Nishoku - Annual Report 2021 | FinancialReports.eu

Stock Code:3679

NISHOKU TECHNOLOGY INC.

Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No.36, Ln.11, Huacheng Rd., Xinzhuang Dist., New Taipei City, Taiwan Telephone: 886-2-29983578

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

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles	Page
	1 2 3 4 5 6 7 8 8 8～9 9～20 20～21 22～41 41～43 44 44 44 44 44～45 45～48 48 48～49 49 49 50～59

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

Page

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of Nishoku Technology Inc.:

Opinion

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

In our opinion, the accompanying 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 Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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 financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters for the Company’s financial statements are stated as follows:

Investments accounted for using equity method

Please refer to Note 4(h) “Investments in subsidiaries” and Note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty” of the financial statements.

Description of key audit matter

The Company’s investments accounted for using equity method are all subsidiaries of the Company. Based on the scope and nature of their businesses which may influence the outcome of their operations, the impairment assessment of accounts receivable, and net realizable value of inventories in certain subsidiaries required the Managements to make subjective judgments, which is the major source of estimation uncertainty. Therefore, the impairment assessment of accounts receivable, and valuation of inventories of the investments accounted for using equity method are the key audit matters for our audit.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

3-1

How the matter was addressed in our audit :

Our principal audit procedures on the impairment assessment of accounts receivable of the investments accounted for using equity method included assessing whether the impairment of accounts receivable has been set aside in accordance with the Company’ s policy, including inquiring from the Management if they had identified the debtors who have financial difficulties ; selecting a moderate number of samples from the account aging statements to ensure the accuracy of the statements, and understanding the reason on overdue accounts; assessing the uncollectable accounts receivable for the approriateness of impairment assessment of accounts receivable; assessing the appropriateness and adequacy for doubtful accounts made by the management based on the subsequent collection of accounts receivable. With respect to the evaluation of inventories, our principal audit procedures included: to understand whether the accounting policy for inventory evaluation is consistency with the Company; examine the accuracy of the aging of inventories by sampling and analyse the changes of the aging of inventories by comparison; retroactively inspecting the reasonability for allowance provided on inventory valuation in the past and compare it to the current year to ensure that the measurements and assumptions are reasonable; sampling the inventories sold in the subsequent period to assess whether the allowance for inventories are reasonable.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the 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 financial statements that are free from material misstatement, whether due to fraud or error.

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

Our objectives are to obtain reasonable assurance about whether the 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 auditing standards generally accepted 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 financial statements.

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

Identify and assess the risks of material misstatement of the 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.
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.

3-2

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period 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.

The engagement partners on the audit resulting in this independent auditors’ report are Cheng-Chien Chen and Sheng-Ho Yu.

KPMG

Taipei, Taiwan (Republic of China) February 25, 2022

Notes to Readers

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

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

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1170 Accounts receivable, net (notes 6(c) and 7) 130X Inventories (note 6(d)) 1470 Other current assets 1476 Other current financial assets (note 7) Non-current assets: 1510 Non-current financial assets at fair value through profit or loss (note 6(b)) 1535 Non-current financial assets at amortised cost, net (note 6(e)) 1551 Investments accounted for using equity method (notes 6(f) and 7) 1600 Property, plant and equipment (note 6(f)) 1755 Right-of-use assets (note 6(h)) 1840 Deferred income tax assets (note 6(n)) 1990 Other non-current asset Total assets	December 31, 2021 Amount % $ 978,669 12 33,459 1 301,550 4 28,095 - 14,171 - 249,876 3 1,605,820 20 197,419 2 1,264,067 15 4,781,464 59 301,775 4 10,658 - 16,646 - 4,965 - 6,576,994 80 $ 8,182,814 100	December 31, 2020 Amount % 455,105 6 28,624 - 338,261 5 37,504 1 17,922 - 235,257 3 1,112,673 15 126,439 2 1,124,961 15 4,738,549 64 299,596 4 1,529 - 16,903 - 4,431 - 6,312,408 85 7,425,081 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(i)) 2110 Short-term notes and bills payable (note 6(j)) 2170 Notes and accounts payable 2180 Accounts payable to related parties (note 7) 2280 Current lease liabilities (note 6(l)) 2300 Other current liabilities Non-Current liabilities: 2540 Long-term borrowings (note 6(k)) 2570 Deferred tax liabilities (note 6(n)) 2580 Non-Current lease liabilities (note 6(l)) Total liabilities Equity attributable to owners (notes 6(o) and (p)): 3110 Ordinary share 3140 Advance receipts for share capital 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings 3400 Other equity Total equity Total liabilities and equity	December 31, 2021		December 31, 2020 Amount % 790,000 11 - - 176,798 2 17,686 - 1,548 - 129,838 2 1,115,870 15 1,200,000 16 651,965 9 - - 1,851,965 25 2,967,835 40 624,462 8 2,993 - 968,882 13 538,129 7 337,817 5 2,295,422 31 3,171,368 43 (310,459) (4) 4,457,246 60 7,425,081 100
			Amount %
			$ 1,500,000 18 99,971 1 135,526 2 41,135 1 3,960 - 166,069 2 1,946,661 24 1,150,000 14 663,741 8 6,713 - 1,820,454 22 3,767,115 46 626,712 8 - - 981,485 12 610,265 7 310,459 4 2,231,720 27 3,152,444 38 (344,942) (4) 4,415,699 54 $ 8,182,814 100

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

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

4110 Sales revenue(notes 6(r) and 7) 4170 Less: Sales returns Net Operating revenues 5000 Operating costs(notes 6(d), (g), (m), 7 and 12) 5910 Less: Unrealized profit from sales Gross profit from operations 6000 Operating expenses(notes 6(c), (g), (m), (p) and 12) 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss Net operating loss Non-operating income and expenses: 7010 Other income (note 6(t)) 7020 Other gains and losses, net (note 6(u)) 7050 Finance costs, net 7070 Share of profit of associates and joint ventures accounted for using equity method, net Total non-operating income and expenses 7900 Profit before tax 7950 Less: Income tax expenses (note 6(n)) Profit 8300 Other comprehensive income (loss): 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign operations 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss (note 6(n)) 8300 Other comprehensive income (after tax) 8500 Total comprehensive income 9750 Basic earnings per share (NT dollars) (note 6(q)) 9850 Diluted earnings per share (NT dollars) (note 6(q))	2021 Amount % $ 1,294,292 101 8,811 1 1,285,481 100 883,916 69 19,718 2 381,847 29 7,109 1 139,613 11 10,843 1 106 - 157,671 13 224,176 16 13,589 1 (66,405) (5) (20,347) (2) 593,749 46 520,586 40 744,762 56 138,074 11 606,688 45 (43,104) (3) 8,621 (1) (34,483) (2) $ 572,205 43 $ 9.70 $ 9.64	2020 Amount % 869,936 100 736 - 869,200 100 590,028 68 43,843 5 235,329 27 7,147 1 123,665 14 9,559 1 401 - 140,772 16 94,557 11 14,427 2 (75,308) (9) (16,649) (2) 767,513 88 689,983 79 784,540 90 63,178 7 721,362 83 34,198 4 (6,840) (1) 27,358 3 748,720 86 11.57 11.51

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Share capital Ordinary shares Advance receipts for share capital $ 622,962 - - - - - - - - - - - - - - - 1,500 2,993 624,462 2,993 - - - - - - - - - - - - - - 2,250 (2,993) $ 626,712 -	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 504,367 199,839 1,994,985 - - 721,362 - - - - - 721,362 33,762 - (33,762) - 137,978 (137,978) - - (249,185) - - - - - - 538,129 337,817 2,295,422 - - 606,688 - - - - - 606,688 72,136 - (72,136) - (27,358) 27,358 - - (625,612) - - - - - - 610,265 310,459 2,231,720	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 504,367 199,839 1,994,985 - - 721,362 - - - - - 721,362 33,762 - (33,762) - 137,978 (137,978) - - (249,185) - - - - - - 538,129 337,817 2,295,422 - - 606,688 - - - - - 606,688 72,136 - (72,136) - (27,358) 27,358 - - (625,612) - - - - - - 610,265 310,459 2,231,720	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 504,367 199,839 1,994,985 - - 721,362 - - - - - 721,362 33,762 - (33,762) - 137,978 (137,978) - - (249,185) - - - - - - 538,129 337,817 2,295,422 - - 606,688 - - - - - 606,688 72,136 - (72,136) - (27,358) 27,358 - - (625,612) - - - - - - 610,265 310,459 2,231,720	Total equity
Ordinary shares $ 622,962 - - - - - - - 1,500 624,462 - - - - - - - 2,250 $ 626,712	Legal reserve 504,367 - - - 33,762 - - - - 538,129 - - - 72,136 - - - - 610,265	Special reserve
		199,839	1,994,985 721,362 - 721,362 (33,762) (137,978) (249,185) - - 2,295,422 606,688 - 606,688 (72,136) 27,358 (625,612) - - 2,231,720	3,943,460
		- -		721,362 27,358
		-		748,720
		- 137,978 - - -		- - (249,185) 1,283 12,968
		337,817 - -		4,457,246 606,688 (34,483)
		-		572,205
				- - (625,612) 429 11,431
				4,415,699

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation and amortization expense Expected credit loss Interest expense Net loss (gain) on financial assets at fair value through profit or loss Interest income Stock option compensation cost Share of profit of subsidiaries accounted for using equity method Gain on disposal of property, plant and equipment Unrealized profit from sales Recognition losses on (reversal of) inventory valuation and obsolescence Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Financial assets at fair value through profit or loss Notes and accounts receivables (including related parties) Inventories Other current assets and other financial assets Changes in operating liabilities: Notes and accounts payables (including related parties) Other current liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow (outflow) generated from operations Interest received Interest paid Income taxes paid Net cash flows from (used in) operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at amortised cost Acquisition of Non-Current financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Cash dividends from investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in other receivables due from related parties Increase in other non-current assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Increase (decrease) in short-term notes and bills payable Proceeds from (repayments of) long-term borrowings Payment of lease liabilities Cash dividends paid Exercise of employee share options Net cash flows from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2021 $ 744,762 8,770 106 20,347 3,493 (10,202) 429 (593,749) (12) 19,718 (504) (551,604) (4,193) 36,605 9,913 4,547 46,872 (17,823) (7,377) (25,200) 21,672 (529,932) 214,830 10,098 (20,336) (74,608) 129,984 (139,106) (79,436) 4,321 - 488,012 (7,501) 12 (14,515) (1,153) 250,634 710,000 100,000 (50,000) (2,873) (625,612) 11,431 142,946 523,564 455,105 $ 978,669	2020 784,540 12,534 401 16,649 (2,940) (11,113) 1,283 (767,513) - 43,843 564 (706,292) (28,490) (272,398) (28,933) (15,971) (345,792) 116,330 36,376 152,706 (193,086) (899,378) (114,838) 12,974 (16,602) (120,166) (238,632) (1,124,961) (123,633) - (241,120) 1,505,266 (188) - (227,840) (722) (213,198) 280,000 (150,000) 200,000 (3,487) (249,185) 12,968 90,296 (361,534) 816,639 455,105

See accompanying notes to financial statements.

(English Translation of Financial Statements Originally Issued in Chinese) NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

NISHOKU TECHNOLOGY INC. (the “Company”) was incorporated in year 1980, as a company limited by shares and registered under the Ministry of Economic Affairs, ROC. The Company conducted an IPO on the Taiwan Stock Exchange (TWSE) on October 5, 2011. The Company primarily is involved in the manufacture and sale of plastic injection mold, tooling manufacturing and general import and export Trade.

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

These financial statements were authorized for issue by the board of directors on February 25, 2022.

(3) New standards, amendments and interpretations adopted:

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

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

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”
(b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

－
●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018–2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”
(c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”

(4) Summary of significant accounting policies:

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

The significant accounting policies presented in the financial statements are summarized below. Except for those specifically indicated, the following accounting policies are applied consistently throughout the periods presented in the financial statements.

(a) Statement of compliance

These financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter, referred to as “the Regulations”).

(b) Basis of preparation
(i) Basis of measurement

Except for the financial instruments at fair value through profit or loss are measured at fair value, the financial statements have been prepared on a historical cost basis.

(ii) Functional and presentation currency

The functional currency is determined based on the primary economic environment in which the Company operates. The financial statements are presented in New Taiwan dollars, which is the Company’ s functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(c) Foreign currencies

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the and of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of transaction.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the Company’s presentation currency at the average rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interest. When the Company disposes of only part of its investment in an associate or a joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future. Exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

(d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or
(iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits, which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes, should be recognized as cash equivalents.

(f) Financial instruments

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL：

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

2) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

3) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL)on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivables, other receivables, guarantee deposit paid and other financial assets).

The Company measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL：

‧ debt securities that are determined to have low credit risk at the reporting date；and
‧ other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

4) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

3) Treasury shares

When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is recognized in capital surplus or retained earnings (if the capital suplus is not sufficient to be written down).

4) Other financial liabilities

Financial liabilities are classified as measured at amortized cost, which comprise loans and borrowings, and trade and other payables. Interest expense and foreign exchange gains and losses are recognized in profit or loss, and is included in financial costs under non-operating income or expenses. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligation are discharged or cancelled, or expired. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(iii) Derivative financial instruments

The Company holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average method and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their present location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in subsidiaries

Investments in subsidiaries are accounted for using the equity method. There is no difference between net income and comprehensive income in the Company’ s financial statements and net income and comprehensive income attributable to stockholders of the parent. The equity in the Company’ s financial statements and the equity attributable to stockholders of the parent in the Company’s consolidated financial statements are also the same.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(i) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1) Buildings: 50 years
2) Accessory equipment of buildings: 8~10 years
3) Machinery and equipment: 3~8 years
4) Office and other equipment: 3~8 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

(j) Lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(i) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

－ fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－
amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

－ there is a change in future lease payments arising from the change in an index or rate; or
－ there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
－ there is a change of its assessment on whether it will exercise a extension or termination option; or
－
there is any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(k) Research and development

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(l) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(m) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods to a customer. The Company recognizes revenue when it satisfies a perfarmance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

(i) Sale of goods

The Company manufactures and sells plastic goods and molds. The Company recognizes revenue when control of the products has transferred, a point in time 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, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered, since this is the point in time when the Company has a right to receive an amount of consideration unconditionally.

(ii) Financing components

The Company does not expect to have any contracts which the period between the transfer of the promised goods to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(n) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

(ii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(o) Share-based payment

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as employee expenses, with a corresponding increase in equity, over the vesting period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

Grant date of a share-based payment award is the date which the board of directors authorized the price and number of a new award.

(p) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax asset are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
- 1) the same taxable entity; or
- 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(q) Earnings per share

The Company discloses the basic and diluted earnings per share attributable to ordinary shareholders of the Company. The calculation of basic earnings per share is the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is the profit attributable to ordinary shareholders of the Company dividend by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

(r) Operating segments

Please refer to Company’s consolidated financial statements for the years ended December 31, 2021 and 2020, for further details.

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

The preparation of the financial statements in conformity with the Regulations requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

There are no critical judgment made in applying the accounting policies that have significant effects on amounts recognized in financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment with the following year is as follows:

(a) The loss allowance of accounts receivable of subsidiaries accounted for using equity method

The Group has estimated the loss allowance of trade receivable that is based on the risk of a default occurring and the rate of expected credit loss. The Group has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs.

(b) Valuation of inventories of subsidiaries accounted for using equity method

As inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be changes in the net realizable value of inventories.

The Company’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss.

The Company’s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back-testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

(a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
(b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
(c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date. Please refer to note 6(v) for assumptions used in measuring fair value.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash Equivalents

Cash and demand deposits Time deposits Bond acquired under repurchase agreement Cash and cash equivalents in the statement of cash flows	December 31, 2021 $ 162,109 304,480 512,080 $ 978,669	December 31, 2020
		198,785 - 256,320
		455,105

Please refer to note 6(v) for the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Company.

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

Financial assets at fair value through profit or loss Fund investments-current Fund investments-non-current	December 31, 2021 $ 33,459 $ 197,419	December 31, 2020
		28,624
		126,439

(i) Please refer to Note 6(e) for fund investments-non-current.
(ii) Please refer to note 6(v) for credit risk and market risk.
(iii) As of December 31, 2021 and 2020, the Company did not provide any financial assets as collateral for its loans.
(c) Accounts receivable (including related parties)

Accounts receivable (including related parties) Less：Loss allowance	December 31, 2021 $ 301,663 (113) $ 301,550	December 31, 2020 338,740 (479) 338,261

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

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

December 31, 2021	December 31, 2021
Gross carrying amount Weighted- average loss rate $ 294,404 -% 7,146 0%~1% 113 0%~100% $ 301,663 December 31, 2020		Loss allowance provision
		- - 113
		113

	Weighted- average loss rate -% 0%~1% 100%	Loss allowance provision
		- - 479
		479

The movement in the allowance for notes and accounts receivables were as follows:

Blance at January 1 Impairment losses recognized Amounts written off Balance at December 31	2021 $ 479 106 (472) $ 113	2020
		78 401 -
		479

(d) Inventories

Raw materials Work in process and semi-finished products Finished goods Merchandise	December 31, 2021 $ 4,371 1,377 11,589 10,758 $ 28,095	December 31, 2020
		1,683 755 2,683 32,383
		37,504

For the years ended December 31, 2021 and 2020, raw material, consumables, and changes in the finished goods and work in progress recognized as cost of sale amounted to $883,916 thousand and $590,028 thousand, respectively. For the years ended December 31, 2021 and 2020, the Company recognized the losses (reversal of gains) on inventory valuation and obsolescence as cost of goods sold amounting to $(504) thousand and $564 thousand, respectively.

As of December 31, 2021 and 2020, the Company did not provide any inventories as collateral for its loans.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(e) Non-current financial assets at amortized cost

Restricted bank deposit	December 31, 2021 $ 1,264,067	December 31, 2020
		1,124,961

In June, 2021 and May and July, 2020, the Company applied to IRS for the application of “The Management, Utilization, and Taxation of Repatriated Offshore Funds Act” (hereinafter referred to as the “Act”), and the remittance was approved within one month. According to the Act, the funds need to be deposited in a special-purpose account for five years, and 5% of the funds can be used without restriction, 25% can be used on financial investment, and 70%, at least, can be used for substantive investment; Otherwise, the funds can only be redeemed within 3 consecutive years on average after the five years maturity. Please refer to Note 6(b) for financial investments.

(f) Investments accounted for using equity method

A summary of the Company’s financial information for investments accounted for using the equity method at the reporting date is as follows:

Subsidiaries	December 31, 2021 $ 4,781,464	December 31, 2020
		4,738,549

(i) Subsidiaries

Please refer to the Company’s consolidated financial statements for the year ended December 31, 2021, for details of subsidiaries.

(ii) As of December 31, 2021 and 2020, the Company did not provide any investments accounted for using the equity method as collateral for its loans.
(g) Property, plant and equipment

The cost, depreciation and impairment loss of the property, plant and equipment of the Company for the years ended December 31, 2021 and 2020, were as follows:

Land	Building	Office and other equipment
$ 179,672 - - $ 179,672 $ 179,672 - - $ 179,672	218,832 173 -	2,873 543 - 3,416 3,683 - (810) 2,873
	219,005
	218,832 - -
	218,832

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

Land	Building	Office and other equipment	Total 117,219 5,322 (371)
$ - - - $ - $ - - - $ - $ 179,672 $ 179,672	101,740 3,865 -	2,600 292 - 2,892 2,902 508 (810) 2,600 524 273
	105,605		122,170
	94,855 6,885 -		109,696 8,333 (810)
	101,740		117,219
	113,400		301,775
	117,092		299,596

As of December 31, 2021 and 2020, the property, plant and equipment of the Company had not been pledged as collateral.

(h) Right-of-use assets

The Company leases vehicles. Information about leases for which the Company as a lessee was presented below:

The Company leases vehicles. Information about leases for which the presented below:	Company a	s a lessee was
		Vehicles
Cost:
Balance at January 1, 2021	$	8,399
Additions		11,958
Disposals/ Wright-off		(8,399)
Balance at December 31, 2021	$	11,958
Balance at December 31, 2020 (equal to balance at January 1, 2020)	$	8,399
Accumulated depreciation and impairment losses:
Balance at January 1, 2021	$	6,870
Depreciation for the year		2,829
Disposals		(8,399)
Balance at December 31, 2021	$	1,300
Balance at January 1, 2020	$	3,435
Depreciation for the year		3,435
Balance at December 31, 2020	$	6,870
Carrying amount:
Balance at December 31, 2021	$	10,658
Balance at December 31, 2020	$	1,529

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(i) Short-term borrowings

The Short-term borrowings were summarizes as follows:

Credit loans, no pledge Interest rate range	December 31, 2021 $ 1,500,000 0.77%~0.83%	December 31, 2020
		790,000
		0.78%~0.83%

(j) Short-term notes and bills payable

The short-term notes and bills payable were summarized as follows:

Commercial paper payable Less: Discount on short-term notes and bills payable Total	December 31, 2021	December 31, 2021
	Guarantee or acceptance institution	Range of interest rates (%) Amount 0.59% $ 100,000 (29 $ 99,971
	Mega Bills

(k) Long-term borrowings

The detail were as follows:

	December 31, 2021	December 31, 2021	December 31, 2021
Currency	Interest rate range
NTD

Currency	Interest rate range	Maturity year Amount 2022 $ 1,200,000	Amount
NTD	0.95%~0.98%

Please refer to note 6(v) for the exchange rate risk, the interest rate risk, and the sensitivity analysis of the financial assets and liabilities of the Company.

(l) Lease liabilities

Current Non-current financial assets For the maturity analysis, please refer to note 6(v).	December 31, 2021 $ 3,960 $ 6,713	December 31, 2020 1,548
		-

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The amounts recognized in profit or loss was as follows:

Interest expenses on lease liabilities	2021 $ 40	2020
		41

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

Total cash outflow for leases	2021 $ 2,913	2020
		3,487

(m) Employee benefits

The Company allocates 6% of each employee’ s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Labor Insurance amounted to $3,521 thousand and $2,337 thousand for the years ended December 31, 2021 and 2020, respectively.

(n) Income taxes
(i) The components of income tax in the years 2021 and 2020 were as follows:

The components of income tax in the years 2021 and 20	20 were as follows:
Current tax expense Deferred tax expense (benefit)	2021 $ 117,420 20,654 $ 138,074	2020
		130,951 (67,773)
		63,178

(ii) The amounts of income tax profit recognized in other comprehensive income or loss for 2021 and 2020 was as follows:

Foreign currency translation differences for foreign operations	2021 $ (8,621)	2020
		6,840

(iii) Reconciliation of income tax and profit before tax for 2021 and 2020 was as follows:

Profit excluding income tax Income tax using the Company’s domestic tax rate Tax incentive- Repatriated offshore funds Change in unrealized deferred tax assets Undistributed earnings additional tax Others	2021 $ 744,762 148,952 (27,948) - 2,549 14,521 $ 138,074	2020
		784,540
		156,908 (177,211) 75,540 - 7,941
		63,178

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(iv) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets

There were no unrecognized deferred tax liabilities and the unrecognized deferred tax assets were as follows:

Unrealized investment losses	December 31, 2021 $ 75,540	December 31, 2020
		75,540

2) Recognized deferred tax liabilities

Changes in the amounts of deferred tax liabilities for 2021 and 2020, were as of follows:

Investment income recognized under the equity method Foreign currency translation differences for foreign operations Deferred tax liabilities Balance at January 1, 2021 $ 725,246 (73,877) Recognized in profit or loss 22,765 - Foreign currency translation differences for foreign operations - (10,401) Balance at December 31, 2021 $ 748,011 (84,278) Balance at January 1, 2020 $ 870,257 (82,177) Recognized in profit or loss (145,011) - Foreign currency translation differences for foreign operations - 8,300 Balance at December 31, 2020 $ 725,246 (73,877)	Others 596 (588) - 8 8 588 - 596	Total 651,965 22,177 (10,401) 663,741 788,088 (144,423) 8,300 651,965

3) Recognized deferred tax assets

Changes in the amounts of deferred tax assets for 2021 and 2020 were as follows:

Deferred tax assets Balance at January 1, 2021 Recognized in profit or loss Recognized in other comprehensive income or loss Balance at December 31, 2021 Balance at January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income or loss Balance at December 31, 2020	Investment income recognized under the equity method $ - - - $ - $ (75,540) 75,540 - $ -	Loss on inventory valuation (560) 101 - (459) (447) (113) - (560)	Foreign currency translation differences for foreign operations (1,780) - 1,780 - (320) - (1,460) (1,780)	Unused tax losses carry forwards - - - - (12,540) 12,540 - -	Others	Total
					(14,563) (1,624) -	(16,903) (1,523) 1,780 (16,646) (92,093) 76,650 (1,460) (16,903)
					(16,187)
					(3,246) (11,317) -
					(14,563)

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(v) The Company income tax returns have been examined by the tax authority through the years up to 2019.

(o) Capital and other equity

On December 31, 2021 and 2020, the total share capital of the Company were both $1,500,000 thousand, and the denomination per share was $ 10, both with a total of 150,000 thousand shares (all including employee stock option, and the amount of shares that can be subscribed is $20,000 thousands). As of that date, both 62,671 thousand shares and 62,446 thousand shares whose legal registration procedure for the authorized capital stock is completed. All issued shares were paid up upon issuance.

The issued and registered shares of common stock in 2021 and 2020 were as follows (expressed in thousands of shares)

thousands of shares)
Balance on January 1 Exercise of employee stock option Balance on December 31	Ordinary shares
	2021 62,446 225 62,671	2020
		62,296 150
		62,446

(i) Issuance of common stock

The Company issued 180 thousand shares, with par value of $10 per share for the exercise of employee stock options in 2021. All shares were completed the related legal and registration procedures. The Company issued 195 thousand shares, with par value of $10 per share for the exercise of employee stock options in 2020. Therein 150 thousand shares were completed the legal registration procedures. As of December 31, 2020 there were still 45 thousand shares whose legal procedure are unfinished and classified under advance receipts for share capital $2,993.

(ii) Capital surplus

The balances of capital surplus as of December 31, 2021 and 2020, were as follows:

Share capital Employee share options	December 31, 2021 $ 970,593 10,892 $ 981,485	December 31, 2020
		958,419 10,463
		968,882

According to the ROC Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring paid-in capital in excess of par value should not exceed 10% of the total common stock outstanding.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(iii) Retained earnings

The Company’s article of incorporation stipulate that, when allocating the profit for each fiscal year, the Company shall first offset its losses in previous years. Of the remaining profit, 10% is to be appropriated as legal reserve, until the accumulated legal reserve equals the Company’s paid-in capital. Aside from the aforesaid legal reserve, the Company shall appropriate or reverse another sum as special earnings reserve in accordance with relevant laws or regulations or requested by the authorities in charge. The remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

According to the amendment of the of Article 240 and Article 241 of the ROC Company Act, the Company authorized the distributable dividends and bonuses in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

Before the distribution of dividends, the Company shall first take into consideration its operating environment, industry developments, and the long-term interests of stockholders, as well as its programs to maintain operating efficiency and meet its capital expenditure budget and financial goals in determining the stock or cash dividends to be paid. The dividend to be distributed shall be no less than 10% of the current-year retained earnings available for distribution only if the current-year retained earnings available for distribution does not reach $0.5 per share, the Company may decide not to distribute dividend. The dividend to be distributed may be in the form of cash and stock, and cash dividend in the distribution shall not be less than 30%.

1) Legal reserve

According to the amendment of the ROC Company Act, the Company must retain 10% of its after-tax annual earnings as legal reserve until such retention equals the amount of total capital. When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be set aside as special earnings reserve during earnings distribution. The amount to be set aside should equal the current-period total net reduction of other shareholders’ equity. Similarly, a portion of undistributed prior-period earnings shall be set aside as special earnings reserve (and can not be distributed) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. As of December 31, 2021, special earnings reserve amounted to $310,459 thousand.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

3) Earnings distribution

Earnings distribution for 2020 and 2019 were decided via the general meeting of shareholders held on August 12, 2021, and June 16, 2020, respectively. The relevant dividend distributions to shareholders were as follows:

Dividend to shareholders Cash	2020 Payout per share Amount $ 10.0 625,612	2019	2019
	Payout per share $ 10.0	Payout per share 4.0	Amount
			249,185

(p) Share-based payment

(i) The Company issued 600 units of employee stock options, at 1,000 shares per unit, to its employees and its subsidiaries’ who met certain requirements on July 28, 2017. The duration of the employee stock options is five year. 50%, 75%, and 100% of the stock options are exercisable 2 years, 3 years, and 4 years, respectively, after the grant date. Those qualified employees are entitled to purchase the shares at the closing price of ordinary shares of the Company on the same day. After the grant of the stock options, any changes in the ordinary shares of the Company, the exercise price of the share options will be adjusted according to the prescribed formula.
(ii) Details of the employee stock options were as follows:

Outstanding at January 1 Granted during the year Forfeited during the year Exercised during the year Outstanding at December 31 Exercisable at December 31 The weighted average price of the stock options	2021 Weighted average exercise price Number of options $ 66.50 (note) 235 - - - (50) 61.60 (180) 61.60 (note) 5 - $ 18.15	2020 Weighted average exercise price Number of options 70.80 440 - - - (10) 66.50 (195) 66.50 (note) 235 135 18.15
		Weighted average exercise price 70.80 - - 66.50 66.50 (note)

(Note) The Company adjusted the exercise price of stock options according to its requirements for issuance stock options.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The details of the stock options of the Company were as follows:

Weighted average of remaining contractual period (years)	December 31, 2021 December 31, 2020 0.57 1.57

(iii) The Company used the Black-Scholes pricing model in measuring the fair based payment at the grant date. The measurement inputs were as follows: Exercise price (NT dollars) Share price at grant date (NT dollars) Expected dividend (%) Expected volatility (%) Risk-free interest rate (%) Expected life (years)	value of the share- 2017 employee stock option
	81.80 81.80 - % 26.78%~27.89% 0.67%~0.73% 5

(iv) For the years ended December 31, 2021 and 2020, the expenses attributable to share based payment amounted to $429 thousand and $1,283 thousand, respectively.

(q) Earnings per share

(i) Basic earnings per share

The calculation of basic earnings per share for the years ended December 31, 2021 and 2020, was based on the profit attributable to ordinary shareholders of the Company and the weightedaverage number of ordinary shares outstanding, calculated as follows:

Profit attributable to ordinary shareholders of the Company Weighted-average number of ordinary shares (thousand shares) Basic earnings per share (NT dollars)	2021 $ 606,688 62,550 $ 9.70	2020
		721,362
		62,321
		11.57

(ii) Diluted earnings per share

The calculation of diluted earnings per share for the years ended December 31, 2021 and 2020, were based on the profit attributable to the ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

Profit attributable to ordinary shareholders of the Company (diluted)	2021 $ 606,688	2020
		721,362
		(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

Weighted-average number of ordinary shares (diluted) (thousand shares)

Weighted-average number of ordinary shares (basic) Effect of employee stock bonus Weighted-average number of ordinary shares (diluted) Diluted earnings per share	2021 62,550 367 62,917 9.64	2020
		62,321 327
		62,648
		11.51

(r) Revenue from contracts with customers

(i) Details of revenue

2021 Primary geographical markets North America $ 163,018 Asia 1,077,923 Europe 44,540 $ 1,285,481 Major products Plastic injection $ 1,196,981 Mold 87,450 Others 1,050 $ 1,285,481	2020
	186,114 653,511 29,575
	869,200
	718,768 140,870 9,562
	869,200

(ii) Contract balances Contract liabilities	December 31, 2021 $ 10,571	December 31, 2020 8,843	January 1, 2020
			5,445

For details on accounts receivable, please refer to note 6 (c).

The major change in the balance of contract liabilities is the advance consideration received from customers for the contracts, in which revenue is recognized when products are delivered to customers. The amount of revenue recognized for the years ended December 31, 2021 and 2020, which was included in the contract liability balance at the beginning of the period, was $8,690 thousand and $5,445 thousand, respectively.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(s) Employee, board of directors' compensation

In accordance with the Articles of incorporation the Company should contribute no less than 1% of the profit as employee compensation and not exceed 5% as directors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

For the years ended December 31, 2021 and 2020, the Company estimated its employee remuneration amounting to $27,000 thousand and $30,000 thousand, and directors’ remuneration amounting to $10,200 thousand and $11,705 thousand, respectively. The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors of each period, multiplied by the percentage of remuneration to employees, directors as specified in the Company’s articles. These remunerations were recognized as operating costs or operating expenses during 2021 and 2020. If the Board of Directors decide to distribute compensation for employees by shares, the numbers of shares to be distributed would be calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of Board of Directors. The related information please refer to Market Observation Post. The amounts, as stated in the financial statements, are identical to those of the actual distributions for 2021 and 2020.

(t) Other revenue

Other revenue
Interest income Others	2021 $ 10,202 3,387 $ 13,589	2020
		11,113 3,314
		14,427

(u) Other gains and losses

The other gains and losses for the years ended December 31, 2021 and 2020 were as follows:

2021 Foreign exchange losses, net $ (62,924) Gains (losses) on financial assets at fair value through profit or loss (3,493) Gains on disposal of property, plant and equipment, net 12 $ (66,405)	2020 (78,248) 2,940 - (75,308)

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(v) Financial Instruments

(i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, which arises from the Company’s accounts receivable and investments.

1) Accounts receivable and others receivables

For credit risk exposure of note and accounts receivables, please refer to note 6(c).

The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and in some cases bank references. These criterias are reviewed periodically.

2) Investment

The credit risk exposure in bank deposits, fixed-income investment, and other financial instruments is measured and monitored by the Company’s finance department. As the Company deals with banks and other external parties with good credit standing and with financial institutions, corporate organizations, and government agencies which are graded above investment level, the management believes their counterparts do not have significant default risk, therefore, the credit risk is insignificant.

3) Credit risk exposure

As of December 31, 2021 and 2020, the Company’s maximum exposure to credit risk was mainly from the carrying amount of financial assets recognized in the statements of financial position and amounted to $3,025,040 thousand and $2,308,647 thousand, respectively. The Company had deposited these bank deposits in different financial institutions, and the Company believes that there is no significant credit risk from the above mentioned financial institutions.

4) Concentration of credit risk

The credit risk exposure of the Company comes from the credit of individual customers, and the industry of the customer also have effect on credit risk. For the years ended December 31, 2021 and 2020, sales to the individual customers whose revenue constituting over 10% of net revenue are 81% and 84% of total revenues respectively. As of December 31, 2021 and 2020, 81% and 89%, of accounts receivable were for those customers, respectively.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(ii) Liquidity risk

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

Carrying amount December 31, 2021 Non-derivative financial liabilities Short-term borrowings $ 1,500,000 Short-term notes and bills payable 99,971 Long-term borrowings 1,150,000 Non-interest bearing liabilities Notes and accounts payables (including related parties) 176,661 Lease liabilities 10,673 Other financial liabilities 14,862 $ 2,952,167 December 31, 2020 Non-derivative financial liabilities Short-term borrowings $ 790,000 Long-term borrowings 1,200,000 Non-interest bearing liabilities Notes and accounts payables (including related parties) 194,484 Lease liabilities 1,548 Other financial liabilities 11,605 $ 2,197,637	Contractual cash flows 1,501,196 100,000 1,169,644 176,661 10,673 14,862 2,973,036 790,638 1,220,867 194,484 1,548 11,605 2,219,142	within 1 year 1,501,196 100,000 10,805 176,661 3,960 14,862 1,807,484 790,638 11,492 194,484 1,548 11,605 1,009,767	1-2 years
			- - 1,158,839 - 6,713 -
			1,165,552
			- 1,209,375 - - -
			1,209,375

The Company does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iii) Market risk

1) Exchange rate risk

The Company’ s significant exposure to foreign currency risk on financial assets and liabilities was as follows:

Financial assets Monetary Items USD CNY EUR Financial liabilities Monetary Items USD	December 31, 2021 December 31, 2020 Foreign currency Exchange rate NTD Foreign currency Exchange rate NTD $ 99,808 27.680 2,762,677 65,578 28.480 1,867,649 51 4.344 220 51 4.377 222 387 31 12,106 210 35 7,349 5,656 27.680 156,555 6,258 28.480 178,233
	Foreign currency Exchange rate $ 99,808 27.680 51 4.344 387 31 5,656 27.680

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, accounts payable and other payables that are denominated in foreign currency.

A weakening (strengthening) of 1% of the NTD against the USD and CNY at December 31, 2021 and 2020, would have increased or decreased the net profit before tax by $26,184 thousand and $16,970 thousand, respectively. The analysis assumes that all other variables remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for both periods.

Since the Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2021 and 2020, foreign exchange gain (including realized and unrealized portions) amounted to $62,924 thousand and $78,248 thousand, respectively.

2) Interest rate analysis

The details of financial instruments exposed to interest rate risk were as follows:

Fixed-rate instruments: Financial assets Financial liabilities Variable-rate instruments: Financial assets Financial liabilities	Carrying amount December 31, 2021 December 31, 2020 $ 1,944,520 256,320 (2,049,971) (1,090,000) $ (105,451) (833,680) $ 298,116 198,685 (700,000) (900,000) $ (401,884) (701,315)
	December 31, 2021 $ 1,944,520 (2,049,971) $ (105,451) $ 298,116 (700,000) $ (401,884)

The sensitivity analysis is based on the exposure to the interest rate risk of nonderivative financial instruments on the reporting date. Regarding liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases 1 basis points when reporting to management internally, which also represents the Company management’ s assessment of the reasonably possible interest rate change.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

If the interest rate had increased / decreased by 1 basis points, the Company’s net income would have decreased / increased by $1,005 thousand and $1,753 thousand for the years ended December 31, 2021 and 2020, with all other variable factors remaining constant. This is mainly due to the Company’s borrowing at variable rates and bank deposits in variable-rate bills.

(iv) Fair value of financial instruments
1) Fair value of financial instruments

The fair value of financial assets at fair value through profit or loss is measured on a recurring basis. The carrying amount and fair value of the Company’s financial assets, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

	December 31, 2021	December 31, 2021	December 31, 2021
Carrying amounts $ 33,459 $ 197,419 $ 978,669 301,550 249,876 4,683 1,264,067 $ 2,798,845 $ 2,650,000 99,971 176,661 10,673 14,862 $ 2,952,167		Fair Value
	Level 1 33,459 197,419	Level 2 - -	Level 3 - -	Total 33,459
				197,419

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

	December 31, 2020	December 31, 2020	December 31, 2020
Carrying amounts $ 28,624 $ 126,439 $ 455,105 338,261 235,257 3,830 1,124,961 $ 2,157,414 $ 1,990,000 194,484 1,548 11,605 $ 2,197,637		Fair Value
	Level 1 28,624 126,439	Level 2 - -	Level 3 - -	Total 28,624
				126,439

2) Valuation techniques for financial instruments measured at fair value
a) Non-derivative financial instruments

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

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

b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants. Fair value of forward currency is usually determined by the forward currency exchange rate.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

3) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Company’s financial instruments that use Level 3 inputs to measure fair value are derivative financial assets. The financial assets’ fair value are using third-party pricing information. The unobservable inputs are not set up as the Company measures fair value, therefore, the quantified information of significant unobservable inputs are not disclosed.

(w) Financial risk management

(i) Structure of risk management

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect any changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The board of directors monitors the management to ensure compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The board of directors is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the board of directors.

(ii) The Company have exposed to the following risks from its financial instruments:
1) Credit risk
2) Liquidity risk
3) Market risk

For more disclosures about the quantitative effects of these risks exposures and the Company’s objectives, policies and processes for measuring and managing the above mentioned risks, please refer to note 6(v).

(x) Capital management

The Board's policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares, paid-in capital, and retained earnings. As of December 31, 2021 and 2020, the Company’s equity to asset ratios were 54% and 60%, respectively. There were no changes in the Company’s approach to capital management as of December 31, 2021.

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(y) Investing and financing activities not affecting current cash flow

The Company’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020, were as follows:

(i) For acquisition of right-of-use assets, please refer to note 6(h).
(ii) Reconciliation of liabilities arising from financing activities were as follows:

Short-term borrowings Short-term notes and bills payable Long-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2021 $ 790,000 - 1,200,000 1,548 $ 1,991,548	Cash flows 710,000 100,000 (50,000) (2,873) 757,127	Non-cash	changes Others - (29) - 40 11	December 31, 2021
			Changes in lease payments - - - 11,958 11,958
					1,500,000 99,971 1,150,000 10,673
					2,760,644

Short-term borrowings Short-term notes and bills payable Long-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2020 $ 510,000 149,994 1,000,000 4,994 $ 1,664,988	Cash flows 280,000 (150,000) 200,000 (3,487) 326,513	Non-cash	changes Others - 6 - 41 47	December 31, 2020 790,000 - 1,200,000 1,548
			Changes in lease payments - - - - -
					1,991,548

(7) Related-party transactions:

(a) Names and relationship with related parties

The following are entities that have had transaction with related party during the periods covered in the financial statements.

Name of related party Relationship with the Company NISHOKU BOUEKI CO., LTD. (NISHOKU BOUEKI) The Company’s subsidiaries NISHOKU TECHNOLOGY VIETNAM CO.,LTD. (NISHOKU The Company’s subsidiaries VIETNAM) SUN NICE LIMITED (SAMOA) (SUN NICE (SAMOA)) The Company’s subsidiaries SAME START LIMITED (Anguilla) (SAME START The Company’s subsidiaries (Anguilla)) NISHOKU HONG KONG HOLDING LTD. (NISHOKU HK) The Company’s subsidiaries SUN NICE LIMITED (BVI) (SUN NICE (BVI)) The Company’s subsidiaries NISHOKU PLASTIC MOLD (SHENZHEN) CO., LTD. The Company’s subsidiaries (NISHOKU (SHENZHEN))

KUNSHAN NISHOKU PLASTIC ELECTRONIC CO., LTD. (KUNSHAN NISHOKU PLASTIC)

The Company’s subsidiaries

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(b) Significant transactions with related parties

(i) The amounts of sales by the Company to related parties and the outstanding balance were as follows:

Sales 2021 2020 $ 900,917 603,930 143,112 7,811 3,037 44 $ 1,047,066 611,785	Accounts receivable-related parties	Accounts receivable-related parties
2021 $ 900,917 143,112 3,037 $ 1,047,066	December 31, 2021 192,562 50,713 634 243,909	December 31, 2020
		301,922 7,730 33
		309,685

The credit terms were 90 days for related parties. The general credit terms were 30 to 150 days for non-related parties. The product sale to related parties was different from other clients, therefore, the sales prices cannot be compared to other clients.

(ii) The amounts of purchase by the Company to related parties and the outstanding balance were as follows:

Purchases 2021 2020 $ 125,332 136,013 - 65 $ 125,332 136,078	Accounts payable- related parties	Accounts payable- related parties
2021 $ 125,332 - $ 125,332	December 31, 2021 41,135 - 41,135	December 31, 2020
		17,686 -
		17,686

The payment terms were 90 days for related parties. The general credit terms for vendors other than related parties are 60 to 120 days. The Company do not purchase the same product from other vendors, therefore, the purchase prices cannot be compared to other vendors.

(iii) Guarantees and endorsements

The amounts of guarantees notes issued as collateral for bank loans were as follows:

Guarantees notes issued Actual usage amount	December 31, 2021 $ 1,360,064 $ 193,760	December 31, 2020
		1,398,688
		153,920

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(iv) Loans to Related Parties

The loans to related parties were as follows:

Relationship Subsidiary company: NISHOKU VIETNAM	December 31, 2021 $ 249,120	December 31, 2020
		227,840

The loans to related parties are unsecured. There are no expected credit loss required after the management’s assessment.

(v) Other

1) The Company paid for operating expenses on behalf of Same Start (Anguilla) amounted to $0 thousand and $37,675 thousand for the years ended December 31, 2021 and 2020, respectively; besides that, there are some receivables not recovery (under other current financial assets) as follows:

SAME START (Anguilla)	December 31, 2021 $ -	December 31, 2020
		6,301

  - 2) The Company sold machinery and controlled items to NISHOKU VIETNAM and KUNSHAN NISHOKU PLASTIC during 2021 and 2020, and the unrealized gains incurred from these transactions are recorded as the deduction of the investments accounted for using equity method, and gains from disposal are recognized by years according to the period of expected use. The realized gains recognized during 2021 and 2020 were $309 thousand and $2,486 thousand, respectively.

(c) Transaction of key management personnel
(i) Key management personnel compensation

Key management personnel compensation comprise:

Short-term employee benefits Post-employment benefits	2021 $ 50,051 324 $ 50,375	2020
		43,511 216
		43,727

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(8) Pledged assets:None

(9) Significant Commitments and Contingencies:

Please refer note 7 for guarantees to subsidiaries.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

follows:
By function By item	2021			2020
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefit expenses Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	15,420 1,910 850 - 1,328 3,638 17	102,757 6,447 2,671 10,780 1,626 4,513 602	118,177 8,357 3,521 10,780 2,954 8,151 619	14,385 1,574 769 - 1,139 5,294 25	89,581 3,473 1,568 12,265 1,895 6,474 741	103,966 5,047 2,337 12,265 3,034 11,768 766

The number of the Company’s employees and the additional information of employee benefits were as follows:

Employees Non concurrently as employees of directors Average of employee benefit expenses Average of employee salary expenses Adjustment of employee salary expenses Remuneration of supervisor

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

The Company compensation policies are as follows:

(a) Director of the Board:

The compensation paid to the directors includes remuneration and meeting travel allowances, which is not fixed monthly remuneration.

The compensation is in accordance with Article 20 of the Company’s Articles of Incorporation, the Company shall allocate at a maximum of 5% of the profit as remuneration to directors for the year, and the Company shall base on its determination of an individual director’s remuneration on the evaluation results of his or her performance.

(b) Managerial officer:

In addition to referring to the employee remuneration policy, the remuneration is determined by the Company's overall operating performance, the individual performance, contribution to the Company's operations, special achievements and peer salary levels.

Aforementioned directors’and managers’compensation is evaluated by the remuneration committee, and is submitted to the Board of Directors for resolution.

(c) Employees:

The salary for each employee is based on the Company’ s salary management regulations, which include the fixed salary, allowances, and the variable pay, as well as performance bonuses and special dividends. The rewards are given according to the seniority, rank, and work performance, etc..

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

No.	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance (Note 2)	Actual usage amount during the period	Intere st rate	Nature of financing	Transaction amounts	Reason for short-term financing	Allowance for bad debt	Collateral	Collateral	Financing limit for each borrowing company	Maximum financing limit for the lender
													Item	Value
0	The Company	NISHOKU VIETNAM	Other accounts receivable	Yes	285,350	276,800	249,120	0.63~ 0.72%	Necessary to loan other parties	-	Operating capital	-	-	-	441,570 (Note 1)	1,766,280 (Note 1)

Note 1: The individual amount and the total amount for lending to a company shall not exceed 10% and 40% of the lending company’s net worth in the latest financial statement, respectively. The Company for lending to the Company directly or indirectly holds 100% of their shares, with the loan amount not limited and the total amounts not exceeding the lending company’s net worth in the last financial statement.

Note 2: Amount actually draw in foreign currencies were translated based on the exchange rate at the reporting date.

(Continued)

NISHOKU TECHNOLOGY INC.

Notes to the Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise (note 1)	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date (Note 3)	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company (Note 2)
0 0 0	The Company 〃〃	SAME START (Anguilla) NISHOKU VIETNAM NISHOKU BOUEKI	3 2 2	4,415,699 4,415,699 4,415,699	113,560 1,196,688 176,560	- 1,184,704 175,360	- 193,760 -	- - -	% - % 26.83 % 3.97	4,415,699 4,415,699 4,415,699	Y 〃〃	N 〃〃	N 〃〃

Note 1: The amount and the total amount of the guarantee to a company shall not exceed 30% and 100%, respectively, of the Company net worth in the latest financial statements. The total amount of the guarantee that the Company and its subsidiaries to a company shall not exceed 100%, of the Company’s net worth in the latest financial statement. The Company directly or indirectly holds 100% of their shares, the guarantee amounts not limited by the Company’s net worth in the latest financial statement.

Note 2: The relationship of guarantor and endorsements to related parties were as follows:

1) Business relationship between the Company
2) The Company directly or indirectly holds over 50% of subsidiaries’ shares;
3) The parent company and its subsidiaries holds over 50% of investees’ shares
4) A subsidiary jointed owned over 50% by the Company and the Company’s directly-owned subsidiary.

Note 3: Amount actually draw in foreign currencies were translated based on the exchange rate at the reporting date.

(iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

	joint ventures):
Name of holder	Nature and name of securities	Relationship with the securities issuer	Account name	Ending balance				Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company 〃〃〃 NISHOKU BOUEKI NISHOKU SHENZHEN The Company 〃〃〃〃〃〃	Nomura Global Financial Bond Fund JPMorgan Investment Funds–Global High Yield Bond Fund ABITL Income Multi-asset Income Fund of Funds A2 BGF ESG Multi-Asset Fund PineBridge Preferred Securities Income Fund Fixed income financial instruments Allianz Global Investors Income and Growth Fund A Allianz Global Investors Income and Growth Fund PineBridge Global ESG Quantitative Bond Fund PineBridge Global Multi-Strategy High Yield Bond Fund Nomura Global Financial Bond Fund FSITC GLOBAL HIGH YIELD BOND FUND ABITL Income Fund -Multi Asset Income Fund of Funds N	None 〃〃〃〃〃〃〃〃〃〃〃〃	Financial assets at fair value through profit or loss - current 〃〃〃〃〃 Financial assets at fair value through profit or loss - non current 〃〃〃〃〃〃	- - - - - - - - - - - - -	8,260 8,360 5,697 11,142 5,402 65,145 11,173 46,552 46,223 37,455 22,092 12,127 21,797	% - % - % - % - % - % - % - % - % - % - % - % - % -	8,260 8,360 5,697 11,142 5,402 65,145 11,173 46,552 46,223 37,455 22,092 12,127 21,797

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Consolidated Financial Statements

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

Name of company	Category and name of security	Account name	Name of counter-party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
KUNSHAN NISHOKU PLASTIC NISHOKU SHENZHEN	Fixed income financial instruments 〃	Financial assets at fair value through profit or loss-current 〃	Wells Fargo Asset Management (Shanghai) Wells Fargo Asset Management (Shanghai)	None 〃	- -	218,869 393,964	- -	217,150 456,014	- -	448,664 807,134	436,019 784,833	12,645 22,301	- -	- 65,145

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Related party	Nature of relationship		Transaction details	Transaction details	Transaction details	Transaction different f	s with terms rom others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC The Company KUNSHAN NISHOKU PLASTIC The Company NISHOKU VIETNAM SAME START (Anguilla) The Company	KUNSHAN NISHOKU PLASTIC SAME START (Anguilla) KUNSHAN NISHOKU PLASTIC The Company NISHOKU VIETNAM The Company The Company SAME START (Anguilla)	Associate 〃〃〃〃〃〃〃	Purchase Sale Sale Purchase Sale Purchase Sale Purchase	194,219 (194,219) (900,917) 900,917 (143,112) 143,112 (125,332) 125,332	% 88 % (5) % (70) % 52 % (11) % 47 % (58) % 15	Note 1 〃〃〃〃〃〃〃	Note 1 〃〃〃〃〃〃〃	Note 1 〃〃〃〃〃〃〃	(68,975) 68,975 192,562 (192,562) 50,713 (50,713) 41,135 (41,135)	(87)% 6% 64% (35)% 17% (51)% 56% (23)%	Note 2 〃 Note 2 〃〃 Note 2 〃 Note 2

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Consolidated Financial Statements

Note 1: Payment term given to related parties and third parties were 90 days and 60 to 120 days, respectively. In addition, the Company did not buy same product from third part, so the purchase price cannot be compared.

Note 2: The subsidiaries did not purchase or sale same product from third parties, so the purchase (sale) price cannot be compared. In addition, the receipt terms of related parties were not significant different to third parties.

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
The Company	KUNSHAN NISHOKU PLASTIC	Associate	192,562	3.64	-		69,279	-

Note 1: Until January 28, 2022.

(ix) Trading in derivative instruments: None

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2021 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance a	s of December	31, 2021	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2021	December 31, 2020	Shares (thousands)	Percentage of ownership	Carrying value
The Company 〃〃 SUN NICE (SAMOA) 〃〃	SUN NICE (SAMOA) NISHOKU BOUEKI NISHOKU VIETNAM SAME START (Anguilla) NISHOKU HK SUN NICE (BVI)	SAMOA Taiwan Vietnam Anguilla HK BVI	Holding Purchase and sales of plastic raws and parts Manufacture and sale of tooling and plastic products Purchase and sale of mold and plastic products Holding 〃	1,096,194 1,000 508,434 (USD 16,500 thousand) - 1,800,361 (USD 57,915 thousand) 585,292 (USD 17,948 thousand)	1,096,194 1,000 508,434 (USD 16,500 thousand) - 1,800,361 (USD 57,915 thousand) 585,292 (USD 17,948 thousand)	34,468 6,300 - - 62,298 15,697	% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	4,538,818 106,388 136,258 (31,132) 3,644,042 982,222	564,574 (3,076) 30,542 60,137 385,025 151,235	564,574 (1,676) 30,851 28,490 385,025 151,235

(c) Information on investment in mainland China:

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

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2020	Investm	ent flows	Accumulated outflow of investment from Taiwan as of December 31, 2021	Net income (losses) of the investee	Percentage of ownership	Investment income (losses) (Note 1)	Book value (Note 1)	Accumu-lated remittance of earnings in current period
					Outflow	Inflow
NISHOKU SHENZHEN KUNSHAN NISHOKU PLASTIC	Manufacture and sale of mold and plastic products Manufacture and sale of mold and plastic products	USD11,288 thousands USD53,310 thousands	Indirect investment through third area 〃	703,870 (USD22,939 thousand) 1,674,270 (USD52,524 thousand)	- -	- -	703,870 (USD22,939 thousand) 1,674,270 (USD52,524 thousand)	5,580 533,010	100.00% 100.00%	5,580 530,721	828,113 3,436,928	475,841 675,359

(Continued)

NISHOKU TECHNOLOGY INC. Notes to the Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

Limitation on investment in	Mainland China:
Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
2,378,140	2,378,140	(Note 2)

Note 1: The above investment income (loss) in mainland China were based on financial statements audited by the Company’s auditors.

Note 2: The Company has received the certificate issue by the Industrial Development Bureau, Ministry of Economic Affairs when investing abroad, allowing it to start operating of its headquarters. As a result, there is no limitation on investment to Mainland China for the Company.

(iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “ Information on significant transactions”.

(d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Yi Feng Investment Limited	4,736,000	% 7.55
Ji Teng Investment Limited	4,500,000	% 7.18
Yun Ding Investment Limited	4,050,000	% 6.46
CTBC Bank Trusted Custody investment account _Gold Talent Co., Ltd.	3,897,856	% 6.21
Jin Hong Investment Limited	3,600,000	% 5.74

(14) Segment information:

Please refer to the Company’s consolidated financial statements for the year ended December 31, 2021 for details.

NISHOKU TECHNOLOGY INC.

Statement of cash and cash equivalents

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item
Cash on hand
Cash in bank
Demand deposit
Foreign currency demand deposits
Time deposits
Bond acquired under repurchase agreement
Total

Description
Amount
$ 100
16,000
USD4,877 thousands; Exchange rate 27.680
134,991
HKD62 thousands; Exchange rate 3.550
222
CNY51 thousands; Exchange rate 4.340
220
EUR338 thousands; Exchange rate 31.320
10,576
USD11,000 thousands; Exchange rate 27.680
Period: 2021.12.23~2022.03.30;
interest rate: 0.30%~0.32%
304,480
USD18,500 thousands; Exchange rate 27.680
Period: 2021.12.07~2022.02.24;
interest rate: 0.29%
512,080
$
978,669

Statement of notes and accounts receivable

(including related parties)

Item KUNSHAN NISHOKU PLASTIC NISHOKU VIETNAM Other (individual amount not exceeding 5%) Less: Allowance for doubtful accounts Net accounts receivable	Description Amount Operating revenue $ 192,562 〃 50,713 〃 58,388 (113) $ 301,550

NISHOKU TECHNOLOGY INC.

Statement of inventories

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Raw materials Work in process and semi-finished products Finished goods Merchandise Less: Provision for inventories	Amount	Amount
	Cost $ 5,300 1,415 12,918 10,758 30,391 (2,296) $ 28,095	Net realizable value
		5,238 1,715 17,045 10,632
		34,630

NISHOKU TECHNOLOGY INC.

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Name of investee SUN NICE LIMITED (SAMOA) NISHOKU BOUEKI NISHOKU VIETNAM Total	Beginning Balance Number of shares Amount 34,468 $ 4,510,300 6,300 114,781 (Note 6) 113,468 $ 4,738,549	Additions Number of shares Amount - - - - - - -	Additions Number of shares Amount - - - - - - -			Reduce Amount (481,295)(Note 1) (6,717)(Note 3) - (488,012)	Other adjustments Number of shares Amount - 509,813 (Note 2) - (1,676)(Note 4) - 22,790 (Note 5) 530,927	Other adjustments Number of shares Amount - 509,813 (Note 2) - (1,676)(Note 4) - 22,790 (Note 5) 530,927	Ending Balance Number of shares Percenta ge of holding shares Amount 34,468 % 100.00 4,538,818 6,300 % 100.00 106,388 (Note 6) % 100.00 136,258 4,781,464	Ending Balance Number of shares Percenta ge of holding shares Amount 34,468 % 100.00 4,538,818 6,300 % 100.00 106,388 (Note 6) % 100.00 136,258 4,781,464	Ending Balance Number of shares Percenta ge of holding shares Amount 34,468 % 100.00 4,538,818 6,300 % 100.00 106,388 (Note 6) % 100.00 136,258 4,781,464	Market value or book value Pledged or guaranteed 4,538,818 None 106,388 〃 136,258 〃
	Number of shares	Number of shares		Number of shares			Number of shares		Number of shares 34,468 6,300 (Note 6)	Percenta ge of holding shares
	34,468 6,300 (Note 6)	- - -		- - -			- - -			% 100.00 % 100.00 % 100.00

(Note 1): Reduced this period was the profit repatriation (under the deduction from long-term equity investment).

(Note 2): Other adjustments are share of profit of subsidiaries accounted for using equity method $564,574 thousand, unrealized gross profit $(15,248) thousand and exchange difference on translation $(39,513) thousand.

(Note 3): Reduced this period was gained cash dividend (under the investments accounted for using equity method minus item).

(Note 4): Other adjustments are share of profit of subsidiaries accounted for using equity method $(1,676) thousand.

(Note 5): Other adjustments are share of loss of subsidiaries accounted for using equity method $30,851 thousand, unrealized gross profit $(4,470) thousand and exchange difference on translation $(3,591) thousand.

(Note 6): No issued stock.

NISHOKU TECHNOLOGY INC.

Statement of changes in property, plant and equipment

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Beginning balance Cost: Land $ 179,672 Building 218,832 Machinery and equipment 15,438 Office and other equipment 2,873 416,815 Depreciation: Building 101,740 Machinery and equipment 12,879 Office and other equipment 2,600 117,219 Net value $ 299,596	Additions - 173 6,785 543 7,501 3,865 1,165 292 5,322 2,179	Reduce - - 371 - 371 - 371 - 371 -	Ending balance Pledged or guaranteed 179,672 None 219,005 〃 21,852 〃 3,416 〃 423,945 105,605 13,673 2,892 122,170 301,775

NISHOKU TECHNOLOGY INC.

Statement of short-term borrowings

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Creditor First Bank Fubon Bank CTBC Bank E-SUN Bank Citi Bank	Description Unsecured Loan 〃〃〃〃	Amount $ 350,000 300,000 50,000 400,000 400,000 $ 1,500,000	Term of contract within one year 〃〃〃〃	Interest rate 0.77% 0.79%-0.83% 0.8% 0.8% 0.77%-0.80%	Credit lines Pledged or guaranteed 500,000 None 400,000 〃 300,000 〃 400,000 〃 442,880 〃 2,042,880

NISHOKU TECHNOLOGY INC.

Statement of short-term bills payable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Amount Unamortized Grantee Interest Total premiums Carrying Pledged on Items insitution Terms of contracts rate amount (Discounts) value guaranteed Commercial Mega Bills 2021.12.30-2022.01.19 0.590% $ 100,000 (29) 99,971 None Paper Payable

NISHOKU TECHNOLOGY INC.

Statement of notes and accounts payable

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Non Related parties Supplier F Supplier G Supplier H Other (individual amount not exceeding 5%) Total	Description Amount Operating cost $ 35,409 〃 33,326 〃 9,378 57,413 $ 135,526

NISHOKU TECHNOLOGY INC.

Statement of long-term borrowings

December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Amount $ 150,000 300,000 250,000 200,000 250,000 $ 1,150,000 Statement	Term of contract Paid the principal at 2023.11.08 Paid the principal at 2023.12.31 Paid the principal at 2023.07.03 Paid the principal at 2023.09.15 Paid the principal at 2023.12.21 of operating revenue Quantity Note 1 Note 1	Interest rate Pledged on guaranteed 0.93% None 0.93% 〃 0.95% 〃 0.92% 〃 0.96% 〃 Amount $ 1,196,981 87,450 1,050 $ 1,285,481

Note 1: The product items are diversify, in order not to let the information users misunderstanding, the Company decided not to disclose.

Note 2: Individual amount not exceeding 5%.

NISHOKU TECHNOLOGY INC.

Statement of operating costs

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Cost of self-produced goods
Raw material on January 1, 2021	$	2,681
Add: Purchases		21,100
Less: Raw material on December 31, 2021		(5,300)
Sale of raw material		(31)
Internal use and others		(780)
Raw material used		17,670
Direct labor		8,727
Manufacturing overhead		29,683
Manufacturing cost		56,080
Add: Work-in-Precess on January 1, 2021		843
Less: Work-in-Process on December 31, 2021		(1,415)
Cost of Finished goods		55,508
Add: Finished goods on January 1, 2021		4,398
Purchases		17,683
Less: Finished goods on December 31, 2021		(12,918)
Internal use and others		(2)
Cost of finish goods		64,669
Cost of Raw materials sold		31
Less: Loss on inventory valuation		(504)
Subtotal		64,196
Cost of sales from purchasing
Merchandise on January 1, 2021		32,383
Add: Purchases		798,095
Less: Merchandise on December 31, 2021		(10,758)
Subtotal		819,720
Operating Cost	$	883,916

NISHOKU TECHNOLOGY INC.

Statement of operating expenses

For the year ended December 31, 2021

(Expressed in thousands of New Taiwan Dollars)

Item Selling expenses Salaries $ 3,547 Research and development consumptive material - Miscellaneous fees 45 Freight 886 Import and export expense 1,223 Other expense (note) 1,408 Total $ 7,109 Note: Individual amount not exceeding 5%.	Administration expenses 96,426 - 15,127 33 - 28,027 139,613	Research and development expenses
		2,784 956 5,641 28 - 1,434
		10,843

AI assistant

Nishoku — Annual Report 2021

52364_rns_2021-12-23_6f382044-5898-4172-9ff1-11ca973dc77f.pdf

NISHOKU TECHNOLOGY INC.

Financial Statements

Table of contents

KPMG

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Investments accounted for using equity method

Description of key audit matter

How the matter was addressed in our audit :

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Auditors’ Responsibilities for the Audit of the Financial Statements

KPMG

Notes to Readers

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Balance Sheets

December 31, 2021 and 2020

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

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

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Changes in Equity

(English Translation of Financial Statements Originally Issued in Chinese.) NISHOKU TECHNOLOGY INC.

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Financial Statements Originally Issued in Chinese) NISHOKU TECHNOLOGY INC.

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

(1) Company history

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

(3) New standards, amendments and interpretations adopted:

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(4) Summary of significant accounting policies:

(a) Statement of compliance

(c) Foreign currencies

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(ii) Foreign operations

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(e) Cash and cash equivalents

(f) Financial instruments

(i) Financial assets

1) Financial assets measured at amortized cost

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

3) Treasury shares

4) Other financial liabilities

5) Derecognition of financial liabilities

6) Offsetting of financial assets and liabilities

(iii) Derivative financial instruments

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(g) Inventories

(h) Investment in subsidiaries

(i) Property, plant and equipment

(i) Recognition and measurement

(ii) Subsequent cost

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(j) Lease

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(k) Research and development

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(l) Impairment of non-financial assets

(m) Revenue from contracts with customers

(i) Sale of goods

(ii) Financing components

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

(n) Employee benefits

(i) Defined contribution plans

(ii) Short-term employee benefits

(o) Share-based payment

(p) Income taxes

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

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

NISHOKU TECHNOLOGY INC. Notes to the Financial Statements

Nishoku Annual Report 2021