Primax — Audit Report / Information 2020

Dec 25, 2020

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Stock Code:4915

PRIMAX ELECTRONICS LTD.

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

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Table of contents

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

Page

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

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. 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 audits the financial statements of certain investments accounted for using equity method. Those financial statements were audited by other auditors, and our opinion, insofar as it relates to the amounts included for those investments, is based solely on the reports of the other auditors. The Company’s investment in these companies constituting 14% and 15% of the total assets, as of December 31, 2020 and 2019, respectively. The related share of profit of subsidiaries and associates accounted for using the equity method amounted constituting 3% and 29% of the profit before tax, for the years ended December 31, 2020 and 2019, respectively.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, 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:

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

3-1

1. Evaluation of inventories

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

Description of key audit matter:

Inventories of the Company are measured at the lower of cost and net realizable value. Due to the fast hightech revolution, as well as the advancement of production technologies that may lead the 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, the 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 Company; 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.

1. Investments accounted for using equity method

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

Description of key audit matter:

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

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 Company to recognize its goodwill, technologies, and customer relations, as intangible assets. The rapid industrial transformation and the assessment of impairment contained an estimation uncertainty; therefore, the assessment of impairment of intangible assets, recognized from the acquisition of the subsidiaries and associates accounted for using equity method, is one of the key audit matters for our audit.

How the matter was addressed in our audit:

For the principal audit procedures on the valuation of inventories of the investments accounted for using equity method, please refer to key audit matters 1. “Evaluation of inventories”. In addition, the consolidated financial statements of all Tymphany Worldwide Enterprises Ltd. and its subsidiaries were audited by other auditors; therefore, we issued audit instructions to their auditors as guidelines to communicate the key audit matters with them and obtained the feedbacks required in the audit instructions.

3-2

The principal audit procedures on the assessment of impairment of intangible assets of the investments accounted for using equity method included: evaluating the identification of cash generating units and any indication of impairment relating to intangible assets made by management; acquiring intangible evaluation reports from external expert engaged by the Company; 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 financial reports.

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

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

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

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

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

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

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

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

3-3

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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

3. Obtain sufficient and appropriate audit evidence regarding the financial information of the investments in other entities accounted for using the equity method to express an opinion on this parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion of the Company.

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

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

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD.

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)) 1170 Accounts receivable, net (notes 6(d) and (t)) 1180 Accounts receivable from related parties, net (notes 6(d), (t) and 7) 1200 Other receivables (notes 6(d) and 7) 1310 Inventories (note 6(e)) 1470 Other current assets 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, net (note 6(f)) 1600 Property, plant and equipment (note 6(g)) 1755 Right-of-use assets (note 6(h)) 1760 Investment property, net (note 6(i)) 1780 Intangible assets (note 6(j)) 1840 Deferred tax assets (note 6(p)) 1990 Other non-current assets Total assets	December 31, 2020 Amount % $ 3,370,254 10 260,987 1 6,575,807 21 563,475 2 220,212 1 4,133,700 13 37,562 - 15,161,997 48 94,263 - 15,465,579 48 100,891 - 255,763 1 240,908 1 7,708 - 493,021 2 78,562 - 16,736,695 52 $ 31,898,692 100	December 31, 2019 Amount % 2,238,853 8 172,807 1 6,638,573 22 567,095 2 388,334 1 3,210,952 11 42,112 - 13,258,726 45 65,547 - 14,973,751 51 92,804 - 342,146 1 244,468 1 9,763 - 524,769 2 79,523 - 16,332,771 55 29,591,497 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(k)) 2170 Notes and accounts payable 2180 Accounts payable to related parties (note 7) 2120 Current financial liabilities at fair value through profit or loss (note 6(b)) 2200 Other payables (note 7) 2201 Salaries payable 2280 Current lease liabilities (note 6(m)) 2300 Other current liabilities (note 6(t)) 2320 Long-term borrowings, current portion (note 6(l)) 2365 Current refund liabilities Non-Current liabilities: 2580 Non-current lease liabilities (note 6(m)) 2630 Long-term deferred revenue (note 6(g)) 2600 Other non-current liabilities (notes 6(o) and (p)) Total liabilities 3110 Ordinary shares (note 6(q)) 3200 Capital surplus (note 6(q)) 3310 Legal reserve (note 6(q)) 3320 Special reserve (note 6(q)) 3350 Unappropriated retained earnings (notes 6(c) and (q)) 3400 Other equity interest (note 6(c)) Total equity Total liabilities and equity	December 31, 2020		December 31, 2019 Amount % - - 90,504 - 11,139,174 38 207,211 1 1,690,295 6 380,641 1 86,887 - 205,773 1 27,777 - 1,340,251 4 15,168,513 51 260,939 1 1,165,686 4 688,357 2 2,114,982 7 17,283,495 58 4,485,808 15 1,483,045 5 1,370,470 5 662,348 2 5,500,198 19 (1,193,867) (4) 12,308,002 42 29,591,497 100
			Amount %
			$ 280,000 1 62,501 - 11,625,520 37 432,171 1 2,163,057 7 256,850 1 91,140 - 541,277 2 - - 1,391,042 4 16,843,558 53 174,194 - 876,467 3 716,640 2 1,767,301 5 18,610,859 58 4,508,983 14 1,567,628 5 1,578,473 5 1,058,941 3 5,733,458 18 (1,159,650) (3) 13,287,833 42 $ 31,898,692 100

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD.

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(t) and 7) 5000 Operating costs (notes 6(e), (m), (o), (u), 7 and 12) Gross profit from operations Operating expenses (notes 6(j), (o), (r), (u), 7 and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss (note 6(d)) Total operating expenses Net operating income Non-operating income and expenses: 7100 Interest income 7010 Other income (notes 6(n), (v) and 7) 7020 Other gains and losses (note 6(w)) 7070 Share of profit of subsidiaries and associates accounted for using equity method (note 6(f)) 7050 Finance costs (note 6(m)) Total non-operating income and expenses Profit before income tax 7950 Less: Income tax expenses(note 6(p)) 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(o)) 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 financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income Comprehensive income (after tax) Earnings per share (note 6(s)) 9710 Basic earnings per share (NT dollars) 9810 Diluted earnings per share (NT dollars)	2020 Amount % $ 34,990,027 100 31,636,141 90 3,353,886 10 496,996 1 502,779 2 1,097,122 3 8,625 - 2,105,522 6 1,248,364 4 9,115 - 12,225 - 851,332 2 150,818 - (48,812) - 974,678 2 2,223,042 6 303,777 1 1,919,265 5 (4,533) - (178) - - - (4,711) - 26,337 - - - 26,337 - 21,626 - $ 1,940,891 5 $ 4.30 $ 4.27	2019 Amount % 36,178,733 100 32,669,734 90 3,508,999 10 609,578 2 526,757 1 1,111,728 3 3,443 - 2,251,506 6 1,257,493 4 17,280 - 12,248 - 380,362 1 896,040 2 (69,109) - 1,236,821 3 2,494,314 7 359,444 1 2,134,870 6 (2,146) - (17,148) - - - (19,294) - (470,683) (1) - - (470,683) (1) (489,977) (1) 1,644,893 5 4.80
		4.77

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD.

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Balance on 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 Disposal of investments in equity instruments designated at fair value through other comprehensive income Retirement of restricted stock Issuance of restricted stock Balance on 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 on December 31, 2020	Share capital		Capital surplus				Retained earnings					O	ther equity interes	t	Unearned employee compensation	Total equity
											Exchange differences on translation of foreign financial statements		Unrealized gains (losses) from financial assets at fair value through other comprehensive income
	Ordinary shares				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) - (178) (178) - - - (13,579) - - - (41,833)		(88,762) - - - - - - - 61,099 - 9,763 (117,026) (134,926) - - - - - - - 117,593 7,975 (103,931) (113,289)	11,625,821
			- -		- -		- -									2,134,870 (489,977)
			-		-		-									1,644,893
					182,687 - - - - - - -		- 363,283 - - - - - -									- - (1,072,341) 48,530 61,099 - - -
					1,370,470 - -		662,348 - -									12,308,002 1,919,265 21,626
					-		-									1,940,891
					208,003 - - - - - -		- 396,593 - - - - -									- - (1,076,876) (1,777) 117,593 - -
					1,578,473		1,058,941									13,287,833

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese)

PRIMAX ELECTRONICS LTD.

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 Amortization of long-term deferred revenue Expected credit loss Interest expense Interest income Compensation cost of share-based payment Share of profit of subsidiaries and associates accounted for using equity method Loss on disposal of property, plant and equipment Gain on disposal of unamortized expense Amortization of unrealized revenue of patents disposed Other Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Accounts receivable, including related parties Other receivable Inventories Other current assets Other operating assets Changes in operating assets Notes and accounts payable, including related parties Salaries payable Other payables Other current liabilities Long-term deferred revenue 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 Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of unamortized expense Acquisition of unamortized expense Decrease in refundable deposits Dividends received Other Net cash used in investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term borrowings Repayments of long-term borrowings Increase in guarantee deposits received Payment of lease liabilities Cash dividends paid Decrease in long-term accounts payable to related parties Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 $ 2,223,042 138,866 30,783 (276,931) 8,625 41,236 (9,115) 117,593 (150,818) 19 (864) (15,450) (2) (116,058) 57,761 160,162 (953,531) (203) (88,237) (824,048) 458,343 (123,791) 291,554 115,432 (10,487) 482,498 1,213,549 389,501 273,443 2,496,485 9,115 (41,163) (41,298) 2,423,139 (28,894) - (301,000) (41,172) 3,450 (11,586) 310 191 - (378,701) 280,000 (27,777) - (88,384) (1,076,876) - (913,037) 1,131,401 2,238,853 $ 3,370,254	2019 2,494,314 138,740 67,919 (336,120) 3,443 63,746 (17,280) 61,099 (896,040) - - (15,450) -
		(929,943)
		408,411 (210,121) (1,095,978) (11,948) (97,725)
		(1,007,361)
		749,305 135,868 653,795 (7,511) 693,975 186,052
		2,411,484
		1,404,123
		474,180
		2,968,494 17,280 (63,675) (248,894)
		2,673,205
		(33,273) 214,202 (318,150) (50,266) - (4,378) 200 214 (89)
		(191,540)
		(950,000) (55,556) 39,418 (85,639) (1,072,341) (357,703)
		(2,481,821)
		(156) 2,239,009
		2,238,853

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only 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 major business activities of the Company were the manufacture and sale of multi-function printers, scanners, digital camera modules, computer mice, keyboards, track pads, mobile phone accessories, consumer electronics products and shredders.

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 parent company only financial statements:

The parent company only 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 Company has initially adopted the following new amendments, which do not have a significant impact on its parent company only 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”

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

(Continued)

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PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2021, would not have a significant impact on its parent company only 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 Company, 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 Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

The Company 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 parent company only 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)

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PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

(4) Summary of significant accounting policies:

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

(a) Statement of compliance

These annual parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“ the Regulations”).

(b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the parent company only 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 the plan assets, less the present value of the defined benefit obligation.

• (ii) Functional and presentation currency

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

• (c) Foreign currencies

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of the Company 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 the functional currency using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into functional currency using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

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

(Continued)

11

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Company’s functional currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated to the Company’ s functional currency 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 Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interest. When the Company disposes of only part of its investment in an associate or 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.

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

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

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

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

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

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

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

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

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

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

• (iv) 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.

(Continued)

12

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

(e) 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.

(f) Financial instruments

Accounts receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value, plus 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 Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

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

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

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

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

(Continued)

13

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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

On initial recognition of an equity investment that is not held for trading, the Company 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 Company’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 Company 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) Assessment 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 Company 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 Company 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；

• ‧ prepayment and extension features；and

• ‧ terms that limit the Company’s claim to cash flows from specified assets (e.g. nonrecourse features).

(Continued)

14

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

• 5) Impairment of financial assets

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

The Company 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 Company is exposed to credit risk.

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

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

The Company 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 Company 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 Company in accordance with the contract and the cash flows that the Company expects to receive). ECL are discounted at the effective interest rate of the financial asset.

(Continued)

15

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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

• 6) Derecognition of financial assets

The Company 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 Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

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

(Continued)

16

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

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

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

• 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 Company 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 Company 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.

(Continued)

17

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average-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.

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

(h) Investments in subsidiaries

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

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. When the Company loses control over its subsidiaries, the Company derecognizes the investment by the book value on the date of loss of control and remeasures the rest of the investments at fair value on the same date.

(i) 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.

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.

(j) 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.

(Continued)

18

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

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

• (iii) Depreciation

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

Land 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 and additional equipment: 1 ~ 51 years

• 2) Machinery and equipment: 1 ~4 years

• 3) 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.

(k) Lease

• (i) Identifying a lease

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

(Continued)

19

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

• 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 Company 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 Company has elected not to separate non-lease components and accounted for the lease and non-lease components as a single lease component.

• (ii) As a lessee

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

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

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

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

• －

• fixed payments, including in-substance fixed payments;

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

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

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

(Continued)

20

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

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

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

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

• －

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

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

• －

• there is any lease modifications

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

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

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

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

• (iii) As a lessor

When the Company 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 Company 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 Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company 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, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

(Continued)

21

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

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

The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term.

• (l) Intangible assets

• (i) Recognition and measurement

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

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete 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 trademarks, patents and copyrights, that are acquired by the Company 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 from the date that they are available for use.

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

• 1) Trademarks 10 years

• 2) Patents 2.5~10 years 3) Copyrights 15 years

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

(Continued)

22

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

(m) Impairment of non-financial assets

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

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

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

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

(n) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company 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 Company’s main types of revenue are explained below.

(i) Sale of goods

The Company sales computer peripherals and non-computer peripherals to customers. The Company 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 Company has objective evidence that all criteria for acceptance have been satisfied.

The Company often offers volume 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 contract liability 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 Company has a right to an amount of consideration that is unconditional.

(Continued)

23

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(ii) Rendering of services

The Company 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 Company 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 Company does not adjust any of the transaction prices for the time value of money.

(o) Deferred grant service

Deferred grant revenue with additional conditions shall be recognized if the Company 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 Company’s expenses that have been incurred or to supply immediate financial support to the Company and there is no related cost in the future, it shall be recognized in profit or loss when the grant revenue becomes receivable.

(p) 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 Company’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.

(Continued)

24

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

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

(q) 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 expected and actual outcomes.

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

(r) 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.

(Continued)

25

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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 Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

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

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

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

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

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

• 1) the same taxable entity; or

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

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.

• (s)

Earnings per share

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

(Continued)

26

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

(t) Operating segments

Please refer to the Company’s consolidated financial statements for the years ended December 31, 2020 and 2019, for further details.

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

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

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 the changes in accounting estimates in the next period.

There are no critical judgments made in applying the accounting policies that have significant effects on the amounts recognized in the parent company only 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 Company 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(e) for valuation of inventories.

• (b) Valuation of inventories and assessment of impairment of intangible assets of investments accounted for using equity method

Please refer to note 5(a) for inventories valuation. The Company’s investments accounted for using equity method include intangible assets from premium investment. The assessment of impairment of intangible assets required the Company 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 Company’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company 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 Company 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.

(Continued)

27

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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

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

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

• (c) Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).

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

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Time deposits	December 31, 2020 $ 600 2,058,286 1,311,368 $ 3,370,254	December 31, 2019
		693 2,238,160 -
		2,238,853

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

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

• (i) The derivative financial instruments were as follows:

The derivative financial instruments were as follows:
Mandatorily measured at FVTPL: Derivative instruments not used for hedging Forward exchange contracts Foreign exchange swap contracts	December 31, 2020 $ 14,481 246,506 $ 260,987	December 31, 2019
		68,661 104,146
		172,807

(Continued)

28

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

Financial liabilities held-for-trading: Derivative instrument not used for hedging Forward exchange contracts Foreign exchange swap contracts	December 31, 2020 $ (399,762) (32,409) $ (432,171)	December 31, 2019 (193,946) (13,265) (207,211)

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

	December 31, 2020	December 31, 2020
Derivative financial instruments Forward exchange contracts – buy USD / sell TWD Forward exchange contracts －buy TWD / sell USD Foreign exchange swap contracts– swap in TWD/ swap out USD	Nominal amount (in thousands) USD 764,000 USD 11,500 USD 593,000	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 6, 2021~ June 23, 2021 28.075~29.424

	December 31, 2019	December 31, 2019
Derivative financial instruments 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	Nominal amount (in thousands) USD 511,000 USD 106,000 USD 117,700 USD 10,000 USD 269,000 USD 11,000	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 6.9973~7.1710 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

(Continued)

29

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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

• (c) Financial assets at FVOCI

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. Total	December 31, 2020 $ 1,263 6,002 49 60,722 26,227 $ 94,263	December 31, 2019
		1,076 2,102 49 55,094 7,226
		65,547

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

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

• (iii) As a result of enhancing its working capital, the Company 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 Company had participated and invested the amounts of $9,006 and $25,953 in the years ended December 31, 2020 and 2019, respectively.

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

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

• (d) Accounts receivable (including related parties)

Accounts receivable Accounts receivable – related parties Less: allowance for doubtful accounts Total	December 31, 2020 $ 6,600,651 563,475 (24,844) $ 7,139,282	December 31, 2019 6,656,011 567,095 (17,438) 7,205,668

(Continued)

30

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

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

• (ii) The Company applies the simplified approach to provide for its ECL, the use of lifetime ECL provision for all accounts receivables. To measure the ECL, 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:

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 accounts receivable (including related parties) Lifetime ECL rate $ 6,418,944 0% 697,858 0%~3.16% 37,084 0%~5% 6,154 0%~10% 4,067 0%~25% - 0%~80% 19 0%~100% $ 7,164,126 December 31, 2019		Loss allowance provision of lifetime ECL
			- 22,030 1,854 616 325 - 19
			24,844
		Lifetime ECL rate 0% 0%~3% 0%~5% 0%~10% 0%~25% 0%~80% 0%~100%	Loss allowance provision of lifetime ECL
			- 15,735 931 16 719 29 8
			17,438

(Continued)

31

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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

		2020	2019
Balance on January 1, 2020 and 2019	$	17,438	18,721
Impairment losses recognized		8,625	3,443
Amounts written off		-	(4,220)
Effect of exchange rate changes		(1,219)	(506)
Balance on December 31, 2020 and 2019	$	24,844	17,438

• (iv) The Company entered into agreements with banks to sell its accounts receivable without recourse. According to the agreements, within the limit of its credit facilities, the Company does not need to guarantee the capability of its customers to pay for reasons other than commercial disputes when transferring its accounts receivable. The Company 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 Company shall pay handling charges based on a fixed rate. The Company 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:

				December 31, 2020	December 31, 2020	Range of Guarantee (promissory Interest rate note) - - - US$ 3,750 - NT$ 58,000 Range of Guarantee (promissory Interest rate note) 2.19%~2.20% US$ 13,500 - - - US$ 3,750
Buyer	Amount derecognized			Amount advanced Amount Recognized in Other Unpaid Paid Receivables - - 158,092 - - - - - - - - 158,092 December 31, 2019
EnTie Bank Mega International Commercial Bank Bank of Taiwan	$ 158,092 - - $ 158,092
Buyer	Amount derecognized			Amount advanced Unpaid Paid - 901,804 - - - - - 901,804	Amount Recognized in Other Receivables 100,200 193,366 - 293,566
				Unpaid - - - -
HSBC Bank EnTie Bank Mega International Commercial Bank	$ 1,002,004 193,366 - $ 1,195,370

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

(Continued)

32

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(e) Inventories

Raw materials Semi-finished goods Finished goods and merchandise	December 31, 2020 $ 90,376 107,340 3,935,984 $ 4,133,700	December 31, 2019
		117,149 121,360 2,972,443
		3,210,952

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

Gains on inventory valuation Losses on disposal of inventories Losses on physical inventories	2020 $ 8,724 (39,420) (87) $ (30,783)	2019
		38,554 (104,344 (2,129
		(67,919

(f) Investments accounted for using equity method

The Company’s investments accounted for using the equity method at the reporting dates were as follows:

Subsidiaries	December 31, 2020 $ 15,465,579	December 31, 2019 14,973,751

(i) Please refer to the Company’s consolidated financial statements for the year ended December 31, 2020, for details of subsidiaries.

• (ii) The Company did not provide investments accounted for using the equity method as collateral.

(iii) To expand the business scale, the Company established a subsidiary, Primax Electronics (Singapore) Pte. Ltd., in 2019, which held a newly established subsidiary, Primax Electronics (Thailand) Pte. Ltd.. All relevant statutory registration procedures had been completed. Furthermore, the Company invested the amounts of USD10,000 and USD10,100 in 2020 and 2019, respectively.

(Continued)

33

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

• (iv) The Company held ALT International Co., Ltd (Cayman) (“ AIC” ) through its subsidiary, Primax AE (Cayman) Holding Ltd.. In July 2019, AIC held an interim shareholders’ meeting and re-elected its directors, wherein the Company did not obtain more than 50% of its voting rights in the board, resulting in the Company to lose the right to direct AIC’ s relevant activities, and also lose its control over it. However, the Company still retained a significant influence over it. Thereafter, the investment in AIC was reclassified to investments accounted for using the equity method. This transaction was recognized as repurchase after disposal, which was remeasured at fair value and resulted in a revaluation loss of $279,377 under share of profit of subsidiaries and associates accounted for using equity method. Please refer to note 6(h) of the Company’ s consolidated financial statements for the year ended December 31, 2020.

(g) Property, plant and equipment

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

Cost or deemed cost: Balance on January 1, 2020 Additions Disposals Reclassifications Balance on December 31, 2020 Balance on January 1, 2019 Additions Disposals Reclassifications Balance on December 31, 2019 Depreciation: Balance on January 1, 2020 Depreciation Disposals Balance on December 31, 2020 Balance on January 1, 2019 Depreciation Disposals Balance on December 31, 2019 Carrying amounts: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019	Land $ 22,879 - - - $ 22,879 $ 22,879 - - - $ 22,879 $ - - - $ - $ - - - $ - $ 22,879 $ 22,879 $ 22,879	Buildings and additional equipment 141,673 - - - 141,673 141,673 - - - 141,673 132,866 347 - 133,213 132,519 347 - 132,866 8,460 8,807 9,154	Machinery and equipment 108,743 13,572 (3,082) 3,237 122,470 68,630 20,542 (1,716) 21,287 108,743 60,823 18,593 (1,304) 78,112 47,735 14,804 (1,716) 60,823 44,358 47,920 20,895	Other equipment 58,865 11,384 (5,355) - 64,894 60,372 2,375 (4,222) 340 58,865 49,146 5,495 (5,313) 49,328 47,934 5,434 (4,222) 49,146 15,566 9,719 12,438	Testing equipment 3,479 16,216 - (10,067) 9,628 26,657 27,349 - (50,527) 3,479 - - - - - - - - 9,628 3,479 26,657	Total
						335,639 41,172 (8,437) (6,830)
						361,544
						320,211 50,266 (5,938) (28,900)
						335,639
						242,835 24,435 (6,617)
						260,653
						228,188 20,585 (5,938)
						242,835
						100,891
						92,804
						92,023

(i) The unamortized deferred revenue of equipment subsidy amounted to $876,467 and $1,165,686 as of December 31, 2020 and 2019, respectively.

(ii) The Company did not provide property, plant and equipment as collateral.

(Continued)

34

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(h) Right-of-use assets

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

Cost: Balance on January 1, 2020 Additions Disposals Balance on December 31, 2020 Balance on January 1, 2019 Additions Balance on December 31, 2019 Depreciation: Balance on January 1, 2020 Depreciation Disposals 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 (i) 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	Land Buildings $ - 422,216 - 721 - - $ - 422,937 $ - 421,495 - 721 $ - 422,216 $ - 86,004 - 86,388 - - $ - 172,392 $ - - - 86,004 $ - 86,004 $ - 250,545 $ - 336,212 $ - 421,495 Land $ 162,012 - $ 162,012 $ 162,012 - $ 162,012	Land Buildings $ - 422,216 - 721 - - $ - 422,937 $ - 421,495 - 721 $ - 422,216 $ - 86,004 - 86,388 - - $ - 172,392 $ - - - 86,004 $ - 86,004 $ - 250,545 $ - 336,212 $ - 421,495 Land $ 162,012 - $ 162,012 $ 162,012 - $ 162,012	Vehicles Other equipments Total 8,427 2,822 433,465 4,488 1,402 6,611 (906) - (906) 12,009 4,224 439,170 5,370 - 426,865 3,057 2,822 6,600 8,427 2,822 433,465 4,098 1,217 91,319 4,303 1,586 92,277 (189) - (189) 8,212 2,803 183,407 - - - 4,098 1,217 91,319 4,098 1,217 91,319 3,797 1,421 255,763 4,329 1,605 342,146 5,370 - 426,865 Buildings and other equipments Total 172,167 334,179 - - 172,167 334,179 172,167 334,179 - - 172,167 334,179
	$ $ $ $ $ $ $ $ $ $ $

(Continued)

35

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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 $ 33,941 - $ 33,941 $ 33,941 - $ 33,941 $ 128,071 $ 128,071 $ 128,071	Buildings and other equipments Total 55,770 89,711 3,560 3,560 59,330 93,271 52,210 86,151 3,560 3,560 55,770 89,711 112,837 240,908 116,397 244,468 119,957 248,028 $ 643,812 $ 623,432 $ 590,010	Total
			89,711 3,560
			93,271
			86,151 3,560
			89,711
			240,908
			244,468
			248,028

• (i) The fair value of investment property is based on the quotation from third 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 15 years. Subsequent renewals are negotiated with the lessee, and no contingent rents are charged. Please refer to note 6(n) for further information.

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

(j)

• Intangible assets

The cost and amortization of the intangible assets of the Company for the years ended December 31, 2020 and 2019, were as follows:

Cost: Balance on January 1, 2020 Acquisition Balance on December 31, 2020 Balance on January 1, 2019 Acquisition Balance on December 31, 2019	Trademarks $ 25,584 - $ 25,584 $ 25,584 - $ 25,584	Patents 64,271 - 64,271 64,271 - 64,271	Copyrights 30,832 - 30,832 30,832 - 30,832	Total
				120,687 -
				120,687
				120,687 -
				120,687

(Continued)

36

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

Amortization: Balance on January 1, 2020 Amortization Balance on December 31, 2020 Balance on January 1, 2019 Amortization Balance on December 31, 2019 Carrying amount: Balance on December 31, 2020 Balance on December 31, 2019 Balance on January 1, 2019	Trademarks $ 25,584 - $ 25,584 $ 23,665 1,919 $ 25,584 $ - $ - $ 1,919	Patents 64,271 - 64,271 64,271 - 64,271 - - -	Copyrights 21,069 2,055 23,124 19,013 2,056 21,069 7,708 9,763 11,819	Total
				110,924 2,055
				112,979
				106,949 3,975
				110,924
				7,708
				9,763
				13,738

(i) In 2020 and 2019, the amortizations of intangible assets amounted to $2,055 and $3,975, respectively, recorded as operating expenses.

(ii) The Company did not provide any of the aforementioned intangible assets as collateral.

(k) Short-term borrowings

The details were as follows:

Unsecured bank loans Unused credit lines Annual interest rates	December 31, 2020 $ 280,000 $ 9,117,536 0.8%~0.93%	December 31, 2019
		-
		9,853,352
		0.8%~3.09%

(l) Long-term borrowings

Unsecured bank loans Less: current portion Unused credit lines		December 31, 2019 Annual interest rate Maturity year Amount 1.35% 2020 $ 27,777 (27,777) $ - $ -
	Currency	Annual interest rate
	TWD	1.35%

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

(Continued)

37

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(m) Lease liabilities

Current Non-current	December 31, 2020 $ 91,140 $ 174,194	December 31, 2019 86,887 260,939

Non-current	$ 174,194	260,939
For the maturity analysis, please refer to note 6(x). 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	2020 $ 6,532 $ 210	2019
		8,289
		1,137

The amounts recognized in the statement of cash flows for the Company 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 $ (210) (6,532) (88,384) $ (95,126)	2019
		(1,137 (8,289 (85,639
		(95,065

(i) Real estate leases

The Company leases buildings for its office and staff dormitory. The leases typically run for a period of one to five years. Some leases require additional rental payments depending on the changes in fair value of the lease assets.

(ii) Other leases

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

The Company also leases vehicles with lease terms of one to two years. These leases are shortterm or leases of low-value items. The Company decided to apply recognition exemptions, and had elected not to recognize its right-of-use assets and lease liabilities for these leases.

(n) Operating lease

The Company leases out its investment property. The Company 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(i).

(Continued)

38

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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

the reporting date was as follows:
Less than one year Between two and five years More than five years Total undiscounted lease payments	December 31, 2020 $ 11,667 40,363 51,135 $ 103,165	December 31, 2019
		11,451 39,589 61,032 112,072

Rental income from investment properties amounted to $11,330 and $11,332 in 2020 and 2019, respectively.

(o) 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 Company 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 Company 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.

The Company’ 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.

(Continued)

39

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

• 2) Movements in present value of defined benefit obligations

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

2020 Defined benefit obligation on January 1 Business combinations $ 163,560 Benefits paid (22,029) Current service costs and interest cost 1,843 Remeasurement of net defined benefit liabilities 7,553 Defined benefit obligation on December 31 $ 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 Company for the years ended December 31, 2020 and 2019, were as follows:

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

• 4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company for the years ended December 31, 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)

40

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

• 5) Remeasurement of net defined liability (asset) recognized in other comprehensive income

The Company’s remeasurement of 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	2020 2019 % 0.350 % 0.800 % 2.750 % 3.000

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

7) Sensitivity analysis

When computing the present value of the defined benefit obligations, the Company 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)

41

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only 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 change in the method and assumptions used in the preparation of the sensitivity analysis for 2020 and 2019.

(ii) Defined contribution plans

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

The Company recognized pension costs under the defined contribution method amounting to $48,985 and $47,536 for the years ended December 31, 2020 and 2019, respectively, recorded as operating expenses and operating cost in the statement of comprehensive income.

(p) Income taxes

• (i) The components of 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 $ 285,876 17,901 $ 303,777	2019 414,614 (55,170) 359,444

• (ii) The Company had no income tax recognized directly in equity or other comprehensive income for the years ended December 31, 2020 and 2019.

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

Profit before tax Income tax calculated based on the Company’s domestic tax rate Overseas investment gains recognized under the equity method Investment tax credits accrued Prior year’s income tax adjustment Surtax on unappropriated earnings Others Income taxes expense	2020 $ 2,223,042 444,608 (113,490) (71,569) 45,356 18,052 (19,180) $ 303,777	2019 2,494,314 498,863 (130,698) (77,016) 25,750 12,470 30,075 359,444

(Continued)

42

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(iv) 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:

December 31, 2020 Aggregate amount of temporary differences related to investments in subsidiaries $ 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
		136,700

The deductible temporary differences cannot be realized. Therefore, they were not recognized as deferred tax assets.

• 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 Recognized in profit or loss Balance on December 31, 2019	Investment income recognized under the equity method (overseas)	Unrealized foreign exchange gains	Unrealized foreign exchange gains		Others	Total 395,622 (13,847) 381,775 359,202 36,420 395,622
	$ 369,676 (83,326) $ 286,350 $ 321,167 48,509 $ 369,676		24,699 69,479		1,247 - 1,247 31,108 (29,861) 1,247
			94,178
			6,927 17,772
			24,699

(Continued)

43

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

Deferred tax assets: Balance on January 1, 2020 Recognized in profit or loss Balance on December 31, 2020 Balance on January 1, 2019 Recognized in profit or loss Balance on December 31, 2019	Bad debt in excess of tax limit $ 39,958 - $ 39,958 $ 46,958 (7,000) $ 39,958	Unfunded pension fund contribution 15,957 (905) 15,052 16,300 (343) 15,957	Refund liabilities 187,650 5,389 193,039 159,382 28,268 187,650	Loss on inventory valuation 11,685 (1,244) 10,441 17,096 (5,411) 11,685	Deferred granted revenue 233,137 (57,844) 175,293 161,566 71,571 233,137	Unrealized revenue from disposal of assets 27,296 (3,090) 24,206 30,386 (3,090) 27,296	Others 9,086 25,946 35,032 1,491 7,595 9,086	Total
								524,769 (31,748
								493,021
								433,179 91,590
								524,769

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

(q) Capital and other equity

(i) Ordinary Shares

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

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

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

(Continued)

44

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(ii) Capital surplus

The balances of capital surplus were as follows:

The balances of capital surplus were as follows:
Additional paid-in capital Employee stock options Restricted employee stock options Long-term stock 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 common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, 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.

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 shareholders’ meeting, and the distribution amount is limited to the portion of legal reserve which exceeds 25 percent of the paid-in capital.

(Continued)

45

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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.

(r) Share-based payment

(i) 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)

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.

(Continued)

46

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

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 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.

• Note 5: 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)

47

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

1) 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

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

Restricted stock	2020 $ 117,593	2019
		61,099

(s) 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 and the weighted-average number of ordinary shares outstanding was as follows:

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

Weighted-average number of ordinary shares (thousand shares)

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

(Continued)

48

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only 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 and the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares was as follows:

Profit of the Company for the year Weighted-average number of ordinary shares (diluted / thousand shares) Diluted earnings per share (NT dollars)	2020 $ 1,919,265 449,909 $ 4.27	2019
		2,134,870
		447,663
		4.77

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

Weighted-average number of ordinary shares on December 31 (basic) Estimated effect of employee stock bonuses Effect of restricted stock Weighted-average number of ordinary shares on December 31 (diluted)	2020 445,829 1,935 2,145 449,909	2019
		444,465 1,462 1,736
		447,663

• (t) Revenue from contracts with customers

(i) Disaggregation of revenue

Goods sold Service rendered Goods sold Service rendered Mainland China Europe America Other		2020	2020	Total 34,540,368 449,659 34,990,027 Total 34,951,830 1,226,903 36,178,733 2019 25,946,885 4,365,971 3,624,571 2,241,306 36,178,733 (Continued)
	Computer Peripherals $ 24,022,677 61,233 $ 24,083,910	Non-computer Peripherals 10,517,691 388,426 10,906,117 2019

49

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(ii) Contract balances

Accounts receivable (including related parties) Less: allowance for impairment Contract liabilities (recorded as other current liabilities)	December 31, 2020 $ 7,164,126 (24,844) $ 7,139,282 $ 121,554	December 31, 2019 7,223,106 (17,438) 7,205,668 57,991	January 1, 2019 7,636,243 (18,721)
			7,617,522
			53,366

For details on accounts receivable and allowance for impairment, please refer to note 6(d).

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 $55,901 and $32,563, 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.

(u) Employee’s, 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

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 estimates and recognized as profit or loss in the distribution year.

(Continued)

50

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

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

Except for the difference on the directors’ 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.

(v) Other income

The details of other income for the years ended December 31, 2020 and 2019, were as follows:

Rent income Cash dividend income	2020 $ 12,034 191 $ 12,225	2019
		12,034 214
		12,248

(w) Other gains and losses

The details of other gains and losses for the years ended December 31, 2020 and 2019, were as follows:

Net losses on financial assets/liabilities measured at FVTPL Foreign currency exchange gains, net Other	2020 $ (171,144) 852,460 170,016 $ 851,332	2019
		(34,404) 276,315 138,451
		380,362

(Continued)

51

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(x) 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 Company’s concentration of credit risk, please refer to note 6(y).

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities:

December 31, 2020 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Accounts payable to related parties Other payables Salaries payable Lease liabilities Refund liabilities Guarantee deposits Derivative financial liabilities: Outflow Inflow December 31, 2019 Non-derivative financial liabilities: Notes and accounts payable Accounts payable to related parties Other payables Salaries payable Lease liabilities Refund liabilities Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow	Carrying amount $ 280,000 62,501 11,625,520 1,491,003 256,850 265,334 1,391,042 1,991 432,171 - - $ 15,806,412 $ 90,504 11,139,174 1,250,253 380,641 347,826 1,340,251 27,777 222,005 207,211 - - $ 15,005,642	Contractual cash flows 280,154 62,501 11,625,520 1,491,003 256,850 273,490 1,391,042 1,991 - 4,601,941 (4,169,770) 15,814,722 90,504 11,139,174 1,250,253 380,641 362,433 1,340,251 27,822 222,005 - 807,886 (598,600) 15,022,369	Within 1 year 280,154 62,501 11,625,520 1,491,003 256,850 95,781 1,391,042 - - 4,601,941 (4,169,770) 15,635,022 90,504 11,139,174 1,250,253 380,641 93,359 1,340,251 27,822 - - 807,886 (598,600) 14,531,290	1~2 years - - - - - 91,755 - - - - - 91,755 - - - - 92,134 - - - - - - 92,134	2~5 years - - - - - 85,954 - - - - - 85,954 - - - - 176,940 - - - - - - 176,940	Over 5 years
						- - - - - - - 1,991 - - -
						1,991
						- - - - - - - 222,005 - - -
						222,005

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

(Continued)

52

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

• (iii) Currency risk

• 1) Exposure to foreign currency risk

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

Financial assets Monetary items USD:TWD Financial liabilities Monetary items USD:TWD	December 31, 2020 Foreign currency Exchange rate TWD $ 371,535 28.508 10,591,710 500,204 28.508 14,259,814	December 31, 2020 Foreign currency Exchange rate TWD $ 371,535 28.508 10,591,710 500,204 28.508 14,259,814	December 31, 2019	December 31, 2019
	Foreign currency $ 371,535 500,204	Exchange rate 28.508 28.508	Foreign currency 324,583 448,430	Exchange rate TWD 30.106 9,771,900 30.106 13,500,424

• 2) Sensitivity analysis

The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts and other receivables (including related parties), loans and borrowings, notes and accounts payable (including related parties), and other payables (including related parties) that are denominated in foreign currency.

A weakening (strengthening) of 5% of the TWD against the USD as of December 31, 2020 and 2019, would have decreased or increased the net profit before tax by $183,405 and $186,426, respectively. The analysis is performed on the same basis for both periods.

3) Exchange gains and losses on monetary items

The Company’s exchange gains and losses on monetary items (including realized and unrealized) translated to functional currency were as follows:

TWD	2020 Exchange gains and losses Average exchange rate $ 852,460 1	2019
	Exchange gains and losses $ 852,460	Exchange gains and losses Average exchange rate 276,315 1

(iv) Interest rate analysis

Please refer to note 6(y) for the interest rate exposure of 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 liabilities with variable interest rates, the analysis is based on the assumption that the amount of liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents the Company management’ s assessment of the reasonably possible interest rate change.

(Continued)

53

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

If the interest rate had increased or decreased by 0.25%, and assumed all other variables remain constant, the net profit before tax would have increased or decreased by $7,781 and by $5,526 for the years ended December 31, 2020 and 2019, respectively. This is mainly due to bank savings and borrowings with variable interest rates.

• (v) Fair value

• 1) Kinds of financial instruments and fair value

The carrying amount and fair value of the Company’ 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 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 (including related parties) Other payables Salaries payable Lease liabilities Refund liabilities Guarantee deposits Total		December 31, 2020	December 31, 2020	December 31, 2020
	Carrying amounts $ 260,987 $ 94,263 $ 3,370,254 7,139,282 220,212 24,419 $ 10,754,167 $ 432,171 $ 280,000 11,688,021 1,491,003 256,850 265,334 1,391,042 1,991 $ 15,374,241		Fair Value
		Level 1 - - -	Level 2 - - -	Level 3 Total 260,987 260,987 94,263 94,263 432,171 432,171

(Continued)

54

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

Financial assets at FVTPL – current Financial assets at FVOCI – non current Financial assets measured at amortized cost Cash and cash equivalents 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 (including related parties) Other payables Salaries payable Lease liabilities Refund liabilities Guarantee deposits Total		December 31, 2019	December 31, 2019	December 31, 2019
	Carrying amounts $ 172,807 $ 65,547 $ 2,238,853 7,205,668 388,334 24,729 $ 9,857,584 $ 207,211 $ 27,777 11,229,678 1,250,253 380,641 347,826 1,340,251 222,005 $ 14,798,431		Fair Value
		Level 1 - - -	Level 2 - - -	Level 3 Total 172,807 172,807 65,547 65,547 207,211 207,211

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)

55

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

The Company 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 lack of liquidity. When prices are available, 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

Balance on January 1 Recognized in profit or loss Recognized in other comprehensive income Acquisition / disposal Balance on December 31		2020	Total 31,143 (171,144) (178) 63,258 (76,921)		2019	Total 86,519 (34,404) 1,387 (22,359) 31,143
	FVTPL $ (34,404) (171,144) - 34,364 $ (171,184)	FVOCI 65,547 - (178) 28,894 94,263		FVTPL 55,632 (34,404) - (55,632) (34,404)	FVOCI 30,887 - 1,387 33,273 65,547

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

The fair value measurements of the Company 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)

56

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only 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.

• (y) Financial risk management

• (i) Overview

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

The Company’s board of directors oversees the management’s monitoring of the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The board of directors is assisted in its oversight role by 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 Company if a customer or a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Company’ s cash and cash equivalents, accounts receivables (including related parties), and derivative instruments.

1) Cash and cash equivalents

The Company had deposited $3,227,058 (including restricted deposits) in DBS Bank and 9 other financial institutions, and $2,181,697 (including restricted deposits) in HSBC Bank and 5 other financial institutions, representing 10% and 7% of total assets, as of December 31, 2020 and 2019, respectively. The Company believes that there is no significant credit risk from the above-mentioned financial institutions.

(Continued)

57

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

2) Accounts receivable

Sales to individual customers (including related parties) constituting over 10% of total revenue for the years ended December 31, 2020 and 2019, totaled 16% and 12%, respectively; also 19% and 5%, respectively, of the ending balance of accounts receivable (including related parties) were accounted for by those customers. In order to reduce credit risk, the Company 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, and the Company did not suffer any significant credit loss from those customers during the financial reporting period.

3) Derivative instruments

The Company entered into derivative instrument contracts with reputable and creditworthy financial institutions. The Company 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 Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’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 Company’ s reputation.

The Company manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Company had unused credit line of $9,117,536 and $9,853,352 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 Company’ 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 Company is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the functional currency. These transactions are denominated in USD.

The Company uses forward exchange contracts and foreign exchange swap contracts to hedge its currency risk. The Company 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.

(Continued)

58

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

2) Interest rate risk

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

(z) 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 Company 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 Company’s debt ratio as of December 31, 2020 and 2019, were both 58%.

• (aa) 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 Long-term accounts payable to related parties Total liabilities from financing activities	January 1, 2020 $ - 27,777 347,826 $ 375,603 January 1, 2019 $ 950,000 83,333 426,865 357,703 $ 1,817,901	Cash flows 280,000 (27,777) (88,384) 163,839 Cash flows (950,000) (55,556) (85,639) (357,703) (1,448,898)	Non-cash changes - - 5,892 5,892 Non-cash changes - - 6,600 - 6,600	December 31, 2020
				280,000 - 265,334
				545,334
				December 31, 2019
				- 27,777 347,826 -
				375,603

(7) Related-party transactions:

(a) Names and relationship with related parties

Name of related party Primax Industries (Cayman Holding) Ltd. (Primax Cayman) Primax Technology (Cayman Holding) Ltd. (Primax Tech.) Destiny Technology Holding Co., Ltd. (Destiny BVI.)	Relationship with the Group
	A subsidiary A subsidiary A subsidiary

(Continued)

59

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

Name of related party 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) Polaris Electronics Inc.(Polaris) Destiny Electronic Corp. (Destiny Beijing) Dongguan Primax Electronic & Telecommunication Products Ltd. (PCH2) Primax Electronics (Chongqing) Corp., Ltd. (PCQ1) Primax Electronics (Kun Shan) Corp., Ltd. (PKS1) Primax Electronics (Thailand) Pte. Ltd. (Primax Thailand) Tymphany Worldwide Enterprises Ltd. (TWEL) Tymphany Acoustic Technology (Huizhou) Co., Ltd. (Tymphany Huizhou) Tymphany Acoustic Technology HK Ltd. (TYM Acoustic HK) Dongguan Tymphany Acoustic Technology Co., Ltd. (Tymphany Dongguan) TYMPHANY ACOUSTIC TECHNOLOGY (UK) LIMITED (TYM UK) Tymphany Acoustic Technology Europe, s.r.o. (TYM Acoustic Europe) Tymphany HK Ltd.(TYM HK) TYP Enterprises, Inc.(TYP) Tymphany Acoustic Technology Limited (TYM Acoustic) Tymphany Acoustic Technology (Thailand) Co., Ltd. (TYTH) Dong Guan Dong Cheng Tymphany Acoustic Technology Co., Ltd. (TYDC) TYMPHANY LOGISTICS, INC (TYML) ALT International Co., Ltd. (Cayman) (AIC) De Amertek Technology Inc. (US) (DAT)

Relationship with the Group

A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary (Note 2) A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary (Note 2) A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary A subsidiary (Note 3) A subsidiary A subsidiary An associate (Note 1) An associate (Note 1)

(Continued)

60

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

Name of related party Relationship with the Group Advanced Micro Electronics Co.,LTD. (AME) An associate (Note 1) Advanced Leading Technology (Shanghai) Co. (ALT An associate (Note 1) (Shanghai)) Advanced Leading Technology Co. (ALT) An associate (Note 1) ALT Investment Limited (BVI) (ALTI) An associate (Note 1 and Note 4)

Note 1:In July 2019, the Company lost its control over AIC and its subsidiaries, (including DAT, AME, ALT (Shanghai), ALT and ALTI), but still retained a significant influence over them. Thereafter, the Company reclassified them from subsidiaries to associates.

Note 2:The subsidiary was established in the third quarter of 2019.

Note 3:The subsidiary was established in the forth quarter of 2019.

Note 4:The subsidiary completed its liquidation procedure in 2019.

• (b) Significant transactions with related-party

(i) Sales

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

follows:
Subsidiaries	Sales 2020 2019 $ 3,484,578 3,359,609	Accounts receivable – related parties
	2020	December 31, 2020 563,475	December 31, 2019
	$ 3,484,578		567,095

• 1) The Company sells semi-finished products to its subsidiaries for processing and production. The finished products are then repurchased back by the Company through triangular trade and sold to the customers. The amount of semi-finished products sold in 2020 and 2019 were $629,006 and $274,640, respectively, which were written off against the related cost of goods sold; therefore, the Company did not recognized the above transaction as sales in the parent company only financial statements. As of December 31, 2020 and 2019, the accounts receivable arising from the sales of semi-finished products to subsidiaries amounted to $153,639 and $215,349, respectively.

• 2) There were no significant differences in the selling prices offered to related parties and those of other customers. The trading terms to other customers are 45 days to 120 days, can be lengthened for related parties.

(Continued)

61

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only Financial Statements

(ii) Purchases

The amounts of purchases by the Company from related parties and the outstanding balances were as follows:

PCH2 PCQ1 PKS1 Others (note)	Purchases 2020 2019 $ 22,349,010 24,518,037 7,476,859 7,310,681 2,230,988 1,682,952 613,050 234,379 $ 32,669,907 33,746,049	Accounts payable	– related parties
	2020 $ 22,349,010 7,476,859 2,230,988 613,050 $ 32,669,907	December 31, 2020 7,583,716 2,803,152 1,067,535 171,117 11,625,520	December 31, 2019
			6,913,767 2,929,458 1,214,876 81,073
			11,139,174

Note: Individual amount not exceeding 10%.

• 1) As of December 31, 2020 and 2019, the amount of accounts payable arising from the transactions mentioned in note 7(b)(i) amounted to $46,221 and $88,248, respectively.

• 2) The prices of purchases from related parties were determined based on the cost, plus a reasonable profit margin. The payment terms of related parties and other vendors are 60 days to 360 days and 30 days to 120 days, respectively.

• 3) The accounts payable to subsidiaries which exceeded the normal payment terms and agreed by both parties were reclassified to other payables. As of December 31, 2020, other payables to related parties were $293,440. There was no aforementioned transaction in 2019.

(iii) Purchase of service

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

Subsidiaries	Purchase of service 2020 2019 $ 45,027 54,343	Other payables	Other payables
	2020 $ 45,027	December 31, 2020 4,875	December 31, 2019
			2,940

• (iv) Receivable and payable on behalf of related parties

The other receivables arising from the materials purchased and shipping fee paid on behalf of the subsidiaries amounted to $45,133 and $75,073 for the years ended December 31, 2020 and 2019, respectively.

The other payables arising from the shipping fee paid by subsidiaries on behalf of the Company amounted to $13,324 and $21,949 on December 31, 2020 and 2019, respectively.

(Continued)

62

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(v) Guarantees and endorsements

The amounts of guarantee the Company provided to PCH2 were as follows:

Purchasing of raw materials	December 31, 2020 $ 285,080	December 31, 2019
		301,060

(vi) Lease

The Company leased out its investment properties to its subsidiaries as office buildings and entered into 15-years lease contract by reference of the rental price of the nearby offices. The rental income in 2020 and 2019 both amounted to $9,914 and there were no outstanding receivables on December 31, 2020 and 2019. Please refer to note 6(n) for non-cancellable receivable.

(c) Key management personnel compensation

Short-term employee benefits Post-employment benefits Share-based payments	2020 $ 139,308 871 63,910 $ 204,089	2019
		128,738 972 26,655
		156,365

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

(8) Pledged assets: None

(9) Significant commitments and contingencies:

(a) For the detail of the Company’s guarantees provided to subsidiaries, please refer to notes 7 and 13.

• (b) The following are savings accounts provided by the Company to the banks in order for the bank to issue a guarantee letter to customs as guarantee deposits.

Guarantee letters	December 31, 2020 $ 6,000	December 31, 2019
		7,000

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

Sales of accounts receivable Long-term borrowings	December 31, 2020 $ 164,905 $ -	December 31, 2019
		519,329
		400,000

(d) The Company entered into lease agreements for its office. Please refer to note 6(m) for future lease liabilities.

(Continued)

63

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(10) Losses due to major disasters: None

(11) Subsequent events:None

(12) Other:

A summary of employee benefits, depreciation, and amortization, 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 Remuneration of directors Others Depreciation Amortization	95,083 7,018 3,573 - 1,724 92,805 5	1,282,956 84,811 46,505 45,191 53,208 23,907 18,589	1,378,039 91,829 50,078 45,191 54,932 116,712 18,594	107,077 6,634 3,442 - 3,520 91,444 -	1,375,856 80,305 45,448 58,794 55,335 20,460 23,276	1,482,933 86,939 48,890 58,794 58,855 111,904 23,276

The following were the additional information on the Company’s employees and employee benefits for the years ended December 31, 2020 and 2019:

Numbers of employees Numbers of directors, but not employees concurrently The average employee benefits The average salaries and wages Adjustment of the average salaries and wages Remunerationto supervisors

The Company’s remuneration policy to directors, supervisors, managers and employees are as follows:

The Company’s remuneration to directors includes directors’ remuneration and bonuses. According to the policy stipulated in the Articles of incorporation, wherein no more than 2% of the profit, if applicable, shall be allocated as remuneration to directors. The remuneration distributed to directors shall be resolved by a majority vote at the Board of Directors attended by directors representing two-thirds or more of the voting rights, and be reported during the shareholders’ meeting. The bonuses to directors are proposed by the Human Resource Department based on the considerations for the competitive environment and operational risks and in line with the corporate management policy and bonus plan, which are then sent to the Board of Directors for resolution after the Remuneration Committee evaluates the performance results and approves the proposal.

The remuneration to employees and managers consists of fixed salary and variable rewards. The fixed salary is the basic salary of the employees, and the variable rewards are mainly linked to the Company’s (or various business units’ ) operational performance and strategic goal achieving status. The rewards policy is proposed by the Human Resource Department based on the corporate salary policy and bonus plan. The bonus plan for the mangers has to be evaluated and approved by the Remuneration Committee, and thereafter, proposed to the Board of Directors for resolution.

(Continued)

64

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

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

(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	Collateral	Collateral	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	Short-term 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.

(ii) Guarantees and endorsements for other parties:

											(In Thou	sands of New Taiwan Dollars)	sands 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 the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
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.

(Continued)

65

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only 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	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
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 94,263 - 27,409 27,409	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

(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	Sa	Sa	les		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

(Continued)

66

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

(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 Tymphany Huizhou 〃 〃 Tymphany Dongguan 〃 〃 〃 TYDC 〃 〃 TYM Acoustic HK 〃 〃 TYM Acoustic Europe	PCH2 PKS1 PCQ1 Polaris Primax Thailand The Company 〃 〃 〃 〃 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	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. 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	Purchase Purchase Purchase (Sale) Purchase (Sale) (Sale) (Sale) (Sale) Purchase (Sale) (Sale) Purchase Purchase (Sale) (Sale) (Sale) (Sale) Purchase (Sale) Purchase Purchase Purchase (Sale)	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 (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)	% 68 % 7 % 23 % (10) % 2 % (84) % (100) % (78) % (92) % 100 % (73) % (2) % 2 % 3 % (97) % (1) % (1) % (88) % 4 % (12) % 69 % 6 % 14 % (87)	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 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	(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) 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	(65)% (12)% (24)% 5% (1)% 86% 100% 86% 95% (100)% 91% 1% (4)% (4)% 96% 2% 1% 65% (6)% 35% (47)% (3)% (36)% 72%	note 1 note 1

(Continued)

67

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only 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)
TYM HK 〃 〃 〃 〃 〃 〃 〃 〃 Tymphany Acoustic TYML TYTH 〃	Tymphany Huizhou Tymphany Dongguan 〃 TYDC Tymphany Acoustic TYML TYTH 〃 Specialty TYM HK 〃 〃 〃	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 The subsidiary of TYM Acoustic HK 〃	Purchase Purchase (Sale) Purchase Purchase (Sale) Purchase (Sale) (Sale) (Sale) Purchase Purchase (Sale)	4,846,055 14,670,226 (519,874) 2,361,105 144,552 (3,775,613) 555,462 (140,764) (579,656) (144,552) 3,775,613 140,764 (555,462)	% 20 % 62 % (2) % 10 % 1 % (15) % 2 % (1) % (2) % (15) % 100 % 25 % (100)	60 days 〃 〃 〃 〃 90 days 60 days 〃 90 days 60 days 90 days 60 days 〃	〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	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	(1,918,374) (3,807,364) 209,815 (415,132) (106,040) 218,130 (185,654) 53,068 198,189 106,040 (218,130) (53,068) 185,654	(30)% (59)% 4% (6)% (2)% 4% (3)% 1% 4% 83% (100)% (15)% 100%

Note 1: The Company’s accounts payable to PKS1 amounting to $293,440 was overdue from its normal payment term. Therefore, these accounts payable 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	Polaris PCH2 〃 The Company Tymphany Dongguan Primax Thailand The Company 〃 〃 〃	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	380,107 153,639 (note 2) 20,678 7,583,716 234,673 216,172 1,067,535 293,440 2,803,152 171,117	9.64 3.41 (note 3) 3.08 (note 3) 〃 1.95 (note 4) 2.61 7.17	- - - - - - - - - -	- - - - - - - - -	380,107 39,194 15,739 5,841,436 75,221 46,329 176,945 293,440 1,556,747 171,117	- - - - - - - - - -

(Continued)

68

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only 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
Tymphany Huizhou Tymphany Dongguan 〃 TYDC 〃 TYM Acoustic Europe TYM HK 〃 〃 〃 〃 〃 Tymphany Acoustic TYTH	TYM HK 〃 〃 〃 TYM Acoustic HK 〃 Tymphany Dongguan 〃 TYDC 〃 TYML Specialty TYM HK 〃	The subsidiary of TYM Acoustic HK 〃 〃 〃 The subsidiary of Tymphany Huizhou Parent The subsidiary of Tymphany Huizhou 〃 The subsidiary of Tymphany Dongguan 〃 Subsidiary Other related party The subsidiary of TYM Acoustic HK 〃	1,918,374 3,807,364 199,141 415,132 220,349 289,275 209,815 2,393,582 826 115,227 218,130 198,189 106,040 185,654	1.66 2.65 (note 3) 2.13 2.82 3.35 3.89 (note 3) 107.67 (note 3) 3.08 3.06 1.00 5.98	- - - - - - - - - - - - - -	- - - - - - - - - - - -	886,402 3,519,439 77,586 175,579 132,879 160,672 57,189 683,074 - 115,227 212,395 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.

• (ix) Trading in derivative instruments: Please refer to note 6(b) in the consolidated financial statements for the year ended December 31, 2020.

• (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	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
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	356,383 108,648 3,067 361 54,514 1,125 (364,325) (105,955) 53,818	425,429 145,801 3,067 361 53,747 1,125 (364,325) (114,387) 150,818

(Continued)

69

PRIMAX ELECTRONICS LTD. Notes to the Parent Company Only 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	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
Primax Singapore	Primax Thailand	Thailand	Manufacture and sale of computer peripherals devices and software	588,291	302,126	600	99.99	456,888	(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	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	7,207	7,207
Diamond	TWEL	Cayman Islands	Holding company	4,083,950	4,083,950	192,251	100.00	5,568,549	129,052	55,243
Primax AE	AIC	Cayman Islands	Holding company	1,356,995	1,356,995	30	37.00	536,303	(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	371,365	371,365
TYM Acoustic HK 〃 〃 〃 〃 〃	TYM HK TYP TYM UK TYM Acoustic Europe Tymphany Acoustic TYTH	Hong Kong USA United Kingdom Czech Taiwan Thailand	Holding company and sale of audio accessories, amplifiers and their components Market development and customer service of amplifiers and their components Research and development, design of audio accessories, amplifiers and their components Manufacture, install and repair of audio accessories and their components Research and development, design, and sale of audio accessories, amplifiers and their components Manufacture and sales of audio accessories, amplifiers and their components	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	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	Sales of audio accessories, amplifiers and their components	6,628	6,628	200	100.00	9,684	406	406

Note 1: The amount is the initial investment costs from the original stockholders prior to the acquisition of the Company through Diamond.

(Continued)

70

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only 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)	Investmen	t flows	Accumulated outflow of investment from Taiwan as of December 31, 2020 (note 2)	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
PCH2 Destiny Beijing PKS1 PCQ1 Tymphany Huizhou Tymphany Dongguan TYDC	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 Manufacture of computer, peripherals and keyboards Research and development, design, and sale of audio accessories, amplifiers and their components 〃 〃	1,948,353 38,596 853,119 833,752 1,782,899 142,540 87,382	Indirect investment through Primax Cayman and Primax Tech. Indirect investment through Destiny BVI. Indirect investment through Primax Cayman 〃 Indirect investment through Diamond 〃 〃	1,652,504 31,611 662,332 602,120 3,883,674 15,053 -	- - - - - - -	- - - - - - -	1,566,806 29,933 627,176 570,160 3,677,532 14,254 -	320,684 3,067 (18,813) 158,604 190,941 65,040 (5,520)	100% 100% 100% 100% 71.43% 71.43% 71.43%	320,684 3,067 (18,813) 158,604 136,393 181,934 (3,943)	6,132,213 (3,000) 807,941 1,532,069 3,987,838 539,298 150,848	- - - - - - -

Note 1: The above information on the exchange rate is as follows: HKD:TWD3.6772 ; USD:TWD 28.508; 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.

(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.

(Continued)

71

PRIMAX ELECTRONICS LTD.

Notes to the Parent Company Only Financial Statements

• (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”.

• (d) Major shareholders:

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

(14) Segment information:

Please refer to the Company’s consolidated financial statements for the year ended December 31, 2020, for details.

72

PRIMAX ELECTRONICS LTD.

Statement of cash and cash equivalents

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Cash on hand Checking accounts and demand deposits Time deposits－foreign currency	Description Amount $ 600 2,058,286 USD 46,000 ; Exchange rate 28.508 1,311,368 $ 3,370,254

Statement of accounts receivable

Item Accounts receivable: Corporation P Corporation A Corporation N Other (individual amount not exceeding 5%) Total Less: Allowance for doubtful accounts Net accounts receivable	Description Amount Operating revenue $ 1,383,508 〃 604,581 〃 417,780 〃 4,194,782 6,600,651 (24,844) $ 6,575,807

73

PRIMAX ELECTRONICS LTD.

Statement of other receivables

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Receivables due to sale of accounts receivable Other receivables－related parties Business tax refund receivables Other (individual amount not exceeding 5%) Total	Description Amount Remaining receivables due to sale of accounts receivable $ 158,092 Payable on behalf of related parties 45,133 16,840 147 $ 220,212

Statement of inventories

Item		Cost	Net realizable value	Net realizable value
Finished goods and merchandises	$	3,997,628		4,608,491
Less: Provision for finished goods and merchandises		(61,644)
Subtotal		3,935,984
Semi-finished products		107,746		107,373
Less: Provision for semi-finished products		(406)
Subtotal		107,340
Raw material		103,028		99,406
Less: Provision for raw material		(12,652)	$	4,815,270
Subtotal		90,376
Net amount	$	4,133,700

74

PRIMAX ELECTRONICS LTD.

－ Statement of changes in financial assets measure at fair value through other comprehensive income non-current

From January 1 to December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Name of investee 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	Beginning Balance Number of shares Amount 359 $ - 161 1,076 184 2,102 11 - 7 49 917 - - 55,094 - 7,226 $ 65,547	Additions Number of shares Amount - - - - - - - - - - - - - 9,006 - 19,888 28,894	Disposal Number of shares Amount - - - - - - - - - - - - - - - - -	Other adjustments (Note 1) Number of shares Amount - - - 187 18 3,900 - - - - - - - (3,378) - (887) (178)	Ending Balance Pledged Number of shares Amount or guaranteed 359 - None 161 1,263 〃 202 6,002 〃 11 - 〃 7 49 〃 917 - 〃 - 60,722 〃 - 26,227 〃 94,263
		Number of shares - - - - - - - -	Number of shares - - - - - - - -	Number of shares - - 18 - - - - -

Note 1:Other adjustments comprise unrealized gains or losses on financial assets at fair value through other comprehensive income and stock dividend.

75

PRIMAX ELECTRONICS LTD.

Statement of changes in investment accounted for using equity method

From January 1 to December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Name of investee Primax Industries (Cayman Holding) Ltd. Primax Technology (Cayman Holding) Ltd. Destiny Technology Holding Co., Ltd Primax Destiny Co., Ltd. Diamond (Cayman) Holdings Ltd. Gratus Technology Corp. Primax AE (Cayman) Holdings Ltd. Primax Electronics (Singapore) Pte. Ltd	Beginning Balance Number of shares Amount 8,147,636 $ 5,917,542 285,067 2,361,803 1,050 (5,523) 0.5 17,845 129,050 5,418,593 300 11,880 48,200 965,342 10,100 286,269 $ 14,973,751	Additions Number of shares Amount - - - - - - - - - - - - - - 10,000 301,000 301,000	Disposal Number of shares Amount - - - - - - - - - - - - - - - - -	Other adjustments Number of shares Amount (Note1) - 505,207 - 136,133 - 2,527 - 352 - 50,886 - 449 - (368,882) - (135,844) 190,828	Ending Balance Number of shares Percentage of holding shares Amount 8,147,636 % 100.00 6,422,749 285,067 % 100.00 2,497,936 1,050 % 100.00 (2,996) 0.5 % 100.00 18,197 129,050 % 100.00 5,469,479 300 % 100.00 12,329 48,200 % 100.00 596,460 20,100 % 100.00 451,425 15,465,579	Ending Balance Number of shares Percentage of holding shares Amount 8,147,636 % 100.00 6,422,749 285,067 % 100.00 2,497,936 1,050 % 100.00 (2,996) 0.5 % 100.00 18,197 129,050 % 100.00 5,469,479 300 % 100.00 12,329 48,200 % 100.00 596,460 20,100 % 100.00 451,425 15,465,579	Market value or book value Pledged of guaranteed 6,508,713 None 2,512,121 〃 (2,996) 〃 18,197 〃 5,577,659 〃 12,329 〃 596,460 〃 459,857 〃 15,682,340
		Number of shares - - - - - - - 10,000	Number of shares - - - - - - - -	Number of shares - - - - - - - -	Number of shares 8,147,636 285,067 1,050 0.5 129,050 300 48,200 20,100	Percentage of holding shares % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00

Note 1: Adjustments under equity method valuation.

76

PRIMAX ELECTRONICS LTD.

Statement of changes in property, plant and equipment

From January 1 to December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Please refer to note 6(g) for property, plant and equipment.

Statement of changes in right-of-use assets

Please refer to note 6(h) for right-of-use assets.

Statement of changes in investment property

Please refer to note 6(i) for investment property.

77

PRIMAX ELECTRONICS LTD.

Statement of short-term borrowings

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Bank Mega International Commercial Bank Tiashin International Bank O-Bank OCBC Bank	Description Unsecured bank loans 〃 〃 〃	Ending Balance $ 80,000 50,000 50,000 100,000 $ 280,000	Contract Period 1 month 1 month 1 month 1 month	Range of interest rate 0.825% 0.8% 0.93% 0.92%	Credit Line Pledged on guaranteed 600,000 None 800,000 〃 330,000 〃 570,160 〃

Statement of other payables

Item Expense payables Others (note) Total Note : individual amount	Description Amount Research and development expense for projects and inspection $ 941,840 Taxes related to income and tariff 660,239 Intercompany loans 293,440 Employee and director remuneration 226,952 Accounts payable for labor and health insurance, employee benefits and freight expense 40,586 $ 2,163,057 not exceeding 5%	Description Amount Research and development expense for projects and inspection $ 941,840 Taxes related to income and tariff 660,239 Intercompany loans 293,440 Employee and director remuneration 226,952 Accounts payable for labor and health insurance, employee benefits and freight expense 40,586 $ 2,163,057 not exceeding 5%

78

PRIMAX ELECTRONICS LTD.

Statement of other current liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Remedy received in advance Contract liabilities Advance receipts for purchasing inventory Equipment receivable received on behalf of non-related parties Other (note) Total	Description Amount $ 263,036 Advance sales receipts－non-related parties 121,554 111,710 37,349 7,628 $ 541,277

Note : individual amount not exceeding 5%

Statement of other non-current liabilities

Item		Amount
Deferred tax liabilities－non-current	$	381,775
Advance receipts on behalf of non-related		262,063
parties
Accrued pension liabilities		67,945
Other (note)		4,857
	$	716,640

Note : individual amount not exceeding 5%

79

PRIMAX ELECTRONICS LTD.

Statement of lease liabilities

December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item	Description Buildings Vehicles Other Equipments Buildings Vehicles Other Equipments	Lease Term 2021.08-2023.11 2021.06-2023.02 2021.06-2022.07 2023.11 2023.02 2022.07	Discount rate	Ending Balance Note $ 86,814 3,069 1,257 $ 91,140 173,273 749 172 $ 174,194
Lease liabilities－ current Lease liabilities－ Non-current			2.17%-2.31% 1.28%-1.64% 1.28%-1.64% 2.17% 1.64% 1.48%

80

PRIMAX ELECTRONICS LTD.

Statement of operating revenue

From January 1 to December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Operating revenue: Computer peripherals Non-Computer peripherals Less: Sales returns Sales discounts Net service revenue Net operating revenue	Quantity (in thousands) Amount 89,030 $ 25,368,244 45,362 10,476,848 35,845,092 (50,769) (1,253,955) 34,540,368 449,659 $ 34,990,027

81

PRIMAX ELECTRONICS LTD.

Statement of operating costs

From January 1 to December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Raw material On January 1, 2020 Add: Purchases of raw materials Less: Raw materials on December 31,2020 Sales of raw material Losses on disposal of raw materials Raw materials used Manufacturing overhead Manufacturing cost Add: Semi-finished products on January 1, 2020 Purchases of semi-finished products Less: Semi-finished products on December 31, 2020 Sales of semi-finished products Losses on disposal of semi-finished products Cost of finished goods Add: Finished goods and merchandises on January 1, 2020 Purchases of finished goods and merchandises Less: Finished goods and merchandises on December 31, 2020 Losses on physical finished goods and merchandises Losses on disposal of finished goods Cost of finished goods and merchandises Service costs Sales of raw material and semi-finished products Loss on inventory valuation, obsolescence and physical inventories Loss on disposal of inventories Operating Costs

Amount $ 119,208 727,873 (103,028) (61,976) (4,336) 677,741 125,185 802,926 124,121 583,557 (107,746) (325,740) (5,909) 1,071,209 3,051,049 31,057,105 (3,997,628) (87) (29,175) 31,152,473 65,169 387,716 (8,637) 39,420 $ 31,636,141

82

PRIMAX ELECTRONICS LTD.

Statement of selling, administrative, research and development expenses

From January 1 to December 31, 2020

(Expressed in thousands of New Taiwan Dollars)

Item Salaries Service expense Insurance expense Storage expense Freight expense Other expense (note) Total	Selling expenses $ 234,647 37,364 36,702 61,154 34,826 92,303 $ 496,996	Administrative expenses 335,466 59,088 16,986 - 48 91,191 502,779	Research and development expenses
			758,034 11,237 53,843 - 1,380 272,628
			1,097,122

Note : individual amount not exceeding 5%