MTI — Audit Report / Information 2021

Nov 12, 2021

MICROELECTRONICS TECHNOLOGY,

INC.

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND INDEPENDENT AUDITORS’

REPORT

DECEMBER 31, 2021 AND 2020

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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.

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Microelectronics Technology, Inc.

Opinion

We have audited the accompanying parent company only balance sheets of Microelectronics Technology, Inc. (the “Company”) as at December 31, 2021 and 2020, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the parent company only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountants in the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company’s 2021 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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Key audit matters for the Company’s 2021 parent company only financial statements are stated as follows:

Intangible assets - assessment of goodwill impairment

Description

As of December 31, 2021, goodwill amounted to NT$263,759 thousand, comprising $143,637 thousand for goodwill of the Company and $120,122 thousand derived from the investment of subsidiaries which was included in the carrying amount of investment accounted for under equity method presented on the parent company only financial statements. For information on evaluation of goodwill impairment, please refer to Note 6(10), impairment of non-financial assets. The Company estimates recoverable amount utilizing the future cash flows of goodwill’s cash generating unit and appropriate discount rates in order to determine whether goodwill is impaired. The estimation of future cash flows involves various assumptions, which may have significant effects on the estimation of recoverable amount. Thus, it has been identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

1. Interviewed with management in order to obtain an understanding of the procedures in relation to identifying cash-generating units and estimating the future cash flows. Compared the financial forecast for the year ended December 31, 2022 with the budget approved by the Board of Directors.

2. Interviewed with management in order to obtain an understanding of development plans and schedules of the projects.

3. Assessed the key assumption that management used to estimate future cash flows, including operating revenue growth rate and gross margin, and evaluated the parameters used in determining the discount rate, including the risk-free rate of return that was used to calculate cost of equity, industry’s risk coefficient and long-term market return.

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Allowance for inventory valuation losses

Description

Please refer to Note 6(5) for the details of inventories. As of December 31, 2021, the balances of inventories and allowance for inventory valuation losses amounted to NT$1,717,767 thousand and NT$42,782 thousand, respectively. Since inventory is material to the financial statements and the determination of net realisable value of the obsolete inventory usually involves management’s subjective judgement, therefore, we determined valuation of inventories that are over a certain age and individually identified as obsolete or slow-moving as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

1. Obtained an understanding of management policies on obsolete or slow-moving inventories, and verified the reasonableness of determining the obsolescence of inventory.

2. Tested the movements of inventories, and sampled individual inventory item numbers to check whether the classification of inventory aging is correct.

3. For obsolete or slow-moving inventories, sampled individual inventory item numbers to check progress of inventory clearance and evaluated the reasonableness of determining the allowance for inventory valuation losses

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate

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the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with the generally accepted auditing standards in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our

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auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

1. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

2. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Li, Tien-Yi[Lin, Yu-Kuan ] For and on Behalf of PricewaterhouseCoopers, Taiwan March 16, 2022

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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MICROELECTRONICS TECHNOLOGY, INC. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) 6(4) 6(4) and 7 7 6(5) 6(3) 6(6) 6(7) 6(8) and 7 6(9) 6(28) 7	December31,2021 AMOUNT % $ 823,494 13 490 - 14,013 - 1,032,852 16 32,276 - 4,217 - 205 - 1,674,985 27 36,028 1 3,618,560 57 13,671 - 1,509,143 24 177,033 3 388,597 6 163,048 3 430,687 7 7,534 - 2,689,713 43 $ 6,308,273 100	December31,2020	December31,2020
		AMOUNT $ 823,494 490 14,013 1,032,852 32,276 4,217 205 1,674,985 36,028 3,618,560 13,671 1,509,143 177,033 388,597 163,048 430,687 7,534 2,689,713 $ 6,308,273	AMOUNT $ 727,097 2,528 4,081 824,833 69,062 18,328 340 809,866 51,758 2,507,893 8,660 1,530,055 119,451 419,034 166,109 441,267 2,603 2,687,179 $ 5,195,072	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1150 Notes receivable 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventories 1410 Prepayments 11XX Total current assets Non-current assets 1517 Financial assets at fair value through other comprehensive income - non- current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets				14 - - 16 1 - - 16 1
				48
				- 30 2 8 3 9 -
				52
				100

(Continued)

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MICROELECTRONICS TECHNOLOGY, INC. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December31,2021 December31,2020 Notes AMOUNT % AMOUNT % 6(11) $ 1,518,880 24 $ 297,593 6 6(12) - - 876 - 6(21) 7,597 - 81,033 2 815,902 13 611,115 12 7 162,449 2 242,139 5 6(13) 232,388 4 250,886 5 7 111,110 2 45,688 1 6(16) 47,249 1 70,558 1 6(8) and 7 52,980 1 73,176 1 6(14) 128,543 2 52,340 1 7 19,099 - 28,336 - 3,096,197 49 1,753,740 34 6(14) 628,437 10 339,089 6 6(28) 109,314 2 107,094 2 6(8) and 7 341,118 5 372,049 7 6(15) 170,841 3 203,570 4 1,249,710 20 1,021,802 19 4,345,907 69 2,775,542 53 6(17) 2,280,283 36 2,280,283 44 6(18) 402,937 6 402,937 8 6(19) 24,972 1 24,972 - 193,426 3 193,426 4 ( 558,307) ( 9) ( 117,336) ( 2 ) 6(20) ( 380,945) ( 6) ( 364,752) ( 7 ) 1,962,366 31 2,419,530 47 8 10 $ 6,308,273 100 $ 5,195,072 100

Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2130 Current contract liabilities 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2250 Provisions for liabilities - current 2280 Current lease liabilities 2320 Long-term liabilities, current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total Liabilities Equity Share capital 3110 Common stock Capital reserve 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Accumulated deficit Other equity interest 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity

The accompanying notes are an integral part of these parent company only financial statements.

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MICROELECTRONICS TECHNOLOGY, INC.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except losses per share amount)

Items

YearendedDecember31 2021 2020 Notes AMOUNT % AMOUNT % 6(21) and 7 $ 3,606,238 100 $ 3,165,331 100 6(5) and 7 ( 3,222,610 ) ( 89) ( 2,667,282) ( 84 ) 383,628 11 498,049 16 6(26)(27) and 7 ( 128,358 ) ( 4) ( 122,642) ( 4 ) ( 61,280 ) ( 2) ( 63,946) ( 2 ) ( 648,522 ) ( 18) ( 495,085) ( 16 ) ( 10,757 ) - ( 249) - ( 848,917 ) ( 24) ( 681,922) ( 22 ) ( 465,289 ) ( 13) ( 183,873) ( 6 ) 6(22) 778 - 1,878 - 6(23) 20,446 1 71,189 2 6(24) and 7 923 - 3,498 - 6(25) ( 17,990 ) ( 1) ( 13,009) - 6(6) 5,116 - 24,902 1 9,273 - 88,458 3 ( 456,016 ) ( 13) ( 95,415) ( 3 ) 6(28) 6,000 - - - ( $ 450,016 ) ( 13) ($ 95,415) ( 3 ) 6(15) $ 9,045 - ($ 24,334) ( 1 ) 6(3) 5,011 - ( 616) - 6(6) ( 1,909 ) - ( 109,507) ( 3 ) 6(6) ( 24,119 ) - ( 7,566) - 6(28) 4,824 - 1,513 - ( $ 7,148 ) - ($ 140,510) ( 4 ) ( $ 457,164 ) ( 13) ($ 235,925) ( 7 ) 6(29) ( $ 1.97) ($ 0.42) 6(29) ( $ 1.97) ($ 0.42)

4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Loss of expected credit impairment 6000 Total operating expenses 6900 Operating loss Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Loss before income tax 7950 Income tax benefit 8200 Loss for the year Other comprehensive income (loss) Components of other comprehensive loss that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealised loss from financial assets measured at fair value through other comprehensive income 8330 Share of other comprehensive income of associates and joint ventures accounted for under equity method, components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8380 Share of other comprehensive income of associates and joint ventures accounted for under equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive income that will be reclassified to profit or loss 8300 Total other comprehensive loss for the year 8500 Total comprehensive loss for the year Basic losses per share 9750 Total basic lossess per share Diluted losses per share 9850 Total diluted losses per share

The accompanying notes are an integral part of these parent company only financial statements.

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MICROELECTRONICS TECHNOLOGY, INC. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

2020 Balance at January 1, 2020 Loss for the year Other comprehensive loss for the year Total comprehensive loss Balance at December 31, 2020 2021 Balance at January 1, 2021 Loss for the year Other comprehensive income (loss) for the year Total comprehensive (loss) income Balance at December 31, 2021	Notes		Share capital - common stock		Capital surplus, additional paid- in capital		Retained Earnings	Retained Earnings	Retained Earnings	Retained Earnings	Other equity interest	Other equity interest		Total equity
							Legal reserve		Special reserve	Unappropriated retained earnings (accumulated deficit)	Financial statements translation differences of foreign operations	Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income
	6(3) 6(3)		$ 2,280,283 - - - $ 2,280,283 $ 2,280,283 - - - $ 2,280,283		$ 402,937 - - - $ 402,937 $ 402,937 - - - $ 402,937		$ 24,972 - - - $ 24,972 $ 24,972 - - - $ 24,972		$ 193,426 - - - $ 193,426 $ 193,426 - - - $ 193,426	$ 2,413 ( 95,415) ( 24,334) ( 119,749) ($ 117,336) ($ 117,336) ( 450,016) 9,045 ( 440,971) ($ 558,307)	($ 104,070) - ( 6,053) ( 6,053) ($ 110,123) ($ 110,123) - ( 19,295) ( 19,295) ($ 129,418)	($ 144,506) - ( 110,123) ( 110,123) ($ 254,629) ($ 254,629) - 3,102 3,102 ($ 251,527)	$ 2,655,455 ( 95,415 ) ( 140,510 ) ( 235,925 ) $ 2,419,530 $ 2,419,530 ( 450,016 ) ( 7,148 ) ( 457,164 ) $ 1,962,366

The accompanying notes are an integral part of these parent company only financial statements.

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MICROELECTRONICS TECHNOLOGY, INC. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustments Adjustments to reconcile profit (loss) Loss on expected credit impairment Depreciation Amortization Net loss on financial assets at fair value through profit or loss Net (gain) loss on financial liabilities at fair value through profit or loss Interest income Dividend income Interest expense Gain on disposal of property, plant and equipment Gains arising from lease modifications Share of profit of associates accounted for under the equity method Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Other receivables - related parties Inventories Prepayments Changes in operating liabilities Accounts payable Accounts payable - related parties Other current liabilities Provisions for liabilities Contract liabilities Other payables Other payables - related parties Accrued pension liabilities Cash outflow generated from operations Interest received Dividend received Interest paid Net cash flows used in operating activities

Year ended December 31 Notes 2021 2020 ($ 456,016 ) ($ 95,415 ) 10,757 249 6(7)(26) 92,339 68,093 6(9)(26) 20,079 16,663 6(2)(24) 2,038 143 6(24) ( 876 ) 603 6(22) ( 778 ) ( 1,878 ) 6(23) ( 130 ) ( 324 ) 6(25) 17,990 13,009 6(24) ( 20 ) ( 663 ) 6(24) - ( 2,949 ) 6(6) ( 5,116 ) ( 24,902 ) ( 9,932 ) 4,943 ( 218,776 ) 35,833 36,786 ( 62,218 ) 14,100 ( 17,688 ) 135 4,363 ( 865,119 ) ( 230,114 ) 15,730 ( 26,367 ) 204,787 183,175 ( 79,690 ) ( 47,602 ) ( 8,419 ) ( 4,830 ) 342 ( 627 ) ( 73,436 ) 25,262 ( 10,709 ) 52,352 65,422 ( 30,332 ) ( 15,600 ) ( 50,682 ) ( 1,264,112 ) ( 191,903 ) 789 1,940 130 324 ( 17,811 ) ( 13,698 ) ( 1,281,004 ) ( 203,337 )

(Continued)

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MICROELECTRONICS TECHNOLOGY, INC. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in guarantee deposits paid Decrease in guarantee deposits paid Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in short-term borrowings Increase in long-term borrowings Decrease in long-term borrowings Repayments of principal portion of lease liabilities Net cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Year ended December 31 Notes 2021 2020 6(30) ($ 105,227 ) ($ 42,225 ) 142 740 6(9) ( 17,018 ) ( 19,687 ) ( 3,793 ) - - 1 ( 125,896 ) ( 61,171 ) 6(31) 2,679,475 1,326,420 6(31) ( 1,458,188 ) ( 1,425,575 ) 6(31) 390,180 418,510 ( 33,533 ) - 6(31) ( 74,637 ) ( 38,451 ) 1,503,297 280,904 96,397 16,396 727,097 710,701 $ 823,494 $ 727,097

The accompanying notes are an integral part of these parent company only financial statements.

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MICROELECTRONICS TECHNOLOGY, INC. NOTES TO THE FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANISATION

Microelectronics Technology Inc. (the “Company”) was incorporated as company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company is primarily engaged in design, manufacture and sales of terrestrial microwave, satellite and photoelectric communication system products, and related customised products.

On January 1, 2011, the Company merged with the subsidiary, Global PCS Inc.. Under the merger, the Company is the surviving company while Global PCS Inc. was the dissolved company.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These financial statements were authorised for issuance by the Board of Directors on March 16, 2022.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are follows:

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest Rate Benchmark Reform— Phase 2’ Amendment to IFRS 16, ‘Covid-19-related rent concessions beyond 30 June 2021’ Note：Earlier application from January 1, 2021 is allowed by FSC.	January 1, 2021 January 1, 2021 April 1, 2021(Note)

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

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(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

The Company

The Company
	Effective date by
	International
	Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’	January 1, 2022
Amendments to IAS 16, ‘Property, plant and equipment:	January 1, 2022
proceeds before intended use’
Amendments to IAS 37, ‘Onerous contracts—	January 1, 2022
cost of fulfilling a contract’
Annual improvements to IFRS Standards 2018–2020	January 1, 2022

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

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Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
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endorsed by the FSC are as follows: New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets	To be determined by
between an investor and its associate or joint venture’	International Accounting
	Standards Board
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, 'Insurance contracts'	January 1, 2023
Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 –	January 1, 2023
comparative information'
Amendments to IAS 1, ‘Classification of liabilities as current or non-	January 1, 2023
current’
Amendments to IAS 1, ‘Disclosure of accounting policies’	January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’	January 1, 2023
Amendments to IAS 12, ‘Deferred tax related to assets and liabilities	January 1, 2023
arising from a single transaction’

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The financial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

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(2) Basis of preparation

• A. Except for the following items, the parent company only financial statements have been prepared under the historical cost convention:

  • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • (b) Financial assets and liabilities at fair value through other comprehensive income.

  • (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The investment of subsidiaries and associates were accounted for under equity method when the Company prepares the parent company only financial statements. In order for the profit or loss, other comprehensive income or loss and owner’s equity presented on the parent company only financial statements to be consistent with those presented on the consolidated financial statements, the differences resulting from accounting treatments under the parent company only basis and consolidation basis were adjusted in accounts of ‘Investment accounted for under equity method’, ‘Share of profit (loss) of subsidiaries and associates accounted for under equity method’ and ‘Share of other comprehensive income of subsidiaries and associates accounted for under equity method’.

• C. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.

• (3) Foreign currency translation

• Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in New Taiwan dollars, which is the Company’s functional currency.

• A. Foreign currency transactions and balances

  • (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

  • (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

  • (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and

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liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

• B. Translation of foreign operations

• (a) The operating results and financial position of all the Company entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities presented in each balance sheet are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

iii. All resulting exchange differences are recognised in other comprehensive income.

  - (b) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

• (4) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

  • (b) Assets held mainly for trading purposes;

  • (c) Assets that are expected to be realised within twelve months from the balance sheet date;

  • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

  • (a) Liabilities that are expected to be settled within the normal operating cycle;

  • (b) Liabilities arising mainly from trading activities;

  • (c) Liabilities that are to be settled within twelve months from the balance sheet date;

  • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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(5) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(6) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

• D. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(7) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value, the changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

• (8) Financial assets at amortised cost

• A. Financial assets at amortised cost are those that meet all of the following criteria:

  • (a) The objective of the Company’s business model is achieved by collecting contractual cash flows.

  • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective

~18~

interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.

• D. The Company’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

• (9) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (10) Impairment of financial assets

For financial assets at amortised cost, at each reporting date, the Company recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant financing component, the Company recognises the impairment provision for lifetime ECLs.

• (11) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

• (12) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(13) Investments accounted for using equity method / associates

• A. Subsidiaries are all entities controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• B. Unrealised gains or losses resulting from inter-company transactions with subsidiaries are eliminated. Necessary adjustments are made to the accounting policies of subsidiaries, to be consistent with the accounting policies of the Company.

• C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movement in other comprehensive income is equals or exceeds its interest in the subsidiary, the Company continues to recognize its share in the

~19~

subsidiary’s loss proportionately.

• D. According to “Regulations Governing the Preparation of Financial Statements by Securities Issuers”, profit for the year and other comprehensive income for the year reported in the parent company only financial statements, shall be equal to profit for the year and other comprehensive income attributable to owners of the parent reported in the consolidated financial statements, equity reported in the parent company only financial statements shall be equal to equity attributable to owners of parent reported in the consolidated financial statements.

• (14) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

are as follows:
Machinery and equipment	3 ~ 6 years
Office equipment	2 ~ 6 years
Transportation equipment	5 years
Leasehold improvements	3 years

(15) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate, lease payments are comprised of the fixed payments.

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The Company subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising including the amount of the initial measurement of lease liability and any initial direct costs incurred by the lessee.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

• (16) Intangible assets

• A. Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 years.

• B. Goodwill arises in a business combination accounted for by applying the acquisition method and subsequently measured at the amount of cost less accumulated impairment loss.

• C. Acquired special technologies are amortised on a straight-line basis over their estimated useful lives of 5 years.

(17) Impairment of non-financial assets

• A. The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

• B. The recoverable amount of goodwill will be assessed periodically. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.

• C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

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(18) Borrowings

• Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(19) Accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services.

• B. The short-term notes without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

(21) Derecognition of financial liabilities

• A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.

(22) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

• (23) Provisions

• Provision-warranties are recognised when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

• (24) Employee benefits

• A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

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B. Pensions

• (a) Defined contribution plans

For the defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans

     - i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

     - ii. Remeasurements arising on the defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as other equity.

• C. Employees’ compensation and directors’ and supervisors’ remuneration

  • Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

• (25) Employee share based payment

• For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and nonvesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

• (26) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

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• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

• D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

• F. Deferred tax assets are recognised for the carry forward of unused tax losses to the extent that it is probable that future taxable profits will be available against which they can be utilized.

• (27) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

(28) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities.

(29) Revenue recognition

• A. Sales of goods

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• (a) The Company manufactures and sells terrestrial microwave, satellite, and related customized products. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

• (b) Revenue from these sales is recognised based on the price specified in the contract. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. The sales usually are made with a credit term of 30 to 90 days, which is consistent with market practice. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Company does not adjust the transaction price to reflect the time value of money.

• (c) The Company’s obligation to provide a refund for faulty products under the standard warranty terms is recognised as a provision.

• (d) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

• B. Technical services on product development

• (a) The Company provides technical services on product development. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. This is determined based on the actual costs spent relative to the total expected cost. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

• (b) The Company’s estimate about revenue, costs and progress towards complete satisfaction of a performance obligation is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management become aware of the changes in circumstances.

• C. Incremental costs of obtaining a contract

• Given that the contractual period lasts less than one year, the Company recognises the incremental costs of obtaining a contract as an expense (mainly derived from sales commissions)

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when incurred although the Company expects to recover those costs.

• (30) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the company will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the company recognises expenses for the related costs for which the grants are intended to compensate.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The related information is addressed below:

(1) Critical judgements in applying the Company’s accounting policies

None.

• (2) Critical accounting estimates and assumptions

• A. Impairment assessment of tangible and intangible assets (including goodwill)

  • The Company assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Company strategy might cause material impairment on assets in the future.

  • The impairment assessment of goodwill relies on the Company’s subjective judgement, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units. 、

  • Please refer to Note 6(9) (10) for the information on goodwill impairment.

As of December 31, 2021, the Company had property, plant and equipment in the amount of $177,033, intangible assets including goodwill in the amount of $263,759 (including goodwill generated from invested in the subsidiaries and was shown as investments accounted for using equity method in parent company only financial statements in the amount of $120,122) and computer software in the amount of $19,411.

• B. Realisability of deferred tax assets

• Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit

~26~

rate, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred tax assets.

As of December 31, 2021, the Company recognised deferred tax assets amounting to $430,687.

• C. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value.

As of December 31, 2021, the carrying amount of inventories was $1,674,985.

• D. Calculation of net defined benefit liabilities

When calculating the present value of defined pension obligations, the Company must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and future salary growth rate. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

As of December 31, 2021, the carrying amount of net defined benefit liabilities was $155,629.

• E. Calculation of lease liability

The Company needs to consider all relevant facts and circumstances that create an economic incentive for the lessees to exercise an option or not when determining the lease term. This includes anticipated modifications in all facts and circumstances from the commencement date of the lease to the option exercise date. Key considerations include the terms and conditions of the contract for the period covered by the options and the importance of the underlying assets to the operation of the lessees. Lessees are required to reassess the lease term when significant events or changes in circumstances occur that are within the control of the Company.

The lessee’s incremental borrowing rate used for discounted lease payments is determined by the market risk-free interest rate in a similar economic environment, and the estimated lessee credit risk discount and secured factors.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and revolving funds Checking accounts and demand deposits Time deposits	December 31,2021 120 $ 760,779 62,595 823,494 $	December 31,2020
		151 $ 570,322 156,624
		727,097 $

The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

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(2) Financial assets at fair value through profit or loss

Items December 31, 2021 December 31, 2020 Current items: Financial assets mandatorily measured at fair value through profit or loss Derivative instruments $ 490 $ 2,528

• A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

Year ended December 31, 2021 Year ended December 31, 2020

Financial assets mandatorily measured at fair value through profit or loss Derivative instruments ($ 2,038) ($ 143)

• B. The Company entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below:

Unit: In thousands

		December 31,	2021		December 31,	2020
	Contract amount		Contract	Contract amount		Contract
Derivative instruments	(Notional principal)		period	(Notional principal)		period
Current items:
Foreign exchange swap	USD	3,000	2021.11.11~	USD	3,000	2020.11.12~
transactions			2022.01.18			2021.01.15
Forward foreign	USD	1,000	2021.12.06~	USD	900	2020.11.27~
exchange contracts			2022.01.04			2021.02.05

The Company entered into foreign exchange swap contracts to sell forward contracts to hedge exchange rate risk of export proceeds. However, these forward contracts are not accounted for under hedge accounting.

(3) Financial assets at fair value through other comprehensive income

Items		December	31,2021		December	31,2020
Non-current items：
Equity instruments
Unlisted stocks		$	25,000		$	25,000
Valuation adjustments	(		11,329)	(		16,340)
		$	13,671		$	8,660

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• A. The Company has elected to classify equity instrument investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $13,671 and $8,660 as at December 31, 2021 and 2020, respectively.

• B. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Year ended December 31, 2021 Year ended December 31, 2020

Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive (loss) income $ 5,011 ($ 616)

(4) Notes and accounts receivable

Notes and accounts receivable
		December	31, 2021		December	31,2020
Notes receivable		$	14,013		$	4,081
Less: Allowance for uncollectible accounts			-			-
		$	14,013		$	4,081
Accounts receivable		$	1,043,880		$	825,111
Accounts receivable - related party			32,276			69,062
Less: Allowance for uncollectible accounts	(		11,028)	(		278)
		$	1,065,128		$	893,895

• A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

is as follows:
Not past due Up to 90 days 91 to 180 days Over 180 days	Accounts receivable Notes receivable 505,708 $ 14,013 $ 424,764 - 58,892 - 86,792 - 1,076,156 $ 14,013 $ December 31, 2021	December31,2020
	Accounts receivable 505,708 $ 424,764 58,892 86,792 1,076,156 $	Accounts receivable 592,685 $ 283,598 15,642 2,248 894,173 $	Notes receivable
			4,081 $ - - -
			4,081 $

The above ageing analysis was based on past due date. Overdue receivables of $438,431 in 2021 has been recovered after the end of December 31, 2021.

• B. As of December 31, 2021 and 2020, accounts receivable and notes receivable were all from contracts with customers. And as of January 1, 2020, the balance of receivables from contracts with customers amounted to $878,036.

• C. As of December 31, 2021 and 2020, without taking into account other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’s notes receivable were $14,013 and $4,081, respectively. As of December 31, 2021 and 2020, the

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maximum exposure to credit risk in respect of the amount that best represents the Company’s accounts receivable were $1,065,128 and $893,895, respectively.

D. Information relating to credit risk of accounts and notes receivable is provided in Note 11(2).

(5) Inventories

Inventories
Raw materials Work in progress Finished goods Inventory in transit Raw materials Work in progress Finished goods	Cost 1,400,777 $ 230,535 84,152 2,303 1,717,767 $ Cost 567,792 $ 108,848 166,618 843,258 $	Allowance for inventory valuation losses 20,013) ($ 13,389) ( 9,380) ( - 42,782) ($ December 31,2021 Allowance for inventory valuation losses 13,624) ($ 10,823) ( 8,945) ( 33,392) ($ December 31,2020	Book value
			1,380,764 $ 217,146 74,772 2,303 1,674,985 $
			Book value
			554,168 $ 98,025 157,673
			809,866 $

The cost of inventories recognised expense for the year:

(6)	Investments accounted for using equity method Cost of goods sold Loss on decline in market value Recognised as selling and R&D expenses Subsidiary-Sasson International Holding Inc.	Years ended December 31,	Years ended December 31,
		2021 3,145,644 $ 76,966 24,398 3,247,008 $ December31,2021 1,509,143 $	2020
			2,652,747 $ 14,535 21,138
			2,688,420 $
			December31,2020
			1,530,055 $

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		2021		2020
At January 1	$	1,530,055	$	1,622,226
Share of profit or loss of investments accounted for	(	6,878)		40,199
using equity method
Unrealized gain (loss)		11,994	(	15,297)
Changes in other equity item-unrealized gain (loss)	(	1,909)	(	109,507)
on financial assets
Currency exchange	(	24,119)	(	7,566)
At December 31	$	1,509,143	$	1,530,055

For information on the Company’s subsidiary – Sasson International Holding Inc., please refer to Note 4 (3) in the Company’s consolidated financial statements for the year ended December 31, 2021.

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(7) Property, plant and equipment

2021

Machinery and Transportation Leasehold equipment Office equipment equipment improvements At January 1 Cost 719,710 $ 63,220 $ 389 $ 13,540 $ Accumulated depreciation and impairment 615,624) ( 53,775) ( 389) ( 7,620) ( 104,086 $ 9,445 $ - $ 5,920 $ At January 1 104,086 $ 9,445 $ - $ 5,920 $ Additions 71,202 4,568 - 6,777 Disposals 122) ( - - - Depreciation expense 28,819) ( 5,731) ( - 3,842) ( At December 31 146,347 $ 8,282 $ - $ 8,855 $ At December 31 Cost 788,967 $ 67,787 $ 389 $ 20,317 $ Accumulated depreciation and impairment 642,620) ( 59,505) ( 389) ( 11,462) ( 146,347 $ 8,282 $ - $ 8,855 $	Unfinished construction and equipment under acceptance Total - $ 796,859 $ - 677,408) ( - $ 119,451 $ - $ 119,451 $ 13,549 96,096 - 122) ( - 38,392) ( 13,549 $ 177,033 $ 13,549 $ 891,009 $ - 713,976) ( 13,549 $ 177,033 $	Total

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2020

										Unfinished
										construction and
		Machinery and				Transportation		Leasehold		equipment under
		equipment		Office equipment		equipment		improvements		acceptance			Total
At January 1
Cost	$	701,975	$	55,411	$	389	$	9,850	$		918	$	768,543
Accumulated depreciation
and impairment	(	621,697)	(	48,865)	(	389)	(	4,258)			-	(	675,209)
	$	80,278	$	6,546	$	-	$	5,592	$		918	$	93,334
At January 1	$	80,278	$	6,546	$	-	$	5,592	$		918	$	93,334
Additions		43,416		7,894		-		3,690			909		55,909
Disposals	(	63)	(	14)		-		-			-	(	77)
Reclassifications		1,827		-		-		-	(	1,827)			-
Depreciation expense	(	21,372)	(	4,981)		-	(	3,362)			-	(	29,715)
At December 31	$	104,086	$	9,445	$	-	$	5,920	$		-	$	119,451
At December 31
Cost	$	719,710	$	63,220	$	389	$	13,540	$		-	$	796,859
Accumulated depreciation
and impairment	(	615,624)	(	53,775)	(	389)	(	7,620)			-	(	677,408)
	$	104,086	$	9,445	$	-	$	5,920	$		-	$	119,451

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－ (8) Leasing arrangements lessee

• A. The Company leases buildings. Rental contracts are typically made for 10 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

• B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

December 31,2021 Carryingamount Buildings 388,597 $ Year ended December 31,2021 Depreciation charge Buildings 53,947 $	December 31,2020 Carrying amount 419,034 $
	Year ended December 31, 2020 Depreciation charge $38,378

• C. The information on profit and loss accounts relating to lease contracts is as follows:

Year ended December 31, 2021 Year ended December 31, 2020

	Year ended	December 31, 2021 Year ended	December 31, 2020
Items affecting profit or loss
Interest expense on lease	$	8,203 $	6,567
liabilities
Expense on short-term lease		23,568	3,715
contracts
Expense on leases of low-		209	208
value assets

• D. For the years ended December 31, 2021 and 2020, the additions to right-of-use assets were $23,510 and $0, respectively.

• E. For the years ended December 31, 2021 and 2020, the Company’s total cash outflow for leases were $106,617 and $48,941, respectively.

• F. Extension and termination options

In determining the lease term, the Company takes into consideration all facts and circumstances that create an economic incentive to exercise an extension option or not to exercise a termination option. The assessment of lease period is reviewed if a significant event occurs which affects the assessment.

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(9) Intangible assets

ntangible assets
At January 1 Cost Accumulated amortisation At January 1 Additions Amortisation charge At December 31 At December 31 Cost Accumulated amortisation At January 1 Cost Accumulated amortisation At January 1 Additions Amortisation charge At December 31 At December 31 Cost Accumulated amortisation	Acquired special Goodwill technology Computer sofware Total 143,637 $ 404,895 $ 367,146 $ 915,678 $ - 404,895) ( 344,674) ( 749,569) ( 143,637 $ - $ 22,472 $ 166,109 $ 143,637 $ - $ 22,472 $ 166,109 $ - - 17,018 17,018 - - 20,079) ( 20,079) ( 143,637 $ - $ 19,411 $ 163,048 $ 143,637 $ 404,895 $ 384,164 $ 932,696 $ - 404,895) ( 364,753) ( 769,648) ( 143,637 $ - $ 19,411 $ 163,048 $ 2021 2020
		163,048 $
	Acquired special Goodwill technology Computer sofware Total 143,637 $ 404,895 $ 349,674 $ 898,206 $ - 404,895) ( 330,226) ( 735,121) ( 143,637 $ - $ 19,448 $ 163,085 $ 143,637 $ - $ 19,448 $ 163,085 $ - - 19,687 19,687 - - 16,663) ( 16,663) ( 143,637 $ - $ 22,472 $ 166,109 $ 143,637 $ 404,895 $ 367,146 $ 915,678 $ - 404,895) ( 344,674) ( 749,569) ( 143,637 $ - $ 22,472 $ 166,109 $	Total
		166,109 $

A. Details of amortisation on intangible assets are as follows:

Operating costs Research and development expenses	Years ended December 31,	Years ended December 31,
	2021 6,379 $ 13,700 20,079 $	2020
		5,674 $ 10,989
		16,663 $

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(10) Impairment of non-financial assets

Goodwill is allocated to the Company’s cash-generating units identified according to operating segment. The recoverable amount of all cash-generating units has been determined based on valuein-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by the management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The recoverable amount of all cashgenerating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired. The key assumptions used for value-in-use calculations are as follows:

Years ended December 31,

		Years endedDecember31,
Operating revenue growth Gross margin Discount rate	Up to 1 year 2 ~ 5 years 97% 5% 16% 16% 14.03% 14.03% 2021	Over 6 years Up to 1 year 2 ~ 5 years 0% 95% 7% 16% 20% 21% 14.03% 14.43% 14.43% 2020	Over 6 years
			0% 22% 14.43%

• A. Operating revenue growth rate: took into consideration the estimated operation and sales plans.

• B. Gross margin: calculated based on the historical data and took into consideration the estimated operation and sales plans.

• C. Discount rate: the discount rates used were pre-tax and reflected specific risks relating to the relevant operating segments.

(11) Short-term borrowings

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Type of borrowings December 31, 2021 Interest rate range Collateral
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Type of borrowings	December 31, 2021	Interest rate range	Collateral
Bank borrowings Unsecured borrowings Borrowings for material purchase Export financing Type of borrowings Bank borrowings Borrowings for material purchase Export financing	1,124,766 $ 311,074 83,040 1,518,880 $ December31,2020 209,875 $ 87,718 297,593 $	0.74%~1.25% 0.70%~0.89% 0.70% Interest rate range 0.74%~0.87% 0.65%~0.75%	None None None Collateral
			None None

For the years ended December 31, 2021 and 2020, the Company recognized interest expense in profit or loss amounting to $4,483 and $4,971, respectively.

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(12) Financial liabilities at fair value through profit or loss

Items	December 31,2021	December	31,2020
Current items:
Financial liabilities held for trading
Non-hedging derivatives	- $	$	876
A. For the years ended December 31, 2021 and 2020, the Company recognised net gain (loss) on
finanical liabilities held for trading amounting to $876 and ($603), respectively.

• B. Explanations of the transactions and contract information in respect of derivative financial liabilities that the Company does not adopt hedge accounting are as follows:

			Unit: In thousands	Unit: In thousands
	December 31,2021		December	31, 2020
Non-derivative financial	Contract amount		Contract amount
Liabilities for hedging	(Notionalprincipal)	Contract period	(Notionalprincipal)	Contract period
Current items:
Forward foreign	-	-	9,560 USD	2020.10.12~
exchange contracts				2021.03.26
C. The Company entered into foreign exchange swap contracts to			sell forward contracts to hedge
exchange rate risk of export proceeds. However,		these forward	contracts are not	accounted for
under hedge accounting.

(13) Other payables

exchange rate risk of export proceeds. However, under hedge accounting. Other payables	these forward contracts	are not accounted for
Employee bonus payable Accrued export expenses Payables for machinery and equipment Payables on miscellaneous purchases Technical service expense payable Insurance expense payable Payables for consulting service fees Others	December 31,2021 132,354 $ 17,626 17,436 17,313 11,910 7,086 6,718 21,945 232,388 $	December 31, 2020
		138,390 $ 15,295 25,429 17,076 4,172 7,735 10,789 32,000
		250,886 $

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- (14) Long term borrowings

Type of borrowings Long-term bank borrowings: Land Bank of Taiwan The Shanghai Commercial & Savings Bank, Ltd. Mega bank Less: Current

Borrowing period and repayment term Interest rate range Collateral December 31,2021 Borrowing period is from February 5, 2021 to February 5, 2026; interest is repayable monthly; principal is repayable monthly from March 15, 2022. 0.800% None. 214,080 $ Borrowing period is from March 31, 2020 to March 15, 2025; interest is repayable monthly; principal is repayable monthly from April 15, 2022. 0.750% None. 297,351 Borrowing period is from December 23, 2019 to September 15, 2026; interest is repayable monthly; principal is repayable monthly from December 15, 2022. 0.945% None. 245,549 756,980 128,543) ( 628,437 $

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Type of borrowings Long-term bank borrowings: The Shanghai Commercial & Savings Bank, Ltd. Mega bank Less: Current

Borrowing period and repayment term Interest rate range Collateral December 31,2020 Borrowing period is from March 31, 2020 to March 15, 2025; interest is repayable monthly; principal is repayable monthly from April 15, 2022. 0.750% None. 281,933 Borrowing period is from December 23, 2019 to September 15, 2026; interest is repayable monthly; principal is repayable monthly from December 15, 2022. 0.845% None. 109,496 391,429 52,340) ( 339,089 $

• A. For years ended December 31, 2021 and 2020, the Company recognized interest expense in profit or loss amounting to $5,304 and $1,471, respectively, due to the long-term borrowings.

• B. On January 1, 2019, Ministry of Economic Affairs, R.O.C. (“MOEA”) implemented the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” and companies are subsidized with preferential interest loans, 0.5% of loan interest is subsidized by the National Development Fund, Executive Yuan, for qualified investment projects. The Company has obtained the qualification from the MOEA, and signed loan agreements with financial institutions during December 2019 to March 2022 with the line of credit amounted to $1.09 billion and terms from five to six years. As of March 16, 2022, the Company has drawn down $0.82 billion. Funding from these borrowings were used to invest in machineries, equipment and broaden the Company’s working capital.

(15) Pensions

• A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal

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to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method; to the employees expected to be qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

(b) The amounts recognized in the balance sheet are as follows:

	December	31,2021	December	31,2020
Present value of defined benefit obligations	$	277,742	$	287,207
Fair value of plan assets	(	122,113)	(	106,949)
Net defined benefit liability		155,629		180,258
Accumulated unadjusted amount		-		16
Net liabilities recognised in the balance sheet	$	155,629	$	180,274

• (c) Movements in net defined benefit liabilities are as follows:

					2021
		Present value of define			Fair value of		Net defined
			benefit obligations		plan assets		benefit liability
At January 1	($		287,207)	$	106,949	($	180,258)
Current service cost	(		829)		-	(	829)
Interest (expense) income	(		862)		321	(	541)
	(		288,898)		107,270	(	181,628)
Remeasurements:
Return on plan assets (excluding amounts			-		623		623
included in interest income or expense)
Change in demographic	(		262)		-	(	262)
assumptions
Change in financial assumptions			7,513		-		7,513
Experience adjustments			1,171		-		1,171
			8,422		623		9,045
Pension fund contribution			-		16,954		16,954
Paid pension			2,734	(	2,734)		-
At December 31	($		277,742)	$	122,113	($	155,629)

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				2020
	Present value of define			Fair value of		Net defined
		benefit obligations		plan assets		benefit liability
At January 1	($	295,022)	$	88,400	($	206,622)
Current service cost	(	893)		-	(	893)
Interest (expense) income	(	2,066)		619	(	1,447)
	(	297,981)		89,019	(	208,962)
Remeasurements:
Return on plan assets (excluding amounts		-		3,234		3,234
included in interest income or expense)
Change in financial assumptions	(	10,528)		-	(	10,528)
Experience adjustments	(	17,040)		-	(	17,040)
	(	27,568)		3,234	(	24,334)
Pension fund contribution		-		30,242		30,242
Paid pension		38,342	(	15,546)		22,796
At December 31	($	287,207)	$	106,949	($	180,258)

• (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorised by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2021 and 2020 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Years endedDecember31,	Years endedDecember31,
	2021 0.60% 2.00%	2020
		0.30%
		2.00%

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Future mortality rate was estimated based on the 6th and 5th Taiwan Standard Ordinary Experience Mortality Table.

Sensitivity analysis of the effect on present value of defined benefit obligation due from the changes of main actuarial assumptions was as follows:

Increase 1% Decrease 1% December 31, 2021 Effect on present value of defined benefit obligation 23,356) ($ 24,096 $ December 31, 2020 Effect on present value of defined benefit obligation 26,577) ($ 27,464 $ Discount rate	Increase 1% Decrease 1% 20,924 $ 20,424) ($ 24,059 $ 23,448) ($ Future salary increases

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis were consistent with previous period.

  - (f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2022 amount to $3,334.

  - (g) As of December 31, 2021, the weighted average duration of the retirement plan is 9 years.

• B. (a)Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • (b) The pension costs under defined contribution pension plans of the Company for the years ended December 31, 2021 and 2020 were $23,323 and $20,780, respectively.

• (16) Provisions

• A. Provision for warranty

		2021			2020
Balance at January 1	$		1,890	$		2,517
Additional provisions			2,694			2,000
Used during the year	(		2,352)	(		2,627)
Balance at December 31	$		2,232	$		1,890

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The Company gives warranties on sales-related products. Provision for warranty is estimated based on historical warranty data of uninterruptible power supply and solar energy products.

• B. Provision for income tax in the United States

The Company recognised provision for contingent income tax liability in 2021 and 2020 for the products sold under the incoterms DDP in the previous years. The US Internal Revenue Service preliminarily determined that it suspects that the Company traded within the US. Although the Company claimed that those were international trades, considering the tax negotiation had been completed, provision for income tax liability amounting to $45,017 and $68,668 was recognised in accordance with IAS 37, respectively.

• C. Analysis of total provisions:

December 31, 2021 December 31, 2020 Current $ 47,249 $ 70,558

(17) Share capital

As of December 31, 2021, the Company’s authorised capital was $7,000,000, consisting of 0.7 billion shares of ordinary stock (including 50 million shares reserved for employee stock options and convertible bonds issued by the Company), and the paid-in capital was $2,280,283 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 (At December 31)	2021 2020 228,028 228,028 (Unit: In thousand shares)

(18) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paidin capital each year. However, capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(19) Retained earnings

• A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior year's operating losses, then 10% of the remaining amount shall be set aside as legal reserve until the legal reserve equals the total capital stock balance. After setting aside or reversal of a special reserve in accordance with related laws, the Company shall appropriate dividends to preferred stock. The Board of Directors should present the distribution of the remaining earnings along with accumulated unappropriated earnings for the

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approval of the shareholders to distribute dividends to shareholders.

• B. As the Company is in the growth stage, considered entire environment and nature of industry as well as future capital needs and long-term financial plans in order to subsequent operation and stable development. Based on the Company’s future budget of capital expenditure and demand of capital, the Company appropriated no less than 30% of distributable earnings to shareholders’ dividends, but if the distributable earnings is lower than 5% of paid-in capital, no dividends will be distributed. Cash dividend has a first priority when distributing shareholders’ dividends, and the ratio is 30~100% of current total dividends. Remaining dividend can be distributed in the form of stocks. The appropriation of retained earnings will be proposed by the Board of Directors every year, and will be approved by the shareholders.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• D. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• E. On June 14, 2021, the shareholders during their meeting resolved not to distribute dividends from 2020 earnings.

• F. The Company incurred operating losses for the years ended December 31, 2021 and 2020, and thus had no earnings for distribution.

(20) Other equity items

At January 1 Valuation adjustments Effects of associate accounted for under equity method Tax effects of associate accounted for under equity method At December 31			2021
		Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income
	254,629) ($ 5,011 1,909) ( - 251,527) ($

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2020

		Unrealised gains (losses)	Unrealised gains (losses)		Financial
			from financial assets		statements
		measured at fair value			translation
			through other		differences of
		comprehensive income		foreign operations			Total
At January 1		($	144,506)	($	104,070)	($	248,576)
Valuation adjustments		(	616)		-	(	616)
Effects of associate accounted for under		(	109,507)	(	7,566)	(	117,073)
equity method
Tax effects of associate accounted for
under equity method			-		1,513		1,513
At December 31		($	254,629)	($	110,123)	($	364,752)
Operating revenue
	Year ended		December 31,2021	Year ended December			31,2020
Revenue from contracts
with customers	$		3,606,238 $			3,165,331

(21) Operating revenue

A. Disaggregation of revenue from contracts with customers

The Company derives revenue in the following major product lines and geographical regions:

Revenue from external customer contracts Revenue from external customer contracts		2021	2021
	USA 1,397,147 $	Mainland China Other 703,262 $ 1,505,829 $ 2020		Total
				3,606,238 $
	USA 1,681,328 $	Mainland China 440,934 $	Other 1,043,069 $	Total
				3,165,331 $

B. Contract liabilities from customers

• (a) The Company has recognised the following revenue-related contract liabilities:

Contract liabilities: Contract liabilities- Products sales contracts	December 31,2021 7,597 $	December 31,2020 81,033 $	January1,2020
			55,771 $

(b) Revenue recognised that was included in the contract liability balance at the beginning of the year

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Year ended December 31, 2021 Year ended December 31, 2020

Revenue recognised that was included in the contract liability balance at the beginning of the period	51,921 $	41,489 $

Changes in contract liabilities are mainly from the timing difference between performance obligations satisfied and customers’ payment.

(22) Interest income

obligations satisfied and customers’ payment. Interest income
Other income Interest income from bank deposits Dividend income Other income, others	2021 2020 778 $ 1,878 $ Years ended December 31, 2021 2020 130 $ 324 $ 20,316 70,865 20,446 $ 71,189 $ Years ended December 31,
		2021 130 $ 20,316 20,446 $	2020 324 $ 70,865 71,189 $

(23) Other income

• A. For the years ended December 31, 2021 and 2020, the Company recognised government grant income of $0 and $27,246, respectively, for salary and working capital subsidies from the Ministry of Economic Affairs under the ‘Salary and Working Capital Subsidies for Businesses Suffered by the COVID-19 Handled by the Ministry of Economic Affairs’.

• B. For the years ended December 31, 2021 and 2020, the Company recognised government grant income of $8,796 and $26,801, respectively, for the subsidiaries from the Ministry of Economic Affairs under the ‘Low Earth Orbit (LEO) Radio Frequency Front End (RFFE) Solution Development Plan’.

(24) Other gains and losses

Development Plan’. Other gains and losses
		Years ended	December 31,
		2021	2020
Gains on disposals of property, plant and equipment	$	20	$	663
Loss on financial assets (liabilities) at fair value	(	1,162)	(	746)
through profit or loss
Currency exchange gains		3,113		2,190
Gains arising from lease modifications		-		2,949
Other gains and losses	(	1,048)	(	1,558)
	$	923	$	3,498

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(25) Finance costs

Interest expense Interest expense on borrowings Interest expense on lease liabilities	2021 2020 9,787 $ 6,442 $ 8,203 6,567 17,990 $ 13,009 $ Years ended December 31,

(26) Expenses by nature

Expenses by nature
Employee benefit expense Depreciation charges on property, plant and equipment Depreciation charges on right-of use asset Amortisation	2021 2020 587,995 $ 549,726 $ 38,392 29,715 53,947 38,378 20,079 16,663 700,413 $ 634,482 $ Years ended December 31,
		549,726 $ 29,715 38,378 16,663
		634,482 $

(27) Employee benefit expense

Employee benefit expense
Salary expenses Labour and health insurance fees Pension costs Other personnel expenses	Years ended December 31,
	2021 502,286 $ 47,713 24,693 13,303 587,995 $	2020
		473,171 $ 38,351 23,120 15,084
		549,726 $

A. According to the Articles of Incorporation of the Company, the ratio of distributable profit of the current year shall not be lower than 7% for employees’ compensation in the form of stocks/cash, and employees must be working for the Company. The current year's earnings, if any, shall not be higher than 1% for directors’ remuneration. Appropriation of employees’ compensation and directors’ remuneration shall be submitted to the shareholders’ meeting. If the Company has accumulated deficit, earnings should be reserved to cover losses and then be appropriated to employees’ compensation and directors’ remuneration based on the abovementioned ratios.

• B. For the years ended December 31, 2021 and 2020, employees’ and compensation directors’ remuneration were accrued both amounted to $0.

The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 7% and 1% of distributable profit for the years ended December 31, 2021 and 2020, respectively. However, there were no amounts accrued for both periods as the Company incurred losses before tax.

For 2020, the employees’ compensation and directors’ remuneration resolved by the Board of

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Directors both amounted to $0, which were in agreement with those amounts recognised in the 2020 financial statements.

• C. Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(28) Tax

• A. Income tax benefit

• (a) Components of income tax expense:

ome tax benefit Components of income tax expense:
		Years ended	December 31,
		2021	2020
Current tax:
Tax of foreign source income withheld at
source	($	23,624)	$	68,726
Total current tax	(	23,624)		68,726
Deferred tax:
Origination and reversal of temporary		3,103		15,755
differences
Impact of tax losses		14,521	(	84,481)
Total deferred tax		17,624	(	68,726)
Income tax benefit	($	6,000)	$	-

• (b)The income tax (charge)/credit relating to components of other comprehensive income (loss) is as follows:

	Years	ended	December 31,	December 31,
	2021			2020
Currency translation differences of foreign
operations	($ ($	4,824) 4 824)	($ ($	1,513) 1 513)

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• B. Reconciliation between income tax expense and accounting profit:

		Years ended	December 31,	December 31,
		2021		2020
Tax calculated based on profit before tax and	($	91,203)	($	19,083)
statutory tax rate (note)
Change in assessment of realisation of deferred tax assets		108,827	(	49,643)
Tax of foreign source income withheld at	(	23,624)		68,726
source
Income tax benefit	($	6,000)	$	-

• C. Amounts of deferred tax assets or liabilities as a result of temporary differences and tax losses are as follows:

						2021	2021
							Recognised
								in other
				Recognised in			comprehensive
		At	January 1		profit	or loss		income	At	December 31
Deferred tax assets:
-Temporary differences:
Allowance for inventory valuation losses	$		6,679	$		1,877	$	-	$	8,556
Unrealised warranty cost of after-sale service			378			68		-		446
Unrealised pension			36,055	(		4,929)		-		31,126
Exchange differences on foreign financial
statements			6,933			-		4,824		11,757
Others			50			2,101		-		2,151
-Tax losses			391,172	(		14,521)		-		376,651
Subtotal	$		441,267	($		15,404)	$	4,824	$	430,687
Deferred income tax liabilities:
Unrealised gain on long-term investments	($		96,469)	($		1,023)	$	-	($	97,492)
Unrealised exchange gain	(		10,294)	(		1,430)		-	(	11,724)
Others	(		331)			233		-	(	98)
Subtotal	($		107,094)	($		2,220)	$	-	($	109,314)
Total	$		334,173	($		17,624)	$	4,824	$	321,373

~49~

					2020	2020
						Recognised
							in other
			Recognised in			comprehensive
	At	January 1		profit	or loss		income	At	December 31
Deferred tax assets:
-Temporary differences:
Allowance for inventory valuation losses	$	12,042	($		5,363)	$	-	$	6,679
Unrealised warranty cost of after-sale service		504	(		126)		-		378
Unrealised pension		41,324	(		5,269)		-		36,055
Exchange differences on foreign financial
statements		5,420			-		1,513		6,933
Others		8			42		-		50
-Tax losses		306,691			84,481		-		391,172
Subtotal	$	365,989	$		73,765	$	1,513	$	441,267
Deferred income tax liabilities:
Unrealised gain on long-term investments	($	91,889)	($		4,580)	$	-	($	96,469)
Unrealised exchange gain	(	10,030)	(		264)		-	(	10,294)
Others	(	136)	(		195)		-	(	331)
Subtotal	($	102,055)	($		5,039)	$	-	($	107,094)
Total	$	263,934	$		68,726	$	1,513	$	334,173

• D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

December 31, 2021

Year incurred 2012 2013 2014 2015 2019 2020 2021	Amount filed/ Assessed 1,356,066 $ 1,086,632 407,486 240,322 103,522 218,752 454,293 .	Unused amount 1,356,066 $ 1,086,632 407,486 210,609 103,522 218,752 454,293 3,837,360 $	Unrecognised deferred tax assets 1,356,066 $ 598,039 - - - - - 1,954,105 $	Expiry year
				2022 2023 2024 2025 2029 2030 2031

~50~

December 31, 2020

Year incurred Amount filed/ Assessed 2011 1,121,209 $ 2012 1,356,066 2013 1,086,632 2014 407,486 2015 240,322 2019 106,422 2020 174,473 .	Unrecognised Unused amount deferred tax assets Expiry year 802,269 $ 802,269 $ 2021 1,356,066 1,356,066 2022 1,086,632 29,762 2023 407,486 - 2024 210,609 - 2025 106,422 - 2029 174,473 - 2030 4,143,957 $ 2,188,097 $

• E. The Company’s income tax returns through 2019 have been assessed and approved by the Tax Authority.

(29) Earnings (losses) per share

Authority. Earnings (losses) per share
		Year	ended December 31,	2021
			Weighted average
			number of ordinary
			shares outstanding	Losses per share
	Amount	after tax	(share in thousands)		(in dollars)
Basic losses per share
Loss attributable to the parent	($	450,016)	228,028	($	1.97)
Diluted losses per share
Loss attributable to the parent	($	450,016)	228,028	($	1.97)
		Year	ended December 31,	2020
			Weighted average
			number of ordinary
			shares outstanding	Losses per share
	Amount	after tax	(share in thousands)		(in dollars)
Basic losses per share
Loss attributable to the parent	($	95,415)	228,028	($	0.42)
Diluted losses per share
Loss attributable to the parent	($	95,415)	228,028	($	0.42)

~51~

(30) Supplemental cash flow information

Investing activities with partial cash payments:

(30)	Supplemental cash flow information Investing activities with partial cash payments:	Supplemental cash flow information Investing activities with partial cash payments:	Supplemental cash flow information Investing activities with partial cash payments:	Supplemental cash flow information Investing activities with partial cash payments:	Supplemental cash flow information Investing activities with partial cash payments:
(31)	Changes in liabilities from financing activities 2021 2020 Purchase of property, plant and equipment 96,096 $ 55,909 $ Add: Opening balance of payable on equipment 25,429 12,150 Ending balance of prepayment for equipment 1,138 - Less: Ending balance of payable on equipment 17,436) ( 25,429) ( Operating balance of prepayment for equipment - 405) ( Cash paid during the year 105,227 $ 42,225 $ Years ended December 31, Payments of lease liabilities Short-term borrowings Long-term borrowings Total January 1, 2021 445,225 $ 297,593 $ 391,429 $ 1,134,247 $ Changes in cash flow from financing activities 74,637) ( 1,221,287 356,647 1,503,297 Changes in other non-cash items 23,510 - 8,904 32,414 December 31, 2021 394,098 $ 1,518,880 $ 756,980 $ 2,669,958 $ Payments of lease liabilities Short-term borrowings Long-term borrowings Total January 1, 2020 221,507 $ 396,748 $ 125 $ 618,380 $ Changes in cash flow from financing activities 38,451) ( 99,155) ( 418,510 280,904 Changes in other non-cash items 262,169 - 27,206) ( 234,963 December 31, 2020 445,225 $ 297,593 $ 391,429 $ 1,134,247 $
	January 1, 2021 Changes in cash flow from financing activities Changes in other non-cash items December 31, 2021 January 1, 2020 Changes in cash flow from financing activities Changes in other non-cash items December 31, 2020	Payments of lease liabilities 445,225 $ 74,637) ( 23,510 394,098 $ Payments of lease liabilities
				297,593 $ 1,221,287 - 1,518,880 $ Short-term borrowings
		221,507 $ 38,451) ( 262,169 445,225 $	396,748 $ 99,155) ( - 297,593 $

~52~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties Sasson International Holding, Inc. Welltop Technology Co., Ltd. MTI Laboratory, Inc. RadioComp ApS Jupiter Network Corp. Jupiter Technology (Wuxi) Inc. Cybertan Technology Inc.

Relationship with the Company The Company's directly owned subsidiary The Company's indirectly owned subsidiary The Company's indirectly owned subsidiary The Company's indirectly owned subsidiary The Company's indirectly owned subsidiary The Company's indirectly owned subsidiary Entities with significant influence to the Company

(2) Significant related party transactions and balances

• A. Operating revenue

gnificant related party transactions and balances Operating revenue
Sales of goods: Subsidiaries Entities with significant influence to the Company	Years ended December 31,
	2021 - $ 55,296 55,296 $	2020
		86,107 $ 25,713
		111,820 $

Goods are sold based on the price lists in force and terms that would be available to third parties. The credit term for the related party is 30 days after invoice date, and the credit term for the general customers is 30 to 90 days after invoice date or monthly billings.

• B. Purchases

Purchases of goods: Jupiter Technology (Wuxi) Inc. Entities with significant influence to the Company	Years ended December 31,	Years ended December 31,
	2021 182,602 $ 2,423 185,025 $	2020
		866,838 $ -
		866,838 $

Goods are purchased based on the price lists in force and terms that would be available to third parties. The debt term for the related party is 60 days after invoice date, and the debt term for the general customers is 30 to 90 days after invoice date or monthly billings.

~53~

C. Receivables from related parties

Receivables from related parties
Accounts receivable: Subsidiaries Entities with significant influence to the Company Other receivables: Entities with significant influence to the Company Total	Years ended December 31,
	2021 - $ 32,276 32,276 205 32,481 $	2020
		59,381 $ 9,681
		69,062
		340
		69,402 $

D. Payables to related parties

Payables to related parties
		Years ended			December 31,
		2021					2020
Accounts payable:
Jupiter Technology (Wuxi) Inc.		$		160,989	$		242,139
Entities with significant Company	influence to the			1,460			-
		$		162,449	$		242,139
Other payables:
MTI Laboratory, Inc.				89,343			19,773
Radiocamp Aps				21,767			25,915
Subtotal				111,110			45,688
Total		$		273,559	$		287,827
Other current liabilities:
		December	31,2021			December 31,2020
Jupiter Technology (Wuxi)	Inc.	$		8,252	$		19,514
Research and development expenses:
	Year ended December 31,2021			Year ended		December 31,2020
MTI Laboratory, Inc.	$	168,414	$				89,843
Radiocamp Aps		143,252					111,649
	$	311,666	$				201,492

E. Other current liabilities:

F. Research and development expenses:

~54~

G. Property transactions:

Disposal of equipment Subsidiaries Purchase of equipment Subsidiaries	Disposal proceeds Gain (loss) on disposal Disposal proceeds Gain (loss) on disposal 142 $ 20 $ 63 $ - $ - $ - $ 1,435 $ - $ Year ended December 31,2021 Year ended December 31,2020

• －

• H. Lease transactions lessee

• (a) The Company leases buildings from Cybertan Technology Inc.. Rental contracts are typically made for periods of 10 years. Rents are paid at the end of year.

• (b) Acquisition of right-of-use assets:

Year ended December 31, 2021 Year ended December 31, 2020 Cybertan Technology Inc. $ 388,597 $ 419,034

• (c) Lease liabilities

• (i) Outstanding balance:

December 31, 2021 December 31, 2020 Cybertan Technology Inc. $ 394,098 $ 445,225 (ii) Interest expense Year ended December 31, 2021 Year ended December 31, 2020 Cybertan Technology Inc. $ 8,203 $ 6,567

• (ii) Interest expense

• (d) As of December 31, 2021 and 2020, guarantee deposits paid (shown as ‘Other non-current

assets’) to entities with significant influence to the Company all amounted to $5,765 and $1,972, respectively.

(3) Key management compensation

$1,972, respectively. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits	Years ended December31,
	2021 26,008 $ 1,979 27,987 $	2020
		24,339 $ 2,409
		26,748 $

8. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

None.

9. SIGNIFICANT DISASTER LOSS

None.

~55~

10. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

On November 5, 2021, the Company’s Board of Directors approved the cash capital increase and received the approval letter from Securities and Futures Bureau on January 14, 2022. The Company calculated arithmetic mean of share price from the closing price of common shares on the date before January 25, 2022, the calculation result was NT$ 65.10 and determined the issuance price is NT$ 52 per share which was 80% of basic price in the cash capital increase, the total issuance number was 10,000 thousand shares. On March 7, 2022, the Company had collected all proceeds from share in the amount of $520 million. The effective date was set on March 8, 2022.

11. OTHERS

(1) Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt.

(2) Financial instruments

A. Financial instruments by category

ancial instruments Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Designation of equity instrument Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Financial liabilities at amortised cost Short-term borrowings Accounts payable Other payables Long-term borrowings (including current portion) Lease liability	December 31,2021 490 $ 13,671 823,494 14,013 1,065,128 4,422 6,396 1,927,614 $ December 31,2021 - $ 1,518,880 978,351 343,498 756,980 3,597,709 $ 394,098 $	December 31, 2020
		2,528 $ 8,660 727,097 4,081 893,895 18,668 2,603
		1,657,532 $
		December 31,2020
		876 $ 297,593 853,254 296,574 391,429
		1,839,726 $
		445,225 $

Lease liability

~56~

• B. Financial risk management policies

• (a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial position and financial performance. The Company uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2) and 6(12)).

• (b) Risk management is carried out by a central treasury department (Company treasury) under policies approved by the Board of Directors. Company treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i.The Company operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD, EUR and RMB. Exchange rate risk arises from future commercial transactions and recognised assets and liabilities.

• ii. Management has set up a policy to require company to manage their foreign exchange risk against their functional currency. The company are required to hedge their entire foreign exchange risk exposure with the company treasury. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Company uses forward foreign exchange contracts, transacted with Company treasury.

• iii.The Company hedges foreign exchange rate by using forward exchange and cross currency swap contracts. However, the Company does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Notes 6(2) and (12).

• iv. The Company’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~57~

==> picture [431 x 512] intentionally omitted <==

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

December 31, 2021
Foreign currency
amount Exchange rate Book value
(In thousands) (NTD)
(Foreign currency ：
functional currency)
Financial assets
Monetary items
USD:NTD $ 63,567 27.68 $ 1,759,535
RMB:NTD 2,329 4.35 10,131
EUR:NTD 1,365 31.32 42,752
Financial liabilities
Monetary items
USD:NTD $ 54,247 27.68 $ 1,501,557
RMB:NTD 2,076 4.35 9,031
EUR:NTD 793 31.32 24,837
December 31, 2020
Foreign currency
amount Exchange rate Book value
(In thousands) (NTD)
(Foreign currency ：
functional currency)
Financial assets
Monetary items
USD:NTD $ 40,781 28.48 $ 1,161,443
RMB:NTD 5,540 4.36 24,154
EUR:NTD 1,152 35.02 40,343
Financial liabilities
Monetary items
USD:NTD $ 41,198 28.48 $ 1,173,319
RMB:NTD 803 4.36 3,501
EUR:NTD 765 35.02 26,790
----- End of picture text -----

v. The total exchange gain (loss), including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2021 and 2020 amounted to $3,113 and $2,190, respectively.

vi. Analysis of foreign currency market risk arising from significant foreign exchange variation:

~58~

Price risk (Foreign currency： functional currency) Financial assets Monetary items USD:NTD RMB:NTD EUR:NTD Financial liabilities Monetary items USD:NTD RMB:NTD EUR:NTD (Foreign currency： functional currency) Financial assets Monetary items USD:NTD RMB:NTD EUR:NTD Financial liabilities Monetary items USD:NTD RMB:NTD EUR:NTD	Effect on Effect on other comprehensive Degree of variation profit or loss income 1% 17,595 $ - $ 1% 101 - 1% 428 - 1% 15,016) ($ - $ 1% 90) ( - 1% 248) ( - Year ended December 31,2021 Sensitivityanalysis Year ended December 31,2020	Effect on Effect on other comprehensive Degree of variation profit or loss income 1% 17,595 $ - $ 1% 101 - 1% 428 - 1% 15,016) ($ - $ 1% 90) ( - 1% 248) ( - Year ended December 31,2021 Sensitivityanalysis Year ended December 31,2020
	Sensitivityanalysis
	Effect on Degree of variation profit or loss 1% 11,614 $ 1% 242 1% 403 1% 11,733) ($ 1% 35) ( 1% 268) (	Effect on other comprehensive income
		- $ - - - $ - -

• i. The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

~59~

• ii. The Company’s investments in equity securities comprise shares issued by the overseas and domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2021 and 2020 would have increased/decreased by $137 and $87, respectively, as a result of equity investment at fair value through other comprehensive income.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost, at fair value through profit or loss and at fair value through other comprehensive income.

• ii. The Company manages their credit risk taking into consideration the company’s concern. For banks and financial institutions, only independently rated parties with a optimised credit rating are accepted. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by management. The utilisation of credit limits is regularly monitored.

• iii. Impairment assessment of credit risk on financial assets at amortised cost is as follows: (i) The Company adopts following assumptions under IFRS 9, if the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

  • (ii) In line with credit risk management procedure, when the counterparty is unable to pay the past-due payables, the default has occurred.

  • (iii) The Company used the forecast ability to adjust historical and timely information and considered credit rating of issue banks to assess the default possibility of accounts and notes receivable.

  • (iv) The Company’s financial assets at amortised cost are including time deposits deposited in banks and restricted time deposits. Such banks all have optimised credit rating, no past due has occurred, and no significant changes in the entire economic environment, therefore no credit loss is expected and the impact to the financial statement is remote.

~60~

• iv. Impairment assessment of credit risk on accounts and notes receivable is as follows:

• (i) The Company classifies customers’ accounts and notes receivable in accordance with credit rating of customer. The Company applies the simplified approach using provision matrix to estimate expected credit loss under the provision matrix basis.

• (ii) The Company used the forecastability to adjust historical and timely information to assess the default possibility of accounts and notes receivable. As of December 31, 2021 and 2020, the provision matrix is as follows:

December 31, 2021 Expected loss rate Total book value Loss allowance December 31, 2021 Expected loss rate Total book value Loss allowance December 31, 2020 Expected loss rate Total book value Loss allowance	Notpast due 0%-1% 519,721 $ - $ Notpast due 0%-1% 596,766 $ - $	90 days past due 0%-1% 424,764 $ 2 $ 90 days past due 0%-1% 283,598 $ 3 $		90-180 days past due 0%-1% 15,869 $ 3 $ Individual provision	Over 180 days past due 0%-100% 9,063 $ 1,306 $ Group provision 0%-3% 969,417 $ 1,311 $ Over 180 days past due 0%-1% 2,248 $ 273 $	Total
						969,417 $ 1,311 $ Total
				12.86% 120,752 $ 9,717 $ 90-180 days past due 0%-1% 15,642 $ 2 $		1,090,169 $ 11,028 $ Total
						898,254 $ 278 $

• (iii) Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts and notes receivable are as follows:

		2021			2020
At January 1	$		278	$		1,253
Write-offs of uncollectible receivables			-	(		1,212)
Reversal of impairment loss			10,757			249
Effect of exchange rate changes	(		7)	(		12)
At December 31	$		11,028	$		278

• v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

• (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

• (ii) The disappearance of an active market for that financial asset because of financial difficulties;

• (iii) Default or delinquency in interest or principal repayments;

~61~

• (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

• vi. The Company used the forecastability to adjust historical and timely information to assess the default possibility of other receivables. As of December 31, 2021 and 2020, the provision matrix is as follows:

Not past due December 31, 2021 Expected loss rate 0% Total book value 740 $ Loss allowance - $ Not past due December 31, 2020 Expected loss rate 0% Total book value 12,661 $ Loss allowance - $	90 days past due 0% 3,682 $ - $ 90 days past due 0% 5,285 $ - $	90-180 days Over 180 days past due past due Total 0% 0% - $ - $ 4,422 $ - $ - $ - $ 90-180 days Over 180 days past due past due Total 0% 0% 722 $ - $ 18,668 $ - $ - $ - $

• (c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs.

• ii. Company treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

• iii.The table below analyses the Company’s non-derivative financial liabilities and netsettled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

~62~

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

Less than 3 Between 3 months Between 1 Between 2 Over
December 31, 2021 months and 1 year and 2 years and 5 years 5 years Total
Non-derivative financial
liabilities
Short-term borrowings $ 1,151,467 $ 371,291 $ - $ - $ - $ 1,522,758
- - -
Accounts payable 849,651 128,700 978,351
(including related party)
- - - -
Other payables 343,498 343,498
(including related party)
-
Long-term borrowings 14,578 120,013 197,409 458,328 790,328
Lease liabilites 15,095 45,284 60,378 181,134 120,756 422,646
Derivative financial Less than 3 Between 3 months Between 1 Between 2 Over
liabilities months and 1 year and 2 years and 5 years 5 years Total
Cross currency swap $ - $ - $ - $ - $ - $ -
contracts
Less than 3 Between 3 months Between 1 Between 2 Over
December 31, 2020 months and 1 year and 2 years and 5 years 5 years Total
Non-derivative financial
liabilities
Short-term borrowings $ 249,297 $ 48,488 $ - $ - $ - $ 297,785
- - -
Accounts payable 768,731 84,523 853,254
(including related party)
- - - -
Other payables 296,574 296,574
(including related party)
Long-term borrowings 800 58,541 78,339 264,760 25,377 427,817
Lease liabilites 14,250 42,751 57,001 171,004 171,004 456,010
Derivative financial Less than 3 Between 3 months Between 1 Between 2 Over
liabilities months and 1 year and 2 years and 5 years 5 years Total
Cross currency swap $ 876 $ - $ - $ - $ - $ 876
contracts
----- End of picture text -----

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s derivative instruments and emerging stocks are included in Level 2.

Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market is included in Level 3.

• B. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, financial assets at amortised cost, other financial assets, short-term borrowings, accounts payable and other payables are approximate to their fair values.

~63~

• C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

• (a) The related information of natures of the assets and liabilities is as follows:

==> picture [443 x 422] intentionally omitted <==

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

Level 1 Level 2 Level 3 Total
December 31, 2021
Assets
Recurring fair value measurements
Financial assets at fair value through profit
or loss
Foreign exchange swap contracts $ - $ 437 $ - $ 437
Foreard foreign exchange contracts - 53 - 53
Financial assets at fair value through other
comprehensive income
Equity securities - - 13,671 13,671
$ - $ 490 $ 13,671 $ 14,161
Liabilities
Recurring fair value measurements
Financial liabilities at fair value through
profit or loss
Foreign exchange swap contracts $ - $ - $ - $ -
Level 1 Level 2 Level 3 Total
December 31, 2020
Assets
Recurring fair value measurements
Financial assets at fair value through profit
or loss
Foreign exchange swap contracts $ - $ 2,175 $ - $ 2,175
Foreard foreign exchange contracts - 353 - 353
Financial assets at fair value through other
comprehensive income
Equity securities - - 8,660 8,660
$ - $ 2,528 $ 8,660 $ 11,188
Liabilities
Recurring fair value measurements
Financial liabilities at fair value through
profit or loss
Forward exchange contracts $ - $ 876 $ - $ 876
----- End of picture text -----

• (b) The methods and assumptions the Company used to measure fair value are as follows:

• i. When assessing non-standard and low-complexity financial instruments, for example, interest rate swap contracts and foreign exchange swap contracts, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• ii. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company’s financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Company’s management policies and relevant control procedures relating to the valuation

~64~

models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

• D. For the years ended December 31, 2021 and 2020, there was no transfer between Level 1 and Level 2.

• E. The following chart is the movement of Level 3 for the years ended December 31, 2021 and 2020:

2020:
		2021
		Equitysecurities
At January 1	$	8,660
Income recognised in other comprehensive
income		5,011
At December 31	$	13,671
		2020
		Equitysecurities
At January 1	$	9,276
Losses recognised in other comprehensive
income	(	616)
At December 31	$	8,660

• F. Treasury department is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price. s used to the valuation model and making any other necessary adjustments to the fair value.

• G. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Unlisted shares Non-derivative equity instrument:	Fair value at Valuation Significant unobservable December 31,2021 technique input $ 13,671 Market comparable companies Discount for lack of marketability P/B ratio	Range Relationship of (weighted average) inputs to fair value 30% 100% The higher the discount for lack of marketability, the lower the fair value	Relationship of inputs to fair value

~65~

Unlisted shares Non-derivative equity instrument:	Fair value at Valuation Significant unobservable December 31,2020 technique input $ 8,660 Market comparable companies Discount for lack of marketability P/B ratio	Range Relationship of (weighted average) inputs to fair value 30% 100% The higher the discount for lack of marketability, the lower the fair value	Relationship of inputs to fair value

• H. The Company has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets categorised within Level 3 if the inputs used to valuation models have changed:

December 31, 2021

Input Change Financial assets Discount for lack of marketability ±10% Equity instruments P/B ratio ±10%	Recognised in	Unfavourable change - $ - - $ profit or loss	Favourable Unfavourable change change 586 $ 586) ($ 1,367 1,367) ( 1,953 $ 1,953) ($ Recognised in other comprehensive income
	Favourable change - $ - - $

Input Financial assets Discount for lack of marketability Equity instruments P/B ratio	Change ±10% ±10%	Recognised in	Unfavourable Favourable Unfavourable change change change - $ 371 $ 371) ($ - 866 866) ( - $ 1,237 $ 1,237) ($ December 31,2020 Recognised in other profit or loss comprehensive income
		Favourable change - $ - - $

(4) Other

• A. Due to the impact of the COVID-19 pandemic in 2021, there were supply problems in raw materials and shortage of workers in the production line of the suppliers in Mainland China and the operating revenue of the Company was therefore affected. However, the Company expects that the impact will be gradually be reduced as the pandemic has been stabilised, the suppliers have gradually resumed their production and the Company has rearranged the Company’s resources for the operational adjustments and countermeasures.

~66~

• B. Since October 26, 2021, the area where the Company’s Mainland China trans-investment company is located started to adopt the orderly use of electricity, and the original policy of power rationing is no longer implemented. Accordingly, the operation is no longer currently affected by the power rationing. During the current year, a budget for purchasing diesel generator and solar power-generating equipment has been provided to support the demand for electricity of production capacity.

12. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: None.

• B. Provision of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period: Please refer to table 1.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 2.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 3.

• I. Trading in derivative financial instruments undertaken during the reporting periods: Please refer to Note 6(2) (12).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 6.

• B. Significant transactions, either directly or indirectly through a third areas, with investee companies in the Mainland China: Please refer to table 7.

(4) Major shareholders information

Major shareholders information: Please refer to table 8.

13. SEGMENT INFORMATION

Not applicable.

~67~

Table 1

Microelectronics Technology, Inc.

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

December 31, 2021

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December 31,2021	As of December 31,2021		Note
				Number of shares	Book value	Ownership (%)	Fair value
Microelectronics Technology, Inc. SASSON INTERNATIONAL HOLDING, INC. SASSON INTERNATIONAL HOLDING, INC. SASSON INTERNATIONAL HOLDING, INC. SASSON INTERNATIONAL HOLDING, INC. SASSON INTERNATIONAL HOLDING, INC. SASSON INTERNATIONAL HOLDING, INC.	Stocks - TAIWAN AEROSPACE CORPORATION Stocks - Optical Scientific, Inc. Stocks - Firetide, Inc. Stocks - Taicom Capital Ltd. Stocks - New Edge Signal Solutions LCC Stocks - Kymeta Corporation Stocks - CDIB-Innolux Limited Partnership	None None None None None None None	Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income Financial assets at fair value through income	648,576 16,023 1,333,360 20,000 1,355,663 205,432 -	13,671 $ - - 100,917 - - 28,906	0.48 5.02 2.24 Note 12.5 0.05 6.99	13,671 $ - - 100,917 - - 28,906

Note: Holding of 10,000 ordinary shares and 10,000 preference shares for 11.43% and 16.67% ownership, respectively.

Table 1, Page1

Microelectronics Technology, Inc.

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

December 31, 2021

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Note
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Microelectronics Technology, Inc. JUPITER TECHNOLOGY (WUXI) INC JUPITER TECHNOLOGY (WUXI) INC	JUPITER TECHNOLOGY (WUXI) INC Microelectronics Technology, Inc. Cybertan Technology Inc.	Indirect subsidiary of the Company Indirect subsidiary of the Company Entities with significant influence to the	Purchases Sales Sales	182,602 $ 182,602) ( 112,950) (	4% (15%) (9%)	60 days 60 days 30 days	Not applicable Not applicable Not applicable	Not applicable Not applicable Not applicable	160,989) ($ 160,989 -	(16%) 95% -

Table 2, Page1

Microelectronics Technology, Inc.

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

Table 3 Creditor	Counterparty	Relationship with the counterparty	December 31, 2021 Balance as at December31,2021 Turnover rate	December 31, 2021 Balance as at December31,2021 Turnover rate	Overdue receivables	Overdue receivables	Expressed in thousands of NTD (Except as otherwise indicated) Amount collected subsequent to the balance sheet date Allowance for doubtful accounts	Expressed in thousands of NTD (Except as otherwise indicated) Amount collected subsequent to the balance sheet date Allowance for doubtful accounts
					Amount	Action taken
JUPITER TECHNOLOGY (WUXI) INC	Microelectronics Technology, Inc.	Parent company	160,988 $	0.91	- $	-	111,318 $	- $

Table 3, Page1

Table 4

Microelectronics Technology, Inc.

Significant inter-company transactions during the reporting periods

December 31, 2021

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

Number (Note1)	Companyname	Counterparty	Relationship (Note2)	General ledgeraccount	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
0 0 0 0 0 0 0	Microelectronics Technology, Inc. Microelectronics Technology, Inc. Microelectronics Technology, Inc. Microelectronics Technology, Inc. Microelectronics Technology, Inc. Microelectronics Technology, Inc. Microelectronics Technology, Inc.	JUPITER TECHNOLOGY (WUXI) INC. JUPITER TECHNOLOGY (WUXI) INC. JUPITER TECHNOLOGY (WUXI) INC. MTI Laboratory, INC. MTI Laboratory, INC. Radiocomp ApS Radiocomp ApS	1 1 1 1 1 1 1	Purchases and processing overhead Accounts payable Other current liabilities Research and development expenses Other payables Research and development expenses Other payables	182,602 $ 160,989 8,252 168,414 89,343 143,252 21,767	Same as those to the third parties Payment term is 60 days from invoice date Based on the mutual agreement Same as those to the third parties Based on the mutual agreement Same as those to the third parties Based on the mutual agreement	4.65% 2.45% 0.13% 4.29% 1.36% 3.65% 0.33%

Note 1: The information of transactions between the Company and the subsidiaries should be noted in “Number” column. Note 2: (1) Number 0 represents the Company.

• (2) The consolidated subsidiaries are numbered in order from number 1.

• Note 2: The transaction relationship with counterparties are as follows:

• (1) The Company to the consolidated subsidiary.

• (2) The consolidated subsidiaries to the Company.

• (3) The consolidated subsidiaries to other consolidated subsidiaries.

Note 3: In calculating the ratio, the transaction amount is divided by consolidated total assets for balance sheet accounts and is divided by consolidated total revenues for income statement accounts. Note 4: Only transaction amounts over 10 million were disclosed and if transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it was not required to be disclosed separately.

Table 4, Page1

Microelectronics Technology, Inc.

Information on investees December 31, 2021

Table 5

Investor Table 5	Investee	Location	Main business activities	Initial investment amount		Shares held as at December 31,2021			Net profit (loss) of the investee for the year ended December 31, 2021	Investment income (loss) recognised by the Company for the year ended December 31,2021 Note Expressed in thousands of NTD (Except as otherwise indicated)
				Balance as at December 31, 2021	Balance as at December 31, 2020	Number of shares	Ownership (%)	Book value
Microelectronics Technology, Inc. SASSON INTERNATIONAL HOLDING, INC. SASSON INTERNATIONAL HOLDING, INC. Welltop Technology Co.,Ltd. Welltop Technology Co.,Ltd.	SASSON INTERNATIONAL HOLDING, INC. Welltop Technology Co.,Ltd. Jupiter Network Corp. MTI Laboratory, Inc. Radiocomp ApS	British Virgin IS. British Virgin IS. British Virgin IS. U.S.A DENMARK	Investment management Investment management Investment management Communications Communications	908,778 $ 216,845 860,067 41,520 130,151	908,778 $ 234,863 931,533 44,970 140,966	3,920 7,834,000 31,071,800 1,500,000 1,527,944	100 100 100 100 100	1,509,143 $ 331,676 972,360 137,467 174,939	6,878) ($ 19,395 35,738) ( 9,305 10,179	5,116 $ 19,395 35,738) ( 9,305 10,179	Note 1 Note 2 Note 2 Note 2 Note 2

Note 1: Subsidiary of the Company. Note 2: Indirect subsidiary of the Company.

Table 5, Page1

Microelectronics Technology, Inc.

Information on investees in Mainland China

December 31, 2021

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Table 6
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Expressed in thousands of NTD (Except as otherwise indicated)

Amount remitted from Taiwan Accumulated to Mainland China / Amount Accumulated amount remitted back to Taiwan for the amount of remittance Investment income Accumulated amount year ended of remittance December 31, 2021 from Taiwan Net income of Ownership (loss) recognised by Book value of of investment from Taiwan to Mainland investee for held by the the Company for investments in income to Mainland China as of the year ended Company the year ended Mainland China remitted back to Investee in Main business Paid-in Investment China as of Remitted to Remitted back December 31, December 31, (direct or December 31, 2021 as of Taiwan as of Mainland China activities capital method January 1, 2021 Mainland China to Taiwan 2021 2021 indirect) (Note 2) December 31, 2021 December 31 2021 Note JUPITER TECHNOLOGY The manufactures $ 858,080 Through investing in $ 858,080 $ - $ - $ 858,080 ($ 35,738) 100 ($ 35,738) $ 972,322 $ - - (WUXI) INC (Note 1) and sales of satellite an existing company in and microwave the third area, which communication then invested in the system and related investee in Mainland technical and China. consultation services

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2021	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Microelectronics Technology, Inc.	$ 967,970	$ 1,079,741	$ 1,177,420

Note 1: It was indirectly invested through Jupiter Network Corp. Note 2: Investment profit or loss was recognised based on the financial statements that were audited by R.O.C. parent company’s CPA.

Table 6, Page1

Table 7

Microelectronics Technology, Inc.

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

December 31, 2021

Expressed in thousands of NTD

(Except as otherwise indicated)

Provision of

							Provision of	Provision of
Investeein Mainland China	Sale (purchase)		Property transaction		Accountsreceivable (payable)		endorsements/guarantees or collaterals			Financing			Others (Note)
	Amount	%	Amount	%	Balance	%	Balance at December 31, 2021	Purpose	Maximum balance during the year ended December31,2021	Balance at December 31, 2021	Interestrate	Interest during the year ended December31,2021
JUPITER TECHNOLOGY (WUXI) INC	($ 182,602)	4	$ 142	1	($ 160,988)	14	$ -	-	$ -	- $	-	- $	$ 8,252

Note: It consisted of current liabilities amounting to $8,252.

Table 7, Page1

Microelectronics Technology, Inc. Major shareholders information December 31, 2021

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T able 8 Expressed in thousands of NTD
(Except as otherwise indicated)
Shares
Name of major shareholders No. of shares held Ownership (%)
Cybertan Technology Inc. 52,353,995 22.95%
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• Note 1: The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation.

The share capital which was recorded in the financial statements may differ from the actual number of shares issued in dematerialised form because of a different calculation basis.

• Note 2: If the aforementioned data contains shares which were kept at the trust by the shareholders, the data disclosed was the settlor’s separate account for the fund set by the trustee. As for the shareholder who reports share equity as an insider whose shareholding ratio is greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio includes the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. For the information of reported share equity of insider, please refer to Market Observation Post System.

Table 8, Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 1

Table 1
Item Cash on hand and revolving funds -NTD NTD Cash on hand and revolving funds-USD USD 3 dollars，exchange rate 27.68 Checking accounts-NTD Demand deposits -NTD Demand deposits -CNY CNY 559 dollars，exchange rate 4.3471 Demand deposits -EUR EUR 1,365 dollars，exchange rate 31.32 Demand deposits -USD USD 9,322 dollars，exchange rate 27.68 Demand deposits -GBP GBP 68 dollars，exchange rate 37.3 Demand deposits - JPY JPY 246 dollars，exchange rate 0.2405 Time deposits(Notes)-NTD Time deposits -CNY Description	Amount
	30 $ 90
	120
	70,783
	384,195 2,430 42,741 258,041 2,530 59
	689,996
	54,900 7,695
	823,494 $

(Note) Expiration date ： 2022/02/07~2022/03/08, Rate:0.11%~0.41%.

Table 1,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 2

Customer name Normal customers: Customer E Customer N Customer M Customer B Customer Z Customer S Others Less: Bad provision Related parties: CyberTAN Technology Inc. Total	Description Amount Note 177,712 $ 152,794 140,173 127,362 120,752 76,737 248,350 None of the individual customer's owing balance exceeding 5% of the ending balance of this account. Aging over one year amounted to $248 1,043,880 11,028) ( 1,032,852 32,276 1,065,128 $	Note

Table 2,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF INVENTORIES DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars) Table 3

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Amount
Item Cost Net Realizable Value Note
Raw material $ 1,400,777 $ 1,413,374
Work in progress 230,535 278,281
Finished goods 84,152 99,162
Inventory in transit 2,303 2,303
1,717,767 $ 1,793,120
Less : allowance for inventory
valuation losses ( 42,782)
$ 1,674,985
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Table 3,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 4

Investee	Percentage of ownership Amount Increase 100.00% 1,530,055 $ 1,909) ($ Balance atJanuary1,2021	Share of profit of associates accounted for under equity	Unrealized gain Currency translation	Percentage of ownership Amount 100.00% 1,509,143 $ Balance at December 31, 2021	Net Equity Valuation Method 1,509,143 $ Equity Method	Collateral
Sasson International Holding Inc.	100.00%	6,878) ($	11,994 $ 24,119) ($	100.00%		None

Table 4,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF SHORT-TERM BANK LOANS

DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 5

Description	Creditor		EndingBalance	Period	Range of Interest	Loan	Collateral
Export financing Purchasing Purchasing Unsecured Purchasing Unsecured Unsecured Unsecured Unsecured Unsecured	The Shanghai Commercial The Shanghai Commercial Land Bank of Taiwan Land Bank of Taiwan Mega International Commercial Mega International Commercial Chang Hwa Commercial Bank, DBS Bank Limited Taishin International Bank CTBC Bank Co., Ltd.		83,040 $ 125,158 16,313 260,000 169,603 200,000 144,766 100,000 300,000 120,000 1,518,880 $	60 days 180 days 90 days 90 days 150 days 180 days 180 days 150 days 90 days 180 days	0.87%~0.89% 1.10% 0.74%~0.78% 0.80% 0.99%~1.09% 1.25% 0.70% 0.90%	150,000 332,160 300,000 150,000 415,200 221,440 $ 300,000	None None None None None None None

Table 5,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

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Table 6
Supplier Amount Note
General Supplier:
Company B $ 106,180
Company J 98,384
Company S 44,635
Other 566,703 None of the individual
supplier's balance exceeding
5% of the ending balance of
this account
815,902
Related parties:
Jupiter Technology(Wuxi)Co.,Ltd 160,989
CyberTAN Technology Inc. 1,460
$ 978,351
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Table 6,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF OTHER PAYABLES DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 7

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Item Amount Note
Other payables ：
Salaries and Employee benefit payable $ 132,354
Accrued export expenses 17,626
Payables for machinery and equipment 17,436
Payable on miscellaneous purchases 17,313
Technical service expense payable 11,910
Insurance expenses payable 7,086
Payables for consulting service fees 6,718
Other 21,945 None of the individual item's
balance exceeding 5% of the
ending balance of this account
232,388
Related parties:
Technical service payable 111,110
$ 343,498
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Table 7,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF REVENUE FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 8

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Item Quantity(in thousands) Amount Note
Satelite communication product 11,194 $ 2,394,687
Terrestrial microwave product 113,771 1,214,778
Total operating revenue 3,609,465
Less: Sales returns ( 2,662)
Sales discount and allowance ( 565)
Operating revenue, net $ 3,606,238
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Table 8,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF COSTS OF REVENUE FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 9

Item		Amount
Raw material at January 1, 2021	$	567,792
Add : Raw material purchase		2,657,367
Less : Scrap of raw material	(	24,844)
Raw material sold	(	574)
Raw shortage	(	77)
Raw material at Decmeber 31, 2021	(	1,403,080)
Consumption of raw material for the year		1,796,584
Direct labor		181,789
Manufacturing expenses		259,432
Manufacturing costs of the year		2,237,805
Add : Work in progress at January 1, 2021		108,848
Work in progress purchase		62,307
Less : Scrap of work in progress	(	36,041)
Work in process at December 31, 2021	(	230,535)
Cost of finished goods		2,142,384
Add : Finished goods at January 1, 2021		166,618
Finished goods purchase		939,403
Transferred from expenses		4,662
Less : Scrap of finished goods	(	886)
Transfer to expenses and others	(	25,730)
Finished goods at December 31, 2021	(	84,152)
Cost of goods sold		3,142,299
Reversal of provisions		2,694
Loss on decline in market value		76,966
Raw material sold		574
Inventory shortage		77
Operating cost	$	3,222,610

Table 9,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

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Table 10
Item Description Amount Note
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Indirect labor cost Depreciation charges Utilities expense Rent expenses Other expenses	69,220 $ 66,661 17,414 14,186 91,951 None of the individual item exceeds 5% of this account 259,432 $

Table 10,Page1

MICROELECTRONICS TECHNOLOGY, INC. STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 11 Selling expenses: Salaries and wages Shipping expenses Commission Others General and administrative expenses: Salaries and wages Services fees Labor and health insurance Other personnel expenses Others Research and development expense: Technical supporting expenses Salaries and wages Research material fees Others Item		Amount Note 40,840 $ 35,538 10,190 41,790 None of the individual item exceeds 5% of this account 128,358 $ 40,849 $ 4,080 3,854 3,280 9,217 None of the individual item exceeds 5% of this account 61,280 $ 327,262 $ 184,612 31,921 104,727 None of the individual item exceeds 5% of this account 648,522 $	Note

Table 11,Page1

MICROELECTRONICS TECHNOLOGY, INC. LABOR, DEPRECIATION AND AMORTISATION BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 12

Table 12
By nature By function	Year ended December 31,2021			Year ended December 31,2020
	Classified as operatingcosts	Classified as operatingexpenses	Total	Classified as operatingcosts	Classified as operatingexpenses	Total
Employee benefit expense
Wages and salaries	$ 235,985	$ 266,301	$ 502,286	$ 196,794	$ 276,377	$ 473,171
Labor and health insurance fees	22,707	25,006	47,713	15,795	22,556	38,351
Directors’ compensation	-	2,646	2,646	-	2,454	2,454
Pension costs	11,751	12,942	24,693	9,522	13,598	23,120
Others employee benefit expense	5,156	8,147	13,303	5,262	9,822	15,084
Depreciation	66,661	25,678	92,339	46,507	21,586	68,093
Amortization	6,379	13,700	20,079	5,674	10,989	16,663

Note:

A. As of December 31, 2021 and 2020, the Company had 640 and 643 employees, respectively excluding 5 and 5 directors, respectively.

• B. For companies whose shares were listed on the Taiwan Stock Exchange or listed on the Taiwan Over-The-Counter Securities Exchange, following information should be disclosed:

• (a) The average employee benefit expense of current year was $926 thousand ((Total employee benefit expense of current year-Total directors’

• compensation of current year)/ (Number of employees of current year-Number of non-employee directors of current year)).

• The average employee benefit expense of prior year was $862 thousand ((Total employee benefit expense of prior year -Total directors’ compensation

• of prior year)/ (Number of employees of prior year-Number of non-employee directors of prior year)).

• (b) The average wages and salaries of current year was $791 thousand (Total wages and salaries of current year/ (Number of employees of current yearNumber of non-employee directors of current year)).

• The average wages and salaries of prior year was $742 thousand (Total wages and salaries of prior year/ (Number of employees of prior year-Number of non-employee directors of prior year)).

• (c) Changes on average wages and salaries adjustment 7% ((Average wages and salaries of current year - Average wages and salaries of prior year)/ Average wages and salaries of prior year).

Table 12,Page1

MICROELECTRONICS TECHNOLOGY, INC. LABOR, DEPRECIATION AND AMORTISATION BY FUNCTION (Cont.) FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Table 12

• (d) The Company has no supervisors’ remuneration for the years ended December 31, 2021 and 2020. (Since the Company sets up the audit committee, it has no supervisors’ it has no supervisors’remuneration).

• (e) The Company’s compensation policy: The remuneration for the directors and managers shall be recommended by reference to the general pay levels of the industry and according to their performance of business, assumption of risk and degree of contribution, etc. The compensation for employees shall be evaluated according to their position, education and work background as well as acknowledged seniority of professional etc. The variable compensation is distributed according to the operation of the Company and individual performance to timely motivate morale and retain outstanding employees. The annual salary adjustment is formulated year by year by reference to the Consumer Price Index in domestic, pay increase in the industry, employees’ performance and salary level, etc.

Table 12,Page2