TMC — Annual Report 2021

Dec 28, 2021

Taiwan Mask Corporation and Subsidiaries Consolidated financial statements and independent auditor’s report 2021 and 2020 (Stock Code: 2338)

Company address: No. 11, Chuangxin 1st Road, Baoshan, Hsinchu County, Hsinchu Science Park

Telephone: (03)563-4370

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Taiwan Mask Corporation and Subsidiaries

2021 and 2020 consolidated financial statements and independent auditor’s report

Table of Contents

Items	Page
I. Cover	1
II. Table of Contents	2 ~ 3
III. Statement	4
IV. Independent Auditors’ Report	5 ~ 10
V. Consolidated Balance Sheets	11 ~ 13
VI. Consolidated Statements of Comprehensive Income	14 ~ 17
VII. Consolidated Statement of Changes in Equity	18 ~ 19
VIII. Consolidated Statements of Cash Flows	20 ~ 23
IX. Notes to the Consolidated Financial Statements	24 ~ 93
(I) Company History	24
(II) Date and procedures for passing the financial statement	24
(III) Application of New and Revised International Financial Reporting
Standards	24 ~ 25
(IV) Summary of Significant Accounting Policies	25 ~ 43
(V) Significant Accounting Judgments and Estimations, and Main Sources of
Assumption Uncertainties	43
(VI) Statements of Main Accounting Items	43 ~ 77

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Items	Page
(VII) Related Party Transactions	77 ~ 79
(VIII) Pledge Assets	79 ~ 80
(IX) Significant Contingent Liabilities and Unrecognized Contract
Commitments	80
(X) Significant Disaster Loss	80
(XI) Significant Subsequent Events	80
(XII) Others	80 ~ 90
(XIII) Supplementary Disclosure	91
(XIV) Segment Information	91 ~ 93

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Taiwan Mask Corporation

Consolidated Financial Statements Declaration

The companies that are required to be included in the affiliated companies consolidated financial statements as of and for the year ended on December 31, 2021, under the “Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as those included in the consolidated financial statements of parent company and subsidiaries prepared in conformity with the International Accounting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the affiliated companies consolidated financial statements is included in the consolidated financial statements of the aforesaid parent company and subsidiaries. Consequently, do not prepare a separate set of consolidated financial statements of the affiliated companies.

Very truly yours

Company Name: Taiwan Mask Corporation

Representative: Cheng-Hsiang Chen

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March 4, 2022

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Independent Auditors’ Report (2022) Tsai-Sheng-Bao-Zi No. 21002897

To Taiwan Mask Corporation,

Opinions

We have audited the accompanying consolidated balance sheets of Taiwan Mask Corporation and its subsidiaries (the “Group”) as of December 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2021 and 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of the other independent auditors, as described in the Other matters section of our report, the accompanying consolidated financial statements present fairly, in all material aspects, the consolidated financial position of the Group as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2021 and 2020 in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for Opinion

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

Key Audit Matters

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

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Key audit matters for the TMC Group’s consolidated financial statements in fiscal year 2021 are stated as follows:

Evaluation of Inventories

Description

Refer to Note 4(13) for the accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of accounting estimations and assumptions for evaluation of inventories, and Note 6(5) for the detailed description of inventory accounts. The inventory amount and allowance for inventory valuation loss as of December 31, 2021 is NT$522,970 thousand and NT$90,955 thousand respectively.

The Group is primarily engaged in mask and integrated circuit services in the semiconductor industry. Due to rapid technological innovations, short life-cycle and competition within the mask industry, the risk of price fluctuations, Loss on decline in value of inventories and obsolescence is higher than that of other industries. Management evaluates inventories stated at the lower of cost and net realizable value. Since the evaluation of inventories is subject to management’s judgment and the accounting estimations will have significant influence on the inventory values, the evaluation of inventories has been identified as one of the key audit matters.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

1. Understand and evaluate the accounting policy for the provision of allowance for losses on decline in value of inventories.

2. Perform test to evaluate the ageing statement of inventories and the statement of lower of cost and net realizable value of inventories, including validating the supporting documents related to the date of inventory movement to confirm the correct ageing classification, and validating the supporting documents related to the net realizable value to assess and confirm the reasonableness of the net realizable value determination.

3. Verify the reasonableness of allowance for inventory valuation loss.

Income recognition

Description

For the accounting policy on income recognition, please refer to Note 4(28) of the financial report. For sales revenue please refer to Note 6(20); the operating income in fiscal year 2021 is

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NT$6,077,362 thousand.

The Group mainly produces and sells products such as masks and integrated circuits used in semiconductors, and has a large and diversified sales base. Trading conditions vary according to market conditions and customer needs. Considering that sales revenue is a major transaction that has a significant impact on the consolidated financial statements, we believe that the recognition of sales revenue is one of the most important matters to be considered in this year’s audit.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

1. Understand the type of major income and assess internal operations, review revenue recognition and accounting treatment.

2. Obtain the sales revenue statement, sample the sales transactions, and verify the relevant documents to determine the appropriateness of the sales revenue.

3. Execute the cut-off test for the sales receipts transaction for a certain period of time before and after the closing date, and confirm that the account is correct at the time of entry.

Other matters–Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only standalone financial statements of Taiwan Mask Corporation as of and for the years ended December 31, 2021 and 2020.

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

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

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

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do so.

Those charged with governance, including the Audit Committee, are responsible for overseeing the Group’s financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors’ Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

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

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

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

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

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

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

We communicated 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 for the current

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period）.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 2021 consolidated financial statements of the current period and are therefore deemed 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 auditor’s report because the adverse consequences of doing so would reasonable are expected to outweigh the public interest benefits of such communication.

PricewaterhouseCoopers Taiwan

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Financial Supervisory Commission of the Executive Yuan Approval Document for Attestation: Jin-Guan-Zheng-ShenZi No. 1020028992

Securities and Futures Bureau of Financial Supervisory Commission of the Executive Yuan

Approval Document for Attestation: Jin-Guan-Zheng-ShenZi No. 0960072936

March 4, 2022

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Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2021 and 2020

Unit: NT$Thousand

Assets	Notes 6(1) 6(2) and 8 6(3) and 8 6(20) 6(4) 6(4) 6(4) and 7 7 6(5) 6(2) and 8 6(3) and 8 6(6) 6(7) and 8 6(8) 6(10) and 8 6(27)	December 31, 2021 Amount % $ 2,681,819 17 3,603,920 22 38,338 - 155,763 1 63 - 1,263,748 8 16,812 - 68,997 - - - 22,600 - 432,015 3 121,866 1 29,897 - 8,435,838 52 1,433,752 9 39,925 - 164,707 1 4,142,224 26 652,652 4 163,042 1 387,866 3 3,241 - 690,980 4 7,678,389 48 $ 16,114,227 100	(After adjustment) December 31, 2020	(After adjustment) December 31, 2020
		Amount $ 2,681,819 3,603,920 38,338 155,763 63 1,263,748 16,812 68,997 - 22,600 432,015 121,866 29,897 8,435,838 1,433,752 39,925 164,707 4,142,224 652,652 163,042 387,866 3,241 690,980 7,678,389 $ 16,114,227	Amount $ 1,036,658 500 34,212 93,809 879 894,612 6,599 47,668 3,068 2,490 196,080 59,271 53,880 2,429,726 2,134,913 40,922 361,161 3,108,099 508,467 313,099 173,724 2,332 29,265 6,671,982 $ 9,101,708	%
Current assets 1100 Cash and Cash Equivalents 1110 Financial Assets at Fair Value Through Profit or Loss - Current 1136 Financial Assets at Amortized Cost - Current 1140 Contract Asset - Current 1150 Notes Receivables (Net) 1170 Accounts Receivables (Net) 1180 Accounts Receivables - Related Parties (Net) 1200 Other Receivables 1210 Other Receivables - Related Parties 1220 Tax Assets 130X Inventories 1410 Prepayments 1470 Other Current Assets 11XX Total Current Assets Non-Current Assets 1510 Financial Asset at Fair Value Through Profit or Loss - Non Current 1535 Financial Assets at Amortized Cost - Non Current 1550 Investment under Equity Method 1600 Property, plant and equipment 1755 Right-of-use Asset 1760 Investment property (Net) 1780 Intangible assets 1840 Deferred Income Tax Assets 1900 Other Non-Current Assets 15XX Total Non-Current Assets 1XXX Total Assets				11 - - 1 - 10 - 1 - - 2 1 1
				27
				24 - 4 34 6 3 2 - -
				73
				100

(Continued)

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Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2021 and 2020

Unit: NT$Thousand

Liabilities andEquities

December 31, 2021 (After adjustment) December 31, 2020 Notes Amount % Amount % 6(11) $ 4,376,766 27 $ 2,298,718 25 6(20) 179,315 1 99,418 1 66 - 66 - 477,232 3 397,237 4 6(12) 742,008 5 436,980 5 186,481 1 80,722 1 10,964 - 12,917 - 287,157 2 244,651 3 6(14) 70,391 1 96,211 1 39,281 - 10,496 - 6,369,661 40 3,677,416 40 6(13) 1,657,049 10 - - 6(14) 2,651,808 17 1,635,872 18 6(27) 74,493 - 53,268 1 368,484 2 262,275 3 6(15) 14,999 - 18,213 - 6,908 - 5,129 - 100,646 1 1,102 - 4,874,387 30 1,975,859 22 11,244,048 70 5,653,275 62 6(16) 2,556,735 16 2,527,136 28 6(17) 1,315,828 8 439,898 5 6(18) 656,037 4 587,990 6 - - 2,666 - 1,509,318 10 814,617 9 6(19) 4,032 - 889 - 6(16) ( 941,423) ( 6 ) ( 834,598) ( 9) 5,100,527 32 3,538,598 39 ( 230,348) ( 2 ) ( 90,165) ( 1) 4,870,179 30 3,448,433 38

Current liabilities 2100 Short Term Loans 2130 Contract Liabilities - Current 2150 Notes Payable 2170 Accounts Payable 2200 Other Payables 2230 Current Income Tax Liabilities 2250 Provision for Liabilities - Current 2280 Lease Liability - Current 2320 Long-term liabilities due within one year or one business cycle 2399 Other Current Liabilities - Other 21XX Total Current Liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term Loans 2570 Deferred Income Tax. 2580 Lease liability - Non Current 2640 Defined Benefit Liabilities - Non Current 2645 Guarantee Deposits Received 2670 Other Non-Current Liabilities - Other 25XX Total Non-Current Liabilities 2XXX Total Liabilities Equity attributable to shareholders of the parent company Capital 3110 Capital stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings Other equity interests 3400 Other equity interests 3500 Treasury stock 31XX Total Equities Attributable to Parent Company 36XX Non-controlling Interests 3XXX Total Equities

Major Commitments and Contingencies 9

The accompanying notes are an integral part of the consolidated financial statements and should be read in conjunction.

Chairperson: Sean Chen

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Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

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Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets December 31, 2021 and 2020

Unit: NT$Thousand

Major Events after Financial Statement 11 Date

3X2X Total Liabilities and Equities

$ 16,114,227 100 $ 9,101,708 100

The accompanying notes are an integral part of the consolidated financial statements and should be read in conjunction.

Chairperson: Sean Chen

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Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

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Taiwan Mask Corporation and Subsidiaries Consolidated Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand (Except for earnings per share)

Items

2021 (After adjustment) 2020 Notes Amount % Amount % 6(20) and 7 $ 6,077,362 100 $ 4,666,756 100 6(5) ( 4,667,982) ( 77)( 3,723,670)( 80) 1,409,380 23 943,086 20 6(25) (26) ( 150,235 ) ( 2) ( 131,841 ) ( 3) ( 656,228 ) ( 11) ( 324,379 ) ( 7) ( 170,245 ) ( 3) ( 144,913 ) ( 3) 12(2) 1,340 - 2,200 - ( 975,368) ( 16)( 598,933)( 13) 434,012 7 344,153 7 6(21) 4,858 - 4,826 - 6(22) 115,294 2 58,758 1 6(23) 804,843 13 360,836 8 6(24) ( 100,524 ) ( 1) ( 33,026 ) ( 1) 6(6) ( 80,385 ) ( 1) ( 105,006 ) ( 2) 744,086 13 286,388 6 1,178,098 20 630,541 13 6(27) ( 291,537) ( 5) ( 144,234 )( 3)

4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling Expenses 6200 Administrative Expenses 6300 R&D Expenses 6450 Expected Credit Impairment Gain 6000 Total Operating Expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other Incomes 7020 Other Gains and Losses 7050 Financial Costs 7060 The share of affiliates and joint venture profits and losses recognized by the equity method 7000 Total Non-Operating Incomes and Losses 7900 Earnings Before Tax 7950 Income Tax Expense

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Taiwan Mask Corporation and Subsidiaries Consolidated Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand (Except for earnings per share)

8200 Net Income

$ 886,561 15 $ 486,307 10

(Continued)

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Taiwan Mask Corporation and Subsidiaries Consolidated Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand (Except for earnings per share)

						(After adjustment)	(After adjustment)
			2021			2020
	Items	Notes	Amount	%		Amount	%
	Other Comprehensive Incomes
	(Net)
	Components of other
	comprehensive income that will
	not be reclassified to profit or
	loss
8311	Re-measurements of defined
	benefit plan	$	1,189	-	$		424	-
8310	Total items that will not be
	reclassified subsequently to
	profit or loss		1,189	-			424	-
	Components of other
	comprehensive income that will
	be reclassified to profit or loss
8361	Financial statement translation	6(19)
	differences of foreign operations		3,143	-			2,761	-
8360	Total Components of other
	comprehensive income that
	will be reclassified to profit or
	loss		3,143	-			2,761	-
8500	Total comprehensive income for
	the year	$	890,893	15	$	489,492		10
	Net Incomes (Losses) Attributable
	to:
	The accompanying notes are an integral part of the consolidated financial statements and				should be read in		conjunction.
Chairperson: Sean Chen		Managerial Officer: Lidon Chen		Accounting Officer: Eve Yang
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Taiwan Mask Corporation and Subsidiaries Consolidated Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand (Except for earnings per share)

8610	Parent Company			$	1,185,777	20	$	683,897	14
8620	Non-controlling Interests		(		299,216) (	5)(		197,590)(	4)
	Total			$	886,561	15	$	486,307	10
	Total Comprehensive Incomes
	(Losses) Attributable to:
8710	Parent Company			$	1,190,109	20	$	687,082	14
8720	Non-controlling Interests		(		299,216) (	5)(		197,590)(	4)
	Total			$	890,893	15	$	489,492	10
	Earnings per share	6(28)
9750	Net Income			$		5.65	$		3.34
	Diluted Earnings per share	6(28)
9850	Net Income			$		5.55	$		3.30

The accompanying notes are an integral part of the consolidated financial statements and should be read in conjunction.

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Managerial Officer: Lidon Chen Accounting Officer: Eve Yang ~17~

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Chairperson: Sean Chen

2020 (after adjustment) Beginning Balance as of 2020/1/1 Net Income Other Comprehensive Profit or Loss Total comprehensive income for the year Distribution and allocation of surplus earnings for FY2019 Legal capital reserve Legal capital reserve Cash dividends Adjustment of capital reserve by dividends paid to subsidiaries Changes in shares of affiliates and joint ventures recognized under the equity method Share-based payment transaction Treasury Stock Buyback Unclaimed dividends of shareholders Reduction in non-controlling interests in mergers Ending Balance as of 2020/12/31 2021 Balance as of 2021/1/1 Net Income Other Comprehensive Profit or Loss Total comprehensive income for the year Distribution and appropriation of earnings for 2020 Legal capital reserve Reversal of Special reserve Cash dividends Conversion of convertible bonds Adjustment of capital reserve by dividends paid to subsidiaries Changes in shares of affiliates and joint ventures recognized under the equity method Share-based payment transaction Treasury Stock Buyback	Notes					F	o	Taiwan Ma	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	of the parentcompany	of the parentcompany	of the parentcompany					Non- controlling Interests	Un	it: NT$Thousan Total Equity
								Consolidate
								r the Years E
									Equity attributableto shareholders
			Capital stock		Capital surplus - Issuepremiums				R	etained earnings			Otherequityinterests			Treasurystock		Total
						Legal reserve				Special reserve		Unappropriated earnings	Financial statement translation differences of foreign operations		Unrealized gain (loss) on investments on financial assets at fair value through other comprehensive income
	6(19) 6(18) 6(17) 6(17) 6(17) 6(16) 6(17) 6(19) 6(18) 6(16) 6(17) 6(17) 6(17) 6(16)		$ 2,527,136 - - - - - - - - - - - - $ 2,527,136 $ 2,527,136 - - - - - - 29,599 - - - -	$ 322,777 - - - - - - 37,081 ( 11,799 ) 88,273 - 3,566 - $ 439,898 $ 439,898 - - - - - - 216,415 55,622 27,526 169,174 -			$ 544,712 - - - 43,278 - - - - - - - - $ 587,990 $ 587,990 - - - 68,047 - - - - - - -		$ - - - - - 2,666 - - - - - - - $ 2,666 $ 2,666 - - - - ( 2,666 ) - - - - - -		$ 432,801 683,897 424 684,321 ( 43,278 ) ( 2,666 ) ( 252,714 ) - ( 3,847 ) - - - - $ 814,617 $ 814,617 1,185,777 1,189 1,186,966 ( 68,047 ) 2,666 ( 379,071 ) - - ( 47,813 ) - -			$ 794 - 2,761 2,761 - - - - - - - - - $ 3,555 $ 3,555 - 3,143 3,143 - - - - - - - -	($ 2,666 ) - - - - - - - - - - - - ($ 2,666 ) ($ 2,666 ) - - - - - - - - - - -	($ 835,332 ) - - - - - - - - 307,654 ( 306,920 ) - - ($ 834,598 ) ($ 834,598 ) - - - - - - - - - 722,059 ( 828,884 )	$ 2,990,222 683,897 3,185 687,082 - - ( 252,714 ) 37,081 ( 15,646 ) 395,927 ( 306,920 ) 3,566 - $ 3,538,598 $ 3,538,598 1,185,777 4,332 1,190,109 - - ( 379,071 ) 246,014 55,622 ( 20,287 ) 891,233 ( 828,884 )		$ 131,236 ( 197,590 ) - ( 197,590 ) - - - - - - - - ( 23,811 ) ($ 90,165 ) ($ 90,165 ) ( 299,216 ) - ( 299,216 ) - - - - - 118,898 7,806 -		$ 3,121,458 486,307 3,185 489,492 - - ( 252,714 ) 37,081 ( 15,646 ) 395,927 ( 306,920 ) 3,566 ( 23,811 ) $ 3,448,433 $ 3,448,433 886,561 4,332 890,893 - - ( 379,071 ) 246,014 55,622 98,611 899,039 ( 828,884 )

Unit: NT$Thousand

Chairperson: Sean Chen

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The accompanying notes are an integral part of the consolidated financial statements and should be read in conjunction.

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Managerial Officer: Lidon Chen ~18~

Accounting Officer: Eve Yang

Capital surplus - convertible bond stock options Acceptance of gifts from shareholders Payment of overdue unclaimed dividends to shareholders Cash increase of non-controlling equity in Subsidiaries Balance as of 2021/12/31	Notes					F	o	Taiwan Ma	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	sk Corporation and Subsidiaries d Statement of Changes in Equity nded December 31, 2021 and 2020	of the parentcompany	of the parentcompany	of the parentcompany	of the parentcompany						Non- controlling Interests	Unit: NT$Thousan Total Equity
								Consolidate
								r the Years E
									Equity attributableto shareholders
			Capital stock		Capital surplus - Issuepremiums				R	etained earnings			Otherequityinterests					Treasurystock		Total
						Legal reserve				Special reserve		Unappropriated earnings	Financial statement translation differences of foreign operations			Unrealized gain (loss) on investments on financial assets at fair value through other comprehensive income
	6(17) 6(17) 6(17)		- - - - $ 2,556,735		406,616 586 ( 9 ) - $ 1,315,828		- - - - $ 656,037			- - - - $ -		- - - - $ 1,509,318		- - - - $ 6,698		- - - - ($ 2,666 )		- - - - ($ 941,423 )		406,616 586 ( 9 ) - $ 5,100,527		- - - 32,329 ($ 230,348 )	406,616 586 ( 9 ) 32,329 $ 4,870,179

Unit: NT$Thousand

Chairperson: Sean Chen

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The accompanying notes are an integral part of the consolidated financial statements and should be read in conjunction.

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Managerial Officer: Lidon Chen ~19~

Accounting Officer: Eve Yang

Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand

Cash Flow from Operating Activities Net Income(Loss) Before Tax Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities Revenues and Expenses Depreciation Amortization Expected Credit Reversal Gain Interest income Interest Incomes Net gain on financial assets measured at fair value through profit or loss Gain (loss) on disposal of investments Impairment Loss of Financial Assets Dividend income Share-based payment transaction Share of losses of affiliated companies recognized under the equity method Loss (gain) on disposal of property, plant and equipment Gains (losses) on Disposal of Property, Plants and Equipment The Changes of Assets/ Liabilities related to Operating Activities The Changes of Assets/ Liabilities related to Operating Activities Mandatory financial assets at fair value through profit or loss Contract Assets Notes Receivables Accounts Receivables Accounts Receivables－Related Parties Other Receivables Other Receivables－Related Parties Inventories Prepayments Other Current Assets Other Non-Current Assets Net Changes of Liabilities related to Operating Activities Contract Liabilities Notes Payable Accounts Payable Other Payables Other Payables- related Parties Other Current Liabilities Defined Benefit Liabilities Other Current Liabilities Cash outflow from operations Interest Received Dividends Received Interest Paid Income Tax Paid

Notes January 1 to December 31, 2021 (After adjustments) For the Year Ended December31,2020 $ 1,178,098 $ 630,541 6(25) 483,274 379,560 6(25) 18,236 7,395 12(2) ( 1,340 ) ( 2,200 ) 6(21) ( 4,858 ) ( 4,826 ) 6(24) 100,524 33,026 6(23) ( 559,714 ) ( 461,862 ) 6(23) ( 326,927 ) ( 74,561 ) 6(23) 11,737 165,253 6(22) ( 85,104 ) ( 25,128 ) 6(16) 176,980 88,273 6(6) 80,385 105,006 6(23) 1,927 ( 1 ) - 72 ( 2,071,523 ) ( 692,023 ) ( 61,954 ) ( 75,688 ) 1,018 ( 879 ) ( 345,858 ) ( 143,401 ) ( 10,213 ) ( 5,031 ) ( 14,606 ) ( 28,480 ) 3,068 ( 3,068 ) ( 182,382 ) 18,383 ( 33,317 ) ( 20,011 ) 40,111 ( 47,960 ) 104,166 ( 614 ) 78,360 56,759 ( 4,263 ) 1 64,213 24,673 211,059 80,593 - ( 1,432 ) 10,526 ( 10,266 ) ( 2,026 ) ( 2,098 ) 51,396 1,035 ( 1,089,007 ) ( 8,959 ) 4,825 5,156 85,104 25,128 ( 101,583 ) ( 30,871 ) ( 165,546)( 60,398)

~20~

Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand

Net cash outflow from operating activities

January 1 to (After adjustments) December 31, 2021 For the Year Ended Notes December 31, 2020 ( 1,266,207 ) ( 69,944 )

(Continued)

~21~

Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand

Cash Flow from Investment Activities Acquisition of Amortized Cost Financial Assets Disposal of Amortized Cost Financial Assets Acquisition of investment property by the Equity Method Cash inflows from changes in consolidated entities Cash outflows from changes in consolidated entities Acquisition of Property, Plants and Equipment Disposal of Property, Plants and Equipment Acquisition of Intangible Assets Decrease (Increase) in Refundable Deposits Net Cash Outflow from Investing Activities Cash Flows from Financing Activities Increase of Short Term Loan Redemption of Short Term Loan Increase of Long Term Loan Redemption of Long Term Loan Issue of convertible bonds Distribution of cash dividends Treasury stocks transfer to employees Treasury stock buyback cost Redemption of Lease Principal Increase in Guarantee Deposits Received Cash increase of non-controlling equity in Subsidiaries Transfer of unclaimed dividends as Additional Paid-in Capital Payment of overdue unclaimed dividends

Notes January 1 to December 31, 2021 (After adjustments) For the Year Ended December31,2020 ( $ 8,397 ) ( $ 141,012 ) 24,868 137,960 ( 188,072 ) ( 268,965 ) 6(29) 46,854 12,100 6(29) - ( 43,089 ) 6(30) ( 1,883,332 ) ( 2,029,071 ) 79,905 618 ( 13,089 ) ( 3,653 ) 2,680 ( 4,323 ) ( 1,938,583 ) ( 2,339,435 ) 6(31) 8,552,978 3,709,278 6(31) ( 6,515,430 ) ( 2,215,498 ) 6(31) 1,936,952 1,342,000 6(31) ( 954,679 ) ( 61,533 ) 6(31) 2,297,099 - ( 323,449 ) ( 215,633 ) 722,059 307,591 ( 828,884 ) ( 306,920 ) 6(31) ( 63,982 ) ( 60,382 ) 6(31) 1,779 3,585 32,329 - - 3,566 ( 9 ) -

The accompanying notes are an integral part of the consolidated financial statements and should be read in conjunction.

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Chairperson: Sean Chen Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

~22~

Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand

January 1 to (After adjustments) December 31, 2021 For the Year Ended Notes December 31, 2020 Net Cash In-Flow (Out-Flow) from Funding Activities 4,856,763 2,506,054 Adjustments of Exchange Rate ( 6,812 ) ( 6,534 ) Increase (Decrease) of Cash and Cash Equivalents 1,645,161 90,141 Beginning Balance of Cash and Cash Equivalents 1,036,658 946,517 Ending Balance of Cash and Cash Equivalents $ 2,681,819 $ 1,036,658

The accompanying notes are an integral part of the consolidated financial statements and should be read in conjunction.

==> picture [43 x 44] intentionally omitted <==

==> picture [40 x 39] intentionally omitted <==

==> picture [45 x 48] intentionally omitted <==

Chairperson: Sean Chen

Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

~23~

Taiwan Mask Corporation and Subsidiaries Notes to the Consolidated Financial Statements

2021 and 2020

Unit: NT$Thousand (Unless otherwise specified)

(I) Company history

Taiwan Mask Corporation (hereinafter referred to as the “Company”) was established on October 21, 1988, and started its operations in March 1989. The Company was approved by the shareholders meeting on June 12, 2000 to acquire Shin-Tai Technology Co., Ltd., on the merger record date of December 1, 2000, with the Company being the surviving entity. The Company and its subsidiary (collectively referred to as the “Group”) mainly engage in the research, development, manufacturing and sales of photomask and integrated circuits, providing technical assistance, consultation, inspection and repair of the abovementioned products, and manufacturing and buying and selling of medical equipment.

(II) Date and procedures for passing the financial report

The accompanying consolidated financial statements were approved and authorized for issuance by the Board of Directors on March 4, 2022.

(III) Application of New and Revised International Financial Reporting Standards

1. The impact from adopting the newly released and revised International Financial Reporting Standards recognized by the Financial Supervisory Commission (FSC).

The following table summarizes the applicable newly released, corrected and amended standards and interpretations of the International Financial Reporting Standards recognized by the Financial Supervisory Commission in 2021:

the Financial Supervisory Commission in 2021:
	Effective Date Issued
Newlyreleased / corrected / amended standards and interpretations	byIASB
Amendment to IFRS 4, “Extension to Temporary Exemption from	January 1, 2021
Application of IFRS 9”
IFRS 9, IAS 39, IFRS 7, IFRS 4 and Phase II amendment to	January 1, 2021
interest rate benchmark reform of IFRS 16.
Amendment to IFRS 16 for “Rent Concessions in the Coronavirus	April 1, 2021
Pandemic after June 30, 2021”	(Note)

Note: The FSC allows the application in advance starting January 1, 2021.

The Group believes that the adoption of aforementioned IFRSs will not have a significant effect on the financial position and performance.

1. Impact of the newly released and amended IFRS recognized by the FSC not yet adopted by the Company.

The following table summarizes the applicable newly released, corrected and amended standards and interpretations of the International Financial Reporting Standards recognized by the Financial Supervisory Commission in 2022:

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	Effective Date Issued
Newlyreleased / corrected / amended standards and interpretations	byIASB
IFRS 3 amendment, “Reference to Conceptual Framework”	January 1, 2022
Amendment to IAS 16 - “Property, Plant and Equipment: Proceeds	January 1, 2022
before Intended Use”.
Amendment to IAS 37 “Onerous Contracts - Cost of Fulfilling a	January 1, 2022
Contract”
Annual improvements to 2018 - 2020 cycle	January 1, 2022

The Group believes that the adoption of aforementioned IFRSs will not have a significant effect on the financial position and performance.

3. IFRSs issued by the IASB but not yet recognized by the FSC.

The following table summarizes the applicable newly released, corrected and amended standards and interpretations of the International Financial Reporting Standards issued by the IASB but not yet recognized by the FSC:

standards and interpretations of the International Financial Reporting IASB but not yet recognized by the FSC:	Standards issued by the
	Effective Date Issued
Newlyreleased / corrected / amended standards and interpretations	byIASB
IFRS 10 and IAS 28 amendments, Sale or contribution of assets	To be determined by the
between an investor and its associate or joint venture	IASB
IFRS 17 - Insurance contracts	January 1, 2023
Amendment to IFRS 17 - Insurance contracts	January 1, 2023
Amendments to IFRS 17 “First-time Adoption of IFRS 17 and IFRS	January 1, 2023
9 - Comparative Information”
Amendment to IAS 1 “Classification of Liabilities as Current or Non-	January 1, 2023
Current”
Amendment to IAS 1 - “Disclosure of Accounting Policies”	January 1, 2023
Amendment to IAS 8 - “Definition of Accounting Estimates”	January 1, 2023
Amendments to IAS 12, “Deferred Income Taxes Related to Assets	January 1, 2023
and Liabilities Arising from a Single Transaction”

The Group believes that the adoption of aforementioned IFRSs will not have a significant effect on the financial position and performance.

(IV) Summary of significant accounting policies

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

1. Compliance statement

These consolidated financial statements of the Group have been prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

~25~

2. Basis of Preparation

• (1) Except for the following items, these consolidated financial statements have been prepared under the historical cost convention.

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

• b Financial assets at fair value through other comprehensive income

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

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

3. Basis of consolidation

• (1) The basis for preparation of consolidated financial statements

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

• b Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Corporate Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Corporate Group.

• c The profit and loss and the components of other comprehensive income attribute to the owners of the parent company and non-controlling interest. The total comprehensive income also attributes to the owners of the parent company and noncontrolling interest, even if this results in the non-controlling interests having a deficit balance.

• d Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are equity transactions, and they are considered as transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is directly recognized in equity.

• e When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed

~26~

of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

~27~

(2) Subsidiaries included in the consolidated financial statements:

			Ownership (%)
Name of	Name of		Main Business Activity December 31,2021 December 31,2020 Explanat ion
Investor	Subsidiary
Taiwan Mask	SunnyLake Park		Name of Investor 100 100
Corporation	International
	Holding, Inc.
Taiwan Mask	Youe Chung		Name of Investor 100 100
Corporation	Capital
	Corporation
Taiwan Mask	Miracle		Electronics components 100 100
Corporation	Technology CO.,		manufacturing, electronics materials and precision equipment distribution and power component design
	LTD.
Taiwan Mask	Weida Hi-Tech		Display panel control Note 1
Corporation	Company		chip and other module’s research, design, development, manufacturing and sales
Taiwan Mask	Innova Vision		Manufacturing, retail, 91.53 13.00 Note 2
Corporation	INC.		wholesale and international trade of medical equipment
Youe Chung	Innova Vision		Manufacturing, retail, 0.23 3.21 Note 2
Capital	INC.		wholesale and international trade of medical equipment
Corporation	.
Youe Chung	Aptos		Design, packaging and 38.16 38.16
Capital	Technology		testing of NAND flash memory, solid state drives and the related products
Corporation	INC.
Youe Chung	Xsense		Precious metal coating 41.43
Capital	Technology
Corporation	Corporation
Youe Chung	DIGITAL-CAN		3D Printing and Plastic 57.39 - Note 5
Capital	TECH. CO.,		Mold Design
Corporation	LTD.
Aptos	ADL		Electronics components 100 52.19
Technology	ENGINEERING
INC.	INC.
	.
APTOS	New Sunrise		Name of Investor 100 100
TECHNOLOG	Limited
Y INC.
.
Adl	Aptos Global		Name of Investor 100 100
Engineering	Holding Corp.
INC.
Aptos Global	Aptos		Name of Investor 100 100
Holding Corp.	Technology Co.,
	Limited
Miracle	Jingjing		Name of Investor 100 100
Technology	Investment Co.,
Co., LTD.	Ltd.
Miracle	Miracle		Name of Investor 100 Note 3

~28~

Technology	Technology
Co., LTD.	(Samoa) Co.,
.	Ltd.
Jingjing	Miko-China	Electronics components 100 100
Investment	Enterprise	manufacturing, electronics materials and precision equipment distribution and power component design
Co., Ltd.	(Shanghai) Co.,
	Ltd.

~29~

			Ownership (%)
Name of	Name of		Main Business Activity December 31,2021 December 31,2020 Explana tion
Investor	Subsidiary
Jingjing	MIKO		Electronics 100 100
Investment	Technology Co.,		components manufacturing, electronics materials and precision equipment distribution and power component design
Co., Ltd.	Ltd.
Miracle	Misun		Name of Investor 100 Note 3
Technology	Technology Co.,
(Samoa) Co.,	Ltd.
Ltd.
Misun	Miracle		Electronics 100 Note 3
Technology	International		components manufacturing, electronics materials and precision equipment distribution and power component design
Co., Ltd.	Enterprise(Shan
	ghai) Co., Ltd.
Miracle	Miracle		Electronics 100 Note 3
Technology	International		components manufacturing, electronics materials and precision equipment distribution and power component design
Co., LTD.	Enterprise(Shan
	ghai) Co., Ltd.
Miko-China	Sichuan Miracle		IC product design, 79.17 64.29 Note 4
Enterprise	Power		production and sales
(Shanghai)	Technology Co.,
Co., Ltd.	Ltd.
Miracle	Sichuan Miracle		IC product design, 20.83 35.71 Note 4
International	Power		production and sales
Enterprise(Sha	Technology Co.,
nghai) Co.,	Ltd.
Ltd.
Innova Vision	Innova		Medical equipment 100 100 Note 2
INC.	Technology		retail and wholesale
Innova Vision	Innova Vision		Name of Investor 100 100 Note 2
INC.	(B.V.I.) Inc.
.
Innova Vision	Innova Vision		Medical equipment 52.03 9.23 Note 2
INC.	Kabushiki		retail and wholesale
.	Kaisha
Innova Vision	Calaview		Name of Investor 100 Note 2
INC.	International		and Note 6
.	Holding
	Company
	Limited
Innova Vision	Innova Vision		Medical equipment 47.97 90.77 Note 2
(B.V.I.)	Kabushiki		retail and wholesale
	Kaisha

~30~

• Note 1: Weida Hi-Tech Company issued new stocks for cash capital increase separately on April 10, 2020 and May 15, 2020. The Group did not keep up with the subscription for shareholding, which caused the shareholding to drop to 36.70%. Weida Hi-Tech Company then held an extraordinary general meeting of shareholders on June 2, 2020 to elect new directors. The Company won one seat of director and lost the control of the Weida. Therefore, the Group has stopped including Weida Hi-Tech and its subsidiaries in the consolidated financial statements since June 2, 2020. For cash flow information related to its subsidiaries, please refer to Note 6 (30) for supplementary cash flow information.

• Note 2: On December 16, 2020, Innova Vision held elections for all directors at its extraordinary general meeting. The Company’s subsidiary Youe Chung Capital Corporation won all the director seats, obtaining substantial control of this firm. Therefore, it is included in consolidated financial statements as a consolidated entity from that date. In the first quarter of 2021, the Company invested $367,671 in a cash capital increase in Innova Vision INC. and its consolidated shareholding increased to 91.76%.

• Note 3: The Company’s Miracle Technology CO., LTD., changed its organizational structure and directly owned Miracle International Enterprise(Shanghai) Co., Ltd. on March 3, 2021.

• Note 4: Miko-China Enterprise (Shanghai) Co., Ltd. increased its investment in Sichuan Miracle Power Technology Co., Ltd. in March 2021 and the shareholding ratio increased to 79.17%; the shareholding of Miracle International Enterprise(Shanghai) Co., Ltd. decreased to 20.83%

• Note 5: In August 2021, the Company’s subsidiary, i-Youe Chung Capital Corporation, increased its investment in DIGITAL-CAN TECH. CO., LTD. to 57.39%.

• Note 6: Calaview International Holding Company Limited was liquidated on April 30, 2021.

• Subsidiaries not included in the consolidated financial report: None.

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

• Significant restrictions: None.

• Subsidiaries that have non-controlling interests that are material to the Corporate Group: None.

The total non-controlling interests of the Group as of December 31, 2021 and 2020 were ($230,348) and ($90,165) The following information shows subsidiaries that have noncontrolling interests that are material to the Corporate Group:

	Non-controllingInterests
Main location	December 31,2021 December 31,2020
	Amount Ownersh ipin% Amount Ownership in% Explan ation
Name of Subsidiary of business
Aptos Taiwan	( $ 245,715 ) 61.84% ( $ 63,630 ) 61.84%
Technology and its subsidiaries

Aggregate financial information of subsidiaries:

Balance Sheet

~31~

	Aptos Technologyand its subsidiaries	Aptos Technologyand its subsidiaries
	December 31,2021 December 31,2020
Current assets	$ 391,993 $ 227,618
Non-Current Assets	560,687 462,810
Current liabilities (	1,159,778 ) ( 657,891 )
Non-current liabilities (	190,261 ) ( 156,705 )
Total net assets (	$ 397,359 ) ( $ 124,168 )
Statement of Comprehensive Income
	Aptos Technologyand its subsidiaries
	2021	2020
Revenue	$ 609,209 $	377,749
Net loss before taxes (	245,370 ) (	254,537 )
Income Tax Expense	-	-
Net loss of current period from continuingoperations (	245,370 ) (	254,537 )
Net loss (	245,370 ) (	254,537 )
Other comprehensive income (net	-	-
after tax)
Total comprehensive income for the year (	$ 245,370 ) ( $	254,537 )
Total comprehensive income attributable to non-controlling interests ( Statements of Cash Flows	$ 1,603 ) ( $	2,264 )
	Aptos Technologyand its subsidiaries
	2021 2020
Net cash outflow from operating activities (	$ 146,589 ) ( $ 223,764 )
Net Cash Outflow from Investing Activities (	94,225 ) ( 28,581 )
Net Cash In-Flow (Out-Flow) from	235,769 203,936
FundingActivities
Increase (Decrease) in Cash and Cash Equivalents (	5,045 ) ( 48,409 )
Beginning Balance of Cash and	39,193 87,602
Cash Equivalents
Ending Balance of Cash and Cash	$ 34,148 $ 39,193
Equivalents

4. Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional currency.

1. Foreign currency transactions and balances

2. (1) Foreign currency transactions are translated into the functional currency using spot

~32~

exchange rate at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

  - (2) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated using spot exchange rate at the balance sheet date. Exchange differences arising from re-translation at the balance sheet date are recognized in profit or loss.

  - (3) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated using spot exchange rate at the balance sheet date. Their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated using spot exchange at the balance sheet date. Their translation differences are recognized in other comprehensive income. For those which are not measured at fair value, they measured by the historical exchange rate of the initial transaction date.

  - (4) All foreign exchange gains and losses are presented in the statement of comprehensive income within “Other gains and losses”.

1. Translation of foreign operations

   • (1) The operating results and financial position of all corporate group entities and affiliates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

     • A. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet.

     • B. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period.

     • C. All resulting exchange differences are recognized in other comprehensive income.

   • (2) When the foreign operation that is partially disposed of or sold is a subsidiary, the accumulated conversion difference recognized as other comprehensive income is reattributed to the foreign operation’s non-controlling interests on a pro rata basis. However, even if the Group retains part of its equity in the former subsidiary, but has lost control of the subsidiary of the foreign operation, it will be treated with as a disposal of the entire equity of the foreign operation

   • (3) Goodwill and fair value adjustments arising on acquisition of a foreign entity are regarded as assets and liabilities of the foreign entity, and are translated at the closing rate.

2. Classification of current and non -current items

3. Assets that meet one of the following criteria are classified as current assets:

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

   • (2) Assets held mainly for trading purposes.

   • (3) Assets that are expected to be realized within twelve months from the balance sheet date.

   • (4) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

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Those that do not meet the above criteria are considered non-current.

1. Liabilities that meet one of the following criteria are classified as current liabilities:

2. (1) Liabilities that are expected to be paid off within the normal operating cycle.

3. (2) Assets held mainly for trading purposes.

4. (3) Liabilities that are to be paid off within twelve months from the balance sheet date.

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

Those that do not meet the above criteria are considered non-current.

6. Financial assets at fair value through profit and loss

1. Refer to the financial assets that are not measured at amortized cost, or are measured at fair value through other comprehensive gain or loss.

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

3. The Group measures financial assets at fair value in initial recognition. The related transaction costs are recognized in profit and loss. These financial assets are subsequently re-measured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.

4. When the right to receive dividends is established, the economic benefits associated with the dividends are likely to flow in, and the amount of dividends can be reliably measured, the Group recognizes dividend income in profit or loss.

7.

Financial assets at fair value through other comprehensive profit and loss

1. Refers to an irrevocable election at the time of initial recognition to report the fair value changes of equity investments that are not held for trading in other comprehensive income.

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

3. The Corporate Group measures financial assets at fair value plus transaction costs at the initial recognition. The financial assets are subsequently measured at fair value. The fair value changes of equity investments are recognized in other comprehensive income. At the time derecognition, the accumulated gains or losses previously recognized in other comprehensive income shall not subsequently reclassified to profit or loss, and shall be transferred to retained earnings. When the right to receive dividends is established, the economic benefits associated with the dividends are likely to flow in, and the amount of dividends can be reliably measured, the Group recognizes dividend income in profit or loss.

4. Financial assets measured at amortized cost

5. Refer to those that meet the following criteria at the same time:

   • (1) The objective of the business model is achieved by collecting contractual cash flows.

   • (2) The assets’ contractual cash flows solely represent payments of principal and interest.

6. The Corporate Group holds time deposits that are not considered cash equivalents. Due to the short holding period, the impact of discounting is insignificant and is measured by the amount of investment.

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9. Accounts and notes receivable

1. Refers to accounts and notes that have been unconditionally charged for the right to exchange the value of the consideration due to the transfer of goods or services.

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

10. Impairment Loss of Financial Assets

Regarding debt instruments measured at FVTOCI, financial assets measured at amortized cost, accounts receivable or contract assets and lease receivables that contain significant financing components, the Group, on each balance sheet date, considers all reasonable and supportable information (including forward-looking ones) and measure the loss allowance based on the 12month expected credit losses for those that do not have their credit risk increased significantly since initial recognition. For those that have increased significantly since initial recognition, the loss allowance is measured based on the full lifetime expected credit losses. A loss allowance for full lifetime expected credit losses is also required for contract assets or trade receivables that do not constitute a financing transaction.

11. De-recognition of financial assets

A financial asset is derecognized when the Group’s rights to receive cash flows from the financial assets have expired.

12. Lessor’s lease transaction -- Operating lease

Lease income from operating leases, less any incentives given to the lessee, is amortized in current profit or loss on a straight-line basis over the lease term.

13. Inventories

Inventories are measured at the lower of cost or net realizable value, and the cost is determined by weighted-average method. The cost of finished goods and work-in-progress comprises raw materials, direct labor, other direct costs and related production overheads (amortized according to normal production capacity), but excludes borrowing costs. At the end of year, inventories are evaluated at the lower of cost or net realizable value. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable costs of completion and selling expenses.

14. Investments accounted for using equity method -- Associates

1. Associates refer to entities over which the Corporate Group has significant influence but is not in control. In general, the associates may have more than 20% of their voting shares directly or indirectly owned by the Group. The Corporate Group accounts for its investment in associates using the equity method, and the investment is initially recognized at cost.

2. The Corporate Group recognizes the profit and loss upon the acquisition of associates as the current profit and loss. Other comprehensive profit and loss after the acquisition are recognized as the other comprehensive profit and loss. When the Corporate Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group will not recognize further losses, unless it has incurred legal or constructive obligations or make payments on behalf of the associate.

3. If an associate has changes in equity not from profit or loss or other comprehensive income,

~35~

and such changes do not affect the Corporate Group’s shareholding in the associate, the Group will recognize all changes in equity attributable to the Group’s share of the associate as “capital surplus” according to the shareholding percentage.

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

2. In the event that an associate issues new shares and the Corporate Group does not subscribe to or acquire the new shares in proportion, which results in a change to the Group’s shareholding percentage but the Group maintains a significant influence on the associate, the increase or decrease of the Group’s share of equity interest is the adjustment of “capital surplus” and “investments accounted for under the equity method”. If the investment percentage is reduced, in addition to the above adjustments, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionally on the same basis as would be required if the relevant assets or liabilities were disposed of.

15. Property, plant and equipment

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

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

3. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

4. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors,” from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures	3 years to 56
years
Machinery and equipment	2 years to 14
years
Office equipment	3 years to 6
years
Transportation equipment	3 years to 6
years

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Leasehold improvements 2 years to 10 years Mold equipment 2 years Other equipment 3 years to 5 years

16. Leasing agreements (lessee) - Right-of-use assets/lease liabilities

1. Leases are recognized as right-of-use assets and lease liabilities at the date at which the leased assets are available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognized as expenses on a straight-line basis over the lease term.

2. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments include fixed payments, less any lease incentives receivables.

The Company subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of re-measurement is recognized as an adjustment to the rightof-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

1. At the commencement date, the right-of-use asset is recognized at cost which includes:

2. (1) The amount of initial measurement of lease liability.

3. (2) Any lease payments made at or before the commencement date.

4. (3) Any original direct costs incurred.

5. (4) The estimated cost of dismantling, removing the underlying asset and restoring its location, or restoring the underlying asset to the condition required in the lease terms and conditions.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s service life or the end of lease term. When the lease liability is remeasured, the amount of re-measurement is recognized as an adjustment to the right-of-use asset.

17. Real estate investment

Investment properties are initially measured at cost, and may be subsequently measured using a cost model. Except for land, the service life is recognized on a straight-line basis of depreciation and is about 45 years.

18. Intangible assets

1. Trademark and concession

Trademarks and concession obtained separately are recognized at the cost of acquisition, and trademarks and concessions obtained as a result of a business combination are recognized at fair value on the acquisition date. Trademarks and concessions are assets with a limited useful life and are amortized based on the estimated useful life of 10 to 15 years based on the straight-line method.

1. Computer software

Computer software is recognized at the cost of acquisition, and amortized based on the

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estimated useful life of 3 years based on the straight-line method.

3. Goodwill

Goodwill is measured in a business combination using the acquisition method.

1. Impairment of non-financial assets

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

3. Goodwill, intangible assets with indefinite useful life and intangible assets not yet available for use are regularly estimated for their recoverable amounts. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The goodwill impairment loss will not be reversed in subsequent years.

4. Goodwill is allocated to cash-generating units for the purpose of conducting the impairment testing. The allocation identified based on the operating segment, and the goodwill is allocated to cash-generation units or groups of cash-generation units expected to benefit from the business combination that generates goodwill.

20. Borrowings

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

1. Accounts and notes receivable

2. Refers to debts incurred as a result of the purchase of raw materials, goods or services and the notes payable due to business and non-business purposes.

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

22. Convertible bonds payable

The convertible bonds payable issued by the Group are embedded with conversion options (i.e., the holder’s right to choose to convert to the Group’s common stock for a fixed amount of shares), put options and call options The issuance price is classified as financial assets, financial liabilities or equity at the time of initial issuance according to the terms of issuance, which is treated as follows:

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1. Embedded put options and call options: “Financial assets or liabilities at fair value through profit or loss” are recorded at their net fair value on initial recognition; subsequently, “Gain or loss on financial assets (liabilities) at fair value through profit or loss” is recognized on the balance sheet date, with the difference valued at current fair value.

2. Master contract of corporate bonds: The difference between the fair value of the corporate bonds and the redemption value is recognized as a premium or discount on the corporate bonds payable at the time of original recognition; subsequently, it is recognized in profit or loss as an adjustment to “finance costs” using the effective interest method under the amortization procedure over the circulation period.

3. Embedded conversion options (which meet the definition of equity): On initial recognition, the remaining value of the issue amount, net of the above “financial assets or liabilities at fair value through profit or loss” and “corporate bonds payable”, is recorded as “capital surplus - stock options” and is not subsequently remeasured.

4. Any directly attributable transaction costs of the issuance are allocated to each component of liabilities and equity in proportion to the original carrying amount of each component mentioned above.

5. Upon conversion, the components of liabilities (including “corporate bonds payable” and “financial assets or liabilities at fair value through profit or loss”) are subsequently measured according to their respective classifications, and the carrying amount of the aforementioned components of liabilities is added to the carrying amount of “capital surplus - stock options” as the issuance cost of common stock exchanged.

23. Employee benefits

1. Short-term employee benefits

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

1. Pension

2. (1) Defined contribution plans

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

(2) Defined benefit plans

• A. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using the current interest rates of government bonds (at the balance sheet date) consistent with the currency and period of the defined-benefit plan instead.

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• B. Re-measurements arising on defined-benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• C. The related expenses of the past service cost are immediately recognized as profit and loss.

3. Termination benefits

Refer to when companies decide to terminate the employees before the normal retirement date, or when employees decide to accept the benefits in exchange for the termination. The Group recognizes expenses when it is no longer able to withdraw the offer of termination benefits or when the relevant restructuring costs are recognized, whichever is earlier. Liabilities that are not expected to be paid off within twelve months from the balance sheet date should be discounted.

1. Remuneration for employees and directors and supervisors

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

24. Share-based payment to employees

The share-based payment agreement for delivery of equity is a transaction in which employees’ labor service received as consideration for the Company’s equity instrument at fair value, and it is recognized as compensation costs during the vesting period, and the equity is adjusted accordingly. The fair value of equity instrument shall reflect the effects of vesting and non-vesting conditions of market value. The recognized remuneration costs are adjusted in accordance with the expected service conditions to be met and the nonvesting market value conditions, until the final recognized amount is recognized with the vesting amount on the vesting date.

25. Income tax

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

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

3. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the

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transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

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

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

26. Capital

1. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

2. When the Company buys back the issued shares, the consideration paid, including any directly attributable incremental costs, is recognized as a deduction of shareholders’ equity with the net amount after tax. When the purchased shares are subsequently reissued, the difference between the consideration received and the book value after deducting any directly attributable incremental costs and the impact of income tax is recognized as an adjustment to shareholders’ equity.

27. Dividend distribution

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities. Stock dividends are recorded as dividends to be distributed and transferred to be common stocks and share premium on the record date of issuance of new shares.

28. Recognized revenue

1. Product sales

• (1) The Group manufactures and sells photomasks and integrated circuit products, medical equipment products, etc. The sales revenue is recognized when the control of the product is transferred to the customer. That is, once products are delivered to customers, the customers have discretion on the channel and price of product sales, and the Corporate Group has no outstanding performance obligations that may affect customers’ acceptance of the products. The delivery of products occurs when products are shipped to a designated location and the risk of obsolescence and loss has been transferred to customers, and the customers accept the products

~41~

in accordance with the sales contract or have objective evidence that all criteria have been met.

• (2) The time interval between the transfer products or services promised to customers and the customers’ payment has not exceeded one year, so the Corporate Group has not adjusted the transaction price to reflect the time value of money.

• (3) Accounts receivable are recognized when goods are delivered to customers. The Corporate Group has unconditional rights to the contract price, and will be able to collect the amount from the customers after the time has passed.

2. Sales of services

The Group mainly provides integrated circuit packaging services. The actual services provided and fees will vary according to different customers. Prices are negotiated separately before providing services, and are based on the prevailing market price. The performance obligations identified based on customer contracts are mainly for packaging services, and revenue is recognized by measuring the degree of completion of performance obligations during the period of service provision.

With the packaging service provided, the customer simultaneously receives and consumes the performance benefits, and the customer has control over the asset when the asset is created or enhanced. The related revenue is recognized by measuring the degree of completion of the performance obligation during the service period. The packaging service is based on the input of the technical staff on the basis of the service, and the progress of completion is measured based on the percentage of the incurred cost to the estimated total cost. After the agreed service or shipment is fulfilled for the contract agreement, a bill is issued, so the contract assets are recognized when the service provided, and transferred to account receivables when the customer agrees to the Group to issue the bill.

29. Government subsidies

Government subsidies are recognized at fair value once it is reasonably convinced that the Company complies with the conditions for subsidies and will be receiving the subsidies. If the nature of the government subsidies is to compensate the expenses incurred by the Group, the government subsidies are recognized as current gains and losses on a systematic basis during the period in which the related expenses are incurred.

30. Business combination

1. The Corporate Group adopts the acquisition method for business combination. The combination consideration is calculated based on the fair value of transferred assets, liabilities incurred or assumed, and equity instruments issued. The transferred consideration includes the fair value of any assets and liabilities arising from contingent consideration agreed. The acquisition-related costs are recognized as expenses when incurred. The identifiable assets acquired and the liabilities assumed in a business combination are measured at the fair value on the acquisition date. The Group uses individual acquisition transactions as the basis. If the non-controlling interest is part of the current ownership interest and the holder has the right to a proportional share of the company’s net assets at the time of liquidation, it is measured at a fair value on the acquisition date or based on the proportion of identifiable assets of acquiree. Other components of non-controlling interests are measured at fair value of the acquisition date.

2. If the total fair value of transfer of consideration, non-controlling interests of acquiree and

~42~

the interest of acquiree that has been held previously exceeds the fair value of identifiable assets and the assumed liabilities, it is recognized as goodwill on the acquisition date. If the identifiable assets acquired and the assumed liabilities exceed the transfer of consideration, the difference between the non-controlling interests of acquiree and the total fair value of acquiree’s interests previously held is recognized as the current profit or loss.

31. Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the president that makes strategic decisions.

(V) Significant Accounting Judgments and Estimations, and Main Sources of Assumption Uncertainties

The preparation of these consolidated financial statements requires the management to make critical judgments in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Please see the following explanation of critical accounting judgments and key sources of estimation and uncertainty:

1. Important judgments adopted by the accounting policies Not applicable.

2. Critical accounting estimates and assumptions

Evaluation of Inventories

The Group is primarily engaged in mask and integrated circuit services in the semiconductor industry. Due to rapid technological innovations, short life-cycle and competition within the mask industry, the risk of price fluctuations, Loss on decline in value of inventories and obsolescence is higher than that of other industries. The Group measures inventory based on the lower of cost and net realizable value. For inventories that are older than a certain period of age or are outdated and obsolete, the Group must use judgment and estimation to determine the net realizable value of the inventory on the balance sheet date. The valuation of inventory may undergo major changes.

As of December 31, 2021, the book value of the Corporate Group’s inventory was NT$432,015.

(VI) Statements of main accounting items

1. Cash

Cash
	December 31,2021 December 31,2020
Cash on hand	$ 295 $ 309
Checking accounts and demand deposits	1,637,066 905,755
Time deposits	1,044,458 130,594
Total	$ 2,681,819 $ 1,036,658

1. The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

2. The Group has no cash and cash and cash equivalents pledged to others.

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2. Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss
Items	December 31,2021	December 31,2020
Current items:
Mandatory financial assets at fair value through
profit or loss
Shares of listed and OTC company	$ 2,464,617	$ -
Convertible bond call/put options	5,000	-
Beneficiarycertificates	500	500
	2,470,117	500
Valuation adjustment	1,133,803	-
	$ 3,603,920	$ 500
Non-current items:
Mandatory financial assets at fair value through
profit or loss
Shares of listed and OTC company	$ 1,155,128	$ 1,302,315
Not listed, OTC or emerging stock board
stocks	124,287	102,023
Private equity	10,000	10,000
	1,289,415	1,414,338
Valuation adjustment	144,337	720,575
	$ 1,433,752	$ 2,134,913

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1. Financial assets at fair value through profit or loss are detailed as follows:

Financial assets at fair value through profit or loss are detailed as follows:	Financial assets at fair value through profit or loss are detailed as follows:
2021 2020
Mandatory financial assets at fair value
through profit or loss
.
Shares of listed and OTC company $ 839,470 $ 542,937
Not listed, OTC or emerging stock board stocks ( 4,147 ) ( 92,831 )
	$ 835,323 $ 450,106

1. Please see Note VIII on how the Group provides financial assets at fair value through profit or loss as a pledged collateral.

2. Please see Note 12 (2) and (3) for the price risk and fair value information related to financial assets at fair value through profit or loss.

3. Financial assets measured at amortized cost

Financial assets measured at amortized cost
Items	December 31,2021	December 31,2020
Current items:
Demand Deposit	$ 15,338	$ 11,111
Time deposits	23,000	23,101
	$ 38,338	$ 34,212
Non-current items:
Time deposits	$ 39,925	$ 40,922

1. Financial assets at amortized cost is recognized in the profit or loss shown as follows:

	2021 2020
Interest income	$ 147 $ 157

1. While not considering the collaterals or other credit enhancements, the financial assets at amortized cost held by the Group had the maximum exposure of credit risk at $78,263 and $75,134 as of December 31, 2021 and 2020, respectively.

2. Please see Note VIII on how the Group provides financial assets at amortized cost as a pledged collateral.

4. Notes and accounts receivable

pledged collateral. Notes and accounts receivable
	December 31,2021	December 31,2020
Notes Receivables	$ 63	$ 879
Accounts Receivables	$ 1,273,787	$ 906,011
Accounts Receivables－Related Parties	16,812	6,599
	1,290,599	912,610
Less: Loss allowance ( 10,039 )		( 11,399 )
	$ 1,280,560	$ 901,211

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1. Aging of accounts receivable notes receivable is as follows:

	December	31,2021	December 31,2020
	Accounts	Notes	Accounts Notes
	Receivables	Receivables	Receivables Receivables
Not past due	$ 1,060,909	$ 63	$ 723,020 $ 879
Within 30		-	-
days	188,933		149,311
31-90 days	29,361	-	32,507 -
91-180 days	1,891	-	2,169 -
More than	9,505		5,603 -
181 days past due		-
	$ 1,290,599	$ 63	$ 912,610 $ 879

The above is an aging report based on the number of days past due.

1. As of December 31, 2021 and 2020, accounts receivable and notes receivable were from contracts with customers. The balances of notes and accounts receivable as of January 1, 2020 was NT$$731,104

2. While not considering the collaterals or other credit enhancements, the accounts receivable held by the Group had the maximum exposure of credit risk at $1,280,560 and $901,211, respectively, as of December 31, 2021 and 2020.

3. Please refer to Note 12 (2) for the information on credit risk of accounts receivable.

5. Inventories

Inventories
		December 31,2021
	Cost	(Gain from reversal
		of) loss allowance on decline in market value of inventories
			Book value
Raw materials	$ 335,807 (	$ 61,865 )	$ 273,942
Work in process	69,890 (	9,068 )	60,822
Finished goods	84,747 (	18,889 )	65,858
Merchandise	32,526 (	1,133 )	31,393
Total	$ 522,970 (	$ 90,955 )	$ 432,015
		December 31,2020
	Cost	(Gain from reversal
		of) loss allowance on decline in market value of inventories
			Book value
Raw materials	$ 236,557 (	$ 57,847 )	$ 178,710
Work in process	14,425 (	7,257 )	7,168
Finished goods	20,288 (	17,653 )	2,635
Merchandise	8,082 (	515 )	7,567
Total	$ 279,352 (	$ 83,272 )	$ 196,080

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The cost of inventories recognized as losses by the Corporate Group.

	2021 2020
Cost of goods sold	$ 4,660,299 $ 3,704,961
Loss on falling prices of inventory and inventory	7,683 2,635
obsolescence
Loss on scrappingof inventory	- 16,074
	$ 4,667,982 $ 3,723,670

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6. Investment under Equity Method

Investment under Equity Method
	December 31,2021 December 31,2020
Affiliates:
Advagene Biopharma Co., Ltd.	$ 76,809 $ 88,915
Xsense Technology Corporation	- 186,821
Weida Hi-Tech Company	87,898 85,425
	$ 164,707 $ 361,161

The book value and the share of operating results of each of the Group’s insignificant affiliates are summarized as follows:

are summarized as follows:
			2021				2020
Net loss of current period from continuing operations	(	$		80,385 )		( $	105,006 )
Other comprehensive income(net after tax)				-			-
Total comprehensive income for the year	(	$		80,385 )		( $	105,006 )

1. As of December 31, 2021, the Group held 30.76% and 28.20% of the shares of Advagene Biopharma Co., Ltd. and Weida Hi-Tech Company, respectively, and was the single largest shareholder of the companies. However, the Group did not hold a majority of the Board of Directors’ seats and therefore did not actually participate in the business decisions and operating policies, including strategic decisions (such as financing, acquisitions, personnel and dividend policies) of Advagene Biopharma and Weida Hi-Tech. The Group’s shareholding alone does no reach the statutory attendance percentage of shareholders meetings, indicating that the Group has no actual ability to direct relevant activities. Therefore it is judged that the Group has no control over the companies, and only has a significant influence on them.

2. As of December 31, 2020, the Group held 29.71% 、 35.38% 及 36.70% of the shares of Advagene Biopharma, Xsense Technology Corporation and Weida Hi-Tech, and was the single largest shareholder. However, the Group did not hold a majority of the Board of Directors’ seats and did not actually participate in the business decisions and operating policies, including strategic decisions (such as financing, acquisitions, personnel and dividend policies) of Advagene Biopharma, Xsense Technology (BVI) and Weida Hi-Tech. The Group’s shareholding alone does not reach the statutory attendance percentage of shareholders meetings, indicating that the Group has no actual ability to direct relevant activities. Therefore it is judged that the Group has no control over the companies, and only has a significant influence on them.

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7. Property, plant and equipment

Property, plant and equipment	Property, plant and equipment	Property, plant and equipment	Property, plant and equipment	Property, plant and equipment	Property, plant and equipment	Property, plant and equipment
Buildings and structures (includingland) Machinery and equipment Office equipment Transportati on equipment Mold equipment Other equipment							Unfinished construction and equipment under acceptance Total
January 1, 2021
Cost $ 1,841,566 $ 2,931,096 $ 28,540 $ 3,675 $ 10,391 $ 39,856							$ 135,172 $ 4,990,296
Accumulated depreciation ( 566,920) ( 1,273,724 ) ( 15,004 ) ( 2,620 ) ( 6,390 ) ( 17,539 )							- ( 1,882,197 )
	$ 1,274,646	$ 1,657,372	$ 13,536	$ 1,055	$ 4,001	$ 22,317	$ 135,172	$ 3,108,099
2021
January 1	$ 1,274,646	$ 1,657,372	$ 13,536	$ 1,055	$ 4,001	$ 22,317	$ 135,172	$ 3,108,099
Add - Cost	288,981	620,121	14,755	2,876	17,408	74,318	231,389	1,249,848
Disposals - Cost	- ( 63,065 ) ( 2,638 )			- ( 9,015 ) ( 68,218 )			- ( 142,936 )
Disposal -	- 18,195 1,986			- 4,915 36,008			- 61,104
Accumulated depreciation
Depreciation ( 88,496) ( 307,938 ) ( 8,256 ) ( 831 ) ( 4,997 ) ( 23,973 )							- ( 434,491 )
Consolidated entities change and reclassification 273,713		- - -			-	-	- 273,713
Reclassification - Cost ( 66,247)		57,266 - -			-	- ( 120,545 ) ( 129,526 )
Reclassification -		- - -			-	-	- 1,056
Accumulated depreciation	1,056
Consolidated	-	103,815 6,448 -			-	45,092	- 155,355
transfer in
Net exchange	-	11 ( 12 ) ( 7 )			-	-	- ( 8 ) - 10
differences - Cost
Net exchange	-	-	3	7	-	-	-
differences - Accumulated depreciation

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December 31	$ 1,683,653	$ 2,085,777	$ 25,822	$ 3,100	$ 12,312	$ 85,544	$ 246,016	$ 4,142,224
December 31, 2021
Cost	$ 2,338,013	$ 3,649,244	$ 47,093	$ 6,544	$ 18,784	$ 91,048	$ 246,016	$ 6,396,742
Accumulated							- ( 2,254,518 )
	$ 1,683,653	$ 2,085,777	$ 25,822	$ 3,100	$ 12,312	$ 85,544	$ 246,016 $ 4,142,224

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Buildings and structures (includingland) Machinery and equipment Office equipment Transportatio n equipment Mold equipment Other equipment	Buildings and structures (includingland) Machinery and equipment Office equipment Transportatio n equipment Mold equipment Other equipment	Buildings and structures (includingland) Machinery and equipment Office equipment Transportatio n equipment Mold equipment Other equipment	Buildings and structures (includingland) Machinery and equipment Office equipment Transportatio n equipment Mold equipment Other equipment	Buildings and structures (includingland) Machinery and equipment Office equipment Transportatio n equipment Mold equipment Other equipment	Buildings and structures (includingland) Machinery and equipment Office equipment Transportatio n equipment Mold equipment Other equipment	Buildings and structures (includingland) Machinery and equipment Office equipment Transportatio n equipment Mold equipment Other equipment		Unfinished construction and equipment under acceptance Total	Unfinished construction and equipment under acceptance Total
January 1, 2020
Cost $ 1,013,344 $ 1,767,700 $ 21,509 $ 3,090 $ 5,700 $ 52,091								$ 253,644 $ 3,117,078
Accumulated depreciation ( 529,905 ) ( 1,004,444 ) ( 11,377 ) ( 2,194 ) ( 2,960 ) ( 19,279 )								- ( 1,570,159 )
	$ 483,439	$ 763,256	$ 10,132	$ 896	$ 2,740	$ 32,812		$ 253,644	$ 1,546,919
2020
January 1	$ 483,439	$ 763,256	$ 10,132	$ 896	$ 2,740	$ 32,812		$ 253,644	$ 1,546,919
Add - Cost	1,086,372	928,787	8,901	570	4,294	7,524		123,585	2,160,033
Disposals - Cost	- ( 89 ) ( 661 )			-	- ( 8,952 )			- ( 9,702 )
Disposal -	- 27 661							- 9,085
Accumulated depreciation				-	- 8,397
Depreciation ( 37,015 ) ( 269,307 ) ( 4,929 ) ( 412 ) ( 3,430 ) ( 13,731 )								- ( 328,824 )
Reclassification - Cost ( 262,122 )		229,016 - -			- -		( 242,057 ) ( 275,163 )
Consolidated		5,682 - -						- 12,404
transfer in	3,972				397 2,353
Consolidated
entities decrease
Transfer out -	-	- ( 1,215 ) -			- ( 13,160 )			- ( 14,375 )
cost
Consolidated
entities decrease
Transfer out -	-	- -			-			- 7,719
accumulated depreciation		645				7,074
Net exchange	-	- 6 15			-	-		- 21 - ( 18 )
differences - Cost
Net exchange	-	- ( 4 ) ( 14 )			-	-
differences - Accumulated depreciation
December 31	$ 1,274,646	$ 1,657,372	$ 13,536	$ 1,055	$ 4,001	$ 22,317		$ 135,172 $ 3,108,099

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December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
Cost $ 1,841,566 $ 2,931,096 $ 28,540 $ 3,675 $ 10,391 $ 39,856								$ 135,172 $ 4,990,296
Accumulated depreciation ( 566,920 ) ( 1,273,724 ) ( 15,004 ) ( 2,620 ) ( 6,390 ) ( 17,539 )								- ( 1,882,197 )
	$ 1,274,646	$ 1,657,372	$ 13,536	$ 1,055	$ 4,001	$ 22,317		$ 135,172 $ 3,108,099

~52~

1. The capitalized borrowing costs for property, plant and equipment and their interest rates are as follows:

follows:
		2021			2020
Capitalized amount	$		-	$		2,364
Range of capitalized interest			-			1.797%

1. The major components of the Group’s houses and buildings include land, buildings and factory renovation projects. Except for land, they are depreciated for 3 to 56 years.

2. Information on property, plant and equipment pledged to others as collateral is provided in Note 8.

3. The abovementioned property, plant and equipment of the Group are for self-use.

8. Leasing arrangements - lessee

1. The underlying assets leased by the Group include land, buildings, machine equipment and company vehicles. Leasing contracts are typically made for periods of 3 to 20 years. Lease contracts are negotiated separately and include a variety of terms and conditions. There are no restrictions for the leased assets, except that they cannot be used as loan collaterals.

2. The lease periods of other equipment leased by the Group did not exceed 12 months and the leased underlying assets were other equipment of low value.

3. The carrying amount of right-of-use assets and the depreciation charge are as follows:

	December 31,2021	December 31,2020
	Book value	Book value
Land	$ 536,478	$ 390,879
Buildings and structures	70,758	107,547
Machinery and equipment	-	6,060
Transportation equipment (company vehicles)	18,683	3,981
Other equipment	26,733	-
	$ 652,652	$ 508,467
	2021	2020
	Depreciation	Depreciation
Land	$ 18,545	$ 12,341
Buildings and structures	12,894	33,598
Machinery and equipment	6,060	-
Transportation equipment(companyvehicles)	6,470	4,118
	$ 43,969	$ 50,057

1. The increase in the right-of-use assets was $188,920 and $135,138 for 2021 and 2020, respectively.

2. The information on profit or loss items related to lease contracts is as follows:

		2021			2020
Items affecting current profit and loss
Interest expenses on lease liabilities	$		5,784	$		4,913
Expenses for short-term lease contracts			3,491			7,088
Lease of low-value assets			266			220

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1. The Group’s total cash outflow on leases for 2021 and 2020 was $73,523 and $72,603, respectively.

2. Options to extend or terminate leases

3. In determining lease terms, the Corporate Group takes into consideration all facts and circumstances that create economic incentives to exercise an option to extend or terminate leases. The assessment of lease period is reviewed if a significant event occurs which affects the assessment of options to extend or options not to terminate.

9. Leasing arrangements - lessor

1. The Corporate Group leases out assets such buildings. The lease contracts are typically made for periods of 1 to 2 years. The terms of lease contracts are negotiated separately and include various terms and conditions. In order to preserve the condition of leased assets, the Group usually requires lessees not to pledge the underlying leased assets.

2. The Group recognized rental income of $29,933 and $17,485 based on operating lease contracts in 2021 and 2020, respectively, and none of the lease contracts were variable lease payments.

3. The maturity analysis of the undiscounted lease payments under the operating leases is as follows:

follows:	follows:
2021 2022 2023 Real estate investment		December 31,2021	December 31,2020 46,446 32,833 24,900 $ 104,179
	2021	-
	2022	13,613
	2023	2,043
		$ 15,656
			Buildings and
			structures
January 1, 2021
Cost			$ 319,557
Accumulated depreciation		(	6,458 )
			$ 313,099
2021
January 1			$ 313,099
Business merger and transfer out		(	273,713 )
Reclassification - Cost			129,526
Reclassification - Accumulated depreciation		(	1,056 )
Depreciation		(	4,814 )
December 31			$ 163,042
December 31, 2021
Cost			$ 175,370
Accumulated depreciation		(	12,328 )
			$ 163,042

10. Real estate investment

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		Buildings and structures $ 44,007 5,320 ) $ 38,687 $ 38,687 275,550 459 ) 679 ) $ 313,099 $ 319,557 6,458 ) $ 313,099
January 1, 2020
Cost
Accumulated depreciation	(
2020
January 1
Reclassification - Cost
Reclassification - Accumulated depreciation	(
Depreciation	(
December 31
December 31, 2020
Cost
Accumulated depreciation	(

1. Rental income and direct operating expenses of investment real estate:

	2021	2020
Rental income from investmentproperty	$ 16,268	$ 2,229
Direct operating expenses incurred by
investment properties that generate rent income in the period
	$ 5,311	$ 758

1. The fair value of the investment property held by the Group as of December 31, 2021 and 2020 were $168,813 and $314,845, respectively. They were valuated using the income method and were of Level 3 fair value, and the major assumptions are as follows:

December	31,2021	December	31,2020
Discount rate	4.49%		5.03%
Annual rent (net income) $	16,286	$	31,778
Number of years	2〜20		2〜20

1. No capitalization of interest for investment property in 2021 and 2020.

2. As of December 31, 2021 and 2020, the investment properties had been used as collaterals.

11. Short Term Loans

ort Term Loans
Type of	Range of interest
borrowings	December 31,2021 rate Collateral
Bank
borrowings
Credit loan	$ 1,685,766 0.90%〜2.60% None
Secured	2,691,000 1.04%〜2.45% Certificates of deposit, reserve
borrowings	accounts, stocks of listed and OTC companies, treasury stock and investmentproperties.
	$ 4,376,766

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Type of	December 31, Range of interest
borrowings	2020 rate Collateral
Bank
borrowings
Credit loan	$ 1,660,118 0.90%~2.60% None
Secured	571,000 1.05%~2.25% Certificates of deposit, reserve
borrowings	accounts, stocks of listed and OTC companies and investment properties.
Funds	67,600 0.89%~1.06% None
borrowed to purchase materials
	$ 2,298,718

The interest expenses recognized in profit and loss in 2021 and 2020 were $27,734 and $15,849, respectively.

1. Other Payables

her Payables
	December 31,2021 December 31,2020 $ 78,558 $ 42,582 196,679 113,311 85,822 53,809 29,411 31,851 351,538 195,427 $ 742,008 $ 436,980
Payroll and bonus payable
Remunerations payable to employees and
directors
Payable on equipment
Machine maintenance payable
Others

1. Corporate bonds payable

rporate bonds payable	rporate bonds payable
December 31, December 31,
2021 2020
Corporate bonds payable $ 2,000,000 $ -
Less: Amount of exercised conversion options ( 258,700 ) -
Less: discount on corporate bondspayable ( 84,251 ) -
	1,657,049 -
Less: Bonds due or exercised within one year	- -
or one business cycle
	$ 1,657,049 $ -

1. The terms of issuance for the Group’s 3rd domestic unsecured convertible bonds are as follows:

2. (1) The Group has been approved by the competent authority to raise and issue $2,000,000 of the 3rd domestic unsecured convertible bonds, with a coupon rate of 0% and an issuance period of 5 years from August 3, 2021 to August 3, 2026. The convertible bonds are repayable in cash at par value on maturity. The convertible bonds were listed for trading on August 3, 2021

3. (2) The bondholders may request the conversion of the convertible bonds into the Group’s common shares at any time from the day after the expiration of three months from the date of issuance of the corporate bonds to the maturity date, except during the period when the transfer of the corporate bonds is suspended in accordance with the

~56~

regulations or laws, and the rights and obligations of the converted common shares are the same as those of the original issued common shares.

• (3) The conversion price of the convertible bonds is determined in accordance with the pricing model stipulated in the Measures, and the conversion price will be adjusted in accordance with the pricing model stipulated in the Conversion Measures in the event that the Group is subject to anti-dilution provisions. The conversion price will be reset on the base date set by the Regulations in accordance with the pricing model stipulated in the Conversion Measures. As of December 31, 2021, the conversion price was NT$87.4 per share.

• (5) If the closing price of the Company’s common stock exceeds 30% of the then conversion price for 30 consecutive business days from the day following the third month of the issuance of the convertible bonds to the 40th business day prior to the expiration of the issuance period, the Company may redeem the outstanding corporate bonds within the next 30 business days at the par value of the corporate bonds in cash.

• (6)If the outstanding balance of the convertible bonds is less than 10% of the total par value of the corporate bonds issued, the Company may redeem the convertible bonds at any time thereafter for cash at the par value of the corporate bonds, from the day following the third month of the issuance of the corporate bonds to the 40th business day prior to the expiration of the issuance period.

• Upon issuance of convertible bonds, the Group separated the conversion options from the components of liabilities in accordance with IAS 32, “Financial Instruments: Presentation,” and recorded “capital surplus - stock options” at $406,616. The embedded repurchase and repurchase rights are separated from the principal contractual debt instruments in accordance with IFRS 9, “Financial Instruments”, because they are not closely related to the economic characteristics and risks of the principal contractual debt instruments, and are recorded as “financial assets or liabilities at fair value through profit or loss” on a net basis. The effective interest rate of the master contract debt after the separation was 0.0902%.

14. Long-term Loans

0.0902%. ng-term Loans
Type of	Borrowing period and payment method Range of interest rate Collateral December 31, 2021
borrowings
Long-term bank
borrowings
Secured	Repaid in instalments and 1.800% Houses and $ 1,250,000
borrowings	different amounts according to the agreed period between 2021/12/28 and 2027/01/28. buildings, machinery equipment and investment property
Secured	Repaid in instalments and 1.580% Buildings and 250,000
borrowings	different amounts according to the agreed period between 2021/12/27 and 2024/12/27. structures
Secured	Repaid in instalments and 1.300% Machinery and 300,000
borrowings	different amounts according to the agreed period between 2021/12/27 and equipment

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		2026/12/15.	2026/12/15.	2026/12/15.	2026/12/15.
	Secured	Repaid in instalments and 1.440% Buildings and 850,000
	borrowings	different amounts according to the agreed period between November 9, 2020 and November 9, 2023 structures and investment properties
	Secured	Repaid in instalments and 1.000%~3.730% Machinery, 72,199
	borrowings	different amounts according to the agreed period between September 27, 2017 and December 29, 2026 equipment and reserve account (Note)
		2,722,199
	Less:Long-termborrowings (including currentportion) ( 70,391 )
	(recognized in other current liabilities)				$ 2,651,808
	Type of borrowings Borrowing period and payment method Range of interest rate		Collateral December 31, 2020
Long-term bank
borrowings
Secured Repaid in instalments and 1.797%~2.640%			Houses and $ 882,083
borrowings different amounts according to the agreed period between 2017/09/27 and 2022/09/27.			buildings, machine and other equipment and reserve account (Note)
Secured Repaid in instalments and 1.070%			Buildings and 850,000
borrowings different amounts according to the agreed period between 2020/11/09 and 2022/08/14.			structures
			1,732,083
Less: Long-term borrowings(includingcurrentportion)			( 96,211 )
(recognized in other current liabilities)				$ 1,635,872

With respect to the long-term loan contracts of the Group that expire between December 20, 2019 to August 12, 2022, the Group had already settled the loan in advance in March 2022 due to financial planning considerations.

Note: According to the loan contract provisions of some banks, the Group shall maintain a specific debt-to-equity ratio and interest solvency every six months during the loan duration.

15. Pensions

1. (1) The Company and its domestic subsidiaries operate a defined benefit pension plan in accordance with the Labor Standards Act, which cover all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages

~58~

of the last six months prior to retirement. The Company and its domestic subsidiaries contribute a monthly amount equal to 2% of employees’ monthly salaries and wages to a retirement fund at the Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contribution for the deficit by the end of next March.

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

		December	31,2021		December	31,2020
Present value of defined benefit obligations	(	$	22,899 )		( $	23,846 )
Fair value ofplan assets			7,990			5,723
Defined Benefit Liabilities	(	$	14,909 )		( $	18,123 )

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

Present value of	Present value of	Fair value of plan	Defined Benefit
defined benefit obligations		assets	Liabilities
2021
Balance on January 1 ( $ 23,846 )		$ 5,723 (	$ 18,123 )
Current service cost ( 61 )		- (	61 )
Interest (expense) income ( 82 )		22 (	60 )
( 23,989 )		5,745 (	18,244 )
Re-measurements:
Return on plan assets (excluding amounts included in interest income or expense) 321		99	420 1,068 1,286 ) 987
Change in financial assumptions 1,068		-
Change in demographic assumptions ( 1,286 )		- (
Experience		-
adjustments	987
	1,090	99	1,189
Pension fund	-		2,146
contribution		2,146
Paidpension	-	-	-
Balance on December 31 (	$ 22,899 )	$ 7,990 (	$ 14,909 )
	Present value of	Fair value of plan assets	Defined Benefit Liabilities
	defined benefit obligations
2020

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Balance on January 1 ( $ 26,873 ) $ 6,562 ( $ 20,311 )	Balance on January 1 ( $ 26,873 ) $ 6,562 ( $ 20,311 )
Current service cost ( 123 ) - ( 123 )
Interest (expense) income ( 215 ) 62 ( 153 )
( 27,211 ) 6,624 ( 20,587 )
Re-measurements:
Return on plan assets (excluding amounts included in interest income or expense) - 240 240 Change in financial assumptions ( 1,387 ) - ( 1,387 ) Change in demographic assumptions ( 277 ) - ( 277 ) Experience adjustments 1,848 - 1,848
184 240 424
Pension fund contribution - 2,040 2,040
Paid pension 3,181 ( 3,181 ) -
Balance on December 31 ( $ 23,846 )	$ 5,723 ( $ 18,123 )

~60~

• (4) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings are less than the aforementioned rates, government shall make payments for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating the fund and hence the Company is unable to disclose the classification of fair value of plan asset in accordance with IAS19 paragraph 142. The composition of fair value of plan assets as of December 31, 2021 and 2020 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

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

	2021	2020
Discount rate	0.75%	0.35%
Future salary increases	2.125%~2.50%	2.125%~2.50%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with the published statistics and experience of various countries.

Because the main actuarial assumption changes, the present value of defined benefit obligation is affected. The analysis is as follows:

	Discount rate	Discount rate	Discount rate	Future salary	Future salary	increases
	0.25%	0.25%		0.25%		0.25%
	increase	decrease		increase		decrease
December 31, 2021
Effect on present value of defined benefit obligation (	$ 697 )	$ 725		$	698 (	$ 675 )
December 31, 2020
Effect on present value of defined benefit obligation (	$ 778 )	$ 811		$	779 (	$ 751 )

The sensitivity analysis above analyzes the impact from changing one of the assumptions while others remain constant. In practice, more than one assumption may change all at once. The sensitivity analysis is the same with the method used to calculate the net pension liabilities of the balance sheet.

• (6) The expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2022 are $2,133

• (7) As of December 31, 2021, the weighted average duration of the retirement plan is 14 years.

• (1) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (hereinafter referred to as the “New Plan”) under the Labor Pension Act (hereinafter referred to as the “Act”), covering all regular employees with domestic citizenship. Under the New Plan, the Company and its

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domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (2) For 2021 and 2020, the pension costs recognized by the Corporate Group in accordance with the abovementioned pension measures were $28,606 and $18,833, respectively.

16. Capital

1. As of December 31, 2021, the Company’s authorized capital was $5,000,000, consisting of 500,000 thousand shares (including 20,000 thousand shares which can be subscribed to as employee stock options). The paid-in capital was $2,556,735 with a par value of NT$10. All proceeds from shares issued have been collected.

The movements in the number of the Company’s common stocks outstanding are as follows:

follows:
	Unit: Thousand shares
	2021 2020
January 1	205,632 198,400
Conversion of convertible bonds	2,960 -
Treasury stocks transfer to employees	20,000 17,232
TreasuryStock Buyback (	14,485 ) ( 10,000 )
December 31	214,107 205,632

2. Treasury stock

• (1) Reasons for repurchase of shares and changes in the quantity:

	December 31,2021	December 31,2021
Company name of the shareholding Reasons for buyback	Number of
	shares (thousand)
		Book value
Subsidiary -
Youe Chung Capital Subsidiary holds the	37,081	$ 527,678
Corporation company’s stock
The Company Transfer shares to	4,485	413,745
employees
	41,566	$ 941,423
	December 31,2020
Company name of the shareholding Reasons for buyback	Number of shares (thousand) Book value
Subsidiary -
Youe Chung Capital Subsidiary holds the	37,081 $ 527,678
Corporation company’s stock
Transfer shares to
The Company employees	10,000 306,920
	47,081 $ 834,598

• (2) Remuneration costs related to the transfer of treasury stocks of the Group in 2021 and 2020 were $176,980 and $88,273, respectively

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• (3) The Securities and Exchange Act stipulates that the percentage of the Company’s repurchase of outstanding shares shall not exceed 10% of the Company’s total issued shares, and the total value of shares purchased shall not exceed the retained earnings plus the premium of issued shares and the amount of realized capital reserve.

• (4) The shares bought back by the Company in accordance with the Securities and Exchange Act shall not be pledged. Before transfer, shareholders are not entitled to the shareholders’ rights.

• (5) According to the provisions of the Securities and Exchange Act, the share repurchased to be transferred to employees shall be transferred within 5 years from the date of the purchase. If the transfer is not made within the time limit, the shares are deemed as unissued shares, and change of registration shall be made to cancel the shares. In order to maintain the Company’s credit and shareholders equity, the shares bought back should have the registration changed to cancel the shares within six months from the date of the purchase.

• (6) The Company’s stock held by the subsidiary Youe Chung Capital is treated as treasury stock. As of December 31, 2021 and 2020, Youe Chung Capital held 37,081 thousand shares of the Company. The average book value per share was NT$14.23, and the fair value per share was NT$108.00 and NT$40.35, respectively. The cost of transferring treasury stocks is calculated based on the book value of the Company’s stock held by Youe Chung Capital and the Company’s indirect shareholding during each period.

• (7) The Company was approved by the Board of Directors on August 5, 2020, to buy back 10,000 thousand shares of the Company in the centralized trading market and transfer them to employees, and the number of shares repurchased accounted for 3.96% of the total issued shares. The buy-back was completed and executed between August 6 and September 30, 2020.

• (8) The Company was approved by the Board of Directors on February 3, 2021, to buy back 10,000 thousand shares of the Company in the centralized trading market and transfer them to employees, and the number of shares repurchased accounted for 3.96% of the total issued shares. The buy-back was completed and executed between February 4, 2021 and April 3, 2021

• (9) The Company was approved by the Board of Directors on November 3, 2021, to buy back 6,000 thousand shares of the Company in the centralized trading market and transfer them to employees, and the number of shares repurchased accounted for 2.37% of the total issued shares. The buy-back of 4,485 thousand shares was completed and executed between November 4, 2021 and January 3, 2022

17. Capital surplus

In accordance with the Company Act, any capital surplus arising from paid-in capital in excess of the par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the Securities and Exchange Act requires that the amount of capital surplus to be capitalized, as above, should not exceed 10% of paid-in capital each year. Capital reserves should not be used to cover accumulated deficit unless the legal reserve is insufficient. The following is a breakdown of the capital reserve:

		Changes in
	Trading of	ownership		Equity
Issue	treasury	interests in	stock	changes in
premiums	stock	subsidiaries	option	affiliates	Others	Total

==> picture [98 x 43] intentionally omitted <==

~63~

	recognized	recognized	recognized	recognized	recognized	recognized	recognized
January 1, 2021	$ - $ 411,379 $ 6,097 $ -							$ 18,540 $ 3,882 $ 439,898
Adjustment of capital	- 55,622 - -							- - 55,622 28,780 - 27,526
reserve by dividends paid to subsidiaries
Changes in shares of	- ( 76 ) ( 1,178 ) -
affiliates recognized under the equity method
Share-based payment	-			- ( 58,947 )				- - 169,174
transaction		228,121
Convertible bond stock	-	-		- 406,616				- - 406,616
options
Conversion of	269,010	-		- ( 52,595 )				- - 216,415
convertible bonds
Acceptance of gifts from	-	-		-		-		- 586 586 ( 9 ) ( 9 )
shareholders
Payment of overdue
unclaimed dividends to shareholders
December 31, 2021	$ 269,010	$ 695,046		$ 4,919		$ 295,074		$ 47,320	$ 4,459 $ 1,315,828
									Others Total
		Changes in ownership
	Trading of
January 1, 2020	$ 187,873 $ 27,255 $ 98,152						$ 9,181		$ 316 $ 322,777
Adjustment of capital	37,081 - - - ( 21,158 ) -						-		- 37,081 - ( 11,799 )
reserve by dividends paid to subsidiaries
Changes in shares of							9,359
affiliates recognized under the equity method
Share-based payment	186,425		- ( 98,152 )				-		- 88,273
transaction
Unclaimed dividends of	-		-		-		-		3,566 3,566
shareholders
December 31, 2020	$ 411,379		$ 6,097		$ -		$ 18,540		$ 3,882 $ 439,898

18. Retained earnings

1. According to the Articles of Incorporation, any surplus from profit concluded at the end of year by the Company is first subject to reimbursement of previous losses and payment of taxes, followed by 10% provision for legal reserve and provision or reversal of special reserve as the laws may require. Any earnings remaining shall be distributed as shareholders’ dividends in whole or partially.

2. The Company takes into account the overall business environment, industrial growth, and the Company’s long-term financial planning for stable operation and development to adopt a residual dividend policy, which is mainly based on the Company’s future capital budgeting plan to measure the annual capital needs. After using the retained earnings for funding, the remaining surplus will be distributed in the form of dividends, and the distribution steps are shown as follows:

3. (1) Decide on the best capital budgeting.

4. (2) Decide on the financing required for one of the capital budgeting items.

5. (3) Decide on the amount of the financing to be supported by retained earnings (methods such as cash capital increase or corporate bonds and so on can be adopted as support).

6. (4) After retaining the portion required for operation needs out of the earnings remainder,

~64~

the rest should be distributed to shareholders in the form of dividends. Cash dividends distribution proportion should not be lower than 20% of the total amount of dividends for the distribution proportion of the Company’s dividends.

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

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

3. The Company’s Board meeting resolved on March 4, 2022 to distribute a cash dividend of NT$1.00 per common share from the 2021 earnings, with a total dividend of $255,674 In addition, a cash distribution of NT$1.00 per share was made from capital surplus for a total of NT$255,674. The above motions are subject to the resolution of the shareholders’ meeting.

4. The Company’s shareholders’ meeting resolved on July 5, 2021 to distribute a cash dividend of NT$1.50 per common share from the 2020 earnings, with a total dividend of $379,071.

5. The Company’s shareholders meeting resolved on June 10, 2020 to distribute a cash dividend of NT$1.07 per common shares from the 2019 earnings, with a total dividend of $252,714.

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19. Other equity interests

19.	Other equity interests	her equity interests	her equity interests
20.	Unrealized gains and losses January 1 ( $ 2,666 ) Difference in foreign currency translation: - Group - December 31 ( $ 2,666 ) Unrealized gains and losses January 1 ( $ 2,666 ) Difference in foreign currency translation: - Group - December 31 ( $ 2,666 ) Operating revenue			2021
		Unrealized gains		Foreign currency
		and losses		translation
		January 1 ( $ 2,666 )		$ 3,555
		Difference in foreign
		currency translation:
		- Group	-	3,143
		December 31 (	$ 2,666 )	$ 6,698
				2020
			Unrealized gains	Foreign currency
			and losses	translation
		January 1 ( $ 2,666 )
		Difference in foreign
		currency translation:
		- Group -
		December 31 ( $ 2,666 )
		Revenue from contracts with customers

1. Segmentation of revenue from contracts with customers

The Corporate Group derives its revenue from the transfer of goods and services either over time or at a point in time. The revenue can be divided into the following main product lines:

lines:
2021	Photomask and	Medicalsegment
	semiconductor segment
			Total
Revenue from contracts with	$ 6,068,709	$ 8,653	$ 6,077,362
externalcustomers
Cut-off point of income
recognition
Income recognized at a	$ 5,354,576	$ 8,653
			$ 5,363,229
particular point in time
Income recognized	714,133	-	614,133
graduallyover time
	$ 6,068,709	$ 8,653	$ 6,077,362
2020			Photomask and
			semiconductor segment
Revenue from contracts with
			$ 4,666,756
external customers
Cut-off point of income
recognition
Income recognized at a			$ 4,289,007
particular point in time
Income recognized
gradually over time			377,749

~66~

$

4,666,756

2. Contract Liabilities

(1) Contract liabilities related to contracts with customers recognized by the Corporate Group:

Group:
	December 31,2021	December 31,2020	January1,2020
Contract Assets	$ 155,763	$ 93,809	$ 18,121
Contract Liabilities	$ 179,315	$ 99,418	$ 39,856

(2) Contract liabilities at the beginning of the period recognized as revenue of the period

					2021			2020
	Opening balance of contract liabilities
	recognized in the current period
	(Including transfer of other income)			$	55,000		$	38,619
21.	Interest income
					2021			2020
	Interest from bank deposits			$	4,678		$	3,304
	Interest income from financial assets				147			157
	measured at amortized cost
	Other interest incomes				33			1,365
				$	4,858		$	4,826
22.	Other Incomes
					2021			2020
	Rental income			$	21,170		$	25,925
	Dividend income				85,104			25,128
	Subsidy income				4,668			-
	Other income -- Others				4,352			7,705
				$	115,294		$	58,758
23.	Other Gains and Losses
					2021			2020
	Gain (loss) on disposal of property, plant	(		$	1,927 )		$	1
	and equipment
	Gain (loss) on disposal of investments				326,927			74,561
	Gain on lease modifications				7			2,486
	Losses on foreign currency exchange				1,057	(		9,801 )
	Gains or losses of financial assets at fair				559,714			450,106
	value through profit or loss
	Impairment Loss of Financial Assets	(			11,737 )	(		165,253 )
	Other miscellaneous expenses	(			4,814 )	(		679 )
	Other Gains and Losses	(			64,384 )			9,415
				$	804,843		$	360,836
24.	Financial Costs
					2021			2020
	Bank borrowings			$	94,740		$	28,113
	Lease liabilities				5,784			4,913
				$	100,524		$	33,026

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25. Expenses by nature

25.	Expenses by nature	nses by nature
26.	Employee benefits expenditure Depreciation Amortization Employee benefits expenditure		2021 2020
		Employee benefits expenditure	$ 1,200,299 $ 640,326
		Depreciation	483,274 379,560
		Amortization	18,236 7,395
			2021 2020
		Payroll expenses	$ 899,267 $ 477,522
		Employee stock options	176,980 88,273
		Labor and health insurance fees	61,958 35,185
		Pension expense	28,727 19,106
		Otherpersonnel expenses	33,367 20,240
			$ 1,200,299 $ 640,326

1. According to the Articles of Incorporation, the Company shall distribute not less than 10% of the current year’s profit situation for employee remuneration and not more than 2% of current year’s profit situation for director remuneration. However, profits must first be taken to offset against cumulative losses, if any.

2. For 2021 and 2020, employees’ remuneration was accrued at $158,000 and $85,723, respectively, and director remunerations was accrued at $30,800 and $16,969, respectively. The abovementioned amounts were listed as payroll expenses.

3. The remuneration to employees and directors were estimated at 10.18% and 1.98%, respectively, based on the profitability for the year ended December 31, 2021; the remuneration to employees and directors were estimated at 10.09% and 1.90%, respectively, based on the profitability for the year ended December 31, 2020.

The employee remuneration and director remuneration resolved by the Board of Directors for 2020 were $86,000 and $16,000, respectively, which were different from $85,723 and $16,969 recognized in the 2020 financial statements by $277 and ($969). This is mainly due to changes in estimates which have been adjusted to the profit or loss of 2021.

Information about employees remuneration and director remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System”.

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27. Income tax

1. Income tax expense

Components of income tax expense:

					2021					2020	2020
Current tax:
Current tax onprofits for theyear			$		271,221			$			120,400
Total current tax					271,221						120,400
Deferred income tax:
Origination and reversal of temporary
differences					20,316						23,834
Deferred income tax:					20,316						23,834
Income Tax Expense			$		291,537			$			144,234
Reconciliation between income tax expense and accounting profit
					2021					2020
Tax calculated based	on profit before tax
and statutory tax rate				$	909,863			$		314,691
Expenses (benefits) to be excluded			(		759,077 )			(		263,499 )
according to the tax law
Temporary difference of unrecognized
deferred income tax assets			(		1,830 )						2,070
Tax loss of unrecognized deferred
income tax assets					58,331						59,331
Income tax effects of the alternative											-
minimum tax system					35,538
Changes in assessment of realizability of					48,712						31,641
deferred income tax assets
Income Tax Expense				$	291,537			$		144,234
Amounts of deferred tax assets or liabilities			as a result of temporary differences are as
follows:
					2021
					Recognized in
	January	1			profit or loss				December		31
Deferred income tax
assets:
- Temporary
differences:
Loss on inventory	$	394		$	3,368			$			3,762
Unrealized
exchange loss		1,938	(		2,459 )		(				521 )
Subtotal	$	2,332		$	909			$			3,241
Deferred income tax
liabilities:
- Temporary
differences:
Unrealized exchange gain	(	287 )	(		122 )		(				409 )

2. Reconciliation between income tax expense and accounting profit

1. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

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Long-term investments ( 52,981 ) ( 21,103 )	Long-term investments ( 52,981 ) ( 21,103 )	Long-term investments ( 52,981 ) ( 21,103 )	Long-term investments ( 52,981 ) ( 21,103 )	( 74,084 )	( 74,084 )
Subtotal (		53,268 ) (	21,225 )	( 74,493 )
Total (		$ 50,936 ) (	$ 20,316 )	(	$ 71,252 )
			2020
			Recognized in		December 31
		January1	profit or loss
Deferred income
tax assets:
- Temporary
differences:
Loss on		$ 3,746 ( $ 3,352 )			$ 394
inventory
Unrealized			605		1,938
exchange loss		1,333
Subtotal		$ 5,079	( $ 2,747 )		$ 2,332
Deferred income
tax liabilities:
- Temporary
differences:
Unrealized exchange gain (		721 )	434	( 287 )
Long-term investments (		31,460 ) ( 21,521 )		( 52,981 )
Subtotal (		32,181 )	( 21,087 )	( 53,268 )
Total (		$ 27,102 ) ( $ 23,834 )		( $ 50,936 )
The effective periods of unused tax losses and the related amounts of unrecognized deferred income tax assets are as follows: December 31,2021 Year of occurrence Reported amount/Assess ed amount Amount not yet deducted Amount of unrecognized deferred income tax assets Last year to be deducted 2012 $ 425,658 $ 425,658 $ 425,658 2022 2013 478,805 478,805 478,805 2023 2014 355,046 355,046 355,046 2024 2015 634,004 634,004 634,004 2025 2016 286,259 286,259 286,259 2026 2017 487,732 481,938 481,938 2027 2018 494,824 490,060 490,060 2028 2019 254,007 239,627 239,627 2029 2020 358,721 358,721 358,721 2030 2021 291,658 291,658 291,658 2031 $ 4,066,714 $ 4,041,776 $ 4,041,776
Year of occurrence	Reported amount/Assess ed amount
2012	$ 425,658
2013	478,805
2014	355,046
2015	634,004
2016	286,259
2017	487,732
2018	494,824
2019	254,007
2020	358,721
2021	291,658
	$ 4,066,714

1. The effective periods of unused tax losses and the related amounts of unrecognized deferred income tax assets are as follows:

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December 31, 2020

		December 31,2020
Year of occurrence	Reported amount/Assesse d amount	Amount not yet deducted Amount of unrecognized deferred income tax assets Last year to be deducted
2011	$ 263,803	$ 263,803 $ 263,803 2021
2012	427,308	427,308 427,308 2022
2013	482,303	482,303 482,303 2023
2014	355,728	355,728 355,728 2024
2015	634,004	634,004 634,004 2025
2016	286,259	286,259 286,259 2026
2017	487,732	487,732 487,732 2027
2018	507,025	507,025 507,025 2028
2019	329,774	329,774 329,774 2029
2020	333,298	333,298 333,298 2030
	$ 4,107,234	$ 4,107,234 $ 4,107,234

1. Deductible temporary difference not recognized as deferred income tax assets

	December 31,2021 December 31,2020
Deductible temporary difference	$ 340,585 $ 349,735

1. The Company’s income tax returns through 2019 have been assessed and approved by the tax authority.

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28. Earnings per share

ngs per share
		2021	Earnings per share (NTD) $ 5.65 $ 5.55 Earnings per share (NTD) $ 3.34 $ 3.30
		Weighted average
	Amount after tax	share outstanding (thousand shares)
Earnings per share
Profit attributable to ordinary	$ 1,185,777	209,770
shareholders of theparent
Diluted Earnings per share
Profit attributable to ordinary	$ 1,185,777
shareholders of the parent		209,770
Effect of dilutive potential common	6,713
shares on convertible bonds		3,220
Employee remuneration	-	1,791
Profit attributable to ordinary	$ 1,192,490	214,781
shareholders of the parent company plus assumed conversion of all dilutive potential ordinaryshares
		2020
		Weighted average
	Amount after tax	share outstanding (thousand shares)
Earnings per share
Profit attributable to ordinary	$ 683,897	204,801
shareholders of theparent
Diluted Earnings per share
Profit attributable to ordinary	$ 683,897	204,801
shareholders of the parent
Effect of dilutive potential common	-
shares on employee remuneration		2,599
Profit attributable to ordinary	$ 683,897	207,400
shareholders of the parent company plus assumed conversion of all dilutive potential ordinary shares

The weighted average number of shares outstanding in 2021 and 2020 has deducted the number of shares held by the subordinate company Youe Chung Capital deemed as the Company’s treasury stock (the number of shares is based on the Company’s shareholding).

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29. Business combination

1. On August 2, 2021, the Group acquired 57.39% of the shares of DIGITAL-CAN TECH. CO., LTD. for $139,072 in cash and gained control over DIGITAL-CAN TECH. CO., LTD.

2. (1). The information on the fair value of the acquired assets and assumed liabilities on the acquisition date and the share of non-controlling interests in the acquiree’s identifiable net assets for the acquisition of DIGITAL-CAN TECH. CO., LTD. is shown as follows:

. The information on the fair value of the acquired assets and assumed liabilities on the acquisition date and the share of non-controlling interests in the acquiree’s identifiable net assets for the acquisition of DIGITAL-CAN TECH. CO., LTD. is shown as follows:	. The information on the fair value of the acquired assets and assumed liabilities on the acquisition date and the share of non-controlling interests in the acquiree’s identifiable net assets for the acquisition of DIGITAL-CAN TECH. CO., LTD. is shown as follows:
August 2,2021
Acquisition consideration
Cash $ 139,072
Share of non-controlling interests in the identifiable net 39,266
assets of the acquiree
178,338
Fair value of acquired identifiable assets and assumed
liabilities
Cash 24,346
Financial assets measured at amortized cost 19,600
Notes Receivables 202
Accounts Receivables 3,251
Inventories 6,128
Prepayments 2,129
Other Current Assets 521
Property, plant and equipment 55,499
Other Non-Current Assets 6,520
Short Term Loans ( 500 )
Contract Liabilities ( 1,187 )
Notes Payable ( 6 )
Accounts Payable ( 1,165 )
Other Payables ( 8,874 )
Other Current Liabilities ( 6,174 )
Long-term Loans ( 7,843 )
Other Current Liabilities ( 300 )
Total identifiable net assets	92,147
Goodwill	$ 86,191

• (2) The assessment of the fair value of acquired identifiable assets and assumed liabilities is in progress. At present, it is recorded at the initial valuation, and the relevant acquisition price allocation will be completed within one year.

• (3) Since the acquisition of DIGITAL-CAN TECH. CO., LTD. in August 2, 2021, the contribution to operating revenue and net loss before tax have both been $18,282 and ($10,265), respectively. Assuming that DIGITAL-CAN TECH. CO., LTD. has been included in the consolidated reports since January 1, 2021, the operating revenue and net profit before tax of the Group for 2021 are $6,089,369 and $1,161,815, respectively.

~73~

• 2.The Group owns 41.43% of Xsense Technology Corporation, and Xsense Technology Corporation and its subsidiary Xsense Technology Corporation (B.V.I.) held a Board of Directors’ meeting on March 25, 2021 to re-elect the Chairperson of the Board of Directors, and the president of the Company was elected. The new management team in April 2021, led by the President of the Company, is involved in the operational decisions and business policies, including strategic decisions, of Xsense Technology Corporation and its subsidiary, Xsense Technology Corporation (B.V.I.), and therefore the firm is included in the consolidated financial statements.

• (1). The information on the fair value of the acquired assets and assumed liabilities on the acquisition date and the share of non-controlling interests in the acquiree’s identifiable net assets for the acquisition of Xsense Technology Corporation is shown as follows:

shown as follows:
	April 1,2021
Fair value of previously held interests in Xsense	$ 193,359
Technology Corporation at the acquisition date
Share of non-controlling interests in the identifiable net	97,319
assets of the acquiree
	290,678
Fair value of acquired identifiable assets and assumed
liabilities
Cash	22,508
Accounts Receivables	18,687
Other Receivables	6,690
Inventories	47,425
Prepayments	27,149
Other Current Assets	15,607
Property, plant and equipment	99,856
Intangible assets	8,574
Other Non-Current Assets	96,544
Short Term Loans (	40,000 )
Contract Liabilities (	350 )
Notes Payable (	4,257 )
Accounts Payable (	14,617 )
Other Payables (	63,602 )
Other Current Liabilities (	12,085 )
Other Current Liabilities (	41,974 )
Total identifiable net assets	166,155
Goodwill	$ 124,523

• (2) The assessment of the fair value of acquired identifiable assets and assumed liabilities is in progress. At present, it is recorded at the initial valuation, and the relevant acquisition price allocation will be completed within one year.

• (3) Since the Group merged Xsense Technology Corporation on April 1, 2021, Xsense Technology Corporation contributed operating revenue and net loss before tax of $95,477 and ($225,070), respectively. If Xsense Technology Corporation had been merged since January 1, 2021, the Group’s operating revenue and net profit before tax would have been $6,098,459 and $1,075,603, respectively, for the year ended December 31, 2021.

~74~

1. The Group held 16.21% of Youe Chung Capital Corporation, a subsidiary of the Company. On December 15, 2020, Youe Chung Capital Corporation signed a share purchase with other original shareholders of Innova Vision to acquire another 8,795,795 shares, increasing the Group’s shareholding to 60.02%. On December 16, 2020, Innova Vision held elections for all directors at its extraordinary general meeting. Youe Chung Capital won all the director seats, obtaining substantial control of this firm. Therefore, it is included in consolidated financial statements as a consolidated entity from that date.

2. (1). The information on the fair value of the acquired assets and assumed liabilities on the acquisition date and the share of non-controlling interests in the acquiree’s identifiable net assets for the acquisition of Innova Vision is shown as follows:

. Therefore, it is included in consolidated financial statements as a consolidated ty from that date. The information on the fair value of the acquired assets and assumed liabilities on the acquisition date and the share of non-controlling interests in the acquiree’s identifiable net assets for the acquisition of Innova Vision is shown as follows:	. Therefore, it is included in consolidated financial statements as a consolidated ty from that date. The information on the fair value of the acquired assets and assumed liabilities on the acquisition date and the share of non-controlling interests in the acquiree’s identifiable net assets for the acquisition of Innova Vision is shown as follows:
December 16,
2020
The fair value of the previously held equity of Innova Vision at $ 935
the acquisition date
Payment to acquire the equity of Innova Vision again 1,759
Share of non-controlling interests in the identifiable net assets of the acquiree ( 26,822 )
( 24,128 )
Fair value of acquired identifiable assets and assumed
liabilities
Cash 12,100
Accounts Receivables 21,082
Other Receivables 2,486
Inventories 3,011
Prepayments 1,804
Other Current Assets 1,586
Property, plant and equipment 12,402
Right-of-use Asset 6,060
Intangible assets 61
Intangible assets - permits 96,749
Other Non-Current Assets 8,805
Contract Liabilities ( 5,235 )
Accounts Payable ( 23,183 )
Other Payables ( 191,573 )
Provisions ( 12,917 )
Other Current Liabilities ( 258 )
Deferred Income Tax. ( 289 )
Other Current Liabilities ( 67 )
Total identifiable net assets ( 67,376 )
Goodwill	$ 43,248

• (2) Non-controlling interest is measured by the proportion of the acquiree’s net identifiable assets to the non-controlling interest.

• (3) Since the acquisition of Innova Vision in December 16, 2020, the contribution to operating revenue and profit before tax have both been $0. Assuming that Innova Vision INC. has been included in the consolidated reports since January 1, 2020, the operating revenue and net profit before tax of the Group for 2020 are $4,757,757 and $361,021, respectively.

~75~

• (4) The fair value of the identifiable net assets acquired as of December 16, 2020 was originally assessed at a provisional amount and the fair value of these net assets was determined after the end of the measurement period as described above.

30. Supplemental cash flow information

1. Investing activities with partial cash payments:

	2021 2020
Purchase of property, plant	$ 1,249,848 $ 2,160,033 53,809 103,845 671,105 5,608 5,608 ) ( 186,606 ) 85,822 ) ( 53,809 )
and equipment
Add: Opening balance of
payable on equipment
Prepayments for
equipment at the end of the period
Less: Prepayments for equipment at the beginning of the period (
Ending balance of payable on equipment (
Cash paid during the year	$ 1,883,332 $ 2,029,071

1. The Group’s subsidiary Weida Hi-Tech Company conducted cash capital increase separately on April 10, 2020 and May 15, 2020. The Group did not keep up with the subscription for shareholding, which caused the shareholding to drop to 36.70%. Weida Hi-Tech Company then held an extraordinary general meeting of shareholders on June 2, 2020 to elect new directors. The Company won one seat of director and lost the control of the Weida (Please see Note 4, (3) 2 and Note 1) for the relevant assets and liabilities of the subsidiary:

subscription for shareholding, which caused the shareholding to drop to 36.70%. Weida Hi-Tech Company then held an extraordinary general meeting of shareholders on June 2, 2020 to elect new directors. The Company won one seat of director and lost the control of the Weida (Please see Note 4, (3) 2 and Note 1) for the relevant assets and liabilities of the subsidiary:	subscription for shareholding, which caused the shareholding to drop to 36.70%. Weida Hi-Tech Company then held an extraordinary general meeting of shareholders on June 2, 2020 to elect new directors. The Company won one seat of director and lost the control of the Weida (Please see Note 4, (3) 2 and Note 1) for the relevant assets and liabilities of the subsidiary:
June 2,2020
Carrying amount of assets and liabilities of Weida Hi-
Tech Company
Cash $ 43,089
Accounts Receivables 41,607
Tax Assets 16
Inventories 33,705
Prepayments 10,783
Other Current Assets 1,856
Property, plant and equipment 6,656
Intangible assets 9,817
Refundable deposit 258
Contract Liabilities ( 2,432 )
Accounts Payable ( 20,446 )
Other Payables ( 11,818 )
Other Current Liabilities ( 1,067 )
Total net assets	$ 112,024

~76~

31. Changes in liabilities arising from financing activities

		Short Term Loans Corporate bonds payable	Short Term Loans Corporate bonds payable	Short Term Loans Corporate bonds payable	Long-term Loans (Including portion due within 1year) Lease liabilities	Long-term Loans (Including portion due within 1year) Lease liabilities	Long-term Loans (Including portion due within 1year) Lease liabilities	Long-term Loans (Including portion due within 1year) Lease liabilities	Total liabilities
									Guarantee Deposits Received arising from financing activities
January 1, 2021		$ 2,298,718 $ -			$ 1,732,083 $ 506,926				$ 5,129 $ 4,542,856
Change in cash		2,037,548 2,297,099			982,273 ( 63,982 )				1,779 5,254,717
flow from financing activities
Interest Incomes		- 8,392			- 5,784				- 14,176
Interest Paid		- -			- ( 5,784 )				- ( 5,784 )
Other non-cash		40,500 ( 648,442 )			7,843		212,697		- ( 387,402 )
transactions
December 31,		$ 4,376,766	$ 1,657,049		$ 2,722,199		$ 655,641
2021
		Short Term Loans
January 1, 2020		$ 804,938		$ 451,616 $ 431,391
Change in cash		1,493,780		1,280,467 ( 60,382 )
flow from financing activities
Interest Incomes		-		- 4,913
Interest Paid		-		- ( 4,913 )
Other non-cash				-		135,917
transactions		-
December 31,		$ 2,298,718		$ 1,732,083		$ 506,926
2020

(VII) Related Party Transactions

1. Related parties’ names and relationship

d Party Transactions Related parties’names and relationship
Name of the relatedparties	Relationshipwith the Group
Innova Vision INC.	Subsidiary (Note 1)
Xsense Technology Corporation	Sub-subsidiary (Note 2)
Weida Hi-Tech Company	Affiliate (Note 3)
Advanced Silicon SA	Affiliate (Note 3)
Powerchip Technology Corporation	Other related party
IMAGE MATCH DESIGN INC.	Other related party
BKS Tec Corp.	Other related party
Taiwan Mask Charity Foundation	Other related party
Chao-Yi Wu	Other related party

• Note 1: On June 18, 2020, the Company resigned from the position of corporate director of Innova Vision INC. and since then, the firm is no longer a related party of the Company.

• On December 16, 2020, Innova Vision held elections for all directors at its extraordinary general meeting. The Company’s subsidiary Youe Chung Capital Corporation won all the director seats, obtaining substantial control of this company. Therefore, it has been included as a consolidated entity from that date.

• Note 2: In April 2021, the Group participated in the management and operating policies of Xsense Technology Corporation, including strategic decisions, and therefore included

~77~

the firm in the consolidated financial statements as a consolidated entity as of that date.

• Note 3: The Company’s shareholding of Weida Hi-Tech has dropped to 36.70% in May 2020, and there are changes to the number of Board seats, thus losing control of the firm. Since then, Weida Hi-Tech is no longer a subsidiary of the Company, but is still the Group’s related party.

2. Significant transactions with the related parties

1. Operating revenue

nificant transactions with the related parties Operating revenue
	2021 2020
Product sales:
Affiliates	$ 72 $ 19,392
Other relatedparty	39,099 12,634
	$ 39,171 $ 32,026

There are no major abnormalities in the transaction prices and payment terms of the related party compared to that of non-related parties.

1. Account receivable from related parties

party compared to that of non-related parties. Account receivable from related parties
	December 31,2021 December 31,2020
Accounts Receivables:
Other related party	$ 16,812 $ 6,599
Other receivables:
Sub-subsidiary (Note 2)	- 3,068
Total	$ 16,812 $ 9,667

1. Loans to related parties (recognized as “Other accounts receivable -- related parties”)

2. Loans to related parties

3. (1) Balance at the end of period:

ns to related parties alance at the end of period:
	December 31,2021 December 31,2020
Innova Vision INC.	$ - $ -
ncome from interests
	2021 2020
Innova Vision INC.	$ - $ 1,081

• (2) Income from interests

The loans to affiliated companies are to be repaid within one year. The interests in 2020 were charged at an annual interest rate of 2%~2.616%.

1. Acquisition of other assets

Acquisition of other assets
	2021 2020
Account item	Acquisitionprice Acquisitionprice
Other related party Intangible assets	$ 8,926 $ -
Other relatedparty Fixed assets	1,750 -
Total	$ 10,676 $ -

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5. Acquisition of financial assets

Acquisition of financial assets
			2021
	Number of shares
Account item	traded		Acquisitionprice
Sub-subsidiary Investment under	14,000,000		$ 49,000
(Note 2) Equity Method
2020: None Others
(1)Deposits Received:	2021		2020
Other relatedparty	$ 95	$	-
(2)Rent income:	2021		2020
Affiliates	$ -	$	12,679

2020: None

6. Others

(3) The Company donated $31,801 in cash to the Taiwan Mask Charity Foundation in 2021.

3. Compensation of key management personnel

3. Compensation of key management personnel	Compensation of key management personnel
2021 2020 Salary and short-term employee benefits $ 32,110 $ 24,673 Post-employment benefits 185 3,301 Other long-term employee benefits 27,501 11,885 Share-basedpayment to employees 13,990 5,200 Total $ 73,786 $ 45,059 Pledged assets Assets pledged by the Corporate Group as collateral are as follows: Book value Assets December 31,2021 December 31,2020 Purpose Demand deposit (Recognized as “Financial assets at amortized cost”) $ 15,338 $ 11,111 Reserve accounts for long- and short- term borrowings Time deposit (Recognized as “Financial assets at amortized cost”) 40,239 41,236 Short-term loans and guarantees for goods out of the free zone Stocks of publicly traded and OTC companies (recognized as “Financial assets at fair value through profit or loss”) 3,681,951 1,249,775 Short Term Loans Shares of the Company (recorded as “treasury stock” Note) 408,437 - Short Term Loans Buildings and structures (including land) 1,683,654 953,601 Long-term Loans Machinery and equipment and equipment under acceptance 2,471,149 1,146,700 Long- and short- term borrowings Real estate investment 163,042 313,099 Long- and short- term borrowings		2021 2020
	Salary and short-term employee benefits	$ 32,110 $ 24,673
	Post-employment benefits	185 3,301
	Other long-term employee benefits	27,501 11,885
	Share-basedpayment to employees	13,990 5,200
	Total	$ 73,786 $ 45,059

(VIII) Pledged assets

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	3,610 1,615 Long- and short- term borrowings $ 8,467,420 $ 3,717,137
Other equipment

Note: The cost of pledged treasury stock was $408,437 and its fair value was $3,099,816 as of December 31, 2021.

(IX) Significant Contingent Liabilities and Unrecognized Contract Commitments

1. Contingencies Not applicable.

2. Commitments

3. Machine equipment maintenance contracts that have been signed but not yet paid

	December 31,2021 December 31,2020
Machine maintenance	$ 29,411 $ 31,851
Capital expenditures that have been signed but not yet incurred
	December 31,2021 December 31,2020
Property, plant and equipment	$ 119,059 $ 153,985

1. Capital expenditures that have been signed but not yet incurred

2. Lease agreement

Please see Note 6 (8) and (9)

(X) Significant Disaster Loss

Not applicable.

(XI) Major Events after Financial Statement Date

1. The resolution of the Company’s Board on March 4, 2022 passed the appropriation of earnings. The proposal has yet to be resolved by the shareholders meeting. Please refer to Note 6 (18) for details.

2. On March 4, 2022, the Board of Directors resolved to process the issuance of new shares by way of shelf registration and the initial issuance of new shares by way of cash capital increase for 2022.

(XII) Others

(I). Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including “current and non-current borrowings” as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as “equity” as shown in the consolidated balance sheet plus net debt.

The Group’s strategy in 2021 and 2020 was to borrow long-term loans to purchase new plants and obtain long-term working capital, unlike in 2019 For the years ended December 31, 2021 and 2020, the debt-to-capital ratios were as follows:

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(II).			December 31,2021 December 31,2020	December 31,2021 December 31,2020	December 31,2021 December 31,2020	December 31,2021 December 31,2020	December 31,2021 December 31,2020
	Total borrowings		$		7,098,965 $ 4,030,801
	Less: Cash and cash equivalents (				2,681,819 ) ( 1,036,658 )
	Net debt				4,417,146	2,994,143
	Total equity				4,870,179	3,448,433
	Total capital		$		9,287,325	$ 6,442,576
	Debt-to-equity ratio				47.56%		46.47%
	Financial instruments 1. Types of financial instrument Financial assets Financial assets at fair value through profit and loss Mandatory financial assets at fair value throughprofit or loss Financial assets measured at amortized cost Cash Financial assets measured at amortized cost Notes Receivables Accounts receivable (Including related parties) Other accounts receivable (Including related parties) Refundable deposit Financial liabilities Financial liabilities at amortized cost Short Term Loans Notes Payable Accounts payable (Including related parties) Other payables (Including related parties) Corporate bonds payable Long-term borrowings (including current portion) Guarantee Deposits Received Lease liabilities						December 31,2020 $ 2,135,413 $ 1,036,658 75,134 879 901,211 50,736 12,792 $ 2,077,410 $ 2,298,718 66 397,237 436,980 - 1,732,083 5,129 $ 4,870,213 $ 506,926
					December 31,2021
		Financial assets
		Financial assets at fair value through
		profit and loss
		Mandatory financial assets at fair value			$ 5,037,672
		throughprofit or loss
		Financial assets measured at amortized
		cost
		Cash			$ 2,681,819
		Financial assets measured at amortized
		cost			78,263
		Notes Receivables			63
		Accounts receivable (Including related
		parties)			1,280,560
		Other accounts receivable (Including
		related parties)			68,997
		Refundable deposit			15,826
					$ 4,125,528
		Financial liabilities
		Financial liabilities at amortized cost
		Short Term Loans			$ 4,376,766
		Notes Payable			66
		Accounts payable (Including related
		parties)			477,232
		Other payables (Including related
		parties)			742,008
		Corporate bonds payable			1,657,049
		Long-term borrowings (including
		current portion)			2,722,199
		Guarantee Deposits Received			6,908
					$ 9,982,228
		Lease liabilities			$ 655,641

2. Risk management policies

(1) The Group’s activities expose it to a variety of financial risks, including market risk (exchange rate, interest rate and price), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and performance.

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• (2) Risk management is carried out by a central finance department (Group finance) under policies approved by the Board of Directors. Group finance identifies, evaluates and hedges financial risks in close collaboration with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as currency exchange risk, interest rate risk, credit risk, the use of derivatives and non-derivative financial instruments and investment of excess liquidity.

• Significant financial risks and degrees of financial risks

• (1) Market risk

A. Foreign exchange risk

The Group’s operations involve certain non-functional currencies (the Company’s and certain subsidiaries’ functional currency is the New Taiwan dollar (NTD), and for other certain subsidiaries, the functional currency is the US Dollars, Japanese Yen and China’s Renminbi (RMB)), so it is subject to the impact of exchange rate fluctuation. The details of assets and liabilities denominated in foreign currencies whose values that would be materially affected by exchange rate fluctuations are as follows:

as follows:	as follows:	as follows:	as follows:
December 31,2021
(Foreign currency: functional currency) Foreign currency (in thousands) Exchange rate		Book value
		(In thousands of
			NTD)
Financial assets
	Monetary items
	USD : NTD USD 45,460 27.680 $		1,258,333
	RMB : NTD CN 146,650 4.344		637,048
	Y
	JPY : NTD JPY 92,077 0.241		22,191
Financial liabilities
	Monetary items
	USD : NTD USD 11,916 27.680		329,835
	RMB : NTD CN 28,431 4.344		123,504
	Y
	JPY : NTD JPY 214,789 0.241		51,764
	December 31,2020
		Book value
		(In thousands of
			NTD)
Financial assets
	Monetary items
	USD : NTD USD 27,563 28.480 $		784,994
	RMB : NTD CN 108,362 4.377		474,300
	Y
	JPY : NTD JPY 83,532 0.276		23,055
Financial liabilities
	Monetary items
	USD : NTD USD 5,266 28.480		149,976

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RMB : NTD	CN	34,457	4.377	150,818
	Y
JPY : NTD	JPY	273,112	0.276	75,379

• B. Total exchange gain, including realized and unrealized gains (losses) from significant foreign exchange variations on monetary items held by the Group amounted to $1,057 and ($9,801) for the years ended December 31, 2021 and 2020, respectively.

• C. The analysis of foreign currency risk due to significant exchange rate fluctuation is as follows:

significant foreign exchange variations on monetary items held by the Group amounted to $1,057 and ($9,801) for the years ended December 31, 2021 and 2020, respectively. The analysis of foreign currency risk due to significant exchange rate fluctuation is as follows:	significant foreign exchange variations on monetary items held by the Group amounted to $1,057 and ($9,801) for the years ended December 31, 2021 and 2020, respectively. The analysis of foreign currency risk due to significant exchange rate fluctuation is as follows:
2021
SensitivityAnalysis
(Foreign currency: functional currency) Fluctuation Effect on profit or loss Other comprehensive profit and loss affected
Financial assets
	Monetary items
	USD : NTD 1% $ 12,583 $ -
	RMB : NTD 1% 6,370 -
	JPY : NTD 1% 222 -
Financial liabilities
	Monetary items
	USD : NTD 1% ( 3,298 ) -
	RMB : NTD 1% ( 1,235 ) -
	JPY : NTD 1% ( 518 ) -
	2020
	SensitivityAnalysis

Price risk

• A. The equity instruments owned by the Company exposing to the price risk are financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.

• B. The Group invests primarily in equity instruments and open-end funds issued by domestic and foreign companies. The price of such equity instrument is subject to

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the uncertainty of the future value of investment target. If the price of such equity instrument increases or decreases by 1%, while all other factors remain unchanged, the net profit after tax affected by equity instruments at fair value through profit or loss after tax for 2021 and 2020 is an increase or decrease of $50,377 and $21,354, respectively; as for the other comprehensive income classified as equity instruments at fair value through other comprehensive income, it is $0 and $0 for 2021 and 2020, respectively.

Cash flow and fair value interest rate risk

• A. The Group’s interest rate risk mainly comes from long-term borrowings issued at floating rates, which exposes the Group to cash flow interest rate risk. For 2021 and 2020, the Group’s borrowings issued at floating rates were mainly denominated in New Taiwan dollars and US dollars.

• B. The Group’s borrowings are measured at amortized cost, and the annual interest rate is re-priced according to the contract, which exposes the Group to the risk of future market interest rate changes.

• C. If the long- and short-term borrowing rates increase or decrease by 0.25%, while all other factors remain constant, the net profit after tax for 2021 and 2020 is a decrease or increase of $14,198 and $8,062, respectively, mainly due to the interest expense changes caused by the floating interest rate.

(2) Credit risk

• A. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments under contract obligations, and the defaults are accounts receivable and the contract cash flow from debt instruments measured at amortized cost, measured at fair value through other comprehensive income and measured at fair value through profit or loss.

• B. The management of credit risk is established with a Group perspective. Only the banks and financial institutionals with an independent credit rating of at least “A” can be accepted as transaction partners of the Group. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored.

• C. The Group considers a contract payment overdue in accordance with the agreed payment terms a breach of contract.

• D. The Group uses IFRS 9 to provide the following assumption as a basis for determining whether there is a significant increase in the credit risk of financial instruments after the original recognition:

• (A) If the contract payment is overdue for more than 30 days in accordance with the agreed payment terms, the credit risk of the financial asset is significantly increased since the original recognition.

• (B) For bond investments in Taipei Exchange, if any external rating agency rates it as an investment grade on the balance sheet date, the credit risk of the financial asset is considered low.

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• E. The Group uses the following indicators to determine the status of credit impairments of debt instruments:

• (A) The issuer has suffered significant financial difficulties or is likely to enter bankruptcy or other financial restructuring.

• (B) The issuer has suffered significant financial difficulties or is likely to enter bankruptcy or other financial restructuring.

• (C) The issuer delays or does not pay for the interest or principal.

• (D) Unfavorable changes in the national- or regional-level economic situation resulting in the issuer’s default.

• F. The Group categorizes the accounts receivable from customers based on the characteristics of trade credit risks. The simplified approach is adopted for estimating the expected credit loss based on the provision matrix.

• G. The Group may write off the amount of financial assets that cannot be reasonably expected to be recovered after recourse. However, the Group will continue the recourse to protect the rights of the claims.

• H. The Group has incorporated forward-looking considerations to adjust the loss rate built according to historic and current data in order to estimate the loss allowance of accounts receivables. The provision matrix for the years ended December 31, 2021 and 2020 are shown as follows:

2021 and 2020 are shown as follows:
Notpast due Within 30 days 31-90 days	91-180 days More than 181 days past due Total
December 31,2021
Expected loss rate 0.0~1% 0.01~1.95% 1.99〜6.29%	5.05〜19.97% 57.18〜100%
Total book value $ 1,060,909 $ 188,933 $ 29,361	$ 1,891 $ 9,505 $ 1,290,599
Loss allowance - ( 2 ) ( 1,397 )	( 598 ) ( 8,042 ) ( 10,039 )
Notpast due Within 30 days 31-90 days	91-180 days More than 181 days past due Total
December 31,2020
Expected loss rate 0.01~1% 0.01~1.95% 1.36〜7.49%	3.62〜23.67% 41.84~100%
Total book value $ 723,020 $ 149,311 $ 32,507	$ 2,169 $ 5,603 $ 912,610
Loss allowance - ( 2,191 ) ( 2,725 )	( 957 ) ( 5,526 ) ( 11,399 )

• I. The Group adopts a simplified method in which the loss allowance for the accounts receivable is shown as follows:

receivable is shown as follows:
	2021
	Accounts
	Receivables
January 1	$ 11,399
Reversal of impairment loss (	1,340 )
Impact from exchange rate (	20 )
December 31	$ 10,039
	2020
	Accounts
	Receivables
January 1	$ 7,759
Consolidated transfer in	5,785
Reversal of impairment loss (	2,200 )
Impact from exchange rate	55
December 31	$ 11,399

(3) Liquidity risk

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• A. Cash flow forecasting is performed by the operating entities of the Corporate Group and aggregated by the Group’s treasury department. It monitors rolling forecasts of liquidity requirements to ensure the Group has sufficient cash to meet operational needs.

• B. The remaining cash held by each operating entity will be transferred back to the Group’s finance department. B. The finance department of the Group invests the remaining funds in interest-bearing demand deposits, time deposits, financial assets at fair value through profit or loss, financial assets at amortized cost and bond investment without an active market (time deposits with a maturity of more than 3 months and less than 12 months), as the instruments chosen have appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. For the years ended December 31, 2021 and 2020, the position of money market held by the Corporate Group is at $2,760,287 and $1,071,061, respectively, and is expected to generate immediate cash flow to manage liquidity risk.

• C. The Group’s unutilized borrowings are shown as follows:

							December	31,				December	December	December	31, 2020
							2021
Floating rate
	Due within 1 year					$	953,880				$				873,400
	Maturityof more than 1	year					20,000								363,851
						$	973,880				$			1,237,251
	The following table shows the Group’s				non-derivative financial liabilities and
derivative financial liabilities settled on				a net or total amount,							grouped		according
to the relevant maturity date.			Non-derivative financial liabilities are											analyzed
based on the remaining period from the balance sheet date to the												contract maturity
date. The amounts disclosed in the table						are the contractual					undiscounted cash
flows.
	Non-derivative financial liabilities:
		Within 1year				1 to2years		2	to		5 years			Over5 years
December 31, 2021
Non-derivative financial
	liabilities:
Short Term Loans		$	4,376,766			$	-	$				-	$			-
Notes Payable			66				-					-				-
Accounts Payable			477,232				-					-				-
Other payables (Including related parties)			742,008				-					-				-
Lease liabilities			159,795				135,884				443,025					-
Corporate bonds payable				-			-		1,657,049							-
Long-term borrowings
	(including portion due															-
	within 1 year)		71,855				792,803		1,861,513
Guarantee Deposits Received				-			6,908					-				-
		Within 1year				1 to 2years		2	to		5years			Over 5years
December 31, 2020
Non-derivative financial
	liabilities:

• D. The following table shows the Group’s non-derivative financial liabilities and derivative financial liabilities settled on a net or total amount, grouped according to the relevant maturity date. Non-derivative financial liabilities are analyzed based on the remaining period from the balance sheet date to the contract maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

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Short Term Loans	$	2,298,718	$	-	$	-	$	-
Notes Payable		66		-		-		-
Accounts Payable		397,237		-		-		-
Other payables (Including related parties)		436,980		-		-		-
Lease liabilities		107,380		106,921		375,907		-
Long-term borrowings
(including portion due						-		-
within 1 year)		100,647		1,698,976
Guarantee Deposits
Received		-		5,129		-		-

(III). Fair value information

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

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

• Level 2:Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3:Unobservable inputs for the asset or liability. The fair value of the Group’s investment in stocks of non-publicly traded or non-OTC firms and private equity fund is included in Level 3.

• Financial instruments not measured at fair value

Cash, notes receivable, accounts receivable, other receivable, short-term borrowings, notes payable, accounts payable and other payable as reasonable approximation of fair value.

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

as follows:	as follows:
December 31,2021		Level 1	Level 2			Level 3	Total
Assets
Recurring fair value
	measurements
Financial assets at fair value
through profit and loss
Equity securities		$ 4,979,549	$ -		$	52,622	$ 5,032,171
Beneficiary certificates		500	-			-	500
Convertible bonds		5,000	-			-	5,000
Total		$ 4,985,049	$ -		$	52,622	$ 5,037,671
December 31,2020		Level 1	Level 2			Level 3	Total
Assets
Recurring fair value
	measurements

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Financial assets at fair value
through profit and loss
Equity securities	$ 2,103,205	$ -	$ 31,708 $ 2,134,913
Beneficiarycertificates	500	-	- 500
Total	$ 2,103,705	$ -	$ 31,708 $ 2,135,413

1. The methods and assumptions adopted by the Group for assessing the fair value are as follows:

2. (1) The Group adopt market pricing as the input of fair value (i.e. Level ), and the breakdown of the characteristics of the instrument is as follows:

	Shares of listed and OTC
	company	Open-end funds
Market price	Closing price	Net Value

• (2) Except for the abovementioned financial instruments with active markets, the fair value of the remaining financial instruments is obtained using valuation techniques. The fair value obtained through valuation techniques can refer to the current fair value of other financial instruments with similar substantive conditions and characteristics, discounted cash flow method, or other valuation techniques, including the use of market information available on the date of the consolidated balance sheet (for example, the Taipei Exchange refers to the yield curve, the Reuters adopts the average quotation of interest rate of commercial promissory notes).

• (3) The output of the valuation model is the estimated value, and the valuation technique may not reflect all the relevant factors of the financial instruments and non-financial instruments held by the Group. Therefore, the estimated value of the valuation model will be appropriately adjusted according to additional parameters, such as model risk or liquidity risk. According to the Group’s fair value valuation model management policies and related control procedures, the management believes that in order to properly express the fair value of financial instruments and non-financial instruments in the consolidated balance sheet, valuation adjustments are appropriate and necessary. The price information and parameters used in the valuation process are carefully assessed and appropriately adjusted according to current market conditions.

• (4) The Group incorporates credit risk valuation adjustments into the consideration of fair value of financial instruments and non-financial instruments to reflect counterparty credit risk and the credit quality of the Group, respectively.

• There were no transfers between Level 1 and 2 in 2021 and 2020.

• The following table shows the changes in Level 3 in 2021 and 2020:

		Equitysecurities
January 1, 2021	$	31,708
Acquisition cost of the period		32,651
Recognized inprofit or loss of theperiod (		11,737 )
December 31,2021	$	52,622
		Equitysecurities
January 1, 2020	$	92,803
Acquisition cost of the period		39,943
Recognize impairment loss (		92,831 )
Return of capital by investee company (		8,207 )

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December 31, 2020 $ 31,708

1. The quantitative information about the significant unobservable input value of the valuation model and the sensitivity analysis of the significant unobservable input value change used in the Level 3 fair value measurements are explained as follows: December 31, 2021

December 31,2021
				Significant	Range
			Valuation	unobservable	(Weighted		Relationship between
		Fair value	technique	inputs	average)		inputs and fair value
Non-derivative
equity instruments:
Shares of non-	$	52,622 Net asset		Net asset value		-	The higher the net asset
listed and non-			value				value, the higher the
OTC company			method				fair value.
December 31,2020
				Significant	Range
			Valuation	unobservable	(Weighted		Relationship between
		Fair value	technique	inputs	average)		inputs and fair value
Non-derivative
equity instruments:
Shares of non-	$	31,708 Net asset		Net asset value		-	The higher the net asset
listed and non-			value				value, the higher the
OTC company			Method				fair value.

1. The Corporate Group has carefully assessed the valuation models and parameters used to measure fair value. However, use of different valuation models or parameters may result in different measurement. For financial assets or liabilities classified in Level 3, changes in valuation parameters have the following impacts on the income or other comprehensive income of the period:

December 31, 2021

	Recognized in profit or	Recognized in profit or	Recognized in other	Recognized in other
	loss		comprehensive income
Change	Favorable changes Adverse changes )		Favorable	Adverse
Inputs s			changes	changes
Financial
assets
Equity Net asset value ±1%	$ 526 ( $ 526 )		$ -	$ -
instrument s
		December	31,2020
	Recognized in profit or		Recognized in other
	loss		comprehensiveincome
Change	Favorable changes Adverse changes		Favorable	Adverse
Inputs s			changes	changes
Financial
assets
Equity instrument s Net asset value ±1%	$ 271 ( $ 271 )		$ -	$ -
Equity Long-term ±1%	468 (	481 )	-	-

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instrument s revenue growth rate
	$ 739 (	$ 752 )	$ -	$ -

(IV). Others

The Company has evaluated the Group’s operations and financial information, and amid the novel coronavirus crisis, the Group’s ability to continue as a going concern, asset impairment and financing risks have not been greatly affected.

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(XIII) Supplementary Disclosure

(I). Significant transactions information

1. Loans to others: Please refer to Table I.

2. Provision of endorsements and guarantees to others: Please refer to Table II.

3. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to Table III.

4. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to Table IV.

5. Acquisition of real estate exceeding $300 million or 20% of paid-in capital or more: None.

6. Disposal of real estate exceeding $300 million or 20% of paid-in capital or more: None.

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

8. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.

9. Engaged in derivative trading: None.

10. Significant inter-company transactions during the reporting periods: Please refer to Table V.

(II). Information on investees

Names, locations and other information of investee companies (not including investees in China): Please refer to Table VI.

(III). Information on investments in China

1. Basic information: Please refer to Table VIII.

2. Significant transactions, either directly or indirectly through a third area, with investee companies in China: None.

(IV). Information on Major Shareholders

Information on major shareholders: Detailed in Table VIII.

(XIV) Segments information

• (I). General information

Management has determined the reportable operating segments based on reports reviewed by the president and used to make strategic decisions.

The Group’s corporate structure, the basis for division of segments, and the basis for measurement of segment information have not changed significantly during the current period.

(II). Measurement of segment information

The Group evaluates the performance of the operating segments and allocates resources based on the adjusted net profit of each segment.

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(III). Segments information

Information on the reporting segments provided to the chief operating decision maker is shown as follows:

2021:

shown as follows: 2021:
	Photomask and	Medical segment	Total
	semiconductor segment
Revenue from external clients	$ 6,068,709	$ 8,653	$ 6,077,362
Segment revenue (	$ 155,571 )	$ - ( $ 155,571 )
Segment margin	$ 1,294,573 (	$ 116,475 )	$ 1,178,098
Segment margin include:
Depreciation	$ 434,569	$ 48,705	$ 483,274
Amortization expense	$ 18,102	$ 134	$ 18,236
Financial Costs (	$ 99,775 ) (	$ 749 ) ( $ 100,524 )
Interest income	$ 4,837	$ 21	$ 4,858
Investments income recognized by using equity method (	$ 80,385 )	$ - ( $ 80,385 )
Segment assets	$ 15,751,644	$ 362,583	$ 16,114,227

2020:

2020:
	Photomask and semiconductor segment $ 4,666,756 $ 118,768 $ 630,541 $ 379,560 ) $ 7,395 ) $ 33,026 ) $ 4,826 $ 105,006 ) $ 9,101,708
Revenue from external clients
Segment revenue
Segment margin
Segment margin include:
Depreciation (
Amortization expense (
Financial Costs (
Interest income
Investments income
recognized by using equity method (
Segment assets

(IV). Reconciliation for segment income

Sales between segments are conducted according to the principle of transactions at fair value. The operating revenue from external customers reported to the operating decision maker is measured in a manner consistent with that in the income statement.

The consolidated income, assets and liabilities of related segments are consistent with the consolidated income, consolidated assets and consolidated liabilities, so there is no reconciliation information.

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(V). Information on products and services

The revenue from external customers mainly come from the sales revenue of photomasks and semiconductors and sales revenue of medical equipment, and the performance of related products is the same as that shown in Note 14 (3).

(VI). Geographical information

Information by region for the Group in 2021 and 2020:

	2021	2021	2020
		Non-Current	Non-Current
	Revenue	Assets	Revenue Assets
Taiwan	$ 2,986,379	$ 4,956,488	$ 2,116,492 $ 3,936,274
Asia	3,084,232	1,430	2,532,492 1,379
Others	6,751	-	17,772 -
Total	$ 6,077,362	$ 4,957,918	$ 4,666,756 $ 3,937,653

(VII). Major customer information

For the year ended December 31, 2021, $942,399 of the Group’s total revenue was derived from a customer.

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