Arima Communications : Announcement of the Company’s Unqualified Opinion by CPA &Independent Audit’Report on Material Uncertainty Related toGoing Concern for Q4 2021.

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Provided by: Arima Communications Corp.
SEQ_NO	2	Date of announcement	2022/03/25	Time of announcement	19:26:03
Subject	Announcement of the Company's Unqualified Opinion by CPA &Independent Audit'Report on Material Uncertainty Related toGoing Concern for Q4 2021.
Date of events	2022/03/25	To which item it meets	paragraph 30
Statement	1.Date of occurrence of the event:2022/03/25 2.Full text of the CPA audit opinion: To the Board of Directors and Stockholders of Arima Communications Corp.: Opinion We have audited the accompanying consolidated balance sheets of Arima Communications Corp.and subsidiaries ("the Group") as of December 31, 2021 and 2020, the related consolidated statementsof comprehensive income, statements of changes in equity and cash flows for the years ended December 31, 2021 and 2020. In our opinion, based on our audits and the reports of the other independent accountants referred to in Other matter section of our report, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as of December 31, 2021 and 2020,and the results of its operations and cash flows for the years ended December 31, 2021 and 2020, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with International Financial Reporting Standard ("IFRS"), International Accounting Standards ("IAS"), Interpretations developed by the International Financial Reporting Interpretations Committee ("IFRIC") or the former Standard Interpretations Committee ("SIC") endorsed and issued into effect by Financial Supervisory Commission of the Republic of China. Basis of opinion We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters. In our judgment, the key audit matters we communicated in the auditor's report were as follows: (1) Inventory valuation Please refer to Note 4(8) for the accounting policy of inventory valuation. Please refer to Note 5(1) for estimates and assumptions of the inventory valuation. Please refer to Note 6(4) for disclosures of inventory valuation. Description: The Group's inventories are measured at the lower of cost and net realizable value. Due to rapid progress and replacement of technology, as well as new products and upgrade of production technology, consumer demand may significantly change. As a result, the estimation of the net realizable value of inventories depends on the subjective judgment of the management, which is an accounting estimate with uncertainty. Therefore, inventory evaluation is a key audit matter. How our audit addressed the matter: The main audit procedures include understanding the Group's inventory valuation policy and examining whether it has been implemented as specified, sampling to inspect the correctness of inventory aging and analyzing changes in inventory aging, reviewing the reasonableness of the allowance for inventory valuation in prior years and comparing it with the method and assumptions used to estimate the allowance for inventory valuation in the current period to assess their appropriateness. (2) Impairment of property, plant and equipment Please refer to Note 4(12) & (15) for the accounting policy of impairment of property, plant and equipment. Please refer to Note 5(2) for accounting estimates and assumptions of impairment of property, plant and equipment. Please refer to Note 6(8) for the details and changes. Description: The Group operates in a high capital expenditure industry, and production capacity is necessary as the industry develops. However, due to the price fluctuation of main raw materials and the tightening of market demand, the profitability varies greatly. Therefore, the impairment assessment of property, plant and equipment is important. The impairment assessment process of property, plant and equipment includes identifying cash-generating units, determining valuation methods, selecting important assumptions and calculating recoverable amounts, etc. All of the above must rely on the subjective judgment of the management, which is an accounting assessment with a high degree of uncertainty. How our audit addressed the matter: The main audit procedures on property, plant and equipment impairment assessment include evaluating the cash-generating units as well as the internal and external indications of impairment identified by the management, obtaining the impairment report issued by the external experts entrusted by the management, and reviewing significant subsequent transactions to identify matters, if any, occurring after the balance sheet date and affecting the impairment test. (3) Related party transactions Please refer to Note 4(7) for the accounting policy of loan. Please refer to Note 7 fordisclosures. Description: The Group has frequent transactions, which are considered to be more controllable, with related parties. The reasonableness and commercial substance of these transactions has a significant impact on their presentation in consolidated financial statements. Therefore, it is a key audit matter. How our audit addressed the matter: The main audit procedures include obtaining the list of related party transactions provided by the management and the letter of representation that all related party transactions have been listed, reviewing the types of related party transactions, checking or sampling the original vouchers or related documents of each related party transaction listed in the in the list, inquiring the management to understand the reasons for related party transactions and the basis and rationality of transaction prices, reviewing the actual receipts and payments of receivables and payables arising from related party transactions, considering the various evidence obtained above to evaluate the rationality of the management's claim that their related party transactions are of commercial substance, sending confirmation letters to related parties and reconciling the response with the list of related party transactions, examining whether significant subsequent events has affected the original processing of related party transactions, and reviewing whether various related party transactions have been properly disclosed in consolidated financial statements. Material Uncertainty Related to Going Concern As described in Note 12(4) to the consolidated financial statements, the Group had a cumulative loss of NT$1,638,919 thousand as of December 31, 2021 due to continuing losses which amounted to 79% of the paid-in capital, its current liabilities exceeded its current assets by NT$122,004 thousand and debt ratio reached 62%, indicating that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter Other matter The financial statements of certain investee companies, which were accounted for under equity method in the consolidated balance sheet as of December 31, 2021 and 2020, were audited only by other independent auditors. Our audit, insofar as it related to the investment, is based on the other independent auditors' reports. The investment amounted to NT$377,773 thousand and NT$410,946 thousand, which represented 35.18% and 15.78% of the total assets as of December 31, 2021 and 2020, respectively. The share of profit of the certain investee companies under equity method amounted to NT$37,868 thousand and NT$9,526 thousand, which represented 200.68% and (1.48)% of the loss from continuing operations before income tax for the years ended December 31, 2021 and 2020, respectively. We have also audited the parent company only financial statements of Arima Communications Corp. as of and for the years ended December 31,2021 and 2020, and have expressed an unqualified opinion on such financial statements. Responsibilities of the management and those charged with governance for the consolidated financial statements The management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparations of Financial Report by Securities Issuers and with IFRS, IAS, IFRIC and SIC endorsed and issued into effect by Financial Supervisory Commission of the Republic of China, and for internal control necessary to enable the preparation of the Group's consolidated financial statements to be free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including the audit committee, are responsible for overseeing the Group's financial reporting process. Auditor's responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the generally accepted auditing standards in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: (1) Identify and assess the risks of material misstatements of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control. (3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. (4) Conclude on the appropriateness of the management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern. (5) Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. (6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethica1 requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, andwhere applicable, related safeguards. From the matters communicated with those charged with governance, we determine thosematters that were of most significance in the audit of the consolidated financia1 statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes pub1ic disclosure about the matter or when, in extreme1y rare circumstances, we determine that a matter shou1d not be communicated in our report because the adverse consequences of doing so wou1d reasonably be expected to outweigh the public interest benefits of such communication. 3.Name of the accounting firm: L.H. CHEN & CO., CPAs 4.CPA name and auditor certificate No.1: Tseng-Kuo Huang,auditor certificate No.1000063960 5.CPA name and auditor certificate No.2: Chih-Jou Tai,auditor certificate No.1070303180 6.Date of audit (review) report:2022/03/25 7.Countermeasures:None 8.Any other matters that need to be specified:None