SESODA - Audit Report / Information 2021

Stock Code:1708

SESODA CORPORATION

Parent Company Only Financial Statements

With Independent Auditors' Report For the Years Ended December 31, 2021 and 2020

Address: 23F., No. 99, Sec. 2, Dunhua S. Rd., Da’an Dist., Taipei City 106, Taiwan Telephone: +886-2-2704-7272

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

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors' Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Significant commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles	Page
	1 2 3 4 5 6 7 8 8 8～9 9～22 22 23～49 49～51 51 51 51 51 52～53 53、 55~56 53、 57 53 54 54 58～67

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

Page

1
2
3
4
5
6
7
8
8
8～9
9～22
22
23～49
49～51
51
51
51
51
52～53
53、
55~56
53、
57
53
54
54
58～67

==> picture [76 x 31] intentionally omitted <==

==> picture [169 x 19] intentionally omitted <==

KPMG

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

Independent Auditors' Report

To the Board of Directors of SESODA CORPORATION:

Opinion

We have audited the financial statements of SESODA CORPORATION (“the Company”), which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

Please refer to note 4(m) and note 6(n) for disclosures related to revenue recognition.

Description of key audit matter:

Revenue is the key indicator used by investors and management while evaluating the Company's finance and operating performance. In addition, since the Company is a listed company, there are risks of material misstatement due to revenue recognition. The accuracy of the timing and amount of revenue recognized have a significant impact on the financial statements. Therefore, we consider it as one of our key audit matters.

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

3-1

How the matter was addressed in our audit:

Testing the effectiveness of design and implementing the internal control of sales and collecting cycle; reviewing the revenue recognition of significant sales contracts to determine whether the accounting treatment key judgment and estimation are appropriate; analyzing the changes in the top 10 customers from the previous year to the most recent period, as well as the changes in the price and quantity of each category of product line to determine whether if there are any significant misstatements; selecting sales transactions from a period of time before and after the balance sheet date, and verifying the vouchers to determine the accuracy of the timing and amounts of revenue recognized; understanding whether if there is a significant subsequent sales return or discount; and reviewing whether the disclosure of revenue made by the management is appropriate.

2. Impairment of investments accounted for using equity method

Please refer to note 4(l), note 5, and note 6(e) for the disclosures related to impairment on investments accounted for using equity method.

Description of key audit matter:

Some subsidiaries accounted for using equity method are subject to impairment test when there are indications that vessels may have been impaired. Also, the impairment assessment is measured using the future cash flow of present discount value. Because the impairment assessment involved significant uncertainty and management's judgment. Therefore, we consider it one of our key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain audit procedures including, understanding the financial reporting process; evaluating the judgement made by the management in measuring the recoverable amount and the historical reasonableness of the management's estimates on business forecasts; verifying the key assumptions used by management to formulate future cash flow forecasts and calculate the recoverable amount; as well as performing a sensitivity analysis of key assumptions, and reviewing whether the relevant information has been properly disclosed.

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

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

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

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

3-2

Auditors' Responsibilities for the Audit of the Financial Statements

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

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

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on these financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

3-3

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

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

The engagement partners on the audit resulting in this independent auditors' report are Ming-Hung Huang and Po-Shu Huang.

KPMG

Taipei, Taiwan (Republic of China) March 24, 2022

Notes to Readers

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

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

(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) SESODA CORPORATION

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6 (a)) 1150 Notes receivable, net (note 6(c)) 1170 Accounts receivable, net (note 6(c)) 1210 Other receivables from related parties (note 7) 1220 Current tax assets 130X Inventories (note 6(d)) 1476 Other current financial assets 1470 Other current assets Total current assets Non-current assets: 1517 Non-current financial assets at fair value through other comprehensive income (note 6(b)) 1550 Investments accounted for using equity method (note 6(e)) 1600 Property, plant and equipment (notes 6(f), 8 and 9) 1755 Right-of-use assets (note 6(g)) 1840 Deferred tax assets (note 6(k)) 1915 Prepayments for business facilities (note 9) 1920 Refundable deposits 1975 Net defined benefit asset (note 6(j)) Total non-current assets Total assets	December 31, 2021 Amount % $ 360,847 4 138,875 2 532,555 7 11,451 - 7,654 - 649,215 8 40,767 - 41,641 - 1,783,005 21 115,630 2 4,345,362 52 2,047,051 25 11,856 - 248 - 649 - 6,894 - 23,710 - 6,551,400 79 $ 8,334,405 100	December 31, 2020 Amount % 346,334 5 79,949 1 353,483 5 13,961 - 108 - 312,112 4 16,280 - 50,303 1 1,172,530 16 137,068 2 3,931,973 54 1,974,870 28 2,268 - 1,003 - 240 - 5,894 - 26,509 - 6,079,825 84 7,252,355 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (notes 6(h) and 8) 2170 Accounts payable 2200 Other payables (note 6(o)) 2220 Other payables to related parties (note 7) 2230 Current tax liabilities 2280 Lease liabilities-current (note 6(i)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2645 Guarantee deposits received 2570 Deferred tax liabilities (note 6(k)) 2580 Lease liabilities-non-current (note 6(i)) 2650 Credit balance of investments accounted for using equity method (note 6(e)) Total non-current liabilities Total liabilities Equity (notes 6(b), (e), (j), (k) and (l)): 3100 Common stock 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest: 3410 Exchange differences on translation of foreign financial statements 3420 Unrealized gains or losses from financial assets measured at fair value through other comprehensive income Total equity Total liabilities and equity	December 31, 2021		December 31, 2020 Amount % 620,000 9 269,219 3 105,304 2 3,702 - 5,897 - 2,305 - 4,086 - 1,010,513 14 242 - 433,929 - - 6 11,594 - 445,765 6 1,456,278 20 2,284,419 32 102,594 1 966,494 13 163,741 2 2,537,958 35 3,668,193 50 (242,652) (3) (16,477) - (259,129) (3) 5,796,077 80 7,252,355 100
			Amount %
			$ 1,020,000 12 392,771 5 245,786 3 3,757 - 77,002 1 5,838 - 5,920 - 1,751,074 21 - - 510,460 6 6,046 - 33,718 1 550,224 7 2,301,298 28 2,490,017 30 103,111 1 984,015 12 258,877 3 2,682,592 32 3,925,484 47 (344,110) (4) (141,395) (2) (485,505) (6) 6,033,107 72 $ 8,334,405 100

See accompanying notes to parent company only financial statements.

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

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

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

4110 Operating revenue (note 6(n)) 5111 Operating cost (notes 6(d), (f) and (j)) Gross profit from operations 6000 Operating expenses (notes 6(f), (g), (i), (j), (o) and 7): 6100 Selling expenses 6200 Administrative expenses Total operating expenses 6900 Net operating income 7000 Non-operating income and expenses (notes 6(e), (f), (i), (p) and 7): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of gains of subsidiaries and associates accounted for using equity method Total non-operating income and expenses 7900 Income before tax 7950 Less: Income tax expenses (note 6(k)) Net income 8300 Other comprehensive income (notes 6(e), (j), (k) and (l)): 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurements of defined benefit plans 8316 Unrealized gains or losses from financial assets measured at fair value through other comprehensive income 8330 Share of other comprehensive income of associates accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8380 Share of other comprehensive income of associates accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income 8500 Total comprehensive income 9750 Basic earnings per share (note 6(m)) (expressed in New Taiwan Dollars) 9850 Diluted earnings per share (note 6(m))(expressed in New Taiwan Dollars)	2021 Amount % $ 3,032,839 100 2,068,152 68 964,687 32 418,306 14 171,212 6 589,518 20 375,169 12 86 - 9,713 - 18,396 1 (6,625) - 421,878 14 443,448 15 818,617 27 147,746 5 670,871 22 (7,674) - (121,249) (4) 85 - (1,535) - (127,303) (4) (101,568) (3) 110 - - - (101,458) (3) (228,761) (7) $ 442,110 15 $ 2.69 $ 2.68	2020 Amount % 2,667,022 100 2,150,161 81 516,861 19 335,721 13 111,892 4 447,613 17 69,248 2 172 - 6,247 - 13,679 1 (4,010) - 102,111 4 118,199 5 187,447 7 13,318 - 174,129 7 3,174 - (54,147) (2) (443) - 635 - (52,051) (2) (174,105) (7) (82) - - - (174,187) (7) (226,238) (9) (52,109) (2) 0.70 0.70

See accompanying notes to parent company only financial statements.

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

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Capital surplus		Retained	earnings		Total	other equity interes	Total equity
					Exchange differences on translation of foreign financial statements (68,465) - - - - - - (174,187) (174,187) - - - (242,652) - - - - - - (101,458) (101,458) - - (344,110)	Unrealized gains or losses on financial assets measured at fair value through other comprehensive income 36,634 - - - - - - (54,147) (54,147) - 1,036 - (16,477) - - - - - - (121,249) (121,249) - (3,669) (141,395)
	Legal reserve 938,804 27,690 - - - - - - - - - - 966,494 17,521 - - - - - - - - - 984,015	Special reserve 131,930 - 31,831 - - (20) - - - - - - 163,741 - 95,388 - - (252) - - - - - 258,877	Unappropriated retained earnings 2,760,702 (27,690) (31,831) (169,216) (169,216) 20 174,129 2,096 176,225 - (1,036) - 2,537,958 (17,521) (95,388) (205,597) (205,598) 252 670,871 (6,054) 664,817 - 3,669 2,682,592	Total retained earnings
17,420 - - - - - - - - 84,670 - 504 102,594 - - - - - - - - 517 - 103,111				3,831,436 - - (169,216) (169,216) - 174,129 2,096 176,225 - (1,036) - 3,668,193 - - (205,597) (205,598) - 670,871 (6,054) 664,817 - 3,669 3,925,484			5,932,228 - - (169,216) - - 174,129 (226,238)
							(52,109)
							84,670 - 504
							5,796,077 - - (205,597) - - 670,871 (228,761)
							442,110
							517 -
							6,033,107

See accompanying notes to parent company only financial statements.

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

SESODA CORPORATION

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities:
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Interest expense
Interest income
Dividend income
Share of profit of subsidiaries and associates accounted for using equity method
Gain on disposal of property, plant and equipment
Property, plant and equipment transferred to expenses
Gain on disposal of investments accounted for using equity method
Others
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Decrease (increase) in notes receivable
Decrease (increase) in accounts receivable
Decrease (increase) in other receivables from related parties
Decrease (increase) in inventories
Decrease in other current assets
Decrease (increase) in other current financial assets
Increase in net defined benefit assets
Increase in accounts payable
Increase (decrease) in other payables
Increase (decrease) in other payables to related parties
Increase (decrease) in other current liabilities
Total changes in operating assets and liabilities
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income
Proceeds from disposal of financial assets at fair value through other comprehensive income
Acquisition of investments accounted for using equity method
Proceeds from disposal of investments accounted for using equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Net cash used in investing activities
Cash flows from (used in) financing activities:
Increase in short-term loans
Decrease in short-term loans
(Decrease) increase in guarantee deposits received
Payment of lease liabilities
Cash dividends paid
Other financing activities
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

See accompanying notes to parent company only financial statements.

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

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

SESODA CORPORATION, formerly called SOUTH EAST SODA MANUFACTURING CO., LTD., (hereinafter referred to as the “Company”) was incorporated on March 2, 1957 as a corporation limited by shares under the Company Act of the Republic of China (R.O.C.). The major business activities of the Company are the manufacturing and sales of pure soda ash, sodium bicarbonate, hydrochloric acid, ammonium bicarbonate power and potassium sulfate.

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

These financial statements were authorized for issue by the Board of Directors as of March 24, 2022.

(3) New standards, amendments and interpretations adopted:

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

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2021:

●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from April 1, 2021:

●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”
(b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

－
●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018–2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”

(Continued)

SESODA CORPORATION Notes to the Financial Statements

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

●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”
●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”
●Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Summary of significant accounting policies:

The significant accounting policies presented in the parent company financial statements are summarized below. The following accounting policies were applied consistently throughout the periods presented in the parent company only financial statements.

(a) Statement of compliance

The parent company financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”).

(b) Basis of preparation
(i) Basis of measurement

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

1) Financial instruments at fair value through profit or loss are measured at fair value;
2) Financial assets at fair value through other comprehensive income are measured at fair value;
3) The net defined benefit assets are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note 4(n).
(ii) Functional and presentation currency

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(c) Foreign currencies

(i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currency of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currency using the exchange rate at that date.

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

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

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into NTD at the exchange rates of the reporting date. The income and expenses of foreign operations are translated into NTD at the average rate. Exchange differences are recognized in other comprehensive income.

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

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

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

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

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or

(Continued)

SESODA CORPORATION Notes to the Financial Statements

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

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

An entity shall classify a liability as current when:

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(e) Cash and cash equivalents

Cash comprises of cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(f) Financial assets

Accounts receivable is initially recognized when it is originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. An accounts receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; fair value through other comprehensive income (FVOCI) –equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

1) Financial assets measured at amortized cost

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

‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

2) Fair value through other comprehensive income (FVOCI )

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

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

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

3) Fair value through profit or loss (FVTPL)

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

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

4) Impairment of financial assets

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

‧ Cash in bank, other receivable, other financial assets and refundable deposits for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

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

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

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

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

The Company holds time deposits for domestic financial institutions, it is considered to be low credit risk.

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

At each reporting date, the Company assesses whether financial assets carried at amortized cost is credit-impaired. A financial asset is ‘credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

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

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company's procedures for recovery of amounts due.

5) Derecognition of financial assets

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

(ii) Financial liabilities

1) Other financial liabilities

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

2) Derecognition of financial liabilities

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

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

3) Offsetting of financial assets and liabilities

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(g) Inventories

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

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

(h) Investment in associates

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

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

The parent company only financial statements include the Company's share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate's equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant influence.

Unrealized gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated Company's interests in the associate.

When the Company's share of losses of an associate equals or exceeds its interest in associates, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company's proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. Moreover, a difference shall be debited to retained earnings when the balance of capital surplus resulting from investments accounted for using equity method is not sufficient to be written off. If the Company's ownership interest is reduced due to the additional subscription to the shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate or jointly controlled entity had directly disposed of the related assets or liabilities.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(i) Investment in subsidiaries

When preparing the parent company only financial statements, the investments in subsidiaries, which are controlled by the Company, are accounted for using the equity method. Under the equity method, the profit or loss for the period and other comprehensive income presented in the parent company only financial statements should be the same as the allocations of profit or loss for the period and of other comprehensive income attributable to the owners of the parent presented in the financial statements prepared on a consolidated basis; and the owners' equity presented in the parent company only financial statements should be the same as the equity attributable to the owners of the parent presented in the financial statements prepared on a consolidated basis. The Company also recognized its shares in the changes in its equity of subsidiaries.

Changes in a parent's ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity.

(j) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

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

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

(ii) Subsequent cost

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

(iii) Depreciation

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

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1)	Buildings	5～50 years
2)	Machinery and equipment	5～15 years
3)	Transportation equipment	3～5 years
4)	Other equipment	2～15 years

(Continued)

SESODA CORPORATION Notes to the Financial Statements

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

(k) Leases

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

(i) As a lessee

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

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

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

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

－ fixed payments, including in-substance fixed payments;
－ variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
－ amounts expected to be payable under a residual value guarantee; and
－ payments for purchase or termination options that are reasonably certain to be exercised.

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

－ there is a change in future lease payments arising from the change in an index or rate; or
－ there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee; or
－ there is a change in the assessment on whether it will have the option to exercise a purchase;, or

(Continued)

SESODA CORPORATION Notes to the Financial Statements

－
there is a change in the assessment on lease term as to whether it will be extended or terminated; or
－
there is any lease modifications

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

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

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

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases that have a lease term of 12 months or less and leases of low-value assets, including office equipment. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(ii) As a lessor

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

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

(l) Impairment of non-financial assets

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

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

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

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

An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(m) Revenue
(i) Revenue from contracts with customers

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

1) Sale of goods

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

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

2) Financing components

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

(n) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution plans are recognized as expense as the related services is provided. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(ii) Defined benefit plans

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

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

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

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

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

(o) Income taxes

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

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be recognized for the below exceptions:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

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

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

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

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

(i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
- 1) the same taxable entity; or
- 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(p) Earnings per share

The Company discloses the Company's basic and diluted earnings per share attributable to common shareholders of the Company. Basic earnings per share are calculated as the profit attributable to common shareholders of the Company divided by the weighted average number of common shares outstanding. Diluted earnings per share are calculated as the profit attributable to common shareholders of the Company divided by the weighted average number of common shares outstanding after adjustment for the effects of all potentially dilutive common shares, such as employee compensation.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(q) Operating segments

The Company has disclosed information about operating segments in its consolidated financial statements. Hence no further information is disclosed in the parent company only financial statements.

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

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

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

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the parent company only financial statements is as follows:

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

As of December 31, 2021 and 2020, the Company holds both 34.89% of the outstanding voting shares of EAST TENDER OPTOELECTRONICS CORPORATION (EOC), and is the single largest shareholder of the investee. Although the remaining shares are not concentrated within specific shareholders, the Company still failed to obtain more than half of the total number of directors’seats of EOC, and it also failed to obtain more than half of the voting rights at a shareholders' meeting. Therefore, it is determined that the Company only has significant influence but not control over EOC.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows:

(a) Impairment of investments accounted for using equity method

The assessment of impairment of investments accounted for using equity method requires the Company to make subjective judgments to identify the cash-generating units and estimate the future cash flow and useful life of its related assets. Any changes in these estimates based on changed economic conditions or business strategies could result in significant adjustments in future years. Please refer to note 6(e) for further description.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(6) Explanation of significant accounts:

(a) Cash and cash equivalents

Cash and cash equivalents
Petty Cash Demand deposits Time deposits Cash and cash equivalents	December 31, 2021 $ 380 359,467 1,000 $ 360,847	December 31, 2020
		380 259,514 86,440
		346,334

(b) Financial assets at fair value through other comprehensive income-non-current

Domestic unlisted companies' stocks Foreign unlisted companies' stocks Total	December 31, 2021 $ - 115,630 $ 115,630	December 31, 2020
		5,571 131,497
		137,068

(i) Equity instruments at fair value through other comprehensive income

The Company held equity securities for long-term strategic purposes (and not for trading purposes) which have been designated as measured at fair value through other comprehensive income.

In June 2021, the Company injected the capital to Qingdao Soda Ash Industrial Potassic Fertilizer Technology Co., Ltd. of CNY15,000 thousand.

In 2021, due to the liquidation of Pushi Venture Capital Co., Ltd. and Puxun Venture Capital Co., Ltd., the Company received the amounts of $4,417 in cash, resulting in the gain of $3,669 to be reclassified from other equity to retained earnings.

In 2019, due to the liquidation of WI Harper Investment Company, the Company received the amounts of $4,029 in cash, resulting in the gain of $70 to be reclassified from other equity to retained earnings in 2020.

(ii) For market risk, please refer to note 6(q).

(iii) The aforementioned financial assets were not pledged.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(c) Notes and accounts receivable

Notes receivable Accounts receivable–measured as amortized cost Less: Loss allowance Subtotals Total	December 31, 2021 $ 138,875 543,858 (11,303) 532,555 $ 671,430	December 31, 2020 79,949 364,786 (11,303) 353,483 433,432

The Company applies the simplified approach to provide for its loss allowance used for expected credit losses, which permit the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, notes and accounts receivable have been grouped based on shared credit risk characteristics and days past due, as well as incorporate forward looking information. The loss allowance provision was determined as follows:

	December 31, 2021
Gross carrying amount $ 621,050 45,097 8,565 4,062 3,959 $ 682,733	Weighted-average expected credit loss rate % 0.39 % 2.53 % 7.60 % 74.22 100.00% December 31, 2020	Loss allowance provision
		2,422 1,141 651 3,015 3,959
		11,188

	Weighted-average expected credit loss rate % 0.33 % 6.95 % 14.95 % 82.57 % 100.00	Loss allowance provision
		1,224 4,209 1,444 12 4,386
		11,275

There was no material difference between the Company's allowance loss and expected credit loss at the reporting date. There was no change in Company's notes and accounts receivable allowance losses in 2021 and 2020, and the amounts were both $11,303 .

As of December 31, 2021 and 2020, the notes and accounts receivable were not discounted and pledged. For other credit risk, please refer to note 6(q).

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(d) Inventories

Merchandise Finished goods Raw materials Fuel Supplies	December 31, 2021 $ 94,369 183,303 349,524 4,831 17,188 $ 649,215	December 31, 2020
		98,737 76,595 120,079 2,262 14,439
		312,112

Except for operating costs arising from the ordinary sale of inventories, other gains or losses directly recorded under operating cost were as follows:

Unallocated overheads Loss (gain) on valuation of inventories Loss (gain) on inventories count	2021 $ 3,077 (24) 98 $ 3,151	2020
		29,983 275 (1,635
		28,623

As of December 31, 2021 and 2020, the inventories were not pledged.

(e) Investments accounted for using the equity method

A summary of the Company's financial information for investments accounted for using the equity method (including prepayments for investments) at the reporting date was as follows:

Investments accounted for using equity method: Subsidiaries Associates Total Credit balance of investments accounted for using equity method: Subsidiaries	December 31, 2021	December 31, 2020 3,433,622 498,351 3,931,973 December 31, 2020 11,594	December 31, 2020
	$ 3,881,027 464,335 $ 4,345,362 December 31, 2021 $ 33,718		3,433,622 498,351
			3,931,973

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(i) Subsidiaries

Please refer to 2021 and 2020 consolidated financial statements. Besides, there was no impairment recognized of investments using the equity method.

(ii) Associates

Name of Associates	Main business	Main operating location	Proportion of shareholding and voting rights
			December 31, 2021 December 31, 2020 % 34.89 % 34.89 (note)
EOC	Manufacturing of DWDM filter components required for Optical communication	Yilan

(Note) EOC made a cash capital increase in the second quarter of 2020. The Company did not participate in capital increase at that time. As a result, the shareholding ratio decreased to 35.64%, and the capital surplus was recognized as $86,571. The Company disposed some shares in July 2020, resulting in a drop in the shareholding ratio to 34.89%.

Fair value	December 31, 2021 $ 463,952	December 31, 2020 696,859

The financial information of EOC was as follows:

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Net assets attributable to the Company Operating revenue $ Profit from continuing operations $ Other comprehensive income Total comprehensive income $ Comprehensive income attributable to the Company $	December 31, 2021 $ 428,981 791,312 (119,431) (93,440) $ 1,007,422 $ 464,335 2021 202,812 8,243 334 8,577 (41)	December 31, 2020 642,144 594,550 (81,976) (105,234) 1,049,484 498,351 2020 334,568 51,124 (1,585) 49,539 15,924

(Continued)

SESODA CORPORATION Notes to the Financial Statements

Share of net assets of associates as of January 1 Comprehensive income attributable to the Company Capital surplus arising from not participating in capital increase Disposals Dividends received from associates Impairment loss Others Share of net assets of associates as of December 31	2021 $ 498,351 (41) - - (13,975) (20,000) - $ 464,335	2020 418,519 15,924 86,571 (10,490) (12,182) - 9 498,351

The aforementioned impairment loss recognized as the book value of the Company's investment in EOC was lowered than the recoverable value (fair value).

In 2020, due to the disposal of EOC, the Company received the amount of $13,559 in cash, resulting in the disposal gain of $4,978 (including the amount of $1,909 from other equity).

The Company's financial information for investments accounted for using the equity method that are individually insignificant was as follows:

Carrying amount of individually insignificant associates' equity Attributable to the Company: Loss from continuing operations Other comprehensive income Comprehensive income There were no such transactions in 2021.	December 31, 2020
	$ - 2020 $ (1,259) - $ (1,259)

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(f) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2021 and 2020 were as follows:

Cost: Balance on January 1, 2021 Additions Disposal Reclassification Balance on December 31, 2021 Balance on January 1, 2020 Additions Disposal Reclassification Balance on December 31, 2020 Depreciation and impairments loss: Balance on January 1, 2021 Depreciation Disposal Others Balance on December 31, 2021 Balance on January 1, 2020 Depreciation Disposal Balance on December 31, 2020 Carrying amounts: Balance on December 31, 2021 Balance on January 1, 2020 Balance on December 31, 2020	Land $ 1,205,356 - (432) - $ 1,204,924 $ 1,205,356 - - - $ 1,205,356 $ - - - - $ - $ - - - $ - $ 1,204,924 $ 1,205,356 $ 1,205,356	Buildings 703,700 - - 31,666 735,366 695,719 64 - 7,917 703,700 470,386 16,159 - (2,123) 484,422 458,334 12,052 - 470,386 250,944 237,385 233,314	Machinery and equipment 1,391,096 603 - 114,915 1,506,614 1,369,648 1,942 (13,549) 33,055 1,391,096 1,096,272 58,086 - - 1,154,358 1,050,373 59,448 (13,549) 1,096,272 352,256 319,275 294,824	Transportation equipment 25,766 - (9,414) - 16,352 25,766 - - - 25,766 15,532 3,119 (5,238) - 13,413 11,612 3,920 - 15,532 2,939 14,154 10,234	Other facilities 140,050 68,017 (981) 7,441 214,527 136,353 41,422 (121) (37,604) 140,050 80,594 6,975 (981) - 86,588 77,477 3,238 (121) 80,594 127,939 58,876 59,456	Construction in progress 171,686 105,157 - (168,794) 108,049 121,649 76,743 - (26,706) 171,686 - - - - - - - - - 108,049 121,649 171,686	Total 3,637,654 173,777 (10,827) (14,772)
							3,785,832
							3,554,491 120,171 (13,670) (23,338)
							3,637,654
							1,662,784 84,339 (6,219) (2,123)
							1,738,781
							1,597,796 78,658 (13,670)
							1,662,784
							2,047,051
							1,956,695
							1,974,870

(i) Pledged information

Please refer to note 8 for the pledged and collateral information of the property, plant and equipment.

(ii) For the years ended December 31, 2021 and 2020, the capitalized interest expenses amounted to $692 and $1,331, with interest rates of 0.90% and 1.01%, respectively.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(g) Right-of-use assets

The Company leases buildings and transportation equipment. The movements in right-of-use assets were as follows:

Cost: Balance at January 1, 2021 Additions Disposal Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposal Balance at December 31, 2020 Accumulated depreciation: Balance at January 1, 2021 Depreciation Disposal Balance at December 31, 2021 Balance at January 1, 2020 Depreciation Disposal Balance at January 1, 2020 Carrying amounts: Balance at December 31, 2021 Balance at January 1, 2020 Balance at December 31, 2020	Buildings $ 543 546 (543) $ 546 $ 543 543 (543) $ 543 $ 407 545 (543) $ 409 $ 407 543 (543) $ 407 $ 137 $ 136 $ 136	Transportation equipment 8,252 14,891 (8,252) 14,891 8,252 - - 8,252 6,120 5,304 (8,252) 3,172 3,060 3,060 - 6,120 11,719 5,192 2,132	Total 8,795 15,437 (8,795) 15,437 8,795 543 (543) 8,795 6,527 5,849 (8,795) 3,581 3,467 3,603 (543) 6,527 11,856 5,328 2,268

The Company leases the building as a parking space for the office. The lease period is usually one year; the lease period of the leased transportation equipment is usually one to three years.

(h) Short-term borrowings

Secured bank loans Unsecured bank loans Unused credit lines Range of interest rates	December 31, 2021 $ 340,000 680,000 $ 1,020,000 $ 480,000 0.42%~1.10%	December 31, 2020
		290,000 330,000
		620,000
		710,000 0.42%~2.46%

For the collateral for short-term borrowings, please refer to note 8.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(i) Lease liabilities

The carrying amounts of lease liabilities were as follow:

Current Non-current For the maturity analysis, please refer to note 6(q).	December 31, 2021 $ 5,838 $ 33,718	December 31, 2020 2,305
		11,594

The amounts recognized in profit or loss were as follows:

2021 Interest expenses on lease liabilities $ 83 Expenses relating to leases of low-value assets $ 5,380 The amounts recognized in the statement of cash flows were as follows: 2021 Total cash outflow for leases $ 11,321	2020
	68
	190
	2020
	3,868

(j) Employee benefits

(i) Defined benefit plans

Reconciliations of defined benefit obligation at present value and plan asset at fair value were as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit assets	December 31, 2021 $ 138,427 (162,137) $ (23,710)	December 31, 2020
		142,658 (169,167)
		(26,509)

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

1) Composition of plan assets

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

The Company's Bank of Taiwan labor pension reserve account balance amounted to $162,137 as of December 31, 2021. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2) Movements in present value of the defined benefit obligation

Movements in the present value of the defined benefit obligations were as follows:

Defined benefit obligations at January 1 Current service costs and interest cost Remeasurements of the net defined benefit asset: －Actuarial gains or losses arising from financial assumption Benefits paid Defined benefit obligations at December 31	2021 $ 142,658 1,006 9,865 (15,102) $ 138,427	2020 146,009 1,619 2,262 (7,232) 142,658

3) The movements in fair value of the defined benefit plan assets

Movements in the fair value of the plan assets were as follows:

Fair value of plan assets at January 1 Interest revenue Remeasurements of the net defined benefit asset: －Actuarial gains or losses arising from financial assumption Amounts contributed to plan Benefits paid Fair value of plan assets at December 31	2021 $ 169,167 845 2,191 5,036 (15,102) $ 162,137	2020 162,578 1,216 5,436 4,929 (4,992) 169,167

4) Expenses recognized in profit or loss

The expenses recognized in profit or losses were as follows:

Current service costs Net interest expense of net defined benefit assets	2021 $ 306 (145) $ 161	2020 545 (142) 403

(Continued)

SESODA CORPORATION Notes to the Financial Statements

Operating cost Operating expenses	2021 $ 147 14 $ 161	2020
		369 34
		403

5) The remeasurements of net defined benefit liabilities (assets) recognized in other comprehensive income

The remeasurements of net defined benefit liabilities (assets) recognized in other comprehensive income were as follows:

Balance at the beginning Recognized in the current period Balance at the beginning	2021 $ (4,147) (7,674) $ (11,821)	2020 (7,321) 3,174 (4,147)

6) Actuarial assumptions

The principal actuarial assumptions were as follows:

Discount rate Future salary increasing rate	2021.12.31 2020.12.31 % 0.500 % 0.500 % 3.000 % 3.000

The Company expects to make contributions of $5,400 to the defined benefit plans in the next year starting from December 31, 2021.

The weighted average duration of the defined benefit plans is 6.90 years.

7) Sensitivity analysis

The changes in main actuarial assumptions might have an impact on the present value of the defined benefit obligation as follows:

December 31, 2021 Discount rate decrease (increase) 0.25% Future salary increasing rate increase (decrease) 0.25% December 31, 2020 Discount rate decrease (increase) 0.25% Future salary increasing rate increase (decrease) 0.25%	Influences on defined benefit obligations Increased Decreased $ 1,896 (1,852) 1,789 (1,757) 2,107 (2,057) 1,991 (1,954)

There is no change in other assumptions when performing the above-mentioned sensitivity analysis. In practice, assumptions may be interactive with each other. The method used on sensitivity analysis is consistent with the calculation on the net pension liabilities.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020.

(ii) Defined contribution plans

The Company set aside 6% of the contribution rate of the employee's monthly wages to the Labor Pension personal account of the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. The Company set aside a fixed amount to the Bureau of Labor Insurance without the payment of additional legal or constructive obligations.

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted for the years ended December 31, 2021 and 2020 were as follow:

Operating cost Operating expense Total	2021 $ 2,081 1,893 $ 3,974	2020
		1,985 1,705
		3,690

(iii) Others

The Company paid and recognized the severance pay for the years ended December 31, 2021 and 2020 as follow:

Operating cost Operating expense Total	2021 $ - 256 $ 256	2020
		48 2,276
		2,324

(k) Income taxes

(i) Income tax expense

The amounts of income tax for the years ended December 31, 2021 and 2020 were as follows:

Current tax expense Current period Adjustment for prior periods Deferred tax expense (benefit) Origination and reversal of temporary differences Income tax expense from continuing operations	2021 $ 77,906 (8,981) 68,925 78,821 $ 147,746	2020 13,534 3 13,537 (219) 13,318

(Continued)

SESODA CORPORATION Notes to the Financial Statements

The amounts of income tax expense (benefit) recognized in other comprehensive income for the years ended December 31, 2021 and 2020 were as follows:

Items that will not be reclassified subsequently to profit or loss: Remeasurement from defined benefit plans	2021 $ (1,535)	2020
		635

Reconciliations of income tax expenses and profit before tax for the years ended December 31, 2021 and 2020 were as follows:

Profit before tax Income tax using the Company’s domestic tax rate The income tax effects on permanent difference Change in unrecognized temporary differences Adjustment for prior periods	2021 $ 818,617 $ 163,723 5,649 (12,645) (8,981) $ 147,746	2020 187,447 37,489 (4,866) (19,308) 3 13,318

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax liabilities

The Company is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as of December 31, 2021 and 2020. Also, management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

tax liabilities. Details are as follows:
Aggregate amount of temporary differences related to investments in subsidiaries	December 31, 2021 $ 408,343	December 31, 2020
		397,529

2) Recognized deferred tax assets and liabilities Deferred Tax Assets:

Balance at January 1, 2021 Recognized in profit or loss Balance at December 31, 2021 Balance at January 1, 2020 Recognized in profit or loss Balance at December 31, 2020

Refund liability $ 162 (162) $ - $ 1,724 (1,562) $ 162	Unrealized exchange loss	Impairment loss of property, plant and equipment	Impairment loss of property, plant and equipment	Defined benefit plans 30 - 30 9 21 30	Total 1,003 (755) 248 2,212 (1,209) 1,003
			479 (479) - 479 - 479

(Continued)

SESODA CORPORATION

Notes to the Financial Statements

Deferred Tax Liability:

Balance at January 1, 2021 Recognized in profit or loss Recognized in other comprehensive income Balance at December 31, 2021 Balance at January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income Balance at December 31, 2020	Land value increment tax $ 166,990 (106) - $ 166,884 $ 166,990 - - $ 166,990	Investment income under equity method	Unrealized exchange gain	Unrealized exchange gain	Defined benefit plans 5,294 975 (1,535) 4,734 3,306 1,353 635 5,294	Others - - - - 25 (25) - -	Total 433,929 78,066 (1,535) 510,460 434,722 (1,428) 635 433,929
		261,645 77,197 -		- - - - 203 (203) - -
		338,842

(iii) Assessment

The Company's income tax returns for all years through 2019 were assessed by the tax authorities.

(l) Capital and other equity

As of December 31, 2021 and 2020, the total number of authorized ordinary shares were 300,000 and 250,000 thousand shares, respectively, with a par value of NTD10 per share, of respectively, which, 249,002 thousand shares and 228,442 thousand shares, respectively, were issued. All issued shares were paid up upon issuance.

Reconciliation of shares outstanding was as follows:

(in thousand shares) Balance on January 1 Capital increase by stock dividend Balance on December 31	Ordinary Shares	Ordinary Shares
	2021 228,442 20,560 249,002	2020
		211,520 16,922
		228,442

(i) Ordinary shares

A resolution was decided during the general meeting of the shareholders held on July 5, 2021 for a capital increase via stock dividends of 20,560 thousand shares amounting to $205,598, with the base date set on September 4, 2021, which was approved by the FSC. All relevant registration procedures had been completed as of the reporting date.

A resolution was decided during the general meeting of the shareholders held on May 27, 2020 for a capital increase via stock dividends of 16,922 thousand shares amounting to $169,216, with the base date set on July 17, 2020, which was approved by the FSC. All relevant registration procedures had been completed as of the reporting date.

(Continued)

SESODA CORPORATION

Notes to the Financial Statements

(ii) Capital surplus

The details of capital surplus were as follows:

The subsidiaries acquired cash dividend from the Company Gain on the subsidiaries sale of the Company's stock Increase through changes in ownership interests in associates Donation from shareholders	December 31, 2021 $ 4,079 2,379 91,152 5,501 $ 103,111	December 31, 2020
		4,079 2,379 91,152 4,984
		102,594

In accordance with Company Act, realized capital reserves can only be reclassified as share capital or be distributed as cash dividends after offsetting against losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the actual amount of capital reserves to be reclassified under share capital shall not exceed 10% of the actual share capital amount.

(iii) Retained earnings

The Company's Article of Incorporation stipulates that the Company's net earnings should first be used to offset the prior years' deficits, if any, after paying any income taxes, of the remaining balance 10% is to be appropriated as legal reserve until the accumulated legal reserve equals the Company's capital; a special reserve should also be set aside in accordance with the relevant regulations or as requested by the authorities. Any balance left over and the beginning balance of retaining earnings shall be distributed by way of cash or stock dividends; and the ratio for all dividends shall exceed 1% of the remaining earnings. The Company's appropriations of earnings are decided in the meeting of the Board of Directors and are presented for approval in the Company's shareholders' meeting.

However, dividends issued in cash may be approved by the Board of Directors with more than two thirds of the directors' attendance, and resolved by more than half of the directors; thereafter, reported in the shareholders' meeting.

In response to the Company's long-term development needs, the Company's capital structure and long-term financial planning were taken into consideration. Therefore, the Company formulated its dividend policy based on its operating performance and principle of balanced dividend payments. Furthermore, the proportion of cash dividend payment shall be no less than 20% of the current year's dividend, which should all be distributed in cash.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders' meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

The Company applied for exemptions granted under IFRS 1 First-time Adoption of International Financial Reporting Standards endorsed by the FSC. Upon the Company’s initial adoption of the above standards, its unrealized revaluation increments and cumulative translation adjustments under shareholders' equity had been reclassified to retained earnings at the adoption date. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, an increase in retained earnings, due to the first-time adoption of the IFRSs endorsed by the FSC, shall be reclassified as a special reserve during earnings distribution. However, when the adjusted retained earnings, due to the first-time adoption of the IFRSs endorsed by the FSC, are insufficient for the appropriation of special reserve at the transition date, the Company may appropriate a special reserve equals the amount of increase in retained earnings. Upon the use, disposal, or reclassification of its related assets, the Company may reverse the special reserve proportionately. As of December 31, 2021 and 2020, the special reserve were $131,658 and $131,910, respectively.

A portion of current-period earnings and undistributed prior-period earnings shall be reclassified as a special reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special reserve resulting from the first-time adoption of IFRSs and the carrying amount of other shareholders' equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as a special reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions. As of December 31, 2021 and 2020, the special reserve were $127,219 and $31,831, respectively.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(iv) Earnings distribution

The appropriations of earning for 2020 had been approved in Board of Directors and shareholders' meetings held on March 29, 2021 and July 5, 2021. The appropriations of earning for 2019 had been approved in Board of Directors and shareholders' meetings held on March 27, 2020 and May 27, 2020. The relevant dividend distributions to shareholders were as follows:

2020 Amount per share (Dollars) Total amount $ 0.90 205,597 0.90 205,598 $ 411,195	2019	2019
Amount per share (Dollars)	Amount per share (Dollars) 0.80 0.80	Total amount
$ 0.90 0.90		169,216 169,216
		338,432

On March 24, 2022, the Company's Board of Directors resolved to appropriate the 2021 earnings. The earnings were appropriated as follows:

				2021
			Amount per			Total
			share(Dollars)		amount
Dividends distributed to ordinary shareholders:
Cash			$	2.00		498,003
Other equity interests, net of tax
				Unrealized gains or
		Exchange		losses on financial
		differences on		assets at fair value
		translation of		through other
	foreign financial			comprehensive
		statements		income		Total
Balance as of January 1, 2021	$	(242,652)		(16,477)		(259,129)
Exchange differences on foreign operations		(101,568)		-		(101,568)
Exchange differences on associates accounted for
using equity method			110	-			110
Unrealized gains or losses from financial assets
measured at fair value through other
comprehensive income		-		(121,249)		(121,249)
Disposal of investments in equity instruments
designated at fair value through other
comprehensive income		-		(3,669)		(3,669)
Balance as of December 31, 2021	$	(344,110)		(141,395)		(485,505)

(v) Other equity interests, net of tax

(Continued)

SESODA CORPORATION Notes to the Financial Statements

Balance as of January 1, 2020 Exchange differences on foreign operations Exchange differences on associates accounted for using equity method Unrealized gains or losses from financial assets measured at fair value through other comprehensive income Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance as of December 31, 2020	Exchange differences on translation of foreign financial statements $ (68,465) (174,105) (82) - - $ (242,652)	Unrealized gains or losses on financial assets at fair value through other comprehensive income 36,634 - - (54,147) 1,036 (16,477)	Total (31,831) (174,105) (82) (54,147) 1,036 (259,129)

(m) Earnings per share

For the years ended December 31, 2021 and 2020, the Company's earnings per share were calculated as follows:

(i) Basic earnings per share

Profit belonging to common shareholders Weighted average number of outstanding shares of common stock (in thousand shares) Basic earnings per share (in NTD) (ii) Diluted earnings per share Profit belonging to common shareholders Weighted average number of outstanding shares of common stock (in thousand shares) Effect on potentially dilutive common stock-employee remuneration (in thousand shares) Weighted average number of common stock (diluted) (in thousand shares) Diluted earnings per share (in NTD)	2021 $ 670,871 249,002 $ 2.69 2021 $ 670,871 249,002 1,250 250,252 $ 2.68	2020
		174,129
		249,002
		0.70
		2020
		174,129
		249,002 553
		249,555
		0.70

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(n) Revenue from contracts with customers

Primary geographical markets: Taiwan Japan Pakistan Australia Other countries Total	2021 $ 1,305,210 371,898 515,896 162,111 677,724 $ 3,032,839	2020
		1,033,559 302,964 182,665 84,309 1,063,525
		2,667,022

The Company was engaged in the sales of chemical products.

(o) Remuneration to employees and directors

In accordance with the articles of incorporation, the Company should contribute 1% of special bonus, 3.5% of employee remuneration, and less than 2% of directors' remuneration when there is profit for the year. However, if the Company has accumulated deficit, the profit should be reserved to offset the deficit.

For the years ended December 31, 2021 and 2020, the Company estimated its employee remuneration amounting to $30,643 and $7,017, special bonus amounting to $8,755 and $2,005, and directors' remuneration amounting to $17,511 and $4,010, respectively. The estimated amounts mentioned above were calculated based on the net profit before tax, excluding the employee remuneration, special bonus and directors' remuneration of each period, multiplied by the percentage of employee remuneration, special bonus and directors' remuneration as specified in the Company's articles. These remunerations and bonuses were expensed under operating expenses for each period. Related information would be available at the Market Observation Post System website. The amounts stated in the parent company only financial statements are identical to those of the actual distributions for 2021 and 2020.

(p) Non operating income and expenses

(i) Interest income

Interest income from bank deposits (ii) Other income Rental income Dividend income Total	2021 $ 86 2021 $ 12 9,701 $ 9,713	2020
		172
		2020
		11 6,236
		6,247

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(iii) Other gains and losses

Foreign exchange losses Gains on disposals of investments Gains on disposals of property, plant and equipment Revenue from endorsement guarantee Others Total Finance costs Interest expenses – bank loan Interest expenses – lease liabilities Total	2021 $ (9,251) - 1,255 11,576 14,816 $ 18,396 2021 $ (6,542) (83) $ (6,625)	2020 (11,060) 4,978 - 14,594 5,167 13,679 2020 (3,942) (68) (4,010)

(iv) Finance costs
(q) Financial instruments
(i) Credit risk

1) Credit risk exposure

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

2) Concentration of credit risk

When financial commodity trading is relatively concentrated within a few trading partners, a significant concentration of credit risk is less likely to occur. However, if the trading partners who are mostly engaged in similar commercial activities and have similar economic characteristics are affected by economic or other conditions, the occurrence of a significant concentration of credit risk is certain. The Company has a large and unrelated customer base, so the concentration of credit risk is limited.

3) Receivables securities

For credit risk exposure of notes and accounts receivable, please refer to note 6(c).

All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected credit losses. Regarding how the financial instruments are considered to have low credit risk, please refer to note 4(f).

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(ii) Liquidity risk

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

December 31, 2021 Non-derivative financial liabilities Short-term loans Accounts payable Other payables Other payables to related parties Lease liabilities December 31, 2020 Non-derivative financial liabilities Short-term loans Accounts payable Other payables Other payables to related parties Lease liabilities Guarantee deposits received	Carrying amount $ 1,020,000 392,771 245,786 3,757 11,884 $ 1,674,198 $ 620,000 269,219 105,304 3,702 2,305 242 $ 1,000,772	Contractual cash flows 1,021,671 392,771 245,786 3,757 12,002 1,675,987 620,597 269,219 105,304 3,702 2,319 242 1,001,383	Within 1 year 1,021,671 392,771 245,786 3,757 5,920 1,669,905 620,597 269,219 105,304 3,702 2,319 242 1,001,383	1-2 year - - - - 4,840 4,840 - - - - - - -	2-5 year - - - - 1,242 1,242 430,100 188,405 145,867 4,719 5,372 - -	Over 5 years
						- - - - -
						-
						- - - - - -
						-

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

(iii) Currency risk

1) Exposure to foreign currency risk

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

Financial assets Monetary items USD Non-monetary items CNY Financial liabilities Monetary items USD	December 31, 2021	December 31, 2021	NTD 516,869 130,200 376,420	December 31, 2020	December 31, 2020
	Foreign currency (thousand dollars) $ 18,673 30,000 13,599	Exchange rate 27.68 4.34 27.68		Foreign currency (thousand dollars) 14,060 15,000 6,551	Exchange rate NTD 28.48 400,429 4.38 65,700 28.48 186,752

(Continued)

SESODA CORPORATION Notes to the Financial Statements

2) Sensitivity analysis

The Company's exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable and accounts payable that are denominated in foreign currency. A weakening (strengthening) 1 % of NTD against the USD for the years ended December 31, 2021 and 2020 would have increased (decreased) the net profit before tax by $1,404 and $2,137, respectively. The analysis assumes that all other variables remain constant.

The amount, expressed in functional currency, of foreign exchange loss (including realized and unrealized portion) of the Company's monetary items, and the exchange rate used to translate the original amount to the Company's functional currency, NTD (also the expressed currency), were $9,251 and $11,060, respectively.

(iv) Interest rate risk

Please refer to the attached note for the liquidity risk and the Company's interest rate exposure to its financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non-derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 1% when reporting to management internally, which also represents the Company management's assessment of the reasonably possible interest rate change.

If the interest rate increases (decreases) by 1%, the Company's net profit before tax would have decreased (increased) by $10,200 and $6,200 for the years ended December 31, 2021 and 2020 , respectively, all other variable factors that remain constant. This is mainly due to the Company's borrowing in floating rates.

(v) Other market price risk

For the years ended December 31, 2021 and 2020, the sensitivity analyses for the changes in the securities price at the reporting date were performed using the same basis for the profit and loss as illustrated below:

loss as illustrated below:
Prices of securities at the reporting date	2021	Income before tax - -	2020
	Other comprehensive income before tax $ 1,156 $ (1,156)		Other comprehensive income before tax 1,371 (1,371)	Income before tax
Increasing 1% Decreasing 1%				-
				-

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(vi) Fair value of financial instruments

1) Categories and fair value of financial instruments

Except for the followings, carrying amount of the Company's financial assets and liabilities are valuated approximately to their fair value, and are not based on observable market data and the value measurements which are not reliable. No additional fair value disclosure is required in accordance with the regulations.

	December 31, 2021	December 31, 2021	December 31, 2021
Book Value $ 115,630		Fair Value
	Level 1 Level 2 Level 3 - - 115,630 December 31, 2020			Total
				115,630

Book Value $ 5,571 131,497 $ 137,068		Fair Value
	Level 1 - - -	Level 2 - - -	Level 3 5,571 131,497 137,068	Total
				5,571 131,497
				137,068

2) Valuation techniques for financial instruments measured at fair value

Non-derivative financial instruments

The fair value of financial assets and liabilities traded in an active market is based on the quoted market prices. The quotation, which is published by the main exchange center or that which was deemed to be a public bond by the Treasury Bureau of Central Bank, is included in the fair value of the listed securities instruments and the debt instruments in active markets with open bid.

A financial instrument is regarded as the quoted price in an active market if the quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency; and if those prices represent the actual and regularly occurring market transactions on an arm’s length basis.

Except for the above-mentioned financial instruments traded in an active market, the fair value is based on the valuation techniques or the quotation from the counterparty. The fair value refers to the current fair value of the other financial instruments with similar conditions and characteristics, using a discounted cash flow analysis or other valuation techniques, such as calculations of using models (for example, applicable yield curve from Taipei Exchange, or average quoted price on interest rate of commercial paper from Reuters), based on the information acquired from the market at the balance sheet date.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

When the financial instrument of the Company is not traded in an active market, its fair value is determined as follows:

‧ Unquoted equity instruments: The fair value is determined based on the ratio of the quoted market price of the comparative listed company and its book value per share. Also, the fair value is discounted for its lack of liquidity in the market.
3) Reconciliation of Level 3 fair values

Balance as of January 1, 2021 Total gains and losses recognized: In other comprehensive income Purchased Disposals Balance as of December 31, 2021 Balance as of January 1, 2020 Total gains and losses recognized: In other comprehensive income Reclassification Balance as of December 31, 2020	Fair value through other comprehensive income Unquoted equity instrument $ 137,068 (84,362) 63,892 (968) $ 115,630 $ 87,591 49,126 351 $ 137,068

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

The Company's financial instruments that use Level 3 inputs to measure fair value were “financial assets measured at fair value through other comprehensive income – equity investments”.

Most of the Company's financial instruments that use level 3 inputs to measure fair value have multiple significant unobservable inputs. There is no correlation existence among the significant unobservable inputs of equity investments that have no active markets because they were independent of each other.

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income equity investments without an active market	Valuation technique Comparable listed companies approach	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ‧EBITDA Ratio (as of December 31, 2021 and 2020 was 17.6 and 13.2) ‧Market liquidity discount rate (as of December 31, 2021 and 2020 was both 40% ) ‧The higher the EBITDA ratio, the higher the fair value ‧The higher the market liquidity discount rate, the lower the fair value

(Continued)

SESODA CORPORATION Notes to the Financial Statements

5) Sensitivity analysis of reasonably possible alternative assumptions for fair value measurements in Level 3 of the fair value hierarchy

The fair value measurements of the Company's financial instruments are reasonable. However, changes in the use of valuation models or valuation variables may affect the estimations. For fair value measurements in Level 3, changing one or more of the assumptions would have the following effect on other comprehensive income:

December 31, 2021 Financial assets at fair value through other comprehensive income December 31, 2020 Financial assets at fair value through other comprehensive income	Inputs EBITDA ratio EBITDA ratio	Effects on changes in fair value on other comprehensive income Increase or decrease Favorable Unfavorable 10% $ 11,452 (11,452) 10% 13,038 (13,038)

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the inter relationships with another input.

(r) Financial risk management

(i) Overview

The Company has exposures to the following risks from its financial instruments:

1) credit risk
2) liquidity risk
3) market risk

The following likewise discusses the Company's objectives, policies and processes for measuring and managing the above-mentioned risks. For more disclosures about the quantitative effects of these risk exposures, please refer to the respective notes in the accompanying financial statements.

(ii) Structure of risk management

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.

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

(Continued)

SESODA CORPORATION Notes to the Financial Statements

The Board of Directors oversees how the supervision of the management is in compliance with the Company's risk management policies and procedures. It also reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Board of Directors is assisted in its oversight role by an internal auditor. An internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Board of Directors.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investments.

1) Notes and accounts receivable and other receivables

The credit risk exposure of the Company is mainly affected by the individual conditions of each customer.

The management also considers the statistical data of the Company's customer, including the default risk of the customer's industry and country, which may have an impact on credit risk.

There was no significant concentration of trading partners of the Company's notes and accounts receivable on December 31, 2021 and December 31, 2020, so the credit risk is limited.

The Company has established a credit policy. According to this policy, the Company must analyze the credit rating of each new customer individually before granting standard payment and shipping conditions and terms. If the Company can obtain an external rating and in some other cases, the bank's notes will be reviewed. The credit limit, which is regularly reviewed, is established based on individual customers and need to be approved by the Board of Directors.

The Company monitors the credit risk of its customers according to their credit characteristics, including whether they are distributors or end users; location, industry, age, expiration date, and previous financial difficulties. The main target of the Company's notes, accounts receivable and other receivables is the Company's dealer customers. Customers who are assessed as high-risk are included in the restricted customer list and monitored by the authorized supervisor. Future sales with these customers must be based on advance receipts.

The Company regularly evaluates the losses incurred in bills, accounts receivable and other receivables. The Company has set up an allowance and impairment loss account to reflect the estimation of the losses incurred in the bills, accounts receivable and other receivables. The main components of the allowance account include specific losses with individual customers and loss estimates measured by expected credit losses during the lifetime.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

2) Investments

The exposure to credit risk for the bank deposits and other financial instruments is measured and monitored by the Company's finance department. The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company expects the counterparties above to meet their obligations; hence, there is no significant credit risk arising from these counterparties.

3) Guarantees

The Company's policy is to provide financial guarantees only to subsidiaries. Please refer to note 7 for related information.

(iv) Liquidity risk

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

The Company calculates its cost of products and services by using the activity-based costing, which assists in monitoring its cash flow requirements and optimizing its cash return on investments. Generally, the Company ensures that it maintains sufficient cash to meet expected operational expenses within 60 days.

(v) Market risk

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

The financial assets of the Company with fair value risk of interest rate changes are bank deposits; financial liabilities are long-term and short-term borrowings. The impact of changes in interest rates on the fair value of the relevant financial assets and liabilities is not significant.

(s) Capital management

The Company's policy is to keep a strong capital base in order to maintain its investors, creditors and market confidence, and to sustain future development of its business. Equity consists of common stock, capital surplus, retained earnings and other equity interest of the Company. The Board of Directors monitors the return on its capital as well as the level of dividends to its shareholders.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

The Company's debt-to-equity ratio at the end of the reporting period was as follows:

Total liabilities Less: cash and cash equivalents Net debt Total equity Debt-to-equity ratio	December 31, 2021 $ 2,301,298 360,847 $ 1,940,451 $ 6,033,107 % 32.16	December 31, 2020
		1,456,278 346,334
		1,109,944
		5,796,077
		% 19.15

The increase in debt-to-capital ratio on December 31, 2021, was mainly due to the Company's needs for plant construction, replacement of machinery and equipment, and operating turnover requirements, so the amount of borrowings was increased to cover related expenses.

(t) Financing activities not affecting current cash flow

Reconciliations of liabilities arising from financing activities for the years ended December 31, 2021 and 2020 were as follows:

Short-term borrowing Lease liabilities Total liabilities from financing activities Short-term borrowing Lease liabilities Total liabilities from financing activities	January 1, 2021 $ 620,000 2,305 $ 622,305 January 1, 2020 $ 430,100 5,372 $ 435,472	Cash flows 400,000 (5,858) 394,142 Cash flows 189,900 (3,610) 186,290	Non-cash	changes Acquisition - 15,437 15,437 changes Acquisition - 543 543	December 31, 2021 1,020,000 11,884
			Foreign exchange movement - - - Non-cash
					1,031,884
					December 31, 2020 620,000 2,305
			Foreign exchange movement - - -
					622,305

(7) Related-party transactions:

(a) Names and relationship with related parties

The followings are entities that have transactions with the Company during the periods covered in the financial statements and the Company's subsidiaries.

Name of related party	Relationship with the Company
Sesoda Steamship Corporation (SSC)	Subsidiary
SS Marine Holding Corporation (SSMHC)	Subsidiary
EAST TENDER TRADING CO., LTD	Subsidiary
YUKARI GROUP CO., LTD.	Subsidiary
E-Teq Venture Co., Ltd.	Subsidiary
Sesoda Investment (BVI) Ltd. (SIL)	Subsidiary

(Continued)

SESODA CORPORATION Notes to the Financial Statements

Name of related party	Relationship with the Company
Southeast Shipping Corp. (SESC)	Subsidiary
Southeast Marine Globe Corporation (SMGC)	Subsidiary
Southeast Marine Transport Corporation (SMTC)	Subsidiary
SE Harmony Corporation (SEHC)	Subsidiary
SE Bulker Corporation (SEBC)	Subsidiary
SE Apex Corporation (SEAC)	Subsidiary
SE Marine Corporation (SEMC)	Subsidiary
SE Carrier Corporation (SECC)	Subsidiary
Zai Feng Auto Transportation Co., Ltd.	Subsidiary
SE Delta Corporation (SEDC)	Subsidiary
SE Evermore Corporation (SEEC)	Subsidiary
SE Fortune Corporation (SEFC)	Subsidiary
SE Glory Corporation (SEGC)	Subsidiary
SE Peace Corporation (SEPC)	Subsidiary
SE Royal Corporation (SERC)	Subsidiary
SE Victory Corporation (SEVC)	Subsidiary
SE Jasmine Corporation (SEJC)	Subsidiary

(b) Significant transactions with related parties

(i) Shipping expenses

2021 Subsidiaries $ 14,393 (ii) Guarantees The Company had provided a guarantee for loans as follow: December 31, 2021 Subsidiaries $ 5,307,663	2020
	15,290
	December 31, 2020
	7,172,972

The Company charges 0.25% 〜 0.5% guarantee fee to its subsidiaries, wherein the guarantee revenues amounted to $11,576 and $14,594 for the years ended December 31, 2021 and 2020, respectively.

(Continued)

SESODA CORPORATION

Notes to the Financial Statements

(iii) Payables to related parties

Account	Relationship		December 31, 2021 $ 3,757 December 31, 2021 $ 11,451 2021 71,002 649 71,651
Other payables to related parties Receivables from related parties Account	Subsidiaries Relationship

			2021 71,002 649 71,651
		$ $

(8) Pledged assets:

Pledged assets Property, plant and equipment －Land －Buildings	Object	December 31, 2021 $ 678,305 54,985 $ 733,290	December 31, 2020
	Guarantees for long-term and short- term borrowing Guarantees for long-term and short- term loans borrowing		678,737 12,520
			691,257

(9) Significant commitments and contingencies:

The Company entered into contracts with domestic and foreign vendors to purchase property, plant and equipment as follows:

		December 31,	December 31,
		2021	2020
Total contract amounts	$	104,759	152,309
Cumulative payments	$	85,507	98,819

(10) Losses Due to Major Disasters: None.

(11) Subsequent Events: None.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(12) Other:

(a) A summary of employee benefits, depreciation, and amortization, by function, is as follows:

By funtion By item		2021	2021	2020	2020	2020
	Operating cost	Operating expense	Total	Operating cost	Operating expense	Total
Employee benefits
Salary	82,660	82,913	165,573	75,336	48,652	123,988
Labor and health insurance	7,784	4,562	12,346	7,063	4,027	11,090
Pension	2,228	2,163	4,391	2,402	4,015	6,417
Remuneration of directors	-	40,834	40,834	-	23,480	23,480
Others	5,331	2,338	7,669	5,006	1,894	6,900
Depreciation	70,520	19,668	90,188	64,727	17,534	82,261
Depletion	-	-	-	-	-	-
Amortization	-	-	-	-	-	-

As of December 31, 2021 and 2020, the additional information for employee numbers and employee benefits was as follows:

Employee numbers Directors numbers without serving concurrently as employee Average employee benefits Average employee salaries Average adjustment rate of employee salaries Remuneration received by supervisors

The Company's salary and remuneration policy (including directors, managers and employees) is as follows:

(i) Remuneration to directors and managers is determined by the Remuneration Committee based on their participation and contribution to the Company's operations, and also with reference to the level of the industry.
(ii) For employee remuneration, the market competitive salary levels, reference to the same industry, the Company’ s overall operating performance, individual performance, and comprehensive contribution considerations are used as a bases for payment principal; and the basic salary of employees depends on their position, responsibility, and competitiveness of their position in the same industry; also, their year-end bonus is distributed based on each year's operating performance, employee contribution, and achievement of their department goal. Furthermore, the employee benefits must first comply with the applicable laws, followed by the regulation requirements of the employees.

(Continued)

SESODA CORPORATION

Notes to the Financial Statements

(b) The Company's Board of Directors decided to donate $10,000 to establish a foundation called "Sesoda Social Welfare Foundation" in December 2021. The foundation is expected to be established in 2022.

(13) Other disclosures:

(a) Information on significant transactions:None

The following were the information on significant transactions required by the Regulations for the Company for the year ended December 31, 2021:

(i) Loans to other parties: None.
(ii) Guarantees and endorsements for other parties: Please refer to schedule A.
(iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures): Please refer to schedule B.
(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock: None.
(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: None.
(ix) Trading in derivative instruments: None.
(b) Information on investees: Please refer to schedule C.
(c) Information on investment in mainland China:
(i) The names of investees in Mainland China, the main businesses and products, and other information: None.
(ii) Limitation on investment in Mainland China: None.
(iii) Significant transactions: None.

(Continued)

SESODA CORPORATION Notes to the Financial Statements

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder's Name	Shares	Percentage
Zhengbang Investment Co., Ltd.	16,086,588	% 6.46
Chu Ying-Piao	12,650,048	% 5.08

(14) Segment information:

Please refers to 2021 consolidated financial statements.

Schedule A Guarantees and endorsements for other parties:

Nunber (Note 1)	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise (Note 3)	Highest balance of guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to subsidiary	Subsidiary endorsements/ guarantees to parent company	Endorsements/ guarantees to the companies in mainland China
		Name	Relationship with the Company (Note 2)
0	The Company	SSC	2	5,796,077	3,189,760	3,189,760	720,544	-	55.03%	17,388,231	Y	N	N
0	The Company	SMTC	2	5,796,077	604,912	128,160	-	-	2.21%	17,388,231	Y	N	N
0	The Company	SMGC	2	5,796,077	628,784	105,376	-	-	1.82%	17,388,231	Y	N	N
0	The Company	SEHC	2	5,796,077	521,056	-	-	-	0.00%	17,388,231	Y	N	N
0	The Company	SEBC	2	5,796,077	546,195	215,474	215,474	-	3.72%	17,388,231	Y	N	N
0	The Company	SECC	2	5,796,077	464,943	345,889	345,889	-	5.97%	17,388,231	Y	N	N
0	The Company	SEMC	2	5,796,077	465,850	302,770	302,770	-	5.22%	17,388,231	Y	N	N
0	The Company	SEDC	2	5,796,077	505,175	356,712	356,712	-	6.15%	17,388,231	Y	N	N
0	The Company	SEVC	2	5,796,077	497,310	383,631	383,631	-	6.62%	17,388,231	Y	N	N
0	The Company	SEEC	2	5,796,077	498,218	370,226	370,226	-	6.39%	17,388,231	Y	N	N
0	The Company	SEFC	2	5,796,077	499,125	455,680	455,680	-	7.86%	17,388,231	Y	N	N
0	The Company	SERC	2	5,796,077	514,250	420,402	420,402	-	7.25%	17,388,231	Y	N	N
0	The Company	SEGC	2	5,796,077	520,300	461,376	461,376	-	7.96%	17,388,231	Y	N	N
0	The Company	SEPC	2	5,796,077	520,300	437,516	437,516	-	7.55%	17,388,231	Y	N	N
					9437821	7,172,972

Note 1: Company numbering as follows:

The Company � 0

Note 2: Relationship with the Company:

For entities the guarantor has business transaction with.
For entities in which the guarantor, directly or indirectly, owned more than 50% of their shares.

Note 3: The Company's operating procedures of guarantee were as follows:

The guarantees and endorsements limit provided by The Company to other parties should not exceed 300% of its equity based on the most recent audited or reviewed financial statements by a certified accountant. The individual guarantee amount should not exceed 100% of its equity based on the most recent audited or reviewed financial statements by a certified accountant.

~55~

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

Name of holder	Category and name of security	Relationship with the company	Account title		Endingbalance	Endingbalance
				Shares/ Units	Carrying value	Percentage of ownership (%)	Fair value	Remark
SSC The Company " " " " " SIL " "	Open-end Funds : Schroder Maturity Asian Emerging Bond Fund Stock : Pushi Venture Capital Co., Ltd. Puxun Venture Capital Co., Ltd. COM2B Qingdao Soda Ash Industrial Potassic Fertilizer Technology Co., Ltd. StemCyte International, Ltd. Others Subtotal Hebei Oxen New Materials Co., Ltd. StemCyte International, Ltd. Others Subtotal Total	� � � � � � � � � �	�� �� comprehensive income " " " " �� �� comprehensive income " ��	10,000 426,166 126,566 1,000,000 - 82,382 78,000 15,675,000 18,070 2	2,970	- 1.00% 0.63% 2.22% 15.00% 0.09% 0.44% 23.64% 0.02% -	2,970
					3,498 2,073 - 130,384 1,113 -		3,498 2,073 - 130,384 1,113 -
					137,068		137,068
					44,059 247 -		44,059 247 -
					44,306		44,306
					181,374		181,374

~56~

Schedule C Information on investments:

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	The ending balance at	The ending balance at	this period	Net income (losses) of investee	Investment income (losses)	Remark
				The ending balance at this year	The ending balance at the beginning	Shares	Percentage of ownership	Carrying value
The Company " " " " " " SSC " " " " " " " " " " " " " " " " SSMHC East Tender Trading Co., Ltd. "	SSC East Tender Trading Co., Ltd. SIL East Tender Optoelectronics Co., Ltd. Yukari Group Co., Ltd. E-Teq Venture Co., Ltd. Other SESC SIL SMGC SEHC SMTC SEBC SEAC SEMC SECC SEEC SEFC SERC SEDC SEVC SEGC SEPC SSMHC SEJC Zai Feng Auto Transportation Co., Ltd. Hing Dian Industrial Co., Ltd.	Panama Taipei BVI Yilan Taipei Taipei Panama BVI Panama Panama Panama Panama Panama Panama Panama Panama Panama Panama Panama Panama Panama Panama Cayman Islands Panama Yilan Chiayi	Ship operation and chartering General trade and investments Holding company Manufacturing of thin film filter components required for optical communication Wholesale of foods and groceries, sales of drinks, operation of restaurant Electronics components manufacturing, data storage media manufacturing and duplicating, general investments Ship operation and chartering Holding company Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Ship operation and chartering Holding company Holding company Automobile cargo transportation business Basic chemical industrial�other chemical materials manufacturing and other chemical products manufacturing	1,696,437 38,023 21,145 97,142 89,787 15,000 25,000	1,696,437 38,023 21,145 99,227 89,787 10,000 25,000	10 3,200,000 880 9,316,297 2,100,000 600,000 2,500,000 10 880 11 10 11 10 10 10 10 10 10 10 10 10 10 10 - - 12,000 587,000	100.00% 100.00% 50.00% 34.89% 100.00% 100.00% 25.00% 100.00% 50.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 48.92%	3,372,541 39,066 (11,594) 498,351 18,280 3,735 -	86,597 2,399 (59) 55,784 253 (2,298) (10,894) 8,126 (59) (16,576) (35,151) (9,400) 3,233 (2,587) 5,409 14,930 18,914 28,395 23,051 7,258 (36) 27,126 37,690 (88) (37) 2,985 -	86,597 2,399 (30) 16,449 253 (2,298) (1,259)	Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Associate Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Associate
				1,982,534	1,979,619			3,920,379		102,111
				20 USD 2,792 USD 14,981 USD 11,116 USD 20,690 USD 8,920 USD 7,501 USD 7,504 USD 7,608 USD 8,451 USD 7,761 USD 8,615 USD 8,828 USD 7,994 USD 8,311 USD 8,119 USD 34 USD	620 USD 2,792 USD 10,581 USD 9,546 USD 15,490 USD 8,420 USD 7,951 USD 7,104 USD 7,608 USD 8,451 USD 7,761 USD 8,615 USD 8,828 USD 7,994 USD 8,311 USD 8,119 USD 27 USD			184,260 51,893 252,953 354,029 368,568 365,795 209,618 229,877 250,801 259,098 268,059 286,812 254,215 234,065 286,282 284,885 191		8,126 (29) (16,576) (35,151) (9,400) 3,233 (2,587) 5,409 14,930 18,914 28,395 23,051 7,258 (36) 27,126 37,690 (88)
				139,245 USD	128,218 USD			4,141,401		110,265
				4 USD	3 USD			(19)		(37)
				20,381 5,870	20,381 5,870			19,881 5,870		2,985 -
				26,251	26,251			25,751		2,985

~57~

SESODA CORPORATION

Statement of cash and cash equivalents

December 31, 2021

(In thousands of New Taiwan Dollars)

Item	Description Amount Petty Cash, etc. $ 380 59,505 USD 8,939 thousand，@27.68 247,420 EUR 1,673 thousand，@31.32 52,391 CNY 35 thousand，@4.34 151 359,467 1,000 $ 360,847
Petty Cash Bank Deposits: Demand deposits and check deposits Foreign currency deposits Time deposit (Note)

Note: The time deposit period is one month, and the annual interest rate is 0.35%.

Statement of notes receivable

Client name SD Company MT Company D Company TM Company HW Company Others (each amount is less than 5%)	Description Operating 〞〞〞〞〞	Account Note $ 27,056 20,538 15,392 13,028 8,874 53,987 $ 138,875

SESODA CORPORATION

Statement of accounts receivables

December 31, 2021

(In thousands of New Taiwan Dollars)

Client name LD Company Others (each amount is less than 5%) Less: Loss allowance	Description Operating 〞	Account Note $ 48,593 495,265 (11,303) $ 532,555

Statement of inventories

Item Description Merchandise Finished goods Raw materials Fuel Supplies Subtotal Less: allowance for inventory valuation losse Total	Description	Amount Cost Net realizable value Note $ 94,369 118,918 183,303 325,949 349,799 349,524 4,831 4,831 17,518 17,188 649,820 816,410 (605) $ 649,215
		Cost $ 94,369 183,303 349,799 4,831 17,518 649,820 (605) $ 649,215

SESODA CORPORATION

Statement of other current financial assets

December 31, 2021

(In thousands of New Taiwan Dollars)

Item Tax refund receivable Purchase discount receivable Bonus Others (each amount is less than 5%)	Description	Amount Note $ 19,853 17,358 1,794 1,762 $ 40,767

Statement of other current assets

Item Prepayment for purchases Prepaid expenses Others (each amount is less than 5%)	Description	Amount Note $ 37,370 4,246 25 $ 41,641

SESODA CORPORATION

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

For the year ended December 31, 2021

(In thousands of New Taiwan Dollars)

Name of financial instrument	Beginning balance	Beginning balance	Addi	tion	Decr	Investment gains (loss) at fair value through other comprehensive income	Ending	balance	Collateral Note
	Shares or units	Fair value	Shares or units - - - -	Amount	Shares or units 426,166 126,566 - -		Shares or units	Fair value
Stocks: Pushi Venture Capital Co., Ltd. Puxun Venture Capital Co., Ltd. Qingdao Soda Ash Industrial Potassic Fertilizer Tecnhnolgy Co., Ltd. StemCyte International Ltd. Total	426,166 126,566 - 82,382	$ 3,498 2,073 130,384 1,113 $ 137,068		- - 63,892 - 63,892		(3,345) (1,258) (79,759) - (84,362)	- - - 82,382	- - 114,517 1,113 115,630	None " " "

SESODA CORPORATION

Statement of changes in investments accounted for using the equity method and credit balance of investment accounted for using equity method

For the year ended December 31, 2021

(In thousands of New Taiwan Dollars)

Name of investee Investment accounted for using equity method: SSC East Tender Trading Co., Ltd. EOC Yukari Group Co., Ltd. E-Teg Venture Co., Ltd. Credit balance of investment accounted for equity method: SIL	Beginning balance Shares Amount 10 $ 3,372,541 3,200,000 39,066 9,316,297 498,351 2,100,000 18,280 600,000 3,735 3,931,973 880 (11,594) $ 3,920,379	Ad	dition Amount 476,733 1,614 195 - 100,480 579,022 - 579,022	Dec	rease Amount 120,472 2,160 34,211 5,915 2,875 165,633 22,124 187,757		Ending balance	Amount 3,728,802 38,520 464,335 12,365 101,340 4,345,362 (33,718) 4,311,644	Market value	or net assets value Total amount 3,728,802 38,520 463,952 12,365 101,340 4,344,979 (33,718) 4,311,261	Collateral Note None " " " " " "
	Shares	Shares - - - - 10,000,000 -		Shares - - - - 220,000 -		Shares 10 3,200,000 9,316,297 2,100,000 10,380,000 880	Percentage of ownership % 100.00 % 100.00 % 34.89 % 100.00 % 100.00 % 50.00		Unit price (NTD) 372,880,166 12 50 6 9 (38,316)
	10 3,200,000 9,316,297 2,100,000 600,000 880

SESODA CORPORATION

Statement of short-term borrowings

December 31, 2021

(In thousands of New Taiwan Dollars)

Type	Description Unsecured bank loans Secured bank loans	Ending balance $ 680,000 340,000 $ 1,020,000	Contract period 2021.2.8~2022.7.2 2021.7.5~2022.3.8	Range of interest rate 0.42%~1.10% 0.88%~0.96%	Credit lines 1,050,000 450,000 1,500,000	Collateral Note None Property, plant and equipment
Short-term loans Short-term loans

Statement of accounts payable

Vendor name CA Company AN Company Others (Each amount is less than 5% of balance)	Description	Amount Note $ 247,044 58,942 86,785 $ 392,771

SESODA CORPORATION

Statement of other payables

December 31, 2021

(In thousands of New Taiwan Dollars)

Item Freight payable Employee compensation and directors' remuneration payable Equipment payment payable Accrued payroll and bonus Others (each amount is less than 5%)	Description	Amount Note $ 87,175 56,909 39,228 15,068 47,406 $ 245,786

Statement of other current liabilities

Item Temporary receipts Receipts under custody	Description	Amount Note $ 5,411 509 $ 5,920

SESODA CORPORATION

Statement of operating revenue

For the year ended December 31, 2021

(In thousands of New Taiwan Dollars)

Item Potassium sulfate Soda Ash Liquid calcium chloride Others Subtotal Less: sales return and discount	Quantity (ton) 131,863 55,616 187,246 -	Amount Note $ 1,808,518 502,933 345,318 378,071 3,034,840 2,001 $ 3,032,839

SESODA CORPORATION

Statement of operating costs

For the year ended December 31, 2021

(In thousands of New Taiwan Dollars)

Item		Amount
Cost of merchandise
Beginning balance	$	98,737
Add: Purchase		566,613
Gain on inventory count		18
Transfer from raw materials		20,957
Other		6,268
Less: Ending balance		94,369
Transfer to raw materials		64
Transfer to finished goods		4,403
Other		7,493
Subtotal		586,264
Cost of manufacturing:
Beginning balance of raw materials		120,354
Add: Purchase		1,367,230
Transfer from merchandise		64
Less: Ending balance of raw materials		349,799
Transfer to overhead		4,368
Transfer to finished goods		22,164
Transfer to merchandise		20,957
Consumed raw materials		1,090,360
Direct labor		39,897
Manufacturing overhead		366,897
Unallocated production overhead		3,077
Manufacturing cost		1,500,231
Other		46,620
Cost of goods manufactured		1,546,851
Add: Beginning balance of finished goods		76,595
Purchases		20,603
Transfer from merchandise		4,403
Transfer from raw materials		22,164
Less: Ending balance of finished goods		183,303
Other		5,499
Cost of finished goods sold		1,481,814
Add: Gain on valuation of inventories		24
Add: Loss on inventory count		98
Operating cost	$	2,068,152

SESODA CORPORATION

Statement of selling expenses

For the year ended December 31, 2021

(In thousands of New Taiwan Dollars)

Item Export cost Shipping cost Others (each amount is less than 5%)	Description	Amount Note $ 259,906 138,952 19,448 $ 418,306

Statement of administrative expenses

Item Payroll Depreciation expense Director's Remuneration Others (each amount is less than 5%)	Description	Amount Note $ 71,338 18,740 17,511 63,623 $ 171,212

For statement of changes in property, plant and equipment, please refer to note 6(f) to the parent-company-only financial statements.

For statement of changes in right-of-use assets, please refer to note 6(g) to the parent-company-only financial statements.

For statement of other income, please refer to note 6(p) to the parent-company-only financial statements.

For statement of other gains and losses, please refer to note 6(p) to the parent-company-only financial statements.

For statement of finance costs, please refer to note 6(p) to the parent-company-only financial statements.

AI assistant

SESODA — Audit Report / Information 2021

51891_rns_2021-11-11_1e4090bf-afa4-4fe9-8c5a-17c695a07c63.pdf

SESODA CORPORATION

Table of contents

KPMG

Independent Auditors' Report

Opinion

Basis for Opinion

Key Audit Matters

2. Impairment of investments accounted for using equity method

Description of key audit matter:

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

Auditors' Responsibilities for the Audit of the Financial Statements

KPMG

Notes to Readers

(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese) SESODA CORPORATION

Balance Sheets

December 31, 2021 and 2020

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

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

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

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

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

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

SESODA CORPORATION

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

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

(3) New standards, amendments and interpretations adopted:

SESODA CORPORATION Notes to the Financial Statements

(4) Summary of significant accounting policies:

(a) Statement of compliance

SESODA CORPORATION Notes to the Financial Statements

(c) Foreign currencies

(i) Foreign currency transactions

(ii) Foreign operations

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

SESODA CORPORATION Notes to the Financial Statements

(f) Financial assets

(i) Financial assets

SESODA CORPORATION Notes to the Financial Statements

SESODA CORPORATION Notes to the Financial Statements

SESODA CORPORATION Notes to the Financial Statements

5) Derecognition of financial assets

(ii) Financial liabilities

2) Derecognition of financial liabilities

3) Offsetting of financial assets and liabilities

SESODA CORPORATION Notes to the Financial Statements

(g) Inventories

(h) Investment in associates

SESODA CORPORATION Notes to the Financial Statements

(i) Investment in subsidiaries

(i) Recognition and measurement

(ii) Subsequent cost

(iii) Depreciation

SESODA CORPORATION Notes to the Financial Statements

(k) Leases

SESODA CORPORATION Notes to the Financial Statements

(ii) As a lessor

(l) Impairment of non-financial assets

SESODA CORPORATION Notes to the Financial Statements

(i) Defined contribution plans

SESODA CORPORATION Notes to the Financial Statements

(ii) Defined benefit plans

(iii) Short-term employee benefits

(o) Income taxes

SESODA CORPORATION Notes to the Financial Statements

SESODA CORPORATION Notes to the Financial Statements

(q) Operating segments

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

(a) Impairment of investments accounted for using equity method

SESODA CORPORATION Notes to the Financial Statements

(6) Explanation of significant accounts:

SESODA Audit Report / Information 2021