FX Hotels : Announcement of the Unqualified Opinion of Independent Audit Report on Material Uncertainty related to Going Concern for Q4 2021.

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Provided by: FX HOTELS GROUP INC.
SEQ_NO	2	Date of announcement	2022/03/31	Time of announcement	19:25:07
Subject	Announcement of the Unqualified Opinion of Independent Audit Report on Material Uncertainty related to Going Concern for Q4 2021.
Date of events	2022/03/29	To which item it meets	paragraph 30
Statement	1.Date of occurrence of the event:2022/03/29 2.CPA audit opinion in its entirety: Independent Auditor's Report FX Hotels Group Inc. Opinion We have audited the accompanying consolidated financial statements of FX Hotels Group Inc. and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.0 In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of FX Hotels Group Inc. and its subsidiaries as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS),IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Basis for 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 Auditors' Responsibilities for the Audit of the Consolidated Financial Statements sectionof our report. We are independent of FX Hotels Group Inc. and its subsidiaries in accordance with the Norm of Professional Ethics for Certified PublicAccountant of the Republic of China and we have fulfilled our other ethicalresponsibilities 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. Material Uncertainties Related to Going Concern As mentioned in the accompanying note 1 of the consolidated financial statements, FX Hotels Group Inc. and its subsidiaries' accumulated deficits were NT$596,260 thousands and NT$948,931 thousands as of December 31, 2021 and 2020, respectively. As the accumulated deficit in 2020 has surpassed its paid-in capital and current liabilities are more than current assets by NT$82,284 thousands. All signs shown FX Hotels Group Inc. and its subsidiaries have material uncertainties in going concern. Yet we have not modified 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, and we do not provide a separate opinion on these matters. Except the matters of Material Uncertainties Related to Going Concern section of our opinion, key audit matters for FX Hotels Group Inc. and subsidiaries' consolidated financial statements for the year ended December 31, 2021 are stated as follows: Income recognition The major operational revenues for FX Hotels Group Inc. and its subsidiaries' come from hotel brand franchising and hotel management service, and since revenue has significant impact in all perspectives to financial statements so it is considered as a key audit matter. For the related accounting policies and disclosures regarding to revenue recognition, please refer to note 4(14) and 6(12) in the consolidated financial report. Our audit procedures performed included the following: 1.Understanding and testing the internal procedures and related controls regarding to revenue recognition. 2.Understanding the forms of key revenue types and transaction terms to assess whether the point of revenue recognition is appropriate. 3.Select a time period before and after the reporting date and check whether or not sales transaction records match with documents to assess such sales transactions are recognized in proper time period. 4.Perform an analytical review of the annual revenue growth rate and the accounts receivables turnover rate of the aforementioned transactions to confirm the reasonableness of the sales targets and the transactions. Impairment assessment of account receivables FX Hotels Group Inc. and its subsidiaries' balance of accounts receivable of December 31, 2021, was $17,575 thousands, 2% of the total assets of FX Hotels Group Inc. and its subsidiaries. For the related information, please refer to the accompanying note 4(13), 5(1) and 6(3). The effect on the consolidated financial statements of FX Hotels Group Inc. and its subsidiaries is significant. Whether the expected credit loss assessment reflects the credit risk of the accounts receivable and the appropriateness of the adopted policies involve the subjective judgment of the management, therefore we have identified the impairment assessment of account receivables as a key audit matter. Our key audit procedures performed in respect of the above area included the following: 1.Review the customers' historical payment status analysis allowance loss, evaluate the reasonableness of the receivables recoverable ratio based on the customers' historical payment status, and verify the individual large overdue accounts receivable with reference to the current year's payment status and other available customer information for verifying the sufficiency of the impairment rate. 2.The recoverability of cash recovered from overdue receivables after the assessment period,taking into account whether additional allowances are required. 3.Understand the management's policy on the accounts receivable generated by the major customer base and test the correctness and completeness of the accounts receivable aging analysis table, and calculate the receivables allowances provided by the management. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing FX Hotels Group Inc. and its subsidiaries' ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate FX Hotels Group Inc. and its subsidiaries or to cease operations, or has no realistic alternative but to do so. Those charged with governance (including audit committee) are responsible for overseeing FX Hotels Group Inc. and its subsidiaries' financial reporting process. Auditors' Responsibilities for the Audit of the Consolidated Financial Statements　　 Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China which wi1l 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 inf1uence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the auditing standards generally accepted 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 misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, 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 FX Hotels Group Inc. and its subsidiaries' internal control. 3.Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4.Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on FX Hotels Group Inc. and its subsidiaries' ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause FX Hotels Group Inc. and its subsidiaries 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 FX Hotels Group Inc. and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 3.Name of the CPA firm:Candor Taiwan CPA firm 4.CPA name and auditor certificate No.-1: Lin Chao-Min, Jin-Guan-Zheng-Shen-Zi ,No. 0980054543 5.CPA name and auditor certificate No.-2: Chen Wen-Pin, Jin-Guan-Zheng-Shen-Zi ,No. 1020049365 6.Date of report audit (review) by CPA:2022/03/29 7.Countermeasures:nil 8.Any other matters that need to be specified:nil