TASC - AGM Information 2021 | FinancialReports.eu

OPTO TECH CORPORATION

Handbook for the 2021 General Meeting of Shareholders Table of Contents

	OPTO TECH CORPORATION Handbook for the 2021 General Meeting of Shareholders Table of Contents
	Page
I. Time	........................................................................................................................................ 1
II. Place	........................................................................................................................................ 1
III. Agenda
1.	Meeting called to order ............................................................................................... 1
2.	Report Items ................................................................................................................ 1
3.	Proposed Resolutions .................................................................................................. 3
4.	Extemporary motions ................................................................................................ 10
IV. Attachments
1.	Business report ........................................................................................................... 11
2.	Audit Committee Report ........................................................................................... 15
3.	Implementation Status of Share Repurchase ............................................................ 16
4.	Guidelines for 2020 Transfer of First Repurchased Shares to Employees ............... 17
5.	Guidelines for 2021 Transfer of First Repurchased Shares to Employees ............. 20
6.	Independent Auditors’ Report and 2020 Consolidated Financial Statements ........... 23
7.	Independent Auditors’ Report and 2020 Parent Company Financial Statements ...... 33
8.	Earnings Distribution Statement ............................................................................... 43
9.	Before and Revision Chart of Company’s Articles of Incorporation ........................ 44
10.	Before and Revision Chart of Regulations Governing the Acquisition and
	Disposal of Assets ..................................................................................................... 46
11.	Before and Revision Chart of Procedures for Election of Directors ......................... 48
12.	Opinion Letter of Assessment on the Necessity and Reasonableness for the
	Private Placement ...................................................................................................... 50
V. Appendices
1.	Articles of Incorporation ........................................................................................... 61
2.	Procedure Rules for Shareholder Meetings .............................................................. 69
3.	Directors’ Shareholding Status .................................................................................. 75

I. Time: 9:00 a.m., June 24, 2021
II. Place: No. 773, Ming-Hu Road, Hsinchu, 300, Taiwan
(Lakeshore Hotel Hsinchu Leith Castle - Apollo II B1)

III.Agenda

1. Meeting called to order

2. Report Items:

(1) 2020 Business Report (Please refer to pages 11 - 14 of this Handbook for details.)
(2) 2020 Audit Committee Report (Please refer to page 15 of this Handbook for details.)
(3) 2020 Surplus Distribution and Cash Dividend Report Description:
1) In accordance with the provisions of Article 29-1 of the Articles of Incorporation, the Board of Directors is authorized to resolve that all or part of the dividends and bonuses distributable are to be made by way of cash, which resolution shall also be reported to the Shareholder meeting.
2) The surplus for the year 2020 is appropriated to be the shareholder bonus in the amount of NT$514,927,071, which is to be distributed by way of cash dividends of approximately NT$1.39 per share. The actual dividend payout ratio is calculated based on the number of shares entitled to participate in the distribution on the ex-dividend date, and rounded up or down to the whole number, of which the total of its fractional amount less than NT$1 shall be adjusted in order starting from the largest decimal number to the smallest decimal number as well as from the smallest shareholder account number to the largest one until it reaches the total amount of the cash dividend to be distributed.
3) This proposal has been adopted by a resolution of the Board of Directors and authorized the Chairman to set the ex-dividend date and to make determinations on other related matters; if the Company subsequently buys back the Company’s shares or transfers treasury stocks to employees, etc., which requires adjustments to be made due to the number of outstanding shares being affected and the dividend payout ratio to its shareholders being changed, the Chairman shall be authorized with discretionary powers to handle such matters.
(4) Distribution of Remuneration to Employees and Directors Report 2020 Description:
In accordance with the Articles of Incorporation, the Company’s Board of Directors has approved appropriating the amount of NT$115,175,082 (15%) as employee remuneration and the amount of NT$38,391,694 (5%) as director remuneration based on the profit status of the year 2020. The aforementioned amounts are to be distributed entirely in cash, and are not different from the estimated amounts of expenses recognized on the account.

(5) A report on the implementation status of the cash capital increase in private placement of common shares or/and special shares adopted by the 2020 General Meeting of Shareholders.

Description:

1) A resolution adopted by the Company’s General Meeting of Shareholders held on June 16, 2020 authorized the Board of Directors to, depending on market conditions and the Company ’ s operational needs, make one (1) or more application(s) for the cash capital increase in private placement of common shares or/and special shares within a quota of no more than 60,000,000 shares.
2) Due to the approaching deadline thereof with no suitable strategic investors having been found, implementation of the aforementioned resolution has not been able to be carried out. The Board of Directors therefore resolved on March 18, 2021 not to proceed with this matter.
(6) A report on the implementation status of the Company’s share repurchase as well as the Guidelines for the Transfer of Repurchased Shares to Employees. Description:

The implementation status of the Company’s share repurchase (please refer to page 16 of this Handbook for details) as well as the Guidelines for the Transfer of Repurchased Shares to Employees (please refer to page 17-22 of this Handbook for details).

3. Proposed Resolutions:

Motion (1) Proposed by: Board of Directors Cause of motion: The 2020 Financial Statements and Business Report are hereby submitted for recognition.

Description:

1) The Company’s 2020 Financial Statement have been completed with the review conducted by the accountants, Lin Yu-kuan and Lai Tsung-hsi, of PricewaterhouseCoopers Taiwan, and such Statement has been submitted with the 2020 Business Report and completed with the review by the Audit Committee. (Please refer to pages 23-42 of this Handbook.)
2) Motion is made to submit the foregoing statements and report for recognition.

Resolution:

Motion (2) Proposed by: Board of Directors Cause of motion: The distribution of the 2020 surplus is hereby submitted for recognition.

Description:

1) The distribution of the Company’s 2020 surplus has been approved by the Board of Directors, as well as submitted to and completed with the review by the Audit Committee.
2) The Table for the Company’s 2020 Surplus Distribution is attached in detail. (Please refer to page 43 of this Handbook.)

Resolution:

Motion (3) Proposed by: Board of Directors Cause of motion: A revision to the Company’s Articles of Incorporation is hereby submitted for discussion.

Description:

Motion is made to revise the Company’s Articles of Incorporation in accordance with the revised content of the Business Category Code List issued by the Ministry of Economic Affairs, as well as to be in line with the practical operations of the Company; the Comparison Table of Amendments is attached hereto in detail. (Please refer to pages 44-45 of this Handbook.)

Resolution:

Motion (4) Proposed by: Board of Directors

Cause of motion: A revision to the Company’s Regulations Governing the Acquisition and Disposal of Assets is hereby submitted for discussion.

Description:

Proposal to revise the Company’s Regulations Governing the Acquisition and Disposal of Assets in order to be i n line with the organizational adjustment and meet the operational needs; the Comparison Table of Amendments is attached hereto in detail. (Please refer to pages 46-47 of this Handbook.)

Resolution:

Motion (5) Proposed by: Board of Directors Cause of motion: A revision to the Company’s Procedures for Election of Directors is hereby submitted for discussion.

Description:

Motion is made to revise the Company’s Procedures for Election of Directors in accordance with the regulations stipulated in Taiwan Stock Exchange Corporation official letter No. Tai-Cheng-Chih-Li-Tzu-1090009468 issued on June 3, 2020; a Comparison Table of Amendments is attached hereto in detail. (Please refer to pages 48-49 of this Handbook.)

Resolution:

Motion (6) Proposed by: Board of Directors Cause of motion: A transfer of shares to employees at a price lower than the average price of the shares actually repurchased is hereby submitted for discussion.

Description:

The Company made a first repurchase of 4,294,000 shares in 2020, and a first repurchase of 4,599,000 shares in 2021. In order to motivate employees and improve cohesion, the Company intends to transfer the repurchased shares to employees at a weighted average price of NT$25.44 and NT$24.35 lower than the average price at which the shares were actually repurchased. According to Article 10-1 of the Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies, to transfer such shares to employees at a price lower than the average price at which the shares were repurchased, the following shall be set out:

1) The set transfer price, discount rate, calculation basis and reasonableness thereof:
The pricing principle of the actual transfer price for the first repurchase of company shares in 2020 and the actual transfer price for the first repurchase of company shares in 2021 are calculated based on a price that is not lower than the simple arithmetic mean of the closing prices of the ordinary shares on the 3 business days prior to the pricing date

multiplied by 50%. The current pricing for the transfer of treasury stocks to employees is NT$12.95(calculated based on the average closing price of the 3 business days prior to March 18, 2021 25.9* 50%), and the discount rate is determined based on the current economic conditions and the future operating status of the Company, which are considered fairly reasonable.

2) Number of shares to be transferred, the purpose and reasonableness thereof: Number of shares to be transferred from the first repurchase of company shares in 2020: 4,294,000 shares.
Number of shares to be transferred from the first repurchase of company shares in 2021: 4,599,000 shares.

Purpose: To motivate employees and improve cohesion.

Reasonableness: The transfer price is set at 50% of the average closing price of the 3 business days prior to March 18, 2021 in order to provide an appropriate incentive to employees. In addition, the number of shares intended to be transferred to employees meets the requirements under Article 10-1 of the Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies, which stipulates that the cumulative number of shares thus transferred shall not exceed 5% of the total issued shares of the company. Therefore, this is considered reasonable.

3) Qualification requirements for employees share subscription, and number of shares employees are allowed to subscribe for: Qualification requirements for employees:

To be handled in accordance with Article 4 of the Guidelines for the Transfer of Repurchased Shares to Company Employees.

Number of shares employees are allowed to subscribe for:

To be handled in accordance with Article 5 of the Guidelines for the Transfer of Repurchased Shares to Company Employees.

4) Factors affecting shareholder equity:
i. Expensable amount and dilution of the Company’s earnings per share:
A. Expensable amount: (market price (closing price on subscription record date) - actual transfer price) × actual number of shares transferred.
B. Dilution of the Company’s earnings per share: Dilution of earnings per share = expensable amount ÷ the Company’s number of outstanding shares.
ii. Explanation of the Company’s financial burden as a result of transferring shares to employees at a price lower than the average price of the shares actually repurchased: After the transfer of treasury stocks to employees, the Company will increase the funds available for use in a total amount of NT$115,164,350, and the Company continues to make profits, so this should not cause major financial burden to the Company. Based on the calculation of the vesting conditions set thereby and the current number of outstanding shares, the dilution of earnings per share due to the expensable amount is a total of approximately NT$0.31, which will not have a significant impact on shareholders’ equity; the calculation is described in detail in the following table.

Unit: NTD

	First repurchase of company shares in 2020	First repurchase of company shares in 2021	Total
Difference between estimated transfer amount and acquisition cost	53,643,410	52,449,229	106,092,639
For additional paid-in capitalon the Company’s accountgenerated by transactionof treasury stocks, expensed amount is deducted from such difference in amount (price to be calculated based on market closing price on March 17, 2021, at which time, expensed amount is to be separately calculated on basis of actual transfer date).	(2,822,690)	(8,027,621)	(10,850,311)
Undistributed surplus to be offset	0	0	0
The Company’s current remaining undistributed surplus after distribution of 2020 surplus	1,790,730,371	1,790,730,371	1,790,730,371
Increase in funds available to the Company after transfer of treasury stock to employees	55,607,300	59,557,050	115,164,350
Effect of amount expensed upon dilution of earnings per share, based on calculation of vesting conditions set thereby and current number of outstandingshares	0.15	0.16	0.31

Resolution:

Motion (7) Proposed by: Board of Directors It is proposed to undertake a private placement of ordinary shares by cash capital increase, and such proposal is submitted for discussion.

Description:

In order to meet the needs of the Company for strategic cooperation in long-term development and to strengthen the Company’s competitiveness, it is proposed to undertake a private placement of ordinary shares by cash capital increase within a quota of not more than 60,000,000 shares once within a year subject to market conditions and the operational requirements of the Company in accordance with Article 43-6 of the Securities and Exchange Act.

Basis and rationality of the private placement pricing:
(1) The price of common shares in this private placement is calculated based on the higher of the following two criteria as the reference price:
- A. The simple arithmetic average of the closing price of the common shares calculated based on one of the 1, 3, or 5 business days prior to the pricing date, after deduction of the free allotment ex-rights and dividends with the add back of capital reduction and ex-rights.
- B. The simple arithmetic average of the closing price for the common shares calculated based on the 30 business days prior to the pricing date, after deduction of the free allotment ex-rights and dividends with the add back of capital reduction and ex-rights.
(2) Percentage of private placement pricing:

The basis for pricing is not less than 90% of the reference price. The actual price is proposed to be submitted to the Shareholders Meeting to authorize the Board of Directors for determination based on the market situation and objective conditions at the time of the issue within a range not less than the percentage adopted by the Shareholders Meeting.

(3) Rationality of the pricing:

The aforementioned pricing is determined with reference to the Company's share price and in compliance with the requirements under the Directions for Public Companies Conducting Private Placements of Securities, as well as in consideration of the restriction on transfer of shares for three years for private placement of securities, which is deemed rational.

3.Selection method, purpose, necessity, and expected benefits for the specified person(s):
(1) Selection method for specified person(s):

The investor targeted for this private placement in the adopted resolution is limited to the specified person who meets the requirements under Article 43-6 of the Securities and Exchange Act, and who must be a strategic investor.

(2)The subscriber that has currently been determined is: Nichia Taiwan Corporation.
(3)The subscriber, Nichia Taiwan Corporation, is also a Company insider. The selection method, purpose, necessity, and expected benefits thereof are described below. This private placement has also been approved by the Taiwan Stock Exchange Corporation for implementation, with a maximum participating subscription amount of NT$2 billion.

List of subscriber(s)	Selection method and purpose	Necessity	Expected benefits	Status as insider or related person/str ategic investor	Relations hip with the Company
Nichia Taiwan Corporation	Those directly or indirectly contributing to the Company's operations in the future and possessing a certain understanding of the Company.	In order to enhance the Company's technology & profitability, and to maintain the Company's sustainable operations; the introduction of strategic investors will help the Company to improve technology, develop products, reduce costs, expand markets, strengthen customer relationships and financial structure, etc.	The strategic investor's injection of capital, knowledge, business, finance, and channel-related capabilities and experience will reduce pressure on working capital costs and increase future profitability, which is considerably helpful to the Company’s competitiveness, operating performance, and long-term development.	Insider/str ategic investor	Corporate director of the Company

(4) Information required to be disclosed for subscriber(s) that are legal persons:

Legal person subscriber	Names of its top ten shareholders and their shareholdingratio	Shareholding ratio(%)	Relationship with the Company
Nichia Taiwan Corporation	Nichia Corporation	99.74	Said company's subsidiary is the Company's corporate director.
	Yen Kan-lin	0.13	None
	ChangJou-li	0.13	None

Reason for necessity of private placement:

(1) Reasons for not adopting public offering:

Taking into account the timeliness, convenience, issuance costs, and actual needs of the introduction of the strategic investor in raising capital, as well as that the regulation that privately placed securities cannot be freely transferred within three years will ensure the long-term cooperative relationship between the Company and the strategic investor, it is resolved to adopt private placement to raise funds and increase flexibility of the funding source.

(2) Quota for private placement approved:

This private placement will be based on market conditions or the operational needs of the Company, and will be issued once within a year, within a quota of not more than 60,000,000 ordinary shares.

(3) Purpose of the funds and expected benefits from such:
A. Purpose of the funds:

For one or more purposes, such as expanding operational scale, replenishing working capital, repaying bank loans, or other capital needs, in response to the Company's long-term operation and future development.

  - B. Expected benefits:

     - In addition to expanding the Company’s future operational scale, effectively reducing capital costs and operating risks, and ensuring financing efficiency, the implementation of this plan is expected to strengthen the Company’s competitiveness and enhance its operational efficiency, which will positively affect the Company’s operational stability and increase shareholder equity.

The assessment opinion issued by the securities underwriter on the necessity and reasonableness for conducting the private placement, which must be provided if there is a significant change in managerial control within the one-year period prior to the implementation of the private placement, is shown in detail as attached. (Please refer to pages 50-60 of this Handbook). The subscriber in this private placement is a strategic investor and an insider as well, and it is expected that after the implementation of this private placement, there will be no significant change in the Company's managerial control.
The rights and obligations of this private new share placement:
The rights and obligations of this private ordinary share placement are the same as those of the Company’s issued ordinary shares. However, according to the provisions of the Securities and Exchange Act, the ordinary shares in this private placement shall not be resold within three (3) years from the date of delivery of the shares, except for the counterparts to the transfer specified in Article 43-8 of the Securities and Exchange Act. After three years from the delivery date thereof, the Company proposes that the Shareholders Meeting authorize the Board of Directors to apply to the Taiwan Stock Exchange Corporation based on the current situation for the issuance of a letter of approval on meeting the criteria for listing, and to make the subsequent filing with the

competent authority for supplemental public issuance, as well as the application for listing transactions and related matters.

In the future, if this private placement requires changes or modifications due to amendments to laws or regulations, instructions from the competent authority, or based on operational evaluations, or changes in objective environmental factors such as the market, it is proposed that the Shareholders Meeting authorize the Board of Directors to handle such matters within its discretion.

Resolution:

4. Extemporary motions:

5. Meeting adjourned

【 Business Report 】

1.2020 Business Results:

(1) Implementation results from 2020 Business Plan:
1) Expanded investment in the application market for sensor components, using proximity sensor and time-of-flight (ToF) to extend the scope of applications such as environmental detection, smart wear, smart home appliances, automotive sensing, etc., and expanded cooperation with large global manufacturers to develop demand for sensing applications; completed sending samples for inspection and certification.
2) Completed development of new infrared products, which increased gross profit margin and market share with new red and infrared light products; in addition to the consolidation of existing markets, further active expansion of new markets maintained a certain market share. At present, new infrared products are being supplied stably.
3) For system products, completed a variety of large-scale display projects, and met high-end customer demand for engineering and products.
4) Overall, total 2020 operating revenue reached NT$5.6 billion, with after-tax net profit of NT$575,129,000, and earnings per share of NT$1.52.
(2) 2020 budget implementation status:

Unit: Millions

Primary product	2020 sales figures	2020 sales figures
	Projected	Actual
Light-emittingcomponents	18,373	15,916
Sensingcomponents	24,254	25,640
Total	42,627	41,556

(3) Analysis of financial income/outlay and profit capacity:

Analysis of financial income/outlay and profit capacity:
	Unit: NT$ thousands
Figure	2020
Net operatingrevenue	5,590,046
Operating profit	689,147
Pre-tax income(%)	619,756
Interest expenses	26,492
Interest expenses asproportion of operating profit(%)	3.84%

		Unit: NT$ thousands; %
	Year/figure	2020
Basic figure	Aggregate liabilities	2,948,101
Financial structure	Equitycapital ratio	72.30%
	Liabilities asproportion of assets	27.70%
	Long-term funds as proportion of real estate,factories and equipment	329.29%
Debt servicing capacity	Current ratio	363.79%
	Quick ratio	295.73%
	Times interest earned ratio	24.39

(4) Research & development

1) We were optimistic about the future application market for VCSEL components, and expected to develop the next generation of VCSEL technology, providing technology platforms and innovative application products.
2) We improved the luminous efficiency of UVC epitaxy and flip chip manufacturing process products, strengthened product reliability, reduced costs, and achieved a competitive advantage of high cost-performance ratio.
3) In response to the raging COVID-19 pandemic, we penetrated the market with products for surface sterilization, water sterilization, and solid solution hardening applications.

2. 2021 operating plan:

(1) Operations program:
1) Develop products with cutting-edge technology that reduce the burden on the environment and promote them globally, especially in high-future applications such as infrared sensing, biometric technology, wearable devices, automotive market, AR, VR, and 5G sensing.
2) Set up a technical platform to allow customers to clearly define product specifications, quality acceptance standards, and mass production procedures specifications, etc., and strategically cooperate with major manufacturers to provide the required sensing components as the supply chain of smart products for large global manufacturers.
3) In production management, adopt automated production and introduce advanced AI automated production processes to improve the production management technology of photoelectric sensing components, drive smart automated production capabilities, maintain product quality, and control costs. Our goal is to create the world’s number one products.
(2) Projected sales volume and basis:
According to a TrendForce research report, with the global impact of the COVID-19 pandemic and due to the rebound in long-term suppressed demand as well as vaccines becoming available on the market, it is estimated that global LED output value will reach US$15.7 billion in 2021, with an annual increase of 3.8%. The Company’s projected 2021 operating goals are as follows:

Unit: Millions

Primary product	2021projected sales volume
Light-emittingcomponents	10,222
Sensingcomponents	29,675
Total	39,897

(3) Major production & sales policies:
1) Through internal vertical integration, improve product reliability, reduce costs, and achieve a competitive advantage, with products that have high cost-performance ratios.
2) Actively expand the new infrared market and increase existing market share; actively develop new infrared products and continue to strive for more customers and orders.
3) With system products, use advanced manufacturing process technology to create differentiated products, and adopt cross-industry cooperation to create new application demands.

3. Strategy for future Company development, and influences from external competitive environment, regulatory environment, and overall operating environment

(1) Strategy for future Company development:

In recent years, the Chinese government’s support and subsidies for China’s LED industry have caused serious threats to local industry players, and the traditional LED industry is no longer competitive; therefore, in 2020, the Company’s development strategy underwent rather significant changes compared to that in the past. We no longer merely focused solely on traditional LEDs, but aimed at the extended development of the sensing component application market as well as the demand for VCSEL applications instead. Through 3D sensing, we will continue to expand the penetration of VCSEL in smart phones and wearable applications. In addition, in response to the advent of the 5G era, we will simultaneously boost the momentum growth of VCSEL and to gradually transform the traditional LED lighting and display industry into a manufacturer of optoelectronic semiconductor sensing components. Therefore, in 2021, the Company will mainly deploy 3D sensing, VCSEL component wearable devices, smart healthcare business opportunities, and commercial application technology platforms. The target application markets are automotive sensing, mobile phones, smart wearables, smart home appliances, environmental detection, AR , VR, etc. We will also move toward the goal of automated production.

(2) Influences from external competitive environment:
According to the TrendForce research report, the development trend of the infrared sensing market in 2021 will gradually grow along with 3D sensing, automotive sensing, the LiDAR market, etc. It is estimated that the infrared sensing market will reach US$3.862 billion in 2025; on the other hand, the total output value of VCSEL for 3D sensing is estimated to reach US$1.842 billion in 2021, with an annual growth rate of 53%; while the wearable device market is expected to have a compound annual growth rate of 16% by 2024. These and other factors represent the future dawn of the LED industry, which is also the very reason that creates the huge business opportunity that attracts quite a lot of manufacturers to compete with themselves for investing therein. Thus, how to maintain competitiveness, obtain benefits from this wave of business opportunities, and avoid falling into a Red Sea Market again, is precisely a moment that is testing the strength of manufacturers.
(3) Influences from the regulatory environment:

In the past, the government recognized the functions of electrocardiograms, heart rhythm, blood oxygen detection, and others to fall within the scope of medical devices. Therefore, the function of smart wear to sense body data was often limited. However, in order to be in line with international trends, many countries have eliminated medical software for people’s daily health management from the field of medical device management. Also, Taiwan’s government no longer recognizes the software used for such smart wearable devices as falling within the scope of medical devices.

Aiming at the increase of public awareness of health management, the demand for health detection functions in smart wearable devices is increasing day by day. In the future, in addition to heart rhythm, blood oxygen, and blood pressure, it will also focus on the detection of blood sugar, sweat, and other analyses. In order to respond accordingly to increased sensing ranges and the demand for improved accuracy, the number of sensing components used will gradually increase.

(4) Influences from the overall operating environment:
Affected by the COVID-19 pandemic in 2020, all industries have been hit hard. According to the TrendForce research report, market demand for the LED industry, affected by the COVID-19 pandemic, declined significantly in 2020, and the output value is estimated to be only US$15.127 billion, for an annual decrease of 10%, a rare decline when viewed in terms of history. Nevertheless, with the development of the pandemic, the demand for remote office, teaching, sterilization products, and medicinal plants has increased, driving the demand for products such as optocoupler sensing, UVC LEDs, and plant grow lighting. In addition to the vaccine for COVID-19 becoming available on the market in early 2021, it is expected that 2021 will be the year when the LED industry rebounds.

In the past year, not only was OPTOTECH affected by the general environment, but the Company also underwent active internal transformation. Although facing various tests and challenges, the Company has been supported, encouraged, and accompanied all along by all the colleagues, customers, suppliers, and shareholders to thrive and grow. All this leads to this moment when OPTOTECH remains standing unwaveringly and maintains outstanding results. In the coming year, OPTOTECH will continue to uphold the long-term goal of social responsibility and sustainable operations, and bring dazzling brilliance to all stakeholders.

Chairman: H.T.Wang President: David Hung Chief Accountant: Chen, Yin-Jui

【 Audit Committee Report 】

The Board of Directors has prepared the Company’s 2020 Business Report, Financial Statements, and the Proposal for profit appropriation. The CPA Lin, Yu-Kuan and Lai, Chung-Hsi from PricewaterhouseCoopers were retained to audit OPTO TECH’s Financial Statements and have issued an audit report relating to the Financial Statements. The said Business Report, Financial Statements, and Proposal for profit appropriation have been reviewed and determined to be correct and accurate by the Audit Committee of OPTO TECH CORPORATION in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, I hereby submit this Report.

General Shareholders Meeting 2021

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OPTO TECH CORPORATION Chair of the Audit Committee: TSAI,KAO-MING

Date: March 18th, 2021

OPTO TECH CORPORATION

Implementation Status of Share Repurchase

	First Repurchase in 2020	First Repurchase in 2021
Repurchase Term

	November 6, 2020	January 8, 2021
Date of Board Resolution

	Transfer of shares to employees	Transfer of shares to employees
Purpose of Repurchase

	December 15, 2020 - January8,2021	January 11, 2021 - March 10,2021
Date of Actual Repurchase

	NT$16.70 – NT$35.20	NT$16.75 – NT$38.80
Repurchase Price Range

Type and Quantity of	Ordinary shares 4,294,000 shares	Ordinary shares 4,599,000 shares
Repurchased Shares
	NT$25.44	NT$24.35
Average Repurchase Price Per
Share

Total Value of Repurchased	NT$109,250,710	NT$112,006,279
Shares
	0 shares	0 shares
Number of Shares Cancelled
and Transferred

	4,294,000 shares	8,893,000 shares
Cumulative Number of
Company Shares Held

Ratio of Cumulative Number	1.13%	2.35%
of Company Shares Held to
Total Number of Issued
Shares(%)

OPTO TECH CORPORATION

Guidelines for 2020 Transfer of First Repurchased Shares to Employees

Article 1 Purpose

In order to motivate employees and enhance employee cohesion, the Company formulates the Guidelines for Transfer of Repurchased Shares to Employees of the Company in accordance with relevant regulations such as Subparagraph 1, Paragraph 1, Article 28-2 of the Securities and Exchange Act and the Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies issued by the Financial Supervisory Commission. The Company’s transfer of repurchased shares to employees shall be entirely handled in accordance with the provisions of these Guidelines, except as otherwise provided for in the relevant laws and regulations.

Article 2 (Types of transferred shares, content of rights, and restrictions on rights)

The shares transferred by the Company to employees shall be ordinary shares, and the rights and obligations therein shall be the same as those in other ordinary shares in circulation, except as otherwise provided for in the relevant laws and regulations as well as these Measures.

Article 3 (Transfer period)

The shares repurchased by the Company may be transferred to employees at one time or in instalments within five (5) years of the date of repurchase of such shares in accordance with the provisions of these Measures.

Article 4 (Eligibility of the transferee)

All full-time employees of the Company as well as full-time employees of domestic and foreign controlled or affiliated companies who have worked at least for one (1) year or have made special contributions to the Company that have been submitted and approved by the Chairman prior to the subscription record date shall be eligible for such subscription, in accordance with the subscription amount prescribed in Article 5 of these Guidelines.

The “controlled or affiliated company” referred hereto shall be subject to the recognition criteria set out in Article 369-2, Article 369-3, Paragraph 2 of Article 369-9 and Article 369-11 of the Company Act.

(Full-time and part-time shall be defined as follows:

Full-time employees: Those who are employed by the Company to perform the work assigned by the Company and who are paid monthly salaries.

Part-time employees: Hourly employees (that is, those who are not required to work at least 8 hours per day) and fixed-term contract employees who are employed by the Company and paid monthly salaries.)

Article 5 (Number of shares that employees may subscribe for)

The Company shall consider the employee’s position, seniority, contributions to the Company and development potential, etc., and take account of factors such as the total number of repurchased shares held by the Company on the subscription record date as well as the upper limit of the number of shares allowed to be subscribed by a single employee to set the weight of shares allowed to be transferred to employees, which shall be approved by the Chairman. However, the list of subscribers with manager status shall be submitted to the Remuneration Committee for deliberation and then submitted to the Board of Directors for resolution. If an employee fails to make a subscription and payment upon the expiry of the subscription and payment period, the subscription right shall be deemed to have been waived. The Company may authorize the Chairman to contact other employees to subscribe for the remaining shares that are left unsubscribed.

Article 6 (Procedure of transfer)

Operating procedure for this transfer of repurchased shares to employees:

(1) The share repurchase of the Company shall be announced, filed and executed in accordance with the resolution of the Board of Directors and within the implementation period.
(2) The Board of Directors shall set and announce the subscription record date for employee subscription, the criteria for the number of shares allowed to be subscribed, the subscription and payment period, the content of rights, conditions of restriction, and other related details in accordance with these Guidelines.
(3) The actual number of shares that are subscribed and paid shall be counted, and registration of the transfer of shares shall then be handled.

Article 7 (Agreed transfer price per share)

The transfer price in this transfer of repurchased shares to employees shall be the average price (to be calculated and rounded up or down to the nearest cent in New Taiwan Dollars, dropping the remaining digits thereafter) of the shares actually repurchased. However, if the Company’s issued ordinary shares increase or decrease prior to the transfer, the price may be adjusted in accordance with the increase or decrease ratio of the issued shares. Where the transfer of share is made to employees at a price lower than the average price of the shares actually repurchased in accordance with the Articles of Incorporation, it shall be submitted prior to the transfer to the latest Shareholder Meeting for approval, which is adopted by the attendance of shareholders representing more than half of the total number of issued shares, with two-thirds or more of the voting rights of the shareholders in attendance. In addition, matters with regard to the items stipulated in Article 10-1 of the Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies shall also be set out in the reasons for convening said Shareholder Meeting before the transfer of share may be implemented.

Transfer price adjustment formula:

Transfer price after adjustment = Actual average repurchase price per share × (total number of ordinary shares at completion of the Company's share repurchase ÷ total number of ordinary shares before the Company transfers repurchased shares to employees).

Article 8 (Rights and obligations after transfer)

After the Company repurchases shares, transfers such shares to employees, and proceeds with registration of the transfer, unless otherwise provided for, the remaining rights and obligations therein shall be the same as those in the original shares.

Article 9 (Other matters concerning rights and obligations of the Company and employees)

With regard to the shares repurchased by the Company and transferred to employees, the transfer of such shares thereafter shall not be allowed for the period of two (2) years from the date of delivery of the shares.
Taxes and expenses incurred in transferring repurchased shares to employees shall be borne by the Company or employees respectively in accordance with relevant laws and regulations.

Article 10

These Guidelines shall take effect after the resolution adopted by the Board of Directors, and may be submitted to and resolved by the Board of Directors for the revision thereof.

Article 11

These Guidelines shall be submitted to the Shareholder Meeting for the report, and the same shall apply when these Guidelines are revised.

OPTO TECH CORPORATION

Guidelines for 2021 Transfer of First Repurchased Shares to Employees

Article 1 Purpose

Article 2 (Types of transferred shares, content of rights, and restrictions on rights)

Article 3 (Transfer period)

Article 4 (Eligibility of the transferee)

(Full-time and part-time shall be defined as follows:

Full-time employees: Those who are employed by the Company to perform the work assigned by the Company and who are paid monthly salaries.

Article 5 (Number of shares that employees may subscribe for)

The Company shall consider the employee’s position, seniority, contributions to the Company and development potential, etc., and take account of factors such as the total number of repurchased

shares held by the Company on the subscription record date as well as the upper limit of the number of shares allowed to be subscribed by a single employee to set the weight of shares allowed to be transferred to employees, which shall be approved by the Chairman. However, the list of subscribers with manager status shall be submitted to the Remuneration Committee for deliberation and then submitted to the Board of Directors for resolution. If an employee fails to make a subscription and payment upon the expiry of the subscription and payment period, the subscription right shall be deemed to have been waived. The Company may authorize the Chairman to contact other employees to subscribe for the remaining shares that are left unsubscribed.

Article 6 (Procedure of transfer)

Operating procedure for this transfer of repurchased shares to employees:

(1) The share repurchase of the Company shall be announced, filed and executed in accordance with the resolution of the Board of Directors and within the implementation period.
(2) The Board of Directors shall set and announce the subscription record date for employee subscription, the criteria for the number of shares allowed to be subscribed, the subscription and payment period, the content of rights, conditions of restriction, and other related details in accordance with these Guidelines.
(3) The actual number of shares that are subscribed and paid shall be counted, and registration of the transfer of shares shall then be handled.

Article 7 (Agreed transfer price per share)

Transfer price adjustment formula:

Article 8 (Rights and obligations after transfer)

Article 9 (Other matters concerning rights and obligations of the Company and employees)

With regard to the shares repurchased by the Company and transferred to employees, the transfer of such shares thereafter shall not be allowed for the period of two (2) years from the date of delivery of the shares.
Taxes and expenses incurred in transferring repurchased shares to employees shall be borne by the Company or employees respectively in accordance with relevant laws and regulations.

Article 10

These Guidelines shall take effect after the resolution adopted by the Board of Directors, and may be submitted to and resolved by the Board of Directors for the revision thereof.

Article 11

These Guidelines shall be submitted to the Shareholder Meeting for the report, and the same shall apply when these Guidelines are revised.

==> picture [160 x 72] intentionally omitted <==

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE T o the Board of Directors and Shareholders of Opto Tech Corporation

Opinion

We have audited the accompanying consolidated balance sheets of Opto Tech Corporation and subsidiaries (the “Group”) as at December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of 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 at December 31, 2020 and 2019, 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FinancialInterpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 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 of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Key audit matter- Allowance for inventory valuation losses

Description

Please refer to Note 4(12) for accounting policies on inventory valuation, Note 5(2) for accounting estimates and assumption uncertainty on inventory valuation, and Note 6(5) for details of allowance for inventory valuation losses. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses were NT$ 1,285,891 thousand and NT$ 130,302 thousand, respectively.

As the value of the Group’s inventories are effected by market prices and product life cycles, there is a higher risk of obsolescence. For inventories aged over a certain period of time and individually identified as obsolete, the net realisable value is estimated based on historical data of inventory closeout. The net realisable value utilised in evaluating obsolete inventories involves uncertainty of estimation as it is subject to management’s judgment. Since inventories and allowance for inventory valuation losses were material to the consolidated financial statements, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Assessed the reasonableness of policies and procedures in the provision of allowance for inventory valuation losses based on our understating the Group’s operations and its industry, such as assessing the data source of historical inventory closeout and the reasonableness in the identification of obsolete inventories; validated the appropriateness of system logic of inventory aging report in order to confirm the compliance with respective policies; and assessed the reasonableness of the Group’s determination of the provision of allowance for inventory valuation losses through obtaining assessment documents and supporting evidences in relation to individually identified obsolete or damaged inventories from management.

Key audit matter- Estimation of fair values of unlisted securities without active market

Description

Please refer to Note 4(7)(8) for accounting policies on financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income or loss, Note 5(2) for accounting estimates and assumption uncertainty on estimation of financial assets-fair value measurement of unlisted stocks without active market, and Note 6(2)(3),12(3) for details of financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income or loss. As of December 31, 2020, the carrying amount of unlisted securities without active market was NT$805,199 thousand.

For unlisted securities without active market held by the Group, management assesses their fair values through market approach and takes into account the discount for liquidity. Since the valuation method is subject to management’s judgment and involves uncertainty, which would affect fair value, it was identified as a key audit matter. How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Assessed the reasonableness of valuation method and parameters referred to in the appraisal report by the independent appraiser who was engaged by the management, including the net assets value measured at fair value, comparability and market liquidity of comparable companies; and assessed the reasonableness of price multipliers and discounts for liquidity in the market.

Key audit matters –Cutoff of sales of goods from hub warehouse

Description

Please refer to Note 4(31) for accounting policies on revenue recognition.

Among the revenue streams of the Group, revenue from sales of goods from hub warehouse is recognised when the custodians (hub warehouses) delivery goods to the customer (the control of goods have been transferred). The Group recognises revenue based on movements of inventories contained in the statements or other information provided by the custodians. Because the frequency and timing of statements provided by custodians vary and the process of revenue recognition contains numerous manual procedures and judgement, which would potentially result in inaccurate timing of revenue recognition. Due to that the revenue from sales of goods from hub warehouse is material to the Group, and the transaction amounts prior to and after the balance sheet date has significant effects on the financial statements, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Assessed and validated the appropriateness of management’s internal controls over the cutoff of sales of goods from hub warehouse prior to and after every month end in 2020, including validating acceptance reports provided by the hub warehouse custodians and ensuring movements of inventories and cost of goods sold have been recorded in appropriate periods. Furthermore, we performed confirmation procedures or conducted inventory physical observation on inventory quantities held by hub warehouses and validated the quantities against accounting records.

Other matter–Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of Opto Tech Corporation as at and for the years ended December 31, 2020 and 2019.

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 Preparations of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, 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 audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditor’s 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 auditor’s 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 ROC GAAS 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.

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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.
Obtain sufficient appropriate audit evidence regarding the financial information of the 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.

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 of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Lin, Yu-Kuan Lai, Chung-Hsi

For and on behalf of PricewaterhouseCoopers, Taiwan March 18, 2021

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2020 AMOUNT % $ 3,100,161 29 320,419 3 8,873 - 1,634,913 16 16,880 - 20,218 - 1,155,589 11 24,202 - 25,245 - 6,306,500 59 106,990 1 783,998 7 5,394 - 2,705,133 26 236,135 2 399,307 4 14,318 - 48,337 1 35,315 - 4,334,927 41 $ 10,641,427 100	December 31, 2019	December 31, 2019
	AMOUNT $ 3,100,161 320,419 8,873 1,634,913 16,880 20,218 1,155,589 24,202 25,245 6,306,500 106,990 783,998 5,394 2,705,133 236,135 399,307 14,318 48,337 35,315 4,334,927 $ 10,641,427	AMOUNT $ 2,997,465 169,315 13,051 1,415,163 32,788 19,011 1,239,698 45,102 26,259 5,957,852 106,853 925,373 8,768 2,909,127 251,529 - 14,229 88,920 43,493 4,348,292 $ 10,306,144	%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable - net Accounts receivable - related parties - net Other receivables Inventories - net Prepayments Other current assets Current Assets Non-current assets Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income or loss - non-current Investments accounted for using equity method Property, plant and equipment - net Right-of-use assets Investment property Intangible assets Deferred tax assets Other non-current assets Non-current assets Total assets			29 2 - 14 - - 12 1 -
			58
			1 9 - 28 3 - - 1 -
			42
			100

(Continued)

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31,2020 December 31,2019 Notes AMOUNT % AMOUNT % 6(11) $ 230,758 2 $ 249,640 3 6(2) 799 - 31 - 1,757 - 6 - 665,926 6 651,067 6 7 51,920 1 78,691 1 6(12) 619,042 6 548,988 5 25,969 - 102,901 1 6(15) 4,033 - 8,272 - 7 19,560 - 19,598 - 6(13)(20) and 7 113,800 1 35,506 - 1,733,564 16 1,694,700 16 6(13) 748,555 7 814,504 8 6(15) 18,808 - 15,745 - 6(27) 42,986 1 81,572 1 7 216,706 2 229,898 2 6(14) 187,482 2 201,409 2 1,214,537 12 1,343,128 13 2,948,101 28 3,037,828 29 6(16) 3,786,228 35 3,786,228 37 6(17) 703,108 7 702,965 7 6(18) 729,360 7 669,312 6 3,743 - 8,392 - 2,361,920 22 1,841,481 18 6(19) 187,351 2 279,469 3 6(16) ( 82,021) ( 1)( 23,172) - 7,689,689 72 7,264,675 71 3,637 - 3,641 - 7,693,326 72 7,268,316 71 9 11 $ 10,641,427 100$10,306,144 100	December 31,2019	December 31,2019
			%
Current liabilities Short-term loans Financial liabilities at fair value through profit or loss - current Notes payable Accounts payable Accounts payable - related parties Other payables Current income tax liabilities Provisions for liabilities - current Current lease liabilities Other current liabilities Current Liabilities Non-current liabilities Long-term loans Provisions for liabilities - non-current Deferred tax liabilities Non-current lease liabilities Other non-current liabilities Non-current liabilities Total Liabilities Equity attributable to owners of parent Capital Common stock Capital Reserve Capital surplus Retained Earnings Legal reserve Special reserve Unappropriated earnings Other Equity Adjustments Other equity interest Treasury stocks Treasury stocks Equity attributable to owners of parent Non-controlling interest Total equity Significant contingent liabilites and unrecognised contract commitments Significant events after the balance sheet date Total liabilities and equity			3 - - 6 1 5 1 - - -
			16
			8 - 1 2 2
			13
			29
			37 7 6 - 18 3 -
			71
			-
			71
			100

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items	Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % 6(20) and 7 $ 5,590,046 100 $ 5,418,004 100 6(5)(25)(26) and 7 ( 3,946,488) ( 71) ( 3,779,675 ) ( 70) 1,643,558 29 1,638,329 30 6(25)(26) ( 127,614) ( 2) ( 125,590 ) ( 2) ( 489,207) ( 9) ( 422,121 ) ( 8) ( 335,103) ( 6) ( 351,895 ) ( 7) 12(2) ( 2,487) - 1,434 - ( 954,411) ( 17) ( 898,172)( 17) 689,147 12 740,157 13 6(21) 11,234 - 16,373 - 6(22) 55,611 1 58,907 1 6(23) ( 108,250) ( 2) ( 2,979 ) - 6(24) ( 27,611) - ( 34,342 ) - 6(6) ( 375) - 8,469 - ( 69,391) ( 1) 46,428 1 619,756 11 786,585 14 6(27) ( 44,627) ( 1) ( 181,950)( 3) $ 575,129 10 $ 604,635 11
Operating revenue Operating costs Gross profit, net Operating expenses Selling expenses General & administrative expenses Research and development expenses Expected credit (loss) gain on financial assets Total operating expenses Operating profit Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of (loss) profit of associates and joint ventures accounted for under equity method Total non-operating revenue and expenses Profit before income tax Income tax expense Net income

Items

Year ended December 31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(20) and 7
$ 5,590,046
100
$ 5,418,004
100
6(5)(25)(26)
and 7
(
3,946,488) (
71) (
3,779,675 ) (
70)
1,643,558
29
1,638,329
30
6(25)(26)
(
127,614) (
2) (
125,590 ) (
2)
(
489,207) (
9) (
422,121 ) (
8)
(
335,103) (
6) (
351,895 ) (
7)
12(2)
(
2,487)
-
1,434
-
(
954,411) (
17) (
898,172)(
17)
689,147
12
740,157
13
6(21)
11,234
-
16,373
-
6(22)
55,611
1
58,907
1
6(23)
(
108,250) (
2) (
2,979 )
-
6(24)
(
27,611)
- (
34,342 )
-
6(6)
(
375)
-
8,469
-
(
69,391) (
1)
46,428
1
619,756
11
786,585
14
6(27)
(
44,627) (
1) (
181,950)(
3)
$ 575,129
10
$ 604,635
11

Operating revenue

Operating costs

Gross profit, net
Operating expenses

Selling expenses
General & administrative expenses
Research and development expenses
Expected credit (loss) gain on financial
assets

Total operating expenses
Operating profit
Non-operating income and expenses
Interest income

Other income

Other gains and losses

Finance costs

Share of (loss) profit of associates and
joint ventures accounted for under
equity method

Total non-operating revenue and
expenses
Profit before income tax
Income tax expense

Net income

(Continued)

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items	Year ended December 31	Year ended December 31
	2020	2019
			%
Other comprehensive income (loss) Items that will not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans Unrealised (losses) gains on valuation of fiancial assets at fair value through other comprehensive (loss) income Income tax related to components of other comprehensive income (loss) that will not be reclassified to profit or loss Total other comprehensive (loss) income that will not be reclassified to profit or loss, net of tax Items that will be reclassified to profit or loss Currency translation differences of foreign operations Share of other comprehensiveshare of other comprehensive income (loss) of associates and joint ventures accounted for using the equity method Total other comprehensive income (loss) that will be reclassified to profit or loss, net of tax Total other comprehensive (loss) income that will be reclassified to profit or loss, net of tax Total comprehensive income for the year Profit (loss), attributable to: Owners of the parent Non-controlling interest Total comprehensive income attributable to: Owners of the parent Non-controlling interest Earnings per share Profit for the year Diluted earnings per share Profit for the year			- 1 -
			1
			- -
			-
			1
			12
			11 -
			11
			12 -
			12
			1.45
		$	1.44

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Note					Equity attributable to owner	Equity attributable to owner	s of the parent	s of the parent	s of the parent				Non-controlling interest
	Common stock		Capital reserve		Retained Earnings			Other equity interest		Treasury stocks		Total
				Legal reserve	Special reserve	Unappropriated earnings		Financial statements translation differences of foreign operations	Unrealised gains or loss on financial assets measured at fair value through other comprehensive income
6(3)(14) (19) 6(18) 6(6) 6(16) 6(3)(14) (19) 6(18) 6(6) 6(3) 6(16)		$4,454,386 - - - - - - - ( 668,158 ) $3,786,228 $3,786,228 - - - - - - - - $3,786,228	$702,521 - - - - - - 444 - $702,965 $702,965 - - - - - 143 - - $703,108	$604,001 - - - 65,311 - - - - $669,312 $669,312 - - - 60,048 - - - - $729,360	$ - - - - - 8,392 - - - $ 8,392 $ 8,392 - - - - ( 4,649 ) - - - $ 3,743	$1,537,426 604,633 ( 4,156 ) 600,477 ( 65,311 ) ( 8,392 ) ( 222,719 ) - - $1,841,481 $1,841,481 575,133 525 575,658 ( 60,048 ) 4,649 - 180 - $2,361,920	$2,021 - ( 11,393 ) ( 11,393 ) - - - - - ( $9,372 ) ( $9,372 ) - 5,309 5,309 - - - - - ( $4,063 )		$251,355 - 37,486 37,486 - - - - - $288,841 $288,841 - ( 97,247 ) ( 97,247 ) - - - ( 180 ) - $191,414	( $24,503 ) - - - - - - - 1,331 ( $23,172 ) ( $23,172 ) - - - - - - - ( 58,849 ) ( $82,021 )	$7,527,207 604,633 21,937 626,570 - - ( 222,719 ) 444 ( 666,827 ) $7,264,675 $7,264,675 575,133 ( 91,413 ) 483,720 - - 143 - ( 58,849 ) $7,689,689		$3,641 2 ( 2 ) - - - - - - $3,641 $3,641 ( 4 ) - ( 4 ) - - - - - $3,637	$7,530,848 604,635 21,935 626,570 - - ( 222,719 ) 444 ( 666,827 ) $7,268,316 $7,268,316 575,129 ( 91,413 ) 483,716 - - 143 - ( 58,849 ) $7,693,326

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Income and expenses having no effect on cash
flows
Expected credit losses (reverse of gains) on
financial assets
Depreciation
Amortization
Net (profit) loss on financial assets and liabilities
at fair value through profit or loss
Interest expense
Interest income
Dividend income
Loss (gain) on sale of investments
Loss on disposal of property, plant and equipment
Gain on lease termination
Impairment loss on non-financial assets
Share of loss (profit) of associates accounted for
using the equity method
Changes in assets/liabilities relating to operating
activities
Changes in operating assets
Acquisition of financial assets at fair value
through profit or loss
Notes receivable - net
Accounts receivable - net
Accounts receivable - related parties - net
Other receivables
Inventories - net
Prepayments
Other current assets
Other non-current assets
Net changes in liabilities relating to operating
activities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Provisions for liabilities
Net defined benefit liability
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash flows from operating activities

Year ended December31
Notes
2020
2019
$ 619,756 $ 786,585
12(2)
2,487 (
1,434 )
6(7)(8)(25)
457,472
474,289
6(10)(24)
15,090
12,298
6(2)(23)
(
473 )
1,144
6(24)
26,492
33,219
6(21)
(
11,234 ) (
16,373 )
6(22)
(
14,454 ) (
20,051 )
6(23)
5,443 (
8,486 )
6(7)(23)
30,897
-
6(8)(23)
(
5 )
-
6(7)(23)
35,585
-
6(6)
375 (
8,469 )
(
150,000 )
52,003
4,178
68
(
222,237 )
160,710
15,908
46,684
(
5,120 ) (
6,026 )
84,109
91,703
20,900 (
18,692 )
1,014
179
3,394
739
1,751 (
27 )
14,859
77,060
(
26,771 ) (
9,272 )
71,456 (
50,739 )
15,334 (
10,349 )
(
1,171 ) (
10,382 )
(
12,595)
1,287
982,440
1,577,668
11,930
16,181
17,671
20,051
(
27,894 ) (
33,020 )
(
79,345) (
128,942 )
904,802
1,451,938

(Continued)

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value throughs
other comprehensive income
Proceeds from disposal of finanacial assets at fair
value through other comprehensive income
Acquisition of investment property
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets
Decrease in deposits-out
Increase in other financial assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Decrease in short-term loans
Increase in long-term loans
Decrease in long-term loans
Repayments of principal portion of lease liabilities
Decrease in guarantee deposits
Stock repurchase
Payment of cash dividends
Payment of capital reduction
Net cash flows used in financing activities
Effect of change in exchange rate
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Year ended December 31
Notes
2020
2019
7
$ - ( $ 3,600 )
6(3)
3,780
-
6(8)
(
399,307 )
-
6(7)(8)
(
297,209 ) (
294,331 )
1
-
6(10)
(
15,179 ) (
17,687 )
4,784
9,899
8
- (
1,950 )
(
703,130 ) (
307,669 )
6(29)
666,529
1,071,311
6(29)
(
685,411 ) (
1,546,477 )
6(29)
-
814,504
6(29)
(
2,989 ) (
250,000 )
6(29)
(
20,221 ) (
21,206 )
6(29)
(
676 ) (
849 )
6(16)
(
58,849 )
-
6(18)
- (
222,275 )
6(15)(16)
- (
666,827 )
(
101,617 ) (
821,819 )
2,641 (
15,211 )
102,696
307,239
2,997,465
2,690,226
$ 3,100,161 $ 2,997,465

==> picture [160 x 72] intentionally omitted <==

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Opto Tech Corporation Opinion

We have audited the accompanying parent company only balance sheets of Opto Tech Corporation (the “Company”) as at December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the accompanying parent company only financial position of the Company as at December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

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

Key audit matters

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

Key audit matters for the parent Company’s parent company only financial statements of the current period are stated as follows:

Key audit matter- Allowance for inventory valuation losses

Description

Please refer to Note 4(11) for accounting policies on inventory valuation, Note 5(2) for accounting estimates and assumption uncertainty on inventory valuation, and Note 6(5) for details of allowance for inventory valuation losses. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses were NT$ 1,206,710 thousand and NT$ 79,860 thousand, respectively.

As the value of the Company’s inventories are affected by market prices and product life cycles, there is a higher risk of obsolescence. For inventories aged over a certain period of time and individually identified as obsolete, the net realisable value is estimated based on historical data of inventory closeout. The net realisable value utilised in evaluating obsolete inventories involves uncertainty of estimation as it is subject to management’s judgement. Since inventories and allowance for inventory valuation losses were material to the parent company only financial statements, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Assessed the reasonableness of policies and procedures in the provision of allowance for inventory valuation losses based on our understanding of the Company’s operations and its industry, such as assessing the data source of historical inventory closeout and the reasonableness in the identification of obsolete inventories; validated the appropriateness of system logic of inventory aging report in order to confirm the compliance with respective policies; and assessed the reasonableness of the Company’s determination of the provision of allowance for inventory valuation losses through obtaining assessment documents and supporting evidences in relation to individually identified obsolete or damaged inventories from management.

Key audit matter- Estimation of fair values of unlisted securities without active market Description

Please refer to Note 4(6)(7) for accounting policies on financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income or loss, Note 5(2) for accounting estimates and assumption

uncertainty on estimation of financial assets-fair value measurement of unlisted stocks without active market, and Note 6(2) (3), 12(3) for details of financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income or loss. As of December 31, 2020, the carrying amount of unlisted securities without active market was NT$805,199 thousand.

For unlisted securities without active market held by the Company, management assesses their fair values through asset-based approach and takes into account the discount for liquidity. Since the valuation

method is subject to management’s judgement and involves uncertainty, which would affect fair value, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Assessed the reasonableness of valuation method and parameters referred to in the appraisal report by the independent appraiser who was engaged by the management, including the net asset values measured at fair value, comparability and market liquidity of comparable companies; assessed the reasonableness of price multipliers and discounts for liquidity in the market.

Key audit matters–Cutoff of sales of goods from hub warehouse

Description

Please refer to Note 4(30) for accounting policies on revenue recognition.

Among the revenue streams of Opto Tech Corporation, revenue from sales of goods from hub warehouse is recognised when the custodians (hub warehouses) delivery goods to the customer (the control of goods have been transferred). Opto Tech Corporation recognises revenue based on movements of inventories contained in the statements or other information provided by the custodians. Because the frequency and timing of statements provided by custodians vary and the process of revenue recognition contains numerous manual procedures and judgement, which would potentially result in inaccurate timing of revenue recognition. Due to that the revenue from sales of goods from hub warehouse is material to Opto Tech Corporation, and the transaction amounts prior to and after the balance sheet date has significant effects on the financial statements, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Responsibilities of management and those charged with governance for the parent company only financial

statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Lin, Yu-Kuan Lai, Chung-Hsi

For and on behalf of PricewaterhouseCoopers, Taiwan March 18, 2021

The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

OPTO TECH CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2020 AMOUNT % $ 2,857,629 27 320,419 3 8,873 - 1,602,380 16 21,009 - 19,689 - 1,126,850 11 64,449 1 23,627 - 6,044,925 58 106,990 1 783,998 8 246,899 2 2,568,311 25 232,876 2 399,307 4 14,046 - 48,487 - 34,929 - 4,435,843 42 $ 10,480,768 100	December 31, 2019	December 31, 2019
	AMOUNT $ 2,857,629 320,419 8,873 1,602,380 21,009 19,689 1,126,850 64,449 23,627 6,044,925 106,990 783,998 246,899 2,568,311 232,876 399,307 14,046 48,487 34,929 4,435,843 $ 10,480,768	AMOUNT $ 2,813,868 169,315 13,051 1,383,056 34,643 18,712 1,212,657 43,176 26,046 5,714,524 106,853 925,373 260,308 2,759,452 247,185 - 13,958 83,712 42,740 4,439,581 $ 10,154,105	%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable - net Accounts receivable - net Accounts receivable - related parties - net Other receivables Inventories - net Prepayments Other current assets Current Assets Non-current assets Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income or loss - non-current Investments accounted for using the equity method Property, plant and equipment-net Right-of-use assets Investment property Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets			28 2 - 14 - - 12 - -
			56
			1 9 3 27 3 - - 1 -
			44
			100

(Continued)

OPTO TECH CORPORATION PARENT COMPANY ONLY BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	December 31,2019 AMOUNT % December 31,2019	December 31,2019 AMOUNT % December 31,2019
Liabilities and Equity
	AMOUNT $ 156,167 31 617,756 80,042 531,165 101,729 7,735 18,799 33,148 1,546,572 814,504 15,745 81,548 229,763 201,298 1,342,858 2,889,430 3,786,228 702,965 669,312 8,392 1,841,481 279,469 23,172) 7,264,675 $10,154,105	%
Current liabilities Short-term loans Financial liabilities at fair value through profit or loss - current Accounts payable Accounts payable - related parties Other payables Current income tax liabilities Provisions for liabilities - current Current lease liabilities Other current liabilities Current Liabilities Non-current liabilities Long-term loans Provisions for liabilities - non - current Deferred tax liabilities Non-current lease liabilities Other non-current liabilities Non-current liabilities Total Liabilities Equity Capital Common stock Capital reserve Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity adjustments Other equity interest Treasury stocks Treasury stocks Total equity Significant contingent liabilites and unrecognised contract commitments Significant events after the balance sheet date Total liabilities and equity		2 - 6 1 5 1 - - -
		15
		8 - 1 2 2
		13
		28
		37 7 7 - 18 3 -
		72
		100

OPTO TECH CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Year ended December 31

Items	2020 2019 Notes AMOUNT % AMOUNT % 6(20) and 7 $ 5,337,870 100 $ 5,144,198 100 6(5)(25)(26) and 7 ( 3,765,252) ( 70) ( 3,583,471 ) ( 70) 1,572,618 30 1,560,727 30 ( 97) - ( 108 ) - 108 - 357 - 1,572,629 30 1,560,976 30 6(25)(26) ( 112,675) ( 2) ( 110,982 ) ( 2) ( 441,594) ( 9) ( 376,502 ) ( 7) ( 326,037) ( 6) ( 342,641 ) ( 7) 12(2) ( 2,408) - 2,478 - ( 882,714) ( 17) ( 827,647)( 16) 689,915 13 733,329 14 6(21) 10,754 - 14,857 - 6(22) 38,699 1 38,753 1 6(23) ( 96,230) ( 2) ( 6,853 ) - 6(24) ( 22,699) - ( 28,211 ) ( 1) 6(6) ( 6,035) - 25,995 1 ( 75,511) ( 1) 44,541 1 614,404 12 777,870 15 6(27) ( 39,271) ( 1) ( 173,237)( 3) $ 575,133 11 $ 604,633 12
Operating revenue Operating costs Gross profit, net Unrealized profit from sales Realized profit from sales Net operating margin Operating expenses Selling expenses General and administrative expenses Research and development expenses Expected credit (loss) gain on financial assets Total operating expenses Operating income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of (loss) profit of associates and joint ventures accounted for using the equity method Total non-operating revenue and expenses Profit before losses tax Income tax expense Net income

Items

2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(20) and 7
$ 5,337,870
100
$ 5,144,198
100
6(5)(25)(26)
and 7
(
3,765,252) (
70) (
3,583,471 ) (
70)
1,572,618
30
1,560,727
30
(
97)
- (
108 )
-
108
-
357
-
1,572,629
30
1,560,976
30
6(25)(26)
(
112,675) (
2) (
110,982 ) (
2)

(
441,594) (
9) (
376,502 ) (
7)

(
326,037) (
6) (
342,641 ) (
7)
12(2)
(
2,408)
-
2,478
-
(
882,714) (
17) (
827,647)(
16)
689,915
13
733,329
14
6(21)
10,754
-
14,857
-
6(22)
38,699
1
38,753
1
6(23)
(
96,230) (
2) (
6,853 )
-
6(24)
(
22,699)
- (
28,211 ) (
1)
6(6)
(
6,035)
-
25,995
1
(
75,511) (
1)
44,541
1
614,404
12
777,870
15
6(27)
(
39,271) (
1) (
173,237)(
3)
$ 575,133
11
$ 604,633
12

Operating revenue

Operating costs

Gross profit, net
Unrealized profit from sales
Realized profit from sales
Net operating margin
Operating expenses

Selling expenses
General and administrative expenses
Research and development expenses
Expected credit (loss) gain on
financial assets

Total operating expenses
Operating income
Non-operating income and expenses
Interest income

Other income

Other gains and losses

Finance costs

Share of (loss) profit of associates
and joint ventures accounted for
using the equity method

Total non-operating revenue and
expenses
Profit before losses tax
Income tax expense

Net income

(Continued)

OPTO TECH CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items	Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % 6(14) $ 656 - ($ 5,175 ) - 6(3)(19) ( 137,595) ( 3) 50,226 1 6(6) - - ( 16 ) - 6(27) 40,217 1 ( 11,705)( 1) ( 96,722) ( 2) 33,330 - 6(19) 5,091 - ( 11,051 ) - 6(19) 218 - ( 342) - 5,309 - ( 11,393) - ( $ 91,413) ( 2) $ 21,937 - $ 483,720 9 $ 626,570 12 6(28) $ 1.52 $ 1.45 6(28) $ 1.49 $ 1.44
Other comprehensive income (loss) Items that will not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans Unrealised (loss) gains on valuation of fiancial assets at fair value through other comprehensive income Share of other comprehensive loss of associates and joint ventures accounted for using the equity method Income tax related to components of other comprehensive income (loss) that will not be reclassified to profit or loss Total other comprehensive (loss) income that will not be reclassified to profit or loss, net of tax Items that will be reclassified to profit or loss Currency translation differences of foreign operations Share of other comprehensive income (loss) of associates and joint ventures accounted for using the equity method Total other comprehensive income (loss) that will be reclassified to profit or loss, net of tax Total other comprehensive (loss) income that will be reclassified to profit or loss, net of tax Total comprehensive income for the year Earnings per share Profit for the year Diluted earnings per share Profit for the year

Items

Year ended December 31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(14)
$ 656
- ($ 5,175 )
-
6(3)(19)
(
137,595) (
3)
50,226
1
6(6)
-
- (
16 )
-
6(27)
40,217
1 (
11,705)(
1)
(
96,722) (
2)
33,330
-
6(19)
5,091
- (
11,051 )
-
6(19)
218
- (
342)
-
5,309
- (
11,393)
-
( $ 91,413) (
2) $ 21,937
-
$ 483,720
9
$ 626,570
12
6(28)
$ 1.52
$ 1.45
6(28)
$ 1.49
$ 1.44

Other comprehensive income (loss)
Items that will not be reclassified to
profit or loss
Gains (losses) on remeasurements of
defined benefit plans

Unrealised (loss) gains on valuation
of fiancial assets at fair value
through other comprehensive
income

Share of other comprehensive loss of
associates and joint ventures
accounted for using the equity
method

Income tax related to components of
other comprehensive income (loss)
that will not be reclassified to profit
or loss

Total other comprehensive (loss)
income that will not be reclassified
to profit or loss, net of tax
Items that will be reclassified to
profit or loss
Currency translation differences of
foreign operations

Share of other comprehensive
income (loss) of associates and joint
ventures accounted for using the
equity method

Total other comprehensive income
(loss) that will be reclassified to
profit or loss, net of tax
Total other comprehensive (loss)
income that will be reclassified to
profit or loss, net of tax
Total comprehensive income for the
year
Earnings per share
Profit for the year

Diluted earnings per share
Profit for the year

OPTO TECH CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Notes 2019 Balance at January 1, 2019 Net income for the year Other comprehensive income (loss) for the year 6(3)(14)(19) Total comprehensive income (loss) Distribution of 2018 earnings: 6(18) Legal reverse Special reverse Cash dividends Other adjustments to net difference of subsidairy book value Adjustments to net difference of subsidairy book value 6(6) Capital reduction 6(16) Balance at December 31, 2019 2020 Balance at January 1, 2020 Net income for the year Other comprehensive income (loss) for the year 6(3)(14)(19) Total comprehensive income Distribution of 2019 earnings: 6(18) Legal reverse Special reverse Liquidate the subsidiary 6(6) Disposal of financial assets at fair value through other comprehensive income 6(3) Stock repurchase 6(16) Balance at December 31, 2020	Notes		Common stock		Capital reserve	Retained Earnings	Retained Earnings	Retained Earnings	Retained Earnings	Retained Earnings		Other equity interest	Other equity interest	Treasury stocks		Total
						Legal reserve			Special reserve	Unappropriated earnings		Financial statements translation differences of foreign operations	Unrealised gain or loss on financial assets at fair value through other comprehensive income
		$4,454,386 - - - - - - - ( 668,158 ) $3,786,228 $3,786,228 - - - - - - - - $3,786,228			$ 702,521 - - - - - - 444 - $ 702,965 $ 702,965 - - - - - 143 - - $ 703,108		$604,001 - - - 65,311 - - - - $669,312 $669,312 - - - 60,048 - - - - $729,360	$ - - - - - 8,392 - - - $8,392 $8,392 - - - - ( 4,649 ) - - - $3,743		$1,537,426 604,633 ( 4,156 ) 600,477 ( 65,311 ) ( 8,392 ) ( 222,719 ) - - $1,841,481 $1,841,481 575,133 525 575,658 ( 60,048 ) 4,649 - 180 - $2,361,920	$ 2,021 - ( 11,393 ) ( 11,393 ) - - - - - ( $ 9,372 ) ( $ 9,372 ) - 5,309 5,309 - - - - - ( $ 4,063 )		$251,355 - 37,486 37,486 - - - - - $288,841 $288,841 - ( 97,247 ) ( 97,247 ) - - - ( 180 ) - $191,414	($ 24,503) - - - - - - - 1,331 ($ 23,172) ($ 23,172) - - - - - - - ( 58,849 ) ($ 82,021)	$7,527,207 604,633 21,937 626,570 - - ( 222,719 ) 444 ( 666,827 ) $7,264,675 $7,264,675 575,133 ( 91,413 ) 483,720 - - 143 - ( 58,849 ) $7,689,689

OPTO TECH CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Realised sales profit
Unrealised slaes profit
Expected credit losses (reverse of gains) on
financial assets
Depreciation
Amortization
Net (profit) loss on financial assets and
liabilities at fair value through profit or loss
Interest income
Dividend income
Gain on disposal of investments
Loss on disposal of property, plant and
equipment
Interest expense
Share of (profit) loss of subsidairy, associates
accounted for using equity method
Impairment loss on non-financial assets
Changes in operating assets and liabilities
Changes in operating assets
Acquisition of financial assets at fair value
through profit or loss
Notes receivable - net
Accounts receivable - net
Accounts receivable - related parties - net
Other receivables
Inventories - net
Prepayments
Other current assets
Other non-current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Provisions for liabilities
Net defined benefit liability
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash flows from operating activities

Year ended December31
Notes
2020
2019
$ 614,404 $ 777,870
(
108 ) (
357 )
97
108
12(2)
2,408 (
2,478 )
6(7)(8)(25)
439,082
453,289
6(10)(25)
14,547
11,760
6(2)(23)
(
473 )
1,144
6(21)
(
10,754 ) (
14,857 )
6(22)
(
14,454 ) (
20,051 )
6(23)
5,443 (
2,003 )
6(7)(23)
30,826
-
6(24)
21,649
27,161
6(6)
6,035 (
25,995 )
6(7)(23)
35,585
-
(
150,000 )
52,003
4,178 (
1,509 )
(
221,732 )
168,276
13,634
48,081
(
1,599 ) (
6,210 )
85,807
95,306
(
21,273 ) (
20,074 )
2,419 (
45 )
3,304 (
2,755 )
9,760
80,873
(
24,012 ) (
11,305 )
67,774 (
49,677 )
9,046 (
11,144 )
(
639 ) (
1,080 )
(
12,475)
1,406
908,479
1,547,737
11,375
14,670
26,781
69,051
(
23,016 ) (
26,905 )
(
78,176) (
125,793 )
845,443
1,478,760

(Continued)

OPTO TECH CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through
other comprehensive income
Increase in other financial assets
Proceeds from disposal of financial assets at fair
value through other comprehensive income
Acquisition of investment accounted for using the
equity method
Acquisition of property, plant and equipment
Acquisition of investment property
Acquisition of intangile assets
Decrease in deposits-out
Capital reduction of subsidiary
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Decrease in short-term loans
Increase in long-terms loans
Decrease in long-terms loans
Decrease in lease principal
Decrease in guarantee deposits
Stock repurchase
Payment of cash dividends
Payment of capital reduction
Net cash flows used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Year ended December 31
Notes
2020
2019
7
$ - ( $ 3,600 )
8
- (
1,950 )
6(3)
3,780
-
(
29,800 )
-
6(7)
(
292,577 ) (
291,571 )
6(8)
(
399,307 )
-
6(10)
(
14,635 ) (
17,149 )
4,507
9,987
6(6)
24,868
-
(
703,164 ) (
304,283 )
6(29)
669,167
1,071,311
6(29)
(
685,411 ) (
1,500,194 )
6(29)
-
814,504
6(29)
(
2,989 ) (
250,000 )
6(29)
(
19,761 ) (
20,489 )
6(29)
(
675 ) (
845 )
6(16)
(
58,849 )
-
6(18)
- (
222,719 )
6(16)
- (
668,158 )
(
98,518 ) (
776,590 )
43,761
397,887
2,813,868
2,415,981
$ 2,857,629 $ 2,813,868

OPTO TECH CORPORATION

Earnings Distribution Statement of 2020

Item Last undistributed earnings Plus: Current net profit after tax Current actuarial gains and losses Disposal of equity instrument measured at fair value through OCI Sub-total Less: 10 % of Legal reserve appropriated Plus: Reversal for special reserve Current distributable earnings Distributions: Shareholder dividends – stock Shareholder dividends – cash Undistributed earnings - ending	Unit: NTD Amount
	1,786,082,990 575,133,081 524,698 180,000
	575,837,779 (57,583,778) 1,320,451 2,305,657,442 0 (514,927,071) 1,790,730,371

OPTO TECH CORPORATION Company’s Articles of Incorporation (Before and Revision Chart)

	Amended article	Current article
Article 2	The business scope of the Company is as follows: 1.CC01080 Electronic Parts and Components Manufacturing. 2. CC01040 Lighting Equipment Manufacturing. 3. E603080 Traffic Signs Installation Engineering. 4. E603090 Lighting Equipment Construction. 5. F401010 International Trade. 6. IE01010 Rental and Leasing. 7.CC01060 Wired Communication Equipment and Apparatus Manufacturing. 8.CC01100 Restrained Telecom Radio Frequency Equipment and Materials Manufacturing. 9 .IG03010 Energy Technical Services. 1.Manufacturing and sales of optoelectronic semiconductor components: (a) Light Emitting Diodes (b) Infrared Emitting Diodes (c) Photodiodes (d) Phototransistors (e) Photo Couplers (f) Laser Diodes (g) Photonic Integrated Circuits. 2. Manufacturing and sales of semiconductor electronic components: (a) Varactor Diodes (b) Field Effect Transistors (c) Microwave Transistors (d) Diodes (e) Transistors and (f) Various Types of Semiconductor Electronic Components. 3. Manufacturing and sales of wireless communication equipment: UHF wireless frequency hopping communication machines. 4. Manufacturing and sales of wired communication equipment: In-vehicle communication systems for armored car artillery. 5. Research, development, design, manufacturing, sales, leasing (limited to self-owned products), promotion, and after-sales service of the items listed above and system products thereof. 6. Concurrently engaging in import and export trade related to the Company’s business.	The business scope of the Company is as follows: 1.CC01080 Electronic Parts and Components Manufacturing. 2. CC01040 Lighting Equipment Manufacturing. 3. E603080 Traffic Signs Installation Engineering. 4. E603090 Lighting Equipment Construction. 5. F401010 International Trade. 6. IE01010 Rental and Leasing. 7.CC01060 Wired Communication Equipment and Apparatus Manufacturing. 8.CC01101 Restrained Telecom Radio Frequency Equipment and Materials Manufacturing. 9.F401021 Restrained Telecom Radio Frequency Equipment and Materials Import. 10 .IG03010 Energy Technical Services. 1.Manufacturing and sales of optoelectronic semiconductor components: (a) Light Emitting Diodes (b) Infrared Emitting Diodes (c) Photodiodes (d) Phototransistors (e) Photo Couplers (f) Laser Diodes (g) Photonic Integrated Circuits. 2. Manufacturing and sales of semiconductor electronic components: (a) Varactor Diodes (b) Field Effect Transistors (c) Microwave Transistors (d) Diodes (e) Transistors and (f) Various Types of Semiconductor Electronic Components. 3. Manufacturing and sales of wireless communication equipment: UHF wireless frequency hopping communication machines. 4. Manufacturing and sales of wired communication equipment: In-vehicle communication systems for armored car artillery. 5. Research, development, design, manufacturing, sales, leasing (limited to self-owned products), promotion, and after-sales service of the items listed above and system products thereof. 6. Concurrently engaging in import and export trade related to the Company’s business.

	Amended article	Current article	Current article

Article 21	The Board of Directors shall convene at least once a quarter. The reason for the convening shall be stated and notified to all the directors seven (7) days in advance; However, it may be convened at any time when there is an emergency. The notice of a board meeting may be given in writing, by fax or e-mail, or by means of other communication. The powers of the Board of Directors shall be as follows: 1. ~6.、8.~11.（Omitted）。 7. Appointment and dismissal of the Company’s managers.	The Board of Directors shall convene at least once a quarter. The reason for the convening shall be stated and notified to all the directors seven (7) days in advance; However, it may be convened at any time when there is an emergency. The notice of a board meeting may be given in writing, by fax or e-mail, or by means of other communication. The powers of the Board of Directors shall be as follows: 1. ~6.、8.~11.（Omitted）。 7. Appointment and dismissal of the Company’s chief strategy officer , president , vice president and assistant manager .

Article 24	The Company shall haveseveral managers .The appointment, dismissal and remuneration standards shall be handled in accordance with Article 29 of the Company Act.	The Company shall haveone (1) Chief Strategy Officer, one (1) president, a number of vice presidents
			a number of vice presidents
		and assistant managers respectively. The appointment, dismissal and remuneration standards shall be handled in accordance with Article 29 of the CompanyAct.
Article 25	（Delete）	The president shall uphold resolutions of the Board of
		Directors and instructions of the Chairman to
		comprehensively manage all the Company’s business.
		In addition, the Chief Strategy Officer is established
		under the Board of Directors to provide the Board of
		Directors with the medium- and long-term
		development strategy of the Company for reference.
Article 28	If the Company makes a profit during the year, it shall appropriate 10% to20% thereof based on the profit status for that current year as employee remuneration; and appropriate no more than10% as director remuneration. However, if the Company still has accumulated losses, such losses shall be compensated. Employee remuneration may be made with stock or in cash. The targets of the stock or cash distributed may include employees of the controlled or affiliated companies who meet certain criteria. The profit status for that current year as mentioned in Paragraph 1 shall refer to the benefits of the pre-tax profit before the distribution of employee and director remunerations are deducted therefrom. The distribution of employee and director remunerations shall be carried out with the resolution of the Board of Directors adopted by the attendance of two-thirds or more of the directors and the consent of more than half of the directors in attendance, which shall be reported to the shareholder meeting.	If the Company makes a profit during the year, it shall appropriate 10% to15% thereof based on the profit status for that current year as employee remuneration; and appropriate no more than5% as director remuneration. However, if the Company still has accumulated losses, such losses shall be compensated. Employee remuneration may be made with stock or in cash. The targets of the stock or cash distributed may include employees of the controlled or affiliated companies who meet certain criteria. The profit status for that current year as mentioned in Paragraph 1 shall refer to the benefits of the pre-tax profit before the distribution of employee and director remunerations are deducted therefrom. The distribution of employee and director remunerations shall be carried out with the resolution of the Board of Directors adopted by the attendance of two-thirds or more of the directors and the consent of more than half of the directors in attendance, which shall be reported to the shareholder meeting.
Article 33	These Articles of Incorporation were formulated on November 19, 1983. 1st revision made on January 21, 1984. ………………………………………………(Omitted) 32nd revision made on June 13, 2019. 33rd revision made on June 16, 2020. 34rd revision made on June 24, 2021.	These Articles of Incorporation were formulated on November 19, 1983. 1st revision made on January 21, 1984. ………………………………………………(Omitted) 32nd revision made on June 13, 2019. 33rd revision made on June 16, 2020.

OPTO TECH CORPORATION

Regulations Governing the Acquisition and Disposal of Assets (Before and Revision Chart)


	Amended article	Current article

Article 7	1. (Omitted) 2. Degree of authority delegated: (1) With regard to the acquisition or disposal of real property, equipment, securities, intangible assets or rights-of-use assets or membership certificates thereof, etc., where their monetary value isless than NT$100 million, the Company authorizes the Chairman to set out the decision-making authority; where the value is more than NT$100 million but no greater than NT$300 million, the Company authorizes the Chairman to make the decision first and then submit it to the next Board of Directors for retroactive ratification; and where the value exceeds NT$300 million, it must be first submitted to the Board of Directors for approval before it can be implemented. (2) With regard to operating procedures for related party transactions, and conducting derivative transactions, mergers, demergers, acquisitions and share transfers, they shall be handled in accordance with the provisions of Sections 3, 4 and 5 of these Handling Procedures.	1. (Omitted) 2. Degree of authority delegated: (1) With regard to the acquisition or disposal of real property, equipment, securities, intangible assets or rights-of-use assets or membership certificates thereof, etc., where their monetary value isno more than NT$50 million , the Company authorizes the President to set out the decision-making authority;where the value exceeds NT$50 million but is no greater than NT$100 million, it shall be submitted to the Chairman for approval ;where the value is more than NT$100 million but no greater than NT$300 million, the Company authorizes the Chairman to make the decision first and then submit it to the next Board of Directors for retroactive ratification; and where the value exceeds NT$300 million, it must be first submitted to the Board of Directors for approval before it can be implemented. (2) With regard to operating procedures for related party transactions, and conducting derivative transactions, mergers, demergers, acquisitions and share transfers, they shall be handled in accordance with the provisions of Sections 3, 4 and 5 of these HandlingProcedures.
			million, it shall be submitted to the
			Chairman for approval ;where the value is more than NT$100 million but no greater than NT$300 million, the Company authorizes the Chairman to make the decision first and then submit it to the next Board of Directors for retroactive ratification; and where the value exceeds NT$300 million, it must be first submitted to the Board of Directors for approval before it can be implemented. With regard to operating procedures for related party transactions, and conducting derivative transactions, mergers, demergers, acquisitions and share transfers, they shall be handled in accordance with the provisions of Sections 3, 4 and 5 of these HandlingProcedures.
Article19	Transaction principles and policies 1.–2. (Omitted) 3. Segregation of duties (1) Trading personnel They shall be responsible for collecting financial market information to be integrated with market trends as the basis for judging market risks and formulating operational orientation, as well as executing transactions in accordance with their decision-making authority. (2) Trade entry personnel They shall be responsible for performing transaction confirmations and monthly evaluations. (3) Settlement personnel: Performs settlement tasks. (4) Decision-making authority for derivatives 1) Decision-making authority for hedge trades If discrepancies arise in the following decision-making authorities as a result of the Company’s organizational functions and procedural rules, such a transaction may only be carried out after being separately submitted for final approval by the Chairman as aproject.	Transaction principles and policies 1.–2. (Omitted) 3. Segregation of duties (1) Trading personnel They shall be responsible for collecting financial market information to be integrated with market trends as the basis for judging market risks and formulating operational orientation, as well as executing transactions in accordance with their decision-making authority. (2) Trade entry personnel They shall be responsible for performing transaction confirmations and monthly evaluations. (3) Settlement personnel: Performs settlement tasks. (4) Decision-making authority for derivatives 1) Decision-making authority for hedge trades If discrepancies arise in the following decision-making authorities as a result of the Company’s organizational functions and procedural rules, such a transaction may only be carried out after being separately submitted for final approval by the Chairman as aproject.


	Amended article				Current article

	Decision-maker	Daily Trading	Trading Limit for		Decision-maker	Daily Trading
		Limit	Unsettled			Limit
			Positions
	Finance Unit	No more than US$1 million	No more than US$2 million		Finance Unit	No more than US$1 million
	Management Center	No more than US$5 million	No more than US$10 million		Management Division	No more than US$5 million
	The highest responsible officer elected by	More than US$5	No more than US$50 million		President	No more than US$15 million
		million
					Chairman	More than US$15million
	Management Center
	2) Other transactions for specific purposes may be carried out only after being submitted to the Board of Directors for approval.
Article 36	Adopted on May 23, 2003. 1stamendment made, June 13, 2007. 2ndamendment made, June 22, 2012. 3rdamendment made, June 19, 2013. 4thamendment made, June 17, 2014. 5thamendment made, June 21, 2017. 6thamendment made, June 13, 2019. 7thamendment made, June 24, 2021.			Adopted on May 23, 2003. 1stamendment made, June 13, 2007. 2ndamendment made, June 22, 2012. 3rdamendment made, June 19, 2013. 4thamendment made, June 17, 2014. 5thamendment made, June 21, 2017. 6thamendment made, June 13, 2019.

OPTO TECH CORPORATION Procedures for Election of Directors

(Before and Revision Chart)


	Amended article	Current article


Article 2	The election of directors of the Companyshall adopt the method of cumulative voting. Each share shall have voting rights in number equal to the positions to be elected, and such votes may be cast for a single candidate or split among multiple candidates.	The election of directors of the Companyshall adopt the method of cumulative voting with recorded names.	shall adopt
		Attendance card numbers printed on the ballots may
		be used instead of recording the names of voting
		shareholders. For the election of directors of the
		Company, each share shall have voting rights in
		number equal to the positions to be elected, and such
		votes may be cast for a single candidate or split among
		multiple candidates.
Article 4	The person with the right to convene shall prepare the same number of ballots as the number of directors to be elected. The number of voting rights associated with each ballot shall be specified on the ballots, which shall then be distributed to the attending shareholders at the shareholder meeting. Attendance card numbers printed on the ballots may	The Board of Directors shall prepare the same number of ballots as the number of directors to be elected. The number of voting rights associated with each ballot shall be specified on the ballots, which shall then be distributed to the attending shareholders at the shareholder meeting.
	be used instead of recording the names of voting
	shareholders.
Article 5	Before the election begins, the chair shall appoint a number of people to perform the respective duties of voting monitors and ballot counters.The person who monitors the voting shall be a shareholder.	Before the election begins, the chair shall appoint a number of people to perform the respective duties of voting monitors and ballot counters.
Article 6	For the election of directors, the ballot boxes shall be prepared bythe person with the right to convene , and the voting monitors shall publicly check such ballot boxes before votingcommences.	For the election of directors, the ballot boxes shall be prepared by theBoard of Directors ,and the voting monitors shall publicly check such ballot boxes before votingcommences.
	The article is deleted.	(Original Article 7:) If a given candidate is a shareholder, a voter voting for
		such candidate must enter the candidate’s account
		name and shareholder account number in the
		"candidate" column of the ballot; for a
		non-shareholder, the voter shall enter the candidate’s
		full name and identity card number. However, when
		the candidate is a governmental organization or
		juristic-person shareholder, the name of the
		governmental organization or juristic-person
		shareholder shall be entered in the column for the
		candidate’s account name on the ballot; alternately,
		both the name of the governmental organization or
		juristic-person shareholder and the name of its
		representative may be entered. When there are
		multiple representatives, the names of each respective
		representative shall be entered.


	Amended article		Current article


Article 7	A ballot is invalid under any of the following circumstances: (1) The ballot was notprepared by a person with the right to convene. (2) A blank ballot is placed in the ballot box. (3) The writing is unclear and indecipherable or has been altered. (4) The candidate whose name is entered in the ballot does not conform to thedirector candidate list. (5) Other words or marks are entered in addition tothe number of voting rights allotted. (6)Where the number of the candidates listed on the same ballot exceeds the prescribed number, or		(Original Article 8:) A ballot shall be invalid in any of the following circumstances: (1) The ballot used is not onestipulated in these Guidelines . (2) A blank ballot is placed in the ballot box. (3) The writing is unclear and indecipherable or has been altered. (4)Where the candidate whose name is written on the ballotis a shareholder, the name of the shareholder and shareholder account number are not consistent with the records kept in the shareholder register; or where the candidate whose name is written on the ballot is not a shareholder, the name and the identity card uniform number thereof are inconsistent after verification. (5) Other words or marks are entered in addition tothe candidate’s account name or shareholder account number (or identity card number) . (6) The name of the candidate entered in the ballot is identical to that of another shareholder, but no shareholder account number or identity card number is provided in the ballot to identify such individual. (7) The same ballot is filled in with two (2) or more
				with the records kept in the shareholder register; or
				where the candidate whose name is written on the
				ballot is not a shareholder, the name and the
				identity card uniform number thereof are inconsistent after verification. Other words or marks are entered in addition tothe candidate’s account name or shareholder account
				number (or identity card number) . The name of the candidate entered in the ballot is
		same ballot exceeds the prescribed number, or		identical to that of another shareholder, but no
	the	total number of votes cast by the elector		shareholder account number or identity card
	exceeds the total number of votes held by the			number is provided in the ballot to identify such
	elector.			individual. The same ballot is filled in with two (2) or more
				candidates.
Article 8	The voting rights shall be calculated on site immediately after the end of the poll, and the results of the calculation,including the list of persons elected as directors and the numbers of		(Original Article 9:) The voting rights shall be calculated on site immediately after the end of the poll, and the results of the calculation, are announced by the chair on site.
	votes with which they were elected, are
	announced by the chair on site. The ballots for the election referred to in the
	preceding paragraph shall be sealed with the
	signatures of the voting monitors and kept in
	proper custody for at least one year. If, however, a
	shareholder files a lawsuit pursuant to Article 189
	of the Company Act, the ballots shall be retained
	until the conclusion of the litigation.
Article 9	Matters not specified in these Guidelines shall be all handled in accordance with the Company Act and relevant laws and regulations.		(Original Article 10:) Matters not specified in these Guidelines shall be all handled in accordance with the Company Act and relevant laws and regulations.
Article 10	These Guidelines, and any amendments hereto, shall be implemented after approval by a shareholder meeting.		(Original Article 11:) These Guidelines, and any amendments hereto, shall be implemented after approval by a shareholder meeting.
Article 11	Made on May 26, 1990. 1stamendment made, March 31, 1995. 2ndamendment made, May 29, 2002. 3rdamendment made, June 24, 2016. 4thamendment made, June 24, 2021.		(Original Article 12:) Made on May 26, 1990. 1stamendment made, March 31, 1995. 2ndamendment made, May 29, 2002. 3rdamendment made, June 24, 2016.

OPTO TECH CORPORATION Opinion Letter of Assessment on the Necessity and Reasonableness

for the Private Placement

Client: OPTO TECH CORPORATION

Recipient: OPTO TECH CORPORATION

Designated purpose: intended only for OPTO TECH CORPORATION to conduct the private placement in 2021

Report type: opinion letter of assessment on the necessity and reasonableness for the private placement

Assessment institution: Taishin Securities Co., Ltd. (with seal)

Representative: KUO, CHIA-HUNG (with seal)

(The content of this opinion shall be used exclusively as a reference basis for OPTO TECH on its private placement in 2021, and shall not be intended for other purposes. This opinion is based on the financial information provided by OPTO TECH and its announced information obtained on the Market Observation Post System. It is hereby declared that the undersigned shall not bear any legal responsibility for the effect on the possible changes in the content of this opinion in the future due to changes in this private placement plan made by OPTO TECH or other circumstances.)

Date: March 31, 2021

In order to respond to the capital needs for the operational development in the future, enhance OPTO TECH’s operational competitiveness, and grasp the timeliness and convenience of fund raising, OPTO TECH CORPORATION intends to conduct the private placement of securities and related matters under Article 43-6 of the Securities and Exchange Act in accordance with the provisions of the “Securities and Exchange Act” and the “Directions for Public Companies Conducting Private Placements of Securities”, which proposal is planned to be discussed at the meeting of the Board of Directors to be held on April 7, 2021, and further submitted to the Shareholders Meeting to be held on June 24, 2021 for discussion over the private placement of no more than 60,000,000 ordinary shares (hereinafter referred to as this Private Placement Plan). According to the provisions of Paragraph 3, Article 4 of the “Directions for Public Companies Conducting Private Placements of Securities” (with the content shown as follows), if there is a significant change in managerial control within the 1 year period immediately preceding the day on which the Board of Directors resolves on the private placement, or if there will be a significant change in managerial control after the introduction of a strategic investor through the private placement, the company shall engage a securities underwriter to provide an assessment opinion on the necessity and reasonableness for conducting the private placement, and shall state the opinion in the notice to convene the shareholders' meeting to serve as a reference for the shareholders to decide whether to agree or not. The underwriter’s assessment is described as follows:

I. Company profile

OPTO TECH is a professional manufacturer of semiconductor optoelectronic sensing components. Its business covers three major areas: LED die manufacturing, LED packaging and LED applications. Its products include four major fields: sensing components, light-emitting components, packaging products, and system products. The proportion of revenue in 2019 was 49% for sensing components (diodes / transistors, etc.), 24% for light-emitting components, 21% for system products, and 5% for packaging products. Its customers include APPLE, OSRAM, NICHIA, and so on. The condensed financial information for the most recent five years is as follows:

(1) Condensed Balance Sheet

1. Consolidated Condensed Balance Sheet (IFRS)

Unit: NT$ thousand

Year	Year	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)

		2016	2017	2018	2019	2020
Item
Current assets		6,716,565	5,601,375	5,973,084	5,957,852	6,306,500
Property, plant and equipment		2,985,178	2,877,768	3,071,603	2,909,127	2,705,133
Intangible assets		9,313	9,051	8,840	14,229	14,318
Other assets		1,094,400	1,402,839	1,140,805	1,424,936	1,615,476
Total assets		10,805,456	9,891,033	10,194,332	10,306,144	10,641,427
Current liabilities	Before distribution	2,600,701	2,390,122	2,126,506	1,694,700	1,733,564
	After distribution	3,255,496	2,991,464	2,349,225	1,694,700	2,248,491
Non-current liabilities		290,982	277,038	536,978	1,343,128	1,214,537
Total liabilities	Before distribution	2,891,683	2,667,160	2,663,484	3,037,828	2,948,101
	After distribution	3,546,478	3,268,502	2,886,203	3,037,828	3,463,028
Equity attributable to owners of theparent		7,910,195	7,220,265	7,527,207	7,264,675	7,689,689
Share capital		5,456,621	4,454,386	4,454,386	3,786,228	3,786,228
Capital surplus		639,351	701,323	702,521	702,965	703,108
Retained earnings	Before distribution	1,888,896	1,865,714	2,141,427	2,519,185	3,095,023
	After distribution	1,234,101	1,264,372	1,918,708	2,519,185	2,580,096
Other Equity		(47,974)	223,345	253,376	279,469	187,351
Treasuryshare		(26,699)	(24,503)	(24,503)	(23,172)	(82,021)
Non-controlling interest		3,578	3,608	3,641	3,641	3,637
Total Equity	Before distribution	7,913,773	7,223,873	7,530,848	7,268,316	7,693,326
	After distribution	7,258,978	6,622,531	7,308,129	7,268,316	7,178,399

Note1: The financial information for the most recent five years has been audited by CPA.

2. Individual Condensed Balance Sheet (IFRS)

Unit: NT$ thousand

Year	Year	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)

		2016	2017	2018	2019	2020
Item

Current assets		6,380,831	5,343,528	5,685,900	5,714,524	6,044,925
Property, plant and equipment		2,783,486	2,688,176	2,898,912	2,759,452	2,568,311
Intangible assets		9,009	8,746	8,569	13,958	14,046
Other assets		1,349,267	1,595,189	1,377,389	1,666,171	1,853,486
Total assets		10,522,593	9,635,639	9,970,770	10,154,105	10,480,768
Current liabilities	Before distribution	2,327,039	2,148,760	1,916,007	1,546,572	1,576,556
	After distribution	2,981,834	2,750,102	2,138,726	1,546,572	2,091,483
Non-current liabilities		285,359	266,614	527,556	1,342,858	1,214,523
Total liabilities	Before distribution	2,612,398	2,415,374	2,443,563	2,889,430	2,791,079
	After distribution	3,267,193	3,016,716	2,666,282	2,889,430	3,306,006
Share capital		5,456,621	4,454,386	4,454,386	3,786,228	3,786,228
Capital surplus		639,351	701,323	702,521	702,965	703,108
Retained earnings	Before distribution	1,888,896	1,865,714	2,141,427	2,519,185	3,095,023
	After distribution	1,234,101	1,264,372	1,918,708	2,519,185	2,580,096
Other Equity		(47,974)	223,345	253,376	279,469	187,351
Treasury	share	(26,699)	(24,503)	(24,503)	(23,172)	(82,021)
Total Equity	Before distribution	7,910,195	7,220,265	7,527,207	7,264,675	7,689,689
	After distribution	7,255,400	6,618,923	7,304,488	7,264,675	7,174,762

Note: The financial information for the most recent five years has been audited by CPA.

(2) Condensed Comprehensive Income Statement

1.Consolidated Condensed Comprehensive Income Statement (IFRS)

Unit: NT$ thousand

Year	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)	Financial information for the most recent fiveyears(Note 1)

	2016	2017	2018	2019	2020
Item

Operatingrevenue	5,488,496	5,589,853	5,364,610	5,418,004	5,590,046
Operating grossprofit	1,594,547	1,654,098	1,621,872	1,638,329	1,643,558
Operating profit or loss	681,716	783,575	738,007	740,157	689,147
Non-operating income and expenses	299,802	29,256	41,988	46,428	(69,391)
Netprofit before tax	981,518	812,831	779,995	786,585	619,756
Net profit for the period of continued operations	854,758	672,313	653,141	604,635	575,129
Loss of discontinued operations	-	-	-	-	-
Net profit (loss) for the period	854,758	672,313	653,141	604,635	575,129
Other comprehensive income for the period (Netprofit after tax)	(108,566)	230,649	264,514	21,935	(91,413)
Total comprehensive income for theperiod	746,192	902,962	917,655	626,570	483,716
Net profit attributable to owners of theparent	854,727	672,283	653,107	604,633	575,133
Net profit attributable to non-controllinginterest	31	30	34	2	(4)
Total comprehensive income attributable to owners of the parent	746,164	902,932	917,622	626,570	483,720
Total comprehensive income attributable to non-controllinginterest	28	30	33	-	(4)
Earningsper share	1.57	1.33	1.47	1.45	1.52

Note 1: The financial information for the most recent five years has been audited by CPA.

2. Individual Condensed Comprehensive Income Statement (IFRS)

$ thousand

Year	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)	Financial information for the most recent fiveyears(Note)

	2016	2017	2018	2019	2020
Item

Operatingrevenue	5,164,598	5,275,911	5,060,329	5,144,198	5,337,870
Operating grossprofit	1,503,104	1,554,620	1,526,900	1,560,727	1,572,618
Operating profit or loss	698,922	743,808	709,570	733,329	689,915
Non-operating income and expenses	276,079	65,681	73,835	44,541	(75,511)
Netprofit before tax	975,001	809,489	783,405	777,870	614,404
Net profit for the period of continued operations	854,727	672,283	653,107	604,633	575,133
Loss of discontinued operations	-	-	-	-	-
Net profit (loss) for the period	854,727	672,283	653,107	604,633	575,133
Other comprehensive income for the period (Netprofit after tax)	(108,563)	230,649	264,515	21,937	(91,413)
Total comprehensive income for theperiod	746,164	902,932	917,622	626,570	483,720
Earningsper share	1.57	1.33	1.47	1.45	1.52

Note: The financial information for the most recent five years has been audited by CPA.

II. Assessment on the significant change in managerial control within the 1 year period immediately preceding the day on which the Board of Directors resolves on the private placement

After inquiring of relevant personnel of OPTO TECH and reviewing relevant materials, it is understood that OPTO TECH re-elected all the directors at the General Shareholders Meeting on June 16, 2020, and another director resigned on February 29, 2021. Therefore, its change in the number of director seats within the 1 year period immediately preceding the day on which the Board of Directors resolved on the private placement was 5/11, and the status of the changes in directors are summarized as follows:

	June 2020 -Before
		March 2021 (Present)
Director	re-election		Change or Not
		Roster of Directors
	Roster of Directors

Director	H.T.Wang	H.T.Wang	No
Director	Su-Chin Tai	Su-Chin Tai	No
Director	Nichia Taiwan Corporation Representative:Ishigami Koji	Nichia Taiwan Corporation Representative:Ishigami Koji	No
Director	Nichia Taiwan Corporation Representative:Sakamoto Takashi	Nichia Taiwan Corporation Representative:Sakamoto Takashi	No
Director	Shun-Chih Chen	Shun-Chih Chen	Yes (Resigned on Feb. 19,2021)
Director	Tsang-Der Ni	Tzu-Chun Lin	Yes (Re-elected on June 16,2020.)
Director	Jung-Huan Lee	Tsun-Chia Tai	Yes (Re-elected on June 16,2020.)
Director	Shin-Etso Opto Electronic Co.,Ltd	Inwood Information System Co.,Ltd.	Yes (Re-elected on June 16,2020.)
Independent Director	Kao-Ming Tsai	Kao-Ming Tsai	No
Independent Director	Pei-Chang Wang	Pei-Chang Wang	No
Independent Director	Shih-Tung Ho	Kuo-Kuang Li	Yes (Re-elected on June 16,2020.)

As of March in 2021, the change in the number of board seats of OPTO TECH was 5/11, which has met the criteria under Paragraph 3, Article 4 of the “Directions for Public Companies Conducting Private Placements of Securities” that: there is a significant change in managerial control within the 1 year period immediately preceding the day on which the Board of Directors resolves on the private placement, and therefore OPTO TECH engages the securities underwriter to provide an assessment opinion on the necessity and reasonableness for conducting the private placement.

III. Assessment on significant changes in managerial control after the introduction of a strategic investor through the private placement

OPTO TECH intends to discuss this Private Placement Plan for issuing ordinary shares at the Board of Directors meeting to be held on April 7, 2021, and plans to further submit this proposal to the Shareholders Meeting to be held on June 24, 2021 for discussion. The strategic investor expected to be introduced in this Private Placement Pan is an insider, namely NICHIA TAIWAN CORPORATION (hereinafter referred to as “NICHIA TAIWAN”). As of March 2021, NICHIA GROUP held the total of 37,463,479 shares (approximately 9.89%) of OPTO TECH and served two seats of the directors. After participating in this Private Placement Plan for issuing ordinary shares in the future, NICHIA GROUP’s shareholding ratio therein will be increased to 22%, making OPTO TECH’s equity more concentrated and management rights more stable. Generally speaking, there should be no change in the shareholding structure of OPTO TECH that results in the transfer of control or the loss of control by the original management after the introduction of the strategic investor in this Private Placement Plan.

IV. Content of this Private Placement Plan

In response to the direction of the industrial development in the future and in order to deploy the next generation product of VCSEL new technology, strengthen OPTO TECH’s competitiveness, and deepen the long-term cooperative relationship with NICHIA TAIWAN, it is planned to conduct the cash capital increase by means of private placement and issuance of new shares in accordance with the provisions of Article 7 and Article 43-6 of the Securities and Exchange Act. It is expected that the maximum total amount of this Private Placement will be 60,000,000 ordinary shares with a par value of NT$ 10 per share. It is proposed to request the Shareholders Meeting to authorize the Board of Directors to adjust the number of shares to be issued based on market conditions. The cash capital increase by this Private Placement Plan may be processed within one year from the date of the resolution adopted by the Shareholders Meeting.

The pricing of this Private Placement Plan is determined in accordance with the “Directions for Public Companies Conducting Private Placements of Securities. ” If the subscriber is an insider or a related party of OPTO TECH , the price per share of the ordinary shares in this Private Placement Plan shall not be lower than 80% of the reference price ( the higher of the following two criteria as the reference price ) :

The simple arithmetic average of the closing price of the ordinary shares calculated based on one of the 1, 3, or 5 business days prior to the pricing date, after deduction of the free allotment ex-rights and dividends with the add back of the capital reduction and ex-rights.
The simple arithmetic average of the closing price of the ordinary shares calculated based on the 30 business days prior to the pricing date, after deduction of the free allotment ex-rights and dividends with the add back of the capital reduction and ex-rights.

Considering that NICHIA TAIWAN is expected to bring new patents, technologies, materials and other resources to the next generation product of VCSEL for OPTO TECH after the private placement while taking into account the shareholder equity and capital needs, the subscription price of this Private Placement Plan is tentatively determined to be at a 10% discount of the reference price, and the actual issuance price is to be submitted to the Shareholders Meeting to authorize the Board of Directors for determination in accordance with laws and regulations and within the range not lower than the pricing basis and percentage adopted by the Shareholders Meeting, as well as with reference to the prevailing market and company conditions.

The pricing of this Private Placement Plan is higher than that under the minimum requirement for the private placement (not less than 80% of the reference price) set by the competent authority with the introduction of insiders. Considering also OPTO TECH’s future prospects and the strict restrictions on the timing, counterparty and quantity for the transfer of private placement securities as well as supplemental public issuance being not allowed within three years, relatively low liquidity and other factors, therefore the pricing for this Private Placement Plan should be reasonable and will not have a significant effect on shareholder equity.

V. Assessment on the necessity and reasonableness of this Private Placement Plan

(1) Necessity of conducting a private placement

In recent years, with the rapid development of 5G that has driven VCSEL-related applications, OPTO TECH expects to realize the mass production of VCSEL in 2024 in order to make an early arrangement on the market. Taking into account the difficulty in the technology, the large scale of funds required and the urgency to gain the market share and other factors, NICHIA TAIWAN is selected to be introduced to serve as a strategic investor through private placement.

NICHIA TAIWAN has held OPTO TECH’s shares for many years since its first investment in OPTO TECH in 2005, and has cooperated well with OPTO TECH. After the private placement is conducted, NICHIA TAIWAN's shareholding therein is expected to increase to 22%, and OPTO TECH will become one of the group enterprises of NICHIA GROUP recognized under the equity method, which can deepen the cooperative relationship with one another, and NICHIA TAIWAN can also unreservedly introduce technology resources into OPTO TECH.

private placement is conducted, NICHIA TAIWAN's shareholding therein is expected to increase to 22%, and OPTO TECH will become one of the group enterprises of NICHIA GROUP recognized under the equity method, which can deepen the cooperative relationship with one another, and NICHIA TAIWAN can also unreservedly introduce technology resources into OPTO TECH.	private placement is conducted, NICHIA TAIWAN's shareholding therein is expected to increase to 22%, and OPTO TECH will become one of the group enterprises of NICHIA GROUP recognized under the equity method, which can deepen the cooperative relationship with one another, and NICHIA TAIWAN can also unreservedly introduce technology resources into OPTO TECH.	private placement is conducted, NICHIA TAIWAN's shareholding therein is expected to increase to 22%, and OPTO TECH will become one of the group enterprises of NICHIA GROUP recognized under the equity method, which can deepen the cooperative relationship with one another, and NICHIA TAIWAN can also unreservedly introduce technology resources into OPTO TECH.	private placement is conducted, NICHIA TAIWAN's shareholding therein is expected to increase to 22%, and OPTO TECH will become one of the group enterprises of NICHIA GROUP recognized under the equity method, which can deepen the cooperative relationship with one another, and NICHIA TAIWAN can also unreservedly introduce technology resources into OPTO TECH.	private placement is conducted, NICHIA TAIWAN's shareholding therein is expected to increase to 22%, and OPTO TECH will become one of the group enterprises of NICHIA GROUP recognized under the equity method, which can deepen the cooperative relationship with one another, and NICHIA TAIWAN can also unreservedly introduce technology resources into OPTO TECH.
Unit: NT$thousand;%
Item Year	2017	2018	2019	2020
Operatingrevenue	5,589,853	5,364,610	5,418,004	5,590,046
Revenue growth % (Compared with the previousperiod)	2%	(4%)	1%	3%
Earningsper share	1.33	1.47	1.45	1.52

Data source: Market Observation Post System.

Note 1: The figures listed above are from the consolidated financial statements.

The data listed above indicates that OPTO TECH’s revenue growth has been relatively stable in recent years. Under the circumstances of facing the micro profit out of the LED die cutting business as well as the price war and production expansion for competition by LED manufacturers in mainland China in recent years, the main reason for OPTO TECH to be able to maintain its revenue level of not less than NT$ 5 billion and continue to profit is the technical and financial support from NICHIA TAIWAN. Since OPTO TECH introduced NICHIA TAIWAN's funds in 2005, it has turned losses into profits. Both parties have closely cooperated in the technology and strategy of traditional LED products, and therefore the operating conditions have always been better than their counterparts in Taiwan. With the gradual clarity of the direction of the industrial development and the emergence of requirements for terminal application, OPTO TECH and NICHIA TAIWAN look forward to cooperating in epitaxy and process technology to deepen the market of next generation sensing components. In order to attend to the cost of building plants and purchasing equipment as well as the protection of technical secrets, issuing ordinary shares to NICHIA TAIWAN through private placement will be able to achieve multiple benefits of raising funds, concentrating equity, stabilizing management rights, and deepening business cooperation, which will have a positive effect on its operations and profitability in the future. Therefore, the adoption of private placement for capital increase by OPTO TECH should be necessary.

In summary, in order to facilitate the long-term operation and development of OPTO TECH while considering the timeliness of the swift, simple and convenient fundraising, it is necessary for OPTO TECH to conduct the private placement of ordinary shares.

(2) Reasonableness of conducting the private placement

OPTO TECH intends to discuss this Private Placement Plan for issuing ordinary shares at the Board of Directors meeting to be held on April 7, 2021 and plans to submit the same proposal to the Shareholders Meeting for discussion on June 24, 2021. It will also set out the explanation in the reasons for convening the Shareholders Meeting on the matter related to this Private Placement Plan in accordance with Paragraph 6, Article 43-6 of the Securities and Exchange Act. Since OPTO TECH has net income after taxes without accumulated losses in the most recent year, the purpose of the funds from the private placement in accordance with relevant laws and regulations shall be used entirely for the introduction of the strategic investor; In addition, according to the explanations set out in the “FAQs on Public Companies Conducting Private Placements of Securities”, Part 2 -- Subject and Target of Private Placements of Securities, Question 16, if the strategic investor is an insider, the relevant documents shall be submitted to the Taiwan Stock Exchange Corporation for approval prior to the resolution to be adopted by the Board of Directors for conducting the private placement. The subscriber for this Private Placement Plan of OPTO TECH is its director, namely Nichia Taiwan Corporation, which has obtained the approval from Taiwan Exchange Corporation with the letter numbered: Tai-Cheng-Shang-1-Zi-1101801127 dated March 26, 2021. In addition, after looking it up in the agenda for the board meeting proposed by OPTO TECH on this Private Placement Plan, it is found that the discussion content on the proposal, the pricing method, and the selection method of the private placement target are all in conformity to the Securities and Exchange Act as well as relevant laws and regulations, and thus are assessed to be legally appropriate in terms of its handling procedures.

In addition, this Private Placement Plan to be conducted by OPTO TECH is for the purpose of building factories and purchasing machinery and equipment. In addition to reducing the interest burden from bank loans in the future as well as being able to obtain stable long-term funds and maintain financial flexibility, compared with public offerings, private placements with the restriction that their securities cannot be transferred within three years will even ensure the long-term cooperative relationship between OPTO TECH and the subscriber as well as the confidentiality of technology patents, which should have a positive effect on OPTO TECH’s business, finance and shareholder equity.

Based on the above assessment, the undersigned securities underwriter is in the belief that it is necessary and reasonable for OPTO TECH to conduct this Private Placement Plan in accordance with the “Directions for Public Companies Conducting Private Placements of Securities”.

OPTO TECH CORPORATION

Articles of Incorporation

Chapter 1 General Principles

Article 1 The Company is established in accordance with the provisions of the Company Act, and is named 光磊科技股份有限公司 in Chinese and OPTO TECH CORPORATION in English.
Article 2 The business scope of the Company is as follows:
CC01080 Electronic Parts and Components Manufacturing.
CC01040 Lighting Equipment Manufacturing.
E603080 Traffic Signs Installation Engineering.
E603090 Lighting Equipment Construction.
F401010 International Trade.
IE01010 Rental and Leasing.
CC01060 Wired Communication Equipment and Apparatus Manufacturing.
CC01101 Restrained Telecom Radio Frequency Equipment and Materials Manufacturing.
F401021 Restrained Telecom Radio Frequency Equipment and Materials Import.
IG03010 Energy Technical Services.
1. Manufacturing and sales of optoelectronic semiconductor components:
2. (a) Light Emitting Diodes (b) Infrared Emitting Diodes (c) Photodiodes (d) Phototransistors
3. (e) Photo Couplers (f) Laser Diodes (g) Photonic Integrated Circuits.
4. Manufacturing and sales of semiconductor electronic components:
5. (a) Varactor Diodes (b) Field Effect Transistors (c) Microwave Transistors (d) Diodes
6. (e) Transistors and (f) Various Types of Semiconductor Electronic Components.
7. Manufacturing and sales of wireless communication equipment: UHF wireless frequency hopping communication machines.
8. Manufacturing and sales of wired communication equipment: In-vehicle communication systems for armored car artillery.
9. Research, development, design, manufacturing, sales, leasing (limited to self-owned products), promotion, and after-sales service of the items listed above and system products thereof.
10. Concurrently engaging in import and export trade related to the Company’s business.

Article 3

The Company may act as a guarantor externally for related business needs.

Article 4

The reinvestment of the Company is not subject to the total investment limit stipulated in Article 13 of the Company Act.

Article 5

The Company establishes its head office in Hsinchu Science Park, and may establish branches at appropriate locations at home and abroad after the resolution of the Board of Directors and the approval of the competent authority when necessary.

Chapter 2 Shares

Article 6

The total authorized capital of the Company is set in the amount of NT$10 billion, divided into 1 billion shares which comprises ordinary shares or special shares, with each share being set in the amount of NT$10, and may be issued in instalments. The Board of Directors is authorized to resolve issuance of unissued shares in accordance with actual needs.

The amount of NT$600 million within the total authorized capital in the preceding paragraph shall be retained for the issuance of employee stock option certificates in a total of 60 million shares, with NT$10 per share, which may be issued in installments in accordance with the resolution of the Board of Directors.

Article 6-1

According to Article 56-1 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers and Article 10-1 of the Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies, the Company shall obtain the consent adopted by a Shareholder Meeting with the attendance of the shareholders representing more than half of the total number of the issued shares, and two-thirds or more of the voting rights of the shareholders in attendance in order to issue employee stock option certificates at a price lower than the closing price of the Company’s ordinary shares on the date of issuance, as well as to transfer the shares to employees at a price lower than the average price of the shares actually repurchased.

Article 6-2

With regard to shares repurchased by the Company in accordance with the law, the recipient of the transfer may include employees of the controlled or affiliated companies who meet certain conditions. With regard to employee stock option certificates issued by the Company in accordance with the law, the recipient of the issuance may include employees of the controlled or affiliated companies who meet certain conditions.

With regard to subscription of new shares of the Company by employees in accordance with provisions of the Company Act, the subject of the subscription may include employees of the controlled or affiliated companies who meet certain conditions. With regard to new shares with restricted rights of employees of the Company issued in accordance with provisions of the Company Act, the subject of the issuance may include employees of the controlled or affiliated companies who meet certain conditions.

Article 6-3

The rights and obligations and other important issuance conditions of the Company’s special shares are set out as follows:

If there is a surplus in the Company’s annual final accounts, in addition to paying taxes in accordance with the law, the Company shall first make up for accumulated losses, set aside statutory surplus reserve, and make provision or reverse the special surplus reserve in accordance with the provisions of the Articles of Incorporation, after which if there is a balance, the dividend distributable on the special shares for that current year may have priority in the distribution.
Dividends on special shares are limited to the maximum annual rate of 8% and are calculated at the issue price per share. Dividends may be paid in cash once a year. After the annual general shareholder meeting recognizes the financial statements, the Board of Directors will set the base date to pay the dividends distributable of the previous year. The distribution of dividends in the year of issuance and in the year of recall shall be calculated based on the actual number of issuance days in that current year.
The Company shall have discretionary powers on the distribution of dividends on special shares. If the Company has no surplus or insufficient surplus to distribute dividends on special shares or other necessary considerations, the Company may resolve not to distribute dividends on special shares, which shall not constitute a breach of contract. If the issued special shares are of non-cumulative type and the Company resolves not to distribute dividends or to distribute insufficient dividends, the undistributed dividends shall not be accumulated for deferred payment in subsequent years with surplus.

In addition to receiving the aforementioned dividends, special shareholders are not allowed to participate in the distribution of ordinary shares with regard to surplus and capital reserve as cash and capitalization if the special shares issued are of non-participating type.
When the Company issues new shares in cash, special shareholders and ordinary shares have the same preemptive right.
With regard to the distribution of the remaining assets of the Company to shareholders, the special shareholders shall have priority over ordinary shareholders, and have the same priority in terms of being compensated as that of shareholders of various special shares issued by the Company, over which general creditors have priority, but subject to the limitation of not exceeding the amount calculated at the issue price of outstanding special shares at the time of the distribution.
Special shareholders have the right to vote and suffrage, and may be elected as directors. Special shareholders have voting rights at special shareholder meetings or on matters concerning rights and obligations of special shareholders at the shareholder meeting.
If special shares issued by the Company are convertible special shares, they shall not be converted within one (1) year of the date of issuance. The Board of Directors is authorized to set the period of conversion in the actual issuance conditions. Shareholders of the convertible special shares may apply for partial or complete conversion of the special shares held by them in accordance with the issuance conditions at the ratio of one special share to one ordinary share (the conversion ratio is 1:1). After the convertible special shares are converted into ordinary shares, their rights and obligations are the same as those of ordinary shares. The distribution of dividends during the year of conversion of special shares shall be calculated based on the ratio of the actual number of issuance days in that current year to the number of days in the whole year. However, the special shares that are converted into ordinary shares prior to the ex-right (dividend) record date for the distribution of dividends in each year shall not participate in the distribution of dividends on special shares in that current year of distribution as well as the distribution of dividends in subsequent years, but may participate in the distribution of earnings of ordinary shares and capital reserve in that current year.
Special shares have no expiry date. Special shareholders do not have the right to request the Company to recall the special shares held by them, but the Company may, from the next day upon expiration of five (5) years of issuance, at any time recall all or part of the special shares by cash, by means of mandatory conversion into new shares issued or other methods permitted by laws and regulations at the original actual issuance price and in accordance with relevant issuance regulations. Unrecalled special shares shall maintain the rights and obligations under the various issuance conditions in this article until the Company recalls such shares. In that current year when special shares are recalled, if the Company resolves to issue dividends, the dividends that should be paid as of the date of recall shall be calculated based on the actual number of issuance days in that current year.

The name, issuance date, specific issuance conditions and other related matters of special shares are authorized to the Board of Directors to determine based on the conditions of the capital market and the willingness of investors to subscribe at the time of the actual issuance in accordance with the Articles of Incorporation of the Company as well as relevant laws and regulations.

Article 7

The Company’s shares may be invested in with specialized technology and patent rights as capital, which is, however, limited to those approved by the competent government agency.

Article 8

The Company may also be exempted from printing share certificates for the shares issued by itself, under which circumstance the Company shall register its issued shares with a centralized securities depositary enterprise and follow the regulations of such an enterprise. The Company’s share certificates shall be issued after being affixed with the signature or seal of the director representing the Company, affixed with the Company’s logo and serial number, and duly certified or authenticated by the bank which is competent to certify and authenticate shares in accordance with the laws. The shares issued by the Company may also be exempted from printing shares and contact the securities centralized custody institution to register the shares

issued by it, and proceed in accordance with the regulations of the institution.

Article 9

The Company’s share affairs include the handling of opening a shareholder account, change of specimen seal, change of address, transfer of ownership, creation of pledge, removal of pledge, reporting of loss, cancellation of reporting of loss, and other related matters. The Company shall handle its share affairs entirely in accordance with the Regulations Governing the Administration of Shareholder Services of Public Companies except as otherwise provided for in the laws and regulations.

Article 10

The renaming and transferal of share ownership shall be suspended in accordance with the law within 60 days prior to the convening of the general shareholder meeting, 30 days prior to the convening of the extraordinary general shareholder meeting, or five (5) days prior to the base date for the distribution of dividends, bonuses or other benefits determined by the Company.

Chapter 3 Shareholder Meeting

Article 11

Shareholder meetings shall be either general meetings or extraordinary meetings, which shall be convened by the Board of Directors unless otherwise provided for under the Company Act.

General meetings shall be convened at least once a year and shall be convened within six (6) months after the end of each fiscal year, except for circumstances with a legitimate reason which has been submitted to the competent authority for approval.

Special shareholder meetings may be convened in accordance with relevant laws and regulations when necessary.

Article 12

All shareholders shall be notified 30 days in advance regarding the convening of a general shareholder meeting, and all shareholders shall be notified 15 days in advance regarding the convening of an extraordinary shareholder meeting shall be notified to all shareholders 15 days in advance. The notice shall specify the date, venue, and reason for convening the meeting.

Article 13

The Company’s shareholders, except as otherwise provided for in relevant laws and regulations, shall have one (1) vote per share.

Article 14

Unless otherwise provided for in relevant laws and regulations, resolutions of shareholder meetings shall be adopted by the attendance of shareholders in person or on behalf of other shareholders representing more than half of the total issued shares, with the consent of more than half of the voting rights of the shareholders in attendance. The Company’s shareholders may exercise their voting rights by means of electronic transmission, and the related matters shall be handled in accordance with laws and regulations.

Article 15

When a shareholder is unable to attend the shareholder meeting for some reason, he/she may issue a proxy published by the Company, specifying the scope of authorization, to entrust an agent to attend the shareholder meeting in accordance with the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies.

Article 16

Where the shareholder meeting is convened by the Board of Directors, the Chairman shall serve as the chair of the meeting; if the Chairman on leave or is unable to attend the meeting for some reason, the proxy thereof shall be proceeded in accordance with Article 208 of the Company Act.

Where the shareholder meeting is convened by a person other than the members of the Board of Directors with the right to convene the meeting, such a person with the right to convene the meeting shall be the chair of the meeting. If there are two or more such persons with the right to convene the meeting, one chair shall be selected among such persons to act as the chair of the meeting.

Article 17

Resolutions adopted at a shareholder meeting shall be recorded in the minutes of the meeting, and handled in accordance with Article 183 of the Company Act.

Chapter 4 Board of Directors

Article 18

The Company shall have 7 to 11 directors, and the number of directors is authorized to be determined by the Board of Directors. The directors shall be elected by the shareholder meeting from among the persons with disposing capacity for a term of three (3) years and may be re-elected. Among the members of the Board of Directors, there shall be at least three (3) independent directors. The election of directors shall adopt a candidate nomination system, and the shareholder meeting shall select the directors from the list of director candidates.

The Company may have one (1) vice chairman and three (3) managing directors. The managing directors shall be selected on by one by the attendance of two-thirds or more of the directors with the consent of more than half of the directors in attendance, the executive directors shall be selected one by one; and the Chairman and the vice chairmen shall be selected by and from among the managing directors.

The Chairman shall be the chair of the shareholder meeting, the Board of Directors and the Board of Managing Directors internally, and shall represent the Company externally.

Among the quota for the managing directors in Paragraph 2 hereof, the number of independent directors shall not be less than one (1) person, and shall not be less than one-fifth of the number of seats for managing directors.

Article 18-1:

The Company may set up an Audit Committee in accordance with Article 14-4 of the Securities and Exchange Act. The Audit Committee shall be composed of all independent directors. The number of the Audit Committee members shall not be less than three (3) persons, one of whom shall be the convener, and at least one (1) of the members shall possess expertise in accounting or finance.

Article 19

When the Board of Directors meets, the Chairman shall be the chair. If the Chairman is unable to exercise his/her powers for some reason, the proxy thereof shall be proceeded in accordance with Article 208 of the Company Act.

Article 20

When the number of vacancies for directors reaches one-third thereof or all independent directors are dismissed, the Board of Directors shall convene an extraordinary shareholder meeting within 60 days for the by-election. The term of their office shall be limited to the remaining term of office of the predecessor.

Article 21

The Board of Directors shall convene at least once a quarter. The reason for the convening shall be stated and notified to all the directors seven (7) days in advance; However, it may be convened at any time when there is an emergency. The notice of a board meeting may be given in writing, by fax or e-mail, or by means of

other communication. The powers of the Board of Directors shall be as follows:

Approval of the Articles of Incorporation and important management systems of the Company.
Approval of the annual budget and review of the annual final accounts.
Approval of the acquisition or disposal of major assets.
Where the Company applies to financial institutions or third parties for financing, guarantee, acceptance and other external advances, loans and borrowing of funds, it shall submit such application proposals or cases to the Board of Directors for approval or recognition retroactively.
Approval of endorsement, guarantee, and acceptance made in the name of the Company.
To propose transfer of dian right (a kind of pawn in real property), sale, lease, pledge, mortgage or other means of disposition of all or important parts of the Company’s property, except for the guarantee provided to financial institutions pursuant to the relationship of authorization.
Appointment and dismissal of the Company’s chief strategy officer, president, vice president and assistant manager.
Approval of the Company’s major reinvestment in other businesses or transfer of shares.
Establishment and abolition of branches.
Selection, appointment and dismissal of the Company’s certified public accountants.
Other powers and authority vested therewith in accordance with the Company Act or resolutions adopted by the shareholder meeting.

Article 22

Directors shall attend the Board of Directors in person. If a director is unable to attend the Board of Directors in person for some reason, he/she may issue a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting to entrust another director to attend on his/her behalf, provided that one director may accept the appointment to act as the proxy by one other director only.

Article 23

During the term of office, directors shall be liability for compensation in accordance with the law within the scope of their performance of business, and authorize the Board of Directors to purchase liability insurance for them in order to reduce and diversify the risk of major damage to the Company and shareholders caused by directors’ mistakes or negligence; after the liability insurance is taken out or renewed, important contents such as the insured amount, the coverage and the insurance premium rate of the liability insurance, shall be submitted to the latest Board of Directors for report.

Chapter 5 Managers and Employees

Article 24

The Company shall have one (1) Chief Strategy Officer, one (1) president, a number of vice presidents and assistant managers respectively. The appointment, dismissal and remuneration standards shall be handled in accordance with Article 29 of the Company Act.

Article 25

The president shall uphold resolutions of the Board of Directors and instructions of the Chairman to comprehensively manage all the Company’s business. In addition, the Chief Strategy Officer is established under the Board of Directors to provide the Board of Directors with the medium- and long-term development strategy of the Company for reference.

Article 26

During the term of office, managers shall be liability for compensation in accordance with the law within the scope of their performance of business, and authorize the Board of Directors to purchase liability insurance for them in order to reduce and diversify the risk of major damage to the Company and shareholders caused by managers’ mistakes or negligence.

Chapter 6 Accounting

Article 27

The Company’s fiscal year goes from January 1 to December 31 each year.

At the end of each fiscal year, the Board of Directors shall prepare the following financial statements and submit such to the general shareholder meeting for recognition in accordance with the procedures prescribed by the law:

Business report.
Financial statements.
Proposals for surplus distribution or deficit compensation.

Article 28

If the Company makes a profit during the year, it shall appropriate 10% to 15% thereof based on the profit status for that current year as employee remuneration; and appropriate no more than 5% as director remuneration. However, if the Company still has accumulated losses, such losses shall be compensated.

Employee remuneration may be made with stock or in cash. The targets of the stock or cash distributed may include employees of the controlled or affiliated companies who meet certain criteria.

The profit status for that current year as mentioned in Paragraph 1 shall refer to the benefits of the pre-tax profit before the distribution of employee and director remunerations are deducted therefrom.

The distribution of employee and director remunerations shall be carried out with the resolution of the Board of Directors adopted by the attendance of two-thirds or more of the directors and the consent of more than half of the directors in attendance, which shall be reported to the shareholder meeting.

Article 29 If there is any surplus in the Company’s annual final accounts, the distribution thereof shall be as follows:
Make up for accumulated losses.
Appropriate 10% thereof as the statutory surplus reserve until the cumulative amount has reached the Company’s paid-in capital.
Make provision or reverse the special surplus reserve in accordance with the Company’s operating needs as well as in accordance with laws and regulations.
After deducting the amounts in Subparagraphs 1-3, if there is any balance, the dividends distributable on special shares in that current year may have priority in the distribution; if there is any balance, such balance plus the accumulated undistributed surplus of the previous year(s) shall, apart from certain amounts thereof being retained discretionarily, be used as the shareholder bonus. The Board of Directors shall determine the amount of distribution, which shall be submitted to the shareholder meeting for resolution.
- Based on the needs of sustainable development, the Company may distribute stock dividends and cash dividends in accordance with the growth rate and capital expenditure situation, provided that cash dividends shall not be less than 50% of the total dividend distribution for that current year.

Article 29-1

The Board of Directors of the Company shall, with the resolution adopted by the attendance of two-thirds or more of the directors and more than half of the directors in attendance, distribute in cash all or part of the dividends and bonuses distributable, capital reserve or statutory surplus reserve, for which the provisions of these Articles of Incorporation regarding resolutions of the shareholder meeting shall not apply.

Article 30

With regard to the director remuneration of the Company, the Board of Directors is authorized to formulate the payment standard in accordance with the common standards of the same trade.

Chapter 7 Supplementary Provision

Article 31

If there are any matters not covered in these Articles of Incorporation, they shall be handled entirely in accordance with the Company Act and relevant laws and regulations.

Article 32

These Articles of Incorporation shall become effective after being adopted by the shareholder meeting in according with the law, and the same shall apply when it is revised.

Article 33

These Articles of Incorporation were formulated on November 19, 1983;

1st revision made on January 21, 1984;2nd revision made on March 24, 1985;3rd revision made on May 27, 1989;4th revision made on September 2, 1989;5th revision made on May 26, 1990;6th revision made on May 11, 1991;7th revision made on September 27, 1991;8th revision made on April 21, 1992;9th revision made on June 22, 1993;10th revision made on May 10, 1994;11th revision made on March 31, 1995;12th revision made on May 2, 1997;13th revision made on April 24, 1998;14th revision made on April 24, 1998;15th revision made on May 19, 1999;16th revision made on May 30, 2000;17th revision made on May 23, 2001;18th revision made on May 29, 2002;19th revision made on May 23, 2003;20th revision made on June 15, 2004;21st revision made on June 10, 2005;22nd revision made on June 14, 2006;23rd revision made on November 16, 2006;24th revision made on June 13, 2007;25th revision made on June 13, 2008;26th revision made on June 16, 2009;27th revision made on June 17, 2011;28th revision made on June 22, 2012;29th revision made on June 19, 2013;30th revision made on June 24, 2016;31st revision made on June 21, 2017;32nd revision made on June 13, 2019;33rd revision made on June 16, 2020.

OPTO TECH CORPORATION Procedure Rules for Shareholder Meetings

Article 1

In order to establish a good governance system for the Company’s shareholder meetings, to improve supervision functions, and to strengthen management mechanism, these Rules are hereby formulated in accordance with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies to facilitate compliance.

Article 2

The procedure rules for the Company’s shareholder meetings shall be subject to the provisions of these Rules, unless otherwise provided for in laws and regulations or the Articles of Incorporation.

Article 3 (Convening of shareholder meeting and notice of meeting)

Unless otherwise provided for in laws and regulations, the Company’s shareholder meetings shall be convened by the Board of Directors.

The Company shall provide the reasons for various proposed discussions, descriptions, and other materials such as the shareholder meeting notice; proxy form; and relevant proposals for recognition, discussion, appointment, or dismissal of directors 30 days prior to a general shareholder meeting and 15 days prior to an extraordinary shareholder meeting, and shall prepare the electronic file(s) of such to be transmitted to the Market Observation Post System. In addition, the Company shall prepare the electronic file of the Shareholder Meeting Handbook and supplementary materials of the meeting to be transmitted to the Market Observation Post System 21 days prior to a general shareholder meeting and 15 days prior to an extraordinary shareholder meeting. The Shareholder Meeting Handbook and supplementary materials for the meeting concerned shall be properly prepared and made available for shareholders’ request for the copy at any time, displayed in the Company and the professional stock affairs agency appointed by the Company, as well as distributed on-site at the venue of the shareholder meeting 15 days prior to the convening of the shareholder meeting.

The notice and announcement thereof shall specify the reason for the convening; if approved by the counterparty, the notice thereof may be given electronically.

Appointment or dismissal of directors, change of Articles of Incorporation, capital reduction, application for suspension of public offerings, release from directors’ non-competition obligation, capital increase from surplus, capital increase from public reserves, dissolution, merger, division of company, or the matters prescribed in Paragraph 1 of Article 185 shall be set out together with the main content thereof to be explained in the cause for the convening, which shall not be proposed in an extraordinary motion; the main content thereof may be placed on the website designated by the competent securities authority or the Company, and its website address shall be included in the notice.

Where the full re-election of directors and the date of taking office have been stated in the causes for the convening of the shareholder meeting, after completion of the re-election at the shareholder meeting concerned, the date of taking office may not be changed at the same meeting further with the extraordinary motion or by other means.

Shareholders holding one (1) or more percent of the total number of issued shares may submit to the Company a proposal for discussion at the general shareholder meeting. The proposal shall be limited to one (1) item, and any proposal with more than one (1) item shall not be included in the meeting agenda. However, where the shareholders’ proposal is to urge the Company to promote the public interest or the advice on the fulfillment of its social responsibilities, the Board of Directors may still include such in the meeting agenda. In addition, if the shareholder’s proposal is in one of the various circumstances stipulated in Subparagraph 4,

Article 172-1 of the Company Act, the Board of Directors is allowed not to list such a proposal in the meeting agenda.

The Company shall announce its acceptance of shareholders’ proposals, the acceptance methods in the written or electronic form, acceptance locations, and acceptance period prior to the date of suspension of stock transfer before the general shareholder meeting is held; the acceptance period shall not be less than ten (10) days.

A shareholder’s proposal shall be limited to 300 characters. If it exceeds 300 characters, such a proposal shall not be included in the meeting agenda; the proposing shareholder shall attend in person or entrust others to attend the general shareholder meeting as well as participate in the discussion of such a proposal.

The Company shall notify the proposing shareholders of the results of its processing the proposal prior to the notice date of the shareholder meeting, and list the proposal that conforms to the provisions of this article in the meeting notice. For shareholder proposals that are not included in the meeting agenda, the Board of Directors shall explain the reasons for not including such at the shareholder meeting.

Article 4

At each shareholder meeting, shareholders may issue a proxy form published by the Company, specifying the scope of authorization, to appoint an agent to attend the shareholder meeting.

A shareholder is limited to issuing one proxy to entrust one person only, and the proxy shall be served to the Company five (5) days prior to the convening of the shareholder meeting. In the event of duplicate proxies, the one that first arrives shall prevail, except that the proxy that arrives later is to revoke the previous proxy. After the proxy form is served to the Company, shareholders who intend to attend the shareholder meeting in person or exercise their voting rights in writing or electronically shall notify the Company in writing of revocation of the proxy two (2) days prior to the convening of the shareholder meeting; if the revocation is overdue, the voting rights of the entrusted agent who attends the meeting shall prevail.

Article 5 (Principles for the venue and time of the shareholder meeting)

The venue of the shareholder meeting shall be at the place of the Company or at a location convenient for shareholders’ attendance and suitable for the convening of the shareholder meeting. The start time of the meeting shall not be earlier than 9 am or later than 3 pm. The opinions of independent directors on the venue and time of the meeting shall be fully considered.

Article 6 (Document preparation)

The Company shall specify in the meeting notice the time and venue of accepting shareholders’ check-in, as well as other matters that should be paid attention to.

The accepting of shareholders’ check-in in the preceding paragraph shall commence at least 30 minutes prior to the start of the meeting; the place for the check-in reception shall be clearly marked and sufficient qualified personnel shall be assigned to handle such work.

The shareholder in person or the agent entrusted by the shareholder (hereinafter referred to as the Shareholder) shall present the attendance certificate, attendance signature card or other attendance certificate to attend the shareholder meeting. The Company shall not arbitrarily add other requests for providing additional supporting documents to the supporting documents required for the shareholders to attend; Solicitors who solicitate the proxy shall also bring their identity documents for verification.

Shareholders in attendance may hand in the attendance signature card to replace the signing for attendance.

The Company shall hand over the meeting handbook, annual report, attendance certificate, speaker slips, voting slips and other meeting materials to the shareholders attending the shareholder meeting; where there is an election of directors or supervisors, pre-printed ballots shall also be furnished.

When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholder meeting. When a juristic person is appointed to attend as proxy, it may designate only one (1) person to represent it at the meeting.

Article 7 (Chair of the shareholder meeting and non-voting participants)

If a shareholder meeting is convened by the Board of Directors, the meeting shall be chaired by the Chairman. When the Chairman is on leave or for any reason unable to exercise the powers of the Chairman, the Chairman shall appoint one director to act as his/her agent; where the Chairman does not make such a designation, the directors shall select from among themselves one person to serve as the chair.

If the shareholder meeting is convened by a person with the right to convene the meeting other than the Board of Directors members, such a person with the right to convene the meeting shall serve as the chair. If there are two (2) or more such persons with the right to convene the meeting, one from among such persons shall be elected to serve as the chair.

The Company may appoint retained lawyers, accountants, and related personnel to participate in the shareholder meeting.

Article 8 (Documentation of a shareholder meeting by audio or video)

The Company shall, beginning from the time it accepts shareholder attendance check-in, make an uninterrupted audio and video recording of the check-in process, the proceedings of the shareholder meeting, and the voting and vote counting procedures.

The recorded materials of the preceding paragraph shall be retained for at least one (1) year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

Article 9

Attendance at shareholder meetings shall be calculated based on numbers of shares. The number of shares in attendance shall be calculated in accordance with the shares indicated by the attendance cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically.

The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent more than half of the total number of issued shares, the chair may announce a postponement, provided that no more than two (2) such postponements, for a combined total of no more than one (1) hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the chair shall call off the meeting for lack of quorum.

If the quorum is not met after two postponements as referred to in the preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Paragraph 1, Article 175 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholder meeting shall be convened within one (1) month.

When, prior to conclusion of the meeting, the attending shareholders represent more than half of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholder meeting pursuant to Article 174 of the Company Act.

Article 10 (Discussion of proposals)

If a shareholder meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. Votes shall be cast on each separate proposal in the agenda (including extraordinary motions and amendments to the original proposals set out in the agenda). The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholder meeting.

The provisions of the preceding paragraph shall apply mutatis mutandis to a shareholder meeting convened by a party with the right to convene the meeting who is not the Board of Directors members.

The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholder meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, the other members of the Board of Directors may continue the meeting by electing a new chair with the consent of more than

half of the votes represented by the attending shareholders.

The chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed, call for a vote, and schedule sufficient time for voting.

Article 11 (Shareholder speech)

Before speaking, an attending shareholder must specify on a speaker’s slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chair.

A shareholder in attendance who has submitted a speaker’s slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker’s slip, the spoken content shall prevail.

Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder’s speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a shareholder meeting, only one (1) of the representatives so appointed may speak on the same proposal.

After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.

Article 12 (Calculation of voting shares and recusal system)

Voting at a shareholder meeting shall be calculated based on the number of shares.

With respect to resolutions of shareholder meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of the Company, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed three (3) percent of the voting rights represented by the total number of issued shares. If such a percentage is exceeded, the voting rights in excess of that percentage shall not be included in the calculation.

Article 13

A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares in accordance with Paragraph 2, Article 179 of the Company Act.

When the Company holds a shareholder meeting, it shall adopt exercise of voting rights by electronic means and may adopt exercise of voting rights by correspondence. When voting rights are exercised by correspondence or electronic means, the method of exercise shall be specified in the shareholder meeting notice. A shareholder exercising voting rights by correspondence or electronic means will be deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that the Company avoid the submission of extraordinary motions and amendments to original proposals.

A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to the Company before two days before the date of the shareholder meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail, except when a declaration is made to cancel the earlier declaration of intent.

After a shareholder has exercised voting rights by correspondence or electronic means, in the event the shareholder intends to attend the shareholder meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to the Company, by the same means by which the voting rights were exercised, before two business days before the date of the shareholder meeting. If the notice of retraction is submitted after that time, the voting rights already exercised by correspondence or electronic means shall prevail. When a shareholder has exercised voting rights both by correspondence or electronic means and by appointing a proxy to attend a shareholder meeting, the voting rights exercised by the proxy in the meeting shall prevail.

Except as otherwise provided for in the Company Act and in the Company’s Articles of Incorporation, the passage of a proposal shall require an affirmative vote of more than half of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the chair or a person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the Market Observation Post System.

When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of the Company.

Vote counting for shareholder meeting proposals or elections shall be conducted in public at the place of the shareholder meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.

Article 14 (Election of directors and supervisors)

The election of directors or supervisors at a shareholder meeting shall be held in accordance with the applicable election and appointment rules adopted by the Company, and the voting results shall be announced on-site immediately, including the names of those elected as directors and supervisors and the numbers of votes with which they were elected.

The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least one year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

Article 15

Matters relating to the resolutions of a shareholder meeting shall be recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting. The meeting minutes may be produced and distributed in electronic form.

This Company may distribute the meeting minutes of the preceding paragraph by means of a public announcement made through the Market Observation Post System.

The meeting minutes shall accurately record the year, month, day, and place of the meeting, the chair’s full name, the methods by which resolutions were adopted, and a summary of the deliberations and their voting

results (including the number of voting rights), and disclose the number of voting rights won by each candidate in the event of an election of directors or supervisors. The minutes shall be retained for the duration of the existence of the Company.

Article 16 (Public announcement)

On the day of a shareholder meeting, the Company shall prepare in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies, and shall make an express disclosure of the same at the place of the shareholder meeting.

If matters put to a resolution at a shareholder meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation regulations, the Company shall upload the content of such resolution to the Market Observation Post System. within the prescribed time period.

Article 17 (Maintenance of order at the venue)

Staff handling administrative affairs of a shareholder meeting shall wear identification cards or arm bands. The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word “Proctor.”

At the place of a shareholder meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by the Company, the chair may prevent the shareholder from so doing. When a shareholder violates the rules of procedure and defies the chair’s correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.

Article 18 (Recess and resumption of a shareholder meeting)

When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholder meeting may adopt a resolution to resume the meeting at another venue.

A resolution may be adopted at a shareholder meeting to defer or resume the meeting within five days in accordance with Article 182 of the Company Act.

Article 19

These Rules shall take effect after having been submitted to and approved by a shareholder meeting. Subsequent amendments thereto shall be effected in the same manner.

Article 20

These Rules were formulated on May 26, 1990.

1st revision made on April 24, 1998. 2nd revision made on May 29, 2002. 3rd revision made on June 17, 2004. 4th revision made on June 24, 2006. 5th revision made on June 16, 2020.

Director Shareholding Status

1. The percentages and numbers of statutory shares held by all Company directors are described as follows:

(1) In accordance with Article 2 of the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies, if a public company has elected two or more independent directors, the shareholding ratio calculated at the rates thereby for all directors and supervisors other than the independent directors shall be decreased to 80 percent.
(2) Number of ordinary shares issued by the Company: 378,622,846 shares.
(3) Number of minimum shares required by the law to be held by all directors: 15,144,913 shares.

2. As of the date of suspending the transfer of shares for the Shareholder meeting 2021 (April 26, 2021), the number of shares held by all directors is as follows, which meets the minimum percentage requirement stipulated in Article 26 of the Securities and Exchange Act.

Title	Name	Number of Shares	Shareholding%
Chairman	H.T. Wang	1,937,625	0.51
Vice Chairman	Tsun-Chia Tai	0	0
Director	Tzu-Chun Lin	374,805	0.10
Director	Su-Chin Tai	54,071	0.01
Director	Nichia Taiwan Corporation. Rep. of legal person: Ishigami Koji Rep. of legalperson: SakamotoTakashi	26,448,822	6.99
Director	Inwood Information System Co., Ltd.	200,000	0.05
Independent Director	Kao-Ming Tsai	0	0
Managing Director & Independent Director	Kuo-Kuang Li	0	0
Independent Director	Pei-Chang Wang	0	0
Total		29,015,323	7.66

AI assistant

TASC — AGM Information 2021

52015_rns_2021-11-02_1d6717df-51fc-4da3-b2a5-fc4efdd0d9c2.pdf

OPTO TECH CORPORATION

Handbook for the 2021 General Meeting of Shareholders Table of Contents

1. Meeting called to order

2. Report Items:

3. Proposed Resolutions:

4. Extemporary motions:

5. Meeting adjourned

【 Business Report 】

1.2020 Business Results:

2. 2021 operating plan:

【 Audit Committee Report 】

OPTO TECH CORPORATION

Implementation Status of Share Repurchase

OPTO TECH CORPORATION

Guidelines for 2020 Transfer of First Repurchased Shares to Employees

Article 1 Purpose

Article 2 (Types of transferred shares, content of rights, and restrictions on rights)

Article 3 (Transfer period)

Article 4 (Eligibility of the transferee)

Article 5 (Number of shares that employees may subscribe for)

Article 6 (Procedure of transfer)

Article 7 (Agreed transfer price per share)

Transfer price adjustment formula:

Article 10

Article 11

OPTO TECH CORPORATION

Guidelines for 2021 Transfer of First Repurchased Shares to Employees

Article 1 Purpose

Article 2 (Types of transferred shares, content of rights, and restrictions on rights)

Article 3 (Transfer period)

Article 4 (Eligibility of the transferee)

Article 5 (Number of shares that employees may subscribe for)

Article 6 (Procedure of transfer)

Article 7 (Agreed transfer price per share)

Transfer price adjustment formula:

Article 10

Article 11

Opinion

Basis for opinion

Key audit matters

Key audit matter- Allowance for inventory valuation losses

Description

How our audit addressed the matter

Description

Key audit matters –Cutoff of sales of goods from hub warehouse

Description

How our audit addressed the matter

Other matter–Parent company only financial reports

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

Basis for opinion

Key audit matters

Key audit matter- Allowance for inventory valuation losses

Description

How our audit addressed the matter

Key audit matters–Cutoff of sales of goods from hub warehouse

Responsibilities of management and those charged with governance for the parent company only financial

statements

Auditor’s responsibilities for the audit of the parent company only financial statements

OPTO TECH CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION PARENT COMPANY ONLY BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

Year ended December 31

OPTO TECH CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

OPTO TECH CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

TASC AGM Information 2021