SUNRACE — Annual Report 2021

Dec 28, 2021

Sun Race Sturmey-Archer Corporation And Subsidiaries

Consolidated Financial Statements for the Year Ended December 31, 2021 and 2020 and Independent Auditors’ Report

REPRESENTATION LETTER

The entities that are required to be included in the combined financial statements of Sun Race Sturmey-Archer Corporation as of and for the year ended December 31, 2021, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Sun Race Sturmey-Archer Corporation and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

Sun Race Sturmey-Archer Corporation

By Yi-Hsung Hsu

March 17, 2022

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Sun Race Sturmey-Archer Corporation

Opinion

We have audited the accompanying consolidated financial statements of Sun Race Sturmey-Archer Corporation Company and its subsidiaries (collectively, the “Group”), which comprise the consolidated balance sheets as of December 31, 2021and 2020, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s consolidated financial statements for the year ended December 31,2021 are stated as follows:

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Valuation of Inventory

The Group is mainly engaged in the sale of bicycle components, whose inventories may suffer from devaluation due to the fluctuations in the global markets, according to the industry characteristics. Therefore, the estimation of the net realizable value of the inventories shall take into account the ages of inventories and current market conditions, which often involves significant judgments of the Management. The amount of inventories for the year ended December 31, 2021, is considered material and has thus been deemed as a key audit matter.

• The audit procedures performed by the accountant include the following:

• Evaluate the policies made by the management regarding the recognition of loss on inventory write-down

• Inspect the data used to calculate the losses on inventory write-down

• Recalculate the amount of allowance for inventory write-down according to the process mentioned above, and compare the recalculated amount with the amount recognized by the Group and its subsidiaries to verify the appropriateness and adequacy of the allowance recognized

Other Matter

We have also audited the parent company only financial statements of the Company as of and for the years ended December 31, 2021 and 2020 on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the audit supervisors) are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

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

4. 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 Group’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 consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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

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

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

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

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2021, 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 audits resulting in this independent auditors’ report are Shiann-Chang Lin and Hsin-Yuan Wang.

Benison Associated CPA’s Firm Taipei, Taiwan Republic of China

March 17, 2022

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and 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 review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ review report and the accompanying consolidated 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’ review report and consolidated financial statements shall prevail

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SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS	December 31,	2021	December 31,	2020
	Amount	%	Amount	%
CURRENT ASSETS Cash and cash equivalents (Note 6 ) Financial assets at fair value through profit or loss - current (Note 7 ) Notes receivable from unrelated parties (Note 8 ) Accounts receivable from unrelated parties (Note 8 ) Accounts receivable from related parties (Note 8 and 28 ) Other receivables Current tax assets (Note 24 ) Inventories (Note 9 ) Prepayments (Note 10 ) Other financial assets - current (Note 11 ) Other current assets Total current assets NON-CURRENT ASSETS Property, plant and equipment (Note 13 ) Right-of-use assets (Note 14 ) Intangible assets (Note 15 ) Deferred tax assets (Note 24 ) Prepayments for equipment Refundable deposits Total non-current assets TOTAL	708,574 $ - 18,472 136,427 268,657 15,248 422 923,039 30,075 96,600 -	25 - 1 5 9 1 - 33 1 3 -	439,657 $ 110 38,725 87,512 279 7,953 - 612,194 38,088 - 15	24 - 2 5 - - - 33 2 - -
	2,197,514	78	1,224,533	66
	527,918 39,608 1,731 42,887 13,527 5,853	19 1 - 2 - -	534,031 33,824 2,320 36,745 10,981 5,083	29 2 - 2 1 -
	631,524	22	622,984	34
	2,829,038 $	100	1,847,517 $	100

(Continued)

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LIABILITIES AND EQUITY	December 31,	2021	December 31,	2020
	Amount	%	Amount	%
CURRENT LIABILITIES Short-term borrowings (Note 16 ) Contract liabilities - current (Note 22 ) Notes payable to unrelated parties Accounts payable to unrelated parties Accounts payable to related parties (Note 28 ) Other payables Other payables to related parties (Note 28 ) Current tax liabilities (Note 24 ) Provisions for liabilities - current (Note 18 ) Current lease liabilities (Note 14 ) Current portion of long-term borrowings (Note 17 ) Other current liabilities (Note 19 ) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 17 ) Deferred tax liabilities (Note 24 ) Non-current lease liabilities (Note 14 ) Net defined benefit liability (Note 20 ) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital (Note 21 ) Ordinary shares Total share capital Capital surplus (Note 21 ) Capital surplus - issuance of ordinary shares Capital surplus - employee share options Total Capital surplus Retained earnings (Note 21 ) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity (Note 20 ) Exchange differences on translating the financial statements of foreign operations Total other equity Total equity attributable to owners of the Company TOTAL	414,828 $ 138,533 214,018 192,193 9,406 90,178 1,786 73,174 4,790 5,294 - 123,193	15 5 8 7 - 2 - 3 - - - 4	60,783 $ 100,913 193,100 140,829 21,694 57,211 2,066 50,129 7,306 1,848 30,000 42	3 6 10 8 1 3 - 3 - - 2 -
	1,267,393	44	665,921	36
	260,000 - 3,965 9,040	10 - - -	30,000 22 1,054 17,827	2 - - 1
	273,005	10	48,903	3
	1,540,398	54	714,824	39
	600,000	21	600,000	32
	600,000	21	600,000	32
	44,865 2,728	2 -	44,865 2,728	2 -
	47,593	2	47,593	2
	73,045 17,470 567,910	2 1 20	55,024 16,245 431,301	3 1 24
	658,425	23	502,570	28
	(17,378)	-	(17,470)	(1)
	(17,378)	-	(17,470)	(1)
	1,288,640	46	1,132,693	61
	2,829,038 $	100	1,847,517 $	100

(The accompanying notes are an integral part of the consolidated financial statements.)

(Concluded)

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SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

OPERATING REVENUE (Note 22 ) OPERATING COSTS(Notes 9、23 and 28 ) GROSS PROFIT/(LOSS) OPERATING EXPENSES(Note 22) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATION NON-OPERATING INCOME AND EXPENSES Interest income Other income (Note 22 ) Other gains and losses (Note 22 ) Finance costs (Note 22 ) Total non-operating income and expenses INCOME BERORE INCOME TAX INCOME TAX EXPENSE (Note 23 ) NET INCOME OTHER COMPREHENSIVE INCOME/(LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Income tax related to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Income tax relating to items that may be reclassified subsequently to profit or loss Other comprehensive income/(loss) for the period, net of income tax TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD EARNINGS PER SHARE (Note 24 ) Basic Diluted	2021		2020
	Amount	%	Amount	%
	1,887,529 $ (1,345,386)	100 (71)	1,246,649 $ (965,375)	100 (77)
	542,143	29	281,274	23
	(74,013) (102,585) (25,731)	(4) (6) (1)	(35,439) (92,028) (21,543)	(3) (7) (2)
	(202,329)	(11)	(149,010)	(12)
	339,814	18	132,264	11
	371 1,432 (9,693) (3,362)	- - (1) -	523 84,609 6,834 (2,934)	- 6 1 -
	(11,252)	(1)	89,032	7
	328,562 (65,615)	17 (3)	221,296 (42,979)	18 (4)
	262,947	14	178,317	14
	1,135 (227)	- -	2,364 (473)	- -
	908	-	1,891	-
	115 (23)	- -	(1,531) 306	- -
	92	-	(1,225)	-
	1,000	-	666	-
	263,947 $	14	178,983 $	14
	4.38 $		2.97 $
	4.37 $		2.97 $

(The accompanying notes are an integral part of the consolidated financial statements.)

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SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

			EquityAttributable to Owners of the Company	EquityAttributable to Owners of the Company	EquityAttributable to Owners of the Company	EquityAttributable to Owners of the Company		Total Equity
	Share Capital	Capital Surplus		Retained Earnings		Other Equity Exchange Differences on Translating the Financial Statements of Foreign Operations (16,245) - - - - (1,225) (17,470) $ (17,470) $ - - - - 92 (17,378) $	Total
			Legal Reserve	Special Reserve	Unappropriated Earnings
BALANCE AT JANUARY 1, 2020 Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends distributed by the Company Net income in 2020 Other comprehensive income in 2020, net of income tax BALANCE AT DECEMBER 31, 2020 BALANCE AT JANUARY 1, 2021 Appropriation of 2020 earnings Legal reserve Special reserve Cash dividends distributed by the Company Net income in 2021 Other comprehensive income in 2021, net of income tax BALANCE AT DECEMBER 31, 2021	600,000 - - - - -	47,593 - - - - -	47,012 8,012 - - - -	11,535 - 4,710 - - -	311,815 (8,012) (4,710) (48,000) 178,317 1,891		1,001,710 - - (48,000) 178,317 666	1,001,710 - - (48,000) 178,317 666
	600,000 $	47,593 $	55,024 $	16,245 $	431,301 $		1,132,693 $	1,132,693 $
	600,000 $ - - - - -	47,593 $ - - - - -	55,024 $ 18,021 - - - -	16,245 $ - 1,225 - - -	431,301 $ (18,021) (1,225) (108,000) 262,947 908		1,132,693 $ - - (108,000) 262,947 1,000	1,132,693 $ - - (108,000) 262,947 1,000
	600,000 $	47,593 $	73,045 $	17,470 $	567,910 $		1,288,640 $	1,288,640 $

(The accompanying notes are an integral part of the consolidated financial statements.)

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SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized/(reversed) on trade receivables Net (gain)/loss on fair value changes of financial [assets/liabilities] at fair value through profit or loss Finance costs Interest income (Gain)/loss on disposal of property, plant and equipment Impairment loss on non financial assets Net (gain)/loss on foreign currency exchange Other adjustments to reconcile profit(loss) Changes in operating assets and liabilities (Increase)/decrease in notes receivable (Increase)/decrease in accounts receivable (Increase)/decrease in accounts receivable from related parties (Increase)/decrease in other receivables (Increase)/decrease in inventories (Increase)/decrease in prepayments (Increase)/decrease in other current assets (Increase)/decrease in other financial assets Increase/(decrease) in contract liabilities Increase/(decrease) in notes payable Increase/(decrease) in accounts payable Increase/(decrease) in accounts payable from related parties Increase/(decrease) in other payables Increase/(decrease) in other payables from related parties Increase/(decrease) in provisions Increase/(decrease) in other current liabilities Increase/(decrease) in net defined benefit liability Cash generated from/(used in) operations Interest received Interest paid Income tax refund(paid) Net cash generated from/(used in) operating activities	2021	2020
	328,562 $ 59,078 589 - (2,453) 3,362 (371) (387) 12,377 14,425 (20) 20,253 (49,268) (275,259) (7,270) (323,254) 8,013 15 (96,600) 37,620 20,918 51,448 (12,288) 32,800 (280) (2,516) 123,151 (7,652)	221,296 $ 43,112 543 79 (110) 2,934 (523) (1,229) 30,345 1,136 - (7,801) (8,510) 108,209 (2,722) (107,802) (16,578) 115 - 10,405 88,578 79,577 13,320 4,075 618 679 - (1,592)
	(65,007) 346 (3,195) (49,406)	458,154 522 (2,937) (11,161)
	(117,262)	444,578

(Continued)

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CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Increase in prepayments for equipment Net cash generated from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayment of the principal portion of lease liabilities Cash Dividends Net cash generated from/(used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	2021	2020
	(32,286) 34,849 (38,802) 581 (3,237) 2,470 - (12,700)	- - (39,028) 1,577 (774) 2,275 (295) (6,675)
	(49,125)	(42,920)
	3,998,632 (3,644,587) 715,000 (515,000) (3,158) (108,000)	2,568,654 (2,542,886) 355,000 (515,000) (2,849) (48,000)
	442,887	(185,081)
	(7,583)	(2,985)
	268,917 439,657	213,592 226,065
	708,574 $	439,657 $

(The accompanying notes are an integral part of the consolidated financial statements.)

(Concluded)- 11 -

SUN RACE STURMEY-ARCHER CORPORATION

NOTES TO CONSOLIDATED FINACIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Sun Race Sturmey-Archer Corporation (the “Company”) was incorporated in the Republic of China (ROC) on May 26, 1972. The company mainly engaged in manufacturing, processing and trading various bicycle parts and mechanical hardware.

The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since March 2000.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved by the Company’s board of directors on March 17, 2022.

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)

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 Financial Supervisory Commission (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.

• 12 -

• 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.

The Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the 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 Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17—Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or Non- current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

Effective Date Announced by IASB (Note 1)

To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 2) January 1, 2023 (Note 3) January 1, 2023 (Note 4)

• 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 for deferred taxes that 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.

The Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the financial position and financial performance and will disclose the relevant impact when the assessment is completed.

• 13 -

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. Classification of current and non-current assets and liabilities

Current assets include:

• Assets held primarily for the purpose of trading;

• Assets expected to be realized within 12 months after the reporting period; and

• 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:

• Liabilities held primarily for the purpose of trading;

• Liabilities due to be settled within 12 months after the reporting period; and

• Liabilities for which the Group 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. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Group and the entities controlled by the Group.

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.

• 14 -

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Group and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance.

See Note 12 、 Tables 4 and 5 for detailed information on subsidiaries (including percentages of ownership and main businesses).

• e. Foreign currencies

In preparing the consolidated financial statements, transactions in currencies other than the entity’s functional currency 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 are recognized in profit or loss in the period they arise.

Exchange differences arising on the retranslation of non-monetary items measured at fair value are included in profit or loss for the period at the rates prevailing at the end of reporting period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

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

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including subsidiaries and associates in other countries that use currencies which are different from the currency of the Group) are translated into New Taiwan dollars using exchange rate prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. The exchange differences arising are recognized in other comprehensive income and accumulated in balance of foreign currency translation of equity.

f. Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to Company similar or related items. 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 weighted-average cost on the balance sheet date.

g Property, plant and equipment

Property, plant and equipment are stated at cost less subsequent accumulated depreciation and subsequent accumulated impairment loss.

Properties, plant and equipment in the course of construction are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation is recognized using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

• 15 -

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

• h Intangible assets

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.

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 and assets related to contract costs

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets, to determine whether there is any indication that those assets have suffered an 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 an individual asset, the Group estimates the recoverable amount of the cashgenerating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired.

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.

Before the Group recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories, property, plant and equipment and intangible assets related to the contract applicable shall be recognized in accordance with applicable standards. Then, impairment loss from the assets related to the contract costs is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Group expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services and which have not been recognized as expenses. The assets related to the contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cashgenerating unit.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset, cashgenerating unit or assets related to contract costs 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 on the asset, cash-generating unit or assets related to contract costs 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 Group becomes a party to the contractual provisions of the instruments.

• 16 -

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance 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 categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized.

• i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are mandatorily classified as at FVTPL.

• ii. Financial assets at amortized cost

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

• i) The financial assets are 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 assets 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 at amortized cost, accounts receivable, other receivables 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 such 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 such financial assets; and

• ii) Financial asset that is not credit impaired on purchase or origination but has 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.

• 17 -

• b) Impairment of financial assets

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

The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables, For all other financial instruments, the Group 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 Group 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.

For internal credit risk management purposes, the Group considers the following situations as indication that a financial asset is in default (without taking into account any collateral held by the Group):

• i. Internal or external information shows that the debtor is unlikely to pay its creditors.

• ii. Financial asset is more than 90 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

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

• c) Derecognition of financial assets

The Group 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

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

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

The repurchase of the Group’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 Group’s own equity instruments.

• 18 -

3) Financial liabilities

a) Subsequent measurement

All 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 Group 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 sales of various bicycle parts and mechanical hardware. Sales of various bicycle parts and mechanical hardware are recognized as revenue when the goods are shipped 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 risks of obsolescence.

l. Leases

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

• 1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for by applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

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. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Rightof-use assets are presented on a separate line in the consolidated balance sheets

• 19 -

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 comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate will be used.

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, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-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. Lease liabilities are presented on a separate line in the consolidated 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

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) 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 and will not be reclassified to profit or loss.

• 20 -

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’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.

• 3) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plans except that remeasurement is recognized in profit or loss.

o. Taxation

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

• 1) Current tax

Income tax payable (recoverable) 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 Law 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. If a temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit, the resulting deferred tax asset or liability is not recognized.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all 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 and interests in joint ventures, except where the Group 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 recognized only 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 such temporary differences 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 Group 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.

• 21 -

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimations, 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 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 revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

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 the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience in the sale of product of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Time deposits	December 31, 2021 $ 762 593,158 114,654 $ 708,574	December 31, 2020
		$ 846 308,073 130,738
		$ 439,657

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at fair value through profit or loss (FVTPL)-current Financial assets mandatorily classified as at FVTPL Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts	December 31, 2021 $ - $ -	December 31, 2020
		$ 110
		$ 110

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting were as follows:

	Carrying		Notional Amount
	Amount	Maturity Date	(In Thousands)
December 31, 2020
Sell EUR /Buy NT$	$ 110	January 2021	EUR 200
	$ 110

The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and therefore were not accounted for using hedge accounting.

• 22 -

8. NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

Notes receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Notes receivable - operating Accounts receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Accounts receivable-related party (Note 28) At amortized cost Gross carrying amount Less: Allowance for impairment loss	December 31, 2021 $ 18,472 - $ 18,472 $ 18,472 $ 136,736 (309) $ 136,427 $ 268,657 - $ 268,657	December 31, 2020
		$ 38,725 -
		$ 38,725
		$ 38,725
		$ 87,821 (309)
		$ 87,512
		$ 279 -
		$ 279

a. Accounts receivable

At amortized cost

The average credit period of sales of goods was 30~150 days. No interest was charged. The police adopted by merge (merged Company) is to trade with objects that crediting rating meets with the requirements of the company, and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit rating information is obtained from the financial information or its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

The Group measures the loss allowance for accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix by reference to the past default experience 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 forecasted 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 accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable 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 accounts receivable based on the Group’s provision matrix.

• 23 -

December 31, 2021

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2020 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due - $ 390,503 - $ 390,503 Not Past Due - $ 77,304 - $ 77,304	Less than 30 Days	31 to 60 Days - $ - - $ - 31 to 60 Days - $ - - $ -	61 to 90 Days	Over 90 Days	Total
		- $ 14,578 -		- $ - -	99% $ 312 (309)	$ 405,393 (309)
		$ 14,578		$ -	$ 3	$ 405,084
		Less than 30 Days		61 to 90 Days	Over 90 Days	Total
		- $ 10,487 -		- $ - -	100% $ 309 (309)	$ 88,100 (309)
		$ 10,487		$ -	$ -	$ 87,791

The movements of the loss allowance of accounts receivable were as follows:

Balance at January 1 Recognition (reversal) Balance at December 31		For the year ended December 31	For the year ended December 31	For the year ended December 31
		2021 $ 309 - $ 309		2020
				$ - 309 $ 309

9. INVENTORIES

Finished goods Semi-finished goods Work in process Raw materials	December 31, 2021 $ 201,180 423,182 181,569 117,108 $ 923,039	December 31, 2020
		$ 119,762 323,432 113,198 55,802
		$ 612,194

The nature of the cost of goods sold is as follows:

Cost of inventories sold Inventory write-downs	For the year ended December 31	For the year ended December 31
	2021 $ 1,333,009 12,377 $ 1,345,386	2020
		$ 935,030 30,345
		$ 965,375

• 24 -

10.PREPAYMENTS

Prepaid expenses Prepaid rents - current Prepayments to suppliers Net input VAT OTHER FINANCIAL ASSETS - CURRENT Pledged time deposits	December 31, 2021 $ 5,008 128 20,073 4,866 $ 30,075 December 31, 2021		December 31, 2020
			$ 5,306 180 13,018 19,584
			$ 38,088
			December 31, 2020
	$ 96,600		$ -

11.OTHER FINANCIAL ASSETS - CURRENT

Pledged time deposits

Other financial assets-current used by the Group and pledged as collateral for bank borrowings are set out in Note 29.

12.SUBSIDIARIES

SUBSIDIARIES
Investor	Investee	Nature of Activities	Proportion of Ownership (%)		Remark
			December 31, 2021	December 31, 2020
The company The company BUSINESS ALLIANCE BUSINESS FIRST	BUSINESS ALLIANCE LIMITED (BUSINESS ALLIANCE) SUN RACE STURMEY- ARCHER DUTCH HOLDING B.V. BUSINESS FIRST LIMITED (BUSINESS FIRST) SUN RACE STURMEY- ARCHER (NANTONG) CO., LTD. (SUN RACE NANTONG)	Investment activities Investment activities Investment activities Production and sales of precision plastic film and bicycle transmission system components	100.00% 100.00% 100.00% 100.00%	100.00% - 100.00% 100.00%	1

Remarks:

1) The company registered and established SUN RACE STURMEY-ARCHER DUTCH HOLDING B.V. in the Netherlands in December 2021, with a shareholding ratio of 100%. The company operates the investment activities. Please refer to Note 32 for the details of the investment of shares.

• 2) The details of the investment subsidiaries indirectly held by the Group, please refer to Note 34.

13.PROPERTY, PLANT AND EQUIPMENT

Assets used by the Group Assets leased under operating leases	December 31, 2021 $ 527,918 - $ 527,918	December 31, 2020
		$ 534,031 -
		$ 534,031

• 25 -

a. Assets used by the Group

Land Cost： Balance at January 1, 2021 $ 169,101 Additions - Disposals - Reclassifications - Effects of foreign currency exchange differences - Balance at December 31, 2021 $ 169,101 Accumulated depreciation and impairment： Balance at January 1, 2021 $ - Depreciation expenses - Disposals - Reclassifications - Effects of foreign currency exchange differences - Balance at December 31, 2021 $ - Carrying amount at December 31,2021 $ 169,101 Land Cost： Balance at January 1, 2020 $ 169,101 Additions - Disposals - Reclassifications - Effects of foreign currency exchange differences - Balance at December 31, 2020 $ 169,101 Accumulated depreciation and impairment： Balance at January 1, 2020 $ - Depreciation expenses - Disposals - Reclassifications - Effects of foreign currency exchange differences - Balance at December 31, 2020 $ - Carrying amount at December 31,2020 $169,101	Land	Buildings	Equipment	Molding equipment	Other equipment	Total $ 944,942 38,802 (20,989) 10,154 376 $ 973,285 $ 410,911 55,213 (20,795) - 38 $ 445,367 $ 527,918 Total $ 906,276 39,028 (16,857) 15,908 587 $ 944,942 $ 372,976 39,240 (16,509) 15,187 17 $ 410,911 $ 534,031
	$ 169,101 - - - -	$ 347,712 - - - 223	$ 134,361 25,776 (12,728) 9,226 11	$ 235,269 11,472 (7,925) 928 10	$ 58,499 1,554 (336) - 132
	$ 169,101	$ 347,935	$ 156,646	$ 239,754	$ 59,849
		$ 106,646 8,094 - - 6	$ 93,298 17,688 (12,534) - 1	$ 189,309 20,976 (7,925) - 5	$ 21,658 8,455 (336) - 26
	$ -	$ 114,746	$ 98,453	$ 202,365	$ 29,803
	$ 169,101	$ 233,189	$ 58,193	$ 37,389	$ 30,046
	Land	Buildings	Equipment	Molding equipment	Other equipment
	$ 169,101 - - - -	$ 287,427 - - 60,097 188	$ 117,875 15,326 (16,292) 17,441 11	$ 217,459 17,383 - 415 12	$ 114,414 6,319 (565) (62,045) 376
	$ 169,101	$ 347,712	$ 134,361	$ 235,269	$ 58,499
		$ 101,401 5,245 - - -	$ 84,083 9,972 (15,944) 15,187 -	$ 171,015 18,290 - - 4	$ 16,477 5,733 (565) - 13
impairment： Balance at January 1, 2020 Depreciation expenses Disposals Reclassifications Effects of foreign currency exchange differences Balance at December 31, 2020 Carrying amount at December 31,2020
	$ -	$ 106,646	$ 93,298	$ 189,309	$ 21,658
	$169,101	$ 241,066	$ 41,063	$ 45,960	$ 36,841

• 26 -

No impairment loss was recognized for the year ended December 31, 2021 and 2020.

The above items of property, plant and equipment used by the Group are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings	20-55 years
Equipment	3-10 years
Molding equipment	2-10 years
Other equipment	3-10 years

Property, plant and equipment used by the Group and pledged as collateral for bank borrowings are set out in Note 29.

b. Assets leased under operating leases

Cost： Balance at January 1, 2020 Additions Disposals Reclassifications Balance at December 31, 2020 Accumulated depreciation and impairment： Balance at January 1, 2020 Depreciation expenses Disposals Reclassifications Balance at December 31, 2020 Carrying amount at December 31, 2020	Equipment
	$ 21,302 - (4,647) (16,655)
	$ -
	$ 19,496 338 (4,647) (15,187)
	$ -
	$ -

Operating leases relate to leases of equipment lease terms is 1 year. The lessees do not have purchase options to acquire the assets at the expiry of the lease periods.

The above items of property, plant and equipment leased under operating leases are depreciated on a straightline basis over their estimated useful lives as follows:

Equipment

3-10 years

14.LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts Buildings Transportation equipment Land	December 31, 2021 $ 4,379 4,846 30,383 $ 39,608	December 31, 2020
		$ - 2,869 30,955
		$ 33,824

• 27 -

Additions to right-of-use assets Depreciation charge for right-of-use assets Buildings Transportation equipment Land	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 9,593 $ 168 3,011 686 $ 3,865	2020
		$ 719
		$ - 2,853 681
		$ 3,534

• b. Lease liabilities

Carrying amounts Current Non-current	December 31, 2021 $ 5,294 $ 3,965	December 31, 2020
		$ 1,848
		$ 1,054

Range of discount rate for lease liabilities was as follows:

Buildings Transportation equipment	December 31, 2021 1.53% 0.96%-2.04%	December 31,2020 - 0.96%-2.07%

• c. Material lease-in activities and terms

The Group leases certain transportation equipment with lease terms of 1 to 3 years. These arrangements do not contain renewal or purchase options.

The Group also leases buildings for the use of warehouse with lease terms of 2 years and 3 months. The Group does not have bargain purchase options to acquire the leasehold buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

The Group also leases land with lease terms of 50 years in China. Payment is made at the time of signing the contract. The Group does not have bargain purchase options to acquire the leasehold land at the end of the lease terms.

• d. Other lease information

Expenses relating to short-term leases and low-value asset leases Total cash outflow for leases		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 452 $ 3,722		2020
				$ 335 $ 3,301

The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

• 28 -

15.INTANGIBLE ASSETS

Cost： Balance at January 1, 2021 Additions Others Balance at December 31, 2021 Accumulated Amortization and Impairment： Balance at January 1, 2021 Amortization Balance at December 31, 2021 Carrying amount at December 31, 2021 Cost： Balance at January 1, 2020 Additions Balance at December 31, 2020 Accumulated Amortization and Impairment： Balance at January 1, 2020 Amortization Balance at December 31, 2020 Carrying amount at December 31, 2020	Computersoftware
	$ 8,876 - -
	$ 8,876
	$ 6,556 589
	$ 7,145
	$ 1,731
	Computer software
	$ 8,581 295
	$ 8,876
	$ 6,013 543
	$ 6,556
	$ 2,320

Intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: Computer software 3-10 years

16.SHORT-TERM BORROWINGS

Unsecured borrowings Bank loans (1) Secured borrowings Bank loans (1) The range of weighted average effective interest rates on bank loans	December 31, 2021 $ 286,428 128,400 $ 414,828 1.07%~4%	December 31, 2020
		$ 60,783 -
		$ 60,783
		0.355%~1.45%

• 1) Guarantee provided by the Group, please refer to Note 29.

• 29 -

17. LONG-TERM BORROWINGS

Secured borrowings Bank loans Unsecured borrowings Bank loans Less: Current portions The range of weighted average effective interest rates on bank loans	December 31, 2021 $ 260,000 - - $ 260,000 1.93%	December 31, 2020
		$ 30,000 30,000 (30,000)
		$ 30,000
		0.54%~1.93%

In January 2021, the borrowing of $30,000 thousand on December 31, 2020, was paid in advance. For the ended December 31, 2021, the Group acquired new bank borrowings facilities in the amounts of $715,000 thousand, which was paid off advance $455,000 thousand, the borrowings balance as of December 31, 2021 is $260,000 thousand, and will be repayable on January 28, 2023. The borrowing rate is floating rate.

In January 2020, the borrowing of $190,000 thousand on December 31, 2019, was paid in advance. For the ended December 31, 2020, the Group acquired new bank borrowings facilities in the amounts of $355,000 thousand, which was paid off advance $325,000 thousand, the borrowings balance as of December 31, 2020 is $30,000 thousand, and paid off in advance in January 2021. The borrowing rate is floating rate.

In June 2020, the application for short-term borrowings of $30,000 thousand was approved by the Ministry of Economic Affairs and reclassified to long-term borrowings, which paid off in April, 2021. The borrowing rate is floating rate.

18.PROVISIONS

Current Employee benefits (a)	December 31, 2021 $ 4,790	December 31, 2020
		$ 7,306

a. An employee benefits liability reserve is estimates of employees’ vested long-term service leave rights.

19.OTHER CURRENT LIABILITIES

Current Deposits received (Note 28) Others	December 31, 2021 $ 122,807 386 $ 123,193	December 31, 2020
		$ - 42
		$ 42

20.RETIREMENT BENEFIT PLANS

a. Defined benefit plan

The defined benefit plan adopted by the Group in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Group contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee of the Group. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each

• 30 -

year, the Group 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 Group 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 amount included in the balance sheet in respect of the Group’s obligation to its defined benefit plan was as follows:

Present value of the defined benefit obligation Fair value of the plan assets Net defined benefit liabilities, non-current	December 31, 2021 $ 32,247 (23,207) $ 9,040	December 31, 2020
		$ 33,035 (15,208)
		$ 17,827

Movements in net defined benefit liabilities (assets) were as follows:

Balance at January 1, 2020 Service cost Current service cost Net interest expense (income) Recognized in profit or loss Remeasurement - Return on plan assets (excluding amounts included in net interest expense) - Actuarial loss (gain) arising from changes in demographic assumptions - Actuarial loss (gain) arising from changes in financial assumptions - Actuarial loss (gain) arising from experience adjustments Recognized in other comprehensive income Contributions from the employer Benefits paid Balance at December 31, 2020	Present Value of the Defined BenefitObligation	Fair Value of the Plan Assets $ (12,866) - (96) (96) (398) - - - (398) (1,848) - $ (15,208)	Net Defined Benefit Liabilities(Assets)
	$ 34,649		$ 21,783
	94 258		94 162
	352		256
	- - 1,498 (3,464)		(398) - 1,498 (3,464)
	(1,966)		(2,364)
	- -		(1,848) -
	$ 33,035		$ 17,827

• 31 -

Balance at January 1, 2021 Service cost Current service cost Net interest expense (income) Recognized in profit or loss Remeasurement - Return on plan assets (excluding amounts included in net interest expense) - Actuarial loss (gain) arising from changes in demographic assumptions - Actuarial loss (gain) arising from changes in financial assumptions - Actuarial loss (gain) arising from experience adjustments Recognized in other comprehensive income Contributions from the employer Benefits paid Balance at December 31, 2021	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets $ (15,208) - (53) (53) (232) - - - (232) (7,714) - $ (23,207)	Net Defined Benefit Liabilities(Assets)
	$ 33,035		$ 17,827
	- 115		- 62
	115		62
	- 66 (1,248) 279		(232) 66 (1,248) 279
	(903)		(1,135)
	- -		(7,714) -
	$ 32,247		$ 9,040

Through the defined benefit plans under the Labor Standards Law, the Group 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 government 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 plan’s debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary 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 principal assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	December 31, 2021 0.70% 2.00%	December 31, 2020
		0.35% 2.00%

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

• 32 -

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease	December 31, 2021 $ (865) $ 896 $ 882 $ (856)	December 31, 2020
		$ (947)
		$ 983
		$ 964
		$ (934)

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

The expected contribution to the plan for the next year The average duration of defined benefit obligation	December 31, 2021 $ 360 10 years	December 31, 2020
		$ 350 11 years

b. Defined contribution plan

The Group 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.

The employees of the Group’s subsidiaries in the China is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

21.EQUITY

• a. Share capital

• 1) Ordinary shares

Shares authorized (in thousands of shares) Shares authorized, par value $10 (in thousands of dollars) Shares issued and fully paid (in thousands of shares) Shares issued and fully paid (in thousands of dollars) Capital surplus May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of ordinary shares May not be used for any purpose Employee share options	December 31, 2021 79,000	December 31, 2020
		79,000
	$ 790,000 60,000 $ 600,000 December 31, 2021 $ 44,865 2,728 $ 47,593	$ 790,000
		60,000
		$ 600,000
		December 31, 2020
		$ 44,865 2,728
		$ 47,593

• b. Capital surplus

• 33 -

• 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).

• c. Retained earnings and dividends policy

Under the dividends policy as set forth in the Articles, which the Company adopts the residual dividend policy, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, however when the legal reserve amounts to the authorized capital, this shall not apply, 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 to shareholders would not less than 3% of the current year's distributable surplus, cash dividends would not less than 1%. 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 23.

An appropriation of earnings to a 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. 1090150022 issued by the FSC on March 31, 2021. When distributing profits, the Company sets aside special reserves in the amount equivalent to the net amount of contra other equity items for the current period, using the balance of net income after tax plus the items included in undistributed retained earnings except those included in net income for the current period. If the balance is insufficient to meet the requirement of special reserves, the remainder shall be set aside using the undistributed retained earnings for the previous period.

The Company shall set aside special reserves that shall not be distributed in the net amount of contra other equity items, using either of the following two methods:

• A. Set aside special reserves using the undistributed retained earnings for the previous period; or

• B.Set aside special reserves using the undistributed retained earnings for the previous period and the balance of net income after tax plus the items included in undistributed retained earnings except those included in net income for the current period when the undistributed retained earnings for the previous period are insufficient, in which case the Company shall state the applied method clearly in the dividend policies of the Articles of in Company.

When the net amount of contra other equity items is subsequently reversed, the reversed amount can be used to reverse the special reserves, allowing the Company to distribute the profits.

The appropriations of earnings for 2020 and 2019 that were approved in the Board of shareholders’ meetings on July 23, 2021 and June 15, 2020, respectively, were as follows:

Legal reserve Special reserve Cash dividends Dividends Per Share (NT$)	Appropriation of Earnings	Appropriation of Earnings
	For the Year Ended December 31
	2020 $ 18,021 1,225 108,000 1.80	2019
		$ 8,012 4,710 48,000 0.80

• 34 -

The appropriation of earnings for 2021 had been proposed by the Corporation’s board of directors on March 17, 2022. The appropriation and dividends per share were as follows:

Legal reserve Special reserve Cash dividends Dividends Per Share (NT$)	Appropriation of Earnings
	$ 26,385
	$ (92)
	$ 156,000
	$ 2.60

The appropriation of earnings for 2021 is to be presented for approval in the Company’s shareholders’ meeting to be held on June 17, 2022 (expected).

d. Other equity items

Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Recognized for the period Exchange differences on translating the financial statements of foreign operations Effect of tax Balance at December 31	For the Year Ended December 31	For the Year Ended December 31
	2021	2020 $ (16,245) (1,531) 306 $ (17,470)
	$ (17,470) 115 (23)
	$ (17,378)

22.REVENUE

Revenue from contracts with customers Revenue from the sale of goods(Note 28)	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 1,887,529	2020
		$ 1,246,649

a. Contract balances

Contract liabilities Sale of goods	December 31, 2021 $ 138,533	December 31, 2020
		$ 100,913

The Group recognized revenue from the beginning balance of contract liability, which amounted to $98,027 thousand and $15,107 thousand for the years ended December 31, 2021 and 2020, respectively.

The contract liabilities from the beginning of the year were recognized as other income for the year ended December 31,2021 and 2020, with an amount of $0 and $70,330 thousands. Please refer to Note 23, and the inventory write-downs has been reasonably assessed.

The details of revenue from contracts with customers, please refer to Note 35.

• 35 -

23.NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

a. Other income

Rental income(Note 28) Others(Note 22)

For the Year Ended December 31	For the Year Ended December 31
2021 $ 129 1,303 $ 1,432	2020
	$ 1,473 83,136
	$ 84,609

• b. Other gains and losses

Financial assets mandatorily classified as at FVTPL Net foreign exchange gains/(losses) (Gain)/loss on disposal of property, plant and equipment Others

For the Year Ended December 31	For the Year Ended December 31
2021 $ 2,453 (12,553) 387 20 $ (9,693)	2020
	$ 110 7,852 1,229 (2,357)
	$ 6,834

• c. Finance costs

Interest on bank loans Interest on lease liabilities

For the Year Ended December 31	For the Year Ended December 31
2021 $ 3,295 67 $ 3,362	2020
	$ 2,856 78
	$ 2,934

• d. Depreciation and amortization

Property, plant and equipment Right-of-use asset Intangible asset

• An analysis of depreciation by function Operating costs Operating expenses

• An analysis of amortization by function Operating costs Operating expenses

For the Year Ended December 31	For the Year Ended December 31
2021 $ 55,213 3,865 589 $ 59,667 $ 46,628 12,450 $ 59,078 $ - 589 $ 589	2020
	$ 39,578 3,534 543
	$ 43,655
	$ 34,772 8,340
	$ 43,112
	$ - 543
	$ 543

• 36 -

e. Employee benefits expense

Short-term benefits Post-employment benefits Defined contribution plan Defined benefit plans Termination benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 176,987 4,882 62 4,944 108 $ 182,039 $ 93,566 88,473 $ 182,039	2020
		$ 146,187 4,020 256
		4,276
		-
		$ 150,463
		$ 71,623 78,840
		$ 150,463

• f. Employees’ compensation and remuneration of directors and supervisors

According to the Company’s Articles, the Company accrued employees’ compensation and remuneration of directors at rates of 0.2~3% and no higher than 3%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. For the year ended December 31, 2021 and 2020, the employees’ compensation and the remuneration of directors and supervisors are as follows (The Company established an audit committee to replace the supervisor after the Board of shareholders’ meetings on July 23, 2021.):

Accrual rate

Employees’ compensation Remuneration of directors and supervisors Amount Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31 2021 2020 1.46% 0.97% 0.98% 0.97% For the Year Ended December 31	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
				2020
	2021 $ 4,900 3,300		2020
			$ 2,200 2,200

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.

There is no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the year ended December 31, 2020 and 2019.

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

• 37 -

24.INCOME TAXES RELATING TO CONTINUING OPERATIONS

• a. Income tax recognized in profit or loss

Major components of income tax expense (benefit) are as follows:

Current tax In respect of the current period Adjustments for prior year Deferred tax In respect of the current period Income tax expense (benefit) recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 73,177 (1,148) (6,414) $ 65,615	2020
		$ 50,139 (1,383) (5,777)
		$ 42,979

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

Profit before tax Income tax expense calculated at the statutory rate Tax-exempt income Additional income tax expense on unappropriated earnings Investment tax credits Adjustments for prior years’ tax	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 328,562 $ 65,712 (484) 2,648 (1,113) (1,148) $ 65,615	2020
		$ 221,296
		$ 44,266 - 953 (857) (1,383)
		$ 42,979

• c. Income tax recognized in other comprehensive income

Deferred income tax expense (benefit) In respect of the current period Translation of foreign operations Remeasurement of defined benefit plans Total income tax expense (benefit) recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 23 227 $ 250	2020
		$ (306) 473
		$ 167

• d. Current tax assets and liabilities

Current tax assets Income tax refund receivable Current tax liabilities Income tax payable

For the Year Ended December 31	For the Year Ended December 31
2021 $ 422 $ 73,174	2020 $ - $ 50,129

• 38 -

e. Deferred tax assets and liabilities

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

For the year ended December 31, 2021 Deferred Tax Assets/(liabilities) Unrealized exchange gains FVTPL financial assets Provisions Allowance for inventory valuation and obsolescence losses Allowance for impairment loss Investments accounted for using equity method Defined benefit obligations Exchange differences on translating the financial statements of foreign operations Property, plant and equipment others Deferred income tax assets Deferred income tax liabilities	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
	$ 149 (22) 1,439 23,708 - 3,824 1,645 4,184 554 1,242	$ 2,734 22 (500) 2,444 - (1,168) - - (34) 2,916	$ - - - - - - (227) (23) - -	$ 2,883 - 939 26,152 - 2,656 1,418 4,161 520 4,158
	$ 36,723	$ 6,414	$ (250)	$ 42,887
	$ 36,745			$ 42,887
	$ 22			$ -

For the year ended December 31, 2020 Deferred Tax Assets/(liabilities) Unrealized exchange gains FVTPL financial assets Provisions Allowance for inventory valuation and obsolescence losses Allowance for impairment loss Investments accounted for using equity method Defined benefit obligations Exchange differences on translating the financial statements of foreign operations Property, plant and equipment others Deferred income tax assets Deferred income tax liabilities	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
	$ 387 - 1,309 19,813 26 2,505 2,118 3,878 588 489	$ (238) (22) 130 3,895 (26) 1,319 - - (34) 753	$ - - - - - (473) 306 - -	$ 149 (22) 1,439 23,708 - 3,824 1,645 4,184 554 1,242
	$ 31,113	$ 5,777	$ (167)	$ 36,723
	$ 31,113			$ 36,745
	$ -			$ 22

• 39 -

• f. Income tax assessments

The Company provided for the income tax assessed by the tax authorities until 2019.

25.EARNINGS PER SHARE

Net Profit for the period is as follows:

Net profit	For the Year Ended December 31	For the Year Ended December 31
	2021 $ 262,947	2020
		$ 178,317

The weighted average number of ordinary shares outstanding (in thousands of shares) is as follows:

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Employees’ compensation or bonuses issued to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31
	2021 60,000 111 60,111	2020
		60,000 62
		60,062

If the Group offered to settle the compensation or bonuses paid to employees in cash or shares, the Group assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

26.CAPITAL MANAGEMENT

In order to ensure the company's sustainable operation, the merged Company plans the future working capital needs (including research and development expenses and debt repayment, etc.) based on the factors such as characteristics of the current operating industry and the future development situation and changes in the external environment. It not only gives back to shareholders but also takes care of stakeholders’ interest. Also, it can maintain the optimal capital structure to enhance shareholder’s value.

• 40 -

27.FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments measured at fair value on a recurring basis

• 1) Fair value hierarchy

December 31, 2020

Level 1 Level 2 Level 3 Total Financial assets at FVTPL Derivative financial assets $ - $ 110 $ - $ 110

• 2) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instrument Valuation Technique and Inputs Derivatives - foreign exchange Discounted cash flow. forward contracts Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

• b. Categories of financial instruments

December 31, 2021 December 31, 2020 Financial assets Financial assets at amortized cost (1) $ 1,249,831 $ 579,209 Mandatorily classified as at FVTPL - 110 Financial liabilities Amortized cost (2) 1,182,409 535,683

• 1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable and accounts receivable, other receivables, refundable deposits and other financial assets.

• 2) The balances include financial liabilities at amortized cost, which comprise short-term and long-term loans, short-term bills payable, trade and other payables.

• c. Financial risk management objectives and policies

The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, and 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 foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The use of financial activity is governed by the Group’s policies approved by the board of directors. During the implementation of financial plans, the Group must comply with the procedures for overall financial risk management and segregation of duties.

• 41 -

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 has been no change to the Group’s exposure to market risks or the manner in which these risks are managed and measured.

a) Foreign currency risk

Several subsidiaries of the Company have foreign currency denominated sales and purchases, which expose the Group to foreign currency risk. Exchange rate exposures are managed within approved policy parameters utilizing foreign exchange forward contracts, but it does not meet the requirements for accounting hedging.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) are set out in Note 33.

Sensitivity analysis

The Group is mainly exposed to the Currency USD and Currency EUR.

The following table details the Group’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (i.e., the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 1%. A positive number below indicates a decrease in pre-tax profit associated with the New Taiwan dollar strengthening 1% against the relevant currency. For a 1% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit, and the balances below would be negative.

Profit or loss	Currency USD Impact For the Year Ended December 31 2021 2020 $ 3,628 $ 414	Currency USD Impact For the Year Ended December 31 2021 2020 $ 3,628 $ 414	Currency EUR Impact	Currency EUR Impact
			For the Year Ended December 31
	2021 $ 3,628		2021 $ 4,766	2020
		$ 414		$ 90

This was mainly attributable to the exposure on outstanding receivables and payables in foreign currency that were not hedged at the end of the reporting period.

• b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates.

• 42 -

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31, 2021 $ 211,254 - 515,027 674,828	December 31, 2020
		$ 130,738 - 247,151 120,783

The sensitivity analysis below was determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. A 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the year ended December 31, 2021 and 2020 would increase/decrease by $1,598 thousand and $1,264 thousand, respectively, which was mainly a result of variable-rate bank deposits and borrowings.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations 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 would cause a financial loss to the Group due to the failure of the counterparty to discharge its obligation and due to the financial guarantees provided by the Group, could be mainly from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

The sales department manages customer credit risk in accordance with the company's customer credit risk policies, procedures and controls. The credit risk assessment of all customers is based on comprehensive consideration of such factors as the customer's financial status, ratings of credit rating agencies, past historical transaction experience, current economic environment, and internal rating standards of the Group, etc. In addition, the Group also uses certain credit enhancement tools (such as advances on sales, etc.) to reduce the credit risk of specific customers at appropriate times.

The Group’s concentration of credit risk of 63% and 0% of total accounts receivable as of December 31, 2021 and 2020, respectively, was attributable to the Group’s largest customer STURMEYARCHER EUROPA B.V.

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 borrowings and ensures compliance with loan covenants.

• 43 -

The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2021 and 2020, the Group had available unutilized bank loan facilities was $173,000 thousand, and $935,000 thousand.

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

The following table details the Group’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has 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 table includes 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 nonderivative financial liabilities were based on the agreed upon repayment dates.

December 31, 2021

On Demand or Less than 1 Year Non-interest bearing $ 507,368 Lease liabilities 5,390 Variable interest rate liabilities 421,822 $ 934,580 December 31, 2020 On Demand or Less than 1 Year Non-interest bearing $ 414,854 Lease liabilities 1,885 Variable interest rate liabilities 91,626 $ 508,365	1-3 Years $ - 4,001 260,426 $ 264,427 1-3 Years $ - 1,065 30,049 $ 31,114	3+ Years $ - - - $ - 3+ Years $ - - - $ -

• 44 -

28.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 as follows.

• a. Related party name and category

Related Party Name Related Party Category STURMEY-ARCHER EUROPA Related party in substance B.V.(STURMEY-ARCHER) HANDY-SHIFT COMPANY The chairman of the Company is a member of the LIMITED(HANDY COMPANY) Company's key management personnel

• b. Sales of goods

Line Item Related Party Name Sales STURMEY-ARCHER	For the Year Ended	For the Year Ended
	2021	2020
	$ 445,711	$ 251,798

The sale of goods to related parties were made at the Group’s usual list prices and the collection period was approximately 150 days.

• c. Purchases of goods

Line Item Related Party Name Purchases HANDY COMPANY	For the Year Ended	For the Year Ended
	2021	2020
	$ 47,723	$ 34,091

Purchases were made at market prices and the payment period was between 50~90 days.

• d. Receivables from related parties

Line Item Related Party Name Accounts receivable STURMEY-ARCHER	December 31, 2021	December 31, 2020
	$ 268,657	$ 279

For the year ended December 31, 2021 and 2020, no impairment losses were recognized for accounts receivable from related parties.

• 45 -

• e. Payables to related parties

Line Item Related Party Name Accounts payables HANDY COMPANY Other payables HANDY COMPANY	December 31, 2021	December 31, 2020
	$ 9,406 1,786	$ 21,694 2,066
	$ 11,192	$ 23,760

• f. Other current liabilities

Line Item Related Party Name Deposits received STURMEY-ARCHER

For the Year Ended	For the Year Ended
2021	2020
$ 122,807	$ -

• g. Others

Line Item Related Party Name Service expense HANDY COMPANY Cost of conversion HANDY COMPANY Rent income HANDY COMPANY	For the Year Ended	For the Year Ended
	2021	2020
	$ 13,152 696 100	$ 10,778 5,504 120
	$ 13,948	$ 16,402

The service expense is the salary and management fees incurred by HANDY COMPANY dispatching workers to the Company to provide labor services.

The cost of conversion between the Company and HANDY COMPANY is contracted in accordance with general market conditions.

It is the rental income of foreign labor beds provided by the Company to HANDY COMPANY and contracted in accordance with general market conditions.

• g. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended
	2021	2020
	$ 34,037 -	$ 25,251 -
	$ 34,037	$ 25,251

• 46 -

29.ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

Pledged time deposits (classified as other financial assets) Property, plant and equipment Land Buildings	December 31, 2021 $ 96,600 169,101 233,189 $ 498,890	December 31, 2020
		$ - 169,101 180,780
		$ 349,881

30.SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

• a. Significant unrecognized commitments

• 1) Unrecognized commitments were as follows:

Acquisition of property, plant and equipment	December 31, 2021 $ 30,426	December 31, 2020
		$ 22,119

• 2) As of December 31, 2021, guarantee notes payable for operation and borrowings amounted to approximately $365,987 thousand.

• 3) As of December 31, 2021, unused letters of credit amounted to approximately $8,357 thousand.

• b. Contingencies

• 1) In December 2016, the Company and the equipment supplier filed a lawsuit because the equipment function did not meet the delivery conditions, and won the lawsuit in the second instance. Therefore, the Company transferred the originally estimated amount of $1,913 thousand payables to other income in the second quarter of 2019. However, the equipment supplier refused to accept the judgment of the second instance and appealed the third instance. The Supreme Court has ruled that the original judgment of the High Court was abandoned except for the provisional execution, referring the case back to Taiwan High Court for further trials. Up to the present, Taiwan High Court has notified that a court session will be held on January 13, 2021, to run the proceeding of the new trial. Up to the present, the case is still in the process of legal proceedings.

31.SIGNIFICANT LOSSES FROM DISASTERS : None

32.SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD :

On November 5, 2021, the board of directors of the Group passed a resolution to establish Sun Race SturmeyArcher Dutch Holding B.V., the Netherlands investment activities. The Group invested a total of EUR 3.39 million in January and February 2022. In March 2022, it acquired 100% equity of STURMEY-ARCHER EUROPA B. V. through Sun Race Sturmey-Archer Dutch Holding B.V.

• 47 -

33.OTHER ITEMS

• a. 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 functional currencies of the entities in the Group and the related exchange rates between foreign currencies and respective functional currencies were as follows:

December 31, 2021

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	12,887	27.6(USD:NTD) $	355,682
USD		342	6.371(USD:RMB)	9,428
EUR		15,282	31.191(EUR:NTD)	476,648
RMB		30,679	4.318(RMB:NTD)	132,473
HKD		2	3.518(HKD:NTD)	8
Financial liabilities
Monetary items
USD		83	27.7(USD:NTD)	2,312
RMB		12,973	4.362(RMB:NTD)	56,588
December 31, 2020
		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	1,301	28.045(USD:NTD) $	36,497
USD		228	6.497(USD:RMB)	6,401
EUR		261	34.399(EUR:NTD)	8,986
RMB		14,055	4.302(RMB:NTD)	60,463
HKD		2	3.596(HKD:NTD)	8
Non-monetary items
USD(Note 1)		4	28.045(USD:NTD)	110
Financial liabilities
Monetary items
USD		54	28.145(USD:NTD)	1,536
RMB		4,411	4.346(RMB:NTD)	19,171
Note 1: Financial assets at fair value through profit or loss - forward foreign exchange.

• 48 -

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

Foreign Currency EUR RMB USD USD	For the Year Ended December 31, 2021 Exchange Rate Net Foreign Exchange Gains (Losses) 31.191&31.551(EUR:NTD)$ (12,719) 4.318&4.362(RMB:NTD) 26 27.6&27.7 (USD:NTD) (1,721) 6.3757 (USD:RMB) (11) $ (14,425)	For the Year Ended December 31, 2020	For the Year Ended December 31, 2020
	Exchange Rate 31.191&31.551(EUR:NTD) 4.318&4.362(RMB:NTD) 27.6&27.7 (USD:NTD) 6.3757 (USD:RMB)	Exchange Rate 34.399&34.76(EUR:NTD) 4.302&4.346(RMB:NTD) 28.045&28.15 (USD:NTD) 6.525 (USD:RMB)	Net Foreign Exchange Gains (Losses) $ 68 (200) (612) (392)
			$ (1,136)

• b. Other items

• In 2021, the COVID-19 spread all over the world, causing some areas to implement quarantine and travel restrictions. The Group assessed that the overall business and financial aspects were not significantly affected, and there is no continuation doubts about operational capabilities and financing risks. However, as uncertainties over the pandemic remains, the Group will continue its observation on development of the epidemic.

34.SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees:

• 1) Financing provided to others (Table 1)

• 2) Endorsements/guarantees provided (None)

• 3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (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 amounting to at least NT$100 million or 20% of the paid-in capital (Table 2)

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 3)

• 9) Trading in derivative instruments (None)

• 10) Intercompany relationships and significant intercompany transactions (Table 6)

• 11) Information on investees (Table 4)

• 49 -

• b. Information on investments in mainland China

• 1) Information on any investee Company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 5)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period (Table 6)

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period (Table 6)

  • c) The amount of property transactions and the amount of the resultant gains or losses (None)

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes (None)

  • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to the financing of funds (Table 1)

  • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services (None)

• c. Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder.(Table 7)

35.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. Specifically, the Group’s reportable segments were as follows:

Domestic department – Production of high-end bicycle parts.

Foreign department – Production of low-end bicycle parts.

• 50 -

a. Segment revenue and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segments:

For the year ended December 31, 2021 Revenue from external customers Inter-segment revenue Segment revenue Eliminations Consolidated revenue Segment income For the year ended December 31, 2020 Revenue from external customers Inter-segment revenue Segment revenue Eliminations Consolidated revenue Segment income	Domestic $ 1,674,143 277,505 $ 1,951,648 $ 322,721 Domestic $ 1,103,925 149,895 $ 1,253,820 $ 227,880	Foreign $ 213,386 176,333 $ 389,719 $ 5,841 Foreign $ 142,724 33,649 $ 176,373 $ (6,584)	Total
			$ 1,887,529 453,838
			2,341,367 (453,838)
			$ 1,887,529
			$ 328,562
			Total
			$ 1,246,649 183,544
			1,430,193 (183,544)
			$ 1,246,649
			$ 221,296

Inter-segment revenue was accounted for according to market prices.

Segment profit represents the profit before tax earned by each segment without income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

• b. Assets and Liabilities of the Segment

The information on assets and liabilities of the consolidated company is not provided to the business decision-makers, so the measured amount of the assets and liabilities of the segment to be disclosed is zero.

c.Income from Main Products and Services

Drivetrain Component Brake Component Spare Parts and Accessories Others	December 31, 2021 $ 1,735,849 14,707 127,412 9,561 $ 1,887,529	December 31, 2020
		$ 1,126,176 7,777 108,870 3,826
		$ 1,246,649

d. Geographical information

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below.

• 51 -

Taiwan Netherlands China Brazil United Kingdom Colombia United States Italy Others	Revenue from External Customers	Revenue from External Customers
	For the Year Ended December 31,2021 $ 534,534 448,028 222,615 80,804 212,348 24,378 29,554 11,168 324,100 $ 1,887,529	For the Year Ended December 31,2020
		$ 436,137 252,383 176,466 38,058 133,703 8,251 19,471 17,003 165,177
		$ 1,246,649

Taiwan China	Non-currentAssets	Non-currentAssets
	December 31,2021 $ 465,339 117,445 $ 582,784	December 31,2020
		$ 454,189 126,967
		$ 581,156

Non-current assets include property, plant and equipment, right-of-use assets, intangible assets and prepayments for equipment, but exclude financial instrument and deferred tax assets.

• e. Details of major customers accounting for more than 10% of net consolidated sales revenue in 2021 and 2020 are as follows:

Customer A from abroad Customer B from abroad	For the Year Ended December31,2021 $ 445,711	For the Year Ended December31,2020
		$ 251,798
	$ 205,627	$ 127,637

• 52 -

TABLE 1

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2021

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

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period	Ending Balance	Actual Amount Borrowed	Interest Rate (%)	Nature of Financing	Business Transaction Amount	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note2)	Aggregate Financing Limit (Note2)
													Item	Value
0	The Company	SUN RACE NANTONG	Other receivable from related parties	YES	86,800	86,800	-	2.5%	Short-term financing	-	Operating turnover	-	-	-	240,000	240,000

Note 1: Business relationships between the parent and subsidiaries are numbered as follows:

a. Parent: 0

• b. Subsidiaries are numbered from 1 in ascending order.

Note 2: Limit of financing amount for individual counter-party and total financing amount are 40% of the lender’s paid-up capital.

• 53 -

TABLE 2

SUN RACE STURMEY-ARCHER CORPORATION 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, 2021

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

Seller	Related Party	Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchases/ Sales	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
The Company	STURMEY-ARCHER	Related party in substance	Sales	$ 445,711	23.61%	150 days	usual list prices	150 days	$ 268,657	63.43%	-

• 54 -

TABLE 3

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL December 31, 2021

(In Thousands of New Taiwan Dollars/USD)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amount Received in Subsequent Period(Note)	Allowance for Impairment Loss
					Amount	Actions Taken
The company	STURMEY-ARCHER	Related party in substance	$ 268,657	3.31	$ -	-	$ 115,511	$ -

Note : The amount recovered as of March 17, 2022.

• 55 -

TABLE 4

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars/USD)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December 31,	As of December 31,	2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2021	December 31, 2020	Number of Shares	%	Carrying Amount
The Company The Company BUSINESS ALLIANCE	BUSINESS ALLIANCE SUN RACESTURMEY- ARCHER DUTCH HOLDING B.V. BUSINESS FIRST	Samoa Netherlands Samoa	Investment activities Investment activities Investment activities	$ 283,488 (USD9,413) - 242,097 (USD8,018)	$ 283,488 (USD9,413) - 242,097 (USD8,018)	9,413,000 - 8,018,000	100 100 100	$ 229,268 - 210,526	$ 6,205 - 7,465	$ 5,841 - 7,465	Note 1,2 Note 3 Note 1

Note 1 : Amount was recognized based on audited financial statements.

Note 2 : Amount was included the adjustment of the realized and unrealized profit of upstream transactions.

• Note 3 : The company registered and established SUN RACE STURMEY-ARCHER DUTCH HOLDING B.V. in the Netherlands in December 2021, with a shareholding ratio of 100%. The company operates the investment activities. Please refer to Note 32 for the details of the investment of shares.

• 56 -

TABLE 5

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars/USD)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2021	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2021	Accumulated Repatriation of Investment Income as of December 31, 2021	Note
							Outward	Inward
SUN RACE NANTONG	Production and sales of precision plastic film and bicycle transmission system components		241,531 (USD8,000)		Note 1	241,531 (USD8,000)	-	-	241,531 (USD8,000)	7,504	100	7,504 (Note2)	201,263	-
Accumulated Outward Remittance for Investments in Mainland China as of December 31, 2021		Investment Amount Authorized by the Investment Commission, MOEA		Upper Limit on the Amount of Investments Stipulated by the Investment Commission, MOEA
$241,531(USD 8,000)		$248,850(USD 9,000) (Note 3)		$ 773,184

Note 1 : Through investing the subsidiary in the third area, which then invested in the investee in Mainland China.

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

Note 3 : Amount are retranslated at the rates prevailing on December 31.

• 57 -

TABLE6

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2021

(Amounts in Thousands of New Taiwan Dollars)

No. (Note1) 0 0 0 0 0 0	Investee Company SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUNRACESTURMEY-ARCHERCORPORATION	Counterparty SUN RACE NANTONG BUSINESS ALLIANCE SUN RACE NANTONG SUN RACE NANTONG SUN RACE NANTONG SUNRACENANTONG	Relationship (Note2) 1 1 1 1 1 1		Transaction Details	Transaction Details
				Financial Statement Accounts Net revenue from sale of goods Other revenue Purchases Manufacturing costs Accounts receivable Accounts payable	Amount $ 276,215 1,291 176,193 140 74,040 39,722	Payment Terms Note 3 Note 4 Note 4 Note 4 Note 4 Note4	% of Total Sales or Assets 14.63 0.07 9.33 0.01 2.62 1.40

Note 1: Business relationships between the parent and subsidiaries are numbered as follows:

a. Parent: 0

b. Subsidiaries are numbered from 1 in ascending order.

Note 2: Relationship between parties is numbered as follows:

No.1 Parent to subsidiary. No.2 Subsidiary to parent. No.3 Subsidiary to subsidiary.

Note 3: The transaction term were made lower than market prices and the payment period was approximately 90 days.

Note 4: The transaction term were made at the Group’s usual list prices.

• 58 -

TABLE 7

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON MAJOR SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2021

Shareholders	Shares
	Total Shares Owned	OwnershipPercentage
Rih-ChangInvestment Corporation	15,144,056	25.24	%

• Note 1 : Information on the above table is based on the calculation provided by the Taiwan Depository & Clearing Corporation for stockholders holding greater than 5% of ordinary shares and special shares who have completed the process of registration and book-entry delivery issued in dematerialized form (including treasury shares) on the last business day of the current quarter. There may be a discrepancy between the number of shares recorded on the Company’s consolidated financial statements and its dematerialized securities due to the difference in basis of preparation and calculation.

• Note 2 : According the above information, the delivery of shares to the trust by shareholders is disclosed by the individual trustee who opened the trust account. In accordance with the Securities Exchange Act, shareholders who acquire more than 10% of shareholding have to disclose their insider ownerships, including their own shares held, delivery to the trust and shares that have the right to make decisions on trust property, etc. Information on insider ownership declaration is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• 59 -