Primax — Audit Report / Information 2023

Dec 28, 2023

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Stock Code:4915

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

With Independent Auditors’ Report for the Years Ended December 31, 2023 and 2022

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

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

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Table of contents

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

Page

1 2 3 4 5 6 7 8 9 9 9～10 10～29 29～30 31～70 70～71 71 71 72 72 72 72～79 79～80 81～82 82 82～83

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Representation Letter

The entities that are required to be included in the combined financial statements of PRIMAX ELECTRONICS LTD. as of and for the year ended December 31, 2023 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, “ Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, PRIMAX ELECTRONICS LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: PRIMAX ELECTRONICS LTD. Chairman: DUH, JIA BIN Date: February 26, 2024

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web kpmg.com/tw

Independent Auditors’ Report

To the Board of Directors of PRIMAX ELECTRONICS LTD.:

Opinion

We have audited the consolidated financial statements of PRIMAX ELECTRONICS LTD. and its subsidiaries, which comprise the consolidated balance sheet as of December 31, 2023 and 2022, and the consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of PRIMAX ELECTRONICS LTD. and its subsidiaries as of December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of PRIMAX ELECTRONICS LTD. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirement. Based on our audits and the report of another auditor, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Other Matter

We did not audit the financial statements of certain subsidiaries. Those financial statements were audited by another auditor. Therefore, our opinion, insofar as it relates to those subsidiaries, is based solely on the report of another auditor. As of December 31, 2023 and 2022, the assets of these subsidiaries constitute 31% and 35% of the consolidated total assets, respectively. For the years ended December 31, 2023 and 2022, the operating revenue of these subsidiaries constitute 37% and 40%, respectively, of the consolidated operating revenue.

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

4-1

The Company has prepared its parent company only financial statements as of and for the years ended December 31, 2023 and 2022, on which we have issued an unmodified opinion with other matter paragraph.

Key Audit Matters

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

1. Evaluation of inventories

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

Description of key audit matter:

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

How the matter was addressed in our audit:

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

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

1. Impairment assessment of intangible assets

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

Description of key audit matter:

In 2014, PRIMAX ELECTRONICS LTD. acquired Tymphany Worldwide Enterprises Ltd. through its subsidiary, Diamond (Cayman) Holdings Ltd. The transaction metioned above resulted in PRIMAX ELECTRONICS LTD. and its subsidiaries to recognize its goodwill, technologies, and customer relations, as intangible assets. The rapid industrial transformation and the assessment of impairment contained estimation uncertainty. Therefore, the assessment of impairment of intangible assets is one of the key audit matters for our audit.

4-2

How the matter was addressed in our audit:

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

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate PRIMAX ELECTRONICS LTD. and its subsidiaries 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 PRIMAX ELECTRONICS LTD. and its subsidiaries’s financial reporting process.

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

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

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

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of PRIMAX ELECTRONICS LTD. and its subsidiaries’ internal control.

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

4-3

1. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on PRIMAX ELECTRONICS LTD. and its subsidiaries’ ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause PRIMAX ELECTRONICS LTD. and its subsidiaries to cease to continue as a going concern.

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

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

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Horng, Shyh-Gang and Fu, Hung-Wen.

KPMG

Taipei, Taiwan (Republic of China) February 26, 2024

Notes to Readers

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

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

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

Consolidated Balance Sheets

December 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2023 Assets Amount % Current assets: 1100 Cash and cash equivalents (note 6(a)) $ 10,904,683 24 1110 Current financial assets at fair value through profit or loss (note 6(b)) 379,608 1 1137 Current financial assets at amortized cost (note 6(d)) 30,234 - 1170 Notes and accounts receivable, net (notes 6(e) and (w)) 11,481,787 25 1180 Accounts receivable from related parties, net (notes 6(e), (w) and 7) 70,606 - 1200 Other receivables (notes 6(e) and (f)) 1,556,671 3 1310 Inventories (note 6(g)) 7,996,397 17 1470 Other current assets 516,388 1 32,936,374 71 Non-current assets: 1511 Non-current financial assets at fair value through profit or loss (note 6(b)) 12,048 - 1517 Non-current financial assets at fair value through other comprehensive income (note 6(c)) 290,285 1 1600 Property, plant and equipment (notes 6(j) and 8) 7,740,909 17 1755 Right-of-use assets (note 6(k)) 1,891,531 4 1760 Investment property (note 6(l)) 649,515 1 1780 Intangible assets (note 6(m)) 2,013,589 4 1840 Deferred tax assets (note 6(s)) 699,981 1 1990 Other non-current assets (note 8) 318,888 1 13,616,746 29 Total assets $ 46,553,120 100	December 31, 2022 Amount % 6,284,887 13 396,984 1 130,023 - 14,338,084 30 54,587 - 1,944,391 4 9,353,504 20 757,957 2 33,260,417 70 2,662 - 350,788 1 8,246,823 17 2,134,317 5 32,900 - 2,130,259 4 747,289 2 358,606 1 14,003,644 30 47,264,061 100 December 31, 2023 Liabilities and Equity Amount % Current liabilities: 2100 Short-term borrowings (note 6(n)) $ 756,252 2 2120 Current financial liabilities at fair value through profit or loss (note 6(b)) 992,339 2 2170 Notes and accounts payable 12,135,123 26 2201 Salaries payable 1,310,137 3 2219 Other payables 3,976,418 9 2280 Current lease liabilities (note 6(p)) 225,189 - 2320 Long-term borrowings, current portion (notes 6(o) and 8) 16,667 - 2365 Current refund liabilities 2,239,016 5 2399 Other current liabilities (note 6(w)) 1,985,860 4 23,637,001 51 Non-Current liabilities: 2540 Long-term borrowings (notes 6(o) and 8) 691,312 2 2580 Non-current lease liabilities (note 6(p)) 1,559,401 3 2630 Long-term deferred revenue (note 6(j)) 606,265 1 2670 Other non-current liabilities (notes 6(r) and (s)) 962,565 2 3,819,543 8 Total liabilities 27,456,544 59 Equity attributable to owners of parent: 3110 Ordinary shares (note 6(t)) 4,629,738 10 3200 Capital surplus (notes 6(i) and (t)) 2,359,753 5 3310 Legal reserve (note 6(t)) 2,274,414 5 3320 Special reserve (note 6(t)) 754,918 2 3350 Unappropriated retained earnings (note 6(t)) 8,311,190 18 3400 Other equity interest (1,316,504) (3) 17,013,509 37 36XX Non-controlling interests(note 6(i)) 2,083,067 4 Total equity 19,096,576 41 Total liabilities and equity $ 46,553,120 100	December 31, 2023		December 31, 2022 Amount % 489,370 1 1,016,661 2 14,038,527 30 1,678,657 4 4,442,911 9 193,405 - - - 1,912,359 4 1,563,872 3 25,335,762 53 464,000 1 1,704,857 4 803,862 2 661,995 1 3,634,714 8 28,970,476 61 4,582,893 10 2,129,908 4 1,999,217 4 1,217,130 3 7,433,108 16 (1,015,162) (2) 16,347,094 35 1,946,491 4 18,293,585 39 47,264,061 100
		Amount %

See accompanying notes to consolidated financial statements.

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

Consolidated Statement of Comprehensive Income

For the years ended December 31, 2023 and 2022

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

4000 Operating revenue (notes 6(w) and 7) 5000 Operating costs (notes 6(g), (p), (r), (x) and 12) Gross profit from operation Operating expenses (notes 6(e), (f), (p), (r), (u), (x) and 12): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss (gain on reversal) Total operating expenses Net operating income Non-operating income and expenses: 7100 Interest income 7010 Other income (notes 6(c), (q) and (y)) 7020 Other gains and losses (notes 6(h), (j), (m), (z) and 12) 7060 Shares of loss of associates accounted for using equity method (note 6(h)) 7050 Finance costs (note 6(p)) Total non-operating income and expenses Profit before tax 7950 Less: Income tax expenses (note 6(s)) Profit 8300 Other comprehensive income (loss): 8310 Items that may not be reclassified subsequently to profit or loss: 8311 Losses (gains) on remeasurements of defined benefit plans (note 6(r)) 8316 Unrealized gains (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 Components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences on translation of foreign operation’s financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income after tax Comprehensive income Profit attributable to: 8610 Owners of parent 8620 Non-controlling interests (note 6(i)) Comprehensive income attributable to: 8710 Owners of parent 8720 Non-controlling interests (note 6(i)) Earnings per share (note 6(v)) 9710 Basic earnings per share (NT dollars) 9810 Diluted earnings per share (NT dollars)	2023 Amount % $ 60,488,402 100 50,907,102 84 9,581,300 16 1,710,326 3 2,074,862 3 3,089,186 5 (36,057) - 6,838,317 11 2,742,983 5 361,013 - 40,491 - 269,338 - - - (147,453) - 523,389 - 3,266,372 5 632,883 1 2,633,489 4 (2,428) - (87,755) - - - (90,183) - (198,741) - - - (198,741) - (288,924) - $ 2,344,565 4 $ 2,485,289 4 148,200 - $ 2,633,489 4 $ 2,220,824 4 123,741 - $ 2,344,565 4 $ 5.50 $ 5.42	2022
		Amount % 79,240,765 100 68,256,490 86 10,984,275 14 1,868,828 3 2,313,027 3 3,366,095 4 91,552 - 7,639,502 10 3,344,773 4 95,190 - 63,709 - 457,298 - (42,489) - (289,517) - 284,191 - 3,628,964 4 760,003 1 2,868,961 3 6,971 - 11,974 - - - 18,945 - 522,322 1 - - 522,322 1 541,267 1 3,410,228 4 2,742,609 3 126,352 - 2,868,961 3 3,214,191 4 196,037 - 3,410,228 4 6.10
		6.02

See accompanying notes to consolidated financial statements.

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

Consolidated Statement of Changes in Equity

For the years ended December 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2022 Profit Other comprehensive income Comprehensive income Appropriation and distribution of retained earnings: Legal reserve Special reserve Cash dividends of ordinary share Changes in shares of investment accounted for using equity method Amortization expense of restricted employee stock Cancellation of restricted stock Issuance of restricted stock Effect of the liquidation of equity instruments at fair value through other comprehensive income Balance at December 31, 2022 Profit Other comprehensive income Comprehensive income Appropriation and distribution of retained earnings: Legal reserve Special reserve Cash dividends of ordinary share Changes in shares of investment accounted for using equity method Amortization expense of restricted employee stock Cancellation of restricted stock Issuance of restricted stock Balance at December 31, 2023							Equity attributable to ow	Equity attributable to ow	Equity attributable to ow		ners of parent						Total equity attributable to owners of parent	Non- controlling interests	Total equity
	Ordinary shares		Capital surplus			R	etained earnings				O	t	her equity intere	st
											Exchange differences on translation of financial statements		Unrealized gains (losses) from financial assets at fair value through other comprehensive income	Unearned employee compensation
					Legal reserve		Special reserve	Unappropriated retained earnings
	$ 4,552,633 - - - - - - - - (5,290) 35,550 - 4,582,893 - - - - - - - - (2,005) 48,850 $ 4,629,738		1,758,780		1,769,946		1,046,360		6,492,401		(1,265,160) - 452,637 452,637 - - - - - - - - (812,523) - (188,627) (188,627) - - - - - - - (1,001,150)		48,029		(227,477) - - - - - - - 184,883 26,973 (244,623) - (260,244) - - - - - - - 250,220 14,199 (303,724) (299,549)		14,175,512	2,267,000 126,352 69,685 196,037 - - - (516,546) - - - - 1,946,491 148,200 (24,459) 123,741 - - - 12,835 - - - 2,083,067	16,442,512
			- -		- -		- -		2,742,609 6,971				- 11,974				2,742,609 471,582		2,868,961 541,267
			-		-		-		2,749,580				11,974				3,214,191		3,410,228
					229,271 - - - - - - -		- 170,770 - - - - - -												- - (1,411,230) (332,808) 184,883 - - -
					1,999,217 - -		1,217,130 - -												18,293,585 2,633,489 (288,924)
					-		-												2,344,565
					275,197 - - - - - -														- - (1,791,794) - 250,220 - -
					2,274,414														19,096,576

See accompanying notes to consolidated financial statements.

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

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Consolidated Statement of Cash Flows

For the years ended December 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss (gain on reversal) Interest expense Net losses on financial assets and liabilities at fair value through profit or loss Interest income Compensation cost of share-based payment Dividend income Impairment losses of intangible assets Impairment losses of associates accounted for using equity method Shares of loss of associates accounted for using equity method Gain on disposal of property, plant and equipment Impairment loss of property, plant and equipment Gain on disposal of right-of-use assets Loss on disposal of intangible assets Total adjustments to reconcile profit Changes in operating assets and liabilities: Financial assets at fair value through profit or loss Accounts receivable Accounts receivable from related parties Other receivables Inventories Other current assets Other operating assets Changes in operating assets Financial liabilities at fair value through profit or loss Notes and accounts payable Salaries payable Other payables Refund liabilities Other current liabilities Other operating liabilities Changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from the liquidation of financial assets at fair value through other comprehensive income Decrease in financial assets measured at amortized cost Acquisition of financial assets designated at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Acquisition of unamortized expense Proceeds from disposal of unamortized expense Dividends received Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term borrowings Increase (decrease) in long-term borrowings Increase (decrease) in guarantee deposits received Payment of lease liabilities Cash dividends Repurchase shares of employee stocks ownership plan Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2023 $ 3,266,372 1,709,347 204,035 (36,057) 147,453 613,592 (361,013) 250,220 (690) - - - (42,630) - (21,491) 3,832 2,466,598 397,484 3,449,280 (16,019) (71,760) 1,357,107 241,569 21,913 5,379,574 (1,016,661) (1,903,404) (368,520) (556,765) 326,657 421,988 (35,932) (3,132,637) 2,246,937 4,713,535 7,979,907 361,013 (147,374) (466,033) 7,727,513 (27,419) - 99,789 (10,747) (1,571,521) 84,657 8,069 (19,279) 311 690 (1,435,450) 266,882 243,979 21,379 (236,951) (1,791,794) - (1,496,505) (175,762) 4,619,796 6,284,887 $ 10,904,683	2022 3,628,964 1,658,468 228,854 91,552 284,692 619,677 (95,190) 200,363 (10,744) 29,198 157,740 42,489 (3,510) 6,084 (17,338) -
		3,192,335
		156,238 (2,065,746) 75,693 367,422 3,811,097 339,712 (5,702)
		2,678,714
		(603,054) (3,654,734) 196,700 1,087,725 212,842 863,648 (74,244)
		(1,971,117)
		707,597
		3,899,932
		7,528,896 95,190 (284,614) (1,142,812)
		6,196,660
		(108,358) 8,538 1,535,721 (2,662) (1,931,157) 27,574 (47,388) (33,665) 4,414 10,744
		(536,239)
		(1,541,459) (996,955) (127) (234,706) (1,411,230) (348,287)
		(4,532,764)
		317,989
		1,445,646 4,839,241
		6,284,887

See accompanying notes to consolidated financial statements.

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

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(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.

The consolidated financial statements of the Company as of and for the years ended December 31, 2023, comprised the Company and subsidiaries (together referred to as “ the Group” ). The major business activities of the Group were the manufacture and sale of multi-function printers, scanners, digital camera modules, computer mice, keyboards, track pads, mobile phone accessories, consumer electronics products, shredders, amplifiers, speakers, audio systems and related parts, as well as other electronic components. Please refer to note 14 for further information.

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

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

The consolidated financial statements were authorized for issuance by the board of directors on February 26, 2024.

(3) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2023:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

The Group has initially adopted the new amendment, which do not have a significant impact on its consolidated financial statements, from May 23, 2023:

• ●Amendments to IAS 12 “International Tax Reform—Pillar Two Model Rules”

(Continued)

10

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

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

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2024, would not have a significant impact on its consolidated financial statements:

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• ●Amendments to IAS 1 “Non-current Liabilities with Covenants”

• ●Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”

• ●Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”

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

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

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

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

• ●Amendments to IAS 21 “Lack of Exchangeability”

(4) Summary of material accounting policies:

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

(a) Statement of compliance

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

(b) Basis of preparation

• (i) Basis of measurement

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

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

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

(Continued)

11

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

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

• (ii) Functional and presentation currency

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

• (c) Basis of consolidation

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

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

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

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

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

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

(Continued)

12

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

(ii) List of subsidiaries in the consolidated financial statements

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

			Percentage of	Percentage of	Percentage of
			shareholding
Name of		Principal	December		December
investor	Name of subsidiary	activities	31, 2023		31, 2022		Description
The Company	Primax Industries (Cayman	Holding company	100.00	%	100.00	%
	Holding) Ltd. (Primax Cayman)
The Company	Primax Technology (Cayman	Holding company	100.00	%	100.00	%
	Holding) Ltd. (Primax Tech.)
The Company	Destiny Technology Holding Co.,	Holding company	100.00	%	100.00	%
	Ltd. (Destiny BVI.)
The Company	Primax Destiny Co., Ltd.	Market development of and	100.00	%	100.00	%
	(Destiny Japan)	customer service for
		computer peripherals,
		mobile device components,
		and business devices
The Company	Diamond (Cayman) Holdings Ltd.	Holding company	100.00	%	100.00	%
	(Diamond)
The Company	Gratus Technology Corp.	Market development of and	100.00	%	100.00	%
	(Gratus Tech.)	customer service for
		computer peripherals,
		mobile device components,
		and business devices
The Company	Primax AE (Cayman) Holdings	Holding company	100.00	%	100.00	%
	Ltd. (Primax AE)
The Company	Primax Electronics (Singapore)	Sale of computer peripherals	100.00	%	100.00	%
	Pte. Ltd.	and mobile device
	(Primax Singapore)	components
Primax Cayman	Primax Industries (Hong Kong)	Holding company and	100.00	%	100.00	%
	Ltd. (Primax HK)	customer service
Primax HK	Dongguan Primax Electronic &	Manufacturing and sale of	100.00	%	100.00	%
and Primax Tech.	Telecommunication Products Ltd.	computer peripherals,
	(PCH2)	mobile device components,
		and business devices
Primax HK	Primax Electronics (Kun Shan)	Production of computer	100.00	%	100.00	%
	Corp., Ltd. (PKS1)	peripheral products
Primax HK	Primax Electronics (Chongqing)	Production of computer	100.00	%	100.00	%
	Corp., Ltd. (PCQ1)	peripheral products
Primax Tech.	Polaris Electronics Inc. (Polaris)	Sale and purchase of	100.00	%	100.00	%
		computer peripherals,
		mobile device components,
		and business devices
Destiny BVI.	Destiny Electronic Corp. (Destiny	R&D of computer	100.00	%	100.00	%
	Beijing)	peripherals and business
		devices
Primax Singapore	Primax Electronics (Thailand) Co.,	Manufacturing and sale of	99.99	%	99.99	%
	Ltd. (Primax Thailand)	computer peripherals,
		mobile device components,
		and business devices
Diamond	Tymphany Worldwide Enterprises	Holding company	100.00	%	100.00	%
	Ltd. (TWEL)

(Continued)

13

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

Name of investor TWEL TWEL Tymphany Huizhou Tymphany Huizhou TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM Acoustic HK TYM HK Tymphany Dongguan	Name of subsidiary	Principal activities Manufacturing, R&D, design, and sales of various speaker accessories, speakers, and their components R&D, design, and sale of various speaker accessories, speakers, and their components, as well as holding business R&D, design, and sale of various speaker accessories, speakers, and their components, as well as holding business Manufacturing, R&D, design and sale of various speaker accessories, speakers, and their components R&D and design of various speaker accessories as well as speakers and their components Manufacturing, installation, and maintenance of various speaker accessories and their components Market development of and customer service for speakers and their components Holding company; sale of, market development of and customer service for various speaker accessories, speakers and their components R&D and design of various speaker accessories as well as speakers and their components Manufacturing and sale of various speaker accessories, speakers, and their components Sale of various speaker accessories, speakers, and their components Manufacturing, R&D, design, and sale of various speaker accessories, speakers, and their components	Percentage of shareholding December 31, 2023 December 31, 2022 Description % 77.01 % 77.01 % 100.00 % - (note 1) % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 99.99 % 99.99 % 100.00 % 100.00 % 100.00 % 100.00
			December 31, 2023 % 77.01 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 99.99 % 100.00 % 100.00
	Tymphany Acoustic Technology (Huizhou) Co., Ltd (Tymphany Huizhou) Tymphany Acoustic Technology (Singapore) Pte. Ltd. (TYM Singapore) 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) TYP Enterprise, inc. (TYP) Tymphany HK Ltd. (TYM HK) Tymphany Acoustic Technology Limited (TYM Acoustic) Tymphany Acoustic Technology (Thailand) Co., Ltd (TYTH) TYMPHANY LOGISTICS, INC (TYML) Dong Guan Dong Cheng Tymphany Acoustic Technology Co., Ltd. (TYDC)

Note 1: As of December 31, 2023, there is no capital injection from the Company.

(Continued)

14

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

(d) Foreign currencies

(i) Foreign currency transactions

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

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

(ii) Foreign operations

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

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

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

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

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

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

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

(Continued)

15

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

• (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.

• (f) Cash and cash equivalents

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

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

• (g) Financial instruments

Accounts receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an 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 Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(Continued)

16

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

• 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.

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

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

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

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

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

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

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

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

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

(Continued)

17

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

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

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

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

• ●prepayment and extension features; and

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

• 5)

• Impairment of financial assets

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

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

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

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

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

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

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

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

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

The Group considers a financial asset to be in default when the financial asset is more

(Continued)

18

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

than 361 days past due or the borrower is unlikely to pay its credit obligations to the Group in full.

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

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

• ●significant financial difficulty of the borrower or issuer;

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

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

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

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

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

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

• 6) Derecognition of financial assets

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

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

(Continued)

19

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

(ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

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

2) Equity instrument

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

3) Financial liabilities

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

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

4) Derecognition of financial liabilities

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

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

• 5) Offsetting of financial assets and liabilities

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

• (iii) Derivative financial instruments

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

(Continued)

20

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

(h) Inventories

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

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

(i) Investment in associates

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

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

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

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

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

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

(Continued)

21

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

(j) Investment property

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

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

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

• (k) Property, plant and equipment

• (i) Recognition and measurement

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

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

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

(ii) Subsequent expenditure

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

• (iii) Depreciation

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

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

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

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

• 2) Machinery and equipment: 1 ~10 years

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

(Continued)

22

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

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.

(l) Lease

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

• (i) As a lessee

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

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

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

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

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

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

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

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

(Continued)

23

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

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

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

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

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

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

• 5) there is any lease modifications

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

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

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

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

(i) As a lessor

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

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

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

(Continued)

24

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

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

• (m) Intangible assets

• (i) Recognition and measurement

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

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

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

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

(ii) Subsequent expenditure

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

• (iii) Amortization

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

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

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

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

(Continued)

25

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

(n) Impairment of non-financial assets

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

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

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

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

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

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

(o) Revenue from contracts with customers

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

(i) Sale of goods

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

(Continued)

26

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

The Group often offers discounts to its customers based on aggregate sales of components. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate the discounts, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A refund liabilities is recognized for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales of components are made with a credit term of 45 days to 120 days, which is consistent with the market practice.

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

(ii) Rendering of services

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

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

(iii) Financing components

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

(p) Deferred grant revenue

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

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

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

(q) Employee benefits

(i) Defined contribution plans

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

(Continued)

27

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

(ii) Defined benefit plans

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

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

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

(iii) Short-term employee benefits

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

(r) Share-based payment

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

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

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

(Continued)

28

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

(s) Income taxes

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

The Group has determined that the global minimum top-up tax – which it is required to pay under Pillar Two legislation – is an income tax in the scope of IAS 12. The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.

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

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities at the reporting date 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 at the time of the transaction affects neither accounting nor taxable profits (losses) and does not give rise to equal taxable and deductible temporary differences;

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

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

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

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

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

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

• 1) the same taxable entity; or

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

(Continued)

29

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

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

(t) Earnings per share

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

(u) Operating segments

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

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

In preparing these consolidated financial statements, management has made judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

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

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

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

(Continued)

30

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

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

(a) Valuation of inventories

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

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

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

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

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

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

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

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

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

(Continued)

31

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts:

• (a) Cash and cash equivalents

Cash on hand Demand accounts and checking deposits Time deposits	December 31, 2023 $ 2,987 7,511,456 3,390,240 $ 10,904,683	December 31, 2022
		4,889 5,098,742 1,181,256
		6,284,887

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

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

Mandatorily measured at FVTPL: Derivative instruments not used for hedging Forward exchange contracts Foreign exchange swap contracts Non-derivative financial assets Equities unlisted in foreign markets －Storm Venture Fund VII, L.P. Equities unlisted in foreign markets －Thin Line Capital Fund II, L.P. Current Non-current	December 31, 2023 $ 102,225 277,383 5,040 7,008 $ 391,656 $ 379,608 12,048 $ 391,656	December 31, 2022
		291,210 105,774 2,662 -
		399,646
		396,984 2,662
		399,646

(Continued)

32

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

Financial liabilities held-for-trading: Derivative instrument not used for hedging Forward exchange contracts Foreign exchange swap contracts	December 31, 2023 $ (985,204) (7,135) $ (992,339)	December 31, 2022 (622,886) (393,775) (1,016,661)

• (ii) The Group invested the amounts of $2,065 and $597 in an unlisted company, Storm Venture Fund VII, L.P. in July and September 2022, respectively. Moreover, Storm Venture Fund VII, L.P increased its capital, wherein the Group participated and invested the amount of $3,097 for the year ended December 31, 2023.

• (iii) The Group invested the amount of $7,650 in an unlisted company, Thin Line Capital Fund II, L.P. in June 2023.

• (iv) The Group held the following derivative instruments as mandatorily measured at fair value through profit or loss and held-for-trading financial liabilities, without the application of edge accounting, as of December 31, 2023 and 2022:

December 31, 2023

	December 31, 2023
Derivative financial instruments	Nominal amount (inthousands)	Maturity date Predetermined rate January 30, 2024 7.8105 January 30, 2024 24.620 January 30, 2024 22.278 January 16, 2024~ June 27, 2024 30.418~31.990 January 16, 2024~ June 20, 2024 30.739~31.315 January 4, 2024~ March 28, 2024 7.0943~7.1756 January 22, 2024~ January 30, 2024 34.400~34.980 January 30, 2024 8.6270 January 16, 2024~ June 24, 2024 30.457~31.761
Forward exchange contracts －buy HKD / sell USD Forward exchange contracts －buy CZK/ sell EUR Forward exchange contracts －buy CZK/ sell USD Forward exchange contracts －buy USD / sell TWD Forward exchange contracts －buy TWD / sell USD Foward exchange contracts －buy CNY/ sell USD Forward exchange contracts －buy USD/ sell THB Forward exchange contracts －buy HKD/ sell EUR Foreign exchange swap contracts －swap in TWD/ swap out USD	USD 8,000 EUR 1,000 USD 9,000 USD 643,000 USD 31,800 USD 303,000 USD 19,000 EUR 3,500 USD 462,000

(Continued)

33

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

	December 31, 2022	Maturity date Predetermined rate January 10, 2023~ July 26, 2023 28.788~32.145 January 4, 2023~ July 3, 2023 6.7117~7.2580 January 9, 2023~ February 24, 2023 34.390~35.000 February 13, 2023 8.320 January 10, 2023~ July 26, 2023 29.095~31.935
Derivative financial instruments	Nominal amount (in thousands)
Forward exchange contracts －buy USD / sell TWD Foward exchange contracts －buy CNY/ sell USD Forward exchange contracts －buy USD/ sell THB Forward exchange contracts －buy HKD/ sell EUR Forward exchange swap contracts －swap in TWD/ swap out USD	USD 680,000 USD 199,000 USD 32,000 EUR 7,500 USD 585,000

• (c) Financial assets at FVOCI

Equity investments at FVOCI 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. Equities unlisted in foreign markets－Grove Ventures III, L.P. Stocks unlisted in foreign markets–Shenzhen Mees Hi- Tech Co., Ltd. Total	December 31, 2023 December 31, 2022 $ 11,093 7,535 250 250 158,070 183,766 97,145 85,267 23,727 11,853 - 62,117 $ 290,285 350,788	December 31, 2023 December 31, 2022 $ 11,093 7,535 250 250 158,070 183,766 97,145 85,267 23,727 11,853 - 62,117 $ 290,285 350,788
		7,535 250 183,766 85,267 11,853 62,117
		350,788

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

• (ii) During the years ended December 31, 2023 and 2022, the dividends of $690 and $10,744, related to equity investments at FVOCI held were recognized as other income.

• (iii) WK Technology Fund IV Ltd. refunded the amount of $60 to the Group due to its liquidation in May 2022.

• (iv) Grove Venture, L.P executed capital increases, where the Group had participated and invested the amounts of $1,377 and $5,340 in the years ended December 31, 2023 and 2022, respectively.

(Continued)

34

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

• (v) Grove Ventures II, L.P. executed capital increases, where the Group had participated and invested the amounts of $10,773 and $26,415 in the years ended December 31, 2023 and 2022, respectively.

• (vi) WK Global Investment III Ltd. refunded the amount of $8,478 to the Group due to its liquidation in November 2022.

• (vii) The Group invested the amount of $7,756 in an unlisted company, Grove Ventures III, L.P. in January 2022. Grove Ventures III, L.P. executed capital increase, where the Group had participated and invested the amount of $15,269 and $5,328 in the years ended December 31, 2023 and 2022, respectively.

• (viii) The Group invested $63,519 in an unlisted company, Shenzhen Mees Hi-Tech Co., Ltd. in January 2022.

• (ix) The Group’ s investments in Grove Ventures, L.P., Grove Ventures II, L.P., and Grove Ventures III, L.P. are investments with duration. The Group’s investments in the above limited partnership was designated as a financial asset at fair value through other comprehensive income at the time of the initial recognition.

Although, in accordance with the IFRS Q&A released by the Accounting Research and Development Foundation on June 15, 2023, wherein the financial asset cannot be designated at fair value through other comprehensive income, the accounting treatment need not be applied retroactively to investments in limited partnership companies prior to June 30, 2023, according to the Q&A of the FSC. Therefore, the Group continues to measure its investment in these limited partnership companies at fair value through other comprehensive income.

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

• (d) Financial assets at amortized cost

Financial assets at amortized cost
Time deposits Annual interest rates Maturity date	December 31, 2023 $ 30,234 0.54%~1.53% 2024.07.10	December 31, 2022
		130,023
		0.88%~0.98%
		2023.01.16~2023.02.20

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

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

(Continued)

35

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

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

Accounts receivable Accounts receivable – related parties Less: allowance for doubtful accounts Total	December 31, 2023 $ 11,549,203 70,606 (67,416) $ 11,552,393	December 31, 2022 14,442,722 54,587 (104,638) 14,392,671

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

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

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, 2023	December 31, 2023
	Carrying amounts of notes and accounts receivable (including related parties) $ 10,450,695 1,047,527 77,561 2,631 5,577 19,330 16,488 $ 11,619,809	Lifetime ECL rate 0%~0.21% 0%~3% 0%~5% 0%~10% 0%~25% 0%~80% 0%~100%	Loss allowance provision of lifetime ECL
			22,061 17,568 3,713 213 595 6,778 16,488
			67,416

(Continued)

36

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

Current 0 to 30 days past due 31 to 60 days past due 61 to 90 days past due 91 to 180 days past due 181 to 360 days past due More than 361 days past due	December 31, 2022	December 31, 2022
	Carrying amounts of notes and accounts receivable (including related parties) $ 12,459,350 1,460,646 320,558 28,285 228,022 444 4 $ 14,497,309	Lifetime ECL rate 0%~0.02% 0%~3% 0%~5% 0%~10% 0%~25% 0%~80% 0%~100%	Loss allowance provision of lifetime ECL
			2,244 27,161 15,060 2,829 56,985 355 4
			104,638

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

Balance on January 1, 2023 and 2022 Impairment losses recognized (reversed) Effect of exchange rate changes Balance on December 31, 2023 and 2022	2023 $ 104,638 (36,057) (1,165) $ 67,416	2022
		29,635 73,093 1,910
		104,638

(iv) The Group entered into agreements with banks to sell its accounts receivable without recourse. According to the agreements, within the limit of its credit facilities, the Group does not need to guarantee the capability of its customers to pay for reasons other than commercial disputes when transferring its accounts receivable. The Group receives partial advances upon sales of accounts receivable and pays interest calculated based on the interest rates agreed for the period through the collection of the accounts receivable. The remaining amounts are received upon the collection of the accounts receivable, and are recorded as other receivables. In addition, the Group shall pay handling charges based on a fixed rate. The Group derecognized the above trade receivables because it has transferred substantially all of the risks and rewards of their ownership and it does not have any continuing involvement in them. As of December 31, 2023 and 2022, the details of transferred accounts receivable which conformed to the criteria for derecognition were as follows:

	Decem	ber 31, 2023
Amount Purchaser Derecognized DBS Bank $ 942,729 Mega International Commercial Bank - $ 942,729	Amount A	dvanced Paid - - -	Amount Recognized in Other Receivables 942,729 - 942,729	Range of Interest Rate - -	Guarantee (Promissory note)
	Unpaid 848,456 - 848,456
					- US$ 2,500

(Continued)

37

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

	Decem	ber 31, 2022
Amount Purchaser Derecognized HSBC Bank $ 686,846 DBS Bank 2,199,261 Bank of Taiwan - Mega International Commercial Bank - $ 2,886,107	Amount A	dvanced Paid 299,286 1,088,331 - - 1,387,617	Amount Recognized in Other Receivables 387,560 1,110,930 - - 1,498,490	Range of Interest Rate 4.34%~4.86% 4.79%~5.32% - -	Guarantee (Promissory note) US$ 56,940 - NT$ 297,000 US$ 3,750
	Unpaid 387,560 891,005 - - 1,278,565

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

• (f) Other receivables

Other receivables - factoring of accounts receivable Other receivables - tax refund receivable Other receivables - others Less: allowance for doubtful accounts	December 31, 2023 $ 942,729 446,860 183,360 (16,278) $ 1,556,671	December 31, 2022
		1,498,490 381,800 80,641 (16,540)
		1,944,391

The movement in the allowance for other receivables was as follows:

Balance on January 1, 2023 and 2022 Impairment losses recognized Amounts written off Effect of exchange rate changes Balance on December 31, 2023 and 2022	2023 $ 16,540 - - (262) $ 16,278	2022
		- 18,459 (1,879) (40) 16,540

• (g) Inventories

Raw materials Semi-finished goods and work in process Finished goods and merchandise	December 31, 2023 $ 2,941,221 1,853,451 3,201,725 $ 7,996,397	December 31, 2022
		3,724,911 1,956,621 3,671,972
		9,353,504

(Continued)

38

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

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

Gain (losses) on inventory valuation and disposal of inventories Unallocated manufacturing overhead resulting from the actual production being lower than the normal capacity Gains (losses) on physical inventories	2023 $ 58,863 (47,657) 444 $ 11,650	2022 (440,359) (62,079) (4,834) (507,272)

(h) Investments accounted for using equity method

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

Carrying amount of individually insignificant associates’ equity Attributable to the Group: Loss Other comprehensive income Comprehensive income	December 31, 2023 $ - 2023 $ - - $ -	December 31, 2022 - 2022 (42,489) 28,662 (13,827)

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

• (ii) The revenue of AIC did not turn out as expected due to intensive industrial competition, resulting in the impairment of the intangible assets and carrying amounts related to this equity investment after the Group's evaluation. The Group evaluated the recoverable amounts of its investments accounted for using equity method, which is based on its value-in-use, for impairment testing at each reporting date. Value-in-use is based on five years of the estimated future cash flow of the Group, discounted to their present value using the yearly discount rate, which reflects the risks specific to cash generating units by 21.70% on June 30, 2022 and recognized impairment loss of $157,740 under other gains and losses in the year ended December 31, 2022.

• (i) Material non-controlling interests of subsidiaries

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

Name of subsidiaries	Main operation place Business/Registered Country	Proportion of Ownership and Voting Rights Held by Non-controlling Interests December 31, 2023 December 31, 2022 % 22.99 % 22.99

(Continued)

39

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

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

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

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests Operating revenue Profit Other comprehensive income (loss) Comprehensive income Profit attributable to non-controlling interests Comprehensive income attributable to non-controlling interests Cash flows from operating activities Cash flows from (used in) investing activities Cash flows used in financing activities Effect of exchange rate changes Net increase in cash and cash equivalents Dividends paid to non-controlling interests

December 31, 2023 December 31, 2022 $ 10,972,844 12,433,413 5,566,788 6,358,816 (7,013,879) (9,618,839) (465,002) (706,703) $ 9,060,751 8,466,687 $ 2,083,067 1,946,491 2023 2022 $ 22,530,076 31,445,453 $ 644,628 529,308 (106,390) 279,563 $ 538,238 808,871 $ 148,200 126,352 $ 123,741 196,037 2023 2022 $ 2,353,646 2,436,507 (11,038) 743,188 (28,899) (2,979,658) (1,429) 90,864 $ 2,312,280 290,901 $ - -

(ii) Tymphany Huizhou repurchased shares from the employee stocks ownership plans in cash and cancelled such shares for a capital reduction in May 2022, resulting in a decrease in the proportion of ownership held by non-controlling interests from 28.57% to 22.99%. Please note 6(t) and (u) for details.

The impact of the change in the Group’s ownership interest in Tymphany Huizhou on equity attributable to owners of parent was as follows:

attributable to owners of parent was as follows:
Decrease in carrying amount of non-controlling	$	534,606
interests
Consideration paid to non-controlling interests		(348,287)
Capital surplus－Long-term equity investments	$	186,319

(Continued)

40

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

(j) Property, plant and equipment

The cost, depreciation, and impairment loss of the property, plant and equipment of the Group for the years ended December 31, 2023 and 2022, were as follows:

Cost or deemed cost: Balance on January 1, 2023 Additions Disposals Reclassifications Reclassification to investment property Effect of changes in exchange rate Balance on December 31, 2023 Balance on January 1, 2022 Additions Disposals Reclassifications Effect of changes in exchange rate Balance on December 31, 2022 Depreciation and impairments loss: Balance on January 1, 2023 Depreciation Disposals Reclassifications Reclassification to investment property Effect of changes in exchange rate Balance on December 31, 2023 Balance on January 1, 2022 Depreciation Impairment loss (reversal) Disposals Reclassifications Effect of changes in exchange rate Balance on December 31, 2022 Carrying amounts: Balance on December 31, 2023 Balance on December 31, 2022 Balance on January 1, 2022	Land $ 1,077,437 - - - - 2,755 $ 1,080,192 $ 1,065,753 - - - 11,684 $ 1,077,437 $ - - - - - - $ - $ - - - - - - $ - $ 1,080,192 $ 1,077,437 $ 1,065,753	Buildings, leasehold improvement, and additional equipment 6,714,735 54,398 (85,042) 239,996 (655,587) (55,445) 6,213,055 3,979,270 60,949 (95,921) 2,672,074 98,363 6,714,735 2,345,364 298,869 (79,852) 218 (45,492) (37,862) 2,481,245 2,191,333 214,316 4,685 (95,154) (651) 30,835 2,345,364 3,731,810 4,369,371 1,787,937	Machinery and equipment 7,407,901 197,560 (500,925) 423,508 - (84,104) 7,443,940 6,666,371 257,965 (460,983) 815,301 129,247 7,407,901 5,496,266 957,454 (470,701) (69,504) - (78,560) 5,834,955 4,780,194 991,872 1,399 (433,857) 76,246 80,412 5,496,266 1,608,985 1,911,635 1,886,177	Office and other equipment 1,176,279 48,449 (82,733) 23,610 (2,133) (12,147) 1,151,325 1,181,926 71,927 (59,612) (44,126) 26,164 1,176,279 747,063 168,203 (75,313) (1,464) (2,133) (10,498) 825,858 689,904 171,292 - (56,175) (71,485) 13,527 747,063 325,467 429,216 492,022	Construction in progress and testing equipment 459,164 1,370,774 (7,442) (821,707) (4,166) (2,168) 994,455 2,372,934 1,499,329 (1,905) (3,463,129) 51,935 459,164 - - - - - - - - - - - - - - 994,455 459,164 2,372,934	Total 16,835,516 1,671,181 (676,142) (134,593) (661,886) (151,109) 16,882,967 15,266,254 1,890,170 (618,421) (19,880) 317,393 16,835,516 8,588,693 1,424,526 (625,866) (70,750) (47,625) (126,920) 9,142,058 7,661,431 1,377,480 6,084 (585,186) 4,110 124,774 8,588,693 7,740,909 8,246,823 7,604,823

(i) The unamortized deferred revenue of equipment subsidy amounted to $529,007 and $723,418 were classified as long-term deferred revenue, as of December 31, 2023 and 2022, respectively.

(Continued)

41

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

• (ii) Due to the relocation of the new factory, the Group’s subsidiary in China adjusted the carrying amount according to the recoverable amount and recognized an impairment loss of $6,084, under other gains and losses for the year ended December 31, 2022.

• (iii) As of December 31, 2023 and 2022, the Group has started the construction of Jhubei Factory in 2022, with the total costs of $662,663 and $58,556, respectively. For the year ended December 31, 2023, the capitalized borrowing costs $1,039, related to the construction of the said factory, had been calculated using a capitalization rate of 1.1%.

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

• (k) Right-of-use assets

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

Cost: Balance on January 1, 2023 Additions Disposals Lease modification Reclassification to investment property Effect of changes in exchange rates Balance on December 31, 2023 Balance on January 1, 2022 Additions Disposals Lease modification Effect of changes in exchange rates Balance on December 31, 2022 Depreciation: Balance on January 1, 2023 Depreciation Disposals Lease modification Reclassification to investment property Effect of changes in exchange rates Balance on December 31, 2023 Balance on January 1, 2022 Depreciation Disposals Lease modification Effect of changes in exchange rates Balance on December 31, 2022	Land $ 371,616 - (90,273) - (30,814) (4,706) $ 245,823 $ 401,900 - (17,305) (18,911) 5,932 $ 371,616 $ 34,845 7,375 (8,435) - (8,732) (482) $ 24,571 $ 39,013 9,284 (12,747) (1,423) 718 $ 34,845	Buildings 2,523,498 193,627 (217,842) 44,330 - 5,500 2,549,113 2,689,447 215,751 (436,885) 8,504 46,681 2,523,498 745,246 252,719 (89,959) (766) - 1,028 908,268 678,513 260,657 (212,364) - 18,440 745,246	Vehicles 40,756 23,479 (7,896) - - 168 56,507 20,124 23,600 (4,086) - 1,118 40,756 21,462 13,169 (7,600) - - 42 27,073 13,747 10,412 (3,182) - 485 21,462	Other equipment 2,106 - (2,106) - - - - 2,106 - - - - 2,106 2,106 - (2,106) - - - - 1,934 172 - - - 2,106	Total 2,937,976 217,106 (318,117) 44,330 (30,814) 962 2,851,443 3,113,577 239,351 (458,276) (10,407) 53,731 2,937,976 803,659 273,263 (108,100) (766) (8,732) 588 959,912 733,207 280,525 (228,293) (1,423) 19,643 803,659

(Continued)

42

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

						Other	Other	Other
			Land	Buildings Vehicles		equipment			Total
	Carrying amounts:
	Balance on December 31, 2023	$	221,252	1,640,845	29,434		-		1,891,531
	Balance on December 31, 2022	$	336,771	1,778,252	19,294		-		2,134,317
	Balance on January 1, 2022	$	362,887	2,010,934	6,377			172	2,380,370
(l)	Investment property
				Buildings	Right-of-use
				and other	assets－
			Land	equipment		Land			Total
	Cost or deemed cost:
	Balance on January 1, 2023	$	50,190	31,735		-			81,925
	Reclassifications		-	661,886		30,814			692,700
	Effect of changes in exchange rates		-	(8,723)		(299)			(9,022)
	Balance on December 31, 2023	$	50,190	684,898		30,515			765,603
	Balance on January 1, 2022	$	50,190	31,735		-			81,925
	(December 31, 2022)
	Depreciation and impairment
	losses:
	Balance on January 1, 2023	$	33,941	15,084		-			49,025
	Reclassifications		-	47,625		8,732			56,357
	Depreciation		-	11,354		204			11,558
	Effect of changes in exchange rates		-	(765)		(87)			(852)
	Balance on December 31, 2023	$	33,941	73,298		8,849			116,088
	Balance on January 1, 2022	$	33,941	14,621		-			48,562
	Depreciation		-	463		-			463
	Balance on December 31, 2022	$	33,941	15,084		-			49,025
	Carrying amounts:
	Balance on December 31, 2023	$	16,249	611,600		21,666			649,515
	Balance on December 31, 2022	$	16,249	16,651		-			32,900
	Balance on January 1, 2022	$	16,249	17,114		-			33,363
	Fair value:
	Balance on December 31, 2023							$	1,035,637
	Balance on December 31, 2022							$	117,774
	Balance on January 1, 2022							$	102,412

(i) The fair value of the investment property listed above is evaluated based on third-party quotation information, which are third-level fair value.

(Continued)

43

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

• (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 3 years. Subsequent renewals are negotiated with the lessee, and no contingent rents are charged. Please refer to note 6(q) for further information.

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

• (m) Intangible assets

The carrying amounts of the intangible assets of the Group for the years ended December 31, 2023 and 2022, were as follows:

and 2022, were as follows:
					Trademarks,
			Customer		Patents and
		Goodwill	Relationships	Technology	Copyrights	Total
Cost or deemed cost:
Balance on January 1, 2023	$	2,038,574	718,800	357,271	124,459	3,239,104
Disposals		-	-	-	(281)	(281)
Effect of changes in exchange rate		(291)	-	-	(22)	(313)
Balance on December 31, 2023	$	2,038,283	718,800	357,271	124,156	3,238,510
Balance on January 1, 2022	$	2,020,049	718,800	357,271	122,708	3,218,828
Acquisition		-	-	-	1,609	1,609
Effect of changes in exchange rate		18,525	-	-	142	18,667
Balance on December 31, 2022	$	2,038,574	718,800	357,271	124,459	3,239,104
Amortization and impairment
loss:
Balance on January 1, 2023	$	30,439	645,180	314,328	118,898	1,108,845
Amortization		-	71,880	41,930	2,712	116,522
Disposals		-	-	-	(281)	(281)
Effect of changes in exchange rate		(47)	-	-	(118)	(165)
Balance on December 31, 2023	$	30,392	717,060	356,258	121,211	1,224,921
Balance on January 1, 2022	$	-	573,300	272,398	116,541	962,239
Amortization		-	71,880	41,930	2,295	116,105
Impairment loss		29,198	-	-	-	29,198
Effect of changes in exchange rate		1,241	-	-	62	1,303
Balance on December 31, 2022	$	30,439	645,180	314,328	118,898	1,108,845
Carrying amounts:
Balance on December 31, 2023	$	2,007,891	1,740	1,013	2,945	2,013,589
Balance on December 31, 2022	$	2,008,135	73,620	42,943	5,561	2,130,259
Balance on January 1, 2022	$	2,020,049	145,500	84,873	6,167	2,256,589

(Continued)

44

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

• (i) The Group evaluated the recoverable amounts of its goodwill arising from the acquisition of TWEL, which is based on its value-in-use, for impairment testing at each annual reporting date. Value-in-use is based on five years of the estimated future cash flow of the Group, and discounted to their present value using the yearly discount rate, which reflects the risks specific to CGU, by 13.08% and 16.78% for the years ended December 31, 2023 and 2022, respectively. There were no impairment losses of goodwill in 2023 and 2022.

• (ii) The Group evaluated the recoverable amounts of its goodwill arising from the acquisition of TYM Acoustic Europe, which is based on its value-in-use, for impairment testing at each annual reporting date. Value-in-use is based on five years of the estimated future cash flow of the Group, and discounted to their present value using the yearly discount rate, which reflects the risks specific to CGU, by 15.80% for the year ended December 31, 2022. Since TYM Acoustic Europe’s operating performance and profit growth did not turn out as expected, the recoverable amount was assessed to be less than the book value, the Group recognized impairment loss of goodwill of $29,198 under other gains and losses for the year ended December 31, 2022.

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

• (n) Short-term borrowings

The details of short-term borrowings were as follows:

The details of short-term borrowings were as follows:
Unsecured bank loans Unused credit lines Annual interest rates	December 31, 2023 $ 756,252 $ 26,822,784 3.04%~3.64%	December 31, 2022
		489,370
		27,873,579
		1.95%~4.98%

• (o) Long-term borrowings

Secured bank loans Less: current portion Unused credit lines		December 31, 2023 Annual interest rate Maturity year Amount 1.1%~1.65% 2026~2028 $ 707,979 (16,667) $ 691,312 $ 2,321,407
	Currency	Annual interest rate
	TWD	1.1%~1.65%

(Continued)

45

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

December 31, 2022

Secured bank loans Less: current portion Unused credit lines	Currency	Annual interest rate	Maturity year Amount 2026 $ 464,000 - $ 464,000 $ 1,950,166
	TWD	1.03%~1.40%

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

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

(p) Lease liabilities

The carrying amounts of lease liabilities of the Group were as follow:

Current Non-current For the maturity analysis, please refer to note 6(aa).	December 31, 2023 $ 225,189 $ 1,559,401	December 31, 2022
		193,405
		1,704,857

The amounts recognized in profit or loss were as follows:

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	2023 $ 58,614 $ 95,597	2022
		68,016
		105,866

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

Rental paid in operating activities Interest on lease liabilities paid in operating activities Payment made on lease liabilities in financing activities Total cash outflow for leases	2023 $ (95,597) (58,614) (236,951) $ (391,162)	2022
		(105,866 (68,016 (234,706
		(408,588

(i) Real estate leases

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

(Continued)

46

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

(ii) Other leases

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

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

(q) Operating lease

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

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

Less than one year One to five years Total undiscounted lease payments	December 31, 2023 $ 58,702 95,317 $ 154,019	December 31, 2022
		1,497 417
		1,914

Rental income from investment property amounted to $15,807 and $1,370 in 2023 and 2022, respectively.

(r) Employee benefits

(i) Defined benefit plans

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

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability (classified as other non-current liabilities)	December 31, 2023 $ 119,828 64,056 $ 55,772	December 31, 2022
		125,391 70,037
		55,354

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

(Continued)

47

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

1) Composition of plan assets

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

The Group’ s Bank of Taiwan labor pension reserve account balance amounted to $64,056 at the end of the reporting period. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

• 2) Movements in present value of defined benefit obligations

The movements in present value of defined benefit obligations for the Group for the years ended December 31, 2023 and 2022, were as follows:

Defined benefit obligation at January 1 Benefits paid Current service costs and interest cost Remeasurement of net defined liabilities Defined benefit obligation at December 31	2023 $ 125,391 (10,208) 1,692 2,953 $ 119,828	2022 134,375 (9,099) 1,195 (1,080) 125,391

• 3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Group for the years ended December 31, 2023 and 2022, were as follows:

Fair value of plan assets at January 1 Interest income Remeasurement of net defined liabilities Contribution paid Benefits paid Fair value of plan assets at December 31	2023 $ 70,037 936 525 2,766 (10,208) $ 64,056	2022 69,942 530 5,891 2,773 (9,099) 70,037

(Continued)

48

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

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group for the years ended December 31, 2023 and 2022, were as follows:

Current service costs Net interest of net liabilities for defined benefit Expenses	2023 $ - 756 $ 756	2022
		192 473
		665

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

The Group’ s remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2023 and 2022, was as follows:

Balance on January 1 Recognized during the period Balance on December 31	2023 $ 16,085 2,428 $ 18,513	2022 23,056 (6,971) 16,085

• 6) Actuarial assumptions

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

Discount rate Future salary increase rate	December 31, 2023 December 31, 2022 % 1.300 % 1.400 % 2.750 % 2.750

The expected allocation payment to be made by the Group to the defined benefit plans for the one-year period after the reporting date was $2,742.

The weighted-average duration of the defined benefit plans is 8 years.

• 7) Sensitivity analysis

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

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

(Continued)

49

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

December 31, 2023 Discount rate Future salary increase rate December 31, 2022 Discount rate Future salary increase rate	Influences of defined benefit obligations
	Increased 0.25% Decreased 0.25% $ (2,033) 2,089 $ 2,007 (1,963) $ (2,198) 2,261 $ 2,169 (2,119)

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

There were no changes in the method and assumptions used in the preparation of the sensitivity analysis for 2023 and 2022.

(ii) Defined contribution plans

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

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

The Group recognized pension costs under the defined contribution method amounting to $397,532 and $455,196 for the years ended December 31, 2023 and 2022, respectively, recorded as operating cost and operating expenses in the statement of comprehensive income.

(s) Income taxes

(i) The details of the Group’s income tax expenses were as follows:

Current tax expense Deferred tax expense (benefit) Income tax expense	2023 $ 470,465 162,418 $ 632,883	2022 852,771 (92,768) 760,003

(ii) The Group has no income tax directly recognized in equity or other comprehensive income.

(Continued)

50

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iii) Reconciliation of income tax expenses and profit before tax were as follows:

Profit before income tax Income tax calculated based on domestic tax rate of individual entity of the Group Overseas investment gains recognized under the equity method Prior year’s income tax adjustment Surtax on unappropriated earnings Investment tax credits accrued Other Income tax expense	2023 $ 3,266,372 938,458 (267,941) (44,188) 35,470 (130,339) 101,423 $ 632,883	2022 3,628,964 1,098,069 (313,077) 20,337 22,425 (146,968) 79,217 760,003

• (iv) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax liabilities

The Group 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:

Aggregate amount of temporary differences related to investments in subsidiaries	December 31, 2023 $ 1,475,850	December 31, 2022
		1,339,438

• 2) Unrecognized deferred tax assets

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

Deductible temporary differences	December 31, 2023 $ 243,900	December 31, 2022
		207,558

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

(Continued)

51

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

3) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities were as follows:

Investment income recognized under the equity method (overseas) Deferred tax liabilities: Balance on January 1, 2023 $ 253,637 Recognized in profit or loss 98,898 Balance on December 31, 2023 $ 352,535 Balance on January 1, 2022 $ 222,385 Recognized in profit or loss 31,252 Balance on December 31, 2022 $ 253,637 Bad debt in excess of tax limit Loss carryforward Unfunded pension fund contribution Refund liabilities Deferred tax assets: Balance on January 1, 2023 $ - 3,181 12,814 243,832 Recognized in profit or loss - (3,181) (402) 32,981 Balance on December 31, 2023 $ - - 12,412 276,813 Balance on January 1, 2022 $ 39,958 13,523 13,235 227,235 Recognized in profit or loss (39,958) (10,342) (421) 16,597 Balance on December 31, 2022 $ - 3,181 12,814 243,832	Investment income recognized under the equity method (overseas) Deferred tax liabilities: Balance on January 1, 2023 $ 253,637 Recognized in profit or loss 98,898 Balance on December 31, 2023 $ 352,535 Balance on January 1, 2022 $ 222,385 Recognized in profit or loss 31,252 Balance on December 31, 2022 $ 253,637 Bad debt in excess of tax limit Loss carryforward Unfunded pension fund contribution Refund liabilities Deferred tax assets: Balance on January 1, 2023 $ - 3,181 12,814 243,832 Recognized in profit or loss - (3,181) (402) 32,981 Balance on December 31, 2023 $ - - 12,412 276,813 Balance on January 1, 2022 $ 39,958 13,523 13,235 227,235 Recognized in profit or loss (39,958) (10,342) (421) 16,597 Balance on December 31, 2022 $ - 3,181 12,814 243,832	Investment income recognized under the equity method (overseas) Deferred tax liabilities: Balance on January 1, 2023 $ 253,637 Recognized in profit or loss 98,898 Balance on December 31, 2023 $ 352,535 Balance on January 1, 2022 $ 222,385 Recognized in profit or loss 31,252 Balance on December 31, 2022 $ 253,637 Bad debt in excess of tax limit Loss carryforward Unfunded pension fund contribution Refund liabilities Deferred tax assets: Balance on January 1, 2023 $ - 3,181 12,814 243,832 Recognized in profit or loss - (3,181) (402) 32,981 Balance on December 31, 2023 $ - - 12,412 276,813 Balance on January 1, 2022 $ 39,958 13,523 13,235 227,235 Recognized in profit or loss (39,958) (10,342) (421) 16,597 Balance on December 31, 2022 $ - 3,181 12,814 243,832	Investment income recognized under the equity method (overseas)	Investment income recognized under the equity method (overseas)	Investment income recognized under the equity method (overseas)	Unrealized foreign exchange gains	Unrealized foreign exchange gains	Unrealized foreign exchange gains	Amortization of appraised value adjustment of intangible assets	Amortization of appraised value adjustment of intangible assets	Amortization of appraised value adjustment of intangible assets			Others	Others	Total 269,298 115,110 384,408 307,600 (38,302) 269,298 thers Total 41,322 747,289 34,121 (47,308) 75,443 699,981 33,066 692,823 8,256 54,466 41,322 747,289	Total 269,298 115,110 384,408 307,600 (38,302) 269,298 thers Total 41,322 747,289 34,121 (47,308) 75,443 699,981 33,066 692,823 8,256 54,466 41,322 747,289
				253,637 98,898		Loss on inventory valuation 119,051 (62,919) 56,132 94,321 24,730 119,051		- -		10,736 (10,482) 254 21,219 (10,483) 10,736 Deferred granted revenue Unrealized revenue from disposal of assets 135,870 18,026 (20,276) (3,090) 115,594 14,936 160,509 21,116 (24,639) (3,090) 135,870 18,026				4,925 26,694 31,619 15,295 (10,370) 4,925 Gain on valuation of financial assets / liabilities O 129,391 (3,342) 126,049 89,860 39,531 129,391
				352,535				-
				222,385 31,252
				253,637
				Refund liabilities						Deferred granted revenue 135,870 (20,276) 115,594 160,509 (24,639) 135,870				Gain on valuation of financial assets / liabilities 129,391 (3,342)		thers 41,322 34,121 75,443 33,066 8,256 41,322
	3,181 (3,181) - 13,523 (10,342) 3,181	12,814 (402) 12,412 13,235 (421) 12,814		243,832 32,981				43,802 (21,200)									747,289 (47,308)
				276,813				22,602			14,936			126,049			699,981
				227,235 16,597				- 43,802			21,116 (3,090)			89,860 39,531			692,823 54,466
				243,832				43,802			18,026			129,391			747,289

(v) The Company’s income tax returns have been examined by the tax authority through the years to 2020.

(vi) Global minimum top-up tax

The Group operates in United Kingdom, Japan and The Czech Republic , which have enacted new legislation to implement the global minimum top-up tax. The Group expects to be subject to the top-up tax in relation to its operations in the Cayman Islands, where the statutory tax rate is 0%. However, since the newly enacted tax legislation in United Kingdom, Japan and The Czech Republic is only effective from January 1, 2024, there is no current tax impact for the year ended December 31, 2023.

The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred. Please refer to note 4(s) for explanation of accounting policies.

(Continued)

52

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

If the top-up tax had applied in 2023, then the profits relating to the Group’s operations in the Cayman Islands for the year ended December 31, 2023 that would be subject to it amount to 4,415 thousand, with the average effective tax rate applied to those profits during 2023 being 0%.

(t) Capital and other equity

(i) Ordinary shares

As of December 31, 2023 and 2022, 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 common shares, of which 462,974 and 458,289 thousand shares, respectively, were issued. All issued shares were paid up upon issuance.

Reconciliation of shares outstanding were as follows:

Balance on January 1 Issuance of restricted stock Cancellation of restricted stock Balance on December 31		Ordinary shares (in thousands of shares)	Ordinary shares (in thousands of shares)
		2023 458,289 4,885 (200) 462,974	2022
			455,263 3,555 (529
			458,289

(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 investments	December 31, 2023 $ 1,076,639 259,401 463,007 560,706 $ 2,359,753	December 31, 2022
		945,508 259,401 351,458 573,541
		2,129,908

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

(Continued)

53

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

Tymphany Huizhou, a subsidiary of the Company, repurchased shares from the employee stock ownership plan in cash and cancelled such shares for a capital reduction in May 2022, resulting in an increase of the shareholding of the Company from 71.43% to 77.01%. The Company recognized the change in its ownership interest in the subsidiary as capital surpluslong-term equity investments. Please refer to notes 6(i) and (u) for details.

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

2) Special reserve

By choosing to apply exemptions granted under IFRS 1 “ First-time Adoption of International Financial Reporting Standards” during the Company’s first-time adoption of the IFRS Accounting Standards 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 the FSC, 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, 2023 and 2022, the carrying amount of special reserve both amounted to $97,300.

(Continued)

54

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

In accordance with the FSC, a portion of earnings shall be allocated as special earnings reserve during earnings distribution. If the Company has already reclassified a portion of earnings to special reserve under the preceding subparagraph, it shall make supplemental allocation of special reserve for any difference between the amount it has already allocated and the amount of the current-period total net reduction of other shareholders’ equity. An equivalent amount of special reserve shall be allocated from the after-tax net profit in the period, plus items other than after-tax net profit in the period, that are included in the undistributed current-period earnings and the undistributed prior-period earnings. 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. Amounts of subsequent reversals pertaining to the net reduction of other stockholders’ equity shall qualify for additional distributions.

• 3) Earnings distribution

On May 25, 2023 and May 26, 2022, the shareholders’ meeting resolved to distribute the 2022 and 2021 earnings, respectively. The distributions for 2022 and 2021 were NT$3.9(dollars) and NT$3.1(dollars) per share, which amounted to $1,791,794 and $1,411,230, respectively.

The earnings distributions for 2023 were proposed to be NT$4(dollars) per share which amounted to $1,851,727 during the board of directors meeting held on February 26, 2024.

(u) Share-based payment

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

• 1) The Group had share-based payment arrangements as follows:

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

(Continued)

55

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

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

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

On February 14 and March 1, 2022, the Group resolved through the board of directors’ and shareholders’ meeting of Tymphany Huizhou to adjust the share incentive plan. As of December 31, 2022, all the shares from the employee ownership plan were repurchase and cancelled.

(ii) Restricted stock

1) As of December 31, 2023, the outstanding restricted stock of the Group was as follows:

Grant date Fair value on grant date (per share) Exercise price Granted units (thousand shares) Vesting period	Plan 5 (note 1) November 21, 2019 February 20, 2020 64.30 53.20 Free grants Free grants 1,820 180 1~3 years (notes 2 and 4) 1~3 years (note 2)	Plan 6 (note 1)	Plan 7 (note 1)	Plan 8 (note 1) Plan 9 (note 1)
		July 30, 2020 January 25, 2021 41.75 55.80 Free grants Free grants 2,260 740 1~5 years (notes 2, 3, 4 and 5) 1~3 years (notes 2, 3 and 4)	October 18, 2021 February 9, 2022 50.40 53.90 Free grants Free grants 3,800 200 1~3 years (note 2) 1~3 years (note 2)	August 9, 2022 February 8, 2023 August 4, 2023 69.70 58.50 63.30 Free grants Free grants Free grants 3,355 1,145 3,740 1~3 years (note 2) 1~3 years (note 2) 1~3 years (note 2)

Note 1: 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, 2019 and February, 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 and 740 thousand shares on July, 2020 and January, 2021, respectively.

Plan 7 was resolved by the stockholders’ meeting held on July 13, 2021, and has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 3,800 thousand and 200 thousand shares on August, 2021 and January, 2022, respectively.

(Continued)

56

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

Plan 8 was resolved by the stockholders’ meeting held on May 26, 2022, and has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 3,355 thousand and 1,145 thousand shares on August, 2022 and January, 2023, respectively.

Plan 9 was resolved by the stockholders’ meeting held on May 25, 2023, and has been registered with and approved by the Securities and Futures Bureau of the FSC. The board of directors’ meeting resolved to issue 3,740 thousand shares on August, 2023.

• Note 2: If the employees continue to provide service to the employer 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 employer 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 employer 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 employer 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 Group, 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 Group will cancel the unvested shares thereafter.

• 2) The related information on restricted stock of the Group 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	2023 7,148 4,885 (2,793) (243) 8,997	2022 6,487 3,555 (2,365) (529) 7,148

(Continued)

57

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

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

Employee stock options Restricted stock Total	2023 $ - 250,220 $ 250,220	2022
		15,480 184,883
		200,363

(v) Earnings per share

The calculation of basic earnings and diluted earnings per share was as follows:

(i) Basic earnings per share

The calculation of basic earnings per share for the years ended December 31, 2023 and 2022, based on the profit attributable to owners of parent of the Company and the weighted-average number of ordinary shares outstanding was as follows:

Profit attributable to owners of parent Weighted-average number of ordinary shares (thousand shares) Basic earnings per share (NT dollars) Ordinary shares at January 1 Vesting of restricted stock Ordinary shares at December 31	2023 $ 2,485,289 452,268 $ 5.50 2023 451,142 1,126 452,268	2022
		2,742,609
		449,522
		6.10
		2022
		448,777 745
		449,522

(ii) Diluted earnings per share

The calculation of diluted earnings per share as of December 31, 2023 and 2022 was based on the profit attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding after adjusting the effects of all dilutive potential ordinary shares was as follows:

Profit attributable to owners of parent Weighted-average number of ordinary shares (diluted) (thousand shares) Diluted earnings per share (NT dollars)	2023 $ 2,485,289 458,794 $ 5.42	2022
		2,742,609
		455,337
		6.02

(Continued)

58

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

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)		2023 452,268 1,605 4,921 458,794	2022
			449,522 2,074 3,741
			455,337

• (w) Revenue from contracts with customers

• (i) Disaggregation of revenue

Goods sold Service rendered Goods sold Service rendered Mainland China Europe America Other				2023
	Computer Peripherals			Non-computer Peripherals 37,025,349 1,014,250 38,039,599 2022	Total
	$ 22,293,789 155,014 $ 22,448,803				59,319,138 1,169,264
					60,488,402
		Computer Peripherals			Total
	$ 27,128,373 153,541 $ 27,281,914				77,336,595 1,904,170
					79,240,765
					2022
					28,212,456 20,771,566 21,964,066 8,292,677
					79,240,765

(Continued)

59

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

(ii) Contract balances

Accounts receivable (including related parties) Less: allowance for impairment Contract liabilities (classified as other current liabilities)	December 31, 2023 $ 11,619,809 (67,416) $ 11,552,393 $ 488,099	December 31, 2022 14,497,309 (104,638) 14,392,671 534,641	January 1, 2022 13,534,590 (29,635) 13,504,955 196,113

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

The amount of revenue recognized for the years ended December 31, 2023 and 2022 that were included in the contract liability balance at the beginning of the period were $432,673 and $196,113, respectively.

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

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

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

Details of remuneration to employees and directors were as follows:

Employee remuneration Directors’ remuneration	2023 $ 89,330 44,665 $ 133,995	2022
		99,830 49,915
		149,745

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

(Continued)

60

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated 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 2022 and 2021 were as follows:

Employee remuneration–Cash Director’s remuneration Employee remuneration–Cash Director’s remuneration	2022 Actual earnings distributed Accrued in the financial statement Difference $ 99,830 99,830 - 49,915 49,915 - 2021 Actual earnings distributed Accrued in the financial statement Difference $ 85,798 85,799 1 42,899 42,899 -

The difference in 2021 was accounted for as changes in accounting estimates and recognized as profit or loss in 2022. Information on the remuneration to employees and directors, approved in the Board of Directors’ meetings, can be accessed in the Market Observation Post System website.

(y) Other income

The details of other income were as follows:

Government grants Rent income Dividend income Other	2023 $ 22,433 16,725 690 643 $ 40,491	2022
		45,289 6,731 10,744 945
		63,709

(z) Other gains and losses

The details of other gains and losses were as follows:

Net losses on financial assets/liabilities measured at FVTPL Impairment losses of property, plant and equipment Foreign currency exchange gains (losses), net Net income on disposal of property, plant and equipment Impairment losses of investments accounted for using equity method Impairment losses of intangible assets Net gains on disposal of right-of-use assets Other	2023 $ (613,592) - 874,567 42,630 - - 21,491 (55,758) $ 269,338	2022 (619,677) (6,084) 1,255,089 3,510 (157,740) (29,198) 17,338 (5,940) 457,298

(Continued)

61

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

(aa) Financial instruments

• (i) Credit risk

1) Credit risk exposure

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

2) Concentration of credit risk

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

(ii) Liquidity risk

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

December 31, 2023 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow December 31, 2022 Non-derivative financial liabilities: Short-term borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Long-term borrowings Guarantee deposits Derivative financial liabilities: Outflow Inflow	Carrying amount $ 756,252 12,135,123 2,999,687 1,310,137 1,784,590 2,239,016 707,979 33,505 992,339 - - $ 22,958,628 $ 489,370 14,038,527 3,365,325 1,678,657 1,898,262 1,912,359 464,000 12,126 1,016,661 - - $ 24,875,287	Contractual cash flows 759,171 12,135,123 2,999,687 1,310,137 2,017,258 2,239,016 732,135 33,505 - 2,134,469 (1,142,130) 23,218,371 502,282 14,038,527 3,365,325 1,678,657 2,213,790 1,912,359 482,562 12,126 - 16,739,065 (15,722,404) 25,222,289	Within 1 year 759,171 12,135,123 2,999,687 1,310,137 272,412 2,239,016 26,686 - - 2,134,469 (1,142,130) 20,734,571 502,282 14,038,527 3,365,325 1,678,657 246,684 1,912,359 6,256 - - 16,739,065 (15,722,404) 22,766,751	1~2 years - - - - 248,423 - 240,064 - - - - 488,487 - - - - 223,907 - 22,923 - - - - 246,830	2~5 years - - - - 631,932 - 465,385 - - - - 1,097,317 - - - - 587,179 - 453,383 - - - - 1,040,562	Over 5 years
						- - - - 864,491 - - 33,505 - - -
						897,996
						- - - - 1,156,020 - - 12,126 - - -
						1,168,146

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

(Continued)

62

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

(iii) Currency risk

1) Exposure to foreign currency risk

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

F	inancial assets Monetary items USD:CNY USD:HKD USD:TWD EUR:CZK USD:CZK USD:THB EUR:HKD CZK:HKD inancial liabilities Monetary items USD:CNY USD:HKD USD:TWD EUR:CZK USD:THB EUR:HKD USD:CZK	D	ecember 31, 2023	TWD 16,811,402 8,139,702 12,715,538 215,742 536,971 1,091,140 263,249 130,385 7,984,009 5,896,555 15,223,471 163,222 1,608,905 113,941 100,749	D	ecember 31, 2022
		Foreign currency $ 546,979 264,835 413,715 6,326 17,471 35,502 7,719 94,345 $ 259,769 191,851 495,314 4,786 52,348 3,341 3,278	Exchange rate 7.0827 7.8157 30.7350 24.6773 22.2390 34.1400 8.6723 0.3514 7.0827 7.8157 30.7350 24.6773 34.1400 8.6723 22.2390		Foreign currency 484,442 278,389 345,280 5,063 16,806 19,139 11,806 135,484 291,417 214,250 421,099 5,871 63,027 2,646 10,461	Exchange rate TWD 6.9646 14,876,249 7.7967 8,548,784 30.7080 10,602,846 24.2078 165,707 22.7180 516,079 34.6530 587,708 8.3098 386,399 0.3433 183,174 6.9646 8,948,836 7.7967 6,579,182 30.7080 12,931,116 24.2078 192,152 34.6530 1,935,447 8.3098 86,601 22.7180 321,236
F

2) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, notes and accounts payable, and other payables that are denominated in foreign currency. A weakening (strengthening) of 5% of the TWD, CNY, HKD, CZK and THB against the USD; the HKD against CZK; as well as HKD and CZK against the EUR, as of December 31, 2023 and 2022, would have increased or decreased the net profit before tax by $440,664 and $243,619, respectively. The analysis is performed on the same basis for both periods.

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2023 and 2022, foreign exchange gain (including realized and unrealized portions) amounted to $874,567 and $1,255,089, respectively.

(Continued)

63

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

(iv) Interest rate analysis

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

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

If the interest rate had increased or decreased by 0.25%, and assumed all other variables remain constant, the profit before tax would have increased or decreased by $15,122 and $10,434 for the years ended December 31, 2023 and 2022, respectively. This is mainly due to borrowings and demand deposits with variable interest rates.

(v) Other price risk

If the market price of the equity securities had changed on the reporting date, the influence on other comprehensive income is as follows (The analysis is performed on the same basis for both periods, and assumes all other variable remain constant):

Price of securities at the reporting date Increasing 10% Decreasing 10%	2023	2023
	Other comprehensive income before tax	Income before tax

(Continued)

64

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

(vi) Fair value

1) Kinds of financial instruments and fair value

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

Financial assets at FVTPL Financial assets at FVOCI – non-current Financial assets measured at amortized cost: Cash and cash equivalents Financial assets at amortized cost －current Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at FVTPL – current Financial liabilities measured at amortized cost: Borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Guarantee deposits Total		December 31, 2023	December 31, 2023	December 31, 2023
	Carrying amounts $ 391,656 $ 290,285 $ 10,904,683 30,234 11,552,393 1,556,671 122,405 $ 24,166,386 $ 992,339 $ 1,464,231 12,135,123 2,999,687 1,310,137 1,784,590 2,239,016 33,505 $ 21,966,289		Fair Value
		Level 1 - - -	Level 2 - - -	Level 3 Total 391,656 391,656 290,285 290,285 992,339 992,339

(Continued)

65

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

Financial assets at FVTPL Financial assets at FVOCI – non-current Financial assets measured at amortized cost: Cash and cash equivalents Financial assets at amortized cost －current Notes and accounts receivable (including related parties) Other receivables Refundable deposits Total Financial liabilities at FVTPL – current Financial liabilities measured at amortized cost : Borrowings Notes and accounts payable Other payables Salaries payable Lease liabilities Refund liabilities Guarantee deposits Total		December 31, 2022	December 31, 2022	December 31, 2022
	Carrying amounts $ 399,646 $ 350,788 $ 6,284,887 130,023 14,392,671 1,944,391 130,474 $ 22,882,446 $ 1,016,661 $ 953,370 14,038,527 3,365,325 1,678,657 1,898,262 1,912,359 12,126 $ 23,858,626		Fair Value
		Level 1 - - -	Level 2 - - -	Level 3 Total 399,646 399,646 350,788 350,788 1,016,661 1,016,661

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)

66

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

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

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

• －

• b) Financial assets at FVTPL non-derivative financial assets and Financial assets at FVOCI without an active market are investments in domestic or foreign non-listed stock. The estimated fair value is based on the market approach of comparable business and adjusted for the lack of liquidity. When prices are unavailable, the fair value is estimated on the basis of unadjusted prior trade prices.

• 3) In 2023 and 2022, there were no transfers between Levels.

• 4) Reconciliation of Level 3 fair values

FVTPL Balance on January 1 $ (617,015) Recognized in profit or loss (613,592) Recognized in other comprehensive income - Acquisition /disposal 629,924 Effect of changes on exchange rate - Balance on December 31 $ (600,683)		2023			FVTPL		2022	Total (206,419) (619,677) 11,974 549,298 (1,403) (266,227)
		FVOCI 350,788 - (87,755) 27,419 (167) 290,285	Total				FVOCI 240,397 - 11,974 99,820 (1,403) 350,788

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

The fair value measurements of the Group which are categorized within level 3 are classified as financial assets and liabilities at FVTPL – non-derivative financial assets and derivative instruments not used for hedging and financial assets at FVOCI – equity investment without an active market. 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 – non- derivative financial assets Financial assets and liabilities at FVTPL– derivative instruments not used for hedging	Valuation technique (note 1) (note 1) (note 2)	Significant unobservable inputs Inter-relationships between significant unobservable inputs and fair value (note 1) (note 1) (note 1) (note 1) (note 2) (note 2)

(Continued)

67

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

• 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.

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

• (ab) Financial risk management

• (i) Briefings

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

• 1) Credit risk

• 2) Liquidity risk

• 3) Market risk

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

(ii) Structure of risk management

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

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

• (iii) Credit risk

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

(Continued)

68

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

1) Cash and cash equivalents

The Group had deposited $9,625,255 (including restricted deposits) in O-Bank and 18 other financial institutions, and $6,120,011 (including restricted deposits) in HSBC Bank and 16 other financial institutions, representing 21% and 13% of total assets, as of December 31, 2023 and 2022, respectively. The Group believes that there is no significant credit risk from the above-mentioned financial institutions.

2) Notes and accounts receivable

Sales to individual customers constituting over 10% of total revenue for the years ended December 31, 2023 and 2022, totaled 24% and 25%, respectively; also 20% and 34%, respectively, of the ending balance of notes and accounts receivable (including related parties) were accounted for by those customers. In order to reduce credit risk, the Group assesses the financial status of each customer and the possibility of collection of receivables on a regular basis. The above-mentioned customers are profitable and have a good credit record; hence, the Group did not suffer any significant credit loss from those customers during the financial reporting period.

3) Derivative instruments

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

(iv) Liquidity risk

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

The Group manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Group had unused credit line of $29,144,191 and $29,823,745 as of December 31, 2023 and 2022, respectively.

(v) Market risk

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

1) Currency risk

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

(Continued)

69

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

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

• 2) Interest rate risk

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

• (ac) Capital management

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

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

The Group’s debt ratios as of December 31, 2023 and 2022, were 59% and 61%, respectively.

• (ad) Changes of liabilities from financing activities

Reconciliation of liabilities arising from financing activities was as follows:

Short-term borrowings Long-term borrowings Lease liabilities Guarantee deposits Total liabilities from financing activities Short-term borrowings Long-term borrowings Lease liabilities Guarantee deposits Total liabilities from financing activities	January 1, 2023 $ 489,370 464,000 1,898,262 12,126 $ 2,863,758 January 1, 2022 $ 2,030,829 1,460,955 2,108,070 12,253 $ 5,612,107	Cash flows 266,882 243,979 (236,951) 21,379 295,289 Cash flows (1,541,459) (996,955) (234,706) (127) (2,773,247)	Effect of changes in exchange rate - - 5,014 - 5,014 Effect of changes in exchange rate - - 41,852 - 41,852	Changes in lease payments - - 118,265 - 118,265 Changes in lease payments - - (16,954) - (16,954)	December 31, 2023
					756,252 707,979 1,784,590 33,505 3,282,326 December 31, 2022
					489,370 464,000 1,898,262 12,126 2,863,758

(Continued)

70

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

(ae) Supplementary information of cash flow

• (i) The Group acquired property, plant and equipment amounting to $1,671,181 and $1,890,170, respectively, and the payables on equipment increased $99,660 and decreased $40,987, respectively, generating cash outflow of $1,571,521 and $1,931,157 for the years ended December 31, 2023 and 2022, respectively.

• (ii) For the year ended December 31, 2023, the Group’s disposal of property, plant and equipment amounting to $50,276, including the write-off of the unamortized deferred revenue of equipment subsidy of $89, resulted in the increase of other accounts receivable amounting to $8,160.

For the year ended December 31, 2022, the Group’s disposal of property, plant and equipment included the write-off of the unamortized deferred revenue of equipment subsidy amounting to $9,171.

(7) Related-party transactions:

• (a) Names and relationship of the related parties

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

Name	Relationship
Specialty Technologies, LLC (Specialty)	Substantive related party

• (b) Significant transactions with related parties

• (i) Sales

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

Other related parties	Sales Notes and accounts receivable 2023 2022 December 31, 2023 December 31, 2022 $ 570,633 288,746 70,606 54,587	Sales Notes and accounts receivable 2023 2022 December 31, 2023 December 31, 2022 $ 570,633 288,746 70,606 54,587	Sales Notes and accounts receivable 2023 2022 December 31, 2023 December 31, 2022 $ 570,633 288,746 70,606 54,587
	2023
	$ 570,633		54,587

There were no significant differences in the selling prices between the related parties and other customers. The trading terms offered to other related parties were 60 days, and the trading terms to other customers were 45 days to 120 days.

(Continued)

71

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

(c) Key management personnel compensation

Key management personnel compensation comprised:

Short-term employee benefits Post-employment benefits Share-based payments	2023 $ 181,262 1,407 115,818 $ 298,487	2022
		183,890 1,315 87,379
		272,584

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

(8) Pledged assets:

The carrying amounts of pledged assets were as follows:

Pledged assets Other non-current assets – restricted assets Property, plant and equipment	Pledged to secure	December 31, 2023 $ 3,414 $ 769,580	December 31, 2022 3,414
	Guarantee letters issued by bank Loan collateral
			769,580

(9) Commitments and contingencies:

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

(b) The following are guarantee letters issued by the bank to customs, business partner and Power Supply Bureau as guarantee deposits and power supply guarantee, respectively.

Guarantee letters	December 31, 2023 $ 62,449	December 31, 2022 57,333

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

Sales of accounts receivable Long-term borrowings	December 31, 2023 $ 76,838 $ 1,800,400	December 31, 2022
		2,160,669
		1,800,400

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

Property, plant and equipment	December 31, 2023 $ 1,555,520	December 31, 2022
		965,744

(Continued)

72

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

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

• (a) A summary of employee benefit, depreciation, and amortization expenses by function, was as follows:

follows:
By function By item	2023			2022
	Operating cost	Operating expenses	Total	Operating cost	Operating expenses	Total
Employee benefits Salaries Labor and health insurance Pension Others Depreciation Amortization	3,590,149 157,612 226,427 58,718 1,314,795 20,228	4,157,297 234,410 171,861 182,091 382,994 183,807	7,747,446 392,022 398,288 240,809 1,697,789 204,035	4,105,848 157,678 256,244 107,306 1,329,460 23,066	4,501,966 226,982 199,617 236,613 328,545 205,788	8,607,814 384,660 455,861 343,919 1,658,005 228,854

Note: Excluding the depreciation of the investment property-buildings (classified as other gains and losses) amounted to $11,558 and $463 for the years ended December 31, 2023 and 2022, respectively.

(13) Other disclosures:

• (a) Information on significant transactions:

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

(i) Loans to other parties:

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Coll	ateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
1	PKS1	The Company	Other receivables	Y	327,475	317,197	317,197	0	Short-term loan to other parties	-	Operating capital	-	-	-	797,141	797,141

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: The above transactions have been eliminated during the preparation of the consolidated financial statements.

(Continued)

73

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Guarantees and endorsements for other parties:

								(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during th period	Property e pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0 � 1	The Company � Tymphany Huizhou	PCH2 Primax Electronics (Singapore) Pte. Ltd. TYM Acoustic HK	The subsidiary of Primax HK and Primax Tech. Subsidiary �	5,104,053 5,104,053 2,162,341	324,190 2,700,000 4,863	307,350 2,700,000 4,610	- 307,919 -	- - -	% 1.81 % 15.87 % 0.06	13,610,807 13,610,807 3,603,901	Y Y N	N N N	Y N 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 50% of the Tymphany Huizhou’s net worth in the latest financial statements.

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

(iii) Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures):

Company Ending balance holding securities	Security type and name	Relationship with company	Account		Ending balance	Ending balance	Ending balance	Highest balance during the year	Highest balance during the year	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value	Shares/Units (thousands)	Percentage of ownership (%)
The Company Primax Tech. Tymphany Huizhou	Stocks (equities): Green Rich Technology Co., Ltd. Changing Information Technology Inc. Formosoft International Inc. Syntronix Corp. Ricavision International Inc. Grove Ventures L.P. Grove Ventures II, L.P. Grove Ventures III, L.P. Storm Ventures Fund VII, L.P. Thin Line Capital fund II, L.P. Stocks: Echo. Bahn. Stocks: Shenzhen Mees Hi-Tech Co., Ltd.	- - - - - - - - - - - -	Financial assets at FVOCI � � � � � � � Financial assets at FVTPL � Financial assets at FVOCI �	359 223 11 7 917 - - - - - 400 556	- 11,093 - 250 - 158,070 97,145 23,727 5,040 7,008	3.59 1.29 0.41 0.02 2.04 2.73 3.29 2.21 0.44 7.10 11.90 10.00	- 11,093 - 250 - 158,070 97,145 23,727 5,040 7,008 - -	359 223 11 7 917 - - - - - 400 556	3.59 1.34 0.41 0.02 2.04 2.73 3.29 2.23 0.48 9.80 11.90 10.00
					302,333
					-
					-

(Continued)

74

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

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of TWD300 million or 20% of the Company’s paid-in capital:None

• (v) Acquisition of individual real estate with amount exceeding the lower of TWD300 million or 20% of the Company’s issued capital: None

• (vi) Disposal of individual real estate with amount exceeding the lower of TWD300 million or 20% of the Company’s issued capital: None

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of TWD100 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 � � � � � Primax Singapore � PCH2 � PKS1 PCQ1 Primax Thailand Polaris Tymphany Huizhou � � � � �	Primax Singapore PCH2 PKS1 PCQ1 Polaris Primax Thailand The Company PCH2 The Company Primax Singapore The Company � � � TYM Acoustic HK TYM HK � TYM Acoustic Europe Tymphany Dongguan TYTH	Subsidiary The subsidiary of Primax HK � � The subsidiary of Primax Tech. The subsidiary of Primax Singapore Parent The subsidiary of Primax HK The parent of Primax Cayman The subsidiary of the Company The parent of Primax Cayman � The parent of Primax Singapore The parent of Primax Tech. Subsidiary The subsidiary of TYM Acoustic HK � � Subsidiary The subsidiary of TYM Acoustic HK	(Sale) Purchase Purchase Purchase (Sale) Purchase Purchase Purchase (Sale) (Sale) (Sale) (Sale) (Sale) Purchase (Sale) (Sale) Purchase (Sale) Purchase (Sale)	(10,935,549) 18,148,657 1,423,450 6,194,057 (3,450,949) 2,369,368 10,935,549 151,474 (18,148,657) (151,474) (1,423,450) (6,194,057) (2,369,368) 3,450,949 (2,902,735) (2,755,372) 107,004 (247,151) 147,433 (148,907)	% (33) % 61 % 5 % 21 % (10) % 8 % 99 % 1 % (78) % (1) % (100) % (73) % (87) % 100 % (47) % (44) % 2 % (4) % 3 % (2)	60 days � � � 90 days 60 days � � � � � � � 90 days 60 days � � � �	Price agreed by both sides � � � � � � � � � � � � � � � � � � �	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	1,823,757 (7,032,690) (672,574) (3,057,622) 806,440 (309,592) (1,823,757) (33,986) 7,032,690 33,986 672,574 3,057,622 309,592 (806,440) 898,112 828,359 (42,943) 58,316 (36,950) 131,551	25% (61)% (6)% (26)% 11% (3)% (84)% (2)% 89% -% 68% 79% 91% (100)% 46% 43% (4)% 3% (3)% 7%	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

(Continued)

75

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

Name of company	Related party	Nature of relationship		Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
Tymphany Dongguan � � � � � TYDC � � � TYM Acoustic HK � � � � TYM Acoustic Europe � � TYM HK � � � � � �	TYM HK � Tymphany Huizhou TYM Acoustic Europe TYM Acoustic HK TYDC TYM HK � Tymphany Dongguan TYM Acoustic HK TYM Acoustic Europe Tymphany Huizhou Tymphany Dongguan TYDC Specialty TYM Acoustic HK Tymphany Huizhou Tymphany Dongguan Tymphany Huizhou � Tymphany Dongguan � TYDC � TYTH	The subsidiary of TYM Acoustic HK � Parent The subsidiary of TYM Acoustic HK The subsidiary of Tymphany Huizhou Subsidiary The subsidiary of TYM Acoustic HK � Parent The subsidiary of Tymphany Huizhou Subsidiary Parent The subsidiary of Tymphany Huizhou The subsidiary of Tymphany Dongguan The other related party Parent The parent of TYM Acoustic HK The subsidiary of Tymphany Huizhou The parent of TYM Acoustic HK � The subsidiary of Tymphany Huizhou � The subsidiary of Tymphany Dongguan � The subsidiary of TYM Acoustic HK	Purchase (Sale) (Sale) (Sale) (Sale) (Sale) (Sale) Purchase Purchase (Sale) Purchase Purchase Purchase Purchase (Sale) (Sale) Purchase Purchase Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase	318,190 (4,170,008) (147,433) (458,859) (1,094,421) (401,058) (1,211,762) 203,179 401,058 (2,538,905) 2,246,710 2,902,735 1,094,421 2,538,905 (570,633) (2,246,710) 247,151 458,859 2,755,372 (107,004) 4,170,008 (318,190) 1,211,762 (203,179) 3,838,067	% 6 % (61) % (2) % (7) % (16) % (6) % (30) % 6 % 12 % (63) % 26 % 33 % 13 % 29 % (6) % (100) % 14 % 27 % 23 % (1) % 35 % (3) % 10 % (2) % 32	60 days � � � � � � � � � � � � � � � � � � � � � � � �	Price agreed by both sides � � � � � � � � � � � � � � � � � � � � � � � �	The same as general purchasing The same as general selling � � � � � The same as general purchasing � The same as general selling The same as general purchasing � � � The same as general selling � The same as general purchasing � � The same as general selling The same as general purchasing The same as general selling The same as general purchasing The same as general selling The same as general purchasing	(99,430) 1,136,082 36,950 188,239 291,991 48,990 (931) (3,502) (48,990) 691,017 (608,020) (898,112) (291,991) (691,017) 70,606 608,020 (58,316) (188,239) (828,359) 42,943 (1,136,082) 99,430 931 3,502 (635,356)	(7)% 65% 2% 11% 17% 3% -% (1)% (13)% 97% (21)% (32)% (10)% (24)% 4% 100% (12)% (39)% (28)% 2% (38)% 5% -% -% (21)%	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

(Continued)

76

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

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactions wit from	h terms different others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase/ Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
TYTH �	TYM HK Tymphany Huizhou	The subsidiary of TYM Acoustic HK The parent of TYM Acoustic HK	(Sale) Purchase	(3,838,067) 148,907	% (98) % 4	60 days �	Price agreed by both sides �	The same as general selling The same as general purchasing	635,356 (131,551)	91% (12)%	Note 1 Note 1

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

(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 � PKS1 � PCQ1 Primax Thailand Tymphany Huizhou � � Tymphany Dongguan � � TYDC TYM Acoustic HK TYM Acoustic Europe TYM HK � �	Primax Singapore Polaris PCH2 � The Company Primax Thailand The Company � � � TYM Acoustic HK TYM HK TYTH TYM HK TYM Acoustic Europe TYM Acoustic HK TYM Acoustic HK Tymphany Huizhou TYM Acoustic HK Tymphany Dongguan � TYM Acoustic HK	Subsidiary The subsidiary of Primax Tech. The subsidiary of Primax HK � The parent of Primax Cayman The subsidiary of Primax Singapore The parent of Primax Cayman � � The parent of Primax Singapore Subsidiary The subsidiary of TYM Acoustic HK � � � The subsidiary of Tymphany Huizhou The subsidiary of Tymphany Huizhou Parent � The subsidiary of Tymphany Huizhou � �	1,823,757 (note 5) 806,440 (note 5) 452,242 (note 2&5) 73,234 (note 5) 7,032,690 (note 5) 241,682 (note 5) 672,574 (note 5) 317,197 (note 5) 3,057,622 (note 5) 309,592 (note 5) 898,112 (note 5) 828,359 (note 5) 131,551 (note 5) 1,136,082 (note 5) 188,239 (note 5) 291,991 (note 5) 691,017 (note 5) 242,498 (note 5) 608,020 (note 5) 99,430 (note 5) 1,157,861 (note 5) 279,433 (note 5)	5.23 6.18 3.74 (note 3) 2.79 (note 3) 2.38 (note 4) 2.23 12.69 3.09 2.89 2.15 3.82 2.24 5.75 3.19 (note 3) 3.92 2.15 (note 3) (note 3)	- - - - - - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - - - - - -	1,322,353 806,440 130,966 29,791 2,916,857 53,522 132,787 - 443,626 - 458,410 213,616 18,774 342,413 34,471 235,544 125,517 242,156 439,898 99,430 305,753 257,207	- - - - - - - - - - - - - - - - - - - - - -

(Continued)

77

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

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period (note 1)	Allowance for bad debts
					Amount	Action taken
TYAT TYTH	TYM HK �	The subsidiary of TYM Acoustic HK �	335,490 (note 5) 635,356 (note 5)	(note 3) 6.96	- -	- -	150,245 -	- -

Note 1: Amounts were collected as of February 6, 2024.

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, 2023 was $1,695,973, which was written off with related cost of goods sold, and not regarded as sales for the Company.

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

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

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

• (x) Business relationships and significant intercompany transactions:

No	Name of company	Name of counter- party	Nature of relationship		Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of consolidated total operating revenues or total assets
0 � � � � � � � � � � � � � � 1 � � �	The Company � � � � � � � � � � � � � � PCH2 � � �	Primax Singapore � PCH2 � � � PKS1 � � PCQ1 � Polaris � Primax Thailand � Tymphany Dongguan Primax Thailand Primax Singapore UTD3	Subsidiary � The subsidiary of Primax HK � � � � � � � � The subsidiary of Primax Tech. � The subsidiary of Primax Singapore � The subsidiary of Tymphany Huizhou The subsidiary of Primax Singapore The subsidiary of the Company The subsidiary of DestinyTech.	Sale Accounts Receivable Purchase Accounts Payable Accounts Receivable Other Receivable Purchase Accounts Payable Other Payable Purchase Accounts Payable Sale Accounts Receivable Purchase Accounts Payable Service Revenue Accounts Receivable Sale Service Expense	10,935,549 1,823,757 18,148,657 7,032,690 452,242 73,234 1,423,450 672,574 317,197 6,194,057 3,057,622 3,450,949 806,440 2,369,368 309,592 259,403 241,682 151,474 104,218	Price agreed by both sides 60 days Price agreed by both sides 60 days � (note 2) Price agreed by both sides 60 days (note 3) Price agreed by both sides 60 days Price agreed by both sides 90 days Price agreed by both sides 60 days Price agreed by both sides (note 2) Price agreed by both sides �	% 18.08 % 3.92 % 30.00 % 15.11 % 0.97 % 0.16 % 2.35 % 1.44 % 0.68 % 10.24 % 6.57 % 5.71 % 1.73 % 3.92 % 0.67 % 0.43 % 0.52 % 0.25 % 0.17

(Continued)

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

No	Name of company	Name of counter- party	Nature of relationship		Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of consolidated total operating revenues or total assets
2 � � � � � � � � � 3 � � � � � � � � � � 4 � � � 5 � 6 �	Tymphany Huizhou � � � � � � � � � Tymphany Dongguan � � � � � � � � � � TYDC � � � TYM Acoustic HK � TYM HK �	TYM Acoustic HK � � TYM HK � � TYTH � TYM Acoustic Europe Tymphany Dongguan TYM HK � � � � TYM Acoustic Europe � TYM Acoustic HK � TYDC � TYM HK � TYM Acoustic HK � TYM Acoustic Europe � TYM Acoustic HK �	Subsidiary � � The subsidiary of TYM Acoustic HK � � � � � Subsidiary The subsidiary of TYM Acoustic HK � � � � � � The subsidiary of Tymphany Huizhou � Subsidiary � The subsidiary of TYM Acoustic HK � The subsidiary of Tymphany Huizhou � Subsidiary � Parent �	Sale Accounts Receivable Other Payable Sale Purchase Accounts Receivable Accounts Receivable Sale Sale Purchase Purchase Sale Accounts Receivable Other Payable Accounts Payable Sale Accounts Receivable Accounts Receivable Sale Sale Service Revenue Sale Purchase Sale Accounts Receivable Purchase Accounts Payable Other Receivable Service Revenue	2,902,735 898,112 242,498 2,755,372 107,004 828,359 131,551 148,907 247,151 147,433 318,190 4,170,008 1,136,082 1,157,861 99,430 458,859 188,239 291,991 1,094,421 401,058 93,650 1,211,762 203,179 2,538,905 691,017 2,246,710 608,020 279,433 573,110	Price agreed by both sides 60 days (note 2) Price agreed by both sides � 60 days � Price agreed by both sides � � � � 60 days (note 2) 60 days Price agreed by both sides 60 days � Price agreed by both sides � � � � � 60 days Price agreed by both sides 60 days (note 2) Price agreed by both sides	% 4.80 % 1.93 % 0.52 % 4.56 % 0.18 % 1.78 % 0.28 % 0.25 % 0.41 % 0.24 % 0.53 % 6.89 % 2.44 % 2.49 % 0.21 % 0.76 % 0.40 % 0.63 % 1.81 % 0.66 % 0.15 % 2.00 % 0.34 % 4.20 % 1.48 % 3.71 % 1.31 % 0.60 % 0.95

(Continued)

79

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

No	Name of company	Name of counter- party	Nature of relationship	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of consolidated total operating revenues or total assets
6 � � � � �	TYM HK � � � � �	TYAT � TYP TYUK TYTH �	The subsidiary of TYM Acoustic HK � � � � �	Other Payable Service Expense Service Expense Service Expense Purchase Accounts Payable	335,490 1,038,863 148,301 115,302 3,838,067 635,356	(note 2) Price agreed by both sides � � � 60 days	% 0.72 % 1.72 % 0.25 % 0.19 % 6.35 % 1.36

Note 1: Disclosure of the amounts was exceeding of NTD$100 million.

Note 2: The receivables arises from service rendering for intercompany or material purchasing on behalf of intercompany or related party. Note 3: The other receivables arise from intercompany loans.

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

(b) Information on investees:

The following is the information on investees for the year ended December 31, 2023 (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 of December 31, 20	Balance as of December 31, 20	23	Highest balance during the year	Highest balance during the year	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2023	December 31, 2022	Shares (thousands)	Percentage of ownership	Carrying value	Shares (thousands)	Percentage of ownership
The Company � � � � � � �	Primax Cayman Primax Tech. Destiny BVI. Destiny Japan Diamond Gratus Tech. Primax AE Primax Singapore Total	Cayman Islands Cayman Islands Virgin Island Japan Cayman Islands USA Cayman Islands Singapore	Holding company Holding company Holding company Market development of and customer service for computer peripherals, mobile device components, and business devices Holding company Market development of and customer service for computer peripherals, mobile device components, and business devices Holding company Sale of computer peripherals and mobile device components	2,540,588 897,421 30,939 7,032 3,889,798 9,330 1,431,540 1,181,150 9,987,798	2,540,588 897,421 30,939 7,032 3,889,798 9,330 1,431,540 1,181,150 9,987,798	8,147,636 285,067 1,050 0.50 129,050 300 48,200 40,100 -	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	8,221,648 3,007,677 3,634 15,281 6,943,949 17,784 64,336 726,315 19,000,624	8,147,636 285,067 1,050 0.5 129,050 300 48,200 40,100	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	601,890 191,367 5,895 364 489,841 2,225 2,528 (10,672) 1,283,438	655,774 192,001 5,895 364 485,956 2,225 2,528 (9,303) 1,335,440	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3
Primax Singapore	Primax Thailand	Thailand	Manufacturing and sale of computer peripherals, mobile device components, and business devices	1,162,928	1,162,928	1,244	99.99	730,196	1,244	99.99	(18,971)	(18,971)	Note 3

(Continued)

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

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2023	Balance as of December 31, 2023	Balance as of December 31, 2023	Highest balance during the year	Highest balance during the year	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2023	December 31, 2022	Shares (thousands)	Percentage of ownership	Carrying value	Shares (thousands)	Percentage of ownership
Primax Cayman	Primax HK	Hong Kong	Holding company and customer service	2,375,164	2,375,164	602,817	100.00	8,232,363	602,817	100.00	602,133	602,133	Note 3
Primax Tech.	Polaris	USA	Sale and purchase of computer peripherals, mobile device components, and business devices	52,680	52,680	1,600	100.00	445,691	1,600	100.00	13,087	13,087	Note 3
Diamond	TWEL	Cayman Islands	Holding company	4,083,950	4,083,950	192,251	100.00	7,004,331	192,551	100.00	569,336	489,764	Note 3
Primax AE	AIC	Cayman Islands	Holding company	1,356,995	1,356,995	30	37.00	-	30	37.00	(108,401)	-	Note 4
TWEL	TYM Singapore	Singapore	R&D, design, and sales of various speaker accessories as well as speakers and their components and holding business	-	-	-	100.00	-	-	-	-	-	Note 3 Note 5
Tymphany Huizhou	TYM Acoustic HK	Hong Kong	R&D, design, and sales of various speaker accessories as well as speakers and their components and holding business	1,592,954	1,592,954	418,090	100.00	3,015,340	418,090	100.00	170,294	170,294	Note 3
TYM Acoustic HK � � � � �	TYM HK TYP TYM UK TYM Acoustic Europe TYAT TYTH	Hong Kong USA United Kingdom Czech Taiwan Thailand	Holding company; sales of, market development of and customer service for various speaker accessories, speakers and their components Market development of and customer service for speakers and their components R&D and design of various speaker accessories as well as speakers and their components Manufacturing, installation, and maintenance of various speaker accessories and their components R&D and design of various speaker accessories as well as speakers and their components Manufacturing and sales of various speaker accessories, speakers, and their components	76,280 (note 1) 15 (note 1) 15,631 653,796 48,318 725,091	76,280 (note 1) 15 (note 1) 15,631 653,796 48,318 725,091	144,395 0.50 400 187,800 5,000 7,789	100.00 100.00 100.00 100.00 100.00 99.99	865,131 50,869 39,749 975,943 353,858 672,676	144,395 0.5 400 187,800 5,000 7,789	100.00 100.00 100.00 100.00 100.00 99.99	(364,720) 5,534 1,418 44,454 21,989 63,101	(364,720) 5,534 1,418 44,454 21,989 63,101	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3
TYM HK	TYML	USA	Sales of various speaker accessories, speakers, and their components	6,628	6,628	200	100.00	7,995	200	100.00	(1,345)	(1,345)	Note 3

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

• Note 2: Related investments (except for AIC) have been eliminated during the preparation of the consolidated financial statements. Note 3: The subsidiary of the Company.

• Note 4: The associate of the Company.

• Note 5: As of December 31, 2023, there was no capital injection from the Group.

(Continued)

81

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

(c) Information on investment in Mainland China:

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

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of Investment	Accumulated outflow of investment from Taiwan as of January 1, 2023 (note 2)	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2023 (note 2)	Net income (losses) of the investee	Percentage of ownership	Highest Percentage of ownership during the year	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Outflow	Inflow
PCH2 Destiny Beijing PKS1 PCQ1 Tymphany Huizhou Tymphany Dongguan TYDC	Manufacturing and sale of computer peripherals, mobile device components, and business devices R&D of computer peripheral and business devices Production of computer peripheral products � Manufacturing, R&D, design and sale of various speaker accessories, speakers, and their components � �	1,935,108 38,333 847,319 828,084 1,642,541 153,675 86,788	Indirect investment through Primax Cayman and Primax Tech. Indirect investment through Destiny BVI. Indirect investment through Primax Cayman � Indirect investment through Diamond � �	1,685,001 32,243 675,576 614,160 3,961,332 15,354 -	- - - - - - -	- - - - - - -	1,685,321 32,272 676,170 614,700 3,964,815 15,368 -	527,890 5,895 13,947 233,597 747,956 285,824 157,901	100% 100% 100% 100% 77.01% 77.01% 77.01%	100% 100% 100% 100% 77.01% 77.01% 77.01%	527,890 5,895 13,947 233,597 575,996 220,113 121,600	7,503,102 3,630 797,141 2,351,492 5,550,780 845,933 283,323	- - - - - - -

Note 1: The above information on the exchange rate was as follows: HKD:TWD3.9325 ; USD:TWD 30.7350; CNY:TWD 4.3394.

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

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

(ii) Limitation on investment in Mainland China:

Name of Company	Accumulated Investment in Mainland China as of December 31, 2023	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
The Company	7,442,764	8,712,498	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)

82

PRIMAX ELECTRONICS LTD. AND SUBSIDIARIES Notes to the Consolidated 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, 2023, are disclosed in “ Information on significant transactions”, and “ Business relationships and significant intercompany transactions”.

• (d) Major shareholders:

Major shareholders:	Major shareholders:	Major shareholders:
Unit: Shares
Shareholding Shareholder’s Name	Shares	Percentage
Capital TIP Customized Taiwan Select High Dividend ETF Investment Account	31,599,000	% 6.82

(14) Segment information:

• (a) General information

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

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

The Group’s segment financial information was as follows:

Revenue External revenue Intra-group revenue Total segment revenue Profit before tax from segments reported		2023	Total 60,488,402 -
	Computer Peripherals $ 22,448,803 - $ 22,448,803 $ 1,487,854	Non-computer Peripherals 38,039,599 - 38,039,599 1,778,518
			60,488,402
			3,266,372

(Continued)

83

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

Revenue External revenue Intra-group revenue Total segment revenue Profit before tax from segments reported		2022
	Computer Peripherals $ 27,281,914 - $ 27,281,914 $ 1,900,472	Non-computer Peripherals 51,958,851 - 51,958,851 1,728,492	Total
			79,240,765 -
			79,240,765
			3,628,964

(b) Geographic information

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

Geographic Information Revenues from external customers: China Europe America Other Total Non-current assets: China Taiwan Thailand Other Total	2023 $ 23,867,070 15,358,686 17,574,186 3,688,460 $ 60,488,402 December 31, 2023 $ 5,049,655 3,195,771 1,957,361 2,214,848 $ 12,417,635	2022
		28,212,456 20,771,566 21,964,066 8,292,677
		79,240,765
		December 31, 2022
		5,944,116 2,616,075 1,819,730 2,296,205
		12,676,126

(c) Major customer information

A company－Non-computer Peripherals B company－Computer Peripherals －Non-computer Peripherals	2023 $ 8,175,939 $ 6,610,707 - $ 6,610,707	2022
		11,850,853
		8,001,352 54,124
		8,055,476