TECOM — Annual Report 2022

Nov 14, 2022

Tecom Co., LTD.

Consolidated Financial Statements for the years

ended December 31, 2022 and 2021 with Independent Auditors’ Report (Stock Symbol 2321)

Company Address ：No. 23, Sec. 2, Yanfa 2nd Rd., Hsinchu City, Taiwan (R.O.C.)

Telephone Number：(03)577-5141

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Tecom Co., LTD.

Consolidated Financial Statements for the years ended December 31, 2022 and 2021 Independent

Auditors’ Report

Table of contents

Table of contents
Item	Page
I、Cover page II、Table of contents III、Representation letter IV、Independent auditors’ report V、Consolidated balance Sheets VI、Consolidated statements of comprehensive income VII、Consolidated statements of changes in equity VIII、Consolidated statements of cash flow IX、Notes to the consolidated financial statements (1) Company history and business scope (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Major sources of uncertainty arising from significant accounting judgments, estimates, and assumptions (6) Explanation of significant accounts (7) Related party transactions (8) Pledged assets (9) Significant Contingencies and Unrecognized Contract Commitments	1 2 ~ 3 4 5 ~ 8 9 ~ 10 11 12 13 ~ 14 15 ~ 61 15 15 15 ~ 16 16 ~ 27 27 28 ~ 47 47 ~ 50 50 51

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Item	Page
(10) Losses due to major disasters (11) Significant subsequent events (12) Others (13) Other disclosures (14) Segment information	51 51 51 ~ 59 60 60 ~ 61

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Tecom Co., LTD.

Statement of Consolidated Financial Statements of Affiliated Enterprises

For the 2022 fiscal year (from 1st January 2022 to 31st December 2022) of the Company in accordance with “Regulation Governing the Preparation of Consolidated Financial Statements and Related Reports of Affiliated Enterprises”, the companies that should be included in the preparation of consolidated financial statements of affiliated enterprises and companies that should be included in the preparation of consolidated financial statements of parent-subsidiary enterprises according to International Financial Reporting Standard No. 10 are the same, and the information that should be disclosed in the consolidated financial statements of affiliated enterprises has already been disclosed in the consolidated financial statements of parent-subsidiary enterprises, therefore a separate consolidated financial statement of affiliated enterprises will not be prepared.

We hereby declare that all the information provided is true and accurate.

Tecom Co., LTD. CEO: Liu, Chao-Kai March 24,2023

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Independent Auditors’ Report

The Board of Directors and Shareholders Tecom Co., LTD.

Opinion

We have audited the accompanying consolidated balance sheets of Tecom Co., LTD. and its subsidiaries (the “Group”) as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2022 and 2021, and notes to the consolidated financial statements, including the summary of significant accounting policies (together referred as “the consolidated financial statements”).

In our opinion, based on our audits and the reports of other auditors (please refer to the section “Other Matter — Making Reference to the Audits of Component Auditors” of our audit report) the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group and its subsidiaries as of December 31, 2022 and 2021, and their consolidated financial performance and cash flows for the years ended December 31, 2022 and 2021, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs), Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC) as endorsed and issued into effective by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the “Auditors’ Responsibilities for the Audit of the consolidated Financial Statements” section of our report. We are independent of the Group and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, 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 Group’s consolidated financial statements for the year ended

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December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters about 2022 consolidated financial statements from the Group’s as below:

Inventory Valuation

Description

The Group measure the inventory valuation based on which is low between cost and net present value. Please refer to Notes 5(2) and Notes 6(6) for significant accounting assumptions and judgments, major sources of estimation uncertainty and information for inventory respectively. Inventory and allowance for inventory valuation loss are NT$ 253,470 thousand and NT$ 61,257 thousand respectively at the year ended. Due to the large inventory amount, the Group are at high risk of inventory impairment loss caused by the rapid changes in industry technology resulting in outdated products or lack of market sales value. Therefore, the valuation of inventories has been identified as a key audit matter.

How our audit addressed the matter

Our audit procedures performed for the above matter are as follows:

1. Assessed the policy on allowance for inventory valuation loss.

2. Estimate and verify about the net fair value of the inventory.

3. Check the event of allowance for inventory valuation loss.

Other Matter — Making Reference to the Audits of Component Auditors

We have audited 2021 and 2022 individual financial statement for, and we claim it will be clean report.

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 requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the ability to continue as a going concern of the Group 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

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alternative but to do so.

Those charged with governance, including audit committee, are responsible for overseeing the financial reporting process of the Group.

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 the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability to continue as a going concern of the Group. 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

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to continue as a going concern.

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

2. 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 2022 consolidated financial statements 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.

Accountants: Cheng, Ya-Huei Li, Tien-Yi For and on behalf of PricewaterhouseCoopers, Taiwan March 24,2023

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Tecom Co., LTD. and Subsidiaries CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

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December 31,2022 December 31,2021
ASSETS Note AMOUNT % AMOUNT %
CURRENT ASSETS
1100 Cash and cash equivalents 6 (1) $ 265,304 14 $ 183,656 9
1110 Financial assets at fair value through 6 (2)
profit or loss - current 10,493 1 73,636 4
1120 Financial assets at fair value through 6 (3)
other comprehensive income - current 31,997 2 47,792 2
1136 Financial assets at amortized cost 6 (4) and 8
-current 295,081 16 334,548 16
1150 Notes receivable, net 6 (5) 26,464 1 51,204 3
1160 Notes receivable from related parties, net 6 (5) and 7 2,220 - 109 -
1170 Accounts receivable, net 6 (5) 153,546 8 150,272 7
1180 Accounts receivables from related 6 (5) and 7
parties, net 11,996 1 17,621 1
1200 Other receivables 7 2,320 - 1,871 -
130X Inventories 6 (6) 192,213 10 206,205 10
1410 Prepayments 5,106 - 15,794 1
1470 Other current assets 1,397 - 315 -
11XX Total current assets 998,137 53 1,083,023 53
NONCURRENT ASSETS
1517 Financial assets at fair value through 6 (3) and 8
other comprehensive income – non
current 467,152 24 523,576 26
1550 Investments accounted for using 6 (7)
equity method 16,896 1 15,771 1
1600 Property, plant and equipment 6 (8) and 8 92,095 5 91,919 4
1755 Right-of-use assets 6 (9) and 7 183,801 10 195,009 9
1780 Investment property 6 (10) 2,644 - 3,355 -
1840 Intangible assets 6 (28) 115,981 6 115,981 6
1900 Deferred income tax assets 8 16,240 1 13,559 1
15XX Other noncurrent assets 894,809 47 959,170 47
1XXX TOTAL $ 1,892,946 100 $ 2,042,193 100
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(continued)

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Tecom Co., LTD. and Subsidiaries CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities and Equity CURRENT LIABILITIES 2100 Short-term loans 2130 Contract liabilities - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable from related parties 2200 Other payables 2230 Current income tax liabilities 2250 Provisions for liabilities - current 2280 Lease liabilities - current 2320 Long-term liabilities - current portion 2399 Other current liabilities 21XX Total current liabilities Non-current liabilities 2540 Long-term loans 2550 Provisions for liabilities - non-current 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2600 Other non-current liabilities 25XX Total noncurrent liabilities 2XXX Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT Share capital 3110 Common stock 3120 Preferred stock Capital surplus 3200 Capital surplus Share capital 3350 Accumulated deficit Other equity 3400 Other equity 3500 Treasury stock 31XX Equity attributable to shareholders of the parent 36XX NON - CONTROLLING INTERESTS 3XXX Total Equity SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL REPORTING 3X2X LIABILITIES AND EQUITY	Notes 6(11) and 8 6(21) 6(12) 6(12) and 7 6(13) and 7 6(9) and 7 6(15) 6(14) 6(15) 6(28) 6(9) and 7 6(16)(17) 6(18) 6(19) 6(20) ( 6(18) ( 4 (3) 9 11	December 31,2022 December 31,2021 AMOUNT % AMOUNT % $ 755,000 40 $ 523,112 26 4,392 - 3,964 - 3,142 - 3,795 - 115,763 6 185,952 9 1,346 - 7,606 - 68,105 4 69,446 4 6,953 1 5,519 - 3,617 - 4,378 - 8,813 1 9,160 1 - - 280,000 14 6,974 - 6,924 - 974,105 52 1,099,856 54 200,000 10 200,000 10 2,064 - 2,198 - 880 - 880 - 185,301 10 194,423 10 55,577 3 66,306 3 443,822 23 463,807 23 1,417,927 75 1,563,663 77 142,719 8 445,997 22 160,000 9 500,000 25 6,237 - 6,227 - 124,694 ) ( 7 ) ( 647,113 ) ( 32 ) 40,604 2 ( 64,853 ) ( 3 ) 13,795 ) ( 1 ) ( 13,795 ) ( 1 ) 211,071 11 226,463 11 263,948 14 252,067 12 475,019 25 478,530 23 $ 1,892,946 100 $ 2,042,193 100

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

Chairman: Liu, Chao-Kai CEO:Tien, Ying-Juei

Accounting Manager: Lee, Mei-Lin

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Tecom Co., LTD. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

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2022 2021
Item Notes AMOUNT % AMOUNT %
4000 Operating revenues 6(21) and 7 $ 1,010,890 100 $ 1,070,339 100
5000 Operating costs 6(6) and 7 ( 750,759 ) ( 74 ) ( 828,233 ) ( 77)
5950 Gross profit, net 260,131 26 242,106 23
Operating expenses 6(26)
(27) and 7
6100 Selling expenses ( 88,656 ) ( 9 ) ( 84,145 ) ( 8)
6200 Administrative expenses ( 71,577 ) ( 7 ) ( 84,702 ) ( 8)
6300 Research and development
expenses ( 79,300 ) ( 8 ) ( 66,381 ) ( 6)
6450 Expected credit gains 12 (2) 62 - 351 -
6000 Total operating expenses ( 239,471 ) ( 24 ) ( 234,877 ) ( 22)
6900 Operating Income 20,660 2 7,229 1
Non-operating income and
expenses
7100 Interest income 6(22) 4,838 - 1,224 -
7010 Other income 6(23) and 7 15,761 2 36,949 3
7020 Other gains and losses 6(24) 21,300 2 ( 3,448 ) -
7050 Financial costs 6(25) ( 24,106 ) ( 2 ) ( 21,674 ) ( 2)
7060 Share of profit of associates 6(7)
and joint ventures accounted
- -
for using the equity method 2,627 2,916
7000 Total non-operating income
and expenses 20,420 2 15,967 1
7900 Income before income tax 41,080 4 23,196 2
7950 Income tax expense 6(28) ( 8,488 ) ( 1 ) ( 5,210 ) -
8200 Net income $ 32,592 3 $ 17,986 2
Other comprehensive income
Not to be reclassified to profit
or loss in subsequent periods
8311 Remeasurements of defined 6(17)
benefit plans $ 2,933 1 $ 3,208 -
8316 Unrealized (losses) gains from 6(3)
equity instruments investments
measured at fair value through
other comprehensive income ( 27,713 ) ( 3 ) ( 19,538 ) ( 2)
8300 Other comprehensive income, net ( $ 24,780 ) ( 2 ) ($ 16,330 ) ( 2)
8500 Total comprehensive income $ 7,812 1 $ 1,656 -
NET INCOME ATTRIBUTABLE
TO
8610 Shareholders of the parent $ 9,378 1 $ 5,272 1
8620 Non-controlling interests $ 23,214 2 $ 12,714 1
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE TO:
8710 Shareholders of the parent ( $ 15,402 ) ( 1 ) ($ 11,058 ) ( 1)
8720 Non-controlling interests $ 23,214 2 $ 12,714 1
Earnings per share
9750 Total basic earnings per share Note 6(29) $ 0.66 $ 0.37
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The accompanying notes are an integral part of the consolidated financial statements.

CEO:Tien, Ying-Juei

Chairman: Liu, Chao-Kai

Accounting Manager: Lee, Mei-Lin

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Tecom Co., LTD. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

2 0 2 1 Balance on January 1, 2021 Net income for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) for the year Changes in the net value of investment equity of associates accounted for using the equity method not recognized by shareholding percentage Changes in non-controlling interests Balance on December 31, 2021 2 0 2 2 Balance on January 1, 2022 Net income for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) for the year Changes in the net value of investment equity of associates accounted for using the equity method not recognized by shareholding percentage Changes in non-controlling interests Capital reduction to cover accumulated deficit Disposal of financial assets at fair value through other comprehensive income Balance on December 31, 2022	Notes 6 (3) 6 (7) 6 (3) 6 (7) 6 (18) 6 (3)			December 31, 2021 and 2022 EquityAttributable to Shareholders oftheParent	December 31, 2021 and 2022 EquityAttributable to Shareholders oftheParent	December 31, 2021 and 2022 EquityAttributable to Shareholders oftheParent	December 31, 2021 and 2022 EquityAttributable to Shareholders oftheParent	December 31, 2021 and 2022 EquityAttributable to Shareholders oftheParent	December 31, 2021 and 2022 EquityAttributable to Shareholders oftheParent					Unit: NT thousand non-controlling interests Total equity $ 245,022 $ 478,995 12,714 17,986 - ( 16,330) 12,714 1,656 - 3,548 ( 5,669 ) ( 5,669) $ 252,067 $ 478,530 $ 252,067 $ 478,530 23,214 32,592 - ( 24,780) 23,214 7,812 - 10 ( 11,333 ) ( 11,333) - - - - $ 263,948 $ 475,019
		Share	capital Preferred stock $ 500,000 - - - - - $ 500,000 $ 500,000 - - - - - ( 340,000 ) - $ 160,000		Capital Surplus $ 2,679 - - - 3,548 - $ 6,227 $ 6,227 - - - 10 - - - $ 6,237		Accumulated deficit ($ 655,593 ) 5,272 3,208 8,480 - - ($ 647,113 ) ($ 647,113 ) 9,378 2,933 12,311 - - 643,278 ( 133,170 ) ($ 124,694 )		Unrealized Gain (Loss) on Financial Assets at Fair value through other comprehensive income ($ 45,315 ) - ( 19,538 ) ( 19,538 ) - - ($ 64,853 ) ($ 64,853 ) - ( 27,713 ) ( 27,713 ) - - - 133,170 $ 40,604		Treasury stock ($ 13,795 ) - - - - - ($ 13,795 ) ($ 13,795 ) - - - - - - - ($ 13,795 )		Total $ 233,973 5,272 ( 16,330 ) ( 11,058 ) 3,548 - $ 226,463 $ 226,463 9,378 ( 24,780 ) ( 15,402 ) 10 - - - $ 211,071
		Common Stock $ 445,997 - - - - - $ 445,997 $ 445,997 - - - - - ( 303,278 ) - $ 142,719

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

CEO:Tien, Ying-Juei

Accounting Manager: Lee, Mei-Lin

Chairman: Liu, Chao-Kai

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Tecom Co., LTD. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2022 AND 2021

Cash flows from operating activities: Income before income tax Adjustments for: The profit or loss items: Depreciation Amortization Expected credit gain Loss (gain) on financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries and joint ventures accounted for using the equity method Loss on disoisak of property, plant and equipment Gain on disposal of investments Gains arising from lease modification Changes in operating assets and liabilities Changes in operating assets Financial assets measured at fair value Notes receivable Notes receivable from related parties Accounts receivable Accounts receivable from related parties Other receivables Inventories Prepayments Other current assets Changes in operating liabilities Contract liabilities Notes payable Accounts payable Accounts payable from related parties Other payables Provisions for liabilities Other current liabilities Accrued pension liabilities Cash inflow (outflow) generated from operations Interest received Dividend received Interest paid Income tax paid Net cash flow from operating activities

Unit: NT thousand Notes 2022 2021 $ 41,080 $ 23,196 6(8)(9) (26) 23,553 24,391 6(10)(26) 2,565 2,037 ( 62 ) ( 351 ) 6(2)(24) ( 1,699 ) ( 1,834 ) 6(25) 24,106 21,674 6(22) ( 4,838 ) ( 1,224 ) 6(23) ( 14,747 ) ( 18,798 ) 6(7) ( 2,627 ) ( 2,916 ) 6(24) 4 41 6(24) ( 80 ) - 6(24) ( 32 ) - 64,842 ( 7,993 ) 24,740 ( 12,833 ) ( 2,111 ) 99 ( 3,212 ) ( 9,264 ) 5,625 ( 12,839 ) 613 9,837 13,992 ( 77,600 ) 10,688 ( 98 ) ( 1,082 ) 441 428 ( 1,004 ) ( 653 ) 100 ( 70,189 ) 68,831 ( 6,260 ) ( 9,136 ) ( 2,125 ) 4,935 ( 895 ) 1,299 50 577 ( 8,803 ) ( 8,956 ) 92,871 ( 7,388 ) 3,620 1,333 16,260 19,554 ( 23,752 ) ( 21,519 ) ( 6,898 ) ( 1,878 ) 82,101 ( 9,898 )

(continued)

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Tecom Co., LTD. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2022 AND 2021

Cash flows from investing activities: Financial assets at amortised cost decrease Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in prepayments for equipment Decrease in refundable deposit paid Acquisition of intangible assets Proceeds from disposal of investments accounted for using equity method Net cash flows used in investing activities Cash flows from financing activities: Increase in short term loans Decrease in short term loans Proceeds from long-term debt Repayments of long-term debt Guarantee deposit received Repayment of principal portion of lease liabilities Cash dividend paid to minority shareholders Net cash (used) generated in financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

Unit: NT thousand Notes 2022 2021 $ 39,467 $ 35,217 44,506 - 6(30) ( 8,857 ) ( 4,008 ) 4 7 ( 3,505 ) ( 336 ) 824 459 6(10) ( 1,854 ) ( 4,718 ) 80 - 70,665 26,621 6(31) 1,973,492 1,827,169 6(31) ( 1,741,604 ) ( 1,917,368 ) 6(31) - 200,000 6(31) ( 280,000 ) ( 20,000 ) 6(31) 1,008 ( 356 ) 6(31) ( 12,681 ) ( 12,621 ) ( 11,333 ) ( 5,669 ) ( 71,118 ) 71,155 81,648 87,878 183,656 95,778 $ 265,304 $ 183,656

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

CEO:Tien, Ying-Juei

Chairman: Liu, Chao-Kai

Accounting Manager: Lee, Mei-Lin

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Tecom Co., LTD. and Subsidiaries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2022 AND 2021

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANISATION

Tecom Co., LTD. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in Research, development, manufacture and sales of private branch exchange (PBX) systems and its components and peripherals, as well as agency sales of mobile phone related products. This company is held by TECO Electric & Machinery Co., Ltd. with 63.52% of the shares, which is the ultimate e of the group. On November 25, 2020, the Company conducted a simplified merger with its 100% owned subsidiary, TECOM International Investment Co., Ltd., of which the Company is still existing.

2. HISTORY AND ORGANISATION

These consolidated financial statements were authorized for issuance by the Board of Directors on March 24, 2023.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1). Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ( “IFRS ” ) as endorsed by the Financial Supervisory Commission ( “FSC ” ) New standards, interpretations and amendments endorsed by the FSC effective from 2022 are as follows:

New Standards, Interpretations and Amendments Amendment No. 3 to International Financial Reporting Standards "Index of Concepts" Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020	Effective date by International Accounting Standards Board
	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

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(2). Effect of new issuances of or amendments to IFRSs that the came into effect as endorsed by the FSC but not yet adopted by the Group

New standards, interpretations and amendments that the came into effect as endorsed by the FSC effective from 2023 are as follows:

effective from 2023 are as follows:
New Standards, Interpretations and Amendments Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’	Effective date by International Accounting Standards Board
	January 1, 2023 January 1, 2023

Amendments to IAS 12, ‘Deferred tax related to assets and liabilities arising from a single January 1, 2023 transaction’

The above standards, interpretations and amendments have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

(3). IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

New Standards, Interpretations and Amendments Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, ‘Insurance contracts’ Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 –comparative information’ Amendments to IAS 1, ‘Classification of liabilities as current or non-current’ Amendments to IAS 1, ‘Non-current liabilities with covenants’

Effective date by International Accounting Standards Board

To be determined by International Accounting Standards Board January 1, 2024 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2024 January 1, 2024

The above standards, interpretations and amendments have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the principal accounting policies applied in the preparation of these consolidated financial statements set out below have been consistently applied to all the periods presented.

(1) Compliance statement

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC (collectively, referred herein as the “IFRSs”).

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(2) Basis of preparation

• A.Except for the following items, these consolidated financial statements have been prepared under the historical cost convention ：

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss

• (b) Financial assets at fair value through other comprehensive income.

• (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

• B.The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A.Basis for preparation of consolidated financial statements

• (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

• (b) Transactions, balances and unrealized gains and losses between companies within the Group have been eliminated. The accounting policies of subsidiaries have been adjusted as necessary to be consistent with the policies adopted by the Group.

• (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

• (d) If the changes in the shares of the subsidiaries do not result in a loss of control (transactions with non-controlling interests), they are treated as equity transactions, that is, transactions between the owners. The difference between the adjustment amount of non-controlling interests and the fair value of the consideration paid or receivable is recognized directly in equity.

• (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. The accounting principles of all amounts previously recognized in other comprehensive income in relation to the subsidiary shall be as same as the basis of dispose of related assets or liabilities, which means any gain or loss previously recognized as other comprehensive income upon disposal of the related assets or liabilities will be reclassified to profit or loss when control of the subsidiary is lost.

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B.Subsidiaries included in the consolidated financial statements:

Investor	Subsidiary			Ownership (%)	Ownership (%)
		Main Business
Name	Name	Activities	December 31,	2022	December 31, 2021	Explanation
Tecom Co.,	Baycom Opto-Electronics	Research, manufacture and sales of optical	43.76		43.76	Note 1
LTD.	Technology Co.,	fiber communication
	Ltd.	systems and optical
		fibers, optical fiber
		cables and their
		components
	Tecom Global	Investment	-		-	Note 2
Tecom Co.,	Tech Investment
LTD.	Pte Limited
	Tecom Global	Investment	100.00		100.00
Tecom Co.,	Tech Investment
LTD.	(B.V.I.) Limited
Tecom Global	Wu Han Tecom	Technology	100.00		100.00
Tech Investment	Co., Ltd.	development,
(B.V.I.) Limited		production, sales and
		technical service
		business of
		communication
		network information
		related products

• Notes 1 ： As of December 31, 2022 and 2021, the Company had full board seats of Baycom Opto-Electronics Technology Co., Ltd. And had control power. Although it did not directly or indirectly hold more than half of the voting shares, it was regarded as a subsidiary.

Notes2 ： The business has completed the legal deregistration procedure in November 2021.

• 3.Subsidiaries not included in the consolidated financial statements: None.

• 4.Adjustments for subsidiaries with different balance sheet dates: None.

• 5.Significant restrictions: None.

• 6.Subsidiaries that have non-controlling interests that are material to the Group ：

The total non-controlling interest of the Group as of December 31, 2022 and 2021 was respectively was respectively$263,948 and $252,067. The information on non-controlling interest and respective subsidiaries is as follows:

Subsidiary Names Baycom Opto-Electronics Technology Co., Ltd.	Principal Place of business Taiwan	Non-controlling interest December 31, 2021 December 31, 2021 Amount Ownership (%) Amount Ownership (%) Note $ 263,948 56.24% $ 252,067 56.24%
		Amount $ 263,948

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Summarized financial information of the subsidiary ：

Balance sheets

Current assets Non-current assets Current liabilities Non-current liabilities Total net assets	Baycom Opto-Electronics Technology Co., Ltd. December 31, 2022 December 31, 2021 $ 393,460 $ 383,083 162,568 163,719 ( 72,899) ( 78,784) ( 13,777) ( 19,791) $ 469,352 $ 448,227

Statements of comprehensive income (loss)

Revenue Net profit before tax Income tax expense Net profit, current Other comprehensive (profit) income, net of tax Total comprehensive (loss) loss for the period Total comprehensive (profit) loss attributable to non-controlling interests Dividends paid to non-controlling interests Statements of cash flows Net cash flows from operating activities Net cash inflows (outflows) from investing activities Net cash (outflow) inflow from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Net cash flows from financing activities	Baycom Opto-Electronics Technology Co., Ltd. 2022 2021 $ 330,601 $ 283,092 49,768 27,818 ( 8,488) ( 5,210) 41,280 22,608 - - $ 41,280 $ 22,608 $ 23,214 $ 12,714 $ 11,333 $ 5,669 Baycom Opto-Electronics Technology Co., Ltd. 2022 2021 $ 101,866 $ 25,272 85,307 ( 1,986) ( 11,092) ( 15,925) 176,081 7,361 59,360 51,999 $ 235,441 $ 59,360	Baycom Opto-Electronics Technology Co., Ltd. 2022 2021 $ 330,601 $ 283,092 49,768 27,818 ( 8,488) ( 5,210) 41,280 22,608 - - $ 41,280 $ 22,608 $ 23,214 $ 12,714 $ 11,333 $ 5,669 Baycom Opto-Electronics Technology Co., Ltd. 2022 2021 $ 101,866 $ 25,272 85,307 ( 1,986) ( 11,092) ( 15,925) 176,081 7,361 59,360 51,999 $ 235,441 $ 59,360
		$ 25,272 ( 1,986) ( 15,925) 7,361 51,999 $ 59,360

(4). Foreign currency translation

The financial statements of each individual consolidated entity were expressed in the currency which reflected its primary economic environment (functional currency).The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.

Foreign currency transactions and balances

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• 1.Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

• 2.Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

• 3.Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• 4.All foreign exchange gains and losses are presented in the statement of comprehensive income within “other gains and losses”.

• (5). Classification of current and non - current items

• 1.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (1) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

  • (2) Assets held mainly for trading purposes;

  • (3) Assets and liabilities to be realized within the next twelve months;

  • (4) Cash or cash equivalents, except those that are restricted to exchanging or settling liabilities within at least twelve months after the date of the balance sheet;

The Group classifies all assets not meeting the above criteria as non-current assets.

• 2.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (1) Liabilities that are expected to be settled within the normal operating cycle;

• (2) Liabilities arising mainly from trading purposes;

• (3) Those expected to be settled within twelve months after the balance sheet date;

• (4) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

The Group classifies all liabilities not meeting the above criteria as non-current liabilities.

• (6). Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the above criteria and are held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents.

(7). Financial assets at fair value through profit or loss

• 1.Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income.

• 2.On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.

• 3.At initial recognition, the Group measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

• 4.The Group recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of

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the dividend can be measured reliably.

• (8). Financial assets at fair value through other comprehensive income

• 1.Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive.

• 2.On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.

• At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value. The cumulative gain or loss recognized in other comprehensive income when equity instruments are measured at fair value with changes recognized in other comprehensive income shall not be reclassified to profit or loss upon derecognition, but instead shall be transferred to the “retained earnings” item. The right to receive dividends is established and the related economic benefits are likely to flow into the Group and the amount of dividends can be reliably measured, the Group will recognize dividend income in the profit and loss.

• (9). Financial assets at amortized cost

• 1.Financial assets at amortized cost is those that meet all of the following criteria:

  • (1) The objective of the Group’s business model is achieved by collecting contractual cash flows. (2) The assets’ contractual cash flows represent solely payments of principal and interest.

• 2.On a regular way purchase or sale basis, financial assets at amortized cost are recognized and derecognized using trade date accounting.

• 3.At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.

• 4.The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

• 5.The bank deposit which is subject to restriction on use does not meet the definition of cash and cash equivalents, and is classified as financial assets measured at amortized cost.

• (10). Accounts and notes receivable

• 1.Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• 2.The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

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(11). Impairment of financial assets

For debt instruments measured financial assets at amortized cost including accounts receivable that have a significant financing component, at each balance sheet date, the Group recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognizes the impairment provision for lifetime ECLs.

(12). Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to receive cash flows from the financial asset has expired.

– (13). Leasing arrangements operating lease

Lease income from an operating lease net of any incentives given to the lessee is recognized in profit or loss on a straight-line basis over the lease term.

(14). Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item-by-item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs of related variable selling expenses.

(15). Investments accounted for under the equity method / associates

• 1.Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.

• 2.The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• 3.When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.

• 4.Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• 5.In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of. If the associated enterprises still have a significant impact, only the amount previously recognized in other comprehensive income shall be transferred out proportionately in the manner described above.

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(16). Property, plant and equipment

• 1.Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

• 2.Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• 3.Plant and equipment that apply cost model are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each component of property, plant and equipment that is significant in relation to the total cost of the item is depreciated separately.

• 4.The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change.

The estimated useful lives of property, plant and equipment are as follows:

Buildings	25～55 years
Machinery and equipment	3～5 years
Computer and communication equipment	3～5 years
Other equipment	2～5 years

(17). Lessee 's lease transactions － Right - of - use Assets / Lease liability

• 1.The Company recognizes right-of-use assets and lease liabilities for all leases at the inception of the lease. When a lease contract is a short-term lease or a lease of a low-value underlying asset, the lease payments are recognized as an expense on a straight-line basis over the lease term.

• 2.Lease liabilities are recognized at the present value of the lease payments outstanding at the inception of the lease, discounted at the Company's incremental borrowing rate of interest. Lease payments are fixed payment rental payments.

• 3.Right-of-use assets are recognized at cost at the inception of the lease, which is the original measurement of lease liabilities and any original direct costs incurred.

When measuring subsequent costs, depreciation expenses shall be recorded at the earlier date of the end of the useful life of the right-of-use asset or the end of the lease term. When re-evaluating lease liabilities, any re-measurement amounts of lease liabilities shall be adjusted accordingly with the right-of-use asset.

(18). Intangible assets

Intangible assets including computer software and technology are amortized on a straight-line basis over its estimated useful life of 1 to 3 years.

(19). Impairment of non - financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior periods no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

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(20). Borrowings

• 1.Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

• When it is likely that some or all of the credit limit will be drawn down, the cost incurred at the establishment of the limit is recognized as transaction costs of the loan and deferred to be recognized as an adjustment to the effective interest rate when advances are made; when it is unlikely that some or all of the credit limit will be drawn down, the cost is recognized as a prepayment and amortized over the period related to the limit.

(21). Notes and accounts payable

• 1.Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• 2.The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(22). Derecognition of financial liabilities

A financial liability is derecognized when the obligation specified in the contract is either discharged or cancelled or expires.

(23). Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

• (24). Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(25). Employee benefits

• 1.Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expense in that period when the employees render service.

• 2.Pensions

• (1) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expense when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

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• (2) Defined benefit plans

  • A. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of highquality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.

  • B. Remeasurements arising on defined benefit plan are recognized in other comprehensive income in the period in which they arise and are recorded as retaining earning.

• Employees’ compensation and directors’ and supervisors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(26). Income tax

• 1.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

• 2.The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• Deferred income tax is recognized, using the balance sheets liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the end of the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

• Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At the end of the balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.

• Current income tax assets and liabilities are offset and the net amount is reported in the balance sheets when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheets when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

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1. A deferred tax asset shall be recognized for the carryforward of unused tax credits to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

2. (27). Share capital

3. 1.Equity is classified in ordinary shares. The classification of special shares is based on the evaluation of the specific rights attached to the special shares in relation to the substance and definition of the contractual agreement and financial liabilities and equity instruments. When the basic characteristics of financial liabilities are displayed, they are classified as liabilities, otherwise they are classified as equity. The net amount after deducting income tax from the increase in costs directly related to the issuance of new shares is listed in equity as a price deduction.

4. When the Company repurchases the issued shares, the consideration paid shall be recognized as a reduction of shareholders’ equity after netting off any directly attributable incremental costs. When the repurchased shares are reissued, the difference between the sales proceeds received and the carrying amount, net of any directly attributable incremental costs and any related income taxes, shall be recognized as an adjustment to equity.

5. (28). Revenue recognition

6. 1.Sales of goods

   • (1) The Group is engaged in manufacture and sales of communication systems, smart electromechanical and optical fiber related products. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer ’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

   • (2) Revenue from the sale is recognized based on the price specified in the contract, net of the estimated volume discounts and sales discounts. Historical experience is usually used to estimate the discounts and returns. A refund liability is recognized at expected sales discounts payable to customers in relation to sales made until the end of the reporting period. The sales are made mainly with a credit term of open account 30 to 120 days. As the time interval between the transfer of committed goods or services and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.

   • (3) The Group’s obligation to provide a repair for faulty products under the standard warranty terms is recognized as a provision.

   • (4) A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

   • (5) If the customer pays the contract price according to the payment terms agreed upon, if the customer pays in advance before the transfer of goods control, it shall be recognized as a contract liability and recognized as income after the transfer of goods control.

7. 2.Costs of obtaining contracts with customers

Although the incremental costs incurred in obtaining customer contracts are expected to be recoverable, as the related contract period is less than one year, such costs are expensed upon occurrence.

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(29). Government subsidy

When the government subsidy is reasonably certain that the Company will comply with the additional conditions of the subsidy and will be recognized according to fair value when receiving the subsidy, if the nature of the government subsidy is to compensate for the expenses incurred by the group, the government subsidy will be recognized as the current period income or loss on the basis of a systematic basis in the period of related expenses.

(30). Operating segments

Operating segments are reported in a manner consistent with the internal management reports provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS ON UNCERTAINTY

When preparing these consolidated financial statements, the management has exercised its judgment to determine the accounting policies adopted and has made accounting estimates and assumptions based on reasonable expectations of future events, considering the circumstances as of the balance sheet date. Significant accounting estimates and assumptions may involve inherent uncertainties and could differ from actual results. The management will continue to evaluate and adjust these estimates and assumptions based on historical experience and other factors. Such estimates and assumptions carry a risk of significant adjustments to the carrying amounts of assets and liabilities in the next financial year. Please refer to the following explanation regarding the uncertainties associated with significant accounting judgments, estimates, and assumptions:

(1) Critical judgments in applying the Group ’s accounting policies

None.

• (2) Critical accounting estimates and assumptions

• 1.Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date based on judgments and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value.

As of December 31, 2022 the book value of the Group’s inventories was $192,213.

1. Availability of deferred tax assets

When assessing the recoverability of deferred tax assets, significant accounting judgments and estimates must be made by management, including assumptions about expected future sales growth and profit margins. Any changes in the global economic and industry environment may lead to a significant adjustment to deferred tax assets.

On December 31, 2022, the deferred tax asset recognized by the Group was $115,981.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand Checking accounts and demand deposits Cash equivalents - Time deposits	December 31, 2022 $ 270 46,677 218,357 $ 265,304	December 31, 2021 $ 257 137,041 46,358 $ 183,656

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• 1.The Group transacts with a variety of financial institutions with high credit quality for the purpose of dispersing credit risk, so it expects that the probability of counterparty default is low.

• 2.The information of cash classified as "Financial assets at amortized cost" due to restrictions on use is stated in Note 8.

(2) Financial assets at fair value through profit or loss

Assets Current items: Financial assets mandatorily measured at fair value through profit or loss Beneficiary certificates Fair value adjustments	December 31, 2022 $ 10,473 20 $ 10,493	December 31, 2021
		$ 71,737 1,899 $ 73,636

Amounts recognized in profit in relation to financial assets at fair value through profit or loss are listed below:

Financial assets and mandatorily measured at fair value through profit or loss Beneficiary certificates	2022 $ 1,699	2021 $ 1,834

(3) Financial assets at fair value through other comprehensive income

Items Current items: Equity instruments Listed stocks Fair value adjustments subtotal Non-current items: Equity instruments Listed and OTC stocks Unlisted and non-OTC stocks Fair value adjustments subtotal Total	December 31, 2022 $ 35,722 ( 3,725) 31,997 400,000 22,823 422,823 44,329 467,152 $ 499,149	December 31, 2021
		$ 56,538 ( 8,746) 47,792 506,859 72,823 579,682 ( 56,106) 523,576 $ 571,368

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• 1.The Group has elected to classify equity investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. As of December 31, 2022 and 2021 the fair value above is respectively $499,149and $571,368.

• Amounts recognized in profit or loss in relation to the financial assets at fair value through other comprehensive income is listed below:

2022 Fair value through other comprehensive income Equity Instruments for Value Measurement Recognized in other comprehensive income changes in fair value ($ 27,713) The accumulated loss is transferred to the accumulated loss when the difference in the carrying amount of an asset and its disposal proceeds is recognized ($ 133,170) Dividend income recognized in profit or loss Hold at the end of the current period $ 12,452 Exclude during the period 2,295 $ 14,747	2021 ($ 19,538) $ -
	$ 18,798 -
	$ 18,798

• 3.Details of the Group’s financial assets at fair value through other comprehensive income pledged to others are provided in Note 8.

(4) Financial assets at amortized cost

Items Current items: Demand deposit Time deposits Total	December 31, 2022 $ 22,557 272,524 $ 295,081	December 31, 2021 $ 35,760 298,788 $ 334,548

• 1.Amounts recognized in profit or loss in relation to financial assets at amortized cost are listed below:

Interest income	2022 $ 3,740	2021
		$ 907

• 2.Under the assumption that no other credit enhancements are in place, the maximum credit risk of financial assets measured at amortized cost, as of December 31, 2022 and 2021, is $295,081 and $334,548, respectively.

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1. As of December 31, 2022 and 2021, the Group provide Financial assets measured at amortized cost with others for pledge guarantee, which amount is $247,074 and $237,618, respectively.Refer to notes 8.

2. 4.The Group's investment in time deposits is with financial institutions of good credit quality and the expected default risk is extremely low. Refer to notes 12(2).

3. (5) Notes and Accounts receivable (including from related party)

Notes receivable Notes receivable from related party Less: Loss allowance Accounts receivable Accounts receivable from related party Less: Loss allowance	December 31, 2022 $ 26,464 2,220 - $ 28,684 $ 154,106 11,996 ( 560) $ 165,542	December 31, 2021 $ 51,204 109 - $ 51,313 $ 150,894 17,621 ( 622) $ 167,893

• 1.The ageing analysis of notes and accounts receivable is as follows:

December 31, 2022 Accounts receivable Notes receivable Not past due $ 149,768 $ 28,684 Less than 30 days past due 16,097 - Between 31 and 90 days past due 28 - Between 91 and 180 days past due 149 - More than 181 days past due 60 - $ 166,102 $ 28,684	December 31, 2021 Accounts receivable Notes receivable $ 157,410 $ 51,313 8,635 - 2,233 - 237 - - - $ 168,515 $ 51,313	December 31, 2021 Accounts receivable Notes receivable $ 157,410 $ 51,313 8,635 - 2,233 - 237 - - - $ 168,515 $ 51,313
	Accounts receivable $ 157,410 8,635 2,233 237 - $ 168,515
		$ 51,313 - - - - $ 51,313

The aging analysis is based on the number of days overdue.

1. The accounts receivable and notes receivable on December 31, 2022 and 2021 were due to the customer contract. As of January 1, 2021 the account receiables was $184,018 from customer contract.

2. Without considering other credit enhancements, the exposure amount that best represents the maximum credit risk of the group's bills receivable on December 31, 2022 and 2021 was $28,684 and $51,313, respectively. The exposure amount that best represents the maximum credit risk of the group's accounts receivable on December 31, 2022 and 2021 was $165,542 and$167,893, respectively.

3. 4.Information about credit risk of notes and accounts receivable is provided in Note 12(2).

~30~

(6) Inventories

Merchandise Finished goods Work in process Raw materials		December 31, 2022	Book Value $ 229 93,385 13,377 85,222 $ 192,213
	Cost $ 8,736 113,288 14,018 117,428 $ 253,470	Loss allowance ($ 8,507) ( 19,903) ( 641) ( 32,206) ($ 61,257)

Merchandise Finished goods Work in process Raw materials		December 31, 2021
	Cost $ 26,544 101,822 12,036 124,874 $ 265,276	Loss allowance ($ 8,202) ( 20,299) ( 304) ( 30,266) ($ 59,071)	Book Value $ 18,342 81,523 11,732 94,608 $ 206,205

Expenses and losses incurred from inventories for the years ended are as follows:

Cost of inventories sold Maintenance costs Allowance for inventory valuation (turnover profit) Others	2022 $ 734,672 1,154 2,186 12,747 $ 750,759	2021 $ 814,301 1,660 ( 512) 12,784
		$ 828,233

The Group’s inventory turnover profit was affected by the devaluation and stagnation of inventory in 2021.

(7) Investments accounted for using equity method

2022 At January 1 $ 15,771 Share of profit or loss of investments accounted for using equity method 2,627 Earnings distribution of investments accounted for using equity method ( 1,512) Adjustment not recognized according to shareholding ratio 10 At December 31 $ 16,896	2021 $ 9,847 2,916 ( 540) 3,548 $ 15,771

~31~

Associate： Tecnos International Consulting Co., Ltd. Teco Tour Travel Service co., ltd. Taian Technology Sdn. Bhd. A-Tel Inc. E-Joy International Co., Ltd.	December 31, 2022 $ 9,412 1,669 3 - 5,812 $ 16,896	December 31, 2021 $ 9,097 1,833 3 - 4,838 $ 15,771

1. The Group has no individual major related companies.

2. 2.Aggregate information of the group's individual insignificant related companies was as follows:

Loss from continuing operations Other comprehensive income (net after tax) Total comprehensive loss for the year	2022 ($ 3,922) - ($ 3,922)	2021 ($ 1,715) -
		($ 1,715)

(8) Property, plant and equipment

2022

		2022
Buildings At January 1 Cost $ 178,965 Accumulated depreciation and impairment ( 98,350) $ 80,615 At January 1 $ 80,615 Additions - Disposals - Depreciation expense ( 3,223) At December 31 $ 77,392 At December 31 Cost $ 178,965 Accumulated depreciation and impairment ( 101,573) $ 77,392	Machinery and equipment $ 12,418 ( 8,539) $ 3,879 $ 3,879 4,438 - ( 1,718) $ 6,599 $ 11,751 ( 5,152) $ 6,599	Test equipment $ 1,419 ( 1,185) $ 234 $ 234 270 - ( 210) $ 294 $ 350 ( 56) $ 294	Other equipment $ 14,719 ( 7,528) $ 7,191 $ 7,191 4,576 ( 6) ( 3,951) $ 7,810 $ 13,953 ( 6,143) $ 7,810	Total $ 207,521 ( 115,602) $ 91,919
				$ 91,919 9,284 ( 6) ( 9,102) $ 92,095
				$ 205,019 ( 112,924) $ 92,095

~32~

2021

		2021
Buildings At January 1 Cost $ 178,965 Accumulated depreciation and impairment ( 95,128) $ 83,837 At January 1 $ 83,837 Additions - Disposals - Depreciation expense ( 3,222) At December 31 $ 80,615 At December 31 Cost $ 178,965 Accumulated depreciation and impairment ( 98,350) $ 80,615	Machinery and equipment $ 28,586 ( 23,545) $ 5,041 $ 5,041 1,800 - ( 2,962) $ 3,879 $ 12,418 ( 8,539) $ 3,879	Test equipment $ 9,624 ( 9,042) $ 582 $ 582 80 - ( 428) $ 234 $ 1,419 ( 1,185) $ 234	Other equipment’s $ 17,884 ( 9,764) $ 8,120 $ 8,120 2,423 ( 48) ( 3,304) $ 7,191 $ 14,719 ( 7,528) $ 7,191	Total $ 235,059 ( 137,479) $ 97,580
				$ 97,580 4,303 ( 48) ( 9,916) $ 91,919
				$ 207,521 ( 115,602) $ 91,919

• 1.The major components of the building and construction of the Group are buildings, which are depreciated according to the 55-year list, and the rest are decoration projects, which are depreciated according to the 25-year list.

• 2.In reference to the information provided by the real estate and factory as collateral, please refer to the explanation in Note 8.

(9) Right - of- use - assets

• 1.The subject assets leased by the Group include land, buildings and official vehicles, etc., and the lease period considers the priority of renewal rights and the period of the contract is usually between 1 to 23 years. The lease contract is negotiated individually and includes various terms and conditions. In addition to the leased assets not being used as collateral for borrowing, there are no other restrictions.

• 2.The book value of right-of-use assets and depreciation expense of recognized are shown as below:

Book Value

Land Building Transportation equipment (official car)	December 31, 2022 $ 178,030 4,914 857 $ 183,801	December 31, 202 1
		$ 186,270 7,393 1,346 $ 195,009

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Depreciation expense

Land Building Transportation equipment (official car)	2022 $ 8,094 5,867 490 $ 14,451	2021 $ 8,099 5,823 553
		$ 14,475

• 3.The amount of group increasing the right-of-used assets were $3,573 and $6,049.

• 4.The profit and loss information of lease contract is shown as below:

Items affecting current profit and loss Interest expense on the lease liability Expenses for short-term rental contracts Expenses for the lease of low-value assets Gain arising from lease modification	2022 $ 4,952 $ 1,149 $ 450 $ 32	2021
		$ 5,135 $ 1,517 $ 387
		$ -

1. The Group leased out cash flows in the fiscal year 2022 and 2021, respectively, for a total of $19,232 and $19,660.

2. 6.When determining the lease term, all facts and circumstances that would give rise to economic incentives for the exercise of any extension options were taken into consideration. If a significant event occurs that affects the evaluation of exercising any extension options, the lease term will be re-estimated.

(10) Intangible assets

At January 1 Cost Accumulated amortization At January 1 Additions Amortization At December 31 At December 31 Cost Accumulated amortization		2022
	Computer software $ 9,577 ( 7,892) $ 1,685 $ 1,685 1,854 ( 1,874) $ 1,665 $ 10,115 ( 8,450) $ 1,665	Technology $ 2,073 ( 403) $ 1,670 $ 1,670 - ( 691) $ 979 $ 2,073 ( 1,094) $ 979	Total $ 11,650 ( 8,295) $ 3,355 $ 3,355 1,854 ( 2,565) $ 2,644 $ 12,188 ( 9,544) $ 2,644

~34~

2021

		2021
At January 1 Cost Accumulated amortization At January 1 Additions Amortization At December 31 At December 31 Cost Accumulated amortization	Computer software $ 9,764 ( 9,090) $ 674 $ 674 2,645 ( 1,634) $ 1,685 $ 9,577 ( 7,892) $ 1,685	Technology $ - - $ - $ - 2,073 ( 403) $ 1,670 $ 2,073 ( 403) $ 1,670	Total
			$ 9,764 ( 9,090) $ 674
			$ 674 4,718 ( 2,037) $ 3,355 $ 11,650 ( 8,295) $ 3,355

The details of amortization are as follows ：

Operating costs Selling expenses Administrative expenses Research and development expenses	2022 $ 263 199 729 1,374 $ 2,565	2021 $ 279 111 805 842
		$ 2,037

(11) Short - term borrowings

Type of borrowings Bank borrowings Secured borrowings Credit borrowings Type of borrowings Bank borrowings Secured borrowings Credit borrowings (including dollar loan USD 1,919 thousand)	December 31, 2022 $ 460,000 295,000 $ 755,000 December 31, 2021 $ 180,000 343,112 $ 523,112	Interest rate range 1.40%~1.97% 2.12%~2.892% Interest rate range 0.85% 0.94%~2.20%	Collateral
			Note 8 none Collateral
			Note 8 none

The interest expenses recorded in the income statement for the Group's long-term and short-term loans for the years 2022 and 2021 were respectively $18,939 and $16,525.

~35~

(12) Accounts payable(including related parties)

(13)	Accounts payable Accrued of accounts payable Other payables Payables for salaries Others	December 31, 2022 $ 115,134 1,975 $ 117,109 December 31, 2022 $ 37,832 30,273 $ 68,105	December 31, 2021
			$ 188,406 5,152
			$ 193,558
			December 31, 2021
			$ 34,613 34,833
			$ 69,446

(14) Other current liabilities

Refund liability Others	December 31, 2022 $ 5,527 1,447 $ 6,974	December 31, 2021 $ 5,493 1,431 $ 6,924

• (15) Long term borrowings

Borrowing period Type of borrowing and repayment term Interest rate range Collatera l December 31, 2022 December 29, 2021~ December 29, 2024.Interests shall be paid monthly, and the principal shall be repaid at Bank Secured Borrowings maturity. 2.17% Note 8 200,000 - Less: Current portion Subtotal $ 200,000 Borrowing period Type of borrowing and repayment term Interest rate range Collatera l December 31, 2021 June 25, 2019~ June 25, 2022. Interests shall be paid monthly, and the principal shall be repaid 10,000 thousand in 5 installment payments, with each installment period being every 6 months starting from June 25th, 2019, and the remainder repaid Bank Secured Borrowings at maturity. 1.75% Note 8 $ 280,000 December 29, 2021~ December 29, 2024.Interests shall be paid monthly, and the principal shall be repaid at Bank Secured Borrowings maturity. 1.80% Note 8 200,000 Subtotal 480,000 Less: Current portion ( 280,000) $ 200,000

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(16) Other non - current liabilities

Accrued pension liabilities Deposits received	December 31, 2022 $ 54,499 1,078 $ 55,577	December 31, 2021 $ 66,236 70
		$ 66,306

(17) Pensions

• 1.(1) The Company has a defined benefit pension plan in accordance with the Labor Standards Law of Taiwan, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

• (2) The amounts recognized in the balance sheets are as follows:

The amounts recognized in the balance sheets are as follows:	The amounts recognized in the balance sheets are as follows:	The amounts recognized in the balance sheets are as follows:
December 31, 2022 December 31, 2021 Present value of allocated defined benefit obligations ($ 80,836) ($ 83,138) Fair value of plan assets 25,524 16,109 Net defined benefit liability ( 55,312) ( 67,029) Cumulative Unadjusted Amount 813 793 Net liabilities recognized on the balance sheet ($ 54,499) ($ 66,236) Movements in net defined benefit liabilities are as follows: 2022 Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability At January 1 ($ 83,138) $ 16,109 ($ 67,029) Current period service costs ( 347) 113 ( 234) Interest expense (income) ( 582) - ( 582) ( 84,067) 16,222 ( 67,845) Remeasurements Actuarial gains and losses arising from changes in financial assumptions 2,899 - 2,899 Experience adjustments ( 766) 800 34 2,133 800 2,933 Pension fund contribution - 9,600 9,600 Paid pension 1,098 ( 1,098) - At December 31 ($ 80,836) $ 25,524 ($ 55,312)			December 31, 2021 ($ 83,138) 16,109 ( 67,029) 793 ($ 66,236)
	Present value of defined benefit obligations	Fair value of plan assets		Net defined benefit liability
		$ 16,109 113 - 16,222 - 800 800 9,600 ( 1,098) $ 25,524		($ 67,029) ( 234) ( 582) ( 67,845) 2,899 34 2,933 9,600 - ($ 55,312)

(3) Movements in net defined benefit liabilities are as follows:

~37~

2021

		2021
Present value of defined benefit obligations At January 1 ($ 85,702) Current period service costs ( 355) Interest expense (income) ( 258) ( 86,315) Remeasurements Actuarial gains and losses arising from changes in demographic assumptions ( 58) Actuarial gains and losses arising from changes in financial assumptions 2,675 Experience adjustments 560 3,177 Pension fund contribution - Paid pension - At December 31 ($ 83,138)	Present value of defined benefit obligations	Fair value of plan assets	Net defined benefit liability
		$ 6,458 - 20 6,478 - - 31 31 9,600 - $ 16,109	($ 79,244) ( 355) ( 238) ( 79,837) ( 58) 2,675 591 3,208 9,600 - ($ 67,029)

• (4) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings are less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2022 and 2021 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

• (5) The principal actuarial assumptions used are as follows:

The principal actuarial assumptions used are	as follows:
Discount rate Future salary increases rate	2022 1.20% 1.70%	2021
		0.70%
		1.70%

~38~

The assumption of future mortality is estimated based on the sixth empirical life table in Taiwan.

The analysis of the present value of the definite benefit obligations changes in the main assumptions adopted is as follows:

assumptions adopted is as follows:
Discount rate Increase1% Decrease1% December 31, 2022 Effect on Present value of defined benefit obligations ($ 5,577) $ 5,723 December 31, 2021 Effect on Present value of defined benefit obligations ($ 6,305) $ 6,485	Future salary increases rate
	Increase1% $ 4,874 $ 5,573	Decrease1% ($ 4,780) ($ 5,455)

The sensitivity analysis above is based on the analysis of the impact of a single assumption change with other assumptions are unchanged.

The method and assumptions used in the sensitivity analysis in this period are the same as those in the previous period

• (6) The Group plan to pay $9,600 to the retirement plan in 2023.

• (7) As of December 31, 2022, the weighted average duration of the retirement plan is 7 years. The Group plan to pay pension $4,322 in 2023.

• (1) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (New Plan) under the Labor Pension Act, covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (2) The Company’s mainland subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China are based on a certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

• (3) The pension costs under the defined contribution pension plans of the Group were $10,769 and $10,412 for the years ended December 31, 2022 and 2021, respectively.

(18) Common shares

1. As of December 31, 2022, the Company’s authorized capital was $9,450,000 (including 20,000 thousand shares which for employee stock option), and the paid-in capital was $142,719 and preferred stock $160,000, with a par value of $10 (in dollars) per share . All proceeds from shares issued have been collected.

The Group’s outstanding shares are shown as below:(Unit ： share)

At January 1 Accumulated deficit At December 31	2022 44,599,774 ( 30,327,846) 14,271,928	2021
		44,599,774 - 44,599,774

The Group’s outstanding preferred stock shares are shown as below:(Unit ： share)

At January 1 Accumulated deficit At December 31	2022 50,000,003 ( 34,000,002) 16,000,001	2021
		50,000,003 - 50,000,003

~39~

In order to improve the financial structure, the shareholders’ meeting on November 16[t h] 2022 passed a resolution to reduce the capital and cancel the accumulated losses of $643,278. The shares of 30,328 thousand common shares and 34,000 thousand preferred shares were cancelled with a par value of NT$10 per share, and the reduction rate was 68%. This reduction was approved by the competent authority on December 6th of 2022, and the reduction standard date was set to December 8th of 2022.

1. On October 12, 2012, the Company passed a resolution at the Extraordinary Meeting of Shareholders to handle the cash capital increase of convertible preferred shares through private placement. The purpose of the cash capital increase is to increase working capital. The number of private placement shares is 333,333,350 shares, and the subscription price per share is $1.5. The case has raised $500,000, and the change registration has been completed. The main rights and obligations of this private placement of convertible preferred shares are shown as below:

2. (1) The dividends of preferred shares are not cumulative.

3. (2) The preferred stock dividends shall be paid first, which are calculated at an annual interest rate of 3% based on the issue price, and then the Company distributes dividends to ordinary shareholders.

4. (3) Except when the dividend of ordinary shares distributed in the year of the above dividend receipt exceeds 3% of the face value, special shares shall not participate in the distribution of ordinary shares' earnings or capital reserves before the conversion.

5. (4) The issuance period of this preferred stock is five years. After the period, if the shareholders do not perform the conversion, the preferred stock dividend has been changed to "3% annual interest and can be accumulated"

6. (5) The shareholders who held the preferred share have the right to vote, the right to be elected, and the right to be elected.

7. (6) When the Company issues new shares by cash, preferred shareholders have the same preemptive stock options as ordinary shareholders

8. (7) When the Company distribute the remaining property, the preferred shareholders have the same order and percentage as ordinary shareholders.

9. (8) According to Article 68 of the Regulations Governing the Offering and Issuance of Securities by the Issuer, the private placement special shares issued can apply for public offering after three years from the date of delivery of private placement securities.

10. (9) The preferred shareholders have not right to sell back.

11. (10) Investors may submit conversion applications to the issuing company at any time, except for suspension period, since the issuance of preferred shares two years. Each preferred shares shall be converted into 1 ordinary share.

12. (11) The Board of Directors is authorized to formulate the issuance, conversion, and other related matters of preferred shares in accordance with the relevant laws and regulations.

13. (12) If the Company reduce the capital and the shares shall reduce based on the proportion of shares, the accumulated dividend rights of special shares before the capital reduction will not be eliminated due to the capital reduction. After the capital reduction, the dividends shall be accumulated according to the number of shares.

14. 3.Treasury stock

The Group and subsidiary BAYCOM OPTO-ELECTRONICS TECHNOLOGY CO., LTD. held 136,000 shares (after capital reduction in 2022) and 426,000 shares on December 31, 2022 and 2021 respectively according to the group's strategic investment plan shares, the average book value per share is $ 32.37, and the fair value per share was $6.01 and $6.60, respectively.

~40~

(19) Capital surplus

Pursuant to the R.O.C. Company Act, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

At January 1 Changes in equity of associates and joint ventures accounted for non under the equity method At December 31	2022 Net change in equity of associates $ 6,227 10 $ 6,237	2021
		Net change in equity of associates $ 2,679 3,548 $ 6,227

(20) Retained earnings(accumulated deficits)

1. Under the Article of Incorporation, the annual net income of the Company shall be appropriated in accordance with the priorities listed as follows:

2. (1) Tax payment.

3. (2) Recovery of losses.

4. (3) Appropriation of 10% for legal reserve unless the total legal reserve accumulated has already reached the amount of Groups’ authorized capital.

5. (4) Appropriation or reversal of special reserve pursuant to applicable law or regulation.

6. (5) Distribution of preferred stock dividend

7. (6) The Board of Directors proposes to the shareholders’ resolutions to distribute the amount of the net profit, which includes the balance of the undistributed profit from the previous year, as dividends to the shareholders.

8. The Company’s dividend distribution policy is subject to the Company’s current and future investment environment, fund requirements, competition from local and abroad, and capital budgets, as well as taking into consideration the interests of shareholders, balance dividend, and the long-term financial planning. The Board of Directors shall prepare a proposal for the distribution of dividends to shareholders each year in accordance with the law. The proportion of cash dividends distributed from the aforementioned shareholders' dividends each year shall not exceed 50%, but shall not be lower than 5%. However, this dividend distribution policy can be adjusted by the Board of Directors after resolution and submitted to the shareholders’ meeting for resolution according to the actual operating conditions.

9. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.

10. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

11. 5.The accumulated deficits off-set for 2020 were approved through electronic voting in the shareholders’ meeting on July 22, 2021.

12. 6.The accumulated deficits off-set for 2021 were approved in the shareholders’ meeting on June 15, 2022.

~41~

(21) Operating revenue

Revenue from contracts with customers	2022 $ 1,010,890	2021
		$ 1,070,339

• 1.Disaggregation of revenue from contracts with customers

The Group revenue divided into major product lines and geographical regions as followed: 2022 ：

Segment income Internal revenue External customers contract income	Homemade products Taiwan USA Others $548,616 $ 61,275 $ 92,917 ( 35,427) - ( 29,851) $513,189 $ 61,275 $ 63,066	Homemade products Taiwan USA Others $548,616 $ 61,275 $ 92,917 ( 35,427) - ( 29,851) $513,189 $ 61,275 $ 63,066	Homemade products Taiwan USA Others $548,616 $ 61,275 $ 92,917 ( 35,427) - ( 29,851) $513,189 $ 61,275 $ 63,066	Proxy Products Taiwan $ 42,760 - $ 42,760	Fiber optic cable	Fiber optic cable		Total
		USA			Taiwan $180,946 - $180,946	USA $ 35,533 - $ 35,533	Others $114,121 - $114,121
		$ 61,275 - $ 61,275	$ 92,917 ( 29,851) $ 63,066					$1,076,168 ( 65,278) $1,010,890

2021 ：

Segment income Internal revenue External customers contract income	Homemade products	Homemade products	Others	Proxy Products		Fiber optic cable USA Others $ 16,151 $ 77,148 - - $ 16,151 $ 77,148	Total
	Taiwan	USA $134,666 - $134,666		Taiwan $143,564 - $143,564	Taiwan	USA $ 16,151 - $ 16,151
	$490,494 ( 38,726) $451,768		$ 84,557 ( 27,308) $ 57,249		$189,793 -		$1,136,373 ( 66,034) $1,070,339
					$189,793

2.Contract liabilities

• (1)The Group has recognised the following revenue-related contract liabilities:

	December 31, 2022	December 31, 2021	January 1, 2021
Contract liabilities - Product sale
contract	$ 4,392	$ 3,964	$ 4,968
ontract liabilities at the beginning of the period recognised as			revenues
	2022		2021
Product sale contract	$ 3,794	$	4,545

• (2)Contract liabilities at the beginning of the period recognised as revenues

~42~

(22) Interest income

(23)	Bank deposit interest Other income Rent income Dividend income Government grants (note) Other income	2022 $ 4,838 2022 $ 70 14,747 - 944 $ 15,761	2021 $ 1,224 2021 $ 87 18,798 8,735 9,329 $ 36,949

Note ： In 2022 and 2021, due to the application of the Ministry of Economic Affairs "the Ministry of Economic Affairs handles salary and working capital subsidies for difficult businesses affected by severe special infectious pneumonia", the salary expenses and working capital by government support were recognized as government subsidies Income of $0 and $8,735, respectively.

(24) Other gains (losses)

2022 Losses on disposal of property, plant and equipment ($ 4) Gains on disposal of investments 80 Gains arising from lease modification 32 Foreign currency exchange gain (loss) 20,738 Gains on financial assets at fair value through profit or loss 1,699 Other net loss ( 1,245) $ 21,300	2021 ($ 41) - - ( 3,902) 1,834 ( 1,339) ($ 3,448)

(25) Financial cost

Interest expense	2022 $ 24,106	2021 $ 21,674

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(26) Additional information of expense

Employee benefits expense Property, plant and equipment depreciation expense Right-of-use assets depreciation expense Intangible assets amortization expense	2022 $ 234,931 9,102 14,451 2,565 $ 261,049	2021
		$ 223,618 9,916 14,475 2,037 $ 250,046

(27) Employee benefit expenses

Wages and salaries Labor and health insurance fee Pension cost Other personnel expenses	2022 $ 196,466 16,763 11,585 10,117 $ 234,931	2021 $ 186,526 16,047 11,005 10,040
		$ 223,618

1. According to the Articles of Incorporation, after deducting the accumulated losses according to the profit status of the year, if there is still a balance, the employee remuneration should be 1% to 10%, and the director's remuneration should not be higher than 5%.

2. The amount of Employee Remuneration and Directors' Remuneration in 2022 is $0. The estimated amount of cumulative losses in 2022 is based on the current profit and loss situation. As of December 31,2022 there is an accumulated loss, so the estimated amount is $0, which is consistent with the resolution of the Board of Directors.

3. The employee remuneration and director's remuneration approved by the Board of Directors in 2021 are the same as the amounts recognized in the 2021 financial report. Information on the appropriation of earnings proposed by the Company’s Board of Directors and approved by the Company’s shareholders is available on the Market Observation Post System website of the Taiwan Stock Exchange.

(28) Income tax

• 1.Income tax expenses

• (1) Components of income tax expense:

Current income tax： Current income tax on profits for the year Additional tax on unappropriated earnings Difference between prior year’s income tax estimation and assessed results Total current income tax Income tax expense	2022 $ 9,701 10 ( 1,223) 8,488 $ 8,488	2021 $ 5,581 - ( 371) 5,210 $ 5,210

• (2) Amount of taxes related to other comprehensive income. ： None.

• (3) The amount of income tax on income arising from direct debits or credits to equity. ： None.

~44~

• 2.The relationship between income tax expenses and accounting profit

2022 Tax payables calculated by profit before tax multiplying the enacted tax rates $ 9,961 Tax exempt income based on tax laws ( 715) Creation and reversal of temporary differences 455 Evaluation changes in the realizability of deferred tax assets - Additional tax on unappropriated earnings 10 Overestimation of income tax of prior periods ( 1,223) $ 8,488	2021 $ 7,265 ( 1,902) ( 4,644) 4,862 - ( 371) $ 5,210

1. The amounts of deferred income tax assets or liabilities arising from temporary differences and tax losses are as follows ：

At January 1 Deferred tax assets Temporary differences Allowance for loss on decline in value of inventory $ 473 Tax loss 115,508 $ 115,981 Deferred tax assets Temporary differences Determining the benefit remeasurement ($ 880) At January 1 Deferred tax assets Temporary differences Allowance for loss on decline in value of inventory $ 473 Tax loss 115,508 Deferred tax assets $ 115,981 Deferred tax assets Temporary differences Determining the benefit remeasurement ($ 880)			2022		At December 31
	At January 1	Recognized in	Recognized in Other Comprehensive	Recognized in equity $ - - $ - $ -
		Profit or Loss	Income $ - - $ - $ - 2021
		$ - - $ - $ -			$ 473 115,508 $ 115,981 ($ 880) At December 31
	At January 1	Recognized in	Recognized in Other Comprehensive	Recognized in equity $ - - $ - $ -
		Profit or Loss $ - - $ - $ -	Income $ - - $ - $ -
	$ 473 115,508 $ 115,981 ($ 880)				$ 473 115,508 $ 115,981 ($ 880)

~45~

• 4.Expiration dates of unused taxable loss and amounts of unrecognized deferred income tax assets are as follows:

					December 31,	December 31,	2022
Year incurred 2013 2014 2015 2016 2017 2018 2019 2021 2022	$	Amount filed/assessed 140,434 135,719 278,639 99,269 116,640 62,637 95,985 498,607 22,512 1,450,442		$			Unrecognized deferred income tax assets $ 140,434 135,719 278,639 99,269 116,640 62,637 39,564 - - $ 872,902 2021	Year of expiration 112 113 114 115 116 117 118 120 121
	$						$
Year incurred 2012 2013 2014 2015 2016 2017 2018 2019 2021	$	Amount filed/assessed 250,918 140,434 135,719 278,639 99,269 116,640 62,637 95,985 498,607 1,678,848		$			Unrecognized deferred income tax assets $ 250,918 140,434 135,719 278,639 99,269 116,640 62,637 17,052 - $ 1,101,308		Year of expiration 111 112 113 114 115 116 117 118 120
	$						$

As described in Note 12(4) of the financial statements,The group continue improving the operating condition, thus, part of the deferred tax assets resulting from the tax losses in the current period can be recognized in the future period.

5.Deductible temporary differences of unrecognized deferred tax assets ：

Deductible temporary differences	December 31, 2022 $ 176,114	December 31, 2021
		$ 199,744

• 6.According to the tax authority, the income tax payable on the profits of our company's business for the year 2020 was determined.

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(29) Earnings per share

==> picture [414 x 298] intentionally omitted <==

----- Start of picture text -----

2022
Weighted average Earnings per share
Amount number of ordinary shares outstanding
after tax (shares in thousand) (in dollars)
Basic earnings per share
Profit attributable to
shareholders of the parent $ 9,378
less ： Preferred stock -
Profit attributable to
ordinary shareholders of
the parent $ 9,378 14,136 $ 0.66
2021
Weighted average
number of ordinary shares Earnings per share
Amount
after tax outstanding (shares in thousand) (in dollars)
Basic earnings per share
Profit attributable to
shareholders of the parent $ 5,272
less ： Preferred stock -
Profit attributable to
ordinary shareholders of
the parent $ 5,272 14,136 $ 0.37
----- End of picture text -----

This company reduced the capital to make up for the deficit in the year 2022. The weighted average number of shares outstanding before the reduction of capital to make up for the deficit in the year 2021 has been adjusted to reflect the equity after the reduction of capital to make up for the deficit.

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(30) Supplemental cash flow information

Investing activities with partial cash payments ：

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid	December 31, 2022 $ 9,284 906 ( 1,333) $ 8,857	December 31, 2021 $ 4,303 611 ( 906) $ 4,008

(31) Changes in liabilities from financing activities

Short-term borrowings January 1, 2022 $ 523,112 Changes in cash flow from financing activities 231,888 Interest expense - Interest expenditure - Add lease liability - Lease liability modification - December 31, 2022 $ 755,000 Short-term borrowings January 1, 2021 $ 613,311 Changes in cash flow from financing activities ( 90,199) Interest expense - Interest expenditure - Add lease liability - December 31, 2021 $ 523,112	Long-term borrowings (including expiry within one year) Deposits received Lease principal repayment $ 480,000 $ 70 $ 203,583 ( 280,000) 1,008 ( 12,681) - - 4,952 - - ( 4,952) - - 3,180 - - 32 $ 200,000 $ 1,078 $ 194,114 Long-term borrowings (including expiry within one year) Deposits received Lease principal repayment $ 300,000 $ 426 $ 210,155 180,000 ( 356) ( 12,621) - - 5,135 - - ( 5,135) - - 6,049 $ 480,000 $ 70 $ 203,583	Long-term borrowings (including expiry within one year) Deposits received Lease principal repayment $ 480,000 $ 70 $ 203,583 ( 280,000) 1,008 ( 12,681) - - 4,952 - - ( 4,952) - - 3,180 - - 32 $ 200,000 $ 1,078 $ 194,114 Long-term borrowings (including expiry within one year) Deposits received Lease principal repayment $ 300,000 $ 426 $ 210,155 180,000 ( 356) ( 12,621) - - 5,135 - - ( 5,135) - - 6,049 $ 480,000 $ 70 $ 203,583	Liabilities from
			financing activities-gross $ 1,206,765 ( 59,785) 4,952 ( 4,952) 3,180 32 $ 1,150,192 Liabilities from
			financing activities-gross $ 1,123,892 76,824 5,135 ( 5,135) 6,049 $ 1,206,765
	within one year) $ 300,000 180,000 - - - $ 480,000
		$ 426 ( 356) - - - $ 70

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7. RELATED PARTY TRANSACTIONS

(1) Parent Company and the final Controller

This company is controlled by TECO Electric Co., Ltd. (registered in Taiwan), which owns 63.52% of the shares of this company, being the ultimate parent company and ultimate controller of this company. The remaining 36.48% is held by the public.

(2) Names of related parties and relationship

Names of related parties TECO Electric & Machinery Co., Ltd. WANTGO.COM CO., LTD. Guandehong Technology Co., Ltd. Taiwan Ericsson Co., Ltd. Wuxi Teco Electric & Machinery Co., Ltd JIE ZHENG PROPERTY SERVICE & MANAGEMENT CO., LTD. Qindao Teco Precision Mechatronics Co., Ltd. INFORMATION TECHNOLOGY TOTAL SERVICES CO., LTD. TUNG PEI INDUSTRIAL CO., LTD. TONG DAI CO., LTD. Dong An Asset Development Management Co., Ltd. TECO Technology（Vietnam）Co.，Ltd. Yubantec Technology Co., Ltd. Yatec Engineering Co., Ltd. E-Joy International Co., Ltd. A-OK Technology Service Co., Ltd. Asia Innovation Technology (Xiamen) Co., Ltd. Taiwan Pelican Express Co., Ltd. Taian Shen Electric Co., Ltd. Taian (Subic) Electric Co., Ltd. Century Development Co., Ltd. SANKYO CO.,LTD Shanghai TECO Electric & Machinery Co., Ltd. Motovario S.p.A TECO Australia Pty Limited (TAC) TECO (PHILIPPINES)3C&APPIANCES,INC TECO - Westinghouse Motor Company YUBANTEC INDIA PRIVATE LIMITED

Related Party Category

Parent Company Substantive related party Substantive related party Substantive related party Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate Associate

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(3) Significant transactions and balances with related parties

1.Sales

Sales of goods： Associate Substantive related party Parent Company	2022 $ 36,965 54 16,894 $ 53,913	2021 $ 44,955 84 20,953 $ 65,992

Sales are on normal commercial terms and conditions.

1. Purchases of goods

Purchases of goods Associate Substantive related party Parent Company	2022 $ - - 13,680 $ 13,680	2021 $ 5,080 51 12,541 $ 17,672

Purchases of goods are on normal commercial terms and conditions.

3.Receivables from related parties

December 31, 2022 Notes receivable： Associate $ 2,220 Trade receivables： Associate 400 Wuxi Teco Electric & Machinery Co., Ltd 5,726 Shanghai TECO Electric & Machinery Co., Ltd. 4,178 Substantive related party - Parent Company 1,692 Subtotal 11,996 Other receivables： Substantive related party 170 Allowance for bad debts ( 164) Subtotal 6 Total $ 14,222	December 31, 2021 $ 109
	3,218 2,621 5,621 9 6,152 17,621 396 ( 391) 5
	$ 17,735

Receivables from related parties mainly arise from sales transactions, with a maturity of 30 to 120 days after the date of sale.

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4.Payables from related parties

ayables from related parties
Accounts payable： Associate Substantive related party Parent Company Other payables： Associate Parent Company	December 31, 2022 $ - - 1,346 $ 1,346 $ 60 481 $ 541	December 31, 2021 $ 3 4,961 2,642 $ 7,606 $ 24 698
		$ 722

The accounts payable to the counterparties are mainly from purchase transactions, and payment shall be made within 25 to 90 days after receipt of goods. There is no interest attached to this accounts payable.

• 5.Labor costs/other expenses

Associate Taiwan Ericsson Co., Ltd. Parent Company	2022 $ 221 ( 3,297) 2,400 ($ 676)	2021 $ - 9,262 3,975 $ 13,237

• 6.Lease transactions － lessee

• (1) The Group rents building and parking area from other related parties. The periods of the lease contracts are 1 month to 3years. The rents are paid in monthly and quarterly.

The Group rents cars from parent company. The period is 1 year, and the rents are paid in monthly.

• (2) Acquire right-of-use assets

Associate (3) Rent expense Associate Parent Company Total (4) Lease liability Interest expense Associate	2022 $ 3,573 2022 $ 48 382 $ 430 2022 $ 48	2021 $ - 2021 $ 48 438 $ 486 2021 $ 48

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7.Leasing transaction － Lessor

In 2022 and 2021, the Group received rental income of $65 and $29 respectively from leasing part of the factories and offices to related parties, which is collected on a monthly basis.

Substantive related party Guandehong Technology Co., Ltd.	December 31, 2022 $ 12 53 $ 65	December 31, 2021 $ 12 17
		$ 29

• (4) Key management compensation

Salaries and other short-term employee benefits Post-employment benefits Total	December 31, 2022 $ 18,123 216 $ 18,339	December 31, 2021 $ 13,680 216
		$ 13,896

8. PLEDGED ASSETS

The book values of the Group’s pledged assets are as follows:

Book value Assets Item December 31, 2022 Bank deposits (Financial assets at amortized cost) $ 247,074 Bank deposits (shown as Refundable deposits) 662 Financial assets at fair value through other comprehensive income－non-current 460,000 Hsinchu plant 77,394 $ 785,130	December 31, 2021 $ 237,618 977 399,600 80,615 $ 718,810	Purpose Lease security deposit and borrowing restrictions Customs Secured Bank Loan Secured Bank Loan Secured

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies

None.

(2) Commitments

By the end of December 2022, the Group commissioned banks to open the guarantee bills and guarantee letters for the fulfillment of sale contracts and bids, with a total amount of $6,574.

10. SIGNIFICANT DISASTER LOSS

None.

1. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

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12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to operate with the goal to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure. The group may issue new shares or sell assets to reduce debts. The Group monitors capital on the basis of the debt capital ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet add the total net debts.

The strategy of capital management is the same in 2021 and 2022. The Group is committed to improving the capital structure and reducing the debt-to-capital ratio through appropriate planning and management, and the debt to capital ratios in 2021 and 2022 are shown as below ：

Total borrowings Less：cash and cash equivalents Net debt Total equity Total capital Debt to Capital Ratio	December 31, 2022 $ 955,000 ( 265,304) 689,696 475,020 $ 1,164,716 59%	December 31, 2021
		$ 1,003,112 ( 183,656) 819,456 478,530 $ 1,297,986 63%

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(2) Financial instruments

1.Financial instruments by category

December 31, 2022 Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss $ 10,493 Financial assets at fair value through other comprehensive income 499,149 Financial assets at amortized cost Cash and cash equivalents 265,304 Financial assets at amortized cost 295,081 Notes receivable 28,684 Accounts receivable 165,542 Other receivables 2,320 Refundable deposits 2,066 $ 1,268,639 December 31, 2022 Financial liabilities Financial liabilities at amortized cost Short-term loans $ 755,000 Notes payable 3,142 Accounts payable 117,109 Other payables 68,105 Long-term loans(including expiry within one year) 200,000 Deposits received 1,078 $ 1,144,434 Lease liabilities $ 194,114

December 31, 2021 $ 73,636 571,368 183,656 334,548 51,313 167,893 1,871 2,890 $ 1,387,175 December 31, 2021 $ 523,112 3,795 193,558 69,446 480,000 70

$ 1,269,981 $ 203,583

2.Risk management policies

(1) The Group’s operation is influence by several financial risks, including market risk (including foreign exchange risk, interest rate risk and price risk), credit risk, and liquidity risk. The Group's overall risk management policy focuses on the unpredictable item of financial markets and seeks to reduce the risk that potentially pose adverse effects on the Group's financial position and financial performance.

(2) Risk management is executed by the Group’s finance department by following authorize policies. The finance department cooperates with the Group's operating units, and take charge in identifying, evaluating and hedging financial risks. The Management has a written policy covering overall risk management. It also has written policies covering specific issues, such as exchange rate risk, interest rate risk, credit risk, derivative and non-derivative financial instruments used, and the investment of excess working capital.

~54~

• 3.Significant financial risks and degrees of financial risks

• (1) Market risk

Foreign exchange risk

• A. The Group is operating on a cross-border basis, so it is exposed to foreign exchange risks arising from the differences between the functional currencies of the Company and its subsidiaries, primarily USD and CNY. The related foreign exchange risks arise from future commercial transactions and assets and liabilities already recognized.

• B. The Group manages its foreign exchange risk through the Group Finance Department. To manage the foreign exchange risk arising from future business transactions and recognized assets and liabilities, all companies within the Group are regularly reviewed by the Group Finance Department for exchange rate fluctuations. When future business transactions, recognized assets or liabilities are priced in currencies other than the functional currency of the entity, foreign exchange risk arises.

• C. The Group's businesses involve a number of non-functional currencies (the Group's functional currency is NTD), so they are affected by exchange rate fluctuations. The foreign assets and liabilities with significant exchange rate fluctuations are as follows.

(Foreign currency: Functional currency) Financial assets Monetary items USD : TWD CNY：TWD Financial liabilities Monetary items USD：TWD CNY：TWD (Foreign currency: Functional currency) Financial assets Monetary items USD : TWD CNY：TWD Financial liabilities Monetary items USD：TWD CNY：TWD	December 31, 2022	December 31, 2022	December 31, 2022	Book Value (NT) $ 271,845 23,371 68,145 9,649
	Foreign currency amount(thousand) Exchange rate $ 8,852 30.710 5,302 4.408 $ 2,219 30.710 2,189 4.408 December 31, 2021 Foreign currency amount(thousand) Exchange rate $ 11,034 27.680 4,317 4.344 $ 5,528 27.680 122 4.344
		Foreign currency amount(thousand) $ 11,034 4,317 $ 5,528 122	Exchange rate 27.680 4.344 27.680 4.344	Book Value (NT) $ 305,421 18,753 153,015 530

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• D.The total amount of all exchange gains (losses) (including realized and unrealized) recognized by the Group due to exchange rate fluctuations was $20,738 and ($3,902) respectively in 2022 and 2021.

• E. The information would be materially affected by the exchange rate fluctuations is as follows:

2022

Sensitivity Analysis Extent of variation Effect on profit and loss (Foreign currency: Functional currency) Financial assets Monetary items USD：TWD 1% $ 2,718 CNY：TWD 1% 234 Financial liabilities Monetary items USD：TWD 1% ($ 681) CNY：TWD 1% ( 96)	Sensitivity Analysis Extent of variation Effect on profit and loss (Foreign currency: Functional currency) Financial assets Monetary items USD：TWD 1% $ 2,718 CNY：TWD 1% 234 Financial liabilities Monetary items USD：TWD 1% ($ 681) CNY：TWD 1% ( 96)	Sensitivity Analysis Extent of variation Effect on profit and loss (Foreign currency: Functional currency) Financial assets Monetary items USD：TWD 1% $ 2,718 CNY：TWD 1% 234 Financial liabilities Monetary items USD：TWD 1% ($ 681) CNY：TWD 1% ( 96)	Effect on other comprehensive income
	Extent of variation
		$ 2,718 234 ($ 681) ( 96)	$ - - $ - -

2021 Sensitivity Analysis Extent of variation Effect on profit and loss (Foreign currency: Functional currency) Financial assets Monetary items USD：TWD 1% $ 3,054 CNY：TWD 1% 188 Financial liabilities Monetary items USD：TWD 1% ($ 1,530) CNY：TWD 1% ( 5)	2021	2021	Effect on other comprehensive income
	Extent of variation
		$ 3,054 188 ($ 1,530) ( 5)	$ - - $ - -

Price risk

• A. The Group’s equity instruments, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity instruments, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

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• B. The Group mainly invests in equity instruments comprised of shares and open-end funds issued by the domestic companies. The value of equity instruments is susceptible to market price risk arising from uncertainties about future performance of equity markets. Assuming a hypothetical increase or decrease of 1% in the price of the aforementioned financial assets at fair value through profit or loss while the other conditions remain unchanged could increase and decrease the Group’s net income after tax for the years ended December 31, 2022 and 2021 by $105 and $736, respectively. A change of increase or decrease 1% in the price of the aforementioned financial assets at fair value through other comprehensive income could increase or decrease the Group’s other comprehensive income for the years ended December 31, 2022 and 2021 by $4,991 and $5,714, respectively.

Cash flow and fair value interest rate risk

• A. The Group’s main interest rate risk arises from long-term and short-term borrowings with variable rates which expose the Group to cash flow interest rate risk. During the years ended December 31, 2022 and 2021, the Group’s borrowings at variable rates were denominated in USD and NTD.

• B. Loans of the Group are measured at amortized cost and the interest rate will be repriced according to the contractual agreement every year, thus the Group is exposed to the risk of future market rate fluctuations.

• C. If interest rates on borrowings had increased or decreased 1% with all other variables held constant, net income after-tax for the years ended December 31, 2022 and 2021 would have decreased or increased 7,640 and $8,025, respectively, mainly as a result of higher interest expense on floating rate borrowings.

• (2) Credit risk

• A. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments. Group is exposed to credit risks from accounts receivables that the counterparty is unable to pay off by the payment term, and the contractual cash flows from investments in debt instruments at amortized cost.

• B. The Group manages credit risk in terms of the Group. The Group only accepts banks or institutions assessed to be with good credit quality as correspondent bank or financial institutions. Based on the internal credit policies, the Group shall manage and implement credit risk analysis before determine payment terms and delivery terms with new customers. Internal risk control evaluates customers’ credit quality by considering the financial condition, past experiences, and other factors. The individual risk limits are established by the management level according to the internal rating, and the credit limit is monitored regularly.

• C. Credit risk impairment assessment of financial assets at amortized cost ：

  • (1) The Group adopts IFRS 9 assuming that if the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition; if past due over 90 days, a default has occurred.

  • (2) The Group has taken into consideration of the forward-looking considerations to adjust historical and current information and consider the credit ratings of the issuing banks to estimate the expected credit losses.

  • (3) The financial assets measured at cost after impairment held by the Group include deposits in banks and restricted deposits in banks, the credit ratings of which are all good, without any overdue in the past. Considering the overall economic environment without significant changes, the risk of credit loss is extremely low and the impact on the financial statements is also small.

~57~

• D. Credit Risk Impairment Assessment of Accounts Receivable and Notes Receivable ： (1) The Group estimates the expected credit losses based on the simplified approach with a loss rate method for the receivables and receivables from customers according to their ratings.

• (2) The Group has incorporated an adjustment to the loss rate based on past and current information over a certain period to estimate the provision for losses on receivables and receivables as of December 31, 2022 and 2021, as follows:

December 31, 2022	Group 1 0.03%~1% $ 84,260 $ - Group 1 0.03%~1% $ 106,191 $ -	Group 2 0.03%~2% $ 28,197 $ - Group 2 0.03%~2% $ 33,890 $ -	Group 3 0.03%~5% $ 69,428 $ 25 Group 3 0.03%~5% $ 60,940 $ 14	Group 4 0.03%~10% $ 10,214 $ 489 Group 4 0.03%~10% $ 11,054 $ 545	Group 5 0.03%~30% $ 2,687 $ 46 Group 5 0.03%~30% $ 7,753 $ 63	Total $ 194,786 $ 560 Total $ 219,828 $ 622
Expected loss rate Total book value Loss allowance December 31, 2021
Expected loss rate Total book value Loss allowance

• (3) The Group’s allowances of trade receivables are shown as below:

At January 1 Provision for impairment loss(reversal) Amount written off due to recoverability At December 31	2022 Trade receivables $ 622 ( 62) - $ 560	2021 Trade receivables $ 1,019 ( 351) ( 46) $ 622

• (3) Liquidity risk

• A. Cash flow forecasting is performed by each operating entity of the Group and aggregated by Group treasury. The Financial Department of the Group monitors the forecast of the Group's liquidity needs to ensure that there are sufficient funds to meet operating needs and maintain sufficient uncommitted loan commitment at all times.

• B. The Group of unutilized borrowing amounts are shown as below:

Floating Rate expiry within 1 year expiry more than 1 year	December 31, 2022 $ 535,061 55,000 $ 590,061	December 31, 2021
		$ 722,383 55,000 $ 777,383

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• C.The table below analyses the Group’s non-derivative financial liabilities based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities: December 31, 2022 Less than 1 year Short-term loans $ 762,735 Notes payable 3,142 Accounts payable 117,109 Other payables 68,105 Lease liability 13,954 Long-term loans(including expiry within one year) 4,360 Derivative financial liabilities：None.	Between 1 and 2 years $ - - - - 13,124 4,160	Between 2 and 5 years $ - - - - 34,963 200,000	More than 5 years
			$ - - - - 188,873 -

Non-derivative financial

Non-derivative financial
liabilities: December 31, 2021 Less than 1 year Short-term loans $ 524,869 Notes payable 3,795 Accounts payable 193,558 Other payables 69,446 Lease liability 14,071 Long-term loans(including expiry within one year) 285,842 Derivative financial liabilities：None.	Between 1 and 2 years $ - - - - 13,568 3,800	Between 2 and 5 years $ - - - - 37,375 203,600	More than 5 years
			$ - - - - 200,134 -

The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis to be significantly earlier, nor expect the actual cash flow amount to be significantly different.

(3) Fair value information

• 1.The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in derivative instruments is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s equity investment without active market is included in Level 3.

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• 2.Financial instruments not measured at fair value:

The carrying amounts of the Group’s financial instruments not measured at fair value (including cash and cash equivalents, notes and accounts receivable, other receivables, financial assets at amortized cost (excluding bank debentures), short-term loans, notes and accounts payable, other payables and long-term loans approximate to their fair values:

1. The related information on financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

2. (1) The related information on the nature of the assets and liabilities is as follows:

December 31, 2022 Level 1 Assets Recurring fair value measurements Financial assets at fair value through profit or loss-Beneficiary certificates $ 10,493 Financial assets at fair value through other comprehensive income - Equity instruments 498,382 Total $ 508,875 Debt：None. December 31, 2021 Level 1 Assets Recurring fair value measurements Financial assets at fair value through profit or loss-Beneficiary certificates $ 73,636 Financial assets at fair value through other comprehensive income - Equity instruments 570,601 Total $ 644,237 Debt：None.	Level 2 $ - - $ - Level 2 $ - - $ -	Level 3 $ - 767 $ 767 Level 3 $ - 767 $ 767	Total $ 10,493 499,149
			$ 509,642 Total $ 73,636 571,368
			$ 645,004

• (2)The methods and assumptions the Group used to measure fair value are as follows:

  • A. The Group used market quoted prices as their fair values (that is, Level 1), which is closing price of listed shares.

  • B. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques.

  • C.When assessing non-standard and low-complexity financial instruments, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• There is no transfer between level 1 and level 2 in 2022 and 2021.

• There is no change of level 3 of financial instruments in 2022 and 2021.

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(4) The future financial plan

As of December 31, 2022, the accumulated loss exceeded 50% of the paid-in capital, the debt-to-capital ratio was 75%, which is 2 % lower than same period last year. The active plans for financial sound were shown as below:

• 1.Operation perspective ： the consolidated revenue in 2022 was $10,108,900 thousand, a 5.5% decline from 2021. However, the net income after-tax was $32,592 thousand, a 81% significant rise, compared to $17,986 thousand in 2021 by adjusting the product mix and business strategy. Taking profit is also the second time in recent 5 years ； In the face of a sudden reversal of the global economic situation, we will tightly grasp customer demands, inventory levels, receivables and capital status to ensure the normal operation of the Company; in production and manufacturing, production schedules will be adjusted in real time to maintain capacity utilization, appropriate inventory levels and to meet customer needs. In order to strengthen operational performance, in addition to continuously deploying new technologies and actively integrating group resources, we will deepen management and strengthen financial structure in the future to enhance shareholder return on equity. The related important point as shown below:

  • (1) Continuously cultivate access control systems, intelligent office business communication systems, etc., related to smart homes/building communities, and actively explore domestic and foreign markets.

  • (2) Launch industrial Internet of Things "Intelligent Mechanical and Electrical Monitoring Equipment and Cloud Health Management Platform" series products, innovate applications and lead the industry.

  • (3) Strengthen team integration of combat capability, expand sales channels, and target mainland China, North America, Europe and emerging markets as the goal for expanding the product agency.

  • (4) To continue adjusting the channel structure, introduce the agency of new products, and improve product quality and strengthen after-sales maintenance services, to enhance profitability.

  • (5) In order to create the unique products and services, the Company will focus on the customers and create a large platform of digital life.

• Continuously adjust and deepen the organization structure, strictly evaluate the performance of each department, consolidate core talents, merge available resources, reduce unnecessary expenses, increase future cash inflows, enhance operational efficiency and business growth.

• 3.Financial perspective ： Keep to maintain support from the bank. The group continue improving the management capacity and profitability to strengthen financial structure. With the successful operation of open-source savings and the support of major shareholders- TECO Electric Co., Ltd. as well as the continuous improvement of operational performance, the Company has successfully obtained continuous support from major banks for short-term and long-term funds. For large and large orders, it also obtains project quotas from banks to support them. The Company's operations are not short of funds.

• (5) Other items

• As of December 31, 2022, the supply and domestic and international market orders demand of mainland suppliers have been planned and responded to, and the supply and delivery are normal without being affected. However, the impact of the epidemic is still uncertain. The Group will continue to monitor the development of the epidemic and its impact.

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13. SUPPLEMENTARY DISCLOSURES

• (1) Significant transactions information

• A. rothers: Refer to table 1.

• B. Provision of endorsements and guarantees to others: Refer to table 2

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Refer to table 2.

• D. Acquisition or sale of the same security with the accumulated cost reaching NT$300 million or 20% of paid-in capital or more: None.

• E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid in capital or more: None.

• H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Refer to table 7.

• I. Trading in derivative instruments undertaken during the reporting periods: None.

• J. Significant inter-company transactions during the reporting periods: Refer to table 3.

• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Refer to table 4.

• (3) Information on investments in Mainland China

• A. Basic information: Refer to table 5.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in China: Please refer to table 6.

• (4) Major shareholders

Major shareholders ： Refer to table 7.

14. SEGMENT INFORMATION

• (1) General information

The management hierarchy of the Group has identified the reportable segments based on the information used by the decision-makers in making decisions.

The Group's Board of Directors manages its business from a regional and product perspective; territorially, the Group currently focuses on product sales in Taiwan and the United States. The operating units disclosed by the Group mainly derive their revenue from self-produced products, agency products, and fiber optic cables.

~62~

(2) Segment information

The related information provided to decision maker is as follows 2022 ：

External income Internal Revenue Segment income Department (loss) profit 2021： External income Internal Revenue Segment income Department (loss) profit	Homemade products $ 637,529 65,278 $ 702,807 ($ 12,011) Homemade products $ 643,683 66,034 $ 709,717 ($ 11,269)	Proxy Products $ 42,760 - $ 42,760 ($ 3,724) Proxy Products $ 143,564 - $ 143,564 ($ 5,271)	Fiber optic cable $ 330,601 - $ 330,601 $ 36,395 Fiber optic cable $ 283,092 - $ 283,092 $ 23,769	Total $ 1,010,890 65,278
				$ 1,076,168 $ 20,660
				Total $ 1,070,339 66,034
				$ 1,136,373 $ 7,229

(3) Reconciliation for segment income

There is no profit adjustment for operating department and the Company.

(4) Information on products and services

Please refer to Notes 6(21) for the Group’s product revenue information in 2022 and 2021. (5) Geographical information

Geographical information for the years ended December 31, 2022 and 2021 is as follows:

Taiwan USA Others Total	2022 Revenue Non-current assets $ 736,894 $ 278,241 96,809 - 177,187 299 $ 1,010,890 $ 278,540	2021 Revenue Non-current assets $ 785,126 $ 289,991 150,817 - 134,396 292 $ 1,070,339 $ 290,283	2021 Revenue Non-current assets $ 785,126 $ 289,991 150,817 - 134,396 292 $ 1,070,339 $ 290,283
	Revenue $ 736,894 96,809 177,187 $ 1,010,890	Revenue $ 785,126 150,817 134,396 $ 1,070,339
			$ 289,991 - 292 $ 290,283

(6) Major customer information

Major customer information for the years ended December 31, 2022 and 2021 is as follows:

A		2022 Dept. fiber optic cable	2021	2021
	Revenue $ 108,445		Revenue $ 94,074	Dept fiber optic cable

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Tecom Co., LTD. and Subsidiaries

Loans to others December 31, 2022

Table 1

Expressed in thousands of TWD (Except as otherwise indicated)

Maximum outstanding balance during theyear ended Balance at ending Actual amount drawn down No. Creditor Borrower General ledger account Is a related party Interest rate Nature of loan Amount of transactions with the borrower Reason for shortterm No. Creditor Borrower financing Allowance for doubtful accounts	Collateral	Limit on loans granted to a singleparty	Ceiling on total loans granted F	Footnote
	Item Value
1 Baycom Opto- Electronics Technology Co., Ltd. Tecom Co., LTD. Other receivables- related parties Y 44,000 $ - $ - $ - short- term financing - Refund -	None -	47,521 $	95,041 $	Footnote 1

Note 1 ： According to the subsidiary of BAYCOM OPTO-ELECTRONICS TECHNOLOGY CO., LTD (Hereinafter referred to as 「 BAYCOM 」 )"loans to others operating procedures"

• (1)The ceiling on total loans granted by the Company to all parties is 20% of the net assets value of the Company 。

• (2)For a single enterprise's capital loan and limit, it shall be determined separately as follows ：

• (1)For companies that are evaluated by equity method by BAYCOM OPTO-ELECTRONICS TECHNOLOGY CO., LTD., or the investment companies evaluated by equity method byBAYCOM OPTO-ELECTRONICS TECHNOLOGY CO., LTD., they are limited to not exceed 10% of the net value of the latest financial statement of BAYCOM OPTO-ELECTRONICS TECHNOLOGY CO., LTD..

• (2)For companies or firms that have business dealings with BAYCOM OPTO-ELECTRONICS TECHNOLOGY CO., LTD. ， the amount of individual loans should not exceed the amount of business dealings between the two parties. The exchange amount refers to the purchase or sale amount between the two parties, which is higher 。

Table 1 p1

Tecom Co., LTD. and Subsidiaries

Holding of marketable securities (not including subsidiaries, associates and joint ventures) December 31, 2022

Table 2

Expressed in thousands of TWD

(Except as otherwise indicated)

Securities held by Marketable securities Relationship with the securities issuer General ledger account		As of December 31, 2022	As of December 31, 2022	Footnote
	Number of shares	Book value	Ownership Fair value
Tecom Co., LTD. Taiwan High Speed Rail Corporation(Common Stock) The parent company is its legal person director Financial assets measured at fair value through other comprehensive income, non-current Tecom Co., LTD. NEOVIDEO TECHNOLOGY CORPORATION(Common Stock) None Financial assets measured at fair value through other comprehensive income, non-current Tecom Co., LTD. EDIMAX TECHNOLOGY CO., LTD.(Common Stock) None Financial assets measured at fair value through other comprehensive income,current Tecom Co., LTD. International Integrated Systems, Inc. (Common Stock) None Financial assets measured at fair value through other comprehensive income, non-current Baycom Opto-Electronics Technology Co., Ltd. Fuhua Investment Trust Guardian Fund None Financial assets measured at fair value through profit or loss, current Baycom Opto-Electronics Technology Co., Ltd. Tecom Co., LTD.(Common Stock) Parent Company Financial assets measured at fair value through other comprehensive income, non-current Baycom Opto-Electronics Technology Co., Ltd. Tecom Co., LTD.(unsecured corp bond) Parent Company Financial assets measured at amortized cost,non-current	16,222,080 1,066,667 2,119,000 94,706 545,765 311,626 -	466,385 $ 87 31,997 680 10,493 1,023 133,000	0.29% 466,385 $ 19.39% 87 1.11% 31,997 0.13% 680 - 10,493 1.03% 1,023 - 133,000	Note 1 Note 2

Note 1 ： The common stock of the Company held by the Company is required for bank secured loans, and it is used as a secured. Please refer to Note 8 for details.

Note 2 ： The company issued the first domestic unsecured payable company bonds in Taiwan in 2021 with a total amount of NT$133,000, each with a face value of NT$1,000, fully issued according to the face value of the ticket, with a coupon rate of 2%, and a circulation period of 5 years from November 17, 2021 to November 17, 2026.

The principal of the ordinary company bonds without warranty shall be paid in cash once according to the face value of the bonds, and the interest shall be paid annually. Since the private placement targets are Baycom Opto-Electronics Technology Co., Ltd. included in the consolidation individual, the relevant transactions have been written off when preparing the combined financial statements.

Table 2 p1

Table 3

Expressed in thousands of TWD

Tecom Co., LTD. and Subsidiaries

Significant inter-company transactions during the reporting period

December 31, 2022

(Except as otherwise indicated)

Transaction

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
0 0 0 0 1	Tecom Co., LTD. Tecom Co., LTD. Tecom Co., LTD. Tecom Co., LTD. Baycom Opto-Electronics Technology Co., Ltd.	Wu Han Tecom Co., Ltd. Wu Han Tecom Co., Ltd. Wu Han Tecom Co., Ltd. Wu Han Tecom Co., Ltd. Tecom Co., LTD.	1 1 1 1 2	Accounts receivable Sales Purchases Other expense Financial assets measured at amortized cost,non-	23,409 $ 29,851 15,020 20,572 133,000	Depending on Term Depending on Term Depending on Term Depending on Term Depending on Term	1% 3% 1% 2% 9%

Note 1: The information of transactions between the Company and the consolidated subsidiaries should be noted in “Number” column.

(1) Number 0 represents the Company.

(2) The consolidated subsidiaries are numbered in order from number 1.

Note 2: The transaction relationships with the counterparties are as follows:

If one of the subsidiaries has already disclosed the transactions between the subsidiaries, the other subsidiary does not need to disclose it again.

(1) The Company to the consolidated subsidiary.

(2) The consolidated subsidiary to the Company.

(3) The consolidated subsidiary to another consolidated subsidiary.

Note 3: In calculating the ratio, the transaction amount is divided by consolidated total assets for balance sheet accounts and is divided by consolidated total revenues for income statement accounts. Note 4 ： nly transactions with a value of more than one million are disclosed, and transactions between related parties are not disclosed separately.

Table 3 p1

Tecom Co., LTD. and Subsidiaries

Information on investees December 31, 2022

			December 31, 2022	31, 2022	31, 2022
Table 4 Investor	Investee	Location	December 31,202 December 31,202 Number of shares Main business activities Initial investment amount Shares held as	Initial investment amount		Shares held as	at December 31,2022		Expressed in thousands of TWD (Except as otherwise indicated) p (loss) of the investee income (loss) recognised Footnote
							Ownership	Book value
Tecom Co., LTD. Tecom Co., LTD. Tecom Co., LTD. Tecom Co., LTD. Tecom Co., LTD. Tecom Co., LTD. Tecom Co., LTD.	Baycom Opto-Electronics Technology Co., Ltd. Tecom Global Tech Investment (B.V.I.) Limited A-Tel Inc. Taian Technology Sdn. Bhd. E-JOY ELECTRONICS INTERNATIONAL CO., LTD. TECNOS INTERNATIONAL CONSULTANT CO., LTD TECO TOUR TRAVEL SERVICE CO., LTD.	Taiwan British Virgin Islands Guatemala Malaysia Taiwan Taiwan Taiwan	Research, manufacture and sales of optical fiber communication systems and optical fibers, optical fiber cables and their components Investment Operating telecommunications system service business Production and sales of gate opening equipment industry Wholesale of telecommunication equipment, wholesale of precision instruments and wholesale of electrical appliances, etc. Operation of talent dispatch service, project contracting service and education and training business Operating a travel service business	431,258 $ 33,213 63,177 8,360 999 2,499 2,912	431,258 $ 33,213 63,177 8,360 999 2,499 2,912	14,700,741 995,000 596,925 1,100,000 435,095 635,815 480,000	43.76 100 19.73 10 4.90 5.26 16.00	205,405 $ 7,133) ( - 3 5,812 9,412 1,669	41,280 $ 1,031 35,245) ( - 27,854 34,867 1,045) (	18,066 $ 1,031 - - 964 1,827 164) (	Note

Note ： This company has invested in A-Tel Inc. receivables of $55,254 and has 100% impairment loss in the previous year.

Table 4 p1

Information on investments in Mainland China December 31, 2022

Tecom Co., LTD. and Subsidiaries

Table 5 Investee in Mainland China	Main business activities	Paid-incapital	Investment method	amount of remittance from Taiwan to	from Taiwan Chi	to Mainland na/	Net income of investee for theyear ended	of investee for the year ended	p held by the Company	(loss) recognised by the Company for theyear ended	investments in Mainland China as of December amount of investment income Expressed in thousand (Except as otherwise	investments in Mainland China as of December amount of investment income Expressed in thousand (Except as otherwise	s of TWD indicated) Footnote
					Mainland	back
Wu Han Tecom Co., Ltd.(Note 1) Companyname	Engage in technical development, production, sales and technical Accumulated amount of remittance from Taiwan to Mainland China	6,950 $ Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Through investment in a third region and reinvesting in a mainland company Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA	6,950 $	- $	- $	6,950 $	1,025 $	100	1,031 $	173) ($	- $	Note 7
Wu Han Tecom Co., Ltd.	$ 6,950	$ 681,144	$ 285,011

Note 1 ： The company has remitted US$995,000 to Tecom Global Tech Investment (B.V.I.) Limited,which US$200,000 has been remitted to invest in Wu Han Tecom Co., Ltd. 。

Note 2 ： The company has remitted US$15,050,000 to Tecom Global Tech Investment Pte Limited, which US$15,000,000 has been remitted to invest in Wu Xi Tecom Co., Ltd. It was dissolved and liquidated in January 2021.

Note 3 ： The company has remitted US$1,500,000 to Tecom Tech Investment (B.V.I.) Limited, and all the investment has been remitted out of Tecom Communication Technology (Xiamen) Co., Ltd. and Beijing Tecom Innovation Technology Co., Ltd. Dissolution and liquidation were completed in October 2017 and May 2019 respectively 。

Note 4 ： As of December 31, 2022 the upper limit of the company's investment in the mainland was $285,011 , which was consolidated the net value 475,019 of 60%.

Note 5 ： When the above Mainland investment project was completed, the investment limit of the company to Mainland China was 60% of the net value of the company's Third Quarter 2010, which is $2,933,752, amounting to $1,760,251. Note 6 ： The investment profit and loss recognized in this period is the financial information checked by the certified accountant of the parent company in Taiwan.

Note 7 ： There is coutoercurrent transactions occurred ($6).

Table 5 p1

Tecom Co., LTD. and Subsidiaries

Information on investments in Mainland China － Directly or indirectly through third-region invest in mainland China Major transactions

December 31, 2022

Table 6

Expressed in thousands of TWD (Except as otherwise indicated)

Investeein Mainland China	Sales	Sales	Accountsreceivable	Accountsreceivable	Otherexpense	Otherexpense	Accountpayable	Accountpayable
	Amount	%	Amount	%	Amount	%	Amount	%
Wuhan Dongxun Technology Co., Ltd Wuhan Dongxun Technology Co., Ltd	29,851 $ 2.77% Otherpayables		$ 23,409 11.79% Purchase		20,572 $	8.59%	1,629 $	1.39%
	Amount	%	Amount	%
	8,016 $	10.36%	15,020 $	2.51%

Table 6 p1

Tecom Co., LTD. and Subsidiaries Major Shareholders Information December 31, 2022

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Table 7
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Shareholders [ shares] Number of Shares Held Shareholding Ratio
common stock 3,868,898
TECO ELECTRIC & MACHINERY CO., LTD. 63.52%
preferred stock 15,360,000
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Descript The Company apply for the information from TDCC:

• (1) This table mainly discloses the shareholder information calculated by the central depository company based on the last business day of each quarter, which is the total number of ordinary shares and special shares that have completed the delivery of non-entity registration (including treasury stocks) exceeding five percent.

• (2) If the shareholders deliver the shares to the trust, the trustees shall disclose the individual accounts of the trustees according to the trust. As for the internal shareholders’ equity declaration of more than 10% of the shares under the Securities and Futures Trading Act, the holdings include the shares held by himself and the trust delivered, and he has the right to decide the use of the trust assets. For the internal shareholders’ equity declaration information, please refer to the Public Information Observation Station.

As for the number of shares recorded in the company's financial report and the actual number of shares that have been completed without physical registration, there may be differences due to different calculation bases.

Table 7 p 1