SOI — Annual Report 2020

Nov 11, 2020

Silicon Optronics, Inc.

Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors' Report

Our main audit procedures performed in respect of the above-mentioned key audit matter are as follows:

• 1. We understood the internal controls on order approval and shipment procedures and tested the operating effectiveness such controls.
• 1. We understood the background of the key customers and assessed whether the transaction amounts and credit lines were comparable to the scope of such customers and whether they had been appropriately approved.
• 1. To confirm the validity of sales revenue, we selected samples of the sales transactions and inspected the customer orders as well, delivery orders and invoices that have been confirmed by the counterparties, and also whether the sales counterparties were the same as the counterparties collecting payment.

Inventory Valuation

As of December 31, 2020, the Company's inventory balance was \$849,523 thousand, accounting for 29% of the combined total assets. For the related accounting policies, please refer to Note 4 (e) to the parent company only financial statements. As the amount of the inventory is significant and the assessment of net realizable value involves significant management judgements, particularly with regard to estimates of inventory valuation and obsolescence loss, thus, inventory valuation was considered as a key audit matter. We have evaluated the appropriateness of the method used by the Company to calculate the inventory valuation and obsolescence loss at the end of the year and performed the following audit procedures:

• 1. Based on our understanding of the industry and nature of products of the Company, we verified the appropriateness of the method of inventory aging management, and also took samples of and tested whether the aging classification was appropriate.
• 1. We performed recalculations to determine if the assessment of the net realizable value was reasonable, and verified whether the inventories were measured at the lower of cost and net realizable value based on the most recent raw material quotes or sales data, and also assessed the reasonableness of the assessment of changes in the provision for inventory write-downs.
• 1. We obtained and verified the details of inventory valuation and obsolescence losses and aging data, and analyzed the reasons for the differences in the provision for loss in 2020 compared to 2019, to assess whether the provision for inventory valuation and obsolescence losses was appropriate.

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with 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 parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including the audit committee, are responsible for overseeing the Company's financial reporting process.

Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 parent company only financial statements.

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

• 1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• 1. 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.
• 1. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• 1. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• 1. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• 1. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2020 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-Yuan Chung and Cheng-Chih Lin.

Deloitte & Touche Taipei, Taiwan Republic of China

March 10, 2021

Notice to Readers

The accompanying parent company only financial statements are intended only to present the parent company only financial position, parent company only financial performance and parent company only cash flows in accordance with 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 applied in the Republic of China.

For the convenience of readers, the independent auditors' report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors' report and parent company only financial statements shall prevail.

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	2020		2019			2020		2019
ASSETS	Amount	%	Amount	%	LIABILITIES AND EQUITY	Amount	%	Amount	%
CURRENT ASSETS					CURRENT LIABILITIES
Cash and cash equivalents (Notes 4 and 6)	\$ 518,384	17	\$ 534,484	22	Contract liabilities - current (Note 19)	\$ 15,940	-	\$ 10,090	1
Financial assets at amortized cost - current (Notes					Accounts payable (Note 4)	116,620	4	121,909	5
4, 7 and 25)	758,754	25	138,610	6	Accounts payable to related parties (Notes 4 and 26)	154,167	5	134,387	6
Accounts receivable - net (Notes 4 and 8)	32,842	1	11,260	-	Other payables to related parties (Notes 4 and 26)	7,873	-	6,310	-
Inventories (Notes 4, 5 and 9)	849,523	29	856,520	35	Other current liabilities (Notes 4 and 16)	86,840	3	51,906	2
Prepayments and other current assets (Notes 4, 14					Current tax liabilities (Notes 4 and 21)	47,029	2	4,610	-
and 25)	20,230	1	60,566	3	Lease liabilities - current (Notes 4 and 12)	4,168	-	4,127	-
Total current assets	2,179,733	73	1,601,440	66	Total current liabilities	432,637	14	333,339	14
NON-CURRENT ASSETS					NON-CURRENT LIABILITIES
Financial assets at amortized cost - noncurrent					Long-term borrowings (Note 15)	350,000	12	-	-
(Notes 4, 7, 25 and 27)	4,048	-	2,532	-	Deferred income tax liabilities (Notes 4 and 21)	208	-	337	-
Investment accounted for using the equity method					Lease liabilities -non-current (Notes 4 and 12)	4,916	-	9,084	-
(Notes 4 and 10)	268,231	9	260,226	11
Property, plant and equipment (Notes 4, 11 and 27)	512,650	17	529,833	22	Total non-current liabilities	355,124	12	9,421	-
Right-of-use assets (Notes 4 and 12)	8,995	-	13,146	1
Intangible assets (Notes 4 and 13)	103	-	516	-	Total liabilities	787,761	26	342,760	14
Deferred tax assets (Notes 4 and 21)	17,454	1	12,952	-
Other non-current assets (Notes 4, 14 and 17)	2,289	-	2,235	-	EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY (Notes 4, 18 and 23)
Total non-current assets	813,770	27	821,440	34	Ordinary shares	781,059	26	780,809	32
					Capital surplus	1,131,714	38	1,131,702	47
					Retained earnings
					Legal reserve	65,911	2	50,310	2
					Special reserve	2,365	-	-	-
					Unappropriated earnings	325,938	11	216,659	9
					Other equity
					Exchange differences on translating the financial
					statements of foreign operations	(4,250)	-	(2,365)	-
					Treasury shares	(96,995)	(3)	(96,995)	(4)
					Total equity	2,205,742	74	2,080,120	86
TOTAL	\$ 2,993,503	100	\$ 2,422,880	100	TOTAL	\$ 2,993,503	100	\$ 2,422,880	100

THE COMPANY (Notes 4, 18 and 23)
Capital surplus	1,131,714	38	1,131,702	47
Legal reserve	65,911	2	50,310	2
Special reserve	2,365	-	-	-
Unappropriated earnings	325,938	11	216,659	9
Exchange differences on translating the financial
statements of foreign operations	(4,250)	-	(2,365)	-
Treasury shares	(96,995)	(3)	(96,995)	(4)
Total equity	2,205,742	74	2,080,120	86

The accompanying notes are an integral part of the parent company only financial statements.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	2020		2019
	Amount	%	Amount	%
OPERATING REVENUE (Notes 4 and 19)	\$ 3,328,695	100	\$ 2,294,110	100
OPERATING COSTS (Notes 9, 20 and 26)	2,656,485	80	1,836,579	80
GROSS PROFIT	672,210	20	457,531	20
OPERATING EXPENSES (Notes 20 and 26)
Selling and marketing expenses	18,080	1	16,693	1
General and administrative expenses	45,670	1	40,693	2
Research and development expenses	297,719	9	238,087	10
Total operating expenses	361,469	11	295,473	13
OPERATING INCOME	310,741	9	162,058	7
NON-OPERATING INCOME AND EXPENSES
Interest income (Note 20)	4,464	-	16,720	1
Other income (Note 20)	364	-	199	-
Other gains and losses (Note 20)	2,175	-	9,697	-
Financial costs (Note 20)	(2,708)	-	(154)	-
Share of income (loss) of subsidiaries (Notes 4 and 10)	9,890	1	(6,669)	-
Total non-operating income and expenses	14,185	1	19,793	1
PROFIT BEFORE INCOME TAX	324,926	10	181,851	8
INCOME TAX EXPENSE (Notes 4 and 21)	(43,488)	(2)	(25,841)	(1)
NET PROFIT FOR THE YEAR	281,438	8	156,010	7
OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit plans (Notes 4 and 17)	19	-	962	-
Item that may be reclassified subsequently to profit or loss:
Exchange differences on translating the financial statements of foreign operations (Notes 4 and 18)	(1,885)	-	(2,755)	-
Total other comprehensive income (loss)	(1,866)	-	(1,793)	-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	\$ 279,572	8	\$ 154,217	7
EARNINGS PER SHARE (Note 22)
Basic	\$ 3.65		\$ 2.01
Diluted	\$ 3.64		\$ 2.00

The accompanying notes are an integral part of the parent company only financial statements.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Other Equity Exchange Differences on Translating the

		Ordinary Share Capital					Financial
	Number of				Retained Earnings		Statements
	Shares (In Thousands)	Amount	Capital Surplus	Legal Reserve	Special Reserve	Unappropriated Earnings	of Foreign Operations	Treasury Shares	Total Equity
BALANCE, JANUARY 1, 2019	77,828	\$ 778,279	\$ 1,124,721	\$ 34,567	\$ 526	\$ 230,859	\$ 390	\$ -	\$ 2,169,342
Appropriation of 2018 earnings
Legal reserve	-		- -	15,743	-	(15,743)	-	-	-
Special reserve Cash dividends distributed by the Company	- -		- - - -	- -	(526) -	526 (155,955)	- -	- -	- (155,955)
Net profit for the year ended December 31, 2019	-		- -	-	-	156,010	-	-	156,010
Other comprehensive loss for the year ended December 31, 2019	-		- -	-	-	962	(2,755)	-	(1,793)
Total comprehensive income for the year ended December 31, 2019	-		- -	-	-	156,972	(2,755)	-	154,217
Issuance of ordinary shares under employee share options	253	2,530	6,981	-	-	-	-	-	9,511
Buy-back of ordinary shares	-		- -	-	-	-	-	(96,995)	(96,995)
BALANCE, DECEMBER 31, 2019	78,081	780,809	1,131,702	50,310	-	216,659	(2,365)	(96,995)	2,080,120
Appropriation of 2019 earnings
Legal reserve Special reserve	- -		- - - -	15,601 -	- 2,365	(15,601) (2,365)	- -	- -	- -
Cash dividends distributed by the Company	-		- -	-	-	(154,212)	-	-	(154,212)
Net profit for the year ended December 31, 2020	-		- -	-	-	281,438	-	-	281,438
Other comprehensive loss for the year ended December 31, 2020	-		- -	-	-	19	(1,885)	-	(1,866)
Total comprehensive income for the year ended December 31, 2020	-		- -	-	-	281,457	(1,885)	-	279,572
Issuance of ordinary shares under employee share options	25	250	12	-	-	-	-	-	262
BALANCE, DECEMBER 31, 2020	78,106	\$ 781,059	\$ 1,131,714	\$ 65,911	\$ 2,365	\$ 325,938	\$ (4,250)	\$ (96,995)	\$ 2,205,742

The accompanying notes are an integral part of the parent company only financial statements.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	2020	2019
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax	\$ 324,926	\$ 181,851
Adjustments for:
Depreciation expenses	85,926	52,792
Amortization expenses	2,750	5,356
Finance costs	2,708	154
Interest income	(4,464)	(16,720)
Share of loss of subsidiaries	(9,890)	6,669
Write-downs of inventories	22,512	12,422
Net (gain) loss on foreign currency exchange	2,881	(9,697)
Changes in operating assets and liabilities
Accounts receivable	(21,686)	47,790
Inventories	(15,515)	(174,521)
Prepayments and other current assets	40,336	(12,338)
Contract liabilities	5,832	4,202
Accounts payable	(6,902)	74,584
Accounts payable to related parties	18,213	10,071
Other payables to related parties	1,563	262
Accrued expenses and other current liabilities	37,236	1,887
Net defined benefit liabilities	(35)	(32)
Cash generated from operations	486,391	184,732
Income tax paid	(5,700)	(53,915)
Net cash generated from operating activities	480,691	130,817
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at amortized cost	(671,516)	(140,132)
Proceeds from financial assets at amortized cost	50,012	830,225
Payments for property, plant and equipment	(66,739)	(530,837)
Decrease in refundable deposits	-	19
Payments for intangible assets	(2,337)	(2,563)
Interest received	4,464	16,720
Net cash (used in) generated from investing activities	(686,116)	173,432
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings	350,000	-
Repayment of the principal portion of lease liabilities	(4,127)	(4,086)
Dividends paid	(154,212)	(155,955)
Exercise of employee share options	262	9,511
Payments for buy-back of ordinary shares	-	(96,995)
Interest paid	(2,708)	(154)
Net cash generated from (used in) financing activities	189,215	(247,679)
		(Continued)

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	2020	2019
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES	\$ 110	\$ 6,143
NET INCREASE IN CASH	(16,100)	62,713
CASH AT THE BEGINNING OF THE YEAR	534,484	471,771
CASH AT THE END OF THE YEAR	\$ 518,384	\$ 534,484

The accompanying notes are an integral part of the parent company only financial statements. (Concluded)

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Silicon Optronics, Inc. (the "Company") was incorporated in the Republic of China ("ROC") on May 24, 2004 and commenced business on May 27, 2004. The Company's main business activities include the design, development and sales of complementary metal-oxide semiconductors.

The Company's shares have been listed on the Taiwan Stock Exchange (TWSE) since July 2018.

The parent company only financial statements are presented in the Company's functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The parent company only financial statements were approved by the board of directors and authorized for issue on March 10, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the "IFRSs") endorsed and issued into effect by the Financial Supervisory Commission (FSC).

Except for the following, the initial application of the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company's accounting policies:

1) Amendments to IFRS 3 "Definition of Business"

The Company's applies the amendments to IFRS 3 to transactions that occur on or after January 1, 2020. The amendments clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. To determine whether an acquired process is substantive, different criteria apply, depending on whether there are outputs at the acquisition date. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether or not an acquired set of activities and assets is a business.

2) Amendments to IAS 1 and IAS 8 "Definition of Materiality"

The Company adopted the amendments starting from January 1, 2020. The threshold of materiality that could influence users has been changed to "could reasonably be expected to influence". Accordingly, disclosures in the parent company only financial statements do not include immaterial information that may obscure material information.

b. The IFRSs endorsed by the FSC for application starting from 2021

New IFRSs	Effective Date Announced by IASB
Amendments to IFRS 4 "Extension of the Temporary Exemption from Applying IFRS 9" Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 "Interest Rate Benchmark Reform - Phase 2"	Effective immediately upon promulgation by the IASB January 1, 2021
Amendment to IFRS 16 "Covid-19-Related Rent Concessions"	June 1, 2020

Except for the above impact, as of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company's financial position and financial performance and will disclose the relevant impact when the assessment is completed.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

	Effective Date
New IFRSs	Announced by IASB (Note 1)
"Annual Improvements to IFRS Standards 2018-2020"	January 1, 2022 (Note 2)
Amendment to IFRS 3 "Reference to the Conceptual Framework"	January 1, 2022 (Note 3)
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets	To be determined by IASB
between an Investor and its Associate or Joint Venture" IFRS 17 "Insurance Contracts"	January 1, 2023
Amendments to IFRS 17	January 1, 2023
Amendments to IAS 1 "Classification of Liabilities as Current or	January 1, 2023
Non-current"
Amendment to IAS 1 "Disclosure of Accounting Policies"	January 1, 2023 (Note 6)
Amendment to IAS 8 "Definition of Accounting Estimates"	January 1, 2023 (Note 7)
Amendments to IAS 16 "Property, Plant and Equipment - Proceeds	January 1, 2022 (Note 4)
before Intended Use"
Amendments to IAS 37 "Onerous Contracts - Cost of Fulfilling a	January 1, 2022 (Note 5)
Contract"

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

• Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 "Agriculture" will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 "First-time Adoptions of IFRSs" will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
• Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
• Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

• Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

• Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
• 1) Amendment to IAS 1 "Classification of liabilities as current or non-current"

The amendments clarify that for a liability to be classified as non-current, the Company shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Company will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Company must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date.

The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Company's own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Company's own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32 "Financial Instruments: Presentation", the aforementioned terms would not affect the classification of the liability.

2) Amendments to IAS 16 "Property, Plant and Equipment: Proceeds before Intended Use"

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of those items is measured in accordance with IAS 2 "Inventories". Any proceeds from selling those items and the cost of those items are recognized in profit or loss in accordance with applicable standards.

The amendments are applicable only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021. The Company will restate its comparative information when it initially applies the aforementioned amendments.

Except for the above impact, as of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company's financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

b. Basis of preparation

The parent company only financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
• 3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing the parent company only financial statements, the Company accounted for subsidiaries and associates using the equity method. In order for the amount of net income, other comprehensive income and equity in the parent company only financial statements to agree with the amount attributable to shareholders of the parent company in the consolidated financial statements, the differences in the accounting treatments between the parent company only basis and the consolidated basis are adjusted under the heading of investments accounted for using the equity method, share of profits of subsidiaries and share of other comprehensive income of subsidiaries in the parent company only financial statements.

c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;
• 2) Assets expected to be realized within 12 months after the reporting period; and
• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;
• 2) Liabilities due to be settled within 12 months after the reporting period; and
• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Foreign currencies

In preparing the Company's financial statements, transactions in currencies other than the Company's functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

At the time of the preparation of the parent company only financial statements, the assets and liabilities of the Company and its foreign operations (including subsidiaries operating in other countries or those using currencies which are different from the Company's functional currency) are converted into NT dollars at each balance sheet date. Income and expense items are translated at the average exchange rates for the period and the resulting currency translation differences are recognized in other comprehensive income.

e. Inventories

Inventories consist of raw materials, supplies, finished goods and work in progress and are stated at the lower of cost and net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary refers to an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost, and adjusted thereafter to recognize the Company's share of the profit or loss and other comprehensive income of the subsidiary. In addition, changes to the Company's share of other equity in the subsidiary are recognized based on its shareholding ratio.

When the Company's change in the ownership interest in the subsidiary does not result in loss of control, it is treated as an equity transaction. The difference between the carrying amount of the investment and the fair value of the consideration paid or received is directly recognized as equity.

When the Company's share of loss in the subsidiary is equal to or exceeds its interest in the subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company's net investment in the subsidiary), the Company continues recognizing its share of further loss according to the shareholding ratio.

Any excess of the cost of acquisition over the Company's share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company's share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee's financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Company directly disposed of the related assets or liabilities.

Profit or loss resulting from downstream transactions is eliminated in full only in the parent company only financial statements. Profit and loss resulting from upstream transactions and transactions between subsidiaries is recognized only in the parent company only financial statements and only to the extent of interests in the subsidiaries that are not related to the Company.

g. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

• h. Intangible assets
• 1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Impairment of property, plant and equipment, right-of-use asset, intangible assets other than goodwill and assets related to contract costs

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets, excluding goodwill, for any indication of impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of a corporate asset, the asset is tested for impairment in the context of the cash-generating unit to which the asset belongs.

Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset, cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

j. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

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

a) Measurement category

Financial assets are classified as financial assets at amortized cost.

i. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, trade receivables, other receivables time deposits with original maturities of more than 3 months and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

i) Purchased or originated credit-impaired financial asset, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of the financial asset; and

ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The impairment loss of all financial assets is recognized in profit or loss by reduction in their carrying amounts through a loss allowance account.

c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

2) Equity instruments

Equity instruments issued by the Company are classified as equity in accordance with the substance of the contractual arrangements and the definitions of an equity instrument.

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Company's own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Company's own equity instruments.

• 3) Financial liabilities
• a) Subsequent measurement

All the financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities

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

k. Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

1) Revenue from the sale of goods

Revenue from the sale of goods comes from the sale of image sensing products. Revenue and receivables from the sale of goods are recognized when the goods are delivered to the customer's specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risk of obsolescence. The transaction price received in advance is recognized as a contract liability until the goods has been delivered to the customer.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

2) Revenue from the rendering of services

Revenue from the rendering of services comes from providing entrusted design services in accordance with customer contract specifications and are recognized when performance obligations are fulfilled.

l. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

The Company as lessee

Except for short-term leases and low-value asset leases that are recognized as expenses on a straight-line basis over the lease terms, the Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Subsequently, the right-of-use assets are measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right of-use assets are presented on a separate line in the parent company only balance sheet.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprises fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If implicit rate cannot be readily determined, the Company uses the lessee's incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Company remeasures the lease liabilities with a corresponding adjustment to theright-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. For a lease modification that is not accounted for as a separate lease, the Company accounts for the remeasurement of the lease liability by (a) decreasing the carrying amount of the right-of-use asset of lease modifications that decreased the scope of the lease, and recognizing in profit or loss any gain or loss on the partial or full termination of the lease; (b) making a corresponding adjustment to the right-of-use asset of all other lease modifications. Lease liabilities are presented on a separate line in the parent company only balance sheets

m. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than those stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

n. Employee benefits

Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company's defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

o. Share-based payment arrangements

Employee share options granted

The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Company's best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. It is recognized as an expense in full at the grant date if vested immediately.

At the end of each reporting period, the Company revises its estimate of the number of employee share options expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus - employee share options.

p. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (refundable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company's accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Company considers the economic implications of the COVID-19 when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

a. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

b. Impairment of goodwill included in investments in subsidiaries

When determining whether the goodwill included in investments in subsidiaries is impaired, the goodwill acquired from a business combination is allocated to each of the Company's cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the combination on the acquisition date, and the value in use of the cash generating unit to which goodwill has been allocated is estimated. In order to calculate the value in use, the management should estimate the future cash flows expected to arise from the cash-generating unit of the goodwill has been allocated and determine the appropriate discount rate to use in calculating the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

6. CASH AND CASH EQUIVALENTS

	December 31
		2020		2019
Cash on hand	\$	173	\$	175
Bank deposits		518,211		89,419
Cash equivalents(investments with original maturities of 3 months or
less)
Time deposits		-		444,890
	\$	518,384	\$	534,484

The market interest rate intervals of the time deposits held in banks at the end of the reporting period were as follows:

		December 31
	2020	2019
Time deposits	-	0.65%-2.32%

7. FINANCIAL ASSETS AT AMORTIZED COST

	December 31
	2020	2019
Current
Time deposit with original maturities of more than 3 months (a)	\$ 758,754	\$ 138,610
Non-current
Pledged time deposits (a and c)	\$ 4,048	\$ 2,532

• a. The interest rates ranges of time deposits with original maturities of more than 3 months were 0.08%-2.4% and 0.16%-2.8% per annum as of December 31, 2020 and 2019, respectively.
• b. Refer to Note 25 for information relating to their credit risk management and impairment of financial assets at amortized cost.
• c. Refer to Note 27 for information relating to investments in financial assets at amortized cost pledged as security.

8. ACCOUNTS RECEIVABLE

	December 31
	2020	2019
Accounts receivable-unrelated parties
At amortized cost Gross carrying amount Less: Allowance for impairment loss	\$ 32,842 -	\$ 11,260 -
	\$ 32,842	\$ 11,260

At amortized cost

The average credit period of sales of goods was 30 days. No interest was charged on trade receivables.

In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company's credit risk was significantly reduced.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default records of the debtor and an analysis of the debtor's current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Company's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company's different customer base.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation, whichever occurs earlier. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of trade receivables based on the Company's provision matrix.

December 31, 2020
	Not Past Due	1 to 30 Days	31 to 90 Days	91 to 180 Days	Over 181 Days	Total
Gross carrying amount Loss allowance (lifetime ECL)	\$ 16,224 -	\$ 16,618 -	\$ - -	\$ - -	\$ - -	\$ 32,842 -
Amortized cost	\$ 16,224	\$ 16,618	\$ -	\$ -	\$ -	\$ 32,842
December 31, 2019
	Not Past Due	1 to 30 Days	31 to 90 Days	91 to 180 Days	Over 181 Days	Total
Gross carrying amount Loss allowance (lifetime ECL)	\$ 10,648 -	\$ 612 -	\$ - -	\$ - -	\$ - -	\$ 11,260 -
Amortized cost	\$ 10,648	\$ 612	\$ -	\$ -	\$ -	\$ 11,260

The movements in the loss allowance of trade receivables was as follows:

	December 31
	2020		2019
Balance at January 1 Add: Net remeasurement of loss allowance Less: Amounts written off	\$	- - -	\$	- 1 (1)
Balance at December 31	\$	-	\$	-

9. INVENTORIES

	December 31
	2020	2019
Finished goods	\$ 170,650	\$ 222,479
Work in progress	675,000	633,513
Raw materials	3,373	528
	\$ 849,523	\$ 856,520

The cost of goods sold related to inventories for the years ended December 31, 2020 and 2019 was \$2,656,485 thousand and \$1,836,579 thousand, respectively, which included inventory write-downs of \$22,512 thousand and \$12,422 thousand, respectively.

10. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries

	December 31
	2020	2019
NUEVA IMAGING, INC. Silicon Optronics (Cayman) Co., Ltd.	\$ 243,371 24,860	\$ 242,747 17,479
	\$ 268,231	\$ 260,226

Name of subsidiary

	Proportion of Ownership and Voting Rights December 31
	2020	2019
NUEVA IMAGING, INC.	100%	100%
Silicon Optronics (Cayman) Co., Ltd.	100%	100%

The share of profit and loss and other comprehensive income of the subsidiaries accounted for using the equity method for the years ended December 31, 2020 and 2019 was recognized based on the subsidiaries' financial statements audited by the accountants for the same periods.

11. PROPERTY, PLANT AND EQUIPMENT

	Testing Equipment	R&D Equipment	Molding Equipment	Computer	Office Equipment	Leasehold improvement	Photomasks	Prepayment For Business Facilities	Total
Cost
Balance at January 1, 2019 Additions Disposal	\$ 4,120 - (2,962)	\$ - - -	\$ 18,644 5,508 (10,566)	\$ 1,431 - (1,276)	\$ 261 - (232)	\$ 204 - (204)	\$ 198,536 51,744 (153,470)	\$ - 472,972 -	\$ 223,196 530,224 (168,710)
Balance at December 31, 2019	\$ 1,158	\$ -	\$ 13,586	\$ 155	\$ 29	\$ -	\$ 96,810	\$ 472,972	\$ 584,710
Accumulated depreciation
Balance at January 1, 2019 Depreciation expense Disposal	\$ 3,409 345 (2,962)	\$ - - -	\$ 13,042 3,697 (10,566)	\$ 1,289 52 (1,276)	\$ 248 6 (232)	\$ 204 - (204)	\$ 155,571 44,541 (153,470)	\$ - - -	\$ 173,763 48,641 (168,710)
Balance at December 31, 2019	\$ 792	\$ -	\$ 6,173	\$ 65	\$ 22	\$ -	\$ 46,642	\$ -	\$ 53,694
Accumulated impairment
Balance at January 1, 2019 and December 31, 2019	\$ -	\$ -	\$ 1,183	\$ -	\$ -	\$ -	\$ -	\$ -	\$ 1,183
Carrying amounts at December 31, 2019	\$ 366	\$ -	\$ 6,230	\$ 90	\$ 7	\$ -	\$ 50,168	\$ 472,972	\$ 529,833 (Continued)

	Testing Equipment	R&D Equipment	Molding Equipment	Computer	Office Equipment	Leasehold improvement	Photomasks	Prepayment For Business Facilities	Total
Cost
Balance at January 1, 2020 Additions Disposal Reclassified	\$ 1,158 115 - -	\$ - - - 473,084	\$ 13,586 4,553 (5,474) -	\$ 155 - - -	\$ 29 - - -	\$ - - - -	\$ 96,810 59,812 (47,822) -	\$ 472,972 112 - (473,084)	\$ 584,710 64,592 (53,296) -
Balance at December 31, 2020	\$ 1,273	\$ 473,084	\$ 12,665	\$ 155	\$ 29	\$ -	\$ 108,800	\$ -	\$ 596,006
Accumulated depreciation
Balance at January 1, 2020 Depreciation expense Disposal	\$ 792 243 -	\$ - 21,026 -	\$ 6,173 3,944 (5,494)	\$ 65 51 -	\$ 22 6 -	\$ - - -	\$ 46,642 56,505 (47,822)	\$ - - -	\$ 53,694 81,775 (53,296)
Balance at December 31, 2020	\$ 1,035	\$ 21,026	\$ 4,643	\$ 116	\$ 28	\$ -	\$ 55,325	\$ -	\$ 82,173
Accumulated impairment
Balance at January 1, 2020 and December 31, 2020	\$ -	\$ -	\$ 1,183	\$ -	\$ -	\$ -	\$ -	\$ -	\$ 1,183
Carrying amounts at December 31, 2020	\$ 238	\$ 452,058	\$ 6,839	\$ 39	\$ 1	\$ -	\$ 53,475	\$ -	\$ 512,650 (Concluded)

The Company's property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Testing equipment	2-5 years
R&D equipment	15 years
Molding equipment	3 years
Computers	3 years
Office equipment	5 years
Leasehold improvements	5-8 years
Photomasks	2 years

12. LEASE ARRANGEMENTS

a. Right-of-use assets

	December 31
	2020	2019
Carrying amounts
Buildings	\$ 8,995	\$ 13,146
	For the Year Ended December 31
	2020	2019
Additions to right-of-use assets	\$ -	\$ -
Depreciation charge for right-of-use assets Buildings	\$ 4,151	\$ 4,151

Except for the aforementioned addition and recognized depreciation, the Company did not have significant sublease or impairment of right-of-use assets during the years ended December 31, 2020 and 2019.

b. Lease liabilities

	December 31
	2020	2019
Carrying amounts
Current	\$ 4,168	\$ 4,127
Non-current	\$ 4,916	\$ 9,084
The discount rate for lease liabilities was as follows:

		December 31
	2020	2019
Buildings	1%	1%

c. Material lease activities and terms (the Company is lessee)

The Company did not have significant new lease contracts in 2020 and 2019. The Company leases buildings for the use of offices with lease terms of 3-4 years. The Company does not have bargain purchase options to acquire the buildings at the expiry of the lease periods. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor's consent.

d. Other lease information

		December 31
		2020	2019
Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases		\$ 505 \$ 59 \$ (4,804)	\$ 515 \$ 55 \$ (4,810)
13. INTANGIBLE ASSETS	Patents	Software	Total
Cost
Balance at January 1, 2019 Additions Disposal	\$ 45,659 - (45,659)	\$ 927 2,563 -	\$ 46,586 2,563 (45,659)
Balance at December 31, 2019	\$ -	\$ 3,490	\$ 3,490
Accumulated amortization
Balance at January 1, 2019 Amortization expense Disposal	\$ 43,071 2,588 (45,659)	\$ 206 2,768 -	\$ 43,277 5,356 (45,659)
Balance at December 31, 2019	\$ -	\$ 2,974	\$ 2,974
Carrying amounts at December 31, 2019	\$ -	\$ 516	\$ 516 (Continued)

	Patents	Software	Total
Cost
Balance at January 1, 2020 Additions Disposal	\$ - - -	\$ 3,490 2,337 -	\$ 3,490 2,337 -
Balance at December 31, 2020	\$ -	\$ 5,827	\$ 5,827
Accumulated amortization
Balance at January 1, 2020 Amortization expense Disposal	\$ - - -	\$ 2,974 2,750 -	\$ 2,974 2,750 -
Balance at December 31, 2020	\$ -	\$ 5,724	\$ 5,724
Carrying amounts at December 31, 2020	\$ -	\$ 103	\$ 103 (Concluded)

Except for the recognition of amortization expense, there were no significant addition, disposal and impairment of the Company's other intangible assets for the year ended December 31, 2019 and 2020.

The above items of intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Patents	7 years
Software	3 years

14. OTHER ASSETS

	December 31
	2020	2019
Current
Tax receivables Prepaid technical service fees Prepayment for purchases Others	\$ 18,054 1,124 - 1,052 \$ 20,230	\$ 22,586 21,363 5,968 10,649 \$ 60,566
Non-current
Refundable deposits Net defined benefit assets	\$ 915 1,374	\$ 915 1,320
	\$ 2,289	\$ 2,235

15. LONG-TERM BORROWINGS

	December 31
	2020	2019
Secured borrowings (Note 27)
Bank borrowing	\$ 350,000	\$ -

In the year ended December 31, 2020, the Company acquired new bank borrowing facilities in the amount of \$350,000 thousand, with a floating interest rate of 0.987% per annum. Interest is paid monthly, and the principal is to be repaid in seven equal semi-annual installments starting from April 2022. The loan is to be repaid before April 1, 2025.

16. OTHER LIABILITIES

	December 31
	2020	2019
Current
Other payables
Payables for employees' compensation	\$ 28,570	\$ 16,030
Payables for bonuses	21,623	13,787
Payable for processing	13,787	-
Payables for purchases of equipment	5,207	7,313
Payables for remuneration of directors	3,750	2,500
Others	13,769	12,152
	86,706	51,782
Other liabilities
Receipts under custody	134	124
	\$ 86,840	\$ 51,906

17. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act ("LPA"), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees' individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Act is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee's name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the Bureau); the Company has no right to influence the investment policy and strategy.

The amounts included in the parent company only balance sheets in respect of the Company's benefit plans are as follows:

	December 31
	2020	2019
Present value of defined benefit obligation Fair value of plan assets	\$ 285 (1,659)	\$ 249 (1,569)
Net defined benefit assets	\$ (1,374)	\$ (1,320)

Movements in net defined benefit assets were as follows:

	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets	Net Defined Benefit Assets
Balance at January 1, 2019	\$ 1,149	\$ (1,475)	\$ (326)
Net interest expense (income)	11	(14)	(3)
Recognized in profit or loss	11	(14)	(3)
Remeasurement
Actuarial (gain) loss
Actuarial loss - changes in financial
assumptions	8	-	8
Actuarial loss - experience adjustments	(919)	(51)	(970)
Recognized in other comprehensive loss
(income)	(911)	(51)	(962)
Contributions from the employer	-	(29)	(29)
Balance at December 31, 2019	249	(1,569)	(1,320)
Net interest expense (income)	3	(13)	(10)
Recognized in profit or loss	3	(13)	(10)
Remeasurement
Actuarial (gain) loss
Actuarial loss - changes in financial
assumptions	17	-	17
Actuarial loss - experience adjustments	16	(52)	(36)
Recognized in other comprehensive loss
(income)	33	(52)	(19)
Contributions from the employer	-	(25)	(25)
Balance at December 31, 2020	\$ 285	\$ (1,659)	\$ (1,374)

Through the defined benefit plans under the Labor Standards Act, the Company is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans' debt investments.
• 3) Salary risk: The present value of the defined benefit obligation is calculated using the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

	December 31
	2020	2019
Discount rate	0.4%	0.8%
Expected rate of salary increase	3.0%	3.0%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

	December 31
	2020	2019
Discount rate
0.25% increase	\$ (11)	\$ (10)
0.25% decrease	\$ 11	\$ 11
Expected rate of salary increase/decrease
0.25% increase	\$ 10	\$ 10
0.25% decrease	\$ (10)	\$ (9)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

	December 31
	2020	2019
Expected contributions to the plans for the next year	\$ 22	\$ 21
Average duration of the defined benefit obligation	16 years	17 years

18. EQUITY

a. Ordinary shares

		December 31
	2020	2019
Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued	100,000 \$ 1,000,000 78,106 \$ 781,059	100,000 \$ 1,000,000 78,081 \$ 780,809

A total of 6,000 thousand shares from the authorized share capital was reserved for the issuance of employee share options. The increase in the Company's share capital is mainly due to the employees' exercise of their employee share options.

b. Capital surplus

		December 31
	2020	2019
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1)
Arising from issuance of ordinary shares	\$ 1,114,427	\$ 1,114,415
May be used to offset a deficit only
Arising from exercise of employee share options	12,269	12,158
May not be used for any purpose
Arising from employee share options	5,018	5,129
	\$ 1,131,714	\$ 1,131,702

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company's capital surplus and to once a year).

Reconciliations of the balance for each class of capital surplus were as follows:

	Premium on Issue of Shares	Arising from Employee Share Options	Total
Balance at January 1, 2019	\$ 1,107,434	\$ 17,287	\$ 1,124,721
Issuance of ordinary shares under employee share options Balance at December 31, 2019	6,981 1,114,415	- 17,287	6,981 1,131,702
Issuance of ordinary shares under employee share options	12	-	12
Balance at December 31, 2020	\$ 1,114,427	\$ 17,287	\$ 1,131,714

c. Retained earnings and dividend policy

Under the Company's articles of incorporation (the "Articles"), where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting accumulated losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company's board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders' meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees' compensation and remuneration of directors after the amendment, refer to "Employees' compensation and remuneration of directors" in Note 20 (g).

Considering that the Company is in a period of operational growth, taking into account the interests of the Company's shareholders and long-term capital and business planning, no more than 90% of the accumulated distributable earnings should be distributed as dividends, out of which no less than 10% of the total dividends distributed should be in the form of cash dividends. If the Company has no distributable earnings for the year, or if there are earnings but the amount of earnings is much lower than that distributed in the previous year, or considering the Company's financial, business and operational factors, the Company may distribute all or part of the earnings in accordance with the law or regulations of the competent authorities.

An appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company's paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company's paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and the directive titled "Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs" should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2019 and 2018 which had been approved in the shareholders in their meetings on June 16, 2020 and June 18, 2019, respectively, were as follows:

	Appropriation of Earnings For the Year Ended December 31
		2019		2018
Legal reserve	\$	15,601	\$	15,743
Special reserve		2,365		(526)
Cash dividends		154,212		155,955
Dividends per share	\$	2.0	\$	2.0

The appropriations of earnings for 2020 had been proposed by the Company's board of directors on March 10, 2021. The appropriations and dividends per share were as follows:

	Appropriation of Earnings
Legal reserve	\$ 28,146
Special reserve	1,885
Cash dividends	215,897
Dividends per share	\$ 2.8

The appropriations of earnings for 2020 are subject to the resolution of the shareholders' in their meeting to be held on June 16, 2021.

d. Other equity items

	For the Year Ended December 31
	2020	2019
Balance, beginning of year	\$ (2,365)	\$ 390
Exchange differences on translation of the financial statements of foreign operations	(1,885)	(2,755)
Balance, end of year	\$ (4,250)	\$ (2,365)

e. Treasury shares

	For the Year Ended December 31
	2020	2019
Treasury shares (in thousands of shares)	1,000	1,000

The Company resolved in its board of directors' meeting held on August 12, 2019 to buy back 1,000 thousand of its ordinary shares listed on the Taiwan Stock Exchange within the period starting August 13, 2019 to October 12, 2019 for transfer to its employees, at a purchase price ranging from NT\$53 to NT\$115 per share.

In October 2019, the Company completed the repurchase of 1,000 thousand shares for \$96,995 thousand.

Purpose of Buy-back	Shares Transferred to Employees (In Thousands of Shares)
Number of shares at January 1, 2019	-
Increase during the year	1,000
Number of shares at December 31, 2019	1,000

Under the Securities and Exchange Act, the Company shall neither pledge treasury shares nor exercise shareholders' rights on these shares, such as the rights to dividends and to vote.

19. REVENUE

	For the Year Ended December 31
		2020	2019
Revenue from contracts with customers
Revenue from the sale of goods		\$ 3,249,068	\$ 2,245,120
Others		79,627	48,990
		\$ 3,328,695	\$ 2,294,110
a. Contract balances
	December 31, 2020	December 31, 2019	January 1, 2018
Accounts receivable (Note 8)	\$ 32,842	\$ 11,260	\$ 59,182
Contract liabilities - current Sale of goods	\$ 15,940	\$ 10,090	\$ 6,012

Revenue recognized in the current reporting period from the contract liabilities at the beginning of the year is as follows:

		For the Year Ended December	31
		2020	2019
	From the contract liabilities at the beginning of the year Sale of goods	\$ 7,408	\$ 3,508
b.	Disaggregation of revenue
		For the Year Ended December	31
		2020	2019
	Primary geographical markets
	Hong Kong	\$ 3,007,489	\$ 2,072,482
	United States of America	99,883	78,194
	Taiwan (the Company's operating location)	87,107	85,466
	Others	134,216	57,968
		\$ 3,328,695	\$ 2,294,110
	Major goods
	CMOS	\$ 3,237,207	\$ 2,226,729
	Other	91,488	67,381
		\$ 3,328,695	\$ 2,294,110

20. NET PROFIT FROM CONTINUING OPERATIONS

a. Interest income

	For the Year Ended December 31
	2020	2019
Bank deposits Financial asset at amortized cost	\$ 2,925 1,531	\$ 14,658 2,053
Others	8	9
	\$ 4,464	\$ 16,720

b. Other income

		For the Year Ended December 31
	2020	2019
Others	\$ 364	\$ 199

c. Other gains and losses

	For the Year Ended December 31
	2020	2019
Net foreign exchange gain Other expenses	\$ 2,179 (4)	\$ 9,708 (11)
	\$ 2,175	\$ 9,697

d. Finance costs

	For the Year Ended December 31
	2020	2019
Interest on lease liabilities Interest on bank loans	\$ 2,595 113	\$ - 154
	\$ 2,708	\$ 154

e. Depreciation and amortization

	For the Year Ended December 31
	2020	2019
Property, plant and equipment	\$ 81,775	\$ 48,641
Right-of-use assets	4,151	4,151
Intangible assets	2,750	5,356
Total	\$ 88,676	\$ 58,148
An analysis of depreciation by function
Operating costs	\$ 20,038	\$ 13,699
Operating expenses	65,888	39,093
	\$ 85,926	\$ 52,792
An analysis of amortization by function Research and development expenses	\$ 2,750	\$ 5,356

f. Employee benefits expense

	For the Year Ended December 31
	2020	2019
Post-employment benefits
Defined contribution plans	\$ 3,097	\$ 3,103
Defined benefit plans	(10)	(3)
	3,087	3,100
Other employee benefits	124,038	98,652
Total employee benefits expense	\$ 127,125	\$ 101,752
An analysis of employee benefits expense by function
Operating expenses	\$ 127,125	\$ 101,752

g. Employees' compensation and remuneration of directors

According to the Company's Articles, the Company accrued employees' compensation at a rate of no less than 0.005% and no higher than 25% and remuneration of directors and supervisors at a rate of no higher than 3%. The employees' compensation and remuneration of directors for the years ended December 31, 2020 and 2019 were resolved in the board of directors' meetings on March 10, 2021 and March 17, 2020, respectively.

Accrual rate

	For the Year Ended December 31
	2020	2019
Employees' compensation	8%	8%
Remuneration of directors and supervisors	1%	2%

Amount

	For the Year Ended December 31
	2020	2019
Employees' compensation	\$ 28,570	\$ 16,030
Remuneration of directors and supervisors	3,750	2,500

If there is a change in the amounts after the annual parent company only financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of employees' compensation and remuneration of directors paid and the amounts recognized in the parent company only financial statements for the years ended December 31, 2019 and 2018.

Information on the employees' compensation and remuneration of directors resolved by the Company's board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

21. INCOME TAXES RELATING TO CONTINUING OPERATIONS

a. Income tax recognized in profit or loss

The major components of tax expense (income) were as follows:

	For the Year Ended December 31
	2020	2019
Current tax
In respect of the current year	\$ 47,347	\$ 27,927
Adjustments for prior years	772	103
	48,119	28,030
Deferred tax
In respect of the current year	(4,631)	(2,189)
Income tax expense recognized in profit or loss	\$ 43,488	\$ 25,841

A reconciliation of accounting profit and income tax expense is as follows:

	For the Year Ended December 31
	2020	2019
Profit before tax from continuing operations	\$ 324,926	\$ 181,151
Income tax expense calculated at the statutory rate	\$ 64,985	\$ 36,370
Nondeductible expenses in determining taxable income	(1,978)	1,336
Unrecognized deductible temporary differences	4,631	2,189
Investment credits of the current year	(20,291)	(11,968)
Deferred tax
Temporary differences	(4,631)	(2,189)
Adjustments for prior years' tax	772	103
Income tax expense recognized in profit or loss	\$ 43,488	\$ 25,841

b. Current tax liabilities

	December 31
	2020	2019
Current tax liabilities Income tax payable	\$ 47,029	\$ 4,610

c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the Year ended December 31, 2020

	Opening	Recognized in	Closing
	Balance	Profit or Loss	Balance
Deferred tax assets
Allowance for impairment loss	\$	\$	\$
	12,952	4,502	17,454
Deferred tax liabilities
Gain on foreign currency exchange	\$	\$	\$
	337	(129)	208
For the Year ended December 31, 2019
	Opening	Recognized in	Closing
	Balance	Profit or Loss	Balance
Deferred tax assets
Allowance for impairment loss	\$	\$	\$
	10,467	2,485	12,952
Deferred tax liabilities
Gain on foreign currency exchange	\$	\$	\$
	41	296	337

d. Income tax assessments

The Company's tax returns through 2018 have been assessed by the tax authorities.

22. EARNINGS PER SHARE

Unit: NT\$ Per Share

	For the Year Ended December 31
	2020	2019
Basic earnings per share Diluted earnings per share	\$ 3.65 \$ 3.64	\$ 2.01 \$ 2.00

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share were as follows:

Net Profit for the Year

	For the Year Ended December 31
	2020	2019
Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares:	\$ 281,438	\$ 156,010
Employee share options	-	-
Bonuses issued to employees	-	-
Earnings used in the computation of diluted earnings per share	\$ 281,438	\$ 156,010

Number of shares

Unit: In Thousands of Shares

	For the Year Ended December 31
	2020	2019
Weighted average number of ordinary shares used in the
computation of basic earnings per share	77,105	77,718
Effect of potentially dilutive ordinary shares:
Employee share options	1	54
Bonuses issued to employees	278	204
Weighted average number of ordinary shares used in the
computation of diluted earnings per share	77,384	77,976

Since the Company can offer to settle the bonuses to employees in cash or shares, the Company assumes the entire amount of the bonus would be settled in shares and the resulting potential shares are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

23. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan

Qualified employees of the Company were granted 2,000 options on July 29, 2013 and 3,200 options on May 16, 2013. Each option entitles the holder to subscribe for one thousand ordinary shares of the Company, and the total number of new ordinary shares required to be issued for the exercise of the employee share options is 2,000 shares and 3,200 shares, respectively. The options granted are valid for 10 years and exercisable at certain percentages after the second year from the grant date.

Information on employee share options is as follows:

	2013 Employee Share Option Plan		2012 Employee Share Option Plan
	Number of Options (In Thousands)	Weighted average Exercise Price (NT\$)	Number of Options (In Thousands)	Weighted average Exercise Price (NT\$)
For the year ended December 31, 2019
Balance at January 1 Options exercised Options expired	288 (188) -	\$ 41.49 46.00 -	805 (65) (110)	\$ 16.34 13.27 12.55
Balance at December 31	100	33.00	630	17.31
Options exercisable, end of period	100		630
For the year ended December 31, 2020
Balance at January 1 Options exercised	100 -	\$ 33.00 -	630 (25)	\$ 17.31 10.50
Balance at December 31	100	33.00	605	17.17
Options exercisable, end of period	100		605

Information on outstanding options as follows:

	December 31, 2020			December 31, 2019
Share Option Plan	Range of Exercise Price(NT\$)	Weighted average Remaining Contractual Life (In Years)	Share Option Plan	Range of Exercise Price(NT\$)	Weighted average Remaining Contractual Life (In Years)
2013 Employee share option plan	\$ 32.21-33.00	2.62	2013 Employee share option plan	\$ 33.0-46.00	3.62
2012 Employee share option plan	10.25-19.03	1.82	2012 Employee share option plan	10.50-19.50	2.81

The resolution for the granting of the 2013 employee share options was passed in the board of directors' meeting on June 10, 2014, and their fair values were assessed using the Black-Scholes pricing model; the inputs to the model are as follows:

\$13.55
\$46.00
33.73%-37.88%
2.5-4.5 years
-
0.68%-1.12%
0.05-0.55

The resolution for the granting of the 2013 employee share options was passed in the board of directors' meeting on August 13, 2013, and their fair values were assessed using the Black-Scholes pricing model; the inputs to the model are as follows:

Grant-date share price (NT\$)	\$11.18
Exercise price (NT\$)	\$33.00
Expected volatility	37.60%-41.65%
Expected life	2.5-4.5 years
Expected dividend yield	-
Risk-free interest rate	0.82%1.07%
Fair value of stock options	0.18-0.93

The resolution for the granting of the 2012 employee share options was passed in the board of directors' meeting on November 13, 2012, and their fair values were assessed using the Black-Scholes pricing model; the inputs to the model are as follows:

Grant-date share price (NT\$)	\$12.29
Exercise price (NT\$)	\$19.50
Expected volatility	44.34%-54.56%
Expected life	2.5-4.5 years
Expected dividend yield	-
Risk-free interest rate	0.75%-0.85%
Fair value of stock options	1.67-3.94

The resolution for the granting of the 2012 employee share options was passed in the board of directors' meeting on May 25, 2012, and their fair values were assessed using the Black-Scholes pricing model; the inputs to the model are as follows:

\$10.10
\$10.50
46.76%-47.19%
6-7 years
-
1.09%-1.15%
4.45-4.81

24. CAPITAL MANAGEMENT

The Company manages its capital to ensure that will be able to continue as a going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

Key management personnel of the Company review the capital structure on a annual basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Company may adjust the number of new shares issued, and/or the amount of new debt issued or existing debt redeemed.

The Company is not subject to any externally imposed capital requirements.

25. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

The management believes the carrying amounts of financial assets and financial liabilities not carried at fair value approximate their fair values.

b. Categories of financial instruments

	December 31
	2020	2019
Financial assets
Financial assets at amortized cost (Note 1)	\$ 1,314,943	\$ 687,801
Financial liabilities
Amortized cost (Note 2)	647,654	269,919

• Note 1: The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, accounts receivable, refundable deposit and pledged time deposits.
• Note 2: The balances include financial liabilities measured at amortized cost, which comprise accounts payable (including related parties), other payables (including related parties), and long-term debt.
• c. Financial risk management objectives and policies

The Company's major financial instruments included accounts receivable, accounts payable and long-term borrowings. The Company's corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports that analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Company's activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There had been no change in the Company's exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Company has foreign currency sales and purchases, which expose the Company to foreign currency risk. Approximately 97% of the Company's sales is denominated in currencies other than the functional currency of the Company, whilst almost 96% of costs is denominated in the Company's functional currency. Exchange rate exposures are managed within approved policy parameters.

The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities are set out in Note 28.

Sensitivity analysis

The Company is mainly exposed to the exchange rate fluctuations in the USD.

The sensitivity analysis regarding foreign currency risk is mainly calculated for USD denominated monetary items on the balance sheet date.

When the NTD appreciates/depreciates by 1% against the USD, the Group's net profit before tax for the years ended December 31, 2020 and 2019 would decrease/increase by \$285 thousand and \$(500) thousand, respectively.

b) Interest rate risk

The Company is exposed to interest rate risk arising from financial assets and financial liabilities at both fixed and floating interest rates.

The carrying amounts of the Company's financial assets and financial liabilities with exposure to interest rates at the end of the reporting periods were as follows:

	December 31
		2020		2019
Fair value interest rate risk
Financial assets	\$	762,802	\$	586,032
Cash flow interest rate risk
Financial assets		518,201		89,409
Financial liabilities		350,000		-

Sensitivity analysis

The sensitivity analysis regarding interest rate risk is calculated based on the changes in the cash flow of floating-rate liabilities on the balance sheet date.

If interest rates had been 0.5% higher/lower, pre-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by \$841 thousand and \$447 thousand, respectively.

2) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in a financial loss to the Company. As at the end of the reporting period, the Company's maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation mainly arise from the carrying amount of the respective recognized financial assets as stated in the parent company only balance sheets.

The Company transacts with a large number of unrelated customers; thus, no concentration of credit risk was observed.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company's operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank facilities and ensures compliance with loan covenants.

Bank borrowings are significant sources of liquidity for the Company. For the Company's unutilized financing facilities, please refer to (2) Financing facilities below.

a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following tables detail the Company's remaining contractual maturities for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

December 31, 2020

	On Demand or Less than 1 Month	1-3 Months	3 Months to 1 Year	1 Year to 5 Years
Non-derivative financial liabilities
Lease liabilities	\$ 353	\$ 707	\$ 3,180	\$ 4,947
Accounts payable	95,205	21,415	-	-
Accounts payable -
related parties	132,384	21,783	-	-
Other payables - related
parties	7,873	-	-	-
Payables on processing	-	13,787	-	-
Payables on equipment	2,771	2,436	-	-
Long-term borrowings	288	576	2,591	356,333
	\$ 238,874	\$ 60,704	\$ 5,771	\$ 361,280

December 31, 2019

	On Demand or Less than 1 Month	1-3 Months	3 Months to 1 Year	1 Year to 5 Years
Non-derivative financial liabilities
Lease liabilities	\$ 353	\$ 707	\$ 3,180	\$ 9,187
Accounts payable	94,917	26,992	-	-
Accounts payable -
related parties	132,521	1,866	-	-
Other payables - related
parties	6,310	-	-	-
Payables on equipment	2,494	4,819	-	-
	\$ 236,595	\$ 34,384	\$ 3,180	\$ 9,187

b) Financing facilities

		December 31
	2020	2019
Unsecured bank overdraft facilities, reviewed annually and payable on demand: Amount used Amount unused	\$ - 200,000	\$ - 200,000
	\$ 200,000	\$ 200,000
Secured bank overdraft facilities: Amount used Amount unused	\$ 350,000 250,000	\$ - 500,000
	\$ 600,000	\$ 500,000

26. TRANSACTIONS WITH RELATED PARTIES

Besides information disclosed elsewhere in the other notes, details of transactions between the Company and other related parties are disclosed below.

a. Related party name and category

Silicon Optronics (Shanghai) Co., Ltd. Subsidiaries NUEVA IMAGING, INC. Subsidiaries Powerchip Technology Corp. Substantive related parties Powerchip Semiconductor Manufacturing Corp. Substantive related parties

Related Party Name Related Party Category

b. Purchases

	For the Year Ended December 31
Related Party Category	2020	2019
Substantive related parties
Powerchip Semiconductor Manufacturing Corp.	\$ 1,473,297	\$ 1,032,202
Powerchip Technology Corp.	-	239,460
	\$ 1,473,297	\$ 1,271,662

The purchase prices and payment terms were based on negotiations and thus not comparable with those in the market.

c. Research and development expenses

	December 31
Related Party Category	2020	2019
Substantive related parties Powerchip Semiconductor Manufacturing Corp. Powerchip Technology Corp.	\$ 4,702 -	\$ 47 379
	\$ 4,702	\$ 426

d. Technical service expense

	December 31
Related Party Category	2020	2019
Subsidiaries
Silicon Optronics (Shanghai) Co., Ltd.	\$ 71,022	\$ 59,908
NUEVA IMAGING, INC.	38,501	43,281
	\$ 109,523	\$ 103,189

The technical service contracts between the Company and its related parties are based on the prices and terms agreed upon by both parties, therefore no other appropriate transaction counterparties are available for comparison.

e. Prepayments and other current assets

	December 31
Related Party Category	2020	2019
Subsidiaries Silicon Optronics (Shanghai) Co., Ltd.	\$ -	\$ 21,363

f. Account payable to related parties

		December 31
	Related Party Category	2020	2019
	Substantive related parties Powerchip Semiconductor Manufacturing Corp.	\$ 154,167	\$ 134,387
g.	Other payables to related parties
		December 31
	Related Party Category	2020	2019
	Subsidiaries Silicon Optronics (Shanghai) Co., Ltd. NUEVA IMAGING, INC.	\$ 4,909 2,964	\$ 3,797 2,513
		\$ 7,873	\$ 6,310

h. Other transactions with related parties

The Company signed a joint development contract with Powerchip Semiconductor Manufacturing Co., Ltd. According to the contract, the Company will provide some machinery and equipment for the purpose of research and development.

i. Remuneration of key management personnel

	For the Year Ended December 31
	2020	2019
Short-term employee benefits	\$ 7,470	\$ 8,208

The remuneration of directors and other key management personnel departments is determined by the remuneration committee based on individual performance and market trends.

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets of the Company were provided as collateral for long-term bank borrowings and as guarantee for the tariff on imported raw materials:

	December 31
	2020	2019
Property, plant and equipment - R&D equipment	\$ 452,058	\$ -
Pledged time deposits (classified as financial assets at amortized cost-noncurrent)	4,048	2,532
	\$ 456,106	\$ 2,532

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Company's significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than the functional currencies and the related exchange rates between the foreign currencies and the respective functional currencies were as follows:

December 31, 2020

	Foreign Currency	Exchange Rate	Carrying Amount
Financial assets
Monetary items USD CNY	\$ 11,019 2,237	28.48 (USD:NTD) 4.377 (RMB:NTD)	\$ 313,810 9,792 \$ 323,602
Financial liabilities
Monetary items USD	10,019	28.48 (USD:NTD)	\$ 285,331
December 31, 2019
	Foreign Currency	Exchange Rate	Carrying Amount
Financial assets
Monetary items USD CNY	\$ 7,033 2,179	29.98 (USD:NTD) 4.305 (RMB:NTD)	\$ 210,863 9,382 \$ 220,245
Financial liabilities
Monetary items USD	8,702	29.98 (USD:NTD)	\$ 260,886

The significant unrealized foreign exchange gains (losses) were as follows:

	For the Year Ended December 31
	2020		2019
Foreign Currency	Exchange Rate	Net Foreign Exchange Gains (Losses)	Exchange Rate	Net Foreign Exchange Gains (Losses)
USD RMB	28.48 (USD:NTD) 4.377 (CNY:NTD)	\$ 1,430 (390)	29.98 (USD:NTD) 4.305 (CNY:NTD)	\$ 2,237 (551)
		\$ 1,040		\$ 1,686

29. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees:
• 1) Financing provided to others: None;
• 2) Endorsements/guarantees provided: None;
• 3) Marketable securities held (excluding investments in subsidiaries): None;
• 4) Marketable securities acquired or disposed of at costs or prices of at least NT\$300 million or 20% of the paid-in capital: None;
• 5) Acquisition of individual real estate at costs of at least NT\$300 million or 20% of the paid-in capital: None;
• 6) Disposal of individual real estate at prices of at least NT\$300 million or 20% of the paid-in capital: None;
• 7) Total purchases from or sales to related parties of at least NT\$100 million or 20% of the paid-in capital: Please see Table 1 attached;
• 8) Receivables from related parties amounting to at least NT\$100 million or 20% of the paid-in capital: None;
• 9) Information about the derivative instruments transaction: None;
• b. Names, locations, and related information of investees over which the Company exercises significant influence (excluding information on investment in Mainland China): Please see Table 2 attached;
• c. Information on investments in mainland China: Please see Table 3 attached.
• d. Information on major shareholders: The name, amount and proportion of shareholders with a shareholding ratio of 5% or more: Please see Table 4 attached.

TABLE 1

SILICON OPTRONICS, INC. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT\$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Company Name					Transaction Details		Abnormal Transaction		Notes/Accounts (Payable) Receivable
	Related Party	Nature of Relationship	Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	Note % of Total - 57
Silicon Optronics, Inc.	Powerchip Semiconductor Manufacturing Corp.	Substantive related parties	Purchase	\$ 1,473,297	57	Note	\$ -	-	\$ (154,167)

Note: Mainly paid on the 30th days after the month of the invoice date.

TABLE 2

SILICON OPTRONICS, INC. AND SUBSIDIARIES

INFORMATION ON INVESTEES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

					Investment Amount		Balance as of December 31, 2020		Net Income
Investor Company	Investee Accounted for using the Equity Method	Location	Main Businesses and Products	December 31, 2020	December 31, 2019	Number of Shares (In Thousands)	Percentage of Ownership (%)	Carrying Amount	of Investee Accounted for using the Equity Method	Investment Income	Note
Silicon Optronics, Inc.	NUEVA IMAGING INC. USA Silicon Optronics (Cayman) Co., Ltd.	Cayman Islands	Product development design of high order CMOS Image Sensor Investment holding company	\$ 358,500 5,237	\$ 358,500 5,237	6,000 170	100 100	\$ 243,371 24,860	\$ 2,941 6,949	\$ 2,941 6,949	Subsidiary Subsidiary

TABLE 3

SILICON OPTRONICS, INC. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Paid-in Capital (US\$ in Thousands)	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2020 (US\$ in Thousands)	Outward	Remittance of Funds Inward	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020 (US\$ in Thousands)	Net Income (Loss) of the Investee	Percentage of Ownership of Direct or Indirect Investment (%)	Investment Gain (Loss)	Carrying Amount as of December 31, 2020	Accumulated Repatriation of Investment Income as of December 31, 2020	Note
Silicon Optronics (Shanghai) Co., Ltd.	Scale Integration and design of related electronic products, R&D and testing and technical service consulting and transfer of finished products.	US\$ 175 thousand	Note 1	\$ 4,984 (US\$ 175) thousand	\$ -	\$ -	\$ 4,984 (US\$ 175) thousand	\$ 6,949	100	\$ 6,949	\$ 24,860	\$ -

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2020 (US\$ in Thousands)	Investment Amount Authorized by Investment Commission, MOEA (US\$ in Thousands)	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA (US\$ in Thousands)
\$ 4,984 (US\$ 175) thousand	Note 1	\$ 1,323,445

Note 1: Through Silicon Optronics (Cayman) Co., Ltd. investment Silicon Optronics (Shanghai) Co., Ltd., the Amount of Investment Stipulated was approved by Investment Commission, MOEA approved investment amount US\$175. (US\$ in Thousands)

Note 2: Amount was recognized on the basis of audited financial statements.

Note 3: Based on the exchange rate as of December 31, 2020.

SILICON OPTRONICS, INC. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2020

	Shares
Name of Major Shareholder	Number of Shares	Percentage of Ownership (%)
Samoa Shangzhao Lake Co., Ltd. Samoa Full Guest Investment Limited Xiao Dong Luo	18,676,413 4,875,458 4,583,587	23.91 6.24 5.86

• Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the parent company only financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.
• Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual truster who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to Market Observation Post System.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM	STATEMENT INDEX
MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND EQUITY
STATEMENT OF CASH	1
STATEMENT OF FINANCIAL ASSETS AT AMORTIZED COST -	Note 7
CURRENT
STATEMENT OF ACCOUNTS RECEIVABLE	2
STATEMENT OF INVENTORY	3
STATEMENT OF PREPAYMENTS AND OTHER CURRENT ASSETS	Note 14
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR	4
USING EQUITY METHOD
STATEMENT OF FINANCIAL ASSETS AT AMORTIZED COST -	Note 7
NONCURRENT
STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT	Note 11
STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS	5
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF	5
RIGHT-OF-USE ASSETS
STATEMENT OF CHANGES IN INTANGIBLE ASSETS	Note 13
STATEMENT OF DEFERRED INCOME TAX ASSETS	Note 21
STATEMENT OF OTHER NON-CURRENT ASSETS	Note 14
STATEMENT OF PAYABLES	6
STATEMENT OF PAYABLE EXPENSES AND OTHER CURRENT	Note 16
LIABILITIES
STATEMENT OF LONG-TERM BANK LOANS	7
STATEMENT OF LEASE LIABILITIES	8
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF NET REVENUE	9
STATEMENT OF OPERATING COST	10
STATEMENT OF OPERATING EXPENSES	11
STATEMENT OF OTHER GAINS AND LOSSES	Note 20
SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION AND	12
AMORTIZATION EXPENSES BY FUNCTION

SILICON OPTRONICS, INC.

STATEMENT OF CASH DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item	Description	Amount
Cash in banks Current accounts	Including NT\$236,318 thousand; US\$9,865 thousand @28.48 and RMB\$209 thousand @4.377	\$ 518,201
Checking deposits		10
Cash in stock	Including RMB\$28 thousand @4.377	123
Cash on hand		50
		\$ 518,384

SILICON OPTRONICS, INC.

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Client Name	Amount
Client A	\$ 24,985
Client B	3,798
Client C	3,035
Client D	854
Client F	170
	\$ 32,842

STATEMENT OF INVENTORY DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Amount
Item	Cost	Net Realizable Value
Finished goods	\$ 170,650	\$ 233,141
Work in progress	675,500	1,077,529
Raw materials	3,373	6,642
	\$ 849,523	\$ 1,317,312

$\frac{6}{9}$	Amount	Net Asset Value
100 100	\$243,371 24,860	44,143 24,860
	268.231	9.003

SILICON OPTRONICS, INC.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

	Balance, January 1, 2020		Investment Gain (Loss) Recognized by	Exchange Differences on the Translation of Financial		Balance, December 31, 2020
Investees	Number of Shares (In Thousands)	Amount	Using Equity Method (Note 1)	Statements of Foreign Operations	Number of Shares (In Thousands)	%	Amount	Net Asset Value
NUUEVA IMAGING, INC. Silicon Optronics (Cayman) Co., Ltd.	6,000 170	\$ 242,747 17,479	\$ 2,941 6,949	\$ (2,317) 432	6,000 170	100 100	\$ 243,371 24,860	\$ 44,143 24,860
		\$ 260,226	\$ 9,890	\$ (1,885)			\$ 268,231	\$ 69,003

Note 1: The net value was based on audited financial statements of the same period.

Note 2: Above investments accounted for using equity method were not pledged as security.

SILICON OPTRONICS, INC.

STATEMENT OF CHANGE IN RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Buildings
Cost
Balance at January 1, 2020 and December 31, 2020	\$ 17,297
Accumulated depreciation
Balance at January 1, 2020	4,151
Depreciation	4,151
Balance at December 31, 2020	8,302
Carrying amount at December 31, 2020	\$ 8,995

STATEMENT OF PAYABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Name	Amount
Non- related parties
A Vendor	\$ 63,373
B Vendor	30,265
C Vendor	11,369
D Vendor	8,853
Other (Note)	2,760
	116,620
Related parties
Powerchip Semiconductor Manufacturing Corp.	154,167
	\$ 270,787

Note: The amount of each item in others does not exceed 5% of the account balance.

SILICON OPTRONICS, INC.

STATEMENT OF LONG-TERM LOANS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Pledged as Collateral or Provided as Guarantee

Type	Summary	Balance, End of Year	Contract Period	Range of Interest Rates (%)	Pledged as Collateral or Provided as Guarantee
Secured borrowings KGI commercial Bank Co., Ltd. (Note 1)	R&D equipment purchase	\$ 350,000	2020.4.1-2025.4.1	0.987	R&D equipment

Note 1: Interest is paid monthly, and principal is repaid in seven equal semiannual installments staring from April 2022. The Company has completed repayment of the loan before April 1, 2025

SILICON OPTRONICS, INC.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Lease Term	Discount Rate (%)	Balance, End of Year
Buildings	2019.1.1-2023.3.31	1	\$ 9,084
Less: Lease liabilities - current			(4,168)
Lease liabilities - non-current			\$ 4,916

SILICON OPTRONICS, INC.

STATEMENT OF NET REVENUE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Quantity	Unit	Amount
Image sensing component	146,757	Thousand pieces	\$ 3,237,207
Others			91,488
			\$ 3,328,695

STATEMENT OF OPERATING COSTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Amount
Raw materials Raw materials at the beginning of the year Purchases in the current year Transfer out to expenses Raw materials at the end of the year Consumption of raw materials	\$ 528 1,501,729 926 (3,373) 1,499,810
Manufacturing fee	1,133,503
Manufacturing cost	2,633,313
Work in progress at the beginning of the year	633,513
Transfer out to expenses	(10,111)
Work in progress at the end of the year	(675,500)
Finished goods cost	2,581,215
Finished goods at the beginning of the year	222,479
Others	(469)
Finished goods at the end of the year	(170,650)
Cost of goods sold	2,632,575
Other adjustments	323
Labor cost	23,587
Operating cost	\$ 2,656,485

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In thousands of New Taiwan Dollars)

Item	Marketing Expense	General and Administrative Expense	Research and Development Expense
Payroll and related expense	\$ 7,382	\$ 16,584	\$ 86,015
Pension expense	248	615	2,224
Director's remuneration	-	3,750	-
Sample fee	4,381	-	-
Import and export fee	1,510	26	150
Shipping fee	3,349	8	10
Park management fee	-	6,275	-
Professional service fee	4	3,626	574
Component fee	-	2,404	3,878
Technical services	-	-	119,881
Depreciation fee	-	4,208	61,680
Others (Note)	1,206	8,174	23,307
	\$ 18,080	\$ 45,670	\$ 297,719

Note: The amount of each item in others does not exceed 5% of the account balance.

SILICON OPTRONICS, INC.

SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In thousands of New Taiwan Dollars)

		For the Year Ended December 31, 2020				For the Year Ended December 31, 2019
	Classified as Cost of Revenue	Classified as Operating Expenses	Total	Classified as Cost of Revenue	Classified as Operating Expenses	Total
Employee benefits expenses
Salary and bonus	\$ -	\$ 109,981	\$ 109,981	\$ -	\$ 87,126	\$ 87,126
Insurance	-	5,328	5,328	-	5,111	5,111
Pension	-	3,087	3,087	-	3,100	3,100
Remuneration of directors	-	3,750	3,750	-	2,500	2,500
Others	-	4,979	4,979	-	3,915	3,915
	\$ -	\$ 127,125	\$ 127,125	\$ -	\$ 101,752	\$ 101,752
Depreciation	\$ 20,038	\$ 65,888	\$ 85,926	\$ 13,699	\$ 39,093	\$ 52,792
Amortization	\$ -	\$ 2,750	\$ 2,750	\$ -	\$ 5,356	\$ 5,356

Note 1: For the year of 2020 and 2019, the Company had an average of 62 and 59 employees, respectively, which included 3 non-employee directors for both years.

Note 2: Average labor costs for the years ended December 31, 2020 and 2019 were NT\$2,091 thousand and NT\$1,722 thousand, respectively.

Note 3: Average salary and bonus for the years ended December 31, 2020 and 2019 were NT\$1,864 thousand and NT\$1,556 thousand, respectively. The average salary and bonus decreased by 19.79% year over year.

Note 4: The Company has established an audit committee, and the remuneration of independent directors has been incorporated into the remuneration of the directors for disclosure.

Note 5: The Company's salary and remuneration policy (including directors, independent directors, managers and employees): The Company's salary and remuneration policy is to provide employees with salaries and benefits above the average level of the industry. Employee remuneration includes monthly salary, quarterly settlement of bonuses for operating performance, and employee remuneration based on annual profitability. The amount and distribution of the Company's employee compensation are proposed by the remuneration committee to the board of directors, and the board of directors approves it. Please refer to Note 20 (g) Employee Compensation and Directors' Compensation for relevant information about the Company's employee compensation and director's compensation allotment.