Optimax — Audit Report / Information 2020

Nov 12, 2020

Stock Code: 3051

OPTIMAX TECHNOLOGY CORPORATION

Parent Company Only Financial Statements Independent Auditors’ Review Report December 31, 2020 and 2019

Address: No. 37 Pingdong Rd., Pingzhen District, Taoyuan, Taiwan Telephone: 886-3-460-6677

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. NOT AUDITED OR REVIEWED BY AUDITORS. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and the parent company only financial statements, the Chinese version shall prevail.

1

Table of contents

Contents Cover Page Table of Contents Independent Auditors’ Report Parent Company Only Balance Sheets Parent Company Only Statements of Comprehensive Income Parent Company Only Statements of Changes in Equity Parent Company Only Statements of Cash Flow Notes to the Parent Company Only Financial Statements 1. Organization and business 2. Approval of financial statements 3. Application of New and Revised Accounting Standards and Interpretations 4. Summary of significant accounting policies 5. Critical accounting judgments and key sources of estimation and assumption uncertainty 6. Description of Significant Accounts 7. Related-party transactions 8. Pledged assets 9. Significant commitments and contingencies 10.Significant loss from disaster 11. Significant subsequent events 12. Others 13. Additional disclosures (1) Information of significant transactions (2) Information of investees (3) Information of investments in Mainland China (4) Major shareholders information 14. Segment information Statements of Major Accounting Items

Page

1 2 3~7 8 9 10 11 12~70 12 12 12 13~22 22~23 23~57 57~58 59 59 60 60 60~61 61~62 62 62 62 62 62 71~84

2

Independent Auditors’ Report

To the Board of Directors of Optimax Technology Corporation:

Opinion

We have audited the parent company only financial statements of Optimax Technology Corporation (“the Company”), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, statements of changes in equity, and statements of cash flows for the years ended December 31, 2020 and 2019, and notes to the parent company only financial statements including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for each of 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 by following the regulations governing auditing and attestation of financial statements by certified public accountants and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the audits report of other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

1. Expression and disclosure of non-current assets held for sale

For the accounting policy of the non-current assets held for sale, please refer to Note 4 (6) of the parent company only financial report; for the accounting items of non-current assets held for sale, please refer to the Note 6 (6) of the parent company only financial report.

In order to activate assets and reduce operating expenses, Optimax Technology Corporation sold the branch in Southern Taiwan Science Park and related ancillary equipment to Taiwan Semiconductor Manufacturing Co., Ltd. on August 12, 2020 through a resolution of the board of directors and signed a real estate purchase contract on October 19, 2020 with a total price of NT$3,832,500,000 (tax included). The above asset disposal is assessed by the management to be completed within one year.

3

In accordance with International Financial Reporting Standards No. 5, the book value and the public value minus the cost of sale will be used to reduce the amount of assets, and the non-current assets for sale will be transferred. The amount of other assets is significant, and the classification and expression of the parent company only financial report involves management's assessment of the possibility of asset sales, so non-current assets held for sale is listed as one of the key audit matters.

The concern of audit procedure:

(1) Understand the procedures and internal control of the acquisition or disposal of assets by Optimax Technology Corporation, and evaluate the design and implementation of the internal control of major asset transactions effective.

(2) Review the proceedings of the board of directors' resolutions to dispose of assets, the written consent of the creditor bank, and the signed asset disposal contract, to confirm that the management has obtained the purchase commitment and meets the general conditions and business practices, and has been approved by the creditor bank for evaluation. Whether the timing of the transfer of non-current assets to be sold is appropriate or not.

(3) When the classification is confirmed as a non-current asset for sale, the management obtains the fair value evaluation information of the asset, evaluates the reasonableness of the fair market value, and recalculates the amount of impairment loss (recovery benefit).

(4) Assess whether the management's expression and disclosure of non-current assets held for sale meets the requirements to determine the adequacy of the financial report expression.

2. Asset impairment assessment

For the accounting policy of asset impairment, please refer to Note 4 (10) of the parent company only financial report; for the uncertainty of the accounting estimates and assumptions of the asset impairment assessment, please refer to Note 5 of the parent company only financial report; for the accounting items of asset impairment, please refer to the Note 6 (8) and Note 6 (11) of the parent company only financial report.

Optimax Technology Corporation is a highly capitalized industry and is facing interference from many factors such as the economic environment and industry competition; because the assessment of asset impairment requires the process of predicting and discounting future cash flows to estimate the recoverable amount, and this process is inherently highly uncertain, therefore the asset impairment assessment is listed as one of the key audit matters.

The concern of audit procedure:

• (1) Understand the relevant policies and processing procedures of Optimax Technology Corporation and its subsidiaries for impairment assessment, and assess the cash-generating units recognized by the management for impairment and the signs of internal and external impairment.

• (2) Consider whether all assets that require annual impairment testing have been fully included in the management evaluation procedure.

• (3) Assess the rationality of the evaluation method used by management to measure the recoverable amount.

4

• (4) For the recoverable amount determined by the independent evaluation report issued by the third party appointed by Optimax Technology Corporation and its subsidiaries, review the reasonableness of the relevant assumptions, and evaluate the qualification and independence of the appraiser to confirm the Fair value of investment real estate.

• (5) Assess the uncertainties and related assumptions involved in the process of asset impairment loss, and consider whether the relevant disclosures of Optimax Technology Corporation and its subsidiaries are sufficient.

Emphasis on matters-extension of the joint loan case

As stated in Notes 6 (12) and 6 (16) of the parent company only financial statement, in accordance with the ”Key Points for the Ministry of Economic Affairs to Assist Enterprises in Handling Bank Credit and Debt Negotiations'', Optimax Technology Corporation applied to the Industrial Bureau of the Ministry of Economic Affairs on April 10, 2020, to assist in the negotiation of bank claims and debts, requesting that short-term credit extension periods be extended to December 7, 2021, and medium and long-term loans extended for one year. The bank was held a delegation meeting on June 19, 2020, and on November 17, 2020, the majority of creditor banks agreed through written consent that the short-term credit extension periods was extended to December 7, 2021 and the mid- and long-term loan repayment period was extended for one year. All operating procedures were completed on December 30, 2020. Optimax Technology Corporation applied to the Industrial Bureau of the Ministry of Economic Affairs on April 25, 2019, in accordance with the” Key Points for the Ministry of Economic Affairs to Assist Enterprises in Handling Bank Credit and Debt Negotiations'', to assist in the negotiation of bank claims and debts, requesting that short-term credit extension periods be extended to December 7, 2020, and medium and long-term loans extended for one year. The bank was held a delegation meeting on June 26, 2019, and on November 25, 2019, the majority of creditor banks agreed through written consent that the short-term credit extension periods was extended to December 7, 2020 and the mid- and long-term loan repayment period was extended for one year. All operating procedures were completed on March 3, 2020. The accountant did not amend the review results.

Responsibilities of management and those charged with governance for the separate financial statements

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

In preparing the separate financial statements, management is responsible for assessing the ability of Optimax Technology Corporation. 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 Optimax Technology Corporation. or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including Audit Committee, are responsible for overseeing the financial reporting process of Optimax Technology Corporation.]

5

Independent auditor’s responsibilities for the audit of the separate financial statements

Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole area free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 ROC GAAS 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 separate financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identifying and assess the risks of material misstatement of the separate 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 no detecting a material misstatement resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

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

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

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Optimax Technology Corporation. to express an opinion on the separate 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.

6

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 separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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 auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

BAKERK TILLY CLOCK & CO. Taiwan (Republic of China) March 25th., 2021

The accompanying financial statements are intended only to present the financial position, financial performance, and cash flows in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards, International Accounting Standards, interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China. The standards, procedures and practices to review such financial statements are those generally accepted and applied in the Republic of China. The independent auditors’ review report and 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 version and Chinese version, the Chinese-language independent auditors’ review report and financial statements shall prevail.

7

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

OPTIMAX TECHNOLOGY CORPORATION

Parent Company Only Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets	December 31, 2020 December 31, 2019
	Amount % Amount %
Current assets Cash and cash equivalents Current financial assets at amortized cost Accounts receivable, net Accounts receivable from related parties, net Other receivables Current inventories Prepayments Non-current assets or disposal groups classified as held for sale, net Other current financial assets Other current assets	$ 162,114 2 320,035 4 35,800 - 42,309 - 770,909 9 645,405 7 - - 105,903 1 305,274 3 307,524 3 957,134 11 976,182 11 44,988 1 10,982 - 3,106,341 36 147,252 2 79 - 78 - 1,698 - 2,581 -
Total current assets	5,384,337 62 2,558,251 43
Noncurrent assets Investments accounted for using equity method Property, plant and equipment Right-of-use assets Investment property, net Deferred tax assets Other non-current financial assets Other non-current assets	106,299 1 83,476 1 2,210,231 25 2,326,928 26 6,586 - 9,698 - 693,783 8 3,737,871 41 161,976 2 175,076 2 180,393 2 129,750 2 7,429 - 6,900 -
Total non-current assets	3,366,697 38 6,469,699 72
Total Assets	$ 8,751,034 100 9,027,950 100
Liabilities and Stockholders’ Equity Current liabilities Short-term loans Accounts payable Other payables Current provisions Current lease liabilities Current Portion of Long-term Debt Current refund liabilities Other current liabilities	$ 702,290 8 741,590 8 178,237 2 162,514 2 280,702 3 137,203 2 13,906 - 13,906 - 18,753 - 17,750 - 111,957 1 920,347 10 7,775 - 19,311 - 120,860 2 28,011 -
Total current liabilities	1,434,480 16 2,040,632 22
Noncurrent liabilities Long-term borrowings Deferred tax liabilities Non-current lease liabilities Non-current net defined benefit liability Guarantee deposits Investments liabilities for usingequitymethod	5,366,681 62 4,937,227 55 147 - 438 - 693,008 8 682,624 8 11,355 - 11,428 - - - 2,996 - - - 118,000 1
Total non-current liabilities	6,071,191 70 5,752,713 64
Total liabilities	7,505,671 86 7,793,345 86
Equity Common stock Retained earnings： Accumulated deficit Other components of equity	3,253,324 37 3,253,324 36 (2,005,321) (23) (2,017,576) (22) (2,640) - (1,143) -
Total equity	1,245,363 14 1,234,605 14
Total liabilities and equity	$ 8,751,034 100 9,027,950 100

8

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

OPTIMAX TECHNOLOGY CORPORATION

Parent Company Only Statements of Comprehensive Income For the years ended December 31, 2020 and 2019

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

Total operating revenue Total operating costs		2020 Amount %	2019 Amount %
		$ 2,416,667 100 (1,972,149) (82)	2,508,959 100 (2,027,627) (81)
Gross profit from operations		444,518 18	481,332 19
Operating expenses Selling expenses Administrative expenses Research and development expenses Impairment loss (impairment gain and reversal of impairment loss) determined in accordance with IFRS 9		(112,470) (5) (139,259) (6) (51,788) (2) (9,336) －	(109,652) (5) (153,105) (6) (54,147) (2) (6,465) －
Total operating expenses		(312,853) (13)	(323,369) (13)
Net operating income		131,665 5	157,963 6
Non-operating income and loss Interest income Other income Other gains and losses – net Finance costs Impairment loss (impairment gain and reversal of impairment loss) determined in accordance with IFRS 9 Share of profit (loss) of subsidiaries accounted for using equity method		409 － 92,727 4 (67,437) (3) (126,583) (5) (21,207) (1) r 21,624 1	998 － 66,785 3 (206,423) (8) (135,250) (5) － － (10,802) (1)
Total non-operating income and expenses		(100,467) (4)	(284,692) (11)
Profit (loss) from continuing operations before tax Total tax expense (income)		31,198 1 (14,734) (1)	(126,729) (5) (42,584) (2)
Net Income		16,464 －	(169,313) (7)
Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss Remeasurement of defined benefit obligations Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss Exchange differences on translating the financial statements of foreign operations Income tax related to components of other comprehensive income that will be reclassified toprofit or loss		(4,209) － － － (1,872) － 375 －	(5,603) － (7) － 259 － (52) －
Other comprehensive income (loss), net of tax		(5,706) －	(5,403) －
Total comprehensive income		$ 10,758 －	(174,716) (7)
Earnings per share Basic earnings per share		$ 0.05	(0.52)

9

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

OPTIMAX TECHNOLOGY CORPORATION

Parent Company Only Statements of Changes in Equity For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Other components of equity

Accounting Title	Common	stock	Accumulated deficit	Accumulated deficit		Foreign Currency Translation differences		Unrealized gains(losses) from financial assets at fair value through other		Total equity
								comprehensive income
For the year ended January 1, 2019	$	3,253,32	$	(1,842,660)	$	(1,343)	$	－	$	1,409,321
Consolidated net price (loss))		－		(169,313)		－		－		(169,313)
Other comprehensive income (loss)		－		(5,603)		207		(7)		(5,403)
Total comprehensive income (loss)		－		(174,916)		207		(7)		(174,716)
For the year ended December 31,2019	$	3,253,32	$	(2,017,576)	$	(1,136)	$	(7)	$	1,234,605
For the year ended January 1, 2020	$	3,253,32	$	(2,017,576)	$	(1,136)	$	(7)	$	1,234,605
Net Income		－		16,464		－		－		16,464
Other comprehensive income(loss)		－		(4,209)		(1,497)		－		(5,706)
Total comprehensive income (loss)		－		12,255		(1,497)		－		10,758
Balance at December 31, 2020	$	3,253,32	$	(2,005,321)	$	(2,633)	$	(7)	$	1,245,363

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

OPTIMAX TECHNOLOGY CORPORATION

Parent Company Only Statements of Cash Flows For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities： Income before income tax	2020 2019
	$ 31,198 (126,729)
Adjustments to reconcile profit (loss)： Depreciation expense Amortization expense Expected credit loss Interest expense Interest income Share of loss (profit) of subsidiaries accounted for using equity method Loss (gain) on disposal of property, plan and equipment Property, plan and equipment transferred to expenses Loss (gain) on disposal of investment properties Loss (gain) on disposal of non-current assets classified as held for sale Reversal of impairment loss on non-financial assets Unrealized foreign exchange loss (gain) Lease liabilities transferred to other income Accumulated exchange differences classified to exchange loss (gain) on disposal of foreign operation Changes in operating assets and liabilities： Decrease (increase) in accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Increase (decrease) in accounts payable Increase (decrease) in other payable Increase (decrease) in Provisions Increase (decrease) in other current liabilities Increase (decrease) in net defined benefit liability Cash generated from operation Cash received from interest income Cash paid for interest Income taxes(paid)refunded	235,369 291,386 989 3,439 30,543 6,465 126,583 135,250 (409) (998) (21,624) 10,802 14,513 8,211 － 6 15 (1,095) (50,607) － (153,823) (1,993) 17,571 21,666 (2,806) － (2,735) － (143,230) (73,919) (24,166) (10,802) 19,048 (14,651) (33,913) 14,927 6,133 (732) 39,773 55,221 140,950 5,144 － 417 78,563 30,381 (4,282) (2,613) 303,653 349,783 418 997 (127,099) (135,298) 18 (41)
Net cashprovided byoperatingactivities	176,990 215,441
Cash flows from investing activities： Acquisition of financial assets at amortised cost Proceeds from disposal of financial assets at amortized cost Proceeds from disposal of non-current assets as held for sale Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of investment properties Proceeds from disposal of investment properties Decrease (increase) in other financial assets Increaseinother non-current assets	(4,000) (34,309) 10,509 － 55,905 － (7,556) (10,403) 4,655 3,512 (5,185) (1,798) － 3,000 (50,644) 25,194 (3,142) (6,836)
Net cash used in investingactivities	542 (21,640)
Cash flows from financing activities： Increase in short-term loans Repayments of long-term debt Increase in guarantee deposits received Decrease in guarantee deposits received Payments of leaseliabilities	46,725 61,260 (350,434) (332,530) 192 50 (438) － (15,753) (17,115)
Net cash flows from(used in)financingactivities	(319,708) (288,335)
Effect of change rate changes on cash and cash equivalents	(15,745) (3,067)
Net decrease (increase) in cash and cash equivalents Cash and cash equivalents at beginningofperiod	(157,921) (97,601) 320,035 417,636
Cash and cash equivalents at end ofperiod	$ 162,114 320,035

11

OPTIMAX TECHNOLOGY CORPORATION Notes to Parent Company Only Financial Statements For the year ended December 31, 2020 and 2019

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

1. Organization and business

• (1) Optimax Technology Corporation was incorporated In March 1998 and registered under the Ministry of Economic Affairs, R.O.C. The registered address is No. 37 Pingdong Rd., Pingzhen District, Taoyuan, Taiwan. The company and subsidiaries (collectively as “the Company”) are primarily engaged in the manufacturing and selling of polarizers.

• (2) In October 2002, Optimax Technology Corporation’s shares were listed on the Taiwan Stock Exchange (TWSE).

2. Approval of financial statements

These parent company only financial statements were approved and authorized for issue by the Board of Directors of Optimax Technology Corporation on March 25, 2021.

3. Application of New, Amended and Revised Standards, and Interpretations

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

	New, Amended and Revised Standards, and Interpretations Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7, ‘Interest rate benchmark reform’ Amendments to IFRS 16 “Covid-19-Related Rent Concessions” Note: Earlier application from January 1, 2020 is allowed by FSC.	Effective date by International Accounting Standards Board
		January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020(Note)

The company has assessed that the adoption of the above standards has not had a material impact on the parent company only financial statements.

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

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

New, Amended and Revised Standards, and Interpretations Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest Rate Benchmark Reform— Phase 2’	Effective date by International Accounting Standards Board
	January 1, 2020 January 1, 2020

12

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

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

New, Amended and Revised Standards, and Interpretations Amendments to IFRS 3, ‘Reference to the conceptual framework’ 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’ Amendments to IFRS 17, 'Insurance contracts' Amendments to IAS 1, ‘Classification of liabilities as current or noncurrent’ Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’ 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

Effective date by International Accounting Standards Board

January 1, 2022 To be determined by International Accounting January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 January 1, 2022 January 1, 2022

The company has assessed that the adoption of the above standards has not had a material impact on the parent company only financial statements.

4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these parent company only financial statements are set out below.

(1) Compliance statement

The parent company only financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”

(2) Basis of preparation

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

• A. Financial instruments at fair value through profit or loss.

• B. Net defined benefit liability at defined benefit obligation deducted plan assets through fair value.

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

13

When the company prepares the individual financial report, the investment subsidiary adopts the equity method. To make the parent company only financial report's current year's profit and loss, other comprehensive gains and losses, and the company's consolidated financial report for the current year attributable to the company's owners, other comprehension benefits and equity being the same, some accounting treatment differences adjusted based on the individual basis and the consolidated basis of "investments using the equity method", "shares of profits and losses of subsidiaries using the equity method", "shares of other comprehensive profits and losses of subsidiaries using the equity method" and related equity items.

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

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

  • (1) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle.

  • (2) Assets held mainly for trading purposes.

  • (3) Assets that are expected to be realized within twelve months from the balance sheet date.

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

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

  • (1) Liabilities that are expected to be settled within the normal operating cycle.

  • (2) Liabilities arising mainly from trading activities.

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

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

(4) Foreign currency

When each entity prepares financial reports, transactions in currencies other than the functional currency (foreign currency) are converted into functional currency records based on the exchange rate on the transaction day.

Monetary items in foreign currencies are translated at the closing exchange rate on each balance sheet date. The exchange difference arising from the currency items of delivery or the conversion of currency items is recognized in the current period profit and loss.

The fair value of foreign currency non-monetary items is used to determine the exchange rate on the day of fair value rate conversion, the resulting exchange difference is listed in the current profit and loss, but if the change in fair value is recognized in other comprehensive gains and losses, the resulting conversion difference is listed in other comprehensive gains and losses.

Non-monetary items in foreign currencies as measured by historical cost are converted at the exchange rate on the transaction date and will not be converted again.

When preparing the parent company only financial report, the assets and liabilities of foreign operating organizations (including subsidiaries in the country where they operate or whose currency is different from that of the company) are converted into New Taiwan dollars at the exchange rate on each balance sheet date.

14

The income and expense items are converted at the average exchange rate of the current period. The resulting exchange difference is listed in other comprehensive profit and loss, and accumulated under the equity of the conversion difference of the foreign operation’s financial statements.

If the company disposes of all the rights and interests of the foreign operation, the accumulated exchange difference related to the foreign operations will be reclassified to profit or loss. If the partial disposal of the subsidiaries of the foreign operation does not result in the loss of control, the accumulated exchange difference is re-attributed to the subsidiary’s non-controlling interests and is not recognized as a profit or loss.

(5) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weightedaverage method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(6) Non-current assets classified as held for sale

The carrying amount of non-current assets is expected to be mainly through sales transactions rather than continued use. When closed, it is classified as pending sale. Non-current assets that meet this classification must be available for immediate sale in their current state, and their sale must be highly probable. When the appropriate level of management commits to the plan to sell the asset, and the sale transaction is expected to start from the classification date when completed within one year, it will meet the sale as highly likely.

Non-current assets classified as pending for sale are measured at the lower of the book value and fair value less the cost of sale, and depreciation is stopped for such assets.

(7) Investments accounted for using equity method

The company uses the equity method to handle investments in subsidiaries.

A subsidiary refers to an entity that the company has control over. Under the equity method, the investment is initially recognized at cost, and the book amount obtained in the future will increase or decrease according to the company's share of subsidiary profit and loss and other comprehensive profit and loss shares and profit distribution. Moreover, the changes in the company's other rights and interests of subsidiaries are recognized based on the shareholding ratio.

When the company's change in ownership and equity of the subsidiary does not result in the loss of control, it is regarded as equity transaction processing. Between the book value of the investment and the fair value of the consideration paid or received the difference is directly recognized as equity. When the company’s share of the subsidiary’s loss equals or exceeds its equity in the subsidiary (including the book amount of the subsidiary under the equity method and the other long-term rights and interests as part of the company’s net investment), the system continues to recognize the loss based on the shareholding ratio .

The amount of the acquisition cost exceeding the company’s share of the net fair value of the identifiable assets and liabilities of the subsidiary that constitutes the business on the acquisition date is classified as goodwill, which is included in the book value of the investment and cannot be amortized. The amount by which the net fair value of the identifiable assets and liabilities of the subsidiary’s identifiable assets and liabilities that constitute the business on the day exceeds the cost of acquisition is recorded as current income.

15

When assessing impairment, the company considers the cash-generating unit as a whole in the financial report and compares its recoverable amount with the book value. If the recoverable amount of the asset increases subsequently, the reversal of the impairment loss is recognized as an interest, but the book value of the asset after the reversal of the impairment loss shall not exceed the asset in the case of unrecognized impairment loss, the deduction should be withdrawn the book amount after amortization. The impairment loss attributable to goodwill shall not be reversed in subsequent periods. When the company loses control of a subsidiary, it measures its remaining investment in the former subsidiary at the fair value on the date of loss of control. The fair value of the remaining investment and the difference between any disposal price and the book value of the investment on the date of loss of control are included in Current profit and loss. In addition, all amounts recognized in other comprehensive profits and losses related to the subsidiary are accounted for on the same basis as the company's direct disposal of related assets or liabilities. The unrealized gains and losses of downstream transactions between the company and its subsidiaries are eliminated in the parent company only financial report. The profits and losses arising from the counter-current and side-current transactions between the company and its subsidiaries are only recognized in the parent company only financial reports within the scope that has nothing to do with the company’s equity in the subsidiaries.

(8) Property, plant and equipment

Real estate, plant and equipment are recognized at cost, and subsequently cost minus accumulated depreciation and the amount after the accumulated impairment loss is measured.

The real property, plant and equipment under construction are the cost minus the accumulated impairment loss and the amount is recognized. Cost includes professional service fees and borrowing costs that meet the capitalization conditions. When these assets are completed and reach the expected state of use, they are classified into real estate, plant and equipment of the appropriate categories of equipment and start depreciation.

Except for self-owned land, which is not depreciated, the rest of the real estate, plant and equipment will be depreciated on a straight-line basis within the service life of each significant part. The company is at least to review the estimated service life, residual value and depreciation method at the end of each year, and postpone the impact of changes in applicable accounting estimates.

When real estate, plant and equipment are delisted, the difference between the net disposal price and the book value of the asset is recognized in profit and loss.

(9) Investment real estate

Investment real estate refers to real estate held for the purpose of earning rent or capital appreciation or both (including right-of-use assets that meet the definition of investment real estate). Investment real estate also includes land that has not yet been determined for future use.

Self-owned investment real estate is initially measured at cost (including transaction costs), and subsequently measured at the amount of cost minus accumulated depreciation and accumulated impairment losses.

The investment real estate acquired by the lease is initially measured at cost (including the original measurement amount of the lease liability and the lease payment paid before the lease start date), and subsequently measured at the amount after the cost minus the accumulated depreciation and accumulated impairment losses, and the lease liability is adjusted again. All investment real estate is depreciated on a straight-line basis. Real estate, plant and equipment are transferred to investment real estate on the book amount at the end of self-use.

16

When investment real estate is delisted, the difference between the net disposal price and the asset's book value is recognized in profit and loss.

(10) Impairment of non-financial assets

The company assesses on each balance sheet date whether there are any indications that real property, plant and equipment, right-of-use assets, and intangible assets may have been impaired. If there is any sign of impairment, estimate the recoverable amount of the asset. If the recoverable amount of an individual asset cannot be estimated, the company estimates the recoverable amount of the cashgenerating unit to which the asset belongs.

The recoverable amount is the higher of the fair value less the cost of sale and its use value. If the recoverable amount of an individual asset or cash-generating unit is lower than its book value, the book value of the asset or cash-generating unit is reduced to its recoverable amount, and the impairment loss is recognized in profit and loss.

When the impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is adjusted to the revised recoverable amount, but the increased carrying amount does not exceed the asset or cash-generating unit if the impairment is not recognized in the previous year which the book value determined at the time of the loss (minus amortization or depreciation). The reversal of the impairment loss is recognized in the profit and loss.

(11) Financial instruments

Financial assets and financial liabilities are recognized on the parent company only balance sheet of the company which becomes one of the contractual terms of the instrument.

When financial assets and financial liabilities are initially recognized, if financial assets or financial liabilities are not measured at fair value through profit and loss, they are directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value plus the transaction cost measurement. Directly attributable to the acquisition or issuance of financial assets or financial liabilities measured at fair value through profit and loss is immediately recognized as profit and loss.

1. Financial assets

2. Conventional transactions of financial assets are recognized and delisted by accounting on the transaction date.

3. (1) Type of measurement

The types of financial assets held by the company are financial assets

measured at amortized cost and equity instruments measured at fair value through other comprehensive gains and losses.

• A. Financial assets measured at amortized cost

If the financial assets invested by the company meet the following two conditions, they are classified as financial assets measured at amortized cost:

• (a) It is held under a certain business model, the purpose of which is to hold financial assets

• (b) The contract terms generate cash flows on a specific date, and these cash flows are completely to collect contractual cash flows; and to pay the principal and interest on the amount of principal in circulation.

Financial assets measured at amortized cost (including cash and cash equivalents, accounts receivable at amortized cost, other receivables and other financial assets) are determined by the effective interest method after initial recognition The total book value is measured after deducting any impairment loss after amortization, and any foreign currency exchange gains and losses are recognized in profit and loss.

Except for the following two cases, interest income is the effective interest rate multiplied by the financial asset of total book amount:

17

• (a) For purchased or created credit-impaired financial assets, interest income is calculated by multiplying the effective interest rate after credit adjustment by the amortized cost of the financial asset.

• (b) For financial assets that are not purchased or original credit impairment, but subsequently become credit impairment, you should be confident to calculate interest income by multiplying the effective interest rate by the amortized cost of the financial asset from the next reporting period after the impairment.

  • Equivalent cash includes fixed deposits that are highly liquid and can be converted into fixed cash at any time within 3 months from the date of acquisition, and are used to meet short-term cash commitments.

• B. Through other comprehensive profit and loss equity instruments measured at fair value to invest in a merged company, at the time of initial recognition, an irrevocable choice may be made, which is not to hold for trading and is not recognized by the purchaser of the business merger or has the consideration. Instrument investment is designated to be measured at fair value through other comprehensive gains and losses.

• Equity instrument investments measured at fair value through other comprehensive gains and losses are measured at fair value, and subsequent changes in fair value are reported in other comprehensive gains and losses and accumulated in other equity. At the time of investment disposal, the accumulated profits and losses are directly transferred to retained earnings and are not reclassified as profits and losses.

The dividends of equity instrument investments measured at fair value through other comprehensive gains and losses are recognized in the profit and loss when the rights of the company to receive payments are established, unless the dividend clearly represents the recovery of part of the investment cost.

(2) Impairment of financial assets

• A. The company assesses the impairment losses of financial assets (including

• accounts receivable) measured at amortized cost based on expected credit losses on each balance sheet date.

• B. Accounts receivable shall be recognized as an allowance loss based on the expected credit loss during the duration. For other financial assets, first assess whether the credit risk has increased significantly since the initial recognition. If there is no significant increase, the allowance loss is recognized based on the 12-month expected credit loss, and if it has increased significantly, it is recognized based on the lifetime expected credit loss Allowance for losses.

• C. Expected credit loss is the weighted average credit loss based on the risk of default. The 12month expected credit loss refers to the expected credit loss caused by the possible default event of the financial instrument within 12 months after the reporting date, and the lifetime expected credit loss represents the expected credit loss caused by all possible default events during the expected lifetime of the financial instrument. The impairment loss of all financial assets is reduced by the allowance account.

(3) Delisting of financial assets

• The company only lapses in the contractual rights from the cash flow of financial assets. It has transferred the financial assets and almost all risks and reports of the ownership of the assets. When transferring to other enterprises, the financial assets are only delisted. When the financial assets measured at the amortized cost are delisted as a whole, their book amount is the difference between the consideration received is recognized in profit and loss. When the equity instrument investment measured at fair value through other comprehensive gains and losses is declassified as a whole, the accumulated gains and losses are directly transferred to the retained earnings are not reclassified as profit or loss.

18

1. Financial liabilities and equity instruments

2. (1) Classification of liabilities or equity

The debt and equity instruments issued by the amalgamating company are classified as financial liabilities or equity based on the substance of the contractual agreement and the definition of financial liabilities and equity instruments.

An equity instrument refers to any contract that recognizes the remaining equity of the company after deducting all its liabilities from its assets. The equity instruments issued are recognized by the company after the acquired price deducting the cost of direct issuance.

• (2) Financial liabilities

Financial liabilities are not held for trading and are not designated as those measured at fair value through profit or loss (including payables). The initial recognition is based on fair value plus direct attributable transaction cost measurement; follow-up evaluation adopts effective interest rate method to amortize this measure.

• (3) Delisting of financial liabilities

The company delists financial liabilities when contractual obligations have been fulfilled, cancelled, or expired debt.

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

(12) Liability provision

When the company has current obligations (statutory or constructive obligations) due to past events, and is likely to be required to pay off the obligations, and the amount of the obligations can be reliably estimated, the liability provision shall be recognized. The amount recognized as a liability reserve is based on the risk and uncertainty of the obligation, and is the best estimate of the expenditure required to settle the obligation on the balance sheet date. The liability reserve is measured by discounting the estimated cash flow of the settlement obligation.

(13) Income recognition

After the company recognizes the performance obligations in the customer contract, it allocates the transaction price to each performance

obligations, and recognize income when each performance obligation is met. Commodity sales revenue

1. Commodity sales revenue comes from the manufacture and sale of polarizers. Sales revenue is recognized when the control of the product is transferred to the customer, that is, when the product is delivered to the customer and the combined company has no outstanding performance obligations that may affect the customer's acceptance of the product. Because when the goods arrive at the customer's designated location, the customer has the right to set the price and use of the goods and bears the main responsibility for resale, and bears the risk of obsolescence and obsolescence of the goods, the merged company recognizes revenue and receivables at that point in time Accounts. The advance receipts received before the arrival of the goods are recognized as contract liabilities.

2. Commodity sales revenue is measured by the fair value of the consideration received or receivable, and deducted estimated customer returns, discounts and other similar discounts. The combined company estimates possible sales returns and discounts based on historical experience and other known reasons, and recognizes them accordingly refund liabilities and related rights to return products.

19

(14) Rent

The company assesses whether the contract belongs to (or contains) a lease on the date of contract establishment.

1. The merged company is the lessor

When the lease term is to transfer almost all the risks and rewards attached to the ownership of the asset to the lessee classifies it as a finance lease. All other leases are classified as operating lease. When the company subleases the right-of-use asset, the right-of-use asset (not

the underlying asset) is used to determine the classification of the sublease. However, if the main lease is a short-term when leasing, the sublease is classified as an operating lease.

Under operating leases, lease payments after deduction of lease incentives are recognized as income on a straight-line basis during the relevant lease period. The lease negotiation with the lessee is related to lease repair from the effective date of the change, it will be treated as a new lease.

1. The company is the lessee

Except for the lease payments of low-value underlying asset leases and short-term leases that are subject to the applicable recognition exemption, the lease payments are recognized as expenses during the lease period on a straight-line basis, and all other leases are opened in the lease. The right-of-use assets and lease liabilities are recognized on the inception date.

The right-of-use asset is initially measured at cost, which comprises the initial measurement of the lease liabilities, adjusted for any lease payments made at or before the commencement date, less any lease incentives received, plus any initial direct costs incurred and an estimate of costs needed to dismantle, remove and restore the underlying assets and the subsequent measures are measured at the cost after deducting the accumulated depreciation and accumulated impairment losses, and the remeasurement amount of the lease liability is adjusted.

Except for those that meet the definition of investment real estate, right-of-use assets are separately expressed in the parent company only balance sheet, and the recognition and balance of right-of-use assets that meet the definition of investment real estate, please refer to Note 4 (9) Accounting Policy for Investment Real Estate.

The right-of-use asset adopts a straight-line basis from the lease start date to the end of its useful life or the lease period expires, the earlier of the two shall be depreciated.

The lease liability was originally measured at the present value of the lease payment. If the implicit interest rate of the lease is easy to determine, the lease payment is discounted using that interest rate. If the interest rate is not easy to determine, use the lessee to increase the borrowing interest rate.

Subsequently, the lease liability is measured on the amortized cost basis using the effective interest method, and the interest expense is amortized during the lease period. If the lease period or the index or rate used to determine the lease payment changes resulting in a change in the future lease payment, the company will continue measure the lease liability and relatively

adjust the right-of-use asset. However, if the book value of the right-of-use asset has been reduced to zero, the remaining remeasured amount is recognized in the profit and loss. For lease modifications that are not treated as separate leases, the scope of the lease is reduced The remeasurement of the lease liability is to reduce the right-of-use asset and recognize the profit and loss of the partial or full termination of the lease; the remeasurement of the lease liability for other modifications is to adjust the right-of-use asset, and the lease liability is separately expressed in the parent company only balance sheet.

20

The company and the lessor negotiated rents directly related to the COVID-19, adjusted the rents due before June 30, 2021, resulting in a decrease in rents. These negotiations did not materially change other lease terms. The company chooses to adopt practical expedients to handle all rental negotiations that meet the aforementioned conditions, and does not assess whether the negotiation is a lease modification, but recognizes the reduction of lease payments in the profit and loss when the concession event or situation occurs, and relatively reduces the lease debt.

(15) Employee benefits

Short-term employee benefits are measured by the expected non-discounted amount of cash paid, and are recognized as expenses when the relevant services are provided.

For the definite allocation plan, the amount of the retirement fund that should be allocated is recognized as the current pension expense on the basis of accrual. The advance payment is recognized as an asset within the scope of refundable cash or reduced future payments.

The net obligation under the definite benefit plan is calculated by discounting the amount of future benefits earned by the employee for the current or past services, and the current value of the definite benefit obligation on the balance sheet date minus the fair value of the plan assets. The net obligation to determine benefits is calculated by the actuary every year using the projected unit benefit method, and the discount rate is determined by referring to the market yield rate of high-quality corporate bonds that are consistent with the currency and period of the determined benefit plan on the balance sheet date; in highquality corporate bonds For countries with no deep market, the market yield rate of government bonds (at the balance sheet date) is used. The remeasurement amount generated by the determined benefit plan is recognized in other comprehensive profit and loss in the current period and included in the retained surplus. The related expenses of the previous service cost are immediately recognized as a loss. Resignation benefits are benefits provided when the employee's employment is terminated before the normal retirement date or when the employee decides to accept the company's welfare invitation in exchange for termination of employment. The company recognizes expenses when the offer for resignation benefits can no longer be revoked or when the relevant reorganization costs are recognized earlier, and it is not expected that the benefits that are fully paid off within 12 months after the balance sheet date should be granted discount.

(16) Income taxes

1. Current income tax

The company determines the current income (loss), based on which to calculate the payable (recoverable) income tax.

The undistributed surplus calculated in accordance with the provisions of the Income Tax Law of the Republic of China is subject to additional income tax, recognized by the resolution of the Shareholders’ annual meeting.

The adjustment of income tax payable in previous years is included in current income tax.

1. Deferred income tax

Deferred income tax is calculated based on the temporary difference between the book value of assets and liabilities and the tax basis for calculating taxable income.

Deferred income tax liabilities are generally recognized for all taxable temporary differences, while deferred income tax assets are recognized when there is likely to be taxable income for deduction of temporary differences or loss deductions.

21

Taxable temporary differences related to investment in subsidiaries are recognized as deferred income tax liabilities, but if the company can control the timing of the reversal

of the temporary difference, and the temporary difference is likely to not revert in the foreseeable future except. The deductible temporary differences related to this type of investment are recognized as deferred income tax only if it is likely to have sufficient taxable income to realize the temporary difference, and within the scope of expected return in the foreseeable future assets.

The carrying amount of deferred income tax assets is reviewed on each balance sheet date, and the carrying amount is reduced for those that are no longer likely to have sufficient taxable income to recover all or part of their assets. Those that were not previously recognized as deferred income tax assets are also reviewed on each balance sheet date and are likely to generate taxable income for the recovery of all or part of their assets in the future, increase the carrying amount. Deferred income tax assets and liabilities are measured by the tax rate for the current period of expected debt settlement or asset realization. The tax rate is based on the tax rate and tax law that has been legislated or substantively legislated on the balance sheet date, and the deferred tax liabilities and assets are measured It reflects the tax consequences arising from the manner in which the company expects to recover or settle the book value of its assets and liabilities on the balance sheet date.

• 3.Current and deferred income tax

Current and deferred income taxes are recognized in profit or loss, but current and deferred income taxes related to items recognized in other comprehensive income or directly included in equity are recognized in other comprehensive profit or loss may be directly included in equity.

5. Critical Accounting Judgments and Key Sources of Estimation and Assumption Uncertainty

When the company adopts the accounting policies described in Note 4, for those who cannot easily obtain information about the carrying amounts of assets and liabilities from other sources, the management must base on historical experience And other relevant factors to make relevant judgments, estimates and assumptions. The estimates and related assumptions are based on historical experience and other factors deemed relevant. Actual results may differ from estimates. Estimates and basic assumptions are continuously reviewed. If the revision of the estimate only affects the current period, it shall be recognized in the current period of the revision of the accounting estimate. If the revision of the accounting estimate affects both the current period and the future period, it shall be recognized in the current period and the future period of the estimate revision. The main sources of uncertainties in major accounting judgments, estimates and assumptions of the company are as follows:

• (1) Evaluation of inventories

Since inventory must be priced at the lower of cost and net realizable value, the merging company must use judgment and estimation to determine the net realizable value of the inventory at the end of the financial reporting period. Due to the rapid changes in the industry, the company assesses the amount of inventory at the end of the financial reporting period due to normal depletion, obsolescence, or no market sales value, and offsets the inventory cost to the net realizable value. This inventory evaluation is mainly based on the product demand in a specific period in the future, which may cause major changes.

22

• (2) Estimated impairment of financial assets

• The estimated impairment of accounts receivable is based on the assumption of default rate and expected loss rate of the company. The company considers historical experience, current market conditions and forward-looking information to make assumptions and select input values for impairment assessment. For important assumptions and input values used, please refer to Note 6 (4). If the actual future cash flow is less than expected, it may be incurred significant impairment losses.

(3) Assessment of impairment of non-financial assets

In the process of asset impairment assessment, the company must rely on subjective judgments and determine the independent cash flow of a specific asset group, the number of years of asset durability, and the possible future income and expenses of a specific asset group based on the use of assets and industrial characteristics. Changes or estimated changes brought about by the company's strategy may cause significant impairment or reversal of recognized impairment losses in the future.

• The assets of the company were recognized NT$153,385,000 and NT$10,054,000 in 2020 and 2019 respectively.

• (4) Calculation of net definite benefit liabilities

• When calculating and determining the present value of welfare obligations, the merging company must use judgments and estimates to determine relevant actuarial assumptions on the balance sheet date, including the discount rate and future salary growth rate, etc. Any change in actuarial assumptions may materially affect the determined benefit obligation of the company.

• (5) The realizability of deferred income tax assets

Deferred income tax assets are recognized when there is likely to be sufficient taxable income in the future to deduct temporary differences. When assessing the feasibility of deferred income tax assets, significant accounting judgments and estimates of the management must be involved, including the expected future sales revenue growth and profit rate, tax exemption period, applicable income tax deductions and tax regulations and cost-effective assumption. Any changes in the global economic environment, industrial environment and laws and regulations may cause major adjustments to deferred income tax assets.

6. Description of Significant Accounts

• (1) Cash and Cash Equivalents

sh and Cash Equivalents
Cash on hand Demand deposits and checking account Total	December 31, 2020 $ 475 161,639 $ 162,114	December 31, 2019
		$ 922 319,113
		$ 320,035

23

(2) Financial assets at amortized cost

ancial assets at amortized cost
Current Domestic investment Time deposits with original maturity more than three months	December 31, 2020 $ 35,800	December 31, 2019
		$ 42,309

1. As of December 31, 2020 and December 31, 2019, the annual interest rate range of fixed deposits with original maturity more than three months is 0.120% ~0.815% and 0.220%~1.065% separately.

2. For information on providing guarantees for the current financial assets measured at amortized cost, please refer to Note 8.

(3) Net notes and accounts receivable

t notes and accounts receivable
Notes receivable (Listed on other current assets) Occurs due to business Less: loss allowance Accounts receivable Measured at amortized cost Total book amount Less: loss allowance	December 31, 2020 $ 3,527 (3,413) $ 114 $ 792,863 (21,954) $ 770,909	December 31, 2019
		$ 107 －
		$ 107
		$ 670,613 (25,208)
		$ 645,405

1. In principle, the credit investment period of the company to customers is 30 to 120 days after the invoice date. In order to reduce credit risk, the management of the company assigns a dedicated team to credit limit determination, credit approval and other monitoring procedures to ensure overdue accounts receivable appropriate actions have been taken for the recovery. In addition, the company will gradually review the recoverable amount of accounts receivable to ensure that the accounts receivable that cannot be recovered have been properly deducted.

2. The company recognizes the allowance loss of accounts receivable based on the expected credit loss during the duration. The expected credit loss during the existence period takes into account the past default records of customers and the current financial situation, industrial economic situation, and also considers the overall economic and industrial outlook. Separate individual customers into different risk groups and recognize allowance losses based on the expected loss rate of each group lost.

3. If there is evidence that the counterparty of the transaction is facing serious financial difficulties and the company cannot reasonably expect the recoverable amount, the company directly writes off the relevant accounts receivable, but will continue to pursue recourse activities. The amount recovered due to recourse is recognized in profit and loss.

24

1. The allowance loss for accounts receivable of the company was as follows:

Expected credit loss rate Carrying amount Loss allowance for lifetime expected credit losses Amortized cost			December 31, 2020	December 31, 2020	December 31, 2020
	Not past due	Past due 1~30 days	Past due 31~60 days	Past due 61~120 day	Past due over 121 days	Total
	0.52％～ 0.59％ $ 587,271 (8,518)	0.59％～ 0.68％ $ 127,289 (1,576)	0.66％～ 0.76％ $ 30,231 (234)	0.73％～ 0.92％ $ 6,784 (1,054)	0.87％～ 100％ $ 41,288 (10,572)	$ 792,863 (21,954)
	$ 578,753	$ 125,713	$ 29,997	$ 5,730	$ 30,716	$ 770,909

Expected credit loss rate Carrying amount Loss allowance for lifetime expected credit losses Amortized cost			December 31, 2019	December 31, 2019	December 31, 2019
	Not past due	Past due 1~30 days	Past due 31~60 days	Past due 61~120 day	Past due over 121 days	Total
	0.57％～ 1.28％ $ 520,091 (3,523)	0.70％～ 1.57％ $ 52,749 (370)	0.84％～ 1.87％ $ 33,815 (285)	0.97％～ 2.47％ $ 2,440 (32)	1.24％～ 100％ $ 61,518 (20,998)	$ 670,613 (25,208)
	$ 516,568	$ 52,379	$ 33,530	$ 2,408	$ 40,520	$ 645,405

1. The movement of the loss allowance for notes and accounts receivable was as follows:

Balance at the beginning of the period Impairment Loss in the current period Actual write-off for the period Balance at the end of the period

2020
Notes receivable $ － 3,413 － $ 3,413	Accounts receivable
	$ 25,825 8,716 (12,590)
	$ 21,954

Balance at the beginning of the period Impairment Loss in the current period Balance at the end of the period

2019
Notes receivable $ － － $ －	Accounts receivable
	$ 18,743 6,465
	$ 25,208

25

(4) Other accounts receivable

Other accounts receivable-related parties Other accounts receivable-non- related parties Operating lease receivable Refundable business tax Equipment receivable Other accounts receivable-other Sub-total Less: loss allowance Total	December 31, 2020 $ 164,644 $ 7,746 － 1,150 149,528 158,424 (17,794) 140,630 $ 305,274	December 31, 2019
		$ 272,288 $ 2,095 17,866 2,975 12,300
		35,236 －
		35,236
		$ 307,524

The movement of the loss allowance for other accounts receivable was as follows:

Balance at the beginning of the period Impairment Loss in the current period Balance at the end of the period	2020 $ － 17,794 $ 17,794	2019
		$ － －
		$ －

(5) Inventories

Inventories
Finished goods Work in process Raw materials Inventory in transit Total	December 31,2020 $ 418,556 298,255 232,206 8,117 $ 957,134	December 31,2019
		$ 375,022 340,484 232,669 28,007
		$ 976,182

The amounts recognized as cost of sales in relation to inventories were as follows:

Inventories sold Gain from price recovery of inventory Unapplied manufacturing expenses Income from Sale of Scrap and Wastes Others Total	2020 $ 2,015,322 (29,690) 18,108 (31,591) － $ 1,972,149	2019
		$ 2,017,198 (4,903) 39,364 (23,768) (264)
		$ 2,027,627

The gain from price recovery in the net realizable value of the inventories of the company in 2020 and 2019, was mainly due to the sale of the inventory that had been assessed for loss in previous years.

26

(6) Non-current assets to be sold

Land Houses and Buildings Mechanical Equipment Transportation Equipment Office Equipment Other Devices Less: Accumulated depreciation Less: Accumulated impairment Total	December 31, 2020 $ － 6,685,469 413,572 14,410 217 898 (4,007,873) (352) $ 3,106,341	December 31, 2019
		$ 36,600 207,535 2,613 － － 2,325 (100,636) (1,185)
		$ 147,252

1. In order to revitalize assets and reduce operating expenses, the Board of Directors resolved to sell the branch in Southern Taiwan Science Park and its related ancillary equipment to Taiwan Semiconductor Manufacturing Co., Ltd., and sign the real estate selling and purchasing contract on October 19, 2020, and the total price is NT$ 3,832.500,000 (tax included), which shall be collected in installments as agreed and remitted to the designated bank trust account. As of December 31, 2020, the bank trust account had received NT$2,572,500,000 and allocated NT$75,000,000 to the company (listed other current liabilities of NT$71,429,000 on December 31, 2020), and the remaining amount was NT$1,260,000,000 which the bank trust account was fully recovered on January 5, 2021, and after deducting the related costs of the sale and repayment of bank loans, the remaining amount of NT$168,820,000 was appropriated to the company on January 29, 2021. The transfer of ownership was completed on January 6, 2021. The company assessed that its related equipment has met the pending sale and related conditions, so it will be estimated to be classified as non-current assets for sale. Since the selling price has exceeded the carrying amount of the relevant net assets, there is no impairment loss that should be recognized, when these assets are classified as non-current assets for sale.

2. In order to revitalize assets and reduce operating costs, the Board of Directors resolved to sell the No.5 Factory in Pingzhen on August 8, 2019, and signed the real estate selling and purchasing contract on November 21, 2019, with a total price of NT$201,523,000 (tax not included). The transfer of the ownership of the land and buildings was completed on January 8, 2020, and the disposal benefit of non-current assets held for sale was N$50,607,000 and the gain of reversal of impairment loss of non-current assets held for sale was NT$1,185,000.

3. Please refer to Note 8 for information on guarantees for non-current assets held for sale.

27

• (7) Investments accounted for using equity method

- Investment in subsidiary company

Non-listed company OPTIMAX OPTOELECTRONIC (MAURITIUS) CORP. OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. ART OPTRONICS CORP. Subtotal Add: Investment loan balance using the equity method Total	December 31, 2020 $ 105,271 － 1,028 106,299 － $ 106,299	December 31, 2019
		$ 82,449 (118,000) 1,027
		(34,524) 118,000
		$ 83,476

1. The company's ownership interest and percentage of voting rights in subsidiaries on the balance sheet date as follows:

eet date as follows:
Subsidiary name OPTIMAX OPTOELECTRONIC (MAURITIUS) CORP. OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. ART OPTRONICS CORP.	The company’s capital and voting rights are divided into %
	December 31, 2020 100％ － 100％	December 31, 2019
		100％ 100％ 100％

OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. was liquidated in March, 2020.

1. For the details of the investment subsidiaries indirectly held by the company, please refer to Attached Table 5.

28

(8) Property, plant and equipment

Item Cost Land Buildings Machinery Transportation equipment Office equipment Other Sub-total Accumulated depreciation Buildings Machinery Transportation equipment Office equipment Other Sub-total Accumulated impairment Machinery Transportation equipment Office equipment Other Sub-total Total			2020
	Balance at January 1, 2020 $ 479,697 3,236,994 4,838,996 155,268 248,876 90,655 9,050,486 1,594,609 4,629,496 145,481 235,360 83,530 6,688,476 27,508 2,427 3,368 1,779 35,082 $2,326,928	Additions $ － 1,141 7,549 88 417 330 9,525 57,237 29,089 1,710 2,180 825 91,041 － － － － － $ (81,516)	Disposals	Reclassification	Balance at December 31, 2020
			$ － (1,440) (411,896) (29,879) (16,627) (33,883)	$ － (173) (413,572) (14,411) (217) (898)	$ 479,697 3,236,522 4,021,077 111,066 232,449 56,204
			(493,725)	(429,271)	8,137,015
			(1,308) (396,089) (28,219) (15,672) (31,069)	(170) (383,834) (13,570) (49) (838)	1,650,368 3,878,662 105,402 221,819 52,448
			(472,357)	(398,461)	5,908,699
			(13,997) (1,228) (348) (1,307)	(117) － － －	13,394 1,199 3,020 472
			(16,880)	(117)	18,085
			$ (4,488)	$ (30,693)	$2,210,231

29

Item Cost Land Buildings Machinery Transportation equipment Office equipment Other Sub-total Accumulated depreciation Buildings Machinery Transportation equipment Office equipment Other Sub-total Accumulated impairment Machinery Transportation equipment Office equipment Other Sub-total Total			2019
	Balance at January 1, 2019 (restatement) $ 479,697 3,264,752 4,995,757 155,485 289,762 94,762 9,280,215 1,555,635 4,750,652 144,413 271,353 86,762 6,808,815 27,673 2,434 4,453 1,800 36,360 $ 2,435,040	Additions $ － 1,062 5,019 570 54 408 7,113 61,261 36,365 1,816 2,485 1,089 103,016 － － － － － $ (95,903)	Disposals	Reclassification	Balance at December 31, 2019
			$ － (24,320) (159,167) (787) (40,940) (2,190)	$ － (4,500) (2,613) － － (2,325)	$ 479,697 3,236,994 4,838,996 155,268 248,876 90,655
			(227,404)	(9,438)	9,050,486
			(19,100) (155,247) (748) (38,478) (2,102)	(3,187) (2,274) － － (2,219)	1,594,609 4,629,496 145,481 235,360 83,530
			(215,675)	(7,680)	6,688,476
			－ (7) (1,085) －	(165) － － (21)	27,508 2,427 3,368 1,779
			(1,092)	(186)	35,082
			$ (10,637)	$ (1,572)	$ 2,326,928

1. The real property, plant and equipment of the company are depreciated based on the following durability years:

Housing and construction Plant main building 9 to 50 years Electro mechanical power equipment 14 to 16 years Other 2 to 18 years Mechanical equipment 1 to 24 years Other equipment 2 to 17 years

1. The recoverable amount of machinery and equipment held by the company is evaluated by independent experts. The recoverable amount is the fair value deducting the disposal cost (decreasing amount method) to assess the fair value, which belongs to the third level of fair value measurement. Based on the evaluation results of independent evaluation experts to evaluate the recoverable amount of machinery and equipment, the impairment loss of real property, plant and equipment was recognized as NT$5,645,000 in 2020.

2. Details of property, plant and equipment were pledged as collateral of long-term borrowings and loans, please refer to Note 8.

30

(9) Leasing arrangements- lessee

• 1.Right-of-use assets

• (1) The carrying amount of right-of-use assets and the depreciation charge are as follows:

Carrying amount of right-of-use asset Land Transportation equipment Office equipment Total Carrying amount of right-of-use asset Land Transportation equipment Office equipment Total	December 31, 2020 $ 3,336 1,988 1,262 $ 6,586 2020	December 31, 2019
		$ 5,004 2,973 1,721
		$ 9,698
		2019
	$ 1,668 1,608 459	$ 1,668 1,082 459
	$ 3,735	$ 3,209

The company leases the land located in the Southern Science Industrial Park is sub-leased in the form of operating leases, and the relevant use right assets are listed as investment real estate. Please refer to Note 6 (11). The above-mentioned amount of right-of-use assets does not include right-ofuse assets that meet the definition of investment real estate.

• (2) The additions of the right-of-use assets of the company in 2020 and 2019 were respectively NT$623,000 and NT$2,423,000.

• (3) Except for the addition and recognition of depreciation expenses listed above, there was no significant sublease or depreciation of the right-of-use assets of the company in 2020 and 2019.

• Leasing liabilities

Carrying amount of leasing liabilities Current Non-current	December 31, 2020 $ 18,753 $ 693,008	December 31, 2019 $ 17,750 $ 682,624

31

The discount rate ranges for lease liabilities are as follows:

Land Transportation Equipment Office Equipment	December 31, 2020 1.8513％ 1.8513％ 1.8513％	December 31, 2019
		1.8513％ 1.8513％ 1.8513％

3. Important rental activities and terms

The assets leased by the company include land, official vehicles and photocopiers. The contract period usually ranges from 3 to 5.5 years. The lease is based on editors, with various terms and conditions, except that the tribute of the leased goods cannot be used for lending and holding. No other restrictions are imposed.

The company leased land to the Southern Science and Technology Industrial Park Administration Bureau from August 7, 2008 to December 31, 2044, and agreed to adjust the lease payment every 2 years. The lease can be renewed when the lease term ends.

The company was to activate assets and reduce operating expenses, on August 12, 2020, the board of directors decided to sell the branch in Southern Taiwan Science Park and its related ancillary equipment to Taiwan Semiconductor Manufacturing Co., Ltd., and signed a real estate purchase contract on October 19, 2020. The transfer of ownership was completed on January 6, 2021, and the land use right contract with the Southern Science Industrial Park was terminated ahead of schedule on January 5, 2021.

In 2020, due to the COVID-19 severely affecting the market economy, the company applied to the Southern Science Industrial Park Administration for the land lease fee extinction plan, and the Science Industrial Park Administration agreed to reduce the rent amount from January 1 to June 30, 2020. The company recognized the profit of NT$2,806,000 from the change in lease payment caused by the rent reduction as other income.

4. Other rental information

Short-term rental expenses Low-value asset lease expenses Total cash outflow from lease	2020 $ 74 $ 166 $ 29,358	2019
		$ 521
		$ 187
		$ 30,947

The company chooses to pay for transportation equipment that meets short-term leases and low-value asset leases. The recognition exemption is applicable to certain office equipment leases under lease, and the recognition of such leases is not relevant. Related right-of-use assets and lease liabilities.

32

(10) Leasing arrangements- lessor

1. The assets leased by the company include land, buildings, machinery and equipment, etc., and the contract period ranges from 1 to 5 years. The lease contract is negotiated separately and contains various terms and conditions. In order to preserve the use of leased assets, the lessor shall not sublet or pledge all or part of the leased object and agreed matters.

2. The benefits recognized by the company based on the operating lease contract are as follows:

Rental income	2020 $ 97,526	2019
		$ 79,424

1. The period ranges recognized by the company based on the operating lease contract are as follows:

The 1styear The 2ndyear The 3thyear The 4thyear The 5thyear Over 5 years Total	December 31, 2020 $ 756 － － － － － $ 756	December 31, 2019
		$ 101,951 13,034 13,174 11,143 300 14
		$ 139,616

(11) Investment property

			2020	2020
Item	Balance at January 1, 2020	Lease liabilities remeasurem ent	Additions	Disposals	Reclassifica tion	Balance at December 31, 2020
Cost Buildings Right-of-use assets Sub-total Accumulated depreciation Buildings Accumulated impairment Sub-total Accumulated impairment Buildings Total	$ 6,679,492 704,582	$ － 29,323	$ 5,410 －
	7,384,074	29,323	5,410	(140)	(6,683,619)	735,048
	3,490,503 19,663	－ －	120,089 20,504	(125) －	(3,609,412) －	1,055 40,167
	3,510,166	－	140,593	(125)	(3,609,412)	41,222
	136,037	－	－	(135,994)	－	43
	$ 3,737,871

33

			2019
Item	Balance at January 1, 2019 (restatement)	Additions	Disposals	Reclassification	Balance at December 31, 2019
Cost Land Buildings Right-of-use assets Sub-total Accumulated depreciation Buildings Right-of-use assets Sub-total Accumulated impairment Buildings Total	$ 36,600 6,895,698 704,582	$ － 170 －	$ － (13,341) －	$ (36,600) (203,035) －	$ － 6,679,492 704,582
	7,636,880	170	(13,341)	(239,635)	7,384,074
	3,429,397 －	165,498 19,663	(11,436) －	(92,956) －	3,490,503 19,663
	3,429,397	185,161	(11,436)	(92,956)	3,510,166
	137,937	－	(901)	(999)	136,037
	$ 4,069,546	$ (184,991)	$ (1,004)	$(145,680)	$3,737,871

1. The investment real property is depreciated based on the following durability years:

Buildings Plant main building 9 to 50 years Electro mechanical power equipment 14 to 16 years Other 2 to 18 years Right-of-use assets 35.8 years

1. The fair value of investment real estate held by the company is evaluated by independent experts on the date of each balance sheet using the third-level input value. The aforementioned evaluation of the main building of the plant and the auxiliary facilities of the building were evaluated using the cost method and the fixed rate method (declining balance method) as of December 31, 2020 and 2019. The evaluation of the land use right assets in the Southern Science Industrial Park on December 31, 2020 and 2019, was based on the bonus period and the rent of each contract, and considering the rent range adjusted according to the announced land price, the discount rate obtained by the risk premium method is used as the implicit interest rate of the lease, and finally discounted appraisal of the value of the right to use assets. The evaluation of the land use right assets in the Suzhou High-tech Zone of the People's Republic of China adopted the comparative method on December 31, 2020 and 2019 for the company.

The fair value of investment real estate of the company on December 31, 2020 and 2019 was as follows:

Fair value	December 31, 2020 $ 693,798	December 31, 2019
		$ 4,009,100

34

1. Rental income and direct operating expenses of the investment real estate of the company:

Rental income from investment real estate Direct operating expenses incurred by investment real estate that generates rental income in the current period Direct operating expenses incurred by investment real estate that does not generate rental income during the current period	2020 $ 96,660 $ 19,821 $ 149,514	2019
		$ 78,442
		$ 18,995
		$ 206,400

1. In order to activate assets and reduce operating expenses, the Board of directors resolved to sell the branch in Southern Science Industrial Park and related ancillary equipment to Taiwan Semiconductor Manufacturing Co., Ltd., and signed a real estate purchase agreement on October 19, 2020, and the total price is NT$3,832,500,000 (tax included). Since the sale price deducted the disposal cost is higher than the book value, the real estate plant and equipment impaired the reversal benefits and investment real estate impaired the reversal benefits of NT$10,980,000 and NT$135,987,000 has been included in the other profit and loss in the income statement. The combined company determines the recoverable amount based on the selling price of the plant deducted the cost of disposal, and the relevant fair value belongs to the first level of fair value measurement.

2. Please refer to Note 8 for information on guarantees provided by investment real estate.

(12) Short-term borrowings

Borrowings without collateral Collateral borrowings Total Interest rate	December 31, 2020 $ 529,453 172,837 $ 702,290 0.6612%～1.84%	December 31, 2019
		$ 511,945 229,645
		$ 741,590
		0.6612%～1.93%

35

1. In accordance with the ”Key Points for the Ministry of Economic Affairs to Assist Enterprises in Handling Bank Credit and Debt Negotiations'', Optimax Technology Corporation applied to the Industrial Bureau of the Ministry of Economic Affairs on April 10, 2020, to assist in the negotiation of bank claims and debts, requesting that short-term credit extension periods be extended to December 7, 2021, and medium and long-term loans extended for one year. The bank was held a delegation meeting on June 19, 2020, and on November 17, 2020, the majority of creditor banks agreed through written consent.

2. (1) Short-term credit extension (including account receivable undertaking): Renew or extend the contract according to the original conditions (until December 7, 2021) based on the current credit limit approved by the banks.

3. (2) Short-term credit application method: until December 7, 2021, within the application period using this quota cyclically.

4. Optimax Technology Corporation applied to the Industrial Bureau of the Ministry of Economic Affairs on April 25, 2019, in accordance with the ”Key Points for the Ministry of Economic Affairs to Assist Enterprises in Handling Bank Credit and Debt Negotiations'', to assist in the negotiation of bank claims and debts, requesting that short-term credit extension periods be extended to December 7, 2020, and medium and long-term loans extended for one year. The bank was held a delegation meeting on June 26, 2019, and on November 25, 2019, the majority of creditor banks agreed through written consent.

5. (1) Short-term credit extension (including account receivable undertaking): Renew or extend the contract according to the original conditions (until December 7, 2020) based on the current credit limit approved by the banks.

6. (2) Short-term credit application method: until December 7, 2020, within the application period using this quota cyclically.

7. Please refer to Note 8 for the provision of assets as guarantees for short-term loans.

(13) Accounts payable

Account payable	December 31, 2020 $ 178,237	December 31, 2019
		$ 162,514

1. The average de-account period of payables is 30 to 180 days. The company has a financial risk management policy to ensure that all payables are repaid within the pre-agreed credit period.

2. The accounts payable and other accounts payable of the company exposed to exchange rate and liquidity risks for disclosure, please refer to Note 6 (28).

36

(14) Other payables

Payable salary and bonus Rent payable Payable labor fees Payable insurance premium Pension payable Interest payable Equipment payment payable Commission payable Business tax payable Compensation payable Others Total	December 31, 2020 $ 51,717 156 840 5,665 2,479 4,525 3,749 18,132 100,051 35,000 58,388 $ 280,702	December 31, 2019
		$ 50,667 163 905 5,872 2,593 5,057 1,385 11,365 － － 59,196
		$ 137,203

1. The company and Hongju Precision Technology Co., Ltd. (hereinafter abbreviated as Hongju Company) signed a plant and factory equipment lease contract for a lease period of 5 years. Because the company planned to sell the branch in Southern Science Industrial Park and related auxiliary equipment, it signed a terminate agreement of the plant and factory equipment with Hongju Company on October 15, 2020. The two parties agreed that the lease contract was terminated on September 30, 2020. The company agreed to pay NT$75,000,000 to Hongju Company for the damage caused by the early termination of the contract as compensation. The company has estimated the related losses in the accounts in September 2020, and paid NT$40,000,000 in November 2020, and on December 31, 2020, the other payables-compensation payables are listed in the table of NT$35,000,000.

2. Other main accounts payable are consist of house tax, water, electricity and gas, freight, import fees, export fees and repair fees.

(15) Liability reserve-current

Employee benefit liability provision	December 31, 2020 $ 13,906	December 31, 2019
		$ 13,906

1. Employee benefit liability provision is an assessment of employees’ vested leave rights. It is reversed at the time of international vacation or cash payment.

2. The aforesaid reserves are not discounted because they are short-term or have little impact on discounting.

37

- (16) Long term borrowings

Long-term bank loan Medium and long-term bank mortgage loans Bank mid-term working capital loan Sub-total Less: part due within one year Long-term borrowings Interest rate	December 31, 2020 $ 5,285,480 112,957 80,201 5,478,638 (111,957) $ 5,366,681 1.8182%～1.8337％	December 31, 2019
		$ 5,612,187 160,890 84,497
		5,857,574 (920,347)
		$ 4,937,227
		1.9281％

1. The financial ratios, important restrictions, defaults and delays in the payment of principal and interest, extensions and reductions in the amount of principal repayment in each period are explained as follows:

2. (1) The company promises to maintain the following financial ratios during the credit extension period:

Financing project Taiwan Cooperative Bank 3.5 billion joint loans Mega International Commercial Bank Co., Ltd. 12 billion joint loan Taiwan Cooperative Bank 2.6 billion joint loan	Minimum current ratio 100％ 100％ 100％	Minimum interest guarantee multiple 2.5 2.5 2.5	Highest debt ratio 200％ 150％ 200％	Minimum tangible net worth
				$ 3,000,000 7,000,000 11,000,000

(1) In accordance with the ”Key Points for the Ministry of Economic Affairs to Assist Enterprises in Handling Bank Credit and Debt Negotiations'', Optimax Technology Corporation applied to the Industrial Bureau of the Ministry of Economic Affairs on April 10, 2020, to assist in the negotiation of bank claims and debts, requesting that short-term credit extension periods be extended to December 7, 2020, and medium and long-term loans extended for one year. The bank was held a delegation meeting on June 19, 2020, and on November 17, 2020, the majority of creditor banks agreed through written consent that the mid- and long-term loan repayment period was extended for one year. In addition, until December 31, 2020, the financial ratio will not be calculated and the overweight penalty for non-compliance with the promised financial ratio will be cancelled. The company has completed the process with banks in accordance with the conclusions of the debt and debt negotiation meeting and the principal extension of the credit extension for one year. The company and its subsidiaries should be performance normally within the time limit for debt (As of December 7, 2021), the main amendments are as follows:

38

• A. Within one year from January 2021, withdraw NT$20,000,000 per month to repay the principal fund and deposit it in the special account of the cooperative vault commercial bank. On July 15, 2021 and January 15, 2022 (delayed on holidays), the repayment of the principal funds deposited in the previous 6 months will be executed, and the repayment ratio will be based on the outstanding balance of the debt.

• B. On July 15, 2021 and January 15, 2022 (posted on holidays), each deposit of NT$50,000,000 for the principal repayment fund will be deposited in the special account of the Taiwan Cooperative Bank, and the repayment ratio will be distributed according to the proportion of the outstanding debt balance.

• C. The monthly rent income by the branch in Tainan Science Park and Pingzhen Factory for one year since 2021 (including income from idle factories that have been rented out and may be rented out in the future) is preferred responsible for all interest expenses on bank loans, land rental costs, factory house tax, factory water and electricity fee, security service fee and management fee of the branch in Tainan Science Park, then the rest is for the company’s operating turnover.

• D.The company promises to review the section of the cash bank account on July 31, 2021, and unconditionally agree to deposit the entire amount in the special account of the Taiwan Cooperative Bank as the principal repayment fund for the cash (including New Taiwan dollar and foreign currency) totaling more than NT$450,000,000.

• (2) Optimax Technology Corporation applied to the Industrial Bureau of the Ministry of Economic Affairs on April 25, 2019, in accordance with the ”Key Points for the Ministry of Economic Affairs to Assist Enterprises in Handling Bank Credit and Debt Negotiations'', to assist in the negotiation of bank claims and debts, requesting that medium and long-term loans extended for one year. The bank was held a delegation meeting on June 26, 2019, and on November 25, 2019, the majority of creditor banks agreed through written consent that the mid- and long-term loan repayment period was extended for one year. In addition, until December 31, 2020, the financial ratio will not be calculated and the overweight penalty for non-compliance with the promised financial ratio will be cancelled. The company has completed the process with banks in accordance with the conclusions of the debt and debt negotiation meeting and the principal extension of the credit extension for one year. The company and its subsidiaries should be performance normally within the time limit for debt (As of December 7, 2020), the main amendments are as follows:

• A. Within one year from January 2020, withdraw NT$20,000,000 per month to repay the principal fund and deposit it in the special account of the cooperative vault commercial bank. On July 15 and January 15, 2020 (delayed on holidays), the repayment of the principal funds deposited in the previous 6 months will be executed, and the repayment ratio will be based on the outstanding balance of the debt.

• B. On July 15, 2020 and January 15, 2021 (posted on holidays), each deposit of NT$50,000,000 for the principal repayment fund will be deposited in the special account of the Taiwan Cooperative Bank, and the repayment ratio will be distributed according to the proportion of the outstanding debt balance.

• C. The monthly rent income by the branch in Tainan Science Park and Pingzhen Factory for one year since 2020 (including income from idle factories that have been rented out and may be rented out in the future) is preferred responsible for all interest expenses on bank loans, land rental costs, factory house tax, factory water and electricity fee, security service fee and management fee of the branch in Tainan Science Park, then the rest is for the company’s operating turnover.

39

1. On June 10, 2003, the company signed a five-year joint credit contract with five financial institutions including Taiwan Cooperative Bank, with a total amount of NT$3.5billion.

(Taiwan Cooperative Bank NT$3.5billion joint loan Case) The balance of loans on December 31, 2020 and December 31, 2019, were NT$26,563,000 and NT$30,360,000, respectively.

1. In response to the expansion needs of the branch in Tainan Science Park, the company signed a five-year joint credit contract with thirteen financial institutions including Mega International Commercial Bank Co., Ltd. and Taiwan Cooperative Bank on July 20, 2004, with a total amount of NT$12 billion. (Mega International Commercial Bank Co., Ltd. NT$12 billion joint loan Case) The balance of loans on December 31, 2020 and December 31, 2019 were NT$3,530,681,000 and NT$3,753,104,000, respectively.

2. In response to turnover needs, the company signed a five-year joint credit agreement with five financial institutions including Taiwan Cooperative Bank on September 20, 2006, with a total amount of NT$2,600,000,000. (Taiwan Cooperative Bank NT$2.6 billion joint loan Case) The balance of loans on December 31, 2020 and December 31, 2019 were NT$1,728,236,000 and NT$1,828,723,000, respectively.

3. Due to the needs of operating turnover, the company submitted a payment to Taiwan Cooperative Bank on August 10, 1999. The bank applied for 18-year mortgage loans with a total amount of NT$300,000,000. The balance of loans on December 31, 2020 and December 31, 2019 were NT$106,790,000 and NT$106,790,000, respectively.

4. Due to the needs of operating turnover, the company submitted a payment to Taiwan Cooperative Bank on April 20, 2001. The bank applied for 13-year mortgage loans with a total amount of NT$250,000,000. The balance of loans on December 31, 2020 and December 31, 2019 were NT$6,167,000 and NT$54,100,000, respectively.

5. Due to the needs of operating turnover, the company submitted a payment to Shin Kong Commercial Bank Co., Ltd. on July 19, 2005. The bank applied for 3-year mortgage loans with a total amount of NT$500,000,000. The balance of loans on December 31, 2020 and December 31, 2019 were NT$80,201,000 and NT$84,497,000, respectively.

6. Expired within one year on December 31, 2020 and December 31, 2019, the loans were NT$111,957,000 and NT$920,347,000 respectively. Please refer to Note 12 for the improvement of the operating conditions of the company.

7. Please refer to Note 8 for the provision of assets as guarantees for long-term loans.

(17) Pension

1. Defined contribution plan

Since July 1, 2005, the company has established Retirement method with defined contribution plan which is applicable to employees of this nationality. Our company and domestic Subsidiaries choose to apply the labor pensions stipulated in the "Labor Pensions Ordinance" for employees. In the system, labor pension is paid to employees of the Labor Insurance Bureau at 6% of the salary monthly. The payment of the employee’s pension is based on the employee’s pension account and the amount of accumulated income. The labor pension in Optimax Suzhou is according to the endowment insurance system stipulated by the government of the People’s Republic of China, contributing a certain percentage of the pension insurance fund monthly. The pension of each employee is contributed monthly by the local government without further obligations. The pensions recognized in the income statement on December 31, 2020 and December 31, 2019 were NT$15,472,000 and NT$16,374,000, respectively.

40

2. Defined benefit plan

In accordance with the regulation of the Labor Standards Law, the company has established a retirement method that defined benefits plan which is applicable of service years to all regular employees before the implementation of the Labor Pension Regulations on July 1, 2005, and the employees who choice to continue after the implementation of the Labor Pension Regulations. Employees who meet the retirement conditions, the pension payment is calculated based on the years of service and the average salary in the 6 months before retirement. The service years within 15 years (inclusive) will be given 2 bases for every full year, more than 15 years of service will be given 1 base for each full year, but the cumulative maximum is 45 bases limited. The company allocates a retirement fund of 2% of the total salary on a monthly basis, and deposits it in a special account in the Bank of Taiwan in the name of the Labor Retirement Reserve Supervision Committee. In addition, the company estimates the balance of the labor retirement reserve in the preceding paragraph before the end of each year. If the balance is not enough to pay the next year, the estimated amount of retirement pension for the employees who meet the retirement conditions in the next year will be calculated based on the foregoing calculation. This special account is managed by the Labor Fund Utilization Bureau of the Ministry of Labor, and the company has no right to influence investment management strategies.

The confirmed benefit plan amounts recognized in the balance sheet were as follows:

Present value of defined benefit obligation Fair value of planned assets Net defined benefit liabilities	December 31, 2020 $ (66,397) 55,042 $ (11,355)	December 31, 2019
		$ (64,145) 52,717
		$ (11,428)

The changes in net defined benefit liabilities were as follows:

Balance at January 1, 2020 Service cost Current service cost Interest (expense) income Recognized in profit and loss Remeasurement Return on plan assets (excluded the amount included in interest income or expenses) Impact of changes in demographic assumptions Impact of changes in financial assumptions Experience adjustment Recognized in other comprehensive income Contributed Retirement Fund Pay pension Balance at December 31, 2020	Present value of defined benefit obligation	Fair value of planned assets	Net defined benefit liabilities
	$ (64,145)	$ 52,717	$ (11,428)
	(173) (561)	－ 474	(173) (87)
	(734)	474	(260)
	－ (2,020) (3,223) (576)	1,610 － － －	1,610 (2,020) (3,223) (576)
	(5,819)	1,610	(4,209)
	－	4,542	4,542
	4,301	(4,301)	－
	$ (66,397)	$ 55,042	$ (11,355)

41

Balance at January 1, 2019 Service cost Current service cost Interest (expense) income Recognized in profit and loss Remeasurement Return on plan assets (excluded the amount included in interest income or expenses) Impact of changes in demographic assumptions Impact of changes in financial assumptions Experience adjustment Recognized in other comprehensive income Contributed Retirement Fund Pay pension Balance at December 31, 2019	Present value of defined benefit obligation	Fair value of planned assets	Net defined benefit liabilities
	$ (56,502)	$ 48,064	$ (8,438)
	(171) (706)	－ 620	(171) (86)
	(877)	620	(257)
	－ (3,253) (3,039) (833)	1,522 － － －	1,522 (3,253) (3,039) (833)
	(7,125)	1,522	(5,603)
	－	2,870	2,870
	359	(359)	－
	$ (64,145)	$ 52,717	$ (11,428)

The y company is exposed to the following risks due to the pension system of the Labor Standards Law:

• (1) Investment risk: The Labor Fund Utilization Bureau of the Ministry of Labor invests labor retirement funds in domestic (foreign) equity securities through its own use and entrusted operations. Subject to debt securities and bank deposits, but in accordance with the provisions of the Labor Standards Law, the overall return on assets shall not be lower than the local bank’s 2-year fixed deposit interest rate: if the interest rate is lower than that, the state treasury shall make up for it.

• (2) Interest rate risk: The decline in the interest rate of government bonds will increase the present value of the determined welfare obligation, but the debt investment return of the planned asset will also increase. The two are in conflict and the impact of fixed benefit liabilities has a partial offset effect.

• (3) Salary risk: The calculation of the present value of the defined benefit obligation is based on the future salary of the plan members. Therefore, the increase in the salary of the plan members will increase the present value of the defined benefit obligation.

The main assumptions of actuarial evaluation are listed as follows:

Discount Rate Expected salary increase rate	December 31,2020 0.500％ 2.0000％	December 31,2019
		0.8750％ 2.0000％

The changes in the main actuarial assumptions that were adopted on December 31, 2020 and 2019, will increase (decrease) the present value of defined benefit obligations by the following amounts:

42

December 31, 2020 Discount Rate Expected salary increase rate December 31, 2019 Discount Rate Expected salary increase rate	Actuarial assumptions increased by0.25% $ (2,209) $ 2,239 Actuarial assumptions increased by0.25% $ (2,130) $ 2,167	Actuarial assumptions reduced by0.25%
		$ 2,310
		$ (2,154)
		Actuarial assumptions reduced by0.25%
		$ 2,227
		$ (2,083)

The sensitivity analysis above is based on the analysis of a single hypothesis while other assumptions remain unchanged the impact of changes. In practice, many changes in assumptions may be linked. The sensitivity analysis is consistent with the method used to calculate the net pension liabilities of the balance sheet. The methods and assumptions used in the preparation of the sensitivity analysis in this period are the same as those in the previous period.

As of December 31, 2020, the weighted average duration of the retirement plan was 13.5 years. In addition, the company expects to allocate NT$5,294,000 to the defined benefit plan within one year after the reporting date on December 31, 2020.

(18) Equity

1. Common stock

Rated equity Issued share capital	December 31, 2020 $ 10,000,000 $ 3,253,324	December 31, 2019
		$ 10,000,000
		$ 3,253,324

As of December 31, 2020 and 2019, the company’s authorized number of shares is 1,000,000,000 shares, each with a denomination of NT$10. The issued shares are 325,332,000 shares.

1. Retained earnings and Dividend policy

(1) According to the regulation of the company's articles of incorporation, if there is a surplus in the annual final accounts, tax should be paid first to make up for the accumulated losses, and 10% of the second allocation is the statutory surplus reserve, but the accumulated amount has reached the paid-in capital, it may no longer be listed, and the rest may be approved by shareholders when necessary. The board of directors plans to allocate or revert the special surplus reserve according to the resolution of the meeting or according to the law; if there is a surplus and the undistributed surplus accumulated in the previous year, the board of directors plans to allocate the surplus, the proposal is submitted to the shareholders meeting for a resolution to distribute dividends to shareholders.

43

• (2) The company’s earnings distribution depends on the company’s current and future development plan, investment environment, fund requirements, and domestic and international competition and the interests of shareholders, the dividend policy of the Company is to set aside no less than 50% of distributable earnings as shareholders’ dividends and bonuses. However, in case the accumulated distributable earnings is less than 30% of paid-in capital, the Company may choose not to distribute dividends. The board of directors drafts the surplus based on the operating results and capital planning situation. At the time, dividends to common shareholder may be distributed by way of combination of cash dividend and stock dividend provided that the cash dividends shall not be less than 10% of the total dividends.

• (3) The legal reserve shall not be used except for making up the company’s losses and issuing new shares or cash in proportion to the shareholders’ original shares. The public reserve is limited to 25% of the paid-in capital.

• (4) When the company distributes surplus, it must be based on the balance sheet date of the current year. The debit balance of other equity items is drawn to the special surplus reserve before the distribution is distributed, and thereafter the debit balance of other equity items is reverted, the reverted amount may be included in the distributable surplus.

• (5) On March 25, 2021, the company passed the resolution of the board of directors to make up for the loss of public information in the year 2020. For related information, please check Market Observation Post System ( MOPS ) for more information.

• (6) On June 9, 2020, the company passed a resolution of the general meeting of shareholders and passed the loss proposal for the year of 2019. Regarding the resolutions of the regular shareholders' meeting, please check Market Observation Post System ( MOPS ) for more information.

• (7) On June 20, 2019, the company passed a resolution of the general meeting of shareholders and passed the loss proposal for the year of 2018. Regarding the resolutions of the regular shareholders' meeting, please check Market Observation Post System ( MOPS ) for more information.

3. Other equity

Balance at January 1, 2020 Generated in the period Exchange Differences on Translation of Foreign Financial Statements Reclassification adjustment Disposal of Foreign Operation Tax effects Balance at December 31, 2020	Exchange Differences on Translation of Foreign Financial Statements $ (1,136) 863 (2,735) 375 $ (2,633)	Unrealized Gain or Loss on Financial Assets Measured at fair value through other comprehensive income $ (7) － － － $ (7)	Total
			$ (1,143) 863 (2,735) 375
			$ (2,640)

44

Balance at January 1, 2019 Generated in the period Exchange Differences on Translation of Foreign Financial Statements Evaluation adjustment Tax effects Balance at December 31, 2019	Exchange Differences on Translation of Foreign Financial Statements $ (1,343) 259 － (52) $ (1,136)	Unrealized Gain or Loss on Financial Assets Measured at fair value through other comprehensive income $ － － (7) － $ (7)	Total
			$ (1,343) 259 (7) (52)
			$ (1,143)

(19) Earnings (loss) per share

The basic earnings (loss) per share	2020 $ 0.05	2019
		$ (0.52)

The basic earnings (loss) per share and the weighted average number of ordinary shares were used to calculate the following:

Net profit attributable to owners of the parent company (thousand yuan) The weighted average number of ordinary shares to calculate the basic earnings (loss) per share (thousand shares) Basic earnings (loss) per share (yuan) ating income Customer contract revenue Commodity sales revenue	2020 $ 16,464 325,332 $ 0.05 2020 $ 2,416,667	2019
		$ (169,313)
		325,332
		$ (0.52)
		2019
		$ 2,508,959

(20) Operating income

1. Please refer to Note 4(13) for the explanation of the income of the company.

2. Contract balance

Accounts receivable (Note 6 (3)) Contract liabilities-current (list other current liabilities) Commodity sales	December 31,2020 $ 770,909 $ 300	December 31,2019
		$ 645,405
		$ 8,773

45

4. Refund liabilities

The company is based on historical experience and other known reasons, it is estimated that the possible refund liabilities for sales returns and discounts are NT$10,231,000 and NT$20,992,000 in 2020 and 2019, respectively. The balance of refund liabilities was NT$7,775,000 and NT$19,311,000 on December 31, 2020 and 2019, respectively.

(21) Other income

Rental income Less: depreciation Other income-other Total	2020 $ 97,526 (19,821) 15,022 $ 92,727	2019
		$ 79,424 (19,051) 6,412
		$ 66,785

(22) Other gains and losses

Losses on disposal of real estate, plant and equipment Gains (losses) on disposal of investment real estate Gains on disposal of interest in non- current assets held for sell Foreign exchange losses Impairment loses in non-current assets held for sell Reversal of Impairment profit -real estate, plant and equipment Reversal of Impairment profit - investment real estate Depreciation expense Miscellaneous Disbursements Total	2020 $ (14,513) (15) 50,607 (48,691) 949 16,880 135,994 (127,519) (81,129) $ (67,437)	2019
		$ (8,211) 1,095 － (19,479) － 1,092 901 (179,134) (2,687)
		$ (206,423)

(23) Financial costs

Interest expense Bank loan Non-financial institution borrowing Lease liability Others Total	2020 $ 113,179 13,365 39 $ 126,583	2019
		$ 122,087 13,124 39 $ 135,250

46

(24) Income Tax

1. The income tax expenses of the company in 2020 and 2019 were as follows:

2020 Tax calculated based on profit (loss) before tax and statutory tax rate $ 6,240 Expenses disallowed by tax regulation (32,432) Sale of land profit exempt from income tax (10,852) Income tax impact of loss deduction 211,836 Temporary differences in the current period (161,608) Land appreciation tax 1,550 Income tax expense $ 14,734	2019
	$ (25,346) 11,348 － 56,944 (362) －
	$ 42,584

The main components of income tax expense recognized in profit and loss were as follows:

Current tax: Current tax on profit in current period Deferred tax: Origination and reversal of temporary differences Income tax expense recognized in profit and loss	2020 $ 1,550 13,184 $ 14,734	2019
		$ － 42,584
		$ 42,584

1. The income tax details recognized in other comprehensive profits and losses of the company on December 31, 2020 and 2019 were as follows:

Deferred income tax benefits (expense) Exchange differences on translation of foreign operations	2020 $ (375)	2019
		$ 52

1. Current income tax assets (listed other current assets)

Tax refund receivable	December 31,2020 $ 108	December 31,2019
		$ 126

47

4. Deferred income tax assets and liabilities

• (1) The analysis of deferred income tax assets was as follows:

Temporary differences Exchange differences on translation of foreign operations Loss deduction Temporary differences Unrealized exchange loss Unrealized inventory decline loss Allowance for excess of bad debts Investment using the equity method Unrealized employees paid Unallocated manufacturing expenses Unrealized sales discount Pension listed excess of pension contributed Exchange differences on translation of foreign operations Loss deduction		2020	2020
	Balance at January 1, 2020	Recognized in profit and loss	Recognized in other comprehensive profit and loss	Balance at December 31, 2020
	$ － － － － － － － － 284 174,792	$ 28,235 47,216 7,046 72,181 2,781 123 1,574 2,161 － (174,792)	$ － － － － － － － － 375 －	$ 28,235 47,216 7,046 72,181 2,781 123 1,574 2,161 659 －
	$ 175,076	$ (13,475)	$ 375	$ 161,976
	Balance at January 1, 2019	Recognized in profit and loss	Recognized in other comprehensive profit and loss	Balance at December 31, 2019
	$ 336 217,738	$ － (42,946)	$ (52) －	$ 284 174,792
	$ 218,074	$ (42,946)	$ (52)	$ 175,076

48

(2) The analysis of deferred income tax liabilities was as follows:

Temporary differences Sales in transit Unrealized rental income Temporary differences Sales in transit Unrealized rental income		2020	2020
	Balance at January 1, 2020	Recognized in profit and loss	Recognized in other comprehensive profit and loss	Balance at December 31, 2020
	$ 19 419	$ 128 (419)	$ － －	$ 147 －
	$ 438	$ (291)	$ －	$ 147
		2019
	Balance at January 1, 2020	Recognized in profit and loss	Recognized in other comprehensive profit and loss	Balance at December 31, 2020
	$ － 800	$ 19 (381)	$ － －	$ 19 419
	$ 800	$ (362)	$ －	$ 438

5. Items not recognized as deferred income tax assets

Loss deduction amount Temporary difference amount	December 31, 2020 $ 2,204,555 $ 263,301	December 31, 2019
		$ 2,975,991
		$ 1,438,313

The loss of the company is deducted, and the final deduction year is 2030.

1. As of December 31, 2020, the company's undeducted loss and the deduction exclusion period was as follows:

Year incurred 2011 2012 2017 2018 2019 2020	Amount filed/ assessed	Expiry year 2021 2022 2027 2028 2029 2030	Loss deduction
	Amount assessed Amount assessed Amount assessed Amount assessed Expected filed amount Amount estimated		$ 1,185,127 583,123 172,271 9,171 69,643 185,220
			$ 2,204,555

49

(25) Expense by nature

1. Functional aggregation of employee benefits, depreciation, depletion and amortization:

Function Nature		2020	2020
	Recognized in cost of sales	Recognized in operating expenses	Recognized in non- operating expenses	Total
Employee benefits expenses: Salaries and wages Labor and health insurances Pension Other employee benefits Depreciation Amortization	$ 233,333 25,496 14,000 －	$ 107,620 9,236 1,732 360	$ － － － －	$ 340,953 34,732 15,732 360
	14,653	4,159	－	18,812
	73,619	14,410	147,340	235,369
Function Nature		2019
	Recognized in cost of sales	Recognized in operating expenses	Recognized in non- operating expenses	Total
Employee benefits expenses: Salaries and wages Labor and health insurances Pension Other employee benefits Depreciation Amortization	$ 233,333 25,496 14,000 －	$ 107,620 9,236 1,732 360	$ － － － －	$ 340,953 34,732 15,732 360
	14,653	4,159	－	18,812
	73,619	14,410	147,340	235,369

50

• (1) The average number of employees of the company in 2020 and 2019 were 606 and 639, respectively, of which the number of directors who were not employees were 8 and 6, respectively.

• (2) The company's average employee benefits in 2020 and 2019 were NT$686,000 and NT$670,000, respectively, and the average employee salaries were NT$570,000 and NT$555,000, respectively, and the average employee salary cost adjustment change situation is 3%.

• (3) The company adopted an audit committee to replace the supervisory system in 2020 and 2019. Therefore, there is no supervisor's remuneration.

• (4) The salary and remuneration policies of the company's directors, managers and employees are as follows:

• A. Directors: The remuneration of the directors of the company is handled in accordance with the company's articles of association, and the board of directors is authorized to be based on the degree of participation and contribution of the directors to the company's operations. The value is determined after the domestic and foreign industry standards.

• B. Managers: The amount of remuneration assigned to the managers of the company is determined by the remuneration committee and submitted to the board of directors based on their positions, contributions, and the company's operating performance for the year.

• C. Employees: The company's employee salary and remuneration policy is to provide employees with average salary and benefits. It is determined based on the company's operating performance and each employee's position, contribution, and performance to determine the year-end bonus and related remuneration. The amount and distribution method are recommended by the remuneration committee to the board of directors for approval.

2. Employee benefits expenses

• (1) According to the regulation of the company's articles of incorporation, when the Company allocates the profit of the current year, if any, 5%~10% of the profit shall be set aside as employees’ compensation, which to be distributed to the qualified employees of the Company or of the subsidiaries of the Company employees in the form of stock or cash. The Board of Directors is hereby authorized to set forth the plan of distribution. The Company may, subject to the resolution adopted by the Board of Director, further allocate no more than 1% of the aforesaid profit as Directors’ compensation. The proposals of the employees’ compensation and the directors’ compensation shall be approved by a majority of total Directors and then reported on the Shareholders’ meeting.

• (2) The employees' remuneration is not estimated remuneration for labor and directors due to the accumulated loss of the company on December 31, 2020.

• The employees' remuneration is not estimated remuneration for labor and directors due to the loss of the company in 2019.

• (3) Please check Market Observation Post System ( MOPS ) for more information of employee remuneration and director remuneration approved by the board of directors.

51

(26) Cash flow information

1. Investing activities with cash and non-cash flow effects

2. (1) Non-current assets held for sell

. Investing activities with cash and non-cash flow effects (1) Non-current assets held for sell
2020 Current increase $ 1,677 Less: Equipment payment due at the end of the period (1,677) Cash paid in this period $ － (2) Real estate, plant and equipment 2020 Current increase $ 9,525 Plus: Equipment payment due at the beginning of the period 1,385 Less: Equipment payment due at the end of the period (2,072) Less: the number of prepaid equipment transfers (1,282) Cash paid in this period $ 7,556 (3) Investment real estate 2020 Current increase $ 5,410 Plus: Equipment payment due at the beginning of the period － Less: the number of prepaid equipment transfers (225) Cash paid in this period $ 5,185	2019
	$ － －
	$ －
	2019
	$ 7,113 5,218 (1,385) (543)
	$ 10,403
	2019
	$ 170 1,628 －
	$ 1,798

2. Changes in liabilities from financing activities

At January 1, 2020 Changes in cash flow from financing activities Changes in lease liabilities Changes in other non-cash items At December 31, 2020	Short-term borrowings $ 741,590 46,725 － (86,025) $ 702,290	Long-term borrowings $5,857,574 (350,434) － (28,502) $ 5,478,638	Guarantee deposits received $ 10,119 (246) － － $ 9,873	Lease liabilities $ 700,374 (15,753) 29,946 (2,806) $ 711,761	Liabilities from financing activities-gross
					$ 7,309,657 (319,708) 29,946 (117,333)
					$ 6,902,562

52

At January 1, 2019 (restatement) Changes in cash flow from financing activities Changes in lease liabilities Changes in other non-cash items At December 31, 2019	Short-term borrowings $ 690,301 61,260 － (9,971) $ 741,590	Long-term borrowings $6,190,104 (332,530) － － $ 5,857,574	Guarantee deposits received $ 10,069 50 － － $ 10,119	Lease liabilities $ 715,066 (17,115) 2,423 － $ 700,374	Liabilities from financing activities-gross
					$ 7,605,540 (288,335) 2,423 (9,971)
					$ 7,309,657

(27) Capital management

Based on the characteristics of the current operating industry and the future development of the company, the company plans the need for working capital (including research and development expenses and debt repayment, etc.) required by the company in the future, taking into account changes in the external environment, to ensure the sustainability of the company operation can give back to shareholders while taking into account the interests of other stakeholders, and maintain the best capital structure to enhance shareholder value. On the whole, the company adopts a prudent risk management strategy.

(28) Financial instruments

1. Categories of financial instruments

Financial assets Cash and cash equivalents Financial assets measured at amortized cost-current Notes receivable Accounts receivable Other receivable Other financial assets- non-current Refundable Deposits (including current) Financial liabilities Short-term borrowings Notes payable Accounts payable Other payable Long-term debt (including current portion) Guarantee deposit received (including current)	December 31,2020 $ 162,114 35,800 114 770,909 305,274 180,472 1,994 109年12月31日 $ 702,290 237 178,237 280,702 5,478,638	December 31,2019
		$ 320,035 42,309 107 751,308 307,524 129,828 2,030 108年12月31日 $ 741,590 254 162,514 137,203 5,857,574

53

2. Financial risk management

The financial risk management objective of the company is to manage exchange rates related to operating activities risk, interest rate risk, credit risk and liquidity risk. In order to reduce related financial risks, the company is committed to identifying, evaluating and avoiding market uncertainty in order to reduce market potential adverse impact on the company’s financial performance. Important financial matters of the company are reviewed by the board of directors in accordance with relevant regulations and internal control systems. During the execution of the financial plan, the company must strictly comply with the overall financial risk management and related financial operation procedures for the division of authority and responsibilities.

3. Market risk

The company is mainly exposed to market risks such as changes in foreign currency exchange rates and changes in interest rates.

(1) Foreign currency exchange rate risk

The operating activities of the company and the net investment of foreign operating institutions are mainly in foreign currencies transaction, therefore, foreign currency exchange rate risk arises. To avoid foreign currency caused by exchange rate changes as asset value decreases and future cash flows fluctuate, the company uses currency conversion of short-term borrowings to avoid exchange rate risk. Since the net investment of foreign operating organizations is a strategic investment, it has not been hedged.

• A. Information about the company's significant foreign currency financial assets and liabilities is as follows:

Unit: Foreign currency yuan /NT$ thousand December 31, 2020

Financial assets Monetary items JPY USD EUR KRW RMB Non-Monetary items JPY Financial liabilities Monetary items JPY USD RMB Non-Monetary items USD RMB	Foreign currency 87,359,148 37,891,387 14,954 40,000 2,237,452 125,817,497 2,239,024,090 1,156,255 103,071 276,492 1,930,825	Exchange rate	NTD		Sensitivityanalysis	Sensitivityanalysis
				Degree of variation	Effect on profit or loss (before tax)	Effect on profit or loss
		0.2763 28.48 35.02 0.0264 4.377 0.2742 0.2763 28.48 4.377 28.48 4.2216	24,137 1,079,112 524 1 9,793 34,497 618,644 32,930 451 7,874 8,151	+10％ +10％ +10％ +10％ +10％ +10％ +10％ +10％	2,414 107,911 52 － 979 (61,864) (3,293) (45)	1,931 86,329 42 － 783 (49,492) (2,634) (36)

54

December 31, 2019

Financial assets Monetary items JPY USD EUR KRW RMB Non-Monetary items JPY Financial liabilities Monetary items JPY USD RMB Non-Monetary items USD RMB	Foreign currency 406,009,313 40,521,003 14,954 40,000 22,154 25,571,510 34,578 2,198,980,877 391,955 114,436 925,766	Exchange rate	NTD		Sensitivityanalysis	Sensitivityanalysis
				Degree of variation	Effect on profit or loss (before tax)	Effect on profit or loss
		0.276 29.98 33.59 0.0262 4.305 0.2845 30.302 0.276 29.98 4.305 30.28	112,059 1,214,699 502 1 95 7,276 1,048 606,919 11,751 493 28,034	+10％ +10％ +10％ +10％ +10％ +10％ +10％ +10％	11,206 121,470 50 － 10 (60,692) (1,175) (49)	8,965 97,176 40 － 8 (48,553) (940) (39)

• B. Monetary items of the company have a significant impact due to exchange rate fluctuations and all exchange loss recognized was NT$48,691,000 and NT$19,479,000 (including realized and unrealized) on December 31, 2020 and 2019, respectively.

(2) Interest rate risk

Interest rate risk refers to the risk of changes in the fair value of financial instruments due to changes in market interest rates. The interest rate risk of the company is mainly income investment and fixed and floating interest rate of borrowings, and the current market interest rate is low, it is expected that there is no major interest rate change risk, so the company did not hedge against it. The sensitivity analysis of interest rate risk is fixed based on the end of the financial reporting period and changes in the fair value of floating-rate borrowings are the calculation basis. If the interest rate rises by ten basis points, the net profit after tax of the company will decrease by NT$6,313,000 and NT$6,641,000 on December 31, 2020 and 2019, respectively.

4. Credit risk management

Credit risk refers to the risk of a counterparty breaching contractual obligations and causing financial loss to the company. The credit risk of the company mainly comes from the accounts receivable of operating activities. Operation-related credit risks and financial credit risks are managed separately.

55

(1) Credit risk related to operations

In order to maintain the quality of accounts receivable, the company has established operating-related credit risks management procedures.

The risk assessment of any customer is based on the consideration of the customer’s financial status, credit rating factors that may affect customers’ ability to make payments, such as structural ratings, internal credit ratings of the company, historical transaction records and current economic conditions. The company will also use certain credit enhancement tools at the right time, such as advance payment and credit insurance, etc., to reduce the credit risk of specific customers.

As of December 31, 2020 and 2019, the balance of accounts receivable of the top ten customers accounted for the balance of accounts receivable of the company, the percentages are 82% and 71%, respectively. The credit risk of the remaining accounts receivable is insignificant.

(2) Financial credit risk

The credit risks of bank deposits, fixed income investments and other financial instruments are measured and monitored by the financial department of the company. The performing parties are all creditworthy banks and financial institutions with investment grade and above Institutions, company organizations and government agencies, there are no major performance concerns, so there is no major credit risk.

5. Liquidity risk management

The objective of the liquidity risk management of the company is to maintain the cash and equivalent cash and ensure that the company has sufficient and flexible financial resources.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments.

Non-derivative financial liabilities Notes and accounts payable Other payables Lease liabilities Loan Guarantee deposit received Total Non-derivative financial liabilities Notes and accounts payable Other payables Lease liabilities Loan Guarantee deposit received Total		December 31, 2020	December 31, 2020	December 31, 2020
	Within 1 year	2~3 years	4~5 years	More than 5 years	Total
	$ 178,474 280,702 31,773 821,356 9,873	$ － － 59,233 5,485,769 －	$ － － 56,119 38,291 －	$ － － 809,045 33,723 －	$ 178,474 280,702 956,170 6,379,139 9,873
	$ 1,322,178	$ 5,545,002	$ 94,410	$ 842,768	$ 7,804,358
	Within 1year	2~3 years	4~5 years	More than 5years	Total
	$ 162,768 137,203 30,568 1,784,162 8,119	$ － － 59,873 4,926,914 －	$ － － 54,193 39,407 2,000	$ － － 803,009 33,886 －	$ 162,768 137,203 947,643 6,784,369 10,119
	$2,122,820	$ 4,986,787	$ 95,600	$ 836,895	$8,042,102

56

1. Fair value of financial instruments

2. (1) Financial instruments measured by amortized cost (including cash and cash equivalents, financial assets measured by amortized cost, notes receivable, accounts receivable, other accounts receivable, other financial assets, guarantee deposit receivable, short-term loans, notes payable, accounts payable, other payables, long-term loans and deposit deposits) is a reasonable approximation of the fair value.

3. (3) When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

4. a. Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets.

5. b. Level 2 inputs: Other than quoted prices included within Level 1, inputs are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

6. c. Level 3 inputs: Derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(7) Related-party Transactions

(1) Name and relationship of related parties

Name of relatedparty ART OPTRONICS CORP. Optimax Technology corp. (Suzhou) Co., Ltd OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. (OPTIMAX BVI) Peter Chao	Relationshipwith the Company
	Subsidiary Subsidiary Subsidiary (Note) Main management

Note: OPTIMAX TECHNOLOGY (BVI) CO., LTD., a subsidiary of the company,

completed the dissolution and liquidation procedures on March 24, 2020.

(2) The Company’s significant related party transactions

• 1.Operating revenue

Operating revenue
Name of related party Subsidiaries	2020 $ 32,286	2019
		$ 216,570

The prices of transactions between the company and its related parties were not comparable in other transactions under the same circumstances in 2020 and 2019. The credit period for related parties is approximately 90-150 days for monthly settlement, and approximately 30-120 days for general customers.

2. Purchases

Purchases
Name of relatedparty Subsidiaries	2020 $ 9,607	2019
		$ 6,357

The purchase transactions with the above-mentioned related parties are handled on the terms of general customers.

57

3. Operating expenses

Name of related party Subsidiaries Accounts receivable Name of related party OPTIMAX BVI Transferred to other receivables overdue Total	2020 $ 2,424 December 31, 2020 $ － － $ －	2019
		$ 3,894
		December 31, 2019
		$ 348,495 (242,592)
		$ 105,903

4. Accounts receivable

5. Other receivables

(1) Loaning Funds to others

Name of related party		2020
	Actual move amount	Interest Rate Range	Interest income
Optimax Technology corp. (Suzhou) Co., Ltd Name of related party	$ 164,644	－ 2019	$ －
	Actual move amount	Interest Rate Range	Interest income
OPTIMAX BVI	$ 29,696	－	$ －

The company ’ s capital loans and its subsidiaries were USD5,781,022 and USD990,539 in 2020 and 2019, respectively.

• (2) Treated as a capital loan and-overdue accounts receivable transfer:

Name of related party OPTIMAX BVI	December 31, 2020 $ －	December 31, 2019
		$ 242,592

6. Advance receipts (listed other current liabilities)

Name of related party Peter Chao	December 31, 2020 $ 10,798	December 31, 2019
		$ －

58

(3) Rewards for the main management

The remuneration information for directors and other key management members was as follows:

Salary and other short-term benefits Resignation benefits Total	December 31, 2020 $ 9,320 108 $ 9,428	December 31, 2019
		$ 11,518 173
		$ 11,691

(8) Pledged assets

Item Financial assets measured by cost after allocation-current Non-current assets held for sell Other financial assets- current Real estate, plant and equipment Investment real estate Other financial assets- non-current Total	Content	Carry amount	Carry amount
		December 31, 2020 $ 35,800 2,909,293 79 2,074,486 － 180,393 $ 5,200,051	December 31, 2019
	Fixed deposits, margins of the customs bureau and financial institutions set up pledges of the branch in Southern Taiwan Science Park Leasing and joint guarantees Provided to financial institutions as collateral for long- and short-term loans Provided to financial institutions as collateral for long- and short-term loans Provided to financial institutions as collateral for long- and short-term loans Provided to financial institutions as collateral for long- and short-term loans Withdraw bank deposits and repay loans according to loan contract		$ 38,300 140,535 78 2,151,110 2,999,823 129,750
			$ 5,459,596

(9) Significant commitments and contingencies

Except as mentioned in other notes, the major commitments of the company at the balance sheet date and contingencies are as follows:

• (1) The balance of the unused letter of credit for imported raw materials from the company is listed below:

below:
Currency JPY USD NTD	December 31, 2020 $ 771,376 $ 861 $ 15,919	December 31, 2019
		$ 446,382
		$ 255
		$ 39,548

59

• (2) List of the amount of deposit guarantee notes issued by the merged company as a result of applying for a loan line from the bank as follows:

December 31, 2020 $ 8,434,741	December 31, 2019
	$ 8,676,574

(10) Significant loss from disaster: None.

(11) Significant subsequent events: None.

(12) Others

The company began to turn losses into profits in 2012, but since 2016, due to the continuous mass production of the polarizing plate factory in mainland China and the economic cycle, the revenue and the gross profit decreased. In addition, the Tainan earthquake caused the disaster loss of the branch in Southern Taiwan Science Park and the lessee of the branch in Southern Taiwan Science Park terminated the lease and the Taiwan dollar have a negative impact on the appreciation of the U.S. dollar, resulting in losses. Face difficulties business environment, the company adopts the following measures to improve operating conditions and strengthen financial structure:

• (1)Funding:

The Company applied to the Industrial Bureau of the Ministry of Economic Affairs on April 10, 2020, in accordance with the ”Key Points for the Ministry of Economic Affairs to Assist Enterprises in Handling Bank Credit and Debt Negotiations'', to assist in the negotiation of bank claims and debts, requesting that short-term credit extension periods be extended to December 7, 2021, and medium and long-term loans extended for one year. The bank was held a delegation meeting on June 19, 2020, and on November 17, 2020, the majority of creditor banks agreed through written consent that the short-term credit extension periods was extended to December 7, 2020 and the mid- and long-term loan repayment period was extended for one year. (Please refer to Note 6 (12), and 6 (16) description)

• (2) Operation:

At present, the gross profit margin of TV products is low and the number of orders is small. The main customers have better gross profit of polarizers for commercial displays and a higher proportion of estimated revenue, plus the contribution of high-margin polarizers for vehicles, so gross profit can still maintain 20 % Level. The company's policy is still to reduce the number of orders for low-margin products and to win orders from customers with high-margin products such as high weather resistant vehicle-mounted products to increase profitability, and to continue to develop new customers in the VR market.

• (3) Activate assets:

The company intends to dispose of the branch in Southern Taiwan Science Park, Pingzhen No. 2 Factory, Pingzhen R&D Building and Pingzhen No. 5 Factory. The resolution was approved by the board of directors on August 8, 2019 and September 12, 2019. The abovementioned real estate has been obtained the written consent of the creditor banks. Among them, the sale of the Pingzhen No. 5 Factory was signed on November 21, 2019, and the sale was completed on January 15, 2020. The sale and purchase contract of the branch in Southern Taiwan Science Park was signed on October 19, 2020, and the sale was completed on January 5, 2021. Please refer to Note 6 (6) for the explanation.

60

At present, the Chinese market still accounts for about 90% of the company's revenue. In addition to aggressively expanding customers, it also makes every effort to develop new products such as VR products. It is expected to increase revenue and gross profit. In terms of financial structure improvement, in addition to the NT$20 million allocated for the sinking fund monthly and NT$50 million allocated every six months, the activation of assets such as the disposal of the Pingzhen No. 2 Factory and the idle equipment is also the goal of the company at this stage. Through the above methods, we can reduce the balance of bank loans and the interest expenses, so as to improve the financial structure and sound operations.

(13) Additional disclosures

When preparing the parent company only financial report, all major transactions between parent and subsidiary companies and their balances have been eliminated.

• (1) Information on significant transactions:

• (a) Financing provided to other parties: Attached Table 1.

• (b) Provision of endorsements and guarantees to others: None.

• (c) Holding of marketable securities at the end of the period (excluding subsidiaries, joint ventures and associates): Attached Table 2.

• (d) Acquisition or sale of the same security with the accumulated cost reaching NT$300 million or 20% of paid-in capital or more: None.

• (e) Acquisition of property reaching NT$300 million or 20% of paid-in capital or more: None.

• (f) Disposal of property reaching NT$300 million or 20% of paid-in capital or more: None.

• (g) Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.

• (h) Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Attached Table 3.

• (i) Provision of endorsements and guarantees to others: None.

• (j) Holding of marketable securities at the end of the period (excluding subsidiaries, joint ventures and associates): Attached Table 4.

• (2) Information on investees:

• (a) Names, locations and other information of investee companies ： Please refer to table 5.

• (b) Financing provided to other parties: Attached Table 1.

• (c) Provision of endorsements and guarantees to others: None.

• (d) Holding of marketable securities at the end of the period (excluding subsidiaries, joint ventures and associates): Attached Table 2.

• (e) Acquisition or sale of the same security with the accumulated cost reaching NT$300 million or 20% of paid-in capital or more: None.

• (f) Acquisition of property reaching NT$300 million or 20% of paid-in capital or more: None.

• (g) Disposal of property reaching NT$300 million or 20% of paid-in capital or more: None.

• (h) Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.

61

• (i) Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.

• (j) Provision of endorsements and guarantees to others: None.

• (3) Information on investments in Mainland China:

• (a) The name of the investee company in mainland China, main business items, paid-in capital, investment method, capital remittance, shareholding ratio, investment profit and loss, book value of investment at the end of the period, repatriated investment income and investment quota for mainland China: Attached Table 6.

• (b) Significant transactions with mainland investee companies directly or indirectly via a third region transactions, including their prices, payment terms, unrealized gains and losses, and other relevant information that helps to understand the impact of mainland investment on financial reporting: Attached Table 1~6.

• (4) Major shareholders information: Attached Table 7.

(14) Segment information

Please refer to the Consolidated Financial Statements Independent Auditors’ Review Report of the year in 2020.

62

【 Attached Table 1 】

Information on significant transactions

For the year ended December 31, 2020, the Company should disclose relevant information on significant transactions in accordance with preparation of financial reports:

(a) Financing provided to other parties:

(Expressed in thousands of New Taiwan dollars)

No. (Note 1)	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the period	Ending balance	Actual amount drawn down	Interes t rate	Nature of loan (Note 2)	Amounts of transaction with the borrower (Note 3)	Reason for short- term financing	Amounts of allowance	Collateral	Collateral	Limit on loans granted to a single party	Ceiling on total loans granted
													Item	Value
0	OPTIMAX	OPTIMAX TECHNOLOG Y (B.V.I.) CO., LTD.	Other receivables	Yes	$ 272,288	$ －	$ －	－	1	$9,818,097	－	$－	None	None	$ 498,145	$ 498,145
		Optimax Technology corp. (Suzhou) Co., Ltd	Other receivables	Yes	174,876	164,644	164,644	－	2	－	Business operation	－	None	None	498,145	498,145
1	OPTIMAX TECHNOLOG Y (B.V.I.) CO., LTD.	Optimax Technology corp. (Suzhou) Co., Ltd	Other receivables	Yes	173,315 (USD 5,781,022)	－	－	－	2	－	Business operation	－	None	None	498,145	498,145

(Note 1): The aggregate financing amount to subsidiaries wholly owned by the parent and the parent company only financing amount of Optimax shall not exceed limited, respectively, of the most recent audited or reviewed net worth of Optimax.

(Note 2): Purpose of fund financing: 1. Business transaction purpose. 2. Short-term financing purpose. (Note 3): The transactions have been eliminated when preparing the parent company only financial statements.

63

【 Attached Table 2 】

Holding of marketable securities at the end of the period (excluding subsidiaries, joint ventures and associates)

Investing company	Marketable securities type and name	Relation with the securities issuer	Financial statement account	As of December 31, 2020	As of December 31, 2020	As of December 31, 2020	As of December 31, 2020	Footnote
				Shares	Carrying amount	Ownership (%)	Fair value
OPTIMAX	Common Stock: Yute Optimax Technology Co., Ltd	－	Financial assets at fair value through other comprehensive profit or loss ─ un- current	1,700	$ －	17％	$	－
Optimax Technology corp. (Suzhou) Co., Ltd	Investment Amount: Chongqing Yunhe Bafang Enterprise Management	－	Financial assets at fair value through other comprehensive profit or loss ─ un- current	－	26,262	6％	26,262

64

【 Attached Table 3 】

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

Company name	Counter party	Relationship with the counter party	Receivable- Related Parties Balance as at December 31, 2020	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
OPTIMAX	Optimax Technology corp. (Suzhou) Co., Ltd	Subsidiary	Other Receivable $ 164,644	－	$ －	－	$ －	$ －

65

【 Attached Table 4 】

- Significant inter company transactions

For the year ended December 31, 2020

(Expressed in thousands of New Taiwan dollars)

No. (Note 1)	Company name	Counter party	Relationship (Note 2)		Transaction	Transaction
				Account	Amount	Transaction term	Percentage of total operating revenues or total assets (Note 3)
0	OPTIMAX	OPTIMAX TECHNOLOGY (B.V.I.)CO.,LTD.	1	Sales	$ 32,286	OA90~150	1％
0	OPTIMAX	ART OPTRONICS CORP.	1	Purchase	9,607	T/T after 7 days	－
0	OPTIMAX	Optimax Technology corp. (Suzhou) Co., Ltd	1	Operation expense	2,424		－
				Other receivable	164,644		2%

66

【 Attached Table 4-1 】

- Significant inter company transactions

For the year ended December 31, 2019

(Expressed in thousands of New Taiwan dollars)

No. (Note 1)	Company name	Counter party	Relationship (Note 2)		Transaction	Transaction
				Account	Amount	Transaction term	Percentage of total operating revenues or total assets (Note 3)
0	OPTIMAX	OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD.	1	Sales	$ 216,570	OA90~150	9％
				Accounts receivable	105,903	OA90~150	1％
				Other accounts receivable- Overdue accounts receivable- Related Parties	242,592		3％
				Other accounts receivable - Financing provided to other parties	29,696		－
0	OPTIMAX	ART OPTRONICS CORP.	1	Purchase	6,357	T/T after 7 days	－
0	OPTIMAX	Optimax Technology corp. (Suzhou) Co., Ltd	1	Operation expense	3,894		－

(Note 1): The number is filled in as follows:

• 1) Number 0 represents the parent.

• 2) Subsidiaries are numbered in order from number 1.

(Note 2): The transaction relationships with the counterparties are as follows:

• 1) The parent to the subsidiary.

• 2) The subsidiary to the parent.

• 3) The subsidiary to another subsidiary.

(Note 3): The calculation of the ratio of the transaction amount to the total revenue or total assets, if it is an asset-liability account, it is calculated as the ending balance in the total assets: if it is a profit and loss account, the cumulative amount is calculated by the method of management.

67

【 Attached Table 5 】

Information on investees

Investor	Investee (Note 1)	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Net profit (loss) of the investee for the current period	Investment income (loss) recognized for the period	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Owner ship (%)	Carrying amount
OPTIMAX	OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. ART OPTRONICS CORP. OPTIMAX OPTOELECTRONIC (MAURITIUS) CORP. (OOMC)	BVI Taiwan MAURITIUS	Manufacture and sales Manufacture and sales Investment	$ － 2,011 614,524 (USD 19,000,000)	$ 1,748 (USD 50,000) 2,011 614,524 (USD 19,000,000)	－ 225,000 19,000,000	－ 100％ 100％	$ － 1,028 105,271	$ 646 1 20,977	$ 646 1 20,977	Subsidiary (Note 2) Subsidiary Subsidiary

(Note 1): If a public issuing company has a foreign holding company and uses statements as the main financial report in accordance with local laws and regulations, the disclosure of information about the foreign investment company may only disclose the relevant assets of the holding company.

(Note 2): OPTIMAX TECHNOLOGY (B.V.I) CO., LTD. was liquidated on March 24, 2020.

68

【 Attached Table 6 】

Information on investments in China

Investee in Mainland China	Main business activities	Paid-in capital		Investment method	Accumulated amount of remittance from Taiwan as of January 1, 2020	Amount remitted from Taiwan or amount remitted back to Taiwan for the currentperiod	Amount remitted from Taiwan or amount remitted back to Taiwan for the currentperiod	Accumulated amount of remittance from Taiwan as of December 31, 2020	Ownership held by Optimax (direct or indirect)	Investment income (loss) recognized for the current period (Note 2)	Carrying amount of investments as of June 30, 2020	Footnote
						Remitted to Mainland China	Remitted back to Taiwan
Optimax Technology corp. (Suzhou) Co., Ltd	Manufacturing and selling of polarizers	$ 614,524 (USD19,000,000)		(Note 1)	$ 614,524 (USD19,000,000)	$ -	$ -	$ 614,524 (USD19,000,000)	100%	$ 20,977	$ 105,271	-
Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020 (Note 5)				Investment amounts authorized by Investment Commission, MOEA (Note 4)			Upper limit on investment by Investment Commission, MOEA (Note 3)
$ 614,524 (USD19,000,000)				$ 629,408 (USD22,100,000)			$ 747,218

• (Note 1): Invest and establish a company through OPTIMAX OPTOELECTRONIC (MAURITIUS) CORP to reinvest in mainland companies.

(Note 2): Obtained based on the investee company's own financial report without an accountant's visa during the same period.

• (Note 3): According to the ``Principles for the Review of Investment or Technical Cooperation in Mainland China'' by the Investment Review Committee of the Ministry of Economic Affairs, the upper limit of the amount of investment in the mainland is 80,000 New Taiwan dollars, or 60% of the net value or combined net value, whichever is higher.

(Note 4): For foreign currency, it is based on the spot remittance and the average exchange rate on the financial report date.

• (Note 5): For foreign currency, it is converted into New Taiwan dollars based on the exchange rate on the actual investment date from Taiwan.

69

【 Attached Table 7 】

Major shareholders information

Major shareholders Name	Shareholding	Shareholding ratio
Peter Chao	34,831,503	10.70%
Long-Shi Lin	18,400,000	5.65%

(Note 1): This table is calculated by Taiwan Depository & Clearing Corporation (TDCC) on the last business day of every season. To compute the shareholding companies’ 5% of total of the ordinary shares and special shares of non-physical securities (including treasury shares). As for the company’s financial reporting, it has written down that the share and the company’s completed non-physical securities’ shareholding might be discrepancy due to its different ways of factorization.

• (Note 2): In the case of the above information, if the shareholder delivers the shares to the trust, it is disclosed by the principal who opened the trust account by the trustee. As for the shareholder, it is handled in accordance with the Securities Exchange Law. For information on insider equity declaration, please refer to the Market Observation Post System ( MOPS ).

70

OPTIMAX TECHNOLOGY CORPORATION

STATEMENT OF CASH AND CASH EQUIVALENTS

DECEMBER 31, 2020

	Expressed in thousands of NTD	Expressed in thousands of NTD
Item	Description	Amount
Cash on hand Cash in banks Checking Account NTD demand deposit Foreign currency demand deposits	Foreign currency (included USD & JPY…etc.) JPY 29,078,457 USD 4,686,376 EUR 13,654 RMB 2,237,007	$ 475 41 9,826 8,034 133,468 478 9,792
Total		$ 162,114

Exchange rate ：

JPY	0.2763
USD	28.48
EUR	35.02
KRW	0.0264
RMB	4.377

71

STATEMENT OF ACCOUNTS RECEIVABLE

DECEMBER 31, 2020

	Expressed in thousands of NTD	Expressed in thousands of NTD	Expressed in thousands of NTD
Client Name	Description	Amount	Note
Non-related parties: CompanyＡ Company B Company C Company D Others	(The amount of individual client does not exceed 5% of the account balance)	$ 260,822 74,045 61,497 41,326 355,173
Total Less：Allowance for losses		792,863 (21,954)
Total (Net)		770,909

72

STATEMENT OF INVENTORIES

DECEMBER 31, 2020

Expressed in thousands of NTD

Item	Description	Amount	Amount	Note
		Cost	Net realizable value
Finished goods Work in process Raw materials In-transit inventory Subtotal Allowance of valuation loss		$ 509,552 390,580 284,964 8,117	$ 429,116 327,494 232,206 8,117
		1,193,213 (236,079)	$ 996,933
Total		$ 957,134

73

STATEMENT OF PREPAYMENTS

DECEMBER 31, 2020

	Expressed in thousands of NTD	Expressed in thousands of NTD
Item	Description	Amount
Prepaid insurance premiums Other prepaid expenses Payment in advance Input Tax	Property insurance Joint loan case management fee, sales service commission, joint insurance remuneration, etc.	$ 57 6,360 36,851 1,720
Total		$ 44,988

74

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2020

Expressed in thousands of NTD

											Expressed in	Expressed in	thousands	of NTD
Name	Balance, January 1, 2020		Additions in Investment		Investment gains and losses recognized using the equity method	Cash dividend	Conversion difference recognized using the equity method	Balance, December 31, 2020			Market Value or Net Assets Value		Collateral	Note
	Shares	Amounts	Shares	Amounts				Shares	%	Amounts	Unit Price (NT$)	Total Amount
OPTIMAX OPTOELECTRONIC (MAURITIUS) CORP. OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. ART OPTRONICS CORP. Plus: the credit balance is transferred to other non-current liabilities	19,000,000 50,000 225,000 －	$ 82,449 (118,000) 1,027 118,000	－ (50,000) － －	$ － 118,336 － (118,000)	$ 20,977 646 1 －	$ － － － －	$ 1,845 (982) － －	19,000,000 － 225,000 －	100％ － 100％ －	$ 105,271 － 1,028 －	－ － － －	$ 105,271 － 1,028 －	No No No No	Note 1
Total		$ 83,476		$ 336	$ 21,624	$ －	$ 863			$ 106,299		$ 106,299

Note 1 ： Investment in OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. The decrease in this period is due to OPTIMAX TECHNOLOGY (B.V.I.) CO., LTD. was liquidated on March 24, 2020.

75

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2020

Expressed in thousands of NTD

Item	Balance, January1,2020	Additions	Disposals	Reclassification	Balance, December 31,2020
Cost： Land Transportation equipment Office equipment	$ 6,672 4,055 2,180	$ － 623 －	$ － － －	$ － － －	$ 6,672 4,678 2,180
Subtotal	12,907	623	－	－	13,530
Accumulated depreciation： Land Transportation equipment Office equipment	1,668 1,082 459	1,668 1,608 459	－ － －	－ － －	3,336 2,690 918
Subtotal	3,209	3,735	－	－	6,944
Total (Net)	$ 9,698	$ (3,112)	$ －	$ －	$ 6,586

76

STATEMENT OF OTHER NON-CURRENT FINANCIAL ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2020

	Expressed in thousands of NTD	Expressed in thousands of NTD	Expressed in thousands of NTD
Item	Description	Amount	Note
Other non-current financial assets	Bank deposit account for loan repayment	$ 180,393
Total		$ 180,393

77

STATEMENT OF SHORT-TERM BORROWINGS

DECEMBER 31, 2020

Expressed in thousands of NTD

Creditor	Type of loan	Balance, December 31, 2020	Repayment period of the amount moved	Interest rate range	Loan Commitments	Collateral	Note
CTBC Bank Co., Ltd. Bank of Taiwan First Commercial Bank Land Bank of Taiwan Mega Bank Taiwan Cooperative Bank	Unsecured loan	$ 126,401 155,782 41,796 205,474 23,835 149,002	110.1.8～110.12.28 110.12.31～111.11.26 110.1.4～110.11.29 110.12.7 110.1.19～110.10.26 110.1.20～111.2.27	0.6795％～1.8203％ 0.6813％～1.8338％ 0.6612％～0.8695％ 1.84％ 0.6809％ 0.6797％～1.8322％	NTD 288,797 USD 11,941 JPY 373,494 NTD 225,772 NTD 530,990 NTD 422,710	Note 8 Note 8
	Unsecured loan Unsecured loan Unsecured loan Secured loan Secured loan
合 計		$ 702,290

78

STATEMENT OF ACCOUNTS PAYABLE

DECEMBER 31, 2020

Expressed in thousands of NT

Vendor Name	Description	Amount	Note
Non-related parties: Company A Company B Company C Company D Company E Others	(The amount of individual vendor does not exceed 5% of the account balance)	$ 46,721 41,867 14,763 9,868 9,419 55,599
Total		$ 178,237

STATEMENT OF LEASE LIABILITIES

DECEMBER 31, 2020

Expressed in thousands of NT

Item	Rental period	Discount Rate	Amount
Land Transportation equipment Office equipment	5~46 years 3 years 5.5 years	1.8513％ 1.8513％ 1.8513％	$ 708,459 2,017 1,285
Total Less：current			711,761 (18,753)
Lease liabilities- non-current			$ 693,008

79

STATEMENT OF OTHER CURRENT LIABILITIES

DECEMBER 31, 2020

	Expressed in thousands of NT	Expressed in thousands of NT
Item	Description	Amount
Contract liabilities Notes payable Prepayments Temporary credits Receipts under custody Other current liabilities-other	Guarantee	$ 300 237 88,931 12,972 8,547 9,873
Total		$ 120,860

80

STATEMENT OF LONG-TERM BORROWINGS

DECEMBER 31, 2020

	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020
				Expressed in thousands of NT
Creditor	Loan Amount	Contract Period	Interest rate	Collateral	Note
Taiwan Cooperative Bank, etc (NT35 billion joint loan) Syndication Loan A loan Mega Bank, etc (NT120 billion joint loan) Syndication Loan B loan Taiwan Cooperative Bank, etc (NT26 billion joint loan) Syndication Loan Taiwan Cooperative Bank Mortgage of land Plant mortgage loan Shin Kong Commercial Bank Co., Ltd. Mid-term borrowings Subtotal Less：current portion of long-term loans payable	$ 26,563 3,530,681 1,728,236 106,790 6,167 80,201	The principal is due on October 27, 2021, and the interest is paid monthly. The principal is due on October 29, 2022, and the interest is paid monthly. Since April 26, 2022, 10%, 20%, 1.8337%, 30% and 40% of the principal will be repaid every six months, and interest will be paid monthly. Since October 30, 2021, the principal is amortized evenly on a monthly basis, and interest will be paid monthly. Since October 30, 2021, the principal is amortized evenly on a monthly basis, and interest will be paid monthly. Since January 1, 2020, the principal has been deposited and repaid to the Fund on a monthly basis in accordance with the bank's debt and debt negotiation, and distributed in proportion to the outstanding balance of the debt, and interest is paid on a monthly basis.	1.8322％ 1.8322％ 1.8337％ 1.8182％ 1.8182％ 1.8337％	Real estate, plant and equipment Non-current assets for sale Real estate, plant and equipment, second order Real estate, plant and equipment Real estate, plant and equipment Sub-guarantee, second order	Note 1 Note 2 Note 3
	5,478,638 (111,957)
Total	$ 5,366,681

Note 1 ： Participating banks in the joint loan include First Commercial Bank, Mega Bank, First Commercial Bank, Land Bank of Taiwan and Standard Chartered Bank 。 Note 2 ： Participating banks in the joint loan include Mega Bank, Taiwan Cooperative Bank, Land Bank of Taiwan, Bank of Taiwan, Chang Hwa Commercial Bank, Ltd., Cathay United Bank, JIH SUN INTERNATIONAL BANK, E.SUN COMMERCIAL BANK, LTD., The Shanghai Commercial & Savings Bank, Ltd., Bank SinoPac, O-Bank, Far Eastern International Bank Co., Ltd. and King's Town Bank 。

Note 3 ： Participating banks in the joint loan include First Commercial Bank, First Commercial Bank, Bank of Taiwan, Land Bank of Taiwan and Yuanta Commercial Bank Co., Ltd. 。

81

STATEMENT OF OPERATING REVENUE

FOR THE YEAR ENDED DECEMBER 31, 2020

		Expressed in thousands of NT	Expressed in thousands of NT
Item	Description	Amount	Note
Commodity sales revenue	Polarizers for TFT LCD Polarizers for TN/STN LCD	$ 1,954,756 461,911
Total		$ 2,416,667

82

STATEMENT OF COST OF SALES

FOR THE YEAR ENDED DECEMBER 31, 2020

	Expressed in thousands of NT	Expressed in thousands of NT
Item	Amount	Note
Direct consumption of raw materials Raw materials, beginning of year Add: Purchase in the period Less: Raw materials, end of year Transferred to expenses Indirect consumption of raw materials Raw materials, beginning of year Add: Purchase in the period Less: Raw materials, end of year Transferred to expenses Direct Labor Manufacturing expenses Manufacturing cost Add:Work in process, beginning of year Purchase in the period Less:Work in process, end of year Transferred to expenses Cost of finished goods Add:Finished goods, beginning of year Other Less: Finished goods, end of year Transferred to expenses Cost of goods of home-made product Revenue from sale of scraps Reversal of inventory write-down Unamoritized fixed production overheads	$ 304,449 1,362,455 (291,731) (79,676)
	1,295,497
	1,676 24,101 (1,350) (23,630)
	797 223,370 387,004
	1,906,668 434,947 71,282 (390,580) 3,712
	2,026,029 498,640 2,239 (509,552) (2,034)
	2,015,322
	(31,591) (29,690) 18,108
Cost of sales	$ 1,972,149

83

STATEMENT OF MANUFACTURING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2020

				Expressed in thousands of NT	Expressed in thousands of NT	Expressed in thousands of NT
Item	Description	Selling and marketing expenses	Administrative expenses	Research and development expenses	Expected credit impairment loss	Note
Wages and salaries Utilities expense Insurance expenses Taxes	Accounts receivable Minor amount less than 5%	$ 22,708 233 2,672 － 36 － 40,741 36,833 － 9,247	$ 60,681 2,860 6,402 16,166 8,629 － － － － 44,521	$ 25,963 3,103 2,746 － 5,745 10,599 － 1,877 － 1,755	$ － － － － － － － 9,336 －
Depreciation
Test and research expense Commission expense Import /Export expenses Expected credit impairment loss Others
Total		$ 112,470	$ 139,259	$ 51,788	$ 9,336

84