LUNG MING - Audit Report / Information 2022

LUNG MING GREEN ENERGY TECHNOLOGY ENGINEERING CO., LTD.

(Old Company Name ： TUNG KAI TECHNOLOGY ENGINEERING CO., LTD.) PARENT COMPANY ONLY FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REPORT FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

-----------------------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

Stock Code: 3018

Auditor’s Report

Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.):

Audit opinion

We have audited the individual balance sheet as of December 31, 2022, the individual statement of comprehensive income, changes in equity, and cash flows, and notes to the individual financial statements from January 1 to December 31, 2022 (including a summary of significant accounting policies) of the Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.).

Based on our audits and the audit reports of other independent auditors, the individual financial statements above are all prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms and fairly present the individual financial position of the Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) as of December 31, 2022, and its individual financial performance and consolidated cash flows from January 1 to December 31, 2022 in our opinion.

Basis for the audit opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants. Our responsibilities under these standards will be further explained in the section of the auditor’s responsibilities in the individual financial statements. We are independent of the Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) and have fulfilled other ethical responsibilities in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China. We believe that we have obtained sufficient and appropriate audit evidence to serve as the basis for our audit opinion.

Material uncertainty related to going concern

As stated in Note XII (2) to the individual financial statements, Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) had a net loss of TWD$213,585 from January 1 to December 31, 2022 and the accumulated loss as of December 31, 2022 was TWD$718,565 thousand, which had reached half of the paid-in capital. The Group’s current liabilities exceeded its current assets by TWD$208,651 thousand, the working capital is significantly insufficient. These circumstances indicate that there is material uncertainty that Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) can continue to operate as a going concern. We have not revised our audit opinion for this

reason.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the Company in 2022. These matters were addressed in the context of our audit of the individual financial statements and in our audit opinion as a whole. We do not issue a separate opinion on these matters.

Key audit matters are stated as follows:

I. Assessment of loss from uncollectible accounts receivables Item description

Please refer to Note IV (5) of the individual financial statements for the accounting policy for the assessment of loss from uncollectible accounts receivables; please refer to Note V of the individual financial statements for important accounting estimates and assumptions; please refer to Note VI (3) of the individual financial statements for the descriptions of accounts receivables.

The assessment of the provision for loss from uncollectible accounts receivables is the management’s best estimate for the possible default of the receivables as of the balance sheet date. The estimates is based on the management’s evaluations and predictions on factors such as past events, current standings, and future economics.

The measurement results will directly affect the recognition of the relevant amount. Therefore, we list the estimation of the Company’s loss from uncollectible accounts receivables as the most important audit matter.

Corresponding audit procedures

Our audit procedures for the key audit matters above include (but are not limited to):

Understand and evaluate the Company’s policy for setting aside allowance for uncollectible accounts receivables (including the relevant forward-looking information to overall economic indicators) and assess the reasonableness of the policy.
Accounts receivables are assessed with reference to the probability of overdue credit loss in the past years, and the loss allowance is calculated according to the Company’s policy. We used the ratio of loss in the past years to overdue receivables and the forward-looking information to test and assess the appropriateness of the receivable group classification.
Sampling inspections on the appropriateness of the supporting documents of the management’s case-by-case assessment and the amounts presented.
Compliance checks for the loss allowance set aside in accordance to the Company’s policies
II. Recognition of construction income - Assessment of completion level Item description

Please refer to Note IV (13) of the individual financial statements for the accounting

policies of construction contracts; please refer to Note V of the individual financial statements for the uncertainty of important judgments, accounting estimates and assumptions adopted in the accounting policies of construction contracts; please refer to Note VI (17) of the individual financial statements for related contract assets and contract liabilities.

Construction income and cost of Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) are mainly generated from the construction contracts. When the outcome of the construction contract can be reasonably estimated, it is recognized at the level of completion calculated from the completion percentage method during the construction contract period. The completion level is calculated from the cost incurred for a contract as of the end of the reporting period as a percentage of the total estimated contract cost. The total cost is estimated from the management’s evaluation of various construction costs such as outsourcing, materials and labor, etc.

Since the estimated total cost affects the completion level and the recognition of construction revenue, and the total cost of construction is complex and often involves subjective judgments with a high degree of uncertainty. We list the evaluations for the completion level of the construction contracts as the most important audit matter.

Corresponding audit procedures

Our audit procedures for the key audit matters above include (but are not limited

to):

Evaluate the reasonableness of the internal procedures adopted by the Company for estimating the total cost of construction based on the understanding of its operation and the nature of the industry, including the basis for estimating the total cost of construction contracts of the same nature.
Assess and test the management’s internal control procedures for the recognition of construction revenue based on the completion level, including reviewing the supporting documents for additional constructions in the current period and major construction projects.
Randomly examine the outsourced contracts for the part outsourced, and evaluate the basis and reasonableness of the estimated cost for the part not yet outsourced.
Execute the relevant verification procedures for the statement of construction income at the end of the period, including auditing the number of costs incurred in the current period to appropriate vouchers, and recalculating the construction income to be recognized based on the completion level which shall has been properly booked.
III. Unsettled litigation cases related to environmental protection business Item description

Please refer to Note IV (12) of the individual financial statements for the accounting policy of liability reserve; please refer to Note IX of the individual financial

statements for the description of pending litigations.

As of December 31, 2022, Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) had an estimated liability reserve of TWD$26,832 thousand due to a violation of the Waste Disposal Act. Since the liability reserve involves the management’s judgement of the final settlement of the court. We list the liability reserve assessment for the relevant litigations as the most important audit matter.

Corresponding audit procedures

Our audit procedures for the key audit matters above include (but are not limited to):

Understand the progress of related litigations.
Assess the reasonableness of the management’s provision for liability reserve and judgment in the relevant litigations.
Issue letters to external lawyers to obtain the latest progress of related litigations and judgments on related cases.

Other matters

The 2021 individual financial statements of Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) were audited by other independent auditors who issued an audit report with an unqualified opinion on March 31, 2022, in addition to the material uncertainty regarding the going concern and other significant matters.

For the investments under equity method included in the individual financial statements of 2022, the financial statements of the related affiliated companies, Shuang Jian Optoelectronics Co., Ltd. and Wingo Investment Co., Ltd., were audited by other independent auditors. Thus, the opinions expressed in the individual financial statements for 2022 concerning the portion of the profit or loss recognized on the investment by the equity method of the Company is based on the audit report of other independent auditors. As of December 31, 2022, the investment under the equity method in the said investee was TWD$15,140 thousand, accounting for 1.68% of the total individual assets. From January 1 to December 31, 2022, the share of profit or loss under the equity method were TWD$262 thousand, representing 0.11% of the individual net loss before tax.

The responsibility of the management and the governing body for the individual financial statements

The responsibility of the management is to prepare the properly expressed individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms. The management shall also maintain the necessary internal control system when preparing the individual financial statements for the reports be free from material misstatement due to fraud or error.

In preparing the individual financial statements, management is responsible for assessing the ability of the Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) to continue as a going concern,

disclosing relevant matters, and using the going concern basis of accounting, unless management intends to liquidate the Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) or cease operation, or for which there is no realistic alternative but to liquidate or suspend the business.

The governing body of Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) (including the Audit Committee) is responsible for supervising the financial reporting process.

Auditor’s responsibilities for the audit of the individual financial statements

Our purpose in auditing the individual financial statements is to obtain reasonable assurance on whether the individual financial statements as a whole are free from material misstatement due to fraud or error, and to issue an independent auditor’s report. Reasonable assurance is a high-level assurance but is not a guarantee that an audit conducted in accordance with the Auditing Standards will always detect a material misstatement existing in the individual financial statements. Misstatement may result from fraud or error. The amount of misstatements, either individually or in aggregate, is considered material if it could reasonably be expected to influence the economic decisions of the users of the individual financial statements.

We exercise professional judgment and maintain professional skepticism during audits in accordance with the Auditing Standards. We also perform the following tasks:

Identify and assess the risks of material misstatement of the individual financial statements due to fraud or error; design and execute appropriate countermeasures for the risks assessed; and obtain sufficient and appropriate audit evidence to serve as the basis for the opinion. Because fraud may involve collusion, forgery, intentional omission, misstatement or violation of internal control, the risk of material misstatement resulting from fraud is higher than that resulting from error.
Obtain an understanding of internal control relevant to the audit in order to design appropriate audit procedures under the circumstances. Please note that the purpose is not to express an opinion on the effectiveness of the internal control of Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.).
Assess the appropriateness of the accounting policies adopted by the management, and the reasonableness of the accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of the management’s adoption of the going concern basis of accounting based on the audit evidence obtained, and whether a material uncertainty exists for events or conditions that may cast significant doubt on the ability to continue as a going concern of Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.). If we conclude that a material uncertainty exists, we shall remind users of the individual financial statements to pay attention to relevant disclosures in the individual financial statements in our audit report, or modify our audit opinion when such disclosures are inadequate.

Our conclusion is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may cause Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the individual financial statements (including relevant notes), and whether the individual financial statements adequately present the relevant transactions and events.
Obtain sufficient and appropriate audit evidence for the financial information of the entities within the Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) to express an opinion on the individual financial statements. We are responsible for guiding, supervising, and performing the audit and forming an audit opinion on the individual financial statements.

The matters communicated between us and the governing body include the planned scope and time of the audit, and significant audit findings (including any significant deficiencies of internal control identified during the audit process).

We also provided the governing body with a declaration that we have complied with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we communicated with the governing body about all relationships and matters that may be considered to affect our independence (including related protective measures).

From the matters communicated with the governing body, we determine the matters that were of most significance in the audit of the 2022 individual financial statements of Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.) and are therefore the key audit matters. We have stated these matters in the audit report, unless the law does not prohibit the public disclosure of a specific matter, or in rare circumstances where we decide not to communicate a specific matter in the audit report because we may reasonably expect negative consequences arising from such communication would exceed positive public interest.

CROWN & CO., CPAs

Accountant: Accountant:

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Document number approved by the regulatory authority (79) Tai-Tsai-Cheng (I) Letter No. 00351 FSC Cheng-Zi No. 5793 May 29, 2023

Lung Ming Green Energy Technology Engineering Co., Ltd. (originally Tung Kai Technology Engineering Co., Ltd.) Individual Balance Sheet December 31 of 2021 and 2022

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Unit: NTD thousand
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Assets Amount % Amount % Liabilities and equity Amount % Amount %
Current assets Current liabilities
1100 Cash and cash equivalent (Note 4 and 6) $ 31,967 4 $ 108,519 10 2100 Short-term loans (Note 4, 6, and 8) $ 28,000 3 $ 30,000 3
1110 Financial assets measured at fair values through profit or loss - Current 1,364 - 2,115 - 2120 Financial liabilities at fair value through profit or loss- Current (Note 6) 7,070 1
(Note 4 and 6) 2130 Contract liabilities - Current (Note 6) 79,572 9 83,154 7
1136 Financial assets measured at amortized cost - Current 108,514 12 46,700 4 2150 Notes payable 17,863 2 50,100 4
(Note 6 and 8) 2170 Accounts payable 166,066 18 212,131 18
1140 Contract assets - Current (Note 4 and 6) 89,756 10 178,891 16 2180 Accounts payable – Related parties (Note 7) 18,172 2 41,118 4
1150 Notes receivable - Net (Note 4 and 6) - - 1,479 - 2200 Other payable 24,669 3 32,541 3
1170 Accounts receivable - Net (Note 4 and 6) 207,190 23 291,193 26 2220 Other payables - Related parties (Note 7) 12,247 1 - -
1180 Accounts receivable - Related parties (Note 7) 27,092 3 3,062 - 2250 Liabilities reserve - Current (Note 6) 26,931 3 41,834 4
1200 Other receivables (Note 6) 1,806 - 4,124 - 2280 Lease liabilities (Note 6) 7,535 1 6,651 -
1210 Other receivables - Related parties (Note 7) 6,293 1 9,304 - 2321 Current portion of corporate bond payables (Note 6 and 8) 341,292 38
1220 Current income tax assets (Note 4 and 6) 7 - 40 - 2322 Current portion of long-term loan (Note 6 and 8) - - 10,625 -
1310 Inventories (Note 4 and 6) - - 535 - 2399 Other current liabilities 3,148 - 4,004 -
1410 Prepayments (Note 6) 48,161 5 110,100 9 21XX Total of current liabilities 732,565 81 512,158 43
1478 Guarantee deposits paid 1,764 - 1,764 - Non-current liabilities
11XX Total of Current Assets 523,914 58 757,826 65 2500 Financial liabilities at fair value through profit or loss- Non-current (Note 6) - - 455 -
Non-current assets 2530 Corporate bond payables (Note 6 and 8) - - 336,295 29
1535 Financial assets measured at amortized cost (Note 6 and 8) - - 87,608 8 2540 Long-term loans (Note 6 and 8) - - 15,833 2
1550 Investments accounted using the equity method (Note 4 and 6) 55,324 6 78,191 7 2550 Liabilities reserve - Non-current (Note 6) 21,615 2 1,000 -
1600 Property, plant and equipment (Note 4, 6, and 8) 135,150 15 152,052 13 2580 Lease liabilities (Note 6) 8,546 1 19,310 2
1755 Right-of-use assets (Note 4 and 6) 15,340 2 25,057 2 2640 Net defined benefit liability - Non-current (Note 6) 4,790 1 5,271 -
1780 Intangible assets (Note 4 and 6) 1,152 - 2,316 - 25XX Total of non-current liabilities 34,951 4 378,164 33
1840 Deferred income tax assets (Note 4 and 6) 64,621 7 43,729 4 2XXX Total liabilities 767,516 85 890,322 76
1920 Guarantee deposits paid (Note 8) 19,527 2 12,139 1 Equity (Note 6)
1960 Prepaid investment (Note 7) 84,033 10 2,000 - 3110 Common stock share capital 781,471 87 731,471 63
15XX Total of Non-Current Assets 375,147 42 403,092 35 3200 Additional paid-in capital 69,473 8 44,723 4
3300 Retained earnings
3350 Accumulated deficit (718,565) (80) (505,260) (43)
3400 Other equity (834) - (338) -
3XXX Total equity 131,545 15 270,596 24
1XXX Total assets $ 899,061 100 $ 1,160,918 100 Total liabilities and equity $ 899,061 100 $ 1,160,918 100
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(Please refer to the notes to the individual financial statements)
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Chairman: Manager:
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Chief Accountant
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Lung Ming Green Energy Technology Engineering Co., Ltd. (originally Tung Kai Technology Engineering Co., Ltd.) Parent Company Only Consolidated Income Statement January 1 to December 31 of 2021 and 2022

Unit: NTD thousand

Amount 4000 Net operating income (Note 4, 6, and 7) 985,170 $ 5000 Operating costs (Note 4 and 6) (991,283) 5900 Gross profit (loss) (6,113) 6000 Operating expenses (Note 4, 6, and 7) 6200 Management expense (94,457) 6450 Expected loss from credit impairment (433) 6000 Total operating expenses (94,890) 6900 Net operating profit (loss) (101,003) Non-operating income and expenses (Note 4, 6, and 7) 7010 Other revenue 8,860 7020 Other profits and losses (13,390) 7050 Financial cost (6,643) 7055 Expected loss from credit impairment - 7060 Shareholding in the profit or loss of the affiliated company under the equity method (122,371) 7000 Total of non-operating income and expenses (133,544) 7900 Net income (loss) before tax (234,547) 7950 Income tax benefits (expenses) (Note 4 and 6) 20,962 8200 Net income (loss) (213,585) Other consolidated income/loss 8310 Titles not reclassified into income 8311 Re-measurement of defined benefit plan 350 8336 Unrealized gain (loss) from investments in equity instruments measured at fair value through other consolidated income or loss of the subsidiary under the equity method - 8349 and income taxes related to items not subject to reclassification (70) 8360 Titles potentially reclassified into income subsequently 8361 (496) 8381 Exchange difference in the financial statements of foreign operations of the affiliate company under the equity method - 8300 Other consolidated income (loss) - Net (216) 8500 Total comprehensive income (213,801) $ Loss per share (TWD) 9750 Basic loss per share (2.73) $ 9850 Diluted loss per share (2.73) $ 2022 Exchange difference in the financial statements of foreign oper	% 100 (101) (1) (10) - (10) (11) 1 (1) (1) - (12) (13) (24) 2 (22) - - - - - - (22)	Amount 1,016,187 $ (984,193) 31,994 (110,002) (2,118) (112,120) (80,126) 11,748 (52,378) (6,829) (2,641) (94,627) (144,727) (224,853) (81,125) (305,978) 1,118 (758) (224) (1,650) (5) (1,519) (307,497) $ (4.18) $ (4.18) $ 2021	% 100 (97) 3 (11) - (11) (8) 1 (5) (1) - (9) (14) (22) (8) (30) - - - - - - (30)

(Please refer to the notes to the individual financial statements)

Chairman:

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Manager:

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Chief Accountant

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Lung Ming Green Energy Technology Engineering Co., Ltd. (originally Tung Kai Technology Engineering Co., Ltd.) Parent Company Only Statement of Changes in Shareholders’ Equity January 1 to December 31 of 2021 and 2022

Unit: NTD thousand

Common stock share ca dditional paid-in cap A1 Balance as of January 1, 2021 731,471 $ 3,464 $ C5 Elements of equity recognized upon issuance of convertible corporate bonds - Generated from recognition of equity - 44,723 C11 Additional paid-in capital used to make up loss - (3,464) D1 Net income (loss) - - D3 Other consolidated income (loss) - - D5 Total consolidated income (loss) - - Z1 Balance as on December 31, 2021 731,471 $ 44,723 $ A1 Balance as on January 1, 2022 731,471 $ 44,723 $ D1 Net income (loss) - - D3 Other consolidated income (loss) - - D5 Total consolidated income (loss) - - E1 Capital increase in cash 50,000 24,750 Z1 Balance as on December 31, 2022 781,471 $ 69,473 $	Retained earnings Accumulated deficit (203,640) $ - 3,464 (305,978) 894 (305,084) (505,260) $ (505,260) $ (213,585) 280 (213,305) - (718,565) $	Exchange difference in the financial statements of foreign operations Unrealized gain (loss) of the financial assets measured at fair values through other consolidated income or loss 2,642 $ (567) $ - - - - - - (1,655) (758) (1,655) (758) 987 $ (1,325) $ 987 $ (1,325) $ - - (496) - (496) - - - 491 $ (1,325) $ Other equities	Total equities 533,370 $ 44,723 - (305,978) (1,519) (307,497) 270,596 $ 270,596 $ (213,585) (216) (213,801) 74,750 131,545 $

(Please refer to the notes to the individual financial statements)

Chairman: Manager: Chief Accountant:

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Lung Ming Green Energy Technology Engineering Co., Ltd. (originally Tung Kai Technology Engineering Co., Ltd.) Parent Company Only Statement of Cash Flows January 1 to December 31 of 2021 and 2022

AAAA Cash flow from operating activities: A10000 Net income (loss) before tax A20010 Income/expenses: A20100 Depreciation expense A20200 Amortization expense A20300 Amount of expected loss from credit impairment A20400 Net loss of financial assets and liabilities measured at fair value through profit or loss A20900 Financial cost A21200 Interest income A22300 Shareholding in the profit or loss of the affiliated company under the equity method A22500 Loss (Gain) from the disposal and obsolescence of property, plants and equipment A29900 Loss from inventory write-down A29900 Profit from lease modification A29900 Designated reserve for liabilities A30000 Changes in assets/liabilities related to operating activities - Net A31115 Decrease in financial assets at fair value enforced through profit or loss A31125 Decrease (increase) in contract assets A31130 Decrease (increase) of note receivables A31150 Decrease in accounts receivable A31160 Decrease (increase) of account receivables -related parties A31180 Decrease (increase) in other receivables A31190 Decrease in other receivables - Related parties A31230 Decrease (increase) in prepayments A31990 Construction deposits paid (increase) A32125 Contract liabilities (decrease) A32130 Increase (decrease) in notes payables A32150 Accounts payables (decrease) A32160 Account payables - Related parties (decrease) A32180 Other payable (decrease) A32190 Decrease (increase) of other payables - related parties A32200 Increase (decrease) of provisions for debts A32230 Other current liabilities (decrease) A32240 Net defined benefit liability - Non-current (decrease) A33000 Cash inflow (outflow) from operating activities A33100 Interest received A33200 Dividend received A33300 Interest paid A33500 Income tax refunded AAAA Net cash inflow (outflow) from operating activities BBBB Cash flow from investing activities: B00040 Acquired financial assets measured at amortized cost B01800 Acquisition of investments under the equity method B02000 Increase in prepaid investment B02400 Refunds from decapitalization of the invested company under the equity method B02700 Acquisition of property, plant, and equipment B02800 Disposal of property, plant, and equipment B03700 Increase in guaranteed deposits paid B03800 Decrease in guarantee deposits paid BBBB Net cash inflow (outflow) from investing activities CCCC Cash flow from financing activities: C00200 Decrease in short-term loans C01200 Issuance of corporate bonds C01700 Retirement of long-term loans C03100 Decrease in guarantee deposits received C04020 Lease principal payment C04600 Capital increase in cash CCCC Net cash inflow from financing activities EEEE Current cash and cash equivalents increase (decrease) E00100 Opening balance of cash and cash equivalents E00200 Closing balance of cash and cash equivalents	2022 (234,547) $ 26,309 1,164 433 7,366 6,643 (338) 122,371 - 535 (1,136) 20,801 - 89,135 85,049 - (24,030) 2,318 3,011 61,939 - (3,582) (32,237) (46,065) (22,946) (7,799) 12,247 (15,089) (856) (131) 50,565 338 - (1,719) 33 49,217 25,794 - (182,033) - (124) - (7,388) - (163,751) (2,000) - (26,458) - (8,310) 74,750 37,982 (76,552) 108,519 31,967 $	Unit: NTD thousand 2021 (224,853) $ 31,522 1,355 4,759 1,959 6,829 (343) 94,627 (5) - (98) - 122 (2,541) (1,447) 41,432 1,032 (2,407) 5,325 (78,947) (1,764) (26,927) 26,298 (44,298) (40,667) (3,633) (3) 38,638 (561) (178) (174,774) 36,867 # 350 (5,258) # 38 # (142,777) 28,580 # (3,000) (2,000) 13,000 (2,086) 5 - 3,184 37,683 (68,358) 380,940 (83,117) (15,853) (12,301) - 201,311 96,217 12,302 108,519 $

(Please refer to the notes to the individual financial statements)

Chairman: Manager: Chief Accountant:

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Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.)

Notes to the individual financial statements

2022 and 2021

Unit: TWD thousands (unless otherwise stated)

I. Company history

The Company was established under the original name “Tong Kai Technology Engineering Co., Ltd.” inJanuary 1996. In 1998, the shareholders’ meeting resolved to use May 1, 1998 as the base date for the merger with Yong Sheng Engineering Co., Ltd., with the Company as the surviving company and Yong Sheng Engineering Co., Ltd. as the cessation company. This merger has been approved by the regulatory authority. The name of the Company was changed to Lung Ming Green Energy Technology Engineering Co., Ltd. in June 2022.

The Company is primarily engaged in the integration of mechanical and electrical systems, construction, and waste disposal related to technological plants, industrial plants, and residences. The Company’s shares have been listed on the Taiwan Stock Exchange since August 26, 2002. The place of incorporation and principal place of operation is 3F, No. 602, Mingshui Rd., Zhongshan District, Taipei City.

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

II. The date and procedure for the approval of the financial statements

The financial statements were approved by the Board of Directors on May 29, 2023.

III. Application of new and amended standards and interpretations

(I) First time adoption of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations (IFRIC) and SIC Interpretations (SIC) (hereinafter referred to as “IFRSs”) issued by the Financial Supervisory Commission R.O.C (Taiwan) (hereinafter referred to as “FSC”).
The application of the amendments to the IFRSs endorsed and issued into effect by the FSC will not have a significant impact on the consolidated company’s accounting policies.

(II) FSC-approved, applicable IFRSs in 2023

International Accounting Standards Board (IASB) New/amended/revised standards and Effective Date of interpretations Promulgation Amendments to IAS 1 “Disclosure of Accounting January 1, 2023 (Note 1) Policies” Amendments to IAS 8 “Definition of Accounting January 1, 2023 (Note 2) Estimates” Amendments to IAS 12 “Deferred Income Tax January 1, 2023 (Note 3) Relating to Assets and Liabilities arising from a Single Transaction”

Note 1: This amendment shall apply to the annual reporting periods beginning on or after January 1, 2023.
Note 2: This amendment shall apply to changes in accounting estimates and changes in accounting policies for the annual reporting periods beginning on or after January 1, 2023.
Note 3: Except for the deferred income tax recognized on January 1, 2022 in respect of the temporary difference between leases and decommissioning obligations, the amendment shall apply to the transactions occurred after January 1, 2022.

Up to the publication date of the individual financial statements, the Company continues to evaluate the impact of amendments to other standards and interpretations on the financial position and financial performance, and will disclose relevant impacts when the evaluation is completed.

(III) IFRSs issued by the International Accounting Standards Board (IASB) but not yet endorsed and issued into effect by the FSC

New/amended/revised standards and Effective date published by interpretations IASB (Note 1) Amendments to IFRS 10 and IAS 28 “The Sale To be determined or Investment of Assets between Investors and Their Affiliated Enterprises or Joint Ventures” Amendments to IFRS 16 “Lease Liabilities under January 1, 2024 (Note 2) After-sale Leaseback” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS17 January 1, 2023 Amendments to IFRS 17 “First-time Adoption of January 1, 2023 IFRS 17 and IFRS 9 - Comparative Information” Amendments to IAS 1 “Classification of Liabilities January 1, 2024 as Current or Non-current” Amendments to IAS1 “ Non-current liabilities with January 1, 2024 contractual terms”

Note 1: Unless otherwise specified, the above new/amended/revised standards

and interpretations are effective for annual reporting periods beginning on or after the respective dates.

Note 2: Vendors and lessees should apply the application for the IFRS 16 Amendment retroactively to the after-sale leaseback transactions entered into after the date of first time adoption of IFRS 16.

IV. Summary of significant accounting policies

(I) Compliance Statement The individual financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Firms.
(II) Basis of preparation
Compiled based on historical cost except for financial instruments measured at fair value.

The fair value measurement is divided into Level 1 to Level 3 according to the observability and significance of the relevant input value:

Level 1 input value: refers to the quoted price (unadjusted) of the same asset or liability in an active market that is available on the measurement date.
Level 2 input value: refers to the direct (i.e. price) or indirect (i.e. derived from price) observable input value of the asset or liability in addition to the quotation of Level 1.
Level 3 input value: unobservable inputs for the asset or liability.
(III) Classification criteria for current and non-current assets and liabilities Current assets include:
Assets held mainly for the purpose of trading;
Assets expected to be realized within 12 months after the balance sheet date; and
Cash and cash equivalents (excluding those restricted for use to exchange or settle liabilities for more than 12 months after the balance sheet date).

Current liabilities include:

Liabilities held mainly for the purpose of trading;
Liabilities due and settled within 12 months after the balance sheet date (even if a long-term refinancing or payment rearrangement agreement has been completed after the balance sheet date and before the financial report is approved and published);
and
Liabilities for which the settlement period cannot be unconditionally deferred for at least 12 months after the balance sheet date. The classification of the

liabilities shall not be affected by the fact that the liabilities can be settle with distribution of equity instruments at the option of the counterparty.

Assets or current liabilities that are not classified as above are classified as noncurrent assets or non-current liabilities.

(IV) Cash and cash equivalents

Cash and cash equivalents refer to cash on hand, demand deposits, and shortterm highly liquid time deposits or investments that are readily convertible to a fixed amounts of cash with insignificant risk of changes in value.

(V) Financial instruments

Financial assets and financial liabilities are recognized in the individual balance sheet when the Company becomes a party to the terms and conditions of the financial instrument contract.

When financial assets and financial liabilities are initially recognized, if financial assets or financial liabilities are not measured at fair value through profit or loss, they are measured at fair value plus transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities. Transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss are immediately recognized in profit or loss.

1. Financial assets

All of the Company’s conventional transactions in financial assets are recognized and removed using the transaction date accounting method.

(1) Measurement type
The financial assets held by the Company include financial assets measured at amortized cost and financial assets measured at fair value through other comprehensive income.
A. Financial assets measured at amortized cost
- If the financial assets invested by the Company meet both of the following conditions, they are classified as financial assets measured at amortized cost:
- a. Held under a certain business model, and the purpose of this model is to hold financial assets to collect contractual cash flows; and
- b. The cash flows on a specific date arising from the terms of the contract are entirely for the payment of the principal and interest on the principal amount outstanding.

Financial assets measured at cost after amortization (including cash and cash equivalents, notes receivable measured at cost after amortization, accounts receivable, and other receivables) are determined using the effective interest method after initial recognition

calculating by substracting any impairment loss from the total book value after amortized cost is measured, and any foreign currency exchange gain or loss is recognized in profit or loss.

Except under the following two circumstances, interest income is calculated by multiplying the effective interest rate by the total book value of financial assets:

a. For credit-impaired financial assets purchased or originated, the interest income is calculated by multiplying the credit-adjusted effective interest rate by the amortized cost of the financial assets.
b. For financial assets that are not acquired or originated creditimpaired but subsequently become credit-impaired, interest income is calculated by applying the effective interest rate multiplied by the amortized cost of the financial asset.

Cash equivalents include time deposits and short-term bills that are highly liquid, readily convertible into a fixed amounts of cash with insignificant risk of change in value within three months from the date of acquisition, and are used to satisfy short-term cash commitments.

B. Equity instrument investment measured at fair value through other comprehensive income

The Company may, at the time of initial recognition, make an irrevocable election to designate the investment in equity not held for trading and not recognized by the acquirer in the business acquisition with contingent consideration at the fair value through other comprehensive income.

Investments in equity instruments measured at fair value through other comprehensive income are measured at fair value,

and subsequent changes in fair value are recognized in other comprehensive income and accumulated in other comprehensive income. When the investment is disposed, the accumulated profit or loss is directly transferred to the retained earnings and is not reclassified as profit or loss.

Dividends of investments in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss when the Company’s right to receive dividends is established, unless such dividends clearly represent the recovery of part of the investment cost.

(2) Impairment of financial assets

The Company assesses the impairment loss of financial assets measured at amortized cost (including accounts receivable) based on the expected

credit loss on each balance sheet date.

Accounts receivable are recognized in allowance for loss based on the lifetime expected credit losses. For other financial assets, the first step is to assess whether the credit risk has increased significantly since the original recognition. If there is no significant increase, a loss allowance is recognized at 12-month expected credit losses. If there has been a significant increase, allowance for loss is recognized at the lifetime expected credit losses.

The expected credit loss is the weighted average credit loss with the risk of default as the weight. The 12-month ECLs represent the ECLs arising from possible defaults of a financial instrument within 12 months after the reporting date.

The lifetime ECLs represent the ECLs generated from all possible defaults of a financial instrument during the expected life of a financial instrument.

The impairment loss of all financial assets is recognized by the reduction of the book value of the allowance account. However, the loss allowance of the investment in debt instruments measured at fair value through other comprehensive profit or loss is recognized in other comprehensive profit or loss without reducing the book value.

(3) Removal of financial assets

The Company removes financial assets only when the contractual rights to the cash flows from the financial assets expire, or when the financial assets are transferred and the risk and return of the ownership of the assets have been transferred to another enterprise.

When a financial asset measured at amortized cost is removed in its entirety, the difference between the book value and the consideration received is recognized in profit or loss. When the investment in equity instrument measured at fair value through other comprehensive income is removed in its entirety, the accumulated profit or loss is directly transferred to retained earnings and is not reclassified as profit or loss.

2. Equity instruments

The equity instruments issued by the Company are recognized at the purchase price net of the direct issuance cost.

The repurchase of the Company’s own equity instruments is recognized in and deducted under equity. The purchase, sale, issuance or cancellation of the Company’s own equity instruments is not recognized in profit or loss.

3. Financial liabilities

(1) Subsequent measurement

All financial liabilities are measured at amortized cost in the effective

interest method.

(2) Removal of financial liabilities

When removing financial liabilities, the difference between the book value and the consideration paid (including any transferred non-cash assets or assumed liabilities) is recognized in profit or loss.

(VI) Inventory

Inventories are measured at the lower of cost or net realizable value. The cost includes the acquisition, production or processing costs and other costs incurred to obtain the inventory at the location and state where it is available for use, and is calculated using the weighted average method. Net realizable value is the estimated selling price under normal operations minus the estimated cost of completion and the estimated cost of sale.

(VII) Investment under equity method

The Company adopts the equity method to treat the investment in the subsidiaries and the affiliated enterprises.

Investment in subsidiaries
Subsidiaries are entities (including structured entities) that are controlled by the Company.
Under the equity method, investments in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. In addition, the changes in other equity of the subsidiary shall be recognized based on the shareholding percentage.

When the Company’s ownership interest in a subsidiary does not result in the loss of control, it is treated as an equity transaction. The difference between the book value of the investment and the fair value of the consideration paid or received is recognized as equity.

When the Company’s share of losses in a subsidiary equals or exceeds its equity in said subsidiary (including the book value of investment under the equity method or the net investment portion of other long-term equity of the Company), the Company shall recognize losses based on the shareholding ratio.

The excess of the acquisition cost exceeding the share of the net fair value of the identifiable assets and liabilities of the subsidiary on the acquisition date is recognized as goodwill. The goodwill is included in the book value of the investment and shall not be amortized; the share of the net fair value of the identifiable assets and liabilities of the subsidiary exceeding the acquisition cost is recognized in the current profit and loss.

In assessing impairment, the Company considers the cash-generating unit as a whole in the individual financial statements and compares its recoverable

amount with the book value. If the recoverable amount of the asset increases subsequently, the reversal of the impairment loss shall be recognized as profit. However, the book value of the asset after the reversal of the impairment loss shall not exceed the book value of the asset after amortization while not recognizing the impairment loss. Impairment loss attributable to goodwill shall not to be reversed in subsequent periods.

When the Company loses control over a subsidiary, it shall measure the remaining investment at the former subsidiary at fair value on the date when the control is lost.

The difference between the book value and the fair value on the date when control was lost of the remaining investment and any proceeds from disposal is recognized in the current profit and loss. In addition, all amounts recognized in other comprehensive income related to the subsidiary shall be accounted for on the same basis as that required for the Company to directly dispose of the relevant assets or liabilities.

The unrealized profit or loss of downstream transactions between the Company and its subsidiaries is eliminated in the individual financial statements. The profit or loss generated from the downstream and lateral transactions between the Company and the subsidiary is only recognized in the individual financial statements when not related to the equity of the Company and the subsidiary.

Investment in affiliated enterprises

Affiliated enterprises are those over which the Company has significant influence but is not a subsidiary.

The Company adopts the equity method to treat the investment in the affiliated enterprise. Under the equity method, investments in an affiliated enterprise are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the affiliated enterprise. In addition, the changes in the equity of the affiliated enterprise shall be recognized based on the shareholding percentage.

The excess of the acquisition cost exceeding the share of the net fair value of the identifiable assets and liabilities of the affiliated enterprise on the acquisition date is recognized as goodwill. The goodwill is included in the book value of the investment and shall not be amortized; the share of the net fair value of the identifiable assets and liabilities of the affiliated enterprise exceeding the acquisition cost is recognized in the current profit and loss.

If the Company does not subscribe in proportion to the ownership when the affiliated enterprise issues new shares which results in a change in the ownership percentage, the capital surplus under equity method and the net equity value of enterprises and joint ventures for investments under the equity

method change when the net equity value of the investment increases or decreases, However, if the shareholding ratio is not subscribed or acquired, resulting in a decrease in the ownership of the affiliated enterprise, the amount recognized in other comprehensive income related to the affiliated enterprise shall be reclassified according to the proportion of decrease. The same basis must be followed for the direct disposal of the relevant assets or liabilities; if the aforementioned adjustment should be debited to the capital surplus, and if the balance of the capital surplus generated from the investment by equity method is insufficient, the difference is debited to the retained earnings.

When the Company’s share of losses in an affiliated enterprise equals or exceeds its equity in said affiliated enterprise (including the book value of investment under the equity method or the net investment portion of other long-term equity of the consolidated company), the Company shall stop recognizing further losses. The Company recognizes additional losses and liabilities only to the extent that legal obligations, constructive obligations, or payments on behalf of affiliated enterprises have been incurred.

When assessing impairment, the Company shall consider the entire book value of the investment (including goodwill) as a single asset to compare the recoverable amount with the book value and conduct an impairment test. The recognized impairment loss is also part of the book value of the investment. Any reversal of the impairment loss is recognized to the extent of the subsequent increase in the recoverable amount of the investment.

The Company stops adopting the equity method on the date when the investment ceases to be affiliated, and its retained equity in the original affiliated enterprise is measured at fair value. The difference between the fair value and the proceeds from the disposal and the carrying amount of the investment is recognized in current profit and loss. In addition, all amounts recognized in other comprehensive income related to the affiliated enterprise shall be accounted for on the same basis as that required for the affiliated enterprise to directly dispose of the relevant assets or liabilities.

Gains and losses arising from upstream, downstream, and lateral transactions between the Company and an affiliated enterprise are recognized in the individual financial statements only to the extent that they are not related to the Company’s equity in the affiliated enterprise.

(VIII) Property, plant and equipment

Property, plant and equipment are recognized at cost less accumulated depreciation and accumulated impairment loss.

No depreciation shall be provided for self-owned land.

Property, plant, and equipment are depreciated separately on a straight-line basis over their useful lives.

The consolidated company reviews the estimated useful life, residual value and depreciation method at least at the end of each year, and applies the effects of changes in accounting estimates in a deferred application.

When removing property, plant and equipment, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

Depreciation is accrued using the straight-line method for the assets over the following estimated useful lives:

Land improvement	5 to 20 years
Houses and buildings	3 to 55 years
Machinery and equipment	3 to 10 years
Transportation equipment	3 to 5 years
Office equipment	3 to 5 years
Other equipment	3 to 7 years
Equipment for rent	1 to 5 years

(IX) Lease

The Company assesses whether the contract is (or contains) a lease on the establishment date of the contract.

The Company as the lessor
When the terms of the lease are to transfer almost all the risks and rewards attached to the ownership of the assets to the lessee, it is classified as a financing lease. All other leases are classified as operating leases. Lease payments under operating leases, net of lease incentives, are recognized as income on a straight-line basis over the relevant lease period.
The Company as the lessee
Except for low-value asset leases and short-term leases to which recognition exemptions apply, where lease payments are recognized as expenses on a straight-line basis over the lease period, right-of-use assets and lease liabilities are recognized for all leases on the starting date of the lease. The initial cost of the right-of-use asset (including the initial measurement amount of lease liabilities, lease payments made before the commencement of the lease less lease incentives received, initial direct cost, and the estimated cost of restoring the underlying asset) is measured with subsequent cost less accumulated depreciation and accumulated impairment after the loss, and adjusted to the re-measurement of the lease liabilities. Right-of-use assets are presented on a separate line in the individual balance sheets.

The right-of-use assets are depreciated on a straight-line basis from the lease start date to the expiry date of the lease or the lease term, whichever is earlier. If the ownership of the underlying asset will be acquired at the end of the lease term, or if the cost of the right-of-use asset reflects the exercise of the purchase option, the asset will be depreciated from the start date of the lease to the

expiration of the useful life of the underlying asset.

Lease liabilities are initially calculated based on the lease payments (including fixed payments, fixed payments in effect, lease payments subject to changes in indices or rates, amounts expected to be paid by the lessee under the residual value guarantee, and exercise prices of purchase options that are reasonably believed to be exercised, the lease termination penalty that has been reflected in the lease period is measured at the present value, and the net of lease incentives.) If the interest rate implicit in the lease is easily determined, the lease payment is discounted at the interest rate.

If such interest rate cannot be easily determined, the lessee’s incremental borrowing rate shall be used. Subsequently, lease liabilities are measured at the amortized cost using the effective interest method, and the interest expenses are amortized over the lease term. If there are changes in future lease payments during the lease term, the expected payment amount under the residual value guarantee, the evaluation of the underlying asset purchase option, or the index or rate used to determine the lease payments, the consolidated company will re-measure the lease liabilities and adjust the rightof-use accordingly. However, if the book value of the right-of-use assets has been reduced to zero, the remaining remeasured amount is recognized in profit or loss. Lease liabilities are presented on a separate line in the individual balance sheets.

The rent changes in the lease agreement that are not dependent on the index or the rate are recognized as expenses in the period in which they are incurred.

(X) Intangible assets

An individually acquired intangible asset with finite useful life is measured at initial cost, and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Intangible assets are amortized on a straight-line basis over the useful lives.

The estimated useful life, residual value, and amortization method are reviewed at least at the end of each year, and the effect of changes in applicable accounting estimates is deferred.

The Company’s intangible assets with finite useful lives are amortized on a straightline basis over the following useful lives:

Computer software 5 years

(XI) Impairment of tangible and intangible assets (excluding goodwill)

The Company assesses whether there is any indication that tangible and intangible assets may have been impaired at each balance sheet date. If there is any sign of impairment, the consolidated company estimates the recoverable amount of the asset. If the recoverable amount of an individual asset cannot be estimated, the Company estimates the recoverable amount of the cash-generating unit to which

the asset belongs. If the common assets can be allocated among the cashgenerating units on a reasonable and consistent basis, the assets are allocated to individual cash-generating units; otherwise, they are allocated to the smallest group of cash-generating units that can be allocated on a reasonable and consistent basis. Intangible assets with indefinite useful lives and not yet available for use are tested for impairment at least annually and when there is a sign of impairment.

The recoverable amount is the higher of the fair value less the selling cost and the value in use.

If the recoverable amount of an individual asset or cash-generating unit is less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, and the impairment loss is recognized in profit or loss.

When the impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised recoverable amount, but the increased carrying amount shall not exceed the amount not recognized as impairment if the asset or cash-generating unit was not recognized in prior years in the book value determined at the time of loss (less amortization or depreciation). Reversal of impairment loss is recognized in profit or loss.

(XII) Provision for liabilities

The conditions for the recognition of liability reserves are the present obligations (statutory obligations or constructive obligations) arising from past events. It is very likely that an outflow of resources with economic effects will be required to settle the obligation, and the amount of the obligation can be estimated reliably. When the Company almost certainly expects that some or all of the liability reserves will be advanced, the liabilities will be recognized as separate assets. If the influence of the time value of money is material, the reserve for liabilities shall be discounted at the interest rate before tax that can properly reflect the level assessment of the time value of money and the specific risk of the liability in the market.

Warranty preparation
The warranty obligation under a sales contract is based on the management’s best estimate of the expenditure required to settle the Company’s obligation, and is recognized on the date when the related product is recognized as income.
Onerous contracts
When the expected unavoidable cost of performing a contractual obligation exceeds the expected economic benefit from the contract, the present obligation arising from the onerous contract is recognized as a reserve for liabilities. When assessing whether a contract is onerous, the cost of performing the contract includes the amortization of the incremental cost of performing the contract and other costs directly related to the performing of

the contract.

3. Pending legal proceedings

The Company ‘s provision for liabilities for cases that have been decided by the courts yet to be decided.

(XIII) Recognition of income

After the Company identifies its performance obligations in contracts with customers, it amortizes the transaction price to each performance obligation. Revenue is recognized when each obligation is fulfilled.

Construction revenue
The Company engages in the business of contracting construction projects. Because the assets are controlled by the customer at the time of construction, the income is gradually recognized over time based on the proportion of the construction cost incurred to date. The contract includes fixed and variable consideration. Customers pay a fixed amount according to the agreed schedule. For some changes in the consideration (such as fines calculated based on the number of days past due and price adjustment subsidy), the expected value is estimated based on the accumulated experience in the past. The Company recognizes income only when the accumulated income is highly probable and no significant reversal will occur. The Company has the right to the consideration exchanged for the transfer of goods or services to the customer recognized as contract assets; when the Company has the right to the consideration unconditionally, the contract assets are reclassified into accounts receivable. However, with some contracts, the Company collects part of the consideration from the customer at the time of payment according to the contract, and the Company undertakes the obligation to provide construction projects, which is recognized as contract liabilities.

If it is impossible to reasonably measure the completion level of the performance obligation under the construction contract, the contract income is only recognized within the scope of the expected recoverable cost.

If the situation changes, the estimates on the income, cost and level of completion will be revised, and the resulting increase or decrease will be reflected in profit or loss during the period when the management is aware of the change and makes the revision.

2. Labor service revenue

The labor services provided by the Company are mainly waste treatment, cleaning and transportation services. These services are priced or negotiated separately and are provided based on the waste treatment results. The income is recognized after the fulfillment of the contract performance obligation at a certain point in time. The contractual negotiation price is collected according to the payment period stipulated in the contract.

(XIV) Cost of borrowing

All borrowing costs are recognized in profit or loss in the period in which they are incurred.

(XV) Employee benefits

Short-term employee benefits Short-term employee benefits are measured at the non-discounted amount expected to be paid and stated as expenses when the related services are provided.
Post-employment benefits The pension under defined contribution plan is the amount of pension contribution recognized as expenses during the period of service provided by the employees.
Remuneration to employees, directors, and supervisors
The remuneration to employees, directors and supervisors shall be stated as expenses and liabilities when they have legal or constructive obligations and the amount can be reasonably estimated. Subsequently, if the actual distributed amount resolved is different from the estimated amount, it will be treated as a change in accounting estimate.

(XVI) Income tax

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

1. Current income tax

The additional income tax levied on undistributed earnings in accordance with the Income Tax Act of R.O.C. is recognized as the income tax expense for the year resolved by the shareholders’ meeting.
Deferred income tax Deferred income tax is calculated on the temporary difference generated at the end of the reporting period between the tax bases of assets and liabilities and their book values on the balance sheet.
Deferred income tax liabilities are generally recognized for all taxable temporary differences, while deferred income tax assets are generally recognized for taxable income against the deduction of temporary differences and losses or the purchase of machinery and equipment. The income tax generated is recognized when used.
The taxable temporary difference related to the investment in subsidiaries, affiliated enterprises, and joint agreements shall be recognized as deferred income tax liabilities except in cases where the consolidated company can control the timing of the temporary difference reversal, and the temporary difference will likely not be reversed in the future. The deductible temporary difference related to such investment is recognized as deferred income tax

only if it is probable that there will be sufficient taxable income to realize the temporary difference and it is expected to be reversed in the foreseeable future. The book value of deferred income tax assets is reviewed at each balance sheet date, and the book value is reduced if it is no longer probable that there will be sufficient taxable income to recover all or part of the assets. The assets that were not recognized as deferred income tax assets are also reviewed at each balance sheet date, and the carrying amount is increased when it is probable that taxable income will be generated in the future against which all or part of the assets can be recovered.

Deferred income tax assets and liabilities are measured at the tax rates in the period in which the liabilities are expected to be settled or assets realized, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred income tax liabilities and assets are measured to reflect the tax consequences that would arise from the events in which the Company expects to recover or settle the carrying amounts of its assets and liabilities at the balance sheet date.

Current and deferred income tax
Current and deferred income tax are recognized in profit or loss, except for those related to items that are recognized in other comprehensive income or directly in equity, respectively.

V. Main Sources of Uncertainty in Significant Accounting Judgments, Estimates, and Assumptions

When the Company adopts the accounting policies and the relevant information that is not readily available from other sources, the management must make relevant judgments, estimates and assumptions based on historical experience and other relevant factors. Actual results may differ from these estimates.

The Company incorporates the recent development of COVID-19 in Taiwan and the possible impact on the economic environment into its cash flow estimates, growth rate, profitability, and other relevant major accounting estimates. The management will continue to review the estimates and basic assumptions. If the estimate revision affects only the current period, it shall be recognized in the current period; if the amendment to the accounting estimate affects the current period and future period at the same time, it is recognized in the current period and future period.

(I) Assessment of expected credit impairment loss of accounts receivables

For the expected credit impairment of the Company’s notes and accounts receivable, the allowance for loss for the overdue accounts was made according to the number of days overdue and the loss rate established by considering forward-looking factors such as future economic conditions; when the management concludes that the abnormal financial status or payment situation shows that the payment may not be recovered, the allowance for loss shall be recognized

individually. The loss allowance assessment process involves the assessment and forecast of past events, actual conditions and future overall economic conditions, thus the actual result may differ from the estimate.

(II) Accounting policies for construction contracts

Construction revenue is recognized based on the degree of completion using the percentage of completion method over the contract period. Contract costs are recognized as expenses in the period in which they are incurred. The completion level is calculated based on the contract cost incurred for each contract up to the end of the reporting period as a percentage of the estimated total cost of the contract.

Because the estimated total cost and contract items are based on the evaluation and judgment of the management according to the nature of the project, the expected contract amount, and the materials and labor cost, they may affect the calculation of construction profit and loss.

VI. Description of important accounting items

(I) Cash and cash equivalents

Cash on hand Bank deposits Total (II)Financial products Details are as follows: Financial assets Financial assets at fair value through profit or loss Financial assets measured at amortized cost Current Non-current	December 31, 2022	December 31, 2021
	$1,174 30,793 $31,967 December 31, 2022	$1,336 107,183 $108,519 December 31, 2021
	$1,364	$2,115
	$108,514	$134,308
	$28,470 $81,408	$48,815 $87,608

Please refer to Note VIII for short-term and long-term borrowings and financing facilities as of December 31, 2022 and 2021.

(III) Notes receivable and net accounts receivable (including related parties)

Notes receivable Accounts receivable Accounts receivable - related parties Less: loss allowance Notes and accounts receivable - Net	December 31, 2022	December 31, 2021
	$- 215,188 27,092 (7,998) $234,282	$1,479 299,624 3,062 (8,431) $295,734

The Company adopts the simplified method to estimate the expected credit loss for all notes and accounts receivable, which is measured by the expected credit loss throughout the duration. For this purpose, the notes and accounts receivable are grouped based on credit risk characteristics common to customers’ ability to pay all amounts due in accordance with the contractual terms.

Forward-looking information has been included. The expected credit losses of the Company’s notes and accounts receivable are analyzed as follows:

receivable are grouped based on credit risk characteristics common to customers’ ability to pay all amounts due in accordance with the contractual terms. Forward-looking information has been included. The expected credit losses of the Company’s notes and accounts receivable are analyzed as follows:	receivable are grouped based on credit risk characteristics common to customers’ ability to pay all amounts due in accordance with the contractual terms. Forward-looking information has been included. The expected credit losses of the Company’s notes and accounts receivable are analyzed as follows:	receivable are grouped based on credit risk characteristics common to customers’ ability to pay all amounts due in accordance with the contractual terms. Forward-looking information has been included. The expected credit losses of the Company’s notes and accounts receivable are analyzed as follows:	receivable are grouped based on credit risk characteristics common to customers’ ability to pay all amounts due in accordance with the contractual terms. Forward-looking information has been included. The expected credit losses of the Company’s notes and accounts receivable are analyzed as follows:
December 31,2022 Book value of notes and accounts receivable Weighted average expectation Credit loss rate Duration of Allowance Expected credit loss Not overdue $231,289 0.72% $(1,670) Less than 60 days - -% - Past due by 61 to 90 days - -% - Past due by 91 to 120 days - -% - Past due by 121 to 180 days - -% - Overdue for more than 181 days 10,991 57.57% (6,328) $242,280 $(7,998) December 31,2021 Book value of notes and accounts receivable Weighted average expectation Credit loss rate Duration of Allowance Expected credit loss Not overdue $287,753 0.48% $(1,363) Less than 60 days - -% - Past due by 61 to 90 days - -% - Past due by 91 to 120 days - -% - Past due by 121 to 180 days - -% - Overdue for more than 181 days 16,412 43.07% (7,068) $304,165 $(8,431)
	Book value of notes and accounts receivable	Weighted average expectation Credit loss rate	Duration of Allowance Expected credit loss
		0.48% -% -% -% -% 43.07%	$(1,363) - - - - (7,068) $(8,431)

The statement of changes in the loss allowance of the notes and accounts receivable of the Company in 2022 and 2021 is as follows:

Beginning balance Amount to be allowed in the current period Write-offs in the current period Ending balance	2022 $8,431 433 (866) $7,998	2021
		$11,928 2,118 (5,615) $8,431

The Company ‘s notes and accounts receivable as of December 31, 2022 and 2021, were not used as long-term borrowings and financing lines. Amount of collateral.

(IV) Other receivables (including related parties)

Other receivables Other receivables - related parties Less: loss allowance Other receivables - Net	December 31, 2022 $4,447 6,293 (2,641) $8,099	December 31, 2021
		$6,765 9,304 (2,641) $13,428

The statement of changes in the loss allowance for other receivables of the Company in 2022 and 2021 is as follows:

Beginning balance Amount to be allowed in the current period Ending balance Inventories Materials	2022 $2,641 - $2,641 December 31, 2022 $-	2021
		$- 2,641 $2,641 December 31, 2021 $535

(V) Inventories

(1) As of December 31, 2022 and 2021 , the Company’s inventories were not pledged as collateral.
(2) The inventory impairment losses recognized by the Company in 2022 and 2021 were TWD$535 thousand and TWD$0 thousand, respectively.

(VI) Prepayment

Prepayment
Prepayment for construction Retained tax credit Other prepaid expenses Total	December 31, 2022 $38,039 1,720 8,402 $48,161	December 31, 2021
		$99,656 4,073 6,371 $110,100

(VII) Investment under equity method

Investee companies

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December 31, 2022 December 31, 2021
Shareholding Shareholding
Amount Amount
Name of investee company ratio (%) ratio (%)
Investment in subsidiaries:
Tong Kai Construction Co.,
$18,396 100.00 $32,473 100.00
Ltd.
Tong Chuang Resources
7,137 100.00 7,707 100.00
Technology Co., Ltd.
Ten Sun Technology
9,335 100.00 16,563 100.00
Service Co., Ltd.
Hsin Jung Hsing
Environmental Technology 4,760 100.00 6,030 100.00
Co., Ltd.
Tung Kai Technology
556 100.00 540 100.00
Engineering Co., Ltd.
Subtotal 40,184 63,313
Investment in Affiliated
Enterprises:
Shuang Jian
15,140 30.00 14,878 30.00
Optoelectronics Co., Ltd.
Total $55,324 $78,191
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The Company participated in the cash capital increase by Tong Kai Construction Co., Ltd. in June 2022. Cash capital increase by TWD$100,000 thousand.
The Company participated in the cash capital increase of Tong Chuang Resources Technology Co., Ltd. in December 2021. Cash capital increase by TWD$3,000 thousand.
The refund of share capital from the capital reduction of the Company’s subsidiary, Ten Sun Technology Service Co., Ltd., in 2021 was TWD$13,000 thousand.
The Company’s investment under equity method for the affiliated enterprise, Shuang Jian Optoelectronic Co., Ltd., in 2021 was not recognized in the financial statements audited by the accountant as investment income or loss. However, in the opinion of the management of the Company, the abovementioned situation where the investee company’s financial statements have not been audited by accountants has no material impact.
The Company’s share of income under equity method recognized in 2022 and

2021 and other comprehensive income is as follows:

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Investee company 2022 2021
Tong Kai Construction Co., Ltd. $(114,077) $(80,445)
Tong Chuang Resources
Technology Co., Ltd. (570) (405)
Ten Sun Technology Service Co.,
Ltd. (6,872) (12,535)
Hsin Jung Hsing Environmental
Technology Co., Ltd. (1,270) (1,697)
Tung Kai Technology Engineering
Co., Ltd. 156 (135)
Shuang Jian Optoelectronics Co.,
Ltd. 262 590
Total $(122,371) $(94,627)
Other comprehensive income:
Ten Sun Technology Service Co., $(356) $(2,483)
Ltd.
Tung Kai Technology Engineering (140) 70
Co., Ltd.
Total $(496) $(2,413)
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The Company has not provided any guarantee for the investment under the equity method.

(VIII) Property, plant and equipment

equity method. Property, plant and equipment
Land and land improvements Houses and buildings Machinery and equipment Transportation equipment Office equipment Lease improvement Total	December 31, 2022	December 31, 2021
	$70,136 37,901 19,041 277 1,595 6,200	$70,322 42,636 25,745 641 3,605 9,103
	$135,150	$152,052

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Machinery Transportati
Land and land Houses and and on Office Lease
improvements buildings equipment equipment equipment improvement Total
Cost
Balance as of
January 1, $75,746 $87,259 $76,840 $1,858 $21,196 $4,712 $267,611
2021
Increase －－－－ 284 11,498 11,782
Disposition －－－－ (800) － (800)
Balance as of
December 31, $75,746 $87,259 $76,840 $1,858 $20,680 $16,210 $278,593
2021
Balance as of
January 1, $75,746 $87,259 $76,840 $1,858 $20,680 $16,210 $278,593
2022
Increase －－－－ 28 96 124
Disposition －－－－－－－
Balance as of
December 31, $75,746 $87,259 $76,840 $1,858 $20,708 $16,306 $278,717
2022
Machinery Transportati
Land and land Houses and and on Office Lease
improvements buildings equipment equipment equipment improvement Total
Accumulated
depreciation
Balance as of
January 1, $5,238 $39,341 $42,974 $853 $15,350 $4,251 $108,007
2021
Depreciation 186 5,282 8,121 364 2,525 2,856 19,334
Disposition －－－－ (800) － (800)
Balance as of
December 31, $5,424 $44,623 $51,095 $1,217 $17,075 $7,107 $126,541
2021
Balance as of
January 1, $5,424 $44,623 $51,095 $1,217 $17,075 $7,107 $126,541
2022
Depreciation 186 4,735 6,704 364 2,038 2,999 17,026
Disposition －－－－－－－
Balance as of
December 31, $5,610 $49,358 $57,799 $1,581 $19,113 $10,106 $143,567
2022
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Please refer to Note VIII for the details of the provision of collateral for property, plant and equipment as of December 31, 2022 and 2021.

(IX) Lease agreement

1. Right-of-use assets

(IX)	Lease agreement 1. Right-of-use assets
(X)	December 31, 2022 December 31, 2021 Book value of right-of-use assets Houses and buildings $8,835 $14,484 Transportation equipment 6,505 10,573 Total $15,340 $25,057 2022 2021 Increase in right-of-use assets $`－` $14,799 Lease modification (lease agreement cancellation) $(434) $(6,075) Depreciation expense of right-of- use assets Building $5,649 $6,239 Transportation equipment 3,634 5,949 Total $9,283 $12,188 2. Lease liabilities December 31, 2022 December 31, 2021 Book value of lease liabilities Current $7,535 $6,651 Non-current $8,546 $19,310 December 31, 2022 December 31, 2021 Discount rate of lease liabilities Building 2.10%~2.37% 2.10%~2.37% Transportation equipment 1.85%~2.37% 1.85%~2.37% 3. Other lease information 2022 2021 Expenses of low-value and short- term lease assets $10,167 $6,187 Total cash (outflow) of leases $(18,919) $(19,106) The Company chooses to recognize the exemption for short-term leases and low-value leases and not recognize the relevant right-of-use assets and lease liabilities. Intangible assets December 31, 2022 December 31, 2021 Computer software $1,152 $2,316	December 31, 2021
		$14,484 10,573 $25,057 2021
		$14,799
		$(6,075)
		$6,239 5,949 $12,188 December 31, 2021
		$6,651 $19,310 December 31, 2021
		2.10%~2.37% 1.85%~2.37% 2021
		$2,316

Computer software

	Computer software	Computer software
(XI)	Cost Balance on January 1, 2021 $6,290 Acquired separately `－` Balance on December 31, 2021 $6,290 Balance on January 1, 2022 $6,290 Acquired separately `－` Balance on December 31, 2022 $6,290 Accumulated amortization Balance on January 1, 2021 $2,619 Amortization expense 1,355 Balance on December 31, 2021 $3,974 Balance on January 1, 2022 $3,974 Amortization expense 1,164 Balance on December 31, 2022 $5,138 Loans 1. Short-term loans December 31, 2022 December 31, 2021 Secured loans $28,000 $30,000 Annual interest rate 3.05% 1.85% Please refer to Note VIII for the Company’s assets pledged as collateral for bank loans. 2. Corporate bonds payable December 31, 2022 December 31, 2021 4th domestic secured convertible corporate bond $341,292 $336,295 Less: portion due within one year - - Net amount $341,292 $336,295 (1) Domestic convertible corporate bonds payable December 31, 2022 December 31, 2021 Elements of liabilities: Face value of domestic convertible corporate bonds payable $350,000 $350,000 Discount of domestic convertible corporate bond payable (8,708) (13,705) Subtotal $341,292 $336,295 Less: portion due within one year - - Total $341,292 $336,295 Embedded financial derivatives $7,070 $455 Elements of equity (Note) $44,723 $44,723
		$350,000 (13,705)
		$336,295 -
		$336,295
		$455 $44,723

Note: Based on the conversion option value and recognized as capital surplus
(2) The Company’s 4th issue of secured convertible corporate bonds was resolved by the board of directors on June 21, 2021 and approved by the Financial Supervisory Commission under Jin-Guan-Zheng-Fa No. 1100351776 on August 25, 2021 to issue a three-year 0% guaranteed convertible corporate bond of TWD $350,000 thousand on September 16, 2021.
(3) Conditions of the Company ‘s 4th domestic secured convertible corporate bond:

1100351776 on August 25, 2021 to issue a three-year 0% guaranteed convertible corporate bond of TWD $350,000 thousand on September 16, 2021. (3) Conditions of the Company ‘s 4th domestic secured convertible corporate bond:	1100351776 on August 25, 2021 to issue a three-year 0% guaranteed convertible corporate bond of TWD $350,000 thousand on September 16, 2021. (3) Conditions of the Company ‘s 4th domestic secured convertible corporate bond:
Item 4th domestic secured convertible corporate bond
Date of issuance September 16,2021 to September 16,2024
Total amount issued TWD$350,000 thousand
Unconverted balance TWD$350,000 thousand
Face valueperpiece TWD$100 thousand
Issuanceprice Issued at 110.84% ofpar value
Bond maturity 3years
Coupon rate 0%
Repayment method To be repaid in cash in a lump sum based on the bond face value on the maturitydate
With or withoutguarantee Guaranteed
Guarantee condition	1. Banxin Commercial Bank Co., Ltd. (hereinafter referred to as the “guarantee bank”) is the guarantor for the Company’s convertible corporate bonds. The period of guarantee is from the date the collection of convertible corporate bonds is fully paid until the principal and interest compensation payable for the convertible corporate bonds in accordance with the Regulations are paid off. Capital and other liabilities subordinate to the primary debt (including all amounts that must be paid according to the issuance and conversion regulations when an issuer has the pre- redemption right and exercise of the pre-redemption right). 2. If the holders of the convertible corporate bonds intends to claim payment for the convertible corporate bonds from the guaranteeing bank, they should make a request to the trustee within the guarantee period. The Bank shall make thepayment to the trustee

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Item 4th domestic secured convertible corporate bond
within 14 business days after receiving the request for
payment from the trustee in accordance with the
provisions of these convertible corporate bonds.
3. During the guarantee period, if the Company fails to
repay the principal and interest on time, or breaches
the trust contract signed with the entrusted bank or
the appointment guaranty contract signed with the
guarantor bank, or violates the matters approved by
the regulatory authority, which affect the rights of the
bondholders, the convertible corporate bonds shall be
deemed as fully mature.
4. When the bondholders request the bank to guarantee
the payment of the bonds, the bondholders should
sign the agreement to certify that the creditors’ rights
of the bonds guaranteed by the bank have been fully
refunded. Upon receiving repayment from the Bank,
the bondholder shall no longer request the Bank to
perform the guarantee obligations for the convertible
corporate bonds.
Convertible subject
The Company’s common stock
matter
Withdrawal or 1. From the day following the expiration of 3 months
Terms and Conditions of after the issuance of the convertible corporate bonds
Redemption (December 17, 2021) to 40 days prior to the maturity
date (August 7, 2024), if the outstanding balance of
the convertible corporate bonds reaches 30%
(inclusive) or higher of the conversion price at the
time, the Company may send a 30-day old “Notice of
Bond Call” by registered mail within 30 business days
(the aforesaid period is counted from the date of
issuance by the expiry date shall be the record date
for the call of the bonds, and the aforementioned
period shall not be disclosed to the bondholders
(using the roster of bond holders on the fifth business
day prior to the dispatch date of the “Notice of Bond
Call” Investors who acquire the Convertible Corporate
Bonds subsequently due to trading or other reasons
shall be informed by public announcement). Besides,
the TWSE shall be requested in writing to announce
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Item 4th domestic secured convertible corporate bond
the Company’s exercise of the Company’s
redemption right. Within 5 business days after the
base date, all outstanding convertible corporate
bonds shall be recovered in cash at the bond face
value.
Withdrawal or 1. From the day following the expiration of three months
Terms and Conditions of after the issuance of the convertible corporate bonds
Redemption (December 17, 2021) to 40 days prior to the maturity
date (August 7, 2024), the outstanding balance of the
convertible corporate bonds shall be lower than the
10% of the original total issued amount, the Company
may send a 30-day old “Notice of Bond Call” by
registered mail at any time thereafter (the aforesaid
period is counted from the date of issuance by the
expiry date shall be the record date for the call of the
bonds, and the aforementioned period shall not be
disclosed to the bondholders (using the roster of bond
holders on the fifth business day prior to the dispatch
date of the “Notice of Bond Call” Investors who
acquire the Convertible Corporate Bonds
subsequently due to trading or other reasons shall be
informed by public announcement). Besides, the
TWSE shall be requested in writing to announce the
Company’s exercise of the Company’s redemption
right. Within 5 business days after the base date, all
outstanding convertible corporate bonds shall be
recovered in cash at the bond face value.
2. The business day following the record date of call for
the convertible corporate bonds is the listing date for
the convertible corporate bonds. The deadline for a
bond party to request for conversion is the second
business day after the listing. The Company should
apply to the original trading securities firm for the
conversion of the convertible corporate bonds into the
common shares of the Company no later than one
business day after the date on which the listing of the
convertible corporate bonds is terminated. For the
convertible corporate bonds held, the convertible
corporate bonds shall be recovered in cash within 5
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Item 4th domestic secured convertible corporate bond
business days after the record date for the recovery
of the bonds. In the event that the Taipei Stock
Exchange Market is closed on the aforementioned
date, it will be postponed to the next business day.
Terms of sale The record date for selling back the convertible corporate
bonds to the holders of the convertible bonds shall be the
expiry date when two years have passed since the
convertible corporate bonds were issued. The Company
shall send a copy of “Notice of Exercise of Put Option” to
the bondholders of this convertible corporate bond via
registered mail 30 days prior to the base date of the put
Investors (Subject to the list of bond holders 5 days prior
to the mailing date of the “Notice for the Exercises of Put
Right”, whereas those who acquire the bonds after trading
or for other reasons will be notified by public
announcement.); the bondholders may, within 30 days
after the announcement of the exercise of the put option,
notify the Company’s stock registrar in writing (effective
upon service; postmark will be used as the evidence for
mailers) and request the Company [101.0025% of the
face value (real yield: 0.5%) of the bonds after 2 years or
more] plus the interest compensation, and redeem the
convertible corporate bonds in cash. The Company shall
redeem the convertible corporate bonds in cash within 5
business days after the record date for the sale back upon
acceptance of the request for the sale. In the event that
the Taipei Stock Exchange Market is closed on the
aforementioned date, it will be postponed to the next
business day.
Re-sold ahead of If the regulatory authority approves the delisting of the
schedule Company’s common shares, the bondholders may request
the Company to redeem the bonds at the par value .
Conversion Measures 1. Conversion period: From the day following the
expiration of three months after the issuance of the
convertible corporate bonds (December 19, 2021) to
the maturity date (September 16, 2024), except for
the (1) the book suspension period for common
shares according to laws; (2) the days from the 15
business days prior to the book closure date for the
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Item 4th domestic secured convertible corporate bond
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Item 4th domestic secured convertible corporate bond	Item 4th domestic secured convertible corporate bond
	Company’s stock dividends, book closure date, or cash capital increase until the record date for distribution of rights, or (3) no conversion may be requested from the record date for the capital reduction until the day prior to the trading date for the shares swapped for the capital reduction, or (4) no conversion (purchase) may be requested from the application date of the change of the bond’s face value until the day prior to the trading date, the bond holder may convert the convertible corporate bonds into common stock of the Company by notifying the Taiwan Depository & Clearing Corporation (hereinafter referred to as TDCC) through the original trading securities firm in accordance with Articles 10, 13 and 14 of the Regulations. 2. The method of setting the conversion price: The conversion price of the Company’s convertible corporate bonds is set on August 27, 2021 as the base date for setting the conversion price. The simple arithmetic average of the closing prices of the new convertible corporate bonds shall be selected as the benchmark price, and the benchmark price shall be multiplied by 110% of the conversion premium to calculate the conversion price of the convertible corporate bonds (hereinafter rounded to the nearest TWD). If the conversion price is ex-right or ex- dividend before the base date, the closing price used to calculate the conversion price shall be calculated as the ex-right or ex-dividend price; if the conversion price is ex-right or ex-dividend from the decision to the actual issue date, it shall be adjusted according to the conversion price adjustment formula specified in Item (2) of this Article. Based on the above methods, the conversion price of the corporate bonds at the time of issuance was TWD$19.6 per share. 3. Adjustment of the conversion price: In the event that the conversion price of the Company’s common shares complies with the terms of issuance, the conversionprice shall be adjusted accordingto the

Item
4th domestic secured convertible corporate bond

Company’s stock dividends, book closure date, or
cash capital increase until the record date for
distribution of rights, or (3) no conversion may be
requested from the record date for the capital
reduction until the day prior to the trading date for the
shares swapped for the capital reduction, or (4) no
conversion (purchase) may be requested from the
application date of the change of the bond’s face
value until the day prior to the trading date, the bond
holder may convert the convertible corporate bonds
into common stock of the Company by notifying the
Taiwan Depository & Clearing Corporation
(hereinafter referred to as TDCC) through the original
trading securities firm in accordance with Articles 10,
13 and 14 of the Regulations.
2.
The method of setting the conversion price: The
conversion price of the Company’s convertible
corporate bonds is set on August 27, 2021 as the
base date for setting the conversion price. The simple
arithmetic average of the closing prices of the new
convertible corporate bonds shall be selected as the
benchmark price, and the benchmark price shall be
multiplied by 110% of the conversion premium to
calculate the conversion price of the convertible
corporate bonds (hereinafter rounded to the nearest
TWD). If the conversion price is ex-right or ex-
dividend before the base date, the closing price used
to calculate the conversion price shall be calculated
as the ex-right or ex-dividend price; if the conversion
price is ex-right or ex-dividend from the decision to
the actual issue date, it shall be adjusted according to
the conversion price adjustment formula specified in
Item (2) of this Article. Based on the above methods,
the conversion price of the corporate bonds at the
time of issuance was TWD$19.6 per share.
3.
Adjustment of the conversion price: In the event that
the conversion price of the Company’s common
shares complies with the terms of issuance, the
conversionprice shall be adjusted accordingto the

Item	4th domestic secured convertible corporate bond
	formula specified in the terms of issuance.

(4) The Company has vested options in the corporate bond embedded derivative in accordance with International Accounting Standards No. 32 for the options and the net bond value separately, and the changes in fair value is recognized in profit or loss of financial assets, capital surplus - stock options, and corporate bonds payable. The Company originally recognized the convertible corporate bond equity of TWD$44,723 thousand as capital surplus-stock options, with no recognition in the subsequent changes in fair value.
(5) The 4th secured domestic convertible corporate bond issued by the Company has not been converted.
(6) Pursuant to the Paragraph 3 and Paragraph 13 of Article 7 under the “Guarantee Issuance Memorandum” and Item 3 of Paragraph 1 of Article 7 under the “Credit Agreement and Guarantee” signed by the Company and the corporate bond guaranteeing bank, Banxin Bank Minsheng Branch, 20% of the outstanding corporate bonds of TWD$357,040 thousand in the amount of TWD$71,408 thousand was pledged to the guarantor bank as collateral. The Company pledged with the real properties held in April 2023 to create additional mortgages in full amount and applied to the guarantee bank for changes of credit conditions.
Long-term borrowings

Long-term borrowings
Secured loans Less: portion due within one year Net amount Annual interest rate	December 31, 2022	December 31, 2021
	$- -	$26,458 (10,625)
	$- -	$15,833 1.85%~2.11%

Please refer to Note VIII for the Company’s assets pledged as collateral for bank loans .

(XII) Provision for liabilities

bank loans . Provision for liabilities
Liability reserves - current Liability reserves - non-current Total	December 31, 2022 $26,931 21,615 $48,546	December 31, 2021
		$41,834 1,000 $42,834

Pending legal proceedings Decision preparation $42,734 1,187 (15,089) $28,832	Reserve for onerous contract liabilities	Total
	$- 19,614 -	$42,834 20,801 (15,089)
	$19,614	$48,546
$1,000 41,734 - $42,734	$- - - $-	$4,196 41,834 (3,196) $42,834

(1) Maintenance and warranty

If the Company is still responsible for the warranty after the completion of the major construction, the warranty reserve shall be provided according to the warranty period stipulated in the contract and the possibility of incurring warranty expenses.

(2) Litigation pending

The Company ‘s provision for liabilities for cases that have been decided by the courts yet to be decided.

(3) Others

The waste removal and transportation plan was approved by the Taichung City Government and Miaoli County Government. The liability provision is measured according to the content of the plan.

(4) The reserve for onerous contracts is the present value of the Company’s existing future payment obligations under irrevocable onerous contracts less the difference between the expected incomes from the contracts.

(XIII) Employee benefits

1. Definite contribution plan

The Company adopts a pension plan under the Labor Pension Act (LPA),

which is a government-managed defined contribution plan. Under the Labor Pension Act,

the Company makes monthly contributions to employees’ personal pension accounts at 6% of their monthly salaries.

2. Defined benefit plan

(1) The pension system implemented by the Company in accordance with the “Labor Standards Act” is a defined benefit pension plan managed by the government. Employee pension is paid based on years of service and the average salary of the 6 months prior to the date of approved retirement. The Company appropriates 2% of the total monthly salary of employees as pension, which is deposited in the special account of Bank of Taiwan in the name of the Labor Pension Reserve Supervisory Committee. Employees who are expected to meet the retirement criteria will be allocated the difference in a lump sum before the end of March of the following year. The special account is managed by the Bureau of Labor Funds, Ministry of Labor. The Company has no right to influence the investment management strategy.

(2) The amounts of the defined benefit plan recognized in the balance sheet are as follows:

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Item December 31, 2022 December 31, 2021
Present value of defined
benefit obligation $10,478 $11,048
Fair value of planned
assets (5,688) (5,777)
Net defined benefit
liability $4,790 $5,271
----- End of picture text -----

(3) The Company is exposed to the following risks due to the pension system under the “Labor Standards Act”:
A. Investment risk: The Bureau invests labor pension funds in

domestic (foreign) equity securities, debt securities, and bank deposits on its own use and through commissioned management. However, the Company’s planned assets may be allocated The income is calculated based on the interest rate of 2-year time deposits not lower than the local banks.

B. Interest rate risk: The decrease in the interest rate of [government bonds/corporate bonds] will increase the present

value of the defined benefit obligation; however, the return on debt investment of plan assets will also increase accordingly, and the impact of the two will partially offset the net defined benefit liability.

C. Salary risk:

The calculation of the present value of the defined benefit obligation is based on the future salaries of members under the plan. Therefore, the increase in the salary of the plan members will increase the present value of the defined benefit obligation.

(4) The actuarial calculation of the present value of the Company’s defined benefit obligation was conducted by qualified actuaries. The significant assumptions made on the measurement date are as follows:

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Item December 31, 2022 December 31, 2021
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Item D	ecember 31, 2022 Dec	ember 31, 2021
Discount rate	1.31%	0.70%
Expected salary	2.00%	2.00%
adjustment

(5) If there are reasonably possible changes to the major actuarial assumptions and all other assumptions remain unchanged, the present value of the defined benefit obligation will be increased (decreased) by the following amounts:

the following amounts:
Discount rate Increase by 0.5% Decrease by 0.5% Expected salary adjustment Increase by 0.5% Decrease by 0.5%	2022 $(422) $571 December 31, 2022 $564 $(422)	2021
		$(610) $655 December 31, 2021
		$643 $(606)

Due to the fact that actuarial assumptions may be related to each other, and it is unlikely that only a single assumption will change, the sensitivity analysis above may not reflect the actual changes in the present value of defined benefit obligations.

(6) The expected amount of contribution within the next year is as follows: December 31, 2022 December 31, 2021

Expected contribution amount within 1 year

$184

$205

Average duration of defined benefit obligations 9 years 11 years

(7) The Company in 2022 and 2021 should contribute to the defined contribution pension plan in proportion to the total expenses recognized in the statement of comprehensive income of TWD$ 3,220 thousand and

4,133 thousand, respectively.

(XIV) Income tax

Income tax recognized in profit or loss

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Item 2022 2021
Current income tax
Incurred in the current period $- $-
Deferred income tax
Incurred in the current year (20,892) 81,125
Income tax (gain) expenses
$(20,892) $81,125
recognized in profit or loss
2. Reconciliation of accounting income and income tax expenses
Item 2022 2021
Net (loss) before tax from continuing
operations $(234,547) $(224,853)
Income tax expenses for net profit before
tax calculated at statutory tax rate $- $-
Items to be adjusted in determining the
taxable income - -
Effect of deferred income tax (20,962) 81,125
Income tax (gain) expenses recognized in
profit or loss $(20,962) $81,125
3. Income tax recognized in other comprehensive income
2022 2021
Deferred income tax
Incurred in the current year
Re-measurement of defined benefit
plan $(70) $(224)
4. Current income tax assets
December 31, December 31,
Item
2022 2021
Current income tax assets
Tax refund receivable $7 $40
5. Deferred income tax assets
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Changes in deferred income tax assets are as follows: 2022

2022
Deferred income tax assets Net defined benefit liability Provision for liabilities Loss carryforwards Expected credit impairment loss Losses on inventory valuation and obsolescence Onerous contracts Others Total 2021 Deferred income tax assets Net defined benefit liability Provision for liabilities Loss carryforwards Expected credit impairment loss Losses on inventory valuation and obsolescence Others Total	Beginning balance $1,054 5,167 29,476 2,290 5,261 - 481 $43,729 Beginning balance $1,314 839 115,259 1,684 5,261 721 $125,078	Recognized in profit or loss $(26) 599 16,969 (1,175) 107 3,923 565 $20,962 Recognized in profit or loss $(36) 4,328 (85,783) 606 - (240) $(81,125)	Recognized in other comprehensive income $(70) - - - - - - $(70) Recognized in other comprehensive income $(224) - - - - - $(224)	Ending balance
				$958 5,766 46,445 1,115 5,368 3,923 1,046 $64,621 Ending balance
				$1,054 5,167 29,476 2,290 5,261 481 $43,729

The income tax of the Company has been approved by the tax collection

authority to 2020 with no incidents of material tax administrative relief.

(XV) Equity

Common stock capital

Authorized number of shares

December 31, 2022 384,000	December 31, 2021 384,000

(thousand shares) Authorized capital of shares that have been issued and paid in full shares (thousand shares) Issued capital stock	$3,840,000 $3,840,000 78,147 73,147 $781,471 $731,471

(1) The issued common stock has a par value of TWD$10 per share and is entitled to one voting right and the right to receive dividends.

(2) The total outstanding amount of shares not exceeding 10,000 thousand shares of common shares through private placement was resolved in the Company’s annual general shareholders’ meeting on May 7, 2021 and the board of directors is authorized to issue those shares within one year from the date of the resolution in two terms. The Board of Directors resolved on March 2, 2022 and set March 2, 2022 as the record date for the pricing of the 1st private placement.

The actual price was set at TWD$14.95 per share and 5,000 thousand shares were expected to be issued. On March 16, 2022, the Company received 5,000 thousand shares of stock amounting to TWD$74,750 thousand of capital increase and set March 16, 2022 as the base date, and the change was approved by the regulatory authority on April 11, 2022 .

Additional paid-in capital

2022 . Additional paid-in capital
Common stock premium Stock options-convertible corporate bonds Total	December 31, 2022	December 31, 2021
	$24,750 44,723 $69,473	$- 44,723 $44,723

According to the laws and regulations, the capital reserve shall not be used except to make up for the loss of the company. When there is no loss for the Company, the premiums from the issuance of shares exceeding the par and the additional paid -in capital generated from the shares are paid up every year at a certain percentage. The aforementioned additional paid-in capital may also be paid in cash based on the percentage based on the original shareholding.

Retained earnings and dividend policy
(1) According to the Company’s Articles of Incorporation, annual earnings, if any, shall be distributed in the following order: (1) Allowance as income taxes (2) Make up for losses; (3) Appropriate 10% of the legal reserve; (4) Appropriate or reversal of special reserve; (5) for the remainder, the board of directors is to formulate the earnings distribution proposal and submit it to the shareholders’ meeting. For the distribution of dividends and

bonuses to shareholders in the annual earnings appropriation proposal, the Company may adopt the issuance of new shares and the payment of cash.

The Board could decide the weighting of the two methods based on actual needs.

However, the amount of cash dividends distributed shall not be less than 20% of the total amount of dividends to be distributed to shareholders in the current year. However, if the amount of cash dividends per share to be distributed based on the aforementioned minimum percentage is less than TWD$0.50 per share, the Board of Directors may change the distribution method according to the prevailing circumstances, and the distribution method shall not be subject to the aforementioned restrictions on the minimum cash dividend percentage.

According to the Company Act, the legal reserve shall be appropriated until the amount reaches the total capital. The legal reserve may be used to offset losses. If the Company has no loss, the legal reserve may add up to 25% of the paid-in capital and new shares or cash will be distributed in proportion to the original number of shares held by shareholders. After the adoption of IFRS, pursuant to FSC Letter No. Jin-Guan-Zheng-Fa-Zi No. 1010012865 dated April 6, 2012 the Company adopted the IFRSs for the first time and recognized the unrealized revaluation gains and the transferred the accumulated adjustments (Gain) to retained earnings in accordance with the exemption item under IFRS 1 “First-time adoption of the IFRS”. After the Company has first adopted IFRSs for the preparation of financial statements, the Company shall take the difference between the balance of the special reserve provided when applying the IFRSs and the net amount debited to other equities for the appropriated special reserves in distribution for the distributable earnings. If there is a reversal of the debited balance of other shareholders’ equity subsequently, the reversal shall be done on the partial distributed of earnings.

(2) The Company has resolved the proposal to offset deficits in 2021 and 2020 at the shareholders’ meeting held on June 1, 2022 and May 7, 2021. Information on the Company’s earnings appropriation in previous years is available at the Market Observation Post System.

4. Other equity items

Exchange Unrealized gains or differences on losses on financial the translation assets measured at of the financial fair value through statements of other Total

foreign operations Balance on January 1, 2022 $987 Exchange differences arising from the translation of the financial statements of foreign operations (496) Balance on December 31, 2022 $491	comprehensive income $(1,325) - $(1,325)
		$(338) (496) $(834)

		Exchange	Exchange		Unrealized gains or
	differences on				losses on financial
	the		translation		assets measured at
	of	the financial			fair value through
	statements of				other
			foreign		comprehensive
		operations			income	Total
Balance on January 1,			$2,642		$(567)	$2,075
2021
Exchange differences
arising from the
translation of the financial
statements of foreign
operations			(1,650)		-	(1,650)
Exchange differences on
the translation of the
financial statements of
foreign operations of
affiliated enterprises
recognized under the
equity method			(5)		-	(5)
Unrealized loss of equity
instruments measured at
fair value				-	(758)	(758)
Balance on December 31, 2021			$987		$(1,325)	(338)
(XVI)Loss per share
					2022	2021
Basic loss per share
Net (loss) of the period					$(213,585)	$(305,978)
Basic weighted average loss
per share of common shares
Shares (thousand shares)					78,147	73,147
Basic loss per share (TWD$)					$(2.73)	$(4.18)
The convertible corporate bonds			issued by the Company have an anti-dilutive
effect, so they are not included in			the calculation of the diluted loss per share for
January 1 to December 31, 2022		and 2021.

(XVII) Revenue from contracts with customers

		2022	2021
Construction revenue - Net		$985,170	$1,016,025
Environmental protection income - Net		-	162
Total		$985,170	$1,016,187
1.	The contract revenue is broken down as follows:
		2022	2021
Time of income recognition:
at	a certain point in time	$-	$162
Completion over time		985,170	1,016,025
Total		$985,170	$1,016,187
2.	The contract assets and contract liabilities related to		the revenue from
	construction contracts with customers recognized by the Company are as
	follows:
		December 31,	December 31,
		2022	2021
	Total costs incurred and recognized
	profit	$4,881,966	$2,362,355
	Less: Amount requested for
	construction progress	(4,871,782)	(2,266,618)
	Net contract assets and liabilities in
	progress	$10,184	$95,737
	Reported as:
	Contract assets	$89,756	$178,891
	Contract liabilities	(79,572)	(83,154)
	Total	$10,184	$95,737
3.	Contract balance
		December 31,	December 31,
		2022	2021
	Contract assets
	Construction contract payment	$89,756	$178,891
	Contract liabilities
	Construction contract payment	$79,572	$83,154

(XVIII) Employee remuneration

According to the Company’s Articles of Incorporation, the Company shall allocate 1% - 8% as the remuneration to employees and no more than 5% as the remuneration to directors and supervisors in case of annual profit. However, if there are still accumulated losses, the amount should be reserved in advance to offset the losses. The aforementioned remuneration to employees is paid in shares or in cash. It shall reported to the Board of Directors’ meeting and shall be implemented with the attendance of more than two-thirds of the directors and a resolution passed

by a majority of the directors present.

Due to the unrecovered losses of 2022 and 2021, the Company does not plan to estimate the remuneration to employees and remuneration to directors/supervisors. Related information is available at the Market Observation Post System.

(XIX) Non- operating income and expenses

Other income

Non-operating income and expenses 1. Other income
Interest income Interest on bank deposit Other income Rent income Others Total 2. Other gains and losses Gains from the disposal of property, plant and equipment Gain on lease modification Net gain (loss) on foreign currency exchange Measured at fair value through profit or loss valuation loss of financial assets and liabilities Others Total 3. Financial costs Interest accrued on bank borrowings Interest on lease liabilities Interest on corporate bonds Other interests Total	2022 $338 1,549 6,973 $8,860 2022 $- 1,136 96 (7,366) (7,256) $(13,390) 2022 $1,096 442 4,997 108 $6,643	2021
		$343 1,747 9,658 $11,748 2021
		$5 98 (678) (1,959) (49,844) $(52,378) 2021
		$4,546 618 1,444 221 $6,829

(XX) Financial instruments

Information on fair value - financial instruments not measured at fair value
The consolidated company’s management believes that the financial instruments not measured at fair value and the book value of the financial instruments are close to its fair value or cannot be measured reliably.
Information on fair value - financial instruments measured at fair value on a recurring basis

3.	Fair value hierarchy December 31, 2022 Level 1 Level 2 Level 3 Total Measured at fair value through profit or loss Financial assets: Shares of domestic companies $1,364 $- $- $1,364 Measured at fair value through profit or loss Financial liabilities: Embedded financial derivatives $- $- $7,070 $7,070 December 31, 2021 Level 1 Level 2 Level 3 Total Measured at fair value through profit or loss Financial assets: Shares of domestic companies $2,115 $- $- $2,115 Measured at fair value through profit or loss Financial liabilities: Embedded financial derivatives $- $- $455 $455 There were no transfers between Level 1 and Level 2 fair value measurements in 2022 and 2021. Adjustment of Level 3 fair value measurement of financial instruments 2022 2021 Financial liabilities measured at fair value through comprehensive income-derivatives Beginning balance $455 $- Newly added in the current period 6,615 1,365 Recognized profit or loss - (910) Ending balance $7,070 $455	Fair value hierarchy December 31, 2022 Level 1 Level 2 Level 3 Total Measured at fair value through profit or loss Financial assets: Shares of domestic companies $1,364 $- $- $1,364 Measured at fair value through profit or loss Financial liabilities: Embedded financial derivatives $- $- $7,070 $7,070 December 31, 2021 Level 1 Level 2 Level 3 Total Measured at fair value through profit or loss Financial assets: Shares of domestic companies $2,115 $- $- $2,115 Measured at fair value through profit or loss Financial liabilities: Embedded financial derivatives $- $- $455 $455 There were no transfers between Level 1 and Level 2 fair value measurements in 2022 and 2021. Adjustment of Level 3 fair value measurement of financial instruments 2022 2021 Financial liabilities measured at fair value through comprehensive income-derivatives Beginning balance $455 $- Newly added in the current period 6,615 1,365 Recognized profit or loss - (910) Ending balance $7,070 $455	Total
			$1,364
			$7,070
			Total
			$2,115
			$455
		$- 1,365 (910) $455

4. Types of financial instruments

Types of financial instruments
Financial assets Financial assets measured at fair value through comprehensive income Financial assets measured at amortized cost Financial liabilities Financial liabilities measured at fair value through comprehensive income Financial liabilities measured at amortized cost	December 31, 2022 $1,364 $382,862 $7,070 $624,390	December 31, 2021
		$2,115 $551,989 $455 $754,604

Financial risk management objectives and policies

The Company’s main financial instruments include cash and cash equivalents, investment in equity instruments, notes and accounts receivable, long-term and short-term loans, and corporate bonds payable. The Company is committed to ensuring that the company has sufficient and cost-effective working capital when necessary. The Company carefully manages the exchange rate risk, interest rate risk, credit risk, and liquidity risk related to its operating activities to reduce potential adverse financial impacts of market uncertainties.

The Company’s major financial plans are reviewed by the Board of Directors in accordance with relevant regulations and internal control systems. The finance department of the Company has strictly followed the relevant financial operating procedures regarding the overall financial risk management and division of responsibilities when executing the financial planning.

(1) Market risk

The Company’s market risk is the risk of changes in the fair value or cash flow; market risk mainly includes exchange rate risk, interest rate risk, and other price risks (e.g. such as equity instruments).

In practice, it is rare for a single risk to change independently, and changes of each risk variable are usually correlated. However, the sensitivity analysis of the following risks does not take into account the interaction of related risk variables.

(A) Interest rate risk

The Company borrowed funds at fixed interest rates and floating interest rates, respectively, resulting in interest rate risk. The book value of the Company’s financial liabilities with exposure to the interest rate risk at the balance sheet date is as follows:

Financial liabilities with cash flow interest rate risk Sensitivity analysis	September 30, 2022 $369,292	December 31, 2021 $392,753

The sensitivity analysis below is based on the exposure to the interest rate risk of non-derivative instruments on the balance sheet date. For floating rate liabilities, the analysis is based on the assumption that the amount of the liabilities outstanding on the balance sheet date was outstanding during the reporting period. The rate of change used when the interest rate is reported to the key management internally by the Company is increased by 1% and also represents the management’s assessment of the reasonably possible change in interest rates.

If the interest rate had changed by 1%, with all other variables remaining unchanged, the Company’s net income before tax in 2022 and 2021 would have decreased by TWD $3,693 thousand and TWD $3,928 thousand, respectively.

(B) Exchange rate risk

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

(Unit: foreign currency/TWD$ thousand) December31,2022 December31,2021 Foreign currency Exchange rate TWD Foreign currency Exchange rate TWD $15.63 30.71 $480 $103 27.68 $2,878	(Unit: foreign currency/TWD$ thousand) December31,2022 December31,2021 Foreign currency Exchange rate TWD Foreign currency Exchange rate TWD $15.63 30.71 $480 $103 27.68 $2,878	(Unit: foreign currency/TWD$ thousand) December31,2022 December31,2021 Foreign currency Exchange rate TWD Foreign currency Exchange rate TWD $15.63 30.71 $480 $103 27.68 $2,878	(Unit: foreign currency/TWD$ thousand) December31,2022 December31,2021 Foreign currency Exchange rate TWD Foreign currency Exchange rate TWD $15.63 30.71 $480 $103 27.68 $2,878	(Unit: foreign currency/TWD$ thousand) December31,2022 December31,2021 Foreign currency Exchange rate TWD Foreign currency Exchange rate TWD $15.63 30.71 $480 $103 27.68 $2,878	(Unit: foreign currency/TWD$ thousand) December31,2022 December31,2021 Foreign currency Exchange rate TWD Foreign currency Exchange rate TWD $15.63 30.71 $480 $103 27.68 $2,878
Foreign currency	Exchange rate	TWD	Foreign currency	Exchange rate	TWD
$15.63	30.71	$480	$103	27.68	$2,878

Sensitivity analysis

The exchange rate risk of the Company mainly comes from foreign currency-denominated cash and cash equivalents, accounts receivable, accounts payable, and foreign currency exchange gains and losses arise during the translation. When the New Taiwan dollar depreciated or appreciated 1% against the US dollar on December 31, 2022 and 2021, with all other factors remaining unchanged, the net income for 2022 and 2021 would increase or decrease by TWD$5 thousand and TWD $28 thousand, respectively. The analysis of the two terms is based on the same basis. The foreign currency exchange gain (loss) (including realized and unrealized) was TWD $96 thousand and TWD $(678) thousand in 2022 and 2021.

(2) Credit risk

Credit risk refers to the risk that the counterparty will fail to perform its contractual obligations, resulting in financial losses.

The Company’s credit risk arises from business activities (mainly accounts and notes receivable) and financial activities (mainly bank deposits and various financial instruments).

(A) Operation-related credit risk
The Company is mainly engaged in the contracting of mechanical, electrical and construction projects, and the main business is with public agencies, TWSE/TPEx-listed companies, and general private companies. Due to the characteristics of the industry, the related receivables may concentrate on a single customer. Therefore, the consolidated company must evaluate the customer’s credit risks based on the business scale, financial status, the evaluation from a credit institution, the historical transaction experience, the current economic environment, and the Company’s internal rating standards in order to decide whether to undertake the business. In addition, the consolidated company shall reduce the credit risks through payment collection methods such as prepayment and checks. The Finance Department of the Company manages the credit risk on bank deposits, fixed income securities, and other financial instruments in accordance with the Company’s policies.
(B) Financial credit risk

The Company’s trading counterparts are determined by internal control procedures, which are reputable banks and investmentgrade financial institutions, corporate organizations, and government agencies, with no significant performance doubts. Therefore, there is no significant credit risk.

(3) Liquidity risk

The Company manages and maintains sufficient positions of cash and cash equivalents to pay for operations and reduce effects of changes in cash flows. The management of the Company supervises the utilization of the bank financing facilities and secures the compliance of contract terms of loans.

Liquidity and interest rate risk statement

The following table details the analysis of the Company’s distribution on the remaining contractual maturity of non-derivative financial liabilities with agreed repayment periods.

The table is compiled based on the earliest possible date on which the Company may be required to repay with cash flows in undiscounted financial liabilities.

December 31, 2022 Non-derivative financial liabilities Non-interest-bearing liabilities Floating interest rate instruments Fixed interest rate instruments Lease liabilities Total December 31, 2021 Non-derivative financial liabilities Non-interest-bearing liabilities Floating interest rate instruments Fixed interest rate instruments Lease liabilities Total	Less than 12 months $239,017 28,000 - 7,535 $274,552 Less than 1 year $335,890 40,625 - 6,651 $383,166	1- 3 years $- - 350,000 7,892 $357,892 1 to 2 years $- 15,833 350,000 7,905 $373,738	3 to 5 years
			$- - - 654 $654 More than 2 years
			$- - - 11,405 $11,405

(4) Information about unobservable significant input value at Level 3 of the fair value hierarchy

The investment in equity instrument measured at fair value without a public quotation adopts the asset method. The assets and and the liabilities are used to assess the overall value of the enterprise, and comprehensively evaluate the non-controlling discount and liquidity risk .

December 31, 2022

December 31, 2022
Item Financial liabilities: Measured at fair value through profit or loss - 4th domestic secured convertible corporate bond	Evaluation technology Binomial tree convertible liabilities evaluation model	Unobservable significant input	Relationship between unobservable major input and fair value
		Volatility 49.04%	The higher the volatility, the higher the liquidity discount ratio and the lower the estimated fair value.

December 31, 2021

bond December 31, 2021	evaluation model		ratio and the lower the estimated fair value.
Item Financial liabilities: Measured at fair value through profit or loss - the 4th domestic guarantee convertible corporate bonds	Evaluation technology Binomial tree convertible liabilities evaluation model	Unobservable significant input	Relationship between unobservable major input and fair value
		Volatility: 40.39%	The higher the volatility, the higher the liquidity discount ratio and the lower the estimated fair value.

(5) Level 3 fair value measurement, fair value sensitivity analysis to reasonably possible alternative

The Company’s measurement of the fair value of financial instruments is reasonable; however, the evaluation results may be different when using different evaluation models or parameters. For financial instruments classified as Level 3, if there are changes in the evaluation parameters, the impact on the current profit or loss or other comprehensive profit or loss is as follows:

December 31, 2022 Measured at fair value through profit or loss - 4th domestic secured convertible corporate bond December 31, 2021 Measured at fair value through profit or loss - 4th domestic secured convertible corporate bond	Input value Volatility Volatility	Upward or downward change	Changes in fair value reflected in comprehensive income Favorable change Unfavorable change $170 $(190) $10 $(80)	Changes in fair value reflected in comprehensive income Favorable change Unfavorable change $170 $(190) $10 $(80)
				Unfavorable change
		5% 5%		$(190)
				$(80)

VII. Transactions with related parties

The transactions between the Company and related parties are as follows:

(I) Names of related parties and their relationships

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Name of Related Party Relationship with the Company
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ames of related parties and their relationships Name of Related Party	Relationship with the Company
Tong Kai Construction Co., Ltd. (hereinafter	Subsidiary of the Company
referred to as Tong Kai Construction)
Ten Sun Technology Service Co., Ltd.	Subsidiary of the Company
(hereinafter referred to as Ten Sun Technology)
Hsin Jung Hsing Environmental Technology	Subsidiary of the Company
Co., Ltd. (hereinafter referred to as Hsin Jung
Hsing)
Tong Chuang Resources Technology Co., Ltd.	Subsidiary of the Company
(hereinafter referred to as Tong Chuang
Resources)
Wingo Investment Co., Ltd. (hereinafter	Affiliated enterprise
referred to as Wingo)
Shuang Jian Optoelectronics Co., Ltd.	Affiliated enterprise
(hereinafter referred to as Shuang Jian
Optoelectronics)
Chien-Lung Hsu	Chairman of the Company

(II) Business transactions

Operating cost Subsidiary	December 31, 2022 $36,587	December 31, 2021 $98,914

(III) Accounts receivable/payable

1. Receivables from related parties

(IV)	Subsidiary 2. Other receivables - related parties Subsidiary 3. Accounts payable - related parties Subsidiary 4. Other payables - related parties Subsidiary Other transactions 1. Prepayments for investment Subsidiary	December 31, 2022 $27,092 December 31, 2022 $6,293 December 31, 2022 $18,172 December 31, 2022 $247 December 31, 2022 $84,033	December 31, 2021 $3,062 December 31, 2021 $9,304 December 31, 2021 $41,118 December 31, 2021 $- December 31, 2021 $2,000

Funds prepaid for capital increase in subsidiaries are recognized as investment under the equity method after the record date for capital increase.

Borrowing of funds

Other payables - related parties

Other related party	December 31, 2022 $12,000	December 31, 2021 $-

Loans to related parties to meet financing needs, and no interest was accrued in 2022 and 2021.

3. Non-operating income

Subsidiary	2022 $1,857	2021 $10,805

Endorsements and guarantees
(1) As of December 31, 2022 and 2021, the endorsements and guarantees provided by the subsidiary to the Company for the bank financing and construction contracts were both TWD $362,143 thousand.

(2) As of December 31, 2022 and 2021, the endorsements and guarantees provided by the Company to the subsidiary and affiliated enterprise for the bank financing and construction contracts were TWD $1,456,145

thousand and TWD $1,483,157 thousand, respectively.

(V) Remuneration to key management personnel

Short-term employee benefits Post-employment benefits Total	2022 $17,873 1,168 $19,041	2021
		$23,840 705 $24,545

VIII. Assets pledged as collateral

The following assets have been provided as collateral for bank guarantees, long-term and short-term loan pledges, guarantees for guarantees, construction performance bonds, restricted construction funds, refund of prepayments, corporate bond guarantees, and long-term loan collateral:

	guarantees, and long-term loan collateral:
		December 31,	December 31,
	Item	2022	2021
	Financial assets measured at amortized cost	$108,514	$134,308
	Property, plant and equipment	$108,465	$105,675
IX.	Significant contingent liabilities and unrecognized contractual		commitments

(I) As of December 31, 2022 and 2021, the guaranteed notes payable and bank guarantees issued by the Company are as follows:

Construction performance guarantee Construction warranty Construction advance payment guarantee Total	December 31, 2022 $241,998 57,971 126,367 $426,336	December 31, 2021
		$259,275 61,021 126,368 $446,664

(II) The endorsement and guarantee amount as of December 31, 2022 and 2021 were TWD$1,456,145 thousand and TWD $1,483,157 thousand.

(III) Taiwan’s Taoyuan District Prosecutor’s Office initiated a prosecution, and Securities Investor and Futures Trader Protection Center sent a letter to inform The Company. To protect the interests of the Company and the investors, the Company initiated a criminal and civil lawsuit against former Chairman Geng-Hsing Chan in February 2019 to compensate the Company for the damages. This criminal case was first tried by Taiwan Taoyuan District Court in July 2021. The Taiwan High Court made a verdict on March 20, 2022, which stated that “in violation of Breach of Trust in Paragraph 3 Article 1 under Section 171 of the Securities Exchange Act, GengHsing Chan shall be sentenced to 2 years in prison (Note: the first instance sentenced him to be in prison for 4 years and 6 months), with appeal under discussion with the prosecutors; other civil lawsuit is currently under investigation in Taiwan’s Taoyuan District Prosecutor’s Office.

(IV) A solar power plant development consultancy contract was signed between the

Company and its counterpart, Chien-Heng Lin. Due to a dispute over the payment of consulting labor service, the counterparty, Chien-Heng Lin, filed a civil lawsuit against the Company in August 2019 over the payment of remunerations. The decision was dismissed in November 2020. Chien-Heng Lin did not accept the decision and filed an appeal. The case is currently being heard by Taiwan High Court.

(V) The appointment contracts of the former managers of the Company’s Lottery Affairs Department, including Chuan-Feng Yu, Shih-Chi Huang, and Chi-Ming Tsai, were terminated due to their poor management of Wingo in Cambodia, which resulted in losses. The aforementioned three persons filed a civil lawsuit for the payment of salaries against the Company in September 2019. The Taiwan New Taipei District Court issued the verdict, and the Company should pay the salaries and wages of the aforementioned three persons totaling TWD$6,499 thousand and an amount equal to the amount from January 2020 to the settlement date with interest rate of 5% per annum. Both parties appealed this case. In July 2022, the Taiwan High Court ruled that the Company should pay salaries of TWD$1,069 thousand and shares worth TWD$5,657 thousand to the aforementioned three persons. The Company has appealed to the Supreme Court and proceeded to mediation. The mediation minutes were executed in the Supreme Court on March 31, 2023, in which the Company paid Chuan-Feng Yu TWD$5,672,223, Shih-Chi Huang TWD$1,424,445, and Chi-Ming Tsai TWD$1,402,222.
(VI) The Company had a disagreement with the subcontractor, Yang Hong Technology Engineering Co., Ltd., over the amount of construction payment. Yang Hong Technology Engineering Co., Ltd. requested that the Company should pay TWD$5,270 thousand. The Company concluded that payment conditions for such construction had not been fulfilled and no claim for performance shall be allowed. The whole case has been settled by Yang Hong and Zhong Pang. The Company has paid TWD$5,050 thousand before April 27, 2023, including the check for TWD$525 thousand dated April 19, 2023. The balance of TWD$4,260 thousand was settle in nine installments and from May 20, 2023 with checks to Zhong Pang Construction. The entire case was resolved by the High Court through mediation on April 27, 2023 and the Company has made the payments to Zhong Pang Construction in the aforementioned installments.
(VII) The Company has a disagreement with the subcontractor, Zhong Pang Construction Co., Ltd., over the amount of construction payment. Zhong Pang Construction Co., Ltd. requested that the Company should pay TWD$5,270 thousand. The Company concluded that payment conditions for such construction had not been fulfilled and no claim for performance shall be allowed. The whole case has been settled by Yang Hong and Zhong Pang. The Company has paid TWD$5,050 thousand before April 27, 2023, including the check for TWD$525 thousand dated April 19, 2023. The balance of TWD$4,260 thousand was settle in

nine installments and from May 20, 2023 with checks to Zhong Pang Construction. The entire case was resolved by the High Court through mediation on April 27, 2023 and the Company has made the payments to Zhong Pang Construction in the aforementioned installments.

(VIII) The Company had a disagreement with the subcontractor, Zhong Ying Technology Engineering Co., Ltd., over the amount of the construction payment. Zhong Ying Technology Engineering Co., Ltd. requested that the Company should pay TWD$3,998 thousand. The Company concluded that payment conditions for such construction had not been fulfilled and no claim for performance shall be allowed. Taiwan Taipei District Court entered a judgment (Jian Zi No. 358) for 2020, ruling that the Company should pay TWD$133 thousand. The Company did not accept the decision and filed an appeal. The entire case was settled through mediation by the High Court on May 24, 2022. The Company paid Zhong Ying Technology TWD$141 thousand on June 10, 2022.
(IX) The Company had a dispute with subcontractors, Xin Hong Da Industrial Co., Ltd., Yi Hong Electric Machinery Co., Ltd., Jun Cheng Industrial Co., Ltd., and Meng Da Industrial Co., Ltd., over the construction payment amount. Said company requested that the Company should pay TWD$11,909 thousand. The Company concluded that payment conditions for such construction had not been fulfilled and no claim for performance shall be allowed. Taipei District Court of first instance ruled that TWD$11,909 thousand should be paid by the Company. However, due to the huge amount of omission of consideration in the first judgment, the Company objected the first judgement and filed an appeal, which is currently pending in Taiwan High Court.
(X) The Company was sued by Taiwan Changhua District Attorney’s Office for violating the Waste Disposal Act. Taiwan Changhua District Court made a judgment of 109Zhu-Chong-Su. No. 1. The Company was fined TWD$17,000 thousand with illegal income earned of TWD $40,082 thousand. Interests were accrued on a monthly basis from December 2021 until it is paid off to the state treasury. The Company filed an appeal. The appeal was reviewed by the Taiwan High Court Taichung Branch Court with the verdict to revoke the first judgement, updating the fine to TWD $14,000 with illegal income earned of TWD $36,645. The Company appealed to the Supreme Court on March 22, 2023, and the appeal is pending.
In addition, the Company is responsible for waste disposal under the Waste Disposal Act. The estimated clean-up cost was TWD$363,889 thousand. In addition, the Company received a letter from Taichung City Government requesting the local waste in Taichung to be disposed under a limited period. However, there is a discrepancy between the quantity stated in the letter and the complaint, and the attribution of responsibility and whether it is a resource-based product are inconsistent with the above judgment. Therefore, the Company has filed a complaint with Taichung City Government, but the decision was rejected. The Taichung High Administrative Court has ruled that the lawsuit shall be suspended

pending the conclusion of the criminal case under Appeal Letter No. 991, 2022 by the Taichung High Court. During the suspension of administrative litigation, the Environmental Protection Bureau of Taichung City Government used TWD$141,794 thousand of which, on March 7, 2023, to apply for a claim to the Taoyuan Branch of the Administrative Enforcement Department of the Ministry of Justice, and requested to seize the Guanyin Factory as a real estate property owned by the Company. The Company submitted an request to the Taoyuan Branch of the Administrative Enforcement Department of the Ministry of Justice to postpone the execution (seizure or expense) with the following proposals: (1) to pay in 72 installments; (2) to come up with specific cleaning plan to the Taichung City Environmental Protection Bureau to avoid being forced to perform on behalf of others on March 16, 2023. Based on this, the Taoyuan Branch of the Administrative Enforcement Administration of the Ministry of Justice has revoked the registration of the seizure of the Guanyin Factory owned by the Company. On March 30, 2023, the Company submitted the cleaning plan to the Taichung City Environmental Protection Bureau for approval. The cleaning plan is still under review by the regulatory authority. If the plan is approved by the Environmental Protection Bureau of Taichung City, the Company will not have to pay the fulfillment fee of TWD$363,889 thousand and the clearance fee of TWD$141,794 thousand. The Company may execute the plan according to the approved clearance plan. The estimated disposal cost is TWD$85,076 thousand after the approval.

In summary, the Company has recognized a liability reserve of TWD$26,832 thousand for fines, illegal income, and cleaning costs.

(XI) The Company holds a Class-B waste treatment permit issued by the Taoyuan City Government, and an application was filed for extension before the expiry date of the permit, but no extension has been granted; the Company plans to obtain approval from the Miaoli County Government and Taichung City Government and has submitted the application for extension to the Taoyuan City Government. However, the extension request was denied per Fu-Huan-Shi-Zi No. 1100236571 on September 29, 2021. The Company filed a petition with the Environmental Protection Administration, Executive Yuan on October 29, 2021. After the EPA review, the petition was rejected on March 17, 2022.
(XII) The Company and the sub-contractor, Jyu Guan Engineering Co., Ltd., had a dispute over the retained funds. Jyu Guan Engineering Co., Ltd. believes that the Company should pay unjust earnings of TWD$4,535 thousand. The Company concludes that there is no conflict of interest for the relationship of rights and obligations under the contracts. Therefore, the claim of Jyu Guan Engineering Co., Ltd. is not in conformity with the law. The case has been won by the Company in the first trial at the Taipei District Court, and the second trial is in progress.
(XIII) There was a dispute between the Company, Huan Chang Construction, and Zhong Xing Electric Engineering on the compensation for damages for Liang Fu Insurance. Liang Fu Insurance held that the Company, Huang Chang Construction, and Zhong Xing Electric should jointly bear the cost of TWD$1,260 thousand. The Company, Huang Chang Construction, and Zhong Xing Electric Co., Ltd. believe that there is no causal relationship between the maintenance action and the result, and thus there is no need to bear the liability. The case is currently being tried by the Taipei District Court and was settled through mediation on April 7, 2023. On June 15, 2023, the Company paid TWD$150,000 to Liang Fu Insurance.
(XIV) There was a dispute between the Company and the customer’s branch office of Chunghwa Telecom over the retention money of the Fuzhou Construction Project. Chunghwa Telecom believes that the Company should pay the construction payment of TWD$5,107 thousand. The dispute is currently being tried by the Taipei District Court.

X. Losses from major disasters: None.

XI. Significant subsequent events: None.

(I) In order to improve the financial structure, strengthen the operational structure and the future development of the Company, the Board of Directors resolved on May 25, 2023 to reduce capital to make up losses. The estimated ratio, shares, and amount for the capital reduction is 50%, 39,073,566 shares, and TWD $390,735,660, respectively. The resolution is pending at the shareholders’ meeting on June 30, 2023.
(II) In order to attract and retain outstanding talents, motivate employees to improve their loyalty, and create benefits for the Company and shareholders, the board of directors resolved on May 25, 2023 to issue new shares with restricted employees’ rights. The estimated amount of new shares to be issue is 2,500,000 shares. The resolution is pending at shareholders’ meeting on June 30, 2023.
(III) On May 25, 2023, the Company’s board of directors resolved to proceed with the capital increase from private placement, limited to 24,000,000 shares with the approval from the shareholders’ meeting. The Board of Directors shall conduct the issuance in two terms within one year from the date of the shareholders’ meeting. The resolution is pending at shareholders’ meeting on June 30, 2023.

XII. Others

(I) Employee benefits, depreciation, depletion, and amortization expenses by function are summarized as follows:

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Functional category 2022 2021
Attributable Attributable Attributable Attributable
General Category to operating to operating to operating to operating
costs expenses Total costs expenses Total
Employee welfare
expenses
Salary expenses $35,918 $24,921 $60,839 $50,263 $32,745 $83,008
Labor and health $3,688 $2,985 $6,673 $5,051 $3,164 $8,215
insurance
premiums
Pension expense $1,900 $1,488 $3,388 $2,524 $1,636 $4,160
Remuneration to $- $8,989 $8,989 $- $10,235 $10,235
directors
Other employee $1,581 $1,514 $3,095 $2,106 $1,766 $3,872
benefit expenses
Depreciation expense $12,204 $14,105 $26,309 $17,101 $14,421 $31,522
Amortization expense $33 $1,131 $1,164 $67 $1,288 $1,355
----- End of picture text -----

The Company had 88 employees and 116 employees in 2022 and 2021, respectively.
The number on the Company’s board of directors, who are not also employees, is 8 and 7, respectively.
Companies whose shares are listed on the Stock Exchange or traded on the TPEx should additionally disclose the following information:
A. The average employee benefit expense for this year was TWD $925 thousand. The average employee benefit expense in the previous year was TWD $911 thousand.
B. The average employee salary expense for this year was TWD$761 thousand. The average employee salaries and wages in the previous year was TWD $762 thousand.
C. Average employee salary expense adjustment (0.13)%.
D. The employees’ remuneration policy of the Company is committed to providing employees with a remuneration and welfare above the average. The remuneration to employees includes monthly salaries and remunerations distributed to each employee based on positions, contributions, and performance. The performance evaluation and remuneration of the Company’s directors and managers should be referred to factors such as the normal level of remuneration for the industry, and the time invested, the responsibilities, and the goal

achievements, performance in other positions, salaries and remuneration paid to others of similar positions by the Company in recent years, and the achievements of the Company’s short-term and long-term business goals, the Company’s financial status, etc. The Company will evaluate the performance of employees and business and the reasonableness of related future risks based on the above-mentioned factors.

According to the Company’s Articles of Incorporation, the Company shall allocate 1% - 8% as the remuneration to employees and no more than 5% as the remuneration to directors and supervisors in case of annual profit. However, if there are still accumulated losses, the amount should be reserved in advance to offset the losses. The aforementioned remuneration to employees is paid in shares or in cash. It shall reported to the Board of Directors’ meeting and shall be implemented with the attendance of more than two-thirds of the directors and a resolution passed by a majority of the directors present. Information on the compensation for employees, directors, and supervisors approved by the board of directors is available at the Market Observation Post System of Taiwan Securities Co., Ltd.
The Company had operation losses in 2022 and 2021, and was not necessary to estimate the remuneration to employees, directors, and supervisors. The remuneration to employees and directors is estimated based on the profitability of the current year. The aforementioned amounts are presented under salary expenses. If there are changes to the estimated amount resolved by the board of directors, the profit or loss of the following year is adjusted. If the board of directors resolves to distribute remuneration to employees in shares, the closing price on the day prior to the date of the board meeting shall be used as the basis for the calculation of the number of shares to be distributed.
(II) Significant uncertainties related to continuing operations: The Company’s accumulated deficits to be recovered amounted to TWD$718,565 thousand as of December 31, 2022, which had exceeded half of the Company’s paid-in capital. Changes to the description or construction method resulted in an increase in construction cost and eroded the profitability of the overall construction. At the same time, in order to diversify the development of owners in recent years, the Company has entered residential projects, hospitals and other projects. Due to the lack of experience in cost estimation, some projects have not produced benefits as expected. In addition, the Company’s reinvested subsidiaries did not reach the economic scale and were not able to cover the fixed expenses and personnel expenses, resulting in the Company’s accumulated losses. The Company intends to take the following countermeasures to improve the operating status and financial structure in order to maintain the continuous operation of the company:
Operational strategies and management:
(1) Maintain existing customers: High-tech plants are the niche field of the Company. The existing international customers have long-term cooperative relations with the Company and have a lot of trust in the professionalism and construction quality of the Company. The Company is still the first choice for maintenance and replacement of equipment, which can also contribute stably to the Company’s profits.
(2) Cultivation of public works performance: The Company will use the experience of taking over the Bade Minimum Security Prison to gradually increase the public works performance, to increase the Company’s operating scale, and to bring stability to the Company’s profits.
(3) Optimization of the existing cost evaluation model for construction projects: In the past, losses were incurred due to lack of experience in changing drawings, construction methods, and estimation. The Company has learned from experiences and will increase the number of personnel involved in the evaluation process in the future. In addition to the design department, the Company has also increased the number of engineering, finance, and accounting personnel with relevant practical experience to form an evaluation committee to hold ad hoc meetings and to reduce the financial risk caused by inaccurate estimates.
(4) Adjust the operating structure of existing subsidiaries and consolidate operating entities to create synergies: Some subsidiaries have been losing money for consecutive years and have virtually no profit-making activities. In the future, the Company will consider simplifying the entities within the group based on the group’s development needs, and evaluate possible options such as: merger, dissolution, disposal, etc., to reduce the cost of maintaining compliance.
(5) Integrate resources within the Group to improve operating efficiency and reduce operating costs: In the future, the back-end administrative personnel of the mechanical and electrical engineering and construction engineering businesses within the Group will be consolidated, the existing corporate information system will be integrated, and process improvements will be made to reduce manual operations procedures and manpower. This could reduce the chance of human error, while freeing up manpower for projects and achieving the goal of reducing operating costs.
Financial:
(1) Improve the financial structure through the capital reduction plan, and then enhance the working capital through the private placement of common shares: The Company will evaluate the scale of the capital reduction based on the future profitability and the expected amount of

the private placement and execute the capital reduction to make up for the losses. The Company will also enhance the working capital through the private placement of common shares in the future, expecting to restoring the credit trading standard where the net value per share reaches the par value.

In the special shareholders’ meeting held on July 27, 2022, it was resolved to reduce the paid-in capital by 60% in the amount of TWD$468,883 thousand, and to cancel 46,888 thousand issued shares improve the financial structure, strengthen the operational structure and the future development. The capital reduction has been approved by Taiwan Stock Exchange under Tai-Zheng-1-Zi Letter No. 1111804918 dated October 3, 2022. The plan was revoked due to concern for the procedures of the special shareholders’ meeting and a new application shall be re-submitted once the concern is eliminated. On May 25, 2023, the Company’s board of directors resolved not to proceed with the private placement of common shares for 2022, and the Board of Directors resolved on the same date to reduce capital to make up losses. The estimated ratio, shares, and amount for the capital reduction is 50%, 39,073,566 shares, and TWD $390,735,660, respectively. The resolution is pending at the shareholders’ meeting on June 30, 2023.

In addition, the introduction of business partners that can contribute directly or indirectly to the Company’s future operations is helpful for the Company’s vertical or horizontal industry integration or diversified operations. In order to meet the Company’s long-term development, enhance working capital, and improve financial structure after the Company’s capital reduction, the Company held a special shareholders’ meeting on July 27, 2022 to resolve the issue of private placement of common stock with an aggregate amount limited to 20,000 thousand shares in 2022, and the shares would be granted within one year in two terms from the date of the resolution through the board of directors. On May 25, 2023, the Company’s board of directors resolved not to proceed with the private placement of common shares for 2022, and the Board of Directors resolved on the same date to proceed with the capital increase from private placement of common shares for 2023, limited to 24,000,000 shares with the approval from the shareholders’ meeting. The Board of Directors shall conduct the issuance in two terms within one year from the date of the shareholders’ meeting. The resolution is pending at shareholders’ meeting on June 30, 2023.

(2) The Company plans to use short-term funds to meet its short-term needs and long-term funds (long-term borrowings) to meet its long-term capital

needs.

The Company believes that through the above countermeasures, there is still significant uncertainty in the ability to continue as a going concern; however, the Company’s financial statements are still prepared based on the going concern basis of accounting.

XIII. Other Disclosures in Notes

(I) Information on major transactions

1. Endorsement/guarantee for others

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Endorsement/ Endorsed/guaranteed Percentage of Endorseme
Limit of Maximum Endorsem Endorsement/ Endorsement/
guarantee parties accumulative nt/guarante
endorsements/ endorsement Ending ent/guaran Maximum guarantee guarantee
endorsement and e made to
guarantees /guarantee balance of Actual Amount tee amount of made by made by
No. guarantee amount the Notes
Company Relationship made to a balance in endorsement/ Contributed amount endorsements/ parent subsidiary to
Company name name (Note 1) single the current guarantee secured by in net value in the guarantees company to parent Mainland
most recent China
enterprise period property subsidiary company
financial statements region
Lung Ming Green Tong Kai
Note 2 and
0 Energy Technology Construction 2 $657,724 $1,496,068 $1,384,068 $1,258,296 $- 1052.16% $657,724 Yes No No Note 3
Engineering Co., Ltd. Co., Ltd.
Tong Chuang
Lung Ming Green
Resources Note 2 and
0 Energy Technology Technology 2 $287,166 $27,077 $27,077 $3,808 $- 20.58% $657,724 Yes No No Note 3
Engineering Co., Ltd.
Co., Ltd.
Lung Ming Green Shuang Jian
Note 2 and
0 Energy Technology Optoelectroni 1 $65,772 $45,000 $45,000 $32,380 $- 34.21% $65,772 No No No Note 3
Engineering Co., Ltd. cs Co., Ltd.
----- End of picture text -----

Note 1: There are seven types of the relationship between the endorser and guarantor and the object of the endorsement and guarantee, and it is sufficient to indicate the type:
(1) A business-trading company.
(2) A company which holds, directly and indirectly, more than 50% of its voting shares of another company.
Note 2: The total amount of external endorsements and guarantees provided by the Company and the total amount of endorsements and guarantees provided to external parties and single enterprise are classified into the following categories according to their types:
Financing endorsements and guarantees provided to external parties and the total endorsement and guarantee amount provided to external parties and single corporate entities shall not exceed 200% of the Company’s net value; 2. For the endorsement and guarantee for tariff, the total amount of the endorsement and guarantee for a single enterprise shall not exceed 50% of the company’s net value; 3. For the endorsement and guarantee for contracts, the total endorsement and guarantee

amount provided to a single corporate entity shall be limited to the total cost for the contract and shall not exceed 300% of the Company’s net value; 4. For other endorsements and guarantees, the total amount of external endorsements and guarantees and the total amount of endorsements and guarantees to single enterprise shall not exceed 50% of the Company’s net value. Note 3: The total amount of endorsements and guarantees made by the Company and its subsidiaries as a whole, and the amount of endorsements and guarantees provided by the Company for a single enterprise shall not exceed 10 times the net value of the Company.

Marketable securities held at the end of the period (excluding investments in subsidiaries, affiliated enterprises, and jointly ventures):

					Unit: TWD thousands	Unit: TWD thousands	Unit: TWD thousands	Unit: TWD thousands
Company	Type and name of marketable securities	Relationship with the issuer of securities	Presentation account		at the end of theperiod			Notes
				Shares/Units	Book value	Shareholding ratio	Fair value
Lung Ming Green Energy Technology Engineering Co., Ltd.	Stock-Young Optics Inc.	-	Financial assets measured at fair value through profit or loss - current	18	$1,364	0.02%	$1,364	-

3. Information on invested businesses:

Unit: TWD thousands

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Initial investment amount Held at end of period Investment
End of End of last Number of Percentage Book value income
Name of Location
Name of investee current year shares Gain (loss) recognized
investment of the Main business activities Notes
company period of investees in the
company Company
current
period
Lung Ming Green Tung Kai Technology Engaged in investment in
Energy Engineering Co., Ltd. the design and
Technology construction of the
$39,644 $39,644 The
Engineering Co., mechanical and electrical
SAMOA USD $1,205 (USD $1,205 USD 875,000 100% $556 $156 $156 Company’s
Ltd. systems for clean room
thousand) thousand) Subsidiary
and industrial plant, and
trading of mechanical and
electrical equipment
The
Tong Kai Construction Integrated construction
Taiwan $234,804 $134,804 20,000,000 100% $18,400 $(114,077) $(114,077) Company’s
Co., Ltd. business
Subsidiary
Tong Chuang Self-used Renewable The
Resources Technology Taiwan Energy Power Generation $8,000 $8,000 800,000 100% $7,137 $(570) $(57) Company’s
Co., Ltd. Equipment Subsidiary
The
Ten Sun Technology Wholesale of Toys and
Taiwan $235,500 $235,500 15,550,000 100% $9,334 $(6,872) $(6,872) Company’s
Service Co., Ltd. Entertainment Articles
Subsidiary
Hsin Jung Hsing The
Environmental Taiwan Waste Disposal $14,000 $14,000 1,200,000 100% $4,760 $(1,270) $(1,270) Company’s
Technology Co., Ltd. Subsidiary
The
Shuang Jian Self-used Renewable
Company’s
Optoelectronics Co., Taiwan Energy Power Generation $15,525 $15,525 1,560,000 30% $15,140 $874 $262
Affiliated
Ltd. Equipment
enterprise
----- End of picture text -----

(III) Information on investments in Mainland China: None.

XIV. Departmental Information

Please refer to the consolidated financial statements 2022.

Lung Ming Green Energy Technology Engineering Co., Ltd.

Description of 2022 important accounting items

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(In Thousands of New Taiwan Dollars Unless Stated Otherwise)
Item Number/index
Statement of Assets, Liabilities and Equity
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Item Statement of Assets, Liabilities and Equity	Number/index
Statement of Cash and Cash Equivalents	Schedule 1
Financial assets measured at fair value through profit or loss - current	Schedule 2
Financial assets measured at amortized cost	Schedule 3
Statement of Changes in Investment Under the Equity Method	Schedule 4
Statement of Short-term Borrowings	Schedule 5
Financial liabilities at fair value through profit or loss - non- current	Schedule 6
Corporate bonds payable	Note VI (11)
Statement of Income and Losses
Statement of Operating Income	Note VI (17)
Statement of Operating Costs	Schedule 7
Statement of Operating Expenses	Schedule 8
Statement of Other Income	Note VI (19)
Statement of Other Gains and Losses	Note VI (19)
Summary table of employee benefits, depreciation, and
amortization expenses incurred in the current period by	Note XII (1)
function

Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of Cash and Cash Equivalents

December 31, 2022

Schedule 1 Item Inventory of cash and allowances Bank deposits Demand deposits Check deposits Total	Unit: TWD thousands Summary Amount $1,174 30,600 193 $31,967

Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of financial assets measured at fair value through profit or loss - current

December 31, 2022

Schedule 2 Name of financial instrument Summary Shares Yang Ming Kuang (3504)	Thousand Shares/ Thousand Units 18	Face value $10	Total a mount $180	Interest rate -	Acquisition cost $2,397	Unit: TWD thousands Fair value Changes in fair value attributable to changes in credit risk Unit price Total amount $75.8 $1,364 $-	Unit: TWD thousands Fair value Changes in fair value attributable to changes in credit risk Unit price Total amount $75.8 $1,364 $-
						Unit price $75.8	Total amount $1,364

Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of financial assets measured at amortized cost

December 31, 2022

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Schedule 3 Unit: TWD thousands
Item Summary Amount Notes
Current
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Check deposits Demand deposits Short-term loan guarantees, restricted deposits Time deposit Guarantee deposits Subtotal Non-current Demand deposits Guarantees for corporate bonds Total	$2 8,035 19,069 27,106 81,408 $108,514

Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of Changes in Investment Under the Equity Method

December 31, 2022

Schedule 4

Unit: TWD thousands

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Increase in the current Decrease in the current Net value of Guarantee
Beginning balance period (Note 1) period Increase Ending balance equity or pledge
Shares Shares Shares (decrease) in Accumulated Shares
(thousand (thousand (thousand value under translation (thousand Shareholding
Name shares) Amount shares) Amount shares) Amount equity method adjustment shares) ratio Amount
Tung Kai Technology
USD 875 $540 - $- - $- $156 $(140) USD 875 100% $556 $556 None
Engineering Co., Ltd.
Tong Kai Construction Co., Ltd. 10,000 32,473 10,000 100,000 - - (114,077) - 20,000 100% 18,396 18,396 None
Tong Chuang Resources 800 7,707 - - - - (570) - 800 100% 7,137 7,137 None
Technology Co., Ltd.
Ten Sun Technology Service 15,550 16,563 - - - - (6,872) (356) 15,550 100% 9,335 9,335 None
Co., Ltd.
Hsin Jung Hsing Environmental 1,200 6,030 - - - - (1,270) - 1,200 100% 4,760 4,760 None
Technology Co., Ltd.
Shuang Jian Optoelectronics 1,560 14,878 - - - - 262 - 1,560 30% 15,140 15,140 None
Co., Ltd.
Total $78,191 $100,000 $- $(122,371) $(496) $55,324 $55,324
----- End of picture text -----

Note 1: An increase in investment.

Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of Short-term Borrowings

December 31, 2022

Schedule 5 Unit: TWD thousands

Type of loan Secured loans	Creditors Cooperative Bank	Balance $28,000	Duration of loan July 29, 2022 to July 29, 2023	Pledge or guarantee Demand deposits

Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of financial liabilities at fair value through profit or loss - non-current

December 31, 2022

Schedule 6

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

Schedule 6 Unit: TWD thousands
Increase in the Decrease in the
Beginning balance current period current period Ending balance
Position Book Number Number Position Guarantee
Name amount value of shares Amount of shares Amount amount Book value or pledge
Domestic
convertible 4 $(455) - $(6,615) - $- 4 $(7,070) None
corporate bond
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Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of Operating Costs

December 31, 2022

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

Schedule 7 Unit: TWD thousands
Item Summary Amount Notes
----- End of picture text -----

Construction cost Materials for construction in progress Contracted construction in progress Expenses for construction in progress Subtotal Add: construction cost adjustment (including deficient losses) Inventory valuation losses Subtotal Other operating costs Cost of environmental protection services Total	$104,940 784,834 64,896 954,670 16,856 535 17,391 19,222 $991,283

Lung Ming Green Energy Technology Engineering Co., Ltd.

Statement of Operating Expenses

December 31, 2022

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

Schedule 8 Unit: TWD thousands
Item Summary Amount Notes
Administrative expenses
Remuneration and bonus $39,393
Others (Note) 55,064
Subtotal 94,457
Expected credit impairment
433
loss
Total $94,890
----- End of picture text -----

Note: The balance of each item did not exceed 5% of the balance of the account.

AI assistant

LUNG MING — Audit Report / Information 2022

52252_rns_2022-08-15_f68fae3c-2501-40b2-8a6c-919512ec9dba.pdf

Auditor’s Report

Audit opinion

Basis for the audit opinion

Material uncertainty related to going concern

Key audit matters

Corresponding audit procedures

Corresponding audit procedures

Corresponding audit procedures

Other matters

The responsibility of the management and the governing body for the individual financial statements

Auditor’s responsibilities for the audit of the individual financial statements

Lung Ming Green Energy Technology Engineering Co., Ltd. (formerly Tong Kai Technology Engineering Co., Ltd.)

Notes to the individual financial statements

I. Company history

II. The date and procedure for the approval of the financial statements

III. Application of new and amended standards and interpretations

IV. Summary of significant accounting policies

(IV) Cash and cash equivalents

1. Financial assets

2. Equity instruments

3. Financial liabilities

(2) Removal of financial liabilities

(VI) Inventory

(VII) Investment under equity method

(VIII) Property, plant and equipment

(IX) Lease

(XI) Impairment of tangible and intangible assets (excluding goodwill)

3. Pending legal proceedings

(XIII) Recognition of income

2. Labor service revenue

(XIV) Cost of borrowing

(XV) Employee benefits

(XVI) Income tax

1. Current income tax

V. Main Sources of Uncertainty in Significant Accounting Judgments, Estimates, and Assumptions

(I) Assessment of expected credit impairment loss of accounts receivables

(II) Accounting policies for construction contracts

VI. Description of important accounting items

(I) Cash and cash equivalents

(IV) Other receivables (including related parties)

(V) Inventories

(VI) Prepayment

(VII) Investment under equity method

(VIII) Property, plant and equipment

(IX) Lease agreement

1. Right-of-use assets

Computer software

(XII) Provision for liabilities

(XIII) Employee benefits

1. Definite contribution plan

2. Defined benefit plan

(XIV) Income tax

(XV) Equity

4. Other equity items

(XVII) Revenue from contracts with customers

(XVIII) Employee remuneration

by a majority of the directors present.

(XIX) Non- operating income and expenses

(XX) Financial instruments

4. Types of financial instruments

Sensitivity analysis

Liquidity and interest rate risk statement

December 31, 2021

VII. Transactions with related parties

(II) Business transactions

(III) Accounts receivable/payable

1. Receivables from related parties

3. Non-operating income

VIII. Assets pledged as collateral

X. Losses from major disasters: None.

XI. Significant subsequent events: None.

XII. Others

needs.

XIII. Other Disclosures in Notes

1. Endorsement/guarantee for others

3. Information on invested businesses:

XIV. Departmental Information

LUNG MING Audit Report / Information 2022