Primax — Audit Report / Information 2020

Dec 25, 2020

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Stock Code:4915

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

With Independent Auditors’ Report for the Years Ended December 31, 2020 and 2019

Address: No. 669, Ruey Kuang Road, Neihu, Taipei Telephone: (02)2798-9008

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

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Table of contents

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

Page

1 2 3 4 5 6 7 8 9 9 9～10 11～31 31～32 33～70 71～72 72 72～73 73 73 73 73～80 80～81 81～82 82 83～84

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Representation Letter

The entities that are required to be included in the combined financial statements of PRIMAX ELECTRONICS LTD. as of and for the year ended December 31, 2020 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, “ Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, PRIMAX ELECTRONICS LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: PRIMAX ELECTRONICS LTD. Chairman: LIANG LI SHENG Date: February 26, 2021

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KPMG

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

Independent Auditors’ Report

To the Board of Directors of PRIMAX ELECTRONICS LTD.:

Opinion

We have audited the consolidated financial statements of PRIMAX ELECTRONICS LTD. (the “Company”) and its subsidiaries (“the Group”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the “ Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants” and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Other Matter

We did not audit the financial statements of certain subsidiaries. Those financial statements were audited by other auditors. Therefore, our opinion, insofar as it relates to those subsidiaries, is based solely on the reports of the other auditors. As of December 31, 2020 and 2019, the assets of these subsidiaries constitute 37% and 49%, respectively, of the consolidated total assets. For the years ended December 31, 2020 and 2019, the operating revenue of these subsidiaries constitute 42% and 51%, respectively, of the consolidated operating revenue.

We did not audit the financial statements of ALT International Co., Ltd (Cayman), which represented the investments accounted for using equity method. Those statements were audited by another auditor, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for ALT International Co., Ltd (Cayman), is based solely on the report of another auditor. The investment in ALT International Co., Ltd (Cayman) accounted for using the equity method both constituted 1% of the consolidated total assets at December 31, 2020 and 2019, and the related share of loss of associates accounted for using equity method constituted (3)% and 0%, respectively, of consolidated profit after tax for the years then ended.

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

4-1

The Company has prepared its parent company only financial statements as of and for the years ended December 31, 2020 and 2019, on which we have issued an unmodified opinion with other matter paragraph.

Key Audit Matters

Key audit matters are those matters that, in our professional judgments, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In our professional judgments, key audit matters to be communicated in the independent auditors’ report are listed below:

1. Evaluation of inventories

Please refer to Note 4(h) “Inventories”, Note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty” , and Note 6(f) “ Inventories” of the consolidated financial statements.

Description of key audit matter:

Inventories of the Group are measured at the lower of cost and net realizable value. Due to the fast high-tech revolution, as well as the advancement of production technologies that may lead dramatic change in customers’ demand, the net realizable value of inventories requires subjective judgments of the management, which is the major source of estimation uncertainty. Therefore, evaluation of inventories is one of the key audit matters for our audit.

How the matter was addressed in our audit:

Our principal audit procedures included: understanding the policies of evaluating the inventories of the Group; inspecting whether existing inventory policies are applied; examine the accuracy of the aging of inventories by sampling and analyze the changes of the aging of inventories; inspecting the reasonableness of the allowance provided for inventory valuation in the past and comparing it to the current year to ensure that the measurements and assumptions are appropriate.

In addition, the consolidated financial statements of certain subsidiaries were audited by other auditors, therefore, we have issued audit instructions to their auditors as guidelines to communicate the above key audit matters with them and reviewed other auditors’ working papers, as well as obtained the feedbacks required in the audit instructions.

2. Impairment assessment of intangible assets

Please refer to Note 4(n) “Impairment of non-financial assets”, Note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty” , and Note 6(m) “ Intangible assets” of the consolidated financial statements.

Description of key audit matter:

In 2014, the Company acquired Tymphany Worldwide Enterprises Ltd. through its subsidiary, Diamond (Cayman) Holdings Ltd.; and in 2019, the Company lost its control over ALT International Co., Ltd (Cayman), recognizing the investment in ALT International Co., Ltd (Cayman) as repurchase after disposal. The transactions metioned above resulted in the Group to recognize its goodwill, technologies, and customer relations, as intangible assets. The rapid industrial transformation and the assessment of impairment contained estimation uncertainty; therefore, the assessment of impairment of intangible assets is one of the key audit matters for our audit.

4-2

How the matter was addressed in our audit:

The principal audit procedures on the assessment of impairment of intangible assets included: evaluating the identification of cash generating units and any indication of impairment relating to intangible assets made by the management; acquiring intangible evaluation reports from external expert engaged by the Group; appointing our internal expert to review the evaluation reports and assessing the reasonability of measurements, parameters, and assumptions; evaluating the operation outcomes and comparing them to the past forecasts; making sensitivity analysis for evaluation of impairment losses and evaluating the completeness of disclosure in the consolidated financial reports.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretations as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are 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 the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

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

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

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

4-3

1. 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 Group’s ability 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 consolidated 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 the Group to cease to continue as a going concern.

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

3. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated 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 report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are MEI-PIN WU and CHILUNG YU.

KPMG

Taipei, Taiwan (Republic of China) February 26, 2021

Notes to Readers

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

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

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1137 Current financial assets at amortized cost (note 6(d)) 1170 Notes and accounts receivable, net (notes 6(e) and (w)) 1180 Accounts receivable from related parties, net (notes 6(e), (w) and 7) 1200 Other receivables (note 6(e)) 1310 Inventories (note 6(f)) 1470 Other current assets (note 8) Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (note 6(c)) 1550 Investments accounted for using equity method (notes 6(g) and (h)) 1600 Property, plant and equipment (notes 6(j) and 8) 1755 Right-of-use assets (note 6(k)) 1760 Investment property (note 6(l)) 1780 Intangible assets (note 6(m)) 1840 Deferred tax assets (note 6(s)) 1990 Other non-current assets (note 8) Total assets	December 31, 2020 Amount % $ 6,935,353 15 313,758 1 855,238 1 13,578,841 29 198,189 - 1,349,362 3 10,247,463 22 1,631,887 4 35,110,091 75 121,672 - 536,303 1 6,542,015 14 1,568,052 3 33,826 - 2,370,578 5 658,289 1 366,256 1 12,196,991 25 $ 47,307,082 100	December 31, 2019 Amount % 6,700,510 13 187,016 - - - 19,197,355 36 180,471 - 1,049,016 2 10,493,246 20 1,515,598 3 39,323,212 74 106,535 - 904,753 2 7,363,740 14 1,843,153 3 34,289 - 2,501,156 5 711,859 1 357,257 1 13,822,742 26 53,145,954 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (notes 6(n) and 8) 2120 Current financial liabilities at fair value through profit or loss (note 6(b)) 2170 Notes and accounts payable 2200 Other payables 2201 Salaries payable 2280 Current lease liabilities (note 6(p)) 2300 Other current liabilities (note 6(w)) 2320 Long-term borrowings, current portion (notes 6(o) and 8) 2365 Current refund liabilities Non-Current liabilities: 2540 Long-term borrowings (notes 6(o) and 8) 2580 Non-current lease liabilities (note 6(p)) 2630 Long-term deferred revenue (note 6(j)) 2600 Other non-current liabilities (notes 6(r) and (s)) Total liabilities Equity attributable to owners of parent: 3110 Ordinary shares (note 6(t)) 3200 Capital surplus (note 6(t)) 3310 Legal reserve (note 6(t)) 3320 Special reserve (note 6(t)) 3350 Unappropriated retained earnings (notes 6(c) and (t)) 3400 Other equity interest (notes 6(c) and (h)) 36XX Non-controlling interests(note 6(i)) Total equity Total liabilities and equity	December 31, 2020		December 31, 2019 Amount % 1,092,126 2 207,211 - 23,744,889 45 4,825,106 9 1,522,052 3 278,609 - 312,761 1 27,777 - 1,552,275 3 33,562,806 63 150,529 - 1,195,744 2 2,960,815 6 772,420 2 5,079,508 10 38,642,314 73 4,485,808 8 1,483,045 3 1,370,470 3 662,348 1 5,500,198 10 (1,193,867) (2) 2,195,638 4 14,503,640 27 53,145,954 100
			Amount %
			$ 905,059 2 432,171 1 19,001,057 40 3,949,527 8 1,131,626 2 271,483 1 753,750 2 74,833 - 1,421,407 3 27,940,913 59 680,626 1 981,436 2 1,499,072 3 704,445 2 3,865,579 8 31,806,492 67 4,508,983 10 1,567,628 3 1,578,473 3 1,058,941 2 5,733,458 12 (1,159,650) (2) 2,212,757 5 15,500,590 33 $ 47,307,082 100

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

4000 Operating revenue (notes 6(w) and 7) 5000 Operating costs (notes 6(f), (p), (r), (x), 7 and 12) Gross profit from operation Operating expenses (notes 6(m), (p), (r), (u), (x) and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss (Reversal of expected credit loss) (note 6(e)) Total operating expenses Net operating income Non-operating income and expenses: 7100 Interest income 7010 Other income (notes 6(q) and (y)) 7020 Other gains and losses (notes 6(g), (h), (j) and (z)) 7060 Share of loss of associates accounted for using equity method (note 6(g)) 7050 Finance costs (note 6(p)) Total non-operating income and expenses Profit before tax 7950 Less: Income tax expenses (note 6(s)) Profit 8300 Other comprehensive income (loss): 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Losses on remeasurements of defined benefit plans (note 6(r)) 8316 Unrealized losses from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences on translation of foreign operation’s financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income after tax Comprehensive income Profit attributable to: 8610 Owners of parent 8620 Non-controlling interests (note 6(i)) Comprehensive income attributable to: 8710 Owners of parent 8720 Non-controlling interests (note 6(i)) Earnings per share (note 6(v)) 9710 Basic earnings per share (NT dollars) 9810 Diluted earnings per share (NT dollars)	2020 Amount % $ 68,240,939 100 60,129,865 88 8,111,074 12 1,354,432 2 1,910,310 3 2,555,565 4 (9,030) - 5,811,277 9 2,299,797 3 141,456 - 13,127 - 292,611 1 (84,179) - (184,375) - 178,640 1 2,478,437 4 534,170 1 1,944,267 3 (4,533) - (13,757) - - - (18,290) - 13,627 - - - 13,627 - (4,663) - 1,939,604 3 1,919,265 3 25,002 - 1,944,267 3 1,927,312 3 12,292 - $ 1,939,604 3 $ 4.30 $ 4.27	2019 Amount % 80,649,608 100 71,218,592 88 9,431,016 12 1,503,193 2 2,145,717 3 2,968,221 4 51,258 - 6,668,389 9 2,762,627 3 120,338 - 8,960 - 241,454 1 (11,067) - (208,411) - 151,274 1 2,913,901 4 650,982 1 2,262,919 3 (2,146) - (17,148) - - - (19,294) - (525,368) (1) - - (525,368) (1) (544,662) (1) 1,718,257 2 2,134,870 3 128,049 - 2,262,919 3 1,644,893 2 73,364 - 1,718,257 2 4.80
		4.77

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2019 Profit Other comprehensive income Comprehensive income Appropriation and distribution of retained earnings: Appropriated legal reserve Appropriated special reserve Cash dividends of ordinary share Changes in shares of investment accounted for using equity method Amortization expense of restricted stock Retirement of restricted stock Change in non-controlling interests Issuance of restricted stock Disposal of investments in equity instruments designated at fair value through other comprehensive income Derecognition of non-controlling interest due to disposal of subsidiaries Balance at December 31, 2019 Profit Other comprehensive income Comprehensive income Appropriation and distribution of retained earnings: Appropriated legal reserve Appropriated special reserve Cash dividends of ordinary share Changes in shares of investment accounted for using equity method Amortization expense of restricted stock Retirement of restricted stock Issuance of restricted stock Balance at December 31, 2020							Equity attributable to ow	Equity attributable to ow	Equity attributable to ow		ners of parent						Total equity attributable to owners of parent	Non- controlling interests	Total equity
	Ordinary shares		Capital surplus			R	etained earnings				O	t	her equity intere	st
											Exchange differences on translation of financial statements		Unrealized gains (losses) from financial assets at fair value through other comprehensive income	Unearned employee compensation
					Legal reserve		Special reserve	Unappropriated retained earnings
	$ 4,474,523 - - - - - - - - (6,915) - 18,200 - - 4,485,808 - - - - - - - - (1,225) 24,400 $ 4,508,983		1,377,077		1,187,783		299,065		5,038,483		(560,182) - (470,683) (470,683) - - - - - - - - - - (1,030,865) - 26,337 26,337 - - - - - - - (1,004,528)		(102,166) - (17,148) (17,148) - - - 38,540 - - - - 52,698 - (28,076) - (13,757) (13,757) - - - - - - - (41,833)		(88,762) - - - - - - - 61,099 9,763 - (117,026) - - (134,926) - - - - - - - 117,593 7,975 (103,931) (113,289)		11,625,821	3,344,297 128,049 (54,685) 73,364 - - - 4,138 - - (42,152) - - (1,184,009) 2,195,638 25,002 (12,710) 12,292 - - - 4,827 - - - 2,212,757	14,970,118
			- -		- -		- -												2,262,919 (544,662)
			-		-		-												1,718,257
					182,687 - - - - - - - - -		- 363,283 - - - - - - - -												- - (1,072,341) 52,668 61,099 - (42,152) - - (1,184,009)
					1,370,470 - -		662,348 - -												14,503,640 1,944,267 (4,663)
					-		-												1,939,604
					208,003 - - - - - -		- 396,593 - - - - -												- - (1,076,876) 16,629 117,593 - -
					1,578,473		1,058,941												15,500,590

See accompanying notes to consolidated financial statements.

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

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation and Amortization expense Loss related to inventories Expected credit loss (reversal) Interest expense Interest income Compensation cost of share-based payment Impairment loss of associates amounted for using equity method Share of loss of associates accounted for using equity method Loss (gain) on disposal of property, plant and equipment Loss on disposal of subsidiaries Impairment loss of property, plant and equipment Other Total adjustments to reconcile profit Changes in operating assets and liabilities: Financial assets at fair value through profit or loss Financial assets measured at amortized cost Notes and accounts receivable Accounts receivable from related parties Other receivables Inventories Other current assets Other operating assets Changes in operating assets Financial liabilities at fair value through profit or loss Notes and accounts payable Salaries payable Accounts payable to related parties Other payables Other current liabilities Refund liabilities Other operating liabilities Changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Net cash flows from loss control of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Dividends received Acquisition of unamortized expense Other non-current assets Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term borrowings Increase in long-term borrowings Increase (decrease) in guarantee deposits received Payment of lease liabilities Cash dividends Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 $ 2,478,437 2,229,636 284,439 (9,030) 176,799 (141,456) 134,222 279,716 84,179 116,532 - 56,507 (1,083) 3,210,461 (126,742) (855,238) 5,629,639 (17,718) (308,306) (38,656) (122,121) 1,014 4,161,872 224,960 (4,743,832) (390,426) - (135,168) 175,762 (130,868) (523,077) (5,522,649) (1,360,777) 1,849,684 4,328,121 141,456 (176,725) (331,847) 3,961,005 (28,894) - - - (3,089,333) 400,410 (4,169) 191 (74,121) - (2,795,916) (187,067) 577,153 - (287,843) (1,076,876) (974,633) 44,387 234,843 6,700,510 $ 6,935,353	2019 2,913,901 2,190,317 349,962 51,258 203,047 (120,338) 75,227 - 11,067 (34,144) 275,306 - -
		3,001,702
		(71,408) - (3,110,708) (79,852) (11,134) (3,326,852) (993,890) (14,412)
		(7,608,256)
		187,231 5,449,971 381,195 (45,328) 500,638 (62,304) 457,442 2,048,913
		8,917,758
		1,309,502
		4,311,204
		7,225,105 120,338 (202,975) (514,457)
		6,628,011
		(33,273) 214,202 2,016 (131,285) (3,559,181) 74,349 (53,170) 214 (91,905) (886)
		(3,578,919)
		125,268 88,002 52,001 (249,186) (1,114,493)
		(1,098,408)
		(240,632)
		1,710,052 4,990,458
		6,700,510

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

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

(1) Company history

PRIMAX ELECTRONICS LTD. (the “Company”), formerly known as Hong Chuan Investments Ltd., was incorporated on March 20, 2006, and registered under the Ministry of Economic Affairs, ROC. The Company changed its name to Hong Chuan Electronics Ltd. and Primax Electronics Ltd. in October 2007 and February 2008, respectively. The address of the Company’s registered office is No. 669, Ruey Kuang Road, Neihu, Taipei.

Primax Electronics Holdings, Ltd. (Primax Holdings, formerly known as Apple Holdings Ltd.) acquired all shares of the Company from YWAN PANG Management Limited on April 2, 2007. The investment was approved by the Investment Commission, Ministry of Economic Affairs. However, all shares of the Company were sold by Primax Holdings to its stockholders in October 2009.

Based on the resolution approved by the Company’ s board of directors on November 5, 2007, the Company resolved to acquire and merge with Primax Electronics Ltd. (“Primax”, a listed company) on December 28, 2007. The Company is the surviving company, and Primax was dissolved upon completion of the merger.

The consolidated financial statements of the Company as at and for the year ended December 31, 2020, comprised the Company and subsidiaries (together referred to as “ the Group” ). The major business activities of the Group were the manufacture and sale of multi-function printers, scanners, digital camera modules, computer mice, keyboards, track pads, mobile phone accessories, consumer electronics products, shredders, amplifiers, speakers, audio systems and related parts, as well as other electronic components. Please refer to note 14 for further information.

The Company’ s common shares were registered with the Financial Supervisory Commission, ROC (“FSC”) on June 22, 2012, and listed on the Taiwan Stock Exchange (“TWSE”) on October 5, 2012.

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

The consolidated financial statements were authorized for issuance by the board of directors on February 26, 2021.

(3) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2020:

• ●Amendments to IFRS 3 “Definition of a Business”

• ●Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform”

• ●Amendments to IAS 1 and IAS 8 “Definition of Material”

(Continued)

10

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• ●Amendments to IFRS 16 “COVID-19-Related Rent Concessions”

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

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its consolidated financial statements:

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

• －

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

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

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

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

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

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

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

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

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• －

• ●Amendments to IAS 16 “Property, Plant and Equipmentt Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018-2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

11

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies:

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

(a) Statement of compliance

These consolidated annual financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“ the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed by the FSC (“the IFRSs endorsed by the FSC”).

(b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on a historical cost basis:

• 1) Financial instruments at fair value through profit or loss are measured at fair value;

• 2) Financial assets at fair value through other comprehensive income are measured at fair value;

• 3) The defined benefit liabilities are measured at fair value of plan assets, less the present value of the defined benefit obligation.

• (ii) Functional and presentation currency

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

(c) Basis of consolidation

• (i) Principles of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(Continued)

12

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any differences between the Group’s share of net assets before and after the change and any consideration received or paid are adjusted to equity attributable to stockholders of the Company.

When the Group loses control over a subsidiary, it derecognizes the assets (including any goodwill) and liabilities of the subsidiary, and any related non-controlling interests at their carring amounts at the date when control is lost. Any interest retained in the former subsidiary is measured at fair value when control is lost, with the resulting gain or loss being recognized in profit or loss. The Group recognizes as gain or loss in profit or loss the difference between (i) the fair value of the consideration received as well as any investment retained in the former subsidiary at its fair value at the date when control is lost ;and (ii) the assets (including any goodwill), liabilities of the subsidiary as well as any related non-controlling interests at their carrying amounts at the date when control is lost. When the Group loses control of its subsidiary, it accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if it had directly disposed of the related assets or liabilities.

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

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

Name of investor The Company The Company The Company The Company The Company The Company The Company The Company Primax Cayman	Name of subsidiary	Principal activities Holding company Holding company Holding company Market development and customer service Holding company Market development and customer service Holding company Holding comapny Holding company and customer service	Percentage of shareholding December 31, 2020 December 31, 2019 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
			December 31, 2020 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
	Primax Industries (Cayman Holding) Ltd. (Primax Cayman) Primax Technology (Cayman Holding) Ltd. (Primax Tech.) Destiny Technology Holding Co., Ltd. (Destiny BVI.) Primax Destiny Co., Ltd. (Destiny Japan) Diamond (Cayman) Holdings Ltd. (Diamond) Gratus Technology Corp. (Gratus Tech.) Primax AE (Cayman) Holdings Ltd. (Primax AE) Primax Electronics (Singapore) Pte. Ltd. (Primax Singapore) Primax Industries (Hong Kong) Ltd. (Primax HK)

(Continued)

13

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

			Percentage of	Percentage of	Percentage of
			shareholding
Name of		Principal	December		December
investor	Name of subsidiary	activities	31, 2020		31, 2019		Description
Primax HK	Dongguan Primax Electronic &	Manufacture of	100.00	%	100.00	%
and Primax Tech.	Telecommunication Products Ltd.	multifunctional
	(PCH2)	peripherals,
		computer mice,
		mobile phone
		accessories,
		consumer
		electronics
		products, and
		shredders
Primax HK	Primax Electronics (Kun Shan)	Manufacture of	100.00	%	100.00	%
	Corp., Ltd. (PKS1)	computer,
		peripherals and
		keyboards
Primax HK	Primax Electronics (Chongqing)	Manufacture of	100.00	%	100.00	%
	Corp., Ltd. (PCQ1)	computer
		peripherals and
		keyboards
Primax Tech.	Polaris Electronics Inc. (Polaris)	Sale of multi-	100.00	%	100.00	%
		function printers
		and computer
		peripheral devices
		and market
		development and
		customer service
Destiny BVI.	Destiny Electronic Corp.	Research and	100.00	%	100.00	%
	(Destiny Beijing)	development of
		computer peripheral
		devices and
		software
Primax Singapore	Primax Electronics (Thailand) Co.,	Manufacture and	99.99	%	99.99	%
	Ltd. (Primax Thailand)	sale of computer
		peripheral devices
		and software
Diamond	Tymphany Worldwide Enterprises	Holding company	100.00	%	100.00	%
	Ltd. (TWEL)
TWEL	Tymphany Acoustic Technology	Manufacture,	71.43	%	71.43	%
	(Huizhou) Co., Ltd (Tymphany	research and
	Huizhou)	development,
		design, and sale of
		audio accessories,
		amplifiers and their
		components
Tymphany Huizhou	Tymphany Acoustic Technology	Research and	100.00	%	100.00	%
	HK Ltd. (TYM Acoustic HK)	development,
		design, and sale of
		audio accessories,
		amplifiers and their
		components and
		holdings
Tymphany Huizhou	Dongguan Tymphany Acoustic	Manufacture,	100.00	%	100.00	%
	Technology Co., Ltd. (Tymphany	research and
	Dongguan)	development,
		design and sale of
		audio accessories,
		amplifiers and their
		components

(Continued)

14

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investor TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM HK Tymphany Dongguan	Name of subsidiary	Principal activities Research and development, design of audio accessories, amplifiers and their components Manufacture, install and repair of audio accessories and their components Market development and customer service of amplifiers and their components Sale of audio accessories, amplifiers and their components Research and development, design of audio accessories, amplifiers and their components Manufacture and sales of audio accessories, amplifiers and their components Sale of audio accessories, amplifiers and their components Research and development, design, and sale of audio accessories, amplifiers and their components	Percentage of shareholding December 31, 2020 December 31, 2019 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 99.99 % 99.99 % 100.00 % 100.00 % 100.00 % 100.00
			December 31, 2020 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 99.99 % 100.00 % 100.00
	TYMPHANY ACOUSTIC TECHNOLOGY (UK) LIMITED (TYM UK) Tymphany Acoustic Technology Europe, s.r.o (TYM Acoustic Europe) TYP Enterprise, inc. (TYP) Tymphany HK Ltd. (TYM HK) Tymphany Acoustic Technology Limited (TYM Acoustic) Tymphany Acoustic Technology (Thailand) Co., Ltd (TYTH) TYMPHANY LOGISTICS, INC (TYML) Dong Guan Dong Cheng Tymphany Acoustic Technology Co., Ltd. (TYDC)

(d) Foreign currencies

• (i) Foreign currency transactions

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

(Continued)

15

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Exchange differences are generally recognized in profit or loss, except for the differences relating to an investment in equity securities designated as at fair value through other comprehensive income, which are recognized in other comprehensive income.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency of the consolidated financial statements, New Taiwan Dollar, at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency of the consolidated financial statements, New Taiwan Dollar, at the average rate. Foreign currency differences are recognized in other comprehensive income.

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

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

• (e) Classification of current and non-current assets and liabilities

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

• (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is expected to be realized within twelve months after the reporting period; or

• (iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

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

• (i) It is expected to be settled in the normal operating cycle;

• (ii) It is held primarily for the purpose of trading;

• (iii) It is due to be settled within twelve months after the reporting period; or

(Continued)

16

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iv) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash, cash in bank, and short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Time deposits with maturities within three months or less which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(g) Financial instruments

Accounts receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an account receivable without a significant financing component) or financial liability is initially measured at fair value, plus transaction costs that are directly attributable to its acquisition or issue. A accounts receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets classified as the same categories are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at amortized cost; Fair value through other comprehensive income (FVOCI) ; or fair value through profit or loss (FVTPL).

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

• 1) Financial assets measured at amortized cost

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

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(Continued)

17

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

• 2) Fair value through other comprehensive income (FVOCI)

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

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

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

• 4) Assemessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, principal is defined as the fair value of the financial assets on initial recognition. Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

• ‧ contingent events that would change the amount or timing of cash flows;

• ‧ terms that may adjust the contractual coupon rate, including variable rate features;

(Continued)

18

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

‧ prepayment and extension features; and

‧ terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).

• 5) Impairment of financial assets

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

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

‧ Bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

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

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

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

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

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

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 61 days past due.

The Group considers a financial asset to be in default when the financial asset is more than 361 days past due or the borrower is unlikely to pay its credit obligations to the Group in full.

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

(Continued)

19

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

At each reporting date, the Group assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

• ‧ significant financial difficulty of the borrower or issuer;

• ‧ a breach of contract such as a default or being more than 361 days past due;

• ‧ the lender of the borrower, for economic or contractual reasons relating to the borrower’ s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• ‧ it is probable that the borrower will enter bankruptcy or other financial reorganization; or

‧ the disappearance of an active market for a security because of financial difficulties.

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

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

6) Derecognition of financial assets

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

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

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

(Continued)

20

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Equity instrument

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

3) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

4) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expired. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

• 5) Offsetting of financial assets and liabilities

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

• (iii) Derivative financial instruments

The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

(h) Inventories

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

(Continued)

21

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(i) Investment in associates

Associates are those entities in which the Group has significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Group’ s share of the profit or loss and other comprehensive income of associates, after adjustments to align their accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes of the Group’s shareholding percentage in the associate, the Group recognizes equity changes attributable to the Group by its shareholding percentage as capital surplus.

Unrealized Gains and losses resulting from transactions between the Group and an associate are recognized only to the extent of unrelated party’s interests in the associate.

When the Group’s share of losses exceeds its interests in an associate, the carrying amount of the investment, including any long term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent the Group has an obligation or has made payments on behalf of its associates.

The Group shall discontinue the use of the equity method from the date when its investment ceases to be an associate. The Group shall measure the retained interest at fair value. The difference between the fair value of retained interest and proceeds from disposal, and the carrying amount of the investment at the date the equity method was discontinued, is recognized in profit or loss. The Group shall account for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if its associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss on the disposal of the related assets or liabilities, the entity shall reclassify the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

(j) Investment property

Investment property is the property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, for use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value, which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

(Continued)

22

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Rental income from investment property is recognized as other income on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

• (k) Property, plant and equipment

• (i) Recognition and measurement

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

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

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

• (ii) Subsequent expenditure

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

• (iii) Depreciation

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

Land has an unlimited useful life, and therefore is not depreciated.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

• 1) Buildings, leasehold improvement, and additional equipment: 1 ~ 51 years

• 2) Machinery and equipment: 1 ~10 years

• 3) Office and other equipment: 1 ~5 years

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

• (iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner occupied to investment property.

(Continued)

23

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Lease

(i) Identifying a lease

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

• 1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and

• 2) the customer has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• 3) the customer has the right to direct the use of the asset throughout the period of use only if either:

• － the customer has the right to direct how, and for what purpose, the asset is used throughout the period of use; or

• － the relevant decisions about how, and for what purpose, the asset is used are predetermined and:

  • the customer has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or

  • the customer designed the asset in a way that predetermines how, and for what purpose, it will be used throughout the period of use.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and accounted for the lease and nonlease components as a single lease component.

• (ii) As a lessee

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

(Continued)

24

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

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

• 1) fixed payments, including in-substance fixed payments;

• 2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• 3) amounts expected to be payable under a residual value guarantee; and

• 4) payments for purchase or termination options that are reasonably certain to be exercised or penalty should be paid.

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

• 1) there is a change in future lease payments arising from the change in an index or rate; or

• 2) there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or

• 3) there is a change of its assessment on purchase option; or

• 4) there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or

• 5) there is any lease modifications

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

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

(Continued)

25

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of machinery and other equipment that have a short-term leases and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a practical expedient, the Group elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

• 1) the rent concessions occurring as a direct consequence of the COVID-19 pandemic;

• 2) the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

• 3) any reduction in lease payments affects only payments originally due on or before June 30, 2021; and

• 4) there is no substantive change to other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

• (ii) As a lessor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS15 to allocate the consideration in the contract.

The Group recognizes lease payments received under operating leases as income on a straightline basis over the lease term.

(Continued)

26

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Intangible assets

• (i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

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

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

Other intangible assets, including customer relationships, technology, patents and trademarks, that are acquired by the Group and have finite useful lives, are measured at cost, less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

• (iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

1) Customer relationships 10 years 2) Technology 10 years 3) Trademarks 10 years 4) Patents 2.5~10 years 5) Copyrights 15 years

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

(Continued)

27

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Impairment of non-financial assets

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

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

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

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

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

(o) Revenue from contracts with customers

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

(i) Sale of goods

The Group manufactures computer peripherals and non-computer peripherals and sales them to customers. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

(Continued)

28

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group often offers discounts to its customers based on aggregate sales of components. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate the discounts, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A refund liabilities is recognized for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales of components are made with a credit term of 45 days to 90 days, which is consistent with the market practice.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(ii) Rendering of services

The Group provides services, such as model research, development, and design to customers. Revenue from providing services is recognized in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognized based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided.

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

(iii) Financing components

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

(p) Deferred grant revenue

Deferred grant revenue with additional conditions shall be recognized if the Group fulfills the conditions and the grant revenue becomes receivable.

Deferred grant revenue shall be recognized in profit or loss on a systematic basis in the periods in which the expenses it is to compensate are recognized. Grant revenue with conditions to compensate for the acquisition cost of an asset shall be deferred and recognized in profit or loss on a systematic basis over the useful life of the asset.

If the deferred grant revenue is to compensate for the Group’s expenses that have been incurred or to supply immediate financial support to the Group and there is no related cost in the future, it shall be recognized in profit or loss when the grant revenue becomes receivable.

(Continued)

29

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(q) Employee benefits

(i) Defined contribution plans

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

(ii) Defined benefit plans

The Group’s net obligation in respect of the defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability (asset), which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as related service are provided.

A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(r) Share-based payment

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

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

(Continued)

30

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Grant date of a share-based payment award is the date which the board of directors authorized the price and number of shares that employees can subscribe for.

• (s) Income taxes

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

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

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

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

• (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill.

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

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

• (i) the Group has a legally enforceable right to set off current tax assets against current tax liabilities; and

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity; or

• 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(Continued)

31

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

(t) Earnings per share

The Group discloses the basic and diluted earnings per share attributable to ordinary stockholders of the Company. Basic earnings per share is calculated as the profit attributable to the ordinary stockholders of the Company divided by the weighted-average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary stockholders of the Company divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Dilutive potential ordinary shares comprise employee stock options, employee remuneration, and restricted stock.

(u) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

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

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

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

Information about critical judgments made in applying the accounting policies that have significant effects on amounts recognized in the consolidated financial statements is as follows:

• (a) Judgment of whether the Group has substantive control over its investees

The Group holds 37% of the outstanding voting shares of ALT International Co., Ltd. (AIC), but the Group did not obtain any director seats of AIC, and the chairman of AIC controls 45% of voting shares. Therefore, the Group does not have power of control over relevant activities of AIC, but remains significant influence.

(Continued)

32

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. Those assumptions and estimation have been updated to reflect the impact of COVID-19 pandemic:

(a) Valuation of inventories

As inventories are measured at the lower of cost or net realizable value, the Group estimates the amount due to inventories’ obsolescence and unmarketable items at the reporting date and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Please refer to note 6(f) for valuation of inventories.

(b) Assessment of impairment of intangible assets (including goodwill)

The assessment of impairment of intangible assets required the Group to make subjective judgments on cash-generating units, allocate the intangible assets to relevant cash-generating units, and estimate the recoverable amount of relevant cash-generating units. Changes in economic conditions or changes in assessment caused by business strategies could result in significant impairment charges or reversal in future years.

The Group’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit and loss. The Group has established an internal control framework with respect to the measurement of fair value and regularly reviews significant unobservable inputs and valuation adjustments. If third-party information, such as broker quotes or pricing services, is used to measure fair value, then the Group assessed the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRSs, including the level in the fair value hierarchy in which such valuations should be classified.

The Group strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

Level 1:quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

Level 2:inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).

Level 3:inputs for the assets or liability that are not based on observable market data.

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

(Continued)

33

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash on hand Demand accounts and checking deposits Time deposits Cash and cash equivalents in the consolidated statements of cash flows	December 31, 2020 $ 7,750 4,417,720 2,509,883 $ 6,935,353	December 31, 2019
		5,260 5,531,016 1,164,234
		6,700,510

Please refer to note 6(aa) for the currency risk and the interest rate risk of the Group’s cash and cash equivalents.

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

• (i) Details of financial instruments were as follows:

Mandatorily measured at FVTPL: Derivative instruments not used for hedging Forward exchange contracts Foreign exchange swap contracts Financial liabilities held-for-trading: Derivative instrument not used for hedging Forward exchange contracts Foreign exchange swap contracts	December 31, 2020 $ 67,252 246,506 $ 313,758 December 31, 2020 $ (399,762) (32,409) $ (432,171)	December 31, 2019 82,870 104,146 187,016 December 31, 2019 (193,946) (13,265) (207,211)

(Continued)

34

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ii) The Group held the following derivative instruments as mandatorily measured at fair value through profit or loss and held-for-trading financial liabilities, without the application of edge accounting, as of December 31, 2020 and 2019:

	December 31, 2020	Maturity date Predetermined rate January 6, 2021~ June 23, 2021 27.150~28.942 January 13, 2021~ January 28, 2021 28.490~28.501 January 4, 2021~ May 19. 2021 6.5273~6.6415 January 6, 2021~ June 23, 2021 28.075~29.424 Maturity date Predetermined rate January 2, 2020~ June 29, 2020 29.575~31.260 January 2, 2020~ March 30, 2020 29.996~30.776 January 3, 2020~ March 25, 2020 6.9800~7.1710 February 26, 2020 31.288 January 6, 2020~ June 23, 2020 29.754~30.859 January 3, 2020~ January 7, 2020 7.0026~7.0036
Derivative financial instruments	Nominal amount (inthousands)
Forward exchange contracts －buy USD / sell TWD Forward exchange contracts －buy TWD / sell USD Forward exchange contracts －buy CNY/ sell USD Foreign exchange swap contracts －swap in TWD / swap out USD	USD 764,000 USD 11,500 USD 262,300 USD 593,000 December 31, 2019
Derivative financial instruments	Nominal amount (inthousands)
Forward exchange contracts －buy USD / sell TWD Forward exchange contracts －buy TWD / sell USD Forward exchange contracts －buy CNY/ sell USD Foreign exchange swap contracts －swap in USD/ swap out TWD Foreign exchange swap contracts －swap in TWD / swap out USD Foreign exchange swap contracts －swap in CNY/ swap out USD	USD 511,000 USD 106,000 USD 197,700 USD 10,000 USD 269,000 USD 11,000

(iii) Please refer to note 6(aa) for the liquidity risk of the Group’s financial instruments.

(Continued)

35

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (c) Financial assets at FVOCI

Equity investments at FVOCI Stocks unlisted in domestic markets–WK Technology Fund IV Ltd. Stocks unlisted in domestic markets–Changing Information Technology Inc. Stocks unlisted in domestic markets–Syntronix Corp. Equities unlisted in foreign markets–Grove Ventures L.P. Equities unlisted in foreign markets–Grove Ventures II, L.P. Stocks unlisted in foreign markets–WK Global Investment III Ltd. Total	December 31, 2020 December 31, 2019 $ 1,263 1,076 6,002 2,102 49 49 60,722 55,094 26,227 7,226 27,409 40,988 $ 121,672 106,535	December 31, 2020 December 31, 2019 $ 1,263 1,076 6,002 2,102 49 49 60,722 55,094 26,227 7,226 27,409 40,988 $ 121,672 106,535
		1,076 2,102 49 55,094 7,226 40,988
		106,535

• (i) The Group designated the investments above as equity securities as at FVOCI because these equity securities represent those investments that the Group intends to hold for long-term for strategic purposes and not for sale.

• (ii) During the years ended December 31, 2020 and 2019, the dividends of $191 and $214, respectively, related to equity investments at FVOCI held were recognized.

• (iii) As a result of enhancing its working capital, the Group sold 5,338 thousand of its shares in Global TEK, with the fair values of $214,202, resulting in the losses of $52,698 for the year ended December 31, 2019. Losses had been recognized as other equity interests, and later on, reclassified to retained earnings.

• (iv) Grove Venture, L.P executed capital increases, wherein the Group had participated and invested the amounts of $9,006 and $25,953 in the years ended December 31, 2020 and 2019, respectively.

• (v) The Group invested the amount of $7,320 in an unlisted company, Grove Ventures II, L.P., for the year ended December 31, 2019. Thereafter, the Group had participated in its capital increase and invested the amount of $19,888 for the year ended December 31, 2020.

• (vi) WK Global Investment III Ltd. refunded the amount of $2,016 to the Group due to its capital reduction in June 2019.

• (vii) The Group did not provide any of the aforementioned financial assets as collateral.

(Continued)

36

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (d) Financial assets at amortized cost

Foreign time deposits	December 31, 2020 $ 855,238	December 31, 2019
		-

• (i) The Group has assessed that these financial assets are held-to-maturity to collect contractual cash flows, which consist solely of payments of principal and interest on principal amount outstanding. Therefore, these investments were classified as financial assets measured at amortized cost.

• (ii) During the year ended December 31, 2020, the Group held foreign time deposits, with the weighted average interest rate of 1.4%, maturing in June 2021. There was no foreign time deposit in 2019.

• (iii) For credit risk, please refer to note (aa).

• (iv) The Group did not provide any of the aforementioned financial assets as collateral.

• (e) Notes and accounts receivable (including related parties)

Notes and accounts receivable (including related parties)
Notes receivable Accounts receivable Accounts receivable – related parties Less: allowance for doubtful accounts Total	December 31, 2020 $ 5,618 13,615,378 198,189 (42,155) $ 13,777,030	December 31, 2019
		5,250 19,267,830 180,471 (75,725)
		19,377,826

• (i) The Group did not provide any of the aforementioned notes and accounts receivable (including related parties) as collateral.

• (ii) The Group applies the simplified approach to provide for its ECL, the use of lifetime ECL provision for all notes and accounts receivables. To measure the ECL, notes and accounts receivable have been grouped based on shared credit risk characteristics and customer’s ability to pay all the amounts due based on the terms of the contract as well as incorporated forward looking information, including macroeconomic and relevant industry information. The ECL allowance provision analysis was as follows:

(Continued)

37

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Current 0 to 30 days past due 31 to 60 days past due 61 to 90 days past due 91 to 180 days past due 181 to 360 days past due More than 361 days past due Current 0 to 30 days past due 31 to 60 days past due 61 to 90 days past due 91 to 180 days past due 181 to 360 days past due More than 361 days past due	December 31, 2020	December 31, 2020
	Carrying amounts of notes and accounts receivable (including related parties) Lifetime ECL rate $ 12,834,801 0%~0.04% 924,894 0%~3.4% 44,042 0%~5% 8,682 0%~10% 4,067 0%~25% - 0%~80% 2,699 0%~100% $ 13,819,185 December 31, 2019		Loss allowance provision of lifetime ECL
			5,505 31,282 2,202 814 325 - 2,027
			42,155
	Carrying amounts of notes and accounts receivable (including related parties) $ 18,107,626 1,266,578 48,325 6,374 11,021 4,145 9,482 $ 19,453,551	Lifetime ECL rate 0%~0.38% 0%~3% 0%~5% 0%~10% 0%~25% 0%~80% 0%~100%	Loss allowance provision of lifetime ECL
			40,506 22,839 1,394 105 1,038 1,144 8,699
			75,725

(iii) The movement in the allowance for notes and accounts receivable (including related parties) was as follows:

Balance on January 1, 2020 and 2019 Impairment losses recognized (reversed) Disposal of subsidiaries Amounts written off Effect of exchange rate changes Balance on December 31, 2020 and 2019	2020 $ 75,725 (9,030) - (22,445) (2,095) $ 42,155	2019 45,467 51,258 (14,861) (4,220) (1,919) 75,725

(Continued)

38

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iv) The Group entered into agreements with banks to sell its accounts receivable without recourse. According to the agreements, within the limit of its credit facilities, the Group does not need to guarantee the capability of its customers to pay for reasons other than commercial disputes when transferring its accounts receivable. The Group receives partial advances upon sales of accounts receivable and pays interest calculated based on the interest rates agreed for the period through the collection of the accounts receivable. The remaining amounts are received upon the collection of the accounts receivable, and are recorded as other receivables. In addition, the Group shall pay handling charges based on a fixed rate. The Group derecognized the above trade receivables because it has transferred substantially all of the risks and rewards of their ownership and it does not have any continuing involvement in them. As of December 31, 2020 and 2019, the details of transferred accounts receivable which conformed to the criteria for derecognition were as follows:

	Decem	ber 31, 2020
Amount Purchaser Derecognized HSBC Bank $ 3,917,358 EnTie Bank 158,092 Bank of Taiwan - Mega International Commercial Bank - $ 4,075,450	Amount A	dvanced Paid 3,416,322 - - - 3,416,322 ber 31, 2019	Amount Recognized in Other Receivables 501,036 158,092 - - 659,128	Range of Interest Rate 0.795%~0.849% - - -	Guarantee (Promissory note)
	Unpaid 382,018 - - - 382,018 Decem
					US$ 37,440 - NT$ 58,000 US$ 3,750
Amount Purchaser Derecognized HSBC Bank $ 1,002,004 EnTie Bank 193,366 Mega International Commercial Bank - $ 1,195,370	Amount A	dvanced Paid 901,804 - - 901,804	Amount Recognized in Other Receivables 100,200 193,366 - 293,566	Range of Interest Rate 2.19%~2.20% - -	Guarantee (Promissory note)
	Unpaid - - - -
					US$ 13,500 - US$ 3,750

• (v) Please refer to note 9 for guarantee notes provided by the Group to sell its accounts receivable.

• (f) Inventories

Raw materials Semi-finished goods and work in process Finished goods and merchandise	December 31, 2020 $ 2,540,293 1,805,774 5,901,396 $ 10,247,463	December 31, 2019
		2,356,395 2,312,106 5,824,745
		10,493,246

(Continued)

39

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group did not provide any of the aforementioned inventories as collateral. Except for cost of inventories sold, the Group recognized the following items as cost of goods sold:

2020 Losses on inventory valuation $ (201,901) Unallocated manufacturing overhead resulting from the actual production being lower than the normal capacity (55,356) Losses on disposal of inventories (32,761) Gains on physical inventories 5,579 $ (284,439)	2019 (244,324) (9,223) (105,102) 8,687 (349,962)

• (g) Investments accounted for using equity method

The Group’s investments accounted for using the equity method are individually insignificant. The related information included in the consolidated financial statements was as follows:

Carrying amount of individually insignificant associates’ equity Attributable to the Group: Loss Other comprehensive income (loss) Comprehensive income (loss)	December 31, 2020 $ 536,303 2020 $ (84,179) (4,556) $ (88,735)	December 31, 2019 904,753 2019 (11,067) (16,701) (27,768)

• (i) In July 2019, AIC held an interim shareholders’ meeting and re-elected its directors, wherein the Group did not obtain more than 50% of its board of directors’ voting rights. Hence, the Group lost its control over AIC, but still retained a significant influence. Thereafter, AIC and its subsidiaries were no longer included in the Group’s consolidated financial statements; thus, they were reclassified to investments accounted for using the equity method. Please refer to note 6(h) for relative information.

• (ii) As of December 31, 2020, the revenue of AIC did not turn out as expected due to intensive industrial competition, resulting in the impairment of the intangible assets and carrying amounts related to this equity investment after the Group’s evaluation, the Group recognized impairment loss of $279,716 under other gains and losses.

(iii) The Group did not provide any investment accounted for using equity method as collateral.

(Continued)

40

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Loss control of subsidiaries

In July 2019, AIC held an interim shareholders’ meeting and re-elected its directors, wherein the Group did not obtain more than 50% of its board of directors’ voting rights. Therefore, the Group lost its control over AIC, but still retained significant influence. Thereafter, AIC and its subsidiaries were no longer included in the Group’ s consolidated financial statements; hence, they were reclassified to investments accounted for using the equity method. Due to the loss of its control over AIC, the Group remeasured its 37% shares in AIC amounting to $932,522 at fair value, resulting in a revaluation loss of $297,377 to be recognized in July 2019. Additionally, the Group reclassified the exchange differences on translation of foreign operation’s financial statements of $4,071 from other equity interest to other income. The Group recorded the net losses of its disposals amounting to $275,306 under other gains and losses.

The carrying amount of assets and liabilities of AIC and its subsidiaries on July 2019 were as follow:

Cash	$	131,285
Notes and accounts receivable		685,683
Inventories		243,977
Other current assets		83,045
Property, plant and equipment		460,424
Intangible assets		1,763,938
Deferred tax assets		29,774
Right-of-use assets		131,996
Other non-current assets		31,029
Short-term borrowings		(235,707)
Notes and accounts payable		(201,424)
Other current liabilities		(83,485)
Deferred tax liabilities		(273,288)
Lease liabilities		(93,980)
Other non-current liabilities		(216,309)
Non- controlling interest		(453)
Carrying amount of net assets	$	2,456,505

(Continued)

41

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Material non-controlling interests of subsidiaries

The material non-controlling interests of subsidiaries were as follows:

Name of subsidiaries	Main operation place Business/Registered Country	Proportion of Ownership and Voting Rights Held by Non- controlling Interests December 31, 2020 December 31, 2019 % 28.57 % 28.57

The following information on the aforementioned subsidiaries have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Included in these information are the fair value adjustment made during the acquisition and relevant difference in accounting principles between the Group as at the acquisition date. Intra-group transactions were not eliminated in this information.

• (i) Tymphany Huizhou and its subsidiaries’s collective financial information:

Current assets $ Non-current assets Current liabilities Non-current liabilities Net assets $ Non-controlling interests $ Operating revenue $ Profit $ Other comprehensive income (loss) Comprehensive income $ Profit attributable to non-controlling interests $ Comprehensive income attributable to non-controlling interests $ Cash flows from operating activities Cash flows used in investing activities Cash flows from financing activities Effect of exchange rate changes Net increase (decrease) in cash and cash equivalents Dividends paid to non-controlling interests	December 31, 2020 13,510,184 6,161,757 (10,030,285) (1,896,051) 7,745,605 2,212,757 2020 28,404,163 87,518 (44,105) 43,413 25,002 12,292 2020 $ 1,307,136 (1,978,242) 9,621 (46,872) $ (708,357) $ -	December 31, 2019 20,221,838 7,069,414 (18,685,167) (920,404) 7,685,681 2,195,638 2019 40,930,219 862,711 (203,331) 659,380 246,459 188,263 2019 2,423,821 (1,778,717) 451,846 (42,790) 1,054,160 42,152

(Continued)

42

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Property, plant and equipment

The cost, depreciation, and impairment loss of the property, plant and equipment of the Group for the years ended December 31, 2020 and 2019, were as follows:

Cost or deemed cost: Balance on January 1, 2020 Additions Disposals Reclassifications Effect of changes in exchange rate Balance on December 31, 2020 Balance on January 1, 2019 Additions Disposals Reclassifications Disposals of subsidiaries Effect of changes in exchange rate Balance on December 31, 2019 Depreciation and impairments loss: Balance on January 1, 2020 Depreciation Impairment loss Disposals Effect of changes in exchange rate Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Disposals Reclassifications Disposals of subsidiaries Effect of changes in exchange rate Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019	Land $ 134,701 281 - 187,451 (2,364) $ 320,069 $ 229,801 - - - (95,100) - $ 134,701 $ - - - - - $ - $ - - - - - - $ - $ 320,069 $ 134,701 $ 229,801	Buildings, leasehold improvement, and additional equipment 4,014,529 14,507 (78,283) 68,061 43,838 4,062,652 4,338,669 52,190 (106,387) 119,600 (251,649) (137,894) 4,014,529 2,035,962 259,159 22,574 (71,792) 25,896 2,271,799 1,977,887 264,081 (96,464) (57) (37,809) (71,676) 2,035,962 1,790,853 1,978,567 2,360,782	Machinery and equipment 7,508,088 301,543 (1,389,899) 645,951 79,927 7,145,610 6,925,443 720,596 (877,359) 1,218,764 (152,682) (326,674) 7,508,088 4,894,405 1,144,119 19,198 (1,037,680) 64,173 5,084,215 4,859,380 1,137,385 (851,365) 5,145 (54,638) (201,502) 4,894,405 2,061,395 2,613,683 2,066,063	Office and other equipment 2,089,856 104,913 (1,110,209) 68,661 7,970 1,161,191 770,043 1,231,970 (29,095) 253,113 (51,256) (84,919) 2,089,856 564,123 259,467 14,735 (193,177) 7,097 652,245 483,293 173,396 (26,769) (5,619) (38,188) (21,990) 564,123 508,946 1,525,733 286,750	Construction in progress and testing equipment 1,111,056 1,800,479 (9,167) (1,056,708) 15,092 1,860,752 566,140 2,235,207 (1,962) (1,594,807) (40,372) (53,150) 1,111,056 - - - - - - - - - - - - - 1,860,752 1,111,056 566,140	Total 14,858,230 2,221,723 (2,587,558) (86,584) 144,463 14,550,274 12,830,096 4,239,963 (1,014,803) (3,330) (591,059) (602,637) 14,858,230 7,494,490 1,662,745 56,507 (1,302,649) 97,166 8,008,259 7,320,560 1,574,862 (974,598) (531) (130,635) (295,168) 7,494,490 6,542,015 7,363,740 5,509,536

(i) The unamortized deferred revenue of equipment subsidy amounted to $1,415,511 and $2,876,379 as of December 31, 2020 and 2019, respectively.

(Continued)

43

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ii) The Group lost its control over AIC, resulting in its property, plant and equipment to be derecognized in July 2019. Please refer to note 6(h).

• (iii) The factory of the Group’s subsidiary in China is expected to be relocated to a new site in 2021, where parts of its property, plant and equipment will be disposed, resulting in the Group to measure the carrying amount by using the recoverable amount and recognized impairment loss of $56,507 under other gains and losses.

• (iv) The Group provided the aforementioned property, plant and equipment as collateral; please refer to note 8.

• (k) Right-of-use assets

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

Cost: Balance on January 1, 2020 Additions Disposals Effect of changes in exchange rates Balance on December 31, 2020 Balance on January 1, 2019 Additions Disposals Disposals of subsidiaries Effect of changes in exchange rates Balance on December 31, 2019 Depreciation: Balance on January 1, 2020 Depreciation Disposals Effect of changes in exchange rates Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Disposals Disposals of subsidiaries Effect of changes in exchange rates Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019	Land $ 402,455 - - 3,740 $ 406,195 $ 435,567 19,896 - (39,374) (13,634) $ 402,455 $ 10,627 14,989 - 174 $ 25,790 $ - 11,485 - (464) (394) $ 10,627 $ 380,405 $ 391,828 $ 435,567	Buildings 1,718,180 53,316 - 2,085 1,773,581 1,729,293 171,597 (45,777) (103,760) (33,173) 1,718,180 277,503 315,688 - 3,309 596,500 - 296,287 (1,550) (10,673) (6,561) 277,503 1,177,081 1,440,677 1,729,293	Vehicles 17,685 13,740 (906) 184 30,703 9,269 8,723 - - (307) 17,685 8,753 12,922 (189) 159 21,645 - 8,932 - - (179) 8,753 9,058 8,932 9,269	Other equipment 3,431 4,159 (2,244) 3 5,349 - 3,464 - - (33) 3,431 1,715 3,049 (935) 12 3,841 - 1,736 - - (21) 1,715 1,508 1,716 -	Total 2,141,751 71,215 (3,150) 6,012 2,215,828 2,174,129 203,680 (45,777) (143,134) (47,147) 2,141,751 298,598 346,648 (1,124) 3,654 647,776 - 318,440 (1,550) (11,137) (7,155) 298,598 1,568,052 1,843,153 2,174,129

In July 2019, the Group lost its control over AIC, and derecognized its right-of-use assets; Please refer to note 6(h).

(Continued)

44

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Investment property

Cost or deemed cost: Balance on January 1, 2020 Additions Balance on December 31, 2020 Balance on January 1, 2019 Additions Balance on December 31, 2019 Depreciation and impairment losses: Balance on January 1, 2020 Depreciation Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019 Fair value: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019	Land $ 50,190 - $ 50,190 $ 50,190 - $ 50,190 $ 33,941 - $ 33,941 $ 33,941 - $ 33,941 $ 16,249 $ 16,249 $ 16,249	Buildings and other equipment Total 31,735 81,925 - - 31,735 81,925 31,735 81,925 - - 31,735 81,925 13,695 47,636 463 463 14,158 48,099 13,233 47,174 462 462 13,695 47,636 17,577 33,826 18,040 34,289 18,502 34,751 $ 93,195 $ 92,171 $ 80,905	Total
			81,925 -
			81,925
			81,925 -
			81,925
			47,636 463
			48,099
			47,174 462
			47,636
			33,826
			34,289
			34,751

• (i) The fair value of the investment property is based on the quotation from parties, which is categorized within Level 3.

• (ii) Investment property comprises a number of commercial properties which are leased to third parties. Each of the leases contains an initial non-cancellable period between 1 and 2 years. Subsequent renewals are negotiated with the lessee, and no contingent rents are charged. Please refer to note 6(q) for further information.

• (iii) The Group did not provide any of the aforementioned investment property as collateral.

(Continued)

45

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Intangible assets

The carrying amounts of the intangible assets of the Group for the years ended December 31, 2020 and 2019, were as follows:

Goodwill Customer Relationships Cost or deemed cost: Balance on January 1, 2020 $ 2,035,095 718,800 Effect of changes in exchange rate (9,011) - Balance on December 31, 2020$ 2,026,084 718,800 Balance on January 1, 2019 $ 2,612,461 1,099,859 Acquisition - - Disposal of subsidiaries (574,604) (381,059) Effect of changes in exchange rate (2,762) - Balance on December 31, 2019$ 2,035,095 718,800 Amortization and impairment loss: Balance on January 1, 2020 $ - 429,540 Amortization - 71,880 Effect of changes in exchange rate - - Balance on December 31, 2020$ - 501,420 Balance on January 1, 2019 $ - 379,889 Amortization - 94,108 Disposal of subsidiaries - (44,457) Effect of changes in exchange rate - - Balance on December 31, 2019$ - 429,540 Carrying amounts: Balance on December 31, 2020$ 2,026,084 217,380 Balance on December 31, 2019$ 2,035,095 289,260 Balance on January 1, 2019 $ 2,612,461 719,970	Technology
	357,271 -
	357,271

(i) In 2020 and 2019, the amortizations of intangible assets amounted to $115,656 and $197,333, respectively, recorded as operating expenses.

(ii) The Group lost its control over AIC, resulting in its intangible assets to be derecognized in July 2019. Please refer to note 6(h).

(Continued)

46

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (iii) The Group evaluated the recoverable amounts of its goodwill , which is based on its value-inuse, for impairment testing at each annual reporting date. Value-in-use is based on five years of the estimated future cash flow of the Group, and discounted to their present value using the yearly discount rate, which reflects the risks specific to CGU, by 16.22% and 14.88% for the years ended December 31, 2020 and 2019, respectively. There were no impairment losses of goodwill in 2020 and 2019.

• (iv) The Group did not provide any of the aforementioned intangible assets as collateral.

(n) Short-term borrowings

The details were as follows:

Unsecured bank loans Unused credit lines Annual interest rates	December 31, 2020 $ 905,059 $ 22,857,597 0.70%~0.95%	December 31, 2019
		1,092,126
		19,664,255
		0.60%~4.02%

Please refer to note 8 for further information on assets provided as collateral.

• (o) Long-term borrowings

Unsecured bank loans Less: current portion Unused credit lines		December 31, 2020 Annual interest rate Maturity year Amount 1.46%~1.67% 2023 $ 755,459 (74,833) $ 680,626 $ 2,237,873
	Currency	Annual interest rate
	USD	1.46%~1.67%

Unsecured bank loans Secured bank loans Less: current portion Unused credit lines		December 31, 2019 Annual interest rate Maturity year Amount 1.35% 2020 $ 27,777 3.05% 2021 150,529 (27,777) $ 150,529 $ 451,587
	Currency	Annual interest rate
	TWD USD	1.35% 3.05%

• (i) Please refer to note 9 for the details of the outstanding guarantee notes.

• (ii) Please refer to note 8 for further information on assets provided as collateral.

(Continued)

47

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(p) Lease liabilities

Current Non-current For the maturity analysis, please refer to note6 (aa).	December 31, 2020 $ 271,483 $ 981,436	December 31, 2019
		278,609
		1,195,744

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases and leases of low-value assets Covid-19-related rent concessions (recognized as deduction of rent expenses)	2020 $ 59,421 $ 115,776 $ 1,066	2019
		68,286
		58,056
		-

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

Rental paid in operating activities Interest on lease liabilities paid in operating activities Payment made on lease liabilities in financing activities Total cash outflow for leases	2020 $ (115,776) (59,421) (287,843) $ (463,040)	2019 (58,056) (68,286) (249,186) (375,528)

(i) Real estate leases

The Group leases lands and buildings for its office, staff dormitory, factory facilities and warehouses. The leases typically run for a period of two to fifty years. Some leases require additional rental payments depending on the changes in fair value of the lease assets.

(ii) Other leases

The Group leases vehicles and some of other equipments with lease terms of one to five years.

The Group also leases machineries and some of other equipments with lease terms of one to five years. These leases are short-term or leases of low-value items. The Group decided to apply recognition exemptions, and had elected not to recognize its right-of-use assets and lease liabilities for these leases.

(Continued)

48

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(q) Operating lease

The Group leases out its investment property. The Group has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Please refer to note 6(l) sets out information about the operating leases of investment property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date, was as follows:

Less than one year One to five years Total undiscounted lease payments	December 31, 2020 $ 1,770 774 $ 2,544	December 31, 2019
		1,553 -
		1,553

Rental income from investment property amounted to $1,416 and $1,418 in 2020 and 2019, respectively.

(r) Employee benefits

(i) Defined benefit plans

Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:

Present value of defined benefit obligations Fair value of plan assets Deficit in the plan Asset ceiling Net defined benefit liability (recorded as other non-current liabilities)	December 31, 2020 $ 150,927 82,982 67,945 - $ 67,945	December 31, 2019
		163,560 95,623
		67,937 -
		67,937

The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. With regard to the utilization of the funds, minimum earnings shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

(Continued)

49

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $82,982 at the end of the reporting period. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2)

• Movements in present value of defined benefit obligations

The movements in present value of defined benefit obligations for the Group for the years ended December 31, 2020 and 2019, were as follows:

Defined benefit obligation at January 1 Benefits paid Current service costs and interest cost Remeasurement of net defined liabilities Defined benefit obligation at December 31	2020 $ 163,560 (22,029) 1,843 7,553 $ 150,927	2019 156,919 (995) 1,898 5,738 163,560

• 3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Group for the years ended December 31, 2020 and 2019, were as follows:

Fair value of plan assets at January 1 Remeasurement of net defined liabilities Interest income Contribution paid Benefits paid Fair value of plan assets at December 31	2020 $ 95,623 3,020 751 2,953 (19,365) $ 82,982	2019 89,417 3,592 544 3,065 (995) 95,623

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group for the years ended December 31, 2020 and 2019, were as follows:

2020 and 2019, were as follows:
Current service costs Net interest of net liabilities for defined benefit Expenses	2020 $ 562 531 $ 1,093	2019
		611 743
		1,354

(Continued)

50

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 5) Remeasurements of net defined benefit liability (asset) recognized in other comprehensive income.

The Company’s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2020 and 2019, was as follows:

Balance on January 1 Recognized during the period Balance on December 31	2020 $ 12,949 4,533 $ 17,482	2019
		10,803 2,146
		12,949

• 6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increase rate	December 31, 2020 December 31, 2019 % 0.350 0.800% % 2.750 3.000%

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date was $2,848. The weighted-average duration of the defined benefit plans is 10 years.

7) Sensitivity analysis

When computing the present value of the defined benefit obligations, the Group uses judgments and estimations to determine the actuarial assumptions, including discount rates and future salary changes, as of the financial statement date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2020 Discount rate Future salary increase rate December 31, 2019 Discount rate Future salary increase rate	Influences of defined benefit obligations
	Increased 0.25% Decreased 0.25% $ (2,963) 3,053 $ 2,902 (2,831) $ (3,248) 3,349 $ 3,191 (3,111)

(Continued)

51

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. Many assumption changes may affect each other in practice. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There were no changes in the method and assumptions used in the preparation of the sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plans

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

The Company’s foreign subsidiaries have defined contribution plans. These plans are funded in accordance with the regulations of their respective countries. Contributions to these plans are expensed as incurred without additional legal or constructive obligation.

The Group recognized pension costs under the defined contribution method amounting to $306,646 and $458,035 for the years ended December 31, 2020 and 2019, respectively, recorded as operating cost and operating expenses in the statement of comprehensive income.

(s)

Income taxes

(i) The details of the Group’s income tax expenses for the years ended December 31, 2020 and 2019, were as follows:

Current tax expense Deferred tax expense (benefit) Income tax expense	2020 $ 496,052 38,118 $ 534,170	2019 726,224 (75,242) 650,982

(Continued)

52

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ii) Reconciliation of income tax expenses and profit before tax for the years ended December 31, 2020 and 2019, were as follows:

Profit before income tax Income tax calculated based on domestic tax rate of individual entity of the Group Overseas investment gains recognized under the equity method Non-taxable income Prior year’s income tax adjustment Surtax on unappropriated earnings Investment tax credits accrued Other Income tax expense	2020 $ 2,478,437 572,620 (171,988) (9,267) 101,886 18,052 (115,878) 138,745 $ 534,170	2019 2,913,901 975,379 (217,045) (2,265) (50,878) 12,974 (118,232) 51,049 650,982

• (iii) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax liabilities

The Company is able to control the timing of the reversal of the temporary differences associated with subsidiaries’ earnings. Also, the management considered it probable that the temporary differences will not be reversed in the foreseeable future. Hence, such temporary differences were not recognized under deferred tax liabilities. Details were as follows:

follows:
Aggregate amount of temporary differences related to investments in subsidiaries	December 31, 2020 $ 1,025,729	December 31, 2019
		889,807

• 2) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items:

Deductible temporary differences	December 31, 2020 $ 160,000	December 31, 2019
		164,776

The deductible temporary differences and losses cannot be realized, or there may not be sufficient taxable profit to utilize after the Group’s evaluation. Therefore, they were not recognized as deferred tax assets.

(Continued)

53

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

3) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for the years ended December 31, 2020 and 2019, were as follows:

Deferred tax liabilities: Balance on January 1, 2020 Recognized in profit or loss Balance on December 31, 2020 Balance on January 1, 2019 Disposals of subsidiaries Recognized in profit or loss Balance on December 31, 2019	Investment income recognized under the equity method (overseas)	Unrealized foreign exchange gains	Amortization of appraised value adjustment of intangible assets	Amortization of appraised value adjustment of intangible assets		Others	Total 444,090 (15,452) 428,638 705,297 (273,288) 12,081 444,090
	$ 369,676 (83,326) $ 286,350 $ 321,168 - 48,508 $ 369,676	24,955 70,665 95,620 8,105 (724) 17,574 24,955		42,184 (10,483) 31,701 343,096 (272,440) (28,472) 42,184		7,275 7,692 14,967 32,928 (124) (25,529) 7,275

Deferred tax assets: Balance on January 1, 2020 Recognized in profit or loss Balance on December 31, 2020 Balance on January 1, 2019 Disposals of subsidiaries Recognized in profit or loss Balance on December 31, 2019	Bad debt in excess of tax limit	Loss carryforward	Loss carryforward		Unfunded pension fund contribution	Refund liabilities	Loss on inventory valuation 107,202 (2,814) 104,388 118,974 (1,104) (10,668) 107,202	Deferred granted revenue 254,056 (59,797)	Unrealized revenue from disposal of assets 27,296 (3,090) 24,206 30,386 - (3,090) 27,296	Others 73,215 3,437 76,652 88,836 (27,497) 11,876 73,215	Total 711,859 (53,570)
	$ 39,958 - $ 39,958 $ 47,018 (1,173) (5,887) $ 39,958		6,525 4,210		15,957 (905) 15,052 16,300 - (343) 15,957	187,650 5,389 193,039 159,382 - 28,268 187,650
			10,735					194,259			658,289
								185,717 - 68,339			654,310 (29,774) 87,323
								254,056			711,859

(iv) The Company’s income tax returns have been examined by the tax authority through the years to 2018.

(t) Capital and other equity

• (i) Ordinary shares

As of December 31, 2020 and 2019, the nominal ordinary shares amounted to $5,500,000. Par value of each share is $10 (dollars), which means in total there were 550,000 thousand authorized common shares, of which 450,898 thousand shares and 448,581 thousand shares, respectively, were issued. All issued shares were paid up upon issuance.

(Continued)

54

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Reconciliation of shares outstanding for the years ended December 31, 2020 and 2019, were as follows:

follows:
Balance on January 1 Issuance of restricted stock Retirement of restricted stock Balance on December 31		Ordinary shares (in thousands of shares)
		2020 448,581 2,440 (123) 450,898	2019
			447,452 1,820 (691)
			448,581

(ii) Capital surplus

The balances of capital surplus were as follows:

Additional paid-in capital Employee stock options Restricted employee stock options Long-term investment	December 31, 2020 $ 759,070 259,401 169,540 379,617 $ 1,567,628	December 31, 2019
		662,230 259,401 193,599 367,815
		1,483,045

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

(iii) Retained earnings

According to the articles of the Company, when allocating the earnings for each year, the Company shall first offset its losses in previous year and set aside a legal capital reserve at 10% of the earing left over, until the accumulated legal capital reserve has equaled the total capital of the Company; then set aside a special capital reserve in accordance with relevant laws, the balance of the earnings shall combined into an aggregate amount of undistributed earnings, which shall become the aggregate distributable earnings to be distributed according to the distribution plan proposed by the board of directors and submitted to the stockholders’ meeting for resolution.

The Company is at the growth stage and considers its future cash demand, long-term financial plans, benefits to stockholders, and balanced dividends. Earnings distribution is made by stock dividend and cash dividend. The cash dividend shall not be less than 10 percent of the total dividends and could be adjusted depending on the Company’s operating condition.

(Continued)

55

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Legal reserve

If the Company experiences profit for the year, the distribution of the statutory earnings reserve, either by new shares or by cash, shall be decided at the stockholders’ meeting, and the distribution amount is limited to the portion of legal reserve which exceeds 25 percent of the paid-in capital.

2) Special reserve

By choosing to apply exemptions granted under IFRS 1 “ First-time Adoption of International Financial Reporting Standards” during the Company’s first-time adoption of the International Financial Reporting Standards endorsed by the FSC, retained earnings increased by $97,300 by recognizing the cumulative translation adjustments (gains) on the adoption date as deemed cost. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, the increase in retained earnings due to the first-time adoption of IFRSs shall be reclassified as special reserve, and when the relevant asset is used, disposed of, or reclassified, this special reserve, shall be reversed as distributable earnings proportionately. As of December 31, 2020 and 2019, the carrying amount of special reserve both amounted to $97,300.

In accordance with the guidelines of the above Ruling, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special earnings reserve resulting from the first-time adoption of IFRSs and the carrying amount of other stockholders’ equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other stockholders’ equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other stockholders’ equity shall qualify for additional distributions.

3) Earnings distribution

On June 23, 2020 and June 18, 2019 the stockholders’meeting resolved the distribution of earnings for 2019 and 2018, respectively. The distribution were both NT$2.4 (dollars) per share, which amounted to $1,076,876 and $1,072,341, respectively.

(Continued)

56

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(u) Share-based payment

• (i) Employee stock options and share-based payment

• 1) As at December 31, 2020, the Group had share-based payment arrangements as follows:

	Employee stocks
	ownership plans
	September 2017
Grant date	September 29, 2017
Exercise price	CNY$1.1952
Granted units (thousand)	40,310
Service period	15 years
Vesting period	12 months after
	Tymphany Huizhou
	listed

The Group measured the fair value of the aforementioned share-based payment. The measurement basis of the fair value was as follows:

Exercise price Expected time until expiration (years) Stock price per share Expected volatility of stock price Expected dividend rate Risk-free interest rate	Issnance of ordinary shares for employee stocks September 2017
	CNY$1.1952 0.26 CNY$1.7784 37.53% - 3.17%

(ii) Restricted stock

• 1) As of December 31, 2020, the outstanding restricted stock of the Company was as follows:

Grant date Fair value on grant date (per share) Exercise price Granted units (thousand shares) Vesting period	Plan 3 (note 1) February 13, 2017 September 7, 2017 45.80 72.40 Free grants Free grants 2,450 550 1~3 years (note 2) 1~3 years (note 2)	Plan 4 (note 1) February 8, 2018 September 13, 2018 76.70 46.85 Free grants Free grants 1,100 900 1~3 years (note 2) 1~3 years (note 2)	Plan 5 (note 1) Plan 6 (note 1) November 21, 2019 February 20, 2020 July 30, 2020 64.30 53.20 41.75 Free grants Free grants Free grants 1,820 180 2,260 1~3 years (notes 2 and 4) 1~3 years (note 2) 1~5 years (notes 2, 3, 4 and 5)

(Continued)

57

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• Note 1: Plan 3 was resolved by the stockholders’ meeting held on June 20, 2016, and has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 2,450 thousand shares and 550 thousand shares on January 23 and August 10, 2017, respectively.

Plan 4 was resolved by the stockholders’ meeting held on May 25, 2017, and has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 1,100 thousand shares and 900 thousand shares on January 31 and August 10, 2018, respectively.

Plan 5 was resolved by the stockholders’ meeting held on June 18, 2019, and has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 1,820 thousand shares and 180 thousand shares on November 12, 2019 and February 18, 2020, respectively.

Plan 6 was resolved by the stockholders’ meeting held on June 23, 2020, and has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 2,260 thousand shares on July 30, 2020.

• Note 2: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 30%, 30% and 40% shall be vested in the first year, second year and third year, respectively, after the grant date.

• Note 3: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 50% of the restricted stock shall be vested in the first year after the grant date, and the remaining 50% shall be vested in the second year after the grant date.

• Note 4: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, the restricted stock shall be vested in the first year after the grant date.

• Note5: If the employees continue to provide service to the Company and meet the prior year’s performance indicator, 15%, 15%, 20%, 20% and 30% shall be vested in the first year, second year, third year, fourth year and fifth year, respectively, after the grant date.

The restricted stock is kept by a trust, which is appointed by the Company, before it is vested. These shares shall not be sold, pledged, transferred, gifted, or, by any other means, disposed of to third parties during the custody period. The voting rights of these shares are executed by the custodian, and the custodian will act based on law and regulations. If the shares remain unvested after the vesting period, the Company will cancel the unvested shares thereafter.

(Continued)

58

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) The related information on restricted stock of the Company was as follows:

(Thousand shares) Outstanding on January 1 Granted during the year Vesting during the year Expired during the year Outstanding on December 31		2020 3,816 2,440 (2,017) (136) 4,103	2019 3,316 1,820 (1,158) (162) 3,816

(iii) Expenses attributable to share-based payment were as follows:

Employee stock options Restricted stock Total	2020 $ 16,629 117,593 $ 134,222	2019
		14,128 61,099
		75,227

(v) Earnings per share

• (i) Basic earnings per share

The calculation of basic earnings per share for the years ended December 31, 2020 and 2019, based on the profit attributable to owners of parent of the Company and the weighted-average number of ordinary shares outstanding was as follows:

2020 Profit attributable to owners of parent $ 1,919,265 Weighted-average number of ordinary shares (thousand shares) 445,829 Basic earnings per share (NT dollars) $ 4.30 Weighted-average number of ordinary shares (thousand shares)	2019
	2,134,870
	444,465
	4.80

Ordinary shares at January 1 Vesting of restricted stock Ordinary shares at December 31		2020 444,765 1,064 445,829	2019
			443,607 858
			444,465

(Continued)

59

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Diluted earnings per share

The calculation of diluted earnings per share for the years ended December 31, 2020 and 2019, based on the profit attributable to owners of parent of the Company and the weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares was as follows:

2020 Profit attributable to owners of parent $ 1,919,265 Weighted-average number of ordinary shares (diluted) (thousand shares) 449,909 Diluted earnings per share (NT dollars) $ 4.27 Weighted-average number of ordinary shares (diluted) (thousand shares) 2020 Weighted-average number of ordinary shares on December 31 (basic) 445,829 Estimated effect of employee stock bonuses 1,935 Effect of restricted stock 2,145 Weighted-average number of ordinary shares on December 31 (diluted) 449,909	2019
	2,134,870
	447,663
	4.77
	2019
	444,465 1,462 1,736
	447,663

• (w) Revenue from contracts with customers

• (i) Disaggregation of revenue

Goods sold Service rendered Goods sold Service rendered		2020
	Computer Peripherals $ 26,182,559 108,735 $ 26,291,294	Non-computer Peripherals 40,001,770 1,947,875 41,949,645 2019	Total
			66,184,329 2,056,610
			68,240,939
		Non-computer Peripherals 54,869,147 2,902,189 57,771,336	Total
			77,515,323 3,134,285
			80,649,608

(Continued)

60

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Mainland China Europe America Other	2020 $ 28,628,366 14,745,306 20,826,899 4,040,368 $ 68,240,939	2019
		31,841,538 23,267,214 23,186,378 2,354,478
		80,649,608

(ii) Contract balances

Notes and accounts receivable (including related parties) Less: allowance for impairment Contract liabilities (classified as other current liabilities)	December 31, 2020 $ 13,819,185 (42,155) $ 13,777,030 $ 226,063	December 31, 2019 19,453,551 (75,725) 19,377,826 133,028	January 1, 2019 16,967,755 (45,467) 16,922,288 106,018

For details on accounts receivable (including related parties) and allowance for impairment, please refer to note 6(e).

The amount of revenue recognized for the years ended December 31, 2020 and 2019 that were included in the contract liability balance at the beginning of the period were $107,344 and $84,909, respectively.

The contract liabilities primarily relate to the advance consideration received from contracts with goods sold, for which revenue is recognized when products are delivered to customers.

(x) Employee’s and directors’ and supervisors’ remuneration

In accordance with the Articles of incorporation, the Company should contribute 2 to 10 percent of the profit as employee remuneration and less than 2 percent as directors’ remuneration when there is profit for the year. However, if the Company has accumulated deficits, the profit should be reserved to offset the deficit. The recipients of shares and cash may include the employees of the Company’s affiliated companies who meet certain conditions.

Details of remuneration to employees and directors for the years ended December 31, 2020 and 2019 were as follows:

Employee remuneration Directors’ remuneration	2020 $ 72,645 36,323 $ 108,968	2019
		75,526 37,763
		113,289

(Continued)

61

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The estimated amounts mentioned above are calculated based on the net profit before tax, excluding the remuneration to employees, directors and supervisors of each period, multiplied by the percentage of remuneration to employees, directors and supervisors as specified in the Company’s articles. These remunerations were expensed under operating costs or operating expenses during each period. The differences between the amounts distributed and those accrued in the financial statements, if any, are accounted for as changes in accounting estimate and recognized as profit or loss in the distribution year.

The differences between the amounts approved in the directors’ meeting and those recognized in the financial statements for the distributions of earnings for 2019 and 2018 were as follows:

Employee remuneration–Cash Director’s remuneration Employee remuneration–Cash Director’s remuneration	2019 Actual earnings distributed Accrued in the financial statement Difference $ 75,520 75,526 6 26,430 37,763 11,333 2018 Actual earnings distributed Accrued in the financial statement Difference $ 64,430 64,439 9 32,200 32,219 19

Except for the difference on the director’s remuneration in 2019, which was due to a voluntary pay cut of directors, the other differences were accounted for as changes in accounting estimates and recognized as profit or loss in the years 2020 and 2019. Information on the remuneration to employees and directors, approved in the board of directors’ meetings, can be accessed in the Market Observation Post System website.

(y) Other income

The details of other income were as follows:

Rent income Dividend income Other	2020 $ 9,431 191 3,505 $ 13,127	2019
		5,798 214 2,948
		8,960

(Continued)

62

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(z) Other gains and losses

The details of other gains and losses were as follows:

Net losses on financial assets/liabilities measured at FVTPL Impairment losses of property, plant and equipment Losses on disposal of investments Foreign currency exchange gains, net Net gains (losses) on disposal of property, plant and equipment Impairment losses of investments accounted for using equity method Other	2020 $ (115,752) (56,507) - 589,985 (116,532) (279,716) 271,133 $ 292,611	2019 (6,247) - (275,306) 318,195 34,144 - 170,668 241,454

• (aa) Financial instruments

(i) Credit risk

1) Credit risk exposure

The carrying amount of financial assets represents the maximum amount exposed to credit risk.

2) Concentration of credit risk

For information on the Group's concentration of credit risk, please refer to note 6(ab).

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments:

December 31, 2020 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow	Carrying amount $ 905,059 19,001,057 3,013,224 1,131,626 1,252,919 1,421,407 755,459 12,225 432,171 - - $ 27,925,147	Contractual cash flows 905,704 19,001,057 3,013,224 1,131,626 1,569,900 1,421,407 781,146 12,225 - 4,601,941 (4,169,770) 28,268,460	Within 1 year 905,704 19,001,057 3,013,224 1,131,626 314,226 1,421,407 85,851 - - 4,601,941 (4,169,770) 26,305,266	1~2 years - - - - 274,753 - 250,101 - - - - 524,854	2~5 years - - - - 403,365 - 445,194 - - - - 848,559	Over 5 years
						- - - - 577,556 - - 12,225 - - -
						589,781

(Continued)

63

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2019 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow	Carrying amount $ 1,092,126 23,744,889 3,983,258 1,522,052 1,474,353 1,552,275 178,306 240,054 207,211 - - $ 33,994,524	Contractual cash flows 1,097,788 23,744,889 3,983,258 1,522,052 1,846,922 1,552,275 187,378 240,054 - 807,886 (598,600) 34,383,902	Within 1 year 1,097,788 23,744,889 3,983,258 1,522,052 326,913 1,552,275 32,429 - - 807,886 (598,600) 32,468,890	1~2 years - - - - 288,479 - 154,949 - - - - 443,428	2~5 years - - - - 616,391 - - - - - - 616,391	Over 5 years
						- - - - 615,139 - - 240,054 - - -
						855,193

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

• (iii) Currency risk

• 1) Exposure to foreign currency risk

The Group’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD:CNY USD:HKD USD:TWD EUR:CZK USD:CZK USD:THB Financial liabilities Monetary items USD:CNY USD:HKD USD:TWD EUR:CZK USD:THB	December 31, 2020 Foreign currency Exchange rate TWD $ 702,844 6.5249 20,036,689 334,958 7.7526 9,548,984 383,595 28.5080 10,935,538 9,948 26.4220 348,783 5,347 21.4820 152,421 18,653 30.0500 531,753 $ 519,840 6.5249 14,819,609 284,168 7.7526 8,101,051 500,374 28.5080 14,299,486 6,624 26.4220 232,256 26,614 30.0500 758,706	December 31, 2020 Foreign currency Exchange rate TWD $ 702,844 6.5249 20,036,689 334,958 7.7526 9,548,984 383,595 28.5080 10,935,538 9,948 26.4220 348,783 5,347 21.4820 152,421 18,653 30.0500 531,753 $ 519,840 6.5249 14,819,609 284,168 7.7526 8,101,051 500,374 28.5080 14,299,486 6,624 26.4220 232,256 26,614 30.0500 758,706	December 31, 2019	December 31, 2019
	Foreign currency $ 702,844 334,958 383,595 9,948 5,347 18,653 $ 519,840 284,168 500,374 6,624 26,614	Exchange rate	Foreign currency 850,418 533,753 347,369 15,073 11,589 - 630,146 491,571 455,443 14,511 -	Exchange rate TWD 6.9762 25,602,688 7.7878 16,069,164 30.1060 10,457,877 25.4167 508,382 22.6820 348,898 - - 6.9762 18,971,177 7.7878 14,799,238 30.1060 13,711,557 25.4167 489,427 - -
		6.5249 7.7526 28.5080 26.4220 21.4820 30.0500 6.5249 7.7526 28.5080 26.4220 30.0500

(Continued)

64

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, notes and accounts receivable, other receivables, derivative financial instruments, loans and borrowings, notes and accounts payable, and other payables that are denominated in foreign currency. A weakening (strengthening) of 5% of the TWD, CNY, HKD, CZK and THB against the USD as well as CZK against the EUR as of December 31, 2020 and 2019, would have increased or decreased the net profit before tax by $168,895 and $250,781, respectively. The analysis is performed on the same basis for both periods.

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2020 and 2019, foreign exchange gain (including realized and unrealized portions) amounted to $589,985 and $318,195, respectively.

(iv) Interest rate analysis

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

The following sensitivity analysis is based on the exposure to the interest rate risk of nonderivative financial instruments on the reporting date. Regarding assets and liabilities with variable interest rates, the analysis is based on the assumption that the amounts of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents the Group management’ s assessment of the reasonably possible interest rate change.

If the interest rate had increased or decreased by 0.25%, and assumed all other variables remain constant, the profit before tax would have increased or decreased by $15,507 and decreased or increased by $13,751 for the years ended December 31, 2020 and 2019, respectively. This is mainly due to borrowings and bank savings with variable interest rates.

(Continued)

65

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(v) Fair value

• 1) Kinds of financial instruments and fair value

The carrying amount and fair value of the Group’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

Financial assets at FVTPL – current Financial assets at FVOCI – non-current Financial assets measured at amortized cost: Cash and cash equivalents Financial assets at amortized cost －current Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at FVTPL – current Financial liabilities measured at amortized cost: Borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Guarantee deposits Total		December 31, 2020	December 31, 2020	December 31, 2020
	Carrying amounts $ 313,758 $ 121,672 $ 6,935,353 855,238 13,777,030 1,349,362 119,092 $ 23,036,075 $ 432,171 $ 1,660,518 19,001,057 3,013,224 1,131,626 1,252,919 1,421,407 12,225 $ 27,492,976		Fair Value
		Level 1 - - -	Level 2 - - -	Level 3 Total 313,758 313,758 121,672 121,672 432,171 432,171

(Continued)

66

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets at FVTPL – current Financial assets at FVOCI – non-current Financial assets measured at amortized cost: Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at FVTPL – current Financial liabilities measured at amortized cost : Borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Guarantee deposits Total		December 31, 2019	December 31, 2019	December 31, 2019
	Carrying amounts $ 187,016 $ 106,535 $ 6,700,510 19,377,826 1,049,016 114,923 $ 27,242,275 $ 207,211 $ 1,270,432 23,744,889 3,983,258 1,522,052 1,474,353 1,552,275 240,054 $ 33,787,313		Fair Value
		Level 1 - - -	Level 2 - - -	Level 3 Total 187,016 187,016 106,535 106,535 207,211 207,211

2) Fair value valuation techniques for financial instruments measured at fair value

If a financial instrument has a quoted price in an active market, the quoted price is used as fair value. The quoted price of a financial instrument obtained from major exchanges and over-the counter markets are the basis used to determine the fair value of a listed company’s stock and the quoted prices in an active market.

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s-length basis. If these conditions can not be reached, then the market is non-active. In general, a market with low trading volume or high bid-ask spreads is an indication of a non-active market.

(Continued)

67

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group uses the following methods in determining the fair value of its financial instruments without a quoted price in an active market:

• a) The fair value of derivative instruments is based on quoted prices. When quoted prices are unavailable, the fair value is estimated on the basis of the contract’s spot exchange rate and swap point.

• b) Financial assets at FVOCI – non-current are investments in domestic or foreign non-listed stock. The estimated fair value is based on the market approach of comparable business and adjusted for the lack of liquidity. When prices are unavailable, the fair value is estimated on the basis of unadjusted prior trade prices.

• 3) In 2020 and 2019, there were no transfers between Levels.

• 4) Reconciliation of Level 3 fair values

FVTPL Balance on January 1 $ (20,195) Recognized in profit or loss (115,752) Recognized in other comprehensive income - Acquisition /disposal 17,534 Balance on December 31 $ (118,413)			2020			FVTPL		2019	Total 130,979 (6,247) 39,927 (78,319) 86,340
	FVTPL		FVOCI 106,535 - (13,757) 28,894 121,672	Total				FVOCI 35,351 - 39,927 31,257 106,535

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

The fair value measurements of the Group which are categorized within level 3 are classified as financial assets and liabilities at FVTPL – derivative financial instruments and financial assets at FVOCI – equity securities. The quantitative information about significant unobservable inputs was as follows:

Item Financial assets at FVOCI – equity investment without an active market Financial assets and liabilities at FVTPL	Valuation technique (note 1) (note 2)	Significant unobservable inputs Inter-relationships between significant unobservable inputs and fair value (note 1) (note 1) (note 2) (note 2)

• note 1: The fair value is based on the market value, and it has considered the recent financing activities, comparable business, market and other economic conditions etc., to determine the assumptions. Also, the significant unobservable inputs are marketability discount, but any changes of marketability discount would not result in significant potential financial impact, therefore there is no need to show the quantified information on it.

(Continued)

68

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

note 2: The fair value is based on the quotation of a third party, therefore there is no need to show the sensitivity analysis of unobservable inputs.

• (ab) Financial risk management

• (i) Briefings

The Group is exposed to the following risks arising from financial instruments:

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

This note presents information on exposure to each of the above risks and on the objectives, policies, and processes for measuring and managing risk. For detailed information, please refer to the related notes on each risk.

(ii) Structure of risk management

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

The Company’s board of directors oversees the management’s monitoring of the Group’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the board of directors.

(iii) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s cash and cash equivalents; notes and accounts receivables (including related parties), and other receivables; and derivative instruments.

1) Cash and cash equivalents

The Group had deposited $7,534,707 (including restricted deposits) in HSBC Bank and 14 other financial institutions, and $6,483,877 (including restricted deposits) in HSBC Bank and 11 other financial institutions, representing 16% and 12% of total assets, as of December 31, 2020 and 2019, respectively. The Group believes that there is no significant credit risk from the above-mentioned financial institutions.

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Notes and accounts receivable

Sales to individual customers constituting over 10% of total revenue for the years ended December 31, 2020 and 2019, totaled 24% and 33%, respectively; also 23% and 34%, respectively, of the ending balance of accounts receivable (including related parties) were accounted for by those customers. In order to reduce credit risk, the Group assesses the financial status of each customer and the possibility of collection of receivables on a regular basis. The above-mentioned customers are profitable and have a good credit record; hence, the Group did not suffer any significant credit loss from those customers during the financial reporting period.

3) Derivative instruments

The Group entered into derivative instrument contracts with reputable and creditworthy financial institutions. The Group believes that the risk that these financial institutions may default on these contracts is relatively low and anticipates no significant credit loss.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’ s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Group had unused credit line of $25,095,470 and $20,115,842 as of December 31, 2020 and 2019, respectively.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

1) Currency risk

The Group is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of the Group’s entities, primarily the TWD, USD, HKD, CNY, CZK and THB. These transactions are denominated in USD.

The Group uses forward exchange contracts and foreign exchange swap contracts to hedge its currency risk. The Group makes performance reports and reviews operating strategy regularly, and believes that there is no significant risk because the gains or losses from exchange rate fluctuation will mostly be offset by the hedged item.

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 2) Interest rate risk

The Group’s main assets and liabilities with a floating-interest-rate basis are deposits and borrowings. The Group believes that cash flow risk arising from interest rate fluctuation is insignificant.

• (ac) Capital management

The board’ s policy is to maintain a strong capital base so as to maintain investor, creditor, and market confidence, and to sustain future development of the business. Capital consists of ordinary shares, capital surplus, retained earnings, other equity, and non-controlling interests.

The Group sets its objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return to stockholders, to safeguard the interest of related parties, and to maintain an optimal capital structure to reduce the cost of capital.

The Group’s debt ratio as of December 31, 2020 and 2019, were 67% and 73%, respectively.

• (ad) Changes of liabilities from financing activities

Reconciliation of liabilities arising from financing activities was as follows:

Short-term borrowings Long-term borrowings Lease liabilities Total liabilities from financing activities Short-term borrowings Long-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2020 $ 1,092,126 178,306 1,474,353 $ 2,744,785 January 1, 2019 $ 1,202,565 306,563 1,684,460 $ 3,193,588	Cash flows (187,067) 577,153 (287,843) 102,243 Cash flows 125,268 88,002 (249,186) (35,916)	Non-cash changes - - 66,409 66,409 Non-cash changes (235,707) (216,259) 39,079 (412,887)	December 31, 2020
				905,059 755,459 1,252,919
				2,913,437
				December 31, 2019
				1,092,126 178,306 1,474,353
				2,744,785

• (ae) Supplementary information of cash flow

• (i) The Group’s cash flow used in acquisition of property, plant and equipment were $3,089,333 and $3,559,181, respectively, wherein cash payment for payables on equipment and the increase of payables on equipment amounted to $867,610 and $680,782 for the years ended December 31, 2020 and 2019, respectively.

• (ii) For the year ended December 31, 2020, the Group’s disposal of property, plant and equipment included the written off of the unamortized deferred revenue of equipment subsidy amounted to $767,967.

(Continued)

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(7) Related-party transactions:

• (a) Names and relationship of the related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

in the consolidated financial statements.
Name	Relationship
Specialty Technologies, LLC (Specialty)	Substantive related party
De Amertek Corporation, Inc. (DAC)	Substantive related party(note)
General Rich International S.A. (GRI)	Substantive related party(note)

Note: In July 2019, the Group lost its control over AIC. Hence, AIC was no longer included in the Group’s consolidated financial statements. Therefore, its transactions related to DAC and GRI need not be disclosed thereafter.

• (b) Significant transactions with related parties

• (i) Sales

The amounts of significant sales by the Group to related parties and the outstanding balances were as follows:

were as follows:
Other related parties	Sales 2020 2019 $ 579,656 697,929	Notes and accounts receivable
	2020 $ 579,656	December 31, 2020 198,189	December 31, 2019
			180,471

There were no significant differences in the selling prices between the related parties and other customers. The trading terms offered to other related parties were 90 days and 140 days, and the trading terms to other customers were 45 days to 120 days.

(ii) Purchase

The amounts of purchase by the Group from its related parties and the outstanding balances were as follows:

Other related parties	Purchase 2020 2019 $ - 53,128	Notes and accounts payable December 31, 2020 December 31, 2019 - -	Notes and accounts payable December 31, 2020 December 31, 2019 - -
	2020 $ -		December 31, 2019
			-

There were no significant differences in the purchasing price between the related parties and other vendors. The payment terms of other related parties and other vendors were 140 days and 30 days to 120 days, respectively.

(Continued)

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Key management personnel compensation

Key management personnel compensation comprised:

2020 Short-term employee benefits $ 179,688 Post-employment benefits 871 Share-based payments 63,910 $ 244,469	2019
	199,261 3,542 26,655
	229,458

Please refer to note 6(u) for information related to share-based payments.

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets Other current assets – restricted assets Other non-current assets – restricted assets Property, plant and equipment	Pledged to secure	December 31, 2020 $ - $ 57,763 $ -	December 31, 2019 1,079
	Guarantee letters issued by bank Guarantee letters issued by bank Loan collateral
			57,757
			908,305

(9) Commitments and contingencies:

• (a) The Group’s unused letters of credit for guarantee of purchasing materials and borrowings were as follows:

December 31, 2020 $ -	December 31, 2019
	301,060

• (b) For the detail of the Group’s guarantee, please refer to note 13.

• (c) The following are savings accounts provided by the Group to the bank in order for the bank to issue a guarantee letter to customs and Power Supply Bureau as guarantee deposits and power supply guarantee, respectively.

Guarantee letters	December 31, 2020 $ 63,012	December 31, 2019 175,716

• (d) Guarantee notes provided as part of agreements with banks to sell accounts receivable and to acquire long-term borrowings were as follows:

long-term borrowings were as follows:
Sales of accounts receivable Long-term borrowings	December 31, 2020 $ 1,232,245 $ 3,135,880	December 31, 2019
		519,329
		400,000

(Continued)

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) The aggregate unpaid amounts of contracts pertaining to the purchase of equipment were as follows:

roperty, plant and equipment	December 31, 2020 $ 877,391	December 31, 2019
		1,157,819

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

A summary of employee benefit, depreciation, and amortization expenses by function, is as follows:

By function By item	2020	2020		2019	2019	2019
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Others Depreciation Amortization	3,933,778 111,850 179,844 156,236 1,817,110 26,505	3,450,411 175,080 127,895 191,547 192,283 193,275	7,384,189 286,930 307,739 347,783 2,009,393 219,780	5,094,034 131,435 315,243 205,875 1,719,974 11,058	3,835,741 191,893 144,146 215,363 173,328 285,495	8,929,775 323,328 459,389 421,238 1,893,302 296,553

(13) Other disclosures:

• (a) Information on significant transactions:

The followings were the information on significant transactions required by the Regulations for the Group:

(i) Loans to other parties:

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Coll	ateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1 2	PKS1 Tymphany Huizhou	The Company TYM HK	Other receivables Other receivables	Y 〃	330,101 91,334	293,440 -	293,440 -	0 0	Necessary to loan to other parties 〃	- -	Operating capital 〃	- -	-	- -	807,941 1,116,539	807,941 2,233,078

Note 1: After the approval from the Board of directors, the loan provided to an individual entity shall not exceed the net worth of PKS1 in the latest financial statements to its parent company, and also to subsidiaries wherein its parent owns 100%, directly and indirectly, of its voting shares. Also, the criterion for the amount available for financing is the same as that offered to an individual entity mentioned above.

Note 2: Due to the short-term financing need, the loan provided to an individual entity shall not exceed 20% of the net worth of Tymphany Huizhou in its latest financial statements. However, the amount available for financing shall not exceed 40% of the net worth of Tymphany Huizhou in its latest financial statements.

Note 3: The above transactions have been eliminated during the preparation of the consolidated Financial statements.

(Continued)

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

								(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during th period	Property e pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0 1	The Company Tymphany Huizhou	PCH2 TYM UK	The subsidiary of Primax HK and Primax Tech. The subsidiary of TYM Acoustic HK	3,986,350 1,674,809	303,300 6,907	285,080 6,795	1,622 6,795	- -	% 2.15 % 0.12	10,630,267 4,466,157	Y N	N N	Y N

Note 1: The amount of the guarantee to a company shall not exceed 30% of the Company’s net worth in the latest financial statements. The total amount of the guarantee to total company shall not exceed 80% of the Company’s net worth in the latest financial statements.

Note 2: The amount of the guarantee to a company shall not exceed 30% of the Tymphany Huizhou’s net worth in the latest financial statements. The total amount of the guarantee to total company shall not exceed 80% of the Tymphany Huizhou’s net worth in the latest financial statements.

Note 3: The above counter-parties of guarantee and endorsement are subsidiaries included in the consolidated financial statements.

(iii) Securities held as of December 31, 2020 (excluding investment in subsidiaries, associates and joint ventures):

Company Ending balance holding securities	Security type and name	Relationship with company	Account		Ending balance	Ending balance	Ending balance	Highest balance during the year	Highest balance during the year	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Shares/Units (thousands)	Percentage of ownership (%)
The Company Primax Tech.	Shares: Green Rich Technology Co., Ltd. WK Technology Fund IV LTD. Changing Information Technology Inc. Formosoft International Inc. Syntronix Corp. Ricavision International Inc. Grove Ventures, L.P. Grove Ventures II, L.P. Shares: Echo. Bahn. WK Global Investment III Ltd.	- - - - - - - - - -	Financial assets at FVOCI 〃 〃 〃 〃 〃 〃 〃 Financial assets at FVOCI 〃	359 161 202 11 7 917 - - 400 361	- 1,263 6,002 - 49 - 60,722 26,227	3.59 0.38 1.48 0.41 0.02 2.04 2.73 3.25 11.90 1.32	- 1,263 6,002 - 49 - 60,722 26,227 - 27,409	359 161 202 11 7 917 - - 400 361	3.59 0.38 1.54 0.41 0.02 2.04 2.73 3.82 11.90 1.32
					94,263
					- 27,409
					27,409

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75

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of TWD$300 million or 20% of the Company’s paid-in capital:

Name of company	Security type and name	Account	counter- party	Relationship with the company (	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares thousands)	Amount	Shares (thousands)	Amount	Shares (thousands)	Price	Cost	Gain (loss) on disposal	Shares (thousands)	Amount
PCH2 PCQ1 PKS1 The Company Tymphany Huizhou TYM Acoustic HK	Money market fund of RMB Money market fund of RMB Money market fund of RMB Primax Singapore TYM Acoustic HK TYTH	Financial assets at FVTPL 〃 〃 Investment accounted for using equity method 〃 〃	Initial Offerings 〃 〃 〃 〃 〃	None 〃 〃 Subsidiary 〃 〃	- - - 10,100 185,536 1,500	- - - 286,269 1,190,387 55,387	- - - 10,000 232,554 3,150	1,196,216 550,056 69,440 301,000 903,000 395,865	- - - - - -	1,192,438 548,937 69,726 - - -	1,190,757 548,258 69,445 - - -	(3,778) (note 2) (1,119) (note 2) 286 (note 2) - - -	- - - 20,100 418,090 4,650	- - - 451,425 (note 1 2,402,172 (note 1 427,843 (note 1

• Note 1: The difference between amounts of ending balance and purchasing price is recognized as profit or loss accounted for using equity method and exchange differences on translation.

• Note 2: Gains on disposal include valuation and exchange differences on translation.

• (v) Acquisition of individual real estate with amount exceeding the lower of TWD$300 million or 20% of the Company’s issued capital: None

• (vi) Disposal of individual real estate with amount exceeding the lower of TWD$300 million or 20% of the Company’s issued capital: None

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of TWD$100 million or 20% of the Company’s issued capital:

Name of company	Related party	Nature of relationship		Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company 〃 〃 〃 〃 PCH2 PKS1 PCQ1 Primax Thailand Polaris	PCH2 PKS1 PCQ1 Polaris Primax Thailand The Company 〃 〃 〃 〃	The subsidiary of Primax HK 〃 〃 The subsidiary of Primax Tech. The subsidiary of Primax Singapore. The parent of Primax Cayman 〃 〃 The parent of Primax Singapore. The parent of Primax Tech.	Purchase Purchase Purchase (Sale) Purchase (Sale) (Sale) (Sale) (Sale) Purchase	22,349,010 2,230,988 7,476,859 (3,429,061) 613,050 (22,349,010) (2,230,988) (7,476,859) (613,050) 3,429,061	% 68 % 7 % 23 % (10) % 2 % (84) % (100) % (78) % (92) % 100	60 days 〃 〃 90 days 60 days 〃 〃 〃 〃 90 days	Price agreed by both side 〃 〃 〃 〃 〃 〃 〃 〃 〃	The same as general purchasing 〃 〃 The same as general selling The same as general purchasing The same as general selling 〃 〃 〃 The same as general purchasing	(7,583,716) (1,360,975) (2,803,152) 380,107 (171,117) 7,583,716 1,360,975 2,803,152 171,117 (380,107)	(65)% (12)% (24)% 5% (1)% 86% 100% 86% 95% (100)%	note 1 note 1 note 2 note 1 〃 〃 〃 note 1 note 2 note 1 〃 〃

(Continued)

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of company	Related party	Nature of relationship		Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
Tymphany Huizhou 〃 〃 Tymphany Dongguan 〃 〃 〃 TYDC 〃 〃 TYM Acoustic HK 〃 〃 TYM Acoustic Europe TYM HK 〃 〃 〃 〃 〃 〃 〃 〃 TYM Acoustic TYML	TYM HK TYM Acoustic HK Tymphany Dongguan TYM HK 〃 Tymphany Huizhou TYDC TYM HK Tymphany Dongguan TYM Acoustic HK TYM Acoustic Europe Tymphany Huizhou TYDC TYM Acoustic HK Tymphany Huizhou Tymphany Dongguan 〃 TYDC TYM Acoustic TYML TYTH 〃 Specialty TYM HK 〃	The subsidiary of TYM Acoustic HK Subsidiary 〃 The subsidiary of TYM Acoustic HK 〃 Parent Subsidiary The subsidiary of TYM Acoustic HK Parent The subsidiary of Tymphany Huizhou Subsidiary Parent The subsidiary of Tymphany Huizhou Parent The parent of TYM Acoustic HK The subsidiary of Tymphany Huizhou 〃 The subsidiary of Tymphany Dongguan The subsidiary of TYM Acoustic HK Subsidiary The subsidiary of TYM Acoustic HK 〃 Other related party The subsidiary of TYM Acoustic HK Parent	(Sale) (Sale) Purchase Purchase (Sale) (Sale) (Sale) (Sale) Purchase (Sale) Purchase Purchase Purchase (Sale) Purchase Purchase (Sale) Purchase Purchase (Sale) Purchase (Sale) (Sale) (Sale) Purchase	(4,846,055) (128,122) 136,680 519,874 (14,670,226) (136,680) (102,767) (2,361,105) 102,767 (311,369) 1,521,567 128,122 311,369 (1,521,567) 4,846,055 14,670,226 (519,874) 2,361,105 144,552 (3,775,613) 555,462 (140,764) (579,656) (144,552) 3,775,613	% (73) % (2) % 2 % 3 % (97) % (1) % (1) % (88) % 4 % (12) % 69 % 6 % 14 % (87) % 20 % 62 % (2) % 10 % 1 % (15) % 2 % (1) % (2) % (15) % 100	60 days 〃 〃 〃 〃 〃 〃 〃 〃 〃 90 days 60 days 〃 90 days 60 days 〃 〃 〃 〃 90 days 60 days 〃 90 days 60 days 90 days	Price agreed by both side 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	The same as general selling 〃 The same as general purchasing 〃 The same as general selling 〃 〃 〃 The same as general purchasing The same as general selling The same as general purchasing 〃 〃 The same as general selling The same as general purchasing 〃 The same as general selling The same as general purchasing 〃 The same as general selling The same as general purchasing The same as general selling 〃 〃 The same as general purchasing	1,918,374 20,183 (72,326) (209,815) 3,807,364 72,326 40,214 415,132 (40,214) 220,349 (289,275) (20,183) (220,349) 289,275 (1,918,374) (3,807,364) 209,815 (415,132) (106,040) 218,130 (185,654) 53,068 198,189 106,040 (218,130)	91% 1% (4)% (4)% 96% 2% 1% 65% (6)% 35% (47)% (3)% (36)% 72% (30)% (59)% 4% (6)% (2)% 4% (3)% 1% 4% 83% (100)%	〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 note 1 〃

(Continued)

77

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
TYTH 〃	TYM HK 〃	The subsidiary of TYM Acoustic HK 〃	Purchase (Sale)	140,764 (555,462)	% 25 % (100)	60 days 〃	Price agreed by both side 〃	The same as general purchasing The same as general selling	(53,068) 185,654	(15)% 100%	〃 〃

Note 1: Related transactions have been eliminated during the preparation of the consolidated financial statements.

Note2: The Company’s accounts payable to PKS1 amounting to $293,440 was overdued from its normal payment term. Therefore, these accounts payables was transferred to other payable.

(viii) Receivables from related parties with amounts exceeding the lower of TWD$100 million or 20% of the Company’s paid-in capital:

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate		Overdue	Amounts received in subsequent period (note 1)	Allowance for bad debts
					Amount	Action taken
The Company 〃 〃 PCH2 〃 〃 PKS 〃 PCQ Primax Thailand Tymphany Huizhou Tymphany Dongguan 〃 TYDC 〃 TYM Acoustic Europe TYM HK 〃 〃 〃	Polaris PCH2 〃 The Company Tymphany Dongguan Primax Thailand The Company 〃 〃 〃 TYM HK 〃 〃 〃 TYM Acoustic HK 〃 Tymphany Dongguan 〃 TYDC 〃	The subsidiary of Primax Tech. The subsidiary of Primax HK. 〃 The parent of Primax Cayman The subsidiary of Tymphany Huizhou The subsidiary of Primax Singapore The parent of Primax Cayman 〃 〃 The parent of Primax Singapore The subsidiary of TYM Acoustic HK 〃 〃 〃 The subsidiary of Tymphany Huizhou Parent The subsidiary of Tymphany Huizhou 〃 The subsidiary of Tymphany Dongguan 〃	380,107 (note 5) 153,639 (note 2) (note 5) 20,678 (note 5) 7,583,716 (note 5) 234,673 (note 5) 216,172 (note 5) 1,067,535 (note 5) 293,440 (note 5) 2,803,152 (note 5) 171,117 (note 5) 1,918,374 (note 5) 3,807,364 (note 5) 199,141 (note 5) 415,132 (note 5) 220,349 (note 5) 289,275 (note 5) 209,815 (note 5) 2,393,582 (note 5) 826 (note 5) 115,227 (note 5)	9.64 3.41 (note 3) 3.08 (note 3) 〃 1.95 (note 4) 2.61 7.17 1.66 2.65 (note 3) 2.13 2.82 3.35 3.89 (note 3) 107.67 (note 3)	- - - - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - -	380,107 39,194 15,739 5,841,436 75,221 46,329 176,945 293,440 1,556,747 171,117 886,402 3,519,439 77,586 175,579 132,879 160,672 57,189 683,074 - 115,227	- - - - - - - - - - - - - - - - - - - -

(Continued)

78

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period (note 1)	Allowance for bad debts
					Amount	Action taken
TYM HK 〃 TYM Acoustic TYTH	TYML Specialty TYM HK 〃	Subsidiary Other related party The subsidiary of TYM Acoustic HK 〃	218,130 (note 5) 198,189 (note 5) 106,040 (note 5) 185,654 (note 5)	3.08 3.06 1.00 5.98	- - - -	- - -	212,395 84,772 105,009 185,654	- - - -

Note 1: Amounts collected as of February 19, 2021.

Note 2: The Company sells semi-finished products to its subsidiaries for processing and production. The finished products are then repurchased back by the Company and sold to the customers. The amount of semi-finished products sold in the year ended December 31, 2020 was $629,006, which was written off with related cost of goods sold, and not regarded as sales for the Company.

Note 3: The receivables arise from service rendering for intercompany or material purchasing on behalf of intercompany or related parties. Note 4: The other receivables arise from intercompany loans.

Note 5: Related transactions have been eliminated during the preparation of the consolidated financial statements.

• (ix) Trading in derivative instruments: Please refer to note 6(b).

• (x) Business relationships and significant intercompany transactions:

No	Name of company	Name of counter-party	Nature of relationship		Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of consolidated total operating revenues or total assets
0 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 1 〃 〃	The Company 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 PCH2 〃 〃	PCH2 〃 〃 〃 PKS1 〃 〃 PCQ1 〃 Polaris 〃 Primax Thailand 〃 Tymphany Dongguan 〃 Primax Thailand	The subsidiary of Primax HK 〃 〃 〃 〃 〃 〃 〃 〃 The subsidiary of Primax Tech. 〃 The subsidiary of Primax Singapore 〃 The subsidiary of Tymphany Huizhou 〃 The subsidiary of Primax Singapore	Purchase Accounts Payable Accounts Receivable Other Receivable Purchase Accounts Payable Other payables Purchase Accounts payable Sale Accounts receivable Purchase Accounts Payable Service revenue Other Receivable 〃	22,349,010 7,583,716 153,639 20,678 2,230,988 1,067,535 293,440 7,476,859 2,803,152 3,429,061 380,107 613,050 171,117 486,840 234,673 216,172	Price agreed by both sides 60 days 〃 (Note 2) Price agreed by both sides 60 days (Note 3) Price agreed by both sides 60 days Price agreed by both sides 90 days Price agreed by both sides 60 days Price agreed by both sides (Note 2) 〃	% 32.75 % 16.03 % 0.32 % 0.04 % 3.27 % 2.26 % 0.62 % 10.96 % 5.93 % 5.02 % 0.80 % 0.90 % 0.36 % 0.71 % 0.50 % 0.46

(Continued)

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PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

No	Name of company	Name of counter-party	Nature of relationship		Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of consolidated total operating revenues or total assets
2 〃 〃 〃 3 〃 〃 〃 〃 〃 4 〃 〃 〃 5 〃 6 〃 〃 〃 〃 〃 〃 〃	Tymphany Huizhou 〃 〃 〃 Tymphany Dongguan 〃 〃 〃 〃 〃 TYDC 〃 〃 〃 TYM Acoustic HK 〃 TYM HK 〃 〃 〃 〃 〃 〃 〃	TYM HK 〃 TYM Acoustic HK Tymphany Dongguan TYM HK 〃 〃 〃 〃 TYDC TYM HK 〃 TYM Acoustic HK 〃 TYM Acoustic Europe 〃 Tymphany Dongguan TYDC 〃 TYM Acoustic 〃 〃 TYML 〃	The subsidiary of TYM Acoustic HK 〃 Subsidiary 〃 The subsidiary of TYM Acoustic HK 〃 〃 〃 〃 Subsidiary The subsidiary of TYM Acoustic HK 〃 The subsidiary of Tymphany Huizhou 〃 Subsidiary 〃 The subsidiary of Tymphany Huizhou The subsidiary of Tymphany Dongguan 〃 The subsidiary of TYM Acoustic HK 〃 〃 Subsidiary 〃	Sale Accounts Receivable Sale Purchase 〃 Accounts Payable Sale Accounts Receivable Other Receivable Sale Sale Accounts Receivable Sale Accounts Receivable Purchase Accounts Payable Other Receivable Accounts Receivable Other Receivable Purchase Accounts Payable Service Expense Sale Accounts Receivable	4,846,055 1,918,374 128,122 136,680 519,874 209,815 14,670,226 3,807,364 199,141 102,767 2,361,105 415,132 311,369 220,349 1,521,567 289,275 2,393,582 826 115,227 144,552 106,040 842,005 3,775,613 218,130	Price agreed by both sides 60 days Price agreed by both sides 〃 〃 60 days Price agreed by both sides 60 days (Note 2) Price agreed by both sides 〃 60 days Price agreed by both sides 60 days Price agreed by both sides 90 days (Note 2) 60 days (Note 2) Price agreed by both sides 60 days Price agreed by both sides 〃 90 days	% 7.10 % 4.06 % 0.19 % 0.20 % 0.76 % 0.44 % 21.50 % 8.05 % 0.42 % 0.15 % 3.46 % 0.88 % 0.46 % 0.47 % 2.23 % 0.61 % 5.06 % - % 0.24 % 0.21 % 0.22 % 1.23 % 5.53 % 0.46

(Continued)

80

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

No	Name of company	Name of counter-party	Nature of relationship	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of consolidated total operating revenues or total assets
6 〃 〃 7	TYM HK 〃 〃 TYP	TYTH 〃 〃 TYM HK	The subsidiary of TYM Acoustic HK 〃 〃 〃	Sale Purchase Accounts Payable Service Revenue	140,764 555,462 185,654 114,117	Price agreed by both sides 〃 60 days Price agreed by both sides	% 0.21 % 0.81 % 0.39 % 0.17

Note 1: Disclosure of the amounts exceeding of NT$100 million. Note 2: The receivables arises from service rendering for intercopmany or material purchasing on behalf of intercompany or related party. Note 3: The other receivables arise from intercompany loans.

Note 4: Related transactions have been eliminated during the preparation of the consolidated financial statements.

(b) Information on investees:

The following is the information on investees for the year ended December 31, 2020 (excluding information on investees in Mainland China):

Name of investor	Name of investee	Location	Main businesses and products	Original i amo	nvestment unt	Balance as o December 31, 2	Balance as o December 31, 2	f 020	Highest balance during the year	Highest balance during the year	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of ownership	Carrying value	Shares (thousands)	Percentage of ownership
The Company 〃 〃 〃 〃 〃 〃 〃	Primax Cayman Primax Tech. Destiny BVI. Destiny Japan Diamond Gratus Tech. Primax AE Primax Singapore Total	Cayman Islands Cayman Islands Virgin Island Japan Cayman Islands USA Cayman Islands Singapore	Holding company Holding company Holding company Market development and customer service Holding company Market development and customer service Holding company Holding company	2,540,588 897,421 30,939 7,032 3,889,798 9,330 1,431,540 619,150 9,425,798	2,540,588 897,421 30,939 7,032 3,889,798 9,330 1,431,540 318,150 9,124,798	8,147,636 285,067 1,050 0.50 129,050 300 48,200 20,100	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	6,422,749 2,497,936 (2,996) 18,197 5,469,479 12,329 596,460 451,425 15,465,579	8,147,636 285,067 1,050 0.5 129,050 300 48,200 20,100	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	356,383 108,648 3,067 361 54,514 1,125 (364,325) (105,955)	425,429 145,801 3,067 361 53,747 1,125 (364,325) (114,387) 150,818
											53,818
Primax Singapore	Primax Thailand	Thailand	Manufacture and sale of computer peripherals devices and software	588,291	302,126	600	99.99	456,888	600	99.99	(105,889)	(105,889)
Primax Cayman	Primax HK	Hong Kong	Holding company and customer service	2,375,164	2,375,164	602,817	100.00	6,449,850	602,817	100.00	356,963	356,963
Primax Tech.	Polaris	USA	Sale of multi-function printers and computer peripheral devices	52,680	52,680	1,600	100.00	383,940	1,600	100.00	7,207	7,207
Diamond	TWEL	Cayman Islands	Holding company	4,083,950	4,083,950	192,251	100.00	5,568,549	192,251	100.00	129,052	55,243
Primax AE	AIC	Cayman Islands	Holding company	1,356,995	1,356,995	30	37.00	536,303	30	37.00	(175,361)	(84,179)
Tymphany Huizhou	TYM Acoustic HK	Hong Kong	Research and development, design, and sale of audio accessories, amplifiers and their components and holding company	1,592,954	689,954	418,090	100.00	2,402,172	418,090	100.00	371,365	371,365

(Continued)

81

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2020	Balance as of December 31, 2020	Balance as of December 31, 2020	Highest balance during the year	Highest balance during the year	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2020	December 31, 2019	Shares (thousands)	Percentage of ownership	Carrying value	Shares (thousands)	Percentage of ownership
TYM Acoustic HK 〃 〃 〃 〃 〃	TYM HK TYP TYM UK TYM Acoustic Europe TYM Acoustic TYTH	Hong Kong s a a USA a a c United Kingdom d a a c Czech a a c Taiwan d a a a Thailand o a c	Holding company and ale of audio ccessories, amplifiers nd their components Market development nd customer service of mplifiers and their omponents Research and evelopment, design of udio accessories, mplifiers and their omponents Manufacture, install nd repair of audio ccessories and their omponents Research and evelopment, design, nd sale of audio ccessories, amplifiers nd their components Manufacture and sales f audio accessories, mplifiers and their omponents	76,280 (note 1) 15 (note 1) 15,631 653,796 48,318 455,877	76,280 (note 1) 15 (note 1) 15,631 653,796 48,318 60,012	144,395 0.50 400 187,800 5,000 4,650	100.00 100.00 100.00 100.00 100.00 99.99	1,359,063 15,780 23,195 771,206 118,355 427,843	144,395 0.5 400 187,800 5,000 4,650	100.00 100.00 100.00 100.00 100.00 99.99	299,510 2,022 2,500 27,444 48,320 (17,206)	299,510 2,022 2,500 27,444 48,320 (17,206)
TYM HK	TYML	USA a a	Sales of audio ccessories, amplifiers nd their components	6,628	6,628	200	100.00	9,684	200	100.00	406	406

Note 1: The amount is the initial investment costs from the original stockholders prior to the acquisition of the Company through Diamond. Note 2: Related investments (except for AIC) have been eliminated during the preparation of the consolidated financial statements.

(c) Information on investment in Mainland China:

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

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2020 (note 2)	Investme	nt flows	Accumulated outflow of investment from Taiwan as of December 31, 2020 (note 2)	Net income (losses) of the investee	Percentage of ownership	Highest Percentage of ownership during the year	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
PCH2 Destiny Beijing PKS1	Manufacture of multifunctional peripherals, computer mice, mobile phone accessories, consumer electronics products, and shredders Research and development of computer peripheral devices and software Manufacture of computer, peripherals and keyboards	1,948,353 38,596 853,119	Indirect investment through Primax Cayman and Primax Tech. Indirect investment through Destiny BVI. Indirect investment through Primax Cayman	1,652,504 31,611 662,332	- - -	- - -	1,566,806 29,933 627,176	320,684 3,067 (18,813)	100% 100% 100%	100% 100% 100%	320,684 3,067 (18,813)	6,132,213 (3,000) 807,941	- - -

(Continued)

82

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

==> picture [500 x 178] intentionally omitted <==

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

Accumulated
Accumulated outflow of
outflow of Investment flows investment from Net Highest
businessesMain amountTotal Method investment fromTaiwan as of December 31,Taiwan as of income(losses) Percentage Percentage ofownership Investment Accumulatedremittance of
Name of and of paid-in of January 1, 2020 2020 of the of during the income earnings in
investee products capital investment (note 2) Outflow Inflow (note 2) investee ownership year (losses) Book value current period
PCQ1 Manufacture of 833,752 Indirect 602,120 - - 570,160 158,604 100% 100% 158,604 1,532,069 -
investment
computer,
through Primax
peripherals and Cayman
keyboards
Tymphany Research and 1,782,899 Indirect 3,883,674 - - 3,677,532 190,941 71.43% 71.43% 136,393 3,987,838 -
Huizhou development, investment
through
design, and sale of Diamond
audio accessories,
amplifiers and their
components
Tymphany 〃 142,540 〃 15,053 - - 14,254 65,040 71.43% 71.43% 181,934 539,298 -
Dongguan
TYDC 〃 87,382 〃 - - - - (5,520) 71.43% 71.43% (3,943) 150,848 -
----- End of picture text -----

Note 1: The above information on the exchange rate is as follows: HKD:TWD3.6772 ; USD:TWD 28.5080; CNY:TWD 4.3691.

Note 2: The differences between the accumulated out flow of investments and paid in capital was derived from the currency exchange on translation, capital increase from retained earning and working capital.

Note 3: Related investments have been eliminated during the preparation of the consolidated financial statements.

• (ii) Limitation on investment in Mainland China:

Name of Company	Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
The Company	6,907,076	8,084,807	None(note)

Note: The Company has received the Certificate issued by the Industrial Development Bureau, Ministry of Economic Affairs, allowing it to start the operating of its headquarters.

The above investment income (losses) in mainland China, except for PCH2, Destiny Beijing, PKS1 and PCQ1 which were based on financial statements audited by the Company’s auditors, others were based on the audited results of other auditors.

• (iii) Significant transactions:

The significant inter-company transactions with the subsidiaries in Mainland China, which were eliminated in the preparation of the consolidated financial statements for the year ended December 31, 2020, are disclosed in “ Information on significant transactions”, and “Business relationships and significant intercompany transactions”.

• (d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
ALPINE ASIA INVESTMENTS LIMITED	25,751,062	% 5.71

(Continued)

83

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

• (a) General information

The Group’ s reported segments are the divisions for computer peripherals and non-computer peripherals. The division for computer peripherals specializes in the manufacture and sale of computer mice, keyboards, track pads, etc. The division for non-computer peripherals specializes in the manufacture and sale of digital camera modules, mobile phone accessories, multi-function printers, scanners, shredders, amplifiers, speakers and audio systems, etc.

The Group’s reported segments consist of strategic business units which provide essentially different products and services. These units have to be separately managed as a result of the different technology and marketing strategies. Most of the business units were acquired, and the original management teams are still operating.

The Group’s segment financial information was as follows:

Revenue External revenue Intra-group revenue Total segment revenue Profit before tax from segments reported Revenue External revenue Intra-group revenue Total segment revenue Profit before tax from segments reported		2020
	Computer Peripherals $ 26,291,294 - $ 26,291,294 $ 1,845,136	Non-computer Peripherals 41,949,645 - 41,949,645 633,301 2019	Total
			68,240,939 -
			68,240,939
			2,478,437
		Non-computer Peripherals 57,771,336 - 57,771,336 1,674,786	Total
			80,649,608 -
			80,649,608
			2,913,901

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84

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Geographic information

In presenting information on the basis of geography, revenue is based on the geographical location of customers, and non-current assets are based on the geographical location of the assets. Details were as follows:

Geographic Information Revenues from external customers: China Europe America Other Total Non-current assets: China Taiwan Thailand Other Total	2020 $ 28,628,366 14,745,306 20,826,899 4,040,368 $ 68,240,939 December 31, 2020 $ 6,539,225 884,135 771,159 2,486,804 $ 10,681,323	2019
		31,841,538 23,267,214 23,186,378 2,354,478
		80,649,608
		December 31, 2019
		8,167,871 991,945 195,413 2,549,196
		11,904,425

• (c) Major customer information

A company－Non-computer Peripherals B company－Computer Peripherals －Non-computer Peripherals	2020 $ 7,153,172 $ 4,207,500 5,071,853 $ 9,279,353	2019
		11,543,557
		4,004,316 10,781,589
		14,785,905