SOI - Interim / Quarterly Report 2021

Stock Code � 3530

Silicon Optronics, Inc. and Subsidiaries

Consolidated Financial Statements for the Nine months Ended September 30, 2021 and 2020 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders Silicon Optronics, Inc.

Introduction

We have reviewed the accompanying consolidated balance sheets of Silicon Optronics, Inc. and its subsidiaries (collectively referred to as the “Group”) as of September 30, 2021 and 2020, the related consolidated statements of comprehensive income for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, of changes in equity, and of cash flows for the nine months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as stated in the basic paragraph of the reserved conclusion, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express and audit opinion.

Basis for Qualified Conclusion

As explained in Note 10, the financial statements of certain insignificant subsidiaries were not reviewed by independent accountants. Those statements reflect total assets of NT$66,098 thousand and NT$36,054 thousand, constituting 2% and 1% of the consolidated total assets, and total liabilities of NT$36,489 thousand and NT$13,100 thousand, constituting 3% and 2% of the consolidated total liabilities as of September 30, 2021 and 2020, respectively; and total comprehensive income of NT$2,073 thousand, NT$2,637 thousand, NT$5,222 thousand and NT$5,656 thousand, constituting 1%, 3%, 1% and 4% of the consolidated total comprehensive income for the three months and nine months ended September 30, 2021 and 2020, respectively.

Qualified Conclusion

Based on our reviews, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain insignificant subsidiaries, and the information disclosed in the footnotes been reviewed by independent accountants described in the preceding paragraph, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Silicon Optronics, Inc. and its subsidiaries as of September 30, 2021 and 2020, their consolidated financial performance for the three months and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30,2021 and 2020, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard No. 34, “Interim Financial Reporting” as endorsed and became effective by Financial Supervisory Commission of the Republic of China.

November 4, 2021

Notice to Readers

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the R.O.C. and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the R.O.C.

SILICON OPTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents Note 6 Financial assets at amortized cost - current Notes 7 and 25 Accounts receivable - net Note 8 Inventories Note 9 Prepayments and other current assets Note 14 Total current assets NON-CURRENT ASSETS Financial assets at amortized cost - noncurrent(Notes 7, 25 and 27) Property, plant and equipment (Notes 11 and 27) Right-of-use assets (Note 12) Goodwill Intangible assets (Note 13) Deferred tax assets (Notes 4 and 21) Other non-current assets (Notes 14 and 17) Total non-current assets	September 30, 2021 (Reviewed) Amount % $ 735,280 20 968,766 27 14,028 - 1,126,093 31 69,857 2 2,914,024 80 3,500 - 497,824 14 11,600 - 199,228 6 5,848 - 15,808 - 5,545 - 739,353 20	December 31, 2020 (Audited) Amount % $ 547,597 18 758,754 25 32,842 1 849,523 29 61,430 2 2,250,146 75 4,048 - 513,112 17 17,085 - 199,228 7 7,784 - 17,454 1 3,161 - 761,872 25	September 30, 2020 (Reviewed)	September 30, 2020 (Reviewed)
				Amount % $ 523,018 18 288,538 10 4,307 - 1,182,992 42 68,348 3 2,067,203 73 2,548 - 529,985 18 18,658 1 199,228 7 8,512 - 19,040 1 3,096 - 781,067 27

TOTAL

$ 3,653,377 100 $ 3,012,018 100 $ 2,848,270 100

LIABILITIES AND EQUITY CURRENT LIABILITIES Contract liabilities - current (Note 19) Accounts payable Accounts payable to related parties (Note 26) Other current liabilities (Note 16) Current tax liabilities (Notes 4 and 21) Lease liabilities - current (Note 12) Long-term loan-current portion (Note 15) Refund liability (Note 16) Total current liabilities NON-CURRENT LIABILITIES Long-term loan (Note 15) Deferred income tax liabilities (Notes 4 and 21) Lease liabilities - non-current (Note 12) Guarantee deposits Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY(Note 18) Common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity Exchange differences on translating the financial statements of foreign operations Treasury shares Total equity TOTAL	September 30, 2021 (Reviewed) Amount % $ 66,318 2 320,685 9 - - 160,125 4 127,937 4 7,659 - 50,000 1 7,971 - 740,695 20 300,000 9 - - 3,638 - 6,977 - 310,615 9 1,051,310 29 781,509 21 1,132,749 31 94,057 3 4,250 - 692,235 19 ( 5,738 ) - ( 96,995) ( 3) 2,602,067 71 $ 3,653,377 100	December 31, 2020 (Audited) Amount % $ 15,940 1 120,321 4 154,167 5 100,836 3 47,664 2 7,667 - - - - - 446,595 15 350,000 12 208 - 9,473 - - - 359,681 12 806,276 27 781,059 26 1,131,714 37 65,911 2 2,365 - 325,938 11 ( 4,250 ) - ( 96,995) ( 3) 2,205,742 73 $ 3,012,018 100	September 30, 2020 (Reviewed)
			Amount % $ 10,141 - 163,246 6 131,509 5 73,650 2 27,155 1 7,624 - - - - - 413,325 14 350,000 12 289 - 11,352 1 - - 361,641 13 774,966 27 781,059 27 1,131,714 40 65,911 2 2,365 - 193,140 7 ( 3,890 ) - ( 96,995) ( 3) 2,073,304 73 $ 2,848,270 100

SILICON OPTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

(Reviewed, Not Audited)
OPERATING REVENUE (Note 19) OPERATING COSTS (Notes 9, 20 and 26) GROSS PROFIT OPERATING EXPENSES (Notes 20 and 26) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES (Note 20) Interest income Other income Other gains and losses Financial costs Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 21) NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations (Note 18) Total comprehensive income For The Period EARNINGS PER SHARE (Note 22) Basic Diluted		Three months ended September 30 2021 2020 Amount � Amount � $ 1,113,850 100 $ 928,521 100 685,298 61 731,049 79 428,552 39 197,472 21 6,178 1 5,863 1 20,670 2 9,977 1 103,491 9 78,405 8 130,339 12 94,245 10 298,213 27 103,227 11 1,399 - 791 - 7 - - - 2,838 - 3,715 1 902) - ( 921) - 3,342 - 3,585 1 301,555 27 106,812 12 55,992) ( 5) ( 14,124) ( 2) 245,563 22 92,688 10 68) - ( 436) - $ 245,495 22 $ 92,252 10 $ 3.18 $ 1.20 $ 3.16 $ 1.20		Nine months Ended September 30 2021 2020 Amount � Amount � $ 3,123,345 100 $ 2,067,379 100 2,024,817 65 1,656,233 80 1,098,528 35 411,146 20 19,426 - 16,737 1 56,384 2 29,781 1 288,726 9 205,140 10 364,536 11 251,658 12 733,992 24 159,488 8 4,154 - 3,527 - 105 - 42 - 6,510 - 11,003 - 2,714) - ( 1,886) - 8,055 - 12,686 - 742,047 24 172,174 8 129,822) ( 4) ( 23,515) ( 1) 612,225 20 148,659 7 1,488) - ( 1,525) - $ 610,737 20 $ 147,134 7 $ 7.94 $ 1.93 $ 7.88 $ 1.92
	( ( (		( ( (		( ( (	Amount � $ 2,067,379 100 1,656,233 80 411,146 20 16,737 1 29,781 1 205,140 10 251,658 12 159,488 8 3,527 - 42 - 11,003 - 1,886) - 12,686 - 172,174 8 23,515) ( 1) 148,659 7 1,525) - $ 147,134 7 $ 1.93 $ 1.92

SILICON OPTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

BALANCE, JANUARY 1, 2020 Appropriation and distribution of 2019 retained earnings Legal reserve Special reserve Cash dividends Net income for the nine months ended September 30, 2020 Other comprehensive income(loss)for the nine months ended September 30, 2020 Total comprehensive income(loss)for the nine months ended September, 2020 Issuance of ordinary shares under employee share options BALANCE, SEPTEMBER 30, 2020 BALANCE, JANUARY 1, 2021 Appropriation and distribution of 2020 retained earnings Legal reserve Special reserve Cash dividends Net income for the nine months ended September 30, 2021 Other comprehensive income(loss)for the nine months ended September 30, 2021 Total comprehensive income(loss)for the nine months ended September 30, 2021 Issuance of ordinary shares under employee share options BALANCE, SEPTEMBER 30, 2021	Share Capital Number of Shares (In Thousands) Amount Capital Surplus 78,081 $ 780,809 $ 1,131,702 - - - - - - - - - - - - - - - - - - 25 250 12 78,106 $ 781,059 $ 1,131,714 78,106 $ 781,059 $ 1,131,714 - - - - - - - - - - - - - - - - - - 45 450 1,035 78,151 $ 781,509 $ 1,132,749	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 50,310 $ - $ 216,659 15,601 - ( 15,601 ) - 2,365 ( 2,365 ) - - ( 154,212 ) - - 148,659 - - - - - 148,659 - - - $ 65,911 $ 2,365 $ 193,140 $ 65,911 $ 2,365 $ 325,938 28,146 - ( 28,146 ) - 1,885 ( 1,885 ) - - ( 215,897 ) - - 612,225 - - - - - 612,225 - - - $ 94,057 $ 4,250 $ 692,235	Other Equity Exchange Difference on Translating the Financial Statements of Foreign Operations Treasury Shares Total Equity ( $ 2,365 ) ( $ 96,995 ) $ 2,080,120 - - - - - - - - ( 154,212 ) - - 148,659 ( 1,525) - ( 1,525) ( 1,525) - 147,134 - - 262 ($ 3,890) ($ 96,995) $ 2,073,304 ( $ 4,250 ) ( $ 96,995 ) $ 2,205,742 - - - - - - - - ( 215,897 ) - - 612,225 ( 1,488) - ( 1,488) ( 1,488) - 610,737 - - 1,485 ($ 5,738) ($ 96,995) $ 2,602,067
	Number of Shares (In Thousands) 78,081 - - - - - - 25 78,106 78,106 - - - - - - 45 78,151

SILICON OPTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expense Amortization expense Finance costs Interest income (Reversal) write downs of inventories Net loss on foreign currency exchange Changes in operating assets and liabilities Accounts receivable Inventories Prepayments and other current assets Contract liabilities Accounts payable Accounts payables to related parties Accrued expenses and other current liabilities Refund liability Cash generated from operations Income tax paid Net cash generated from(used in)operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at amortized cost Proceeds from financial assets at amortized cost Payments of property, plant and equipment Increase in refundable deposits Payments for intangible assets Payments for right-of-use assets Interest received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings Proceeds from guarantee deposits received Repayment of the principal portion of lease liabilities Cash dividend payment Exercise of employee share options Interest paid Net cash generated from(used in)investing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE IN CASH CASH AT THE BEGINNING OF PERIOD CASH AT THE END OF PERIOD		Nine months Ended September 30	Nine months Ended September 30
	( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (	2021 $ 742,047 77,116 5,267 2,714 4,154 ) ( 9,917 ) 785 ) 19,130 266,653 ) ( 8,427 ) 50,400 199,719 155,010 ) ( 57,767 7,971 717,185 ( 48,111) ( 669,074 ( 592,242 ) ( 381,962 54,191 ) ( 2,400 ) ( 3,475 ) ( 502 ) 4,154 266,694) ( - 6,977 5,713 ) ( 215,897 ) ( 1,485 2,714) ( 215,862) 1,165 ( 187,683 ( 547,597 $ 735,280	2020 $ 172,174 65,359 5,624 1,886 3,527 ) 30,442 1,429 7,075 356,914 ) 34,923 93 37,306 3,436 ) 3,245 - 4,321 ) 7,115) 11,436) 200,016 ) 50,000 44,870 ) 147 ) 2,337 ) - 3,527 193,843) 350,000 - 5,523 ) 154,212 ) 262 1,886) 188,641 2,050) 18,688 ) 541,706 $ 523,018

SILICON OPTRONICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) (Reviewed, Not Audited)

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 consolidated financial statements of the Company and its subsidiary (collectively referred to as the “Group”) are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on November 04, 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 material impact on the Group’s accounting policies

b. The IFRSs endorsed by the FSC for application starting from 2022

New IFRSs �Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB
	January 1, 2022 (Note 1) January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4)

Note 1: 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 2: 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 3: 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 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

1) Annual Improvements to IFRS Standards 2018-2020

Several standards, including IFRS 9 “Financial Instruments”, were amended in the annual improvements. IFRS 9 requires the comparison of the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received, with that of the cash flows under the original financial liability when there is an exchange or modification of debt instruments. The new terms and the original terms are substantially different if the difference between those discounted present values is at least 10%. The amendments to IFRS 9 clarify that the only fees that should be included in the above assessment are those fees paid or received between the borrower and the lender.

2) Amendments to IFRS 3 “'Reference to the Conceptual Framework”

The amendments replace the references to the Conceptual Framework of IFRS 3 and specify that the acquirer shall apply IFRIC 21 “Levies” to determine whether the event that gives rise to a liability for a levy has occurred at the acquisition date.

3) 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 Group shall restate its comparative information when it initially applies the aforementioned amendments.

4) Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

The amendments specify that when assessing whether a contract is onerous, the “cost of fulfilling a contract” includes both the incremental costs of fulfilling that contract (for example, direct labor and materials) and an allocation of other costs that relate directly to fulfilling contracts (for example, an allocation of depreciation for an item of property, plant and equipment used in fulfilling the contract).

The Group will recognize the cumulative effect of the initial application of the amendments in the retained earnings at the date of the initial application.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’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

New IFRSs

Effective Date Announced by IASB (Note 1)

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of To be determined by IASB Assets 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 2) Amendment to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 3) Amendments to IAS 12 “Deferred Tax related to Assets January 1, 2023 (Note 4) andLiabilities arising from a Single Transaction”

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 will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: 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.
Note 4: Except that deferred taxes will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.
1) Amendments 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 Group 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 Group will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Group 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 Group’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 Group’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. Except for the above impact, as of the date the consolidated financial statements were authorized

for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’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 consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation
The consolidated 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.
c. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (its subsidiaries).Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Refer to Notes 10 and 29 for detailed information on subsidiaries (including the percentages of ownership and main businesses).
d. Other significant accounting policies Except for the following, please refer to the consolidated financial statements for the year ended
December 31, 2020.

1)Retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events

2) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period's pre-tax income the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The Group considers the recent development of the COVID-19 in Taiwan and its economic environment implications when making its critical accounting estimates in cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. For other-related information. Except for the following, refer to the statements of critical accounting judgments and key sources of estimation uncertainty to the consolidated financial statements for the year ended December 31, 2020.

6. CASH AND CASH EQUIVALENTS

Cash on hand Bank deposits Cash equivalents (investments with original maturities of 3 months or less) Time deposits in banks	September 30, 2021 $ 182 595,848 139,250 $ 735,280	December 31, 2020 $ 263 547,334 - $ 547,597	September 30, 2020 $ 286 472,732 50,000 $ 523,018

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

reporting period were as follows:
September 30, 2021 Time deposits 0.29% 7. FINANCIAL ASSETS AT AMORTIZED COST September30, 2021 Current Time deposit with original maturities of more than 3 months (a) $ 968,766 Non-current Pledged time deposits (a and c) $ 3,500	December 31, 2020 - December 31, 2020 $ 758,754 $ 4,048	September 30, 2020 0.38% September30, 2020 $ 288,538
		$ 2,548

a. The interest rates rangess of time deposits with original maturities of more than 3 months were 0.08%-2.40% � 0.08%-2.40% and 0.45%-2.80% per annum as of September 30, 2021 � December 31, 2020 and September 30, 2020, 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

Accounts receivable-unrelated parties At amortized cost Gross carrying amount Less: Allowance for impairment loss	September30, 2021 $ 14,028 - $ 14,028	December 31, 2020 $ 32,842 - $ 32,842	September30, 2020 $ 4,307 - $ 4,307

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 Group 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 Group 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 Group’s credit risk was significantly reduced.

The Group 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 Group’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 Group’s different customer base.

The Group 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 Group 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 Group’s provision matrix.

	September 30,2021	September 30,2021
				Past	Due		Past Due		Past Due			Past Due		Past Due			Past Due
				Up to			61 ~90		91 ~120			121~150		151~180			Over 181
		Not Past Due		60 Days			Days			Days			Days		Days			Days	Total
	Gross carrying
	amount	$ 14,028		$	-		$	-	$	-		$	-	$	-		$	-	$ 14,028
	Loss allowance
	(Lifetime ECL)	-			-			-		-			-		-			-	-
	Amortized cost	$ 14,028		$	-		$	-	$	-		$	-	$	-		$	-	$ 14,028
	December 31,2020
			Past Due			Past Due			Past Due		Past Due			Past Due		Past Due
		Not Past	Up to			61 ~90			91 ~120		121~150			151~180		Over		181
		Due	60 Days			Days			Days			Days		Days			Days		Total
	Gross carrying
	amount	$ 16,224	$ 16,618			$	-		$	-	$		-	$	-	$		-	$ 32,842
	Loss allowance
	(Lifetime ECL)	-			-		-			-			-		-			-	-
	Amortized cost	$ 16,224	$ 16,618			$	-		$	-	$		-	$	-	$		-	$ 32,842
	September 30,2020
			Past Due			Past Due			Past Due		Past Due			Past Due		Past Due
		Not Past	Up to			61 ~90			91 ~120		121~150			151~180		Over		181
		Due	60 Days			Days			Days			Days		Days			Days		Total
	Gross carrying
	amount	$ 1,690	$ 2,617			$	-		$	-	$		-	$	-	$		-	$ 4,307
	Loss allowance
	(Lifetime ECL)	-			-		-			-			-		-			-	-
	Amortized cost	$ 1,690	$ 2,617			$	-		$	-	$		-	$	-	$		-	$ 4,307
9.	INVENTORIES
						September30,					December 31,					September30,
							2021						2020					2020
	Finished goods					$		536,084			$		170,650			$		412,186
	Work in progress							588,528					675,500					769,003
	Raw materials							1,481					3,373						1,803
	Total					$	1,126,093				$		849,523			$		1,182,992

the loss of NT$5,459 thousand and NT$5,640 thousand for the three -month periods ended September 30, 2021 and 2020,and the loss of NT$(9,917) thousand and NT$30,442 thousand for the nine - month periods ended September 30, 2021 and 2020 respectively, due to the sale of stagnant inventories write-down of inventories to net realizable value.

10. SUBSIDIARIES

Investor Silicon Optronics, Inc. Silicon Optronics (Cayman) Co., Ltd.	Investee NUEVA IMAGING, INC. (“NUEVA”) Silicon Optronics (Cayman) Co., Ltd. (“Silicon Cayman”) Silicon Optronics (Shanghai) Co., Ltd.	Main Business Research and development and design of high order CMOS Image Sensor products Investment business Design, development and testing of integrated circuits and related electronic products, technical service consultation and transfer of R&D results	Percentage%of Ownership	Percentage%of Ownership	Percentage%of Ownership
			September 30, 2021 100% 100% 100%	December 31, 2020	September 30, 2020 100% 100% 100%
				100% 100% 100%

Except for US NUEVA which fulfills the definition of a major subsidiary per Article 2 of the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, the remaining entities are non-major subsidiaries Silicon Optronics (Shanghai) Co., Ltd. is an immaterial subsidiary; its financial statements have not been reviewed.

11. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2021 Additions Disposal Effect of exchange rate changes Balance at September 30, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Disposal Effect of exchange rate changes Balance at September 30, 2021 Accumulated impairment Balance at January 1, 2021 and September 30, 2021 Balance at January 1,2021 Balance at September 30,2021 Cost Balance at January 1, 2020 Additions Disposal Effect of exchange rate changes Balance at September 30, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Disposal Effect of exchange rate changes Balance at September 30, 2020 Accumulated impairment Balance at January 1, 2020 and September 30, 2020 Balance at January 1,2020 Balance at September 30,2020	Testing Equipment $ 1,584 644 ( 978 ) ( 5) $ 1,245 $ 1,260 201 ( 978 ) ( 4) $ 479 $ - $ 324 $ 766 $ 1,464 115 - - ( 3) $ 1,576 $ 980 205 - ( 2) $ 1,183 $ - $ 484 $ 393	R&D Equipment $ 473,084 - - - $ 473,084 $ 21,026 23,654 - - $ 44,680 $ - $ 452,058 $ 428,404 $ - - - 473,084 - $ 473,084 $ - 13,141 - - $ 13,141 $ - $ - $ 459,943	Molding Equipment $ 12,665 4,752 ( 1,074 ) - $ 16,343 $ 4,643 3,155 ( 1,074 ) - $ 6,724 $ 1,183 $ 6,839 $ 8,436 $ 13,586 3,831 ( 2,838 ) - - $ 14,579 $ 6,173 2,917 ( 2,838 ) - $ 6,252 $ 1,183 $ 6,230 $ 7,144		Computer $ 1,153 118 155 ) 16) $ 1,100 $ 846 135 155 ) 12) $ 814 $ - $ 307 $ 286 $ 1,137 - - - 8) $ 1,129 $ 639 153 - 5) $ 787 $ - $ 498 $ 342	Office Equipment $ 1,665 31 ( 29 ) ( 37) $ 1,630 $ 1,556 25 ( 29 ) ( 33) $ 1,519 $ - $ 109 $ 111 $ 1,672 32 - - ( 47) $ 1,657 $ 1,607 49 - ( 46) $ 1,610 $ - $ 65 $ 47	P	hotomasks $ 108,800 49,926 42,632 ) - $ 116,094 $ 55,325 43,580 42,632 ) - $ 56,273 $ - $ 53,475 $ 59,821 $ 96,810 54,613 41,741 ) - - $ 109,682 $ 46,642 42,665 41,741 ) - $ 47,566 $ - $ 50,168 $ 62,116	Prepayment for Business Facilities $ - - - - $ - $ - - - - $ - $ - $ - $ - $ 472,972 112 - ( 473,084 ) - $ - $ - - - - $ - $ - $ 472,972 $ -		Total
	( ( ( ( ( (		( ( ( (	( ( ( ( ( (		( ( ( ( ( (	( ( ( (		(	( ( ( ( ( ( ( (	$ 598,951 55,471 44,868 ) 58) $ 609,496 $ 84,656 70,750 44,868 ) 49) $ 110,489 $ 1,183 $ 513,112 $ 497,824 $ 587,641 58,703 44,579 ) - 58) $ 601,707 $ 56,041 59,130 44,579 ) 53) $ 70,539 $ 1,183 $ 530,417 $ 529,985

The Group’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
Photomasks	2 years

12. LEASE ARRANGEMENTS

a. Right-of-use assets


		$

2021 $ 2,118	2020		2021	2020
			$ 502 $ 6,366	$ - $ 6,229

Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the years ended September 30, 2021 and 2020.

b. Lease liabilities

September 30, 2021 Carrying amount Current $ 7,659 Non-current $ 3,638 The discount rate for lease liabilities was as follows: September 30, 2021 Buildings 1%		December 31, 2020 $ 7,667 $ 9,473 December 31, 2020 1%		September 30, 2020
				$ 7,624 $ 11,352 September 30, 2020
				1%

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

The Group did not have significant new lease contracts in September 30, 2021 and 2020. The Group leases buildings for the use of offices with lease terms of 3-4 years. The Group does not have bargain purchase options to acquire the buildings at the expiry of the lease periods. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases		Three months ended September 30 2021 2020 $ 127 $ 127 $ 14 $ 15	Three months ended September 30 2021 2020 $ 127 $ 127 $ 14 $ 15		Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
		2021 $ 127 $ 14			2021	(	2020
				(	$ 379 $ 47 $ 6,245)		$ 379 $ 44 $ 5,946)

13. INTANGIBLE ASSETS

Cost Balance at January 1, 2021 Additions Effect of exchange rate changes Balance at September 30, 2021 Accumulated amortization Balance at January 1, 2021 Amortization expense Effect of exchange rate changes		Patents $ 14,169 - 313) $ 13,856 $ 8,738 2,094 209)		Software $ 25,877 3,475 444) $ 28,908 $ 23,524 3,173 404)		Total
	( (		( (		( (	$ 40,046 3,475 757) $ 42,764 $ 32,262 5,267 613)

Balance at September 30, 2021 Balance at January 1, 2021 Balance at September 30, 2021 Cost Balance at January 1, 2020 Additions Effect of exchange rate changes ( Balance at September 30, 2020 Accumulated amortization Balance at January 1, 2020 Amortization expense Effect of exchange rate changes ( Balance at September 30, 2020 Balance at January 1, 2020 Balance at September 30, 2020	$ 10,623 $ 5,431 $ 3,233 $ 14,915 - 438) ( $ 14,477 $ 6,215 2,225 236) ( $ 8,204 $ 8,700 $ 6,273	$ 26,293 $ 2,353 $ 2,615 $ 23,306 2,337 581) ( $ 25,062 $ 19,954 3,399 530) ( $ 22,823 $ 3,352 $ 2,239	$ 36,916 $ 7,784 $ 5,848 $ 38,221 2,337 1,019) $ 39,539 $ 26,169 5,624 766) $ 31,027 $ 12,052 $ 8,512

Except for the recognition of amortization expense, there were no significant additions, disposals and impairment of the Group’s other intangible assets for the years ended September 30, 2020 and 2021.

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

Patents 3-7 years Software 1-3 years

14. OTHER ASSETS

Current Prepaid income tax Tax receivables of business tax Prepayments for purchases Others Non-current Refundable deposits Net defined benefit assets		September 30, 2021 $ 42,947 23,914 1,992 1,004 $ 69,857 $ 4,171 1,374 $ 5,545		December 31, 2020 $ 41,175 18,054 1,187 1,014 $ 61,430 $ 1,787 1,374 $ 3,161		September 30, 2020
						$ 35,785 30,320 758 1,485 $ 68,348 $ 1,776 1,320 $ 3,096

15. LONG-TERM LOAN

G-TERM LOAN
Secured loan (Note 27) Bank loan Less: Current portion Bank loan		September 30, 2021 $ 350,000 50,000 $ 300,000		December 31, 2020 $ 350,000 - $ 350,000		September 30, 2020
						$ 350,000 - $ 350,000

In the year ended December 31, 2020, the Group acquired new bank loan facilities in the amount of $350,000 thousand, with a floating interest rate of 0.98767% per annum. Interest is paid monthly, and the principal is to be repaid in seven equal semiannual installments staring from April 2022. The loan is to be repaid before April 1, 2025.

16. OTHER LIABILITIES

OTHER LIABILITIES
Current Other payables Payables for bonuses Payables for employees’ compensation	September 30, 2021 $ 67,463 65,110	December 31, 2020 $ 35,536 28,570	September 30, 2020
			$ 21,346 16,704

Payables for remuneration of directors Payables for purchases of equipment Payables for processing Others Other liabilities Receipts under custody Refund liabilities (a)	8,130 6,563 866 11,846 159,978 147 $ 160,125 $ 7,971	3,750 5,207 13,787 13,852 100,702 134 $ 100,836 $ -	1,875 21,171 - 12,422
			73,518 132
			$ 73,650
			$ -

a. Sales revenue is measured at the fair value of the consideration received or receivable, and deducted from estimated customer returns, discounts and other similar discounts. Based on historical experience and considering different contract conditions, the combined company estimates the possible sales discounts and recognizes the refund liabilities accordingly.

17. RETIREMENT BENEFIT PLANS

For the three months ended September 30,2021 and 2020, the pension expenses of defined benefit plans were $5 thousand and $7 thousand, respectively, for the nine months ended September 30, 2021 and 2020 are NT$23 thousand and NT$19 thousand, respectively and these were calculated based on the pension cost rate determined by the actuarial calculation on December 31, 2020 and 2019, respectively.

18. EQUITY

a. Common stock

Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		September 30, 2021 100,000 $ 1,000,000 78,151 $ 781,509		December 31, 2020 100,000 $ 1,000,000 78,106 $ 781,059		September 30, 2020
						100,000 $ 1,000,000 78,106 $ 781,059

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

b. Capital surplus
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Arising from issuance of ordinary shares May be used to offset a deficit only Arising from employee share options exercised price May not be used for any purpose Arising from employee share options		September 30, 2021 $ 1,115,462 12,277 5,010 $ 1,132,749		December 31, 2020 $ 1,114,427 12,269 5,018 $ 1,131,714		September 30, 2020
						$ 1,114,427 12,269 5,018 $ 1,131,714

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:

Balance at January 1, 2020 Issuance of ordinary shares under employee share options Balance at September 30, 2020 Balance at January 1, 2021 Issuance of ordinary shares under employee share options Balance at September 30, 2021	Premium on Issue of Shares $ 1,114,415 12 $ 1,114,427 $ 1,114,427 1,035 $ 1,115,462		Arising from Employee Share Options $ 17,287 - $ 17,287 $ 17,287 - $ 17,287		Total
					$ 1,131,702 12 $ 1,131,714 $ 1,131,714 1,035 $ 1,132,749

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.

The appropriations of earnings for 2020 and 2019. which had been approved in the shareholders’ meetings on July 1, 2021 and June 16, 2020, respectively, were as follows:

Legal reserve Special reserve Cash dividends Dividends per share (NT$)		Appropriation of Earnings	Appropriation of Earnings	Appropriation of Earnings
		For the Year Ended December 31
		2020 $ 28,146 $ 1,885 $ 215,897 $ 2.8		2019
				$ 15,601 $ 2,365 $ 154,212 $ 2.0

d. Other equity items

Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
			2020
$		( ( (	$ 2,365 ) 1,525) $ 3,890) September 30, 2020
$

	1,000		1,000

e. Treasury shares

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.

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

ENUE
Revenue from contracts with customers Revenue from the sale of goods Others Contract balances Accounts receivable (Note 8) Contract liabilities - current Sale of goods	Three months Ended September 30 2021 2020 $ 1,113,850 $ 906,418 - 22,103 $ 1,113,850 $ 928,521 September 30, 2021 December 31, 2020 $ 14,028 $ 32,842 $ 66,318 $ 15,940	Nine months Ended September 30
	2021	2021 $ 3,123,218 127 $ 3,123,345 September 30, 2020 $ 4,307 $ 10,141	2020
	$ 1,113,850 - $ 1,113,850 September 30, 2021		$ 2,012,822 54,557 $ 2,067,379 January 1, 2020
	$ 14,028 $ 66,318		$ 11,260 $ 10,090

a. Contract balances

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

From the contract liabilities at the beginning of the year Sale of goods		Nine months Ended September 30	Nine months Ended September 30
		2021 $ 11,323		2020
				$ 5,494

b. Disaggregation of revenue

Primary geographical markets Hong Kong Taiwan (the Group’s operating location) Others Major goods CMOS Others		Three months Ended September 30 2021 2020 $ 959,302 $ 839,498 79,143 22,171 75,405 66,852 $ 1,113,850 $ 928,521 $ 1,101,083 $ 904,994 12,767 23,527 $ 1,113,850 $ 928,521	Three months Ended September 30 2021 2020 $ 959,302 $ 839,498 79,143 22,171 75,405 66,852 $ 1,113,850 $ 928,521 $ 1,101,083 $ 904,994 12,767 23,527 $ 1,113,850 $ 928,521		Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
		2021			2021 $ 2,750,186 176,805 196,354 $ 3,123,345 $ 3,102,685 20,660 $ 3,123,345		2020
		$ 959,302 79,143 75,405 $ 1,113,850 $ 1,101,083 12,767 $ 1,113,850					$ 1,871,306 51,567 144,506 $ 2,067,379 $ 2,007,654 59,725 $ 2,067,379

20. NET PROFIT FROM CONTINUING OPERATIONS

a. Interest income

terest income
Financial assets at amortized cost Bank deposit Others	Three months Ended September 30 2021 2020 $ 1,223 $ 409 175 381 1 1 $ 1,399 $ 791	Nine months Ended September 30
	2021	2021 $ 3,540 609 5 $ 4,154	2020
	$ 1,223 175 1 $ 1,399		$ 1,079 2,443 5 $ 3,527

b. Other income

ther income
Others ther gains and losses Net foreign exchange gain Other losses nance costs Interest on bank loans Interest on lease liabilities	Three months Ended September 30 2021 2020 $ 7 $ - Three months Ended September 30 2021 2020 $ 2,838 $ 3,745 - ( 30) $ 2,838 $ 3,715 Three months Ended September 30 2021 2020 $ 871 $ 871 31 50 $ 902 $ 921		Nine months Ended September 30
			2021 2020 $ 105 $ 42 Nine months Ended September 30	2020

			2021 2020 $ 6,609 $ 11,037 99) ( 34) $ 6,510 $ 11,003 Nine months Ended September 30	2020
		(
	2021 $ 871 31 $ 902		2021 $ 2,608 106 $ 2,714	2020
				$ 1,722 164 $ 1,886

c. Other gains and losses

d. Finance costs

e. Depreciation and amortization

Property, plant and equipment Right-of-use assets Intangible assets Total An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Research and development expenses		Three months Ended September 30 2021 2020 $ 24,423 $ 24,017 2,118 2,118 1,760 1,840 $ 28,301 $ 27,975 $ 5,137 $ 5,029 21,404 21,106 $ 26,541 $ 26,135 $ 1,760 $ 1,840	Three months Ended September 30 2021 2020 $ 24,423 $ 24,017 2,118 2,118 1,760 1,840 $ 28,301 $ 27,975 $ 5,137 $ 5,029 21,404 21,106 $ 26,541 $ 26,135 $ 1,760 $ 1,840		Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
		2021 $ 24,423 2,118 1,760 $ 28,301 $ 5,137 21,404 $ 26,541 $ 1,760			2021 $ 70,750 6,366 5,267 $ 82,383 $ 15,031 62,085 $ 77,116 $ 5,267		2020
							$ 59,130 6,229 5,624 $ 70,983 $ 15,404 49,955 $ 65,359 $ 5,624

f. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating expenses		Three months Ended September 30 2021 2020 $ 845 $ 769 5 7 850 776 91,936 55,072 $ 92,786 $ 55,848 $ 92,786 $ 55,848	Three months Ended September 30 2021 2020 $ 845 $ 769 5 7 850 776 91,936 55,072 $ 92,786 $ 55,848 $ 92,786 $ 55,848		Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
		2021 $ 845 5 850 91,936 $ 92,786 $ 92,786			2021 $ 2,464 23 2,487 252,839 $ 255,326 $ 255,326		2020
							$ 2,318 19 2,337 141,152 $ 143,489 $ 143,489

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 rate of no higher than 3%. The employees’ compensation and remuneration of directors for the three months ended September 30, 2020 and 2019, were as follows: Accrual rate

irectors for the three months ended September 30, 2020 and 2019, were as follows: Accrual rate	mber 30, 2020 and 2019, were as follows:	mber 30, 2020 and 2019, were as follows:	mber 30, 2020 and 2019, were as follows:	mber 30, 2020 and 2019, were as follows:
Nine months Ended September 30 2021 2020 Employees’ compensation 8% 8% Remuneration of directors and supervisors 1% 2% Amount Three months Ended September 30 Nine months Ended September 30 2021 2020 2021 2020 Employees’ compensation $ 26,520 $ 9,341 $ 65,110 $ 14,952 Remuneration of directors and supervisors $ 3,610 $ 625 $ 8,130 $ 1,875	Nine months Ended September 30
	2021	2020 8% 2% Nine months Ended September 30	2020

		2021 $ 65,110 $ 8,130		2020
				$ 14,952 $ 1,875

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate. The appropriations of employees’ compensation and remuneration of directors and supervisors for 2020 and 2019 that were resolved by the board of directors on March 10, 2021 and March 17, 2020, respectively, are as shown below:

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

There is no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated 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

a. Income tax recognized in profit or loss

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

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Income tax expense recognized in profit or loss		Three months Ended September 30 2021 2020 $ 55,092 $ 15,312 1,776 - - - 876) ( 1,188) $ 55,992 $ 14,124	Three months Ended September 30 2021 2020 $ 55,092 $ 15,312 1,776 - - - 876) ( 1,188) $ 55,992 $ 14,124		Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
		2021	(		2021 $ 126,701 1,776 93 ) 1,438 $ 129,822		2020
	(	$ 55,092 1,776 - 876) $ 55,992		(		(	$ 27,444 - 2,206 6,135) $ 23,515

b. Income tax assessments

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

22. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share		Three months Ended September 30 2021 2020 $ 3.18 $ 1.20 $ 3.16 $ 1.20	Three months Ended September 30 2021 2020 $ 3.18 $ 1.20 $ 3.16 $ 1.20		Unit: NT$ Per Share Nine months Ended September 30 2021 2020 $ 7.94 $ 1.93 $ 7.88 $ 1.92	Unit: NT$ Per Share Nine months Ended September 30 2021 2020 $ 7.94 $ 1.93 $ 7.88 $ 1.92
		2021 $ 3.18 $ 3.16			2021 $ 7.94 $ 7.88

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

Net Profit for the Year
Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee share options Bonuses issued to employees Earnings used in the computation of diluted earnings per share	Three months Ended September 30 2021 2020 $ 245,563 $ 92,688 - - - - $ 245,563 $ 92,688	Nine months Ended September 30
	2021 $ 245,563 - - $ 245,563	2021 $ 612,225 - - $ 612,225	2020
			$ 148,659 - - $ 148,659

Number of shares

Number of shares
Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employee share options Bonuses issued to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	Three months Ended September 30 2021 2020 77,117 77,106 28 - 447 176 77,592 77,282	Unit: In Thousands of Shares Nine months Ended September 30 2021 2020 77,111 77,105 31 1 513 232 77,655 77,338
	2021 77,117 28 447 77,592	2021 77,111 31 513 77,655

Since the Group 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, 2012, 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 option 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.

Qualified employees of the Company were granted 5,000 options on July 22, 2021, 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 option is 5,000 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 S		2012 Employee S	hare Option Plan
	Number of Options (In Thousands) 100 45) 55 55 100 - 100 100		Number of Options (In Thousands) 605 - 605 605 630 25) 605 605	Weighted- average Exercise Price (NT$)
(				$ 17.17 - 17.17
		(		$ 17.31 10.50 17.17

Information on outstanding options as follows:

	September 30,2021			December 31,2020			September 30,2020
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)	Share Option Plan	Range of Exercise Price(NT$)	Weighted- average Remaining Contractual Life (In Years)
2013 Employee share option plan 2012 Employee share option plan	$ 32.21 10.25~19.03	1.87 1.07	2013 Employee share option plan 2012 Employee share option plan	$ 32.21~33.00 10.25~19.03	2.62 1.82	2013 Employee share option plan 2012 Employee share option plan	$ 32.21~33.00 10.25~19.03	2.87 2.07

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:

Grant-date share price (NT$)	$13.55
Exercise price (NT$)	$46.00
Expected volatility	33.73%-37.88%
Expected life	2.5-4.5 years
Expected dividend yield	-
Risk-free interest rate	0.68%-1.12%
Fair value of stock options	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$) $11.18 Exercise price (NT$) $33.0 Expected volatility 37.6%-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$) $12.29 Exercise price (NT$) $19.5

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:

Grant-date share price (NT$) $10.10 Exercise price (NT$) $10.50 Expected volatility 46.76%-47.19% Expected life 6-7 years Expected dividend yield Risk-free interest rate 1.09%-1.15% Fair value of stock options 4.45-4.81

24. CAPITAL MANAGEMENT

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

Key management personnel of the Group review the capital structure on an 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 Group may adjust the number of new shares issued, and/or the amount of new debt issued or existing debt redeemed.

The Group 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

Financial assets Financial assets at amortized cost (Note 1) Financial liabilities Amortized cost (Note 2)	September 30, 2021 $ 1,725,745 685,091	December 31, 2020 $ 1,345,028 643,482	September 30, 2020
			$ 820,187 665,926

Note 1: The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, accounts receivable, refundable deposits 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), Long-term loan-current portion, long-term debt and refund liability.
c. Financial risk management objectives and policies

The Group’s major financial instruments included accounts receivable, accounts payable and long-term borrowings. The Group’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 Group 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 Group’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 Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Group has foreign currency sales and purchases, which exposes the Group to foreign currency risk. Approximately 97% of the Group’s sales is denominated in currencies other than the functional currency of the entity making the sale, whilst almost 97% of costs is denominated in the entity’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 Group 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 Nine months Ended September 30, 2021 and 2020 would decrease/increase by $2,266 thousand and $476 thousand, respectively. b) Interest rate risk

The Group 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 Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting periods were as follows.

Fair value interest rate risk Financial assets Cash flow interest rate risk Financial assets	September 30, 2021 $ 1,111,516 595,838	December 31, 2020 $ 762,802 547,324	September 30, 2020
			$ 341,086 472,722

350,000

Financial liabilities 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 Nine months Ended September 30, 2021 and 2020 would have increased/decreased by $922 thousand and $460 thousand, respectively.

2) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations and resulting in a financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group 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 consolidated balance sheets.

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

3) Liquidity risk

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

Bank borrowings are significant sources of liquidity for the Group. For the Group’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 Group’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 Group 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.

September 30, 2021

Non-derivative financial liabilities Leas liabilities Accounts payable Payables for processing Payables for purchases of equipment Long-term loan	On Demand or Less than 1 Month $ 644 264,668 - 3,933 288 $ 269,533		1-3 Months $ 1,289 56,017 866 2,630 576 $ 61,378		3 Months to 1 Year $ 5,799 - - - 52,508 $ 58,307		1 Year to 5 Years
							$ 3,711 - - - 304,687 $ 308,398


On Demand or
Less than		3 Months	1 Year to
1 Month	1-3 Months	to 1 Year	5 Years

Non-derivative financial liabilities Leas liabilities Accounts payable Accounts payable - related parties Payables for processing Payables for purchases of equipment Long-term loan	$ 650 95,205 132,384 - 2,771 288 $ 231,298	$ 1,300 25,116 21,783 13,787 2,436 576 $ 64,998	$ 5,849 - - - - 2,591 $ 8,440	$ 9,687 - - - - 356,333
				$ 366,020

September 30, 2020

Non-derivative financial liabilities Leas liabilities Accounts payable Accounts payable - related parties Payables for purchases of equipment Long-term loan	On Demand or Less than 1 Month $ 632 137,737 116,732 4,076 288 $ 259,465		1-3 Months $ 1,900 25,509 14,777 17,095 576 $ 59,857		3 Months to 1 Year $ 5,730 - - - 2,591 $ 8,321		1 Year to 5 Years
							$ 11,696 - - - 357,198 $ 368,894

b) Financing facilities

Unsecured bank overdraft facilities, reviewed annually and payable on demand: Amount used Amount unused Secured bank overdraft facilities: Amount used Amount unused		September 30, 2021 $ - 200,000 $ 200,000 $ 350,000 250,000 $ 600,000		December 31, 2020 $ - 200,000 $ 200,000 $ 350,000 250,000 $ 600,000		September 30, 2020
						$ - 200,000 $ 200,000 $ 350,000 250,000 $ 600,000

26. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed below.

a. Related party name and category

Related Party	Name						Related Party Category
					Substantive related parties(Non-related parties after
Powerchip Semiconductor Manufacturing Corp.					April 18, 2021)
urchases
	Three months		Ended				Nine months Ended
		September 30					September 30
Related Party Category	2021			2020			2021	2020
Substantive related parties
Powerchip Semiconductor
Manufacturing Corp.	$	-	$	304,704		$	437,695 $	1,114,229

b. Purchases

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

c. Research and development expenses

Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
2021	2020 $ 4,702 September 30, 2020	2020
$ -
	$ 131,509

d. Accounts payable to related parties
e. Other transactions with related parties

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

f. Remuneration of key management personnel

Short-term employee benefits		Three months Ended September 30 2021 2020 $ 12,267 $ 6,535	Three months Ended September 30 2021 2020 $ 12,267 $ 6,535		Nine months Ended September 30	Nine months Ended September 30	Nine months Ended September 30
		2021 $ 12,267			2021		2020
					$ 27,855		$ 18,839

The remuneration of directors and other key management personnel is determined by the remuneration committee based on with 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:

Property, plant and equipment - R&D equipment Pledged time deposits (classified as financial assets a amortized cost-noncurrent)		September 30, 2021 $ 428,404 3,500 $ 431,904		December 31, 2020 $ 452,058 4,048 $ 456,106		September 30, 2020
						$ 459,943 2,548 $ 462,491

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group’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:

September 30, 2021

Financial assets Monetary items USD CNY Financial liabilities Monetary items USD Decmeber 31, 2020 Financial assets Monetary items	Foreign Currency $ 21,540 2,274 13,404 Foreign Currency	Exchange Rate 27.85 �USD:NTD � 4.305 �RMB:NTD� 27.85 �USD:NTD � Exchange Rate		Carrying Amount
				$ 599,911 9,790 $ 609,701 $ 373,315 Carrying Amount

USD CNY Financial liabilities Monetary items USD September 30, 2020 Financial assets Monetary items USD CNY Financial liabilities Monetary items USD	$ 11,060 2,237 10,019 Foreign Currency $ 11,637 2,225 10,000	28.48(USD:NTD) 4.377(RMB:NTD) 28.48(USD:NTD) Exchange Rate 29.10(USD:NTD) 4.269(RMB:NTD) 29.10(USD:NTD)		$ 314,965 9,792 $ 324,757 $ 285,331 Carrying Amount
				$ 338,617 9,497 $ 348,114 $ 291,001

The Group is mainly exposed to the USD and CNY. The following information was aggregated by the functional currencies of the entities in the Group, and the exchange rates between the presentation currency and the respective functional currencies were disclosed. The significant unrealized foreign exchange gains (losses) were as follows:

	Three months Ended September 30	Three months Ended September 30
2021	2020 Net Foreign Exchange Gains (Losses) Exchange Rate $ 2,891 1 (NTD:NTD) ( 54 ) 4.257 (CNY:NTD) 1 29.45 (USD:NTD) $ 2,838 Nine months Ended September 30	2020
Exchange Rate 1 (NTD:NTD) 4.337 (CNY:NTD) 27.858 (USD:NTD)		Exchange Rate	Net Foreign Exchange Gains (Losses) $ 3,659 86 - $ 3,745
	(			$ 3,659 86 - $ 3,745
2021		2020
Exchange Rate 1 (NTD:NTD) 4.337 (CNY:NTD) 28.067 (USD:NTD)		Exchange Rate	Net Foreign Exchange Gains (Losses) $ 9,586 1,147 304 $ 11,037
		1 (NTD:NTD) 4.259 (CNY:NTD) 29.817 (USD:NTD)		$ 9,586 1,147 304 $ 11,037

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: See Table 1;
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;
10) Intercompany relationships and significant intercompany transactions: See Table 2;
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 3;
c. Information on investments in mainland China: See Table 4.
d. Information on major shareholders: the name, amount and proportion of shareholders with a shareholding ratio of 5% or more: See Table 5

30. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided.

The segment revenues and operating results for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020 are shown in the consolidated income statements for the three months ended September 30, 2021 and 2020 and nine months ended September 30, 2021 and 2020. The segment assets as of September 30, 2021, December 31, 2020 and September 30, 2020 are shown in the consolidated balance sheets as of September 30, 2021, December 31, 2020 and September 30, 2020.

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 NINE MONTHS ENDED SEPTEMBER 30, 2021

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts (Payable) Receivable	Notes/Accounts (Payable) Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
Silicon Optronics, Inc.	Powerchip Semiconductor Manufacturing Corp.	Substantive related parties	Purchase	$ 437,695	19	Note 2	-	-	$ -	-	-

Note 1: Non-related parties after April 18, 2021.

Note 2: Mainly paid on the 30th days after the month of the invoice date.

TABLE 2

SILICON OPTRONICS, INC. AND SUBSIDIARIES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS NINE MONTHS ENDED SEPTEMBER 30, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Counterparty	Nature of Relationship (Note 3)	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions
			Financial Statement Item	2021		Terms
				Amount	Percentage of Consolidated Total Gross Sales or Total Assets
Silicon Optronics, Inc.	NUEVA IMAGING INC. NUEVA IMAGING INC. Silicon Optronics (Shanghai) Co., Ltd. Silicon Optronics (Shanghai) Co., Ltd.	1 1 1 1	Technical service expense Other payable from related parties Technical service expense Other payable from related parties	$ 29,011 2,681 79,403 7,167	1% - 3% -	- - - -

Note 1: Represents the transactions from parent company to subsidiary.

Note 2: The intercompany transactions, prices and terms are determined in accordance with mutual agreements.

TABLE 3

SILICON OPTRONICS, INC. AND SUBSIDIARIES INFORMATION ON INVESTEES SEPTEMBER 30, 2021

(In Thousands of New Taiwan Dollars)

Investor Company	Investee Accounted for using the Equity Method	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance as of September 30, 2021	Balance as of September 30, 2021	Balance as of September 30, 2021	Net Income of Investee Accounted for using the Equity Method	Investment Income	Note
				September 30, 2021	December 31, 2020	Number of Shares (In Thousands)	Percentage of Ownership (%)	Carrying Amount
Silicon Optronics, Inc.	NUEVA IMAGING INC. Silicon Optronics (Cayman) Co., Ltd.	USA Cayman Islands	Product development & design of high-end CMOS Image Sensor Investment holding company	$ 358,500 5,237	$ 358,500 5,237	6,000 170	100 100	$ 245,054 29,609	$ 2,697 5,222	$ 2,697 5,222	Subsidiary Subsidiary

TABLE 4

SILICON OPTRONICS, INC. AND SUBSIDIARIES INFORMATION ON INVESTMENTS IN MAINLAND CHINA NINE MONTHS ENDED SEPTEMBER 30, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital (US$ in Thousands)	Paid-in Capital (US$ in Thousands)	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021 (US$ in Thousands)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of September 30, 2021 (US$ in Thousands)	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of September 30, 2021	Accumulated Repatriation of Investment Income as of September 30, 2021
							Outward	Inward
Silicon Optronics (Shanghai) Co., Ltd.	Design, test and research and development of IC and related electronic products with consultation on technology services and technology transfer		US$ 175 thousand		Note 1	$ 4,874 (US$ 175 thousand )	$ -	$ -	$ 4,874 (US$ 175 thousand )	$ 5,222	100	$ 5,222	$ 29,609	$ -

Accumulated Outward Remittance Investment in Mainland China as September 30, 2021 (US$ in Thousands)	for of	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)
$ 4,874 (US$ 175 thousand )		Note 1		$ 1,561,240

Note 1: Through Silicon Optronics (Cayman) Co., Ltd.’s investment in Silicon Optronics (Shanghai) Co., Ltd., the investment was approved by the Investment Commission, MOEA with the approved amount of US$ 175 thousand.

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

Note 3: Based on the exchange rate as of September 30, 2021.

TABLE 5

SILICON OPTRONICS, INC. AND SUBSIDIARIES INFORMATION OF MAJOR SHAREHOLDERS NINE MONTHS ENDED SEPTEMBER 30, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
Samoa Shangzhao Lake Co., Ltd. Samoa Full Guest Investment Limited Xiao Dong Luo	17,691,413 4,875,458 4,583,587	22.63 6.23 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 consolidated 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 Obsrvation Post System.

AI assistant

SOI — Interim / Quarterly Report 2021

52337_rns_2021-11-04_8f449737-cbf3-4376-a8ad-fb76354b6372.pdf

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Notice to Readers

SILICON OPTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

SILICON OPTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

SILICON OPTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

SILICON OPTRONICS, INC. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

1) Annual Improvements to IFRS Standards 2018-2020

New IFRSs

Effective Date Announced by IASB (Note 1)

1)Retirement benefits

6. CASH AND CASH EQUIVALENTS

8. ACCOUNTS RECEIVABLE

10. SUBSIDIARIES

11. PROPERTY, PLANT AND EQUIPMENT

12. LEASE ARRANGEMENTS

a. Right-of-use assets

b. Lease liabilities

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

d. Other lease information

13. INTANGIBLE ASSETS

14. OTHER ASSETS

15. LONG-TERM LOAN

16. OTHER LIABILITIES

17. RETIREMENT BENEFIT PLANS

18. EQUITY

c. Retained earnings and dividend policy

d. Other equity items

e. Treasury shares

19. REVENUE

a. Contract balances

b. Disaggregation of revenue

20. NET PROFIT FROM CONTINUING OPERATIONS

a. Interest income

b. Other income

c. Other gains and losses

d. Finance costs

e. Depreciation and amortization

f. Employee benefits expense

g. Employees’ compensation and remuneration of directors

21. INCOME TAXES

b. Income tax assessments

22. EARNINGS PER SHARE

Net Profit for the Year

Number of shares

23. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan

Information on employee share options is as follows:

24. CAPITAL MANAGEMENT

25. FINANCIAL INSTRUMENTS

1) Market risk

a) Foreign currency risk

Sensitivity analysis

b) Financing facilities

26. TRANSACTIONS WITH RELATED PARTIES

c. Research and development expenses

f. Remuneration of key management personnel

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

September 30, 2021

29. SEPARATELY DISCLOSED ITEMS

30. SEGMENT INFORMATION

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 NINE MONTHS ENDED SEPTEMBER 30, 2021

SILICON OPTRONICS, INC. AND SUBSIDIARIES INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS NINE MONTHS ENDED SEPTEMBER 30, 2021

SILICON OPTRONICS, INC. AND SUBSIDIARIES INFORMATION ON INVESTEES SEPTEMBER 30, 2021

SOI Interim / Quarterly Report 2021