Weikeng — Interim / Quarterly Report 2021

Dec 15, 2021

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Stock Code:3033

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Three Months Ended March 31, 2021 and 2020

Address: 11F., No.308, Sec.1, Neihu Rd., Neihu Dist., Taipei City Telephone: (02)2659-0202

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

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Table of contents

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

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) Telephone 電話 + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Fax 傳真 + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) Internet 網址 home.kpmg/tw

Independent Auditors’ Review Report

To the Board of Directors of Weikeng Industrial Co., Ltd.:

Introduction

We have reviewed the accompanying consolidated balance sheets of Weikeng Industrial Co., Ltd. and its subsidiaries as of March 31, 2021 and 2020, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2021 and 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies. 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 International Accounting Standard 34, “ Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standard 65, “ Review of Financial Information Performed by the Independent Auditor of the Entity” . A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Weikeng Industrial Co., Ltd. and its subsidiaries as of March 31, 2021 and 2020, and of its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “ Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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

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The engagement partners on the review resulting in this independent auditors’ review report are Jui-Lan Lo and Yiu-Kwan Au.

KPMG

Taipei, Taiwan (Republic of China) May 13, 2021

Notes to Readers

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

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

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of March 31, 2021 and 2020

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

March 31, 2021, December 31, and March 31, 2020

(Expressed in Thousands of New Taiwan Dollars)

March 31, 2021 Assets Amount % Current assets: 1100 Cash and cash equivalents (note (6)(a)) $ 2,122,475 9 1110 Financial assets at fair value through profit or loss - current (note (6)(b)) 624 - 1170 Notes and accounts receivable, net (note (6)(d)) 11,809,908 52 1200 Other receivables (notes (6)(d), (6)(e) and (7)) 361,883 2 1300 Inventories, net (note (6)(f)) 7,499,402 33 1470 Prepaid expenses and other current assets 271,118 1 22,065,410 97 Non-current assets: 1517 Financial assets at fair value through other comprehensive income－non-current (note (6)(c)) 46,860 - 1600 Property, plant and equipment (note (6)(g)) 133,214 1 1755 Right-of-use assets (note (6)(h)) 174,250 1 1780 Intangible assets 50,397 - 1840 Deferred tax assets 199,706 1 1900 Other non-current assets 75,056 - 679,483 3 Total assets $ 22,744,893 100	December 31, 2020 Amount % 2,486,340 11 624 - 10,679,023 47 912,877 4 7,855,756 34 218,979 1 22,153,599 97 44,822 - 134,770 1 190,179 1 53,665 - 203,229 1 73,566 - 700,231 3 22,853,830 100	March 31, 2020 Amount % 2,378,722 10 474 - 8,546,178 35 2,867,240 12 9,748,219 39 292,296 1 23,833,129 97 45,268 - 145,129 1 247,479 1 55,423 - 211,313 1 76,056 - 780,668 3 24,613,797 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note (6)(i)) 2130 Contract liabilities-current (note (6)(r)) 2170 Notes and accounts payable 2200 Other payables (notes (6)(j) and (7)) 2216 Dividends payable 2230 Current tax liabilities 2280 Current lease liabilities (note (6)(l)) 2300 Other current liabilities Non-current liabilities: 2500 Financial liabilities at fair value through profit or loss－non-current (note (6)(b)) 2530 Convertible bonds payable (note (6)(k)) 2570 Deferred tax liabilities 2580 Non-current lease liabilities (note (6)(l)) 2640 Non-current net defined benefit liabilities (note (6)(n)) 2670 Other non-current liabilities Total liabilities Equity (note (6)(p)): 3100 Ordinary shares 3200 Capital surplus 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest: 3410 Exchange differences on translation of foreign financial statements 3420 Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Total equity Total liabilities and equity	March 31, 2021		December 31, 2020		March 31, 2020 Amount % 11,386,647 46 151,069 1 3,603,389 14 2,656,299 11 212,452 1 95,278 - 125,726 1 235,766 1 18,466,626 75 - - - - 332,618 1 123,569 - 127,527 1 181 - 583,895 2 19,050,521 77 3,677,513 15 884,335 4 864,760 3 138,615 1 207,587 1 (124,488) (1) (85,046) - (209,534) (1) 5,563,276 23 24,613,797 100
			Amount %		Amount %
					9,745,315 43 195,013 1 3,575,860 16 1,246,481 5 - - 43,793 - 112,146 - 313,843 1 15,232,451 66 9,600 - 929,322 4 408,431 2 78,793 - 120,974 1 181 - 1,547,301 7 16,779,752 73 3,677,513 16 941,349 4 890,626 4 229,459 1 700,837 3 (282,193) (1) (83,513) - (365,706) (1) 6,074,078 27 22,853,830 100

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statement of Comprehensive Income

For the three months ended March 31, 2021 and 2020

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

4100 Net sales revenue (note (6)(r) and note (7)) 5000 Cost of sales (note (6)(f)) Gross profit Operating expenses (notes (6)(l), (6)(m), (6)(n), note (7) and (12)): 6100 Selling expenses 6200 Administrative expenses 6450 Expected credit losses (gains) (note (6)(d)) Net operating income Non-operating income and expenses: 7100 Interest income 7010 Other income (note (7)) 7235 Gains (losses) on financial assets (liabilities) at fair value through profit or loss 7230 Foreign currency exchange gains (losses), net (note (6)(t)) 7050 Financial costs (note (6)(l)) 7590 Miscellaneous disbursements 7900 Profit before tax 7950 Income tax expenses (note (6)(o)) 8200 Profit Other comprehensive income: 8310 Items that will not be reclassified to profit or loss 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8349 Less: income tax relating to components of other comprehensive income that will not be reclassified to profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Less: income tax relating to components of other comprehensive income that may be reclassified to profit or loss (note (6)(o)) Other comprehensive income, net 8500 Comprehensive income Earnings per share: (note (6)(q)) 9750 Basic earnings per share 9850 Diluted earnings per share

For the three months ended March 31 2021 2020 Amount % Amount % $ 15,823,146 100 11,561,510 100 14,870,236 94 10,880,484 94 952,910 6 681,026 6 436,095 3 353,035 3 130,868 1 103,402 1 (11,829) - 11,171 - 555,134 4 467,608 4 397,776 2 213,418 2 744 - 1,145 - 10,140 - 13,998 - 2,500 - 1,653 - 14,027 - (22,684) - (43,678) - (82,983) (1) (144) - (143) - (16,411) - (89,014) (1) 381,365 2 124,404 1 107,311 1 33,527 - 274,054 1 90,877 1 2,038 - 106 - - - - - 2,038 - 106 - 17,373 - 24,775 - 3,474 - 4,955 - 13,899 - 19,820 - 15,937 - 19,926 - $ 289,991 1 110,803 1 $ 0.75 0.25 $ 0.65 0.25

2021 Amount % $ 15,823,146 100 14,870,236 94 952,910 6 436,095 3 130,868 1 (11,829) - 555,134 4 397,776 2 744 - 10,140 - 2,500 - 14,027 - (43,678) - (144) - (16,411) - 381,365 2 107,311 1 274,054 1 2,038 - - - 2,038 - 17,373 - 3,474 - 13,899 - 15,937 - $ 289,991 1 $ 0.75 $ 0.65

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statement of Changes in Equity

For the three months ended March 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2020 Appropriation and distribution of retained earnings: Cash dividends Consolidated net income for the three months ended March 31, 2020 Other comprehensive income for the three months ended March 31, 2020 Total comprehensive income for the three months ended March 31, 2020 Balance at March 31, 2020 Balance at January 1,2021 Appropriation and distribution of retained earnings: Cash dividends Consolidated net income for the three months ended March 31, 2021 Other comprehensive income for the three months ended March 31, 2021 Total comprehensive income for the three months ended March 31, 2021 Balance at March 31, 2021	Ordinary shares $ 3,677,513 - - - - $ 3,677,513 $ 3,677,513 - - - - $ 3,677,513	Capital surplus 884,335 - - - - 884,335 941,349 - - - - 941,349	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 864,760 138,615 329,162 - - (212,452) - - 90,877 - - - - - 90,877 864,760 138,615 207,587 890,626 229,459 700,837 - - (494,508) - - 274,054 - - - - - 274,054 890,626 229,459 480,383	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 864,760 138,615 329,162 - - (212,452) - - 90,877 - - - - - 90,877 864,760 138,615 207,587 890,626 229,459 700,837 - - (494,508) - - 274,054 - - - - - 274,054 890,626 229,459 480,383	Other equity interest Exchange differences on Unrealized gains (losses) from financial assets measured at fair value translation of foreign financial statements through other comprehensive income (144,308) (85,152) - - - - 19,820 106 19,820 106 (124,488) (85,046) (282,193) (83,513) - - - - 13,899 2,038 13,899 2,038 (268,294) (81,475)	Total equity
					Exchange differences on translation of foreign financial statements (144,308) - - 19,820 19,820 (124,488) (282,193) - - 13,899 13,899 (268,294)
			Legal reserve 864,760 - - - - 864,760 890,626 - - - - 890,626	Special reserve 138,615 - - - - 138,615 229,459 - - - - 229,459
						5,664,925 (212,452) 90,877 19,926 110,803 5,563,276 6,074,078 (494,508) 274,054 15,937 289,991 5,869,561

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statement of Cash Flows

For the three months ended March 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit (gains) losses Net (gains) losses on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Others Changes in operating assets and liabilities: Decrease (increase) in financial assets at fair value through profit or loss Decrease (increase) in notes and accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepaid expenses and other current assets Increase (decrease) in notes and accounts payable Increase (decrease) in other payable Increase (decrease) in contract liabilities and other current liabilities Others Total changes in operating assets and liabilities Total adjustments Cash flow from (used in) operations Interest received Interest paid Income taxes paid Net cash flows from (used in) operating activities Cash flows from (used in) investing activities: Acquisition of property, plant and equipment Decrease (increase) in refundable deposits Acquisition of intangible assets Increase in prepayments for business facilities Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term loans Increase (decrease) in guarantee deposits received Payment of lease liabilities Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

For the three months ended March 31, 2021 2020 $ 381,365 124,404 39,236 38,779 6,790 5,568 (11,829) 11,171 (2,500) (1,653) 43,678 82,983 (744) (1,145) - 2 74,631 135,705 - (2,339) (1,119,056) (333,896) 550,994 (1,623,401) 356,354 730,781 (52,090) (15,544) (263,798) (1,244,399) 407,538 (1,712,829) (734,892) 1,254,363 31,410 74,012 (1,660) (1,480) (297,604) (385,934) (561,402) (1,630,333) (486,771) (1,494,628) (105,406) (1,370,224) 744 1,145 (40,582) (86,642) (10,452) (25,865) (155,696) (1,481,586) (1,767) (88) (1,340) (276) (5,570) (9,302) (150) - (8,827) (9,666) (180,844) 1,541,794 - (30) (35,817) (32,519) (216,661) 1,509,245 17,319 24,368 (363,865) 42,361 2,486,340 2,336,361 $ 2,122,475 2,378,722

2021 $ 381,365 39,236 6,790 (11,829) (2,500) 43,678 (744) - 74,631 - (1,119,056) 550,994 356,354 (52,090) (263,798) 407,538 (734,892) 31,410 (1,660) (297,604) (561,402) (486,771) (105,406) 744 (40,582) (10,452) (155,696) (1,767) (1,340) (5,570) (150) (8,827) (180,844) - (35,817) (216,661) 17,319 (363,865) 2,486,340 $ 2,122,475

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of March 31, 2021 and 2020

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

March 31, 2021 and 2020

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

(1) Company history

Weikeng Industrial Co., Ltd. (the Company) was incorporated in Taiwan as a company limited by shares in January 1977 and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company’ s registered office is 11F, No.308 Sec. 1, Neihu Rd., Neihu Dist., Taipei City. The major activities of the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) are the purchase and sale of electronic components and computer peripherals, technical service, and the import-export trade business. Please refer to note (4)(b) for related information. The Company’s common shares were listed on the Taiwan Stock Exchange (TSE).

(2) Approval date and procedures of the consolidated financial statements

These consolidated financial statements were reported to the board of directors and issued on May 13, 2021.

(3) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• －

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform Phase 2”

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

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

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

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

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

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• －

• ●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

(Continued)

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WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

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

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

(4) Summary of significant accounting policies

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the preparation and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed and issued into effect by FSC, and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC (hereinafter referred to IFRS endorsed by the FSC) for a complete set of the annual consolidated financial statements.

Except the following accounting policies mentioned below, the significant accounting policies adopted in the consolidated financial statement are the same as those in the consolidated financial statement for the year ended December 31, 2020. For the related information, please refer to note (4) of the consolidated financial statement for the year ended December 31, 2020.

(b) Basis of Consolidation

List of subsidiaries in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Nature of operation	Shareholding	Shareholding
			March 31, 2021	December 31, 2020 March 31, 2020 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100
The Company 〃 〃 WKI 〃 WKS	Weikeng International Co., Ltd. (WKI) Weikeng Technology Co., Ltd. (WTC) Weikeng Technology Pte. Ltd. (WTP) Weikeng International (Shanghai) Co., Ltd. (WKS) Weitech International Co., Ltd. (Weitech) Weikeng Electronic Technology (Shanghai) Co., Ltd. (WKE)	Electronic components computer peripherals products distribution and technical support Electronic components and technical support 〃 Electronic components computer peripherals products distribution and technical support Import and export trade of electronic components Electronic technology development and technical advisory	% 100 % 100 % 100 % 100 % 100 % 100

(Continued)

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WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of IAS 34 “Interim Financial Reporting”.

Income tax expenses for the period are best estimated by multiplying the pre-tax income for the interim reporting period using the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rate that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

(d) Employee benefits

The pension cost in the interim period was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events.

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

The preparation of the consolidated financial statements in conformity with the Regulations and IFRSs (in accordance with IAS 34 "Interim Financial Reporting" and endorsed by the FSC) requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The preparation of the consolidated financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, 2020. For related information, please refer to note (5) of the consolidated financial statements for the year ended December 31, 2020.

(6) Explanation of significant accounts

Except for the following disclosures, there were no material differences in the disclosures of significant accounts between the interim consolidated financial statements for the current period and the 2020 consolidated financial statements. Please refer to note (6) of the 2020 annual consolidated financial statements.

(a) Cash and cash equivalents

March 31, 2021 Cash on hand $ 497 Checking accounts and demand deposits 2,121,978 $ 2,122,475	December 31, 2020 493 2,485,847 2,486,340	March 31, 2020
		496 2,378,226
		2,378,722

(Continued)

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WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Please refer to Note (6)(t) for the exchange rate, interest rate risk and sensitivity analysis of the financial assets of the Group.

• (b) Financial assets and liabilities at fair value through profit or loss

Financial assets measured at fair value through profit or loss－current: Non-derivative financial assets Stock listed on domestic markets Financial liabilities at fair value through profit or loss－non-current: Convertible bonds embedded options	March 31, 2021 $ 624 March 31, 2021 $ 7,100	December 31, 2020 624 December 31, 2020 9,600	March 31, 2020
			474
			March 31, 2020
			-

As of March 31, 2021, December 31 and March 31, 2020, the Group did not provide any financial assets and liabilities at fair value through profit or loss as collateral for its loans.

• (c) Financial assets at fair value through other comprehensive income – non-current

March 31, 2021 Equity investments at fair value through other comprehensive income: Domestic emerging market stock $ 6,386 Domestic unlisted stock 17,866 Foreign unlisted stock 22,608 $ 46,860	December 31, 2020 4,348 17,866 22,608 44,822	March 31, 2020
		2,815 17,866 24,587
		45,268

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments as of March 31, 2021 and 2020.

• (i) For credit risk and market risk, please refer to note (6)(t).

• (ii) As of March 31, 2021, December 31 and March 31, 2020, the Group did not provide any financial assets at fair value through other comprehensive income as collateral for its loans.

(Continued)

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WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Notes and accounts receivable

March 31, 2021 Notes receivable $ 220,537 Accounts receivable-measured as amortized cost 9,932,843 Accounts receivable-fair value through other comprehensive income 1,757,562 11,910,942 Less: Loss allowance (101,034) $ 11,809,908	December 31, 2020 266,113 8,994,783 1,530,656 10,791,552 (112,529) 10,679,023	March 31, 2020 154,961 6,857,958 1,716,093 8,729,012 (182,834) 8,546,178

The Group has assessed a portion of its accounts receivable that was held within a business model whose objective is achieved by selling financial assets; therefore, such accounts receivable were measured at fair value through other comprehensive income.

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, notes and accounts receivable have been grouped based on shared credit risk characteristics of the customer's ability to pay all due amounts in accordance with contract terms, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision was determined as follows:

(i) The Company

Credit rating Listed company (assessed by group) Level A Level B Unlisted company Credit rating Listed company (assessed by group) Level A Level B Unlisted company		March 31, 2021	March 31, 2021
	Carrying amount $ 3,458,869 838,224 1,157,775 $ 5,454,868	Expected credit loss rate 0.76% 1.13% 1.85% December	Loss allowance provision Credit impaired 26,278 No 9,489 No 21,382 No 57,149 31, 2020
	Carrying amount $ 2,754,068 988,347 1,118,185 $ 4,860,600	Expected credit loss rate 0.85% 0.96% 2.42%	Loss allowance provision Credit impaired 23,534 No 9,456 No 27,060 No 60,050

(Continued)

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WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Credit rating Listed company (assessed by group) Level A Level B Unlisted company		March 31, 2020	March 31, 2020
	Carrying amount $ 2,087,101 1,005,061 710,684 $ 3,802,846	Expected credit loss rate 0.65% 1.17% 1.35%	Loss allowance provision Credit impaired 13,514 No 11,770 No 9,604 No 34,888

The aging analysis of notes and accounts receivable was determined as follows:

March 31, 2021 Current $ 5,304,035 Overdue less than 90 days 149,751 Overdue 91 to 180 days 604 Overdue more than 181 days 478 $ 5,454,868	December 31, 2020 4,675,460 182,910 1,836 394 4,860,600	March 31, 2020
		3,605,677 189,417 4,287 3,465
		3,802,846

(ii) Subsidiaries

Current Overdue less than 90 days Overdue 91 to 180 days Overdue more than 181 days Current Overdue less than 90 days Overdue 91 to 180 days Overdue more than 181 days		March 31, 2021
	Carrying amount Expected credit loss rate $ 5,882,281 0.15% 568,940 5.41% 34 41.18% 4,819 100.00% $ 6,456,074 December 31, 2020		Loss allowance provision
			9,089 30,754 14 4,819
			44,676
	Carrying amount $ 5,387,951 538,255 11 4,735 $ 5,930,952	Expected credit loss rate 0.18% 6.91% 72.73% 100.00%	Loss allowance provision
			9,655 37,167 8 4,735
			51,565

(Continued)

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WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Current Overdue less than 90 days Overdue 91 to 180 days Overdue more than 181 days		March 31, 2020
	Carrying amount $ 4,265,432 545,936 24,976 89,822 $ 4,926,166	Expected credit loss rate 0.01% 7.89% 37.92% 100.00%	Loss allowance provision
			320 43,095 9,472 89,822
			142,709

For the three months ended March 31, 2021 and 2020, the movement in the allowance for notes and accounts receivable were as follows:

Balance at January 1 Impairment losses recognized (reversed) Effect of changes in foreign exchange rates Balance at March 31	For the three months ended March 31,	For the three months ended March 31,
	2021 $ 112,529 (11,829) 334 $ 101,034	2020
		170,737 11,171 926
		182,834

The Group entered into accounts receivable factoring agreements with banks. According to the factoring agreement, the Group does not bear the loss if the account debtor does not have the ability to make payments upon the transfer of the accounts receivable factoring. The Group has not provided other guarantees except for the promissory notes, which have the same amount with the factoring, used as the guarantee for the sales return and discount. The Group received the proceeds from the discounted accounts receivable on the selling date. Interest is calculated and paid based on the duration and interest rate of the agreement, and the remaining amounts are received when the accounts receivable are paid by the customers. In addition, the Group has to pay a service charge based on a certain rate.

The Group derecognized the above accounts receivable because it has transferred substantially all of the risks and rewards of their ownership, and it does not have any continuing involvement by them. The amounts receivable from the financial institutions were recognized as “other receivables” upon the derecognition of those accounts receivable.

As of March 31, 2021, December 31 and March 31, 2020, the Group sold its accounts receivable without recourse as follows:

March 31, 2021

Purchaser	Amount Derecognized $ 2,967,460	Amount Paid 2,673,054	Advanced Unpaid -	Amount Recognized in Other Receivables 294,406	Range of Interest Rate Significant Transferring Terms 0.58%~1.17% None
Financial institutions

(Continued)

15

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

		December 31, 2020	December 31, 2020
Purchaser	Amount Derecognized $ 3,053,437	Amount Paid Advanced Unpaid 2,749,698 - March 31, 2020		Amount Recognized in Other Receivables 303,739	Range of Interest Rate Significant Transferring Terms 0.64%~1.37% None
Financial institutions
Purchaser	Amount Derecognized $ 3,123,272	Amount Paid 2,838,554	Advanced Unpaid -	Amount Recognized in Other Receivables 284,718	Range of Interest Rate Significant Transferring Terms 1.07%~3.2% None
Financial institutions

As of March 31, 2021, December 31 and March 31, 2020, the Group did not provide any receivables as collaterals for its loans.

Please refer to note (6)(t) for further credit risk information.

(e) Other receivables

March 31, 2021 Other receivables－the receivables of the Group as an agent (note (6)(r)) $ 26,309 Other receivables－accounts receivable factored 294,406 Tax refund 28,917 Overdue receivable 22,124 Others 12,251 384,007 Less: Loss allowance (22,124) $ 361,883	December 31, 2020 580,597 303,739 28,037 22,124 504 935,001 (22,124) 912,877	March 31, 2020 2,561,789 284,718 20,371 23,320 362 2,890,560 (23,320) 2,867,240

For the three months ended March 31, 2021 and 2020, the movement in the allowance for other receivables were as follows:

Balance at January 1 Effect of changes in foreign exchange rates Balance at December 31	For the three months ended March 31,	For the three months ended March 31,
	2021 $ 22,124 - $ 22,124	2020
		23,313 7
		23,320

As of March 31, 2021, December 31 and March 31, 2020, the Group did not provide any other receivables as collaterals for its loans.

For further credit risk information, please refer to note (6)(t).

(Continued)

16

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(f) Inventories

March 31, 2021 Merchandise inventories $ 6,911,554 Goods in transit 587,848 $ 7,499,402	December 31, 2020 7,369,025 486,731 7,855,756	March 31, 2020
		9,003,823 744,396
		9,748,219

The details of inventory-related losses and expenses were as follows:

	For	the three months ended	the three months ended
		March 31,
		2021	2020
Inventory valuation loss and obsolescence (Gain from price
recovery of inventory)	$	25,371	(49,771)
Loss on scrapping of inventory and others		56,818	-
	$	82,189	(49,771)

As of March 31, 2021, December 31 and March 31, 2020, the Group did not provide any inventories as collaterals for its loans.

(g) Property, plant and equipment

Carrying amounts: Balance on January 1, 2021 Balance on March 31, 2021 Balance on January 31, 2020 Balance on March 31, 2020	Land $ 77,377 $ 77,377 $ 77,377 $ 77,377	Buildings and construction 30,065 29,850 30,927 30,710	Transportation equipment 3,854 3,515 5,436 5,084	Machinery equipment 4,817 5,797 4,578 4,268	Office and other facilities equipment 18,657 16,675 30,973 27,690	Total
						134,770
						133,214
						149,291
						145,129

The Group’s property, plant and equipment have no significant additions, disposals, impairments or reversals during for the three months ended March 31, 2021 and 2020. Information on depreciation for the period is disclosed in note (12)(a). For other related information, please refer to note (6)(g) of the 2020 annual consolidated financial statements.

(Continued)

17

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(h) Right-of-use assets

The Group leases many assets including buildings and transportation equipment. Information about leases for which the Group as a lessee is presented below:

Buildings Transportation equipment Cost: Balance on January 1, 2021 $ 407,267 11,861 Additions 18,745 - Effect of changes in exchange rates 2,703 86 Balance on March 31, 2021 $ 428,715 11,947 Balance on January 1, 2020 $ 389,090 7,548 Additions 1,131 - Effect of changes in exchange rates 1,510 - Balance on March 31, 2020 $ 391,731 7,548 Accumulated depreciation: Balance on January 1, 2021 $ 223,194 5,755 Depreciation 34,785 911 Effect of changes in exchange rates 1,758 9 Balance on March 31, 2021 $ 259,737 6,675 Balance on January 1, 2020 $ 114,037 2,988 Depreciation 33,572 747 Effect of changes in exchange rates 456 - Balance on March 31, 2020 $ 148,065 3,735 Carrying amount: Balance on January 1, 2021 $ 184,073 6,106 Balance on March 31, 2021 $ 168,978 5,272 Balance on January 1, 2020 $ 275,053 4,560 Balance on March 31, 2020 $ 243,666 3,813 (i) Short-term borrowings March 31, 2021 December 31, 2020 Unsecured loans $ 8,895,542 9,076,469 Short-term notes and bills payable, net 668,929 668,846 $ 9,564,471 9,745,315 Unused short-term credit lines $ 4,061,113 3,678,463 Range of interest rates 0.52%~3.90% 0.52%~4.57%	Total
	419,128 18,745 2,789
	440,662
	396,638 1,131 1,510
	399,279
	228,949 35,696 1,767
	266,412
	117,025 34,319 456
	151,800
	190,179
	174,250
	279,613
	247,479
	March 31, 2020 10,717,345 669,302 11,386,647 3,119,732 1.02%~4.57%

(Continued)

18

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Issuance and repayment of borrowings

The Group’s additional amounts in loans for the three months ended March 31, 2021 and 2020 were $7,761,366 and $9,564,806, respectively, with maturities from April to September, 2021 and from March, 2020, to March, 2021, respectively; and the repayments were $7,942,210 and $8,023,012, respectively.

• (ii) For information on the Group’s interest risk, foreign currency risk and liquidity risk, please refer to note (6)(t).

• (j) Other payables

March 31, 2021 Other payable — the payables of the Group’s as an agent (note(6)(r)) $ 2,809 Accrued expenses 295,287 Bonus payable 54,219 Remuneration to employees and directors 142,840 Interest payable 13,904 $ 509,059	December 31, 2020 632,478 257,310 233,671 108,755 14,267 1,246,481	March 31, 2020
		2,312,263 213,583 41,797 56,000 32,656
		2,656,299

The accrued expenses include import and export fees, processing expense, professional services fees, pension, insurance, and payable for unused vacation time, etc.

• (k) Convertible bonds payable

• (i) Non-guaranteed convertible bonds:

March 31, 2021 Aggregate principal amount $ 1,000,000 Bond discount (67,140) Bonds payable at end of period $ 932,860 Embedded derivative – call and put options $ 7,100 Equity component – conversion options (included in capital surplus – conversion options) $ 57,014	December 31, 2020 1,000,000 (70,678) 929,322 9,600 57,014	March 31, 2020
		- -
		-
		-
		-

There were no significant issues, repurchases and repayments of bonds payable for the three months ended March 31, 2021 and 2020. Please refer to note (6)(k) of the 2020 annual consolidated financial statements for the related information.

(Continued)

19

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l) Lease liabilities

March 31, 2021 Current $ 103,066 Non-current $ 71,760	December 31, 2020 112,146 78,793	March 31, 2020
		125,726
		123,569

For the maturity analysis, please refer to note (6)(t) of financial instruments.

The amounts recognized in profit or loss were as follows:

	For	the three months ended	the three months ended
		March 31,
		2021	2020
Interests on lease liabilities	$	1,109	1,873
Expenses relating to short-term leases	$	1,598	1,528

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

Total cash outflow for leases	For the three months ended March 31,	For the three months ended March 31,
	2021 $ 38,524	2020
		35,920

(i) Real estate leases

The Group leases buildings for its office space, warehouses and dormitories. The leases of office space typically run for a period of 1 to 5 years, of warehouses for 1 to 4 years, and of dormitories for 2 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases of office buildings contain extension or cancellation options exercisable by the Group before the end of the non-cancellable contract period. These leases are negotiated and monitored by local management, and accordingly, contain a wide range of different terms and conditions. The extension options held are exercisable only by the Group and not by the lessors. When the lessee is not reasonably certain to use an optional extended lease term, payments associated with the optional period will not be included within lease liabilities.

(ii) Other leases

The Group leases transportation equipment and parking space with lease terms of one year. These leases are short-term. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(m) Operating lease —as lessor

There were no significant leases contracts for the three months ended March 31, 2020. Please refer to note (6)(m) of the 2020 annual consolidated financial statements for other related information.

(Continued)

20

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(n) Employee benefits

(i) Defined benefit plans

Management believes that there was no material volatility of the market, no material reimbursement and settlement or other material onetime events since prior fiscal year. As a result, the pension cost in the accompanying interim period was measured and disclosed according to the actuarial report as of December 31, 2020 and 2019.

The Company makes defined benefit plan contributions to the pension fund account at the Bank of Taiwan that provides pensions for employees upon retirement. The plans entitle a retired employee to receive an annual payment based on years of service and average salary for the six months prior to retirement.

The expenses recognized in profit or loss for the Group were as follows:

		For the three months ended	For the three months ended	For the three months ended
			March 31,
		2021		2020
Operating	expense	$	274	429

• (ii) Defined contribution plans

The Company and WTC allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Company and WTC allocates a fixed amount to the Bureau of the Labor Insurance without additional legal or constructive obligations.

The Company and WTC recognized the pension costs under the defined contribution method amounting to $5,629 and $5,527 for the three months ended March 31, 2021 and 2020, respectively. Payment was made to the Bureau of Labor Insurance.

Other subsidiaries recognized the pension expense, basic endowment insurance expense, and social welfare expenses amounting to $15,412 and $10,177 for the three months ended March 31, 2021 and 2020, respectively.

(o) Income taxes

(i) Income tax expenses

The amounts of income tax for the three months ended March 31, 2021 and 2020 were as follows:

follows:
	For the three months ended
	March 31,
	2021	2020
Current tax expense	$ 107,311	33,527

(Continued)

21

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The amounts of income tax recognized in other comprehensive income for the three months ended March 31, 2021 and 2020 were as follows:

		For the three months ended	For the three months ended
		March 31,
		2021	2020
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign financial
statements	$	3,474	4,955

(ii) The tax authorities have authorized of the Company and WTC through 2018.

(p) Capital and other equities

As of March 31, 2021, December 31 and March 31, 2020, the total value of nominal ordinary shares amounted to $4,500,000, each having a par value of $10 per share, totaling 450,000 thousand ordinary shares, of which 367,751 thousand shares were issued. All issued shares were paid up upon issuance.

(i) Capital surplus

Balances on capital surplus of the Group were as follows:

March 31, 2021 Additional paid in capital $ 845,753 Treasury share transactions 37,617 Donation from shareholders 712 Convertible bonds– conversion options 57,014 Others 253 $ 941,349	December 31, 2020 845,753 37,617 712 57,014 253 941,349	March 31, 2020
		845,753 37,617 712 - 253
		884,335

In accordance with the Company Act, realized capital reserves can only be utilized for issuing new shares or being distributed as cash dividends after offsetting losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be utilized for issuing new shares shall not exceed 10 percent of paid-in capital. Capital reserve increased by transferring paid-in capital in excess of par value may not be capitalized until the fiscal year after the competent authority for company registrations approves registration of the capital increase.

(Continued)

22

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Retained earnings

The Company's Article of Incorporation stipulates that Company's earnings should first be used to pay any taxes, offset the prior years' deficits, be set aside as legal reserve, and then set aside or reverse special reserve, any remaining profit, together with any undistributed retained earnings at the beginning, be distributed according to the distribution plan proposed by the Board of Directors to be submitted during the stockholders’ meeting for approval. Before the distribution of dividends, the Board of Directors shall first take into consideration its profitability, plan of capital expenditure, business expansion and capital, requirements for cash flow, regulations, and degree of dilution of earnings per share in determining the proportion of stock and cash dividends to be paid. After the above appropriations, current and prior-period earnings that remain undistributed will be proposed for distribution by the Board of Directors, and a meeting of shareholders will be held to adopt this resolution. The total distribution shall not be less than 50% of the current earnings, and the cash dividends shall not be less than 20% of the total dividends.

The Company authorize dividends, bonus and the legal reserve and capital surplus in whole or in part be paid in cash based on the resolution of the Board of Directors with two-thirds directors present and approved by one-half of the present directors, then shall be reported to shareholders meeting.

1) Earnings distribution

The amounts for cash dividends of Company’s earnings distribution for 2020 and 2019 were decided by the board meeting held on March 26, 2021 and March 27, 2020.

Dividends distributed to ordinary shareholders: Cash dividends	2020 Amount per share Total amount $ 1.34468073 494,508	2019 Amount per share Total amount 0.57770670 212,452	2019 Amount per share Total amount 0.57770670 212,452
	Amount per share $ 1.34468073		Total amount
			212,452

• (q) Earnings per share

The basic earnings per share and diluted earnings per share are calculated as follows:

• (i) Basic earnings per share

• 1) Profit attributable to ordinary shareholders of the Company

	For	the three months ended	the three months ended
		March 31,
		2021	2020
Profit attributable to ordinary shareholders of the
Company	$	274,054	90,877

(Continued)

23

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 2) Weighted-average number of ordinary shares (thousands)

Weighted-average number of ordinary shares	For the three months ended March 31,	For the three months ended March 31,
	2021 367,751	2020
		367,751

• (ii) Diluted earnings per share

• 1) Profit attributable to ordinary shareholders of the Company (diluted)

	For	the three months ended	the three months ended
		March 31,
		2021	2020
Profit attributable shareholders of the Company (basic)	$	274,054	90,877
Convertible bonds payable		1,038	-
Profit attributable to ordinary shareholders of the
Company (diluted)	$	275,092	90,877

• 2) Weighted-average number of ordinary shares (thousands, diluted)

Weighted-average number of ordinary shares (basic) Effect of convertible bonds Effect of employee stock remuneration Weighted-average number of ordinary shares (diluted) on March 31	For the three months ended March 31,	For the three months ended March 31,
	2021 367,751 52,854 4,780 425,385	2020
		367,751 - 2,909
		370,660

• (r) Revenue from contracts with customers

• (i) Disaggregation of revenue

	For the three months ended	For the three months ended	For the three months ended
		March 31,
		2021	2020
Primary geographical markets:
Taiwan	$	1,627,267	1,147,544
China		13,157,920	9,655,493
Others		1,037,959	758,473
	$	15,823,146	11,561,510

(Continued)

24

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

	For the three months ended	For the three months ended	For the three months ended
		March 31,
		2021	2020
Major products/services lines
Chipset/memory components	$	5,485,817	4,918,378
Assorted and other components		10,333,375	6,643,089
Others		3,954	43
	$	15,823,146	11,561,510

The Group was determined in some specific transactions as an agent that the other party sold some merchandises to end-customer by delivering them to the Group. In these cases, the Group did not obtain the control of the merchandises, therefore, the Group recognized the remaining sales amounts which have been offset against the payment to the other party from the transactions; or recognized the commission signed with the other party, as revenue.

For the three months ended March 31, 2021 and 2020, the Group was determined as an agent in the aforementioned transactions, which revenue amounted to $3,643 and $0, respectively. Due to the above transactions, the other receivables amounted to $26,309 and $2,561,789 as of March 31, 2021 and 2020, respectively; and the other payables amounted to $2,809 and $2,312,263 as of the three months ended March 31, 2021 and 2020, respectively. Please refer to note (6)(e) and (6)(j).

(ii) Contract balance

Notes and accounts receivable (included related parties) Less: allowance for impairment Contract liabilities	March 31, 2021 $ 11,910,942 (101,034) $ 11,809,908 $ 229,221	December 31, 2020 10,791,552 (112,529) 10,679,023 195,013	March 31, 2020 8,729,012 (182,834) 8,546,178 151,069

For the details on accounts receivable and allowance for impairment, please refer to note (6)(d).

The amounts of revenue recognized for the three months ended March 31, 2021 and 2020 that were included in the contract liability balance at the beginning of the period were $133,835 and $46,731, respectively.

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

(Continued)

25

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) Remuneration to employees and directors

The Company’s Articles of Incorporation require that earning shall first be offset against any deficit, then, 6% to 10% of profit before tax (before deducting remuneration to employees and directors) will be distributed as employee remuneration and a maximum of 2.5% will be allocated as directors’ remuneration. Employees who are entitled to receive the above-mentioned employee remuneration, in share or cash, include the employees of the subsidiaries of the Company who meet certain specific requirements. Actual distribution should be determined in the Board of Directors’ meeting, with no less than two-thirds of directors present, and approved by more than half of the directors attending the meeting, then shall be report to the meeting of shareholders.

For the three months ended March 31, 2021 and 2020, the accrued remuneration of the Company’s employees were $30,254 and $10,186; as well as directors were $7,563 and $2,546, respectively. These amounts were calculated by using the Company’ s profit before tax for the period before deducting the amount of the remuneration to employees and directors, multiplied by the distribution ratio of remuneration to employees and directors under the Company’s articles of Incorporation, and expensed under operating expenses. If the Board of Directors resolved to distribute employees’ remuneration in the form of shares, the numbers of shares to be distributed were calculated based on the closing price of the Company’s ordinary shares one day before the date of the meeting of the board of directors.

The accrued remuneration of the Company’ s employees was $78,442 and $29,690 as well as remuneration of directors was $19,611 and $7,422 for the years ended December 31, 2019 and 2018, respectively. There were no differences between the distributed amounts and the accrued amounts in the consolidated financial statements. Related information would be available at the Market Observation Post System website.

(t) Financial Instruments

Except for those mentioned below, there were no significant changes in the fair value of the Group's financial instruments and degree of exposure to credit risk. Please refer to the note (6)(t) of the consolidated financial statement for the year ended December 31, 2020.

(i) Credit risk

For credit risk exposure of notes and trade receivables, please refer to note (6)(d). The amount of other financial assets at amortized cost include other receivables which had been impaired. For the three months ended March 31, 2021 and 2020, loss allowance provision, please refer to the note (6)(e).

(Continued)

26

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, excluding estimated interest payments.

March 31, 2021 Non-derivative financial liabilities Unsecured loans Short-term notes and bill payable Lease liabilities Notes and accounts payables Other payables and dividends payable Bonds payable Derivative financial liabilities Converible bonds payable embedded derivatives December 31, 2020 Non-derivative financial liabilities Unsecured loans Short-term notes and bills payable Lease liabilities Notes and accounts payables Other payables Bonds payable Derivative financial liabilities Convertible bonds payable embedded derivatives March 31, 2020 Non-derivative financial liabilities Unsecured loans Short-term notes and bill payable, net Lease liabilities Notes and accounts payable Other payables and dividends payable	Carrying Amount $ 8,895,542 668,929 174,826 3,983,398 1,003,567 932,860 7,100 $ 15,666,222 $ 9,076,469 668,846 190,939 3,575,860 1,246,481 929,322 9,600 $ 15,697,517 $ 10,717,345 669,302 249,295 3,603,389 2,868,751 $ 18,108,082	Contractual cash flows (8,895,542) (670,000) (178,455) (3,983,398) (1,003,567) (1,000,000) - (15,730,962) (9,076,469) (670,000) (196,566) (3,575,860) (1,246,481) (1,000,000) - (15,765,376) (10,717,345) (670,000) (257,338) (3,603,389) (2,868,751) (18,116,823)	Within a year (8,895,542) (670,000) (105,759) (3,983,398) (1,003,567) - - (14,658,266) (9,076,469) (670,000) (115,933) (3,575,860) (1,246,481) - - (14,684,743) (10,717,345) (670,000) (130,669) (3,603,389) (2,868,751) (17,990,154)	Over 1 year
				- - (72,696) - - (1,000,000) - (1,072,696) - - (80,633) - - (1,000,000) - (1,080,633) - - (126,669) - - (126,669)

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

(Continued)

27

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Market risk

1) Currency risk

The Group’s significant exposure to foreign currency risk was as follows:

March 31, 2021 Foreign currency Exchange rate TWD Financial assets Monetary items USD $ 250,050 USD/TWD 28.51 7,128,937 USD 934 USD/CNY 6.5782 26,637 Non-monetary items USD 745 USD/TWD 28.51 21,240 Financial liabilities Monetary items USD 149,196 USD/TWD 28.51 4,253,571 USD 27,059 USD/CNY 6.5782 771,463	March 31, 2021	March 31, 2021	March 31, 2021	December 31, Foreign currency Exchange rate	December 31,	December 31,	2020	March 31, 2020 Foreign currency Exchange rate TWD	March 31, 2020 Foreign currency Exchange rate TWD
	Foreign currency	Exchange rate	TWD			Exchange rate	TWD		Exchange rate TWD
		USD/TWD 28.51 USD/CNY 6.5782 USD/TWD 28.51 USD/TWD 28.51 USD/CNY 6.5782	7,128,937 26,637 21,240 4,253,571 771,463	257,506 540 745 172,907 19,077		USD/TWD 28.480 USD/CNY 6.5142 USD/TWD 28.480 USD/TWD 28.480 USD/CNY 6.5142	7,333,779 15,383 21,218 4,924,379 543,302	288,557 1,474 745 242,237 43,424	USD/TWD 30.205 8,715,856 USD/CNY 7.1037 44,516 USD/TWD 30.205 22,503 USD/TWD 30.205 7,316,760 USD/CNY 7.1037 1,311,636

2) Currency risk sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, account receivables, other receivables, financial assets at fair value through other comprehensive income, loans and borrowings, accounts payables and other payables that are denominated in foreign currency. A change of 5% in the exchange rate of TWD or CNY against foreign currency for the three months ended March 31, 2021 and 2020 would have increase (decreased) the other comprehensive income (before tax) $1,062 and $1,125, respectively. For the three months ended March 31, 2021 and 2020 would have increased (decreased) the net profit before tax as follows. The analysis is performed on the same basis for both periods.

For the three months ended March 31,

USD (against the TWD) Strengthening 5% Weakening 5% USD (against the CNY) Strengthening 5% Weakening 5%	2021 2020 $ 143,768 69,955 (143,768) (69,955) (37,241) (63,356) 37,241 63,356 (Continued)

28

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 3) Exchange gains and losses of monetary items

As the Group deals in diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the three months ended March 31, 2021 and 2020, the foreign exchange gain (loss), including both realized and unrealized, amounted to a gain of $14,027 and a loss of $22,684, respectively.

4) Interest rate analysis

The details of financial assets and liabilities exposed to interest rate risk were as follows:

Variable rate instruments: Financial assets Financial liabilities	Carrying amount March 31, 2021 March 31, 2020 $ 1,391,760 1,761,481 (8,895,542) (10,717,345)

The following sensitivity analysis is based on the risk exposure to interest rate on the derivative and non-derivative financial instruments on the reporting date. Regarding the assets and liabilities with variable interest rates, the analysis is on the basis of the assumption that the amount of assets and liabilities outstanding at the reporting date were outstanding throughout the year. The rate of change is expressed as the interest rate increase or decrease by 0.25% when reporting to management internally, which also represents the Group’s management's assessment of the reasonably possible interest rate change.

If the interest rate had increased or decreased by 0.25%, the Group's net profit before tax would have decreased or increased by $4,690 and $5,597 for the three months ended March 31, 2021 and 2020, respectively, which would be mainly resulting from demand deposits, and unsecured loans with variable interest rates.

(iv) Fair value

• 1) Categories and the fair value of financial instruments

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income are measured on a recurring basis. The carrying amount and fair value of the Group’s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

(Continued)

29

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets mandatorily measured at fair value through profit or loss Stocks listed on domestic markets Financial assets at fair value through other comprehensive income Notes and accounts receivable, net Emerging market stock Stocks unlisted on domestic markets and foreign market Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Other receivables Guarantee deposits paid Subtotal Financial liabilities at fair value through profit or loss Convertible bonds payable embedded derivative Financial liabilities measured at amortized cost Bank loans Lease liabilities Notes and accounts payable Other payables and dividends payable Bonds payable Subtotal		March 31, 2021	March 31, 2021	March 31, 2021
	Carrying amount $ 624 1,757,562 6,386 40,474 1,804,422 2,122,475 10,052,346 332,966 74,807 12,582,594 $ 14,387,640 $ 7,100 9,564,471 174,826 3,983,398 1,003,567 932,860 15,659,122 $ 15,666,222		Fair Value
		Level 1 624 - 6,386 - - - - - - - - - - -	Level 2 - - - - - - - - 7,100 - - - - -	Level 3 Total - 624 - - - 6,386 40,474 40,474 - - - - - - - - - 7,100 - - - - - - - - - -

(Continued)

30

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets mandatorily measured at fair value through profit or loss Stocks listed on domestic markets Financial assets at fair value through other comprehensive income Notes and accounts receivable, net Emerging market stock Stocks unlisted on domestic markets and foreign market Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Other receivables Guarantee deposits paid Subtotal Financial liabilities at fair value through profit or loss Convertible bonds payable embedded derivative Financial liabilities measured at amortized cost Bank loans Lease liabilities Notes and accounts payable Other payables Bonds payable Subtotal		December 31, 2020	December 31, 2020	December 31, 2020
	Carrying amount $ 624 1,530,656 4,348 40,474 1,575,478 2,486,340 9,148,367 884,840 73,467 12,593,014 $ 14,169,116 $ 9,600 9,745,315 190,939 3,575,860 1,246,481 929,322 15,687,917 $ 15,697,517		Fair Value
		Level 1 624 - 4,348 - - - - - - - - - - -	Level 2 - - - - - - - - 9,600 - - - - -	Level 3 Total - 624 - - - 4,348 40,474 40,474 - - - - - - - - - 9,600 - - - - - - - - - -

(Continued)

31

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Financial assets mandatorily measured at fair value through profit or loss Stocks listed on domestic markets Financial assets at fair value through other comprehensive income Notes and accounts receivable, net Emerging market stock Stocks unlisted on domestic markets and foreign market Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Other receivables Guarantee deposits paid Subtotal Financial liabilities measured at amortized cost Bank loans Lease liabilities Notes and accounts payable Other payables and dividends payable		March 31, 2020	March 31, 2020	March 31, 2020
	Carrying amount $ 474 1,716,093 2,815 42,453 1,761,361 2,378,722 6,830,085 2,846,869 71,825 12,127,501 $ 13,889,336 $ 11,386,647 249,295 3,603,389 2,868,751 $ 18,108,082		Fair Value
		Level 1 474 - 2,815 - - - - - - - - -	Level 2 - - - - - - - - - - - -	Level 3 Total - 474 - - - 2,815 42,453 42,453 - - - - - - - - - - - - - - - -

There were no transfers of financial instruments between any levels for the three months ended March 31, 2021 and 2020.

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

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

• a) Financial assets measured at amortized cost

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

(Continued)

32

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 3) Valuation technique of financial instruments measured at fair value

• a) Non-derivative financial instruments

If the financial instrument has a public quoted price in an active market, the public quoted price will be determined as the fair value. The measurements on fair value of the financial instruments without an active market are determined using the valuation technique or the quoted market price of its counterparts. Fair value measured using the valuation technique can be extrapolated from similar financial instruments, discounted cash flow method, or other valuation techniques which include the model used in calculating the observable market data at the consolidated balance sheet date.

The Group holds the unquoted equity investments of financial instruments without an active market. The measurement of fair value of the equity instruments is based on the Guideline Public Company method, which mainly assumes the evaluation by the price value and the price to book value ratio of similar public company and by the discount for lack of marketability. The estimation has been adjusted by the effect resulting from the discount for lack of marketability of the securities.

• b) Derivative financial instruments

Measurement of fair value of derivative instruments is based on the valuation techniques that are generally accepted by the market participants. For instance, discount method or option pricing models. Fair value of forward currency exchange is usually determined by using the forward currency rate.

• 4) Reconciliation of Level 3 fair values

Reconciliation of Level 3 fair values
		Fair value through
		other comprehensive
		income
		Unquoted equity
		instruments
Opening balance, January 1, 2021
(the same as ending Balance, March 31, 2021)	$	40,474
Opening balance, January 1, 2020
(the same as ending Balance, March 31, 2020)	$	42,453

• 5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group’s financial instruments that use Level 3 inputs to measure fair value include “ financial assets measured at fair value through other comprehensive income - equity investments”.

(Continued)

33

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss	Valuation technique Guideline Public Company method Net Asset Value Method	Significant unobservable inputs Inter-relationships between significant unobservable inputs and fair value measurement ‧Price-Sales ratio (1.03, 1.44and0.88 at March 31, 2021, December 31 and March 31, 2020, respectively) The estimated fair value would increase (decrease) if: ‧The Price-Sales ratio were higher (lower); ‧Price-Book ratio (0.84, 0.88 and 0.64 at March 31, 2021, December 31 and March 31, 2020, respectively) ‧The Price-Book ratio were higher (lower); or ‧Lack-of-Marketability discount rate (17.25%, 17.25% and12.93% on March 31, 2021, December 31 and March 31, 2020, respectively) ‧The Lack-of- Marketability discount rate were lower (higher) ‧Net asset value ‧Not applicable

(u) Financial risk management

There was no significant changes in the Group’s financial risk management and policies as disclosed in the note (6)(u) of the consolidated financial statements for the year ended December 31, 2020.

(v) Capital management

The Group’ s objectives, policies and processes of capital management are consistent with those disclosed in the consolidated financial statements for the year ended December 31, 2020. In addition, there were no significant differences between the summary quantitative data of the items of capital management in the consolidated financial statements and those disclosed in the consolidated financial statements for the year ended December 31, 2020. Please refer to note (6)(v) of the consolidated financial statements for the year ended December 31, 2020 for further details.

(Continued)

34

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(w) Investing and financing activities not affecting current cash flow

The Group’s investing and financing activities which did not affect the current cash flow for the three months ended March 31, 2021 and 2020, were as follows:

• (i) For the acquisition of right-of-use assets from leases, please refer to note (6)(h).

The reconciliation of liabilities arising from financing activities was as follows:

Short-term loans Lease liabilities Bonds payable Total liabilities from financing activities Short-term loans Lease liabilities Total liabilities from financing activities	January 1, 2021 $ 9,745,315 190,939 929,322 $ 10,865,576 January 1, 2020 $ 9,844,853 279,792 $ 10,124,645	Cash flows (180,844) (35,817) - (216,661) Cash flows 1,541,794 (32,519) 1,509,275	Non-cash changes Acquisition Reduction Foreign exchange movement - - - 19,854 (1,188) 1,038 3,538 - - 23,392 (1,188) 1,038 Non-cash changes Acquisition Reduction Foreign exchange movement - - - 1,131 - 891 1,131 - 891	March 31, 2021
				9,564,471 174,826 932,860
				10,672,157
				March 31, 2020
				11,386,647 249,295
				11,635,942

(7) Related-party transactions

(a) Name and relationship with related parties

The following are entities that have had transactions with the Group during the period covered in the consolidated financial report:

Related-party	Relationship
Weiji Investment Co., Ltd.	The same chairman
Yang Sheng Education Foundation	The same chairman
Genlog Industrial Co., Ltd.	Substantive related-party

(Continued)

35

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Other related party transactions

• (i) Sale of goods to related parties

The amounts of sales transactions between the Group and related parties were as follows:

	For the three months ended	For the three months ended	For the three months ended
		March 31,
	2021		2020
Other related parties	$	13	2

There were no significant differences in terms of collection and pricing on sales to related parties and other customers. The collection period was approximately 30 days after the sales date.

• (ii) Processing fee and consultancy fees from related Parties

Other related parties were commissioned to provide processing services and consulting services to the Group. The amounts were as follows:

	For the three months ended	For the three months ended
	March 31,
	2021	2020
Other related parties	$ 1,682	2,269

(iii) Lease

The Group leased a portion of its building to its related parties for office use purpose. The rentals collected monthly were as follows:

		For	the three months ended	the three months ended
			March 31,
			2021	2020
	Other related parties	$	298	298
(iv)	Receivables from related parties

The receivables from related parties were as follows:

Account Relationship March 31, 2021 Notes and accounts receivables Other related parties $ 13 Payable to related parties Account Related party categories March 31, 2021 Other payables Other related parties $ 573	December 31, 2020 12 December 31, 2020 460	March 31, 2020 - March 31, 2020 887 (Continued)

• (v) Payable to related parties

36

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(c) Key management personnel compensation

Key management personnel compensation comprised:

		For the three months ended	For the three months ended
		March 31,
		2021	2020
Short-term employee benefits	$	48,883	27,100
Post-employment benefits		207	200
	$	49,090	27,300

(8) Pledged assets: None.

(9) Commitments and contingencies:

As of March 31, 2021, December 31 and March 31, 2020 the balances of L/Cs for defferred payment of import value added tax and the purchase of merchandise were as follows:

March 31, 2021 $ 167,550	December 31, 2020 167,400	March 31, 2020 172,025

(10) Losses Due to Major Disasters: None

(11) Subsequent Events:

On May 13, 2021, the Company's Board of Directors resolved to increase capital of WKI, the subsidiary of the Company, for cash, which amounted to HK$77,770 thousand.

(12) Other:

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

follows:
	For the three months ended March 31,
By function By item	2021	2020
	Operating expense	Operating expense
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	297,083 26,050 21,315 14,226 14,697 39,236 6,790	257,680 22,900 16,133 3,347 11,105 38,779 5,568

(Continued)

37

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Seasonality of operations:

The Group’s operation were not affected by seasonality or cyclically factors.

(13) Other disclosures:

• (a) Information on significant transactions:

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group for the three months ended March 31, 2021:

• (i) Loans to other parties: None

• (ii) Guarantees and endorsements for other parties:

								(in thousands of new Taiwan dollars)	(in thousands of new Taiwan dollars)	(in thousands of new Taiwan dollars)	(in thousands of new Taiwan dollars)	(in thousands of new Taiwan dollars)	(in thousands of new Taiwan dollars)
No.	Name of guarantor	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for a specific enterprise	Highest balance for guarantees and endorsements during the period	Balance of guarantees and endorsements as of reporting date	Actual usage amount during the period	Property pledged for guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements	Parent company endorsements/ guarantees to third parties on behalf of subsidiary (note 2)	Subsidiary endorsements/ guarantees to third parties on behalf of parent company (note 2)	Endorsements/ guarantees to third parties on behalf of companies in Mainland China (note 2)
		Name	Relationship with the Company
0 〃 〃	The Company 〃 〃	WKI WTP WKS	100％owned subsidiary 100％owned subsidiary 100％owned subsidiary	8,804,342 8,804,342 8,804,342	6,137,694 598,710 785,750	5,375,766 598,710 785,750	4,349,156 410,389 151,690	- - -	% 91.6 % 10.2 % 13.4	17,608,683 17,608,683 17,608,683	Y Y Y	- - -	- - Y

Note 1：The total amount of the guarantee provided by the Company shall not exceed three hundred percent (300%) of the higher amount between the Company’s capital amount and net worth. However, for any individual entity whose voting shares are 50% or more owned, directly or indirectly, by the Company shall not exceed fifty percent (50%) of the maximum amount for guarantee on recent audited or reviewed financial statements.

Note 2：For those entities as the guarantor to the subsidiary, subsidiary as the guarantor to the company, or the guarantor that located in China, please fill in “Y”.

• (iii) Securities held as of March 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

ventures):	ventures):	ventures):	ventures):
					(Shares/units (thousands))
Name of holder	Category and name of security	Relationship with company	Account title		Ending balance			Note
				Shares/Units (thousands)	Carrying amount	Percentage of ownership (%)	Fair value
The Company 〃 〃 〃 〃 〃 〃 〃	Securities of listed companies EBM Technologies Inc. Feature Integration Technology Inc. Clientron Corp. Paradigm I Venture Capital Company (Paradigm I) Paradigm Venture Capital Corporation (PVC Corp.) InnoBridge Venture Fund ILP. (InnoBridge) Shin Kong Global Venture Capital Corp. Vision Wide Technology Co., Ltd. (VTEC)	- - - - - - - -	Financial assets mandatorily measured at fair value through profit or loss- current Financial assets at fair value through other comprehensive income- noncurrent 〃 〃 〃 〃 〃 〃	34 158 15 750 271 - 3,000 800	$ 624 $ 6,056 330 $ 6,386 $ 7,458 3,226 15,150 4,800 9,840 $ 40,474	- 0.53 0.02 6.79 10.49 9.90 12.00 1.70	$ 624 $ 6,056 330 $ 6,386 $ 7,458 3,226 15,150 4,800 9,840 $ 40,474

(Continued)

38

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to Consolidated Financial Statements

• (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None

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

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

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

								(in thousands of foreign currency)	(in thousands of foreign currency)	(in thousands of foreign currency)	(in thousands of foreign currency)
Name of company	Related party	Nature of relationship	Transaction details				Transaction different f	s with terms rom others	Notes/Accounts receivable (payable)		Note
			Purchases/ (Sales)	Amount	Percentage of total purchases/ (sales)	Payment terms	Unit price	Payment terms	Ending balance	Percentage of total notes/accounts receivable (payable)
WKI WKS	WKS WKI	Subsidiary Parent company	(Sales) Purchases	(1,220,806) (USD(43,028)) 1,220,806 (USD43,028)	(15.45)% 78.77 %	OA60 〃	〃 〃	- -	Accounts Receivable 798,922 (USD28,023) Accounts Payable (798,922) (USD(28,023))	15.15 % (81.99) %

Note: The transactions have been eliminated in the consolidated financial statement.

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

of the capital stock:	of the capital stock:	of the capital stock:	of the capital stock:	of the capital stock:
					(in thousands of foreign currency)
Name of company	Counter- party	Nature of relationship	Ending balance	Turnover rate	Overdue		Amounts received in subsequent period (Note)	Allowance for bad debts	Note
					Amount	Action taken
WKI	WKS	Subsidiary	798,922 (USD28,023)	7.25	-	-	USD 23,227	-	The transactions have been eliminated in the consolidated financial statement

Note: Information as of May 7, 2021.

• (ix) Trading in derivative instruments: Please refer to note (6)(b)

(Continued)

39

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(x) Business relationships and significant intercompany transactions:

No. (Note 1)	Name of company	Name of counter-party	Nature of relationship (Note 2)		Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
0 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 1 〃 〃 2 〃	The Company 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 WKI 〃 〃 WKS 〃	WKI 〃 〃 〃 WKS 〃 〃 WTP 〃 〃 〃 The Company WKS 〃 WKI 〃	1 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 2 3 〃 〃 〃	Sales Revenue Accounts Receivable Management and Credit Service Revenue Other Receivables Sales Revenue Accounts Receivable Management and Credit Service Revenue Sales Revenue Accounts Receivable Management and Credit Service Revenue Other Receivables Sales Revenue Sales Revenue Accounts Receivable Service Revenue Accounts Receivable	8,793 68,147 77,943 91,818 533 919 1,965 9,012 9,091 1,353 1,801 62,338 1,220,806 798,922 10,894 4,693	The price is marked up based on operating cost, and the receivables depend on OA30 after offsetting the accounts payable. 〃 The price is set by percentage of the contract and is received quarterly. 〃 The price is marked up based on operating cost, OA60. 〃 The price is set by percentage of the contract and is received quarterly. The price is marked up based on operating cost, and the receivables depend on OA30 after offsetting the accounts payable. 〃 The price is set by percentage of the contract and is received quarterly. 〃 〃 The price is marked up based on operating cost, and the receivables depend on funding demand and OA60. 〃 The price is set by percentage of the contract, OA30. 〃	0.06% 0.30% 0.49% 0.40% -% -% 0.01% 0.06% 0.04% 0.01% 0.01% 0.39% 7.72% 3.51% 0.07% 0.02%

• Note 1: The numbers filled in as follows:

• 0 represents the Company.

• Subsidiaries are sorted in a numerical order starting from 1.

(Continued)

40

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Note 2: Relationship with the transactions labeled as follows:

1 represents the transactions from the parent company to its subsidiaries.

2 represents the transactions from the subsidiaries to the parent company.

3 represents the transactions between subsidiaries.

(b) Information on investees:

The following is the information on investees for the three months ended March 31, 2021 (excluding information on investees in Mainland China):

								(in thou	(in thou	sands of foreign currency)	sands of foreign currency)
Name of investor	Name of investee	Location	Main businesses and products	Original inves	tment amount	Highest			Net income (losses) of investee	Investment income (losses) of investor	Note
				March 31, 2021	December 31, 2020	Shares (In Thousands)	Percentage of Ownership	Carrying amount
The Company 〃 〃 WKI	WKI WTC WTP Weitech	Hong Kong Taipei Singapore Hong Kong	Electronic components computer peripherals products distribution and technical support Electronic components and technical support 〃 Import and export trade of electronic components	$ 1,044,995 12,983 293,327	1,044,995 12,983 293,327	396,250 1,589 12,413 -	100% 100% 100% 100%	$ 3,934,926 25,918 342,780	167,947 (147) 11,463 44 (USD2)	$ 167,947 (147) 11,463	Subsidiary 〃 〃 Subsidiary's subsidiary
				$ 1,351,305	1,351,305			$ 4,303,624		$ 179,263
				0.41 (HKD0.1)	0.41 (HKD0.1)			2,020 (USD71)		44 (USD2)

• (c) Information on investment in mainland China:

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

	information:
											(in thousands o	f foreign currency)
Name of investee	Main businesses and products	Total amount of paid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2021	Inves flo	tment ws	Accumulated outflow of investment from Taiwan as of March 31, 2021	Net income (losses) of the investee	Percentage of ownership	Investment income (losses) of investor	Book value (Note 3)	Accumulated remittance of earnings in current period
					Outflow (Note 3)	Inflow
WKS c s WKE a	Electronic components omputer peripherals products distribution and technical upport Electronic technology development and technical dvisory	786,647 (USD25,000) 5,067 (RMB1,000)	Note 1、4 Note 1、5	304,594 (USD9,800) -	- -	- -	304,594 (USD9,800) -	(12,397) (USD(437)) (Note 2) (1,117) (USD(39))	100% 100%	(12,397) (USD(437)) (Note 2) (1,117) (USD(39))	658,361 (USD23,092) 4,483 (USD157)	- -

• (ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of March 31, 2021	Investment Amounts Authorized by Investment Commission, MOEA (note 3)	Upper Limit on Investment
304,594 (USD9,800)	712,750 (USD25,000)	3,521,737

Note 1: Investment in Mainland China was through a company in the third area.

Note 2: The investment gains and losses of the current period are recognized according to the financial statements, which have been reviewed by the Company’ s independent auditors, and were translated into New Taiwan Dollars at the average exchange rates.

• Note 3: The currency was translated into New Taiwan Dollars at the exchange rates at the end of reporting period.

• Note 4: The difference was due to Weikeng International Co. Ltd.'s investment of US15,200 thousand dollars on Weikeng International (Shanghai) Co. Ltd. using its own funds.

(Continued)

41

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Note 5: The difference was due to Weikeng International (Shanghai) Co. Ltd.'s investment of RMB1,000 thousand dollars on Weikeng Electronic Technology (Shanghai) Co. Ltd. using its own funds.

• (iii) Significant transactions:

Please refer to Information on significant transactions for the information on significant direct or indirect transactions, which were eliminated in the preparation of consolidated financial statements, between the Group and the investee companies in Mainland China in 2021.

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Weiji Investment Co., Ltd.	30,426,876	% 8.27

Note (i): The information of major shareholders is based on the last business day of the end of each quarter set by Taiwan Depository & Clearing Corporation, wherein the shareholders hold more than 5% of the Company's ordinary shares, which have been completely registered non-physically (including treasury shares). There may be differences between the share capital recorded in the Company's financial statements and the actual number of the delivered shares, which have been completely registered non-physically due to the different methods used in their calculation.

• Note (ii):In the case of the above information, if the shareholder delivers the shares to the trust, the shares will be disclosed as a personal account under the trust account of the principal opened by the trustee. As for the shareholders’ declaration of more than 10% of the insider’s shareholdings under the Securities and Exchange Act, the shareholders’ stocks should be include in their own shareholdings, plus, the shares delivered to the trust, wherein the shareholders have the right of decision on using the trust property. For information on insider’s equity declaration, please refer to market observation post system.

(14) Segment information:

The Group has only one operating segment, which is the electronic components segment, of which, the major activities are the purchase and sales of electronic components and computer peripherals, technical service, as well as the import/export trade business. The Group’s details and reconciliations of operating segment are consistent with the consolidated financial statements. Please refer to the consolidated statements of comprehensive income and the consolidated balance sheet for the segment profit and assets, respectively.