, America, Australia, the Middle East, and other countries, proving that our reliability, stability, and durability are recognized and supported worldwide.

The international competition will only become more intense and fast. Facing the challenges in the competitive environment, the Company will strive toward reducing production costs, leveraging on the advantages it possesses in terms of technologies to expand its sales rate and market share of its products so as to improve its profits in due course. Looking ahead, the Company will continue to focus on launching the following products and services: (1) Optical communication equipment: Integrate PTN and SDH/SONET platforms to provide total solutions. (2) IP transmission equipment: Combine the L2/L3 Ethernet access transmission and carrier Ethernet (including CE and MPLS-TP) technologies to develop the next-generation G7860A and G7820 transmission network equipment. (3) IP/TDM Hybrid equipment: Combine abundant existing terminal equipment interfaces and applications, the Company will continue to improve the emulating bridging and virtual network equipment of IP67xx series and TDM over Ethernet and widely apply relevant technologies on the hybrid card equipment of the Company. (4) 5G communication transmission equipment: Based on technologies and experience accumulated for 3G/3.5/4G base station, the Company has completed WDM1800 and MPLS-TP 10G carrier Ethernet equipment and has been actively making arrangements for 5G communication technologies. (5) Comprehensive network management system: In response to the newly launched MPLS/CE PTN and innovative products based on PWE3 technologies to provide point-to-point business planning, circuit building, business diagnosis, flow engineering, QoS, and other advanced network management functions. (6) Next-generation corporate office LAN: Integrate selfowned products of the Company, relevant information safety software/hardware equipment, IIoT solutions, and A.I. to assist customers in building office network system structures that satisfy information safety, the physical safety of assets, and office environment safety.

For future development strategies, Loop will continue to promote the advances in the vertical development model of enterprises and actively expand into power, 5G, transportation (railway, MRT, and aerospace control), oil and natural gas (O&G), military, governmental agency, corporate user, and other relevant communication markets through the launches of integrated products and services and the continual expansion of successful cases in global sales channels, actively assist overseas partners in becoming strong and forceful suppliers in local MCC markets via Loop-Webinars and Loop-Trainings, and strive for becoming the market leader so as to create favorable performance and continue to secure the maximum operating performance for all shareholders.

b. Favorable factors:

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b-1 Finance: The financial structure, solvency, operating ability, profitability, cash flow, and other financial ratios are above the general level within the industry.

b-2: Market: There are 52 countries having business dealings with the Company worldwide. Our export sales accounted for approximately 70% of the revenue throughout the year. In particular, we recorded growth in America, the EU, and Southeast Asia. For the market in Taiwan, the project has proceed to the next stage, and there has been a slight decrease for the Indian market. In terms of industry, electricity and governmental agencies account for 70% of our total revenue, and transportation and private corporate markets account for approximately 15%. In 2022, 80% of our revenue was from 13% of countries having dealings with us. Among all 32 product lines, 80% of the revenue was from 10% of the sales products. With the stabilization of the outbreak, it is likely to maintain the growth in the European and American region as in prior years, and the market in Southeast Asia also recovered. We continued to develop emerging markets to flexibly satisfy customers’ requirements. Loop Telecommunication has long been cooperating with large-scale international SI companies to develop markets, which is deemed as the market driver under the trend of the new norms.

c. Technology:

With over three decades of R&D experience accumulated, the Company integrated multiple service interfaces of PDH, SDH fiber technologies, Ethernet router technologies, and MPLS technologies as a comprehensive network solution. It included the cross-field and cross-company product integration into the Company’s network system to directly face end users (i.e., electric power communication and military network of the government), directly cooperate with large-scale international SI companies (i.e., NEC), and directly cooperate with IoT customers (i.e., power plants, public transport, and governmental agencies) to develop new products in the hope of providing popular products and comprehensive solutions under the trends of the IoT industry.

Facing the intense situation of the trade war between the U.S. and China and uncertainties derived from the war and geopolitics, the economic environment became challenging. 5G brought about the digital transition of all industries, giving rise to a new wave of evolution within the network industry and to business opportunities of new technologies and new applications. Based on the existing foundation, the Company continues to reinforce its management and makes constant efforts by adhering to the philosophy of continuing to develop new products and explore new markets.

With the successful R&D experience of 3G/4G and in response to the requirements of 5G communication in the future, the Company has also been actively developing optical fronthaul series products (i.e., OBSAI, CPRI, and other DWDM series products). They were launched for sale in 2020.

Facing the transition period from existing technologies to new technologies, the provision of the new generation packet transport network technologies and concurrently accessing the existing legacy services have become the solutions most required by MCC users. Loop’s product line includes over 60 products, and it has been committed to the R&D of new products (i.e., G7860A, WDM1800, O9400-PTN10G, O9500-PTN10G, and other mixed service multiplexers for the abovementioned requirements. Meanwhile, it also upgraded the access service product line (AM3440-CCPB, IP6704A, and G7820) and developed Loop proprietary ultra-low latency and zero-packet-loss protection switching technologies to solve two major hindrances faced by MCC users in terms of the packet transport network. Combining the network management system with point-to-point circuit management capability. Such solutions may be used in domestic and foreign power company, transportation, airport, and military markets. They will have material contributions to our revenue in the following years.

From R&D to production, and to market branding, the Company has transformed from a pure product supplier to a contractor of solutions and stands out as a professional manufacturer in Taiwan. The Company has gained recognition of extensive users and ODM orders with large-scale international companies in the intensive global competition, and its strong software/hardware capacity is unlikely to be plagiarized or duplicated.

d. Management:

The Company has an outstanding R&D leader and R&D management team and has introduced internationalized CQ, RPM, CAR, and CCT systems of IBM for the progress follow-up of projects and human resource and working hour management of the R&D Department so as to effectively grasp the procedures and resource allocation of different projects on a timely basis.

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D. Unfavorable factors:

a. Finance:

The export sales market accounts for over 70% of the Company’s revenue. Any intense fluctuation of the exchange rate of NTD will cause considerable exchange effects.

b. Market:

Due to the trade war between the U.S. and China and changes in international situations, the growth in the emerging market recorded was less favorable than expected. Furthermore, the transition of communication technologies and the conservative market affected the Company’s operating performance. Facing the changes in the market, the Company has transformed from a pure product supplier to a contractor of solutions, which will have material effects on the contributions to its revenue in the future.

c. Countermeasures:

c-1 When providing quotes to export sales, the Company also considers the development of exchange rates to minimize the level of impacts of the fluctuation of exchange rates on the profits of orders accepted, engages in quotations of multiple currencies based on the circumstances, and uses strong currencies for trading to avoid possible risks.

c-2 Facing the competition between enterprises and within the environment, the Company continues to observe market requirements and develop functional and differentiated products. To maintain the competitiveness of its new products and break through the resource restrictions of new product development, the Company will call for more outstanding talents in the future to carry out R&D and innovation and reduce operating costs.

c-3 In light of the global economic development, the Company continues to develop new markets and combinations of different industrial patterns and new products. In the future, the Company will fully invest in performing the market pattern of “solution provider,” focus on the requirements of major customers and the application requirements in the future market, and provide comprehensive and integrated transmission systems for customers’ use. Furthermore, the Company strives for ODM opportunities with large-scale international companies and seeks concepts and targets for the development of new products. It will closely combine the strategies of new products under development and the practices of product development management procedures and adopt product specifications and expected benefit audits that are in line with the market requirements as the foundation to improve the success rate of product development and profitability.

(2) Main use of major products and their manufacturing procedures:

A. Main use of major products

AM3440 may be used in telecommunication, railway communication, electric power communication, hydraulic communication, traffic communication control, security systems, and automated control communication; the main use is as follows:

• a. E1 multiplexers are used for TDM E1/T1 network transmission.

• b. Point-to-point video conference (V.35 or Ethernet interface).

• c. Environment monitoring (dry contact or Ethernet interface) (i.e., door alarm and video surveillance

• d. Auto-control (RS232 interface), such as SCADA system, automation control, and traffic light control.

• e. Audio, data, and Ethernet transmission.

• f. Teleprotection/SCADA applications.

• g. Teletra wireless transmission applications.

• h. E1 DS0 SNCP is used in police/fire control/emergency relief systems.

• i. RS232 radar clock transparent transmission is used in airborne radar.

• j. ECA is used in echo cancelation for transformation from 2-line to 4-line transmission of audio circuits.

• k. ABRA is used in the point-to-point transmission of analog audio modems of the power category.

• l. 6UDEA/8UDTEA is used in banking and SCADA.

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B. According to the operating specifications of ISO9001, the production procedures of the Company are as follows:

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

Development procedures
for new products: Market evaluation
Product specification
formulation
Hardware structural Software structural
design design
Detail design of Detail design of
hardware software
Software/hardware system
integration test
EMC
PreScan
Small-amount
production
Mass
----- End of picture text -----

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Small-amount production:

Prepare the production testing plan and testing instruments

Propose the requirement and quantity for small-amount pilot production Prepare materials Transfer the semi-finished PCB assembly SOP and matter of notice to contractors Outsource semi-finished goods for assembly Outsource semi-finished goods testing Finished system assembly and test Warehouse entry of finished goods

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Mass production procedures:

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

Production Final Quality
Visual Inspection
Schedule Lot Sampling
Inspection (F/T)
Material
Burn-In
Preparation
Packing
Production Final
Assembly Function Test
Final Quality
Lot Sampling
Inspection (Visual)
PCBA Final
Function Test Assembly
Turn-In
Pre-Work
----- End of picture text -----

(3) Supply of main raw materials

Products produced by the Company are composed of many parts and components that we purchased from extensive counterparties; therefore, the Company only enters into long-term supply orders for crucial parts and components. Raw material procurement of the Company is relatively dispersed, and there is no risk of overly concentrated sources. The Company has always maintained favorable cooperating relationships with suppliers, and the level of cooperation of suppliers is high; therefore, the supply status in the most recent three years remained healthy, and there was no supply shortage or interruption in the past three years. The supplying status of major raw materials of the Company at present is set out in the following table:

Main raw materials	Main supplier	Supplyingstatus
PCB	Kintech and Circuitech	Favorable
IC	Avnet and WT Microelectronics	Normal
Power supplier	Hua Ko and Universal Microelectronics	Normal
LCD	SDEC Technologyand Winstar Display	Favorable
Cable	Yuh Chieh and Goal Ray	Favorable
Connector	OUPIIN Enterprise and Chief Land	Favorable

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(4) List of customers accounting for 10% or above of the Company's total purchases (sales) in any of the most recent two years and purchases (sales) amount and ratio, and the descriptions of the reasons for the changes:

A. Information on the major supplier for the most recent two years

									(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
	2021				2022				As of 2023 Q1
Item	Name	Amount	Ratio to net purchase throughout the year	Relationship with the issuer	Name	Amount	Ratio to net purchase throughout the year [%]	Relationship with the issuer	Name	Amount	Ratio to net purchase as of Q1 of the	Relationship with the issuer
			[%]								year [%]
1	Avnet	26,765	13.88	None	WT Microelectronics	25,186	17.17	None	WT Microelectronics	8,817	15.33	None
2	WT Microelectronics	23,381	12.12	None	Avnet	12,959	8.84	None	Avnet	8,567	14.89	None
3	Yu chuang	20,721	10.74	None	Chongqing Loop	8,567	5.84	Mother and son company	Chongqing Loop	4,234	7.36	Parent company and subsidiary
4	Chang Bau	14,751	7.65	None	Universal Microelectronics	8,102	5.52	None	ILU	3,986	6.93	None
5	Peng-Hua	14,184	7.34	None	Kintech	6,382	4.35	None	Universal Microelectronics	3,125	5.43	None
6	Chongqing Loop	13,767	7.14	Mother and son company	Yuan Tsu	5,726	3.90	None	Kintech	2,714	4.72	None
7	Kintech	8,084	4.19	None	ILU	5,309	3.62	None	Macnica Galaxy	2,131	3.70	None
8	Sanhui(Hk)	5,221	2.71	None	Macnica Galaxy	4,033	2.75	None	Yuan Tsu	1,963	3.41	None
9	Yong Yi	5,092	2.64	None	Tianjin Loop	3,191	2.18	Mother and son company	Mouldex	1,395	2.43	None
10	Universal Microelectronics	4,207	2.18	None	Kaiyida	2,905	1.98	None	Suncode	1,275	2.22	None
	Others	56,689	29.41		Others	64,289	43.84		Others	19,309	33.57
	Total net purchase	192,862	100.00		Total net purchase	146,649	100.00		Total net purchase	57,516	100.00

Description: There has been no material change in suppliers, with a total purchase reaching 10% or above in the most recent two years; therefore, the Company has no intention to analyze.

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B. Data on major customers of sales for the most recent two years:

									(In	Thousands of New Taiwan Dollars)	Thousands of New Taiwan Dollars)	Thousands of New Taiwan Dollars)
		2021				2022				As of 2023 Q1
Item	Name	Amount	Ratio to annual net sales (%)	Relations hip with the issuer	Name	Amount	Ratio to annual net sales (%)	Relations hip with the issuer	Name	Amount	Ratio to annual net sales (%)	Relation ship with the issuer
1	F	229,413	44.50	None	E	90,308	20.61	None	E	65,575	43.07	None
2	A	57,283	11.11	None	F	76,978	17.57	None	A	18,060	11.86	None
3	E	35,881	6.96	None	A	39,497	9.01	None	G	14,044	9.22	None
4	G	30,392	5.90	None	Z	37,495	8.56	None	H	8,915	5.86	None
5	H	24,722	4.80	None	H	34,030	7.77	None	AE	8,766	5.76	None
6	Y	12,942	2.51	None	G	21,558	4.92	None	AF	7,900	5.19	None
7	D	12,713	2.47	None	AD	13,418	3.06	None	AG	4,013	2.64	None
8	Z	10,671	2.07	None	N	13,184	3.01	None	AH	2,059	1.35	None
9	Q	8,422	1.63	None	D	12,610	2.88	None	AI	2,014	1.32	None
10	AA	5,862	1.14	None	Q	7,846	1.79	None	AJ	1,702	1.12	None
	Others	87,209	16.92		Others	91,318	20.84		Others	19,197	12.61
	Total net sales	515,510	100	None	Total net sales	438,242	100	None	Total net sales	152,243	100

Note: Specify the name of customers who contribute to 10% of total sales or above in the most recent two years and their sales amount and ratio; however, code names may be used instead if the name of customers may not be disclosed due to agreements in the contract or if the counterparties are individual and not related parties.

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(1) Production volume and value in the most recent two years:

Unit ofproduction capacityandproduction volume: Machine Unit ofproduction value: NT$thousand	Unit ofproduction capacityandproduction volume: Machine Unit ofproduction value: NT$thousand	Unit ofproduction capacityandproduction volume: Machine Unit ofproduction value: NT$thousand	Unit ofproduction capacityandproduction volume: Machine Unit ofproduction value: NT$thousand	Unit ofproduction capacityandproduction volume: Machine Unit ofproduction value: NT$thousand	Unit ofproduction capacityandproduction volume: Machine Unit ofproduction value: NT$thousand	Unit ofproduction capacityandproduction volume: Machine Unit ofproduction value: NT$thousand
Product	2021			2022
Name	Production capacity	Production Volume	Value	Production capacity	Production Volume	Value
U interface multiplexer	25,000	17,347	126,887	28,000	18,508	128,415
Optical fiber network	22,000	6,832	131,202	23,000	8,052	196,800
High-speed digital user line equipment	20,000	550	8,214	2,500	30	687
Internet access equipment	8,000	660	10,339	7,500	280	5,851
Time-slot interchanger	6,500	331	3,630	5,500	580	3,410
High-speed network access equipment	4,000	38	494	4,500	99	1,295
Network management system	15,000	2,818	20,268	13,000	1,971	16,559
Others	-		214,476			85,225
Total	100,500	28,576	515,510	84,000	43,881	438,242

(2) Sales volume and value in the most recent two years:

Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand	Unit of sales volume: Machine Unit of sales value: NT$thousand
Product	2021				2022
Name	Domestic		Overseas		Domestic		Overseas
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
U interface multiplexer	4,540	33,557	14,807	71,275	4,442	30,820	14,066	97,596
Optical fiber network access equipment	5,507	149,616	16,325	167,010	1,932	47,232	6,120	149,568
High-speed digital user line equipment	276	10,190	304	1,705	7	165	23	522
Internet access equipment	487	5,697	2,573	14,392	67	1,404	213	4,446
Time-slot interchanger	52	2,945	309	948	139	818	441	2,592
High-speed network access equipment	0	16	38	334	24	311	75	984
Network management system	15	1,035	283	5,284	473	3,974	1,498	12,585
Others		49,062		2,443	3,447	20,454	10,914	64,771
Total	10,877	252,119	34,639	263,391	10,531	105,178	33,350	333,064

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3. The number of employees for the most recent two years and up to the date of publication of the annual report, their average years of service, average age, and education distribution ratio:

		April 29,2023	April 29,2023	April 29,2023
	Year	2021	2022	Current year as of April 29, 2023
Number of employees	Indirect staff	137persons	129persons	136persons
	Direct staff	17persons	17persons	17persons
	Total	154persons	146persons	153persons
Average age		43.81years old	44.09years old	43.85years old
Average service seniority		12.12years	12.75years	12.39years
Education background distribution ratio	PhD	0.65%	0.69%	0.66%
	Master degree	23.38%	23.29%	24.84%
	College diploma	61.69%	61.64%	60.78%
	Senior high school	10.39%	10.27%	9.80%
	Below senior high school	3.89%	4.11%	3.92%

4. Information on environmental expenditure

Any losses suffered by the Company in the most recent year and up to the publication date of the annual report due to labor disputes (for any compensation and violation of environmental protection regulations found in the environmental protection audits, specify the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations and the content of the dispositions), and disclose an estimate of possible expenses that could incur currently and in the future and countermeasures; if it is not able to be reasonably estimated, the

fact that it cannot be reasonably estimated shall be specified:

The Company focuses on the conservation of environments and received the excellent environmental cleanliness and recycling inspection award of the Park in October 1999. It formally announced its environmental policies in 2004 in the hope of improving the environmental protection awareness of employees, suppliers, and channel providers and reducing the impacts of operations on environments through internal and external education and promotion. Over the years, Loop has been adhering to the operating philosophy of sustainable corporate development and has deeply recognized the importance of environmental protection; therefore, the Company adopts pollution prevention and continual improvements as its basic structure for development.

Commitments of Loop: The Company will: ◆ make the best use of resources on earth; ◆develop products of green concepts; ◆ improve procedure technologies and minimize impacts on the environment; ◆ comply with the requirements of environmental regulations; ◆ commit to pollution control and continue to improve the current status of environments; ◆ implement environmental protection education; ◆ appropriately carry out environmental communication to create an enterprise of sustainable development. For the processing of waste, the Company has its SOP in place; there was no environmental pollution event; therefore, there was no loss, and there was no pollution to the environment.

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5. Labor-capital relations

(I) Welfare measures, continuing education, training, and retirement systems of employees and

their implementation, and the labor-capital agreements and measures for protecting employees' interests:

A. Employee benefit measures

The Company has comprehensive and favorable benefit measures; major items include: a. Insurance:

a-1 Labor insurance and National Health Insurance:

Employees of the Company participate in labor insurance and National Health Insurance according to the law.

a-2 Group insurance:

Formal employees of the Company are entitled to the group insurance purchased by the Company on behalf of employees after three months from the day reporting to work, and the premium is borne by the Company. Employees are entitled to different coverage based on the range of salaries.

b. Educational training program:

Based on the training demand of employees, the Company organizes new employee training, professional technology training, management talent training, self-development training, quality management training, safety and health, and other training programs and provides comprehensive professional skills cultivation and self-growth and development for employees.

c. Profit-sharing and share ownership method:

The Company shares a fixed ratio of its earning after the final account of the year, with relevant taxes, reserves, and dividends deducted, with all employees.

d. Bonus system:

The bonus system of the Company has performance bonuses and evaluation bonuses, and the distribution basis of bonuses is the performance of employees within a certain period.

e. Domestic/foreign company trip:

A domestic or foreign company trip for employees is organized once a year.

f. Employee dormitory:

The Company has an employee dormitory allocated by the Park Bureau for new employees and general employees as the residence so as to fully care for employees.

g. Leisure equipment:

The Company has a table tennis room, gym, yoga classroom, library, reading area, and other facilities to provide the best activity venues for employees to dine and chill.

h. Employee Benefits Committee:

The Company has established its Employee Benefits Committee according to the law and appropriated benefit funds as scheduled according to the requirements. Members of the committee are publicly elected by employees, and the committee organizes various benefit activities.

B. Employee training, continuing education system, and its implementation:

Employee educational training expenses:

a. Onboarding training for new employees: Include the introduction to the Company’s system, corporate culture, organization, and operating system, an introduction to system operation, a description of job scope, new product development procedures, and professional knowledge training and succession. b. In response to the development of the business and management system, the Company enhanced its talent cultivation and improved human resources structure and the quality of human resources; therefore, it established the “Procedures for Educational Training” observation by employees. The Company provides subsidies and funding for educational training each year for employees to choose internal training or external training related to their own work. Employees may combine the development of their abilities with hobbies to maximize the learning effects; the content is summarized as follows:

b-1. Internal training: For new R&D personnel, the Company arranges senior R&D personnel to provide guidance to pass down the R&D experience and fully invest in product and technology R&D and allows them to learn the latest communication technologies through technical exchanges with the industry sector. For administration-related personnel, their knowledge, abilities, and aspiration are improved based on their working field, and professional lecturers are also invited to visit the Company for training

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from time to time.

b-2. External training: The Company encourages employees to participate in professional/relevant seminars and appoints them to receive training from domestic and foreign professional training institutions.

Relevant educational training performance in 2022 is set out in the following table:

Item	Number of classes	Total number of persons	Total number of hours	Total expenses
1. New employee training	16	72	82	0
2. Professional function training	13	106	505.1	26,200
3. Management talent training	3	27	88	18,000
4. General knowledge training	9	38	294	9,150
Total	41	243	969.1	53,350

C. Employee retirement system and its implementation:

Employee retirement system: The retirement system of the Company is subject to the Labor Standards Act and Labor Pension Act.

D. Labor-capital agreements and measures for protecting employees' interest:

Labor-capital agreements: Employees of the Company have premium quality, and our business philosophies and management policies are duly implemented. In addition, there is employee communication/activity time and the "Employee Benefits Committee” in place. The internal communication channels are smooth, and the labor-capital relations over the years have been healthy; there has been no labor-capital dispute.

E. Code of Conducts or Ethics of Employees: Please refer to Attachment 2 of the handbook.

F. Working environment and employees’ personal safety protection measures

No.	Objective/target	Plan	Description of current status	Execution
1	Fully transformed to lead-free products	Transformed to lead-free procedures in 2009	Lead-free operating procedures were fully introduced for the products of the Company	Continued to execute the 100% lead-free product procedures
2	Recycled and reused the packaging cartons of products	Recycled and reused the cartons of finished goods	Required suppliers to always recycle packaging cartons to minimize the environmental load and comply with the objective of energy-saving and carbon dioxide reduction	Required suppliers to always recycle
3	Implemented garbage classification and recycling in our plant	Garbage classification	Classification, declaration, and clearing of garbage are completed according to the requirements of the Environmental Protection Administration to align with the policy of energy-saving and carbon dioxide reduction	Continued implementing
4	Checked whether the power circuits were overloaded, added protective tubes forwires,	Improved power use safety and personal safety	Added EMT tubes for power cables to avoid sparks that may result from mouse biting or aging and installed electricity leakage breakers for shower andpantry	Installed electricity leakage breakers and metal EMT tubes to protect power cables

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No.	Objective/target	Plan	Description of current status	Execution
	and installed electricity leakage breakers
5	Reduced the use of wood pallets	Reduced the quantity of wood pallets	Wood pallets may be easily damaged, and the use of wood pallets for in- house product transport is not environmental-friendly	Purchased static plastic pallets to increase the number of repeated use
6	Isolated environmental noises	Reduced noises that discomfort human bodies	The noise pollution of the AC unit exceeded 80dB	Isolated the AC machine room and added soundproof doors and soundproof rock wools
7	Labeled power- use safety areas	Labeled power area warnings	Added warnings for the power use areas to remind persons that entered shall be aware of the power use safety and noiseprevention	Added label warning and relevant preventive equipment

G. Subsequent environmental and labor safety and health management

a. Restriction on hazardous substance (ROHS)

ROHS became formally effective on July 1, 2006; products sold to the EU shall not contain six hazardous substances, including lead, cadmium, mercury, hexavalent chromium, PBB, and PBDE. The Company made active promotion and cooperation and formally commenced its lead-free operations in 2009, and required relevant suppliers to propose products free of hazardous substances that are in compliance with the EU requirements.

b. Promote the recycling and reuse of product cartons

The Company promotes recycling and reuse to reduce the generation of waste and reduce production costs. Apart from garbage classification, the Company also require suppliers to remove product cartons upon intake and bring them back, and use the used cartons for the next intake to achieve the energysaving, carbon dioxide reduction, and environmental protection promoted by the government.

c. Implement automatic check and inspection before starting the operations

When working in different operating environments, employees may have physical injuries due to unsafe environments, equipment, management, and other factors. Therefore, the Company promotes automatic inspection before starting the operations in the hope of discovering potential hazardous factors and controlling and improving hazardous factors.

d. On-site operating environment inspection

To ensure the operating environments of the Company comply with labor safety operating specifications, the Company performed regular tests for CO2, noise, and lighting of operating environments to ensure the operating environments of employees are comfortable and safe; for noise pollution source areas due to the AC unit, it adopted soundproof materials for noise isolation to eliminate noise pollution.

(2) Any losses suffered by the Company in the most recent year and up to the publication date of

the annual report due to labor disputes (including any violations of the Labor Standards Act found in labor inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations and the content of the dispositions), and disclose an estimate of possible expenses that could incur currently and in the future and countermeasures: None.

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(3) Continuing education and training related to corporate governance of managers of the Company:

Continuing education of managers in 2022

Title	Name	Date	Organizer	Course name	Number of hours of continuing education
Manager	Chang Xiao- Ling	2022/11/28~11/29	Accounting Research and Development Foundation	TWSE chief accountant continuing education course (online)	30
Chief auditor	Xu Zheng	2022/09/22	The Institute of Internal Auditors	Risk-oriented internal audit methods and practices	6
Chief auditor	Xu Zheng	2022/11/08	The Institute of Internal Auditors	Audit practices of subsidiaries	6

(4) Acquisition of relevant certificates designated by the competent authority by personnel of the

Company related to financial information transparency:

Proficiency Test for Enterprise Internal Control Basic Ability organized by the SFC and Accounting Research and Development Foundation: Two persons.

6. Cybersecurity management

• (I) Describe the cybersecurity risk management structure, the cybersecurity policy, the specific management plan, and the resources invested in cybersecurity management:

• Cybersecurity risk management structure:

The Company established a dedicated department for information safety in 2022 to be responsible for the formulation of cybersecurity policies, the promotion of cybersecurity measures, and regular examination. The information safety committee has a chief of information safety, who is concurrently the director of the information department, and four members. When any information safety event occurs, they shall contract responsible personnel for operating procedures of relevant departments for crisis management. In addition, the Company has also passed the ISO27001 audit. The audit department also included cybersecurity inspection in the items of the annual audit plan each year.

2. Cybersecurity policy:

The Company’s cybersecurity policy states the requirements, standards, and specifications for cybersecurity management operations, including but not limited to electronic hardware equipment safety management, installation of operating systems and applications, e-mail management and control, network firewall installation, the establishment of Internet use access, wireless network use specifications, anti-virus software installation, access control of system program data, updates

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and maintenance of internal servers, and development of safety monitoring of systems.

1. Substantial management plan:

2. (1) Safety management of electronic hardware equipment:

3. A. Servers and major equipment are placed in the machine room with access control, and only personnel with permission can access them by using cards.

4. B. Install protection software that has automatic updates of virus signatures for computer

   • equipment to ensure it can effectively detect viruses and vicious software and acts.

5. (2) Installation, management, and control of operating systems and applications:

6. A. The using department shall propose a permission application based on the information functions, application system, and programs required. After the application is approved by the director of the department and the director of the information department based on their work duties, information personnel will set its use permission.

7. B. For any personnel change or resignation, the information department will immediately alter its account and use permission to ensure information safety.

8. (3) Internet use authorization:

9. A. Install firewall control and endpoint protection and invasion detection software for the external network to detect and block external invasion and attacks.

10. B. Install attack detection equipment for the internal network to regularly detect anomalies of the internal network and computers.

11. (4) Safety monitoring of the system:

12. A. UPS and voltage stabilizers are installed for the mainframe in the machine room to prevent system damage resulting from a power outage or abnormal power supply.

13. B. Established a remote-backup system; when the local machine room loses its function due to disasters, the recovery plan may be initiated by the remote backup mainframe and storage equipment.

14. C. Reinforced the data backup and recovery system and regularly made schedules for backup storage to enhance the completeness and efficiency of system recovery.

15. Resources for cybersecurity management:

16. (1) The information safety committee regularly examines the internal information safety management and operating status, provides reports and recommendations to the management, and regularly compiles and reports to the Board each year.

17. (2) The audit department also regularly submits cybersecurity audit reports to the Board.

18. (3) All employees had executed the consent for employee information management regulations and completed information safety educational training.

19. (II) List any losses suffered by the Company in the most recent year and up to the publication date of the annual report due to significant cybersecurity incidents, the possible impacts therefrom, and countermeasures: There was no significant cybersecurity incident that occurred to the Company.

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7. Important contracts:

Type of contract	Party	Contract starting and ending date	Main content	Restrictive terms
Long-term borrowings	Yuanta Commercial Bank	2013/10/08~2023/10/07	Loans for the Tainan Office	None
Land lease	Science Park Bureau	2019/08/06~2038/12/31 2007/06/12~2026/12/31	Leasing land with an area of 2,101.05m2 Leasing land with an area of 1,384.65m2	None
Insurance contract	1. Fubon Insurance 2. Nan Shan General Insurance 3. AIG Taiwan 4. Nan Shan General Insurance	2022/10/01~2023/09/30 2022/12/31~2023/12/31 2023/04/01~2024/04/01 2022/10/15~2023/10/15	Liability insurance for Directors, supervisors, and material employees Fire insurance Commercial general liability insurance Transportation cargo open policyinsurance	None

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(VI) Finance overview

1. Condensed balance sheet and statement of consolidated income for the most recent five years

(1) Condensed Consolidated Balance Sheet

(In Thousands of NewTaiwan Dollars)	(In Thousands of NewTaiwan Dollars)	(In Thousands of NewTaiwan Dollars)	(In Thousands of NewTaiwan Dollars)	(In Thousands of NewTaiwan Dollars)	(In Thousands of NewTaiwan Dollars)	(In Thousands of NewTaiwan Dollars)
Year Item	2018	2019	2020	2021	2022	Financial information as of March 31, 2023(Note 1)
Current assets	679,243	734,029	790,673	721,419	802,210	848,123
Property, plant and equipment	205,614	168,742	164,449	155,782	146,206	144,794
Intangible assets	1,162	572	2,072	5,499	8,638	7,785
Other assets	24,427	112,334	114,949	109,623	122,400	126,435
Total Assets	910,446	1,015,677	1,072,143	992,323	1,079,454	1,127,137
Current liabilities Before distribution	104,874	114,724	140,674	106,707	134,582	148,373
After distribution	104,874	155,859	211,595	135,075	Note 2	Not applicable
Non-current liabilities	42,757	91,360	85,871	79,357	92,789	83,623
Total Liabilities Before distribution	147,631	206,084	226,545	186,064	227,371	231,996
After distribution	147,631	247,219	297,466	214,432	Note 2	Not applicable
Equity attributable to owners of theparent company	762,974	809,593	845,598	806,259	852,083	895,141
Capital stock	709,206	709,206	709,206	709,206	709,206	709,206
Capital surplus	49,419	49,626	49,626	48,208	48,208	48,208
Retained earnings Before distribution	6,746	53,661	89,771	51,933	97,455	140,545
After distribution	6,746	12,526	18,850	23,565	Note 2	Not applicable
Other equity	(2,397)	(2,900)	(3,005)	(3,088)	(2,786)	(2,818)
Treasury stock	0	0	0	0	0	0
Non-controlling interests	(159)	0	0	0	0	0
Total equity Before distribution	762,815	809,593	845,598	806,259	852,083	895,141
After distribution	762,815	768,458	774,677	777,891	Note2	Not applicable

Note 1: As of the quarter before the publication date of the annual report, the financial information had been certified and reviewed by CPAs.

Note 2: The proposal for the 2022 earning distribution is to be resolved by the shareholders’ meeting.

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(2) Condense Consolidated Statement of Comprehensive Income

(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Year Item	2018	2019	2020	2021	2022	Financial information as of March 31, 2023
Net revenue	548,039	544,995	598,096	515,510	438,242	152,243
Gross profit	207,710	287,932	333,646	266,319	240,564	94,499
Net operating (loss) profit	(5,713)	56,121	94,784	39,999	14,509	39,134
Non-operating income and expenses	7,581	2,658	(1,128)	(154)	68,894	9,032
Income before income tax	1,868	58,779	93,656	39,845	83,403	48,166
Net income (loss)	957	49,353	78,648	33,026	67,403	43,090
Other comprehensive income, net of income tax (net after tax)	(320)	(565)	(1,508)	(1,444)	6,789	(32)
Total comprehensive income	637	48,788	77,140	31,582	74,192	43,058
Net profits attributable to shareholders of parent company	1,164	49,503	78,648	33,026	67,403	43,090
Net profits attributable to non- controllinginterests	(207)	(150)	0	0	0
Total comprehensive income attributable to shareholders of parent company	841	48,941	77,140	31,582	74,192	43,058
Total comprehensive income attributable to non-controlling interests	(204)	(153)	0	0	0	0
Basic earnings per share	0.02	0.70	1.11	0.47	0.95	0.61

Note 1: As of the quarter before the publication date of the annual report, the financial information had been certified and reviewed by CPAs.

120

(3) Condensed Parent Company Only Balance Sheet

(In Thousands of New Taiwan Dollars)

Year Item	2018	2019	2020	2021	2022	Financial information as of March 31, 2023 (Note 3)
Current assets	671,591	724,426	784,445	715,202	798,472	-
Property, plant and equipment	199,322	163,162	159,406	151,301	142,313	-
Intangible assets	1,161	572	2,072	5,499	8,638	-
Other assets	40,918	122,061	117,866	110,765	121,497	-
Total Assets	912,992	1,010,221	1,063,789	982,767	1,070,920	-
Current liabilities Before distribution	107,261	109,268	132,320	97,151	126,048	-
After distribution	107,261	150,403	203,241	125,519	Note2	-
Non-current liabilities	42,757	91,360	85,871	79,357	92,789	-
Total LiabilitiesBefore distribution	150,018	200,628	218,191	176,508	218,837	-
After distribution	150,018	241,763	289,112	204,876	Note2	-
Capital stock	709,206	709,206	709,206	709,206	709,206	-
Capital surplus	49,419	49,626	49,626	48,208	48,208	-
Retained earnings Before distribution	6,746	53,661	89,771	51,933	97,455	-
After distribution	6,746	12,526	18,850	23,565	Note2	-
Other equity	(2,397)	(2,900)	(3,005)	(3,088)	(2,786)	-
Treasury stock	0	0	0	0	0	-
Total equity Before distribution	762,974	809,593	845,598	806,259	852,083	-
After distribution	762,974	768,458	774,677	777,891	註2	-

Note 1: As of the quarter before the publication date of the annual report, the financial information had been certified and reviewed by CPAs.

Note 2: The proposal for the 2022 earning distribution is to be resolved by the shareholders’ meeting. Note 3: The Company has not issued the parent company only quarterly financial statements as of March 31, 2023.

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(4) Condensed Parent Company Only Statement of Comprehensive Income

(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Year Item	2018	2019	2020	2021	2022	Financial information as of March 31, 2023 (Note 2)
Operating revenue	547,198	544,515	598,175	515,380	438,234	-
Gross profit	205,470	286,106	333,802	265,658	235,360	-
Net operating (loss) profit	(4,901)	60,539	101,343	41,743	16,850	-
Non-operating income and expenses	6,976	(1,610)	(7,687)	(1,898)	66,553	-
Net profit (loss) before tax	2,075	58,929	93,656	39,845	83,403	-
Net income (loss)	1,164	49,503	78,648	33,026	67,403	-
Other comprehensive income (net after taxes)	(323)	(562)	(1,508)	(1,444)	6,789	-
Total comprehensive income	841	48,941	77,140	31,582	74,192	-
Basic earnings per share	0.02	0.70	1.11	0.47	0.95	-

Note 1: As of the quarter before the publication date of the annual report, the financial information had been certified and reviewed by CPAs. Note 2: The Company has not issued the parent company only quarterly financial statements as of March 31, 2023.

(5) Names and opinions of CPAs for the most recent five years

Year	CPA firm	CPA name	CPA name	Audit opinion
2018	Deloitte & Touche Taiwan	Lin Zheng-Zhi	Huang Yu-Feng	Unqualified opinion
2019	Deloitte & Touche Taiwan	Lin Zheng-Zhi	Huang Yu-Feng	Unqualified opinion
2020	Deloitte & Touche Taiwan	Lin Zheng-Zhi	Huang Yu-Feng	Unqualified opinion
2021	Deloitte & Touche Taiwan	Tseng Jian-Ming	Huang Yu-Feng	Unqualified opinion
2022	Deloitte & Touche Taiwan	Huang Yu-Feng	Tseng Jian-Ming	Unqualified opinion

(6) Description of the reason for the replacement of CPAs in the most recent five years:

In 2021 Q4, due to the internal CPA rotation of Deloitte & Touche Taiwan, our CPAs were replaced.

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2. Financial analysis for the most recent five years

(1) Financial analysis - IFRS

Year (Note 1) Analysis item (Note 3)	Year (Note 1) Analysis item (Note 3)	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Current year as of March 31, 2023 (Note 2)
		2022	2021	2020	2019	2018
Financial structure(%)	Debt to assets ratio	21.06	18.75	21.13	20.29	16.22	20.58
	Ratio of long-term capital to property, plant, and equipment	646.26	568.50	566.42	533.92	391.79	675.97
Solvency	Current ratio	596.08	676.07	562.06	639.82	647.68	571.62
	Quick ratio	361.34	388.17	332.26	383.24	397.69	352.50
	Interests coverage multiplier (times)	67.83	30.80	69.56	45.53	6.40	143.08
Operating performance	Accounts receivable turnover rate(times)	5.10	2.75	3.93	4.52	3.26	1.98
	Average collection days	72	133	93	81	112	46
	Inventory turnover rate (times)	0.65	0.85	0.93	0.98	1.55	0.18
	Accounts payable turnover rate(times)	5.27	5.04	5.74	5.30	5.33	1.44
	Average sales days	562	429	392	372	236	507
	Property, plant and equipment turnover rate (times)	2.90	3.22	3.59	2.91	2.62	1.05
	Total assets turnover rate (times)	0.42	0.50	0.57	0.57	0.59	0.14
Profitability	Return on assets (%)	6.60	3.30	7.64	5.24	0.13	3.93
	Return on equity (%)	8.13	4.00	9.50	6.28	0.12	4.93
	Ratio of net profit before tax to paid-in capital (%) (Note 7)	11.76	5.62	13.21	8.29	0.26	5.52
	Net margin (%)	15.38	6.41	13.15	9.06	0.17	28.30
	Earnings per share (NT$)	0.95	0.47	1.11	0.70	0.02	0.61
Cash flow	Cash flow ratio (%)	228.84	90.50	-13.57	-8.58	-82.60	-22.91
	Cash flow adequacy ratio (%)	90.00	-18.68	-14.46	-51.39	-25.64	135.74
	Cash flow reinvestment ratio (%)	28.84	2.84	-6.46	-1.07	-10.49	-3.39
Leverage	Operating leverage	14.37	6.03	3.07	4.27	-31.55	-1.82
	Financial leverage	1.09	1.03	1.01	1.02	0.94	1.01
Reasons for th 1、 Decreas 2、 Decreas 3、 Increase 4、 Increase	e changes in the financial ratios reaching 20% or above in the most recent two years are described as follows: e in solvency: Primarily due to the decrease in net profit before tax. e in operating performance: Primarily due to the decrease in net sales. in profitability: Primarily due to the increase in net income. in cash flow: Primarily due to the recovery of accounts receivables due during the period.

Note 1: Years not audited or certified by CPAs shall be specified.

• Note 2: Companies with shares listed on TWSE or TPEx; the financial information of the current year as of Q1 before the publication date of the annual report shall be included in the analysis.

• Note 3: At the end of the table of the annual report, the following calculation formulas shall be presented: 1. Financial structure

• (1) Debt-to-asset ratio = Total liabilities / Total assets

• (2) Long-term fund to property, plant and equipment ratio = (Shareholders’ equity + non-current liabilities) / Net property, plant and equipment

• Solvency

• (1) Current ratio = current assets/current liabilities

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• (2) Quick ratio = (Current assets - inventory - prepayments)/current liabilities.

• (3) Interests coverage multiplier = income before income tax and interest expense/interest expense for the period

• Operating performance

• (1) Receivables (including accounts receivable and notes receivable due to business operation) turnover = Net sales / the balance of average receivables of different periods (including accounts receivable and notes receivable due to business operation)

• (2) Average collection days = 365 / Receivable turnover ratio

• (3) Average inventory turnover = Cost of goods sold / average inventory

• (4) Payables (including accounts payables and notes payable due to business operation) turnover = Cost of goods sold / the balance of average payables of different periods (including accounts payables and notes payable due to business operation)

• (5) Average sales days = 365/inventory turnover rate

• (6) Property, plant, and equipment turnover = Net sales/average property, plant, and equipment.

• (7) Total assets turnover rate = net sales/average total assets

• Profitability analysis

• (1) Return on total assets = [Net income + Interest expenses x (1 – tax rate)] / Average total assets

• (2) Return on equity = net profits after tax/average total equity

• (3) Net profit margin = net profits after tax/net sales

• (4) Earnings per share = (Profit or loss attributable to owners of the parent - preferred stock dividend)/weighted average number of issued shares. (Note 4)

• Cash flow

• (1) Cash flow ratio = Net cash provided by operating activities / Current Liabilities

• (2) Cash flow adequacy ratio = sum of net cash flow from operating activities for the most recent 5 years / sum of capital expenditures, inventory additions, and cash dividend for the most recent 5 years.

• (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividend) / (gross property, plant, and equipment + long-term investment + other non-current assets + working capitals). (Note 5)

• Leverage:

• (1) Operating leverage = (Net revenue - variable cost of revenue and expenses)/operating gains (Note 6).

• (2) Financial leverage = operating profits / (operating profits - interest expense).

• Note 4: Regarding the calculation formula for earnings per share above, please be aware of the following matters upon measurement:

• Adopt the weighted average number of ordinary shares as the basis instead of the number of issued shares at the end of the year.

• If there is any capital increase in cash or treasury share transactions, the circulation period shall be considered when calculating the weighted average number of shares.

• If there is any capital increase from earnings or capital increase from the capital reserve, when calculating the earnings per share for prior years and the interim period, retrospective adjustments shall be made based on the ratio of capital increase without considering the issuance period of the capital increase.

• If preferred shares are non-convertible cumulative preferred shares, their dividend of the year (whether distributed or not) shall be deducted from net income, or net loss after tax shall be increased. If preferred shares are not cumulative, in the case of having a net income, dividends of preferred shares shall be deducted from net income; if losses are recorded, no adjustment is required.

• Note 5: Please be aware of the following matters for the measurement of cash flow analysis:

• Net cash flow from operating income refers to the net cash inflow from operating income in the statement of cash flow.

• Capital expenditures refer to cash outflow from investments.

• The increase in inventory is only included when the closing balance is higher than the opening balance; if inventory decreases at the end of the year, calculate it as 0.

• Cash dividends include cash dividends of ordinary shares and preferred shares.

• Gross amount of property, plant and equipment refers to total property, plant and equipment before deducting accumulated depreciation.

• Note 6: Issuers shall distinguish cost of revenue and operating expenses into fixed and variant based on nature; if any estimate or subjective judgment is involved, please be aware of the rationale and maintain consistency.

• Note 7: If shares of the Company have no par value or the par value is not NT$10, the calculation of the abovementioned ratio to paid-in capital shall be calculated based on equity attributable to owners of the parent company in the balance sheet.

124

(2) Individual Financial Analysis - International Financial Reporting Standards

Year (Note 1) Analysis item (Note 3)	Year (Note 1) Analysis item (Note 3)	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Financial analysisfor themost recentfive years	Current year as of March 31, 2023 (Note 2)
		2022	2021	2020	2019	2018
Financial structure(%)	Debt to assets ratio	20.43	17.96	20.51	19.86	16.43	Not applicable
	Ratio of long-term capital to property, plant, and equipment	663.94	585.33	584.34	552.18	404.24
Solvency	Current ratio	633.47	736.18	592.84	662.98	626.13
	Quick ratio	381.25	419.99	349.12	395.35	384.18
	Interests coverage multiplier (times)	68.92	31.46	70.48	56.54	7.53
Operating performanc e	Accounts receivable turnover rate(times)	5.12	2.76	3.94	4.52	3.25
	Average collection days	71	132	93	81	112
	Inventory turnover rate (times)	0.67	0.85	0.94	1.00	1.56
	Accounts payable turnover rate (times)	5.45	5.08	5.81	5.42	5.38
	Average sales days	545	429	389	367	234
	Property, plant and equipment turnover rate (times)	2.99	3.32	3.71	3.00	2.70
	Total assets turnover rate (times)	0.43	0.50	0.58	0.57	0.59
Profitability	Return on assets (%)	6.66	3.33	7.69	5.24	0.15
	Return on equity (%)	8.13	4.00	9.5	6.30	0.15
	Ratio of net profit before tax to paid-in capital (%) (Note 7)	11.76	5.62	13.21	8.31	0.29
	Net margin (%)	15.38	6.41	13.15	9.09	0.21
	Earnings per share (NT$)	0.95	0.47	1.11	0.70	0.02
Cash flow	Cash flow ratio (%)	245.06	98.76	-10.93	-9.71	-77.41
	Cash flow adequacy ratio (%)	93.51	-14.12	-10.53	-54.70	-13.01
	Cash flow reinvestment ratio (%)	29.34	2.97	-6.04	-1.18	-10.23
Leverage	Operating leverage	12.34	5.77	2.94	4.23	-34.10
	Financial leverage	1.08	1.03	1.01	1.02	0.94
Reasons for the changes in the financial ratios reaching 20% or above in the most recent two years are described as follows: 1、 Solvency: The increase in the interest coverage multiplier was primarily due to the decrease in interest. 2、 Decrease in operating performance: Primarily due to the decrease in net sales. 3、 Increase in profitability: Primarily due to the increase in net profit (before tax) after tax of the period. 4、 Increase in cash flow: Primarily due to the increase in the net cash inflow of operating activities.

Note 1: Years not audited or certified by CPAs shall be specified.

• Note 2: The Company has not issued the parent company only quarterly financial statements as of March 31, 2023.

Note 3: At the end of the table of the annual report, the following calculation formulas shall be presented:

1. Financial structure

2. (1) Debt-to-asset ratio = Total liabilities / Total assets

3. (2) Long-term fund to property, plant and equipment ratio = (Shareholders’ equity + non-current liabilities) / Net property, plant and equipment

4. Solvency

5. (1) Current ratio = current assets/current liabilities

6. (2) Quick ratio = (Current assets - inventory - prepayments)/current liabilities.

7. (3) Interests coverage multiplier = income before income tax and interest expense/interest expense for the period

8. Operating performance

9. (1) Receivables (including accounts receivable and notes receivable due to business operation) turnover =

125

Net sales / the balance of average receivables of different periods (including accounts receivable and notes receivable due to business operation)

• (2) Average collection days = 365 / Receivable turnover ratio

• (3) Average inventory turnover = Cost of goods sold / average inventory

• (4) Payables (including accounts payables and notes payable due to business operation) turnover = Cost of goods sold / the balance of average payables of different periods (including accounts payables and notes payable due to business operation)

• (5) Average sales days = 365/inventory turnover rate

• (6) Property, plant, and equipment turnover = Net sales/average property, plant, and equipment.

• (7) Total assets turnover rate = net sales/average total assets

• Profitability analysis

• (1) Return on total assets = [Net income + Interest expenses x (1 – tax rate)] / Average total assets

• (2) Return on equity = net profits after tax/average total equity

• (3) Net profit margin = net profits after tax/net sales

• (4) Earnings per share = (Profit or loss attributable to owners of the parent - preferred stock dividend)/weighted average number of issued shares. (Note 4)

• Cash flow

• (1) Cash flow ratio = Net cash provided by operating activities / Current Liabilities

• (2) Cash flow adequacy ratio = sum of net cash flow from operating activities for the most recent 5 years / sum of capital expenditures, inventory additions, and cash dividend for the most recent 5 years.

• (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividend) / (gross property, plant, and equipment + long-term investment + other non-current assets + working capitals). (Note 5)

• Leverage:

• (1) Operating leverage = (Net revenue - variable cost of revenue and expenses)/operating gains (Note 6).

• (2) Financial leverage = operating profits / (operating profits - interest expense).

• Note 4: Regarding the calculation formula for earnings per share above, please be aware of the following matters upon measurement:

• Adopt the weighted average number of ordinary shares as the basis instead of the number of issued shares at the end of the year.

• If there is any capital increase in cash or treasury share transactions, the circulation period shall be considered when calculating the weighted average number of shares.

• If there is any capital increase from earnings or capital increase from the capital reserve, when calculating the earnings per share for prior years and the interim period, retrospective adjustments shall be made based on the ratio of capital increase without considering the issuance period of the capital increase.

• If preferred shares are non-convertible cumulative preferred shares, their dividend of the year (whether distributed or not) shall be deducted from net income, or net loss after tax shall be increased. If preferred shares are not cumulative, in the case of having a net income, dividends of preferred shares shall be deducted from net income; if losses are recorded, no adjustment is required.

• Note 5: Please be aware of the following matters for the measurement of cash flow analysis:

• Net cash flow from operating income refers to the net cash inflow from operating income in the statement of cash flow.

• Capital expenditures refer to cash outflow from investments.

• The increase in inventory is only included when the closing balance is higher than the opening balance; if inventory decreases at the end of the year, calculate it as 0.

• Cash dividends include cash dividends of ordinary shares and preferred shares.

• Gross amount of property, plant and equipment refers to total property, plant and equipment before deducting accumulated depreciation.

• Note 6: Issuers shall distinguish cost of revenue and operating expenses into fixed and variant based on nature; if any estimate or subjective judgment is involved, please be aware of the rationale and maintain consistency.

• Note 7: If shares of the Company have no par value or the par value is not NT$10, the calculation of the abovementioned ratio to paid-in capital shall be calculated based on equity attributable to owners of the parent company in the balance sheet.

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3. Audit Committee's Review Report of the financial statements of the most recent year:

Audit Committee’s Review Report

The Board has prepared the 2022 business report, financial statements (including consolidated financial statements), and the Table of Earning Distribution, in which Deloitte & Touche Taiwan, engaged by the Board, has audited the financial statements and issued an auditor’s report.

We have reviewed the abovementioned books and statements and consider that they comply with the requirements of the Company Act and relevant laws and regulations; therefore, we issue the review report as above according to the requirements under Article 219 of the Company Act.

Submitted for examination Sincerely,

The 2023 annual shareholders’ meeting of Loop Telecommunication International, Inc.

Convener of the Audit Committee: Ko Shu-Mei

March 28, 2023

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4. Financial statements of the most recent year: Please refer to page 153 of the annual report.

5. Parent company only financial statements of the most recent year audited and certified by

CPAs: Please refer to page 220 of the annual report.

6. KPIs of the Company:

(1) Financial indicator

Meaning: The control of the Company’s operating performance, financial structure, and profitability

profitability
Percentage	Formula	Objective	2021	2022
Revenue - EPS (earnings per share)	Net income/weighted average number of issued shares	>1	0.47	0.95
Net profit margin (NP %)	Net profits after tax/net sales	>10%	6.41%	15.38%
Liability ratio	Total liabilities/total assets	<23%	18.75%	21.06%
Current ratio	Current assets/current liabilities	>225%	676.07	596.08
Inventory turnover	Cost of goods sold/average inventory	>3	0.85	0.65

(2). Performance indicator

Meaning: Expense control regarding personnel of Sales, R&D, and Production departments and profit creation

	profit creation
Departmen t	Percentage	Formula	Objective	2021	2022
Sales Departmen t	(SP/Sales Expense) Level of contribution of sales personnel	Net profit of sales/sales expenses	>3.5	7.39	15.02
Sales Departmen t	(Revenue/Sales Expense)	Revenue/sales expenses	>10	11.54	9.76
R&D Departmen t	Resource Utilization Rate	Baseline*Complete% / Working Hours (in pass 12 month)	>80%	72%	75%
R&D Departmen t	(ECR/(Lab) man-month)	(ECR/(Lab) man- month)	<0.5	1.95	2.25
Production Departmen t	Annual increase/decrease rate of idle stock	Comparison of the amount in the same period of twoyears	<Revenue0.5%	0.30%	0.87%

7. If the Company and its affiliates have experienced financial difficulties in the most recent year

and up to the date of publication of the annual report, explain how said difficulties affect the Company's financial conditions: None.

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(VII) Review and analysis of financial condition and financial performance and risk management

1. Financial position:

			(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Year Item	2021	2022	Difference
			Amount	Increase/decrease ratio(%)
Current assets	721,419	802,210	80,791	11%
Fixed assets	155,782	146,206	-9,576	-6%
Other assets	115,122	131,038	15,916	14%
Total Assets	992,323	1,079,454	87,131	9%
Current liabilities	106,707	134,582	27,875	26%
Long-term liabilities	79,357	92,789	13,432	17%
Total Liabilities	186,064	227,371	41,307	22%
Capital stock	709,206	709,206	0	0%
Capital surplus	48,208	48,208	0	0%
Retained earnings	51,933	97,455	45,522	88%
Total shareholders’ equity	806,259	852,083	45,824	6%
Analysis of changes exceeding 20%: 1. The increase in current liabilities was primarily due to the increase in other payables and other current liabilities during the period. 2. The increase in retained earnings was primarily due to the net profits in2022. Effects of changes in the financial position in the most recent two years: There was no material effect on the financial position. Future response plan: Not applicable.

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2. Financial performance:

(In Thousands of New Taiwan Dollars)

Year Item Total net revenue Net revenue Operating cost Operating gross profit Operating expenses Operating profit Non-operating income and gains Non-operating expenses and losses Gains before tax Income tax gains (expenses) Net profit (loss)	2021	2021	2021	2022	2022	2022	Amount increased (decreased)	increase/decrease (%)	Analysis of change
	$515,510 515,510 249,191 266,319 226,320 39,999 6,095 (6,249) 39,845 (6,819) $33,026			$438,242 438,242 197,678 240,564 226,055 14,509 73,888 (4,994) 83,403 (16,000) $67,403			-77,268 -77,268 -51,513 -25,755 -265 -25,490 67,793 1,255 43,558 -9,181 34,377	-15% -15% -21% -10% 0% -64% 1112% -20% 109% 135% 104%	1 1 2 3 2
		39,999 6,095 (6,249) 39,845 (6,819) $33,026	39,999 6,095 (6,249)		14,509 73,888 (4,994) 83,403 (16,000)	14,509 73,888 (4,994)
			39,845 (6,819)
					$67,403
Analysis of changes exceeding 20%: 1. The decrease in cost of revenue and operating gains was primarily due to the decrease in net revenue of the year. 2. The increase in non-operating income and gains and net profit was primarily due to the increase in trademark licensing income. 3. The decrease in non-operating expenses and losses was primarily due to the decrease in net currency exchange losses. Effects of changes in the financial position in the most recent two years: There was no material effect on financial performance. Future response plan: Make adjustments according to operating strategies and solidify key products for active arrangements; meanwhile, continue to improve the management and actively improve and stabilize the financial structure in the hope of improvingthe operations.

3. Cash flow analysis:

(In Thousands of New Taiwan Dollars) Opening cash balance Net cash flow from operating and investing activities throughout the year Cash outflow from financing activities throughout theyear Cash residual amount Effects on changes in exchange rates Remedy for estimated cash deficit Investment plan Financing plan 119,623 250,572 (33,048) 361,283 24,136 None None 1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.	(In Thousands of New Taiwan Dollars) Opening cash balance Net cash flow from operating and investing activities throughout the year Cash outflow from financing activities throughout theyear Cash residual amount Effects on changes in exchange rates Remedy for estimated cash deficit Investment plan Financing plan 119,623 250,572 (33,048) 361,283 24,136 None None 1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.	(In Thousands of New Taiwan Dollars) Opening cash balance Net cash flow from operating and investing activities throughout the year Cash outflow from financing activities throughout theyear Cash residual amount Effects on changes in exchange rates Remedy for estimated cash deficit Investment plan Financing plan 119,623 250,572 (33,048) 361,283 24,136 None None 1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.	(In Thousands of New Taiwan Dollars) Opening cash balance Net cash flow from operating and investing activities throughout the year Cash outflow from financing activities throughout theyear Cash residual amount Effects on changes in exchange rates Remedy for estimated cash deficit Investment plan Financing plan 119,623 250,572 (33,048) 361,283 24,136 None None 1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.	(In Thousands of New Taiwan Dollars) Opening cash balance Net cash flow from operating and investing activities throughout the year Cash outflow from financing activities throughout theyear Cash residual amount Effects on changes in exchange rates Remedy for estimated cash deficit Investment plan Financing plan 119,623 250,572 (33,048) 361,283 24,136 None None 1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.	(In Thousands of New Taiwan Dollars) Opening cash balance Net cash flow from operating and investing activities throughout the year Cash outflow from financing activities throughout theyear Cash residual amount Effects on changes in exchange rates Remedy for estimated cash deficit Investment plan Financing plan 119,623 250,572 (33,048) 361,283 24,136 None None 1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.	(In Thousands of New Taiwan Dollars) Opening cash balance Net cash flow from operating and investing activities throughout the year Cash outflow from financing activities throughout theyear Cash residual amount Effects on changes in exchange rates Remedy for estimated cash deficit Investment plan Financing plan 119,623 250,572 (33,048) 361,283 24,136 None None 1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.
Opening cash balance	Net cash flow from operating and investing activities throughout the year	Cash outflow from financing activities throughout theyear	Cash residual amount	Effects on changes in exchange rates	Remedy for estimated cash deficit
					Investment plan	Financing plan
119,623	250,572	(33,048)	361,283	24,136	None	None
1. Analysis of changes in cash flows during the year: Cash inflow from operating income: Primarily due to the receipt of accounts receivable. Cash outflow from investing activities: Primarily due to the acquisition of financial assets at fair value through profit or loss. Cash outflow from financing activities: Primarily due to the distribution of cash dividends. 2. Improvement plan for insufficient liquidity and liquidity analysis: There is no insufficient cash liquidity. 3. Remedial measures for cash deficiency and liquidity analysis: None.

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4. Effect of major capital expenditures on finance and business in the most recent year: None.

5. Investment policy for the most recent year, the main reasons for profit or loss, improvement

plan, and investment plan for the coming year:

Description	Investment policy	Main reasons for gains or losses	Improvement plan	Investment gains or losses recognized during the period (NT$thousand)	Other future investment plans
Tianjin Loop	Develop and provide service for Mainland China	Losses arising from the discontinued operations	Pending the disposal of properties	$877	None
Tianjin Hutong	Develop and provide service for Mainland China	Operating income failed to achieve the expectations	Continue to explore new customers in Mainland China	($2,366)	None
Chongqing Cantong	Develop LOOP- iNET (smart network equipment management system)	Operating income failed to achieve the expectations	Adjustments will be made to product strategies in due course according to the overall trends of the market	($1,852)	None

6. Analysis and evaluation of risks shall be performed for the following matters in the most recent

year and up to the publication date of the annual report:

• (1) Effects of changes in interest rates and exchange rates and inflation on the Company’s

profit or loss and future countermeasures

• A. Effects on the Company’s profit or loss:

2022 (NT$ thousand; %) Item 3,940 Net interest income and expenses 32,598 Net exchange profit 0.899% Ratio of net interest income and expenses to net revenue 4.724% Ratio of net interest income and expenses to net profit before tax 7.438% Ratio of net exchange profit to net revenue 39.085% Ratio of net exchange profit to net profit before tax

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a. Changes in interest rates

Financial assets and financial liabilities with cash flow risks due to changes in interest rates in 2022 were NT$106,119 thousand and NT$1,936 thousand. If changes in market interest rates will result in changes in the effective interest rates of such financial products, assuming that the market interest rates increase by 0.1%, the net profit before tax of the Company increases by NT$104 thousand.

b. Changes in exchange rates

The Company has import/export business and capital transactions denominated in foreign currencies. Changes in exchange rates primarily affect the costs of sales and income. In 2022, derivatives (forward exchange agreements) with risks due to changes in exchange rates were US$0 thousand. If changes in market exchange rates will result in changes in the fair value of such financial products, when NTD depreciates by 1% against foreign currencies, the net profit before tax of the Company in 2022 will decrease by NT$3,300 thousand.

3. Inflation

There is no effect caused by inflation.

B. Future countermeasures:

a. Countermeasures for changes in interest rates

The Company has a stable financial structure and favorable credit standing. If there is a demand for capital accommodation, it can obtain capital with reasonable costs from banks or the capital market. For interest rates of bank borrowings, the Company maintains close contact with banks to understand the trending of interest rates to serve as a reference to secure the most favorable borrowing and asset allocation. The main terms of mid-to-long-term working capital are described as follows:

Loan item	Loan A				Loan B
Content	Long-term secured borrowings	Guarantees receivable (letter of credit for developmentguarantees)	Case A - Comprehensive loans - 1	Case B - Comprehensive loans - 2	Comprehensive bank loans
Limit	NT$21.4 million	US$ (or other equivalent foreign currencies) 1 million	NT$80 million	NT$72 million	NT$40 million
Criteria	Fixed savings interest rate index + interest at the variable rate of 0.73%		NTD”Fixed savings interest rate index + interest at the variable rate of 0.93% USD: LIBOR on the same date/period + 1% and divided by 0.946 (at present, interest per annum is 1.3319%) for the fixed interest	Fixed savings interest rate index + interest at the variable rate of 0.93%	NTD: Basic NTD loan interest rate + 1.675% USD: Basic USD loan interest rate + 0.875%; however, it shall not be lower than the three- month or six-month TAIFX + 1%/0.946
Period	10 years	1 year	1 year	1 year	1 year (2022/7/19- 2023/7/18)
Settlement deadline	October 7, 2023	US$410,000, with the expiry of the guarantee on June 30,2023
Drawdown period	Initial drawdown on October 8, 2013				(2022/7/19-2023/7/18)
Unused balance					NT$39,000,000
Remarks	Using 10F and 11F, No.88, Zhongshan Road, West Central District, Tainan City, as collateral.	Deposit certificate	Plant on Xin’an Rd., Hsinchu City	Using the plant on Ruiguang Rd., Taipei and equipment as collateral.

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b. Countermeasures for changes in exchange rates

The Company and abundant working capital and has relatively better flexibility to respond to the risk of changes in interest rates in financial operations. For changes in exchange rates, the Company has established a risk assessment team. Our purchases are primarily denominated in USD, which is offset by regular purchase and sales payments. The Company offsets the exchange rate fluctuations of different currencies to achieve a certain level of natural hedging effects from changes in exchange rates. Apart from partial dynamic and natural hedging, the Company sells the remaining currencies by selecting better timing to avoid risks of changes in exchange rates. The Company and customers have reached a consensus for the handling principles; if the appreciation/depreciation of the exchange rate exceeds a certain level, it will be reflected immediately on the quotation.

3. Countermeasures for inflation

The selling price of products and the purchasing price of raw materials are determined based on the pricing strategies and the supply/demand status in the market. With the increase in the market supply and the intense market competition, the price showed a dropping trend; therefore, there was no effect of inflation in the most recent two years. Regarding the effects of inflation, the industry the Company is in is estimated to have no inflation; however, the Company keeps abreast of price volatility rates in relevant markets and will horizontally adjust product quotations based on the prices or execute cost control plans in due course.

(2) Policies regarding high-risk investments, high-leverage investments, loans to others,

endorsement/guarantees, and derivative transactions, and main reasons for gains or losses, and countermeasures in the future:

To manage financial risks, the Company had not engaged in any high-risk/high-leverage financial investment from the beginning of 2022 to the publication date of the annual report. To control certain risks, the Company has established its internal management regulations and procedures based on the optimization of finance and operations according to relevant laws and regulations and requirements of the SFC. Such management regulations include “Procedures for Derivative Transactions,” “Procedures for Loans to Others,” “Procedures for Acquisitions or Disposals of Assets,” and “Procedures for Endorsements and Guarantees.” In addition, forward exchange agreements of the Company are for hedging purposes instead of transaction or speculative operations.

(3) Future R&D plan and R&D expenses expected to be invested:

A. Future R&D plan: Please refer to pages 91-98 of the annual report.

B. Current progress of uncompleted R&D plans and R&D expenses required to be invested :

Please refer to pages 99 of the annual report.

(4) Effect of changes in domestic and foreign policies and laws of significance on the finance

and business of the Company and countermeasures:

The management team has been keeping abreast of policies and laws, and regulations that may affect the business and operations of the Company. In 2022, changes in relevant laws and regulations had no material effect on the Company’s operations.

(5) Effect of changes in technologies and industry on the finance and business matters of the

Company, and countermeasures:

In 2022, 80% of our revenue was from 13% of countries having dealings with us. Among all 32 product lines, 80% of the revenue was from 10% of the sales products. There are 52 countries

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having business dealings with the Company worldwide. Our export sales accounted for approximately 70% of the revenue throughout the year. In particular, we recorded growth in America, the EU, and Southeast Asia. For the market in Taiwan, the project has proceed to the next stage, and there has been a slight decrease for the Indian market. In terms of industry, electricity and governmental agencies account for 70% of our total revenue, and transportation and private corporate markets account for approximately 15%. With the stabilization of the outbreak, it is likely to maintain the growth in the European and American region as in prior years, and the market in Southeast Asia also recovered. We continued to develop emerging markets to flexibly satisfy customers’ requirements. Loop Telecommunication has long been cooperating with large-scale international SI companies to develop markets, which is deemed as the market driver under the trend of the new norms.

The Company regularly carries out market demand forecasts for its products and services. The demand forecast will be adjusted based on the dynamic changes in the market environment. In addition, the Company will continue to observe the changes in the market and closely work with customers. If the market demand is less favorable than expected, the Company will adjust its production capacity plan in due course to minimize the negative effects on the financial performance of the Company. The Company established a dedicated department for information safety in 2022 to be responsible for the formulation of cybersecurity policies, the promotion of cybersecurity measures, and regular examination. The information safety committee has a chief of information safety, who is concurrently the director of the information department, and four members. When any information safety event occurs, they shall contract responsible personnel for operating procedures of relevant departments for crisis management.

• (6) Effects of changes in the corporate image on crisis management of the enterprise and

countermeasures: As of the end of 2022, there were no such circumstances.

• (7) Expected benefits of M&As, possible risks, and countermeasures: As of the end of 2022, there were no such circumstances.

• (8) Expected benefits of the expansion of plants, possible risks, and countermeasures: As of the end of 2022, there were no such circumstances.

(9) Risks related to concentrated sales or purchases and countermeasures:

The Company purchases raw materials from different suppliers as much as possible to ensure there is sufficient raw material supply for mass production and minimize the risk of centralized procurement. Even though the company acquires partial raw materials from a single supplier, it continuously seeks other purchase methods to minimize the risk of centralized procurement. In 2022, the top 10 customers of sales accounted for 79.16% of the Company’s revenue. As the Company focuses on communication transmission equipment manufacturing and services, partial customers account for a significant ratio of its sales income, which is a characteristic of the industry.

(10) Effects and risk of mass transfer or change in the equity held by Directors or major shareholders with a shareholding over 10% of the Company, and countermeasures

The Company generally has close contact with major shareholders for them to release their shares by adopting methods having the least possible negative impacts on the stock price of the Company and other shareholders.

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• (11) Effects of changes in management rights on the Company, risks, and countermeasures: None.

• (12) Litigious and non-litigious matters. List major litigious, non-litigious or administrative disputes that involve the Company and its Directors, President, persons with actual responsibility for the Company, major shareholders holding a stake of greater than 10%, and subsidiaries that have been concluded by means of a final and unappealable judgment, or are still under litigation. Where such a dispute could materially affect shareholders' equity or the prices of the Company's securities, disclose the facts of the dispute, the amount of money at stake in the dispute, the date of litigation commencement, the main parties involved in the dispute, and the status of the dispute as of the publication date of the annual report: None.

(13) Other important risks and countermeasures: None.

7. Risk management structure:

(1) Risk management structure and operation

A. The Company has enhanced its corporate risk management, including risk detection, assessment, reporting, and handling, based on the latest development of internal audit requirements of the standards by adopting a cautious and stringent attitude. Risk control of the Company is divided into three levels (systems): The organizer or the undertaker is the “first system,” it shall be responsible for the initial risk detection, assessment, consideration and design of the control and prevention. The second system is the review committee hosted by the President (or Vice President); it is responsible for feasibility evaluation and assessment of risks. The third system is the review of the Legal Affairs Office and Audit Office and review and discussion by Directors and supervisors. The Company has no chief risk officer, and the purpose is to allow all employees to fully exert risk control. Hierarchical prevention measures are adopted instead of being controlled by one person, which is the method to implement risk control. As shown in the following table. B. For material risk assessment matters of the Company, if it is a matter of implementation that the review and discussion of the second and the third systems are not required, a meeting shall be held with the Audit Office to detect risks, make assessments, and provide preventive recommendations. If there are any imminent, possible risks detected, employees may also report to their superiors for due prevention. For significant matters (i.e., investment and wealth management and construction tender), review meetings or tender monitoring will be performed for each proposal, and regular audits will be implemented.

(2). Organizational chart of risks management

Significant risk assessment matters	Direct department for risk control (Business organizer) (first system)	Risk discussion/review and control (second system)	Board meetings, supervisor meetings, and Audit Office (third system)
I. Interest rate, exchange rate, and financial risks II. High-risk and high-leverage investments, loans to others, derivative transactions, and wealth management and investments	Department of Finance Department of Finance	Wealth management and investment review team	Board meeting and supervisor meeting: (decision-making of risk assessment and control and final control)

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Significant risk assessment matters	Direct department for risk control (Business organizer) (first system)	Risk discussion/review and control (second system)	Board meetings, supervisor meetings, and Audit Office (third system)
III. R&D plan IV. Changes in policies and laws V. Changes in technologies and industry VI. Changes in corporate image VII. Benefits of investments and M&As	R&D Department Management Department Market system Market system Management Department	MSRD meeting (member: directors of different departments)
VIII. Expansion of plants or production IX. Concentrated purchase or sales	Management Department and Production Department Procurement Department and Management Department	Production and marketing meeting	Audit Office: (risk inspection, assessment, supervision, improvement follow- up, and reporting)
X. Changes in equity of Directors, supervisors, and major shareholders XI. Changes in management rights	Stock affairs and the Board Stock affairs and the Board	Management Department meeting
XII. Litigious and non-litigious matters XIII. Other operating matters	Management Department Management Department
XIV. Employee’s conduct, ethics, and integrity	Directors of different levels and the Administration Section	Management Department meeting
XV. Compliance with SOP and regulations	Directors of different levels	Audit Office
XVI. Management of procedures of the Board	Board’s Office	Audit Office

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(VIII) Special Items

1. Information on affiliates:

(1) Name and organizational chart of affiliates

As of the end of 2022, the investment relationships and shareholding ratio of the Company and its subsidiaries are set out in the following figure:

==> picture [489 x 260] intentionally omitted <==

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

Loop Telecommunication
International, Inc.
100% 100%
Tech-Plan (BVI) Ltd. Loop Telecom NA, Inc.
100% 100%
Maxi View Holdings Ltd.
Loop Telecommunication
100% 100% 100%
Tianjin Loop Tianjin Loop Chongqing Loop
Technology Electron Technology Co.,
Co.,Ltd. Technology Co., Ltd.
----- End of picture text -----

137

December 31, 2022

(2) Basic information on affiliates:

				December 31,2022
Company name	Establishment Date	Address	Paid-in capital	Paid-in capital
1.Tech-Plan (BVI) Ltd. 2. Maxi View Holdings Ltd. 3.Loop Telecommunication International Ltd. 4. Tianjin Loop Electron Technology Co., Ltd. Chongqing Loop Technology Co., Ltd. 6. Tianjin Loop Technology Co.,Ltd. 7.Loop Telecom NA, Inc	1998.08.12 1998.11.16 2002.06.20 2001.10.30 2002.06.25 2015.10.14 2018.01.23	Portcullis Chambers, 4th Floor, Ellen Skelton Building, 3076 Sir Francis Drake Highway, Road Town, Tortola VG1110, VIRGIN ISLANDS, BRITISH 15/F BOC GROUP LIFE ASSURANCE TOWER 136 DES VOEUX ROAD CENTRAL CENTRAL HK P.O. BOX 32052 Grand Cayman KYI-1208,Cayman Islands. No.405, 4F, Building A, Keyuan Science and Trading Building, No. 240, Baiti Road, Nankai District, Tianjin City, China No. 10-5, Building C, Yugao Plaza, No. 200, Keyuan 1st Road, Shiqiaopu, Chongqing City, China No.405, 4F, Building A, Keyuan Science and Trading Building, No. 240, Baiti Road, Nankai District, Tianjin City, China 2000 G Avenue, Suite 804 Plano, Texas 75074	USD4,016,000 USD1,616,000 USD2,400,000 USD850,000 USD2,400,000 USD600,000 USD5,000	General investment General investment General investment Development, production, sales, and relevant technical consultation services of data communication equipment, computers, network systems, and software/hardware of computers R&D, design, production, and processing of data communication equipment (excluding satellite communication equipment), computer network system equipment, network testing instruments and equipment, computers and external equipment, office automation equipment, and relevant service software/hardware of the abovementioned products, sales of products produced by the Company, and provision of relevant after-sales services. R&D, production, and sales of communication equipment, computer network system equipment, network testing instruments and equipment, computers and external equipment, office automation equipment, relevant service software/hardware of the abovementioned products, and product system integration Development and trading of digital communication equipment and software

Relevant information on those with presumed controlled or subordinated relationships: None.

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(3) Name of directors and presidents of affiliates and their shareholding:

			December 31,2022	December 31,2022
Company name	Title (Note 1)	Name or representative	Shareholding (Note 2) (Note 3)
			Number of shares (amount of capital contribution)	Shareholding (capital contribution)ratio
1.Tech-Plan (BVI) Ltd. 2. Maxi View Holdings Ltd. 3.Loop Telecommunication International Ltd. 4. Tianjin Loop Electron Technology Co., Ltd. Chongqing Loop Technology Co., Ltd. 6. Tianjin Loop Technology Co.,Ltd. 7.Loop Telecom NA, Inc	Chairman Director Chairman Director Chairman Director Chairman President Director Director Supervisor Chairman (concurrently the president) Director Director Chairman Director Director (concurrently the president) Supervisor Director Director Director	Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Representative of Loop Telecommunication International, Inc. - He Hwa-Chi Wang Yen-Min Representative of Loop Telecommunication International, Inc. - Wu Ming-Ze Fan Zheng-Chun Representative of Loop Telecommunication International, Inc. - Liu Dong-Jie Representative of Loop Telecommunication International, Inc. - He Hwa-Chi Representative of Loop Telecommunication International, Inc. - Wu Ming-Ze Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Representative of Loop Telecommunication International, Inc. - He Hwa-Chi Representative of Loop Telecommunication International, Inc. - Yeh Maw-Lin Wang Yen-Min Representative of Loop Telecommunication International, Inc. - Wu Ming-Ze Representative of Loop Telecommunication International, Inc. - He Hwa-Chi Representative of Loop Telecommunication International, Inc. - Wu Ming-Ze Representative of LoopTelecommunication International,Inc. - Lai Yong-Zan	USD4,016,000 (Note 4) USD1,616,000 (Note 4) USD2,400,000 (Note 4) USD850,000 (Note 4) (Note 4) (Note 4) (Note 4) USD2,400,000 (Note 4) (Note 4) USD600,000 (Note 4) (Note 4) (Note 4) USD5,000 (Note 4) (Note 4)	100% (Note 4) 100% (Note 4) 100% (Note 4) 100% (Note 4) (Note 4) (Note 4) (Note 4) 100% (Note 4) (Note 4) 100% (Note 4) (Note 4) (Note 4) 100% (Note 4) (Note 4)

Note 1: If an affiliate is a foreign company, specify the persons of equivalent positions.

Note 2: If the investee is a limited company by shares, please specify the number of shares and shareholding ratio; for others, please specify the amount of capital contribution and capital contribution ratio and make remarks. Note 3: If a Director is a corporation, relevant information on the representative shall be additionally disclosed. Note 4: The amount of capital contributions of representatives shall be disclosed in summary.

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(4) Business overview of associates

(4) Business overview of associates
	December 31,2022/(Unit: NT$thousand,except for otherwise specified
Company name	Amount of Capital	Total Assets	Total liabilities	Net value	Net revenue	Operating profit	Profit or loss for the period (after tax)	Net loss per share (NT$) (after tax)
1.Tech-Plan (BVI) Ltd. (Note 1) 2. Maxi View Holdings Ltd. (Note 1) 3.Loop Telecommunication International Ltd. (Note 1) 4. Tianjin Loop Electron Technology Co., Ltd. 5.Chongqing Loop Technology Co., Ltd. 6. Tianjin Loop Technology Co.,Ltd. 7. Loop Telecom NA, Inc	US$4,016 thousand US$1,616 thousand US$2,400 thousand US$850 thousand US$2,400 thousand US$600 thousand US$5 thousand	571 -274 845 3,967 8,216 5,829 184	- - - 4,881 7,379 7,695 31	571 -274 845 -914 837 -1,866 153	- - - 596 10,563 3,576 -	- - - 1,382 -1,902 -2,379 -	-3,341 -1,489 -1,852 877 -1,852 -2,366 -	Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable

Note 1: Refer to investee.

Note 2: If an affiliate is a foreign company, relevant figures shall be translated into NTD by adopting the exchange rate on the reporting date for presentation. The exchange rate of USD to NTD was NT$30.71. Note 3: Consolidated financial statements of affiliates: Please refer to page 153 of the annual report. Note 4: Affiliation report of affiliates: Not applicable.

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2. Regarding securities under private placement in the most recent year and up to the publication date of the annual report, the date and amount approved by the shareholders’ meeting or the Board, the basis and rationale of pricing, the selection method of particular persons, reasons for the necessity of private placement, targets of the private placement, qualification and conditions, subscription quantity, relationships with the Company, participation in the Company’s operations, actual subscription (or conversion) price, differences between the actual subscription (or conversion) price and the reference price, effects of the private placement of shareholders’ interest, capital utilization plans after the full collection of share payments or considerations, utilization of capital from the private placement of securities, the progress of plan execution, and the exhibition of plan benefits: None.

3. Holding or disposal of the Company’s shares by its subsidiaries in the most recent year and up to the publication date of the annual report: None.

4. Other matters that require additional explanation: None .

• (IX) Any of the circumstances listed in subparagraph 2, paragraph 2, Article 36 of the Securities and Exchange Act, which may materially affect shareholders' interest or the price of the Company's securities, that have occurred in the most recent year (2022) and up to the publication date of the annual report: None.

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Attachment 1 Procedures for Handling Material Inside Information

Chapter 1	General Provisions
Article 1	(Purpose of the Procedures)
	These Procedures are specially adopted to establish sound mechanisms for the handling and disclosure of
	material inside information by the Company in order to prevent improper information disclosures and to
	ensure the consistency and accuracy of information released by the Company to the public.
Article 2	(The handling of material inside information shall be subject to laws and regulations, and the Procedures)
	The Company shall implement its handling and disclosure of material inside information in accordance with
	applicable laws and regulations, the rules and regulations of the TWSE or the TPEx, and these Procedures.
Article 3	(Applicable targets)
	These Procedures shall apply to all Directors, supervisors, managers, and employees of the Company. The
	Company shall ensure that any other person who acquires knowledge of the Company's material inside
	information due to their position, profession, or relationship of control shall comply with the applicable
	provisions of these Procedures.
Article 4	(Coverage of material inside information)
	The term "material inside information" refers to in the Procedures formulated by the Management Department
	that handles material inside information of the Company and approved by the Board as a resolution; the
	Securities and Exchange Act, relevant laws and regulations, the rules and regulations of the TWSE or the
	TPEx, and these Procedures were considered upon the formulation.
Article 5	(Dedicated department for handling material inside information: the Management Department)
	The Company shall establish a dedicated department for handling material inside information that composes
	an appropriate number of competent members based on the scale, business status, and management
	requirements of the Company, and such matters shall be approved by the Board; the powers are as follows:
	I. Responsibility for formulating the drafts of these Procedures and any amendments to them.
	II. Responsibility for receiving inquiries in connection with the methods of handling material inside
	information and for consultation, review, and recommendations relating to these Procedures.
	III. Responsibility for receiving reports on unauthorized disclosures of material inside information and
	formulation of corresponding measures.
	IV. Responsibility for designing a system for preserving all documents, files, electronic records, and other
	materials related to these Procedures.
	V. Other activities related to these Procedures.
Chapter 2	Confidentiality Procedures for Material Inside Information
Article 6	(Confidentiality firewall operation - employees)
	The Company's Directors, supervisors, managers, and employees shall exercise the due care and fiduciary duty
	of a good administrator and act in good faith when performing their duties and shall sign confidentiality
	agreements.
	No Directors, supervisors, managers, or employees with knowledge of material inside information of the
	Company may divulge the information to others.
	No Directors, supervisors, managers, or employees of the Company may inquire about or collect any non-
	public material inside information of the Company not related to their individual duties from a person with
	knowledge of such information, nor may they disclose to others any non-public material inside information of
	the Company of which they become aware for reasons other than the performance of their duties.
Article 7	(Confidentiality firewall operation - item)
	Proper protection of confidentiality shall be given to files and documents containing the Company's material
	inside information when transmitted in written form. When transmitted by e-mail or other electronic means,
	such files and documents must be processed with appropriate security technology such as encryption or
	electronic signatures.
	Files and documents containing the Company's material inside information shall be backed up and stored in a
	secure location.
Article 8	(Confidentiality firewall operation)
	The Company shall ensure that the firewalls specified in the preceding two articles are established and take the
	following additional steps:
	I. Adopt adequate control measures for the firewalls and perform periodic testing.
	II. Enhance measures for custody and maintaining the secrecy of files and documents containing non-public
	material inside information of the Company.

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Article 9	(Confidentiality operation for external institutions or personnel)
	Any organization or person outside of the Company that is involved in any corporate action of the Company
	relating to a merger or acquisition, major memorandum of understanding, strategic alliance, other business
	partnership plans, or the signing of a major contract shall be required to sign a confidentiality agreement, and
	may not disclose to another party any material inside information of the Company's thus acquired.
Chapter 3	Disclosure Procedures for Material Inside Information
Article 10	(Principles for disclosures of material inside information)
	The Company shall comply with the following principles when making external disclosures of material inside
	information:
	I. The information disclosed shall be accurate, complete, and timely.
	II. There shall be a well-founded basis for the information disclosure.
	III. The information shall be disclosed fairly.
Article 11	(Implementation of the spokesperson system)
	Any disclosure of the Company's material inside information, except as otherwise provided by law or
	regulation, shall be made by the Company's spokesperson or by a deputy spokesperson acting in such capacity
	in confirmed sequential order. When necessary, the disclosure may be made directly by a responsible person
	of the Company.
	The Company's spokesperson or deputy spokesperson shall communicate to outside parties only information
	within the scope authorized by the Company, and no personnel of the Company other than those serving as the
	Company's responsible person, spokesperson, or deputy spokesperson may disclose any material inside
	information of the Company to outside parties without authorization.
Article 12	(Disclosure records of material inside information)
	The Company shall keep records of the following in respect of any disclosure of information to outside
	parties:
	I. The person who discloses the information, the date, and the time.
	II. How the information is disclosed.
	III. What information is disclosed.
	IV. What written material is delivered.
	V. Any other relevant details.
Article 13	(Response to untrue media release)
	If a media agency releases information that is in any respect inconsistent with material information disclosed
	by the Company, the Company shall promptly issue a clarification on the Market Observation Post System
	(MOPS) and request the media agency to correct the information.
Chapter 4	Handling Anomaly
Article 14	(Report of anomaly)
	Any Director, supervisor, manager, or employee of the Company that becomes aware of any unauthorized
	disclosure of the Company's material inside information shall report to the dedicated department and the
	Internal Audit Department of the Company as soon as practicable.
	Upon receipt of a report made pursuant to the preceding paragraph, the dedicated department shall formulate
	corresponding measures. When necessary, it may invite members from the Internal Audit Department and
	other departments to meet for discussion of the measures and shall keep a record of the results of the measures
	for future reference. The internal auditors shall also perform such audits as their duties may require.
Article 15	(Default handling)
	The Company shall take measures to discover those responsible and take appropriate legal action against any
	personnel under either of the following circumstances:
	I. Personnel of the Company disclose material inside information without authorization to any outside party or
	otherwise violate these Procedures or any other applicable law or regulation.
	II. A spokesperson or deputy spokesperson of the Company communicates to any outside party any
	information beyond the scope authorized by the Company or otherwise violates these Procedures or any other
	applicable law or regulation.
	If any person outside the Company divulges any material inside information of the Company, thereby causing
	damage to any property or interest of the Company, the Company shall pursue appropriate measures to hold
	the person divulging the information legally liable.
Chapter 5	Internal Control Operations and Internal Educational Promotion
Article 16	(Internal control system)
	These Procedures shall be incorporated into the Company's internal control system. The internal auditors shall
	keep themselves regularly informed of the status of compliance with these Procedures and shall prepare related
	audit reports so as to ensure full implementation of the procedures for handling material inside information.

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Article 17 (Education and promotion)

At least once per year, the Company shall conduct educational campaigns to promote awareness among all Directors, supervisors, managers, and employees with respect to these Procedures and related laws and regulations.

The Company shall also provide educational campaigns to new Directors, supervisors, managers, and employees in a timely manner.

Chapter 6 Supplementary provisions

Article 18 The Procedures were implemented after being approved by the Board, and the same shall apply upon any amendment.

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Attachment 2 Code of Conducts or Ethics of Employees

1. The Company has prepared its working rules, employee handbook, new employee handbook, and Code of Ethical Conduct to serve as the basis for observation of daily work and behaviors of employees. The code of ethical conduct to be observed by the employees of the Company is as follows:

2. (1) When executing their duties, employees of the Company shall focus on team spirit and reject selfish departmentalism, comply with the principles of honesty and credibility, and adhere to an active, earnest, and responsible attitude.

3. (2) Employees of the Company shall have no discrimination or crowd-out due to gender, ethnicity, religion, political party, gender orientation, job grade, nationality, age, or other factors.

4. (3) Employees of the Company shall jointly maintain a healthy and safe working environment; any sexual harassment or other violence, threat, or intimidation is banned.

5. (4) Employees of the Company are responsible for maintaining and improving justifiable and legal benefits gained by the Company and shall avoid:

   • a. Facilitate opportunities for itself or any third party to gain profits by using the properties and information of the Company or leveraging the convenience of its duties.

   • b. Compete with the Company.

6. (5) Employees of the Company shall treat counterparties of business dealings fairly; when having transactions with related parties, there shall be no special discount. When executing duties, employees of the Company shall not request, offer, deliver, or accept gifts, entertainment, rebate, bribery, or other unjust benefits in any form for its or any third party’s benefits. However, gifts or entertainment that are social customs or permitted by the Company are excluded.

7. (6) Regarding any information that may materially affect the trading price of the Company’s securities acknowledged by employees of the Company due to their duties, before the public disclosure, the information shall be kept strictly confidential according to the requirements of the Securities and Exchange Act, and employees shall not use such information for insider trading.

8. (7) Employees of the Company shall respect personal privacy and shall not spread rumors or slander. For matters or confidential information acknowledged due to their duties, they shall manage cautiously. Except for disclosures made by the Company or provision necessary due to the execution of duties, employees shall not leak such information to others or use it for purposes other than work; the same shall apply after resignation.

9. (8) The information that shall be kept confidential in the preceding paragraph includes the date of personnel and customers, inventions, business secrets, technical data, product designs, manufacturing know-how, financial and accounting data, intellectual properties, and other information of the Company, and other undisclosed information that may be used by competitors or may harm the Company or customers upon leakage.

10. (9) Employees of the Company shall ensure that all forms of paper-based information that they handle are accurate and complete, and duly preserved.

11. (10) When executing their duties, employees of the Company shall avoid the theft, interference, destruction, and invasions of data, information systems, and network equipment to protect the confidentiality, completeness, and availability of information of the Company. .

12. (11) Employees of the Company shall not affect other employees in any means for political donations, supporting particular political parties or candidates, or participation in other political activities. In addition, they shall also avoid engaging in political activities during working hours and at the workplace.

13. (12) Employees of the Company shall respect legal requirements related to intellectual property rights and prohibit the illegal use or duplication of intellectual properties with copyright, including books, magazines, and software.

14. (13) Directors of the Company shall reinforce the promotion of the internal ethical concepts of the Company and encourage employees to report with their name recorded when discovering any violation of laws, regulations, rules, or the code, and the Company shall keep the identity of the reporting personnel confidential and provide protection to avoid threats.

15. To maintain the work equality of both genders and provide a working and service environment free of sexual harassment to employees, the Company has established its Regulations for Sexual Harassment Control and Handling for employees to observe.

16. Computers are necessary instruments for employees of the Company. To regulate the use of electronic instruments by employees, it has established requirements for Internet management and use for employees to observe.

17. The Company is an information system company, and the use and development of software are closely related to its daily work. To protect intellectual property rights, the Company has formulated the ethical commitment contract and letter of commitment for confidentiality and copyrights to regulate employees’ work ethics.

18. The code was implemented after being approved by the Board, submitted to supervisors, and reported to the shareholders’ meeting; the same shall apply upon any amendment.

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Attachment 3 Code of Ethical Conduct

Article 1 Purpose of and basis for adoption

To establish a favorable behavioral model to align with ethical standards and allow all stakeholders to learn more about the corporate ethical specifications of the Company, the code was established according to Article 1 of the “Guidelines for the Adoption of Codes of Ethical Conduct for TWSE/GTSM Listed Companies.”

• Article 2 The code includes the following eight items

• (I) Prevention of conflicts of interest:

  • Conflicts of interest occur when personal interest intervenes or is likely to intervene in the overall interest of the Company, for example, when a Director, supervisor, or manager of the Company is unable to perform its duties in an objective and efficient manner or when a person in such a position takes advantage of their position in the Company to obtain improper benefits for either themselves or their spouse, parents, children, or relatives within the third degree of kinship. The Company shall pay special attention to loans of funds, provisions of guarantees, and major asset transactions or the purchase (or sale) of goods involving the affiliated enterprise at which a Director, supervisor, or managers. The Company shall establish a policy aimed at preventing conflicts of interest and shall offer appropriate means for Directors, supervisors, and managers to voluntarily explain whether there is any potential conflict between them and the Company.

• (II) Minimizing incentives to pursue personal gain: The Company shall prevent its Directors, supervisors, or managers from engaging in any of the following activities: (1) seeking an opportunity to pursue personal gain by using the Company’s property or information or taking advantage of their positions; (2) obtaining personal gain by using the Company’s property or information or taking advantage of their positions; (3) competing with the Company. When the Company has an opportunity for profit, it is the responsibility of the Directors, supervisors, and managers to maximize the reasonable and proper benefits that can be obtained by the Company.

• (III) Confidentiality

  • The Directors, supervisors, and managers of the Company shall be bound by the obligation to maintain the confidentiality of any information regarding the Company itself or its suppliers and customers, except when authorized or required by law to disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Company or the suppliers and customers.

• (IV) Fair trade:

  • Directors, supervisors, and managers shall treat all suppliers and customers, competitors, and employees fairly and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions or misrepresentation of important matters or through other unfair trading practices.

• (V) Safeguarding and proper use of company assets:

All Directors, supervisors, and managers have the responsibility to safeguard the Company’s assets and to ensure that they can be effectively and lawfully used for official business purposes; any theft, negligence in care, or waste of the assets will directly impact the Company's profitability.

• (VI) Legal compliance:

Except for strengthening its compliance with the Securities and Exchange Act and other applicable laws, regulations, and bylaws, the Company shall otherwise establish a code of conduct for employees to regulate the behaviors of employees.

• (VII) Encouraging reporting on illegal or unethical activities:

• The Company shall raise awareness of ethics internally and encourage employees to report to a supervisor, manager, chief auditor, or other appropriate individuals upon suspicion or discovery of any activity in violation of a law or regulation or the code of ethical conduct. To encourage employees to report illegal conduct, the Company has established relevant procedures and systems and made employees aware that the Company will use its best efforts to ensure the safety of informants and protect them from reprisals.

• (VIII) Disciplinary measures:

When a Director, supervisor, or manager violates the Code of Ethical Conduct, the Company shall handle the matter in accordance with the disciplinary measures prescribed in the code, and shall immediately disclose on the MOPS the date of the violation by the violator, reasons for the violation, the provisions of the code violated, and the disciplinary actions that are taken. The Company has established relevant complaint systems to provide the violator with remedies.

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Article 3 Procedures for exemption

The Code of Ethical Conduct adopted by the Company shall state any exemption for Directors, supervisors, or managers from compliance with the code be adopted by a resolution of the Board, and state the titles and names of those who were exempted, the date on which the Board approved the exemption, the application period of the exemption, reasons for the applicability of the exemption, and information on the applicable exemption standards shall be disclosed on MOPS within 2 days.

• Article 4 Method of disclosure

The code will be disclosed in the Company’s annual report, prospectus, and on MOPS; the same shall apply upon any amendment.

• Article 5 Implementation

The code was implemented after being approved by the Board, submitted to supervisors, and reported to the shareholders’ meeting; the same shall apply upon any amendment.

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Attachment 4 Regulations for Employees’ Complaints

Article 1. Purpose

To protect the legal interest of employees and assist individuals in solving difficulties, the Company provides smooth communication channels to solve problems encountered by employees for work and life in the hope of improving labor-capital harmony.

Article 2. Applicable targets

Apply to employees of the Company or service targets of employees.

• Article 3. Scope of application

• I. In the case when the results of rewards/punishments, evaluation, re-allocation, and other matters of an employee harm the individual’s legal interest or result in dissenting opinions.

• II. Sexual harassment complaint cases.

• III. In the case when the current management rules, systems, administrative measures, or work requirements harm the individual’s legal interest.

• IV. Other matters related to official business affairs that affect the individual’s legal interest.

Article 4. Procedures for complaint cases

• I. Sexual harassment complaint cases:

• (I) For the complaint of sexual harassment, complete the “Employee’s Complaint Form” (Attachment 1) and file the complaint with the responsible acceptance department for complaints; the direct line is 2001, and the complaint may also be filed verbally or in writing.

• (II) For a sexual harassment complaint filed verbally, the acceptance department or personnel shall complete the “Employee’s Complaint Form” for recording and read out loud or allow the whistleblower to read it, confirm the content is free of mistakes, and sign or affix its seal. If there is any proxy involved, a power of attorney shall be enclosed when filing the complaint to the acceptance department.

• (III) After the acceptance department receives the complaint, it may hand over the complaint case to the complaint handling/investigation department, when necessary; during the course of the investigation, the privacy and other legal interests of the personality of the party involved shall be protected, and the investigation shall be undisclosed.

• (IV) When handling a sexual complaint case, the complaint handling/investigation department may notify the party involved and related parties to provide descriptions in person and provide the opportunity for the parties involved to provide comprehensive descriptions. Also, it shall guarantee that the whistleblower will not suffer from any revenge or other unfavorable treatments. When necessary, persons with relevant knowledge and experience may be invited.

• (V) The complaint handling/investigation department shall determine whether to establish or reject the complaint case and provide recommendations to impose punishments or other disposals. For the decision above, the “Complaint Response Form” (Attachment 2) shall be used to notify the whistleblower and the counterparty of the complaint; the results of the decision shall be submitted to the chief decision-making director for sign-off for approval, and the HR department shall impose the punishments according to the requirements or relevant departments shall execute relevant matters.

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When the case is rejected, both parties involved shall be notified, and the Company shall re-state its stance of banning sexual harassment.

• (VI) A complaint case shall be closed within three months from the filing. If the whistleblower or the counterparty of the complaint has any dissenting opinion against the decision of the complaint case, they may propose a reconsideration petition within 10 days. After the case is closed, no complaint shall be filed for the same subject.

• (VII) The whistleblower may rescind the complaint during the consideration period; the rescind method shall be in writing. After it is delivered to the complaint handling/investigation department, the case shall be closed and archived for future reference, and no complaint shall be filed for the same subject.

• (VIII)If there is any risk that personnel of the complaint handling/investigation department may involve in the complaint matter if there are other matters sufficient for considering that they may be biased, such personnel shall recuse themselves, and parties involved may also request for their recusal. Their recusal shall be subject to the decision made by the complaint handling/investigation department.

• (IX) Personnel participating in the investigation and the consideration shall be responsible for the confidentiality of the complaint case. For any violation, the complaint handling/investigation department may immediately terminate their participation and impose punishments according to the requirements.

• (X) For any of the following circumstances, the complaint handling/investigation department may determine to postpone the investigation and consideration:

• (1) When the whistleblower proposes a request.

• (2) When the sexual harassment case has entered judicial procedures or is transferred to the Control Yuan for investigation or the civil servant disciplinary committee for review and discussion.

• (3) Other matters that require the postponement of the investigation and consideration.

Other complaints:

• (I) For any petition or complaint of an employee shall complete the “Employee’s Complaint Form” in person or via its proxy and enclose relevant data and evidence, and submit them to the director of the Administration Department.

• (II) After the director of the Administration Department has received the complaint case, it shall investigate the truth. If any disposal is required, it shall coordinate with relevant directors to manage. If involving other departments, it shall actively negotiate and discuss the disposal with such departments. Also, it shall communicate with the parties involved within two months from the receipt of the case and inform them of the handling results or handling methods and progress.

• (III) Upon the closure of the complaint case, the director of the Administration Department shall make a response to the whistleblower by using the “Complaint Response Form” (Attachment 2) If a whistleblower has any dissenting opinion against the handling results, it may complete another “Employee’s Complaint Form” within 10 days from the receipt of the response, propose a new cause or new evidence, and apply for a review with the director of the Administration Department; the application for a review is up to one time.

• (IV) During the handling process of the complaint case, parties involved in the complaint and relevant personnel who are responsible for handling the case shall not make any disclosure, and they shall be responsible for confidentiality; arrangements will be made according to human affairs rules for any

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violation. Parties involved in the complaint and relevant personnel are obliged to accept inquiries and faithfully provide responses and relevant information.

• (V) Any complaint made anonymous or if the party is not the person involved, or any complaint not filed according to the regulations will not be accepted. Any false accusation, concealment, assault, or intentional interference will not be accepted, and arrangements will be made according to relevant rules.

Article 5: The regulations were implemented after being approved by the President; the same shall apply upon any amendment.

Article 6: Attachment:

Attachment 1: Employee’s Complaint Form Attachment 2: Complaint Response Form

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Attachment 5 Procedures for Protection of Personal Data

1. To comply with the implement personal data management, maintenance, and execution as stated in the Personal Data Protection Act (the “Act”) and its implementation rules, Regulations for Personal Data File Safety and Maintenance for Non-governmental Agencies Designated by the FSC, and other laws and regulations related to personal data protection, the Company has established the procedures, and the application scope involves the Company and its subsidiaries.

2. Personal data in the procedures refers to the name, date of birth, national ID No., passport No., characteristics, fingerprint, marital status, educational background, occupation, medical history, medication, gene, sexual life, health inspection, criminal record, contact methods, financial status, social activities of a natural person or other data that may directly or indirectly identify the individual.

3. The Company shall establish and implement a personal data protection and safety management system and identify internal and external stakeholders to ensure the operation and implementation of personal data protection management.

4. The Company shall measure the reasonable allocation of the management resources and allocate management personnel and relevant resources to plan for, establish, amend, and execute its personal data file safety maintenance plan and the handling method of personal data after the termination of the operation; the CEO is authorized to approve such specifications for implementation.

5. The administration section of the Company is designated as the responsible department to accurately define the powers and responsibilities of departments related to personal data protection and promote and examine the protection and management of personal data to comply with the requirements under the Act and relevant laws and regulations.

6. The Company shall collect, process, and use personal data within the scope of particular purposes by adopting reasonable and safe methods under the backdrop of legal organization operations and businesses.

7. The Company shall establish and protect personal data files and make updates based on the requirements to ensure the accuracy and completeness of personal data.

8. The Company shall establish the judging standards for the level of risk of personal data files to specify the acceptable risk value of personal data files and establish a relevant preservation period to comply with the requirements under the Act and relevant laws and regulations.

9. The Company shall protect the personal data files collected, processed, and used by the Company by

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using reasonable safety technologies expected and establishing various information and data safety management measures, including advertisements, marketing, supplies, orders, or delivery of relevant products or services via general business activities or the Internet, and other business transactions.

1. The Company designates the Human Resources Department as the contact for personal data for parties involved to exercise their rights related to their personal data or file complaints and make consultations.

2. In response to the theft, alteration, damage, losses, leakage, or other safety incidents of personal data, the Company shall establish a complete response, reporting, and prevention system, and the content shall include response measures to be adopted after the occurrence of incidents, targets required to be reported, the reporting methods, and the discussion system for the corrective and preventive measures.

3. When consigning the collection, processing and use of personal data, the Company shall duly monitor the consigned party, specify the information safety responsibilities and confidentiality requirements of the consigned party and include them in the contract, and require the consigned party to observe and perform regular audits. The Company shall be equipped with an appropriate and sufficient transmission system to ensure the safety of personal data during domestic/overseas transmissions. The Company shall organize promotion and educational training for the awareness of its employees regarding personal data regularly to allow them to understand the requirements of relevant laws and regulations, the scope of responsibility of employees, and the systems, procedures, and measures of personal data protection matters.

4. To ensure the implementation of the personal data protection safety management system, the Company shall establish an appropriate personal data safety audit system and relevant record preservation systems.

5. The Company shall continue to implement and improve the personal data protection safety management system to ensure the safety of personal data files. The Audit Office shall carry out personal data protection management audits from time to time, and the CEO is authorized to approve the execution results; if there is any significant deficiency, it shall be reported to the Board.

6. The procedures were approved for implementation by the Board on October 30, 2014.

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Stock Code: 3025

Loop Telecommunication International, Inc. and its subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

Address: 7F, No.8, Xin’an Road, Hsinchu Science Park Tel: (03)5787696

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§Table of Contents§

Item I. Cover II. Table of Contents III. Declaration of Consolidated Financial Statements of Affiliated Enterprises IV. Independent Auditors’ Report Translated from Chinese V. Consolidated Balance Sheet VI. Consolidated Statement of Comprehensive Income VII. Consolidated Statement of Changes in Equity VIII. Consolidated Statement of Cash Flows IX. Notes to Consolidated Financial Statements (I) Company History (II) Approval date and procedures of the financial statements (III) New standards, amendments and interpretations adopted: (IV) Summary of significant accounting policies (V) Significant accounting judgments and key source of uncertainties for estimations and assumptions (VI) Explanation of significant accounting items (VII) Related party transactions (VIII) Pledged assets (IX) Significant contingent liabilities and unrecognized contractual commitments (X) Losses due to severe disasters (XI) Significant subsequent events (XII) Assets and liabilities in foreign currencies of material effects (XIII) Disclosuresnotes 1. Information on significant transactions 2. Information on investees 3. Information on investments in Mainland China 4. Information on major shareholders (XIV) Segment information	Pages 1 2 3 4～8 9 10～11 12 13～14 15 15 15～17 17～28 29 30～56 56~57 57 - - 57 57~58 58~59、 62、66 59、63 59~60、 64～65 60、67 60～61	Notes to the Financial Statements
		- - - - - - - - 1 2 3 4 5 6 to 26 27 28 - - 29 30 31 31 31 31 32

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Declaration of Consolidated Financial Statements of Affiliated Enterprises

The entities that are required to be included in the consolidated financial statements of the Company for 2022 (from January 1, 2022 to December 31, 2022) under the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No.

10, "Consolidated Financial Statements" endorsed by the Financial Supervisory Commission. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, the Company and its subsidiaries will not prepare a separate set of combined financial statements.

Very truly yours

Loop Telecommunication International, Inc.

Chairman: Yeh Maw-Lin

March 28, 2023

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Independent Auditors’ Report Translated from Chinese

Shareholders and the Board of Directors of Loop Telecommunication International, Inc.,

Opinion

We have audited the accompanying consolidated balance sheet of Loop Telecommunication International, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements (including a summary of significant accounting policies).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountants of the Republic of China and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of the most

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significance in our audit of the consolidated financial statements of the Company for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s consolidated financial statements for the year ended December 31, 2022 is stated as follows:

Revenue recognition

1. The major revenue sources of the Company includes the production and sales of user remote line disconnectors, high-speed network access equipment, smart network resource management selectors, and other relevant products. As revenue has material effects on the 2022 consolidated financial statements of Loop Telecommunication International, Inc., revenue recognition involves manual control operations, and there are risks related to sales counterparties and the authenticity of transactions due to the significant growth in the revenue from partial customers, we have identified the revenue recognition as a key audit matter. For the accounting policies of revenue recognition, please refer to Note 4.(12) to the consolidated financial statements.

2. In response to the abovementioned risks, we have performed the following audit procedures:

   • (1) Understand and test the internal control systems and procedures related to the cycle of sales transactions to identify and evaluate the effectiveness of the internal control procedures involved in making sales transactions.

   • (2) Sample whether internal orders are approved by the responsible supervisor.

   • (3) Sample whether external orders and transportation documents have been obtained for revenue recognition and whether the amount and the invoiced amount are consistent.

   • (4) Sample whether the amount of collection after the period for relevant sales income transactions, remittance certificates, and counterparties is consistent with the amount of revenue recognition and counterparties.

Other matters

We have also audited the parent company only financial statements of Loop Telecommunication International, Inc. as of and for the years ended December 31, 2022 and 2021 on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated

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

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

Those charged with governance, including members of the Audit Committee, are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

3. 158 -

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

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

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

7. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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Deloitte & Touche Taiwan Accountant Huang Yu-Feng Accountant Tseng Jian-Ming

Approval No. of the Securities and Futures Approval No. of the Financial Supervision Bureau Commission Tai-Cai-Zheng-Liu-Zi No.0920123784 Jin-Guan-Shen-Zheng-Zi No.1100356048

March 28, 2023

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China.

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

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Loop Telecommunication International, Inc. and its subsidiaries

Consolidated Balance Sheet

December 31, 2022 and 2021

Assets Current assets Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at amortized cost - current (Notes 4 and 8) Contract assets - current (Notes 4 and 21) Net accounts receivable (Notes 4, 5, 9, and 21) Other receivables (Notes 4 and 9) Inventories (Notes 4, 5, and 10) Other current assets (Note 16) Total current assets Non-current assets Financial assets at amortized cost - non-current (Notes 4, 8, and 28) Property, plant and equipment (Notes 4, 12, and 28) Right-of-use assets (Notes 4, 5 and 13) Investment property (Notes 4, 14, and 28) Intangible assets (Notes 4 and 15) Deferred income tax assets (Notes 4 and 23) Refundable deposits (Note 28) Total non-current assets Total assets Financial liabilities and equity Current liabilities Contract liabilities - current (Notes 4 and 21) Accounts payable Other payables (Note 18) Income tax payable (Notes 4 and 23) Lease liabilities - current (Notes 4 and 13) Long-term liabilities - current portion (Notes 4, 17, and 28) Other current liabilities (Note 18) Total current liabilities Non-current liabilities Long-term borrowings (Notes 4, 17, and 28) Deferred income tax liabilities (Notes 4 and 23) Lease liabilities - non-current (Notes 4 and 13) Net defined benefit liabilities - non-current (Notes 4 and 19) Guarantee deposits Non-current liabilities (Note 18) Total non-current liabilities Total liabilities Equity (Note 20) Common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity Total Liabilities and Equity		(In Thousands of New Taiwan Dollars) December31,2022 December31,2021 Amount ％ Amount ％ $ 361,283 34 $ 119,623 12 33,546 3 321 - 15,773 1 14,120 2 32,776 3 148,875 15 41,771 4 130,098 13 1,150 - 1,170 - 312,977 29 295,902 30 2,934 - 11,310 1 802,210 74 721,419 73 12,026 1 12,018 1 146,206 14 155,782 16 42,591 4 43,894 4 31,858 3 32,968 3 8,638 1 5,499 1 5,713 - 6,698 1 30,212 3 14,045 1 277,244 26 270,904 27 $ 1,079,454 100 $ 992,323 100 $ 3,002 - $ 1,112 - 29,638 3 45,443 5 59,150 5 47,269 5 9,235 1 7,042 1 1,159 - 2,327 - 1,936 - 2,289 - 30,462 3 1,225 - 134,582 12 106,707 11 - - 1,936 - 3,455 - - - 48,109 5 48,000 5 16,731 2 28,148 3 1,190 - 1,273 - 23,304 2 - - 92,789 9 79,357 8 227,371 21 186,064 19 709,206 66 709,206 71 48,208 4 48,208 5 19,174 2 16,008 2 3,088 - 3,005 - 75,193 7 32,920 3 97,455 9 51,933 5 2,786) - ( 3,088) - 852,083 79 806,259 81 $ 1,079,454 100 $ 992,323 100	(In Thousands of New Taiwan Dollars) December31,2022 December31,2021 Amount ％ Amount ％ $ 361,283 34 $ 119,623 12 33,546 3 321 - 15,773 1 14,120 2 32,776 3 148,875 15 41,771 4 130,098 13 1,150 - 1,170 - 312,977 29 295,902 30 2,934 - 11,310 1 802,210 74 721,419 73 12,026 1 12,018 1 146,206 14 155,782 16 42,591 4 43,894 4 31,858 3 32,968 3 8,638 1 5,499 1 5,713 - 6,698 1 30,212 3 14,045 1 277,244 26 270,904 27 $ 1,079,454 100 $ 992,323 100 $ 3,002 - $ 1,112 - 29,638 3 45,443 5 59,150 5 47,269 5 9,235 1 7,042 1 1,159 - 2,327 - 1,936 - 2,289 - 30,462 3 1,225 - 134,582 12 106,707 11 - - 1,936 - 3,455 - - - 48,109 5 48,000 5 16,731 2 28,148 3 1,190 - 1,273 - 23,304 2 - - 92,789 9 79,357 8 227,371 21 186,064 19 709,206 66 709,206 71 48,208 4 48,208 5 19,174 2 16,008 2 3,088 - 3,005 - 75,193 7 32,920 3 97,455 9 51,933 5 2,786) - ( 3,088) - 852,083 79 806,259 81 $ 1,079,454 100 $ 992,323 100
		Amount $ 361,283 33,546 15,773 32,776 41,771 1,150 312,977 2,934 802,210 12,026 146,206 42,591 31,858 8,638 5,713 30,212 277,244 $ 1,079,454 $ 3,002 29,638 59,150 9,235 1,159 1,936 30,462 134,582 - 3,455 48,109 16,731 1,190 23,304 92,789 227,371 709,206 48,208 19,174 3,088 75,193 97,455 2,786) 852,083 $ 1,079,454
	(

The accompanying notes are an integral part of the consolidated financial statements.

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Loop Telecommunication International, Inc. and its subsidiaries

Consolidated Statement of Comprehensive Income

For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Net revenue (Notes 4, 21, and 32) Cost of revenue (Notes 4, 10, and 22) Gross profit Operating expenses (Note 22) Sales and marketing expenses General and administrative expenses Research and development expenses Subtotal Income from operations Non-revenue and expenses (Note 22) Interest income Other income Other gains and losses Finance costs Total non- operating income and expenses Income before income tax Income tax expenses (Notes 4 and 23) Net income (Cont’d)		2022		％ 100 45 55 10 11 31 52 3 1 8 7 - 16 19 4 15		2021
		Amount $ 438,242 197,678 240,564 44,881 46,459 134,715 226,055 14,509 4,029 36,119 29,994 1,248) 68,894 83,403 16,000 67,403						％
	(						100 48 52 9 8 27 44 8 - 1 ( 1 ) - - 8 2 6

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(Cont’d)

Other comprehensive income (Notes 4, 19, and 20) Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit obligation Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Other comprehensive income, net of income tax Total comprehensive income Earnings per share (Note 24) Basic Diluted		2022		％ 2 - 2 17	2021
		Amount $ 6,487 302 6,789 $ 74,192 $ 0.95 $ 0.94			Amount ( $ 1,361 ) ( 83) ( 1,444) $ 31,582 $ 0.47 $ 0.46		％
							- - - 6

The accompanying notes are an integral part of the consolidated financial statements.

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Loop Telecommunication International, Inc. and its subsidiaries

Consolidated Statement of Changes in Equity

For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Balance on January 1, 2021 Earnings distribution and appropriation in 2020 Legal reserve Special reserve Cash dividends of shareholders Cash distribution from the capital reserve Netincomein 2021 Other comprehensive income, net of income tax in 2021 Total comprehensive income in 2021 Balance of December 31, 2021 Earnings distribution and appropriation in 2021 Legal reserve Special reserve Cash dividends of shareholders Netincomein 2022 Other comprehensive income, net of income tax in 2022 Total comprehensive income in 2022 Balance of December 31, 2022	Capital stock Shares (1,000 shares) Amount 70,921 $ 709,206 - - - - - - - - - - - - - - 70,921 709,206 - - - - - - - - - - - - 70,921 $ 709,206	Capital stock Shares (1,000 shares) Amount 70,921 $ 709,206 - - - - - - - - - - - - - - 70,921 709,206 - - - - - - - - - - - - 70,921 $ 709,206	Capital surplus $ 49,626 - - - ( 1,418 ) - - - 48,208 - - - - - - $ 48,208		Retained earnings	Unappropriated earnings $ 78,588 ( 7,725 ) ( 105 ) ( 69,503 ) - 33,026 ( 1,361) 31,665 32,920 ( 3,166 ) ( 83 ) ( 28,368 ) 67,403 6,487 73,890 $ 75,193	Other Equity Exchange differences arising on translation of foreign operations ( $ 3,005 ) - - - - - ( 83) ( 83) ( 3,088 ) - - - - 302 302 ($ 2,786)	Total equity
	Shares (1,000 shares) 70,921 - - - - - - - 70,921 - - - - - - 70,921			Legal reserve $ 8,283 7,725 - - - - - - 16,008 3,166 - - - - - $ 19,174	Special reserve $ 2,900 - 105 - - - - - 3,005 - 83 - - - - $ 3,088
								$ 845,598 - - ( 69,503 ) ( 1,418 ) 33,026 ( 1,444) 31,582 806,259 - - ( 28,368 ) 67,403 6,789 74,192 $ 852,083

The accompanying notes are an integral part of the consolidated financial statements.

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Loop Telecommunication International, Inc. and its subsidiaries

Consolidated Statement of Cash Flows

For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars)

Cash flows from operating activities Income before income tax Item of profit or loss: Depreciation expense Amortization expense Losses (gains) on financial assets and liabilities at fair value through profit or loss Finance costs Interest income Dividend income Losses of inventory write-down or obsolescence Net gains on foreign exchange Changes in operating assets and liabilities Contract assets Accounts receivables Other receivables Inventories Other current assets Contract liabilities Accounts payable Other payables Other current liabilities Net defined benefit liability Other non-current liabilities Cash from operations Interest paid Income tax paid Net cash generated by operating activities	2022 $ 83,403 15,419 3,658 508 1,248 ( 4,029 ) ( 43 ) 3,876 ( 25,165 ) 116,099 88,855 869 ( 20,951 ) 8,376 1,890 ( 15,098 ) 12,063 29,237 ( 4,930 ) 23,304 318,589 ( 1,248 ) ( 9,367) 307,974	2021
		$ 39,845 16,297 2,414 ( 100 ) 1,337 ( 196 ) ( 5 ) - ( 165 ) ( 48,181 ) 114,572 ( 678 ) ( 3,702 ) 19,761 ( 1,162 ) ( 9,217 ) ( 16,017 ) 607 ( 2,787 ) - 112,623 ( 1,337 ) ( 14,714) 96,572

(Cont’d)

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(Cont’d)

Cash flows from investing activities Acquisition of financial assets at amortized cost Disposal of financial assets at amortized cost Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Refundable deposits (paid) refunded Acquisition of intangible assets Interest received Dividends received Net cash used in investing activities Cash flows from financing activities Repayment of long-term debt Guarantee deposits refunded Repayment for the principal of lease liabilities Cash dividends paid Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents during the year Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year	2022 ( $ 335,426 ) 333,765 ( 33,733 ) - ( 2,267 ) ( 16,167 ) ( 6,797 ) 3,180 43 ( 57,402) ( 2,289 ) ( 83 ) ( 2,308 ) ( 28,368) ( 33,048) 24,136 241,660 119,623 $ 361,283	2021
		( $ 40,989 ) 46,861 ( 70,000 ) 70,084 ( 3,978 ) 790 ( 5,841 ) 220 5 ( 2,848) ( 2,254 ) ( 472 ) ( 2,280 ) ( 70,921) ( 75,927) 236 18,033 101,590 $ 119,623

The accompanying notes are an integral part of the consolidated financial statements.

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Loop Telecommunication International, Inc. and its subsidiaries

Notes to Consolidated Financial Statements

For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars; unless specified otherwise)

I. Company History

Loop Telecommunication International, Inc. (the “Company”) was established in Hsinchu Science Park in December 1991 and commenced its operation in December of the same year. The Company primarily engages in the R&D, development, production, manufacturing, and sales of user remote line disconnectors, protectors and their components, line reactors and their components, subtitle phones and their components, and smart network resource management multiplexers.

Shares of the Company were listed on Taipei Stock Exchange for trading in February 2001 and transferred to Taiwan Stock Exchange for listing and trading in August 2002.

The consolidated financial statements are presented in New Taiwan Dollars (NTD), which is the Company’s functional currency.

The Company and its subsidiaries are referred to as the Company, collectively, below.

II. Approval date and procedures of the financial statements

The accompanying consolidated financial statements were approved by the Board on March 28, 2023.

III. New standards, amendments and interpretations adopted:

• (I) Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations IFRIC(IFRIC), and SIC Interpretations (SIC) (collectively “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

The initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC did not cause significant change to the Company’s accounting policies.

• (II) IFRSs endorsed by the FSC that are applicable in 2023

New, revised or amended Effective date issued standards and interpretations by IASB

Amendment to IAS 1 “Disclosures of Accounting January 1, 2023 (Note 1) Policies”

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New,revised oramended standardsand interpretations Amendment to IAS 8 “Definition of Accounting Estimate” Amendment to IAS 12 “Deferred Income Tax related to Assets and Liabilities arising from a Single Transaction”	Effective date issued byIASB
	January 1, 2023 (Note 2) January 1, 2023 (Note 3)

Note 1: The amendment is applicable to the annual reporting period commencing after January 1, 2023.

• Note 2: The amendment is applicable to changes in accounting estimates and accounting policies that occur in the annual reporting period commencing after January 1, 2023.

• Note 3: Except for recognizing temporary differences for leases and decommissioning obligations as deferred income tax on January 1, 2022, the amendment is applicable to transactions that occur after January 1, 2022.

• As of the date of approval for the publication of the consolidated financial

• statements, the Company has been continuing the evaluation of the amendments to the standards and interpretations above would not have a material effects on the financial positions and financial performance.

• (III) IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC

New,revised oramended standardsand interpretations Amendment to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture” Amendment to IFRS 16 “Lease Liability in a Sale and Leaseback” IFRS 17 “Insurance Contract” Amendment to IFRS 17 Amendment to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 - Comparison Information” Amendment to IAS 1 “Classification of Liabilities as Current or Non-current” Amendment to IAS 1 “Non-current Liabilities with Contractual Terms”

Effective date issued byIASB(Note 1)

To be determined January 1, 2024 (Note 2) January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2024 January 1, 2024

Note 1: Except for otherwise stated, the abovementioned new,revised or amended standards and interpretations become effective in the annual reporting period commencing after the respective date.

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• Note 2: The amendment of IFRS 16 is applicable retrospectively to a sale and leaseback transaction entered into after the initial application of IFRS 16 for the seller, who is concurrently the lessee.

As of the date of approval for the publication of the consolidated financial statements, the Company has been continuing the evaluation regarding the effects of the amendments to standards and interpretations above on the financial positions and financial performance; relevant effects will be disclosed upon the completion of the evaluation.

IV. Summary of significant accounting policies

• (I) Statement of compliance

The consolidated statements were prepared according to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs endorsed and issued into effect by the FSC.

• (II) Basis of preparation

Except for financial instruments at fair value and net defined benefit liabilities recognized based on the present value of defined benefit obligations less the fair value of plan assets, the consolidated financial statements are prepared based on historical costs.

The measurement of fair value is divided into levels 1 to 3 based on the observable level and significance of relevant inputs:

1. Level 1 input: Refer to quotations (unadjusted) of equivalent assets or liabilities available in the active market on the measurement date.

2. Level 2 input: Refer to direct (i.e., prices) or indirect (i.e., inferred from prices) observable inputs of assets or liabilities other than level 1 quotations

3. Level 3 input: Refer to unobservable inputs of assets or liabilities.

4. (III) Classification of current and non-current assets and liabilities

Current assets include:

1. Assets held primarily for the purpose of trading;

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

3. Cash and cash equivalents (excluding those restricted for being used for exchange or settling liabilities over 12 months after the balance sheet date).

4. Current liabilities include:

5. Liabilities held primarily for the purpose of trading;

6. 169 -

7. Liabilities expected to be settled within 12 months after the reporting period (they shall be current liabilities even if a long-term refinancing or re-arranged payment agreement is entered into after the balance sheet date and before the approval of the publication of the financial statements); and

8. Liabilities with a settlement deadline that cannot be unconditionally deferred to at least 12 months after the reporting period. However, terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

Liabilities that are not current assets or current liabilities described above are noncurrent assets and non-current liabilities.

• (IV) Basis of consolidation

The consolidated financial statements comprise the Company and entities controlled by the Company (i.e., subsidiaries). The Company prepares consolidated financial statements using uniform accounting policies for like transactions and other events in similar circumstances. When preparing the consolidated financial statements, transactions, accounting balances, gains and losses between all entities are eliminated in full.

For details of subsidiaries, shareholding, and scope of business, please refer to Note 11 and Table 2 and Table 3.

• (V) Foreign currency

When each entity is preparing its financial statements, transactions in currencies other than the functional currency of the entity (foreign currencies) are translated into functional currencies at the exchange rate on the transaction date for records.

Monetary items in foreign currencies are translated at the closing exchange rate on each balance sheet date. Exchange differences arising from the delivery of monetary items or the translation of monetary items are recognized in profit or loss in the year of occurrence.

Non-monetary items in foreign currencies at fair value are translated at the exchange rate on the date determining the fair value, and the exchange difference arising thereof is presented as profit or loss of the period; however, for changes in fair value recognized in other comprehensive income, exchange difference arising thereof shall be recognized in other comprehensive income.

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Non-monetary items in foreign currencies at historical costs shall be translated at the exchange rate on the transaction date without re-translation.

When preparing the consolidated financial statements, assets and liabilities of the Company and its foreign operations (including subsidiaries in different countries or using currencies different from the Group) are translated into NTD at the exchange rate on each balance sheet date. Items of income and expenses are translated at the average exchange rate of the period, and the exchange difference arising thereof is recognized in other comprehensive income.

(VI) Inventory

Inventory includes raw materials, work-in-progress, and finished goods. Inventories are stated at the lower of cost or net realizable value. Except for inventories of the same category, the comparison of the lower of cost and net realizable value is made on an item-by-item basis. The net realizable value represents the estimated selling price in the ordinary course of business, less all estimated costs of completion and necessary selling expenses. The weighted average method is adopted for the calculation of the costs of inventory.

(VII) Property, plant and equipment

Property, plant and equipment are recognized at costs, and subsequently measured at the amount of costs less cumulative depreciation and cumulative impairment losses.

The Company separately provides depreciation for each material component of property, plant and equipment within the useful life on a straight-line basis. The Company shall examine the estimated useful life, residual value, and depreciation method at least at the end of each year and postpone the effects of changes in applicable accounting estimation.

For the derecognition of property, plant and equipment, the difference between the net disposal considerations and the carrying amount of such assets is recognized in profit or loss.

(VIII) Investment properties

Investment properties refer to properties held for earning rental or capital appreciation or both (including right-of-use assets that fulfill the definition of investment properties).

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Self-owned investment properties are initially measured at costs (including transaction costs), and subsequently measured at the amount of costs less cumulative depreciation and cumulative impairment losses.

Investment properties obtained via leases are initially measured at costs (including the initial measurement of lease liabilities), and subsequently measured at the amount of costs less cumulative depreciation and cumulative impairment losses, with adjustments made to the remeasurement of lease liabilities.

Depreciation is provided for all investment properties on a straight-line basis. For properties under property, plant and equipment, their carrying amounts are transferred to investment properties upon the end of the self-use period.

For the derecognition of investment properties, the difference between the net disposal considerations and the carrying amount of such assets is recognized in profit or loss.

(IX) Intangible assets

1. Individually acquired

Intangible assets with definite useful life that are individually acquired are initially measured at costs, and subsequently measured at the amount of costs less cumulative amortization and cumulative impairment losses. Intangible assets are amortized on a straight-line basis within their useful like. The Company shall examine the estimated useful life, residual value, and amortization method at least at the end of each year and postpone the effects of changes in applicable accounting estimation. Intangible assets with indefinite useful life are presented at costs less cumulative impairment losses.

2. Derecognition

For the derecognition of intangible assets, the difference between the net disposal considerations and the carrying amount of such assets is recognized in profit or loss of the period.

• (X) Impairment of property, plant and equipment, right-of-use assets, and intangible assets The Company evaluates whether there is any indication of impairment of property,

• plant and equipment, right-of-use assets, and intangible assets on each balance sheet date. If any such indication of impairment exists, then the asset's recoverable amount is estimated. If the recoverable amount of the individual asset cannot be estimated,

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the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less disposal costs and its value in use. If the recoverable amount of individual assets or cash-generating units is lower than their carrying amounts, the carrying amount of such assets or cash-generating units shall be reduced to the recoverable amount, and the impairment losses shall be recognized in profit or loss.

If impairment losses are subsequently reversed, the carrying amount of such assets or cash-generating units shall be increased to the recoverable amount after amendments; however, the increased carrying amount shall not exceed the carrying amount determined of the carrying amount of such assets or cash-generating units if there were no impairment losses recognized in prior years (less amortization or depreciation). The reversal of impairment losses is recognized in profit or loss.

(XI) Financial instruments

Financial assets and financial liabilities are recognized in the consolidated balance sheet when the Company becomes a party to the contract terms of such instruments.

For the initial recognition of financial assets and financial liabilities, if financial assets or financial liabilities are not measured at fair value through profit or loss, they shall be measured at the carrying amount plus the transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities. Transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss are immediately recognized as profit or loss.

1. Financial assets

Regular transactions of financial assets are recognized and derecognized by adopting trade date accounting.

• (1) Measurement category

On initial recognition, financial assets are classified as financial assets at amortized cost and financial assets at fair value through profit or loss.

A. Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets designated as measuring at value through profit or loss.

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Financial assets at fair value through profit or loss are measured at fair value, and their dividends and remeasurement gains or losses are recognized in other income and other gains and losses, respectively. For the determination method of fair value, please refer to Note 26.

B. Financial assets measured at amortized cost

If the financial assets of the Company concurrently fulfill both of the following conditions, they are recognized as financial assets at amortized costs:

• a. Held under a certain operating model, and the purpose of the model if to hold financial assets to collect contract cash flows; and

• b. Contract terms generate cash flows on particulate dates, and such cash flows are fully used to pay the principal and interests of the outstanding principal.

Financial assets at amortized costs (including cash and cash equivalents, accounts receivable and other receivables at amortized costs) are measured at a total carrying amount determined by using the effective interest method less amortized costs of any impairment losses after the initial recognition; any gains or losses on exchange gains are recognized in profit or loss.

Cash equivalents include short-term and high-liquidity time deposits within 3 months that can be converted to a fixed amount of cash at any time with minor risk of changes in value, and are used to satisfy short-term cash commitments instead of investments or other purposes.

• (2) Impairment of financial assets and contract assets

The Company evaluates the impairment losses of financial assets at amortized costs (including accounts receivable) and contract assets based on ECL on each balance sheet date.

Loss allowance of accounts receivables and contract assets are recognized based on the lifetime ECL. For other financial assets, the Company evaluates whether credit risks have significantly increased after the initial recognition. If there is no significant increase, the Company recognizes loss allowance based on the 12-month ECL; if there is a

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significant increase, the Company recognizes loss allowance based on the lifetime ECL.

ECL is average credit loss using default risks as its weight. 12-month ECL refers to ECL that may arise from possible defaults of financial instruments within 12 months after the reporting date; lifetime ECL refers to ECL that may arise from all defaults of financial instruments during the lifetime.

The Company reduces the carrying amount via the allowance account for the impairment losses of all financial assets.

• (3) Derecognition of financial assets

The Company derecognizes financial assets when the contractual rights to the cash flows from the financial asset become invalid, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred.

For the derecognition of financial assets at amortized cost, the difference between the carrying amount and the considerations received is recognized in profit or loss.

1. Equity instruments

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreements and the definitions of a financial liability and an equity instrument. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

The retrieval of the Company’s own equity instruments is recognized and deducted under equity. Acquisition, disposals, issuance, or cancellation of the Company’s own equity instruments is not recognized in profit or loss.

1. Financial liabilities

2. (1) Subsequent measurement

All financial liabilities are measured at amortized costs by adopting the effective interest method.

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(2) Derecognition of financial liabilities

For the derecognition of financial liabilities, the difference between the carrying amount and the considerations paid (including any non-cash assets transferred or liabilities assumed) is recognized as profit or loss.

(XII) Revenue recognition

After the Company has identified the performance obligations in a contract with a customer, it allocates the transaction price to each performance obligation and recognizes income when fulfilling each performance obligation.

1. Sales revenue of products

Sales revenue of products is primarily from the sales of optical transport network access equipment, U interface and MDSL interface multiplexer, network management systems, Internet access equipment, time-slot interchanger, and other products. From the shipping of products sold, customers are entitled to pricing and use, hold the primary responsibilities for reselling, and assume the risks of product obsolescence. The Company recognizes income and contract assets at the point of time and transfers them to accounts receivable after the performance of the remaining obligations. Prepayments for the sales of products are recognized as contract liabilities before the products arrive.

1. Service revenue

2. Service revenue arises from educational training services and

3. software/hardware installation services.

With educational training services and software/hardware installation services provided by the Company, customers also obtain and consume performance benefits. The Company recognizes relevant income based on the service provided by technicians over time during the contract period. It is agreed in contracts that customers shall make payments after the installation and acceptance; therefore, the Company recognizes contract assets when providing services and transfers them to accounts receivable upon the completion of installation and acceptance.

(XIII) Lease

The Company evaluates whether a contract is (or includes) a lease on the establishment date of the contract.

1. The Company as the lessor

All leases are classified as operating leases.

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Under operating leases, lease payments are recognized as gains during the relevant leasing period on a straight-line basis.

Variable rentals not subject to the index or rate used in the lease agreement are recognized as gains during the period.

When a lease contains elements of land and building, the Company evaluates the classification of elements into financing lease or operating lease depending on whether the majority of all risks and compensation of the ownership of each element is transferred to the lessee. Lease payments are allocated to land and buildings based on the corresponding ratio of the fair value of leasing rights of land and buildings on the establishment date of the contract. If lease payments may be reliably allocated to such two elements, each element is treated based on the applicable lease classification. If lease payments may not be reliably allocated to such two elements, the overall lease is classified as a financing lease; however, if such two elements are evidently in line with the standards of operating leases, the overall lease is classified as an operating lease. The Company as the lessee

Except for lease payments of low-value target asset leases and short-term leases with recognition exemption applicable recognizing as expenses within the leasing period on a straight-line basis, right-of-use assets and lease liabilities are recognized for other leases on the commencement date of leases.

Right-of-use assets obtained via leases are initially measured at costs (including the initial measurement of lease liabilities), and subsequently measured at the amount of costs less cumulative depreciation and cumulative impairment losses, with adjustments made to the remeasurement of lease liabilities. Apart from those complying with the definition of investment properties, right-of-use assets are separately presented in the consolidated balance sheet. For the recognition and measurement of right-of-use assets fulfilling the definition of investment properties, please refer to the accounting policies of investment properties in (VIII).

Depreciation is provided for investment properties one a straight-line basis from the commencement date of the lease to the earlier of the expiry of the useful life or the expiry of the leasing period.

Lease liabilities are initially measured at the current value of lease payments (including fixed payments). If the implied interest rate of leases may be easily

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confirmed, lease payments are discounted by using the interest rate. If the interest rate may not be easily confirmed, the incremental borrowing interest rate of lessees is used.

Subsequently, lease liabilities are measured at amortized costs, and the interest expenses are allocated during the leasing period. If there is any change in lease payment in the future resulting from the index or rate used to determine the lease payment during the leasing period, the Company remeasures lease liabilities and makes adjustments to right-of-use assets accordingly; however, if the carrying amount of the right-of-use assets is reduced to nil, the remaining remeasurement amount shall be recognized in profit or loss. Lease liabilities are separately presented in the consolidated balance sheet.

(XIV) Borrowing costs

All borrowing costs are recognized as profit or loss during the period of occurrence.

• (XV) Governmental grants

Governmental grants are recognized only upon the receipt of such grants when it is reasonably assured that the Company will comply with the additional conditions of governmental grants.

(XVI) Employees benefits

1. Short-term employee benefits

Liabilities related to short-term employee benefits are measured at the nondiscounted amount expected to be paid in exchange for employees’ services.

2. Post-employment benefits

Pension of the defined contribution plan is recognized as expenses based on the amount of pension to be contributed during the period in which employees provide their services.

The projected unit credit method is adopted for the actuarial valuation of defined benefit costs of the defined benefit plan (including service costs, net profit, and remeasurement). Current period service costs and net interest of net defined liabilities (assets) are recognized as employee benefit expenses upon

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occurrence. Remeasurements (including actuarial gains or losses and plan asset compensation after interest) are recognized in other comprehensive income and presented as other equity upon the occurrence and will not be reclassified to profit or loss subsequently.

Net defined benefit liabilities (assets) are the appropriation deficit (surplus) of the defined benefit plan. Net defined benefit assets shall not exceed the current value of the amount of appropriation refunded from the plan or the amount of appropriation that may be reduced in the future.

3. Severance benefits

The Company recognizes severance benefit liabilities when it can no longer cancel the offer of severance benefits or recognize relevant reorganization costs (the earlier).

• (XVII) Income tax

Income tax expenses are the sum of income tax of the period and deferred income tax.

1. Income tax of the period

The additional income tax on undistributed earnings calculated based on the Income Tax Act of the Republic of China is recognized during the year of the shareholders’ resolution.

Adjustments to income taxes payable in prior years are recognized as income tax of the period.

1. Deferred income tax

Deferred income tax is calculated based on the temporary difference between the carrying amount of assets and liabilities accounted for and the taxation basis for calculating income tax.

Deferred income tax liabilities shall be recognized for all taxable temporary differences, and deferred income tax assets are recognized when it is likely to offset the deductible temporary differences and income tax credits arising from R&D and other expenses.

Temporary taxable differences related to subsidiaries it invested are recognized as deferred income tax liabilities, except when the Company is able to control the point of time to reverse the temporary differences, and such temporary differences are not likely to be reversed in the foreseeable future.

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Deductible temporary differences related to such investments are only recognized as deferred income tax assets when it is likely that there will be sufficient taxable income to realize the temporary differences and when it is expected to be within the reversal scope in the foreseeable future.

The carrying amount of deferred income tax assets is re-examined on each balance sheet date, and the carrying amount is adjusted for those having no possible, sufficient taxable income to recover the entire or partial assets. For those not recognized as deferred income tax assets initially, the Company also re-examines them on each balance sheet date and increases their carrying amounts when it is likely to have taxable income to recover the entire or partial assets in the future.

Deferred income tax assets and liabilities are measured at the tax rate of the period in which the liabilities or assets are expected to be settled or realized, respectively, and the tax rate is based on the tax rate and tax laws enacted or substantially enacted on the balance sheet date. The measurement of deferred income tax reflects the tax consequences of the method for recovering or settling the carrying amount of its assets and labilities by the Company after the balance sheet date.

1. Deferred income tax of the period

Deferred income tax of the period is recognized in profit or loss; however, deferred income tax related to items recognized in other comprehensive income or directly included in equity is recognized in other comprehensive income or directly included in equity, respectively.

V. Significant accounting judgments and key source of uncertainties for estimations and assumptions

When adopting accounting policies, the management shall make relevant judgments, estimations, and assumptions based on its historical experience and other relevant factors when it is difficult to obtain relevant information from other sources. Actual results may differ from these estimates.

The Company includes the recent development of COVID-19 and the possible effects on the economic environment and inflation, and market fluctuations into the considerations for cash flow estimation, growth rate, discount rate, profitability, and other

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relevant material accounting estimation; the management will continue to examine the estimates and basic assumptions. If the amendment to an estimate only affects the current period, it is recognized in the period of the amendment. If the amendment to accounting estimates affects the current period and future periods, it is recognized in the period of the amendment and future periods.

Uncertainties for estimations and assumptions

• (I) Estimated impairment of financial assets

The estimated impairment of accounts receivable is based on the assumption of the Company for default probability and default loss ratio. The Company considers its historical experience, current market status, and forward-looking information to form the assumptions and select the input value for impairment assessment. For the material assumptions and inputs adopted, please refer to Note 9. If the actual cash flow in the future is less than the Company’s expectations, there may be material impairment losses.

• (II) Inventory impairment

The net realizable value of inventories is estimated based on the balance of estimated selling price during the course of normal operations less the estimated costs required to be invested in until the completion and the costs required until the completion of sales; such estimates are evaluated based on the current market condition and the historical sales experience of similar products; any change in the market condition may materially affect the results of such estimates.

VI. Cash and cash equivalents

Cash and cash equivalents
Cash in hand and working capital Bank checks and demand deposits Cash equivalents (investments with an initial expiry within 3 months) Time deposits with banks	December 31,2022 $ 380 95,115 265,788 $ 361,283	December 31,2021
			$ 349 99,412 19,862 $ 119,623

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The market interest range of deposits and time deposits with banks on the balance sheet date is as follows:

sheet date is as follows:	sheet date is as follows:
December 31,2022 Bank deposits 0.001%~3.80% Time deposits 0.92%~4.40% Financial instruments at fair value through profit or loss December 31,2022 Financial assets-current Measured at fair value through profit or loss - Domestic listed stocks $ 3,375 - Beneficiary certificates 30,171 $ 33,546 Financial assets at amortized costs December 31,2022 Current Time deposits with an initial expiry exceeding 3 months $ 15,773 Non-current Time deposits pledged $ 12,026		December 31,2021
		0.001%~0.20% 0.12%~0.35% December 31,2021
Financial assets-current Measured at fair value through profit or loss - Domestic listed stocks - Beneficiary certificates Financial assets at amortized costs Current Time deposits with an initial expiry exceeding 3 months Non-current Time deposits pledged
		$ 321 - $ 321 December 31,2021
			$ 14,120 $ 12,018

VII. Financial instruments at fair value through profit or loss

VIII. Financial assets at amortized costs

• (I) The interest rate range of time deposits with an initial expiry exceeding 3 months and time deposits pledged is as follows:

time deposits pledged is as follows:
Time deposits with an initial expiry over 3 months Time deposits pledged	December 31,2022 3.77% 0.32%~1.44%	December 31,2021
		0.18% 0.06%~0.82%

• (II) For information on financial assets at amortized costs, please refer to Note 28.

IX. Accounts receivable and other receivables

Accounts receivables Financial assets measured at amortized cost Total carrying amount Less: loss allowance Other receivables	December 31,2022 $ 49,264 ( 7,493) $ 41,771	December 31,2021	December 31,2021
	(	(	$ 137,493 7,395) $ 130,098

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$ 1,150 $ 1,170

Others

The average credit period of product sales is settled by month or within 30 to 90 days from the issuance of the invoice; no interest is accrued for accounts receivable. The Company adopts the policy to engage in transactions with counterparties with equivalent ratings. For the credit rating information, the Company rated major customers based on publicly available financial information and historical transaction records and allocated the total transaction amount to different customers with qualified credit ratings. In addition, it regularly reviews and approves the credit limits of counterparties to manage its credit exposure.

The Company recognizes loss allowance of accounts receivable based on lifetime expected credit loss. Lifetime expected credit loss is calculated by using the provision matrix, which considers the past default records and current financial positions of customers, industrial and economic status, and considers GDP and the unemployment rate. Based on the Company’s past experience of credit losses, there is no material difference between the loss patterns of different customer bases; therefore, customer bases are not further distinguished for the provision matrix, and the expected credit loss rate is determined based on the number of overdue days of accounts receivable.

Loss allowance of accounts receivable measured based on the provision matrix is as follows:

December 31, 2022

Total carrying amount Loss allowance (lifetime ECL) Amortized costs	Not overdue $ 40,169 - $ 40,169	Overdue for 1 to 60 days $ 407 - $ 407	Overdue for 61 to 120 days $ 647 - $ 647	Overdue for 121 to 364 days $ 168 - $ 168		Overdue more than 365 days $ 7,873 7,493) $ 380		Total
					(		(	$ 49,264 7,493) $ 41,771

December 31, 2021

Total carrying amount Loss allowance (lifetime ECL) Amortized costs	Not overdue $ 109,685 - $ 109,685	Overdue for 1 to 60 days $ 16,421 - $ 16,421	Overdue for 61 to 120 days $ 1,428 - $ 1,428	Overdue for 121 to 364 days $ 3,129 ( 565) $ 2,564		Overdue more than 365 days $ 6,830 6,830) $ -		Total
				(	(		(	$ 137,493 7,395) $ 130,098

Changes in loss allowance of accounts receivable are as follows:

2022

2021

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Beginning balance Differences in currency exchange Ending balance	$ 7,395 98 ( $ 7,493	$ 7,423 28) $ 7,395

X. Inventories

Inventories
Finished goods Work in progress Raw material	December 31,2022 $ 82,346 39,077 191,554 $ 312,977	December 31,2021
			$ 45,725 52,897 197,280 $ 295,902

The nature of costs of sales is as follows:

Costs of goods sold Losses for market price decline and obsolete and slow-moving inventories		2022 $ 192,828 3,876 $ 196,704		2021
				$ 204,012 - $ 204,012

XI. Subsidiary

Subsidiaries included in the consolidated financial statements

The consolidated financial statements entities include:

Name of the investors The Company Tech-Plan（BVI）Ltd. Loop Telecommunication International Ltd.	Name of subsidiaries Tech-Plan（BVI）Ltd. Loop Telecom NA, Inc. Maxi View Holdings Ltd. Loop Telecommunication International Ltd. Chongqing Loop Technology Co., Ltd.	Main Business Activity Investment business Development and trading of digital communication equipment and software Investment business Investment business R&D, design, production, processing, and trading of digital communication equipment	Shareholding	Shareholding
			December 31,2022 100% 100% 100% 100% 100%	December 31,2021
				100% 100% 100% 100% 100%

(Cont’d)

(Cont’d)

Name of the investors Maxi View Holdings Ltd.	Name of subsidiaries Tianjin Loop Electron Technology Co., Ltd. Tianjin Loop Technology Co.,Ltd	Main Business Activity Development and trading of digital communication equipment and software Development and trading of digital communication equipment and software	Shareholding	Shareholding
			December 31,2022 100% 100%	December 31,2021
				100% 100%

XII. Property, plant and equipment

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Costs Balance on January 1, 2022 Addition Disposal Net exchange differences Balance on December 31, 2022 Cumulative depreciation Balance on January 1, 2022 Depreciation Disposal Net exchange differences Balance on December 31, 2022 Net amount on December 31, 2022 Costs Balance on January 1, 2021 Addition Net exchange differences Balance on December 31, 2021 Cumulative depreciation Balance on January 1, 2021 Depreciation Net exchange differences Balance on December 31, 2021 Net amount on December 31, 2021		Buildings $ 226,535 - - 190 $ 226,725 $ 83,721 5,705 - 134 $ 89,560 $ 137,165 $ 226,588 - 53 ) $ 226,535 $ 78,028 5,728 35 ) $ 83,721 $ 142,814	Machinery and equipment $ 5,972 1,672 ( 740 ) 27 $ 6,931 $ 3,642 1,159 ( 740 ) 20 $ 4,081 $ 2,850 $ 5,134 845 ( 7 ) $ 5,972 $ 2,789 858 ( 5 ) $ 3,642 $ 2,330	R&D equipment $ 17,005 58 ( 3,261 ) - $ 13,802 $ 10,242 3,189 ( 3,261 ) - $ 10,170 $ 3,632 $ 15,298 1,707 - $ 17,005 $ 6,250 3,992 - $ 10,242 $ 6,763	Transportation equipment $ 629 - - 1 $ 630 $ 320 91 - 2 $ 413 $ 217 $ 629 - - $ 629 $ 225 95 - $ 320 $ 309	Office equipment	Other equipment $ 2,660 - ( 1,375 ) - $ 1,285 $ 1,895 333 ( 1,375 ) - $ 853 $ 432 $ 2,585 75 - $ 2,660 $ 1,349 546 - $ 1,895 $ 765	Total
	( (					$ 8,708 355 ( 1,042 ) 40 $ 8,061 $ 5,907 1,251 ( 1,042 ) 35 $ 6,151 $ 1,910 $ 7,401 1,319 ( 12) $ 8,708 $ 4,545 1,371 ( 9) $ 5,907 $ 2,801		$ 261,509 2,085 ( 6,418 ) 258 $ 257,434 $ 105,727 11,728 ( 6,418 ) 191 $ 111,228 $ 146,206 $ 257,635 3,946 ( 72) $ 261,509 $ 93,186 12,590 ( 49) $ 105,727 $ 155,782

As there was no indication of impairment in 2022 and 2021, the Company did not

perform any impairment assessment.

Depreciation expenses are provided for based on the following useful lives on a straight-line basis:

basis:
Buildings	11 to 51 years
Machinery and equipment	3 to 10 years
R&D equipment	4 years
Transportation equipment	4 to 6 years
Office equipment	3 to 10 years
Other equipment	4 to 5 years

The material components of the Company’s building are primarily plant and interior fitting, and the depreciation is provided based on their useful life of 35 to 51 years and 11 years, respectively.

For the amount of property, plant and equipment pledged for borrowings, please refer to Note 28.

XIII. Lease agreement

• (I) Right-of-use assets

December 31, 2022 December 31, 2021

Carrying amount of right-of-

use assets

Land $ 42,591 $ 42,739

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Buildings Addition of right-of-use assets Depreciation expenses of right- of-use assets Land Buildings Gains on the sublease of right- of-use assets (accounted for as other income)	December 31,2022 - $ 42,591 2022 $ 1,217 $ 1,394 1,155 $ 2,549 ($ 590)	December 31,2021	December 31,2021
		(	1,155 $ 43,894 2021
	(		$ - $ 1,400 1,156 $ 2,556 $ 639)

Except for the additional and recognition of depreciation fees, right-of-use assets of the Company have no material sub-lease or impairment in 2022 and 2021.

(II) Lease liabilities

Lease liabilities
Carrying amount of lease liabilities Current Non-current	December 31,2022 $ 1,159 $ 48,109	December 31,2021
			$ 2,327 $ 48,000

The range of discount rate of lease liabilities is as follows:

Land Buildings	December 31,2022 2.30% -	December 31,2021
		2.30% 1.80%

(III) Material leasing activities and terms

The Company also rents certain land and buildings for use as plant, office, and dormitory, with a leasing period of 5 to 51 years. Lease payments may be adjusted for the land lease in Hsinchu Science Park based on the announced land price and other reasons at all times. Upon the end of the leasing period, the Company has no preemptive right for the acquisition of land and buildings it rented, and it is agreed that the Company may not sublease or transfer the entire or partial lease target without the consent of the lessor.

In 2019, the Company subleased partial right-of-use assets to Company A; relevant right-of-use assets are presented as investment properties; please refer to Note 14.

• 186 -

(IV) Other leases

Other leases
Expenses of short-term leases Total cash (outflow) of leases		2022 $ 476 $ 3,943)		2021
	(		(	$ 733 $ 4,190)

The Company chose the application of recognition exemption for employee dormitory and office leases that fulfill the conditions of short-term leases and do not recognize relevant right-of-use assets and lease liabilities for such leases.

XIV. Investment properties

Investment properties
Costs Balance on January 1, 2022 Addition Balance on December 31, 2022 Cumulative depreciation Balance on January 1, 2022 Depreciation Balance on December 31, 2022 Net amount on December 31, 2022 Costs Balance on January 1, 2021 and December 31, 2021 Cumulative depreciation Balance on January 1, 2021 Depreciation Balance on December 31, 2021 Net amount on December 31, 2021	Completed investment properties		Right-of-use assets $ 7,937 32 $ 7,969 $ 771 240 $ 1,011 $ 6,958 $ 7,937 $ 532 239 $ 771 $ 7,166		Total
		$ 39,159 - $ 39,159 $ 13,357 902 $ 14,259 $ 24,900 $ 39,159 $ 12,445 912 $ 13,357 $ 25,802			$ 47,096 32 $ 47,128 $ 14,128 1,142 $ 15,270 $ 31,858 $ 47,096 $ 12,977 1,151 $ 14,128 $ 32,968

During the leasing period, rental commitments commence after the balance sheet date are as follows:

date are as follows:
Rental commitment of investment properties	December 31,2022 $ 17,550	December 31,2021
			$ 23,241

The depreciation of investment properties is provided for based on the following useful lives on a straight-line basis:

Completed investment properties 35 to 51 years

• 187 -

Right-of-use assets

20 years

The fair value of investment properties is measured at the level 3 input by the independent appraiser Integration Appraiser Firm which is not a related party. The appraisal is performed by adopting the weighted average of the cost approach and the market comparison approach, and unobservable material inputs adopted include the discount rate; the fair value derived from the assessment is as follows:

Fair value measurement	December 31,2022 $ 66,684	December 31,2021	December 31,2021
			$ 65,335

For the amount of investment properties pledged for borrowings, please refer to Note 28.

XV. Intangible assets

Intangible assets
Costs Balance on January 1, 2022 Individually acquired Disposal Net exchange differences Balance on December 31, 2022 Cumulative amortization Balance on January 1, 2022 Amortization expense Disposal Net exchange differences Balance on December 31, 2022 Net amount on December 31, 2022	Software
	$ 8,838 6,797 ( 133 ) 1 $ 15,503 $ 3,339 3,658 ( 133 ) 1 $ 6,865 $ 8,638

(Cont’d)

(Cont’d)

Costs Balance on January 1, 2021 Individually acquired Balance on December 31, 2021 Cumulative amortization Balance on January 1, 2021 Amortization expense		Software
		$ 2,997 5,841 $ 8,838 $ 925 2,414

• 188 -

Balance on December 31, 2021 $ 3,339 Net amount on December 31, 2021 $ 5,499

The Company provides for the amortization fees of intangible assets based on a straight-line basis over 3 years.

XVI. Other assets

XVII.

Other assets
Current Overpaid sales tax Temporary payments Prepaid insurance premium Prepayments for goods Other prepayments Borrowings Long-term borrowings Secure borrowings(Note 28) Bank borrowings Less: Presented as due within one year Long-term borrowings	December 31,2022 $ 975 658 94 73 1,134 $ 2,934 December 31,2022 $ 1,936 ( 1,936) $ -	December 31,2021
		$ 19 1,236 5,427 1,400 3,228 $ 11,310 December 31,2021
	(	(	$ 4,225 2,289) $ 1,936

Bank borrowings are secured by the building of the Company and shall be repaid in installments each month starting from October 2013, with settlement in October 2023. As of December 31, 2022 and 2021, the effective annual interest rate was 2.08% and 1.53%, respectively.

XVIII. Other liabilities

Other liabilities
Current Other payables Remunerations of employees and Directors payable Bonuses payable Salaries payable Insurance premium payable	December 31,2022 $ 11,374 10,207 9,806 3,072	December 31,2021
		$ 5,434 11,752 10,102 2,379

• 189 -

Service fees payable Equipment payments payables Others Other current liabilities Advance (Note) Receipts under custody Others Other non-current liabilities Advance (Note)	1,795 85 22,811 $ 59,150 $ 29,778 550 134 $ 30,462 $ 23,304	1,789 267 15,546 $ 47,269 $ - 569 656 $ 1,225 $ -

Note: The Company has entered into a trademark licensing contract of NT$82,860 thousand (US$3,000 thousand), and the amount was fully collected in cash in

January 2022. The Company allocates and recognizes trademark licensing income on a straight-line basis; in 2022, it recognized trademark licensing income of NT$29,778 thousand (accounted for as other income).

XIX. Retirement benefit plan

• (I) Defined contribution plans

The pension system under the “Labor Pension Act” applicable to the Company is a defined contribution plan managed by the government, and the Company appropriates 6% of the monthly salaries of employees to the personal accounts with the Bureau of Labor Insurance.

• (II) Defined benefit plans

The pension system, organized in accordance with the “Labor Standards Act” of R.O.C., is a defined benefit plan managed by the government. The payment of an employee’s retirement pension is calculated based on the service seniority and average wages during the six months before the approved retirement date. The Company appropriates 6% of the total monthly salaries of employees as the pension for the Supervisory Committee of Labor Retirement Reserve to deposit in the account with the Bank of Taiwan in the name of the Committee. At the end of the year, if it is estimated that the balance of the account is not sufficient to make the payments for laborers who are estimated to fulfill the retirement conditions in the following year, the Company will appropriate the difference in a lump sum by the end of March in the following year. The Bureau of Labor Funds, Ministry of Labor, is entrusted with the management of the account, and the Company has no right to affect the investment and management strategies.

• 190 -

The amount of the defined benefit plan included in the consolidated balance sheet

is as follows:

is as follows:
Defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31,2022 $ 54,458 (37,727) $ 16,731	December 31,2021
	(	(	$ 63,268 35,120) $ 28,148

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

(Cont’d) (Cont’d)

						Net defined	Net defined
	Defined benefit		Fair value of			benefit liabilities
	obligation		plan assets				(assets)
January 1, 2021	$	64,121	($	34,547)		$	29,574
Service costs
Current period service
costs		85			-		85
Interest expenses
(income)		482	(	271)			211
Recognized in profit or
loss		567	(	271)			296
Remeasurement
Compensation of plan
assets (except for
amounts included in net
interest)		-	(	351 )		(	351 )
Actuarial losses -
experience adjustments		1,712			-		1,712
Recognized in other
comprehensive income		1,712	(	351)			1,361
Appropriated by the
employer		-	(	3,083)		(	3,083)
Benefit payments	(	3,132)		3,132			-
December 31, 2021		63,268	(	35,120)			28,148
Service costs
Current period service
costs		87			-		87
Interest expenses
(income)		316	(	183)			133
						Net defined
	Defined benefit		Fair value of			benefit liabilities
	obligation		plan assets				(assets)
Recognized in profit or
loss	$	403	($	183)		$	220
Remeasurement

• 191 -

Compensation of plan assets (except for amounts included in net interest) Actuarial gains - experience adjustments ( Recognized in other comprehensive income ( Appropriated by the employer Benefit payments ( December 31, 2022	- ( 2,743 ) ( 2,743 ) 3,744) - ( 3,744) 3,744) ( 2,743) ( 6,487) - ( 5,150) ( 5,150) 5,469) 5,469 - $ 54,458 ($ 37,727) $ 16,731

The amount of the defined benefit plan recognized in profit or loss is summarized by function as follows:

by function as follows:
Operating cost Sales and marketing expenses General and administrative expenses Research and development expenses		2022 $ 57 23 27 113 $ 220		2021
				$ 69 26 51 150 $ 296

The Company is exposed to the following risks due to the pension system under the “Labor Standards Act”:

1. Investment risks: The Bureau of Labor Funds, Ministry of Labor, invests labor pension funds in domestic (foreign) equity securities, debt securities, bank deposits, and other targets by way of self-utilization or entrusted management; however, the amount available for allocation of the Company’s plan assets shall not be lower than the gains calculated at the interest rate for two-year time deposits with local banks.

2. Interest rate risks: A decrease in the government bonds interest rate will lead to an increase in the current value of the defined benefit obligations; however, debt investment returns of plan assets will also increase; both items have partial offsetting effects on net defined benefit liabilities.

3. Salary risks: The calculation of the current value of defined benefit obligations refers to the future salaries of the plan’s participants. Therefore, an increase in the salaries of the plan’s participants will result in an increase in the current value of defined benefit obligations.

4. 192 -

The actuarial valuation for the current value of defined benefit obligations of the Company is performed by a qualified actuary; the material assumption adopted on the measurement date is as follows:

measurement date is as follows:
Discount rate Expected increase rate of salaries	December 31,2022 1.25% 3.00%	December 31,2021
		0.50% 3.00%

If there are reasonable and possible changes in a material actuarial assumption and when all other assumptions remain unchanged, the increase (decrease) in the current value of defined benefit obligations is as follows:

Discount rate Increased by 0.25% Decreased by 0.25% Expected increase rate of salaries Increased by 1.00% Decreased by 1.00%	December 31,2022 ($ 1,041) $ 1,073 $ 4,505 ($ 4,070)	December 31,2021	December 31,2021
	( (	( (	$ 1,455) $ 1,504 $ 6,174 $ 5,530)

As actuarial assumptions may be correlated, the possibility of having changes in a single assumption is low; therefore, the abovementioned sensitivity analysis may not be able to reflect the actual changes in the current value of defined benefit obligations.

Amount expected to be appropriated in one year Average maturity of defined benefit obligations	December 31,2022 $ 5,150 10.7 years	December 31,2021
		$ 3,084 11.4 years

XX. Equity

• (I) Common stock

Common stock
Authorized shares ( in thousands) Authorized capital Number of issued and paid-in shares (in thousands) Issued share capital	December 31,2022 128,000 $ 1,280,000 70,921 $ 709,206	December 31,2021
			128,000 $ 1,280,000 70,921 $ 709,206

The par value of issued ordinary shares is NT$10 per share, and each share is entitled to one vote and the right to receive dividends.

(II) Capital surplus

• 193 -

December 31, 2022 December 31, 2021

Available for loss compensation, cash distribution, or appropriation to share capital(Note) Premium of share issuance Premium of corporate bond conversion Treasury share transactions Only available for loss compensation Uncollected dividends of shareholders’ past due	$ 6,913 31,731 9,357 207 $ 48,208	$ 6,913 31,731 9,357 207 $ 48,208

Note: Such capital reserve may be used in loss compensation, and may be used in cash distribution or appropriation to share capital when the Company has no loss; however, appropriation to share capital is limited to a certain ratio of the paid-in ratio.

• (III) Retained earnings and dividend policy

According to the requirements of earning distribution policy in the Articles of Incorporation, if the Company records earnings from the final account of the year, after paying taxes and compensating cumulative losses according to the law, the Company shall appropriate 10% as the statutory surplus reserve. For the remaining earnings, the Company shall appropriate or reverse special surplus reserve according to the requirements of laws and regulations. Shall there be remaining balances, the Company shall combine such balances with the cumulated undistributed earnings, and the Board shall prepare the proposal for earning distribution and submit it to the shareholders’ meeting for the resolution of distributing dividends and bonuses to shareholders. For the distribution policy of remuneration of employees and Directors stipulated in the Articles of Incorporation, please refer to Note 22 (7).

In addition, according to the requirements of the Articles of Incorporation, the Company responds to the current and future development plans and takes investment environments, capital requirements, and domestic and foreign competition status into account, with equal consideration given to shareholders’ benefits. The Board shall prepare the proposal for earning distribution, and the shareholders’ meeting shall make the resolution. Distribution of shareholders' dividends/bonuses may be made in shares

• 194 -

or cash; however, in principle, the ratio of cash dividends to the total distribution amount shall not be less than 10%.

The appropriation of the legal reserve shall be until its balance reaches the total paid-in capital of the Company. Legal reserve may be used in loss compensation. When the Company has no loss, the part of the legal reserve that exceeds the total paidin capital for 25% may be distributed in cash.

The Company held its annual shareholders’ meetings on June 29, 2022 and August 27, 2021 and the proposals for earning distribution for 2021 and 2020 approved as resolutions are as follows:

as resolutions are as follows:
Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2021 $ 3,166 $ 83 $ 28,368 $ 0.40		2020
				$ 7,725 $ 105 $ 69,503 $ 0.98

In addition, on August 27, 2021, the Board of the Company intended to distribute cash of NT$1,418 thousand from its capital reserve, NT$0.02 per share.

On March 28, 2023, the proposal for the earning distribution of 2022 discussed by the Board is as follows:

by the Board is as follows:
Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2022
	(	$ 7,389 $ 302) $ 66,665 $ 0.94

In addition, the Board of the Company intended to distribute cash of NT$4,255 thousand from its capital reserve, NT$0.06 per share on March 28, 2023.

The proposal for the earning distribution and the proposal for the cash distribution from the capital reserve of 2022 are expected to be resolved at the annual shareholders’ meeting to be convened on June 28, 2023.

(IV) Special reserve

(V)

Special reserve
Beginning balance Appropriation of special reserve Ending balance Other Components of Equity		2022 $ 3,005 83 $ 3,088		2021
				$ 2,900 105 $ 3,005

Exchange differences on translation of foreign operations

Beginning balance	2022 ( $ 3,088 )	2021
		( $ 3,005 )

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XXI.	Generated during the year Translation difference of foreign operations Ending balance Net revenue Revenue from contracts with customers Income from product sales Service revenue	(		302 2,786) 2022 $ 402,957 35,285 $ 438,242	( (	83) $ 3,088) 2021
			$
						$ 342,154 173,356 $ 515,510

• (I) Description of contracts with customers

• Sales revenue of products

Refer to the sales of optical transport network access equipment, U interface

and MDSL interface multiplexer, network management systems, Internet access equipment, time-slot interchanger, and other products.

1. Service revenue

Partial contracts entered into with customers include educational training services and software/hardware installation services.

• (II) Contract balance

Contract balance
Accounts receivable (Note 9) Contract assets - current Sales of products Contract liabilities - current Sales of products	December 31, 2022 $ 41,771 $ 32,776 $ 3,002	December 31, 2021 $ 130,098 $ 148,875 $ 1,112	January1,2021
				$ 244,293 $ 100,694 $ 2,274

Changes in contract assets and liabilities are primarily due to the difference in the point of time fulfilling the performance obligations and the point of time that customers make payments.

The amount of contract liabilities at the beginning of the year recognized as revenue of the current period is as follows:

Contract liabilities from the beginning of the year	2022	2021

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$

$ 1,775

Sales of products

393

• (III) Breakdown of revenue from contracts with customers

For the details of revenue, please refer to Note 32.

XXII. Net income

(I)	Interest income
			2022		2021
	Bank deposits		$ 4,029	$	196
(II)	Other income
			2022		2021
	Trademark licensing income
	(Note 18)		$ 29,778	$	-
	Income and expenses of
	investment properties
	Rental income		6,322		4,739
	Depreciation of investment
	properties	(	1,142 )	(	1,151 )
	Dividend income		43		5
	Others		1,118		1,055
			$ 36,119	$	4,648
(III)	Other gains and losses
			2022		2021
	Net gains (losses) on currency
	exchange		$ 32,598	( $	3,738 )
	Net (losses) gains on financial
	assets at fair value through
	profit or loss	(	508 )		100
	Others	(	2,096)	(	23)
			$ 29,994	($	3,661)
(IV)	Finance costs
			2022		2021
	Interest of lease liabilities		$ 1,159	$	1,177
	Interest of bank borrowings		89		160
			$ 1,248	$	1,337
(V)	Depreciation and amortization
			2022		2021
	Summary of depreciation
	expenses by function
	Operating cost		$ 5,281	$	4,564
	Operating expenses		8,996		10,582

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Other expenses Summary of amortization expenses by function Operating cost Operating expenses	1,142 $ 15,419 $ 128 3,530 $ 3,658	1,151 $ 16,297 $ 40 2,374 $ 2,414

(VI) Employee benefits expense

Employee benefits expense
Short-term employee benefits Post-employment benefits (Note 19) Defined contribution plans Defined benefit plans Other employee benefits Total employee benefits expenses Summary by function Operating cost Operating expenses		2022 $ 176,620 6,558 220 6,778 8,843 $ 192,241 $ 33,304 158,937 $ 192,241		2021
				$ 181,643 6,782 296 7,078 8,025 $ 196,746 $ 36,259 160,487 $ 196,746

(VII) Remunerations of employees and Directors

According to the requirements of the Articles of Incorporation, if there is any balance after retaining the amount for compensating cumulative losses, the Company shall distribute no less than 10% and no more than 5% of the net income before tax

and before deduction remuneration of employees and Directors of the year as remuneration of employees and remuneration of Directors, respectively. In 2022 and 2021, remuneration of employees and remuneration of Directors were resolved by the Board on March 28, 2023 and March 30, 2022, respectively, as follows:

Estimated ratio

Estimated ratio
Remuneration of employees Directors' remuneration Amount	2022 10% 2%	2021
		10% 2%

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Remuneration of employees Directors' remuneration		2022 Cash Shares $ 9,478 $ - $ 1,896 $ -	2022 Cash Shares $ 9,478 $ - $ 1,896 $ -		2021	2021	2021
		Cash			Cash		Shares
		$ 9,478 $ 1,896			$ 4,528 $ 906		$ - $ -

If there is any change in the amount after the approval date for the publication of the consolidated financial statements, it shall be treated as a change in accounting estimate, and adjusted and accounted for in the following year.

In 2021 and 2020, the actual distribution amount of remuneration of employees and remuneration of Directors has no difference from the amount recognized in the 2021 and 2020 consolidated financial statements.

For information on the remuneration of employees and remuneration of Directors resolved by the Board of the Company, please visit “MOPS” of the Taiwan Stock Exchange for inquiries.

(VIII) Foreign currency exchange gains and losses

Total gains on currency exchange Total losses on currency exchange Net gains (losses)		2022 $ 32,598 - $ 32,598		2021
			( (	$ 545 4,283) $ 3,738)

XXIII. Income tax

(I) Income tax recognized in profit or losses The major components of income tax expenses are as follows:

Income tax of the period Generated during the year Additional tax on undistributed earnings Adjustments from prior years		2022 $ 9,510 2 2,048 11,560		2021
			(	$ 7,042 - 1,049) 5,993

(Cont’d) (Cont’d)

Deferred income tax Generated during the year Income tax expenses recognized in profit or losses		2022 4,440 $ 16,000		2021
				826 $ 6,819

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The reconciliation of accounting income and income tax expenses is as follows:

				2022		2021
	Net income before tax			$ 83,403		$ 39,845
	Income tax expense at the
	statutory rate			$ 16,681		$ 7,969
	Non-deductible items in
	determining taxable income			1,069		1,164
	Tax-exempted income		(	9 )	(	18 )
	Unrecognized deductible
	temporary differences			283		1,771
	Investment tax credits during the	63
	period		(	4,074 )	(	3,018 )
	Additional tax on undistributed	63
	earnings			2		-
	Adjustments from prior years			2,048	(	1,049)
	Income tax expenses recognized
	in profit or losses			$ 16,000		$ 6,819
(II)	Tax liability
			December 31,2022		December 31,2021
	Tax liability
	Income tax payable			$ 9,235		$ 7,042

(III) Deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as follows:

2022

2022
Deferred income tax assets Temporary difference Unrealized allowance for inventory valuation and obsolescence losses Unrealized exchange losses Others		Beginning balance $ 4,854 1,733 111 $ 6,698	Changes duringtheyear $ 775 ( 1,733 ) ( 27) ($ 985)		Ending balance
					$ 5,629 - 84 $ 5,713

Deferred income tax liabilities	Beginning balance	Changes duringtheyear	Ending balance

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Temporary difference Unrealized exchange gains 2021 Deferred income tax assets Temporary difference Unrealizedallowance for inventory valuation and obsolescence losses Unrealized exchange losses Estimation of payment in lieu of untaken annual leave Others		$ - Beginning balance $ 4,854 1,735 823 112 $ 7,524	$ 3,455 Changes duringtheyear $ - ( 2 ) ( 823 ) ( 1) ($ 826)		$ 3,455 Ending balance
					$ 4,854 1,733 - 111 $ 6,698

• (IV) Deductible temporary differences of deferred income tax assets not recognized in the consolidated balance sheet

consolidated balance sheet
Deductible temporary differences	December 31,2022 $ 63,866	December 31,2021
			$ 62,451

• (V) Assessment of tax

The profit-seeking business income tax declarations of the Company as of 2020

have been approved by the taxation authority.

XXIV. Earnings per share

arnings per share
Basic earnings per share Diluted earnings per share		(In New Taiwan Dollarsper share) 2022 2021 $ 0.95 $ 0.47 $ 0.94 $ 0.46
				$ 0.47 $ 0.46

Net income and the weighted average number of ordinary shares used to calculate earnings per share are as follows:

Net income for the year

Net income for the year
Net income used to calculate basic and diluted earnings per share Shares		2022 2021 $ 67,403 $ 33,026 Unit: thousand shares		2021

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Weighted average number of ordinary shares used to calculate basic earnings per share Impacts of potential ordinary shares with diluted effects: Remuneration of employees Weighted average number of ordinary shares used to calculate diluted earnings per share		2022 70,921 512 71,433		2021
				70,921 255 71,176

If the Company may choose to distribute remuneration of employees in stock or in cash, when calculating the diluted earnings per share, it assumes that remuneration of employees will be distributed in stock and calculates the diluted earnings per share by including the weighted average number of outstanding shares when potential ordinary shares have diluted effects. When calculating diluted earnings per share before resolving

the number of shares for the distribution of remuneration of employees in the following year, the Company continues to consider the diluted effects of such potential ordinary shares.

XXV. Capital risk management

The Company engages in capital management to ensure all enterprises within the Group can optimize the balance of liabilities and equity with a precondition of continuing operations so as to maximize shareholders’ return. The overall strategy of the Company has no significant change.

The capital structure of the Company is composed of equity (i.e., share capital, capital reserve, retained earnings, and other equity items).

The Company is not required to comply with other external capital requirements. XXVI. Financial instruments

• (I) Information on fair value - financial instruments not measured at fair value

• The management of the Company considers that the carrying amounts of financial

• assets and financial liabilities not measured at fair value are equivalent to their fair value.

• (II) Information on fair value - financial instruments at fair value on a repeatability basis

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• Fair value hierarchy December 31, 2022

December 31, 2022
Financial asset measured at fair value through profit or loss Domestic listed stocks Beneficiary certificates December 31, 2021 Financial asset measured at fair value through profit or loss Domestic listed stocks		Level 1 $ 3,375 30,171 $ 33,546 Level 1 $ 321		Level 2 $ - - $ - Level 2 $ -		Level 3 $ - - $ - Level3 $ -	Total
							$ 3,375 30,171 $ 33,546 Total
							$ 321

In 2022 and 2021, there was no measurement transfer between level 1 and

level 2 fair value.

• (III) Categories of financial instruments

Categories of financial instruments
Financial assets Measured at fair value through profit or loss Financial assets at amortized costs (Note 1) Financial liabilities Measured at amortized costs (Note 2)	December 31,2022 $ 33,546 432,003 90,724	December 31,2021
		$ 321 277,029 96,937

Note 1: The balance includes cash and cash equivalents, financial assets at amortized costs (current and non-current), accounts receivable, other receivables, and other financial assets at amortized costs.

• Note 2: The balance includes accounts payable, other payables, long-term borrowings (including those due within one year), and other financial liabilities at amortized costs.

• (IV) Financial risk management purpose and policy

The Company’s main financial instruments include investments in equity instruments, cash and cash equivalents, accounts receivable, bank borrowings, accounts payable, and lease liabilities. The financial management department of the Company provides services for all business departments, coordinates the entrance to

• 203 -

domestic and international financial markets for operations, analyzes the internal risk of exposure based on the level and width of risks, and monitors and manages financial risks related to the operations of the Company. Such risks include market risks (including exchange rate risks, interest rate risks, and other price risks), credit risks, and liquidity risks.

1. Market risk

The major financial risks assumed by the Company due to its operating activities are the risk of changes in exchange rates (please refer to (1) below for details) and the risk of changes in interest rates (please refer to (2) below for details).

There is no change in the exposure to financial instrument market risks of the Company and its management and measurement methods of such exposures. (1) Exchange rate risks

The Company engages in sales and purchases denominated in foreign currencies, resulting in the exposure of the Company to changes in exchange rates. The management of exchange rate exposure of the Company is to utilize natural hedging methods for risk management within the scope permitted under its policies.

For the carrying amount of monetary assets and monetary liabilities denominated in non-functional currencies of the Company on the balance sheet date, please refer to Note 30.

Sensitivity analysis

The Company is primarily affected by the fluctuation of the USD’s exchange rate.

The following table describes the sensitivity analysis of the Company when the exchange rate of the functional currency appreciates and depreciates by 1% for each of the relevant foreign currencies. The sensitivity ratio used to report to the major management within the Company for exchange rate risks is 1%, which also represents the scope of reasonable and possible changes in exchange rates assessed by the management. The sensitivity analysis only includes outstanding monetary items in foreign currencies, and adjustments are made to their translation at the end of the period based on a change of 1%. The positive figures in the following table refer to the increase in net income before tax when

• 204 -

NTD depreciates by 1% against relevant currencies; when NTD appreciates by 1% against relevant currencies, the effects on net income before tax will be the same amount in negative.

Profit or loss	Effects of	USD
	2022 $ 3,300(i)	2021
		$ 1,589(i)

• (i) Primarily originated from cash and cash equivalents, accounts receivable, other receivables, and accounts payable denominated in USD that is outstanding on the balance sheet date with no cash flow

hedging performed.

• (2) Interest rate risks

Interest rate exposure arising from the borrowing of capital at fixed and floating rates by entities within the Company. The Company manages the interest rates risk by maintaining an adequate portfolio of fixed and variable interest rates.

The carrying amount of financial assets and financial liabilities under interest rate exposure on the balance sheet date is as follows:

With fair value interest rate risks - Financial assets - Financial liabilities With cash flow interest rate risks - Financial assets - Financial liabilities	December 31,2022 $ 282,187 49,268 106,119 1,936	December 31,2021
		$ 40,200 50,327 104,810 4,225

Sensitivity analysis

The following sensitivity analysis is based on the risk exposure to the interest rates risk of non-derivative instruments on the balance sheet date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding on the balance sheet date was outstanding throughout the reporting period. The rate of change used to report to the major management within the Group is an increase or decrease of 0.1% in the interest rate, which also represents the scope of reasonable and possible changes in interest rates assessed by the management.

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With other variables remaining unchanged, if the interest rate increases/decreases by 0.1%, the net income before tax of the Company in 2022 and 2021 will increase/decrease by NT$104 thousand and NT$101 thousand in 2022 and 2021, respectively, primarily due to the interest rate exposure of net assets at variable interest rates.

• (3) Other price risks

The Company has equity price exposure arising from its investments in equity securities. Such equity investments are not held for trading purposes but strategic investments; the Company is not actively trading such investments. In addition, the Company has appointed a particular team to monitor price risks and evaluate the timing to increase the hedging positions of the risks hedged.

Sensitivity analysis

The following sensitivity analysis is based on the equity price on the balance sheet date.

If the equity price increases/decreases by 5%, net income before tax in 2022 and 2021 will increase/decrease by NT$1,677 thousand and NT$16 thousand, respectively, due to the increase/decrease in the fair value of financial assets at fair value through profit or loss.

1. Credit risks

Credit risks refer to risks of financial losses of the Group resulting from the delay in performing contract obligations of counterparties. As of the balance sheet date, the maximum credit risk exposure of financial losses that may incur to the Company due to non-performance of obligations by counterparties and the provision of financial guarantees is the carrying amount of financial assets recognized in the consolidated balance sheet.

To mitigate credit risks, the management of the Company has appointed a dedicated team to be responsible for the decision of loan limits, loan approval, and other monitoring procedures to ensure that appropriate actions are adopted for the recovery of overdue amounts receivable. In addition, the Company reviews the recoverable amount of amounts receivables on a case-by-case basis on the balance sheet date to ensure impairment losses are provided for amounts receivable not recoverable. Accordingly, the management of the Company considers that the credit risks of the Company have reduced significantly.

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3. Liquidity risks

The Company supports its operations and mitigates the effects of cash flow fluctuation by managing and maintaining abundant positions of cash and cash equivalents. The management of the Company monitors the use status of financing limits with banks and ensures compliance with the terms of borrowing contracts.

Bank borrowings represent a material source of liquidity to the Company. As of December 31, 2022 and 2021, the Group has not utilized any financing limit; please refer to the description of the financing limit in (3) below.

(1) Table of liquidity and interest rate risks of non-derivate financial liabilities

The maturity analysis of remaining contracts for non-derivative liabilities is prepared in accordance with the earliest date on which the Company may be requested to make repayment based on the undiscounted cash flow of financial liabilities (including principals and estimated interests). Therefore, bank borrowings that the Company may be requested to repay immediately are set out in the earliest period in the following table, without considering the probability of banks exercising their rights immediately; the maturity analysis of other non-derivative financial liabilities is prepared based on the repayment dates agreed upon. December 31, 2022

Non-derivative financial liabilities Accounts payable Other payables Lease liabilities Instruments at floating interest rates		Request of instant payment or less than 1 month $ 11,239 7,760 190 195 $ 19,384	1 to 3 months $ 18,342 45,497 380 391 $ 64,610	3 months to 1 year $ 57 5,893 1,711 1,368 $ 9,029		Over 1year $ - - 65,943 - $ 65,943		Total
								$ 29,638 59,150 68,224 1,954 $ 158,966

Further information on the maturity analysis of the abovementioned financial liabilities is as follows:

• 207 -

Lease liabilities Instruments at floating interest rates	Less than 1 year	Less than 1 year	1 to 5years	1 to 5years		5 to 10 years		10 to 15 years		15 to 20 years		Over 20 years
		$ 2,281 1,954 $ 4,235		$ 9,119 - $ 9,119		$ 11,398 - $ 11,398		$ 11,398 - $ 11,398		$ 11,398 - $ 11,398		$ 22,630 - $ 22,630

December 31, 2021

Non-derivative financial liabilities Accounts payable Other payables Lease liabilities Instruments at floating interest rates		Request of instant payment or less than 1 month $ 24,189 36,091 288 194 $ 60,762	1 to 3 months $ 20,210 6,219 576 390 $ 27,395	3 months to 1 year $ 1,044 4,959 2,592 1,753 $ 10,348		Over 1year $ - - 65,820 1,950 $ 67,770		Total
								$ 45,443 47,269 69,276 4,287 $ 166,275

Further information on the maturity analysis of the abovementioned financial liabilities is as follows:

Less than 1 year 1 to 5years 5 to 10 years 10 to 15 years Lease liabilities $ 3,456 $ 11,348 $ 11,348 $ 11,348 Instruments at floating interest rates 2,337 1,950 - - $ 5,793 $ 13,298 $ 11,348 $ 11,348 Financing limit December 31,2022 Secured bank borrowings limits (may be extended with the consent of both parties) - Amount utilized $ 1,936 - Amount not utilized 352,875 $ 354,811	Less than 1 year	1 to 5years		5 to 10 years		10 to 15 years			15 to 20 years	15 to 20 years		Over 20 years
						$ 11,348 -		$ 11,348 - $ 11,348 December			$ 20,428 - $ 20,248 31,2021
						$ 11,348
										$ 4,225 449,775 $ 454,000

• (2) Financing limit

XXVII. Related party transactions

When preparing the consolidated financial statements, transactions, accounting balances, gains and losses between the Company and subsidiaries (who are related parties of the Company) are eliminated in full; therefore, they are not disclosed in the note.

Compensation of key management personnel

• 208 -

Short-term employee benefits Post-employment benefits Other employee benefits		2022 $ 18,070 375 144 $ 18,589		2021
				$ 20,136 376 144 $ 20,656

The salary of Directors and other major management is determined by the Remuneration Committee based on individual performance and market trends.

XXVIII. Pledged assets

The following assets were provided as collateral for bank borrowings, performance guarantees, and lease deposits:

guarantees, and lease deposits:
Time deposits pledged (accounted for financial assets at amortized costs - non-current) Property, plant and equipment and investment properties Refundable deposits	December 31,2022 $ 12,026 23,425 30,212 $ 65,663	December 31,2021
			$ 12,018 24,301 14,045 $ 50,364

XXIX. Significant subsequent events

On March 28, 2023, the Board approved the resolution to reduce its capital and return the capital contribution in cash in the amount of NT$141,841 thousand and reduce the paid-in capital in the amount of 14,184 thousand shares; the paid-in capital after the

capital reduction was NT$567,365 thousand, and the capital reduction ratio is approximately 20%. The proposal is expected to be resolved at the annual shareholders’ meeting to be convened on June 28, 2023 and declared to the competent authority for effectiveness.

XXX. Assets and liabilities in foreign currencies of material effects

The following information is presented as a summary of foreign currencies other than functional currencies of entities within the Company, and the exchange rates disclosed are the exchange rates used to translate such foreign currencies into functional currency. Assets and liabilities in foreign currencies of material effects are as follows:

Unit: Foreign currencies/NT$ thousand

• 209 -

December 31, 2022

December 31, 2022
Assets in foreign currencies Monetary items USD RMB EURO GBP Liabilities in foreign currencies Monetary items USD December 31, 2021 Assets in foreign currencies Monetary items USD RMB GBP Liabilities in foreign currencies Monetary items USD	Foreign currency $ 11,235 1,257 155 104 489 Foreign currency $ 6,432 1,190 104 692	Exchange rate 30.71 4.408 32.72 37.09 30.71 Exchange rate 27.68 4.344 37.30 27.68	Carryingamount
			$ 345,027 5,541 5,072 3,857 $ 359,497 $ 15,017 Carryingamount
				$ 178,038 5,169 3,879 $ 187,086 $ 19,155

(Losses) gains (unrealized) on currency exchange of material effects are as follows:

Foreign currency USD	2022	Net exchange gains or losses $ 17,269	2021
	Exchange rate 30.71		Exchange rate	Net exchange gains or losses ($ 7,587)
			27.68		$ 7,587)

XXXI. Disclosures notes

• (I) Information on significant transactions:

• Financings provided to others: None.

• Endorsements and guarantees provided to others: None

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• Marketable securities held (excluding investments in the equity of subsidiaries). (Table 1)

• Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None

• Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None

• Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None

• Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: None

• Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None

• Information about the derivative financial instruments transaction: None

• Others: The business relationship between the parent and the subsidiaries and significant transactions between them (Table 5)

• (II) Information on investees (Table 2)

• (III) Information on investments in Mainland China:

• Name of investees in Mainland China, major scope of business, paid-in capital, investment methods, outward/inward remittance of capital, shareholding ratio, carrying amount of investments at the end of the period, gains or losses on investments remitted back, and investment limits in Mainland China. (Table 3)

• Material transactions that occurred directly or indirectly via a third-party region with investees in Mainland China, their prices, payment conditions, and unrealized gains or losses: (Table 4)

  • (1) Purchase amount and ratio and ending balance and ratio of relevant amounts payable.

  • (2) Sales amount and ratio and ending balance and ratio of relevant amounts receivable.

  • (3) Amount of property transaction and gains or losses arising thereof.

  • (4) Ending balance of note endorsements/guarantees of provision of collateral and its purpose.

• 211 -

• (5) Maximum balance of fund accommodation, closing balance, interest rate range, and total interest of the period.

• (6) Other transactions have material effects on the profit or loss of the period or financial position (i.e., provision or receipt of services).

• (IV) Information on major shareholders: Name of major shareholders with a shareholding of 5% or above and shareholding ratio. (Table 6)

XXXII. Segment information

(I) Segment income, operating achievements, and total assets and liabilities of segments: The operating decision-maker of the Company focuses on the financial information of products to allocate resources and evaluate segment performance; each product has similar economic features, each product adopts similar procedures, and products are sold via unified and centralized sales methods; therefore, the Company is reported as a single operating segment. Furthermore, for the segment information provided by the Company to the operating decision-maker for review, the measurement basis is equivalent to that of financial statements; therefore, the consolidated statement of comprehensive income in 2022 and 2021 may be referred to for the reportable segment income and operating achievements in 2022 and 2021. The consolidated balance sheet as of December 31, 2022 and 2021 may be referred to for the reportable segment assets as of December 31, 2022 and 2021.

• (II) Revenue from major products

Revenue from major products of the Company is analyzed as follows:

Product Optical transport network access equipment U interface and MDSL interface multiplexer Network management system Time-slot interchanger Internet access equipment Others		2022 $ 236,872 132,501 7,003 3,582 3,039 55,245 $ 438,242		2021
				$ 326,623 122,329 8,250 3,034 24,093 31,181 $ 515,510

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(III) Geographic information

The Company primarily operates in three regions - Asia, Europe, and America. Information on the revenue of continuing operations from external customers by operating venue and on non-current assets by location of assets is set out as follows:

Taiwan Asia (other than Taiwan) America Europe Others		External customer 2022 2021 $ 107,240 $ 252,119 102,028 115,254 101,558 54,651 85,562 71,234 41,854 22,252 $ 438,242 $ 515,510	External customer 2022 2021 $ 107,240 $ 252,119 102,028 115,254 101,558 54,651 85,562 71,234 41,854 22,252 $ 438,242 $ 515,510	Non-current assets	Non-current assets	Non-current assets	Non-current assets
		2022		December 31, 2022		December 31, 2021 $ 231,598 6,545 - - - $ 238,143
		$ 107,240 102,028 101,558 85,562 41,854 $ 438,242			$ 223,352 5,941 - - - $ 229,293		$ 231,598 6,545 - - - $ 238,143

Non-current assets exclude deferred income tax assets, refundable deposits, and financial instruments.

(IV) Major customers

The breakdown of customers who account for 10% of the Company’s net revenue

or above is as follows:

or above is as follows:
Customer A Customer B Customer C		2022 $ 90,308 $ 78,171 $ 39,497		2021
				Note $ 229,413 $ 53,096

Note: Sales revenue has not reached 10% of the Company’s revenue.

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Loop Telecommunication International, Inc. and its subsidiaries

Marketable securities held

December 31, 2022

Table 1

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Names of companies held	Category of marketable securities	Name of marketable securities	Relationship with the securities issuer	Accounting item		At the end of theperiod	At the end of theperiod		Remarks
					Shares (In Thousands)	Carrying amount	Shareholding ratio(%)	Market price
The Company	Fund Common shares Common shares Common shares Common shares Common shares Preferred shares	Union Money Market Fund Taiwan Semiconductor Manufacturing Company Limited TPK Holding Co., Ltd. G-TECH Optoelectronics Corporation Sunspring Metal Corporation TTY Biopharm Company Limited Formerica Optoelectronics Inc.	－ － － － － － －	Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current	2,249 7 3 3 2 1 8	$ 30,171 3,140 88 62 45 40 -	- - - - - - -	$ 30,171 3,140 88 62 45 40 -	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 －

Note 1: Calculated based on the closing price of shares on December 31, 2022.

Note 2: As of December 31, 2022 the abovementioned securities were not provided for guarantee, pledge, or being restricted from use due to other agreements.

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Loop Telecommunication International, Inc. and its subsidiaries

Information on investees, location, and other relevant information

For the year ended December 31, 2022

Table 2

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Name of the investors	Name of the investees	Location	Main business line	Original / investment amount	Original / investment amount	Held at the end of theperiod	Held at the end of theperiod	Held at the end of theperiod	Net loss of the investee for the period (Note)	Investment losses recognized during the period(Note)	Remarks
				Ending balance of the period	End of the preceding period	Shares (In Thousands)	Ratio (%)	Carrying amount (Note)
The Company Tech-Plan (BVI) Ltd.	Tech-Plan (BVI) Ltd. Loop Telecom NA, Inc. Maxi View Holdings Ltd. Loop Telecommunication International Ltd.	BVI The U.S. Hong Kong Cayman	Investment business Development and trading of digital communication equipment and software Investment business Investment business	USD 4,016 thousand USD 5 thousand USD1,616 thousand USD2,400 thousand	USD4,016 thousand USD 5 thousand USD1,616 thousand USD2,400 thousand	4,016 5 1,616 2,400	100 100 100 100	$ 571 153 ( 274 ) 845	( $ 3,341 ) - ( 1,489 ) ( 1,852 )	( $ 3,341 ) - ( 1,489 ) ( 1,852 )	Subsidiary of the Company Subsidiary of the Company Sub-subsidiary of the Company Sub-subsidiary of the Company

Note: Calculated based on the financial statements of the same period audited by Accountants.

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Loop Telecommunication International, Inc. and its subsidiaries

Information on investments in Mainland China

For the year ended December 31, 2022

Table 3

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Investee in Mainland China	Main business line	Paid-in capital	Method of investment	Accumulated investment amount of remittance from Taiwan at the beginning of the period	Accumulated investment amount of remittance from Taiwan at the beginning of the period	Investment flows	Investment flows	Accumulated investment amount of remittance from Taiwan at the end of the period	Shareholdin g ratio of the Company’s direct or indirect investments (%)	Investment gains or losses recognized during the period (Note 2)	Carrying amount of investments at the end of the period	Accumulated inward remittance of earnings as of the end of the period
						Outflow	Inflow
Tianjin Loop Electron Technology Co., Ltd.	Development and trading of digital communication equipment and software	USD 850 thousand	Note 1	USD296 thousand and RMB500 thousand ( $ 11,294 ) Note 3		$ -	$ -	USD296 thousand and RMB500 thousand ( $ 11,294 ) Note 3	100	$ 877	( $ 914)	$ -
Tianjin Loop Technology Co.,Ltd	Development and trading of digital communication equipment and software	USD 600 thousand	Note 1	USD300 thousand ( $ 9,213 ) Note 6		-	-	USD 300 thousand ( $ 9,213 ) Note 6	100	( 2,366 )	( 1,865)	-
Chongqing Loop Technology Co., Ltd.	R&D, design, production, processing, and trading of digital communication equipment	USD2,400 thousand	Note 1	USD2,400 thousand ( $ 73,704 )		-	-	USD2,400 thousand ( $ 73,704 )	100	( 1,852 )	837	-
Accumulated Investment in Mainland China at the end of the period(Note 5)		Investment amounts authorized by Investment Commission, MOEA			Ceiling on investments in Mainland China imposed by the Investment Commission of the Ministry of Economic Affairs is 60% of the net worth
USD 3,882 thousand and RMB 500 thousand ( $ 121,420)		USD 5,536 thousand ( $ 170,011)			$511,250

Note 1: Investment in the company in Mainland China through investing in establishing a company in a third-party region.

Note 2: Calculated based on the financial statements of the same period audited by Accountants.

Note 3: Maxi View Holdings Ltd. was established through the investments from earnings distributed by Tianjin Loop Communication Equipment Co., Ltd. Maxi View Holdings Ltd. acquired the residual equity of Tianjin Loop Electron Technology Co., Ltd. at RMB500 thousand in August 2019, and its shareholding ratio increased from 75% to 100%.

Note 4: For those involving foreign currencies, they are translated into NTD at the exchange rates on December 31, 2022 using the following rate: US$1=NT$30.71 and RMB$1=NT$4.408. Note 5: Include the cumulative outward remittance amount of US$886 thousand to Hangzhou Loop Electronics Co., Ltd. and Hangzhou Loop Smart Instrument Co., Ltd. Note 6: Exclude the investment amount of US$300 thousand from the earnings of Maxi View Holdings Ltd..

• 216 -

Loop Telecommunication International, Inc. and its subsidiaries

Material transactions that occurred directly or indirectly via a third-party region with investees in Mainland China, their prices, payment conditions, unrealized gains or losses, and other relevant information

For the year ended December 31, 2022

Table 4							(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Investee in Mainland China	Transaction category	Purchases and sales		Transaction conditions (Note)	Notes and accounts receivable(payable)		Unrealized gains or losses	Remarks
		Amount	Ratio		Amount	Ratio
Tianjin Loop Technology Co.,Ltd ChongqingLoopTechnologyCo., Ltd.	Sales Purchases Purchases	$ 347 938 10,503	0.07% 0.47% 5.31%	－ － －	$ 201 ( 757 ) ( 1,018)	0.48% 2.55% 3.43%	$ - - -	－ － －

Note: For transactions between related parties, the transacting price is determined by both parties with reference to the market status; however, the collection of payments for goods shall be subject to the capital status of the related parties.

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Loop Telecommunication International, Inc. and its subsidiaries

The business relationship between the parent and the subsidiaries and significant transactions between them

For the year ended December 31, 2022

Table 5

(In Thousands of New Taiwan Dollars)

No.	Company	Counter-party	Relationship with the counterparty (Note 1)		Status of transaction	Status of transaction
				Account	Amount	Transaction conditions (Note 2)	Ratio to the consolidated total revenue or total assets
0	The Company	Chongqing Loop Technology Co., Ltd. Tianjin Loop Technology Co.,Ltd	1 1	Purchases Accounts payable Sales Purchases Accounts receivables Prepayments for goods Accountspayable	$ 10,503 1,018 347 938 201 5,244 757	－ － － － － － －	2.40% 0.09% 0.08% 0.21% 0.02% 0.49% 0.07%

Note 1: 1 refers to transactions between the parent company and subsidiaries.

• Note 2: The selling price provided by the Company to related parties is equivalent to other customers; however, the credit period for general customers is 30 to 60 days, and for related parties is 180 days; however, the collection is temporarily made based on the capital status of subsidiaries at present.

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Loop Telecommunication International, Inc. Information on major shareholders

December 31, 2022

Table 6

Name of major shareholder	Shares
	Number of shares held(share)	Ownership
Yeh Maw-Lin	7,032,306	9.91%

• Note 1: Information on the major shareholder in the table is provided by the centralized depository enterprise on the last business day of the current quarter for the calculation of the total number of ordinary shares and preferred shares of the Company with non-physical registration completed (including treasury shares) held by shareholders, in aggregate, reaching 5% or above. The share capital in the consolidated financial statements of the Company may differ from the actual number of shares delivered with non-physical registration completed due to a different preparation or calculation basis.

• Note 2: Regarding the abovementioned data, if the shareholding of shareholders is entrusted, the individual account of the consignor for whom the trustee opens the trust account shall be presented separately. For the declaration of insiders with over 10% of equity according to the Securities and Exchange Act by a shareholder, the shareholding includes shareholding of the shareholder plus shares delivered to a trust that has rights to determine the utilization of trusted properties; for data on insider equity declaration, please refer to MOPS.

• 219 -

Stock Code: 3025

Loop Telecommunication International, Inc.

Parent Company Only Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

Address: 7F, No.8, Xin’an Road, Hsinchu Science Park Tel: (03)5787696

• 220 -

§Table of Contents§

Item I. Cover II. Table of Contents III. Independent Auditors’ Report Translated from Chinese IV. Parent Company Only Balance Sheet V. Parent Company Only Statement of Comprehensive Income VI. Parent Company Only Statement of Changes in Equity VII. Parent Company Only Statement of Cash Flows VIII. Notes to the Parent-Only Financial Statements (I) Company History (II) Approval date and procedures of the financial statements (III) New standards, amendments and interpretations adopted: (IV) Summary of significant accounting policies (V) Significant accounting judgments and key source of uncertainties for estimations and assumptions (VI) Explanation of significant accounting items (VII) Related party transactions (VIII) Pledged assets (IX) Significant contingent liabilities and unrecognized contractual commitments (X) Losses due to severe disasters (XI) Significant subsequent events (XII) Assets and liabilities in foreign currencies of material effects (XIII) Disclosuresnotes 1. Information on significant transactions 2. Information on investees 3. Information on investments in Mainland China 4. Information on major shareholders (XIV) Segment information IX. Breakdown of Major Accounting Items	Pages 1 2 3～7 8 9～10 11 12～13 14 14 14～16 16～28 28~29 29～57 57～59 59 - - 59 60 61、63 61、64 61、65～66 62、67 - 68～80	Notes to the Financial Statements - - - - - - - 1 2 3 4 5 6 to 26 27 28 - - 29 30 31 31 31 31 - -

• 221 -

Independent Auditors’ Report Translated from Chinese

Opinion

We have audited the accompanying parent company only balance sheet of Loop Telecommunication International, Inc. (the “Company”) as of December 31, 2022 and 2021, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent company only financial statements (including a summary of significant accounting policies).

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the accompanying parent company only financial position of the Company as of December 31, 2022 and 2021, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the parent company only Financial Statements section of our report. We comply with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China and independent of the Company. We have also fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the Company for the year ended December 31, 2022. These matters were addressed in the context of our audit of the

• 222 -

parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31, 2022 is stated as follows:

Revenue recognition

1. The major revenue sources of Company includes the production and sales of user remote line disconnectors, high-speed network access equipment, smart network resource management selectors, and other relevant products. As revenue has material effects on the 2022 parent company only financial statements of Loop Telecommunication International, Inc., revenue recognition involves manual control operations, and there are risks related to sales counterparties and the authenticity of transactions due to the significant growth in the revenue from partial customers, we have identified the revenue recognition as a key audit matter. For the accounting policies of revenue recognition, please refer to Note 4.(12) to the parent company only financial statements.

2. In response to the abovementioned risks, we have performed the following audit procedures:

(1) Understand and test the internal control systems and procedures related to the cycle of sales transactions to identify and evaluate the effectiveness of the internal control procedures involved in making sales transactions.

• (2) Sample whether internal orders are approved by the responsible supervisor.

• (3) Sample whether external orders and transportation documents have been obtained for revenue recognition and whether the amount and the invoiced amount are consistent.

(4) Sample whether the amount of collection after the period for relevant sales income transactions, remittance certificates, and counterparties is consistent with the amount of revenue recognition and counterparties.

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

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

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters

• 223 -

related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including members of the Audit Committee, are responsible for overseeing the Company’s financial reporting process.

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

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in

5. 224 -

our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

2. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinions on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

• 225 -

Deloitte & Touche Taiwan Accountant Huang Yu-Feng

Accountant Tseng Jian-Ming

Approval No. of the Securities and Futures Approval No. of the Financial Supervision Bureau Commission Tai-Cai-Zheng-Liu-Zi No.0920123784 Jin-Guan-Shen-Zheng-Zi No.1100356048

March 28, 2023

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China.

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

• 226 -

Loop Telecommunication International, Inc.

Parent Company Only Balance Sheet December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars)

Assets Current assets Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at amortized cost - current (Notes 4 and 8) Contract assets - current (Notes 4 and 21) Net accounts receivable (Notes 4, 5, 9, and 21) Accounts receivable - related party (Notes 4, 5, 9, and 21) Other receivables (Notes 4 and 9) Other receivables - related party (Notes 4 and 27) Inventories (Notes 4, 5, and 10) Other current assets (Notes 16 and 27) Total current assets Non-current assets Financial assets at amortized cost - non-current (Notes 4, 8, and 28) Investments accounted for using equity method (Notes 4 and 11) Property, plant and equipment (Notes 4, 12, and 28) Right-of-use assets (Notes 4 and 13) Investment property (Notes 4, 14, and 28) Intangible assets (Notes 4 and 15) Deferred income tax assets (Notes 4 and 23) Refundable deposits (Note 28) Total non-current assets Total assets Financial liabilities and equity Current liabilities Contract liabilities - current (Notes 4 and 21) Accounts payable Accounts payable - related party (Note 27) Other payables (Note 18) Income tax payable (Notes 4 and 23) Lease liabilities - current (Notes 4 and 13) Long-term liabilities - current portion (Notes 4, 17, and 28) Other current liabilities (Note 18) Total current liabilities Non-current liabilities Long-term borrowings (Notes 4, 17, and 28) Deferred income tax liabilities (Notes 4 and 23) Lease liabilities - non-current (Notes 4 and 13) Net defined benefit liabilities - non-current (Notes 4 and 19) Guarantee deposits Other non-current liabilities (Note 18) Total non-current liabilities Total liabilities Equity (Note 20) Common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity Total Liabilities and Equity		December 31,2022 Amount ％ $ 355,599 33 33,546 3 15,773 2 32,776 3 41,771 4 201 - 886 - - - 310,379 29 7,541 1 798,472 75 12,026 1 1,145 - 142,313 13 40,543 4 31,858 3 8,638 1 5,713 - 30,212 3 272,448 25 $ 1,070,920 100 $ 3,002 - 29,581 3 1,775 - 49,032 5 9,235 1 1,159 - 1,936 - 30,328 3 126,048 12 - - 3,455 - 48,109 4 16,731 2 1,190 - 23,304 2 92,789 8 218,837 20 709,206 66 48,208 5 19,174 2 3,088 - 75,193 7 97,455 9 2,786) - 852,083 80 $ 1,070,920 100	December 31,2022 Amount ％ $ 355,599 33 33,546 3 15,773 2 32,776 3 41,771 4 201 - 886 - - - 310,379 29 7,541 1 798,472 75 12,026 1 1,145 - 142,313 13 40,543 4 31,858 3 8,638 1 5,713 - 30,212 3 272,448 25 $ 1,070,920 100 $ 3,002 - 29,581 3 1,775 - 49,032 5 9,235 1 1,159 - 1,936 - 30,328 3 126,048 12 - - 3,455 - 48,109 4 16,731 2 1,190 - 23,304 2 92,789 8 218,837 20 709,206 66 48,208 5 19,174 2 3,088 - 75,193 7 97,455 9 2,786) - 852,083 80 $ 1,070,920 100		December 31,2021	December 31,2021	December 31,2021
		Amount $ 355,599 33,546 15,773 32,776 41,771 201 886 - 310,379 7,541 798,472 12,026 1,145 142,313 40,543 31,858 8,638 5,713 30,212 272,448 $ 1,070,920 $ 3,002 29,581 1,775 49,032 9,235 1,159 1,936 30,328 126,048 - 3,455 48,109 16,731 1,190 23,304 92,789 218,837 709,206 48,208 19,174 3,088 75,193 97,455 2,786) 852,083 $ 1,070,920			Amount $ 112,993 321 14,120 148,875 129,573 58 981 1,105 295,512 11,664 715,202 12,018 3,206 151,301 41,830 32,968 5,499 6,698 14,045 267,565 $ 982,767 $ 1,112 44,897 597 38,247 7,042 2,327 2,289 640 97,151 1,936 - 48,000 28,148 1,273 - 79,357 176,508 709,206 48,208 16,008 3,005 32,920 51,933 3,088) 806,259 $ 982,767		％
	(			(			12 - 2 15 13 - - - 30 1 73 1 - 15 4 3 1 1 2 27 100 - 5 - 4 1 - - - 10 - - 5 3 - - 8 18 72 5 2 - 3 5 - 82 100

The accompanying notes are an integral part of the parent company only financial statements.

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Loop Telecommunication International, Inc.

Parent Company Only Statement of Comprehensive Income

For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Net revenue (Notes 4, 21, and 27) Cost of revenue (Notes 4, 10, 22, and 27) Gross profit Unrealized gross profit on sales with subsidiaries (Note 4) Realized gross profit Operating expenses (Note 22) Sales and marketing expenses General and administrative expenses Research and development expenses Subtotal Income from operations Non-revenue and expenses (Note 22) Interest income Other income Other gains and losses Finance costs Share of losses of subsidiaries accounted for using equity method (Note 4) Total non- operating income and expenses		2022		％ 100 46 54 - 54 10 9 31 50 4 1 8 7 - 1) 15		2021
								％
			(				100 49 51 - 51 8 8 27 43 8 - 1 ( 1 ) - - -

(Cont’d)

• 228 -

(Cont’d)

Income before income tax Income tax expenses (Notes 4 and 23) Net income Other comprehensive income (Notes 4, 19, and 20) Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit obligation Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Other comprehensive income, net of income tax Total comprehensive income Earnings per share (Note 24) Basic Diluted		2022		％ 19 4 15 2 - 2 17		2021
		Amount $ 83,403 16,000 67,403 6,487 302 6,789 $ 74,192 $ 0.95 $ 0.94						％
								8 2 6 - - - 6

The accompanying notes are an integral part of the parent company only financial statements.

• 229 -

Loop Telecommunication International, Inc.

Parent Company Only Statement of Changes in Equity

For the years ended December 31, 2022 and 2021

Balance on January 1, 2021 Earnings distribution and appropriation in 2020 Legal reserve Special reserve Cash dividends of shareholders Cash distribution from the capital reserve Net income in 2021 Other comprehensive income, net of income taxin 2021 Total comprehensive income in 2021 Balance of December 31, 2021 Earnings distribution and appropriation in 2021 Legal reserve Special reserve Cash dividends of shareholders Net income in 2022 Other comprehensive income, net of income taxin 2022 Total comprehensive income in 2022 Balance of December 31, 2022	Capital stock Shares (1,000 shares) Amount 70,921 $ 709,206 - - - - - - - - - - - - - - 70,921 709,206 - - - - - - - - - - - - 70,921 $ 709,206	Capital stock Shares (1,000 shares) Amount 70,921 $ 709,206 - - - - - - - - - - - - - - 70,921 709,206 - - - - - - - - - - - - 70,921 $ 709,206	Capital surplus $ 49,626 - - - ( 1,418 ) - - - 48,208 - - - - - - $ 48,208		(In Thousands of New Taiwan Dollars; unless specified otherwise) Other Equity Exchange differences arising on translation of foreignoperations Retained earnings Special reserve Unappropriated earnings Total equity $ 2,900 $ 78,588 ( $ 3,005 ) $ 845,598 - ( 7,725 ) - - 105 ( 105 ) - - - ( 69,503 ) - ( 69,503 ) - - - ( 1,418 ) - 33,026 - 33,026 - ( 1,361) ( 83) ( 1,444) - 31,665 ( 83) 31,582 3,005 32,920 ( 3,088 ) 806,259 - ( 3,166 ) - - 83 ( 83 ) - - - ( 28,368 ) - ( 28,368 ) - 67,403 - 67,403 - 6,487 302 6,789 - 73,890 302 74,192 $ 3,088 $ 75,193 ($ 2,786) $ 852,083
	Shares (1,000 shares) 70,921 - - - - - - - 70,921 - - - - - - 70,921			Legal reserve $ 8,283 7,725 - - - - - - 16,008 3,166 - - - - - $ 19,174	Special reserve $ 2,900 - 105 - - - - - 3,005 - 83 - - - - $ 3,088

The accompanying notes are an integral part of the parent company only financial statements.

• 230 -

Loop Telecommunication International, Inc.

Parent Company Only Statement of Cash Flows For the years ended December 31, 2022 and 2021

(In Thousands of New Taiwan Dollars)

Cash flows from operating activities Income before income tax Item of profit or loss: Depreciation expense Amortization expense Net losses (gains) on financial assets at fair value through profit or loss Finance costs Interest income Dividend income Allowance for inventory valuation and obsolescence losses Share of losses of subsidiaries accounted for using the equity method Unrealized gains on sales with subsidiaries Net gains on foreign exchange Changes in operating assets and liabilities Contract assets Accounts receivable (including those from related parties) Other receivables (including those from related parties) Inventories Other current assets Contract liabilities Accounts payable (including those to related parties) Other payables Other current liabilities Net defined benefit liability Other non-current liabilities Cash from operations Interest paid Income tax paid Net cash generated by operating activities	2022 $ 83,403 14,688 3,658 508 1,228 ( 4,016 ) ( 43 ) 3,876 3,341 ( 978 ) ( 25,977 ) 116,099 88,190 2,585 ( 18,743 ) 4,123 1,890 ( 13,377 ) 10,967 29,688 ( 4,930 ) 23,304 319,484 ( 1,228 ) ( 9,367) 308,889	2021
		$ 39,845 15,510 2,414 ( 100 ) 1,308 ( 185 ) ( 5 ) - 1,749 ( 3 ) ( 11 ) ( 48,181 ) 115,018 ( 971 ) ( 3,989 ) 19,300 ( 1,162 ) ( 9,510 ) ( 16,353 ) 83 ( 2,787 ) - 111,970 ( 1,308 ) ( 14,714) 95,948

(Cont’d)

• 231 -

(Cont’d)

Cash flows from investing activities Acquisition of financial assets at amortized cost Disposal of financial assets at amortized cost Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Refundable deposits (paid) refunded Acquisition of intangible assets Interest received Dividends received Net cash used in investing activities Cash flows from financing activities Repayment of long-term debt Guarantee deposits refunded Repayment for the principal of lease liabilities Cash dividends paid Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents during the year Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year	2022 ( $ 335,426 ) 333,765 ( 33,733 ) - ( 2,236 ) ( 16,167 ) ( 6,797 ) 3,180 43 ( 57,371) ( 2,289 ) ( 83 ) ( 2,308 ) ( 28,368) ( 33,048) 24,136 242,606 112,993 $ 355,599	2021
		( $ 40,989 ) 46,861 ( 70,000 ) 70,084 ( 3,775 ) 790 ( 5,841 ) 220 5 ( 2,645) ( 2,254 ) ( 472 ) ( 2,280 ) ( 70,921) ( 75,927) 236 17,612 95,381 $ 112,993

The accompanying notes are an integral part of the parent company only financial statements.

• 232 -

Loop Telecommunication International, Inc.

Notes to the Parent-Only Financial Statements For the years ended December 31, 2022 and 2021

((In Thousands of New Taiwan Dollars; unless specified otherwise))

I. Company History

Loop Telecommunication International, Inc. (the “Company”) was established in Hsinchu Science Park in December 1991 and commenced its operation in December of the same year. The Company primarily engages in the R&D, development, production, manufacturing, and sales of user remote line disconnectors, protectors and their components, line reactors and their components, subtitle phones and their components, and smart network resource management multiplexers.

Shares of the Company were listed on Taipei Stock Exchange for trading in February 2001 and transferred to Taiwan Stock Exchange for listing and trading in August 2002.

The parent company's only financial statements are presented in New Taiwan Dollars (NTD), which is the Company's functional currency.

II. Approval date and procedures of the financial statements

The parent company only financial statements were approved by the Board on March 28, 2023.

III. New standards, amendments and interpretations adopted:

• (I) Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations IFRIC(IFRIC), and SIC Interpretations(SIC) (collectively “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (the “FSC”)

The initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC did not cause significant change to the Company’s accounting policies.

• (II) IFRSs endorsed by the FSC that are applicable in 2023

New, revised or amended Effective date issued standards and interpretations by IASB Amendment to IAS 1 “Disclosures of Accounting January 1, 2023 (Note 1) Policies”

Amendment to IAS 8 “Definition of Accounting January 1, 2023 (Note 2) Estimate”

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New, revised or amended Effective date issued standards and interpretations by IASB Amendment to IAS 12 “Deferred Income Tax related January 1, 2023 (Note 3) to Assets and Liabilities arising from a Single Transaction”

Note 1: The amendment is applicable to the annual reporting period commencing after January 1, 2023.

Note 2: The amendment is applicable to changes in accounting estimates and accounting policies that occur in the annual reporting period commencing after January 1, 2023.

• Note 3: Except for recognizing temporary differences for leases and decommissioning obligations as deferred income tax on January 1, 2022, the amendment is applicable to transactions that occur after January 1, 2022.

As of the date of approval for the publication of the parent company only financial statements, the Company has been continuing the evaluation of the amendments to the standards and interpretations above would not have a material effects on the financial positions and financial performance.

(III) IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC

New, revised or amended standards and interpretations Amendment to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture” Amendment to IFRS 16 “Lease Liability in a Sale and Leaseback” IFRS 17 “Insurance Contract” Amendment to IFRS 17 Amendment to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 - Comparison Information” Amendment to IAS 1 “Classification of Liabilities as Current or Non-current” Amendment to IAS 1 “Non-current Liabilities with Contractual Terms”

Effective date issued byIASB(Note 1)

To be determined January 1, 2024 (Note 2) January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2024 January 1, 2024

Note 1: Except for otherwise stated, the abovementioned new,revised or amended standards and interpretations become effective in the annual reporting period commencing after the respective date.

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Note 2: The amendment of IFRS 16 is applicable retrospectively to a sale and leaseback transaction entered into after the initial application of IFRS 16 for the seller, who is concurrently the lessee.

As of the date of approval for the publication of the parent company only financial statements, the Company has been continuing the evaluation regarding the effects of the amendments to standards and interpretations above on the financial positions and financial performance; relevant effects will be disclosed upon the completion of the evaluation.

IV. Summary of significant accounting policies

• (I) Statement of compliance

The parent company only financial statements were prepared according to the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (II) Basis of preparation

Except for financial instruments at fair value and net defined benefit liabilities recognized based on the presentt value of defined benefit obligations less the fair value of plan assets, the parent company only financial statements are prepared based on historical costs.

The measurement of fair value is divided into levels 1 to 3 based on the observable level and significance of relevant inputs:

1. Level 1 input: Refer to quotations (unadjusted) of equivalent assets or liabilities available in the active market on the measurement date.

2. Level 2 input: Refer to direct (i.e., prices) or indirect (i.e., inferred from prices) observable inputs of assets or liabilities other than level 1 quotations

3. Level 3 input: Refer to unobservable inputs of assets or liabilities.

When preparing the parent company only financial statements, the Company adopts the equity method for the treatment of the subsidiaries it invested investment. To allow the profit or loss of the year, other comprehensive income, and equity in the parent company only financial statements to be equivalent to profit or loss of the year, other comprehensive income, and equity attributable to owners of the Company in the Company’s consolidated financial statements, “investments accounted for using the equity method,” “share of profit or loss of subsidiaries certain accounting differences accounted for using the equity method,” and relevant equity items are adjusted under the parent company only basis and consolidation basis.

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• (III) Classification of current and non-current assets and liabilities

   - Current assets include:
  

  • Assets held primarily for the purpose of trading;

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

  • Cash and cash equivalents (excluding those restricted for being used for exchange or settling liabilities over 12 months after the balance sheet date).

  • Current liabilities include:

  • Liabilities held primarily for the purpose of trading;

• Liabilities expected to be settled within 12 months after the reporting period (they shall be current liabilities even if a long-term refinancing or re-arranged payment agreement is entered into after the balance sheet date and before the approval of the publication of the financial statements); and

• Liabilities with a settlement deadline that cannot be unconditionally deferred to at least 12 months after the reporting period. However, terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification. Liabilities that are not current assets or current liabilities described above are non-

current assets and non-current liabilities.

• (IV) Foreign currency

When preparing the parent company only financial statements, transactions in currencies other than the functional currency of the Company (foreign currencies) are translated into functional currencies at the exchange rate on the transaction date for records.

Monetary items in foreign currencies are translated at the closing exchange rate on each balance sheet date. Exchange differences arising from the delivery of monetary items or the translation of monetary items are recognized in profit or loss in the year of occurrence.

Non-monetary items in foreign currencies at fair value are translated at the exchange rate on the date determining the fair value, and the exchange difference arising thereof is presented as profit or loss of the period; however, for changes in fair value recognized in other comprehensive income, exchange difference arising thereof shall be recognized in other comprehensive income.

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Non-monetary items in foreign currencies at historical costs shall be translated at the exchange rate on the transaction date without re-translation.

(V)

When preparing the parent company only financial statements, assets and liabilities of the Company’s foreign operations (including subsidiaries in different countries or using currencies different from the Company) are translated into NTD at the exchange rate on each balance sheet date. Items of income and expenses are translated at the average exchange rate of the period, and the exchange difference arising thereof is recognized in other comprehensive income. Inventory

Inventory includes raw materials, work-in-progress, and finished goods. Inventories are stated at the lower of cost or net realizable value. Except for inventories of the same category, the comparison of the lower of cost and net realizable value is made on an item-by-item basis. The net realizable value represents the estimated selling price in the ordinary course of business, less all estimated costs of completion and necessary selling expenses. The weighted average method is adopted for the calculation of the costs of inventory.

• (VI) Investments in subsidiaries

The Company adopts the equity method for treating investments in subsidiaries. Subsidiaries are entities the Company has control over.

Under the equity method, investments are initially recognized at costs, and the carrying amount after the acquisition increases/decreases in the share of profit or loss of subsidiaries and other comprehensive income and profit allocation entitled to the Company. In addition, changes in other equity of subsidiaries entitled to the Company are recognized based on the shareholding ratio.

Changes in the Company's ownership interest in a subsidiary that do not result in loss of control are treated as equity transactions. The carrying amount of investments and the differences between the fair value of considerations paid or received are directly recognized as equity.

If the share of loss of subsidiaries of the Company equals or exceeds the interests in such subsidiaries (including the carrying amount of subsidiaries under the equity method and other long-term equity of net investment components in such subsidiaries that is substantially attributable to the Company), it continues to recognize losses based on the shareholding ratio.

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When assessing impairment, the Company considers cash-generating units and compares their recoverable amount and carrying amount for the financial statements as a whole. Subsequently, if the recoverable amount of assets increases, the reversal of impairment losses is recognized as gains; however, the carrying amount of assets after the reversal of impairment losses shall not exceed the carrying amount of such assets less amortization that should be provided when no impairment loss is recognized. The impairment losses attributable to goodwill may not be reversed subsequently.

Unrealized profit or loss of downstream transactions between the Company and subsidiaries are eliminated in the parent company only financial statements. Profit or loss arising from upstream and side stream transactions between the Company and subsidiaries are recognized in the parent company only financial statements within the scope that are not related to the interest of the Company in subsidiaries.

(VII) Property, plant and equipment

Property, plant and equipment are recognized at costs, and subsequently measured at the amount of costs less cumulative depreciation and cumulative impairment losses.

The Company separately provides depreciation for each material component of property, plant and equipment within the useful life on a straight-line basis. The Company shall examine the estimated useful life, residual value, and depreciation method at least at the end of each year and postpone the effects of changes in applicable accounting estimation.

For the derecognition of property, plant and equipment, the difference between the net disposal considerations and the carrying amount of such assets is recognized in profit or loss.

(VIII) Investment properties

Investment properties refer to properties held for earning rental or capital appreciation or both (including right-of-use assets that fulfill the definition of investment properties).

Self-owned investment properties are initially measured at costs (including transaction costs), and subsequently measured at the amount of costs less cumulative depreciation and cumulative impairment losses.

Investment properties obtained via leases are initially measured at costs (including the initial measurement of lease liabilities), and subsequently measured at

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the amount of costs less cumulative depreciation and cumulative impairment losses, with adjustments made to the remeasurement of lease liabilities.

Depreciation is provided for all investment properties on a straight-line basis. For properties under property, plant and equipment, their carrying amounts are transferred to investment properties upon the end of the self-use period.

For the derecognition of investment properties, the difference between the net disposal considerations and the carrying amount of such assets is recognized in profit or loss.

• (IX) Intangible assets

• Individually acquired

Intangible assets with definite useful life that are individually acquired are initially measured at costs, and subsequently measured at the amount of costs less cumulative amortization and cumulative impairment losses. Intangible assets are amortized on a straight-line basis within their useful like. The Company shall examine the estimated useful life, residual value, and amortization method at least at the end of each year and postpone the effects of changes in applicable accounting estimation. Intangible assets with indefinite useful life are presented at costs less cumulative impairment losses.

1. Derecognition

For the derecognition of intangible assets, the difference between the net disposal considerations and the carrying amount of such assets is recognized in profit or loss of the period.

(X) Impairment of property, plant and equipment, right-of-use assets, and intangible assets The Company evaluates whether there is any indication of impairment of property, plant and equipment, right-of-use assets, and intangible assets on each balance sheet date. If any such indication of impairment exists, then the asset's recoverable amount is estimated. If the recoverable amount of the individual asset cannot be estimated, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less disposal costs and its value in use. If the recoverable amount of individual assets or cash-generating units is lower than their carrying amounts, the carrying amount of such assets or cash-generating units shall be reduced to the recoverable amount, and the impairment losses shall be recognized in profit or loss.

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If impairment losses are subsequently reversed, the carrying amount of such assets or cash-generating units shall be increased to the recoverable amount after amendments; however, the increased carrying amount shall not exceed the carrying amount determined of the carrying amount of such assets or cash-generating units if there were no impairment losses recognized in prior years (less amortization or depreciation). The reversal of impairment losses is recognized in profit or loss. (XI) Financial instruments

Financial assets and financial liabilities are recognized in the parent company only balance sheet when the Company becomes a party to the contract terms of such instruments.

For the initial recognition of financial assets and financial liabilities, if financial assets or financial liabilities are not measured at fair value through profit or loss, they shall be measured at the carrying amount plus the transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities. Transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss are immediately recognized as profit or loss.

1. Financial assets

Regular transactions of financial assets are recognized and derecognized by adopting trade date accounting.

• (1) Measurement category

On initial recognition, financial assets are classified as financial assets at amortized cost and financial assets at fair value through profit or loss.

A. Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets designated as measuring at value through profit or loss. Financial assets at fair value through profit or loss are measured at fair value, and their d4idends and remeasurement gains or losses are recognized in other income and other gains and losses, respect4ely. For the determination method of fair value, please refer to Note 26.

B. Financial assets measured at amortized cost

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If the financial assets of the Company concurrently fulfill both of the following conditions, they are recognized as financial assets at amortized costs:

• a. Held under a certain operating model, and the purpose of the model if to hold financial assets to collect contract cash flows; and

• b. Contract terms generate cash flows on particulate dates, and such cash flows are fully used to pay the principal and interests of the outstanding principal.

Financial assets at amortized costs (including cash and cash equivalents, accounts receivable and other receivables at amortized costs) are measured at a total carrying amount determined by using the effective interest method less amortized costs of any impairment losses after the initial recognition; any gains or losses on exchange gains are recognized in profit or loss.

Cash equivalents include short-term and high-liquidity time deposits within 3 months that can be converted to a fixed amount of cash at any time with minor risk of changes in value, and are used to satisfy short-term cash commitments instead of investments or other purposes.

• (2) Impairment of financial assets and contract assets

The Company evaluates the impairment losses of financial assets at amortized costs (including accounts receivable) and contract assets based on ECL on each balance sheet date.

Loss allowance of accounts receivables and contract assets are recognized based on the lifetime ECL. For other financial assets, the Company evaluates whether credit risks have significantly increased after the initial recognition. If there is no significant increase, the Company recognizes loss allowance based on the 12-month ECL; if there is a significant increase, the Company recognizes loss allowance based on the lifetime ECL.

ECL is average credit loss using default risks as its weight. 12-month ECL refers to ECL that may arise from possible defaults of financial instruments within 12 months after the reporting date; lifetime ECL refers

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to ECL that may arise from all defaults of financial instruments during the lifetime.

The Company reduces the carrying amount via the allowance account for the impairment losses of all financial assets.

• (3) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset become invalid, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred.

For the derecognition of financial assets at amortized cost, the difference between the carrying amount and the considerations received is recognized in profit or loss.

1. Equity instruments

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreements and the definitions of a financial liability and an equity instrument. Equity instruments issued by the Company are recognized at the amount after deducting direct issuance costs from the obtained proceeds.

The retrieval of the Company’s own equity instruments is recognized and deducted under equity. Acquisition, disposals, issuance, or cancellation of the Company’s own equity instruments is not recognized in profit or loss.

1. Financial liabilities

2. (1) Subsequent measurement

All financial liabilities are measured at amortized costs by adopting the effective interest method.

• (2) Derecognition of financial liabilities

For the derecognition of financial liabilities, the difference between the carrying amount and the considerations paid (including any non-cash assets transferred or liabilities assumed) is recognized as profit or loss.

• (XII) Revenue recognition

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After the Company has identified the performance obligations in a contract with a customer, it allocates the transaction price to each performance obligation and recognizes income when fulfilling each performance obligation.

1. Sales revenue of products

Sales revenue of products is primarily from the sales of optical transport network access equipment, U interface and MDSL interface multiplexer, network management systems, Internet access equipment, time-slot interchanger, and other products. From the shipping of products sold, customers are entitled to pricing and use, hold the primary responsibilities for reselling, and assume the risks of product obsolescence. The Company recognizes income and contract assets at the point of time and transfers them to accounts receivable after the performance of the remaining obligations. Prepayments for the sales of products are recognized as contract liabilities before the products arrive.

1. Service revenue

2. Service revenue arises from educational training services and

3. software/hardware installation services.

With educational training services and software/hardware installation services provided by the Company, customers also obtain and consume performance benefits. The Company recognizes relevant income based on the service provided by technicians over time during the contract period. It is agreed in contracts that customers shall make payments after the installation and acceptance; therefore, the Company recognizes contract assets when providing services and transfers them to accounts receivable upon the completion of installation and acceptance.

(XIII) Lease

The Company evaluates whether a contract is (or includes) a lease on the establishment date of the contract.

1. The Company as the lessor

All leases are classified as operating leases.

Under operating leases, lease payments are recognized as gains during the relevant leasing period on a straight-line basis.

Variable rentals not subject to the index or rate used in the lease agreement are recognized as gains during the period.

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2.

When a lease contains elements of land and building, the Company evaluates the classification of elements into financing lease or operating lease depending on whether the majority of all risks and compensation of the ownership of each element is transferred to the lessee. Lease payments are allocated to land and buildings based on the corresponding ratio of the fair value of leasing rights of land and buildings on the establishment date of the contract. If lease payments may be reliably allocated to such two elements, each element is treated based on the applicable lease classification. If lease payments may not be reliably allocated to such two elements, the overall lease is classified as a financing lease; however, if such two elements are evidently in line with the standards of operating leases, the overall lease is classified as an operating lease. The Company as the lessee

Except for lease payments of low-value target asset leases and short-term leases with recognition exemption applicable recognizing as expenses within the leasing period on a straight-line basis, right-of-use assets and lease liabilities are recognized for other leases on the commencement date of leases.

Right-of-use assets obtained via leases are initially measured at costs (including the initial measurement of lease liabilities), and subsequently measured at the amount of costs less cumulative depreciation and cumulative impairment losses, with adjustments made to the remeasurement of lease liabilities. Apart from those complying with the definition of investment properties, right-of-use assets are separately presented in the parent company only balance sheet. For the recognition and measurement of right-of-use assets fulfilling the definition of investment properties, please refer to the accounting policies of investment properties in (VIII).

Depreciation is provided for investment properties one a straight-line basis from the commencement date of the lease to the earlier of the expiry of the useful life or the expiry of the leasing period.

Lease liabilities are initially measured at the current value of lease payments (including fixed payments). If the implied interest rate of leases may be easily confirmed, lease payments are discounted by using the interest rate. If the interest rate may not be easily confirmed, the incremental borrowing interest rate of lessees is used.

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Subsequently, lease liabilities are measured at amortized costs, and the interest expenses are allocated during the leasing period. If there is any change in lease payment in the future resulting from the index or rate used to determine the lease payment during the leasing period, the Company remeasures lease liabilities and makes adjustments to right-of-use assets accordingly; however, if the carrying amount of the right-of-use assets is reduced to nil, the remaining remeasurement amount shall be recognized in profit or loss. Lease liabilities are separately presented in the parent company only balance sheet.

(XIV) Borrowing costs

All borrowing costs are recognized as profit or loss during the period of occurrence.

• (XV) Governmental grants

Governmental grants are recognized only upon the receipt of such grants when it is reasonably assured that the Company will comply with the additional conditions of governmental grants.

(XVI) Employees benefits

1. Short-term employee benefits

Liabilities related to short-term employee benefits are measured at the nondiscounted amount expected to be paid in exchange for employees’ services.

1. Post-employment benefits

Pension of the defined contribution plan is recognized as expenses based on the amount of pension to be contributed during the period in which employees provide their services.

The projected unit credit method is adopted for the actuarial valuation of defined benefit costs of the defined benefit plan (including service costs, net profit, and remeasurement). Current period service costs and net interest of net defined liabilities (assets) are recognized as employee benefit expenses upon occurrence. Remeasurements (including actuarial gains or losses and plan asset compensation after interest) are recognized in other comprehensive income and presented as other equity upon the occurrence and will not be reclassified to profit or loss subsequently.

Net defined benefit liabilities (assets) are the appropriation deficit (surplus) of the defined benefit plan. Net defined benefit assets shall not exceed the current

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value of the amount of appropriation refunded from the plan or the amount of appropriation that may be reduced in the future.

3. Severance benefits

The Company recognizes severance benefit liabilities when it can no longer cancel the offer of severance benefits or recognize relevant reorganization costs (the earlier).

• (XVII) Income tax

Income tax expenses are the sum of income tax of the period and deferred income tax.

1. Income tax of the period

The additional income tax on undistributed earnings calculated based on the Income Tax Act of the Republic of China is recognized during the year of the shareholders’ resolution.

Adjustments to income taxes payable in prior years are recognized as income tax of the period.

1. Deferred income tax

Deferred income tax is calculated based on the temporary difference between the carrying amount of assets and liabilities accounted for and the taxation basis for calculating income tax.

Deferred income tax liabilities shall be recognized for all taxable temporary differences, and deferred income tax assets are recognized when it is likely to offset the deductible temporary differences and income tax credits arising from R&D and other expenses.

Temporary taxable differences related to subsidiaries it invested are recognized as deferred income tax liabilities, except when the Company is able to control the point of time to reverse the temporary differences, and such temporary differences are not likely to be reversed in the foreseeable future. Deductible temporary differences related to such investments are only recognized as deferred income tax assets when it is likely that there will be sufficient taxable income to realize the temporary differences and when it is expected to be within the reversal scope in the foreseeable future.

The carrying amount of deferred income tax assets is re-examined on each balance sheet date, and the carrying amount is adjusted for those having no

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possible, sufficient taxable income to recover the entire or partial assets. For those not recognized as deferred income tax assets initially, the Company also re-examines them on each balance sheet date and increases their carrying amounts when it is likely to have taxable income to recover the entire or partial assets in the future.

Deferred income tax assets and liabilities are measured at the tax rate of the period in which the liabilities or assets are expected to be settled or realized, respectively, and the tax rate is based on the tax rate and tax laws enacted or substantially enacted on the balance sheet date. The measurement of deferred income tax reflects the tax consequences of the method for recovering or settling the carrying amount of its assets and liabilities by the Company after the balance sheet date.

1. Deferred income tax of the period

Deferred income tax of the period is recognized in profit or loss; however, deferred income tax related to items recognized in other comprehensive income or directly included in equity is recognized in other comprehensive income or directly included in equity, respectively.

V. Significant accounting judgments and key source of uncertainties for estimations and assumptions

When adopting accounting policies, the management shall make relevant judgments, estimations, and assumptions based on its historical experience and other relevant factors when it is difficult to obtain relevant information from other sources. Actual results may differ from these estimates.

The Company includes the recent development of COVID-19 and the possible effects on the economic environment and inflation, and market fluctuations into the considerations for cash flow estimation, growth rate, discount rate, profitability, and other relevant material accounting estimation; the management will continue to examine the estimates and basic assumptions. If the amendment to an estimate only affects the current period, it is recognized in the period of the amendment. If the amendment to accounting estimates affects the current period and future periods, it is recognized in the period of the amendment and future periods.

Uncertainties for estimations and assumptions

• (I) Estimated impairment of financial assets

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The estimated impairment of accounts receivable is based on the assumption of the Company for default probability and default loss ratio. The Company considers its historical experience, current market status, and forward-looking information to form the assumptions and select the input value for impairment assessment. For the material assumptions and inputs adopted, please refer to Note 9. If the actual cash flow in the future is less than the Company’s expectations, there may be material impairment losses.

(II) Inventory impairment

The net realizable value of inventories is estimated based on the balance of estimated selling price during the course of normal operations less the estimated costs required to be invested in until the completion and the costs required until the completion of sales; such estimates are evaluated based on the current market condition and the historical sales experience of similar products; any change in the market condition may materially affect the results of such estimates.

VI. Cash and cash equivalents

sh and cash equivalents
Cash in hand and working capital Bank checks and demand deposits Cash equivalents (investments with an initial expiry within 3 months) Time deposits with banks	December 31,2022 $ 270 89,541 265,788 $ 355,599	December 31,2021
			$ 252 92,879 19,862 $ 112,993

The market interest range of deposits and time deposits with banks on the balance sheet date is as follows:

December 31, 2022 December 31, 2021 Bank deposits 0.001%~3.80% 0.001%~0.20% Time deposits 0.92%~4.40% 0.12%~0.35%

VII. Financial instruments at fair value through profit or loss

December 31, 2022 December 31, 2021 Financial assets - current Measured at fair value through profit or loss - Domestic listed stocks $ 3,375 $ 321

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- Beneficiary certificates	30,171 $ 33,546	- $ 321

VIII. Financial assets at amortized costs

inancial assets at amortized costs
Current Time deposits with an initial expiry exceeding 3 months Non-current Time deposits pledged	December 31,2022 $ 15,773 $ 12,026	December 31,2021
			$ 14,120 $ 12,018

(I) The interest rate range of time deposits with an initial expiry exceeding 3 months and time deposits pledged is as follows:

Time deposits with an initial expiry exceeding 3 months Time deposits pledged	December 31,2022 3.77% 0.32%~1.44%	December 31,2021 0.18% 0.06%~0.82%

• (II) For information on financial assets at amortized costs, please refer to Note 28.

IX. Accounts receivable and other receivables

Accounts receivables Financial assets measured at amortized cost Total carrying amount Less: loss allowance Other receivables Others	December 31,2022 $ 42,336 ( 565) $ 41,771 $ 886	December 31,2021	December 31,2021
	(	(	$ 130,138 565) $ 129,573 $ 981

The average credit period of product sales is settled by month or within 30 to 90 days from the issuance of the invoice; no interest is accrued for accounts receivable. The Company adopts the policy to engage in transactions with counterparties with equivalent ratings. For the credit rating information, the Company rated major customers based on publicly available financial information and historical transaction records and allocated the total transaction amount to different customers with qualified credit ratings. In addition, it regularly reviews and approves the credit limits of counterparties to manage its credit exposure.

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The Company recognizes loss allowance of accounts receivable based on lifetime expected credit loss. Lifetime expected credit loss is calculated by using the provision matrix, which considers the past default records and current financial positions of customers, industrial and economic status, and considers GDP and the unemployment rate. Based on the Company’s past experience of credit losses, there is no material difference between the loss patterns of different customer bases; therefore, customer bases are not further distinguished for the provision matrix, and the expected credit loss rate is determined based on the number of overdue days of accounts receivable.

Loss allowance of accounts receivable measured based on the provision matrix is as follows:

December 31, 2022

Total carrying amount Loss allowance (lifetime ECL) Amortized costs	Not overdue $ 40,169 - $ 40,169	Overdue for 1 to 60 days $ 407 - $ 407	Overdue for 61 to 120 days $ 647 - $ 647	Overdue for 121 to 364 days $ 168 - $ 168	Overdue for 365 days or above $ 945 ( 565) $ 380		Total
					(	(	$ 42,336 565) $ 41,771

December 31, 2021

Total carrying amount Loss allowance (lifetime ECL) Amortized costs		Current $ 109,160 - $ 109,160	Overdue for 1 to 60 days $ 16,421 - $ 16,421	Overdue for 61 to 120 days $ 1,428 - $ 1,428	Overdue for 121 to 364 days $ 3,129 ( 565) $ 2,564	Overdue for 365 days or above $ - - $ -		Total
					(		(	$ 130,138 565) $ 129,573

Changes in loss allowance of accounts receivable are as follows:

		2022		2021
Balance at the beginning and the
end of the year	$	565	$	565
Inventories
	December 31,2022		December 31,2021
Finished goods	$	79,748	$	45,335
Work in progress		39,077		52,897
Raw material		191,554		197,280
	$	310,379	$	295,512

• X. Inventories

The nature of costs of sales is as follows:

Costs of goods sold Losses for market price decline		2022 $ 198,024 3,876		2021
				$ 204,543 -

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and obsolete and slow-moving inventories

$ 201,900

$ 204,543

XI. Investments accounted for using the equity method

Investments in subsidiaries Tech-Plan (BVI) Ltd. Loop Telecom NA, Inc.	December 31,2022 $ 992 153 $ 1,145	December 31,2021	December 31,2021
			$ 3,068 138 $ 3,206

Name of subsidiaries Tech-Plan (BVI) Ltd. Loop Telecom NA, Inc.	Ownership interest and votingrightpercentage	Ownership interest and votingrightpercentage
	December 31,2022 100% 100%	December 31,2021
		100% 100%

For details of subsidiaries indirectly held by the Company, please refer to Note 31. In 2022 and 2021, the share of profit or loss and other comprehensive income of subsidiaries accounted for using the equity method is recognized based on the financial statements of the same period of subsidiaries audited by Accountants.

XII. Property, plant and equipment

Costs Balance on January 1, 2022 Addition Disposal Balance on December 31, 2022 Cumulative depreciation Balance on January 1, 2022 Depreciation Disposal Balance on December 31, 2022 Net amount on December 31, 2022 Costs Balance on January 1, 2021 Addition Balance on December 31, 2021		Buildings $ 213,195 - - $ 213,195 $ 74,130 5,196 - $ 79,326 $ 133,869 $ 213,195 - $ 213,195	Machinery and equipment	Machinery and equipment	R&D equipment	R&D equipment	Transportation equipment $ 542 - - $ 542 $ 233 91 - $ 324 $ 218 $ 542 - $ 542		Office equipment $ 5,924 324 1,042) $ 5,206 $ 3,449 1,133 1,042) $ 3,540 $ 1,666 $ 4,635 1,289 $ 5,924		Other equipment $ 2,660 - 1,375) $ 1,285 $ 1,895 333 1,375) $ 853 $ 432 $ 2,585 75 $ 2,660		Total
			( (	$ 4,141 1,672 740) $ 5,073 $ 2,217 1,100 740) $ 2,577 $ 2,496 $ 3,469 672 $ 4,141	( (	$ 17,005 58 3,261) $ 13,802 $ 10,242 3,189 3,261) $ 10,170 $ 3,632 $ 15,298 1,707 $ 17,005		( (		( (		( (	$ 243,467 2,054 6,418) $ 239,103 $ 92,166 11,042 6,418) $ 96,790 $ 142,313 $ 239,724 3,743 $ 243,467

(Cont’d)

(Cont’d)

Cumulative depreciation Balance on January 1, 2021 Depreciation		Buildings $ 68,968 5,162	Machinery and equipment	Machinery and equipment	R&D equipment	R&D equipment	Transportation equipment $ 143 90		Office equipment $ 2,206 1,243		Other equipment $ 1,349 546		Total
				$ 1,402 815		$ 6,250 3,992							$ 80,318 11,848

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Balance of December 31, 2021 $ 74,130 $ 2,217 $ 10,242 $ 233 $ 3,449[$ 1,895 ] $ 92,166 Net amount of December 31, 2021 $ 139,065 $ 1,924 $ 6,763 $ 309 $ 2,475 $ 765 $ 151,301

As there was no indication of impairment in 2022 and 2021, the Company did not perform any impairment assessment.

Depreciation expenses are provided for based on the following useful lives on a straight-line basis:

basis:
Buildings	11 to 51 years
Machinery and equipment	4 years
R&D equipment	4 years
Transportation equipment	6 years
Office equipment	4 years
Other equipment	4 to 5 years

The material components of the Company’s building are primarily plant and interior fitting, and the depreciation is provided based on their useful life of 35 to 51 years and 11 years, respectively.

For the amount of property, plant and equipment pledged for borrowings, please refer to Note 28.

XIII. Lease agreement

(I) Right-of-use assets

(I) Right-of-use assets
Carrying amount of right-of- use assets Land Buildings Addition of right-of-use assets Depreciation expenses of right- of-use assets Land Buildings (Cont’d) (Cont’d) Gains on the sublease of right- of-use assets (accounted for as other income)	December 31,2022 $ 40,543 - $ 40,543 2022 $ 1,217 $ 1,349 1,155 $ 2,504 2022 ($ 590)	December 31,2021
			$ 40,675 1,155 $ 41,830 2021
			$ - $ 1,355 1,156 $ 2,511 2021
	(	(	$ 639)

• 252 -

Except for the additional and recognition of depreciation fees, right-of-use assets of the Company have no material sub-lease or impairment in 2022 and 2021.

• (II) Lease liabilities

Lease liabilities
Carrying amount of lease liabilities Current Non-current	December 31,2022 $ 1,159 $ 48,109	December 31,2021
			$ 2,327 $ 48,000

The range of discount rate of lease liabilities is as follows: December 31,2022 Land 2.30% Buildings -	December 31,2021
	2.30% 1.80%

• (III) Material leasing activities and terms

The Company also rents certain land and buildings for use as plant, office, and dormitory, with a leasing period of 5 to 51 years. Lease payments may be adjusted for the land lease in Hsinchu Science Park based on the announced land price and other reasons at all times. Upon the end of the leasing period, the Company has no preemptive right for the acquisition of land and buildings it rented, and it is agreed that the Company may not sublease or transfer the entire or partial lease target without the consent of the lessor.

In 2019, the Company subleased partial right-of-use assets to Company A; relevant right-of-use assets are presented as investment properties; please refer to Note 14.

• (IV) Other leases

Other leases
Expenses of short-term leases Total cash (outflow) of leases		2022 $ 57 $ 3,524)		2021
	(		(	$ 187 $ 3,644)

The Company chose the application of recognition exemption for employee dormitory and office leases that fulfill the conditions of short-term leases and do not recognize relevant right-of-use assets and lease liabilities for such leases.

XIV. Investment properties

Completed investment Right-of-use properties assets Total

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Costs Balance on January 1, 2022 Addition Balance on December 31, 2022 Cumulative depreciation Balance on January 1, 2022 Depreciation Balance on December 31, 2022 Net amount on December 31, 2022 Costs Balance on January 1, 2021 and and December 31, 2021 Cumulative depreciation Balance on January 1, 2021 Depreciation Balance on December 31, 2021 Net amount on December 31, 2021	$ 39,159 - $ 39,159 $ 13,357 902 $ 14,259 $ 24,900 $ 39,159 $ 12,445 912 $ 13,357 $ 25,802	$ 7,937 32 $ 7,969 $ 771 240 $ 1,011 $ 6,958 $ 7,937 $ 532 239 $ 771 $ 7,166	$ 47,096 32 $ 47,128 $ 14,128 1,142 $ 15,270 $ 31,858 $ 47,096 $ 12,977 1,151 $ 14,128 $ 32,968

During the leasing period, rental commitments commence after the balance sheet date are as follows:

December 31, 2022 December 31, 2021 Rental commitment of investment properties $ 17,550 $ 23,241

The depreciation of investment properties is provided for based on the following useful lives on a straight-line basis:

Completed investment properties 35 to 51 years Right-of-use assets 20 years

The fair value of investment properties is measured at the level 3 input by the independent appraiser Integration Appraiser Firm which is not a related party. The appraisal is performed by adopting the weighted average of the cost approach and the

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market comparison approach, and unobservable material inputs adopted include the discount rate; the fair value derived from the assessment is as follows:

Fair value measurement	December 31,2022 $ 66,684	December 31,2021	December 31,2021
			$ 65,335

For the amount of investment properties pledged for borrowings, please refer to Note

28.

XV. Intangible assets

Intangible assets
Costs Balance on January 1, 2022 Individually acquired Disposal Balance on December 31, 2022 Cumulative amortization Balance on January 1, 2022 Amortization expense Disposal Balance on December 31, 2022 Net amount on December 31, 2022 Costs Balance on January 1, 2021 Individually acquired Balance on December 31, 2021 Cumulative amortization Balance on January 1, 2021 Amortization expense Balance on December 31, 2021 Net amount on December 31, 2021		Software
	( (	$ 8,801 6,797 133) $ 15,465 $ 3,302 3,658 133) $ 6,827 $ 8,638 $ 2,960 5,841 $ 8,801 $ 888 2,414 $ 3,302 $ 5,499

The Company provides for the amortization fees of intangible assets based on a straight-line basis over 3 years.

XVI. Other assets

Other assets
Current Prepayments for goods Overpaid sales tax Temporary payments Prepaid insurance premium	December 31,2022 $ 5,290 975 658 94	December 31,2021
		$ 1,400 19 1,590 5,427

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Other prepayments	524 $ 7,541	3,228 $ 11,664

XVII.	Borrowings Long-term borrowings Secure borrowings (Note 28) Bank borrowings Less: Presented as due within one year Long-term borrowings	December 31,2022 $ 1,936 ( 1,936) $ -	December 31,2021	December 31,2021
		(	(	$ 4,225 2,289) $ 1,936

Bank borrowings are secured by the building of the Company and shall be repaid in installments each month starting from October 2013, with settlement in October 2023. As of December 31, 2022 and 2021, the effective annual interest rate was 2.08% and 1.53%, respectively.

XVIII. Other liabilities

Other liabilities
Current Other payables Remunerations of employees and Directors payable Bonuses payable Salaries payable Insurance premium payable Service fees payable Equipment payments payables Others	December 31,2022 $ 11,374 10,207 9,046 3,072 1,795 85 13,453 $ 49,032	December 31,2021
			$ 5,434 11,752 9,305 2,379 1,789 267 7,321 $ 38,247

(Cont’d)

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(Cont’d)

December 31, 2022

December 31, 2021

Other liabilities Advance (Note) Receipts under custody Others Other non-current liabilities Advance (Note)	$ 29,778 550 - $ 30,328 $ 23,304	$ - 569 71 $ 640 $ -

Note: The Company has entered into a trademark licensing contract of NT$82,860 thousand (US$3,000 thousand), and the amount was fully collected in cash in January 2022. The Company allocates and recognizes trademark licensing income on a straight-line basis; in 2022, it recognized trademark licensing income of NT$29,778 thousand (accounted for as other income).

XIX. Retirement benefit plan

(I) Defined contribution plans

The pension system under the “Labor Pension Act” applicable to the Company is a defined contribution plan managed by the government, and the Company appropriates 6% of the monthly salaries of employees to the personal accounts with the Bureau of Labor Insurance.

• (II) Defined benefit plans

The pension system, organized in accordance with the “Labor Standards Act” of R.O.C , is a defined benefit plan managed by the government. The payment of an employee’s retirement pension is calculated based on the service seniority and average wages during the six months before the approved retirement date. The Company appropriates 6% of the total monthly salaries of employees as the pension for the Supervisory Committee of Labor Retirement Reserve to deposit in the account with the Bank of Taiwan in the name of the Committee. At the end of the year, if it is estimated that the balance of the account is not sufficient to make the payments for laborers who are estimated to fulfill the retirement conditions in the following year, the Company will appropriate the difference in a lump sum by the end of March in the following year. The Bureau of Labor Funds, Ministry of Labor, is entrusted with the management of the account, and the Company has no right to affect the investment and management strategies.

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The amount of the defined benefit plan included in the parent company only balance sheet is set out as follows:

balance sheet is set out as follows:
Defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31,2022 $ 54,458 (37,727) $ 16,731	December 31,2021
	(	(	$ 63,268 35,120) $ 28,148

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

Defined benefit obligation January 1, 2021 $ 64,121 Service costs Current period service costs 85 Interest expenses (income) 482 Recognized in profit or loss 567 Remeasurement Compensation of plan assets (except for amounts included in net interest) - Actuarial losses – experience adjustments 1,712 Recognized in other comprehensive income 1,712 Appropriated by the employer - Benefit payment ( 3,132) December 31, 2021 63,268 Service costs Current period service costs 87 Interest expenses (income) 316 Recognized in profit or loss 403 Remeasurement Compensation of plan assets (except for amounts included in net interest) - Actuarial gains – experience adjustments ( 3,744) Recognized in other comprehensive income ( 3,744)	Fair value of plan assets ($ 34,547) - ( 271) ( 271) ( 351 ) - ( 351) ( 3,083) 3,132 ( 35,120) - ( 183) ( 183) ( 2,743 ) - ( 2,743)	Net defined benefit liabilities (assets)
		$ 29,574 85 211 296 ( 351 ) 1,712 1,361 ( 3,083) - 28,148 87 133 220 ( 2,743 ) ( 3,744) ( 6,487)

(Cont’d)

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(Cont’d)

Appropriated by the employer Benefit payment December 31, 2022	Defined benefit obligation $ - ( 5,469) $ 54,458	Fair value of plan assets ($ 5,150) 5,469 ($ 37,727)	Net defined benefit liabilities (assets)	Net defined benefit liabilities (assets)
	(	( (	(	$ 5,150) - $ 16,731

The amount of the defined benefit plan recognized in profit or loss is summarized by function as follows:

by function as follows:
Operating cost Sales and marketing expenses General and administrative expenses Research and development expenses		2022 $ 57 23 27 113 $ 220		2021
				$ 69 26 51 150 $ 296

The Company is exposed to the following risks due to the pension system under the “Labor Standards Act”:

1. Investment risks: The Bureau of Labor Funds, Ministry of Labor, invests labor pension funds in domestic (foreign) equity securities, debt securities, bank deposits, and other targets by way of self-utilization or entrusted management; however, the amount available for allocation of the Company’s plan assets shall not be lower than the gains calculated at the interest rate for two-year time deposits with local banks.

2. Interest rate risks: A decrease in the government bonds interest rate will lead to an increase in the current value of the defined benefit obligations; however, debt investment returns of plan assets will also increase; both items have partial offsetting effects on net defined benefit liabilities.

3. Salary risks: The calculation of the current value of defined benefit obligations refers to the future salaries of the plan’s participants. Therefore, an increase in the salaries of the plan’s participants will result in an increase in the current value of defined benefit obligations.

4. 259 -

The actuarial valuation for the current value of defined benefit obligations of the Company is performed by a qualified actuary; the material assumption adopted on the measurement date is as follows:

measurement date is as follows:
Discount rate Expected increase rate of salaries	December 31,2022 1.25% 3.00%	December 31,2021
		0.50% 3.00%

If there are reasonable and possible changes in a material actuarial assumption and when all other assumptions remain unchanged, the increase (decrease) in the current value of defined benefit obligations is as follows:

Discount rate Increased by 0.25% Decreased by 0.25% Expected increase rate of salaries Increased by 1.00% Decreased by 1.00%	December 31,2022 ($ 1,041) $ 1,073 $ 4,505 ($ 4,070)	December 31,2021	December 31,2021
	( (	( (	$ 1,455) $ 1,504 $ 6,174 $ 5,530)

As actuarial assumptions may be correlated, the possibility of having changes in a single assumption is low; therefore, the abovementioned sensitivity analysis may not be able to reflect the actual changes in the current value of defined benefit obligations.

Amount expected to be appropriated in one year Average maturity of defined benefit obligations	December 31,2022 $ 5,150 10.7 years	December 31,2021
		$ 3,084 11.4 years

XX. Equity

• (I) Common stock

Common stock
Authorized shares (in thousands) Authorized capital Number of issued and paid-in shares (in thousands) Issued share capital	December 31,2022 128,000 $ 1,280,000 70,921 $ 709,206	December 31,2021
			128,000 $ 1,280,000 70,921 $ 709,206

The par value of issued ordinary shares is NT$10 per share, and each share is entitled to one vote and the right to receive dividends.

(II) Capital surplus

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December 31, 2022 December 31, 2021

Available for loss compensation, cash distribution, or appropriation to share capital (Note) Premium of share issuance Premium of corporate bond conversion Treasury share transactions Only available for loss compensation Uncollected dividends of shareholders’ past due	$ 6,913 31,731 9,357 207 $ 48,208	$ 6,913 31,731 9,357 207 $ 48,208

Note: Such capital reserve may be used in loss compensation, and may be used in cash distribution or appropriation to share capital when the Company has no loss; however, appropriation to share capital is limited to a certain ratio of the paid-in ratio.

• (III) Retained earnings and dividend policy

According to the requirements of earning distribution policy in the Articles of Incorporation, if the Company records earnings from the final account of the year, after paying taxes and compensating cumulative losses according to the law, the Company shall appropriate 10% as the statutory surplus reserve. For the remaining earnings, the Company shall appropriate or reverse special surplus reserve according to the requirements of laws and regulations. Shall there be remaining balances, the Company shall combine such balances with the cumulated undistributed earnings, and the Board shall prepare the proposal for earning distribution and submit it to the shareholders’ meeting for the resolution of distributing dividends and bonuses to shareholders. For the distribution policy of remuneration of employees and Directors stipulated in the Articles of Incorporation, please refer to Note 22 (7).

In addition, according to the requirements of the Articles of Incorporation, the Company responds to the current and future development plans and takes investment environments, capital requirements, and domestic and foreign competition status into account, with equal consideration given to shareholders’ benefits. The Board shall prepare the proposal for earning distribution, and the shareholders’ meeting shall make the resolution. Distribution of shareholders' dividends/bonuses may be made in shares

• 261 -

or cash; however, in principle, the ratio of cash dividends to the total distribution amount shall not be less than 10%.

The appropriation of the legal reserve shall be until its balance reaches the total paid-in capital of the Company. Legal reserve may be used in loss compensation. When the Company has no loss, the part of the legal reserve that exceeds the total paidin capital for 25% may be distributed in cash.

The Company held its annual shareholders’ meetings on June 29, 2022 and August 27, 2021 and the proposals for earning distribution for 2021 and 2020 approved as resolutions are as follows:

as resolutions are as follows:
Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2021 $ 3,166 $ 83 $ 28,368 $ 0.40		2020
				$ 7,725 $ 105 $ 69,503 $ 0.98

In addition, on August 27, 2021, the Board of the Company intended to distribute cash of NT$1,418 thousand from its capital reserve, NT$0.02 per share.

On March 28, 2023, the proposal for the earning distribution of 2022 discussed by the Board is as follows:

by the Board is as follows:
Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2022
	(	$ 7,389 $ 302) $ 66,665 $ 0.94

In addition, , on March 28, 2023, the Board of the Company intended to distribute cash of NT$4,255 thousand from its capital reserve, NT$0.06 per share.

The proposal for the earning distribution and the proposal for the cash distribution from the capital reserve of 2022 are expected to be resolved at the annual shareholders’ meeting to be convened on June 28, 2023.

(IV) Special reserve

Special reserve
Beginning balance Appropriation of special reserve Ending balance		2022 $ 3,005 83 $ 3,088		2021
				$ 2,900 105 $ 3,005

• 262 -

• (V) Other Components of Equity

Exchange differences on translation of foreign operations

XXI.	Beginning balance Generated during the year Translation difference of foreign operations Ending balance Net revenue Revenue from contracts with customers Revenue from product sales Service revenue	2022 ( $ 3,088 ) 302 ($ 2,786) 2022 $ 402,949 35,285 $ 438,234	2021 ( $ 3,005 ) ( 83) ($ 3,088) 2021	2021 ( $ 3,005 ) ( 83) ($ 3,088) 2021
				$ 342,024 173,356 $ 515,380

• (I) Description of contracts with customers

• Sales revenue of products

Refer to the sales of optical transport network access equipment, U interface and MDSL interface multiplexer, network management systems, Internet access equipment, time-slot interchanger, and other products.

1. Service revenue

Partial contracts entered into with customers include educational training services and software/hardware installation services.

• (II) Contract balance

Contract balance
Accounts receivable (Note 9) Contract assets - current Sales of products Contract liabilities - current Sales of products	December 31, 2022		December 31, 2021 $ 129,573 $ 148,875 $ 1,112	January1,2021
		$ 41,771 $ 32,776 $ 3,002			$ 244,269 $ 100,694 $ 2,274

Changes in contract assets and liabilities are primarily due to the difference in the point of time fulfilling the performance obligations and the point of time that customers make payments.

• 263 -

The amount of contract liabilities at the beginning of the year recognized as revenue of the current period is as follows:

Contract liabilities from the beginning of the year Sales of products		2022 $ 393		2021
				$ 1,775

• (III) Breakdown of revenue from contracts with customers

Breakdown of revenue from contracts	with	customers
Primary geographical markets Taiwan Asia (other than Taiwan) America Europe Others Major products Optical transport network access equipment U interface and MDSL interface multiplexer Network management system Time-slot interchanger Internet access equipment Others		2022 $ 107,240 102,028 101,558 85,562 41,846 $ 438,234 $ 236,872 132,501 7,003 3,582 3,039 55,237 $ 438,234		2021
				$ 252,119 115,254 54,651 71,234 22,122 $ 515,380 $ 326,623 122,329 8,250 3,034 24,093 31,051 $ 515,380

XXII.	Net income
(I)	Interest income
			2022			2021
	Bank deposits		$ 4,016		$	185
(II)	Otherincome
			2022			2021
	Trademark licensing income
	(Note 18)		$ 29,778		$	-
	Income and expenses of
	investment properties
	Rental income		6,322			4,739
	Depreciation of investment
	properties	(	1,142 )	(		1,151 )
	Dividend income		43			5
	Others		575			1,028
			$ 35,576		$	4,621

• 264 -

• (III) Other gains and losses

Other gains and losses
Net gains (losses) on currency exchange Net (losses) gains on financial assets at fair value through profit or loss Others	2022 $ 32,598 ( 508 ) ( 560) $ 31,530	2021
		( $ 3,724 ) 100 ( 23) ($ 3,647)

• (IV) Finance costs

Finance costs
Interest of lease liabilities Interest of bank borrowings		2022 $ 1,159 69 $ 1,228		2021
				$ 1,177 131 $ 1,308

• (V) Depreciation and amortization

Depreciation and amortization
Summary of depreciation expenses by function Operating cost Operating expenses Other expenses Summary of amortization expenses by function Operating cost Operating expenses Employee benefits expense Short-term employee benefits Post-employment benefits (Note 19) Defined contribution plans Defined benefit plans Other employee benefits Total employee benefits expenses		2022 $ 5,281 8,265 1,142 $ 14,688 $ 128 3,530 $ 3,658 2022 $ 163,185 6,558 220 6,778 6,898 $ 176,861		2021
				$ 4,564 9,795 1,151 $ 15,510 $ 40 2,374 $ 2,414 2021
				$ 169,940 6,782 296 7,078 6,397 $ 183,415

• (VI) Employee benefits expense

(Cont’d)

• 265 -

(Cont’d)

Summary by function Operating cost Operating expenses		2022 $ 33,277 143,584 $ 176,861		2021
				$ 36,175 147,240 $ 183,415

(VII) Remunerations of employees and Directors

According to the requirements of the Articles of Incorporation, if there is any balance after retaining the amount for compensating cumulative losses, the Company shall distribute no less than 10% and no more than 5% of the net income before tax

and before deduction remuneration of employees and Directors of the year as remuneration of employees and remuneration of Directors, respectively. In 2022 and 2021, remuneration of employees and remuneration of Directors were resolved by the Board on March 28, 2023 and March 30, 2022, respectively, as follows:

Estimated ratio

Estimated ratio
Remuneration of employees Remuneration of Directors	2022 10% 2%	2021
		10% 2%

Amount

Amount
Remuneration of employees Directors' remuneration		2022 Cash Shares $ 9,478 $ - $ 1,896 $ -			2021
		Cash			Cash		Shares
		$ 9,478 $ 1,896			$ 4,528 $ 906		$ - $ -

If there is any change in the amount after the approval date for the publication of the parent company only financial statements, it shall be treated as a change in accounting estimate, and adjusted and accounted for in the following year.

In 2021 and 2020, the actual distribution amount of remuneration of employees and remuneration of Directors has no difference from the amount recognized in the 2021 and 2020 parent company only financial statements.

For information on the remuneration of employees and remuneration of Directors resolved by the Board of the Company, please visit “MOPS” of the Taiwan Stock Exchange for inquiries.

• 266 -

(VIII) Foreign currency exchange gains and losses

Total gains on currency exchange Total losses on currency exchange Net gains (losses)		2022 $ 32,598 - $ 32,598		2021
			( (	$ 545 4,269) $ 3,724)

XXIII. Income tax

• (I) Income tax recognized in profit or losses

The major components of income tax expenses are as follows:

Income tax of the period Generated during the year Additional tax on undistributed earnings Adjustments from prior years Deferred income tax Generated during the year Income tax expenses recognized in profit or losses		2022 $ 9,510 2 2,048 11,560 4,440 $ 16,000		2021
			(	$ 7,042 - 1,049) 5,993 826 $ 6,819

The reconciliation of accounting income and income tax expenses is as follows:

			2022		2021
Net income before tax			$ 83,403		$ 39,845
Income tax expense calculated
at the statutory tax rate based
on net profit before tax			$ 16,681		$ 7,969
Non-deductible items in
determining taxable income			1,069		1,164
Tax-exempted income		(	9 )	(	18 )
Unrecognized deductible
temporary differences			283		1,771
Investment tax credits offset
during the period	63	(	4,074 )	(	3,018 )
Additional tax on undistributed
earnings	63		2		-
Adjustments from prior years			2,048	(	1,049)
Income tax expenses
recognized in profit or losses			$ 16,000		$ 6,819

(II) Tax liability Tax liability Income tax payable	December 31,2022 $ 9,235	December 31,2021	December 31,2021
			$ 7,042

• 267 -

(III) Deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as follows:

2022

2022
Deferred income tax assets Temporary difference Unrealized allowance for inventory valuation and obsolescence losses Unrealized exchange losses Others Deferred income tax liabilities Temporary difference Unrealized exchange gains 2021 Deferred income tax assets Temporary difference Unrealized allowance for inventory valuation and obsolescence losses Unrealized exchange losses Estimation of bonuses for outstanding leaves Others		Beginning balance $ 4,854 1,733 111 $ 6,698 Beginning balance $ - Beginning balance $ 4,854 1,735 823 112 7,524 (	Changes during theyear $ 775 ( 1,733 ) ( 27) ($ 985) Changes during theyear $ 3,455 Changes during theyear $ - ( 2 ) ( 823 ) ( 1) $ 826)		Ending balance
					$ 5,629 - 84 $ 5,713 Ending balance
					$ 3,455 Ending balance
	$			$	$ 4,854 1,733 - 111 6,698

• (IV) Deductible temporary differences of deferred income tax assets not recognized in the

parent company only balance sheet

parent company only balance sheet
Deductible temporary differences	December 31,2022 $ 63,866	December 31,2021
			$ 62,451

(V) Assessment of tax

The profit-seeking business income tax declarations of the Company as of 2020 have been approved by the taxation authority.

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XXIV. Earnings per share

arnings per share
Basic earnings per share Diluted earnings per share		(In New Taiwan Dollars per share) 2022 2021 $ 0.95 $ 0.47 $ 0.94 $ 0.46

Net income and the weighted average number of ordinary shares used to calculate earnings per share are as follows:

Net income for the year

Net income for the year
Net income used to calculate basic and diluted earnings per share Shares Weighted average number of ordinary shares used to calculate basic earnings per share Impacts of potential ordinary shares with diluted effects: Remuneration of employees Weighted average number of ordinary shares used to calculate diluted earnings per share		2022 2021 $ 67,403 $ 33,026 Unit: thousand shares 2022 2021 70,921 70,921 512 255 71,433 71,176

If the Company may choose to distribute remuneration of employees in stock or in cash, when calculating the diluted earnings per share, it assumes that remuneration of

employees will be distributed in stock and calculates the diluted earnings per share by

including the weighted average number of outstanding shares when potential ordinary

shares have diluted effects. When calculating diluted earnings per share before resolving

the number of shares for the distribution of remuneration of employees in the following

year, the Company continues to consider the diluted effects of such potential ordinary shares.

XXV. Capital risk management

The Company engages in capital management to ensure all enterprises within the Company can optimize the balance of liabilities and equity with a precondition of continuing operations so as to maximize shareholders’ return. The overall strategy of the Company has no significant change.

• 269 -

The capital structure of the Company is composed of equity (i.e., share capital, capital reserve, retained earnings, and other equity items).

The Company is not required to comply with other external capital requirements.

XXVI. Financial instruments

• (I) Information on fair value - financial instruments not measured at fair value

The management of the Company considers that the carrying amounts of financial assets and financial liabilities not measured at fair value are equivalent to their fair value.

• (II) Information on fair value - financial instruments at fair value on a repeatability basis

• Fair value hierarchy

December 31, 2022

cember 31, 2022
Financial asset measured at fair value through profit or loss Domestic listed stocks Beneficiary certificates cember 31, 2021 Financial asset measured at fair value through profit or loss Domestic listed stocks		Level 1 $ 3,375 30,171 $ 33,546 Level 1 $ 321		Level 2 $ - - $ - Level 2 $ -		Level 3 $ - - $ - Level 3 $ -		Total
								$ 3,375 30,171 $ 33,546 Total
								$ 321

December 31, 2021

In 2022 and 2021, there was no measurement transfer between level 1 and

level 2 fair value.

• (III) Categories of financial instruments

Categories of financial instruments
Financial assets Measured at fair value through profit or loss Financial assets at amortized costs (Note 1) Financial liabilities Measured at amortized costs (Note 2)	December 31,2022 $ 33,546 426,256 82,324	December 31,2021
		$ 321 270,848 87,966

Note 1: The balance includes cash and cash equivalents, financial assets at amortized

costs (current and non-current), accounts receivable (including those from

• 270 -

related parties), other receivables (including those from related parties), and other financial assets at amortized costs.

• Note 2: The balance includes accounts payable (including those to related parties), other payables, long-term borrowings (including those due within one year), and other financial liabilities at amortized costs.

• (IV) Financial risk management purpose and policy

The Company’s main financial instruments include investments in equity instruments, cash and cash equivalents, accounts receivable, bank borrowings, accounts payable, and lease liabilities. The financial management department of the Company provides services for all business departments, coordinates the entrance to domestic and international financial markets for operations, analyzes the internal risk of exposure based on the level and width of risks, and monitors and manages financial risks related to the operations of the Company. Such risks include market risks (including exchange rate risks, interest rate risks, and other price risks), credit risks, and liquidity risks.

1. Market risks

The major financial risks assumed by the Company due to its operating activities are the risk of changes in exchange rates (please refer to (1) below for details) and the risk of changes in interest rates (please refer to (2) below for details).

There is no change in the exposure to financial instrument market risks of the Company and its management and measurement methods of such exposures. (1) Exchange rate risks

The Company engages in sales and purchases denominated in foreign currencies, resulting in the exposure of the Company to changes in exchange rates. The management of exchange rate exposure of the Company is to utilize natural hedging methods for risk management within the scope permitted under its policies.

For the carrying amount of monetary assets and monetary liabilities denominated in non-functional currencies of the Company on the balance sheet date, please refer to Note 30.

Sensitivity analysis

The Company is primarily affected by the fluctuation of the USD exchange rate.

• 271 -

The following table describes the sensitivity analysis of the Company when the exchange rate of the functional currency appreciates and depreciates by 1% for each of the relevant foreign currencies. The sensitivity ratio used to report to the major management within the Group for exchange rate risks is 1%, which also represents the scope of reasonable and possible changes in exchange rates assessed by the management. The sensitivity analysis only includes outstanding monetary items in foreign currencies, and adjustments are made to their translation at the end of the period based on a change of 1%. The positive figures in the following table refer to the increase in net income before tax when NTD depreciates by 1% against relevant currencies; when NTD appreciates by 1% against relevant currencies, the effects on net income before tax will be the same amount in negative.

Profit or loss	Effects of	USD
	2022 $ 3,299(i)	2021
		$ 1,587(i)

• (i) Primarily originated from cash and cash equivalents, accounts receivable, other receivables, and accounts payable denominated in USD that is outstanding on the balance sheet date with no cash flow hedging performed.

• (2) Interest rate risks

Interest rate exposure arising from the borrowing of capital at fixed and floating rates by entities within the Company. The Company manages the interest rates risk by maintaining an adequate portfolio of fixed and variable interest rates.

The carrying amount of financial assets and financial liabilities under interest rate exposure on the balance sheet date is as follows:

With fair value interest rate risks - Financial assets - Financial liabilities With cash flow interest rate risks - Financial assets	December 31,2022 $ 282,187 49,268 100,545	December 31,2021
		$ 40,200 50,327 98,277

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December 31, 2022 December 31, 2021 - Financial liabilities 1,936 4,225

Sensitivity analysis

The following sensitivity analysis is based on the risk exposure to the interest rates risk of non-derivative instruments on the balance sheet date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding on the balance sheet date was outstanding throughout the reporting period. The rate of change is expressed as the interest rate increases or decreases by 0.1% when reporting to the key management internally, which also represents the management's assessment of the reasonable and possible scope of change in interest rates.

With other variables remaining unchanged, if the interest rate increases/decreases by 0.1%, the net income before tax of the Company in 2022 and 2021 will increase/decrease by NT$99 thousand and NT$94 thousand in 2022 and 2021, respectively, primarily due to the interest rate exposure of net assets at variable interest rates.

• (3) Other price risks

The Company has equity price exposure arising from its investments in equity securities. Such equity investments are not held for trading purposes but strategic investments; the Company is not actively trading such investments. In addition, the Company has appointed a particular team to monitor price risks and evaluate the timing to increase the hedging positions of the risks hedged.

Sensitivity analysis

The following sensitivity analysis is based on the equity price on the balance sheet date.

If the equity price increases/decreases by 5%, net income before tax in 2022 and 2021 will increase/decrease by NT$1,677 thousand and NT$16 thousand, respectively, due to the increase/decrease in the fair value of financial assets at fair value through profit or loss.

1. Credit risks

2. 273 -

Credit risks refer to risks of financial losses of the Company resulting from the delay in performing contract obligations of counterparties. As of the balance sheet date, the maximum credit risk exposure of financial losses that may incur to the Company due to non-performance of obligations by counterparties and the provision of financial guarantees is the carrying amount of financial assets recognized in the consolidated balance sheet.

To mitigate credit risks, the management of the Company has appointed a dedicated team to be responsible for the decision of loan limits, loan approval, and other monitoring procedures to ensure that appropriate actions are adopted for the recovery of overdue amounts receivable. In addition, the Company reviews the recoverable amount of amounts receivables on a case-by-case basis on the balance sheet date to ensure impairment losses are provided for amounts receivable not recoverable. Accordingly, the management of the Company considers that the credit risks of the Company have reduced significantly.

3.

• Liquidity risks

The Company supports its operations and mitigates the effects of cash flow fluctuation by managing and maintaining abundant positions of cash and cash equivalents. The management of the Company monitors the use status of financing limits with banks and ensures compliance with the terms of borrowing contracts.

Bank borrowings represent a material source of liquidity to the Company. As of December 31, 2022 and 2021, the Company has not utilized any financing limit; please refer to the description of the financing limit in (3) below.

(1) Table of liquidity and interest rate risks of non-derivate financial liabilities

The maturity analysis of remaining contracts for non-derivative liabilities is prepared in accordance with the earliest date on which the Company may be requested to make repayment based on the undiscounted cash flow of financial liabilities (including principals and estimated interest). Therefore, bank borrowings that the Company may be requested to repay immediately are set out in the earliest period in the following table, without considering the probability of banks exercising their rights immediately; the maturity analysis of other non-derivative financial liabilities is prepared based on the repayment dates agreed upon. December 31, 2022

• 274 -

Non-derivative financial liabilities Accounts payable Other payables Lease liabilities Instruments at floating interest rates	Request of instant payment or less than 1 month $ 11,239 3,152 190 195 $ 14,776		1 to 3 months $ 18,342 41,435 380 391 $ 60,548		3 months to 1 year $ - 4,445 1,711 1,368 $ 7,524		Over 1year $ - - 65,943 - $ 65,943		Total
									$ 29,581 49,032 68,224 1,954 $ 148,791

Further information on the maturity analysis of the abovementioned financial liabilities is as follows:

Lease liabilities Instruments at floating interest rates	Less than 1 year	Less than 1 year	1 to 5years	1 to 5years		5 to 10 years		10 to 15 years		15 to 20 years $ 11,398 - $ 11,398	Over 20 years
		$ 2,281 1,954 $ 4,235		$ 9,119 - $ 9,119		$ 11,398 - $ 11,398		$ 11,398 - $ 11,398			$ 22,630 - $ 22,630

December 31, 2021

Non-derivative financial liabilities Accounts payable Other payables Lease liabilities Instruments at floating interest rates	Request of instant payment or less than 1 month $ 24,189 31,978 288 194 $ 56,649		1 to 3 months $ 20,210 6,179 576 390 $ 27,355		3 months to 1 year $ 498 90 2,592 1,753 $ 4,933		Over 1year $ - - 65,820 1,950 $ 67,770		Total
									$ 44,897 38,247 69,276 4,287 $ 156,707

Further information on the maturity analysis of the abovementioned financial liabilities is as follows:

Lease liabilities Instruments at floating interest rates	Less than 1 year	Less than 1 year	1 to 5years	1 to 5years		5 to 10 years		10 to 15 years		15 to 20 years $ 11,348 - $ 11,348	Over 20 years
		$ 3,456 2,337 $ 5,793		$ 11,348 1,950 $ 13,298		$ 11,348 - $ 11,348		$ 11,348 - $ 11,348			$ 20,428 - $ 20,428

(2) Financing limit

December 31, 2022 December 31, 2021

Secured bank borrowing limits (may be

• 275 -

extended with the consent of both parties) - Amount utilized - Amount not utilized	$ 1,936 352,875 $ 354,811	$ 4,225 449,775 $ 454,000

XXVII. Related party transactions

Transactions between the Company and its related parties are as follows:

• (I) Names and relationships with related parties

Name of the related parties Relationship with the Company Tianjin Loop Technology Co.,Ltd Subsidiary Tianjin Loop Electron Technology Subsidiary Co., Ltd. Chongqing Loop Technology Co., Subsidiary Ltd.

Loop Telecom NA, Inc Subsidiary

• (II) Operating revenue

Operating revenue
Accountingitem Operating revenue	Type of relatedparties Subsidiary		2022 $ 347		2021
					$ 100

• (III) Purchases

Purchases
Type of relatedparties Subsidiary		2022 $ 11,441		2021
				$ 15,559

The Company purchases from and sales to related parties without purchasing from other suppliers and sales to other customers as there is no market price available for comparison; the transacting price is determined by both parties with reference to the market status.

• (IV) Amounts receivable from related parties

Accountingitem Accounts receivable (including those from related parties)	Type of relatedparties Tianjin Loop Technology Co.,Ltd	December 31, 2022 $ 201	December 31, 2021	December 31, 2021
				$ 58

No guarantee is received for amounts due from related parties that are outstanding. In 2022 and 2021, no loss provision was made for amounts due from related parties.

• (V) Other receivables

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Accountingitem Other receivables	Type of relatedparties Tianjin Loop Electron Technology Co., Ltd. Chongqing Loop Technology Co., Ltd. Tianjin Loop Technology Co.,Ltd	December 31, 2022 $ - - - $ -	December 31, 2021	December 31, 2021
				$ 525 447 133 $ 1,105

The selling price provided by the Company to related parties is equivalent to other customers; however, the collection period for general customers is 30 to 60 days, and for related parties is 180 days; however, the collection is temporarily made based on the capital status of subsidiaries at present. At the end of 2021, the part of amounts due from related parties past the abovementioned collection period is transferred from amounts due from related parties to other receivables - related parties, and the aging distribution is as follows:

December 31, 2021

Type of related parties Subsidiary	Overdue for 30 to 60 days $ -	Overdue for 30 to 60 days $ -	Overdue for 61 to 120 days $ -	Overdue for 121 days or above $ 658		Total
						$ 658

(VI) Prepayments for goods (accounted for as other current assets)

Accountingitem Prepayments for goods	Type of relatedparties Tianjin Loop Technology Co.,Ltd	December 31, 2022 $ 5,244	December 31, 2021	December 31, 2021
				$ 1,313

(VII) Prepayments (accounted for as other current assets)

Accountingitem Temporary payments	Type of relatedparties Loop Telecom NA, Inc	December 31, 2022 $ 31	December 31, 2021	December 31, 2021
				$ 31

(VIII) Amounts payable to related parties

Accountingitem Accounts payable - related parties	Type of relatedparties Chongqing Loop Technology Co., Ltd.	December 31, 2022 $ 1,018	December 31, 2021
			$ 597

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Tianjin Loop 757 - Technology Co.,Ltd $ 1,775 $ 597

No guarantee is provided for the balance of amounts payable to related parties that are outstanding.

• (IX) Salary of the major management

Salary of the major management
Short-term employee benefits Post-employment benefits Other employee benefits		2022 $ 18,070 375 144 $ 18,589		2021
				$ 20,136 376 144 $ 20,656

The salary of Directors and other major management is determined by the Remuneration Committee based on individual performance and market trends. XXVIII. Pledged assets

The following assets were provided as collateral for bank borrowings, performance guarantees, and lease deposits:

guarantees, and lease deposits:
Time deposits pledged (accounted for financial assets at amortized costs - non-current) Property, plant and equipment and investment properties Refundable deposits	December 31,2022 $ 12,026 23,425 30,212 $ 65,663	December 31,2021
			$ 12,018 24,301 14,045 $ 50,364

XXIX. Significant subsequent events

On March 28, 2023, the Board approved the resolution to reduce its capital and return the capital contribution in cash in the amount of NT$141,841 thousand and reduce the paid-in capital in the amount of 14,184 thousand shares; the paid-in capital after the

capital reduction was NT$567,365 thousand, and the capital reduction ratio is approximately 20%. The proposal is expected to be resolved at the annual shareholders’ meeting to be convened on June 28, 2023 and declared to the competent authority for effectiveness.

XXX. Assets and liabilities in foreign currencies of material effects

The following information is presented as a summary of foreign currencies other than the functional currency of the Company, and the exchange rates disclosed are the

• 278 -

exchange rates used to translate such foreign currencies into functional currency. Assets and liabilities in foreign currencies of material effects are as follows:

Unit Foreign currencies/NT$ thousand

December 31, 2022

December 31, 2022
Assets in foreign currencies Monetary items USD RMB EURO GBP Liabilities in foreign currencies Monetary items USD December 31, 2021 Assets in foreign currencies Monetary items USD RMB GBP Liabilities in foreign currencies Monetary items USD	Foreign currency $ 11,232 1,257 155 104 489 Foreign currency $ 6,428 1,190 104 692	Exchange rate 30.71 4.408 32.72 37.09 30.71 Exchange rate 27.68 4.344 37.30 27.68	Carryingamount
			$ 344,935 5,541 5,072 3,857 $ 359,405 $ 15,017 Carryingamount
				$ 177,927 5,169 3,879 $ 186,975 $ 19,155

(Losses) gains (unrealized) on currency exchange of material effects are as follows:

XXXI.	2022 Foreign currency Exchange rate Net exchange gainsor losses USD 30.71 $ 17,269 Disclosures notes	2021	2021	2021
		Exchange rate 27.68	Net exchange gainsor losses
			(	$ 7,587)

(I) Information on significant transactions:

1. Financings provided to others: None.

2. 279 -

3. Endorsements and guarantees provided to others: None

4. Marketable securities held at the end of the period (excluding investments in the equity of subsidiaries). (Table 1)

5. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None

6. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None

7. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None

8. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: None

9. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None

10. Information about the derivative financial instruments transaction: None

(II) Information on investees (Table 2)

• (III) Information on investments in Mainland China:

• Name of investees in Mainland China, major scope of business, paid-in capital, investment methods, outward/inward remittance of capital, shareholding ratio, carrying amount of investments at the end of the period, gains or losses on investments remitted back, and investment limits in Mainland China. (Table 3)

• Material transactions that occurred directly or indirectly via a third-party region with investees in Mainland China, their prices, payment conditions, and unrealized gains or losses: (Table 4)

  • (1) Purchase amount and ratio and ending balance and ratio of relevant amounts payable.

  • (2) Sales amount and ratio and ending balance and ratio of relevant amounts receivable.

  • (3) Amount of property transaction and gains or losses arising thereof.

  • (4) Ending balance of note endorsements/guarantees of provision of collateral and its purpose.

  • (5) Maximum balance of fund accommodation, closing balance, interest rate range, and total interest of the period.

  • (6) Other transactions have material effects on the profit or loss of the period or financial position (i.e., provision or receipt of services).

• 280 -

• (IV) Information on major shareholders: Name of major shareholders with a shareholding of 5% or above and shareholding ratio. (Table 5)

• 281 -

Loop Telecommunication International, Inc.

Marketable securities held

December 31, 2022

Table 1

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Names of companies held	Category of marketable securities	Name of marketable securities	Relationship with the securities issuer	Accounting item		At the end of theperiod	At the end of theperiod		Remarks
					Shares (In Thousands)	Carrying amount	Shareholding ratio(%)	Market price
The Company The Company The Company The Company The Company The Company The Company	Fund Common shares Common shares Common shares Common shares Common shares Preferred shares	Union Money Market Fund Taiwan Semiconductor Manufacturing Company Limited TPK Holding Co., Ltd. G-TECH Optoelectronics Corporation Sunspring Metal Corporation TTY Biopharm Company Limited Formerica Optoelectronics Inc.	－ － － － － － －	Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current Financial assets at fair value through profit or loss - Current	2,249 7 3 3 2 1 8	$ 30,171 3,140 88 62 45 40 -	- - - - - - -	$ 30,171 3,140 88 62 45 40 -	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 -

Note 1: Calculated based on the net assets of funds and closing price of shares on December 31, 2022.

Note 2: As of December 31, 2022 the abovementioned securities were not provided for guarantee, pledge, or being restricted from use due to other agreements.

• 282 -

Loop Telecommunication International, Inc.

Information on investees, location, and other relevant information

For the year ended December 31, 2022

Table 2

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Name of the investors	Name of the investees	Location	Main business line	Original / investment amount	Original / investment amount	Held at the end of theperiod	Held at the end of theperiod	Held at the end of theperiod	Net loss of the investee for the period (Note)	Investment losses recognized during the period(Note)	Remarks
				Ending balance of the period	End of the preceding period	Shares (In Thousands)	Ratio (%)	Carrying amount (Note)
The Company Tech-Plan (BVI) Ltd.	Tech-Plan (BVI) Ltd. Loop Telecom NA, Inc. Maxi View Holdings Ltd. Loop Telecommunication International Ltd.	BVI The U.S. Hong Kong Cayman	Investment business Development and trading of digital communication equipment and software Investment business Investment business	USD4,016 thousand USD 5 thousand USD1,616 thousand USD2,400 thousand	USD4,016 thousand USD 5 thousand USD1,616 thousand USD2,400 thousand	4,016 5 1,616 2,400	100 100 100 100	$ 571 153 ( 274 ) 845	( $ 3,341) - ( 1,489) ( 1,852)	( $ 3,341) - ( 1,489) ( 1,852)	Subsidiary of the Company Subsidiary of the Company Sub-subsidiary of the Company Sub-subsidiary of the Company

Note: Calculated based on the financial statements of the same period audited by Accountants.

• 283 -

Loop Telecommunication International, Inc.

Information on investments in Mainland China

For the year ended December 31, 2022

Table 3

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Investee in Mainland China	Main business line	Main business line	Paid-in capital	Method of investment	Accumulated investment amount of remittance from Taiwan at the beginning of the period	Investment flows	Investment flows	Accumulated investment amount of remittance from Taiwan at the end of the period	Shareholdin g ratio of the Company’s direct or indirect investments (%)	Investment gains or losses recognized during the period (Note 2)	Carrying amount of investments at the end of the period	Accumulated inward remittance of earnings as of the end of the period
						Outflow	Inflow
Tianjin Loop Electron Technology Co., Ltd.	Development and trading of digital communication equipment and software		USD850 thousand	Note 1	USD296 thousand and RMB500 thousand ( $ 11,294 ) Note 3	$ -	$ -	USD296 thousand and RMB500 thousand ( $ 11,294 ) Note 3	100	$ 877	( $ 914 )	$ -
Tianjin Loop Technology Co.,Ltd	Development and trading of digital communication equipment and software		USD600 thousand	Note 1	USD300 thousand ( $ 9,213 ) Note 6	-	-	USD300 thousand ( $ 9,213 ) Note 6	100	( 2,366 )	( 1,865 )	-
Chongqing Loop Technology Co., Ltd.	R&D, design, production, processing, and trading of digital communication equipment		USD2,400 thousand	Note 1	USD2,400 thousand ( $ 73,704 )	-	-	USD2,400 thousand ( $ 73,704 )	100	( 1,852 )	837	-
					Ceiling on investments in Mainland China imposed by the Investment Commission of the Ministry of Economic Affairs is 60% of the net worth $511,250
Accumulated Investment in Mainland China at the end of the period(Note 5)		Investment amounts authorized by Investment Commission, MOEA			Ceiling on investments in Mainland China imposed by the Investment Commission of the Ministry of Economic Affairs is 60% of the net worth
USD 3,882 thousand and RMB 500 thousand ( $ 121,420)		USD 5,536 thousand ( $ 170,011 )			$511,250

Note 1: Investment in the company in Mainland China through investing in establishing a company in a third-party region.

Note 2: Calculated based on the financial statements of the same period audited by Accountants.

Note 3: Maxi View Holdings Ltd. was established through the investments from earnings distributed by Tianjin Loop Communication Equipment Co., Ltd. Maxi View Holdings Ltd. acquired the residual equity of Tianjin Loop Electron Technology Co., Ltd. at RMB500 thousand in August 2019, and its shareholding ratio increased from 75% to 100%.

Note 4: For those involving foreign currencies, they are translated into NTD at the exchange rates on December 31, 2022 using the following rate: US$1=NT$30.71 and RMB$1=NT$4.408. Note 5: Include the cumulative outward remittance amount of US$886 thousand to Hangzhou Loop Electronics Co., Ltd. and Hangzhou Loop Smart Instrument Co., Ltd. Note 6: Exclude the investment amount of US$300 thousand from the earnings of Maxi View Holdings Ltd..

• 284 -

Loop Telecommunication International, Inc.

Material transactions that occurred directly or indirectly via a third-party region with investees in Mainland China, their prices, payment conditions, unrealized gains or losses, and other relevant information

For the year ended December 31, 2022

Table 4

(In Thousands of New Taiwan Dollars)

Investee in Mainland China	Transaction category	Purchases and sales	Purchases and sales	Transaction conditions (Note)	Notes and accounts receivable(payable)	Notes and accounts receivable(payable)	Unrealized gains or losses	Remarks
		Amount	Ratio		Amount	Ratio
Tianjin Loop Technology Co.,Ltd ChongqingLoopTechnologyCo., Ltd.	Sales Purchases Purchases	$ 347 938 10,503	0.08% 0.46% 5.18%	－ － －	$ 201 ( 757 ) ( 1,018 )	0.48% 2.56% 3.44%	$ - - -	－ － －

Note: For transactions between related parties, the transacting price is determined by both parties with reference to the market status; however, the collection of payments for goods shall be subject to the capital status of the related parties.

• 285 -

Loop Telecommunication International, Inc.

Information on major shareholders

December 31, 2022

Table 5

Name of major shareholder	Shares
	Number of shares held(share)	Ownership
Yeh Maw-Lin	7,032,306	9.91%

• Note 1: Information on the major shareholder in the table is provided by the centralized depository enterprise on the last business day of the current quarter for the calculation of the total number of ordinary shares and preferred shares of the Company with non-physical registration completed (including treasury shares) held by shareholders, in aggregate, reaching 5% or above. The share capital in the parent company only financial statements of the Company may differ from the actual number of shares delivered with non-physical registration completed due to different preparation or calculation basis.

• Note 2: Regarding the abovementioned data, if the shareholding of shareholders is entrusted, the individual account of the consignor for whom the trustee opens the trust account shall be presented separately. For the declaration of insiders with over 10% of equity according to the Securities and Exchange Act by a shareholder, the shareholding includes shareholding of the shareholder plus shares delivered to a trust that has rights to determine the utilization of trusted properties; for data on insider equity declaration, please refer to MOPS.

• 286 -

§List of Major Accounting Items§

Item	No./index
Breakdown of assets, liabilities, and equity items
Breakdown of cash and cash equivalents	Breakdown 1
Breakdown of financial assets at fair value through	Note 7
profit or loss - current
Breakdown of accounts receivable	Breakdown 2
Breakdown of inventories	Breakdown 3
Breakdown of other assets	Note 16
Breakdown of changes in investments accounted for	Breakdown 4
using the equity method
Breakdown of changes in property, plant and equipment	Note 12
Breakdown of changes in right-of-use assets	Breakdown 5
Breakdown of changes in investment properties	Note 14
Breakdown of changes in intangible assets	Note 15
Breakdown of deferred income tax assets	Note 23 (3)
Breakdown of accounts payable	Breakdown 6
Breakdown of other liabilities	Note 18
Breakdown of lease liabilities	Breakdown 7
Breakdown of long-term bank borrowings	Breakdown 8
Breakdown of profit or loss items
Breakdown of operating revenue	Breakdown 9
Breakdown of operating costs	Breakdown 10
Breakdown of operating expenses	Breakdown 11
Breakdown of other net income and expenses	Note 22
Breakdown of financial costs	Note 22 (4)
Summary of employee benefits and depreciation and	Breakdown 12
amortization expenses that occurred during the
period by function

• 287 -

Loop Telecommunication International, Inc.

Breakdown of cash and cash equivalents

December 31, 2022

Breakdown 1 (In Thousands of New Taiwan Dollars)

Item Bank deposits Cash in hand and working capital Subtotal Transferred to financial assets at amortized cost - current (Note 3) Transferred to financial assets at amortized cost - non-current (Note 4) Total	Summary Time deposits (Note 1) Deposits in foreign currency (Note 2) Demand deposit Checking account deposits		Amount
		$ 293,587 47,359 41,786 396 383,128 270 383,398 ( 15,773 ) (12,026) $ 355,599

• Note 1: Expired by July 2023 successively with an interest rate per annum ranging from 0.32% to 4.40%.

• ＝

• Note 2: Refer to approximately US$1,237 thousand (the exchange rate was US$1 NT$30.71), ＝

• EUR$154 thousand (the exchange rate was EUR$1 NT$32.72), GBP$104 thousand ＝

• (the exchange rate was GBP$1 NT$37.09) and other petty foreign currencies, including RMB and AUD.

• Note 3: Time deposits with an initial expiry exceeding 3 months.

• Note 4: Time deposits pledge with a bank as the collateral for the performance guarantee of the Company.

• 288 -

Loop Telecommunication International, Inc.

Breakdown of accounts receivable

December 31, 2022

December 31, 2022	December 31, 2022	December 31, 2022
Breakdown 2 (In Thousands of New Taiwan Dollars) Client Name Amount Related party $ 201 Non-related party Customer A 17,997 Customer B 8,226 Customer C 4,740 Customer D 2,686 Others (Note) 8,687 42,336 Less: loss allowance ( 565) Net amount $ 41,972
	(	$ 201 17,997 8,226 4,740 2,686 8,687 42,336 565) $ 41,972

(In Thousands of New Taiwan Dollars)

Note: The balance of each customer has not exceeded 5% of the balance of the item.

• 289 -

Loop Telecommunication International, Inc.

Breakdown of inventories

December 31, 2022

Breakdown 3 Item Finished goods Work in progress Raw material Less: Allowance for inventory valuation and obsolescence losses		(In Thousands of New Taiwan Dollars) Amount	(In Thousands of New Taiwan Dollars) Amount	(In Thousands of New Taiwan Dollars) Amount
		Costs $ 83,063 57,169 198,293 338,525 28,146) $ 310,379	Net realizable value (Note 2)
	(			$ 149,803 87,045 195,300 $ 432,148

(In Thousands of New Taiwan Dollars)

Note 1: The combined insurance amount of inventory and property, plant and equipment were NT$562,481 thousand.

• Note 2: Inventories are stated at the lower of cost or net realizable value. Except for inventories of the same category, the comparison of the lower of cost and net realizable value is made on an item-by-item basis.

• 290 -

Loop Telecommunication International, Inc.

Breakdown of changes in investments accounted for using the equity method For the year ended December 31, 2022

Breakdown 4

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Name of the investees Tech-Plan (BVI) Ltd. Loop Telecom NA, Inc.	Beginningbalance Shares (In Thousands) Amount 4,016 $ 3,068 5 138 $ 3,206	Beginningbalance Shares (In Thousands) Amount 4,016 $ 3,068 5 138 $ 3,206	Investment losses recognized by using the equity method(Note 1) ( $ 3,341 ) - ($ 3,341)		Amount of translation adjustments $ 287 15 $ 302	Others(Note 2) $ 978 - $ 978		Endingbalance		Amount $ 992 153 $ 1,145	Net value of equity (Note 2)	Net value of equity (Note 2)
	Shares (In Thousands) 4,016 5						Number of shares (1,000 shares) 4,016 5	Shareholding (%) 100 100
												$ 571 153 $ 724

Note 1: Calculated based on the financial statements audited by Accountants.

Note 2: Include deferred credit amount of NT$(421) thousand at the end of the period, and the unrealized gains on sales of the year were NT$978 thousand.

• 291 -

Loop Telecommunication International, Inc.

Breakdown of changes in right-of-use assets For the year ended December 31, 2022

Breakdown 5

(In Thousands of New Taiwan Dollars)

Costs Balance on January 1, 2022 Addition Balance on December 31, 2022 Cumulative depreciation Balance on January 1, 2022 Depreciation Balance on December 31, 2022 Net amount on December 31, 2022		Land $ 45,050 1,217 $ 46,267 $ 4,375 1,349 $ 5,724 $ 40,543		Buildings $ 4,852 - $ 4,852 $ 3,697 1,155 $ 4,852 $ -		Total
						$ 49,902 1,217 $ 51,119 $ 8,072 2,504 $ 10,576 $ 40,543

• 292 -

Loop Telecommunication International, Inc.

Breakdown of accounts payable

December 31, 2022

Breakdown 6 (In Thousands of New Taiwan Dollars)

Supplier Accounts payable - related parties Accounts payable - non-related parties: WT Microelectronics Qinyi Enterprise Yuan Tsu Enterprise Avnet Macnica Galaxy Kintech Electronics Others (Note) Total		Amount
		$ 1,775 5,455 2,476 2,191 1,867 1,788 1,764 14,040 29,581 $ 31,356

Note: The balance of each supplier has not exceeded 5% of the balance of the item.

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Loop Telecommunication International, Inc.

Breakdown of lease liabilities

December 31, 2022

Breakdown 7

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Name Land Less: Lease liabilities - current Lease liabilities - non-current	Leasing period 1996.06~2026.12 and 2019.08~2038.12	Discount rate 2.30%	Endingbalance	Endingbalance
			(	$ 49,268 1,159) $ 48,109

• 294 -

Loop Telecommunication International, Inc. Breakdown of long-term bank borrowings December 31, 2022

Breakdown 8 Lenders Yuanta Commercial Bank Less: Presented as due within one year	Summary Borrowings on pledge		Borrowing amount $ 1,936 1,936) $ -	(In Thousands of New Taiwan Dollars; unless specified otherwise) Contractperiod Interest rate range(%) Pledge or Guarantee 2013.10~2023.10 2.08 Buildings with a carrying amount of NT$23,425 thousand	(In Thousands of New Taiwan Dollars; unless specified otherwise) Contractperiod Interest rate range(%) Pledge or Guarantee 2013.10~2023.10 2.08 Buildings with a carrying amount of NT$23,425 thousand
		(			Buildings with a carrying amount of NT$23,425 thousand

(In Thousands of New Taiwan Dollars; unless specified otherwise)

• 295 -

Loop Telecommunication International, Inc.

Breakdown of operating revenue

For the year ended December 31, 2022

Breakdown 9

(In Thousands of New Taiwan Dollars; unless specified otherwise)

Item Optical transport network access equipment U interface multiplexer and MDSL interface multiplexer Network management system Time-slot interchanger Internet access equipment Others Total	Quantity (thousand machines) 16 17 1 - - 10		Amount
			$ 236,872 132,501 7,003 3,582 3,039 55,237 $ 438,234

• 296 -

Loop Telecommunication International, Inc.

Breakdown of operating costs

For the year ended December 31, 2022

Breakdown 10

(In Thousands of New Taiwan Dollars)

Item Raw material Raw materials at the beginning of the year Purchase of materials during the year Other outward transfers Raw materials at the end of the year Raw material used Direct labor costs Manufacturing expenses Manufacturing costs Work-in-progress at the beginning of the year Purchase of materials during the year Other inward transfers Work-in-progress at the end of the year Cost of finished good Finished good at the beginning of the year Inward transfers or transfers to others of fees Finished good at the end of the year Total costs of sales Service costs Total operating cost

Amount

$ 197,280 156,768 ( 6,831 ) (191,554) 155,663 7,594 54,968 218,225 52,897 860 11,235 (39,077) 244,140 45,335 ( 7,827 ) (79,748) 201,900 974 $ 202,874

• 297 -

Loop Telecommunication International, Inc.

Breakdown of operating expenses For the year ended December 31, 2022

Breakdown 11 (In Thousands of New Taiwan Dollars)

Item Salary expenses Service fees Travel expenses Insurance premium Depreciation Indirect materials Others (Note) Total		Sales and marketing expenses $ 17,365 10,557 4,081 2,197 467 83 9,514 $ 44,264	General and administrative expenses $ 19,928 4,544 83 6,873 499 2,400 6,182 $ 40,509	Research and development expenses	Research and development expenses
					$ 86,016 2,032 55 7,115 7,299 9,500 22,698 $ 134,715

Note: The amount of each entry item has not exceeded 5% of the amount of the item.

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Loop Telecommunication International, Inc.

Summary of employee benefits and depreciation and amortization expenses that occurred during the period by function For the years ended December 31, 2022 and 2021

Breakdown 12 (In Thousands of New Taiwan Dollars)

Employee benefits expense Salary expenses Labor and health insurance Pension costs Directors’ remuneration Other employee benefits expense Total Depreciation Amortization expense			2022		Total $ 150,779 12,405 6,778 1,968 4,931 $ 176,861 $ 13,546 $ 3,658			2021
	Operatingcosts $ 27,470 2,889 1,447 - 1,471 $ 33,277 $ 5,281 $ 128		Operating expenses $ 123,309 9,516 5,331 1,968 3,460 $ 143,584 $ 8,265 $ 3,530			Operatingcosts $ 29,664 3,392 1,481 - 1,638 $ 36,175 $ 4,564 $ 40		Operating expenses $ 126,718 10,166 5,597 1,098 3,661 $ 147,240 $ 9,795 $ 2,374		Total
										$ 156,382 13,558 7,078 1,098 5,299 $ 183,415 $ 14,359 $ 2,414

• Note 1: The number of employees of the year and the preceding year was 153 persons and 161 persons, respectively, and the number of Directors who are not concurrently employees was 7 persons and 5 persons, respectively.

Note 2: Companies whose shares are listed on TWSE or TPEx for trading shall additionally disclose the following information:

• (1) The average employee benefits expenses of the year were NT$1,198 thousand (“total employee benefits expenses of the year - total Directors’ Remuneration”/“number of employees of the year - number of Directors who are not concurrently employees“). The average employee benefits expenses of the preceding year were NT$1,169 thousand (“total employee benefits expenses of the preceding year - total Directors’ Remuneration”/“number of employees of the preceding year - number of Directors who are not concurrently employees“).

• (2) The average salary expenses of employees of the year were NT$1,033 thousand (total salary expenses of the year/“number of employees of the year - number of Directors who are not concurrently employees“).

• The average salary expenses of employees of the preceding year were NT$1,002 thousand (total salary expenses of the preceding year/“number of employees of the preceding year - number of Directors who are not concurrently employees“).

• (3) The average adjustments and changes in salary expenses reached 3.09% (“average salary expenses of employees of the year - average salary expenses of employees of the preceding year”/average salary expenses of employees of the preceding year).

• (4) The remuneration of supervisors for the year was NT$8 thousand, and the remuneration of supervisors for the preceding year was NT$362 thousand. The Company has established its Audit Committee in place for supervisors in June 2022; therefore, there will no longer be remuneration of supervisors.

• (5) Remuneration policy

• A. Based on the percentage or scope of remuneration of employees and Directors stipulated in the Company’s Articles of Incorporation: Based on the distribution policy of remuneration of employees and Directors stipulated in the Articles of Incorporation. If the

• Company records any earnings from its final account of the year, apart from paying all taxes according to the law, it shall first compensate cumulative losses from prior years. It may appropriate special reserve based on the Company’s requirements. Then, the remaining balance shall be combined with the cumulative undistributed earnings from prior years; after retaining partial earnings based on the operating status and for a balanced dividend policy, the Company may make distribution after a resolution is made by the shareholders’ meeting based on the following principles:

  • a. Remuneration of employees shall be no less than 10%: Remuneration of employees may be made in shares or cash, and the distribution targets may include employees, who fulfill certain conditions, of subordinated companies; such conditions shall be resolved by the Board.

  • b. Remuneration of Directors shall be no more than 5%.

  • c. The remaining shall be shareholders’ bonuses.c. The remaining shall be shareholders’ bonuses.

• 299 -

Loop Telecommunication International, Inc.

Chairman: Yeh Maw-Lin