TEX-RAY — Audit Report / Information 2022

Nov 14, 2022

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Stock Code:1467

TEX-RAY INDUSTRIAL CO., LTD.

Parent Company Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2022 and 2021

Address: 2F., No. 426, Linsen N. Rd., Jhongshan Dist., Taipei City Telephone: (02)2521-5155

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web kpmg.com/tw

Independent Auditors’ Report

To the Board of Directors of TEX-RAY INDUSTRIAL CO., LTD.

Opinion

We have audited the financial statements of TEX-RAY INDUSTRIAL CO., LTD.(“ the Company” ), which comprise the balance sheets as of December 31, 2022 and 2021, the statements of comprehensive income, changes in equity and cash flows for the years then ended and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and 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 Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Account of Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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 financial statements of the current period. These matters were addressed in the context of our audit of the 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 that in our professional judgement, should be communicated are as follows:

1. Revenue recognition

Please refer to Note 4(o) for the accounting policies on revenue and Note 6(r) “Revenue from contracts with customers” for the details of the related disclosure.

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KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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Description of the key audit matter:

The Company is in the garment textile industry. In order to enhance the international competency, the management adopts global layout as its business strategy and adds multiple production and sales supply chains overseas. Therefore, the extent of influence of local laws and political and economic changes in various countries to such strategy increases dramatically. Resulting in that the revenue recognition is regarded as highly concerns. Therefore, the Company’ s revenue recognition has been identified as one of the key audit matters.

How the matter was addressed in our audit:

We have performed certain audit procedures including understanding the design of internal controls over the recognition of revenue and the collection of receivables, performing test of details by inspecting the sales orders, shipping records, invoices and documents related to accounts receivable and cash collection and assessing the adequacy of revenue recognition. Furthermore, we also performed sample testing for verification from transactions within a period before and after balance sheet date to determine whether the revenue is recognized in appropriate period.

2. Valuation of accounts receivable

For the accounting policies on the valuation of accounts receivable, please refer to Note 4(f). Refer to Note 5(a) for the accounting estimates and assumptions related to the valuation of accounts receivable on reporting date and refer to Note 6(c) for the details of the accounts receivable.

Description of the key audit matter:

As of December 31, 2022, the accounts receivable of the Company was $167,516 thousand. We have considered that the Company’s trading partners are scattered in different industries and geographic regions, how the management control credit risk of its customer is thoroughly important. Therefore, the impairment assessment of accounts receivable has been identified as one of the key audit matters.

How the matter was addressed in our audit:

We have performed certain audit procedures including inspecting the controls over customer credit assessment process, analyzing the accounts receivable aging table, viewing past collection experience of customers and checking cash collection records after the reporting date to evaluate whether the impairment of the accounts receivable has been properly assessed.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

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

1. Identify and assess the risks of material misstatement of the 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 Company’s internal control.

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Kuo-Yang Tseng and Shu-Ying Chang.

KPMG

Taipei, Taiwan (Republic of China) March 28, 2023

Notes to Readers

The accompanying parent company only financial statements are intended only to present the statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China.

The auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ report and parent company only financial statements, the Chinese version shall prevail.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Balance Sheets

December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (Note 6(a)) 1161 Notes receivable due from related parties (Note 7) 1170 Accounts receivable, net (Note 6(c)) 1181 Accounts receivable due from related parties (Note 7) 1200 Other receivables, net 1210 Other receivables due from related parties, net (Note 7) 1310 Inventories, manufacturing business, net (Note 6(d)) 1410 Prepayments (Note 7) 1470 Other current assets 1476 Other current financial assets (Note 8) Non-current assets: 1518 Non-current investments in equity instruments designated at fair value through other comprehensive income (Note 6(b)) 1550 Investments accounted for using equity method, net (Note 6(e)) 1600 Property, plant and equipment (Notes 6(f) and 8) 1755 Right-of-use assets (Note 6(g)) 1760 Investment property, net (Notes 6(h) and 8) 1780 Intangible assets 1840 Deferred tax assets (Note 6(o)) 1960 Prepayments for investments 1980 Other non-current financial assets (Note 8) 1990 Other non-current assets Total assets	December 31, 2022 Amount % $ 508,975 8 - - 167,516 3 115,349 2 3,954 - 47,473 1 306,417 5 198,934 3 1,995 - 151,951 2 1,502,564 24 20,012 - 3,205,497 52 420,896 7 28,912 - 1,094,413 17 10,332 - 12,294 - - - 4,690 - 1,857 - 4,798,903 76 $ 6,301,467 100	December 31, 2021 Amount % 113,418 2 96 - 447,377 8 98,240 2 5,197 - 26,229 - 477,693 8 163,299 3 261 - 151,965 3 1,483,775 26 - - 2,708,459 48 429,264 7 26,603 - 1,114,398 19 11,843 - 18,556 - 9,092 - 5,187 - - - 4,323,402 74 5,807,177 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (Note 6(i)) 2110 Short-term notes and bills payable (Note 6(j)) 2130 Current contract liabilities (Note 6(r)) 2150 Notes payable 2170 Accounts payable 2180 Accounts payable due to related parties (Note 7) 2200 Other payables 2220 Other payables due to related parties (Note 7) 2230 Current tax liabilities 2280 Current lease liabilities (Note 6(l)) 2320 Long-term liabilities, current portion (Note 6(k)) 2300 Other current liabilities (Note 7) Non-current liabilities: 2540 Long-term borrowings (Note 6(k)) 2570 Deferred tax liabilities (Note 6(o)) 2580 Non-current lease liabilities (Note 6(l)) 2640 Net defined benefit liability, non-current (Note 6(n)) 2670 Other non-current liabilities, others (Note 7) Total liabilities Equity (Note 6(p)): 3110 Ordinary share 3200 Capital surplus 3300 Retained earnings 3400 Other equity interest Total equity Total liabilities and equity	December 31, 2022		December 31, 2021
			Amount %		Amount %
			$ 450,000 7 279,473 4 - - 1,383 - 240,231 4 17,638 - 103,770 2 291,657 4 41,363 1 5,766 - 48,543 1 2,776 - 1,482,600 23 1,499,356 24 179,123 3 23,426 - 10,323 - 46,947 1 1,759,175 28 3,241,775 51 2,336,247 37 239,699 4 259,608 4 224,138 4 3,059,692 49 $ 6,301,467 100		440,000 8 299,584 5 556 - 9,449 - 320,853 6 5,924 - 96,853 2 139 - 68,989 1 5,238 - 140,000 2 8,800 - 1,396,385 24 1,256,179 23 177,699 3 21,821 - 19,909 - 502 - 1,476,110 26 2,872,495 50 2,336,247 40 239,714 4 281,648 5 77,073 1 2,934,682 50 5,807,177 100

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese)

TEX-RAY INDUSTRIAL CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4000 Operating revenues (Notes 6(r) and 7) 5000 Operating costs (Notes 6(d), (n) and 7) 5900 Gross profit from operations 5910 Less:Unrealized profit from sales 5920 Add:Realized profit on from sales 5950 Gross profit (loss) from operations 6000 Operating expenses (Notes 6(n) and (s)): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6900 Net operating income 7000 Non-operating income and expenses: 7010 Other income (Notes 6(t) and 7) 7020 Other gains and losses, net (Note 6(t)) 7100 Interest income (Notes 6(t) and 7) 7070 Share of loss of subsidiaries, associates and joint ventures accounted for using equity method, net 7510 Interest expense (Note 6(t)) Profit (loss) before tax 7950 Less: Income tax expenses (Note 6(o)) Profit (loss) 8300 Other comprehensive income: 8310 Items that will not be reclassified subsequently to profit or loss 8311 Losses on remeasurements of defined benefit plans 8312 Gains on revaluation surplus 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified subsequently to profit or loss Items that will not be reclassified subsequently to profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that may be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss 8300 Other comprehensive income 8500 Total comprehensive income Basic earnings per share (Note 6(q)) 9750 Basic earnings per share (dollars) 9850 Diluted earnings per share (dollars)	2022 Amount % $ 2,878,383 100 2,411,182 84 467,201 16 (10,791) - 13,236 - 469,646 16 303,478 11 154,472 5 16,967 1 474,917 17 (5,271) (1) 32,108 1 73,566 3 3,170 - (95,170) (3) (33,549) (1) (19,875) - (25,146) (1) 13,237 - (38,383) (1) 5,422 - - - 6,879 - - - 12,301 - 151,107 5 - - 151,107 5 163,408 5 $ 125,025 4 $ (0.16) $ (0.16)	2021 Amount % 3,110,103 100 2,572,050 83 538,053 17 (13,236) - 7,336 - 532,153 17 360,587 12 102,848 3 7,571 - 471,006 15 61,147 2 35,218 1 18,786 1 2,107 - (100,901) (3) (31,960) (1) (76,750) (2) (15,603) - 15,279 - (30,882) - 2,427 - 59,893 2 - - - - 62,320 2 (126,919) (4) - - (126,919) (4) (64,599) (2) (95,481) (2) (0.13) (0.13)

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2021 Loss Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Cash dividends of ordinary share Reversal of special reserve Difference between consideration and carrying amount of subsidiaries acquired or disposed of Changes in ownership interests in subsidiaries Balance on December 31, 2021 Loss Other comprehensive income Total comprehensive income Changes in ownership interests in subsidiaries Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2022	Ordinary shares		Capital surplus				Retained	earnings	earnings					Total other equity interest	Total other equity interest		Total other equity interest	Total equity
												Exchange differences on translation of foreign financial statements		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Revaluation surplus
					Legal reserve		Special reserve		Unappropriated retained earnings	Total retained earnings
	$ 2,336,247 - - - - - - - - 2,336,247 - - - - - $ 2,336,247		234,052		166,655		201,749		105,236 (30,882) 2,427 (28,455) (10,523) (163,537) 201,749 - - 104,470 (38,383) 5,661 (32,722) - 10,682 82,430	473,640		(848,171) - (126,919) (126,919) - - - - - (975,090) - 151,107 151,107 - - (823,983)		(36,504) - - - - - - - - (36,504) - 5,682 5,682 - (10,682) (41,504)	1,028,774		144,099 - (67,026) (67,026) - - - - - 77,073 - 157,747 157,747 - (10,682) 224,138	3,188,038 (30,882) (64,599) (95,481) - (163,537) - 5,164 498 2,934,682 (38,383) 163,408 125,025 (15) - 3,059,692
			- -		- -		- -								- 59,893
			-		-		-								59,893
			- - - 5,164 498		10,523 - - - -										- - - - -
															1,088,667 - 958
															958
															- -
															1,089,625

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Loss before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Reversal of provision for expected credit loss Loss on financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share of loss of subsidiaries, associates and joint ventures accounted for using equity method Loss on disposal of property, plan and equipment Unrealized (loss) profit from sales Loss (gain) on fair value adjustment of investment property Other income Total adjustments to reconcile profit Changes in operating assets and liabilities: Decrease in financial assets at fair value through profit or loss Decrease in notes receivable Decrease (increase) in notes receivable due from related parties Decrease (increase) in accounts receivable (Increase) decrease in accounts receivable due from related parties Decrease in other receivables (Increase) decrease in other receivables due from related parties Decrease (increase) in inventories (Increase) decrease in prepayments (Increase) decrease in other current assets Total changes in operating assets Changes in operating liabilities: Decrease in contract liabilities Decrease in notes payable Decrease in notes payable due to related parties (Decrease) increase in accounts payable Increase (decrease) in accounts payable due to related parties Increase (decrease) in other payables Increase (decrease) in other payable due to related parties Decrease in advance receipts (Decrease) increase in other current liabilities Decrease in net defined benefit liability Decrease in other non-current assets Increase (decrease) in other operating liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from (used in) operating activities	2022 $ (25,146) 16,013 6,569 (146) - 33,549 (3,170) - 95,170 (95) (2,445) 7,193 (2,240) (420) 149,978 - - 96 280,007 (17,109) 1,243 (21,244) 171,276 (31,468) (1,734) 381,067 (556) (8,066) - (80,622) 11,714 6,713 533 - (6,024) (4,164) (1,856) 500 (81,828) 299,239 449,217 424,071 3,170 - (33,345) (33,177) 360,719	2021 (15,603) 18,410 7,319 (60) (111) 31,960 (2,107) (21) 100,901 (7,152) 5,900 (21,048) (2,203) - 131,788 723 500 (96) (108,480) 12,299 735 105,803 (56,932) 19,935 69 (25,444) (17,352) (37,890) (13) 57,704 (21,039) (214,503) (227) (4,679) 4,884 (2,919) - (257) (236,291) (261,735) (129,947) (145,550) 2,107 21 (32,094) (16,108) (191,624)

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Statements of Cash Flows (CONT’D)

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

2022 Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income (10,920) Acquisition of investments accounted for using equity method (100,510) Acquisition of property, plant and equipment (1,528) Proceeds from disposal of property, plant and equipment 95 Acquisition of intangible assets (5,059) Decrease in other financial assets 511 Dividends received 20,680 Net cash flows (used in) investing activities (96,731) Cash flows from (used in) financing activities: Increase in short-term loans 1,225,000 Decrease in short-term loans (1,215,000) Increase in short-term notes and bills payable 779,889 Decrease in short-term notes and bills payable (800,000) Proceeds from long-term debt 287,553 Repayments of long-term debt (140,000) Payment of lease liabilities (5,873) Cash dividends paid - Disposal of ownership interests in subsidiaries (without losing control) - Net cash flows from financing activities 131,569 Net increase (decrease) in cash and cash equivalents 395,557 Cash and cash equivalents at beginning of period 113,418 Cash and cash equivalents at end of period $ 508,975

2021 - (433,850) (4,590) 9,084 (1,430) 19,505 26,435 (384,846) 566,624 (246,614) 49,924 - - (38,250) (6,720) (163,537) 16,378 177,805 (398,665) 512,083 113,418

See accompanying notes to parent company only financial statements.

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TEX-RAY INDUSTRIAL CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

TEX-RAY INDUSTRIAL CO., LTD. (the “Company”) was established with the approval of the Ministry of Economic Affairs in August 1978, and was listed in Taiwan Stock Exchange in 1998. The registered address is 2F., No. 426, Linsen N. Rd., Jhongshan Dist., Taipei City. The Company was originally a modern yarn dyeing factory, and then expanded to spinning business, plain weaving business, and garment business, etc.. In order to enhance competency in international business, the Company established multiple production and sales supply chains overseas in Mexico, Eswatini, Vietnam, and Mainland China, and deployed the marketing department in US and Mexico market. The Company further divided its departments or established new subsidiaries for specialization purpose in particular technologies and markets in order to enhance the overall economic efficiency.

The main business of the Company is in weaving, manufacturing and processing, dyeing and spinning, and trading of cotton and any kind of fibers and textiles, and yarn trading business, garment processing and trading business, ultrasonic cleaning and supercritical cleaning business and extraction businesses.

(2) Approval date and procedures of the financial statements

The financial statements were authorized for issue by the Board of Directors on March 28, 2023.

(3) New standards, amendments and interpretations adopted:

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2022:

• －

• ●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

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2023, would not have a significant impact on its financial statements:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Non- current Liabilities with Covenants”

Content of amendment Effective date per IASB Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to defer settlement for at least 12 months after the reporting date. The amendments has removed the requirement for a right to be unconditional and instead now requires that a right to defer settlement must exist at the reporting date and have substance. The amendments clarify how a company classifies a liability that can be settled in its own shares – e.g. convertible debt. January 1, 2024 After reconsidering certain aspects of the 2020 amendments1, new IAS 1 amendments clarify that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants) do not affect a liability’ s classification at that date. However, when non-current liabilities are subject to future covenants, companies will now need to disclose information to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date. January 1, 2024

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts”

• ●Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “

• ●IFRS16 “Requirements for Sale and Leaseback Transactions”

(4) Summary of significant accounting policies

The significant accounting policies presented in the financial statements are summarized below. The following accounting policies were applied consistently throughout the periods presented in the financial statements.

• (a) Statement of compliance

The financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (b) Basis of preparation

• (i) Basis of measurement

Except for the following significant accounts, the financial statements have been prepared on a historical cost basis:

• 1) Financial instruments at fair value through profit or loss are measured at fair value,

• 2) Fair value through other comprehensive income are measured at fair value,

• 3) Investment property is measured at fair value, and

• 4) The defined benefit liabilities is recognized as the fair value of the plan assets less the present value of defined benefit obligation and the upper limit impact mentioned in Note 4(r).

• (ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the Company operates. The Company’ s financial statements are presented in New Taiwan Dollar, which is the Company’ s functional currency. All the financial information presented in New Taiwan Dollar has been rounded to the nearest thousand.

(Continued)

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TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(c) Foreign currencies

(i) currencies transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for equity securities designated as at fair value through other comprehensive income; which are recognized in other comprehensive income.

(ii) Foreign operation

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interests. When the Company disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, foreign exchange gains and losses arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income.

• (d) Classification of current and non-current assets and liabilities

An asset is classified as current when

• (i) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle,

• (ii) The Company holds the asset primarily for the purpose of trading,

• (iii) The Company expects to realize the asset within twelve months after the reporting period,

(Continued)

12

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• (iv) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current when

• (i) The Company expects to settle the liability in its normal operating cycle,

• (ii) The Company holds the liability primarily for the purpose of trading,

• (iii) The liability is due to be settled within twelve months after the reporting period,

• (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. 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.

(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

Bank overdrafts that are repayable on demand and form an integral part of the Company’ s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at amortized cost, fair value － through other comprehensive income (FVOCI) equity investment, or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

(Continued)

13

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• 1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• 2) Fair value through other comprehensive income (FVOCI )

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

• 3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

(Continued)

14

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• 4) Business model assessment

The Company makes an assessment of the objective of the business model in which a financial asset is held at portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

‧ the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’ s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

‧ how the performance of the portfolio is evaluated and reported to the Company’ s management;

• ‧ the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

• ‧ how managers of the business are compensated ─ e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

• ‧ the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, and are consistent with the Company’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

• 5) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and trade receivables, other receivables, guarantee deposit and other financial assets) and contract assets.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

(Continued)

15

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Since the performance object of the Company’ s cash deposits are investment grade financial institutions, the Company’s credit risk are considered low.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

6) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (ii) Financial liabilities and equity instruments

1) Classification of debt or equity

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

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

(Continued)

16

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

3) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

4) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

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

5) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(g) Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is calculated using weighted average method, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In case of manufactured inventories and work in process, cost includes an appropriate share of production overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

• (h) Investment in associates

Associates are those entities in which the Company has significant influence, but no control, over the financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, minus any accumulated impairment losses.

(Continued)

17

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses resulting from the transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company’s share of losses of an associate equals or exceeds its interest in associates, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

The Company discontinues the use of the equity method and measures the retained interest at fair value from the date when its investment ceases to be an associate. The difference between the fair value of retained interest and proceeds from disposing, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Company accounts for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss ( or retained earnings) on the disposal of the related assets or liabilities, the Company reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) (or retained earnings) when the equity method is discontinued. If the Company’ s ownership interest in an associate is reduced while it continues to apply the equity method, the Company reclassifies the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss.

If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method without remeasuring the retained interest.

When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment will differ from the amount of the Company’s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus. The aforesaid adjustment should first be adjusted under capital surplus. If the capital surplus resulting from changes in ownership interest is not sufficient, the remaining difference is debited to retained earnings. If the Company’s ownership interest is reduced due to the additional subscription to the shares of the associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate will be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities.

(Continued)

18

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(i) Subsidiaries

The subsidiaries in which the Company holds controlling interest are accounted for under equity method in the non-consolidated financial statements. Under equity method, the net income, other comprehensive income and equity in the non-consolidated financial statement are the same as those attributable to the owners of parent in the consolidated financial statements.

The changes in ownership of the subsidiaries are recognized as equity transaction.

(j) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognized in profit or loss.

Any gain or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss. When investment property that was previously classified as property, plant and equipment is sold, any related amount included in ‘other equity - revaluation surplus’ is transferred to retained earnings.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease.

(k) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses. The cost includes any expenditure of acquiring assets. Self-built asset cost includes materials, direct labor, any other expenditure to make the asset usable, removement and recovery cost, and the loan cost meeting the criteria of capitalization. Besides, the cost also includes the software purchased to integrate related functions, which is capitalized as a part of the equipment.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

• (iii) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straightline basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

(Continued)

19

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1)	Buildings	5～55 years
2)	Machinery equipment	7～13 years
3)	Transportation equipment	3～6 years
4)	Office and Other equipment	1～20 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

• (iv) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owneroccupied to investment property.

• (l) Leases

• (i) Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

• (ii) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• 1) fixed payments, including in-substance fixed payment,

• 2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date,

(Continued)

20

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• 3) amounts expected to be payable under a residual value guarantee, and

• 4) payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• 1) there is a change in future lease payments arising from the change in an index or rate, or

• 2) there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or

• 3) there is a change of its assessment on whether it will exercise a purchase, extension or termination option, or

• 4) there is any lease modifications.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases of machinery and office equipment that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a practical expedient, the Company elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

• 1) the rent concessions occurring as a direct consequence of the COVID-19 pandemic,

• 2) the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change,

• 3) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2022, and

• 4) there is no substantive change in other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

(Continued)

21

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iii) As a leasor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

(m) Intangible assets

• (i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including patents and trademarks, that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. Additionally intangible assets such as computer software are amortized at estimated useful lives ranging from three to twenty years, and recognized in profit and loss.

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(Continued)

22

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(n) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(o) Revenue from contracts with customers

• (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’ s main types of revenue are explained below.

• 1) Sale of goods

The Company engages in manufacturing, processing and wholesaling of textile and garments. The Company recognizes revenue 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, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

(Continued)

23

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

• 2) Financial components

The Company does not expect to have any contracts where the period between the transfer of the goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(p) Employee benefits

• (i) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

• (ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity.

The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(Continued)

24

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iii) Termination benefits

Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

• (iv) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

• (q) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

• (i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction,

• (ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future, and

• (iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset if the following criteria are met:

• (i) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

(Continued)

25

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• (ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• 1) the same taxable entity, or

• 2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized.

(r) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as convertible bonds and employee compensation.

(s) Operating segments

Please refer to the consolidated financial report of TEX-RAY INDUSTRIAL CO., LTD. for the years ended December 31, 2022 and 2021 for operating segments information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

The preparation of the financial statements in conformity with the Regulations requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the following period.

There is no judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements.

(Continued)

26

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

• (a) The loss allowance of trade receivables

The Company has estimated the loss allowance of trade receivables that is based on the risk of a default occurring and the rate of expected credit loss. The Company has considered historical experience, current economic conditions and forward-looking information at the reporting date to determine the assumptions to be used in calculating the impairments and the selected inputs. The relevant assumptions and input values, please refer to Note 6(c).

• (b) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Please refer to Note 6(d) for further description of the valuation of inventories.

The Company’s accounting policies include measuring financial and non-financial assets and liabilities at fair value through profit or loss. The Company’ s financial instrument valuation group conducts independent verification on fair value by using data sources that are independent, reliable, and representative of exercise prices. This financial instrument valuation group also periodically adjusts valuation models, conducts back-testing, renews input data for valuation models, and makes all other necessary fair value adjustments to assure the rationality of fair value. Investment property measured at fair value is periodically remeasured by the Company’s finance Dept. or by appraisers using appraisal method accepted by FSC.

The Company strives to use market observable inputs when measuring assets and liabilities. Different levels of the fair value hierarchy to be used in determining the fair value of financial instruments are as follows:

• (a) Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

• (b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).

• (c) Level 3: inputs for the assets or liability that are not based on observable market data.

For any transfer within the fair value hierarchy, the impact of the transfer is recognized on the reporting date.

Please refer to following notes for assumptions used in measuring fair value:

• (a) Note 6(h), Investment property.

• (b) Note 6(u), Financial instruments.

(Continued)

27

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(6) Explanation of significant accounts

(a) Cash and cash equivalents

Cash and cash equivalents
Cash Check deposits Demand deposits Foreign currency deposits Time deposits Cash and cash equivalents in the statements of cash flows	December 31, 2022 $ 442 7,097 38,579 124,064 338,793 $ 508,975	December 31, 2021
		442 6,719 18,793 76,688 10,776
		113,418

Please refer Note 6(u) for the disclosure of interest risk and sensitivity analysis of the Company’s financial assets and liabilities.

• (b) Financial assets at fair value

The portfolio of the Company were as follows:

The portfolio of the Company were as follows:
Equity investments measured at fair value through other comprehensive income Unlisted Common Shares	December 31, 2022 $ 20,012	December 31, 2021
		-

• (i) The Company designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term strategic purposes. The revaluation loss of the investment has been recognized in equity accounts.

• (ii) During 2021, the Company sold part of its financial assets at fair value through profit or loss. The financial asset was disposed at fair value amounted to $723 thousand.

• (iii) Please refer to Note 6(u) for credit risk and market risk of the financial assets.

• (iv) The aforesaid financial assets were not pledged as collateral.

• (c) Notes and trade receivables

Accounts receivable-measured at amortized cost Less: Loss allowance	December 31, 2022 $ 167,522 6 $ 167,516	December 31, 2021
		447,529 152
		447,377

(Continued)

28

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• (i) The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward looking information. The expected credit losses of the notes receivables and trade receivables were as follows:

Overdue under 90 days Overdue 90 to 180 days Overdue 180 to 360 days Over 360 days past due Overdue under 90 days Overdue 90 to 180 days Overdue 180 to 360 days Over 360 days past due	December 31, 2022	December 31, 2022
	Gross carrying amount Weighted- average loss rate $ 167,501 0% 12 10% 9 56% - 100% $ 167,522 December 31, 2021		Loss allowance Provision
			- 1 5 -
			6
		Weighted- average loss rate 0% 10% 52% 100%	Loss allowance Provision
			- 87 13 52
			152

• (ii) The movement in the allowance for notes and accounts receivable was as follow:

Balance on January 1 Reversal of impairment losses Balance on December 31	For the years ended December 31 2022 2021 $ 152 212 (146) (60) $ 6 152
	2022 $ 152 (146) $ 6

(iii) The aforesaid receivables were not pledged as collateral.

(Continued)

29

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(d) Inventories

Raw materials Work in process Finished goods Merchandise	December 31, 2022 $ 15,274 244,567 289 46,287 $ 306,417	December 31, 2021
		21,159 381,080 3,939 71,515
		477,693

• (i) As of December 31, 2022 and 2021, inventories recognized as cost of sales amounted to $2,439,415 thousand and $2,586,134 thousand, respectively. For the years ended 2022 and 2021, the reversal of write-down amounted to $28,233 thousand and $14,084 thousand, respectively. The reversals were included in cost of sales.

• (ii) The aforesaid inventories were not pledged as collateral.

• (e) Investments accounted for using equity method

A summary of the Company's investments accounted for using equity method at the reporting date were as follows:

were as follows:
Subsidiaries	December 31, 2022 $ 3,205,497	December 31, 2021
		2,708,459

• (i) Subsidiary

Please refer to the consolidated financial statements for the year ended December 31, 2022.

• (ii) Associate

The company adopts the equity method for affiliated enterprises that are individually insignificant, and the amount included in the company's financial report in the consolidated financial information in 2022 and 2021 is zero.

• (iii) Pursuant to the resolution passed on December 27, 2022 by the Board of Directors, the Company acquired 100% of equity interests of TRLA GROUP, INC. and Z-PLY CORPORATION from its subsidiary, FLYNN International Ltd., for a total of US$1,372 thousand and US$10,246 thousand, respectively. The above transaction price is paid at the schedule agreed by both parties.

• (iv) The aforesaid investments accounted for using equity method were not pledged as collateral.

(Continued)

30

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(f) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2022 and 2021, were as follows:

Cost: Balance on January 1, 2022 Additions Disposals Balance on December 31, 2022 Balance on January 1, 2021 Additions Transfers Disposals Balance on December 31, 2021 Depreciation and impairment loss: Balance on January 1, 2022 Depreciation for the period Disposals Balance on December 31, 2022 Balance on January 1, 2021 Depreciation for the period Disposals Balance on December 31, 2021 Carrying amounts: Balance on December 31, 2022 Balance on December 31, 2021 Balance on January 1, 2021	Land $ 193,016 - - $ 193,016 $ 193,016 - - - $ 193,016 $ - - - $ - $ - - - $ - $ 193,016 $ 193,016 $ 193,016	Buildings 291,448 914 - 292,362 290,117 1,331 - - 291,448 68,585 5,837 - 74,422 62,759 5,826 - 68,585 217,940 222,863 227,358	Machinery equipment 13,098 - - 13,098 137,058 2,758 2,133 (128,851) 13,098 6,306 1,443 - 7,749 130,749 2,496 (126,939) 6,306 5,349 6,792 6,309	Transporta tion equipment 1,419 - (315) 1,104 1,906 - - (487) 1,419 1,348 - (315) 1,033 1,867 108 (627) 1,348 71 71 39	Office equipment 41,360 280 - 41,640 43,054 501 - (2,195) 41,360 36,218 2,086 - 38,304 36,237 2,176 (2,195) 36,218 3,336 5,142 6,817	Other facilities 35,544 334 - 35,878 75,271 - - (39,727) 35,544 34,164 530 - 34,694 72,810 921 (39,567) 34,164 1,184 1,380 2,461	Total 575,885 1,528 (315) 577,098 740,422 4,590 2,133 (171,260) 575,885 146,621 9,896 (315) 156,202 304,422 11,527 (169,328) 146,621 420,896 429,264 436,000

The property, plant and equipment of the Company had been pledged as collateral for bank borrowings, please refer to Note 8.

(g) Right-of-use assets

The Company leases assets including land, buildings, machinery and transportation equipment. Information about leases for which the Company as a lessee was presented below:

Cost: Balance on January 1, 2022 Additions Disposal Balance on December 31, 2022	Land $ 33,980 1,578 - $ 35,558	Buildings 641 5,709 (641) 5,709	Transportation equipment 5,152 1,164 (4,641) 1,675	Total 39,773 8,451 (5,282) 42,942

(Continued)

31

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Balance on January 1, 2021 Additions Disposal Balance on December 31, 2021 Accumulated depreciation: Balance on January 1, 2022 Depreciation for the year Disposal Balance on December 31, 2022 Balance on January 1, 2021 Depreciation for the year Disposal Balance on December 31, 2021 Carrying amounts: Balance on December 31, 2022 Balance on December 31, 2021 Balance on January 1, 2021	Land $ 33,980 - - $ 33,980 $ 8,491 4,511 - $ 13,002 $ 4,245 4,246 - $ 8,491 $ 22,556 $ 25,489 $ 29,735	Buildings 693 641 (693) 641 413 394 (616) 191 480 626 (693) 413 5,518 228 213	Transportation equipment 6,190 - (1,038) 5,152 4,266 1,212 (4,641) 837 3,293 2,011 (1,038) 4,266 838 886 2,897	Total 40,863 641 (1,731) 39,773 13,170 6,117 (5,257) 14,030 8,018 6,883 (1,731) 13,170 28,912 26,603 32,845

• (h) Investment property

The movement of the investment property were as follows:

Book Value: Balance on January 1, 2022 Change in fair value Balance on December 31, 2022 Balance on January 1, 2021 Change in fair value Balance on December 31, 2021 Carrying amounts: Balance on December 31, 2022 Balance on December 31, 2021 Balance on January 1, 2021	Land and improvement $ 1,011,870 (16,743) $ 995,127 $ 963,693 48,177 $ 1,011,870 $ 995,127 $ 1,011,870 $ 963,693	Buildings 102,528 (3,242) 99,286 94,748 7,780 102,528 99,286 102,528 94,748	Total
			1,114,398 (19,985)
			1,094,413
			1,058,441 55,957
			1,114,398
			1,094,413
			1,114,398
			1,058,441

• (i) The recurring fair value measurement for the investment properties has been categorized as a Level 3 fair value based on the input to the valuation technique used. The above table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

(Continued)

32

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The Company’ s investment properties were subsequently measured at fair value using the income approach after initial recognition. The relevant contract information and key assumptions used in the method are as follows:

Contract Terms	Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City	Building No. 6576, Sec. 3, Zhongshan Dist., Taipei City
	December 31, 2022	December 31, 2021
Contract terms	1.Rental:$238 thousand /month 2.Period:60 months 3.Deposits: $460 thousand 4.Tax borne by lessor:$83 thousand/year	1.Rental:$238 thousand /month 2.Period:60 months 3.Deposits: $460 thousand 4.Tax borne by lessor:$84 thousand/year
Rent at local market rate (note)	$3,220 /Py /month	$3,250 /Py /month
Current market rent for comparable properties in similar locations and condition	$2,794～$3,065 /Py /month	$2,794~$4,125 /Py /month
Current status	In use	In use
Capitalization rate	3.95%	3.77%
Discount rate	2.20%	2.02%
Appraised by external independent appraiser or self-appraisal	Appraised by external independent appraiser	Appraised by external independent appraiser
Appraiser office(s)	Grand Elite Real Estate Appraisers Firm	Grand Elite Real Estate Appraisers Firm
Appraiser name(s)	Fu-Sheng Wang	Fu-Sheng Wang
Appraisal date	December 31, 2022	December 31, 2021
Fair value by external independent appraiser(s)	$67,670 thousand	$70,970 thousand

Contract Terms	Land No. 38, and buildings in Dehui Sec. 4, Zhongshan Dist., Taipei City	Land No. 38, and buildings in Dehui Sec. 4, Zhongshan Dist., Taipei City
	December 31, 2022	December 31, 2021
Contract terms	1.Rental:$44 thousand /month 2.Period:12 months 3.Deposits: $0 thousand 4.Tax borne by lesson:$14 thousand/year	1.Rental:$39 thousand /month 2.Period:12 months 3.Deposits: $0 thousand 4.Tax borne by lesson:$14 thousand/year
Rent at local market rate (note)	$1,190 /Py /month	$1,150 /Py /month
Current market rent for comparable properties in similar locations and condition	$1,139～$1,253 /Py /month	$1,105~$1,182 /Py /month
Current status	In use	In use
Capitalization rate	2.10%	2.19%
Discount rate	1.95%	2.02%

(Continued)

33

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Contract Terms	Land No. 38, and buildings in Dehui Sec. 4, Zhongshan Dist., Taipei City	Land No. 38, and buildings in Dehui Sec. 4, Zhongshan Dist., Taipei City
	December 31, 2022	December 31, 2021
Appraised by external independent appraiser or self-appraisal	Appraised by external independent appraiser	Appraised by external independent appraiser
Appraiser office(s)	Grand Elite Real Estate Appraisers Firm	Grand Elite Real Estate Appraisers Firm
Appraiser name(s)	Fu-Sheng Wang	Fu-Sheng Wang
Appraisal date	December 31, 2022	December 31, 2021
Fair value by external independent appraiser(s)	$14,370 thousand	$13,730 thousand

Contract Terms	Land No. 868, and buildings in Zhenquian Sec. Changhua County	Land No. 868, and buildings in Zhenquian Sec. Changhua County
	December 31, 2022	December 31, 2021
Contract terms	1.Rental:$178～$309 thousand /month 2.Period:36 months 3.Deposits: $0 thousand 4.Tax borne by lesson:$152 thousand/year	1.Rental:$200～$309 thousand /month 2.Period:36 months 3.Deposits: $0 thousand 4.Tax borne by lesson:$154 thousand/year
Rent at local market rate (note)	$300～$400 /Py /month	$300～$400 /Py /month
Current market rent for comparable properties in similar locations and condition	As above	As above
Current status	In use	In use
Capitalization rate	3.00%	3.50%
Discount rate	2.50%	3.00%
Appraised by external independent appraiser or self-appraisal	Appraised by external independent appraiser	Appraised by external independent appraiser
Appraiser office(s)	Grand Elite Real Estate Appraisers Firm	Grand Elite Real Estate Appraisers Firm
Appraiser name(s)	Fu-Sheng Wang	Fu-Sheng Wang
Appraisal date	December 31, 2022	December 31, 2021
Fair value by external independent appraiser(s)	$82,113 thousand	$95,545 thousand

(Continued)

34

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Contract Terms	Land No. 228-240, 240-1, 241, 531, 531-1, 533-535 and buildings located at Shengli Sec., Rende Dist., Tainan City, total in twenty items.	Land No. 228-240, 240-1, 241, 531, 531-1, 533-535 and buildings located at Shengli Sec., Rende Dist., Tainan City, total in twenty items.
	December 31, 2022	December 31, 2021
Rent at local market rate (note)	$220～$280 /Py /month	$200～$218 /Py /month
Current market rent for comparable properties in similar locations and condition	As above	As above
Current status	Available for leasing	Available for leasing
Capitalization rate	2.345%	1.754%
Discount rate	2.22%	3.29%
Appraised by external independent appraiser or self-appraisal	Appraised by external independent appraiser	Appraised by external independent appraiser
Appraiser office(s)	Grand Elite Real Estate Appraisers Firm	CHINA PROPERTY APPAISING CENTER CO., LTD
Appraiser name(s)	Fu-Sheng Wang、Ming-Quan Chen	Dian-Jing Hsieh、Xiang-Ling Chiu
Appraisal date	December 31, 2022	December 31, 2021
Fair value by external independent appraiser(s)	$930,260 thousand	$934,513 thousand

Note: If there is no actual lease case in the area where the target premises are, the valuation report’s selection of the rent comparison case for the premises is based on the investigation and evaluation of the target land use, within the range of the neighboring area, select three appropriate comparison cases, after analysis and comparison and adjustment, obtain the reasonable market rent of the target land.

In accordance with Article 34 of the Regulations on Real Estate Appraisal, the procedures of the income approach include estimating the effective gross income and total expenses, computing the net operating income, determining the capitalization rate or discount rate, and computing the income. The attributes used by the Company for the estimations above were the last three years’ data from the subject property and comparable properties which have similar characteristics, and these data were assessed and adjusted based on their persistency, stability, and growth to ensure the availability and reasonableness of these data. The movement of income (cash inflows) and expenditure (cash outflows) for future periods was based on the vacancies or losses, existing or future cash flow plans of the Company, and historical cash flows from the subject property, identical properties, or properties in the same industry. The estimation and computation of the net income were based on the highest and best use of the subject property and have taken into consideration the income generated from comparable properties in the same location based on their highest and best use.

(Continued)

35

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The discount rate is determined by the risk premium method, which takes into consideration of the bank time deposit interest rate, government bond interest rate, the risk of real estate investment, currency changes and the trend of real estate prices, etc., and is selected to represent the general property return. The rate is a benchmark, and it is determined after adjusting the difference between the investment property and the individual characteristics of the target. The discount rate is based on the mobile interest rate of the two-year postal fixed rate of small deposit issued by Chunghwa Post Co., Ltd., plus no less than 75 basis points of percentage. Factors such as the underlying income situation, liquidity, risk, value-added and ease of management are also taking account. As of December 31, 2022 and 2021, the discount rates were determined to be 1.95%~3.29% and, with risk premium added up. The estimation of capitalization rates refer to the weighted average returns which is calculated by dividing the net income of the comparative targets by the prices.

• (ii) As of December 31, 2022 and 2021, the investment property of the Company had been pledged as collateral for long-term borrowings, please refer to Note 8.

• (i) Short-term borrowings

Secured bank loans Unsecured bank loans Total Unused credit line Range of interest rates	December 31, 2022 $ - 450,000 $ 450,000 $ 333,550 1.50%~1.97%	December 31, 2021 70,000 370,000 440,000 20,000 1.00% ~ 1.25%

The Company had pledged assets as collateral for short-term borrowing, please refer to Note 8.

• (j) Short-term notes and bills payable

Commercial paper payable Less: Discount on short-term notes and bills payable Net Range of interest rates Guarantee institution	December 31, 2022

The Company had pledged assets as collateral for short-term notes and bills payable, please refer to Note 8.

(Continued)

36

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(k) Long-term borrowings

The details were as follows:

Secured bank loans Less: current portion borrowing fees Net Unused credit line Range of interest rates Maturity	December 31, 2022 $ 1,552,066 (48,543) (4,167) $ 1,499,356 $ 170,000 1.79%~2.04% 2027.05~2029.05	December 31, 2021 1,400,000 (140,000) (3,821) 1,256,179 - 2% 2025.01

• (i) The Company entered into a five-year syndicated loan agreement of $1.2 billion with 5 banks including Changhua Commercial Bank LTD. on April 14, 2022. The funds obtained in the syndicated loan are used to settle the outstanding balance of the previous syndicated loan agreement and to supplement the operating turnover. According to the agreement, the Company shall calculate and maintain its current ratio, debt ratio and net tangible asset based on the Company’s annual parent only financial statements audited by auditors during the loan period.The Company met the aforementioned financial ratio as of December 31, 2022.

• (ii) Please refer to Note 8 for details of the related assets pledged as collateral.

(l) Lease liabilities

The carrying amount of lease liabilities were as follows:

Current Non-current For the maturity analysis, please refer to Note 6(u).	December 31, 2022 $ 5,766 $ 23,426	December 31, 2021
		5,238
		21,821

The amounts recognized in profit or loss were as follows:

The amounts recognized in profit or loss were as follows:
Interest on lease liabilities Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the years ended December 31
	2022 $ 570 $ 3,154	2021
		565
		181

The amounts recognized in the statement of cash flows for the Company were as follows：

Total cash outflow for leases	For the years ended December 31	For the years ended December 31
	2022 $ 9,597	2021
		7,466
		(Continued)

37

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(m) Operating lease

Please refer to Note 6(h) for information about the operating leases of property.

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date were as follows:

Less than one year One to two years Two to three years Three to four years Four to five years More than five years Total undiscounted lease payments	December 31, 2022 $ 13,545 7,767 720 720 720 720 $ 24,192	December 31, 2021
		11,023 8,605 7,767 720 720 960
		29,795

For the information of rent revenue from operating lease, please refer to Note 6(t).

(n) Employee benefits

(i) Defined benefit plans

Reconciliation of defined obligation at present value and asset at fair value were as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2022 $ (30,390) 20,067 $ (10,323)	December 31, 2021 (52,634) 32,725 (19,909)

The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provide pension benefits for employees upon retirement. Plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average monthly salary for six months prior to retirement.

1) Composition of plan assets

The Company set aside pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. Under these regulations, the minimum earnings from these pension funds shall not be less than the earnings from two-year time deposits with the interest rates offered by local banks.

(Continued)

38

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $20,067 thousand as of December 31, 2022. For information on the utilization of the labor pension fund assets, including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

2)

Movements in present value of the defined benefit obligations

The movements in the present value of the defined benefit obligations for the years ended December 31, 2022 and 2021 were as follows:

Defined benefit obligation, January 1 Current service costs and interest cost Remeasurements of the net defined benefit liability －Experience adjustments －Actuarial gains (losses) arose from changes in demographic assumptions －Actuarial gains (losses) arose from changes in financial assumption Benefits paid by the plan Loss of control of a subsidiary Defined benefit obligation, December 31	For the years ended December 31 2022 2021 $ (52,634) (55,352) (385) (191) 436 (306) - (57) 2,556 2,010 4,251 1,262 15,386 - $ (30,390) (52,634)
	2022 $ (52,634) (385) 436 - 2,556 4,251 15,386 $ (30,390)

3)

Movements in the fair value of plan assets

The movements in the fair value of the defined benefit plan assets for the years ended December 31, 2022 and 2021 were as follows:

Fair value of plan assets, January 1 Interests revenue Remeasurements of the fair value of plan assets －Return on plan asset excluding interest income Contributions made Benefits paid by the plan Settlement payment of plan asset Fair value of plan assets, December 31	For the years ended December 31 2022 2021 $ 32,725 30,340 226 92 2,430 538 3,121 3,017 (4,251) (1,262) (14,184) - $ 20,067 32,725
	2022 $ 32,725 226 2,430 3,121 (4,251) (14,184) $ 20,067

• 4) Movements of the effect of the asset ceiling: None.

(Continued)

39

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

5) Expenses recognized in profit or loss

The Company’s pension expenses that should be recognized in profit or loss for the years ended December 31, 2022 and 2021 were as follows:

Current service costs Net interest of net liabilities for defined benefit obligations Curtailment or settlement gains	For the years ended December 31	For the years ended December 31
	2022 $ 27 132 (1,202) $ (1,043)	2021
		27 72 -
		99

The actual expenses recognized in profit or loss for the years ended December 31, 2022 and 2021 were as follows:

Selling expenses Administration expenses Research and development expenses Prepayment	For the years ended December 31	For the years ended December 31
	2022 $ (677) (296) (70) - $ (1,043)	2021
		58 24 - 17
		99

• 6) Actuarial assumptions

The principal actuarial assumptions at the reporting date were as follows:

Discount rate Future salary increase rate	December 31, 2022 December 31, 2021 % 1.30 % 0.70 % 2.00 % 2.00

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $1,270 thousand.

The weighted average lifetime of the defined benefits plans is 8 years.

(Continued)

40

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

7) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2022 Discount rate (change 0.25％) Future salary increasing rate (change 0.25％) December 31, 2021 Discount rate (change 0.25％) Future salary increasing rate (change 0.25％)	Influences of defined benefit obligations Increase 0.25％ Decrease 0.25％ $ (640) 663 657 (638) (1,208) 1,253 1,233 (1,196)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2022 and 2021.

(ii) Defined contribution plans

The Company allocates the regulated percentage of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The pension costs incurred from the contributions to the Bureau of the Labor Insurance amounted to $8,127 thousand and $8,188 thousand for the years ended December 31, 2022 and 2021, respectively.

(Continued)

41

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(o) Income taxes

(i) Tax expense

The components of income tax for the years ended December 31, 2022 and 2021 were as follows:

Current income tax expense Current period Prior years income tax adjustment Additional tax on undistributed earnings Deferred income tax expense Origination and reversal of temporary differences Tax expense	For the years ended December 31	For the years ended December 31
	2022 $ 5,495 56 - 5,551 7,686 $ 13,237	2021
		- 2,768 5,101
		7,869
		7,410
		15,279

The reconciliation of tax expense and income before tax for the years ended December 31, 2022 and 2021 were as followed:

Loss before tax Income tax expense at domestic statutory tax rate Tax-exempt income Recognition of investment loss under the equity method Realized investment loss Prior years income tax adjustment Gains on financial assets at fair value through profit or loss Origination and reversal of temporary differences Others	For the years ended December 31 2022 2021 $ (25,146) (15,603) $ (5,029) (3,121) - (4) 19,034 20,180 (1,536) (4,400) 56 2,768 - (22) 7,686 7,410 (6,974) (7,532) $ 13,237 15,279	For the years ended December 31 2022 2021 $ (25,146) (15,603) $ (5,029) (3,121) - (4) 19,034 20,180 (1,536) (4,400) 56 2,768 - (22) 7,686 7,410 (6,974) (7,532) $ 13,237 15,279
	2022 $ (25,146) $ (5,029) - 19,034 (1,536) 56 - 7,686 (6,974) $ 13,237
		(3,121) (4) 20,180 (4,400) 2,768 (22) 7,410 (7,532)
		15,279

(Continued)

42

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(ii) Recognized deferred tax asset and liability recognized

Changes in the amount of deferred tax assets and liabilities for 2022 and 2021 were as follows:

1) Deferred tax asset:

Balance on January 1, 2022 Recognized in profit or loss Balance on December 31, 2022 Balance on January 1, 2021 Recognized in profit or loss Balance on December 31, 2021	Unrealized loss of inventory valuation $ 14,245 (5,646) $ 8,599 $ 17,062 (2,817) $ 14,245	Unrealized sales margin 2,647 (488) 2,159 1,467 1,180 2,647	Unrealized exchange loss 624 (624) 6,193 (5,569) 624	Others 1,040 496 1,536 1,244 (204) 1,040	Total 18,556 (6,262) 12,294 25,966 (7,410) 18,556

• 2) Deferred tax liabilities:

Balance on January 1, 2022 Recognized in profit or loss Balance on December 31, 2022 Balance on January 1, 2021 Balance on December 31, 2021	Defined benefit plan		Provision for land value increment tax	Unrealized exchange benefits - 1,424 1,424 - -	Total
	$ 654 - $ 654 $ 654 $ 654		177,045 -		177,699 1,424
			177,045		179,123
			177,045		177,699
			177,045		177,699

(iii) The Company’s income tax returns through 2020 have been assessed and approved by the Tax Authority.

(p) Capital and other equity

(i) Ordinary shares

A resolution was passed by the general meeting of shareholders held on 27 June, 2013, for the issuance of 42,052 thousand ordinary shares for cash under private placement, with par value of $10 per share, amounting to $420,524 thousand. The date of capital increase was on 28 April, 2014, which was approved on 23 April, 2014 by the Board. The relevant statutory registration procedures have been completed.

A resolution was passed by the temporary meeting held on December 4, 2018 for the issuance of 23,362 thousand ordinary shares for cash under private placement, with par value of $10 and issuance price of $10.16 per share, amounting to $237,363 thousand. The date of capital increase was on December 12, 2018. The relevant statutory registration procedures have been completed.

(Continued)

43

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

As of December 31, 2022 and 2021, the number of authorized shares were each $3,000,000 thousand, respectively, with par value of $10 per share and divided into 300,000 thousand shares. All of the aforementioned shares are ordinary shares, and the number of issued shares was 233,625 thousand shares. All proceeds from the shares have been collected.

The aforementioned private placement of ordinary shares and the transfer of any subsequently obtained bonus shares would be subject to article 43-8 under the Securities and Exchange Act. The Company can only apply for these shares to be traded on the Taiwan Stock Exchange after a three-year period has elapsed from the delivery date of the private-placed securities, and after applying for a public offering with the Financial Supervisory Commission.

(ii) Capital surplus

The components of the capital surplus were as follows:

Share capital Conversion of bonds Treasury stock transactions Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in equity of subsidiaries under equity method Donated surplus	December 31, 2022 $ 121,485 14,648 3,949 95,847 3,516 254 $ 239,699	December 31, 2021
		121,485 14,648 3,949 95,847 3,531 254
		239,714

According to the R.O.C. Company Act, capital surplus can only be used to offset a deficit, and only the realized capital surplus can be used to increase the common stock or be distributed as cash dividends. The aforementioned realized capital surplus includes capital surplus resulting from premium on issuance of capital stock and earnings from donated assets received. According to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, capital increases by transferring capital surplus in excess of par value should not exceed 10% of the total common stock outstanding.

(iii) Retained earnings

The Company’s article of incorporation stipulate that Company’s net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes or salary. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit, together with any undistributed retained earnings, shall be distributed according to the distribution plan proposed by the Board of Directors to be submitted to the stockholders’ meeting for approval.

(Continued)

44

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The Company’s dividend policy considering factors such as current and future development plans, investment environment, capital requirements and domestic and international competition, and the interests of shareholders, is to distribute dividends to shareholders in an amount not less than 10% of the current distributable earnings each year.

The earnings distribution may be distributed by cash or stock. The distribution ratio of cash dividends should not be less than 10% of the total dividends.

• 1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

When the Company first adopted the International Financial Reporting Standards endorsed by the FSC, it chose to apply the exemption item of IFRS 1 "First-time Adoption of International Financial Reporting Standards". The unrealized revaluation increase and accumulation accounted under shareholders’ equity amounted to $216,408 thousand result in the reduction of retained earnings. In accordance with the requirements issued by the FSC, for the net reduction of retained earnings on the conversion date due to the first adoption of IFRSs, the Company was exempted from reclassifying special surplus reserve for the amount transferred to the retained earnings on January 1, 2013.

The Company chose the fair value model for subsequent measurement of its investment property. According to the requirements of the FSC, the Company took the special surplus reserve amounting to the net increase in fair value of investment property measured by the fair value model at first adoption, and the special surplus reserve shall be taken in the following order when the Company distribute the earnings every year:

• a) Take the special reserve, which amounts to the net increase in the fair value model for subsequent measurement of investment property, from undistributed earnings of current period and prior year. If it is the cumulative net increase in fair value in the previous period, the amount of the special reserve equals to the same amount from the undistributed earnings from the previous period. When the accumulated net increase in fair value of the investment real estate is subsequently reduced or the investment real estate is disposed of, the surplus may be reverted to distribute the surplus based on the reduction or the disposal situation.

• b) According to the requirements issued by the FSC, the special surplus reserve calculated based on the difference between the market value and the book value of the parent company’s stock held by the subsidiaries at the end of the period, shall not be distributed. If there is any rebound in the market price thereafter, the reversal amount based on the shareholding percentage shall be reclassified into retained earnings.

(Continued)

45

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• c) In accordance with the requirements issued by the FSC, the amount of net deduction of other shareholders’ equity recognized in current year should be retained from undistributed earnings from current period and prior year. The amount of net deduction of other shareholders’ equity generated from previous period should be made up from undistributed earnings from the prior year. When the accumulated net deduction of other shareholders’ equity is subsequently reduced, the special reserve may be reversed to distributable earnings.

3) Earnings distribution

On June 15, 2022, the Company resolved not to distribute dividends at the general meeting of stockholders. On July 12, 2021, the general meeting of stockholders resolved to distribute earnings for 2020. The cash dividends of $0.7 per share, amounting to $163,537 thousand, were distributed to ordinary shareholders for the year 2020.

(q) Earnings per share

The basic earnings per share and diluted earnings per shares were calculated as follow:

• (i) Basic earnings per share

Basic earnings per share Loss attributable to ordinary shareholders Weighted-average number of ordinary shares (thousand shares) Loss attributable to shareholders per share	For the years ended December 31 2022 2021 $ (38,383) (30,882) 233,625 233,625 $ (0.16) (0.13)

• (ii) For the years ended December 31, 2022 and 2021 was operating loss, there is no dilution effect. The diluted earnings per share have not been disclosed.

• (r) Revenue from contracts with customers

• (i) Disaggregation of revenue

Primary geographical markets: Taiwan America Asia Europe Africa Other countries	For the years ended December 31	For the years ended December 31
	2022 $ 117,775 1,890,889 604,117 11,576 247,694 6,332 $ 2,878,383	2021
		141,595 2,273,523 444,165 13,938 223,421 13,461
		3,110,103

(Continued)

46

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(ii) Contract balances

Contract liabilities	December 31, 2022 $ -	December 31, 2021 556	January 1, 2021
			17,908

The major change in the balance of contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

(s) Employee compensation and directors' remuneration

According the amended Company’ s Articles of Incorporation, remuneration of employees is appropriated at 2% of profit settled by cash or shares decided by the board of directors. The recipients of cash and shares may include the employees of the Company’s affiliated companies who meet certain conditions. Remuneration of directors is appropriated at no more than 2% of the profit. Remuneration of employees and directors is submitted to general meeting of the shareholders. However, accumulated deficit from prior years is first offset before any appropriation of profit.

For the years ended December 31, 2022 and 2021, the Company suffered operating loss, hence, no remuneration of employees and directors were estimated. The estimated amounts were calculated based on the net profit before tax, excluding the remuneration of employees and directors of each period, and multiplied by the percentage of remuneration of employees and directors as specified in the Company’s Articles of Incorporation.

There was no difference between the amounts approved by Board of Directors and recognized for the years ended December 31, 2022 and 2021. For further information, please refer to Market Observation Post System website.

(t) Non-operating income and expenses

(i) Other income

The details of other income were as follows:

Rent income Management service revenue Dividend income Overdue payment income Others	For the years ended December 31	For the years ended December 31
	2022 $ 15,815 723 - 53 15,517 $ 32,108	2021
		10,168 6,224 21 10,359 8,446
		35,218

(Continued)

47

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(ii) Other gains and losses

The details of other gain and losses were as follows:

Gains on disposal of property, plant and equipment (Losses) gains on remeasurement of investment property Foreign exchange gains (losses) Gains on financial asset at fair value through profit or loss Other income Other expenses	For the years ended December 31	For the years ended December 31
	2022 $ 95 (7,193) 89,140 - 709 (9,185) $ 73,566	2021
		7,152 21,048 (11,058) 111 1,533 -
		18,786

(iii) Interest income

The details of interest income were as follows:

Interest income Bank deposits Interest subsidy Loans	For the years ended December 31	For the years ended December 31
	2022 $ 2,465 17 688 $ 3,170	2021
		739 20 1,348
		2,107

(iv) Interest expenses

The details of interest expenses were as follows:

Loans and borrowings Lease liabilities	For the years ended December 31	For the years ended December 31
	2022 $ 32,979 570 $ 33,549	2021
		31,395 565
		31,960

(Continued)

48

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(u) Financial instruments

(i) Categories of financial instruments

1) Financial asset

Measured at fair value through other comprehensive income Measured at amortized cost (deposits and receivables) Cash and cash equivalents Notes, accounts receivable, and other receivables Other current financial assets Other non-current financial assets Subtotal Total Financial liabilities Financial liabilities carried at amortized cost Short-term borrowings Short-term notes and bills payable Accrued payables (including non-current) Long-term borrowing, current portion Lease liabilities Long-term borrowings Total	December 31, 2022 $ 20,012 508,975 334,292 151,951 4,690 999,908 $ 1,019,920 December 31, 2022 $ 450,000 279,473 700,624 48,543 29,192 1,499,356 $ 3,007,188	December 31, 2021
		-
		113,418 577,139 151,965 5,187
		847,709
		847,709
		December 31, 2021
		440,000 299,584 433,218 140,000 27,059 1,256,179
		2,596,040

2) Financial liabilities

(ii) Credit risk

1) Credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to the credit risk. The amounts of maximum credit risk exposure of the Company on December 31, 2022 and 2021, were $1,019,920 thousand and $847,709 thousand, respectively.

(Continued)

49

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• 2) The customers of the Company are concentrated in the retail and wholesale of textile or garments. In order to reduce credit risk, the Company continuously evaluates the financial status of customers, conducts individual assessment based on the signs of impairment of accounts receivable and credit risk characteristics, handles accounts receivable insurance policy for some customers. On December 31, 2022 and 2021, the top five customers comprised 87% and 79% of the balances of accounts receivable, resulting in the concentration of credit risk.

• 3) For credit risk exposure of notes and trade receivables, please refer to Notes 6(c).

• (iii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

December 31, 2022 Non-derivative financial liabilities Secured loans Unsecured loans Short-term notes and bills payable Accrued payables (including non-current Lease liabilities December 31, 2021 Non-derivative financial liabilities Secured loans Unsecured loans Short-tern notes and bill payble Accrued payables Lease liabilities	Carrying amount $ 1,552,066 450,000 279,473 700,624 29,192 $ 3,011,355 $ 1,470,000 370,000 299,584 433,218 27,059 $ 2,599,861	Contractual cash flows 1,710,326 451,274 280,000 700,624 30,553 3,172,777 1,542,014 370,532 300,000 433,218 28,573 2,674,337	Within 6 months 39,483 451,274 280,000 498,466 3,302 1,272,525 153,797 370,532 300,000 433,218 3,092 1,260,639	6-12 months 39,483 - - 156,213 3,288 198,984 82,717 - - - 2,616 85,333	1-2 years 78,966 - - 45,945 6,227 131,138 163,333 - - - 4,573 167,906	2-5 years 698,995 - - - 17,736 716,731 1,142,167 - - - 13,719 1,155,886	Over 5 years
							853,399 - - - -
							853,399
							- - - - 4,573
							4,573

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(Continued)

50

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iv) Currency risk

1) Exposure to foreign currency risk

The Company’s significant exposures to foreign currency risk were as follow:

The Company’s sig	nificant exposures to foreign currenc	nificant exposures to foreign currenc	y risk were as follow:	y risk were as follow:
Financial assets Monetary items NTD:USD Financial liabilities Monetary items NTD:USD	December 31, 2022 Foreign Currency Exchange Rate NTD $ 30,627 30.710 940,555 15,822 30.710 485,894		December 31, 2021
	Foreign Currency $ 30,627 15,822	Exchange Rate 30.710 30.710	Foreign Currency 28,440 8,017	Exchange Rate NTD 27.680 787,230 27.680 221,924

2) Sensitivity analysis

The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable and other receivables, other financial assets, loans, trade and other payables that are denominated in foreign currency. A 1% of appreciation or depreciation of each major foreign currency against the Company’s functional currency as of December 31, 2022 and 2021 would have increased (decreased) the net income for the years ended December 31, 2022 and 2021 by $4,547 thousand and $5,653 thousand, respectively.

• 3) Foreign exchange gains or losses on monetary item

Since the Company has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the years ended December 31, 2022 and 2021, foreign exchange gains and losses (including realized and unrealized portions) amounted to gains $89,140 thousand and losses $11,058 thousand, respectively.

(v) Interest rate analysis

The book values of the financial assets and financial liabilities exposed to the interest rate risk on the reporting date were as below:

Fixed interest rate instruments： Financial assets Financial liabilities Variable interest rate instruments： Financial assets Financial liabilities	Book value December 31, 2022 December 31, 2021 $ 493,244 162,741 $ (279,473) (299,854) $ 162,643 95,481 $ (1,997,899) (1,836,179)
	December 31, 2022 $ 493,244 $ (279,473) $ 162,643 $ (1,997,899)

(Continued)

51

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding throughout the year. The Company’s internal management reported the change of interest rate and the exposure to changes in interest rate of 1% is considered by management to be a reasonable change of interest rate.

If the interest rate had increased / decreased by 1% basis points, the Company’ s interest expenses would have increased / decreased by $18,353 thousand and $17,407 thousand for the years ended December 31, 2022 and 2021 respectively, with all other variable factors remaining constant. The is mainly due to variable-rate loans.

(vi) Other market price risk

If the security price of domestic stocks measured at fair value through profit or loss held by the Company changes, the impact to other comprehensive income will be as follows, assuming the analysis is based on the same basis for both years and assuming that all other variables considered in the analysis remain the same:

Price of securities at reporting date Increasing 7% Decreasing 7%		For the years ended December 31

• (vii) Information of fair value

• 1) Classification of financial instruments and fair value hierarchy

The book value of the financial assets and liabilities was close to the fair value. The fair value of the financial assets measured at fair value through profit and loss and those measured at fair value through other comprehensive income was estimated on a recurring basis of level 1 and 3, respectively.

• 2) Valuation techniques for financial instruments not measured at fair value

The Company’s valuation techniques and assumptions used for financial instruments not measured at fair value are as follows:

• a) Financial assets and liabilities measured at amortized cost (including debt investment that has no active markets).

If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values.

(Continued)

52

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• 3) Valuation techniques for financial instruments measured at fair value

The Company’ s valuation techniques and assumptions used for financial instruments measured at fair value are as follows:

• a) The financial instrument that have standard terms and are traded in an active market, such as listed stocks, the fair value is determined by quoted prices.

• b) Measurements of fair value of financial instruments without an active market

  • i) Using discounted cash flow analysis to measure its fair value. The main assumption is investors’ expected standard profit which is manipulated by capitalization rate that reflects investment risk.

  • ii) Using observable market data at the reporting date to measure its fair value. The main assumption is based on comparable price-book ratio, which is adjusted by offsetting the impact of discount for lack of marketability and minority interest.

• c) The fair values of financial assets and financial liabilities other than those aforesaid are determined in accordance with discounted cash flow analysis which is generally accepted.

• 4) Transfers between Level 1 and Level 2

There are no transfers from each level for the years ended December 31, 2022 and 2021.

• (v) Financial risk management

• (i) Overview

The Company have exposures to the following risks from its financial instruments:

• 1) credit risk

• 2) liquidity risk

• 3) market risk

The following likewise discusses the Company’ s exposure information, objectives, policies and processes for measuring and managing the above mentioned risks. For further information, please refer to the relevant notes to the financial statement.

(ii) Structure of risk management

The financial management department of the Company provides intercompany services for various businesses, coordinates the operation of entering the domestic and international financial markets, and supervises and manages the financial risks related to the operation of the Company by analyzing the internal risk report according to the degree and breadth of the risk. Internal auditors continue to review compliance with policies and the risk limit. The Company did not trade financial instruments (including derivative financial instruments) for speculative purposes.

(Continued)

53

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investments in equity investment.

1) Trade and other receivables

The policy adopted by the Company is to only trade with reputable customers and obtain collateral when necessary to reduce the risk of financial losses from default. The Company only trades with companies rated equivalent to the investment grade. Such information is provided by independent rating agencies; if such information is not available, the Company will use other publicly available financial information and transaction experience to rate major customers. The Company continues to monitor the credit risk insurance level and the credit rating of the counterparty, and distributes the total transaction amount to those with qualified credit ratings, and controls the credit risk through the credit limit that is reviewed and approved annually.

The accounts receivable is comprised from vast customers base, which is scattered in different industries and geographic regions. The Company continues to evaluate the financial status of customers.

2) Investments

The exposure to credit risk for the bank deposits, fixed income investments, and other financial instruments is measured and monitored by the Company’s finance department. The Company only deals with banks, other external parties, corporate organizations, government agencies and financial institutions with good credit rating. The Company does not expect any counterparty above fails to meet its obligations hence there is no significant credit risk arising from these counterparties.

3) Guarantees

The Company’ s policy is to provide financial guarantees only to wholly owned subsidiaries. On December 31, 2022 and 2021, no other guarantees were outstanding.

(iv) Liquidity risk

The Company manages and maintains sufficient cash and cash equivalents to support the operation and ease the impact of cash flow fluctuation. The management supervises the unused credit lines and ensures the compliance of loan contracts.

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’ s reputation.

(Continued)

54

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Bank loans were important resource of liquidity risk for the Company. The unused credit line of the Company on December 31, 2022 and 2021 were $503,550 thousand and $20,000 thousand, respectively.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

• 1) Currency risk

The Company is exposed to currency risk arising from sales, purchases and borrowings that are not denominated in functional currencies of the Group’s main operating entities. The functional currency of the Group is primarily the New Taiwan Dollars (NTD), as well as US Dollars (USD), Euro (EUR), Chinese Yuan (CNY) and South African Rand (ZAR). The currencies used in these transactions are denominated in NTD, EUR, USD, CNY and ZAR.

The loan interest is denominated in the same currency as principal. Generally, borrowings are denominated in the same currencies that generates operating cash flows of the Company, mainly in NTD, as well as in USD and CNY. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

• 2) Interest rate risk

The Company borrowed funds in the fixed and variable rate simultaneously, resulting in fair value change risk and cash flow risk. The Company manage the interest rate risk through maintaining a proper combination of fixed and variable rate.

3) Other market price risk

The Company is exposed to equity price risk due to the investments in domestic listed stocks. The Company does not actively trade these investments, and the management continuously monitor the price risk and assess the portfolio.

(w) Capital management

The Company’s objectives for managing capital to safeguard the capacity to continue to operate, to continue to provide a return on shareholders, to maintain the interest of other related parties, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the dividend payment to the shareholders, reduce the capital for redistribution to shareholders, issue new shares, or sell assets to settle any liabilities.

(Continued)

55

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

The Company and other entities in the same industry use the debt-to-equity ratio to manage capital. This ratio is the total net debt divided by the total capital. The net debt from the balance sheet is derived from the total liabilities less cash and cash equivalents. The total capital and equity include share capital, capital surplus, retained earnings and other equity plus net debt.

As of December 31, 2022, the Company’s capital management strategy is consistent with the prior year. The Company’s debt-to-equity ratio at the end of the reporting period as of December 31, 2022 and 2021, were as follows:

Total liabilities Less: cash and cash equivalents Net debt Total Equity Adjusted equity Debt-to-equity ratio	December 31, 2022 $ 3,241,775 (508,975) 2,732,800 3,059,692 $ 5,792,492 % 47.18	December 31, 2021 2,872,495 (113,418) 2,759,077 2,934,682 5,693,759 % 48.46

(7) Related-party transactions

• (a) Names and relationship with related parties

The following are entities that have had transactions with related parties and the Company's subsidiaries during the periods covered in the financial statements.

Name of related party	Relationship with the Company
TEX-RAY INDUSTRIAL CO., LTD. (BELIZE)	Subsidiary
TEX-RAY (BN) INTERNATIONAL CO., LTD.	Subsidiary
FLYNN INTERNATIONAL LTD.	Subsidiary
KING’S METAL FIBER LTD.	Subsidiary
TAIWAN SUPERCRITICAL TECHNOLOGY CO., LTD.	Subsidiary
GREAT CPT INTERNATIONAL CO., LTD.	Subsidiary
KASUMI APPARELS SWAZILAND (PTY) LTD.	Subsidiary
(KASUMI (SWAZILAND))
T.Q.M. TEXTILE SWAZLAND (PTY) LTD.	Subsidiary
(T.Q.M. (SWAZILAND))
UNION INDUSTRIAL WASHING (PTY) LTD.	Subsidiary
(U.I.W. (SWAZILAND))
TEX-RAY (SA) (PTY) LTD. (TEX-RAY (SA))	Subsidiary
J.M. Rotary Print Industrial Co., Ltd.	Subsidiary
GOLDEN JUBILEE APPAREL (PROPRIETARY LIMITED)	Subsidiary
ZHENG-RAY Industrial CO.,LTD.	Subsidiary

(Continued)

56

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Name of related party Relationship with the Company WEI LI TEXTILE CO., LTD. Subsidiary TEX-RAY INDUSTRIAL CO., LTD. Subsidiary (TEX-RAY (CAYMAN)) TEX-RAY INDUSTRIAL CO., LTD. (SHANGHAI) Subsidiary (TEX-RAY (SHANGHAI)) TRLA GROUP, INC. (TRLA GROUP) Subsidiary Z-PLY CORPORATION (Z-PLY (NY)) Subsidiary TEXRAY SWAZILAND PTY LTD. Subsidiary GOOD TIME(VIETNAM) ENTERPRISE CO.,LTD. Subsidiary (GOOD TIME) MSWATI HOLDINGS LTD. Subsidiary TEXRAY (VN) CO., LTD. (TEXRAY (VN)) Subsidiary T.R.C.A GARMENT CO., LTD. (TRCA GARMENT) Subsidiary TEXRAY MEXICO S.A. DE C.V. (TEXRAY (MEXICO)) Subsidiary AMRAY S.A. DE C.V. (AMRAY (MEXICO)) Subsidiary KING'S METAL FIBER TECHNOLOGIES B.V. Subsidiary TEX-RAY INDUSTRIAL CO., LTD. (YANCHENG) Subsidiary AIQ SMART CLOTHING INC. (AIQ) Subsidiary AIQ SMART CLOTHING (Zhejiang) CO.,LTD. Subsidiary KING'S METAL FIBER (SHANGHAI) CO., LTD. Subsidiary TRYD APPAREL CO., LTD. (TRYD APPAREL) Subsidiary JIANGSU TRYD TEXTILE TECHNOLOGY CO., LTD. Subsidiary (TRYD TEXTILE) TEXRAY (KUNSHAN) CO., LTD. Subsidiary Taiwan Innovation Technology Co., Limited (HK) Subsidiary AIQ SYNERTIAL LTD. (AIQ-S) Subsidiary Yancheng Wei-Da Textile Testing Service Co., Ltd. Subsidiary HUAI WEI BIOTECHNOLOGY CO., LTD. Subsidiary SEN JEWEL TECHNOLOGY CO., LTD. Same president with the Company TAI CHAM TECHNOLOGY CO., LTD. The entity's chairman is the vice chairman of the Company

(Continued)

57

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(b) Significant transactions with related parties

(i) Sales

The amounts of sales to the related parties were as follows:

Subsidiary－Z-PLY(NY) Subsidiaries Other related party Associates	For the years ended December 31	For the years ended December 31
	2022 $ 645,534 265,542 - 593 $ 911,669	2021
		605,314 244,837 150 32
		850,333

The payment terms ranged from one to three months, which were no difference from the those given to other customers. The pricing cannot be compared due to the specifications and styles of the orders.

(ii) Purchase

• 1) The amounts of inventory purchases from related parties were as follows:

Subsidiary－TEX-RAY (SHANHAI) Subsidiary－TRYD APPAREL Subsidiaries	For the years ended December 31	For the years ended December 31
	2022 $ 58,122 92,110 2,985 $ 153,217	2021
		82,976 46,087 4,761
		133,824

The payment terms ranged from one to three months, which were no difference from those given by other vendors. The pricing cannot be compared due to the specifications and styles of the orders.

• 2) The amount of processing service purchases from related parties were as follows:

Subsidiary－GOOD TIME Subsidiary－TEXRAY (VN) Subsidiaries	For the years ended December 31	For the years ended December 31
	2022 $ 131,741 280,939 10,307 $ 422,987	2021
		96,384 297,207 17,524
		411,115

The Company's outsourcing processing transactions with related parties are based on the content of the customer's order. The prices and payment terms are negotiated, and if necessary, the advance payment may be made based on the operational needs of the related parties.

(Continued)

58

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iii) Receivables from related parties

The receivables from related parties were as follows:

Account	Relationship	December 31, 2022 $ - $ 43,322 63,901 8,126 - $ 115,349 1,104 5,127 902 - $ 7,133	December 31, 2021
Notes receivable from related parties Accounts receivable due from related parties Accounts receivable due from related parties Accounts receivable due from related parties Accounts receivable due from related parties Other receivables due from related parties Other receivables due from related parties Other receivables due from related parties Other receivables due from related parties	Subsidiary Subsidiary-Z-PLY(NY) Subsidiary-T.Q.M. (SWAZILAND) Subsidiaries Other related parties Subsidiary-TEXRAY (SHANGHAI) Subsidiary-AMRAY (MEXICO) Subsidiaries Other related parties		96
			388 96,821 873 158
			98,240
			995 1,194 1,518 200
			3,907

(Continued)

59

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(iv) Payables to related parties

Account	Relationship	December 31, 2022 $ 16,237 1,401 $ 17,638 $ 290,985 672 $ 291,657 $ 45,945	December 31, 2021
Accounts payable due to related parties Accounts payable due to related parties Other payable due to related parties Other payable due to related parties Other non-current liabilities	Subsidiary-TRYD APPAREL Subsidiaries Subsidiary-FLYNN Subsidiary Subsidiary-FLYNN		4,344 1,580
			5,924
			- 139
			139
			-

In December 2022, the Company acquired 100% of the equity interests in TRLA GROUP, INC and Z-PLY CORPORATION from its subsidiary FLYNN INTERNATIONAL LTD. for US$11,618 thousand, and the outstanding amount is US$11,000 thousand. Please refer to note 6 (e) for details.

(v) Prepayments

The prepayments of the Company to related parties were as follows：

Subsidiary-TEXRAY (VN) Subsidiary-TRCA GARMENT Subsidiary-GOOD TIME Subsidiary-TEX-RAY (SHANGHAI)	December 31, 2022 $ 119,652 23,797 32,203 - $ 175,652	December 31, 2021
		69,145 23,797 40,169 696
		133,807

• (vi) Receipts under custody (accounted as other current liabilities)

The receipts of the Company for related parties were as follows:

Subsidiary	December 31, 2022 $ -	December 31, 2021 2,580

(Continued)

60

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(vii) Financing provided to related parties (accounted as other receivables due from related parties)

Balances of financing provided by the Company to related parties were as follows:

Subsidiary-TRYD TEXTILE Subsidiary-AIQ Subsidiary-AIQ-S	December 31, 2022 $ 31,080 - 9,260 $ 40,340	December 31, 2021
		- 19,000 3,322
		22,322

The financing provided to related parties was unsecured. The interest charged by the Company to its subsidiaries is ranging from 2.5%～ 4%. The interest incomes in 2022 and 2021 were $688 thousand and $1,348 thousand, respectively.

(viii) Endorsement guarantee

• 1) The balances of endorsement guarantee provided to the subsidiaries, which was due to bank borrowings and material purchase borrowings, were as follows (expressed in thousands of each currency ):

December 31,	December 31,	December 31,	December 31,
	2022		2021
USD	34,500	USD	36,300
NTD	161,000	NTD	61,000
CNY	24,000	CNY	72,000

• 2) As of December 31, 2022 and 2021, the assets pledged by the Company as collateral for subsidiaries’ outstanding loans were $304,053 thousand and $298,133 thousand, respectively.

(ix) Leases

The Company leased its factory buildings and offices to subsidiaries, associates and other related parties in lease terms of a year. The rental income was paid on a monthly basis. For the years ended December 31, 2022 and 2021, the rental income was $11,888 thousand and $7,060 thousand, respectively.

(x) Others

• 1) Management service income

The amount of management service income from related party received by the Company (accounted as other income under non-operating income and expenses) was as follows:

Subsidiary	For the years ended December 31 2022 2021 $ 723 6,224	For the years ended December 31 2022 2021 $ 723 6,224
		2021
		6,224

(Continued)

61

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

2) Commission income

The amounts of commission income (accounted as other income under non-operating income and expenses) received by the Company for purchasing raw materials for related parties were as follows:

parties were as follows:
Subsidiaries	For the years ended December 31
	2022 $ 5	2021
		13

The commission income was charged based on 1% of the purchase price.

3) Other income

The amounts of income (accounted as other income under non-operating income and expenses) received by the company from providing services is as follows:

Subsidiaries	For the years ended December 31	For the years ended December 31
	2022 $ 1,860	2021
		2,056

(c) Key management personnel compensation

Key management personnel compensation comprised:

Key management personnel compensation comprised:
Short-term employee benefits Post-employment benefits	For the years ended December 31
	2022 $ 27,022 739 $ 27,761	2021
		26,159 723
		26,882

(8) Pledged assets

The carrying values of pledged assets were as follows:

Pledged assets	Pledged to secure Collateral for borrowings (including guarantee for subsidiaries) Collateral for borrowings and short- term notes and bills payable Collateral for long-term borrowings	December 31, 2022 $ 154,451 248,993 1,083,936 $ 1,487,380	December 31, 2021
Other financial assets－ current and non-current Property, plant and equipment Investment property			151,965 253,916 1,100,668
			1,506,549

(Continued)

62

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(9) Commitments and contingencies

• (a) Significant commitments and contingencies were as follows:

Outstanding standby letter of credit

USD	December 31, 2022 $ 7,314	December 31, 2021
		12,036

(b) Significant contingent liability: None.

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

By funtion By item	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31	For the years ended December 31
	2022			2021
	Cost of Sale	Operating Expense	Total	Cost of Sale	Operating Expense	Total
Employee benefits
Salary	-	186,055	186,055	-	152,380	152,380
Labor and health insurance	-	16,489	16,489	-	16,703	16,703
Pension	-	7,084	7,084	-	8,270	8,270
Remuneration of directors	-	6,587	6,587	-	8,818	8,818
Others	-	9,696	9,696	-	9,750	9,750
Depreciation	-	16,013	16,013	-	18,410	18,410
Depletion	-	-	-	-	-	-
Amortization	-	6,569	6,569	-	7,319	7,319

(Continued)

63

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

For the years ended December 31, 2022 and 2021 , the additional information on the number of employees and employee benefits of the Company was as follows:

and employee benefits of the Company was as follows:
Number of employees Number of directors (non-employed) Average employee benefit expense Average employee salary expense Change in percentage of average employee benefit Supervisor's remuneration		For the years ended December 31
			2021
			247
			9
			786
			640
			% (16.78)
			-

The Company’s salary and remuneration policies (including directors, managers and employees) are as follows:

The Company has formulated the "Board of Directors and Functional Committee Performance Evaluation Measures", which is used as the basis for performance evaluation of independent directors and directors. It is considered that Company's overall operating performance, future operating risks and industry development trends, the achievement rate of individual performance and the contribution on the Company as well. Reasonable remuneration will be granted after comprehensive consideration.

The managers of the Company have the responsibility of performing group operations and management, function. To provide reasonable remuneration, their remuneration structure is based on salary and allowance. The bonus is based on the overall operating performance, and takes into account the target achievement rate, profitability, operating efficiency and contribution of each manager, as well as the peer industry standards.

The employee’s salary includes monthly salary and bonuses distributed by the Company based on annual profitability. The amount assigned to each employee depends on their position, contribution, and performance.

(Continued)

64

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company:

(i) Loans to other parties:

(In Thousands of New Taiwan Dollars)

Number	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral	Collateral	Individual funding loan limits	Maximum limit of fund financing
													Item	Value
0	The Company	TRYD APPAREL	Other accounts receivable- related party	Yes	64,430	61,420	-	4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
0	The Company	TRYD TEXTILE	〞	Yes	84,075	61,420	30,710	4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
0	The Company	AIQ	〞	Yes	40,000	-	-	4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
0	The Company	AIQ-S	〞	Yes	9,665	9,213	9,213	2.5%-4%	2	-	Operating turnover	-	-	-	1,223,877	1,223,877
1	The Company	TRYD TEXTILE	〞	Yes	128,860	122,840	61,420	2.5%	2	-	Operating turnover	-	-	-	322,557	483,835
1	Z-PLY(NY)	TEXRAY (MEXICO)	〞	Yes	64,430	61,420	-	2.5%	2	-	Operating turnover	-	-	-	322,557	483,835
1	Z-PLY(NY)	AMRAY (MEXICO)	〞	Yes	32,215	30,710	-	2.5%	2	-	Operating turnover	-	-	-	322,557	483,835
2	TEX-RAY (SHANGHAI)	TRYD TEXTILE	〞	Yes	270,850	267,177	266,509	6%	2	-	Operating turnover	-	-	-	422,882	634,323
2	TEX-RAY (SHANGHAI)	TRYD APPAREL	〞	Yes	90,283	89,059	-	6%	2	-	Operating turnover	-	-	-	422,882	634,323
2	TEX-RAY (SHANGHAI)	AIQ(Zheiji ang)	〞	Yes	49,656	48,982	48,982	6%	2	-	Operating turnover	-	-	-	422,882	634,323
3	TEX-RAY (MEXICO)	AMRAY (MEXICO)	〞	Yes	81,182	78,771	49,626	2.5%	2	-	Operating turnover	-	-	-	293,086	439,629
4	TEX-RAY (CAYMAN)	TEXRAY (MEXICO)	〞	Yes	128,860	122,840	118,848	2.5-4%	2	-	Operating turnover	-	-	-	471,333	707,000
4	TEX-RAY (CAYMAN)	AMRAY (MEXICO)	〞	Yes	289,935	276,390	261,035	2.5-4%	2	-	Operating turnover	-	-	-	471,333	707,000
5	AIQ	AIQS	〞	Yes	4,832	-	-	4%	2	-	Operating turnover	-	-	-	578	578
6	ZHENG-RAY	HUAI WEI BIOTECH NOLOGY CO.,LTD	〞	Yes	10,000	-	-	4%	2	-	Operating turnover	-	-	-	43,326	43,326

Note 1: Financing purposes:

1) Business dealings

2) Short-term financing needs

• Note 2: The maximum limit of Capital Finance is limited to 40% of the company's net value, so the calculation is based on the net value of the most recent financial report. The calculation limit is 3,059,692 thousand NTD × 40% = 1,223,877 thousand NTD.

• Note 3: The loan amount of individual objects is limited to not more than 40% of the company's net value, so the calculation is based on the net value of the most recent financial report. The calculation limit is 3,059,692 thousand NTD × 40% = 1,223,877 thousand NTD.

• Note 4: The maximum limit of capital financing is limited to 40% of the net value of the financial report of the loan and the company. However, the maximum limit of 100% holding of foreign subsidiary financing is limited to 150% of the company’s financial report net value.

• Note 5: The loan amount of individual objects shall not exceed 40% of the subsidiary’s financial report net value. However, the amount of loans to individual objects between 100% held foreign subsidiaries shall not exceed 100% of the net value of the financial report of the subsidiary.

(Continued)

65

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(ii) Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

No.	Name of guarantor	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsements/ guarantees to third parties on behalf of parent company	Endorsements guarantees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company
0 T	he Company	TRYD TEXTILE	2	1,529,846	969,517	783,105	458,531	230,808	% 25.59	3,059,692	Y	N	Y
0 T	he Company	TRYD APPAREL	2	1,529,846	225,505	214,970	145,565	51,589	% 7.03	3,059,692	Y	N	Y
0 T	he Company	TEX-RAY (VN)	2	1,529,846	64,430	61,420	-	-	% 2.01	3,059,692	Y	N	N
0 T	he Company	TEX-RAY (SHANGHAI)	2	1,529,846	108,340	106,871	87,500	-	% 3.49	3,059,692	Y	N	Y
0 T	he Company	TST	2	1,529,846	48,625	20,000	-	-	% 0.65	3,059,692	Y	N	N
0 T	he Company	AIQ	2	1,529,846	41,000	41,000	35,021	15,355	% 1.34	3,059,692	Y	N	N
0 T	he Company	WEI LI TEXTILE	2	1,529,846	100,000	100,000	50,607	-	% 3.27	3,059,692	Y	N	N
1 T (	EX-RAY SHANGHAI)	TEX-RAY (KUNSHAN)	2	422,882	45,142	44,530	30,280	-	% 10.53	634,323	N	N	Y
2 T T	RYD EXTILE	TRYD APPAREL	4	1,529,846	180,567	178,118	178,118	190,989	% -	3,059,692	N	N	Y

• Note 1: The relationship between the guarantee and the guarantor are as follows:

• Transactions between the companies.

• The Company directly or indirectly holds more than 50% voting right.

• When other companies directly or indirectly hold more than 50% voting rights of the Company.

• The Company directly or indirectly holds more than 90% voting right.

• A company that is mutually protected under contractual requirements based on the needs of the contractor.

• A company that is endorsed by all the contributing shareholders in accordance with their shareholding ratio due to joint investment relationship.

• Under the Consumer Protection Act, performance guarantees for pre-sale contracts for companies in the same industry.

• Note 2: The maximum limit of endorsement guarantee is limited to not exceeding 100% of the net value of the company's latest financial report, so the calculation is based on the net value of the most recent financial report, and the calculation limit is 3,059,692 thousand NTD × 100% = 3,059,692 thousand NTD.

• Note 3: The limit for a single enterprise endorsement guarantee is limited to 50% of the net value of the company's latest financial report. Therefore, the calculation is based on the net value of the latest financial report. The calculation limit is 3,059,692 thousand NTD × 50% = 1,529,846 thousand NTD.

• Note 4: The amount of the endorsement guarantee provided to a single enterprise in business dealings shall not exceed the total amount of business dealings in the twelve months before the endorsement of the two parties.

Note 5: The maximum limit of overseas subsidiary endorsement guarantee is limited to 150% of the net value of each subsidiary's latest financial statement, and the limit of endorsement guarantee for individual objects is limited to 100% of the net value of each subsidiary's latest financial statement.

(iii) Securities held as of December 31, 2022 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
The Company	SHIN ERA TECH	-	Non-current financial assets at fair value through other comprehensive income	68	-	% 1.88	-
The Company	Cayman iMaker Technlogy Inc.	-	Non-current financial assets at fair value through other comprehensive income	800	-	% 8.80	-
The Company	TAIWAN United Outdoor Group, Inc.	-	Non-current financial assets at fair value through other comprehensive income	500	-	% 15.67	-
The Company	PHYSICLO, Inc.	-	Non-current financial assets at fair value through other comprehensive income	51	-	% 5.00	-
The Company	Uniigym Global	-	Non-current financial assets at fair value through other comprehensive income	250	9,092	% 2.26	9,092
The Company	eAi Technologies Inc.	-	Non-current financial assets at fair value through other comprehensive income	1,092	10,920	% 13.03	10,920
AIQ	Joiiup Technology Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	333	-	% 5.71	-

(Continued)

66

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Name of holder	Category and name of security	Relationship with company	Account title	Ending balance	Ending balance	Ending balance	Ending balance	Note
				Shares/Units (thousands)	Carrying value	Percentage of ownership (%)	Fair value
ZENG-RAY	SEN JEWEL TECHNOLOGY CO., LTD.	-	Non-current financial assets at fair value through other comprehensive income	950	4,500	% 19.00	4,500

Note: The stocks of unlisted OTC companies have no market price to follow, so they are listed based on the net equity value multiplied by the shareholding ratio or equity evaluation report for reference.

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Category and name of security	Account name	Name of counter- party	Relationship with the company	Beginning Balance	Beginning Balance	Purchases	Purchases	Sales	Sales	Sales	Sales	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Price	Cost	Gain (loss) on disposal	Shares	Amount
TEX-RAY ndustrial	Z-PLY CORPORTION	Investment accounted for using equity method, net	FLYNN (SAMOA)	Subsidiary	-	-	200	314,491	-	-	-	-	200	314,491

• (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

• (vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None

• (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transactio different	ns with terms from others	Notes/Accounts receivable (payable)	Notes/Accounts receivable (payable)	Note
			Purchase /Sale	Amount	Percentage of total purchases/sales	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
The Company	Z-PLY(NY)	Subsidiary	Sale	$ (645,534)	(22.43)%	45 days	-		43,322	15.32%
The Company	T.Q.M.(SWAZILAND)	Sub-subsidiary	Sale	(243,332)	(8.45)%	30 days	-		63,901	22.59%
TRYD APPAREL	Z-PLY(NY)	Affiliated company	Sale	(161,834)	(22.62)%	90days	-		30,848	17.73%
T.Q.M(SWAZILAND)	TEX-RAY(SA)	Parent company	Sale	(1,384,113)	(95.80)%	75 days	-		1,096,649	99.24%
KASUMI(SWAILAND)	T.Q.M(SWAZILAND)	Affiliated company	Sale	(180,367)	(99.36)%	75 days	-		379,695	99.99%
GOOD TIME	The Company	Ultimate Parent company	Sale	(124,237)	(87.92)%	60 days	-		-	-%
KMT	KMBV	Subsidiary	Sale	(129,708)	(33.40)%	60 days	-		28,051	40.82%
TEX-RAY(VN)	The Company	Ultimate Parent company	Sale	(275,624)	(97.46)%	60 days	-		-	-%
Z-PLY(NY)	The Company	Ultimate Parent company	Purchase	645,534	73.45%	45 days	-		(43,322)	(56.56)%
T.Q.M(SWAZILAND)	The Company	Ultimate Parent company	Purchase	243,332	30.00%	30 days	-		(63,901)	(11.70)%
TEX-RAY (SA)	T.Q.M (SWAZILAND)	Subsidiary	Purchase	1,384,113	99.52%	75 days	-		(1,096,649)	(99.83)%
T.Q.M(SWAZILAND)	KASUMI (SWAZILAND)	Affiliated Company	Purchase	180,367	22.24%	75 days	-		(379,695)	(69.55)%
The Company	GOOD TIME	Sub-subsidiary	Purchase	124,237	8.19%	60 days	-		-	-%
KMBV	KMT	Subsidiary	Purchase	129,708	96.85%	60 days	-		(28,051)	(99.60)%
The Company	TEX-RAY (VN)	Sub-subsidiary	Purchase	275,624	18.16%	60 days	-		-	-%
Z-PLY(NY)	TRYD APPAREL	Affiliated company	Purchase	161,834	18.41%	90 days	-		(30,848)	(40.27)%

(Continued)

67

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Nature of relationship	Ending balance	Turnover rate	Overdue	Overdue	Amounts received in subsequent period	Allowance for bad debts
					Amount	Action taken
T.Q.M.(SWAZILAND)	TEX-RAY(SA)	Parent company	1,096,649	1.29	-		176,947	-
KASUMI(SWAILAND)	T.Q.M.(SWAZILAND)	Affiliated company	379,695	0.48	-		12,841	-
FLYNN	The Company	Parent company	337,810	-	-		-	-
TEX-RAY (SHANGHAI)	TRYD TEXTILE	Affiliated company	266,509	(note 1)	-		-	-
TEX-RAY(CAYMAN)	AMRAY(MEXICO)	Subsidiary	261,035	(note 1)	-		-	-
TEX-RAY(CAYMAN)	TEX-RAY(MEXICO)	Subsidiary	118,848	(note 1)	-		-	-

Note 1: Loan provided by the related party.

(ix) Trading in derivative instruments: None

(b) Information on investees:

The following is the information on investees for the years ended December 31, 2022 (excluding information on investees in Mainland China):

(In Thousands of New Taiwan Dollars)

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares (thousands)	Percentage of wnership	Carrying value
The Company	Great CPT	TAIWAN	Overseas investment holding	124,370	104,370	5,000,000	% 100.00	66,549	(7,563)	(7,661)	Subsidiary
The Company	KMT	TAIWAN	Non-woven fabrics, copper secondary processing and fabric retailing, etc	83,002	83,002	12,924,963	% 59.22	217,818	68,734	40,702	Subsidiary
The Company	ZHENG-RAY	TAIWAN	Trading and manufacturing of Spinning and weaving	63,000	63,000	11,580,000	% 100.00	77,874	(4,222)	(5,362)	Subsidiary
The Company	WLT	TAIWAN	Wholesale trade	27,440	27,440	2,744,000	% 68.60	(20,145)	(27,548)	(18,898)	Subsidiary
The Company	FLYNN (SAMOA)	SAMOA	Overseas investment holding	310,613	310,613	9,100,000	% 100.00	356,880	11,190	11,190	Subsidiary
The Company	TEX-RAY (BELIZE)	BELIZE	Overseas investment holding	1,063,287	1,063,287	32,348,213	% 100.00	423,900	1,022	1,022	Subsidiary
The Company	TEX-RAY (BN)	SAMOA	Overseas investment holding	1,756,813	1,756,813	60,579,330	% 100.00	(384,978)	(221,040)	(221,040)	Subsidiary
The Company	TEX-RAY (SA)	SOUTH AFRICA	Marketing and trading	102,704	102,704	39,651,771	% 100.00	1,470,477	228,908	228,908	Subsidiary
The Company	TEX-RAY (CAYMAN)	CAYMAN	Overseas investment holding	1,414,580	1,353,739	46,042,722	% 100.00	471,334	(85,597)	(85,597)	Subsidiary
The Company	AIQ	TAIWAN	Wholesale trade	163,512	163,512	11,503,200	% 70.44	1,019	(54,561)	(38,434)	Subsidiary
The Company	Z-PLY (NY)	USA	Marketing and trading	314,491	-	200	% 100.00	483,809	11,801	-	Subsidiary
The Company	TRLA GROUP	USA	Marketing and trading	42,109	-	2,936,000	% 100.00	40,960	(611)	-	Subsidiary
TEX-RAY(BN)	GOOD TIME	VIETNAM	Garment processing	227,750	227,750	-	% 100.00	11,528	15,997	Exempt from disclosure	Sub-subsidiary
TEX-RAY(BN)	MSWATI	MAURITIUS	Overseas investment holding	1,160,125	1,160,125	-	% 100.00	(513,076)	(204,685)	Exempt from disclosure	Sub-subsidiary
TEX-RAY(BN)	TEXRAY (VN)	VIETNAM	Garment processing	423,990	423,990	-	% 100.00	134,325	(27,231)	Exempt from disclosure	Sub-subsidiary
TEX-RAY(BN)	TRCA GARMENT	CAMBODIA	Garment processing	63,564	63,564	-	% 100.00	(23,644)	-	Exempt from disclosure	Sub-subsidiary
FLYNN (SAMOA)	TRLA GROUP	USA	Marketing and trading	-	18,384	-	% -	-	(611)	Exempt from disclosure	Sub-subsidiary
FLYNN (SAMOA)	Z-PLY (NY)	USA	Marketing and trading	-	260,443	-	% -	-	11,801	Exempt from disclosure	Sub-subsidiary
Great CPT	TEXRAY (SWAZILAND)	ESWATINI	Garment processing	158,524	158,524	12,417,938	% 100.00	3,622	169	Exempt from disclosure	Sub-subsidiary
ZHENG-RAY	HUAI WEI BIOTECHNOLOGY CO.,LTD	TAIWAN	Biotechnology Service	9,540	9,540	1,200,000	% 60.00	(2,255)	(12,509)	Exempt from disclosure	Sub-subsidiary
ZHENG-RAY	TST	TAIWAN	Printing and dyeing finishing, machinery and equioment manufacturing and whole sale, etc.	68,067	68,067	5,067,217	% 75.63	56,708	5,173	Exempt from disclosure	Sub-subsidiary
KMT	KMBV	NETHERLANDS	Marketing and trading	7,950	7,950	200,000	% 100.00	10,370	1,179	Exempt from disclosure	Sub-subsidiary
AIQ	AIQ-S	UK	Development of smart clothing technology	15,419	15,419	396,266	% 50.00	(1,774)	(5,608)	Exempt from disclosure	Sub-subsidiary
AIQ	Taiwan Innoration(HK)	HONG KONG	Development of smart clothing technology	390	390	100,000	% 100.00	(2,229)	(1,453)	Exempt from disclosure	Sub-subsidiary
TEX-RAY (CAYMAN)	TEX-RAY (MEXICO)	MEXICO	Dyeing	1,168,882	1,168,882	-	% 100.00	293,086	9,099	Exempt from disclosure	Sub-subsidiary
TEX-RAY (CAYMAN)	AMRAY(MEXICO)	MEXICO	Garment processing	178,119	178,119	-	% 100.00	(265,690)	(100,247)	Exempt from disclosure	Sub-subsidiary
TEX-RAY(SA)	KASUMI (SWAZILAND)	ESWATINI	Trading and manufacturing of Spinning and weaving	43,461	43,461	1,657,400	% 100.00	375,413	(111)	Exempt from disclosure	Sub-subsidiary
TEX-RAY(SA)	TQM (SWAZILAND)	ESWATINI	Dyeing	569,316	569,316	132,525,183	% 100.00	1,154,231	110,494	Exempt from disclosure	Sub-subsidiary

(Continued)

68

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Name of investor	Name of investee	Location	Main businesses and products	Original investment amount	Original investment amount	Balance as of December 31, 2022	Balance as of December 31, 2022	Balance as of December 31, 2022	Net income (losses) of investee	Share of profits/losses of investee	Note
				December 31, 2022	December 31, 2021	Shares (thousands)	Percentage of wnership	Carrying value
TEX-RAY(SA)	U.I.W (SWAZILAND)	ESWATINI	Garment processing	47,508	47,508	12,031,000	% 100.00	20,157	120	Exempt from disclosure	Sub-subsidiary
TEX-RAY(SA)	J.M Retary Print Industrial Co.Ltd	ESWATINI	Dyeing and finishing of fabrics, clothing sales	12,908	12,908	5,618,729	% 100.00	4,241	5,202	Exempt from disclosure	Sub-subsidiary
TEX-RAY(SA)	GOLDEN JUBILEE APPAREL(PTY)LTD.	ESWATINI	Garment processing	10,800	10,800	5,000,000	% 100.00	42,275	5,290	Exempt from disclosure	Sub-subsidiary

Note: Voting interest percentage differed due to secured bonds converted to ordinary shares.

• (c) Information on investment in mainland China:

• (i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of New Taiwan Dollars)

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2022	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in currentperiod
					Outflow	Inflow
TEX-RAY (SHANGHAI)	Operating textile storage, trading, distribution, display and technology development	282,574	( 2 )	282,574	-	-	282,574	1,163	100.00%	1,163	422,882	-
TEX-RAY (YANCHENG)	Manufacturing and sales of textiles, clothing, shoes and hats	45,527	( 3 )	-	-	-	-	(4,932)	100.00%	(4,932)	(54,778)	-
TEXRAY (KUNSHAN)	Development of composite fabrics	168,268	( 3 )	-	-	-	-	1,486	100.00%	1,486	187,851	-
TRYD TEXTILE	Garment processing and engaged in spinning, weaving, highend fabrics, bleaching and dyeing, printing and garment production	1,749,139	( 2 )	1,235,108	-	-	1,235,108	(146,480)	100.00%	(146,480)	(233,485)	-
TRYD ARRAREL	Knitted garment processing	164,220	( 2 )	86,711	-	-	86,711	(60,934)	100.00%	(60,934)	(188,262)	-
KING’S METAL FIBER (SHANGHAI)	Wholesale of glass products, high-efficiency insulation materials, textiles, clothing, apparel and accessories	62,008	( 2 )	51,221	10,787	-	62,008	(20,577)	70.44%	(14,494)	(11,702)	-
AIQ (Zhejiang)	System development, production and sales of smart devices	20,947	( 3 )	-	-	-	-	(20,643)	70.44%	(14,541)	(23,770)	-
TRYD ARRAREL (HENAN) (Note 3)	Garment processing	-	( 2 )	46,494	-	-	46,494	-	-%	-	-	-
TRYD TEXTILE RESEARCH INSTITUTE (Note 4)	Technology research and development of polymer composite materials and new textile material	49,149	( 3 )	-	-	-	-	-	-%	-	-	-

(Continued)

69

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2022	Net income (losses) of the investee	Percentage of ownership	Investment income (losses)	Book value	Accumu-lated remittance of earnings in currentperiod
					Outflow	Inflow
Wei-Da Testing	Testing service and environmental assessment	31,065	( 3 )	-	-	-	-	2,134	100.00%	2,134	9,366	-
SHANGHAI JIN PEILI (Note 5)	Weaving, dyeing and finishing of high-end fabrics, sales of products of the company	111,088	( 2 )	14,321	-	-	14,321	-	-%	-	-	-
JIANAN TEXTILE (Note 6)	Weaving, dyeing and finishing of high-grade fabrics	29,613	( 2 )	29,613	-	-	29,613	-	-%	-	-	-

Note 1: Three types of investment method are as follows:

1. Directly investing in the mainland area

2. Investing in the mainland through companies in another country (Please refer to consolidated financial statements for the year ended December 31, 2022 Noter 4(c)).

3. Other methods

Note 2: The investment gains and losses recognized at the equity method are based on the financial information of the mainland investee companies, which was audited by the auditors of parent company during the same fiscal period.

Note 3: The business was deregistered in November 2015, and the share capital was remitted back to the upper parent company MSWATI in March 2016.

Note 4: The business was liquidated in October 2019.

Note 5: The business was liquidated in December 2012.

Note 6: The business was deregistered in June 2012, and only the investment fund was remitted back to the upper parent company MSWATI.

Note 7: The numbers listed above are presented in NTD, according to the currency rate on December 31, 2022. (USD: 30.710, CNY: 4.408)

(ii) Limitation on investment in Mainland China

The Company had obtained the certification letter of the operating headquarters from the Ministry of Economic Affairs on July 12, 2021. The validity period is from June 29, 2021 to June 28, 2024, and there is no such restriction of ceiling on investment in Mainland China.

• (iii) Significant transactions:

The significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

(Continued)

70

TEX-RAY INDUSTRIAL CO., LTD. Notes to the Financial Statements

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Yue-Da Textile holdings, Ltd B.V	42,052,440	% 17.99
Nan-Yu, Guo	23,680,000	% 10.13
Suzhou Wei-De Co., Ltd.	23,362,466	% 9.99
Feng-Ying, Yeh	14,280,000	% 6.11

(14) Segment information

Please refer to the consolidated financial statements for the year ended December 31, 2022.

71

TEX-RAY INDUSTRIAL CO., LTD.

Statement of cash and cash equivalents

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Item	Description		Amount
Cash		$	442
Check accounts and demand			45,676
deposits
Foreign currency deposits	USD4,046thousand		124,064
Time deposits	USD11,050thousand		338,793
		$	508,975

Statement of accounts receivables.

Name of customers Customer A Customer B Customer C Customer D Customer E Customer F Customer G Customer H Others Less：Loss allowance Net amount	Description Sales of inventories Sales of inventories Sales of inventories Sales of inventories Sales of inventories Sales of inventories Sales of inventories Sales of inventories Sales of inventories	Amount Note $ 94,270 23,146 16,192 6,376 4,927 3,425 2,764 2,705 13,717 The balances of each customers did not exceed 2% of the account. 167,522 (6) $ 167,516

72

TEX-RAY INDUSTRIAL CO., LTD.

Statement of inventories

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Items	Description Weaving Obsolete Subtotal Weaving Garment Obsolete Subtotal General administration office Obsolete Subtotal Weaving Garment General administration office Obsolete Subtotal	Amount Cost Net realizable value Note $ 16,719 15,274 Replacement cost 9,004 - Replacement cost 25,723 15,274 33,477 27,616 Net realizable value 216,961 216,951 Net realizable value 20,432 - Net realizable value 270,870 244,567 289 289 Net realizable value 5,740 - Net realizable value 6,029 289 75 47 Net realizable value 46,066 46,064 Net realizable value 176 176 Net realizable value 474 - Net realizable value 46,791 46,287 349,413 306,417 (42,996) $ 306,417
		Cost $ 16,719 9,004 25,723 33,477 216,961 20,432 270,870 289 5,740 6,029 75 46,066 176 474 46,791 349,413 (42,996) $ 306,417
Raw materials Work in process Finished goods Merchandise Less:Allowance Net amount

73

TEX-RAY INDUSTRIAL CO., LTD.

Statement of changes in investments accounted for using the equity method

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Name GREAT CPT KMT ZHENG-RAY AIQ WLT FLYNN (SAMOA) TEX-RAY (CAYMAN) TEX-RAY (BELIZE) TEX-RAY(BN) TEX-RAY(SA) TRLA Z-PLY	Beginning balance shares amount 4,500,000 $ 54,627 12,924,963 196,427 11,580,000 73,975 11,503,200 29,245 2,744,000 (1,247) 9,100,000 462,479 44,042,722 447,399 32,348,213 413,132 60,579,330 (157,854) 39,651,771 1,190,276 - - - - $ 2,708,459	Incre in the curre	ase nt period amount 20,000 - - - - - 60,841 - - - 42,109 314,491 437,441	Decre in the curre	ase nt period amount - - - - - - - - - - - - -	Investment profit and loss (7,661) 40,702 (5,362) (38,434) (18,898) 11,190 (85,597) 1,022 (221,040) 228,908 - - (95,170)	Difference of foreign operating agency financial report conversion 125 357 - (474) - 51,380 48,691 9,746 (7,042) 48,324 - - 151,107	Others (542) (19,668) 9,261 10,682 - (168,169) - - 958 2,969 (1,149) 169,318 3,660	Ending balance	Ending balance	Amount 66,549 217,818 77,874 1,019 (20,145) 356,880 471,334 423,900 (384,978) 1,470,477 40,960 483,809 3,205,497	Condition of providing Net value of equity guarantee or pledge 66,549 None 217,818 None 77,874 None 1,019 None (20,145) None 356,880 None 471,334 None 423,900 None (384,978) None 1,470,477 None 40,960 None 483,809 None 3,205,497
	shares	shares 2,000,000 - - - - - 2,000,000 - - - 2,936,000 200		shares 1,500,000 - - - - - - - - - - -					shares 5,000,000 12,924,963 11,580,000 11,503,200 2,744,000 9,100,000 46,042,722 32,348,213 60,579,330 39,651,771 2,936,000 200	% Ownership % 100.00 % 59.22 % 100.00 % 70.44 % 68.60 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
	4,500,000 12,924,963 11,580,000 11,503,200 2,744,000 9,100,000 44,042,722 32,348,213 60,579,330 39,651,771 - -

74

TEX-RAY INDUSTRIAL CO., LTD.

Statement of changes in property, plant and equipment

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Please refer to Note 6(f) for related information.

Statement of changes in investment property

Please refer to Note 6(h) for related information.

Statement of short-term borrowings

December 31, 2022

Type of loan	Bank Bank A Bank B Bank C Bank D Bank E Bank F Bank G	Ending balance $ 20,000 80,000 50,000 100,000 90,000 100,000 10,000 $ 450,000	Contract period 2022/12/09~2023/01/09 2022/12/28~2023/01/25 2022/10/31~2023/03/31 2022/12/27~2023/03/30 2022/10/20~2023/02/10 2022/11/18~2023/02/24 2022/09/07~2023/01/05	Interest rate range 1.90% 1.85% 1.88% 1.75%~1.90% 1.73% 1.5%~1.58% 1.97%	Mortgage or guarantee Note None None None None None None None
Credit loan Credit loan Credit loan Credit loan Credit loan Credit loan Credit loan

75

TEX-RAY INDUSTRIAL CO., LTD.

Statement of short-term notes and bills payable

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Please refer to Note 6(j) for related information.

Statement of long-term borrowings

Creditor Description Bank H Mortgage loan Bank I Mortgage loan Less: Current portion Less: Fee	Amount $ 500,000 1,052,066 (48,543) (4,167) $ 1,499,356	Contract period 2022/05/05~2027/05/05 2022/05/05~2029/05/05	Interest rate 1.79%~1.97% 1.99%~2.04%	Mortgage or guarantee Note Land and buildings Land and Buildings

76

TEX-RAY INDUSTRIAL CO., LTD.

Statement of accounts payable

December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Name of clients Company A Company B Company C Company D Company E Company F Others	Description Payment for goods Payment for goods Payment for goods Payment for goods Payment for goods Payment for goods Payment for goods	Amount Note $ 55,162 17,245 14,675 10,419 8,525 7,779 126,426 The balances of each company did not exceed 3% of the account. $ 240,231

Statement of operating revenue

For the year ended December 31, 2022

Items Sales revenue of garments Sales revenue of fabrics Sales revenue of merchandise Sales of raw yarn and colored yarn Garments revenue Weaving revenue Others	Quantities 2,498,754 pieces 695,911Y, 43,035KG, 35,229 pieces, 6,799M 2,981,670 pieces, 6 sets, 1,564,195KG 10,003,699 pieces 847,589KG, 1,256,350 pieces	Amount Note $ 651,142 78,819 73,478 181,351 1,647,750 243,678 2,165 $ 2,878,383

77

TEX-RAY INDUSTRIAL CO., LTD.

Statement of operating costs

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Items

Amount Note $ 71,564 791,816 (46,791) (110) 816,479 32,256 725,737 (435) (25,723) 731,835 733,939 1,465,774 438,842 (270,870) 1,633,746 6,259 (6,029) (503) (10,537) 1,622,936 (28,233) $ 2,411,182

Merchandising Beginning balance of inventory Add：Purchase Less：Ending balance of inventory Transfer to expenses Merchandising costs Manufacturing Beginning balance of raw material Add：Purchase Transfer to expenses Ending balance of inventory Raw material used Manufacturing overhead Manufacturing costs Add：Beginning balance of work in process Less：Ending balance of work in process Cost of finished goods Add：Beginning balance of finished goods Ending balance of finished goods Transfer to expenses Other－Sales of raw material Costs of goods sold Add：Loss for valuation of inventories Operating costs

78

TEX-RAY INDUSTRIAL CO., LTD.

Statement of operating expenses

For the year ended December 31, 2022

(Expressed in thousands of New Taiwan Dollars)

Items Salary expense Commission expense Traveling expenses Utility bill Sample fee Insurance expense Shipping fee Depreciation expense Amortization expense Service fee Pension expense Import and export expense Miscellaneous expenses Other expenses Total	Selling expenses $ 112,190 15,571 5,987 - 5,992 11,267 44,852 815 4,718 1,722 4,357 74,361 7,878 13,768 $ 303,478		Administrative expenses 75,306 743 1,455 3,657 129 10,779 187 14,986 1,851 6,603 2,171 1 6,744 29,860 154,472		Research and development expenses 12,563 - 83 - 96 1,214 87 212 - 15 556 - 259 1,882 16,967	Total
						200,059 16,314 7,525 3,657 6,217 23,260 45,126 16,013 6,569 8,340 7,084 74,362 14,881 45,510
						474,917

Statement of the net amount of other revenues and

gains and expenses and losses

Please refer to Note 6(t) for related information.