RECTRON - Annual Report 2022 | FinancialReports.eu

Stock Code: 2302

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RECTRON LTD.

2022 ANNUAL REPORT

Printing Date: May 26, 2023 Website: http://mops.twse.com.tw/

1. Company Spokesperson and Acting Spokesperson:

Spokesperson:

Name: Lin Jui Ping

Title: Deputy General Manager of General Administration and General Manager of the Electronic Business Department

Phone: (02) 2880-1122 Email: [email protected] Acting Spokesperson: Name: Wang Tsuo Tzu Title: Deputy Manager of the Accounting Department Phone: (02) 2880-1122 Email: [email protected]

2. Address and Phone Numbers of Head Office and Factory:

Head Office: Address: No. 192-2, Section 4, Chengde Road, Shilin District, Taipei City 11167 Phone: (02) 2880-1122 Factory: Address: No. 71, Zhongshan Road, Tucheng District, New Taipei City 23680 Phone: (02) 2268-1314

3. Share Transfer Agency:

Name: Guo-Pu Securities Co., Ltd., Stock Transfer Agency Department

Address: 15F, No. 188, Section 5, Nanjing East Road, Songshan District, Taipei City 105411 Website: www.wls.com.tw

Phone: (02) 2528-8988

4. Certified Public Accountants and Audit Firm for the Recent Annual Financial Report:

Accountant Names: Shih-Chin Chih, Li-Chen Lai Firm Name: An-Hou Jianye Certified Public Accountants Address: 68F, No. 7, Section 5, Xinyi Road, Taipei City 11049 Website: www.kpmg.com.tw Phone: (02) 8101-6666

5. Name of Overseas Stock Exchange for Trading and Method of Obtaining Information on Overseas Securities: N/A

6. Company Website: www.rectron.com.tw

1. Report to Shareholders ............................................................................................................................... 1 2. Company Profile 1. Date of Establishment ........................................................................................................................... 5 2. Company History .................................................................................................................................. 5 3. Corporate Governance Report 1. Organization System ............................................................................................................................. 7 2. Information of Directors, Supervisors, the General Manager, Deputy General Managers, Assistant Managers, and Heads of Departments ............................................................................... 9 3. Corporate Governance Practices ......................................................................................................... 27 4. Information on Auditor's Remuneration ............................................................................................. 80 5. Information on Change of Auditors .................................................................................................... 81 6. Information on the Chairman of the Board, General Manager, and Manager responsible for financial or accounting affairs who have served in the past year in accounting firms affiliated with the auditing firm or its related entities. ................................................................................... 81 7. Substantial transfer or replacement of the shares of Directors, Supervisors, or major shareholders holding more than 10% of the shares in the most recent year and up to the date of the publication of the annual report ............................................................................................ 82 8. Information on the interrelationships among the top ten shareholders in terms of share proportion, as defined in Financial Accounting Standards Bulletin No. 6 regarding related party relationships. .......................................................................................................................... 83 9. The shares held by the Company, its Directors, Supervisors, managers, and enterprises directly or indirectly controlled by the Company in the same reinvested enterprise, and the comprehensive shareholding ratio calculated on a consolidated basis. .......................................... 84 4. Funding Status 1. Share Capital and Shares .................................................................................................................... 85 2. Status of corporate bond issuance. ...................................................................................................... 91 3. Status of preferred stock issuance. ...................................................................................................... 91 4. Status of issuance of overseas depositary receipts. ............................................................................. 91 5. Handling of employee stock options. .................................................................................................. 91 6. Status of issuance of new shares with restricted employee rights. ..................................................... 91 7. Status of issuance of new shares for mergers or acquisitions of other companies' shares. ................. 91 8. Implementation status of the capital utilization plan. ......................................................................... 91 5. Operation Overview 1. Business Contents ............................................................................................................................... 92 2. Market and production/sales overview. .............................................................................................. 97 3. Number of employees in the company. ............................................................................................. 102

Environmental expenditure information ........................................................................................... 102 5. Labor-Management Relations ........................................................................................................... 103 6. Information on information technology and cybersecurity management. ........................................ 104 7. Key contracts and agreements. ......................................................................................................... 105 6. Financial Status 1. The summary balance sheets and income statements for the past five years. ................................... 106 2. Financial analysis for the past five years. ......................................................................................... 110 3. Audit committee review report for the most recent annual financial report. .................................... 114 4. Latest annual financial statements. ................................................................................................... 115 5. Consolidated financial statements of the parent and subsidiary companies for the most recent year, with the audit verification by the accountant. ...................................................................... 185 6. For the company and its affiliated enterprises, as of the date of the latest annual report publication, any financial difficulties encountered should be specified along with their impact on the financial condition of the company. ....................................................................... 250 7. Review Analysis and Risk Assessment of Financial Status and Financial Performance 1. Financial Status ................................................................................................................................. 251 2. Financial Performance ...................................................................................................................... 252 3. Cash Flow ......................................................................................................................................... 253 4. The impact of significant capital expenditures in the most recent fiscal year on financial operations. ..................................................................................................................................... 254 5. The recent year's investment policy and the main reasons for profitability or loss in investments, along with improvement plans and future one-year investment plans. ......................................... 254 6. Analysis and assessment of risk factors. ........................................................................................... 255 7. Other important matters. ................................................................................................................... 257 8. Special Notes 1. Related information on affiliated enterprises .................................................................................... 258 2. Handling of Private Offering of Marketable Securities for the Most Recent Year and up to the Date of Publication of the Annual Report ..................................................................................... 261 3. The Status of Holding or Disposing of the Company's Shares by a Subsidiary for the Most Recent Year and up to the Date of Publication of the Annual Report ........................................... 262 4. Other necessary supplemental explanatory matters. ......................................................................... 262 9. Major events in the most recent year up until the publication date of the annual report with significant impact on shareholders’ equity or stock price. ....................................................................... 262

1. Report to Shareholders

Dear Shareholders,

Thank you for attending the Annual General Meeting of Rectron Ltd. for the year 2023.

Since the outbreak of the COVID-19 pandemic, which has had a global economic impact, Rectron achieved an overall operating revenue of NT$877,633 thousand in the fiscal year 2022, representing an 18% increase compared to the revenue of NT$745,850 thousand in the year 2021. This growth can be attributed mainly to the increased demand from the US market due to the effects of the ongoing trade tensions between China and the US, which resulted in a transfer of customer orders to our Electronics Division. Additionally, the successful expansion of our high-end medical mask business, along with strategic adjustments in our product sales portfolio, customer base, and cost control measures, contributed to a significant increase in operating gross profit. In 2022, our operating gross profit reached NT$343,849 thousand, reflecting a 37% growth compared to NT$251,630 thousand in the year 2021. As a result, our net profit after tax for the fiscal year 2022 amounted to NT$176,100 thousand, showing a remarkable growth of 107% compared to the profit of NT$84,972 thousand in the year 2021.

Since the outbreak of the COVID-19 pandemic, the global economy has faced significant challenges. The disruptions in the supply chain have led to increased prices of raw materials and transportation costs, indirectly contributing to inflationary pressures. Furthermore, the escalating geopolitical and military conflicts, such as the ongoing Russia-Ukraine war, have created prolonged and expanding impacts, affecting the smoothness of the supply of critical raw materials and thereby influencing global economic activities, including production and consumption. These factors have added to the overall business risks and variables for Rectron Ltd. in the year 2023.

In recent years, climate change has made energy-saving and carbon reduction issues an international consensus, and the green energy industry has become one of the necessary industries for countries to develop. The demand for energy-saving industries such as electric vehicles and solar panels has relatively increased. In response to this market niche, our company has increased our efforts to cultivate related customer groups in order to increase revenue and contribute to our company's profits.

In recent years, our company has maintained stable growth and strived to create greater profits for shareholders. Even in the face of diverse future challenges, we continue to maintain a positive and proactive attitude, seeking progress and innovation, deepening our brand value, and aiming to achieve the best business performance to maximize profits for our shareholders.

Chairman LIN I-CHIN

1. Operating Results for the Year 2022

(1) Achievement of Operating Plan:

Unit: NTD in thousands; %

Item	Year 2022	Year 2021	Amount of Increase (Decrease)	Amount of Increase (Decrease)
	Amount	Amount	Difference Amount	Percentage of Increase (Decrease)%
OperatingRevenue	877,633	745,850	131,783	18%
OperatingCost	533,784	494,220	39,564	8%
OperatingGross Profit	343,849	251,630	92,219	37%
OperatingExpenses	173,109	169,757	3,352	2%
OperatingProfit(Loss)	170,740	81,873	88,867	109%
Non-Operating Revenue (Expenses)	33,905	8,756	25,149	287%
Consolidated Pre-tax Net Income (Loss)	204,645	90,629	114,016	126%
Income Tax Expense	28,545	5,657	22,888	405%
Consolidated Total Net Income(Loss)	176,100	84,972	91,128	107%

During the fiscal year 2022, the total operating revenue of our company was NT$ 877,633 thousand, which increased from NT$ 745,850 thousand in 2021 due to the benefits of diverting trade from China to the United States. In fiscal year 2022, we adjusted our product mix and implemented effective cost control measures, which resulted in an increase in gross profit from NT$ 251,630 thousand in 2021 to NT$ 343,849 thousand. As a result, our company's net profit after tax for fiscal year 2022 was NT$ 176,100 thousand, which increased by NT$ 91,128 thousand from the net profit of NT$ 84,972 thousand in fiscal year 2021.

(2) Regarding the budget execution:

In accordance with the guidelines for handling public financial forecasts of publicly traded companies, the company did not have a public financial forecast for the year 2022.

(3) Financial income and profitability analysis

al income and	profitability analysis
		Unit: %
Analysis	Item	Year 2022	Year 2021
Financial Structure(%)	Debt to Assets Ratio(%)	14.16	16.29
	Ratio of Long-Term Capital to Real Estate, Plant,and Equipment(%)	386.95	364.30
Debt-Paying Capacity (%)	Current ratio(%)	264.52	207.86
	Quick Ratio (%)	192.01	140.59
Profitability (%)	Returnon assets (%)	8.23	4.02
	ReturnonShareholder Equity (%)	9.66	4.80
	Net Profit Margin(%)	20.07	11.39
	Earnings Per Share(NT$)	1.06	0.51

(4) Research and Development Status

In consideration of the importance of brand value, our company places great emphasis on product development and long-term investment in core technological capabilities. We strive to introduce products that best meet the needs of end customers. Over the past two years, we have invested approximately 1% of our revenue in research and innovation, continuously developing new products and improving existing ones to establish a solid technological foundation for the sustainable development of the company.

2. Overview of 2023 Business Plan

1. Business Policy

Given the increasing geopolitical and military conflicts in recent times, such as the outbreak of the Russia-Ukraine war, which has had a prolonged impact on global economic activities in production and consumption, and the Federal Reserve's aggressive interest rate hikes to curb inflation, the global economic growth prospects for 2023 have become more uncertain. Therefore, our company's operational direction for 2023 has become more conservative and cautious.

In addition to continuously enhancing competitiveness in terms of quality, price, and delivery, our business policy for 2023 will focus on cultivating high-value customer segments, investing in process automation, improving production efficiency, and advancing towards lean manufacturing processes. In terms of market deployment, we will not only strive to develop the high-end markets in Europe and the United States but also strengthen our presence in markets such as India. Our product applications will primarily focus on the demand in the electric vehicle and energy-efficient solar panel industries, aiming to increase our revenue and profitability.

2. Expected Sales Volume and Basis

Our company expects a 3% increase in sales volume in 2023 compared to 2022. This is mainly due to the continued surge in inflation in the United States and the Federal Reserve's ongoing aggressive interest rate hikes, which indirectly increase operational risks for businesses and reduce the purchasing power of end consumers. Our overall business policy will be more cautious, resulting in a relatively conservative outlook for overall sales volume.

Important Sales and Marketing Policies
(1) Continuously establish VMI (Vendor Managed Inventory) mechanism with customers in sales regions to accelerate inventory turnover.
(2) Expand the establishment of technical service teams for end customers to understand their needs and enhance product development efficiency.
(3) Optimize product portfolio and pricing strategies.

3. Company's Future Development Strategies

Customer-oriented approach, closely collaborate with market-leading manufacturers to jointly develop new products and create company value.
Deepen relationships with existing customers, expand product lines tailored to their needs, and provide customers with diverse product services.
Leverage and strengthen the company's vertical integration manufacturing advantage from
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materials, parts, components to system products to reduce manufacturing costs and enhance competitiveness.

Establish capabilities for the development and mass production of critical components to gain irreplaceable competitive advantages.

4. Impact of External Competitive, Regulatory, and Macro-Economic Environment.

External Competitive Environment

Due to the rapidly changing external environment and industry fluctuations, the company faces competition not only within Taiwan but also globally. Leveraging its years of experience in cultivating high-value customer channels in Europe and America, the company continues to reduce costs to gain a competitive advantage. It strives to create product value, service value, and differentiation value to secure customer loyalty and stability.

Regulatory Environment

The company adheres to national policies and regulations, and the financial, equity, audit, and legal departments stay informed about important policy or legal changes. They work in accordance with the company's internal control system and operational activities to ensure full compliance with laws and regulations, thereby ensuring smooth operations. Currently, there are no significant domestic or international regulatory changes that have a major impact on the company's finances or operations.

Impact of Overall Business Environment

In terms of the overall business environment, there are pressures from inflation and the gradual decoupling of the economies of China and the United States. The United States has adopted protectionist measures, adding uncertainties to the globalized economy. In response to these changes in the overall business environment, the company will focus on strengthening customer service value and product cost competitiveness to adapt to the evolving landscape.

2. Company Profile

1. Establishment Date: January 23, 1976.

2. Company History

1976 - Company establishment with a paid-up capital of 20,000 thousand New Taiwan Dollars

(NTD) and the establishment of a factory in the Tucheng Industrial Zone.
1977 - Conducted a cash capital increase of 30,000 thousand NTD, resulting in a cumulative paid-up capital of 50,000 thousand NTD.
1981 - Conducted a surplus capital increase of 20,000 thousand NTD, resulting in a cumulative paidup capital of 70,000 thousand NTD.
1982 - Conducted a surplus capital increase of 10,000 thousand NTD, resulting in a cumulative paidup capital of 80,000 thousand NTD.
1983 - Conducted a surplus capital increase of 80,000 thousand NTD and a capital surplus capital increase of 20,000 thousand NTD, resulting in a cumulative paid-up capital of 180,000 thousand NTD.

1984 - Conducted a public offering,

with a cash capital increase of 94,000 thousand NTD and a surplus capital increase of
26,000 thousand NTD, resulting in a cumulative paid-up capital of 400,000 thousand NTD.
1985 - The company's stocks were publicly listed.
Conducted a surplus capital increase of 76,000 thousand NTD and a capital surplus capital increase of 24,000 thousand NTD, resulting in a cumulative paid-up capital of 500,000 thousand NTD.
1987 - Establishment of a sales company in Los Angeles, USA. Conducted a cash capital increase of 100,000 thousand NTD, a surplus capital increase of 50,000 thousand NTD, and a capital surplus capital increase of 50,000 thousand NTD, resulting in a cumulative paid-up capital of 700,000 thousand NTD.
1988 - Conducted a cash capital increase of 101,000 thousand NTD, a surplus capital increase of 41,300 thousand NTD, resulting in a cumulative paid-up capital of 842,300 thousand NTD.
1991 - Conducted a surplus capital increase of 76,198 thousand NTD and a capital surplus capital increase of 33,692 thousand NTD, resulting in a cumulative paid-up capital of 952,190 thousand NTD.

1994 - Shanghai RECTRON LTD. was established.

Obtained ISO-9002 quality certification.

1996 - Shanghai RECTRON LTD. obtained ISO-9002 quality certification.
1997 - Conducted a capital reduction of 480,000 thousand NTD, resulting in a cumulative paid-up capital of 472,190 thousand NTD.
1998 - Conducted a cash capital increase of 600,000 thousand NTD, resulting in a cumulative paidup capital of 1,072,190 thousand NTD.
1999 - Conducted a surplus capital increase of 107,219 thousand NTD, capital surplus reserve capital increase of 214,438 thousand NTD, and a cash capital increase of 1,000,000 thousand NTD, resulting in a cumulative paid-up capital of 2,393,847 thousand NTD. Obtained ISO9001 and QS9000 certifications.
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2000 - Renamed as RECTRON LTD.

Conducted a surplus capital increase of 98,147 thousand NTD, capital surplus reserve capital increase of 272,898 thousand NTD, and an employee bonus capital increase of 5,106 thousand NTD, resulting in a cumulative paid-up capital of 2,770,000 thousand NTD.
2001 - Established Zhejiang RECTRON LTD.
2003 - Conducted a capital reduction of 900,250 thousand NTD, resulting in a cumulative paid-up capital of 1,869,750 thousand NTD.
Zhejiang RECTRON LTD. obtained QS9000 certification.
2005 - Conducted a private placement of common shares, increasing the paid-up capital by 500,000 thousand NTD, resulting in a cumulative paid-up capital of 2,369,750 thousand NTD.
Zhejiang RECTRON LTD. obtained ISO14001 certification.
2006 - Conducted a private placement of common shares, increasing the paid-up capital by 500,000 thousand NTD, resulting in a cumulative paid-up capital of 2,869,750 thousand NTD.
2007 - Conducted a capital reduction of 837,967 thousand NTD, resulting in a cumulative paid-up capital of 2,031,783 thousand NTD.
RECTRON Ltd. Tucheng Factory obtained ISO9001/TS9000-2002 certification.
2008 - Conducted a capital reduction of 550,500 thousand NTD, resulting in an accumulated paid-up capital of 1,481,283 thousand NTD.

Conducted a private placement of common shares, increasing the paid-up capital by 600,000 thousand NTD, resulting in an accumulated paid-up capital of 2,081,283 thousand NTD.

2009 - Conducted a capital reduction of 508,000 thousand NTD, resulting in an accumulated paid-up capital of 1,573,283 thousand NTD.
2010 - RECTRON Ltd. Tucheng Factory obtained ISO9001/TS16949-2009 certification. 2011 - Conducted a capital increase of 26,746 thousand NTD, resulting in an accumulated paid-up capital of 1,600,029 thousand NTD.
2014 - Conducted a capital increase of 13,000 thousand NTD, resulting in an accumulated paid-up capital of 1,613,029 thousand NTD.
2015 - Conducted a capital increase of 50,000 thousand NTD, resulting in an accumulated paid-up capital of 1,663,029 thousand NTD.
2018 - RECTRON Ltd. Tucheng Factory obtained IATF16949-2016 certification.
2020 - CHU-TING ENTERPRISE CO., LTD. ventured into the medical device industry, focusing on the production and manufacturing of medical masks.
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3. Corporate Governance Report

1. Organizational Chart

(1) Organizational Chart

Company Organizational Chart

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Shareholders'
Meeting
Audit Committee
Auditing Board of Remuneration
Office Directors Committee
Chairman
General
Manager
Vice General
Manager
General Electronics Property
Management Medical Devices Division Management
Office Department Division
Financial Taiwan Business CHU-TING
Department Division ENTERPRISE CO., LTD.
Information Overseas Business
Department Division
Administrative Rectron Electronics Zhejiang Rectron
Electronics Co.,
Department (China) Co., Ltd. Ltd.
Legal Rectron Electronic
Department Enterprises Inc.
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(2) Business Operations of Each Major Department

Department	Job Duties
Office of the General Manager.	(1) Company operational strategy planning. (2) Formulation of company objectives and policies, supervising departments to achieve objectives. (3) Overall operational improvement projects, evaluation, and optimization of workflow efficiency.
General Management Office	(1) Responsible for overall company operations management. (2) Planning and implementation of major project matters. (3) Review, tracking, and recommendations for decision-making meetings, management meetings, goal management, project meetings, and other discussions. (4) Development, review, and revision of annual goals, business policies, and operational policies.

	(5) Consolidation, control, analysis, and reporting of annual budget and execution results. (6) Utilization and allocation of short-term and long-term funds. (7) Evaluation and management of subsidiary companies. (8) Planning and management of systems and regulations to clearly define employee roles and responsibilities. (9) Tracking and handling of individual case litigation progress. (10) Planning and supervision of investment business operations. (11) Maintenance and technical support of computer hardware and software, coordination and allocation of equipment resources. (12) Trackingandprocessingof case litigationprogress.
Auditing Office	(1) Establishment, revision, audit, and effectiveness tracking of internal audit and internal control systems within the company. (2) Audit of departmental operations and execution and promotion of self-assessment operations within the company.
Electronics Division	(1) Market research, development, and sales of rectifier products. (2) Procurement of raw materials, supplier management, and control of raw materials, etc. (3) Manufacturing and production of rectifiers, maintenance of plant equipment, overall management of factory labor safety and health, document control, etc. (4) Inspection of rectifier raw materials, materials, finished products, and instrument fixtures, and promotion and execution of international standard quality management and quality assurance for rectifier and other products. (5) Research and development of new rectifier products, new processes, and new equipment.
Medical Equipment Division	(1) Market research, development, and sales of medical equipment products. (2) Procurement of raw materials, supplier management, and control of raw materials, etc. (3) Manufacturing and production of medical equipment, maintenance of plant equipment, overall management of factory labor safety and health, document control, etc. (4) Manufacturing and production of medical equipment. (5) Research and development of new medical equipmentproducts and newprocesses.
Property Management Division	(1) Property leasing matters. (2) Property maintenance matters.

2. Information of Directors, Supervisors, the General Manager, Deputy General Managers, Assistant Managers, and Heads of Departments

1. Information of Directors and Supervisors

																		March 31,2023	March 31,2023	March 31,2023
J o b t i t l e	Natio nality or Place of Regis tratio n	Name	Gender/ Age	Appointme nt Date	T e r m o f O f f i c e	Initial Date of Election	Time of El Shares H	ection eld	Currently Shares Held		Spouse a Chil Current S	nd Minor dren hares Held	Unde N Shar	r Others' ames es Held	Key Experie nces (Educati on) and Backgro und	Current Positions Held in the Company and Other Companies		Other Executives, Directors, or Supervisors with Spousal or Second-Degree Relative Relationships
							Number of Shares	Shareho lding Ratio %	Number of Shares	Share holdi ng Ratio %	Number of Shares	Shareho lding Ratio %	Numb er of Share s	Shareho lding Ratio %		Company Positions	Positions in Other Companies	Job Title	Name	Relation ship
C h a i r m a n	Repu blic of China .	Juiye Enterprise Co., Ltd.		2022.06.23	3	1996.10.16	42,788,288	25.73	42,788,288	25.73	Not applicab le	Not applicab le	Not applic able	Not ap plicabl e	Not applicab le	Not applicable	Not applicable	Not applicab le	Not applicab le	Not applicabl e
	Repu blic of China .	Lin, I-Chin	Female 31~ 40 years old.	2022.06.23	3	2016.06.28	0	0	0	0	0	0	0	0	Master's Degree	Chairman and General Manager	None	Director	LIN, WEN- TENG	Father and daughter
D i r e c t o r	Repu blic of China .	Juiye Enterprise Co., Ltd.		2022.06.23	3	1996.10.16	42,788,288	25.73	42,788,288	25.73	Not applicab le	Not app licable	Not applic able	Not ap plicabl e	Not applicab le	Not applicable	Not applicable	Not applicab le	Not applicab le	Not applicabl e
	Repu blic of China .	Representa tive: LIN, WEN- TENG	Male 61~ 70 years old.	2022.06.23	3	1996.10.16	0	0	0	0	0	0	0	0	College degree	Director	None	Director	LIN, I- CHIN	Father and daughter
	Repu blic of China .	Representa tive: PAN, HSIN-JEN	Male 31~ 40 years old.	2022.06.23	2	2020.09.14	0	0	0	0	0	0	0	0	Universi ty degree	Director	General Manager of RECTRON ELECTRONIC ENTERPRISE S,INC	None	None	None
	Repu blic	Representa tive:	Female 71~ 80	2022.06.23	3	2012.08.01	0	0	0	0	0	0	0	0	Universi ty	Director	None	None	None	None

	of China .	LIU,FEN G-CHIN	years old.				degree
	Repu blic of China .	Representa tive: LIN, JUI- PING	Female 41~ 50 years old.	2022.06.23	3	2010.06.25	Universi ty degree	Deputy General Manager and General Manager of the Electronic Business Division	None	None	None	None
I n d e p e n d e n t D i r e c t o r	Repu blic of China .	Lin, Ruey- Tou	Male 61~ 70 years old.	2022.06.23	3	2016.06.28	Universi ty degree	None	Advisor to the Legislative Yuan Advisor to the Taipei City Government Advisor to the Taipei CityCouncil	None	None	None
	Taiw an R.O. C.	Maa Kwo- Juh	Male 61~ 70 years old.	2022.06.23		2021.08.30	Master's Degree	None	President of the Corporate Governance Professionals Association, a non-profit organization	None	None	None
	Taiwan R.O.C.	Lee, Shiue- Chen	Male 40~ 50 years old.	2022.06.23	3	2022.06.23	University degree	None	Deputy General Manager of Fulai Construction Co., Ltd.	None	None	None

Note 1: Representatives of Juiye Enterprise Co., Ltd.: LIN, I-CHIN, LIN, WEN-TENG, PAN, HSIN-JEN, LIU, FENG-CHIN, LIN, JUI-PING. Table 1: Major shareholders of corporate shareholders

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2.
	Name of Corporate Shareholder		Major Shareholders of Corporate S h a r e h o l d e r s
	Juiye Enterprise Co., Ltd.		LIN, WEN-TENG (75%), LIN, I-CHIN (25%)
	Bigwig Perfect International Co., Ltd.		LIN, CHIANG-YA (98.27%)
Conditions Name		Professional Qualifications and Experience		Independence status	Number of other public corporations in which the person concurrently serves as an independent director.
Juiye Enterprise Co., Ltd. Representative: LIN, I- CHIN		Chairman and General Manager of RECTRON LTD.		1. Holding the position of General Manager of the company while having the status of a manager. 2. The remaining individuals have been verified against the independence criteria listed in the "Regulations Governing the Appointment of Independent Directors of Publicly Issued Companies and Related Compliance Matters" issued by the Financial Supervisory Commission, and still meet the relevant independence requirements.	None
Juiye Enterprise Co., Ltd. Representative: LIN, WEN-TENG		Chairman of RECTRON LTD.		The remaining individuals have been verified against the independence criteria listed in the "Regulations Governing the Appointment of Independent Directors of Publicly Issued Companies and Related Compliance Matters" issued by the Financial Supervisory Commission, and still meet the relevant independence requirements.	None

2. Disclosure of Directors' and Supervisors' Professional Qualifications and Independence of Independent Directors:

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Conditions Name	Professional Qualifications and Experience	Independence status	Number of other public corporations in which the person concurrently serves as an independent director.
Juiye Enterprise Co., Ltd. Representative: PAN, HSIN-JEN	Director of RECTRON ELECTRONIC ENTERPRISES, INC General Manager of RECTRON ELECTRONIC ENTERPRISES,INC	The remaining individuals have been verified against the independence criteria listed in the "Regulations Governing the Appointment of Independent Directors of Publicly Issued Companies and Related Compliance Matters" issued by the Financial Supervisory Commission, and still meet the relevant independence requirements.	None
Juiye Enterprise Co., Ltd. Representative: LIU,FENG-CHIN	Deputy Chief Editor of Zili Evening News. Legal Director of RECTRON LTD.	The remaining individuals have been verified against the independence criteria listed in the "Regulations Governing the Appointment of Independent Directors of Publicly Issued Companies and Related Compliance Matters" issued by the Financial Supervisory Commission, and still meet the relevant independence requirements.	None
Juiye Enterprise Co., Ltd. Representative: LIN, JUI- PING	Audit Manager at KPMG United Accounting Firm. General Manager of the Electronic Business Division and Deputy General Manager of the General Management Department at RECTRON LTD.	The remaining individuals have been verified against the independence criteria listed in the "Regulations Governing the Appointment of Independent Directors of Publicly Issued Companies and Related Compliance Matters" issued by the Financial Supervisory Commission, and still meet the relevant independence requirements.	None

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Conditions Name	Professional Qualifications and Experience	Independence status	Number of other public corporations in which the person concurrently serves as an independent director.
LIN, Ruey-Tou	Bachelor's Degree in Business Administration from Tamkang University. Former Legislator, Taipei City Councilor.	The company follows the provisions of the "Regulations Governing the Appointment and Compliance Matters of Independent Directors of Public Companies" in its establishment. In addition to obtaining a declaration from the independent director, the company has also reviewed the company's employee system, the director's own holdings, holdings by spouse and relatives within the second degree of kinship, the list of directors of affiliated companies, and examined the shareholder registry and financial systems of the company and its affiliated companies for the past two years to verify the absence of the aforementioned situations. The company has conducted searches on the Judicial Yuan's Legal Information Retrieval System, Taiwan Bills Finance Corporation, etc., and found no circumstances falling under Article 30 of the Company Act. Based on the audit results, the company confirms that the independent director meets the independence criteria.	None

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Conditions Name	Professional Qualifications and Experience	Independence status	Number of other public corporations in which the person concurrently serves as an independent director.
Maa Kwo-Juh	Master's Degree in Accounting, National Chengchi University. Certified Public Accountant of the Republic of China. KPMG Chief Consultant Chairman and CEO of KPMG Taiwan. President of the Professional Association of Corporate Governance. Adjunct Professor at the Department of Law, National Chengchi University. Adjunct Professor at the Department of Law, National Taiwan University.	The company follows the provisions of the "Regulations Governing the Appointment and Compliance Matters of Independent Directors of Public Companies" in its establishment. In addition to obtaining a declaration from the independent director, the company has also reviewed the company's employee system, the director's own holdings, holdings by spouse and relatives within the second degree of kinship, the list of directors of affiliated companies, and examined the shareholder registry and financial systems of the company and its affiliated companies for the past two years to verify the absence of the aforementioned situations. The company has conducted searches on the Judicial Yuan's Legal Information Retrieval System, Taiwan Bills Finance Corporation, etc., and found no circumstances falling under Article 30 of the Company Act. Based on the audit results, the company confirms that the independent director meets the independence criteria.	1 company

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Conditions Name	Professional Qualifications and Experience	Independence status	Number of other public corporations in which the person concurrently serves as an independent director.
Lee, Shiue-Chen	Audit Manager at KGMP United Accounting Firm, Finance. Finance and Accounting Manager at Hung Kuo Group. Deputy General Manager of Fulai Construction Co., Ltd.	The company follows the provisions of the "Regulations Governing the Appointment and Compliance Matters of Independent Directors of Public Companies" in its establishment. In addition to obtaining a declaration from the independent director, the company has also reviewed the company's employee system, the director's own holdings, holdings by spouse and relatives within the second degree of kinship, the list of directors of affiliated companies, and examined the shareholder registry and financial systems of the company and its affiliated companies for the past two years to verify the absence of the aforementioned situations. The company has conducted searches on the Judicial Yuan's Legal Information Retrieval System, Taiwan Bills Finance Corporation, etc., and found no circumstances falling under Article 30 of the Company Act. Based on the audit results, the company confirms that the independent director meets the independence criteria.	None

Note 1: Professional qualifications and experience: Describe the professional qualifications and experience of individual directors and supervisors, and if they are members of the audit committee with accounting or financial expertise, their accounting or financial background and work experience should be stated. Also, indicate whether there are any circumstances under Article 30 of the Company Act. Note 2: Independent directors should state their independence status, including but not limited to whether they or their spouses, parents, or children within the second degree of kinship serve as directors, supervisors, or employees of the Company or its affiliates; whether they or their spouses, parents, or children within the second degree of kinship hold shares of the Company or its affiliates or utilize others' names to hold such shares; whether they serve as directors, supervisors, or employees of related parties of the Company as referred to in Article 3, Paragraph 1, Subparagraphs 5 to 8 of the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies; and the amount of compensation received in the past two years for providing business, legal, financial, accounting or other services to the Company or its affiliates.

3. Board Diversity and Independence:

(1) Board Diversity:

The company advocates and respects a policy of board diversity to enhance corporate governance and promote the sound development of the board's composition and structure. We believe that a diverse board can contribute to the overall performance of the company. The selection of board members is based on the principle of selecting individuals with diverse and complementary capabilities across industries. This includes basic diversity factors such as age, gender, and nationality, as well as industry experience and relevant skills in areas such as finance, accounting, legal, information technology, and public utilities. Additionally, board members possess abilities in business judgment, management, leadership decision-making, and crisis handling. Article 20 of the "Corporate Governance Practices Guidelines" states that the board as a whole should possess the following abilities to strengthen its functions and achieve the ideal goals of corporate governance:

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Operational judgment ability. 2. Accounting and financial analysis ability. 3. Business management ability. 4. Crisis handling ability. 5. Industry knowledge. 6. International market perspective. 7. Leadership ability. 8. Decision-making ability.

The current status of the company's policy and implementation of diversified board members are as follows:

Conditions Name				Basic Composition	Basic Composition	Basic Composition	Basic Composition						IndustryExperience	IndustryExperience	IndustryExperience		Professional Abilities	Professional Abilities	Professional Abilities	Professional Abilities	Number of other public corporations in which the person concurrently serves as an independent director.
	Nationa lity	Gend er	Have employ ee status			Age			Independent Director Tenure			Profes sional Servic es and Marke ting	Financi al and Finance	Archite cture and Engine ering	Busin ess and Suppl y	Inform ation and Techno logy	Legal	Acco untin g	Engin eering	Risk Manag ement
				31 to 40 years old	41 to 50 years old	51 to 60 years old	61 to 70 years old	71 to 80 years old	3 years or less	3 to 6 years	6 Year or more
Chairman LIN I-CHIN	Taiwan R.O.C.	Fema le																			None
Director LIN, WEN-TENG	Taiwan R.O.C.	Male																			None
Director PAN,HSIN-JEN	Taiwan R.O.C.	Male																			None
Director LIU,FENG-CHIN	Taiwan R.O.C.	Fema le																			None
Director LIN, JUI-PING	Taiwan R.O.C.	Fema le																			None
Independent Director LIN, Ruey-Tou	Taiwan R.O.C.	Male																			None
Independent Director Maa Kwo-Juh	Taiwan R.O.C.	Male																			1 Company
Independent Director Lee, Shiue-Chen	Taiwan R.O.C.	Male																			None
The 19th Board of Directors of the company consists of 8 directors, including 3 independent directors. They possess the overall abilities of business judgment, leadership decision-making, operational management, international market perspective, and crisis handling. They have industry experience and professional expertise. One independent director has accounting and financial expertise with practical experience in practice, management, or teaching. The average tenure of the company's directors is 8 years. All directors are nationals of the company. The composition structure includes 3 independent directors, accounting for 37.5%, and 2 directors with employee status, accounting for 25%. The age distribution of the directors includes 2 directors in the age range of 31-

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40, 2 directors in the age range of 41-50, 3 directors in the age range of 61-70, and 1 director in the age range of 71-80. In addition to the above, the company also emphasizes gender equality in the composition of the board. The current board includes 3 female members, accounting for a high percentage of 37.5% female directors. The company will continue to strive to increase the percentage of female directors in the future.

The diversity, complementarity, and implementation of the board have already included and complied with the standards specified in Article 20 of the "Corporate Governance Best Practice Principles." In the future, the company will timely revise and enhance the diversity policy based on the operation of the board, operational requirements, and development needs. This includes but is not limited to the standards related to basic qualifications and values, professional knowledge, and skills, to ensure that board members possess the necessary knowledge, skills, and qualities for executing their duties.

(2) Board Independence:

The average tenure of independent directors in the company is below 3 years. Among them, one independent director has served for more than 3 terms consecutively. This is due to their financial expertise, familiarity with relevant laws and regulations, and specialized experience in corporate governance, which significantly benefits the company. Despite their extended tenure, they are still able to utilize their expertise and provide professional opinions for the supervision of the board. The tenure of other independent directors does not exceed 3 terms.

(3) Compliance with Securities and Exchange Act:

There are no circumstances within the meaning of Article 26(3) and (4) of the Securities and Exchange Act, including situations where there are spousal or close relatives relationships between directors, supervisors, or between directors and supervisors. None of the directors or independent directors of the company have relationships that fall within the provisions of Article 26(3) and (4) of the Securities and Exchange Act. The number of directors with spousal or close relatives’ relationships within the company does not exceed half of the total seats.

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4. General Manager, Deputy General Manager, Assistant Managers, and Head of Departments and Branch Offices:

											March31,2023	March31,2023	March31,2023	March31,2023	March31,2023	March31,2023
Job title	Nationa lity	Name	G en de r	Date of appointment	Shareholdings Shares		Shareholdings held by spouse and minor children		Holding shares under another person's name		Primary professional (educational) background	Current positions held by managers	with spousal or close relatives relationships in other companies			Remarks
					Numbe r of Shares	Shareh olding Ratio %	Numbe r of Shares	Sharehold ing Ratio %	Number of Shares	Shareholdi ng Ratio %			Job Title	Name	Relatio nship
General Manager Deputy General Manager and General Deputy General Manager of the Electronic Business Division Director of the Electronic Business Division.	Taiwan R.O.C. Taiwan R.O.C. Taiwan R.O.C. Taiwan R.O.C.	LIN, I- CHIN LIN, JUI- PING Liu Nian- fu Lin Shi-jie	Fe ma le Fe ma le Ma le Ma le	2016.06.28 2020.09.14 2020.08.11 2014.05.01	- - - -	- - - -	- - - -	- - - -	- - - -	- - - -	Master's degree/Chairman of RECTRON LTD. University degree/Audit Manager at KGMP United Accounting Firm. Deputy General Manager of Sales Chief Engineer of Taiwan Semiconductor Corporation.	- - - -	- - - -	- - - -	- - - -	Note - - -

Note: When the Chairman of the Board and the General Manager hold the highest managerial positions and are spouses or close relatives, the reasons, justifications, necessity, and

corresponding measures should be disclosed (such as increasing the number of independent director seats and ensuring that a majority of directors do not hold positions as employees or managers, etc.) along with relevant information.

The Chairman of the Board in our company also serves as the General Manager to enhance operational efficiency and decision-making execution. In order to strengthen the independence of the Board of Directors, appropriate candidates have been actively trained internally. Additionally, the Chairman closely communicates with the directors to fully understand the company's operational status and plans, and implements corporate governance initiatives. In the future, the company plans to increase the number of independent director seats to enhance the capabilities of the Board and strengthen its oversight functions. Currently, the following specific measures have been implemented:

Independent directors in the company possess expertise in business, law, finance, accounting, or necessary knowledge related to company operations to effectively fulfill their supervisory roles.
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Directors are arranged to attend professional director courses provided by external organizations such as the Securities and Futures Institute to enhance the effectiveness of the Board's operations.
Independent directors participate in functional committees, engage in comprehensive discussions, and provide recommendations for the Board's reference. They also

communicate with the accountants and internal auditors to ensure effective corporate governance.

5. Remuneration for general directors and independent directors (individual names and remuneration methods disclosed separately)

																	December 31, 2022 Unit: NT$1,000	December 31, 2022 Unit: NT$1,000	December 31, 2022 Unit: NT$1,000	December 31, 2022 Unit: NT$1,000	December 31, 2022 Unit: NT$1,000	December 31, 2022 Unit: NT$1,000
Job Title	Name		Director remuneration							Percentage of Total Net Profit After Tax of A, B, C, and D After-tax net profit of NT$176,100 thousand		Remu			neration Paid t	o Part-T	ime Employees			The total amount and proportion of A, B, C, D, E, F, and G, as well as their respective percentages of net income after tax. After-tax net profit of NT$176,100 thousand		Compensatio n Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary
		Rem	uneration (A)	Retirement and sev pay (B)		Director Compensation (C) (Note 3)		Business execution Expenses (D)				Salary, Bonuses, and Other Allowances (E)		Retire pay (F)	ment and sev		Employee Compensation (G)
		The Co mp any	All compani es in the financial report	The Compan y	All compani es in the financial report	The Compan y	All compani es in the financial report	The Comp any	All companies in the financial report	The Company	All companies in the financial report	The Comp any	All companies in the financial report	The Comp any	All companies in the financial report	The	Company	All companies in the financial report		The Company	Companies in the Consolidated financial statements
																Cash divide nd amou nt	Stock dividend amount Stock Amount	Cash divide nd Amou nt	Stock dividend amount
Corpo rate Direct or	Juiye Enterprise Co., Ltd.	0	0	0	0	0	0	0	0	0 0%	0 0%	0	0	0	0	0	0	0	0	0 0%	0 0%	None
Chair man	Juiye Enterprise Co., Ltd. Representativ e: LIN, I- CHIN	0	0	0	0	375	375	0	0	375 0.21%	375 0.21%	673	3,398	0	0	0	0	0	0	1,048 0.60%	3,773 2.14%	None
Direct or	Juiye Enterprise Co., Ltd. Representativ e: LIN, WEN-TENG	0	0	0	0	375	375	0	0	375 0.21%	375 0.21%	0	350	0	0	0	0	0	0	375 0.21%	725 0.41%	None
Direct or	Juiye Enterprise Co., Ltd. Representativ	0	0	0	0	375	375	0	0	375 0.21%	375 0.21%	0	4,677	0	0	0	0	0	0	375 0.21%	5,052 2.87%	None

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	e: PAN,HSIN- JEN
Direct or	Juiye Enterprise Co., Ltd. Representativ e: LIU,FENG- CHIN	0	0	0	0	0	0	210	210	210 0.12%	210 0.12%	449	449	29	29	0	0	0	0	688 0.39%	688 0.39%	None
Direct or	Juiye Enterprise Co., Ltd. Representativ e: LIN, JUI- PING	0	0	0	0	375	375	60	60	435 0.25%	435 0.25%	1,940	2,895	95	95	0	0	0	0	2,470 1.40%	3,425 1.94%	None
Indepen dent Director	LIN, RUEY-	0	0	0	0	0	0	514	514	514 0.29%	514 0.29%	0	0	0	0	0	0	0	0	514 0.29%	514 0.29%	None
Indepen dent Director	MAA KWO-	0	0	0	0	0	0	600	600	600 0.34%	600 0.34%	0	0	0	0	0	0	0	0	600 0.34%	600 0.34%	None
Indepen dent Director	LEE, SHIUE-	0	0	0	0	0	0	60	60	60 0.03%	60 0.03%	0	0	0	0	0	0	0	0	60 0.03%	60 0.03%	None
1. Please specify the policy, system, standards, and structure of independent director remuneration and describe the correlation between the remuneration amount and factors such as responsibilities, risks, and time commitment: The remuneration for independent directors in our company is determined based on the results of the "Board of Directors' Performance Evaluation" and the provisions of the "Remuneration and Compensation Committee Organizational Regulations." It takes into account individual responsibilities, time commitment, as well as the individual's performance achievements and contributions as an independent director to provide reasonable compensation. The standards and structure of remuneration for independent directors are submitted to the Board of Directors for approval after being reviewed and approved by the Compensation Committee. 2. Apart from the disclosure in the table above, in the most recent fiscal year, directors of the company received remuneration for services provided (such as serving as consultants to the parent company, all companies within the financial reports,or non-employee advisors to investee businesses): There is no such case.

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6. Remuneration for supervisors (individual names and remuneration methods)

December 31, 2022

				December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022	December 31, 2022
				Unit: NTD in thousands Remuneration of Supervisor The total amounts and the ratios to the post-tax net income of A, B, and C Compensation Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary Compensation (B) Business Allowances (C) The Company All companies in the financial report The CompanyAll companies in the financial report The Company All companies in the financial report 0 0 58 58 58 0.03% 58 0.03% None 0 0 58 58 58 0.03% 58 0.03%
Job Title	Name			Remuneration of Supervisor				The total amounts and the ratios to the post-tax net income of A, B, and C		Compensation Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary
		Remuneration (A)		Compensation (B)		Business Allowances (C)
		The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report
Supervis or	LIN, LI- CHUN	0	0	0	0	58	58	58 0.03%	58 0.03%	None
Total		0	0	0	0	58	58	58 0.03%	58 0.03%

Note: In line with the establishment of an audit committee to replace the responsibilities of the supervisor, LIN, LI-CHUN was relieved of duties on June 23, 2022.

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7. Remuneration for the General Manager and Deputy General Manager (Individual disclosure of names and remuneration methods)

												December 31, 2022 Unit: NTD in thousands Percentage of Total Net Profit After Tax of A, B, C, and D`（％）` Compensatio n Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary The Company All companie s in the financial report 673 0.38% 3,398 1.93% None 2,035 1.16% 2,990 1.70% None 5,926 3.37% 7,527 4.27% None	December 31, 2022 Unit: NTD in thousands Percentage of Total Net Profit After Tax of A, B, C, and D`（％）` Compensatio n Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary The Company All companie s in the financial report 673 0.38% 3,398 1.93% None 2,035 1.16% 2,990 1.70% None 5,926 3.37% 7,527 4.27% None	December 31, 2022 Unit: NTD in thousands Percentage of Total Net Profit After Tax of A, B, C, and D`（％）` Compensatio n Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary The Company All companie s in the financial report 673 0.38% 3,398 1.93% None 2,035 1.16% 2,990 1.70% None 5,926 3.37% 7,527 4.27% None
Job Title	Name	Salary (A)		Retirement benefits (B)		Bonuses and Special Expenses (C)		Employee Compensation Amount (D)				Percentage of Total Net Profit After Tax of A, B, C, and D`（％）`		Compensatio n Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary
		The Compa ny	All companies in the financial report	The Compa ny	All companies in the financial report	The Compa ny	All companies in the financial report	The Company		All companies in the financial report		The Company	All companie s in the financial report
								Cash dividen d amount	Stock dividend Amount	Cash dividend amount	Stock dividend Amount
General Manager	LIN, I- CHIN	673	3,398	0	0	0		0	0	0	0	673 0.38%	3,398 1.93%	None
Deputy General Manager and General Manager of the Electronic Business Division	LIN, JUI- PING	1,940	2,895	95	95	0	0	0	0	0	0	2,035 1.16%	2,990 1.70%	None
Deputy General Manager of the Electronic Business Division	Liu Nian- fu	960	2,305	4,049	4,049	917	1,173	0	0	0	0	5,926 3.37%	7,527 4.27%	None

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Remuneration for the top five highest-paid executives (Individual disclosure of names and remuneration methods)

Job Title	Name	Salary (A)	Salary (A)	Retirement	benefits (B)	Bonuses and Special Expenses (C)	Bonuses and Special Expenses (C)	Employee Compensation Amount (D)	Employee Compensation Amount (D)	Employee Compensation Amount (D)	Employee Compensation Amount (D)	A, B, C, and D, the total amount and the proportion (in percentage) to the net income after tax of 176,100 thousand NTD are as follows:	A, B, C, and D, the total amount and the proportion (in percentage) to the net income after tax of 176,100 thousand NTD are as follows:	Compensation Paid to Directors by a Re-Invested Company Other than the Company’s Subsidiary
		The Company	All companies in the financial report	The Company	All companies in the financial report	The Company	All companies in the financial report	The Company		All companies in the financial report (Note 5)		The Company	All companies in the financial report
								Cash Amount	Stocks Amount	Cash Amount	Stocks Amount
Subsidiary Sales Vic President	Joseph Rocta	0	4,995	0	110	0	4,573	0	0	0	0	0 0.00%	9,678 5.50%	None
Vice General Manager of the Electronics Division	LIU, NIEN- FU	960	2,305	4,048	4,048	917	1,173	0	0	0	0	5,925 3.36%	7,526 4.27%	None
CEO of the Subsidiary	Sidney Pan	0	3,615	0	0	0	1,062	0	0	0	0	0 0.00%	4,677 2.66%	None
Logistics Director of the Subsidiary	Sean Kelley	0	3,337	0	0	0	765	0	0	0	0	0 0.00%	4,102 2.33%	None
General Manager	LIN, I- CHIN	584	2,709	0	0	89	689	0	0	0	0	673 0.38%	3,398 1.93%	None

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The names of managers involved in distributing employee compensation and the distribution details are as follows

The names of managers involved in distributing employee compensation and the distribution details are as follows

						December 31, 2022 Unit: NTD in thousands The proportion (%) of the total amount to the net income after tax. 0%
	Job title	Name	Stock Amount	Cash amount	Total	The proportion (%) of the total amount to the net income after tax.
M a n a g e r	General Manager	LIN, I-CHIN	0	0	0	0%
	Deputy General Manager and General Manager of the Electronic Business Division	LIN, JUI-PING

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Analysis and explanation of the proportion of total remuneration to net income after tax for directors, supervisors, general manager, and deputy general manager paid by the company and all consolidated companies in the past two fiscal years, including the policies, standards, composition, procedures for determining remuneration, and their correlation with business performance.

Job Title	Proportion of total remuneration to net income after tax for directors, supervisors, general manager, and deputy general manager paid by the company in 2021.	Proportion of total remuneration to net income after tax for directors, supervisors, general manager, and deputy general manager paid by all consolidated companies in the company's 2021 consolidated financial statements.	Proportion of total remuneration to net income after tax for directors, supervisors, general manager, and deputy general manager paid by the company in 2022.	Proportion of total remuneration to net income after tax for directors, supervisors, general manager, and deputy general manager paid by all consolidated companies in the company's 2022 consolidated financial statements.
Director	7.31%	15.44%	3.48%	8.43%
Supervisor	0.26%	0.26%	0.03%	0.03%
General Manager and Vice General Manager	3.71%	7.23%	1.54%	4.09%

The procedure for remuneration payment is closely associated with operational performance and future risks.

The remuneration paid to directors of the Company is determined based on the percentages and scope stipulated in the Company's Articles of Incorporation. In years of profitability, an allocation of not less than 1% shall be provided for employee compensation and not more than 2% for director remuneration. If the company has accumulated losses from previous years and makes a profit in the current year, it should first make up for the losses before allocating employee and director remuneration, and the remaining balance should be allocated according to the aforementioned ratio.

In the event of accumulated losses from previous years, any profits in the current year must first be used to offset the losses before allocating funds for employee compensation and director remuneration, with the remaining balance allocated according to the aforementioned proportions. The distribution of employee and director remuneration should be resolved by the board of directors and reported to the shareholders' meeting.

The salary and compensation paid by the company include cash compensation, retirement benefits, various allowances, and other measures with substantial

25 -

incentives. The scope is consistent with the requirements for disclosure in the annual report of publicly traded companies regarding director, supervisor, and manager remuneration. To establish a sound salary and compensation system for the company's directors, supervisors, and managers, the company has established a salary and compensation committee and formulated the "Salary and Compensation Committee Organization Regulations." The Compensation Committee, in accordance with the aforementioned regulations, evaluates the Company's remuneration policies and systems for directors, supervisors, and managers from a professional and objective standpoint. It periodically reviews the performance evaluation of directors, supervisors, and managers, as well as the policies, systems, standards, and structures of remuneration. During the review process by the Compensation Committee, the remuneration should be based on the continued assessment of directors, supervisors, and managers and reference the usual industry standards, taking into account individual performance, the Company's ongoing performance, and the rationality of future risk linkage.

The remuneration of executives in the Company is determined by the Chairman of the Board, authorized by the Board of Directors, taking into account the nature of their work, responsibilities, as well as factors such as education, experience, skills, and potential development. The policies, standards, composition, and procedures for remuneration, as well as their relationship with business performance and future risks, are established in accordance with the Company's "Articles of Incorporation" and relevant management regulations.

In summary, the policies, standards, procedures for determining remuneration, and their relationship with business performance and future risks in the Company are all carried out in accordance with the provisions of the Company's "Articles of Incorporation" and relevant "Management Regulations."

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3. Corporate Governance Practices

`（` 1 `）` Board of Directors operation situation

The Board of Directors held 8 meetings (A) during the recent fiscal year, ending on March 31, 2023. The attendance record of directors and supervisors is as follows:

Job Title	Name	Actual attendance (B)	Delegated attendance count	Actual attendance rate (%) [B/A]	remarks
Chairman	Juiye Enterprise Co., Ltd. Representative: LIN,I-CHIN	8	0	100%
Director	Juiye Enterprise Co., Ltd. Representative: LIN,WEN-TENG	2	0	25%
Director	Juiye Enterprise Co., Ltd. Representative: PAN,HSIN-JEN	8	0	100%
Director	Juiye Enterprise Co., Ltd. Representative: LIU,FENG-CHIN	7	0	87.5%
Director	Juiye Enterprise Co., Ltd. Representative: LIN, JUI-PING	8	0	100%
Independent Director	LIN, RUEY-TOU	7	1	87.5%
Independent Director	MAA KWO-JUH	8	0	100%
Independent Director	LEE, SHIUE-CHEN	6	0	100%	2022.06.23 Selection
Supervisor	LIN, LI-CHUN	2	0	50%	2022.06.23 Resigned

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Meeting date	Important decisions of the Board of Directors
18th session 17th time 2022.03.31	(1) Whether the outstanding receivables exceeding the normal credit period as of December 31, 2021, are considered as loans and advances. (2) Case regarding loans and advances to subsidiary CHU-TING ENTERPRISE CO., LTD.. (3) Internal control system statement for the fiscal year 2021. (4) Evaluation of the independent auditor's independence. (5) Amendment of certain provisions in the company's "Acquisition or Disposal of Assets Procedure." (6) Amendment of the company's "Endorsement and Guarantee Procedures." (7) Amendment of the company's "Loan Operations to Others Procedure." (8) Distribution of employee remuneration and director and supervisor remuneration for the fiscal year 2021. Independent Director's opinion: None. Company's handling of independent director's opinion: None. Resolution: Approved by all attending directors.
18th session 18th time 2022.05.16	(1) Whether the outstanding receivables exceeding the normal credit period as of March 31, 2022, are considered as loans and advances. Independent Director's opinion: None. Company's handling of independent director's opinion: None. Resolution: Approved by all attending directors.

Meeting date

Important decisions of the Board of Directors

18th session
17th time
2022.03.31

(1) Whether the outstanding receivables exceeding the normal credit period as of
December 31, 2021, are considered as loans and advances.
(2) Case regarding loans and advances to subsidiary CHU-TING ENTERPRISE CO.,
LTD..
(3) Internal control system statement for the fiscal year 2021.
(4) Evaluation of the independent auditor's independence.
(5) Amendment of certain provisions in the company's "Acquisition or Disposal of
Assets Procedure."
(6) Amendment of the company's "Endorsement and Guarantee Procedures."
(7) Amendment of the company's "Loan Operations to Others Procedure."
(8) Distribution of employee remuneration and director and supervisor remuneration
for the fiscal year 2021.
Independent Director's opinion: None.
Company's handling of independent director's opinion: None.
Resolution: Approved by all attending directors.

18th session
18th time
2022.05.16

(1) Whether the outstanding receivables exceeding the normal credit period as of
March 31, 2022, are considered as loans and advances.
Independent Director's opinion: None.
Company's handling of independent director's opinion: None.
Resolution: Approved by all attending directors.

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	19th session 2nd time 2022.07.06	(1) The proposal to purchase Directors, Supervisors, and Managers' liability insurance. (2) The appointment of the Compensation Committee. Independent Director's opinion: None. Company's handling of independent director's opinion: None. Resolution: Approved byall attendingdirectors.
	19th session 3rd time 2022.08.15	(1) The financial statements for the second quarter of the company's fiscal year 2022. (2) The matter of whether the outstanding receivables beyond the normal credit period as of June 30, 2022, are considered loans in nature. Independent Director's opinion: None. Company's handling of independent director's opinion: None. Resolution: Approved byall attendingdirectors.
	19th session 4th time 2022.11.10	(1) The financial statements for the third quarter of 2022. (2) The matter regarding the outstanding receivables exceeding the normal credit period as of September 30, 2022, and whether they should be classified as loans and advances. (3) The proposal for a 100% cash capital increase in the subsidiary company, CHU- TING ENTERPRISE CO., LTD. Independent Director's opinion: None. Company's handling of independent director's opinion: None. Resolution: Approved byall attendingdirectors.
	19th session 5th time 2022.12.21	(1) The proposed audit plan for the fiscal year 2023. (2) In response to the KPMG auditor adjustment case. (3) Evaluation of the independent auditor's independence. (4) The proposal to establish the remuneration plan for the directors and executives of the company. Independent Director's opinion: None.

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		Company's handling of independent director's opinion: None.
		Resolution: Approved byall attendingdirectors.
	19th session	(1) The Company's operating report and financial statements for the year 2022.
	6Th time	(2) The Company's declaration on internal control system for the year 2022.
	2023.03.24	(3) Evaluation of the independent auditor's independence.
		(4) The matter regarding the outstanding receivables exceeding the normal credit
		period as of December 31, 2022, and whether they should be classified as loans
		and advances.
		(5) The proposal for profit distribution for the fiscal year 2022.
		(6) The proposal for employee remuneration and director's compensation
		distribution for the fiscal year 2022.
		Independent Director's opinion: None.
		Company's handling of independent director's opinion: None.
		Resolution: Approved byall attendingdirectors.
	(2) Other board resolutions	that were opposed or had reservations from independent directors with recorded or written statements, besides
	the aforementioned items: None.
2.	Members who recused themselves from voting on matters related to conflicts of interest shall state their names, the content of the resolution,
	the reasons for recusal, and	their voting participation:
	1. During the 17th board meeting of the 18th term held on March 31, 2022, directors Lin Yi-Cen, Lin Wen-Teng, Pan Xin-Ren, Liu Feng-
	Qin, Lin Rui-Ping, and independent directors Lin Rui-Tu and Ma Guo-Zhu abstained from voting due to their status as interested parties
	in the matter of the distribution of employee remuneration and director's compensation for the fiscal year 2021.
	2. During the 2nd board meeting of the 19th term held on July 6, 2022, the appointment of the Compensation Committee for the company
	was discussed. Independent directors Lin Rui-Tu, Ma Guo-Zhu, and Li Xue-Cheng abstained from participating in the discussion and
	voting due to their status as interested parties in this matter.
	3. During the 5th board meeting of the 19th term held on December 21, 2022, when setting the remuneration plan for		directors and executives
	of the company, except for Director Lin Wen-Teng's absence from the board meeting, directors Lin Yi-Cen, Pan		Xin-Ren, Liu Feng-Qin,
	Lin Rui-Ping, and independent directors Lin Rui-Tu, Ma Guo-Zhu, and Li Xue-Cheng abstained from voting due to their status as interested
	parties in this matter.

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3.	Implementationof BoardEvaluation:	Implementationof BoardEvaluation:	Implementationof BoardEvaluation:
	Evaluation Period	Evaluation Period	Evaluation Scope	Evaluation Method	Evaluation Content
	Conducted annually	From January 1, 2022 to December 31, 2022	Overall Board, Individual Directors, Compensation Committee	Board Self- Assessment, Director Self- Assessment, Functional Committees	(1) Board performance evaluation: at least includes the degree of participation in company operations, quality of board decision-making, board composition and structure, selection and continuing education of directors, internal control, etc. (2) Individual director performance evaluation: at least includes the grasp of company goals and missions, recognition of director's duties, degree of participation in company operations, internal relationship management and communication, director's expertise and continuing education, internal control, etc. (3) Functional committee performance evaluation: degree of participation in company operations, recognition of functional committee duties, quality of functional committee decision-making, composition and member selection of functional committees,internal control,etc.

Evaluation of the goals and execution of strengthening the functions of the board in the current year and recent years (such as establishing an audit committee, enhancing information transparency, etc.):
In addition to providing relevant laws and regulations to directors and supervisors at any time, the company prepares agenda items and related materials for directors and supervisors to review and inquire seven days before the board meeting. During the meeting, the company reports on the current business status to keep directors and supervisors informed of the company's current operations.
Regularly providing various training courses and encouraging directors to actively participate in corporate governance programs to enhance the capabilities of board and supervisory members. In 2022, directors completed a total of 43 hours of training.
With a commitment to operational transparency and safeguarding shareholder rights, the company regularly discloses important decisions of the board and other relevant information on its website.
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Every year, the company conducts performance evaluations of the board, individual directors, and functional committees, and reports the evaluation results to the board.
To strengthen corporate governance, the company has been covered by Directors and Officers liability insurance since June 28, 2020, and the renewal was completed on June 28, 2022.

Note: On June 23, 2022, the company established an Audit Committee to replace the role of the supervisor. Therefore, the involvement of the supervisor in the operation of the board is no longer applicable from that date.

Attendance of Independent Directors at Board Meetings from the most recent year to March 31, 2023

◎ ： indicates personal attendance ☆ ： indicates attendance by proxy * ： indicates absence

Independent Director	March 31	May 16	June 23	July 6	August 15	November 10	December 21	March 24
LIN, Ruey-Tou	◎	◎	◎	◎	◎	☆	◎	◎
MA,Kwo-Juh	◎	◎	◎	◎	◎	◎	◎	◎
Lee, Shiue- Chen	NONE	NONE	◎	◎	◎	◎	◎	◎

Note: Independent Director Mr. Li Hsueh-Cheng was appointed on June 23, 2022.

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Communication between Independent Directors, Internal Audit Manager, and Auditors (including significant matters, methods, and outcomes regarding the company's finances and business conditions):

The company's internal audit department submits audit reports and audit tracking tables to the Independent Directors on a monthly and quarterly basis. In regular circumstances, communication between the internal audit manager and Independent Directors takes place through email, phone, or face-to-face meetings, as needed. Additionally, the internal audit department provides an annual audit business report to the Independent Directors, communicating the audit report results and the status of other tracking reports.
The company's external auditors report to the Independent Directors at least once a year regarding key audit matters, financial statement reviews, or audit results for the company and its subsidiaries. They also engage in communication with the Independent Directors.
Summary of communication between Independent Directors, Internal Audit Manager, and Auditors over the past year:

Date	Communication with Internal Audit Director:	Communication with Auditors	Results
2022.03.31	Internal Audit Business Report for the year 2021.	Audit status of the financial reports for theyear 2021.	No special recommendations from the independent directors.
2022.05.16	Internal Audit Business Report for the period fromJanuary2022 to March 2022.	Review status of the financial reports for the firstquarter of 2022.	No special recommendations from the independent directors.
2022.08.15	Internal Audit Business Report for the period from April 2022 toJune 2022.	Review status of the financial reports for the first half of 2022.	No special recommendations from the independent directors.
2022.11.10	Internal Audit Business Report for the period fromJuly2022 toSeptember 2022.	Review status of the financial reports for the thirdquarter of 2022.	No special recommendations from the independent directors.

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(2) Audit Committee Operations:

Information on the operations of the Audit Committee

The Audit Committee held four meetings during the most recent fiscal year ( Ａ ). The attendance of independent directors is as follows:

Job Title	Name	Number of attendance in person(B)	Delegated attendance count	Rate of attendance in person (%) (`Ｂ`/`Ａ`)(Note1, Note 2)
Independent Director	Lin, Rui-tu		0	100%
Independent Director	MAA KWO- JUH	4	0	100%
Independent Director	LEE, SHIUE- CHEN	4	0	100%
Other items that shall be recorded: 1. In the event of any of the following circumstances regarding the operation of the Audit Committee, the date and session, agenda items, dissenting opinions of independent directors, reservations or significant recommendations, decision results of the Audit Committee, and the company's handling of the opinions of the Audit Committee shall be disclosed. (1)Matters listed in Article 14-5 of the Securities and Exchange Act.

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(1) Hold separate meetings at least once a year between the auditors and the internal audit supervisor to discuss completed internal audits and external audit opinions, as well as communicate about audit deficiencies for the year. Opinions from the communication should be documented and reported to the board of directors.

(2) The auditors shall have separate meetings with the independent directors at least once a year to report on audit or review results and related matters to be noted.

(3) Other: In case of significant abnormal matters or when the independent directors, audit supervisor, and auditors deem it necessary to have independent communication, meetings can be held irregularly and at any time for communication purposes.

Date	Attendees	Matters discussed	Results of communication
2022/11/10	Independent Director MAA KWO-JUH Independent Director LEE, SHIUE-CHEN AuditSupervisor: CHIEN,I-CHEN	Report on the execution of audit activities for the third quarter of 2022.	No objections.
2022/11/10	Independent Director MAA KWO-JUH Independent Director LEE, SHIUE-CHEN Auditor: CHEN,TSUNG-CHE	Communication with the company's governance unit for thethird quarterof 2022.	No objections.
2023/3/24	Independent Director MAA KWO-JUH Independent Director LEE, SHIUE-CHEN AuditorCHIH, SHIH-CHIN	Communication with the company's governance unit for the year 2022.	No objections.

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(3) Involvement of the supervisor in the operations of the board of directors.

The Board of Directors held 8 meetings during the recent fiscal year, ending on March 31, 2023 (A). The attendance record of directors and supervisors is as follows:

Job Title	Name	Actual attendance (B)	Actual attendance rate (%) [B/A]	remarks
Supervisor	LIN, LI-CHUN	2	100%	Terminated in response to the establishment of the Audit Committee on 2022.06.23.
Other items that shall be recorded: 1. Composition and duties of the Supervisors: (1) Communication between the Supervisors and shareholders and employees: Supervisors believe, when necessary, they shall communicate directly with employees and shareholders. (2) Communication between the supervisor and the internal audit manager and auditor: 1. The internal audit manager submits audit reports to the supervisor on a monthly basis upon completion of audit projects, and the supervisor has no objections. 2. The internal audit manager attends board meetings and provides audit business reports, and the supervisor has no objections. 3. The supervisor may communicate with the auditor at any time regarding the company's financial status. 2. If the Supervisors attend the Board meeting and express an opinion, it shall state the date, session number, content of the proposal, result of the resolution of the Board of Directors and the company's handlingof the supervisor’s statement: No such situation.

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(4) The state of the Company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TSEC/TPEx Listed Companies, and the reason for any such departure.

Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
1. Does the company`」`establish and disclose a code of practice of corporate governance in accordance with the “Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies?”	v		To establish sound corporate governance practices, our company has referred to the Corporate Governance Best Practice Principles for Listed and OTC Companies established by the Taiwan Stock Exchange and the Taipei Exchange. We have formulated our own Corporate Governance Guidelines for compliance and have disclosed them on the Market Observation Post System.	We comply with the requirements of the "Corporate Governance Best Practices for Listed and OTC Companies."

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
2. Equity Structure and Shareholders' Equity of the Company (1) Does the Company have internal procedures in place to handle shareholders’ suggestions, questions, disputes, and lawsuits, and implement these procedures accordingly? (2) Does the Company have a list of its major shareholders and a list of actual controllers of the major shareholders? (3) Does the Company establish and implement risk management and firewall mechanisms with related companies? (4) Does the Company have internal rules that prohibit insiders from trading securities using market information that is not publicly available?	v v v v		(1) Shareholder suggestions or disputes are handled by a dedicated spokesperson or proxy spokesperson appointed by the company. Shareholders can submit their questions through telephone or the company's website. If legal issues are involved, assistance from legal professionals is sought. (2) The company regularly obtains the latest shareholder registry from a shareholder services agency to understand the list of major shareholders and the ultimate controllers of major shareholders. (3) Assets, financial operations, and accounting related to related-party transactions are independently operated by dedicated personnel. The head office conducts periodic audits, and transactions with related parties are conducted in accordance with the company's internal control rules. (4) The company has established the "Internal Handling Procedures for Material Information" and the "Internal Handling and Prevention of Insider Trading Procedures" to prevent unauthorized disclosure of information and ensure consistencyand accuracyin the company's external communications.	We comply with the requirements of the "Corporate Governance Best Practices for Listed and OTC Companies."

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3. Composition and Responsibilities of the Board of Directors (1) The Board of Directors has formulated a policy on diversity, specific management objectives, and has effectively implemented them. (2) Besides the Compensation Committee and Audit Committee, does the company voluntarily set up other functional committees? (3) Has the company established a board performance evaluation method and its evaluation method, conducted performance evaluations regularly every year, and reported the results of the evaluation to the board for use as a reference for individual director compensation and nomination for reappointment?	v v v		(1) The company advocates and respects a policy of board diversity to enhance corporate governance and promote the sound development of the board's composition and structure. We believe that a diverse board can contribute to the overall performance of the company. The selection of board members is based on the principle of selecting individuals with diverse and complementary capabilities across industries. This includes basic diversity factors such as age, gender, and nationality, as well as industry experience and relevant skills in areas such as finance, accounting, legal, information technology, and public utilities. Additionally, board members possess abilities in business judgment, management, leadership decision-making, and crisis handling. Article 20 of the "Corporate Governance Practices Guidelines" states that the board as a whole should possess the following abilities to strengthen its functions and achieve the idealgoals of corporategovernance: Core elements of diversity Director's name Gend er Oper ation al judg ment abilit y Acco untin g and finan cial analy sis abilit y B us in es s m an ag e m en t ab ilit y Cr isi s m an ag e m en t ab ilit y In du str y kn o wl ed ge int er na tio na l m ar ke t in si gh t le ad er sh ip ab ilit y de cis io n- m ak in g ab ilit y Le ga l kn o wl ed ge LIN, I-CHIN Female v v v v v v v v LIN, WEN-TENG Male v v v v v v PAN, HSIN-JEN Male v v v v v v v LIU,FENG-CHIN Female v LIN, JUI-PING Female v v v v v v v v LIN, RUEY-TOU Male v v v MAA KWO-JUH Male v v v v v v v v v LEE, SHIUE- CHEN Male v v v v v v v v (2) The company currently has established an Audit Committee and a Compensation Committee. Regarding the establishment of other functional committees, the company has conducted an overall assessment consideringthe effective utilization of resources	We comply with the requirements of the "Corporate Governance Best Practices for Listed and OTC Companies."

3. Composition and Responsibilities of the Board of Directors

(1) The Board of Directors has formulated a policy on diversity, specific management objectives, and has effectively implemented them.
(2) Besides the Compensation Committee and Audit Committee, does the company voluntarily set up other functional committees?
(3) Has the company established a board performance evaluation method and its evaluation method, conducted performance evaluations regularly every year, and reported the results of the evaluation to the board for use as a reference for individual director compensation and nomination for reappointment?
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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
			and the absence of an urgent need for their establishment at present. However, future establishment of such committees will be based on the actual operational situation. (3) The company has conducted evaluations in accordance with the "Board Performance Evaluation Measures," which include the overall board, individual director members, and functional committees. The evaluation methods include self-assessment within the board and self-assessment by director members. The performance evaluation of the board covers six major dimensions: 1. Understanding of company goals and missions. 2. Awareness of director responsibilities. 3. Involvement in company operations. 4. Internal relationship management and communication. 5. Director's expertise and continuous professional development. 6. Internal controls. The company's shareholder services department conducts an evaluation of the overall performance of the board of directors at the end of each fiscal year. The results of this evaluation are utilized as a reference for future director selection, nomination, and determination of individual director compensation.

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(4) The company's designated auditing firm is An-Hou Jianye Certified Public Accountants. The company follows the provisions of Article 47 of the Accountants Act and formulates independence assessment criteria based on the contents of Bulletin No. 10, "Integrity, Fairness, Objectivity, and Independence," regarding independence and professional ethics. The appointment and independence assessment of auditors Chi Shih-Chin and Lai Li-Chen for the current year were approved by the board of directors on March 24,Year 2023. The assessment criteria include: Evaluation Items Evaluati on Results Compliance with independence requirements 1. No significant financial interest with the client. Yes Yes 2. Avoiding any inappropriate relationship with the client. Yes Yes 3. The auditor must ensure the honesty, fairness, and independence of their assistants. Yes Yes 4. The auditor is prohibited from auditing the financial statements of a client for whom they provided services within the previous twoyears. Yes Yes 5. The auditor cannot allow others to use their name. Yes Yes 6. The auditor cannot hold shares of the client. Yes Yes 7. The auditor cannot engage in monetary loans with the client, except for normal financial transactions with the financial industry. Yes Yes 8. The auditor cannot have joint investments or profit-sharing relationships with the client. Yes Yes 9. The auditor cannot hold a regular job or receive a fixed salary from the client. Yes Yes 10. The auditor cannot be involved in management functions that maycompromise their independence. Yes Yes 11. The auditor cannot engage in any other business activities that may jeopardize their independence. Yes Yes 12. The auditor cannot perform auditing services for a client if they have a spousal, direct blood relative, direct relative by marriage, or fourth-degree collateral blood relationship with the client or its managementpersonnel. Yes Yes 13. The auditor cannot receive any commissions related to their professional services. Yes Yes	(4) The company's designated auditing firm is An-Hou Jianye Certified Public Accountants. The company follows the provisions of Article 47 of the Accountants Act and formulates independence assessment criteria based on the contents of Bulletin No. 10, "Integrity, Fairness, Objectivity, and Independence," regarding independence and professional ethics. The appointment and independence assessment of auditors Chi Shih-Chin and Lai Li-Chen for the current year were approved by the board of directors on March 24,Year 2023. The assessment criteria include: Evaluation Items Evaluati on Results Compliance with independence requirements 1. No significant financial interest with the client. Yes Yes 2. Avoiding any inappropriate relationship with the client. Yes Yes 3. The auditor must ensure the honesty, fairness, and independence of their assistants. Yes Yes 4. The auditor is prohibited from auditing the financial statements of a client for whom they provided services within the previous twoyears. Yes Yes 5. The auditor cannot allow others to use their name. Yes Yes 6. The auditor cannot hold shares of the client. Yes Yes 7. The auditor cannot engage in monetary loans with the client, except for normal financial transactions with the financial industry. Yes Yes 8. The auditor cannot have joint investments or profit-sharing relationships with the client. Yes Yes 9. The auditor cannot hold a regular job or receive a fixed salary from the client. Yes Yes 10. The auditor cannot be involved in management functions that maycompromise their independence. Yes Yes 11. The auditor cannot engage in any other business activities that may jeopardize their independence. Yes Yes 12. The auditor cannot perform auditing services for a client if they have a spousal, direct blood relative, direct relative by marriage, or fourth-degree collateral blood relationship with the client or its managementpersonnel. Yes Yes 13. The auditor cannot receive any commissions related to their professional services. Yes Yes	(4) The company's designated auditing firm is An-Hou Jianye Certified Public Accountants. The company follows the provisions of Article 47 of the Accountants Act and formulates independence assessment criteria based on the contents of Bulletin No. 10, "Integrity, Fairness, Objectivity, and Independence," regarding independence and professional ethics. The appointment and independence assessment of auditors Chi Shih-Chin and Lai Li-Chen for the current year were approved by the board of directors on March 24,Year 2023. The assessment criteria include: Evaluation Items Evaluati on Results Compliance with independence requirements 1. No significant financial interest with the client. Yes Yes 2. Avoiding any inappropriate relationship with the client. Yes Yes 3. The auditor must ensure the honesty, fairness, and independence of their assistants. Yes Yes 4. The auditor is prohibited from auditing the financial statements of a client for whom they provided services within the previous twoyears. Yes Yes 5. The auditor cannot allow others to use their name. Yes Yes 6. The auditor cannot hold shares of the client. Yes Yes 7. The auditor cannot engage in monetary loans with the client, except for normal financial transactions with the financial industry. Yes Yes 8. The auditor cannot have joint investments or profit-sharing relationships with the client. Yes Yes 9. The auditor cannot hold a regular job or receive a fixed salary from the client. Yes Yes 10. The auditor cannot be involved in management functions that maycompromise their independence. Yes Yes 11. The auditor cannot engage in any other business activities that may jeopardize their independence. Yes Yes 12. The auditor cannot perform auditing services for a client if they have a spousal, direct blood relative, direct relative by marriage, or fourth-degree collateral blood relationship with the client or its managementpersonnel. Yes Yes 13. The auditor cannot receive any commissions related to their professional services. Yes Yes
Evaluation Items	Evaluati on Results	Compliance with independence requirements
1. No significant financial interest with the client.	Yes	Yes
2. Avoiding any inappropriate relationship with the client.	Yes	Yes
3. The auditor must ensure the honesty, fairness, and independence of their assistants.	Yes	Yes
4. The auditor is prohibited from auditing the financial statements of a client for whom they provided services within the previous twoyears.	Yes	Yes
5. The auditor cannot allow others to use their name.	Yes	Yes
6. The auditor cannot hold shares of the client.	Yes	Yes
7. The auditor cannot engage in monetary loans with the client, except for normal financial transactions with the financial industry.	Yes	Yes
8. The auditor cannot have joint investments or profit-sharing relationships with the client.	Yes	Yes
9. The auditor cannot hold a regular job or receive a fixed salary from the client.	Yes	Yes
10. The auditor cannot be involved in management functions that maycompromise their independence.	Yes	Yes
11. The auditor cannot engage in any other business activities that may jeopardize their independence.	Yes	Yes
12. The auditor cannot perform auditing services for a client if they have a spousal, direct blood relative, direct relative by marriage, or fourth-degree collateral blood relationship with the client or its managementpersonnel.	Yes	Yes
13. The auditor cannot receive any commissions related to their professional services.	Yes	Yes

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
			After evaluation, both auditors have been found to meet the requirements for independence andqualification.
4. Does the company allocate a sufficient number of qualified and appropriate corporate governance personnel and designate a corporate governance officer responsible for corporate governance-related matters (including, but not limited to, providing necessary information to directors and supervisors for their duties, assisting directors and supervisors in complying with laws, conducting board of directors and shareholders' meetings, preparing minutes of meetings, etc.)?	v		In accordance with the company's "Corporate Governance Guidelines," the management team is responsible for fulfilling their duties and implementing the corporate governance system. According to the company's "Board of Directors Meeting Procedures" and "Remuneration Committee Organization Rules," a corporate governance working group comprising the Finance Department, Internal Audit, and Shareholders' Services has been established to handle relevant corporate governance affairs. Their responsibilities include providing necessary information to directors for the execution of their duties, ensuring compliance with laws during board of directors and shareholders' meetings, managing company registrations, preparing minutes of meetings, and assisting the board of directors in strengthening their functions to uphold the rights and interests of stakeholders and ensure equal treatmentofshareholders.	We comply with the requirements of the "Corporate Governance Best Practices for Listed and OTC Companies."

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
(5) Whether the company has established communication channels with stakeholders (including but not limited to shareholders, employees, customers, and suppliers), and set up a stakeholder section on the company's website to address important corporate social responsibility issues raised by stakeholders.	v		The company has currently disclosed a stakeholder section and an investor relations contact window on its website www.rectron.com.tw, and appropriately addresses important corporate social responsibility issues raised by stakeholders. The company respects the rights and interests of stakeholders. When the legitimate rights and interests of stakeholders are infringed upon, the company handles them appropriately based on the principles of good faith: (1) Banks and creditors: Direct communication with the company's financial supervisor or treasury personnel to provide sufficient information for their management decisions. (2) Employees: Direct communication through the company's internal complaint channels in written or email form, with supervision from the management department. (3) Suppliers: Acceptance of suggestions and communication coordination by the procurement supervisor and procurement personnel. (4) Consumers: Direct communication with customers by the business supervisor or sales staff, promptly addressing customer demands and product feedback, and resolving related issues immediately. (5) Communities or stakeholders: Communication with the company is conducted by the company's spokesperson or authorized representative. For nearby communities, communication with the communities is conducted by the plant manager on behalf of the company. (6) The company has currently disclosed a stakeholder section and an investor relations contact window on its website, appropriately addressing important corporate social responsibility issues raised by stakeholders.	We comply with the requirements of the "Corporate Governance Best Practices for Listed and OTC Companies."

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
6. Does the company appoint a professional stock agency to handle the affairs of the Board of Shareholders?	v		The company has appointed a professional share registrar agency, "Guo-Pu Securities Share Registrar Department," to handle shareholder meeting affairs.	We comply with the requirements of the "Corporate Governance Best Practices for Listed and OTC Companies."
7. Information Disclosure (1) Does the company have a website that discloses financial and corporate governance information? `（`2`）`The company has implemented other forms of information disclosure (such as establishing an English website, designating dedicated personnel for collecting and disclosing company information, implementing a spokesperson system, and placing the process of corporate presentations on the company's website)? (3) Has the company announced and filed its annual financial report within two months after the end of the accounting year, and announced and filed its first, second, and third quarter financial reports and monthly business operations before the prescribed deadline?	v v	v	(1) The company's website, www.rectron.com.tw, is used to disclose financial, operational, and corporate governance information. (2) The company has designated individuals responsible for collecting and disclosing company information. It has established a spokesperson and proxy spokesperson system and has set up an investor mailbox to promptly respond to investor inquiries. All relevant information that the company is required to disclose by law is promptly announced and made available for investor clarity and queries through the "Public Information Observation System." (3) The company completes the announcement and filing of the annual financial report within the prescribed deadline after the end of the fiscal year. It also meets the deadlines for announcing and filing the first, second, and third quarterly financial reports and provides information on monthly operating performance.	We comply with the requirements of the "Corporate Governance Best Practices for Listed and OTC Companies."

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8. Does the company have other important information that helps understand the operation of corporate governance (including but not limited to employee benefits, employee care, investor relations, supplier relationships, rights of stakeholders, status of education and training for directors and supervisors, implementation of risk management policies and risk measurement standards, execution of customer policies, and the company's purchase of liability insurance for directors and supervisors)?	v		(1) Employee benefits: The company has always treated its employees with integrity and adhered to relevant labor laws to safeguard their legal rights and interests. (`二`) Employee Care: The company establishes personnel management regulations based on government laws and regulations such as the Labor Standards Act, Gender Equality Act, and Sexual Harassment Prevention Act as the minimum standards to protect employee rights. Regular labor-management meetings are held for effective communication. Additionally, a "Welfare Committee" is established, allocating funds monthly to organize employee welfare activities, including holiday gift vouchers, year-end party lucky draws, health check-ups, and labor, health, and group insurance. (3) Investor Relations: The company appoints a spokesperson and proxy spokesperson to handle shareholder suggestions or disputes, aiming to establish effective communication between the company and investors. This ensures that investors have a comprehensive understanding of the company's business performance, achievements, and long-term operational strategies. (4) Supplier Relationships: The company promotes "green procurement" and requires suppliers of raw materials to provide declarations guaranteeing that their products do not contain harmful substances to the environment. This ensures compliance with customer and EU RoHS regulations. Furthermore, communication with suppliers is conducted to enhance their positive impact on society and the environment. (5) Rights of Stakeholders: Stakeholders can communicate with the company or provide feedback through the dedicated stakeholder section on the company's website, ensuring the protection of their relevant rights and interests. (6) Directors and Supervisors Continuing Education: Please refer to the company's 2022 annual report (Section Ten). (7) Implementation of Risk Management Policies and Risk Measurement Standards: The company has established various internal regulations and conducts risk management assessments. (8) Implementation of Customer Policy: The company has established the "Code of Business Conduct" to adhere to ethical business practices. Please refer to Section Five of the company's 2022 annual report for an overviewof operations.	Compliance with the "Corporate Governance Best Practice Principles for Listed Companies" requirements.

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Item	Implementation Status	Implementation Status	Implementation Status
	Yes	No	Summary and Explanation
			(9) Purchase of Directors and Supervisors Liability Insurance: In 2022, the company obtained directors and officers liability insurance coverage of USD 1 million. As of the publication of the annual report, the coverage has not expired. The renewal process will be completed before the expiration in June 2023, and important details of the insurance will be submitted to the upcoming board of directors meeting.
9. please provide an explanation of the improvements made based on the recent corporate governance evaluation published by the Corporate Governance Center of Taiwan Stock Exchange, and propose priority areas and measures for further enhancement where improvements have not yet been made: The company is continuously addressing relevant matters and measures based on the corporate governance evaluation results and in accordance with the Corporate Governance Best Practice Principles.

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(5) Composition, Responsibilities, and Utilization of the Remuneration Committee:

(1) Compensation Committee Membership Details

				March 31, 2023
itions Identity (Note 1)	Cond Name	Professional Qualifications and Experience (Note 2)	Independence Status (Note 3)	Number of members who are also members of the compensation committee of other public corporations.
Independent Director Convener	LIN, RUEY-TOU	Department of Business Administration, Tamkang University Legislators Taipei City Councilor	Independence status All three positions have no circumstances as described in Note 2. Furthermore, they have obtained a declaration of independence from independent directors, confirming their compliance with the legal requirements for independence (at the time of appointment and duringtheir term).	None
Remuneration Committee	MAA KWO-JUH	Master's degree in Accounting from National Chengchi University. Passed the Certified Public Accountant (CPA) Examination in Taiwan. Chief Consultant at KPMG. CEO at KPMG Taiwan. Chairman and CEO at KPMG Taiwan. President of the Corporate Governance Professionals Association, a non-profit organization	Independence status All three positions have no circumstances as described in Note 2. Furthermore, they have obtained a declaration of independence from independent directors, confirming their compliance with the legal requirements for independence (at the time of appointment and duringtheir term).	1

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Remuneration Committee	LEE, SHIUE- CHEN	Tamkang University, Department of Accounting Audit Manager at KGMP United Accounting Firm. Finance and Accounting Manager at Pao Lai Construction Co., Ltd. Finance and Accounting Manager at Hong Guo Group's affiliated business. Deputy General Manager of Fulai Construction Co., Ltd.	Independence status All members of the Compensation Committee meet the independence criteria as specified in Note 2. They have also obtained a declaration from the Compensation Committee members confirming their compliance with the legal requirements for independence during their appointment and tenure.	None

Note 1: For relevant work experience, professional qualifications, experience, and independence status of Compensation Committee members, please refer to the information provided in "Directors and Supervisors Data (1)."
Note 2: Independence criteria include but are not limited to the following: whether the Compensation Committee member, their spouse, or relatives within the second degree of kinship serve as directors, supervisors, or employees of the company or its related enterprises; whether the member, their spouse, or relatives within the second degree of kinship (or through the use of others' names) hold shares in the company and the proportion of such holdings; whether they serve as directors, supervisors, or employees of specific related companies with the company (as defined in Article 6, Paragraph 1, Subsections 5-8 of the Regulations Governing the Establishment and Exercise of Powers of Compensation Committees of Listed and OTC Companies); and the remuneration received for providing business, legal, financial, accounting, or other services to the company or its related enterprises in the past two years.

(2) Duties of the Compensation Committee:

Legal basis: Article 4 and Article 5 of the "Organizational Regulations of the Compensation Committee" of the company. According to Article 4 of the regulations:

The committee shall faithfully fulfill the following duties with the care of a good manager and submit its recommendations to the Board of Directors for discussion:
Establish and regularly review the performance evaluation criteria for directors, supervisors, and managers, as well as the annual and long-term performance objectives, compensation policies, systems, standards, and structures. Disclose the content of the performance
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evaluation criteria in the annual report.

Conduct regular evaluations and set performance targets for directors, supervisors, and managers. Based on the evaluation results derived from the performance evaluation criteria, determine the content and amount of their individual compensation. The annual report should disclose the individual performance evaluation results of directors and managers, as well as the content, amount, relevance, and reasonableness of individual compensation in relation to the evaluation results, and report them at the shareholders' meeting.

The term "compensation" referred to in the above provisions includes cash compensation, stock options, bonus shares, retirement benefits or severance pay, various allowances, and other substantial incentive measures. Its scope should be consistent with the matters to be disclosed in the guidelines for items related to remuneration of directors, supervisors, and managers of publicly listed companies.

According to Article 5, the principles for fulfilling the duties are as follows:

The performance evaluation and compensation of directors, supervisors, and managers should reference the customary levels of the industry and consider the reasonable correlation with individual performance, company's operating performance, and future risks.
Directors and managers should not be encouraged to engage in activities that exceed the company's risk tolerance in pursuit of compensation.
The proportion of short-term performance-based bonuses and the timing of variable compensation payments for directors and senior executives should be determined taking into account the industry characteristics and the nature of the company's business.
The content and amount of compensation for directors and managers should be reasonable and considerate. The determination of directors' and managers' compensation should not significantly deviate from the financial performance. If there is a significant decline in profits or long-term losses, the annual compensation should not be higher than the previous year. If it is still higher than the previous year, a reasonable explanation should be disclosed in the annual report and reported at the shareholders' meeting.
When discussing the recommendations of the remuneration committee, the board of directors should consider various factors, including the amount, payment methods, and future risks of compensation.
If the board of directors does not adopt or modifies the recommendations of the remuneration committee, it must be approved by a twothirds majority of the directors present at the meeting, with the agreement of a majority of the attending directors. The resolution should comprehensively consider and specifically explain whether the adopted remuneration is better than the recommendations of the remuneration committee.
If the remuneration approved by the board of directors is better than the recommendations of the remuneration committee, the differences
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and reasons should be recorded in the minutes of the board of directors' meeting. Furthermore, within two days from the date of the board's approval, the company should make an announcement and report the information on the designated information disclosure website of the competent authority.

For matters related to the compensation of directors and managers of subsidiary companies that require approval from the board of directors of the parent company due to the hierarchical responsibility of the subsidiary companies, the remuneration committee of the parent company should submit recommendations to the board of directors for discussion.

(3) Information about the Operation of the Compensation Committee

1.The Company has 3 members of the Compensation Committee.

2. Current term of the committee: July 6, 2022, to June 22, 2025. In the most recent fiscal year, the remuneration committee held two meetings (A), and the qualifications and attendance of the committee members are as follows:

Job Title	Name	Number of attendance in person (B)	Delegated attendance count	Rate of attendance in person (%) (B/A) (Note)
Convener	LIN, RUEY- TOU	1	1	50%
Committee member	MAA KWO- JUH	2	0	100%
Committee member	LEE, SHIUE- CHEN	2	0	100%
Other items that shall be recorded: 1. If the Board of Directors rejects or amends the suggestions of the Compensation Committee, the date, session number, proposal content, results of Board resolution, and the Company’s handling of Compensation Committee’s opinions should be recorded in details (e.g., where the compensation approved by the Board is higher than the compensation suggested by the Compensation Committee, the difference and reasons should be detailed): None. 2. If any Committee member has objections and/or reservations with the resolutions of the Compensation Committee and such situations were recorded or as written statements, the committee meeting date, session number, proposal content, all members’ opinions, and the handling of opinions shall be documented in details: None. 3. If any Committee member has objections and/or reservations with the resolutions of the Compensation Committee and such situations were recorded or as written statements, the committee meeting date, session number, proposal content, all members’ opinions, and the handling of opinions shall be documented in details: None. 4. Discussions and Resolutions of the Remuneration Committee,and Company's Handlingof Member Opinions:

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	Remuneration Committee Meeting Dates	Content and Follow-up of the Proposal
	2022.03.31	Distribution of employee remuneration and director and supervisor remuneration for the fiscal year 2021. Remuneration Committee Resolution: The resolution was unanimously approved by all committee members. Company's Handling of Remuneration Committee Resolution: The resolution was approved by the attending directors without any objections, in accordance with therecommendationof theRemunerationCommittee.
	2022.12.21	1.Amended the organizational regulations of the Compensation Committee and established the Executive Compensation Management Policy for directors and executives. 2.Evaluated the reasonableness of the compensation structure for the company's directors and executives. Decision of the Compensation Committee regarding compensation: The decision was unanimously approved by all committee members. Company's handling of the Compensation Committee's decision: The recommendation of the Compensation Committee was unanimously adopted bytheattending directors.
	2023.03.24	Distribution of employee remuneration and director and supervisor remuneration for the fiscal year 2021. Remuneration Committee Resolution: The resolution was unanimously approved by all committee members. Company's Handling of Remuneration Committee Resolution: The resolution was approved by the attending directors without any objections, in accordance with the recommendation of the Remuneration Committee.

(4) Nomination Committee Member Information and Operation Status: The company has not established a Nomination Committee.

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(6) The implementation of sustainable development and the differences with the sustainability practices guidelines of listed companies are as follows:

Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
1. Is the company established with a governance framework for promoting sustainable development, including the establishment of dedicated personnel responsible for driving sustainable development initiatives, authorized by the board of directors and supervised by the board of directors?		v	The company has not yet established such a framework but will set up dedicated positions for promoting corporate social responsibility when necessary.	Future compliance with legal requirements will be ensured.
2. Has the Company conducted risk assessments on environmental, social, and corporate governance issues related to its operations, in accordance with the principles of materiality, and established relevant risk management policies or strategies?	v		1. The company has established the "Corporate Governance Best Practice Principles" to ensure effective corporate governance, promote sustainable environmental development, and uphold social welfare. The "Insider Trading Prevention Operational Procedures," "Code of Conduct," and "Internal Control System" formulated by the company are designed to implement risk management policies. The content of these policies is developed in compliance with relevant government regulations. 2. To enhance the management of corporate social responsibility, the company has formed a committee comprising personnel from different departments to promote corporate social responsibility as part of their job responsibilities. The Deputy General Manager of the General Administration Department is responsible for overseeing these initiatives and regularly reporting the progress and effectiveness to the board of directors. To fulfill our corporate social responsibility, one of our subsidiaries entered the medical equipment field in 2020 to contribute to public safety during the pandemic.	No difference found.

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
3. Environmental issues (1) Has the company established an appropriate environmental management system based on its industry characteristics?	v		(1) The company has obtained ISO 14001 certification for its environmental management system, which effectively prevents and controls environmental pollution while improving energy efficiency.	No difference found.
(2) The company is committed to enhancing energy efficiency and utilizing low-impact renewable materials to minimize environmental burdens.	v		(2) In recent years, due to energy shortages and escalating ecological damage, along with the increasingly severe issue of global warming, the company has been implementing various measures to promote energy conservation and carbon reduction. This includes the adoption of energy-saving equipment in offices, advocating for energy-saving practices, encouraging employees to conserve energy, and strengthening resource utilization and recycling to reduce the impact on the environment.	No difference found.

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
(3) Has the company evaluated the potential risks and opportunities of climate change on its current and future operations, and taken climate-related measures in response?	v		(3) The company evaluates the potential risks and opportunities posed by climate change to its current and future operations and takes corresponding measures to address climate-related issues. The company continues to monitor the impact of climate change on its business activities and invests in pollution control equipment to reduce the environmental impact of its operations. As a manufacturing company, potential risks mainly include resource shortages, rising raw material costs, unstable transportation demand, and threats to employee safety from extreme weather conditions. These factors could potentially affect the company. To mitigate risks, the company not only stays informed about international trends but also improves energy efficiency, actively develops related products using green energy technologies, reduces water and electricity consumption, and adopts more efficient processes to lower operating costs.	No difference found.
(4) The company tracks greenhouse gas emissions, water consumption, and total waste weight over the past two years and has developed policies for energy conservation, carbon reduction, greenhouse gas reduction, water conservation, and waste management.	v		(4) The company is committed to ongoing research and development of advanced technologies to reduce greenhouse gas emissions and achieve low-carbon manufacturing in the industry. Additionally, the company aims to increase the use of renewable energy. Each year, the company establishes measures to improve energy efficiency. In the year 2022, due to a significant increase in overall revenue, greenhouse gas emissions increased by 2% compared to 2021, water consumption increased by 76% compared to 2021, electricity consumption decreased by 1% compared to 2021, and total waste weight decreased by1% comparedto2021.	No difference found.

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
4. Social Issues (1) The company has developed management policies and procedures in accordance with relevant laws and international human rights conventions.	v		(1) The company complies with the International Bill of Human Rights and national labor laws, and has established employee "work rules" and a labor- management committee. Important matters are communicated and coordinated between labor and management representatives, and regular assessments and discussions on human rights issues are conducted to safeguard the rights and interests of employees. 1. Employee Rights: The company ensures compliance with legal requirements for employee labor insurance, national health insurance, and retirement pension contributions. 2. Insurance: The company has obtained public liability insurance and employee group insurance. 3. Management Methods and Procedures: The company has developed work rules and published them on company bulletin boards and internal websites for employees to adhere to.	No difference found.
(2) Has the company established and implemented reasonable employee welfare measures (including salary, vacation, and other benefits), and appropriately reflected business performance or results in employee compensation?	v		(2) The company adheres to the Labor Standards Act and relevant regulations to establish various salary and benefits measures for employees. It provides competitive welfare benefits to motivate employees, conducts regular assessments, and distributes performance bonuses to sharetheachievements of the company's operations.	No difference found.

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Item			Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
(3) The company provides a safe and healthy working environment for employees and regularly conducts safety and health education.	v		(3) The company conducts annual employee health checks and provides counseling for employees on psychological issues by physicians. It regularly organizes fire safety training and implements safety personnel to ensure a secure working environment. The company conducts regular inspections of safety precautions in the work environment. Through continuous education and training, as well as employee awareness, unsafe behaviors leading to accidents are reduced. The company promotes a smoke-free working environment to enable employees to work in a comfortable and healthy atmosphere. It regularly maintains and disinfects water supply facilities. In case of natural disasters or accidents caused by human error, the company conducts periodic fire/earthquake drills to ensure that employees are well-prepared and capable of handling emergencies according to the contingency plans, minimizing the impact on employees. Additionally, the company provides group insurance for employees, ensuring appropriate medical coverage in case ofwork-relatedinjuries.	No difference found.
(4) The company establishes an effective career development and training plan for employees.	v		(4) To promote employees' career development, the company regularly conducts internal or external training programs to enhance their professional capabilities.
(5) With regard to issues such as customer health and safety, customer privacy, marketing and labeling related to products and services, does the company comply with relevant laws and international standards, and develop relevant policies and complaint procedures to protect consumerorcustomer rights?	v		(5) The company values customer feedback and provides channels for customers to contact them, such as dedicated product contact points and email addresses. They also have a dedicated section for stakeholders to submit inquiries, complaints, or suggestions. The company upholds ethical and integrity principles and ensures appropriate handling and feedback to safeguard customer rights.	No difference found.

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Item	Implementation Status	Implementation Status	Implementation Status	The Reason of Departure from the Corporate Governance Best Practice Principles for TWSE & TPEx Listed Companies
	Yes	No	Summary and Explanation
(6) Has the company established a supplier management policy, requiring suppliers to follow relevant regulations on environmental protection, occupational safety and health, or labor rights, and implemented such policy?	v		(6) The company has a supplier evaluation method that requires suppliers to meet the company's requirements for product safety and ethical standards. It encourages suppliers to enhance their social and environmental responsibilities, including compliance with labor rights, health and safety standards, environmental protection, and ethical norms. By working together with suppliers, the company strives for sustainable development and improves corporate social responsibilityefforts.	No difference found.
5. Has the company referred to internationally recognized standards or guidelines for preparing non-financial reports such as sustainability reports? Has the aforementioned report obtained a confirmation or assurance opinion from a third-party verification agency?		v	The company complies with the requirements and regulations of the competent authorities and relevant laws in fulfilling its corporate social responsibility. The company has established a dedicated section on its website for corporate social responsibility, where relevant information will be disclosed, including on the company's website and public information disclosure platforms.	The company has not yet prepared a corporate responsibility report. The decision to compile such a report will be based on the company's development needs and regulatory requirements.
6. If the company has established its own sustainability guidelines based on the "Practical Guidelines for Sustainable Development of Listed and OTC Companies," please describe how they differ from the operational guidelines established. The company has not yet established a corporate social responsibility (CSR) code, therefore this item is not applicable. However, the company actively promotes various social responsibilities and is committed to complying with the requirements outlined in the "Guidelines for Corporate Social ResponsibilityPractices of Listed and Over-the-Counter Companies."

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			Implementation Status	The Reason of Departure
				from the Corporate
Item				Governance Best Practice
	Yes	No	Summary and Explanation	Principles for TWSE &
				TPEx Listed Companies

7. Other important information to understand the execution of sustainable development:

The company has established product environmental specifications to ensure that the products are free from hazardous substances. It has also implemented the ISO 14001 environmental management system and obtained the OHSAS 18001 occupational health and safety management system certification. The production of products complies with the EU ROHS requirements and incorporates halogen-free design. The company is committed to continuously fulfilling its corporate social responsibility by meeting the evolving technological requirements for environmentally-friendly products as demanded by customers.

1. Product: SGS ROHS certification

Company: The company has obtained ISO 9001, ISO/IATF 16949, ISO 14001 certifications.

(7) If the company has established corporate governance guidelines and related regulations, the inquiry methods should be disclosed. The company's website provides an "Information Disclosure" section where stakeholders can access and download relevant regulations, including corporate governance practices, code of conduct, ethical guidelines, and important board decisions. The website address is http://www.rectron.com.tw.

(8) The company's compliance with ethical business practices and measures:

The company has established the "Internal Handling Procedures for Material Non-public Information" and disseminated it to all employees for their compliance and awareness.

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Disclosure of compliance with the principles of integrity management and differences and reasons from the best practice guidelines for integrity management of listed and OTC companies.Item	Operational Status	Operational Status	Operational Status	Departure from the Ethical Corporate Management Best Practice Principles for TWSE & TPEx Listed Companies,and reasons
	Yes	No	Summary and Explanation
1. Formulating Policies and Plans for Ethical Corporate Management (1) Has the company established a policy of ethical management approved by the board of directors and clearly stated the policy and practices of ethical management in regulations and external documents, and has the board of directors and senior management actively implemented the commitment to the management policy? (2) Has the company established a risk assessment mechanism for dishonest behavior, regularly analyzed and evaluated business activities with higher risk of dishonest behavior within its scope of business, and formulated measures to prevent dishonest behavior, covering at least preventive measures for each item in Article 7, Paragraph 2 of the "Code of Conduct for Integrity in Listed and OTC Companies"?	v v		(1) To promote and advocate for ethical behavior, the company has established the "Code of Conduct" and "Ethical Behavior Standards," which are disclosed on the Public Information Observation System and the company's website. All employees receive guidance on the company's core values and compliance with the system. The company also requires stakeholders who have business dealings with the company, such as suppliers and contractors, to adhere to the same ethical standards as company employees. (2) In order to ensure the implementation of integrity practices, the company has established effective accounting and internal control systems. Internal auditors regularly assess compliance with these systems and implement relevant preventive measures for activities that pose higher risks of dishonest behavior, as outlined in Article 7, Section 2 of the "Integrity Practices for Listed Companies and Over-the-Counter Companies," or other business activities within the scope of operations. The company has also formulated the "Internal Handling of Material Information and Prevention of Insider Trading Guidelines," "Code of Conduct," and "Ethical Behavior Standards," which are published on the company's website for compliance. Additionally, the company has an internal reporting system in place for employees and relevant individuals to report any improper conduct, and designated managementpersonnel handle such reportspersonally.	No difference found.

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Disclosure of compliance with the principles of integrity management and differences and reasons from the best practice guidelines for integrity management of listed and OTC companies.Item	Operational Status	Operational Status	Operational Status	Departure from the Ethical Corporate Management Best Practice Principles for TWSE & TPEx Listed Companies,and reasons
	Yes	No	Summary and Explanation
(3) Has the company clearly defined operating procedures, behavioral guidelines, disciplinary measures for violations, and appeal procedures in its plan to prevent dishonest behavior, and implemented and periodically reviewed and revised the aforementioned plan?	v		(3) To prevent any dishonest behavior, unauthorized information disclosure, ensure consistency and accuracy in the company's external communications, and strengthen the prevention of insider trading, the company has developed the "Code of Conduct" and the "Internal Handling of Material Information and Prevention of Insider Trading Guidelines." All employees are required to refrain from engaging in activities that may involve conflicts of interest or potential conflicts of interest, and important personnel and senior executives must regularly report their compliance with these guidelines. The company requires suppliers or other collaborators to refrain from engaging in any illegal business activities and from providing improper benefits or bribes to companyemployees.	No difference found.

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Disclosure of compliance with the principles of integrity management and differences and reasons from the best practice guidelines for integrity management of listed and OTC companies.Item	Operational Status	Operational Status	Operational Status	Departure from the Ethical Corporate Management Best Practice Principles for TWSE & TPEx Listed Companies,and reasons
	Yes	No	Summary and Explanation
2. Implementation of Ethical Corporate Management (1) Does the company evaluate the integrity records of its business counterparts and include clauses on ethical conduct in contracts signed with them? (2) Has the company established a dedicated unit under the Board of Directors to promote corporate integrity and reports regularly (at least once a year) to the Board of Directors on its integrity management policy, measures to prevent dishonest behavior, and the monitoring and implementation status? (3) Has the company formulated a policy to prevent conflicts of interest, established appropriate channels for reporting, and ensured its implementation? (4) Does the company have effective accounting and internal control systems in place to implement corporate integrity, and does the internal audit unit develop relevant audit plans based on the assessment of the risk of dishonest behavior, and use them to verify compliance with anti- dishonesty behavior plans, or commission accountants to conduct audits? (5) Does the company regularly conduct internal and external education and training on ethical corporate management?	v v v v v		(1) The company requires its business counterparts, such as suppliers or other collaborators, to adhere to the same ethical standards as the company's management and employees. (2) The company's Board of Directors appoints dedicated managers and internal audit teams to vigorously promote corporate integrity from different levels and perspectives. Any abnormal circumstances will be promptly reported to the Board of Directors. (3) The company has an internal reporting system in place, allowing employees and related individuals to report any improper professional conduct, which is then handled personally by designated management personnel. (4) The company has designed internal control systems for operational procedures with potential higher risks of dishonest behavior. The internal audit team implements annual audit plans based on risk assessments and submits audit reports to the Board of Directors. (5) The company's "Code of Conduct" is not only disclosed in the "Corporate Governance" section of the company's website but also regularly communicated within the company to ensure that every employee understands and complies with it.	No difference found.

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Disclosure of compliance with the principles of integrity management and differences and reasons from the best practice guidelines for integrity management of listed and OTC companies.Item	Operational Status	Operational Status	Operational Status	Departure from the Ethical Corporate Management Best Practice Principles for TWSE & TPEx Listed Companies,and reasons
	Yes	No	Summary and Explanation
3. Implementation of the Company's Whistleblowing System (1) Does the company have a specific whistleblowing and reward system, a convenient whistleblowing channel, and appropriate personnel assigned to handle the whistleblowing? (2) Has the company established standard operating procedures for investigating reported matters, including the actions to be taken after the investigation and relevant confidentiality measures? (3) Does the company take measures to protect the whistleblower against inappropriate disciplinary actions?	v v v		(1) The company has already established an internal reporting system that allows employees and relevant individuals to report any improper professional conduct. Any behavior that violates our code of ethics will be strictly disciplined according to the company's disciplinary measures, including termination of employment and legal actions. (2) In accordance with Article 19 of our "Code of Conduct," we have established an internal reporting mechanism that operates based on confidentiality principles for conducting investigation procedures. (3) In accordance with Article 19 of our "Code of Conduct," we ensure the confidentiality of the whistleblower's identity and the reported content. Whistleblowers are protected from any improper treatment as a result of their reports.	No difference found.
4. Enforcing Information Disclosure Does the company disclose the content of its integrity management guidelines and their implementation effectiveness on its website and the public informationplatform?	v		The company places integrity management-related regulations and promotional information on its website and internal resources for employees to access at any time. The annual reports published on the website provide detailed information on integritymanagement.	No difference found.

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Disclosure of compliance with the principles of integrity management and differences and reasons from the best practice guidelines for integrity management of listed and OTC companies.Item	Operational Status	Operational Status	Operational Status
	Yes	No	Summary and Explanation
5. If the company has its own Code of Ethical Corporate Management in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE & TPEx Listed Companies,” please describe any departure from the code in its operation: In addition to the "Integrity Management Guidelines" and "Code of Ethics," the company has also incorporated relevant regulations in its "Work Rules." The company, guided by principles of integrity, transparency, and accountability, establishes sound corporate governance and risk management mechanisms to create a sustainable operating environment. To ensure the effective management of integrity operations, the company has assigned a dedicated unit responsible for policy development, prevention plans, and overseeing their implementation. This unit regularly reports to the board of directors. The company has clearly stated its integrity management policies and practices, as well as the commitment of the board of directors and management to actively implement these policies. There have been no significant deviations from the establishedguidelines.
6.Other important information that helps to understand the operation of the company's business integrity (such as the company's review and revision of its established code of conduct for business integrity, etc.): (1) The company complies with company law, securities trading law, commercial accounting law, relevant regulations for listed and OTC companies, and other applicable business laws and regulations as the basis for implementing integrity management. (2) To establish a robust internal system for processing and disclosing significant information, prevent improper information leakage, ensure consistency and accuracy in external information disclosures, and strengthen the prevention of insider trading, the company has developed the "Internal Handling and Prevention of Insider Trading Management Regulations." These regulations specify the guidelines for directors, executives, and employees in handling significant internal information. The "Code of Ethics" of the company prohibits directors and executives from seeking personal gains through the use of company assets, information, or their positions. Additionally, to ensure the implementation of integrity management, the company has established effective accounting and internal control systems. The internal audit department conducts regular audits to assess compliance with these systems. For business activities that pose a higher risk of dishonest behavior under Article 7, Paragraph 2 of the "Integrity Management Guidelines for Listed and OTC Companies" or within the company's scope of operations, relevant preventive measures have been implemented. In conclusion, the company has implemented the provisions of the "Integrity Management Guidelines for Listed and OTC Companies."

(9) Other significant information that enhances understanding of the company's corporate governance practices: None.

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(10) Continuing Education of Directors and Supervisors for the year 2022:

Job Title	Name	Date of Education	Organizer	Course Name	Study Hours
Chairman	LIN, I- CHIN	2022/12/28	Accounting Research and Development Foundation, Republic of China.	Common deficiencies in "financial report review" and practical analysis of important internalcontrol regulations	6 hours
Director	LIN, WEN- TENG	2022/11/09	Taiwan Institute of Sustainable Energy	2023 GCSF International Online Strive Towards Sustainable Deve	1 hours
Director	PAN, HSIN-JEN	2022/11/23	Accounting Research and Development Foundation, Republic of China.	Common deficiencies in "financial report review" and practical analysis of important internal control regulations	6 hours
Director	LIU,FENG- CHIN	2022/07/20	Taiwan Stock Exchange	Industry Theme Promotion Meeting for the Sustainable Development Roadmap	2 hours
		2022/10/25	Taiwan Institute of Financial Research and Training (TIFRT)	Corporate Governance Lecture Series	3 hours
Director	LIN, JUI- PING	2022/07/06	Accounting Research and Development Foundation, Republic of China.	Recent Corporate Governance Policies and Practical Analysis of Corporate Governance Evaluation	3 hours
		2022/08/08	Foundation for the Development of Accounting Research and Development, Republic ofChina	Compliance Audit Practices for the Operation of Audit Committees	6 hours
Independent Director	LIN, RUEY- TOU	2022/11/09	Taiwan Institute of Sustainable Energy	2023 GCSF International Online Strive Towards Sustainable Deve	1 hours
Independent Director	MAA KWO-JUH	2022/09/21	National Federation of Certified Public Accountants Associations, Republic ofChina	International Lease Transformation and Wealth Succession for Family Businesses	3 hours
		2022/11/11	Chinese Corporate Governance Association (CCGA)	Information Security Governance and Trends in Supply Chain Cybersecurity Sharing	3 hours
Independent Director	LEE, SHIUE- CHEN	2022/09/08	Foundation for the Development of Accounting Research and Development, Republic ofChina	Analysis of Financial Statement Fraud Cases and How to Identify Key Financial Information	3 hours
		2022/12/08	Securities and Futures Institute	Protection of Trade Secrets	3 hours
		2022/12/20	Taiwan Institute of Financial Research and Training (TIFRT)	Green Energy Innovation Business Model in Corporate Governance	3 hours

(11) Manager's Participation in Governance-Related Training and Education:

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Job Title	Name	Date of Education	Organizer	Course Name	Study Hours
General Manager	LIN, I- CHIN	2022/12/28	Foundation for the Development of Accounting Research and Development, Republic of China	Common deficiencies in "financial report review" and practical analysis of important internal control regulations	6 hours
Deputy General Manager and General Manager of the Electronic Business Division	LIN, JUI- PING	2022/06/16	Foundation for the Development of Accounting Research and Development, Republic of China	Further education for accounting supervisors of issuers, securities firms, and stock exchanges	3 hours
		2022/07/06	Foundation for the Development of Accounting Research and Development, Republic of China	Recent Corporate Governance Policies and Practical Analysis of Corporate Governance Evaluation	3 hours
		2022/08/08	Foundation for the Development of Accounting Research and Development, Republic of China	Compliance Audit Practices for the Operation of Audit Committees	6 hours

(12) Employee Training and Development:

The average training hours per employee in our company for the year 2022 was 7 hours.

The training courses were categorized into three major types, and their execution status is as follows:

Course Categories	Shift	Total Number of Participants	Total Training Hours
Financial	4	4	24
Management	8	8	39
Environment, Health, and Safety	6	6	55
Total	18	18	118
mation on personnel responsible for financial transparency and their relevant licenses as s the competent authority: License Number(personnel holding the licenses) Internal Audit Financial Basic Internal Control Competency Test 1

(13) Information on personnel responsible for financial transparency and their relevant licenses as specified

by the competent authority:

(14) Procedures for handling significant information

The company has established procedures for handling significant information, and all relevant departments and personnel involved in the processing and disclosure of such information are required to comply with the relevant procedures and legal regulations.

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(15) Disclosure of the implementation status of internal control system

1. Internal Control Statement

RECTRON LTD. Internal Control System Statement

Date: March 24, 2023

Based on the results of self-assessment, the Company hereby declares the following regarding its internal control system for the year 2022:

It is the responsibility of the Board of Directors and Managers of the Company to establish, implement and maintain the internal control system, which the company has established. The purpose of the system is to achieve the goals of effectiveness and efficiency in operations (including profitability, performance, and safeguarding of assets), reliable reporting with timeliness, transparency, and compliance with relevant regulations and laws, providing reasonable assurance.
The internal control system has its inherent limitation, no matter how perfect the design is, the effective internal control system can only provide reasonable assurance for the above three objectives; moreover, the effectiveness of the internal control system may change with the change of environment and situation. However, the internal control system of the Company is provided with a self-monitoring mechanism, and the company will take corrective actions once the absence is identified.
The Company shall judge whether the design and implementation of the internal control system are effective or not according to the judgment items of the effectiveness of the internal control system stipulated in the "Guidelines for the Establishment of Internal Control System by Public Owned Corporations" (hereinafter referred to as " Handling Guidelines"). The internal control system assessment criteria adopted in the "handling guidelines" are based on the management control process, which divides the internal control system into five components: 1. Control Environment, 2. Risk Assessment, 3. Control Activities, 4. Information and Communication, and 5. Monitoring Activities. Each component includes a number of items. For the foregoing items, please refer to the provisions of "Handling Guidelines".
The Company has adopted the above internal control system assessment criteria to evaluate the effectiveness of the design and implementation of the internal control system.
Based on the assessment results mentioned above, the Company believes that its internal control system as of December 31, 2022 (including the supervision and management of subsidiaries) is effectively designed and implemented to understand the degree of achieving operational effectiveness and efficiency goals, provide reliable, timely, transparent, and compliant reporting, and reasonably ensure the achievement of the aforementioned goals.
This statement will become a major part of the Company's annual report and public disclosure. If any of the contents disclosed above is found to be false, with concealment or other illegal matters, it will involve legal liabilities under Articles 20, 32, 171 and 174 of the Securities and Exchange Act.
This statement has been approved by the Board of Directors of the Company on March 24, 2023. Among the 8 directors present, there were no objections, and all agreed with the content of this statement. This statement is hereby declared.

RECTRON LTD.

Chairperson: Lin, I-Chin

General Manager: Lin, I-Chin

67 -
The Company has not commissioned an accountant to conduct a special review of the internal control

system: None.

(16) In the most recent fiscal year and up until the date of printing this annual report, there have been no penalties imposed on the Company or its insiders in accordance with the law, and there have been no major deficiencies or improvements related to penalties imposed by the Company on its insiders for violations of internal control system provisions: None.
68 -

Meeting date

Significant Resolutions of Shareholders' Meeting

2022.06.23

1. Date: June 23, 2022 (Thursday) at 9:00 AM
2. Venue: No. 71 Zhongshan Road, Tucheng District, New Taipei City (3rd Floor Auditorium)
3. Attendance: A total of 95,542,860 shares were present or represented by proxy, accounting for
57.45% of the total issued shares of the company, which is 166,302,881 shares.
4. Attendance: Directors LIU, FENG-CHIN and LIN, JUI-PING were present in person.
5. Important Resolutions:
(1) Reporting Matters
1. 2021 annual operating report.
2. 2021 audit report by the supervisor.
3. 2021 employee compensation and director's remuneration report.
(2) Acknowledgment Matters
1. 2021 annual operating report and financial statements (including consolidated financial
statements) case.
Resolution: The voting results for this case are as follows: in favor votes account for
99.87% of the voting rights present at the shareholders' meeting. The original
proposal ispassed accordingto the votingresults.
Item
Attendance of
voting
shareholders
Votes in
favor
Votes
against
Invalid
votes
Abstentions/
Not voted
Voting
rights
95,542,860
95,420,977
Votes in
favor
through
electronic
voting:
87,915,782
46,136
Votes
against
through
electroni
c voting:
46,136
0
75,747
Abstentions
through
electronic
voting:
68,956
Proport
ion
100.00%
99.87%
0.05%
0.00%
0.08%
Implementation: The resolution has been fully executed according to the decision.
2. The distribution of earnings for the fiscal year 2021.
Resolution: The voting results for this case are as follows: in favor votes account for
99.88% of the voting rights present at the shareholders' meeting. The original
proposal is passed according to the voting results.
Item
Attendance of
voting
shareholders
Votes in
favor
Votes
against
Invalid
votes
Abstentions/
Not voted
Voting
rights
95,542,860
95,433,977
Votes in
favor
through
electronic
voting:
87,928,782
47,136
Votes
against
through
electroni
c voting:
47,136
0
61,747
Abstentions
through
electronic
voting:
54,956
Proport
ion
100.00%
99.88%
0.05%
0.00%
0.07%
Implementation: The resolution has been fully executed. The ex-dividend date for the
distribution has been set as July 29, 2022, and the cash dividend will be distributed
on August 15, 2022.

69 -
(3) Discussion items
Amendment of the company's "Articles of Incorporation" case. Resolution: The voting results for this case are as follows: in favor votes account for 99.88% of the voting rights present at the shareholders' meeting. The original proposal is passed according to the voting results.

	Item	Attendance of	Votes in	Votes	Invalid	Abstentions/N
		voting	favor	against	votes	ot voted
		shareholders
	Voting	95,542,860	95,428,977	48,136	0	65,747
	rights		Votes in	Votes		Abstentions
			favor	against		through
			through	through		electronic
			electronic	electronic		voting:
			voting:	voting:		58,956
			87,923,782	48,136
	Proporti	100.00%	99.88%	0.05%	0.00%	0.07%
	on
Review of Implementation Status: The resolution has been fully executed, and the implementation
has been successful.

Amendment of the company's "Asset Acquisition or Disposal Procedures" case. Resolution: The voting results for this case are as follows: in favor votes account for 99.88% of the voting rights present at the shareholders' meeting. The original proposal is passed according to the voting results.

	Item	Attendance of	Votes in	Votes	Invalid	Abstentions/N
		voting	favor	against	votes	ot voted
		shareholders
	Voting	95,542,860	95,428,977	48,136	0	65,747
	rights		Votes in	Votes		Abstentions
			favor	against		through
			through	through		electronic
			electronic	electronic		voting:
			voting:	voting:		58,956
			87,923,782	48,136
	Proporti	100.00%	99.88%	0.05%	0.00%	0.07%
	on
Review of Implementation Status: The resolution has been fully executed, and the implementation
has been successful.

Amendment of the company's "Endorsement and Guarantee Procedures" case. Resolution: The voting results for this case are as follows: in favor votes account for 99.88% of the voting rights present at the shareholders' meeting. The original proposal is passed according to the voting results.


Item	Attendance of voting shareholders	Votes in favor	Votes against	Invalid votes	Abstentions/N ot voted
Voting rights	95,542,860	95,432,658 Votes in favor through electronic voting: 87,927,463	49,136 Votes against through electronic voting: 49,136	0	61,066 Abstentions through electronic voting: 54,275
Proporti on	100.00%	99.88%	0.05%	0.00%	0.07%

70 -
Amendment of the company's "Operational Procedures for Lending Funds to Others" case. Resolution: The voting results for this case are as follows: in favor votes account for 99.88% of the voting rights present at the shareholders' meeting. The original proposal is passed according to the voting results.

results.
Item	Attendance of voting shareholders	Votes in favor	Votes against	Invalid votes	Abstentions/N ot voted
Voting rights	95,542,860	95,432,658 Votes in favor through electronic voting: 87,927,463	49,136 Votes against through electronic voting: 49,136	0	61,066 Abstentions through electronic voting: 54,275
Proporti on	100.00%	99.88%	0.05%	0.00%	0.07%

Review of Implementation Status: The resolution has been fully executed, and the implementation has been successful.

Amendment of the company's "Rules of Shareholders' Meeting Proceedings" case. Resolution: The voting results for this case are as follows: in favor votes account for 99.88% of the voting rights present at the shareholders' meeting. The original proposal is passed according to the voting results.

results.
Item	Attendance of voting shareholders	Votes in favor	Votes against	Invalid votes	Abstentions/N ot voted
Voting rights	95,542,860	95,432,657 Votes in favor through electronic voting: 87,927,462	49,137 Votes against through electronic voting: 49,137	0	61,066 Abstentions through electronic voting: 54,275
Proporti on	100.00%	99.88%	0.05%	0.00%	0.07%

Review of Implementation Status: The resolution has been fully executed, and the implementation has been successful.

Amendment of the company's "Rules for the Election of Directors and Supervisors" case. Resolution: The voting results for this case are as follows: in favor votes account for 99.88% of the voting rights present at the shareholders' meeting. The original proposal is passed according to the voting results.

results.
Item	Attendance of voting shareholders	Votes in favor	Votes against	Invalid votes	Abstentions/N ot voted
Voting rights	95,542,860	95,433,466 Votes in favor through electronic voting: 87,928,271	49,328 Votes against through electronic voting: 49,328	0	60,066 Abstentions through electronic voting: 53,275
Proporti on	100.00%	99.88%	0.05%	0.00%	0.07%

Review of Implementation Status: The resolution has been fully executed, and the implementation has been successful.

71 -

6. Election of Directors Proposal. Election Results: Identity Candidate Names Number of Votes Elected Director Juiye Enterprise Co., Ltd. Representative: LIN,I-CHIN 117,707,561 right Director Juiye Enterprise Co., Ltd. Representative: LIN,WEN-TENG 95,143,483 right Director Juiye Enterprise Co., Ltd. Representative: Pan Xinren. 95,143,775 right Director Juiye Enterprise Co., Ltd. Representative: LIN,JUI-PING 95,106,302 right Director Juiye Enterprise Co., Ltd. Representative: LIU,FENG-CHIN 95,170,766 right Independent Director LIN, RUEY-TOU 87,732,175 right Independent Director MAA KWO-JUH 87,684,270 right Independent Director LEE, SHIUE-CHEN 87,651,668 right 7. Resolution to Lift Restrictions on New Directors' Non-Competition Agreement. Resolution: The voting results for this case are as follows: in favor votes account for 99.82% of the voting rights present at the shareholders' meeting. The originalproposal ispassed accordingto the votingresults. Item Attendance of voting shareholders Votes in favor Votes against Invalid votes Abstentions/N ot voted Voting rights 95,542,860 95,376,148 Votes in favor through electronic voting: 87,870,953 39,008 Votes against through electronic voting: 39,008 0 127,704 Abstentions through electronic voting: 120,913 Proporti on 100.00% 99.82% 0.04% 0.00% 0.14% Review of Implementation Status: The resolution has been fully executed, and the implementation has been successful.
Identity	Candidate Names	Number of Votes Elected
Director	Juiye Enterprise Co., Ltd. Representative: LIN,I-CHIN	117,707,561 right
Director	Juiye Enterprise Co., Ltd. Representative: LIN,WEN-TENG	95,143,483 right
Director	Juiye Enterprise Co., Ltd. Representative: Pan Xinren.	95,143,775 right
Director	Juiye Enterprise Co., Ltd. Representative: LIN,JUI-PING	95,106,302 right
Director	Juiye Enterprise Co., Ltd. Representative: LIU,FENG-CHIN	95,170,766 right
Independent Director	LIN, RUEY-TOU	87,732,175 right
Independent Director	MAA KWO-JUH	87,684,270 right
Independent Director	LEE, SHIUE-CHEN	87,651,668 right

72 -

(17) Important resolutions of the shareholders' meeting and the board of directors for the most recent fiscal year up to the date of printing of the annual report:

Meeting date

Important decisions of the Board of Directors

18th session
17th time
2022.03.31

(1) The company's financial statements and annual business report for the year 2021 were
presented for review.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved and will be submitted for recognition at the
shareholders' meeting.
(2) The Company's declaration on internal control system for the year 2021 is submitted
for approval.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(3) Evaluation of the independent auditor's independence, to be discussed.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(4) Whether the outstanding receivables exceeding the normal credit period as of
December 31, 2021, are considered as loans and advances, shall be discussed by the
Board of Directors.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(5) Resolution: The proposal regarding the loan to the subsidiary company, CHU-TING
ENTERPRISE CO., LTD.., is submitted for public voting.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(6) Resolution: The report on the self-assessment or peer evaluation of the members of
the Board of Directors for the year 2021 is submitted for public review.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(7) Proposed amendment to certain articles of the company's bylaws is submitted for
discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for
public resolution at the shareholders' meeting.
(8) Proposed amendment to certain articles of the company's "Acquisition or Disposal of
Assets Processing Procedures" is submitted for discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for
public resolution at the shareholders' meeting.
(9) Proposed amendment to the company's "Endorsement and Guarantee Procedures" is
submitted for discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for
public resolution at the shareholders' meeting.

73 -

18th session
17th time
2022.03.31

(10) Proposed amendment to the company's "Operating Procedures for Lending Funds to
Others" is submitted for discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for
public resolution at the shareholders' meeting.
(11) Proposed amendment to the company's "Board Meeting Rules" is submitted for
discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(12) Proposed amendment to the company's "Shareholders' Meeting Rules" is submitted
for discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for
public resolution at the shareholders' meeting.
(13) Proposed amendment to the company's "Director and Supervisor Election
Procedures" is submitted for discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for
public resolution at the shareholders' meeting.
(14) Proposal to establish an Audit Committee and formulate the Organizational
Regulations of the Audit Committee is submitted for discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(15) Proposal for the distribution of earnings for the fiscal year 2021 is submitted for
discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved and will be submitted for recognition at the
shareholders' meeting.
(16) Proposal for the distribution of employee compensation and director's remuneration
for the fiscal year 2021 is submitted for discussion.
Resolution: Directors LIN, I-CHIN, LIN, WEN-TENG, PAN, HSIN-JEN, LIU,
FENG-CHIN, LIN, JUI-PING, and independent director LIN, RUEY-TOU,
MAA KWO-JUH are related parties in this matter. After abstaining from
voting due to conflicts of interest, the resolution was unanimously approved
by all attending directors upon the Chairman's consultation and will be
reported to the shareholders' meeting.
(17) Proposal for the election of directors is submitted for discussion.
Resolution: The proposal is approved by all attending directors upon the Chairman's
consultation and will be presented for election at the shareholders' meeting.
(18) Discussion on the list of nominated director candidates, including independent
directors, is proposed.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(19) Proposal to lift the restriction on new directors regarding non-competition is
submitted for discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for public
resolution at the shareholders' meeting.
(20) Proposal to establish matters related to the 2022 Shareholders' Meeting is submitted
for discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that theproposal was approved unanimously.

Meeting date

Important decisions of the Board of Directors

74 -

	(21) Proposal to establish the acceptance period and venue for the submission of proposals and nominations by shareholders holding 1% of the shares for the 2022 Shareholders' Meeting is submitted for discussion. Resolution: After consulting with all attending directors, the Chairman confirmed that theproposal was approved unanimously.
18th session 18th time 2022.05.16	(1) The financial statements for the first quarter of 2022 for the company are submitted for review. Resolution: After consulting with all attending directors, the Chairman confirmed that the proposal was approved unanimously. (2) Whether the outstanding receivables exceeding the normal credit period as of March 31, 2022, are considered as loans and advances, shall be discussed by the Board of Directors. Resolution: After consulting with all attending directors, the Chairman confirmed that theproposal was approved unanimously.
19th session 1st time 2022.06.23	(1) Election of Chairman of the Board Proposal. Resolution: All attending directors unanimously recommend Ms. Lin I-Chin to continue serving as the Chairman of the Board effective from June 23, 2022.
19th session 2nd time 2022.07.06	(1) Establishment of Matters Related to Ex-dividend Date for 2022, Proposal for Discussion. Resolution: After consulting with all attending directors, the Chairman confirmed that the proposal was approved unanimously. (2) Appointment of Company Spokesperson and Deputy Spokesperson, Proposal for Discussion. Resolution: After consulting with all attending directors, the Chairman confirmed that the proposal was approved unanimously. (3) Appointment of Remuneration Committee Members, Proposal for Resolution. Appoint independent director Mr. LIN, RUEY-TOU as a member of the Remuneration Committee, the qualification is confirmed by the Chairman after consulting all attending directors, and there is no objection to the proposal. (Due to Mr. LIN, RUEY-TOU being the subject of appointment, he abstains from participating in the discussion and voting during the qualification review in this case.) Appoint independent Mr. MAA KWO-JUH as a member of the Remuneration Committee, the qualification is confirmed by the Chairman after consulting all attending directors, and there is no objection to the proposal. (Due to Mr. MAA KWO-JUH being the subject of appointment, he abstains from participating in the discussion and voting during the qualification review in this case.) Appoint Mr. LEE, SHIUE-CHEN as a member of the Remuneration Committee, the qualification is confirmed by the Chairman after consulting all attending directors, and there is no objection to the proposal. (Due to Mr. LEE, SHIUE-CHEN being the subject of appointment, he abstains from participating in the discussion and voting during the qualification review in this case.) (4) The proposal to purchase Directors, Supervisors, and Managers' liability insurance will be submitted to the Board of Directors for retrospective approval. Resolution: After consulting with all attending directors, the Chairman confirmed that the proposal was approved unanimously. (5) Discussion on the Application for Extension of Loan Limit for Chang'an Branch of Taiwan Shin Kong Commercial Bank. Resolution: After consulting with all attending directors, the Chairman confirmed that the proposalwasapproved unanimously.

75 -

19th session
3rd time
2022.08.15

(1) The financial statements for the second quarter of the company's fiscal year 2022 will
be presented for deliberation.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(2) The matter of whether the outstanding receivables beyond the normal credit period
as of June 30, 2022, are considered loans in nature will be discussed in the Board of
Directors meeting.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposalwasapproved unanimously.

19th session
4th time
2022.11.10

(1) The financial statements for the third quarter of 2022 are submitted for review.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(2) The matter regarding the outstanding receivables exceeding the normal credit period
as of September 30, 2022, and whether they should be classified as loans and
advances, is presented for discussion at the board meeting.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(3) Discussion on the Amendment of the "Internal Handling Procedures for Material Non-
public Information" of the Company.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(4) The proposal for a 100% cash capital increase in the subsidiary company, CHU-TING
ENTERPRISE CO., LTD.. is submitted for discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposalwasapproved unanimously.

76 -

19th session
5th time
2022.12.21

(1) Proposal for the 2023 Operational Plan, to be put to a Shareholder Vote.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(2) The proposed audit plan for the fiscal year 2023 is submitted for public resolution.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(3) Proposed amendment to the Company's "Internal Control System" and "Internal
Audit Implementation Regulations," for deliberation.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(4) The proposal to change the auditor is submitted for public resolution.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(5) Evaluation of the independent auditor's independence, to be discussed.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(6) Proposal to establish general principles for the pre-approval policy of non-assurance
services and submit for discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(7) The proposal to establish the remuneration plan for the directors and executives of
the company is submitted for resolution.
Resolution: Directors' Compensation. Directors LIN, I-CHIN, LIN, WEN-TENG,
PAN, HSIN-JEN, LIU, FENG-CHIN, LIN, JUI-PING, and Independent
Directors LIN, RUEY-TOU, MAA KWO-JUH, and LEE, SHIUE-CHEN are
related parties in this matter. Except for Director LIN, WEN-TENG, all other
directors abstained from voting due to conflicts of interest. The resolution was
approved by the Chairman after consulting with all attending directors.
Management's Compensation. LIN, I-CHIN and LIN, JUI-PING are related
parties in this matter. They abstained from voting due to conflicts of interest.
The resolution was approved by the Chairman after consulting with all
attending directors.
(8) Discussion on the Lease of 4th Floor, Shihlin District Building, Taipei City.
Resolution: The lease price for this case is set at NT$1,350 per square meter per
month, which is not lower than the prevailing market rate in the vicinity. There is no
risk of harm to the company's interests. Therefore, there is no need to abstain from
voting due to personal interests. The resolution was approved by the Chairman after
consulting with all attending directors.

77 -

19th session
6th time
2023.03.24

(1) The Company's operating report and financial statements for the year 2022 are
submitted for review.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved and will be submitted for recognition at the
shareholders' meeting.
(2) The Company's declaration on internal control system for the year 2022 is submitted
for approval.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(3) Evaluation of the independent auditor's independence, to be discussed.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(4) Resolution: The Board of Directors will discuss whether the outstanding receivables
beyond the normal credit period as of December 31, 2022, should be classified as
loans.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(5) Resolution: The performance evaluation and self-assessment report of the board
members, board of directors, and functional committees for the year 2022 will be
presented for public review.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(6) Resolution: The proposed amendment to the "Board Meeting Rules" of the company
will be presented for deliberation.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(7) Proposal to amend certain articles of the company's "Articles of Incorporation" for
discussion.
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for
public resolution at the shareholders' meeting.
(8) Proposal for the distribution of profits for the fiscal year 2022 for discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved and will be submitted for recognition at the
shareholders' meeting.
(9) Proposal for the distribution of employee compensation and director's remuneration
for the fiscal year 2022 is submitted for discussion.
Resolution: Approved unanimously by all attending directors upon consultation by
the Chairman, and to be reported to the shareholders' meeting.
(10) By-election of one independent director position for discussion
Resolution: The proposal is approved by all attending directors upon the Chairman's
consultation and will be presented for election at the shareholders' meeting.
(11) Presentation of the list of nominated candidates for the by-election of an independent
director position for discussion.
Resolution: After consulting with all attending directors, the Chairman confirmed
that the proposal was approved unanimously.
(12) Discussion on lifting the restriction on the new independent director regarding non-
competition.

78 -
Resolution: After consultation with all attending directors, the Chairman obtained
unanimous agreement for the proposed amendment, and it is now submitted for public resolution at the shareholders' meeting.
(13) Proposal to establish matters related to the 2023 Shareholders' Meeting is submitted for discussion. Resolution: After consulting with all attending directors, the Chairman confirmed that the proposal was approved unanimously.
(14) Proposal to establish the acceptance period and venue for the submission of proposals and nominations by shareholders holding 1% of the shares for the 2023 Shareholders' Meeting is submitted for discussion. Resolution: After consulting with all attending directors, the Chairman confirmed that the proposal was approved unanimously.

(18) In the recent fiscal year and up to the printing date of the annual report, there were no dissenting opinions, recorded statements, or written declarations from directors or supervisors regarding significant resolutions passed by the Board of Directors.

(19) Summary of resignations and dismissals of company personnel during the recent fiscal year up to the printing date of the annual report:

March 31, 2023

				March 31, 2023
JOB TITLE	NAME	DATE OF APPOINTMENT	DATE OF TERMINATION	REASON FOR RESIGNATION OR DISMISSAL
Supervisor	LIN, LI- CHUN	2016.06.28	2022.06.23	In line with the establishment of the Audit Committee, replacing the position of supervisor.

79 -

4.Information on Auditor's Remuneration

(1) Accounting Firm Fee Information Range Table (Please check the applicable range or enter the amount)

Amount unit: NTD in thousands.

Name of accounting firm	Name of the accountant	Auditor's review period	Audit Fees	Non-Audit Fees	Total	Rema rks
KPMG United Accounting Firm.	CHEN, TSUNG-CHE	2022.01.01~2022.0 9.30	2,838	735	3,578	Note 1
	CHIH, SHIH- CHIN	2022.10.01~2022.1 2.31
	LAI, LI-CHEN	2022.01.01~2022.1 2.31

Note 1: Due to internal operations and personnel adjustments within the accounting firm, starting from the fourth quarter of 2022, Chen, Tsung-Che, CPA was replaced by Chih, Shih-Chin, CPA. Note 2: The non-audit fees include a transfer pricing report fee of 225 thousand NTD, a tax certification fee of 470 thousand NTD, a salary information verification fee of 30 thousand NTD, and a business registration service fee of 10 thousand NTD.

(1) Cases where the non-audit fees paid to the signing accountant, the accounting firm to which the signing accountant belongs, and its affiliated enterprises account for more than one-fourth of the audit fees: Primarily, the non-audit fees include a transfer pricing report fee of 225 thousand NTD, a tax certification fee of 470 thousand NTD, a salary information verification fee of 30 thousand NTD, and a business registration service fee of 10 thousand NTD.
(2) In the case of changing accounting firms and a decrease in audit fees paid for the current fiscal year compared to the previous fiscal year, the amount and proportion of the decrease in audit fees, as well as the reasons, should be disclosed: There are no such cases.
(3) In the case of a reduction in audit fees of more than 10 percent compared to the previous fiscal year, the amount and proportion of the decrease in audit fees, as well as the reasons, should be disclosed: There are no such cases.
80 -

5.Information on Change of Auditors `：`

(1) About the previous CPAs

out the previous CPAs
Date ofchange	November 21,2022
Reasons and explanation for the change	Internal adjustments within the accounting firm.
The explanation is provided by the appointing party or the accountant. Termination or refusal of appointment.	Involved parties Circumstances		The accountant.	The appointing party.
	Voluntarytermination		Not applicable Rotation within the firm
	Not appointed anymore.
The reasons for issuing opinions other than Unqualified Opinions in therecent two years		None
Differences of opinion with the issuer	Yes	Accounting principles andpractices
		Disclosure of financialstatements
		Auditscopeand steps
		Others
	None
	Explanation : Not applicable
Other matters to be disclosed (Disclosure requirements for the first through fourth items of the first objective under Article 10, Paragraph6 of this standard.)	Not applicable

(2) Regarding the name of the

gardingthe name of the
succeedingaccountingfirm.	KGMPUnitedAccountingFirm.
Name of CPA	CHIH,SHIH-CHIN,LAI,LI-CHEN
Date of appointment	November 21,2022
Consulting results regarding the accounting method or principle applied on specific transactions and the possible opinions on the financial reports beforeappointment	Not applicable
Different opinions from the succeeding CPAs as comparedtothe previous CPAsinwriting	Not applicable

(3) Former auditor's response regarding the matters specified in Article 10, Section 6, Subparagraphs 1 and 2: Not applicable.

6. The Chairman, General Manager, or individuals responsible for finance or accounting management of the company who have served in the affiliated firm of the signing auditor or its related entities in the past year: None.

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7. Changes in the transfer of share ownership and share pledge by directors, supervisors, managers, and shareholders with a stake exceeding 10% during the recent fiscal year and up to the date of printing the annual report. (1) Changes in the Shareholding of Directors, Supervisors, Managers and Major Shareholders

Job Title	Name	Year 2022	Year 2022	For the fiscal year ending on March31,2023.	For the fiscal year ending on March31,2023.
		Increase (decrease) in the number of shares held.	Increase (decrease) in the number of pledged shares	Increase (decrease) in the number of sharesheld.	Increase (decrease) in the number of pledged shares
Director Independe nt Director Independe nt Director Independe nt Director Superviso r Manager Manager Major sharehold er	Juiye Enterprise Co., Ltd. Representative: LIN, I-CHIN Representative: LIN, WEN- TENG Representative: PAN, HSIN- JEN Representative: LIU, FENG- CHIN Representative: LIN, JUI- PING LIN, RUEY-TOU MAA KWO-JUH LEE, SHIUE-CHEN LIN, LI-CHUN LIN, I-CHIN LIN, JUI-PING Bigwig Perfect International Co., Ltd.	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -	- - - - - - - - - - - -

Note: Mr. Lin, Li-Chun, the supervisor, was removed from office on June 23, 2022.

(2) Share transfer information: None.

(3) Share pledge information: None.

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8. Information on related parties or relatives within the second degree of kinship among the top ten shareholders in terms of shareholding percentage:

Information on the relationships among the top ten shareholders in terms of shareholding percentage.

Name (Note 1)	Individual hold shares.	Individual hold shares.	Shares Held by Spouses and Minor Children	Shares Held by Spouses and Minor Children	Total Shares Held in the Name of Other Persons	Total Shares Held in the Name of Other Persons	The titles or names and relationships of the top ten shareholders who are related persons, spouses, or relatives within the second degree of kinship. (Note 3)	The titles or names and relationships of the top ten shareholders who are related persons, spouses, or relatives within the second degree of kinship. (Note 3)
	Number of Shares	Shareh olding Ratio %	Nu mb er of Sha res	Share holdi ng Ratio %	Num ber of Shar es	Share holdi ng Ratio %	Name (Or Name)	Relationshi p
Juiye Enterprise Co., Ltd.	42,788,288	25.73	-	-	-	-	Corporat e directors.	-
Bigwig Perfect International Co., Ltd.	38,141,792	22.94	-	-	-	-	-	-
Juyang Xingye Co.,Ltd	7,505,195	4.51	-	-	-	-	-	-
New Multi Investment Co., Ltd.	3,695,000	2.22
WU, TSUNG- HSI	3,248,000	1.95	-	-	-	-	-	-
CHEN, MEI- CHEN	2,451,264	1.47
WANG, SHIH- HAO	1,682,976	1.01
LIN, LI-CHUN	1,500,000	0.90
CHEN, YU- CHIEN	1,434,507	0.86	-	-	-	-	-	-
HUANG, PING- TSE	1,300,000	0.78	-	-	-	-	-	-

Note 1: All top ten shareholders, including corporate shareholders, should be listed, with the names of the corporate shareholders and their representatives listed separately.

Note 2: The calculation of shareholding percentage should include shares held under one's own name, as well

as those held under the name of one's spouse, minor children, or held by others on one's behalf.

Note 3: The disclosure of relationships between the shareholders listed above, including both corporate and natural persons, should be made in accordance with the disclosure requirements of the financial reporting standards for issuers.
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9. The shares held by the Company, its Directors, Supervisors, managers, and enterprises directly or indirectly controlled by the Company in the same reinvested enterprise, and the comprehensive shareholding ratio calculated on a consolidated basis.

Comprehensive ownership percentage.

As of March 31, 2023 (unit: shares; %)

Investment in other businesses.	Investments made by the company.	Investments made by the company.	Investments of Directors, Supervisors, Managers and Businesses Directly or IndirectlyControlled	Investments of Directors, Supervisors, Managers and Businesses Directly or IndirectlyControlled	Comprehensive investments.	Comprehensive investments.
	Number of Shares	Sharehold ingRatio	Number of Shares	Sharehold ingRatio	Number of Shares	Sharehold ingRatio
Rectron Electronic Enterprise Inc.(USA) Rectron Electronics (China) Co., Ltd. CHU-TING ENTERPRISE CO., LTD.	205,000 20,000 13,000,000	100.00% 100.00% 100.00%	- - -	- - -	205,000 20,000 13,000,000	100.00% 100.00% 100.00% 100.00%
Zhejiang Rectron Electronics Co., Ltd (Note 2)	0	0.00%	398,900 (Note 1)	100.00%	398,900 (Note 1)

Note 1: The investment amount is disclosed in thousands of New Taiwan Dollars.

Note 2: The company has entrusted investment in mainland China companies to Rectron China Investments.

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4. Funding Status

1. Share Capital and Shares

(1) Source of Share Capital

Year and month	Iss ue Pri ce:	Authorized Capital	Authorized Capital	Paid-In Capital	Paid-In Capital	Note	Note
		Number of Shares	Amount	Number of Shares	Amount	Source of Share Capital	Equity- Settled Share-Based Payment	Others
87.04	10	170,000,000	1,700,000,000	107,219,023	1,072,190,230	Cash capital increase 600,000,000	-	-
1999.07.28	10	300,000,000	3,000,000,000	239,384,729	2,393,847,290	Capital increase by retained earnings 107,219,020 Capital reserve to capital increase 214,438,040 Cash increase in capital. 1,000,000,000	-	-
2000.09.21	10	400,000,000	4,000,000,000	277,000,000	2,770,000,000	Capital increase by retained earnings 98,147,740 Capital reserve to capital increase 272,898,590 Employee Bonus Transferred to Capital Increase 5,106,380	-	-
2003.11.25	10	400,000,000	4,000,000,000	186,975,000	1,869,750,000	Capital reduction. 900,250,000	-	-
2005.04.22	10	400,000,000	4,000,000,000	236,975,000	2,369,750,000	Private placement cash increase in capital. 500,000,000	-	-
2006.11.21	10	400,000,000	4,000,000,000	286,975,000	2,869,750,000	Private placement cash increase in capital. 500,000,000	-	-
2007.09.27	10	400,000,000	4,000,000,000	203,178,300	2,031,783,000	Capital reduction. 837,967,000	-	-
2008.09.20	10	400,000,000	4,000,000,000	148,128,300	1,481,283,000	Capital reduction. 550,500,000	-	-
2008.12.29	10	400,000,000	4,000,000,000	208,128,300	2,081,283,000	Private placement cash increase in capital. 600,000,000	-	-
2009.10.10	10	400,000,000	4,000,000,000	157,328,300	1,573,283,000	Capital reduction. 508,000,000	-	-

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2011.08.27	10	400,000,000	4,000,000,000	160,002,881	1,600,028,810	Capital increase by retained earnings 26,745,810
2014.11.03	10	400,000,000	4,000,000,000	161,302,881	1,613,028,810	Capital increase by retained earnings 13,000,000	-		-
2015.08.27	10	400,000,000	4,000,000,000	166,302,881	1,663,028,810	Capital increase by retained earnings 50,000,000

Shares Category		Approved Capital Stock						R e m a r k s
		Outstanding shares in circulation.		Unissued shares.		Total
Common Share		166,302,881		233,697,119		400,000,000

Summary declaration system-related information: Not applicable.

(2) Shareholding structure

April 18, 2023

Shareholder Structure Number	Governmen t institutions.	Financial institutions.	Other Corporations	Individuals.	Foreign institutions and foreigners.	Total
Number of Persons	0	2	26	22,501	25	22,554
Number of Shares Held	0	3,469	93,459,557	71,290,084	1,549,771	166,302,881
Shareholding Ratio	0%	0.00%	56.20%	42.87%	0.93%	100%

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(3) Ownership Structure

1. Distribution of Ordinary Shares

1. Distribution of Ordinary Shares	1. Distribution of Ordinary Shares	1. Distribution of Ordinary Shares	1. Distribution of Ordinary Shares
April 18,2023
Shareholding Levels	Number of Shareholders	Number of Shares Held	Shareholding Ratio
1 to 999	13,605	2,662,599	1.60%
1,000 to 5,000	7,099	14,889,057	8.95%
5,001 to 10,000	991	8,091,129	4.87%
10,001 to 15,000	259	3,318,924	2.01%
15,001 to 20,000	183	3,460,058	2.08%
20,001 to 30,000	147	3,770,220	2.27%
30,001 to 40,000	67	2,450,113	1.47%
40,001 to 50,000	51	2,409,303	1.45%
50,001 to 100,000	81	5,792,215	3.48%
100,001 to 200,000	37	4,912,634	2.95%
200,001 to 400,000	12	3,332,692	2.00%
400,001 to 600,000	8	3,695,556	2.22%
600,001 to 800,000	1	635,027	0.38%
800,001 to 1,000,000	1	838,332	0.50%
1,000,001 and above	12	106,045,022	63.77%
Total	22,554	166,302,881	100.00%

Distribution of Preferred Shares: As of now, the company has not issued any preferred shares.
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(4) List of Major Shareholders

List of Major Shareholders
Shares Name of Major Shareholders	Number of Shares Held	Percentage of Shareholding
Juiye Enterprise Co., Ltd.	42,788,288	25.73%
Bigwig Perfect International Co., Ltd.	38,141,792	22.94%
Juyang Xingye Co., Ltd	7,505,195	4.51%
New Multi Investment Co., Ltd.	3,695,000	2.22%
WU, TSUNG-HSI	3,248,000	1.95%
CHEN, MEI-CHEN	2,451,264	1.47%
WANG, SHIH-HAO	1,682,976	1.01%
LIN, LI-CHUN	1,500,000	0.90%
CHEN, YU-CHIEN	1,434,507	0.86%
HUANG, PING-TSE	1,300,000	0.78%

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(5) Per Share Market Price, Net Asset Value, Earnings, Dividends, and Related Information.

Per Share Market Price, Net Asset Value, Earnings, and Dividends Data

Item	Fiscal Year	Fiscal Year	Year 2021	Year 2022	As of March 31, 2023, for the current fiscalyear
Per Share Market Price	Highest		26.30	20.45	19.7
	Lowest		14.60	14.15	16.5
	Average		18.92	16.74	18.4
Per Share Net Asset Value (Note 1)	BeforeDistribution		10.81	11.12	10.36
	After Distribution (Note 2)		10.21	Note 2	10.49
Per Share Earnings	Weighted Average Shares Outstanding		166,302,881	166,302,881	166,302,881
	Per Share Earnings		0.51	1.06	0.06
Dividends per Share	Cash Dividends		100,000,000	Note 2	-
	Free Stock Dividends	Earnings Stock Dividends	-	-	-
		Capital Surplus Stock Dividends	-	-	-
	Accumulated Unpaid Dividends		-	Note 2	-
Investment Return Analysis	Returnon Equity (Note 3)		37.10	15.79	306.67
	Return on Assets(Note 4)		31.46	Note 2	-
	Cash Dividend Yield (%) (Note 5)		3.18	Note 2	-

Note 1: The figures are based on the year-end issued shares and the distribution approved at the subsequent shareholders' meeting.

Note 2: The profit distribution plan for 2022 was approved by the board of directors on March 24, 2023, but it has not yet been ratified by the 2023 shareholders' meeting.

Note 3: P/E ratio = Average closing price per share for the year / Earnings per share.

Note 4: Payout ratio = Average closing price per share for the year / Cash dividend per share.

Note 5: Dividend yield = Cash dividend per share / Average closing price per share for the year.

(6) Dividends and Distribution Status

The dividend policy of the company is as follows:

In accordance with the company's articles of incorporation, if there is a surplus in the annual financial statements after payment of all taxes and the offsetting of prior-year losses as required by law, ten percent (10%) of the remaining balance shall be allocated to the legal reserve for retained earnings. However, this requirement does not apply when the legal reserve for retained earnings has reached the total capital of the company.

If necessary, the board of directors may propose the allocation of special retained earnings, which are adjusted according to legal requirements or business needs, and retain them accordingly. After considering these factors, any remaining profits can be distributed. The distribution percentages are as follows:

(1) Employee compensation ratio shall not be lower than one percent (1%).

(2) Compensation for directors and supervisors shall not exceed two percent (2%).

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(3) The remaining profits shall be determined by the board of directors and proposed to the shareholders' meeting for approval.

The distribution of employee bonuses in the form of stock dividends may include eligible employees of subsidiary companies, and the allocation ratio shall be determined by the board of directors.

As the company is in a period of growth, considering business expansion, long-term financial planning, and meeting shareholders' demand for cash flow, the annual cash dividend shall not be less than ten percent (10%) of the total amount of cash and stock dividends. The ratio of cash dividends shall be determined by the board of directors and proposed to the shareholders' meeting for approval.

Proposed dividend distribution for the current shareholders' meeting:

The profit distribution for the fiscal year 2022 has been approved by the board of directors on March 24, 2023, with a cash dividend of NT$133,042,305 (NT$0.8 per share of free distribution to shareholders). However, it has not yet been approved by the shareholders' general meeting in 2023.

(7) The proposed issuance of bonus shares for the current year's shareholders' meeting will have no impact on the company's business performance and earnings per share.
(8) Employee bonuses and director/supervisor remuneration
Information related to employee bonuses and director/supervisor remuneration as stated in the company's articles of incorporation:
If there is a surplus in the annual financial statements, the company shall allocate no less than one percent (1%) as employee compensation and no more than two percent (2%) as compensation for directors and supervisors. However, when the company has accumulated losses, an amount should be reserved in advance for offsetting, and then employee compensation and director/supervisor remuneration should be allocated based on the aforementioned ratios.
Basis for estimating employee bonuses and director/supervisor remuneration for the current period, calculation basis for distributing stock dividends, and accounting treatment in case of differences between the estimated and actual distribution amounts:
If there are changes in the amounts of employee bonuses and director/supervisor remuneration as approved by the shareholders' meeting on profit distribution, the differences should be accounted for as adjustments based on accounting estimates and recognized in the subsequent fiscal year's income statement. This does not affect the financial statements that have already been recognized.
Information regarding proposed employee bonuses approved by the board of directors: (1) Cash dividends of NT$2,500,000 are proposed to be distributed to employees. Director and supervisor remunerations of NT$2,000,000 are proposed to be distributed. This proposal has been approved by the Board of Directors but is pending approval at the 2022 Shareholders' Meeting.
(2) Proposed distribution of employee stock dividends and the proportion to the current period's net income after tax and the total amount of employee dividends: N/A.
(3) Calculation of earnings per share after considering the proposed distribution of employee dividends and director and supervisor remunerations: N/A.
Distribution of retained earnings from the previous year for employee dividends and director and supervisor remunerations (including the number of shares distributed, amounts, and share prices), any differences with recognized employee dividends and director and supervisor remunerations should be disclosed, along with the reasons and handling: There is no difference between the distribution of retained earnings from the previous year by the company and the proposed distribution approved by the Board of Directors.
(9) Share repurchases by the company: As of now, the company has not repurchased any of its own shares.
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2. Bond Issuance by the Company: As of now, the company has not issued any corporate bonds.

3. Preferred Shares Issuance by the Company : As of now, the company has not issued any preferred shares.

4. American Depositary Receipts (ADRs) Issuance by the Company: As of now, the company has not issued any ADRs.

5. Employee Stock Options Issuance by the Company: As of now, the company has not issued any employee stock options.

6. Accumulated information until the printing date of the annual report regarding managers who obtained employee stock options and the top ten employees in terms of the number of stock options exercisable, including their names, acquisition details, and exercise status: Not applicable.

7. Restricted Employee Stock Issuance by the Company: As of now, the company has not issued any restricted employee stocks.

8. Accumulated information until the printing date of the annual report regarding managers who obtained restricted employee stocks and the top ten employees in terms of the number of shares acquired, including their names and acquisition status: Not applicable.

9. Issuance of New Shares in Merger or Acquisition of Other Companies: As of now, the company has not conducted any mergers or acquisitions that involved the issuance of new shares.

10. Execution Status of Fund Utilization Plan: None.

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5. Operation Overview

1. Business Contents

(I) Business Scope ：
(A) The main business activities of the company are as follows:
- （ 1 ） CC01080 Electronic components manufacturing.
- （ 2 ） F119010 Wholesale of electronic materials.
- （ 3 ） F219010 Electronic materials retail.
- （ 4 ） F113030 Wholesale of precision instruments.
- （ 5 ） F213040 Retail of precision instruments.
- （ 6 ） F401010 International trade.
- （ 7 ） I301010 Information software services.
- （ 8 ） I301020 Data processing services.
- （ 9 ） I301030 Electronic information supply services.
- （ 10 ） F118010 Wholesale of computer software.
- （ 11 ） F218010 Retail of information software.
- （ 12 ） E605010 Computer equipment installation.
- （ 13 ） E604010 Mechanical installation.
- （ 14 ） CC01060 Wired communication equipment manufacturing.
- （ 15 ） F113020 Wholesale of electrical appliances.
- （ 16 ） F213010 Retail of electrical appliances.
- （ 17 ） F113070 Wholesale of telecommunications equipment.
- （ 18 ） F213060 Retail of telecommunications equipment.
- （ 19 ） H701010 Residential and commercial property development and leasing.
- （ 20 ） H701020 Industrial factory development and leasing.
- （ 21 ） H701040 Specialized zone development.
- （ 22 ） H701050 Investment in public infrastructure construction.
- （ 23 ） I102010 Investment consulting.
- （ 24 ） I103060 Management consulting.
- （ 25 ） CB01030 Pollution control equipment manufacturing.
- （ 26 ） F113100 Wholesale of pollution control equipment.
- （ 27 ） F213100 Retail of pollution control equipment.
- （ 28 ） J101030 Waste removal.
- （ 29 ） J101040 Waste disposal.
- （ 30 ） J101060 Waste (wastewater) treatment.
- （ 31 ） J101090 Waste cleaning.
- （ 32 ） CD01030 Automobile and its components manufacturing.
- （ 33 ） F114030 Wholesale of automobile and motorcycle parts.
- （ 34 ） F214030 Retail of automobile and motorcycle parts.
- （ 35 ） J901020 General hotel industry.
- （ 36 ） F501030 Beverage shops.
- （ 37 ） F501060 Restaurant industry.
- （ 38 ） F104110 Wholesale of textiles, clothing, shoes, hats, umbrellas, and fashion accessories.
- （ 39 ） F204110 Retail of textiles, clothing, shoes, hats, umbrellas, and fashion accessories.
- （ 40 ） F105050 Wholesale of furniture, bedding, kitchenware, and decorative items.
- （ 41 ） F205040 Retail of furniture, bedding, kitchenware, and decorative items.
- （ 42 ） F109070 Wholesale of educational, musical instruments, and recreational products.
- （ 43 ） F209060 Retail of educational, musical instruments, and recreational products.
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（ 44 ） F111090 Wholesale of building materials.

（ 45 ） F211010 Retail of building materials.
（ 46 ） E801010 Interior decorating.
（ 47 ） I503010 Landscape and interior design.
（ 48 ） F108031 Wholesale of medical equipment.
（ 49 ） F208031 Retail of medical equipment.
（ 50 ） ZZ99999 Permitted activities not restricted or prohibited by law.
(B) The revenue distribution of the company for the year 2022 is as follows: Semiconductors

account for 88.87%, Medical Equipment accounts for 7.45%, and Other sectors account for 3.68%.

(C) The current product lineup of the company includes:
Rectifiers:
- (1) Bridge rectifiers
- (2) Fast recovery bridge rectifiers

(3) High-efficiency fast recovery bridge rectifiers

(4) Schottky rectifiers

(5) High-voltage Schottky rectifiers

(6) Low forward voltage drop Schottky rectifiers

(7) High-temperature (H Type) Schottky rectifiers

(8) Diode rectifiers

(9) Fast rectifiers
(10) High-efficiency rectifiers

(11) Ultra-high-efficiency rectifiers

(12) TVS transient voltage suppressors

(13) High-voltage (>220V) TVS transient voltage suppressors

(14) Low-voltage (<10V) TVS transient voltage suppressors

(15) Zener diodes

(16) Automotive power diodes

(17) High-power surface mount Schottky rectifiers

(18) High-power surface mount diodes

(19) Trench Schottky diodes

Transistor Field:
(1)Power transistors
(2)Trench Metal-Oxide-Semiconductor Field-Effect Transistor (Trench MOSFET)
(3)Super-Junction Metal-Oxide-Semiconductor Field-Effect Transistor (Super-Junction MOSFET)
(4)Metal-Oxide-Semiconductor Field-Effect Transistor (MOSFET) for Automotive Applications
Small Signal Products:
(1) ESD (Electrostatic Discharge) protection devices

(2) Schottky diodes

(3) Switching diodes
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(4) Zener diodes

  - (5) Digital transistors

Third-generation semiconductors:
- (1) Silicon Carbide (SiC) Schottky 650V-1200V
- (2) Silicon Carbide (SiC) MOSFET 650V-1200V
(D) Future Research and Development Plans and Estimated Research Expenses:

The projected developments include the following, with an estimated R&D expenditure of approximately 5 million NT dollars:

  - (1) Low-loss Schottky wafer with a high groove structure.

  - (2) High voltage (>300V) trench Schottky wafer.

  - (3) High voltage (200V-500V) transient voltage suppressor wafer.

  - (4) Low voltage (<5V) transient voltage suppressor wafer.

  - (5) High voltage (1700V) SiC Schottky wafer.

(2) Sector Overview:
(A) Current Industry Status and Development:

Due to the specific needs in various fields, semiconductor devices have rapidly developed into two distinct branches. One branch is represented by microelectronic devices, characterized by low power and high density, serving as tools for information viewing, transmission, and processing. The other branch is power electronic devices, known for high power and high reliability. Power semiconductor products have a wide range of applications. As electronic products integrate multiple functions, each function requires independent power supply with specific voltage or current. Power conversion using power semiconductors is essential.

Power devices, with the capability of energy conversion and circuit control, are crucial components for electrical energy processing. They enable the control of high-power operations with low-power signals. With the automotive industry transitioning towards electronics and electrification, the demand for power devices is expected to increase, especially for high-current and high-voltage products.

Similar to the IC industry, the entire power semiconductor industry involves specifications design, wafer manufacturing, and final packaging, making it highly comparable to the IC industry. Most foreign power semiconductor manufacturers adopt the IDMs (Integrated Device Manufacturer) model, encompassing specifications design, wafer manufacturing, and device packaging. In Taiwan, most power semiconductor companies also follow the IDM model. However, there are also fabless design companies focusing solely on specifications design, as well as companies specializing in wafer manufacturing (wafer foundries) or device packaging. Currently, most MOSFET manufacturers in Taiwan are primarily design companies, while wafer manufacturing is outsourced to professional wafer foundries. Domestic diode manufacturers in Taiwan operate under the IDM model, as diode manufacturing processes are relatively simple and can be handled in-house. In addition to producing MOSFETs for domestic clients, Taiwanese wafer foundries have the advantage of superior manufacturing capabilities, allowing them to provide foundry

94 -

services for a select few power semiconductor companies abroad, particularly for IGBTs. This represents an important opportunity for Taiwanese manufacturers in the power semiconductor industry.

(B) Interrelationships among Upstream, Midstream, and Downstream in the Industry:

The structure of discrete component industry can generally be divided into upstream chip materials, midstream wafer manufacturing and packaging/testing, and downstream application areas including machine tools, automotive electronics, telecommunications, information technology, and consumer electronics.

Upstream materials are similar to those used in integrated circuits and include wafers/epiwafers, precious metals, non-ferrous metals, aluminum alloys, and non-metallic materials. While Taiwan is partially self-sufficient in wafers/epiwafers, other materials like precious metals (gold, silver, platinum) and some non-ferrous metals rely on imports. The major domestic manufacturers in the upstream segment include companies like Taiwan Silicon Crystal, Hanlei, and Jiajing, supplying wafer materials and diffusion materials.

In the midstream segment of wafer manufacturing and packaging/testing, many companies have adjusted their strategies and actively integrated upstream by engaging in the research and manufacturing of epiwafers.

Downstream applications cover a wide range, including information technology, telecommunications, consumer electronics, machine tools, automotive electronics, automotive, and office equipment, as well as solar energy, making the market extremely vast.

(C) Product Development Trends:
Diode components have been polarized in recent years. High-voltage and high-current applications such as electromechanical devices require high-power components with higher voltage tolerance for regulation and rectification. On the other hand, electronic information products demand smaller, more precise diode components for protection. Therefore, there is a sustained market demand for various types of diodes due to different usage scenarios.
Regarding production technology, the functionality and electrical characteristics of discrete components are determined during the wafer manufacturing stage. Product characteristics are closely related to the wafer fabrication process. Many companies are integrating into higherlevel processes, such as chip diffusion and epiwafer manufacturing. This integration helps with material cost control and provides flexibility in production scheduling by allowing the production of different chip functionalities based on specific product requirements.
Diodes, classified by packaging methods, have evolved from traditional axial packaging, power packaging (TO type), and bridge packaging towards smaller surface-mount devices (SMD). Currently, SMD is the mainstream and fastest-growing packaging method, with further miniaturization in the direction of DFN packaging.

In terms of product development, it progresses from general standard products at the lowest technological level to high-voltage, high-speed, and Schottky high-power rectifier diodes at higher technological levels. With the increasing applications of MOSFETs, further

95 -

development of MOSFETs, IGBTs, and SiC devices is necessary to meet market demands.

(D) Competitive Situation:

Currently, there are not many domestic manufacturers of diodes in the country. Most of them have shifted their assembly processes to mainland China, where self-production capabilities have improved in recent years. Therefore, the main business strategy in the market competition is to lower production costs and expand market share to achieve economies of scale.

(3) Technology and R&D Overview `：`

Research and development expenses are as follow:

ogy and R&D Overview`：` arch and development expenses are as follow:	ogy and R&D Overview`：` arch and development expenses are as follow:	ogy and R&D Overview`：` arch and development expenses are as follow:
Unit: NTD in thousands Fiscal Year Year 2022 2023 Q1 Explanation Consolidated financial reports Consolidated financial reports Research and development expenses 10,522 2,017 Net operatingrevenue 877,633167,675 Proportion of net operatingrevenue 1.20% 1.20%
Fiscal Year Explanation	Year 2022	2023 Q1
	Consolidated financial reports	Consolidated financial reports
Research and development expenses	10,522	2,017
Net operatingrevenue	877,633	167,675
Proportion of net operatingrevenue	1.20%	1.20%

2. Successful technology or product developments:

In response to the global demand for electronic products, diodes/transistors, as fundamental electronic components, have a steady demand. The company continues to upgrade its automated equipment to increase production capacity in line with business orders. Additionally, the company focuses on enhancing competitiveness in high-end markets by dedicating efforts to the research and production of related components for smart mobile phone power applications and new energy vehicle battery management systems. This has led to the company's leading position in the market. The following are the summarizations of the successful new products and technologies developed in the past two years:

General Purpose Diodes.
Fast Recovery Diodes.
Bridge Rectifiers.
(1) Establishment of RSM fully automated production line.
(2) Establishment of RBU fully automated production line.
Ultra Small Surface Mount Bridge Rectifiers (MINI-BRIDGES). DIP Bridge ULBF610 (Bridge Rectifier).
Schottky Diodes.
(1) LOW VF Schottky products.
(2) 150V High Voltage Schottky products.
(3) 200V High Voltage Schottky products.
(4) MBR series Schottky products.
(5) High Current Schottky products.
96 -
- (6) Mass production of Schottky with reduced grain size.
- (7) Low-loss Schottky products.
- (8) Low VF 100/120V Schottky products.
- (9) Low VF 150/200V Schottky products.
- (10) High Temperature (High Tj Type) Schottky products.
- (11) Trench Low VF 60V Schottky products.
- (12) Trench Low VF 45V Schottky products.
- (13) 0.5A 30V Schottky wafer.
High Voltage Rectifiers.
Electrostatic Protection Devices.
High-Efficiency Recovery Diodes and Ultra-Fast Recovery Diodes. STD GPP/SF (EPI) 200V 3A products with reduced grain size.
Full series Transient Voltage Suppressors (T.V.S) TVS diodes. Transient Voltage Suppressors of 5KW and above.
Surface Mount Devices (SMD)
High Power Surface Mount Devices TO252, TO263.
Insulated High Power Rectifiers (IT0-220).
0.5 and 1 Watts SMA Zener Diodes.
600V-800V Metal-Oxide-Semiconductor Field-Effect Transistors.
20~300V SGT Mosfet.
SOD123F automated production line establishment. SMD TRIM/FORM automation.
SOD123FL 0.98mm fully automated production line establishment.
DO277 fully automated production line establishment.
Solar Photovoltaic Irregular Package Schottky products.
DO-218 Automotive TVS wafer and packaging.
(4) Long-term and short-term business development plans:

As part of the short-term development plan, the company will continue to drive production automation, focusing on refining existing processes to improve yield, reduce production costs, and enhance product competitiveness.

In the long term, the company aims to develop high-value products such as MOFET/SiC/ESD protection as part of its business expansion strategy. This includes offering customers a wider range of choices and superior product quality and services to effectively expand the company's arket share.

2. Market and production/sales overview.

(1) Market Analysis
1.Product Sales Regions (Consolidated for 2022)

In 2022, our company's product line focused on diode rectifiers, making the Asian region

the highest in terms of sales structure.

97 -

Region	Amount (in thousand NTD)	Percentage (%)
Taiwan	88,082	10.04
United States	135,687	15.46
Asia	639,472	72.86
Europe	13,189	1.50

Other countries	1,203	0.14

2. Major Competitors

Our main competitors in the industry include Taiwan Semiconductor and PANJIT Electronics.

3. Market Supply and Demand Outlook and Business Objectives

In recent years, the overall impact of the US-China trade war and the COVID-19 pandemic has led multinational companies to gradually address the issue of de-Chinaization. As a result, manufacturing industries have moved production outside of the Asia-Pacific emerging regions, and Taiwanese businesses have accelerated their return. The dominance of the Greater China region as the world's factory has gradually declined, while the Southeast Asian region has seen an increasing share in the international division of the semiconductor industry.

Our company's products belong to the category of semiconductor discrete components, including rectifiers, small-signal products, and power management products. As fundamental components, they have a wide range of applications in various sectors such as home appliances, telecommunications, audio-visual, computers, multimedia, as well as emerging markets in new energy solutions like electric vehicles and 5G applications. These products are essential, and with the increasing reliance on electronic products in the middle class of emerging markets and the development of the Greater China region, as well as the growth of portable electronic products, there is an expected significant demand and growth opportunity for global power management components.

Favorable and unfavorable factors for future development and corresponding strategies: Favorable factors:

The company has established a strong presence in European and American markets over the years, and with the increasing awareness of renewable energy applications, there is an expected surge in the replacement of new energy vehicles. This provides an opportunity to expand the market reach through existing sales channels.

Unfavorable factors:

The sluggish market has intensified the chaotic competition, while inflation and exchange rate fluctuations have led to uncertainties in costs and delivery schedules.

98 -

The company has gradually increased the proportion of high-profit products and maintained good relationships within the supply chain to ensure stable supply and enhance

customer satisfaction.

(2) Major product applications and production processes
(1) Major product applications:

The company's main products are used in household appliances, communication devices, computers, and new energy vehicles.

(2) Production processes:

==> picture [356 x 566] intentionally omitted <==

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(3) Main Raw Material Supply Situation

The main materials used in the production of our company's power semiconductor devices are non-special components. We maintain good technical cooperation and long-term business relationships with our suppliers, ensuring a high level of supply stability.

(4) Customer Names and Purchase (or Sales) Amounts for any Year in the Past Two Years that Accounted

for more than 10% of the Total Purchase (or Sales) Amount, and Explanation of the Changes. Due to contractual agreements and the confidentiality of customer names and transaction parties, especially when they involve individuals who are not related parties, they will be represented by code names.

1. Key suppliers in the recent two years

Unit: NTD in thousands

	Year 2021	Year 2021	Year 2021	Year 2021	Year 2022	Year 2022	Year 2022	Year 2022	As of the fiscal year ending on March 31,2023	As of the fiscal year ending on March 31,2023	As of the fiscal year ending on March 31,2023	As of the fiscal year ending on March 31,2023
Item	Name	Amount	Percentage of net purchase amount for the full year. (%)	Relation to the issuer	Name	Amount	Percenta ge of net purchase amount for the full year. (%)	Relation to the issuer	Name	Amount	Percentag e of the net purchase of the current fiscal year(%)	Relation to the issuer
1	Z25	42,517	10	Note 1	Z25	52,312	14	Note 1	Z25	12,497	18	Note 1
2	T9	42,120	10	Note 1	Z28	27,832	7	Note 1	T4	6,343	9	Note 1
	Others	345,989	80	Note 1	Others	299,666	79	Note 1	Others	51,634	73	Note 1
Total	Net purchase	430,626	100		Net purchase	379,810	100		Net purchase	70,474	100

Note 1: Non-related persons

Note 2: Reasons for Changes in the List of Major Purchasing Customers in the Last Two Years: The changes in the list of major purchasing customers were mainly due to fluctuations in procurement activities within the electronics industry, influenced by factors such as delivery conditions, product quality, and pricing. In order to meet the timely requirements of customer orders, the company gradually shifted to sourcing from suppliers with better delivery schedules, product quality, and overall value.
100 -

2. Key customers in the recent two years

Unit: NTD in thousands

	Year 2021	Year 2021	Year 2021	Year 2021	Year 2022	Year 2022	Year 2022	Year 2022	As of March 31, 2023	As of March 31, 2023	As of March 31, 2023	As of March 31, 2023
Item	Name	Amount	Percentage of the net sales of the year(%)	Relation to the issuer	Name	Amount	Percentage of the net sales of the year(%)	Relation to the issuer	Name	Amount	Sales-to- Net Sales Ratio for the period ending the previous quarter of	Relation to the issuer
											the current fiscal year (%).
1	T14	112,053	15	Note 1	T14	120,033	14	Note 1	T14	28,572	17	Note 1
2	T18	61,862	8	Note 1	T18	104,981	12	Note 1	T21	18,096	11	Note 1
	Others	571,935	77		Others	652,619	74		Others	121,007	72
Total	Net sales	745,850	100		Net sales	877,633	100		Net sales	167,675	100

Note 1: Non-related persons

Note 2: Reasons for the changes in the list of major customers in the past two years: There have been no significant changes among the major customers, mostly variations in their sales rankings.

(5) Production value for the past two years.

Production value for the past two years.

Production value for the past two years.	Production value for the past two years.	Production value for the past two years.	Production value for the past two years.	Production value for the past two years.	Production value for the past two years.	Production value for the past two years.
Unit: Thousand NTD;KPS
Year Production Volume Year 2021 Mainproduct Production Capacity (K) Production Volume(K) Production Value				Year 2022
	Production Capacity (K)	Production Volume(K)	Production Value	Production Capacity (K)	Production Volume(K)	Production Value
Diodes	600,000	270,940	118,788	600,000	523,708	147,424
FaceMasks	60,000	21,532	53,830	60,000	8,405	21,013
Total	660,000	292,472	172,618	660,000	532,113	168,437

(6) Sales Volume in the Past Two Years

Table of sales volume and value of the recent two years

Unit: Thousand NTD; K/PS

					Unit:ThousandNTD;K/PS	Unit:ThousandNTD;K/PS	Unit:ThousandNTD;K/PS	Unit:ThousandNTD;K/PS
Year Sales volume Mainproduct	Year 2021				Year 2022
	Domestic sales		Overseas sales		Domestic sales		Overseas sales
	Volume	values	Volume	values	Volume	values	Volume	values
Rectifier diodes	15,040	10,608	589,236	641,823	8,770	6,899	509,897	773,090
Face Masks	17,421	50,918	2,339	9,887	9,063	64,035	1,031	1,365
Others	-	22,404	-	10,210	-	19,999	-	12,245
Total	32,461	83,930	591,575	661,920	17,834	90,933	510,929	786,700

101 -

3. Number of employees in the company.

Employee Information for the Recent Two Years Up to the Publication Date of This Annual Report

March 31, 2023

				March31,2023
	Year	Year 2021	Year 2022	As of the end of the current fiscal year March 31, 2023
Num ber of Empl oyees	S t a f f M e m b e r s	90 persons	94 persons	95 persons
	T o t a l W o r k f o r c e	86 persons	71 persons	71 persons
	T o t a l	176 persons	165 persons	166 persons
	A v e r a g e a g e	48years old	48years old	49years old
	A v e r a g e y e a r s o f s e r v i c e	13 years	14 years	15 years
Educ ation al attain	D o c t o r a t e	0 persons	0 persons	0 persons
	M a s t e r ' s d e g r e e	2 persons	2 persons	2 persons
	C o l l e g e d e g r e e	59 persons	62 persons	65 persons
	H i g h s c h o o l	68 persons	63 persons	62 persons
ment distri butio n Ratio	B e l o w h i g h s c h o o l	47 persons	38 persons	37 persons

4. Environmental expenditure information

(1) The company's factory is located in the Tucheng Industrial Zone, New Taipei City. Our company complies with environmental regulations and takes relevant environmental protection measures to prevent pollution.
(2) In response to the requirements of the European Union's environmental directive (ROHS), the company adopts green design, green management, green manufacturing management, and green marketing management. The company actively requests that the raw materials supplied by its suppliers comply with ROHS regulations, enabling the smooth export of products to the European region.
(3) In the past two years, the company has not incurred any losses or disposals due to environmental pollution.
102 -

5. Labor-Management Relations

List of employee welfare measures, training and development programs, retirement system, and their implementation, as well as the agreements and measures for safeguarding employee rights.
(1) Employee welfare measures include
(a) Group insurance, accident insurance, and medical insurance.
(b) Subsidies for marriage, funeral, and joyous occasions.
(c) Annual company trips.
(d) Bonuses during major festivals.
(e) Retirement benefits system.
(2) Employee training and development

The company organizes periodic external training programs to enhance employees' skills, knowledge, and work efficiency. The effectiveness of education and training is assessed and included in the performance evaluation criteria.

(3) Retirement system and its implementation:

To ensure stable post-retirement lives for our employees, our company has established a labor retirement policy in accordance with the law. We have also set up a Labor Retirement Reserve Supervisory Committee, which regularly allocates retirement reserves to the "Labor Retirement Reserve Fund" account at the Taiwan Bank, based on a fixed ratio of the total payroll expenses. This is done to safeguard the rights of our employees. Starting from July 1, 2005, we have also adopted the government's new retirement policy, whereby a monthly contribution of 6% of the employee's total wages is made to the employee's individual retirement account. For employees who voluntarily contribute to their retirement funds, an additional amount is deducted from their monthly salary based on their voluntary contribution rate, which is then remitted to the Bureau of Labor Insurance's individual retirement account.

(4) Agreements between labor and management and measures for safeguarding employee rights:

The company has established legal provisions for working conditions and has implemented systems such as work rules. In addition to complying with the Labor Standards Act to protect employees' rights at work, there is a mechanism for resolving labor disputes. As a result, the labor-management relationship in the company has always been harmonious, and there have been no labor disputes. The employees have a strong sense of belonging and there are no issues regarding labor disputes. Furthermore, the company maintains open channels of communication through autonomous management within the organization. Regular employee trips are organized externally to alleviate work-related stress and fatigue.

Specify the losses incurred due to labor disputes in the most recent fiscal year and up to the date of the annual report's printing, and disclose the estimated amounts and strategies to address current and potential future losses: None.
103 -

6. Information on information technology and cybersecurity management.

Information Security Organization:

The company has established a cross-departmental task force called the "Information Security Management Team." The team is led by the Vice President of Administration and is responsible for planning and executing the company's information security initiatives. They also develop measures for information security management, crisis reporting, and emergency response.

Information Security Policy:

The company's information security policy is to "maintain the confidentiality, integrity, availability, and legality of the company's information, and to prevent unauthorized use, disclosure, alteration, destruction, or loss of assets in the event of human error, intentional sabotage, or natural disasters, which could impact the company's operations or compromise its interests."

In addition to adhering to the requirements of the information security policy, the company regularly conducts information security awareness programs and provides employee training.

Risk Control for Information Security:

With rapidly evolving cyber-attack techniques, it is impossible to completely avoid paralyzing network attacks from any third party. Network attacks can occur through methods such as email phishing, network spoofing, or brute force attacks, resulting in the introduction of malicious programs into the company's internal network for disruption or data theft. Disruptive attacks can lead to operational interruptions, while data theft attacks can result in the leakage of important operational data or personal information of employees and customers.

The company actively plans and implements information security measures to continuously improve the information security environment and reduce information security risks. In terms of management, relevant management standards are established in areas such as policy and system, organizational responsibilities, manpower security, document control, asset management, communication and operation management, access control, physical environment, system development and maintenance, business continuity management, security incident management, and regulatory compliance. On the technical side, various measures are deployed, including network firewalls, intrusion detection systems, email security systems, automated detection and updating of operating systems, virus protection systems, network access systems, security monitoring systems, and vulnerability scanning systems. Internal auditors and organizations conduct annual audits of the company's information security management system. The security operations, risk control, and incident improvements are reviewed annually and reported to the Information Security Committee to control and reduce information security risks.

Employee Information Security Training:

Basic information security education and training are provided to new employees upon their onboarding. Regular information security education and training are conducted for employees to enhance their

104 -

awareness of information security. Internal information audit findings are addressed through immediate information security controls and preventive measures to minimize the risk of employees leaking confidential information about the company and its clients. In the event of external information security incidents, timely information security notifications are issued to strengthen the company's information security maturity and raise employee awareness of defending against external malicious attacks. These measures provide information security assurance for the company's production and operational activities.

In 2022, no significant network attacks that impacted the company's operations occurred.
Management Measures:

Our company places great importance on the field of information security and is committed to building a comprehensive defense architecture to ensure the confidentiality, integrity, and availability of company, customer, and supplier data.

(1) Network protection includes the deployment of firewalls for multi-layered isolation and protection.
(2) Access control is implemented through permission management and various authentication methods.

(3) Each endpoint is required to install antivirus software for virus defense and early warning.

The company will take a more proactive approach in terms of information security strategy, incident response mechanisms, and technical infrastructure to assess the exposure level of information security risks and plan appropriate insurance measures to ensure optimal control of information security risks.

In the most recent fiscal year and up to the date of printing of the annual report, there have been no significant losses, potential impacts, or necessary measures resulting from major information and communication security incidents: The company has not been affected by any significant information and communication security incidents that would impact its operations in the most recent fiscal year up to the date of printing of the annual report.

7. Key contracts and agreements.

Type of contract	Parties involved	Contract start and end date	Key content	Restrictio ns
Financing agreement	Hua Nan Commercial Bank, Nansongshan Branch	2022.04-2023.04	Financing borrowings	None
Financing agreement	Panshin Commercial Bank HuajiangBranch	2022.01-2023.01	Financing borrowings	None
Financing agreement	Shin Kong Commercial Bank, Chang'an Branch	2021.09-2023.09	Financing borrowings	None

105 -

6. Financial Overview

1. The summary balance sheets and income statements for the past five years.

Condensed Consolidated Balance Sheet (in accordance with International Financial Reporting Standards)

Unit: NTD in thousands

		Unit: NTD in thousands	Unit: NTD in thousands	Unit: NTD in thousands	Unit: NTD in thousands	Unit: NTD in thousands	Unit: NTD in thousands
Fiscal Year Item		IFRS - Consolidated
		2018years	2019years	2020years	2021years	2022years	March 31, 2023
Current asset		429,951	427,486	593,096	566,969	602,181	599,257
Property, plant, and equipment		484,759	458,819	495,901	514,703	497,837	487,868
Intangible Assets		0	0	0	0	0	0
Other Assets		1,076,021	1,065,267	1,057,527	1,066,168	1,054,001	1,051,336
Total Assets		1,990,731	1,951,572	2,146,524	2,147,840	2,154,019	2,138,461
Current Liability	Before distribution.	257,577	254,899	327,037	272,767	227,647	337,199
	After distribution.	257,577	254,899	277,037	172,767	Note 3	Note 3
Non-Current Liability		78,157	78,157	80,175	80,601	77,127	77,441
Total Liabilities	Before distribution.	335,734	335,074	407,638	349,894	304,979	414,640
	After distribution.	335,734	335,074	357,638	249,894	Note 3	Note 3
Equity attributable to owners of the parent company.		1,654,997	1,654,997	1,616,498	1,738,886	1,797,946	1,723,821
Capital stock		1,663,029	1,663,029	1,663,029	1,663,029	1,663,029	1,663,029
Capitalsurplus		9	9	9	9	9	9
Retained earnings	Before distribution.	30,273	29,878	134,314	169,832	246,076	123,631
	After distribution.	30,273	29,878	84,314	69,832		Note 3
Other Equities		(42,743)	(38,314)	(76,418)	(58,466)	(34,924)	(62,848)
Treasury stock		0	0	0	0	0	0
Non-control equity		0	0	0	0	0	0
Total equity	Before distribution.	1,654,997	1,616,498	1,738,886	1,797,946	1,849,040	1,723,821
	After distribution.	1,654,997	1,616,498	1,688,886	1,697,946	Note 3	Note 3

Note 1: The above information has been audited and certified by the accountant. The data for the first quarter of

2023 is reviewed by the accountant.

Note 2: Asset revaluation has not been conducted in any of the mentioned years.

Note 3: The profit distribution plan for 2022 was approved by the board of directors on March 24, 2023, but it has not yet been ratified by the 2023 shareholders' meeting.

106 -

Unit: NTD in thousands

Fiscal Year Item	Fiscal Year Item	IFRS - Individual	IFRS - Individual	IFRS - Individual	IFRS - Individual	IFRS - Individual
		2018years	2019years	2020years	2021years	2022years
Current asset		260,425	273,489	419,978	326,475	256,336
Property, plant, and equipment		300,668	301,922	302,074	294,457	285,105
IntangibleAssets		0	0	0	0	0
Other Assets		1,389,303	1,312,483	1,310,819	1,421,629	1,539,258
Total Assets		1,950,396	1,887,894	2,032,871	2,042,561	2,080,699
Current Liability	Before distribution.	220,778	196,853	172,412	172,412	161,482
	After distribution.	220,778	196,853	72,412	72,412	Note3
Non-Current Liability		74,621	74,543	75,153	72,203	70,177
Total Liabilities	Before distribution.	295,399	271,396	244,615	244,615	231,659
	After distribution.	295,399	271,396	144,615	144,615	Note 3
Equity		1,654,997	1,616,498	1,738,886	1,797,946	1,849,040
Capitalstock		1,663,029	1,663,029	1,663,029	1,663,029	1,663,029
Capital surplus		9	9	9	9	9
Retained earnings	Before distribution.	30,273	29,878	134,314	169,832	246,076
	After distribution.	30,273	29,878	84,314	69,832	Note 3
Other Equities		(38,314)	(76,418)	(58,466)	(34,924)	(60,074)
Treasurystock		0	0	0	0	0
Total equity	Before distribution.	1,654,997	1,616,498	1,738,886	1,797,946	1,849,040
	After distribution.	1,654,997	1,616,498	1,688,886	1,697,946	Note 3

Note 1: The above information has been audited and certified by the accountant.

Note 2: Asset revaluation has not been conducted in any of the mentioned years.

Note 3: The profit distribution plan for 2022 was approved by the board of directors on March 24, 2023, but it has not yet been ratified by the 2023 shareholders' meeting.

107 -

2. Summary Statement of Comprehensive Income (in accordance with IFRS)

Unit: NTD in thousands (except for earnings per share in "NTD")

	Unit: NTD in thousands (except for earnings per share in "NTD")	Unit: NTD in thousands (except for earnings per share in "NTD")	Unit: NTD in thousands (except for earnings per share in "NTD")	Unit: NTD in thousands (except for earnings per share in "NTD")	Unit: NTD in thousands (except for earnings per share in "NTD")	Unit: NTD in thousands (except for earnings per share in "NTD")
Year Item	IFRS-Consolidated
	2018 years	2019 years	2020 years	2021 years	2022years	March 31,2023
Operatingrevenue	520,371	498,284	759,358	745,850	877,633	167,675
Operating gross profit	176,784	151,808	295,044	251,630	343,849	54,199
Operatingexpenses	162,774	156,160	153,936	169,757	173,109	48,039
OperatingProfit and Loss	14,010	(4,352)	141,108	81,873	170,740	6,160
Non-operating income and expenses	13,667	4,818	(30,262)	8,756	33,905	6,910
Profit before tax	27,677	466	110,846	90,629	204,645	13,070
Net income from continuing operations for thisyear	27,653	441	105,636	84,972	176,100	10,597
LossfromSuspended Operations	0	0	0	0	0	0
Current netprofit(loss)	27,653	441	105,636	84,972	176,100	10,597
Other comprehensive income (after-tax net amount)	4,102	(38,940)	16,752	24,088	(25,006)	(2,774)
Total comprehensive income for thisreporting period	31,755	(38,499)	122,388	109,060	151,094	7,823
Net profit attributable to owners of the parent.	27,653	441	105,636	84,972	176,100	10,597
Net Profit Attributable to Non- ControllingInterests	0	0	0	0	0	0
Total Comprehensive Profit and Loss Attributable to Owners of ParentCompany	31,755	(38,499)	122,388	109,060	151,094	7,823
Total comprehensive income attributable to non-controlling interests.	0	0	0	0	0	0
EarningsPerShare (NT$)	0.17	0.00	0.64	0.51	1.06	0.06

Note: The above information has been audited and certified by the accountant. The data for the first quarter of 2023 is reviewed by the accountant.

108 -

Unit: NTD in thousands (except for earnings per share in "NTD")

Year Item	IFRS- Individual	IFRS- Individual	IFRS- Individual	IFRS- Individual	IFRS- Individual
	2018years	2019years	2020years	2021years	2022years
Operatingrevenue	286,473	303,202	352,826	475,170	634,715
Operating grossprofit	80,039	77,903	67,386	77,585	141,420
Intercompany (unrealized) gains/losses.	(386)	5,640	(1,742)	(1,881)	4
Operating gross profit	79,653	83,543	65,644	75,704	141,424
Operatingexpenses	52,194	52,841	53,469	55,024	53,507
Netothergainsandlosses	0	0	0	0	0
OperatingProfit andLoss	27,459	30,702	12,175	20,680	87,917
Non-operating income and expenses	194	(30,261)	94,085	68,861	109,861
Profit before tax	27,653	441	106,260	89,541	107,778
Net income from continuing operations for thisyear	27,653	441	105,636	84,972	176,100
LossfromSuspended Operations	0	0	0	0	0
Current netprofit(loss)	27,653	441	105,636	84,972	176,100
Other comprehensive income (after-tax net amount)	4,102	(38,940)	16,752	24,088	-25,006
Total comprehensive income for this reporting period	31,755	(38,499)	122,388	109,060	151,094
Earnings pershare (inyuan) (Note)	0.17	0.00	0.64	0.51	1.06

Note 1: The above information has been audited and certified by the accountant.

Name of the Auditing Accountants and Audit Opinions for the Past Five Years

Year	Name of Auditing Accountants	Audit opinion
2018	CHEN, TSUNG-CHE, LAI, LI- CHEN	Unqualified Opinion (Emphasis or other matters)
2019	CHEN, TSUNG-CHE, LAI, LI- CHEN	Unqualified Opinion (Emphasis or other matters)
2020	CHEN, TSUNG-CHE, LAI, LI- CHEN	Unqualified Opinion (Emphasis or other matters)
2021	CHEN, TSUNG-CHE, LAI, LI- CHEN	Unqualified Opinion (Emphasis or other matters)
2022	CHIH, SHIH-CHIN, LAI, LI- CHEN	Unqualified Opinion (Emphasis or other matters)

109 -

2. Financial analysis for the past five years.

(1) Financial Analysis based on International Financial Reporting Standards (IFRS)

Year (Note 1)	Year (Note 1)	Consolidation.	Consolidation.	Consolidation.	Consolidation.	Consolidation.	Consolidation.	Consolidation.	Consolidation.
							Percentage
Analysis Items (Note 2)		2018	2019	2020	2021	2022	(%) Change		Q1
								Explanation
		years	years	years	years	years	in the Past 2		2023

							Years
		16.86	17.17	18.99	16.29	14.16	-13.08		19.39
Financial	Debt to assets ratio(%)
	Ratio of Long-Term
	Capital to Real Estate,	357.53	369.79	366.91	364.30	386.95	6.22		369.21
Structure	Plant and Equipment
Percentage(%)	, (%)
		166.92	167.71	181.35	207.86	264.52	27.26	2	177.72
Debt Repayment	Current ratio(%)
		112.93	117.76	137.39	140.59	192.01	36.57	2	135.55
Ability	Quick Ratio(%)
		12.50	1.23	52.79	57.34	206.09	259.42	3	95.77
%	Interest Coverage Ratio
	Accounts Receivable	4.35	4.27	6.04	4.62	5.16	11.69		1.19
Operating	Turnover Ratio(times)
	Average Collection	83.90	85.48	60.43	79.00	70.73	-10.47		75.81
Efficiency	Days
	Inventory Turnover	2.87	2.76	3.73	3.24	3.36	3.70		0.86
	Ratio(times)
	Accounts Payable	4.17	4.70	4.79	4.22	4.43	4.98		0.95
	Turnover Ratio(times)
		127.17	132.24	97.85	112.65	108.63	-3.57		104.65
	Average Days for Sales
	Fixed Assets Turnover	0.97	1.06	1.59	1.48	1.73	16.89		0.34
	Ratio(times)
	Total Assets Turnover	0.26	0.25	5.25	0.35	0.41	17.14		0.08
	Ratio(times)
	Rate of Return on Assets	1.50	0.11	6.30	4.02	8.23	104.73	1	0.5
Profitability	(%)
	Rate of Return on	1.69	0.03	6.67	4.80	9.66	101.25	1	0.59
`能力`	Equity (%)
	Pre-tax Net Income to
	Paid-in Capital Ratio	1.66	0.03	13.91	5.45	12.31	125.87	1	0.79
	(%)(Note 7)
	Net Profit Margin (%)	5.31	0.09	0.64	11.39	20.07	76.21	1	6.32


	Earnings Per Share	0.17	0.00	52.92	0.51	1.06	107.84	1	0.06
	(NTD)
		8.99	29.85	183.08	17.91	144.5	706.81	4	15.87
Cash	Cash Flow Ratio(%)
	Cash Flow Adequacy	197.18	224.79	12.25	103.71	211.09	103.54	4	55.49
flow	Ratio(%)
	Cash Flow	1.82	6.10	1.91	-0.08	14.06	-17675.00	4	3.53
	Reinvestment Ratio(%)
	Degree of Operating	11.35	-29.82	1.02	2.73	1.76	-35.53	5	7.09
	Leverage
	Degree of Financial
		1.21	0.67	5.25	1.02	1.01	-0.98		1.03
Degree of Leverage	Leverage

Explanation for the changes in financial ratios exceeding 20% in the past two years:

The increase in operating profit compared to the previous period resulted in a change in the ratio of over 20%.
The growth in operating profit and increase in current assets led to an increase in accounts receivable turnover compared to the previous period.
The increase in operating profit and decrease in bank borrowings contributed to this change.
The increase in net cash inflows from operating activities resulted in an increase in cash flow ratios.
The increase in operating revenue led to an increase in operating income compared to the previous period.
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Analysis Items	Year	Individual	Individual	Individual	Individual	Individual	Individual	Individual
		2018 years	2019 years	2020 years	2021 years	2022 years	Percentage (%) Change in the Past 2 Years	Explanation
Financial Structure Percentage(%)	Debt to assets ratio(%)	15.15	14.38	14.46	11.98	11.13	-7.10
	Ratio of Long-Term Capital to Real Estate, Plant,and Equipment(%)	575.26	560.09	600.53	635.12	673.16
							5.99

Debt Repayment Ability %	Current ratio(%)	117.96	138.93	191.92	189.36	158.74	-16.17
	Quick Ratio(%)	107.77	117.81	159.18	160.89	133.07	-17.29
	Interest Coverage Ratio	12.48	1.20	48.99	57.22	197.82	245.72	1
Operating Efficiency	Accounts Receivable Turnover Ratio(times)	3.05	3.51	4.07	4.36	5.14	17.89
	Average Collection Days	119.74	103.90	89.57	83.71	71.07	-15.10
	Inventory Turnover Ratio (times)	12.72	8.92	8.36	9.00	11.09	23.22	2
	Accounts Payable Turnover Ratio(times)	1.85	6.52	9.49	12.08	8.36	-30.79	3
	Average Days for Sales	28.69	40.92	43.64	40.55	32.9	-18.87
	Fixed Assets Turnover Ratio(times)	0.94	1.01	1.17	1.59	2.19	37.74	4
	Total Assets Turnover Ratio(times)	0.14	0.16	0.18	0.23	0.31	34.78	4
Profitability	Rate of Return on Assets (%)	1.48	0.12	5.48	4.24	8.59	102.59	5
	Rate of Return on Equity (%)	1.69	0.03	6.30	4.80	9.66	101.25	5
	Pre-tax Net Income to Paid-in Capital Ratio (%)	1.66	0.03	6.39	5.38	11.89		6
							121.00

	Net Profit Margin (%)	9.65	0.15	29.94	17.88	27.74	55.15	6
	Earnings Per Share (NT$)	0.17	0.00	0.64	0.51	1.06	107.84	6
Cash flow	Cash Flow Ratio(%)	-	7.08	28.04	15.53	179.46	1055.57	7
	Cash Flow Adequacy Ratio(%)	118.47	119.37	62.78	61.37	142.59	132.34
	Cash Flow Reinvestment Ratio(%)	0.00	1.51	5.76	-2.07	15.99	-872.46	7
	Degree of Operating Leverage	2.58	2.13	4.53	3.26	1.48	-54.60	8
Degree of Leverage	Degree of Financial Leverage	1.10	1.08	1.22	1.09	1.01
							-7.34

Explanation for the changes in financial ratios exceeding 20% in the past two years:

The increase in operating profit and the decrease in bank borrowings contributed to this change.
The increase in operating revenue compared to the previous period resulted in an increase in inventory turnover.
The increase in purchases in the fourth quarter compared to the previous period led to an increase in average accounts payable.
The growth in operating activities resulted in an increase in turnover ratio.
The increase in operating profit compared to the previous period resulted in an increase in the current period's ratio change.
The increase in pre-tax net profit compared to the previous period resulted in an increase in the current period's ratio change.
The increase in net cash inflows from operating activities compared to the previous period resulted in an increase in the ratio change.
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The increase in operating income resulted in a decrease in operating leverage. decrease in interest expenses is due to a reduction in loans in the current period compared to the previous period.

Note 1: The above information has been audited and certified by the accountant. The data for the first quarter of 2023 is reviewed by the accountant.

Note 2: The formulas for calculating important financial ratios are as follows:

Financial Structure
(1) Debt to asset ratio = Total liabilities / Total assets.
(2) Long-Term Capital to Property, Plant, And Equipment Ratio = (Total Equity + Non-Circulating Liability)
- / Net Amount of Property, Plant and Equipment.
Debt Servicing Capacity
(1) Current ratio = Current assets / Current liabilities.
(2) Quick ratio = (Current assets - Inventory - Prepaid expenses) / Current liabilities.
(3) Interest Coverage Ratio = Net Profit Before Income Tax and Interest Expense / Current Interest

Expenditure

Operating Efficiency
(1) Accounts Receivable Turnover Ratio (including both accounts receivable and notes receivable) = Net Sales / Average Accounts Receivable.
(2) Average collection period = 365 / Turnover ratio of accounts receivable.
(3) Inventory turnover ratio = Cost of goods sold / Average inventory.
(4) Accounts Payable Turnover Ratio (including both accounts payable and notes payable) = Cost of Goods Sold / Average Accounts Payable.
(5) Average sales period = 365 / Inventory turnover ratio.
(6) Turnover ratio of property, plant and equipment = Net sales / Average net property, plant and equipment.
(7) Total asset turnover ratio = Net sales / Average total assets.
Profitability
(1) Return on assets = (Net income after tax + Interest expense × (1 - Tax rate)) / Average total assets.
(2) Return on Equity = Post-Tax Profit or Loss / Average Total Equity.
(3) Profit Margin = Post-Tax Profit or Loss / Net Sales.
(4) Earnings Per Share = (Gain or Loss Attributable to Owners of the Parent Company – Preference

Dividend) / Weighted Average Number of Issued Shares. (Note 4)

5. Cash Flow

(1) Cash Ratio = Operating Cash Flow / Current Liabilities.
(2) Net Cash Flow Adequacy Ratio = Net Cash Flow from Operating Activities for the past five years /

(Capital Expenditures + Increase in Inventory + Cash Dividends) for the past five years.

(3) Cash Reinvestment Ratio = (Net Cash Flow from Operating Activities - Cash Dividends) / (Gross Property, Plant, and Equipment + Long-term Investments + Other Non-current Assets + Operating Working Capital).
112 -
Degree of Leverage ：
- (1) Degree of Operating Leverage = (Net Operating Income - Variable Operating Costs and Expenses) / Operating Profit
- (2) Degree of Financial Leverage = Operating Profit / (Operating Profit - Interest Expense).
Note 3: When calculating Earnings per Share (EPS), the following considerations should be noted:
Use the weighted average number of ordinary shares outstanding rather than the year-end issued shares.
Traders with cash additions or treasury stocks shall calculate a weighted average shares, taking into account their period of circulation.
For any increase in share capital resulting from retained earnings or capital surplus, when calculating earnings per share for previous fiscal years and interim periods, the adjustment should be made retrospectively based on the proportion of the increase in share capital. The period of issuance of such increase in share capital should not be considered.
In the case of cumulative preferred shares that are non-convertible, the dividends for the current year (whether paid or not) should be deducted from or added to the post-tax net income. For non-cumulative preferred shares, in the presence of post-tax net income, the dividends should be deducted from it. If there is a net loss, no adjustment is necessary.
Note 4: When analyzing cash flows, the following considerations should be noted:
Net cash flow from operating activities refers to the net cash inflow in the cash flow statement from operating activities.
Capital expenditures refer to the cash outflow for capital investments each year.
The increase in inventory should only be included when the ending balance is greater than the beginning balance. If the inventory decreases at the year-end, it should be considered as zero.
Cash dividends include dividends for both common shares and preferred shares.
Gross property, plant, and equipment refers to the total amount of property, plant, and equipment before accumulated depreciation.
Note 5: The various operating costs and expenses should be classified into fixed and variable categories based on their nature. When involving estimates or subjective judgments, it is important to ensure their reasonableness and consistency.
Note 6: In the case of company stocks without par value or with a per-share par value other than NTD 10, the calculation of the ratio based on the paid-in capital will be revised to calculate the ratio based on the equity attributable to the owners of the parent company as shown in the balance sheet.
113 -

3. Audit committee review report for the most recent annual financial report.

RECTRON LTD.

Audit Committee Review Report

Hereby,

We hereby present the operating report, financial statements, consolidated financial statements, and proposal for profit distribution as submitted by the Board of Directors. The financial statements and consolidated financial statements have been audited by the appointed accounting firm, KGMP United Accounting Firm, under the authorization of the Board of Directors, and an audit report has been issued.

Upon examination by our Audit Committee, it has been determined that there are no discrepancies. Therefore, in compliance with the provisions of Article 219 of the Company Act and Article 14-4 of the Securities and Exchange Act, we have prepared this report for your consideration.

Your kind attention and review are appreciated.

Sincerely,

RECTRON LTD. 2023 Annual Shareholders' Meeting

RECTRON LTD.

Convener of the Audit Committee: MAA KWO-JUH.

March 24, 2023

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INDEPENDENT AUDITORS’ REPORT

Rectron LTD. Board of Directors –

Auditor's Opinion

The balance sheets of Rectron LTD.and its subsidiaries (Rectron Ltd.) as of December 31, 2022 and 2021, and the statements of comprehensive income, statements of changes in equity, and statements of cash flows for the periods ended December 31, 2022 and 2021, along with the accompanying notes to the financial statements (including the summary of significant accounting policies), have been audited by our auditors.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis of Audit Opinion

We, as auditors, have conducted our audit work in accordance with the Regulations Governing the Audit Signatures of Certified Public Accountants and the Auditing Standards. Our CPA s responsibility under these standards will be further explained in the paragraph of responsibility of the accountant for examining the financial statements. The personnel of our accounting firm, who are subject to independence regulations, have maintained independence in accordance with the Code of Ethics for Professional Accountants and fulfilled other responsibilities prescribed by the regulations. They have maintained a professional and objective stance in relation to Rectron LTD.and its subsidiaries. We believe that we have obtained adequate and appropriate audit evidence to form the basis of our audit opinion.

Key audit matters

The key audit matters refer to those matters that, in the auditor's professional judgment, are of most significance in the audit of the financial statements of Rectron Ltd. for the year ended 2022. Such items have been taken into consideration in the process of auditing the overall financial reports and forming audit opinions. The accountant does not express opinions on such items separately. Our CPA determined to address the following key auditing matters in the accountant’s report:

1. Revenue Recognition

Please refer to Note 4 (13) of the financial statements for details on the accounting policy for revenue recognition. Additionally, refer to Note 6 (14) of the financial statements for a breakdown of revenue by customer contracts.

Explanation of Key Audit Matters

The recognition of revenue is a critical area of focus in our audit of Rectron Ltd.'s financial statements for the year ended 2022. The company's primary source of revenue is derived from the manufacturing and sale of various rectifiers, semiconductor components, and medical devices. The risk lies in ensuring the accuracy and reliability of revenue recognition. The company's viability and ongoing operations depend on a consistent inflow of cash generated from revenue. Therefore, the company's business strategy and operational management are centered around revenue. Consequently, the testing of revenue recognition is a significant assessment area for our audit of Rectron Ltd.'s financial statements.

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Corresponding audit program：

The main audit procedures performed by the auditor for the above-mentioned key audit matters include testing the controls and effectiveness of the sales and cash collection cycle, as well as sampling the accuracy of recognizing sales revenue around the balance sheet date, which involves verifying warehouse dispatch records and comparing contractual terms. The auditor also evaluates whether control over the goods has been transferred at the appropriate recognition point.

2. inventory valuation

Regarding inventory valuation, please refer to Note 4 (8) "Inventory" for the accounting policy. For the accounting estimates and assumptions related to inventory valuation and their uncertainties, please refer to Note 5 (2). Further explanation on the assessment of inventory valuation can be found in Note 6 (4) "Inventory" of the financial statements. Explanation of Key Audit Matters

The valuation of inventory for Rectron Ltd. is subject to the risk of cost exceeding its net realizable value due to fluctuations in international raw material prices and market supply and demand conditions, which may result in significant fluctuations in product selling prices and sales volumes. Therefore, the testing of inventory valuation is considered as one of the important assessment matters in the auditor's examination of Rectron Ltd.'s financial statements. Corresponding audit program：

The main audit procedures performed by the auditor for the above-mentioned key audit matters include reviewing the inventory aging report, analyzing the changes in inventory aging over different periods, assessing the reasonableness of Rectron Ltd.'s accounting policies and their implementation, conducting trend analysis on the treatment of obsolete inventory, understanding the basis and methods of inventory valuation, and comparing relevant variances to identify any significant abnormalities.

Other Matters

Inclusion of certain subsidiaries' financial statements in Rectron financial report that were audited by other auditors and not by the auditor. Therefore, with respect to the financial statements of those subsidiaries listed in the above-mentioned financial report, the amounts presented are based on the audit reports of other auditors. The total assets of those subsidiaries as of December 31, 2022, and December 31, 2021, accounted for 8% and 7% of the total assets, and the net sales for the period from January 1, 2022, to December 31, 2022, and January 1, 2021, to December 31, 2021, accounted for 34% and 33% of the total net sales.

Responsibility of the Management and the Governing Body for the Financial Reports

The management is responsible for the preparation of the appropriate financial statements, which are in accordance with the Financial Reporting Standards for Issuers of Securities and approved and issued by the Financial Supervisory Commission, as well as the applicable International Financial Reporting Standards, International Accounting Standards, Interpretations, and Interpretive Bulletins. They are also responsible for maintaining necessary internal controls related to the preparation of the financial statements to ensure that they are free from material misstatement caused by fraud or error.

In preparing the financial statements, the management's responsibility also includes assessing the ability of the Rectron Ltd. to continue as a going concern, making relevant disclosures, and adopting the going concern basis of accounting unless there are intentions to liquidate the Rectron Ltd. or cease its operations, or unless there are no other practical alternative courses of action other than liquidation or cessation.

The governance body of Rectron Ltd., including the Audit Committee, has the responsibility to

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oversee the financial reporting process.

Responsibility of the CPA to Audit Financial Reports

The purpose of the accountant's audit of the financial reports is to obtain reasonable assurance of whether the financial reports as a whole are substantially misrepresented due to fraud or error, and to issue an audit report. Reasonable assurance is a high level of assurance, but audit procedures performed in accordance with auditing standards cannot guarantee that material misstatements due to fraud or error in the financial reports will be detected. Misstatements may arise from fraud or errors. A misrepresentation of an individual amount or sum of transfers is considered significant if it is reasonably expected to affect the economic decisions made by users of financial reports.

Our auditor exercised professional judgment and skepticism in accordance with the auditing standards. We also performed the following tasks:

1.We identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or errors, designed and performed audit procedures according to those risks, and obtained audit evidence that can sufficiently and appropriately form the basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for the one resulting from error because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2.The understanding of the internal controls relevant to the audit was obtained to design appropriate audit procedures based on the circumstances at that time. However, it should be noted that the objective was not to express an opinion on the effectiveness of the internal controls of Rectron Ltd..
3.We evaluated the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and related disclosures made by management.
4.Based on the audit evidence obtained, a conclusion was reached regarding the appropriateness of management's use of the going concern basis of accounting and whether there were any significant uncertainties that may cast significant doubt on Rectron Ltd.'s ability to continue as a going concern. If the accountant considers that there is significant uncertainty in such events or circumstances, he/she shall, in the audit report, alert the users of the financial reports to the disclosure of the financial reports or amend the audit opinion if such disclosure is inappropriate. Our conclusions are based on the audit evidence obtained up to the date of this accountant’s report. However, it should be noted that future events or circumstances could arise that may jeopardize Rectron Ltd.'s ability to continue as a going concern.
5.Evaluate the overall presentation, structure, and content of the financial statements (including related notes), and determine whether the financial statements appropriately represent the relevant transactions and events.
6.Obtain sufficient and appropriate audit evidence regarding the financial information of the entities within the Ltd. in order to express an opinion on the financial statements. The auditor is responsible for guiding, supervising, and executing the audit of the Ltd. engagement and forming an audit opinion on the Ltd.'s financial statements.

The auditor communicates with the governance body regarding matters such as the planned audit scope and timing, as well as significant audit findings (including significant deficiencies in internal controls identified during the audit process).

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The auditor also provides the governance body with a statement that the personnel responsible for independence within the auditor's firm have complied with the independence requirements in the Code of Ethics for Professional Accountants, and communicates with the governance body on all relationships and other matters that could be considered to affect the auditor's independence (including relevant safeguards).

Based on communications with the governance unit, the auditor has determined the key audit matters for the audit of Rectron Ltd.'s financial statements for the year ended in the Republic of China 2022. We described these matters in the accountant’s report, unless the laws and regulations prohibit such disclosure or under rare condition that we decide not to communicate a given matter because the negative impact from such communication may override its public benefits under reasonable assumption.

The engagement partners on the audit resulting in this independent auditors’report are Shih-Chin Chih and Li-Chen Lai.

KPMG

Taipei, Taiwan (Republic of China) March 24, 2023

Notes to Readers

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

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

118 -

Rectron LTD. Balance Sheets As of December 31, 2022 and 2021

Unit: Thousands of New Taiwan Dollars

Current Asset: 1100 Cash and cash equivalents (Note 6(1)) $ 1170 Accounts receivable, net (Note 6(3), (15)) 1180 Accounts receivable due from related parties, net (Note 6(15), and 7) 1200 Other receivables 1210 Other receivables due from related parties, net (Note 7) 130X Inventory (Note 6(4)) 1410 Prepayments(Note 7) 1479 Other current assets - Other Non-Current Asset: 1517 Non-current financial assets measured at fair value through other comprehensive income (Note 6(2) ) 1550 Investments accounted for using equity method (note 6(5)) 1600 Property, plant, and equipment (Note 6(6) , 7, 8and 9) 1755 Right-of-use assets (Note 6(7)) 1760 Net investment properties (Note 6(8), 7) 1990 Other non-current assets - Other $ Total assets Asset	Amount % 88,578 4 108,281 5 14,358 1 1,867 - 208 - 40,806 2 650 - 1,588 - 256,336 12 2022.12.31 45,229 3 569,100 27 285,105 14 240 - 910,412 44 5,277 - 1,824,363 88 2,080,699 100 2022.12.31		Amount % Liabilities and Equity Current Liability: 42,133 2 2100 Short-term borrowings (Note 6 (9) and 8) $ 96,114 5 2130 Current portion of lease liabilities (Note 6 (15) and 7) 28,445 1 2170 Accounts payable 675 - 2180 Accounts payable due from related parties, net (Note 7) 107,242 5 2200 Other current liabilities (Note 6 (12) and 7) 48,134 2 2220 Other current liabilities due from related parties, net (Note 7) 952 - 2230 Current income tax liabilities (Note 6 (12)) 2,780 - 2280 Current lease liabilities 326,475 15 2300 Other current liabilities (Note 7) 2021.12.31 2640 Non-current lease liabilities 58,420 3 2570 Net defined benefit liabilities - Non-current (Note 6(11)) 438,704 22 2580 Deferred tax liabilities (Note 6(12)) 294,457 14 2600 Other non-current liabilities (Note 7) 791 - 915,851 46 Total liabilities 7,863 - 1,716,086 85 3110 Share capital - common stock 3200 Capital surplus 3310 Legal reserve 3320 Special surplus reserve 3351 Retained earnings 3400 Other equity Total equity 2,042,561 100 $ 2021.12.31 Total liabilities and equity Equity attributable to owners of the parent (Note 6(13))： Non-current liabilities：	A	mount % 30,000 1 682 - 40,195 2 49,863 2 19,035 1 151 - 20,076 1 214 - 1,266 - 161,482 7 3,509 - 62,679 3 - - 3,989 - 70,177 - 231,659 10 1,663,029 81 9 - 34,364 2 34,924 2 176,788 8 (60,074) 3 1,849,040 90 2,080,699 100 2022.12.31		A	mount % 117,000 7 - - 25,645 1 2,241 - 22,537 1 188 - 3,115 - 586 - 1,100 - 172,412 9 5,583 - 62,679 3 215 - 3,726 - 72,203 3 244,615 12 1,663,029 82 9 - 25,812 1 58,466 3 85,554 4 (34,924) (2) 1,797,946 88 2,042,561 100 2021.12.31

(Please refer to notes of the financial reports attached)

〜 4 〜

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Rectron Ltd. and its subsidiaries

Statements of Profit or Loss

For the years 2022 and January 1 to December 31, 2021

Unit: NTD 1,000

Amount 4000 $ 634,715 5110 493,295 141,420 5910 (58) 5920 (54) 141,424 6100 10,871 6200 41,407 6300 1,229 53,507 87,917 7010 2,851 7020 28,289 7050 (1,115) 7070 79,836 109,861 197,778 7950 21,678 176,100 8300 8310 8311 144 8316 440 8330 - 584 8360 8361 8367 (11,485) 8380 (14,105) (25,590) 8300 (25,006) 8500 151,094 9750 9850 Net profit for the period Management expense Research and development expenses. Selling expenses Less: Income tax expense (Note 6 (12)) Other revenue Other Profits and Losses Financial costs Share of profit of associates accounted for using equity method Non-operating revenue and expenditure (Notes 6 (17) and 7): Operating expenses (Notes 6 (11), (16) and 7): Operating net profit Profit before tax Less: Income tax related to items that may be reclassified Total of Items may be subsequently reclassified to profit/loss Exchange differences on translation of foreign financial statements Debt instruments measured at fair value through other comprehensive income in the financial statements. is not Unrealized gains or losses on equity instruments measured at fair value through other comprehensive income. Year 2022 Less: Unrealized profit (loss)from sales (Note 7) Add: Realized profit (loss)from sales (Note 7) Operating revenue (Notes 6 (15) and 7) Operating costs (Note 6(4) and (11) and 7) Operating gross profit Other Profit or Loss: Diluted earnings per share Basic earnings per share Earnings per share (NTD) (Note 6(14)) Current Other Comprehensive Income Total comprehensive income for the period Net profit for the period attributable to: Less: Income tax related to items that are not reclassified Total of Non-recurring items recognized directly in equity Items may be subsequently reclassified to profit/loss Defined benefit plan - remeasurement amount Investments in equity instruments measured at fair value through other comprehensive income in the financial statements. is not Unrealized gains or losses on equity instruments measured at fair value through other comprehensive income. Items Not to Be Reclassified Into Profit or Loss	`%` 100 78 22 - - 22 2 7 - 9 13 - 4 - 13 17 30 3 27 - - - - -2 -2 -4 -4 23 1.06 1.06	Amount 475,170 397,585 77,585 (54) (1,935) 75,704 10,087 42,434 2,503 55,024 20,680 3,176 (2,978) (1,674) 70,337 68,861 89,541 4,569 84,972 118 1,727 428 1,845 (2,748) 24,991 22,243 24,088 109,060 Year 2021	`%` 100 84 16 - - 16 2 9 1 12 4 1 -1 - 15 15 19 1 18 - - - - -1 5 4 4 22 0.51 0.51

(Please refer to notes of the financial reports attached)

〜 5 〜

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Statement of Changes in Equity for Rectron LTD.and its subsidiaries

For the years 2022 and January 1 to December 31, 2021

Unit: NTD 1,000

Equity Attributable to Owners of the Parent

Balance as of January 1, 2021 $ Net profit for the period Current Other Comprehensive Income Total comprehensive income for the period Appropriation and Distribution of Earnings: Appropriation to legal reserve Appropriation to special earnings reserve Cash dividend for common stock Balance as of December 31, 2021 Net profit for the period Other comprehensive income for the period Total comprehensive income for the period Appropriation and Distribution of Earnings: Appropriation to legal reserve Reversal of special reserve Cash dividends on ordinary shares As of December 31, 2022 balance. $ Equity Instruments measured at Fair Value through Other Comprehensive Income (OCI) upon disposal	Share capital 1,663,029 - - - - - - - 1,663,029 - - - - - - 1,663,029 Common share capital	Capital surplus 9 - - - - - - - 9 - - - - - - 9	Undistributed Legal Special Undistributed reserve reserve earnings 16,089 20,997 97,228 - - 84,972 - - 118 - - 85,090 9,723 - (9,723) - 37,469 (37,469) - - (50,000) - - 428 25,812 58,466 85,554 - - 176,100 - - 144 - - 176,244 8,552 - (8,552) - (23,542) 23,542 - - (100,000) 34,364 34,924 176,788 Retained earnings	Translation adjustments of foreign operations Total (66,039) 7,573 (58,466) - - - 24,991 (1,021) 23,970 24,991 (1,021) 23,970 - - - - - - - - - - (428) (428) (41,048) 6,124 (34,924) - - - (14,105) (11,045) (25,150) (14,105) (11,045) (25,150) - - - - - - - - - (55,153) (4,921) (60,074) Other equity items Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total equity 1,738,886 84,972 24,088 109,060 - - (50,000) - 1,797,946 176,100 (25,006) 151,094 - - (100,000) 1,849,040

(Please refer to notes of the financial reports attached)

〜 6 〜

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Rectron Ltd. and its subsidiaries

Statements of Cash Flows

For the years 2022 and January 1 to December 31, 2021

		Unit: NTD 1,000
Cash Flow from Operating Activities:		Year 2022 Year 2021
Net profit before tax for the period	$	197,778 89,541
Adjustments:
Revenue, expense, and loss items
Depreciation expenses		19,584 22,182
Amortization expense		2,586 1,709
Interest expense		1,115 1,674
Interest income		(1,462) (1,214)
Dividend income		(291) (280)
Share of loss (profit) of associates accounted for using equity method		(79,836) (70,337)
Unrealized profit loss sales		(58) (54)
Realized profit loss from sales		54 1,935
Foreign Exchange (Gain) Loss on Financial Assets		(2,462) 758
Disposition loss of real estate, plant and equipment		(3,998) -
Unrealized Gain on Disposal of Assets		15,339 -
Reclassification of Prepaid Equipment Payments to Expenses		- 1,321
Total income (expense) items		(49,429) (42,306)
Changes in assets/liabilities related to operating activities
Net changes in assets related to operating activities：
Notes receivable		- 64
Accounts receivable		(12,167) (11,882)
Accounts receivable due from related parties		140,487 (19,331)
Other receivables		(281) (40)
Other receivables due from related parties		78,730 (6,059)
Inventory		7,328 (7,907)
Prepayments		320 25,153
Other Current Assets		1,192 6,795
And Total Net Changes in Assets Related to Operating Activities		89,191 (13,207)
Net changes in liabilities related to operating activities:
Current Contract Liabilities		682 (50)
Accounts payable		14,550 (12,319)
Accounts payable due from related parties		47,622 2,241
Other accounts receivable		(3,088) 2,097
Other accounts receivable due from related parties		(37) -
Other current liabilities		166 (140)
Net defined benefit liabilities		(1,930) (930)
And Total Net Changes in Liabilities Related to Operating Activities		57,965 (9,101)
And Total Net Changes in Assets and Liabilities Related to Operating Activities		147,156 (22,308)
Total Adjusted Items		97,727 (64,614)
Cash inflow generated from operations		295,505 24,927
Interests received		169 1,079
Interests paid		(1,161) (1,688)
Income taxes paid		(4,717) (2,046)
Net cash inflow from operating activities		289,796 22,272

〜 7 〜

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Rectron Ltd. and its subsidiaries

Statements of Cash Flows

For the years 2022 and January 1 to December 31, 2021

		Unit: NTD 1,000
Cash Flow from Operating Activities:		Year 2022 Year 2021
Acquisition of financial assets at fair value through other comprehensive income		(3,260) (22,466)
Acquisition of Equity Method Investments		(80,000) -
Acquisition of property, plants, and equipment		(10,632) (8,762)
Disposal of property, plants, and equipment		9,270 -
Other accounts receivable due from related parties		28,304 (8,174)
Increase in other non-current assets		- (203)
Dividends received		291 280
Net cash outflows from investment activities		(56,027) (39,325)
Cash flows from financing activities: Increase in short-term borrowings.		65,000 20,000
Decrease in short-term borrowings.		(152,000) (60,000)
Increase (Decrease) in deposits as collateral.		263 (1,388)
Other accounts payable due from related parties		- 76
Principal repayment of leases		(587) (1,213)
Cash dividends paid		(100,000) (50,000)
Net cash outflow from financing activities		0 (92,525)
Net increase (decrease) in cash and cash equivalents for the current period.		46,445 (109,578)
Beginning balance of cash and cash equivalents.		42,133 151,711
Ending balance of cash and cash equivalents for the period.	$	88,578 42,133

(Please refer to notes of the financial reports attached)

〜 7-1 〜

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RECTRON LTD. Notes to Individual Financial Report Fiscal year 2012 and 2021

(Unless otherwise noted, all amounts are expressed in thousands of New Taiwanese Dollars.)

1. Company History

Rectron Technology Co., Ltd. (hereinafter referred to as "the Company") was established on January 23, 1976 with its registered address at No. 71, Zhongshan Rd., Tucheng Dist., New Taipei City, Taiwan The Company was originally named "Rectron Precision Electronics Industry Co., Ltd." and was renamed "RECTRON LTD." at the shareholders' meeting on June 29, 2000, which was approved by the Ministry of Economic Affairs.

The Company's main business activities include the manufacturing and sales of various rectifiers, other semiconductor components, and real estate leasing and sales.

2. Date and procedure of approval of the financial report

The individual financial statements have been approved and released by the Board of Directors on March 24, 2023.

3. Applicability of newly issued and revised standards and interpretations

(1) Impacts from adopting the latest and amended standards, and related interpretations approved by the Financial Supervisory Commission (ROC)

The Company has been applying the following newly revised International Financial Reporting Standards since January 1, 2022, and it has not had a significant impact on the individual financial statements.

‧ Amendment to International Accounting Standard 16 "Property, Plant and Equipment-second before Intended Use"
‧ Amendment to International Accounting Standard and Compliance 17 Fulfilling a Contract"

‧International Financial Reporting Standards Improvements for the 2018-2020 cycle

‧ Revision of IFRS 3 “Reference to the Conceptual Framework”
(2) Impact of International Financial Reporting Standards Not Yet Adopted by FSC

The company has assessed the following newly amended International Financial Reporting Standards, effective from January 1, 2023, and determined that they will not have a significant impact on the individual financial statements:

‧ Amendment to International Accounting Standard No. 1 "Disclosure of Accounting Policies"
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‧ Amendment to International Accounting Standard No. 8 "Definition of Accounting Estimates"
‧ Amendment to International Accounting Standard No. 12 "Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction with Income Tax Profit or Loss"
(3) Applicability of newly issued and revised standards and interpretations not yet recognized by the Financial Supervisory Commission (ROC)

The Company expects that the following new and revised standards, which have not yet

been approved, will not have a material impact on the individual financial reports.

‧ Amendment to International Financial Reporting Standard No. 10 and International Accounting Standard No. 28 "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"
‧ International Financial Reporting Standard No. 17 "Insurance Contracts" and the amendment to International Financial Reporting Standard No. 17 .
‧ Amendment to International Accounting Standard No. 1 "Classification of Liabilities as Current or Non-current"

4. Summary of significant accounting policies

‧ Amendment to International Accounting Standard No. 1 "Non-Current Liabilities with Contractual Terms"
‧ Amendment to International Financial Reporting Standard No. 17 "Comparative Information on Initial Adoption of IFRS 17 and IFRS 9"
‧ Amendment to International Financial Reporting Standard No. 16 "Requirements for Sale and Leaseback Transactions"

Summary of Significant Accounting Policies Adopted in this Individual Financial Report The

following accounting policies have been consistently applied to all periods covered in this individual financial report.

(1) Compliance Statement

This individual financial report is prepared in accordance with the "Financial Reporting Standards for Securities Issuers".

(2) Preparation Foundation
Measurement basis

Except for the significant items presented in the balance sheet below, this individual financial report is prepared on a historical cost basis:

(1) Financial assets measured at fair value through other comprehensive income.

(2) Net defined benefit liabilities (or assets)

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measured as the fair value of retirement fund assets minus the present value of defined benefit obligations.

2. Functional Currency and Presentation Currency

The functional currency of the company is the currency of the primary economic environment in which it operates. The individual financial report is presented in the functional currency of the Company, which is the New Taiwan Dollar (NTD). All financial information presented in New Taiwan dollars is in thousands of New Taiwan dollars.

(3) Foreign Currency

1. Foreign currency transactions.

Foreign currency transactions are translated into the functional currency at the exchange rates on the transaction dates. At the end of each reporting period (referred to as the reporting date), foreign currency monetary items are translated into the functional currency using the exchange rates on that day. Foreign currency non-monetary items measured at fair value are translated into the functional currency at the exchange rates on the measurement date, while those measured at historical cost are translated at the exchange rates on the transaction dates.

Foreign exchange gains or losses are usually recognized in profit or loss, except for the following cases that are recognized in other comprehensive income:

(1) Equity instruments designated as measured at fair value through other comprehensive income;
(2) Financial liabilities designated as net investment hedges of foreign operations within the hedge effectiveness; or
(3) Cash flow hedges that meet the qualifying criteria within the hedge effectiveness.

2. Foreign Operations

Assets and liabilities of foreign operating entities, including goodwill and fair value adjustments generated during acquisitions, are translated into New Taiwan dollars based on the exchange rate on the reporting date. Revenue and expense items are translated into New Taiwan dollars based on the average exchange rate of ； period. Any exchange differences are recognized in other comprehensive income.

When disposing of foreign operating entities leads to the loss of control, joint control or significant influence, all related accumulated exchange differences are reclassified in full to profit or loss. When partially disposing of subsidiaries that include foreign operating entities, related accumulated exchange differences are reattributed to non-controlling interests in proportion. When partially disposing of investments in associates or joint ventures that include foreign operating entities, related accumulated

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exchange differences are reclassified to profit or loss in proportion.

For monetary receivables or payables from foreign operating entities that have no settlement plan and cannot be settled in the foreseeable future, any foreign exchange gains or losses are recognized as part of the net investment in the foreign operating entity and recorded in other comprehensive income.

(4) Classification Criteria for Distinguishing Current and Non-Current Assets and Liabilities Assets that meet either of the following conditions are classified as current assets, while

all other assets that do not belong to current assets are classified as non-current assets:

Assets that are expected to be realized in their normal operating cycle or intended to be sold or consumed;
Assets held primarily for trading purposes;
Assets expected to be realized within twelve months after the reporting period; or
Assets that are cash or cash equivalents, unless there are restrictions on exchanging or using them to settle liabilities for at least twelve months after the reporting period.
Liabilities that meet any of the following conditions are classified as current liabilities,
and all other liabilities not meeting the criteria are classified as non-current liabilities:
Liabilities expected to be settled within the normal operating cycle;
Liabilities held primarily for trading purposes;
Liabilities expected to be settled within twelve months after the reporting period; or
Liabilities for which there is no unconditional right to defer settlement beyond at least twelve months after the reporting period. The terms of the liability that may be settled by issuing equity instruments at the option of the counterparty do not affect its classification.
(5) Cash and Cash Equivalents

Cash includes cash on hand and demand deposits. Cash equivalents refer to short-term investments that are highly liquid and have minimal risk of value fluctuations, which can be converted to a fixed amount of cash at any time. Time deposits that meet the above definition and are held to fulfill short-term cash commitments rather than for investment or other purposes are classified as cash equivalents.

(6) Financial Instruments

Accounts receivable and issued debt securities are initially recognized when generated. All other financial assets and financial liabilities are initially recognized when the contractual terms of the financial instrument become effective for the Company. Financial assets not measured at fair value through profit or loss (excluding trade receivables that do not contain significant financing components) or financial liabilities are initially measured at fair value plus directly attributable transaction costs. Accounts receivable that are not significant

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financial components are measured at transaction price on initial recognition.

Financial Assets

For financial assets purchased or sold in customary transactions, the Company consistently applies the accounting treatment based on the transaction date for financial assets same manner.

Financial assets are initially classified as: financial assets measured at amortized cost, debt instrument investments measured at fair value through other comprehensive income, and equity instrument investments measured at fair value through other comprehensive income. The Company only reclassifies all affected financial assets starting from the first day of the next reporting period when there is a change in the business model for managing financial assets.

(1) Financial Assets Measured at Amortized Cost

Financial assets that meet the following conditions and are not designated as measured at fair value through profit or loss are measured at amortized cost:

‧ The financial asset is held in a business model whose objective is to hold assets in order to collect contractual cash flows.
‧ Cash flows generated at specific dates by the contract terms and conditions of said financial assets and are fully used for paying the principals for outstanding principals. Subsequently, these assets are measured at their amortized cost, which is calculated
using the effective interest rate method based on the original recognized amount. Any accumulated amortization and adjustments for impairment losses are reflected in the amortized cost measurement. Interest income, foreign exchange gains and losses, and impairment losses are recognized in profit or loss. Gains or losses are recognized in profit or loss upon derecognition of financial assets.
(2) Financial Assets Measured at Fair Value through Other Comprehensive Income

Debt instruments investments that simultaneously meet the following conditions and are not designated as fair value through profit or loss are measured at fair value through other comprehensive income:

‧ The financial asset is held in a business model whose objective is to hold assets in order to collect contractual cash flows.
‧ Cash flows generated at specific dates by the contract terms and conditions of said financial assets and are fully used for paying the principals for outstanding principals. The Company has an irrevocable option at initial recognition to classify equity
investments that are not held for trading as subsequently measured at fair value through other comprehensive income. The aforementioned election is made on an
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instrument-by-instrument basis.

Debt instruments held by investors are subsequently measured at fair value. Interest income, foreign exchange gains and losses, and impairment losses calculated using the effective interest rate method are recognized in profit or loss, while other net gains or losses are recognized in other comprehensive income. Upon disposal, the accumulated amount of other comprehensive income is reclassified to profit or loss.

Equity instruments held by investors are subsequently measured at fair value. Dividend income (unless it represents a recovery of a portion of the investment cost) is recognized in profit or loss. Other net gains or losses are recognized in other comprehensive income and are not reclassified to profit or loss.

Dividend income from equity investments is recognized on the date the Company has the right to receive the dividend (usually the ex-dividend date).

(3) Financial asset impairment

The company recognizes an allowance for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables, deposits, and other financial assets), as well as debt instrument investments measured at fair value through other comprehensive income.

The allowance for expected credit losses on the following financial assets is measured based on 12-month expected credit losses, while the rest are measured based on lifetime expected credit losses:

‧ The credit risk of the debt securities as of the reporting date is considered low; and

‧ Other debt securities and bank deposits with no significant increase in credit risk (i.e.,

the risk of default occurring over the expected remaining lifetime of the financial instruments) since their initial recognition.

The allowance for expected credit losses on accounts receivable and contract assets is measured based on lifetime expected credit losses

The allowance for credit losses on accounts receivable and contract assets is measured based on the expected credit losses over their entire lifetime.

If the credit risk rating of a financial instrument is equivalent to the globally defined "investment grade" (such as Standard & Poor's BBB-, Moody's Baa3, or Taiwan Ratings twA, or higher than these ratings), the company considers the credit risk of that debt security to be low.

If a contractual payment is overdue for more than 180 days, the company assumes that the credit risk of the financial asset has significantly increased.

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If a contractual payment is overdue for more than 365 days, or it is highly unlikely that the borrower will fulfill its credit obligations and make full payments to the company, the company considers the financial asset to be in default.

The expected credit loss during the remaining term refers to the expected credit loss generated by all possible default events during the expected remaining term of the financial instruments.

Twelve-month expected credit losses refer to the expected credit losses resulting from potential default events that may occur within twelve months after the reporting date (or a shorter period if the expected remaining lifetime of the financial instrument is less than twelve months).

The maximum period for measuring expected credit losses is the longest contractual period that the company is exposed to credit risk.

Expected credit losses are the probability-weighted estimate of credit losses during the expected lifetime of the financial instrument. Credit losses are measured as the present value of all cash shortfalls, which is the difference between the contractual cash flows and the cash flows that the company expects to collect. Expected credit losses are discounted at the effective interest rate of the financial asset.

On each reporting date, the company assesses whether there is any credit impairment for financial assets measured at amortized cost and debt securities measured at fair value through other comprehensive income. A financial asset is impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence of impairment of financial assets includes observable data related to the following factors:

‧ Significant financial difficulties of the borrower or issuer;
‧ Default, such as delays or overdue for more than 365 days;
‧ Due to economic or contractual reasons related to the borrower's financial difficulties, the company provides concessions that it would not have considered originally.
‧ The borrower is highly likely to apply for bankruptcy or other financial reorganization;

‧ The active market of the financial asset disappears due to financial difficulties.

The allowance for impairment losses on financial assets measured at amortized cost is deducted from the carrying amount of the asset. The allowance for impairment losses on debt instruments measured at fair value through other comprehensive income is adjusted in the income statement and recognized in other comprehensive income (rather than reducing the carrying amount of assets).

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When the company cannot reasonably expect to recover the financial asset, either wholly or partially, it is directly reduced from the total carrying amount of the financial assets. For corporate clients, the company individually assesses the timing and amount of offsetting based on whether recovery can be reasonably expected. The company expects that the amounts offset will not have a significant reversal. However, the financial assets that have been offset can still be enforced to comply with the company's procedures for recovering overdue amounts.

In cases where the company enters into transactions involving the transfer of financial assets and retains substantially all risks and rewards of ownership, the assets continue to be recognized on the balance sheet.

(4) Derecognition of financial assets

The company only derecognizes a financial asset when there is termination of the contractual rights to receive cash flows from the asset, or when the asset has been transferred and substantially all risks and rewards of ownership have been transferred to another entity, or when neither the risks and rewards of ownership nor control over the financial asset are retained.

2. Financial liabilities

(1) Financial liabilities

Financial liabilities are classified as measured at amortized cost. Financial liabilities held for trading, derivatives, or designated at fair value through profit or loss at initial recognition are classified as fair value through profit or loss. Financial liabilities at fair value through profit or loss are measured at fair value, and related net gains and losses, including any interest expense, are recognized in profit or loss.

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

(2) Derecognition of Financial Liabilities

The Company derecognizes financial liabilities when the contractual obligations have been fulfilled, cancelled, or expired. When the terms of a financial liability are modified and the cash flows of the modified liability differ significantly, the original financial liability is derecognized, and a new financial liability is recognized at fair value based on the modified terms.

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Upon derecognition of a financial liability, any difference between its carrying amount and the total consideration paid or payable (including any non-cash assets transferred or liabilities assumed) is recognized in the income statement.

(3) Offsetting Financial Assets and Liabilities

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

(7) Inventories

Inventories are measured at the lower of cost and net realizable value. Cost includes the acquisition, production, or processing costs, as well as other costs incurred to bring the asset to its intended location and condition. The weighted average method is used to calculate cost. The cost of finished and work in progress inventory includes the manufacturing costs allocated to them in proportion to normal capacity.

Net realizable value is the estimated selling price in the normal course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(8) Investment in Subsidiaries

In preparing the individual financial statements, the company uses the equity method to assess its investments in subsidiaries over which it has control. Under the equity method, the current period's profit or loss and other comprehensive income in the individual financial statements are allocated in the same proportion as in the consolidated financial statements, attributable to the owners of the parent company. The owner's equity in the individual financial statements is the same as the equity attributable to the owners of the parent company in the consolidated financial statements.

If the change of ownership equity of the subsidiary company does not result in loss of control, it shall be treated as an equity transaction between the owner and the company. (9) Investment Real Estate

Investment properties are properties held to earn rentals or for capital appreciation or both, and not for use in the production or supply of goods or services, for administrative purposes or for sale in the normal course of business. Investment properties are initially measured at cost and subsequently measured at cost less accumulated depreciation and impairment losses. The depreciation method, useful lives and residual values are the same as those used for buildings and equipment.

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

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profit or loss.

Rental income from investment properties is recognized in the income statement under "Rental income" on a straight-line basis over the lease term. Lease incentives granted are recognized as part of rental income over the lease term.

(10) Real estate, plant and equipment.
Recognition and measurement

Real estate, plant and equipment items are measured at cost (including capitalized borrowing costs), less accumulated depreciation and any accumulated impairment.

If the useful lives of significant components of real estate, plant and equipment differ, they are treated as separate items (major components) of real estate, plant and equipment.

Gains or losses on disposal of real estate, plant and equipment are recognized in profit or loss.

Subsequent Costs

Subsequent expenditures are capitalized only when it is highly probable that they will generate future economic benefits for the company.

Depreciation

Depreciation is calculated based on the asset cost less residual value and is recognized in profit or loss using the straight-line method over the estimated useful life of each component.

Land is not subject to depreciation.

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

(1) Buildings and structures 5 ～ 55years
(2) Machinery and equipment 5 ～ 10 years
(3) Office equipment 3 ～ 10 years

The company reviews depreciation methods, useful lives, and residual values of

assets on each reporting date and makes appropriate adjustments when necessary.

Reclassification to Investment Properties

When a property for own use is reclassified as an investment property, the property is

reclassified as an investment property at the carrying amount at the date of reclassification.

(11) Leases

The Company assesses at the date of formation whether the contract is or includes a lease, if the contract assigns control over the use of the identified asset for a period of time in exchange for consideration.

1. Lessee

The Company recognizes the right-of-use assets and lease liabilities on the

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commencement date of the lease. The right-of-use assets are initially measured at cost, which includes the original measured amount of the lease liability. Adjustment of any lease payments made on or before the commencement date of the lease, adding to the original direct costs incurred and the estimated costs of dismantling, removing and restoring the underlying asset to its location or the underlying asset, excluding any lease inducements received.

The subsequent depreciation of the right-of-use assets at the beginning of the lease is made by the straight-line method when the useful life of the right-of-use assets expires or when the lease term expires earlier. In addition, the Company regularly evaluates whether there is any impairment of the right-of-use assets and deals with any impairment losses that have been incurred, and adjusts the right-of-use assets in the event of re-measurement of the lease liabilities.

Lease liabilities are measured in terms of the present value of outstanding lease payments at the commencement date of the lease. If the implied lease rate is easy to determine, the discount rate is that rate; if not, the Company's incremental borrowing rate is used. In general, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measure of lease liabilities include:

(1) Fixed payments, including substantial fixed payments.
(2) Variable lease payments determined by changes in an index or rate are initially measured using the index or rate at the lease commencement date.
(3) Expected residual value guarantees.
(4) Exercise prices or penalties to be paid upon reasonably certain exercise of purchase options or lease termination options.

Interests of lease liabilities are subsequently accrued by the effective interest method. The amount of which is re-measured under the following conditions:

(1) Changes in the index or rate used to determine lease payments result in changes in future lease payments.
(2) Changes in the amount of residual value guarantees expected to be paid.
(3) Changes in the assessment of purchase options for the underlying asset.
(4) Changes in the estimation of whether extension or termination options will be exercised, resulting in a change in the assessment of the lease term.

(5) Modifications to the lease's underlying asset, scope, or other terms.

When the lease liability is remeasured as a result of the foregoing changes in the index or rate used to determine lease benefits, changes in the guaranteed residual value amount, and changes in the evaluation of the option to purchase, extend, or terminate, if

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the book amount of the right-of-use assets is adjusted accordingly, and when the carrying amount of the right-of-use assets is reduced to zero, the remaining remeasured amount shall be recognized as the profit or loss.

For a lease modification that reduces the scope of the lease, the carrying amount of the right-of-use assets is reduced to reflect the partial or full termination of the lease, and the difference between this and the remeasured amount of the lease liability is recorded in the profit or loss.

The Company shall separately present the right-of-use assets and lease liabilities which do not meet the definition of investment real estate in the balance sheet as separate items.

For short-term leases and leases of low-value assets related to office rentals, the Company chooses not to recognize the right-of-use assets and lease liabilities, and instead, recognizes the related lease payments on a straight-line basis over the lease term as expenses.

Sale-and-leaseback transactions are assessed under International Financial Reporting Standard No. 15 to determine if the transfer of assets to the buyer-lessee qualifies for sale treatment. If it is determined that it is treated as a sale, the asset is derecognized and the portion of the rights transferred to the buyer and lessor is recognized in the related income or expense. The leaseback transaction is accounted for using the lessee accounting model, and the right-of-use asset is measured based on the original carrying amount of the portion leased back. If it is determined that the criteria for treatment as a sale are not met, the transaction is treated as financing.

As a lessor

The Company as a lessor involves the classification of almost all the risks and rewards of the lease contract on the date of the lease, depending on whether or not it is transferred to the ownership of the underlying asset. If so, it is classified as financial lease; otherwise, it is classified as business lease. In the evaluation, the Company considers certain relevant indicators, including whether the lease term covers a major part of the economic life of the target asset.

Sublease transactions: If the lessor is involved in subleasing, the main lease and sublease transactions are accounted for separately, and the classification of the sublease transaction is based on the evaluation of the right-of-use asset generated by the main lease. If the main lease is a short-term lease and is eligible for exemption from recognition, the sub-lease transaction should be classified as an operating lease.

If the agreement contains leasehold and non-leasehold components, the Company

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will use the consideration in the apportionment agreement as specified in IFRS 15.

Assets held under a financial lease shall be expressed as financial lease receivable in terms of the net amount of leasing investment. The original direct costs incurred in negotiating and arranging operating leases are included in the net investment in the lease. The net investment in the lease is recognized as interest income over the lease term in a pattern that reflects a constant periodic rate of return. For business leases, the Company shall recognize the lease payments received as rental income during the lease term on a straight line basis.

(12) Financial asset impairments

The company evaluates on each reporting date whether there are indications that the carrying amount of non-financial assets (excluding inventory and deferred tax assets) may be impaired. If any indicators exist, the estimated recoverable amount of the asset is determined.

The recoverable amount is the higher of the fair value less costs of disposal and the value in use of individual assets or cash-generating units. In estimating the value in use, the future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market's assessment of the time value of money and the specific risks of the asset or cash-generating unit.

If the recoverable amount of an individual asset or cash-generating unit is lower than its carrying amount, an impairment loss is recognized.

The impairment loss is recognized immediately in profit or loss and reduces the carrying amount of each asset within the unit on a pro-rata basis based on the carrying amount of each asset before the impairment loss.

Non-financial assets other than goodwill are only reversed to the extent that the carrying amount does not exceed the amount that would have been determined had no impairment loss been recognized in prior years (net of depreciation or amortization).

(13) Revenue Recognition

Revenue from customer contracts

Revenue is measured by the consideration expected to be received in exchange for the transfer of goods or services. The company recognizes revenue when control over the goods or services is transferred to the customer, thereby satisfying performance obligations. The company provides the following explanations based on its primary revenue streams:

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(1) Sale of Goods - Electronic Rectifier Diodes and Semiconductor Passive Components

The company manufactures electronic components and sells them to electronic equipment manufacturers. Revenue is recognized when control over the products is transferred. Control over the product is deemed to have been transferred when the product has been delivered to the customer, the customer has the full ability to decide on the sales channel and price of the product, and there are no unfulfilled obligations affecting the customer's acceptance of the product. Delivery occurs when the products are shipped to a specific location, and the Company risks of obsolescence, deterioration, and loss have been transferred to customers. Customers have accepted the products in accordance with the sales contract, the acceptance clauses have expired, or the merging company has objective evidence that all acceptance criteria have been met.

The Company shall recognize accounts receivable at the time of delivery of commodities, since the Company has the right to receive consideration unconditionally at that time.

(2) Rental income

Rental income from investment properties and income from leasing real estate are recognized as lease income in the operating revenue item.

(3) Financial Components

The company expects that the time between the transfer of goods or services to customers and the customer's payment for those goods or services does not exceed one year. Therefore, the company does not adjust the transaction price for the time value of money.

(14) Employee benefits

1. Defined Contribution Plans

The recognition of obligations for defined contribution retirement plans occurs as expenses during the period in which the employees provide services.

2. Defined Benefit Plans

The net obligation for defined benefit plans is calculated by discounting the future benefit amounts earned by employees for their service in the current or prior periods and subtracting any fair value of plan assets.

The determination of the benefit obligation is annually actuarially calculated using the projected unit credit method by a qualified actuary. When the calculation results in an economic benefit for the company, the recognition of an asset is limited to the present value of any economic benefits available from refunds from the plan or reductions in future contributions to the plan. When calculating the present value of economic benefits, any minimum funding requirements are considered.

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Any changes in the remeasurement of the net defined benefit liability, including actuarial gains and losses, return on plan assets (excluding interest), and any changes to the asset ceiling (excluding interest), are immediately recognized in other comprehensive income and accumulated in retained earnings. The net interest expense (income) related to the net defined benefit liability (asset) is determined using the net defined benefit liability (asset) and the discount rate determined at the beginning of the reporting period. The net interest cost and other expenses of the defined benefit plan are recognized in income.

When the plan is amended or curtailed, any benefit changes related to the cost of prior service or curtailment gain or loss are immediately recognized in income. The company recognizes the settlement gains or losses of the defined benefit plans upon settlement occurrence.

3. Short-term employee benefits

Short-term employee benefits are recognized as expenses when services are provided. If the company has a present legal or constructive obligation resulting from past employee services, and the amount of that obligation can be reliably estimated, it is recognized as a liability.

(15) Income Tax

Income tax includes current and deferred income tax. Current income tax and deferred income tax, except for items related to business combinations, direct recognition in equity, or other comprehensive income, shall be recognized in profit or loss.

Current income taxes include the estimated income tax payable or receivable based on taxable income (loss) for the year, and any adjustments to income tax payable or receivable for prior years. The amounts are measured at the best estimate of the expected payments or receipts, based on the statutory tax rate or the substantive enacted tax rate as of the reporting date.

Deferred income tax is recognized by measuring the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. The following temporary differences that arise shall not give rise to recognition of deferred income tax:

The initial recognition of assets or liabilities from transactions that are not business combinations and do not affect accounting profit or taxable income (loss) at the time of the transaction;
Temporary differences arising from investments in subsidiaries, associates, and joint ventures for which the company has control over the timing of the reversal of the temporary differences and it is highly probable that they will not reverse in the foreseeable future; and
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Temporary differences arising from the initial recognition of goodwill.

Unused tax losses and unused tax credits for future periods, and deductible temporary differences, are recognized as deferred tax assets within the scope of being very likely to have future taxable income available for use. They shall be reassessed on each reporting date, and adjustments shall be made to reduce the related income tax benefits that are unlikely to be realized; or to reverse the amount of the previously reduced income tax benefits that are likely to have sufficient taxable income in the future.

Deferred income tax is measured based on the tax rate expected to be applied when the temporary differences are reversed, based on the statutory tax rate or the substantive enacted tax rate as of the reporting date.

The company only offsets deferred tax assets and deferred tax liabilities when the following conditions are simultaneously met:

When there is a legally enforceable right to offset current income tax assets and current income tax liabilities; and
Deferred income tax assets and deferred income tax liabilities are related to either: (1) the same taxpayer entity; or
(2) different taxpayer entities, provided that each entity intends to settle the current income tax liabilities and assets on a net basis or simultaneously realize the assets and settle the liabilities in each future period in which significant amounts of the deferred income tax assets are expected to be recovered and deferred income tax liabilities are expected to be settled.
(16) Earnings per share

The Company lists out the basic and the dilutive earnings per share (EPS) of the Company's common share equity holders. The Company's basic earnings per shares are calculated by having the equity of the equity holders of the Company's common shares divided by the weighted average of the number of outstanding common shares. The diluted earnings per share are calculated after adjusting for the effect of all potential diluted common shares on the profits and losses attributable to holders of the Company's common shares and the weighted average number of outstanding common shares. The potential dilutive ordinary shares of the Company include the estimated amount of employee compensation accruals.

(17) Segment information

The company has disclosed segment information in the consolidated financial statements, and therefore, the individual financial statements do not disclose segment information.

～ 13 ～

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5. Critical accounting judgments, estimates and key sources of assumption uncertainty

When preparing the individual financial statements, management must make judgments, estimates, and assumptions that will affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

Management continually reviews its estimates and underlying assumptions, and any adjustments are recognized in the period of change and in future periods affected.

The following assumptions and estimates involve significant uncertainties that could result in material adjustments to the carrying amounts of assets and liabilities in the next financial year and have been impacted by the COVID-19 pandemic. Details of these assumptions and estimates are provided below:

(1) Allowance for doubtful accounts for accounts receivable.

The allowance for doubtful accounts is estimated based on assumptions regarding default risk and expected loss rates. The company considers historical experience, current market conditions, and forward-looking estimates on each reporting date to determine the assumptions and inputs to be used in calculating impairment. For detailed explanation of the related assumptions and input values, please refer to Note 6(3).

(2) Inventory evaluation

Due to the requirement to measure inventory at cost or net realizable value, whichever is lower, the Company assesses the amount of inventory cost to be written down to net realizable value due to normal wear and tear, obsolescence, or lack of market sales value as of the evaluation report date. The inventory valuation is primarily based on estimates of product demand during a specific future period, and may be subject to significant changes due to rapid changes in the industry. Please refer to Note 6(4) for details on the inventory valuation estimate.

The company's accounting policies and disclosures include the use of fair value measurement for its financial and non-financial assets and liabilities. The company has established internal control systems for fair value measurement. This includes establishing an assessment team responsible for reviewing all significant fair value measurements (including level 3 fair value) and reporting directly to the Chief Financial Officer. The assessment team periodically reviews significant unobservable inputs and adjustments. If third-party information (such as brokers or pricing service organizations) is used as inputs to measure fair value, the assessment team will evaluate the evidence supporting the input values provided by the third party to ensure that the valuation and its fair value classification comply with International Financial Reporting Standards. Investment properties are periodically valued by the company based on the evaluation methods

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and parameter assumptions specified by the Financial Supervisory Commission, or by external appraisers commissioned by the company.

The company strives to use market observable inputs as much as possible when measuring its assets and liabilities. The fair value level is classified based on the input values used by the valuation technique, as follows:

(1) Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
(2) Level 2: Inputs for the asset or liability that are directly (i.e., prices) or indirectly (i.e., derived from prices) observable, excluding those included in Level 1.
(3) Level 3: Inputs for the asset or liability that are unobservable (i.e., non-market observable inputs).

In the event of transfers between different levels of fair value hierarchy, the company recognizes the transfer on the reporting date.

Please refer to the following notes for information related to the assumptions used in measuring fair value:

Note 6(8): Investment properties.
Note 6(18): Financial instruments.

6. Explanation of Significant Accounting Items

(1) Cash and Cash Equivalents

ation of Significant Accounting Items ash and Cash Equivalents
Cash and cash equivalents. Bank deposit Time Deposits The cash and cash equivalents as presented in the statement of cash flows.	2022.12.31 $ 41 70,111 18,426	2021.12.31 41 42,092 -
	$ 88,578	42,133

For the disclosure of interest rate risk and sensitivity analysis related to the company's financial assets and liabilities, please refer to Note 6(18).

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(2) Financial assets measured at fair value through other comprehensive income.

Debt instruments measured at fair value through other comprehensive income: Foreign corporate bonds - APPLE Foreign corporate bonds - AT&T Foreign corporate bonds - Pfizer Equity instruments measured at fair value through other comprehensive income: Domestic unlisted (OTC) company stocks - SunnyBank. Total	2022.12.31 $ 25,444 8,631 4,154 16,000 $ 54,229	2021.12.31 26,746 11,006 5,108 15,560 58,420

Debt instrument investments measured at fair value through other comprehensive income

As of December 31, 2022, and December 31, 2021, the Company held bond investments measured at fair value through other comprehensive income with effective interest rates ranging from 2.00% to 4.01% and maturity dates ranging from 2036 to 2045. The Company evaluates these bond investments as held for the purpose of collecting contractual cash flows and selling financial assets, in line with its operating model. Therefore, they are reported as financial assets measured at fair value through other comprehensive income.

Equity instrument investments measured at fair value through other comprehensive income

The Company holds these equity instrument investments as long-term strategic investments and not for trading purposes, thus they have been designated as measured at fair value through other comprehensive income.

For information regarding credit risk (including impairment of debt instrument investments) and market risk, please refer to Note 6(18).
As of December 31, 2022, and December 31, 2021, none of the above-mentioned financial asset investments held by the Company were provided as collateral.
(3) Accounts receivable (excluding related parties)

ccounts receivable (excluding related parties)
Accounts receivable Less: Allowance for Doubtful Accounts	2022.12.31 $ 108,281 -	2021.12.31 96,114 -
	$ 108,281	96,114

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The Company applies a simplified approach to estimate expected credit losses for all accounts receivable. This approach involves measuring expected credit losses over the remaining expected lifetime of the receivables. For this measurement purpose, the accounts receivable are grouped based on shared credit risk characteristics that represent the customers' ability to pay all amounts due under the contract terms. The analysis incorporates forward-looking information, including macroeconomic and industry-specific information. The analysis of expected credit losses for the Company's accounts receivable is as follows:

2022.12.31

		2022.12.31
Not Overdue Within 180 days of overdue Not Overdue Within 180 days of overdue	Accounts receivable Book Value $ 88,623 19,658	Weighted Average Expected Credit Loss Rate	Expected Credit Losses During Allowance Duration - -
		0%~0.30% 0%~3.58% 2021.12.31
	$ 108,281		-
			Expected Credit Losses During Allowance Duration - -
	Accounts receivable Book Value $ 71,248 24,866	Weighted Average Expected Credit Loss Rate
		0%~0.25% 0%~10%
	$ 96,114		-

There were no changes in the allowance for doubtful accounts for accounts receivable in both 2022 and 2021.

As of December 31, 2022, and December 31, 2021, none of the accounts receivable of the company were pledged as collateral.

(4) Inventory

the company were pledged as collateral. ventory
Raw materials and supplies Work in progress Finished goods Goods-in-Transit Inventory Subtotal Less: Allowance for Doubtful Accounts	2022.12.31 $ 1,091 3,051 33,966 3,340	2021.12.31 3,587 12,370 38,515 756
	41,448 (642)	55,228 (7,094)
	$ 40,806	48,134

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Details of inventory-related expenses recognized by the company in the fiscal years 2022 and 2021 are as follows:

2022 and 2021 are as follows:
Reversal of inventory sold. Inventory obsolescence (reversal of impairment) loss Total	Year 2022 $ 491,939 (6,452) $ 485,487	Year 2021 385,392 4,039
		389,431

As of December 31, 2022, and December 31, 2021, the company's inventory was not pledged or used as collateral.

(5) Investments accounted for using the equity method

The investments accounted for using the equity method as of the reporting date are presented as follows: ：

Subsidiary	2022.12.31 $ 569,100	2021.12.31 438,704

1. Subsidiary

Please refer to the 2022 annual consolidated financial statements for details.

2. Pledges

As of December 31, 2022, and December 31, 2021, none of the equity method investments of the Company were provided as collateral.

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(6) Property, Plant, and Equipment

The details of changes in the cost, depreciation, and impairment loss of property, plant, and equipment for the year 2022 and 2021 are as follows:

Land Cost or deemed cost: Balance as of January 1, 2022 $ 181,394 Increase - Reclassify - Disposition - Balance as of December 31, 2022 $ 181,394 Balance as of January 1, 2021 $ 181,394 Increase - Reclassify - Balance as of December 31, 2021 $ 181,394 Depreciation and impairment loss`：` Balance as of January 1, 2022 $ - Depreciation of this year - Disposition - Balance as of December 31, 2022 $ - Balance as of January 1, 2021 $ - Depreciation of this year - Balance as of December 31, 2021 $ - Book value: December 31, 2022 $ 181,394 January 1, 2021 $ 181,394 December 31, 2021 $ 181,394	Buildings and structures 94,503 - - -	Machinery and equipment 203,607 1,466 3,030 (16,126)	Office equipment 37,765 - - (24)	Unfinished works and equipment to be inspected 6,247 8,798 (3,030) -	Total 523,516 10,264 - (16,150)
$ 181,394	94,503	191,977	37,741	12,015	517,630
	94,503 - -	193,160 2,969 7,478	37,250 - 515	9,398 5,793 (8,944)	515,705 8,762 (951)
$ 181,394	94,503	203,607	37,765	6,247	523,516
	37,061 3,356 -	163,395 7,569 (10,104)	28,603 2,669 (24)	- - -	229,059 13,594 (10,128)
$ -	40,417	160,860	31,248	-	232,525
	33,705 3,356	153,983 9,412	25,943 2,660	- -	213,631 15,428
$ -	37,061	163,395	28,603	-	229,059
$ 181,394	54,086	31,117	6,493	12,015	285,105
$ 181,394	60,798	39,177	11,307	9,398	302,074
$ 181,394	57,442	40,212	9,162	6,247	294,457

The balance Details of the mortgaged real estate, plants, and equipment as of December 31, 2022 and 2021, are explained in Note 8.

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(7) Right-of-use assets

The cost, depreciation, and impairment loss related to the leased transportation equipment and other equipment of the Company are detailed as follows:

Transportation Equipment	Other equipment 280 (280)	Total 4,785 (3,343)
$ 4,505 (3,063)
$ 1,442	-	1,442
$ 4,505	280	4,785
$ 4,505	280	4,785
$ 3,784 481 (3,063)	210 70 (280)	3,994 551 (3,343)
$ 1,202	-	1,202
$ 2,538 1,246	140 70	2,678 1,316
$ 3,784	210	3,994
240	-	240
$ 721	70	791
$ 1,967	140	2,107

(8) Investment real estate

Land $ 663,510	Buildings and structures 289,958	Total 953,468
$ 663,510	289,958	953,468
$ 663,510	289,958	953,468
$ 663,510	289,958	953,468

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`Land` $ - -	`Buildings` `and` `structures` 37,617 5,439	`Buildings` `and` `structures` 37,617 5,439	`Total` 37,617 5,439
$ -	43,056		43,056
$ - -	32,179 5,438		32,179 5,438
$ -	37,617		37,617
$ 663,510	246,902		910,412
$ 663,510	257,779		921,289
$ 663,510	252,341		915,851
		$ 1,783,220
		$ 1,727,543
		$ 1,713,643

Investment properties are self-owned assets held by the Company. The original non-cancellable lease term for leased investment properties ranges from 5 to 6 years.
Due to the restriction in the law at the time of acquiring certain real estate investments, which prohibited private entities from acquiring agricultural land, Mr. Lin Wenteng, a director of the Company, registered the property under his personal name. To ensure the preservation of the Company's assets, the property has been pledged back to the Company.
The fair value of investment properties is based on the evaluation conducted by independent appraisers who possess recognized professional qualifications and recent experience in evaluating properties of similar location and type. The evaluation is based on market value. If an active market price is not available, the valuation is determined by considering the estimated aggregate of expected cash flows from leasing the property, discounted at a rate that reflects the specific risks associated with the inherent net cash flows of the property, to determine its value.
For the years ended 2022 and December 31, 2021, please refer to Note 8 for details regarding the pledging of investment properties by the Company.
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(9) Short-term borrowings

The details of the Company's short-term borrowings are as follows:

hort-term borrowings The details of the Company's short-term borrowings	are as follows:	are as follows:
Secured bank borrowings. Unused credit facilities Interest rate range	2022.12.31 $ 30,000		2021.12.31 117,000 283,000 1.28%~1.29%
	$ 370,000
		1.29%~1.79%

Please refer to Note 8 for details on the collateral provided for bank borrowings.

(10) Operating Leases

Lessor Leases

The company leases its investment properties under operating leases. Please refer to Note 6(8) for further information. The future minimum lease payments receivable for non-cancellable lease agreements are as follows:

Within a year 1-5 years	2022.12.31 $ 20,466 38,182	2021.12.31 15,680 32,757 48,437
	$ 58,648

(11) Employee benefits

1. Defined Benefit Plans

The adjustments to the present value of defined benefit obligations and the fair value of plan assets are as follows:

of plan assets are as follows:
Present value of defined benefit obligation The fair value of plan assets. Net defined benefit liability.	2022.12.31 $ 9,523 (6,014) $ 3,509	2021.12.31 11,642 (6,059)
		5,583

The company's defined benefit plan contributions are allocated to the Taiwan Bank's special account for labor retirement reserves. Retirement benefits for each employee subject to the Labor Standards Act are calculated based on their years of service, base salary, and average salary for the six months prior to retirement.

(1) Composition of Plan Assets

The retirement fund allocated by the company under the Labor Standards Act is managed by the Labor Pension Fund Supervisory Committee (referred to as the Labor Fund Committee). According to the "Regulations on Income, Preservation, and Utilization of Labor Retirement Funds," the minimum annual return on fund distribution shall not be lower than the interest calculated based on the local bank's two-year fixed

148 -

deposit rate.

As of the reporting date, the company's balance in the Taiwan Bank's special account for labor retirement reserves is NT$6,014 thousand. The data on the operation of labor retirement funds includes the fund yield and asset allocation, which are disclosed on the website of the Bureau of Labor Funds.

(2) Changes in the Present Value of Defined Benefit Obligations

The changes in the present value of defined benefit obligations for the company in 2022 and 2021 are as follows:

January 1 Defined Benefit Obligations Current service cost and interest Net remeasurement of defined benefit liability (asset) `－`Actuarial gains and losses resulting from changes in financial assumptions Benefits payable under the plan December 31 Defined Benefit Obligations	Year 2022 $ 11,642 163 314 (2,596)	Year 2021 12,718 120 (28) (1,168)
	$ 9,523	11,642

(3) Changes in Fair Value of Plan Assets

The changes in fair value of the defined benefit plan assets for the year ended 2022 and 2021 are as follows:

Fair value of plan assets as of January 1st Interest income Net determination of welfare (liabilities) asset remeasures `－`Plan asset return (excluding current interest). Amounts recognized as contributions to the plan. Benefits payable under the plan Fair value of plan assets as of December 31	Year 2022 $ 6,059 43 458 151 (697)	Year 2021 6,087 18 90 198 (334)
	$ 6,014	6,059

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(4) Expenses recognized in profit or loss

The details of expenses recognized for the fiscal year 2022 and 2021 are as follows:

Current service costs Net interest on the net defined benefit liability (asset) recognized. Operating cost Selling expenses Management expense research and development expenses	Year 2022 $ 81 39 $ 120 $ 42 12 66 - $ 120	Year 2021 82 20
		102
		36 18 45 3
		102

(5) Accumulated remeasurements of net defined benefit liability (asset) recognized in other comprehensive income

The accumulated remeasurements of net defined benefit liability (asset) recognized in other comprehensive income are as follows:

January 1st Cumulative Balance Current Period Recognition December 31st Cumulative Balance	Year 2022 Year 2021 $ (1,376 ) (1,494) 144 118 $ (1,232) (1,376)

(6) Actuarial Assumptions

The significant actuarial assumptions used by the Company as of the end of the financial reporting period to determine the present value of defined benefit obligations are as follows:

are as follows:
Discount rate Future salary increase	2022.12.31 1.30% 1.25%	2021.12.31
		0.70% 1.25%

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The company is expected to make a contribution of 137 thousand dollars to the defined benefit plan within one year after the reporting date in 2022.

The weighted average remaining service period of the defined benefit plan is 10 years.

(7) Sensitivity Analysis

When calculating the present value of the defined benefit obligation, the company must exercise judgment and make estimates to determine actuarial assumptions for the balance sheet date, including discount rates, employee turnover rates, and future salary changes. Any changes in actuarial assumptions could have a significant impact on the amount of the company's defined benefit obligations.

The impact of significant changes to the main actuarial assumptions adopted on December 31, 2022 and December 31, 2021 on the present value of defined benefit obligations is as follows:

December 31, 2022 Discount rate (variation of 0.25%) Future salary increase (variation of 0.25%) December 31, 2021 Discount rate (variation of 0.25%) Future salary increase (variation of 0.25%)	Impact on the defined benefit obligation. Increase Decrease $ (154) 159 142 (139) (220) 227 197 (192)
	Increase $ (154) 142 (220) 197

The sensitivity analysis above examines the impact of a single assumption change while holding other assumptions constant. In practice, many assumption changes may be interrelated. Sensitivity analysis is consistent with the method used to calculate the net defined benefit liability on the balance sheet.

The method and assumptions used in this period's sensitivity analysis are the same as those used in the previous period.

2. Defined Contribution Plans

In accordance with the provisions of the Labor Pension Act, the definitional contribution plan of the Company shall be allocated to the labor pension individual account of the Bureau of Labor Insurance at a contribution rate of 6% of the monthly wages of the labors. Under the scheme, there is no statutory or constructive obligation on the part of the Company to pay any additional amount after a fixed contribution has been made to the Bureau of Labor Insurance.

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The retirement benefit expenses under the defined benefit plan of the company have been allocated to the Labor Bureau:

Operating cost Selling expenses Management expense research and development expenses	Year 2022 $ 513 157 626 56 $ 1,352	Year 2021 667 95 636 93
		1,491

(12) Income tax
The detailed income tax expenses for the fiscal years 2022 and 2021 are as follows:

Current Generation Tax on unappropriated earnings Adjustment of prior-period income taxes. Current income tax expense	Year 2022 $ 21,892 - (214)	Year 2021 3,806 2 761 4,569
	$ 21,678

The adjustments between income tax expenses and pre-tax net income for the fiscal years 2022 and 2021 are as follows:

Profit before tax Income tax calculated based on the domestic tax rate of the company's jurisdiction. Investment gains and losses recognized under the equity method Tax on unappropriated earnings Unrecognized changes in temporary differences Underestimated (overestimated) income tax in prior periods. `其他` Total	Year 2022 $ 197,778	Year 2021 89,541 17,908 (14,067) 2 884 761 (919) 4,569
	$ 39,555 (15,967) - (1,438) (214) (258)
	$ 21,678

3. Deferred income tax assets and liabilities

(1) Unrecognized deferred income tax assets

Items not recognized as deferred income tax assets of the Company are as follows:

Deductible Temporary Differences	2022.12.31 $ 25,156	2021.12.31 23,718

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(2) Recognized deferred income tax assets (and liabilities)

The changes in deferred income tax liabilities for the year 2022 and 2021 are as follows:

Deferred income tax liabilities: January 1, 2021 Balance as of December 31, 2022 January 1, 2021 Balance as of December 31, 2021	Land value increment tax reserve $ 62,679 $ 62,679 $ 62,679 $ 62,679

The corporate income tax settlement and declaration for the company have been approved by the tax authorities until the year 2020.

(13) Capital and Other Equity

1. Issuance of Common Stock

As of December 31, 2022 and 2021, the total par value of the authorized common stock of the Company was NT$4,000,000 thousand, consisting of 400,000 thousand shares with a par value of NT$10 per share. The total issued common shares were 166,303 thousand shares and all the proceeds from the issuance of the issued shares have been received.

2. Capital Surplus

Content of the Company’s capital surplus balance is as follows:

Treasury stock	2022.12.31 $ 9	2021.12.31 9

In accordance with the provisions of the Company Act, after the capital reserves need to be first used to cover losses, the company may issue new shares or cash out of the realized capital reserves according to the proportion of the shareholders' original shares. The "realized capital surplus" referred to in the preceding paragraph includes the surplus resulting from the issuance of shares at a premium over their face value and income from receiving gifts. The total amount of the capital reserve that may be allocated as capital in accordance with the issuer's standards for handling the issue of securities shall not exceed 10% of the paid-up capital.

3. Retained Earnings

The company's annual financial statements require the payment of taxes from any

153 -

profits earned. After offsetting accumulated losses, 10 percent of the remaining amount is allocated as the statutory surplus reserve. However, if the statutory surplus reserve exceeds the company's paid-up capital, no further allocation is required. Any remaining profits, along with undistributed profits from previous periods, are considered distributable profits and must be proposed by the board of directors and approved by the shareholders' meeting for dividend distribution.

The company, considering financial, operational, and business factors, may distribute dividends to shareholders not less than 10 percent of the distributable profits of the current fiscal year. However, if the accumulated distributable profits are less than 3 percent of the paid-up capital, no distribution may be made. The distribution of dividends may be in the form of cash dividends or stock dividends. Cash dividends shall take priority, and the ratio of cash dividends shall not be less than 10 percent of the dividend amount.

If the aforementioned shareholder dividends are to be distributed in cash, the Board of Directors is authorized to implement the decision with the consent of two-thirds or more of the attending directors and a majority of the attending directors, and to report it to the shareholders' meeting.

(1) Statutory Surplus Reserve

When the Company has no losses, it may distribute new shares or cash by using the statutory surplus reserve upon approval of the shareholders' meeting, subject to the limitation of the surplus reserve exceeding 25% of the paid-in capital.

(2) Special Surplus Reserve

Upon initial adoption of International Financial Reporting Standards (IFRS) approved by the Financial Supervisory Commission, the Company chose to apply the exemption item of IFRS 1 "First-time Adoption of International Financial Reporting Standards." Unrealized revaluation gains, cumulative translation adjustments (gains), and assets classified as "investment property" on the transition date were not recognized in equity. In accordance with the FSC Order No. 1010012865 issued on April 6, 2012, the same amount of special surplus reserve shall be appropriated. When related assets are used, disposed of, or reclassified, the proportion of the originally appropriated special surplus reserve may be reversed and distributed as profits.

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According to the regulations of the Financial Supervisory Commission, when distributing distributable earnings, the Company shall deduct the net amount of other shareholders' equity reduction items recorded during the year and the difference between the special surplus reserve balance mentioned in the previous paragraph. When distributing the earnings of fiscal year 2020 in 2021, the Company appropriated the current year's profit or loss and the undistributed earnings of prior years to the special surplus reserve. When distributing the earnings of fiscal year 2021 in 2022, the Company appropriated the amount of the current year's after-tax net income and items other than the current year's after-tax net income to the undistributed earnings of the current year, and made up for the special surplus reserve of prior years. If there are any other shareholders' equity reduction items accumulated in prior years, they shall not be distributed from the special surplus reserve made up for undistributed earnings of prior years. When there is a reversal of the amount of reduction in other shareholders' equity items, the Company may distribute the profits for the corresponding portion. As of December 31, 2022 and 2021, the remaining balance of the special reserve for surplus was NT$34,924 thousand and NT$58,466 thousand, respectively.

(3) Surplus distribution

On March 31, 2022, this company resolved the cash dividend amount for the fiscal year 2021 distribution plan for profits at the Board of Directors meeting. On June 30, 2022, the fiscal year 2021 other profit distribution plan was approved at the Shareholders' Meeting. In addition, the fiscal year 2020 profit distribution plan was approved at the Shareholders' Meeting on August 30, 2021. Relevant information can be found on the Public Information Observation Platform. The amounts of distribution to the shareholders are as follows ：

the shareholders are as follows`：`
Dividends allocated to common shareholders: Cash	Year 2021
	Allotment ratio (NTD)	Amount	Allotment ratio (NTD)
	$ 0.60

Other Equities (Net Amount After Tax)
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Balance as of January 1, 2022 Share of translation differences on subsidiaries accounted for using the equity method. Unrealized losses on financial assets measured at fair value through other comprehensive income. Balance as of December 31, 2022 Balance as of January 1, 2021 Share of translation differences on subsidiaries accounted for using the equity method. Share of unrealized gains or losses on financial assets measured at fair value through other comprehensive income of subsidiaries accounted for using the equity method. Unrealized losses on financial assets measured at fair value through other comprehensive income. Disposal of equity instruments measured at fair value through other comprehensive income of subsidiaries. Balance as of December 31, 2021	Exchange differences on translation of foreign financial statements $ (41,048) (14,105) - $ (55,153)	Unrealized gains or losses on financial assets measured at fair value through other comprehensive income. 6,124 - (11,045) (4,921)	Total (34,924) (14,105) (11,045) (60,074) (58,466) 24,991 428 (1,449) (428) (34,924)
	$ (66,039) 24,991 - - -	7,573 - 428 (1,449) (428)
	$ (41,048)	6,124

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(14) Earnings per share

1. Basic earnings per share

Basic earnings per share of the Company for the year 2022 and 2021 are calculated based on the net income attributable to the Company's common equity shareholders and the weighted average number of common shares outstanding. The calculations are as follows:

(1) Net income attributable to the Company's common equity shareholders.

Year 2022 Net profit attributable to the Company for the period $ 176,100 (2) Weighted average number of outstanding common shares Year 2022 (2) Weighted average number of outstanding common shares 166,303	Year 2022 $ 176,100	Year 2021 84,972
		Year 2021 166,303

2. Diluted earnings per share

The diluted earnings per share of the Company for the years 2022 and 2021 are calculated based on the net income attributable to the Company's common equity holders and the weighted average number of common shares outstanding, adjusted for the dilutive effects of all potential common shares. The relevant calculations are as follows:

(1) Net income attributable to the Company's common equity shareholders.

Year 2022 Net income attributable to the Company's common equity holders (basic) $ 176,100 Weighted average number of outstanding common shares Year 2022 Weighted average number of common shares outstanding (basic) 166,303 Impact of employee stock dividends 164 Weighted average number of common shares outstanding (diluted) 166,467 Year 2022 Basic earnings per share $ 1.06 Diluted earnings per share $ 1.06	Year 2022 $ 176,100	Year 2021 84,972
		Year 2021 166,303 67
	166,467	166,370
	Year 2022 $ 1.06	Year 2021 0.51
	$ 1.06	0.51

(2) Weighted average number of outstanding common shares

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(15) Customer contract revenue

1. Breakdown of Revenue

	Year 2022	Total 557,445 64,082 13,188
Diodes department $ 541,113 64,082 13,188	Real estate Investment department 16,332 - -
$ 618,383	16,332	634,715
$ 618,383 -	- 16,332	618,383 16,332
$ 618,383	16,332	634,715
	Year 2021	Total 405,791 39,704 29,675
Diodes department $ 386,324 39,704 29,675	Real estate Investment department 19,467 - -
$ 455,703	19,467	475,170
$ 455,703 -	- 19,467	455,703 19,467
$ 455,703	19,467	475,170

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2. Contract balance

Contract balance
Accounts Receivable(including related parties) Less: Allowance for Doubtful Accounts Total Contract liabilities - electronic components	2022.12.31 $ 122,639 -	2021.12.31 124,559 -	2021.1.1 93,410 -
	$ 122,639	124,559	93,410
	$ 682	-	50

Accounts receivable and impairment disclosure should refer to Note 6(3).

(16) Employee and Director/Supervisor Remuneration.

Pursuant to the Company's Articles of Incorporation, if a profit is made during the year, no less than 1% should be allocated for employee compensation, and no more than 2% for directors' and supervisors' compensation. However, if the Company has accumulated deficit, the priority is to allocate an amount to offset the deficit first. The recipients of employee compensation paid in the form of stocks or cash include employees of subsidiary companies who meet certain conditions.

Estimated employee compensation for the Company in 2022 and 2021 was NT$2,012 thousand and NT$923 thousand, respectively, and estimated compensation for directors and supervisors was NT$1,500 thousand and NT$1,846 thousand, respectively. These amounts were based on the pre-tax net profit for the relevant period, after deducting employee and director/supervisor compensation and accumulated losses, multiplied by the percentage of employee compensation and director/supervisor compensation as stipulated in the Company's Articles of Incorporation, and were reported as operating expenses for the relevant period. If the Board of Directors resolves to issue employee compensation in the form of stocks, the number of shares for stock compensation is calculated based on the closing price of the Company's common stock on the day of the Board's resolution.

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The Board-approved amounts for employee and director/supervisor remuneration for the year 2021 are consistent with the estimates in the individual financial statements for 2021. The differences between the Board-approved amounts and the estimates for employee and director/supervisor remuneration for the year 2022 are NT$488 thousand and NT$500 thousand, respectively. These differences mainly arise from accounting estimates, and they will be recognized as income or expense in the year 2023.

(17) Non-operating Income and Expenses

1. Other revenue

The detailed breakdown of other income for the company is as follows:

Interest income Dividend income Rental income	Year 2022 $ 1,462 291 1,098	Year 2021 1,214 280 1,682
	$ 2,851	3,176

2. Other gains and losses

The detailed breakdown of other gains and losses for the company is as follows:

Foreign exchange gains and losses. Gain on disposal of unrealized gains on assets - Subsidiary Manpower supports income Manpower support spending Gains on disposal of property, plants, and equipment Others	Year 2022 $ 17,514 (15,339) 4,542 (4,542) 3,998 22,116	Year 2021 (3,540) - 8,607 (8,607) - 562
	$ 28,289	(2,978)

3. Financial cost

Details of financial expenses of the company are as follows:

Interest expense	Year 2022 $ (1,115)	Year 2021 (1,674)

(18) Financial Instruments

1. Credit Risk

(1) Exposure of Credit Risk

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

(2) Concentration of Credit Risk

The company has a broad customer base and does not have significant concentration of transactions with any single customer. Sales are also geographically

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diversified, therefore there is no significant concentration of credit risk.

(3) Credit Risk of Receivables and Debt Securities

For information on the credit risk exposure of notes and accounts receivable, please refer to Note 6(3). Other financial assets measured at amortized cost include other receivables.

All of the above are financial assets with low credit risk. Therefore, the allowance for credit losses is measured based on a 12-month expected credit loss for the respective period. Other receivables and held-to-maturity deposits held by the company have counterparties and contractual parties that are financial institutions with investment-grade ratings or above, hence they are considered to have low risk. Changes in the provision for credit losses for 2022 and 2021 fiscal years are as follows:

Balance as of January 1, 2022 Balance as of December 31, 2022 Balance as of January 1, 2021 Balance as of December 31, 2021	Other receivables $ 36,992 $ 36,992 $ 36,992 $ 36,992

2. Liquidity Risk

The following table presents contractual due dates of financial liabilities, including estimated interests but not affects of net amount agreements.

Book Value	Contract ual cash Flow	6 months within	6-12 months	1-2years 2-5 years - - - - - -	Over 5 years
		30,020 109,244 252
$ 30,000 109,244 214			- - -		- - -
	30,020 109,244 252
$ 139,458	139,516	139,516	-	- -	-
$ 117,000 50,611 801	117,179 50,611 809	117,179 50,611 313	- - 281	- - - - 215 -	- - -
$ 168,412	168,599	168,103	281	215 -	-

The Company does not expect the timing of the occurrence of cash flows through the maturity date analysis will be significantly earlier or the actual amount will significantly differ.

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3. Currency Risk

(1) Exposure of Currency Risk

The financial assets and liabilities of the Company exposed to material foreign exchange risk are as follows:

	2022.12.31			2021.12.31
Foreign Currency	Foreign exchange effect	NTD	Foreign Currency	Foreign exchange effect
		179,561 38,229 35,654
$ 5,847 1,245 1,161			6,176 1,548 913
	30.710 30.710 30.710			27.680 27.680 27.680

(2) Sensitivity Analysis

The exchange rate risk of the company mainly comes from cash and cash equivalents, accounts receivable and other receivables, financial assets measured at fair value through other comprehensive income, accounts payable, and other payables denominated in foreign currencies, which generate foreign exchange gains and losses upon translation. In 2022 and 2021, assuming a 0.5% depreciation or appreciation of the New Taiwan Dollar against the US Dollar and Hong Kong Dollar, while keeping all other factors unchanged, the after-tax net profit for 2022 and 2021 will respectively increase or decrease by $576 thousand and $583 thousand. Equity will increase or decrease by $153 thousand and $171 thousand respectively due to the fair value measurement of financial assets through other comprehensive income. The analysis of the two periods is based on the same basis.

(3) Foreign Exchange Gain/Loss on Monetary Items

As the company deals with multiple functional currencies, the information regarding foreign exchange gain/loss on monetary items is disclosed in an aggregated manner. The foreign exchange gain/loss (including realized and unrealized) for 2022 and 2021 amounts to a gain of $17,514 thousand and a loss of $3,540 thousand, respectively.

4. Interest Rate Analysis

The interest rate exposure of the financial assets and financial liabilities of the Company is indicated in the liquidity risk management in this note.

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The following sensitivity analysis is based on the risk of interest rate spike of both derivative and non-derivative instruments at the reporting date. For floating rate liabilities, the analysis assumes that the outstanding amount of liabilities at the reporting period is outstanding throughout the year. Internally, the Company report changes to the interest rate that are increased or decreased by 0.5% to the major management. This means that management evaluates the range of reasonable possible changes of the interest rates.

Assuming all other variables remain constant, if the interest rate increases or decreases by 0.5%, the after-tax net profit for 2022 and 2021 will respectively decrease or increase by $120 thousand and $468 thousand. This is primarily due to the impact of variable rate borrowings in the company.

5. Other Price Risk

The impact of changes in equity securities prices as of the reporting date (based on consistent analysis for two periods and assuming no other variable changes) on the comprehensive income items is as follows:

Year 2022 Other comprehensive income after tax Net income after tax $ 80 - $ (80) -	Year 2022 Other comprehensive income after tax Net income after tax $ 80 - $ (80) -	Year 2021 Other comprehensive income after tax Net income after tax 78 - (78) -	Year 2021 Other comprehensive income after tax Net income after tax 78 - (78) -
Other comprehensive income after tax		Other comprehensive income after tax
$ 80		78 (78)
$ (80)	-		-

6. Information of Fair Value

(1) Categories of Financial Instrument and Fair Value

The company measures its financial assets at fair value through other comprehensive income based on recurring assessments. The following table presents the carrying amounts and fair values of various types of financial assets and financial liabilities (including fair value hierarchy information, except for financial instruments not measured at fair value where the carrying amount approximates fair value reasonably, and lease liabilities, which are not required to disclose fair value information) as follows:

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	2022.12.31	2022.12.31	2022.12.31	Total 38,229 16,000
Book Value $ 38,229 16,000		Fairvalue
	Level 1 - -	Level 2 38,229 16,000	Level 3 - -
54,229	-	54,229	-	54,229
$ 88,578 122,639 2,075 661	- - - -	- - - -	- - - -	- - - -
213,953	-	-	-	-
$ 268,182	-	54,229	-	54,229
$ 30,000 90,058 19,186 214	- - - -	- - - -	- - - -	- - - -
$ 139,458	-	-	-	-

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	2021.12.31	2021.12.31	2021.12.31	Total 42,860 15,560
Book Value $ 42,860 15,560		Fair value
	Level 1 - -	Level 2 42,860 15,560	Level 3 - -
58,420	-	58,420	-	58,420
$ 42,133 124,559 107,917	- - -	- - -	- - -	- - -
274,609	-	-	-	-
$ 333,029	-	58,420	-	58,420
$ 117,000 27,886 22,725 801	- - - -	- - - -	- - - -	- - - -
$ 168,412	-	-	-	-

(2) Fair Value Evaluation Techniques for Financial Instruments Measured at Fair Value

For financial instruments that have active markets and public quotations, the fair value is determined using the quoted prices in the active market. The market prices announced by the TPEX of the central government and the major exchanges judged to be popular securities are the basis of the fair value of listed (counter) equity instruments and debt instruments with active open market quotations.

If the financial instruments can be obtained through a timely and frequent public quotation from exchanges, brokers, underwriters, industry associations, pricing service organizations, or regulatory authorities, and the price represents the fair market value of actual and frequent transactions, then the financial instruments have active market public quotations. If the above conditions are not met, the market is considered inactive.

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Generally, a large bid-ask spread, a significant increase in bid-ask spread, or low trading volume are indicators of an inactive market.

The financial instruments held by the company are considered to have active markets, and their fair values are determined based on standard terms and conditions in active market transactions. Market quotations are used as a reference for determining the fair values.

(3) Transition between Level 1 and Level 2

There were no significant transfers of financial assets from Level 2 to Level 1 during the years 2022 and 2021.

(19) Financial Risk Management

1. Summary

The Company is exposed to the following risks as a result of the use of financial instruments:

(1) Credit Risk

(2) Liquidity Risk

(3) Market Risk

This note provides information on the risks of the Company and the Company's objectives, policies. and procedures for measuring and managing risks. For further quantified disclosure, please refer to the respective notes in this financial report.

2. Risk Management Framework

The company's financial management department provides services to various business units, coordinating and overseeing operations in domestic and international financial markets. It monitors and manages financial risks related to the company's operations by analyzing internal risk reports based on the degree and breadth of risks involved. Internal auditors continuously review compliance with policies and exposure limits. The company does not engage in transactions involving financial instruments, including derivative financial instruments, for speculative purposes.

3. Credit Risk

Credit risk refers to the risk of financial loss arising from the inability of customers or counterparties to fulfill their contractual obligations. It primarily arises from the company's accounts receivable from customers and securities investments.

(1) Accounts Receivable and Other Receivables

The company's policy is to transact only with reputable counterparties and, when necessary, obtain collateral to mitigate the risk of financial loss resulting from defaults. The company only engages in transactions with entities that have credit ratings equivalent to investment grade. Such information is provided by independent rating

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agencies. If such information cannot be obtained, the Company will use other publicly available financial information and transaction records to rate its major customers. The Company continuously monitors credit exposure and counterparties' credit ratings and distributes the total transaction amount among customers with qualified credit ratings. The Company controls credit exposure by annually reviewing and approving counterparties' credit limits.

Due to the company's extensive customer base and the absence of significant concentration in transactions with any single customer, as well as the geographical diversification of sales regions, the credit risk related to accounts receivable is not significantly concentrated. To mitigate credit risk, the company regularly assesses the financial condition of its customers. However, collateral is typically not required from customers.

(2) Investment

The credit risk associated with bank deposits and other financial instruments is assessed and monitored by the company's finance department. As the company transacts with reputable banks, financial institutions with investment-grade ratings or higher, corporate organizations, and government agencies, all of which have good credit standing and no significant concerns regarding their ability to fulfill obligations, there is no significant credit risk.

(3) Guarantees

The company's policy stipulates that financial guarantees can only be provided to wholly-owned subsidiaries. As of December 31, 2022, and 2021, the company has not provided any endorsement guarantees.

4. Liquidity Risk

The Company manages and maintains sufficient positional cash and equivalent cash to support the operations of the Company and mitigate the impact of cash flow fluctuations. The company's management oversees the utilization of bank financing facilities and ensures compliance with loan agreement terms.

Bank borrowings are an important source of liquidity for the company. As of December 31, 2022, and 2021, the unused short-term bank financing facilities amounted to 370,000 thousand yuan and 283,000 thousand yuan, respectively.

5. Market Risk

Market risk refers to the risk that the company's earnings or the value of its financial instruments may be affected by market price movements, such as exchange rates, interest rates, and equity instrument prices. The goal of market risk management is to control the

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level of market risk exposure within acceptable limits and optimize investment returns.

(1) Currency Risk

The company is exposed to exchange rate risk arising from sales and purchases denominated in currencies other than the functional currencies of the respective group entities. The primary currencies involved in these transactions are New Taiwan Dollar and US Dollar.

(2) Interest Rate Risk

The company faces cash flow risk due to its use of floating-rate borrowings. The company manages interest rate risk by maintaining an appropriate portfolio of floating interest rate instruments.

(20) Capital management

The capital management objective of the company is to safeguard its ability to continue operations, provide returns to shareholders and other stakeholders, and maintain an optimal capital structure to lower the cost of funds.

To maintain or adjust the capital structure, the company may make adjustments such as changing dividend payments to shareholders, reducing capital and returning shareholder investments, issuing new shares, or selling assets to repay debts.

Similar to its industry peers, the company manages its capital based on the debt-to-capital ratio. This ratio is calculated as net debt divided by total capital. Net debt is the total amount of liabilities listed in the balance sheet minus cash and cash equivalents. Total capital includes all components of equity (i.e., share capital, capital surplus, retained earnings, and other equity) plus net debt.

The capital management policy for 2022 remains consistent with 2021, maintaining a debt-to-capital ratio between 7% and 10% to ensure financing at reasonable costs. As of December 31, 2022 and 2021, the debt-to-capital ratios are as follows:

2022.12.31 $ 231,659 (88,578)	2022.12.31 $ 231,659 (88,578)	2021.12.31 244,615 (42,133)
143,081 1,849,040		202,482 1,797,946
$ 1,992,121		2,000,428
	7%	10%

As of December 31, 2022, the capital management approach of the company has not changed.

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7. Related Party Transactions

(1) Names and Relationships of Related Parties

During the reporting period covered by this individual financial report, the subsidiary companies and other parties with transactions with the Company are as follows: Names of related parties Relationships with the Company Rectron Electronics (China) Co., Ltd. The Company's subsidiary (hereinafter referred to as "Rectron (China) Limited") Zhejiang Rectron Electronics Co., Ltd. The Company's subsidiary (hereinafter referred to as "Zhejiang Rectron") Retron Electronic Enterprises Inc. The Company's subsidiary (hereinafter referred to as "REEI") CHU-TING ENTERPRISE CO., LTD. The Company's subsidiary (hereinafter referred to as "CHU-TING") PU HWUA ENTERPRISE CO., LTD. Other Related Parties (hereinafter referred to as " PU HWUA ") Juyang Xingye Co., Ltd Other Related Parties (hereinafter referred to as "Juyang Xingye") Lin Wenteng Directors of the Company

(2) Significant transactions between the Company and the subsidiaries

1. Operating revenue

The significant sales amount of the Company to related persons is as follows:

Subsidiary: Rectron (China) Limited REEI Zhejiang Rectron	Year 2022 $ 245 64,024 29,912	Year 2021 9,887 39,568 -
	$ 94,181	49,455

(1) Sales to related parties are priced at cost plus an agreed-upon profit margin. The credit terms extended to related parties are determined based on the product type and the location of the related company, with an average credit period ranging from 30 to 120 days. For regular customers, the credit period is approximately 30 to 75 days. Actual transactions may require adjustments considering factors such as order quantity, product quality, and market conditions.

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(2) Regarding sales to subsidiaries, the unrealized losses associated with unsold inventory as of the end of 2022 and 2021 amounted to NT$58 thousand and NT$54 thousand, respectively. These losses are recorded under the investment item using the equity method.

2. Purchase

The amount of purchase by the Company from its related parties is as follows:

Subsidiary: Rectron (China) Limited	Year 2022 $ 337,793	Year 2021 275,734

The Company's purchases from related parties are primarily priced at the cost of finished goods plus an agreed-upon profit margin. The payment terms for these purchases range from 90 to 120 days, while for regular customers, it is approximately 30 to 90 days. Actual payment arrangements are made while considering the overall fund allocation within the group.

Receivables from related parties

The details of accounts receivable by the Company's related parties are as follows:

(1) Accounts receivable

==> picture [431 x 36] intentionally omitted <==

The credit policy of our company towards related parties is based on the agreed payment terms between both parties.

(2) Other receivables (excluding loans and advances)

Accounting item	Related party category	2022.12.31 $ 208	2021.12.31 78,938
Other receivables	Subsidiary - CHU-TING

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4. Amount of payables to related parties

(1) Accounts payable

The details of accounts payable by the Company's related parties are as follows: Accounting item Related party category 2022.12.31 2021.12.31 Accounts payable Subsidiary - Rectron (China) Limited $ 49,863 2,241 (2) Other payables Accounting item Related party category 2022.12.31 2021.12.31 Other Payables Subsidiary - Rectron (China) Limited $ 81 85 `〃` Subsidiary - CHU-TING 19 - `〃` Other related persons - PU HWUA 51 103 $ 151 188	The details of accounts payable by the Company's related parties are as follows: Accounting item Related party category 2022.12.31 2021.12.31 Accounts payable Subsidiary - Rectron (China) Limited $ 49,863 2,241 (2) Other payables Accounting item Related party category 2022.12.31 2021.12.31 Other Payables Subsidiary - Rectron (China) Limited $ 81 85 `〃` Subsidiary - CHU-TING 19 - `〃` Other related persons - PU HWUA 51 103 $ 151 188	The details of accounts payable by the Company's related parties are as follows: Accounting item Related party category 2022.12.31 2021.12.31 Accounts payable Subsidiary - Rectron (China) Limited $ 49,863 2,241 (2) Other payables Accounting item Related party category 2022.12.31 2021.12.31 Other Payables Subsidiary - Rectron (China) Limited $ 81 85 `〃` Subsidiary - CHU-TING 19 - `〃` Other related persons - PU HWUA 51 103 $ 151 188	The details of accounts payable by the Company's related parties are as follows: Accounting item Related party category 2022.12.31 2021.12.31 Accounts payable Subsidiary - Rectron (China) Limited $ 49,863 2,241 (2) Other payables Accounting item Related party category 2022.12.31 2021.12.31 Other Payables Subsidiary - Rectron (China) Limited $ 81 85 `〃` Subsidiary - CHU-TING 19 - `〃` Other related persons - PU HWUA 51 103 $ 151 188
	Subsidiary - Rectron (China) Limited Related party category
		2022.12.31 $ 81 19 51	2021.12.31 85 - 103
Other Payables `〃` `〃`	Subsidiary - Rectron (China) Limited Subsidiary - CHU-TING Other related persons - PU HWUA
		$ 151	188

(3) Disposition of real estate, plant and equipment

The details of the sale of real estate, plant and equipment by the Company to related persons are summarized below:

Related party category Subsidiary`－`Zhejiang Rectron	Year 2022 Disposal Price Disposal Profit and Loss $ 9,646 4,233

The unrealized gains implied from the transactions of real estate, buildings, and equipment between the company and its subsidiaries in the year 2022 amounted to NT$3,835 thousand, which is recorded under the investment accounted for using the equity method.

(4) Disposal of restricted assets

The summary of the company's sales of restricted assets to related parties is as follows:

Related party category Subsidiary`－`Zhejiang Rectron	Year 2022 Disposal Price Other Revenue $ 23,051 23,051

The unrealized gains implied from the transactions of restricted assets between the company and its subsidiaries in the year 2022 amounted to NT$11,504 thousand, which is recorded under the investment accounted for using the equity method.

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Loans to related parties (included in other receivables - related parties)

The actual disbursements of funds as loans to related parties by the company are as follows:

Related party category CHU-TING	2022.12.31 $ -	2021.12.31 28,304

The company did not accrue interest on loans extended to related parties in the fiscal years 2022 and 2021.

Leasing
(1) The company leased its factory buildings to subsidiaries in 2022 and 2021. The reported non-operating rental income amounted to NT$1,098 thousand and NT$1,682 thousand, respectively.
(2) The company leased investment properties to other related parties in 2022 and 2021. The reported operating lease income amounted to NT$190 thousand and NT$154 thousand, respectively. The related deposits received were NT$16 thousand and NT$18 thousand, respectively.
Others
(1) Please refer to Note 6(8) for details on the registration of real estate under the name of other related parties.
(2) The company's subsidiary, CHU-TING, entered into outsourcing manufacturing and service contracts with the company for the provision of manpower assistance in the manufacturing and promotion of medical products by the subsidiary. The income from these arrangements amounted to NT$4,542 thousand and NT$8,607 thousand in 2022 and 2021, respectively (recorded under other gains and losses).
(3) Significant transactions with key management personnel.

The compensation of major management personnel includes:

Short-term employee benefits Post-Employment Benefits	Year 2022 $ 3,062 124	Year 2021 4,160 153
	$ 3,186	4,313

8. Pledged Asset

The book value of the assets pledged by the Company is detailed as follows:

Assets name	Target pledge guarantee	2022.12.31 $ 235,480 51,703	2021.12.31 238,836 52,801
Property, plant, and equipment Investment property	Security for bank borrowings Security for bank borrowings

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287,183

291,637

9. Significant contingent liabilities and unrecognized contractual commitments

(1) Material Unrecognized Contractual Obligations:

The detailed installment amounts of the contract price for equipment purchases entered

into by the company with suppliers as of December 31, 2022, and December 31, 2021, are as follows:

follows:
Total Contract Price (Exclusive of Tax) Unpaid amount	2022.12.31 $ 21,257	2021.12.31 24,646
	$ 9,821	18,414

10. Significant disaster losses: None.

Significant subsequent events: None.

12. Others

(1) The functions of employee benefits, depreciation, depletion, and amortization expenses are summarized as follows:

Functional Classification Nature Classification	Year 2022	Year 2022	Year 2022	Year 2021	Year 2021	Year 2021
	Under operating costs	Under operating expenses	Total	Under operating costs	Under operating expenses	Total
Employee Benefits Expenses
Salaryexpense	15,092	16,551	31,643	18,196	21,200	39,396
Health and labor insurance expense	1,439	1,629	3,068	1,898	1,643	3,541
Retirement benefits expenses	555	917	1,472	703	890	1,593
Director remuneration	-	2,944	2,944	-	2,086	2,086
Other Employee benefit expense	897	1,038	1,935	2,458	998	3,456
Depreciation expenses	15,855	3,729	19,584	17,731	4,451	22,182
Amortization expense	214	2,372	2,586	734	975	1,709

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Additional information regarding employee headcount and employee benefits expenses for the fiscal years 2022 and 2021:

for the fiscal years 2022 and 2021:
Employee Headcount Number of directors who are not concurrently employees Average employee benefits expenses Average employee salary expenses Adjustments made to average employee salary expenses Remuneration of Supervisor	Year 2022 56	Year 2021 59 2 842 691 27.96% 120
	4
	$ 733
	$ 609
	(11.87)% $ 58

Information regarding the company's compensation policy for remuneration (including directors, supervisors, executives, and employees):

(2) Independent Directors:

Remuneration for independent directors is provided at least semi-annually, regardless of the company's operating profit or loss, based on their level of involvement and contribution to the company's operations.
Independent directors do not participate in the distribution of director remuneration or other forms of bonuses.

(3) Other Directors:

The remuneration of other directors is determined based on their level of involvement in the company's operations and their contribution value, taking into account industry standards.
Director's remuneration is allocated according to the ratio specified in the company's articles of incorporation.
Necessary expenses such as transportation and accommodation may be provided based on the actual performance of their duties.

(4) Managers:

Fixed monthly salaries for executives are determined based on the salary standards for each position.
Performance-based bonuses are allocated based on the results of business performance evaluations.
Year-end bonuses are distributed based on employee performance evaluations.
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Employee remuneration is allocated according to the ratio specified in the company's articles of incorporation.
Relevant allowances and subsidies are provided based on job positions and standards.
(5) Other Employees:

The salaries of our company's employees are determined based on the principles of job evaluation for each position. Employee salaries can be classified into regular and non-regular components.

Regular salaries include basic salary, managerial allowances, position-based allowances, meal subsidies, and other allowances.

13. Additional disclosure

(1) Information on Significant Transactions

In accordance with the regulations of the Financial Reporting Standards for Issuers of Securities, the relevant information regarding significant transactions that should be disclosed for the year 2022 is as follows:

Loans to Others:

disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:	disclosed for the year 2022 is as follows: 1. Loans to Others:
													Unit: NTD 1,000
Num ber	Lending company for funds	Borrower	Accou nt receiva ble /payab le	Whet her it is a relate d party	Highest amount during the period	Ending balance	Actual disburse d amount	Inter est rate range	Fundi ng loans and nature	Amount of business s transact ion	Reasons for short-term s funding requireme nt	Provisio n for doubtfu l debts Amount	Collateral		Individual limit for funds loan to specific parties	Total limit for funds loan
													Name	Valu e
0	The Company	CHU-TING ENTERPRISE Co., Ltd	Other receiva bles	Yes	130,000	100,000	-	-	2 (Note 3)	-	Business requiremen ts	-		-	184,904	739,616
1	Rectron Electronics (China) Co., Ltd.	CHU-TING ENTERPRISE Co., Ltd	Other receiva bles	Yes	26,533	26,411	26,411	-	2 (Note 3)	-	Business requiremen ts	-		-	157,512	196,891

Note 1: The business transaction amount between the Company and its counterparties is based

on the cumulative purchase/sales amount within the preceding 12 months.

Note 2: According to the Company's regulations on providing funds to others, the calculation is as follows:
(1) The Company

Individual limit for funds provision to specific parties = Equity Net Value × 10% = $1,849,040 thousand × 10% = $184,904 thousand.

Maximum limit for funds provision = Equity Net Value × 40% = $1,849,040 thousand × 40% = $739,616 thousand.

(2) Rectron (China) Limited:

Individual limit for funds provision to specific parties = Equity Net Value × 40% = $393,781 thousand × 40% = $157,512 thousand.

Maximum limit for funds provision = Equity Net Value × 50% = $393,781 thousand

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× 50% = $196,891 thousand.

Note 3: (1) Business transactions exist.

(2) Short-term funding is necessary.
Endorsements or guarantees for others: None.
End-of-period holdings of marketable securities (excluding investments in subsidiaries, affiliated enterprises, and joint venture interests):

Held Company	Type and name of securities held	Relationship with the issuer of securities	Accounting Item		End of	Period
				Number of Shares	Book Value	Equity Ownership Ratio	Fair Value
The Company	Stock - Sunny Bank	-	Financial Assets at Fair Value through Other Comprehensive Income - Non-current	1,515,198	16,000	0.05 %	16,000
The Company	Corporate Bonds - APPLE	-	Financial Assets at Fair Value through Other Comprehensive Income - Non-current	-	25,444	- %	25,444
The Company	Corporate Bonds -AT&T	-	Financial Assets at Fair Value through Other Comprehensive Income - Non-current	-	8,631	- %	8,631
The Company	Corporate Bonds -Pfizer	-	Financial Assets at Fair Value through Other Comprehensive Income - Non-current	-	4,154	- %	4,154

Held Company	Type and name of securities held	Relationship with the issuer of securities	Accounting Item	End of	End of	Period
				Number of Shares	Book Value	Equity Ownership Ratio	Fair Value
CHU-TING	Fund - Yuanta High Dividend 0056	-	Financial assets measured at fair value throughprofit or loss	21,000	533	- %	533
CHU-TING	Stock - Amazon	-	Financial assets at fair value through profit or loss - current	5,600	14,446	- %	14,446
CHU-TING	Stock - TSMC	-	Financial assets at fair value through profit or loss - current	12,000	5,382	- %	5,382
CHU-TING	Stock - Tesla	-	Financial assets at fair value through profit or loss - current	1,400	5,296	- %	5,296

Cumulative purchases or sales of the same securities amounting to NT$300 million or more, or 20% of the paid-in capital: None.
Acquisition of real estate amounting to NT$300 million or more, or 20% of the paid-in capital: None.
Disposal of real estate amounting to NT$300 million or more, or 20% of the paid-in capital: None.
176 -
Transactions with related parties involving sales or purchases amounting to NT$100 million or more, or 20% of the paid-in capital:

Company engaging in purchases (sales)	Name Of the Counter party	Relationship	Transaction details	Transaction details	Transaction details	Transaction details	Instances and reasons for transaction conditions differing from normal trade conditions	Instances and reasons for transaction conditions differing from normal trade conditions	Accounts receivable (payable) notes and accounts	Accounts receivable (payable) notes and accounts
			Purchases (sales)	Amount	Ratio of total purchases (sales)	Credit period	Unit price	Credit period	Balance	Ratio of total accounts receivable (payable) notes and account
The Company	Rectron (China) Limited	Investee companies evaluated using the equity method	Purchases	337,793	78 %	Normal	Normal	90-120 days	(49,863)	55%
Rectron (China) Limited	The Company	Investee companies evaluated using the equity method	Sales	(337,793)	99 %	Normal	Normal	90-120 days	49,863	100%
Rectron (China) Limited	Zhejiang Rectron	Investee companies evaluated using the equity method, both being investees of the company.	Purchases	145,620	29 %	Normal	Normal	120 days	(15,890)	(10)%
Zhejiang Rectron	Rectron (China) Limited	Investee companies evaluated using the equity method, both being investees of the company.	Sales	(145,620)	17 %	Normal	Normal	120 days	15,890	10%

Receivables from related parties reach NT$100 million or 20% of paid-in capital: None.
Engaging in derivatives trading: None.
(2) Information related to the reinvestment business:

The information regarding the investment businesses of the Company in 2022 (excluding invested companies in Mainland China) is as follows:

Investment Companies Name	Investee Companies Name	Region	Main business items	Original Investment Amount	Original Investment Amount	End-of-Period Holdings	End-of-Period Holdings	End-of-Period Holdings	Investee Companies Income or Loss for the Period	Investment gains and losses recognized in the current period
				Ending of this reporting period	End-of-perio d Balance for Last Year	Shares	Ratio %	Book Value
The Company	REEI	USA	Sales of rectifiers and other electronic components	142,264	142,264	205,000	100.00%	21,394	8,700	8,700
The Company	Rectron (China) Limited	Hong Kong	Sales of rectifiers and other electronic components	607,273	607,273	20,000	100.00%	393,781	51,667	51,667
The Company	Zhejiang Rectron	Taiwan	Wholesale of tobacco and alcohol products and manufacturing and sales of medical equipment.	109,987	29,987	130,000	100.00%	153,925	19,469	19,469

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(3) Information on investments in mainland China:
Name and relevant information of the investee company in Mainland China, including its primary business activities:

Name of the investee company in Mainland China	Primary business items	Paid-in capital	Inves tment meth od	Cumulative investment amount transferred from Taiwan at the beginning of the period	Investment amount transferred out or repatriated during the period	Investment amount transferred out or repatriated during the period	Cumulative investment amount transferred from Taiwan as of the end of the period.	Investee Companies Current Profit and Loss	Percentage of direct or indirect ownership in the invested company by the company	Recogniz ed investme nt income (loss) for the period	Book value of the investme nt at the end of the period	Investme nt income repatriate d as of the end of the period
					Remitt ed out	Recover ed
Zhejiang Rectron Electronics Co., Ltd.	Manufacture s and sells electronic components such as rectifiers	409,029 USD12,000	(3)	409,029 USD12,000	-	-	409,029 USD12,000	(7,732)	100.00%	(7,732)	253,491	-

Investment Quota for Mainland China:

Period end accumulated investment amount remitted from Taiwan to mainland China	Investment amount approved by Investment Commission of the Ministry of Economic Affairs (MOEAIC)	Investment limit for investment in Mainland China as regulated by the Investment Commission, Ministry of Economic Affairs
332,172 USD12,000	442,066 USD15,970	1,109,424

Note 1: Investment methods are categorized into the following three types, simply indicated by their types:

(1) Direct investment in mainland China.
(2) Investment in Mainland China through a third-party company in another region (please

specify the investment company in that third region).

(3) Others method.

Note 2: In the investment gains/losses recognized in this period column:

(1) If it is in the preparation stage and there is no investment gain or loss, it should be explicitly stated.
(2) The basis for recognizing investment gains or losses is the audited financial statements of the Taiwanese parent company by a certified public accountant.
Note 3: Investment limit based on the "Principles for Reviewing Investments or Technical Cooperation in Mainland China."

Equity Net Value × 60% = $1,849,040 thousand × 60% = $1,109,424 thousand.

Note 4: Significant transaction matters directly or indirectly occurring between the Mainland China investment company and a third-party enterprise through a third region:
Please refer to Note 7 for detailed explanations of significant transactions between the
178 -

Company and Mainland Chinese investment companies directly or indirectly through entities in a third location.

3. Significant Transactions:

For the year 2022, please refer to the explanations in the "Information on Significant Transactions" section for detailed information on significant transactions between the Company and the Mainland Chinese investment companies, whether direct or indirect.

(4) Major shareholder information:

ignificant Transactions: For the year 2022, please refer to the explanations in the "Information on Significant ansactions" section for detailed information on significant transactions between the ompany and the Mainland Chinese investment companies, whether direct or indirect. shareholder information:	ignificant Transactions: For the year 2022, please refer to the explanations in the "Information on Significant ansactions" section for detailed information on significant transactions between the ompany and the Mainland Chinese investment companies, whether direct or indirect. shareholder information:	ignificant Transactions: For the year 2022, please refer to the explanations in the "Information on Significant ansactions" section for detailed information on significant transactions between the ompany and the Mainland Chinese investment companies, whether direct or indirect. shareholder information:
Unit: Shares Shares Major Shareholder Name Number of Shares Held Percentage of shareholding Juiye Enterprise Co.,Ltd. 42,788,288 25.72% BigwigPerfect International Co.,Ltd. 38,141,792 22.93%
Shares Major Shareholder Name	Number of Shares Held	Percentage of shareholding
Juiye Enterprise Co.,Ltd.	42,788,288	25.72%
BigwigPerfect International Co.,Ltd.	38,141,792	22.93%

Note: The information of major shareholders in this table refers to the information calculated by the company on the last business day at the end of each quarter of the total number of common shares and special shares held by the company which have been delivered without physical registration (including treasury stocks) by the shareholders. The number of shares recorded in the company's financial report and the actual number of shares completed without physical registration delivery may differ due to differences in calculation bases or other reasons.

14. Segment Information

Please refer to the 2022 consolidated financial report

179 -

RECTRON LTD.

Detailed List of Accounts Receivable

December 31, 2022

Unit: NTD 1,000

Customer Name Customer - A Customer - B Customer - C Others	Summary Payment `〃` `〃` `〃`	Amount $ 33,241 29,727 11,416 33,897 $ 108,281	Note
			The balance of the above accounts does not reach 5% of the amount of this account

180 -

RECTRON LTD.

Statement of changes in investments using the equity method

January 1 to December 31, 2022

Unit : NTD1000, share

Name of invested business	Beginning balance	Beginning balance	Increase during theperiod	Decrease during theperiod	Decrease during theperiod	Ending balance	Ending balance	Ending balance	Market price or net equity	Market price or net equity	Guarantee provision or Pledge Status
	Shares Amount		Shares	Shares	Amount 659 (Note 2) 30,202 (Note 4) - 30,861	Shares	Shareholdi ng Ratio	Amount 21,394 393,781 153,925
									Unit price ($)	Total Price
	205,000 $ 11,932 20,000 372,316 4,700,000 54,456 $ 438,704			- - -		205,000 20,000 13,000,000				21,394 393,781 153,925
Valuation using Equity Method REEI Rectron (China) Limited Zhejiang Rectron Electronic Co., LTD Total							100.00% 100.00% 100.00%		104.36 19,689.05 11.84		None `〃` `〃`
		$ 438,704						569,100

Note 1: Investment gains of $8,700 thousand and foreign exchange translation adjustments of $1,421 thousand are recognized under the equity method. Note 2: Intercompany deferred loan interest of $659 thousand is recognized under the equity method.

Note 3: Investment gains of $51,667 thousand are recognized under the equity method.

Note 4: Foreign exchange translation adjustments of $15,526 thousand and intercompany deferred loan interest of $14,676 thousand are recognized under the equity method. Note 5: Additional investments of $80,000 thousand and investment gains of $19,469 thousand yuan are recognized under the equity method.

181 -

RECTRON LTD.

Real Estate, Plant, and Equipment Changes

Statement

January 1 to December 31, 2022

Unit: NTD 1,000

Please refer to Note 6 (6) for related information.

Investment Property Changes Statement

Please refer to Note 6 (8) for related information.

Statement of Operating Revenue

Items Diode Department Rectifiers, etc. Less: Sales Returns and Allowances. Subtotal Real Estate Investment Department Rental income Total	Quantity 1,196,834KPCS	Amount $ 621,686 (3,303)	Remarks

		618,383
		16,332
		$ 634,715

182 -

RECTRON LTD.

Schedule of Cost of Goods Sold

	Schedule of Cost of Goods Sold
	January 1 to December 31, 2022 Items Summary Diode Department Direct Raw Materials Beginning Inventory of Materials Add: Materials Purchased during the Period Less: R&D Expenses or Other Expenses Less: Sales of Raw Materials Less: Ending Inventory and Goods in Transit Direct raw material consumption Direct Labor Manufacturing Expenses Manufacturing Costs Add: Work-in-progress at beginning of period Finished goods are transferred in Purchased Work in Progress Period-end Work-in-Process Inventory Less: Sales of Work in Progress Cost of Finished Goods Add: Beginning Finished Goods Purchased Finished Goods Ending Finished Goods and Goods in Transit Less: Transferred to Work in Progress Transfer to R&D Expenses or Other Expenses Cost of Finished Goods Sold Production and Sales Cost of Finished Goods Sales of Raw Materials Sales of Work in Progress Revenue from Scrap and Waste Sales Recovery of Obsolete Inventory Lease Costs (Note)		Unit: NTD 1,000 Amount $ 3,587 10,596 (588) (2,394) (1,884) 9,317 7,600 38,454 55,371 12,370 2,594 24,346 (3,051) (4,400) 87,230 39,271 398,047 (36,513) (2,594) (2) 485,439 485,439 2,394 4,400 (294) (6,452) 7,808 $ 493,295

Note: The lease cost includes depreciation of $6,522 thousand.

183 -

RECTRON LTD.

Detailed List of Manufacturing Expenses

January 1 to December 31, 2022

Unit: NTD 1,000

Items Salary Expenditure Utility expense Depreciation Material charges Packaging Expenses OEM fees Other expense Total	Summary	Amount $ 3,576 2,867 9,333 7,796 3,056 7,694 4,132	Remarks

		$ 38,454

Schedule of Operating Expenses

Item	Selling expenses $ 3,608 5,658 - - - 1,605 10,871		Administrative and general expenses 14,888 28 3,000 3,729 2,869 16,893 41,407		Research and development expense 999 - - - - 230		Total 19,495 5,686 3,000 3,729 2,869 18,728 53,507
Salaries Freight/Shippi ng Costs Donations Depreciation Labor costs Other expense TOTAL

					1,229

184 -

==> picture [463 x 33] intentionally omitted <==

Representation Letter

Our company, for the fiscal year 2022 (from January 1, 2022, to December 31, 2022), prepares consolidated financial statements of related companies in accordance with the "Criteria for the Preparation of Business Combination Reports, Consolidated Financial Statements of Related Companies, and Related Reports." The companies included in the preparation of consolidated financial statements of related companies under these criteria are the same as those included in the preparation of consolidated financial statements of parent and subsidiary companies under the International Financial Reporting Standard No. 10 recognized by the Financial Supervisory Commission. Furthermore, the relevant information required to be disclosed in the consolidated financial statements of related companies has already been disclosed in the aforementioned consolidated financial statements of parent and subsidiary companies. Therefore, no separate consolidated financial statements of related companies will be prepared.

It is hereby declared

Company name: Rectron LTD.

Chairman: Lin I-Chin Date: March 24, 2023

185 -

INDEPENDENT AUDITORS ’ REPORT

Rectron LTD. Board of Directors –

Auditor's Opinion

The consolidated balance sheets of Rectron LTD.and its subsidiaries (Rectron Group) as of December 31, 2022 and 2021, and the consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated statements of cash flows for the periods ended December 31, 2022 and 2021, along with the accompanying notes to the consolidated financial statements (including the summary of significant accounting policies), have been audited by our auditors.

In our auditors' opinion, based on their audit findings and other auditors' reports (please refer to the Other Matters section), the aforementioned consolidated financial statements have been prepared in accordance with the Financial Reporting Standards for Issuers of Securities and the International Financial Reporting Standards, endorsed and issued by the Financial Supervisory Commission, and are fairly presented to reflect the financial position of Rectron Group as of December 31, 2022 and 2021, and the financial performance and cash flows for the periods ended December 31, 2022 and 2021.

Basis of Audit Opinion

We, as auditors, have conducted our audit work in accordance with the Regulations Governing the Audit Signatures of Certified Public Accountants and the Auditing Standards. Our CPA s responsibility under these standards will be further explained in the paragraph of responsibility of the accountant for examining the consolidated financial statements. The personnel of our accounting firm, who are subject to independence regulations, have maintained independence in accordance with the Code of Ethics for Professional Accountants and fulfilled other responsibilities prescribed by the regulations. They have maintained a professional and objective stance in relation to Rectron LTD.and its subsidiaries. We believe that we have obtained adequate and appropriate audit evidence to form the basis of our audit opinion.

Key audit matters

The key audit matters refer to those matters that, in the auditor's professional judgment, are of most significance in the audit of the consolidated financial statements of Rectron Group for the year ended 2022. Such items have been taken into consideration in the process of auditing the overall consolidated financial reports and forming audit opinions. The accountant does not express opinions on such items separately. Our CPA determined to address the following key auditing matters in the accountant’s report:

1. Revenue Recognition

Please refer to Note 4 (13) of the consolidated financial statements for details on the accounting policy for revenue recognition. Additionally, refer to Note 6 (14) of the consolidated financial statements for a breakdown of revenue by customer contracts.

186 -

Explanation of Key Audit Matters

The recognition of revenue is a critical area of focus in our audit of Rectron Group's consolidated financial statements for the year ended 2022. The company's primary source of revenue is derived from the manufacturing and sale of various rectifiers, semiconductor components, and medical devices. The risk lies in ensuring the accuracy and reliability of revenue recognition. The company's viability and ongoing operations depend on a consistent inflow of cash generated from revenue. Therefore, the company's business strategy and operational management are centered around revenue. Consequently, the testing of revenue recognition is a significant assessment area for our audit of Rectron Group's financial statements.

Corresponding audit program：

2. inventory valuation

Explanation of Key Audit Matters

The valuation of inventory for Rectron Group is subject to the risk of cost exceeding its net realizable value due to fluctuations in international raw material prices and market supply and demand conditions, which may result in significant fluctuations in product selling prices and sales volumes. Therefore, the testing of inventory valuation is considered as one of the important assessment matters in the auditor's examination of Rectron Group's financial statements.

Corresponding audit program：

The main audit procedures performed by the auditor for the above-mentioned key audit matters include reviewing the inventory aging report, analyzing the changes in inventory aging over different periods, assessing the reasonableness of Rectron Group's accounting policies and their implementation, conducting trend analysis on the treatment of obsolete inventory, understanding the basis and methods of inventory valuation, and comparing relevant variances to identify any significant abnormalities.

Other Matters

Inclusion of certain subsidiaries' financial statements in Rectron Group's consolidated financial report that were audited by other auditors and not by the auditor. Therefore, with respect to the financial statements of those subsidiaries listed in the above-mentioned consolidated financial report, the amounts presented are based on the audit reports of other auditors. The total assets of those subsidiaries as of December 31, 2022, and December 31, 2021, accounted for 4% of the total consolidated assets, and the net sales for the period from January 1, 2022, to December 31, 2022, and January 1, 2021, to December 31, 2021, accounted for 16% of the total consolidated net sales.

Rectron LTD.has prepared separate financial statements for the years ended December 31, 2022, and

187 -

December 31, 2021, and an audit report with an unqualified opinion and an other matters paragraph has been issued by the auditor, which is available for reference.

Responsibility of the Management and the Governing Body for the Consolidated Financial Reports

The management is responsible for the preparation of the appropriate consolidated financial statements, which are in accordance with the Financial Reporting Standards for Issuers of Securities and approved and issued by the Financial Supervisory Commission, as well as the applicable International Financial Reporting Standards, International Accounting Standards, Interpretations, and Interpretive Bulletins. They are also responsible for maintaining necessary internal controls related to the preparation of the consolidated financial statements to ensure that they are free from material misstatement caused by fraud or error.

In preparing the consolidated financial statements, the management's responsibility also includes assessing the ability of the Rectron Group to continue as a going concern, making relevant disclosures, and adopting the going concern basis of accounting unless there are intentions to liquidate the Rectron Group or cease its operations, or unless there are no other practical alternative courses of action other than liquidation or cessation.

The governance body of Rectron Group, including the Audit Committee, has the responsibility to oversee the financial reporting process.

Responsibility of the CPA to Audit Consolidated Financial Reports

The purpose of the accountant's audit of the consolidated financial reports is to obtain reasonable assurance of whether the consolidated financial reports as a whole are substantially misrepresented due to fraud or error, and to issue an audit report. Reasonable assurance is a high level of assurance, but audit procedures performed in accordance with auditing standards cannot guarantee that material misstatements due to fraud or error in the consolidated financial reports will be detected. Misstatements may arise from fraud or errors. A misrepresentation of an individual amount or sum of transfers is considered significant if it is reasonably expected to affect the economic decisions made by consolidated users of financial reports.

Our auditor exercised professional judgment and skepticism in accordance with the auditing standards. We also performed the following tasks:

1.We identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or errors, designed and performed audit procedures according to those risks, and obtained audit evidence that can sufficiently and appropriately form the basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for the one resulting from error because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2.The understanding of the internal controls relevant to the audit was obtained to design appropriate audit procedures based on the circumstances at that time. However, it should be noted that the objective was not to express an opinion on the effectiveness of the internal controls of Rectron Group.
3.We evaluated the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and related disclosures made by management.
4.Based on the audit evidence obtained, a conclusion was reached regarding the appropriateness of management's use of the going concern basis of accounting and whether there were any significant
188 -

uncertainties that may cast significant doubt on Rectron Group's ability to continue as a going concern. If the accountant considers that there is significant uncertainty in such events or circumstances, he/she shall, in the audit report, alert the users of the consolidated financial reports to the disclosure of the consolidated financial reports or amend the audit opinion if such disclosure is inappropriate. Our conclusions are based on the audit evidence obtained up to the date of this accountant’s report. However, it should be noted that future events or circumstances could arise that may jeopardize Rectron Group's ability to continue as a going concern.

5.Evaluate the overall presentation, structure, and content of the consolidated financial statements (including related notes), and determine whether the consolidated financial statements appropriately represent the relevant transactions and events.
6.Obtain sufficient and appropriate audit evidence regarding the financial information of the entities within the group in order to express an opinion on the consolidated financial statements. The auditor is responsible for guiding, supervising, and executing the audit of the group engagement and forming an audit opinion on the group's financial statements.

Based on communications with the governance unit, the auditor has determined the key audit matters for the audit of Rectron Group's consolidated financial statements for the year ended in the Republic of China 2022. We described these matters in the accountant’s report, unless the laws and regulations prohibit such disclosure or under rare condition that we decide not to communicate a given matter because the negative impact from such communication may override its public benefits under reasonable assumption.

The engagement partners on the audit resulting in this independent auditors’ report are Shih-Chin Chih and Li-Chen Lai.

KPMG

Taipei, Taiwan (Republic of China) March 24, 2023

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’ 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.

189 -

Rectron LTD.and its subsidiaries Consolidated Balance Sheets As of December 31, 2022 and 2021

Unit: Thousands of New Taiwan Dollars

Current Asset: 1100 Cash and cash equivalents (Note 6(1)) $ 1110 Financial assets at fair value through profit or loss - Current (Note 6(2) and 17) 1150 Notes receivable, net (Note 6(3) and 14) 1170 Accounts receivable, net (Note 6(3), 14, and 7) 1200 Other receivables 1220 Current income tax assets 130X Inventory (Note 6(4)) 1410 Prepayments 1479 Other current assets - Other Non-Current Asset: 1517 Non-current financial assets measured at fair value through other comprehensive income (Note 6(2) and (17)) 1600 Property, plant, and equipment (Note 6(5) and 8) 1755 Right-of-use assets (Note 6(6), 7, and 8) 1760 Net investment properties (Note 6(7), 7, and 8) 1840 Deferred tax assets (Note 6(XI)) 1990 Other non-current assets - Other (Note 6(3)) $ Asset Total assets	Amount % 245,962 12 25,657 1 2,083 - 156,377 7 3,178 - 1,679 - 141,704 7 23,375 1 2,166 - 602,181 28 2022.12.31 45,229 3 497,837 23 15,603 1 975,678 45 1,321 - 7,170 - 1,551,838 72 2,154,019 100 2022.12.31		Amount % Liabilities and Equity Current Liability: 187,464 9 2100 Short-term borrowings (Note 6 (8)) $ 691 - 2130 Current portion of lease liabilities (Note 6 (14)) 2,506 - 2170 Accounts payable 179,445 8 2200 Other current liabilities (Note 6 (12) and 7) 8,025 - 2230 Current income tax liabilities 1,751 - 2280 Current lease liabilities 176,443 8 2300 Other current liabilities 7,054 - 3,587 - 566,969 25 2021.12.31 2580 Non-current lease liabilities 58,420 3 2640 Net defined benefit liabilities - Non-current (Note 6(10)) 514,703 25 2570 Deferred tax liabilities (Note 6(11)) 13,071 1 2600 Other non-current liabilities (Note 7) 984,046 46 Total liabilities - - 10,631 - 1,580,871 75 3110 Share capital - common stock 3200 Capital surplus 3310 Legal reserve 3320 Special surplus reserve 3351 Retained earnings 3400 Other equity Total equity 2,147,840 100 $ 2021.12.31 Non-current liabilities： Equity attributable to owners of the parent (Note 6(12)): Total liabilities and equity	A	mount % 30,000 1 1941 - 129,538 6 36,063 2 25,821 1 3,018 - 1,266 - 227,647 10 2280 3,768 - 3,509 - 62,679 3 7,376 - 77,332 3 304,979 13 1,663,029 81 9 - 34,364 2 34,924 2 176,788 8 (60,074) 3 1,849,040 87 2,154,019 100 2022.12.31		A	mount % 117,000 6 1997 - 111,294 6 35,914 2 3,115 - 2,346 - 1,011 - 272,767 14 1834 - 5,583 - 62,679 3 7,031 - 77,127 3 349,894 17 1,663,029 82 9 - 25,812 1 58,466 3 85,554 4 (34,924) (2) 1,797,946 83 2,147,840 100 2021.12.31

(Please refer to notes of the financial reports attached)

〜5〜

190 -

Rectron Ltd. and its subsidiaries

Consolidated Statements of Consolidated Profit or Loss For the years 2022 and January 1 to December 31, 2021

Unit: NTD 1,000

Amount 4000 $ 877,633 5000 533,784 343,849 6100 42,625 6200 119,962 6300 10,522 173,109 170,740 7010 2,208 7020 32,834 7050 (1,137) 33,905 7950 204,645 28,545 176,100 8300 8310 8311 144 8316 440 8349 - 584 8360 8361 (14,105) 8367 (11,485) 8399 - (25,590) 8300 (25,006) 8500 $ 151,094 8610 $ 176,100 8710 $ 151,094 9750 $ 9810 $ Year 2022 Operating revenue (Notes 6 (14) and 7) Operating costs (Note 6(4) and (10)) Operating gross profit Financial costs Operating expenses (Notes 6 (3), (10),(15) and 12): Selling expenses Management expense Research and development expenses. Operating net profit Non-operating revenue and expenditure (Notes 6 (16) and 7): Other revenue Other Profits and Losses Total of Non-recurring items recognized directly in equity Less: Income tax expense (Note 6 (11)) Net profit for the period Profit before tax Other Consolidated Profit or Loss: Current Other Comprehensive Income Total comprehensive income for the period Net profit for the period attributable to: Owners of the parent company Diluted earnings per share Basic earnings per share Non-operating revenue and expenditure (Notes 6 (16) and 7): Profit before tax Total comprehensive income attributable to: Owners of the parent company Earnings per share (NTD) (Note 6(13)) Items may be subsequently reclassified to profit/loss Exchange differences on translation of foreign financial statements Debt instruments measured at fair value through other comprehensive income in the financial statements. is not Unrealized gains or losses on equity instruments measured at fair value through other comprehensive income. Less: Income tax related to items that may be reclassified Total of Items may be subsequently reclassified to profit/loss Items Not to Be Reclassified Into Profit or Loss Defined benefit plan - remeasurement amount Investments in equity instruments measured at fair value through other comprehensive income in the financial statements. is not Unrealized gains or losses on equity instruments measured at fair value through other comprehensive income. Less: Income tax related to items that are not reclassified	% 100 61 39 5 14 1 20 19 - 4 - 4 23 3 20 - - - - -2 -1 - -3 -3 17 20 17 1.06 1.06	Amount 745,850 494,220 251,630 27,712 130,870 11,175 169,757 81,873 3,582 6,883 (1,709) 8,756 90,629 5,657 84,972 118 1,727 - 1,845 24,991 (2,748) - 22,243 24,088 109,060 84,972 109,060 Year 2021	% 100 66 34 4 18 1 23 11 0 1 - 1 12 1 11 - - - - 3 - - 3 3 14 11 14 0.51 0.51

(Please refer to notes of the financial reports attached)

〜6〜

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StConsolidated Statement of Changes in Equity for Rectron LTD.and its subsidiaries

For the years 2022 and January 1 to December 31, 2021

Unit: NTD 1,000

Equity Attributable to Owners of the Parent

Balance as of January 1, 2021 $ Net profit for the period Current Other Comprehensive Income Total comprehensive income for the period Appropriation and Distribution of Earnings: Appropriation to legal reserve Appropriation to special earnings reserve Cash dividend for common stock Balance as of December 31, 2021 Net profit for the period Other comprehensive income for the period Total comprehensive income for the period Appropriation and Distribution of Earnings: Appropriation to legal reserve Reversal of special reserve Cash dividends on ordinary shares As of December 31, 2022 balance. $ Equity Instruments measured at Fair Value through Other Comprehensive Income (OCI) upon disposal	Share capital 1,663,029 - - - - - - - 1,663,029 - - - - - - 1,663,029 Common share capital	Capital surplus 9 - - - - - - - 9 - - - - - - 9	Undistributed Legal Special Undistributed reserve reserve earnings 16,089 20,997 97,228 - - 84,972 - - 118 - - 85,090 9,723 - (9,723) - 37,469 (37,469) - - (50,000) - - 428 25,812 58,466 85,554 - - 176,100 - - 144 - - 176,244 8,552 - (8,552) - (23,542) 23,542 - - (100,000) 34,364 34,924 176,788 Retained earnings	Translation adjustments of foreign operations Total (66,039) 7,573 (58,466) - - - 24,991 (1,021) 23,970 24,991 (1,021) 23,970 - - - - - - - - - - (428) (428) (41,048) 6,124 (34,924) - - - (14,105) (11,045) (25,150) (14,105) (11,045) (25,150) - - - - - - - - - (55,153) (4,921) (60,074) Other equity items Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total equity 1,738,886 84,972 24,088 109,060 - - (50,000) - 1,797,946 176,100 (25,006) 151,094 - - (100,000) 1,849,040

(Please refer to notes of the financial reports attached)

〜7〜

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Rectron Ltd. and its subsidiaries

Consolidated Statements of Consolidated Profit or Loss For the years 2022 and January 1 to December 31, 2021

Unit: NTD 1,000

Cash Flow from Operating Activities:
Year 2022
Net profit before tax for the period
$ 204,645
Adjustments:
Revenue, expense, and loss items
Depreciation expenses
53,040
Amortization expense
4,749
Expected Credit Impairment Reversal Profits
(2,165)
Interest expense
1,137
Interest income
(1,698)
Dividend income
(510)
Disposition loss of real estate, plant and equipment
173
Reclassification of property, plant, and equipment to expenses
-
Impairment loss on financial assets
5,508
Foreign exchange (gain) loss on financial assets
(2,462)
Total income (expense) items
57,772
Changes in assets/liabilities related to operating activities
Net changes in assets related to operating activities：
Notes receivable
423
Accounts receivable
25,233
Other receivables
5,761
Inventory
34,739
Prepayments
(16,321)
Other Current Assets
1,421
And Total Net Changes in Assets Related to Operating
Activities
51,256
Net changes in liabilities related to operating activities:
Current Contract Liabilities
(56)
Accounts payable
18,244
Other accounts receivable
2,732
Other current liabilities
165
Net defined benefit liabilities
(1,930)
And Total Net Changes in Liabilities Related to Operating
Activities
19,155
And Total Net Changes in Assets and Liabilities Related to Operating
Activities
70,411
Total Adjusted Items
128,183
Cash inflow generated from operations
332,828
Interests received
1,537
Dividends received
219
Interests paid
(1,182)
Income taxes paid
(4,446)
Net cash inflow from operating activities
$
328,956

Year 2021
90,629
53,590
4,145
(2,151)
1,709
(3,282)
(300)
-
1,321
-
330
55,362
2,409
(41,011)
(1,172)
(47,812)
3,306
1,011
(83,269)
644
(11,841)
1,498
(326)
(930)
(10,955)
(94,224)
(38,862)
51,767
3,282
300
(1,722)
(9,193)
44,434

〜8〜

193 -

Rectron Ltd. and its subsidiaries Consolidated Statements of Consolidated Profit or Loss

For the years 2022 and January 1 to December 31, 2021

Unit: NTD 1,000

Cash Flow from Investment Activities: Acquisition of financial assets at fair value through other comprehensive income Financial assets measured at fair value through other comprehensive income (FVOCI) upon disposal. Financial assets measured at FVPL upon acquisition Disposal of financial assets measured at FVPL. Acquisition of property, plants, and equipment Disposal of property, plants, and equipment Increase in other non-current assets Dividends received Net cash outflows from investment activities Decrease in short-term borrowings. Increase in deposits as collateral. Decrease in deposits as collateral. Principal repayment of leases Cash dividends paid Net cash outflow from financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents for the current period. Beginning balance of cash and cash equivalents. Ending balance of cash and cash equivalents for the period. Cash flows from financing activities: Increase in short-term borrowings.	Year 2022 (3,260) - (64,690) 34,216 (32,474) 1,072 (1,287) 291 (66,132) 65,000 (152,000) 345 - (2,701) (100,000) (189,356) (14,970) 58,498 187,464 245,962	Year 2021 (26,123) 4,085 (691) - (61,790) 2,712 (109) - (81,916) 20,000 (60,000) - (1,351) (3,174) (50,000) (94,525) 22,805 (109,202) 296,666 187,464

(Please refer to notes of the consolidated financial reports attached)

〜8-1〜

194 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue) Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries Fiscal year 2022 and 2021 (Unless otherwise noted, all amounts are expressed in thousands of New Taiwanese Dollars.)

1. Company history

Rectron Ltd. (hereinafter referred to as "the Company") was established on January 23, 1976 with its registered address at No. 71, Zhongshan Rd., Tucheng Dist., New Taipei City, Taiwan The Company was originally named "Rectron Precision Electronics Industry Co., Ltd." and was renamed "Rectron Ltd." at the shareholders' meeting on June 29, 2000, which was approved by the Ministry of Economic Affairs.

The main business operations of Rectron Ltd. (hereinafter referred to as "the Company") and its subsidiaries (hereinafter collectively referred to as "the Consolidated Companies") include the manufacture and sale of various rectifiers, other semiconductor components, rental and sale of real estate, trading of wines, and manufacture and sale of medical equipment.

2. Date and procedure of approval of the financial report

This consolidated financial report has been approved by the Board of Directors on March 24, 2023 and announced.

3. Applicability of newly issued and revised standards and interpretations

(1) Impacts from adopting the latest and amended standards, and related interpretations approved by

the Financial Supervisory Commission (ROC)

The Consolidated Companies have applied the following newly revised International Financial Reporting Standards since January 1, 2022, which have not had a significant impact on the consolidated financial statements.

Amendment to International Accounting Standard 16 "Property, Plant and Equipmentsecond before Intended Use"
Amendment to International Accounting Standard and Compliance 17 Fulfilling a Contract"
IFRS Annual Improvements to 2018 - 2020Cycle
•The Impact of IFRS 3 Amendments "Reference to the Conceptual Framework"
(2) Regarding the adoption of international financial reporting standards not yet endorsed by the Financial Supervisory Commission.

The consolidated company assesses the application of the following newly revised international financial reporting standards effective from January 1, 2023, and will not have a significant impact on the consolidated financial statements.

Amendment to International Accounting Standard No. 1 "Disclosure of Accounting Policies"
Amendment to International Accounting Standard No. 8 "Definition of Accounting Estimates"
Amendment to International Accounting Standard No. 12 "Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction with a Taxable Profit or Loss"
(3) Applicability of newly issued and revised standards and interpretations not yet recognized by the Financial Supervisory Commission (ROC)

The consolidated company expects that the following newly issued and revised standards that have not been approved by the Financial Supervisory Commission of Taiwan

[FSC] will not have a significant impact on the consolidated financial statements.
Amendment to International Financial Reporting Standard No. 10 and International Accounting Standard No. 28 "Sale or Contribution of Assets between an Investor and its

〜 9 〜 - 195 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

Associate or Joint Venture"

International Financial Reporting Standard No. 17 "Insurance Contracts" and the amendment to International Financial Reporting Standard No. 17.
Amendment to International Accounting Standard No. 1 "Classification of Liabilities as Current or Non-current"
Amendment to International Accounting Standard No. 1 "Non-Current Liabilities with Contractual Terms"
Amendment to International Financial Reporting Standard No. 17 "Comparative Information on Initial Adoption of IFRS 17 and IFRS 9"
Amendment to International Financial Reporting Standard No. 16 "Requirements for Sale and Leaseback Transactions"

4. Summary of significant accounting policies

(1) Statement of compliance

This consolidated financial report is prepared in accordance with the Financial Reporting Standards for Issuers of Securities (referred to as "the preparation standards") and the international financial reporting standards, international accounting standards, interpretations, and interpretation notices recognized and issued by the Financial Supervisory Commission (referred to as "the FSC-recognized international financial reporting standards").

(2) Basis of preparation
Measurement basis

Except for the significant items presented in the following balance sheet, this consolidated financial report is prepared on a historical cost basis:

(1) Financial assets at fair value through profit or loss measured at fair value through profit or loss, and
(2) Financial assets at fair value through other comprehensive income measured at fair value through other comprehensive income, and
(3)Net defined benefit liabilities (or assets) are measured by deducting the fair value of retirement fund assets from the present value of defined benefit obligations.
Functional and presentation currencies

The functional currency of each entity within the consolidated company is the currency of the primary economic environment in which it operates. This consolidated financial report is presented in New Taiwan dollars, which is the functional currency of the Company. All financial information presented in New Taiwan dollars is in thousands of New Taiwan dollars.

(3) Basis of consolidation

Principles for consolidated financial report preparation

The preparation of the consolidated financial statements includes the Company and the entities (i.e. subsidiaries) controlled by the Company. The Company 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 power over the entity.

From the date that control over a subsidiary is obtained, its financial statements are included in the consolidated financial statements until the date that control is lost. Intercompany transactions, balances, and any unrealized gains and losses have been fully eliminated in the preparation of the consolidated financial statements. The total comprehensive income of a subsidiary is attributed to the Company's owners and non-

〜 10 〜 - 196 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

controlling interests, even if the non-controlling interests result in a deficit balance.

The financial statements of the subsidiaries have been properly adjusted to ensure that their accounting policies are consistent with those used by the consolidated company.

Changes in the ownership equity interests of subsidiaries that do not result in loss of control are treated as transactions with equity owners. Adjustments to non-controlling interests between fair value paid or received and the carrying amount are directly recognized in equity and attributable to the Company's owners.

The subsidiaries included in the consolidated financial statements.

The subsidiaries included in this consolidated financial report are:

==> picture [477 x 54] intentionally omitted <==

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

Investment Company Percentage of Ownership
Name Subsidiary Name Nature of 2022.12.31 2021.12.31 Description
Business
The Company Rectron (China) Sales of 100.00% Subsidiaries where the total
100.00%
Limited rectifiers, number of shares representing the
----- End of picture text -----

The Company	Rectron (China) Limited	Business Sales of rectifiers,	100.00%	100.00% Subsidiaries where the total number of shares representing the
		etc.		directly held voting rights exceeds 50%.
	(hereinafter referred to	Electronic
	as "Rectron China")	components
The Company	Rectron Electronic	Sales of rectifiers, etc.	100.00 %	100.00% Subsidiaries where the total number of shares representing the directly held voting rights exceeds 50%.
	Enterprises Inc.	Electronic		Subsidiary with capital
		components		contribution
The Company	(USA)(hereinafter referred to as "REEI") Juding Xingye Co., Ltd	Wholesale of tobacco and alcohol products and	100.00 %	100.00% Subsidiaries where the total number of shares representing the directly held voting rights exceeds 50%.
	(hereinafter referred to	Manufacture
	as "Juding Xingye")	of medical
		equipment
		Sales
Rectron (China) Limited	RECTRON Zhejiang Technology Co., Ltd.	Production and sales of rectifiers	100.00 %	100.00% Subsidiaries where the total number of shares representing the directly held voting rights exceeds 50%.
	(hereinafter referred to	and other
	as "Zhejiang Rectron")	electronic
		components

3.Subsidiaries not included in the consolidated financial statements: None.

(4) Foreign Currency

1. Foreign Currency Transactions

Foreign currency transactions are translated into the functional currency at the exchange rates on the transaction dates. For each reporting period end date (hereinafter referred to as the "reporting date"), foreign currency monetary items are translated into the functional currency at the exchange rates on that day. Foreign currency non-monetary items measured at fair value are translated into the functional currency at the exchange rates on the measurement date, while those measured at historical cost are translated at the exchange rates on the transaction dates.

Foreign exchange gains or losses are usually recognized in profit or loss, except for

197 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

the following cases that are recognized in other comprehensive income:

(1) Equity instruments designated as at fair value through other comprehensive income; (2) Financial liabilities designated as net investment hedges of foreign operations within the effective range of the hedge; or

(3) Cash flow hedges that qualify within the effective range of the hedge.
Foreign operating institutions

Assets and liabilities of foreign operating entities, including goodwill and fair value adjustments generated during acquisitions, are translated into New Taiwan dollars based on the exchange rate on the reporting date. Revenue and expense items are translated into New Taiwan dollars based on the average exchange rate of the period. Any exchange differences are recognized in other comprehensive income.

(5) Classification standards for distinguishing current and non-current assets and liabilities Assets that meet either of the following conditions are classified as current assets, while
all other assets that do not belong to current assets are classified as non-current assets:
1.Expected to be realized or consumed within the normal operating cycle or intended to be sold or consumed;
2.Primarily held for trading purposes.
3.Expect to realize the asset within the next twelve months after the reporting period; or
4.The asset is cash or cash equivalents, except when there are restrictions on exchanging or using the asset to settle liabilities within at least twelve months after the reporting period. Liabilities that meet any of the following conditions are classified as current liabilities,
and all other liabilities not meeting the criteria are classified as non-current liabilities:
1.Expected to be settled within the normal operating cycle;
2.Primarily held for the purpose of trading;
3.Expected to be settled within the next twelve months after the reporting period; or
4.Liabilities that do not have an unconditional right to defer settlement for at least twelve months after the reporting period. The terms of the liability that may be settled by issuing equity instruments at the option of the counterparty do not affect its classification.
(6) Cash and cash equivalents

〜 12 〜 - 198 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(7) Financial Instruments

Accounts receivable and issued debt securities are initially recognized when generated. All other financial assets and financial liabilities are initially recognized when the company becomes a party to the contractual terms of the financial instrument. Non-derivative financial assets (excluding accounts receivable that are not significant financial components) or financial liabilities that are not measured at fair value through profit or loss are measured by adding the transaction costs directly attributable to the acquisition or issuance to the fair value. Accounts receivable that are not significant financial components are measured at transaction price on initial recognition.

1. Financial Assets

For financial assets purchased or sold in accordance with customary trading practices, the Company records all purchases and sales consistently on the trade date basis for financial assets classified in the same manner.

When initially recognized, financial assets are classified as amortized cost, debt instruments investments measured at fair value through other comprehensive income, equity instruments investments measured at fair value through other comprehensive income, or financial assets measured at fair value through profit or loss. The Company reclassifies all affected financial assets only when there is a change in the business model for managing the financial assets, effective from the first day of the next reporting period.

(1) Financial assets measured at amortized cost

Financial assets that meet the following conditions and are not designated as

measured at fair value through profit or loss are measured at amortized cost:

The financial asset is held in a business model whose objective is to hold assets in order to collect contractual cash flows.
The cash flows of the financial asset's contract are solely payments of principal and interest on the principal amount outstanding on specific dates.

When the Company reclassifies a financial asset, it recalculates the effective interest rate and starts recognizing interest income or expense on a trade date basis from the reclassification date. Interest income, foreign exchange gains and losses, and impairment losses are recognized in profit or loss. Gains or losses are recognized in profit or loss upon derecognition of financial assets.

(2) Financial assets measured at fair value through other comprehensive income

payable refer Financial assets held under the operating model with the purposes of collecting contract cash flow and for sales;
The cash flows of the financial asset's contract are solely payments of principal and interest on the principal amount outstanding on specific dates.

When initially recognized, the consolidated company may make an irrevocable choice to report the subsequent fair value changes of equity instruments that are not held for trading in other comprehensive income. The aforementioned election is made on an instrument-by-instrument basis.

Debt instruments held by investors are subsequently measured at fair value. Interest income, foreign exchange gains and losses, and impairment losses calculated using the

〜 13 〜 - 199 -

Notes to the consolidated financial statements of Rectron Ltd. and its

subsidiaries(continue)

effective interest rate method are recognized in profit or loss, while other net gains or losses are recognized in other comprehensive income. Upon disposal, the accumulated amount of other comprehensive income is reclassified to profit or loss.

Equity instruments held by investors are subsequently measured at fair value. Dividend income (unless it clearly represents a recovery of a portion of the investment cost) is recognized in profit or loss. Other net gains or losses are recognized in other comprehensive income and are not reclassified to profit or loss.

Dividend income from equity investments is recognized on the date the consolidated company has the right to receive dividends (usually the ex-dividend date).

(3) Financial assets measured at fair value through profit or loss.

Stock Amount Production that do not meet the criteria for amortized cost measurement or fair value measurement through other comprehensive income are measured at fair value through profit or loss, including derivative financial assets. At initial recognition, the reporting entity may irrevocably designate a financial asset that meets the criteria for amortized cost or fair value measurement through other comprehensive income as a financial asset measured at fair value through profit or loss to eliminate or significantly reduce accounting mismatch.

Such assets are subsequently measured at fair value, and net gains or losses (including any dividend and interest income) are recognized in profit or loss.

(4) Impairment loss on financial assets

The consolidated company recognizes allowance for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, accounts receivable and trade receivables, other receivables, deposits paid for guarantees and other financial assets) and debt instruments investments and contract assets measured at fair value through other comprehensive income.

The allowance for expected credit losses on the following financial assets is measured based on 12-month expected credit losses, while the rest are measured based on lifetime expected credit losses:

The credit risk of the debt securities as of the reporting date is considered low; and
The credit risk (i.e. the risk of default during the expected remaining lifetime of financial instruments) of other debt securities and bank deposits has not increased significantly since initial recognition.

The allowance for expected credit losses on accounts receivable and contract assets is measured based on lifetime expected credit losses

In determining whether credit risk has increased significantly since initial recognition, the consolidated company considers reasonable and supportable information (that can be obtained without undue cost or effort), including qualitative and quantitative information, and analysis based on the consolidated company's historical experience, credit assessments and forward-looking information.

If the credit risk rating of financial instruments is equivalent to the "investment grade" defined globally (such as Standard & Poor's investment grade BBB-, Moody's investment grade Baa3, Taiwan Ratings' investment grade A, or higher than these ratings), the consolidated company considers the credit risk of the debt securities to be low.

If the contractual payments are overdue for more than 180 days, the consolidated company assumes that the credit risk of financial assets has significantly increased.

〜 14 〜 - 200 -

Notes to the consolidated financial statements of Rectron Ltd. and its

subsidiaries(continue)

If the contractual payments are overdue for more than 365 days or the borrower is unlikely to fulfill its credit obligations to pay the full amount to the consolidated company, the consolidated company considers the financial assets to be in default.

The expected credit loss during the remaining term refers to the expected credit loss generated by all possible default events during the expected remaining term of the financial instruments.

Expected credit losses over a 12-month period refer to the estimated credit losses that may arise from default events of financial instruments within 12 months after the reporting date (or a shorter period if the expected lifetime of the financial instrument is less than 12 months).

The longest period to measure expected credit losses is the longest contractual period in which the consolidated entity is exposed to credit risk. Expected credit losses are the probability-weighted estimate of credit losses during the expected lifetime of the financial instrument.

Credit losses are measured at the present value of all cash shortfalls, which is the difference between the present value of cash flows that the consolidated entity is entitled to receive under the contract and the present value of the cash flows that the consolidated entity expects to receive. Expected credit losses are discounted at the effective interest rate of the financial asset.

The consolidated entity evaluates whether there is any credit impairment for financial assets measured at amortized cost and debt securities measured at fair value through other comprehensive income on each reporting date. A financial asset is impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence of impairment of financial assets includes observable data related to the following factors:

Significant financial difficulties of the borrower or issuer;
Default, such as delays or overdue for more than 365 days;
Concessions given by the Company to the borrower due to economic or contractual reasons related to the borrower's financial difficulties that were not considered originally;
The borrower is highly likely to apply for bankruptcy or other financial reorganization; or

• The active market of the financial asset disappears due to financial difficulties. The allowance for impairment losses on financial assets measured at amortized cost is deducted from the carrying amount of the asset. The allowance for impairment losses on debt instruments measured at fair value through other comprehensive income is adjusted in the income statement and recognized in other comprehensive income (rather than reducing the carrying amount of assets).

When the Company cannot reasonably anticipate the recovery of the financial asset as a whole or in part, the total carrying amount of the financial assets is directly reduced. For corporate customers, the Company performs individual analysis for offsetting based on the timing and amount of reasonable expected recoverable amount. The Company expects that the amount already offset will not be significantly reversed. However, the financial assets that have been offset can still be enforced to comply with the procedure of recovering overdue amounts by the Company.

(5) Disposal of Financial Assets

The financial assets are derecognized only when the contractual rights to the cash

〜 15 〜 - 201 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

flows from the assets have expired, or the financial assets have been transferred and almost all risks and rewards of ownership have been transferred to another enterprise, or when the financial assets have neither been transferred nor retained the control of the financial assets and almost all risks and rewards of ownership have not been retained.

If the enterprise retains almost all risks and rewards of ownership of the transferred financial assets, the assets will continue to be recognized on the balance sheet.

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

Debt and equity instruments issued by the enterprise are classified as financial liabilities or equity instruments based on the substance of the contractual agreement and the definition of financial liabilities and equity instruments.

(2) Equity transactions

Equity instruments refer to any contract that recognizes the residual equity of the enterprise after deducting all liabilities from its assets. The equity instruments issued by the enterprise are recognized at the amount of proceeds received, net of directly attributable issuance costs.

(3) Financial liabilities

Financial liabilities are classified as either amortized cost or fair value through profit or loss. Financial liabilities held for trading, derivatives, or designated at fair value through profit or loss at initial recognition are classified as fair value through profit or loss. Financial liabilities at fair value through profit or loss are measured at fair value, and related net gains and losses, including any interest expense, are recognized in profit or loss.

(4) Derecognization of financial liabilities

Financial liabilities are derecognized by the consolidated company when the contractual obligations have been fulfilled, cancelled, or expired. When the terms of a financial liability are modified and the cash flows of the modified liability differ significantly, the original financial liability is derecognized, and a new financial liability is recognized at fair value based on the modified terms.

When a financial liability is derecognized, any difference between the carrying amount and the total consideration paid or payable (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

(5) Offset of financial assets and liabilities

Financial assets and financial liabilities are offset and presented on a net basis in the balance sheet only when there is a legally enforceable right to set off the recognized amounts and when there is an intention to settle the assets and liabilities on a net basis or to realize them simultaneously.

(8) Inventory

Inventory is measured at the lower of cost or net realizable value. Cost includes the costs of acquiring, producing or processing inventory to its present location and condition for its intended use, as well as other costs, and is calculated using the weighted average method. The cost of finished and work in progress inventory includes the manufacturing costs allocated to

〜 16 〜 - 202 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

them in proportion to normal capacity.

Net realizable value is the estimated selling price in the normal course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

(9) Investment properties

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

(10) Property, plants, and equipment

Recognition and Measurement

Real estate, plant and equipment items are measured at cost (including capitalized borrowing costs), less accumulated depreciation and any accumulated impairment.

If the useful lives of significant components of real estate, plant and equipment differ, they are treated as separate items (major components) of real estate, plant and equipment. Gains or losses on disposal of real estate, plant and equipment are recognized in profit or loss.

2. Subsequent Costs

Subsequent expenditures are capitalized only when it is probable that they will result in future economic benefits that flow to the combined company.

3. Depreciation

Depreciation is calculated based on the asset cost less residual value and is

recognized in profit or loss using the straight-line method over the estimated useful life of each component.

Land is not subject to depreciation.

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

(1) Buildings and structures 5-55 years
(2) Machinery and equipment 5-10 years
(3) Office equipment 3-10 years

The consolidated company reviews the depreciation method, useful life, and residual value on each reporting date and adjusts them appropriately if necessary.

4. Reclassification to investment properties.

When a property for own use is reclassified as an investment property, the property is reclassified as an investment property at the carrying amount at the date of reclassification.

〜 17 〜

203 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(11) Leases

The consolidated company assesses whether a contract is or contains a lease on the inception date of the contract. If a contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration, the contract is or contains a lease.

1. Lessee

The consolidated company recognizes right-of-use assets and lease liabilities on the lease commencement date. The right-of-use assets are measured at cost, which includes the initial measurement of the lease liability, adjusted for any lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received.

Depreciation of the right-of-use asset is recognized on a straight-line basis over the shorter of the lease term and the useful life of the asset. In addition, the consolidated company assesses whether there are any indicators of impairment of the right-of-use assets on a regular basis and recognizes any impairment losses incurred. The consolidated company also adjusts the right-of-use asset in the case of a remeasurement of the lease liability.

Lease liabilities are measured at the present value of lease payments not yet paid at the lease commencement date. If the implicit interest rate of the lease is readily determinable, the discount rate is that interest rate. Otherwise, the incremental borrowing rate of the consolidated company is used. Generally, the consolidated company uses its incremental borrowing rate as the discount rate.

Lease payments measured accounted for as lease liabilities include:

(1) Fixed payment, including substantial fixed payments;
(2) Lease payment dependent upon changes to certain indexes or rates, which is originally measured by indexes or rates on the starting date of lease;
(3) Guarantee amount of salvage value expected to be paid; and
(4) Exercise price upon reasonable decision to exercise purchase option or the option to terminate a lease or penalty to be.

Interests of lease liabilities are subsequently accrued by the effective interest method. The amount of which is re-measured under the following conditions:

(1) Changes in indices or rates used to determine lease payments that result in changes in future lease payments;
(2) Changes in the expected residual value guarantee amount.
(3) Changes to evaluation of purchase option of target asset;
(4) There have been changes in the estimates of exercising extension or termination options, which resulted in a reassessment of the lease term evaluation;
(5) modifications to the leased asset, scope, or other terms.

When the lease liabilities are remeasured due to changes in the index or rate used to determine lease payments, changes in the residual value guarantee, and changes in the assessment of options to purchase, extend or terminate, the corresponding adjustment to the carrying amount of the right-of-use assets is recognized, and any remaining revaluation amount is recognized in profit or loss when the carrying amount of the right-of-use assets is reduced to zero.

For lease changes to reduce range of lease, book value of right-of-use asset is reduced

〜 18 〜

204 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

to reflect partial or total termination of leases. Difference between which and remeasurement amount of lease liability is recognized in income (loss).

The Group presents right-of-use assets and lease liabilities that do not meet the definition of investment property respectively as individual items in balance sheets.

For short-term leases and leases of low-value assets related to office rentals, the consolidated company chooses not to recognize the right-of-use assets and lease liabilities, and instead, recognizes the related lease payments on a straight-line basis over the lease term as expenses.

2. Lessor

In transactions where the consolidated company is the lessor, the lease contract is classified based on whether almost all of the risks and rewards associated with ownership of the underlying asset have been transferred on the lease commencement date. If so, it is classified as a finance lease; otherwise, it is classified as an operating lease. In the evaluation process, the consolidated company considers specific indicators, such as whether the lease term covers a significant portion of the economic life of the underlying asset.

If the consolidated company is a sub-lessor, the sub-lease transaction is accounted for separately from the main lease, and the classification of the sub-lease transaction is based on the right-of-use asset generated by the main lease. If the main lease is a short-term lease and is eligible for exemption from recognition, the sub-lease transaction should be classified as an operating lease.

If an agreement includes lease and non-lease components, the Group uses regulations of IFRS 15 to allocate contractual.

The assets held under finance leases are expressed as receivables from finance leases based on the net investment in the lease. The original direct costs incurred in negotiating and arranging operating leases are included in the net investment in the lease. The net investment in the lease is recognized as interest income over the lease term in a pattern that reflects a constant periodic rate of return. For operating leases, the consolidated company recognizes lease payments received as rental income on a straight-line basis over the lease term.

(12) Financial asset impairments

The consolidated company evaluates on each reporting date whether there are indicators of impairment of non-financial assets (excluding inventories and deferred tax assets) that may result in a reduction in the carrying amount. If any indicators exist, the estimated recoverable amount of the asset is determined.

For impairment testing purposes, a group of assets that generates largely independent cash inflows from other individual assets or groups of assets is identified as the smallest identifiable group of assets. The goodwill acquired through business combinations is allocated to cashgenerating units or groups of cash-generating units that are expected to benefit from the

〜 19 〜

205 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

synergies of the combination.

If the recoverable amount of an individual asset or cash-generating unit is lower than its carrying amount, an impairment loss is recognized.

(13) Revenue Recognition
Revenue from customer contracts.

Revenue is measured by the consideration expected to be received in exchange for the transfer of goods or services. Revenue is recognized when control of goods or services is transferred to customers and the performance obligations are satisfied. The consolidated company's main revenue items are described as follows:

(1) Sale of Goods - Electronic rectifier diodes and passive semiconductor components.

The consolidated company manufactures electronic components and sells them to electronic equipment manufacturers. Revenue is recognized when control of the products is transferred to customers. Control over the product is deemed to have been transferred when the product has been delivered to the customer, the customer has the full ability to decide on the sales channel and price of the product, and there are no unfulfilled obligations affecting the customer's acceptance of the product. Delivery occurs when the products are shipped to a specific location, and the risks of obsolescence, deterioration, and loss have been transferred to customers. Customers have accepted the products in accordance with the sales contract, the acceptance clauses have expired, or the merging company has objective evidence that all acceptance criteria have been met.

The merging company recognizes accounts receivable upon delivery of goods because it has an unconditional right to receive consideration at that point in time.

(2) Sale of Goods - Trading of alcoholic beverages.

The consolidated company purchases alcoholic products for sale in the retail market and recognizes revenue when the physical product is delivered to the customer. The price is paid immediately upon the customer's purchase of the product.

(3) Sales of Goods - Medical Equipment.

The consolidated company manufactures and sells medical equipment in the retail market, and recognizes revenue when the amount of revenue from transferring the goods can be reliably measured and it is highly probable that economic benefits will flow to the enterprise in the future.

The merging company recognizes accounts receivable upon delivery of goods because it has an unconditional right to receive consideration at that point in time.

〜 20 〜

206 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(4) Rental income

Rental income from investment properties and income from leasing real estate are recognized as lease income in the operating revenue item.

(5) Components of Financial Statements.

The merged company expects to transfer goods or services to its customers under contracts with payment terms not exceeding one year, and therefore, the merged company does not adjust the transaction price for the time value of money.

(14) Employee benefits

1. Defined contribution plans (DCP)

The obligation to contribute to the defined contribution plan is recognized as an expense during the period in which the employees provide services.

2. Defined benefit plan.

The net obligations of the defined benefit plan in the consolidated financial statements are calculated by discounting the future benefit amounts earned by employees during the current or prior periods to their present value, and subtracting any fair value of plan assets.

The determination of the benefit obligation is annually actuarially calculated using the projected unit credit method by a qualified actuary. When the result of the calculation is favorable to the consolidated company, the recognition of an asset is limited to the present value of any economic benefits obtainable from the plan, which may be derived from refunds or reductions in future contributions to the plan. When calculating the present value of economic benefits, any minimum funding requirements are considered.

Any changes in the remeasurement of the net defined benefit liability, including actuarial gains and losses, return on plan assets (excluding interest), and any changes to the asset ceiling (excluding interest), are immediately recognized in other comprehensive income and accumulated in retained earnings. The net interest cost (income) of the net defined benefit liability (asset) is determined by the consolidated company using the net defined benefit liability (asset) and discount rate determined at the beginning of the reporting period. The net interest cost and other expenses of the defined benefit plan are recognized in income.

When the plan is amended or curtailed, any benefit changes related to the cost of prior service or curtailment gain or loss are immediately recognized in income. When settlement occurs, the consolidated company recognizes the settlement gain or loss of the defined benefit plan.

3. Short-term Employee Benefits.

Short-term employee benefits are recognized as expenses when services are provided. If the merger company has a current legal or constructive obligation resulting from past employee services and the obligation can be reliably estimated, the amount is recognized as a liability.

(15) Income tax

207 - 〜 21 〜

Notes to the consolidated financial statements of Rectron Ltd. and its

subsidiaries(continue)

Current income tax includes the estimated payable income tax or receivable tax refund calculated based on the taxable income (loss) for the year, as well as any adjustments to the payable income tax or receivable tax refund from previous years. The amounts are measured at the best estimate of the expected payments or receipts, based on the statutory tax rate or the substantive enacted tax rate as of the reporting date.

Assets or liabilities recognized in the original transaction that does not constitute a business combination and do not affect accounting profit or taxable income (loss) at the time of the transaction;
Temporary differences arising from investments in subsidiaries, associates, and joint ventures that the merging company can control the timing of reversal of the temporary differences and are very likely not to reverse in the foreseeable future; and
The temporary taxable differences arising from the initial recognition of goodwill. Unused tax losses and unused tax credits for future periods, and deductible temporary differences, are recognized as deferred tax assets within the scope of being very likely to have future taxable income available for use. They shall be reassessed on each reporting date, and adjustments shall be made to reduce the related income tax benefits that are unlikely to be realized; or to reverse the amount of the previously reduced income tax benefits that are likely to have sufficient taxable income in the future.

The merging company shall only offset deferred tax assets and deferred tax liabilities when the following conditions are met simultaneously:

The current income tax assets and current income tax liabilities are set off with statutory execution authority; and
The deferred income tax assets and deferred income tax liabilities are related to one of the taxpayers subject to income tax levied by the same tax authority as follows:
(1) The same taxpayer; or
(2) Different taxpayers, but each taxpayer intends to offset the current income tax liabilities and assets on a net basis for each future period in which significant amounts of deferred income tax assets are expected to be recovered and deferred income tax liabilities are expected to be settled, or simultaneously realize assets and settle liabilities.

(16) Earnings per share

The basic and diluted earnings per share attributable to the equity holders of the Company are presented in the consolidated financial statements. Consolidated company the basic earnings per share are calculated by dividing the profit or loss attributable to the equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. For diluted earnings per shares, the equity of the equity holders of the Company's common shares and the weighted average of the number of outstanding common shares are respectively adjusted by all effects of the potential dilutive common shares before the calculation. The potential dilutive ordinary shares of the Company include the estimated amount of employee compensation accruals.

〜 22 〜

208 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(17) Segment information

The operating segments are components of the consolidated company engaged in activities that generate revenue and incur expenses. (including revenue and expenses related to transactions with other components of the consolidated company) in its operations. The operating results of all operating segments are regularly reviewed by the primary operating decision-makers of the consolidated company to make resource allocation decisions for the segment and assess its performance. Each operating segment has separate financial information.

5. Critical accounting judgments, estimates and key sources of assumption uncertainty

In preparing these consolidated financial statements, management makes judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets,

liabilities, revenues, and expenses. Actual results may differ from these estimates.

Management continuously reviews its estimates and underlying assumptions, and accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected.

(1) Allowance for doubtful accounts for accounts receivable.

The allowance for doubtful accounts of the consolidated company is estimated based on assumptions of default risk and expected loss rates. The consolidated company considers historical experience, current market conditions, and forward-looking estimates as of each reporting date to determine the assumptions and input values to be used when calculating impairment. For detailed explanation of the related assumptions and input values, please refer to Note 6(3).

(2) Inventory evaluation

Due to the requirement to measure inventory at cost or net realizable value, whichever is lower, the consolidated company assesses the amount of inventory cost to be written down to net realizable value due to normal wear and tear, obsolescence, or lack of market sales value as of the evaluation report date. The inventory valuation is primarily based on estimates of product demand during a specific future period, and may be subject to significant changes due to rapid changes in the industry. Please refer to Note 6(4) for details on the inventory valuation estimate.

The accounting policies and disclosures of the consolidated company include the use of fair value measurement for its financial and non-financial assets and liabilities. The consolidated company has established internal control systems for fair value measurement. This includes establishing an assessment team responsible for reviewing all significant fair value measurements (including level 3 fair value) and reporting directly to the Chief Financial Officer. The assessment team periodically reviews significant unobservable inputs and adjustments. If third-party information (such as brokers or pricing service organizations) is used as inputs to measure fair value, the assessment team will evaluate the evidence supporting the input values provided by the third party to ensure that the valuation and its fair value classification comply with International Financial

209 - 〜 23 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

Reporting Standards. Investment properties are periodically evaluated by the consolidated company in accordance with the evaluation method and parameter assumptions announced by the Financial Supervisory Commission, or by external appraisers appointed by the company.

The consolidated company uses observable market inputs as much as possible when measuring its assets and liabilities. The fair value level is classified based on the input values used by the valuation technique, as follows:

•Level 1: Assets or liabilities with the same assets or liabilities traded in active markets at unadjusted public prices.
Level 2: Assets or liabilities not included in Level 1 with input parameters that are directly (i.e., price) or indirectly (i.e., derived from prices) observable.
Level 3: Assets or liabilities with input parameters not based on observable market data (unobservable parameters). Please refer to the following notes for information related to the assumptions used in measuring fair value:
Note 6 (7), Investment properties
Note6 (17), Financial Instruments

6. Explanation of Significant Accounting Items

(1) Cash and cash equivalents

ation of Significant Accounting Items ash and cash equivalents
		2022.12.31	2021.12.31
Cash and cash equivalents.	$	138	173
Bank deposit		227,398	187,291
Time Deposits		18,426	-
Cash and cash equivalents as presented in	$	245,962	187,464
the consolidated statement of cash flows.
For disclosure of interest rate risk and sensitivity analysis of the consolidated financial a
and liabilities, please refer to Note 6(17).
inancial Assets
1. Financial assets at fair value through profit or loss -	Current
		2022.12.31	2021.12.31
Financial assets designated at fair value through
profit or loss:
Foreign listed equity - Tesla	$	5,296	-
Foreign listed equity - Amazon		14,446	-
Domestic listed equity - TSMC		5,382	-
Financial Assets at Fair Value through Profit or Loss
– Mandatorily：
Beneficiary certificates		533	691
Total	$	25,657	691

For disclosure of interest rate risk and sensitivity analysis of the consolidated financial assets and liabilities, please refer to Note 6(17).

(2) Financial Assets
Financial assets carried at fair value through other comprehensive income - non-current

〜 24 〜

210 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

2022.12.31 2021.12.31 Debt instruments measured at fair value through other comprehensive income: Foreign corporate bonds - Apple $ 25,444 26,746 Foreign corporate bonds - AT&T 8,631 11,006 Foreign corporate bonds - Pfizer 4,154 5,108 Equity instruments measured at fair value through other comprehensive income: Domestic unlisted (OTC) company stocks - SunnyBank. 16,000 15,560 Total $ 54,229 58,420	2022.12.31	2021.12.31	2021.12.31
			58,420

(1) Debt instruments measured at fair value through other comprehensive income in the financial

statements.

The Company consolidated investments in bonds measured at fair value through other comprehensive income in the financial statements as of December 31, 2022 and 2021. The effective interest rates range from 2.00% to 4.01%, and the maturity dates range from 2056 to 2065. The Company holds bond investments through the business model of collecting contractual cash flows and selling financial assets, and therefore reports them as financial assets measured at fair value through other comprehensive income.

(2) Investments in equity instruments measured at fair value through other comprehensive income in the financial statements.

The Company holds these equity instrument investments as long-term strategic investments and not for trading purposes, and therefore designates them as financial assets measured at fair value through other comprehensive income.

The Company sold a portion of its equity instrument investments measured at fair value through other comprehensive income in the financial statements in 2021, with a fair value of NT$4,085 thousand and an accumulated gain of NT$428 thousand. As a result, the accumulated gain was transferred from other equity to retained earnings.

(3) For credit risk (including impairment of debt instrument investments) and market risk information, please refer to Note 6(17).
(4) The above-mentioned financial asset investments held by the Company as of December 31, 2022 and 2021 were not pledged or secured.
(3) Accounts receivable, accounts receivable from related parties, and long-term receivables.

Accounts Receivable - Generated from Sales Accounts receivable Long-term Accounts Receivable Less: Allowance for Doubtful Accounts	2022.12.31 $ 2,083 186,944 48,227 (78,794) $ 158,460	2021.12.31 2,506 209,895 48,227 (78,677) 181,951

For all accounts receivable and long-term accounts receivable, the consolidated company uses a simplified approach to estimate expected credit losses, i.e. using expected credit losses over the remaining life of the financial assets. For this measurement purpose, these accounts are grouped based on the shared credit risk characteristics of customers to pay all amounts due

〜 25 〜

211 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

under the contract terms, and forward-looking information, including macroeconomic and industry-specific information, has been incorporated. The expected credit loss analysis of accounts receivable, long-term accounts receivable, and long-term receivables of the consolidated company are as follows:

		2022.12.31	2022.12.31
$ $		Accounts receivable Book Value Weighted average expected credit loss rate 121,502 0%~0.3% 37,246 0.3%~3.58% 78,506 100% 237,254 2021.12.31




$ $	$	Accounts receivable Book Value 146,141 35,843 78,644 260,628	Weighted average expected credit loss rate 0%~0.25% 0.5%~10% 100%

The table of changes in the allowance for doubtful accounts for accounts receivable and longterm accounts receivable of the consolidated company is as follows:

Opening balance $ Recognized impairment loss The amount written off during the year due to uncollectible accounts The amount written off during the year due to the collection of accounts The impact of exchange rate fluctuations Closing balance $	Year 2022	Year 2021
	78,677 - (931) (2,165) 3,213 78,794	83,382 90 (1,903) (2,241) (651) 78,677

On December 31, 2022 and 2021, neither the accounts receivable nor the long-term accounts receivable of the merged company were pledged as collateral.

212 - 〜 26 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(4) Inventory. Raw materials and consumables Work in progress Finished Goods Inventory Product Goods-in-Transit Inventory and Raw Materials Subtotal Less: Allowance for inventory losses.	2022.12.31 $ 30,189 27,206 68,078 28,262 4,312 158,047 (16,343) $ 141,704	2021.12.31 30,498 50,231 58,618 40,122 10,485 189,954 (13,511) 176,443

The details of inventory-related expenses recognized by the consolidated company in the 2022 and 2021 fiscal years are as follows:

Reversal of inventory sold. Inventory impairment and obsolescence losses (gain from recovery). The impact of actual production capacity being lower than normal capacity. Loss on inventory write-off Total	Year 2022 $ 516,278 2,832 1,898 - $ 521,008	Year 2021 472,056 (1,254) 11,355 94 482,251

As of December 31, 2022 and 2021, the inventory of the consolidated company was not provided as collateral.

213 - 〜 27 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(5) Property, plants, and equipment

The details of cost, depreciation, and impairment losses on real estate, plants, and equipment of the consolidated company in the 2022 and 2021 fiscal years are as follows:

Cost or deemed cost: Land January 1, 2022 balance $ 181,394 Add - Disposal - Reclassification (transfer). - Effect of exchange rate changes - December 31, 2022 balance $ 181,394 January 1, 2021balance $ 181,394 Add - Reclassification (transfer). - Disposal - Affected number of exchange rate changes - December 31, 2021 balance $ 181,394 Depreciation and impairment loss： January 1, 2022 balance $ - Depreciation of this year - Disposal - Affected number of exchange rate changes - December 31, 2022 balance $ - January 1, 2021 balance $ - Depreciation of this year - Effect of exchange rate changes - December 31, 2021 balance $ - Book value December 31, 2022 $ 181,394 January 1, 2021 $ 181,394 December 31, 2021 $ 181,394	Buildings and structures 249,527 - - - 3,866 253,393 247,757 - - - 1,770 249,527 115,638 10,469 - 1,997 128,104 104,488 10,316 834 115,638 125,289 143,269 133,889	Buildings and structures 249,527 - - - 3,866 253,393 247,757 - - - 1,770 249,527 115,638 10,469 - 1,997 128,104 104,488 10,316 834 115,638 125,289 143,269 133,889	Machinery and equipment 664,281 16,704 (5,898) 10,614 1,089 686,790 600,002 51,222 9,716 - 3,341 664,281 488,073 25,299 (3,903) 8,554 518,023 458,316 26,441 3,316 488,073 168,767 141,686 176,208	Office equipment	Work in progress 12,690 11,704 - (10,614) 172 13,952 16,121 10,473 (11,182) (2,712) (10) 12,690 - - - - - - - - - 13,952 16,121 12,690	Total 1,162,287 29,936 (5,922) - 5,648 1,191,949 1,098,934 61,790 (951) (2,712) 5,226 1,162,287 647,584 39,442 (3,927) 11,013 694,112 603,033 40,280 4,271 647,584 497,837 495,901 514,703
				54,395 1,528 (24) - 521 56,420 53,660 95 515 - 125 54,395 43,873 3,674 (24) 462 47,985 40,229 3,523 121 43,873 8,435 13,431 10,522

Details of the mortgaged real estate, plants, and equipment as of December 31, 2022 and 2021, are explained in Note 8.

214 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(6) Right-of-use Assets

The changes in cost, depreciation, and impairment losses of leased land, buildings, transportation equipment, and other equipment of the consolidated company are as follows:

Buildings

	Buildings
lated depreciation of operating lease assets: Book value Land Cost of Leased Assets: January 1, 2022 balance $ 9,948 Add - Disposal - Affected number of exchange rate changes 248 December 31, 2022 balance $ 10,196 January 1, 2022 balance $ 9,834 Effect of exchange rate changes 114 December 31, 2021 balance $ 9,948 January 1, 2022 balance $ 915 Depreciation of this year 312 Disposal - Affected number of exchange rate changes 25 December 31, 2022 balance $ 1,252 January 1, 2021 balance $ 604 Depreciation of this year 305 Effect of exchange rate changes 6 December 31, 2021 balance $ 915 December 31, 2022 $ 8,944 January 1, 2021 $ 9,230 December 31, 2021 $ 9,033	and Construction	Transportation equipment 4,505 - (3,063) - 1,442 4,505 - 4,505 3,789 476 (3,063) - 1,202 2,541 1,248 - 3,789 240 1,964 716	Other equipment 280 - (280) - - 280 - 280 214 66 (280) - - 142 72 - 214 - 138 66	Total
				21,239 5,307 (3,343) 1,262 24,465 21,244 (5) 21,239 8,168 3,560 (3,343) 477 8,862 4,780 3,347 41 8,168
	6,506 5,307 - 1,014 12,827 6,625 (119) 6,506 3,250 2,706 - 452 6,408 1,493 1,722 35 3,250 6,419 5,132 3,256
				15,603
				16,464 13,071

Accumulated depreciation of operating lease assets:

215 - 〜 29 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue) (7) Investment properties

s 7) Investment properties	usares(contnue	)
Cost or deemed cost: January 1, 2022 balance Effect of exchange rate changes December 31, 2022 balance January 1, 2021 balance Effect of exchange rate changes December 31, 2021 balance	Land and land improvements $ 663,510 - $ 663,510 $ 663,510 - $ 663,510	Buildings and structures and Subsidiary equipment 374,230 2,101 376,331 373,268 962 374,230	Total
			1,037,740 2,101 1,039,841 1,036,778 962 1,037,740

〜 30 〜

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216 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

Depreciation and impairment loss： January 1, 2022 balance Depreciation of this year Effect of exchange rate changes December 31, 2022 balance January 1, 2021 balance Depreciation of this year Effect of exchange rate changes December 31, 2021 balance Book Value December 31, 2022 January 1, 2021 December 31, 2021 Fair value December 31, 2022 January 1, 2021 December 31, 2021	Land and land improvements $ - - - $ - $ - - - $ - $ 663,510 $ 663,510 $ 663,510	Buildings and structures and Subsidiary equipment 53,694 10,038 431 64,163 43,607 9,963 124 53,694 312,168 329,661 320,536 $ $ $	Total
			53,694 10,038 431 64,163 43,607 9,963 124 53,694 975,678 993,171 984,046

			1,873,841
			1,787,031
			1,818,136

Investment properties are self-owned assets held by the consolidated company. The original noncancellable lease term for investment properties for lease is 1 to 6 years.
Due to the restriction on private entities from acquiring farmland under the law at the time, some of the real estate investments of the consolidated company were registered under the name of the director Lin Wen-Teng in his personal capacity. In order to ensure the preservation of the consolidated company's assets, the land was pledged back to the consolidated company.
As of December 31, 2022 and 2021, please refer to Note 8 for details on the pledge status of investment properties of the consolidated company.
(8) Short-term borrowings

Short-term borrowings of the consolidated company are detailed as follows:

Secured bank loans Quote yet for use Interest rate range	2022.12.31 $ 30,000 $ 370,000 1.29%~1.79%	2021.12.31
		117,000
		283,000 1.28%~1.29%

For conditions of guarantee made by the Group with asset collateral for bank borrowing, please refer to Note 8.

217 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(9) Operating lease

1. Rental by the Lessor

The merged company leases its investment properties through operating leases. Please refer to Note 6(7) for details. The future minimum lease payments receivable for non-cancellable lease agreements are as follows:

non-cancellable lease agreements are as follows:
Less than one year 1-2 years 2-3 years 3-4 years 4-5 years Over 5 years Total undiscounted lease payments	2022.12.31 $ 32,391 26,239 12,930 4,952 4,355 - $ 80,867	2021.12.31
		25,525 20,666 16,963 6,729 3,652 609
		74,144

(10) Employee benefits

1. Defined benefit plan.

The adjustments to the present value of benefit obligation and fair value

of plan assets for the merged company are as follows:

Present value of benefit obligation Fair value of plan assets Net defined benefit liability	2022.12.31 $ 9,523 (6,014) $ 3,509	2021.12.31 11,642 (6,059) 5,583

The merged company's defined benefit plan contributions are transferred to the retirement reserve account for employees of Taiwan Bank. Retirement benefits for each employee subject to the Labor Standards Act are calculated based on their years of service, base salary, and average salary for the six months prior to retirement.

(1) Composition of plan assets:

The retirement fund accrued by the merged company in accordance with the Labor Standards Act is managed by the Bureau of Labor Funds, Ministry of Labor (hereinafter referred to as the BLF), and the use of the fund must comply with the "Regulations Governing the Receipt, Disbursement and Investment of Labor Retirement Funds." The minimum return on the annual settlement and distribution of the fund shall not be lower than the return calculated based on the interest rate of a two-year fixed deposit of a local bank.

As of the reporting date, the balance of the merged company's retirement reserve account at Taiwan Bank is NT$6,014,000. The data on the operation of labor retirement funds includes the fund yield and asset allocation, which are disclosed on the website of the Bureau of Labor Funds.

==> picture [57 x 36] intentionally omitted <==

〜 32 〜

218 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(2) Changes in the present value of the benefit obligation.

The changes in the present value of the benefit obligation of the merged company in 2022 and 2021 are as follows:

January 1st Defined Benefit Obligation Current service cost and interest Net remeasurement of defined benefit liability (asset) －Actuarial gains and losses resulting from changes in financial assumptions Benefits already paid under the plan Benefits payable under the plan Defined benefit obligation as of December 31st	Year 2022 $ 11,642 163 314 - (2,596) $ 9,523	Year 2021 12,718 120 (28) (1,168) - 11,642

(3) Changes in fair value of plan assets

Changes in fair value of plan assets for the Company's defined benefit plan for the years 2022 and 2021 are as follows:

The fair value of plan assets as of January 1st. Interest income Net remeasurement of defined benefit (liability) asset. －Plan asset return (excluding current interest). Amounts recognized as contributions to the plan. Benefits already paid under the plan Fair value of plan assets as of December 31.	Year 2022 $ 6,059 43 458 151 (697) $ 6,014	Year 2021 6,087 18 90 198 (334) 6,059

(4) Recognized as expenses in income statement.

Fair value of plan assets as of December 31. $ 6,014 6,059 Recognized as expenses in income statement.	Fair value of plan assets as of December 31. $ 6,014 6,059 Recognized as expenses in income statement.	Fair value of plan assets as of December 31. $ 6,014 6,059 Recognized as expenses in income statement.
The details of expenses reported by the merged company for the 2022 and 2021 fiscal years are as follows: Current service costs Year 2022 $ 81 Year 2021 82
Net interest on the net defined benefit		39 20
liability (asset) recognized.	$	120 102
Operating cost	$	42 36
Selling expenses		12 18
Management expense		66 45
Research and development expenses.		- 3
	$	120 102

219 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(5) Recognized as the re-measurement amount of net defined benefit liability (asset) in other comprehensive income.

The accumulated amount recognized in other comprehensive income for the net defined benefit liability (asset) re-measurement by the consolidated company is as follows:

January 1st accumulated balance Current period recognized amount Accumulated balance as of December 31	Year 2022 $ (1,376) 144 $ (1,232)	Year 2021 (1,494) 118 (1,376)

(6) Actuarial Assumptions

The significant actuarial assumptions used by the Company at the end of the financial reporting period to determine the present value of the defined benefit obligation are as follows:

obligation are as follows:
Discount rate Future salary increase	2022.12.31 1.30 % 1.25 %	2021.12.31
		0.70% 1.25%

The Company is expected to pay an amount of NTD 137,000 to the defined benefit plan within one year after the reporting date of the 2022 fiscal year.

The weighted average remaining service period of the defined benefit plan is 10 years.

(7) Sensitivity analysis

When calculating the present value of defined benefit obligations, the Company must use judgement and estimation to determine actuarial assumptions on the balance sheet date, including discount rates, employee turnover rates, and future salary changes. Any changes to actuarial assumptions may significantly impact the amount of the Company's defined benefit obligations.

The impact of significant changes to the main actuarial assumptions adopted on December 31, 2022 and December 31, 2021 on the present value of defined benefit obligations is as follows:

December 31, 2022 Discount rate (change by 0.25%) Future salary increase (change by 0.25%) December 31, 2021 Discount rate (change by 0.25%) Future salary increase (change by 0.25%)	Impact on the defined benefit obligation	Impact on the defined benefit obligation
	Addition $ (154) 142 (220) 197	Decrease 159 (139) 227 (192)

220 - 〜 34 〜

Notes to the consolidated financial statements of Rectron Ltd. and its

subsidiaries(continue)

The method and assumptions used in this period's sensitivity analysis are the same as those used in the previous period.

Defined contribution plans (DCP)

The company's defined contribution plan is in accordance with the Labor Pension Act, which requires a contribution rate of 6% of an employee's monthly salary to be deposited into an individual account with the Labor Insurance Bureau for retirement benefits. Under this plan, the company contributes a fixed amount to the Labor Insurance Bureau and has no legal or constructive obligation to pay additional amounts.

Year 2022 Year 2021 Operating cost $ 520 700 Selling expenses 201 130 Management expense 683 715 Research and development expenses. 56 93 $ 1,460 1,638 Details of retirement benefit expenses recognized by foreign subsidiaries in accordance w local laws are as follows: Year 2022 Year 2021 Management expense $ 3,320 4,019	Year 2021	Year 2021
	700 130 715 93
	1,638
3,320		4,019

Details of retirement benefit expenses recognized by foreign subsidiaries in accordance with local laws are as follows:

Management expense

(11) Income tax
The details of income tax expenses of the consolidated company are as follows:

Income tax expense Current period activities Tax on unappropriated earnings Adjustment of prior-period income taxes. Deferred income tax expense Occurrence and reversal of temporary differences Income tax expense	Year 2022 $ 29,978 - (112) 29,866 (1,321) $ 28,545	Year 2021
		4,712 19 926
		5,657
		-
		5,657

221 - 〜 35 〜

Notes to the consolidated financial statements of Rectron Ltd. and its

subsidiaries(continue)

The adjustment of the relationship between income tax expense and pre-tax net income for the fiscal year 2022 and 2021 of the consolidated company is as follows:

Profit before tax
Income tax calculated according to domestic tax
rate of the location of the Company
Difference in foreign tax rates
Non-deductible expenses.
Impairment losses on domestic financial assets
Recognition of previously unrecognized tax
losses from prior periods
Changes in unrecognized temporary differences
Adjustment of prior-period income taxes.
Tax on unappropriated earnings
Other
Total

Deferred tax assets and liabilities

(1) unrecognized deferred tax

assets

Items not recognized as deferred income tax assets by the Group are as follows:

Deductible temporary differences Tax losses	2022.12.31 $ 65,770 9,852 $ 75,622	2021.12.31
		67,128 9,222
		76,350

Tax losses are carried forward for five years in accordance with the tax laws of the People's Republic of China, as approved by the tax authorities. The losses can be deducted from the current year's net income and subject to income tax. These items are not recognized as deferred tax assets because it is not probable that the temporary differences will be utilized against sufficient taxable income in the future.

As of December 31, 2022, the Company has not recognized tax losses as deferred tax assets. The expiration dates of the tax losses are as follows:

Loss yet to be deducted

		Lossyet to be deducted
Loss Year Fiscal year 2019 ( as approved ) Fiscal year 2020 ( as approved )		Mainland China subsidiary 9,177 30,229 39,406	Last year for deduction
	$ $		Fiscal year 2024 Fiscal year 2025

222 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(2) Recognized deferred income tax assets (and liabilities)

Changes in Deferred Income Tax Assets and Liabilities for the Years Ended 2022 and 2021: Deferred Income Tax Assets:

		Other	Other
January 1, 2022	$	-
(Debit)/Credit Income Statement			1,321
December 31, 2022	$		1,321
Deferred income tax liabilities:
	Land value		increment
	tax reserve
January 1, 2022	$		62,679
December 31, 2022	$		62,679
January 1, 2021	$		62,679
December 31, 2021	$		62,679

Approval conditions of income tax
(1) Income tax returns of the Company’s profit-seeking enterprise have been authorized by the audit authorities to 2020.
(2) Our domestic subsidiary's corporate income tax settlement and declaration has been approved by the tax authorities until the year 2020.

(12) Capital and other equities

1. The issuance of common stock.

As of December 31, 2022 and 2021, the total par value of the authorized common stock of the Company was $4,000 thousand, consisting of 400,000 thousand shares with a par value of $10 per share. The total issued common shares were 166,303 thousand shares and all the proceeds from the issuance of the issued shares have been received.

2. Capital surplus

Content of the Company’s capital surplus balance is as follows:

Treasury stock	2022.12.31	2021.12.31
	$ 9	9

According to the Company Act, the capital surplus must be used to offset losses before new shares or cash can be issued in proportion to shareholders' original shares. The "realized capital surplus" referred to in the preceding paragraph includes the surplus resulting from the issuance of shares at a premium over their face value and income from receiving gifts. According to the Guidelines for Handling the Offering and Issuance of Securities by Issuers, the capital surplus may be set aside as capital, and the total amount set aside each year shall not exceed 10% of the paid-in capital.

3. Retained earnings

If the annual financial statements of the Company show a profit, the Company shall first pay taxes and donate to public welfare funds, make up for accumulated losses, and

〜 37 〜 - 223 -

Notes to the consolidated financial statements of Rectron Ltd. and its

subsidiaries(continue)

allocate 10% of the profit as legal reserve fund, but when the legal reserve fund reaches the Company's paid-in capital, no further allocation is required. Other allocations or reversal of special surplus funds shall be made in accordance with laws and regulations. If there is still profit left after the above allocation, it shall be combined with the undistributed earnings from the beginning of the period as distributable earnings, and shall be proposed by the Board of Directors for approval at the shareholders' meeting for distribution to shareholders as dividends.

Based on financial, business, and operational considerations, the Company may distribute dividends to shareholders at no less than 10% of the distributable earnings of the current fiscal year. However, if the accumulated distributable earnings are less than 3% of the paid-in capital, no distribution shall be made. The aforementioned dividends may be distributed in cash or stock, with cash dividends being given priority. The proportion of cash dividends shall not be less than 10% of the total dividends.

(1) Legal reserve

(2) Special reserve

〜 38 〜

224 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

was $34,924 and $58,466, respectively.

(3) Earning distribution

are as follows.
	Year2021	Year2020
	Stock Dividend Rate (NTD) Amount Stock Dividend		Rate (NTD) Amount
Dividends allocated to common shareholders:
Cash $	0.60100,000	0.30	50,000

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

50
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4.Other equity

Foreign currency translation differences in financial statements of overseas operating entities. January 1, 2022 balance $ (41,048) Translation: Foreign exchange gains/losses arising from the conversion of net assets of overseas operating entities. (14,105) Unrealized losses on financial assets measured at fair value through other comprehensive income. - (Loss) December 31, 2022 balance $ 55,153 January 1, 2021 balance $ (66,039) Translation: Foreign exchange gains/losses arising from the conversion of net assets of overseas operating entities. 24,991 Unrealized losses on financial assets measured at fair value through other comprehensive income. - Disposal Equity instrument with no open quotes measured at fair value in equity instruments - December 31, 2021 balance $ 41,048	Foreign currency translation differences in financial statements of overseas operating entities.	Unrealized gains and losses on financial assets measured at fair value through other comprehensive income. 6,124 - (11,045) (4,921) 7,573 - (1,021) (428) 6,124	Unrealized gains and losses on financial assets measured at fair value through other comprehensive income. 6,124 - (11,045) (4,921) 7,573 - (1,021) (428) 6,124	TOTAL
				(34,924) (14,105) (11,045) (60,074) (58,466) 24,991 (1,021) (428) (34,924)

225 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(13) Earnings per share

1. Basic earnings per share

The basic earnings per share of the consolidated company for the years 2022 and 2021 were calculated based on the net profit attributable to the owners of the common stock equity of the Company and the weighted average number of common shares outstanding. The relevant calculations are as follows:

(1) Profit or loss attributable to the owners of the common stock equity of the Company.

	Year 2022	Year 2022	Year 2021
	$176,100 Year 2022	176,100	84,972 Year 2021

166,303 $ 1.06			166,303
			0.51

2. Diluted earnings per share

Diluted earnings per share for the years ended 2022 and 2021 on a consolidated basis are calculated based on the net income attributable to shareholders of the Company and the adjusted weighted average number of common shares outstanding for the dilutive effect of all potential common shares, as follows:

(1) Net income attributable to shareholders of the Company.

Year 2022	Year 2022	Year 2021
		84,972
	Year 2022	Year 2021
166,303 164 166,467 $ 1.06	166,303 164	166,303 67
	166,467	166,370
		0.51

226 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(14) Customer Contract Revenue
1.Revenue breakdown:

susa (14) Customer Contract Revenue 1. Revenue breakdown:	es(contnue
Primary Geographic Markets: Electronics Department Asia $ 632,925 Americas 132,672 Europe 13,188 Others 1,204 $ 779,989	Real Estate Investment 26,873 - - - 26,873	Year 2022 Medical Equipment Department Wine Trading Department Total 62,515 5,371 727,684 2,885 - 135,557 - - 13,188 - - 1,204 65,400 5,371 877,633
		Medical Equipment Department 62,515 2,885 - - 65,400
			5,371 - - - 5,371
		62,515 2,885 - - 65,400

〜 41 〜

227 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

	Year 2022	Year 2022
Real Estate Investment Department - 26,873 - - 26,873	Medical Equipment Department - - 65,400 - 65,400 Yea	Wine Trading Department - - - 5,371 5,371 r 2021


Real Estate Investment Department Medical Equipment Department 29,677 51,101 9,704 29,677 60,805 29,677 60,805 29,677 60,805 2022.12.31 $ 189,027 (30,567) $ 158,460 $ 1,941		Wine Trading Department 2,937 2,937 2,937 2,937 2021.12.31

Disclosure of accounts and notes receivable and their impairment should be detailed in Note 6 (3).

228 - 〜 42 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(15) Employee and Director Remuneration

For the year 2021, the remuneration amounts approved by the Board of Directors for employees, directors, and supervisors of the Company are the same as the estimated amounts for 2021. For the year 2022, the remuneration amounts approved by the Board of Directors for employees, directors, and supervisors of the Company differ from the estimated amounts for 2022 by NT$488 thousand and NT$500 thousand, respectively. This is mainly due to differences in the Company's accounting estimates, and the difference will be recognized as income and expenses in 2023.

(16) Non-operating income and

expenses

1. Other income

The details of other income of the consolidated company are as follows:

Interest income Dividend income	Year 2022 $ 1,698 510 $ 2,208	Year 2021
		3,282 300
		3,582

〜 43 〜

229 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

2. Other gains and losses

The details of other gains and losses of the consolidated

company are as follows:

Foreign exchange gains Gains and losses through fair value adjustments recognized in profit (loss) Loss on disposal of fixed assets Other gains and losses	Year 2022		Year 2021
	$ 37,987 (5,508) (173) 528 $ 32,834		1,353 - - 5,530
			6,883

Finance costs The details of financial costs of the consolidated company are as follows: Interest expense.		Year 2022		Year 2021 (1,709)
	$ (1,137)

3. Finance costs

230 - 〜 44 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(17) Financial Instruments

1. Credit risk

(1) Credit risk exposure

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

(2) Concentration of credit risk

The Company has a broad customer base and does not significantly concentrate transactions with a single customer, and the sales are distributed in various regions, thus there is no significant concentration of credit risk.

(3) Credit risk of accounts receivable and debt securities

For information on the credit risk exposure of notes and accounts receivable, please refer to Note 6(3).

Other financial assets measured at amortized cost include other receivables. All of the above are financial assets with low credit risk, and therefore, the provision for credit losses is measured based on the expected credit losses within the next twelve months. The fixed deposits held by the Company are with counterparties and issuers that have investment-grade or higher credit ratings, and thus are considered low risk. Changes in the provision for credit losses for 2022 and 2021 fiscal years are as follows:

January 1, 2022 balance December 31, 2022 balance January 1, 2021 balance December 31, 2021 balance	$ 36,992 $ 36,992 $ 36,992 $ 36,992 Other receivables

2. Liquidity risk

The following table presents contractual due dates of financial liabilities, including estimated interests but not effects of net amount agreements.

231 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

December 31, 2022 Non-derivitive financial liabilities: Floating rate instruments $ No liabilities with interests Lease Liabilities (including non-current) $ December 31, 2021 Non-derivitive financial liabilities: Floating rate instruments $ No liabilities with interests Lease Liabilities (including non-current) $	December 31, 2022 Non-derivitive financial liabilities: Floating rate instruments $ No liabilities with interests Lease Liabilities (including non-current) $ December 31, 2021 Non-derivitive financial liabilities: Floating rate instruments $ No liabilities with interests Lease Liabilities (including non-current) $	Book Value 30,000 165,601 6,786 202,387 117,000 147,208 4,180 268,388	Cash flow 30,020 165,601 7,218 202,839 117,179 147,208 4,627 269,014	Contract: 6 months. Within: 30,020 165,601 1,753 197,374 117,179 147,208 1,259 265,646		6- 12 month - - 1,337 1,337 - - 1,180 1,180		1 to 2 years - - 2,277 2,277 - - 2,098 2,098		2 to 5 years - - 1,851 1,851 - - 90 90	Over 5 years - - -	Over 5 years - - -
	$											-
	$ $											- - - -

The Group does not expect time of occurrence of cash flow analyzed on due date will be materially moved forward, or actual amounts to be materially different.

〜 46 〜

232 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

3.Exchange rate risk

Financial assets and liabilities of the Group under the exposure of material foreign exchange rate risk are as follows:

==> picture [461 x 47] intentionally omitted <==

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

2022.12.31 2021.12.31
Foreign Exchange New Taiwan Foreign Exchange New Taiwan
currenc rate Dollar currenc rate Dollar
----- End of picture text -----

Fi	nancial Assets Monetary items USD $ 6,607 30.710 202,901 4,848 27.680 134,193 USD:RMB Non-monetary items 1,703 6.697 52,299 874 6.372 24,192 USD 1,245 30.71 38,229 1,548 27.680 42,860 Financial liabilities Monetary items USD 2,021 30.710 62,065 832 27.680 23,030

The exchange rate risk of the consolidated company mainly comes from cash and cash equivalents, accounts receivable and other receivables, financial assets measured at fair value through other comprehensive income, accounts payable, and other payables denominated in foreign currencies, which generate foreign exchange gains and losses upon translation. As of December 31, 2022 and 2021, if the NTD and RMB depreciate or appreciate against the USD by 0.5% while all other factors remain constant, the consolidated net profit after tax for 2022 and 2021 will increase or decrease by $773 and $541, respectively; the equity will increase or decrease by $153 and $171, respectively, due to financial assets measured at fair value through other comprehensive income. The analysis of the two periods is based on the same basis.

Due to the various functional currencies of the consolidated company, the information on gains and losses from foreign exchange translation of monetary items is disclosed in an aggregated manner. The gains from foreign exchange translation (including realized and unrealized) for 2022 and 2021 are $37,987 and $1,353, respectively.

(1) Interest rate analysis.

The interest rates of financial assets and financial liabilities of the consolidated company are subject to liquidity risk management described in the attached note.

The following sensitivity analysis is based on the interest rate risk on the reporting date of derivative and non-derivative instruments. For floating-rate liabilities, the analysis assumes that the amount of outstanding debt on the reporting date remains outstanding throughout the year. The volatility used by the consolidated company's management to report interest rates internally is an increase or decrease of 0.5%, which also represents the assessment range of management's reasonable possible changes in interest rates.

If the interest rate increases or decreases by 0.5% while all other variables remain

〜 47 〜

233 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

constant, the consolidated net profit after tax for 2022 and 2021 will increase or decrease by $120 and $468, respectively, mainly due to the variable rate borrowings of the consolidated company.

(2) Other price risks.

If there is a change in the fair value of equity securities on the reporting date (assuming the same basis of comparison for both periods and no changes in other variables), the impact on comprehensive income items is as follows:

Securities prices at the reporting date Up 0.5%. Decline by 0.5%	Year 2022 Tax-affected amount of other comprehensive income Tax-affected amount of net income $ 80 100 $ (80) (100)	Year 2021	Year 2021
		Tax-affected amount of other comprehensive income Tax-affected amount of net income 78 - (78) -
			-

4. Fair value

(1) Types of financial instruments and fair value

The book values and fair values (including fair value hierarchy information) of the consolidated company's financial assets and financial liabilities are presented below. Note that the book values of financial instruments that are not measured at fair value but whose book values are reasonable approximations of their fair values, as well as lease liabilities, are not required to be disclosed with fair value information according to regulations.

==> picture [56 x 35] intentionally omitted <==

〜 48 〜

234 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

	2022.12.31	2022.12.31	2022.12.31
Book Value $19,742 5,382 533 25,657 38,229 16,000 54,229 245,962 158,460 4,550 888 409,860 $489,746 $ 30,000 129,538 36,063 6,786 $202,387		Fair value
	Level 1 19,742 5,382 533 25,657 - - - - - - - - 25,657 - - - - -	Level 2 - - - - 38,229 16,000 54,229 - - - - - 54,229 - - - - -	Level 3 - - - - - - - - - - - - - - - - - -	Total 19,742 5,382 533
				25,657
				38,229 16,000
				54,229
				- - - -
				-
				79,886
				- - - -
				-

235 - 〜 49 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

2021.12.31	2021.12.31	2021.12.31	2021.12.31
	Fair value
-	Level 2 ------------- 42,860 15,560 58,420 - - - - - 58,420	-	Level 3 ------------- - - - - - - - - -	-	Total 691
					42,860 15,560
					58,420
					- - -
					-
					-
					59,111
	- - - - - -		- - - - - -		- - - - -
					-

(2) Evaluating technique of fair value of financial instruments measured at fair value

For financial instruments that have active markets and public quotations, the fair value is determined using the quoted prices in the active market. The fair value of listed (OTC) equity instruments and debt instruments with active markets and public quotations announced by the central government bond over-the-counter exchange and determined to be popular securities is based on their market prices.

236 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

quotations. If the above conditions are not met, the market is considered inactive. Generally, a large bid-ask spread, a significant increase in bid-ask spread, or low trading volume are indicators of an inactive market.

For financial instruments held by the consolidated company that have active markets, their fair value is determined separately based on market quotations, which have standard terms and conditions and are traded in active markets.

(3) Transfers between level 1 and level 2.

There were no transfers of level 2 financial assets to level 1 in 2022 and 2021.

(18) Financial risk management

1. Overview

Due to usage of financial instruments, the Group is exposed to the following risks:

(1) Credit risk
(2) liquidity risk
(3) market risk.

The accompanying notes express the exposure information of the above risks for the consolidated company, as well as the objectives, policies, and procedures for measuring and managing risks.

For further quantified disclosure, please refer to the respective notes in this financial report.

2. Risk management structure

The financial management department of the consolidated company provides services to various businesses, coordinates and manages the entry into domestic and international financial markets, and supervises and manages the financial risks related to the operation of the consolidated company by analyzing the internal risk reports of exposures based on the degree and breadth of risk. Internal auditors continuously review compliance with policies and exposure limits. The consolidated company does not conduct transactions of financial instruments (including derivative financial instruments) for speculative purposes.

3. Credit risk

Credit risk refers to the risk that the Company may suffer financial losses due to the failure of its customers or counterparties of financial instruments to fulfill contractual obligations. It mainly arises from accounts receivable from customers and securities investments.

(1) Accounts receivable and other receivable

The Company's policy is to only transact with reputable counterparties and obtain collateral when necessary to mitigate the risk of financial losses due to default. The Company only transacts with enterprises rated at an investment grade level. Such information is provided by independent rating agencies. If such information cannot be obtained, the Company will use other publicly available financial information and transaction records to rate its major customers. The Company continuously monitors credit exposure and counterparties' credit ratings and distributes the total transaction amount among customers with qualified credit ratings. The Company controls credit exposure by annually reviewing and approving counterparties' credit limits.

Due to the Company's extensive customer base, which is not significantly concentrated on a single customer and is geographically diverse, there is no significant concentration of credit risk related to accounts receivable. In order to reduce credit risk,

237 - 〜 51 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

the Company also regularly evaluates the financial condition of its customers, but usually does not require collateral from them.

(2) Investment

Credit risk of bank deposits and other financial instruments is measured and monitored by the finance department of the consolidated company. Since the counterparty and performance parties of the consolidated and company are banks and financial institutions, corporate organizations, and government agencies with good credit ratings or above, there is no significant doubt about their performance, and therefore there is no significant credit risk.

(3) Guarantees

The policy of the consolidated company stipulates that financial guarantees can only be provided to wholly-owned subsidiaries. As of December 31, 2022 and 2021, the consolidated company did not provide any endorsement guarantees.

4. Liquidity risk

The Company manages and maintains sufficient cash and cash equivalents to support its operations and mitigate the impact of cash flow fluctuations. The management of the Company supervises the utilization of bank credit lines and ensures compliance with loan contract terms.

Bank loans are an important source of liquidity of the Consolidated company. As of December 31, 2022 and 2021, the unused short-term bank credit lines of the Company were NT$370,000 thousand and NT$283,000 thousand, respectively.

Market risk

Market risk refers to the risk of loss in earnings or value of financial instruments held by the Company due to changes in market prices such as exchange rates, interest rates, and equity instrument prices. The goal of market risk management is to control the level of market risk exposure within acceptable limits and optimize investment returns.

(1) Exchange rate risk

The consolidated company is exposed to foreign exchange risk arising from sales and purchasing transactions denominated in non-functional currencies of the respective group entities. The primary currencies used in these transactions are New Taiwan Dollars and US Dollars.

(2) Interest Rate Risk

The consolidated company faces cash flow risk due to the individual entities borrowing funds at floating interest rates. The consolidated company manages interest rate risk by maintaining an appropriate portfolio of floating interest rates.

(19) Capital management

The capital management objective of the consolidated company is to ensure the ability to continue operating, provide returns to shareholders and other stakeholders, and maintain an optimal capital structure to reduce funding costs.

To maintain or adjust the capital structure, the consolidated company may adjust the payment of dividends to shareholders, reduce capital and return funds to shareholders, issue new shares, or sell assets to pay off debt.

The consolidated company, like its peers, manages capital based on the debt-to-capital ratio. This ratio is calculated as net debt divided by total capital. Net debt is the total amount of liabilities listed in the balance sheet minus cash and cash equivalents. Total capital is the sum of all equity components (i.e., share capital, capital surplus, retained earnings, and other

238 -

〜 52 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

equity) plus net debt.

The capital management policy of the merged company for the year 2022 is consistent with that of 2021, which aims to ensure the ability to continue operations, provide shareholder returns and benefits to other stakeholders, and maintain an optimal capital structure to reduce funding costs by maintaining a debt-to-capital ratio between 3% and 8%. As of December 31, 2022 and 2021, the debt-to-capital ratios are as follows:

Liabilities Total Less: Cash and Cash Equivalents Liability Total equity Total Assets Debt to assets ratio	2022.12.31 $ 304,979 (245,962) 59,017 1,849,040 $ 1,908,057 3 %	2021.12.31 349,894 (187,464) 162,430 1,797,946 1,960,376 8%

As of December 31, 2022, the capital management approach of the merged company has not changed.

7. Transactions with related parties

(1) Name of the related parties and the relations

During the coverage period of this consolidated financial report, the related parties who had transactions with the consolidated company are as follows:

Relationship with the Consolidated Company

Related Party Name

CHU-TING CORP.

Chairman of this company is the same as the Chairman of the other company.

LIN I-Chin Chairman of this company Lin, Wen-Teng Director of this company Shanghai Shenglongpuhua Hotel Co., Ltd.(Hereafter the chairman of the Company. referred to as "Shanghai Puhua") PU HWUA ENTERPRISE CO., LTD (Hereafter referred to as " the chairman of the Company. PU HWUA ") Juyang Xingye Industrial Co., Ltd. (Hereafter referred to as " Juyang Xingye") director of the subsidiary.

The chairman of the subsidiary is the same as

the chairman of the Company.

The chairman of the subsidiary is the same as

the chairman of the Company.

The chairman of the Company is also a

239 - 〜 53 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(2) Significant transactions with related parties:

1. Sales Revenue

Amounts of major sales of the Group to related parties are as follows:

nificant transactions with related parties: Sales Revenue Amounts of major sales of the Group to related parties are as follows:
Names of related parties Others related parties-PU HWUA Others related parties-Shanghai Puhua Others related parties-CHU-TING CORP. Others related parties	Year 2022 $ 3,730 2,775 919 $ 7,424	Year 2021
		2,985 395 7,259
		10,639

The selling prices of the Company's sales to the aforementioned related parties are not significantly different from the normal selling prices. The average credit period granted to related parties by the Company in the fiscal year 2022 and 2021 was approximately 120 days, while for general customers it was about 30 to 90 days.

2. Accounts receivable from related parties.

Details of payables to related parties of the Group are as follows:

Accounts receivable from related parties. Details of payables to related parties of the Group	are as follows:
Account items Relationship Type	2022.12.31 $ 2,558	2021.12.31
Accounts Receivable Other Related Parties		6,917

3.Other payable related party accounts

The details of the consolidated company's payable related party accounts are as follows:

Account items Relationship Type	2022.12.31 $ 62	2021.12.31
Accounts payable Other related parties		128

4. Leases

The operating lease between the consolidated company and other related parties is based on the neighboring rental market and rental payments are collected monthly from the related parties.

The lease income reported in 2022 and 2021 were $225 and $154, respectively. The related security deposits were $16 and $18, respectively, as of December 31, 2022 and 2021.

In November 2022, the consolidated company signed a five-year lease agreement with the key management personnel for office space, based on the neighboring rental market, with a total contract value of $5,309. The interest expense recognized in 2022 was $88. The lease liability as of December 31, 2022 was $4,808.

(3) Others

In case of registering real estate under the name of other related parties, please refer to Note 6(7) for details.

〜 54 〜 - 240 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(4) Transactions of

major management personnel compensation of major management personnel The compensation of major management personnel includes:

Short-term Employee Benefits. Post-Employment Benefits	Year 2022 $ 11,769 124 $ 11,893	Year 2021
		11,064 153
		11,217

8. Pledged assets

Details of book value of assets offered as pledge guarantee by the Group are as follows:

Assets name Target pledge guarantee Property, plant, and equipment Security for bank borrowings Investment property ″	2022.12.31 $ 235,480 51,703 $ 287,183	2021.12.31
		238,836 52,801
		291,637

9. Significant contingent liabilities and unrecognized contractual commitments

(1) Material Unrecognized Contractual Obligations:

On December 31, 2022 and December 31, 2021, the Company entered into contracts with suppliers for the purchase of equipment and construction of buildings. The details of the payments due under these contracts are as follows:

payments due under these contracts are as follows:
Total Contract Price (Exclusive of Tax) Unpaid amount	2022.12.31 $ 25,234 $ 11,971	2021.12.31
		28,527 20,637

10. Significant disaster losses: None.

11. Significant subsequent events: None.

〜 55 〜

241 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

12. Others

Employee benefits, depreciation, amortization, and amortized expenses are summarized by function as follows:

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

Function Year 2022 Year 2021
Under non- Under non- Total Under non- Under non- Total
Nature operating operating operating operating
cost cost cost cost
Employee benefits
expenses
Salary expense 21,580 81,397 102,977 26,649 70,252 96,901
Health and labor 1,448 7,049 8,497 1,965 5,793 7,758
insurance expense
Pension expense 562 4,338 4,900 736 5,023 5,759
Other Employee 897 4,983 5,880 2,458 5,831 8,289
benefit expense
Depreciation expenses 40,878 12,162 53,040 41,471 12,119 53,590
Amortization expense 1,765 2,984 4,749 2,517 1,628 4,145
----- End of picture text -----

13. Additional disclosure

(1) Information related to material transactions

In 2022, relevant information of material transactions to be further disclosed by the Group according to Regulations Governing the Preparation of Financial Reports by Securities Issuers is as follows：

Loans to others：

Unit: NTD 1,000

Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Numb Company idi Borr Accou t Rela ted Part Maximu Ending Actual Dib Inter t Natu re of Fund Business Tti Short- Term Financin Provisi on for Bad	Collateral Individu al lending Total ldi	Collateral Individu al lending Total ldi	Collateral Individu al lending Total ldi	Collateral Individu al lending Total ldi
er provng the loan ower n Recei vable y m Amount in Current Period Balance surs ement Amoun t es Rate Ran ge Lend ing ransac ons Amount g Necessity Debt Amou nt													limit for each party enng limit Name Valu e
0 The Company CHU-TING ENTERPRISE Co., Ltd Other receiva bles Yes 130,000 100,000 - (Note 3) - 2 (Note 4) - Business requirem ents -													- 184,904 739,616
1	Rectron Electronic s (China) Co.,Ltd.	CHU-TING ENTERPRISE Co., Ltd	Other receiva bles	Yes	26,533	26,411	26,411 (Note 3)	-	2 (Note 4)	-	Business requirem ents	-		-	157,512	196,891

Note 1: The business transaction amount between the Company and its counterparties is based on the cumulative purchase/sales amount within the preceding 12 months.

Note 2: According to the Company's regulations on providing funds to others, the calculation is as follows:

(1) The Company

Individual counterparty funding limit = Shareholders' equity x 10% = $1,849,040 x 10% = $184,904 The maximum funding limit for an individual counterparty = Shareholders' equity x 40% = $1,849,040 x 40% = $739,616.

〜 56 〜

242 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(2) Rectron China:

Individual counterparty funding limit = Shareholders' equity x 30% = $393,781 x 40% = $157,512. The maximum funding limit for an individual counterparty = Shareholders' equity x 40% = $393,781 x 50% = $196,891.

Note 3: Already eliminated during the preparation of the consolidated financial statements. Note 4: (1) Business transaction with counterparts exists.

(2) Short-term funding is necessary.

2.Endorsement guarantees for others: None.

3.Status of holding marketable securities at the end of the period (excluding investments in subsidiaries, affiliated companies, and joint venture equity):

==> picture [471 x 296] intentionally omitted <==

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

Compan Type and name of Relationship End of period Maximum
ies held securities held with the Account Number Book Value Percentag Fair value shareholding or Note
issuer of of shares e of contribution in
shareholdi
securities the middle of the
ng
period
The Stock - Sunny Bank - Financial assets carried at fair 1,515,198 16,000 0.05% 16,000 0.05%
Company value through other
comprehensive income - non-
current
The Corporate bonds - APPLE - Financial assets carried at fair - 25,444 - % 25,444 - %
Company value through other
comprehensive income - non-
current
The Corporate bonds - AT&T - Financial assets carried at fair - 8,631 - % 8,631 - %
Company value through other
comprehensive income - non-
current
The Corporate bonds - Pfizer - Financial assets carried at fair - 4,154 - % 4,154 - %
Company value through other
comprehensive income - non-
current
CHU- Fund - Yuanta High - Financial assets measured at 21,000 533 - % 533 - %
TING Dividend 0056 fair value through profit or
loss.
CHU- Stock - Amazon - Financial assets at fair value 5,600 14,446 - % 14,446 - %
TING through profit or loss -
Current
CHU- Stock - TSMC Financial assets at fair value 12,000 5,382 - % 5,382 - %
TING through profit or loss -
Current
CHU- Stock - Tesla Financial assets at fair value 1,400 5,296 - % 5,296 - %
TING through profit or loss -
Current
----- End of picture text -----

4.Cumulative amount of buying or selling the same security reaches NT$300 million or 20% of paid-in capital: None.
5.Acquisition of real estate amounts to NT$300 million or 20% of paid-in capital or more: None.
6.Disposal of real estate amounts to NT$300 million or 20% of paid-in capital or more: None.

〜 57 〜 - 243 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

7.The amount of purchases and sales with related parties reaches NT$100 million or 20% of paidin capital:

Company purchasing (selling) goods	Trading partner name	Relation		Transaction condition	Transaction condition		Special co and reason different normal tr	nditions s from ansactions	Accounts receivable (payable)	Accounts receivable (payable)
			Purchase (sales)	Amount (Note) Percentage of total purchases (sales)		Credit period	Unit Price	Credit period	Balance Percentage of total accounts receivable (payable)
The Company	Rectron China	Parent-subsidiary relationship	Purchases	337,793 68 %		Normal	Normal	90~ 120 days	(49,863) (38) %
Rectron China	The Company	Parent-subsidiary relationship	Sales	(337,793) 38 %		Normal	Normal	90~ 120 days	49,863 31 %
Rectron China	Zhejiang Rectron	Investee companies that are also evaluated using the equity method by the Company	Purchases	145,620 29 %		Normal	Normal	120 days	(15,890) (12) %
Zhejiang Rectron	Rectron China	Investee companies that are also evaluated using the equity method by the Company	Sales	(145,620)	17 %	Normal	Normal	120 days	15,890	10 %

Note: Already eliminated during the preparation of the consolidated financial statements.

8.Receivables from related parties reach NT$100 million or 20% of paid-in capital: None.
9.Engagement in derivative instruments: None.
Business Relationships and Significant Transactions between Parent and Subsidiary Companies：

==> picture [455 x 273] intentionally omitted <==

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

Relationship Nature of
Number Name of Counterparty with the transaction transaction
transaction party Percentage of
party Accou Amount Transaction terms transaction
nt amount to
total
consolidated
revenue or
assets
0 Rectron Ltd. Rectron China 1 Cost of Goods Sold 337,793 Calculated with finished product cost 38 %
plus agreed profit.
0 Rectron Ltd. Zhejiang 1 Sales revenue 29,912 Calculated with finished product cost 3 %
Rectron plus agreed profit.
0 Rectron Ltd. Rectron China 1 Accounts payable 49,863 Adjusted according to the overall 2 %
funding situation between the parent
and subsidiary companies, with a term
of 120 days as stipulated in the
agreement.
0 Rectron Ltd. REEI 1 Sales revenue 64,024 Calculated with finished product cost 7 %
plus agreed profit.
0 Rectron Ltd. REEI 1 Accounts receivable 14,358 Adjusted according to the overall 1 %
funding situation between the parent
and subsidiary companies, with a term
of 120 days as stipulated in the
agreement.
1 Rectron China CHU-TING 3 Other receivables 26,411 Adjusted according to the overall 1 %
funding situation between the parent
and subsidiary companies, with a
term of 120 days as stipulated in the
agreement.
1 Rectron China Zhejiang 3 Cost of Goods Sold 145,620 Calculated with finished product cost 17 %
Rectron plus agreed profit.
----- End of picture text -----

244 - 〜 58 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

Note 1: The numbering method is as follows:

0 represents the parent company.
Subsidiaries are numbered sequentially starting from 1

according to the company type using Arabic numerals.

Note 2: The types of relationships with the counterparty

are indicated as follows:
Parent company to subsidiary.
Subsidiary to parent company.
Subsidiary to subsidiary.

(2) Re-investment related information:

In 2022, information of the Group’s re-investment(does not include investee in mainland China)：

Investment Companies Name	Investee Companies Name	Geographic Region	Major Business Activities	Original Investment Amount	Original Investment Amount	End-of-P	eriod Holdings	eriod Holdings	Maximum Holdings or Contributions	Investee Companies Income or	Investment Gains or L Remarks
				Ending of this reporting period	As of the end of last year	Number of shares	Ratio	Book Value	During the Period	Loss for the Period	osses Recognized in the Period
The Company	REEI	USA	Sales of rectifiers and other electronic components	142,264	142,264	205,000	100.00 %	21,394	100.00 %	8,700	8,700
The Company	Rectron China	Hong Kong	Sales of rectifiers and other electronic components	607,273	607,273	20,000	100.00 %	393,781	100.00 %	51,667	51,667
The Company	CHU-TING	Taiwan	Wholesale of tobacco and alcohol products and manufacturing and sales of medical equipment.	109,987	29,987	13,000,000	100.00 %	153,925	100.00 %	19,469	19,469

Note: When preparing the consolidated financial statements, the company's securities holdings and the equity of subsidiaries have been eliminated.

(3) Information on investments in mainland China:

Name of the invested company in mainland China, and related information on the main business items:

Investee in mainland China Company	Major Business Activities	Paid-in capital. Investment method	Paid-in capital. Investment method	Cumulative amount of investments exported from Taiwan at the beginning	Amount of investments exported or withdrawn during the period.	Amount of investments exported or withdrawn during the period.	Cumulative amount of investments exported from Taiwan at the end of the period. Investee Companies Income or Loss for The shareholdin g ratio of the company's direct or indirect investment	Cumulative amount of investments exported from Taiwan at the end of the period. Investee Companies Income or Loss for The shareholdin g ratio of the company's direct or indirect investment	Cumulative amount of investments exported from Taiwan at the end of the period. Investee Companies Income or Loss for The shareholdin g ratio of the company's direct or indirect investment	The highest shareho lding or capital contributi on in the	Invest ment gains and losses are recogniz ed in The book value of the invest ment at the end of	Invest ment gains and losses are recogniz ed in The book value of the invest ment at the end of	Investme nt income has been repatriat ed as at the end of
Name				of the period.	Remitted out	Recovered	the Period			period	the current period the period		the period
Zhejiang Rectron Electronics (China) Co., Ltd.	Manufactur es and sells electronic components such as rectifiers	409,029 USD12,000	(3)	409,029 USD12,000	-	-	409,029 USD12,000	(7,732	) 100.00 %	100.00%	(7,732)	253,491	-

245 - 〜 59 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

Investment limit in mainland China:

==> picture [410 x 78] intentionally omitted <==

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

Period end accumulated It is in accordance with the
investment amount Investment amount quota stipulated by the
remitted from Taiwan to approved by Investment Investment Commission of the
mainland China Commission of the Ministry Ministry of Economic Affairs
of Economic Affairs (MOEAIC) for investment in
(MOEAIC) mainland China.
332,172 442,066 1,109,424
USD12,000 USD15,970
----- End of picture text -----

Note 1: Investment methods are categorized into the following three types, simply indicated by their types:

(1) Direct investment in mainland China.

(2) Investment in Mainland China through a third-party company in another region (please specify the investment company in that third region). (3) Others method.

Note 2: In the investment gains/losses recognized in this period column:

(1) If it is under preparation and there are no investment gains/losses yet, it should be noted.

(2) The basis for recognizing investment gains/losses is the financial statements audited and certified by the certified public accountant of the Taiwan parent company.

Note 3: According to the "Principles for Reviewing Investment or Technical Cooperation in Mainland China," there are limits to the amount of investment.

Equity net worth × 60% = NT$1,849,040 thousand × 60% = NT$1,109,424 thousand.

Note 4: Significant transaction matters directly or indirectly occurring between the Mainland China investment company and a third-party enterprise through a third region:

For significant transaction matters directly or indirectly occurring between the merged company and the Mainland China investment company through a third region, please refer to Note 7 for details.

〜 60 〜

246 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

1. Significant transaction matters:

Significant transaction matters directly or indirectly occurring between the merged company and the Mainland China invested company during the fiscal year 2022 (already offset in the preparation of the consolidated report), please refer to the "Related Information on Significant Transaction Matters" for details.

(4) Major shareholder information:

Unit: Shares

mpany and the Mainland China invested company during the fiscal year 2022 (already fset in the preparation of the consolidated report), please refer to the "Related formation on Significant Transaction Matters" for details. shareholder information: Unit: Shares	mpany and the Mainland China invested company during the fiscal year 2022 (already fset in the preparation of the consolidated report), please refer to the "Related formation on Significant Transaction Matters" for details. shareholder information: Unit: Shares	mpany and the Mainland China invested company during the fiscal year 2022 (already fset in the preparation of the consolidated report), please refer to the "Related formation on Significant Transaction Matters" for details. shareholder information: Unit: Shares
Shareholdings Major Shareholder Name Number of Shares Held Percentage of shareholding
Juiye Enterprise Co.,Ltd. 42,788,288 25.72%
BigwigPerfect International Co.,Ltd.	38,141,792	22.93%

Note: The information on major shareholders in this table is calculated by Taiwan Depository & Clearing Corporation based on the ordinary and preferred shares, including treasury stocks, completed without physical registration delivery by the last business day of each quarter and reaching more than 5% of the total outstanding shares of the company. The number of shares of the company's financial reports and the actual completed shares without physical registration delivery by the company may differ due to different calculation bases.

14. Segment Information

(1) General information

The consolidated company has four reporting segments: Electronics, Real Estate Investment, Medical Equipment, and Wine Trading. The Diode segment is engaged in the manufacturing and sales of various rectifiers and other semiconductor components. The Real Estate Investment segment is engaged in the business of leasing office buildings and factories. The Medical Equipment segment is engaged in the business of buying and selling and manufacturing masks. The Wine Trading segment is engaged in the business of trading red and white wines.

The reporting segments of the consolidated company are strategic business units that provide different products and services. As each strategic business unit requires different technology and marketing strategies, they need to be managed separately.

(2) Information of profit or loss, assets, liabilities, basis and adjustments of which of departments to be reported.

The consolidated company uses the departmental pre-tax profit (excluding non-recurring gains and losses and exchange gains and losses) reviewed by the chief operating decisionmaker in the internal management report as the basis for resource allocation and performance evaluation by the management. Since income tax, non-recurring gains and losses, and exchange gains and losses are managed on a group basis, the consolidated company does not allocate income tax expenses (benefits), non-recurring gains and losses, and exchange gains and losses to the reporting segments. In addition, not all significant non-cash items, other than depreciation and amortization, are included in the income statement of all reporting segments. The amounts reported are consistent with the reports used by the operating decision-makers.

247 - 〜 61 〜

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

The information and adjustments for the operating segments of the consolidated company are as follows:

Electronic Year 2022 Revenue: Department Revenue from external customers $ 779,989 Interdepartmental revenue 596,452 Interest income 1,698 Total revenue $1,378,139 Interest expense $ 1,137 Depreciation and amortization 29,717 Reported pre-tax profit/loss by segment. $ 157,329 ASSETS: Investment accounted for using the equity method $ 569,100 Assets of reportable segments. $1,559,844 Year 2021 Revenue: Revenue from external customers $ 652,431 Interdepartmental revenue 324,022 Interest income 3,282 Total revenue $ 979,735 Interest expense $ 1,709 Depreciation and amortization 44,241 Reported pre-tax profit/loss by segment. $ 70,599 ASSETS: Investment accounted for using the equity method $ 438,704 Assets of reportable segments. $1,622,384		Real Estate Investment Department 26,873 - - 26,873 - 10,038 14,096 - 975,678 29,677 - - 29,677 - 5,439 16,679 - 935,065		Medical Equipment Department 65,400 585 - 65,985 - 9,703 32,270 - 161,863 60,805 151 - 60,956 - 8,055 2,657 - 167,054		Liquor Trading Department 5,371 - - 5,371 - - 950 - 25,734 2,937 - - 2,937 - - 694 - 25,734	Adjustments and Eliminations - (597,037) - (597,037) - - - (569,100) (569,100) - (324,173) - (324,173) - - - (438,704) (576,663)	Total 877,633 - 1,698


								879,331
								1,137 49,458 204,645

								- 2,154,019
								745,850 - 3,282
Revenue: Revenue from external customers Interdepartmental revenue Interest income Total revenue Interest expense Depreciation and amortization Reported pre-tax profit/loss by segment. ASSETS: Investment accounted for using the equity method Assets of reportable segments.
								749,132
								1,709 57,735 90,629
								- 2,173,574

248 -

Notes to the consolidated financial statements of Rectron Ltd. and its subsidiaries(continue)

(3) Regional Information:

The following is the regional information of the consolidated company. Revenue is classified based on the geographic location of customers.

based on the geographic location of customers.
Region: Revenue from external customers Taiwan Asia America Europe Others	Year 2022 $ 88,082 639,472 135,687 13,189 1,203 $ 877,633	Year 2021
		86,747 548,060 79,953 29,675 1,415
		745,850

〜 63 〜

249 -

6. For the company and its affiliated enterprises, as of the date of the latest annual report publication, any financial difficulties encountered should be specified along with their impact on the financial condition of the company: None.

250 -

7. Review Analysis and Risk Assessment of Financial Status and Financial Performance

1. Financial Status

(1) Comparative Analysis of Changes in Consolidated Assets, Liabilities, and Shareholders' Equity for the Past Two Years.

Unit: NTD in thousands

Year Item	Year 2021	Year 2022	Difference	Difference	Change in the proportion of increase and decrease Analysis Description (Note)
			Amount	%
Current asset	566,969	602,181	35,212	6.21
Property, plant, and equipment	514,703	497,837	-16,866	-3.28
IntangibleAssets	0	0	0	0
Other Assets	1,055,537	1,046,831	-8,706	-0.82
Other non-current assets	10,631	7,170	-3,461	-32.56
Total Assets	2,147,840	2,154,019	6,179	0.29
Current Liability	272,767	227,647	-45,120	-16.54
Deferred income tax liabilities	62,679	62,679	0	0.00
Other non-current liabilities	14,448	14,653	205	1.42
Total Liabilities	349,894	304,979	-44,915	-12.84
Capital stock	1,663,029	1,663,029	0	0.00
Capitalsurplus	9	9	0	0.00
Retained earnings	169,832	246,076	76,244	44.89	Note(2)1
Other Equities	-34,924	-60,074	-25,150	72.01	Note (2)2
Treasury stock	0	0	0	0
Non-control equity	0	0	0	0
Total equity	1,797,946	1,849,040	51,094	2.84

(2) Analysis of Recent Changes: (the analysis focuses on items with changes exceeding 20% and reaching a threshold of NT$10,000 thousand.)
Retained Earnings: The increase in retained earnings is attributed to the higher operating profits in the previous period, leading to an increase in the allocation of statutory reserve and special reserve for retained earnings.
Other Equity: The change in other equity is a result of the foreign exchange translation impact on the financial statements of overseas operating entities in the current period.
251 -

2. Financial Performance

(1) Consolidated comparative analysis table of financial performance

Unit: NTD

Year Item	Year 2021	Year 2022	Increase (Decrease) in Amount	Change Ratio `％`
Operating revenue Operating gross profit Operating expenses Operating Profit (Loss) Non-operating income and expenses Net Profit Before Tax on Continuing Operations Income Tax Expense Current net profit (loss) Current Other Comprehensive Income Total comprehensive income for the period Net profit attributable to owners of the parent. Net Profit Attributable to Non- Controlling Interests Total Comprehensive Profit and Loss Attributable to Owners of Parent Company Total comprehensive income Comprehensive income attributed to non-controlling interests.	745,850 251,630 169,757 81,873 8,756 90,629 5,657 84,972 24,088 109,060 84,972 - 109,060 - 0.51	877,633 343,849 173,109 170,740 33,905 204,645 28,545 176,100 -25,006 151,094 176,100 - 151,094 - 1.06	131,783 92,219 3,352 88,867 25,149 114,016 22,888 91,128 -49,094 42,034 91,128 - 42,034 - 0.55	17.67 36.65 1.97 108.54 287.22 125.81 404.60 107.24 -203.81 38.54 107.24 - 38.54 - 107.84
Earnings Per Share(NT$)

1. Analysis of Changes in Ratios:

(1) Operating Revenue (Gross Profit): The growth in operating revenue and gross profit in the current period is attributed to the benefits of the diversion effect from the US-China trade war and the synergies achieved through cost control measures.

(2) Operating Net Profit (Loss): The increase in operating gross profit and effective sales and administrative cost control in the current period led to a rise in operating net profit.

(3) Non-operating Income and Expenses: The increase in foreign exchange gains is a result of the impact of exchange rate fluctuations.

(4) Net Profit (Loss) for the Period: The increase in net profit for the period is a result of the growth in operating revenue and the rise in gross profit.

(5) Other Comprehensive Income for the Period (Net of Tax): The increase in foreign currency translation differences in the financial statements of overseas operations contributes to the increase in other comprehensive income.

252 -
Reasons for significant changes in the company's main business activities: None.
Forecasted sales quantity for the upcoming fiscal year and the primary factors influencing the company's

expected sales growth or decline:

Unit: Thousand Pieces (K/PCS)

			Unit:ThousandPieces (K/PCS)
Expected sales quantity for major products			Primary factors influencing the potential continuous growth or decline in expected salesquantity:
Item	Year 2023	Year 2022	The company's sales forecast is based on the sales performance and pricing in the years 2022 and 2023.
R e c t i f i e r	570,534	518,667
F a c e m a s k	8,075	10,094

3. Cash Flow

Cash Flow Analysis

Unit: NTD in thousands

				Unit: NTD in thousands	Unit: NTD in thousands
Initial Cash Balance	Net Cash Flow from Operating Activities for the Year	Total Cash Outflows for the Year	Cash Surplus (Deficit) Amount	Remedial Measures for Cash Shortage
				Investmen tplan	Financial Planning
187,464	328,956	270,458	245,962	-	-

(1) Analysis of Annual Cash Flow Changes:

The company experienced a net increase in cash of 58,498 thousand in the fiscal year 2022 compared to 2021. The changes in cash flows from various operating activities are as follows:

(1) Operating Activities: The overall net cash inflow from operating activities increased compared to the previous period due to effective inventory management, revenue growth, and increased collections.

(2) Investment Activities: The slightly lower net cash outflow in the current period compared to the previous period is primarily attributed to higher equipment investments in the previous period.
(3) Financing Activities: The higher net cash outflow from financing activities in the current period compared to the previous period is primarily due to the partial repayment of bank loans and cash dividends distributed.
(2) Cash Shortage Remedial Measures and Liquidity Analysis:
Cash Shortage Remedial Measures: None.
Liquidity Analysis:

2.LiquidityAnalysis:
	December 31, 2021	December 31, 2022	Increase (decrease) rate %
Cash Flow Ratio(%)	17.91	17.91	-66.16
Cash Flow Adequacy Ratio ( % )	103.71	103.71
			-51.05

Cash Flow Reinvestment R a t i o ( % )	-0.08	-0.08
			-100.65

(1) Cash Flow Ratio: The decrease in cash flow in the current period compared to the same

253 -

period last year is primarily due to the payment of accounts payable in operating activities, resulting in a lower cash flow ratio.

(2) Cash Liquidity Ratio: The decrease in operating cash flow in the current period compared to the same period last year has led to a decline in the cash liquidity ratio over the past five years, indicating reduced cash flow adequacy.

(3) Cash Reinvestment Ratio: The increase in net cash inflow from operating activities in the current period compared to the same period last year is due to various factors.

(3) Analysis of Future Cash Liquidity for the Next Year:

Beginning Beginning Cash Balance	Estimated net cash flows from operating activities for the full year.	Estimated cash outflows for the full year.	Estimated surplus (deficiency) of cash remaining.	Expected measures to remedy any cash shortfall.	Expected measures to remedy any cash shortfall.
				Investment plan	Financial Planning
245,962	253,000	205,000	293,962	-	-

1.Analysis of Expected Cash Flows for the Year 2023:

The company had an initial cash balance of 245,962 thousand NT dollars. It is anticipated that net cash inflow from operating activities in the next year will be approximately 253,000 thousand NT dollars, while net cash outflow from financing activities is expected to be approximately 205,000 thousand NT dollars. As a result, the projected remaining cash balance is approximately 293,962 thousand NT dollars.

2.Remedial measures and analysis of cash shortfall: None.

4. The impact of significant capital expenditures in the most recent fiscal year on financial operations.

The total amount spent by the company and its subsidiaries on the purchase of machinery and equipment in the fiscal year 2022 was 32,474 thousand NT dollars. The primary purpose of these acquisitions by the company and its subsidiaries is to meet future operational demands, replace outdated equipment, fulfill automation requirements, enhance process capabilities, strengthen product research and development, and improve product quality to meet customer demands. These investments are expected to have a positive impact on the financial operations of the company.

5. Recent Year's Investment Policy, Main Reasons for Profit or Loss, Improvement Plan, and Future Year's Investment Plan:

1. Investment Policy

The company has made new investments with a focus on the semiconductor industry to diversify its business operations and mitigate operational risks. The diversification strategy serves as a complementary approach to the company's main operations and takes into account market dynamics.

2. Main Reasons for Profit or Loss.

In the fiscal year 2022, the Electronic Business Division of the company benefited from the effects of the shift in trade orders between China and the United States, leading to increased revenue. Additionally, successful adjustments in product sales mix, customer portfolio restructuring, and effective cost control contributed to the growth in overall profitability compared to the same period last year. The company's fruitful efforts in the high-value medical field also played a significant role

254 -

in achieving positive financial performance in the fiscal year 2022.

3. Future Year Investment Plan.

In addition to adhering to the existing investment policy, the company will assess industry environment changes and opportunistically pursue investments.

6. Analysis and assessment of risk factors.

(1) Impact of interest rates, exchange rates, and inflation on the company's income and measures to be taken in the future.

alysis and assessment of risk factors. (1) Impact of interest rates, exchange rates, and inflation on the company's income and measures to be taken in the future.	alysis and assessment of risk factors. (1) Impact of interest rates, exchange rates, and inflation on the company's income and measures to be taken in the future.	alysis and assessment of risk factors. (1) Impact of interest rates, exchange rates, and inflation on the company's income and measures to be taken in the future.
Unit: NTD in thousands Year Item Year 2021 Year 2022 Interestexpense 1,709 1,137 Netexchange (loss) gain 1,353 37,987 Inflation - -
Year Item	Year 2021	Year 2022
Interestexpense	1,709	1,137
Netexchange (loss) gain	1,353	37,987
Inflation	-	-

Impact of interest rates, exchange rates, and inflation on company's revenue and profitability:

The company closely monitors interest rate fluctuations and manages its cash position to control liquidity risk. The company's operating funds are sufficient to meet cash requirements when bank loan contracts mature, mitigating liquidity risk without the need for additional fundraising.

The sensitivity analysis is based on the interest rate exposure of derivative and non-derivative instruments as of the reporting date. For floating-rate liabilities, the analysis assumes that the outstanding amount remains constant throughout the year.

The management reports to key executives using a rate change of +/- 0.5%, which represents a reasonable range of interest rate fluctuations.

If interest rates increase or decrease by 0.5% while all other variables remain constant, the company's pre-tax net profit for the fiscal year 2022 will decrease or increase by 120 thousand NT dollars due to the impact of variable-rate bank borrowings.

Specific measures to address exchange rate fluctuations:
(1) The company regularly analyzes exchange rate trends, monitors its cash position, and plans appropriate fundraising channels. It evaluates bank loan interest rates and maintains close communication with banks to stay informed about the latest exchange rate developments and control liquidity risk.
(2) Depending on the financial situation and exchange rate fluctuations, the company adjusts foreign currency deposits in a timely manner.
Impact of inflation and corresponding measures:

Rising oil and electricity prices and higher raw material costs exert pressure on the company's expenses. The current strategy is to continuously develop suppliers to lower raw material costs and

255 -

minimize the impact of inflationary pressures on raw material price increases.

(2) Policies, main reasons for profit or loss, and future response measures for engaging in high-risk, highleverage investments, lending funds to others, endorsing guarantees, and trading in derivative financial products are analyzed and evaluated on an annual basis and up until the date of the annual report ：
The company does not engage in high-risk or highly leveraged investments, nor does it provide funds to others.
Endorsement and guarantees: The company follows its endorsement and guarantee procedures, and as of the date of the annual report printing, the company has not engaged in any endorsement or guarantee transactions.
Derivative transactions: The company follows its procedures for dealing with derivatives, and as of the date of the annual report printing, the company has not engaged in any derivative transactions.

(3) Future research and development plans and expected R&D expenses:

Products under development	Current development progress	Expected R&D and production costs (in NTD)	Expected completion time
D3K	Inprogress	1,500,000	2023/6/30
SOD323FL	Project Proposal Stage	8,000,000	2023/12/30
SOD323HE	Project Proposal Stage	8,000,000	2023/12/30
TO247-IGBT- RI40N1200T7/RI75N650T7	Project Proposal Stage	5,000,000	2023/9/30

(4) Impact of Important Changes in Domestic and International Policies and Regulations on Corporate Finance and Sales, and Response Strategies:

The company constantly monitors significant domestic and international policy and legal changes and evaluates their potential impact. In the past year, there have been no significant policy or legal changes that have adversely affected the company's financial operations.

(5) The impact of technological changes (including cybersecurity risks) and industry transformations on the Company's financial operations and corresponding measures are considered.

The company's products serve as essential components in electronic products, and technological advancements still require the use of the company's products. The company actively invests in research and development to promote the application of its products and enhance competitiveness, which is a key goal for the company. In terms of information security risk management, the company has established and implemented an information security management system. Information security policies have been established to regulate the company's information security practices. Regular internal information security audits are conducted to ensure the effectiveness of the management system and compliance with legal regulations. Therefore, information security risks are not considered significant operational risks for the company.

(6) Impact of changes in corporate image on crisis management and response measures:

The company maintains a good corporate image, and there have been no changes in corporate image that would impact crisis management.

256 -
(7) Anticipated benefits, potential risks, and response measures related to mergers and acquisitions: None.
(8) Anticipated benefits, potential risks, and response measures related to expanding facilities: None.
(9) Risks associated with concentration in purchasing or sales and response measures: None.
(10) Impact, risks, and response measures related to the significant transfer or replacement of directors, supervisors, or major shareholders holding more than 10% of shares: None.
(11) Impact, risks, and response measures related to changes in ownership rights: None.
(12) Disclosure of significant litigation, non-litigation events involving the company, directors, supervisors, general manager, substantial responsible person, major shareholders holding more than 10% of shares, and subsidiary companies, where the outcomes may have a significant impact on shareholders' equity or securities prices. The disclosure should include the disputed facts, amount involved, commencement date of litigation, key parties involved, and the status of the proceedings as of the printing date of the annual report: None.
(13) Other significant risks and response measures: None.

7. Other significant matters: None.

257 -

8. Special Notes

1. Related information on affiliated enterprises

(1) Consolidated business report of affiliated enterprises
1.Organization of Related Companies under RECTRON Group

==> picture [407 x 256] intentionally omitted <==

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

RECTRON
LTD.
RECTRON ELECTRONIC Rectron Electronics CHU-TING ENTERPRISE
ENTERPRISES, INC. (China) Co., Ltd. CO., LTD.
(100%) (100%) (100%)
Zhejiang Rectron
Electronics Co., Ltd
(100%)
----- End of picture text -----

According to Article 369-2, Paragraph 2 of the Company Law, there are no subsidiary companies directly or indirectly controlled by the Company in terms of personnel, finance, or business operations.

258 -

2. Basic Information of Related Companies

Company Name	Date of Establishment	Address	Paid-in capital	Main Business or Production Items
Director of RECTRON	1986.02.28	1400 N Harbor Blvd, Suite 520	USD	Sales of rectifiers
ELECTRONIC		Fullerton, CA 92835 U.S.A	$2,050	and other electronic
ENTERPRISES, INC			thousand.	components
Rectron Electronics (China)	1991.06.04	Room 1102, 11th Floor, Sinfung	HKD	Sales of rectifiers
Co., Ltd.		Centre, 20 Cheung Shun Street,	$20 thousand.	and other electronic
		Cheung Sha Wan, Kowloon, Hong		components
	2001.01.17	Kong.	RMB
Zhejiang Rectron			$99,322	Manufactures and
Electronics		No. 28, Rectron Road, Economic	thousand.	sells electronic
(China) Co., Ltd.		Development Zone, Jiashan County,		components such as
		Zhejiang Province, China.		rectifiers
CHU-TING ENTERPRISE	1998.09.03	2nd Floor, No. 71 Zhongshan	NTD$	Wholesale of
CO., LTD.		Road, Tucheng District, New	130,000	tobacco and alcohol
		Taipei City, Taiwan.	thousand.	products, and
				manufacturing and
				sales of medical
				equipment.

No identical shareholder information is presumed to indicate control or subsidiary relationships.

4. Overall business operations of related companies

The business operations of the company and its related companies include manufacturing and sales of various rectifiers, other semiconductor components, real estate leasing and sales, and trading of alcoholic beverages and manufacturing and sales of medical equipment.

Information of Directors, Supervisors, and General Managers of affiliated enterprises

Unit: Shares (%)

			Unit: Shares(%)	Unit: Shares(%)
Company Name	Job title	Name or representative person	SharesHeld
			Number of Shares	Shareholding Ratio
Rectron Electronics (China) Co., Ltd.	Director	Rectron Ltd. Representative Person: LIN, WEN-TENG	20,000 shares	100%
Director of RECTRON ELECTRONIC ENTERPRISES, INC	Director	Rectron Ltd. Representative Person: Sidney Newman Pan I-Chin Lin Weng-Teng Lin Sean S. Kelly	205,000 shares	100%
CHU-TING ENTERPRISE CO., LTD.	Chairman Director	RECTRON LTD. Representative Person: LIN, CHIANG-YA	13,000,000 shares	100%

259 -

6. Operational Overview of Related Companies

Unit: NTD in thousands

CompanyName	Currency	Registered Capital	Total Assets	Total Liabilities	Net Value	Operating Revenue	Operating Profit	Income or Loss for the Period (After Tax)	Earnings Per Share (NT$) (After Tax)
Rectron Electronic Enterprises , Inc.	USD	2,050	1,598	903	695	4,431	288	290	1.41
	NTD	62,956	49,075	27,731	21,343	136,076	8,844	8,906	43
Rectron Electronics (China) Co., Ltd.	HKD	20	137,234	95,041	42,193	91,747	10,594	10,850	5425
	NTD	79	540,427	374,271	166,156	361,300	41,719	42,727	6,104
Zhejiang Rectron Electronics Co., Ltd (Note 1)	RMB	99,322	91,136	34,260	56,877	92,050	-1,647	1,843	`－`
	NTD	437,811	401,727	151,018	250,714	405,756	-7,260	8,124	`－`
CHU-TING ENTERPRISE CO.,LTD.	NTD	130,000	187,596	33,671	156,925	69,651	27,919	19,469	4.14

Note: For limited companies, the capital is calculated based on the investment amount.

If the related company is a foreign company, the relevant figures are converted to NTD at the exchange rates on the balance sheet date.

USD : NTD = 1: 30.710

HKD : NTD = 1: 3.938

RMB : NTD = 1: 4.408

260 -

(2) Consolidated Financial Statements of Related Companies

Declaration

It is hereby declared

Company Name: Rectron LTD. Chairman: LIN, I-CHIN Date: March 24, 2023

(3) Related party report: Not applicable

2. Private placement of tradable securities in the recent fiscal year and up to the date of printing of the

261 -

annual report: None.

3. Holdings or disposals of the company's shares by subsidiary companies in the recent fiscal year and up to the date of printing of the annual report: None.

4. Other necessary supplementary explanations: None.

Major events in the most recent year up until the publication date of the annual report with significant impact on shareholders’ equity or stock price.
262 -

AI assistant

RECTRON — Annual Report 2022

51998_rns_2023-06-21_66634d60-5b76-4b50-95d1-f7bcb0c4c4c3.pdf

RECTRON LTD.

2022 ANNUAL REPORT

1. Company Spokesperson and Acting Spokesperson:

2. Address and Phone Numbers of Head Office and Factory:

3. Share Transfer Agency:

4. Certified Public Accountants and Audit Firm for the Recent Annual Financial Report:

5. Name of Overseas Stock Exchange for Trading and Method of Obtaining Information on Overseas Securities: N/A

6. Company Website: www.rectron.com.tw

Table of Contents

1. Report to Shareholders

1. Operating Results for the Year 2022

(1) Achievement of Operating Plan:

(2) Regarding the budget execution:

(3) Financial income and profitability analysis

(4) Research and Development Status

2. Overview of 2023 Business Plan

1. Business Policy

2. Expected Sales Volume and Basis

3. Company's Future Development Strategies

4. Impact of External Competitive, Regulatory, and Macro-Economic Environment.

2. Company Profile

1. Establishment Date: January 23, 1976.

2. Company History

3. Corporate Governance Report

1. Organizational Chart

(1) Organizational Chart

2. Information of Directors, Supervisors, the General Manager, Deputy General Managers, Assistant Managers, and Heads of Departments

1. Information of Directors and Supervisors

2. Disclosure of Directors' and Supervisors' Professional Qualifications and Independence of Independent Directors:

3. Board Diversity and Independence:

(1) Board Diversity:

4. General Manager, Deputy General Manager, Assistant Managers, and Head of Departments and Branch Offices:

5. Remuneration for general directors and independent directors (individual names and remuneration methods disclosed separately)

6. Remuneration for supervisors (individual names and remuneration methods)

7. Remuneration for the General Manager and Deputy General Manager (Individual disclosure of names and remuneration methods)

3. Corporate Governance Practices

（ 1 ） Board of Directors operation situation

Attendance of Independent Directors at Board Meetings from the most recent year to March 31, 2023

(2) Audit Committee Operations:

Information on the operations of the Audit Committee

(3) Involvement of the supervisor in the operations of the board of directors.

3. Composition and Responsibilities of the Board of Directors

(5) Composition, Responsibilities, and Utilization of the Remuneration Committee:

(1) Compensation Committee Membership Details

(2) Duties of the Compensation Committee:

According to Article 5, the principles for fulfilling the duties are as follows:

(3) Information about the Operation of the Compensation Committee

7. Other important information to understand the execution of sustainable development:

1. Product: SGS ROHS certification

(8) The company's compliance with ethical business practices and measures:

by the competent authority:

(15) Disclosure of the implementation status of internal control system

1. Internal Control Statement

RECTRON LTD. Internal Control System Statement

Date: March 24, 2023

4.Information on Auditor's Remuneration

5.Information on Change of Auditors ：

(1) About the previous CPAs

(2) Regarding the name of the

8. Information on related parties or relatives within the second degree of kinship among the top ten shareholders in terms of shareholding percentage:

Comprehensive ownership percentage.

4. Funding Status

1. Share Capital and Shares

(1) Source of Share Capital

(2) Shareholding structure

(3) Ownership Structure

1. Distribution of Ordinary Shares

(4) List of Major Shareholders

(6) Dividends and Distribution Status

5. Operation Overview

1. Business Contents

(D) Competitive Situation:

(3) Technology and R&D Overview ：

2. Successful technology or product developments:

2. Market and production/sales overview.

2. Major Competitors

3. Market Supply and Demand Outlook and Business Objectives

RECTRON Annual Report 2022

`（` 1 `）` Board of Directors operation situation

5.Information on Change of Auditors `：`

(3) Technology and R&D Overview `：`