Stock Symbol: 3533

Lotes Co., Ltd. and its Subsidiaries

Consolidated Financial Statements and Accountant’s Review Report

Third Quarter 2021 and Third Quarter 2020

Notice to Readers :

For the convenience of readers, the Consolidated Financial Statements and Accountant’s Review Report have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

Address: No. 15, Wuxun St., Anle Dist., Keelung City 204 Telephone: (02)2433 1110

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Contents I. Cover page II. Table of Content III. Independent Auditor’s Report IV. Consolidated Balance Sheet V. Consolidated Statement of Comprehensive Income VI. Consolidated Statement of Changes in Equity VII. Consolidated Statement of Cash Flows VIII. Notes to the Consolidated Financial Statements (I) Company History (II) Date and Procedures of Approval of Financial Statement (III) Application of New and Revised Standards and Interpretations (IV) Summary of Major Accounting Policies (V) Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties (VI) Descriptions for Important Accounting Items (VII) Related Party Transactions (VIII) Pledged Assets (IX) Significant Contingent Liabilities and Unrecognized Contractual Commitments (X) Significant Disaster Loss (XI) Significant Post-Period Events (XII) Others (XIII) Disclosing Information (1) Major Transaction Details (2) Information on Reinvestment Business (3) Investment in Chinese Company (4) Principal Shareholder Information (XIV) Segmental Information	Page
	1 2 3 4 5 6 7 8 8 8～9 9～12 12 12～50 51～52 52 52 52 52 53 54～62 63～64 65～66 66～67 67~68

Contents
I.
Cover page
II.
Table of Content
III.
Independent Auditor’s Report
IV.
Consolidated Balance Sheet
V.
Consolidated Statement of Comprehensive Income
VI.
Consolidated Statement of Changes in Equity
VII.
Consolidated Statement of Cash Flows
VIII.
Notes to the Consolidated Financial Statements
(I)
Company History
(II)
Date and Procedures of Approval of Financial Statement
(III)
Application of New and Revised Standards and Interpretations
(IV)
Summary of Major Accounting Policies
(V)
Primary Sources of Major Accounting Judgment, Estimate and
Assumption Uncertainties
(VI)
Descriptions for Important Accounting Items
(VII) Related Party Transactions
(VIII) Pledged Assets
(IX)
Significant Contingent Liabilities and Unrecognized Contractual
Commitments
(X)
Significant Disaster Loss
(XI)
Significant Post-Period Events
(XII) Others
(XIII) Disclosing Information
(1) Major Transaction Details
(2) Information on Reinvestment Business
(3) Investment in Chinese Company
(4) Principal Shareholder Information
(XIV) Segmental Information

Page

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3
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8～9
9～12
12
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51～52
52
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54～62
63～64
65～66
66～67
67~68

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Independent Auditor’s Report

To the Board of Directors, Lotes Co., Ltd.:

Foreword

We have audited the Consolidated Balance Sheet of Lotes Co., Ltd. and its subsidiaries as of September 30, 2021 and 2020, the Consolidated Statement of Comprehensive Income as of July 1 to September 30, 2021 and 2020 and as of January 1 to September 30, 2021 and 2020 as well as the Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and the Notes to the Consolidated Financial Statements (including important accounting policies summary) as of January 1 to September 30, 2021 and 2020. The preparation of consolidated financial statements in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” issued by the Financial Supervisory Commission, which became effective, is the responsibility of management; our responsibility is to express an opinion on these consolidated financial statements based on our review.

Scope

We conducted our review in accordance with Statements on Auditing Standards No. 65, “The Auditor’s Consideration of the Internal Audit Function in an Audit of Financial Statements”. A review of the consolidated financial statements consists of inquiries (primarily of persons responsible for financial and accounting matters), analytical procedures and other review procedures. A review is substantially less in scope than an audit, and consequently, we may not be able to discern all significant matters that could be identified in an audit and express an opinion on those matters.

Conclusion

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS No. 34 “Interim Financial Reporting” issued by the Financial Supervisory Commission, which may affect the presentation of the consolidated financial position of Lotes Co., Ltd. and its subsidiaries as of September 30, 2021 and 2020, and the consolidated financial results as of July 1 to September 30, 2021 and 2020 and as of January 1 to September 30, 2021 and 2020 and consolidated cash flows as of January 1 to September 30, 2021 and 2020.

The engagement partners on the reviews resulting in this independent auditors' review report are Li, Fung-Hui and Chung, Tan-Tan.

KPMG

Taipei, Taiwan (Republic of China)

November 11, 2021

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

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September 30, 2021 and 2020 are reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Consolidated Balance Sheet

September 30, 2021, December 31, 2020, and September 30, 2020

Unit: NT$1,000

Sep 30, 2021 Assets Amount % Current assets: 1100 Cash and cash equivalents (Note VI (1) and (27)) $ 3,296,664 13 1110 Financial assets measured at FVTPL – current (Note VI (2) and (27)) 120,199 - 1120 Financial assets measured at FVTOCI – current (Note VI (2) and (27)) 1,552 - 1150 Net notes receivable (Note VI (3) and (27)) 72,869 - 1170 Net accounts receivable (Note VI (3) and (27)) 7,951,350 32 1200 Other receivables (Note VI (3) and (27)) 479,138 2 1220 Income tax assets for the period (Note VI (20)) 1,056 - 130X Net inventory (Note VI (4)) 3,859,568 16 1410 Advance payment 201,757 1 1476 Other financial assets – current (Note VI (6) and (27)) - - 1479 Other current assets – other 8,067 - 15,992,220 64 Non-current assets: 1510 Financial assets measured at FVTPL – non-current (Note VI (2) and (27)) 1,500 - 1517 Financial assets measured at FVTOCI – non-current (Note VI (2) and (27)) 28,271 - 1600 Property, plant and equipment (Note VI (7) and VIII) 6,143,378 25 1755 Right-of-use assets (Note VI (8)) 649,791 3 1760 Net investment property (Note VI (9)) 335,219 1 1780 Intangible assets (Note VI (10)) 184,723 1 1840 Deferred tax assets (Note VI (20)) 149,265 1 1900 Other non-current assets 1,175,104 5 8,667,251 36 Total of assets $ 24,659,471 100	Dec 31, 2020 Amount % 2,949,412 15 122,960 1 2,016 - 54,105 - 6,840,879 35 357,029 2 12,937 - 2,559,028 13 62,208 1 87,320 1 6,665 -	Sep 30, 2021 Amount % $ 804,867 3 241,770 1 15,020 - 2,676,585 11 1,838,842 7 464,551 2 129,636 1 184,276 1 27,547 - 15,885 -	Dec 31, 2020 Amount % - - 91,659 1 3,574 - 2,501,155 13 1,206,695 6 505,527 3 71,971 - 161,767 1 33,197 - 5,335 -	Sep 30, 2020 Amount % 730,000 4 94,297 - 6,078 - 2,524,466 13 1,349,832 7 360,943 2 79,041 - 141,853 1 15,898 1 16,287 -
		6,398,979 26	4,580,880 24	5,318,695 28
15,992,220 64	13,054,559 68
		971,762 4 - - 49,114 - 38,312 - 32,846 - 303,144 2 22,429 -	- - 18,661 - 49,258 - 21,037 - 27,054 - 104,279 1 2,167 -	- - 35,683 - 41,681 - 24,543 - 22,080 - 71,575 - 78,085 1
1,500 - 28,271 - 6,143,378 25 649,791 3 335,219 1 184,723 1 149,265 1 1,175,104 5	- - 20,120 - 4,495,974 23 399,749 2 368,019 2 155,510 1 127,144 1 661,820 3
		1,417,607 6	222,456 1	273,647 1
		7,816,586 32	4,803,336 25	5,592,342 29
8,667,251 36	6,228,336 32
		1,059,779 4 5,221,852 21 10,193,070 41 (782,553) (3)	1,034,779 5 3,958,247 21 9,101,144 47 (594,972) (3)	1,034,779 5 3,963,062 21 8,458,679 44 (723,181) (4)
$ 24,659,471 100	19,282,895 100
		15692148 63	13499198 70	12733339 66
		,, 1,150,737 5	,, 980,361 5	,, 900,537 5
		16,842,885 68	14,479,559 75	13,633,876 71
		$ 24,659,471 100	19,282,895 100	19,226,218 100

(Please refer to the notes to the consolidated financial statement for further details) Manager: Ho, Te-Yu

Chairperson: Chu, Te-Hsiang

Accounting Officer: Liu, Hsing-Hsia

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Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Comprehensive Income

July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020

Unit: NT$1,000

Jul to Sep, 2021 Amount % $ 5,733,436 100 3,545,744 62	Jul to Sep, 2021 Amount % $ 5,733,436 100 3,545,744 62	Jul to Sep, 2020 Amount % 4,629,484 100 2,777,401 60	Jul to Sep, 2020 Amount % 4,629,484 100 2,777,401 60	Jan to Sep, 2021 Amount % 15,336,022 100 9,212,808 60	Jan to Sep, 2021 Amount % 15,336,022 100 9,212,808 60	Jan to Sep, 2020 Amount % 12,501,555 100 7,498,719 60	Jan to Sep, 2020 Amount % 12,501,555 100 7,498,719 60
Amount $ 5,733,436 3,545,744		Amount 4,629,484 2,777,401		Amount 15,336,022 9,212,808		Amount 12,501,555 7,498,719
2,187,692	38	1,852,083	40	6,123,214	40	5,002,836	40
184,722 395,074 525,902 (1,049)	3 7 9 -	152,893 276,078 374,934 4,620	3 6 8 -	556,649 1,008,808 1,481,087 2,505	4 6 10 -	424,170 802,629 1,031,363 3,691	3 6 8 -
1,104,649	19	808,525	17	3,049,049	20	2,261,853	17
1,083,043	19	1,043,558	23	3,074,165	20	2,740,983	23
3,268 - 116,690 (52,002) (8,861) 3	- - 2 (1) - -	5,902 - 48,024 (90,715) (5,854) (339)	- - 1 (2) - -	9,438 - 239,846 (88,401) (17,683) (1,101)	- - 2 (1) - -	24,003 8,385 155,791 (143,932) (13,198) 2,170	- - 1 (1) - -
59,098	1	(42,982)	(1)	142,099	1	33,219	-
1,142,141 198,052	20 3	1,000,576 227,270	22 5	3,216,264 730,986	21 5	2,774,202 621,004	23 5
944,089	17	773,306	17	2,485,278	16	2,153,198	18
	- -	(97) -	- -	(6,713) -	- -	(6) -	- -
(2,986)	-	(97)	-	(6,713)	-	(6)	-
	(1) -	120,460 1,181	2 -	(181,570) 767	(1) -	(85,039) (3,122)	(1) -
(41,142)	(1)	119,279	2	(182,337)	(1)	(81,917)	(1)
(44,128)	(1)	119,182	2	(189,050)	(1)	(81,923)	(1)
$ 899,961	16	892,488	19	2,296,228	15	2,071,275	17
$ 925,425 18,664	17 -	771,435 1,871	17 -	2,468,182 17,096	16 -	2,083,818 69,380	17 1
$ 944,089	17	773,306	17	2,485,278	16	2,153,198	18
$ 881,817 18,144	16 -	888,370 4,118	19 -	2,280,601 15,627	15 -	2,001,029 70,246	16 1
$ 899,961	16	892,488	19	2,296,228	15	2,071,275	17
$	8.91		7.46		23.82		20.14
$	8.82		7.44		23.71		20.09

(Please refer to the notes to the consolidated financial statement for further details) Chairperson: Chu, Te-Hsiang Manager: Ho, Te-Yu Accounting Officer: Liu, Hsing-Hsia

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Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Changes in Equity

January 1 to September 31, 2021 and 2020

Unit: NT$1,000

		Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent		Non-controlling interests	Total equity 12,545,22 2,153,19 (81,923
Capital	Capital reserves		Retained earnings		Other equity Exchange differences on translation of foreign financial statements Unrealized gains (losses) on financial assets measured at FVTOCI (631,970 (18,562) - - (82,789 -		Total equity attributable to owners of parent
						Unrealized gains (losses) on financial assets measured at FVTOCI
Common stock		Legal reserve	Special reserve	Unappropriated retained earnings
$ 1,034,779 - -	3,959,560 - -	1,091,939 - -	317,020 - -	6,062,560 2,083,818 - 2,083,818 (207,604) (333,513) (1,086,518) - - - (10,140) 6,508,603 7,151,068 2,468,182 - 2,468,182 (271,615) 55,561 (1,376,256) - - - - - - 8,026,940			11,815,326 2,083,818 (82,789)	729,899 69,380 866 70,246 - - - - 149,509 (49,117) - 900,537 980,361 17,096 (1,469) 15,627 - - - - - - - 226,879 (72,130) 1,150,737
-	-	-	-		(82,789 -		2,001,029		2,071,27
- - - - - - -	- - - 3,502 - - -	207,604 - - - - - -	- 333,513 - - - - -		- - - - - - - - - - - - - 10,140		- - (1,086,518) 3,502 - - -		- - (1,086,518 3,50 149,50 (49,117 -
$ 1,034,779	3,963,062	1,299,543	650,533		(714,759 (8,422)		12,733,339		13,633,87
$ 1,034,779 - -	3,958,247 - -	1,299,543 - -	650,533 - -		(586,953 (8,019) - - (180,839 (6,742)		13,499,198 2,468,182 (187,581)		14,479,55 2,485,27 (189,050
-	-	-	-		(180,839 (6,742)		2,280,601		2,296,22
- - - - - - 25,000 - -	- - - 183,236 4,467 24,931 1,050,971 - -	271,615 - - - - - - - -	- (55,561) - - - - - - -		- - - - - - - - - - - - - - - - - -		- - (1,376,256) 183,236 4,467 24,931 1,075,971 - -		- - (1,376,256 183,23 4,46 24,93 1,075,97 226,87 (72,130
$ 1,059,779	5,221,852	1,571,158	594,972		(767,792 (14,761)		15,692,148		16,842,88

(Please refer to the notes to the consolidated financial statement for further details) Manager: Ho, Te-Yu

Chairperson: Chu, Te-Hsiang

Accounting Officer: Liu, Hsing-Hsia

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Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Cash Flows

January 1 to September 31, 2021 and 2020

Unit: NT$1,000

Cash flows from (used in) operating activities: Net profit before tax Adjustments: Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Expected credit loss Net loss (gain) on financial assets or liabilities at FVTPL Interest expense Interest income Dividend income Compensation expense for share-based payment Loss (gain) on disposal of property, plan and equipment Inventory valuation and disposal loss Gain recognized in bargain purchase transaction Other adjustments Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Increase in notes receivable Increase in accounts receivable Increase in other receivables Increase in inventory Increase in advance payment Decrease (increase) in other current assets Decrease in other financial assets Total changes in operating assets Changes in operating liabilities: Increase (decrease) in contract liabilities Decrease in notes payable Increase in accounts payable Increase in other payables Decrease in provisions Decrease in other current liabilities Increase (decrease) in refund liabilities Decrease in other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities Disposal of financial assets measured at FVTOCI Acquisition of financial assets measured at FVTOCI Acquisition of financial assets measured at FVTPL Disposal of financial assets measured at FVTPL Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of intangible assets Net cash inflows from business combination Disposal of investment property Increase in other non-current assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities Increase (decrease) in short-term loans Issuance of corporate bonds Borrowings of long-term loans Repayments of long-term loans Payments of lease liabilities Increase in other non-current liabilities Cash dividends paid Cash dividends paid to non-controlling interests Cash capital increase Changes in non-controlling interests Changes in subsidiaries, associates and joint ventures accounted for using equity method Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	Jan to Sep, 2021 $ 3,216,264 1,006,465 37,584 3,606 (20,823) 17,683 (9,438) (4,886) 24,931 3,305 44,052 - (2,466)	Jan to Sep, 2020 2,774,202 849,394 11,583 1,521 (26,378) 13,198 (24,003) (1,341) 7,795 3,994 39,287 (8,385) -
	1,100,013	866,665
	(18,764) (1,112,976) (127,670) (1,344,592) (139,549) (1,402) 87,320	(15,352) (487,995) (101,419) (374,018) (7,062) 4,321 5,009
	(2,657,633)	(976,516)
	150,111 11,446 175,430 658,333 (144) (5,650) 22,509 -	40,069 (20,587) 562,929 329,456 (48) (7,439) (15,403) (38)
	1,012,035	888,939
	(1,645,598)	(87,577)
	(545,585)	779,088
	2,670,679 13,898 4,886 (16,568) (759,475)	3,553,290 22,707 1,341 (13,261) (658,701)
	1,913,420	2,905,376
	- (14,400) (112,340) 135,324 (2,505,771) 16,232 (66,797) - 30,898 (569,290)	4,860 (15,896) (59,270) 267,342 (1,190,517) 29,327 (48,870) (59,647) - (160,367)
	(3,086,144)	(1,233,038)
	804,867 1,152,983 2,000 (10,111) (110,916) 4,559 (1,376,256) (72,130) 1,075,971 226,879 4,467	663,340 - 4,870 (82,444) (89,081) - (1,086,518) (49,117) - 96,729 (562)
	1,702,313	(542,783)
	(182,337) 347,252 2,949,412	(81,917) 1,047,638 2,845,994
	$ 3,296,664	3,893,632

(Please refer to the notes to the consolidated financial statement for further details)

Chairperson: Chu, Te-Hsiang

Accounting Officer: Liu, Hsing-Hsia

Manager: Ho, Te-Yu

～ 7 ～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Notes to the Consolidated Financial Statements

Third Quarter 2021 and Third Quarter 2020

(Except as otherwise indicated, the unit for all amounts in this document is NT$1,000)

I. Company History

Lotes Co., Ltd. (hereinafter referred to as the “Company”) was incorporated on Aug. 23, 1986 in accordance with the provisions of the Company Law and was approved for registration with its registered office at No.15, Wuxun Street, Anle District, Keelung City. The Company and its subsidiaries (hereinafter referred to as the “Consolidated Company”) are principally engaged in the sale and purchase of various hardware parts and components, the manufacturing and processing of various terminals and their connectors, the import and export business in connection with the preceding item and the agency of the preceding item in connection with the tender quotation and distribution of products of domestic and foreign manufacturers. Please refer to Note XIV for further details.

II. Date and Procedures of Approval of Financial Statement

The Consolidated Financial Statement was approved and released by the Board of Directors on November 11, 2021.

III. Application of New and Revised Standards and Interpretations

(1) Influence of the adoption of new and revised standards and integrations approved by the Financial Supervisory Commission
The Consolidated Company has applied the following newly revised IFRSs from
January 1, 2021, with no material impact on the consolidated financial statements
‧ Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
‧ Interest Rate Benchmark Reform—Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The Consolidated Company has applied the following newly revised IFRSs from April

1, 2021, with no material impact on the consolidated financial statements.
‧ Covid-19-Related Rent Concessions (Amendment to IFRS 16)
(2) Impact of not adopting IFRSs recognized by the FSC

The Consolidated Company assesses that the application of the following newly amended IFRSs, effective January 1, 2022, will not have a material impact on the consolidated financial statements.

～8～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

‧ Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
‧ Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS 37)
‧ Annual Improvements to IFRS Standards 2018–2020
‧ Reference to the Conceptual Framework (Amendments to IFRS 3)
(3) Newly issued and amended standards and interpretations not yet approved by the FSC

The Consolidated Company estimates that the following newly issued and amended standards, which have not yet been approved, will not have a material impact on the consolidated financial statements.

‧ Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
‧ Insurance Contracts (Amendments to IFRS 17 and IAS 17)
‧ Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
‧ Disclosure of Accounting Policies (Amendments to IAS 1)
‧ Definition of Accounting Estimates (Amendments to IAS 8)
‧ The main change in Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

IV. Summary of Major Accounting Policies

The significant accounting policies used in the consolidated financial statements are summarized below. Unless otherwise stated, the following accounting policies have been applied consistently to all periods presented in the consolidated financial statements.

(1) Compliance statement

The Consolidated Financial Statement was compiled in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the Regulations Governing the Preparation) and IAS 34 “Interim Financial Reporting” which is effective upon endorsement and issuance by the Financial Supervisory Commission. The consolidated financial statements do not include all of the information required to be disclosed in the full annual consolidated financial statements prepared in accordance with the following, as recognized by the Financial Supervisory Commission (FSC): International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).

Except as described below, the significant accounting policies used in this consolidated financial statement are the same as those used in the 2020 consolidated financial statement; see Note IV to the 2020 consolidated financial statements for related information.

～9～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(2) Basis of consolidation

1. Subsidiary listed in the Consolidated Financial Statement

The including subsidiaries listed in the Consolidated Financial Statement are as follows:

follows:
Name of Investment			Shareholding Percentage
Company		Place of
	Name ofSubsidiary	Incorporation	Sep 30, 2021	Dec 31, 2020	Sep 30, 2020	Note
The Company	Lotes Investments Limited	Samoa	100.00%	100.00%	100.00%
`〞`	Good Hope Investments Limited	`〞`	100.00%	100.00%	100.00%
`〞`	Guansi Development Co., Ltd.	`〞`	100.00%	100.00%	100.00%
`〞`	Zhaxi Investment Co., Ltd.	Anguilla	100.00%	100.00%	100.00%
`〞`	Jiayu Investment Co., Ltd.	Taiwan	100.00%	100.00%	100.00%
`〞`	Lotes USA, Inc	America	100.00%	100.00%	100.00%
`〞`	LOTES EU GmbH	Germany	100.00%	100.00%	100.00%
`〞`	Lerain Technology Co., Ltd.	Taiwan	16.40%	33.92%	33.92%	(Note 1)
`〞`	Mikronpoint Co., Ltd.	`〞`	100.00%	100.00%	- %
The Company	Lotes Viet Nam CO., Ltd.	Vietnam	100.00%	- %	- %
Lotes Investments Limited	Loteson International Investments	Hong Kong	100.00%	100.00%	100.00%
	Limited
Loteson International	Lotes Guangzhou Co., Ltd.	China	100.00%	100.00%	100.00%
Investments Limited
Lotes Guangzhou Co., Ltd.	Lotes Hengnan Co., Ltd.	`〞`	100.00%	100.00%	100.00%
`〞`	Shenzhen DeYi Automation	`〞`	100.00%	100.00%	100.00%
	Equipment Co., Ltd.
`〞`	Lotes Zhongshan Co., Ltd.	`〞`	50.00%	50.00%	50.00%
`〞`	Zhongshan Dezhi Metal Surface	`〞`	100.00%	100.00%	100.00%
	Treatment Co., Ltd.
`〞`	Hengnan Deyi Property	`〞`	100.00%	100.00%	100.00%
	Development Co., Ltd.
`〞`	Guangzhou Leside Technology Co.,	`〞`	100.00%	100.00%	100.00%
	Ltd.
Guangzhou Leside	Chongqing Fuxinrui Electronic	`〞`	51.00%	51.00%	51.00%
Technology Co., Ltd.	Technology Co., Ltd.
Good Hope Investments	Xincheng Development Co., Ltd.	Samoa	100.00%	100.00%	100.00%
Limited
`〞`	REKA Technology Co., Ltd.	Hong Kong	100.00%	100.00%	100.00%
Guansi Development Co., Ltd.	Jae You Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Jae You Co., Ltd.	Lotes Suzhou Co., Ltd.	China	100.00%	100.00%	100.00%
Lotes Suzhou Co., Ltd.	Lotes Zhongshan Co., Ltd.	`〞`	50.00%	50.00%	50.00%
Zhaxi Investment Co., Ltd.	Wangden Investments Limited	Hong Kong	100.00%	100.00%	100.00%
Wangden Investments	Zongka Technology (Shenzhen)	China	100.00%	100.00%	100.00%

～10～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Limited	Co., Ltd.
Jiayu Investment Co., Ltd.	Ememe Robot Co., Ltd.	Taiwan	94.37%	94.37%	94.37%
`〞`	Compertum Microsystems Inc.	`〞`	35.34%	35.34%	31.38% (Note 1)
`〞`	Good News Medical Co., Ltd.	`〞`	25.44%	5.00%	5.00% (Note 1)
`〞`	Lintes Technology Co., Ltd.	`〞`	52.13%	52.13%	52.13%
Lintes Technology Co., Ltd.	Jiajun Investment Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Lintes Technology Co., Ltd.	Genie Precision Machine Co., Ltd.	Taiwan	60.00%	60.00%	60.00% (Note 2)
`〞`	Compertum Microsystems Inc.	`〞`	11.77%	11.77%	10.46% (Note 1)
`〞`	Lerain Technology Co., Ltd.	`〞`	1.90%	- %	- % (Note 1)
`〞`	Jilong Co., Ltd.	Samoa	100.00%	100.00%	100.00%
Jilong Co., Ltd.	Rihui Co., Ltd.	`〞`	100.00%	100.00%	100.00%
Rihui Co., Ltd.	Lintes Technology (Suzhou) Co.,	China	100.00%	100.00%	100.00%
	Ltd.

Note 1: Although the Consolidated Company does not hold more than half of the voting shares of this company, it is included as a subsidiary in the consolidated financial statements because the Consolidated Company has control over its major operating activities and other decisions.

Note 2: Please refer to Note VI (5) for the Consolidated Company's acquisition of control over this company.

2. Subsidiary not listed in the Consolidated Financial Statement: none.

(3) Compound financial instruments

The number of shares issued does not vary with the change in fair value of the compound financial instruments issued by the Consolidated Company, which are convertible bonds (denominated in NTD) that the holders have the option to convert to equity.

The original recognition amount of the liability component of a compound financial instrument is measured at the fair value of a similar bond that does not include the equity conversion rights. The original recognition amount of the equity component is measured as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to the carrying amounts of the original liability and equity.

After initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured after initial recognition.

Interest related to financial liabilities is recognized as profit or loss. Financial liabilities are reclassified to equity upon conversion, and no profit or loss is recognized upon conversion.

～11～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) Employee benefits

The defined benefit plan pension for the interim period is calculated based on the actuarial pension cost ratio from the previous year’s reporting date to the end of the current period and adjusted for significant market fluctuations, and significant curtailment, liquidation or other significant one-time events after the reporting date.

(5) Income tax

The Consolidated Company’ income tax expense for the interim period is measured and disclosed in accordance with B12 of IAS No. 34 “Interim Financial Reporting”.

Income tax expense, which is recognized directly in equity or other comprehensive income, is measured as the temporary difference between the carrying amount of the related assets and liabilities for financial reporting purposes and their tax bases at the applicable tax rates that are expected to apply when the related assets and liabilities are realized or settled.

V. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

The preparation of the consolidated financial statements in conformity with the Regulations Governing the Preparation of Financial Statements and IAS 34 “Interim Financial Reporting” which is approved by the FSC, requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from the estimates.

The significant judgments made by management in the preparation of the consolidated financial statements and the key sources of estimation uncertainty in the adoption of the Consolidated Company’ accounting policies are consistent with Note V to the 2020 consolidated financial statements.

VI. Descriptions for Important Accounting Items

Except as noted below, the description of significant accounting items in this consolidated financial statement is not yet materially different from the 2020 consolidated financial statement, see Note VI to the 2020 consolidated financial statement for related information.

(1) Cash and cash equivalents

Cash and cash equivalents
Petty cash Checks and demand deposits Time deposits Cash and cash equivalents listed on the Statement	Sep 30, 2021 $ 2,468 2,467,508 826,688	Dec 31, 2020 2,139 2,169,311 777,962	Sep 30, 2020 4,418 2,488,323 1,400,891 3,893,632
	$ 3,296,664	2,949,412

～12～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Please refer to Note VI (27) for the disclosure of the interest rate risk and sensitivity analysis of the financial assets of the Consolidated Company.

(2) Financial assets
Financial assets measured at FVTPL

Financial assets mandatorily measured at FVTPL: Current: Non-hedging derivatives Forward foreign exchange contracts Non-derivative financial assets Listed shares Subtotal Non-current Non-hedging derivatives Embedded derivative—right of redemption Total	Sep 30, 2021 $ - 120,199	Dec 31, 2020 6,180 116,780	Sep 30, 2020 1,989 56,351 58,340 - 58,340
	120,199	122,960
	1,500	-
	$ 121,699	122,960

Please refer to Note VI (14) for the disclosure of embedded derivative of convertible bonds issued by the Consolidated Company.

Please refer to Note VI (27) for the amount recognized in profit or loss based on fair value remeasurement.

The Consolidated Company engages in derivative financial instruments to hedge the exposure to exchange rate risk arising from operating activities. The details of the derivatives of financial assets measured at FVTPL as reported in the Consolidated Company's financial statements for which hedge accounting is not applicable are as follows:

～13～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

	Financial Asset Forward foreign exchange contracts " " " " " " " " " " " " " "	Dec 31, 2020	Dec 31, 2020
		Principal ($1,000) USD 3,000	Expiry Date
			Jan 8, 2021 Jan 11, 2021 Jan 12, 2021 Jan 20, 2021 Jan 22, 2021 Jan 28, 2021 Feb 9, 2021 Feb 18, 2021 Feb 19, 2021 Feb 23, 2021 Feb 24, 2021 Feb 26, 2021 Mar 10, 2021 Mar 15, 2021 Mar 23, 2021
		USD 4,000
		USD 2,000
		USD 9,000
		USD 2,000
		USD 4,000
		USD 5,000
		USD 2,000
		USD 2,000
		USD 2,000
		USD 9,000
		USD 4,000
		USD 6,000
		USD 4,400
		USD 2,000

	Financial Asset Forward foreign exchange contracts " " " "	Sep 30, 2020	Sep 30, 2020
		Principal ($1,000) USD 2,500	Expiry Date
			Oct 13, 2020 Oct 22, 2020 Nov 3 2020 Nov 9 2020 Nov 23 2020
		USD 1,500
		USD 800
		USD 2,000
		USD 1,200

2. Financial assets measured at FVTOCI

Equity instruments measured at FVTOCI: Current: Domestic unlisted shares`－`AICP Technology Corporation Non-current: Domestic listed shares`－`Chailease Finance Co., Ltd. Domestic unlisted shares`－`SteadyBeat Technology Corporation Domestic unlisted shares`－`G-sau Co., Ltd Subtotal Total	Sep 30, 2021 $ 1,552 20,180 7,234 857	Dec 31, 2020 2,016 20,120 - -	Sep 30, 2020 1,584 15,884 - -
	28,271	20,120	15,884
	$ 29,823	22,136	17,468

～14～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The Consolidated Company holds these investments in equity instruments that are not held for trading purposes and have been designated as measured at FVTOCI.

The Consolidated Company has no dividend income from equity instruments measured at fair value through other comprehensive income for the periods from January 1 to September 31, 2021 and 2020.

On May 8, 2020, due to asset allocation considerations, the Consolidated Company adjusted its investment portfolio to diversify risks and sold Kuang Ying Computer Equipment Co., Ltd. which was designated to be measured at fair value through other comprehensive income, with a fair value of NT$4,860 thousand at the time of disposal, and the accumulated loss on disposal amounted to NT$10,140 thousand, therefore, the aforementioned accumulated loss on disposal was transferred from other equity to retained earnings.

As of September 30, 2021, December 31, 2020 and September 30, 2020, none of the Consolidated Company's financial assets had been pledged as collateral.

(3) Notes receivable, accounts receivable and other receivables

Notes receivable Accounts receivable Other receivables Less: Allowance for loss	Sep 30, 2021 $ 72,869 7,965,831 482,211 (17,554)		Dec 31, 2020 54,105 6,852,928 359,009 (14,029)		Sep 30, 2020 39,208 6,552,658 326,030 (14,097) 6,903,799
	$ 8,503,357		7,252,013

Please refer to Note VI (27) 1. (3) Statement of Changes in Allowance for Loss on notes and accounts receivable as of September 30, 2021, December 31, 2020 and September 30, 2020 for details.

(4) Inventory

2020 for details. Inventory
Merchandise Finished goods Work in progress Raw materials	Sep 30, 2021 $ 992,751 998,772 1,153,773 714,272		Dec 31, 2020 773,548 676,044 695,361 414,075		Sep 30, 2020 719,646 564,537 792,414 378,305 2,454,902
	$ 3,859,568		2,559,028

The Consolidated Company’s inventories as of September 30, 2021, December 31, 2020 and September 30, 2020 including an allowance for inventory losses were NT$333,407 thousand, NT$295,528 thousand and NT$312,067 thousand, respectively.

～15～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The Consolidated Company recognized inventory-related expenses as follows:

Cost of goods sold Shutdown cost Losses on inventory valuation loss and scrapping (reversal of loss) Total	Jul to Sep, 2021 $ 3,534,491 - 11,253 $ 3,545,744	Jul to Sep, 2020 2,733,858 - 43,543 2,777,401	Jan to Sep, 2021 9,168,756 - 44,052 9,212,808	Jan to Sep, 2020 7,368,633 90,799 39,287 7,498,719

As of September 30, 2021, December 31, 2020 and September 30, 2020, the Consolidated Company’s inventories were not pledged as security.

(5) Changes in ownership interests in subsidiaries

Acquisition of subsidiaries

On May 13, 2020, the Consolidated Company acquired control of Genie Precision Machine Co., Ltd. (GPM) by acquiring 63.93% of the shares of GPM, an ultra-precision optical and automation equipment manufacturer, and the acquisition of control of GPM will enable the Consolidated Company to expand its automotive electronics operations.

For the period from the acquisition date to September 30, 2020, the revenue and net income contributed by GPM were NT$128,920 thousand and NT$11,681 thousand, respectively. If the acquisition had occurred on January 1, 2020, management estimates that the Consolidated Company's revenue from January 1, 2020 to September 30, 2020 would have been NT$12,600,870 thousand and net income would have been NT$2,159,139 thousand. These amounts do not reflect the actual revenue and results of operations of the Consolidated Company if the business combination were to be completed on the commencement date of the year of acquisition and shall not be used as a forecast of future results of operations.

Costs incurred in connection with this acquisition transaction were recognized under “administrative expenses” in the Consolidated Statement of Comprehensive Income.

The major categories of the consideration transferred, the assets acquired, and liabilities assumed at the date of acquisition and the amounts recognized are as follows:

～16～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(1) Net cash used in acquisition of subsidiaries

Consideration paid in cash Less: Balance of cash and cash equivalents acquired	$ 78,533 (18,886)
	$ 59,647

(2) Identifiable assets acquired and liabilities assumed

) Identifiable assets acquired and liabilities assumed
The fair values of the identified assets acquired and liabilities	assumed	at the date
of acquisition are as follows:
Current assets
Cash and cash equivalents	$	18,886
Financial assets measured at amortized cost		5,009
Notes receivable, accounts receivable and other receivables		116,145
Inventory		144,150
Other current assets		12,297
Non-current assets
Property, plant and equipment		207,880
Intangible assets		127
Deferred tax assets		6,190
Other non-current assets		53,033
Current liabilities
Short-term loans		(36,680)
Contract liabilities – current		(34,282)
Notes payable, accounts payable and other payables		(142,001)
Income tax liabilities for the period – current		(7,955)
Long-term loans due within one year		(29,491)
Other non-current liabilities – other		(1,097)
Non-current liabilities
Long-term loans		(100,053)
Other non-current liabilities		(76,191)
Fair value of identifiable net assets	$	135,967

～17～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The fair value of receivables (mainly accounts receivable) and the total contract amount were both $116,145 thousand, and there were no unrecoverable contractual cash flows expected at the date of acquisition.

The Consolidated Company will review the above matters on an ongoing basis during the measurement period. If, within one year of the acquisition date, new information becomes available regarding facts and circumstances existing at the acquisition date that would identify an adjustment to the provisional amount described above or any additional provision for liabilities existing at the acquisition date, the accounting for the acquisition will be modified.

(3) Gain recognized in bargain purchase transaction

The gain recognized in bargain purchase transaction for acquisition is as follows:

Consideration transferred Add: Non-controlling interests Less: Fair value of identifiable net assets Gain recognized in bargain purchase transaction	$ 78,533 49,049 (135,967)
	$ (8,385)

The Consolidated Company's gain of NT$8,385 thousand from the acquisition of GPM is reported in “gain recognized in bargain purchase transaction” in the Consolidated Statement of Comprehensive Income.

2. Acquisition of additional equity interests in subsidiaries

On July 23, 2021, the Consolidated Company invested $5,471 thousand in cash in Lerain Technology Co., Ltd., increasing its interest in Lerain Technology Co., Ltd. by 1.62%.

The effect of the change in the Consolidated Company's ownership interest in the subsidiaries listed above on the equity attributable to the owners of parent is as follows:

Carrying amount of non-controlling interests acquired Consideration paid to non-controlling interests Capital reserves - the difference between the actual acquisition or disposal price and the carrying amount of the subsidiary	Jan to Sep, 2021 $ 4,513 (5,471) $ (958)

～18～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The Consolidated Company did not subscribe to the subsidiary's cash capital increase in proportion to its shareholding, which did not result in a loss of control

On September 15, 2021, Lerain Technology Co., Ltd. issued 11,193 thousand new shares with total funds raised of NT$111,929 thousand. The Consolidated Company's interest in Lerain Technology Co., Ltd. decreased by 11.03% as the Consolidated Company did not subscribe.

On May 14, 2021, Lerain Technology Co., Ltd. issued 12,683 thousand new shares with total funds raised of NT$126,832 thousand. The Consolidated Company subscribed 3,794 thousand shares for NT$37,935 thousand, and the Consolidated Company's interest in Lerain Technology Co., Ltd. increased by 7.94% because the shares were not subscribed in proportion to its shareholding.

On April 8, 2021, Good News Medical Co., Ltd. issued 2,000 thousand new shares with total funds raised of NT$20,000 thousand. The Consolidated Company subscribed 611 thousand shares for NT$6,110 thousand, and the Consolidated Company's interest in Good News Medical Co., Ltd. increased by 20.44% because the shares were not subscribed in proportion to its shareholding.

On January 31, 2021, Lerain Technology Co., Ltd. issued 2,210 thousand new shares with total funds raised of NT$22,100 thousand. The Consolidated Company's interest in Lerain Technology Co., Ltd. decreased by 15.06% as the Consolidated Company did not subscribe.

On July 8, 2020, Genie Precision Machine Co., Ltd. issued 15,000 thousand new shares with total funds raised of NT$150,000 thousand. The Consolidated Company subscribed 8,630 thousand shares for NT$86,300 thousand, and the Consolidated Company's interest in Genie Precision Machine Co., Ltd. decreased by 3.93% because the shares were not subscribed in proportion to its shareholding.

On April 30, 2020, Compertum Microsystems Inc. issued 1,379 thousand new shares with total funds raised of NT$13,786 thousand. The Consolidated Company's interest in Compertum Microsystems Inc. decreased by 9.91% as the Consolidated Company did not subscribe.

～19～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The effect of changes in the Consolidated Company's ownership interest in the subsidiaries listed above on the equity attributable to owners of parent was as follows:

Increase in equity after issuance of new shares by subsidiaries Amount not subscribed in proportion to shareholding Capital reserves - recognition of changes in ownership interests in subsidiaries	Jan to Sep, 2021 $ 49,470 (44,045)	Jan to Sep, 2020 89,802 (86,300)
	$ 5,425	3,502

(6) Subsidiaries with significant non-controlling interests

The non-controlling interests of subsidiaries that are material to the Consolidated Company are as follows:

Name of subsidiary Lintes Technology Co., Ltd.	Principal place of business/country of incorporation Taiwan	The percentage of ownership interests and voting interests in all non-controlling interests Sep 30, 2021 Dec 31, 2020 Sep 30, 2020 47.87% 47.87% 47.87%
		Sep 30, 2021 Dec 31, 2020
		47.87% 47.87%

The aggregate financial information of the above subsidiaries is as follows. The financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs) approved by the Financial Supervisory Commission (FSC), and the financial information represents amounts before the elimination of intercompany transactions:

1. Comprehensive financial information of Lintes Technology Co., Ltd.:

Sep 30, 2021	Dec 31, 2020 2,297,917 523,357 (954,458) (75,631) 128,484	Sep 30, 2020 2,177,967 441,675 (744,134) (168,480) 122,165
$ 2,293,215 738,290 (1,179,447) (75,336) 135,973 $ 1,640,749 $ 785,454
	1,662,701	1,584,863
	795,973	758,710

～20～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Jul to Sep, 2021 $ 745,478	Jul to Sep, 2020 516,591	Jul to Sep, 2020 516,591	Jan to Sep, 2021 1,796,599
$ 60,318	29,619		124,630
$ 1,935	(1,054)		11,401
$ (1,084)	4,706		(3,006)
$ -	7		-
$ 59,234	34,325		121,624
$ 1,935	(1,047)		11,401
$ 28,875	14,179		59,671
$ 28,356	16,593		58,224
		Jan to Sep, 2021 $ 8,889 (308,004) 37,430 3,100

		$ (258,585)
		$ 68,128

～21～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(7) Property, plant and equipment

The changes in the costs of the property, plant and equipment, losses on depreciation and impairment of the Consolidated Company are as follows:

Cost or deemed cost: Balance on Jan 1, 2021 Addition Prepayment for equipment transferred in Completion of construction in progress and acceptance of equipment to be examined Disposal Effect of change in exchange rate Balance on Sep 30, 2021	Land $ 48,584 128,951 - 31,235 - (450)	Buildings 769,413 66,849 - 747,920 - (19,483)		Machinery 2,951,297 490,464 36,311 11,015 (42,542) (45,033)		Others 3,275,852 1,047,949 19,912 317,349 (481,560) (56,445)	Construction in progress and equipment to be examined		Total 8,379,722 2,646,453 56,223 (217) (524,102) (140,682)
							1,334,576 912,240 - (1,107,736) - (19,271)
	$ 208,320	1,564,699		3,401,512		4,123,057	1,119,809		10,417,397

～22～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

$ 49,655 - - - - - - (628)	759,739 - - - - - - (4,840)	2,698,613 148,968 10,959 213,892 - (152,597) - (20,830)	2,740,900 88,769 5,065 96,686 584,210 (582,436) - (15,902)	756,731 998,597 - - (584,210) - (168) (3,617)	7,005,638 1,236,334 16,024 310,578 - (735,033) (168) (45,817)
$ 49,027	754,899	2,899,005	2,917,292	1,167,333	7,787,556
$ - - - -	309,715 39,080 - (5,153)	1,700,534 179,131 (34,434) (27,269)	1,873,499 736,383 (470,131) (27,336)	- - - -	3,883,748 954,594 (504,565) (59,758)
$ -	343,642	1,817,962	2,112,415	-	4,274,019
$ - - - - -	266,518 29,387 - - (1,480)	1,595,925 179,629 62,001 (127,331) (14,399)	1,628,481 570,935 40,697 (574,381) (9,878)	- - - - -	3,490,924 779,951 102,698 (701,712) (25,757)
$ -	294,425	1,695,825	1,655,854	-	3,646,104
$ 48,584	459,698	1,250,763	1,402,353	1,334,576	4,495,974
$ 208,320	1,221,057	1,583,550	2,010,642	1,119,809	6,143,378
$ 49,655	493,221	1,102,688	1,112,419	756,731	3,514,714
$ 49,027	460,474	1,203,180	1,261,438	1,167,333	4,141,452

～23～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The subsidiary, Lotes Zhongshan Co., Ltd, acquired the land use rights for the construction of the new plant in 2017, and the acquisition cost was NT$183,934 thousand to list right-of-use assets in the account. As of September 30, 2021, December 31, 2020 and September 30, 2020, the accumulated expenditures (tax included) for the construction of the new plant were NT$913,455 thousand, NT$787,873 thousand and NT$735,599 thousand, respectively.

The subsidiary, Lotes Hengnan Co., Ltd., acquired the land use rights for the construction of the new plant in 2016, and the acquisition cost was $NT9,878,000 to list right-of-use assets in the account. As of September 30, 2021, December 31, 2020 and September 30, 2020, the accumulated expenditures (tax included) for the construction of the new plant were NT$290,704 thousand, NT$192,369 thousand and NT$121,273 thousand, respectively.

In April, 2019, subsidiary, Lotes Zhongshan Co., Ltd, signed the pre-purchase contract and decoration contract with Zhongshan Willie Property Development Co., Ltd. and Tianjin Xinhong Yuanchuang Decoration Engineering Co., Ltd., respectively. As of September 30, 2021, has to pay the price of RMB 10,881 thousand and RMB 3,285 thousand respectively (account listed as other non-current assets), is expected to transfer the property in October 2021.

As of September 30, 2021, December 31, 220 and September 30, 2020, real estate, plant and equipment were used as collateral for short-term loans and financing lines. Please refer to Note VIII for details.

(8) Right-of-use assets

The changes in the costs of the lease of lands, buildings, machinery and other equipment, losses on depreciation and impairment of the Consolidated Company are as follows:

Cost of right-of-use assets: Balance on Jan 1, 2021 Addition Reduction Effect of change in exchange rate Balance on Sep 30, 2021 Balance on Jan 1, 2020 Addition Reduction	Land $ 240,690 - - (3,916)	Building s 347,687 407,067 (193,295) (6,160)	Machine ry - - - -	Others 4,131 - - (67)	Total 592,508 407,067 (193,295) (10,143)
	$ 236,774	555,299	-	4,064	796,137
	$ 236,908 - -	254,674 85,877 (41,637)	687 - (682)	5,181 - (1,501)	497,450 85,877 (43,820)

～24～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Effect of change in exchange
rate
Balance on Sep 30, 2020
Depreciation and impairment
loss on right-of-use assets:
Balance on Jan 1, 2021
Depreciation for the period
Reduction
Effect of change in exchange
rate
Balance on Sep 30, 2021
Balance on Jan 1, 2020
Depreciation for the period
Reduction
Effect of change in exchange
rate
Balance on Sep 30, 2020
Book value:
Sep 30, 2021
Sep 30, 2020

(1,341)
(1,351)
(5)
(32)
(2,729)
$ 235,567
297,563
-
3,648
536,778
$ 10,465
179,759
-
2,535
192,759
3,899
106,965
-
1,077
111,941
-
(156,140)
-
-
(156,140)
(209)
(1,953)
-
(52)
(2,214)
$
14,155
128,631
-
3,560
146,346
$ 5,150
105,843
687
2,344
114,024
3,836
87,506
-
1,299
92,641
-
(41,637)
(682)
(1,501)
(43,820)
(24)
1,165
(5)
(14)
1,122
$
8,962
152,877
-
2,128
163,967
$ 222,619
426,668
-
504
649,791
$ 226,605
144,686
-
1,520
372,811

(9) Investment property

The changes in the investment property of the Consolidated Company are as follows:

Self-owned Assets Land Buildings $ 260,576 44,832 - 1,516 - - - -	Self-owned Assets Land Buildings $ 260,576 44,832 - 1,516 - - - -	Right-of-use assets Land 69,160 - (31,612) (802)	Total 374,568 1,516 (31,612) (802)
Land $ 260,576 - - -
$ 260,576	46,348	36,746	343,670
$ 248,200 - -	39,285 - -	- 97,452 167	287,485 97,452 167

～25～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Balance on Sep 30, 2020
Losses on depreciation and
impairment:
Balance on Jan 1, 2021
Depreciation
Effect of change in
exchange rate
Balance on Sep 30, 2021
Balance on Jan 1, 2020
Depreciation
Effect of change in
exchange rate
Balance on Sep 30, 2020
Book value:
Jan 1, 2021
Sep 30, 2021
Jan 1, 2020
Sep 30, 2020
Fair value:
Jan 1, 2021
Sep 30, 2021
Jan 1, 2020
Sep 30, 2020

$
248,200
39,285
97,619
385,104
$ -
5,481
1,068
6,549
-
868
1,062
1,930
-
-
(28)
(28)
$
-
6,349
2,102
8,451
$ -
4,483
-
4,483
-
740
696
1,436
-
-
1
1
$
-
5,223
697
5,920
$
260,576
39,351
68,092
368,019
$
260,576
39,999
34,644
335,219
$
248,200
34,802
-
283,002
$
248,200
34,062
96,922
379,184

$
467,325
$
465,788
$
322,604
$
420,223

As of September 30, 2021, December 31, 2020 and June 30, 2020, the Consolidated Company’s investment properties were not pledged as security.

～26～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(10) Intangible assets

The changes in the cost and amortization of the intangible assets of the Consolidated Company are as follows:

$	Computer Software 253,415 68,774 (6,608) (1,977)	Other 600 - - -

$	313,604	600
$	166,221 49,307 4,127 (412) (437)	600 - - - -
$	218,806	600
$	98,505 38,462 (6,608) (878)	- - - -
$	129,481	-
$	67,032 11,765 4,000 (412) (182)	- - - - -
$	82,203	-
$	154,910	600
$	184,123	600
$	99,189	600
$	136,603	600

～27～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The amortization expenses of the intangible assets of the Consolidated Company was recognized in the following items in the Consolidated Statement of Comprehensive Income:

		Jul to Sep,	Jul to Sep,	Jul to Sep,	Jul to Sep,	Jan to Sep,	Jan to Sep,
		2021		2020		2021	2020
Operating cost	$	455			438	1,259	1,067
Operating expense	$	12,965		3,798		37,203	10,698
ther financial assets
The details of the other financial assets of the				Consolidated Company are			as follows:
			Sep 30,	2021		Dec 31, 2020	Sep 30, 2020
Other financial assets – current
Time deposits		$	-			87,320	85,438

(11) Other financial assets

As of September 30, 2021, December 31, 2020 and September 30, 2020, the Consolidated Company's other financial assets were not pledged as collateral.

(12) Short-term loans

The details, conditions and terms of the short-term loans of the Consolidated Company are as follows:

	Sep 30, 2021		Amount $ 804,867
Currency USD	Interest rate range	Maturity year
	0.66%~1% Dec 31, 2020	2021
			$ 2,363,058
			Amount $ -
Currency -	Interest rate range - Sep 30, 2020	Maturity year
		-
			$ 1,556,320
			Amount $ 730,000
Currency NTD	Interest rate range 0.85%~0.9%	Maturity year
		2020-2021
			$ 1,565,600

Please refer to Note VI (27) for more information on the Consolidated Company’s exposure to interest rate and foreign currency risk, Note VIII for information of the Consolidated Company’s assets pledged as collateral for short-term loans, and Note IX for information of the guaranteed notes opened due to bank loans and financing facilities.

～28～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(13) Long-term loans

The breakdown of the Consolidated Company's long-term loans is as follows:

Sep 30, 2021 $ 15,885 - -		Dec 31, 2020 974 23,022 -
15,885 15,885		23,996 5,335
$ -		18,661
$ 815		51,907
1.31%	1.31%~1.83%

For details of the guarantees provided by the Consolidated Company for bank loans using assets pledged as collateral, please refer to Note VIII.

(14) Bonds payable

Information on the issuance of unsecured convertible bonds by the Consolidated Company is as follows:

Total amount of convertible bonds issued Unamortized balance of discount on bonds payable Bonds payable at the end of the period Embedded derivative`－`right of redemption(reported as financial assets measured at FVTPL) Equity components - conversion rights (reported in capital reserves - stock options) Right of redemption valuation benefit (reported in other gains and losses) Interest expense	Sep 30, 2021 $ 1,000,000 (28,238) $ 971,762 $ 1,500 $ 183,236 Jan to Sep, 2021 $ 600 $ 1,115

～29～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

On August 19, 2021, the Company issued 10,000 domestic first three-year unsecured convertible bonds with a coupon rate of 0%, which are repayable in cash at par on maturity.

The conversion price was set at NT$563.2 per share at the time of issuance. If the conversion price of the Company's common stock is subject to adjustment in accordance with the terms of the issuance, the conversion price will be adjusted in accordance with the formula stipulated in the terms of the issuance. There is no reset clause in the bonds.

If the right of redemption meets one of the following criteria, the Company will redeem the outstanding bonds at par value in cash:

The closing price of the Company's common stock on the Taiwan Stock Exchange exceeds the conversion price of the bonds by 30% or more for 30 consecutive business days from the day after the third month of the issuance of the bonds to the 40th day prior to the expiration of the issuance period.
If the closing price of the Company's common stock on the Taiwan Stock Exchange exceeds the conversion price of the bonds by 30% or more for 30 consecutive business days from the day after the third month of the issuance of the bonds to the 40th day prior to the expiration of the issuance period.

(15) Lease liabilities

The book values of the lease liabilities of the Consolidated Company are as follows:

Current Non-current	Sep 30, 2021 $ 129,636	Dec 31, 2020 71,971	Sep 30, 2020 79,041
	$ 303,144	104,279	71,575

For the maturity analysis, please refer to Note VI (27).

The amounts recognized in profit or loss are as follows:

Jul to Sep, 2021 $ 5,578	Jul to Sep, 2020 2,146	Jan to Sep, 2021 12,775
$ 2,597	-	2,597
$ 7,771	5,107	18,025
$ 194	411	3,877

～30～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The amounts recognized in the Statement of Cash Flows are as follows:

Total cash outflow for leases	Jan to Sep, 2021	Jan to Sep, 2020
	$ 130,165 97,058

1. Lease of land, premises and buildings

The Consolidated Company leases land, premises and buildings for plant, office space and staff quarters. The lease term of the plant and office space is usually one to ten years, and the lease term of the staff quarters is three to eight years. Part of the lease includes an option to extend the lease at the end of the lease term. In cases where it is not reasonably determined to exercise an optional extension of lease term, the relevant benefits for the period covered by the option are not included in the lease liabilities.

The Consolidated Company is a sublease of right-of-use assets by business lease.

2. Other leases

The leasing period of machines and other equipment leased by the Consolidated Company shall be two to six years. In addition, the lease term of some lease contracts of the Consolidated Company is one year, and these leases are short-term subject leases. The Consolidated Company chooses to apply the exemption of relevant right-of-use assets and lease liabilities.

(16) Refund liabilities – current

Refund liabilities – current	Sep 30, 2021 $ 184,276	Dec 31, 2020 Sep 30, 2020 161,767 141,853

The refund liabilities are mainly the prepayments to customers for the sales discount and defects of electronic components.

(17) Provisions

Provisions – non-current Employee benefits	Sep 30, 2021 $ 49,114	Dec 31, 2020 Sep 30, 2020 49,258 41,681

Employee benefits are estimated under the Consolidated Company’s defined benefit plan.

(18) Operating lease

The Consolidated Company leases its investment real estate, which is classified as an operating lease because almost all risks and rewards belonging to the ownership of the underlying asset have not been transferred. Please refer to Note VI (9) for details of the investment real estate.

The maturity analysis of lease payments is presented in the following table for the total

～31～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

undiscounted lease payments to be received after the reporting date:

Not more than 1 year 1-2 years Total undiscounted lease payment	Sep 30, 2021 $ 1,659 195	Dec 31, 2020 4,330 350	Sep 30, 2020 4,394 1,400
	$ 1,854	4,680	5,794

In the periods from July 1 to September 30, 2021 and 2020 and from January 1 to September 30, 2021 and 2020, the income tax generated in the investment property from rentals were NT$1,062 thousand, NT$1,062 thousand, NT$3,185 thousand and NT$3,665 thousand, respectively, and the direct operating expenses (including maintenance) incurred in the investment property from rentals were NT$210 thousand, NT$220 thousand, NT$654 thousand and NT$630 thousand, respectively.

(19) Employee benefits

1. Defined benefit plans

The Consolidated Company used actuarially determined pension costs as of December 31, 2020 and 2019 to measure and disclose pension costs for the interim period as there were no significant market fluctuations and no significant curtailments, settlements or other significant one-time events subsequent to the prior fiscal year reporting date.

The Consolidated Company recognized NT$208 thousand, NT$233 thousand, NT$624 thousand and NT$698 thousand of expense in profit or loss from (July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020, respectively.

2. Defined contribution plan

As to the defined contribution plan, the Consolidated Company shall contribute the retirement funds of employees to the individual accounts for labor retirement funds of the Bureau of Labor Insurance according to 6% of the monthly salaries of labors under the provisions of Labor Pension Act. Under this plan, after contributing fixed amount to the Bureau of Labor Insurance, the Consolidated Company will not assume the legal or constructive obligations of paying extra amount.

The pension expense under the defined contribution retirement funds of the Consolidated Company from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020 were NT$3,807 thousand, NT$3,401 thousand, NT$11,154 thousand and NT$9,103 thousand respectively, which have been contributed to the Bureau of Labor Insurance.

In accordance with the pension insurance system established by the government of the People’s Republic of China, the subsidiaries in Mainland China make monthly

～32～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

contributions to employees’ pension insurance based on a certain percentage of their salaries and wages. The monthly pension plan is administered and arranged by the government, and the above-mentioned company has no further obligation other than to make monthly contributions. The related pension expense from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020 were NT$82,913 thousand, NT$43,068 thousand, NT$190,220 thousand and NT$91,793 thousand, respectively. (20) Income tax

The details of the income tax expense of the Consolidated Company are as follows:

Jul to Sep, 2021 $ 285,059 915 (78,602)	Jul to Sep, 2020 239,894 901 995	Jan to Sep, 2021 786,307 57,107 (95,759)	Jan to Sep, 2020 612,338 24,864 (41,721)
207,372	241,790	747,655	595,481
(9,320)	(14,520)	(16,669)	25,523
$ 198,052	227,270	730,986	621,004

A breakdown of the Consolidated Company's income tax expense (benefit) recognized under other comprehensive income from January 1 to September 31, 2021 and 2020 is as follows:

Components of other comprehensive income that will be reclassified to profit or loss: Exchange differences on translation	Jul to Sep, 2021 $ 266	Jul to Sep, 2020 1,181	Jul to Sep, 2020 1,181	Jan to Sep, 2021 767	Jan to Sep, 2020 (3122)
					,

～33～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Income tax assessment

The Company's income tax returns have been assessed by the tax authorities through fiscal 2018.

The income tax of domestic subsidiaries Jiayu Investment Co., Ltd., Ememe Robot Co., Ltd., Compertum Microsystems Inc., Lintes Technology Co., Ltd. and Genie Precision Machine Co., Ltd. has been assessed through fiscal 2019.

(21) Capital and other equity

As of September 30, 2021, December 31, 2020, and September 30, 2020, the total authorized capital stock of the Company were all NT$1,550,000 thousand with a par value of $10 per share, and the actual amount issued were NT$1,059,779, NT$1,034,779, and NT$1,034,779 thousand respectively.

On May 13, 2021, the Board of Directors resolved to issue 2,500 thousand shares at a par value of $10 per share at an issue price of $432 per share through a cash capital increase, with September 17, 2021 as the base date. The capital increase was approved by the Financial Supervisory Commission and the legal registration was completed on October 8, 2021.

1. Capital reserves

The components of the Company’s capital reserve are as follows:

Premium of issued shares Change in the net value of the stock of subsidiaries and associates accounted for using the equity method Employee stock options Convertible bond stock options	Sep 30, 2021 $ 4,628,739 369,547 40,330 183,236		Dec 31, 2020 3,577,768 365,080 15,399 -		Sep 30, 2020 3,577,768 369,895 15,399 - 3,963,062
	$ 5,221,852		3,958,247

In accordance with the Companies Act, capital reserves are required to cover losses first before new shares or cash can be issued in proportion to the shareholders’ original shares. Realized capital reserves referred to in the preceding paragraph include premiums from the issuance of shares in excess of par value and proceeds from gifts received. In accordance with the Regulations Governing the Issuer’s Offerings and Issuance of Marketable Securities, the aggregate amount of capital reserves that may be capitalized each year shall not exceed 10% of the paid-in capital.

2. Retained earnings

～34～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

In accordance with the Company’s Articles of Incorporation, the Company shall, after the final settlement of each year’s earnings, first complete tax contributions, make up for prior years’ deficits and set aside 10% as legal reserve, except when the legal reserve has reached the level of total capital; the Company is required by law to set aside or reverse special reserve. In the case of unappropriated retained earnings for the same period, the Board of Directors shall propose a proposal for the distribution of earnings to the shareholders for resolution, and the dividend to be distributed shall not be less than 20% of the net profit for the year after taxation, after deducting the net income provided for by law.

The Company will take into account the environment and growth of the Company and the distribution of earnings should take into account the Company’s future capital expenditure budget and capital requirements, and pay cash dividends of not less than 10% of the dividends distributed in the current year.

(1) Legal reserve

If the Company has no deficit, it may, by resolution of the shareholders in general meeting, issue new shares or cash out of the legal reserve to the extent that such reserve exceeds 25% of the paid-in capital.

(2) Special reserve

When the Company distributes distributable earnings, the Company accounts for other shareholders’ equity in the current year and provides a special reserve of the same amount from current period’s profit or loss as the prior period’s unappropriated retained earnings, and a special reserve of the same amount from prior period’s unappropriated retained earnings is not distributed. If there is a subsequent reversal in the amount of other decreases in shareholders’ equity, the reversal may be distributed in the form of a surplus.

(3) Earnings distribution

The Company's proposed distribution of earnings for fiscal 2020 reached the statutory resolution requirement through electronic voting on June 19, 2021, and was resolved at the annual shareholders' meeting held on July 26, 2021. On June 19, 2020, the shareholders' meeting resolved the distribution of the 2019 earnings, and the dividends distributed to owners are as follows:

～35～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2020 2019 Dividend Rate Amount Dividend Rate Amount Distributed to the holders of ordinary shares: Cash $ 13.30 1,376,256 10.50 1,086,518

Information on the distribution of earnings as proposed by the Board of Directors and resolved by the Shareholders’ Meeting is available on the “Public Information Observation Post System”.

3. Other equity

Balance on Jan 1, 2021 Exchange differences arising from the translation of the net assets of foreign operations Unrealized gains from financial assets measured at FVTOCI Balance on Sep 30, 2021 Balance on Jan 1, 2020 Unrealized losses from financial assets measured at FVTOCI Disposal of equity instruments measured at FVTOCI Balance on Sep 30, 2020	Exchange differences on translation of foreign financial statements $ (586,953) (180,839) -	Unrealized gains (losses) on financial assets measured at FVTOCI (8,019) - (6,742)	Total (594,972) (180,839) (6,742) (782,553) (650,532) (82,789) 10,140 (723,181)
	$ (767,792)	(14,761)
	$ (631,970) (82,789) -	(18,562) - 10,140
	$ (714,759)	(8,422)

～36～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(22) Share-based payment

The Consolidated Company has the following share-based payment transactions:

Grant day Number of grants Granted to Vesting conditions	Cash capital increase reserved for employee stock options	Cash capital increase reserved for employee stock options
	The Company	GENIE PRECISION
	Aug 23, 2021 233 thousand shares Current employees of the Company Immediately vested
		Jul 23, 2020 1,500 thousand shares Current employees of the Company Immediately vested

The estimated fair value of the above cash capital increase reserved employee stock options was $107 on the grant day, and the share-based payment of employee compensation cost resulting from the cash capital increase reserved employee stock options was $24,931 thousand recognized in fiscal 2021.

The fair value of the above cash capital increase reserved employee stock options of Genie Precision Machine Co., Ltd. at the estimated grant day was $15.87, and the share-based payment of employee compensation cost resulting from the cash capital increase reserved employee stock options was $7,795 thousand recognized in fiscal 2020.

(23) Earnings per share

The basic earnings per share and diluted earnings per share of the Consolidated Company were calculated as follows:

Jul to Sep, 2021 $ 925,425	Jul to Sep, 2020 771,435	Jan to Sep, 2021 2,468,182	Jan to Sep, 2020 2,083,818
103,858	103,478	103,606	103,478
$ 8.91	7.46	23.82	20.14
$ 925,425	771,435	2,468,182	2,083,818

～37～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

stock
Convertible bonds		412	-	412	-
Net income attributable to	$	925,837	771,435	2,468,594	2,083,818
equity holders of the
Company's common stock
(adjusted for the effect of
dilutive potential common
stock)
Weighted-average number		103,858	103,478	103,606	103,478
of common stock
outstanding (thousand
shares)
Dilutive potential ordinary
stock
Employee bonus		156	251	215		251
Convertible bonds		900	-	303	-
Weighted-average number		104,914	103,729	104,124	103,729
of common stock
outstanding (adjusted for
the effect of dilutive
potential common stock)
Diluted earnings per share	$	8.82	7.44	23.71		20.09

(24) Revenue from contracts with customers
Please refer to Note XIV (3) and (4) for the disclosure of disaggregation of revenue for the major products and major regional markets.
Balance of contract

Contract liabilities	Sep 30, 2021 $ 241,770	Dec 31, 2020 91,659	Sep 30, 2020 94,297

The amounts of beginning balances of contractual liabilities as of January 1, 2021 and January 1, 2020 were respectively recognized as income of NT$0 thousand, NT$287 thousand, NT$54,776 thousand and NT$18,605 thousand as of July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020.

～38～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(25) Non-operating revenue/expense

1.Interest income

The breakdown of interest income of the Consolidated Company is as follows:

Interest on bank deposits	Jul to Sep, 2021 $ 3,268	Jul to Sep, 2020 5,902	Jan to Sep, 2021 9,438	Jan to Sep, 2020 24,003

2.Other income

The details of other income of the Consolidated Company are as follows:

Dividend income Income from molding Income from compensation Income from rentals Income from the sales of R&D products Income from subsidies Others	Jul to Sep, 2021 $ 4,886 7,687 1,492 8,444 - 62,378 31,803 $ 116,690	Jul to Sep, 2020 1,341 468 739 8,668 208 12,373 24,227	Jan to Sep, 2021 4,886 15,425 12,937 27,230 - 91,420 87,948	Jan to Sep, 2020 1,341 35,417 3,949 22,568 3,493 13,384 75,639 155,791
		48,024	239,846

3.Other gains and losses

The details of other gains and losses of the Consolidated Company are as follows:

Jul to Sep, 2021 Foreign exchange gain (loss) $ (5,500) Net profit or loss from financial assets (liabilities) measured at FVTPL: Derivatives: Forward foreign exchange contracts 61 Metal commodity swap contracts - Embedded derivative 600	Jul to Sep, 2020 (106,644) 2,393 1,057 -	Jan to Sep, 2021	Jan to Sep, 2020
		(97,988) 11,154 21,077 600	(145,104) 2,393 4,346 -

～39～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Non-derivatives (43,729) 24,112 (12,008) 19,639 Loss from the disposal of property, plant and equipment (2,112) (630) (3,305) (3,994) Lease modification interest 2,449 - 2,466 - Other (3,771) (11,003) (10,397) (21,212) Total $ (52,002) (90,715) (88,401) (143,932) .Financial costs The details of the financial costs of the Consolidated Company are as follows: Jul to Sep, 2021 Jul to Sep, 2020 Jan to Sep, 2021 Jan to Sep, 2020 Interest expense $ 8,861 5,854 17,683 13,198	(43,729) (2,112) 2,449 (3,771)	24,112 (630) - (11,003)	(12,008) 19,639 (3,305) (3,994) 2,466 - (10,397) (21,212)
	$ (52,002)	(90,715)	(88,401) (143,932)

4.Financial costs

(26) Compensation of employees and directors, supervisors

In accordance with the Company’s Articles of Incorporation, no less than 3% of the Company’s annual profits shall be appropriated to the compensation of employees and no more than 3% to the compensation of directors and supervisors; however, if the Company has accumulated losses, it shall retain the amount of compensation in advance and appropriate the compensation of employees and supervisors in proportion to the aforementioned. The former compensation of employees to whom stock or cash is issued may include employees of a subordinate company who meet certain criteria.

The estimated amount of compensation of employees from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020 were NT$32,440 thousand, NT$26,363 thousand, NT$86,762 thousand and NT$74,456 thousand respectively, and the estimated amount of compensation of directors and supervisors were NT$1,120 thousand, NT$1,120 thousand, NT$3,360 thousand and NT$3,360 thousand. The Company’s Net profit before tax for the period is estimated by multiplying the amount of the Company’s Net profit before issuing the compensation of employees and directors and supervisors by the proportion of the Company’s compensation distribution to employees and directors and supervisors as provided in the Company’s Articles of Incorporation, and is reported as operating costs or expenses for that period. If there is a difference between the actual distribution amount and the estimated amount for the following year, the change in accounting estimate is adjusted and the difference is recognized in profit or loss for the following year. In the event that the Board of Directors resolves to grant a compensation of employees by way of stock, the number of shares of stock-based compensation is calculated

～40～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

based on the closing price of the common stock on the day before the Board of Directors’ resolution.

There is no difference between the actual allotment of compensation of employees, directors and supervisors in fiscal 2020 and the estimated amount in the consolidated financial statements for fiscal 2020. The difference of NT$46 thousand between the actual allotment of compensation of employees, directors and supervisors in fiscal 2019 and the estimated amount in the consolidated financial statements for fiscal 2019 has been treated as a change in accounting estimate and the difference has been recognized as profit or loss in fiscal 2020. Related information can be found at the Market Observation Post System (MOPS).

(27) Financial instruments and fair value information

1. Credit risk

(1) Credit risk exposure

The carrying amount of a financial asset represents the maximum amount of credit risk. The maximum amount of credit risk exposure was NT$11,797,553 thousand, NT$10,286,606 thousand, and NT$10,878,451 thousand as of September 30, 2021, December 31, 2020, and September 30, 2020, respectively.

(2) Credit risk concentration risk

As of September 30, 2021, December 31, 2020 and September 30, 2020, the Consolidated Company's accounts receivable balances from a single customer that exceeded 5% of total accounts receivable were from four different customers. The Consolidated Company regularly evaluates the probability of collection of accounts receivable and recognizes an allowance for loss, and the total loss is always within management's expectations.

(3) Impairment loss

The Consolidated Company for all notes receivable and accounts receivable adopts simplified approach to estimate the expected credit losses, i.e. using the term forecast credit losses measure, measure for this purpose, such as the notes receivable and accounts receivable department press on behalf of clients according to the terms of the contract to pay all amount due ability of credit risk characteristics shall be grouped together, and has set up into a forward-looking information. The expected credit loss analysis of notes receivable and accounts receivable of the Consolidated Company is as follows:

～41～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

	Sep 30, 2021	Expected credit loss in the duration of provision 1,090 1,729 1,198 1,034 469 8,961
Book value of notes and accounts receivable $ 7,537,566 468,000 17,996 5,214 963 8,961	Weighted average expected credit loss rate
	0.01% 0.37% 6.66% 19.83% 48.70% 100.00% Dec 31, 2020
$ 8,038,700		14,481
		Expected credit loss in the duration of provision 750 3,690 572 489 1 6,547
Book value of notes and accounts receivable $ 6,413,813 479,202 5,698 1,771 2 6,547	Weighted average expected credit loss rate
	0.01% 0.77% 10.04% 27.61% 50.00% 100.00% Sep 30, 2020
$ 6,907,033		12,049
		Expected credit loss in the duration of provision 990 1,957 2,675 287 - 7,071
Book value of notes and accounts receivable $ 6,238,150 325,581 20,280 784 - 7,071	Weighted average expected credit loss rate
	0.02% 0.60% 13.19% 36.61% 50.00% 100.00%
$ 6,591,866		12,980

～42～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The changes in the provisions for notes and accounts receivable of the Consolidated Company are as follows:

Opening balance Acquired in business combination Recognized impairment loss (gain on reversal) Write-offs for the period Foreign currency translation gains and losses Closing balance	Jan to Sep, 2021 $ 12,049 - 2,505 - (73)	Jan to Sep, 2020 8,592 3,214 3,691 (2,461) (56)
	$ 14,481	12,980

2. Liquidity risk

The contracts of financial liabilities are sorted by their expiry dates as follows. The estimated interests are included, but the effect of net value agreement is excluded.

Book Value $ 804,867 971,762 15,885 15,020 2,676,585 1,838,842 432,780	Cash flow from the contract 808,182 1,000,000 16,053 15,020 2,676,585 1,838,842 489,753	Within 6 months 531,364 - 2,257 15,020 2,676,585 1,838,842 75,045	6 to 12 months 276,818 - 13,796 - - - 75,351	1-to 2years - - - - - - 112,943	2 to-5years - 1,000,000 - - - - 192,981	More than 5 years - - - - - - 33,433
$ 6,755,741	6,844,435	5,139,113	365,965	112,943	1,192,981	33,433
$ 23,996 3,574 2,501,155 1,206,695 176,250	24,680 3,574 2,501,155 1,206,695 193,213	2,303 3,574 2,501,155 1,206,695 49,038	3,318 - - - 30,274	6,973 - - - 43,091	12,086 - - - 70,810	- - - - -
$ 3,911,670	3,929,317	3,762,765	33,592	50,064	82,896	-
$ 730,000 51,970 6,078 2,524,466 1,349,832 150,616	733,629 54,520 6,078 2,524,466 1,349,832 162,062	732,250 8,807 6,078 2,524,466 1,349,832 51,633	1,379 8,987 - - - 33,041	- 29,174 - - - 32,530	- 7,552 - - - 44,858	- - - - - -
$ 4,812,962	4,830,587	4,673,066	43,407	61,704	52,410	-

The Consolidated Company does not anticipate that the cash flows analyzed at expiry date will alter significantly or that the actual amounts will vary significantly.

～43～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Market risk—exchange rate risk
(1) Exposure to exchange rate risk

The Consolidated Company’s financial assets and liabilities exposed to significant foreign currency exchange rate risk are as follows:

	Financial assets Currency USD RMB HKD JPY EUR INR VND Financial liabilities Currency USD RMB HKD JPY EUR Financial assets Currency USD RMB HKD JPY EUR INR VND Financial liabilities Currency USD RMB HKD JPY EUR Financial assets Currency USD RMB		Sep 30, 2021	Exchange Rate NTD 27.8500 13,124,483 4.2943 781,456 3.5760 3,894 0.2490 37,368 32.3200 78,384 0.4791 2 0.0012 5,267 Exchange Rate NTD 27.8500 7,541,007 4.2943 1,623 3.5760 6,139 0.2490 15,806 32.3200 9,575 Exchange Rate NTD 28.4800 11,831,263 4.3648 773,189 3.6730 27,918 0.2763 37,153 35.0200 38,696 0.4791 2 0.0012 4,394 28.4800 6,487,452 4.3648 312 3.6730 10,202 0.2763 20,772 35.0200 1,157 Exchange Rate NTD 29.1000 13,601,196 4.2731 768,731
			Foreign Currency (Note) $ 471,256 181,970 1,089 150,073 2,425 4 4,389,096 Sep 30, 2021
			Foreign Currency (Note) $ 270,773 378 1,717 63,479 296 Dec 31, 2020
			Foreign Currency (Note) $ 415,424 177,119 7,601 134,465 1,105 4 3,662,009 $ 222,790 71 2,778 75,180 33 Sep 30, 2020
			Foreign Currency (Note) $ 467,396 179,921

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

	HKD 16,235 3.7540 60,945 JPY 64,178 0.2756 17,688 EUR 952 34.1500 32,507 INR 4 0.4791 2 Financial liabilities Currency USD $ 248,755 29.1000 7,238,793 RMB 22 4.2731 93 HKD 2,992 3.7540 11,233 JPY 69,214 0.2756 19,075 EUR 32 34.1500 1,086

Note: The foreign currencies denominated in the non-functional currencies of the consolidated entities include items that have been eliminated in the consolidated financial statements for inter-group transactions.

Due to the variety of functional currencies of the Consolidated Company, information on exchange gains and losses on monetary items is presented on a consolidated basis. Foreign currency exchange gains and losses (including realized and unrealized) for the periods from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020 were NT$5,500 thousand, NT$106,644 thousand, NT$97,988 thousand and NT$145,104 thousand, respectively.

(2) Sensitivity analysis

The Consolidated Company's exchange rate risk arises mainly from cash and cash equivalents denominated in foreign currencies, financial assets at FVTPL, accounts receivable and other receivables, other financial assets, short-term loans, accounts payable and other payables, which generate foreign currency exchange gains or losses upon translation. As of September 30, 2021 and 2020, when NTD depreciates or appreciates by 1% against the foreign currencies held by the Consolidated Company, with all other factors held constant, net income after tax would increase or decrease by $51,654 thousand and $57,686 thousand from January 1 to September 30, 2021 and 2020, respectively. The same basis was used for the analysis of both periods.

Market risk—changes in interest rates

The interest rate risk of the Consolidated Company mainly comes from the bank deposit and short-term loan of floating rate, so the interest rate change will cause the effective interest rate of bank deposit and short-term loan to change accordingly, and the future cash flow will fluctuate.

The following sensitivity analysis is based on the risk of interest rate shocks reported by financial instruments on the date of coverage. For floating rate liabilities, the analysis is based on the assumption that the reported amount of daily outstanding liabilities is current throughout the year. The rate of change used by the Consolidated Company in reporting

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

interest rates to the main management is 1% up or down, which represents the management’s assessment of the reasonable range of possible interest rate changes.

The Consolidated Company’ financial assets with variable interest rates as of September 30, 2021, December 31, 2020, and September 30, 2020 were NT$2,473,020 thousand, NT$2,262,409 thousand and NT$2,753,027 thousand, respectively, and its financial liabilities were NT$15,885 thousand, NT$23,996 thousand and NT$32,749 thousand, respectively. If interest rates had increased or decreased by 1%, the Consolidated Company’ net income would have increased or decreased by NT$14,743 thousand and NT$16,322 thousand from January 1 to September 30, 2021 and 2020, respectively, with all other variables held constant.

5. Market risk—fair value

(1) Fair value and carrying amount

The management of the Consolidated Company believes that non-derivative short-term financial instruments should be estimated at their fair value based on their book value on the balance sheet, and that their book value should be a reasonable basis for the estimated fair value because of the near expiry date of such commodities. This method is applied to cash and equivalent cash, notes receivable and payable, accounts receivable and payable, other receivables and payables, deposit margin and short-term borrowings.

In addition to the above financial instruments, the fair value and book value information of the remaining financial instruments and investment real estate of the Consolidated Company on the financial reporting date are as follows:

Measured at fair value Financial assets: Financial assets measured at FVTPL Financial assets measured at FVTOCI Not measured at fair value Non-financial assets: Investment property	Sep 30,	2021 Fair value 121,699 29,823 465,788	Dec 31, 2020 Book value Fair value 122,960 122,960 22,136 22,136 368,019 467,325	Sep 30, 2020 Book value Fair value 58,340 58,340 17,468 17,468 379,184 420,223
	Book value $ 121,699 29,823 335,219		Book value 122,960 22,136 368,019	Book value 58,340 17,468 379,184

(2) The evaluation techniques used to determine fair value are as follows
A. When financial assets are quoted publicly in an active market, this market price is the fair value. When market prices are not available, estimates are made by reference to quoted counterparties or using valuation techniques. The estimates and assumptions used are consistent with the information used by market participants as estimates and

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

assumptions in pricing financial instruments.

B. The fair value of investment properties is based on the evaluations of independent evaluators with recognized professional qualifications and recent experience in the area and type of investment properties evaluated.
(3) Fair value hierarchy

The following table analyzes the fair value hierarchy of financial instruments and investment property by valuation. Each fair value hierarchy is defined as follows:

A. Level 1: Publicly quoted prices (unadjusted) in an active market for identical assets or liabilities.
B. Level 2: Input parameters for an asset or liability are observable either directly (i.e., prices) or indirectly (i.e., derived from prices), except for publicly quoted prices included in Level 1.
C. Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable parameters).

Level 1 $ 120,199 20,180	Level 2 - -	Level 3 1,500 9,643
$ 140,379	-	11,143
$ -	-	465,788
$ 116,780 20,120	- -	6,180 2,016
$ 136,900	-	8,196
$ -	-	467,325
Level 1 $ 56,351 15,884	Level 2 - -	Level 3 1,989 1,584
$ 72,235	-	3,573
$ -	-	420,223

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) Transfer between the level 1 and the level 2

The Consolidated Company does not have any transfers from January 1 to September 31, 2021 and 2020.

(5) Statement of changes in financial assets (liabilities) classified as level 3 at fair value

Unit: NT$1,000

							Jan to Sep, 2021	Jan to Sep, 2021
				Total profit or loss				Addition				Reduction
		Opening	Recognized		Recognized	in	Issuance or		Transferred			Sales,	Closing
Name		balance	in	profit or loss	other comprehensive		purchase		to level 3			disposal or settlement	balance
					income
Financial assets measured at FVTPL	$	6,180		600	-			900			-	(6,180)		1,500
Financial assets measured at FVTOCI		2,016		-	(6,773)			14,400			-	-		9,643
														11,143
	$	8,196		600	(6,773)			15,300			-	(6,180)
							Jan to Sep, 2020
				Profit or loss				Addition				Reduction
		Opening	Recognized		Recognized	in	Issuance or		Transferred			Sales,	Closing
Name		balance	in	profit or loss	other comprehensive		purchase		to level 3			disposal or settlement	balance
					income
Financial assets measured at FVTPL	$	219,103		499	-			-			-	(217,613)		1,989
Financial assets measured at FVTOCI		6,438		-		6		-			-	(4,860)		1,584
	$	225,541		499		6		-			-	(222,473)		3,573
The above total	gains or		losses are reported in “other								gains	and losses” and
“unrealized valuation	gains (losses) on financial						assets at		FVTOCI,” of which					those
related to assets still held		as of September			30, 2021		and	2020	are		as follows:
								Jan	to	Sep,		Jan to Sep,
								2021				2020
Total gain or loss
Recognized in (loss) gain (reported in “Other							$				600		1,989
gains and losses”)
Recognized in other	comprehensive income									(6,773)				(347)
(reported as “Unrealized valuation gains (losses)
on financial assets at FVTOCI”)

(6) Quantitative information on the fair value measurement of significant non-observable input values (level 3)

The Consolidated Company's financial assets measured at FVTPL classified as level 3 fair value were NT$1,500 thousand, NT$6,180 thousand and NT$1,989 thousand as of September 30, 2021, December 31, 2020 and September 30, 2020, respectively. Quantitative information is not disclosed because there is no active market for quoted prices but reference to counter-parties' quotes, and the relationship between significant non-observable inputs and fair values cannot be fully obtained in practice.

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The remaining quantitative information of significant non-observable inputs measured at fair value for level 3 is listed below:

Item Financial assets measured at FVTPL`－`embedded derivative`－` right of redemption Financial assets measured at FVTOCI`－`investments in equity instruments with no active market "	Valuation technique Binary tree model for convertible bond pricing Comparable to regulations governing listed companies Net asset value method	Significant non-observable inputs ‧The volatility of Sep 30, 2021 is 38.78%. ‧Net price to market ratio multiplier of Sep 30, 2021 is 1.56~1.73 ‧Discount for lack of marketability of Sep 30, 2021 is 10.80%~20.80% ‧Net asset value	Relationship between significant non-observable inputs and fair value
			‧The higher the volatility, the lower the fair value ‧The higher the multiplier, the higher the fair value ‧The higher the discount for lack of marketability, the lower the fair value. ‧Positive fair value relationship

(7) Evaluation process for classifying fair value in level 3

The fair value of the Consolidated Company is measured using unobservable inputs, and its fair value is classified as level 3. The sources of input values for this level are the prices provided by reference to quotations from counter-parties or net market value multipliers of comparable companies in the market, and the relevant quotations and evaluation data are appropriately maintained. The results are subsequently reviewed to ensure consistency with the evaluation sources and the reasonableness of the evaluation results.

(8) Sensitivity analysis of fair value to reasonably possible alternative assumptions for level 3 fair value measurements

The Consolidated Company's fair value measurement of financial instruments is reasonable, but the use of different evaluation models or evaluation parameters may result in different evaluation results. For financial instruments classified as level 3, if the evaluation parameters are changed, the effect on the profit or loss or other comprehensive income for the period would be as follows:

Sep 30, 2021 Financial assets measured at FVTPL Embedded derivative`－`right of redemption Financial assets measured at FVTOCI Investment in equity instruments	Input value	Upward or downward change	Fair value changes reflected in profit or loss for the period Fair value changes reflected in other comprehensive income Favorable changes Unfavorable changes Favorable changes Unfavorable changes	Fair value changes reflected in other comprehensive income
	Volatility Stock price Net to	5% 10% 5%	$ 300 (400) - - 100 (500) - - - - - (143)

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

with no active market

market price multiplier Lack of 5% - - - (143) marketability discount

(28) Financial risk management

The Consolidated Company’ financial risk management objectives and policies are consistent with those disclosed in the 2020 consolidated financial statement; see Note VI (27) to the 2020 consolidated financial statement for related information.

(29) Capital management

The Consolidated Company’ capital management objectives, policies and procedures have not changed materially from those disclosed in the 2020 consolidated financial statements; see Note VI (28) of the 2020 consolidated financial statements for related information.

(30) Investment and fund raising activities for non-cash transactions

Please refer to Notes VI (8) and VI (15) for information on the Consolidated Company’ non-cash trading investments and fundraising activities for right-of-use assets acquired under leases from January 1 to September 30, 2021 and 2020.

A reconciliation of the Consolidated Company's liabilities from fundraising activities for the periods from January 1 to September 30, 2021 and 2020 is as follows:

Short-term loans Bonds payable Long-term loans (including long-term loans – current portion) Lease liabilities Total liabilities from fundraising activities	Jan 1, 2021 Cash flow $ - 807,203 - 1,152,983 23,996 (8,111) 176,250 (106,360)	Non-cash change Other Change in exchange rate Change in fair value Sep 30, 2021 - (2,336) - 804,867 (181,221) - - 971,762 - - - 15,885 367,446 (4,556) - 432,780
	$ 200,246 1,845,715	186,225 (6,892) - 2,225,294

Short-term loans Long-term loans Lease liabilities Total liabilities from fundraising activities	Jan 1, 2020 Cash flow $ 29,980 662,855 - (77,574) 155,411 (88,215)	Non-cash change Other Change in exchange rate Change in fair value Sep 30, 2020 36,680 485 - 730,000 129,544 - - 51,970 84,286 (866) - 150,616
	$ 185,391 497,066	250,510 (381) - 932,586

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

VII. Related Party Transactions

(1) Parent company and ultimate controller: The Company is the ultimate controller of the Company and the Company’s subsidiaries.
(2) Names and relationships of related parties

The related parties with whom the Company had transactions during the period covered

by these consolidated financial statements are as follows:

Name of related party Relationship with the Company De Chuang Investment Co., Ltd. Substantive related party Key management Including directors, supervisors, managers, their relatives, spouses, etc.

(3) Material transactions with the related parties

1. Lease

The Consolidated Company entered into a one-year lease agreement with key management for the warehouse with reference to the rental rate of the neighboring warehouses, with a total contract value of NT$60 thousand. Interest expense of NT$0 thousand, NT$0 thousand, NT$1 thousand and NT$1 thousand was recognized from July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020, respectively. The balance of lease liabilities as of September 30, 2021, December 31, 2020 and September 30, 2020 were NT$74 thousand, NT$0 thousand and NT$15 thousand, respectively.

Acquisition of equity in subsidiaries

Type/name of related party Key management HE, XIU-LAN	Subject of transaction Lerain Technology Co., Ltd.	Number of shares traded 547,059	Acquisition price Jan to Sep, 2021 $ 5,471

3. Borrowings from related parties

The Consolidated Company's loans from related parties bear interest at 2% per annum on pledges of fixed deposits with financial institutions in the year in which each such related party appropriated funds, and were fully repaid as of September 30, 2021, with interest expense of $128 thousand recognized from January 1, 2021 to September 30, 2021.

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) Transaction with key management

Related compensation includes:

Short-term employee benefits Post-employment benefits Share-based payment	Jul to Sep, 2021	Jul to Sep, 2020	Jan to Sep, 2021	Jan to Sep, 2020 43,617 941 -
	$ 59,751 325 2,087	15,198 326 -	90,611 968 2,087
	$ 62,163	15,524	93,666	44,558

VIII. Pledged Assets

The carrying value of the assets pledged as collateral by the Consolidated Company was as follows:

	Name of Asset	Sep 30, 2021 $ 43,038	Dec 31, 2020 66,669	Sep 30, 2020 126,508
	Property, plant and equipment

IX. Significant Contingent Liabilities and Unrecognized Contractual Commitments

(1) Significant unrecognized contractual commitments:

As of September 30, 2021, the Consolidated Company, had signed and unpaid major plant construction contracts, with the value of approximately RMB 139,705.

As of September 30, 2021, the Consolidated Company had outstanding land use rights purchase contracts amounting to approximately VND 99,168,675 thousand.

As of September 30, 2021, the Consolidated Company had unpaid contracts related to information system amounting to approximately NT$10,068 thousand.

(2) The issuance of guarantee notes for bank loans, financing lines and derivative financial commodity transactions:

Guaranteed notes	Sep 30, 2021 $ 2,022,852	Dec 31, 2020 1,570,240	Sep 30, 2020 1,178,300

X. Significant Disaster Loss: None.

XI. Significant Post-Period Events: None.

～52～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

XII. Others

(1) Employee benefits, depreciation, depletion and amortization functions are summarized below:

Function Nature	Jul to Sep, 2021	Jul to Sep, 2021	Jul to Sep, 2021	Jul to Sep, 2020	Jul to Sep, 2020	Jul to Sep, 2020
	Operation cost	Operation expense	Total	Operation cost	Operation expense	Total
Employee benefit expense Salary expenses Labor and health insurance expense Pension expense Compensation to directors Other employee benefit expense Depreciation expense Amortization expense	1,041,325 163,672 754 - 69,663 282,594 455	404,670 32,535 3,261 1,786 32,869 110,615 12,965	1,445,995 196,207 4,015 1,786 102,532 393,209 13,420	775,398 92,146 768 - 47,838 186,304 438	305,691 24,406 2,866 1,376 27,825 99,501 3,798	1,081,089 116,552 3,634 1,376 75,663 285,805 4,236

Function Nature	Jan to Sep, 2021			Jan to Sep, 2020
	Operation cost	Operation expense	Total	Operation cost	Operation expense	Total
Employee benefit expense Salary expenses Labor and health insurance expense Pension expense Compensation to directors Other employee benefit expense Depreciation expense Amortization expense	3,067,126 369,747 2,247 - 163,770 743,008 1,259	1,090,092 92,806 9,531 4,711 94,953 325,457 37,203	4,157,218 462,553 11,778 4,711 258,723 1,068,465 38,462	1,657,634 184,736 1,596 - 117,140 590,594 1,067	837,761 63,692 8,205 4,106 83,090 283,434 10,698	2,495,395 248,428 9,801 4,106 200,230 874,028 11,765

(2) Seasonality of operations:

The Company’s operations are subject to seasonal fluctuations due to the downstream computer industry.

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

XIII. Disclosing Information

(1) Major transaction details

In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about major transactions form January 1 to September 30, 2021:

Capital lending to others:

Unit: NT$1,000/1,000 in foreign currency

No.	Lender	Borrower	Item	Related party	Max amount for the period	Ending balance	Actual lending amount	Interest rate	Nature of the lending (Note 1)	Business amount	Purpose f or the lending	Allowance for bad debt	Collateral	Collateral	Individual limit (Note 2)	Overall limit (Note 2)
													Name	Value
0	The Company	Lotes Guangzhou Co.,Ltd.	Internal transacti on	Yes	219, (RMB50, 000)	3 214,715 (RMB50,000)	-	4.5%	2	-	Working capital	-	None	-	3,138,430	6,276,859

Note 1: The description of loaning funds to others are as follow:

(1) Where an business transaction is necessary.
(2) Where an short-term financing facility is necessary.
Note 2: The amount of the Company’s financing to a single party shall not exceed 20% of the Company’s net worth.

The total amount of funds lent by the Company to others shall not exceed 40% of the Company’s net worth.

Endorsement for others:

Unit: NT$1,000/1,000 in foreign currency

==> picture [460 x 173] intentionally omitted <==

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

[No. ] Endorser Endorsee Guarantee limit Maximum Ending Actual Amount of Percentage of the Maximum Endorsement Endorsement Endorsement
for single endorsement endorsement expenditures endorsement accumulated endorsement made by parent made by made to any
enterprise guarantee and guarantee backed by amount of guarantee to subsidiary subsidiary to party in
endorsement balance for the balance assets endorsement in (Note 2) parent Mainland
(Note 2) period the net value of China
current financial
statement (%)
Company Relationship
name (Note 1)
[0 The ] REKA 2 3,138,430 35,000 35,000 - - 0.22% 7,846,074 Yes No No
Company Technology
Co., Ltd.
[0 ] " Lotes 2 3,138,430 501,300 501,300 275,715 - 3.19% 7,846,074 " " Yes
Guangzhou (USD18,000) (USD18,000)
Co., Ltd.
[1 Lotes ] REKA 1 1,263,420 85,605 83,550 - - 1.32% 3,158,551 No " No
Guangzhou Technology (USD3,000) (USD3,000)
Co., Ltd. Co., Ltd.
[2 Lintes ] Lintes 2 820,374 114,140 - - - - % 1,640,749 " " Yes
Technology Technology (USD4,000)
Co., Ltd. (Suzhou)
Co., Ltd.
[2 ] " Genie 2 820,374 101,260 97,000 15,885 - 5.91% 1,640,749 " " No
Precision
Machine
Co., Ltd.
----- End of picture text -----

Note 1: There are seven types of relationship between the Endorser and Endorsee, which can be marked:

(1) Companies with business dealings.
(2) Companies in which the company directly and indirectly holds more than 50% of the voting rights.
(3) Companies that hold more than 50% of the voting rights in the company, both directly and indirectly.

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) The Company owns, directly and indirectly, more than 90 percent of the voting shares.
(5) Company that is mutually insured under a contract between its peers or co-manufacturers based on the need to perform the work.
(6) Company in which all of the contributory shareholders have given their endorsement in proportion to their shareholding in the joint venture.
(7) Intercompany performance guarantees and guarantees for pre-sale contracts in accordance with the Consumer Protection Act.

Note 2:

(1) The amount of the Company’s guarantee for a single corporate endorsement shall not exceed 20% of the net worth of the Company.
- The aggregate amount of the Company’s guarantees under external endorsement shall not exceed 50% of the net worth of the Company.
(2) The amount of Lotes Guangzhou Co., Ltd’s guarantee for a single corporate endorsement is limited to not more than 20% of the net worth of the company.
- The aggregate amount of Lotes Guangzhou Co., Ltd’s external endorsement guarantees is limited to an amount not exceeding 50% of the Company’s net worth.
(3) The amount of Lintes Technology Co., Ltd.’s guarantee for a single corporate endorsement is limited to not more than 50% of the net worth of the company.
- The aggregate amount of Lintes Technology Co., Ltd.’s external endorsement guarantees is limited to an amount not exceeding 100% of the Company’s net worth.
Securities held at the end of period (excluding the equity of controlled by subsidiaries, affiliated companies, or joint company):

Unit: NT$1,000

Company which holds the security	Category and name of security	Relationship with the issuer of the security	Listed as	End of period	End of period	End of period	End of period	Note
				Shares	Book Value	Shareholding proportion	Fair value
Lotes Co., Ltd. " Jiayu Investment Co., Ltd. " " " " " " " Jiayu Investment Co., Ltd. Lintes Technology Co., Ltd.	SteadyBeat Technology Corporation G-sau Co., Ltd Grand-Tek Technology Co., Ltd. Taidoc Technology Corp. Lian Hong Art Company Limited Patec Precision Industry Co., Ltd. Gigabyte Technology Co., Ltd. OtO Photonics Inc. Lucemitek Co., Ltd. Radinet Communications Inc. AICP Technology Corporation Chailease Finance Co., Ltd. Type A	None " " " " " " " " " None "	Financial assets measured at FVTOCI – non-current " Financial assets measured at FVTPL – current " " " " " " " Financial assets measured at FVTOCI – current Financial assets measured at	950,000 300,000 382,980 30,000 1,017,000 477,000 279,000 1,368,800 1,169,977 600,000 400,000 202,000	7,234 857 14,228 5,340 62,820 13,594 24,217 - - - 1,552 20,180	9.90 % 14.29 % 1.56 % 0.03 % 2.98 % 1.04 % 0.04 % 4.57 % 17.33 % 26.25 % 5.33 % 0.13 %	7,234 857 14,228 5,340 62,820 13,594 24,217 - - - 1,552 20,180	Note Note Note

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Preferred Stock FVTOCI – non-current

Note: All of them were recognized in losses.

The cumulative purchase or sale of the same securities amounted to at least NT$300 million or 20% of the paid-in capital: None.
Acquisition of real property amounting to NT$300 million or 20% or more of the paid-in capital:

capital:	capital:	capital:
							Unit: NT$1,000
The company which acquired the property	Name of asset	Date of occurrence	Amount of transaction (Note 2)	Payment condition (Note 2)	Counterparty of transaction	Relationship	If the counterparty is a related party, the information of its previous transfer shall be provided				Reference for pricing	Purpose of the acquisition and the condition of use	Other agreed matters
							Owner	Relationship with the issuer	Date of transfer	Amount
Lotes Zhongshan Co., Ltd. Lotes Hengnan Co., Ltd. Lotes Viet Nam CO., Ltd. Lintes Technology Co., Ltd.	Plant (Note 1) " Land use rights Land and Building, Lot 1159, Jiankang Rd., Zhonghe Dist., New Taipei City	Oct 2017 ~ Sep 2021 Oct 2019 ~ Sep 2021 Jan 1, 2021 Dec 16, 2020	1,461,920 342,176 299,921 237,700	913,455 290,704 180,918 237,700	Chongqing Chuangyou Construction Group, etc " GREEN i-PARK CORP. Natural person	None " " "	- - - -	- - - -	- - - -	- - - -	Bidding " Mutual bargaining Appraisal report provided by an appraisal firm	Construction of plant " " Office use (Note 3)	None " "

Note 1: Build the factory by own contracting committee.

Note 2: The conversions to NTD were made at the exchange rates prevailing on the balance sheet date. Note 3: To be used as an office after the decoration is completed.

Disposal of real property amounting to NT$300 million or 20% or more of paid-in capital: None.

～56～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

The amount of sales to or from related parties is at least $100 million or 20% of the paid-in capital:

Unit: NT$1,000

The company which purchases (sells) products	Name of transaction counterparty	Relationship	Condition of Transaction	Condition of Transaction	Condition of Transaction	Condition of Transaction	Situation and reason for the conditions of transaction to be different from the ordinary ones	Situation and reason for the conditions of transaction to be different from the ordinary ones	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchase (sales)	Amount	Percentage in total goods purchased (sold)	Credit period	Unit price	Credit period	Balance	Percentage in the notes and accounts receivable (payable)
Xincheng Development Co., Ltd. " REKA Technology Co., Ltd. " " " " " Lotes Guangzhou Co., Ltd. Lotes Guangzhou Co., Ltd. " Lintes Technology (Suzhou) Co., Ltd. Lotes Hengnan Co., Ltd. " Zongka Technology (Shenzhen) Co., Ltd. Shenzhen DeYi Automation Equipment Co.,Ltd.	The Company Lotes Suzhou Co., Ltd. The Company Lotes Guangzhou Co., Ltd. Lotes Hengnan Co., Ltd. " Lotes Zhongshan Co., Ltd. Guangzhou Leside Technology Co., Ltd. REKA Technology Co., Ltd. Lotes Hengnan Co., Ltd. Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Lintes Technology Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Guangzhou Leside Technology Co., Ltd. "	Subsidiary The ultimate parent company is the same parent company Subsidiary The ultimate parent company is the same parent company " " " " " The ultimate parent company is the same parent company " Subsidiary The ultimate parent company is the same parent company " " "	Net revenue from the goods sold Net expense from the goods purchased Net revenue from the goods sold Net expense from the goods purchased " Net revenue from the goods sold Net expense from the goods purchased Net revenue from the goods sold Net expense from the goods purchased Net expense from the goods purchased " Net revenue from the goods sold " " Net expense from the goods purchased "	990,543 1,028,719 7,402,425 7,349,165 515,904 347,386 1,755,865 766,442 1,747,616 276,045 107,792 1,330,862 271,283 108,727 561,688 240,098	96.06 % 99.77 % 75.40 % 76.21 % 5.35 % 3.54 % 18.21 % 7.95 % 32.63 % 5.15 % 1.40 % 96.27 % 28.01 % 11.22 % 80.36 % 37.32 %	Settled by month at intervals of 90 days " " " " " " " " Settled by month at intervals of 90 days " " " " "	- - - - - - - - - - - - - - - -	No significant difference " " " " " " " " No significant difference " " " " "	337,144 (352,241) 1,147,905 (982,507) (93,255) 82,967 (447,965) 452,602 (698,240) (40,244) (19,206) 243,809 126,490 67,491 (339,995) (95,507)	95.66% 99.77% 34.44% 46.20% 4.38% 2.49% 21.06% 13.58% 39.43% 2.27% 1.08% 94.87% 33.61% 17.93% 76.60% 34.19%

～57～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Amounts due from related parties amounting to at least NT$100 million or 20% of paid-in capital:

Unit: NT$1,000

Related party with accounts receivable by the Company	Name of transaction counterparty	Relationship	Balance of receivables from the related party	Turnover ratio	Past due receivables from the related party	Past due receivables from the related party	Amount received after the period ended	Amount of loss
					Amount	Solution
Xincheng Development Co., Ltd. REKA Technology Co., Ltd. " " " Lotes Suzhou Co., Ltd. Good Hope Investments Limited Lotes Guangzhou Co., Ltd. " Lotes Zhongshan Co., Ltd. Lotes Hengnan Co., Ltd. Guangzhou Leside Technology Co., Ltd. Lintes Technology (Suzhou) Co., Ltd.	The Company " Lotes Guangzhou Co., Ltd. Lotes Zhongshan Co., Ltd. Guangzhou Leside Technology Co., Ltd. Xincheng Development Co., Ltd. REKA Technology Co., Ltd. " Lotes Zhongshan Co., Ltd. REKA Technology Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Lintes Technology Co.,Ltd.	Subsidiary " The ultimate parent company is the same parent company " " " Parent company The ultimate parent company is the same company " " " The ultimate parent company is the same company Subsidiary	337,144 1,147,905 698,240 193,782 452,602 352,241 861,151 982,507 556,789 447,965 126,490 339,995 243,809	4.22 6.86 4.66 - 4.52 4.16 - 9.19 - 7.48 3.11 4.41 5.76	- - - - - - - - - - - - -		99,038 1,005,074 230,917 58,049 79,540 103,831 - 933,127 1,500 278,500 19,754 67,421 136,932	- - - - - - - - - - - - -

Engagement in derivative transactions: Please refer to Note VI (2) and (25).

～58～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

10. Business relationships and material transactions between parent and subsidiaries:

Business relationships and significant intercompany transactions from January 1 to September 30, 2021:

Unit: NT$1,000

				Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
No.	Name	Transaction with	Relationship	Transaction in 2021
				Subject	Amount	Term	Operating revenue Accounting for total assets
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1	The Company " " " " " " " " " " " " " " " " " " " " " " " " " " " " " Lotes Guangzhou Co., Ltd. " " " " Lotes Guangzhou Co., Ltd. " " "	Ememe Robot Co., Ltd. Lintes Technology Co., Ltd. " " " " Jiayu Investment Co., Ltd. LOTES USA, INC. " LOTES EU GmbH Xincheng Development Co., Ltd. " " " " REKA Technology Co., Ltd. " " " " Lotes Suzhou Co., Ltd. Good News Medical Co., Ltd. Lotes Guangzhou Co., Ltd. Lerain Technology Co., Ltd. " " Lotes Viet Nam Co., Ltd " " " REKA Technology Co., Ltd. " " " " Lotes Suzhou Co., Ltd. " " "	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3	Other receivables Other income Sales revenue Net expense from the goods purchased Accounts receivable Accounts payable Other income Administration expense Other payables Administration expense Sales revenue Net expense from the goods purchased Accounts receivable Accounts payable Promotion expense Sales revenue Net expense from the goods purchased Accounts receivable Accounts payable Promotion expense Other income Other income Interest income Accounts payable Net expense from the goods purchased Other income Net expense from the goods purchased Accounts payable R&D expenses Other receivables Sales revenue Purchases for the period Accounts receivable Accounts payable Purchase of fixed assets Sales revenue Purchases for the period Accounts receivable Other receivables	2,272 172 370 68,991 357 39,301 34 25,714 2,761 2,106 2,376 990,543 757 337,144 1,135 24,622 7,402,425 13,300 1,147,905 1 103 32 1,306 15,652 14,845 123 28 50 22 223 7,349,165 1,747,616 982,507 698,240 153,766 3,014 5,706 1,638 76	Same as general transactions " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " Same as general transactions " " "	0.01% -% -% 0.45% -% 0.16% -% 0.17% 0.01% 0.01% 0.02% 6.46% -% 1.37% -% 0.16% 48.27% 0.05% 4.65% -% -% -% -% 0.06% 0.10% -% -% -% -% -% 47.92% 12.40% 3.98% 2.83% 0.62% 0.02% 0.04% 0.01% -%

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2	" " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " Lotes Suzhou Co., Ltd. " " " " " Lotes Suzhou Co., Ltd. "	" " Lotes Hengnan Co., Ltd. " " " " " Zongka Technology (Shenzhen) Co., Ltd. " " " " " " " Shenzhen DeYi Automation Equipment Co., Ltd. " Shenzhen DeYi Automation Equipment Co., Ltd. " " " Lintes Technology (Suzhou) Co., Ltd. " Lotes Zhongshan Co., Ltd. " " " " " " " Guangzhou Leside Technology Co., Ltd. " Zhongshan Dezhi Metal Surface Treatment Co., Ltd. " " " Xincheng Development Co., Ltd. " " " Zongka Technology (Shenzhen) Co., Ltd. " Lintes Technology (Suzhou) Co., Ltd. "	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Accounts payable Sale of fixed assets Sales revenue Purchases for the period Accounts receivable Accounts payable Other receivables Sale of fixed assets Sales revenue Purchases for the period Accounts receivable Accounts payable Administration expense Other income Sale of fixed assets Other receivables Sales revenue Purchases for the period Accounts receivable Accounts payable Other income Other receivables Sales revenue Accounts receivable Sales revenue Purchases for the period Accounts receivable Accounts payable Sale of fixed assets Purchase of fixed assets Other receivables Other payables Sales revenue Accounts receivable Purchases for the period Accounts payable Sale of fixed assets Other receivables Sales revenue Purchases for the period Accounts receivable Accounts payable Sales revenue Accounts receivable Sales revenue Accounts receivable	4,898 68 8,070 276,045 10,012 40,244 284 2,091 16,982 958 16,336 1,072 768 147 56 80 15,953 845 9,762 3 110 13 36,859 13,453 22,900 82,503 19,568 29,924 146,040 2,366 556,789 4,622 9 9 107,792 19,206 533 63 1,028,719 2,415 352,241 808 30,469 18,440 6,544 2,191	" " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " Same as general transactions "	0.02% -% 0.05% 1.80% 0.04% 0.16% -% 0.01% 0.11% -% 0.07% -% -% -% -% -% 0.10% -% 0.04% -% -% -% 0.24% 0.05% 0.15% 0.54% 0.08% 0.12% 0.59% 0.01% 2.25% 0.02% -% -% 0.70% 0.08% -% -% 6.71% 0.02% 1.43% -% 0.20% 0.07% 0.04% 0.01%

～60～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4	" " " " " " " " " " REKA Technology Co., Ltd. " " " " " " " " " " " " " " " REKA Technology Co., Ltd. " " " " " Lotes Hengnan Co., Ltd. " " " " " " " " " "	" " Shenzhen DeYi Automation Equipment Co., Ltd. " " " Lotes Zhongshan Co., Ltd. " " " Xincheng Development Co., Ltd. " " " Zongka Technology (Shenzhen) Co., Ltd. " " Good Hope Investments Limited Ememe Robot Co., Ltd. Lotes Hengnan Co., Ltd. " " " Shenzhen DeYi Automation Equipment Co., Ltd. Lotes Zhongshan Co., Ltd. " Lotes Zhongshan Co., Ltd. " Guangzhou Leside Technology Co., Ltd. " Lotes Viet Nam Co., Ltd " Shenzhen DeYi Automation Equipment Co., Ltd. " Zongka Technology (Shenzhen) Co., Ltd. " Lotes Suzhou Co., Ltd. " " " Lotes Zhongshan Co., Ltd. " "	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Other income Other receivables Sales revenue Purchases for the period Accounts receivable Accounts payable Sales revenue Purchases for the period Accounts receivable Accounts payable Sales revenue Purchases for the period Accounts receivable Accounts payable Sales revenue Purchases for the period Other payables Other payables Accounts receivable Sales revenue Purchases for the period Accounts receivable Accounts payable Sales revenue Sales revenue Purchases for the period Accounts payable Other receivables Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Accounts payable Purchase of fixed assets Sales revenue Accounts receivable Purchase of fixed assets	13,559 6,534 84,037 21 46,598 17 201 504 238 480 42 37,438 42 15,711 30,386 1,119 368 861,151 7,627 347,386 515,904 82,967 93,255 23,367 7,575 1,755,865 447,965 193,782 766,442 452,602 4,594 38,995 271,283 126,490 108,727 67,491 4,097 2,617 4,957 4,431 31,638 4,625 8	" " " " " " " " " " " " " " " " " " " " " " " " " " Same as general transactions " " " " " " " " " " " " " " " "	0.09% 0.03% 0.55% -% 0.19% -% -% -% -% -% -% 0.24% -% 0.06% 0.20% -% -% 3.49% 0.03% 2.27% 3.36% 0.34% 0.38% 0.15% 0.05% 11.45% 1.81% 0.78% 5.00% 1.83% 0.03% 0.16% 1.77% 0.51% 0.71% 0.27% 0.03% 0.01% 0.02% 0.02% 0.21% 0.02% -%

～61～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

4 5 5 5 6 6 7 7 7 7 7 8 8 8 8 8 8 8 8 8 8 9 9 9 9	" Lintes Technology (Suzhou) Co., Ltd. " " Lintes Technology Co., Ltd. " Zongka Technology (Shenzhen) Co., Ltd. " " " " Lotes Zhongshan Co., Ltd. " " " " " " " " " Guangzhou Leside Technology Co., Ltd. " " "	" Lintes Technology Co., Ltd. " " Genie Precision Machine Co., Ltd. " Lotes Zhongshan Co., Ltd. " " Guangzhou Leside Technology Co., Ltd. " " " Shenzhen DeYi Automation Equipment Co., Ltd. " " " Zhongshan Dezhi Metal Surface Treatment Co., Ltd. " Lintes Technology (Suzhou) Co., Ltd. " Shenzhen DeYi Automation Equipment Co., Ltd. " Chongqing Fuxinrui Electronic Technology Co., Ltd. "	3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 1 1	Other payables Sales revenue Accounts receivable Accounts payable Other payables Operating expense Sales revenue Purchases for the period Accounts payable Purchases for the period Accounts payable Sales revenue Accounts receivable Sales revenue Purchases for the period Accounts receivable Accounts payable Accounts payable Purchases for the period Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable	9 1,330,862 243,809 5,180 190 206 36 493 331 561,688 339,995 58,465 25,971 5,761 349 1,025 73 7,539 53,752 17,567 19,631 240,098 95,507 473 468	" " " Same as general transactions " " " " " " " " " " " " " " " " " " " "	-% 8.68% 0.99% 0.02% -% -% -% -% -% 3.66% 1.38% 0.38% 0.11% 0.04% -% -% -% 0.03% 0.35% 0.11% 0.08% 1.57% 0.39% -% -%

Note 1: The number should be filled in as follows:

0 refer to parent company
Subsidiaries are numbered by company, starting with the Arabic numeral 1.

Note 2: The type of relationship with the counterparty is indicated below:

Parent company to subsidiaries
Subsidiaries to parent company
Subsidiaries to subsidiaries

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(2) Information on Reinvestment Business:

Information on the Company’s investees from January 1 to September 30, 2021 was as follows (excluding investees in China):

Unit: NT$1,000

Name of the company investing	Name of investee company	Location	Main business	Initial investment amount (Note 1)	Initial investment amount (Note 1)	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Gain/loss of investee company in the fiscal period	Gain/loss in the investment recognized in the fiscal period	Remarks
				End of this period	End of the previous year	Shares	Percentage	Book value
The Company " " " " " " " " The Company Lotes Investment Ltd. Good Hope Investments Limited " Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. " Jiayu Investment Co., Ltd. "	Lotes Investment Ltd. Good Hope Investments Limited Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. Lotes USA, Inc. LOTES EU GmbH Lerain Technology Co., Ltd. Mikronpoint Co., Ltd. Lotes Viet Nam CO., Ltd. Loteson International Investments Limited Xincheng Development Co., Ltd. REKA Technology Co., Ltd. Jae You Co., Ltd. Wangden Investments Limited Ememe Robot Co., Ltd. Compertum Microsystems Inc. Good News Medical Co., Ltd. Lintes Technology	Samoa " " Anguilla Taiwan America Germany Taiwan " Vietnam Hong Kong Samoa Hong Kong " " Taiwan " Taiwan "	Holding and investment businesses " " " General investment Market development Market development Chip design, testing and sales Manufacture and sale of machinery and electronic components Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Holding and investment businesses Sales of connectors for the information industry, communications industry, and consumer electronics industry Sales of connectors for the information industry, communications industry, and consumer electronics industry Holding and investment businesses Holding and investment businesses Manufacture of electrical and audiovisual products Manufacture of electronic components Manufacture and sale of machinery and equipment, electronic parts and components, and optical instruments Manufacture of	725,493 11,176 557,457 13,925 690,000 69,625 3,232 47,321 5,000 403,407 725,493 2,785 2,821 557,467 13,925 69,600 43,880 6,360 486,926	741,904 11,428 570,068 14,240 690,000 71,200 3,502 9,385 5,000 - 741,904 2,848 2,884 570,077 14,240 69,600 43,880 250 486,926	26,050,000 401,281 20,016,426 500,000 69,000,000 2,500,000 100,000 4,732,059 500,000 14,485,000 26,050,000 100,000 101,281 20,016,756 500,000 6,960,000 2,632,800 636,000 29,712,788	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 16.40% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 94.37% 35.34% 25.44% 52.13%	6,109,143 1,549,273 2,541,696 146,825 1,085,991 75,258 3,118 36,934 2,808 386,265 6,317,118 1,342 686,757 2,560,405 146,825 (8,051) 20,134 5,260 855,284	1,046,847 51,568 341,546 27,851 45,363 1,128 (654) (43,591) (2,128) (14,280) 1,046,847 (244) 51,812 341,546 27,851 (292) (31,178) (3,144) 124,630	1,004,821 51,568 342,603 27,851 44,923 1,128 (654) (9,245) (2,128) (14,280) 1,046,847 (244) 51,812 341,546 27,851 (275) (11,018) (513) 64,976	Note 2 Note 2 Note 2

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lintes Technology Co., Ltd. " " " " Jilong Co., Ltd.	Co., Ltd. Jiajun Investment Co., Ltd. Genie Precision Machine Co., Ltd. Compertum Microsystems Inc. Lerain Technology Co., Ltd. Jilong Co., Ltd. Rihui Co., Ltd.	" " " " Samoa "	electronic parts and components, other electrical and electronic machinery and equipment General investment Manufacture and sale of optical molds Manufacture of electronic components Chip design, testing and sales Holding and investment businesses Holding and investment businesses	15,000 164,833 14,620 5,471 137,858 137,858	15,000 164,833 14,620 - 140,976 140,976	1,500,000 14,671,000 877,200 547,059 4,950,000 4,950,000	100.00% 60.00% 11.77% 1.90% 100.00% 100.00%	15,001 204,558 6,708 4,270 233,546 233,546	- 29,511 (31,178) (43,591) (4,410) (4,410)	- 17,023 (3,671) (125) (22,844) (22,844)	Note 2 Note 2 Note 2

Note 1: The original investment amount was converted into New Taiwan dollars using the exchange rate at the balance sheet date.

Note 2: Investment income recognized in the current period includes adjustments for unrealized gains or losses on intercompany transactions.

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(3) Investment in Chinese Company:

Names of investee companies in Mainland China, major business activities, and other related information:

Unit: NT$1,000

Name of investee company in Mainland China	Main business	Paid-in capital (Note 3)	Method of investment (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of the fiscal period (Note 3)	Amount of investment remitted out or recovered during theperiod	Amount of investment remitted out or recovered during theperiod	Accumulated investment amount remitted from Taiwan at the end of the fiscal period (Note 3)	Gain/loss of investee company in the fiscal period	Shareholding ratio	Gain/loss in investment recognized in the fiscal period (Note 2)	Carrying amount of investment at the end of the fiscal period	Investment income remitted back to Taiwan by the end of the fiscal period
					Remitted	Recovered
Lotes Guangzhou Co., Ltd. Lotes Suzhou Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Lotes Hengnan Co., Ltd. Lintes Technology (Suzhou) Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Lotes Zhongshan Co., Ltd. Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Hengnan Deyi Property Development Co., Ltd. Guangzhou Leside Technology Co., Ltd. Chongqing Fuxinrui Electronic Technology Co., Ltd.	Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Research and development of electronic products, plastic materials and products, and import and export business Manufacture of connectors for the information industry, communications industry, and consumer electronics industry Development and production of optical communication measurement instruments, optical transceivers with speed of 10GB/S and above, and provision of technical services for the above products Manufacturing of robotic arms, automation equipment and relevant components Manufacturing of connectors for the information industry, communications industry, and consumer electronics industry, and production of industrial robots, automation equipment, and related parts Surface treatment of metal products and plastic products Development of real estate, lease of premises, landscape design and interior decorating Research, testing and development R&D and sales of electronic components, automobile components and accessories, computers and accessories, development of molds and the import and export of goods and technologies	743,595 556,700 13,925 881,620 137,858 107,358 1,760,663 240,481 98,769 20,183 4,294	(`二`) (`二`) (`二`) (`三`) (`二`) (`三`) (`三`) (`三`) (`三`) (`三`) (`三`)	710,175 556,700 13,925 - 137,858 - - - - - -	- - - - - - - - - - -	- - - - - - - - - - -	710,175 556,700 13,925 - 137,858 - - - - - -	1,046,847 341,546 27,851 88,104 5,204 18,256 196,834 (16,578) (40) 28,033 (1,288)	100.00% 100.00% 100.00% 100.00% 52.13% 100.00% 100.00% 100.00% 100.00% 100.00% 51.00%	1,004,820 342,603 27,851 87,497 (6,896) 18,256 196,834 (16,578) (1,102) 28,033 (657)	6,109,100 2,541,643 146,825 1,199,352 145,682 127,342 2,003,390 208,913 96,533 45,009 251	- - - - - - - - - - -

Note 1: There are six types of investments:

(1) Investment in Chinese Corporation via Third Region Remittance.

(2) Establishment of a company to reinvest in a continental company through a third regional investment.

(3) Reinvest in Chinese companies by re-investing in existing companies in third regions.

(4) Direct Investment

～65～

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(5) Others.

(6) NA.

Note 2: The investment gain or loss recognized in the current period has been reconciled with the unrealized gain or loss from intercompany transactions.
Note 3: The balance sheet date exchange rates are used to translate the paid-in capital and remittance of cumulative investment amounts into New Taiwan dollars.

2. Investment ceiling in Mainland China:

Name	Accumulated amount remitted from Taiwan at the end of the fiscal period for investment in Mainland China (Note 1)	Investment amount approved by Investment Commission, MoEA (Note 1)	Investment ceiling in Mainland China according to the regulations made by Investment Commission, MoEA
Lotes Co.,Ltd.	NT$1,280,800thousand	NT$1,422,113thousand	NT$9,415,289thousand
Lintes Technology Co., Ltd.	NT$137,858thousand	NT$137,858thousand	NT$984,449thousand

Note 1: The conversions to NTD were made at the exchange rates prevailing on the balance sheet date.

Significant transactions with the investee companies in Mainland China:

Please refer to the “major transaction details” and “business relationship and significant transactions between the Company and its subsidiaries” for details of the significant transactions between the Company and its investee companies in Mainland China, directly or indirectly, from January 1 to September 30, 2021.

(4) Principal Shareholder Information:

Shares Major Shareholders	Number of shares held	Shareholding ratio
JinlingInvestment Co.,Ltd.	10,956,237	10.33%
JiamingInvestment Co.,Ltd.	9,797,037	9.24%
2nd discretionary entrustment to investment account of Fuh Hwa Investment for New Labor Pension Fund 2018	7,622,303	7.19%

Note:

(1) This table summarizes the principal shareholders’ information for the Company, based on the last business day of each calendar quarter, for the common and preferred shares of the Company for which the stockholders hold at least 5% of the Company’s outstanding common shares and treasury shares. The difference between the number of shares recorded in the financial statements and the number of shares for which the Company has completed the dematerialized shares may be due to differences in the basis of calculation.

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(2) If the above information is related to a shareholder’s share held in a trust, it is disclosed in the client’s separate account of the trustee’s trust account. For shareholders who apply for declaration of internal shareholdings of more than 10% according to the Securities and Exchange Act, their shareholdings include their own shares plus shares held by them in the trust and have the right to decide on the use of trust property; please refer to Market Observation Post System for more information on the declaration of internal shareholdings.

XIV. Segmental Information

(1) General information

The company’s main business is the trading of various hardware and tool parts, the manufacturing, processing and trading of various terminals and their finished connectors, the import and export trade of the preceding items, and the agency of the preceding items related to domestic and foreign manufacturers’ products in the tender quotation and distribution business.

(2) Information on reportable segment profit or loss, assets, liabilities and their measurement basis and reconciliation

The Consolidated Company’s major decisions are based on the performance appraisal and resource allocation by the production regions. After analysis, the two regions meet the conditions of consolidation into a single operating segment, therefore the Consolidated Company as a whole is a single operating segment, and the information of segment profit or loss, segment assets and segment liabilities are consistent with the financial statements.

(3) Product and labor provision information

The Consolidated Company’s revenue information from external customers is as follows:

Product and Labor Name	Jul to Sep, 2021 $ 1,582,704 1,325,163 811,514 929,983 677,290 74,067 332,715	Jul to Sep, 2020 1,059,055 1,312,516 745,252 751,539 423,885 25,696 311,541	Jan to Sep, 2021 4,168,163 3,934,195 2,329,471 2,135,972 1,574,560 222,287 971,374	Jan to Sep, 2020 3,295,872 3,540,135 2,004,000 1,583,861 1,498,595 73,721 505,371 12,501,555
Server DT NB Strategic Projects LINTES(High Speed Cable) Automotive Other Total
	$ 5,733,436	4,629,484	15,336,022

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Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) Geographical information

The Consolidated Company’s geographical information is shown below, where revenue is classified based on the geographic location of customers and non-current assets are classified based on the geographic location of assets.

Area Revenue from external customers: Taiwan Mainland China Other countries Total	Jul to Sep, 2021 $ 695,335 4,114,238 923,863	Jul to Sep, 2020 314,413 3,931,997 383,074	Jan to Sep, 2021
	$ 5,733,436	4,629,484

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LOTES — Interim / Quarterly Report 2021

52339_rns_2021-11-15_5c346dd8-3dc1-4706-bcbb-8b7e3c515927.pdf

Lotes Co., Ltd. and its Subsidiaries

Consolidated Financial Statements and Accountant’s Review Report

Notice to Readers :

Table of Contents

Independent Auditor’s Report

Foreword

Scope

Conclusion

KPMG

September 30, 2021 and 2020 are reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Consolidated Balance Sheet

September 30, 2021, December 31, 2020, and September 30, 2020

Unit: NT$1,000

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Comprehensive Income

July 1 to September 30, 2021 and 2020 and January 1 to September 30, 2021 and 2020

Unit: NT$1,000

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Changes in Equity

January 1 to September 31, 2021 and 2020

Unit: NT$1,000

Reviewed only, not audited in accordance with GAAS Lotes Co., Ltd. and its Subsidiaries

Consolidated Statement of Cash Flows

January 1 to September 31, 2021 and 2020

Unit: NT$1,000

Reviewed only, not audited in accordance with GAAS

Lotes Co., Ltd. and its Subsidiaries

Notes to the Consolidated Financial Statements

Third Quarter 2021 and Third Quarter 2020

(Except as otherwise indicated, the unit for all amounts in this document is NT$1,000)

I. Company History

II. Date and Procedures of Approval of Financial Statement

III. Application of New and Revised Standards and Interpretations

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

IV. Summary of Major Accounting Policies

(2) Basis of consolidation

1. Subsidiary listed in the Consolidated Financial Statement

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Subsidiary not listed in the Consolidated Financial Statement: none.

(3) Compound financial instruments

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(4) Employee benefits

(5) Income tax

V.

Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

VI. Descriptions for Important Accounting Items

(1) Cash and cash equivalents

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Financial assets measured at FVTOCI

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(3) Notes receivable, accounts receivable and other receivables

(4) Inventory

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(1) Net cash used in acquisition of subsidiaries

(2) Identifiable assets acquired and liabilities assumed

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

2. Acquisition of additional equity interests in subsidiaries

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(6) Subsidiaries with significant non-controlling interests

1. Comprehensive financial information of Lintes Technology Co., Ltd.:

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(7) Property, plant and equipment

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(8) Right-of-use assets

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(9) Investment property

(10) Intangible assets

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

(13) Long-term loans

(14) Bonds payable

Lotes Co., Ltd. and its Subsidiaries’ Notes to the Consolidated Financial Statements (Continued)

1. Lease of land, premises and buildings

2. Other leases

LOTES Interim / Quarterly Report 2021