Share Dilution

Qisda: The Board of Directors’ Resolution to Issue New Ordinary Shares for Cash in a Private Placement (“Private Placement Shares”)

Declaration

1.Date of the board of directors resolution:2022/03/07
2.Types of securities privately placed:Common shares
3.Counterparties for private placement and their relationship with
the Company:
The investors to subscribe the Private Placement Shares shall meet the
qualifications listed in Article 43-6 of the Securities and Exchange Law
and are limited to strategic investor(s) whom could benefit the Company's
long term development, competitiveness, and existing shareholders' rights.
The Board is fully authorized to determine the specific investor(s).
4.Number of shares or bonds privately placed:
It will be proposed that the shareholders meeting to authorize the Board,
within the limit of 195,000,000 common shares and preferred shares,
depending on the market conditions and the Company's capital needs, to
choose appropriate timing and fund raising method(s), to issue new common
shares for cash to sponsor DR Offering and/or issue new common shares for
cash in public offering and/or issue new preferred shares for cash in public
offering and/or issue Private Placement Shares and/or issue Private Placement
CB, in accordance with the applicable laws and regulations and the principles
of the above mentioned fund raising instrument(s) For issuance of Private
Placement CB, the number of common shares can be converted within the limit
of 195,000,000 common shares shall be calculated in accordance with the
conversion price determined at the time of issuance of Private Placement CB.
5.Amount limit of the private placement:To be determined
6.Pricing basis of private placement and its reasonableness:
(a)The higher of (x) the simple average closing price of the Company's
   common shares for 1, 3 or 5 trading days prior to the pricing date,
   and (y) the simple average closing price of the Company's common
   shares for 30 trading days prior to the pricing date, after
   adjustment for shares issued as stock dividends, shares
   cancelled in connection with capital reduction and the cash dividends,
   as the reference price of the Private Placement Shares.
(b)The issue price of the Private Placement Shares shall be no less than
   80% of the reference price. It is proposed to authorize the board of
   directors to decide the actual issue price within the range
   approved by the shareholders meeting, depends on the status of finding
   specific investor(s) and market conditions.
(c)Subscription price of the Private Placement Shares will be
   determined with reference to the price of the Company's common shares
   in accordance with the regulations governing public companies issuing
   securities in private placement, thus, the price should be reasonable.
7.Use of the funds raised in this private placement:
To enrich working capital, strengthen financial structure, purchase of
materials from oversea and/or support the Company's funding needs for
long term development funding needs and plans.
8.Reason for conducting non-public offering:
Considering the effectiveness and convenience for issuance of the Private
Placement Shares Private Placement CB and/or to accommodate the Company's
development planning,including inviting the strategic investor(s), it would
be necessary to issue the Private Placement Shares.
9.Objections or qualified opinions from independent directors:None
10.Actual price determination date:NA
11.Reference price:NA
12.Actual private placement price, and conversion or subscription price:NA
13.Rights and obligations of these new shares privately placed:
For the Private Placement Shares and/or the new common shares to be
issued upon conversion of Private Placement CB, after expiration of
three years following delivery date of the Private Placement
Shares/Private Placement CB, the Board is authorized to apply for
approval from the Taiwan Stock Exchange ("TWSE")
acknowledging that the Private Placement Shares /new common shares
to be issued upon conversion of Private Placement CB meet the
requirements for TWSE listing before the Company submitting application
with the Financial Supervisory Commission for retroactive handling of
public issuance of such shares and submitting application with TWSE for
listing such shares on TWSE. The Private Placement Shares and the new
common shares to be issued upon conversion of Private Placement CB will
have the same rights and obligations as the Company's existing issued
and outstanding common shares.
14.Record date for any additional share exchange, stock swap,
or subscription:NA
15.Possible dilution of equity in case of any additional share exchange,
stock swap, or subscription:NA
16.For additional share exchange or subscription, possible influence of
change in shareholding ratio of TWSE-listed common shares if all privately
placed corporate bonds are converted and shares subscribed for (no.of TWSE -
listed common shares (A), (A) / common shares issued):NA
17.Please explain any countermeasures for lower circulation in shareholding
if the aforesaid estimated no.of TWSE -listed common shares does not reach
60million and the ratio does not reach 25%:NA
18.Any other matters that need to be specified:
The reason for the situation where the issue price of the new common
shares to be issued to sponsor the DR Offering, the new common shares
to be issued in public offering, the new preferred shares to be issued
in public offering, Private Placement Shares and the conversion price
for the Private Placement CB is set at a price less than the par value
due to change of the market change and the reason for the Company not
adopt other fund raising method and the reasonableness for such
determination:
This is mainly based on considerations of the sound operation of the
Company and the security of its financial structure and issuing equity
related securities for fund raising is more appropriate than issuing
pure debt financing. If the Company decides to use the fund
raising methods, such as issuing new shares for cash to sponsor the DR
Offering, issuing new commom shares for cash in public offering, issuing
new preferred shares for cash in public offering,and issuing
Private Placement Shares, etc., the Company would not incur any interest
of the debt in such case not only the Company's financial risk could be
reduced, the Company's financial structure could be improved and the
flexibility of the Company's treasury management would also be increased.
For issuance of Private Placement CB, if investors convert  Private
Placement CB into the common shares, such would improve the Company's
financial structure and would benefit the Company's long term
development.  Thus, it should be reasonable for the Company to issue the
equity related securities. If the issue price and the conversion price
is less than the par value, such would be expected to cause decrease of
the Company's capital surplus and retained earnings in which case the
Company will, depending on the actual operating conditions in the future,
make up for the losses. As the issue price and conversion price will be
determined in accordance with the relevant regulations, thus, after
realization of the benefits of the capital increase, the Company's
financial structure will be effectively improved which would be
favorable to the Company's long-term development and would not have
adverse impact on the rights and benefits of the shareholders.