MACHVISION — Interim / Quarterly Report 2021

Dec 6, 2021

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Stock Code:3563

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Three Months Ended March 31, 2021 and 2020

Address: No. 2-3, Gongye East 2nd Road, Hsinchu Science Park, Hsinchu 30075, Taiwan, R.O.C Telephone: (03)563-8599

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Review Report 4. Consolidated Balance Sheets 5. Consolidated Statements of Comprehensive Income 6. Consolidated Statements of Changes in Equity 7. Consolidated Statements of Cash Flows 8. Notes to the Consolidated Financial Statements (1) History and organization (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses due to major disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in China (d) Information of major shareholders (14) Segment information

Page

1 2 3 4 5 6 7 8 8 8～9 9～11 11 11～32 33 33 33 33 33 33～34 34～35 35～36 36 37 37

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Independent Auditors’ Review Report

To the Board of Directors of Machvision Inc. Co., Ltd.:

Introduction

We have reviewed the accompanying consolidated balance sheets of Machvision Inc. Co., Ltd. and its subsidiaries as of March 31, 2021 and 2020, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2021 and 2020, and notes to the consolidated financial statements(including a summary of significant accounting policies). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission, R.O.C.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, the review is conducted in accordance with Statement of Auditing Standard 65, "Review of Financial Information Performed by the Independent Auditor of the Entity". A review of the consolidated financial statements consists of making inquiries(primarily of persons responsible for financial and accounting matters), and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Therefore, we do not express an audit opinion.

Basis for Qualified Conclusion

As mentioned in note 4 (b) of the consolidated financial report, the inclusion of non-significant subsidiaries of the consolidated financial reports is based on the financial reports that the invested companies have asked in the same period without the approval of the accountants for the capital of March 31, 2021 and 2020; the total amount of assets was $568,722 thousand and $679,382 thousand respectively, accounting for 14% and 20% of the total consolidated assets respectively; the total liabilities were $62,433 thousand and $ 92,147 thousand respectively, accounting for 4% and 6% of the total consolidated liabilities respectively; the consolidated profits and losses between January 1 to March 31, 2021 and 2020 were $(23,727) thousand and $(5,816) thousand respectively, accounting fo (11)% and (3)% of the consolidated profit and loss.

Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and equity accounted investee companies described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our review report, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Machvision Inc. Co., Ltd. and its subsidiaries as of March 31, 2021 and 2020, and of its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2021 and 2020 in line with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, "Interim Financial Reporting", as endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

KPMG

Taipei, Taiwan (Republic of China) May 4, 2021

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of March 30, 2021 and 2020 MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2021 December 31, 2020 and March 31, 2020

(Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity Current liabilities: 2130 Current contract liabilities (note 6(p)) 2150 Notes payable 2170 Accounts payable 2209 Other payables (note 6(q)) 2216 Dividend payable (note 6(n)) 2230 Current tax liabilities 2250 Provisions (note 6(j)) 2280 Lease Liabilities (note 6(i)) 2313 Deferred revenue (note 6(k)) 2322 Current portion of long-term borrowings (note 6(k)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2540 Long-term borrowings (note 6(k)) 2580 Lease liabilities – Non-current (note 6(i)) 2630 Long-term deferred revenue (note 6(k)) 2640 Net defined benefit liabilities – Non-current Total non-current liabilities Totalliabilities Equity attributable to shareholders of the Company (note 6(n) and 12): 3100 Share capital Capital surplus: 3211 Capital surplus - additional paid-in capital arisingfrom ordinary share 3235 Capital surplus - Number of changes in recognition of ownership rights and interests of subsidiaries 3280 Capital surplus, Others Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest: 3410 Exchange differences on translation of foreign financial statements Equity attributable to the parent Company 36xx Non-controlling interests Total Equity Total liabilities and equity	March 31, 2021	December	December	December	March 31, 2020	March 31, 2020
	Amount %	Amount % 31,885 1 216 - 245,897 7 319,164 9 - - 171,660 5 13,442 - 12,039 - 1,038 - 16,875 - 9,682 - 821,898 22 199,535 5 66,286 2 2,552 - 11,286 - 279,659 7 1,101,557 29 447,282 12 568,285 15 4 - 23 - 568,312 15 438,263 12 3,791 - 1,064,573 29 1,506,627 41 (3,514) - 2,518,707 68 89,023 3 2,607,730 71 3,709,287 100	%		Amount	%
	$ 20,537 1 1,115 - 293,116 7 318,960 8 402,554 10 222,262 6 14,502 - 10,973 - 1,074 - 22,500 1 7,508 - 1,315,101 33 194,247 5 63,933 2 2,179 - 11,286 - 271,645 7 1,586,746 40 447,282 11 165,731 4 4 - 28 - 165,763 4 438,263 11 3,791 - 1,279,611 32 1,721,665 43 (3,705) - 2,331,005 58 87,109 2 2,418,114 60 $ 4,004,860 100				33,167 724 302,345 416,441 447,282 88,508 13,436 11,667 940 - 12,190 1,326,700 195,986 90,307 3,074 10,429 299,796 1,626,496 426,082 59,485 4 23 59,512 309,915 2,957 894,470 1,207,342 (5,286) 1,687,650 110,469 1,798,119 3,424,615	1 - 9 13 13 3 - - - - - 39 6 3 - - 9 48 12 2 - - 2 9 - 26 35 - 49 3 52 100

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1151 Notes receivable (note 6(b) and (p)) 1170 Accounts receivable, net (note 6(b) and (p)) 1200 Other receivables (note 6(d)) 130x Inventories (note 6(c)) 1410 Prepayments 1479 Other current assets Total current assets Non-current assets: 1510 Financial assets at fair value through profit or loss—non current (note 6(e)) 1600 Property, plant and equipment (note 6(f)) 1755 Right-of-use assets (note 6(g)) 1780 Intangible assets(note (h)) 1840 Deferred income tax assets 1920 Refundable deposits 1932 Long-term receivables (note 6(b) and (p)) 1995 Other non-current assets (note (h)) Total non-current assets	March 31, 2021	March 31, 2021		December 31, 2020	December 31, 2020		March 31, 2020	March 31, 2020
	Amount $ 1,727,919 19,347 1,258,349 - 384,762 9,035 10,325 3,409,737 10,744 267,381 73,428 55 57,564 11,620 157,991 16,340 595,123	%		Amount 1,616,607 15,284 1,110,321 - 363,424 7,243 10,524 3,123,403 10,744 271,280 77,013 83 57,564 11,872 141,032 16,296 585,884	%		Amount 1,058,295 19,168 1,284,647 28,096 365,169 22,183 11,183 2,788,741 9,644 264,403 100,568 8,870 37,460 14,576 192,951 7,402 635,874	%
		43 1 31 - 10 - - 85 - 7 2 - 2 - 4 - 15			44 - 30 - 10 - - 84 - 7 2 - 2 1 4 - 16			31 1 37 1 11 1 - 82 - 8 3 - 1 - 6 - 18

Total assets $ 4,004,860 100 3,709,287 100 3,424,615 100

Chairman: Wang Guang Shiah

Manager: Chen Fu Sheng Accounting Officer: Wen Pei Chun

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

4000 Operating revenue (notes 6(p)) 5000 Operating costs (notes 6(c), (f), (g), (i), (l), (q) and 7) 5900 Gross profit from operations 6000 Operating expenses (notes 6(b), (f), (g), (i), (l), (q) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit impairment loss Total operating expenses Net operating income 7000 Non-operating income and expenses (note 6(d), (i) and (r)): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Financial costs Total non-operating income and expenses Pre-tax net profit of continued operations 7950 Less: Income tax expenses (note 6(m)) Profit for the period 8300 Other comprehensive income: 8360 Items that may be subsequently reclassified into profit or loss 8361 Exchange Differences on Translation of Foreign Financial Statements 8399 Less: Income tax related to items that may be reclassified Total of items that may be subsequently reclassified into profit or loss 8300 Other comprehensive income for the period, net of tax Total comprehensive income for the period Profit attributable to: 8610 Owners of the parent company 8620 Non-controlling interests Comprehensive income attributable to: 8710 Owners of the parent company 8720 Non-controlling interests 9750 Earnings per share(note 6(o)): 9710 Basic earnings per share (Unit: New Taiwan dollars) 9810 Diluted earnings per share (Unit: New Taiwan dollars)	.	For the three	For the three	For the three	For the three	For the three	For the three	For the three
		. 2021		.	**- **		2020
				%			Amount 686,231 241,506 444,725 75,927 29,473 47,701 13,766 166,867 277,858 823 254 4,755 (348) 5,484 283,342 55,672 227,670 (739) - (739) (739) 226,931 225,775 1,895 227,670 225,032 1,899 226,931
				100 37
	436,594			63
	63,036 27,424 77,106 875			9 4 11 -
	168,441			24
	268,153			39				41
	581 881 (3,630) (814)			- - (1) -				- - - -
	(2,982)			(1)				-
	265,171 52,049			38 7				41 8
	213,122			31				33
	(189) -			- -				- -
	(189)			-				-
	(189)			-				-
	$ 212,933			31				33
	$ 215,038 (1,916)			31 -				33 -
	$ 213,122			31				33
	$ 214,847 (1,914)			31 -				33 -
	$ 212,933			31				33
	$		4.81 4.79					5.30 5.27
	$

Chairman: Wang Guang Shiah Manager: Chen Fu Sheng Accounting Officer: Wen Pei Chun

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the three months ended March 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2020 Appropriation and distribution of retained earnings: Cash dividends of Common Stock Profit for the period Other comprehensive income for the period Total comprehensive income for the period Disposal of subsidiaries Changes in non-controlling interests Balance at March 31, 2020 Balance at January 1, 2021 Cash dividends by Capital surplus Other changes in capital surplus Profit for the period Other comprehensive income for the period Total comprehensive income for the period Balance at March 31, 2021			Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent				Non-controlling interests 132,918 - 1,895 4 1,899 (29,521) 5,173 110,469 89,023 - - (1,916) 2 (1,914) 87,109	Total equity 2,042,818 (447,282) 227,670 (739) 226,931 (29,521) 5,173 1,798,119 2,607,730 (402,554) 5 213,122 (189) 212,933 2,418,114
	Ordinary shares	Capital surplus 59,512 - - -		Retained earnings			Total other equity interest Exchange differences on translation of foreign financial statements (4,543) - - (743) (743) - - (5,286) (3,514) - - - (191) (191) (3,705)	Total equity attributable to owners of parent 1,909,900 (447,282) 225,775 (743) 225,032 - - 1,687,650 2,518,707 (402,554) 5 215,038 (191) 214,847 2,331,005
			Legal reserve 309,915 - - - - - - 309,915 438,263 - - - - - 438,263	Special reserve 2,957 - - - - - - 2,957 3,791 - - - - - 3,791	Inappropriate earnings 1,115,977 (447,282) 225,775 - 225,775 - - 894,470 1,064,573 - - 215,038 - 215,038 1,279,611	Total 1,428,849 (447,282) 225,775 - 225,775 - - 1,207,342 1,506,627 - - 215,038 - 215,038 1,721,665
	$ 426,082 - - -
	-	-
	- -	- -
	$ 426,082	59,512
	$ 447,282 - - - -	568,312 (402,554) 5 - -
	-	-
	$ 447,282	165,763

Chairman: Wang Guang Shiah Manager: Chen Fu Sheng Accounting Officer: Wen Pei Chun

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

Reviewed only, not audited in accordance with the generally accepted auditing standards MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the three months ended March 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

**(Expressed in Thousands of New Taiwan Dollars) **
Cash flows from operating activities: Profit before tax Adjustments: Adjustments to reconcile profit: Depreciation expense Amortization expense Expected credit impairment loss Interest expense Interest income Loss on disposal of property, plant and equipment Loss on disposal of investments Lease modification gains Total adjustments to reconcile profit Changes in operating assets and liabilities Changes in operating assets, net Notes receivable Accounts receivable and long-term accounts receivable Inventories Prepayments Other current assets Total changes in operating assets, net Changes in operating liabilities, net Contract liabilities Notes payable Accounts payable Other payables Provisions liabilities Other current liabilities Total changes in operating liabilities, net Total changes in operating assets and liabilities, net Total adjustments Cash inflows generated from operations Interest received Income taxes Net cash flow from operating activities Cash flow used in investing activities Disposal of subsidiaries Acquisition of property, plant and equipment Decrease in guarantee deposits paid Increase in other non-current assets Net cash (outflow) used in investing activities Cash flows from financing activities Proceeds from long-term borrowings Payment of lease liabilities Interest paid Changes in non controlling interests Surplus not paid due to overdue Net cash (outflow) used in financing activities Effect of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents for the period Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year	$	.For the three months ended March 31.
		. 2021	**. **	. 2020 ___ . 283,342 8,122 28 13,766 348 (823) 1 2,280 - 23,722 (5,459) (140,611) 8,553 (2,937) 500 (139,954) 30,781 (269) (59,530) (2,019) 1,311 (2,142) (31,868) (171,822) (148,100) 135,242 667 (305) 135,604 (19,157) (3,775) 2,060 (1) (20,873) 200,000 (1,405) (2,006) 5,173 - 201,762 (97) 316,396 741,899 1,058,295
		265,171 9,048 28 875 814 (581) 19 - (11) 10,192 (4,063) (165,888) (21,293) (1,792) 199 (192,837) (11,348) 899 47,219 (204) 1,060 (2,174) 35,452 (157,385) (147,193) 117,978 607 (1,447) 117,138 - (2,262) 252 (44) (2,054) - (1,600) (1,814) - 5 (3,409) (363) 111,312 1,616,607 1,727,919
	$

Chairman: Wang Guang Shiah Manager: Chen Fu Sheng Accounting Officer: Wen Pei Chun

See accompanying notes to consolidated financial statements.

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MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the three months ended March 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

(1) Company history

MACHVISION INC. CO., LTD. (the Company) was incorporated in June 9, 1998 as a company limited by shares under the laws of (ROC). The address of the Company’s registered office is No. 2-3, Gongye East 2nd Road, Hsinchu Science Park, Hsinchu 30075, Taiwan, R.O.C. The consolidated entities in the consolidated financial statements dated March 31, 2021 include the Company and its subsidiaries (the Group). The Group is mainly engaged in the manufacturing and trading of optical inspection machinery equipment.

(2) Approval date and procedures of the consolidated financial statements

The consolidated financial statements were approved by the Board of Directors and published on May 4, 2021.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

• Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform － ” Phase 2

• (b) The impact of IFRS issued by IASB but not yet endorsed by the FSC

• Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond 30 June 2021”

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

(Continued)

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MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Standards or Interpretations		Content of amendment	Effective date perIASB
Amendments to IAS	1	The amendments aim to promote consistency in applying the	January 1, 2023
“Classification	of	requirements by helping companies determine whether, in the
Liabilities as Current	or	statement of balance sheet, debt and other liabilities with an
Non-current”		uncertain settlement date should be classified as current (due
		or potentially due to be settled within one year) or non-
		current.
		The amendments include clarifying the classification
		requirements for debt a company might settle by converting it
		into equity.

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial stements.

(4) Summary of significant accounting policies

Except as described below, the summary statement of the significant accounting policies for this consolidated financial report is the same as the consolidated financial report for 2020, please refer to the related information 2020 Consolidated Financial Statements Note 4.

(a) Statement of compliance

This consolidated financial report is prepared in line with the guidelines for the preparation of financial reports of issuers of securities (hereinafter referred to as "The Preparation of Guidelines") and the International Accounting Standards 34, about "Interim Financial Reports", which are approved and issued in force by the FSC. This consolidated financial report does not include all the necessary information to be disclosed in the entire annual consolidated financial report prepared in accordance with the international Financial Reporting Standards, International Accounting Standards, Interpretation and Interpretation notices (hereinafter referred to as the "International Financial Reporting Standards approved by the FSC"), which are approved and issued in force by the FSC.

(b) Basis of consolidation

(i) Principles of preparation of consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

(Continued)

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MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ii) List of subsidiaries included in the consolidated financial statements

The subsidiaries included in the consolidated financial statements are as follows:

Investor	Subsidiary	Nature of business	Percentage of ownership March 31, 2021 December 31, 2020 March 31, 2020	Percentage of ownership March 31, 2021 December 31, 2020 March 31, 2020	Percentage of ownership March 31, 2021 December 31, 2020 March 31, 2020	Notes
				December 31, 2020
The Company The Company The Company The Company The Company The Company The Company The Company The Company Machvision Inc. (Samoa) Machvision (Dongguan) Inc. Sigold Optics Inc.	Machvision Inc. (Samoa) Autovision Technology Inc. Sigold Optics Inc. ChipAI Co., LTD. RedPay Co., Ltd. MiM Tech. Inc. Machvision Korea Co., Ltd. Machvision Holding (Samoa) Limited Avountes Inc. Machvision (Dongguan) Inc. Dongguan muxin intelligent equipment Co., Ltd SISSCA Co.,Ltd.	Investment Manufacturing of computer peripheral products Manufacturing of machinery equipment Manufacturing of computer peripheral products Manufacturing of computer peripheral products Manufacturing of computer peripheral products Maintaining and trading of machinery equipment Investment Electronic Information Supply Services Maintaining and trading of machinery equipment Maintaining and trading of machinery equipment Manufacturing of computer peripheral products	100.00% 45.00% 49.47% 90.00% - - 100.00% - 45.00% 100.00% 51.00% 70.00%	100.00% 45.00% 49.47% 90.00% 50.00% - 100.00% - 40.00% 100.00% 51.00% 70.00%	100.00% 45.00% 49.47% 90.00% 50.00% 40.98% 100.00% 100.00% - 100.00% 51.00% 70.00%	1 2 6 3 4 5&6

Note 1: The Company holds 45% of the ownership of Autovision Technology Inc. However, it remains to be a subsidiary since the Company retains control of its financial and operational policy decision.

Note 2: The Company holds 49.47% of the ownership of Sigold Optics Inc. However, it remains to be a subsidiary since the Company retains control of its financial and operational policy decision.

Note 3: The Company has disposed all the shares of its subsidiary in December 2020.

Note 4: The subsidiary was liquidated in September 2020.

Note 5: The Company holds 45% of the ownership of Avountes Inc. However, it remains to be a subsidiary since the Company retains control of its financial and operational policy decision.

Note 6: Integrating the Group's resources,lowering costs and improving work efficiency.RedPay has be merge by Avountes in stock swap way. Avountes will generally assume all rights and obligations of RedPay.The merger record date is March 5,2021 and the registration has been changed on April 15,2021.

Note 7: The subsidiaries are not significant subsidiaries, their financial statements have not been reviewed.

(Continued)

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MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Employee benefits

In the interim, the benefit scheme pension department uses the previous year's reporting date to determine the pension cost rate on an actuarial basis, based on the end of the reclassified period at the beginning of the year, and to adjust for major market fluctuations, major downsizing, liquidation or other major one-off matters.

(d) Income tax

The Group is measured and exposed for income tax expenses during the interim period in line with the paragraph B12 of interim financial report of the International Accounting Standards bulletin No. 34.

The income tax fee is in order to multiply the pre-tax net profit by the management during the reporting period by the best estimated street volume of the expected effective tax rate for the whole year, and is fully recognized as the current income tax fee.

The income tax fee, which is directly recognized as an equity item or other consolidated profit and loss item, is a temporary difference between the carrying amount of the relevant assets and liabilities for the purpose of reporting and its tax base, which is measured by the applicable tax rate at the time of expected realization or liquidation.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

Management shall, in accordance with the preparation criteria and the interim financial report of IAS34 as approved by the FSC, make judgments, estimates and assumptions in the preparation of the consolidated financial reports, which will have an impact on the adoption of accounting policies and the amount of assets, liabilities, benefits and expenses reported. Actual results may differ from estimates·

In the preparation of consolidated financial reports, the management adopts the uncertainty of significant judgment and estimation of the consolidation of corporate accounting policies, the main source of which is consistent with the consolidated Financial Report Note 5 of 2020.

(6) Explanation of significant accounts

(a) Cash and cash equivalents

Cash on hand Saving deposits Foreign currency deposits Time deposits Cash and cash equivalents per statements of cash flow	March 31, 2021	March 31, 2020 1,636 581,690 348,259 126,710
	$ 1,727,919 1,616,607	1,058,295

(Continued)

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MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The expiry date of three months to a year on deposit satisfy the highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes.

Please refer to note 6(s)for the interest rate risk and the fair value sensitivity analysis of the financial assets and liabilities of the Group.

• (b) Notes, accounts and long-term accounts receivable

Notes receivable Accounts receivable Long-term accounts receivable Less: allowance for impairment unrealized interest income	March 31, 2021

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected credit loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward-looking information, including macroeconomic and relevant industry information. The expected credit losses were determined as follows:

March 31, 2021

Current 1 to 90 days past due 91 to 180 days past due 181 to 270 days past due 271 to 365 days past due Past due over 365 days	Gross carrying amount $ 1,208,597 108,427 76,260 35,411 22,130 58,219	Weighted-average expected credit loss rate		Loss allowance provision 50 313 1,395 2,395 10,985 58,219
		0.0041% 0.2887% 1.8292% 6.7624% 49.6390% 100.000%
	$ 1,509,044			73,357

(Continued)

13

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Current 1 to 90 days past due 91 to 180 days past due 181 to 270 days past due 271 to 365 days past due Past due over 365 days		December 31, 2020 Weighted-average expected credit loss rate Loss allowance provision 0.0022% 23 0.3475% 476 1.0536% 632 8.4800% 2,562 47.7466% 3,580 100.000% 65,177 72,441	December 31, 2020 Weighted-average expected credit loss rate Loss allowance provision 0.0022% 23 0.3475% 476 1.0536% 632 8.4800% 2,562 47.7466% 3,580 100.000% 65,177 72,441
	Gross carrying amount $ 1,041,816 134,448 59,927 30,213 7,497 65,177	Weighted-average expected credit loss rate
		0.0022% 0.3475% 1.0536% 8.4800% 47.7466% 100.000%
	$ 1,339,078

Current 1 to 90 days past due 91 to 180 days past due 181 to 270 days past due 271 to 365 days past due Past due over 365 days		March 31, 2020	March 31, 2020	Loss allowance provision - 426 1,120 3,251 13,521 2,868 21,186
	Gross carrying amount $ 1,239,483 127,766 63,520 60,557 23,758 2,868	Weighted-average expected credit loss rate
		0.00% 0.3332% 1.7633% 5.3690% 56.9119% 100.000%
	$ 1,517,952

The movement in the allowance for accounts receivable was as follows:

Balance at January 1 Impairment losses recognized Foreign exchange (losses) / gains Balance at March 31		For the three months ended March 31 2021 2020 72,441 7,421 875 13,766 41 (1) 73,357 21,186	For the three months ended March 31 2021 2020 72,441 7,421 875 13,766 41 (1) 73,357 21,186	For the three months ended March 31 2021 2020 72,441 7,421 875 13,766 41 (1) 73,357 21,186
		2021 72,441 875 41 73,357
	$
	$			21,186

The aforementioned notes and accounts receivables of the Group had not been pledged as collateral.

The carrying amounts of notes and accounts receivable with short maturity are not discounted under the assumption that the carrying amount approximates the fair value.

(Continued)

14

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Inventories

The components of the Group's inventories were as follows:

Merchandise and finished goods Work in process Raw material	March 31, 2021		December 31, 2020 69,251 80,913 213,260	March 31, 2020 86,582 85,187 193,400
	$ 68,616 86,477 229,669 $ 384,762
			363,424	365,169

The Group inventories were not provided as pledged assets.

Except for operating costs arising from the ordinary sale of inventories, other gains and losses directly recorded under operating cost were as follows:

directly recorded under operating cost were as follows:
Losses on decline in market value and write-down of inventory

(d) Disposal of subsidiaries

• 1) Disposal of the shares of Machvision Holding (Samoa) and Guandong Greatsense Intelligent Equipment Co., Ltd.

On December 25, 2019, the Board of Directors of the Company had decided to dispose the entire 51% shares of Guandong Greatsense Intelligent Equipment Co., Ltd. held by Machvision Holding (Samoa) Limited for RMB6,600 thousand. The related equity transfer procedures had been completed on January 7, 2020. The receivables arising from the foregoing transactions have been collected, resulting in the investment loss on disposal of $2,248 thousand, recognized as other gains and losses.

The details of the book amount of assets and liabilities of Guandong Greatsense Intelligent Equipment Co., Ltd. on the disposition date are as follows:

Cash and cash equivalents Accounts receivable Inventory Prepayments and other current assets Property, plant and equipment Right-of-use assets Refundable deposits Current contract liabilities Accounts payable Other payables Lease liabilities Other current liabilities	$ 19,157 61,963 7,947 5,155 2,066 6,140 1,171 (11,208) (19,592) (1,640) (6,230) (4,682)
	$ 60,247

(Continued)

15

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

As a result of the abovementioned transactions, the Company liquidated Machvision Holding (Samoa) Limited in September 2020, resulting in the investment loss on disposal of $2,053 thousand, recognized as other gains and losses.

• 2) Disposal of the shares of MiM Tech. Inc.

On December 28, 2020, the Board of Directors of the Company had decided to dispose the entire 40.98% shares of MiM Tech. Inc. for $10,574 thousand. The receivables arising from the foregoing transactions have been collected, resulting in the investment gain on disposal of $227 thousand, recognized as other gains and losses.

The details of the book amount of assets and liabilities of MiM Tech. Inc. on the disposition date are as follows:

Cash and cash equivalents Accounts receivable Inventory Prepayments and other current assets Right-of-use assets Intangible assets Refundable deposits Other payables Lease liabilities Other current liabilities	$ 2,116 604 1,689 76 754 8,705 105 (530) (759) (48)
	$ 12,712

• (e) Financial assets at fair value through profit or loss－non-current

Mandatorily measured at fair value through profit or loss: Unlisted stocks (domestic) - Yayatech Co., Ltd. For Win Tech Co.,Ltd Total	March 31, 2021		December 31, 2020		March 31, 2020
	$ 9,644 1,100		9,644 1,100		9,644 - 9,644
	$ 10,744		10,744

(Continued)

16

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(f) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group were as follows:

Cost: Balance as of January 1, 2021 Additions Reclassification Disposals Effect of movement in exchange rates Balance as of March 31, 2021 Balance as of January 1, 2020 Disposal of subsidiaries Additions Reclassification Disposals Effect of movement in exchange rates Balance as of March 31, 2020 Depreciation and impairment losses: Balance as of January 1, 2021 Depreciation Disposals Effect of movement in exchange rates Balance as of March 31, 2021 Balance as of January 1, 2020 Disposal of subsidiaries Depreciation Disposals Effect of movement in exchange rates Balance as of March 31, 2020 Carrying amounts: January 1, 2021 March 31, 2021 January 1, 2020 March 31, 2020	Buildings	Machinery equipment	Other equipment	Construction inprogress	**Total **
	$ 305,182 165 - - 229	6,265 85 -	27,032 834 1,901 111 - (45) - - (120) - 14 -		339,313 2,262 (45) (120) 243
	$ 305,576	6,350	28,782 945		341,653
	$ 266,183 - 1,729 12,774 - (427)	4,250 16 (420) -	19,364 27,995 - (2,488) - 895 1,135 - - (12,774) (10) - (41) -		317,792 (2,488) 3,775 - (430) (468)
	$ 280,259	3,846	17,720 16,356		318,181
	$ 57,416 4,492 - 68	1,778 8,839 - 370 1,408 - - (101) - (1) 3 -			68,033 6,270 (101) 70
	$ 61,976	2,147 10,149 -			74,272
	$ 42,653 - 3,924 - (160)	1,318 5,906 - - (422) - 183 819 - (420) (9) - - (14) -			49,877 (422) 4,926 (429) (174)
	$ 46,417	1,081 6,280 -			53,778
	$ 247,766	4,487 18,193 834			271,280
	$ 243,600	4,203 18,633 945			267,381
	$ 223,530	2,932 13,458 27,995			267,915
	$ 233,842	2,765 11,440 16,356			264,403

(Continued)

17

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(g) The Right-of-use assets

The Group leases assets including land and buildings, and transportation equipment. Information about leases for which the Group as a lessee is presented below:

Cost: Balance at January 1, 2021 Lease modification Effect of changes in foreign exchange rates Balance at March 31, 2021 Balance at January 1, 2020 Disposal of subsidiaries Additions Effect of changes in foreign exchange rates Balance at December 31, 2020 Accumulated depreciation and impairment losses: Balance at January 1, 2021 Depreciation Lease modification Effect of changes in foreign exchange rates Balance at March 31, 2021 Balance at January 1, 2020 Disposal of subsidiaries Depreciation Effect of changes in foreign exchange rates Balance at March 31, 2020 Carrying value: January 1, 2021 March 31, 2021 January 1, 2020 March 31, 2020	Land and buildings $ 73,924 - (94)	Other equipment 22,375 (1,590) (49)	Total 96,299 (1,590) (143) 94,566 119,609 (7,557) 1,114 (194) 112,972 19,286 2,778 (862) (64) 21,138 10,664 (1,417) 3,196 (39) 12,404 77,013 73,428 108,945 100,568
	$ 73,830	20,736
	$ 104,356 (7,557) 1,114 (122)	15,253 - - (72)
	$ 97,791	15,181
	$ 8,471 1,244 - (37)	10,815 1,534 (862) (27)
	$ 9,678	11,460
	$ 5,269 (1,417) 1,604 (22)	5,395 - 1,592 (17)
	$ 5,434	6,970
	$ 65,453	11,560
	$ 64,152	9,276
	$ 99,087	9,858
	$ 92,357	8,211

(h) Intangible assets

There were no significant additions, disposal or recognition and reversal of impairment losses of intangible assets for the three months ended March 31, 2021 and 2020. Information on amortization for the period is discussed in Note 12(a). Please refer to note 6(h) of the 2020 annual consolidated financial statements for other related information.

(Continued)

18

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Lease liabilities

The Group's lease liabilities were as follow:

Current Non-current	March 31, 2021	December 31, 2020

For the maturity analysis, please refer to note 6(s).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the three months ended March 31, 2021 For the three months ended March 31, 2020 $ 250 348 $ 2,986 1,110 $ 61 115

The amounts recognized in the statement of cash flows for the Group was as follows:

Total cash outflow for leases (j) Provisions Warranty	March 31, 2021 $ 14,502	For the three months ended March 31, 2021 For the three months ended March 31, 2020	For the three months ended March 31, 2021 For the three months ended March 31, 2020	For the three months ended March 31, 2021 For the three months ended March 31, 2020	For the three months ended March 31, 2021 For the three months ended March 31, 2020
		$		5,897	4,636
				December 31, 2020 13,442	March 31, 2020 13,436

There is no significant change in the liability reserve of the Group for the three months ended March 31, 2021 and 2020. For information, please refer to Note 6 (j) of the consolidated financial report of 2020.

(k) Long-term borrowings

The Company obtained government project loans in 2020. The credit lines amount is $960,000 thousand. As of March 31, 2021, the operating working capital $220,000 thousand has been borrowed with the loan recognized and measured by the market rate. The differences between the market rate and the actual rate will be recognized as deferred revenue according to the government grants.

(Continued)

19

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Unsecured bank loans Less: deferred revenue Current Non-current Total Unsecured bank loans Less: deferred revenue Current Non-current Total Unsecured bank loans Less: deferred revenue Current Non-current Total Deferred income－Government grants: Current Non-current Total	March 31, 2021 Currency Interest rate Due year Amount NTD 1.05~1.1 2021-2027 $ 220,000 3,253 $ 216,747 $ 22,500 194,247 $ 216,747 December 31, 2020 Currency Interest rate Due year Amount NTD 1.1 2021-2027 $ 220,000 3,590 $ 216,410 $ 16,875 199,535 $ 216,410 March 31, 2020 Currency Interest rate Due year Amount NTD 1.1 2021-2027 $ 220,000 4,014 $ 195,986 $ - 195,986 $ 195,986 March 31, 2021 December 31, 2020 March 31, 2020 $ 1,074 1,038 940 2,179 2,552 3,074 $ 3,253 3,590 4,014	March 31, 2021	March 31, 2021	March 31, 2021
		Currency Interest rate Due year			Amount
		NTD 1.05~1.1 2021-2027 December 31, 2020			$ 220,000 3,253 $ 216,747 $ 22,500 194,247 $ 216,747
		Currency Interest rate Due year			Amount
		NTD 1.1 2021-2027 March 31, 2020			$ 220,000 3,590 $ 216,410 $ 16,875 199,535 $ 216,410
		Currency Interest rate		Due year	Amount
			1.1 December 31, 2020

(Continued)

20

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Employee benefits

1. Defined benefit plans

Management believes that there was no material volatility of the market, no material reimbursement and settlement or other material one time events since prior fiscal year. As a result, the pension cost in the accompanying interim period was measured and disclosed according to the actuarial report as of December 31, 2020 and 2019.

The expenses recognized in profit or loss for the Group were as follows:

Operating costs Operating expenses Total	$		For the three months ended March 31 .2021 2020 . 5 6 11 9
	$		16 15

2. Defined contribution plans

The Group’s expenses under the pension plan cost to the Bureau of Labor Insurance and local government were as follows:

Operating costs Operating expenses Total	$		For the three months ended March 31 .2021 2020 . 1,393 1,473 2,848 2,305
	$		4,241 3,778

(m) Income tax

The income tax expense is estimated by the profit before tax in the interim financial period multiplied by the best estimated effective interest rate of the whole year of the management.

The Group’s income tax expense is as follows:

Current income tax expense Current tax expense recognized in the current period Income tax expense	$		For the three months ended March 31 .2021 2020 . 52,049 55,672
	$		52,049 55,672

The tax authorities have examined income tax returns of the Company through 2018.

(Continued)

21

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Capital and other equity

Except for the following terms, there is no significant change in capital and other rights for the group for the three months ended March 31, 2021 and 2020. The relevant liability is referred to in note 6 (n) of the consolidated financial report of 2020.

1. Capital surplus

Dividends distributed by capital surplus please refer to the following retained earings.

1. Retained earings

Cash dividends distributed by capital surplus and earnings distribution were as follows:

For the six months eneded June 30,2020 Date resolved by Board of Directors July31,2020 Dividends distributed to common stockholders Cash-Retained earings $ 134,185 Cash-Capital surplus - Total $ 134,185 Dividend rate $ 3.00 Date resolved by Board of Directors Dividends distributed to common stockholders Cash-Retained earings Dividend rate		For the six months eneded June 30,2020		For the six months eneded December 31,2020	Total
		July31,2020		February3,2021 - 402,554 402,554 9.00 2019 March 27,2020 $ 447,282 $ 10.00	134,185 402,554 536,739

• (o) Earnings per share

The calculation of the Company's basic and diluted earnings per is as follows:

• (i) Basic earnings per share

Net income attributable to ordinary shareholders of the Company Weighted average number of ordinary shares Basic earnings per share (NTD)	$		For the three months ended March 31 .2021 2020 . 215,038 225,775 44,728 42,608 4.81 5.30
	$

(Continued)

22

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Diluted earnings per share

Net income attributable to ordinary shareholders of the Company (diluted) Weighted average number of ordinary shares (basic) Effect of potential ordinary shares Employees' compensation Weighted average number of ordinary shares (diluted) Diluted earnings per share (NTD)	$		For the three months ended March 31 .2021 2020 . 215,038 225,775
			44,728 42,608 174 198
			44,902 42,806
	$		4.79 5.27

(p) Revenue from contracts with customers

(i) Disaggregation of revenue

Primary geographical markets: Taiwan China Others Primary merchandises/services lines: Sale of optical inspection machinery equipment Revenue from services Primary geographical markets: Taiwan China Others Primary merchandises/services lines: Sale of optical inspection machinery equipment Revenue from services	For the three months ended March 31, 2021 Taiwan China Total $ 226,124 - 226,124 379,104 66,779 445,883 16,626 - 16,626	For the three months ended March 31, 2021 Taiwan China Total $ 226,124 - 226,124 379,104 66,779 445,883 16,626 - 16,626	For the three months ended March 31, 2021 Taiwan China Total $ 226,124 - 226,124 379,104 66,779 445,883 16,626 - 16,626
	Taiwan $ 226,124 379,104 16,626	China - 66,779 -
	$ 621,854	66,779	688,633
	$ 609,763 12,091	51,217 15,562	660,980 27,653
	$ 621,854	66,779	688,633
	For the three months ended March 31, 2020 Taiwan China Total $ 105,032 - 105,032 486,359 60,642 547,001 34,198 - 34,198
	Taiwan $ 105,032 486,359 34,198	China - 60,642 -
	$ 625,589	60,642	686,231
	$ 614,505 11,084	52,002 8,640	666,507 19,724
	$ 625,589	60,642	686,231

(ii) Contract balance

Notes receivable Accounts receivable Long-term accounts receivable Less: allowance loss Total Contract liabilities--advance receipts	March 31, 2021	March 31, 2020
		19,168 1,305,833 192,951 21,186 1,496,766 33,167
	$ 1,435,687 1,266,637
	$ 20,537 31,885

(Continued)

23

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Please refer to note 6(b) for the details on accounts receivables and allowance for impairments. The contract liability is mainly due to advance receipts, wherein the Company will recognize revenue when the product is delivered to the customer. The amount of revenue recognized for the three months ended March 31, 2021 and 2020 that were included in the contract liability balance at the beginning of the period were $30,059 thousand and $1,500 thousand, respectively.

(q) Remuneration to employees and directors

In accordance with the Company's Articles, the profit for the year should be reserved to offset the deficit, then, should contribute no less than 5% of the profit as employee remuneration, and less than 3% as directors' remuneration.

The remunerations to employees amounted to $22,199 thousand and $25,620 thousand, respectively, for the three-month period ended March 31, 2021 and 2020 The remunerations to directors amounted to $3,505 thousand and $4,482 thousand, respectively, for the three-month period ended March 31, 2021 and 2020. These amounts were calculated using the Company's net income before tax without the remunerations to employees and directors for each period, multiplied by the proposed percentage which is stated under the Company's proposed Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period. If there are any subsequent adjustments to the actual remuneration amounts after the annual shareholder’ meeting, the adjustment will be regarded as changes in accounting estimates and will be reflected in profit or loss in the following year.

In 2020 and 2019, the amount of employee remuneration is NT$67,278 thousand and NT$97,368 thousand, respectively, and that of directors is NT$10,623 thousand and NT$17,931 thousand, respectively. There is no difference from the distribution of board resolutions. The information is available on the Market Observation Post System website.

• (r) Non-operating income and expenses

(i) Interest income

Bank deposits Others Total (ii) Other income Others			For the three months ended **March 31 **	For the three months ended **March 31 **	For the three months ended **March 31 **
			2021 2020 $ 607 648 (26) 175 $ 581 823 For the three months ended **March 31 **		2020
			2021 $ 881		2020
					254

(Continued)

24

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iii) Other gains and losses

s and losses
Losses on disposals of property, plant and equipment Losses on disposal of investments Gains on lease modification Foreign exchange gains(losses) Others Other gains and losses, net		For the three months ended **March 31 **
		2021		2020
	$ (19) - 11 (3,510) (112) $ (3,630)			(1) (2,280) - 7,054 (18) 4,755

(iv) Finance costs

ance costs
Interest expenses			**For the three months ended March 31 **
			2021 $ 814		2020
					348

(s) Financial instruments

Except for the following, there is no significant change in the fair value of the financial instruments and the exposure to credit risks and market risks due to financial instruments. Please refer to note 6 (s) of the consolidated financial report of 2020.

1. Credit risk

The credit receivable account of the credit risk Group in March 31, 2021, December 31, 2020 and March 31, 2020 was concentrated on single customers, accounting for 27%, 26% and 19% of the receivable and accounts receivable (including long-term receivables) respectively.

2. Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

(Continued)

25

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

March 31, 2021 Non-derivative financial liabilities Long-term borrowings(including deferred revenue) Notes payable Accounts payable Other payables Dividend payable Lease liabilities (Current and non-current) December 31, 2020 Non-derivative financial liabilities Long-term borrowings(including deferred revenue) Notes payable Accounts payable Other payables Lease liabilities (Current and non-current) March 31, 2020 Non-derivative financial liabilities Long-term borrowings(including deferred revenue) Notes payable Accounts payable Other payables Dividend payable Lease liabilities (Current and non-current)	Carrying Amount	Contractual cash flows	Within 1 year 23,648 1,115 293,116 318,960 402,554 10,973	1-5years	1-5years
	$ 220,000 1,115 293,116 318,960 402,554 74,906	223,942 1,115 293,116 318,960 402,554 93,708
	$ 1,310,651	1,333,395	1,050,366	191,096	91,933
	Carrying Amount	Contractual cash flows	Within 1 year 18,161 216 245,897 319,164 12,039	1-5years
	$ 220,000 216 245,897 319,164 78,325	224,405 216 245,897 319,164 97,377
	$ 863,602	887,059	595,477	192,367	99,215
	Carrying Amount	Contractual cash flows	Within 1 year 1,174 724 302,345 416,441 447,282 11,667	1-5years
	$ 200,000 724 302,345 416,441 447,282 101,974	204,944 724 302,345 416,441 447,282 125,241
	$ 1,468,766	1,496,977	1,179,633	179,126	138,218

The Group is not expecting the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(Continued)

26

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Liquidity risk

1) Currency risk

The Group's financial assets and liabilities exposed to significant currency risk was as follows:

March 31, 2021 Financial Assets Monetary items USD CNY Financial liabilities Monetary items USD CNY December 31, 2020 Financial Assets Monetary items USD CNY Financial liabilities Monetary items USD CNY March 31, 2020 Financial Assets Monetary items USD JPY CNY Financial liabilities Monetary items USD CNY	Foreign currency $ 34,071 $ 93,694 $ 1,519 $ 11,875 $ 31,338 $ 105,130 $ 1,774 $ 13,093 $ 40,480 $ 78,029 $ 1,987 $ 10,895	Exchange rate 28.5350 4.3440 28.5350 4.3440 28.4800 4.3770 28.4800 4.3770 30.2430 4.2570 30.2430 4.2570	NTD 972,210 407,007 43,348 51,585 892,516 460,153 50,516 57,307 1,224,245 332,171 60,080 46,382

The Group's exposure to foreign currency risk arises from the translation of foreign currency exchange gains and losses on cash and cash equivalents, receivables, accounts

(Continued)

27

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

payables that are denominated in foreign currency. A weakening or strengthening 3% appreciation or depreciation of the NTD against the USD and CNY as of March 31, 2021 and 2020, would have increased or decreased the net profit after tax by $30,823 thousand and $34,799 thousand, respectively. The analysis is performed on the same basis for both periods.

Since the Group has many kinds of functional currencies, the information on foreign exchange gains (loss) on monetary items is disclosed based on the total amount. For the three months ended March 31, 2021 and 2020, foreign exchange gains (losses) (including realized and unrealized portion) amounted to $(3,510) thousand and $7,054 thousand.

2) Interest rate risk

Please refer to the notes on liquidity risk management and interest rate exposure of the Group's financial assets and liabilities.

The following sensitivity analysis is determined by the interest rate storm risk of derivative and non-derivative instruments in the reporting day. For floating rate liabilities, the way of analysis is to assume that the amount of debt in circulation outside the reporting day is in circulation throughout the year. The rate of change used to report interest rates to key management within the Group is an increase or loss of 1% per cent in interest rates, which also represents an assessment by management of the extent to which interest rates may vary reasonably.

If the interest rate had increased or decreased by 1%, the Group's net income before tax would have increase or decrease by $3,765 thousand and $2,142 thousand for the three months ended March 31, 2021 and 2020, respectively, with all other variable factors remain constant. This is mainly due from the Group's cash in bank and borrowing on variable rates.

(iv) Information of fair value

• 1) Categories and fair value of financial instruments

Except for the followings, carrying amount of the Group's financial assets and liabilities are valuated approximately to their fair value, and are not based on observable market date and the value measurements which are not reliable. No additional fair value disclosure is required in accordance to the regulations.

(Continued)

28

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets measured at amortized cost Cash and cash equivalents Accounts, notes and long-term receivables Refundable deposits Other non-current assets Subtotal Total Financial liabilities measured at amortized cost Long-term borrowings (including deferred income) Notes payable Accounts payable Other payables Dividends payable Lease liabilities Total		March 31, 2021	March 31, 2021	March 31, 2021	Total 10,744
	Carrying amount $ 10,744		Fair value
		Level 1 -	Level 2 -	Level 3 10,744
	1,727,919 1,435,687 11,620 16,340	- - - -	- - - -	- - - -	- - - -
	3,191,566	-	-	-	-
	$ 3,202,310	-	-	10,744	10,744
	$ 220,000 1,115 293,116 318,960 402,554 74,906	- - - - - -	- - - - - -	- - - - - -	- - - - - -
	$ 1,310,651	-	-	-	-

Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets measured at amortized cost Cash and cash equivalents Accounts, notes and long-term receivables Refundable deposits Other non-current assets Subtotal Total		December 31, 2020	December 31, 2020	December 31, 2020	Total 10,744
	Carrying amount $ 10,744		Fair value
		Level 1 -	Level 2 -	Level 3 10,744
	1,616,607 1,266,637 11,872 16,296	- - - -	- - - -	- - - -	- - - -
	2,911,412	-	-	-	-
	$ 2,922,156	-	-	10,744	10,744

29

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Carrying amount Financial liabilities measured at amortized cost Long-term borrowings (including deferred income) Notes payable Accounts payable Other payables Lease liabilities Total Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets measured at amortized cost Cash and cash equivalents Accounts, notes and long-term receivables Other receivables Refundable deposits Other non-current assets Subtotal Total Financial liabilities measured at amortized cost Long-term borrowings (including deferred income) Notes payable Accounts payable Other payables Dividends payable Lease liabilities Total			December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020		Total - - - - -
	Carrying amount	Level 1 $ 220,000 216 245,897 319,164 78,325		Fair value
				Level 2 - - - - - - - - - -		Level 3 - - - - -
		$ 863,602		- -		-			-
				March 31, 2020					Total 9,644
		Carrying amount $ 9,644			Fair value
			Level 1 -		Level 2 -		Level 3
		1,058,295 1,496,766 28,096 14,576 7,402	- - - - -		- - - - -		- - - - -		- - - - -
		2,605,135	-		-		-		-
		$ 2,614,779	-		-		9,644		9,644
		$ 200,000 724 302,345 416,441 447,282 101,974	- - - - - -		- - - - - -		- - - - - -		- - - - - -
		$ 1,468,766	-		-		-		-

30

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (1) Valuation techniques for financial instruments measured at fair value – non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s-length basis. Whether transactions are taking place “regularly” is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market price may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

If the financial instruments have no quoted market price in an active market, the Group shall use the market comparison approach to evaluate the fair value. The main assumption used in computing the market price is based on the investee’s equity and the quoted price from a competitor. The estimated price has been discounted due to the lack of liquidity in the price of securities.

• (2) Fair value hierarchy

The Group uses observable market inputs for measuring its assets and liabilities as much as possible. The fair value levels are classified as follows according to the input values for the assessment:

• A. Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities

• B. Level 2: Inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• C. Level 3: Inputs are unobservable inputs for an asset or liability. No transfers between the Group’s fair value levels.

• (3) Reconciliation of leve3 fair values

nciliation of leve3 fair values
Balance at March 31, 2021 (Balance at January 1, 2021) Balance at March 31, 2020 (Balance at January 1, 2020)	Unquoted equity instruments
	$ 10,744 $ 9,644

31

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (4) Quantitative information of significant unobservable inputs (Level 3) through fair value

Item Financial assets at fair value through profit or loss – investment of equity instruments without active market	Valuation technique Guideline publicly traded company method	Significant unobservable inputs P/B multiplier (March 31, 2021, December 31, 2020 and March 31, 2020 were 2.44-2.76, 2.44-2.76 and 2.6 respectively) P/E multiplier (March 31, 2021, December 31, 2020 and March 31, 2020 were 19.84-37.81, 19.84-37.81 and 11.77 respectively) Discount for Lack of Market ability (March 31, 2021, December 31, 2020 and March 31, 2020 were 30%)	Relation between significant unobservable inputs and fair value
			Higher P/B multiplier and P/E multiplier will cause an increase in the fair value Higher discount for Lack of Market ability will cause a decrease in fair value.

• (5) Fair value measurements in Level 3- sensitivity analysis of reasonably possible alternative assumptions

• The Group’s measurement on the fair of financial instruments is deemed reasonable despite different valuation models or assumptions may lead to different results. For fair value measurements in Level 3, changing one or more of the assumptions would have the following effects on profit or loss and other comprehensive income:

March 31, 2021 Financial assets at fair value through profit or loss Equity investments without an active market December 31, 2020 Financial assets at fair value through profit or loss Equity investments without an active market March 31, 2020 Financial assets at fair value through profit or loss Equity investments without an active market	Input	Assumptions	Other comprehensive income Favorable Unfavorable
	Market illiquidity discount rate Market illiquidity discount rate Market illiquidity discount rate	10％ 10％ 10％	4,664 (4,664) 4,664 (4,664) 3,917 (3,917)

The favorable and unfavorable effects represent the change in fair value, and the fair value is based on a variety of un-observable inputs calculated using a valuation technique.

32

MACHVISION INC. CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(a) Financial risk management

Consolidation of corporate financial risk management objectives and policies there were no significant changes in the disclosure of Notes 6 (t) to the 2020 consolidated financial report.

(b) Capital management

The Group’s capital management objectives, policies and procedures are consistent with those revealed in the 2020 consolidated financial report. For further information, please refer to note 6 (u) of the consolidated financial report of 2020.

The Group's debt-to-adjusted-capital ratio at the end of the reporting period was as follows:

Liabilities Less: cash and cash equivalents Net liabilities Total equity Debt-to-capital ratio	March 31, 2021	December 31, 2020 $ 1,001,173 1,616,607 $ (515,050) $ 2,607,730 - %	December 31, 2020		March 31, 2020
	$ 1,586,746 1,727,919 $ (141,173) $ 2,418,114 - %				1,626,496 1,058,295 568,201 1,798,119 31.60%

As of March 31, 2021, there was no change in the Group's approach of capital management.

(c) Reconciliation of liabilities arising from financing activities

The Group’s liability adjustment associated with financing activities for the three months ended March 31, 2021 were as follows:

Long-term borrowings(including deferred revenue) Lease liabilities Total liabilities from financing activities Long-term borrowings(including deferred revenue) Lease liabilities Total liabilities from financing activities		January 1, 2021	January 1, 2021					Non-cash adjustments	Non-cash adjustments	Non-cash adjustments		Interest expenses March 31, 2021 - 220,000 250 74,906 250 294,906 Interest expenses March 31, 2020 - 200,000 348 101,974 348 301,974	Interest expenses March 31, 2021 - 220,000 250 74,906 250 294,906 Interest expenses March 31, 2020 - 200,000 348 101,974 348 301,974
						Cash flows - (2,850) (2,850)		Lease Modification Foreign exchange movement - - (739) (80) (739) (80) Non-cash adjustments
			$ 220,000 78,325
			$ 298,325
					Cash flows 200,000 (3,411)		Increase in right-of- use assets - 1,114 1,114		Disposal of Subsidiary - (6,230) (6,230)	Foreign exchange movement - (157) (157)
		$ 110,310			196,589							348	301,974

33

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(7) Related-party Transactions

Compensation of key management personnel:

Short-term employee benefits Post-employment benefits		For the three months ended March 31	For the three months ended March 31	For the three months ended March 31
		2021	2020 $ 14,721 81 $ 14,802	2020
	$ 14,079 81 $ 14,160

(8) Pledge assets

The carrying value of pledged assets were as follows:

Pledged assets Other non-current assets: Time deposits Time deposits Time deposits	Object asset Guarantee for customs Guarantee for the Hsinchu Science Park Bureau Guarantee for Sales agreement	March 31, 2021 $ 1,512 4,478 10,350	December 31, 2020		March 31, 2020
			1,511 4,478 10,307		1,508 5,892 - 7,402
		$ 16,340	16,296

(9) Commitments and contingencies: None

(10) Losses due to major disasters: None.

(11) Subsequent events: None

(12) Others

(a) The following is a summary statement of employee benefits, depreciation and amortization expensed by function:

Function Item	For the three months ended March 31 2021	For the three months ended March 31 2021	For the three months ended March 31 2021	For the three months ended March 31 2020	For the three months ended March 31 2020	For the three months ended March 31 2020
	Operating costs	Operating expense	Total	Operating costs	Operating expense	Total
Employee benefits
Salaries	29,584	89,792	119,376	28,038	73,995	102,033
Labor and health insurance	2,376	5,403	7,779	2,399	3,986	6,385
Pension	1,398	2,859	4,257	1,479	2,314	3,793
Directors' remuneration	-	3,546	3,546	-	4,701	4,701
Other employee benefits	3,178	6,964	10,142	4,654	8,368	13,022
Depreciation	2,816	6,232	9,048	3,406	4,716	8,122
Amortization	-	28	28	-	28	28

34

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

• (b) Seasonal of operations:

The operation of the Group is not affected by seasonal or cyclical factors.

(13) Other Disclosure

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing

the Preparation of Financial Reports by Securities Issuers” for the Group:

1. Loans to other parties: None.

2. Guarantees and endorsements for other parties: None.

3. Securities held as of March 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

					(Amounts in Thousands of New Taiwan Dollar)	(Amounts in Thousands of New Taiwan Dollar)	(Amounts in Thousands of New Taiwan Dollar)	(Amounts in Thousands of New Taiwan Dollar)
Company holding securities	Security type and name	Relationship with the Company	Account		March 31, 2021			Notes
				Shares (in thousands)	Carrying value	Percentage of ownership (%)	Market value
The Company	Yayatech Co. Ltd.	-	Financial assets at fair value through profit or loss-noncurrent	884,000	9,644	5 %	9,644
SISSCA Co.,Ltd.	FOR WIN TECH CO., LTD.	-	Financial assets at fair value through profit or loss-non current	110,000	1,100	10 %	1,100

1. Individual securities acquired of disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock : None.

2. Acquisitions of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

3. Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

4. Related-party transaction for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock: None

5. Receivable from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital:

					(Amounts in Thousands of New Taiwan Dollar)	(Amounts in Thousands of New Taiwan Dollar)	(Amounts in Thousands of New Taiwan Dollar)	(Amounts in Thousands of New Taiwan Dollar)
Company Name	Related Party	Nature of relationships	Balance as March 31, 2021	Turnover rate	Overdue		Amount Received in Subsequent	Allowance for Impairment Loss
					Amount	Action Taken
The Company	Machvision (Dongguan) Inc.	Subsidiaries	382,773	0.37	154,800	Depends on the end customer's creditperiod	26,836 (As of May 4, 2021)	-

1. Trading in derivative instruments: None.

35

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

10. Business relationships and significant intercompany transactions:

No.	Name of company	Name of counterparty	Existing relationship with the counter-party		Transaction details	Transaction details	Transaction details
				Account name	Amount	Trading terms	Percentage of the total consolidated revenue or total assets
0	The Company	Machvision (Dongguan) Inc.	1	Operating revenue	37,300	Depends on the Group overall profit allocation	5.42%
0	The Company	Sigold Optics. Inc.	1	Operating revenue	12,144	Depends on the Group overall profit allocation	1.76%
0	The Company	Machvision (Dongguan) Inc.	1	Accounts receivable – related parties (including long-term accounts receivable)	382,773	Depends on the end customer's credit period	9.56%
0	The Company	Machvision (Dongguan) Inc.	1	Other payables – related parties	57,971	Dependent on capital budgeting	1.45%

Note 1: Company numbering is as follows:

(1) Parent company is 0.

(2) Subsidiary starts from 1.

Note 2: The number of the relationship with the transaction counterparty represents the following:

• (1) 1 represents downstream transactions.

• (2) 2 represents upstream transaction.

Note 3: For balance sheet items, over 1% of total consolidated assets, and for profit or loss items, over 1% total consolidated revenue were selected for disclosure.

(b) Information On Investees:

The following is the information on investees for the three months ended March 31, 2021

(excluding information on investees in China):

Name of Investor	Name of investee	Address	Scope of business	OriginalCost	OriginalCost	Ending balance	Ending balance	Ending balance	Net Income of Investee	Investment income (Losses) (Note 3)	Note
				March 31, 2021	December 31, 2020	Shares	Percentage of ownership	Book value
The Company	Machvision Inc.	Samoa	Investment	105,433	105,433	3,463,650	100.00%	(28,980)	(19,327)	(19,327)	1, 2
The Company	Autovision Technology Inc.	Taiwan	Manufacturing of computer peripheral products	9,000	9,000	900,000	45.00%	10,425	(235)	(106)	2
The Company	Sigold Optics Inc.	Taiwan	Manufacturing of machinery equipment	49,470	49,470	6,316,330	49.47%	68,313	2,042	1,010	2
The Company	Machvision Korea Co., Ltd.	Korea	Maintaining and trading of machinery equipment	21,542	21,542	10,000	100.00%	7,996	84	84	2
The Company	ChipAI Co., LTD.	Taiwan	Manufacturing of computer peripheral products	18,000	18,000	1,800,000	90.00%	6,540	(1,231)	(1,108)	2
The Company	RedPay Co., Ltd.	Taiwan	Electronic Information supply Services	-	10,000	-	- %	-	(223)	(111)	2
The Company	Avountes Inc.	Taiwan	Electronic Information supply Services	8,962	5,714	900,000	45.00%	8,836	(4,695)	(2,064)	2
Sigold Optics Inc.	SISSCA Co.,Ltd.	Taiwan	Manufacturing of computer peripheral products	7,700	7,700	770,000	70.00%	4,639	(1,712)	(1,198)	2

Note 1: The company is a limited company.

Note 2: The transactions within the Group were eliminated in the consolidated financial statements.

36

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Note 3: The investment income was recognized under the equity method and based on the financial statements audited by the auditor of the Company.

• (c) Information on investments in China

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:	(c) Information on investments in China (i) The names of investees in Mainland China, the main businesses and products, and other information:
Units: NT$thousand
Name of investment in China	Major operations	Issued capital	Method of Investment (Note 1)	Beginning remittance balance – cumulative investment (amount) from Taiwan	Current remittance / receivable investment (amount)		Ending remittance balance - cumulative investment (amount) from Taiwan	Net income of investee	Direct / indirect shareholdings or investments (%) in the Company	Current investment gains and losses (Note 3)	Book value (Note 2)	Remittance of investment income in current period
					Invested amount	Returned amount
Machvision (Dongguan) Inc.	Maintaining and trading of machinery equipment	105,361	(2)i	105,361	-	-	105,361	(19,327)	100%	(19,327)	(21,890)	-
Dongguan muxin intelligent equipment Co.,Ltd	Maintaining and trading of machinery equipment	4,220	(4)i	-	-	-	-	1,145	51%	584	1,562	-

Note 1: The method of investment is divided into the following four categories:

• (1) Remittance from third region companies to invest in Mainland China.

• (2) Through the establishment of third region companies then investing in Mainland China.

• i. Through the establishment of Machvision Inc. then investing in Mainland China.

• (3) Through transferring the investment to third region existing companies then investing in Mainland China.

• (4) Other methods: EX: delegated investments.

• i. Through the establishment of Machvision (Dongguan) Inc. then investing in Mainland China.

Note 2: The transactions within the Group were eliminated in the consolidated financial statements.

Note 3: The recognition of investment gains and losses in this period is based on the same period that the invested company prepares its own financial reports that have not been approved by the accountant, and the evaluation of the rights and interest’s method is adopted.

(ii) Limitation on investment in China:

Company Name	Accumulated investment amount in Mainland China as of End of the Period	Investment (amount) approved by Investment Commission, Ministry of Economic Affairs	Maximum investment amount set by Investment Commission, Ministry of Economic Affairs
The Company	105,361	105,361	1,398,603 (Note 1)

Note 1: It represents 60% of the Company's net equity.

(iii) Significant transactions:

Please refer to details in the “Relationships between Parent Company and Subsidiaries and Significant Transactions” for the significant transactions directly or indirectly related to the investment in China for the three months ended March 31, 2021.

37

MACHVISION INC. CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(d) Information of major shareholders:None.

(14) Segment Information

The Corporation’s business operations are focused in a single industry, mainly in the manufacturing, sales and testing of optical inspection machines and equipment. The end use of the Corporation’s products are similar. The operational decision makers evaluate the Corporation’s overall performance and allocate resources for the Corporation’s overall business operations. Hence, there is only one reportable segment for the Corporation.

The Group’s reportable segments and adjustments were as follows:

For the three months ended March, 2021 Revenue: Revenue from external customers Inter-segment revenue Total revenue Reportable segment revenue or loss For the three months ended March, 2020 Revenue: Revenue from external customers Inter-segment revenue or loss Total revenue Reportable segment revenue or loss	Taiwan $ 621,854 60,514	China 66,779 3,533	Adjustment and Elimination - (64,047)	Total 688,633 -
	$ 682,368	70,312	(64,047)	688,633
	$ 287,715	(19,562)	-	268,153
	$ 625,589 62,637	60,642 -	- (62,637)	686,231 -
	$ 688,226	60,642	(62,637)	686,231
	$ 282,146	(4,288)	-	277,858

For the three months ended March, 2021 and 2020, the total revenue of the reportable segment should exclude the inter-segment revenue of $64,047 thousand and $62,637 thousand, respectively.