Stock Code:3033

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Review Report For the Six Months Ended June 30, 2022 and 2021

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.

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) Assets pledged as security (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	Page
	1 2 3 4 5 6 7 8 8 8～9 9～11 11 11～37 37～39 39 39 39 39 39～40 40～43 43 43～44 44 45

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)
Assets pledged as security
(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) 電話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網址 Web 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 June 30, 2022 and 2021, and the related consolidated statements of comprehensive income for the three months and six months ended June 30, 2022 and 2021, as well as the changes in equity and cash flows for the six months ended June 30, 2022 and 2021, 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 June 30, 2022 and 2021, and of its consolidated financial performance for the three months and six months ended June 30, 2022 and 2021, as well as its consolidated cash flows for the six months ended June 30, 2022 and 2021 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.

3-1

The engagement partners on the review resulting in this independent auditors’ review report are Yiu-Kwan Au and Kuan-Ying Kuo.

KPMG

Taipei, Taiwan (Republic of China) August 10, 2022

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.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of June 30, 2022 and 2021

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2022, December 31, and June 30, 2021

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note (6)(a)) 1110 Current financial assets at fair value through profit o loss (note (6)(b)) 1170 Notes and accounts receivable, net (notes (6)(d) and (7)) 1200 Other receivables (notes (6)(d) and (6)(e)) 1300 Inventories, net (note (6)(f)) 1470 Prepaid expenses and other current assets Non-current assets: 1510 Non-current financial assets at fair value through profit or loss (note (6)(b)) 1517 Non-current financial assets at fair value through other comprehensive income (note (6)(c)) 1600 Property, plant and equipment (note (6)(g)) 1755 Right-of-use assets (note (6)(h)) 1780 Intangible assets 1840 Deferred tax assets 1900 Other non-current assets Total assets	June 30, 2022 Amount % $ 1,861,994 6 r 809 - 13,517,700 44 348,868 1 14,399,395 46 203,213 1 30,331,979 98 25 - 39,921 - 132,043 - 256,748 1 22,739 - 185,640 1 78,066 - 715,182 2 $ 31,047,161 100	December 31, 2021 Amount % 2,266,607 8 607 - 13,548,981 49 376,347 1 10,286,868 38 197,132 1 26,676,542 97 375 - 40,065 - 133,459 1 317,375 1 30,480 - 262,057 1 74,877 - 858,688 3 27,535,230 100	June 30, 2021 Amount % 2,940,892 12 622 - 12,300,609 49 315,084 1 8,303,299 33 338,133 2 24,198,639 97 - - 47,111 - 135,013 1 271,142 1 43,525 - 218,146 1 73,777 - 788,714 3 24,987,353 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note (6)(i)) 2130 Current contract liabilities (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 Non-current financial liabilities at fair value through profit or loss (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 Retained earnings: 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	June 30, 2022		December 31, 2021		June 30, 2021 Amount % 8,819,187 36 281,257 1 6,254,626 25 501,062 2 494,508 2 336,864 2 113,797 - 308,222 1 17,109,523 69 3,800 - 889,578 3 408,415 2 159,653 1 117,641 - 181 - 1,579,268 6 18,688,791 75 3,703,940 15 962,097 4 890,626 3 229,459 1 935,720 4 2,055,805 8 (342,056) (2) (81,224) - (423,280) (2) 6,298,562 25 24,987,353 100
				Amount %		Amount %
				$ 10,359,597 34 236,537 1 5,983,503 19 856,180 3 1,270,232 4 630,824 2 111,949 - 392,277 1 19,841,099 64 32,200 - 1,875,283 6 697,540 2 154,387 1 114,636 - 181 - 2,874,227 9 22,715,326 73 4,223,886 13 1,434,828 5 1,132,248 4 454,583 1 1,233,485 4 2,820,316 9 (65,873) - (81,322) - (147,195) - 8,331,835 27 $ 31,047,161 100		10,996,048 40 305,931 1 5,308,148 19 952,772 4 - - 361,274 1 135,160 1 318,617 1 18,377,950 67 - - 126,336 - 697,487 3 188,566 1 122,222 - 181 - 1,134,792 4 19,512,742 71 4,159,342 15 1,275,927 5 960,709 4 365,705 1 1,715,388 6 3,041,802 11 (373,405) (2) (81,178) - (454,583) (2) 8,022,488 29 27,535,230 100

See accompanying notes to consolidated financial statements.

(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 and six months ended June 30, 2022 and 2021

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

For the three months ended June 30 2022 2021 Amount % Amount % $ 17,421,017 100 18,680,068 100 15,906,005 91 17,364,652 93 1,515,012 9 1,315,416 7 515,526 3 479,209 2 152,200 1 145,500 1 7,465 - (11,057) - 675,191 4 613,652 3 839,821 5 701,764 4 1,672 - 948 - 2,949 - 1,363 - (6,780) - 2,943 - (27,390) - (1,207) - (66,457) (1) (42,206) - (165) - (266) - (96,171) (1) (38,425) - 743,650 4 663,339 4 200,797 1 208,002 2 542,853 3 455,337 2 (109) - 251 - - - - - (109) - 251 - 194,270 1 (92,202) - 38,854 - (18,440) - 155,416 1 (73,762) - 155,307 1 (73,511) - $ 698,160 4 381,826 2 $ 1.29 1.24 $ 1.24 1.08	For the six months ended June 30	For the six months ended June 30
2022 Amount % $ 17,421,017 100 15,906,005 91 1,515,012 9 515,526 3 152,200 1 7,465 - 675,191 4 839,821 5 1,672 - 2,949 - (6,780) - (27,390) - (66,457) (1) (165) - (96,171) (1) 743,650 4 200,797 1 542,853 3 (109) - - - (109) - 194,270 1 38,854 - 155,416 1 155,307 1 $ 698,160 4 $ 1.29 $ 1.24	2022 Amount % 34,345,562 100 31,527,418 92 2,818,144 8 1,006,556 3 297,847 1 2,526 - 1,306,929 4 1,511,215 4 2,282 - 5,386 - (6,831) - 45,871 - (112,385) - (315) - (65,992) - 1,445,223 4 396,477 1 1,048,746 3 (144) - - - (144) - 384,415 1 76,883 - 307,532 1 307,388 1 1,356,134 4 2.50 2.41	2021
		Amount % 34,503,214 100 32,234,888 93 2,268,326 7 915,304 3 276,368 1 (22,886) - 1,168,786 4 1,099,540 3 1,692 - 11,503 - 5,443 - 12,820 - (85,884) - (410) - (54,836) - 1,044,704 3 315,313 1 729,391 2 2,289 - - - 2,289 - (74,829) - (14,966) - (59,863) - (57,574) - 671,817 2 1.98
		1.72

See accompanying notes to consolidated financial statements.

(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 six months ended June 30, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Retained earnings Legal reserve Special reserve Unappropriated retained earnings 890,626 229,459 700,837 - - (494,508) - - 729,391 - - - - - 729,391 - - - 890,626 229,459 935,720 960,709 365,705 1,715,388 171,539 - (171,539) - 88,878 (88,878) - - (1,270,232) 171,539 88,878 (1,530,649) - - 1,048,746 - - - - - 1,048,746 - - - - - - 1,132,248 454,583 1,233,485	Retained earnings Legal reserve Special reserve Unappropriated retained earnings 890,626 229,459 700,837 - - (494,508) - - 729,391 - - - - - 729,391 - - - 890,626 229,459 935,720 960,709 365,705 1,715,388 171,539 - (171,539) - 88,878 (88,878) - - (1,270,232) 171,539 88,878 (1,530,649) - - 1,048,746 - - - - - 1,048,746 - - - - - - 1,132,248 454,583 1,233,485	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 (282,193) (83,513) - - - - (59,863) 2,289 (59,863) 2,289 - - (342,056) (81,224) (373,405) (81,178) - - - - - - - - - - 307,532 (144) 307,532 (144) - - - - (65,873) (81,322)	Total equity
		Exchange differences on translation of foreign financial statements (282,193) - - (59,863) (59,863) - (342,056) (373,405) - - - - - 307,532 307,532 - - (65,873)
Legal reserve 890,626 - - - - - 890,626 960,709 171,539 - - 171,539 - - - - - 1,132,248	Special reserve 229,459 - - - - - 229,459 365,705 - 88,878 - 88,878 - - - - - 454,583
			6,074,078
			(494,508)
			729,391 (57,574)
			671,817
			47,175
			6,298,562
			8,022,488
			- - (1,270,232)
			(1,270,232)
			1,048,746 307,388
			1,356,134
			114,313
			109,132
			8,331,835

See accompanying notes to consolidated financial statements.

(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 six months ended June 30, 2022 and 2021

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expenses Amortization expenses Expected credit losses (reversal gains) Net losses (gains) on financial assets or liabilities at fair value through profit or loss Interest expenses Interest income Others Changes in operating assets and liabilities: Decrease (increase) in notes and accounts receivable Decrease in other receivables Increase in inventories Increase in prepaid expenses and other current assets Increase in notes and accounts payable Decrease in other payable Increase in contract liabilities and other current liabilities Others Total changes in operating assets and liabilities Total adjustments Cash flows (used in) from operations Interest received Interest paid Income taxes paid Net cash flows (used in) from operating activities Cash flows from (used in) investing activities: Acquisition of property, plant and equipment Disposal of property, plant and equipment (Increase) decrease in refundable deposits Acquisition of intangible assets Decrease (increase) in prepayments for equipments Net cash flows used in investing activities Cash flows from (used in) financing activities: Decrease in short-term loans Proceeds from issuing bonds Payments of lease liabilities Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period	For the six months ended June 30, 2022 2021 $ 1,445,223 1,044,704 81,356 78,503 13,723 13,491 2,526 (22,886) 6,831 (5,443) 112,385 85,884 (2,282) (1,692) - 122 214,539 147,979 28,755 (1,598,700) 27,479 597,793 (4,112,527) (447,543) (6,068) (119,106) (4,062,361) (1,567,556) 675,355 2,678,766 (115,042) (740,363) 4,266 80,623 (7,586) (3,333) 556,993 2,015,693 (3,505,368) 448,137 (3,290,829) 596,116 (1,845,606) 1,640,820 2,282 1,692 (96,163) (81,421) (147,581) (20,591) (2,087,068) 1,540,500 (3,995) (7,490) - 283 (3,206) 222 (4,995) (6,122) 17 (433) (12,179) (13,540) (636,451) (926,128) 2,000,000 - (74,491) (70,591) 1,289,058 (996,719) 405,576 (75,689) (404,613) 454,552 2,266,607 2,486,340 $ 1,861,994 2,940,892
	2022 $ 1,445,223 81,356 13,723 2,526 6,831 112,385 (2,282) - 214,539 28,755 27,479 (4,112,527) (6,068) (4,062,361) 675,355 (115,042) 4,266 (7,586) 556,993 (3,505,368) (3,290,829) (1,845,606) 2,282 (96,163) (147,581) (2,087,068) (3,995) - (3,206) (4,995) 17 (12,179) (636,451) 2,000,000 (74,491) 1,289,058 405,576 (404,613) 2,266,607 $ 1,861,994

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

For the six months ended
June 30,
2022
2021
$ 1,445,223
1,044,704
81,356
78,503
13,723
13,491
2,526
(22,886)
6,831
(5,443)
112,385
85,884
(2,282)
(1,692)
-
122
214,539
147,979
28,755
(1,598,700)
27,479
597,793
(4,112,527)
(447,543)
(6,068)
(119,106)
(4,062,361)
(1,567,556)
675,355
2,678,766
(115,042)
(740,363)
4,266
80,623
(7,586)
(3,333)
556,993
2,015,693
(3,505,368)
448,137
(3,290,829)
596,116
(1,845,606)
1,640,820
2,282
1,692
(96,163)
(81,421)
(147,581)
(20,591)
(2,087,068)
1,540,500
(3,995)
(7,490)
-
283
(3,206)
222
(4,995)
(6,122)
17
(433)
(12,179)
(13,540)
(636,451)
(926,128)
2,000,000
-
(74,491)
(70,591)
1,289,058
(996,719)
405,576
(75,689)
(404,613)
454,552
2,266,607
2,486,340
$
1,861,994
2,940,892

2022
$ 1,445,223
81,356
13,723
2,526
6,831
112,385
(2,282)
-
214,539
28,755
27,479
(4,112,527)
(6,068)
(4,062,361)
675,355
(115,042)
4,266
(7,586)
556,993
(3,505,368)
(3,290,829)
(1,845,606)
2,282
(96,163)
(147,581)
(2,087,068)
(3,995)
-
(3,206)
(4,995)
17
(12,179)
(636,451)
2,000,000
(74,491)
1,289,058
405,576
(404,613)
2,266,607
$
1,861,994

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of June 30, 2022 and 2021

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2022 and 2021

(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 August 10, 2022.

(3) New standards, amendments and interpretations adopted:

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

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

●Amendments to IAS 16 “Property, Plant and Equipment—Proceeds before Intended Use”
－
●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
●Annual Improvements to IFRS Standards 2018–2020
●Amendments to IFRS 3 “Reference to the Conceptual Framework”
(b) The impact of IFRS issued by the FSC but not yet effective

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

●Amendments to IAS 1 “Disclosure of Accounting Policies”
●Amendments to IAS 8 “Definition of Accounting Estimates”
●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(Continued)

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

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

Standards or Effective date per Interpretations Content of amendment IASB Amendments to IAS 1 The amendments aim to promote January 1, 2023 “Classification of Liabilities consistency in applying the requirements as Current or Non-current” by helping companies determine whether, in the statement of balance sheet, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity.

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

The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its 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 IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information “

(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.

(Continued)

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

Except the following accounting policies mentioned below, the significant accounting policies adopted in the consolidated financial statements are the same as those in the consolidated financial statement for the year ended December 31, 2021. For the related information, please refer to note (4) of the consolidated financial statements for the year ended December 31, 2021.

(b) Basis of Consolidation

(i) List of subsidiaries in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Nature of operation	Shareholding	Shareholding
			June 30, 2022	December 31, 2021 June 30, 2021 % 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. (WKZ) 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

(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 rates 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.

(Continued)

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

(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, 2021. For related information, please refer to note (5) of the consolidated financial statements for the year ended December 31, 2021.

(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 2021 consolidated financial statements. Please refer to note (6) of the 2021 annual consolidated financial statements.

(a) Cash and cash equivalents

June 30, 2022 Cash on hand $ 475 Checking accounts and demand deposits 1,861,519 $ 1,861,994	December 31, 2021 488 2,266,119 2,266,607	June 30, 2021
		490 2,940,402
		2,940,892

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

June 30, 2022 Current financial assets at fair value through profit or loss: Non-derivative financial assets Stock listed on domestic markets $ 809	December 31, 2021 607	June 30, 2021 622

(Continued)

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

June 30, 2022 Non-current financial assets at fair value through profit or loss: Convertible bonds – embedded derivatives $ 25 Non-current financial liabilities at fair value through profit or loss: Convertible bonds – embedded derivatives $ 32,200	December 31, 2021 375 -	June 30, 2021 - 3,800

As of June 30, 2022, December 31 and June 30, 2021, the Group did not provide any financial assets and liabilities at fair value through profit or loss as collateral for its loans.

June 30, 2022 Equity investments at fair value through other comprehensive income: Domestic emerging market stock $ 372 Domestic unlisted stock 16,941 Overseas unlisted stock 22,608 $ 39,921	December 31, 2021 516 16,941 22,608 40,065	June 30, 2021
		6,637 17,865 22,609
		47,111

(i) Equity investments at fair value through other comprehensive income

The Group designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term strategic purposes.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments for the six months ended June 30, 2022 and 2021.

(ii) As of June 30, 2022, December 31 and June 30, 2021, the Group did not provide any financial assets at fair value through other comprehensive income as collateral for its loans.
(d) Notes and accounts receivable

June 30, 2022 Notes receivable $ 161,942 Accounts receivable-measured as amortized cost 11,049,653 Accounts receivable-fair value through other comprehensive income 2,402,409 13,614,004 Less: Loss allowance (96,304) $ 13,517,700	December 31, 2021 238,953 11,366,808 2,034,971 13,640,732 (91,751) 13,548,981	June 30, 2021 263,230 10,865,175 1,259,352 12,387,757 (87,148) 12,300,609 (Continued)

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

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 was 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 Credit rating Listed company (assessed by group) Level A Level B Unlisted company		June 30, 2022 Expected credit loss rate Loss allowance provision Credit impaired 0.50% 16,541 No 1.20% 18,021 No 1.33% 17,237 No 51,799 December 31, 2021 Expected credit loss rate Loss allowance provision Credit impaired 0.52% 20,909 No 1.40% 16,108 No 1.16% 16,663 No 53,680 June 30, 2021 Expected credit loss rate loss allowance provision Credit impaired 0.86% 23,189 No 1.26% 16,175 No 1.06% 14,083 No 53,447 (Continued)
	Carrying amount $ 3,341,659 1,502,686 1,295,370 $ 6,139,715	Expected credit loss rate 0.50% 1.20% 1.33% December
	Carrying amount $ 4,009,216 1,150,808 1,436,928 $ 6,596,952
	Carrying amount $ 2,697,726 1,282,103 1,333,116 $ 5,312,945	Expected credit loss rate 0.86% 1.26% 1.06%

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

The aging analysis of the Company's notes and accounts receivable was determined as follows:

June 30, 2022 Not past due $ 5,985,321 Overdue 90 days or less 110,424 Overdue 91 to 180 days 43,970 Overdue 181 days or more - $ 6,139,715	December 31, 2021 6,429,577 163,041 2,595 1,739 6,596,952	June 30, 2021
		5,181,700 121,450 9,144 651
		5,312,945

(ii) Subsidiaries

	June 30, 2022
Carrying amount Expected credit loss rate $ 6,835,921 0.02% 636,711 6.46% 1,360 100% 297 100% $ 7,474,289 December 31, 2021		Loss allowance provision
		1,703 41,145 1,360 297
		44,505

Carrying amount $ 6,516,929 524,592 879 1,380 $ 7,043,780	Expected credit loss rate 0.02% 6.63% 92.61% 100% June 30, 2021	Loss allowance provision
		1,107 34,770 814 1,380
		38,071

Carrying amount $ 6,511,484 557,658 2,414 3,256 $ 7,074,812	Expected credit loss rate 0.05% 4.71% 30.16% 100%	Loss allowance provision
		3,436 26,281 728 3,256
		33,701

(Continued)

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

For the six months ended June 30, 2022 and 2021, the movement in the allowance for notes and accounts receivable of the Group was as follows:

Balance at January 1 Impairment losses recognized (reversed) Amounts written off Reclassifications Effect of changes in foreign exchange rates Balance at June 30	For the six months ended June 30, 2022 2021 $ 91,751 112,529 2,526 (22,886) - (1,868) (21) - 2,048 (627) $ 96,304 87,148
	2022 $ 91,751 2,526 - (21) 2,048 $ 96,304

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 determined by agreements 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 June 30, 2022, December 31 and June 30, 2021, the Group sold its accounts receivable without recourse as follows:

		June 30, 2022	June 30, 2022
Purchaser	Amount Derecognized $ 2,823,650	Amount Paid Advanced Unpaid 2,546,165 - December 31, 2021		Amount Recognized in Other Receivables 277,485	Range of Interest Rate Significant Transferring Terms 0.85%~3.04% None
Financial institutions
Purchaser	Amount Derecognized $ 3,341,896	Amount Paid Advanced Unpaid 3,010,559 - June 30, 2021		Amount Recognized in Other Receivables 331,337	Range of Interest Rate Significant Transferring Terms 0.53%~1.14% None
Financial institutions
Purchaser	Amount Derecognized $ 3,193,391	Amount Paid 2,890,593	Advanced Unpaid -	Amount Recognized in Other Receivables 302,798	Range of Interest Rate Significant Transferring Terms 0.54%~1.12% None
Financial institutions

(Continued)

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

As of June 30, 2022, December 31 and June 30, 2021, 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

June 30, 2022 Other receivables－accounts receivable factored $ 277,485 Tax refund 45,802 Overdue receivables 22,150 Others 25,581 371,018 Less: Loss allowance (22,150) $ 348,868	December 31, 2021 331,337 32,623 22,121 12,387 398,468 (22,121) 376,347	June 30, 2021 302,798 3,091 22,122 9,195 337,206 (22,122) 315,084

For the six months ended June 30, 2022 and 2021, the movement in the allowance for other receivables was as follows:

Balance at January 1 Reclassification Effect of changes in foreign exchange rates Balance at June 30	For the six months ended June 30, 2022 2021 $ 22,121 22,124 21 - 8 (2) $ 22,150 22,122
	2022 $ 22,121 21 8 $ 22,150

As of June 30, 2022, December 31 and June 30, 2021, the Group did not provide any other receivables as collaterals for its loans.

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

(f) Inventories

June 30, 2022 Merchandise inventories $ 13,320,216 Goods in transit 1,079,179 $ 14,399,395	December 31, 2021 9,688,311 598,557 10,286,868	June 30, 2021 7,390,600 912,699 8,303,299

(Continued)

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

The details of the cost of sales were as follows:

For the three months ended June 30, 2022 2021 Inventory that has been sold $ 15,885,689 17,438,455 Write-down of inventories (Reversal of write-downs) 19,469 (74,211) Loss on disposal of inventories and others 847 408 $ 15,906,005 17,364,652	For the six months ended June 30, 2022 2021 31,490,756 32,226,502 35,700 (48,840) 962 57,226 31,527,418 32,234,888
	2022 31,490,756 35,700 962 31,527,418

As of June 30, 2022, December 31 and June 30, 2021, the Group did not provide any inventories as collaterals for its loans.

(g) Property, plant and equipment

Carrying amounts: Balance on January 1, 2022 Balance on June 30, 2022 Balance on January 1, 2021 Balance on June 30, 2021	Land $ 77,377 $ 77,377 $ 77,377 $ 77,377	Buildings and construction 29,202 28,771 30,065 29,634	Transportation equipment 4,316 3,949 3,854 4,927	Machinery equipment 8,581 8,321 4,817 7,273	Office and other facilities equipment 13,983 13,625 18,657 15,802	Total
						133,459
						132,043
						134,770
						135,013

The Group’s property, plant and equipment have no significant additions, disposals, impairments or reversals during for the six months ended June 30, 2022 and 2021. Information on depreciation for the period is disclosed in note (12)(a). For other related information, please refer to note (6)(g) of the 2021 annual consolidated financial statements.

(h) Right-of-use assets

Carrying amount: Balance on January 1, 2022 Balance on June 30, 2022 Balance on January 1, 2021 Balance on June 30, 2021	Buildings $ 314,404 $ 248,768 $ 184,073 $ 266,852	Transportation equipment 2,971 7,980 6,106 4,290	Total
			317,375
			256,748
			190,179
			271,142

There were no significant additions, disposal, or recognition and reversal of impairment losses of buildings and transportation equipments that are held as right-of-use assets for the six months ended June 30, 2022 and 2021. Please refer to note (6)(h) of the 2021 annual consolidated financial statements for other related information.

(Continued)

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

(i) Short-term borrowings

June 30, 2022 Unsecured loans $ 10,209,659 Short-term notes and bills payable, net 149,938 $ 10,359,597 Unused short-term credit lines $ 7,629,963 Range of interest rates 0.52%~3.75%	December 31, 2021 10,077,546 918,502 10,996,048 4,473,838 0.52%~3.9%	June 30, 2021 7,960,744 858,443
		8,819,187
		5,496,155
		0.52%~3.90%

(i) Issuance and repayment of borrowings

The Group’s additional amounts in loans for the six months ended June 30, 2022 and 2021 were $19,083,039 and $15,652,592, respectively, with maturities from July to December, 2022 and from July to December, 2021, respectively; and the repayments were $19,719,490 and $16,578,720, 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

June 30, 2022 Accrued expenses $ 295,810 Bonus payable 170,235 Remuneration to employees and directors 362,611 Interest payable 27,524 $ 856,180	December 31, 2021 319,556 340,548 278,657 14,011 952,772	June 30, 2021
		249,440 115,598 124,660 11,364
		501,062

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

(Continued)

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

(k) Convertible bonds payable
(i) Non-guaranteed convertible bonds:

June 30, 2022 Aggregate principal amount $ 3,000,000 Bond discount (143,017) Cumulative converted amount (981,700) Bonds payable at end of period $ 1,875,283 Embedded derivative – call and put options Included in non-current financial liabilities at fair value through profit or loss $ 32,200 Included in non-current financial assets at fair value through profit or loss $ 25 Equity component – conversion options (included in capital surplus – conversion options) $ 115,357	December 31, 2021 1,000,000 (7,564) (866,100) 126,336 - 375 7,634	June 30, 2021 1,000,000 (60,422) (50,000) 889,578 3,800 - 54,164

(ii) The effective interest rate of the fifth convertible bonds was 1.53%. The interest expenses on convertible bonds for the three months and six months ended June 30, 2022 and 2021, were $144, $3,538, $510 and $7,076, respectively.
(iii) There were no issues, repurchases and repayments of bonds payable for the six months ended June 30, 2021. Please refer to note (6)(k) to the 2021 annual consolidated financial statements for the related information.
(iv) The Company issued the sixth domestic unsecured convertible bonds, with a face value of $2,000,000 on June 1, 2022. The Company separated the convertible option from the liability and recognized it as equity and liability, respectively. The relevant information were as follows:

The compound interest present values of the convertible bonds’ face value at issuance The embedded derivative financial liabilities at issuance-redemption rights The equity components at issuance The total amounts of the convertible bonds at issuance	The Sixth
	$ 1,860,200 25,200 114,600 $ 2,000,000

The equity components were reported in capital surplus-conversion options. In accordance with IFRSs, the issue cost of the sixth domestic unsecured convertible bonds were allocated at $287 to the capital surplus-conversion options.

(Continued)

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

The gains or losses on recognition of financial liabilities was loss $7,000 for the six months ended June 30, 2022.

The effective interest rate of the sixth convertible bonds was 1.51%. The interest expenses on convertible bonds was $2,336 for the six months ended June 30, 2022.

(v) The main terms of issuance of the sixth convertible bonds were as follows:
1) Duration: five years (June 1, 2022 to June 1, 2027).
2) Interest rate: 0%.
3) Redemption clause: The Company may redeem the bonds under the following circumstances:
- a) Within the period between three months after the issuance date and 40 days before the end of duration, the Company may redeem the bonds at their principal amount if the closing prices of the Company’ s common stock on the Taiwan Stock Exchange for a period of 30 consecutive trading days has been 30% more than the conversion price in effect on each such trading day.
- b) If at least 90% of the principal amount of the bonds has been converted, redeemed, or purchased and cancelled, the Company may redeem the bonds at their principal amount within the period between three months after the issuance date and 40 days before the end of duration.
4) Redemption at the option of the bondholders:

The bondholders have the right to request the Company to repurchase the bonds at a price equal to the face value, plus, an accrued premium three and four years after the issuance date. The annual interest rates for the redemption are 0.5% both three and four years after the issuance date.

5) Conversion clause:
- a) Bondholders may request to have the bonds converted into the common stock of the Company in accordance with conversion clause from September 2, 2022 to June 1, 2027.
- b) Conversion price: NT$34.27 per share. Starting from July 31, 2022, the adjusted conversion price due to distribution of retained earnings for 2021 was $30.32.
(l) Lease liabilities

Lease liabilities
June 30, 2022 Current $ 111,949 Non-current $ 154,387	December 31, 2021 135,160 188,566	June 30, 2021
		113,797
		159,653

(Continued)

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

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 June 30, 2022 2021 $ 1,709 2,163 $ 1,539 1,577	For the six months ended June 30,	For the six months ended June 30,
2022 $ 1,709 $ 1,539	2022 3,558 3,047	2021
		3,272
		3,175

The amounts recognized in the consolidated statements of cash flows were as follows:

Total cash outflow for leases	For the six months ended June 30,	For the six months ended June 30,
	2022 $ 81,096	2021
		77,038

(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 6 years, of warehouses for 1 to 4 years, and of dormitories for 3 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 six months ended June 30, 2022 and 2021. Please refer to note (6)(m) of the 2021 annual consolidated financial statements for other related information.

(Continued)

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, 2021 and 2020.

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 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:

Operating expenses	For the three months ended June 30, 2022 2021 $ 278 274	For the six months ended June 30,	For the six months ended June 30,
	2022 $ 278	2022 557	2021
			548

(ii) Defined contribution plans

The Company and WKZ 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 WKZ allocates a fixed amount to the Bureau of the Labor Insurance without additional legal or constructive obligations.

The Company and WKZ recognized the pension costs under the defined contribution method amounting to $6,022, $5,720, $11,989 and $11,349 for the three months and six months ended June 30, 2022 and 2021, 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 $19,758, $15,919, $38,634 and $31,331 for the three months and six months ended June 30, 2022 and 2021, respectively.

(o) Income taxes

(i) Income tax expenses

The amounts of income tax for the three months and six months ended June 30, 2022 and 2021 were as follows:

were as follows:
Current tax expenses	For the three months ended June 30, 2022 2021 $ 200,797 208,002	For the six months ended June 30,
	2022 $ 200,797	2022 396,477	2021
			315,313

(Continued)

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 and six months ended June 30, 2022 and 2021 were as follows:

and six months ended June 30,	2022 and 2021 were as follows:
Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements	For the three months ended June 30, 2022 2021 $ 38,854 (18,440)	For the six months ended June 30, 2022 2021 76,883 (14,966)
	2022 $ 38,854

(ii) Income tax asessment

The Company's and WKZ's income tax returns through 2020 have been examined and approved by the R.O.C. tax authorities.

(p) Capital and other equities

A resolution was passed at the shareholders' meeting held on June 16, 2022, and July 20, 2021, to increase the Company's registered capital to $6,000,000 and $5,500,000, respectively. The registration procedure has been completed.

As of June 30, 2022, December 31 and June 30, 2021, the total number of authorized ordinary shares were 600,000 thousand shares, 550,000 thousand shares and 450,000 thousand shares, respectively, with par value of TWD 10 per share. The total value of authorized ordinary shares amounted to $6,000,000, $5,500,000 and $4,500,000, respectively. As of that date, 422,389 thousand shares, 415,934 thousand shares and 370,394 thousand shares of ordinary shares were issued. All issued shares were paid up upon issuance.

(i) Common stock

For the six months ended June 30, 2022, 6,454 thousand new common shares, with a par value of TWD 10, amounting to $64,544, were issued due to the conversion of convertible bonds. As of reporting date, the related registration procedures for 6,320 thousand shares were completed.

(ii) Capital surplus

Balances on capital surplus of the Company were as follows:

June 30, 2022 Additional paid in capital $ 1,280,889 Treasury share transactions 37,617 Donation from shareholders 712 Convertible bonds – conversion options 115,357 Others 253 $ 1,434,828	December 31, 2021 1,229,711 37,617 712 7,634 253 1,275,927	June 30, 2021 869,351 37,617 712 54,164 253 962,097 (Continued)

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

For the six months ended June 30, 2022, the capital surplus deriving from those convertible bonds, which were converted to common stock, amounted to $44,588 (including the capital surplus-conversion options transferred to the capital surplus-additional paid-in capital of $6,590).

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

(iii) 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 and submitted by the Board of Directors and afterwards approved by the stockholders’ meeting. 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 to determine 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 distributable 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 over two-thirds directors present and approved by a majority vote of the present directors, then shall be reported to shareholders meeting.

1) Earnings distribution

The amounts for cash dividends of the Company’s earnings distribution for 2021 and 2020 were decided by the Board meeting held on March 25, 2022 and March 26, 2021.

Dividends distributed to ordinary shareholders: Cash dividends	2021 Amount per share (in dollars) Total amount $ 3.00725919 1,270,232	2020 Amount per share (in dollars) Total amount 1.33341226 494,508 (Continued)	2020 Amount per share (in dollars) Total amount 1.33341226 494,508 (Continued)
	Amount per share (in dollars) $ 3.00725919		Total amount
			494,508
			(Continued)

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

(q) Earnings per share

The Company's 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

Profit attributable to ordinary shareholders of the Company	For the three months ended June 30, 2022 2021 $ 542,853 455,337	For the six months ended June 30,	For the six months ended June 30,
	2022 $ 542,853	2022 1,048,746	2021
			729,391

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

Weighted-average number of ordinary shares	For the three months ended June 30, 2022 2021 421,178 367,751	For the three months ended June 30, 2022 2021 421,178 367,751	For the six months ended June 30,	For the six months ended June 30,
		2022 421,178	2022 419,458	2021
				367,751

(ii) Diluted earnings per share
1) Profit attributable to ordinary shareholders of the Company (diluted)

For the three months ended June 30, 2022 2021 Profit attributable shareholders of the Company (basic) $ 542,853 455,337 Convertible bonds payable 9,483 593 Profit attributable to ordinary shareholders of the Company (diluted) $ 552,336 455,930	For the six months ended June 30,	For the six months ended June 30,
	2022 1,048,746 9,858 1,058,604	2021
		729,391 1,631
		731,022

(Continued)

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

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

For the three months ended June 30, 2022 2021 421,178 367,751 21,472 52,854 4,193 3,412 446,843 424,017	For the six months ended June 30,	For the six months ended June 30,
2022 421,178 21,472 4,193 446,843	2022 419,458 13,626 6,761 439,845	2021
		367,751 52,854 5,074
		425,679

(r) Revenue from contracts with customers

(i) Disaggregation of revenue

For the three months ended June 30, 2022 2021 $ 1,848,829 1,913,498 14,483,531 15,656,310 1,088,657 1,110,260 $ 17,421,017 18,680,068 $ 6,872,498 7,280,269 10,547,728 11,398,583 791 1,216 $ 17,421,017 18,680,068	For the six months ended June 30,	For the six months ended June 30,
2022 $ 1,848,829 14,483,531 1,088,657 $ 17,421,017 $ 6,872,498 10,547,728 791 $ 17,421,017	2022 3,712,948 28,259,686 2,372,928 34,345,562 12,895,981 21,446,243 3,338 34,345,562	2021
		3,540,765 28,814,230 2,148,219
		34,503,214
		12,766,086 21,731,958 5,170
		34,503,214

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.

(Continued)

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

For the three months and six months ended June 30, 2022 and 2021, the Group was determined as an agent in the aforementioned transactions which revenue amounted to $0, $0, $0 and $3,643, respectively. Due to the above transactions, all of the other receivables and the other payables amounted to $0 as of June 30, 2022 and 2021.

(ii) Contract balance

Notes and accounts receivable (included related parties) Less: allowance for impairment Contract liabilities	June 30, 2022 $ 13,614,004 (96,304) $ 13,517,700 $ 236,537	December 31, 2021 13,640,732 (91,751) 13,548,981 305,931	June 30, 2021 12,387,757 (87,148) 12,300,609 281,257

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

The amounts of revenue recognized for the six months ended June 30, 2022 and 2021 that were included in the contract liability balance at the beginning of the periods were $262,032 and $161,464, 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.

(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 and six months ended June 30, 2022 and 2021, the accrued remuneration of the Company’s employees were $59,833, $50,944, $116,155 and $81,198; as well as directors were $14,958, $12,736, $29,039 and $20,299, 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.

(Continued)

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

The accrued remuneration of the Company’ s employees was $191,512 and $78,442 as well as remuneration of directors was $47,878 and $19,611 for the years ended December 31, 2021 and 2020, 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 statements for the year ended December 31, 2021.

(i) Credit risk

For credit risk exposure of notes and accounts receivable, please refer to note (6)(d).

The amount of other financial assets at amortized cost include other receivables which had been impaired. For the six months ended June 30, 2022 and 2021 loss allowance provision, please refer to the note (6)(e).

(ii) Liquidity risk

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

June 30, 2022 Non-derivative financial liabilities Unsecured loans Short-term notes and bill payable Lease liabilities Notes and accounts payable Other payables and dividends payable Bonds payable Derivative financial liabilities Converible bonds – embedded derivatives December 31, 2021 Non-derivative financial liabilities Unsecured loans Short-term notes and bills payable Lease liabilities Notes and accounts payable Other payables Bonds payable	Carrying Amount $ 10,209,659 149,938 266,336 5,983,503 2,126,412 1,875,283 32,200 $ 20,643,331 $ 10,077,546 918,502 323,726 5,308,148 952,772 126,336 $ 17,707,030	Contractual cash flows (10,243,502) (150,000) (276,374) (5,983,503) (2,126,412) (2,018,300) - (20,798,091) (10,099,600) (920,000) (339,394) (5,308,148) (952,772) (133,900) (17,753,814)	Within a year (10,243,502) (150,000) (115,848) (5,983,503) (2,126,412) - - (18,619,265) (10,099,600) (920,000) (141,152) (5,308,148) (952,772) - (17,421,672)	Over 1 year
				- - (160,526) - - (2,018,300) - (2,178,826) - - (198,242) - - (133,900) (332,142)

(Continued)

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

June 30, 2021 Non-derivative financial liabilities Unsecured loans Short-term notes and bill payable Lease liabilities Notes and accounts payable Other payables and dividends payable Bonds payable Derivative financial liabilities Convertible bonds – embedded derivatives	Carrying Amount $ 7,960,744 858,443 273,450 6,254,626 995,570 889,578 3,800 $ 17,236,211	Contractual cash flows (7,978,263) (860,000) (291,598) (6,254,626) (995,570) (950,000) - (17,330,057)	Within a year (7,978,263) (860,000) (120,588) (6,254,626) (995,570) - - (16,209,047)	Over 1 year - - (171,010) - - (950,000) - (1,121,010)

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

(iii) Market risk

1) Currency risk

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

Foreign currency Financial assets Monetary items USD $ 259,089 USD 734 Non-monetary items USD 745 Financial liabilities Monetary items USD 183,721 USD 24,102		June 30, 2022	June 30, 2022	December 31, Foreign currency Exchange rate	December 31,	December 31,	2021	Foreign currency	June 30, 2021
	Foreign currency	Exchange rate	TWD			Exchange rate	TWD		Exchange rate TWD
		USD/TWD 29.67 7,687,193 USD/CNY 6.7421 21,763 USD/TWD 29.67 22,104 USD/TWD 29.67 5,450,999 USD/CNY 6.7421 715,102		294,374 388 745 196,128 24,714		USD/TWD 27.68 8,148,260 USD/CNY 6.3935 10,731 USD/TWD 27.68 20,622 USD/TWD 27.68 5,428,819 USD/CNY 6.3935 684,073		257,128 1,388 745 168,922 25,149	USD/TWD 27.895 7,172,578 USD/CNY 6.4602 38,727 USD/TWD 27.895 20,782 USD/TWD 27.895 4,712,082 USD/CNY 6.4602 701,538

(Continued)

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

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 six months ended June 30, 2022 and 2021 would have increased (decreased) the other comprehensive income (before tax) $1,105 and $1,039, respectively. For the six months ended June 30, 2022 and 2021 would have increased (decreased) the net profit before tax as follows. The analysis is performed on the same basis for both periods.

USD (against the TWD) Appreciating 5% Depreciating 5% USD (against the CNY) Appreciating 5% Depreciating 5%	For the six months ended June 30, 2022 2021 $ 111,810 123,025 (111,810) (123,025) (34,667) (33,141) 34,667 33,141

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 and six months ended June 30, 2022 and 2021, the foreign exchange gain (loss), including both realized and unrealized, amounted to a loss of $27,390, a loss of $1,207, a gain of $45,871 and a gain of $12,820, 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 June 30, 2022 June 30, 2021 $ 1,357,959 2,177,279 (10,209,659) (7,960,744)

(Continued)

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

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 based on 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 $11,065 and $7,229 for the six months ended June 30, 2022 and 2021, 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:

Financial assets mandatorily measured at fair value through profit or loss Stocks listed on domestic markets Convertible bonds – embedded derivatives Subtotal Financial assets at fair value through other comprehensive income Notes and accounts receivable, net Emerging market stocks Stocks unlisted on domestic markets and overseas market Subtotal		June 30, 2022	June 30, 2022	June 30, 2022
	Carrying amount $ 809 25 834 2,402,409 372 39,549 2,442,330		Fair Value
		Level 1 809 - - 372 -	Level 2 - 25 - - -	Level 3 Total - 809 - 25 - - - 372 39,549 39,549

(Continued)

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

June 30, 2022	June 30, 2022	June 30, 2022
	Fair Value
Level 1 Level 2 Level 3 Total - - - - - - - - - - - - - - - - - 32,200 - 32,200 - - - - - - - - - - - - - - - - - - - - December 31, 2021
	Fair Value
Level 1 607 -	Level 2 - 375	Level 3 Total - 607 - 375

(Continued)

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

Financial assets at fair value through other comprehensive income Notes and accounts receivable, net Emerging market stocks Stocks unlisted on domestic markets and overseas market Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Other receivables Guarantee deposits Subtotal Financial liabilities measured at amortized cost Bank loans Lease liabilities Notes and accounts payable Other payables Bonds payable Subtotal			December 31, 2021	December 31, 2021	December 31, 2021
				Fair Value
			Level 1 - 516 - - - - - - - - - -	Level 2 - - - - - - - - - - - -	Level 3 Total - - - 516 39,549 39,549 - - - - - - - - - - - - - - - - - -

(Continued)

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 stocks Stocks unlisted on domestic markets and overseas market Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Other receivables Guarantee deposits Subtotal Financial liabilities at fair value through profit or loss Convertible bonds – embedded derivatives Financial liabilities measured at amortized cost Bank loans Lease liabilities Notes and accounts payable Other payables and dividends payable Bonds payable Subtotal		June 30, 2021	June 30, 2021	June 30, 2021
	Carrying amount $ 622 1,259,352 6,637 40,474 1,306,463 2,940,892 11,041,257 311,993 73,245 14,367,387 $ 15,674,472 $ 3,800 8,819,187 273,450 6,254,626 995,570 889,578 17,232,411 $ 17,236,211		Fair Value
		Level 1 622 - 6,637 - - - - - - - - - - -	Level 2 - - - - - - - - 3,800 - - - - -	Level 3 Total - 622 - - - 6,637 40,474 40,474 - - - - - - - - - 3,800 - - - - - - - - - -

There were no transfers of financial instruments between any levels for the six months ended June 30, 2022 and 2021.

(Continued)

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

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.

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, 2022	$	39,549
(the same as ending Balance, June 30, 2022)
Opening balance, January 1, 2021	$	40,474
(the same as ending Balance, June 30, 2021)

(Continued)

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

5) Quantified information of 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”.

Quantified information of significant unobservable inputs was as follows:

Inter-relationships between significant unobservable inputs Valuation Significant and fair value Item technique unobservable inputs measurement Financial assets at fair Guideline Public ‧ Enterprise value to sale ‧ The higher the pricevalue through other Company method ratio as of June 30, 2022 to-sales ratio,pricecomprehensive income and December 31, 2021 book ratio, and the were 1.39 and 1.61, enterprise value to sale respectively. ratio, the higher the fair value ‧ Price-to-sale ratio as of 〃 June 30, 2021 was 0.85. ‧ Price-book ratio as of 〃 June 30, 2022, December 31 and June 30, 2021 were 0.79, 0.9 and 0.91, respectively. ‧ ‧ Market liquidity The higher the market discount rate as of June liquidity discount 30, 2022, December 31 rate,the lower the fair and June 30, 2021 were value 17.45%, 17.45% and 17.25%, respectively. Financial assets at fair Net Asset Value ‧ Net asset value ‧ Not applicable value through profit or Method loss

(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, 2021.

(Continued)

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

(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, 2021. 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, 2021. Please refer to note (6)(v) of the consolidated financial statements for the year ended December 31, 2021 for further details.

(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 six months ended June 30, 2022 and 2021, were as follows:

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

The reconciliations of liabilities arising from financing activities were as follows:

Short-term loans Lease liabilities Bonds payable Total liabilities from financing activities Short-term loans Lease liabilities Bonds payable Total liabilities from financing activities	January 1, 2022 $ 10,996,048 323,726 126,336 $ 11,446,110 January 1, 2021 $ 9,745,315 190,939 929,322 $ 10,865,576	Cash flows (636,451) (74,491) 2,000,000 1,289,058 Cash flows (926,128) (70,591) - (996,719)	Non-cash changes Acquisition Reduction Foreign exchange movement - - - 7,559 (427) 9,969 - (251,053) - 7,559 (251,480) 9,969 Non-cash changes Acquisition Reduction Foreign exchange movement - - - 153,694 (2,982) 2,390 - (39,744) - 153,694 (42,726) 2,390	June 30, 2022
				10,359,597 266,336 1,875,283
				12,501,216
				June 30, 2021
				8,819,187 273,450 889,578
				9,982,215

(7) Related-party transactions

(a) Name and relationships with related parties

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

The following are entities that have had consolidated financial statements:	transactions with the Group during the period cover
Related-party	Relationship
Weiji Investment Co., Ltd.	The same chairman
Genlog Industrial Co., Ltd.	Substantive related-party

(Continued)

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:

Other related parties	For the three months ended June 30, 2022 2021 $ - -	For the six months ended June 30,	For the six months ended June 30,
	2022 $ -	2022 -	2021
			13

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:

Other related parties	For the three months ended June 30, 2022 2021 $ 1,331 1,834	For the six months ended June 30,	For the six months ended June 30,
	2022 $ 1,331	2022 3,023	2021
			3,516

(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:

(iv)	For the three months ended June 30, 2022 2021 Other related parties $ 228 298 Payable to related parties Account Related party categories June 30, 2022 Other payables Other related parties $ 326	For the six months ended June 30,	For the six months ended June 30,
		2022 457 December 31, 2021 355	2021
			596
			June 30, 2021
			615

(Continued)

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 June 30, 2022 2021 $ 81,675 66,721 209 208 $ 81,884 66,929	For the six months ended June 30,	For the six months ended June 30,
2022 $ 81,675 209 $ 81,884	2022 154,292 419 154,711	2021
		115,604 415
		116,019

(8) Assets pledged as security: None

(9) Commitments and contingencies:

The balances of L/Cs for deferred payment of import value added tax and the purchase of merchandise were as follows:

June 30, 2022 $ 337,634	December 31, 2021 188,312	June 30, 2021 499,215

(10) Losses Due to Major Disasters: None

(11) Subsequent Events: None

(12) Other:

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

	For the three months ended June 30,	For the three months ended June 30,
By function By item	2022	2021
	Operating expenses	Operating expenses
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	374,583 27,077 26,058 26,984 12,307 41,143 6,989	341,083 26,257 21,913 29,211 15,358 39,267 6,071

(Continued)

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

	For the six months ended June 30,	For the six months ended June 30,
By function By item	2022	2021
	Operating expenses	Operating expenses
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	751,338 56,452 51,180 52,602 24,705 81,356 13,723	638,166 52,307 43,228 43,437 30,055 78,503 13,491

(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 six months ended June 30, 2022:

(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)	(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 by a subsidiary	12,497,753 12,497,753 12,497,753	7,062,162 887,855 1,341,796	7,062,162 815,925 1,341,796	6,200,291 386,356 710,912	- - -	% 84.76 % 9.79 % 16.10	24,995,505 24,995,505 24,995,505	Y Y Y	N N N	N N 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”.

(Continued)

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

(iii) Securities held as of June 30, 2022 (excluding investment in subsidiaries, associates and joint ventures):

					(Shares/units (thousands))	(Shares/units (thousands))	(Shares/units (thousands))	(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. 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-non- current 〃〃〃〃〃	34 15 750 230 - 960 800	$ 809 $ 372 $ 7,458 2,301 15,150 4,800 9,840 $ 39,549	- 0.02 6.79 10.49 9.90 12.00 1.61	$ 809 $ 372 $ 7,458 2,301 15,150 4,800 9,840 $ 39,549

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of TWD300 million or 20% of the capital stock: None
(v) Acquisition of individual real estate with amount exceeding the lower of TWD300 million or 20% of the capital stock: None
(vi) Disposal of individual real estate with amount exceeding the lower of TWD300 million or 20% of the capital stock: None
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of TWD100 million or 20% of the capital stock:

							(In thousands)	(In thousands)	(In thousands)	(In thousands)	(In thousands)
Name of company	Related party	Nature of relationship		Transaction details			Transactions with terms different from 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)
The Company The Company WKI WKI	WKI WKI The Company The Company	100% owned subsidiary 100% owned subsidiary Parent company Parent company	(Sales) Purchases Purchases (Sales)	(104,600) (USD(3,600)) 115,696 (USD4,021) 104,600 (USD3,600) (115,696) (USD(4,021))	(0.77)% 0.83 % 0.55 % (0.64)%	OA30 〃〃〃	No significant difference with other customers No significant difference with other suppliers 〃 No significant difference with other customers	No significant difference with other customers No significant difference with other suppliers 〃 No significant difference with other customers	89,487 (USD3,016) - (USD - ) (89,487) (USD(3,016)) - (USD - )	1.44 % - % (3.63) % - %

(Continued)

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

Name of company	Related party	Nature of relationship	Transaction details	Transaction details	Transaction details	Transaction details	Transaction different f	s with terms rom others	Notes/Accounts receivable (payable)	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	(2,656,117) (USD(92,529)) 2,656,117 (USD92,529)	(14.71)% 66.32 %	OA60 〃	No significant difference with other customers No significant difference with other suppliers	No significant difference with other customers No significant difference with other suppliers	697,057 (USD23,494) (697,057) (USD(23,494))	12.43 % (53.02) %

Note: The amounts of the transaction and the ending balance had been offset in the consolidated financial statements.

(viii) Receivables from related parties with amounts exceeding the lower of TWD100 million or 20% of the capital stock:

					(In thousands)	(In thousands)	(In thousands)	(In thousands)	(In thousands)
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
The Company WKI	WKI WKS	100% owned subsidiary Subsidiary	Other receivables 158,542 (USD5,344) Accounts receivable 697,057 (USD23,494)	- 7.66	- -	- -	USD 2,199 USD 10,933	- -	The amounts of the transaction and the ending balance had been offset in the consolidated financial statements. 〃

Note: Information as of August 2, 2022.

(ix) Trading in derivative instruments: Please refer to note (6)(b).
(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 〃〃	The Company 〃〃	WKI 〃〃	1 〃〃	Sales Revenue Management and Credit Service Revenue Other Receivables	104,600 175,545 158,542	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 the receivable is received quarterly. 〃	0.30% 0.51% 0.51%

(Continued)

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

No. (Note 1)	Name of company	Name of counter-party	Nature of relationship (Note 2)	Intercompany transactions	Intercompany transactions	Intercompany transactions	Intercompany transactions
				Account name	Amount	Trading terms	Percentage of the consolidated net revenue or total assets
1 〃〃	WKI 〃〃	The Company WKS 〃	2 3 〃	Sales Revenue Sales Revenue Accounts Receivable	115,696 2,656,117 697,057	The price is marked up based on operating cost, and the receivables depend on OA30 after offsetting the accounts payable. The price is marked up based on operating cost, and the receivables depend on funding demand and OA60. 〃	0.34% 7.73% 2.25%

Note 1: The numbers filled in as follows:

0 represents the Company.
Subsidiaries are sorted in a numerical order starting from 1.

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 six months ended June 30, 2022 (excluding information on investees in Mainland China):

										(In thousands)	(In thousands)
Name of investor	Name of investee	Location	Main businesses and products	Original invest	ment amount	Highest			Net income (losses) of investee	Investment income (losses) of investor	Note
				June 30, 2022	December 31, 2021	Shares (In Thousands)	Percentage of Ownership	Carrying amount
The Company 〃〃 WKI	WKI WKZ WTP Weitech	Hong Kong Taiwan Singapore Hong Kong	Electronic components computer peripherals products distribution and technical support Electronic components and technical support 〃 Import and export trade of electronic components	$ 1,322,295 12,983 293,327 $ 1,628,605 0.41 (HKD0.1)	1,322,295 12,983 293,327	473,950 1,589 12,413 -	100% 100% 100% 100%	$ 6,174,048 25,711 461,753	585,966 (220) 66,413 (426) (USD(15))	$ 585,966 (220) 66,413	Subsidiary 〃〃 Sub- subsidiary
					1,628,605			$ 6,661,512		$ 652,159
					0.41 (HKD0.1)			1,773 (USD60)		(426) (USD(15))

(c) Information on investment in mainland China:
(i) The names of investees in Mainland China, the main businesses and products, and other information:

												(In thousands)
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, 2022	Inves flo	tment ws	Accumulated outflow of investment from Taiwan as of June 30, 2022	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 E c d s WKE E d a	lectronic components omputer peripherals products istribution and technical upport lectronic technology evelopment and technical dvisory	786,647 (USD25,000) 5,067 (CNY1,000)	Note 1、4 Note 1、5	304,594 (USD9,800) -	- -	- -	304,594 (USD9,800) -	6,403 (USD223) (Note 2) (1,374) (USD(48))	100% 100%	6,403 (USD223) (Note 2) (1,374) (USD(48))	734,616 (USD24,760) 4,372 (USD147)	- -

(Continued)

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

(ii) Limitation on investment in Mainland China:

Accumulated Investment in Mainland China as of June 30, 2022	Investment Amounts Authorized by Investment Commission, MOEA (note 3)	Upper Limit on Investment
304,594 (USD9,800 thousand)	741,750 (USD25,000 thousand)	4,999,101

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 rate at the end of reporting period. (NTD: 29.67/USD)

Note 4: The difference was due to Weikeng International Co. Ltd.'s investment of USD15,200 thousand on Weikeng International (Shanghai) Co. Ltd. using its own funds.

Note 5: The difference was due to Weikeng International (Shanghai) Co. Ltd.'s investment of CNY1,000 thousand 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 2022.

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Weiji Investment Co., Ltd.	30,426,876	% 7.20

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.

(Continued)

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

(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 sheets for the segment profit and assets, respectively.

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Weikeng — Interim / Quarterly Report 2022

52266_rns_2022-11-29_99c6c2c5-cd61-48eb-b4dd-b9847cedd845.pdf

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

KPMG

Independent Auditors’ Review Report

Introduction

Scope of Review

Conclusion

KPMG

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards as of June 30, 2022 and 2021

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2022, December 31, and June 30, 2021

(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 and six months ended June 30, 2022 and 2021

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Reviewed only, not audited in accordance with generally accepted auditing standards

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Consolidated Statement of Cash Flows

For the six months ended June 30, 2022 and 2021

WEIKENG INDUSTRIAL CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2022 and 2021

(1) Company history

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

(3) New standards, amendments and interpretations adopted:

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

(4) Summary of significant accounting policies

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

(b) Basis of Consolidation

(c) Income taxes

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

(d) Employee benefits

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

(6) Explanation of significant accounts

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

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

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

(ii) Subsidiaries

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

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

(e) Other receivables

(f) Inventories

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

(g) Property, plant and equipment

(h) Right-of-use assets

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

(i) Short-term borrowings

(i) Issuance and repayment of borrowings

(j) Other payables

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

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

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

(ii) Other leases

(m) Operating lease — as lessor

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

(n) Employee benefits

(i) Defined benefit plans

(o) Income taxes

(i) Income tax expenses

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

(ii) Income tax asessment

(p) Capital and other equities

(i) Common stock

(ii) Capital surplus

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

(iii) Retained earnings

1) Earnings distribution

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

(q) Earnings per share

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

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

(ii) Contract balance

(s) Remuneration to employees and directors

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

Weikeng Interim / Quarterly Report 2022