TRI - Audit Report / Information 2022

TEST RESEARCH, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2022 AND 2021

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Test Research, Inc.

Opinion

We have audited the accompanying consolidated balance sheets of Test Research, Inc. (the “Company”) and its subsidiaries (the “Group”) as at December 31, 2022 and 2021, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

~2~

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group’s 2022 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s 2022 consolidated financial statements are stated as follows:

Valuation of inventories

Description

Refer to Note 4(12) for accounting policies adopted for the valuation of inventories, Note 5 for critical accounting estimates and assumptions related to the valuation of inventories, and Note 6(4) for details of inventories. As of December 31, 2022, inventory and allowance for valuation losses are NT$1,618,130 thousand and NT$152,595 thousand, respectively.

The Group is primarily engaged in the design, manufacture, sales, repairs and maintenance of automated inspection and testing equipment, and inventories are stated at the lower of cost and net realisable value. Management considers the rapidly changing technology and the short life cycle of electronic products in evaluating inventories. For inventories that are over a certain aging and individually identified obsolete or slow-moving items, the net realisable value is determined based on inventory aging and the market demand of such items in the future for a specific period, which are based on sales, obsolescence and the inventory quality. As the amount of inventory is significant, involves numerous items, and the valuation of inventory requires critical judgement and a high degree of uncertainty in estimation, we considered the valuation of inventory a key audit matter.

How our audit addressed the matter

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

Understanding the industry and operations of the Group, and assessing the reasonableness of accounting policies applied in determining the adequacy of inventory provision.
Understanding the inventory management processes, examining the annual physical count plan, and performing physical inventory observation to assess the effectiveness of judgement and control over obsolete or slow-moving inventory.

~3~

Obtaining inventory aging report and testing movements to confirm whether they are assigned to the correct aging category and are in accordance with the Group’s accounting policy. We also recalculated to check the adequacy of the allowance for valuation losses.
Analysing and comparing the difference of inventory valuation losses between the latest two years and examining supporting evidences in relation to allowance for slow-moving inventory valuation losses, which were individually identified by the management based on the inventory clearance condition, to assess the propriety of inventory valuation losses.

Cutoff of export revenue recognition of the Company

Description

For accounting policies adopted for revenue recognition, refer to Note 4(24).

The Group recognises export revenue in accordance with the terms of the transaction with the customer. Export revenue constitutes approximately 80% of consolidated operating revenue and the period of revenue recognition is based on transaction terms of different customers. As the timing of revenue recognition is subject to management judgement based on past experience, revenue may not be recorded in the proper period. Thus, we considered the cutoff of export revenue recognition a key audit matter.

How our audit addressed the matter

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

Understanding and assessing the effectiveness of export revenue recognition control processes.
Obtaining a detailed listing of export sales of the Company within a certain period before and after period end, selecting samples and assessing the completeness by agreeing the sale to supporting documentation (such as export bill of lading and proof of delivery) to ascertain whether the sale was recorded in the proper period.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Test Research, Inc. as at and for the years ended December 31, 2022 and 2021.

~4~

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 that came into effect as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,

~5~

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

~6~

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

Pan, Hui-Lin Huang, Pei-Chuan

For and on behalf of PricewaterhouseCoopers, Taiwan February 22, 2023

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

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

~7~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2022 AMOUNT % `$` `1,148,655` `13` `285,090` `3` `1,443,713` `16` `69,748` `1` `1,513,877` `16` `37,872` `-` `1,465,535` `16` `33,618` `-` `5,998,108` `65` `3,017,829` `33` `45,485` `1` `23,992` `-` `74,457` `1` `12,675` `-` `3,174,438` `35` `$` `9,172,546` `100`	December 31, 2021	December 31, 2021
	AMOUNT `$` `1,148,655` `285,090` `1,443,713` `69,748` `1,513,877` `37,872` `1,465,535` `33,618` `5,998,108` `3,017,829` `45,485` `23,992` `74,457` `12,675` `3,174,438` `$` `9,172,546`	AMOUNT `$` `1,226,378` `196,790` `1,007,996` `37,073` `1,325,315` `32,136` `1,746,923` `35,517` `5,608,128` `2,227,309` `56,977` `26,772` `80,721` `10,075` `2,401,854` `$` `8,009,982`	%
Current assets 1100 Cash and cash equivalents 1136 Current financial assets at amortised cost 1140 Current contract assets 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 130X Inventory 1470 Other current assets 11XX Total current assets Non-current assets 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1920 Guarantee deposits paid 15XX Total non-current assets 1XXX Total assets			`15` `3` `13` `-` `17` `-` `22` `-`
			`70`
			`28` `1` `-` `1` `-`
			`30`
			`100`

(Continued)

~8~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December 31, 2022
December 31, 2021
Notes
AMOUNT
%
AMOUNT
%
6(12)
$
55,567
1
$
76,577
1
17,172
-
30,493
-
482,981
5
916,403
12
6(7)
669,984
8
354,683
5
345,442
4
179,870
2
18,654
-
25,040
-
9,707
-
7,948
-
1,599,507
18
1,591,014
20
15,743
-
39,920
1
6(17)
224,302
3
194,168
2
26,537
-
31,658
-
6(8)
39,580
-
56,931
1
306,162
3
322,677
4
1,905,669
21
1,913,691
24
6(9)
2,362,160
26
2,362,160
29
6(10)
53,290
-
53,290
1
6(11)
1,533,787
17
1,415,311
18
68,362
1
57,209
1
3,297,982
36
2,276,683
28
(
48,704) (
1) (
68,362) (
1 )
7,266,877
79
6,096,291
76
7,266,877
79
6,096,291
76
9
11
$
9,172,546
100
$
8,009,982
100

Current liabilities
2130
Contract liabilities - current
2150
Notes payable
2170
Accounts payable
2200
Other payables
2230
Current income tax liabilities
2280
Current lease liabilities
2300
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2550
Provisions for liabilities - non-current
2570
Deferred income tax liabilities
2580
Non-current lease liabilities
2600
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity attributable to owners of the
parent
Share capital
3110
Common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
3400
Other equity interest
31XX
Equity attributable to owners of
the parent
3XXX
Total equity
Significant contingent liabilities and
unrecognized contract commitments
Significant events after the balance
sheet date
3X2X
Total liabilities and equity

Liabilities and Equity	December 31, 2022 December 31, 2021 Notes AMOUNT % AMOUNT % 6(12) `$` `55,567` `1` `$` `76,577` `1` `17,172` `-` `30,493` `-` `482,981` `5` `916,403` `12` 6(7) `669,984` `8` `354,683` `5` `345,442` `4` `179,870` `2` `18,654` `-` `25,040` `-` `9,707` `-` `7,948` `-` `1,599,507` `18` `1,591,014` `20` `15,743` `-` `39,920` `1` 6(17) `224,302` `3` `194,168` `2` `26,537` `-` `31,658` `-` 6(8) `39,580` `-` `56,931` `1` `306,162` `3` `322,677` `4` `1,905,669` `21` `1,913,691` `24` 6(9) `2,362,160` `26` `2,362,160` `29` 6(10) `53,290` `-` `53,290` `1` 6(11) `1,533,787` `17` `1,415,311` `18` `68,362` `1` `57,209` `1` `3,297,982` `36` `2,276,683` `28` `(` `48,704) (` `1) (` `68,362) (` `1 )` `7,266,877` `79` `6,096,291` `76` `7,266,877` `79` `6,096,291` `76` 9 11 `$` `9,172,546` `100` `$` `8,009,982` `100`
Current liabilities 2130 Contract liabilities - current 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2280 Current lease liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2550 Provisions for liabilities - non-current 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity

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

~9~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

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

Items Year ended December 31
2022
2021
Notes
AMOUNT
%
AMOUNT
%
6(12)
$
6,708,832
100
$
5,606,690
100
6(4)(15)(16)
(
2,860,203) (
43) (
2,558,849) (
46)
3,848,629
57
3,047,841
54
6(15)(16)
(
967,934) (
14) (
836,385) (
15)
(
186,378) (
3) (
158,851) (
2)
(
534,901) (
8) (
497,036) (
9)
12(2)
(
5,934)
-
2,531
-
(
1,695,147) (
25) (
1,489,741) (
26)
2,153,482
32
1,558,100
28
9,077
-
8,065
-
6(13)
23,789
1
26,080
1
6(14)
269,834
4 (
33,195) (
1)
(
2,334)
- (
1,548)
-
300,366
5 (
598)
-
2,453,848
37
1,557,502
28
6(17)
(
532,363) (
8) (
372,448) (
7)
$
1,921,485
29
$
1,185,054
21
6(8)
$
8,956
- ($
291)
-
24,573
- (
13,941)
-
6(17)
(
4,915)
-
2,788
-
19,658
- (
11,153)
-
$
28,614
- ($
11,444)
-
$
1,950,099
29
$
1,173,610
21
$
1,921,485
29
$
1,185,054
21
$
1,950,099
29
$
1,173,610
21
6(18)
$
8.13
$
5.02
$
8.11
$
5.01

4000
Operating revenue
5000
Operating costs
5950
Gross margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit impairment (loss)
gain
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
8311
Actuarial gain (loss) on defined
benefit plan
Components of other comprehensive
income that will be reclassified to
profit or loss
8361
Financial statements translation
differences of foreign operations
8399
Income tax relating to the
components of other comprehensive
(loss) income that will be
reclassified to profit or loss
8360
Other comprehensive income
(loss) that will be reclassified to
profit or loss
8300
Total other comprehensive income
(loss) for the year
8500
Total comprehensive income for the
year
Profit attributable to:
8610
Owners of the parent
Comprehensive income attributable to:
8710
Owners of the parent
Earnings per share (in dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

Items	Year ended December 31 2022 2021 Notes AMOUNT % AMOUNT % 6(12) `$` `6,708,832` `100` `$` `5,606,690` `100` 6(4)(15)(16) `(` `2,860,203) (` `43) (` `2,558,849) (` `46)` `3,848,629` `57` `3,047,841` `54` 6(15)(16) `(` `967,934) (` `14) (` `836,385) (` `15)` `(` `186,378) (` `3) (` `158,851) (` `2)` `(` `534,901) (` `8) (` `497,036) (` `9)` 12(2) `(` `5,934)` `-` `2,531` `-` `(` `1,695,147) (` `25) (` `1,489,741) (` `26)` `2,153,482` `32` `1,558,100` `28` `9,077` `-` `8,065` `-` 6(13) `23,789` `1` `26,080` `1` 6(14) `269,834` `4 (` `33,195) (` `1)` `(` `2,334)` `- (` `1,548)` `-` `300,366` `5 (` `598)` `-` `2,453,848` `37` `1,557,502` `28` 6(17) `(` `532,363) (` `8) (` `372,448) (` `7)` `$` `1,921,485` `29` `$` `1,185,054` `21` 6(8) `$` `8,956` `- ($` `291)` `-` `24,573` `- (` `13,941)` `-` 6(17) `(` `4,915)` `-` `2,788` `-` `19,658` `- (` `11,153)` `-` `$` `28,614` `- ($` `11,444)` `-` `$` `1,950,099` `29` `$` `1,173,610` `21` `$` `1,921,485` `29` `$` `1,185,054` `21` `$` `1,950,099` `29` `$` `1,173,610` `21` 6(18) `$` `8.13` `$` `5.02` `$` `8.11` `$` `5.01`
4000 Operating revenue 5000 Operating costs 5950 Gross margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit impairment (loss) gain 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Actuarial gain (loss) on defined benefit plan Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8399 Income tax relating to the components of other comprehensive (loss) income that will be reclassified to profit or loss 8360 Other comprehensive income (loss) that will be reclassified to profit or loss 8300 Total other comprehensive income (loss) for the year 8500 Total comprehensive income for the year Profit attributable to: 8610 Owners of the parent Comprehensive income attributable to: 8710 Owners of the parent Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

~10~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Equity attributable to owners of the parent

2021 Balance at January 1, 2021 Profit for the year Other comprehensive loss for the year Total comprehensive income (loss) Appropriations of 2020 earnings Legal reserve Reversal of special reserve Cash dividends Balance at December 31, 2021 2022 Balance at January 1, 2022 Profit for the year Other comprehensive income for the year Total comprehensive income Appropriations of 2021 earnings Legal reserve Special reserve Cash dividends Balance at December 31, 2022	Notes		Share capital - common stock	Capital Reserves	Capital Reserves	Capital Reserves	Capital Reserves			Retained Earnings	Retained Earnings			Financial statements translation differences of foreign operations		Total equity
				Capital surplus, additional paid-in capital			Donated assets received		Legal reserve		Special reserve		Unappropriated retained earnings
	6(11) 6(11)		`$ 2,362,160` `-` `-` `-` `-` `-` `-` `$ 2,362,160` `$ 2,362,160` `-` `-` `-` `-` `-` `-` `$ 2,362,160`		`$` `51,874` `-` `-` `-` `-` `-` `-` `$` `51,874` `$` `51,874` `-` `-` `-` `-` `-` `-` `$` `51,874`		`$` `1,416` `-` `-` `-` `-` `-` `-` `$` `1,416` `$` `1,416` `-` `-` `-` `-` `-` `-` `$` `1,416`		`$ 1,306,390` `-` `-` `-` `108,921` `-` `-` `$ 1,415,311` `$ 1,415,311` `-` `-` `-` `118,476` `-` `-` `$ 1,533,787`	`$` `67,270` `-` `-` `-` `-` `(` `10,061)` `-` `$` `57,209` `$` `57,209` `-` `-` `-` `-` `11,153` `-` `$` `68,362`		`$ 1,970,293` `1,185,054` `(` `291` `)` `1,184,763` `(` `108,921` `)` `10,061` `(` `779,513` `)` `$ 2,276,683` `$ 2,276,683` `1,921,485` `8,956` `1,930,441` `(` `118,476` `)` `(` `11,153` `)` `(` `779,513` `)` `$ 3,297,982`		`($` `57,209)` `-` `(` `11,153)` `(` `11,153)` `-` `-` `-` `($` `68,362)` `($` `68,362)` `-` `19,658` `19,658` `-` `-` `-` `($` `48,704)`	`$ 5,702,194` `1,185,054` `(` `11,444` `)` `1,173,610` `-` `-` `(` `779,513` `)` `$ 6,096,291` `$ 6,096,291` `1,921,485` `28,614` `1,950,099` `-` `-` `(` `779,513` `)` `$ 7,266,877`

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

~11~

TEST RESEARCH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Amortisation

Expected credit impairment loss (gain)

Interest income
Interest expense
Gain on disposal of property, plant and equipment

Changes in operating assets and liabilities
Changes in operating assets
Contract assets
Notes receivable
Accounts receivable
Other receivables
Inventory
Other current assets
Changes in operating liabilities
Contract liabilities
Notes payable
Accounts payable
Other payables
Other current liabilities
Provisions for liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
(Acquisition of) proceeds from financial assets at
amortised cost
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in guarantee deposits paid
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Lease principal repayment
Cash dividends paid

Net cash flows used in financing activities
Effect due to changes in exchange rate
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year YearendedDecember 31
Notes
2022
2021
$
2,453,848 $
1,557,502
6(15)
125,571
123,081
6(15)
15,174
14,654
12(2)
5,934 (
2,531 )
(
9,077 ) (
8,065 )
2,334
1,548
6(14)
(
7,700 ) (
4,239 )
(
441,159 ) (
825,366 )
(
32,675 )
35,767
(
189,126 )
341,095
(
4,994 ) (
10,483 )
225,041 (
875,064 )
1,899 (
7,540 )
(
21,010 )
52,275
(
13,321 )
13,711
(
433,422 )
421,806
150,252
54,380
1,759
89
(
24,177 ) (
1,423 )
(
8,395 ) (
6,271 )
1,796,756
874,926
8,335
7,262
(
2,334 ) (
1,548 )
(
335,546 ) (
289,227 )
1,467,211
591,413
(
88,300 )
34,632
6(19)
(
667,544 ) (
138,506 )
16,342
11,821
(
12,388 ) (
16,623 )
(
2,600 )
215
(
754,490 ) (
108,461 )
(
34,383 ) (
27,141 )
6(11)
(
779,513 ) (
779,513 )
(
813,896 ) (
806,654 )
23,452 (
10,829 )
(
77,723 ) (
334,531 )
1,226,378
1,560,909
$
1,148,655 $
1,226,378

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

~12~

TEST RESEARCH, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANISATION

Test Research, Inc. (the Company) was incorporated in April 1989 under the provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the design, assembly, manufacture, sales, repairs and maintenance of automated inspection and testing equipment.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on February 22, 2023.

APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC and became effective from 2022 are as follows:

2022 are as follows:
New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IAS 16, ‘Property, plant and equipment: proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts - cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018 - 2020	January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2022

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

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

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

~13~

	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IAS 1, ‘Disclosure of accounting policies’	January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’	January 1, 2023
Amendments to IAS 12, ‘Deferred tax related to assets and liabilities	January 1, 2023
arising from a single transaction’

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

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

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

==> picture [477 x 48] intentionally omitted <==

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

Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets	To be determined by
between an investor and its associate or joint venture’	International Accounting
	Standards Board
Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’	January 1, 2024
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17,’Insurance contracts’	January 1, 2023
Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 –	January 1, 2023
comparative information’
Amendments to IAS 1, ‘Classification of liabilities as current or non-	January 1, 2024
current’
Amendments to IAS 1, ‘Non-current liabilities with covenants’	January 1, 2024

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies 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

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

~14~

(2) Basis of preparation

A. Except for defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation, the consolidated financial statements have been prepared under the historical cost convention.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
B. Subsidiaries included in the consolidated financial statements:

Name of investor	Name of subsidiary	Main business activities	% of Ownership	% of Ownership	Description
			December 31,2022	December 31,2021
Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc.	TEST RESEARCH USA INC. (TRU) TRI TEST RESEARCH EUROPE GMBH (TRE) TRI JAPAN CORPORATION (TRJ) TEST RESEARCH INNOVATION MALAYSIA SDN BHD (TRM) TRI KOREA CO., LTD. (TRK)	Trading Trading Trading Trading Trading	100 100 100 100 100	100 100 100 100 100	- - - - -

~15~

Name of investor Name of subsidiary Test Research, Inc. TRI INVESTMENTS LIMITED (TIL) TRI INVESTMENTS LIMITED (TIL) TRI Electronic (Shenzhen) Limited (TRI (SHENZHEN)) TRI INVESTMENTS LIMITED (TIL) TRI Electronic (Shanghai) Limited (TRI (SHANGHAI)) TEST RESEARCH INNOVATION MALAYSIA SDN BHD (TRM) TEST RESEARCH INNOVATION VIETNAM COMPANY LIMITED (TRV) TEST RESEARCH INNOVATION MALAYSIA SDN BHD (TRM) TEST RESEARCH INNOVATION THAILAND COMPANY LIMITED (TRT) TRI INVESTMENTS LIMITED (TIL) TRI Electronic (Suzhou) Limited (TRI (SUZHOU))	Main business activities Investment holdings Manufacture and sales of test equipment Manufacture and sales of test equipment Import and export of equipment, consulting and after- sale maintenance service of equipment Trading Trading	December December 31,2022 31,2021 % of Ownership 100 100 100 100 100 100 100 100 - - 100 100	Description - - - - Note -
		100 100 100 100 - 100

Note: TEST RESEARCH INNOVATION THAILAND COMPANY LIMITED (TRT) was established on December 23, 2022. As of December 31, 2022, the capital contribution to the subsidiary has not yet been made.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(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”).

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are

~16~

recognised in profit or loss in the period in which they arise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within ‘other gains and losses’.
B. Translation of foreign operations

The operating results and financial position of all the group entities, associates and joint arrangements 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; and

  - (c) All resulting exchange differences are recognised in other comprehensive income.

(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realised within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be settled within the normal operating cycle;
- (b) Liabilities arising mainly from trading activities;
- (c) Liabilities that are to be settled within twelve months from the balance sheet date;
- (d) 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.

~17~

(6) Cash equivalents

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

(7) Financial assets at amortised cost

A. Financial assets at amortised cost are those that meet all of the following criteria:
(a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.
D. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

(8) Accounts receivable, notes receivable and contract assets

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
C. Contract assets entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services. The consideration will be received upon acceptance by the customer.

(9) Impairment of financial assets

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

(10) Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

~18~

`－` (11) Leasing arrangements (lessor) operating leases

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

(12) Inventories

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

(13) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. 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.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures	15 ~ 55 years
Machinery and equipment	2 ~ 10 years
Transportation equipment	4 ~ 5 years
Office equipment	1 ~ 10 years
Other equipment	1 ~ 30 years

~19~

(14) Leasing arrangements (lessee) － right-of-use assets/lease liabilities

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. 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 are comprised of fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost comprising the following: (a) The amount of the initial measurement of lease liability;
(b) Any lease payments made at or before the commencement date; and
(c) Any initial direct costs incurred by the lessee;

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 useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(15) Intangible assets

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 1 to 5 years.

(16) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising 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 amortised historical cost would have been if the impairment had not been recognised.

(17) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured

~20~

at initial invoice amount as the effect of discounting is immaterial.

(18) Derecognition of financial liabilities

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

(19) Offsetting financial instruments

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

(20) Provisions

Provisions (including warranties) are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date.

(21) Employee benefits

A. 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 recognised as expense in that period when the employees render service.

B. Pensions
(a) Defined contribution plans

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

(b) Defined benefit plans

i. 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 recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date).
ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

~21~

C. Employees’ compensation and directors’ remuneration

Employees’ compensation and directors’ remuneration are recognised 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.

(22) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. 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.
C. Deferred tax is recognised, 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 tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, 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 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 tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

(23) Dividends

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.

~22~

(24) Revenue recognition

A. Sales of goods
(a) The Group is engaged in the design, assemble, manufacture and sale of automatic inspection equipment and related products. Sales are recognised when control of the products has transferred, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.
(b) Revenue from these sales is recognised based on the price specified in the contract, net of the business tax, sales return and discounts. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. The sales usually are made with a credit term of 30 days. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.
(c) The Group’s obligation to provide a repair for faulty products under the standard warranty terms is recognised as a provision.
(d) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
B. Sales of services

The Group provides repairs and maintenance services of automated inspection and testing equipment. Revenue from providing services is recognised in the accounting period in which the services are rendered.

C. Incremental costs of obtaining a contract
Given that the contractual period lasts less than one year, the Group recognises the incremental costs of obtaining a contract as an expense when incurred although the Group expects to recover those costs.

(25) Operating segments

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

~23~

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires 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. In the process of applying the Group's accounting policies, there is no critical accounting judgment. The critical accounting estimates and assumptions is addressed below:

Valuation of inventories

The Group’s inventories are stated at the lower of cost and net realisable value. The Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Management considers the rapidly changing technology and the short life cycle of electronic products in evaluating inventories. For inventories that are over a certain age and individually identified obsolete or slow-moving items, the net realisable value is determined based on inventory aging and the market demand of such items in the future for a specific period, which are based on sales, obsolescence and the inventory quality. The valuation of inventories is principally based on the demand for the products within the specified period in the future. As the valuation of inventories usually involves subjective judgment and a high degree of estimation uncertainty, there may be material changes to the valuation. As of December 31, 2022, the carrying amount of inventories was $1,465,535.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and revolving funds Demand deposits Time deposits Short-term notes and bills	December 31, 2022 750 $ 517,214 530,710 99,981 1,148,655 $	December31,2021
		452 $ 797,612 148,314 280,000
		1,226,378 $

A. The Group transacts 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.
B. The Group has no cash and cash equivalents pledged to others.

(2) Financial assets at amortised cost

Financial assets at amortised cost
Current items: Time deposits maturing over three months	December31,2022 285,090 $	December31,2021
		196,790 $

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

~24~

		Year ended	December31	December31
		2022		2021
Interest income	$	5,988	$	4,387

B. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2). The counterparties of the Group’s investments in certificates of deposits are financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

(3) Notes receivable, accounts receivable and contract assets

		December	31,2022		December	31, 2021
Notes receivable		$	69,748		$	37,073
Accounts receivable		$	1,519,773		$	1,330,647
Less: Allowance for uncollectible
accounts	(		5,896)	(		5,332)
		$	1,513,877		$	1,325,315
Contract assets		$	1,449,457		$	1,008,298
Less: Loss allowance	(		5,744)	(		302)
		$	1,443,713		$	1,007,996

A. The ageing analysis of accounts receivable, notes receivable and contract assets that were past due but not impaired is as follows:

==> picture [462 x 39] intentionally omitted <==

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

December 31, 2022 December 31, 2021
Accounts Notes Contract Accounts Notes Contract
receivable receivable assets receivable receivable assets
----- End of picture text -----

	Accounts receivable	Notes receivable	Contract assets	Accounts receivable	Notes receivable	Contract assets
Not past due Past due Up to 60 days 61 to 90 days 91 to 180 days 181 to 365 days Over 365 days	1,184,391 $ 220,490 41,080 44,648 22,511 6,653 1,519,773 $	69,748 $ - - - - - 69,748 $	1,449,457 $ - - - - - 1,449,457 $	1,032,865 $ 186,807 29,755 46,523 32,897 1,800 1,330,647 $	37,073 $ - - - - - 37,073 $	1,008,298 $ - - - - -
						1,008,298 $

The above ageing analysis was based on past due date.

B. As at December 31, 2022 and 2021, accounts receivable, notes receivable and contract assets were all from contracts with customers. As of January 1, 2021, the balance of receivables from contracts (including notes receivable and contract assets) with customers amounted to $1,919,349.
C. As at December 31, 2022 and 2021, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $69,748 and $37,073, and accounts receivable and contract assets were $2,957,590 and $2,333,311, respectively.
D. Information relating to credit risk of accounts receivable, notes receivable and contract assets is

~25~

provided in Note 12(2).

(4) Inventories

Inventories
Raw materials Work in progress Semi-finished and finished goods Merchandise Raw materials Work in progress Semi-finished and finished goods Merchandise		December31,2022
	Allowance for Cost valuation loss 1,039,103 $ 107,130) ($ 90,460 25) ( 455,648 42,830) ( 32,919 2,610) ( 1,618,130 $ 152,595) ($ December31,2021		Bookvalue
			931,973 $ 90,435 412,818 30,309
			1,465,535 $

	Allowance for Cost valuation loss 1,168,419 $ 94,524) ($ 126,543 6) ( 577,487 35,803) ( 7,191 2,384) ( 1,879,640 $ 132,717) ($		Bookvalue
			1,073,895 $ 126,537 541,684 4,807
			1,746,923 $

The cost of inventories recognised as expense for the year:

Cost of goods sold Loss on market value decline and obsolete and slow-moving inventories Loss on physical inventory	Year ended December 31	Year ended December 31
	2022 2,829,285 $ 19,977 25 2,849,287 $	2021
		2,518,298 $ 22,165 58
		2,540,521 $

~26~

(5) Property, plant and equipment

At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Additions Transfers from inventories Disposals Depreciation charge Net exchange differences Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation				2022	2022
	Land 1,166,021 $ - 1,166,021 $ 1,166,021 $ - - - - - 1,166,021 $ 1,166,021 $ - 1,166,021 $	Buildings and structures	Machinery and equipment	Transportation equipment	Office equipment	Miscellaneous equipment
		921,538 $ 267,796) ( 653,742 $ 653,742 $ - - - 18,098) ( - 635,644 $ 921,538 $ 285,894) ( 635,644 $	457,585 $ 273,525) ( 184,060 $ 184,060 $ 12,826 29,968 7,894) ( 34,389) ( 3,591 188,162 $ 504,350 $ 318,477) ( 185,873 $	6,430 $ 3,999) ( 2,431 $ 2,431 $ 785 - - 796) ( 74 2,494 $ 7,433 $ 4,939) ( 2,494 $	227,459 $ 155,330) ( 72,129 $ 72,129 $ 4,409 18,873 732) ( 24,134) ( 112 70,657 $ 244,964 $ 172,018) ( 72,946 $	177,321 $ 129,062) ( 48,259 $ 48,259 $ 7,840 7,506 16) ( 16,303) ( 165 47,451 $ 190,321 $ 142,870) ( 47,451 $

~27~

==> picture [726 x 268] intentionally omitted <==

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

2021
Buildings and Machinery and Transportation Office Miscellaneous Unfinished
Land structures equipment equipment equipment equipment construction Total
At January 1
Cost $ 1,166,021 $ 921,538 $ 414,098 $ 6,752 $ 222,402 $ 164,463 $ 40 $ 2,895,314
Accumulated depreciation - ( 249,696) ( 238,558) ( 3,358) ( 150,498) ( 121,244) - ( 763,354)
$ 1,166,021 $ 671,842 $ 175,540 $ 3,394 $ 71,904 $ 43,219 $ 40 $ 2,131,960
Opening net book
amount as at January 1 $ 1,166,021 $ 671,842 $ 175,540 $ 3,394 $ 71,904 $ 43,219 $ 40 $ 2,131,960
Additions - - 14,020 - 9,205 14,654 100,627 138,506
Transfers from inventories - - 36,516 - 19,415 6,939 - 62,870
- - -
Disposals ( 6,786) ( 1) ( 550) ( 245) ( 7,582)
- -
Depreciation charge ( 18,100) ( 33,439) ( 829) ( 27,799) ( 15,773) ( 95,940)
Net exchange differences - - ( 1,791) ( 133) ( 46) ( 535) - ( 2,505)
Closing net book
amount as at December 31 $ 1,166,021 $ 653,742 $ 184,060 $ 2,431 $ 72,129 $ 48,259 $ 100,667 $ 2,227,309
At December 31
Cost $ 1,166,021 $ 921,538 $ 457,585 $ 6,430 $ 227,459 $ 177,321 $ 100,667 $ 3,057,021
Accumulated depreciation - ( 267,796) ( 273,525) ( 3,999) ( 155,330) ( 129,062) - ( 829,712)
$ 1,166,021 $ 653,742 $ 184,060 $ 2,431 $ 72,129 $ 48,259 $ 100,667 $ 2,227,309
----- End of picture text -----

Note: Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

~28~

`－` (6) Leasing arrangements lessee

A. The Group leases offices and rental contracts are typically made for periods from 1 to 6 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets shall not be used as security for borrowing purposes.
B. Short-term leases pertain to leases of dormitories and company cars with a lease term of not more than 12 months.
C. The carrying amounts of right-of-use assets and the depreciation charge are as follows:

Buildings Buildings	December31,2022 December31,2021 Carrying amount Carrying amount 45,485 $ 56,977 $ 2022 2021 Depreciationcharge Depreciation charge 31,851 $ 27,141 $ YearendedDecember31	December31,2021 Carrying amount 56,977 $

D. For the years ended December 31, 2022 and 2021, the additions to right-of-use assets were $16,381 and $41,880, respectively.
E. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Lease expense of low-value assets	Year ended December 31	Year ended December 31
	2022 2,236 $ 8,436 $ 309 $	2021
		1,548 $
		11,080 $
		309 $

F. For the years ended December 31, 2022 and 2021, the Group’s total cash outflow for leases were $45,364 and $40,078, respectively.

(7) Other payables

Other payables
Salaries and bonus payable Employees’ compensation and directors’ remuneration payable Construction payable Others	December31,2022 311,951 $ 57,609 165,049 135,375 669,984 $	December31,2021
		219,628 $ 35,900 - 99,155
		354,683 $

~29~

(8) Pensions

A. Defined benefit plan
(a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the 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 of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 4% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.
(b) The amounts recognised in the balance sheet are as follows:

		December	31,2022		December	31,2021
Present value of defined benefit obligations		$	94,324		$	117,131
Fair value of plan assets	(		54,744)	(		60,200)
Net defined benefit liability (shown as “other
non-current liabilities”)		$	39,580		$	56,931

~30~

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

		Present value of	Present value of
			defined benefit		Fair value of			Net defined
			obligations		planassets			benefitliability
2022
At January 1		$	117,131	($	60,200)		$	56,931
Interest expense (income)			586	(	301)			285
			117,717	(	60,501)			57,216
Remeasurements:
Actuarial gain			-	(	4,708)	(		4,708)
Change in financial
assumptions	(		6,231)		-	(		6,231)
Experience adjustments			1,983		-			1,983
	(		4,248)	(	4,708)	(		8,956)
Pension fund contribution			-	(	8,680)	(		8,680)
Paid pension	(		19,145)		19,145			-
At December 31		$	94,324	($	54,744)		$	39,580
		Present value of
			defined benefit		Fair value of			Net defined
			obligations		planassets			benefitliability
2021
At January 1		$	122,611	($	59,700)		$	62,911
Interest expense (income)			368	(	179)			189
			122,979	(	59,879)			63,100
Remeasurements:
Actuarial gain			99	(	886)	(		787)
Change in financial
assumptions	(		2,012)		-	(		2,012)
Experience adjustments			3,090		-			3,090
			1,177	(	886)			291
Pension fund contribution			-	(	6,460)	(		6,460)
Paid pension	(		7,025)		7,025			-
At December 31		$	117,131	($	60,200)		$	56,931

(d) 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 utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation 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 securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual

~31~

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 is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2022 and 2021 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

(e) The principal actuarial assumptions used were as follows:

				Yearended	Yearended	December31	December31
				2022			2021
Discount rate					1.30%		0.50%
Future salary increases					3.00%		3.00%

For the years ended December		31, 2022 and 2021, future mortality				rate was estimated base
on the 6th Taiwan Standard Ordinary Experience Mortality Table.
Because the main actuarial assumption changed, the present value of defined							benefit ob	ligatio
is affected. The analysis	was as follows:
		Discount rate			Future salaryincreases
	Increase 0.25%		Decrease0.25%		Increase	0.25%	Decrease	0.25%
December 31, 2022
Effect on present value of
defined benefit obligation	($	1,827)	$	1,883	$	1,623	($	1,586)
		Discount rate			Future salaryincreases
	Increase0.25%		Decrease 0.25%		Increase	0.25%	Decrease	0.25%
December 31, 2021
Effect on present value of
defined benefit obligation	($	2,324)	$	2,398	$	2,053	($	2,004)

For the years ended December 31, 2022 and 2021, future mortality rate was estimated based on the 6th Taiwan Standard Ordinary Experience Mortality Table.

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

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(f) Expected contributions to the defined benefit pension plan of the Group for the year ending December 31, 2023 amount to $4,450.
(g) As of December 31, 2022, the weighted average duration of the retirement plan is 8 years. The analysis of timing of the future pension payment was as follows:

~32~

Within 1 year 1-2 year(s) 2-5 years Over 5 years	8,651 $ 14,178 13,117 31,742
	67,688 $

B. Defined contribution plans

(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount not lower than 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.
(b) Other overseas companies have a defined contribution plan in accordance with the local regulations, and contributions to endowment insurance and pension reserve are based on employees’ salaries and wages. Other than the monthly contributions, the Group has no further obligations.
(c) For the aforementioned pension plan, the Group recognised pension costs of $29,635 and $27,879 for the years ended December 31, 2022 and 2021, respectively.

(9) Share capital

The Company’s authorised capital was $2,500,000. As of December 31, 2022, the Company’s issued and outstanding capital was $2,362,160. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows (in thousands):

2022 2021 At January 1 and December 31 236,216 236,216

(10) Capital surplus

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

(11) Retained earnings

A. Under the Company’s Articles of Incorporation, the dividend policy of the Company is based on the Company’s future capital expenditure budget and capital requirements. Dividends shall be appropriated from accumulated distributable earnings, and the distribution amount shall not be

~33~

lower than 60% of accumulated distributable earnings, of which cash dividends shall not be lower than 50% of the total dividends distributed. The current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ 1osses and then 10% of the remaining amount shall be set aside as legal reserve until the amount of legal reserve is equal to the amount of total capital. After the provision or reversal of special reserve, the remaining earnings constitute the distributable earnings of the current year. The appropriation of the remaining earnings along with the unappropriated earnings of prior years shall be proposed by the Board of Directors and approved by the shareholders at the shareholders’ meeting.

B. The appropriations of 2021 and 2020 earnings had been resolved at the stockholders’ meeting on May 25, 2022 and July 7, 2021, respectively. Details are summarised below:

May 25, 2022 and	July 7, 2021, respectively. Details are summarised below:	July 7, 2021, respectively. Details are summarised below:
Legal reserve Special reserve Cash dividends	Dividends per Dividends per Amount share(in dollars) Amount share(in dollars) 118,476 $ 108,921 $ 11,153 $ 10,061) ($ 779,513 $ 3.3 $ 779,513 $ 3.3 $ YearendedDecember31 2021 2020
	Amount 118,476 $ 11,153 $ 779,513 $	Dividends per share(in dollars)
		3.3 $

C. The appropriations of 2022 earnings as proposed by the Board of Directors on February 22, 2023 were as follows:

ere as follows:
		YearendedDecember31,2022
				Dividends per
		Amount	share(in dollars)
Legal reserve	$	193,044
Special reserve	($	19,658)
Cash dividends	$	1,062,972	$	4.5

As of the report date, the abovementioned appropriations of 2022 earnings have not yet been resolved by the stockholders.

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

~34~

(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate-1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently.

(12) Sales revenue

Revenue from contracts with customers

	Year ended	December 31	December 31
	2022		2021
$	6,708,832	$	5,606,690

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services at a point in time in the following major geographical regions.

Asia America Europe Others	Year ended December 31
	2022 2021 5,628,381 $ 5,009,618 $ 790,996 384,215 240,471 164,456 48,984 48,401 6,708,832 $ 5,606,690 $

B. Contract liabilities

The Group has recognised the following revenue-related contract liabilities:

Contract liabilities	December31,2022 55,567 $	December31,2021 76,577 $	January1,2021
			24,302 $

For the years ended December 31, 2022 and 2021, the Group’s contract liabilities on January 1, 2022 and 2021 were realised to revenue amounting to $75,510 and $24,210, respectively.

(13) Other income

Other income
Rental income Other income	Year ended December31
	2022 310 $ 23,479 23,789 $	2021
		4,726 $ 21,354
		26,080 $

~35~

(14) Other gains and losses

Gains on disposal of property, plant and equipment Net currency exchange gains (losses) Other gains and losses

(15) Expenses by nature

Employee benefit expense Depreciation charges on property, plant and equipment and right-of-use assets Amortisation charges on intangible assets

==> picture [224 x 252] intentionally omitted <==

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

Year ended December 31
2022 2021
$ 7,700 $ 4,240
264,144 ( 37,348)
( 2,010) ( 87)
$ 269,834 ($ 33,195)
Year ended December 31
2022 2021
$ 1,283,178 $ 1,090,390
125,571 123,081
15,174 14,654
$ 1,423,923 $ 1,228,125
----- End of picture text -----

(16) Employee benefit expense

Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses	Year ended December 31	Year ended December 31
	2022 1,111,560 $ 95,161 29,920 46,537 1,283,178 $	2021
		935,470 $ 83,812 28,068 43,040
		1,090,390 $

A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be lower than 1% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.
B. For the years ended December 31, 2022 and 2021, employees’ compensation was accrued at $38,022 and $23,694, respectively; while directors’ remuneration was accrued at $19,587 and $12,206, respectively. The aforementioned amounts were recognised in salary expenses. The employees’ compensation and directors’ remuneration were estimated and accrued based on the distributable profit of current year for the years ended December 31, 2022 and 2021 and the percentage as prescribed in the Company’s Articles of Incorporation.

The employees’ compensation and directors’ remuneration for 2022 and 2021 amounted to $38,022 and $23,694, $19,587 and $12,206, respectively, as resolved by the Board of Directors on February 22, 2023 and February 23, 2022 were in agreement with those amounts recognised in the 2022 and 2021 financial statements, respectively.

~36~

Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(17) Income tax

A. Income tax expense
(a) Components of income tax expense:

Current tax: Current tax on profit for the year Prior year income tax underestimation Tax on undistributed earnings Total current tax Deferred tax: Origination and reversal of temporary differences Total deferred tax Income tax expense	2022 2021 470,098 $ 293,840 $ 17,001 21,358 13,781 10,542 500,880 325,740 31,483 46,708 31,483 46,708 532,363 $ 372,448 $ YearendedDecember31	2022 2021 470,098 $ 293,840 $ 17,001 21,358 13,781 10,542 500,880 325,740 31,483 46,708 31,483 46,708 532,363 $ 372,448 $ YearendedDecember31
		325,740
		46,708
		46,708
		372,448 $

(b) The income tax expense (benefit) relating to components of other comprehensive income is as follows:

as follows:
Currency translation differences	Year ended December31
	2022 2021 4,915 $ 2,788) ($	2021

B. Reconciliation between income tax expense and accounting profit

			Year ended December 31	Year ended December 31	Year ended December 31	Year ended December 31
			2022			2021
Income tax calculated by applying statutory
rate to the profit before tax		$	522,447		$	370,874
Effect from investment tax credits	(		20,866)	(		30,326)
Prior year income tax underestimation			17,001			21,358
Tax on undistributed earnings			13,781			10,542
Income tax expense		$	532,363		$	372,448

~37~

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

						2022	2022
							Recognised
					Recognised		in other
					in		comprehensive
			January1		profit or loss		income	December31
Temporary differences:
- Deferred tax assets:
Provision for contingent
service cost/warranty	$		7,285	($	4,738)	$	-	$	2,547
Unrealised foreign
exchange loss			181	(	181)		-		-
Unrealised gross profit			20,867		2,466		-		23,333
Allowance for
uncollectible accounts			1,316		443		-		1,759
Allowance for inventory
valuation losses			26,905		4,068		-		30,973
Unrealised reserve for
lending product and
rework			698	(	8)		-		690
Accrued pension
liabilities			11,385	(	3,470)		-		7,915
Unused compensated
absences			4,847		71		-		4,918
Currency translation
differences			6,241		-	(	4,915)		1,326
Others			996		-		-		996
	$		80,721	($	1,349)	($	4,915)	$	74,457
-Deferred tax liabilities:
Unrealised exchange gain		$	-	($	5,738)	$	-	($	5,738)
Recognised investment
income accounted for
under equity method	(		176,538)	(	29,329)		-	(	205,867)
Book-tax difference of
depreciation charges on
fixed assets	(		17,619)		4,939		-	(	12,680)
Others	(		11)	(	6)		-	(	17)
	($		194,168)	($	30,134)	$	-	($	224,302)

~38~

					2021	2021
						Recognised
				Recognised		in other
				in		comprehensive
		January1		profit or loss		income		December31
Temporary differences:
- Deferred tax assets:
Provision for contingent
service cost/warranty	$	7,419	($	134)	$	-	$	7,285
Unrealised foreign
exchange loss		5,317	(	5,136)		-		181
Unrealised gross profit		29,671	(	8,804)		-		20,867
Allowance for
uncollectible accounts		2,202	(	886)		-		1,316
Allowance for inventory
valuation losses		24,560		2,345		-		26,905
Unrealised reserve for
lending product and
rework		849	(	151)		-		698
Accrued pension
liabilities		11,893	(	508)		-		11,385
Unused compensated
absences		4,475		372		-		4,847
Currency translation
differences		3,453		-		2,788		6,241
Others		781		215		-		996
	$	90,620	($	12,687)	$	2,788	$	80,721
-Deferred tax liabilities:
Recognised investment
profit accounted for
under equity method	($	136,920)	($	39,618)	$	-	($	176,538)
Book-tax difference of
depreciation charges on
fixed assets	(	23,121)		5,502		-	(	17,619)
Others	(	106)		95		-	(	11)
	($	160,147)	($	34,021)	$	-	($	194,168)

The Group had no significant unused tax losses not recognised as deferred tax assets and deductible temporary differences.

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

~39~

(18) Earnings per share

Earnings per share
		Year	endedDecember31,	2022
			Weighted average
			number of
			ordinary shares
			outstanding
			(shares in	Earnings per share
	Amount aftertax		thousands)	(in	dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent	$	1,921,485	236,216	$	8.13
Diluted earnings per share
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation		-	652
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares	$	1,921,485	236,868	$	8.11
		Year	ended December31,	2021
			Weighted average
			number of
			ordinary shares
			outstanding
			(shares in	Earnings per share
	Amount aftertax		thousands)	(in	dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent	$	1,185,054	236,216	$	5.02
Diluted earnings per share
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation		-	459
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares	$	1,185,054	236,675	$	5.01
As employees’ compensation could be distributed in the form of stock, the diluted EPS computation
shall include those estimated shares that		would increase from employees’		stock compensation
issuance in the calculation of the weighted-average number of common shares outstanding during
the reporting year, taking into account the dilutive effect of stock compensation					on potential

~40~

common shares.

(19) Supplemental cash flow information

pplemental cash flow information
Purchase of property, plant and Less: Ending balance of payable on equipment Cash paid during the year
		2022
	832,593 $ 165,049) ( 667,544 $		138,506 $ - 138,506 $

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

The Company’s shares are widely held. The Company d/oes not have an ultimate parent and ultimate controlling party.

(2) Key management compensation

Salaries and other short-term employee benefits Post-employment benefits	Year ended December31	Year ended December31
	2022 72,151 $ 1,382 73,533 $	2021
		51,177 $ 1,335
		52,512 $

A. Salaries and other short-term employee benefits include regular wages, special responsibility allowances, various bonuses, service execution fees, directors’ remuneration and employees’ compensation, etc.
B. Post-employment benefits represent pension costs.

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset		December31,2022 December31,2021 Purpose 577,252 $ 577,252 $ Security for lines of credit 53,446 55,283 " 630,698 $ 632,535 $ Bookvalue
		December31,2022 577,252 $ 53,446 630,698 $
Property, plant and equipment - Land - Buildings and structures

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

On May 6, 2021, the Company entered into a contract with Lee Ming Construction Co., Ltd. for the construction of the second-phase plant on its own land in Guishan Dist Huaya Section as approved by the Board of Directors on May 5, 2021. The total price of the construction was $1,828,800 (tax included). As of December 31, 2022, the Company has paid $747,065 and the amount billed but not yet paid

~41~

amounted to $165,049.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

On February 22, 2023, the Board of Directors resolved the following items:
A. Appropriations of earnings as described in Note 6(11) C.
B. In order to expand to new markets in Mexico, provide services to Taiwanese customers and engage in business activities on behalf of the head office, such as acting as a liaison office, and providing consulting and after-sale services, the Company plans to establish an overseas stronghold in Mexico. The Chairman has been authorised to handle the establishment of a new company (including investment structure and stronghold types) with a total investment of up to USD 500 thousand in accordance with domestic and local regulations.

12. OTHERS

(1) Capital management

The Group’s main objectives when managing capital are to ensure solid and good capital ratio in order to support operations and to provide maximum returns for shareholders. The Group manages and adjusts capital structure based on economic situation and debt ratio, and achieves the purpose of maintaining and adjusting capital structure possibly by adjusting dividend payment or shares issuance.

~42~

(2) Financial instruments

A. Financial instruments by category

0 Financial assets Cash and cash equivalents Financial assets at amortised cost Contract assets Notes receivable Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Notes payable Accounts payable Other payables Lease liabilities (including current portion) Financial liabilities at amortised cost Financial assets at amortised cost	December31,2022 1,148,655 $ 285,090 1,443,713 69,748 1,513,877 37,872 12,675 4,511,630 $ 17,172 $ 482,981 669,984 1,170,137 $ 45,191 $	December31,2021
		1,226,378 $ 196,790 1,007,996 37,073 1,325,315 32,136 10,075 3,835,763 $
		30,493 $ 916,403 354,683
		1,301,579 $
		56,698 $

B. Financial risk management policies

The Group adopts an overall risk management and control system to identify and measure a variety of financial risks including market risk, credit risk, liquidity risk and cash flow interest rate risk. This allows the management of the Group to effectively control and measure market risk, credit risk, liquidity risk and cash flow interest risk.

C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD, RMB, JPY and EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
ii. The Group’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~43~

		December	31,2022	31,2022
Foreign currency amount (inthousands) 65,584 $ 30,348 3,457 $ 5,208 371 236,672 1,287	Exchangerate 30.71 4.41 30.71 4.41 32.72 0.23 1,249.90	Book value (NTD) 2,014,088 $ 133,773 106,153 $ 22,959 12,152 55,003 39,521	SensitivityAnalysis
			Degree of variation 1% 1% 1% 1% 1% 1%	Effect on profit of loss 20,141 $ 1,338 1,062 $ 230 122 550 395	Effect on other comprehensive income
					- $ - - $ - - - -

~44~

Foreign currency amount (inthousands) (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 46,876 $ RMB:NTD 92,710 JPY:NTD 52,305 Financial liabilities Monetary items USD:NTD 3,667 $ RMB:NTD 3,933 JPY:NTD 148,124	Exchangerate 27.68 4.34 0.24 27.68 4.34 0.24	Book value (NTD) 1,297,528 $ 402,732 12,579 101,503 $ 17,085 35,624 December	Degree of Effect on profit variation of loss 1% 12,975 $ 1% 4,027 1% 126 1% 1,015 $ 1% 171 1% 356 31,2021 SensitivityAnalysis	Effect on other comprehensive income
				- $ - - - $ - -

~45~

iii. Total exchange gain (loss), including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2022 and 2021, amounted to $264,144 and ($37,348), respectively.

Price risk

The Group has no equity instruments held for trading; thus, the Group has no price risk.

Cash flow and fair value interest rate risk

The Group has no borrowings; thus, the Group has no cash flow and fair value interest rate risk.

(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of financial assets stated at amortised cost.
ii. The Group’s credit risk management policy is that for banks and financial institutions, only institutions with good credit rating are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing 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 utilisation of credit limits is regularly monitored.
iii. In accordance with the internal management policy of the Group, if the contract payments were past due over 120 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iv. In accordance with the internal management policy of the Group, the default occurs when the contract payments are past due over 365 days.
v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
- (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
- (ii) The disappearance of an active market for that financial asset because of financial difficulties;
- (iii) Default or delinquency in interest or principal repayments.
vi. The Group classifies customer’s accounts receivable and contract assets in accordance with credit risk on trade. The Group applies the modified approach using the provision matrix based on the loss rate methodology to estimate expected credit loss.

~46~

vii. The Group writes off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.
viii.The Group’s notes receivable had no significant loss allowance. The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable and contract assets. On December 31, 2022 and 2021, the provision matrix and loss rate methodology is as follows:

Both Group A and Group B that exceeded credit facilities:

December 31, 2022	91~180 days past due	181~365 days past due	Total
	25.00% 14,620 $ 1,928 91~180 days past due	40.00% 9,087 $ 1,540 181~365 days past due	1,204,668 $ 6,174 Total
Expected loss rate Total book value Loss allowance December 31, 2021
	25.00% 248 $ 62	40.00% 12,303 $ 4,921	485,404 $ 5,355
Expected loss rate Total book value Loss allowance

Group B:

Expected loss rate Total book value Loss allowance	December31,2022 0.03% 1,764,562 $ 5,466	December31,2021
		0.03% 1,853,541 $ 279

Group A: Customers excluding Group B.

Group B: Domestic and foreign clients that have good operating conditions, high degree of financial transparency, the payment status of past transactions is normal and rated with optimized internal credit rating. The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable and contract assets. The expected default rate used was 0.03%.

~47~

ix. Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable and contract assets are as follows:

						2022
		Accounts	receivable			Contract assets			Total
At January 1		$	5,332		$	302		$	5,634
Provision for
impairment			492			5,442			5,934
Effect of exchange
rate changes			72			-			72
At December 31		$	5,896		$	5,744		$	11,640
						2021
		Accounts	receivable			Contract assets			Total
At January 1		$	10,585		$	55		$	10,640
Provision for
impairment			-			248			248
Reversal of
provision for
impairment	(		2,779)			-	(		2,779)
Effect of exchange
rate changes	(		2,474)	(		1)	(		2,475)
At December 31		$	5,332		$	302		$	5,634

(c) Liquidity risk

i. Cash flow forecasting is performed and aggregated by the Group’s treasury. Surplus cash held by the operating entities over and above balance required for working capital management are invested in interest bearing current accounts and time deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.
ii. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31, 2022 Notes payable Accounts payable Other payables Lease liabilities Non-derivative financial liabilities:	Less than 1year $ 17,172 482,981 669,984 26,935	Over 1year
		$ - - - 31,891

~48~

Non-derivative financial liabilities:

December 31, 2021 Notes payable Accounts payable Other payables Lease liabilities	Less than 1year $ 30,493 916,403 354,683 30,496	Over 1year $ - - - 23,489

(3) Fair value information

A. The Group has no financial instruments measured at fair value by valuation method.
B. The carrying amounts of cash and cash equivalents, financial assets at amortised cost, notes receivable, accounts receivable (including contract assets), other receivables, guarantee deposits paid, notes payable, accounts payable and other payables are approximate to their fair values.

(4) Other matter

In response to the Covid-19 outbreak and the government's various pandemic prevention measures, the Group provided the applications of work from home for employees, and employees were advised to avoid movement between different sites as much as possible. Also, the Group has implemented several prevention control measures such as conducting meetings online and managing related issues accordingly. The pandemic had no significant impact on the Group's operations and business for the year ended December 31, 2022.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loan to others: Refer to table 1.
B. Provisions of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: Refer to table 2.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Refer to table 3.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Refer to table 4.

~49~

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Refer to table 5.

(3) Information on investments in Mainland China

A. Basic information: Refer to table 6.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Refer to Table 3 to 4.

(4) Major shareholders information

Major shareholders information: Refer to Table 7.

14. SEGMENT INFORMATION

(1) General information

The Group is primarily engaged in the design, assembly, manufacture, sales, repairs and maintenance of automated inspection and testing equipment. The Group operates business only in a single industry. The Board of Directors who allocates resources and assesses performance of the Group as a whole, has identified that the Group has only one reportable operating segment.

(2) Measurement of segment information

The accounting policies of the operating segments and the Group are the same. The Group uses the operating profit as the measurement for operating segment profit and the basis of performance assessment.

(3) Information about segment profit or loss, assets and liabilities

The segment information provided to the chief operating decision maker for the reportable segments is as follows:

is as follows:
Revenue from external customers Segment profit	YearendedDecember31
	2022 6,708,832 $ 2,153,482 $	2021
		5,606,690 $
		1,558,100 $

(4) Reconciliation for segment income (loss)

Net profit (loss) of segments reported to the chief operating decision maker is measured in a manner consistent with revenues and expenses in the income statement. A reconciliation of segment profit (loss) to profit (loss) before tax and discontinued operations is provided as follows:

~50~

Reportable segments income Unallocated profit or loss: Non-operating income and expenses Income before tax from continuing operations	2022 2021 2,153,482 $ 1,558,100 $ 300,366 598) ( 2,453,848 $ 1,557,502 $ Year ended December31

(5) Information on products and services

External customer revenue mainly arose from design, assembly and manufacture of automatic inspection equipment and sales and repair business.

Details of revenue are as follows:

inspection equipment and sales and repair business. Details of revenue are as follows:
Sales revenue Sales of services Total	2022 2021 6,551,067 $ 5,441,929 $ 157,765 164,761 6,708,832 $ 5,606,690 $ Year ended December31
		5,606,690 $

(6) Geographical information

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

==> picture [469 x 136] intentionally omitted <==

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

Year ended December 31
2022 2021
Revenue Non-current assets Revenue Non-current assets
Taiwan $ 1,424,634 $ 2,864,173 $ 936,197 $ 2,078,395
Asia 4,203,747 207,617 4,073,421 223,629
America 790,996 8,809 384,215 889
Europe 240,471 6,707 164,456 8,145
Others 48,984 - 48,401 -
Total $ 6,708,832 $ 3,087,306 $ 5,606,690 $ 2,311,058
----- End of picture text -----

(7) Major customer information

There are no customers accounting for more than 10% of the Group’s operating revenues for the years ended December 31, 2022 and 2021.

~51~

Test Research, Inc. and Subsidiaries

Loans to others

Year ended December 31, 2022

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Maximum outstanding Amount of Collateral General Is a balance during the Balance at Actual transactions Reason for Allowance Limit on loans Ceiling on ledger related year ended December 31, December amount Interest Nature of with the short-term for doubtful granted to a total loans No. Creditor Borrower account party 2022 31, 2022 drawn down rate loan borrower financing accounts Item Value single party granted Footnote 1 TRI Electronic TRI Electronic Other Yes $ 27,036 $ 26,448 $ 26,448 4.75% Short-term $ - Additional $ - None $ - $ 726,688 $ 1,453,375 Note (Shanghai) Limited (Suzhou) Limited receivables financing operating capital

Note:

The Board of Directors resolved to amend TRI Electronic (Shanghai) Limited's policy “Procedures for Provision of Loans” and the policy as follows:

Ceiling on total loans to others: 50% of the creditor's net worth. For business transactions, if for short-term financing purpose, the ceiling on loans shall not exceed 40% of the creditor's net worth. Limit to a single party is RMB 4 million. However, limit on loans for financing granted by and to subsidiaries with the same ultimate parent which directly or indirectly holds 100% of its voting shares shall not exceed 20% of parent company's net worth. Ceiling to the aforementioned single party shall not exceed 10% of parent company's net worth.

Table 1, Page 1

Test Research, Inc. and Subsidiaries

Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more Year ended December 31, 2022

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

If the counterparty is a related party, information as to the last transaction of the real estate is disclosed below:

Relationship Original owner between the Reason for Relationship who sold the original owner Date of the Basis or reference acquisition of real Transaction with the real estate to the and original used in setting the estate and status of Other Real estate acquired by Real estate acquired Date of the event amount Status of payment Counterparty counterparty counterparty the acquirer transaction Amount price the real estate commitments Test Research, Inc. Test Research Linkou plant May 5, 2021 $ 1,828,800 Based on the contract LEE MING None Not applicable Not applicable Not applicable Not applicable Price comparison Expansion of future business and None schedule (Note) CONSTRUCTION CO., and price operational needs LTD. negotiation

Note: As of December 31, 2022, the Company has paid $747,065 (including the payment amounting to $677,570 for the year ended December 31, 2022) and the amount which has been billed but not yet paid amounted to $165,049.

Table 2, Page 1

Test Research, Inc. and Subsidiaries Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more Year ended December 31, 2022

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Differences in transaction terms compared to third party

							Differences in transaction terms compared to third party	Differences in transaction terms compared to third party
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			transactions		Notes/accountsreceivable (payable)		Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Test Research, Inc. TRI Electronic (Shenzhen) Limited Test Research, Inc. TRI Electronic (Suzhou) Limited	TRI Electronic (Shenzhen) Limited Test Research, Inc. TRI Electronic (Suzhou) Limited Test Research, Inc.	Second-tier subsidiary Parent company Second-tier subsidiary Parent company	Sales Purchases Sales Purchases	483,533 $ 483,533 379,898 379,898	8% 100% 6% 100%	90-120 days after acceptance and same with the third parties 90-120 days after acceptance 90-120 days after acceptance and same with the third parties 90-120 days after acceptance	30% to 60% of the standard price offered to third parties Determined by the parent company 30% to 60% of the standard price offered to third parties Determined by the parent company	90-120 days after acceptance and same with the third parties 90-120 days after acceptance 90-120 days after acceptance and same with the third parties 90-120 days after acceptance	Accounts receivable $50,969 Accounts payable $50,969 Accounts receivable $80,349 Accounts payable $80,349	2% 75% 3% 95%	None None None None

Table 3, Page 1

Test Research, Inc. and Subsidiaries

Significant inter-company transactions during the reporting period

Year ended December 31, 2022

Table 4 Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)		Expressed in thousands of NTD (Except as otherwise indicated) Transactions	Expressed in thousands of NTD (Except as otherwise indicated) Transactions	Expressed in thousands of NTD (Except as otherwise indicated) Transactions
				General ledger account	Amount(Note 4)	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 1 2 3 1 4 5 6 7 8	Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. TRI Electronic (Shanghai) Limited TRI Electronic (Shenzhen) Limited TRI Electronic (Suzhou) Limited TRI Electronic (Shanghai) Limited TEST RESEARCH USA, INC. TRI TEST RESEARCH EUROPE GMBH TRI JAPAN CORPORATION TRI MALAYSIA SDN. BHD TEST RESEARCH INNOVATION VIETNAM COMPANY LIMITED	TRI Electronic (Suzhou) Limited TRI Electronic (Shenzhen) Limited TRI JAPAN CORPORATION TRI KOREA CO., Ltd. TRI Electronic (Suzhou) Limited TRI Electronic (Shenzhen) Limited TRI KOREA CO., Ltd. TRI Electronic (Suzhou) Limited Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc.	1 1 1 1 1 1 1 3 2 2 2 2 2 2 2 2	Sales revenue Sales revenue Sales revenue Sales revenue Accounts receivable Accounts receivable Accounts receivable Other receivables Service revenue Service revenue Service revenue Service revenue Service revenue Service revenue Service revenue Service revenue	379,898 $ 483,533 10,237 42,731 80,349 50,969 39,521 26,448 69,641 97,431 10,392 46,007 36,804 16,064 14,796 19,629	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 5 Notes 6 and 7 Notes 6 and 7 Notes 6 and 7 Notes 6 and 7 Notes 6 and 7 Notes 6 and 7 Notes 6 and 7 Notes 6 and 7	6 7 - 1 1 1 - - 1 1 - 1 1 - - -

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:
(1) Parent company is ‘0’.
(2) The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between transaction company and counterparty is classified into the following two categories:
(1) Parent company to subsidiary.
(2) Subsidiary to parent company.
(3) Subsidiary to subsidiary.

Note 3: Selling prices to the parent company and the Mainland China investees are determined based on 30% to 60% of the standard sales price. The credit term is 90 to 120 days after acceptance and was the same with the third parties.

Note 4: Only related party transactions in excess of $10,000 are disclosed. Corresponding transactions from the other side are not disclosed.
Note 5: Loans to others.
Note 6: Companies signed agency agreements with subsidiaries and second-tier subsidiary, and the subsidiaries and second-tier subsidiary act as product sales agent.
Note 7: Commission revenue was based on agency contract, others were based on agreed conditions.
Note 8: The above inter-company transactions between companies within the Group are eliminated when preparing consolidated financial statements.

Table 4, Page 1

Test Research, Inc. and Subsidiaries

Expressed in thousands of NTD (Except as otherwise indicated)

Information on investees Year ended December 31, 2022

Table 5

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December31,2022	as at December31,2022	Net profit (loss) of the investee for the year ended December 31, 2022	Investment income (loss) recognised by the Company for the year ended December, 2022	Footnote
				Balance as at December 31, 2022	Balance as at December 31, 2021	Number of shares	Ownership (%)	Bookvalue
Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. Test Research, Inc. TRI MALAYSIA SDN. BHD	TRI INVESTMENTS LIMITED TEST RESEARCH USA, INC. TRI TEST RESEARCH EUROPE GMBH TRI JAPAN CORPORATION TRI MALAYSIA SDN. BHD TRI KOREA CO., Ltd. TEST RESEARCH INNOVATION VIETNAM COMPANY LIMITED	Samoa United States Germany Japan Malaysia South Korea Vietnam	Investment holding Trading Trading Trading Trading Trading Trading	219,811 $ 61,299 17,679 10,750 2,066 10,591 4,153	219,811 $ 61,299 17,679 10,750 2,066 10,591 4,153	6,724,109 1,518,935 - 720 1,000,000 80,000 -	100 100 100 100 100 100 100	1,102,835 $ 64,518 12,800 18,092 38,042 21,568 16,024	115,610 $ 175) ( 120) ( 5,132 18,153 7,611 10,596	116,043 $ 175) ( 120) ( 5,132 18,153 7,611 10,596	None None Note None None None None

Note: A limited liability company.

Table 5, Page 1

Test Research, Inc. and Subsidiaries

Information on investments in Mainland China - Basic information

Year ended December 31, 2022

Table 6


Table 6 Investee in Mainland China	Main business activities	Paid-in capital (Note 3)	Investment method (Note1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2022 (Note 3)	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December31,2022		Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2022(Note 3)	Net income of investee for the year ended December 31, 2022	Ownership held by the Company (direct or indirect)	Investment income recognised by the Company for the year ended December 31, 2022 (Note2(2)C)	Book value of investments in Mainland China as of December 31, 2022 (Note 5)	Accumulated amount of investment income remitted back to Taiwan as of December31,2022 Expressed in thousands of NTD (Except as otherwise indicated) Footnote
					Remitted to Mainland China	Remitted back to Taiwan
TRI Electronic (Shenzhen) Limited TRI Electronic (Suzhou) Limited TRI Electronic (Shanghai) Limited Companyname	Manufacture and sales of test equipment $ 93,666 Manufacture and sales of test equipment 79,506 Import and export of equipment, consulting and after-sale maintenance service of equipment 119,769 Accumulated amount of remittance from Taiwan to Mainland China as of December31,2022(Note 3)		2 $ 23,033 2 61,420 2 119,769 Investment amount approved by the Investment Commission of the Ministry of EconomicAffairs (MOEA) (Note 3)		$ - $ - - - - - Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA(Note4)		$ 23,033 61,420 119,769	$ 43,792 72,829 ( 1,011)	100 100 100	$ 35,764 72,166 ( 988)	$ 736,869 284,853 81,113	$ - - -
Test Research, Inc.	$ 204,222		$ 273,746		$ 4,360,126

Note 1: Investment methods are classified into the following three categories:

(1) Directly invest in a company in Mainland China.
(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China. (Reinvested through TRI INVESTMENTS LIMITED)
(3) Based on the investees’ financial statements which were not reviewed by audiors.

Note 2: In the ‘Investment income (loss) recognised by the Company for the twelve months ended December 31, 2022’ column:

(1) It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.
(2) Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:
A. The financial statements were audited by international accounting firm which has cooperative relationship with accounting firm in R.O.C.
B. The financial statements were audited by R.O.C. parent company’s CPA.
C. Others.

Note 3: The amount was originally denominated in USD and was translated to NTD at the exchange rate (1:30.71) prevailing at the balance sheet date.

Note 4: The highest of $80,000, 60% of the stockholder's equity and 60% of consolidated net assets.

Note 5: Including net changes of realised and unrealised profit from sales.

Table 6, Page 1

Test Research, Inc. and Subsidiaries

Major shareholders information December 31, 2022

Table 7

Table 7
Name of major shareholders Shares	Number of shares held	Ownership (%)
Chieh-Yuan, Chen	37,889,235	16.04%
Mei-Hsing, Yeh	17,338,054	7.33%
Der-Hsin Investment Co., Ltd.	13,464,174	5.69%

Note 1: The major shareholders information was derived from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation. The share capital reflected in the financial statements may be different from the actual number of shares in dematerialised form due to the difference in the calculation basis.

Note 2: If the aforementioned data contains shares which were held in trust by the shareholders, the data is disclosed as a separate account of the client which was set by the trustee. As for the shareholder who reports share equity as an insider whose shareholding ratio is greater than 10%, in accordance with the Securities and Exchange Act, the shareholding ratio includes the self-owned shares and shares held in trust, and at the same time, the shareholder has the power to decide how to allocate the trust assets. For the information on reported share equity of insider, please refer to the Market Observation Post System.

Table 7, Page 1

AI assistant

TRI — Audit Report / Information 2022

52263_rns_2022-12-22_c5c291be-dea4-4df2-a396-9df721bbcadd.pdf

TEST RESEARCH, INC. AND SUBSIDIARIES

Opinion

Basis for opinion

Key audit matters

Valuation of inventories

Description

How our audit addressed the matter

Cutoff of export revenue recognition of the Company

How our audit addressed the matter

Other matter – Parent company only financial reports

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

Auditors’ responsibilities for the audit of the consolidated financial statements

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021

Equity attributable to owners of the parent

TEST RESEARCH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

TEST RESEARCH, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2022 AND 2021

1. HISTORY AND ORGANISATION

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

(4) Foreign currency translation

(6) Cash equivalents

(7) Financial assets at amortised cost

(8) Accounts receivable, notes receivable and contract assets

(9) Impairment of financial assets

(10) Derecognition of financial assets

－ (11) Leasing arrangements (lessor) operating leases

(12) Inventories

(13) Property, plant and equipment

(15) Intangible assets

(16) Impairment of non-financial assets

(17) Notes and accounts payable

(18) Derecognition of financial liabilities

(19) Offsetting financial instruments

(20) Provisions

(21) Employee benefits

(b) Defined benefit plans

(22) Income tax

(23) Dividends

(24) Revenue recognition

(25) Operating segments

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

(2) Financial assets at amortised cost

(3) Notes receivable, accounts receivable and contract assets

provided in Note 12(2).

(4) Inventories

(5) Property, plant and equipment

－ (6) Leasing arrangements lessee

(7) Other payables

(8) Pensions

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

B. Defined contribution plans

(9) Share capital

(10) Capital surplus

(11) Retained earnings

(12) Sales revenue

B. Contract liabilities

(13) Other income

(14) Other gains and losses

(15) Expenses by nature

(16) Employee benefit expense

(17) Income tax

(18) Earnings per share

common shares.

(19) Supplemental cash flow information

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

TRI Audit Report / Information 2022

`－` (11) Leasing arrangements (lessor) operating leases

`－` (6) Leasing arrangements lessee